-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V/HtG4CE9tVGOjCS5044X9on8jEoNPMAbd+1oKK4QA64kty3vfXZdoi45MlXRKrV ++xDlv0Aag1wI51/zAfo7w== 0000950109-99-003710.txt : 19991021 0000950109-99-003710.hdr.sgml : 19991021 ACCESSION NUMBER: 0000950109-99-003710 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19991020 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIRMINGHAM STEEL CORP CENTRAL INDEX KEY: 0000779334 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 133213634 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-09820 FILM NUMBER: 99730834 BUSINESS ADDRESS: STREET 1: 1000 URBAN CENTER DRIVE STREET 2: SUITE 300 CITY: BIRMINGHAM STATE: AL ZIP: 35242 BUSINESS PHONE: 2059701200 MAIL ADDRESS: STREET 1: P.O. BOX 1208 CITY: BIRMINGHAM STATE: AL ZIP: 35201-1208 10-K405/A 1 FORM 10-K AMENDMENT #1 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-K/A (Amendment No. 1) (Mark One) [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 1999 OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 From the transition period from to Commission File Number 1-9820 ---------------- BIRMINGHAM STEEL CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 13-3213634 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification Number) 1000 Urban Center Drive, Suite 300 Birmingham, Alabama 35242-2516 (Address of principal executive offices) (Zip Code)
(205) 970-1200 (Registrant's telephone number, including area code) ---------------- Securities Registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange Title of Each Class on Which Registered ------------------- --------------------- Common Stock, par value New York Stock $0.01 per share Exchange
Securities Registered pursuant to Section 12 (g) of the Act: NONE ---------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), 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 amendment to this Form 10-K. [X] As of September 30, 1999, 29,732,615 shares of Common Stock of the registrant were outstanding. On such date the aggregate market value of shares (based upon the closing market price of the Company's Common Stock on the New York Stock Exchange on September 30, 1999) held by non-affiliates was $221,856,443. For purposes of this calculation only directors and officers are deemed to be affiliates. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- DOCUMENTS INCORPORATED BY REFERENCE Portions of our Proxy Statement for the 1999 Annual Meeting of Stockholders are incorporated herein by reference in response to items 10 through 12 in Part III of the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999 originally filed on October 13, 1999. EXPLANATORY NOTE The Registrant hereby amends its Annual Report on Form 10-K for the fiscal year ended June 30, 1999, previously filed on October 13, 1999, solely to include Exhibits 4.1.3, 4.1.4, 4.2.2, 4.2.3, 4.3, 10.18, 10.26.5 and 10.26.6 and to amend Part IV, Item 14(c) to reflect the inclusion of such Exhibits. 1 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K ITEM 14 (c) EXHIBITS
Exhibit Description of Exhibits ------- ----------------------- 3.1 Restated Certificate of Incorporation of the Registrant (incorporated by reference from Form 8-A, Exhibit 2.2, filed November 16, 1986) 3.2 By-laws of the Registrant as amended on August 3, 1999 (incorporated by reference to Exhibit 3.1 from Current Report on Form 8-K filed August 11, 1999) 4.1 Birmingham Steel Corporation $130,000,000 Senior Note Purchase Agreement dated December 15, 1993 between the Registrant and the following group of investors: The Equitable Life Assurance Society of the U.S., The Guardian Life Insurance Company of America, Principal Mutual Life Insurance Company, The Travelers Indemnity Company, Jefferson-Pilot Life Insurance Company, Phoenix Home Life Mutual Life Insurance Company, American United Life Insurance Company, Canada Life Assurance Company, Canada Life Assurance Company of America, Canada Life Assurance Company of New York, Ameritas Life Insurance Corporation, Berkshire Life Insurance Company, Provident Mutual Life Insurance Company-CALIC, Provident Mutual Life Insurance Company of Philadelphia (incorporated by reference from Form 10-Q for quarter ended December 31, 1993, Exhibit 4.1) 4.1.1 First Amendment to $130,000,000 Senior Note Purchase Agreement dated October 18, 1996 (to be filed by amendment) 4.1.2 Second Amendment to $130,000,000 Senior Note Purchase Agreement dated December 14, 1998 (incorporated by reference to Exhibit 10.3 from Form 10-Q for quarter ended December 31, 1998) 4.1.3* Waiver and Third Amendment to $130,000,000 Senior Note Purchase Agreement dated as of October 12, 1999 4.1.4* Amended and Restated $130,000,000 Senior Note Purchase Agreement dated as of October 12, 1999 4.2 Birmingham Steel Corporation $150,000,000 Senior Note Purchase Agreement dated December 15, 1995 between the Registrant and the following group of investors: Connecticut General Life Insurance Company, Life Insurance Company of North America, CIGNA Property and Casualty Insurance Company, Principal Mutual Life Insurance Company, Nationwide Life Insurance Company, Employers Life Insurance Company of Wausau, The Northwestern Mutual Life Insurance Company, The Equitable Life Assurance Society of the United States, Sun Life Assurance Company of Canada (U.S.), Sun Life Assurance Company of Canada, Sun Life Insurance and Annuity Company of New York, The Minnesota Mutual Life Insurance Company, Mutual Trust Life Insurance Company, The Reliable Life Insurance Company, Federated Mutual Insurance Company, Federated Life Insurance Company, Minnesota Fire and Casualty Company, National Travelers Life Company, First National Life Insurance Company of America, Guarantee Reserve Life Insurance Company, First Colony Life Insurance Company, American United Life Insurance Company, The State Life Insurance Company, Ameritas Life Insurance Company (incorporated by reference from Form 10-Q for quarter ended December 31, 1995, Exhibit 4.1). 4.2.1 Amendment to $150,000,000 Senior Note Purchase Agreement dated December 14, 1998 (incorporated by reference to Exhibit 10.2 from Form 10-Q for quarter ended December 31, 1998)
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Exhibit Description of Exhibits ------- ----------------------- 4.2.2* Waiver and Second Amendment to $150,000,000 Senior Note Purchase Agreement dated as of October 12, 1999 4.2.3* Amended and Restated $150,000,000 Senior Note Purchase Agreement dated as of October 12, 1999 4.3* Letter from Birmingham Steel Corporation to Senior Noteholders dated October 13, 1999 4.4 Shareholder Rights Plan of Registrant (incorporated by reference from Form 8-K filed January 23, 1996) 4.5 Reimbursement Agreement, dated as of October 1, 1996, between Birmingham Steel Corporation and PNC Bank, Kentucky, Inc. (incorporated by reference from Form 10-Q for quarter ended December 31, 1996, exhibit 4.1) 10.1 1986 Stock Option Plan of Registrant, as amended (incorporated by reference from Registration Statement on Form S-8 (No. 33-16648), filed August 20, 1987)** 10.2 Amended and Restated Management Security Plan, effective January 1, 1994 (incorporated by reference from Form 10-K for year ended June 30, 1994, Exhibit 10.2)** 10.3 Steel Billet Sale and Purchase Master Agreement between American Steel & Wire Corporation and QIT-Fer et Titane, Inc. dated July 1, 1994 (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1995, Exhibit 10.3) 10.4 Supply Agreement, dated as of August 2, 1985, among MC Acquisition Corp., Birmingham Bolt Company, Inc., Magna Corporation, Contractors Material Co., Inc., and Hackney Steel Co., Inc. (incorporated by reference from Registrant Statement No. 33-945, Exhibit 10.6.3, filed November 20, 1985) 10.5 1989 Non-Union Employees' Stock Option Plan of the Registrant (incorporated by reference from a Registration Statement on Form S-8, Registration No. 33-30848, filed August 31, 1989, Exhibit 4.1)** 10.6 Restated Birmingham Steel Corporation 401(k) Plan restated as of January 1, 1990 (incorporated by reference from Post-Effective Amendment No. 1 to Form S-8, Registration No. 33-23563, filed July 12, 1990, Exhibit 4.1)** 10.7 Special Severance Benefits Plan of the Registrant (incorporated by reference from the Annual Report on Form 10-K for the Year ended June 30, 1989, Exhibit 10.12)** 10.8 Lease Agreement, as amended, dated July 13, 1993 between Torchmark Development Corporation and Birmingham Steel Corporation (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1993, Exhibit 10.12) 10.8.1 Third Amendment to Lease Agreement, dated November 30, 1993, between Torchmark Development Corporation and Birmingham Steel Corporation (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1997, Exhibit 10.8.1) 10.8.2 Fourth Amendment to Lease Agreement, dated June 13, 1994, between Torchmark Development Corporation and Birmingham Steel Corporation (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1997, Exhibit 10.8.2) 10.8.3 Fifth Amendment to Lease Agreement, dated September 6, 1995, between Torchmark Development Corporation and Birmingham Steel Corporation (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1997, Exhibit 10.8.3)
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Exhibit Description of Exhibits ------- ----------------------- 10.8.4 Sixth Amendment to Lease Agreement, dated April 11, 1997, between Torchmark Development Corporation and Birmingham Steel Corporation (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1997, Exhibit 10.8.4) 10.8.5 Seventh Amendment to Lease Agreement, dated April 11, 1997, between Torchmark Development Corporation and Birmingham Steel Corporation (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1997, Exhibit 10.8.5) 10.8.6 Eighth Amendment to Lease Agreement, dated April 11, 1997, between Torchmark Development Corporation and Birmingham Steel Corporation (incorporated by reference from Annual Report on Form 10-K for the year ended June 30, 1998, Exhibit 10.8.6) 10.9 1990 Management Incentive Plan of the Registrant (incorporated by reference from a Registration Statement on Form S-8, Registration No. 33-41595, filed July 5, 1991, Exhibit 4.1)** 10.10 1992 Non-Union Employees' Stock Option Plan of the Registrant (incorporated by reference from a Registration Statement on Form S-8, Registration No. 33-51080, filed August 21, 1992, Exhibit 4.1)** 10.11 Employment Agreement, dated January 5, 1996 between Registrant and Robert A. Garvey (incorporated by reference from Form 10-Q for quarter ended December 31, 1995 exhibit 10.1)** 10.11.1 Amendment to Employment Agreement, dated January 5, 1996 between Registrant and Robert A. Garvey dated August 10, 1998 (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1998 Exhibit 10.11.1)** 10.11.2 Second Amendment to Employment Agreement, dated January 5, 1996 between Registrant and Robert A. Garvey dated September 20, 1999 (incorporated herein by reference to the same numbered exhibit previously filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999) ** 10.12 Employment Agreement, dated May 11, 1999, between Registrant and Brian F. Hill (incorporated herein by reference to the same numbered exhibit previously filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999) ** 10.12.1 Amendment to Employment Agreement, dated September 21, 1999, between Registrant and Brian F. Hill (incorporated herein by reference to the same numbered exhibit previously filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999) ** 10.13 Employment Agreement, dated September 20, 1999, between Registrant and Kevin E. Walsh (incorporated herein by reference to the same numbered exhibit previously filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999) ** 10.15 Stock Accumulation Plan of the Registrant (incorporated by reference from a Registration Statement on Form S-8, Registration No. 33-64069, filed November 8, 1995, Exhibit 4.1)** 10.16 Lease Agreement, dated January 7, 1997, between Torchmark Development Corporation and Birmingham Southeast LLC (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1998, Exhibit 10.13) 10.17 Director Stock Option Plan of the Registrant (incorporated by reference from Form 10-Q for quarter ended September 30, 1996, exhibit 10.1)** 10.18* Director Compensation Plan of the Registrant**
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Exhibit Description of Exhibits -------- ----------------------- 10.19 Amended and Restated Executive Severance Plan of the Registrant (incorporated herein by reference to the same numbered exhibit previously filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999) ** 10.20 Chief Executive Officer Incentive Compensation Plan of the Registrant (incorporated by reference from Form 10-Q for quarter ended September 30, 1996, exhibit 10.2)** 10.21 Equity Contribution Agreement among American Iron Reduction, L.L.C., GS Technologies Operating Co., Inc., Birmingham Steel Corporation and Nationsbank, N.A., dated August 30, 1996 (incorporated by reference from Form 10-Q for quarter ended September 30, 1996, exhibit 10.3) 10.22 DRI Purchase Agreement between Birmingham Steel Corporation and American Iron Reduction, L.L.C., dated as of August 30, 1996 (incorporated by reference from Form 10-Q for quarter ended September 30, 1996, exhibit 10.4) 10.23 Operating Agreement between Birmingham Steel Corporation and Raw Material Development Co., Ltd., dated as of September 18, 1996 (incorporated by reference from Form 10-Q for quarter ended September 30, 1996, exhibit 10.5) 10.24 Asset Purchase Agreement, dated as of October 31, 1996, among Mitsui & Co., Ltd., R. Todd Neilson, as Chapter 11 Trustee for the bankruptcy estate of Hiuka America Corporation, All-Ways Recycling Company, B&D Auto & Truck Salvage, and Weiner Steel Corporation (incorporated by reference from Form 10-Q for quarter ended December 31, 1996, exhibit 10.1) 10.25 Contribution Agreement, dated as of November 15, 1996, among IVACO, Inc., Atlantic Steel Industries, Inc., Birmingham Steel Corporation and Birmingham Southeast, LLC (incorporated by reference from Current report on Form 8-K filed December 12, 1996) 10.26 $300 million Credit Agreement, dated as of March 17, 1997 by and among Birmingham Steel Corporation, as Borrower, the financial institutions party hereto and their assignees under section 12.5.(d), as Lenders, PNC Bank, National Association and The Bank of Nova Scotia, as Co-agents and Nationsbank, N.A. (South), as Agent and as Arranger (incorporated by reference from Form 10-Q for quarter ended March 31, 1997, exhibit 10.1) 10.26.1 First Amendment to Credit Agreement dated June 23, 1998 (incorporated by reference to Exhibit 10.2 from Current Report on Form 8-K filed September 30, 1999) 10.26.2 Second Amendment to Credit Agreement dated September 30, 1998 (incorporated by reference to Exhibit 10.1 from Form 10-Q for quarter ended December 31, 1998) 10.26.3 Third Amendment to Credit Agreement dated July 27, 1999 (incorporated by reference to Exhibit 10.4 from Current Report on Form 8-K filed September 30, 1999) 10.26.4 Fourth Amendment to Credit Agreement dated September 28, 1999 (incorporated by reference to Exhibit 10.5 from Current Report on Form 8-K filed September 30, 1999) 10.26.5* Fifth Amendment to Credit Agreement dated October 12, 1999 10.26.6* Collateral Agency and Intercreditor Agreement dated October 12, 1999 10.27 Executive Retirement and Compensation Deferral Plan of the Registrant (incorporated by reference from Annual Report on Form 10-K for year ended June 30, 1998, Exhibit 10.22)** 10.28 1997 Management Incentive Plan of the Registrant (incorporated by reference from a Registration Statement on Form S-8, Registration No. 333-46771, filed February 24, 1998, Exhibit 4.6).** 22.1 Subsidiaries of the Registrant (incorporated herein by reference to the same-numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999)
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Exhibit Description of Exhibits ------- ----------------------- 23.1 Consent of Ernst & Young LLP, Independent Auditors (incorporated herein by reference to the same-numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999) 23.2 Accountants' Consent (KPMG LLP) (incorporated herein by reference to the same-numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999) 27 Financial Data Schedule (incorporated herein by reference to the same- numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999) 99.1 Risk Factors that May Affect Future Operating Results (incorporated herein by reference to the same-numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended June 30, 1999, as filed on October 13, 1999)
- -------- * Being filed herewith ** Denotes a management contract or compensatory plan or arrangement required to be filed as an exhibit to this report. 6 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. BIRMINGHAM STEEL CORPORATION /s/ Robert A. Garvey By: _________________________________ Robert A. Garvey Chairman of the Board, President and CEO (signing in his capacity as a duly authoried officer of the Registrant pursuant to Rule 12b-15) October 19, 1999 Date: _______________________________ 7 EX-4.1.3 2 WAIVER AND THIRD AMENDMENT ================================================================================ EXHIBIT 4.1.3 BIRMINGHAM STEEL CORPORATION ----------------------- WAIVER AND THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT ----------------------- Re: Note Purchase Agreements Dated as of September 1, 1993 and $130,000,000 Original Principal Amount of 7.28% Senior Notes Due December 15, 2005 DATED OCTOBER 12, 1999 ================================================================================ TABLE OF CONTENTS PAGE 1. PRELIMINARY STATEMENT...................................................1 1.1 BACKGROUND..........................................................1 1.2 DEFINITIONS.........................................................3 2. AMENDMENTS AND WAIVERS..................................................6 2.1 AMENDMENT AND RESTATEMENT OF EXISTING NOTE PURCHASE AGREEMENT.......6 2.2 AMENDMENT AND RESTATEMENT OF EXISTING NOTES.........................6 2.3 WAIVERS OF EXISTING EVENTS OF DEFAULT...............................6 2.4 CONTINUITY AND AFFIRMATION OF OBLIGATIONS...........................6 3. REPRESENTATIONS AND WARRANTIES..........................................7 3.1 SUBSIDIARIES AND STOCK OWNERSHIP....................................7 3.2 CORPORATE EXISTENCE AND POWER.......................................7 3.3 CORPORATE AUTHORITY.................................................8 3.4 BINDING EFFECT......................................................8 3.5 NO CONFLICTS WITH AGREEMENTS, ETC...................................8 3.6 CONSENTS, ETC.......................................................9 3.7 FULL DISCLOSURE.....................................................9 3.8 OUTSTANDING DEBT AND LIENS..........................................9 3.9 PENDING LITIGATION.................................................10 3.10 NO DEFAULTS.......................................................10 3.11 COMPLIANCE WITH LAW...............................................10 3.12 TITLE TO PROPERTIES...............................................10 3.13 ENVIRONMENTAL COMPLIANCE..........................................11 3.14 RESTRICTIONS ON COMPANY AND SUBSIDIARIES..........................12 3.15 COLLATERAL........................................................13 3.16 SOLVENCY..........................................................14 4. CONDITIONS PRECEDENT...................................................15 4.1 CERTIFICATES.......................................................15 4.2 OPINIONS OF COUNSEL................................................16 4.3 OMNIBUS COLLATERAL AGREEMENT.......................................15 4.4 GUARANTY AGREEMENT.................................................16 4.5 1995 SECOND AMENDMENT..............................................16 4.6 FIFTH AMENDMENT TO CREDIT AGREEMENT................................16 4.7 LETTER OF CREDIT DOCUMENTS.........................................17 4.8 OTHER RELATED MATTERS..............................................17 4.9 INTERCREDITOR AGREEMENT............................................17 4.10 SECURITY DOCUMENTS................................................17 4.11 LIEN SEARCHES.....................................................19 4.12 RESTRUCTURING FEE.................................................19 4.13 PRIVATE PLACEMENT NUMBER..........................................19 4.14 PAYMENT OF SPECIAL COUNSEL AND FINANCIAL ADVISOR FEES.............19 4.15 LEASE LETTERS.....................................................20 4.16 PROCEEDINGS AND DOCUMENTS SATISFACTORY............................20 I TABLE OF CONTENTS PAGE 5. MISCELLANEOUS..........................................................20 5.1 EFFECT OF AMENDMENT AND WAIVER.....................................20 5.2 NO LEGEND REQUIRED.................................................20 5.3 FEES AND EXPENSES..................................................20 ***5.4 SURVIVAL........................................................21 5.5 DUPLICATE ORIGINALS; EXECUTION IN COUNTERPART......................21 5.6 RELEASE OF CLAIMS..................................................22 5.7 GOVERNING LAW......................................................22 Schedule 3.1 -- Subsidiaries Schedule 3.8 -- Outstanding Debt and Liens Schedule 3.14 -- Restrictive Agreements Schedule 3.15 -- Recording Information Exhibit A -- Amended and Restated Note Purchase Agreement Exhibit B1 -- Form of Opinion of Special Company Counsel to the Company and the Restricted Subsidiaries Exhibit B2 -- Form of Opinion of Local Counsel to the Company and the Restricted Subsidiaries Exhibit B3 -- Form of Opinion of Special Counsel to the Collateral Agent Exhibit C -- Form of Omnibus Collateral Agreement Exhibit D -- Form of Guaranty Agreement Exhibit E -- Form of Intercreditor Agreement Exhibit F1 -- Form of Alabama Mortgage Exhibit F2 -- Form of Florida Mortgage Exhibit F3 -- Form of Illinois Mortgage Exhibit F4 -- Form of Mississippi Mortgage Exhibit F5 -- Form of Ohio Mortgage Exhibit F6 -- Form of Tennessee Mortgage Exhibit F7 -- Form of Washington Mortgage Exhibit G -- Form of Security Agreement Exhibit H -- Form of Trademark/Copyright Security Agreement Exhibit I -- Form of Stock Pledge Agreement Exhibit J -- Form of Note Pledge Agreement II BIRMINGHAM STEEL CORPORATION WAIVER AND THIRD AMENDMENT TO NOTE PURCHASE AGREEMENT Re: Note Purchase Agreements Dated as of September 1, 1993 and $130,000,000 Original Principal Amount of 7.28% Senior Notes Due December 15, 2005 Dated October 12, 1999 To the Persons listed on the signature pages hereof Ladies and Gentlemen: BIRMINGHAM STEEL CORPORATION, a Delaware corporation (together with its successors and assigns, the "Company"), hereby agrees with you as follows: 1. PRELIMINARY STATEMENT. 1.1 Background. (a) The Company entered into those certain Note Purchase Agreements dated as of September 1, 1993, as amended by an Amendment to Note Purchase Agreement dated as of October 18, 1996 and as further amended by Amendment to 1993 Note Purchase Agreement dated as of December 14, 1998 (collectively, as in effect immediately prior to the Effective Date, the "Existing Note Purchase Agreement," and as amended hereby, the "Amended Note Purchase Agreement"), with each of the institutions named in Annex 1 thereto, under and pursuant to which the Company issued and sold to such institutions an aggregate principal amount of One Hundred Thirty Million Dollars ($130,000,000) of the Company's 7.28% Senior Notes due December 15, 2005 (as in effect immediately prior to the Effective Date, the "Existing Notes," and as amended hereby, the "Amended Notes"). (b) The institutions (other than the Company) listed on the signature pages to this Agreement (collectively, the "Noteholders") are the holders of one hundred percent (100%) of the Existing Notes outstanding as of the Effective Date. (c) The Company entered into those certain Note Purchase Agreements dated as of September 15, 1995, with each of the institutions named in Annex 1 thereto (together with their successors and assigns, the "1995 Noteholders"), as amended by an Amendment to 1995 Note Purchase Agreement dated as of December 14, 1998 (collectively, as in effect immediately prior to the Effective Date, the "1995 Existing Note Purchase Agreement," and, as amended by a Waiver and Second Amendment to 1995 Note Purchase Agreement dated as of the date hereof (the "1995 Second Amendment"), the "1995 Amended Note Purchase Agreement"), under and pursuant to which the Company issued and sold to such institutions (i) an aggregate principal amount of Seventy-Six Million Dollars ($76,000,000) of the Company's 6.96% Series A Senior Notes due December 15, 2002, (ii) an aggregate principal amount of Fourteen Million Dollars ($14,000,000) of the Company's 7.07% Series B Senior Notes due December 15, 2005, and (iii) an aggregate principal amount of Sixty Million Dollars ($60,000,000) of the Company's 7.17% Series C Senior Notes due December 15, 2005 (collectively, the "1995 Notes"). (d) The Company entered into that certain Credit Agreement dated as of March 17, 1997 (as in effect immediately prior to the Effective Date, the "Existing Credit Agreement," and as heretofore amended and as amended by a Fifth Amendment to Credit Agreement dated as of the date hereof (the "Fifth Amendment"), the "Amended Credit Agreement"), by and among the Company, the banks party thereto (collectively, the "Banks"), and Bank of America, N.A., as agent (the "Agent"), pursuant to which a Three Hundred Million Dollar ($300,000,000) credit facility has been provided to the Company. (e) Bank of America, N.A. and PNC Bank, National Association (collectively, the "L/C Issuers") have separately provided the Company with three (3) letters of credit (collectively, the "Letters of Credit") which have an aggregate face amount of Fifty-One Million Nine Hundred Ninety-Three Thousand One Hundred Fifty-One Dollars ($51,993,151), which Letters of 2 Credit were issued pursuant to (i) an Amended and Restated Reimbursement Agreement, dated as of October 12, 1999, among the Company, American Steel & Wire Corporation and Bank of America, N.A. (as amended, the "B of A Reimbursement Agreement"), (ii) a Reimbursement Agreement dated as of October 1, 1996, between PNC Bank, National Association successor to PNC Bank, Kentucky, Inc. and the Company (as amended, "PNC Reimbursement Agreement One") and (iii) a Reimbursement Agreement dated as of August 15, 1995 between the Company and PNC Bank, National Association, successor to PNC Bank, Kentucky, Inc. ("PNC Reimbursement Agreement Two," and collectively with the B of A Reimbursement Agreement and PNC Reimbursement Agreement One, the "Existing Reimbursement Agreements"). (f) The Company has notified the Noteholders, the 1995 Noteholders, the Banks and the L/C Issuers of certain Defaults and Events of Default under, and as defined in, the Existing Note Purchase Agreement, the 1995 Existing Note Purchase Agreement, the Existing Credit Agreement and the Existing Reimbursement Agreements, respectively. (g) The Company requests the amendment and restatement of the Existing Note Purchase Agreement and the waiver of the existing Defaults and Events of Default specified herein, and, in exchange therefor, the Company agrees to amend and restate the Existing Notes to, among other things, increase the interest rate applicable thereto, to cause one or more of its Restricted Subsidiaries to enter into the Guaranty Agreement, and to grant, and to cause one or more of its Restricted Subsidiaries to grant, the security interests described in the Security Documents to the Collateral Agent for the ratable benefit of the Noteholders, the 1995 Noteholders, the Banks and the L/C Issuers and for the benefit of the Indenture Trustee and the Owner Trustee. (h) The Noteholders are agreeable, subject to the terms and conditions set forth herein, to amending and restating in full the Existing Note Purchase Agreement and the Existing Notes as provided herein. 1.2 Definitions. Capitalized terms used but not specifically defined in this Agreement have the respective meanings assigned to them in the Existing Note Purchase Agreement. As used in this Agreement, the following terms have the respective meanings specified below or set forth in the Section hereof following such term: Acceptable SBQ Asset Sale - has the meaning specified in the 3 Amended Note Purchase Agreement. Agent - Section 1.1(d). Agreement, this - means this Waiver and Third Amendment to Note Purchase Agreement, as it may be amended or otherwise modified from time to time. Amended Credit Agreement - Section 1.1(d). Amended Note Purchase Agreement - Section 1.1(a). Amended Notes - Section 1.1(a). Banks - Section 1.1(d). B of A Reimbursement Agreement - Section 1.1(e). Collateral Agent - means State Street Bank and Trust Company, in its capacity as collateral agent under the Intercreditor Agreement. Company - the introductory sentence. Effective Date - Section 4. Existing Credit Agreement - Section 1.1(d). Existing Note Purchase Agreement - Section 1.1(a). Existing Notes - Section 1.1(a). Existing Reimbursement Agreements - Section 1.1(e). Fifth Amendment - Section 1.1(d). Financing Documents - means, collectively, this Agreement, the Omnibus Collateral Agreement, the Intercreditor Agreement, the Guaranty Agreement and each of the Security Documents, in each case, as may be amended or otherwise modified from time to time. Guaranty Agreement - Section 4.4. Indenture Trustee - has the meaning set forth in the Intercreditor Agreement. 4 Intercreditor Agreement - Section 4.9. L/C Issuers - Section 1.1(e). Letters of Credit - Section 1.1(e). Mortgages - Section 4.10(a). 1995 Amended Note Purchase Agreement - Section 1.1(c). 1995 Existing Note Purchase Agreement - Section 1.1(c). 1995 Noteholders - Section 1.1(c). 1995 Notes - Section 1.1(c). 1995 Second Amendment - Section 1.1(c). Note Pledge Agreement - Section 4.10(e). Noteholders - Section 1.1(b). Omnibus Collateral Agreement - Section 4.3. Operative Agreements - has the meaning specified in Appendix A to that certain Participation Agreement (Birmingham Steel Trust 97-1), dated as of September 30, 1997, among the Company, as lessee, the Owner Trustee, the Indenture Trustee and the institutional lenders party thereto, as amended. Owner Trustee - has the meaning set forth in the Intercreditor Agreement. PNC Reimbursement Agreement One - Section 1.1(e). PNC Reimbursement Agreement Two - Section 1.1(e). Security Agreement - Section 4.10(b). Security Documents - means, collectively, each of the Mortgages, the Security Agreement, the Trademark/Copyright Security Agreement, the Stock Pledge Agreement and the Note Pledge Agreement. Stock Pledge Agreement - Section 4.10(d). 5 Trademark/Copyright Security Agreement - Section 4.10(c). Transaction Documents - has the meaning specified in the Omnibus Collateral Agreement. 2. AMENDMENTS AND WAIVERS 2.1 Amendment and Restatement of Existing Note Purchase Agreement. The Existing Note Purchase Agreement (including Exhibit A) is hereby amended and restated in full in the form attached hereto as Exhibit A. On the Effective Date, the Amended Note Purchase Agreement shall supercede and replace the Existing Note Purchase Agreement and the Existing Note Purchase Agreement will cease to be of further force and effect. 2.2 Amendment and Restatement of Existing Notes. (a) The form of the Existing Notes attached to the Existing Note Purchase Agreement as Exhibit A is hereby amended and restated in full in the form attached as Exhibit A to the Amended Note Purchase Agreement. (b) All Existing Notes outstanding on the Effective Date are hereby, without any further action being required on the part of the Noteholders or on the part of any other Person, deemed to be conformed to the form of Amended Note attached to the Amended Note Purchase Agreement as Exhibit A. The outstanding Amended Notes shall be and are entitled to all of the rights and benefits provided therefor in the Amended Note Purchase Agreement. 2.3 Waivers of Existing Events of Default. Each existing Default and Event of Default under the Existing Note Purchase Agreement arising as a result of facts, circumstances or events in effect or existence on or prior to the effectiveness of this Agreement on the date hereof is hereby permanently and irrevocably waived and the Company and the Noteholders hereby agree that each such existing Default and Event of Default shall be deemed to have been permanently and irrevocably waived as of the date of the initial occurrence thereof. 2.4 Continuity and Affirmation of Obligations. Notwithstanding any other provision of this Agreement or any other document or agreement, the indebtedness of the Company under the Existing Note 6 Purchase Agreement and the Existing Notes shall not be or be deemed to be paid or discharged or novated hereby and shall continue in full force and effect as amended hereby. 3. REPRESENTATIONS AND WARRANTIES To induce the Noteholders to enter into this Agreement, the Company makes the representations and warranties set forth in this Section 3. The Company agrees and acknowledges that for purposes of Section 10.1(e) of the Amended Note Purchase Agreement, its representations and warranties, as set forth in this Agreement, are and constitute representations and warranties furnished in connection with the Amended Note Purchase Agreement. 3.1 Subsidiaries and Stock Ownership. Schedule 3.1 hereto states the name of each Subsidiary (indicating which Subsidiaries are Restricted Subsidiaries), its jurisdiction of incorporation and the percentage of its Voting Stock owned by the Company and each other Subsidiary. Each of the Company and the Subsidiaries has good and marketable title to all of the shares it purports to own of the stock of each Subsidiary, free and clear in each case of any Lien. All such shares have been duly issued and are fully paid and nonassessable. 3.2 Corporate Existence and Power. Each of the Company and the Subsidiaries: (a) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; (b) has the legal and corporate power and authority necessary to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted; (c) has all necessary licenses, certificates, permits, franchises and other governmental authorizations necessary to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted, except where the failure to have such licenses, certificates and permits, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect; (d) has duly qualified or has been duly licensed, and is authorized to do business and is in good standing, as a foreign corporation, in each state 7 where the failure to be so qualified or licensed and authorized and in good standing could reasonably be expected to have a Material Adverse Effect; and (e) has, in the case of each Restricted Subsidiary, all requisite power and authority to execute, deliver and perform its obligations under each Financing Document to which it is a party. 3.3 Corporate Authority. The execution, delivery and performance by the Company and each Restricted Subsidiary of each Financing Document to which the Company or such Restricted Subsidiary is a party, and the performance by the Company of the Amended Note Purchase Agreement and the Amended Notes, is within the corporate powers of the Company or such Restricted Subsidiary, as the case may be, and has been duly authorized by all necessary corporate action on the part of the board of directors (no action on the part of the stockholders of the Company or any such Restricted Subsidiary being required by law, other than such actions which have been duly taken), of the Company or such Restricted Subsidiary. 3.4 Binding Effect. Each Financing Document to which the Company or any Restricted Subsidiary is a party has been duly executed by the Company or such Restricted Subsidiary and each Financing Document, the Amended Note Purchase Agreement and each Amended Note is a legal, valid and binding obligation of the Company or such Restricted Subsidiary, as the case may be, enforceable against the Company or such Restricted Subsidiary in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally, or by general principles of equity. 3.5 No Conflicts with Agreements, Etc. Neither the execution and delivery by the Company or any Restricted Subsidiary of any Financing Document to which it is a party, nor the fulfillment of, or compliance with, the terms and provisions of any Financing Document, the Amended Note Purchase Agreement or the Amended Notes, will conflict with, or result in a breach or violation of any term, condition or provision of, or constitute a default under, or result in the creation of any Lien (other than Liens under the Security Documents) on any Property of the Company or such Restricted Subsidiary pursuant to its charter or by-laws, or any contract, agreement, mortgage, indenture, lease or instrument to which it is a party or by which it is bound or to which it or any of its Property is subject, or any order, statute, law, rule or regulation to which it or any of its Property is subject. 8 3.6 Consents, Etc. No consent, approval or authorization of, or declaration, registration or filing (except as contemplated under Section 4) with, any Governmental Authority or any nongovernmental Person, including, without limitation, any creditor (other than the 1995 Noteholders, the Banks and the L/C Issuers) or stockholder of the Company or any Restricted Subsidiary, is required in connection with the execution or delivery by the Company or any Restricted Subsidiary of any Financing Document to which it is a party or the performance by the Company or such Restricted Subsidiary of its obligations under any Financing Document, the Amended Note Purchase Agreement or the Amended Notes, or as a condition to the legality, validity or enforceability of any such Financing Document, the Amended Note Purchase Agreement or the Amended Notes, except, in each case, those which have been obtained or which are contemplated by the Transaction Documents. 3.7 Full Disclosure. The financial statements and other written statements, certificates and materials provided to the Noteholders pursuant to the Existing Note Purchase Agreement and the written statements, certificates and materials furnished by or on behalf of the Company to you in connection with this Agreement and the transactions contemplated hereby do not contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading in light of the circumstances in which they were made. Except as disclosed (i) in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, (ii) in the other reports filed by the Company with the Securities and Exchange Commission after June 30, 1998, (iii) in press releases issued by the Company prior to the Effective Date, or (iv) to you or Nightingale Associates, LLC in writing, there is no fact known to the Company which materially affects adversely or, so far as the Company can now reasonably foresee, will materially affect adversely the business, prospects, profits, Properties or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or the ability of the Company and each Restricted Subsidiary to perform its obligations set forth in the Financing Documents to which it is a party or, in the case of the Company, the Amended Note Purchase Agreement or the Amended Notes. 3.8 Outstanding Debt and Liens. Schedule 3.8 hereto sets forth a correct and complete schedule and brief description of all Debt of the Company and the Subsidiaries outstanding on the Effective Date and all consensual Liens securing such Debt. There are no Liens on any of the Property of the Company or any Restricted Subsidiary except Liens permitted by Section 8.17(a) of the Amended Note Purchase Agreement. 9 3.9 Pending Litigation. There are no proceedings, actions or investigations pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal (a) challenging, or in any way dealing with, the legality, validity or enforceability of any Financing Document, the Amended Note Purchase Agreement or the Amended Notes or the authority of the Company or any Restricted Subsidiary to enter into or execute any Financing Document, the Amended Note Purchase Agreement or the Amended Notes, or (b) except as disclosed (i) in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, (ii) in the other reports filed by the Company with the Securities and Exchange Commission after June 30, 1998, (iii) in press releases issued by the Company prior to the Effective Date, or (iv) to you or Nightingale Associates, LLC in writing, that, in the aggregate for all such proceedings, actions and investigations, could reasonably be expected to have a Material Adverse Effect. 3.10 No Defaults. No event has occurred and is continuing and no condition exists which, upon execution and delivery of this Agreement (and giving effect to Section 2.3) and the other Transaction Documents, would constitute a Default or Event of Default. Neither the Company nor any Subsidiary is in violation in any respect of any term of any charter instrument or by-law and neither the Company nor any Subsidiary is in default in the payment of principal or interest on any Debt or in default under any instrument or instruments or agreements under and subject to which any Debt has been issued and no event has occurred and is continuing under the provisions of any such instrument or agreement which with the lapse of time or the giving of notice, or both, would constitute a default or an event of default thereunder, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. 3.11 Compliance with Law. Neither the Company nor any Subsidiary is in violation of any law, ordinance, governmental rule or regulation to which it is subject, except for such violations that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 3.12 Title to Properties. (a) Each of the Company and the Subsidiaries has good and marketable title to all real Property, and good title to all of the other 10 Property, reflected in the most recent balance sheet delivered pursuant to Section 9.1 of the Existing Note Purchase Agreement (except as sold or otherwise disposed of in the ordinary course of business), except for such failures to have such good and marketable title as are immaterial to such financial statements and that, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect. All such Property is free from Liens not permitted by Section 8.17 of the Amended Note Purchase Agreement. (b) Upon execution and delivery of this Agreement and the other Transaction Documents, each lease of real Property in the name or for the benefit of the Company or any Subsidiary is valid and subsisting and in full force and effect and good standing, except for such failures to be valid and subsisting and in full force and effect and good standing that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (c) Each of the Company and the Subsidiaries owns, possesses or has the right to use all of the patents, trademarks, service marks, trade names, copyrights and licenses, and rights with respect thereto, necessary for the present and currently planned future conduct of its business, without any known conflict with the rights of others, except for such failures to own, possess, or have the right to use, that, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect. 3.13 Environmental Compliance. Except as disclosed (i) in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, (ii) in the other reports filed by the Company with the Securities and Exchange Commission after June 30, 1998, (iii) in press releases issued by the Company prior to the Effective Date, or (iv) to the Noteholders or Nightingale Associates, LLC in writing: (a) Compliance -- each of the Company and the Subsidiaries is in compliance with all Environmental Protection Laws in effect in each jurisdiction where it is presently doing business, and in which the failure so to comply could be reasonably expected to have a Material Adverse Effect; (b) Liability -- neither the Company nor any of the Subsidiaries is subject to any liability under any Environmental Protection Laws that, in the aggregate, could reasonably be expected to have a Material Adverse Effect; and 11 (c) Notices -- neither the Company nor any Subsidiary has received any (i) notice from any Governmental Authority by which any of its present or previously-owned or leased real Properties has been designated, listed, or identified in any manner by any Governmental Authority charged with administering or enforcing any Environmental Protection Law as a Hazardous Substance disposal or removal site, "Super Fund" clean-up site, or candidate for removal or closure pursuant to any Environmental Protection Law, (ii) notice of any Lien arising under or in connection with any Environmental Protection Law that has attached to any revenues of, or to, any of its owned or leased real Properties, or (iii) summons, citation, notice, directive, letter, or other communication, written or oral, from any Governmental Authority concerning any intentional or unintentional action or omission by the Company or such Subsidiary in connection with its ownership or leasing of any real Property resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying, dumping, or otherwise disposing of any Hazardous Substance into the environment resulting in any material violation of any Environmental Protection Law, in each case where the effect of the matters that are the subject of any such notice, summons, citation, directive, letter or other communication could reasonably be expected to have a Material Adverse Effect. 3.14 Restrictions on Company and Subsidiaries. Neither the Company nor any Subsidiary: (a) except as set forth in Schedule 3.14 hereto, is a party to any contract or agreement, or subject to any charter or other corporate restriction that, in the aggregate for all such contracts, agreements, charter and corporate restrictions, could reasonably be expected to have a Material Adverse Effect; (b) is a party to any contract or agreement that restricts the right or ability of such corporation to incur Debt, other than the Amended Note Purchase Agreement, the 1995 Amended Note Purchase Agreement, the Amended Credit Agreement, any other Transaction Document and the agreements listed in Schedule 3.14 hereto, the terms of none of which is 12 violated by the execution and delivery by the Company or any Restricted Subsidiary of the Financing Documents to which it is a party, or compliance by the Company or any Restricted Subsidiary with the Financing Documents to which it is a party or, in the case of the Company, the Amended Note Purchase Agreement and the Amended Notes; and (c) has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its Property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 8.17 of the Amended Note Purchase Agreement. 3.15 Collateral. (a) Collateral Documents. (i) Mortgages. Each Mortgage creates a valid Lien upon the grantor's right, title and interest in the real property and interests described therein in favor of the Collateral Agent, and when such document has been recorded as indicated on Schedule 3.15 and all appropriate recording fees and taxes have been paid, such Lien shall be a perfected first priority Lien subject to no other Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement; (ii) Security Agreement. The Security Agreement creates a valid Lien in and to the Collateral (as defined in the Security Agreement) in favor of the Collateral Agent, and when all UCC-1 financing statements required by the Security Agreement to be filed with public recording offices have been so filed, and all taxes, recording fees and other fees and charges required by applicable law to be paid in connection therewith have been duly paid in full, such Lien shall be a perfected, first priority Lien on the Collateral of a type which may be perfected by the filing of a UCC financing statement or by possession, subject to no Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement; (iii) Trademark/Copyright Security Agreement. The Trademark/Copyright Security Agreement creates a valid Lien in and to the Trademark Collateral, Copyright Collateral and Related Assets (as such terms are defined in the Trademark/Copyright Security Agreement) in favor of the Collateral Agent, and upon the filing thereof with the United States Patent and Trademark Office or the United States Copyright Office and the filing of UCC-1 financing statements 13 as therein provided for, such Lien will be a perfected first priority Lien in and to the Trademark Collateral, Copyright Collateral and Related Assets in which a Lien may be perfected by the filing of a UCC financing statement or filing with the United States Patent and Trademark Office or the United States Copyright Office, subject to no Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement; (iv) Stock Pledge Agreement. The Stock Pledge Agreement creates a valid Lien in and to the Pledged Collateral (as defined in the Stock Pledge Agreement) in favor of the Collateral Agent, and upon delivery of certificates or instruments evidencing the Pledged Collateral to the Collateral Agent and the filing of related UCC-1 Financing Statements, such Lien will be a perfected first priority Lien in and to such of the Pledged Collateral as to which a Lien may be perfected by delivery, subject to no Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement; and (v) Note Pledge Agreement. The Note Pledge Agreement creates a valid Lien in and to the Pledged Collateral (as defined in the Note Pledge Agreement) in favor of the Collateral Agent, and upon delivery of the instrument or instruments evidencing the Pledged Collateral to the Collateral Agent and the filing of related UCC-1 Financing Statements, such Lien will be a perfected first priority Lien in and to such of the Pledged Collateral as to which a Lien may be perfected by delivery, subject to no Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement. (b) Warranties and Representations True. All warranties and representations made by the Company and the Restricted Subsidiaries in each of the Security Documents are true and correct as of the date hereof. 3.16 Solvency. After giving effect to the transactions contemplated by the Transaction Documents, (a) the fair value and the fair salable value of the assets of the Company and each Restricted Subsidiary (excluding any Debt due from any Affiliate of the Company or such Restricted Subsidiary, as the case may be) will each be in excess of the fair valuation of its total liabilities (including all contingent liabilities), (b) the Company and each Restricted Subsidiary will be able to pay its debts or other obligations in the ordinary course as they mature, and (c) the Company and each Restricted Subsidiary has capital not unreasonably small to 14 carry on its business and all business in which it proposes to be engaged. 4. CONDITIONS PRECEDENT The amendments and the waivers set forth in Sections 2.1, 2.2 and 2.3 shall become effective upon the satisfaction of the following conditions (the date of such effectiveness is herein referred to as the "Effective Date"): 4.1 Certificates. (a) Company Officer's Certificate. The Company shall have delivered to the Noteholders (or their special counsel) a certificate signed by the Chairman, the Vice Chairman, the President or the Executive Vice President-Chief Financial Officer of the Company, dated the Effective Date, certifying that (i) no Default or Event of Default under the Amended Note Purchase Agreement exists and (ii) the representations and warranties set forth in Section 3 and in each of the other Financing Documents (excluding, however, for purposes of such officer's certificate, Section 2 of the Amended Note Purchase Agreement) are true and correct on the Effective Date. Such officer's certificate may expressly state that it is not certifying as to the accuracy of the representations and warranties set forth in Section 2 of the Amended Note Purchase Agreement. (b) Company Secretary's Certificate. The Company shall have delivered to the Noteholders a certificate signed by Secretary or one of the Assistant Secretaries of the Company, dated the Effective Date, certifying as true and correct copies of the Company's charter and by-laws and the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of each of the Financing Documents to which the Company is a party. (c) Subsidiary Secretary's Certificates. Each Restricted Subsidiary entering into one or more of the Financing Documents shall have delivered to the Noteholders a certificate signed by the Secretary or one of the Assistant Secretaries of such Restricted Subsidiary, dated the Effective Date, certifying as true and correct copies of such Restricted Subsidiary's charter and by-laws and the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Financing Documents to which such Restricted Subsidiary is a party. 4.2 Opinions of Counsel. The Noteholders shall have received opinions from 15 (a) Balch & Bingham, special counsel for the Company and the Restricted Subsidiaries, (b) special local counsel for the Company and the Restricted Subsidiaries in the States of Florida, Georgia, Illinois, Mississippi, Ohio, New York, Tennessee and Washington, and (c) Shipman & Goodwin, special counsel for the Collateral Agent, each dated as of the Effective Date, substantially in the respective forms set forth in Exhibit B1, Exhibit B2 and Exhibit B3, and as to such other matters as the Noteholders may reasonably request. The Noteholders also shall have received an opinion from Bingham Dana LLP, special counsel for the Noteholders, in form and substance satisfactory to the Noteholders. 4.3 Omnibus Collateral Agreement. The Omnibus Collateral Agreement, in the form of Exhibit C hereto (the "Omnibus Collateral Agreement"), shall be duly executed and delivered to the Noteholders (or their special counsel) by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto. 4.4 Guaranty Agreement. The Guaranty Agreement, in the form of Exhibit D hereto (the "Guaranty Agreement"), shall be duly executed by each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent and delivered to the Noteholders (or their special counsel). 4.5 1995 Second Amendment. The Company and the 1995 Noteholders shall have executed and delivered to the Noteholders (or their special counsel) a counterpart of the 1995 Second Amendment. 4.6 Fifth Amendment to Credit Agreement. The Company, the Banks and the Agent shall have executed and delivered to the Noteholders (or their special counsel) a copy of the Fifth Amendment, which shall be in form and substance satisfactory to the Noteholders and their special counsel. 16 4.7 Letter of Credit Documents. The Company shall have executed and delivered to the Noteholders (or their special counsel) a copy of each of the following Letter of Credit documents: (a) the B of A Reimbursement Agreement, (b) PNC Reimbursement Agreement One, and (c) PNC Reimbursement Agreement Two, each of which shall be in form and substance satisfactory to the Noteholders and their special counsel. 4.8 Other Related Matters. The Company shall have delivered a letter addressed to the Noteholders with respect to certain other matters relating to the Transaction Documents the receipt of which shall have been acknowledged by special counsel to the Noteholders. 4.9 Intercreditor Agreement. The Banks, the 1995 Noteholders, the L/C Issuers, State Street Bank and Trust Company, the Company, the Owner Trustee, the Indenture Trustee and each of the Restricted Subsidiaries identified on the signature pages thereto, shall have delivered to the Noteholders (or their special counsel) a fully executed counterpart of the Collateral Agency and Intercreditor Agreement, in form attached hereto as Exhibit E (the "Intercreditor Agreement"). 4.10 Security Documents. (a) Mortgages. Separate Mortgages and Deeds of Trust, substantially in the form of Exhibit F1 through Exhibit F7 hereto (collectively, the "Mortgages"), relating to real properties of the Company and certain Restricted Subsidiaries located in the States of Alabama, Florida, Illinois, Mississippi, Ohio, Tennessee and Washington, shall be duly executed and delivered to the Collateral Agent, and a copy 17 of each thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). (b) Security Agreement. A Security Agreement, substantially in the form of Exhibit G hereto (the "Security Agreement"), shall be duly executed and delivered by the Company, each of the Restricted Subsidiaries identified on the signature pages thereto, and the Collateral Agent, and a copy of each thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). (c) Trademark/Copyright Security Agreement. A Trademark and Copyright Collateral Assignment and Security Agreement (the "Trademark/Copyright Security Agreement"), substantially in the form of Exhibit H hereto, shall be duly executed and delivered by the Company, each of the Restricted Subsidiaries identified on the signature pages thereto, and the Collateral Agent, and a copy thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). (d) Stock Pledge Agreement. The Stock Pledge Agreement, substantially in the form of Exhibit I hereto (the "Stock Pledge Agreement"), shall be duly executed and delivered by the Company, each of the Restricted Subsidiaries identified on the signature pages thereto, and the Collateral Agent, and a copy of each thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). All stock certificates and undated stock powers executed in blank required to be executed and delivered to the Collateral Agent by the terms of the Stock Pledge Agreement shall have been so delivered, and the Company shall provide the Noteholders with copies thereof. (e) Note Pledge Agreement. A Note Pledge Agreement, substantially in the form of Exhibit J hereto (the "Note Pledge Agreement"), shall be duly executed and delivered by the Company and the Collateral Agent, and a copy thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). The instrument or instruments evidencing the Pledged Collateral (as defined in the Note Pledge Agreement) and a power of attorney executed by the Company required to be executed and delivered by the Company to the Collateral Agent by the terms of the Note Pledge Agreement shall have been so delivered, and the Company shall provide the Noteholders (or their special counsel) with a copy thereof. (f) Perfection of Liens. The Company and each Restricted Subsidiary that has entered into a Security Document shall have executed and delivered to the Collateral Agent all UCC-1 financing statements as are necessary to perfect the Liens of the Collateral Agent in the Collateral which may be perfected by the filing thereof . (g) Title Matters. With respect to each of the Mortgages, the Company shall have delivered or caused to be delivered to the Collateral Agent one or more loan policies of title insurance, or commitment therefor, 18 satisfactory to you and showing no exceptions to title except as reasonably acceptable to the Noteholders (or their special counsel). (h) Certificates of Insurance. The Company shall have delivered to the Noteholders (or their special counsel) certificates of insurance evidencing the insurance required by the Security Documents, showing the Collateral Agent as loss payee (as its interest may appear) thereunder. (i) Taxes. All taxes, fees and other charges payable in connection with the execution, delivery, recording, filing and registration of the Security Documents shall have been paid or provision for such payment shall have been made to the reasonable satisfaction of the Noteholders (or their special counsel). 4.11 Lien Searches. The Noteholders (or their special counsel) shall have received Lien searches showing that the Collateral (as defined in the Security Agreement) of the Company and the Subsidiaries is subject to no Liens other than Liens permitted under Section 8.17 of the Amended Note Purchase Agreement. 4.12 Restructuring Fee. The Company shall have paid to the Noteholders an aggregate of Two Hundred Sixty Thousand Dollars ($260,000) as a restructuring fee in respect of the transactions contemplated by this Agreement. Such payment shall be made to the Noteholders in proportion, as nearly as practicable, to the respective unpaid principal amount of Existing Notes held by each Noteholder on the Effective Date, in the manner provided in the Existing Note Purchase Agreement for the payment of principal. 4.13 Private Placement Number. A private placement number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for the Notes. 4.14 Payment of Special Counsel and Financial Advisor Fees. Without limiting the provisions of Section 5.3, the Company shall have paid on or before the Effective Date the fees, charges and disbursements of the Noteholders' special counsel referred to in Section 4.2, and Nightingale Associates, LLC, in each case to the extent reflected in statements rendered to the Company on or prior to the Effective Date. 19 4.15 Lease Letters. Letters from the owner participants and the debt participants in respect of the Equipment Lease Agreement dated as of September 30, 1997, as amended, shall have been delivered to the Noteholders (or their special counsel), in form, scope and substance satisfactory to the Noteholders and their special counsel. 4.16 Proceedings and Documents Satisfactory. All opinions, certificates and other instruments and all proceedings taken in connection with the execution and delivery of this Agreement and the transactions contemplated hereby shall be reasonably satisfactory to the Noteholders and their special counsel; and the Noteholders and their special counsel shall have received copies of such documents and papers as may be reasonably requested in connection therewith. 5. MISCELLANEOUS 5.1 Effect of Amendment and Waiver. If the foregoing is acceptable to you, please note your acceptance in the space provided below. Upon the execution and delivery of this Agreement by each of the Noteholders and the Company, the conditions set forth in Section 4 shall be deemed satisfied or waived and the Existing Note Purchase Agreement shall be deemed to be amended and restated as set forth above and the waivers as set forth above shall be deemed to be effective. This Agreement shall be binding upon, and shall inure to the benefit of, the permitted successors and assigns of the parties hereto and the holders from time to time of the Amended Notes. 5.2 No Legend Required. Any and all notices, requests, certificates and other instruments including, without limitation, the Amended Notes, may refer to the Note Purchase Agreement or the Note Purchase Agreement dated as of September 1, 1993 without making specific reference to this Waiver and Third Amendment to Note Purchase Agreement, but nevertheless all such references shall be deemed to include this Waiver and Third Amendment to Note Purchase Agreement unless the context shall otherwise require. 5.3 Fees and Expenses. Whether or not the transactions herein contemplated shall be consummated, the Company agrees to pay directly all reasonable out-of-pocket travel expenses and other reasonable out-of-pocket expenses of the Noteholders in connection with the 20 preparation, negotiation, execution and delivery of the Financing Documents and the Amended Note Purchase Agreement, and the transactions contemplated hereby and thereby, including, but not limited to, the reasonable fees and disbursements of Bingham Dana LLP, the Noteholders' special counsel, and Nightingale Associates, LLC, financial advisor to the Noteholders and the 1995 Noteholders, photocopying costs, and charges for shipping the Amended Notes, adequately insured, to each Noteholder at its home office or at such other place as such Noteholder may designate, and so long as any Noteholder shall hold any of the Amended Notes, all such expenses relating to any amendments, waivers or consents pursuant to the provisions of the Amended Note Purchase Agreement, including, without limitation, any amendments, waivers or consents resulting from any work-out, restructuring or similar events relating to the performance by the Company and the Restricted Subsidiaries of their respective obligations under the Financing Documents, the Amended Note Purchase Agreement and the Amended Notes. The Company also agrees that it will pay and save each Noteholder harmless against any and all liability with respect to stamp and other similar taxes, if any, which may be payable or which may be determined to be payable in connection with the execution and delivery of the Financing Documents, the Amended Note Purchase Agreement and the Amended Notes, whether or not any Amended Notes are then outstanding. The Company agrees to protect and indemnify each Noteholder against any liability for any and all brokerage fees and commissions payable or claimed to be payable to any Person retained by the Company, their Subsidiaries, or any of their respective Affiliates that are controlled by the Company in connection with the transactions contemplated by this Agreement. Without limiting the foregoing, the Company agrees to pay the costs of obtaining a private placement number for the Amended Notes, and authorizes the submission of such information as may be required by the CUSIP Service Bureau of Standard & Poor's for the purpose of obtaining such a number. 5.4 Survival. All warranties, representations, certifications and covenants made by the Company in this Agreement or in any certificate or other instrument delivered by it or on its behalf under this Agreement shall be considered to have been relied upon by the Noteholders and shall survive the execution of this Agreement, regardless of any investigation made by or on behalf of the Noteholders. All statements in any such certificate or other instrument shall constitute warranties and representations of the Company under this Agreement. 5.5 Duplicate Originals; Execution in Counterpart. Two or more duplicate originals of this Agreement may be signed by the parties, each of which shall be an original but all of which together shall constitute 21 one and the same instrument. This Agreement may be executed in one or more counterparts and shall be effective when at least one counterpart shall have been executed by each party to this Agreement, and each set of counterparts which, collectively, show execution by each such party to this Agreement shall constitute one duplicate original. 5.6 Release of Claims. The Company, for itself and all of its predecessors, successors and assigns, acknowledges, affirms and represents that immediately prior to giving effect to this Agreement, it is legally, validly and enforceably obligated to each of the Noteholders under and pursuant to the Existing Notes and the Existing Note Purchase Agreement and that the Company has no defense, offset, counterclaim or right of recoupment with regard to such obligations. Additionally, the Company for itself and all of its predecessors, successors and assigns, does hereby fully, forever and completely release and discharge each of the Noteholders and all of their respective employees, officers, directors, trustees, shareholders, affiliates, agents, attorneys, representatives, predecessors, successors and assigns (collectively, the "Released Parties"), from any and all claims, demands, liabilities, damages and causes of action of any kind whatsoever, whether based on facts in existence prior to or as of the date hereof, whether known or unknown, which the Company may now have or may have had at any time heretofore or may have at anytime hereafter, whether for contribution or indemnity or otherwise, and whether direct or indirect, fixed or contingent, liquidated or unliquidated, arising out of or related in any way to any of the following: (a) the Existing Notes and the Existing Note Purchase Agreement and all documents relating thereto or executed in connection therewith (the "Existing Note Documents"); and (b) any action, inaction or omission by any of the Released Parties in connection with the Existing Note Documents or the administration thereof. 5.7 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. [Remainder of page intentionally left blank; next page is signature page.] 22 If you are in agreement with the foregoing, please sign the form of acceptance in the space provided below, whereupon the foregoing shall become a binding agreement between you and the Company as of the date first above written. BIRMINGHAM STEEL CORPORATION By: ---------------------------- Name: Title: Accepted: PRINCIPAL LIFE INSURANCE COMPANY (f/k/a Principal Mutual Life Insurance Company) By: Principal Capital Management, LLC a Delaware limited liability company, its authorized signatory By ----------------------------------- Name: Title: By ----------------------------------- Name: Title: THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES By ----------------------------------- Name: Title: JEFFERSON-PILOT LIFE INSURANCE COMPANY By ----------------------------------- Name: Title: AMERICAN UNITED LIFE INSURANCE COMPANY By ----------------------------------- Name: Title: THE STATE LIFE INSURANCE COMPANY By ----------------------------------- Name: Title: GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY By ----------------------------------- Name: Title: By ----------------------------------- Name: Title: THE GREAT-WEST LIFE ASSURANCE COMPANY By ----------------------------------- Name: Title: By ----------------------------------- Name: Title: J. ROMEO & CO. as nominee for MONY LIFE INSURANCE COMPANY OF NEW YORK By ----------------------------------- Name: Title: TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA By ----------------------------------- Name: Title: PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY By ----------------------------------- Name: Title: CANADA LIFE ASSURANCE COMPANY By ----------------------------------- Name: Title: CANADA LIFE ASSURANCE COMPANY OF NEW YORK By ----------------------------------- Name: Title: CANADA LIFE INSURANCE COMPANY OF AMERICA By ----------------------------------- Name: Title: AMERITAS LIFE INSURANCE CORP. By Ameritas Investment Advisors Inc., as Agent By ----------------------------------- Name: Title: BERKSHIRE LIFE INSURANCE COMPANY By ----------------------------------- Name: Title: PROVIDENT MUTUAL LIFE INSURANCE COMPANY By ----------------------------------- Name: Title: EX-4.1.4 3 AMENDED AND RESTATED EXHIBIT 4.1.4 BIRMINGHAM STEEL CORPORATION AMENDED AND RESTATED NOTE PURCHASE AGREEMENT Dated as of October 12, 1999 $130,000,000 10.03% Senior Notes due December 15, 2005 ================================================================================ TABLE OF CONTENTS PAGE 1. DESCRIPTION OF NOTES AND COMMITMENT................... 1 1.1. Amendment of Original Note Purchase Agreements..... 1 1.2. Description of Notes............................... 2 1.3. The Closing........................................ 5 1.4. Purchase for Investment............................ 5 1.5. Expenses........................................... 6 2. WARRANTIES AND REPRESENTATIONS........................ 8 2.1. Nature of Business................................. 8 2.2. Financial Statements; Debt; Material Adverse Change............................................ 8 2.3. Subsidiaries and Affiliates........................ 9 2.4. Pending Litigation................................. 10 2.5. Title to Properties................................ 10 2.6. Taxes.............................................. 10 2.7. Full Disclosure.................................... 11 2.8. Corporate Organization and Authority............... 11 2.9. Restrictions on Company and Subsidiaries........... 12 2.10. Compliance with Law............................... 12 2.11. ERISA............................................. 12 2.12. Certain Laws...................................... 14 2.13. Environmental Compliance.......................... 14 2.14. Sale is Legal and Authorized; Obligations are Enforceable...................................... 15 2.15. Governmental Consent.............................. 16 2.16. Private Offering.................................. 16 2.17. No Defaults....................................... 17 2.18. Use of Proceeds................................... 17 3. INTENTIONALLY OMITTED................................. 18 4. HOLDERS' SPECIAL RIGHTS............................... 18 4.1. Direct Payment..................................... 18 4.2. Delivery Expenses.................................. 18 4.3. Issuance Taxes..................................... 19 5. PREPAYMENTS........................................... 19 5.1. Required Scheduled Prepayments..................... 19 5.2. Other Prepayments.................................. 19 5.3. Notice of Optional Prepayment...................... 21 5.4. Partial Prepayment Pro Rata........................ 22 5.5. Notation of Amended Notes on Prepayment............ 22 5.6. No Other Optional Prepayments...................... 23 6. CHANGE IN CONTROL PUT................................. 23 6.1. Offer to Prepay upon Change in Control............. 23 6.2. Effect of Prepayments.............................. 25 7. REGISTRATION; SUBSTITUTION OF NOTES................... 25 7.1. Registration of Notes.............................. 25 7.2. Exchange of Notes.................................. 25 7.3. Replacement of Notes............................... 25 i 8. COMPANY BUSINESS COVENANTS............................ 26 8.1. Payment of Taxes and Claims........................ 26 8.2. Maintenance of Properties and Corporate Existence.. 26 8.3. Payment of Notes and Maintenance of Office......... 28 8.4. ERISA.............................................. 28 8.5. Line of Business................................... 29 8.6. Transactions with Affiliates....................... 29 8.7. Pro-Rata Offers.................................... 29 8.8. Private Offering................................... 30 8.9. Designation of Subsidiaries........................ 30 8.10. New Restricted Subsidiaries or Properties......... 31 8.11. Fixed Charge Coverage Ratio....................... 32 8.12. Minimum Consolidated EBITDA....................... 33 8.13. Minimum Tangible Net Worth........................ 33 8.14. Capital Expenditures.............................. 33 8.15. Debt to Consolidated EBITDA Ratio................. 34 8.16. Debt.............................................. 34 8.17. Liens............................................. 35 8.18. Mergers; Consolidations........................... 38 8.19. Disposition of Assets............................. 38 8.20. Restricted Payments............................... 39 8.21. Permitted Investments............................. 39 8.22. Accounts with Financial Institutions other than the Banks........................................ 40 8.23. Proceeds from Equity Issuances.................... 40 8.24. No Voluntary Reductions in Commitment............. 40 9. INFORMATION AS TO COMPANY............................. 40 9.1. Financial and Business Information................. 40 9.2. Officers' Certificates............................. 45 9.3. Accountants' Certificates.......................... 46 9.4. Quarterly Review With Financial Advisor............ 46 9.5. Inspection......................................... 47 10. EVENTS OF DEFAULT.................................... 47 10.1. Nature of Events.................................. 47 10.2. Default Remedies.................................. 50 10.3. Annulment of Acceleration of Notes................ 51 11. INTERPRETATION OF THIS AGREEMENT..................... 52 11.1. Terms Defined..................................... 52 11.2. GAAP.............................................. 73 11.3. Directly or Indirectly............................ 73 11.4. Section Headings and Table of Contents and Construction..................................... 73 11.5. Governing Law..................................... 74 12. MISCELLANEOUS........................................ 74 12.1. Communications.................................... 74 12.2. Reproduction of Documents......................... 75 12.3. Survival.......................................... 76 12.4. Successors and Assigns............................ 76 12.5. Amendment and Waiver.............................. 76 12.6. Payments, When Received........................... 78 12.7. Entire Agreement.................................. 78 12.8. Duplicate Originals, Execution in Counterpart..... 78 ii Annex 1 - Information as to Purchasers Annex 2 -- Payment Instructions at Closing Annex 3 - Information as to Company Exhibit A - Form of 10.03% Senior Note due December 15, 2005 iii BIRMINGHAM STEEL CORPORATION ---------------------------------- AMENDED AND RESTATED NOTE PURCHASE AGREEMENT ---------------------------------- $130,000,000 10.03% Senior Notes due December 15, 2005 Dated as of October 12, 1999 To the Purchaser Named on the Signature Page Hereto Ladies and Gentlemen: BIRMINGHAM STEEL CORPORATION, a Delaware corporation (together with its successors and assigns, the "Company"), hereby agrees with you as follows: 1. DESCRIPTION OF NOTES AND COMMITMENT 1.1. Amendment of Original Note Purchase Agreements. The Company entered into those separate Note Purchase Agreements dated as of September 1, 1993 (collectively, as amended by the Amendment to Note Purchase Agreement dated as of October 18, 1996, as further amended by the Amendment to 1993 Note Purchase Agreement dated as of December 14, 1998, the "Original Note Purchase Agreements"), with each of the purchasers identified on Annex 1 thereto (such purchasers, including their successors or assigns from and after the Original Closing Date, are referred to collectively as the "Purchasers"). The Company and the Purchasers have agreed, pursuant to the Waiver and Third Amendment to Note Purchase Agreement, dated as of the date hereof (the "Waiver and Third Amendment"), entered into by the Company and the Purchasers, to amend and restate in full the Original Note Purchase Agreements, and to amend and restate in full the Original Notes in the form attached hereto as Exhibit A. The term "Note Purchase Agreements" means this Agreement and the other Amended and Restated Note Purchase Agreements, as amended from time to time hereafter. 1.2. Description of Notes. (a) Original Notes. On the Original Closing Date, the Company authorized the issue and sale of One Hundred Thirty Million Dollars ($130,000,000) in aggregate principal amount of its 7.28% Senior Notes due December 15, 2005 (the "Original Notes"), dated the date of issue, bearing interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof at the rate of seven and twenty- eight one-hundredths percent (7.28%) per annum, payable semi-annually on the fifteenth (15th) day of June and December in each year, commencing on the payment date next succeeding the date of such Original Note, and at maturity, and bearing interest on overdue principal and premium, if any, and (to the extent legally enforceable) on any overdue installment of interest at a rate equal to the lesser of (A) the highest rate allowed by applicable law and (B) the rate of nine and twenty-eight hundredths percent (9.28%) per annum; (b) Amended Notes. Pursuant to the Waiver and Third Amendment, the Company and the Purchasers have agreed to amend and restate the Original Notes in the form attached hereto as Exhibit A (the "Amended Notes," such term to include each Amended Note delivered from time to time in accordance with any of the Note Purchase Agreements). The Amended Notes shall be in an aggregate principal amount of One Hundred Thirty Million Dollars ($130,000,000). Each Amended Note will: (i) be dated the most recent date on which interest shall have been paid on the Note surrendered in exchange for such Amended Note or the lost, stolen, destroyed or mutilated Note in respect of which such Amended Note is being issued; (ii) bear interest (computed on the basis of a 360-day year of twelve 30-day months) from such date to and including the Effective Date at the rate of seven and twenty-eight one-hundredths percent (7.28%) per annum, payable on November 15, 1999; (iii) bear interest at all times after the Effective Date and until (and including) the maturity date thereof (whether such maturity is scheduled or occurs by reason of acceleration or otherwise), at the rate of ten and three one-hundredths percent (10.03%) per annum, payable monthly on the fifteenth (15th) day of each month in each year (commencing on November 15, 1999) and at maturity; (iv) bear interest, payable on demand, on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of 2 (A) the highest rate allowed by applicable law, and (B) twelve and three one-hundredths percent (12.03%) per annum; (v) mature on December 15, 2005; and (vi) be in the form of the Amended Note set out in Exhibit A hereto. (c) Interest Rate Adjustments. (i) Interest Payments under Credit Agreement. If at any time after the Effective Date the Credit Agreement shall be amended to provide that interest payments on the principal loan obligations under the Credit Agreement shall be paid quarterly (rather than monthly), the Company may, by giving written notice thereof to each holder of Notes, elect to pay interest on the Notes quarterly on the fifteenth (15th) day of March, June, September and December in each year, beginning with the period commencing on the interest payment date immediately following the date of such notice, provided that the unpaid principal amount of the Notes shall bear interest (A) at all times from and after the first day of such quarterly interest period and until (and including) the maturity date thereof (whether such maturity is scheduled or occurs by reason of acceleration or otherwise) at a rate per annum equal to (1) the interest rate then applicable to the Notes plus (2) ten hundredths of one percent (.10%); and (B) on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate per annum equal to the lesser of (1) the highest rate allowed by applicable law, and (2) the interest rate then applicable to the Notes (after giving effect to the adjustment required by clause (A) above) plus two percent (2%). If following any adjustment pursuant to this Section 1.2(c)(i) the Credit Agreement shall be amended to provide for interest payments on the principal loan obligations under the Credit Agreement to be made monthly, the Company shall promptly provide written notice of such fact to all of the holders of the Notes and the interest payments on the Notes shall be adjusted, concurrently with the adjustment of the interest payments in respect of the principal loan obligations under the 3 Credit Agreement, to be made on the dates, and at the rate (subject to subsection 1.2(c)(ii) below), provided in subsection 1.2(b)(iii). (ii) SBQ Asset Sale. If the Company shall fail to make the SBQ Asset Sale Prepayment on or prior to January 31, 2001, the unpaid principal amount of the Notes shall bear interest (A) at all times after January 31, 2001 and until (and including) the maturity date thereof (whether such maturity is scheduled or occurs by reason of acceleration or otherwise) at a rate per annum equal to (x) the interest rate then applicable to the Notes plus (y) one percent (1%), provided, however, that if the Company shall make the SBQ Asset Sale Prepayment after January 31, 2001, then at all times after the date of the SBQ Asset Sale Prepayment and until (and including) the maturity date of the Notes, the one percent (1%) increase in the interest rate applicable to the Notes referred to in clause (y) above shall be reduced to a fifty one-hundredths percent (.50%) increase; and (B) on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate per annum equal to the lesser of (1) the highest rate allowed by applicable law, and (2) the interest rate then applicable to the Notes (after giving effect to the adjustment required by clause (A) above) plus two percent (2%). (d) Notes. The term "Note" as used herein shall include each Note delivered pursuant to this Agreement and the other Note Purchase Agreements and each Note delivered in substitution or exchange for any such Note pursuant to Section 7.2 or Section 7.3 of this Agreement or any of the other Note Purchase Agreements, and shall be deemed, when reference is made to a date prior to the Effective Date, to be a reference to the Original Notes, and when reference is made to a date on or after the Effective Date, to be a reference to the Amended Notes. 1.3. The Closing. (a) Purchase and Sale of Notes. On the Original Closing Date, the Company agreed to sell to you and you agreed to purchase from the Company, in accordance with the provisions hereof, the aggregate principal amount of Notes set forth below your name on Annex 1 to the Original Note 4 Purchase Agreements (in the amount or amounts set forth therein) at one hundred percent (100%) of the principal amount thereof. (b) The Closing. The closing (the "Closing") of the Company's sale of Notes occurred on December 15, 1993 (the date of the Closing herein referred to as the "Original Closing Date"). At the Closing, the Company delivered to you one or more Notes (as set forth below your name on Annex 1 to the Original Note Purchase Agreements), in the denominations indicated on Annex 1 to the Original Note Purchase Agreements, in the aggregate principal amount of your purchase, dated the Original Closing Date and payable to you or payable as indicated on Annex 1 hereto, against payment by federal funds wire transfer in immediately available funds of the purchase price thereof, as directed by the Company on Annex 2 hereto. 1.4. Purchase for Investment. (a) Purchase for Investment. On the Original Closing Date, you represented to the Company that you were purchasing the Notes listed on Annex 1 to the Original Note Purchase Agreements below your name for your own account for investment and with no present intention of distributing the Notes or any part thereof, but without prejudice to your right at all times to: (i) sell or otherwise dispose of all or any part of the Notes under a registration statement filed under the Securities Act, or in a transaction exempt from the registration requirements of the Securities Act; and (ii) have control over the disposition of all of your assets to the fullest extent required by any applicable insurance law. It is understood that when the Company made the representations set out in Section 2.14(a) hereof and Section 2.15 hereof on the Original Closing Date, the Company was relying, to the extent applicable, upon your representation as aforesaid. (b) ERISA. On the Original Closing Date, you represented that: (i) you were acquiring the Notes for your own account with your general corporate assets and that no part of such assets constitutes assets of an "employee benefit plan" (as defined in section 3 of ERISA) or a "plan" (as defined in section 4975(e)(1) of the IRC); (ii) if any part of the funds being used by you to purchase the Notes came from assets of an employee benefit plan or plan, that: 5 (A) if such funds were attributable to a "separate account" (as defined in section 3 of ERISA), then (1) all requirements for an exemption under DOL Prohibited Transaction Exemption 90-1, issued January 29, 1990 were met with respect to the use of such funds to purchase the Notes, or (2) the employee benefit plans with an interest in such separate account had been identified in a writing delivered by you to the Company; (B) if such funds were attributable to a "separate account" (as defined in section 3 of ERISA) that was maintained solely in connection with fixed contracted obligations of an insurance company, any amounts payable, or credited, to any employee benefit plan having an interest in such account and to any participant or beneficiary of such plan (including an annuitant) were not affected in any manner by the investment performance of the separate account; or (C) if such funds were attributable to an "investment fund" managed by a "qualified plan asset manager" (as such terms are defined in Part V of DOL Prohibited Transaction Exemption 84-14, issued March 13, 1984), all requirements for an exemption under such Exemption are met with respect to the use of such funds to purchase the Notes; or (iii) such employee benefit plan was excluded from the provisions of section 406 of ERISA by virtue of section 4(b) of ERISA. 1.5. Expenses. (a) Generally. Whether or not the transactions contemplated hereby are consummated, the Company will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all fees, expenses and costs (including reasonable attorneys' fees of a special counsel and, if reasonably required, local or other counsel) incurred by you and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, but not limited to: (i) the reasonable costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any 6 rights under this Agreement, the Notes or any other Financing Document or in responding to any subpoena or other legal process or informal investigative demand issued in connection this Agreement, the Notes or any other Financing Document, or by reason of being a holder of any Note, (ii) the reasonable fees, costs and expenses, including reasonable attorneys' and reasonable financial advisors' fees, costs and expenses incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes, and (iii) the reasonable costs and expenses (including travel expenses) incurred in connection with the review, evaluation, negotiation, analysis, due diligence investigation or other activity related to any of the Financing Documents and the holders' and the Collateral Agent's rights and remedies thereunder (including any such activity occurring during any work-out or restructuring of the transactions contemplated hereby and by the Notes or during a bankruptcy, insolvency, reorganization or similar proceeding). (b) Counsel. Without limiting the generality of the foregoing, it is agreed and understood that the Company will pay, contemporaneously with the execution and delivery of the Waiver and Third Amendment on the Effective Date, each statement for reasonable fees and disbursements of your special counsel presented in connection with such execution and delivery and the Company will also pay, upon receipt of any statement thereof, each additional statement for reasonable fees and disbursements of your special counsel rendered after the Effective Date in connection with the Waiver and Third Amendment. (c) Broker's Fees. The Company agrees to indemnify and hold you harmless against any and all fees, expenses and costs of any broker or investment banker retained by the Company, if any, incurred in connection with the issuance and delivery of the Amended Notes, the execution and delivery of the Waiver and Third Amendment, or the transactions contemplated thereby. (d) Survival. The obligations of the Company under this Section 1.5 shall survive the payment or prepayment of the Notes and the termination hereof. 7 2. WARRANTIES AND REPRESENTATIONS To induce the Purchasers to enter into the Original Note Purchase Agreements and to purchase the Original Notes, the Company warranted and represented, as of the Original Closing Date, as set forth in this Section 2. The following representations and warranties are historical in nature and included in this Agreement as a matter of convenience only. All such representations and warranties and related disclosure schedules were made only as of the Original Closing Date and the Company makes no representation or warranty in this Agreement as to whether such representations and warranties were true on the Original Closing Date or at any time thereafter. Solely for purposes of this Section 2 references to "this Agreement," "hereto," "hereof," and terms of similar import are to the Original Note Purchase Agreements. 