NS Group, Inc. Form 10-Q March 31, 2002 Exhibit 4.3
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this "AGREEMENT") dated as of March 28,
2002, is made by and between THE HUNTINGTON NATIONAL BANK, a national banking
association ("HUNTINGTON"), as trustee (in such capacity, as "INDENTURE
TRUSTEE") under the Indenture dated as of July 28, 1995 (as amended,
supplemented or otherwise modified from time to time, the "INDENTURE") between
NS Group, Inc. (the "COMPANY") and Huntington as collateral agent under certain
of the Security Documents (as defined in the Indenture) (Huntington, in its
capacities as Indenture Trustee and Collateral Agent, shall be referred to
herein as "TRUSTEE"), and THE CIT GROUP/BUSINESS CREDIT, INC., a New York
corporation, as Agent (in such capacity, the "AGENT") under the Financing and
Security Agreement dated as of March 28, 2002 among the Borrowers (hereinafter
defined), the Lenders party thereto (collectively, the "BANKS") and the Agent
(as amended, supplemented, or otherwise modified from time to time, the "LOAN
AGREEMENT"). The Trustee and the Agent are each hereinafter sometimes referred
to individually as a "COLLATERAL AGENT" and collectively as the "COLLATERAL
AGENTS".
The Banks will make loans (collectively, the "REVOLVING LOANS") jointly
and severally to Newport Steel Corporation ("NEWPORT") and Xxxxxx Steel
Corporation ("XXXXXX"; and together with Newport, the "BORROWERS"), guaranteed
by the Company, Erlanger Tubular Corporation ("ERLANGER") and Northern Kentucky
Management, Inc. (collectively, the "BANK LOAN GUARANTORS"), and secured
principally by Borrowers' accounts receivable arising in the ordinary course of
business, inventory, certain deposit accounts, general intangibles relating to
any of the foregoing and the proceeds thereof, all as more particularly
described in the Loan Agreement and the other "LOAN DOCUMENTS" (as defined in
the Loan Agreement).
The Company issued $131,096,000 13.5% Senior Secured Notes due 2003
(the "SECURITIES") under the Indenture, and Xxxxxx, Newport and Erlanger
(collectively, the "SENIOR SECURED NOTE GUARANTORS") each have executed a
Subsidiary Guarantee of the Company's obligations under the Indenture and the
Securities (the "SENIOR SECURED NOTE GUARANTEE") and each have executed and
delivered to the Company an Intercompany Note in connection with the issuance of
the Securities (collectively, the "INTERCOMPANY NOTES"). The Company has
received security interests in certain property of each of the Senior Secured
Note Guarantors in connection with the Intercompany Notes and has pledged the
Intercompany Notes and related security interests to the Trustee as additional
collateral for the issuance of the Securities. The Securities, the Intercompany
Notes, and the Senior Secured Note Guarantee are secured by Borrowers'
equipment, fixtures and real property, as more particularly described in the
Security Documents (as defined in the Indenture, but excluding this Agreement)
(collectively, the "SENIOR SECURED NOTE SECURITY DOCUMENTS"). The Indenture and
the Senior Secured Note Security Documents are collectively referred to herein
as the "TRUSTEE SECURITY DOCUMENTS." The Company, the Borrowers, the Bank Loan
Guarantors and the Senior Secured Note Guarantors are sometimes collectively
referred to as "HOLDINGS GROUP".
NOW, THEREFORE, in consideration of the premises for other good and
valuable consideration, the parties hereto hereby agree as follows:
1. DESCRIPTION OF COLLATERAL.
(a) The Agent has, pursuant to the Loan Documents, a security interest
in the "Collateral" as defined in each of Loan Document, as applicable
(hereinafter, the "AGENT COLLATERAL"), which Agent Collateral includes, among
other items,
(i) Accounts, as defined in each applicable Loan Document (herein,
the "ACCOUNTS RECEIVABLE");
(ii) General Intangibles, as defined in each applicable Loan
Document (herein, the "WORKING CAPITAL INTANGIBLES");
(iii) Inventory, as defined in each applicable Loan Document
(herein, the "INVENTORY");
(iv) Depository Accounts and Other Collateral, each as defined in
the Loan Agreement; and
(iv) The proceeds and products of all the items of Agent
Collateral, in whatever form (herein, the "AGENT COLLATERAL
PROCEEDS").
(b) The Trustee has, pursuant to the Trustee Security Documents, a
security interest in the "Collateral" as defined in the Indenture (hereinafter,
the "TRUSTEE COLLATERAL") which Trustee Collateral includes, among other items:
(i) The real estate and improvements owned or leased by the Senior
Secured Note Guarantors (herein, the "REAL PROPERTY");
(ii) Equipment now or hereafter owned or leased by the Company and
Senior Secured Note Guarantors, including, without limitation,
(x) furniture, furnishings, tools, lubricants, spare parts,
shelving, displays, cases, accessories, motors and engines,
and (y) with respect to the foregoing all attachments,
components, parts, equipment and accessories installed thereon
or affixed thereto (herein, the "EQUIPMENT");
(iii) Fixtures, as defined in the Senior Secured Note Security
Documents (herein, the "FIXTURES");
(iv) The Intercompany Notes and the collateral securing such
Intercompany Notes pursuant to the Pledge and Security
Agreement (as defined in the Indenture); and
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(v) The proceeds and products of all the items of Trustee
Collateral in whatever form (herein, the "TRUSTEE COLLATERAL
PROCEEDS").
