NS Group, Inc. December 31, 2001 Form 10-K
Exhibit 4.19
MARCH, 2002 AMENDMENT TO CREDIT AGREEMENT
THIS MARCH, 2002 AMENDMENT TO CREDIT AGREEMENT (the "Amendment") is
made and entered into as of March 15, 2002, by and among (i) NS Group, Inc., a
Kentucky corporation (the "Company"), (ii) the several financial institutions
from time to time party to the Credit Agreement (as defined below)
(collectively, the "Banks"), and (iii) Bank of America, N.A., f/k/a Bank of
America National Trust and Savings Association, as agent for the Banks (the
"Agent"). Newport Steel Corporation, a Kentucky corporation ("Newport"), Xxxxxx
Steel Corporation, a Pennsylvania corporation ("Xxxxxx"), and Erlanger Tubular
Corporation, an Oklahoma corporation ("Erlanger") (Newport, Xxxxxx and Erlanger
are collectively referred to herein as the "Guarantors"), join in this Amendment
for purposes of Section 10 herein.
RECITALS
A. The Company, the Banks and the Agent entered into that certain
Credit Agreement dated as of July 31, 1998, as amended pursuant to that certain
March, 1999 Amendment to Credit Agreement dated as of March 25, 1999 and that
certain October, 2000 Amendment to Credit Agreement dated as of October 10, 2000
(collectively, the "Credit Agreement"), pursuant to which, among other things,
the Banks agreed to make available to the Company loans not to exceed in the
aggregate Fifty Million Dollars ($50,000,000).
B. The parties desire to amend the Credit Agreement in the manner set
forth herein in order to, among other things, reduce the Banks' combined
Commitments from $50,000,000 in the aggregate to $25,000,000 in the aggregate,
revise the amount of certain margins, fees and rates payable by the Company
thereunder and revise the Termination Date applicable thereto.
C. In connection with the foregoing, the Company has now requested, and
the Banks and the Agent have agreed, to certain amendments to the Credit
Agreement, subject to the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth in this Amendment and for other good and
valuable consideration, the mutuality, receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. Definitions. Each capitalized term used herein, unless otherwise
expressly defined herein, shall have the meaning ascribed thereto in the Credit
Agreement.
2. Amendments to Credit Agreement.
(a) The definition of "Applicable Margin" contained in Section
1.01 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
"'Applicable Margin' means: (A) on any date
before February 15, 2002, the percentage per annum
specified below opposite the Pricing Ratio (which
shall be calculated as of the end of the immediately
preceding fiscal quarter for the four fiscal quarters
ended on such date):
====================================================================================================================
If the Pricing Ratio is Applicable Margin with respect to Applicable Margin with respect to
Base Rate Loans Offshore Rate Loans
--------------------------------------------------------------------------------------------------------------------
Greater than 2.50 0.25% 0.875%
--------------------------------------------------------------------------------------------------------------------
Greater than 2.00 and Less than 2.50 0.125% 0.75%
--------------------------------------------------------------------------------------------------------------------
Greater than 1.50 and Less than 2.00 0.00% 0.625%
--------------------------------------------------------------------------------------------------------------------
Greater than 1.00 and Less than 1.50 0.00% 0.50%
--------------------------------------------------------------------------------------------------------------------
Less than 1.00 0.00% 0.375%
====================================================================================================================
The Applicable Margin shall be determined as of the
end of each fiscal quarter and shall be effective on
the date that falls 45 days after the end of such
fiscal quarter; and (B) from and after February 15,
2002, (i) 1.25% per annum with respect to Base Rate
Loans, and (ii) 1.75% per annum with respect to
Offshore Rate Loans."
(b) The definition of "Guaranty" contained in Section 1.01 of
the Credit Agreement is hereby amended and restated to read in its entirety as
follows:
"`Guaranty' means an amended and restated
guaranty, dated as of March 15, 2002, executed by the
Guarantors for the benefit of the Agent, as the same
may hereafter be amended, restated, supplemented or
otherwise modified from time to time."
(c) The definition of "Note" contained in Section 1.01 of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:
"'Note' means an amended and restated
promissory note executed by the Company in favor of
the Bank pursuant to Section 2.02(b), in
substantially the form of Exhibit F, as the same may
be amended, modified or supplemented from time to
time."
(d) The definition of "Termination Date" contained in Section
1.01 of the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
"`Termination Date' means the earlier to
occur of:
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(a) December 31, 2002; or
(b) the date on which the
Commitments terminate in accordance with provisions
of this Agreement."