2.1. Nature of Business. Except as set forth in Part 2.1 of Annex 3 hereto, the Private Placement Memorandum, dated April, 1993 and prepared by Nationsbank Investment Banking (together with all exhibits and annexes thereto, the "Placement Memorandum") (a copy of which previously has been delivered to you), correctly describes the general nature of the business and principal Properties of the Company and the Subsidiaries as of the Original Closing Date. 2.2. Financial Statements; Debt; Material Adverse Change. (a) Financial Statements. The following financial statements (copies of which have been delivered to you): (i) the consolidated balance sheets of the Company and its consolidated subsidiaries as of June 30 in the years 1990, 1991 and 1992, and the related consolidated statements of income, changes in shareholders' equity and cash flows for the fiscal years ended on such dates, all accompanied by opinions thereon by Ernst & Young, independent certified public accountants, and (ii) the consolidated balance sheet of the Company and its consolidated subsidiaries as of March 31, 1993, and the related consolidated statements of income and cash flows for the nine (9) months ended on such date, have been prepared in accordance with generally accepted accounting principles consistently applied, and present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of such dates and the results of their operations and cash flows for such periods. All such financial statements include the accounts of all subsidiaries of the Company for the respective periods during which a 8 subsidiary relationship has existed. Except as set forth on Part 2.2(a) of Annex 3, all Restricted Subsidiaries were subsidiaries of the Company during all of the periods covered by such financial statements. (b) Indebtedness. Part 2.2(b) of Annex 3 hereto correctly lists all outstanding Indebtedness of the Company and the Subsidiaries (showing which portion is classified as current under GAAP) as of the Original Closing Date. (c) Material Adverse Change. Since June 30, 1992, there has been no change in the business, prospects, profits, Properties or condition (financial or otherwise) of the Company or any of the Subsidiaries except changes in the ordinary course of business that, in the aggregate for all such changes, could not reasonably be expected to have a Material Adverse Effect. 2.3. Subsidiaries and Affiliates. Part 2.3 of Annex 3 hereto states: (a) the name of each Subsidiary (indicating which Subsidiaries are Restricted Subsidiaries), its jurisdiction of incorporation and the percentage of its Voting Stock owned by the Company and each other Subsidiary; and (b) the name of each Affiliate that is a corporation, partnership or joint venture (other than Subsidiaries) and the nature of the affiliation. Each of the Company and the Subsidiaries has good and marketable title to all of the shares it purports to own of the stock of each Subsidiary, free and clear in each case of any Lien. All such shares have been duly issued and are fully paid and nonassessable. 2.4. Pending Litigation. There are no proceedings, actions or investigations pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal that, in the aggregate for all such proceedings, actions and investigations, could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary is in default with respect to any judgment, order, writ, injunction, or decree of any court, Governmental Authority or arbitration board or tribunal that, in the aggregate for all such proceedings, actions and investigations, could reasonably be expected to have a Material Adverse Effect. 9 2.5. Title to Properties. (a) Each of the Company and the Subsidiaries has good and marketable title to all of the real Property, and good title to all of the other Property, reflected in the most recent balance sheet referred to in Section 2.2(a) hereto (except as sold or otherwise disposed of in the ordinary course of business), except for such failures to have such good and marketable title as are immaterial to such financial statements and that, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect. All such Property is free from Liens not permitted by Section 8.9 of the Original Note Purchase Agreements. (b) Each of the Company and the Subsidiaries owns, possesses or has the right to use all of the patents, trademarks, service marks, trade names, copyrights and licenses, and rights with respect thereto, necessary for the present and currently planned future conduct of its business, without any known conflict with the rights of others, except for such failures to own, possess, or have the right to use, that, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect. 2.6. Taxes. (a) Returns Filed; Taxes Paid. All tax returns required to be filed by each of the Company and each Subsidiary and any other Person with which the Company or any Subsidiary files or has filed a consolidated return in any jurisdiction have in fact been filed on a timely basis, and all taxes, assessments, fees and other governmental charges upon each of the Company, such Subsidiary and any such Person, and upon any of their respective Properties, income or franchises, that are due and payable have been paid. Except as disclosed in Part 2.6(a) of Annex 3 hereto, the Company does not know of any proposed additional tax assessment against it or any such Person. All liabilities of the Company and such Persons with respect to federal income taxes have been finally determined except for the fiscal years 1985 through 1992, the only years not closed by the completion of an audit or the expiration of the statute of limitations. (b) Book Provisions Adequate. The amount of the liability for taxes reflected in the consolidated balance sheet of the Company and its consolidated subsidiaries as of March 31, 1993 referred to in Section 2.2(a) hereof is an adequate provision for taxes (including, without limitation, any payment due pursuant to any tax sharing agreement) as are or may become payable by any one or more of the Company and its consolidated subsidiaries in respect of all tax periods ending on or prior to such date. 10 2.7. Full Disclosure. The financial statements referred to in Section 2.2(a) hereof do not, nor does this Agreement, the Placement Memorandum or any written statement furnished by or on behalf of the Company to you in connection with the negotiation of the sale of the Original Notes, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading. There is no fact that the Company has not disclosed to you in writing that has had or, so far as the Company can now reasonably foresee, could have a Material Adverse Effect. 2.8. Corporate Organization and Authority. Each of the Company and the Subsidiaries: (a) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; (b) has all legal and corporate power and authority necessary to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted; (c) has all licenses, certificates, permits, franchises and other governmental authorizations necessary to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted, except where the failure to have such licenses, certificates and permits, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect; and (d) has duly qualified or has been duly licensed, and is authorized to do business and is in good standing, as a foreign corporation, in each state where the failure to be so qualified or licensed and authorized and in good standing could reasonably be expected to have a Material Adverse Effect. 2.9. Restrictions on Company and Subsidiaries. Neither the Company nor any Subsidiary: (a) is a party to any contract or agreement, or subject to any charter or other corporate restriction that, in the aggregate for all such contracts, agreements, charter and corporate restrictions, could reasonably be expected to have a Material Adverse Effect; (b) is a party to any contract or agreement that restricts the right or ability of such corporation to incur Debt, other than this Agreement and the agreements listed in Part 2.9 of Annex 3 hereto, the terms of none of which is 11 violated by the issuance of the Original Notes or the execution and delivery of, or compliance with, this Agreement by the Company; and (c) has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its Property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 8.9 hereof. 2.10. Compliance with Law. Neither the Company nor any Subsidiary is in violation of any law, ordinance, governmental rule or regulation to which it is subject, which violations, in the aggregate, could reasonably be expected to have a Material Adverse Effect. 2.11. ERISA. (a) Relationship of Vested Benefits to Pension Plan Assets. The present value of all benefits, determined as of the most recent valuation date for such benefits as provided in Section 8.11(c) hereof, vested under each Pension Plan does not exceed the value of the assets of such Pension Plan allocable to such vested benefits, determined as of such date as provided in Section 8.11(c) hereof. (b) ERISA Requirements. Each of the Company and the ERISA Affiliates: (i) has fulfilled all obligations under the minimum funding standards of ERISA and the IRC with respect to each Pension Plan that is not a Multiemployer Plan; (ii) has satisfied all respective contribution obligations in respect of each Multiemployer Plan; (iii) is in compliance in all material respects with all other applicable provisions of ERISA and the IRC with respect to each Pension Plan and each Multiemployer Plan; and (iv) has not incurred any liability under Title IV of ERISA to the PBGC (other than in respect of required insurance premiums, all of which that are due having been paid), with respect to any Pension Plan, any Multiemployer Plan or any trust established thereunder. 12 No Pension Plan, or trust created thereunder, has incurred any "accumulated funding deficiency" (as defined in section 302 of ERISA), whether or not waived, as of the last day of the most recently ended plan year of such Pension Plan. (c) Prohibited Transactions. (i) The purchase of the Original Notes by you will not constitute a "prohibited transaction" (as defined in section 406 of ERISA or section 4975 of the IRC) that could subject any Person to the penalty or tax on prohibited transactions imposed by section 502 of ERISA or section 4975 of the IRC, and neither the Company or any ERISA Affiliate, nor any "employee benefit plan" (as hereinafter defined) of the Company or any ERISA Affiliate or any trust created thereunder or any trustee or administrator thereof, has engaged in any "prohibited transaction" that could subject any such Person, or any other party dealing with such employee benefit plan or trust, to such penalty or tax. The representation by the Company in the preceding sentence is made in reliance upon and subject to the accuracy of the representations in Section 1.3(b) hereof as to the source of funds used by you. (ii) Part 2.11(c)(ii) of Annex 3 hereto completely lists all ERISA Affiliates and all employee benefit plans with respect to which the Company or any "affiliate" (as hereinafter defined) is a "party- in-interest" (as hereinafter defined) or in respect of which the Original Notes could constitute an "employer security" (as hereinafter defined). As used in this Section 2.11(c), the terms "employee benefit plan" and "party-in-interest" have the meanings specified in section 3 of ERISA, "affiliate" and "employer security" have the meanings specified in section 407(d) of ERISA. (d) Reportable Events. No Pension Plan or trust created thereunder has been terminated, and there have been no "reportable events" (as defined in section 4043 of ERISA), with respect to any Pension Plan or trust created thereunder or with respect to any Multiemployer Plan, which reportable event or events will or could result in the termination of such Pension Plan or Multiemployer Plan and give rise to a liability of the Company or any ERISA Affiliate in respect thereof. (e) Multiemployer Plans. Except as set forth in Part 2.11(e) of Annex 3 hereto, neither the Company nor any ERISA Affiliate is an employer required to contribute to any Multiemployer Plan. Neither the Company nor any ERISA Affiliate has incurred, or is expected to incur, any withdrawal liability (that has not previously been fully satisfied) under ERISA with 13 respect to any Multiemployer Plan. None of the Multiemployer Plans referred to in such Part of Annex 3 hereto have been terminated under section 4041A of ERISA, have been placed in reorganization status under Title IV of ERISA or have been determined to be "insolvent" (as defined in section 4245 of ERISA). (f) Multiple Employer Pension Plans. Except as set forth in Part 2.11(f) of Annex 3 hereto, neither the Company nor any ERISA Affiliate is a "contributing sponsor" (as defined in section 4001 of ERISA) in any Multiple Employer Pension Plan and neither the Company nor any ERISA Affiliate has incurred (without fully satisfying the same), or reasonably expects to incur, withdrawal liability in respect of any such Multiple Employer Pension Plan listed in such Part of Annex 3 hereto, which withdrawal liability could have a Material Adverse Effect. (g) Foreign Pension Plan. No Foreign Pension Plans presently exist or existed in the past. 2.12. Certain Laws. (a) Investment Company Act. Neither the Company nor any Subsidiary is, or is directly or indirectly controlled by, or acting on behalf of any Person that is, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (b) Holding Company Status. Neither the Company nor any Subsidiary is a "holding company" or an "affiliate" of a "holding company," or a "subsidiary company" of a "holding company," or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 2.13. Environmental Compliance. Except as set forth in Part 2.13 of Annex 3 hereto: (a) Compliance - each of the Company and the Subsidiaries is in compliance with all Environmental Protection Laws in effect in each jurisdiction where it is presently doing business, and in which the failure so to comply could be reasonably expected to have a Material Adverse Effect; (b) Liability - neither the Company nor any of the Subsidiaries is subject to any liability under any Environmental Protection Laws that, in the aggregate, could reasonably be expected to have a Material Adverse Effect; and (c) Notices - neither the Company nor any Subsidiary has received any 14 (i) notice from any Governmental Authority by which any of its present or previously-owned or leased real Properties has been designated, listed, or identified in any manner by any Governmental Authority charged with administering or enforcing any Environmental Protection Law as a Hazardous Substance disposal or removal site, "Super Fund" clean-up site, or candidate for removal or closure pursuant to any Environmental Protection Law, (ii) notice of any Lien arising under or in connection with any Environmental Protection Law that has attached to any revenues of, or to, any of its owned or leased real Properties, or (iii) summons, citation, notice, directive, letter, or other communication, written or oral, from any Governmental Authority concerning any intentional or unintentional action or omission by the Company or such Subsidiary in connection with its ownership or leasing of any real Property resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying, dumping, or otherwise disposing of any Hazardous Substance into the environment resulting in any material violation of any Environmental Protection Law, in each case where the effect of the matters that are the subject of any such notice, summons, citation, directive, letter or other communication could reasonably be expected to have a Material Adverse Effect. 2.14. Sale is Legal and Authorized; Obligations are Enforceable. (a) Sale is Legal and Authorized. Each of the issuance, sale and delivery of the Original Notes by the Company, the execution and delivery hereof by the Company and compliance by the Company with all of the provisions hereof and of the Original Notes: (i) is within the corporate powers of the Company; and (ii) is legal and does not conflict with, result in any breach in any of the provisions of, constitute a default under, or result in the creation of any Lien upon any Property of the Company or any Subsidiary under the provisions of, any agreement, charter instrument, bylaw or other instrument to which it is a party or by which it or any of its Property may be bound. (b) Obligations are Enforceable. Each of this Agreement and the Original Notes has been duly authorized by all necessary action on the part of the Company, has been executed and delivered by duly authorized officers of the Company and constitutes a legal, valid and binding obligation 15 of the Company, enforceable in accordance with its terms, except that the enforceability hereof and of the Original Notes may be: (i) limited by applicable bankruptcy, reorganization, arrangement, insolvency, moratorium or other similar laws affecting the enforceability of creditors' rights generally; and (ii) subject to the availability of equitable remedies. 2.15. Governmental Consent. Neither the nature of the Company or any Subsidiary, or of any of their respective businesses or Properties, nor any relationship between the Company or any Subsidiary and any other Person, nor any circumstance in connection with the offer, issuance, sale or delivery of the Original Notes and the execution and delivery of this Agreement, is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority on the part of the Company as a condition to the execution and delivery of this Agreement or the offer, issuance, sale or delivery of the Original Notes. 2.16. Private Offering. Neither the Company nor NationsBank Investment Banking (the only Person authorized or employed by the Company as agent, broker, dealer or otherwise in connection with the offering or sale of the Original Notes or any similar Security of the Company, other than employees of the Company) has offered any of the Original Notes or any similar Security of the Company for sale to, or solicited offers to buy any thereof from, or otherwise approached or negotiated with respect thereto with, any prospective purchaser, other than you and one hundred ten (110) other institutional investors, each of whom was offered all or a portion of the Original Notes at private sale for investment. 2.17. No Defaults. (a) The Original Notes. No event has occurred and no condition exists that, upon the issuance of the Original Notes and the execution and delivery of this Agreement, would constitute a Default or an Event of Default. (b) Charter Instrument, Other Agreements. Neither the Company nor any Subsidiary is in violation in any respect of any term of any charter instrument or bylaw and neither the Company nor any Subsidiary is in violation in any respect of any term in any agreement or other instrument to which it is a party or by which it or any of its Property may be bound, except for violations which, in the aggregate for all such violations, could not reasonably be expected to have a Material Adverse Effect. 16 2.18. Use of Proceeds. (a) Use of Proceeds. The Company will apply the proceeds from the sale of the Original Notes in the manner specified in Part 2.18(a) of Annex 3 hereto. (b) Margin Securities. None of the transactions contemplated herein and in the Original Notes (including, without limitation, the use of the proceeds from the sale of the Original Notes) violates, will violate or will result in a violation of section 7 of the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto, including, without limitation, Regulations G, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. Neither the Company nor any Subsidiary owns, or with the proceeds of the sale of the Original Notes intends to own, carry or purchase, or refinance borrowings that were used to own, carry or purchase, any Margin Security, including Margin Securities originally issued by the Company or any Subsidiary. The obligations of the Company under this Agreement and the Original Notes are not and will not be secured by any Margin Security, and no Original Notes are being sold on the basis of any such collateral. (c) Absence of Foreign or Enemy Status. The Company is not an "enemy" or an "ally of the enemy" within the meaning of section 2 of the Trading with the Enemy Act (50 U.S.C. App. (S)(S) 1 et seq.), as amended. The Company is not in violation of, and neither the issuance and sale of the Original Notes by the Company nor its use of the proceeds thereof as contemplated by this Agreement will violate, the Trading with the Enemy Act, as amended, or the International Emergency Economic Powers Act, as amended, or any executive orders, proclamations or regulations issued pursuant thereto including, without limitation, regulations administered by the Office of Foreign Asset Control of the Department of the Treasury (31 C.F.R., Subtitle B, Chapter V). 17 3. INTENTIONALLY OMITTED 4. HOLDERS' SPECIAL RIGHTS 4.1. Direct Payment. Notwithstanding anything to the contrary contained herein or in the Amended Notes, but subject to the terms of the Intercreditor Agreement, the Company will pay, or will direct the Collateral Agent to pay, all amounts payable with respect to each Amended Note held by an Institutional Investor (without any presentment of such Amended Notes and without any notation of such payment being made thereon) by crediting (prior to 11:00 a.m. local time of such Institutional Investor's bank), by federal funds bank wire transfer, the account of such Institutional Investor in any bank in the United States of America as may be designated in writing by such Institutional Investor, or in such other manner as may be reasonably directed or to such other address in the United States of America as may be reasonably designated in writing by such Institutional Investor. Your address on Annex 1 hereto will be deemed to constitute notice, direction or designation (as appropriate) to the Company with respect to direct payments as aforesaid. In all other cases, all amounts payable with respect to each Amended Note will be made by check mailed and addressed to the registered holder of each Amended Note at the address shown in the register maintained by the Company pursuant to Section 8.3 hereof. Each holder of Amended Notes agrees that, in the event it shall sell or transfer any Amended Note, it shall: (a) prior to the delivery of such Amended Note, make a notation thereon of all principal, if any, prepaid on such Amended Note and shall also note thereon the date to which interest shall have been paid on such Amended Note; and (b) promptly notify the Company of the name and address of the transferee of any such Amended Note so transferred and the effective date of such transfer. 4.2. Delivery Expenses. If any holder of Amended Notes surrenders any Amended Note to the Company pursuant hereto, the Company will pay the cost of delivering to or from such holder's home office or custodian bank from or to the Company, insured to the reasonable satisfaction of such holder, the surrendered Amended Note and any Amended Note issued in substitution or replacement for the surrendered Amended Note. 18 4.3. Issuance Taxes. The Company will pay all taxes (other than any income taxes imposed upon any Purchaser) arising in connection with the issuance and sale of the Amended Notes or in connection with any modification of this Agreement and the Amended Notes, and will save each holder of Amended Notes harmless without limitation as to time against any and all liabilities with respect to all such taxes. The obligations of the Company under this Section 4.3 shall survive the payment or prepayment of the Amended Notes and the termination hereof. 5. PREPAYMENTS 5.1. Required Scheduled Prepayments. In addition to paying the entire principal amount and the interest due on the Amended Notes outstanding on the maturity date thereof, the Company shall prepay, and there shall become due and payable, Twenty-Six Million Dollars ($26,000,000) principal amount of the Amended Notes on December 15 in each year beginning on December 15, 2001 and ending on December 15, 2004, inclusive. Each such prepayment shall be at one hundred percent (100%) of the principal amount prepaid, together with interest accrued thereon to the date of prepayment. The principal of the Amended Notes remaining outstanding on December 15, 2005, together with interest accrued thereon, shall become due and payable on December 15, 2005. 5.2. Other Prepayments. (a) Optional Prepayments. The Company may at any time after the Original Closing Date prepay the principal amount of the Amended Notes in part, in integral multiples of Five Million Dollars ($5,000,000), or in whole, in each case together with: (i) an amount equal to the Make-Whole Amount at such time in respect of the principal amount of the Amended Notes being so prepaid, and (ii) interest on such principal amount then being prepaid accrued to the prepayment date. (b) Special Prepayments. In any event wherein the Company requests from all of the holders of the Amended Notes (pursuant to Section 12.5 hereof) an amendment to, or waiver of (in each case setting forth in such request detailed information concerning the transaction or condition for which the amendment or waiver is requested), the Company's obligations hereunder that are permitted by the provisions of Section 12.5 to be amended or waived with consent of the Majority Holders, and the Majority Holders do not, within sixty (60) days of the date on which such request is made, grant 19 their consent to the proposed amendment or waiver, the Company may prepay Amended Notes as set forth in this Section 5.2(b), provided that all of the following conditions are met: (i) the Company elects to prepay all, but not less than all, of the Amended Notes held by each holder of Amended Notes that shall have not consented to the proposed amendment or waiver; and (ii) the Company, within forty-five (45) days of the expiration of such sixty (60) day period contemporaneously prepays each holder of Amended Notes who has not consented to the proposed amendment or waiver in an amount equal to the aggregate principal amount of all Amended Notes held by such holder, together with interest accrued and unpaid on such principal amount and the Make-Whole Amount in respect of such principal amount of Amended Notes. (c) Cash Flow Sweep Prepayments. In the event that any Secured Party acquires custody, control or possession of any payment constituting a Post- Default Cash Sweep Payment (as defined in the Intercreditor Agreement), such amount shall be paid over to the Collateral Agent for distribution as provided in Section 4.1(b) of the Intercreditor Agreement. Each amount received from the Collateral Agent as contemplated by this Section 5.2(c) in respect of the Amended Notes shall constitute an amount paid in respect of a prepayment of the Amended Notes which includes a principal amount, together with interest accrued thereon to the date of prepayment and the Make-Whole Amount in respect of such principal amount of Amended Notes. (d) Disposition Prepayments. If the Collateral Agent receives any cash amounts as payments under the Security Documents or as proceeds of or otherwise constituting Collateral (including, without limitation, net proceeds received in connection with an Acceptable SBQ Asset Sale or any other Disposition (as defined in the Intercreditor Agreement as in effect on the Effective Date)), as more particularly described in Section 4.1(b) of the Intercreditor Agreement, such amounts shall be distributed as provided in Section 4.1(b) of the Intercreditor Agreement. Each amount received from the Collateral Agent as contemplated by this Section 5.2(d) in respect of the Amended Notes shall constitute an amount paid in respect of a prepayment of the Amended Notes which includes a principal amount, together with interest accrued thereon to the date of prepayment and the Make-Whole Amount in respect of such principal amount of Amended Notes. (e) Equity Issuance Prepayments. In the event of any Equity Issuance by the Company, sixty percent (60%) of the Net Proceeds of such Equity Issuance shall be promptly paid over to the Collateral Agent for 20 distribution as provided in Section 4.1(b) of the Intercreditor Agreement. Each amount received from the Collateral Agent as contemplated by this Section 5.2(e) in respect of the Amended Notes shall constitute an amount paid in respect of a prepayment of the Amended Notes which includes a principal amount, together with interest accrued thereon to the date of prepayment and the Make-Whole Amount in respect of such principal amount of Amended Notes. (f) Effect of Prepayments. Each prepayment of principal of the Amended Notes pursuant to Section 5.2(a), Section 5.2(c), Section 5.2(d) and Section 5.2(e) hereof shall be applied first, to the principal amount of the Amended Notes due on the maturity date of the Amended Notes and second, to the mandatory principal prepayments applicable to the Amended Notes, as set forth in Section 5.1 hereof, in the inverse order of the maturity thereof. Each prepayment of principal of the Amended Notes pursuant to Section 5.2(b) and each purchase of Amended Notes pursuant to Section 8.7 hereof shall be applied ratably to the principal amount of the Amended Notes due on the maturity date thereof and to each remaining mandatory principal prepayment required by Section 5.1 hereof. 5.3. Notice of Optional Prepayment. The Company will give notice of each prepayment of the Amended Notes made pursuant to the provisions of Section 5.2 to each holder of Amended Notes (in the case of prepayments made pursuant to Section 5.2(a), Section 5.2(c), Section 5.2(d) and Section 5.2(e)) and to each holder of Amended Notes to be prepaid (in the case of prepayments made pursuant to Section 5.2(b)), in each case not less than thirty (30) days or more than sixty (60) days before the date fixed for prepayment, specifying: (a) such date; (b) the Section hereof under which the prepayment is to be made; (c) the principal amount of each Amended Note to be prepaid on such date; (d) the interest to be paid on each such Amended Note, accrued to the date fixed for payment; and (e) a reasonably detailed calculation of an estimated Make-Whole Amount, if any (calculated as if the date of such notice was the date of prepayment), that would be due in connection with such prepayment. Such notice of prepayment shall also certify all facts that are conditions precedent to any such prepayment. Further, with respect to any prepayment made pursuant to Section 5.2(c), 5.2(d) or 5.2(e) hereof, the notice required in the first sentence of 21 this Section 5.3 shall be given within the time period specified to the extent practicable given the timing of the event or events triggering the obligations of the Company to make such prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Amended Notes specified in such notice, together with the Make-Whole Amount, if any, and accrued interest thereon shall become due and payable on the specified prepayment date. Contemporaneously with such prepayment, the Company shall deliver to each holder of Amended Notes to be prepaid a certificate of the Chairman, the Vice Chairman, a Vice President, the Treasurer or the President of the Company specifying the calculation of such Make-Whole Amount as of the specified prepayment date, accompanied by a copy of any applicable documentation used in connection with determining the Make-Whole Discount Rate in respect of such prepayment. 5.4. Partial Prepayment Pro Rata. If at the time any required or optional prepayment under Section 5.1 or Section 5.2(a), Section 5.2(c), Section 5.2(d) or Section 5.2(e) hereof is due there is more than one Amended Note outstanding, the aggregate principal amount of each required or optional partial prepayment of the Amended Notes shall be allocated among the holders of the Amended Notes at the time outstanding in proportion as nearly as practicable, to the respective unpaid principal amounts of the Amended Notes then outstanding, with adjustments, to the extent practicable, to equalize for any prior prepayments not in such proportion. 5.5. Notation of Amended Notes on Prepayment. Upon any partial prepayment of an Amended Note, such Amended Note may, at the option of the holder thereof, be (a) surrendered to the Company pursuant to Section 7.2 hereof in exchange for a new Amended Note in a principal amount equal to the principal amount remaining unpaid on the surrendered Amended Note, (b) made available to the Company for notation thereon of the portion of the principal so prepaid, or (c) marked by such holder with a notation thereon of the portion of the principal so prepaid. In case the entire principal amount of any Amended Note is prepaid, such Amended Note shall be surrendered to the Company for cancellation and shall not be reissued, and no Amended Note shall be issued in lieu of the prepaid principal amount of any Amended Note. 22 5.6. No Other Optional Prepayments. Except as provided in Section 5.2 hereof or in accordance with an offer made in compliance with Section 6 or Section 8.7 hereof, the Company shall not make any optional prepayment (whether directly or indirectly by purchase or other acquisition) in respect of the Amended Notes. 6. CHANGE IN CONTROL PUT 6.1. Offer to Prepay upon Change in Control. (a) Notice and Offer. In the event of either (i) a Change in Control, or (ii) the obtaining of knowledge of a Control Event by the Company (including, without limitation, via the receipt of notice of a Control Event from any holder of Notes), the Company will, within three (3) Business Days of the occurrence of either of such events (or, in the case of any Change in Control the consummation or finalization of which would involve any action of the Company, at least thirty (30) days prior to such Change in Control), give written notice of such Change in Control or Control Event to each holder of Notes by registered mail and, simultaneously with the sending of such written notice, send a copy of such notice to each such holder via an overnight courier of national reputation. In the event of a Change in Control, such written notice shall contain, and such written notice shall constitute, an irrevocable offer to prepay all, but not less than all, the Notes held by such holder on a date specified in such notice (the "Control Prepayment Date") that is not less than thirty (30) days and not more than sixty (60) days after the date of such notice. If the Control Prepayment Date shall not be specified in such notice, the Control Prepayment Date shall be the thirtieth (30th) day after the date of such holder's first receipt of such notice. If the Company shall not have received a written response to such notice from each holder of Notes within ten (10) days after the date of posting of such notice to such holder of Notes, then the Company shall immediately send a second written notice via an overnight courier of national reputation to each such holder of Notes who shall have not previously responded to the Company. In no event will the Company take any action to consummate or finalize a Change in Control unless contemporaneously with such action the Company prepays all Notes required to be prepaid in accordance with Section 6.1(b) hereof. (b) Acceptance and Payment. To accept such offered prepayment, a holder of Notes shall cause a notice of such acceptance to be delivered to the Company not later than fifteen (15) days after the date of 23 receipt by such holder of the latest written offer of such prepayment (it being understood that the failure by a holder to respond to such written offer of prepayment within such period of fifteen (15) days shall be deemed to constitute a rejection of such offer, provided that such deemed rejection shall not prejudice such holder's right to accept any subsequent offer). If so accepted, such offered prepayment shall be due and payable on the Control Prepayment Date. Such offered prepayment shall be made at one hundred percent (100%) of the principal amount of such Notes, together with any Make-Whole Amount as of the Control Prepayment Date with respect thereto and interest on the Notes then being prepaid accrued to the Control Prepayment Date. Two (2) Business Days prior to the making of any such prepayment, the Company shall deliver to each holder of such Notes by facsimile transmission a certificate of the Chairman, the Chief Executive Officer, an Executive Vice President, a Vice President, the Treasurer or the President of the Company specifying the details of the calculation of such Make-Whole Amount as of the specified Control Prepayment Date, accompanied by a copy of any applicable documentation used in connection with determining the Make-Whole Discount Rate in respect of such prepayment. (c) Officer's Certificate. Each offer to prepay the Notes pursuant to this Section 6.1 shall be accompanied by a certificate, executed by the Chairman, the Chief Executive Officer, an Executive Vice President, a Vice President, the Treasurer or the President of the Company and dated the date of such offer, specifying: (i) the Control Prepayment Date; (ii) the Section hereof under which such offer is made; (iii) the principal amount of each Note offered to be prepaid; (iv) the interest that would be due on each such Note offered to be prepaid, accrued to the date fixed for payment; (v) a reasonably detailed calculation of an estimated Make-Whole Amount, if any (calculated as if the date of such notice was the date of prepayment), that would be due in connection with such offered prepayment; (vi) that the conditions of this Section 6.1 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. 24 6.2. Effect of Prepayments. Each prepayment of principal of the Notes pursuant to Section 6.1 shall be applied ratably to the principal amount of the Notes due on the maturity date of the Notes and to each remaining mandatory principal prepayment required by Section 5.1 hereof. 7. REGISTRATION; SUBSTITUTION OF NOTES 7.1. Registration of Notes. The Company will cause to be kept at its office, maintained pursuant to Section 8.3 hereof, a register for the registration and transfer of Notes. The name and address of each holder of one or more Notes, the outstanding principal amount of each such Note, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in the register. The Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. 7.2. Exchange of Notes. Upon surrender of any Note at the office of the Company maintained pursuant to Section 8.3 hereof duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or its attorney duly authorized in writing, the Company will execute and deliver, within five (5) Business Days after such surrender, at the Company's expense (except as provided below), new Notes in exchange therefor, in denominations of at least One Hundred Thousand Dollars ($100,000) (except as may be necessary to reflect any principal amount not evenly divisible by One Hundred Thousand Dollars ($100,000)), in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit A hereto. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. 7.3. Replacement of Notes. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor (or of such Institutional Investor's nominee) of such ownership and such loss, theft, destruction or mutilation) and 25 (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is an Institutional Investor or a nominee of an Institutional Investor, such Institutional Investor's own unsecured agreement of indemnity shall be deemed to be satisfactory for such purpose), or (b) in the case of mutilation, upon surrender and cancellation thereof, the Company at its own expense will execute and deliver, within five (5) Business Days after such receipt, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. 8. COMPANY BUSINESS COVENANTS The Company covenants that on and after the Effective Date and so long as any of the Notes shall be outstanding: 8.1. Payment of Taxes and Claims. The Company will, and will cause each Subsidiary to, pay before they become delinquent: (a) all taxes, assessments and governmental charges or levies imposed upon it or its Property; and (b) all claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons that, if unpaid, might result in the creation of a Lien upon its Property; provided, that items of the foregoing description need not be paid (i) while being contested in good faith and by appropriate proceedings as long as adequate book reserves have been established and maintained and exist with respect thereto, and (ii) so long as the title of the Company or the Subsidiary, as the case may be, to, and its right to use, such Property, is not materially adversely affected thereby. 8.2. Maintenance of Properties and Corporate Existence. The Company will, and will cause each Subsidiary to: 26 (a) Property - maintain its Property in good condition for its intended purpose, ordinary wear and tear excepted, and make all necessary renewals, replacements, additions, betterments and improvements thereto; (b) Insurance - maintain, with Acceptable Insurers, insurance with respect to its Property and business against such casualties and contingencies, of such types (including, without limitation, insurance with respect to losses arising out of Property loss or damage, public liability, business interruption, larceny, workers' compensation, embezzlement or other criminal misappropriation) and in such amounts as is customary in the case of corporations of established reputations engaged in the same or a similar business and similarly situated, provided, however, that if an insurer is an Acceptable Insurer at the beginning of any policy period, it shall be deemed to remain an Acceptable Insurer for the balance of such policy period; (c) Financial Records - keep accurate books of records and accounts in which full and correct entries shall be made of all its business transactions and that will permit the provision of accurate and complete financial statements in accordance with GAAP; (d) Corporate Existence and Rights - do or cause to be done all things necessary (i) to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises, subject to Section 8.18 hereof, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, and (ii) to maintain each Restricted Subsidiary as a Restricted Subsidiary, except as otherwise permitted by Section 8.18 hereof; and (e) Compliance with Law - not be in violation of any law, ordinance or governmental rule or regulation to which it is subject (including, without limitation, any Environmental Protection Law and OSHA) and not fail to obtain any license, certificate, permit, franchise or other governmental authorization necessary to the ownership of its Properties or to the conduct of its business if such violation or failure to obtain could be reasonably expected to have a Material Adverse Effect. 27 8.3. Payment of Notes and Maintenance of Office. The Company will punctually pay, or cause to be paid, the principal of and interest (and Make-Whole Amount, if any) on, the Notes, as and when the same shall become due according to the terms hereof and of the Notes, and will maintain an office at the address of the Company set forth in Section 12.1 hereof where notices, presentations and demands in respect hereof or the Notes may be made upon it. Such office will be maintained at such address until such time as the Company shall notify the holders of the Notes of any change of location of such office, which will in any event be located within the United States of America. 8.4. ERISA. (a) Compliance. The Company will, and will cause each ERISA Affiliate to, at all times with respect to each Pension Plan, make timely payment of contributions required to meet the minimum funding standard set forth in ERISA or the IRC with respect thereto, and to comply with all other applicable provisions of ERISA. (b) Relationship of Vested Benefits to Pension Plan Assets. The Company will not at any time permit the present value of all employee benefits vested under each Pension Plan to exceed the assets of such Pension Plan allocable to such vested benefits at such time, in each case determined pursuant to Section 8.4(c) hereof. (c) Valuations. All assumptions and methods used to determine the actuarial valuation of vested employee benefits under Pension Plans and the present value of assets of Pension Plans will be reasonable in the good faith judgment of the Company and will comply with all requirements of law. (d) Prohibited Actions. The Company will not, and will not permit any ERISA Affiliate to: (i) engage in any "prohibited transaction" (as defined in section 406 of ERISA or section 4975 of the IRC) that would result in the imposition of a material tax or penalty; (ii) incur with respect to any Pension Plan any "accumulated funding deficiency" (as defined in section 302 of ERISA), whether or not waived; (iii) terminate any Pension Plan in a manner that could result in 28 (A) the imposition of a Lien on the Property of the Company or any Subsidiary pursuant to section 4068 of ERISA, or (B) the creation of any liability under section 4062 of ERISA; (iv) fail to make any payment required by section 515 of ERISA; or (v) at any time be an "employer" (as defined in section 3(5) of ERISA) required to contribute to any Multiemployer Plan if, at such time, it could reasonably be expected that the Company or any Restricted Subsidiary will incur withdrawal liability in respect of such Multiemployer Plan and such liability, if incurred, together with the aggregate amount of all other withdrawal liability as to which there is a reasonable expectation of incurrence by the Company or any Restricted Subsidiary under any one or more Multiemployer Plans, could reasonably be expected to have a Material Adverse Effect. 8.5. Line of Business. The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than the businesses related to their present businesses or those that are substantially similar to their present businesses. 8.6. Transactions with Affiliates. The Company will not, and will not permit any Restricted Subsidiary to, enter into any transaction, including, without limitation, the purchase, sale or exchange of Property or the rendering of any service, with any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of the Company's or such Restricted Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate. 8.7. Pro-Rata Offers. Except as provided in Section 5.2(b) above, the Company will not, and will not permit any Restricted Subsidiary or any Affiliate to, directly or indirectly, acquire or make any offer to acquire any Notes unless the Company or such Restricted Subsidiary or Affiliate shall have offered to acquire Notes, pro rata, from all holders of Notes and upon the same terms. In case the Company acquires any Notes, such Notes will immediately thereafter be cancelled and no Notes will be issued in substitution therefor. 29 8.8. Private Offering. The Company will not, and will not permit any Person acting on its behalf to, offer the Notes or any part thereof or any similar Securities for issuance or sale to, or solicit any offer to acquire any of the same from, any Person so as to bring the issuance and sale of the Notes within the provisions of section 5 of the Securities Act. 8.9. Designation of Subsidiaries. (a) Right of Designation. Each Subsidiary acquired after the Effective Date that, as of the date of such acquisition or at any future date, meets all of the requirements of a Restricted Subsidiary, as set forth in the definition thereof, shall be deemed, on and after such date and without any further action by the Company or any holder of Notes, to have been designated by the Company as a Restricted Subsidiary. Each Subsidiary designated as a Restricted Subsidiary in Schedule 3.1 to the Waiver and Third Amendment and each other Restricted Subsidiary shall, so long as it shall continue to satisfy the requirements of the definition of Restricted Subsidiary, be a Restricted Subsidiary on and after the Effective Date and all other Subsidiaries, if any, listed in such Schedule 3.1 shall, subject to Section 8.9(b) hereof, be Unrestricted Subsidiaries on and after the Effective Date. (b) Right of Redesignation. Subject to the satisfaction of the requirements of Section 8.9(c) hereof, the Company shall have the right, with respect to each Subsidiary that is an Unrestricted Subsidiary as of the Effective Date, to designate such Subsidiary as a Restricted Subsidiary by delivering a written notice to such effect, signed by the Chairman, Chief Executive Officer, an Executive Vice President, a Vice President or the President of the Company, to each holder of Notes. Any designation under and in accordance with this Section 8.9(b) shall become effective, for purposes of this Agreement, on the day that notice thereof shall have been mailed (postage prepaid, by registered or certified mail, return receipt requested) by the Company to each holder of Notes at the addresses as provided in Section 12.1 hereof. The Company shall not have the right to designate a Restricted Subsidiary as an Unrestricted Subsidiary. (c) Designation Criteria. (i) No Unrestricted Subsidiary shall at any time after the Effective Date be designated as a Restricted Subsidiary unless: (A) such Subsidiary at such time meets all of the requirements of a Restricted Subsidiary as set forth in the definition thereof; and 30 (B) immediately before and after, and after giving effect to such designation, and assuming that all Investments of, all obligations and liabilities of, and all Liens on the Property of, such Subsidiary being so designated were made or incurred contemporaneously with such designation, no Default or Event of Default exists or would exist. (ii) No Restricted Subsidiary shall at any time after the Effective Date be designated as an Unrestricted Subsidiary. 8.10. New Restricted Subsidiaries or Properties. (a) Guaranty Agreement. The Company will cause each Person that, after the Effective Date, becomes a direct or indirect Restricted Subsidiary of the Company, to become, promptly and in any event within ten (10) Business Days of becoming a Restricted Subsidiary, a Guarantor by executing and delivering an Accession Agreement. (b) Security Agreement and Stock Pledge Agreement. The Company will cause each Person that, after the Effective Date, becomes a direct or indirect Restricted Subsidiary of the Company, to become, promptly and in any event within ten (10) Business Days of becoming a Restricted Subsidiary, a Pledgor under (and as defined in) each of the Security Agreement and the Stock Pledge Agreement by executing and delivering to the Collateral Agent and to each holder of Notes an Accession Agreement, and to take all other actions necessary to perfect the Liens of the Collateral Agent in the Property of such Person pledged thereunder (including, without limitation, the filing of all appropriate Uniform Commercial Code financing statements, the recording of all appropriate documents with public officials, the payment of all fees and taxes, and the delivery to the Collateral Agent of all certificates and documents constituting Pledged Collateral (as defined in the Stock Pledge Agreement) together with all related stock powers that in the opinion of the Collateral Agent are necessary to create and preserve the Liens with respect to all of the capital stock of each domestic Restricted Subsidiary and at least 65% of the capital stock of each Restricted Subsidiary incorporated, and doing business, outside the United States of America, in accordance with the provisions of the Security Agreement and the Stock Pledge Agreement. (c) Future Real Property. The Company will, and will cause each Restricted Subsidiary to, promptly following the acquisition of any fee simple property, provide written notice thereof to the holders of the Notes and execute and deliver to the Collateral Agent a Mortgage in form and substance satisfactory to the Collateral Agent, creating a first priority Lien on such Property (including fixtures) in favor of the Collateral Agent, subject 31 to no Liens, except to the extent permitted by Section 8.17(a), and provide to the Collateral Agent such customary lender's title insurance policies, environmental reports and other related documents as the Collateral Agent or the Majority Holders may reasonably request. (d) Assets Subject to Lien Restrictions. If at any time any Restricted Subsidiary is prohibited by contract from entering into the Guaranty Agreement, or the Company or any Restricted Subsidiary is prohibited by contract from granting a Lien on any of its unencumbered Property in favor of the Collateral Agent, the Company shall, or shall cause such Restricted Subsidiary to, use its good faith efforts to obtain a waiver of such prohibition and promptly execute an Accession Agreement or Security Document, as applicable, necessary to make such Restricted Subsidiary a Guarantor, or to make such Property a part of the Collateral, as the case may be, and to take all other actions necessary to perfect the Liens of the Collateral Agent in such additional Collateral. (e) Certificates Regarding Authorization, etc. Each Accession Agreement and each Security Document delivered by the Company or any Restricted Subsidiary pursuant to this Section 8.10 shall be accompanied by copies of the constitutive documents and corporate resolutions (or equivalent) of the Company or such Restricted Subsidiary authorizing the respective transactions contemplated thereby, in each case certified as true and correct by an officer of the Company or such Restricted Subsidiary. (f) Further Assurances. The Company will, at the request of the Majority Holders or the Collateral Agent, execute and deliver, or cause to be executed and delivered, such further instruments and do, or cause to be done, such further acts as the Majority Holders or the Collateral Agent deem necessary or advisable to maintain the priority and validity of the Lien of the Security Documents and to carry out more effectively the purposes of the Financing Documents. 8.11. Fixed Charge Coverage Ratio. The Company will not permit the Fixed Charge Coverage Ratio for any Four- Quarter Period specified in the following table to be less than or equal to the ratio corresponding to such period in the table: Four-Quarter Period Ending Minimum Ratio - ------------------------------------------------------------------------------- September 30, 1999 1.05 to 1.00 - ------------------------------------------------------------------------------- December 31, 1999 1.05 to 1.00 - ------------------------------------------------------------------------------- March 31, 2000 1.05 to 1.00 - ------------------------------------------------------------------------------- June 30, 2000 1.05 to 1.00 - ------------------------------------------------------------------------------- 32 September 30, 2000 1.05 to 1.00 - ------------------------------------------------------------------------------- December 31, 2000 1.05 to 1.00 - ------------------------------------------------------------------------------- March 31, 2001 1.10 to 1.00 - ------------------------------------------------------------------------------- June 30, 2001 1.10 to 1.00 - ------------------------------------------------------------------------------- September 30, 2001 1.20 to 1.00 - ------------------------------------------------------------------------------- December 31, 2001 and 0.95 to 1.00 thereafter - ------------------------------------------------------------------------------- 8.12. Minimum Consolidated EBITDA. The Company will not permit the aggregate amount of Consolidated EBITDA for any Four-Quarter Period specified in the following table to be less than the amount corresponding to such period in such table: Four-Quarter Period Ending Minimum EBITDA - ------------------------------------------------------------------------------- September 30, 1999 $57,000,000 - ------------------------------------------------------------------------------- December 31, 1999 $57,000,000 - ------------------------------------------------------------------------------- March 31, 2000 $57,000,000 - ------------------------------------------------------------------------------- June 30, 2000 $61,500,000 - ------------------------------------------------------------------------------- September 30, 2000 $61,500,000 - ------------------------------------------------------------------------------- December 31, 2000 $65,500,000 - ------------------------------------------------------------------------------- March 31, 2001 $66,000,000 - ------------------------------------------------------------------------------- June 30, 2001 $64,000,000 - ------------------------------------------------------------------------------- September 30, 2001 $67,500,000 - ------------------------------------------------------------------------------- December 31, 2001 and $71,000,000 thereafter - ------------------------------------------------------------------------------- 8.13. Minimum Tangible Net Worth. The Company will not permit Consolidated Tangible Net Worth at any time to be less than (i) One Hundred Eighty-Eight Million Dollars ($188,000,000) plus (ii) fifty percent (50%) of consolidated income from continuing operations (only if greater than Zero Dollars ($0)) of the Company and the Restricted Subsidiaries for each fiscal quarter of the Company ending after June 30, 1999, minus (iii) one hundred percent (100%) of consolidated net loss from discontinued operations (including any write-downs) of the Company and the Restricted Subsidiaries after June 30, 1999, plus (iv) sixty percent (60%) of the Net Proceeds from each Equity Issuance by the Company after June 30, 1999. 8.14. Capital Expenditures. The Company will not permit the aggregate amount of Capital Expenditures of the Company and the Restricted Subsidiaries to be greater than: (i) Thirty 33 Million Dollars ($30,000,000) during the Company's fiscal year ending June 30, 2000; (ii) Thirty-Five Million Dollars ($35,000,000) during the Company's fiscal year ending June 30, 2001; and (iii) Forty Million Dollars ($40,000,000) during the Company's fiscal year ending June 30, 2002. 8.15. Debt to Consolidated EBITDA Ratio. The Company will not permit, for any Four-Quarter Period ending on or after the Performance Release Date, the Debt to Consolidated EBITDA Ratio to be greater than or equal to 3.50 to 1.00. 8.16. Debt. The Company will not, and will not permit any Restricted Subsidiary to, create, incur, assume, or permit or suffer to exist, any Debt other than the following: (a) Debt arising under this Agreement and the other Note Purchase Agreements, including Debt evidenced by the Amended Notes; (b) Debt existing or arising under the Credit Agreement, the Existing Reimbursement Agreements, the 1995 Notes and the other Transaction Documents; or (c) other Debt existing on the Effective Date and described in Part 2.2(b) of Annex 3 to the Waiver and Third Amendment; (d) Debt extending the maturity of, or refunding, refinancing or replacing, in whole or in part, any Debt of the Company or any Restricted Subsidiary described in the immediately preceding clauses (a) through (c) above on terms no more restrictive in the aggregate (as reasonably determined by the Majority Holders) to the Company or such Restricted Subsidiary, as applicable, than the terms of the Debt so extended, refunded, refinanced or replaced, and in a principal amount not in excess of that outstanding as of the date of such renewal, refinancing, replacement or extension; (e) Debt of a Restricted Subsidiary owing to the Company or to another Restricted Subsidiary that is a Guarantor; (f) Debt in respect of Capitalized Lease obligations secured as permitted under Section 8.17(a)(xi) and Debt secured by Purchase Money Liens permitted under Section 8.17(a)(vii); provided that the aggregate outstanding principal amount of all such Debt does not exceed Thirty-five Million Dollars ($35,000,000) at any time; 34 (g) Debt of a Person secured by real property or Debt of a Person represented by an industrial revenue bond financing, in each case where such Person becomes a Restricted Subsidiary of the Company or is merged with or into the Company or a then-existing Restricted Subsidiary, so long as such Debt was not incurred in anticipation of such Person becoming a Restricted Subsidiary or merging with the Company or a Restricted Subsidiary; and (h) Debt that is unsecured Debt and that is not otherwise permitted under any of the preceding clauses (a) through (g) in an aggregate amount not to exceed Twenty-Five Million Dollars ($25,000,000) at any time outstanding. 8.17. Liens. (a) Negative Pledge. The Company will not, and will not permit any Restricted Subsidiary to, cause or permit to exist, or agree or consent to cause or permit to exist in the future (upon the happening of a contingency or otherwise), any of their Property, whether now owned or hereafter acquired, to be subject to a Lien except: (i) Liens securing taxes, assessments or governmental charges or levies or the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons, provided that the payment thereof is not at the time required by Section 8.1 hereof; (ii) Liens incurred or deposits made in the ordinary course of business (A) in connection with workers' compensation, unemployment insurance, social security and other like laws, and (B) to secure the performance of letters of credit, bids, tenders, sales contracts, leases, statutory obligations, surety and performance bonds (of a type other than set forth in Section 8.17(a)(iii)) hereof) and other similar obligations not incurred in connection with the borrowing of money, the obtaining of advances or the payment of the deferred purchase price of Property; (iii) Liens (A) arising from judicial attachments and judgments, (B) securing appeal bonds, supersedeas bonds, and 35 (C) arising in connection with court proceedings (including, without limitation, surety bonds and letters of credit or any other instrument serving a similar purpose), provided that the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings, and provided further that the aggregate amount so secured will not at any time exceed Ten Million Dollars ($10,000,000); (iv) Liens on Property of a Restricted Subsidiary, provided that such Liens secure only obligations owing to the Company or a Restricted Subsidiary that is a Guarantor; (v) Liens in the nature of reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other similar title exceptions or encumbrances affecting real property, provided that such exceptions and encumbrances do not in the aggregate materially detract from the value of such Properties or materially interfere with the use of such Property in the ordinary conduct of the business of the Company and the Restricted Subsidiaries; (vi) (A) Liens securing Debt in existence on the Effective Date and listed in Schedule 3.8 to the Waiver and Third Amendment, and (B) Liens securing renewals, extensions (as to time) and refinancings of such Debt secured by such Liens listed in such Schedule, provided that (1)the amount of Debt secured by each such Lien is not increased in excess of the amount of Debt outstanding on the date of such renewal, extension or refinancing, (2) none of such Liens is, or is required to be, extended to include any additional Property of the Company or any Restricted Subsidiary as a condition to, or as a result of, such renewal, extension or refinancing, and (3) in the case of Debt existing under the Credit Agreement, the renewal, extension or refinancing of such Debt is permitted by, and is consummated in accordance with the provisions of, Section 4.10 of the Intercreditor Agreement; and (vii) Purchase Money Liens securing Debt incurred within the limitations of Section 8.16(f) hereof, so long as each such Purchase Money Lien secures Debt of the Company or a Restricted Subsidiary in an amount not exceeding one hundred percent (100%) of the cost of 36 construction or acquisition of the particular Property to which such Debt relates (or, in the case of a Lien existing on any Property of any corporation the time it becomes a Restricted Subsidiary, the Fair Market Value of such Property at such time); (viii) Liens securing the Secured Obligations (as defined in the Omnibus Collateral Agreement); (ix) Liens arising by virtue of any statutory or common law provision relating to bankers' liens, rights of setoff or similar rights as to deposit accounts or other funds maintained with a creditor depository institution; (x) Liens constituting intellectual property licenses entered into in the ordinary course of business; (xi) Liens securing Capitalized Lease obligations to the extent such Debt is permitted under Section 8.16(f), so long as any such Lien secures Debt of the Company or a Restricted Subsidiary in an amount not exceeding one hundred percent (100%) of the cost of construction or acquisition of the particular Property that is the subject of such Capitalized Lease; (xii) Liens securing Off Balance Sheet Liabilities which do not constitute Debt; (xiii) financing statements permitted to be signed or filed under Section 8.17(b); (xiv) leases and subleases of Property of the Company or a Restricted Subsidiary to other Persons entered into in the ordinary course of business; and (xv) Liens permitted under the express terms of the Security Documents. In addition, the Company will not, and will not permit any Restricted Subsidiary, directly or indirectly, to create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of such Person to grant a security interest in, or assign its property to, the Collateral Agent, except for encumbrances or restrictions existing under or by reason of (i) customary non-assignment provisions in any lease governing a leasehold interest, license or other contract, (ii) with respect to any Person which becomes a Subsidiary of the Company after the Effective Date, an agreement or other instrument of such Person existing at the time it becomes a Subsidiary, 37 provided that such encumbrance or restriction is not applicable to any other Person, other than such Person becoming a Subsidiary and was not entered into in contemplation of such Person becoming a Subsidiary, (iii) this Agreement and the other Financing Documents, and (iv) any agreement of the Company or any Restricted Subsidiary existing on the Effective Date and any renewal or extension of any such agreement. (b) Financing Statements. The Company will not, and will not permit any Restricted Subsidiary to, sign or file a financing statement under the Uniform Commercial Code of any jurisdiction that names the Company or such Restricted Subsidiary as debtor, or sign any security agreement authorizing any secured party thereunder to file any such financing statement, except, in any such case, a financing statement filed or to be filed to perfect or protect a security interest that the Company or such Restricted Subsidiary is entitled to create, assume or incur, or permit to exist, under the foregoing provisions of this Section 8.17 or to evidence for informational purposes a lessor's interest in Property leased to the Company or any such Restricted Subsidiary. 8.18. Mergers; Consolidations. The Company will not, and will not permit any Restricted Subsidiary to, merge with or into or consolidate with or into any other Person or permit any other Person to merge or consolidate with or into it; provided, however, so long as no Default or Event of Default exists at the time thereof, or would exist immediately after giving effect thereto, a Restricted Subsidiary may (x) merge into or consolidate with a Wholly-Owned Restricted Subsidiary that is a Guarantor and (y) merge with and into the Company so long as the Company is the survivor of such merger. 8.19. Disposition of Assets. The Company will not, and will not permit any Restricted Subsidiary to, convey, sell, lease, sublease, transfer or otherwise dispose of any assets (including without limitation, capital stock of or other equity interests in any Subsidiary or other Person) except for: (a) sales of inventory in the ordinary course of business; (b) the sale, lease, sublease, transfer or other disposition of machinery and equipment no longer used or useful in the conduct of business; (c) the sale, lease, sublease, transfer or other disposition of assets to the Company or to a Wholly-Owned Restricted Subsidiary that is a Guarantor; 38 (d) the sale of assets of the SBQ Division (Memphis/Cleveland) to the extent permitted under the express terms of the Intercreditor Agreement; (e) transfers of assets made as consideration for Permitted Investments; (f) the transfer by Cumberland Recyclers, LLC to BSE of the assets known as the "mega shredder" so long as: (i) the Company shall have given at least sixty (60) days prior written notice of such transfer to each holder of Notes; (ii) no Default or Event of Default exists at the time of such transfer; (iii) such transfer is made subject to the Lien of the Collateral Agent in such assets; and (iv) all actions required under the Security Agreement to maintain the validity, perfection, enforceability and priority and rank of such Lien in connection with such transfer are taken; and (g) other sales and dispositions of Property of the Company or any Restricted Subsidiary, so long as the Fair Market Value of such Property does not exceed Ten Million Dollars ($10,000,000) in the aggregate during any fiscal year of the Company. 8.20. Restricted Payments. The Company will not declare or make, or permit any Restricted Subsidiary to declare or make, any Restricted Payment; provided, however, that (a) Restricted Subsidiaries may declare and make Restricted Payments payable to the Company or any other Restricted Subsidiary that is a Guarantor, and (b) so long as no Default or Event of Default shall have occurred and be continuing, or would result therefrom, the Company may declare and make cash dividends with respect to its common stock so long as (i) the aggregate amount of such cash dividends paid during any fiscal quarter of the Company does not exceed Seven Hundred Fifty Thousand Dollars ($750,000) and (ii) immediately after giving effect to the payment of any such cash dividend, the aggregate amount of all cash dividends paid by the Company during the period commencing on July 1, 1999 and ending on the date of the payment of such cash dividend (excluding the cash dividend in the amount of $737,836.76 paid on August 9, 1999) would not exceed 50% of cumulative consolidated income from continuing operations of the Company and the Restricted Subsidiaries for such entire period. 8.21. Permitted Investments. The Company will not, and will not permit any Restricted Subsidiary to, make any Investment other than Permitted Investments. 39 8.22. Accounts with Financial Institutions other than the Banks. The Company shall not, and shall not permit any Subsidiary to, maintain any deposit account, savings account, investment account or other similar account with any financial institution or other Person except for the agent bank and the Banks under the Credit Agreement, excluding: (a) lockbox accounts existing as of the Effective Date and disclosed on Schedule 2.10 to the Omnibus Collateral Agreement the entire balances of which are automatically transferred on a daily basis to a deposit account of the Company maintained with such agent bank; and (b) other deposit accounts so long as the balances of such deposit accounts do not exceed $150,000 in the aggregate at any time; provided, however, Birmingham Steel Overseas, Ltd. may maintain its existing deposit account with Barclay's Bank, PLC in Barbados in which the proceeds of foreign sales are deposited so long as (i) the balance of such account does not exceed One Million Dollars ($1,000,000) in the aggregate at any time and (ii) such Subsidiary remains qualified as a "foreign sales corporation" under Section 922 of the IRC. 8.23. Proceeds from Equity Issuances. The Company may use such portion of the Net Proceeds from any Equity Issuance which the Company is permitted to retain under the terms of the Intercreditor Agreement and the other applicable Transaction Documents (a) to fund Restricted Payments not otherwise permitted under Section 8.20, (b) to finance Investments not otherwise permitted under Section 8.21, (c) to finance Capital Expenditures not otherwise permitted under Section 8.14 and (d) for any other purpose not otherwise prohibited by this Agreement. 8.24. No Voluntary Reductions in Commitment. The Company will not, without the prior written consent of the Special Majority Holders, agree to any voluntary reduction of the Commitments as defined in Section 2.12 of the Credit Agreement, whether such voluntary reductions would be pursuant to such Section 2.12 or otherwise. 9. INFORMATION AS TO COMPANY 9.1. Financial and Business Information. The Company will deliver to each holder of Notes: 40 (a) Monthly Statements - promptly following, and in any event within thirty (30) days of, the end of each calendar month, the consolidated balance sheet of the Company and the Subsidiaries as at the end of such month and the related consolidated statement of income of the Company and the Subsidiaries for such month, all of which shall be certified by the Executive Vice President-Chief Financial Officer or Vice President-Finance and Control of the Company, in his or her opinion, to present fairly, in accordance with GAAP and in all material respects, the consolidated financial position of the Company and the Subsidiaries as at the date thereof and the results of operations for such month (without notes and subject to normal year-end adjustments), together with a cash analysis report substantially in the form of Exhibit N to the Credit Agreement; (b) Quarterly Statements - as soon as practicable after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), and in any event within forty-five (45) days thereafter, duplicate copies of: (i) a consolidated balance sheet of the Company and the Subsidiaries as at the end of such quarter, and (ii) consolidated statements of income and cash flows of the Company and the Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP (without notes and subject to normal year-end adjustments) applicable to quarterly financial statements generally, and certified as complete and correct, subject to changes resulting from year-end adjustments, by the Vice President-Finance and Control or Executive Vice President of the Company, and accompanied by the certificate required by Section 9.2 hereof; (c) Annual Statements - as soon as practicable after the end of each fiscal year of the Company, and in any event within ninety-five (95) days thereafter, duplicate copies of: (i) a consolidated balance sheet of the Company and the Subsidiaries as at the end of such year, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and the Subsidiaries for such year, 41 setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by (iii) an opinion thereon of the accountants named in Section 2.2 hereof or other independent certified public accountants of recognized national standing selected by the Company, which opinion shall, without qualification, state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and (iv) the certificates required by Section 9.2 and Section 9.3 hereof; (d) Company Business Plan -- On or before September 1 of each calendar year, commencing September 1, 2000, a copy of the Company's internal business plan for the fiscal year commencing on July 1 of such calendar year and ending on June 30 of the following year, such plan to include the Company's forecast on a month-by-month basis; (e) Effects of APB 30 - together with each financial statement required to be delivered pursuant to Section 9.1(a), Section 9.1(b) or Section 9.1(c) hereof, copies of such financial statements prepared by the Company in accordance with GAAP (without notes and subject to normal year- end adjustments) in all respects but which excludes the effect of the accounting entries made by the Company with respect to its financial statements for the fiscal year ending June 30, 1999 and as required under Accounting Principles Board Opinion No. 30 ("APB 30") solely to the extent relating to the SBQ Division. Each such financial statement shall disclose, in form and substance satisfactory to the Majority Holders, the resulting differences between such statement and one prepared entirely in accordance with GAAP; (f) Audit Reports - promptly upon receipt thereof, a copy of each other report submitted to the Company or any Subsidiary by independent accountants in connection with any management report, special audit report or comparable analysis prepared by them with respect to the books of the Company or any Subsidiary; (g) SEC and Other Reports - promptly upon their becoming available, one copy of each financial statement, report, notice or proxy 42 statement sent by the Company or any Subsidiary to stockholders generally, and of each regular or periodic report and any registration statement, prospectus or written communication (other than transmittal letters and routine comment letters with respect to drafts of such statements, reports or prospectuses), and each amendment thereto, in respect thereof filed by the Company or any Subsidiary with, or received by, such Person in connection therewith from, the National Association of Securities Dealers, any securities exchange or the Securities and Exchange Commission or any successor agency; (h) ERISA - immediately upon becoming aware of the occurrence of any (i) "reportable event" (as defined in section 4043 of ERISA) or (ii) "prohibited transaction" (as defined in section 406 or section 4975 of the IRC) in connection with any Pension Plan or any trust created thereunder, a written notice specifying the nature thereof, what action the Company is taking or proposes to take with respect thereto, and, when known, any action taken by the IRS, the DOL or the PBGC with respect thereto; (i) ERISA Waivers - prompt written notice of and a description of any request pursuant to section 303 of ERISA or section 412 of the IRC for, or notice of the granting pursuant to such section 303 or section 412 of, a waiver in respect of all or part of the minimum funding standard set forth in ERISA or the IRC, as the case may be, of any Pension Plan, and, in connection with the granting of any such waiver, the amount of any waived funding deficiency (as defined in such section 303 or such section 412) and the terms of such waiver, in each of the cases specified in this clause (i), where the effect of such conditions or events or of events or conditions related thereto could reasonably be expected to have a Material Adverse Effect; (j) Other ERISA Notices - prompt written notice of and, where applicable, a description of (i) any notice from the PBGC in respect of the commencement of any proceedings pursuant to section 4042 of ERISA to terminate any Pension Plan or for the appointment of a trustee to administer any Pension Plan, (ii) any distress termination notice delivered to the PBGC under section 4041 of ERISA in respect of any Pension Plan, and any determination of the PBGC in respect thereof, 43 (iii) the placement of any Multiemployer Plan in reorganization status under Title IV of ERISA, (iv) any Multiemployer Plan becoming "insolvent" (as defined in section 4245 of ERISA) under Title IV of ERISA, (v) the whole or partial withdrawal of the Company or any ERISA Affiliate from any Multiemployer Plan and the withdrawal liability incurred in connection therewith, and (vi) the withdrawal of the Company or any ERISA Affiliate from any Multiple Employer Pension Plan and the withdrawal liability under ERISA incurred in connection therewith; in each of the cases specified in the foregoing clauses (i) through (vi), inclusive, where the effect of such conditions or events or of events or conditions related thereto could reasonably be expected to have a Material Adverse Effect; (k) Notice of Default or Event of Default - immediately upon becoming aware of the existence of any condition or event that constitutes a Default or an Event of Default, a written notice specifying the nature and period of existence thereof or of such failure and what action the Company is taking or proposes to take with respect thereto; (l) Notice of Claimed Default - immediately upon becoming aware that the holder of any Note, or of any evidence of indebtedness or other Security of the Company or any Subsidiary, shall have given notice or taken any other action with respect to a claimed Default, Event of Default, default or event of default, a written notice specifying the notice given or action taken by such holder and the nature of the claimed Default, Event of Default, default or event of default and what action the Company is taking or proposes to take with respect thereto; (m) Notice of Violation of Environmental Protection Law - promptly upon becoming aware of the existence of any violation by the Company or any Subsidiary of any Environmental Protection Law that could reasonably be expected to have a Material Adverse Effect, a written notice specifying the nature and period of such violation and what action any one or more of the Company and such Subsidiary, as the case may be, are taking or propose to take with respect thereto; (n) Information furnished to Banks, etc. - not later than the time furnished to any of the Banks or any agent acting for the Banks under the Credit Agreement, copies of each report, statement, document, notice or other item furnished pursuant to Article VIII of the Credit Agreement or any related instrument, agreement or other document; 44 (o) Monthly Financial Report - as soon as practicable after the end of each quarterly fiscal period in each fiscal year of the Company, and in any event within thirty (30) days thereafter, a copy of the "Financial Report" (the Company's monthly internal operating report) together with the schedules that are supplemental thereto; and (p) Requested Information - with reasonable promptness, such other data and information as from time to time may be reasonably requested by any holder of Notes, including, without limitation, (i) copies of any statement, report or certificate furnished to any holder of Debt of the Company or any Subsidiary, (ii) information requested to comply with any request of the National Association of Insurance Commissioners in respect of the designation of the Notes, and (iii) information requested to comply with 17 C.F.R. (S)230.144A, as amended from time to time, (any such request with respect to the data and information referred to in the foregoing clauses (i), (ii) and (iii) being deemed to be reasonable for purposes of this clause (p)). 9.2. Officers' Certificates. Each set of financial statements delivered to each holder of Notes pursuant to Section 9.1(b) or Section 9.1(c) hereof shall be accompanied by a certificate of the Vice President-Finance and Control or the Executive Vice President-Chief Financial Officer of the Company setting forth: (a) Covenant Compliance - the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Sections 8.11 through Section 8.17 hereof, inclusive, and Sections 8.19, 8.20 and 8.23 during the period covered by the income statement then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amounts, ratio or percentage then in existence); and (b) Event of Default - a statement that the signers have reviewed the relevant terms hereof and have made, or caused to be made, under their supervision, a review of the transactions and conditions of the Company and the Subsidiaries from the beginning of the accounting period covered by the income statements being delivered therewith to the date of the certificate and 45 that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. 9.3. Accountants' Certificates. Each set of annual financial statements delivered pursuant to Section 9.1(c) shall be accompanied by a certificate of the accountants who certify such financial statements, stating that they have reviewed this Agreement and stating further, whether, in making their audit, such accountants have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if such accountants are aware that any such condition or event then exists, specifying the nature and period of existence thereof. 9.4. Quarterly Review With Financial Advisor. Within ten (10) Business Days of the delivery of the financial statements provided pursuant to Section 9.1(b) for each quarterly period ending on or prior to an Acceptable SBQ Asset Sale, the Company will cause its Chief Financial Officer or Vice President-Finance and Control to meet, either in person at the Company's executive office or via telephone conference call, with a representative of Nightingale or such other Person designated by the Majority Holders to discuss the Company's financial condition and results of operations as such condition and results of operations relate to the Company's projections for such items previously delivered to Nightingale or the holders of the Notes. The Company agrees to pay, for each such quarterly period, Nightingale's fees in connection with such review and any reporting thereof to the holders of the Notes in an amount not to exceed Three Thousand Dollars ($3,000), plus its reasonable out-of-pocket costs and expenses in connection therewith. 9.5. Inspection. The Company will permit the representatives of each holder of Notes, once only during each fiscal quarter of the Company at such reasonable time as may be requested by such holder, to visit and inspect any of the Properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants (and by this provision the Company authorizes such accountants to discuss the finances and affairs of the Company and the Subsidiaries), provided that during any time when an Event of Default exists, any such inspection or visit shall be at the expense of the Company and may be made as often as may be requested. 46 10. EVENTS OF DEFAULT 10.1. Nature of Events. An "Event of Default" shall exist if any of the following occurs and is continuing: (a) Principal or Make-Whole Amount Payments - the Company shall fail to make any payment of principal or Make-Whole Amount on any Note on or before the date such payment is due; (b) Certain Prepayments - the Company shall fail to fulfill any of its obligations set forth in Section 6.1 hereof; (c) Interest Payments - the Company shall fail to make any payment of interest on any Note on or before five (5) Business Days after the date such payment is due; (d) Other Defaults - the Company or any Subsidiary shall fail to comply with any other provision of this Agreement or any other Financing Document, and such failure shall continue for more than thirty (30) days after such failure shall first become known to any officer of the Company; (e) Warranties or Representations - any warranty, representation or other statement by or on behalf of the Company contained in this Agreement or any other Financing Document or in any instrument furnished in compliance with or in reference to this Agreement or any other Financing Document shall have been false or misleading in any material respect when made or deemed made; (f) Default on Debt or Other Security - (i) the Company or any Restricted Subsidiary shall fail to make any payment on any Debt when due, or (ii) any event shall occur or any condition shall exist in respect of Debt or any Security of the Company or any Restricted Subsidiary, or under any agreement securing or relating to such Debt or Security, that immediately or with any one or more of (x) the passage of time, (y) the giving of notice or (z) the expiration of waivers or modifications granted in respect of such event or condition: (A) causes (or permits any one or more of the holders thereof or a trustee therefor to cause) such Debt or Security, or a portion thereof, to become due prior to its stated maturity or prior to its regularly scheduled date or dates of payment; or 47 (B) permits any one or more of the holders thereof or a trustee therefor to require the Company or any Restricted Subsidiary to repurchase such Debt or Security; provided that either such Debt is outstanding under the Credit Agreement or the aggregate amount of all obligations in respect of such Debt and Securities exceeds at such time Ten Million Dollars ($10,000,000); provided, further, however, this clause (ii) shall not be deemed to apply to the Debt evidenced by the industrial revenue bonds described in Schedule 3.8 to the Waiver and Third Amendment which are supported by letters of credit issued for the account of the Company or American Steel & Wire Corporation; (g) Involuntary Bankruptcy Proceedings - (i) a receiver, liquidator, custodian or trustee of the Company, or any Restricted Subsidiary, or of all or any of the Property of either, shall be appointed by court order and such order remains in effect for more than forty-five (45) days; or an order for relief shall be entered with respect to the Company or any Restricted Subsidiary, or the Company or any Restricted Subsidiary shall be adjudicated a bankrupt or insolvent, (ii) any of the Property of the Company or any Restricted Subsidiary shall be sequestered by court order and such order remains in effect for more than forty-five (45) days, or (iii) a petition shall be filed against the Company or any Restricted Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and shall not be dismissed within forty-five (45) days after such filing; (h) Voluntary Petitions - the Company or any Restricted Subsidiary shall file a petition in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or shall consent to the filing of any petition against it under any such law; (i) Assignments for Benefit of Creditors, etc. - the Company or a Restricted Subsidiary shall make an assignment for the benefit of its creditors, or shall admit in writing its inability, or shall fail, to pay its debts generally as they become due, or shall consent to the appointment of a receiver, liquidator or trustee of the Company or a Restricted Subsidiary or of all or any part of the Property of either; 48 (j) Undischarged Final Judgments - a final judgment or final judgments for the payment of money aggregating in excess of Ten Million Dollars ($10,000,000) shall be outstanding against one or more of the Company and the Restricted Subsidiaries and any one of such judgments shall have been outstanding for more than thirty (30) days from the date of its entry and shall not have been discharged in full or stayed; or (k) Other Financing Documents - (i) the Guaranty Agreement or any Security Document shall cease to be in full force and effect or shall be declared by a court or Governmental Authority of competent jurisdiction to be void, voidable or unenforceable against the Company or any Restricted Subsidiary which is a party to such Financing Document; (ii) the Company or any Restricted Subsidiary shall disavow, revoke or terminate any Financing Document to which it is a party or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of any Financing Document; or (iii) the Collateral Agent shall, for a period of thirty (30) days, cease to have a valid and perfected first-priority security interest (subject only to Liens permitted by the Financing Documents) in Collateral having an aggregate book value in excess of Five Million Dollars ($5,000,000), or in any other material portion of the Collateral, for any reason other than the failure of the Collateral Agent to take any action within its control. 