-----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, DW2w06eeYGtuqZmG4WU+sizFk3ehF2OY2DHPG6vqYEjj2ZQzaBUOXedEl+9A5yt8 QdBubyrAr8csW/MLYVu4CA== 0000912057-97-027801.txt : 19970815 0000912057-97-027801.hdr.sgml : 19970815 ACCESSION NUMBER: 0000912057-97-027801 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEEL OF WEST VIRGINIA INC CENTRAL INDEX KEY: 0000820960 STANDARD INDUSTRIAL CLASSIFICATION: STEEL WORKS, BLAST FURNACES ROLLING MILLS (COKE OVENS) [3312] IRS NUMBER: 550684304 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16254 FILM NUMBER: 97660647 BUSINESS ADDRESS: STREET 1: 17TH ST & 2ND AVE CITY: HUNTINGTON STATE: WV ZIP: 25703 BUSINESS PHONE: 3046968200 MAIL ADDRESS: STREET 1: 17TH STREET & 2ND AVENUE CITY: HUNTINGTON STATE: WV ZIP: 25703 10-Q 1 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to ___________ Commission file number 0-16254 Steel of West Virginia, Inc. ------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 55-0684304 - -------------------------------- ---------------- (State or other jurisdiction I.R.S. Employer of incorporation or organization) Identification No. 17th Street and 2nd Avenue, Huntington, West Virginia 25703 ----------------------------------------------------------- (Address of principal executive offices, Zip Code) (304) 696-8200 ----------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- The number of shares outstanding of each of the issuer's classes of common stock, as of June 30, 1997, is as follows: 5,991,276 shares of common stock, par value $.01 per share. STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES INDEX
PAGE NUMBER PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996......................... 3 Condensed Consolidated Statements of Income for the Three-Month and Six-Month Periods Ended June 30, 1997 and June 30, 1996............................. 4 Condensed Consolidated Statements of Cash Flows for the Three-Month and Six-Month Periods Ended June 30, 1997 and June 30, 1996............................. 5 Notes to Condensed Consolidated Financial Statements............ 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 9 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders.... 11 Item 6. Exhibits and Reports on Form 8-K....................... 12
2 PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED BALANCE SHEETS STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JUNE 30 DECEMBER 31 1997 1996 --------- ------------ ASSETS CURRENT ASSETS Cash................................................................................. $ 0 $ 0 Receivables, net of allowances of $579 and $599.......................................................................... 11,513 6,579 Inventories.......................................................................... 21,494 17,307 Deferred income taxes................................................................ 3,121 3,121 Other current assets................................................................. 421 220 --------- ----------- TOTAL CURRENT ASSETS............................................ 36,549 27,227 Property, plant, and equipment........................................................... 39,951 33,298 Goodwill................................................................................. 18,111 18,452 Other assets............................................................................. 329 322 --------- ------------ TOTAL ASSETS.................................................... $ 94,940 $ 79,299 --------- ------------ --------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Overdraft............................................................................. $ 1,731 $ 1,097 Accounts payable...................................................................... 5,983 4,161 Accrued payroll and benefits payable.................................................. 4,517 3,599 Income taxes payable (refundable)..................................................... 648 (1,146) Other current liabilities............................................................. 2,237 2,021 Current maturities of long-term debt.................................................. 891 2,434 --------- ------------ TOTAL CURRENT LIABILITIES........................................ 16,007 12,166 Long-term debt........................................................................ 19,774 10,975 Deferred income taxes................................................................. 6,332 6,332 Other long-term liabilities........................................................... 618 819 --------- ------------ TOTAL LIABILITIES................................................ 42,731 30,292 STOCKHOLDERS' EQUITY Common stock, $.01 par value: 12,000,000 voting shares authorized, 7,096,576 and 7,091,360 issued, including treasury stock.............................................................................. 71 71 Paid-in capital....................................................................... 26,627 26,627 Treasury stock--1,105,300 shares at cost.............................................. (11,483) (11,483) Retained earnings..................................................................... 36,994 33,792 --------- ------------ TOTAL STOCKHOLDERS' EQUITY....................................... 52,209 49,007 --------- ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......................................... $ 94,940 $ 79,299 --------- ------------ --------- ------------
NOTE: The balance sheet at December 31, 1996, has been derived from the audited financial statements at that date. See notes to condensed consolidated financial statements. 3 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES (In thousands, except per share amounts)
Three Months Ended Six Months Ended June 30 June 30 -------------------- -------------------- 1997 1996 1997 1996 --------- --------- --------- --------- Net sales............................................................. $ 27,923 $ 23,797 $ 52,351 $ 50,444 Cost of sales......................................................... 23,675 21,429 44,042 44,669 --------- --------- --------- --------- GROSS PROFIT...................................................... 4,248 2,368 8,309 5,775 Selling and administrative expenses................................... 1,646 987 3,055 2,155 Interest Expense...................................................... 235 343 495 708 (Gain)/Loss on disposal of assets..................................... (230) 53 (453) 2,003 Other (income) expense................................................ (276) (156) (343) (254) --------- -------- --------- --------- INCOME BEFORE INCOME TAXES............................................ 2,873 1,141 5,555 1,163 Income Taxes.......................................................... (1,216) (523) (2,353) (532) --------- --------- --------- --------- NET INCOME........................................................ $ 1,657 $ 618 $ 3,202 $ 631 --------- --------- --------- --------- --------- --------- --------- --------- NET INCOME PER COMMON SHARE, based on 5,994,114 and 5,992,987 weighted average shares of common stock outstanding during the three months and six months ended June 30, 1997 and 5,986,923 and 6,060,658 weighted average shares of common stock outstanding during the three months and six months ended June 30, 1996........................... $ .28 $ .10 $ .53 $ .10 --------- --------- --------- --------- --------- --------- --------- ---------
See notes to condensed consolidated financial statements. 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES (In thousands)