2. AGREEMENTS WITH RESPECT TO COLLATERAL.
(a) The Agent shall not have a security interest and shall not exercise
any right or remedy or assert, except as provided for by this Agreement, any
claim with respect to the Trustee Collateral, and the Trustee shall not have a
security interest and shall not exercise any right or remedy, or assert any
claim with respect to the Agent Collateral.
(b) If either Collateral Agent shall receive any proceeds or other
accounts payable with respect to any collateral (including, without limitation,
any proceeds of a sale, foreclosure, loss, damage or otherwise with respect to
such collateral), which collateral, pursuant hereto, is subject to a security
interest in favor of the other Collateral Agent, the Collateral Agent receiving
such proceeds shall promptly remit the same to the other Collateral Agent.
(c) Each of the Collateral Agents will, upon request of the other, from
time to time execute and deliver or cause to be executed and delivered such
further instruments and do and cause to be done such further acts as may be
necessary or proper to carry out more effectively the provisions of this
Agreement.
(d) The Trustee will send to the Agent a copy of each notice of default
it sends to Noteholders pursuant to Section 9.2 of the Indenture. The Agent
shall send to Trustee a copy of each notice of default it sends to the Borrowers
pursuant to the Loan Agreement.
(e) The Trustee agrees that, at any time when it has physical
possession or control of any of the Trustee Collateral or any Agent Collateral,
it will at all times allow the Agent the right, at the cost, risk and expense of
the Agent and so long as such right is exercised in a manner which does not
damage the Trustee Collateral, to enter and use such Trustee Collateral for the
purpose of repossessing, completing the manufacture of, removing, selling or
preparing for shipment any Inventory which is subject to the Agent's security
interest, and otherwise to realize upon the Agent Collateral in a manner not
inconsistent with the provisions of this Agreement; PROVIDED that if the Trustee
believes that the Trustee Collateral is not safe for operation and use, the
Trustee and Agent shall jointly select and hire an outside independent expert to
examine the Trustee Collateral. If the Trustee and the Agent cannot agree on an
outside independent expert within five days, the Agent may select and hire the
outside independent expert, PROVIDED that the Agent may not unreasonably object
to a qualified expert proposed by the Trustee. If such expert agrees that the
Trustee Collateral is not safe for operation and use, the Agent agrees not to
enter and use such Trustee Collateral without Trustee's consent. Notwithstanding
the foregoing provisions, the Agent may always have limited access to the
Trustee Collateral for the purpose of retrieving the books and records relating
to the Agent Collateral. In addition, the Trustee will allow the Agent to store
any such collateral or take the actions referred to in the preceding sentence on
the premises which comprise the Trustee Collateral for up to (i) with respect to
the Agent's right to store the Agent collateral and to take all of the actions
enumerated above other than completing the
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manufacture of Inventory, six months after the date, if ever, on which the
Trustee gains physical possession or control of said premises, and (ii) with
respect to the Agent's right to complete the manufacture of Inventory, three
months after the date, if ever, on which the Trustee gains physical possession
or control of said premises. The rights of the Agent enumerated in this
Paragraph (e) are effective notwithstanding any default of the Company under the
Indenture or of the Company or any of the Senior Secured Note Guarantors under
any other agreement relating to the Senior Secured Notes between the Trustee and
the Company or any of the Senior Secured Note Guarantors; PROVIDED that the
rights of the Agent enumerated in this Paragraph (e) do not preclude the Trustee
from proceeding simultaneously with the foreclosure and sale of the Trustee
Collateral so long as such proceedings are subject to the Agent's rights under
this Paragraph (e).
3. APPLICABILITY OF PRIORITIES. The priorities provided for in Section 1 of this
Agreement shall apply:
(a) without regard to the time or order of attachment or perfection of
the security interests and other liens to secure either the Revolving Loans or
the Securities, and without regard to the giving or failure to give notice of
the acquisition of any such security interest or lien; and
(b) with respect to the relative priority and attachment of the
security interests and other liens perfected by any party hereto, or with
respect to the attachment of such security interests or liens to the proceeds of
the collateral in question or to the proceeds of the proceeds thereof,
notwithstanding anything to the contrary in the provisions of the Uniform
Commercial Code or the Bankruptcy Code of 1978, as amended, or any state
bankruptcy or creditors act, and notwithstanding the giving or failure to give
notice of the acquisition or expected acquisition of any property or security
interest.
4. NOTICE OF DEFAULT. Each Collateral Agent agrees that if it declares an
obligor to be in default under its agreements, or makes demand for payment of
all obligations thereunder, such Collateral Agent will promptly notify the other
Collateral Agent of any such declaration, but the failure to so notify shall not
affect the rights of the parties hereto.
