NS Group, Inc. Form 10-Q March 31, 2002 Exhibit 4.2
GUARANTY
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Dated as of March 29, 2002
Reference is made to that certain Financing Agreement dated as of the
date hereof by and among Newport Steel Corporation, a Kentucky corporation
("Newport"), Xxxxxx Steel Corporation, a Pennsylvania corporation ("Koppel";
Newport and Xxxxxx are referred to herein, individually, as a "Company" and,
collectively, as the "Companies"), CIT Group/Business Credit, Inc., a New York
corporation, as agent ("Agent") and the Lenders from time to time a party
thereto (as the same may be amended, supplemented or otherwise modified from
time to time, the "Financing Agreement"). Capitalized terms used but not defined
herein shall have the meaning given to them in the Financing Agreement. Each of
NS Group, Inc., a Kentucky corporation ("Parent"), Erlanger Tubular Corporation,
an Oklahoma corporation and a wholly-owned subsidiary of Parent ("Erlanger"),
and Northern Kentucky Management, Inc., a Kentucky corporation and a
wholly-owned subsidiary of Parent ("NK Management"; Parent, Erlanger and NK
Management are referred to herein individually as a "Guarantor" and,
collectively, as the "Guarantors"), hereby, jointly and severally,
unconditionally guarantees and agrees to be liable for the full and indefeasible
payment in full, in cash and the performance when due of all Obligations owed by
the Companies to Agent and the Lenders.
To the extent Agent receives payment on account of any of the
Obligations, which payment is thereafter set aside or required to be repaid by
Agent or the Lenders in whole or in part, then, to the extent of any sum not
finally retained by Agent or the Lenders (regardless of whether such sum is
recovered from Agent or the Lenders by either Company, its trustee, or any other
party acting for, on behalf of or through either Company or its respective
representatives), each Guarantor's obligation to the Lenders under this
Guaranty, as amended, modified or supplemented, shall remain in full force and
effect (or be reinstated) until such Guarantor has made payment to Agent
therefor, which payment shall be due upon demand.
This Guaranty is executed by each Guarantor as an inducement to the
Lenders to extend credit to the Companies. Each Guarantor agrees that the
Lenders' extension of credit to the Companies shall be deemed to have been done
in consideration of and in reliance upon the execution of this Guaranty.
To the full extent permitted by applicable law, each Guarantor hereby
waives notice of (a) acceptance of this Guaranty, the making of loans or
advances to the Companies or the extension of any other financial accommodation
to the Companies under the Loan Documents, (b) the amendment, extension or
termination of the Promissory Notes or the amendment, modification, supplement,
renewal, restatement or extension of, or the increase or decrease in the amount
of, the Obligations or the Loan Documents and any Collateral, as applicable, and
the guaranty made herein shall apply to the Obligations as so amended, modified,
supplemented, renewed, restated, extended, increased or decreased, (c) any other
changes in terms of, or extensions of the time of payment of,
the Obligations owed by the Companies to the Lenders, (d) the taking and
releasing of the Collateral for, or other guarantors of, the Obligations owed by
the Companies to the Lenders, (e) the settlement, compromise or release of any
of the Obligations owed by the Companies to the Lenders, (f) any waiver of, or
consent to either Company's deviation from, any term, condition or covenant set
forth in the Loan Documents by Agent or the Lenders, and (g) presentment,
demand, protest, notice of protest, notice of non-payment and all other notices
to which any Guarantor may be entitled under applicable law (except as expressly
provided in this Guaranty), and each Guarantor agrees that the amount of the
Obligations and the validity and enforceability of this Guaranty shall not be
diminished or affected by the failure to provide such Guarantor with any such
notice or by Agent's or the Lenders' doing any of the foregoing. This Guaranty
is a guaranty of payment and performance and not merely a guaranty of
collection, and accordingly each Guarantor also agrees that neither Agent nor
the Lenders need attempt to collect any Obligations from the Companies or any
other obligor or guarantor with respect thereto, or to realize upon any
Collateral, prior to making demand upon any Guarantor under this Guaranty. This
Guaranty is absolute, unconditional and continuing, regardless of the validity,
regularity or enforceability of any of the Obligations or Loan Documents or the
fact that a security interest or lien in any Collateral or security therefor may
not be enforceable by Agent or the Lenders or may otherwise be subject to
equities, defenses or prior claims in favor of others, or may be invalid or
defective in any way and for any reason, including any action, or failure to
act, on Agent's or the Lenders' part. It is the intent of each Guarantor by this
paragraph to waive any to the full extent permitted by applicable law, and all
suretyship defenses available to such Guarantor with respect to the Obligations,
whether or not specifically enumerated above.