(e) Section 2.01 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"2.01 Amounts and Terms of Commitments. Each
Bank severally agrees, on the terms and conditions
set forth herein, to (i) make loans to the Company
(each such loan, a `Loan') from time to time on any
Business Day during the period from the Closing Date
to the Termination Date, and (ii) purchase from the
Agent a participation in the Letters of Credit and
make Disbursements in accordance with this Article
II, in an aggregate amount not to exceed at any time
outstanding, the amount set forth on Schedule 2.01
(such amount as the same may be reduced under Section
2.05 or as a result of one or more assignments under
Section 10.08, the Bank's `Commitment'); provided,
however, that, after giving effect to any Borrowing
of Loans or issuance of any Letter of Credit, the
aggregate principal amount of all outstanding Loans
plus the then aggregate amount of all Letter of
Credit Outstandings shall not at any time exceed the
combined Commitments; provided, however, that the
Agent shall not be required to issue any Letter of
Credit if, after giving effect thereto, the Letter of
Credit Outstandings would exceed $5,000,000. Within
the limits of each Bank's Commitment, and subject to
the other terms and conditions hereof, the Company
may borrow under this Section 2.01, prepay under
Section 2.06 and reborrow under this Section 2.01.
Subject to the terms hereof, the Company may from
time to time request the issuance of Letters of
Credit, allow Letters of Credit to expire undrawn or,
if drawn upon, repay Reimbursement Obligations
relative thereto and request the issuance of new
Letters of Credit."
(f) Section 2.10 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"2.10 Fees.
(a) Closing Fee. On the Closing
Date, the Company shall pay to the Agent for the
account of each Bank a closing fee in the amount
of $10,000.
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(b) Agency Fee. The Company shall
pay an annual agency fee to the Agent for the Agent's
own account in the amount of $10,000 in the event
that any one or more financial institutions other
than BofA becomes a `Bank' for purposes of this
Agreement as of the Closing Date or pursuant to
Section 10.08. Such agency fee shall be due and
payable on the date the first such other financial
institution becomes a `Bank' for purposes of this
Agreement and on each anniversary date thereof while
there remains one or more `Banks' other than BofA
through the Termination Date.
(c) Commitment Fees. The Company
shall pay to the Agent for the account of each Bank a
commitment fee equal to the Non-Use Fee Rate
multiplied by the average daily unused portion of
such Bank's Commitment, computed on a quarterly basis
in arrears on the last Business Day of each calendar
quarter based upon the daily utilization for that
quarter as calculated by the Agent. For purposes of
calculating the "unused portion" of each Bank's
Commitment pursuant to this Section 2.10, Letter of
Credit Outstandings shall be included as a usage of
the Commitment. From and after February 15, 2002, the
'Non-Use Fee Rate' means 0.375% per annum.
Such commitment fee shall accrue at all times through
the Termination Date and shall be due and payable
quarterly in arrears on the last Business Day of each
March, June, September and December commencing on
September 30, 1998, through the Termination Date
(each a 'Quarterly Payment Date'), with the final
payment to be made on the Termination Date; provided
that, in connection with any reduction or termination
of Commitments under Section 2.05 or Section 2.07,
the accrued commitment fee calculated for the period
ending on such date shall also be paid on the date of
such reduction or termination. The commitment fees
provided in this subsection shall accrue at all
times, including at any time during which one or more
conditions in Article IV are not met."
(g) Section 2.14 of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
"2.14 Letter of Credit Issuance Request. By
delivering an Issuance Request to the Agent at or
before 10:00 a.m., Chicago time, on any Business Day,
the Company may request, prior to the Termination
Date, on
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not less than two Business Days' notice (or such
lesser number of Business Days' notice as the Agent
may consent to in its sole discretion), that Agent
issue, on any such Business Day on or after the
Closing Date (if such date is prior to the
Termination Date), an irrevocable letter of credit in
such form as may be requested by the Company and
reasonably approved by the Company (a 'Letter of
Credit`), solely as required by the Company in the
ordinary course of business. The Company shall
deliver each Issuance Request to the Agent by either
(1) delivering or telecopying to the Agent an
Issuance Request or (2) giving telephonic notice
thereof to the Agent, in each case at or before 10:00
a.m., Chicago time, and, in the case of any such
telephonic notice, promptly confirming such notice by
delivering or telecopying an Issuance Request
therefor, signed by a Responsible Officer of the
Company, to the Agent, on any Business Day. Each
Letter of Credit shall by its terms:
(i) be issued in a Stated Amount
which, when added to the then aggregate amount
of Letter of Credit Outstandings, would not
exceed $5,000,000; and
(ii) be stated to expire on a date
no later than the earlier of
(A) 30 days prior to the
Termination Date, and
(B) the first anniversary
of the date of issuance of such
Letter of Credit."
(h) Schedule 2.01 to the Credit Agreement is hereby amended
and replaced in its entirety by Schedule 2.01 to this Amendment, which is
attached hereto and made a part hereof.
(i) Exhibit F to the Credit Agreement is hereby amended and
replaced in its entirety by Exhibit F to this Amendment, which is attached
hereto and made a part hereof.
3. Conditions Precedent. The Banks' obligations under this Amendment
shall be subject to the satisfaction of the following conditions precedent:
(a) The Company and the Guarantors shall have duly executed
and delivered to the Bank this Amendment and such other certificates,
authorizations, consents, documents, instruments and/or agreements as the Banks
and the Agent, in their sole discretion, may require.
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(b) The Company shall have duly executed and delivered to the
Bank an Amended and Restated Master Note in substantially the form attached
hereto as Exhibit F.
