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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED JULY 31, 1996
/ / TRANSITION REPORT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-4288
NORTHWESTERN STEEL AND WIRE COMPANY
(Exact name of registrant as specified in its charter)
ILLINOIS
(State or other jurisdiction of
incorporation or organization)
121 WALLACE STREET
STERLING, ILLINOIS
(Address of principal executive offices)
36-1562920
(I.R.S. Employer
Identification No.)
61081
(Zip Code)
Registrant's telephone number, including area code 815/625-2500
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS
----------------
None
NAME OF EACH EXCHANGE
ON WHICH REGISTERED
---------------------
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
9 1/2% Senior Notes due 2001
-------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K of any amendment to this Form 10-K. /X/
State the aggregate market value of the Registrant's voting stock held by
non-affiliates of the Registrant: $80,844,000
Number of shares of Common Stock, par value $0.01 per share, outstanding as
of October 16, 1996: 24,881,529
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PART I
ITEM 1. BUSINESS
GENERAL
Founded in 1879, the Company is a major mini-mill producer of structural
steel products and rod and wire products. In contrast to integrated mills which
produce steel from coke and iron ore through the use of blast furnaces and basic
oxygen furnaces, mini-mills use electric arc furnaces to melt steel scrap and
cast the resulting molten steel into long strands of various shapes in a
continuous casting process. The Company's steel products include wide flange
beams, light structural shapes and merchant bars. The Company's rod and wire
products include nails, concrete reinforcing mesh, residential and agricultural
fencing and a wide range of other wire products.
The Company pioneered the use of electric arc furnaces for steelmaking,
installing its first electric arc furnace in 1936. The Company's three 400-ton
electric arc furnaces are among the world's largest, providing the Company with
considerable economies of scale in its steel scrap melting operations.
The Company's operations are located in Sterling and neighboring Rock
Falls, Illinois (the "Sterling Operations"); Houston, Texas (the "Houston
Facility"); and Hickman, Kentucky (the "Kentucky Facility"). The Sterling
Operations consist primarily of a melt shop with three 400-ton electric arc
furnaces with an annual scrap melting capacity in excess of 2.4 million tons,
two ladle metallurgical furnaces, three continuous casters, three rolling and
finishing mills and the Company's nail and wire operations. The Houston Facility
consists of a wide flange beam rolling and finishing mill. The Kentucky Facility
is the Company's newest operation which produces concrete reinforcing mesh. The
Company's continuous casters have sufficient capacity to cast semi-finished
steel for all of the Company's rolling and finishing mills.
OPERATIONS
The Company's operations constitute one line of business with several
classes of products. Operations are divided into the Steel Division and the Rod
and Wire Products Division.
The Steel Division produces raw steel using the electric arc furnace
process. Semi-finished steel is made by continuously casting into billets,
blooms and beam blanks.
Finished products are rolled from the semi-finished steel through a series
of reduction mill processes. Such products include wide flange beams, channel
and angle products and merchant bar and bar shapes, which are sold nationally to
steel fabricators, distributors and original equipment manufacturers, including
industrial and agricultural machinery manufacturers. The Company sells its
output principally through Company personnel and independent sales agents to
customers located throughout the United States. In addition, semi-finished
products are sold to other steel producers.
The Rod and Wire Products Division produces rods for use in drawing to
various wire gauges to produce nails, fence and a wide range of other fabricated
wire products for shipments to hardware jobbers, agricultural cooperatives and
the construction industry.
CUSTOMERS AND MARKETS
Structural steel products are used in a variety of commercial, industrial
and residential construction applications, as well as infrastructure projects,
such as roads and bridges, and public sector construction, such as schools and
hospitals. In construction applications, structural steel products are used as
beams, columns and girders which form the support structure of a building. In
infrastructure construction, structural forms are combined to form bridge
trusses and vertical highway supports. Original equipment manufacturers use
light structural shapes in the fabrication of heavy equipment.
Approximately one-half of the Company's steel rod production is utilized in
the manufacture of the Company's rod and wire products, while the remaining
one-half of the Company's rod production is sold to other manufacturers of rod
and wire products. The Company sells its rod and wire products largely to
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hardware jobbers, agricultural cooperatives, hardware and other retailers
serving the do-it-yourself market and the construction industry in the upper
Midwest region of the United States. Manufacturers' wire is sold directly to
manufacturers of a variety of products, such as fan guards, automotive door
rods, shopping carts and dishwasher baskets. The Company believes that it is the
largest single-site manufacturer of nails in the United States.
The Company addresses the needs of its markets through enhanced customer
focus achieved through a variety of initiatives. These initiatives include
dedicated market sector sales groups, customer-direct computer access, on-time
delivery improvement programs and customer-friendly production cycles.
CAPITAL IMPROVEMENTS
Over the years, the Company has improved many of its steel manufacturing
operations. At the Sterling Operations, capital improvements have included the
modernization of the 12 bar mill into a high-speed rod mill and the
modernization of the 14 rolling mill. Melt shop improvements at the Sterling
Operations have included construction and installation of a billet caster, a
bloom caster and a beam blank caster which permits the Company to continuously
cast 100% of its product. Other melt shop improvements have included the
installation of a second ladle metallurgical station, low impedance arms,
upgraded transformer and ladle transfer cars.
In the last three years the Company has invested approximately $95 million
in capital improvements. Projects placed in service during that time include a
second ladle metallurgical station to eliminate production bottlenecks, a
state-of-the-art high voltage transformer that reduces the time needed to
produce a ton of steel, improved furnace controls, a twin line high-speed
reinforcing mesh facility (the Kentucky Facility), an in-line rod gauging system
to improve quality, an electrical system upgrade at the Houston Facility to
increase mill throughput, a mechanical nail galvanizing facility and a
healthcare clinic to help control rising health care costs. The Company believes
that these improvements have enabled it to lower its cost for both its
structural steel products and rod and wire products.
RAW MATERIALS
The Company's major raw material is steel scrap, which is generated
principally from industrial, automotive, demolition and railroad sources and is
purchased by the Company in the open market through a number of scrap brokers
and dealers or by direct purchase. The cost of scrap is subject to market forces
including demand by other steel producers for comparable grades of scrap. The
cost of scrap to the Company can vary significantly, and product prices
generally cannot be adjusted in the short-term to recover large increases in
steel scrap costs. Over longer periods of time, however, product prices and
scrap prices have tended to move in the same direction.
The long term demand for ferrous scrap and its importance to the domestic
steel industry can be expected to increase as steelmakers continue to expand
scrap-based electric furnace capacity with additions to or replacements of
existing integrated facilities. For the foreseeable future, however, the Company
believes that supplies of scrap grades used in its operations will continue to
be available in sufficient quantities.
ENERGY
Steelmaking is an electricity-intensive industry. Historically, the Company
has been adequately supplied with electricity and does not anticipate any
curtailment in its operations resulting from energy shortages. The Company's
second largest source of energy is natural gas. Historically, the Company has
been adequately supplied with natural gas and an adequate supply is expected to
be available in the future.
COMPETITION
The Company competes with a number of domestic and foreign mini-mill and
integrated steel producers. In the structural steel market, the Company believes
its principal competitors are Bethlehem Steel Corporation, an integrated steel
producer, and Chaparral Steel Co. and Nucor-Yamato Steel Company, both
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of whom use an electric arc furnace-based steelmaking process. The Company has
attempted to differentiate itself from its mini-mill competitors by taking
advantage of its ability to supply "cut to length" quantities and higher value
added services to the steel fabricator market. Integrated producers generally
operate at a competitive disadvantage to domestic mini-mill producers because of
less efficient production techniques and higher labor costs. A relatively weak
dollar and high shipping costs had reduced foreign exports of structural steel
products to the United States in the past several years. More recently, a
strengthening dollar and relatively strong U.S. construction market compared to
other world markets has led to higher levels of imported steel products.
According to the American Iron and Steel Institute, ("AISI"), the size of
the U.S. structural steel market was approximately 6.3 million tons in calendar
1995. Because of their cost disadvantage, domestic integrated producers have
reduced their structural steel production. This supply has been replaced by
domestic mini-mills and imported steel products. Although integrated producers
have been reducing their production levels, the Company believes that the market
for structural steel products will increase, as the use of structural steel is
expanding in various construction applications, replacing traditional materials
such as concrete, because of the flexibility and strength of steel products and
structural steel's speed of installation and resistance to earthquake damage.
Based on information published by the AISI, the Company believes that its share
of shipments by domestic mills in the U.S. structural steel market was
approximately 16% for fiscal 1996. Within the market for wide flange beams, the
Company believes its share of domestic mill shipments in the U.S. market was
approximately 24% for fiscal 1996, based on information published by the AISI.
The market for rod and wire products in which the Company competes is
generally confined to the upper Midwest region of the United States in which the
Sterling Operations are located. This confinement results from the relatively
high freight costs as compared to product values. The Company's competitors in
the rod market include G.S.T., CF&I Steel L.P. ("CF&I"), Keystone Steel & Wire
Co. ("Keystone") and North Star Steel Co. The Company's competitors in the wire
market include Bekaert Corp., CF&I, Keystone, Insteel Industries, Inc., and
Oklahoma Steel Corp.