10.2. Default Remedies. (a) Acceleration on Event of Default. (i) If an Event of Default specified in clause (g), (h) or (i) of Section 10.1 hereof shall exist, all of the Notes at the time outstanding shall automatically become immediately due and payable together with interest accrued thereon and, to the extent permitted by law, the Make-Whole Amount at such time with respect to the principal amount of such Notes, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived. (ii) If an Event of Default other than those specified in clause (g), (h) or (i) of Section 10.1 hereof shall exist, the holder or holders of at least thirty-five percent (35%) in principal amount of the Notes then outstanding (exclusive of Notes then owned by any one or more of the Company, any Restricted Subsidiary or any Affiliate) may exercise any 49 right, power or remedy permitted to such holder or holders by law, and shall have, in particular, without limiting the generality of the foregoing, the right to declare the entire principal of, and all interest accrued on, all the Notes then outstanding to be, and such Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and the Company shall forthwith pay to the holder or holders of all the Notes then outstanding the entire principal of, and interest accrued on, the Notes and, to the extent permitted by law, the Make-Whole Amount at such time with respect to such principal amount of such Notes. (b) Acceleration on Payment Default. During the existence of an Event of Default described in Section 10.1(a), Section 10.1(b) or Section 10.1(c) hereof, and irrespective of whether the Notes then outstanding shall have been declared to be due and payable pursuant to Section 10.2(a)(ii) hereof, any holder of Notes that shall have not consented to any waiver with respect to such Event of Default may, at its option, by notice in writing to the Company, declare the Notes then held by such holder to be, and such Notes shall thereupon become, forthwith due and payable together with all interest accrued thereon, without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and the Company shall forthwith pay to such holder the entire principal of and interest accrued on such Notes and, to the extent permitted by law, the Make-Whole Amount at such time with respect to such principal amount of such Notes. (c) Valuable Rights. The Company acknowledges, and the parties hereto agree, that the right of each holder to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) is a valuable right and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. (d) Other Remedies. During the existence of an Event of Default and irrespective of whether the Notes then outstanding shall have been declared to be due and payable pursuant to Section 10.2(a)(ii) hereof and irrespective of whether any holder of Notes then outstanding shall otherwise have pursued or be pursuing any other rights or remedies, any holder of Notes may proceed to protect and enforce its rights under this Agreement, under such Notes and under the other Financing Documents by exercising such remedies as are available to such holder in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any agreement contained herein or in aid of the exercise of any power granted herein, provided that the maturity of such 50 holder's Notes may be accelerated only in accordance with Section 10.2(a) and Section 10.2(b) hereof. (e) Nonwaiver and Expenses. No course of dealing on the part of any holder of Notes nor any delay or failure on the part of any holder of Notes to exercise any right shall operate as a waiver of such right or otherwise prejudice such holder's rights, powers and remedies. If the Company shall fail to pay when due any principal of, or Make-Whole Amount or interest on, any Note, or shall fail to comply with any other provision hereof, the Company shall pay to each holder of Notes, to the extent permitted by law, such further amounts as shall be sufficient to cover the costs and expenses, including, but not limited to, reasonable attorneys' fees, incurred by such holder in collecting any sums due on such Notes or in otherwise assessing, analyzing or enforcing any rights or remedies that are or may be available to it. 10.3. Annulment of Acceleration of Notes. If a declaration is made pursuant to Section 10.2(a)(ii) hereof, then and in every such case, the holders of sixty-six percent (66%) in aggregate principal amount of the Notes then outstanding (exclusive of Notes then owned by any one or more of the Company, any Restricted Subsidiaries and any Affiliates) may, by written instrument filed with the Company, rescind and annul such declaration, and the consequences thereof, provided that at the time such declaration is annulled and rescinded: (a) no judgment or decree shall have been entered for the payment of any moneys due on or pursuant hereto or the Notes; (b) all arrears of interest upon all the Notes and all other sums payable hereunder and under the Notes (except any principal of, or interest or Make-Whole Amount on, the Notes that shall have become due and payable by reason of such declaration under Section 10.2(a)(ii) hereof) shall have been duly paid; and (c) each and every other Default and Event of Default shall have been waived pursuant to Section 12.5 hereof or otherwise made good or cured, and provided further that no such rescission and annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. 51 11. INTERPRETATION OF THIS AGREEMENT 11.1. Terms Defined. As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: Acceptable Insurer - means any financially sound and reputable insurance company accorded a rating by A.M. Best Company of "A-" or better and a size rating of "VI" or better (or a comparable rating by any comparable successor rating agency). Acceptable SBQ Asset Sale - means a sale by the Company of the SBQ Division (Memphis/Cleveland). Accession Agreement - means an Accession Agreement in the form attached as Exhibit F to the Omnibus Collateral Agreement. Affiliate - means, at any time, a Person (other than a Restricted Subsidiary) (a) that directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, the Company, (b) that beneficially owns or holds five percent (5%) or more of any class of the Voting Stock of the Company, or (c) five percent (5%) or more of the Voting Stock (or in the case of a Person that is not a corporation, five percent (5%) or more of the equity interest) of which is beneficially owned or held by the Company or a Subsidiary, at such time. As used in this definition: Control - means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Agreement, this - means this agreement, as it may be amended and restated from time to time. AIR - means American Iron Reduction, L.L.C., a limited liability company organized under the laws of the State of Delaware. 52 Amended Notes - Section 1.2(b). Banks - means the lending institutions listed on the signature pages of the Credit Agreement and their respective successors and assigns. Board of Directors - means, at any time, the board of directors of the Company or any committee thereof that, in the instance, shall have the lawful power to exercise the power and authority of such board of directors. BSE - means Birmingham Southeast, LLC, a limited liability company organized under the laws of the State of Delaware. Business Day - means a day other than a Saturday, a Sunday or, if the provisions of Section 4.1 hereof are applicable with respect to any Note, a day on which the bank designated (by the holder of such Note) to receive (for such holder's account) payments on such Note is required by law (other than a general banking moratorium or holiday for a period exceeding four (4) consecutive days) to be closed. Capital Expenditures - means, with respect to any Person, all expenditures made and liabilities incurred for the acquisition of assets which are not, in accordance with GAAP, treated as expense items for such Person in the year made or incurred or as a prepaid expense applicable to a future year or years, and shall include all Capitalized Lease obligations. Capitalized Lease - means, at any time, a lease with respect to which, under GAAP, the lessee is or will be required to recognize the acquisition of an asset and the incurrence of a liability at such time. Change in Control - means any Acquisition subsequent to the Original Closing Date by any Person, or related Persons constituting a "group" (as such term is defined in section 13(d) of the Securities Exchange Act of 1934), of (a) the power to elect, appoint or cause the election or appointment of at least a majority of the members of the Board of Directors (other than the normal acquisition of proxies by the then current Board of Directors), through beneficial ownership of the capital stock of the Company or otherwise, or (b) all or substantially all of the properties and assets of the Company; provided, however, that a Change in Control pursuant to the foregoing clause (b) shall not be deemed to have occurred if no Person, or related Persons constituting a "group" for purposes of section 13(d) of the Securities Exchange Act of 1934, shall have the 53 power to elect, appoint or cause the election or appointment of at least a majority of the members of the board of directors of such successor or transferee. For purposes of this definition "Acquisition" of the power or properties and assets stated in the preceding sentence means the earlier of (i) the actual possession thereof and (ii) the consummation of any transaction or series of related transactions which, with the passage of time, will give such Person or Persons the actual possession thereof. Closing - Section 1.3. Collateral - has the meaning specified in the Intercreditor Agreement. Collateral Agent - has the meaning specified in the Intercreditor Agreement. Commitment - has the meaning specified in the Credit Agreement as in effect on the Effective Date. Company - has the meaning specified in the introductory sentence hereof. Consolidated EBITDA - means, for any period, the sum of (a) Consolidated Net Income for such period, plus (b) the aggregate amount of (i) taxes imposed on, or measured by, income or excess profits, (ii) Consolidated Interest Expense, and (iii) depreciation and amortization for such period (to the extent, and only to the extent, that any such amount in clauses (i), (ii) or (iii) was deducted in the computation of Consolidated Net Income for such period), in each case accrued for such period by the Company and the Restricted Subsidiaries, determined on a consolidated basis for such Persons. Consolidated EBITDAR - means, for any period, the sum of (a) Consolidated EBITDA for such period, plus (b) Rental Expense for such period (to the extent, and only to the extent, deducted in the computation of Consolidated Net Income for such period). Consolidated Interest Expense - means, for any period, all interest charges for such period accrued on or with respect to Debt of the Company and the Restricted Subsidiaries (including, without limitation, amortization of debt discount and expense and imputed interest on Capitalized Lease obligations). Consolidated Net Income - means, with respect to the Company and the Restricted Subsidiaries for any period of computation thereof, the net income (or loss) 54 of the Company and the Restricted Subsidiaries on a consolidated basis for such period; provided, however, that the following shall be excluded when determining Consolidated Net Income: (a) any item of gain or loss resulting from the sale, conversion or other disposition of plant, property and equipment; (b) gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of the Company and the Restricted Subsidiaries; (c) the income (or loss) for such fiscal period of any Person prior to the date such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any of the Restricted Subsidiaries, or such Person's assets are acquired by the Company or any of the Restricted Subsidiaries; (d) any write-up of any asset; (e) any other net gains or losses of an extraordinary nature as determined in accordance with GAAP; (f) any earnings attributable to the amortization of negative goodwill; (g) that portion of net earnings of any Restricted Subsidiary that is unavailable for payment as dividends to the Company or another Restricted Subsidiary as a result of a legal or contractual prohibition, unless such portion of such net earnings is legally available for either: (x) reimbursement to the Company or another Restricted Subsidiary for advances, loans or allocated expenses, or (y) advances or loans to the Company or another Restricted Subsidiary; (h) pre-operating/start-up costs as would be set forth in the financial statements of the Company and the Restricted Subsidiaries for such period prepared in accordance with GAAP; provided, however, the amount of such costs excluded for a fiscal quarter occurring during any such period shall not exceed the following amounts: (w) $10,000,000 for the fiscal quarter ending on September 30, 1999; (x) $8,000,000 for the fiscal quarter ending December 31, 1999; (y) $5,000,000 for the fiscal quarter ending March 31, 2000; and (z) $0 for each fiscal quarter ended thereafter; (i) any losses on disposal of the SBQ Division; and 55 (j) any non-cash charges relating to the restructuring of, or write- down of the investments of the Company in, AIR and PCR. For purposes of calculating Consolidated Net Income, the amount shall include income from both continuing and discontinued operations, except that adjustments to the allowance for discontinued operations and the related tax effects shall be excluded from such amount. Consolidated Tangible Net Worth - means (a) the Company's stockholder's equity which would appear as such on a consolidated balance sheet of the Company and the Restricted Subsidiaries prepared in accordance with GAAP less (b) all intangible items reflected therein, including all goodwill, all intangible plant expansion costs, all unamortized debt discount and expense, unamortized research and development expense, unamortized deferred charges, patents, trademarks, service marks, trade names and copyrights, unamortized excess cost of investment in Subsidiaries over equity at dates of acquisition, and all similar items which should properly be treated as intangibles in accordance with GAAP. Control Event - means the execution of any written agreement that, when fully performed by the parties thereto, would result in a Change in Control. Control Prepayment Date - Section 6.1. Credit Agreement - means that certain Credit Agreement dated as of March 17, 1997, by and among the Company, Bank of America, N.A., as agent, and the Banks, as may be amended, restated or modified from time to time. Debt - means, with respect to a Person and at the time of determination thereof, all of the following (without duplication): (a) obligations of such Person in respect of money borrowed; (b) obligations of such Person (other than trade debt incurred in the ordinary course of business), (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property; (c) obligations of such Person in respect of mandatorily redeemable Securities issued by such Person; (d) Capitalized Lease obligations of such Person; 56 (e) all reimbursement obligations of such Person under any letters of credit or acceptances (whether or not the same have been presented for payment); and (f) all Debt of other Persons which (i) such Person has Guaranteed or (ii) are secured by a Lien on any property of such Person (whether or not such Person has assumed liability with respect to such Debt). Debt to Consolidated EBITDA Ratio - means, for any Four-Quarter Period of determination, the ratio of (a) Debt of the Company and the Restricted Subsidiaries as determined on a consolidated basis at the end of such period to (b) Consolidated EBITDA for such period. Default - means an event or condition the occurrence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. DOL - means the Department of Labor of the United States of America or any successor organization thereof. Dollars or $ - means United States of America dollars. Effective Date - means October 12, 1999. Environmental Protection Law - means any federal, state, county, regional or local law, statute or regulation (including, without limitation, CERCLA, RCRA and SARA) enacted in connection with or relating to the protection or regulation of the environment, including, without limitation, those laws, statutes and regulations regulating the disposal, removal, production, storing, refining, handling, transferring, processing or transporting of Hazardous Substances, and any regulations, issued or promulgated in connection with such statutes by any Governmental Authority and any orders, decrees or judgments issued by any court of competent jurisdiction in connection with any of the foregoing. As used in this definition: CERCLA - means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time (by SARA or otherwise), and all rules and regulations promulgated in connection therewith. RCRA - means the Resource Conservation and Recovery Act of 1976, as amended from time to time, and all rules and regulations issued in connection therewith. 57 SARA - means the Superfund Amendments and Reauthorization Act of 1986, as amended from time to time, and all rules and regulations promulgated in connection therewith. Equity Issuance - has the meaning specified in the Intercreditor Agreement (as in effect on the Effective Date). ERISA - means the Employee Retirement Income Security Act of 1974, as amended from time to time. ERISA Affiliate - means any corporation or trade or business that (i) is a member of the same controlled group of corporations (within the meaning of section 414(b) of the IRC) as the Company, or (ii) is under common control (within the meaning of section 414(c) of the IRC) with the Company. Event of Default - Section 10.1. Existing Reimbursement Agreements - means (a) that certain Amended and Restated Reimbursement Agreement, dated as of October 12, 1999, among the Company, American Steel & Wire Corporation and Bank of America, N.A., (b) that certain Reimbursement Agreement, dated as of October 1, 1996, between PNC Bank, National Association successor to PNC Bank, Kentucky, Inc. and the Company, and (c) that certain Reimbursement Agreement, dated as of August 15, 1995, between the Company and PNC Bank, National Association, successor to PNC Bank, Kentucky, Inc. Fair Market Value - means, at any time, with respect to any Property, the sale value of such Property that would be realized in an arm's-length sale at such time between an informed and willing buyer, and an informed and willing seller, under no compulsion to buy or sell, respectively. Financing Documents - means this Agreement, the Notes, the Omnibus Collateral Agreement, the Guaranty Agreement, the Intercreditor Agreement, the Security Documents and all other documents, instruments and agreements executed in connection therewith or contemplated thereby, as the same may be amended, restated or otherwise modified from time to time. Fixed Charge Coverage Ratio - means, with respect to any period of determination, the ratio of (a) Consolidated EBITDAR for such period to (b) the sum of (i) Consolidated Interest Expense for such period plus (ii) Rental Expense for such period plus (iii) the aggregate amount of all scheduled principal payments on 58 Debt made by the Company and the Restricted Subsidiaries during such period (excluding any payments made by the Company to PNC Bank, National Association in respect of reimbursement obligations owing in connection with Irrevocable Letter of Credit No. 14321 dated August 30, 1995 issued by PNC Bank, Kentucky, Inc. for the benefit of PNC Bank, Kentucky, Inc. (predecessor to The Chase Manhattan Trust Company, National Association), as Trustee and having an initial stated amount of $10,493,151), plus (iv) the aggregate amount of all cash dividends paid by the Company with respect to any of its capital stock during such period. Foreign Pension Plan - means any plan, fund or other similar program (a) established or maintained outside of the United States of America by any one or more of the Company or the Subsidiaries primarily for the benefit of the employees (substantially all of whom are aliens not residing in the United States of America) of the Company or such Subsidiaries which plan, fund or other similar program provides for retirement income for such employees or results in a deferral of income for such employees in contemplation of retirement, and (b) not otherwise subject to ERISA. Four-Quarter Period - means a period of four full consecutive fiscal quarters of the Company and the Restricted Subsidiaries, taken together as one accounting period, and unless set forth herein to the contrary, shall mean the four full consecutive fiscal quarters of the Company and the Restricted Subsidiaries ending on (or most recently ending before) the date of any computation of any given financial ratio or covenant contained herein. GAAP - means accounting principles as promulgated from time to time in statements, opinions and pronouncements by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board and in such statements, opinions and pronouncements of such other entities with respect to financial accounting of for-profit entities as shall be accepted by a substantial segment of the accounting profession in the United States. Governmental Authority - means (a) the government of (i) the United States of America and any State or other political subdivision thereof, or (ii) any jurisdiction (y) in which the Company or any Subsidiary conducts all or any part of its business or (z) that 59 asserts jurisdiction over the conduct of the affairs or Properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. Guarantor - means, at any time, any Restricted Subsidiary that is a Guarantor at such time under the Guaranty Agreement. Guaranty - means with respect to any Person (for the purposes of this definition, the "Guarantor") any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person (the "Primary Obligor") in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by the Guarantor: (a) to purchase such indebtedness or obligation or any Property or assets constituting security therefor; (b) to advance or supply funds (i) for the purpose of payment of such indebtedness or obligation, or (ii) to maintain working capital or other balance sheet condition or any income statement condition of the Primary Obligor or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease Property or to purchase Securities or other Property or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of the Primary Obligor to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of the indebtedness or obligation of the Primary Obligor against loss in respect thereof. For purposes of computing the amount of any Guaranty, in connection with any computation of indebtedness or other liability, it shall be assumed that the indebtedness or other liabilities that are the subject of such Guaranty are direct obligations of the issuer of such Guaranty. 60 Guaranty Agreement - means that certain Guaranty Agreement, dated as of the Effective Date, entered into by each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent, as the same may be amended, restated, modified or supplemented (including to add new Guarantors), and as in effect from time to time. Hazardous Substances - means any and all pollutants, contaminants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law. Indebtedness - means, at any time, with respect to any Person, without duplication, (a) its liabilities for borrowed money (whether or not evidenced by a Security) and its obligations in respect of mandatorily redeemable preferred stock; (b) any liabilities for borrowed money secured by any Lien existing on Property owned by such Person (whether or not such liabilities have been assumed); (c) any obligations in respect of any Capitalized Lease of such Person; (d) the present value of all payments due under any arrangement for retention of title or any conditional sale agreement (other than a Capitalized Lease) discounted at the implicit rate, if known, with respect thereto or, if unknown, at 8% per annum; (e) obligations of such Person in respect of letters of credit or instruments serving a similar function issued or accepted by banks and other financial institutions for the account of such Person (whether or not representing obligations for borrowed money); and (f) any Guaranty of such Person of any Indebtedness of another Person. Institutional Investor - means the Purchasers, any affiliate of any of the Purchasers, and any holder of Notes that is an "accredited investor" as defined in section 2(15) of the Securities Act. 61 Intercreditor Agreement - means that certain Collateral Agency and Intercreditor Agreement dated as of the Effective Date, among the Collateral Agent, the Banks, the L/C Issuers, the holders of the 1995 Notes, the holders of the Notes, The Chase Manhattan Trust Company, National Association, as successor to PNC Bank, National Association, as successor to PNC Bank, Kentucky, Inc., in the capacity specified therein, First Union National Bank, in the capacity specified therein, the Company and each of the Restricted Subsidiaries identified on the signature pages thereto, as amended from time to time. Investment - means any investment, made in cash or by delivery of Property, by the Company or any Restricted Subsidiary (x) in any Person, whether by acquisition of stock, indebtedness or other obligation or Security, or by loan, Guaranty, advance or capital contribution, or otherwise, or (y) in any Property. IRC - means the Internal Revenue Code of 1986, together with all rules and regulations promulgated pursuant thereto, as amended from time to time. IRS - means the Internal Revenue Service and any successor agency. L/C Issuer - means, with respect to the Existing Reimbursement Agreements, Bank of America, N.A. and PNC Bank, National Association, as applicable. Lien - means any interest in Property constituting any pledge, assignment, hypothecation, mortgage, security interest, deposit arrangement, conditional sale or title retaining contract, sale and leaseback transaction, financing statement filing, lessor's or lessee's interest under any lease, subordination of any claim or right, or any type of lien, charge, encumbrance, preferential arrangement or other claim or right. The term "Lien" includes, with respect to stock, stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements. For the purposes hereof, the Company and each Subsidiary is deemed to be the owner of any Property that it shall have acquired or holds subject to a conditional sale agreement, Capitalized Lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes, and such retention or vesting is deemed a Lien. Majority Holders - means, at any time, the holders of at least fifty-one percent (51%) in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by any one or more of the Company, any Restricted Subsidiary, any Affiliate and any officer or director of any thereof). Make-Whole Amount - means, with respect to any date (the "Payment Date"), and any principal amount of Notes required for any reason to be paid prior to the regularly scheduled maturity thereof on such Payment Date: 62 (a) if the Make-Whole Discount Rate, determined with respect to such principal amount and such Payment Date, equals or exceeds seven and twenty- eight one-hundredths percent (7.28%) per annum, then Zero Dollars ($0); or (b) if the Make-Whole Discount Rate, determined with respect to such principal amount and such Payment Date, is less than seven and twenty-eight one-hundredths percent (7.28%) per annum, then (i) the sum of the present values of the then remaining scheduled payments of principal and interest for the Notes (on the basis of the interest rate applicable to the Original Notes) that would be payable in respect of such principal amount but for such prepayment or acceleration, minus (ii) such principal amount plus the amount of interest accrued on such principal amount since the scheduled interest payment date immediately preceding such Payment Date. In determining such present values, a discount rate equal to the Make-Whole Discount Rate (with respect to the Payment Date and such principal amount) divided by two (2), and a discount period of six (6) months of thirty (30) days each, shall be used. Make-Whole Discount Rate - means, with respect to any date and any principal amount of Notes required for any reason to be paid prior to the regularly scheduled maturity thereof on such date, the sum of (a) the Treasury Rate with respect to such principal amount and such date, plus (b) if such payment is made (i) pursuant to Section 5.2(b) hereof, one percent (1.00%) per annum, or (ii) pursuant to Section 6.1 hereof, one hundred twenty-five one- hundredths percent (1.25%) per annum, or (iii) pursuant to any provision of this Agreement other than Section 5.2(b) or Section 6.1 hereof, fifty one-hundredths percent (0.50%) per annum. As used in this definition only: 63 Remaining Dollar-Years - means, with respect to any date and any principal amount of Notes being paid prior to the regularly scheduled maturity thereof for any reason on such date, the result obtained by (a) multiplying, in the case of each required payment of principal (including payment at maturity) that would be payable in respect of such principal amount being so prepaid but for such prepayment, (i) an amount equal to such required payment of principal, by (ii) the number of years (calculated to the nearest one- twelfth (1/12)) that will elapse between such date and the date such required principal payment would be due if such prepayment had not occurred, and (b) calculating the sum, with respect to each of such required payments of principal, of each of the products obtained in the preceding subsection (a). Treasury Rate - means, with respect to any date and any principal amount of Notes of required for any reason to be paid prior to the regularly scheduled maturity thereof on such date, (a) the yield reported as of 10:00 a.m., New York City time, on the day on which such calculation is being made, on the display designated as "Page 678" on the Bridge Telerate (or such other display as may replace Page 678 on the Bridge Telerate) (or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in United States government Securities) providing the most current yields for actively traded United States Treasury securities with maturities corresponding to the remaining Weighted Average Life to Maturity on such date of such principal amount of the Notes (such Weighted Average Life to Maturity being determined as of the date of such calculation and rounded to the nearest month), or (b) if and only if such Bridge Telerate ceases to exist or fails to report such yield, such yield as reported on a reasonably comparable electronic service as may be designated by the Majority Holders, or (c) if and only if such Bridge Telerate ceases to exist or fails to report such yield and the Majority Holders shall fail to agree upon a 64 comparable electronic service pursuant to clause (b) of this definition, such yield reported under the heading "Week Ending" for the week most recently ended and under the caption "Treasury Constant Maturities" of the maturity corresponding to the remaining Weighted Average Life to Maturity on such date of such principal amount of the Notes being prepaid or accelerated (such Weighted Average Life to Maturity being determined as of the date of such calculation and rounded to the nearest month) as most recently published and made available to the public in the statistical release designated "H.15(519)" or any successor publication that is published weekly by the Federal Reserve System and that establishes yields on actively traded United States Treasury securities or, if no such successor publication is available, then any other source of current information in respect of interest rates on the securities of the United States of America that is generally available and, in the judgment of the Majority Holders, provides information reasonably comparable to the H.15(519) statistical release. If no maturity exactly corresponds to such rounded Weighted Average Life to Maturity, yields for the two (2) most closely corresponding published maturities next above and below such rounded Weighted Average Life to Maturity shall be calculated pursuant to the immediately preceding sentence and the Treasury Rate shall be interpolated from such yields on a straight- line basis, rounding with respect to each such relevant period to the nearest month. Weighted Average Life to Maturity - means, with respect to any date and any principal amount of Notes being paid on such date, the number of years obtained by dividing the Remaining Dollar-Years on such date of such principal amount by such principal amount. Margin Security - means "margin stock" within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II, as amended from time to time. Material Adverse Effect - means a material adverse effect on (a) the business, prospects, profits, Properties or condition (financial or otherwise) of the Company and the Restricted Subsidiaries, taken as a whole, (b) the ability of the Company or any Restricted Subsidiary to perform its obligations under any of the Financing Documents to which it is a party, or (c) the validity or enforceability of any of the Financing Documents. Moody's - means Moody's Investors Service, Inc. Mortgages- means, collectively, those certain mortgages and deeds of trust, dated the Effective Date, executed by the Company and certain Restricted 65 Subsidiaries, respectively, in favor of the Collateral Agent, as more specifically identified in the Omnibus Collateral Agreement, together with any additional mortgages or deeds of trust executed and delivered pursuant to the terms of this Agreement or any other Financing Documents, in each case as amended, restated or otherwise modified from time to time. Multiemployer Plan - means any multiemployer plan (as defined in section 3(37) of ERISA) in respect of which the Company or any ERISA Affiliate is an "employer" (as defined in section 3 of ERISA). Multiple Employer Pension Plan - means any employee benefit plan within the meaning of section 3(3) of ERISA (other than a Multiemployer Plan), subject to Title IV of ERISA, to which the Company or any ERISA Affiliate and an employer (as defined in section 3 of ERISA) other than an ERISA Affiliate or the Company contribute. Net Proceeds - has the meaning specified in the Intercreditor Agreement, as in effect on the Effective Date. Nightingale - means Nightingale Associates, LLC. 1995 Notes - means the Company's 9.71% Series A Senior Notes due December 15, 2002, the Company's 9.82% Series B Senior Notes due December 15, 2005, and the Company's 9.92% Series C Senior Notes due December 15, 2005. Note Pledge Agreement - means that certain Note Pledge Agreement, dated as of the Effective Date, executed by the Company in favor of the Collateral Agent, as amended, restated or otherwise modified from time to time. Note Purchase Agreements - Section 1.1. Notes - Section 1.2(d). Off Balance Sheet Liabilities - means, with respect to any Person, all obligations of such Person under any synthetic lease, tax retention operating lease, off balance sheet loan or similar off balance sheet financing if the transaction giving rise to such obligation (a) is considered indebtedness for borrowed money for tax purposes but is classified as an operating lease or (b) does not (and is not required to pursuant to GAAP) appear as a liability on the balance sheet of such Person. Omnibus Collateral Agreement - means that certain Omnibus Collateral Agreement dated as of the Effective Date, executed by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the 66 Collateral Agent and the Secured Parties (as such term is defined therein), as amended, restated or otherwise modified from time to time. Original Bank Commitment Amount - means Three Hundred Million Dollars ($300,000,000). Original Closing Date - Section 1.3. Original Note Purchase Agreements - Section 1.1. Original Notes - Section 1.2(a). OSHA - means the Occupational Safety and Health Act of 1970, together with all rules, regulations and standards promulgated pursuant thereto, as amended from time to time. PBGC - means the Pension Benefit Guaranty Corporation and any successor corporation or governmental agency. PCR - means Pacific Coast Recycling, LLC, a limited liability company formed under the laws of the State of Delaware. Pension Plan - means, at any time, any "employee pension benefit plan" (as defined in section 3 of ERISA) maintained at such time by the Company or any ERISA Affiliate for employees of the Company or such ERISA Affiliate, excluding any Multiemployer Plan, but including, without limitation, any Multiple Employer Pension Plan. Performance Release Date - means the date on which the Company has delivered to the Majority Holders evidence satisfactory to the Majority Holders demonstrating that the Debt to Consolidated EBITDA Ratio calculated as of the end of two consecutive fiscal quarters of the Company ending after the Effective Date was less than 3.50 to 1.00. Permitted Investments - means any of the following Investments: (a) direct obligations of the United States of America or obligations guaranteed by the United States of America maturing no later than 365 days from the date of acquisition; (b) repurchase agreements or eurodollar deposits with, or certificates of deposit maturing no later than 365 days from the date of acquisition and issued by, banks having a combined capital and surplus of over Two Hundred 67 Fifty Million Dollars ($250,000,000) and rated at least A- by S&P, and at least A3 by Moody's; (c) Investment in commercial paper issued by corporations incorporated in the United States of America or any state thereof and maturing in 270 days or less and rated at least A-1 by S&P or P-1 by Moody's; (d) Investments in Property used in the ordinary course of business of the Company and the Guarantors; (e) Investments in AIR; (f) Investments in Restricted Subsidiaries which were Restricted Subsidiaries as of the Effective Date; (g) Investments in other Persons (whether a Person which became a Restricted Subsidiary after the Effective Date, an Unrestricted Subsidiary, or any unconsolidated Affiliate (excluding AIR)) not to exceed $3,000,000 in the aggregate during any period of twelve (12) consecutive months so long as, in the case of this clause (g) only, immediately prior to, and immediately after the consummation of such Investment, and after giving effect thereto, no Default or Event of Default would exist; and (h) loans and advances to employees (x) for moving, entertainment, travel and other similar expenses, (y) to finance tax liabilities incurred with respect to restricted stock bonuses and (z) for other purposes, so long as all such loans and advances referred to in the preceding clauses (x) through (z) are made in the ordinary course of the Company's business consistent with past practices and do not exceed Two Million Dollars ($2,000,000) in aggregate outstanding principal amount at any time. For purpose of this definition, an "Investment" shall include the direct or indirect acquisition, in one or a series of transactions, of any ongoing business, of all or substantially all of the assets of any Person, or of a division or asset group of a Person with identifiable net earnings (or loss), whether through purchase of assets, merger or otherwise. Following the Performance Release Date, the dollar amount limitation contained in the immediately preceding clause (g) shall no longer apply. Person - means an individual, partnership, corporation, trust, unincorporated organization, or a government or agency or political subdivision thereof. Placement Memorandum - Section 2.1. 68 Preferred Stock - means any class of capital stock of a corporation that is preferred over any other class of capital stock of such corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation. Property - means any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. Purchase Money Lien - means (a) any Lien held by any Person (whether or not the seller of such Property) on tangible Property (or a group of related items of Property the substantial portion of which are tangible) acquired or constructed by the Company or any Restricted Subsidiary, which Lien secures all or a portion of the related purchase price or construction costs of such Property, provided that such Purchase Money Lien (i) encumbers only Property acquired or constructed after the Effective Date and acquired with the proceeds of the Debt secured thereby, and (ii) such Lien is not thereafter extended to any other Property, and (b) any Lien existing on Property of any Person at the time it becomes a Restricted Subsidiary, provided that (i) no such Lien shall extend to or cover any Property other than the Property subject to such Lien at the time of any such transaction, and (ii) such Lien was not created in contemplation of any such transaction. Purchasers - Section 1.1. Rental Expense - means, with respect to any period of determination, lease, rental and all other payments made in respect of or in connection with the use of property (whether real, personal or mixed) by the Company and the Restricted Subsidiaries with respect to such period other than (a) payments with respect to Capitalized Leases and (b) payments made with respect to any operating lease under which the annual lease payments do not exceed Twenty-Five Thousand Dollars ($25,000) in the aggregate. Restricted Payment - means: (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock or other equity interest of the Company or any of the Restricted Subsidiaries now or hereafter outstanding, other than (i) a dividend payable solely in shares of that class of stock to the holders of that class and (ii) a distribution of Rights under, and as defined in, that certain Rights Agreement dated as of January 16, 1996 between the Company and First Union National Bank, successor to First Union National Bank of North Carolina, as such agreement has been amended prior to, and is in effect on, the Effective Date; 69 (b) any redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock or other equity interest of the Company or any of the Restricted Subsidiaries now or hereafter outstanding; (c) any payment or prepayment of principal of, premium, if any, or interest on, redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Debt of the Company or any of the Restricted Subsidiaries that is subordinated in right of payment and otherwise to the Notes or the obligations of the Restricted Subsidiaries that are Guarantors under the Guaranty Agreement; and (d) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of the Company or any of the Restricted Subsidiaries now or hereafter outstanding. Restricted Subsidiary - means, at any time, a corporation, (a) organized under the laws of the United States, Puerto Rico or Canada or a jurisdiction thereof at such time, (b) that conducts substantially all of its business and has substantially all of its Property within the United States, Puerto Rico and Canada at such time, and (c) at least eighty percent (80%) (by number of votes) of each class of Voting Stock of which and one hundred percent (100%) of all Preferred Stock and other equity Securities of which are legally and beneficially owned by the Company and its Wholly-Owned Restricted Subsidiaries at such time. S&P - means Standard & Poor's Rating Group, a division of McGraw-Hill, Inc. SBQ Asset Sale Prepayment - means a prepayment of the Notes in connection with an Acceptable SBQ Asset Sale pursuant to Section 5.2(d) hereof and in accordance with Section 4.1(b) of the Intercreditor Agreement. SBQ Division - means the "special bar quality" division of the Company and the Subsidiaries which includes (a) all assets of the Company located in, or related to its operations in, Memphis, Tennessee; (b) the assets of American Steel and Wire Corporation (and the Company's equity interests in American Steel and Wire Corporation) but excluding the "missile wire" facility located in Cleveland, Ohio; and 70 (c) the Company's equity interest in AIR. The SBQ Division, excluding the Company's equity interest in AIR, is referred to herein as "SBQ Division (Memphis/Cleveland)." Securities Act - means the Securities Act of 1933, as amended from time to time. Security - means "security" as defined by section 2(1) of the Securities Act. Security Agreement - means that certain Security Agreement, dated as of the Effective Date, executed by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent, as amended, restated or otherwise modified from time to time. Security Documents - means, collectively, the Mortgages, the Security Agreement, the Trademark/Copyright Security Agreement, the Stock Pledge Agreement, the Note Pledge Agreement and all other mortgages, deeds of trust, security agreements, pledges, powers of attorney, assignments, financing statements and all other written instruments and documents now or hereafter executed by or on behalf of the Company or any of the Restricted Subsidiaries for the direct or indirect benefit of the holders of the Notes, together with all agreements and documents referred to therein or contemplated thereby. Special Majority Holders - means, at any time, the holders of at least sixty-six and two-thirds percent (66-2/3%) in principal amount of the Notes at the time outstanding (exclusive of the Notes then owned by any one or more of the Company, any Restricted Subsidiary, any Affiliate or any officer or director thereof. Stock Pledge Agreement - means that certain Stock Pledge Agreement, dated as of the Effective Date, executed by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent, as amended, restated or otherwise modified from time to time. Subsidiary - means, at any time, a corporation of which the Company owns, directly or indirectly, more than fifty percent (50%) (by number of votes) of each class of Voting Stock at such time. Trademark/Copyright Security Agreement - means that certain Trademark and Copyright Collateral Assignment and Security Agreement, dated as of the Effective Date, executed by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent, as amended, restated or otherwise modified from time to time. 71 Transaction Documents - has the meaning specified in the Omnibus Collateral Agreement. Voting Stock - means capital stock of any class or classes of a corporation the holders of which are ordinarily, in the absence of contingencies, entitled to elect corporate directors (or Persons performing similar functions). Unrestricted Subsidiary - means, at any time, any Subsidiary that has been designated by the Company's Board of Directors as an Unrestricted Subsidiary, provided that at the time of such designation (a) the Subsidiary so designated neither owns, directly or indirectly, any Debt of the Company or any Restricted Subsidiary or any capital stock of any Restricted Subsidiary, (b) no Debt of such Subsidiary is guaranteed by the Company or a Restricted Subsidiary, and (c) no Default or Event of Default would occur as a result of such designation. Waiver and Third Amendment - Section 1.1. Wholly-Owned Restricted Subsidiary - means, at any time, any Restricted Subsidiary one hundred percent (100%) of all of the Debt and equity Securities (except directors' qualifying shares) of which are owned by any one or more of the Company and the Company's other Wholly-Owned Restricted Subsidiaries at such time. 72 11.2. GAAP. All accounting terms, ratios and measurements shall be interpreted or determined in accordance with GAAP except (x) the Company's compliance with the covenants contained in Section 8.11, Section 8.12 and, if applicable, Section 8.15 and calculations of the Debt to Consolidated EBITDA Ratio for purposes of determining the Performance Release Date shall be determined based on the financial statements required to be provided by the Company pursuant to Section 9.1(b) and (y) as otherwise expressly provided in this Agreement or any other Financing Document. If a change in GAAP occurs after the Effective Date and such change materially affects the ability of the Company to comply with the provisions of Section 8.11, Section 8.12 or Section 8.15 or any other financial covenant contained in this Agreement, the Company and the holders of the Notes shall enter into good faith negotiations with a view to amending such provisions with the desired result that determination of the Company's compliance with such provisions taking into account such change in GAAP will be as close as possible to the determination of the Company's compliance with such provisions prior to such change. 11.3. Directly or Indirectly. Where any provision herein refers to action to be taken by any Person, or that such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, including actions taken by or on behalf of any partnership in which such Person is a general partner. 11.4. Section Headings and Table of Contents and Construction. (a) Section Headings and Table of Contents, etc. The titles of the Sections and the Table of Contents appear as a matter of convenience only, do not constitute a part hereof and shall not affect the construction hereof. The words "herein," "hereof," "hereunder" and "hereto" refer to this Agreement as a whole and not to any particular Section or other subdivision. (b) Construction. Each covenant contained herein shall be construed (absent an express contrary provision herein) as being independent of each other covenant contained herein, and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with one or more other covenants. 11.5. Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW. 73 12. MISCELLANEOUS 12.1. Communications. (a) Method; Address. All communications hereunder or under the Notes shall be in writing, shall be hand delivered, deposited into the United States mail (registered or certified mail), postage prepaid, or sent by overnight courier, and shall be addressed, (i) if to the Company, 1000 Urban Center Drive, Suite 300 Birmingham, Alabama 35242-2516 Attention: Chief Financial Officer provided, that the failure to provide any such copy shall in no way affect the validity of any communication to the Company for purposes of this Agreement), or at such other address as the Company shall have furnished in writing to all holders of the Notes at the time outstanding, and (ii) if to any of the holders of the Notes, (A) if such holders are the Purchasers, at their respective addresses set forth on Annex 1 hereto, and further including any parties referred to on such Annex 1 that are required to receive notices in addition to such holders of the Notes, and (B) if such holders are not the Purchasers, at their respective addresses set forth in the register for the registration and transfer of Notes maintained pursuant to Section 8.3 hereof, or to any such party at such other address as such party may designate by notice duly given in accordance with this Section 12.1 to the Company (which other address shall be entered in such register). (b) When Given. Any communication so addressed and deposited in the United States mail, postage prepaid, by registered or certified mail (in each case, with return receipt requested) shall be deemed to be received on the third (3rd) succeeding Business Day after the day of such deposit (not including the date of such deposit). Any notice so addressed and otherwise delivered shall be deemed to be received when actually received at the address of the addressee. 74 12.2. Reproduction of Documents. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the closing of your purchase of the Notes (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to you or any other holder of Notes, may be reproduced by any holder of Notes by any photographic, photostatic, microfilm, micro-card, miniature photographic, digital or other similar process and each holder of Notes may destroy any original document so reproduced. The Company agrees and stipulates that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such holder of Notes in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. Nothing in this Section 12.2 shall prohibit the Company or any holder of Notes from contesting the accuracy of any such reproduction. 12.3. Survival. All warranties, representations, certifications and covenants made by the Company herein or in any certificate or other instrument delivered by it or on its behalf hereunder shall be considered to have been relied upon by you and shall survive the delivery to you of the Amended Notes regardless of any investigation made by you or on your behalf. The representations made in Section 1.4 hereof shall be considered to have been relied upon by the Company and shall survive the execution and delivery of this Agreement and delivery to you of the Amended Notes regardless of any investigation made by the Company or on its behalf. All statements in any such certificate or other instrument shall constitute warranties and representations by the Company hereunder. 12.4. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. The provisions hereof are intended to be for the benefit of all holders, from time to time, of Notes, and shall be enforceable by any such holder, whether or not an express assignment to such holder of rights hereunder shall have been made by you or your successor or assign. 75 12.5. Amendment and Waiver. (a) Requirements. This Agreement may be amended, and the observance of any term hereof may be waived, with (and only with) the written consent of the Company and the Majority Holders; provided that no such amendment or waiver of any of the provisions of Section 1 through Section 4 hereof, inclusive, or any defined term used therein, shall be effective as to any holder of Notes unless consented to by such holder in writing; provided that no such amendment or waiver shall, without the written consent of the holders of all Notes (exclusive of Notes held by the Company, any Restricted Subsidiary or any Affiliate) at the time outstanding, (i) subject to the provisions of Section 10.2 and Section 10.3 hereof, change the amount or time of any prepayment or payment of principal or Make-Whole Amount or the rate or time of payment of interest (including, without limitation, by amendment of Section 5 or Section 6 hereof), (ii) amend Section 10 hereof, (iii) amend the definition of Majority Holders, or (iv) amend this Section 12.5. The holder of any Note may specify that any such written consent executed by it shall be effective only with respect to a portion of the Notes held by it (in which case it shall specify, by Dollar amount, the aggregate principal amount of Notes with respect to which such consent shall be effective) and in the event of any such specification such holder shall be deemed to have executed such written consent only with respect to the portion of the Notes so specified. (b) Solicitation of Noteholders. (i) Solicitation. The Company shall not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions hereof or of the Notes unless each holder of Notes (irrespective of the amount of Notes then owned by it) shall be informed thereof by the Company with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or consent effected pursuant to the provisions of this Section 12.5 shall be delivered by the Company to each holder of outstanding Notes forthwith following the date on which the same shall have been executed and delivered by all holders of 76 outstanding Notes required to consent or agree to such waiver or consent. (ii) Payment. The Company shall not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or such security is concurrently granted, on the same terms, ratably to the holders of all Notes then outstanding. (iii) Scope of Consent. Any consent made pursuant to this Section 12.5 by a holder of Notes that has transferred or has agreed to transfer its Notes to the Company, any Restricted Subsidiary or any Affiliate and has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force and effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force and effect, retroactive to the date such amendment or waiver initially took or takes effect, except solely as to such holder. (c) Binding Effect. Except as provided in Section 12.5(b) hereof, any amendment or waiver consented to as provided in this Section 12.5 shall apply equally to all holders of Notes and shall be binding upon them and upon each future holder of any Note and upon the Company whether or not such Note shall have been marked to indicate such amendment or waiver. No such amendment or waiver shall extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. 12.6. Payments, When Received. (a) Payments Due on Holidays. If any payment due on, or with respect to, any Note shall fall due on a day other than a Business Day, then such payment shall be made on the first Business Day following the day on which such payment shall have so fallen due; provided that if all or any portion of such payment shall consist of a payment of interest, for purposes of calculating such interest, such payment shall be deemed to have been originally due on such first following Business Day, such interest shall accrue and be payable to (but not including) the actual date of payment, and the 77 amount of the next succeeding interest payment shall be adjusted accordingly. (b) Payments, When Received. Any payment to be made to the holders of Notes hereunder or under the Notes shall be deemed to have been made on the Business Day such payment actually becomes available to such holder at such holder's bank prior to 11:00 a.m. (local time of such bank). 12.7. Entire Agreement. This Agreement constitutes the final written expression of all of the terms hereof and is a complete and exclusive statement of those terms. 12.8. Duplicate Originals, Execution in Counterpart. Two or more duplicate originals hereof may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement may be executed in one or more counterparts and shall be effective when at least one counterpart shall have been executed by each party hereto, and each set of counterparts that, collectively, show execution by each party hereto shall constitute one duplicate original. Each of the parties hereto agrees that the contract evidenced by this Agreement shall for all purposes be considered to have been made in New York, New York. [Remainder of page intentionally left blank; next page is signature page.] 78 If this Agreement is satisfactory to you, please so indicate by signing the acceptance at the foot of a counterpart hereof and returning such counterpart to the Company, whereupon this Agreement shall become binding between us in accordance with its terms. Very truly yours, BIRMINGHAM STEEL CORPORATION By ----------------------------- Name: Title: Accepted: [PURCHASER] By ----------------------------- Name: Title: 79 EX-4.2.2 4 WAIVER AND SECOND AMENDMENT ================================================================================ EXHIBIT 4.2.2 BIRMINGHAM STEEL CORPORATION ----------------------- WAIVER AND SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT ----------------------- Re: Note Purchase Agreements Dated as of September 15, 1995 and $76,000,000 Original Principal Amount of 6.96% Series A Senior Notes Due December 15, 2002 $14,000,000 Original Principal Amount of 7.07% Series B Senior Notes Due December 15, 2005 $60,000,000 Original Principal Amount of 7.17% Series C Senior Notes Due December 15, 2005 DATED OCTOBER 12, 1999 ================================================================================ TABLE OF CONTENTS PAGE 1. PRELIMINARY STATEMENT....................................................1 1.1 BACKGROUND...........................................................1 1.2 DEFINITIONS..........................................................4 2. AMENDMENTS AND WAIVERS...................................................6 2.1 AMENDMENT AND RESTATEMENT OF EXISTING NOTE PURCHASE AGREEMENT........6 2.2 AMENDMENT AND RESTATEMENT OF EXISTING NOTES..........................6 2.3 WAIVERS OF EXISTING EVENTS OF DEFAULT................................7 2.4 CONTINUITY AND AFFIRMATION OF OBLIGATIONS............................7 3. REPRESENTATIONS AND WARRANTIES...........................................7 3.1 SUBSIDIARIES AND STOCK OWNERSHIP.....................................7 3.2 CORPORATE EXISTENCE AND POWER........................................8 3.3 CORPORATE AUTHORITY..................................................8 3.4 BINDING EFFECT.......................................................8 3.5 NO CONFLICTS WITH AGREEMENTS, ETC....................................9 3.6 CONSENTS, ETC........................................................9 3.7 FULL DISCLOSURE......................................................9 3.8 OUTSTANDING DEBT AND LIENS..........................................10 3.9 PENDING LITIGATION..................................................10 3.10 NO DEFAULTS........................................................10 3.11 COMPLIANCE WITH LAW................................................11 3.12 TITLE TO PROPERTIES................................................11 3.13 ENVIRONMENTAL COMPLIANCE...........................................12 3.14 RESTRICTIONS ON COMPANY AND SUBSIDIARIES...........................13 3.15 COLLATERAL.........................................................13 3.16 SOLVENCY...........................................................15 4. CONDITIONS PRECEDENT....................................................15 4.1 CERTIFICATES........................................................15 4.2 OPINIONS OF COUNSEL.................................................16 4.3 OMNIBUS COLLATERAL AGREEMENT........................................16 4.4 GUARANTY AGREEMENT..................................................17 4.5 1993 THIRD AMENDMENT................................................17 4.6 FIFTH AMENDMENT TO CREDIT AGREEMENT.................................17 4.7 LETTER OF CREDIT DOCUMENTS..........................................17 4.8 OTHER RELATED MATTERS...............................................17 4.9 INTERCREDITOR AGREEMENT.............................................18 4.10 SECURITY DOCUMENTS.................................................18 4.11 LIEN SEARCHES......................................................19 4.12 RESTRUCTURING FEE..................................................20 ***4.13 PRIVATE PLACEMENT NUMBERS.......................................20 4.14 PAYMENT OF SPECIAL COUNSEL AND FINANCIAL ADVISOR FEES..............20 4.15 LEASE LETTERS......................................................20 4.16 PROCEEDINGS AND DOCUMENTS SATISFACTORY.............................20 i TABLE OF CONTENTS PAGE 5. MISCELLANEOUS...........................................................20 5.1 EFFECT OF AMENDMENT AND WAIVER......................................21 5.2 NO LEGEND REQUIRED..................................................21 5.3 FEES AND EXPENSES...................................................21 5.4 SURVIVAL............................................................22 5.5 DUPLICATE ORIGINALS; EXECUTION IN COUNTERPART.......................22 5.6 RELEASE OF CLAIMS...................................................22 5.7 GOVERNING LAW.......................................................23 Schedule 3.1 -- Subsidiaries Schedule 3.8 -- Outstanding Debt and Liens Schedule 3.14 -- Restrictive Agreements Schedule 3.15 -- Recording Information Exhibit A -- Amended and Restated Note Purchase Agreement Exhibit B1 -- Form of Opinion of Special Company Counsel to the Company and the Restricted Subsidiaries Exhibit B2 -- Form of Opinion of Local Counsel to the Company and the Restricted Subsidiaries Exhibit B3 -- Form of Opinion of Special Counsel to the Collateral Agent Exhibit C -- Form of Omnibus Collateral Agreement Exhibit D -- Form of Guaranty Agreement Exhibit E -- Form of Intercreditor Agreement Exhibit F1 -- Form of Alabama Mortgage Exhibit F2 -- Form of Florida Mortgage Exhibit F3 -- Form of Illinois Mortgage Exhibit F4 -- Form of Mississippi Mortgage Exhibit F5 -- Form of Ohio Mortgage Exhibit F6 -- Form of Tennessee Mortgage Exhibit F7 -- Form of Washington Mortgage Exhibit G -- Form of Security Agreement Exhibit H -- Form of Trademark/Copyright Security Agreement Exhibit I -- Form of Stock Pledge Agreement Exhibit J -- Form of Note Pledge Agreement ii BIRMINGHAM STEEL CORPORATION WAIVER AND SECOND AMENDMENT TO NOTE PURCHASE AGREEMENT Re: Note Purchase Agreements Dated as of September 15, 1995 and $76,000,000 Original Principal Amount of 6.96% Series A Senior Notes Due December 15, 2002 $14,000,000 Original Principal Amount of 7.07% Series B Senior Notes Due December 15, 2005 $60,000,000 Original Principal Amount of 7.17% Series C Senior Notes Due December 15, 2005 Dated October 12, 1999 To the Persons listed on the signature pages hereof Ladies and Gentlemen: BIRMINGHAM STEEL CORPORATION, a Delaware corporation (together with its successors and assigns, the "Company"), hereby agrees with you as follows: 1. PRELIMINARY STATEMENT. 1.1 Background. (a) The Company entered into those certain Note Purchase Agreements dated as of September 15, 1995, as amended by an Amendment to 1995 Note Purchase Agreement dated as of December 14, 1998 (collectively, as in effect immediately prior to the Effective Date, the "Existing Note Purchase Agreement," and as amended hereby, the "Amended Note Purchase Agreement"), with each of the institutions named in Annex 1 thereto, under and pursuant to which the Company issued and sold to such institutions (i) an aggregate principal amount of Seventy-Six Million Dollars ($76,000,000) of the Company's 6.96% Series A Senior Notes due December 15, 2002 (the "Existing Series A Notes"), (ii) an aggregate principal amount of Fourteen Million Dollars ($14,000,000) of the Company's 7.07% Series B Senior Notes due December 15, 2005 (the "Existing Series B Notes"), and (iii) an aggregate principal amount of Sixty Million Dollars ($60,000,000) of the Company's 7.17% Series C Senior Notes due December 15, 2005 (the "Existing Series C Notes;" collectively with the Existing Series A Notes and the Existing Series B Notes, as in effect immediately prior to the Effective Date, the "Existing Notes" and as amended hereby, the "Amended Notes"). (b) The institutions (other than the Company) listed on the signature pages to this Agreement (collectively, the "Noteholders") are the holders of one hundred percent (100%) of the Existing Notes outstanding as of the Effective Date. (c) The Company entered into those certain Note Purchase Agreements dated as of September 1, 1993, with each of the institutions named in Annex 1 thereto (together with their successors and assigns, the "1993 Noteholders"), as amended by an Amendment to Note Purchase Agreement dated as of October 18, 1996 and an Amendment to 1993 Note Purchase Agreement dated as of December 14, 1998 (collectively, as in effect immediately prior to the Effective Date, the "1993 Existing Note Purchase Agreement," and, as amended by a Waiver and Third Amendment to 1993 Note Purchase Agreement dated as of the date hereof (the "1993 Third Amendment"), the "1993 Amended Note Purchase Agreement"), under and pursuant to which the Company issued and sold to such institutions an aggregate principal amount of One Hundred Thirty Million Dollars ($130,000,000) of the Company's 7.28% Senior Notes due December 15, 2005 (collectively, the "1993 Notes"). (d) The Company entered into that certain Credit Agreement dated as of March 17, 1997 (as in effect immediately prior to the Effective Date, the "Existing Credit Agreement," and as heretofore amended and as amended by a Fifth Amendment to Credit Agreement dated as of the date hereof (the "Fifth Amendment"), the "Amended Credit Agreement"), by and among the Company, the banks party thereto (collectively, the "Banks"), and Bank of America, N.A., as agent (the "Agent"), pursuant to which a Three Hundred 2 Million Dollar ($300,000,000) credit facility has been provided to the Company. (e) Bank of America, N.A. and PNC Bank, National Association (collectively, the "L/C Issuers") have separately provided the Company with three (3) letters of credit (collectively, the "Letters of Credit") which have an aggregate face amount of Fifty-One Million Nine Hundred Ninety-Three Thousand One Hundred Fifty-One Dollars ($51,993,151), which Letters of Credit were issued pursuant to (i) an Amended and Restated Reimbursement Agreement, dated as of October 12, 1999, among the Company, American Steel & Wire Corporation and Bank of America, N.A. (as amended, the "B of A Reimbursement Agreement"), (ii) a Reimbursement Agreement dated as of October 1, 1996, between PNC Bank, National Association successor to PNC Bank, Kentucky, Inc. and the Company (as amended, "PNC Reimbursement Agreement One") and (iii) a Reimbursement Agreement dated as of August 15, 1995 between the Company and PNC Bank, National Association, successor to PNC Bank, Kentucky, Inc. ("PNC Reimbursement Agreement Two," and collectively with the B of A Reimbursement Agreement and PNC Reimbursement Agreement One, the "Existing Reimbursement Agreements"). (f) The Company has notified the Noteholders, the 1993 Noteholders, the Banks and the L/C Issuers of certain Defaults and Events of Default under, and as defined in, the Existing Note Purchase Agreement, the 1993 Existing Note Purchase Agreement, the Existing Credit Agreement and the Existing Reimbursement Agreements, respectively. (g) The Company requests the amendment and restatement of the Existing Note Purchase Agreement and the waiver of the existing Defaults and Events of Default specified herein, and, in exchange therefor, the Company agrees to amend and restate the Existing Notes to, among other things, increase the interest rate applicable thereto, to cause one or more of its Restricted Subsidiaries to enter into the Guaranty Agreement, and to grant, and to cause one or more of its Restricted Subsidiaries to grant, the security interests described in the Security Documents to the Collateral Agent for the ratable benefit of the Noteholders, the 1993 Noteholders, the Banks and the L/C Issuers and for the benefit of the Indenture Trustee and the Owner Trustee. (h) The Noteholders are agreeable, subject to the terms and conditions set forth herein, to amending and restating in full the Existing 3 Note Purchase Agreement and the Existing Notes as provided herein. 1.2 Definitions. Capitalized terms used but not specifically defined in this Agreement have the respective meanings assigned to them in the Existing Note Purchase Agreement. As used in this Agreement, the following terms have the respective meanings specified below or set forth in the Section hereof following such term: Acceptable SBQ Asset Sale - has the meaning specified in the Amended Note Purchase Agreement. Agent - Section 1.1(d). Agreement, this - means this Waiver and Second Amendment to Note Purchase Agreement, as it may be amended or otherwise modified from time to time. Amended Credit Agreement - Section 1.1(d). Amended Note Purchase Agreement - Section 1.1(a). Amended Notes - Section 1.1(a). Banks - Section 1.1(d). B of A Reimbursement Agreement - Section 1.1(e). Collateral Agent - means State Street Bank and Trust Company, in its capacity as collateral agent under the Intercreditor Agreement. Company - the introductory sentence. Effective Date - Section 4. Existing Credit Agreement - Section 1.1(d). Existing Note Purchase Agreement - Section 1.1(a). Existing Notes - Section 1.1(a). Existing Reimbursement Agreements - Section 1.1(e). Existing Series A Notes - Section 1.1(a). 4 Existing Series B Notes - Section 1.1(a). Existing Series C Notes - Section 1.1(a). Fifth Amendment - Section 1.1(d). Financing Documents - means, collectively, this Agreement, the Omnibus Collateral Agreement, the Intercreditor Agreement, the Guaranty Agreement and each of the Security Documents, in each case, as may be amended or otherwise modified from time to time. Guaranty Agreement - Section 4.4. Indenture Trustee - has the meaning set forth in the Intercreditor Agreement. Intercreditor Agreement - Section 4.9. L/C Issuers - Section 1.1(e). Letters of Credit - Section 1.1(e). Mortgages - Section 4.10(a). 1993 Amended Note Purchase Agreement - Section 1.1(c). 1993 Existing Note Purchase Agreement - Section 1.1(c). 1993 Noteholders - Section 1.1(c). 1993 Notes - Section 1.1(c). 1993 Third Amendment - Section 1.1(c). Note Pledge Agreement - Section 4.10(e). Noteholders - Section 1.1(b). Omnibus Collateral Agreement - Section 4.3. Operative Agreements - has the meaning specified in Appendix A to that certain Participation Agreement (Birmingham Steel Trust 97-1), dated as of September 30, 1997, among the Company, as lessee, the Owner Trustee, the Indenture Trustee and the institutional lenders party thereto, as amended. 5 Owner Trustee - has the meaning set forth in the Intercreditor Agreement. PNC Reimbursement Agreement One - Section 1.1(e). PNC Reimbursement Agreement Two - Section 1.1(e). Security Agreement - Section 4.10(b). Security Documents - means, collectively, each of the Mortgages, the Security Agreement, the Trademark/Copyright Security Agreement, the Stock Pledge Agreement and the Note Pledge Agreement. Stock Pledge Agreement - Section 4.10(d). Trademark/Copyright Security Agreement - Section 4.10(c). Transaction Documents - has the meaning specified in the Omnibus Collateral Agreement. 2. AMENDMENTS AND WAIVERS 2.1 Amendment and Restatement of Existing Note Purchase Agreement. The Existing Note Purchase Agreement (including Exhibit A1, Exhibit A2 and Exhibit A3) is hereby amended and restated in full in the form attached hereto as Exhibit A. On the Effective Date, the Amended Note Purchase Agreement shall supercede and replace the Existing Note Purchase Agreement and the Existing Note Purchase Agreement will cease to be of further force and effect. 2.2 Amendment and Restatement of Existing Notes. (a) The forms of the Existing Series A Note, Existing Series B Note and Existing Series C Note attached to the Existing Note Purchase Agreement as Exhibit A1, Exhibit A2 and Exhibit A3, respectively, are hereby amended and restated in full in the forms attached as Exhibit A1, Exhibit A2 and Exhibit A3, respectively, to the Amended Note Purchase Agreement. (b) All Existing Notes of each Series outstanding on the Effective Date are hereby, without any further action being required on the part of the Noteholders or on the part of any other Person, deemed to be conformed to the form of Amended Note of such Series attached to the Amended Note 6 Purchase Agreement as Exhibit A1, Exhibit A2 or Exhibit A3, as the case may be. The outstanding Amended Notes shall be and are entitled to all of the rights and benefits provided therefor in the Amended Note Purchase Agreement. 2.3 Waivers of Existing Events of Default. Each existing Default and Event of Default under the Existing Note Purchase Agreement arising as a result of facts, circumstances or events in effect or existence on or prior to the effectiveness of this Agreement on the date hereof is hereby permanently and irrevocably waived and the Company and the Noteholders hereby agree that each such existing Default and Event of Default shall be deemed to have been permanently and irrevocably waived as of the date of the initial occurrence thereof. 2.4 Continuity and Affirmation of Obligations. Notwithstanding any other provision of this Agreement or any other document or agreement, the indebtedness of the Company under the Existing Note Purchase Agreement and the Existing Notes shall not be or be deemed to be paid or discharged or novated hereby and shall continue in full force and effect as amended hereby. 3. REPRESENTATIONS AND WARRANTIES To induce the Noteholders to enter into this Agreement, the Company makes the representations and warranties set forth in this Section 3. The Company agrees and acknowledges that for purposes of Section 10.1(e) of the Amended Note Purchase Agreement, its representations and warranties, as set forth in this Agreement, are and constitute representations and warranties furnished in connection with the Amended Note Purchase Agreement. 3.1 Subsidiaries and Stock Ownership. Schedule 3.1 hereto states the name of each Subsidiary (indicating which Subsidiaries are Restricted Subsidiaries), its jurisdiction of incorporation and the percentage of its Voting Stock owned by the Company and each other Subsidiary. Each of the Company and the Subsidiaries has good and marketable title to all of the shares it purports to own of the stock of each Subsidiary, free and clear in each case of any Lien. All such shares have been duly issued and are fully paid and nonassessable. 7 3.2 Corporate Existence and Power. Each of the Company and the Subsidiaries: (a) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; (b) has the legal and corporate power and authority necessary to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted; (c) has all necessary licenses, certificates, permits, franchises and other governmental authorizations necessary to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted, except where the failure to have such licenses, certificates and permits, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect; (d) has duly qualified or has been duly licensed, and is authorized to do business and is in good standing, as a foreign corporation, in each state where the failure to be so qualified or licensed and authorized and in good standing could reasonably be expected to have a Material Adverse Effect; and (e) has, in the case of each Restricted Subsidiary, all requisite power and authority to execute, deliver and perform its obligations under each Financing Document to which it is a party. 3.3 Corporate Authority. The execution, delivery and performance by the Company and each Restricted Subsidiary of each Financing Document to which the Company or such Restricted Subsidiary is a party, and the performance by the Company of the Amended Note Purchase Agreement and the Amended Notes, is within the corporate powers of the Company or such Restricted Subsidiary, as the case may be, and has been duly authorized by all necessary corporate action on the part of the board of directors (no action on the part of the stockholders of the Company or any such Restricted Subsidiary being required by law, other than such actions which have been duly taken), of the Company or such Restricted Subsidiary. 3.4 Binding Effect. Each Financing Document to which the Company or any Restricted Subsidiary is a party has been duly executed by the Company or such Restricted 8 Subsidiary and each Financing Document, the Amended Note Purchase Agreement and each Amended Note is a legal, valid and binding obligation of the Company or such Restricted Subsidiary, as the case may be, enforceable against the Company or such Restricted Subsidiary in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally, or by general principles of equity. 3.5 No Conflicts with Agreements, Etc. Neither the execution and delivery by the Company or any Restricted Subsidiary of any Financing Document to which it is a party, nor the fulfillment of, or compliance with, the terms and provisions of any Financing Document, the Amended Note Purchase Agreement or the Amended Notes, will conflict with, or result in a breach or violation of any term, condition or provision of, or constitute a default under, or result in the creation of any Lien (other than Liens under the Security Documents) on any Property of the Company or such Restricted Subsidiary pursuant to its charter or by-laws, or any contract, agreement, mortgage, indenture, lease or instrument to which it is a party or by which it is bound or to which it or any of its Property is subject, or any order, statute, law, rule or regulation to which it or any of its Property is subject. 3.6 Consents, Etc. No consent, approval or authorization of, or declaration, registration or filing (except as contemplated under Section 4) with, any Governmental Authority or any nongovernmental Person, including, without limitation, any creditor (other than the 1993 Noteholders, the Banks and the L/C Issuers) or stockholder of the Company or any Restricted Subsidiary, is required in connection with the execution or delivery by the Company or any Restricted Subsidiary of any Financing Document to which it is a party or the performance by the Company or such Restricted Subsidiary of its obligations under any Financing Document, the Amended Note Purchase Agreement or the Amended Notes, or as a condition to the legality, validity or enforceability of any such Financing Document, the Amended Note Purchase Agreement or the Amended Notes, except, in each case, those which have been obtained or which are contemplated by the Transaction Documents. 3.7 Full Disclosure. The financial statements and other written statements, certificates and materials provided to the Noteholders pursuant to the Existing Note Purchase Agreement and the written statements, certificates and materials furnished by or on behalf of the Company to you in connection with this Agreement and the transactions contemplated hereby do not contain any untrue statement of a 9 material fact or omit a material fact necessary to make the statements contained therein or herein not misleading in light of the circumstances in which they were made. Except as disclosed (i) in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, (ii) in the other reports filed by the Company with the Securities and Exchange Commission after June 30, 1998, (iii) in press releases issued by the Company prior to the Effective Date, or (iv) to you or Nightingale Associates, LLC in writing, there is no fact known to the Company which materially affects adversely or, so far as the Company can now reasonably foresee, will materially affect adversely the business, prospects, profits, Properties or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or the ability of the Company and each Restricted Subsidiary to perform its obligations set forth in the Financing Documents to which it is a party or, in the case of the Company, the Amended Note Purchase Agreement or the Amended Notes. 3.8 Outstanding Debt and Liens. Schedule 3.8 hereto sets forth a correct and complete schedule and brief description of all Debt of the Company and the Subsidiaries outstanding on the Effective Date and all consensual Liens securing such Debt. There are no Liens on any of the Property of the Company or any Restricted Subsidiary except Liens permitted by Section 8.17(a) of the Amended Note Purchase Agreement. 3.9 Pending Litigation. There are no proceedings, actions or investigations pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal (a) challenging, or in any way dealing with, the legality, validity or enforceability of any Financing Document, the Amended Note Purchase Agreement or the Amended Notes or the authority of the Company or any Restricted Subsidiary to enter into or execute any Financing Document, the Amended Note Purchase Agreement or the Amended Notes, or (b) except as disclosed (i) in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, (ii) in the other reports filed by the Company with the Securities and Exchange Commission after June 30, 1998, (iii) in press releases issued by the Company prior to the Effective Date, or (iv) to you or Nightingale Associates, LLC in writing, that, in the aggregate for all such proceedings, actions and investigations, could reasonably be expected to have a Material Adverse Effect. 3.10 No Defaults. No event has occurred and is continuing and no condition exists which, upon execution and delivery of this Agreement (and giving effect to Section 2.3) and the 10 other Transaction Documents, would constitute a Default or Event of Default. Neither the Company nor any Subsidiary is in violation in any respect of any term of any charter instrument or by-law and neither the Company nor any Subsidiary is in default in the payment of principal or interest on any Debt or in default under any instrument or instruments or agreements under and subject to which any Debt has been issued and no event has occurred and is continuing under the provisions of any such instrument or agreement which with the lapse of time or the giving of notice, or both, would constitute a default or an event of default thereunder, which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect. 3.11 Compliance with Law. Neither the Company nor any Subsidiary is in violation of any law, ordinance, governmental rule or regulation to which it is subject, except for such violations that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 3.12 Title to Properties. (a) Each of the Company and the Subsidiaries has good and marketable title to all real Property, and good title to all of the other Property, reflected in the most recent balance sheet delivered pursuant to Section 9.1 of the Existing Note Purchase Agreement (except as sold or otherwise disposed of in the ordinary course of business), except for such failures to have such good and marketable title as are immaterial to such financial statements and that, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect. All such Property is free from Liens not permitted by Section 8.17 of the Amended Note Purchase Agreement. (b) Upon execution and delivery of this Agreement and the other Transaction Documents, each lease of real Property in the name or for the benefit of the Company or any Subsidiary is valid and subsisting and in full force and effect and good standing, except for such failures to be valid and subsisting and in full force and effect and good standing that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (c) Each of the Company and the Subsidiaries owns, possesses or has the right to use all of the patents, trademarks, service marks, trade names, copyrights and licenses, and rights with respect thereto, necessary for the present and currently planned future conduct of its business, without any 11 known conflict with the rights of others, except for such failures to own, possess, or have the right to use, that, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect. 3.13 Environmental Compliance. Except as disclosed (i) in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1998, (ii) in the other reports filed by the Company with the Securities and Exchange Commission after June 30, 1998, (iii) in press releases issued by the Company prior to the Effective Date, or (iv) to the Noteholders or Nightingale Associates, LLC in writing: (a) Compliance -- each of the Company and the Subsidiaries is in compliance with all Environmental Protection Laws in effect in each jurisdiction where it is presently doing business, and in which the failure so to comply could be reasonably expected to have a Material Adverse Effect; (b) Liability -- neither the Company nor any of the Subsidiaries is subject to any liability under any Environmental Protection Laws that, in the aggregate, could reasonably be expected to have a Material Adverse Effect; and (c) Notices -- neither the Company nor any Subsidiary has received any (i) notice from any Governmental Authority by which any of its present or previously-owned or leased real Properties has been designated, listed, or identified in any manner by any Governmental Authority charged with administering or enforcing any Environmental Protection Law as a Hazardous Substance disposal or removal site, "Super Fund" clean-up site, or candidate for removal or closure pursuant to any Environmental Protection Law, (ii) notice of any Lien arising under or in connection with any Environmental Protection Law that has attached to any revenues of, or to, any of its owned or leased real Properties, or (iii) summons, citation, notice, directive, letter, or other communication, written or oral, from any Governmental Authority concerning any intentional or unintentional action or omission by the Company or such Subsidiary in connection with its ownership or leasing of any real Property resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying, dumping, or otherwise 12 disposing of any Hazardous Substance into the environment resulting in any material violation of any Environmental Protection Law, in each case where the effect of the matters that are the subject of any such notice, summons, citation, directive, letter or other communication could reasonably be expected to have a Material Adverse Effect. 3.14 Restrictions on Company and Subsidiaries. Neither the Company nor any Subsidiary: (a) except as set forth in Schedule 3.14 hereto, is a party to any contract or agreement, or subject to any charter or other corporate restriction that, in the aggregate for all such contracts, agreements, charter and corporate restrictions, could reasonably be expected to have a Material Adverse Effect; (b) is a party to any contract or agreement that restricts the right or ability of such corporation to incur Debt, other than the Amended Note Purchase Agreement, the 1993 Amended Note Purchase Agreement, the Amended Credit Agreement, any other Transaction Document and the agreements listed in Schedule 3.14 hereto, the terms of none of which is violated by the execution and delivery by the Company or any Restricted Subsidiary of the Financing Documents to which it is a party, or compliance by the Company or any Restricted Subsidiary with the Financing Documents to which it is a party or, in the case of the Company, the Amended Note Purchase Agreement and the Amended Notes; and (c) has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its Property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 8.17 of the Amended Note Purchase Agreement. 3.15 Collateral. (a) Collateral Documents. (i) Mortgages. Each Mortgage creates a valid Lien upon the grantor's right, title and interest in the real property and interests described therein in favor of the Collateral Agent, and when such document has been recorded as indicated on Schedule 3.15 and all appropriate recording fees and taxes have been paid, such Lien shall be a perfected first priority Lien subject to no other Liens except to the 13 extent permitted by Section 8.17 of the Amended Note Purchase Agreement; (ii) Security Agreement. The Security Agreement creates a valid Lien in and to the Collateral (as defined in the Security Agreement) in favor of the Collateral Agent, and when all UCC-1 financing statements required by the Security Agreement to be filed with public recording offices have been so filed, and all taxes, recording fees and other fees and charges required by applicable law to be paid in connection therewith have been duly paid in full, such Lien shall be a perfected, first priority Lien on the Collateral of a type which may be perfected by the filing of a UCC financing statement or by possession, subject to no Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement; (iii) Trademark/Copyright Security Agreement. The Trademark/Copyright Security Agreement creates a valid Lien in and to the Trademark Collateral, Copyright Collateral and Related Assets (as such terms are defined in the Trademark/Copyright Security Agreement) in favor of the Collateral Agent, and upon the filing thereof with the United States Patent and Trademark Office or the United States Copyright Office and the filing of UCC-1 financing statements as therein provided for, such Lien will be a perfected first priority Lien in and to the Trademark Collateral, Copyright Collateral and Related Assets in which a Lien may be perfected by the filing of a UCC financing statement or filing with the United States Patent and Trademark Office or the United States Copyright Office, subject to no Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement; (iv) Stock Pledge Agreement. The Stock Pledge Agreement creates a valid Lien in and to the Pledged Collateral (as defined in the Stock Pledge Agreement) in favor of the Collateral Agent, and upon delivery of certificates or instruments evidencing the Pledged Collateral to the Collateral Agent and the filing of related UCC-1 Financing Statements, such Lien will be a perfected first priority Lien in and to such of the Pledged Collateral as to which a Lien may be perfected by delivery, subject to no Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement; and (v) Note Pledge Agreement. The Note Pledge Agreement 14 creates a valid Lien in and to the Pledged Collateral (as defined in the Note Pledge Agreement) in favor of the Collateral Agent, and upon delivery of the instrument or instruments evidencing the Pledged Collateral to the Collateral Agent and the filing of related UCC-1 Financing Statements, such Lien will be a perfected first priority Lien in and to such of the Pledged Collateral as to which a Lien may be perfected by delivery, subject to no Liens except to the extent permitted by Section 8.17 of the Amended Note Purchase Agreement. (b) Warranties and Representations True. All warranties and representations made by the Company and the Restricted Subsidiaries in each of the Security Documents are true and correct as of the date hereof. 3.16 Solvency. After giving effect to the transactions contemplated by the Transaction Documents, (a) the fair value and the fair salable value of the assets of the Company and each Restricted Subsidiary (excluding any Debt due from any Affiliate of the Company or such Restricted Subsidiary, as the case may be) will each be in excess of the fair valuation of its total liabilities (including all contingent liabilities), (b) the Company and each Restricted Subsidiary will be able to pay its debts or other obligations in the ordinary course as they mature, and (c) the Company and each Restricted Subsidiary has capital not unreasonably small to carry on its business and all business in which it proposes to be engaged. 4. CONDITIONS PRECEDENT The amendments and the waivers set forth in Sections 2.1, 2.2 and 2.3 shall become effective upon the satisfaction of the following conditions (the date of such effectiveness is herein referred to as the "Effective Date"): 4.1 Certificates. (a) Company Officer's Certificate. The Company shall have delivered to the Noteholders (or their special counsel) a certificate signed by the Chairman, the Vice Chairman, the President or the Executive Vice President- Chief Financial Officer of the Company, dated the Effective Date, certifying that (i) no Default or Event of Default under the Amended Note Purchase Agreement exists and (ii) the representations and warranties set forth in Section 3 and in each of the other Financing Documents (excluding, however, for purposes of such officer's certificate, Section 2 of the Amended Note Purchase Agreement) are true and correct on the Effective Date. Such officer's certificate may expressly state that it is not certifying as to the 15 accuracy of the representations and warranties set forth in Section 2 of the Amended Note Purchase Agreement. (b) Company Secretary's Certificate. The Company shall have delivered to the Noteholders a certificate signed by Secretary or one of the Assistant Secretaries of the Company, dated the Effective Date, certifying as true and correct copies of the Company's charter and by-laws and the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of each of the Financing Documents to which the Company is a party. (c) Subsidiary Secretary's Certificates. Each Restricted Subsidiary entering into one or more of the Financing Documents shall have delivered to the Noteholders a certificate signed by the Secretary or one of the Assistant Secretaries of such Restricted Subsidiary, dated the Effective Date, certifying as true and correct copies of such Restricted Subsidiary's charter and by-laws and the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Financing Documents to which such Restricted Subsidiary is a party. 