(c) The Guarantors shall have duly executed and delivered to
the Bank an Amended and Restated Guaranty in substantially the form attached
hereto as Exhibit G.
(d) The Banks shall have received, with respect to the Company
and the Guarantors, in form and substance satisfactory to the Banks, evidence
that the transactions contemplated hereby have been duly authorized by all
necessary corporate action.
(e) The Agent and the Banks shall have received opinions of
counsel to the Company and the Guarantors, in form and substance satisfactory to
the Agent and the Banks.
(f) All proceedings taken in connection with the transactions
contemplated by this Amendment shall be satisfactory to the Banks, the Agent and
their counsel.
4. Representations and Warranties. To induce the Banks and the Agent to
enter into this Amendment, the Company represents, warrants and acknowledges the
following:
(a) Each of the representations and warranties given by the
Company in the Credit Agreement and the Loan Documents are true and correct in
all material respects on the date hereof, with the same force and effect as
though made on and as of the date hereof.
(b) No material adverse change has occurred in the condition
of the Company or the Guarantors, financial or otherwise, or their respective
earnings, affairs or business prospects, since the date of the most recent
financial statements delivered to the Banks.
(c) No Default or Event of Default exists under the Credit
Agreement or any of the Loan Documents, and no such Default or Event of Default
shall exist after giving effect to the transactions contemplated by this
Amendment.
(d) The Company has the power to enter into and perform this
Amendment. The making and performance of this Amendment by the Company has been
duly authorized by all necessary corporate action and will not violate any
provision of law or the Company's articles of incorporation or bylaws, or result
in the breach of, or constitute a default under, any agreement or instrument to
which the Company is a party or by which it or its properties may be bound or
affected, or result in the creation of any lien, charge or encumbrance,
approval, authorization, declaration, exemption or other action by, or require
notice to any Governmental Authority or any other person or entity in connection
with the execution, delivery, performance, validity or enforcement of this
Amendment or any other agreement, instrument or document to be executed and
delivered pursuant hereto.
5. Costs and Expenses. The Company shall pay on demand all of the
out-of-pocket costs and expenses of the Banks and the Agent in connection with
the preparation, execution, delivery, administration, enforcement or protection
of the rights of the Banks and the Agent under this Amendment and the other Loan
Documents.
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6. No Change Not Explicitly Made. Except as expressly amended by this
Amendment, the Credit Agreement is and shall be unchanged, and all of the terms,
provisions, covenants, agreements, conditions, schedules and exhibits thereof or
thereto shall remain and continue in full force and effect and are hereby
incorporated by reference, and hereby ratified, reaffirmed and confirmed by the
Company, the Banks and the Agent in all respects on and as of the date of this
Amendment. The Company acknowledges and agrees that the Loan Documents and all
liens, security interests and pledges granted to the Banks and the Agent prior
to the date hereof, including without limitation, all liens, security interests
and pledges granted to the Agent pursuant to the Security Agreement, shall
remain in full force and effect, are first priority liens, security interests
and pledges, shall not be diminished, impaired or released as a result hereof,
and shall secure all obligations arising under the Credit Agreement, this
Amendment and the other Loan Documents and all instruments and agreements
executed in connection herewith.
7. Binding Effect. This Amendment shall be binding on the successors
and assigns of the respective parties.
8. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9. Governing Law. This Amendment shall be governed by the laws of the
State of Illinois.
10. Consent and Reaffirmation of Guarantors.
(a) Each of the Guarantors hereby acknowledges that it has
reviewed and understands the terms and provisions of this Amendment, consents to
this Amendment and ratifies, reaffirms, confirms and restates its obligations
under the Guaranty, as amended and restated in connection with this Amendment.
(b) To induce the Banks and the Agent to enter into this
Amendment, each of the Guarantors represents and warrants that (i) it has the
power to enter into and perform this Amendment; (ii) the making and performance
of this Amendment by the Guarantor has been duly authorized by all necessary
corporate action and will not violate any provision of law or such Guarantor's
articles or certificate of incorporation or bylaws, or result in the breach of,
or constitute a default under, any agreement or instrument to which such
Guarantor is a party or by which it or its properties may be bound or affected,
or result in the creation of any lien, charge or encumbrance, approval,
authorization, declaration, exemption or other action by, or require notice to
any Governmental Authority or any other person or entity in connection with the
execution, delivery, performance, validity or enforcement of this Amendment or
any other agreement, instrument or document to be executed and delivered
pursuant hereto.
[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and year first above written.