BACKLOG
As of September 30, 1996, order backlog, all of which is expected to be
filled in fiscal 1997, totaled approximately $63 million compared with
approximately $96 million as of September 30, 1995. The decrease in order
backlog is primarily in the Company's large structural products. The Company
believes that the decrease in order backlog reflects shorter lead times as
supply and demand were more balanced as compared to tight market conditions in
the prior year. In addition, the uncertainty of production and shipping
schedules related to labor negotiations in late July 1996, resulted in lower
order levels for large structural products.
SALES BY DIVISION
During the fiscal years ended July 31, 1996, 1995 and 1994 no single
customer accounted for more than 10% of total dollar net sales. Sales to the
Company's ten largest customers accounted for approximately 22% of total net
sales in fiscal 1996. Total foreign sales accounted for approximately 2% of
total fiscal 1996 net sales.
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For the fiscal years indicated below, the approximate percentage of net
sales contributed by each class of similar products is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Steel Division
Structural.......................................... 59.3% 52.5% 52.1%
Merchant bar........................................ 8.2 11.8 9.9
Semi-finished....................................... 5.0 3.7 6.7
----- ----- -----
72.5 68.0 68.7
----- ----- -----
Rod and Wire Products Division
Wire Products....................................... 17.7 20.0 21.8
Rod................................................. 9.8 12.0 9.5
----- ----- -----
27.5 32.0 31.3
----- ----- -----
Total............................................ 100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
EMPLOYEES
As of July 31, 1996, there were approximately 2,300 active employees of the
Company, approximately 2,000 of which are members of five collective bargaining
units. The majority are members of two local unions affiliated with the United
Steelworkers of America ("USWA"), and the remainder represented by one local
union affiliated with the United Plant Guard Workers of America and one local
union affiliated with the International Brotherhood of Teamsters. The Company is
party to collective bargaining agreements with the USWA with respect to
employees in Sterling and Rock Falls, Illinois, and Houston, Texas, which
agreements expire on August 1, 2000. Certain employees at the Hickman, Kentucky
facility are also represented by the USWA. The two remaining bargaining units
are party to collective bargaining agreements with the Company, each of which
expires in fiscal 1997.
Through the ESOP and defined contribution savings plans, employees of the
Company currently own approximately 17% of the outstanding Common Stock.
ENVIRONMENTAL COMPLIANCE
The Company is subject to a broad range of federal, state and local
environmental requirements, including those governing discharges to the air and
water, the handling and disposal of solid and/or hazardous wastes and the
remediation of contamination associated with releases of hazardous substances.
Primarily because the melting process at the Sterling Operations produces dust
that contains lead and cadmium, the Company is classified, in the same manner as
other similar steel mills in its industry, as a generator of hazardous waste.
Based on continuing review of applicable regulatory requirements by the
Company's internal environmental compliance officer and advice from independent
consultants, the Company believes that it is currently in substantial compliance
with applicable environmental requirements, except as described below.
Nevertheless, as is the case with steel producers in general, if a release of
hazardous substances located on the Company's property occurs, the Company may
be held liable and may be required to pay the cost of remedying the condition.
The amount of any such liability and remedial cost could be material. During
fiscal 1997 the Company is anticipating capital expenditures of approximately
$2.3 million for environmental controls consisting of an upgrade to the
particulate emission collection system, Phase II of the landfill expansion and
equipment upgrades for waste water discharge treatment.
The Company possesses air emission permits for all major operations. New
rules to be adopted under amendments to the 1990 Clean Air Act ("CAA") may
impose significantly stricter air emissions standards on the Company. The
Company has applied for an air permit under Title V of the CAA. Because
regulations applicable to the Company's operations have not yet been promulgated
under the CAA, the Company cannot
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at this time determine the cost to comply with the new regulations. Because
these standards will also apply to the Company's domestic competitors, they
should not materially affect the Company's competitive position.
The Company has been cited by the United States Environmental Protection
Agency (USEPA) for alleged violations of clean air standards and other
requirements at it Sterling furnace operations. As part of its ongoing
environmental compliance program, the Company will make a capital expenditure of
approximately $1.3 million in fiscal 1997 to upgrade the particulate emission
collection system in the furnace area. The Company is also studying additional
alternatives to improve emission control and address issues raised by the USEPA.
The cost of further remedial steps and potential penalties imposed by the USEPA,
if any, cannot be determined at this time.
The Resource Conservation and Recovery Act ("RCRA") regulates the disposal
of emission control sludge/dust from electric arc furnaces ("K061"), a waste
stream generated in significant quantities at the Sterling Operations. The
Company is complying with RCRA with respect to K061 by using a third party to
chemically stabilize this waste before its disposal. Fiscal 1996 expenses in
connection with such services were approximately $4.5 million. This chemical
stabilization process allows the Company to use the fully permitted hazardous
waste landfill at the Sterling Operations for disposal of the stabilized K061.
In 1994, the Company received a modification to its Part B RCRA permit from
the Illinois EPA to allow an expansion to its hazardous waste landfill. Phase II
of the expansion will be conducted during fiscal 1997. The Company also operates
an on-site non-hazardous waste landfill. The Company expects to close this
landfill site in fiscal 1998. The Company has established reserves for landfill
closure costs.
The Company has occasionally exceeded the limits of its wastewater
discharge permit at its Sterling Operations. The Company believes that modified
operating procedures and certain equipment upgrades should eliminate the waste
water discharge concerns of the State of Illinois and the EPA.
The Company has been identified by the Illinois Environmental Protection
Agency (IEPA) as one of eighteen potentially responsible parties for costs
associated with a third party owned disposal site. The IEPA is likely to seek
compensation from the Company as an alleged waste generator for recovery of past
costs and future remediation of the waste site. Under Illinois law, the
Company's share of liability can be limited to its proportionate share based
upon causation of the total cost of the site. Based on data available, the
Company's share will be a smaller fraction of the total site clean up costs,
however no determination of total cost for remediation can be made at this time.
PATENTS AND TRADEMARKS
The Company holds no patents, trademarks, licenses, franchises or
concessions of material importance to its business.
ENTERPRISE ZONE DESIGNATION
In 1988, the Company's property was designated to be within an Illinois
Enterprise Zone ("Enterprise Zone") by the Illinois Department of Commerce and
Community Affairs. The primary benefit to the Company of operating within an
Enterprise Zone is the receipt of a state utility tax exemption on gas and
electricity as well as an exemption on the Illinois Commerce Commission's
administrative charge on these utilities. The Company has been able to
demonstrate sufficient capital spending and thus is entitled to the utility tax
exemption through July 31, 1998. This utility tax exemption is expected to save
the Company approximately $2.0 million to $2.5 million per year through July 31,
1998.
An additional benefit to the Company of operating within the Enterprise
Zone is the receipt of a state sales tax exemption on the purchase of consumable
manufacturing supplies. Eligibility for the sales tax exemption was contingent
upon the Company making a $40 million investment that causes the retention of
2,000 full time jobs in Illinois. The Company has been able to demonstrate
sufficient capital spending and thus is entitled to the sales tax exemption
through June 30, 2000. This sales tax exemption is expected to save the Company
approximately $300,000 to $400,000 per year through June 30, 2000.
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ITEM 2. PROPERTIES
The executive offices of the Company and its steel producing facilities,
designated as Plants 1, 2, 3, 5, and 6, are located on approximately 596 acres
of land along the Rock River in Sterling, Illinois, and Plant 4 is on 8 acres of
land located directly across the river in Rock Falls, Illinois. The Houston
Facility is located on approximately 180 acres of land in Houston, Texas. The
Kentucky Facility is located on approximately 60 acres of land in Hickman,
Kentucky.
Plant 1, comprising 641,081 square feet of floor space, consists of a wire
mill with equipment for drawing, galvanizing and annealing wire, and machinery
for manufacturing fence, netting, nails and other wire products.
Located in Plant 2 are liquid metal producing facilities, with 2,400,000
tons annual capacity, consisting of three 400-ton electric furnaces. Also
located at Plant 2 is a six-strand bloom continuous caster, an eight-strand
billet continuous caster and a three-strand jumbo beam caster having a combined
annual capacity of 2,500,000 tons, and a 12 rod train having an annual capacity
of 400,000 tons. At present, this plant comprises 961,318 square feet of floor
space.
Plant 3 consists of a 24 structural mill, with a total annual capacity of
440,000 tons. The plant comprises approximately 900,000 square feet of floor
space.
Manufacturing facilities for the production of welded wire products are
located at the Rock Falls Plant 4, which consists of 397,880 square feet.
The 14 merchant bar mill, comprising 434,740 square feet and having an
annual capacity of 400,000 tons, is located at Plant 5.
Plant 6 consists of 48,304 square feet of floor space and is currently
idle.
The Houston Facility consists of a wide flange structural mill and
comprises approximately 860,000 square feet of floor space. The total annual
capacity of the mill is 600,000 tons. The Houston Facility consists generally of
a 48 wide flange beam finishing mill, a barge dock, and the corresponding real
property on which these structures are located.