4.2 Opinions of Counsel. The Noteholders shall have received opinions from (a) Balch & Bingham, special counsel for the Company and the Restricted Subsidiaries, (b) special local counsel for the Company and the Restricted Subsidiaries in the States of Florida, Georgia, Illinois, Mississippi, Ohio, New York, Tennessee and Washington, and (c) Shipman & Goodwin, special counsel for the Collateral Agent, each dated as of the Effective Date, substantially in the respective forms set forth in Exhibit B1, Exhibit B2 and Exhibit B3, and as to such other matters as the Noteholders may reasonably request. The Noteholders also shall have received an opinion from Bingham Dana LLP, special counsel for the Noteholders, in form and substance satisfactory to the Noteholders. 4.3 Omnibus Collateral Agreement. The Omnibus Collateral Agreement, in the form of Exhibit C hereto (the "Omnibus Collateral Agreement"), shall be duly executed and delivered to the 16 Noteholders (or their special counsel) by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto. 4.4 Guaranty Agreement. The Guaranty Agreement, in the form of Exhibit D hereto (the "Guaranty Agreement"), shall be duly executed by each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent and delivered to the Noteholders (or their special counsel). 4.5 1993 Third Amendment. The Company and the 1993 Noteholders shall have executed and delivered to the Noteholders (or their special counsel) a counterpart of the 1993 Third Amendment. 4.6 Fifth Amendment to Credit Agreement. The Company, the Banks and the Agent shall have executed and delivered to the Noteholders (or their special counsel) a copy of the Fifth Amendment, which shall be in form and substance satisfactory to the Noteholders and their special counsel. 4.7 Letter of Credit Documents. The Company shall have executed and delivered to the Noteholders (or their special counsel) a copy of each of the following Letter of Credit documents: (a) the B of A Reimbursement Agreement, (b) PNC Reimbursement Agreement One, and (c) PNC Reimbursement Agreement Two, each of which shall be in form and substance satisfactory to the Noteholders and their special counsel. 4.8 Other Related Matters. The Company shall have delivered a letter addressed to the Noteholders with respect to certain other matters relating to the Transaction Documents the receipt of which shall have been acknowledged by special counsel to the Noteholders. 17 4.9 Intercreditor Agreement. The Banks, the 1993 Noteholders, the L/C Issuers, State Street Bank and Trust Company, the Company, the Owner Trustee, the Indenture Trustee and each of the Restricted Subsidiaries identified on the signature pages thereto, shall have delivered to the Noteholders (or their special counsel) a fully executed counterpart of the Collateral Agency and Intercreditor Agreement, in form attached hereto as Exhibit E (the "Intercreditor Agreement"). 4.10 Security Documents. (a) Mortgages. Separate Mortgages and Deeds of Trust, substantially in the form of Exhibit F1 through Exhibit F7 hereto (collectively, the "Mortgages"), relating to real properties of the Company and certain Restricted Subsidiaries located in the States of Alabama, Florida, Illinois, Mississippi, Ohio, Tennessee and Washington, shall be duly executed and delivered to the Collateral Agent, and a copy of each thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). (b) Security Agreement. A Security Agreement, substantially in the form of Exhibit G hereto (the "Security Agreement"), shall be duly executed and delivered by the Company, each of the Restricted Subsidiaries identified on the signature pages thereto, and the Collateral Agent, and a copy of each thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). (c) Trademark/Copyright Security Agreement. A Trademark and Copyright Collateral Assignment and Security Agreement (the "Trademark/Copyright Security Agreement"), substantially in the form of Exhibit H hereto, shall be duly executed and delivered by the Company, each of the Restricted Subsidiaries identified on the signature pages thereto, and the Collateral Agent, and a copy thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). (d) Stock Pledge Agreement. The Stock Pledge Agreement, substantially in the form of Exhibit I hereto (the "Stock Pledge Agreement"), shall be duly executed and delivered by the Company, each of the Restricted Subsidiaries identified on the signature pages thereto, and the Collateral Agent, and a copy of each thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). All stock certificates and undated stock powers executed in blank required to be executed and delivered to the Collateral Agent by the terms of the Stock 18 Pledge Agreement shall have been so delivered, and the Company shall provide the Noteholders with copies thereof. (e) Note Pledge Agreement. A Note Pledge Agreement, substantially in the form of Exhibit J hereto (the "Note Pledge Agreement"), shall be duly executed and delivered by the Company and the Collateral Agent, and a copy thereof evidencing such due execution and delivery shall be delivered to the Noteholders (or their special counsel). The instrument or instruments evidencing the Pledged Collateral (as defined in the Note Pledge Agreement) and a power of attorney executed by the Company required to be executed and delivered by the Company to the Collateral Agent by the terms of the Note Pledge Agreement shall have been so delivered, and the Company shall provide the Noteholders (or their special counsel) with a copy thereof. (f) Perfection of Liens. The Company and each Restricted Subsidiary that has entered into a Security Document shall have executed and delivered to the Collateral Agent all UCC-1 financing statements as are necessary to perfect the Liens of the Collateral Agent in the Collateral which may be perfected by the filing thereof. (g) Title Matters. With respect to each of the Mortgages, the Company shall have delivered or caused to be delivered to the Collateral Agent one or more loan policies of title insurance, or commitment therefor, satisfactory to you and showing no exceptions to title except as reasonably acceptable to the Noteholders (or their special counsel). (h) Certificates of Insurance. The Company shall have delivered to the Noteholders (or their special counsel) certificates of insurance evidencing the insurance required by the Security Documents, showing the Collateral Agent as loss payee (as its interest may appear) thereunder. (i) Taxes. All taxes, fees and other charges payable in connection with the execution, delivery, recording, filing and registration of the Security Documents shall have been paid or provision for such payment shall have been made to the reasonable satisfaction of the Noteholders (or their special counsel). 4.11 Lien Searches. The Noteholders (or their special counsel) shall have received Lien searches showing that the Collateral (as defined in the Security Agreement) of the Company and the Subsidiaries is subject to no Liens other than Liens permitted under Section 8.17 of the Amended Note Purchase Agreement. 19 4.12 Restructuring Fee. The Company shall have paid to the Noteholders an aggregate of Three Hundred Thousand Dollars ($300,000) as a restructuring fee in respect of the transactions contemplated by this Agreement. Such payment shall be made to the Noteholders in proportion, as nearly as practicable, to the respective unpaid principal amount of Existing Notes held by each Noteholder on the Effective Date, in the manner provided in the Existing Note Purchase Agreement for the payment of principal. 4.13 Private Placement Numbers. A private placement number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for each Series of Notes. 4.14 Payment of Special Counsel and Financial Advisor Fees. Without limiting the provisions of Section 5.3, the Company shall have paid on or before the Effective Date the fees, charges and disbursements of the Noteholders' special counsel referred to in Section 4.2, and Nightingale Associates, LLC, in each case to the extent reflected in statements rendered to the Company on or prior to the Effective Date. 4.15 Lease Letters. Letters from the owner participants and the debt participants in respect of the Equipment Lease Agreement dated as of September 30, 1997, as amended, shall have been delivered to the Noteholders (or their special counsel), in form, scope and substance satisfactory to the Noteholders and their special counsel. 4.16 Proceedings and Documents Satisfactory. All opinions, certificates and other instruments and all proceedings taken in connection with the execution and delivery of this Agreement and the transactions contemplated hereby shall be reasonably satisfactory to the Noteholders and their special counsel; and the Noteholders and their special counsel shall have received copies of such documents and papers as may be reasonably requested in connection therewith. 5. MISCELLANEOUS 20 5.1 Effect of Amendment and Waiver. If the foregoing is acceptable to you, please note your acceptance in the space provided below. Upon the execution and delivery of this Agreement by each of the Noteholders and the Company, the conditions set forth in Section 4 shall be deemed satisfied or waived and the Existing Note Purchase Agreement shall be deemed to be amended and restated as set forth above and the waivers as set forth above shall be deemed to be effective. This Agreement shall be binding upon, and shall inure to the benefit of, the permitted successors and assigns of the parties hereto and the holders from time to time of the Amended Notes. 5.2 No Legend Required. Any and all notices, requests, certificates and other instruments including, without limitation, the Amended Notes, may refer to the Note Purchase Agreement or the Note Purchase Agreement dated as of September 15, 1995 without making specific reference to this Waiver and Second Amendment to Note Purchase Agreement, but nevertheless all such references shall be deemed to include this Waiver and Second Amendment to Note Purchase Agreement unless the context shall otherwise require. 5.3 Fees and Expenses. Whether or not the transactions herein contemplated shall be consummated, the Company agrees to pay directly all reasonable out-of-pocket travel expenses and other reasonable out-of-pocket expenses of the Noteholders in connection with the preparation, negotiation, execution and delivery of the Financing Documents and the Amended Note Purchase Agreement, and the transactions contemplated hereby and thereby, including, but not limited to, the reasonable fees and disbursements of Bingham Dana LLP, the Noteholders' special counsel, and Nightingale Associates, LLC, financial advisor to the Noteholders and the 1993 Noteholders, photocopying costs, and charges for shipping the Amended Notes, adequately insured, to each Noteholder at its home office or at such other place as such Noteholder may designate, and so long as any Noteholder shall hold any of the Amended Notes, all such expenses relating to any amendments, waivers or consents pursuant to the provisions of the Amended Note Purchase Agreement, including, without limitation, any amendments, waivers or consents resulting from any work-out, restructuring or similar events relating to the performance by the Company and the Restricted Subsidiaries of their respective obligations under the Financing Documents, the Amended Note Purchase Agreement and the Amended Notes. The Company also agrees that it will pay and save each Noteholder harmless against any and all liability with respect to stamp and other similar taxes, if any, which may be payable or which may be determined to be payable in connection with the execution and 21 delivery of the Financing Documents, the Amended Note Purchase Agreement and the Amended Notes, whether or not any Amended Notes are then outstanding. The Company agrees to protect and indemnify each Noteholder against any liability for any and all brokerage fees and commissions payable or claimed to be payable to any Person retained by the Company, their Subsidiaries, or any of their respective Affiliates that are controlled by the Company in connection with the transactions contemplated by this Agreement. Without limiting the foregoing, the Company agrees to pay the costs of obtaining a private placement number for each Series of Amended Notes, and authorizes the submission of such information as may be required by the CUSIP Service Bureau of Standard & Poor's for the purpose of obtaining such numbers. 5.4 Survival. All warranties, representations, certifications and covenants made by the Company in this Agreement or in any certificate or other instrument delivered by it or on its behalf under this Agreement shall be considered to have been relied upon by the Noteholders and shall survive the execution of this Agreement, regardless of any investigation made by or on behalf of the Noteholders. All statements in any such certificate or other instrument shall constitute warranties and representations of the Company under this Agreement. 5.5 Duplicate Originals; Execution in Counterpart. Two or more duplicate originals of this Agreement may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement may be executed in one or more counterparts and shall be effective when at least one counterpart shall have been executed by each party to this Agreement, and each set of counterparts which, collectively, show execution by each such party to this Agreement shall constitute one duplicate original. 5.6 Release of Claims. The Company, for itself and all of its predecessors, successors and assigns, acknowledges, affirms and represents that immediately prior to giving effect to this Agreement, it is legally, validly and enforceably obligated to each of the Noteholders under and pursuant to the Existing Notes and the Existing Note Purchase Agreement and that the Company has no defense, offset, counterclaim or right of recoupment with regard to such obligations. Additionally, the Company for itself and all of its predecessors, successors and assigns, does hereby fully, forever and completely release and discharge each of the Noteholders and all of their respective employees, officers, directors, trustees, shareholders, affiliates, agents, attorneys, 22 representatives, predecessors, successors and assigns (collectively, the "Released Parties"), from any and all claims, demands, liabilities, damages and causes of action of any kind whatsoever, whether based on facts in existence prior to or as of the date hereof, whether known or unknown, which the Company may now have or may have had at any time heretofore or may have at anytime hereafter, whether for contribution or indemnity or otherwise, and whether direct or indirect, fixed or contingent, liquidated or unliquidated, arising out of or related in any way to any of the following: (a) the Existing Notes and the Existing Note Purchase Agreement and all documents relating thereto or executed in connection therewith (the "Existing Note Documents"); and (b) any action, inaction or omission by any of the Released Parties in connection with the Existing Note Documents or the administration thereof. 5.7 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. [Remainder of page intentionally left blank; next page is signature page.] If you are in agreement with the foregoing, please sign the form of acceptance in the space provided below, whereupon the foregoing shall become a binding agreement between you and the Company as of the date first above written. BIRMINGHAM STEEL CORPORATION By: ----------------------------- Name: Title: Accepted: PRINCIPAL LIFE INSURANCE COMPANY (f/k/a Principal Mutual Life Insurance Company) By: Principal Capital Management, LLC a Delaware limited liability company, its authorized signatory By -------------------------------- Name: Title: By -------------------------------- Name: Title: THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES By -------------------------------- Name: Title: NATIONWIDE LIFE INSURANCE COMPANY By -------------------------------- Name: Title: EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU By -------------------------------- Name: Title: CONNECTICUT GENERAL LIFE INSURANCE COMPANY By CIGNA Investments, Inc., its authorized agent By -------------------------------- Name: Title: LIFE INSURANCE COMPANY OF NORTH AMERICA By CIGNA Investments, Inc., its authorized agent By -------------------------------- Name: Title: CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY By CIGNA Investments, Inc., its authorized agent By -------------------------------- Name: Title: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By -------------------------------- Name: Title: AMERICAN UNITED LIFE INSURANCE COMPANY By -------------------------------- Name: Title: THE STATE LIFE INSURANCE COMPANY By -------------------------------- Name: Title: THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY By: MIMLIC Asset Management Company By -------------------------------- Name: Title: FEDERATED LIFE INSURANCE COMPANY By: MIMLIC Asset Management Company By -------------------------------- Name: Title: FEDERATED MUTUAL INSURANCE COMPANY By: MIMLIC Asset Management Company By -------------------------------- Name: Title: MUTUAL TRUST LIFE INSURANCE COMPANY By: MIMLIC Asset Management Company By -------------------------------- Name: Title: GUARANTEE RESERVE LIFE INSURANCE COMPANY By: MIMLIC Asset Management Company By -------------------------------- Name: Title: FIRST NATIONAL LIFE INSURANCE COMPANY OF AMERICA By: MIMLIC Asset Management Company By -------------------------------- Name: Title: MINNESOTA FIRE & CASUALTY COMPANY By: MIMLIC Asset Management Company By -------------------------------- Name: Title: NATIONAL TRAVELERS LIFE COMPANY By: MIMLIC Asset Management Company By -------------------------------- Name: Title: SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) By -------------------------------- Name: Title: By -------------------------------- Name: Title: SUN LIFE ASSURANCE COMPANY OF CANADA By -------------------------------- Name: Title: By -------------------------------- Name: Title: SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK By -------------------------------- Name: Title: By -------------------------------- Name: Title: GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY (formerly known as Great Northern Insured Annuity Corporation) By -------------------------------- Name: Title: THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By -------------------------------- Name: Title: AMERITAS LIFE INSURANCE COMPANY By -------------------------------- Name: Title: 23 EX-4.2.3 5 AMENDED AND RESTATED $150,000,00 SENIOR NOTE EXHIBIT 4.2.3 BIRMINGHAM STEEL CORPORATION AMENDED AND RESTATED NOTE PURCHASE AGREEMENT Dated as of October 12, 1999 $76,000,000 9.71% Series A Senior Notes due December 15, 2002 $14,000,000 9.82% Series B Senior Notes due December 15, 2005 $60,000,000 9.92% Series C Senior Notes due December 15, 2005 ================================================================================ TABLE OF CONTENTS PAGE 1. DESCRIPTION OF NOTES AND COMMITMENT............................. 1 1.1. Amendment of Original Note Purchase Agreements............... 1 1.2. Description of Notes......................................... 2 1.3. The Closing.................................................. 7 1.4. Purchase for Investment...................................... 8 1.5. Expenses..................................................... 9 2. WARRANTIES AND REPRESENTATIONS.................................. 11 2.1. Nature of Business........................................... 11 2.2. Financial Statements; Debt; Material Adverse Change.......... 11 2.3. Subsidiaries and Affiliates.................................. 12 2.4. Pending Litigation........................................... 12 2.5. Title to Properties.......................................... 12 2.6. Taxes........................................................ 13 2.7. Full Disclosure.............................................. 14 2.8. Corporate Organization and Authority......................... 14 2.9. Restrictions on Company and Subsidiaries..................... 14 2.10. Compliance with Law......................................... 15 2.11. ERISA....................................................... 15 2.12. Certain Laws................................................ 17 2.13. Environmental Compliance.................................... 17 2.14. Sale is Legal and Authorized; Obligations are Enforceable... 18 2.15. Governmental Consent........................................ 19 2.16. Private Offering............................................ 19 2.17. No Defaults................................................. 19 2.18. Use of Proceeds............................................. 20 3. INTENTIONALLY OMITTED........................................... 21 4. HOLDERS' SPECIAL RIGHTS......................................... 21 4.1. Direct Payment............................................... 21 4.2. Delivery Expenses............................................ 21 4.3. Issuance Taxes............................................... 22 5. PREPAYMENTS..................................................... 22 5.1. Required Scheduled Prepayments............................... 22 5.2. Other Prepayments............................................ 22 5.3. Notice of Optional Prepayment................................ 25 5.4. Partial Prepayment Pro Rata.................................. 26 5.5. Notation of Amended Notes on Prepayment...................... 26 5.6. No Other Optional Prepayments................................ 26 6. CHANGE IN CONTROL PUT........................................... 26 6.1. Offer to Prepay upon Change in Control....................... 26 6.2. Effect of Prepayments........................................ 28 7. REGISTRATION; SUBSTITUTION OF NOTES............................. 29 7.1. Registration of Notes........................................ 29 7.2. Exchange of Notes............................................ 29 7.3. Replacement of Notes......................................... 29 i 8. COMPANY BUSINESS COVENANTS...................................... 30 8.1. Payment of Taxes and Claims.................................. 30 8.2. Maintenance of Properties and Corporate Existence............ 30 8.3. Payment of Notes and Maintenance of Office................... 31 8.4. ERISA........................................................ 32 8.5. Line of Business............................................. 33 8.6. Transactions with Affiliates................................. 33 8.7. Pro-Rata Offers.............................................. 33 8.8. Private Offering............................................. 33 8.9. Designation of Subsidiaries.................................. 33 8.10. New Restricted Subsidiaries or Properties................... 34 8.11. Fixed Charge Coverage Ratio................................. 36 8.12. Minimum Consolidated EBITDA................................. 36 8.13. Minimum Tangible Net Worth.................................. 37 8.14. Capital Expenditures........................................ 37 8.15. Debt to Consolidated EBITDA Ratio........................... 37 8.16. Debt........................................................ 37 8.17. Liens....................................................... 38 8.18. Mergers; Consolidations..................................... 42 8.19. Disposition of Assets....................................... 42 8.20. Restricted Payments......................................... 43 8.21. Permitted Investments....................................... 43 8.22. Accounts with Financial Institutions other than the Banks... 43 8.23. Proceeds from Equity Issuances.............................. 44 8.24. No Voluntary Reductions in Commitment....................... 44 9. INFORMATION AS TO COMPANY....................................... 44 9.1. Financial and Business Information........................... 44 9.2. Officers' Certificates....................................... 49 9.3. Accountants' Certificates.................................... 50 9.4. Quarterly Review With Financial Advisor...................... 50 9.5. Inspection................................................... 50 10. EVENTS OF DEFAULT.............................................. 50 10.1. Nature of Events............................................ 50 10.2. Default Remedies............................................ 53 10.3. Annulment of Acceleration of Notes.......................... 55 11. INTERPRETATION OF THIS AGREEMENT............................... 55 11.1. Terms Defined............................................... 55 11.2. GAAP........................................................ 77 11.3. Directly or Indirectly...................................... 77 11.4. Section Headings and Table of Contents and Construction..... 77 11.5. Governing Law............................................... 78 12. MISCELLANEOUS.................................................. 78 12.1. Communications.............................................. 78 12.2. Reproduction of Documents................................... 79 12.3. Survival.................................................... 80 12.4. Successors and Assigns...................................... 80 12.5. Amendment and Waiver........................................ 80 12.6. Payments, When Received..................................... 82 12.7. Entire Agreement............................................ 82 12.8. Duplicate Originals, Execution in Counterpart............... 82 ii Annex 1 - Information as to Purchasers Annex 2 - Payment Instructions at Closing Annex 3 - Information as to Company Exhibit A1 - Form of 9.71% Series A Senior Note due December 15, 2002 Exhibit A2 - Form of 9.82% Series B Senior Note due December 15, 2005 Exhibit A3 - Form of 9.92% Series C Senior Note due December 15, 2005 iii BIRMINGHAM STEEL CORPORATION -------------------------------- AMENDED AND RESTATED NOTE PURCHASE AGREEMENT -------------------------------- $76,000,000 9.71% Series A Senior Notes due December 15, 2002 $14,000,000 9.82% Series B Senior Notes due December 15, 2005 $60,000,000 9.92% Series C Senior Notes due December 15, 2005 Dated as of October 12, 1999 To the Purchaser Named on the Signature Page Hereto Ladies and Gentlemen: BIRMINGHAM STEEL CORPORATION, a Delaware corporation (together with its successors and assigns, the "Company"), hereby agrees with you as follows: 1. DESCRIPTION OF NOTES AND COMMITMENT 1.1. Amendment of Original Note Purchase Agreements. The Company entered into those separate Note Purchase Agreements dated as of September 15, 1995 (collectively, as amended by the Amendment to 1995 Note Purchase Agreement dated as of December 14, 1998, the "Original Note Purchase Agreements"), with each of the purchasers identified on Annex 1 thereto (such purchasers, including their successors or assigns from and after the Original Closing Date, are referred to collectively as the "Purchasers"). The Company and the Purchasers have agreed, pursuant to the Waiver and Second Amendment to Note Purchase Agreement, dated as of the date hereof (the "Waiver and Second Amendment"), entered into by the Company and the Purchasers, to amend and restate in full the Original Note Purchase Agreements, and to amend and restate in full the Original Notes of each Series in the respective forms attached hereto as Exhibit A1, Exhibit A2 and Exhibit A3. The term "Note Purchase Agreements" as used herein shall mean this Agreement and the other Amended and Restated Note Purchase Agreements, as amended from time to time hereafter. 1.2. Description of Notes. (a) Original Notes. On the Original Closing Date, the Company authorized the issue and sale of (i) Seventy-Six Million Dollars ($76,000,000) in aggregate principal amount of its 6.96% Series A Senior Notes due December 15, 2002 (the "Original Series A Notes"), dated the date of issue, bearing interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof at the rate of six and ninety-six one-hundredths percent (6.96%) per annum, payable semi- annually on the fifteenth (15th) day of June and December in each year, commencing on the payment date next succeeding the date of such Original Series A Note, and at maturity, and bearing interest on overdue principal and premium, if any, and (to the extent legally enforceable) on any overdue installment of interest at a rate equal to the lesser of (A) the highest rate allowed by applicable law and (B) the rate of eight and ninety-six hundredths percent (8.96%) per annum; (ii) Fourteen Million Dollars ($14,000,000) in aggregate principal amount of its 7.07% Series B Senior Notes due December 15, 2005 (the "Original Series B Notes"), dated the date of issue, bearing interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof at the rate of seven and seven one-hundredths percent (7.07%) per annum, payable semi- annually on the fifteenth (15th) day of June and December in each year, commencing on the payment date next succeeding the date of such Original Series B Note, and at maturity, and bearing interest on overdue principal and premium, if any, and (to the extent legally enforceable) on any overdue installment of interest at a rate equal to the lesser of (A) the highest rate allowed by applicable law and (B) the rate of nine and seven one-hundredths percent (9.07%) per annum; and (iii) Sixty Million Dollars ($60,000,000) in aggregate principal amount of its 7.17% Series C Senior Notes due December 15, 2005 (the "Original Series C Notes"), dated the date of issue, bearing interest (computed on the basis of a 360-day year of twelve 30-day months) on the unpaid principal balance thereof at the rate of seven and seventeen one-hundredths percent (7.17%) per annum, payable semi- annually on the fifteenth (15th) day of June and December in each year, commencing on the payment date next succeeding the date of such 2 Original Series C Note, and at maturity, and bearing interest on overdue principal and premium, if any, and (to the extent legally enforceable) on any overdue installment of interest at a rate equal to the lesser of (A) the highest rate allowed by applicable law and (B) the rate of nine and seventeen one-hundredths percent (9.17%) per annum. The Original Series A Notes, the Original Series B Notes and the Original Series C Notes are herein referred to collectively as the "Original Notes." (b) Amended Series A Notes. Pursuant to the Waiver and Second Amendment, the Company and the Purchasers have agreed to amend and restate the Original Series A Notes in the form attached hereto as Exhibit A1 (the "Amended Series A Notes," such term to include each Amended Series A Note delivered from time to time in accordance with any of the Note Purchase Agreements). The Amended Series A Notes shall be in an aggregate principal amount of Seventy-Six Million Dollars ($76,000,000). Each Amended Series A Note will: (i) be dated the most recent date on which interest shall have been paid on the Note surrendered in exchange for such Amended Series A Note or the lost, stolen, destroyed or mutilated Note in respect of which such Amended Series A Note is being issued; (ii) bear interest (computed on the basis of a 360-day year of twelve 30-day months) from such date to and including the Effective Date at the rate of six and ninety-six one-hundredths percent (6.96%) per annum, payable on November 15, 1999; (iii) bear interest at all times after the Effective Date and until (and including) the maturity date thereof (whether such maturity is scheduled or occurs by reason of acceleration or otherwise), at the rate of nine and seventy-one one-hundredths percent (9.71%) per annum, payable monthly on the fifteenth (15th) day of each month in each year (commencing on November 15, 1999) and at maturity; (iv) bear interest, payable on demand, on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (A) the highest rate allowed by applicable law, and (B) eleven and seventy-one one-hundredths percent (11.71%) per annum; 3 (v) mature on December 15, 2002; and (vi) be in the form of the Amended Series A Note set out in Exhibit A1 hereto. (c) Amended Series B Notes. Pursuant to the Waiver and Second Amendment, the Company and the Purchasers have agreed to amend and restate the Original Series B Notes in the form attached hereto as Exhibit A2 (the "Amended Series B Notes," such term to include each Amended Series B Note delivered from time to time in accordance with any of the Note Purchase Agreements). The Amended Series B Notes shall be in an aggregate principal amount of Fourteen Million Dollars ($14,000,000). Each Amended Series B Note will: (i) be dated the most recent date on which interest shall have been paid on the Note surrendered in exchange for such Amended Series B Note or the lost, stolen, destroyed or mutilated Note in respect of which such Amended Series B Note is being issued; (ii) bear interest (computed on the basis of a 360-day year of twelve 30-day months) from such date to and including the Effective Date at the rate of seven and seven one-hundredths percent (7.07%) per annum, payable on November 15, 1999; (iii) bear interest at all times after the Effective Date and until (and including) the maturity date thereof (whether such maturity is scheduled or occurs by reason of acceleration or otherwise), at the rate of nine and eighty-two one-hundredths percent (9.82%) per annum, payable monthly on the fifteenth (15th) day of each month in each year (commencing on November 15, 1999) and at maturity; (iv) bear interest, payable on demand, on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (A) the highest rate allowed by applicable law, and (B) eleven and eighty-two one-hundredths percent (11.82%) per annum; (v) mature on December 15, 2005; and (vi) be in the form of the Amended Series B Note set out in Exhibit A2 hereto. 4 (d) Amended Series C Notes. Pursuant to the Waiver and Second Amendment, the Company and the Purchasers have agreed to amend and restate the Original Series C Notes in the form attached hereto as Exhibit A3 (the "Amended Series C Notes," such term to include each Amended Series C Note delivered from time to time in accordance with any of the Note Purchase Agreements). The Amended Series C Notes shall be in an aggregate principal amount of Sixty Million Dollars ($60,000,000). Each Amended Series C Note will: (i) be dated the most recent date on which interest shall have been paid on the Note surrendered in exchange for such Amended Series C Note or the lost, stolen, destroyed or mutilated Note in respect of which such Amended Series C Note is being issued; (ii) bear interest (computed on the basis of a 360-day year of twelve 30-day months) from such date to and including the Effective Date at the rate of seven and seventeen one-hundredths percent (7.17%) per annum, payable on November 15, 1999; (iii) bear interest at all times after the Effective Date and until (and including) the maturity date thereof (whether such maturity is scheduled or occurs by reason of acceleration or otherwise), at the rate of nine and ninety-two one-hundredths percent (9.92%) per annum, payable monthly on the fifteenth (15th) day of each month in each year (commencing on November 15, 1999) and at maturity; (iv) bear interest, payable on demand, on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate equal to the lesser of (A) the highest rate allowed by applicable law, and (B) eleven and ninety-two one-hundredths percent (11.92%) per annum; (v) mature on December 15, 2005; and (vi) be in the form of the Amended Series C Note set out in Exhibit A3 hereto. (e) Interest Rate Adjustments. (i) Interest Payments under Credit Agreement. If at any time after the Effective Date the Credit Agreement shall be amended to provide that interest payments on the principal loan 5 obligations under the Credit Agreement shall be paid quarterly (rather than monthly), the Company may, by giving written notice thereof to each holder of Notes, elect to pay interest on the Notes quarterly on the fifteenth (15th) day of March, June, September and December in each year, beginning with the period commencing on the interest payment date immediately following the date of such notice, provided that the unpaid principal amount of the Notes of each Series shall bear interest (A) at all times from and after the first day of such quarterly interest period and until (and including) the maturity date thereof (whether such maturity is scheduled or occurs by reason of acceleration or otherwise) at a rate per annum equal to (1) the interest rate then applicable to the Notes plus (2) ten hundredths of one percent (.10%); and (B) on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate per annum equal to the lesser of (1) the highest rate allowed by applicable law, and (2) the interest rate then applicable to the Notes (after giving effect to the adjustment required by clause (A) above) plus two percent (2%). If following any adjustment pursuant to this Section 1.2(e)(i) the Credit Agreement shall be amended to provide for interest payments on the principal loan obligations under the Credit Agreement to be made monthly, the Company shall promptly provide written notice of such fact to all of the holders of the Notes and the interest payments on the Notes of each Series shall be adjusted, concurrently with the adjustment of the interest payments in respect of the principal loan obligations under the Credit Agreement, to be made on the dates, and at the rates (subject to subsection 1.2(e)(ii) below), provided in subsections 1.2(b)(iii), 1.2(c)(iii) and 1.2(d)(iii), respectively. (ii) SBQ Asset Sale. If the Company shall fail to make the SBQ Asset Sale Prepayment on or prior to January 31, 2001, the unpaid principal amount of the Notes of each Series shall bear interest (A) at all times after January 31, 2001 and until (and including) the maturity date thereof (whether such maturity is scheduled or occurs by reason of acceleration or otherwise) at a rate per annum equal to (x) the interest rate then applicable to the Notes plus (y) one percent (1%), provided, however, that if 6 the Company shall make the SBQ Asset Sale Prepayment after January 31, 2001, then at all times after the date of the SBQ Asset Sale Prepayment and until (and including) the maturity date of the Notes, the one percent (1%) increase in the interest rate applicable to the Notes referred to in clause (y) above shall be reduced to a fifty one-hundredths percent (.50%) increase; and (B) on any overdue principal (including any overdue prepayment of principal) and Make-Whole Amount, if any, and (to the extent permitted by applicable law) on any overdue installment of interest, at a rate per annum equal to the lesser of (1) the highest rate allowed by applicable law, and (2) the interest rate then applicable to the Notes (after giving effect to the adjustment required by clause (A) above) plus two percent (2%). (f) Notes. The term "Note" as used herein shall include each Note delivered pursuant to this Agreement and the other Note Purchase Agreements and each Note delivered in substitution or exchange for any such Note pursuant to Section 7.2 or Section 7.3 of this Agreement or any of the other Note Purchase Agreements, and shall be deemed, when reference is made to a date prior to the Effective Date, to be a reference to the Original Notes, and when reference is made to a date on or after the Effective Date, to be a reference to the Amended Series A Notes, Amended Series B Notes and Amended Series C Notes. The Amended Series A Notes, Amended Series B Notes and Amended Series C Notes are referred to collectively as the "Amended Notes." 1.3. The Closing. (a) Purchase and Sale of Notes. On the Original Closing Date, the Company agreed to sell to you and you agreed to purchase from the Company, in accordance with the provisions hereof, the aggregate principal amount of each Series of Notes set forth below your name on Annex 1 to the Original Note Purchase Agreements (in the amount or amounts and of the Series set forth therein) at one hundred percent (100%) of the principal amount thereof. (b) The Closing. The closing (the "Closing") of the Company's sale of Notes occurred on December 15, 1995 (the date of the Closing herein referred to as the "Original Closing Date"). At the Closing, the Company delivered to you one or more Notes (as set forth below your name on Annex 1 to the Original Note Purchase Agreements), in the Series and denominations indicated on Annex 1 to the Original Note Purchase Agreements, in the 7 aggregate principal amount of your purchase, dated the Original Closing Date and payable to you or payable as indicated on Annex 1 hereto, against payment by federal funds wire transfer in immediately available funds of the purchase price thereof, as directed by the Company on Annex 2 hereto. 1.4. Purchase for Investment. (a) Purchase for Investment. On the Original Closing Date, you represented to the Company that you were purchasing the Notes listed on Annex 1 to the Original Note Purchase Agreements below your name for your own account for investment and with no present intention of distributing the Notes or any part thereof, but without prejudice to your right at all times to: (i) sell or otherwise dispose of all or any part of the Notes under a registration statement filed under the Securities Act, or in a transaction exempt from the registration requirements of the Securities Act; and (ii) have control over the disposition of all of your assets to the fullest extent required by any applicable insurance law. It is understood that when the Company made the representations set out in Section 2.14(a) hereof and Section 2.15 hereof on the Original Closing Date, the Company was relying, to the extent applicable, upon your representation as aforesaid. (b) ERISA. On the Original Closing Date, you represented that: (i) you were acquiring the Notes for your own account with funds from your general account assets or from assets of one or more segments of such general account, as the case may be, and that, solely for purposes of determining whether such acquisition is a "prohibited transaction" (as provided for in section 406 of ERISA or section 4975 of the IRC) and in reliance on the representations of the Company set forth in Section 2.11(c)(ii) to the Original Note Purchase Agreement and the related disclosure of "employee benefit plans" set forth in Part 2.11(c)(ii) of Annex 3 to the Original Note Purchase Agreement, you have met all requirements for an exemption under DOL Prohibited Transaction Exemption 95-60 (60 FR 35925, July 12, 1995) in respect of such "employee benefit plans"; or (ii) if any part of the funds being used by you to purchase the Notes came from assets of an employee benefit plan (as defined in section 3 of ERISA) or a plan (as defined in section 4975(e)(1) of the IRC), that: 8 (A) if such funds are attributable to a "separate account" (as defined in section 3 of ERISA), then (1) all requirements for an exemption under DOL Prohibited Transaction Exemption 90-1, issued January 29, 1990 were met with respect to the use of such funds to purchase the Notes, or (2) the employee benefit plans with an interest in such separate account had been identified in a writing delivered by you to the Company; (B) if such funds were attributable to a "separate account" (as defined in section 3 of ERISA) that was maintained solely in connection with fixed contracted obligations of an insurance company, any amounts payable, or credited, to any employee benefit plan having an interest in such account and to any participant or beneficiary of such plan (including an annuitant) were not affected in any manner by the investment performance of the separate account; or (C) if such funds were attributable to an "investment fund" managed by a "qualified plan asset manager" (as such terms are defined in Part V of DOL Prohibited Transaction Exemption 84-14, issued March 13, 1984), all requirements for an exemption under such Exemption are met with respect to the use of such funds to purchase the Notes; or (iii) such employee benefit plan was excluded from the provisions of section 406 of ERISA by virtue of section 4(b) of ERISA. 1.5. Expenses. (a) Generally. Whether or not the transactions contemplated hereby are consummated, the Company will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all fees, expenses and costs (including reasonable attorneys' fees of a special counsel and, if reasonably required, local or other counsel) incurred by you and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, but not limited to: (i) the reasonable costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, the Notes or any other Financing 9 Document or in responding to any subpoena or other legal process or informal investigative demand issued in connection this Agreement, the Notes or any other Financing Document, or by reason of being a holder of any Note, (ii) the reasonable fees, costs and expenses, including reasonable attorneys' and reasonable financial advisors' fees, costs and expenses incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes, and (iii) the reasonable costs and expenses (including travel expenses) incurred in connection with the review, evaluation, negotiation, analysis, due diligence investigation or other activity related to any of the Financing Documents and the holders' and the Collateral Agent's rights and remedies thereunder (including any such activity occurring during any work-out or restructuring of the transactions contemplated hereby and by the Notes or during a bankruptcy, insolvency, reorganization or similar proceeding). (b) Counsel. Without limiting the generality of the foregoing, it is agreed and understood that the Company will pay, contemporaneously with the execution and delivery of the Waiver and Second Amendment on the Effective Date, each statement for reasonable fees and disbursements of your special counsel presented in connection with such execution and delivery and the Company will also pay, upon receipt of any statement thereof, each additional statement for reasonable fees and disbursements of your special counsel rendered after the Effective Date in connection with the Waiver and Second Amendment. (c) Broker's Fees. The Company agrees to indemnify and hold you harmless against any and all fees, expenses and costs of any broker or investment banker retained by the Company, if any, incurred in connection with the issuance and delivery of the Amended Notes, the execution and delivery of the Waiver and Second Amendment, or the transactions contemplated thereby. (d) Survival. The obligations of the Company under this Section 1.5 shall survive the payment or prepayment of the Notes and the termination hereof. 10 2. WARRANTIES AND REPRESENTATIONS To induce the Purchasers to enter into the Original Note Purchase Agreements and to purchase the Original Notes, the Company warranted and represented, as of the Original Closing Date, as set forth in this Section 2. The following representations and warranties are historical in nature and included in this Agreement as a matter of convenience only. All such representations and warranties and related disclosure schedules were made only as of the Original Closing Date and the Company makes no representation or warranty in this Agreement as to whether such representations and warranties were true on the Original Closing Date or at any time thereafter. Solely for purposes of this Section 2 references to "this Agreement," "hereto," "hereof," and terms of similar import are to the Original Note Purchase Agreements. 2.1. Nature of Business. Except as set forth in Part 2.1 of Annex 3 hereto, the Private Placement Memorandum, dated June 1995 and prepared by Nationsbanc Capital Markets, Inc. (together with all exhibits and annexes thereto, the "Placement Memorandum") (a copy of which previously has been delivered to you), correctly describes the general nature of the business and principal Properties of the Company and the Subsidiaries as of the Original Closing Date. 2.2. Financial Statements; Debt; Material Adverse Change. (a) Financial Statements. The Company has delivered to you the consolidated balance sheets of the Company and its consolidated subsidiaries as of June 30 in the years 1990, 1991, 1992, 1993, 1994 and 1995 and the related consolidated statements of income, changes in shareholders' equity and cash flows for the fiscal years ended on such dates, all accompanied by opinions thereon by Ernst & Young, independent certified public accountants. Such financial statements have been prepared in accordance with generally accepted accounting principles consistently applied, and present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of such dates and the results of their operations and cash flows for such periods. All such financial statements include the accounts of all subsidiaries of the Company for the respective periods during which a subsidiary relationship has existed. Except as set forth in Part 2.2(a) of Annex 3 hereto, all Restricted Subsidiaries were subsidiaries of the Company during all of the periods covered by such financial statements. (b) Indebtedness. Part 2.2(b) of Annex 3 hereto correctly lists all outstanding Indebtedness of the Company and the Subsidiaries (showing which portion is classified as current under GAAP) as of the Original Closing Date. 11 (c) Material Adverse Change. Since June 30, 1995, there has been no change in the business, prospects, profits, Properties or condition (financial or otherwise) of the Company or any of the Subsidiaries except changes in the ordinary course of business that, in the aggregate for all such changes, could not reasonably be expected to have a Material Adverse Effect. 2.3. Subsidiaries and Affiliates. Part 2.3 of Annex 3 hereto states: (a) the name of each Subsidiary (indicating which Subsidiaries are Restricted Subsidiaries), its jurisdiction of incorporation and the percentage of its Voting Stock owned by the Company and each other Subsidiary; and (b) the name of each Affiliate that is a corporation, partnership or joint venture (other than Subsidiaries) and the nature of the affiliation. Each of the Company and the Subsidiaries has good and marketable title to all of the shares it purports to own of the stock of each Subsidiary, free and clear in each case of any Lien. All such shares have been duly issued and are fully paid and nonassessable. 2.4. Pending Litigation. There are no proceedings, actions or investigations pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary in any court or before any Governmental Authority or arbitration board or tribunal that, in the aggregate for all such proceedings, actions and investigations, could reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary is in default with respect to any judgment, order, writ, injunction, or decree of any court, Governmental Authority or arbitration board or tribunal that, in the aggregate for all such defaults, could reasonably be expected to have a Material Adverse Effect. 2.5. Title to Properties. (a) Each of the Company and the Subsidiaries has good and marketable title to all of the real Property, and good title to all of the other Property, reflected in the most recent balance sheet referred to in Section 2.2(a) hereof (except as sold or otherwise disposed of in the ordinary course of business), except for such failures to have such good and marketable title as are immaterial to such financial statements and that, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect. All such Property is free from Liens not permitted by Section 8.9 of the Original Note Purchase Agreements. 12 (b) Each lease of real Property in the name or for the benefit of the Company or any Subsidiary is valid and subsisting and in full force and effect and good standing, except for such failures to be valid and subsisting and in full force and effect and good standing that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. (c) Each of the Company and the Subsidiaries owns, possesses or has the right to use all of the patents, trademarks, service marks, trade names, copyrights and licenses, and rights with respect thereto, necessary for the present and currently planned future conduct of its business, without any known conflict with the rights of others, except for such failures to own, possess, or have the right to use, that, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect. 2.6. Taxes. (a) Returns Filed; Taxes Paid. All tax returns required to be filed by each of the Company and each Subsidiary and any other Person with which the Company or any Subsidiary files or has filed a consolidated return in any jurisdiction have in fact been filed on a timely basis, and all taxes, assessments, fees and other governmental charges upon each of the Company, such Subsidiary and any such Person, and upon any of their respective Properties, income or franchises, that are due and payable have been paid. Except as disclosed in Part 2.6(a) of Annex 3 hereto, the Company does not know of any proposed additional tax assessment against it or any such Person. All liabilities of the Company and such Persons with respect to federal income taxes have been finally determined except for the fiscal years 1989 through 1995, the only years not closed by the completion of an audit or the expiration of the statute of limitations. (b) Book Provisions Adequate. The amount of the liability for taxes reflected in the consolidated balance sheet of the Company and its consolidated subsidiaries as of June 30, 1995 referred to in Section 2.2(a) hereof is an adequate provision for taxes (including, without limitation, any payment due pursuant to any tax sharing agreement) as are or may become payable by any one or more of the Company and its consolidated subsidiaries in respect of all tax periods ending on or prior to such date. 13 2.7. Full Disclosure. The financial statements referred to in Section 2.2(a) hereof do not, nor does this Agreement, the Placement Memorandum or any written statement furnished by or on behalf of the Company to you in connection with the negotiation of the sale of the Original Notes, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading. There is no fact that the Company has not disclosed to you in writing that has had or, so far as the Company can now reasonably foresee, could have a Material Adverse Effect. 2.8. Corporate Organization and Authority. Each of the Company and the Subsidiaries: (a) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation; (b) has all legal and corporate power and authority necessary to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted; (c) has all licenses, certificates, permits, franchises and other governmental authorizations necessary to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted, except where the failure to have such licenses, certificates and permits, in the aggregate for all such failures, could not reasonably be expected to have a Material Adverse Effect; and (d) has duly qualified or has been duly licensed, and is authorized to do business and is in good standing, as a foreign corporation, in each state where the failure to be so qualified or licensed and authorized and in good standing could reasonably be expected to have a Material Adverse Effect. 2.9. Restrictions on Company and Subsidiaries. Neither the Company nor any Subsidiary: (a) is a party to any contract or agreement, or subject to any charter or other corporate restriction that, in the aggregate for all such contracts, agreements, charter and corporate restrictions, could reasonably be expected to have a Material Adverse Effect; (b) is a party to any contract or agreement that restricts the right or ability of such corporation to incur Debt, other than this Agreement and the agreements listed in Part 2.9 of Annex 3 hereto, the terms of none of which is 14 violated by the issuance of the Original Notes or the execution and delivery of, or compliance with, this Agreement by the Company; and (c) has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its Property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 8.9 hereof. 2.10. Compliance with Law. Neither the Company nor any Subsidiary is in violation of any law, ordinance, governmental rule or regulation to which it is subject, which violations, in the aggregate, could reasonably be expected to have a Material Adverse Effect. 2.11. ERISA. (a) Relationship of Vested Benefits to Pension Plan Assets. The present value of all benefits, determined as of the most recent valuation date for such benefits as provided in Section 8.11(c) hereof, vested under each Pension Plan does not exceed the value of the assets of such Pension Plan allocable to such vested benefits, determined as of such date as provided in Section 8.11(c) hereof. (b) ERISA Requirements. Each of the Company and the ERISA Affiliates: (i) has fulfilled all obligations under the minimum funding standards of ERISA and the IRC with respect to each Pension Plan that is not a Multiemployer Plan; (ii) has satisfied all respective contribution obligations in respect of each Multiemployer Plan; (iii) is in compliance in all material respects with all other applicable provisions of ERISA and the IRC with respect to each Pension Plan and each Multiemployer Plan; and (iv) has not incurred any liability under Title IV of ERISA to the PBGC (other than in respect of required insurance premiums, all of which that are due having been paid), with respect to any Pension Plan, any Multiemployer Plan or any trust established thereunder. 15 No Pension Plan, or trust created thereunder, has incurred any "accumulated funding deficiency" (as defined in section 302 of ERISA), whether or not waived, as of the last day of the most recently ended plan year of such Pension Plan. (c) Prohibited Transactions. (i) The purchase of the Original Notes by you will not constitute a "prohibited transaction" (as defined in section 406 of ERISA or section 4975 of the IRC) that could subject any Person to the penalty or tax on prohibited transactions imposed by section 502 of ERISA or section 4975 of the IRC, and neither the Company or any ERISA Affiliate, nor any "employee benefit plan" (as hereinafter defined) of the Company or any ERISA Affiliate or any trust created thereunder or any trustee or administrator thereof, has engaged in any "prohibited transaction" that could subject any such Person, or any other party dealing with such employee benefit plan or trust, to such penalty or tax. The representation by the Company in the preceding sentence is made in reliance upon and subject to the accuracy of the representations in Section 1.3(b) hereof as to the source of funds used by you. (ii) Part 2.11(c)(ii) of Annex 3 hereto completely lists all ERISA Affiliates and all employee benefit plans with respect to which the Company or any "affiliate" (as hereinafter defined) is a "party- in-interest" (as hereinafter defined) or in respect of which the Original Notes could constitute an "employer security" (as hereinafter defined). As used in this Section 2.11(c), the terms "employee benefit plan" and "party-in-interest" have the meanings specified in section 3 of ERISA, "affiliate" has the meaning specified in section 407(d) of ERISA and section V of DOL Prohibited Transaction Exemption 95-60 (60 FR 35925, July 12, 1995) and "employer security" has the meaning specified in section 407(d) of ERISA. (d) Reportable Events. No Pension Plan or trust created thereunder has been terminated, and there have been no "reportable events" (as defined in section 4043 of ERISA), with respect to any Pension Plan or trust created thereunder or with respect to any Multiemployer Plan, which reportable event or events will or could result in the termination of such Pension Plan or Multiemployer Plan and give rise to a liability of the Company or any ERISA Affiliate in respect thereof. (e) Multiemployer Plans. Except as set forth in Part 2.11(e) of Annex 3 hereto, neither the Company nor any ERISA Affiliate is an employer required to contribute to any Multiemployer Plan. Neither the Company nor 16 any ERISA Affiliate has incurred, or is expected to incur, any withdrawal liability (that has not previously been fully satisfied) under ERISA with respect to any Multiemployer Plan. None of the Multiemployer Plans referred to in such Part of Annex 3 hereto have been terminated under section 4041A of ERISA, have been placed in reorganization status under Title IV of ERISA or have been determined to be "insolvent" (as defined in section 4245 of ERISA). (f) Multiple Employer Pension Plans. Except as set forth in Part 2.11(f) of Annex 3 hereto, neither the Company nor any ERISA Affiliate is a "contributing sponsor" (as defined in section 4001 of ERISA) in any Multiple Employer Pension Plan and neither the Company nor any ERISA Affiliate has incurred (without fully satisfying the same), or reasonably expects to incur, withdrawal liability in respect of any such Multiple Employer Pension Plan listed in such Part of Annex 3 hereto, which withdrawal liability could have a Material Adverse Effect. (g) Foreign Pension Plan. No Foreign Pension Plans presently exist or existed in the past. 2.12. Certain Laws. (a) Investment Company Act. Neither the Company nor any Subsidiary is, or is directly or indirectly controlled by, or acting on behalf of any Person that is, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (b) Holding Company Status. Neither the Company nor any Subsidiary is a "holding company" or an "affiliate" of a "holding company," or a "subsidiary company" of a "holding company," or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 2.13. Environmental Compliance. Except as set forth in Part 2.13 of Annex 3 hereto: (a) Compliance - each of the Company and the Subsidiaries is in compliance with all Environmental Protection Laws in effect in each jurisdiction where it is presently doing business, and in which the failure so to comply could be reasonably expected to have a Material Adverse Effect; (b) Liability - neither the Company nor any of the Subsidiaries is subject to any liability under any Environmental Protection Laws that, in the aggregate, could reasonably be expected to have a Material Adverse Effect; and 17 (c) Notices - neither the Company nor any Subsidiary has received any (i) notice from any Governmental Authority by which any of its present or previously-owned or leased real Properties has been designated, listed, or identified in any manner by any Governmental Authority charged with administering or enforcing any Environmental Protection Law as a Hazardous Substance disposal or removal site, "Super Fund" clean-up site, or candidate for removal or closure pursuant to any Environmental Protection Law, (ii) notice of any Lien arising under or in connection with any Environmental Protection Law that has attached to any revenues of, or to, any of its owned or leased real Properties, or (iii) summons, citation, notice, directive, letter, or other communication, written or oral, from any Governmental Authority concerning any intentional or unintentional action or omission by the Company or such Subsidiary in connection with its ownership or leasing of any real Property resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying, dumping, or otherwise disposing of any Hazardous Substance into the environment resulting in any material violation of any Environmental Protection Law, in each case where the effect of the matters that are the subject of any such notice, summons, citation, directive, letter or other communication could reasonably be expected to have a Material Adverse Effect. 2.14. Sale is Legal and Authorized; Obligations are Enforceable. (a) Sale is Legal and Authorized. Each of the issuance, sale and delivery of the Original Notes by the Company, the execution and delivery hereof by the Company and compliance by the Company with all of the provisions hereof and of the Original Notes: (i) is within the corporate powers of the Company; and (ii) is legal and does not conflict with, result in any breach in any of the provisions of, constitute a default under, or result in the creation of any Lien upon any Property of the Company or any Subsidiary under the provisions of, any agreement, charter instrument, bylaw or other instrument to which it is a party or by which it or any of its Property may be bound. (b) Obligations are Enforceable. Each of this Agreement and the Original Notes has been duly authorized by all necessary action on the 18 part of the Company, has been executed and delivered by duly authorized officers of the Company and constitutes a legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except that the enforceability hereof and of the Original Notes may be: (i) limited by applicable bankruptcy, reorganization, arrangement, insolvency, moratorium or other similar laws affecting the enforceability of creditors' rights generally; and (ii) subject to the availability of equitable remedies. 2.15. Governmental Consent. Neither the nature of the Company or any Subsidiary, or of any of their respective businesses or Properties, nor any relationship between the Company or any Subsidiary and any other Person, nor any circumstance in connection with the offer, issuance, sale or delivery of the Original Notes and the execution and delivery of this Agreement, is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority on the part of the Company as a condition to the execution and delivery of this Agreement or the offer, issuance, sale or delivery of the Original Notes. 2.16. Private Offering. Neither the Company nor NationsBanc Capital Markets, Inc. (the only Person authorized or employed by the Company as agent, broker, dealer or otherwise in connection with the offering or sale of the Original Notes or any similar Security of the Company, other than employees of the Company) has offered any of the Original Notes or any similar Security of the Company for sale to, or solicited offers to buy any thereof from, or otherwise approached or negotiated with respect thereto with, any prospective purchaser, other than you and one hundred twenty-five (125) other institutional investors, each of whom was offered all or a portion of the Original Notes at private sale for investment. 2.17. No Defaults. (a) The Original Notes. No event has occurred and no condition exists that, upon the issuance of the Original Notes and the execution and delivery of this Agreement, would constitute a Default or an Event of Default. (b) Charter Instrument, Other Agreements. Neither the Company nor any Subsidiary is in violation in any respect of any term of any charter instrument or bylaw and neither the Company nor any Subsidiary is in violation in any respect of any term in any agreement or other instrument to which it is a party or by which it or any of its Property may be bound, 19 except for violations which, in the aggregate for all such violations, could not reasonably be expected to have a Material Adverse Effect. 2.18. Use of Proceeds. (a) Use of Proceeds. The Company will apply the proceeds from the sale of the Original Notes in the manner specified in Part 2.18(a) of Annex 3 hereto. (b) Margin Securities. None of the transactions contemplated herein and in the Original Notes (including, without limitation, the use of the proceeds from the sale of the Original Notes) violates, will violate or will result in a violation of section 7 of the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto, including, without limitation, Regulations G, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. Neither the Company nor any Subsidiary owns, or with the proceeds of the sale of the Original Notes intends to own, carry or purchase, or refinance borrowings that were used to own, carry or purchase, any Margin Security, including Margin Securities originally issued by the Company or any Subsidiary. The obligations of the Company under this Agreement and the Original Notes are not and will not be secured by any Margin Security, and no Original Notes are being sold on the basis of any such collateral. (c) Absence of Foreign or Enemy Status. The Company is not an "enemy" or an "ally of the enemy" within the meaning of section 2 of the Trading with the Enemy Act (50 U.S.C. App. (S)(S) 1 et seq.), as amended. The Company is not in violation of, and neither the issuance and sale of the Original Notes by the Company nor its use of the proceeds thereof as contemplated by this Agreement will violate, the Trading with the Enemy Act, as amended, or the International Emergency Economic Powers Act, as amended, or any executive orders, proclamations or regulations issued pursuant thereto including, without limitation, regulations administered by the Office of Foreign Asset Control of the Department of the Treasury (31 C.F.R., Subtitle B, Chapter V). 20 3. INTENTIONALLY OMITTED 4. HOLDERS' SPECIAL RIGHTS 4.1. Direct Payment. Notwithstanding anything to the contrary contained herein or in the Amended Notes, but subject to the terms of the Intercreditor Agreement, the Company will pay, or will direct the Collateral Agent to pay, all amounts payable with respect to each Amended Note held by an Institutional Investor (without any presentment of such Amended Notes and without any notation of such payment being made thereon) by crediting (prior to 11:00 a.m. local time of such Institutional Investor's bank), by federal funds bank wire transfer, the account of such Institutional Investor in any bank in the United States of America as may be designated in writing by such Institutional Investor, or in such other manner as may be reasonably directed or to such other address in the United States of America as may be reasonably designated in writing by such Institutional Investor. Your address on Annex 1 hereto will be deemed to constitute notice, direction or designation (as appropriate) to the Company with respect to direct payments as aforesaid. In all other cases, all amounts payable with respect to each Amended Note will be made by check mailed and addressed to the registered holder of each Amended Note at the address shown in the register maintained by the Company pursuant to Section 8.3 hereof. Each holder of Amended Notes agrees that, in the event it shall sell or transfer any Amended Note, it shall: (a) prior to the delivery of such Amended Note, make a notation thereon of all principal, if any, prepaid on such Amended Note and shall also note thereon the date to which interest shall have been paid on such Amended Note; and (b) promptly notify the Company of the name and address of the transferee of any such Amended Note so transferred and the effective date of such transfer. 4.2. Delivery Expenses. If any holder of Amended Notes surrenders any Amended Note to the Company pursuant hereto, the Company will pay the cost of delivering to or from such holder's home office or custodian bank from or to the Company, insured to the reasonable satisfaction of such holder, the surrendered Amended Note and any Amended Note issued in substitution or replacement for the surrendered Amended Note. 21 4.3. Issuance Taxes. The Company will pay all taxes (other than any income taxes imposed upon any Purchaser) arising in connection with the issuance and sale of the Amended Notes or in connection with any modification of this Agreement and the Amended Notes, and will save each holder of Amended Notes harmless without limitation as to time against any and all liabilities with respect to all such taxes. The obligations of the Company under this Section 4.3 shall survive the payment or prepayment of the Amended Notes and the termination hereof. 5. PREPAYMENTS 5.1. Required Scheduled Prepayments. (a) Amended Series A Notes. There shall be no required scheduled prepayments in respect of the Amended Series A Notes. The entire principal amount of the Amended Series A Notes remaining outstanding on December 15, 2002, together with accrued unpaid interest thereon, shall be due and payable on such date. (b) Amended Series B Notes. The Company shall prepay, and there shall become due and payable, Three Million Five Hundred Thousand Dollars ($3,500,000) in aggregate principal amount of the Amended Series B Notes on December 15 in each year beginning on December 15, 2002 and ending on December 15, 2004, inclusive. Each such prepayment shall be at one hundred percent (100%) of the principal amount prepaid, together with interest accrued thereon to the date of prepayment. The entire principal amount of the Amended Series B Notes remaining outstanding on December 15, 2005, together with accrued unpaid interest thereon, shall be due and payable on such date. (c) Amended Series C Notes. There shall be no required scheduled prepayments in respect of the Amended Series C Notes. The entire principal amount of the Amended Series C Notes remaining outstanding on December 15, 2005, together with accrued unpaid interest thereon, shall be due and payable on such date. 5.2. Other Prepayments. (a) Optional Prepayments. The Company may at any time after the Original Closing Date prepay (without distinguishing among the different Series) the principal amount of the Amended Notes in part, in integral multiples of Five Million Dollars ($5,000,000), or in whole, in each case together with: 22 (i) an amount equal to the Make-Whole Amount at such time in respect of the principal amount of each Series of the Amended Notes being so prepaid, and (ii) interest on such principal amount then being prepaid accrued to the prepayment date. (b) Special Prepayments. In any event wherein the Company requests from all of the holders of the Amended Notes (pursuant to Section 12.5 hereof) an amendment to, or waiver of (in each case setting forth in such request detailed information concerning the transaction or condition for which the amendment or waiver is requested), the Company's obligations hereunder that are permitted by the provisions of Section 12.5 to be amended or waived with consent of the Majority Holders, and the Majority Holders do not, within sixty (60) days of the date on which such request is made, grant their consent to the proposed amendment or waiver, the Company may prepay Amended Notes as set forth in this Section 5.2(b), provided that all of the following conditions are met: (i) the Company elects to prepay all, but not less than all, of the Amended Notes held by each holder of Amended Notes that shall have not consented to the proposed amendment or waiver; and (ii) the Company, within forty-five (45) days of the expiration of such sixty (60) day period contemporaneously prepays each holder of Amended Notes who has not consented to the proposed amendment or waiver in an amount equal to the aggregate principal amount of all Amended Notes of each Series held by such holder, together with interest accrued and unpaid on such principal amount and the Make- Whole Amount in respect of such principal amount of Amended Notes of each such Series. (c) Cash Flow Sweep Prepayments. In the event that any Secured Party acquires custody, control or possession of any payment constituting a Post- Default Cash Sweep Payment (as defined in the Intercreditor Agreement), such amount shall be paid over to the Collateral Agent for distribution as provided in Section 4.1(b) of the Intercreditor Agreement. Each amount received from the Collateral Agent as contemplated by this Section 5.2(c) in respect of the Amended Notes shall constitute an amount paid in respect of a prepayment of the Amended Notes which includes a principal amount, together with interest accrued thereon to the date of prepayment and the Make-Whole Amount in respect of such principal amount of Amended Notes of each such Series. 23 (d) Disposition Prepayments. If the Collateral Agent receives any cash amounts as payments under the Security Documents or as proceeds of or otherwise constituting Collateral (including, without limitation, net proceeds received in connection with an Acceptable SBQ Asset Sale or any other Disposition (as defined in the Intercreditor Agreement as in effect on the Effective Date)), as more particularly described in Section 4.1(b) of the Intercreditor Agreement, such amounts shall be distributed as provided in Section 4.1(b) of the Intercreditor Agreement. Each amount received from the Collateral Agent as contemplated by this Section 5.2(d) in respect of the Amended Notes shall constitute an amount paid in respect of a prepayment of the Amended Notes which includes a principal amount, together with interest accrued thereon to the date of prepayment and the Make-Whole Amount in respect of such principal amount of Amended Notes of each such Series. (e) Equity Issuance Prepayments. In the event of any Equity Issuance by the Company, sixty percent (60%) of the Net Proceeds of such Equity Issuance shall be promptly paid over to the Collateral Agent for distribution as provided in Section 4.1(b) of the Intercreditor Agreement. Each amount received from the Collateral Agent as contemplated by this Section 5.2(e) in respect of the Amended Notes shall constitute an amount paid in respect of a prepayment of the Amended Notes which includes a principal amount, together with interest accrued thereon to the date of prepayment and the Make-Whole Amount in respect of such principal amount of Amended Notes of each such Series. (f) Effect of Prepayments. Each prepayment of principal of the Amended Notes pursuant to Section 5.2(a), Section 5.2(c), Section 5.2(d) and Section 5.2(e) hereof shall be applied first, to the principal amount of the Amended Notes of each Series due on the maturity date of the Amended Notes of such Series and second, in the case of the Amended Series B Notes, to the mandatory principal prepayments applicable to the Amended Series B Notes, as set forth in Section 5.1 hereof, in the inverse order of the maturity thereof. Each prepayment of principal of the Amended Notes of any Series pursuant to Section 5.2(b) and each purchase of Amended Notes pursuant to Section 8.7 hereof shall be applied ratably to the principal amount of the Amended Notes of such Series due on the maturity date of the Amended Notes of such Series and, in the case of the Amended Series B Notes, to each remaining mandatory principal prepayment required by Section 5.1 hereof. 24 5.3. Notice of Optional Prepayment. The Company will give notice of each prepayment of the Amended Notes made pursuant to the provisions of Section 5.2 to each holder of Amended Notes (in the case of prepayments made pursuant to Section 5.2(a), Section 5.2(c), Section 5.2(d) and Section 5.2(e)) and to each holder of Amended Notes to be prepaid (in the case of prepayments made pursuant to Section 5.2(b)), in each case not less than thirty (30) days or more than sixty (60) days before the date fixed for prepayment, specifying: (a) such date; (b) the Section hereof under which the prepayment is to be made; (c) the principal amount of each Amended Note to be prepaid on such date; (d) the interest to be paid on each such Amended Note, accrued to the date fixed for payment; and (e) a reasonably detailed calculation of an estimated Make-Whole Amount, if any (calculated as if the date of such notice was the date of prepayment), that would be due in connection with such prepayment. Such notice of prepayment shall also certify all facts that are conditions precedent to any such prepayment. Further, with respect to any prepayment made pursuant to Section 5.2(c), 5.2(d) or 5.2(e) hereof, the notice required in the first sentence of this Section 5.3 shall be given within the time period specified to the extent practicable given the timing of the event or events triggering the obligations of the Company to make such prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Amended Notes specified in such notice, together with the Make-Whole Amount, if any, and accrued interest thereon shall become due and payable on the specified prepayment date. Two (2) Business Days prior to the making of any such prepayment, the Company shall deliver to each holder of Amended Notes to be prepaid a certificate of the Chairman, the Vice Chairman, a Vice President, the Treasurer or the President of the Company specifying the calculation of such Make-Whole Amount as of the specified prepayment date, accompanied by a copy of any applicable documentation used in connection with determining the Make-Whole Discount Rate in respect of such prepayment. 25 5.4. Partial Prepayment Pro Rata. If at the time any required or optional prepayment under Section 5.1 or Section 5.2(a), Section 5.2(c), Section 5.2(d) or Section 5.2(e) hereof is due there is more than one Amended Note outstanding, the aggregate principal amount of each required or optional partial prepayment of the Amended Notes shall be allocated among the holders of the Amended Notes at the time outstanding in proportion (without distinguishing among the different Series), as nearly as practicable, to the respective unpaid principal amounts of the Amended Notes then outstanding, with adjustments, to the extent practicable, to equalize for any prior prepayments not in such proportion. 5.5. Notation of Amended Notes on Prepayment. Upon any partial prepayment of an Amended Note, such Amended Note may, at the option of the holder thereof, be (a) surrendered to the Company pursuant to Section 7.2 hereof in exchange for a new Amended Note in a principal amount equal to the principal amount remaining unpaid on the surrendered Amended Note, (b) made available to the Company for notation thereon of the portion of the principal so prepaid, or (c) marked by such holder with a notation thereon of the portion of the principal so prepaid. In case the entire principal amount of any Amended Note is prepaid, such Amended Note shall be surrendered to the Company for cancellation and shall not be reissued, and no Amended Note shall be issued in lieu of the prepaid principal amount of any Amended Note. 5.6. No Other Optional Prepayments. Except as provided in Section 5.2 hereof or in accordance with an offer made in compliance with Section 6 or Section 8.7 hereof, the Company shall not make any optional prepayment (whether directly or indirectly by purchase or other acquisition) in respect of the Amended Notes. 6. CHANGE IN CONTROL PUT 6.1. Offer to Prepay upon Change in Control. (a) Notice and Offer. In the event of either (i) a Change in Control, or 26 (ii) the obtaining of knowledge of a Control Event by the Company (including, without limitation, via the receipt of notice of a Control Event from any holder of Notes), the Company will, within three (3) Business Days of the occurrence of either of such events (or, in the case of any Change in Control the consummation or finalization of which would involve any action of the Company, at least thirty (30) days prior to such Change in Control), give written notice of such Change in Control or Control Event to each holder of Notes by registered mail and, simultaneously with the sending of such written notice, send a copy of such notice to each such holder via an overnight courier of national reputation. In the event of a Change in Control, such written notice shall contain, and such written notice shall constitute, an irrevocable offer to prepay all, but not less than all, the Notes held by such holder on a date specified in such notice (the "Control Prepayment Date") that is not less than thirty (30) days and not more than sixty (60) days after the date of such notice. If the Control Prepayment Date shall not be specified in such notice, the Control Prepayment Date shall be the thirtieth (30th) day after the date of such holder's first receipt of such notice. If the Company shall not have received a written response to such notice from each holder of Notes within ten (10) days after the date of posting of such notice to such holder of Notes, then the Company shall immediately send a second written notice via an overnight courier of national reputation to each such holder of Notes who shall have not previously responded to the Company. In no event will the Company take any action to consummate or finalize a Change in Control unless contemporaneously with such action the Company prepays all Notes required to be prepaid in accordance with Section 6.1(b) hereof. (b) Acceptance and Payment. To accept such offered prepayment, a holder of Notes shall cause a notice of such acceptance to be delivered to the Company not later than fifteen (15) days after the date of receipt by such holder of the latest written offer of such prepayment (it being understood that the failure by a holder to respond to such written offer of prepayment within such period of fifteen (15) days shall be deemed to constitute a rejection of such offer, provided that such deemed rejection shall not prejudice such holder's right to accept any subsequent offer). If so accepted, such offered prepayment shall be due and payable on the Control Prepayment Date. Such offered prepayment shall be made at one hundred percent (100%) of the principal amount of such Notes, together with any Make-Whole Amount as of the Control Prepayment Date with respect thereto and interest on the Notes then being prepaid accrued to the Control Prepayment Date. Two (2) Business Days prior to the making of any such prepayment, the Company shall deliver to each holder of such Notes by facsimile transmission a certificate of the Chairman, the Chief Executive Officer, an Executive Vice President, a Vice President, the Treasurer or the 27 President of the Company specifying the details of the calculation of such Make-Whole Amount as of the specified Control Prepayment Date, accompanied by a copy of any applicable documentation used in connection with determining the Make-Whole Discount Rate in respect of such prepayment. (c) Officer's Certificate. Each offer to prepay the Notes pursuant to this Section 6.1 shall be accompanied by a certificate, executed by the Chairman, the Chief Executive Officer, an Executive Vice President, a Vice President, the Treasurer or the President of the Company and dated the date of such offer, specifying: (i) the Control Prepayment Date; (ii) the Section hereof under which such offer is made; (iii) the principal amount of each Note offered to be prepaid; (iv) the interest that would be due on each such Note offered to be prepaid, accrued to the date fixed for payment; (v) a reasonably detailed calculation of an estimated Make-Whole Amount, if any (calculated as if the date of such notice was the date of prepayment), that would be due in connection with such offered prepayment; (vi) that the conditions of this Section 6.1 have been fulfilled; and (vii) in reasonable detail, the nature and date or proposed date of the Change in Control. 6.2. Effect of Prepayments. Each prepayment of principal of the Notes of any Series pursuant to Section 6.1 shall be applied ratably to the principal amount of the Notes of such Series due on the maturity date of the Notes of such Series and, in the case of the Amended Series B Notes, to each remaining mandatory principal prepayment required by Section 5.1 hereof. 28 7. REGISTRATION; SUBSTITUTION OF NOTES 7.1. Registration of Notes. The Company will cause to be kept at its office, maintained pursuant to Section 8.3 hereof, a register for the registration and transfer of Notes. The name and address of each holder of one or more Notes, the outstanding principal amount and Series of each such Note, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in the register. The Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. 7.2. Exchange of Notes. Upon surrender of any Note at the office of the Company maintained pursuant to Section 8.3 hereof duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or its attorney duly authorized in writing, the Company will execute and deliver, within five (5) Business Days after such surrender, at the Company's expense (except as provided below), new Notes in exchange therefor, of the same Series as such surrendered Note, in denominations of at least One Hundred Thousand Dollars ($100,000) (except as may be necessary to reflect any principal amount not evenly divisible by One Hundred Thousand Dollars ($100,000)), in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit A1, Exhibit A2 or Exhibit A3 hereto, as applicable. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. 7.3. Replacement of Notes. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor (or of such Institutional Investor's nominee) of such ownership and such loss, theft, destruction or mutilation) and (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is an Institutional Investor or a nominee of an Institutional Investor, such Institutional Investor's own unsecured agreement of indemnity shall be deemed to be satisfactory for such purpose), or 29 (b) in the case of mutilation, upon surrender and cancellation thereof, the Company at its own expense will execute and deliver, within five (5) Business Days after such receipt, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. 8. COMPANY BUSINESS COVENANTS The Company covenants that on and after the Effective Date and so long as any of the Notes shall be outstanding: 8.1. Payment of Taxes and Claims. The Company will, and will cause each Subsidiary to, pay before they become delinquent: (a) all taxes, assessments and governmental charges or levies imposed upon it or its Property; and (b) all claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons that, if unpaid, might result in the creation of a Lien upon its Property; provided, that items of the foregoing description need not be paid (i) while being contested in good faith and by appropriate proceedings as long as adequate book reserves have been established and maintained and exist with respect thereto, and (ii) so long as the title of the Company or the Subsidiary, as the case may be, to, and its right to use, such Property, is not materially adversely affected thereby. 8.2. Maintenance of Properties and Corporate Existence. The Company will, and will cause each Subsidiary to: (a) Property - maintain its Property in good condition for its intended purpose, ordinary wear and tear excepted, and make all necessary renewals, replacements, additions, betterments and improvements thereto; (b) Insurance - maintain, with Acceptable Insurers, insurance with respect to its Property and business against such casualties and contingencies, of such types (including, without limitation, insurance with 30 respect to losses arising out of Property loss or damage, public liability, business interruption, larceny, workers' compensation, embezzlement or other criminal misappropriation) and in such amounts as is customary in the case of corporations of established reputations engaged in the same or a similar business and similarly situated, provided, however, that if an insurer is an Acceptable Insurer at the beginning of any policy period, it shall be deemed to remain an Acceptable Insurer for the balance of such policy period; (c) Financial Records - keep accurate books of records and accounts in which full and correct entries shall be made of all its business transactions and that will permit the provision of accurate and complete financial statements in accordance with GAAP; (d) Corporate Existence and Rights - do or cause to be done all things necessary (i) to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises, subject to Section 8.18 hereof, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, and (ii) to maintain each Restricted Subsidiary as a Restricted Subsidiary, except as otherwise permitted by Section 8.18 hereof; and (e) Compliance with Law - not be in violation of any law, ordinance or governmental rule or regulation to which it is subject (including, without limitation, any Environmental Protection Law and OSHA) and not fail to obtain any license, certificate, permit, franchise or other governmental authorization necessary to the ownership of its Properties or to the conduct of its business if such violation or failure to obtain could be reasonably expected to have a Material Adverse Effect. 8.3. Payment of Notes and Maintenance of Office. The Company will punctually pay, or cause to be paid, the principal of and interest (and Make-Whole Amount, if any) on, the Notes, as and when the same shall become due according to the terms hereof and of the Notes, and will maintain an office at the address of the Company set forth in Section 12.1 hereof where notices, presentations and demands in respect hereof or the Notes may be made upon it. Such office will be maintained at such address until such time as the Company shall notify the holders of the Notes of any change of location of such office, which will in any event be located within the United States of America. 31 8.4. ERISA. (a) Compliance. The Company will, and will cause each ERISA Affiliate to, at all times with respect to each Pension Plan, make timely payment of contributions required to meet the minimum funding standard set forth in ERISA or the IRC with respect thereto, and to comply with all other applicable provisions of ERISA. (b) Relationship of Vested Benefits to Pension Plan Assets. The Company will not at any time permit the present value of all employee benefits vested under each Pension Plan to exceed the assets of such Pension Plan allocable to such vested benefits at such time, in each case determined pursuant to Section 8.4(c) hereof. (c) Valuations. All assumptions and methods used to determine the actuarial valuation of vested employee benefits under Pension Plans and the present value of assets of Pension Plans will be reasonable in the good faith judgment of the Company and will comply with all requirements of law. (d) Prohibited Actions. The Company will not, and will not permit any ERISA Affiliate to: (i) engage in any "prohibited transaction" (as defined in section 406 of ERISA or section 4975 of the IRC) that would result in the imposition of a material tax or penalty; (ii) incur with respect to any Pension Plan any "accumulated funding deficiency" (as defined in section 302 of ERISA), whether or not waived; (iii) terminate any Pension Plan in a manner that could result in (A) the imposition of a Lien on the Property of the Company or any Subsidiary pursuant to section 4068 of ERISA, or (B) the creation of any liability under section 4062 of ERISA; (iv) fail to make any payment required by section 515 of ERISA; or (v) at any time be an "employer" (as defined in section 3(5) of ERISA) required to contribute to any Multiemployer Plan if, at such time, it could reasonably be expected that the Company or any 32 Restricted Subsidiary will incur withdrawal liability in respect of such Multiemployer Plan and such liability, if incurred, together with the aggregate amount of all other withdrawal liability as to which there is a reasonable expectation of incurrence by the Company or any Restricted Subsidiary under any one or more Multiemployer Plans, could reasonably be expected to have a Material Adverse Effect. 8.5. Line of Business. The Company will not, and will not permit any Restricted Subsidiary to, engage in any business other than the businesses related to their present businesses or those that are substantially similar to their present businesses. 8.6. Transactions with Affiliates. The Company will not, and will not permit any Restricted Subsidiary to, enter into any transaction, including, without limitation, the purchase, sale or exchange of Property or the rendering of any service, with any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of the Company's or such Restricted Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate. 8.7. Pro-Rata Offers. Except as provided in Section 5.2(b) above, the Company will not, and will not permit any Restricted Subsidiary or any Affiliate to, directly or indirectly, acquire or make any offer to acquire any Notes unless the Company or such Restricted Subsidiary or Affiliate shall have offered to acquire Notes, pro rata, from all holders of Notes and upon the same terms. In case the Company acquires any Notes, such Notes will immediately thereafter be cancelled and no Notes will be issued in substitution therefor. 8.8. Private Offering. The Company will not, and will not permit any Person acting on its behalf to, offer the Notes or any part thereof or any similar Securities for issuance or sale to, or solicit any offer to acquire any of the same from, any Person so as to bring the issuance and sale of the Notes within the provisions of section 5 of the Securities Act. 8.9. Designation of Subsidiaries. (a) Right of Designation. Each Subsidiary acquired after the Effective Date that, as of the date of such acquisition or at any future date, meets all of the requirements of a Restricted Subsidiary, as set forth in the definition thereof, shall be deemed, on and after such date and without any 33 further action by the Company or any holder of Notes, to have been designated by the Company as a Restricted Subsidiary. Each Subsidiary designated as a Restricted Subsidiary in Schedule 3.1 to the Waiver and Second Amendment and each other Restricted Subsidiary shall, so long as it shall continue to satisfy the requirements of the definition of Restricted Subsidiary, be a Restricted Subsidiary on and after the Effective Date and all other Subsidiaries, if any, listed in such Schedule 3.1 shall, subject to Section 8.9(b) hereof, be Unrestricted Subsidiaries on and after the Effective Date. (b) Right of Redesignation. Subject to the satisfaction of the requirements of Section 8.9(c) hereof, the Company shall have the right, with respect to each Subsidiary that is an Unrestricted Subsidiary as of the Effective Date, to designate such Subsidiary as a Restricted Subsidiary by delivering a written notice to such effect, signed by the Chairman, the Chief Executive Officer, an Executive Vice President, a Vice President or the President of the Company, to each holder of Notes. Any designation under and in accordance with this Section 8.9(b) shall become effective, for purposes of this Agreement, on the day that notice thereof shall have been mailed (postage prepaid, by registered or certified mail, return receipt requested) by the Company to each holder of Notes at the addresses as provided in Section 12.1 hereof. The Company shall not have the right to designate a Restricted Subsidiary as an Unrestricted Subsidiary. (c) Designation Criteria. (i) No Unrestricted Subsidiary shall at any time after the Effective Date be designated as a Restricted Subsidiary unless: (A) such Subsidiary at such time meets all of the requirements of a Restricted Subsidiary as set forth in the definition thereof; and (B) immediately before and after, and after giving effect to such designation, and assuming that all Investments of, all obligations and liabilities of, and all Liens on the Property of, such Subsidiary being so designated were made or incurred contemporaneously with such designation, no Default or Event of Default exists or would exist. (ii) No Restricted Subsidiary shall at any time after the Effective Date be designated as an Unrestricted Subsidiary. 8.10. New Restricted Subsidiaries or Properties. (a) Guaranty Agreement. The Company will cause each Person that, after the Effective Date, becomes a direct or indirect Restricted 34 Subsidiary of the Company, to become, promptly and in any event within ten (10) Business Days of becoming a Restricted Subsidiary, a Guarantor by executing and delivering an Accession Agreement. (b) Security Agreement and Stock Pledge Agreement. The Company will cause each Person that, after the Effective Date, becomes a direct or indirect Restricted Subsidiary of the Company, to become, promptly and in any event within ten (10) Business Days of becoming a Restricted Subsidiary, a Pledgor under (and as defined in) each of the Security Agreement and the Stock Pledge Agreement by executing and delivering to the Collateral Agent and to each holder of Notes an Accession Agreement, and to take all other actions necessary to perfect the Liens of the Collateral Agent in the Property of such Person pledged thereunder (including, without limitation, the filing of all appropriate Uniform Commercial Code financing statements, the recording of all appropriate documents with public officials, the payment of all fees and taxes, and the delivery to the Collateral Agent of all certificates and documents constituting Pledged Collateral (as defined in the Stock Pledge Agreement) together with all related stock powers that in the opinion of the Collateral Agent are necessary to create and preserve the Liens with respect to all of the capital stock of each domestic Restricted Subsidiary and at least 65% of the capital stock of each Restricted Subsidiary incorporated, and doing business, outside the United States of America, in accordance with the provisions of the Security Agreement and the Stock Pledge Agreement. (c) Future Real Property. The Company will, and will cause each Restricted Subsidiary to, promptly following the acquisition of any fee simple property, provide written notice thereof to the holders of the Notes and execute and deliver to the Collateral Agent a Mortgage in form and substance satisfactory to the Collateral Agent, creating a first priority Lien on such Property (including fixtures) in favor of the Collateral Agent, subject to no Liens, except to the extent permitted by Section 8.17(a), and provide to the Collateral Agent such customary lender's title insurance policies, environmental reports and other related documents as the Collateral Agent or the Majority Holders may reasonably request. (d) Assets Subject to Lien Restrictions. If at any time any Restricted Subsidiary is prohibited by contract from entering into the Guaranty Agreement, or the Company or any Restricted Subsidiary is prohibited by contract from granting a Lien on any of its unencumbered Property in favor of the Collateral Agent, the Company shall, or shall cause such Restricted Subsidiary to, use its good faith efforts to obtain a waiver of such prohibition and promptly execute an Accession Agreement or Security Document, as applicable, necessary to make such Restricted Subsidiary a Guarantor, or to make such Property a part of the Collateral, as the case may 35 be, and to take all other actions necessary to perfect the Liens of the Collateral Agent in such additional Collateral. (e) Certificates Regarding Authorization, etc. Each Accession Agreement and each Security Document delivered by the Company or any Restricted Subsidiary pursuant to this Section 8.10 shall be accompanied by copies of the constitutive documents and corporate resolutions (or equivalent) of the Company or such Restricted Subsidiary authorizing the respective transactions contemplated thereby, in each case certified as true and correct by an officer of the Company or such Restricted Subsidiary. (f) Further Assurances. The Company will, at the request of the Majority Holders or the Collateral Agent, execute and deliver, or cause to be executed and delivered, such further instruments and do, or cause to be done, such further acts as the Majority Holders or the Collateral Agent deem necessary or advisable to maintain the priority and validity of the Lien of the Security Documents and to carry out more effectively the purposes of the Financing Documents. 8.11. Fixed Charge Coverage Ratio. The Company will not permit the Fixed Charge Coverage Ratio for any Four- Quarter Period specified in the following table to be less than or equal to the ratio corresponding to such period in the table:
