EXHIBIT 99.2
AMENDED AND RESTATED FORBEARANCE AGREEMENT
THIS AMENDED AND RESTATED FORBEARANCE AGREEMENT (this "Forbearance
Agreement") is entered into as of December 21, 2001 among GENEVA STEEL LLC, a
Delaware limited liability company ("Borrower"), each Lender signatory hereto
(each, together with its successors and permitted assigns, a "Lender"), and
CITICORP USA, INC., acting as agent for itself and the other Lenders (in such
capacity, "Agent"). Unless otherwise specified herein, all capitalized terms
used in this Forbearance Agreement shall have the meanings ascribed to them in
the Loan Agreement (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Borrower, the Agent and the Lenders are party to a Term
Loan Agreement dated as of January 3, 2001 (as amended, supplemented, restated
or otherwise modified from time to time, the "Loan Agreement");
WHEREAS, prior to November 15, 2001, the Borrower informed the Agent of
its intention to temporarily shut down the majority of its operations and the
operations of its Subsidiaries and to continue to sell certain of their
inventories and to collect their receivables in an orderly manner during such
temporary shut-down period;
WHEREAS, the Agent determined that there had occurred a material adverse
change in the value of the security interests or in the business, operations,
assets, liabilities (contingent or otherwise) or financial condition of the
Borrower since January 2, 2001;
WHEREAS, the Agent also determined that a shut-down of the Borrower's
and its Subsidiaries' operations constitutes a Default and/or an Event of
Default under the Loan Agreement;
WHEREAS, prior to November 15, 2001 the Borrower informed the Agent of
its belief that the best method for the preservation of the value of the assets
of the Borrower and its Subsidiaries was to continue to sell certain of their
inventories and to collect their receivables in conjunction with continued
limited funding in accordance with a budget made under the Credit Agreement,
dated as of January 3, 2001, as amended, among the Borrower, the lenders and
issuers party thereto and Citicorp, as agent for the lenders (as amended, the
"Credit Agreement");
WHEREAS, in light of the foregoing, prior to November 15, 2001 the
Borrower requested that the Agent and the Lenders forbear from exercising the
remedies available to them under the Loan Agreement until the close of business
on December 21, 2001 while the Borrower and its Subsidiaries operated in a
shut-down mode and applied the proceeds of the collateral securing the Credit
Agreement to the outstandings thereunder (including the cash collateralization
of letters of credit);
WHEREAS, on November 15, 2001 the Borrower, the Agent and the Lenders
entered into a Forbearance Agreement, which was consented to by the Government
Guarantor, pursuant to which the Agent and the Lenders agreed, with the
Government Guarantor's consent, to such forbearance on the terms set forth
therein (the "Original Forbearance Agreement");
WHEREAS, as of December 21, 2001 the Borrower had paid all of the
outstandings under the Credit Agreement and cash collateralized all letters of
credit issued thereunder, and the commitments under the Credit Agreement had
been terminated;
WHEREAS, the Borrower believes that the best method for the preservation
of the value of the assets of the Borrower and its Subsidiaries is, at least
until January 11, 2002, to continue to investigate the possibility of additional
financing and to continue to sell certain of their inventories and to collect
their receivables and to deposit the proceeds of such inventory and receivables
in a Blocked Account or a Cash Collateral Account as directed by the Agent,
which proceeds the Agent shall disburse to the Borrower (after receipt of a
written request from the Borrower) for application to the shut-down costs of the
Borrower in accordance with the Budget;
WHEREAS, in light of the foregoing, the Borrower has requested that the
Agent and the Lenders amend and restate the Original Forbearance Agreement to
provide that the Agent and Lenders forbear from exercising the remedies
available to them under the Loan Agreement for an extended period until the
close of business on January 11, 2002 while the Borrower and its Subsidiaries
operate in accordance with Budget and deposit the proceeds of such inventory and
receivables into a Blocked Account or a Cash Collateral Account as directed by
the Agent, which proceeds the Agent shall disburse to the Borrower (after
receipt of a written request from the Borrower) for application to the shut-down
costs of the Borrower in accordance with the Budget;
WHEREAS, the Borrower has requested that the Agent release the proceeds
of the Collateral from the Liens held by the Agent to effect the purposes
hereof;
WHEREAS, the Agent and the Lenders are willing to agree, and the
Government Guarantor is willing to consent, to such extended forbearance on the
terms and conditions set forth herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
FORBEARANCE; RELEASE OF COLLATERAL
SECTION 1.01. FORBEARANCE; RELEASE OF COLLATERAL.