The Kentucky Facility consists of a manufacturing facility for the
production of concrete reinforcing mesh. The facility comprises approximately
192,000 square feet of floor space and has an annual capacity of 80,000 net
tons.
All buildings are owned by the Company and are of steel, brick or concrete
construction. The Company believes that its plants and equipment are in good
operating condition.
Pursuant to the Company's existing credit facility, the Company has granted
mortgages on all of the Company's real estate and security interests in its
other assets, including equipment and fixtures.
ITEM 3. LEGAL PROCEEDINGS
In September 1996, the Company and the Illinois Industrial Commission (The
"Commission") reached agreement regarding the amount of security to be posted by
the Company to maintain the Company's self-insurance workers' compensation
status. The Company will post $2 million in security in October 1996, and each
year thereafter, subject to adjustment for annual changes in estimated
liability, over a four year phase-in period, at the end of which the Company is
scheduled to comply with the then current security requirement of the
Commission. Total security requirements at July 1996 approximate $7.1 million.
The Company will utilize letters of credit available under its Revolving Credit
Agreement to meet its security obligations.
The Company is not a party to any other significant pending legal
proceedings not covered by insurance, other than routine litigation incidental
to its business which the Company believes will not materially affect its
financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
At October 16, 1996, 24,461,385 shares of Common Stock were issued and
outstanding and held by 1,200 registered holders.
The Company does not expect to pay dividends on the Common Stock during the
foreseeable future. The Company's Senior Credit Facility prohibits the payment
of any dividends. The indenture relating to the 9 1/2% Senior Notes due 2001 of
the Company also restricts the payment of dividends.
MARKET PRICE AND CASH DIVIDENDS
The following table presents the high and low market price by quarter for
the last two fiscal years.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
----------------------------------------------------- ------ ----
<S> <C> <C>
Fiscal 1996
October 31,........................................ $10 1/8 $6 1/2
January 31,........................................ 9 1/8 6 7/8
April 30,.......................................... 9 1/8 5 7/8
July 31,........................................... 6 7/8 5
Fiscal 1995
October 31,........................................ $9 5/8 $6
January 31,........................................ 7 7/8 5 1/2
April 28,.......................................... 7 5/8 5 3/4
July 31,........................................... 10 1/4 5 7/8
</TABLE>
As of October 16, 1996 the closing price of Common Stock on The Nasdaq
Stock Market (under the symbol NWSW) was $5 1/8. Since the initial public
offering of June 12, 1993, there have been no dividends paid on the Common
Stock.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FISCAL YEARS ENDED JULY 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(IN THOUSANDS OF DOLLARS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................................. $661,069 $638,420 $603,609 $539,210 $470,049
Cost of goods sold (excluding
depreciation)............................ 588,774 563,325 540,701 484,122 435,953
Selling and administrative expenses........ 11,920 11,334 10,882 11,608 6,884
Operating profit........................... 35,587 40,718 29,821 21,554 5,130
Interest expense........................... 18,583 19,674 19,221 23,200 27,745
Income (loss) before income taxes,
extraordinary item and cumulative effect
of accounting change..................... 17,167 21,178 10,730 (1,522) (22,372)
Net income (loss).......................... $ 20,670(1) $ 26,978(2) $ 10,010 $(47,695)(4) $(22,372)
Income (loss) per share before
extraordinary item and cumulative effect
of accounting change..................... $ 0.83 $ 1.07 $ 0.40 $ (0.08) $ (1.72)
Net income (loss) per common share......... 0.83(1) 1.07(2) 0.40 (2.62)(4) (1.72)
OTHER DATA:
Capital expenditures....................... $ 36,269 $ 35,573 $ 22,930 $ 12,271 $ 7,119
EBITDA(3).................................. $ 60,375 $ 64,883 $ 53,148 $ 44,603 $ 28,334
Total Tons Shipped (000's)................. 1,668 1,662 1,632 1,577 1,363
Active employees........................... 2,339 2,380 2,517 2,500 2,696
</TABLE>
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<TABLE>
<CAPTION>
AT JULY 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets............................. $190,279 $186,045 $168,999 $144,247 $101,799
Plant and equipment -- net................. 241,189 229,708 217,178 216,515 226,170
Other assets............................... 11,050 5,655 7,999 10,896 11,853
-------- -------- -------- -------- --------
Total assets............................... $442,518 $421,408 $394,176 $371,658 $339,822
======== ======== ======== ======== ========
Current liabilities........................ $105,742 $ 96,641 $ 90,082 $ 80,889 $107,371
Long term debt............................. 153,646 162,110 166,942 164,234 199,551
Other long term liabilities................ 77,114 75,042 79,246 64,043 22,567
Deferred income taxes...................... -- 4,744 7,402 7,602 --
Shareholders' equity....................... 106,016 82,871 50,504 54,890 10,333
-------- -------- -------- -------- --------
Total liabilities and shareholders'
equity................................... $442,518 $421,408 $394,176 $371,658 $339,822
======== ======== ======== ======== ========
Working capital............................ $ 84,537 $ 89,404 $ 78,917 $ 63,358 $ (5,572)
======== ======== ======== ======== ========
</TABLE>
- -------------------------
Notes for Summary of Selected Financial Data
(1) Net income included a $10.4 million or $.42 per share tax benefit due to
recognition of certain deferred tax assets which are now more likely than
not to be realized.
(2) Net income included a $10.6 million or $.42 per share tax benefit due to
recognition of certain deferred tax assets which are now more likely than
not to be realized.
(3) EBITDA is defined as operating profit plus depreciation and amortization.
The Company believes EBITDA provides additional information for determining
its ability to meet debt service requirements. EBITDA does not represent net
income or cash flow from operations as determined by generally accepted
accounting principles, and is not necessarily an indication of whether cash
flow will be sufficient to fund cash requirements.
(4) Net income included extraordinary loss of $6.4 million or $.35 per share
related to early extinguishment of debt and cumulative effect of accounting
change of $39.8 million or $2.19 per share related to adoption of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other than
Pensions".
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
NET SALES
Net sales for fiscal 1996 were $661.1 million, an increase of $22.6 million
or 4% from fiscal 1995. Revenues increased in fiscal 1996 as medium and heavy
structural products benefited from continuing strength in non-residential
construction markets and low levels of imported structural steel products.
However, import levels for such products began to increase late in the fiscal
year. Medium and heavy structural products represented 50% of revenue in 1996,
with selling prices 14% higher compared to the prior year. Volume and prices for
products in the wire, rod and small structural markets declined in 1996 due to
reduced demand. Semi-finished steel sales were higher in 1996 compared to the
prior year period, however, selling prices and margins are lower in this product
group than the Company's value-added finished products.
Net sales for fiscal 1995 increased by $34.8 million or 6% from fiscal
1994. The 6% increase in fiscal 1995 net sales resulted from several price
increases during the fiscal year on many of the Company's products, together
with a 2% increase in steel shipments. Many of the price increases resulted from
improved market conditions. Pricing of the Company's principal product,
structural steel, improved with increased demand and the announced reduction in
capacity by a major competitor.
COST OF GOODS SOLD
Cost of goods sold (excluding depreciation) as a percentage of net sales
increased from 88% in fiscal 1995 to 89% in fiscal 1996. Despite an overall
increase in selling prices, the cost of goods sold as a percentage of
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sales increased due to increases in the Company's principal raw material, steel
scrap, as well as higher other non-scrap related material costs. These cost
increases were partially offset through improved operating rates, increased
selling prices and changes in product mix through the first nine months of
fiscal 1996. However, during the final quarter of 1996, cost of goods sold as a
percentage of sales increased to almost 91% due to the impact associated with
labor negotiations and a potential work stoppage. Lower margins were also
realized in the fourth quarter due to higher costs and changes in product mix.
Total volume shipped during this period was maintained primarily through
increased levels of semi-finished sales. The uncertainty of production and
shipping schedules related to labor negotiations resulted in lower orders and
shipments of large structural products. Due to this temporary reduction in order
flow, the production schedules for structural products were impacted, resulting
in decreased operating rates and increased costs. The reduced order level at the
end of fiscal 1996 will continue to impact earnings into fiscal 1997.
Despite higher prices for steel scrap in fiscal 1995, cost of goods sold
(excluding depreciation) as a percentage of net sales decreased from 90%
experienced in fiscal 1994 to 88% for fiscal 1995. This resulted from a
combination of improved operating efficiencies and increased selling prices.
Improved Sterling Operations operating efficiencies resulted from increased
capacity utilization and workforce reductions. Record production levels were
achieved in semi-finished products from the Company's primary facility and rod
products from the 120 Mill. These record production levels were achieved while
remaining on plan to reduce the Company's hourly and salaried workforce by 20%
from fiscal 1993 to fiscal 1996. Continued improvements in production costs at
the Houston Facility resulted from increased yield and operating rates. As a
result of these increases, the Houston Facility achieved record production
levels in fiscal 1995. Selling prices improved from increased market demand in
conjunction with emphasis on higher value-added products and customer service.