Three Months Ended Six Months Ended June 30 June 30 -------------------- -------------------- 1997 1996 1997 1996 --------- --------- --------- --------- CASH FROM OPERATIONS....................................................... $ 689 $ 3,939 $ 1,099 $ 6,448 INVESTMENT ACTIVITIES Additions to property, plant, and equipment....................................................... (5,579) (798) (8,989) (1,444) FINANCING ACTIVITIES Revolving credit loan.................................................. 4,991 (2,598) 9,226 1,228 Long-term debt repayments.............................................. (201) (1,471) (1,970) (2,942) Purchase of treasury stock............................................. 0 0 0 (3,500) --------- --------- --------- --------- 4,790 (4,069) 7,256 (5,214) --------- --------- --------- --------- INCREASE (DECREASE) IN CASH............................................ $ (100) $ (928) $ (634) $ (210) --------- --------- --------- --------- --------- --------- --------- ---------
See notes to condensed consolidated financial statements. 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS STEEL OF WEST VIRGINIA, INC. AND SUBSIDIARIES June 30, 1997 NOTE A--BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements include the accounts of Steel of West Virginia, Inc. (the "Company") and its wholly-owned subsidiaries SWVA, Inc. and Marshall Steel, Inc. Such condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month and six-month periods ended June 30, 1997 are not necessarily indicative of the results that may be expected for the year ended December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1996. The preparation of the condensed consolidated financial statements in conformity with generally accepted accounting principles requires that management make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Net income per common share is calculated based on 5,994,114 and 5,992,987 weighted average shares of common stock outstanding during the three-month and six-month periods ended June 30, 1997 and 5,986,923 and 6,060,658 weighted average shares of common stock outstanding during the three-month and six-month periods ended June 30, 1996. The effect of the Company's stock option plans was anti-dilutive for all periods presented. NOTE B--INVENTORIES Inventories consist of the following (in thousands):
June 30 December 31 1997 1996 --------- ------------ Raw materials................................................... $ 1,737 $ 1,638 Work-in-process................................................. 7,738 6,624 Finished goods.................................................. 12,435 9,103 Manufacturing supplies.......................................... 3,609 3,967 --------- ------------ 25,519 21,332 Less LIFO reserve............................................... 4,025 4,025 --------- ------------ $ 21,494 $ 17,307 --------- ------------ --------- ------------
Annually, at the end of each year, management determines inventory levels based on the taking of a physical inventory. The amount of inventories at June 30, 1997, has been determined based upon inventory levels indicated by perpetual inventory accounting records. In addition, an actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and 6 costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Since these are subject to many forces beyond management's control, interim results are subject to the final year-end LIFO inventory valuation. NOTE C--CREDIT ARRANGEMENTS A summary of indebtedness under the Company's credit arrangements consists of the following (in thousands):
June 30 December 31 1997 1996 --------- ------------ Term loan I.................................. $ 0 $ 1,120 Term loan II................................. 0 427 1994 Capital expenditure line................ 3,850 4,280 1997 Capital expenditure line 6,000 0 Revolver..................................... 10,531 7,305 Other notes payable.......................... 284 277 --------- ----------- 20,665 13,409 Less current maturities...................... (891) (2,434) --------- ----------- $ 19,774 $ 10,975 --------- ----------- --------- -----------
The Company maintains a senior financing agreement that, as last amended April 1997, provides for up to $15,000,000 of revolving credit borrowings, capital expenditure line term loans, and other term loans. The interest rates on its existing credit lines and term loans vary based on the Chemical Bank prime rate or LIBOR plus 1-3/4%; and the annual revolving credit line commitment fee is 1/8% of the unused balance. Under the terms of its senior financing agreement, the Company is permitted to convert its Capital Expenditure Line indebtedness to a fixed interest rate. The senior credit agreement may be terminated by the Company or, on or after January 1, 2001 and upon 90 days written notice, by the lender. Effective April 1997, the Company's senior lending agreement was amended to provide, under the terms of an "Additional Capital Expenditure Line," up to $23,000,000 additional borrowing availability to finance current machinery and equipment expenditures, governed by a percentage of such expenditures. Under the terms of the amendment the total borrowings under this new borrowing line may, at the Company's election, through January 1, 1999, bear a fixed interest rate, and certain prepayments of the credit through January 1, 1999, could result in prepayment fees of 1.5% of the amounts prepaid. As of June 30, 1997, the Company has borrowed $6,000,000 under this "Additional Capital Expenditure Line." The final principal installments totaling $1,547,050 under the Term Loan I and II portions of the senior financing agreement were repaid in full during the quarter ended March 31, 1997. As of June 30, 1997, the revolving credit line loan balance, due January 1, 2001, was $10,531,000, and the unused borrowing availability approximated $4,469,000. The 1994 Capital Expenditure Line portion of the loan agreement is required to be repaid in quarterly principal installments of $215,000, with a final principal payment of $195,000 on October 1, 2001. The 1997 Capital Expenditure Line will be repaid in equal quarterly installments of principal computed on a ten year amortization schedule, which installments shall commence on July 1, 1998 and quarterly thereafter until paid in full. 7 The Company's senior lending agreement contains various restrictive covenants, including that the Company must maintain specified levels of working capital and net worth (as defined in the agreement). In addition, capital expenditures and dividends are limited to the annual amounts set forth in the agreement. At June 30, 1997, the Company's retained earnings available for dividends is $-0-. As a result of the lending agreement, substantially all of the Company's property, plant, and equipment, inventory and accounts receivable are subject to a third party's security interests. NOTE D--COMMITMENTS AND CONTINGENCIES The Company is principally self-insured for employees' medical care costs and workers' compensation claims up to certain specified dollar limits. Under the medical care program, the Company is insured by a private carrier for individual claims in excess of specified dollar limits. The Company also has excess coverage provided by the West Virginia Workers' Compensation Fund (a state agency) for certain work related injuries. In connection with the self-insured workers' compensation program, the Company has obtained an irrevocable standby letter of credit in the amount of $1,000,000 (through July 1998). A liability has been established for those illnesses and injuries occurring on or before June 30, 1997, for which an amount of expected loss could be reasonably estimated. NOTE E--STOCKHOLDERS' EQUITY Commencing in April 1995 through the quarter ended March 31, 1996, the Company repurchased 1,105,000 shares at a total cost of $11,483,000, including 350,000 shares purchased at a cost of $3,500,000 during the quarter ended March 31, 1996. NOTE F--FIXED ASSET IMPAIRMENT During the first quarter of 1996, the Company determined that certain cut-to-length equipment utilized in one of the Company's production lines was not performing up to expectations and the decision to replace the equipment was made. Based upon this indication of impairment, the Company recorded a $1,862,000 charge against operations that has been included in the gain/loss on disposal of assets. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NET SALES Net sales increased 17.3% in the second quarter of 1997 to $27,923,000 up $4,126,000 from the second quarter of 1996, primarily due to an increase in tonnage of products shipped. Finished tonnage sales increased to 45,070 tons in the second quarter of 1997 from 35,421 tons for the second quarter of 1996. Billet sales increased to 1,370 tons for the second quarter of 1997 from 1,189 tons in the second quarter of 1996. Net sales for the six months ended June 30, 1997 increased 3.8% to $52,351,000 from $50,444,000 for the comparable period in 1996, primarily due to an increase in tonnage of products shipped. Finished tonnage sales increased to 82,526 tons for the six months ended June 30, 1997 from 75,808 tons for the comparable period in 1996. Billet sales increased to 3,380 tons for the same period in 1997, from 2,334 tons for the comparable period in 1996. COST OF SALES Cost of sales decreased to 84.8% of net sales or $23,675,000 for the second quarter of 1997 from 90.0% of net sales or $21,429,000 for the second quarter of 1996. The percent decrease in cost of goods sold is principally due to an increase in productivity and a decrease in workers compensation expense coupled with fixed costs being a smaller component of cost of goods sold due to higher sales and production levels. Cost of sales for the six months ended June 30, 1997 decreased to 84.1% of net sales or $44,042,000 from 88.6% of net sales or $44,669,000 for the comparable period in 1996. This decrease in costs of goods sold was principally due to an increase in productivity and lower costs for utilities, medical care, and workers compensation, in addition to fixed costs being a smaller component of costs of goods sold due to higher sales and production levels. SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES Selling, general, and administrative expenses for the second quarter of 1997 were $1,646,000 as compared to $987,000 for the second quarter of 1996. This increase was due primarily to (i) higher legal and professional fees incurred in connection with the unsolicited proposal from CPT Holdings, Inc. to enter into discussions regarding the possible sale of the Company, and the proxy contest relating to certain of the matters that were voted on by the stockholders at the Annual Meeting of the Stockholders, and (ii) higher travel expenses. As a percentage of net sales, selling and administrative expense was 5.9% in the second quarter of 1997 and 4.1% for the comparable period in 1996. Selling, general, and administrative expenses for the six month period ended June 30, 1997 were $3,055,000, compared to $2,155,000 for the comparable period in 1996. This increase was due primarily to higher legal and professional fees, for the reasons set forth above, and higher travel expenses. As a percentage of net sales, selling and administrative expense was 5.8% in the six month period ended June 30, 1997, compared to 4.3% for the comparable period in 1996. 9 INTEREST EXPENSE, GAIN/LOSS ON DISPOSAL OF ASSETS AND OTHER OPERATING EXPENSE/INCOME Interest expense for the second quarter of 1997 was $235,000, compared to $343,000 for the second quarter of 1996. Interest expense decreased primarily due to $145,000 of capitalized interest incurred in connection with Phase II of the Company's expansion and modernization program. As a percentage of net sales, interest expense was .8% in the second quarter of 1997, compared to 1.4% for the second quarter of 1996. The Company recognized a gain on the sale of certain equipment during the second quarter of 1997 in the amount of $230,000 as compared to a $53,000 loss in the second quarter of 1996. Other operating expense/income for the second quarter of 1997 was $276,000 of income compared to $156,000 of income for the second quarter of 1996. Interest expense for the six months ended June 30, 1997 was $495,000, compared to $708,000 for the comparable period in 1996. Interest expense decreased primarily due to $179,000 of capitalized interest incurred in connection with Phase II of the Company's expansion and modernization program. As a percentage of net sales, interest expense was .9% in the six month period ended June 30, 1997, compared to 1.4% for the comparable period in 1996. The Company recognized a gain on the sale of certain equipment of $453,000 for the six months ended June 30, 1997 compared to a loss on the disposal of equipment of $2,003,000 for the six months ended June 30, 1996. Other operating expense/income for the six months ended June 30, 1997 was $343,000 of income compared to $254,000 of income for the comparable period in 1996. NET INCOME Net income for the second quarter of 1997 increased by $1,039,000 to $1,657,000 from $618,000 for the second quarter of 1996. This increase in net income is due primarily to higher sales and operating income. As a percentage of net sales, net income was 5.9% for the second quarter of 1997, compared to 2.6% for the second quarter of 1996. Net income for the six months ended June 30, 1997 was $3,202,000, compared to $631,000 for the comparable period in 1996. This increase reflected both an increase in gross profit and the absence, in this year's results, of the loss on disposal of assets. As a percentage of net sales, net income was 6.1% in the six month period ended June 30, 1997, compared to 1.3% for the comparable period in 1996. LIQUIDITY AND SOURCES OF CAPITAL The Company's primary ongoing cash needs are for working capital requirements, debt service and capital expenditures. The three present sources for the Company's liquidity needs are internally generated funds, a capital expenditure term loan line, and the Company's revolving credit facility, which the Company anticipates will be sufficient for its ongoing cash needs. Working capital at the end of the second quarter of 1997 was $20,542,000, compared to $15,061,000 at the end of the prior fiscal year. This increase in working capital was funded primarily by the Company's revolving credit facility. The Company's expenditures for required capital replacements are currently anticipated to average approximately $1,000,000 annually over the next several years. In December 1996, the Company's Board of Directors approved Phase II of the Company's expansion and modernization program to the Huntington, West Virginia plant. The program includes a new high speed reheat furnace, quick-change mill roll stands, new warehouse space, and other miscellaneous equipment enhancements. The 10 project is expected to cost approximately $30.5 million (not including capitalized interest) and is scheduled to be completed by late 1997 without material disruptions to existing operations. The Company has funded, and will continue to fund, the project from a combination of internally generated cash flow and bank debt. In addition, from time to time, the Company evaluates discretionary capital expenditures and acquisition opportunities. Any such expenditure would be subject to availability of funds and approval by the Company's Board of Directors. FORWARD LOOKING STATEMENTS Any Forward Looking Statements contained herein are subject to the section on Forward Looking Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, including the following risk factors set forth therein: the cyclical and capital intensive nature of the industry; pressure resulting from foreign and domestic competition; reduction in demand for the Company's products and industry pricing; volatility of raw material costs, especially steel scrap, resulting in reduced profit margins; excess industry capacity resulting in reduced profit margins; and the cost of compliance with environmental regulations. In addition, the Forward Looking Statements contained herein are also subject to the timely completion of the modernization and expansion program and the Company's ability to effectively integrate new equipment. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Stockholders held on May 15, 1997, for which proxies for the meeting were solicited pursuant to Regulation 14A of the Securities Exchange Act of 1934, the stockholders elected six directors, each for a term of one year. The tabulation of the votes cast for each nominee for director was as follows:
Name of Nominee VOTED FOR - --------------- ---------- Stephen A. Albert........................ 4,752,127 Robert L. Bunting, Jr.................... 4,752,127 Timothy R. Duke.......................... 4,752,084 Albert W. Eastburn....................... 4,752,127 Daniel N. Pickens........................ 4,752,127 Paul E. Thompson......................... 4,752,177
At the Annual Meeting of Stockholders, the stockholders also approved the following: (1) the appointment of Ernst & Young as independent auditors, by a vote of 5,312,028 shares in favor, 8,199 shares against and 4,410 shares abstained. At the Annual Meeting of Stockholders, the stockholders did not approve the following: (1) an Amendment to Steel of West Virginia, Inc.'s Certificate of Incorporation to authorize 13,000,000 additional shares of common stock, by a vote of 2,021,121 shares in favor, 3,010,333 shares against and 3,114 shares abstained; (2) an Amendment to Steel of West Virginia, Inc.'s Certificate of Incorporation to authorize 2,000,000 shares of preferred stock, by a vote of 1,509,690 shares in favor, 3,414,708 shares against and 4,119 shares abstained; 11 (3) an Amendment to Steel of West Virginia, Inc.'s Certificate of Incorporation to provide that stockholder action may be taken only at a meeting of the stockholders, by a vote of 1,844,828 shares in favor, 3,080,535 shares against and 3,154 shares abstained; and (4) a non-binding resolution requesting that the Board negotiate with potential bidders concerning the sale of the Company, by a vote of 388,257 shares in favor, 4,974,071 shares against and 709 shares abstained. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 4.1(h) Amendment, dated April 3, 1997 ("Amendment No. 8"), to the Financing Agreement, dated December 30, 1986, between SWVA, Inc. ("SWVA") and The CIT Group/Business Credit, Inc. ("CIT") 4.10(d) Fourth Amendment to Deed of Trust, Assignment of Leases and Rents and Security Agreement, dated April 3, 1997 ("Mortgage Amendment No. 4"), by SWVA in favor of CIT 4.12 Promissory Note, dated April 3, 1997 ("Note 5"), in the principal amount of $23,000,000 issued by SWVA in favor of The CIT Group/Business Credit, Inc. 10.1(h) Amendment No. 8 (see Exhibit 4.1(h)) 10.10(c) Mortgage Amendment No. 4 (see Exhibit 4.10(d)) 10.26 Note 5 (see Exhibit 4.12) 11.1 Computation of Earnings Per Share Data (b) Reports on Form 8-K None 12 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. DATED: August 14, 1997 STEEL OF WEST VIRGINIA, INC. ----------------------------------- (Registrant) /s/ Timothy R. Duke ----------------------------------- Timothy R. Duke, President and Chief Executive Officer /s/ Mark G. Meikle ----------------------------------- Mark G. Meikle, Vice President, Treasurer and Chief Financial Officer 13 EX-4.1(H) 2 AMEND. TO FINANCING AGREEMENT Exhibit 4.1(h) 1997 Amendment Agreement , 1997 -------------- SWVA, Inc. 17th Street and 2nd Avenue Huntington, WV 25726 Gentlemen: We refer to the Financing Agreement between us dated December 30, 1986, as amended (the "Financing Agreement"). Capitalized terms used herein and defined in the Financing Agreement shall have the meanings set forth in said Financing Agreement unless otherwise specifically defined herein. You have requested that we extend to you an additional credit facility with respect to financing your new capital expenditures program and that various provisions of the Financing Agreement be amended. We have agreed to the foregoing subject to, and in accordance with, the terms, provisions and conditions hereof. Effective immediately pursuant to mutual understanding, the Financing Agreement shall be, and hereby is, amended as follows: 1) The definitions of "Anniversary Date", "Term Loans", "Promissory Notes", "Early Termination Fee", and "Prepayment Discount Rate" in Section 1 of the Financing Agreement shall be, and each hereby is, deleted and the following shall be, and hereby is substituted in lieu thereof: "ANNIVERSARY DATE shall mean January 1, 2001." "TERM LOANS shall mean the CAPEX Term Loans and the Additional CAPEX Term Loans made and to be made by CITBC to the Company pursuant to, and repayable in accordance with, the provisions of Section 3 of the Financing Agreement." "PROMISSORY NOTES shall mean the notes in the forms of Exhibits B and C attached hereto, delivered by the Company to CITBC to evidence the Term Loans pursuant to, and repayable in accordance with the provisions of Section 3 of this Financing Agreement." 1 "EARLY TERMINATION FEE shall: i) mean the fee CITBC is entitled to charge the Company in the event the Company terminates the Line of Credit or this Financing Agreement on a date prior to January 1, 1999; and ii) be determined by multiplying the average daily loan balance under the Revolving Loan for the period from the date of this Financing Agreement to the Early Termination Date by one and one-half percent (1 1/2%) for the number of days from the Early Termination Date to January 1, 1999." PREPAYMENT DISCOUNT RATE shall mean the sum of (i) the yield equal to the quarterly bid yield to maturity of a U.S. Treasury Note or Bond issued within three (3) months prior to the date prepayment of any Treasury Rate Loan (as shown under the column heading "Ask Yld." for "Govt. Bonds & Notes" in the Treasury Bonds, Notes & Bills" section of The Wall Street Journal - Eastern Edition published on the second (2nd) business day prior to the date of prepayment) with a remaining term equal to the Weighted Average Life to Maturity, plus (ii) three percent (3%) for any part of the Term Loans that bears interest at the Treasury Rate. 2) The definition of "Going Public Fee" shall be, and hereby is, deleted from Section 1 of the Financing Agreement and the following definitions shall be, and each hereby is, added to Section 1 of the Financing Agreement in the proper alphabetical order: "ADDITIONAL CAPEX TERM LOANS shall mean the term loans made and to be made to the Company by CITBC in the aggregate principal amount of up to $23,000,000, as more fully described in Section 3 of this Financing Agreement." "ADDITIONAL CAPEX TERM LOAN LINE OF CREDIT shall mean the commitment of CITBC to make Additional CAPEX Term Loans to the Company pursuant to Section 3 of this Financing Agreement in the aggregate amount not to exceed $23,000,000." "CHASE BANK RATE shall mean the rate of interest per annum announced by The Chase Manhattan Bank, or its successor in interest, from time to time as its prime rate in effect at its principal office in the County, City and State of New York. (The prime rate is not intended to be the lowest rate of interest charged by The Chase Manhattan Bank to its borrowers)." 