Four-Quarter Period Ending Minimum Ratio - ----------------------------------------------------------------------------------------- September 30, 1999 1.05 to 1.00 - ----------------------------------------------------------------------------------------- December 31, 1999 1.05 to 1.00 - ----------------------------------------------------------------------------------------- March 31, 2000 1.05 to 1.00 - ----------------------------------------------------------------------------------------- June 30, 2000 1.05 to 1.00 - ----------------------------------------------------------------------------------------- September 30, 2000 1.05 to 1.00 - ----------------------------------------------------------------------------------------- December 31, 2000 1.05 to 1.00 - ----------------------------------------------------------------------------------------- March 31, 2001 1.10 to 1.00 - ----------------------------------------------------------------------------------------- June 30, 2001 1.10 to 1.00 - ----------------------------------------------------------------------------------------- September 30, 2001 1.20 to 1.00 - ----------------------------------------------------------------------------------------- December 31, 2001 and 0.95 to 1.00 thereafter - -----------------------------------------------------------------------------------------
8.12. Minimum Consolidated EBITDA. The Company will not permit the aggregate amount of Consolidated EBITDA for any Four-Quarter Period specified in the following table to be less than the amount corresponding to such period in such table: 36
Four-Quarter Period Ending Minimum EBITDA - ----------------------------------------------------------------------------------------- September 30, 1999 $57,000,000 - ----------------------------------------------------------------------------------------- December 31, 1999 $57,000,000 - ----------------------------------------------------------------------------------------- March 31, 2000 $57,000,000 - ----------------------------------------------------------------------------------------- June 30, 2000 $61,500,000 - ----------------------------------------------------------------------------------------- September 30, 2000 $61,500,000 - ----------------------------------------------------------------------------------------- December 31, 2000 $65,500,000 - ----------------------------------------------------------------------------------------- March 31, 2001 $66,000,000 - ----------------------------------------------------------------------------------------- June 30, 2001 $64,000,000 - ----------------------------------------------------------------------------------------- September 30, 2001 $67,500,000 - ----------------------------------------------------------------------------------------- December 31, 2001 and $71,000,000 thereafter - -----------------------------------------------------------------------------------------
8.13. Minimum Tangible Net Worth. The Company will not permit Consolidated Tangible Net Worth at any time to be less than (i) One Hundred Eighty-Eight Million Dollars ($188,000,000) plus (ii) fifty percent (50%) of consolidated income from continuing operations (only if greater than Zero Dollars ($0)) of the Company and the Restricted Subsidiaries for each fiscal quarter of the Company ending after June 30, 1999, minus (iii) one hundred percent (100%) of consolidated net loss from discontinued operations (including any write-downs) of the Company and the Restricted Subsidiaries after June 30, 1999, plus (iv) sixty percent (60%) of the Net Proceeds from each Equity Issuance by the Company after June 30, 1999. 8.14. Capital Expenditures. The Company will not permit the aggregate amount of Capital Expenditures of the Company and the Restricted Subsidiaries to be greater than: (i) Thirty Million Dollars ($30,000,000) during the Company's fiscal year ending June 30, 2000; (ii) Thirty-Five Million Dollars ($35,000,000) during the Company's fiscal year ending June 30, 2001; and (iii) Forty Million Dollars ($40,000,000) during the Company's fiscal year ending June 30, 2002. 8.15. Debt to Consolidated EBITDA Ratio. The Company will not permit, for any Four-Quarter Period ending on or after the Performance Release Date, the Debt to Consolidated EBITDA Ratio to be greater than or equal to 3.50 to 1.00. 8.16. Debt. The Company will not, and will not permit any Restricted Subsidiary to, create, incur, assume, or permit or suffer to exist, any Debt other than the following: 37 (a) Debt arising under this Agreement and the other Note Purchase Agreements, including Debt evidenced by the Amended Notes; (b) Debt existing or arising under the Credit Agreement, the Existing Reimbursement Agreements, the 1993 Notes and the other Transaction Documents; or (c) other Debt existing on the Effective Date and described in Part 2.2(b) of Annex 3 to the Waiver and Second Amendment; (d) Debt extending the maturity of, or refunding, refinancing or replacing, in whole or in part, any Debt of the Company or any Restricted Subsidiary described in the immediately preceding clauses (a) through (c) above on terms no more restrictive in the aggregate (as reasonably determined by the Majority Holders) to the Company or such Restricted Subsidiary, as applicable, than the terms of the Debt so extended, refunded, refinanced or replaced, and in a principal amount not in excess of that outstanding as of the date of such renewal, refinancing, replacement or extension; (e) Debt of a Restricted Subsidiary owing to the Company or to another Restricted Subsidiary that is a Guarantor; (f) Debt in respect of Capitalized Lease obligations secured as permitted under Section 8.17(a)(xi) and Debt secured by Purchase Money Liens permitted under Section 8.17(a)(vii); provided that the aggregate outstanding principal amount of all such Debt does not exceed Thirty-five Million Dollars ($35,000,000) at any time; (g) Debt of a Person secured by real property or Debt of a Person represented by an industrial revenue bond financing, in each case where such Person becomes a Restricted Subsidiary of the Company or is merged with or into the Company or a then-existing Restricted Subsidiary, so long as such Debt was not incurred in anticipation of such Person becoming a Restricted Subsidiary or merging with the Company or a Restricted Subsidiary; and (h) Debt that is unsecured Debt and that is not otherwise permitted under any of the preceding clauses (a) through (g) in an aggregate amount not to exceed Twenty-Five Million Dollars ($25,000,000) at any time outstanding. 8.17. Liens. (a) Negative Pledge. The Company will not, and will not permit any Restricted Subsidiary to, cause or permit to exist, or agree or consent to cause or permit to exist in the future (upon the happening of a contingency or 38 otherwise), any of their Property, whether now owned or hereafter acquired, to be subject to a Lien except: (i) Liens securing taxes, assessments or governmental charges or levies or the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons, provided that the payment thereof is not at the time required by Section 8.1 hereof; (ii) Liens incurred or deposits made in the ordinary course of business (A) in connection with workers' compensation, unemployment insurance, social security and other like laws, and (B) to secure the performance of letters of credit, bids, tenders, sales contracts, leases, statutory obligations, surety and performance bonds (of a type other than set forth in Section 8.17(a)(iii)) hereof) and other similar obligations not incurred in connection with the borrowing of money, the obtaining of advances or the payment of the deferred purchase price of Property; (iii) Liens (A) arising from judicial attachments and judgments, (B) securing appeal bonds, supersedeas bonds, and (C) arising in connection with court proceedings (including, without limitation, surety bonds and letters of credit or any other instrument serving a similar purpose), provided that the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings, and provided further that the aggregate amount so secured will not at any time exceed Ten Million Dollars ($10,000,000); (iv) Liens on Property of a Restricted Subsidiary, provided that such Liens secure only obligations owing to the Company or a Restricted Subsidiary that is a Guarantor; (v) Liens in the nature of reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, 39 restrictions, leases and other similar title exceptions or encumbrances affecting real property, provided that such exceptions and encumbrances do not in the aggregate materially detract from the value of such Properties or materially interfere with the use of such Property in the ordinary conduct of the business of the Company and the Restricted Subsidiaries; (vi) (A) Liens securing Debt in existence on the Effective Date and listed in Schedule 3.8 to the Waiver and Second Amendment, and (B) Liens securing renewals, extensions (as to time) and refinancings of such Debt secured by such Liens listed in such Schedule, provided that (1)the amount of Debt secured by each such Lien is not increased in excess of the amount of Debt outstanding on the date of such renewal, extension or refinancing, (2) none of such Liens is, or is required to be, extended to include any additional Property of the Company or any Restricted Subsidiary as a condition to, or as a result of, such renewal, extension or refinancing, and (3) in the case of Debt existing under the Credit Agreement, the renewal, extension or refinancing of such Debt is permitted by, and is consummated in accordance with the provisions of, Section 4.10 of the Intercreditor Agreement; and (vii) Purchase Money Liens securing Debt incurred within the limitations of Section 8.16(f) hereof, so long as each such Purchase Money Lien secures Debt of the Company or a Restricted Subsidiary in an amount not exceeding one hundred percent (100%) of the cost of construction or acquisition of the particular Property to which such Debt relates (or, in the case of a Lien existing on any Property of any corporation the time it becomes a Restricted Subsidiary, the Fair Market Value of such Property at such time); (viii) Liens securing the Secured Obligations (as defined in the Omnibus Collateral Agreement); (ix) Liens arising by virtue of any statutory or common law provision relating to bankers' liens, rights of setoff or similar rights as to deposit accounts or other funds maintained with a creditor depository institution; (x) Liens constituting intellectual property licenses entered into in the ordinary course of business; 40 (xi) Liens securing Capitalized Lease obligations to the extent such Debt is permitted under Section 8.16(f), so long as any such Lien secures Debt of the Company or a Restricted Subsidiary in an amount not exceeding one hundred percent (100%) of the cost of construction or acquisition of the particular Property that is the subject of such Capitalized Lease; (xii) Liens securing Off Balance Sheet Liabilities which do not constitute Debt; (xiii) financing statements permitted to be signed or filed under Section 8.17(b); (xiv) leases and subleases of Property of the Company or a Restricted Subsidiary to other Persons entered into in the ordinary course of business; and (xv) Liens permitted under the express terms of the Security Documents. In addition, the Company will not, and will not permit any Restricted Subsidiary, directly or indirectly, to create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of such Person to grant a security interest in, or assign its property to, the Collateral Agent, except for encumbrances or restrictions existing under or by reason of (i) customary non-assignment provisions in any lease governing a leasehold interest, license or other contract, (ii) with respect to any Person which becomes a Subsidiary of the Company after the Effective Date, an agreement or other instrument of such Person existing at the time it becomes a Subsidiary, provided that such encumbrance or restriction is not applicable to any other Person, other than such Person becoming a Subsidiary and was not entered into in contemplation of such Person becoming a Subsidiary, (iii) this Agreement and the other Financing Documents, and (iv) any agreement of the Company or any Restricted Subsidiary existing on the Effective Date and any renewal or extension of any such agreement. (b) Financing Statements. The Company will not, and will not permit any Restricted Subsidiary to, sign or file a financing statement under the Uniform Commercial Code of any jurisdiction that names the Company or such Restricted Subsidiary as debtor, or sign any security agreement authorizing any secured party thereunder to file any such financing statement, except, in any such case, a financing statement filed or to be filed to perfect or protect a security interest that the Company or such Restricted Subsidiary is entitled to create, assume or incur, or permit to exist, under the 41 foregoing provisions of this Section 8.17 or to evidence for informational purposes a lessor's interest in Property leased to the Company or any such Restricted Subsidiary. 8.18. Mergers; Consolidations. The Company will not, and will not permit any Restricted Subsidiary to, merge with or into or consolidate with or into any other Person or permit any other Person to merge or consolidate with or into it; provided, however, so long as no Default or Event of Default exists at the time thereof, or would exist immediately after giving effect thereto, a Restricted Subsidiary may (x) merge into or consolidate with a Wholly-Owned Restricted Subsidiary that is a Guarantor and (y) merge with and into the Company so long as the Company is the survivor of such merger. 8.19. Disposition of Assets. The Company will not, and will not permit any Restricted Subsidiary to, convey, sell, lease, sublease, transfer or otherwise dispose of any assets (including without limitation, capital stock of or other equity interests in any Subsidiary or other Person) except for: (a) sales of inventory in the ordinary course of business; (b) the sale, lease, sublease, transfer or other disposition of machinery and equipment no longer used or useful in the conduct of business; (c) the sale, lease, sublease, transfer or other disposition of assets to the Company or to a Wholly-Owned Restricted Subsidiary that is a Guarantor; (d) the sale of assets of the SBQ Division (Memphis/Cleveland) to the extent permitted under the express terms of the Intercreditor Agreement; (e) transfers of assets made as consideration for Permitted Investments; (f) the transfer by Cumberland Recyclers, LLC to BSE of the assets known as the "mega shredder" so long as: (i) the Company shall have given at least sixty (60) days prior written notice of such transfer to each holder of Notes; (ii) no Default or Event of Default exists at the time of such transfer; (iii) such transfer is made subject to the Lien of the Collateral Agent in such assets; and (iv) all actions required under the Security Agreement to maintain the validity, perfection, enforceability and priority and rank of such Lien in connection with such transfer are taken; and 42 (g) other sales and dispositions of Property of the Company or any Restricted Subsidiary, so long as the Fair Market Value of such Property does not exceed Ten Million Dollars ($10,000,000) in the aggregate during any fiscal year of the Company. 8.20. Restricted Payments. The Company will not declare or make, or permit any Restricted Subsidiary to declare or make, any Restricted Payment; provided, however, that (a) Restricted Subsidiaries may declare and make Restricted Payments payable to the Company or any other Restricted Subsidiary that is a Guarantor, and (b) so long as no Default or Event of Default shall have occurred and be continuing, or would result therefrom, the Company may declare and make cash dividends with respect to its common stock so long as (i) the aggregate amount of such cash dividends paid during any fiscal quarter of the Company does not exceed Seven Hundred Fifty Thousand Dollars ($750,000) and (ii) immediately after giving effect to the payment of any such cash dividend, the aggregate amount of all cash dividends paid by the Company during the period commencing on July 1, 1999 and ending on the date of the payment of such cash dividend (excluding the cash dividend in the amount of $737,836.76 paid on August 9, 1999) would not exceed 50% of cumulative consolidated income from continuing operations of the Company and the Restricted Subsidiaries for such entire period. 8.21. Permitted Investments. The Company will not, and will not permit any Restricted Subsidiary to, make any Investment other than Permitted Investments. 8.22. Accounts with Financial Institutions other than the Banks. The Company shall not, and shall not permit any Subsidiary to, maintain any deposit account, savings account, investment account or other similar account with any financial institution or other Person except for the agent bank and the Banks under the Credit Agreement, excluding: (a) lockbox accounts existing as of the Effective Date and disclosed on Schedule 2.10 to the Omnibus Collateral Agreement the entire balances of which are automatically transferred on a daily basis to a deposit account of the Company maintained with such agent bank; and (b) other deposit accounts so long as the balances of such deposit accounts do not exceed $150,000 in the aggregate at any time; provided, however, Birmingham Steel Overseas, Ltd. may maintain its existing deposit account with Barclay's Bank, PLC in Barbados in which the proceeds of foreign sales are deposited so long as (i) the balance of such account does not exceed One Million Dollars ($1,000,000) in the aggregate at any time and (ii) such Subsidiary remains qualified as a "foreign sales corporation" under Section 922 of the IRC. 43 8.23. Proceeds from Equity Issuances. The Company may use such portion of the Net Proceeds from any Equity Issuance which the Company is permitted to retain under the terms of the Intercreditor Agreement and the other applicable Transaction Documents (a) to fund Restricted Payments not otherwise permitted under Section 8.20, (b) to finance Investments not otherwise permitted under Section 8.21, (c) to finance Capital Expenditures not otherwise permitted under Section 8.14 and (d) for any other purpose not otherwise prohibited by this Agreement. 8.24. No Voluntary Reductions in Commitment. The Company will not, without the prior written consent of the Special Majority Holders, agree to any voluntary reduction of the Commitments as defined in Section 2.12 of the Credit Agreement, whether such voluntary reductions would be pursuant to such Section 2.12 or otherwise. 9. INFORMATION AS TO COMPANY 9.1. Financial and Business Information. The Company will deliver to each holder of Notes: (a) Monthly Statements - promptly following, and in any event within thirty (30) days of, the end of each calendar month, the consolidated balance sheet of the Company and the Subsidiaries as at the end of such month and the related consolidated statement of income of the Company and the Subsidiaries for such month, all of which shall be certified by the Executive Vice President-Chief Financial Officer or Vice President-Finance and Control of the Company, in his or her opinion, to present fairly, in accordance with GAAP and in all material respects, the consolidated financial position of the Company and the Subsidiaries as at the date thereof and the results of operations for such month (without notes and subject to normal year-end adjustments), together with a cash analysis report substantially in the form of Exhibit N to the Credit Agreement; (b) Quarterly Statements - as soon as practicable after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), and in any event within forty-five (45) days thereafter, duplicate copies of: (i) a consolidated balance sheet of the Company and the Subsidiaries as at the end of such quarter, and (ii) consolidated statements of income and cash flows of the Company and the Subsidiaries for such quarter and (in the case of the 44 second and third quarters) for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP (without notes and subject to normal year-end adjustments) applicable to quarterly financial statements generally, and certified as complete and correct, subject to changes resulting from year-end adjustments, by the Vice President-Finance and Control or Executive Vice President of the Company, and accompanied by the certificate required by Section 9.2 hereof; (c) Annual Statements - as soon as practicable after the end of each fiscal year of the Company, and in any event within ninety-five (95) days thereafter, duplicate copies of: (i) a consolidated balance sheet of the Company and the Subsidiaries as at the end of such year, and (ii) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and the Subsidiaries for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by (iii) an opinion thereon of the accountants named in Section 2.2 hereof or other independent certified public accountants of recognized national standing selected by the Company, which opinion shall, without qualification, state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and (iv) the certificates required by Section 9.2 and Section 9.3 hereof; (d) Company Business Plan -- On or before September 1 of each calendar year, commencing September 1, 2000, a copy of the Company's internal business plan for the fiscal year commencing on July 1 of such 45 calendar year and ending on June 30 of the following year, such plan to include the Company's forecast on a month-by-month basis; (e) Effects of APB 30 - together with each financial statement required to be delivered pursuant to Section 9.1(a), Section 9.1(b) or Section 9.1(c) hereof, copies of such financial statements prepared by the Company in accordance with GAAP (without notes and subject to normal year- end adjustments) in all respects but which excludes the effect of the accounting entries made by the Company with respect to its financial statements for the fiscal year ending June 30, 1999 and as required under Accounting Principles Board Opinion No. 30 ("APB 30") solely to the extent relating to the SBQ Division. Each such financial statement shall disclose, in form and substance satisfactory to the Majority Holders, the resulting differences between such statement and one prepared entirely in accordance with GAAP; (f) Audit Reports - promptly upon receipt thereof, a copy of each other report submitted to the Company or any Subsidiary by independent accountants in connection with any management report, special audit report or comparable analysis prepared by them with respect to the books of the Company or any Subsidiary; (g) SEC and Other Reports - promptly upon their becoming available, one copy of each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to stockholders generally, and of each regular or periodic report and any registration statement, prospectus or written communication (other than transmittal letters and routine comment letters with respect to drafts of such statements, reports or prospectuses), and each amendment thereto, in respect thereof filed by the Company or any Subsidiary with, or received by, such Person in connection therewith from, the National Association of Securities Dealers, any securities exchange or the Securities and Exchange Commission or any successor agency; (h) ERISA - immediately upon becoming aware of the occurrence of any (i) "reportable event" (as defined in section 4043 of ERISA) or (ii) "prohibited transaction" (as defined in section 406 or section 4975 of the IRC) 46 in connection with any Pension Plan or any trust created thereunder, a written notice specifying the nature thereof, what action the Company is taking or proposes to take with respect thereto, and, when known, any action taken by the IRS, the DOL or the PBGC with respect thereto; (i) ERISA Waivers - prompt written notice of and a description of any request pursuant to section 303 of ERISA or section 412 of the IRC for, or notice of the granting pursuant to such section 303 or section 412 of, a waiver in respect of all or part of the minimum funding standard set forth in ERISA or the IRC, as the case may be, of any Pension Plan, and, in connection with the granting of any such waiver, the amount of any waived funding deficiency (as defined in such section 303 or such section 412) and the terms of such waiver, in each of the cases specified in this clause (i), where the effect of such conditions or events or of events or conditions related thereto could reasonably be expected to have a Material Adverse Effect; (j) Other ERISA Notices - prompt written notice of and, where applicable, a description of (i) any notice from the PBGC in respect of the commencement of any proceedings pursuant to section 4042 of ERISA to terminate any Pension Plan or for the appointment of a trustee to administer any Pension Plan, (ii) any distress termination notice delivered to the PBGC under section 4041 of ERISA in respect of any Pension Plan, and any determination of the PBGC in respect thereof, (iii) the placement of any Multiemployer Plan in reorganization status under Title IV of ERISA, (iv) any Multiemployer Plan becoming "insolvent" (as defined in section 4245 of ERISA) under Title IV of ERISA, (v) the whole or partial withdrawal of the Company or any ERISA Affiliate from any Multiemployer Plan and the withdrawal liability incurred in connection therewith, and (vi) the withdrawal of the Company or any ERISA Affiliate from any Multiple Employer Pension Plan and the withdrawal liability under ERISA incurred in connection therewith; 47 in each of the cases specified in the foregoing clauses (i) through (vi), inclusive, where the effect of such conditions or events or of events or conditions related thereto could reasonably be expected to have a Material Adverse Effect; (k) Notice of Default or Event of Default - immediately upon becoming aware of the existence of any condition or event that constitutes a Default or an Event of Default, a written notice specifying the nature and period of existence thereof or of such failure and what action the Company is taking or proposes to take with respect thereto; (l) Notice of Claimed Default - immediately upon becoming aware that the holder of any Note, or of any evidence of indebtedness or other Security of the Company or any Subsidiary, shall have given notice or taken any other action with respect to a claimed Default, Event of Default, default or event of default, a written notice specifying the notice given or action taken by such holder and the nature of the claimed Default, Event of Default, default or event of default and what action the Company is taking or proposes to take with respect thereto; (m) Notice of Violation of Environmental Protection Law - promptly upon becoming aware of the existence of any violation by the Company or any Subsidiary of any Environmental Protection Law that could reasonably be expected to have a Material Adverse Effect, a written notice specifying the nature and period of such violation and what action any one or more of the Company and such Subsidiary, as the case may be, are taking or propose to take with respect thereto; (n) Information furnished to Banks, etc. - not later than the time furnished to any of the Banks or any agent acting for the Banks under the Credit Agreement, copies of each report, statement, document, notice or other item furnished pursuant to Article VIII of the Credit Agreement or any related instrument, agreement or other document; (o) Monthly Financial Report - as soon as practicable after the end of each quarterly fiscal period in each fiscal year of the Company, and in any event within thirty (30) days thereafter, a copy of the "Financial Report" (the Company's monthly internal operating report) together with the schedules that are supplemental thereto; and (p) Requested Information - with reasonable promptness, such other data and information as from time to time may be reasonably requested by any holder of Notes, including, without limitation, (i) copies of any statement, report or certificate furnished to any holder of Debt of the Company or any Subsidiary, 48 (ii) information requested to comply with any request of the National Association of Insurance Commissioners in respect of the designation of the Notes, and (iii) information requested to comply with 17 C.F.R. (S)230.144A, as amended from time to time, (any such request with respect to the data and information referred to in the foregoing clauses (i), (ii) and (iii) being deemed to be reasonable for purposes of this clause (p)). 9.2. Officers' Certificates. Each set of financial statements delivered to each holder of Notes pursuant to Section 9.1(b) or Section 9.1(c) hereof shall be accompanied by a certificate of the Vice President-Finance and Control or the Executive Vice President-Chief Financial Officer of the Company setting forth: (a) Covenant Compliance - the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Sections 8.11 through Section 8.17 hereof, inclusive, and Sections 8.19, 8.20 and 8.23 during the period covered by the income statement then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amounts, ratio or percentage then in existence); and (b) Event of Default - a statement that the signers have reviewed the relevant terms hereof and have made, or caused to be made, under their supervision, a review of the transactions and conditions of the Company and the Subsidiaries from the beginning of the accounting period covered by the income statements being delivered therewith to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto. 49 9.3. Accountants' Certificates. Each set of annual financial statements delivered pursuant to Section 9.1(c) shall be accompanied by a certificate of the accountants who certify such financial statements, stating that they have reviewed this Agreement and stating further, whether, in making their audit, such accountants have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if such accountants are aware that any such condition or event then exists, specifying the nature and period of existence thereof. 9.4. Quarterly Review With Financial Advisor. Within ten (10) Business Days of the delivery of the financial statements provided pursuant to Section 9.1(b) for each quarterly period ending on or prior to an Acceptable SBQ Asset Sale, the Company will cause its Chief Financial Officer or Vice President-Finance and Control to meet, either in person at the Company's executive office or via telephone conference call, with a representative of Nightingale or such other Person designated by the Majority Holders to discuss the Company's financial condition and results of operations as such condition and results of operations relate to the Company's projections for such items previously delivered to Nightingale or the holders of the Notes. The Company agrees to pay, for each such quarterly period, Nightingale's fees in connection with such review and any reporting thereof to the holders of the Notes in an amount not to exceed Three Thousand Dollars ($3,000), plus its reasonable out-of-pocket costs and expenses in connection therewith. 9.5. Inspection. The Company will permit the representatives of each holder of Notes, once only during each fiscal quarter of the Company at such reasonable time as may be requested by such holder, to visit and inspect any of the Properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers, employees and independent public accountants (and by this provision the Company authorizes such accountants to discuss the finances and affairs of the Company and the Subsidiaries), provided that during any time when an Event of Default exists, any such inspection or visit shall be at the expense of the Company and may be made as often as may be requested. 10. EVENTS OF DEFAULT 10.1. Nature of Events. An "Event of Default" shall exist if any of the following occurs and is continuing: 50 (a) Principal or Make-Whole Amount Payments - the Company shall fail to make any payment of principal or Make-Whole Amount on any Note on or before the date such payment is due; (b) Certain Prepayments - the Company shall fail to fulfill any of its obligations set forth in Section 6.1 hereof; (c) Interest Payments - the Company shall fail to make any payment of interest on any Note on or before five (5) Business Days after the date such payment is due; (d) Other Defaults - the Company or any Subsidiary shall fail to comply with any other provision of this Agreement or any other Financing Document, and such failure shall continue for more than thirty (30) days after such failure shall first become known to any officer of the Company; (e) Warranties or Representations - any warranty, representation or other statement by or on behalf of the Company contained in this Agreement or any other Financing Document or in any instrument furnished in compliance with or in reference to this Agreement or any other Financing Document shall have been false or misleading in any material respect when made or deemed made; (f) Default on Debt or Other Security - (i) the Company or any Restricted Subsidiary shall fail to make any payment on any Debt when due, or (ii) any event shall occur or any condition shall exist in respect of Debt or any Security of the Company or any Restricted Subsidiary, or under any agreement securing or relating to such Debt or Security, that immediately or with any one or more of (x) the passage of time, (y) the giving of notice or (z) the expiration of waivers or modifications granted in respect of such event or condition: (A) causes (or permits any one or more of the holders thereof or a trustee therefor to cause) such Debt or Security, or a portion thereof, to become due prior to its stated maturity or prior to its regularly scheduled date or dates of payment; or (B) permits any one or more of the holders thereof or a trustee therefor to require the Company or any Restricted Subsidiary to repurchase such Debt or Security; 51 provided that either such Debt is outstanding under the Credit Agreement or the aggregate amount of all obligations in respect of such Debt and Securities exceeds at such time Ten Million Dollars ($10,000,000); provided, further, however, this clause (ii) shall not be deemed to apply to the Debt evidenced by the industrial revenue bonds described in Schedule 3.8 to the Waiver and Second Amendment which are supported by letters of credit issued for the account of the Company or American Steel & Wire Corporation; (g) Involuntary Bankruptcy Proceedings - (i) a receiver, liquidator, custodian or trustee of the Company, or any Restricted Subsidiary, or of all or any of the Property of either, shall be appointed by court order and such order remains in effect for more than forty-five (45) days; or an order for relief shall be entered with respect to the Company or any Restricted Subsidiary, or the Company or any Restricted Subsidiary shall be adjudicated a bankrupt or insolvent, (ii) any of the Property of the Company or any Restricted Subsidiary shall be sequestered by court order and such order remains in effect for more than forty-five (45) days, or (iii) a petition shall be filed against the Company or any Restricted Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and shall not be dismissed within forty-five (45) days after such filing; (h) Voluntary Petitions - the Company or any Restricted Subsidiary shall file a petition in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or shall consent to the filing of any petition against it under any such law; (i) Assignments for Benefit of Creditors, etc. - the Company or a Restricted Subsidiary shall make an assignment for the benefit of its creditors, or shall admit in writing its inability, or shall fail, to pay its debts generally as they become due, or shall consent to the appointment of a receiver, liquidator or trustee of the Company or a Restricted Subsidiary or of all or any part of the Property of either; (j) Undischarged Final Judgments - a final judgment or final judgments for the payment of money aggregating in excess of Ten Million Dollars ($10,000,000) shall be outstanding against one or more of the 52 Company and the Restricted Subsidiaries and any one of such judgments shall have been outstanding for more than thirty (30) days from the date of its entry and shall not have been discharged in full or stayed; or (k) Other Financing Documents - (i) the Guaranty Agreement or any Security Document shall cease to be in full force and effect or shall be declared by a court or Governmental Authority of competent jurisdiction to be void, voidable or unenforceable against the Company or any Restricted Subsidiary which is a party to such Financing Document; (ii) the Company or any Restricted Subsidiary shall disavow, revoke or terminate any Financing Document to which it is a party or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of any Financing Document; or (iii) the Collateral Agent shall, for a period of thirty (30) days, cease to have a valid and perfected first-priority security interest (subject only to Liens permitted by the Financing Documents) in Collateral having an aggregate book value in excess of Five Million Dollars ($5,000,000), or in any other material portion of the Collateral, for any reason other than the failure of the Collateral Agent to take any action within its control. 10.2. Default Remedies. (a) Acceleration on Event of Default. (i) If an Event of Default specified in clause (g), (h) or (i) of Section 10.1 hereof shall exist, all of the Notes at the time outstanding shall automatically become immediately due and payable together with interest accrued thereon and, to the extent permitted by law, the Make-Whole Amount at such time with respect to the principal amount of such Notes, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived. (ii) If an Event of Default other than those specified in clause (g), (h) or (i) of Section 10.1 hereof shall exist, the holder or holders of at least thirty-five percent (35%) in principal amount of the Notes then outstanding (exclusive of Notes then owned by any one or more of the Company, any Restricted Subsidiary or any Affiliate) may exercise any right, power or remedy permitted to such holder or holders by law, and shall have, in particular, without limiting the generality of the foregoing, the right to declare the entire principal of, and all interest 53 accrued on, all the Notes then outstanding to be, and such Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and the Company shall forthwith pay to the holder or holders of all the Notes then outstanding the entire principal of, and interest accrued on, the Notes and, to the extent permitted by law, the Make-Whole Amount at such time with respect to such principal amount of such Notes. (b) Acceleration on Payment Default. During the existence of an Event of Default described in Section 10.1(a), Section 10.1(b) or Section 10.1(c) hereof, and irrespective of whether the Notes then outstanding shall have been declared to be due and payable pursuant to Section 10.2(a)(ii) hereof, any holder of Notes that shall have not consented to any waiver with respect to such Event of Default may, at its option, by notice in writing to the Company, declare the Notes then held by such holder to be, and such Notes shall thereupon become, forthwith due and payable together with all interest accrued thereon, without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and the Company shall forthwith pay to such holder the entire principal of and interest accrued on such Notes and, to the extent permitted by law, the Make-Whole Amount at such time with respect to such principal amount of such Notes. (c) Valuable Rights. The Company acknowledges, and the parties hereto agree, that the right of each holder to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for) is a valuable right and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances. (d) Other Remedies. During the existence of an Event of Default and irrespective of whether the Notes then outstanding shall have been declared to be due and payable pursuant to Section 10.2(a)(ii) hereof and irrespective of whether any holder of Notes then outstanding shall otherwise have pursued or be pursuing any other rights or remedies, any holder of Notes may proceed to protect and enforce its rights under this Agreement, under such Notes and under the other Financing Documents by exercising such remedies as are available to such holder in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any agreement contained herein or in aid of the exercise of any power granted herein, provided that the maturity of such holder's Notes may be accelerated only in accordance with Section 10.2(a) and Section 10.2(b) hereof. 54 (e) Nonwaiver and Expenses. No course of dealing on the part of any holder of Notes nor any delay or failure on the part of any holder of Notes to exercise any right shall operate as a waiver of such right or otherwise prejudice such holder's rights, powers and remedies. If the Company shall fail to pay when due any principal of, or Make-Whole Amount or interest on, any Note, or shall fail to comply with any other provision hereof, the Company shall pay to each holder of Notes, to the extent permitted by law, such further amounts as shall be sufficient to cover the costs and expenses, including, but not limited to, reasonable attorneys' fees, incurred by such holder in collecting any sums due on such Notes or in otherwise assessing, analyzing or enforcing any rights or remedies that are or may be available to it. 10.3. Annulment of Acceleration of Notes. If a declaration is made pursuant to Section 10.2(a)(ii) hereof, then and in every such case, the holders of sixty-six percent (66%) in aggregate principal amount of the Notes then outstanding (exclusive of Notes then owned by any one or more of the Company, any Restricted Subsidiaries and any Affiliates) may, by written instrument filed with the Company, rescind and annul such declaration, and the consequences thereof, provided that at the time such declaration is annulled and rescinded: (a) no judgment or decree shall have been entered for the payment of any moneys due on or pursuant hereto or the Notes; (b) all arrears of interest upon all the Notes and all other sums payable hereunder and under the Notes (except any principal of, or interest or Make-Whole Amount on, the Notes that shall have become due and payable by reason of such declaration under Section 10.2(a)(ii) hereof) shall have been duly paid; and (c) each and every other Default and Event of Default shall have been waived pursuant to Section 12.5 hereof or otherwise made good or cured, and provided further that no such rescission and annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereon. 11. INTERPRETATION OF THIS AGREEMENT 11.1. Terms Defined. As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term: 55 Acceptable Insurer - means any financially sound and reputable insurance company accorded a rating by A.M. Best Company of "A-" or better and a size rating of "VI" or better (or a comparable rating by any comparable successor rating agency). Acceptable SBQ Asset Sale - means a sale by the Company of the SBQ Division (Memphis/Cleveland). Accession Agreement - means an Accession Agreement in the form attached as Exhibit F to the Omnibus Collateral Agreement. Affiliate - means, at any time, a Person (other than a Restricted Subsidiary) (a) that directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, the Company, (b) that beneficially owns or holds five percent (5%) or more of any class of the Voting Stock of the Company, or (c) five percent (5%) or more of the Voting Stock (or in the case of a Person that is not a corporation, five percent (5%) or more of the equity interest) of which is beneficially owned or held by the Company or a Subsidiary, at such time. As used in this definition: Control - means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Agreement, this - means this agreement, as it may be amended and restated from time to time. AIR - means American Iron Reduction, L.L.C., a limited liability company organized under the laws of the State of Delaware. Amended Notes - Section 1.2(f). Amended Series A Notes - Section 1.2(a). Amended Series B Notes - Section 1.2(b). 56 Amended Series C Notes - Section 1.2(c). Banks - means the lending institutions listed on the signature pages of the Credit Agreement and their respective successors and assigns. Board of Directors - means, at any time, the board of directors of the Company or any committee thereof that, in the instance, shall have the lawful power to exercise the power and authority of such board of directors. BSE - means Birmingham Southeast, LLC, a limited liability company organized under the laws of the State of Delaware. Business Day - means a day other than a Saturday, a Sunday or, if the provisions of Section 4.1 hereof are applicable with respect to any Note, a day on which the bank designated (by the holder of such Note) to receive (for such holder's account) payments on such Note is required by law (other than a general banking moratorium or holiday for a period exceeding four (4) consecutive days) to be closed. Capital Expenditures - means, with respect to any Person, all expenditures made and liabilities incurred for the acquisition of assets which are not, in accordance with GAAP, treated as expense items for such Person in the year made or incurred or as a prepaid expense applicable to a future year or years, and shall include all Capitalized Lease obligations. Capitalized Lease - means, at any time, a lease with respect to which, under GAAP, the lessee is or will be required to recognize the acquisition of an asset and the incurrence of a liability at such time. Change in Control - means any Acquisition subsequent to the Original Closing Date by any Person, or related Persons constituting a "group" (as such term is defined in section 13(d) of the Securities Exchange Act of 1934), of (a) the power to elect, appoint or cause the election or appointment of at least a majority of the members of the Board of Directors (other than the normal acquisition of proxies by the then current Board of Directors), through beneficial ownership of the capital stock of the Company or otherwise, or (b) all or substantially all of the properties and assets of the Company; provided, however, that a Change in Control pursuant to the foregoing clause (b) shall not be deemed to have occurred if no Person, or related Persons constituting a "group" for purposes of section 13(d) of the Securities Exchange Act of 1934, shall 57 have the power to elect, appoint or cause the election or appointment of at least a majority of the members of the board of directors of such successor or transferee. For purposes of this definition "Acquisition" of the power or properties and assets stated in the preceding sentence means the earlier of (i) the actual possession thereof and (ii) the consummation of any transaction or series of related transactions which, with the passage of time, will give such Person or Persons the actual possession thereof. Closing - Section 1.3. Collateral - has the meaning specified in the Intercreditor Agreement. Collateral Agent - has the meaning specified in the Intercreditor Agreement. Commitment - has the meaning specified in the Credit Agreement as in effect on the Effective Date. Company - has the meaning specified in the introductory sentence hereof. Consolidated EBITDA - means, for any period, the sum of (a) Consolidated Net Income for such period, plus (b) the aggregate amount of (i) taxes imposed on, or measured by, income or excess profits, (ii) Consolidated Interest Expense, and (iii) depreciation and amortization for such period (to the extent, and only to the extent, that any such amount in clauses (i), (ii) or (iii) was deducted in the computation of Consolidated Net Income for such period), in each case accrued for such period by the Company and the Restricted Subsidiaries, determined on a consolidated basis for such Persons. Consolidated EBITDAR - means, for any period, the sum of (a) Consolidated EBITDA for such period, plus (b) Rental Expense for such period (to the extent, and only to the extent, deducted in the computation of Consolidated Net Income for such period). Consolidated Interest Expense - means, for any period, all interest charges for such period accrued on or with respect to Debt of the Company and the Restricted Subsidiaries (including, without limitation, amortization of debt discount and expense and imputed interest on Capitalized Lease obligations). Consolidated Net Income - means, with respect to the Company and the Restricted Subsidiaries for any period of computation thereof, the net income (or loss) 58 of the Company and the Restricted Subsidiaries on a consolidated basis for such period; provided, however, that the following shall be excluded when determining Consolidated Net Income: (a) any item of gain or loss resulting from the sale, conversion or other disposition of plant, property and equipment; (b) gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of the Company and the Restricted Subsidiaries; (c) the income (or loss) for such fiscal period of any Person prior to the date such Person becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any of the Restricted Subsidiaries, or such Person's assets are acquired by the Company or any of the Restricted Subsidiaries; (d) any write-up of any asset; (e) any other net gains or losses of an extraordinary nature as determined in accordance with GAAP; (f) any earnings attributable to the amortization of negative goodwill; (g) that portion of net earnings of any Restricted Subsidiary that is unavailable for payment as dividends to the Company or another Restricted Subsidiary as a result of a legal or contractual prohibition, unless such portion of such net earnings is legally available for either: (x) reimbursement to the Company or another Restricted Subsidiary for advances, loans or allocated expenses, or (y) advances or loans to the Company or another Restricted Subsidiary; (h) pre-operating/start-up costs as would be set forth in the financial statements of the Company and the Restricted Subsidiaries for such period prepared in accordance with GAAP; provided, however, the amount of such costs excluded for a fiscal quarter occurring during any such period shall not exceed the following amounts: (w) $10,000,000 for the fiscal quarter ending on September 30, 1999; (x) $8,000,000 for the fiscal quarter ending December 31, 1999; (y) $5,000,000 for the fiscal quarter ending March 31, 2000; and (z) $0 for each fiscal quarter ended thereafter; (i) any losses on disposal of the SBQ Division; and 59 (j) any non-cash charges relating to the restructuring of, or write- down of the investments of the Company in, AIR and PCR. For purposes of calculating Consolidated Net Income, the amount shall include income from both continuing and discontinued operations, except that adjustments to the allowance for discontinued operations and the related tax effects shall be excluded from such amount. Consolidated Tangible Net Worth - means (a) the Company's stockholder's equity which would appear as such on a consolidated balance sheet of the Company and the Restricted Subsidiaries prepared in accordance with GAAP less (b) all intangible items reflected therein, including all goodwill, all intangible plant expansion costs, all unamortized debt discount and expense, unamortized research and development expense, unamortized deferred charges, patents, trademarks, service marks, trade names and copyrights, unamortized excess cost of investment in Subsidiaries over equity at dates of acquisition, and all similar items which should properly be treated as intangibles in accordance with GAAP. Control Event - means the execution of any written agreement that, when fully performed by the parties thereto, would result in a Change in Control. Control Prepayment Date - Section 6.1. Credit Agreement - means that certain Credit Agreement dated as of March 17, 1997, by and among the Company, Bank of America, N.A., as agent, and the Banks, as may be amended, restated or modified from time to time. Debt - means, with respect to a Person and at the time of determination thereof, all of the following (without duplication): (a) obligations of such Person in respect of money borrowed; (b) obligations of such Person (other than trade debt incurred in the ordinary course of business), (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property; (c) obligations of such Person in respect of mandatorily redeemable Securities issued by such Person; (d) Capitalized Lease obligations of such Person; 60 (e) all reimbursement obligations of such Person under any letters of credit or acceptances (whether or not the same have been presented for payment); and (f) all Debt of other Persons which (i) such Person has Guaranteed or (ii) are secured by a Lien on any property of such Person (whether or not such Person has assumed liability with respect to such Debt). Debt to Consolidated EBITDA Ratio - means, for any Four-Quarter Period of determination, the ratio of (a) Debt of the Company and the Restricted Subsidiaries as determined on a consolidated basis at the end of such period to (b) Consolidated EBITDA for such period. Default - means an event or condition the occurrence of which would, with the lapse of time or the giving of notice or both, become an Event of Default. DOL - means the Department of Labor of the United States of America or any successor organization thereof. Dollars or $ - means United States of America dollars. Effective Date - means October 12, 1999. Environmental Protection Law - means any federal, state, county, regional or local law, statute or regulation (including, without limitation, CERCLA, RCRA and SARA) enacted in connection with or relating to the protection or regulation of the environment, including, without limitation, those laws, statutes and regulations regulating the disposal, removal, production, storing, refining, handling, transferring, processing or transporting of Hazardous Substances, and any regulations, issued or promulgated in connection with such statutes by any Governmental Authority and any orders, decrees or judgments issued by any court of competent jurisdiction in connection with any of the foregoing. As used in this definition: CERCLA - means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time (by SARA or otherwise), and all rules and regulations promulgated in connection therewith. RCRA - means the Resource Conservation and Recovery Act of 1976, as amended from time to time, and all rules and regulations issued in connection therewith. 61 SARA - means the Superfund Amendments and Reauthorization Act of 1986, as amended from time to time, and all rules and regulations promulgated in connection therewith. Equity Issuance - has the meaning specified in the Intercreditor Agreement (as in effect on the Effective Date). ERISA - means the Employee Retirement Income Security Act of 1974, as amended from time to time. ERISA Affiliate - means any corporation or trade or business that (i) is a member of the same controlled group of corporations (within the meaning of section 414(b) of the IRC) as the Company, or (ii) is under common control (within the meaning of section 414(c) of the IRC) with the Company. Event of Default - Section 10.1. Existing Reimbursement Agreements - means (a) that certain Amended and Restated Reimbursement Agreement, dated as of October 12, 1999, among the Company, American Steel & Wire Corporation and Bank of America, N.A., (b) that certain Reimbursement Agreement, dated as of October 1, 1996, between PNC Bank, National Association successor to PNC Bank, Kentucky, Inc. and the Company, and (c) that certain Reimbursement Agreement, dated as of August 15, 1995, between the Company and PNC Bank, National Association, successor to PNC Bank, Kentucky, Inc. Fair Market Value - means, at any time, with respect to any Property, the sale value of such Property that would be realized in an arm's-length sale at such time between an informed and willing buyer, and an informed and willing seller, under no compulsion to buy or sell, respectively. Financing Documents - means this Agreement, the Notes, the Omnibus Collateral Agreement, the Guaranty Agreement, the Intercreditor Agreement, the Security Documents and all other documents, instruments and agreements executed in connection therewith or contemplated thereby, as the same may be amended, restated or otherwise modified from time to time. Fixed Charge Coverage Ratio - means, with respect to any period of determination, the ratio of (a) Consolidated EBITDAR for such period to (b) the sum of (i) Consolidated Interest Expense for such period plus (ii) Rental Expense for such period plus (iii) the aggregate amount of all scheduled principal payments on 62 Debt made by the Company and the Restricted Subsidiaries during such period (excluding any payments made by the Company to PNC Bank, National Association in respect of reimbursement obligations owing in connection with Irrevocable Letter of Credit No. 14321 dated August 30, 1995 issued by PNC Bank, Kentucky, Inc. for the benefit of PNC Bank, Kentucky, Inc. (predecessor to The Chase Manhattan Trust Company, National Association), as Trustee and having an initial stated amount of $10,493,151), plus (iv) the aggregate amount of all cash dividends paid by the Company with respect to any of its capital stock during such period. Foreign Pension Plan - means any plan, fund or other similar program (a) established or maintained outside of the United States of America by any one or more of the Company or the Subsidiaries primarily for the benefit of the employees (substantially all of whom are aliens not residing in the United States of America) of the Company or such Subsidiaries which plan, fund or other similar program provides for retirement income for such employees or results in a deferral of income for such employees in contemplation of retirement, and (b) not otherwise subject to ERISA. Four-Quarter Period - means a period of four full consecutive fiscal quarters of the Company and the Restricted Subsidiaries, taken together as one accounting period, and unless set forth herein to the contrary, shall mean the four full consecutive fiscal quarters of the Company and the Restricted Subsidiaries ending on (or most recently ending before) the date of any computation of any given financial ratio or covenant contained herein. GAAP - means accounting principles as promulgated from time to time in statements, opinions and pronouncements by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board and in such statements, opinions and pronouncements of such other entities with respect to financial accounting of for-profit entities as shall be accepted by a substantial segment of the accounting profession in the United States. Governmental Authority - means (a) the government of (i) the United States of America and any State or other political subdivision thereof, or (ii) any jurisdiction (y) in which the Company or any Subsidiary conducts all or any part of its business or (z) that 63 asserts jurisdiction over the conduct of the affairs or Properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. Guarantor - means, at any time, any Restricted Subsidiary that is a Guarantor at such time under the Guaranty Agreement. Guaranty - means with respect to any Person (for the purposes of this definition, the "Guarantor") any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person (the "Primary Obligor") in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by the Guarantor: (a) to purchase such indebtedness or obligation or any Property or assets constituting security therefor; (b) to advance or supply funds (i) for the purpose of payment of such indebtedness or obligation, or (ii) to maintain working capital or other balance sheet condition or any income statement condition of the Primary Obligor or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (c) to lease Property or to purchase Securities or other Property or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of the Primary Obligor to make payment of the indebtedness or obligation; or (d) otherwise to assure the owner of the indebtedness or obligation of the Primary Obligor against loss in respect thereof. For purposes of computing the amount of any Guaranty, in connection with any computation of indebtedness or other liability, it shall be assumed that the indebtedness or other liabilities that are the subject of such Guaranty are direct obligations of the issuer of such Guaranty. 64 Guaranty Agreement - means that certain Guaranty Agreement, dated as of the Effective Date, entered into by each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent, as the same may be amended, restated, modified or supplemented (including to add new Guarantors), and as in effect from time to time. Hazardous Substances - means any and all pollutants, contaminants, toxic or hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law. Indebtedness - means, at any time, with respect to any Person, without duplication, (a) its liabilities for borrowed money (whether or not evidenced by a Security) and its obligations in respect of mandatorily redeemable preferred stock; (b) any liabilities for borrowed money secured by any Lien existing on Property owned by such Person (whether or not such liabilities have been assumed); (c) any obligations in respect of any Capitalized Lease of such Person; (d) the present value of all payments due under any arrangement for retention of title or any conditional sale agreement (other than a Capitalized Lease) discounted at the implicit rate, if known, with respect thereto or, if unknown, at 8% per annum; (e) obligations of such Person in respect of letters of credit or instruments serving a similar function issued or accepted by banks and other financial institutions for the account of such Person (whether or not representing obligations for borrowed money); and (f) any Guaranty of such Person of any Indebtedness of another Person. Institutional Investor - means the Purchasers, any affiliate of any of the Purchasers, and any holder of Notes that is an "accredited investor" as defined in section 2(15) of the Securities Act. 65 Intercreditor Agreement - means that certain Collateral Agency and Intercreditor Agreement dated as of the Effective Date, among the Collateral Agent, the Banks, the L/C Issuers, the holders of the 1993 Notes, the holders of the Notes, The Chase Manhattan Trust Company, National Association, as successor to PNC Bank, National Association, as successor to PNC Bank, Kentucky, Inc., in the capacity specified therein, First Union National Bank, in the capacity specified therein, the Company and each of the Restricted Subsidiaries identified on the signature pages thereto, as amended from time to time. Investment - means any investment, made in cash or by delivery of Property, by the Company or any Restricted Subsidiary (x) in any Person, whether by acquisition of stock, indebtedness or other obligation or Security, or by loan, Guaranty, advance or capital contribution, or otherwise, or (y) in any Property. IRC - means the Internal Revenue Code of 1986, together with all rules and regulations promulgated pursuant thereto, as amended from time to time. IRS - means the Internal Revenue Service and any successor agency. L/C Issuer - means, with respect to the Existing Reimbursement Agreements, Bank of America, N.A. and PNC Bank, National Association, as applicable. Lien - means any interest in Property constituting any pledge, assignment, hypothecation, mortgage, security interest, deposit arrangement, conditional sale or title retaining contract, sale and leaseback transaction, financing statement filing, lessor's or lessee's interest under any lease, subordination of any claim or right, or any type of lien, charge, encumbrance, preferential arrangement or other claim or right. The term "Lien" includes, with respect to stock, stockholder agreements, voting trust agreements, buy-back agreements and all similar arrangements. For the purposes hereof, the Company and each Subsidiary is deemed to be the owner of any Property that it shall have acquired or holds subject to a conditional sale agreement, Capitalized Lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes, and such retention or vesting is deemed a Lien. Majority Holders - means, at any time, the holders of at least fifty-one percent (51%) in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by any one or more of the Company, any Restricted Subsidiary, any Affiliate and any officer or director of any thereof). Make-Whole Amount - means, with respect to any date (the "Payment Date"), and any principal amount of Notes of any Series required for any reason to be paid prior to the regularly scheduled maturity thereof on such Payment Date: 66 (a) if the Make-Whole Discount Rate, determined with respect to such principal amount of such Series and such Payment Date, (i) in the case of the Amended Series A Notes equals or exceeds six and ninety-six one-hundredths percent (6.96%) per annum, (ii) in the case of the Amended Series B Notes equals or exceeds seven and seven one-hundredths percent (7.07%) per annum, or (iii) in the case of the Amended Series C Notes equals or exceeds seven and seventeen one-hundredths percent (7.17%) per annum, then Zero Dollars ($0); or (b) if the Make-Whole Discount Rate, determined with respect to such principal amount of such Series and such Payment Date, (i) in the case of the Amended Series A Notes is less than six and ninety-six one-hundredths percent (6.96%) per annum, (ii) in the case of the Amended Series B Notes is less than seven and seven one-hundredths percent (7.07%) per annum, or (iii) in the case of the Amended Series C Notes is less than seven and seventeen one-hundredths percent (7.17%) per annum, then (A) the sum of the present values of the then remaining scheduled payments of principal and interest for the Notes of any Series (in each case, on the basis of the interest rate applicable to the Original Notes of such Series) that would be payable in respect of such principal amount of such Series but for such prepayment or acceleration, minus (B) such principal amount of such Series plus the amount of interest accrued on such principal amount since the scheduled interest payment date immediately preceding such Payment Date. In determining such present values, a discount rate equal to the Make-Whole Discount Rate (with respect to the Payment Date and such principal amount of such Series) divided by two (2), and a discount period of six (6) months of thirty (30) days each, shall be used. 67 Make-Whole Discount Rate - means, with respect to any date and any principal amount of Notes of any Series required for any reason to be paid prior to the regularly scheduled maturity thereof on such date, the sum of (a) the Treasury Rate with respect to such principal amount of such Series and such date, plus (b) if such payment is made (i) pursuant to Section 5.2(b) hereof, ninety one-hundredths percent (0.90%) per annum, or (ii) pursuant to Section 6.1 hereof, ninety-five one-hundredths percent (0.95%) per annum, or (iii) pursuant to any provision of this Agreement other than Section 5.2(b) or Section 6.1 hereof, fifty one-hundredths percent (0.50%) per annum. As used in this definition only: Remaining Dollar-Years - means, with respect to any date and any principal amount of Notes of any Series being paid prior to the regularly scheduled maturity thereof for any reason on such date, the result obtained by (a) multiplying, in the case of each required payment of principal (including payment at maturity) that would be payable in respect of such principal amount being so prepaid but for such prepayment, (i) an amount equal to such required payment of principal, by (ii) the number of years (calculated to the nearest one- twelfth (1/12)) that will elapse between such date and the date such required principal payment would be due if such prepayment had not occurred, and (b) calculating the sum, with respect to each of such required payments of principal, of each of the products obtained in the preceding subsection (a). 68 Treasury Rate - means, with respect to any date and any principal amount of Notes of any Series required for any reason to be paid prior to the regularly scheduled maturity thereof on such date, (a) the yield reported as of 10:00 a.m., New York City time, on the second Business Day preceding the date of payment, on the display designated as "Page 678" on the Bridge Telerate (or such other display as may replace Page 678 on the Bridge Telerate) (or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in United States government Securities) providing the most current yields for actively traded United States Treasury securities with maturities corresponding to the remaining Weighted Average Life to Maturity on such date of such principal amount of the Notes of such Series (such Weighted Average Life to Maturity being determined as of the date of such calculation and rounded to the nearest month), or (b) if and only if such Bridge Telerate ceases to exist or fails to report such yield, such yield as reported on a reasonably comparable electronic service as may be designated by the Majority Holders, or (c) if and only if such Bridge Telerate ceases to exist or fails to report such yield and the Majority Holders shall fail to agree upon a comparable electronic service pursuant to clause (b) of this definition, such yield reported under the heading "Week Ending" for the week most recently ended and under the caption "Treasury Constant Maturities" of the maturity corresponding to the remaining Weighted Average Life to Maturity on such date of such principal amount of the Notes being prepaid or accelerated (such Weighted Average Life to Maturity being determined as of the date of such calculation and rounded to the nearest month) as most recently published and made available to the public in the statistical release designated "H.15(519)" or any successor publication that is published weekly by the Federal Reserve System and that establishes yields on actively traded United States Treasury securities or, if no such successor publication is available, then any other source of current information in respect of interest rates on the securities of the United States of America that is generally available and, in the judgment of the Majority Holders, provides information reasonably comparable to the H.15(519) statistical release. If no maturity exactly corresponds to such rounded Weighted Average Life to Maturity, yields for the two (2) most closely corresponding published maturities next above and below such rounded Weighted Average Life to Maturity shall be calculated pursuant to the immediately preceding sentence 69 and the Treasury Rate shall be interpolated from such yields on a straight- line basis, rounding with respect to each such relevant period to the nearest month. Weighted Average Life to Maturity - means, with respect to any date and any principal amount of Notes of any Series being paid on such date, the number of years obtained by dividing the Remaining Dollar-Years on such date of such principal amount of such Series by such principal amount. Margin Security - means "margin stock" within the meaning of Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II, as amended from time to time. Material Adverse Effect - means a material adverse effect on (a) the business, prospects, profits, Properties or condition (financial or otherwise) of the Company and the Restricted Subsidiaries, taken as a whole, (b) the ability of the Company or any Restricted Subsidiary to perform its obligations under any of the Financing Documents to which it is a party, or (c) the validity or enforceability of any of the Financing Documents. Moody's - means Moody's Investors Service, Inc. Mortgages- means, collectively, those certain mortgages and deeds of trust, dated the Effective Date, executed by the Company and certain Restricted Subsidiaries, respectively, in favor of the Collateral Agent, as more specifically identified in the Omnibus Collateral Agreement, together with any additional mortgages or deeds of trust executed and delivered pursuant to the terms of this Agreement or any other Financing Documents, in each case as amended, restated or otherwise modified from time to time. Multiemployer Plan - means any multiemployer plan (as defined in section 3(37) of ERISA) in respect of which the Company or any ERISA Affiliate is an "employer" (as defined in section 3 of ERISA). Multiple Employer Pension Plan - means any employee benefit plan within the meaning of section 3(3) of ERISA (other than a Multiemployer Plan), subject to Title IV of ERISA, to which the Company or any ERISA Affiliate and an employer (as defined in section 3 of ERISA) other than an ERISA Affiliate or the Company contribute. Net Proceeds - has the meaning specified in the Intercreditor Agreement, as in effect on the Effective Date. Nightingale - means Nightingale Associates, LLC. 70 1993 Notes - means the Company's 10.03% Senior Notes due December 15, 2005. Note Pledge Agreement - means that certain Note Pledge Agreement, dated as of the Effective Date, executed by the Company in favor of the Collateral Agent, as amended, restated or otherwise modified from time to time. Note Purchase Agreements - Section 1.1. Notes - Section 1.2(f). Off Balance Sheet Liabilities - means, with respect to any Person, all obligations of such Person under any synthetic lease, tax retention operating lease, off balance sheet loan or similar off balance sheet financing if the transaction giving rise to such obligation (a) is considered indebtedness for borrowed money for tax purposes but is classified as an operating lease or (b) does not (and is not required to pursuant to GAAP) appear as a liability on the balance sheet of such Person. Omnibus Collateral Agreement - means that certain Omnibus Collateral Agreement dated as of the Effective Date, executed by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent and the Secured Parties (as such term is defined therein), as amended, restated or otherwise modified from time to time. Original Bank Commitment Amount - means Three Hundred Million Dollars ($300,000,000). Original Closing Date - Section 1.3. Original Note Purchase Agreements - Section 1.1. Original Notes - Section 1.2(a). Original Series A Notes - Section 1.2(a)(i). Original Series B Notes - Section 1.2(a)(ii). Original Series C Notes - Section 1.2(a)(iii). OSHA - means the Occupational Safety and Health Act of 1970, together with all rules, regulations and standards promulgated pursuant thereto, as amended from time to time. 71 PBGC - means the Pension Benefit Guaranty Corporation and any successor corporation or governmental agency. PCR - means Pacific Coast Recycling, LLC, a limited liability company formed under the laws of the State of Delaware. Pension Plan - means, at any time, any "employee pension benefit plan" (as defined in section 3 of ERISA) maintained at such time by the Company or any ERISA Affiliate for employees of the Company or such ERISA Affiliate, excluding any Multiemployer Plan, but including, without limitation, any Multiple Employer Pension Plan. Performance Release Date - means the date on which the Company has delivered to the Majority Holders evidence satisfactory to the Majority Holders demonstrating that the Debt to Consolidated EBITDA Ratio calculated as of the end of two consecutive fiscal quarters of the Company ending after the Effective Date was less than 3.50 to 1.00. Permitted Investments - means any of the following Investments: (a) direct obligations of the United States of America or obligations guaranteed by the United States of America maturing no later than 365 days from the date of acquisition; (b) repurchase agreements or eurodollar deposits with, or certificates of deposit maturing no later than 365 days from the date of acquisition and issued by, banks having a combined capital and surplus of over Two Hundred Fifty Million Dollars ($250,000,000) and rated at least A- by S&P, and at least A3 by Moody's; (c) Investment in commercial paper issued by corporations incorporated in the United States of America or any state thereof and maturing in 270 days or less and rated at least A-1 by S&P or P-1 by Moody's; (d) Investments in Property used in the ordinary course of business of the Company and the Guarantors; (e) Investments in AIR; (f) Investments in Restricted Subsidiaries which were Restricted Subsidiaries as of the Effective Date; (g) Investments in other Persons (whether a Person which became a Restricted Subsidiary after the Effective Date, an Unrestricted Subsidiary, or 72 any unconsolidated Affiliate (excluding AIR)) not to exceed $3,000,000 in the aggregate during any period of twelve (12) consecutive months so long as, in the case of this clause (g) only, immediately prior to, and immediately after the consummation of such Investment, and after giving effect thereto, no Default or Event of Default would exist; and (h) loans and advances to employees (x) for moving, entertainment, travel and other similar expenses, (y) to finance tax liabilities incurred with respect to restricted stock bonuses and (z) for other purposes, so long as all such loans and advances referred to in the preceding clauses (x) through (z) are made in the ordinary course of the Company's business consistent with past practices and do not exceed Two Million Dollars ($2,000,000) in aggregate outstanding principal amount at any time. For purpose of this definition, an "Investment" shall include the direct or indirect acquisition, in one or a series of transactions, of any ongoing business, of all or substantially all of the assets of any Person, or of a division or asset group of a Person with identifiable net earnings (or loss), whether through purchase of assets, merger or otherwise. Following the Performance Release Date, the dollar amount limitation contained in the immediately preceding clause (g) shall no longer apply. Person - means an individual, partnership, corporation, trust, unincorporated organization, or a government or agency or political subdivision thereof. Placement Memorandum - Section 2.1. Preferred Stock - means any class of capital stock of a corporation that is preferred over any other class of capital stock of such corporation as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such corporation. Property - means any interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. Purchase Money Lien - means (a) any Lien held by any Person (whether or not the seller of such Property) on tangible Property (or a group of related items of Property the substantial portion of which are tangible) acquired or constructed by the Company or any Restricted Subsidiary, which Lien secures all or a portion of the related purchase price or construction costs of such Property, provided that such Purchase Money Lien (i) encumbers only Property acquired or constructed after the Effective Date and acquired with the proceeds of the Debt secured thereby, and (ii) such Lien is not thereafter extended to any other Property, and (b) any Lien existing on Property of any Person at the time it becomes a Restricted Subsidiary, provided that (i) no such Lien shall extend to or cover any Property other than the Property 73 subject to such Lien at the time of any such transaction, and (ii) such Lien was not created in contemplation of any such transaction. Purchasers - Section 1.1. Rental Expense - means, with respect to any period of determination, lease, rental and all other payments made in respect of or in connection with the use of property (whether real, personal or mixed) by the Company and the Restricted Subsidiaries with respect to such period other than (a) payments with respect to Capitalized Leases and (b) payments made with respect to any operating lease under which the annual lease payments do not exceed Twenty-Five Thousand Dollars ($25,000) in the aggregate. Restricted Payment - means: (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock or other equity interest of the Company or any of the Restricted Subsidiaries now or hereafter outstanding, other than (i) a dividend payable solely in shares of that class of stock to the holders of that class and (ii) a distribution of Rights under, and as defined in, that certain Rights Agreement dated as of January 16, 1996 between the Company and First Union National Bank, successor to First Union National Bank of North Carolina, as such agreement has been amended prior to, and is in effect on, the Effective Date; (b) any redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock or other equity interest of the Company or any of the Restricted Subsidiaries now or hereafter outstanding; (c) any payment or prepayment of principal of, premium, if any, or interest on, redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Debt of the Company or any of the Restricted Subsidiaries that is subordinated in right of payment and otherwise to the Notes or the obligations of the Restricted Subsidiaries that are Guarantors under the Guaranty Agreement; and (d) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of the Company or any of the Restricted Subsidiaries now or hereafter outstanding. Restricted Subsidiary - means, at any time, a corporation, 74 (a) organized under the laws of the United States, Puerto Rico or Canada or a jurisdiction thereof at such time, (b) that conducts substantially all of its business and has substantially all of its Property within the United States, Puerto Rico and Canada at such time, and (c) at least eighty percent (80%) (by number of votes) of each class of Voting Stock of which and one hundred percent (100%) of all Preferred Stock and other equity Securities of which are legally and beneficially owned by the Company and its Wholly-Owned Restricted Subsidiaries at such time. S&P - means Standard & Poor's Rating Group, a division of McGraw-Hill, Inc. SBQ Asset Sale Prepayment - means a prepayment of the Notes in connection with an Acceptable SBQ Asset Sale pursuant to Section 5.2(d) hereof and in accordance with Section 4.1(b) of the Intercreditor Agreement. SBQ Division - means the "special bar quality" division of the Company and the Subsidiaries which includes (a) all assets of the Company located in, or related to its operations in, Memphis, Tennessee; (b) the assets of American Steel and Wire Corporation (and the Company's equity interests in American Steel and Wire Corporation) but excluding the "missile wire" facility located in Cleveland, Ohio; and (c) the Company's equity interest in AIR. The SBQ Division, excluding the Company's equity interest in AIR, is referred to herein as "SBQ Division (Memphis/Cleveland)." Securities Act - means the Securities Act of 1933, as amended from time to time. Security - means "security" as defined by section 2(1) of the Securities Act. Security Agreement - means that certain Security Agreement, dated as of the Effective Date, executed by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent, as amended, restated or otherwise modified from time to time. Security Documents - means, collectively, the Mortgages, the Security Agreement, the Trademark/Copyright Security Agreement, the Stock Pledge Agreement, the Note Pledge Agreement and all other mortgages, deeds of trust, security agreements, pledges, powers of attorney, assignments, financing statements and all other written instruments and documents now or hereafter executed by or on behalf of the Company or any of the Restricted Subsidiaries for the direct or indirect 75 benefit of the holders of the Notes, together with all agreements and documents referred to therein or contemplated thereby. Series - means any or all of any series of Notes issued hereunder. Special Majority Holders -- means, at any time, the holders of at least sixty-six and two-thirds percent (66-2/3%) in principal amount of the Notes at the time outstanding (exclusive of the Notes then owned by any one or more of the Company, any Restricted Subsidiary, any Affiliate or any officer or director thereof. Stock Pledge Agreement - means that certain Stock Pledge Agreement, dated as of the Effective Date, executed by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent, as amended, restated or otherwise modified from time to time. Subsidiary - means, at any time, a corporation of which the Company owns, directly or indirectly, more than fifty percent (50%) (by number of votes) of each class of Voting Stock at such time. Trademark/Copyright Security Agreement - means that certain Trademark and Copyright Collateral Assignment and Security Agreement, dated as of the Effective Date, executed by the Company and each of the Restricted Subsidiaries identified on the signature pages thereto in favor of the Collateral Agent, as amended, restated or otherwise modified from time to time. Transaction Documents - has the meaning specified in the Omnibus Collateral Agreement. Voting Stock - means capital stock of any class or classes of a corporation the holders of which are ordinarily, in the absence of contingencies, entitled to elect corporate directors (or Persons performing similar functions). Unrestricted Subsidiary - means, at any time, any Subsidiary that has been designated by the Company's Board of Directors as an Unrestricted Subsidiary, provided that at the time of such designation (a) the Subsidiary so designated neither owns, directly or indirectly, any Debt of the Company or any Restricted Subsidiary or any capital stock of any Restricted Subsidiary, (b) no Debt of such Subsidiary is guaranteed by the Company or a Restricted Subsidiary, and 76 (c) no Default or Event of Default would occur as a result of such designation. Waiver and Second Amendment - Section 1.1. Wholly-Owned Restricted Subsidiary - means, at any time, any Restricted Subsidiary one hundred percent (100%) of all of the Debt and equity Securities (except directors' qualifying shares) of which are owned by any one or more of the Company and the Company's other Wholly-Owned Restricted Subsidiaries at such time. 11.2. GAAP. All accounting terms, ratios and measurements shall be interpreted or determined in accordance with GAAP except (x) the Company's compliance with the covenants contained in Section 8.11, Section 8.12 and, if applicable, Section 8.15 and calculations of the Debt to Consolidated EBITDA Ratio for purposes of determining the Performance Release Date shall be determined based on the financial statements required to be provided by the Company pursuant to Section 9.1(b) and (y) as otherwise expressly provided in this Agreement or any other Financing Document. If a change in GAAP occurs after the Effective Date and such change materially affects the ability of the Company to comply with the provisions of Section 8.11, Section 8.12 or Section 8.15 or any other financial covenant contained in this Agreement, the Company and the holders of the Notes shall enter into good faith negotiations with a view to amending such provisions with the desired result that determination of the Company's compliance with such provisions taking into account such change in GAAP will be as close as possible to the determination of the Company's compliance with such provisions prior to such change. 