DEPRECIATION
Capital expenditure spending levels during fiscal 1996 and 1995 represent
an increase of more than twice the prior two year period. Depreciation expense
increased $1.7 million in 1996 compared to the prior year as a result of this
higher spending level.
Fiscal 1995 depreciation expense was $23.0 million compared to $22.2
million for 1994 when the Company embarked on an increased capital expenditure
program.
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses were $11.9 million in fiscal 1996
compared to $11.3 million in the prior year. The increase resulted primarily
from increased professional fees related to labor negotiations and other legal
matters, as well as settlement of non-income related tax matters. During fiscal
1995, the Company settled a wrongful death action for which previously
established reserves were not required as the losses arising from the complaint
were covered by the Company's insurance carriers.
Selling and administrative expenses increased from $10.9 million in fiscal
1994 to $11.3 million in fiscal 1995. The increase resulted primarily from an
increase in management incentive program expense. These incentives are based on
the Company's achieved versus planned profitability for the fiscal year.
OPERATING PROFIT
Operating profit decreased almost 13% in fiscal 1996 compared to fiscal
1995 due primarily to the impact of labor negotiations and a potential work
stoppage. Through the first three quarters of fiscal 1996, operating profit was
virtually unchanged from the same period in the prior year. During the final
quarter of 1996, operating profit was down 43% compared to the same period in
1995.
Operating profit increased 37% in fiscal 1995 to $40.7 million from $29.8
million in fiscal 1994. These increases were a result of cost reductions due
principally to increased capacity utilization and workforce reductions. Also
contributing to the improvement was revenue growth. Increased revenue resulted
from
10
<PAGE> 11
improved market demand, product penetration and emphasis on higher value-added
products and customer service.
INTEREST EXPENSE
Interest expense was $18.6 million for 1996 which represents a $1.1 million
decrease compared to the prior year. The decrease in interest expense is
primarily due to the effect of capitalizing interest on major capital projects.
Interest expense increased from $19.2 million in fiscal 1994 to $19.7
million for fiscal 1995. The additional interest expense resulted primarily from
the increase in interest rates on the Company's variable rate debt.
INCOME TAXES
The fiscal 1996 and 1995 provisions for income taxes include $10.4 million
and $10.6 million, respectively, in tax benefits associated with the recognition
of certain deferred tax assets which are now more likely than not to be
realized. Excluding these benefits, the current portion of the tax provisions
for fiscal 1996 and 1995 were $4.0 million and $4.8 million, respectively. The
effective tax rate in fiscal 1997 is expected to approximate 40%.
NET INCOME
Net income of $20.7 million or $.83 per share in fiscal 1996 compares to
net income of $27.0 million or $1.07 per share in the prior year.
Net income in fiscal 1995 was $27.0 million or $1.07 per share compared to
$10.0 million or $.40 per share in fiscal 1994. Excluding the tax benefit for
deferred tax assets of $10.6 million or $.42 per share, as described above, net
income increased 64% in fiscal 1995 compared to the prior fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
The financial position of the Company has improved. The Company achieved
cash flow from operations of $35.5 million, which represents the Company's
eleventh consecutive year of positive cash flow from operations. Additionally
the Company generated earnings for the third consecutive year. As of July 31,
1996, the Company had cash on hand of approximately $5.6 million and
approximately $89 million available under its revolving credit facility. The
Company's current ratio was 1.8:1 at July 31, 1996 compared to 1.9:1 at July 31,
1995. The consolidated debt-to-equity ratio improved to 1.5:1 at July 31, 1996
compared to 2.0:1 at July 31, 1995. The Company's improved financial condition
has provided it with flexibility to better manage inventory levels that, when
combined with the Company's enhanced product line, has enabled it to better
serve its customers' needs.
In April 1996, the Company and its lenders amended its revolving credit
facility, thereby improving liquidity. The new credit facility increased
borrowing capacity to $100 million from $65 million, the maturity date was
extended to April 2001 and the new credit facility increasing borrowing capacity
provides for borrowing options at reduced interest rates from the prior
agreement.
On a longer term basis, the Company has significant future debt service
obligations. The Company's ability to satisfy these obligations and to secure
adequate capital resources in the future will be dependent on its ability to
generate adequate cash flow. The Company expects that its cash flow from
operations, available borrowings and access to the capital markets will be
sufficient to fund future debt service.
CAPITAL EXPENDITURES
Among the most important aspects of the Company's planning system is the
identification of needs for capital expenditures. The system incorporates
selective allocation of funds to projects that will lower operating costs
through technological improvements and/or increase capacity and maintain
equipment and facilities.
11
<PAGE> 12
The Company assesses likely market, technological and other business changes in
coming years and develops plans to ensure that it will be responsive to such
changes.
In view of the increased level of operations and resulting improved
profitability, but more importantly due to the generation of adequate cash flow,
the Company was able to maintain capital expenditures levels of approximately
$36 million during fiscal 1996 and 1995. Capital expenditures for fiscal 1994
were approximately $23 million. This plan continues to be based upon internally
generated funds and maintaining debt generally at existing levels. The Company
is now poised to more effectively compete, grow and provide improvements in the
quality and cost of our products as well as customer service.
ACCOUNTING STANDARDS
Statement of Financial Accounting ("SFAS") Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" (SFAS 121), was issued in March 1995. SFAS 121 requires recognition of
impairment losses on long-lived assets as well as the accounting for long-lived
assets that are expected to be disposed of in future periods. SFAS 121 becomes
effective in 1997. The effect on the Company of adoption of this statement
cannot be determined at this time. The Company applies the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" for its stock-based compensation programs and intends to adopt the
disclosure provisions of SFAS No. 123, "Accounting for Stock Based
Compensation," beginning in 1997.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Financial statements and supplementary data of the Company are included in
this Annual Report of Form 10-K beginning on page F-1 and are listed in Item 14
hereof.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item is incorporated herein by reference
to the caption "Directors and Executive Officers of the Registrant" in the
Company's definitive Proxy Statement relating to its 1996 Annual Meeting of
Shareholders. With the exception of the information specifically incorporated by
reference, said definitive Proxy Statement is not deemed to be filed as part of
this report.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference
to the caption "Executive Compensation" in the Company's definitive Proxy
Statement relating to its 1996 Annual Meeting of Shareholders. With the
exception of the information specifically incorporated by reference, said
definitive Proxy Statement is not deemed to be filed as part of this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference
to the caption "Security Ownership of Certain Beneficial Owners and Management"
in the Company's definitive Proxy Statement relating to its 1996 Annual Meeting
of Shareholders. With the exception of the information specifically incorporated
by reference, said definitive Proxy Statement is not deemed to be filed as part
of this report.
12
<PAGE> 13
ITEM 13. CERTAIN TRANSACTIONS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference
to the caption "Certain Transactions and Related Transactions" in the Company's
definitive Proxy Statement relating to its 1996 Annual Meeting of Shareholders.
With the exception of the information specifically incorporated by reference,
said definitive Proxy Statement is not deemed to be filed as part of this
report.
