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:
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Its
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