3) Section 3, Paragraphs 6 and 7 of the Financing Agreement shall be, and each hereby is amended in its entirety to read as follows: "6. The Company may, at its option, prepay all or any part of the principal of the Term Loans, before maturity, provided that on each prepayment the Company shall pay accrued interest on the principal so prepaid to the date of such prepayment." "7. Each Mandatory Prepayment or voluntary prepayment shall be applied to the last maturing installments of principal of the CAPEX Term Loans until paid in full and then to the last maturing installments of the Additional CAPEX Term Loans until paid in full." 2 4) Section 3, Paragraph 3 of the Financing Agreement shall be, and hereby is, amended by the addition thereto of the following new paragraphs d and e: "3.(d) Within the available and unused Additional CAPEX Term Loan Line of Credit and upon receipt of a Promissory Note, in the form of Exhibit C attached hereto, from the Company in the amount of the Additional CAPEX Term Loan, CITBC will extend to the Company an Additional CAPEX Term Loan, provided: a) the Company is not then in breach or violation of this Financing Agreement, and b) all of the conditions listed below are fulfilled to the sole but reasonable satisfaction of CITBC. The conditions are as follows: i) Additional CAPEX Term Loan proceeds are to be used exclusively to pay for, or reimburse the Company for, the acquisition by the Company of newly acquired capital improvements (other than Real Estate) which are not subject to Purchase Money Liens or any other lien or security interest; ii) the Company must give CITBC fifteen (15) days prior written notice of its intention to enter into an Additional CAPEX Term Loan and draw down the Additional CAPEX Term Loans no later than July 1, 1998; iii) the Company shall be entitled to four (4) Additional Capex Term Loans per calendar year but no more than one (1) Additional CAPEX Term Loan in any fiscal quarter; iv) no Additional CAPEX Term Loan may exceed eighty percent (80%) of the total acquisition costs of the capital improvements (other than Real Estate) exclusive of assembly costs, installation expenses, maintenance, shipping costs, taxes and import or custom charges for which the Additional CAPEX Term Loan is sought; and v) each Additional CAPEX Term Loan must be in increments of $250,000.00 or whole multiples thereof and may not exceed in the aggregate the Additional CAPEX Term Loan Line of Credit. (e) Each Additional CAPEX Term Loan will be repaid to CITBC by the Company in equal quarterly installments of principal computed on a ten (10) year amortization schedule, which installments shall commence on July 1, 1998 and thereafter on the first business day of each October, January, April and July thereafter until paid in full. To the extent repaid, Additional CAPEX Term Loans may not be reborrowed under this Section 3 of the Financing Agreement." 5) Section 7, Paragraph 2 of the Financing Agreement shall be, and each hereby is, amended in its entirety to read as follows: "2.(a) Interest on the Term Loans shall be payable monthly as of the end of each month on the unpaid balance or on payment in full prior to maturity in an amount 3 equal to the (i) Chase Bank Rate, on a per annum basis on the outstanding balance of all Term Loans (other than Libor Loans), and (ii) one and three-quarters percent (1 3/4%) plus Libor, on a per annum basis, on any Term Loans which are Libor Loans on the average of the net balances owing by the Company to CITBC in the Company's account at the close of each day during the month. The Company may elect to use Libor as to any then outstanding Term Loans provided x) there is then no Event of Default, y) the Company has so advised CITBC of its election to use Libor and the Libor Period selected no later than three (3) business days preceding the first day of a Libor Period and z) the election and Libor shall be effective, provided there is then no Event of Default, on the fourth business day following said notice. The Libor elections must be for $1,000,000 or more and there shall be no more than 3 elections to use Libor to compute interest at any one time under paragraphs 1 and 2 of this Section 7. If no such election is timely made or can be made or if Libor can not be determined, then CITBC shall use the Chase Bank Rate to compute interest. In the event of any change in said Chase Bank Rate, the rate under clause "(i)" above shall change, as of the first of the month following any change, so as to remain equal to the Chase Bank Rate. The rates hereunder shall be calculated based on a 360 day year. CITBC shall be entitled to charge the Company's account at the rate provided for herein when due until all Obligations have been paid in full. (b)(i) In lieu of interest computed at the rates specified in Paragraph "(a)" above, the Company shall have the option to elect a fixed rate of interest on all or a portion of the Additional CAPEX Term Loans during a one hundred and eighty (180) days period commencing on July 1, 1998 (the "Election Period"), such interest rate (x) shall be applied only to the then outstanding balance of the Additional CAPEX Term Loans, and (y) shall be equal to the Treasury Rate plus three percent (3%). Such fixed rate election may be exercised only once during such Election Period. In addition, if the first day for which interest is payable on the Additional CAPEX Term Loans subject to a fixed interest rate is other than the first day of a calendar month, the amount of such interest payable pursuant to Paragraph 2 of this Section 7 with respect to such Additional CAPEX Term Loans for the initial month for which such fixed interest rate is calculated shall be prorated for the number of days of such month that such Addition CAPEX Term Loans are outstanding. (ii) Provided that (x) there is then no Event of Default and (y) the Company has given a notice in accordance with this Paragraph 2(b)(ii), the Company may convert all or a portion of the Additional CAPEX Term Loans from a variable interest rate to a Treasury Rate - provided, however, (A) that such fixed rate shall be applicable only to the then outstanding Additional CAPEX Term Loans and (B) any such conversion must be made within one hundred and eighty (180) days after July 1, 1998 and (C) the Treasury Rate shall be applicable for a period up to but not exceeding 3 years. Whenever the Company desires to convert a variable interest rate to a Treasury Rate, the Company must notify CITBC of its election no later than thirty (30) calendar days preceding the first day of the next succeeding month. If no such election is timely made or can be made or upon expiration of the applicable duration of any such Treasury Rate Loan, CITBC shall use the Chase Bank Rate in lieu of the Treasury Rate. Each notice of election hereunder shall (1) identify the Additional CAPEX Term Loans to be converted and the aggregate outstanding principal balance thereof, (2) specify 4 the effective date of the conversion and the duration of such conversion, and (3) specify the principal amount of such Additional CAPEX Term Loans to be converted, and, in the case of any such notice given other than in writing , shall be immediately followed by a written confirmation thereof by the Company; provided, however, that if