11.3. Directly or Indirectly. Where any provision herein refers to action to be taken by any Person, or that such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person, including actions taken by or on behalf of any partnership in which such Person is a general partner. 11.4. Section Headings and Table of Contents and Construction. (a) Section Headings and Table of Contents, etc. The titles of the Sections and the Table of Contents appear as a matter of convenience only, do not constitute a part hereof and shall not affect the construction hereof. The words "herein," "hereof," "hereunder" and "hereto" refer to this Agreement as a whole and not to any particular Section or other subdivision. (b) Construction. Each covenant contained herein shall be construed (absent an express contrary provision herein) as being independent 77 of each other covenant contained herein, and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with one or more other covenants. 11.5. Governing Law. THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, INTERNAL NEW YORK LAW. 12. MISCELLANEOUS 12.1. Communications. (a) Method; Address. All communications hereunder or under the Notes shall be in writing, shall be hand delivered, deposited into the United States mail (registered or certified mail), postage prepaid, or sent by overnight courier, and shall be addressed, (i) if to the Company, 1000 Urban Center Drive, Suite 300 Birmingham, Alabama 35242-2516 Attention: Chief Financial Officer provided, that the failure to provide any such copy shall in no way affect the validity of any communication to the Company for purposes of this Agreement), or at such other address as the Company shall have furnished in writing to all holders of the Notes at the time outstanding, and (ii) if to any of the holders of the Notes, (A) if such holders are the Purchasers, at their respective addresses set forth on Annex 1 hereto, and further including any parties referred to on such Annex 1 that are required to receive notices in addition to such holders of the Notes, and (B) if such holders are not the Purchasers, at their respective addresses set forth in the register for the registration and transfer of Notes maintained pursuant to Section 8.3 hereof, 78 or to any such party at such other address as such party may designate by notice duly given in accordance with this Section 12.1 to the Company (which other address shall be entered in such register). (b) When Given. Any communication so addressed and deposited in the United States mail, postage prepaid, by registered or certified mail (in each case, with return receipt requested) shall be deemed to be received on the third (3rd) succeeding Business Day after the day of such deposit (not including the date of such deposit). Any notice so addressed and otherwise delivered shall be deemed to be received when actually received at the address of the addressee. 12.2. Reproduction of Documents. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by you at the closing of your purchase of the Notes (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to you or any other holder of Notes, may be reproduced by any holder of Notes by any photographic, photostatic, microfilm, micro-card, miniature photographic, digital or other similar process and each holder of Notes may destroy any original document so reproduced. The Company agrees and stipulates that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such holder of Notes in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. Nothing in this Section 12.2 shall prohibit the Company or any holder of Notes from contesting the accuracy of any such reproduction. 79 12.3. Survival. All warranties, representations, certifications and covenants made by the Company herein or in any certificate or other instrument delivered by it or on its behalf hereunder shall be considered to have been relied upon by you and shall survive the delivery to you of the Amended Notes regardless of any investigation made by you or on your behalf. The representations made in Section 1.4 hereof shall be considered to have been relied upon by the Company and shall survive the execution and delivery of this Agreement and delivery to you of the Amended Notes regardless of any investigation made by the Company or on its behalf. All statements in any such certificate or other instrument shall constitute warranties and representations by the Company hereunder. 12.4. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. The provisions hereof are intended to be for the benefit of all holders, from time to time, of Notes, and shall be enforceable by any such holder, whether or not an express assignment to such holder of rights hereunder shall have been made by you or your successor or assign. 12.5. Amendment and Waiver. (a) Requirements. This Agreement may be amended, and the observance of any term hereof may be waived, with (and only with) the written consent of the Company and the Majority Holders; provided that no such amendment or waiver of any of the provisions of Section 1 through Section 4 hereof, inclusive, or any defined term used therein, shall be effective as to any holder of Notes unless consented to by such holder in writing; provided that no such amendment or waiver shall, without the written consent of the holders of all Notes (exclusive of Notes held by the Company, any Restricted Subsidiary or any Affiliate) at the time outstanding, (i) subject to the provisions of Section 10.2 and Section 10.3 hereof, change the amount or time of any prepayment or payment of principal or Make-Whole Amount or the rate or time of payment of interest (including, without limitation, by amendment of Section 5 or Section 6 hereof), (ii) amend Section 10 hereof, (iii) amend the definition of Majority Holders, or (iv) amend this Section 12.5. 80 The holder of any Note may specify that any such written consent executed by it shall be effective only with respect to a portion of the Notes held by it (in which case it shall specify, by Dollar amount, the aggregate principal amount of Notes with respect to which such consent shall be effective) and in the event of any such specification such holder shall be deemed to have executed such written consent only with respect to the portion of the Notes so specified. (b) Solicitation of Noteholders. (i) Solicitation. The Company shall not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions hereof or of the Notes unless each holder of Notes (irrespective of the amount of Notes then owned by it) shall be informed thereof by the Company with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or consent effected pursuant to the provisions of this Section 12.5 shall be delivered by the Company to each holder of outstanding Notes forthwith following the date on which the same shall have been executed and delivered by all holders of outstanding Notes required to consent or agree to such waiver or consent. (ii) Payment. The Company shall not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or such security is concurrently granted, on the same terms, ratably to the holders of all Notes then outstanding. (iii) Scope of Consent. Any consent made pursuant to this Section 12.5 by a holder of Notes that has transferred or has agreed to transfer its Notes to the Company, any Restricted Subsidiary or any Affiliate and has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force and effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force and effect, retroactive to the date such amendment or waiver initially took or takes effect, except solely as to such holder. 81 (c) Binding Effect. Except as provided in Section 12.5(b) hereof, any amendment or waiver consented to as provided in this Section 12.5 shall apply equally to all holders of Notes and shall be binding upon them and upon each future holder of any Note and upon the Company whether or not such Note shall have been marked to indicate such amendment or waiver. No such amendment or waiver shall extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. 12.6. Payments, When Received. (a) Payments Due on Holidays. If any payment due on, or with respect to, any Note shall fall due on a day other than a Business Day, then such payment shall be made on the first Business Day following the day on which such payment shall have so fallen due; provided that if all or any portion of such payment shall consist of a payment of interest, for purposes of calculating such interest, such payment shall be deemed to have been originally due on such first following Business Day, such interest shall accrue and be payable to (but not including) the actual date of payment, and the amount of the next succeeding interest payment shall be adjusted accordingly. (b) Payments, When Received. Any payment to be made to the holders of Notes hereunder or under the Notes shall be deemed to have been made on the Business Day such payment actually becomes available to such holder at such holder's bank prior to 11:00 a.m. (local time of such bank). 12.7. Entire Agreement. This Agreement constitutes the final written expression of all of the terms hereof and is a complete and exclusive statement of those terms. 12.8. Duplicate Originals, Execution in Counterpart. Two or more duplicate originals hereof may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement may be executed in one or more counterparts and shall be effective when at least one counterpart shall have been executed by each party hereto, and each set of counterparts that, collectively, show execution by each party hereto shall constitute one duplicate original. Each of the parties hereto agrees that the contract evidenced by this Agreement shall for all purposes be considered to have been made in New York, New York. [Remainder of page intentionally left blank; next page is signature page.] 82 If this Agreement is satisfactory to you, please so indicate by signing the acceptance at the foot of a counterpart hereof and returning such counterpart to the Company, whereupon this Agreement shall become binding between us in accordance with its terms. Very truly yours, BIRMINGHAM STEEL CORPORATION By -------------------------- Name: Title: Accepted: [PURCHASER] By -------------------------- Name: Title: EX-4.3 6 LETTER FROM BIRMINGHAM STEEL CORPORATION EXHIBIT 4.3 October 13, 1999 To Each of the Purchasers Named In the Amended and Restated Note Purchase Agreements dated as of October 12, 1999 with Birmingham Steel Corporation referred to below: RE: (i) Amended and Restated Note Purchase Agreement - $130,000,000, 10.03% Senior Notes Due December 15, 2005; (ii) Amended and Restated Note Purchase Agreement - $76,000,000, 9.71% Series A Senior Notes due December 15, 2002; $14,000,000, 9.82% Series B Senior Notes due December 15, 2005; $60,000,000, 9.92% Series C Senior Notes due December 15, 2005 (collectively, the "Note Purchase Agreements"). Ladies and Gentlemen: Reference is made to (a) the Note Purchase Agreements, and (b) the Limited Liability Company Agreement of American Iron Reduction, LLC ("AIR"), of which Birmingham Steel Corporation (the "Company") is a member, and to the DRI Purchase Agreement, Sponsor Performance and Indemnity Agreement, Equity Contribution Agreement, and other agreements and documents executed in connection with any of the foregoing (collectively, including the Limited Liability Company Agreement, the "AIR Documents"). Capitalized terms used herein and not defined herein have the meanings ascribed to them in the AIR Documents or Note Purchase Agreements, as applicable. As a condition to your entering into the Waiver and Second Amendment to Note Purchase Agreement and Waiver and Third Amendment to Note Purchase Agreement, as applicable, the Company has agreed as follows with respect to the AIR Documents and the Company's rights and obligations thereunder: 1. Neither the Company nor any Subsidiary of the Company will make any payment or transfer any asset at any time, pursuant to any of the AIR Documents or with respect to the purchase of DRI, that (i) is greater than the amount that the Company is required to pay, or (ii) is made prior to the time that it is due pursuant to the AIR Documents as in effect on the date hereof, except that (x) the Company may pay the purchase price for DRI that the Company would be obligated to pay under the DRI Purchase Agreement if the AIR facility were fully operational and Completion had occurred, whether or not the AIR facility is not yet fully operational or Completion has not yet occurred, and (y) the Company may from time to time advance to AIR, in accordance with prior practices of the Company, up to 50% of the expenses incurred in the ordinary course of AIR's business, if AIR does not have sufficient cash to pay such expenses and if such advances will be credited against each subsequent invoice and other amount owed by the Company to DRI until the amount of such advance is paid in full. The Company acknowledges that the business plan that it has delivered to you contemplates the Company having to make the payments referred to in the preceding sentence. 2. Without the written consent of the Special Majority Holders, the Company will not enter into any agreement for the purpose or having the effect of terminating the Company's obligations under any of the AIR Documents or entering into a settlement of any such obligations or any agreement to pay any of the Company's obligations under any of the AIR Documents prior to the time that they would otherwise be payable under the AIR Documents, except that the Company may enter into an agreement to settle all of its obligations under the AIR Documents if the Company delivers to the Note Purchasers pro forma financial statements showing that (a) the Company, after giving effect to such settlement and/or payments, will have sufficient cash to pay all of its obligations as they become due, and (b) the Company will be in compliance and will remain in compliance with each of the financial covenants set forth in the Note Purchase Agreements. This letter is intended to constitute, and shall constitute, a "Security Document" (and accordingly a "Financing Document") under each of the Note Purchase Agreements, and any failure of the Company to carry out its agreements in this letter shall accordingly constitute an Event of Default under Section 10.1(d) of each of the Note Purchase Agreements upon the expiration of the 30 day grace period provided for therein. This letter will become effective in accordance with its terms upon the delivery of this letter in connection with the delivery of the Waiver Documents, without any requirement that any of you execute or acknowledge receipt of this letter. Very truly yours, BIRMINGHAM STEEL CORPORATION By: ----------------------------------- Its -2- EX-10.18 7 DIRECTOR COMPENSATION PLAN OF THE REGISTRANT EXHIBIT 10.18 BIRMINGHAM STEEL CORPORATION 1999 DIRECTOR COMPENSATION PLAN Section 1. Purpose of the Plan. ------------------- The purpose of the Birmingham Steel Corporation 1999 Director Compensation Plan (the "Plan") is to provide cash and stock based compensation to non-employee directors of Birmingham Steel Corporation (the "Company") in order to encourage the highest level of director performance and to promote long-term shareholder value by providing such directors with a proprietary interest in the Company's success and progress through the issuance of shares of the Company's common stock ("Common Stock"). Section 2. Certain Definitions. ------------------- (a) "Board" means the Board of Directors of the Company. (b) "Committee" means the Compensation and Stock Option Committee of the Board. (c) "Common Stock" means the common stock of the Company. (d) "Company" means Birmingham Steel Corporation, a Delaware corporation. (e) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (f) "Non-Employee Director" means each member of the Board who is not an employee of the Company or any of its subsidiaries at the date of each grant or award. (g) "Plan" means the Birmingham Steel Corporation 1999 Director Compensation Plan. (h) "Rule 16b-3" means Rule 16b-3, as currently in effect or as hereinafter amended or modified, promulgated under the Exchange Act. Section 3. Administration of the Plan. -------------------------- The Plan shall be administered by the Committee of the Board of Directors of the Company. Grants of cash and Common Stock under the Plan shall be made automatically as provided in Section 6 hereof. However, the Committee shall have full authority to interpret the Plan, to promulgate such rules and regulations with respect to the Plan as it deems desirable, and to make all other determinations necessary or appropriate for the administration of the Plan, and such determinations shall be final and binding upon all persons having an interest in the Plan. Section 4. Common Stock Subject to the Plan. -------------------------------- The total number of shares of Common Stock reserved and available for distribution under the Plan shall be 500,000. Such shares may consist, in whole or in part, of authorized and unissued shares or treasury shares. In the event of any merger, reorganization, consolidation, recapitalization, Common Stock dividend, or other change in corporate structure affecting the Common Stock, a substitution or adjustment shall be made in the aggregate number of shares reserved for issuance under the Plan and in the number of shares granted under the Plan as may be determined to be appropriate by the Committee, in its sole discretion, provided that the number of shares subject to any award shall always be a whole number. Section 5. Participation. ------------- Each Non-Employee Director shall be eligible to participate in the Plan. Section 6. Annual Retainer. --------------- On the date of each Annual Meeting of Stockholders of Birmingham Steel Corporation at which directors are elected, commencing with the 1999 Annual Meeting of Stockholders, each director who is elected to the Board of Directors at such Annual Meeting and who is not an employee of the Company shall receive in payment of such director's annual retainer shares of Common Stock with a market value of $30,000 based on the closing price on the last trading day of the month preceding such annual meeting, except that cash shall be paid in lieu of fractional shares. Section 7. Termination or Amendment of the Plan. ------------------------------------ The Board may suspend or terminate the Plan or any portion thereof at any time, and the Board may amend the Plan from time to time as may be deemed to be in the best interests of the Company; except as may be required by applicable laws or regulations. Section 8. Section 16. ---------- It is intended that the Plan and any grants made to a person subject to Section 16 of the Exchange Act meet all of the requirements of Rule 16b-3. If any provision of the Plan or any award hereunder would disqualify the Plan or such award, or would otherwise not comply with Rule 16b-3, such provision or award shall be construed or deemed amended to conform to Rule 16b-3. Section 9. General Provisions. ------------------ -2- (a) No Right of Continued Service. Nothing in the Plan shall be ----------------------------- deemed to create any obligation on the part of the Board to nominate any Non- Employee Director for reelection by the Company's stockholders. (b) Payment of Taxes. A Non-Employee Director shall, no later than ---------------- the date as of which the value of any award under this Plan first becomes includable in the Non-Employee Director's gross income for federal income tax purposes, make arrangements satisfactory to the Committee regarding payment of any federal, state, local or FICA taxes of any kind required by law to be withheld with respect to such award. (c) Shares. The shares of Common Stock issued under the Plan may be ------ either authorized but unissued shares or shares which have been or may be reacquired by the Company, as determined from time to time by the Board. (d) Governing Law. The Plan and all actions taken thereunder shall be ------------- governed by and construed in accordance with the laws of the State of Delaware (other than its law respecting choice of law). The Plan shall be construed to comply with all applicable law, and to avoid liability to the Company or a Non- Employee Director, including, without limitation, liability under Section 16(b) of the Exchange Act. (e) Effective Date of Plan. The Plan shall be effective July 1, 1999. ---------------------- (f) Headings. The headings contained in this Plan are for reference -------- purposes only and shall not affect the meaning or interpretation of this Plan. (g) Severability. If any provision of this Plan shall for any reason ------------ be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereby, and this Plan shall be construed as if such invalid or unenforceable provision were omitted. (h) Successors and Assigns. This Plan shall inure to the benefit of ---------------------- and be binding upon each successor and assign of the Company. All obligations imposed upon a Non-Employee Director, and all rights granted to the Company hereunder, shall be binding upon the Non-Employee Director's heirs, legal representatives and successors. (i) Status of Existing Plan. This Plan supercedes and replaces the ----------------------- Birmingham Steel Corporation Director's Compensation Plan effective July 1, 1992, as amended May 14, 1993. -3- EX-10.26.5 8 FIFTH AMENDMENT TO CREDIT AGREEMENT Exhibit 10.26.5 Execution Copy FIFTH AMENDMENT TO CREDIT AGREEMENT THIS FIFTH AMENDMENT TO CREDIT AGREEMENT dated as of October 12, 1999 (this "Agreement"), by and among BIRMINGHAM STEEL CORPORATION (the "Borrower"), each of the financial institutions party hereto, and BANK OF AMERICA, N.A., successor to NationsBank, N.A. (South), as Agent (the "Agent"). WHEREAS, the Borrower, the Lenders, the Swingline Lender and the Agent have entered into that certain Credit Agreement dated as of March 17, 1997, as amended as of June 23, 1998, as of September 30, 1998, as of July 27, 1999 and as of September 28, 1999 (as so amended, the "Credit Agreement"); WHEREAS, the Borrower, the Agent, the Lenders and the Swingline Lender desire to amend the Credit Agreement upon the terms and conditions set forth herein; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by all of the parties hereto, all of the parties hereto agree as follows: Section 1. Amendments to Credit Agreement. Subject to the terms and ------------------------------ conditions hereof, including without limitation, satisfaction of the conditions contained in Section 2, the parties hereto agree that the Credit Agreement is amended as follows: (a) The Credit Agreement is amended by deleting from Section 1.1 the definition of the terms "Consolidated EBIT", "Consolidated Net Worth" and "Debt to Capitalization Ratio" in their entirety. (b) The Credit Agreement is amended by deleting from Section 1.1 the definitions of the terms "Applicable Facility Fee", "Applicable Margin", "Consolidated Net Income", "Consolidated Tangible Net Worth", "Loan Document", "Material Adverse Effect", "Obligations", "Permitted Investments" and "Post- Default Rate" in their entirety and substituting in their places the following: "Applicable Facility Fee" means one-half of one percent (0.50%); provided, -------- however, following the Performance Release Date, so long as the Agent shall ------- have received the unanimous written consent of the Lenders thereto (and the execution of the Fifth Amendment by any Lender shall constitute such Lender's irrevocable consent to such reduction of the Applicable Facility Fee upon the Performance Release Date), the Applicable Facility Fee shall equal seven-twentieths of one percent (0.350%). "Applicable Margin" means, subject to adjustment as provided herein, (a) two percent (2.00%) with respect to LIBOR Loans and (b) one-half of one percent (0.50%) with respect to Base Rate Loans. If the Borrower shall fail to consummate the sale of all of the SBQ Division (Memphis/Cleveland) on or before January 31, 2001 (or such later date as the Requisite Lenders may agree to in writing), the Applicable Margin for both Types of Loans shall be increased by 1.00% above the Applicable Margin set forth in the first sentence of this definition; provided, however, upon receipt by the Agent of evidence reasonably satisfactory to the Agent that such sale shall have been consummated, the Applicable Margin for both Types of Loans shall be decreased to 0.50% above the Applicable Margin set forth in the first sentence of this definition on and after the effective date of such sale. Following the Performance Release Date, so long as the Agent shall have received the unanimous written consent of the Lenders thereto (and the execution of the Fifth Amendment by any Lender shall constitute such Lender's irrevocable consent to such reduction of the Applicable Margin upon the Performance Release Date), the Applicable Margin for (x) LIBOR Loans shall equal one and two-fifths of one percent (1.40%) and (b) Base Rate Loans shall equal zero percent (0.00%). "Consolidated Net Income" means, with respect to the Borrower and its Restricted Subsidiaries for any period of computation thereof, the net income (or loss) of the Borrower and its Restricted Subsidiaries on a consolidated basis for such period; provided, however, that the following -------- ------- shall be excluded when determining Consolidated Net Income: (a) any item of gain or loss resulting from the sale, conversion or other disposition of plant, property, and equipment; (b) gains or losses on the acquisition, retirement, sale or other disposition of capital stock and other securities of the Borrower and its Restricted Subsidiaries; (c) the income (or loss) for such fiscal period of any Person prior to the date such Person becomes a Restricted Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Restricted Subsidiaries, or such Person's assets are acquired by the Borrower or any of its Restricted Subsidiaries; (d) any write-up of any asset; (e) any other net gains or losses of an extraordinary nature as determined in accordance with GAAP; (f) any earnings attributable to the amortization of negative goodwill; (g) that portion of net earnings of any Restricted Subsidiary that is unavailable for payment as dividends to the Borrower or another Restricted Subsidiary as a result of a legal or contractual prohibition, unless such portion of such net earnings is legally available for either: (x) reimbursement to the Borrower or another Restricted Subsidiary for advances, loans or allocated expenses, or (y) advances or loans to the Borrower or another Restricted Subsidiary; (h) pre-operating/start-up costs as would be set forth in the financial statements of the Borrower and its Restricted Subsidiaries for such period prepared in accordance with GAAP; provided, however, the amount of such costs excluded for a fiscal quarter occurring during any such period shall not exceed the following amounts: (w) $10,000,000 for the fiscal quarter ending on September 30, 1999; (x) $8,000,000 for the fiscal quarter ending December 31, 1999; (y) $5,000,000 for the fiscal quarter ending March 31, 2000; and (z) $0 for each fiscal quarter ended thereafter; (i) any losses on disposal of the SBQ Division; and (j) any non-cash charges relating to the restructuring of, or write-down of the investments of the Borrower in, AIR and PCR. For purposes of calculating Consolidated Net Income, the amount shall include income (or loss) from both continuing and discontinued operations, except that adjustments to the -2- allowance for discontinued operations and the related tax effects shall be excluded from such amount. "Consolidated Tangible Net Worth" means (a) the Borrower's stockholder's equity which would appear as such on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance with GAAP less (b) all ---- intangible items reflected therein, including all goodwill, all intangible plant expansion costs, all unamortized debt discount and expense, unamortized research and development expense, unamortized deferred charges, patents, trademarks, service marks, trade names, copyrights, unamortized excess cost of investment in Subsidiaries over equity at dates of acquisition, and all similar items which should properly be treated as intangibles in accordance with GAAP. "Loan Document" means this Agreement, each Note, the Guarantee, the Security Agreement, the Pledge Agreement, each Mortgage, the Trademark/Copyright Security Agreement, the Note Pledge Agreement, each document, instrument or agreement executed and delivered by the Borrower to or in favor of the Agent in connection with or relating to any Letter of Credit, the Collateral Agency Agreement, the Omnibus Agreement, and each other document or instrument now or hereafter executed and delivered by the Borrower or any Restricted Subsidiary to or in favor of the Agent, the Swingline Lender or any Lender in connection with, pursuant to or relating to this Agreement. "Material Adverse Effect" means a materially adverse effect on (a) the business, assets, liabilities, financial condition or results of operations of the Borrower and its Restricted Subsidiaries taken as a whole, (b) the ability of the Borrower or any Restricted Subsidiary to perform its obligations under any Loan Document to which it is a party, (c) the validity or enforceability of any of the Loan Documents, or (d) the timely payment of the principal of or interest on the Loans or other amounts payable in connection therewith. "Obligations" means, individually and collectively: (a) the aggregate principal balance of, and all accrued and unpaid interest on, all Loans; (b) all Reimbursement Obligations and all other Letter of Credit Liabilities; and (c) all other indebtedness, liabilities, obligations, covenants and duties of the Borrower owing to the Agent, any Lender, the Swingline Lender or NCMI of every kind, nature and description, under or in respect of this Agreement or any of the other Loan Documents, including, without limitation, all Fees and indemnification obligations, whether direct or indirect, absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any promissory note. "Permitted Investments" means any of the following Investments: (a) direct obligations of the United States of America or obligations guaranteed by the United States of America maturing no later than 365 days from the date of acquisition; (b) repurchase agreements or eurodollar deposits with or certificates of deposit maturing -3- no later than 365 days from the date of acquisition and issued by banks having a combined capital and surplus of over $250,000,000 and rated at least A- by Standard & Poor's Rating Group, a division of McGraw-Hill, Inc. ("S&P") and at least A3 by Moody's Investor Service, Inc. ("Moody's"); (c) Investment in commercial paper issued by corporations incorporated in the United States of America or any state thereof and maturing in 270 days or less and rated at least A-1 by S&P or P-1 by Moody's; (d) Investments in Property used in the ordinary course of business of the Borrower and the Guarantors; (e) Investments in AIR; (f) Investments in Restricted Subsidiaries which were Restricted Subsidiaries as of the Fifth Amendment Date; (g) Investments in other Persons (whether a Person which became a Restricted Subsidiary after the Fifth Amendment Date, an Unrestricted Subsidiary, or any unconsolidated Affiliate (excluding AIR)) not to exceed $3,000,000 in the aggregate during any period of twelve consecutive months so long as, in the case of this clause (g) only, immediately prior to, and immediately after the consummation of such Investment, and after giving effect thereto, no Default or Event of Default would exist; and (h) loans and advances to employees (x) for moving, entertainment, travel and other similar expenses, (y) to finance tax liabilities incurred with respect to restricted stock bonuses and (z) for other purposes, so long as all such loans and advances referred to in the preceding clauses (x) through (z) are made in the ordinary course of the Borrower's business consistent with past practices and do not exceed $2,000,000 in aggregate outstanding principal amount at any time. For purpose of this definition, an Investment shall include the direct or indirect acquisition, in one or a series of transactions, of any ongoing business, of all or substantially all of the assets of any Person, or of a division or asset group of a Person with identifiable net earnings (or loss), whether through purchase of assets, merger or otherwise. Following the Performance Release Date, the dollar amount limitation contained in the immediately preceding clause (g) shall no longer apply. "Post-Default Rate" means, in respect of any principal of any Loan, any Reimbursement Obligation or any other Obligation that is not paid when due (whether at stated maturity, by acceleration, by optional or mandatory prepayment or otherwise), a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to two percent (2.0%) plus the interest rate for Base Rate Loans as provided in Section 2.5.(a); provided that, if the amount so in default is the principal of a LIBOR Loan or a Bid Rate Loan and the due date thereof is a day other than the last day of the Interest Period therefor, the "Post-Default Rate" for such principal shall be, for the period from and including such due date to but excluding the last day of the Interest Period, two percent (2.0%) plus the interest rate for such Loan as provided in Section 2.5.(a), and thereafter, the rate provided for above in this definition. (c) Section 1.1 of the Credit Agreement is hereby amended by adding the definitions of the following terms thereto in the appropriate alphabetical order: "AIR" means American Iron Reduction, L.L.C., a limited liability company organized under the laws of the State of Delaware. -4- "Amount Limitation" has the meaning given that term in Section 2.8.(b)(ii). "Available Cash" means the aggregate amount of all available cash, cash equivalents and other funds on deposit in, held in or credited to, any deposit account, savings account, investment account or other similar account maintained by the Borrower or any Subsidiary with any financial institution or any other Person. "BSE" means Birmingham Southeast, LLC, a limited liability company organized under the laws of the State of Delaware. "Collateral Agent" means State Street Bank and Trust Company, solely in its capacity as Collateral Agent under the Collateral Agency Agreement. "Collateral Agency Agreement" means that certain Collateral Agency and Intercreditor Agreement dated as of October 12, 1999 by and among the Borrower, the Restricted Subsidiaries, the Secured Parties described therein and the Collateral Agent. "Consolidated EBITDA" means, for any period, the sum of (a) Consolidated Net Income for such period, plus (b) the aggregate amount of (i) taxes imposed on, or measured by, income or excess profits, (ii) Consolidated Interest Expense, and (iii) depreciation and amortization for such period (to the extent, and only to the extent, that any such amount in clauses (i), (ii) or (iii) was deducted in the computation of Consolidated Net Income for such period), in each case accrued for such period by the Borrower and the Restricted Subsidiaries, determined on a consolidated basis for such Persons. "Consolidated EBITDAR" means, for any period, the sum of (a) Consolidated EBITDA for such period, plus (b) Rental Expense for such period (to the extent, and only to the extent, deducted in the computation of Consolidated Net Income for such period). "Debt to Consolidated EBITDA Ratio" means, for any Four-Quarter Period, the ratio of (a) Debt of the Borrower and its Restricted Subsidiaries as determined on a consolidated basis at the end of such period to (b) Consolidated EBITDA for such period. "Disposition" has the meaning given that term in the Collateral Agency Agreement (as in effect on the Fifth Amendment Date). "Equity Issuance" has the meaning given that term in the Collateral Agency Agreement (as in effect on the Fifth Amendment Date). "Existing Note Purchase Agreements" means (a) that certain Amended and Restated Note Purchase Agreement dated as of October 12, 1999 executed by the Borrower in respect of the Borrower's 10.03% Senior Notes due December 15, 2005 in the aggregate amount of $130,000,000 and (b) that certain Amended and Restated Note -5- Purchase Agreement dated as of October 12, 1999 executed by the Borrower in respect of the Borrower's (i) 9.71% Series A Senior Notes due December 15, 2002 in the aggregate amount of $76,000,000; (ii) 9.82% Series B Senior Notes due December 15, 2005 in the aggregate amount of $14,000,000; and (iii) 9.92% Series C Senior Notes due December 15, 2005 in the aggregate amount of $60,000,000. "Existing Reimbursement Agreements" means (a) that certain Amended and Restated Reimbursement Agreement dated as of October 12, 1999 among the Borrower, American Steel & Wire Corporation, and Bank of America, N.A.; (b) that certain Reimbursement Agreement dated as of October 1, 1996 between the Borrower and PNC Bank, National Association, successor to PNC Bank, Kentucky, Inc.; and (c) that certain Reimbursement Agreement dated as of August 15, 1995 between the Borrower and PNC Bank, National Association, successor to PNC Bank, Kentucky, Inc. "Fixed Charge Coverage Ratio" means, with respect to any period of determination, the ratio of (a) Consolidated EBITDAR for such period to (b) the sum of (i) Consolidated Interest Expense for such period plus (ii) Rental ---- Expense for such period plus (iii) the aggregate amount of all scheduled principal payments on Debt made by the Borrower and its Restricted Subsidiaries during such period (excluding any payments made by the Borrower to PNC Bank, National Association in respect of reimbursement obligations owing in connection with Irrevocable Letter of Credit No. 14321 dated August 30, 1995 issued by PNC Bank, Kentucky, Inc. for the benefit of PNC Bank, Kentucky, Inc. (predecessor to Chase Manhattan Trust Company), as Trustee and having an initial stated amount of $10,493,151), plus (iv) the aggregate amount of all cash dividends paid by ---- the Borrower with respect to any of its capital stock during such period. "Fifth Amendment" means that certain Fifth Amendment to Credit Agreement dated as of October 12, 1999 by and among the Borrower, the Lenders party thereto and the Agent. "Fifth Amendment Date" means the date on which all of the conditions precedent set forth in Section 2 of the Fifth Amendment have been satisfied or waived in writing by the Requisite Lenders. "Guarantee" has the meaning given that term in the Omnibus Agreement. "Guarantor" means each Person that executes, or otherwise becomes a party to, the Guarantee. "LC Issuer" means with respect to the Existing Reimbursement Agreements, Bank of America, N.A. or PNC Bank, National Association, as applicable. "Mortgage" has the meaning given that term in the Omnibus Agreement. -6- "Net Proceeds" has the meaning given that term in the Collateral Agency Agreement (as in effect on the Fifth Amendment Date). "Note Pledge Agreement" has the meaning given that term in the Omnibus Agreement. "Off Balance Sheet Liabilities" means, with respect to a Person, all obligations of such Person under any synthetic lease, tax retention operating lease, off balance sheet loan or similar off balance sheet financing if the transaction giving rise to such obligation (a) is considered indebtedness for borrowed money for tax purposes but is classified as an operating lease or (b) does not (and is not required to pursuant to generally accepted accounting principles) appear as a liability on the balance sheet of such Person. "Omnibus Agreement" means that certain Omnibus Collateral Agreement dated as of October 12, 1999 executed by the Borrower and the Restricted Subsidiaries in favor of the Collateral Agent and the Secured Parties identified therein. "Outstanding Credit" means the aggregate principal amount of all outstanding Revolving Loans, together with the aggregate amount of all Letter of Credit Liabilities, the aggregate principal amount of all outstanding Swingline Loans and the aggregate principal amount of all outstanding Bid Rate Loans. "PCR" means Pacific Coast Recycling, LLC, a limited liability company formed under the laws of the State of Delaware. "Performance Release Date" means the date on which the Borrower has delivered to the Agent evidence satisfactory to the Agent demonstrating that the Debt to Consolidated EBITDA Ratio as of the end of two consecutive fiscal quarters ending after the Fifth Amendment Date was less than 3.50 to 1.00. "Pledge Agreement" has the meaning given the term "Stock Pledge Agreement" in the Omnibus Agreement. "Priority Threshold Amount" means an amount equal to $235,000,000 as such amount may reduced from time to time in accordance with the provisions of Section 2.12.(d). "Rental Expense" means, with respect to any period of determination, lease, rental and all other payments made in respect of or in connection with the use of property (whether real, personal or mixed) by the Borrower and its Restricted Subsidiaries with respect to such period other than (a) payments with respect to Capitalized Leases and (b) payments made with respect to any operating lease under which the annual lease payments do not exceed $25,000 in the aggregate. -7- "Restricted Payment" means: (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock or other equity interest of the Borrower or any of its Restricted Subsidiaries now or hereafter outstanding, other than (i) a dividend payable solely in shares of that class of stock to the holders of that class and (ii) a distribution of Rights under, and as defined in, that certain Rights Agreement dated as of January 16, 1996 between the Borrower and First Union National Bank, successor to First Union National Bank of North Carolina, as such agreement has been amended prior to, and is in effect on, the Fifth Amendment Date; (b) any redemption, conversion, exchange, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock or other equity interest of the Borrower or any of its Restricted Subsidiaries now or hereafter outstanding; (c) any payment or prepayment of principal of, premium, if any, or interest on, redemption, conversion, exchange, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Debt of the Borrower or any of its Restricted Subsidiaries that is subordinated in right of payment and otherwise to the Obligations or the obligations of the Guarantors under or in respect of the Guarantee; and (d) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of the Borrower or any of its Restricted Subsidiaries now or hereafter outstanding. "SBQ Division" means the "special bar quality" division of the Borrower and its Subsidiaries which includes (a) all assets of the Borrower located in, or in related to its operations in, Memphis, Tennessee; (b) the assets of American Steel and Wire Corporation (and the Borrower's equity interests in American Steel and Wire Corporation); and (c) the Borrower's equity interest in AIR. The SBQ Division, excluding the Borrower's equity interest in AIR and the "missile wire" facility located in Cleveland, Ohio, is referred to herein as "SBQ Division (Memphis/Cleveland)". "Security Agreement" has the meaning given that term in the Omnibus Agreement. "Trademark/Copyright Security Agreement" has the meaning given that term in the Omnibus Agreement. (d) The Credit Agreement is amended by deleting the first sentence of Section 1.2. thereof in its entirety and substituting in its place the following two sentences: All accounting terms, ratios and measurements shall be interpreted or determined in accordance with GAAP except (x) the Borrower's compliance with the covenants contained in Section 9.1.(a), (b) and, if applicable, (e) (and accordingly all applicable calculations contained in any Compliance Certificate) and calculations of the Debt to Consolidated EBITDA Ratio for purposes of determining the Performance Release Date shall be determined based on the financial statements required to be provided by the Borrower pursuant to Section 8.4.(e) and (y) as otherwise expressly provided in this Agreement or any other Loan Document. If a change in GAAP occurs after the Fifth -8- Amendment Date and such change materially affects the ability of the Borrower to comply with the provisions of Section 9.1. or any other financial covenant contained in this Agreement, the parties hereto shall enter into good faith negotiations with a view to amending such Section with the desired result that determination of the Borrower's compliance with such Section taking into account such change in GAAP will be as close as possible to the determination of the Borrower's compliance with such Section prior to such change. (e) The Credit Agreement is amended by deleting Section 2.3.(a) in its entirety and substituting in its place the following: (a) Letters of Credit. Subject to the terms and conditions of this ----------------- Agreement, the Agent, on behalf of the Lenders, agrees to issue for the account of the Borrower during the period from and including the Effective Date to, but excluding the date 90 days prior to the Termination Date one or more stand-by or documentary letters of credit (each a "Letter of Credit") up to a maximum aggregate Stated Amount at any one time outstanding not to exceed the L/C Commitment Amount. (f) The Credit Agreement is amended by deleting Section 2.5. in its entirety and substituting in its place the following: Section 2.5. Rates and Payment of Interest on Loans. (a) Rates. ----- (i) Generally. The Borrower promises to pay to the Agent for --------- account of each Lender interest on the unpaid principal amount of each Loan made by such Lender for the period from and including the date of the making of such Loan to but excluding the date such Loan shall be paid in full, at the following per annum rates: (A) during such periods as such Loan is a Base Rate Loan, at the Base Rate (as in effect from time to time), plus the Applicable ---- Margin; (B) during such periods as such Loan is a LIBOR Loan, at the Adjusted Eurodollar Rate for such Loan for the Interest Period therefor, plus the Applicable Margin; and ---- (C) if such Loan is a Bid Rate Loan, at the Bid Rate for such Loan for the Interest Period therefor quoted by the Lender making such Loan in accordance with Section 2.2. (ii) Additional Interest Amounts Payable on Outstanding Credit Below --------------------------------------------------------------- Priority Threshold Amount. In addition to the interest payable pursuant to ------------------------- the immediately preceding clause (i), the Borrower promises to pay to the Agent for the -9- account of each Lender additional interest calculated at a per annum rate equal to one-quarter of one percent (0.250%) on the lesser of (A) the outstanding balance of Revolving Loans and (B) an amount of Revolving Loans equal to the Priority Threshold Amount minus the aggregate amount of Letter ----- of Credit Liabilities. Such interest shall be calculated on a daily basis and shall be payable as provided in the immediately following subsection (b). (iii) Default Interest. Notwithstanding the foregoing, during the ---------------- continuance of an Event of Default, the Borrower shall pay to the Agent for the account of each Lender, or the Swingline Lender, as applicable, interest at the Post-Default Rate on the outstanding principal amount of all Loans made by such Lender or the Swingline Lender, on all Reimbursement Obligations and on any other amount payable by the Borrower hereunder or under the Notes held by such Lender to or for the account of such Lender (including without limitation, accrued but unpaid interest to the extent permitted under Applicable Law). (b) Payment. Accrued interest on each Loan shall be payable (i) in the ------- case of all Loans (including Swingline Loans), monthly on the last day of each calendar month, (ii) in the case of a LIBOR Loan or a Bid Rate Loan, on the last day of each Interest Period therefor, (iii) in the case of any LIBOR Loan, upon the payment, prepayment or Continuation thereof or the Conversion of such Loan to a Loan of another Type (but only on the principal amount so paid, prepaid or Converted) and (iv) in the case of any Loan, upon the payment or prepayment thereof in full. Subject to receipt by the Agent of the written consent of all of the Lenders to the following payment terms contained in this sentence (which the Agent agrees to use good faith efforts to obtain), accrued interest on each Loan shall be payable (A) in the case of a Base Rate Loan, quarterly on the Quarterly Dates, (B) in the case of a LIBOR Loan or a Bid Rate Loan, on the last day of each Interest Period therefor and, if such Interest Period is longer than three months, at three-month intervals following the first day of such Interest Period, (C) in the case of any LIBOR Loan, upon the payment, prepayment or Continuation thereof or the Conversion of such Loan to a Loan of another Type (but only on the principal amount so paid, prepaid or Converted) and (D) in the case of any Base Rate Loan, upon the payment or prepayment thereof in full. Interest payable at the Post-Default Rate shall be payable from time to time on demand. Promptly after the determination of any interest rate provided for herein or any change therein, the Agent shall give notice thereof to the Lenders to which such interest is payable and to the Borrower. All determinations by the Agent of an interest rate hereunder shall be conclusive and binding on the Lenders and the Borrower for all purposes, absent manifest error. -10- (g) The Credit Agreement is amended by deleting Section 2.8.(b) in its entirety and substituting in its place the following: (b) Mandatory. --------- (i) Outstandings in Excess of Commitments; Reductions in ---------------------------------------------------- Commitments. If at any time the Outstanding Credit exceeds the ----------- aggregate amount of the Commitments in effect at such time, the Borrower shall immediately pay to the Agent for the account of the Lenders the amount of such excess. In addition, the Borrower shall pay to the Agent for the account of the Lenders for application to the Outstanding Credit an amount equal to the amount of any reduction in the Commitments pursuant to Section 2.12. (ii) Outstandings in Excess of Amount Limitations. -------------------------------------------- Notwithstanding the first sentence of Section 2.1.(a) or Section 2.14., the Borrower agrees that at no time during the following periods shall it permit the aggregate Outstanding Credit to exceed the amount limitation corresponding to such period in the following table (each an "Amount Limitation"): - -------------------------------------------------------------------------------- Period Amount Limitation - -------------------------------------------------------------------------------- Fifth Amendment Date through and including October 31, 1999 $250,000,000 - -------------------------------------------------------------------------------- November 1, 1999 through and including November 30, 1999 $260,000,000 - -------------------------------------------------------------------------------- December 1, 1999 through and including December 31, 1999 $270,000,000 - -------------------------------------------------------------------------------- If at any time during any such period the Outstanding Credit shall exceed the Amount Limitation corresponding to such period, the Borrower shall immediately pay to the Agent for the account of the Lenders, or the Swingline Lender, as the case may be, the amount of such excess. (iii) Excess Available Cash. If at any time the aggregate amount --------------------- of Available Cash shall exceed $5,000,000, then the Borrower shall immediately pay to the Agent for the account of the Lenders, or the Swingline Lender, as the case may be, the amount of such excess. (iv) Application of Mandatory Prepayments. Any payment received ------------------------------------ by the Agent as a result of the immediately preceding clauses (i) through (iii), shall be applied first to pay all amounts of principal outstanding on the Swingline Loans and then to pay all amounts of principal outstanding on the other Loans and any Reimbursement Obligations pro rata in accordance with Section 3.2. Subject to the immediately following clause (v), if the Borrower is required to pay any -11- outstanding LIBOR Loans by reason of this subsection (b) prior to the end of the applicable Interest Period therefor, the Borrower shall pay all amounts due under Section 4.4. (v) Investment of Certain Payments. With respect to any ------------------------------ payment received by the Agent as a result of the immediately preceding clause (iii), if (x) in the judgment of the Agent such payment was received late enough in the day that the application of such payment would not be practicable on such day or (y) the amount of such payment exceeds the amount of outstanding Swingline Loans and Loans which can be prepaid without any amounts being payable under Section 4.4, then the Agent shall invest such payment, in the case of clause (x), or such excess, in the case of clause (y), in such cash equivalents or other investments as the Agent shall determine in its sole discretion until the Agent has determined that the application of such payment (or excess) is practicable or will not result in any amounts being payable under Section 4.4. All such investments shall be held in the name of, and be under the sole dominion and control of, the Agent. (h) The Credit Agreement is amended by deleting Section 2.12. in its entirety and substituting in its place the following: Section 2.12. Reductions of the Commitments, Amount Limitations and Priority Threshold Amount. (a) Voluntary. The Borrower shall have the right to terminate --------- or reduce the aggregate unused amount of the Commitments (for which purpose use of the Commitments shall be deemed to include the aggregate amount of Letter of Credit Liabilities and the aggregate principal amount of all outstanding Bid Rate Loans and Swingline Loans) at any time and from time to time without penalty or premium upon not less than 5 Business Days prior written notice to the Agent of each such termination or reduction, which notice shall specify the effective date thereof and the amount of any such reduction and shall be irrevocable once given and effective only upon receipt by the Agent. The Agent will promptly transmit such notice to each Lender. (b) Mandatory. The aggregate amount of the Commitments shall be --------- reduced by the amount of Net Proceeds distributed to the Lenders pursuant to the terms of the Collateral Agency Agreement in connection with any Disposition or Equity Issuance which amount so distributed shall be applied in satisfaction of the Borrower's obligations under the last sentence of Section 2.8(b)(i). (c) Effect of Reductions of Commitments on Amount Limitations. --------------------------------------------------------- Any reduction in the aggregate amount of Commitments shall result in a simultaneous and equal reduction in the Amount Limitation in effect at such time (as well as a simultaneous and equal reduction in each of the dollar amounts in the table set forth in Section 2.8.(b)(ii)). -12- (d) Effect of Reductions of Commitments on Priority Threshold --------------------------------------------------------- Amount. Any reduction in the aggregate amount of Commitments shall ------ result in a simultaneous and equal reduction in the Priority Threshold Amount in effect at such time if, and only if, such reduction in the aggregate amount of Commitments results from (i) any Disposition of the SBQ Division (Memphis/Cleveland) or (ii) an Equity Issuance. (i) The Credit Agreement is amended by deleting Section 3.5.(b) thereof in its entirety and substituting in its place the following: (c) Reductions in Commitments. Each voluntary reduction in ------------------------- Commitments under Section 2.12.(a) shall be in a minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess thereof. (j) The Credit Agreement is amended by deleting Section 3.5.(d) in its entirety and substituting in its place the following: (d) Letters of Credit. The initial Stated Amount of each ----------------- stand-by Letter of Credit shall be at least $100,000 and each documentary letter of credit shall be at least $15,000. (k) The Credit Agreement is amended by deleting the first sentence of Section 3.6.(b) thereof in its entirety and substituting in its place the following: The Borrower agrees to pay to the Agent for account of each Lender a letter of credit fee at a rate per annum equal to (i) the Applicable Margin for LIBOR Loans plus one-quarter of one percent (0.250%) times ---- (ii) the daily average Stated Amount of each Letter of Credit for the period from and including the date of issuance of such Letter of Credit to and including the date such Letter of Credit is drawn in full, expires or is terminated. (l) The Credit Agreement is amended by adding to the end of Section 5.2 the following new sentence: In addition, no Lender shall make any Revolving Loan or Bid Loan, the Agent shall not issue any Letter of Credit, and the Swingline Lender shall not make any Swingline Loan, if (i) the Borrower, or American Steel & Wire Corporation, as the case may be, shall have failed to pay to an LC Issuer any amount owing to it under the terms of an Existing Reimbursement Agreement referred to in clause (a) or (b) of the definition of "Existing Reimbursement Agreement" and such failure shall have continued for a period of 3 Business Days, (ii) such LC Issuer shall have given written notice of such failure to the Agent and the Lenders and (iii) the resulting Event of Default under Section 10.1.(d) shall not have been waived by the Requisite Lenders (including such LC Issuer). (m) The Credit Agreement is amended by deleting clause (iii) of Section 6.1.(d) thereof in its entirety and substituting in its place the following: -13- (iii) result in or require the imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Borrower or any Subsidiary, other than the Liens of the "Security Documents" as defined in the Omnibus Agreement. (n) The Credit Agreement is amended by deleting the last sentence of Section 6.1.(g) thereof in its entirety and substituting in its place the following: All Debt of the Borrower (other than Debt secured by a Lien permitted hereunder) ranks pari passu in, or subordinate to, right of repayment ---------- to all the Obligations. (o) The Credit Agreement is amended by deleting Section 6.1.(i) in its entirety and substituting in its place the following: (i) Litigation. Except as disclosed (i) in the Borrower's ---------- Annual Report on Form 10K for the year ended June 30, 1998, (ii) in any other report filed by the Borrower with the Securities and Exchange Commission after June 30, 1998 but prior to the Fifth Amendment Date, (iii) in any press release issued by the Borrower after June 30, 1998 but prior to the Fifth Amendment Date or (iv) in writing to the Agent by the Borrower prior to the Fifth Amendment Date, there are no actions, suits or proceedings pending (nor, to the knowledge of the Borrower, are there any actions, suits or proceedings threatened) against or in any other way relating adversely to or affecting the Borrower or any Subsidiary or any of its respective property in any court or before any arbitrator of any kind or before or by any governmental body which, if adversely determined, could reasonably be expected to have a Material Adverse Effect, and there are no strikes, slow downs, work stoppages or walkouts or other labor disputes in progress, or to the knowledge of the Borrower threatened, relating to the Borrower or any Subsidiary. (p) The Credit Agreement is amended by deleting Section 6.1.(k) thereof in its entirety and substituting in its place, the following: (k) Financial Statements and Condition. The Borrower has ---------------------------------- furnished to each Lender copies of the audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at June 30, 1998, and the related consolidated statements of income, retained earnings and cash flow for the fiscal year ending on such date, with the opinion thereon of Ernst & Young LLP, and the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at March 31, 1999, and the related consolidated statements of income, retained earnings and cash flow of the Borrower and its consolidated Subsidiaries for the fiscal quarter ending on such date. All such financial statements (including in each case related schedules and notes) are complete and correct and present fairly, in accordance with GAAP consistently applied throughout the periods involved, in all material respects, the consolidated financial position of the Borrower and its consolidated Subsidiaries as at their respective dates and the results of operations and the cash flow for such periods (subject, as to interim statements, to changes resulting from audits and normal year-end adjustments). Except as disclosed (i) in the Borrower's -14- Annual Report on Form 10K for the year ended June 30, 1998, (ii) in any other report filed by the Borrower with the Securities and Exchange Commission after June 30, 1998 but prior to the Fifth Amendment Date, (iii) in any press release issued by the Borrower after June 30, 1998 but prior to the Fifth Amendment Date or (iv) in writing to the Agent by the Borrower prior to the Fifth Amendment Date, since June 30, 1998, there has been no material adverse change in the financial condition, operations, or business of the Borrower and its consolidated Subsidiaries taken as a whole. After giving effect to the transactions contemplated by the Transaction Documents (as defined in the Omnibus Agreement), each of the Borrower and the Restricted Subsidiaries is Solvent. (q) The Credit Agreement is amended by deleting Section 6.1.(m) in its entirety and substituting in its place the following: (m) Environmental Laws. Except as disclosed (i) in the ------------------ Borrower's Annual Report on Form 10K for the year ended June 30, 1998, (ii) in any other report filed by the Borrower with the Securities and Exchange Commission after June 30, 1998 but prior to the Fifth Amendment Date, (iii) in any press release issued by the Borrower after June 30, 1998 but prior to the Fifth Amendment Date or (iv) in writing to the Agent by the Borrower prior to the Fifth Amendment Date, each of the Borrower and its Subsidiaries has obtained all Governmental Approvals which are required under Environmental Laws and is in compliance with all terms and conditions of such Governmental Approvals except for those Governmental Approvals, the failure to obtain or the failure with which to comply, could not reasonably be expected to have a Material Adverse Effect. Each of the Borrower and its Subsidiaries is also in material compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules, and timetables contained in the Environmental Laws. Except as disclosed (w) in the Borrower's Annual Report on Form 10K for the year ended June 30, 1998, (x) in any other report filed by the Borrower with the Securities and Exchange Commission after June 30, 1998 but prior to the Fifth Amendment Date, (y) in any press release issued by the Borrower after June 30, 1998 but prior to the Fifth Amendment Date or (z) in writing to the Agent by the Borrower prior to the Fifth Amendment Date, and except for matters which could not reasonably be expected to have a Material Adverse Effect, the Borrower is not aware of, and has not received notice of, any past, present, or future events, conditions, circumstances, activities, practices, incidents, actions, or plans which, with respect to the Borrower or any of its Subsidiaries, may interfere with or prevent compliance or continued compliance with Environmental Laws, or may give rise to any common-law or legal liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study, or investigation, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, chemical, or industrial, toxic, or other Hazardous Material. Except as disclosed (w) in the Borrower's Annual Report on Form 10K for the year ended June 30, 1998, (x) in any other report filed by the Borrower with the Securities and Exchange Commission after June 30, 1998 but prior to the Fifth Amendment Date, (y) in any press release issued by the Borrower after June 30, 1998 but prior to the Fifth Amendment Date -15- or (z) in writing to the Agent by the Borrower prior to the Fifth Amendment Date, there is no civil, criminal, or administrative action, suit, demand, claim, hearing, notice, or demand letter, notice of violation, investigation, or proceeding pending or, to the Borrower's knowledge, threatened, against the Borrower or any of its Subsidiaries relating in any way to Environmental Laws an adverse determination in respect of which could reasonably be expected to have a Material Adverse Effect. (r) The Credit Agreement is amended by deleting the first sentence of Section 6.1.(r) in its entirety and substituting in its place the following: Other than statements, estimates and projections provided by the Borrower with respect to the anticipated future performance of the Borrower and its Subsidiaries, all written information, reports and other papers and data furnished to the Agent or any Lender by, on behalf of, or at the direction of, the Borrower or any Subsidiary in connection with any of the Loan Documents were, at the time the same were so furnished, complete and correct in all material respects, to the extent necessary to give the recipient a true and accurate knowledge of the subject matter and did not contain any untrue statement of a fact material to the creditworthiness of the Borrower or any Subsidiary and did not omit to state a material fact necessary in order to make the statements contained therein not misleading, or, in the case of financial statements, present fairly, in all material respects and in accordance with GAAP consistently applied throughout the periods involved, the financial position of the Persons involved as at the date thereof and the results of operations for such periods, except as otherwise provided in Section 8.4.(e). (s) The last sentence of Section 6.2. of the Credit Agreement is deleted in its entirely and the following substituted in its place: All representations and warranties made under this Agreement shall be deemed to be made at and as of the Fifth Amendment Date and at and as of the date of the occurrence of any Credit Event, except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically permitted hereunder. (t) The Credit Agreement is amended by deleting Section 7.2. thereof in its entirety and substituting in its place the following: Section 7.2. Compliance with Applicable Law and Material Contracts. Comply, and cause each Subsidiary to comply, with (a) all Applicable Law, including the obtaining of all Governmental Approvals, if the failure to comply with which could reasonably be expected to have a Material Adverse Effect, and (b) all material terms and conditions of all Material Contracts to which it is a party unless, in the good faith judgment of the Borrower failure to comply would be in the best interests of the Borrower; provided, however, the provisions -------- ------- of this clause (b) shall not be construed -16- or deemed to be a waiver by a Lender of any rights it may have or claim under or with respect to any such Material Contract. (u) The Credit Agreement is amended by deleting the word "and" from the end of Section 8.4.(b), replacing the "." at the end of Section 8.4.(c) with a ";" and by adding to the end of Section 8.4. the following new subsections: (d) Promptly following, and in any event within 30 days of, the end of each calendar month, the consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such month and the related consolidated statement of income of the Borrower and its Subsidiaries for such month, all of which shall be certified by an assistant treasurer, chief financial officer or vice president-finance and control of the Borrower, in his or her opinion, to present fairly, in accordance with GAAP and in all material respects, the consolidated financial position of the Borrower and its Subsidiaries as at the date thereof and the results of operations for such month (without notes and subject to normal year-end adjustments). Together with such financial statements, the Borrower shall deliver a cash analysis report substantially in the form of Exhibit N; (e) Together with each financial statement required to be delivered pursuant to Sections 8.1., 8.2. and the immediately preceding subsection (d), that same financial statement prepared by the Borrower in accordance with GAAP (without notes and subject to normal year-end adjustments) in all respects but which excludes the effect of the accounting entries made by the Borrower with respect to its financial statements for the fiscal year ending June 30, 1999 and as required under Accounting Principles Board Opinion No. 30 ("APB 30") solely to the extent relating to the SBQ Division. Each such financial statement shall disclose, in form and substance satisfactory to the Requisite Lenders, the resulting differences between such statement and one prepared entirely in accordance with GAAP; and (f) On or before September 1 of each calendar year, commencing September 1, 2000, a copy of the Borrower's internal business plan for the fiscal year commencing on July 1 of such calendar year and ending on June 30 of the following year, such plan to include the Borrower's forecast on a month-by-month basis; and (g) Not later than the time furnished under the Existing Note Purchase Agreements, copies of each report, statement, document, notice or other item furnished pursuant to Section 9 of any such Existing Note Purchase Agreement or any related instrument, agreement or other document, to the extent not otherwise provided to the Lenders under any of the other provisions of this Agreement. (v) The Credit Agreement is amended by deleting Section 8.5.(b) in its entirety and substituting in its place the following: -17- (b) any amendment to the articles of incorporation, articles of organization, certificate of limited partnership, by-laws, operating agreement, partnership agreement or other comparable organizational instrument of the Borrower or any Subsidiary; (w) The Credit Agreement is amended by deleting Section 9.1. in its entirety and substituting in its place the following: Section 9.1. Financial Covenants. The Borrower shall not: (a) Fixed Charge Coverage Ratio. Permit the Fixed Charge --------------------------- Coverage Ratio for any Four-Quarter Period specified in the following table to be less than or equal to the ratio corresponding to such period in the table: -------------------------------------------------------------- Four-Quarter Period Ending Minimum Ratio -------------------------------------------------------------- September 30, 1999 1.050 to 1.000 -------------------------------------------------------------- December 31, 1999 1.050 to 1.000 -------------------------------------------------------------- March 31, 2000 1.050 to 1.000 -------------------------------------------------------------- June 30, 2000 1.050 to 1.000 -------------------------------------------------------------- September 30, 2000 1.050 to 1.000 -------------------------------------------------------------- December 31, 2000 1.050 to 1.000 -------------------------------------------------------------- March 31, 2001 1.10 to 1.00 -------------------------------------------------------------- June 30, 2001 1.10 to 1.00 -------------------------------------------------------------- September 30, 2001 1.20 to 1.00 -------------------------------------------------------------- December 31, 2001 and any date thereafter 0.950 to 1.000 -------------------------------------------------------------- (b) Minimum Consolidated EBITDA. Permit the aggregate amount --------------------------- of Consolidated EBITDA for any Four-Quarter Period specified in the following table to be less than the amount corresponding to such period in the table: ---------------------------------------------------------------- Four-Quarter Period Ending Minimum EBITDA ---------------------------------------------------------------- September 30, 1999 $57,000,000 ---------------------------------------------------------------- December 31, 1999 $57,000,000 ---------------------------------------------------------------- March 31, 2000 $57,000,000 ---------------------------------------------------------------- June 30, 2000 $61,500,000 ---------------------------------------------------------------- September 30, 2000 $61,500,000 ---------------------------------------------------------------- December 31, 2000 $65,500,000 ---------------------------------------------------------------- March 31, 2001 $66,000,000 ---------------------------------------------------------------- June 30, 2001 $64,000,000 ---------------------------------------------------------------- September 30, 2001 $67,500,000 ---------------------------------------------------------------- -18- ---------------------------------------------------------------- December 31, 2001 and any date thereafter $71,000,000 ---------------------------------------------------------------- (c) Minimum Tangible Net Worth. Permit Consolidated Tangible Net -------------------------- Worth to be less than (i) $188,000,000 plus (ii) 50% of consolidated income from continuing operations (only if greater than $0) of the Borrower and its Subsidiaries for each fiscal quarter of the Borrower ending after June 30, 1999 minus (iii) 100% of consolidated net loss from discontinued operations (including any write-downs) of the Borrower and its Subsidiaries after June 30, 1999 plus (iv) 60% of all Net Proceeds from any Equity Issuance after June 30, 1999. (d) Capital Expenditures. Permit the aggregate amount of Capital -------------------- Expenditures of the Borrower and its Restricted Subsidiaries to be greater than: (i) $30,000,000 during the Borrower's fiscal year ending June 30, 2000; (i) $35,000,000 during the Borrower's fiscal year ending June 30, 2001; and (iii) $40,000,000 during the Borrower's fiscal year ending June 30, 2002. (e) Debt to Consolidated EBITDA Ratio. For any Four-Quarter Period --------------------------------- ending on or after the Performance Release Date, permit the Debt to Consolidated EBITDA Ratio to be greater than or equal to 3.50 to 1.00. (x) The Credit Agreement is amended by deleting Sections 9.2.(a) through (d) in their entirety and substituting in their place the following: (a) Negative Pledge. The Borrower covenants that it will not, and --------------- will not permit any Restricted Subsidiary to, cause or permit to exist, or agree or consent to cause or permit to exist in the future (upon the happening of a contingency or otherwise), any of their Property, whether now owned or hereafter acquired, to be subject to a Lien except: (i) Liens securing taxes, assessments or governmental charges or levies or the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons; (ii) Liens incurred or deposits made in the ordinary course of business (1) in connection with workers' compensation, unemployment insurance, social security and other like laws, and (2) to secure the performance of letters of credit, bids, tenders, sales contracts, leases, statutory obligations, surety and performance bonds (of a type other than set forth in the immediately following subsection (iii)) and other similar obligations not incurred in connection with the borrowing of money, the obtaining of advances or the payment of the deferred purchase price of Property; -19- (iii) Liens (1) arising from judicial attachments and judgments, (2) securing appeal bonds, supersedeas bonds, and (3) arising in connection with court proceedings (including, without limitation, surety bonds and letters of credit or any other instrument serving a similar purpose), provided that the execution or -------- other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings, and provided further that the aggregate amount so secured will not at any time exceed $10,000,000; (iv) Liens on Property of a Restricted Subsidiary which secure only obligations owing to the Borrower or a Restricted Subsidiary that is a Guarantor; (v) Liens in the nature of reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other similar title exceptions or encumbrances affecting real property, provided that such exceptions and encumbrances could not reasonably be expected to materially interfere with the use of such Property in the ordinary conduct of the business of the Borrower and the Restricted Subsidiaries; (vi) (1) Liens securing Debt in existence and listed in Schedule 6.1.(f) as of the Fifth Amendment Date, and (2) Liens securing renewals, extensions (as to time) and refinancings of such Debt secured by such Liens listed in such Schedule, provided that (A) the amount of Debt secured by each such Lien is not increased in excess of the amount of Debt outstanding on the date of such renewal, extension or refinancing, (B) none of such Liens is, or is required to be, extended to include any additional Property of the Borrower or any Restricted Subsidiary as a condition to, or as a result of, such renewal, extension or refinancing and (C) the holder or holders of such Liens and Debt have become parties to the Collateral Agency Agreement to the extent required to do so under the terms thereof; (vii) Purchase Money Liens, securing Debt to the extent permitted under Section 9.2.(d)(viii), so long as each such Purchase Money Lien secures Debt of the Borrower or a Restricted Subsidiary in an amount not exceeding one hundred percent (100%) of the cost of construction or acquisition of the particular -20- Property to which such Debt relates (or, in the case of a Lien existing on any Property of any corporation at the time it becomes a Restricted Subsidiary, the Fair Market Value of such Property at such time); (viii) Liens securing the Secured Obligations (as defined in the Omnibus Agreement); (ix) Liens arising by virtue of any statutory or common law provision relating to bankers' liens, rights of setoff or similar rights as to deposit accounts or other funds maintained with a creditor depository institution; (x) Liens constituting intellectual property licenses entered into in the ordinary course of business; (xi) Liens securing Capitalized Lease obligations to the extent such Debt is permitted under Section 9.2.(d)(viii), so long as any such Lien secures Debt of the Borrower or a Restricted Subsidiary in an amount not exceeding one hundred percent (100%) of the cost of construction or acquisition of the particular Property that is the subject of such Capitalized Lease; (xii) Liens securing Off Balance Sheet Liabilities which do not constitute Debt; (xiii) Financing statements permitted to be signed or filed under Section 9.2.(b); (xiv) Liens permitted under the express terms of the Security Documents (as defined in the Omnibus Agreement); (xv) Leases and subleases of Property to other Persons entered into in the ordinary course of business. In addition, the Borrower will not, and will not permit any Restricted Subsidiary, directly or indirectly, to create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on the ability of such Person to grant a security interest in, or assign its property to, the Collateral Agent, except for encumbrances or restrictions existing under or by reason of (i) customary non-assignment provisions in any lease governing a leasehold interest, license or other contract, (ii) with respect to any Person which becomes a Subsidiary of the Borrower after the Fifth Amendment Date, an agreement or other instrument of such Person existing at the time it becomes a Subsidiary, provided that such encumbrance or restriction is not applicable to any other Person, other than such Person becoming a Subsidiary and was not entered into in contemplation of such Person becoming a Subsidiary, (iii) this Agreement and the other Loan Documents, and (iv) any agreement existing on the Fifth Amendment Date to which the Borrower or any Restricted -21- Subsidiary is a party or by which any of their respective Properties is bound, and any renewal or extension of any such agreement. (b) Financing Statements. The Borrower will not, and will not permit -------------------- any Restricted Subsidiary to, sign or file a financing statement under the Uniform Commercial Code of any jurisdiction that names the Borrower or such Restricted Subsidiary as debtor, or sign any security agreement authorizing any secured party thereunder to file any such financing statement, except, in any such case, a financing statement filed or to be filed to perfect or protect a security interest that the Borrower or such Restricted Subsidiary is entitled to create, assume or incur, or permit to exist, under the foregoing provisions of this Section 9.2. or to evidence for information purposes a lessor's interest in Property leased to the Borrower or any such Restricted Subsidiary. (c) [Intentionally Omitted.] (d) Debt. The Borrower will not, and will not permit any Restricted ---- Subsidiary to, create, incur, assume, or permit or suffer to exist, any Debt other than the following: (i) Debt arising under this Agreement and the other Loan Documents; (ii) Debt arising under the Existing Note Purchase Agreements; (iii) Debt arising under the Existing Reimbursement Agreements; (iv) Debt arising under the other Transaction Documents (as defined in the Omnibus Agreement); (v) other Debt existing on the Fifth Amendment Date and described on Schedule 6.1.(g); (vi) Debt extending the maturity of, or refunding, refinancing or replacing, in whole or in part, any Debt described in the immediately preceding clauses (i) through (v) above on terms no more restrictive in the aggregate (as reasonably determined by the Requisite Lenders) to the Borrower or such Restricted Subsidiary, as applicable, than the terms of the Debt so extended, refunded, refinanced or replaced, and in a principal amount not in excess of that outstanding as of the date of such renewal, refinancing, replacement or extension; (vii) Debt owing to the Borrower or to another Restricted Subsidiary that is a Guarantor; (viii) Debt in respect of Capital Leases and Debt secured by Purchase Money Liens permitted under Section 9.2.(a)(vii); provided that the aggregate -22- outstanding principal amount of all such Debt does not exceed $35,000,000 at any time; and (ix) Debt that is unsecured Debt and that is not otherwise permitted under any of the preceding clauses (i) through (ix) in an aggregate amount not to exceed $25,000,000 at any time outstanding. (y) The Credit Agreement is amended by deleting Sections 9.2.(f) and (g) in their entirety and substituting in their place the following: (f) [Intentionally Omitted.] (g) Mergers; Consolidations. The Borrower will not, and will not ----------------------- permit any Restricted Subsidiary to, merge with or into or consolidate with or into any other Person or permit any other Person to merge or consolidate with or into it; provided, however, so long as no Default or Event of -------- ------- Default exists at the time thereof, or would exist immediately after giving effect thereto, a Restricted Subsidiary may (x) merge into or consolidate with a Wholly-Owned Restricted Subsidiary that is a Guarantor and (y) merge with and into the Borrower so long as the Borrower is the survivor of such merger. (z) The Credit Agreement is amended by adding to the end of Article IX the following new Sections: Section 9.5. Restricted Payments. The Borrower shall not declare or make, or permit any Restricted Subsidiary to declare or make, any Restricted Payment; provided, however, -------- ------- that (a) Restricted Subsidiaries may declare and make Restricted Payments payable to the Borrower or any other Restricted Subsidiary that is a Guarantor and; (b) so long as no Default or Event of Default shall have occurred and be continuing, or would result therefrom, the Borrower may declare and make cash dividends with respect to its common stock so long as (i) the aggregate amount of such Restricted Payments paid during any fiscal quarter of the Borrower does not exceed $750,000 and (ii) immediately after giving effect to the payment of any such cash dividend, the aggregate amount of all cash dividends paid by the Borrower during the period commencing on July 1, 1999 and ending on the date of the payment of such cash dividend (excluding the cash dividend in the amount of $737,836.76 paid on August 9, 1999) does not exceed 50% of cumulative consolidated income from continuing operations of the Borrower and its Subsidiaries for such entire period. Section 9.6. Disposition of Assets. The Borrower shall not, and shall not permit any Restricted Subsidiary to, convey, sell, lease, sublease, transfer or otherwise dispose of any assets (including without -23- limitation, capital stock of or other equity interests in any Subsidiary or other Person) except for: (a) sales of inventory in the ordinary course of business; (b) the sale, lease, sublease, transfer or other disposition of machinery and equipment no longer used or useful in the conduct of business; (c) the sale, lease, sublease, transfer or other disposition of assets to the Borrower or to a Wholly-Owned Restricted Subsidiary that is a Guarantor; (d) the sale of assets of the SBQ Division (Memphis/Cleveland) to the extent permitted under the express terms of the Collateral Agency Agreement; (e) transfers of assets made as consideration for Permitted Investments; (f) the transfer by Cumberland Recyclers, LLC to BSE of the assets known as the "mega shredder" so long as: (i) the Borrower shall have given the Collateral Agent and the Agent at least 60-days' prior written notice of such transfer; (ii) no Default or Event of Default exists at the time of such transfer; (iii) such transfer is made subject to the Lien of the Collateral Agent in such assets; and (iv) all actions required under the Security Agreement to maintain the validity, perfection, enforceability and priority and rank of such Lien in connection with such transfer are taken; and (g) other sales and dispositions of Property of the Borrower or any Restricted Subsidiary, so long as the Fair Market Value of such Property does not exceed $10,000,000 in the aggregate during any fiscal year of the Borrower. The Borrower shall, and shall cause each Restricted Subsidiary that owns any Collateral to, pay over to the Collateral Agent all Net Proceeds received by the Borrower or such Restricted Subsidiary upon any Disposition for application and distribution in accordance with the terms of the Collateral Agency Agreement. Section 9.7. Accounts with Financial Institutions other than the Lenders. The Borrower shall not, and shall not permit any Subsidiary to, maintain any deposit account, savings account, investment account or other similar account with any financial institution or other Person except for the Agent and the Lenders excluding: (a) lockbox accounts existing as of the Fifth Amendment Date and disclosed on the applicable Schedule to the Omnibus Agreement the entire balances of which are automatically transferred on a daily basis to a deposit account of the Borrower maintained with the Agent; and (b) other deposit accounts so long as the balances of such deposit accounts do not exceed $150,000 in the aggregate at any time; provided, however, Birmingham Steel Overseas, Ltd. may --------- ------- maintain its existing deposit account with Barclay's Bank, PLC in Barbados in which the proceeds of foreign sales are deposited so -24- long as (i) the balance of such account does not exceed $1,000,000 in the aggregate at any time and (ii) such Subsidiary remains qualified as a "foreign sales corporation" under Section 922 of the Internal Revenue Code. Section 9.8. Certain Proceeds from Equity Issuances. The Borrower may use Net Proceeds from any Equity Issuance which the Borrower is permitted to retain under the terms of the Collateral Agency Agreement and the other applicable Transaction Documents (as defined in the Omnibus Agreement) (a) to fund Restricted Payments not otherwise permitted under Section 9.5.; (b) to finance Investments not otherwise permitted under Section 9.2.