NS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Vice President & Treasurer
------------------------------------
BANK OF AMERICA, N.A., f/k/a Bank of
America National Trust and Savings
Association, as Agent
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------------
Title: Vice President
------------------------------------
BANK OF AMERICA, N.A., f/k/a Bank
of America National Trust and Savings
Association, as a Bank
By: /s/ Xxxxx Xxxxxxx
---------------------------------------
Title: Vice President
------------------------------------
NEWPORT STEEL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Secretary & Treasurer
------------------------------------
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XXXXXX STEEL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Secretary & Treasurer
------------------------------------
ERLANGER TUBULAR CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Title: Secretary & Treasurer
------------------------------------
9
SCHEDULES
Schedule 2.01 Commitments and Pro Rata Shares
EXHIBITS
Exhibits A through E [Reserved]
Exhibit F Note
Exhibit G Guaranty
10
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Bank Commitment Pro Rata Share
---- ---------- --------------
Bank of America, N.A. $25,000,000 100%
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NS Group, Inc. December 31, 2001 Form 10-K
Exhibit 4.19
EXHIBIT F
AMENDED AND RESTATED MASTER NOTE
March 15, 2002
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay, in
lawful money of the United States of America and immediately available funds, to
the order of Bank of America, N.A., f/k/a Bank of America National Trust and
Savings Association and or other affiliates or subsidiaries thereof ("Bank") at
its principal office located at 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, or such other place as the holder may from time to time designate, the
aggregate unpaid principal amount of all advances made by Bank from time to time
from and after the date hereof in its sole discretion to or for the benefit of
Borrower under this Note (each, an "Advance"), on the maturity dates (each, a
"Maturity Date") as may be offered by Bank and accepted by Borrower with respect
to such Advances (which acceptance shall in any event be deemed to occur upon
receipt by Borrower of the proceeds of any Advance), together with interest
accrued thereon, on the applicable Maturity Date and on such other interest
payment dates and at such rates as may be so offered and accepted. No Advance
shall be made under this note if, as a result, the total principal amount
outstanding under this note would exceed Twenty-Five Million U.S. Dollars
($25,000,000). Any amount not paid within five business days after the date due
(whether at maturity, by acceleration or otherwise) shall bear interest from
such due date until the date paid at the rate of interest set forth in
subsections 2.09(c) and (d) of the Credit Agreement (as defined below). Unless
otherwise agreed by Bank, no Advances will be made hereunder after December 31,
2002.
The loan account records maintained by Bank shall at any time be
conclusive evidence as to the amount of any Advance, and its Maturity Date,
interest rate, interest payment dates and outstanding amount at such time,
absent manifest error. All interest will be calculated on the basis of a 360-day
year, actual days elapsed. If any payment of principal or of interest on this
Note shall become due on a day other than a business day, such payment shall be
made on the next succeeding business day and such extension of time shall be
included in computing the amount of interest due and payable. For purposes
hereof, "business day" means any day other than a Saturday, Sunday or other day
on which commercial banks in Cincinnati, New York City or San Francisco are
authorized or required by law to close.
Any of the following shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to pay in full the amount of any Advance,
together with all accrued interest, on the applicable Maturity
Date, or any accrued interest within five (5) days of any
applicable interest payment date; or
(b) the occurrence of an Event of Default under and as defined in
the Credit Agreement (as defined below).
The occurrence of an Event of Default under this Note shall have the
same effect as the occurrence of an Event of Default under the Credit Agreement,
and upon the occurrence of an Event of Default under this Note the Bank shall
have all of the remedies available upon the occurrence of an Event of Default
under the Credit Agreement. As used herein, the term "Credit Agreement" shall
mean that certain Credit Agreement dated as of July 31, 1998, among Borrower,
the other financial institutions party thereto and Bank of America, N.A. f/k/a
Bank of America National Trust and Savings Association, as agent, as amended,
and as the same may be amended, restated, modified, renewed, supplemented or
extended from time to time.
The request of Borrower for any Advance and the receipt by Borrower of
the proceeds thereof shall be deemed a representation by Borrower as of each
such date that no Event of Default has occurred and that Borrower is duly
authorized to incur such indebtedness hereunder. Borrower acknowledges that it
may, for its convenience, request Bank to make Advances from time to time on the
basis of telephonic or written requests. Borrower assumes all risks regarding
the validity, authenticity, due authorization and correct interpretation of any
such request purported to be made by or on behalf of Borrower and agrees that
its obligations hereunder shall not be affected in any way by Bank's failure to
receive or provide written confirmation of any such request or of the terms of
any offer or acceptance relating to any Advance. Borrower hereby authorizes Bank
to charge any deposit account of Borrower now or hereafter maintained with Bank
for amounts due hereunder.
Borrower shall pay holder upon demand for all costs, expenses and
attorneys' fees (including allocated costs of internal counsel) incurred in
connection with the enforcement or attempted enforcement of this Note.
At any time and from time to time, but subject to the provisions of the
Credit Agreement, the holder may assign or otherwise transfer, in whole or in
part, to any person (an "Assignee") this Note or any Advance, or may sell a
participation therein to any person. Borrower agrees not to assert against any
Assignee any claim or defense which Borrower may have against Bank.
This Note is issued pursuant to the March, 2002 Amendment to Credit
Agreement of even date herewith and is given in amendment of and in substitution
for that certain Master Note dated July 31, 1998 (the "Prior Note") to evidence
the Borrower's continuing indebtedness thereunder, and to reflect the amended
terms agreed upon with respect to the Borrower's indebtedness to the Bank. The
execution and delivery of this Note does not constitute, and shall not be
construed as constituting, payment or discharge of the outstanding obligation to
pay amounts evidenced by the Prior Note, or as releasing any security therefor,
and shall not constitute a novation of the Prior Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF ILLINOIS. No delay or omission on the part of the
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holder in exercising any right hereunder shall operate as a waiver of such
right. If any provision of this Note shall be held invalid or unenforceable in
whole or in part, such invalidity or unenforceability shall not affect the
remaining provisions hereof.