13
<PAGE> 14
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF NORTHWESTERN STEEL AND WIRE COMPANY
We have audited the accompanying consolidated balance sheets of
Northwestern Steel and Wire Company and Subsidiaries as of July 31, 1996 and
1995 and the related consolidated statements of shareholders' equity, operations
and cash flows for each of the three years in the period ended July 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Northwestern
Steel and Wire Company and Subsidiaries as of July 31, 1996 and 1995 and the
consolidated results of their operations and cash flows for each of the three
years in the period ended July 31, 1996 in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
September 12, 1996
F-1
<PAGE> 15
NORTHWESTERN STEEL AND WIRE COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF JULY 31,
--------------------
1996 1995
-------- --------
(DOLLAR AMOUNTS IN
THOUSANDS
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................. $ 5,558 $ 14,275
Receivables, less allowances of $825 and $1,000, respectively......... 68,004 58,878
Inventories........................................................... 98,401 90,577
Deferred income taxes................................................. 11,517 15,344
Other assets.......................................................... 6,799 6,971
-------- --------
Total current assets............................................... 190,279 186,045
PLANT AND EQUIPMENT, at cost, less accumulated depreciation of $166,206
and $141,321, respectively............................................ 241,189 229,708
DEFERRED INCOME TAXES................................................... 6,616 --
DEFERRED FINANCING COSTS................................................ 4,434 5,655
-------- --------
Total assets....................................................... $442,518.. $421,408
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable...................................................... $ 75,470 $ 66,441
Accrued expenses...................................................... 22,768 23,810
Current portion of long term debt..................................... 7,504 6,390
-------- --------
Total current liabilities.......................................... 105,742 96,641
LONG TERM DEBT.......................................................... 153,646 162,110
DEFERRED INCOME TAXES................................................... -- 4,744
OTHER LONG TERM LIABILITIES............................................. 77,114 75,042
-------- --------
336,502 338,537
-------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, par value $1 per share:
-- Authorized -- 1,000,000 shares
-- Issued -- none
Common stock, par value $.01 per share:
-- Authorized -- 75,000,000 shares
-- Issued -- 24,858,842 and 24,809,842 shares, respectively........ 123,786 123,609
Retained (deficit) earnings........................................... (5,051) (25,721)
Minimum pension liability............................................. (7,395) (9,693)
Treasury shares, at cost; 420,144 shares of common stock.............. (5,324) (5,324)
-------- --------
Total shareholders' equity......................................... 106,016 82,871
-------- --------
Total liabilities and shareholders' equity......................... $442,518 $421,408
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
F-2
<PAGE> 16
NORTHWESTERN STEEL AND WIRE COMPANY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
$.01 PAR VALUE RETAINED TREASURY SHARE TOTAL
--------------------- EARNINGS ----------------- SHAREHOLDERS'
SHARES AMOUNT (DEFICIT) OTHER SHARES AMOUNT EQUITY
---------- -------- -------- -------- ------- ------- -------------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at July 31, 1993... 24,631,955 $122,942 $(62,709) 420,014 $(5,343) $ 54,890
Net income................. 10,010 10,010
Treasury shares............ (21) 20 (1)
Options exercised.......... 83,067 332 332
Cost from prior year stock
issuance................. (155) (155)
Establishment of minimum
pension liability........ $(14,572) (14,572)
---------- -------- -------- -------- ------- ------- --------
Balance at July 31, 1994... 24,715,022 123,098 (52,699) (14,572) 420,014 (5,323) 50,504
Net income................. 26,978 26,978
Treasury shares............ 130 (1) (1)
Options exercised.......... 94,820 361 361
Contributed capital........ 150 150
Change in minimum pension
liability................ 4,879 4,879
---------- -------- -------- -------- ------- ------- --------
Balance at July 31, 1995... 24,809,842 123,609 (25,721) (9,693) 420,144 (5,324) 82,871
Net income................. 20,670 20,670
Options exercised.......... 49,000 177 177
Change in minimum pension
liability................ 2,298 2,298
---------- -------- -------- -------- ------- ------- --------
Balance at July 31, 1996... 24,858,842 $123,786 $ (5,051) $ (7,395) 420,144 $(5,324) $ 106,016
========== ======== ======== ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 17
NORTHWESTERN STEEL AND WIRE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE
YEARS ENDED JULY 31,
--------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C>
Net sales..................................................... $661,069 $638,420 $603,609
-------- -------- --------
Cost and operating expenses:
Cost of goods sold (excluding depreciation)................. 588,774 563,325 540,701
Depreciation................................................ 24,788 23,043 22,205
Selling and administrative.................................. 11,920 11,334 10,882
-------- -------- --------
Total cost and operating expenses........................ 625,482 597,702 573,788
-------- -------- --------
Operating profit.............................................. 35,587 40,718 29,821
-------- -------- --------
Other income and expenses:
Interest expense............................................ 18,583 19,674 19,221
Interest and other income................................... (163) (134) (130)
-------- -------- --------
Total other income and expenses.......................... 18,420 19,540 19,091
-------- -------- --------
Income before income taxes.................................... 17,167 21,178 10,730
(Benefit) provision for income taxes.......................... (3,503) (5,800) 720
-------- -------- --------
Net income.................................................... $ 20,670 $ 26,978 $ 10,010
======== ======== ========
Net income per share.......................................... $ 0.83 $ 1.07 $ 0.40
======== ======== ========
Net tons shipped.............................................. 1,668 1,662 1,632
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 18
NORTHWESTERN STEEL AND WIRE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED JULY 31,
----------------------------------
1996 1995 1994
--------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash Flow From Operations:
Net income................................................ $ 20,670 $ 26,978 $ 10,010
Depreciation.............................................. 24,788 23,043 22,205
Loss on sale of plant and equipment....................... -- -- 14
Amortization of deferred financing costs and debt
discount............................................... 2,029 2,176 2,294
Amortization of organizational and pre-operating costs.... -- 1,122 1,122
Deferred income tax benefit............................... (7,533) (10,600) --
Increase in receivables................................... (9,126) (1,602) (3,247)
Increase in inventories................................... (7,824) (5,895) (8,960)
Decrease (increase) in other current assets............... 172 (149) (1,701)
Increase in accounts payable and accrued expenses......... 7,987 258 9,190
Increase in other long term liabilities................... 4,370 676 631
Deferred interest due at maturity......................... -- 15 2,147
--------- --------- --------
Net cash provided by operations............................. 35,533 36,022 33,705
--------- --------- --------
Cash Flows From Investing Activities:
Capital expenditures...................................... (36,269) (35,573) (22,930)
Proceeds from sale of plant and equipment................. -- -- 48
--------- --------- --------
Net cash used in investing activities....................... (36,269) (35,573) (22,882)
--------- --------- --------
Cash Flows From Financing Activities:
Payments of long term debt................................ (252,658) (165,246) (97,645)
Proceeds from issuance of long term debt.................. 244,500 165,745 97,689
Exercise of stock options................................. 177 511 332
Other..................................................... -- (1) (155)
--------- --------- --------
Net cash (used in) provided by financing activities......... (7,981) 1,009 221
--------- --------- --------
(Decrease) increase in cash and cash equivalents.......... (8,717) 1,458 11,044
Cash and Cash Equivalents:
Beginning of period....................................... 14,275 12,817 1,773
--------- --------- --------
End of period............................................. $ 5,558 $ 14,275 $ 12,817
========= ========= ========
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest.................................................. $ 17,591 $ 17,716 $ 14,859
Income taxes paid......................................... 5,301 6,184 1,380
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 19
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Founded in 1879, the Company is a major mini-mill producer of structural
steel components which include wide flange beams, channels, angles and merchant
bar, as well as rod and wire products which include nails, fencing, concrete
reinforcing mesh and other fabricated wire products. Structural products are
used in a wide variety of commercial, industrial and residential construction
applications, while rod and wire products are marketed to the construction and
agricultural industries, retail "do-it-yourself" outlets, distributors and other
wire manufacturers. The majority of employees are covered by collective
bargaining agreements.
CONSOLIDATION
The consolidated financial statements include accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
CONCENTRATION OF CREDIT RISK
The Company grants credit to its customers in the normal course of
business. Credit limits, on-going credit evaluation and account monitoring
procedures are utilized to minimize the risk of loss. Collateral is generally
not required.
INVENTORIES AND PRODUCTION COSTS
Inventories are valued at the lower of cost or market. Cost is determined
on a monthly moving average method and includes materials, labor and certain
components of conversion overhead.
PLANT AND EQUIPMENT
Plant and equipment is carried at cost and depreciated when placed in
service based on methods and rates designed to amortize the cost over the
estimated useful lives (generally 40 years for buildings, 12 and 18 years for
mill machinery and 3 to 20 years for all other equipment). Depreciation is
computed principally on the straight line method for financial reporting
purposes while accelerated methods and straight line methods are used for income
tax purposes. When properties are retired or otherwise disposed of, the related
cost and accumulated depreciation are removed from the respective accounts and
any profit or loss on disposition is reflected in income.
NET INCOME PER SHARE
Net income per share is based upon the average number of common and common
equivalent shares outstanding.
BENEFITS FOR RETIRED EMPLOYEES
The Company provides pension benefits to substantially all hourly and
salaried employees under noncontributory plans. The pension costs are funded by
the Company in accordance with the requirements of ERISA. The Company also
provides post-retirement welfare benefits (life insurance and medical) to
substantially all its retired employees. These benefits are accounted for in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 87 and
SFAS No. 106.
F-6
<PAGE> 20
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and other liquid instruments
purchased with an original maturity of three months or less.
USE OF ESTIMATES
Generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at year end and
the reported amounts of revenues and expenses during the year. Actual results
could differ from these estimates.
NEW ACCOUNTING STANDARDS
The Company applies the provisions of Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" for its stock-based
compensation programs and intends to adopt the disclosure provisions of SFAS No.
123, "Accounting for Stock Based Compensation," beginning in 1997.
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", becomes effective in 1997. The effect on
the Company of adoption of this statement cannot be determined at this time.
EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company's noncontributory defined benefit plans cover the majority of
employees and provide pension benefits that are generally based on years of
credited service and employee compensation during the years preceding
retirement. Plan assets include primarily equity and fixed income securities.
The Company also sponsors defined contribution savings plans that cover the
majority of employees. The Company contributes up to 5% of eligible
compensation.
A non-cash increase to shareholders' equity of $2.3 million during fiscal
1996 resulted primarily from pension plan asset changes due to investment
experience and pension payouts.