such written confirmation differs in any material respect from the action taken by CITBC prior to receiving such written confirmation and based upon a nonwritten notice, the records of CITBC shall control absent manifest error. (iii) Subject to the applicable provisions relating to prepayment of the Term Loans, the Company may prepay the Treasury Rate Loans at any time provided that upon such prepayment it pays to CITBC the Make-Whole Premium in immediately available funds. (iv) Interest on the Additional CAPEX Term Loans for which a fixed rate election has been made shall be payable as of the end of each month on the unpaid balance thereof or on payment in full prior to maturity in an amount equal to such applicable fixed rate on any Additional CAPEX Term Loans which are the Treasury Rate Loans computed on the average of the net balances thereof owing by the Company to CITBC in the Company's account at the close of each day during the month. Such rate shall be calculated on a 360 day year. CITBC shall be entitled to charge the Company's account at such rate when due until all Obligations have been paid in full." 7) Section 10 of the Financing Agreement shall be, and hereto is, amended by deleting the "proviso" at the end of the fourth sentence thereof. 8) It is further agreed that: (a) The term "Obligations" as used in the Financing Agreement shall also include, without limitation, all present and future indebtedness, liabilities and obligations of the Company to CITBC pursuant to the Additional CAPEX Term Loans. (b) The form of Promissory Note attached hereto shall be annexed to the Financing Agreement as Exhibit C and shall evidence the Additional CAPEX Term Loans. (c) The Additional CAPEX Term Loans shall (i) incur interest at the rate specified in Section 7, Paragraph 2 of the Financing Agreement and (ii) be secured by all Collateral. (d) All references to "Chemical Bank Rate" in the Financing Agreement shall be, and hereby are, amended to read "Chase Bank Rate". (e) The Company acknowledges and agrees that CITBC may make assignments and/or sell participation in the loans and extensions of credit made and to be made to the Company under the Financing Agreement (as amended hereby) on such terms and conditions as CITBC shall in its sole discretion determine. The Company further acknowledges that in doing so, CITBC may grant to such co-lenders or participants certain rights which would require CITBC to obtain the co-lender's or participant's consent prior to executing certain waivers 5 and/or amendments, and prior to taking certain other actions with respect to the provisions of the Financing Agreement, provided that such co-lenders and participants shall not be granted independent rights to conduct audits and/or examinations of the Company's books and records and/or Collateral but shall have the right to accompany CITBC on any such audits or examinations at the participant's cost and expense. (f) The extension of Additional CAPEX Term Loans shall be conditioned upon the fulfillment of the following conditions precedent to CITBC's reasonable satisfaction: (i) The Company simultaneously executing and delivering to CITBC the Promissory Note referred to in Paragraph 8(b) above and Mortgages and/or Deeds of Trust granting to CITBC first mortgage liens upon the Company's Real Estate to secure the Additional CAPEX Term Loans. (ii) Our receipt of certified resolutions authorizing the execution, delivery and performance of the transactions contemplated by this amendment. (iii) Parent signing below to confirm that the term "Obligations" as defined and used in the Guaranty and Pledge Agreement executed by Parent in favor of CITBC shall also include, without limitation, all indebtedness, liabilities and obligations of the Company to CITBC arising in connection with the Additional CAPEX Term Loans. (iv) Marshall Steel, Inc. ("Marshall") signing below to confirm that the term "Obligations" as defined and used in the Guaranty, Security Agreement and Negative Pledge Agreement executed by Marshall in favor of CITBC shall also include, without limitation, all present and future indebtedness, liabilities and obligations of the Company to CITBC arising in connection with the Additional CAPEX Term Loans. (v) CITBC's receipt of title insurance and a current survey (in form and substance satisfactory to CITBC) with respect to the Real Estate to be subject to the Mortgages and/or Deeds of Trust referred to in paragraph 8(f)(i). (vi) The absence of any Event of Default under the Financing Agreement. (g) By signing below you confirm your agreement to (i) pay to us an Accommodation and Documentation Fee equal to $28,750 in the aggregate upon execution of this amendment, and (ii) reimburse us for all of our Out-of-Pocket Expenses incurred in connection with this amendment and the transactions contemplated hereby. All such amounts may, at our option, be charged to your loan amount under the Financing Agreement when due. Except as set forth herein no other change in the terms or provisions of the Financing Agreement is intended or implied. If the foregoing is in accordance with your understanding, kindly so indicate by signing and returning the enclosed copy of this letter. 6 Parent and Marshall have signed below to confirm their respective agreements to subparagraphs (iii) and (iv) of paragraph 8(f) above. THE CIT GROUP/BUSINESS CREDIT, INC. By: --------------------------- Title: Read and Agreed to: SWVA, INC. By: ---------------------- Title: Confirmed: STEEL OF WEST VIRGINIA, INC. By: ----------------------- Title: MARSHALL STEEL, INC. By: ----------------------- Title: 7 EX-4.10(D) 3 4TH AMEND TO DEED OF TRUST Exhibit 4.10(d) CROSS REFERENCE TO: Trust Deed Book 1195, Page 112 Trust Deed Book 1250, Page 628 Trust Deed Book 1329, Page 45 Trust Deed Book ____, Page __ Land Records of Cabell County, West Virginia - -------------------------------------------------------------------------------- A CREDIT LINE DEED OF TRUST This instrument is "A CREDIT LINE DEED OF TRUST" as provided in West Virginia Code Chapter 38, Article 1, Section 14. - -------------------------------------------------------------------------------- FOURTH AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT THIS FOURTH AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT (this "Fourth Amendment") effective as of __________ __, 1997 and executed as of ________ __, 1997, is made by and among SWVA, INC., a Delaware corporation (successor by corporate merger to Steel of West Virginia, Inc.), having a mailing address at 17th Street and 2nd Avenue, Huntington, West Virginia 25726, Attention: President, party of the first part as grantor ("Grantor"), Douglas C. McElwee, an individual resident of the State of West Virginia, whose mailing address is 600 United Center, 500 Virginia Street East, Charleston, West Virginia 25301, party of the second part as trustee ("Trustee") and THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, having a mailing address of 900 Ashwood Parkway, Atlanta, Georgia 30338, Attention: Michael F. Lapresi, Vice President, party of the third part as beneficiary ("Lender"); WITNESSETH: WHEREAS, pursuant to that certain Financing Agreement (the "Original Financing Agreement") dated December 30, 1986, by and between Grantor and Lender, Lender extended to Grantor a certain credit facility and term debt (the "Loan"), which Loan was evidenced by a certain Promissory Note ("Promissory Note") dated of even date therewith, made by Grantor in favor of Lender, in the original principal amount of $20,000,000.00 and secured by that certain Deed of Trust, Assignment of Leases and Rents and Security