(a) Standstill. From the Effective Date (as defined below) until
the close of business on January 11, 2002 (the "Standstill Period"), and subject
to the satisfaction of the conditions set forth herein, the Agent and the
Lenders agree to refrain from (i) accelerating the Obligations under the Loan
Agreement and (ii) exercising any other rights or remedies available to them
pursuant to the Loan Agreement.
(b) Termination of Standstill. Notwithstanding the foregoing, the
Standstill Period shall automatically and immediately terminate without
necessity or requirement of any notice or any other action and, upon such
termination, each of the Agent and the Lenders may take any action granted or
available to it under law or contract (including, without limitation,
acceleration of the Obligations, foreclosure on the Collateral and exercise of
set-off rights), upon the occurrence of any of the following events:
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(i) The occurrence of any Default or Event of Default
under Loan Agreement other than a Specified Default (as defined below).
(ii) The Borrower and its Subsidiaries shall not at any
time operate their businesses in accordance with the budget prepared by the
Borrower and attached hereto as Exhibit A (the "Budget").
(iii) The Borrower shall fail to deposit any and all
proceeds of the Collateral into a Blocked Account or a Cash Collateral Account
as directed by the Agent.
(iv) The commencement by the Borrower or any of its
Subsidiaries, or any creditor of the Borrower or any of its Subsidiaries, or any
other Person of any legal, judicial, administrative or arbitration proceeding in
any court or other tribunal to challenge any Lender's secured claims with
respect to the Obligations.
(v) The commencement of any voluntary proceeding, or the
filing of any voluntary petition, by the Borrower or any of its Subsidiaries
under title 11, United States Code (the "Bankruptcy Code") or any similar law
for the protection of creditors or relief of debtors.
(vi) The commencement of any involuntary proceeding, or
the filing of any involuntary petition, by any creditor of the Borrower or any
of its Subsidiaries, or any other Person, under the Bankruptcy Code or any
similar law for the protection of creditors or relief of debtors, and such
proceeding or petition shall not be dismissed within 30 days of the commencement
or filing thereof.
(c) Definition of Specified Default. For purposes of this
Forbearance Agreement, "Specified Default" means any Default which occurs under
any of (A) clause (d) of Section 8.1 of the Loan Agreement to the extent that
such Default occurs as a result of non-compliance with Section 6.3, clause (a)
of Section 6.8 or Section 7.5 of the Loan Agreement (to the extent such
non-compliance with Section 7.5 relates to the sale of inventory not in the
ordinary course of business which is made in accordance with the Budget), (B)
clauses (e) and (f) of Section 8.1 the Loan Agreement as a result of the
non-payment of trade payables (but not any other Indebtedness) by the Borrower
after the Effective Date, or (C) Section 1.4 of that certain Deed of Trust,
Security Agreement, Assignment of Rents and Fixture Filing dated January 3,
2001, in the case of each of (A), (B) and (C) above, which occurs in connection
with the shut-down of the majority of the operations of the Borrower and its
Subsidiaries and as a result of the sale of certain of their inventories and the
collection of their receivables in accordance with the Budget.