NS GROUP, INC.
By:
--------------------------------------
Printed Name:
----------------------------
Title:
-----------------------------------
3
NS Group, Inc. December 31, 2001 Form 10-K
Exhibit 4.19
EXHIBIT G
AMENDED AND RESTATED GUARANTY
THIS AMENDED AND RESTATED GUARANTY (this "Guaranty") is entered into as
of March 15, 2002, by Newport Steel Corporation, a Kentucky corporation, Xxxxxx
Steel Corporation, a Pennsylvania corporation, and Erlanger Tubular Corporation,
an Oklahoma corporation (each, individually, a "Guarantor" and collectively, the
"Guarantors"), in favor of Bank of America, N.A., f/k/a Bank of America National
Trust and Savings Association, a national banking association, as agent for the
Banks and its successors as agent for the Banks (in such capacity, and together
with its successors as agent for the Banks, the "Agent").
Recitals
A. NS Group, Inc., a Kentucky corporation (the "Company"), the
several financial institutions from time to time party thereto (the "Banks") and
Bank of America, N.A., f/k/a Bank of America National Trust and Savings
Association, as agent for the Banks, entered into a Credit Agreement dated as of
July 31, 1998, as amended pursuant to that certain March, 1999 Amendment to
Credit Agreement dated as of March 25, 1999, that certain October, 2000
Amendment to Credit Agreement dated as of October 10, 2000 and that certain
March, 2002, Amendment to Credit Agreement of even date herewith. The Credit
Agreement, as amended and as now in effect or hereafter extended, renewed,
modified, supplemented, amended, or restated, is hereinafter called the "Credit
Agreement".
B. The Banks are willing to make certain Loans to the Company
as provided in the Credit Agreement on the condition (among others) that each of
the Guarantors enter into this Guaranty.
C. Each Guarantor, as a wholly-owned Subsidiary of the
Company, will derive substantial and direct benefits (which benefits are hereby
acknowledged by the Guarantors) from the Loans and other benefits to be provided
to the Company under the Credit Agreement.
D. In order to induce the Banks to make such Loans available
to the Company as provided in the Credit Agreement and for other valuable
consideration, each of the Guarantors issues this Guaranty to the Agent for its
benefit and for the ratable benefit of the Banks.
1. Definitions. Unless otherwise defined herein, capitalized terms used
in this Guaranty have the meanings given to them from time to time in the Credit
Agreement.
2. Guaranty.
2.1 Guaranty.
(a) Each Guarantor hereby irrevocably, absolutely and
unconditionally guarantees to Agent, its successors and assigns, for its benefit
and for the ratable benefit of the Banks, the full and punctual payment or
performance when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, of all of the Obligations,
including Obligations in respect of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code or
the operation of Sections 502(b) and 506(b) of the Bankruptcy Code. This
Guaranty constitutes a guaranty of payment and performance when due and not of
collection, and each Guarantor specifically agrees that it shall not be
necessary or required that each Bank exercise any right, assert any claim or
demand or enforce any remedy whatsoever against the Company (or any other
Person) before or as a condition to the obligations of the Guarantors hereunder.
Each Bank may permit the indebtedness of the Company to such Bank to include
indebtedness other than the Obligations, and may apply any amounts received from
any source, other than from the Guarantors, to that portion of the Company's
indebtedness to such Bank which is not a part of the Obligations.
(b) It is understood that although the amount of the
Obligations guaranteed hereby is not limited, if in any action or proceeding
involving any state, federal or foreign bankruptcy, insolvency or other law
affecting the rights of creditors generally, this Guaranty would be held or
determined to be void, invalid or unenforceable against any Guarantor on account
of the amount of its aggregate liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the
aggregate amount of such Guarantor's liability hereunder shall, without any
further action of the Agent, be automatically limited and reduced to the highest
amount which is valid and enforceable as determined in such action or
proceeding.
(c) Notwithstanding anything contained in this
Guaranty, if in any action or proceeding involving any state, federal or foreign
bankruptcy, insolvency or other law affecting the rights of creditors generally,
it is determined that the laws of the Commonwealth of Kentucky shall apply to
this Guaranty then the following shall apply:
(i) The maximum aggregate principal amount of
this Guaranty shall not exceed $25,000,000 ("Maximum Aggregate Liability"), plus
interest on the Obligations accruing from the date of and pursuant to the
instrument(s) creating or evidencing the Obligations, or if there are no such
instruments, from the date the Obligations were incurred until the Obligations
have been repaid or otherwise satisfied in full to the Banks (the "Interest"),
plus all reasonable attorneys' fees and costs and expenses incurred by the Agent
and the Banks in collecting or attempting to collect the Obligations or incurred
in attempting to enforce this Guaranty (the "Costs"). The Maximum Aggregate
Liability does not include Interest and Costs and shall be in addition to the
Maximum Aggregate Liability of any Guarantor to the Agent or the Banks under any
other guaranty of any of the Guarantors heretofore or hereafter given; and
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(ii) With respect to the Obligations, this
Guaranty shall terminate on January 1, 2005 (the "Limitation Date"). The words
terminate and termination in the preceding sentence shall be given the same use
and effect as set forth in KRS 371.065, as amended and effective in July, 1990,
and shall hereinafter be referred to as the "Limitation." The Limitation of this
Guaranty shall not affect in any manner the Obligations created or incurred on
or prior to and existing on the Limitation Date and shall not affect any
renewals, extensions, modifications or revivals of, Interest accruing on, or
Costs incurred with respect to, the Obligations on or after the Limitation Date.