Payment in cash by each Guarantor shall be made from time to time on
demand as Obligations become due to Agent, and one or more successive or
concurrent actions may be brought hereon against each Guarantor either in the
same action or in separate actions. In the event any claim or action based on
this Guaranty is made or brought against any Guarantor, such Guarantor agrees
not to assert against Agent or the Lenders any set-off or counterclaim which
either Company may have against Agent or the Lenders (other than the assertion
of a defense of payment), and further, each Guarantor agrees not to deduct,
set-off, or seek to counterclaim for or recoup, any amounts which are or may be
owed by Agent or the Lenders to any Guarantor, or for any loss of contribution
from any other guarantor. Each Guarantor hereby consents to the in personam
jurisdiction of the courts of the State of Illinois. In the event that Agent or
the Lenders bring any action or suit in any court of record in Illinois (whether
state or federal) to enforce any or all of the Obligations, service of process
may be made upon any Guarantor by mailing a copy of the summons to such
Guarantor at the address set forth below.
All sums at any time to the credit of any Guarantor and any property of
any Guarantor on which Agent at any time has a lien or security interest, or of
which Agent at any time has possession, shall secure payment and performance of
all Obligations.
Upon the occurrence of any of the following events:
(a) any Event of Default under the Loan Documents; or
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(b) the failure of any Guarantor to observe or perform any agreements,
warranties or covenants contained herein;
then immediately, the liability of each Guarantor for the entire amount of the
Obligations shall mature, even if the liability of the Companies therefor does
not.
Each Guarantor hereby irrevocably grants to Agent access to, and a
license to use, all Equipment of such Guarantor for the sole purpose, upon the
occurrence of an Event of Default, of making, assembling, preparing for sale or
completing, or causing others to do so, any raw materials or Inventory,
including use of the real property in which such Guarantor has a fee or
leasehold interest for the purpose of completing the manufacture of unfinished
goods, raw materials or work-in-process comprising Inventory to the extent such
Guarantor is permitted to do so under the license or assignment agreements
pursuant to which such Guarantor acquired rights in and to such Equipment and in
accordance with applicable law, and applying the proceeds thereof to the
obligations hereunder. Parent shall cause each of its subsidiaries existing or
acquired after the date hereof to grant an irrevocable license or access
agreement similar in nature and scope to the license and access granted pursuant
to the foregoing sentence.
This Guaranty may be terminated by the Guarantors (or any one of them)
only upon actual receipt by Agent of at least thirty (30) days prior written
notice of termination sent by registered or certified mail; PROVIDED, HOWEVER,
that the terminating Guarantor(s) shall remain bound hereunder, and this
Guaranty shall continue in full force and effect, with respect to any and all
Obligations created or arising prior to the effective date of such termination
and with respect to any and all extensions, renewals or modifications of said
pre-existing Obligations. Termination shall not relieve any Guarantor from
liability for any post-termination collection expenses or interest which accrues
hereunder.
Agent's books and records showing the Revolving Loan Account shall be
admissible in evidence in any action or proceeding as prima facie proof of the
items therein set forth. Agent's statements, if any, rendered to the Companies
shall be binding upon each Guarantor (whether or not such Guarantor received
copies thereof) and shall constitute an account stated between Agent and the
Companies unless Agent shall have received a written statement of the Companies'
exceptions in the manner provided in the Loan Documents.
Each Guarantor expressly waives any and all rights of subrogation,
reimbursement, indemnity, exoneration, contribution or any other claim which it
may now or hereafter have against either Company or any other person directly or
contingently liable for the Obligations, or against or with respect to either
Company's property (including, without limitation, property securing the
Obligations owed by the Company to Agent or the Lenders) arising from the
existence or performance of this Guaranty.
This Guaranty embodies the whole agreement of the parties and may not
be modified except in writing, and no course of dealing between Agent or the
Lenders and the Guarantors shall be effective to change or modify this Guaranty.