5. NO EFFECT ON OTHERS. This Agreement shall not affect the rights of the
Collateral Agents relative to the rights of any other creditors of any member of
the Holdings Group. Nothing in this Agreement shall be construed in any way to
modify or relieve the obligations of the members of the Holdings Group to
perform their respective obligations under the Loan Agreement or the Trustee
Security Documents or to modify the respective obligations and liabilities
contained therein.
6. AMENDMENTS. The Agent may amend the Loan Agreement and the other Loan
Documents, and the Trustee may amend the Trustee Security Documents, without the
consent of the other Collateral Agent, PROVIDED that for the purposes of this
Agreement, the capitalized terms contained in Paragraph l (a) hereof shall have
the meanings given to them on the date of this Agreement. In addition, any
amendment to the Loan Agreement that materially impairs the
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ability of the Company to repay the Securities and any amendment to the Trustee
Security Documents that materially impairs the ability of the Borrowers to repay
the Revolving Loans shall not be effected without the consent of the other
Collateral Agent.
7. BOOKS AND RECORDS. In the event the Agent elects to exercise its right in
connection with its security interest to remove the books and records of any
member of Holdings Group it will do so, except with respect to Agent Collateral,
only for the purpose of copying such books and records, and it will return the
original for the benefit of the Company, the Borrowers or the Guarantors (to the
extent agreed under the Loan Agreement) or the Trustee, as the case may be.
8.ADDITIONAL AGREEMENTS. Trustee hereby irrevocably and unconditionally
represents, warrants, acknowledges and agrees, as applicable, as follows:
(a) The Loan Agreement is and shall constitute a "Credit Facility" as
defined in and for all purposes under the Indenture.
(b) No Default or Event of Default would be created by the execution
and delivery by the Borrowers and the Bank Loan Guarantors of the Loan Agreement
and the other Loan Documents or by the performance of their respective
obligations thereunder, or to the best of Trustee's knowledge, no Default or
Event of Default exists under the Indenture as of the date hereof.
(c) Based upon a reasonable reading of the Indenture, no provision of
the Indenture, including, without limitation Section 6.13 thereof or the
definition of "Restricted Payment" thereunder, is intended or shall operate to
restrict, prohibit or impair the ability of the Borrowers or the Bank Loan
Guarantors to pay or perform their respective obligations under the Loan
Agreement and other Loan Documents.
(d) Trustee is authorized to enter into, execute and deliver this
Intercreditor Agreement, which shall be enforceable against the parties hereto
in accordance with its terms.
9.MISCELLANEOUS.
(a) NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be deemed to have been duly
given or made when delivered or telexed or if deposited in the United States
mail, three days after the day of deposit, first class postage prepaid. A copy
of any such notice, request or demand and any other communication shall be
delivered to Holdings Group at the following address:
Notices shall be addressed as follows:
If to Borrower: Xxxxxx X. Xxxxxxxxxx
NS Group, Inc.
X.X. Xxx 000
000 Xxxx Xxxxx Xxxxxx
0
Xxxxxxx, Xxxxxxxx 00000
Telecopier No. (606) 292?0593
If to Trustee: The Huntington National Bank
Rockwood Tower Suite 350
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx-Xxxxxx
Telecopy: (000) 000-0000
If to Agent: CIT Group/Business Credit, Inc.
00 Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, XX 00000
Attn: Regional Credit Manager
Telecopy: (000) 000-0000
(b) AMENDMENTS AND SUCCESSORS. No agreement shall be effective to
amend, supplement or discharge in whole or in part this Agreement unless such
agreement is in writing, signed by the Collateral Agents. This Agreement shall
be binding upon and shall inure to the benefit of the successors and assigns of
the parties hereto.
(c) SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(d) TERMINATION. This Agreement shall terminate upon the payment in
full of all amounts outstanding under the Loan Agreement and other obligations
of the Company, the Borrowers and the Bank Loan Guarantors incurred thereunder
or the payment in full of the Securities and other obligations of the Company
and the Senior Secured Note Guarantors incurred thereunder or under the Senior
Secured Note Guaranties.
(e) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not define or limit the terms thereof.
10. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11. SUBMISSION TO JURISDICTION; WAIVERS. Each of the Collateral Agents
hereby irrevocably and unconditionally:
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(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement to which it is a party, or for recognition
and enforcement of judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
(c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Collateral Agent at
its address set forth in the Indenture or the Loan Agreement, respectively, or
at such other address of which the other Collateral Agent shall have been
notified pursuant hereto;
(d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to xxx
in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
Balance of Page Intentionally Left Blank
Signature Page Follows
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IN WITNESS WHEREOF, the parties have caused this Intercreditor
Agreement to be executed and delivered by their respective officers as of the
date first above written.
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Agent as aforesaid
By: /s/ Xxxxx Xxxxxxxxxxxx
Title: Vice President
THE HUNTINGTON NATIONAL BANK, as
Trustee
By: /s/ Candada X. Xxxxx
Title: Senior Vice President