Actuarial present value of benefit obligations:
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
HOURLY SALARIED HOURLY SALARIED
PLAN PLAN PLAN PLAN
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Vested benefit obligation............................. $157,029 $ 51,249 $155,939 $ 51,810
======== ======= ======== =======
Accumulated benefit obligation........................ $167,436 $ 53,593 $166,458 $ 54,465
======== ======= ======== =======
Projected benefit obligation.......................... $177,267 $ 58,462 $176,305 $ 58,302
Plan assets at fair value............................. 160,365 57,021 155,922 56,635
-------- ------- -------- -------
Plan assets less than projected benefit obligation (16,902) (1,441) (20,383) (1,667)
Unrecognized net loss................................. 17,226 7,214 19,540 7,654
Adjustment required to recognize minimum liability.... (7,395) -- (9,693) --
-------- ------- -------- -------
Pension (liability) asset............................. $ (7,071) $ 5,773 $(10,536) $ 5,987
======== ======= ======== =======
</TABLE>
F-7
<PAGE> 21
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
A summary of the components of net periodic expense for the defined benefit
and contribution plans for the three years ended July 31 follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Defined benefit plans:
Service cost of current period............................ $ 3,774 $ 3,569 $ 4,004
Interest cost on projected benefit obligation............. 17,928 17,944 17,075
Actual return on plan assets.............................. (18,915) (12,633) (4,401)
Net amortization and deferral............................. 673 (2,683) (11,045)
-------- -------- --------
Net pension expense....................................... 3,460 6,197 5,633
Defined contribution plans.................................. 3,828 3,684 3,493
-------- -------- --------
Total expense............................................... $ 7,288 $ 9,881 $ 9,126
======== ======== ========
Assumptions:
Discount rate............................................... 7.91% 7.91% 8.45%
Rate of future compensation increase........................ 3.50% 3.50% 3.50%
Long term return on assets.................................. 9.00% 9.00% 9.00%
</TABLE>
POSTRETIREMENT HEALTHCARE AND LIFE INSURANCE BENEFITS
The postretirement benefit expense includes the following components:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Service cost...................................................... $ 912 $1,074 $1,177
Interest cost on accumulated benefit obligation................... 5,370 5,329 4,754
Net amortization and deferral..................................... (291) (348) --
------- ------- ------
$5,991 $6,055 $5,931
======= ======= ======
</TABLE>
The Company continues to fund benefit costs on a cash basis, with retirees
paying a portion of the costs. The amounts paid for such benefits were $4.4
million, $5.4 million and $5.1 million for the fiscal years ended July 31, 1996,
1995 and 1994, respectively. The status of the Company's postretirement benefit
obligation at July 31, 1996 and 1995 was:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Retirees and surviving spouses............................ $45,224 $39,266
Fully eligible active plan participants................... 10,650 8,986
Other active employees.................................... 17,453 21,205
------- -------
73,327 69,457
Unrecognized amounts...................................... (5,435) (3,188)
------- -------
Post-retirement benefit obligation........................ $67,892 $66,269
======= =======
</TABLE>
The actuarial assumptions used to determine 1996 and 1995 costs and benefit
obligations include a discount rate of 7.91% in both years. The assumed health
care cost trend rate in 1996 was 7.3% for pre-65 retirees and 6.7% for post-65
retirees declining to an ultimate rate of 4.6% over a 10-year period for both
populations. The assumed health care cost trend rate used in 1995 was 7.7% for
pre-65 retirees and 7.0% for post-65 retirees declining to an ultimate rate of
4.1% over a 10-year period for both populations.
F-8
<PAGE> 22
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
If the health care cost trend rate assumptions were increased by 1% each
year, the accumulated postretirement benefit obligation as of July 31, 1996,
would be increased by $10,484 and the net periodic post retirement benefit cost
for the year then ended would be increased by $921.
INCOME TAXES
As of July 31, 1996, the Company has approximately $27.5 million of net
operating loss carryforwards which expire in 2006 and 2007. As a result of an
"ownership change" in fiscal 1993, as defined by Section 382 of the Internal
Revenue Code of 1986, as amended, the loss carryforwards of the Company are
subject to an annual limitation of approximately $2 million.
The Company also has investment tax credit and alternative minimum tax
credit carryforwards of approximately $2,996 and $1,486, respectively. The
ability to utilize the investment tax credit carryforwards are subject to yearly
limitations under Internal Revenue Code Section 382.
Deferred income taxes are recognized for temporary differences between
financial statement and income tax bases of assets and liabilities for which
income tax effects will be realized in future years. Deferred tax benefits of
approximately $10,400 and $10,600 were recorded in fiscal years 1996 and 1995,
respectively, as the result of a reduction in the recorded valuation allowance.
The basis for the reduction is the determination that the future profitability
of the Company will more likely than not allow realization of certain deferred
tax assets. The Company continues to record a valuation allowance with respect
to the future tax benefits of certain investment tax credits and net operating
loss carryforwards. This valuation allowance results from the uncertainty of the
future tax benefits ultimate realization due to restrictions placed on their
usage and the anticipated years in which they are expected to reverse.
The types of temporary differences resulting from the difference between
the tax bases of assets and liabilities and their financial reporting amounts
that give rise to the deferred tax liabilities and the deferred tax assets and
their approximate tax effects are as follows:
<TABLE>
<CAPTION>
1996 1995
TEMPORARY TAX TEMPORARY TAX
DIFFERENCE EFFECT DIFFERENCE EFFECT
---------- ------- ---------- --------
<S> <C> <C> <C> <C>
Retirement costs..................................... $ 58,106 $22,662 $ 58,921 $ 22,979
Net operating loss................................... 27,462 10,710 29,432 11,479
Employee compensation................................ 20,058 7,823 19,669 7,671
ITC and AMT carryforwards............................ 4,482 4,482 5,146 5,146
Other................................................ 8,122 3,168 8,311 3,241
-------- ------- -------- --------
Subtotal........................................ 118,230 48,845 121,479 50,516
Less: valuation allowance............................ (8,418) (5,110) (31,678) (15,509)
-------- ------- -------- --------
Total deferred tax asset............................. $ 109,812 $43,735 $ 89,801 $ 35,007
======== ======= ======== ========
Property, plant and equipment........................ $ 65,645 $25,602 $ 62,582 $ 24,407
-------- ------- -------- --------
Total deferred tax liability......................... $ 65,645 $25,602 $ 62,582 $ 24,407
======== ======= ======== ========
Net deferred tax asset............................... $ 44,167 $18,133 $ 27,219 $ 10,600
======== ======= ======== ========
</TABLE>
F-9
<PAGE> 23
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
The (benefit) provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
------- -------- ----
<S> <C> <C> <C>
Current............................................. $ 4,030 $ 4,800 $720
Deferred............................................ (7,533) (10,600) --
------- -------- ----
Total income tax (benefit) provision................ $(3,503) $ (5,800) $720
======= ======== ====
</TABLE>
The (benefit) provision for income taxes on income differs from expected
tax expense computed by applying the federal corporate rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Taxes computed at statutory rate................. $ 6,008 $ 7,200 $ 3,648
Utilization of net operating loss carryforward... -- (3,274) (3,809)
Current benefit of deferred tax asset............ (10,399) (10,600) --
Other............................................ 888 874 881
-------- -------- -------
Total income tax (benefit) provision............. $ (3,503) $ (5,800) $ 720
======== ======== =======
</TABLE>
The deferred tax benefit results from temporary differences in the
recognition of certain items of revenue and expense for tax and financial
reporting purposes. The source of these differences and tax effect of each were
as follows:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Utilization of NOL carryforward............................ $ (769) $(3,743)
ITC and AMT credit carryforwards........................... (664) (343)
Difference in tax and book asset bases..................... (1,196) 658
Change in valuation allowance for deferred tax asset....... 10,399 14,075
Other changes in assets and liabilities, net............... (237) (47)
------- -------
Deferred tax benefit....................................... $ 7,533 $10,600
======= =======
</TABLE>
DEBT AND CREDIT ARRANGEMENTS
Long term debt consists of the following obligations at July 31, 1996 and
1995:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Senior Credit Facility:
Rollover Term Loan..................................... $ 35,615 $ 41,912
Revolving Credit Loans................................. 8,000 --
Deferred Financing Fee................................... -- 7,673
9.5% Senior Notes due 2001, net of discount.............. 114,518 114,419
Other notes payable (average rates of 5.9% and 6.2%,
respectively).......................................... 3,017 4,496
-------- --------
161,150 168,500
Less Current Portion..................................... 7,504 6,390
-------- --------
$153,646 $162,110
======== ========
Market value of total debt............................... $159,437 $170,093
======== ========
</TABLE>
F-10
<PAGE> 24
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
On April 30, 1996, the Company and its lenders entered into an amended
Senior Credit Facility (the "Facility"), which comprises the Rollover Term Loan
and Revolving Credit Loans, each of which are described below. The Facility
extends to April 2001, unless certain financial conditions are not met at July
31, 1999, in which case the Facility expires on that date. In connection with
the amended Facility, the Company agreed to pay fees which had been deferred
from previous transactions.
The Rollover Term Loan is being repaid in varying quarterly installments,
with final maturity on July 31, 1999 and bears interest at a fixed annual rate
of 13.07%. The Company generally may not prepay the Rollover Term Loan without
penalty, except to the extent defined in the Facility. No such prepayments were
required at July 31, 1996 and 1995.
The Revolving Credit Loans outstanding at July 31, 1996 bear interest at
7.5%. At the option of the Company, any borrowings of Revolving Credit Loans
bear interest at (a) the prime rate plus applicable margin, or (b) the LIBO rate
plus applicable margin. Revolving Credit Loans are available up to $100 million,
subject to certain borrowing base criteria. At July 31, 1996 approximately $89.0
million of borrowing capacity was available.