(e); (c) to finance Capital Expenditures not otherwise permitted under Section 9.1.(d) and (d) for any other purpose not otherwise prohibited by this Agreement. To the extent the Borrower is not permitted to retain a portion of Net Proceeds from any Equity Issuance pursuant to the terms of the Collateral Agency Agreement, the Borrower shall pay such portion of Net Proceeds over to the Collateral Agent for application in accordance with the terms of the Collateral Agency Agreement. (aa) The Credit Agreement is amended by deleting subsections (b), (c), (d) and (g) of Section 10.1. and substituting in their respective places the following: (b) Default in Performance. (i) The Borrower shall fail to perform ---------------------- or observe any term, covenant, condition or agreement contained in Article IX. or (ii) the Borrower or any Restricted Subsidiary shall fail to perform or observe any term, covenant, condition or agreement on its part to be performed and contained in this Agreement or any other Loan Document to which it is a party and not otherwise mentioned in this Section and such failure shall continue for a period of 30 days after the earlier of (x) the date upon which the Borrower or such Restricted Subsidiary, as applicable, obtains knowledge of such failure or (y) the date upon which the Borrower or such Restricted Subsidiary, as applicable, has received written notice of such failure from the Agent. (c) Misrepresentations. Any written statement, representation or ------------------ warranty made or deemed made by or on behalf of the Borrower or any Restricted Subsidiary under this Agreement or under any other Loan Document, or any amendment hereto or thereto, or in any other writing or statement at any time furnished or made or deemed made by or on behalf of the Borrower or any Restricted Subsidiary to the Agent, any Lender or the Swingline Lender, shall at any time prove to have been incorrect or misleading in any material respect when furnished or made. (d) Debt Cross-Default. ------------------ (i) The Borrower or any Subsidiary shall fail to pay when due and payable and after the expiration of any applicable grace and cure periods the principal of, or interest on, any Debt other than the Loans having an aggregate outstanding principal amount of $10,000,000 or more ("Material Debt"); or -25- (ii) the maturity of any such Material Debt shall have (x) been accelerated in accordance with the provisions of any indenture, contract or instrument evidencing, providing for the creation of or otherwise concerning such Material Debt or (y) been required to be prepaid or repurchased prior to the stated maturity thereof; provided, -------- however, this clause (y) shall not be deemed to apply to the Debt ------- evidenced by the industrial revenue bonds described on Schedule 6.1.(g) which are supported by letters of credit issued for the account of the Borrower or American Steel & Wire Corporation; or (iii) any other event shall have occurred and be continuing which, with or without the passage of time, the giving of notice, or otherwise, would permit any holder or holders of such Material Debt, any trustee or agent acting on behalf of such holder or holders or any other Person, (x) to accelerate the maturity of any such Material Debt or (y) require any such Material Debt to be prepaid or repurchased prior to its stated maturity; provided, however, this clause (y) shall -------- ------- not be deemed to apply to the Debt evidenced by the industrial revenue bonds described on Schedule 6.1.(g) which are supported by letters of credit issued for the account of the Borrower or American Steel & Wire Corporation. (g) Contesting Loan Documents. The Borrower or any Restricted ------------------------- Subsidiary shall disavow, revoke or terminate any Loan Document to which it is a party or shall otherwise challenge or contest in any action, suit or proceeding in any court or before any Governmental Authority the validity or enforceability of any Loan Document. (bb) The Credit Agreement is amended by adding to the end of Section 10.1. the following new subsection: (o) Perfection. The Collateral Agent shall, for a period of 30 days, ---------- cease to have a valid and perfected first-priority security interest (subject only to Permitted Liens) in Collateral having an aggregate book value in excess of $5,000,000 or in any other material portion of the Collateral, for any reason other than the failure of the Collateral Agent to take any action within its control. (cc) The Credit Agreement is hereby amended by deleting Section 12.3. thereof in its entirety and substituting in its place the following: In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, the Agent, each Lender and each Participant is hereby authorized by the Borrower, at any time or from time to time during the continuance of an Event of Default, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, but subject to receipt of the prior written consent of the Requisite Lenders, to set-off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at -26- any time held or owing by the Agent, such Lender or any affiliate of such the Agent or such Lender, to or for the credit or the account of the Borrower against and on account of any of the Obligations, irrespective of whether or not any or all of the Loans and all other Obligations have been declared to be, or have otherwise become, due and payable as permitted by Section 10.2., and although such obligations shall be contingent or unmatured. (dd) The Credit Agreement is amended by deleting the portion of the first sentence of Section 12.5.(d) preceding the proviso in its entirety and substituting in its place the following: Any Lender may with the prior written consent of the Agent (which consent shall not be unreasonably withheld) and with notice to, but not the consent of, the Borrower, assign to one or more banks or other financial institutions (each an "Assignee") all or a portion of its Commitment and its other rights and obligations under this Agreement and the Notes (ee) The Credit Agreement is amended be deleting Section 12.8. thereof in its entirety and substituting in its place the following: Section 12.8. Designation of Subsidiaries. (a) Right of Designation. Each Subsidiary acquired after the Fifth -------------------- Amendment Date that, as of the date of such acquisition or at any future date, meets all of the requirements of a Restricted Subsidiary, as set forth in the definition thereof, shall be deemed, on and after such date and without any further action by the Borrower or any holder of Notes, to have been designated by the Borrower as a Restricted Subsidiary. Each Subsidiary designated as a Restricted Subsidiary in Schedule 2.1 of the Omnibus Agreement and each other Restricted Subsidiary shall, so long as it shall continue to satisfy the requirements of the definition of Restricted Subsidiary, be a Restricted Subsidiary on and after the Fifth Amendment Date and all other Subsidiaries, if any, listed in Schedule 2.1 of the Omnibus Agreement shall, subject to the immediately following subsection (b), be Unrestricted Subsidiaries on and after the Fifth Amendment Date. (b) Right of Redesignation. Subject to the satisfaction of the ---------------------- requirements of the immediately following subsection (c), the Borrower shall have the right, with respect to each Subsidiary that is an Unrestricted Subsidiary as of the Fifth Amendment Date, to designate such Subsidiary as a Restricted Subsidiary by delivering a written notice to such effect, signed by the Chairman, the Chief Executive Officer, an Executive Vice President, a Vice President or the President of the Borrower, to each Lender. Any designation under and in accordance with this subsection shall become effective, for purposes of this Agreement, on the day that notice thereof shall have been mailed (postage prepaid, by registered or certified mail, return receipt requested) by the Borrower to each Lender as provided in Section 12.1. The Borrower shall not have the right to designate a Restricted Subsidiary as an Unrestricted Subsidiary. -27- (c) Designation Criteria. -------------------- (i) No Unrestricted Subsidiary shall at any time after the Fifth Amendment Date be designated as a Restricted Subsidiary unless: (A) such Subsidiary at such time meets all of the requirements of a Restricted Subsidiary as set forth in the definition thereof; and (B) immediately before and after, and after giving effect to such designation, and assuming that all Investments of, all obligations and liabilities of, and all Liens on the Property of, such Subsidiary being so designated were made or incurred contemporaneously with such designation, no Default or Event of Default exists or would exist. (ii) No Restricted Subsidiary shall at any time after the Fifth Amendment Date be designated as an Unrestricted Subsidiary. (ff) The Credit Agreement is amended by adding to the end of Article XII the following new Section: Section 12.20. Collateral Agency Agreement. THIS AGREEMENT IS SUBJECT TO THE TERMS AND CONDITIONS OF THE COLLATERAL AGENCY AGREEMENT. (gg) The Credit Agreement is amended by deleting Schedules 6.1.(f) and (g) thereto and substituting in their respective places Schedules 6.1.(f) and (g) attached hereto. (hh) The Credit Agreement is amended by deleting Exhibit B thereto and substituting in its place Exhibit B attached hereto. (ii) The Credit Agreement is amended by deleting Exhibit E thereto and substituting in its place Exhibit E attached hereto. (jj) The Credit Agreement is amended by adding as Exhibit N thereto the Exhibit N attached hereto. Section 2. Conditions Precedent. The effectiveness of Section 1 and -------------------- Section 13 of this Amendment is subject to receipt by the Agent (unless receipt thereof is wanted in writing by the Requisite Lenders) of each of the following, each in form and substance satisfactory to the Agent: (a) Evidence that the conditions precedent to the effectiveness of the Omnibus Agreement as contained in Section 1.1(a) thereof have been satisfied or waived as permitted under the terms thereof; -28- (b) Copies of fully-executed amendments to (or amendments and restatements of) each of the following agreements evidencing that such agreements have been amended in a manner comparable to the amendments to the Credit Agreement provided for in Section 1 above: (i) those certain Note Purchase Agreements dated as of September 1, 1993, as amended executed by the Borrower in favor of the purchasers of the Borrower's 7.28% Senior Notes due December 15, 2005 in the aggregate amount of $130,000,000; (ii) those certain Note Purchase Agreements dated as of September 15, 1995 executed by the Borrower in favor of the purchasers of the Borrower's (A) 6.96% Series A Senior Notes due December 15, 2002 in the aggregate amount of $76,000,000; (B) 7.07% Series B Senior Notes due December 15, 2005 in the aggregate amount of $14,000,000; and (C) 7.17% Series C Senior Notes due December 15, 2005 in the aggregate amount of $60,000,000; (iii) that certain Reimbursement Agreement dated as of September 1, 1995, as amended, among the Borrower, American Steel and Wire Corporation and Bank of America, N.A., successor to Bank of America Illinois; (iv) that certain Reimbursement Agreement dated as of August 15, 1995, as amended, between the Borrower and PNC Bank, National Association, successor to PNC Bank, Kentucky, Inc.; and (v) that certain Reimbursement Agreement dated as of October 1, 1996, as amended, between the Borrower and PNC Bank, National Association, successor to PNC Bank, Kentucky, Inc.; (c) all fees and expenses payable by the Borrower to the Agent, Banc of America Securities LLC and the Lenders on or prior to the effectiveness of this Amendment, including without limitation, the closing fees referred to in that certain letter agreement dated August 3, 1999 between the Agent and the Borrower, all fees payable under Section 4 hereof, and all fees and expenses of the Agent's counsel and each Lender's counsel as provided in Section 8 hereof; (d) an opinion or opinions of counsel to the Borrower and the Restricted Subsidiaries, in form reasonably satisfactory to the Agent, regarding (i) the formation of the Borrower and each Guarantor, (ii) the authority of the Borrower and each Guarantor to execute, deliver and perform this Amendment, the Credit Agreement as amended by this Amendment, and other Loan Documents being executed and delivered in connection herewith (to the extent a party thereto), (iii) the enforceability of such Loan Documents under the laws of the State of Georgia or New York, as the case may be, (iv) whether the execution, delivery and performance by the Borrower and such Guarantor of such Loan Document violate certain specified agreements to which the Borrower or any Guarantor is a party and (v) such other matters as the Agent may reasonably request; -29- (e) If requested by the Agent, a letter from the Borrower addressed to the Agent and the Lenders in which the Borrower agrees to use commercially reasonable efforts to deliver to the Agent by specified dates items which were to be delivered to the Agent on or prior to the date hereof; (f) With respect to (i) the Equipment Lease Agreement dated as of September 30, 1997, as amended (the "Equipment Lease"), between Chase Manhattan Trust Company, National Association, successor to PNC Bank, National Association (the "Owner Trustee"), as Lessor, and the Borrower, as Lessee, regarding certain melt shop equipment leased by the Borrower, and (ii) the related Trust Indenture and Security Agreement dated as of September 30, 1997, as amended, between the Owner Trustee and First Union National Bank, as Indenture Trustee, a letter from each of the Owner Participants (as defined in the Equipment Lease) and each holder of an Equipment Note (as defined in the Equipment Lease) regarding the right of the Borrower to terminate the Equipment Lease and to cause the prepayment of such Equipment Notes; and (g) such other documents, agreements and instruments as Agent may reasonably request. Upon the execution and delivery of this Agreement by Requested Lenders, the Agent and the Borrower, the conditions in this Section 2 shall be deemed satisfied and waived. Section 3. Representations and Warranties of the Borrower. To induce the ---------------------------------------------- Agent, the Lenders and the Swingline Lender to enter into this Amendment, the Borrower represents and warrants to each of them as follows as of the date hereof (and assuming the effectiveness of this Amendment): (a) No Default or Event of Default has occurred and is continuing; (b) The representations and warranties made or deemed made by the Borrower and each Restricted Subsidiary in the Loan Documents to which it is a party, are true and correct with the same force and effect as if made on and as of the date hereof except to the extent that such representations and warranties expressly relate solely to an earlier date (in which case such representations and warranties were true and accurate on and as of such earlier date) and except for changes in factual circumstances specifically and expressly permitted under the Credit Agreement; (c) The Borrower and the Restricted Subsidiaries have the right and power, and each has taken all necessary action to authorize it, to execute, deliver and perform this Amendment, the Guarantee, the Collateral Agency Agreement, the Security Agreement, the Pledge Agreement, the Mortgages (as each such term is defined in the Omnibus Agreement) and all of the other documents, instruments and agreements being executed by the Borrower or any Restricted Subsidiary in connection with any of the foregoing (collectively, the "Amendment Documents") to the extent such Person is a party thereto, and, with respect to the Borrower, to perform the Credit Agreement as amended by this Amendment, in each case in accordance with their respective terms. This Amendment and the other Amendment Documents to which the -30- Borrower or any Restricted Subsidiary is a party have been duly executed and delivered by the duly authorized officers of the Borrower and its Restricted Subsidiaries, as the case may be, and each of this Amendment, such other Amendment Documents and the Credit Agreement as amended by this Amendment is a legal, valid and binding obligation of the Borrower and each Restricted Subsidiary a party thereto enforceable against such Person in accordance with its respective terms except as may be limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors' rights generally and general principles of equity; and (d) The execution and delivery of this Amendment, such other Amendment Documents, and the performance of each of this Amendment, such other Amendment Documents and the Credit Agreement as amended by this Amendment, in accordance with its respective terms, do not and will not, by the passage of time, the giving of notice, or otherwise: (i) require any Governmental Approval or violate any Applicable Law relating to the Borrower or any Subsidiary; (ii) conflict with, result in a breach of or constitute a default under the certificate of incorporation or the bylaws of the Borrower or any Restricted Subsidiary, or any indenture, agreement or other instrument to which the Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary or any of its respective properties may be bound; or (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by the Borrower or any Subsidiary except for Liens granted pursuant to, or contemplated by, the Collateral Agency Agreement. Section 4. Amendment Fee. In consideration of the Lenders amending the ------------- Credit Agreement as provided herein, the Borrower agrees to pay to the Agent for the account of each Lender a fee in an amount equal to two-tenths of one-percent (0.20%) of the amount of such Lender's Commitment. Section 5. No Third Party Beneficiaries. Except for the Borrower, the ---------------------------- Lenders, the Swingline Lender and the Agent, no Person is intended to be a beneficiary of this Amendment and no other Person shall be authorized to rely upon the contents of this Amendment. Section 6. Effect. The amendments contained herein shall be deemed to have ------ prospective application only. Section 7. Release of Claims. The Borrower, for itself and all of its ----------------- predecessors, successors and assigns, acknowledges, affirms and represents that immediately prior to giving effect to this Amendment, it is legally, validly and enforceably obligated to each of the Agent, the Lenders and the Swingline Lender under and pursuant to the Credit Agreement and each of the other Loan Documents (as defined in the Credit Agreement) to which the Borrower is a party (the Credit Agreement, together with such other Loan Document, the "Existing Loan Documents") and that the Borrower has not defense, offset, counterclaim or right of recoupment with regard to such obligations, hereby fully, forever and completely releases and discharges each of the Agent, the Lenders and the Swingline Lender and all of their respective employees, officers, directors, trustees, shareholders, affiliates, agents (including, without limitation, Banc of America Securities LLC), attorneys, representatives, predecessors, successors and assigns -31- (collectively, the "Released Parties"), from any and all claims, demands, liabilities, damages and causes of action of any kind whatsoever, whether based on facts in existence prior to or as of the date of the effectiveness of this Amendment, whether known or unknown, which the Borrower may now have or may have had at any time heretofore or may have at anytime hereafter, whether for contribution or indemnity or otherwise, and whether direct or indirect, fixed or contingent, liquidated or unliquidated, arising out of or related in any way to any of the following: (a) any of the Existing Loan Documents; and (b) any action, inaction or omission by any of the Released Parties in connection with any of the Existing Loan Documents or the administration thereof. Section 8. Expenses. The Borrower agrees to pay or reimburse the Agent -------- and each Lender for all of their reasonable out-of-pocket costs and expenses incurred in connection with the preparation, negotiation and execution of this Amendment, any of the other Amendment Documents (including due diligence expenses and travel expenses relating to closing), and the consummation of the transactions contemplated hereby and thereby, including the reasonable fees and disbursements of counsel to the Agent and counsel to each Lender. Section 9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND ------------- CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE. Section 10. Counterparts. This Amendment may be executed in any number of ------------ counterparts and by different parties hereto in separate counterparts, each of which when so executed shall constitute an original, but all of which taken together shall be one and the same instrument. Section 11. Severability. If any provision of this Amendment shall be ------------ determined to be invalid, then only such provision shall be invalid and all other provisions of this Amendment shall remain effective and binding. Section 12. Defined Terms. Terms not otherwise defined in this Amendment ------------- which are defined in the Credit Agreement are used herein with the respective meanings given them in the Credit Agreement. Section 13. Waiver of Existing Defaults. Subject to satisfaction of the --------------------------- conditions precedent contained in Section 2 above, the Lenders hereby irrevocably and permanently waive all Defaults and Events of Default which existed immediately prior to the effectiveness of this Agreement and the Lenders agree that each such existing Default and Event of Default shall be deemed to have been permanently and irrevocably waived as of the date of the initial occurrence thereof. Section 14. Transaction Documents. The Lenders direct and authorize the --------------------- Agent to enter into each Transaction Document (as defined in the Omnibus Agreement) to which the Agent (in such capacity) is or is to become a party. -32- [Signatures on Following Page] -33- IN WITNESS WHEREOF, the parties hereto have caused this Fifth Amendment to Credit Agreement to be executed as of the date first above written. THE BORROWER: BIRMINGHAM STEEL CORPORATION By: ---------------------------- Name: ----------------------- Title: ---------------------- THE AGENT AND THE LENDERS: BANK OF AMERICA, N.A., successor to NationsBank, N.A. (South), as Agent, as a Lender and as Swingline Lender By: ---------------------------- Name: ----------------------- Title: ---------------------- PNC BANK, NATIONAL ASSOCIATION, as Co-Agent and as a Lender By: ---------------------------- Name: ----------------------- Title: ---------------------- THE BANK OF NOVA SCOTIA, as Co-Agent and as a Lender By: ---------------------------- Name: ----------------------- Title: ---------------------- -34- [Signatures continued on the following page] -35- [Signature Page to Fifth Amendment to Credit Agreement dated as of October __, 1999 with Birmingham Steel Corporation] THE BANK OF TOKYO - MITSUBISHI, LTD ATLANTA AGENCY By: ---------------------------- Name: ----------------------- Title: ---------------------- CIBC INC. By: ---------------------------- Name: ----------------------- Title: ---------------------- AMSOUTH BANK By: ---------------------------- Name: ----------------------- Title: ---------------------- DG BANK DEUTSCHE GENOSSENSCHAFTSBANK, CAYMAN ISLAND BRANCH By: ---------------------------- Name: ----------------------- Title: ---------------------- By: ---------------------------- Name: ----------------------- Title: ---------------------- [Signatures continue on the following page] -36- [Signature Page to Fifth Amendment to Credit Agreement dated as of October __, 1999 with Birmingham Steel Corporation] GENERAL ELECTRIC CAPITAL CORPORATION By: ---------------------------- Name: ----------------------- Title: ---------------------- BANK ONE, NA, formerly known as The First National Bank of Chicago By: ---------------------------- Name: ----------------------- Title: ---------------------- FIRST AMERICAN NATIONAL BANK By: ---------------------------- Name: ----------------------- Title: ---------------------- THE SANWA BANK, LIMITED By: ---------------------------- Name: ----------------------- Title: ---------------------- [Signatures continue on the following page] -37- [Signature Page to Fifth Amendment to Credit Agreement dated as of October __, 1999 with Birmingham Steel Corporation] UBS AG, SAMFORD BRANCH, successor to Union Bank of Switzerland, New York Branch By: ---------------------------- Name: ----------------------- Title: ---------------------- By: ---------------------------- Name: ----------------------- Title: ---------------------- -38- EX-10.26.6 9 COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT EXHIBIT 10.26.6 EXECUTION COPY COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT This COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT (as may be amended from time to time, this "Agreement") dated as of the 12th day of October, 1999, by and among: (i) State Street Bank and Trust Company (in its individual capacity herein referred to as the "Collateral Agent Bank" and in its capacity as collateral agent herein referred to as the "Collateral Agent"), (ii) Bank of America, N.A. and the other financial institutions (collectively, together with their respective successors and assigns, the "Banks") which are parties to the Credit Agreement (as defined below), (iii) Bank of America, N.A., as agent for itself and the other Banks (the "Agent Bank"), (iv) each of the holders of Notes (together with their respective successors and assigns as holders of Notes) issued pursuant to the Note Purchase Agreements (as defined below) (the "Note Holders"), (v) Bank of America, N.A. and PNC Bank, National Association, each as the issuer of IRB Letters of Credit (as defined below) (each, an "LC Issuer"), (vi) Birmingham Steel Corporation (the "Company"), (vii) Chase Manhattan Trust Company, National Association, as successor to PNC Bank National Association, as successor to PNC Bank, Kentucky, Inc., as Owner Trustee (the "Owner Trustee") under the Equipment Lease Agreement dated as of September 30, 1997 between the Owner Trustee, as Lessor, and Birmingham Steel Corporation, as Lessee, as supplemented by Lease Supplement No. 1, dated November 10, 1997, and as further amended, modified and supplemented from time to time (the "Equipment Lease"), (viii) First Union National Bank, as Indenture Trustee (the "Indenture Trustee") under the Trust Indenture and Security Agreement dated as of September 30, 1997, as supplemented by Trust Indenture Supplement No. 1, dated November 10, 1997, and as further amended, modified and supplemented from time to time (the "Indenture") between the Owner Trustee and Indenture Trustee, and (ix) each Guarantor (as defined below) which executes this Agreement or which from time to time hereafter executes an instrument accepting and agreeing to the provisions of this Agreement. PREAMBLE WHEREAS, pursuant to a Credit Agreement dated as of March 17, 1997, among the Company, the Agent Bank, PNC Bank, National Association, and The Bank of Nova Scotia, as Co-Agents, and the Banks (as amended from time to time, the "Credit Agreement"), the Banks have, upon the terms and subject to the conditions contained therein, made and agreed to make loans and otherwise extended and agreed to extend credit to the Company; and WHEREAS, the Credit Agreement has been amended by a First Amendment to Credit Agreement dated as of June 23, 1998; a Second Amendment to Credit Agreement dated as of September 30, 1998; a Third Amendment to Credit Agreement dated as of July 27, 1999; and a Fourth Amendment to Credit Agreement dated as of September 28, 1999; and WHEREAS, the parties to such Credit Agreement have agreed to further amend the Credit Agreement pursuant to the Fifth Amendment to Credit Agreement dated as of the date hereof (the "New Bank Amendment"; references herein to the Credit Agreement refer to the -2- Credit Agreement as amended by the New Bank Amendment, and as may be further amended from time to time); and WHEREAS, pursuant to separate Note Purchase Agreements each dated as of September 1, 1993 (collectively, as amended from time to time, the "1993 Note Purchase Agreement"), between the Company and each purchaser as party thereto, the Company issued, and such purchasers purchased, $130,000,000 principal amount of the Company's 7.28% Senior Notes (the "1993 Notes"); and WHEREAS, pursuant to separate Note Purchase Agreements, each dated as of September 15, 1995 (as amended from time to time, the "1995 Note Purchase Agreement" and, collectively with the 1993 Note Purchase Agreement, the "Note Purchase Agreements"), between the Company and each purchaser as party thereto, the Company has issued, and such purchasers purchased, (i) $76,000,000 principal amount of the Company's 6.96% Series A Senior Notes, (ii) $14,000,000 principal amount of the Company's 7.07% Series B Senior Notes, and (iii) $60,000,000 principal amount of the Company's 7.17% Series C Senior Notes (the Notes described in clauses (i), (ii) and (iii), as such Notes may be amended from time to time being the "1995 Notes" and, collectively with the 1993 Notes, the "Notes"); and WHEREAS, the Note Purchase Agreements have been amended by (i) an Amendment to Note Purchase Agreement with respect to the 1993 Note Purchase Agreement, dated as of October 18, 1996, and (ii) an Amendment to 1993 Note Purchase Agreement and an Amendment to 1995 Note Purchase Agreement, each dated as of December 14, 1998; and WHEREAS, the Note Holders have agreed to further amend the Note Purchase Agreements pursuant to the Waiver and Third Amendment to 1993 Note Purchase Agreement and the Waiver and Second Amendment to 1995 Note Purchase Agreement, each dated as of the date hereof (collectively, the "New Note Purchase Amendment"; references herein to the Note Purchase Agreements refer to the Note Purchase Agreements as amended by the New Note Purchase Amendment and as may be further amended from time to time); and WHEREAS, Bank of America, N.A. has issued a letter of credit pursuant to which up to $15,172,603 may be drawn in connection with certain Industrial Revenue Bonds issued to provide financing to the Company with respect to the facility of America Steel and Wire Corporation in Cleveland, Ohio (the "Bank of America Letter of Credit"); and PNC Bank, National Association, has issued a letter of credit pursuant to which up to $26,299,179 may be drawn in connection with certain Industrial Revenue Bonds issued to provide financing to the Company with respect to the facility of the Company in Memphis, Tennessee (the "PNC Letter of Credit"; and, collectively with the Bank of America Letter of Credit, the "IRB Letters of Credit"); and the Company has agreed to reimburse the LC Issuers for all amounts drawn on the IRB Letters of Credit pursuant to an Amended and Restated Reimbursement Agreement dated as of the date hereof between Bank of America, N.A. (as successor to Bank of America Illinois), American Steel and Wire Corporation, and the Company (the "Bank of America Reimbursement Agreement"), and a Reimbursement Agreement dated as of October 1, 1996, between PNC Bank, National Association (as successor to PNC Bank, Kentucky, Inc.), and the Company (the -3- "PNC Reimbursement Agreements" and, collectively with the Bank of America Reimbursement Agreement, as may be amended from time to time, the "Reimbursement Agreements"); and WHEREAS, the Company and the LC Issuers have agreed to amend the Reimbursement Agreements by amendments dated as of the date hereof (the "LC Amendments"; references herein to the Reimbursement Agreements refer to the Reimbursement Agreements as amended by the LC Amendments, and as may be further amended from time to time); and WHEREAS, pursuant to the Equipment Lease, the Owner Trustee, as Lessor, has leased certain melt shop equipment to the Company, as Lessee, and the rights of the Owner Trustee to payments thereunder have been collaterally assigned to the Indenture Trustee to secure amounts due with respect to the Equipment Notes outstanding under (and as defined in) the Indenture (the "Equipment Notes"); and WHEREAS, it was a condition precedent to (i) the Banks' entering into the New Bank Amendment, (ii) the Note Holders entering into the New Note Purchase Amendment, (iii) the LC Issuers entering into the LC Amendments, and (iv) the Owner Trustee and Indenture Trustee entering into this Agreement that, among other things, the Company and each of the Guarantors grant a first priority perfected lien on and security interest in the Collateral (as hereinafter defined) to the Collateral Agent, for the benefit of (1) the Banks and the Agent Bank, as security for the Company's obligations to the Banks and the Agent Bank under the Credit Agreement and the Guarantors' guarantee thereof, (2) the Note Holders, as security for the Company's obligations under the Note Purchase Agreements and the Notes and the Guarantors' guarantee thereof, (3) the LC Issuers, as security for the Company's obligations under the Reimbursement Agreements and the Guarantors' guarantee thereof, and (4) the Owner Trustee and the Indenture Trustee, as assignee of the Owner Trustee, as security for the Lease Claims, as defined herein. WHEREAS, the Guarantors have executed and delivered guaranties of the Secured Obligations (as hereinafter defined); and each of the Company and the Guarantors has entered into certain security agreements and related documents pursuant to which the Company or such Guarantor (as the case may be) has granted to the Collateral Agent, for the benefit of the Secured Parties, a security interest in and lien upon the Collateral, as defined herein. NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: (S)1. DEFINITIONS. ----------- (S)1.1. Definitions. The following terms shall have the meanings set ----------- forth in this (S)1 or elsewhere in the provisions of this Agreement referred to below: Action. See (S)2.2(a). ------ Actionable Default. Any failure of the Company or any Guarantor to ------------------ pay any of the Secured Obligations as and when due and payable in accordance with the terms of any Bank -4- Credit Document, Note Credit Document, Reimbursement Agreement, Equipment Lease or Security Document, whether by acceleration (including automatic acceleration upon the commencement of a bankruptcy case) or otherwise (collectively, a "Payment Default"), or the commencement of any bankruptcy, insolvency, reorganization or other similar case or proceeding by or against the Company or any Guarantor, or the making by the Company or any Guarantor of an assignment for the benefit of its creditors. Additional Advance Amount. The principal amount of any additional ------------------------- loans made or letters of credit issued under the Credit Agreement such that, after giving effect to all of such additional loans and letters of credit, the sum of the Loan and Reimbursement Principal Obligations and Outstanding Bank LC Exposure at the time of reference thereto do not exceed in the aggregate the Maximum Bank Commitment. Affiliate. As to any Person, a Person controlling, controlled by, or --------- under common control with such Person. Agent Bank. As defined in the introductory paragraph hereto and shall ---------- include any replacement or successor Agent under the Credit Agreement, or any like agent (or replacement thereof or successor thereto) under any Replacement Credit Agreement. Agreement. As defined in the introductory paragraph hereto. --------- Applicable Amount. See (S)4.1(d) hereof. ----------------- Applicable Deposit. See (S) 4.1(c) hereof. ------------------ Applicable LC Issuer. See (S) 4.1(d) hereof. -------------------- Avoidance Event. The commencement of bankruptcy or insolvency --------------- proceedings against the Company within ninety (90) days after the date that the Lien of the Collateral Agent in the Collateral becomes perfected with respect to such portion of the Collateral existing on the date hereof as may be perfected by the filing of UCC-1 financing statements, and the avoidance of such Lien of the Collateral Agent in any material amount of such Collateral as to which such Lien that may be perfected by the filing of UCC-1 financing statements. Bank Credit Documents. The Credit Agreement and the other Bank Loan --------------------- Documents, and any Replacement Credit Agreement, as the same may hereafter be amended, renewed, extended, restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement. Bank Debt. The "Obligations" as defined in the Credit Agreement (as --------- in effect on the date hereof), or any like term of the same meaning contained in any Replacement Credit Agreement. Notwithstanding the foregoing, Bank Debt shall not include Loan and Reimbursement Principal Obligations and Outstanding Bank LC Exposure to the extent, and only to the extent, that the sum of the Loan and Reimbursement Principal Obligations and Outstanding Bank LC Exposure exceeds the Maximum Bank Commitment. -5- Bank Loan Documents. The "Loan Documents", as defined in the Credit ------------------- Agreement, or any like term of the same meaning contained in any Replacement Credit Agreement. Bank of America Letter of Credit. As defined in the Preamble hereto. -------------------------------- Bank of America Reimbursement Agreement. As defined in the Preamble --------------------------------------- hereto. Bank of America Reimbursement Agreement Debt. All indebtedness, -------------------------------------------- obligations and liabilities of the Company or American Steel & Wire Corporation owing to Bank of America, N.A. arising or incurred under the Bank of America Reimbursement Agreement, whether existing on the date of this Agreement or arising hereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, arising by contract, operation of law or otherwise. Notwithstanding the foregoing, Bank of America Reimbursement Agreement Debt shall not include (a) the principal amount of any reimbursement obligations in respect of drawings under the Bank of America Letter of Credit in excess of $15,172,603 in the aggregate, or (b) any Outstanding IRB LC Exposure; provided, -------- that (i) drawings of amounts which will be automatically reinstated unless a notice is timely given by the LC Issuer that such amount will not be reinstated will not be deemed to be drawings for the purposes of this sentence unless such notice of non-reinstatement is in fact given, and (ii) drawings to fund any tender purchase price of the related industrial revenue bonds will not be deemed to be drawings for the purposes of this sentence so long as the related LC Issuer has reinstated the amount of such paid drawing,. Bankruptcy Event. (a) Commencement by the Company or any Guarantor ---------------- (the Company or any such Guarantor, a "Debtor") of a voluntary case in the United States seeking liquidation, reorganization, or other relief under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, consent to the entry of an order for relief in an involuntary case under any such law, or consent by the Debtor to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of a Debtor or of any substantial part of its property, or any general assignment by a Debtor for the benefit of creditors; (b) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of a Debtor in an involuntary case in the United States under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of a Debtor or for any substantial part of its property, or shall order the winding-up or liquidation of its affairs; or (c) any involuntary bankruptcy petition shall have been filed against any Debtor seeking a decree or order of relief of the type referred to in clause (b) above and such petition shall not have been dismissed within a period of sixty (60) consecutive days. Banks. As defined in the introductory paragraph hereto, together with ----- their respective successors and assigns, and shall include any replacement, additional or successive lenders under any Replacement Credit Agreement. Cash Collections Collateral. Collateral consisting of cash amounts --------------------------- deposited in local depository bank accounts and lock-box accounts of the Company or any of the Securing -6- Guarantors and cash amounts deposited from such accounts into any like account or accounts maintained by the Agent Bank or any of the other Banks or the Collateral Agent. Casualty Event. See definition of Net Proceeds in this (S) 1.1. -------------- Collateral. Any of the properties and assets of whatever nature, ---------- tangible or intangible, now owned or existing or hereafter acquired or arising, of the Company or any of the Guarantors in which at the time of reference a Lien has been granted or has purportedly been granted to the Collateral Agent to secure the Secured Obligations and which has not been released pursuant to the terms hereof, including, without limitation, all Cash Collections Collateral and all other cash provided to be the subject of a Lien to secure any of the Secured Obligations as contemplated by any Security Document, and any property and assets paid or payable to the Secured Parties or Collateral Agent under any of the Guaranties or any subordination agreement, but specifically excluding the Lease Assets. Collateral Agent. As defined in the introductory paragraph hereto ---------------- unless and until a successor Collateral Agent shall have been appointed pursuant to (S)5.4 hereof, and thereafter "Collateral Agent" shall mean such successor Collateral Agent. Collateral Agent Bank. As defined in the introductory paragraph --------------------- hereto and any bank, in its individual capacity, serving as Collateral Agent. Company. As defined in the introductory paragraph hereto. ------- Credit Agreement. As defined in the Preamble hereto. ---------------- Credit Documents. Collectively, the Bank Credit Documents, the Note ---------------- Credit Documents, the Reimbursement Agreements, the Lease Documents, and the Security Documents. Debtor. See definition of Bankruptcy Event in this (S)1.1. ------ Default. Any event or condition which, with the giving of notice or ------- the lapse of time, or both, would become an Event of Default. Demand Notice. See (S)4.4(a). ------------- Disposition. Any sale, exchange, or other disposition of assets, ----------- except that the following shall not constitute Dispositions hereunder: (a) any sale of inventory in the ordinary course of business; (b) the Transfer of assets by the Company to a Guarantor or by a Guarantor to the Company or another Guarantor, and (c) any sale or other Transfer of assets of Cumberland Recyclers L.L.C. to Birmingham Southeast, LLC provided that such assets are sold subject to the continuing Lien of the Collateral Agent. Distribution Amount. See (S)4.1(c)(i). ------------------- -7- Enforcement Notice. Written notice given by the Requisite Parties or ------------------ Special Requisite Parties, as the case may be, to the Collateral Agent (a) stating that a Notice of Actionable Default has theretofore been given by such Requisite Parties or Special Requisite Parties, as the case may be, to the Collateral Agent and that the Actionable Default specified in such Notice of Actionable Default continued to exist uncured for the applicable period described in (S)4.5, and (b) setting forth instructions from such Requisite Parties or Special Requisite Parties, as the case may be, to the Collateral Agent to exercise all or any such rights, powers and remedies as are available under the Security Documents and making such additional statements as may be called for under (S)4.5. Equipment Lease. As defined in the Preamble hereto. --------------- Equipment Notes. As defined in the Preamble hereto. --------------- Equity Interests. With respect to any Person, shares of capital stock ---------------- of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are authorized or otherwise existing on any date of determination. Equity Issuance. Any issuance or sale by a Person of any Equity --------------- Interest in such Person; provided, however, that the term "Equity Issuance" does not include any issuance or sale by a Person to the extent that such issuance or sale is made (a) to a current or former director, officer or employee of such Person pursuant to an "employee benefit plan", as such term is defined in Rule 405 promulgated under the Securities Act of 1933, as amended, or (b) pursuant to a rights plan existing on the date hereof (or such other rights plan as to which the issuance of Equity Interests thereunder has been excluded from the definition of "Equity Interest" herein with the written consent of the Requisite Parties). Event of Default. Any "Event of Default" under and as defined in the ---------------- Credit Agreement, any "Event of Default" under and as defined in either of the Note Purchase Agreements, any Event of Default under either of the Reimbursement Agreements, any "Lease Event of Default" under or as defined in the Equipment Lease or any like term of similar meaning contained in any Replacement Credit Agreement. Guaranties. See definition of "Guarantors" in this (S)1.1. ---------- Guarantors. American Steel & Wire Corporation, Birmingham East Coast ---------- Holdings, LLC, Norfolk Steel Corporation, Port Everglades Steel Corporation, Birmingham Recycling Investment Company, Midwest Holdings, Inc., and Cumberland Recyclers, LLC, and any other party that may from time to time hereafter execute and deliver a guaranty for the -8- benefit of any one or more of the Secured Parties guarantying the Secured Obligations (collectively, the "Guaranties"). Indemnity. See Section 4.1(d) hereof. --------- Indenture. As defined in the introductory paragraph hereto. --------- Indenture Trustee. As defined in the introductory paragraph hereto. ----------------- IRB Letters of Credit. As defined in the Preamble hereto. --------------------- LC Amendments. As defined in the Preamble hereto. ------------- LC Issuers. As defined in the introductory paragraph hereto, together ---------- with their respective successors and assigns (except that references to LC Issuers in (S) 4.1(d) hereof refer to the LC Issuers without giving effect to any succession or assignment that is effected or agreed to in connection with or as a condition of a sale of the assets of SBQ). Lease Assets. The "Equipment" and the "Indenture Estate", as each ------------ term is defined in the Equipment Lease (as in effect on the date hereof); and any other property of the Owner Trustee or the Indenture Trustee. Lease Claims. All Lease Payment Claims and Lease Expense/Indemnity ------------ Claims. Lease Documents. The "Operative Agreements," as defined in the --------------- Equipment Lease (as in effect on the date hereof). Lease Expense/Indemnity Claims. All claims of the Owner Trustee, the ------------------------------ Indenture Trustee, or any of the Owner Participants or the Lenders against the Company under any of the Lease Documents or under Section 11.11 of this Agreement (other than the Lease Payment Claims), in each case whether existing on the date of this Agreement or arising hereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, arising by contract, operation of law or otherwise. Lease Payment Claims. All claims of the Owner Trustee against the -------------------- Company under the Equipment Lease (as in effect on the date hereof) for payment of "Basic Rent," "Stipulated Loss Value," "Make-Whole Amount" (as each term is defined therein), and interest accrued on any of the foregoing, in each case whether existing on the date of this Agreement or arising hereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, arising by contract, operation of law or otherwise. Lease Sharing Amount. An amount equal, as of any date, to either (a) -------------------- if the Equipment Lease has been terminated on or prior to such date, the aggregate unpaid amount of Lease Payment Claims claimed by the Owner Trustee (and/or the Indenture Trustee, as assignee) under Section 15 of the Equipment Lease (or, in the event that such claim has been liquidated by adjudication or settlement, such liquidated amount), or (b) if the Equipment Lease has not been -9- terminated on or prior to such date, an amount equal to 33 1/3% of the Stipulated Loss Value as of such date. Lease Trigger Event. The occurrence of any of the following: (a) a ------------------- Bankruptcy Event, (b) any of the Secured Obligations (other than the Lease Claims) shall have been declared by the holder thereof to be due and payable prior to the scheduled maturity date therefor, (c) any action shall have been taken to realize on the Collateral at any time while an Actionable Default shall be continuing, (d) a Lease Event of Default (as defined in the Equipment Lease as in effect on the date hereof) shall have occurred and be continuing, or (e) such time as the book value of all assets of the Company and its Subsidiaries (other than the assets of SBQ) which have been included in Dispositions subsequent to the date hereof shall be more than $75,000,000. Lenders. As defined in the Indenture. ------- Letter of Credit Collateral Obligations. The obligations of the --------------------------------------- Company under any Bank Credit Document or Reimbursement Agreement (as in effect on the date hereof) to deposit cash with respect to Outstanding Bank LC Exposure or Outstanding IRB LC Exposure up to, but not exceeding, one dollar of cash for each dollar of undrawn face amount of each applicable outstanding letter of credit. Lien. Any mortgage, security deed, deed of trust, pledge, lien, ---- security interest or other encumbrance, whether now existing or hereafter created, acquired or arising, and whether voluntary or involuntary, to secure payment of a debt or performance of an obligation. Loan and Reimbursement Principal Obligations. At the time of -------------------------------------------- reference thereto, Bank Debt consisting of the principal amount of loans outstanding under the Bank Credit Documents and any unpaid reimbursement obligations in respect of drawings under letters of credit issued pursuant to the Bank Credit Documents. Majority Secured Parties. (i) A group of holders of Secured ------------------------- Obligations which includes (a) the holders of at least 51% of the Note Principal Obligations, (b) the holders of at least 51% of the Reimbursement Agreement Debt, and (c) the holders of at least 51% of the Loan and Reimbursement Principal Obligations, or (ii) after the Secured Obligations referred to in clause (i) above have been paid in full, the Indenture Trustee for so long as the Lien of the Indenture remains outstanding, and thereafter the Owner Trustee. Make-Whole Amount. With respect to either of the Note Purchase ----------------- Agreements and the Note Debt owed thereunder, the "Make-Whole Amount" as defined in such Note Purchase Agreement on the date hereof. Maximum Bank Commitment. (a) $300,000,000 prior to any mandatory ----------------------- reductions of the Commitments, as such term is defined in the Credit Agreement, pursuant to Section 2.12 of the Credit Agreement; and (b) after any mandatory reductions of such Commitments pursuant to Section 2.12 of the Credit Agreement, the result of (i) $300,000,000 minus (ii) the aggregate amount of such mandatory ----- reductions. -10- Net Lease Sharing Amount. An amount equal, as of any date, to either ------------------------ (a) if the Equipment Lease has been terminated on or prior to such date, the Lease Sharing Amount as of such date, or (b) if the Equipment Lease has not been terminated on or prior to such date, the result of the Lease Sharing Amount as of such date minus the sum of all amounts previously deposited in the Section ----- 4.1(e) Cash Collateral Account. Net Proceeds. (a) In the case of (x) a Disposition, the aggregate ------------ amount of all cash received (including without limitation, all cash payments received by way of deferred payment of principal or interest pursuant to a note or installment receivable or otherwise, but only as and when received), directly or indirectly, by the Company or any Guarantor in connection with such Disposition or (y) in the case of any loss, theft, damage, destruction, or taking or other eminent domain action (a "Casualty Event"), the aggregate amount of cash proceeds of insurance, condemnation awards and other compensation received by the Company or any Guarantor in respect of such Casualty Event, in each case net of (i) the amount of any reasonable out-of-pocket legal fees, title and recording tax expenses, commissions and other customary fees and expenses actually incurred by the Company or any Guarantor in connection with such Disposition or Casualty Event, (ii) any income taxes reasonably estimated in good faith by the independent certified public accountant of the Company or any such Guarantor to be payable in connection with such Disposition or Casualty Event and other taxes thereon to the extent such other taxes are actually paid by the Company or any Guarantor, (iii) any repayments by the Company or any Guarantor of indebtedness (other than indebtedness under any of the Credit Documents (other than the Lease Documents)) to the extent that such indebtedness is secured by a Lien on the property that is the subject of such Disposition or Casualty Event, (iv) in the case of a Casualty Event, the amount of any proceeds permitted under the Security Documents to be paid to the Company or any Guarantor for the purpose of replacing, rebuilding or restoring the Collateral which was affected by the Casualty Event, (v) in the case of a Disposition, the amount of any proceeds which are not required under the Credit Agreement or the Note Purchase Agreements to be applied to prepay the Bank Debt or the Note Debt, and (vi) in the case of a Disposition, any amount of cash reserves reasonably required to be established to satisfy liabilities relating to the assets sold, so long as such reserves are paid to and held by the Collateral Agent as additional Collateral hereunder; and (b) in the case of an Equity Issuance, sixty percent (60%) of the aggregate amount of all cash received by the Company or any Guarantor in respect of such Equity Issuance, net of investment banking fees, legal fees, accountants fees, underwriting discounts and commissions and other customary fees and expenses actually incurred by the Company in connection with such Equity Issuance. New Bank Amendment. As defined in the Preamble hereto. ------------------ New Note Purchase Amendment. As defined in the Preamble hereto. --------------------------- 1993 Note Purchase Agreement. As defined in the Preamble hereto. ---------------------------- 1995 Note Purchase Agreement. As defined in the Preamble hereto. ---------------------------- 1993 Notes. As defined in the Preamble hereto. ---------- -11- 1995 Notes. As defined in the Preamble hereto. ---------- Note Credit Documents. The Note Purchase Agreements and the other --------------------- Note Purchase Documents, as the same may hereafter be amended, renewed, extended, restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement. Note Debt. All indebtedness, obligations and liabilities of any of --------- the Company, the Guarantors and the Subsidiaries to or for the benefit of any Note Holder arising or incurred under the Note Purchase Agreements (including, without limitation, Make-Whole Amounts), the Notes or the Guaranties, existing on the date of this Agreement or arising hereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, arising by contract, operation of law or otherwise. Notwithstanding the foregoing, Note Debt shall not include Note Principal Obligations to the extent, and only to the extent, that such Note Principal Obligations at any time exceed $280,000,000. Note Holders. As defined in the introductory paragraph hereto, ------------ together with their respective successors and assigns, and shall include any replacement, additional or successive lender or note purchaser. Note Principal Obligations. At the time of reference thereto, Note -------------------------- Debt consisting of the amounts of principal outstanding under the Notes. Note Purchase Agreements. As defined in the Preamble hereto. ------------------------ Note Purchase Documents. The Notes, the Note Purchase Agreements and ----------------------- any "notes" and "loan documents", or any like terms of the same meaning, may be amended, renewed, extended, restated, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement. Notes. The Notes, as such term is defined in the Preamble hereto, ----- together with any promissory notes or other evidences of indebtedness issued in exchange for, replacement of or substitution for the Notes under the Note Purchase Agreements. Notice of Actionable Default. A notice by the Requisite Parties or ---------------------------- the Special Requisite Parties as the case may be, delivered to the Collateral Agent, stating that an Actionable Default has occurred and is continuing. Other Banks. See (S)4.1(d) hereof. ----------- Outstanding Bank LC Exposure. The undrawn face amount of all ---------------------------- outstanding letters of credit issued under the Bank Credit Documents. For the avoidance of doubt, the undrawn face amount of the Outstanding IRB Letters of Credit are not included in the Outstanding Bank LC Exposure. -12- Outstanding IRB LC Exposure. The aggregate undrawn face amount of the --------------------------- outstanding IRB Letters of Credit. Owner Participants. As defined in the Indenture. ------------------ Owner Trustee. As defined in the Preamble hereto. ------------- Paid Percentage. See (S)4.1(c)(ii). --------------- Payment Default. See (S)1.1 (in the definition of Actionable --------------- Default). Permitted Liens. Liens the existence of which does not breach Section --------------- 8.19(a) of each of the Note Purchase Agreements (as in effect on the date hereof) and the existence of which does not breach Section 9.2(a) of the Credit Agreement. Person. Any individual, corporation, partnership, limited liability ------ company, trust, unincorporated association, business or other legal entity, and any government or any governmental agency or political subdivision thereof. PNC Letter of Credit. As defined in the Preamble hereto. -------------------- PNC Reimbursement Agreement. As defined in the Preamble hereto. --------------------------- PNC Reimbursement Agreement Debt. The "Company Obligations" as -------------------------------- defined in the PNC Reimbursement Agreement. Notwithstanding the foregoing, PNC Reimbursement Agreement Debt shall not include (a) the principal amount of any reimbursement obligations in respect of drawings under the PNC Letter of Credit in excess of $26,299,197 in the aggregate, or (b) any Outstanding IRB LC Exposure; provided, that (i) drawings of amounts which will be automatically -------- reinstated unless a notice is timely given by the LC Issuer that such amount will not be reinstated will not be deemed to be drawings for the purposes of this sentence unless such notice of non-reinstatement is in fact given, and (ii) drawings to fund any tender purchase price of the related industrial revenue bonds will not be deemed to be drawings for the purposes of this sentence so long as the related LC Issuer has reinstated the amount of such paid drawing. Post-Default Cash Sweep Payment. Any payment to any Bank pursuant to ------------------------------- the provisions of (S)2.8(b)(iii) of the Credit Agreement (as in effect on the date hereof) or any similar successor provision which, in any such case, shall have been made after the Collateral Agent receives notice from any Bank, Note Holder or LC Issuer of the occurrence of an Event of Default and prior to the receipt by the Collateral Agent from such Bank, Note Holder or LC Issuer, or from the Requisite Parties, of notice that payments referred to in this definition made after such Event of Default shall nevertheless not constitute Post-Default Cash Sweep Payments (subject to the implementation of the same provisions after notice to the Collateral Agent of any subsequent Event of Default). Pre-Reduction Percentage. See (S)4.1(c)(i). ------------------------ -13- Principal Obligations. Loan and Reimbursement Principal Obligations, --------------------- Note Principal Obligations, Bank of America Reimbursement Agreement Debt in an amount not to exceed $15,172,603, and PNC Reimbursement Agreement Debt in an amount not to exceed $26,299,197. Priority Debt. The aggregate amount of Loan and Reimbursement -------------- Principal Obligations and Outstanding Bank LC Exposure under any Bank Credit Document at any time in an amount equal to the lesser of (a) the amount thereof at such time in excess of the Priority Threshold Amount, and (b) $65,000,000. Priority Threshold Amount. $235,000,000, as reduced from time to time ------------------------- by the same amount as the "Priority Threshold Amount" (as such term is defined in the Credit Agreement) is reduced pursuant to (S)2.12(d) thereof as in effect on the date hereof. Qualifying Assets. See (S)4.9(b) hereof. ----------------- Reimbursement Agreements. As defined in the Preamble hereto. ------------------------ Reimbursement Agreement Debt. Collectively, the Bank of America ---------------------------- Reimbursement Agreement Debt and the PNC Reimbursement Agreement Debt. Replacement Credit Agreement. See (S)4.10(a). ---------------------------- Requisite Parties. As of any date, (i) the holders of at least 66 ----------------- 2/3% in aggregate principal amount of the sum of the Reimbursement Agreement Debt, the Note Debt and the Bank Debt outstanding on such date, or (ii) after the Secured Obligations referred to in clause (i) above have been paid in full, the Indenture Trustee so long as the Lien of the Indenture remains outstanding, and thereafter the Owner Trustee. Responsible Officer. With respect to the Collateral Agent means an ------------------- officer in its Corporate Trust Department. Restricted Subsidiary. As defined in the Credit Agreement. --------------------- SBQ. The "special bar quality" division of the Company and its --- Subsidiaries which includes (a) all assets of the Company and its Subsidiaries located in, or related to its operations in, Memphis, Tennessee; and (b) the assets of American Steel and Wire Corporation (and the Company's equity interests in American Steel and Wire Corporation), but specifically excluding (i) the "missile wire" facility, located in Cleveland, Ohio, (ii) the Company's equity interest in American Iron Reduction, LLC, and (iii) the interests of the Owner Trustee and/or the Indenture Trustee in the Lease Assets. Section 4.1(e) Cash Collateral Account. See (S)4.1(e) hereof. -------------------------------------- Section 4.1(h) Cash Reserves Account. See (S) 4.1(h) hereof. ------------------------------------ -14- Section 4.1(e) Distribution Amount. See (S)4.1(e) hereof. ---------------------------------- Secured Obligations. Collectively, (a) the Bank Debt, unless and ------------------- until the Agent Bank has given notice in writing to the Collateral Agent that either (i) the Bank Debt has been paid in full and all commitments under the Bank Credit Documents have terminated, been canceled or permanently reduced to zero or (ii) the Bank Debt otherwise no longer constitutes Secured Obligations hereunder, (b) the Note Debt, unless and until all of the Note Holders have given notice in writing to the Collateral Agent that the Note Debt has been paid in full or no longer constitutes Secured Obligations hereunder, (c) the Lease Claims, unless and until the Indenture Trustee and Owner Trustee have given notice in writing to the Collateral Agent that the Lease Claims have been paid in full or no longer constitute Secured Obligations hereunder, (d) the Bank of America Reimbursement Agreement Debt unless and until the holder thereof has given notice in writing to the Collateral Agent that the Bank of America Letter of Credit has been terminated and any and all Bank of America Reimbursement Agreement Debt has been paid in full or no longer constitutes Secured Obligations hereunder, (e) the PNC Reimbursement Agreement Debt unless and until the holder thereof has given notice in writing to the Collateral Agent that the PNC Letter of Credit has been terminated and any and all PNC Reimbursement Agreement Debt has been paid in full or no longer constitutes Secured Obligations hereunder, (f) involuntary overdrafts arising in the ordinary course of banking business of cash management, payroll and similar deposit accounts maintained by the Company with any of the Banks, which overdrafts exist at the time that an Event of Default occurs, and (g) all indebtedness, obligations and liability of the Company or any Guarantor to the Collateral Agent under any Security Document. Secured Parties. The Agent Bank, the Banks, the Note Holders, the --------------- Owner Trustee, the Indenture Trustee, the LC Issuers and the Collateral Agent. Securing Guarantors. The Guarantors who have granted to the ------------------- Collateral Agent for the benefit of the Secured Parties a Lien on any of their properties and assets to secure payment or performance of any of the Secured Obligations. Security Documents. Any and all instruments or agreements pursuant to ------------------ which a Lien is created or arises, or a Guaranty is delivered, in favor of the Collateral Agent or any other Secured Party to secure or guarantee any of the Secured Obligations (but excluding in any event the Lease Documents). Special Cash Collateral Account. See (S)4.1(c). ------------------------------- Special Requisite Parties. As of any date, either (a) the holders of ------------------------- at least 25% in aggregate principal amount of the Reimbursement Agreement Debt, the Note Debt, and the Bank Debt outstanding on such date if a Payment Default shall have occurred and be continuing with respect to such Reimbursement Agreement Debt, Note Debt or Bank Debt, as the case may be, on such date and at least thirty (30) days prior to such date the Agent Bank, the LC Issuers, each of the Note Holders and the Indenture Trustee (or, if the Lien of the Indenture shall no longer remain outstanding, the Owner Trustee) shall have received written notice of such Payment Default, or otherwise (b) the Requisite Parties. -15- Stipulated Loss Value. As defined in the Equipment Lease (as in --------------------- effect on the date hereof). Stock Pledge Agreement. One or more instruments or agreements ---------------------- executed in favor of and delivered to the Collateral Agent in connection with this Agreement which purports to pledge and grant a security interest to the Collateral Agent in shares of capital stock or other debt or equity interest of any Subsidiary or other Person. Subsidiary. As defined in the Note Purchase Agreements (as in effect ---------- on the date hereof). Terminated IRB LC. See (S) 4.1(d) hereof. ----------------- Total Undrawn Letter of Credit Exposure. At the time of reference --------------------------------------- thereto, the Outstanding Bank LC Exposure at such time and the Outstanding IRB LC Exposure at such time. Transfer. Any sale (including any sale and subsequent lease as -------- lessee), lease as lessor, transfer or other disposition of any asset. (S)1.2. Terms Generally. The definitions in (S)1.1 shall apply ----- --------- (except as otherwise specified) equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". All references herein to Sections shall be deemed references to Sections of this Agreement unless the context shall otherwise require. (S)2. RECOURSE OF SECURED PARTIES; OTHER COLLATERAL; ACTION BY -------- -- ------- ------- ----- ---------- ------ -- SECURED PARTIES. - ------- ------- (S)2.1. Recourse of Secured Parties; Other Collateral. -------- -- ------- ------- ----- ---------- (a) Each of the Secured Parties acknowledges and agrees that (i) it shall only have recourse to the Guaranties and the Collateral through the Collateral Agent and that it shall have no independent recourse to the Guaranties or the Collateral and (ii) the Collateral Agent shall have no obligation to, and shall not (except pursuant to (S)3.2(c) or as otherwise specifically provided herein), take any action hereunder or under any Security Document to which it is a party, except upon instructions from the Requisite Parties in accordance with (S)2.2 hereof. (b) Nothing contained herein shall restrict (i) the rights of any Secured Party to pursue remedies, by proceedings in law and equity, to collect any of the Secured Obligations or to enforce the performance of and provisions of any of the Secured Obligations, to the extent in either case that such remedies do not relate to the Collateral or interfere with the Collateral Agent's ability to take action hereunder or under the Security Documents or (ii) the rights of any Secured Party to initiate an action or actions in any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar proceeding in -16- its individual capacity and to appear or be heard on any matter before the bankruptcy or other applicable court in any such proceeding, including, without limitation, with respect to any question concerning the post-petition usage of Collateral and post-petition financing arrangements. (c) None of the Agent Bank, the Collateral Agent or any other Secured Party shall contest the validity, perfection, priority or enforceability of or seek to avoid any Lien securing any Secured Obligation, and each party hereby agrees to cooperate in the defense of any action contesting the validity, perfection, priority or enforceability of such Liens. Except as expressly provided in this Agreement with respect to distributions of Collateral or proceeds by the Collateral Agent to the Secured Parties, no Secured Party shall have the right to obtain any of the Collateral for its sole account or the benefit for its sole account of any Lien securing any of the Secured Obligations. No Secured Party may seek, and each Secured Party hereby waives, any right to require any of the Collateral to be partitioned. (d) Notwithstanding the foregoing, nothing in this Agreement, any Security Document or any related agreement shall impair or otherwise adversely affect in any respect any rights or entitlements of the Owner Trustee or the Indenture Trustee under any of the Lease Documents or, in the event of any Bankruptcy Event, under Section 365 of the United States Bankruptcy Code with respect to any of the Lease Documents. (S)2.2. Action by Secured Parties. ------ -- ------- ------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other action permitted or required by this Agreement to be given or taken by the Requisite Parties or Special Requisite Parties shall be embodied in and evidenced by one or more instruments and signed by or on behalf of such Requisite Parties or Special Requisite Parties, as applicable, and, except as otherwise expressly provided in any such instrument to be effective at a later date, any such action shall become effective when such instrument or instruments shall have been received by the Collateral Agent. The instrument or instruments evidencing any action (and the action embodied therein and evidenced thereby) are sometimes referred to herein as an "Action" of the Persons signing such instrument or instruments. (b) The Collateral Agent shall be entitled to rely absolutely upon an Action of the Requisite Parties or Special Requisite Parties if such Action purports to be taken by or on behalf of such Requisite Parties or Special Requisite Parties, and nothing in this (S)2.2 or elsewhere in this Agreement shall be construed to require the Collateral Agent to demonstrate that such Requisite Parties or Special Requisite Parties have been authorized by the Banks, Note Holders, LC Issuers, the Indenture Trustee and/or the Owner Trustee, as applicable, to take any action which they purport to be taking, the Collateral Agent being entitled to rely conclusively, and being fully protected in so relying, on any Action of any Banks, any Note Holders, LC Issuers, the Indenture Trustee and/or the Owner Trustee, as the case may be. (S)3. DUTIES OF COLLATERAL AGENT. ------ -- ---------- ----- -17- (S)3.1. Notices to the Secured Parties. The Collateral Agent shall, ------- -- --- ------- ------- as soon as practicable but in any event, if applicable, within five (5) business days following receipt thereof, furnish to each of the Agent Bank, each of the Note Holders, each of the LC Issuers, and the Owner Trustee and the Indenture Trustee: (a) a copy of each Notice of Actionable Default, Demand Notice or Enforcement Notice received by the Collateral Agent; (b) a copy of each certificate received by the Collateral Agent rescinding or withdrawing a Notice of Actionable Default, Demand Notice or Enforcement Notice; (c) written notice of any release or subordination by the Collateral Agent of any Collateral; (d) a copy of any notice or other communication given or received by the Collateral Agent under any Security Document; and (e) such other notices required by the terms of this Agreement to be furnished by or to the Collateral Agent. Any Notice of Actionable Default, Demand Notice or Enforcement Notice shall be deemed to have been given when actually received by a Responsible Officer of the Collateral Agent and, subject to (S)4.5(c), to have been rescinded or withdrawn when a Responsible Officer of the Collateral Agent has actually received from the notifying party a notice rescinding or withdrawing such Notice of Actionable Default, Demand Notice or Enforcement Notice. Any Notice of Actionable Default, Demand Notice or Enforcement Notice shall be deemed to be outstanding at all times after such notice has been given until such time, if any, as such notice has been rescinded or withdrawn. (S)3.2. Actions Under Security Documents. ------- ----- -------- --------- (a) The Collateral Agent shall not be obligated to take any action under this Agreement or any of the Security Documents except for the performance of such duties as are specifically set forth herein or therein. The Collateral Agent shall take any action under or with respect to the Security Documents or the Collateral which is requested by the Requisite Parties or Special Requisite Parties pursuant to (S)4.5; provided that the Collateral Agent shall not amend -------- or waive any provision of the Security Documents except in accordance with (S)7. (b) The Collateral Agent shall exercise or refrain from exercising all such rights, powers and remedies as shall be available to it under the Security Documents to which it is a party or any of them or with respect to the Collateral solely in accordance with an Enforcement Notice received from the Requisite Parties or Special Requisite Parties in accordance with (S)4.5. The Collateral Agent shall have the right to decline to follow any such direction if (i) the Collateral Agent, being advised by counsel and acting in good faith, determines that the directed action is not permitted by the terms of this Agreement or the -18- Security Documents or is unlawful or (ii) the Collateral Agent, being advised by counsel and acting in good faith, is in reasonable doubt as to whether such directed action is permitted by this Agreement or the Security Documents or would involve it in personal liability and, in the case of this clause (ii), is not provided, upon its request therefor, written confirmation from the Requisite Parties or the Special Requisite Parties, as the case may be, providing the Enforcement Notice that the Collateral Agent's indemnity by the other Secured Parties contained in this Agreement would apply without exception for such directed action. All directions from the Requisite Parties and Special Requisite Parties shall be as contemplated and permitted by this Agreement and the applicable Security Document and will not be illegal. The Collateral Agent may rely on any such direction given to it by the Requisite Parties and Special Requisite Parties and shall be fully protected, and shall under no circumstances (absent the gross negligence and willful misconduct of the Collateral Agent) be liable to the Company, any Guarantor, any holder of any Secured Obligations, or any other Person for taking or refraining from taking action in accordance with such direction and the otherwise applicable terms of this Agreement. (c) In the absence of an Enforcement Notice (which may relate to the exercise of specific remedies or to the exercise of remedies in general) from the Requisite Parties or Special Requisite Parties, the Collateral Agent shall not, without the written consent or direction of the Requisite Parties or Special Requisite Parties, exercise remedies available to it under any Security Documents or with respect to the Collateral or any part thereof. (S)3.3. Status of Moneys Received. ------ -- ------ -------- All moneys received by the Collateral Agent pursuant to this Agreement shall be held in trust for the purposes for which they were paid, and shall be segregated from any other moneys held by the Collateral Agent, and may be deposited by the Collateral Agent under such general conditions as may be prescribed by law in the general banking department of the Collateral Agent, and the Collateral Agent shall not be liable for any interest thereon except for interest and other income obtained in accordance with this paragraph. The Collateral Agent shall invest any funds held by it pursuant to this Agreement as directed in writing by the Requisite Parties in any of the following: (i) obligations issued or guaranteed by The United States of America or any agency or instrumentality thereof; (ii) certificates of deposit of or interest bearing accounts with national banks or corporations endowed with trust powers having capital and surplus in excess of $100,000,000; (iii) commercial paper that at the time of investment is rated A-1 by Standard & Poor's Ratings Group, a division of McGraw-Hill, Inc., or Prime-1 by Moody's Investor's Service, Inc.; (iv) repurchase agreements with any bank or corporation described in clause (ii) fully secured by obligations described in clause (i); and (v) shares of a money market fund investing only in short term U.S. Treasury obligations or obligations backed by short-term U.S. Treasury obligations. The Collateral Agent shall add any interest or other income from such investments to the amounts to be distributed in accordance with (S)4.1(b) hereof. All interest earned on such investments shall be considered the currently reportable income of the Company for federal income tax purposes. The Collateral Agent annually shall file information returns with the United States Internal Revenue Service and payee statements with the Company, documenting such interest payments. The Company shall provide the -19- Collateral Agent all forms and information necessary to complete such information returns and payee statements. Should the Collateral Agent become liable for the payment of taxes including withholding taxes, relating to income derived from any funds held by its pursuant to this Agreement or any payment made hereunder, the Collateral Agent may pay such taxes from such funds. (S)4. CERTAIN INTERCREDITOR ARRANGEMENTS. ------- ------------- ------------ (S)4.1. General Rule: Pari Passu Rights Against Collateral. ------- ---- ---- ----- ------ ------- ---------- (a) General Rule. All amounts owing with respect to the Secured ------- ---- Obligations shall be secured by the Guaranties and the Collateral, without distinction as to whether some Secured Obligations are then due and payable and other Secured Obligations are not then due and payable, all in accordance with the priorities established in this (S)4. (b) Application of Collateral Proceeds Generally. If (i) the ----------- -- ---------- -------- --------- Collateral Agent receives any cash amounts as payments under any Security Documents or as proceeds of or otherwise constituting the Collateral (which amounts, under the terms of any of the Security Documents, are to be applied to any of the Secured Obligations), including (but subject to (S) 4.1(d) below) any amounts received pursuant to (S)4.6 and (S)4.7, any proceeds received by the Collateral Agent in connection with any Disposition of the assets of SBQ or any of the other Collateral and, if applicable, any sum received by the Collateral Agent pursuant to (S)507(b) of the Bankruptcy Code in any bankruptcy case in which the Company or a Guarantor is a debtor, or (ii) the Company or any Guarantor receives any Net Proceeds from a Disposition or Casualty Event with respect to the Collateral or from an Equity Issuance, all such cash amounts shall be applied (subject to (S)4.2 hereof): (i) first, to the payment of any unpaid fees or other amounts ----- owing to the Collateral Agent pursuant to (S)5.5, (S)5.6 or (S)5.7; (ii) second, equally and ratably to reimburse the Secured ------ Parties for any amounts paid by the Secured Parties pursuant to (S)5.6; (iii) third, equally and ratably to all outstanding accrued and ----- unpaid interest on and principal of Priority Debt, provided that, except as -------- provided in (S)4.1(g) hereof, none of the proceeds from any sale of the assets of SBQ or any Equity Issuance shall be applied pursuant to this clause (iii); (iv) fourth, equally and ratably to all outstanding accrued and ------ unpaid interest and Make-Whole Amounts and outstanding Loan and Reimbursement Principal Obligations, Reimbursement Agreement Debt, Outstanding Bank LC Exposure, Outstanding IRB LC Exposure, and Note Principal Obligations, constituting Bank Debt, Note Debt, or Reimbursement Agreement Debt, and the Lease Payment Claims, -20- according to the aggregate amounts thereof (other than the Lease Payment Claims) on the date of such distribution and, in the case of Lease Payment Claims, the Net Lease Sharing Amount as of the date of such distribution; provided, however, that no such cash amounts arising from a Disposition -------- of the assets of SBQ, or from or in connection with a release of Collateral which is approved by the Requisite Parties (whether or not arising from a Disposition thereof), shall be applied to the Lease Payment Claims pursuant to this clause (iv) (or any other clause of this (S)4.1(b)) unless a Lease Trigger Event has occurred and is continuing, (v) fifth, equally and ratably, to all other Secured Obligations ----- not covered by clauses (i) through (iv) of this (S) 4.1(b); and (vi) sixth, after payment of all Secured Obligations, to the ----- Company or to whomever else the Collateral Agent may be required to pay by applicable law. (c) Special Letter of Credit Provision. Except to the extent provided ----------------------------------- otherwise in (S)4.1(d) hereof, any payment pursuant to clause (iv) of (S)4.1(b) with respect to Outstanding Bank LC Exposure or Outstanding IRB LC Exposure (an "Applicable Deposit") shall be paid to (or retained by) the Collateral Agent for deposit in an account (the "Special Cash Collateral Account") to be held as Collateral for the Secured Obligations and to be applied as provided in this (S)4.1(c). (i) Distributions of Cash Collateral. On each date after the -------------------------------- creation of the Special Cash Collateral Account on which a reduction in Total Undrawn Letter of Credit Exposure occurs by reason of either a drawing under any letter of credit (including any IRB Letter of Credit) or any other reduction, expiration or cancellation of any such letter of credit, the Collateral Agent shall distribute from the Special Cash Collateral Account an amount (a "Distribution Amount") equal to the product of (1) the Paid Percentage immediately prior to such reduction in Total Undrawn Letter of Credit Exposure (the "Pre-Reduction Percentage") and (2) the amount of such reduction, provided, that any reduction of Outstanding -------- IRB LC Exposure which will be automatically reinstated unless a notice is timely given by the applicable LC Issuer that such reduction will not be reinstated, shall not be deemed to be a reduction of Total Undrawn Letter of Credit Exposure unless such notice of non-reinstatement is in fact given. The Distribution Amount shall be distributed as follows: (A) first, to pay any outstanding principal amount of whichever of the Loan and Reimbursement Principal Obligations, Bank of America Reimbursement Agreement Debt, and PNC Reimbursement Agreement Debt, if any, shall have been increased by such reduction pro rata in proportion to the respective --- ---- amounts thereof owed to each Bank and LC Issuer, to the extent, if any, necessary so that the Paid Percentage of each of the Loan and Reimbursement Principal Obligations, Bank of America Reimbursement Agreement Debt and PNC Reimbursement Agreement Debt (not including Outstanding IRB LC Exposure) immediately after giving effect both to any increase in the amount thereof which may have occurred as a result of such reduction in the Total Undrawn Letter of Credit Exposure and to such payment being made from the Special Cash Collateral Account -21- under this clause (A), is equal to the Pre-Reduction Percentage; and (B) next, to the extent of any balance of the Distribution Amount, as provided in clauses (iii), (iv), (v) and (vi) of (S)4.1(b). Subject to the provisions of (S)4.1(d) hereof, at such times as the Outstanding Bank LC Exposure and Outstanding IRB LC Exposure are reduced to zero, any amount remaining in the Special Cash Collateral Account, after the payment of all prior Distribution Amounts, shall be distributed as provided in clauses (iii), (iv), (v) and (vi) of (S)4.1(b). (ii) Definition of Paid Percentage. The "Paid Percentage" means, ----------------------------- at the relevant time of reference thereto with respect to any Distribution Amount, the fraction (expressed as a percentage) the numerator of which is (x) the sum of all payments with respect to Principal Obligations made pursuant to (S)4.1 prior to or at such time and the denominator of which is (y) the aggregate amount of Principal Obligations outstanding, immediately before the Applicable Deposit from which such Distribution Amount was funded. In the event that, at the relevant time of reference thereto, no payments with respect to Principal Obligations shall have been made pursuant to (S)4.1, the Paid Percentage shall be zero. (d) Special Provisions Regarding Proceeds from Sale of SBQ. ------------------------------------------------------ Notwithstanding the provisions of (S)4.1(b), under the circumstances set forth in this (S)4.1(d), the distribution to the Note Holders, the Banks, and the LC Issuers of the proceeds from any sale of the assets of SBQ shall be made in accordance with the provisions of this (S)4.1(d), it being understood that nothing in this (S)4.1(d) shall alter the amount of such proceeds otherwise required to be distributed under (S)4.1(b) in respect of the Lease Payment Claims in the event that a Lease Trigger Event has occurred and is continuing. If (i) there is a sale of all or a substantial portion of the assets of SBQ, and (ii) prior to, contemporaneous with, or as a condition of such sale, the IRB Letters of Credit (or either of them) expire undrawn, are terminated, are cancelled (any of the foregoing being a "Terminated IRB LC"), or the LC Issuers receive any letter of credit, indemnity or other comfort (collectively "Indemnity") that the IRB Letters of Credit (or any portion of them or either of them) will not be drawn or that, if drawn, the LC Issuers will be reimbursed or indemnified for all or a portion of the amount drawn by a Person or Persons other than the Company and the Guarantors (or from assets other than those of the Company and the Guarantors), regardless of whether such Indemnity is absolute or is contingent or conditional (the issuer of a Terminated IRB LC or recipient of an Indemnity being an "Applicable LC Issuer"), then (w) for purposes of determining the amount payable to the Note Holders, the net proceeds from any sale of the assets of SBQ shall be deemed to have been greater than the actual net proceeds from any sale of the assets of SBQ by an amount equal to the sum, if any, of (A) with respect to Terminated IRB LCs, the aggregate undrawn face amount of the IRB Letters of Credit immediately prior to the expiration, termination or cancellation thereof, and (B) with respect to IRB Letters of Credit as to which Indemnity was obtained, the amount of such Indemnity (collectively, the sum of (A) and (B) being the "Applicable Amount"), -22- (x) the Note Holders will receive the same amount from the net proceeds from the sale of the assets of SBQ as the Note Holders would have received pursuant to (S)4.1(b) had such net proceeds been increased by such Applicable Amount, (y) after the Note Holders have received the amount payable to them pursuant to (S)4.1(b) (after giving effect to this (S)4.1(d)), the amounts payable pursuant to (S)4.1(b) to the Banks that are not (and whose direct and indirect assignors were not) the Applicable LC Issuers (the "Other Banks") shall be the amount that the Other Banks would have received if the net proceeds from the sale of the assets of SBQ had been increased by the Applicable Amount, and (z) after the Note Holders and the Other Banks have received the amounts payable to them pursuant to (S)4.1(b) (after giving effect to this (S)4.1(d)), the Banks that are (or whose direct or indirect assignors were) the Applicable LC Issuers shall receive on account of the Bank Debt the remaining net proceeds, if any, allocable to the Banks that are the LC Issuers from the sale of the assets of SBQ, provided that, -------- (1) if the net proceeds from the sale of the assets of SBQ are not sufficient for the Note Holders to receive the amount that they are entitled to receive pursuant to (S)4.1(b) (after giving effect to this (S)4.1(d), then (A) the Note Holders shall receive all of the proceeds from the sale of the assets of SBQ covered by this (S)4.1(d), (B) the Applicable LC Issuers shall make such arrangements with the Banks that are not the Applicable LC Issuers (which arrangements shall be without cost to or effect on the Secured Parties other than the Banks and the Applicable LC Issuers) so as to cause the Banks that are not the Applicable LC Issuers to have received (at or about the same time that the Note Holders are paid pursuant to clause (A) of this paragraph) the same percentage of the amount that would have been payable to the Banks that are not the Applicable LC Issuers pursuant to clause (y) (if there had been sufficient proceeds to pay such amounts), as the percentage that the amount that the Note Holders receive pursuant to clause (A) of this paragraph constitutes with respect to the amount that the Note Holders would have received pursuant to clause (x) had there been sufficient proceeds to pay such amounts, and (C) all amounts that thereafter become payable pursuant to (S)4.1(b) with respect to the Bank Debt to the Banks that are (or whose direct or indirect assignors were) the Applicable LC Issuers shall be paid instead equally and ratably to the Note Holders and the Banks that are not the Applicable LC Issuers (and allocated among each of them equally and ratably) until the Note Holders and Banks that are not Applicable LC Issuers have received, in addition to all other amounts payable to them hereunder, the amounts that would have been paid to them pursuant to this (S)4.1(d) but for the Net Proceeds from the sale of the assets of SBQ being insufficient to pay such amounts to them, provided that, -------- notwithstanding the foregoing, the provisions of this (S) 4.1(d) shall not be applied