Agent's or the Lenders' failure to exercise any right
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hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any other time and from time to time thereafter, and such
rights shall be considered as cumulative rather than alternative. Agent's or any
Lender's knowledge of any breach or other nonobservance by any Guarantor of the
terms and provisions of this Guaranty shall not constitute a waiver thereof, nor
a waiver of any obligations to be performed by any Guarantor hereunder.
This Guaranty may be assigned by Agent and shall inure to the benefit
of Agent, on behalf of the Lenders, and for the benefit of any of Agent's
assignees or transferees, and shall cover all Obligations owed to the Lenders
and to Agent at the time of assignment or transfer as well as any and all future
Obligations under the Loan Documents owed by the Company to such assignees or
transferees. This Guaranty shall be binding jointly and severally upon the
Guarantors and their respective successors and assigns and shall pertain to the
Companies and their respective successors and assigns.
Anything contained in this Guaranty to the contrary notwithstanding,
the obligations of each Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the greatest amount that would not render such
Guarantor's obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
provisions of applicable state law (collectively, the "Fraudulent Conveyance
Laws"), in each case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Conveyance Laws (specifically excluding, however, any liabilities of such
Guarantor in respect of intercompany indebtedness to the Companies or affiliates
of the Companies to the extent such indebtedness would be discharged in an
amount equal to the amount paid by such Guarantor hereunder) and after giving
effect as assets to the value (as determined under the applicable provisions of
the Fraudulent Conveyance Laws) of any rights of subrogation, contribution,
reimbursement, indemnity or similar rights of such Guarantor pursuant to
applicable law or any agreement providing for an equitable allocation among
Guarantors and other Affiliates of the Companies of obligations arising under
guaranties by such parties.
After giving effect to the transactions contemplated by this Guaranty
and the other Loan Documents to which Erlanger or NK Management is a party, (i)
neither Erlanger or NK Management intends to incur or believes that it will
incur, debts beyond its ability to pay such debts as they become due, and (ii)
each of Erlanger and NK Management (a) owns and will own property, the fair
salable value of which is (1) greater that the total amount of its liabilities
(including contingent liabilities) and (2) greater than the amount that will be
required to pay the probable liabilities of its then existing debts as they
become absolute and matured, and (b) has and will have capital that is not
unreasonably small in relation to its business as presently conducted and as
proposed to be conducted.
THE OBLIGATIONS OF EACH GUARANTOR HEREUNDER ARE SECURED BY THE SECURITY
INTERESTS GRANTED BY SUCH GUARANTOR TO AGENT, FOR THE BENEFIT OF THE LENDERS,
PURSUANT TO THE SECURITY AGREEMENT EXECUTED BY SUCH GUARANTOR IN FAVOR OF AGENT,
FOR THE BENEFIT OF THE LENDERS.
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This instrument is executed and given in addition to, and not in
substitution, reduction, replacement, or satisfaction of, any other endorsements
or guarantees of the Obligations, now existing or hereafter executed by the
Guarantors or others in favor of Agent or the Lenders.
All notices, approvals, requests, demands and other communications
hereunder shall be given (i) if to a Guarantor, to such Guarantor's address set
forth on the signature page hereto and (ii) if to Agent, to Agent's address set
forth in the Financing Agreement, in each case in accordance with the notice
provisions of the Financing Agreement.
When used in this agreement, all pronouns shall, wherever applicable,
be deemed to include the singular and plural as well as the masculine, feminine,
and neuter genders.
Each Guarantor hereby acknowledges that it has received a copy of the
Loan Documents and is familiar with the terms and provisions thereof.
This Guaranty shall be governed by and construed in accordance with the
laws of the State of Illinois, without regard for its conflict of law
principles.
EACH OF THE GUARANTORS, AGENT AND THE LENDERS HEREBY WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS GUARANTY.
Balance of Page Intentionally Left Blank
Signature Page Follows
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IN WITNESS WHEREOF, the Guarantors has caused this Guaranty to be
executed by its duly authorized officer and delivered effective as of the date
above set forth.
NS GROUP, INC., a Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxxxxx
Its: Vice President and Treasurer
Address: 000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
ERLANGER TUBULAR CORPORATION, an
Oklahoma corporation
By: /s/ Xxxxxx X. Xxxxxxxxxx
Its: Treasurer
Address: 000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
NORTHERN KENTUCKY MANAGEMENT, INC., a
Kentucky corporation
By: /s/ Xxxxxx X. Xxxxxxxxxx
Its: Treasurer
Address: Address: 000 X. Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