The Facility contains various covenants, including covenants prohibiting or
limiting the incurrence of additional indebtedness, the granting of liens or
guarantees, sales of assets, and capital expenditures, as well as financial
covenants requiring maintenance of a specified current ratio, a fixed charge
coverage ratio and a leverage ratio. Loans under the Facility are collateralized
by a lien on substantially all of the Company's assets, and all loans are
cross-collateralized.
The Facility lenders receive a quarterly commitment fee of 1/2% per annum
based on the average unused amount of the commitment.
At July 31, 1996, $114,518 (net of unamortized discount of $482) of Senior
Notes were outstanding. The Senior Notes bear interest at the rate of 9.5% per
annum, payable semi-annually on June 15 and December 15. The Company will be
required to redeem on June 15, 2001 the aggregate principal amount of the Senior
Notes plus accrued and unpaid interest. The Senior Notes may not be redeemed
prior to June 15, 1997. On or after June 15, 1997, the Company may, at its
option, redeem the Senior Notes in whole or in part at a premium plus accrued
and unpaid interest. On or after June 15, 1999, the Company may redeem in whole
or in part the Senior Notes at the aggregate principal amount plus accrued and
unpaid interest.
The Senior Notes are unsecured obligations of the Company. They are senior
to all subordinated indebtedness of the Company, and rank pari passu with all
other existing and future senior indebtedness of the Company and contain various
covenants equal to or less restrictive than the Facility. Upon the occurrence of
a change in control, the holders will have the option to cause the Company to
repurchase all or a portion of the outstanding Senior Notes at 101% of the
principal amount.
Annual maturities of long term debt for the years subsequent to fiscal 1996
are: 1997 - $7,504; 1998 - $7,959; 1999 - $21,805; 2000 - $557; 2001 - $122,626;
and thereafter - $699.
The Company estimated the market value of its total debt by utilizing a
discounted cash flow methodology.
F-11
<PAGE> 25
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
SUPPLEMENTAL BALANCE SHEET DATA
The following balance sheet information is provided as of July 31:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
INVENTORIES:
Raw materials and supplies............................... $ 22,746 $ 21,907
Semi-finished products................................... 36,832 33,839
Finished products........................................ 38,823 34,831
-------- --------
$ 98,401 $ 90,577
======== ========
PLANT AND EQUIPMENT:
Land..................................................... $ 5,952 $ 5,651
Buildings................................................ 38,958 31,833
Machinery and equipment.................................. 361,458 318,627
Construction in progress................................. 1,027 14,918
-------- --------
Total.................................................. 407,395 371,029
Less accumulated depreciation............................ 166,206 141,321
-------- --------
Net plant and equipment................................ $241,189 $229,708
======== ========
ACCRUED EXPENSES:
Salaries and wages....................................... $ 11,920 $ 12,609
Other employment costs................................... 8,181 7,738
Other accrued expenses................................... 2,667 3,463
-------- --------
$ 22,768 $ 23,810
======== ========
OTHER LONG TERM LIABILITIES:
Postretirement welfare benefits.......................... $ 62,892 $ 61,269
Other long term liabilities.............................. 14,222 13,773
-------- --------
$ 77,114 $ 75,042
======== ========
</TABLE>
STOCK OPTION PLANS
The Company has two active stock option plans and two plans under which no
further awards may be made, all approved by shareholders.
Under the 1994 Long Term Incentive Plan, 1,250,000 shares of common stock
are reserved for issuance to key employees and other key individuals who perform
services for the Company. Stock options, stock appreciation rights and
restricted stock may be granted by the Board of Directors at not less than the
fair market value on the date of grant, and such grants generally expire ten
years from the date of grant. At July 31, 1996, shares available for future
grants were 679,492.
Under the 1994 Director Stock Plan, 50,000 shares are reserved for issuance
of non-qualified stock options to directors who are not employees of the Company
or affiliates of Kohlberg & Co., L.P. Each eligible director is awarded 2,500
stock options at the first meeting of the Board of Directors following the
annual meeting of shareholders. Each award is at the fair market value on the
date of grant and expire not less than five years, nor more than ten years from
the grant date.
An aggregate of 1,400,000 shares had been reserved for the Management Stock
Option Plan and the Employee Stock Purchase and Option Plan. Options generally
expire ten years from the date of grant. No further awards may be granted under
either Plan.
F-12
<PAGE> 26
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
Activity for common shares under option for the years ended July 31, 1996
and 1995 were as follows:
<TABLE>
<CAPTION>
NUMBER OF AVERAGE
SHARES PRICE
--------- -------
<S> <C> <C>
Outstanding, August 1, 1994............................... 1,131,903 $4.84
Granted................................................. 135,000 6.08
Exercised............................................... (94,820) 4.00
Canceled................................................ (112,690) 4.24
--------- -----
Outstanding, July 31, 1995................................ 1,059,393 $5.14
Granted................................................. 350,000 8.14
Exercised............................................... (49,000) 4.00
Canceled................................................ (33,168) 6.47
--------- -----
Outstanding, July 31, 1996................................ 1,327,225 $5.94
========= =====
Exercisable, July 31, 1996................................ 795,775 $5.00
========= =====
</TABLE>
COMMITMENTS AND CONTINGENCIES
There are various claims and legal proceedings arising in the normal course
of business pending against or involving the Company wherein monetary damages
are sought. These claims and proceedings are generally covered by insurance, and
it is management's opinion that the Company's liability, if any, under such
claims or proceedings would not materially affect its financial position or
results of operations.
The Company is subject to a broad range of federal, state and local
environmental requirements, including those governing discharges to the air and
water, the handling and disposal of solid and/or hazardous wastes and the
remediation of contamination associated with releases of hazardous substances.
Primarily because the scrap melting process produces dust that contains lead and
cadmium, the Company is classified, in the same manner as other similar steel
mills in its industry, as a generator of hazardous waste.
The Company has been identified by the Illinois Environmental Protection
Agency (IEPA) as one of eighteen potentially responsible parties for costs
associated with a third party owned disposal site. The IEPA is likely to seek
compensation from the Company as an alleged waste generator for recovery of past
costs and future remediation of the waste site. Under Illinois law, the
Company's share of liability can be limited to its proportionate share based
upon causation of the total cost of the site. Based on data available, the
Company's share will be a smaller fraction of the total site clean up costs,
however no determination of total cost for remediation can be made at this time.
The Company has been cited by the United States Environmental Protection
Agency (USEPA) for alleged violations of clean air standards and other
requirements at its Sterling furnace operations. As part of its ongoing
environmental compliance program, the Company will make a capital expenditure of
approximately $1.3 million in fiscal 1997 to upgrade the particulate emission
collection system in the furnace area. The Company is also studying additional
alternatives to improve emission control and address issues raised by the USEPA.
The cost of further remedial steps and potential penalties imposed by the USEPA,
if any, cannot be determined at this time.
DESCRIPTION OF LEASING ARRANGEMENTS
The Company has entered into various operating leases for transportation
equipment (principally over-the-road tractors and trailers for shipment of a
portion of the Company's products) and other equipment. The majority of the
transportation equipment leases expire during fiscal 1999.
F-13
<PAGE> 27
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
The future minimum rental payments required for the noncancelable lease
term of the operating leases as of July 31, 1996, were as follows:
<TABLE>
<S> <C>
Fiscal year ending July 31:
1997....................................................... $1,716
1998....................................................... 926
1999....................................................... 218
2000....................................................... 68
2001....................................................... 13
Remaining years............................................ 10
------
Total minimum future lease payments........................ $2,951
======
</TABLE>
Rental expense under operating leases for the years ended July 31, 1996,
1995 and 1994 was approximately $2,318; $2,364; and $4,300, respectively.
SUBSEQUENT EVENT
On August 27, 1996, four year labor agreements covering the majority of
hourly employees were ratified. Under one such agreement, higher retirement
payments are required under the Company's defined benefit plan for hourly
employees. Using the same assumptions described in the Employee Benefit Plans
Note to Financial Statements, the accumulated benefit obligation would increase
by $17,250; the unfunded prior service cost would increase by 12,594; and
therefore, the minimum pension liability recorded in Shareholders' Equity would
increase by $4,656. Annual pension expense will not change significantly due to
negotiated reductions in benefit levels in the hourly defined contribution plan.
To improve the liquidity of common stock held by participants in the ESOP,
the Company has agreed to seek termination of the ESOP and distribute such
shares to participants. Distribution is subject to, among other things,
favorable determination by the Internal Revenue Service as to the ESOP
termination. No timetable has yet been established.