The sole effect of the Limitation of this Guaranty shall be to exclude from the
Obligations all liabilities and Obligations arising out of additional loans,
advances, discounts, or credit extensions made by the Banks to the Company after
the Limitation Date which are not renewals, extensions, modifications or
revivals of the Obligations.
2.2 Obligations Independent. The obligations hereunder are
independent of the obligations of the Company, and a separate action or actions
may be brought and prosecuted against each of the Guarantors whether action is
brought against the Company or whether the Company be joined in any such action
or actions.
2.3 Authorization of Renewals, Etc. Each Guarantor authorizes
the Agent and the Banks, without notice or demand and without affecting its
liability hereunder, from time to time:
(a) to renew, compromise, extend, accelerate or
otherwise change the time for payment, or otherwise change the terms, of the
Obligations, including increase or decrease of the rate of interest thereon, or
otherwise change the terms of the Credit Agreement or any other Loan Document;
(b) to receive and hold security for the payment of
this Guaranty or the Obligations and exchange, enforce, waive, release, fail to
perfect, sell, or otherwise dispose of any such security;
(c) to apply such security and direct the order or
manner of sale thereof as the Agent in its discretion may determine; and
(d) to release or substitute any one or more of any
endorsers or guarantors of the Obligations, including, without limitation, the
Guarantors.
Each Guarantor further agrees that the performance or occurrence of any of the
acts or events described in clauses (a), (b), (c) and (d) above with respect to
indebtedness or other obligations of the Company, other than the Obligations, to
the Banks, shall not affect the liability of any of the Guarantors hereunder.
2.4 Waiver of Certain Rights. Each Guarantor waives any right
to require the Agent:
(a) to proceed against the Company or any other
Person,
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(b) to proceed against or exhaust any security for the Obligations
or any other indebtedness of the Company to the Banks; or
(c) to pursue any other remedy in the Agent's power whatsoever.
2.5 Waiver of Certain Defenses. Each Guarantor waives any
defense arising by reason of any disability or other defense of the Company, or
the cessation from any cause whatsoever of the liability of the Company, whether
consensual or arising by operation of law or any bankruptcy, insolvency or
debtor relief proceeding, or from any other cause, or any claim that any of the
Guarantors' obligations exceed or are more burdensome than those of the Company.
Each Guarantor waives any defense arising by reason of any statute of
limitations affecting the liability of the Company. Each Guarantor waives all
rights and defenses arising out of an election of remedies by the Agent, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for the Obligations, has destroyed the Guarantors' rights of
subrogation and reimbursement against the Company by operation of state law, and
all rights or defenses the Guarantors may have by reason of protection afforded
to the Company with respect to the Obligations pursuant to state antideficiency
laws or other laws limiting or discharging the Obligations. Each Guarantor
waives any of, and any right to participate in, any security or other guaranty
now or hereafter held by the Agent or the Banks securing the Obligations.
2.6 Waiver of Presentments, Etc. Each Guarantor waives all
presentments, demands for performance, notices of nonperformance, protests,
notices of protest, notices of dishonor and notices of acceptance of this
Guaranty and of the existence, creation, or incurring of new or additional
Obligations or any other indebtedness of the Company to the Banks.
2.7 Information Relating to Company. Each Guarantor
acknowledges and agrees that it shall have the sole responsibility for obtaining
from the Company such information concerning the Company's financial condition
or business operations as such Guarantor may require, and that neither the Agent
nor the Banks has any duty at any time to disclose to such Guarantor any
information relating to the business operations or financial condition of the
Company.
2.8 Right of Setoff. In addition to any rights and remedies of
the Agent and the Banks provided by law, if any Guarantor has failed to make any
payment due hereunder upon demand, each of the Banks is authorized at any time
and from time to time, without prior notice to such Guarantor, any such notice
being waived by such Guarantor to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of such Guarantor against any
and all obligations of such Guarantor now or hereafter existing under this
Guaranty or any other Loan Document, irrespective of whether or not the Agent or
the Banks shall have made demand under this Guaranty or any other Loan Document
and although such obligations may be contingent or unmatured. The rights of the
Banks under this Section 2.8 are in addition to the other rights and remedies
(including, without limitation, other rights of set-off) which the Banks may
have.