Agreement (the "Original Deed of Trust"), dated as of even date therewith, made and entered into by and among Grantor, James O. Porter, as the original trustee thereunder, and Lender and recorded in Trust Deed Book 1195, beginning at page 112, Land Records of Cabell County, West Virginia, conveying to Trustee in trust for the benefit of Lender certain improved real property located in the City of Huntington, Cabell County, West Virginia, as more particularly described in the Original Deed of Trust; and WHEREAS, on September 27, 1989, Grantor and Lender amended the Original Financing Agreement to modify certain terms and conditions of the Loan, including, inter alia, increasing the amount of term debt and, in connection therewith, Grantor executed that certain Term Note ("Term Note II"), dated of even date, in favor of Lender in the principal amount of $26,922,000.00, and Grantor, Trustee and Lender entered into that certain First Amendment to Deed of Trust, Assignment of Leases and Rents and Security Agreement dated of even date therewith and recorded in Trust Deed Book 1250, beginning at page 628, aforesaid Land Records, (the "First Amendment") to reflect the modifications to the Loan; and WHEREAS, on September 30, 1992, Grantor and Lender further amended the Original Financing Agreement to modify certain terms and conditions of the Loan including, inter alia, the extension to Grantor of an additional term loan in the principal amount of $6,500,000.00 ("Term Loan III"), Term Loan III being evidenced by that certain term note in the original principal amount of $6,500,000.00 ("Term Note III"), and Grantor, Trustee and Lender entered into that certain Second Amendment to Deed of Trust, Assignment of Leases and Rents and Security Agreement dated of even date therewith and recorded in Trust Deed Book 1329, beginning at page 45, aforesaid Land Records, (the "Second Amendment") to reflect the further modifications to the Loan; and WHEREAS, on February 1, 1994, Grantor and Lender further amended the Original Financing Agreement to modify certain terms and conditions of the Loan including, inter alia, the extension to Grantor of a certain CAPEX Term Loan Line of Credit (as defined in the Financing Agreement) in an aggregate principal amount of up to $16,000,000, pursuant to which Lender shall extend certain Capex Term Loans (as defined in the Financing Agreement) to Grantor, which Capex Term Loans shall be evidenced by certain Promissory Notes as more particularly described in the Financing Agreement, Grantor, Trustee and Lender entered into that certain Third Amendment to Deed of Trust, Assignment of Leases and Rents and Security Agreement dated of even date therewith and recorded in Trust Deed Book ___, beginning at page ___, aforesaid Land Records (the "Third Amendment") to reflect the further modifications to the Loan; and WHEREAS, effective as of March ___, 1997, Grantor and Lender have further amended the Original Financing Agreement (the Original Financing Agreement, as so amended, being hereinafter referred to as the "Financing Agreement") to modify certain terms and conditions of the Loan including, inter alia, the extension to Grantor under the Financing Agreement of a certain Additional CAPEX Term Loan Line of Credit (as defined in the Financing Agreement) in the aggregate principal amount not to exceed $23,000,000, pursuant to which Lender shall extend certain Additional CAPEX Term Loans (as defined in the Financing Agreement) to Grantor, which 2 Additional CAPEX Term Loans shall be evidenced by certain Promissory Notes as more particularly described in the Financing Agreement; WHEREAS, all amounts due and owing under the Promissory Note, the Term II Note and the Term III Note have been paid in full; and WHEREAS, Grantor, Trustee and Lender desire to further modify the terms and conditions of the Original Deed of Trust, as amended by the First Amendment, the Second Amendment and the Third Amendment, to reflect the above-referenced modification to the Loan. NOW, THEREFORE, in consideration of the foregoing premises and the sum of TEN AND NO/100THS DOLLARS ($10.00) in hand paid by Lender to Grantor and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: A. Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Deed of Trust. B. Modification of the Deed of Trust. The Original Deed of Trust, as amended by the First Amendment, the Second Amendment and the Third Amendment, is hereby further amended as follows: 1. Paragraph (a) on page 4 of the Original Deed of Trust as amended by the First Amendment, the Second Amendment and the Third Amendment, is hereby deleted in its entirety and the following new paragraph (a) is inserted in lieu thereof: "(a) The debt evidenced by (i) the Promissory Note (the "Capex Promissory Notes") to be executed and delivered in connection with the CAPEX Term Loan to be extended pursuant to Section 3 of the Financing Agreement (as hereinafter defined) in an aggregate principal amount of up to $16,000,000 and (ii) the Promissory Note (the "Additional CAPEX Promissory Note") to be executed and delivered in connection with the Additional CAPEX Term Loan to be extended pursuant to Section 3 of the Financing Agreement in an aggregate principal amount not to exceed $23,000,000 (the CAPEX Promissory Note and the Additional CAPEX Promissory Note are hereinafter collectively referred to as the "Notes" and singularly referred to as a "Note"), together with any and all renewals, modifications, amendments and extensions and/or consolidations of the indebtedness evidenced by the Notes." 2. The defined term "Note" is hereby deleted wherever it appears and the defined term "Notes" is inserted in lieu thereof. 3 3. The Original Deed of Trust, as amended by the First Amendment, the Second Amendment, the Third Amendment and as further amended by this Fourth Amendment, is hereafter referred to as the "Deed of Trust." 4. The Deed of Trust, the Notes and any other document heretofore, now or hereafter executed to evidence, secure or otherwise pertain to the Loan are hereafter collectively referred to as the "Loan Documents." C. Warranties. By its execution hereof, Grantor warrants and represents to Lender that, as of the date hereof, there does not exist a Default, Event of Default or event or circumstance which with the passage of time or giving of notice or both would constitute a Default or Event of Default, as the case may be, under the Notes, the Deed of Trust or any of the other Loan Documents; by its execution hereof, Grantor also reaffirms, as of the date hereof, all of the representations and warranties of Grantor contained in the Notes, the Deed of Trust and all of the other Loan Documents. D. Ratification. Grantor hereby acknowledges and agrees that, except as set forth herein or expressly modified or amended hereby, the Loan Documents have not previously been modified or amended and are in full force and effect. Grantor hereby ratifies and confirms all of the terms, covenants and conditions set forth in the Notes, Deed of Trust and the other Loan Documents and hereby acknowledges that the Notes, Deed of Trust and the other Loan Documents constitute valid and binding obligations of Grantor. Without limiting the foregoing, Grantor hereby ratifies and confirms the grant and conveyance of the "Premises" (as defined in the Deed of Trust) to Trustee for the benefit of Lender as security for repayment of the "Indebtedness", as defined in the Deed of Trust. Grantor further represents and warrants to Lender that the Deed of Trust is and continues to be a first priority Deed of Trust encumbering the Premises as security for the Loan, subject only to the Permitted Encumbrances stated therein. Grantor further acknowledges and agrees that the Notes, the Deed of Trust and the other Loan Documents are enforceable in accordance with their terms and free from claims of defense, setoff or recoupment against Lender or any other person or party. E. Execution in Counterparts. This Fourth Amendment may be executed in any number of counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same agreement. 