(d) Release of Collateral. In order to permit the Borrower to
apply the proceeds of the inventory and receivables to the shut-down costs of
the Borrower in accordance with the Budget, upon receipt of a written request
from the Borrower the Agent will, and is hereby authorized to, release (in
accordance with the Budget and, in any event, only in amounts not to exceed in
the aggregate $6,000,000 as follows: for the week ending December 28, 2001, an
amount not to exceed $2,150,000; for the week ending January 4, 2002, an amount
not to exceed $1,900,000; and for the week ending January 11, 2002, an amount to
exceed $2,100,000) such Collateral from the Liens of the Agent. The Agent shall
have no obligation to disburse to the Borrower, and the Borrower shall have no
right to withdraw, any amount from any Blocked Account or Cash Collateral
Account except as provided for in the Budget and subject to the limitations set
forth in the immediately preceding sentence.
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ARTICLE II
CONDITIONS PRECEDENT TO FORBEARANCE AGREEMENT
The forbearance set forth in Article I hereof shall become effective on
the date (the "Effective Date") that each of the following conditions precedent
are or shall be contemporaneously satisfied:
SECTION 2.01. The Agent shall have received counterparts of this
Forbearance Agreement duly executed by the Agent, the Requisite Lenders, the
Borrower, and the conditions to amendments and modifications set forth in
Section 5.5 of the U.S. Government Guarantee shall be satisfied.
SECTION 2.02. The Agent shall have received, dated the date of
receipt thereof by the Agent, in form and substance satisfactory to the Agent, a
certificate signed by a duly authorized officer of the Borrower stating that:
(a) The representations and warranties contained in Article III
hereof are correct on and as of the date of such certificate as though made on
and as of such date; and
(b) After giving effect to this Forbearance Agreement, no event
has occurred and is continuing which constitutes a Default or an Event of
Default, other than the Specified Defaults.
SECTION 2.03. After giving effect to this Forbearance Agreement,
no event has occurred and is continuing which constitutes a Default or an Event
of Default, other than the Specified Defaults.
SECTION 2.04. Borrower shall have paid and reimbursed the Agent
and the Lenders for all outstanding and unpaid fees, costs and expenses,
including fees and expenses of Weil, Gotshal & Xxxxxx LLP.
SECTION 2.05. Each of the Agent and the Government Guarantor
shall have received such documents from the Borrower as the Agent shall request
in writing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
The Borrower represents and warrants to the Agent and the Lenders that:
SECTION 3.01. AUTHORIZATION. The execution, delivery and
performance by the Borrower of this Forbearance Agreement have been authorized
by all necessary limited liability company action, and this Forbearance
Agreement constitutes the legal, valid and binding obligation of the Borrower
enforceable against it in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability affecting the enforcement of creditors'
rights and the application of general principles of equity (regardless of
whether such enforcement is sought in a proceeding in equity or at law).
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SECTION 3.02. NO CONFLICT. Neither the execution, delivery and
performance of this Forbearance Agreement nor the consummation of the
transactions contemplated hereby does or shall contravene, result in a breach
of, or violate (a) any provision of the Borrower's certificate of formation or
agreement of limited liability company, (b) any law or regulation, or any order
or decree of any court or government agency or instrumentality, or (c) any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which the Borrower or any of its Subsidiaries is a party or by which the
Borrower or any of its Subsidiaries or any of their property is bound.
SECTION 3.03. REPRESENTATIONS AND WARRANTIES IN THE LOAN
AGREEMENT. The representations and warranties set forth in Article IV of the
Loan Agreement (other than the representations and warranties set forth in
Section 4.5 of the Loan Agreement) and in each other Loan Document are true and
correct in all material respects on and as of the Effective Date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate only to an earlier date.
SECTION 3.04. NO DEFAULT. After giving effect to this Forbearance
Agreement, no Default or Event of Default other than any Specified Default has
occurred and is continuing under the Loan Agreement.
ARTICLE IV
MISCELLANEOUS PROVISIONS
SECTION 4.01. REFERENCE TO AND EFFECT UPON THE LOAN AGREEMENT; NO
WAIVER.
(a) The Loan Agreement and the other Loan Documents shall remain
in full force and effect and are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Forbearance
Agreement shall not operate as a waiver of any Default or Event of Default or
any right, power, privilege or remedy of the Agent or any Lender under the Loan
Agreement or any Loan Document, or constitute a waiver of any provision of the
Loan Agreement or any Loan Document.