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2.9 Subordination. Any obligations of the Company to the
Guarantors, now or hereafter existing, including, but not limited to,
obligations to the Guarantors as subrogees of the Banks or resulting from the
Guarantors' performance under this Guaranty, are hereby fully subordinated in
time and priority of payment to the Obligations.
2.10 Reinstatement of Guaranty. If any payment or transfer of
any interest in property by the Company to the Agent or the Banks in fulfillment
of any Obligation is rescinded or must at any time (including after the return
or cancellation of this Guaranty) be returned, in whole or in part, by the Agent
or the Banks to the Company or any other Person, upon the insolvency, bankruptcy
or reorganization of the Company or otherwise, this Guaranty shall be reinstated
with respect to any such payment or transfer, regardless of any such prior
return or cancellation.
2.11 Powers. It is not necessary for the Agent or the Banks to
inquire into the powers of the Company or of the officers, directors, or agents
acting or purporting to act on its behalf, and any Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
2.12 Taxes.
(a) Any and all payments by each Guarantor to the
Agent under this Guaranty shall be made free and clear of, and without deduction
or withholding for, any Taxes. In addition, the Guarantors shall pay all Other
Taxes.
(b) If any of the Guarantors shall be required by law
to deduct or withhold any Taxes, Other Taxes or Further Taxes (each, as defined
in this Section) from or in respect of any sum payable hereunder to the Agent,
then:
(i) the sum payable shall be increased as
necessary so that, after making all required deductions and
withholdings (including deductions and withholdings applicable to
additional sums payable under this Section), the Agent receives and
retains an amount equal to the sum it would have received and retained
had no such deductions or withholdings been made;
(ii) such Guarantor shall make such deductions
and withholdings;
(iii) such Guarantor shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) such Guarantor shall also pay to the
Agent, at the time interest is paid, Further Taxes in the amount that
the Agent specifies as necessary to preserve the after-tax yield the
Agent would have received if such Taxes, Other Taxes or Further Taxes
had not been imposed.
(c) Each Guarantor agrees to indemnify and hold
harmless the Agent for the full amount of (i) Taxes, (ii) Other Taxes, and (iii)
Further Taxes in the amount that the
5
Agent specifies as necessary to preserve the after-tax yield the Agent would
have received if such Taxes, Other Taxes or Further Taxes had not been imposed,
and any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes, Other
Taxes or Further Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Agent makes
written demand therefor.
(d) Within 30 days after the date of any payment by a
Guarantor of Taxes, Other Taxes or Further Taxes, such Guarantor shall furnish
to the Agent the original or a certified copy of a receipt evidencing payment
thereof, or other evidence of payment satisfactory to the Agent.
(e) For purposes of this Section, (i) "Taxes" means
any and all present or future taxes, levies, assessments, imposts, duties,
deductions, fees, withholdings or similar charges, and all liabilities with
respect thereto, excluding, in the case of the Agent and the Banks,
respectively, taxes imposed on or measured by its net income by the jurisdiction
(or any political subdivision thereof) under the laws of which any Bank is
organized or maintains a lending office; (ii) "Other Taxes" means any present or
future stamp, court or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Guaranty; and (iii) "Further Taxes" means any
and all present or future taxes, levies, assessments, imposts, duties,
deductions, fees, withholdings or similar charges (including, without
limitation, net income taxes and franchise taxes), and all liabilities with
respect thereto, imposed by any jurisdiction on account of amounts payable or
paid pursuant to this Section.
2.13 Waiver of Subrogation. Until the termination of the
Commitment of the Banks under the Credit Agreement and payment and performance
in full of all Obligations, each Guarantor waives any right of subrogation,
reimbursement, indemnification and contribution (contractual, statutory or
otherwise), including any claim or right of subrogation under the Bankruptcy
Code or any successor statute, against the Company arising from the existence or
performance of this Guaranty and each Guarantor waives any right to enforce any
remedy which the Agent or the Banks now have or may hereafter have against the
Company, and waives any benefit of, and any right to participate in, any
security now or hereafter held by the Agent or the Banks securing the
Obligations.
3. Representations and Warranties. Each Guarantor jointly and severally
represents and warrants to the Agent as follows, which representations and
warranties shall survive the execution and delivery of this Guaranty:
3.1 Corporate Existence and Power. Each Guarantor (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; (b) has the power and authority and
all governmental licenses, authorizations, consents and approvals to own its
assets, carry on its business and to execute, deliver, and perform its
obligations under, this Guaranty and any other Loan Document to which it is a
party; (c) is duly qualified as a foreign corporation, and licensed and in good
standing, under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its
6
business requires such qualification or license, and (d) is in compliance with
all Requirements of Law; except to the extent that the failure to do so could
not reasonably be expected to have a Material Adverse Effect.
3.2 Corporate Authorization; No Contravention. The execution,
delivery and performance by each Guarantor of this Guaranty and any other Loan
Document to which it is party, have been duly authorized by all necessary
corporate action, and do not and will not (a) contravene the terms of any of
such Guarantor's Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any lien under, any document
evidencing any Contractual Obligation to which such Guarantor is a party or any
order, injunction, writ or decree of any Governmental Authority to which such
Guarantor or its property is subject; or (c) violate any Requirement of Law.