to pay to the Note Holders or Banks that are not Applicable LC Issuers amounts that are payable to the Applicable LC Issuers pursuant to clause (iii) of (S) 4.1(b) after the following events have occurred: (1) the holders of 51% of the Bank Debt give notice to the Collateral Agent that an Actionable Default has occurred, and (2) the Banks declare all of the Bank Debt to be due and payable on account of such Actionable Default. -23- (e) Special Equipment Lease Provisions. Any payment pursuant to ---------------------------------- clause (iv) of (S)4.1(b) which is to be applied to Lease Payment Claims prior to the termination of the Equipment Lease shall be paid to (or retained by) the Collateral Agent for deposit in an account (the "Section 4.1(e) Cash Collateral Account") to be held as Collateral for the sole and exclusive benefit of the Lease Payment Claims (subject to and to the extent set forth in this (S)4.1(e)) and to be applied as provided in this (S)4.1(e). Any payment pursuant to clause (iv) of (S)4.1(b) which is to be applied to Lease Payment Claims on or after termination of the Equipment Lease shall be paid by the Collateral Agent to the Indenture Trustee (for distribution by the Indenture Trustee in the order of priority set forth in Section 3.03(a) of the Indenture for so long as the Lien of the Indenture remains outstanding, and thereafter to the Owner Trustee). (i) Distribution of Section 4.1(e) Cash Collateral After ---------------------------------------------------- Termination of Equipment Lease. If, on any date on or after creation of the - ------------------------------ Section 4.1(e) Cash Collateral Account, the Equipment Lease is terminated, the Collateral Agent shall distribute to the Indenture Trustee (for distribution by the Indenture Trustee in the order of priority set forth in Section 3.03(a) of the Indenture, for so long as the Lien of the Indenture remains outstanding, and thereafter to the Owner Trustee), from the Section 4.1(e) Cash Collateral Account an amount (a "Section 4.1(e) Distribution Amount") equal to the lesser of (x) the Lease Sharing Amount as of such date, and (y) the amount in the Section 4.1(e) Cash Collateral Account. Any amount remaining in the Section 4.1(e) Cash Collateral Account after such distribution to the Indenture Trustee or the Owner Trustee, as the case may be, shall be applied in accordance with (S)4.1(b) hereof. (ii) Other Distributions of Section 4.1(e) Cash Collateral. ----------------------------------------------------- If the Equipment Lease expires at the end of its term (and is not terminated prior to such expiration) and all Lease Payment Claims have been paid in full, then the amount in the Section 4.1(e) Cash Collateral Account shall be applied in accordance with (S)4.1(b) hereof. (f) Reallocation of Subsequent Distributions. Notwithstanding the ----------------------------------------- foregoing, if (i) any deposit(s) shall be made into the Section 4.1(e) Cash Collateral Account on any date(s) in respect of the Lease Payment Claims pursuant to this (S)4.1 and (ii) the Equipment Lease shall be terminated on a subsequent date and the Net Lease Sharing Amount thereupon shall become an amount smaller or larger than 33 1/3% of the Stipulated Loss Value as of such earlier date(s), a "true-up" shall be effected with respect to the next distribution(s) of Collateral proceeds and other amounts pursuant to (S) 4.1 hereof so that the Lease Payment Claims shall receive pursuant to this (S) 4.1 a cumulative amount of Collateral proceeds and other amounts pursuant to (S) 4.1 hereof equal to what the Indenture Trustee or Owner Trustee, as the case may be, would have received pursuant to this (S) 4.1 had the revised Net Lease Sharing Amount been in effect on and after the first occurrence of a Lease Trigger Event. (g) Special Provision Regarding Allocation of SBQ and Equity Issuance ----------------------------------------------------------------- Proceeds After the Occurrence of an Event of Default. If the holders of 51% of - ---------------------------------------------------- the Bank Debt give notice to the Collateral Agent before a distribution by the Collateral Agent pursuant to (S)4.1(b)(iii) hereof that an Event of Default has occurred under the Credit Agreement, and if such notice certifies that there is at the time of such distribution any outstanding accrued and unpaid interest on or principal of Priority Debt, and if such distribution includes proceeds from the sale -24- of the assets of SBQ or any Equity Issuance (the "SBQ or Equity Issuance Proceeds"), then the amount of such distribution that is allocable to the SBQ or Equity Issuance Proceeds shall be paid to (or retained by) the Collateral Agent to the extent of the amount of such outstanding accrued and unpaid interest on or principal of Priority Debt, for deposit in an account to be held as Collateral for the Secured Obligations (the "Section 4.1(g) Account"), and to be applied as provided in this (S)4.1(g). (i) Distributions on Account of Priority Debt. If the Banks ----------------------------------------- declare all of the Bank Debt to be due and payable on account of such Event of Default within thirty (30) days after the date that such notice is given to the Collateral Agent pursuant to this (S)4.1(g) that an Event of Default has occurred, and if during such thirty (30) day period after such notice is given such declaration is not rescinded or waived and no loans are made and no credit is extended by the Banks to the Company or the Guarantors, then the distribution that is to be made by the Collateral Agent on account of the SBQ or Equity Issuance Proceeds shall be applied to the Priority Debt, to the extent of the amount thereof, before being applied pursuant to (S)4.1(b)(iv). (ii) Distributions on Account of Other Secured Obligations. ----------------------------------------------------- Any amounts in the Section 4.1(g) Account that are not distributable to the Banks on account of Priority Debt pursuant to clause (i) of this (S)4.1(g) shall be applied by the Collateral Agent in accordance with clauses (iv), (v) and (vi) of (S)4.1(b) hereof. (h) Special Provision Regarding Cash Reserves Relating for Sold ----------------------------------------------------------- Assets. Any amount of cash reserves referred to in clause (vi) of the definition of Net Proceeds shall be deposited by the Collateral Agent in an account (the "Section 4.1(h) Cash Reserves Account") to be held as Collateral for the Secured Obligations and to be applied as provided in this (S)4.1(h). (i) If, prior to the Collateral Agent receiving notice from any Bank, Note Holder, LC Issuer or the Requisite Parties that an Actionable Default has occurred, the Company certifies to the Collateral Agent in writing that an amount specified in such certification is payable to the buyer of assets (the sale of which gave rise to the requirement that cash reserves be maintained) to satisfy liabilities owed to such buyer under the purchase agreement relating to such assets, then the Collateral Agent shall pay to the Company the amount specified in such certification (but not more than the amount maintained in the Section 4.1(h) Cash Reserves Account on account of the applicable sale). (ii) If the Collateral Agent receives notice from any Bank, Note Holder, LC Issuer or the Requisite Parties that an Actionable Default has occurred, then the Collateral Agent shall not pay or distribute any funds from the Section 4.1(h) Cash Reserves Account except in accordance with the written instructions of the Requisite Parties, provided that such instructions may only instruct the -------- Collateral Agent to pay the funds (or a portion thereof) in the Section 4.1(h) Cash Reserves Account to the Company (or the applicable seller) or to the Secured Parties in accordance with this (S) 4.1. -25- (i) On each occasion that the Collateral Agent makes any payment or distribution to a Secured Party pursuant to this (S) 4.1, the Collateral Agent shall give notice to the Company setting forth the amount paid or distributed to each Secured Party. (S)4.2. Non-Cash Distributions or Proceeds. If the Collateral Agent -------- ------------- -- -------- receives any non-cash distributions or proceeds in respect of the Guaranties or the Collateral, then, unless the Requisite Parties instruct the Collateral Agent to the contrary, the Collateral Agent shall hold such non-cash distributions and proceeds as Collateral upon the terms of this Agreement and the Security Documents until converted to cash and thereupon applied or disbursed in accordance with this (S)4; provided, however, that, if any non-cash distribution -------- ------- is received by the Collateral Agent and is to be applied in satisfaction of any Secured Obligation by operation of a plan of reorganization under Chapter 11 of the United States Bankruptcy Code or otherwise as required by applicable law, the Requisite Parties may, instead of awaiting the conversion of such non-cash distribution to cash, direct the Collateral Agent to distribute such non-cash distribution as provided in (S)4.1(b), except in respect of a distribution under (S)4.1(b)(i). (S)4.3. Additional Collateral. If any of the Banks, the Agent Bank, ---------- ---------- the LC Issuers or the Note Holders receives any mortgage, pledge, security interest in or other lien or encumbrance on any assets of the Company, any Guarantor or any other of the Company's Subsidiaries, then any such mortgage, pledge, security interest or other lien or encumbrance shall secure the Secured Obligations, and be assigned to the Collateral Agent for the benefit of the Secured Parties. (S)4.4. Notice of Demand; Acceleration. ------ -- ------ ------------ (a) Each of the Banks, the Agent Bank, the LC Issuers, the Note Holders, the Owner Trustee and the Indenture Trustee hereby agrees to give written notice to the Collateral Agent of any demand for payment in full of the Secured Obligations owing to the demanding party, whether by acceleration of such obligations or otherwise (a "Demand Notice"). (b) Neither the Agent Bank, any Bank, any LC Issuer, any Note Holder, the Owner Trustee nor the Indenture Trustee shall incur liability of any kind should it, upon the occurrence of any Actionable Default, refrain from accelerating the maturity or otherwise demanding payment in full of any Secured Obligations owing to it, or should it refrain from exercising any of its rights and remedies against the Company, any Guarantor or any other obligor in respect of the Secured Obligations. (S)4.5. Enforcement. ----------- (a) The Collateral Agent shall (subject to the provisions of (S)3.2 and (S)5) take any such actions in the exercise of rights and remedies under the Security Documents as are directed in an Enforcement Notice given by the Requisite Parties or Special Requisite Parties, as the case may be, at any time more than three (3) business days after a Notice of Actionable Default has been given to a Responsible Officer of the Collateral Agent with respect to the Event of Default that is the basis (or one of the bases) of the Enforcement Notice. The Requisite -26- Parties or Special Requisite Parties, as the case may be, giving a Notice of Actionable Default or Enforcement Notice to the Collateral Agent shall contemporaneously give a copy thereof to the other Secured Parties. (b) Each of the Agent Bank, each Bank, each LC Issuer, each Note Holder, the Indenture Trustee and the Owner Trustee agrees that it will promptly, and in any event within five (5) business days after the request by one of the others (which request may be made telephonically), advise the requesting party (telephonically, confirmed in writing) as to the outstanding principal amount of the Loan and Reimbursement Principal Obligations, Outstanding Bank LC Exposure, Outstanding IRB LC Exposure, Letter of Credit Collateral Obligations, Reimbursement Agreement Debt, or Note Principal Obligations owed to it (or, in the case of the Agent Bank, owed to the Banks) or (in the case of the Owner Trustee or Indenture Trustee) as to the Lease Sharing Amount. Any party may rely on such information (or other means available to it) to determine whether the Requisite Parties have acted with respect to any action or proposed action. (c) No Enforcement Notice, when issued, may be rescinded or withdrawn without the written consent of the Requisite Parties or Special Requisite Parties, whichever shall have given such Enforcement Notice. (S)4.6. Turnover of Collateral and Post-Default Cash Sweep. If any -------- -- -------------------------------------- Secured Party (other than the Owner Trustee or Indenture Trustee) acquires custody, control or possession of any payment or assets constituting a Post- Default Cash Sweep Payment or any Collateral (including proceeds therefrom), other than pursuant to the terms of (S)4.1 or (S)4.2 hereof, such Secured Party shall, promptly with respect to Collateral (including proceeds thereof), and within fifteen (15) days after their receipt thereof with respect to Post- Default Cash Sweep Payments, cause such payment or assets to be delivered to or put in the custody, possession or control of the Collateral Agent or, if the Collateral Agent shall so designate, an agent of the Collateral Agent (which agent may be a branch or affiliate of the Collateral Agent) in the same form of payment received, with appropriate endorsements, for distribution in accordance with the provisions of (S)4.1 or (S)4.2, as applicable. The Collateral Agent shall notify each of the Secured Parties within two (2) business days after the Collateral Agent receives any notice (a) from any Bank, Note Holder or LC Issuer of the occurrence of an Event of Default, or (b) from the Requisite Parties that payments referred to in the definition of Post-Default Cash Sweep Payments will not constitute Post-Default Cash Sweep payments on account of such Event of Default. If any cash is received by any of the Banks with respect to Letter of Credit Collateral Obligations other than pursuant to (S)4.1 hereof, and such cash has not been applied to reduce Loan and Reimbursement Principal Obligations resulting from a drawing upon a letter of credit relating to such Letter of Credit Collateral Obligations prior to the time that an Enforcement Notice is given, such cash shall, at the time that such Enforcement Notice is given, be delivered to the Collateral Agent and applied as provided in (S)4.1. Until such time as the provisions of the immediately preceding sentences have been complied with, such Secured Party shall be deemed to hold such Collateral in trust for the Collateral Agent. Notwithstanding the foregoing, neither the Agent Bank, the Banks, the LC Issuers nor the Note Holders shall be required to deliver to the Collateral Agent or such agent of the Collateral Agent, any amounts received by the Agent Bank, the Banks, the LC Issuers, or the Note Holders prior to receipt by -27- such Secured Party of a Notice of Actionable Default to the extent that such amounts constitute (a) payments of principal (other than Post-Default Cash Sweep Payments) on the Bank Debt, the Reimbursement Agreement Debt or the Notes required to be made pursuant to the Credit Documents and due and paid prior to such date, or (b) regular payments of interest, fees and other charges on or in respect of the Bank Debt, the Reimbursement Agreement Debt or the Notes due and paid prior to such date. (S)4.7. Setoffs. Each of the Secured Parties agrees with each other ------- Secured Party that (a) if any Secured Party (other than the Owner Trustee or Indenture Trustee) exercises any right of setoff, banker's lien or similar right with respect to any Collateral or any assets of the Company or any Guarantor (other than a setoff by a Bank prior to any Notice of Actionable Default (x) to repay an involuntary overdraft arising in the ordinary cause of banking business of cash management, payroll and similar deposit accounts maintained by the Company or any Guarantor with any of the Banks, or (y) to pay regular account maintenance fees), the amount set off shall be applied ratably to the Secured Obligations in accordance with (S)4.1 or (S)4.2, as the case may be, (b) if such Secured Party (other than the Owner Trustee or Indenture Trustee) shall receive from the Company or any Guarantor, (i) whether by voluntary payment, exercise of the right of setoff, counterclaim, cross-action, enforcement of the claim in respect of the Secured Obligations owing to such Secured Party by proceedings against the Company at law or in equity or by proof thereof in bankruptcy, reorganization, liquidation, receivership or similar proceedings, or otherwise, for application to the payment of the Secured Obligations owing to such Secured Party any amount in excess of its ratable portion of the payments received by the other Secured Parties as contemplated by (S)4.1 or (S)4.2, as the case may be, or (ii) any of the Banks shall receive any Post-Default Cash Sweep Payment, such Bank or other Secured Party will make such disposition and arrangements with the other Secured Parties with respect to such excess, either by way of distribution, pro tanto assignment of claims, subrogation or otherwise as shall --- ----- result in each Secured Party receiving in respect of the Secured Obligations owing to it its proportionate payment as contemplated by (S)4.1 or (S)4.2, as the case may be; provided that if all or any part of such excess payment is -------- thereafter recovered from such Secured Party, such disposition and arrangements shall be rescinded and the amount restored to the extent of such recovery, but without interest. (S)4.8. Waivers and Amendments of Credit Documents. ------- --- ---------- -- ------ --------- (a) Without the prior written consent of the Agent Bank, the holders of 51% of the Note Debt, the holders of 51% of the PNC Reimbursement Agreement Debt, and the holders of 51% of the Bank of America Reimbursement Agreement Debt, the parties hereto (other than the Owner Trustee and the Indenture Trustee) shall not modify or amend any provisions of or give any waiver with respect to the Credit Documents to which such party hereto is a signatory, if the effect of such modification or amendment or waiver is (i) to cause the maximum principal amount or maximum commitment of or in respect of the Bank Debt to exceed the Maximum Bank Commitment, or (ii) to increase the principal amount of the Note Debt or Reimbursement Agreement Debt then outstanding, or (iii) to increase the stated rate of interest or any fees or other amounts due under any of the Credit Documents to which such party hereto is a signatory as outstanding on the date hereof, or (iv) to amend or modify any term defined therein which is incorporated by reference into this Agreement, or is specifically referred to in this Agreement in -28- such a way as to alter its meaning in this Agreement. Without the prior written consent of the Requisite Parties, the parties hereto (other than the Owner Trustee and the Indenture Trustee) shall not modify or amend any provisions of or give any waiver with respect to the Credit Documents to which such party is a signatory, if the effect of such modification or amendment or waiver is to provide for loans to be made or letters of credit to be issued (other than by extension or renewal) after the issuance of an Enforcement Notice. Except as otherwise specified in the two preceding sentences, the Agent Bank and the Banks, the Note Holders and the LC Issuers, without the consent of the other parties, shall be free to deal with the Company and the Guarantors in their respective sole discretion under and in respect of the provisions of the Credit Documents to which they are party, with the right and power without limitation to modify, amend or waive any terms or provisions of such Credit Documents, to grant extensions of the time of payment or performance, and to make compromises and settlements with the Company or any Guarantor. (b) The Agent Bank and the Banks agree that they will not modify or amend any covenants, defaults or payment provisions which are based on the financial condition or results of operations of the Company and/or its Subsidiaries contained in the Bank Credit Documents without giving at least five (5) business days' prior written notice thereof to the Note Holders, and the LC Issuers; the Note Holders agree that they will not modify or amend any covenants, defaults or payment provisions which are based on the financial condition or results of operations of the Company and/or its Subsidiaries in the Note Credit Documents without giving at least five (5) business days' prior written notice thereof to the Agent Bank, and the LC Issuers; the Owner Trustee and the Indenture Trustee agree that they will not modify or amend any covenants, defaults or payment provisions which are based on the financial condition or results of operations of the Company and/or its Subsidiaries in the Equipment Lease without giving at least five (5) business days' prior written notice thereof to the Agent Bank, the Note Holders and the LC Issuers; and each LC Issuer agrees that it will not modify or amend any covenants, defaults or payment provisions which are based on the financial condition or results of operations of the Company and/or its Subsidiaries contained in the Reimbursement Agreement to which it is a party without giving at least five (5) business days' prior written notice thereof to the Agent Bank and the Note Holders. -29- (S)4.9. Release or Subordination of Collateral. ------- -- ------------- -- ---------- (a) Collateral consisting of (i) Net Proceeds of any Disposition which, together with the aggregate Net Proceeds of all other Dispositions of Collateral within the preceding twelve (12) months, do not exceed $1,000,000, and the proceeds of any other Disposition with the consent of the Requisite Parties, and (ii) the Net Proceeds of any Casualty Event which, taken together with the aggregate Net Proceeds of all other Casualty Events with respect to Collateral within the preceding twelve (12) months, do not exceed $5,000,000, shall, unless, in either case, a party hereto has notified the Collateral Agent that a Default or an Event of Default has occurred and is continuing or would occur after giving effect thereto, be released to the Company or Guarantor that owned the Collateral, as the case may be, subject to the provisions of the next sentence. The Collateral Agent is hereby authorized to release such Collateral and to provide such discharge, release and termination statements with respect to such Released Collateral upon receipt of a certificate of the chief financial officer or any vice president of the Company to the effect that no Default or Event of Default exists or would result therefrom and that such release is permitted under this (S)4.9(a), and that, with respect to Net Proceeds of Casualty Events, the Company intends to use such Net Proceeds to repair or replace the Collateral that was the subject of the Casualty Event. (b) The Collateral Agent shall, if requested by the Company or any Guarantor, release any Collateral that is the subject of a Disposition but which is not released pursuant to (S)4.9(a), and provide such releases and termination statements as may be reasonably requested by the Company or any such Guarantor with respect thereto in connection with any Disposition thereof, so long as (i) the Requisite Parties have consented to such request, (ii) the Collateral Agent receives a certificate of the chief financial officer or any vice president of the Company to the effect that (A) no Default or Event of Default exists or would result from the honoring of such request, (B) the transferee of the Collateral is not an Affiliate of the Company, and (C) the proceeds of such Disposition equal or exceed the fair market value of the Collateral subject to such Disposition, (iii) the Collateral Agent obtains a perfected security interest in any non-cash proceeds of such Disposition, (iv) except as otherwise provided herein, the Net Proceeds of such Disposition are delivered to the Collateral Agent, and (v) any cash portion of the Net Proceeds of such Disposition are applied or paid in accordance with this Agreement; provided, -------- that, with respect to a Disposition of the assets of SBQ, no consent of the Requisite Parties shall be required under clause (i) of this paragraph and the provisions of clause (ii)(C) of this paragraph shall not be applicable if: (1) an executive officer of the Company certifies that the Company has consulted with and received advice from Credit Suisse First Boston in connection with such Disposition and has received a letter from Credit Suisse First Boston stating that in its view the consideration to be received by the Company in connection with such Disposition is fair from a financial point of view under the circumstances; (2) the cash portion of the sales price is not less than 75% of the total sales price; and (3) the cash portion of the Net Proceeds of such sale are applied to the Secured Obligations in accordance with the terms of this Agreement, and further provided that (x) if the certificate provided pursuant to ---------------- clause (ii) of this paragraph (b) further certifies that the Company intends to purchase, within thirty (30) days after the date of such certificate, assets of the same type of assets that were the subject of the Disposition (e.g. the purchase of equipment after the sale of equipment) which are usable in the ordinary course of the Company's business ("Qualifying Assets"), (y) subject to the provisions of clause (z) below, the -30- Collateral Agent shall retain, rather than distributing, the proceeds from such Disposition (except that this clause (y) and clause (z) below in this paragraph (b) shall not apply to any Disposition of SBQ or any Disposition that would cause the proceeds received by the Collateral Agent from Dispositions during any consecutive twelve (12) month period to exceed $10,000,000), and (z) if the Collateral Agent receives a certificate of the chief financial officer or any vice president of the Company on or within thirty (30) days after the date of such disposition, to the effect that (1) the Company has purchased Qualifying Assets on or within thirty (30) days after the date of the applicable Disposition, (2) the cash portion of the purchase price of such Qualifying Assets was as set forth in such certificate, (3) such Qualifying Assets were purchased from a Person that is not an Affiliate of the Company, (4) the purchase price for such Qualifying Assets did not exceed their fair market value, and (5) no Default or Event of Default exists or would result from the purchase of the Qualifying Assets, the Collateral Agent shall pay to the Company the lesser of the purchase price for the Qualifying Assets and the amount received by the Collateral Agent from the applicable Disposition. Any amounts not paid to the Company pursuant to the preceding sentence shall be distributed in accordance with (S) 4.1 hereof. (c) The Net Proceeds from any Casualty Event with respect to Collateral shall (i) be paid to (or retained by) the Collateral Agent for distribution in accordance with (S)4.1 hereof, if such Net Proceeds from any such Casualty Event equal or exceed $25,000,000, and (ii) except as provided in (S)4.9(a) and except as set forth below in this paragraph (c), be paid to (or retained by) the Collateral Agent for distribution in accordance with (S)4.1 hereof, if such Net Proceeds from any such Casualty Event are less than $25,000,000. The Company may utilize the Net Proceeds from a Casualty Event with respect to Collateral if such Net Proceeds are less than $25,000,000 (1) with the written consent of the Requisite Parties, on such terms and conditions as may be established by the Requisite Parties with respect thereto, or (2) without such written consent of the Requisite Parties, on the following conditions and in the following manner: (A) the Company shall provide to the Collateral Agent, within thirty (30) days after the date that the amount of the Net Proceeds is determined, a certificate of the chief financial officer or any vice president of the Company to the effect that (x) no Default or Event of Default exists (or would exist if the Net Proceeds from Casualty Event were used to repair or replace the Collateral that was the subject of the Casualty Event), (y) the Company intends to repair or replace the Collateral that was the subject of the Casualty Event, and (z) the Company has sufficient cash on hand or available in order to fund such repair or replacement, if such Net Proceeds are made available to the Company, (B) to the extent that the Company desires funding or reimbursement therefor from the Net Proceeds applicable thereto, the Company shall submit to the Collateral Agent (or to such agent as may be retained by the Collateral Agent to carry out the responsibilities of the Collateral Agent pursuant to this sentence) such invoices as the Company receives from time to time for goods or services purchased or obtained in connection with such repair or replacement, together with a written request that such invoice be paid from such applicable Net Proceeds (or that the Company be reimbursed from such applicable Net Proceeds for its payment of such invoice), (C) no Event of Default shall have occurred prior to the requested payment from time to time of an invoice pursuant to this paragraph (c), and (D) the Company shall provide such evidence as the Requisite Parties or any agent retained by the Collateral Agent in accordance with clause (B) above may require in order to evidence that the remaining Net Proceeds are sufficient to fund the balance of cost of the repair or replacement of the Collateral that was the subject of the Casualty Event. The Company shall pay to the -31- Collateral Agent, as and when billed therefor, all fees and reasonable expenses incurred by the Collateral Agent or any such agent in connection with the matters set forth in this paragraph. (d) To the extent that the Credit Documents (other than the Lease Documents) of any party explicitly permit any Disposition without consent under such Credit Document but in respect to which such party's consent is required pursuant to this (S)4.9, such party agrees to provide that consent. But nothing in this (S)4.9 shall (i) be deemed to imply any waiver of any restriction on Dispositions under the Credit Agreement, either of the Note Purchase Agreements or any other Credit Document, or (ii) without the prior written consent of the Requisite Parties, authorize the Collateral Agent in any bankruptcy case to enter into any agreement for, or give any authorization or consent with respect to, the post-petition usage of Collateral. (e) In the event all of the security interests created by the Security Documents in favor of the Secured Parties other than the Owner Trustee and Indenture Trustee are terminated pursuant to Section 11.5(a)(i), (ii) and (iii) hereof, the security interest created by the Security Documents in favor of the Owner Trustee and Indenture Trustee shall also be released and thereupon the Lease Claims shall no longer constitute Secured Obligations hereunder; provided -------- that concurrently with such release, the Company shall secure the Lease Claims with a perfected first priority security interest in separate collateral in amount and in form reasonably satisfactory to the Indenture Trustee and the Owner Trustee. (f) Whether or not so instructed by the Requisite Parties, the Collateral Agent may release any Collateral and may provide any release, termination statement or instrument of subordination required by order of a court of competent jurisdiction or otherwise required by applicable law. (S)4.10. Replacement Credit Facilities. ----------------------------- (a) The Company shall be free, without the consent of the Note Holders, the LC Issuers, the Owner Trustee or the Indenture Trustee, to enter into a Replacement Credit Agreement (as defined below) provided that (i) upon -------- giving effect to such Replacement Credit Agreement all outstanding Secured Obligations owed to the Banks shall have been discharged and the Credit Agreement shall have been terminated, (ii) each lender under such Replacement Credit Agreement shall assume in writing all obligations of the Banks hereunder accruing on or after the date such lenders become parties hereto, as amended as provided in clause (iv) hereof, (iii) after giving effect to such Replacement Credit Agreement, no Default or Event of Default shall then be in existence, and (iv) such technical amendments to the Note Credit Documents, the Lease Documents and this Agreement, reasonably requested by the Note Holders, the LC Issuers, the Owner Trustee or the Indenture Trustee, as the case may be, as necessary for any terms in the Note Credit Documents, the Lease Documents or this Agreement cross referencing the Credit Agreement to cross reference instead such Replacement Credit Agreement, shall have been made. A "Replacement Credit Agreement" shall mean a credit facility from one or more commercial banks or other financial institutions providing the Company with loans, letters of -32- credit or other advances or extensions of credit (A) without any lien or other priority over the other Secured Obligations, (B) not in excess of the Commitments (as defined in the Credit Agreement) under the Credit Agreement immediately prior to such refinancing and pursuant to which the loan availability and loan commitments to the Company from such refinancing shall not be less than that available and in effect immediately prior to such refinancing, (C) for a committed term of at least 36 months, (D) the financial covenants of such refinancing or extension shall not be more stringent than the financial covenants contained in the amended Note Purchase Agreements as reasonably determined by the holders of 51% of the Note Debt; and (E) such refinancing would be permitted under the then applicable debt incurrence tests of the Note Purchase Agreements. (b) The term of the existing Credit Agreement may be extended (i) without the consent of the Note Holders if such extension provides for no Priority Debt, or (ii) in all other cases with, but only with, the consent of the holders of 66 2/3% of the Note Debt. To the extent that the term of the Credit Agreement is extended with such consent, or any other provisions thereof are amended or modified by the parties thereto, the Credit Agreement shall not be considered a Replacement Credit Agreement for purposes of (S)4.10(a). (S)4.11. Independent Investigation; Sharing of Financial Information. ----------- ------------- ------- -- --------- ----------- Each of the Banks, the Agent Bank, the LC Issuers, and the Note Holders acknowledges and agrees that it has entered into the Credit Documents to which it is party and (as applicable) extended funds and/or credit or provided services to the Company on the basis of its own independent investigation of the Company, its Subsidiaries and affiliated companies, and their business, operations and financial condition, that it shall continue to make such investigations in connection with the credit and/or loans extended to the Company as it deems appropriate and that it has not conducted any such investigations in reliance upon information, analysis and recommendations which it may have obtained from any other Secured Party. Without derogation in any way of the preceding sentence, the Company acknowledges and consents to any exchange of information by and among the Banks, the Agent Bank, the LC Issuers, the Note Holders, the Owner Trustee and the Indenture Trustee, without regard to whether the impact of any such exchange is favorable or unfavorable to the Company and without regard to the accuracy or completeness of any information so exchanged. (S)4.12. Agents. Except as specifically provided in this Agreement, ------ and except for the role of the Collateral Agent as specified in this Agreement, neither the Agent Bank nor any of the Banks is acting as agent for any Note Holder, LC Issuer or the Owner Trustee or Indenture Trustee; no Note Holder is acting as agent for the Agent Bank or any Bank or LC Issuer or the Owner Trustee or Indenture Trustee; no LC Issuer is acting as agent for the Agent Bank, the Banks, any Note Holder, or the Owner Trustee or Indenture Trustee; neither the Owner Trustee nor the Indenture Trustee is acting as agent for the Agent Bank, the Banks, the Note Holders or the LC Issuers; and nothing stated or implied in this Agreement shall be deemed to create such an agency, or other fiduciary relationship. (S)4.13. Effect of Avoidance. If an Avoidance Event occurs, (a) the ------------------- provisions of (S)2 hereof and this (S)4 with respect to the Collateral and distribution of the proceeds thereof shall cease to be effective with respect to the Collateral as to which the Lien of the Collateral Agent is -33- avoided and the proceeds thereof, (b) (S)4.1(d) shall cease to be effective, and (c) this Agreement shall not thereafter restrict any party's right to amend and administer its Credit Documents in such party's discretion. For the avoidance of doubt, nothing in this paragraph is intended to affect any of the provisions herein regarding the Guaranties. (S)5. CONCERNING THE COLLATERAL AGENT. ---------- --- ---------- ----- (S)5.1. Appointment of Collateral Agent. The Agent Bank, acting on ----------- -- ---------- ----- instructions from the Banks, the Note Holders, the Owner Trustee, Indenture Trustee, and the LC Issuers hereby appoint the Collateral Agent Bank to act as collateral agent pursuant to the terms of this Agreement and the Security Documents, and the Collateral Agent Bank hereby accepts such appointment. The relationship between the Collateral Agent and the holders of the Secured Obligations is and shall be that of agent and principal only, and nothing contained in this Agreement or any of the Credit Documents shall be construed to appoint the Collateral Agent as a trustee for any such holder. (S)5.2. Limitations on Responsibility of Collateral Agent. ----------- -- -------------- -- ---------- ----- (a) The Collateral Agent shall not be responsible in any manner whatsoever for the correctness of any recitals, statements, representations or warranties contained herein or in any Security Document, except for those made by it herein. The Collateral Agent makes no representation as to the value or condition of the Collateral or any part thereof, as to the title of the Company or any Guarantor to the Collateral, as to the security afforded by this Agreement or any Security Document or, except as set forth in (S)6, as to the validity, execution, enforceability, legality or sufficiency of this Agreement or any Security Document, and the Collateral Agent shall incur no liability or responsibility in respect of any such matters. The Collateral Agent shall not be responsible for insuring the Collateral, for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral, except as provided in the immediately following sentence when the Collateral Agent has possession of the Collateral. The Collateral Agent shall have no duty to the Company or any Guarantor or to the holders of any of the Secured Obligations as to the care of any Collateral in its possession or control or in the possession or control of any agent or nominee of the Collateral Agent or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto, except the duty to accord such of the Collateral as may be in its possession substantially the same care as it accords its own assets and the duty to account for monies received by it. The Collateral Agent's duties and responsibilities shall be determined solely by the provisions of this Agreement and the Security Documents to which it is a party, and the Collateral Agent shall not be liable or responsible for any duties or obligations set forth in any other document to which it is not a party. (b) The Collateral Agent shall not be responsible for any loss suffered with respect to any investment permitted to be made under this Agreement and shall not be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Collateral Agent may be liable for losses due to its willful misconduct, or negligence. The Collateral Agent shall not be required to ascertain or inquire as to the performance by the Company of any of the covenants or agreements contained herein or in any of the Credit -34- Documents. Neither the Collateral Agent nor any officer, agent or representative thereof shall be personally liable for any action taken or omitted to be taken by any such Person in connection with this Agreement or any Security Document except for such Person's own gross negligence or willful misconduct. Neither the Collateral Agent nor any officer shall be personally liable for any action taken by any such Person in accordance with any notice given by the Requisite Parties in accordance with and pursuant to the terms of this Agreement even if, at the time such action is taken by any such Person, the Requisite Parties or Persons purporting to be the Requisite Parties are not so authorized by the Requisite Parties to give such notice, except where a Responsible Officer of the Collateral Agent has actual knowledge that such Requisite Parties or Persons purporting to be the Requisite Parties are not so authorized by the Requisite Parties to give such notice. The Collateral Agent may execute any of the powers granted under this Agreement or any of the Security Documents and perform any duty hereunder or thereunder either directly or by or through agents or attorneys-in-fact and shall not be responsible for anything done by such agents or attorneys-in-fact selected by it with due care. (c) Whenever pursuant to the provisions hereof or of any Security Document it is required that any party hereto obtain the consent or approval of the Collateral Agent, or that any matter prove satisfactory to the Collateral Agent, or that any action be taken at the request, discretion, option or determination of the Collateral Agent, the Collateral Agent, prior to giving any such consent or approval or request, or exercising any such option, discretion or determination, or indicating its satisfaction with any such matter, shall (except where the failure to do so, in its good faith judgment, could imperil the Collateral or the Liens thereon) be required to consult with the Secured Parties in a manner deemed reasonable by the Collateral Agent, and the Collateral Agent shall be protected in following any direction of the Requisite Parties or Special Requisite Parties, as the case may be. (d) The foregoing provisions of this (S)5.2 shall not relieve the Collateral Agent of any liability for any failure to perform any contractual duty expressly undertaken by it to be performed under this Agreement if such liability is caused by the negligence or willful misconduct of the Collateral Agent. (S)5.3. Reliance by Collateral Agent; Etc. -------- -- ---------- ----- --- (a) Whenever in the performance of its duties under this Agreement the Collateral Agent shall deem it necessary or desirable that a matter be proved or established with respect to any Person in connection with the taking, suffering or omitting of any action hereunder by the Collateral Agent, such matter may be conclusively deemed to be proved or established by a certificate executed by an officer of such Person, and the Collateral Agent shall have no liability with respect to any action taken, suffered or omitted in reliance in good faith thereon. (b) The Collateral Agent may consult with counsel and shall be fully protected in taking any action hereunder in good faith in accordance with any advice of such counsel. The Collateral Agent shall have the right but not the obligation at any time to seek instructions concerning the administration of this Agreement, the duties created hereunder, or any of the Collateral from any court of competent jurisdiction. -35- (c) The Collateral Agent shall be fully protected in relying in good faith upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order or other paper or document which it believes to be genuine and to have been signed or presented by the proper party or parties. In the absence of its gross negligence or willful misconduct, the Collateral Agent may conclusively rely in good faith, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificate or opinions furnished to the Collateral Agent in connection with this Agreement. (d) The Collateral Agent shall not be deemed to have actual, constructive, direct or indirect notice or knowledge of the occurrence of any Event of Default or Actionable Default unless and until a Responsible Officer of the Collateral Agent shall have received a Notice of Actionable Default or notice of such Event of Default. The Collateral Agent shall have no obligation whatsoever either prior to or after receiving such a Notice of Actionable Default to inquire whether an Actionable Default has, in fact, occurred and shall be entitled to rely in good faith conclusively, and shall be fully protected in so relying, on any certificate so furnished to it and shall have no obligation, absent written instructions from the Requisite Parties, to take or omit to take any action with respect to such Notice of Actionable Default. (e) To the extent the Collateral Agent is required (pursuant to (S)4 or otherwise) to determine any amount of, or take any action to distribute any amount in respect of, any Secured Obligation hereunder, it shall have no obligation to do so unless such amount shall have been certified in writing by the holder of such Secured Obligations as being the amount in question. Each of the other parties hereto agrees to certify such amounts upon request of the Collateral Agent. If any dispute or disagreement shall arise as to the allocation of any sum of money received by the Collateral Agent hereunder or under any Security Document, the Collateral Agent shall have the right to deliver such sum to a court of competent jurisdiction and therein commence an action for interpleader. (f) The Collateral Agent shall assume for all purposes hereunder that the Lien of the Indenture remains outstanding unless and until the Collateral Agent receives notice from the Indenture Trustee that the Lien of the Indenture is no longer outstanding. (S)5.4. Resignation or Removal of the Collateral Agent. The ----------- ------------- --- ---------- ----- Collateral Agent may at any time resign by giving at least sixty (60) days prior written notice thereof to each Secured Party and the Company, and the Collateral Agent may at any time be removed for cause (consisting of fraud, gross misconduct, willful or reckless breach of this Agreement or other just cause, as determined in their discretion by the Requisite Parties) by at least sixty (60) days prior written notice thereof to the Collateral Agent, each other Secured Party and the Company given by the Requisite Parties, provided that no -------- resignation or removal shall be effective until a successor for the Collateral Agent is appointed. Upon such resignation or removal, the Requisite Parties shall have the right to appoint a successor Collateral Agent. If no successor Collateral Agent shall have been so appointed by the Requisite Parties and shall have accepted such appointment within forty-five (45) days after the retiring Collateral Agent's giving of notice of resignation or the giving of notice of removal, as the case may be, then the retiring Collateral Agent may, on behalf of the Secured Parties, appoint a successor Collateral Agent, which shall -36- be a financial institution having a long-term bank deposit rating of not less than "A" from Standard & Poor's Ratings Group, a Division of McGraw-Hill, Inc., or "A-2" from Moody's Investors Service, Inc. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder. After any retiring Collateral Agent's resignation or removal, the provisions of this Agreement and the Security Documents shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Collateral Agent. Any corporation into which the Collateral Agent Bank may be merged or with which it may be consolidated, or any corporation which acquires all or substantially all of the corporate trust business of the Collateral Agent Bank, including the Collateral agency established pursuant to this Agreement, or any corporation resulting from any merger or consolidation to which the Collateral Agent Bank shall be a party, shall be the successor to the Collateral Agent Bank without the execution of any paper. (S)5.5. Expenses and Indemnification by the Company. By -------- --- --------------- -- --- ------- countersigning this Agreement, the Company agrees (a) to reimburse the Collateral Agent, on demand, for any expenses incurred by the Collateral Agent, including reasonable counsel fees and disbursements and compensation of agents, arising out of, in any way connected with, or as a result of, the execution or delivery of this Agreement or any Security Document or any agreement or instrument contemplated hereby or thereby or the performance by the parties hereto or thereto of their respective obligations hereunder or thereunder or in connection with the enforcement or protection of the rights of the Collateral Agent and the Secured Parties hereunder or under the Security Documents, (b) to indemnify and hold harmless the Collateral Agent and its directors, officers, employees and agents, on demand, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Collateral Agent Bank in its capacity as the Collateral Agent or any of them in any way relating to or arising out of this Agreement or any Security Document or any action taken or omitted by them under this Agreement or any Security Document; provided that the Company shall -------- not be liable to the Collateral Agent for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Collateral Agent or any of its directors, officers, employees or agents as determined by a final non-appealable order of a court of competent jurisdiction, and (c) to indemnify and hold harmless the Collateral Agent, on demand, from and against any and all liabilities which may be imposed on or incurred by the Collateral Agent Bank (in its capacity as Collateral Agent) for the net amount of taxes (after taking into account any deduction, credit or other tax reduction or benefit available by reason of the imposition of any such tax) in any jurisdiction in which the Collateral Agent Bank would not otherwise be subject to tax except by reason of its acting under this Agreement or the Security Documents (directly or through agents); provided that such -------- indemnification for taxes (i) shall apply only in respect of taxes attributable to the performance of the Collateral Agent's obligations hereunder and (ii) shall in no event cover any federal, state, local or other taxes imposed upon the Collateral Agent Bank with respect to or measured by its gross or net income or profits or franchise or excise taxes. A statement by the Collateral Agent that is submitted to the Company with respect to the amount of -37- such expenses and containing a basic description thereof and/or the amount of its indemnification obligation shall be prima facie evidence of the amount ----- ----- thereof owing to the Collateral Agent or the Collateral Agent Bank, as the case may be. Except as otherwise expressly provided herein, the Collateral Agent shall be under no obligation to take any action to protect, preserve or enforce any rights or interests in the Collateral or to take any action in connection with the execution or enforcement of its duties hereunder, whether on its own motion or on request of any other Person, which in the opinion of the Collateral Agent may involve loss, liability or expense to it, unless one or more of the Requisite Parties shall offer and furnish security or indemnity, reasonably satisfactory to the Collateral Agent in accordance herewith, against loss, liability and expense to the Collateral Agent. Notwithstanding anything to the contrary contained in this Agreement, or any Security Document, Credit Document or any other document noted in Section 10 of this Agreement, in the event that the Collateral Agent is entitled or required to commence an action to foreclose on such Security Document, Credit Document or other document, or otherwise exercise its remedies to acquire control or possession of any property constituting all or part of the Collateral, the Collateral Agent shall not be required to commence any such action or exercise any such remedy if the Collateral Agent has determined in good faith that it may incur liability under any federal or state environmental or hazardous waste law, rule or regulation as the result of the presence at, or release on or from, any property of any hazardous materials or waste, as defined under such federal or state laws, unless it has received security or indemnity from a Person, in an amount and in form, all satisfactory to the Collateral Agent in its sole discretion, protecting the Collateral Agent from all such liability. (S)5.6. Expenses and Indemnification by Secured Parties. Each of the -------- --- --------------- -- --------------- Banks, the LC Issuers and the Note Holders severally agrees (i) to reimburse the Collateral Agent, on demand, in the amount of its pro rata share for any --- ---- expenses referred to in (S)5.5 and fees due pursuant to (S)5.7 which shall not have been reimbursed or paid by the Company or paid from the proceeds of Collateral as provided herein and (ii) to indemnify and hold harmless the Collateral Agent, the Collateral Agent Bank and its directors, officers, employees and agents, on demand, in the amount of its pro rata share, from and --- ---- against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements referred to in (S)5.5, to the extent the same shall not have been reimbursed by the Company or paid from the proceeds of Collateral as provided herein; provided that no Bank, -------- LC Issuer, or Note Holder shall be liable to the Collateral Agent or the Collateral Agent Bank for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of, or the negligence or willful misconduct in the failure to perform any express duty undertaken under this Agreement to be performed by, the Collateral Agent or the Collateral Agent Bank or any of its directors, officers, employees or agents. For purposes of this (S)5.6, the pro rata share of any Bank's, Note Holder's, or LC Issuer's --------- claim for which a reimbursement or indemnity obligation arises under this (S)5.6 shall be its percentage share of the sum of the Principal Obligations, the Outstanding Bank LC Exposure and the Outstanding IRB LC Exposure as of the last day of the calendar month preceding the date on which such claim was incurred and on which any Outstanding Bank LC Exposure or Outstanding IRB LC Exposure existed or any Principal Obligations were outstanding. -38- (S)5.7. Collateral Agent's Fee. By countersigning this Agreement, ---------- ------- --- the Company agrees to pay to the Collateral Agent for the Collateral Agent's own account, a non-refundable Collateral Agent's fee, in an amount designated in writing by the Collateral Agent to the Company, on the date this Agreement is entered into and at the end of each quarterly period hereafter until the Secured Obligations have been paid in full in cash, the commitments represented by the Bank Credit Documents shall have expired or been reduced to zero or terminated, there is no Outstanding IRB LC Exposure, and the Collateral Agent no longer has any duties hereunder. (S)5.8. Appointments of Co-Agent or Separate Agent. ------------------------------------------ (a) Notwithstanding any other provision of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Collateral may at the time be located, the Collateral Agent shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co- agent, or separate agent, of all or any part of the Collateral, and to vest in such Person, in such capacity and for the benefit of the Secured Parties, subject to the other provisions of this (S)5.8, such powers, duties, obligations, rights and trusts as the Collateral Agent may consider necessary or desirable. No co-agent or separate agent hereunder shall be required to meet the terms of eligibility as a successor Collateral Agent under (S)5.4 and no notice to Secured Parties of the appointment of any co- agent or separate agent shall be required. (b) Every separate agent and co-agent shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) all rights, powers, duties and obligations conferred or imposed upon the Collateral Agent shall be conferred or imposed upon and exercised or performed by the Collateral Agent and such separate agent or co-agent jointly (it being understood that such separate agent or co-agent is not authorized to act separately without the Collateral Agent joining in such act), except to the extent that under any laws of any jurisdiction in which any particular act or acts are to be performed, the Collateral Agent shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Collateral or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate agent or co-agent, but solely at the direction of the Collateral Agent; (ii) no agent hereunder shall be personally liable by reason of any act or omission of any other agent hereunder appointed with due care or for any action or omission in connection with its duties hereunder not constituting gross negligence or willful misconduct; and (iii) the Collateral Agent may at any time accept the resignation of or remove any separate agent or co-agent. -39- (c) Any notice, request or other writing given to the Collateral Agent shall be deemed to have been given to each of the then separate agents and co-agents, as effectively as if given to each of them. Every instrument appointing any separate agent or co-agent shall refer to this Agreement and the conditions of this (S)5.8. Each separate agent and co-agent, upon its acceptance of the agency conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Collateral Agent or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Collateral Agent. Every such instrument shall be filed with the Collateral Agent. (d) Any separate agent or co-agent may at any time appoint the Collateral Agent, its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect to this Agreement on its behalf and in its name. If any separate agent or co-agent shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Collateral Agent, to the extent permitted by law, without the appointment of a new or successor agent. (S)6. REPRESENTATIONS AND WARRANTIES. Each of the Collateral Agent, --------------- --- ---------- the Agent Bank, the LC Issuers, the Note Holders, the Owner Trustee, the Indenture Trustee, and, by countersigning this Agreement, the Company and each Guarantor, represents and warrants to the other parties hereto that (a) the execution, delivery and performance of this Agreement (i) have been duly authorized by all requisite corporate action on its part and, in the case of the Agent Bank, by the appropriate number of Banks required under the Credit Agreement, and (ii) do not conflict with or result in any breach or contravention of any provision of law, statute, rule or regulation to which it is subject or any judgment, order, writ, injunction, license or permit applicable to it and will not conflict with any provision of its corporate charter or bylaws or any agreement or other instrument binding upon it; and (b) this Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable in accordance with its terms. (S)7. AMENDMENT OF THIS AGREEMENT. --------- -- ---- --------- (S)7.1. Amendments. No modification or amendment of this Agreement ---------- shall be effective unless the same shall be in writing and signed by the Majority Secured Parties and no modification or amendment of any Security Document shall be effective, nor shall any waiver of any provision of any Security Document be executed by the Collateral Agent, without the written consent of the Requisite Parties; provided, however, (i) no amendment or waiver -------- ------- shall adversely affect any of the Collateral Agent's rights, immunities or rights to indemnification hereunder or under any of the Security Documents or expand its duties or reduce any amount payable to the Collateral Agent hereunder or under any Security Documents without the written consent of the Collateral Agent; (ii) (S)(S)3 and 5 of this Agreement and any other provision of this Agreement or of any of the Security Documents affecting the rights and obligations of the Collateral Agent hereunder may not be amended without the written consent of the Collateral Agent; (iii) no modification or amendment of (x) (S)4.1(i), (S)4.9(a), (S)4.9(b) (except for the last sentence thereof), (S)4.9(c), (S)4.9(e), (S)5.5, (S)5.7, clause (iii) of (S)7.1, (S)8, (S)11.5(a), (S)11.5(b), (S)11.5(c), or (S)11.11 of this -40- Agreement, or (y) the definitions of Equity Interests, Equity Issuance, Disposition, Net Proceeds, SBQ, Lease Claims, Lease Payment Claims on Lease Expense/Indemnity Claims set forth herein, or (z) (S)4.8, if the effect of the modification or amendment is to increase the vote that is required to give any waiver with respect to any of the Credit Documents, shall be effective unless the same shall have been consented to in writing by the Company; (iv) no modification, amendment or waiver of the provisions of this Agreement or any of the Security Documents that changes the amount that a Secured Party receives from a distribution hereunder or that delays the time of a distribution or expands the obligations of such Secured Party hereunder shall be effective without the consent of such Secured Party, and (v) no amendment, modification or waiver of the provisions of this Agreement or any of the Security Documents that could directly or indirectly prejudice the Lease Claims in a discriminatory manner vis-a-vis the other Secured Parties shall be effective without the written consent of the Owner Trustee and, for so long as the Lien of the Indenture remains outstanding, the Indenture Trustee, provided that the Agent -------- Bank shall be authorized to give such consent on behalf of the Banks if the Agent Bank represents that it has such authority under the Credit Agreement. Any Security Document executed after the date hereof shall be approved by the Requisite Parties as to form and, in the case of Collateral consisting of any mortgage or deed of trust over a real estate interest, shall not be deemed to have been accepted until such time as environmental site assessments satisfactory to the Requisite Parties have been delivered if requested by such Requisite Parties. (S)7.2. Waivers. No waiver of any provision of this Agreement and no ------- consent to any departure by any party hereto from the provisions hereof shall be effective unless such waiver or consent shall be set forth in a written instrument executed by the party against which it is sought to be enforced, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any party hereto in any case shall entitle such party to any other or further notice or demand in the same, similar or other circumstances. (S)8. APPROVAL BY THE COMPANY AND GUARANTORS; COMPANY'S OBLIGATIONS -------- -- --- ------- --- ---------- --------- ----------- ABSOLUTE. - -------- (S)8.1. General. By countersigning this Agreement, each of the ------- Company and the Guarantors acknowledges and consents to and agrees to perform and be bound by each provision of this Agreement which expressly recites that the Company or such Guarantor is agreeing to such provision by countersigning this Agreement. (S)8.2 Obligations Absolute. Nothing contained in this Agreement -------------------- shall impair, as between the Company, or any Guarantor and the Agent, the Banks, the LC Issuers, the Note Holders, the Owner Trustee and the Indenture Trustee, (a) the obligation of the Company or such Guarantor to pay to the Agent Bank and the Banks all amounts payable in respect of the Bank Debt as and when the same shall become due and payable in accordance with the terms thereof, or prevent the Agent Bank or any of the Banks (except as expressly otherwise provided in this Agreement) from exercising all rights, powers and remedies otherwise permitted by the Bank Credit Documents and by applicable law upon a default in the payment of the Bank Debt, all, however, subject to the rights of the Note Holders and LC Issuers as set forth in this Agreement; or (b) the obligation of the Company or such Guarantor to pay to the Note Holders all amounts -41- payable in respect of the Note Debt as and when the same shall become due and payable in accordance with the terms thereof, or prevent any of the Note Holders (except as expressly otherwise provided in this Agreement) from exercising all rights, powers and remedies otherwise permitted by the Note Credit Documents and by applicable law upon a default in the payment of the Note Debt, all, however, subject to the rights of the Agent Bank, the Banks and the LC Issuers as set forth in this Agreement, or (c) the obligation of the Company or such Guarantor to pay to the LC Issuers all amounts payable in respect of the Reimbursement Agreement Debt as and when the same shall become due and payable in accordance with the terms thereof, or prevent either of the LC Issuers (except as expressly otherwise provided in this Agreement) from exercising all rights, powers and remedies otherwise permitted by the Reimbursement Agreements and by applicable law upon a default in the payment of the Reimbursement Agreement Debt, all, however, subject to the rights of the Agent Bank, the Banks and the Note Holders as set forth in this Agreement. (S)8.3. No Additional Rights for Company Hereunder. If the ------------------------------------------ Collateral Agent, the Agent Bank, or any Secured Party shall enforce its rights or remedies in violation of the terms of this Agreement, the Company and each Guarantor agrees, by its consent hereto, that it shall not use such violation as a defense to such enforcement by any such party nor assert such violation as a counterclaim or basis for setoff or recoupment against any such party. Nothing contained in this Agreement shall constitute a commitment by any Bank, LC Issuer or Note Holder to make available to the Company any loans or letters of credit which would comprise, in the case of the Banks, an Additional Advance Amount or, in the case of the LC Issuers and the Note Holders, any additional loans or letters of credit. (S)9. COLLATERAL AGENT AS AGENT AND LENDER. If a Secured Party is ---------- ----- -- ----- --- ------ at any time the Collateral Agent or a co-agent or separate agent pursuant to (S)5.8, such Secured Party shall, in its individual capacity and as Collateral Agent, have the same obligations and the same rights, powers and privileges as it would have had were it not also the Collateral Agent. (S)10 INTENTIONALLY DELETED. --------------------- (S)11. MISCELLANEOUS. ------------- (S)11.1. Further Assurances, Etc. The Agent Bank, the Banks, the LC ------- ---------- --- Issuers and the Note Holders and, by countersigning this Agreement, the Company and each Guarantor, agree to execute and deliver such other documents and instruments, in form and substance reasonably satisfactory to the Collateral Agent, and shall take such other action, in each case as the Collateral Agent (upon instructions from the Requisite Parties) or any Secured Party may reasonably request (at the sole, but reasonable, cost and expense of the Company which, by countersigning this Agreement, agrees to pay such reasonable costs and expenses), to effectuate and carry out the provisions of this Agreement including, without limitation, by recording or filing in such places as the requesting party may deem desirable, this Agreement or such other documents or instruments. -42- (S)11.2. No Individual Action; Marshaling; Etc. No holder of any -- ---------- ------ ---------- --- Secured Obligations may require the Collateral Agent to take or refrain from taking any action hereunder or under any of the Security Documents or with respect to any of the Collateral except as and to the extent expressly set forth in this Agreement. The Collateral Agent shall have no duty to, and the Company and each Guarantor hereby waives any and all right to require the Collateral Agent to, marshal any assets or otherwise to take any actions with respect to marshaling. (S)11.3. Successors and Assigns. ---------- --- ------- (a) This Agreement shall be binding on and inure to the benefit of the Collateral Agent, each of the Banks, the Agent Bank, each of the LC Issuers, each of the Note Holders, the Owner Trustee, the Indenture Trustee, and their respective successors and assigns, and shall be binding on the Company and each Guarantor and their respective successors and permitted assigns. Each of the Note Holders acknowledges that the provisions of this Agreement apply regardless of any sale, transfer, pledge, assignment, hypothecation or other disposition by such Note Holder of any Notes to any Person, each of the Banks, LC Issuers, Owner Trustee and Indenture Trustee agrees that the provisions of this Agreement apply regardless of any sale, transfer, pledge, assignment, hypothecation or other disposition by such Bank, LC Issuer, Owner Trustee or Indenture Trustee of any instrument or right evidencing the Bank Debt, Reimbursement Agreement Debt or Lease Claims to any Person. Each Secured Party agrees that it shall not sell, transfer, assign or otherwise dispose of any interest in any Secured Obligation unless the buyer, transferee or assignee assumes in writing the obligations of such Secured Party under this Agreement; provided, however, that the foregoing shall not prohibit any Secured Party from - -------- ------- pledging or otherwise granting a security interest in any Secured Obligation so long as the pledgee or other secured party, as a condition to its retaining or further transferring such Secured Obligation by way of enforcement of such pledge or other security interest, assumes or causes its transferee to assume in writing the obligations of such Secured Party under this Agreement. (b) No Secured Party (other than the Owner Trustee or Indenture Trustee) may sell any Secured Obligation or any interest therein to the Company or any Subsidiary or affiliate of the Company, or accept any payment of a Secured Obligation from an affiliate of the Company that is not a Guarantor, without the consent of the Requisite Parties. The Agent Bank shall require each Bank becoming a party to the Credit Agreement after the date of this Agreement to execute and deliver to the other parties hereto a counterpart of this Agreement. Any Note Holder assigning all or a portion of its note shall require its assignee to execute and deliver to all other parties hereto a counterpart of this Agreement. (c) Nothing contained in this (S)11.3 shall permit any assignment of any Secured Obligation created or evidenced by any Credit Document if such assignment is not otherwise permitted by that Credit Document. (S)11.4. Notices. All notices and other communications made or ------- required to be given pursuant to this Agreement or the Security Documents shall be in writing and shall be delivered in hand, mailed by United States registered or certified first class mail, postage prepaid, sent by overnight courier or sent by telecopy, confirmed by delivery via courier or postal service, addressed as set forth on Schedule 11.4 hereto or to such other address or ------------- -43- addresses as any such party shall specify by notice given to the other parties. Any such notice and other communications shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or facsimile, at the time of the receipt thereof, and (ii) if sent by registered or certified first class mail postage prepaid, on the fourth (4th) business day following the mailing thereof; provided, however, that a Notice of -------- ------- Actionable Default or any other notice to be delivered to the Collateral Agent pursuant to the terms of this Agreement shall not be deemed to have been received by a Responsible Officer of the Collateral Agent until the Collateral Agent actually receives such notice. Any party hereto (other than the Collateral Agent) that is required or permitted to give notice to any other party hereto may, in lieu of giving such notice directly to such other party, give such notice to the Collateral Agent for delivery to such other party or parties, provided that (a) the party giving such notice shall expressly instruct the Collateral Agent in writing as to which parties to deliver such notice to, (b) the Collateral Agent shall give such notice within two (2) Business Days after receiving such request, and (c) such notice will only be deemed to have been given (in accordance with clauses (i) and (ii) of the preceding sentence) to the recipients thereof after such notice was given by the Collateral Agent, rather than when such request was made to the Collateral Agent. (S)11.5. Termination. ----------- (a) The security interests created by the Security Documents, including the security interest of the Collateral Agent, shall terminate and all right, title and interest in the Collateral shall revert to the Company and its successors and assigns upon the satisfaction of each of the following five conditions: (i) receipt by the Collateral Agent from the Agent Bank of notice stating that either: (A) the Bank Debt has been paid in full, in cash, and all commitments under the Credit Agreement have terminated, been canceled or been reduced to zero; or -- (B) the Bank Debt no longer constitutes a Secured Obligation under the Security Documents; and --- (ii) receipt by the Collateral Agent from each of the Note Holders of notice that either: (A) the Note Debt held by such Note Holders has been paid in full, in cash, in accordance with the Note Purchase Agreement; or -- (B) the Note Debt held by such Note Holders no longer constitutes a Secured Obligation under the Security Documents; and --- -44- (iii) receipt by the Collateral Agent from each of the LC Issuers of notice stating that: (A) the Reimbursement Obligations due to it have been paid in full, in cash, and it has no Outstanding IRB LC Exposure; or -- (B) the Reimbursement Obligations due to it no longer constitute a Secured Obligation under the Security Documents; and --- (iv) receipt by the Collateral Agent from the Owner Trustee and Indenture Trustee of notice that either: (A) the Lease Claims have been paid in full, in cash, in accordance with the Lease Documents; or (B) the Lease Claims no longer constitute a Secured Obligation under the Security Documents; and (v) payment in full in cash of all amounts owed to the Collateral Agent pursuant to (S)5.5 and (S)5.7. The Secured Parties agree, severally and not jointly, to provide the notices contemplated by (S)11.5(a)(i), (S)11.5(a)(ii), (S)11.5(a)(iii), and (S)11.5(a)(iv) under the circumstances provided in Clause (A) of such Sections for such notices to be capable of being given, upon the Company's request and in any event as if (S)9-208 of the Uniform Commercial Code as in effect in the State of New York on the date hereof were applicable to them as direct secured parties. (b) Upon the termination of the Collateral Agent's security interest and the release of the Collateral in accordance with subsection (a) of this (S)11.5, the Collateral Agent will promptly, at the Company's written request and expense, (i) execute and deliver to the Company such documents as the Company shall reasonably request to evidence the termination of such security interest, the release of the Collateral or the discharge of the Guaranties and (ii) deliver or cause to be delivered to the Company all property of the Company constituting Collateral then held by Collateral Agent or any agent thereof. (c) This Agreement shall terminate automatically when the security interests granted under the Security Documents have terminated and the Collateral has been released to the Company by the Collateral Agent as provided in the foregoing provisions of this (S)11.5. (d) If, at any time, any payment made or value received with respect to any Secured Obligation must be returned by the Secured Party receiving the same upon the insolvency, bankruptcy or reorganization of the Company or any Guarantor, or otherwise, with the effect as though such payment had not been made or value received, the security interest in the Collateral created by the Security Documents in favor of the Collateral Agent and the rights of the Collateral Agent to act as agent hereunder and to receive amounts pursuant to this Agreement shall be reinstated to the extent those rights had previously been terminated. In such -45- event each Secured Party (other than the Owner Trustee and the Indenture Trustee) agrees that it will pay to the other Secured Parties such amounts so that, after giving effect to the payments hereunder by all Secured Parties, the amounts received by all Secured Parties are not in excess of the amounts to be paid to them hereunder as though any payment so returned had not been made. (e) Notwithstanding the foregoing, (S)5.5, (S)5.6 and (S)5.7 of this Agreement shall survive, and remain operative and in full force and effect, regardless of the termination of this Agreement. (S)11.6. Applicable Law. THIS AGREEMENT SHALL BE CONSTRUED IN ---------- --- ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PRINCIPLES). (S)11.7. Waiver of Rights. Neither any failure nor any delay on the ------ -- ------ part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, and a single or partial exercise thereof shall not preclude any other or further exercise or the exercise of any other right, power or privilege. (S)11.8. Severability. In case any one or more of the provisions ------------ contained in this Agreement should 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. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provision. (S)11.9. Counterparts. This Agreement may be executed in two or more ------------ counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument. (S)11.10. Section Headings. The section headings used herein are for ------- -------- convenience of reference only and are not to affect the construction of or be taken into consideration in interpreting this Agreement. (S)11.11 Additional Fees. Contemporaneously with the execution ---------- ---- hereof, the Company (a) shall pay all reasonable counsel fees of the Owner Trustee, the Indenture Trustee, the Lenders and the Owner Participants under the Indenture in connection with the negotiation and execution of this Agreement. In addition, the Company and the Guarantors shall pay all on-going fees and expenses (including any fees and expenses of counsel) of the Owner Trustee, the Indenture Trustee, the Owner Participants and the Lenders to enforce this Agreement, and (b) agree to indemnify the Owner Participants against any adverse tax consequences resulting from the Owner Trustee's entering into this Agreement. The parties hereto acknowledge that the Owner Participants and the Lenders are third party beneficiaries of this (S)11.11 and agree not to amend this (S)11.11 as it pertains to the Owner Participants and the Lenders without their prior written consent. The Company acknowledges and agrees that, in executing and delivering this Agreement to the other parties hereto and in performing its obligations hereunder, the Indenture Trustee shall be entitled to all of the rights and benefits afforded to the Indenture Trustee under -46- the Lease Documents, including, without limitation, the Company's indemnification obligations under Section 7.2 of the Participation Agreement, as such term is defined in the Indenture, and the limitations on liability provided under Section 10.11(a) of the Participation Agreement and Section 5.04 of the Indenture, and the Company hereby agrees that its indemnification of the Indenture Trustee under Section 7.2 of the Participation Agreement shall include, subject to the provisions of Section 7.2(d) thereof, any and all Claims (as defined therein) arising out of the Indenture Trustee's execution, delivery and performance of its obligations under this Agreement. (S)11.12. Complete Agreement. This Agreement constitutes the entire -------- --------- agreement among the parties hereto with respect to the subject matter hereof and supersedes and all other prior representations, negotiations, writings, memoranda and agreements. To the extent any provision of this Agreement conflicts with the Credit Agreement, the Note Purchase Agreements or any other Credit Document (other than the Lease Documents), as between the Secured Parties the provisions of this Agreement shall be controlling. Nothing in this Agreement, expressed or implied, is intended to confer upon any person other than the parties hereto any rights or remedies under or by reason of this Agreement. (S)11.13. No Recourse to the Owner Trustee or Indenture Trustee. It -- -------- -- --- ----- ------- -- --------- ------- is expressly understood and agreed by the parties hereto that, subject to the proviso contained in this (S)11.13, all representations, warranties and agreements of the Owner Trustee and Indenture Trustee hereunder shall be binding upon the Owner Trustee and Indenture Trustee, only in their respective capacities as Owner Trustee and Indenture Trustee and (except as expressly provided herein) the Owner Trustee and Indenture Trustee shall not be liable in their respective individual capacities for any breach thereof, except for their gross negligence or willful misconduct, or for breach of their respective agreements, representations and warranties contained herein, except to the extent agreed or made in their respective individual capacities; provided, -------- however, that nothing in this (S)11.13 shall be construed to limit in scope or - ------- substance those representations and warranties of the Owner Trustee or Indenture Trustee made expressly in its individual capacity set forth herein. The terms "Owner Trustee" and "Indenture Trustee" as used in this Agreement shall include any successor thereto as Owner Trustee or Indenture Trustee. [SIGNATURES FOLLOW ON NEXT PAGE] IN WITNESS WHEREOF, the Collateral Agent Bank, the Collateral Agent, the Agent Bank, the Banks, the Note Holders, the LC Issuers, the Owner Trustee, the Indenture Trustee, the Company and each of the Guarantors have caused this Collateral Agency and Intercreditor Agreement to be duly executed by their duly authorized officers, all as of the day and year first above written. STATE STREET BANK AND TRUST COMPANY, in its individual capacity and in its capacity as Collateral Agent By: --------------------------------- Name: ----------------------------- Title: ---------------------------- BANK OF AMERICA, N.A. in its capacity as Agent Bank By: --------------------------------- Name: ----------------------------- Title: ---------------------------- BANK OF AMERICA, N.A., in its capacity as Bank and LC Issuer By: --------------------------------- Name: ----------------------------- Title: ---------------------------- PNC BANK, NATIONAL ASSOCIATION, as LC Issuer By: --------------------------------- Name: ----------------------------- Title: ---------------------------- FIRST UNION NATIONAL BANK, in its capacity as Indenture Trustee By: --------------------------------- Name: ----------------------------- Title: ---------------------------- CHASE MANHATTAN TRUST COMPANY, NATIONAL ASSOCIATION as Successor to PNC BANK, NATIONAL ASSOCIATION, in its capacity as Owner Trustee By: --------------------------------- Name: ----------------------------- Title: ---------------------------- NOTE HOLDERS PRINCIPAL LIFE INSURANCE COMPANY (f/k/a Principal Mutual Life Insurance Company) By: Principal Capital Management, LLC, A Delaware limited liability company, Its authorized signatory By --------------------------------- Its: By --------------------------------- Its: JEFFERSON-PILOT LIFE INSURANCE COMPANY By --------------------------------- Name: Title: THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES By --------------------------------- Name: Title: J. ROMEO & CO., as nominee for MONY LIFE INSURANCE COMPANY OF NEW YORK By --------------------------------- Name: Title: THE RELIABLE LIFE INSURANCE COMPANY By: Advantus Capital Management, Inc. By --------------------------------- Name: Title: GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY By --------------------------------- Name: Title: By --------------------------------- Name: Title: THE GREAT-WEST LIFE ASSURANCE COMPANY By --------------------------------- Name: Title: By --------------------------------- Name: Title: TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA By --------------------------------- Name: Title: PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY By --------------------------------- Name: Title: AMERICAN UNITED LIFE INSURANCE COMPANY By --------------------------------- Name: Title: THE CANADA LIFE ASSURANCE COMPANY (Cummings & Co. as nominee) By --------------------------------- Name: Title: CANADA LIFE INSURANCE COMPANY OF AMERICA (CUMMINGS & CO. as nominee) By --------------------------------- Name: Title: CANADA LIFE INSURANCE COMPANY OF NEW YORK (CUMMINGS & CO. as nominee) By --------------------------------- Name: Title: AMERITAS LIFE INSURANCE CORP. By: Ameritas Investment Advisors Inc., By --------------------------------- Name: Title: BERKSHIRE LIFE INSURANCE COMPANY By --------------------------------- Name: Title: PROVIDENT MUTUAL LIFE INSURANCE COMPANY - CALIC By --------------------------------- Name: Title: NATIONWIDE LIFE INSURANCE COMPANY By --------------------------------- Name: Title: NATIONWIDE LIFE INSURANCE COMPANY (as successor to EMPLOYERS LIFE INSURANCE COMPANY OF WAUSAU) By --------------------------------- Name: Title: CONNECTICUT GENERAL LIFE INSURANCE COMPANY By CIGNA Investments, Inc., its authorized agent By --------------------------------- Name: Title: LIFE INSURANCE COMPANY OF NORTH AMERICA By CIGNA Investments, Inc., its authorized agent By --------------------------------- Name: Title: CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY By CIGNA Investments, Inc., its authorized agent By --------------------------------- Name: Title: CENTURY INDEMNITY COMPANY By: CIGNA Investments, Inc., its authorized agent By --------------------------------- Name: Title: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By --------------------------------- Name: Title: THE STATE LIFE INSURANCE COMPANY By ---------------------------- Name: Title: MINNESOTA LIFE INSURANCE COMPANY By: Advantus Capital Management, Inc. By ---------------------------- Name: Title: FEDERATED LIFE INSURANCE COMPANY By: Advantus Capital Management, Inc. By ---------------------------- Name: Title: FEDERATED MUTUAL INSURANCE COMPANY By: Advantus Capital Management, Inc. By ---------------------------- Name: Title: MUTUAL TRUST LIFE INSURANCE COMPANY By: Advantus Capital Management, Inc. By ---------------------------- Name: Title: GUARANTEE RESERVE LIFE INSURANCE COMPANY By: Advantus Capital Management, Inc. By -------------------------------- Name: Title: NATIONAL TRAVELERS LIFE COMPANY By: Advantus Capital Management, Inc. By -------------------------------- Name: Title: SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) By -------------------------------- Name: Title: By -------------------------------- Name: Title: SUN LIFE ASSURANCE COMPANY OF CANADA By -------------------------------- Name: Title: By -------------------------------- Name: Title: SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK By -------------------------------- Name: Title: By -------------------------------- Name: Title: GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY (formerly known as Great Northern Insured Annuity Corporation) By -------------------------------- Name: Title: THE LINCOLN NATIONAL LIFE INSURANCE COMPANY By: Lincoln Investment Management, Inc., Its Attorney-In-Fact By -------------------------------- Name: Title: ACACIA LIFE INSURANCE COMPANY By: Ameritas Investment Advisors Inc., as Agent By -------------------------------- Name: Title: ACCEPTED AND AGREED TO: BIRMINGHAM STEEL CORPORATION By: -------------------------- Name: ---------------------- Title: --------------------- GUARANTORS: AMERICAN STEEL & WIRE CORPORATION BIRMINGHAM EAST COAST HOLDINGS, LLC NORFOLK STEEL CORPORATION PORT EVERGLADES STEEL CORPORATION BIRMINGHAM RECYCLING INVESTMENT COMPANY MIDWEST HOLDINGS, INC. CUMBERLAND RECYCLERS, LLC By: -------------------------- Name: ---------------------- Title: --------------------- SCHEDULE 11.4 (ADDRESSES) State Street Bank and Trust Company 225 Asylum Street Hartford, Connecticut 06103 Bank of America, N.A. 600 Peachtree Street, 9/th/ Floor Atlanta, GA 30308 PNC Bank, National Association One PNC Plaza 249 5/th/ Avenue, 3/rd/ Floor Pittsburgh, PA 15222-2707 First Union National Bank Chase Manhattan Trust Company, National Association Principal Life Insurance Company 801 Grand Avenue Des Moines, IA 50392-0800 Jefferson-Pilot Life Insurance Company 100 North Greene Street Greensboro, NC 27420 The Equitable Life Assurance Society of the United States 1290 Avenue of the Americas New York, NY 10104 J. Romeo & Co. c/o MONY Life Insurance Company 1740 Broadway New York, NY 10019 The Reliable Life Insurance Company c/o Advantus Capital Management, inc. 400 Robert Street North St. Paul, MN 55101 Great-West Life & Annuity Insurance Company 8515 East Orchard Road Englewood, CO 80111 The Great-West Life Assurance Company 8515 East Orchard Road Englewood, CO 80111 Teachers Insurance And Annuity Association of America Phoenix Home Life Mutual Insurance Company One American Row Hartford, CT 06115 American United Life Insurance Company One American Square Indianapolis, IN 46282 The Canada Life Assurance Company 330 University Avenue Toronto, Ontario M5H 2X7 Canada Canada Life Insurance Company of America 330 University Avenue Toronto, Ontario M5H 2X7 Canada Canada Life Insurance Company of New York 330 University Avenue Toronto, Ontario M5H 2X7 Canada Ameritas Life Insurance Corp. c/o Ameritas Investment Advisors, Inc. 5900 "O" Street Lincoln, NE 68510-2234 Berkshire Life Insurance Company 700 South Street Pittsfield, MA 01201 Provident Mutual Life Insurance Company 1205 Westlakes Drive Berwyn, PA 19312-249 Nationwide Life Insurance Company One Nationwide Plaza Columbus, OH 43215-2220 Connecticut General Life Insurance Company c/o CIGNA Investments, Inc. 900 Cottage Grove Road Bloomfield, CT 06002 Life Insurance Company of North America c/o CIGNA Investments, Inc. 900 Cottage Grove Road Bloomfield, CT 06002 CIGNA Property and Casualty Insurance Company c/o CIGNA Investments, Inc. 900 Cottage Grove Road Bloomfield, CT 06002 Century Indemnity Company c/o CIGNA Investments, Inc. 900 Cottage Grove Road Bloomfield, CT 06002 The Northwestern Mutual Life Insurance Company 720 East Wisconsin Avenue Milwaukee, WI 53202 The State Life Insurance Company c/o American United Life Insurance Company One American Square Indianapolis, IN 46282 Minnesota Life Insurance Company c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, MN 55101 Federated Life Insurance Company c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, MN 55101 Federated Mutual Insurance Company c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, MN 55101 Mutual Trust Life Insurance Company c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, MN 55101 Guarantee Reserve Life Insurance Company c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, MN 55101 National Travelers Life Company c/o Advantus Capital Management, Inc. 400 Robert Street North St. Paul, MN 55101 Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley, MA 02481 Sun Life Assurance Company of Canada One Sun Life Executive Park Wellesley, MA 02481 Sun Life Insurance and Annuity Company of New York One Sun Life Executive Park Wellesley, MA 02481 General Electric Capital Assurance Company 601 Union Street, Suite 1500 Seattle, WA 98101 The Lincoln National Life Insurance Company c/o Lincoln Investment Management, Inc. 200 East Berry Street Fort Wayne, IN 46802 ACACIA Life Insurance Company c/o Ameritas Investment Advisors, Inc. 5900 "O" Street Lincoln, NE 68510-2234 American Steel & Wire Corporation 1000 Urban Center Drive Suite 300 Birmingham, AL 35242 Birmingham East Coast Holdings, LLC 1000 Urban Center Drive Suite 300 Birmingham, AL 35242 Norfolk Steel Corporation 1000 Urban Center Drive Suite 300 Birmingham, AL 35242 Port Everglades Steel Corporation 1000 Urban Center Drive Suite 300 Birmingham, AL 35242 Birmingham Recycling Investment Company 1000 Urban Center Drive Suite 300 Birmingham, AL 35242 Midwest Holdings, Inc. 1000 Urban Center Drive Suite 300 Birmingham, AL 35242 Cumberland Recycles, LLC 1000 Urban Center Drive Suite 300 Birmingham, AL 35242 -----END PRIVACY-ENHANCED MESSAGE-----