SECTION 4.02. COSTS AND EXPENSES. As provided in Section 10.3 of
the Loan Agreement, the Borrower agrees to reimburse the Agent and the Lenders
and the Government Guarantor for all reasonable fees, costs and expenses,
including the reasonable fees, costs and expenses of counsel or other advisors
for advice, assistance, or other representation in connection with this
Forbearance Agreement.
SECTION 4.03. RELEASE. In further consideration of the Lenders'
execution of this Forbearance Agreement, the Borrower hereby releases each of
the Agent, the Government Guarantor and each Lender and each of their respective
affiliates, officers, employees, directors, agents and attorneys (collectively,
the "Releasees") from any and all claims, demands, liabilities,
responsibilities, disputes, causes of action (whether at law or equity) and
obligations of every kind or nature whatsoever, whether liquidated or
unliquidated, known or unknown, matured or unmatured, fixed or contingent that
the Borrower may have against the Releasees which arise from or in any way
relate to the Obligations, any Collateral, any Loan Document (including, without
limitation, the Original Forbearance Agreement and this Forbearance Agreement),
any documents, agreements, dealings or other matters in connection with or
relating to any of the
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Loan Documents, and any third parties liable in whole or in part for the
Obligations, in each case to the extent arising (x) on or prior to the date
hereof or (y) out of, or relating to, actions, dealings or matters occurring on
or prior to the date hereof (including, without limitation, any actions or
inactions which any of the Releasees may have taken or omitted to take prior to
the date hereof).
SECTION 4.04. GOVERNING LAW. THIS FORBEARANCE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4.05. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. Any
legal action or proceeding with respect to this Forbearance Agreement or any
other Loan Document may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York, and, by
execution and delivery of this Forbearance Agreement, the Borrower hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties hereto
hereby irrevocably waive any objection, including any objection to the laying of
venue or based on the grounds of forum non conveniens, which any of them may now
or hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
SECTION 4.06. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND
THE BORROWER IRREVOCABLY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS FORBEARANCE AGREEMENT.
SECTION 4.07. AMENDMENT AND RESTATEMENT. This Forbearance
Agreement amends and restates in its entirety the Original Forbearance Agreement
and on the Effective Date the Original Forbearance Agreement shall be of no
further force and effect.
SECTION 4.08. HEADINGS. Section headings in this Forbearance
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Forbearance Agreement for any other purposes.
SECTION 4.09. COUNTERPARTS. This Forbearance Agreement may be
executed in any number of counterparts and by facsimile, each of which
counterparts when so executed shall be deemed an original, but all such
counterparts shall constitute one and the same instrument.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Forbearance
Agreement to be executed and delivered by their proper and duly authorized
officers as of the date set forth above.
BORROWER:
GENEVA STEEL LLC
By: /s/ Xxxxx Xxxxxx
Name: Xxxxx Xxxxxx
Title: Vice President and Treasurer
AGENT AND LENDER:
CITICORP USA, INC.,
as Agent and Term A Lender
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Title: Vice President
LENDERS:
CITICORP NORTH AMERICA, INC.
as Term B Lender
By: /s/ Xxxx Xxxxxxxxx
Name: Xxxx Xxxxxxxxx
Title: Managing Director
XXXXXX XXXXX & COMPANY
as Term C Lender
By: /s/ Xxxxxx Xxxxx, Jr.
Name: Xxxxxx Xxxxx Jr.
Title: Managing Director
[Government Guarantor Consent Page to Amended and Restated Forbearance
Agreement]
GOVERNMENT GUARANTOR:
Approved and consented to the foregoing Forbearance Agreement
as of this 21st of December, 2001
EMERGENCY STEEL LOAN GUARANTY BOARD,
as Government Guarantor
By: /s/ Xxxxxxxxxx Xxxx
Name: Xxxxxxxxxx Xxxx
Title: General Counsel
[Government Guarantor Consent Page to Amended and Restated Forbearance
Agreement]