3.3 Governmental Authorization. No approval, consent,
exemption, authorization or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, each Guarantor of
this Guaranty or any other Loan Document to which it is a party.
3.4 Binding Effect. This Guaranty and each other Loan Document
to which each Guarantor is a party constitute the legal, valid and binding
obligations of such Guarantor, enforceable against such Guarantor in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.
3.5 Regulated Entities. No Guarantor, nor any Person
controlling any Guarantor or any Subsidiary of any Guarantor, is (a) an
"Investment Company" within the meaning of the Investment Company Act of 1940;
or (b) subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation limiting its
ability to incur or guarantee Indebtedness.
4. Miscellaneous.
4.1 Application of Payments on Guaranty. All payments required
to be made by any of the Guarantors hereunder shall, unless otherwise expressly
provided herein, be made to the Agent at the Agent's Payment Office. Payments
received from the Guarantors shall, unless otherwise expressly provided herein,
be applied to costs, fees, or other expenses due under the Loan Documents, any
interest (including interest due under subsection 2.09(d) of the Credit
Agreement) and any principal due under the Loan Documents and any other
Obligations.
4.2 Assignments, Confidentiality. Subject to the provisions of
the Credit Agreement, each of the Agent and the Banks may from time to time,
without notice to the Guarantors and without affecting the Guarantors'
obligations hereunder, transfer its interests in the Obligations to assignees.
Each Guarantor agrees that each such transfer will give rise to a direct
obligation of such Guarantor to each such assignee and each such assignee shall
have the
7
same rights and benefits under this Guaranty as it would have if it were a
party to the Credit Agreement and this Guaranty.
4.3 Loan Document. This Guaranty is a Loan Document executed
and delivered pursuant to the Credit Agreement and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof. Without limiting the generality of the
foregoing, the provisions of Sections 1.02 and 1.03 of the Credit Agreement
shall apply to the interpretation and administration of this Guaranty as if such
provisions were incorporated herein, with all references to the "Agreement" in
such Sections being deemed to be references to this Guaranty.
4.4 Waivers; Writing Required. No delay or omission by the
Agent to exercise any right under this Guaranty shall impair any such right, nor
shall it be construed to be a waiver thereof. No waiver of any single breach or
default under this Guaranty shall be deemed a waiver of any other breach or
default. Any amendment or waiver of any provision of this Guaranty must be in
writing and signed by all the Guarantors and the Agent in accordance with the
terms of Section 10.01 of the Credit Agreement.
4.5 Remedies. All rights and remedies provided in this
Guaranty and any instrument or agreement referred to herein are cumulative, and
are not exclusive of any rights or remedies otherwise provided by law. Any
single or partial exercise of any right or remedy shall not preclude the further
exercise thereof or the exercise of any other right or remedy.
4.6 Costs and Expenses. Each Guarantor agrees to pay or
reimburse the Agent and the Banks within five Business Days after demand for all
reasonable costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Guaranty (including in connection with any
"workout" or restructuring regarding amounts due under this Guaranty, and
including in any Insolvency Proceeding or appellate proceeding).
4.7 Severability. The illegality or unenforceability of any
provision of this Guaranty or any instrument or agreement referred to herein
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Guaranty or any instrument or agreement referred to
herein.
4.8 (a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED THAT THE AGENT SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS GUARANTY AND ANY OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE
STATE OF ILLINOIS OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF ILLINOIS,
AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, EACH OF THE GUARANTORS AND THE
AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE GUARANTORS AND THE AGENT
8
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED HERETO.
4.9 Waiver of Jury Trial. EACH OF THE GUARANTORS AND THE AGENT
WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE GUARANTORS AND THE AGENT EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO
A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE
OTHER LOAN DOCUMENTS.
4.10 Entire Agreement. This Guaranty (a) integrates all the
terms and conditions mentioned herein or incidental hereto, (b) supersedes all
oral negotiations and prior writings with respect to the subject matter hereof,
and (c) is intended by the parties as the final expression of the agreement with
respect to the terms and conditions set forth in this Guaranty and any such
instrument, agreement and document and as the complete and exclusive statement
of the terms agreed to by the parties.
4.11 Amendment, Restatement and Supersession. This Guaranty
amends, restates and supersedes in its entirety that certain Amended and
Restated Guaranty dated as of October 10, 2000, executed by the Guarantors for
the benefit of the Agent.
[THE REMAINDER OF THIS PAGE IS
INTENTIONALLY LEFT BLANK]
9
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty by its
duly authorized officer as of the day and year first above written.
NEWPORT STEEL CORPORATION
By:
-------------------------------------
Title:
----------------------------------
XXXXXX STEEL CORPORATION
By:
-------------------------------------
Title:
----------------------------------
ERLANGER TUBULAR CORPORATION
By:
-------------------------------------
Title:
----------------------------------
Accepted and acknowledged:
BANK OF AMERICA, N.A., f/k/a Bank
of America National Trust and Savings Association
By:
------------------------------------
Title:
---------------------------------
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