4 F. Successors and Assigns. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of Lender and Grantor. The captions and headings of the paragraphs of this Fourth Amendment are for convenience only and are not to be used to interpret or define the provisions hereof. 5 IN WITNESS WHEREOF, the parties hereto have executed this Fourth Amendment under seal as of the day and year first above written. GRANTOR: Signed, sealed and delivered SWVA, INC., in the presence of: a Delaware corporation ______________________________ By: _______________________________ Witness Name: Title: ______________________________ Attest: ___________________________ Witness Name: Title: [CORPORATE SEAL] [SIGNATURES CONTINUED ON NEXT PAGE] 6 TRUSTEE: Signed, sealed and delivered in the presence of: _____________________________ ___________________________(SEAL) Witness Douglas C. McElwee _____________________________ Witness [SIGNATURES CONTINUED ON NEXT PAGE] 7 LENDER: Signed, sealed and delivered THE CIT GROUP/BUSINESS CREDIT, in the presence of: INC., a New York corporation ______________________________ By: _______________________________ Witness Name: Title: ______________________________ Attest: ___________________________ Witness Name: Title: [CORPORATE SEAL] 8 ACKNOWLEDGMENT STATE OF __________ COUNTY OF _________ I, ___________________, a notary public of said State and County, do certify that ______________ and ________________, who signed the writing above bearing date the day of _____, 1997, as _______________ and ________________, respectively, of SWVA, Inc., have this day in my said County, before me, acknowledged the said writing to be the act and deed of said corporation. Given under my hand and official seal this _______ day of _______, 1997. ______________________________ Notary Public My Commission Expires: [NOTARIAL SEAL] 9 ACKNOWLEDGMENT STATE OF WEST VIRGINIA COUNTY OF KANAWHA I, ____________________, a notary public of said State and County, do certify that [Douglas C. McElwee], whose name is signed to the writing above as Trustee, bearing date the _______ day of ________, 1997, has this day acknowledged the same before me in my said County. Given under my hand and official seal this _______ day of __________, 1997. ______________________________ Notary Public My Commission Expires: [NOTARIAL SEAL] 10 ACKNOWLEDGMENT STATE OF _________ COUNTY OF ________ I, __________________, a notary public of said State and County, do certify that ______________ and ______________, who signed the writing above bearing date the day of ________, 1997, as ______________ and ______________, respectively, of The CIT Group/Business Credit, Inc., have this day in my said County, before me, acknowledged the said writing to be the act and deed of said corporation. Given under my hand and official seal this ________ day of _________, 1997. _________________________________ Notary Public My Commission Expires: [NOTARIAL SEAL] 11 EX-4.12 4 PROMISSORY NOTE Exhibit 4.12 EXHIBIT C PROMISSORY NOTE --------------------- , 199- $23,000,000 FOR VALUE RECEIVED, the undersigned SWVA, Inc., a Delaware corporation (the "Company"), promises to pay to the order of THE CIT GROUP/BUSINESS CREDIT, INC. (herein "CITBC") at its office located 900 Ashwood Parkway, Atlanta, GA 30338, in lawful money of the United States of America and in immediately available funds, the principal amount equal to the lesser of (i) Twenty-Three Million Dollars ($23,000,000) or (ii) the aggregate outstanding principal balance of Additional CAPEX Term Loans made to the Company during the period from the date hereof to and including July 1, 1998 as reflected on CIT/BC's books and records which, subject to the provisions of Section 2, Paragraph 7 of the Financing Agreement, shall be conclusive proof of the amount outstanding hereunder in forty (40) equal quarterly principal installments each in the amount of $575,000 until principal balance of this Note is paid in full, whereof the first such installment shall be due and payable on July 1, 1998 and subsequent installments shall be due and payable on the first business day of each October, January, April and July thereafter until this note is paid in full. The Company further agrees to pay interest at said office, in like money, on the unpaid principal amount owing hereunder from time to time from the date of disbursement thereof and at the rate specified in Section 7, paragraph 2 of the Financing Agreement. If any payment on this Note becomes due and payable on a day other than a business day, the maturity thereof shall be extended to the next succeeding business day, and with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. This Note is one of the Promissory Notes referred to in the Financing Agreement dated December 30, 1986, between the Company and CITBC, as amended (the "Financing Agreement"), evidences the Additional CAPEX Term Loans thereunder, and is subject to, and entitled to, all provisions and benefits thereof and is subject to optional and mandatory prepayment, in whole or in part, as provided therein. Upon the occurrence of any one of the Events of Default specified in the Financing Agreement or upon termination of the Financing Agreement, all amounts then remaining unpaid on this Note may become, or be declared to be, at the sole election of CITBC, immediately due and payable as provided in the Financing Agreement. SWVA, INC. By:----------------- Title: EX-11.1 5 COMPUTATION OF EARNINGS PER SHARE DATA EXHIBIT 11.1 Computation of Earnings Per Share Data The following formulas were used to calculate the earnings per share data shown in the Consolidated Statements of Income and Retained Earnings for the three months and six months ended June 30, 1997 and June 30, 1996 included in this Report. CALCULATION THREE MONTHS ENDED June 30, 1997 Net Income Net Income = $1,657,000 = $ .28 ---------------------- ----------- per common Weighted average shares 5,994,114 share of Common Stock for the period June 30, 1996 Net Income Net Income = $ 618,000 = $ .10 ----------------------- ----------- per common Weighted average shares 5,986,923 share of Common Stock for the period SIX MONTHS ENDED June 30, 1997 Net Income Net Income = $ 3,202,000 = $ .53 ----------------------- ----------- per common Weighted average shares 5,992,987 share of Common Stock for the period June 30, 1996 Net Income Net Income = $ 631,000 = $ .10 ----------------------- ----------- per common Weighted average shares 6,060,658 share of Common Stock for the period For purposes of calculating earnings per share, there were 5,994,114 and 5,992,987 weighted average shares of common stock outstanding during the three months and six months ended June 30, 1997 and 5,986,923 and 6,060,658 weighted average shares of common stock outstanding during the three months and six months ended June 30, 1996. The effect of the Company's stock option plans was anti-dilutive for all periods presented. EX-27 6 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1997 JUN-30-1997 0 0 11,513 579 21,494 36,549 69,236 (29,285) 94,940 16,007 20,665 0 0 71 52,138 94,940 52,351 52,351 44,042 44,042 0 30 495 5,555 2,353 3,202 0 0 0 3,202 .53 .53
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