F-14
<PAGE> 28
NORTHWESTERN STEEL AND WIRE COMPANY
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------------
1996 OCTOBER JANUARY APRIL JULY FULL YEAR
- ------------------------------------------ -------- -------- -------- -------- ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales................................. $160,912 $149,175 $173,183 $177,799 $661,069
Gross profit(1)........................... 19,724 16,958 19,033 16,580 72,295
Net income(2)............................. 4,682 2,504 3,558 9,926 20,670
Per common share data:
Net income(2)........................... $ 0.19 $ 0.10 $ 0.14 $ 0.40 $0.83
Stock price range-
High................................. 10.125 9.125 9.125 6.875 10.125
Low.................................. 6.5 6.875 5.875 5 5
Close................................ 7.5 9 6.75 5.125 5.125
Tons Shipped.............................. 398,488 376,242 438,621 454,428 1,667,779
</TABLE>
<TABLE>
<CAPTION>
1995 OCTOBER JANUARY APRIL JULY FULL YEAR
- ------------------------------------------ -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net sales................................. $153,546 $145,818 $166,594 $172,462 $638,420
Gross profit(1)........................... 19,196 16,943 18,432 20,524 75,095
Net income(3)............................. 4,261 2,215 3,428 17,074 26,978
Per common share data:
Net income(3)........................... $ 0.17 $ 0.09 $ 0.14 $ 0.67 $1.07
Stock price range-
High................................. 9.625 7.875 7.625 10.25 10.25
Low.................................. 6 5.5 5.75 5.875 5.5
Close................................ 6.125 7.25 5.875 10 10
Tons Shipped.............................. 415,675 388,257 422,734 435,358 1,662,024
</TABLE>
The common stock of Northwestern Steel and Wire Company is traded on the
Nasdaq-National Market (Trading symbol NWSW).
- -------------------------
Notes:
(1) Gross profit is defined as net sales less cost of goods sold excluding
depreciation.
(2) For the quarter ended July 31, 1996, net income included an $8.8 million
($.35 per share) tax benefit associated with the recognition of certain
deferred tax assets which are now more likely than not to be realized. For
the full year, the tax benefits recognized were $10.4 million ($.42 per
share).
(3) For the quarter and year ended July 31, 1995, net income included a $10.6
million ($.42 per share) tax benefit associated with the recognition of
certain deferred tax assets which are now more likely than not to be
realized.
F-15
<PAGE> 29
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of Northwestern Steel and Wire Company
Our report on the consolidated financial statements of Northwestern Steel
and Wire Company and Subsidiaries is included on page F-1 of this Form 10-K. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index included in Item 14
of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
September 12, 1996
F-16
<PAGE> 30
SCHEDULE II
NORTHWESTERN STEEL AND WIRE COMPANY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JULY 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
CHARGED
BALANCE AT TO COSTS BALANCE AT
BEGINNING AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
- ----------------------------------------------------- ---------- -------- ---------- ----------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
FOR THE YEAR ENDED JULY 31, 1996................... $1,000 $163 $ (338) $ 825
====== ==== ===== ======
FOR THE YEAR ENDED JULY 31, 1995................... $1,000 $ 57 $ (57) $1,000
====== ==== ===== ======
FOR THE YEAR ENDED JULY 31, 1994................... $1,000 $ 91 $ (91) $1,000
====== ==== ===== ======
Inventory valuation allowance:
FOR THE YEAR ENDED JULY 31, 1996................... $ 334 $459 $ -- $ 793
====== ==== ===== ======
FOR THE YEAR ENDED JULY 31, 1995................... $ 690 $ -- $ (356) $ 334
====== ==== ===== ======
FOR THE YEAR ENDED JULY 31, 1994................... $ 809 $ -- $ (119) $ 690
====== ==== ===== ======
</TABLE>
F-17
<PAGE> 31
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedule
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Report of Independent Accountants................................................ F-1
Consolidated Balance Sheets as of July 31, 1996 and 1995......................... F-2
Consolidated Statements of Shareholders' Equity for the years ended July 31,
1996, 1995 and 1994.............................................................. F-3
Consolidated Statements of Operations for the years ended July 31, 1996, 1995 and
1994............................................................................. F-4
Consolidated Statements of Cash Flows for the years ended July 31, 1996, 1995 and
1994............................................................................. F-5
Notes to Financial Statements (Including Quarterly Financial Data)............... F-6
2. Financial Statements Schedules:
Report of Independent Accountants................................................ F-16
Schedule II -- Valuation and Qualifying Accounts for the years ended July 31,
1996, 1995 and 1994.............................................................. F-17
3. (a) See Index to Exhibits on pages 20 through 21.
(b) Exhibit 11.1 Computation of Income Per Share
(c) Exhibit 24. Consent of Independent Accountants
(d) No reports on Form 8-K were filed during the last fiscal quarter of the
period covered by this report.
</TABLE>
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 24th day of
October 1996.
NORTHWESTERN STEEL AND WIRE
COMPANY
By: /s/ ROBERT N. GURNITZ
------------------------------------
Robert N. Gurnitz
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the Company and in the
capacities indicated on the 24th day of October, 1996.
SIGNATURES
/s/ ROBERT N. GURNITZ
------------------------------------------------------
Robert N. Gurnitz
Chairman of the Board
Chief Executive Officer
Principal Executive Officer
and Director
/s/ TIMOTHY J. BONDY
------------------------------------------------------
Timothy J. Bondy
Vice President, Chief Financial Officer
Secretary and Treasurer
Principal Financial Officer
/s/ THOMAS M. VERCILLO
------------------------------------------------------
Thomas M. Vercillo
Controller
Principal Accounting Officer
/s/ WILLIAM F. ANDREWS
------------------------------------------------------
William F. Andrews
Director
/s/ WARNER C. FRAZIER
------------------------------------------------------
Warner C. Frazier
Director
/s/ DARIUS W. GASKINS, JR.
------------------------------------------------------
Darius W. Gaskins, Jr.
Director
/s/ JAMES A. KOHLBERG
------------------------------------------------------
James A. Kohlberg
Director
/s/ CHRISTOPHER LACOVARA
------------------------------------------------------
Christopher Lacovara
Director
/s/ ALBERT G. PASTINO
------------------------------------------------------
Albert G. Pastino
Director
/s/ GEORGE W. PECK, IV
------------------------------------------------------
George W. Peck, IV
Director
/s/ RICHARD F. WILLIAMS
------------------------------------------------------
Richard F. Williams
Director
<PAGE> 33
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE
NUMBER DESCRIPTION TO OTHER DOCUMENT
- ------ ----------------------------------------- -----------------------------------------
<C> <S> <C>
2.1 Stock Purchase Agreement dated as of July Current Report on Form 8-K dated July 27,
27, 1992 between the Company and KNSW 1992, File No. 1-4288, Exhibit 2.1
3.1 Second Amended and Restated Articles of Annual Report on Form 10-K for the fiscal
Incorporation of the Company dated as of year ended July 31, 1992, File No.
August 12, 1992 1-4288, Exhibit 3.1
3.2 Amended and Restated By-Laws of the Annual Report on Form 10-K for the fiscal
Company year ended July 31, 1992, File No.
1-4288, Exhibit 3.2
3.3 Amended and Restated By-Laws of the
Company
4.1 Amended and Restated Credit Agreement Annual Report on Form 10-K for the fiscal
dated as of August 16, 1988 As Amended year ended July 31, 1996, File No. 1-4288
and Restated as of April 30, 1996
4.2 Form of Indenture dated as of 1993, Registration Statement No. 33-60766,
between the Company and Continental Bank, Exhibit 4.38
National Association, as Trustee
(including form of Senior Note)
4.3 Northwestern Steel and Wire Company Rule 13e-3 Transaction Statement, File
Employee Stock Ownership Plan No. 5-10871, Exhibit 17(c)(vii)
4.4 Amendment No. 1 to ESOP dated March 29, Annual Report on Form 10-K for the fiscal
1990 year ended July 31, 1992, File No.
1-4288, Exhibit 19.1
4.5 Amendment No. 2 to ESOP effective as of Annual Report on Form 10-K for the fiscal
August 1, 1990 year ended July 31, 1992, File No.
1-4288, Exhibit 19.2
4.6 Amendment No. 3 to ESOP effective as of Annual Report on Form 10-K for the fiscal
January 1, 1992 year ended July 31, 1992, File No.
1-4288, Exhibit 19.3
4.7 Amendment No. 4 to the ESOP effective as Annual Report on Form 10-K for the fiscal
of August 12, 1992 year ended July 31, 1992, File No.
1-4288, Exhibit 4.27
4.8 Amendment No. 5 to the ESOP effective Annual Report on Form 10-K for the fiscal
April 29, 1995 year ended July 31, 1995, File No. 1-4288
4.9 Amendment No. 6 to the ESOP effective Annual Report on Form 10-K for the fiscal
July 26, 1995 year ended July 31, 1995, File No. 1-4288
10.1 Employment Agreement between Robert N. Annual Report on Form 10-Q for the
Gurnitz and the Company dated as of quarter ended January 31, 1995, File No.
October 31, 1994 1-4288, Exhibit 10.1
10.2 Form of Indemnification Agreements dated Annual Report on Form 10-K for the fiscal
April, 1992 between the Company and its year ended July 31, 1992, File No.
directors 1-4288, Exhibit 10.16
</TABLE>
20
<PAGE> 34
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED BY REFERENCE
NUMBER DESCRIPTION TO OTHER DOCUMENT
- ------ ----------------------------------------- -----------------------------------------
<C> <S> <C>
10.3 Form of Indemnification Agreements dated Annual Report on Form 10-K for the fiscal
May 29, 1992 between the Company and year ended July 31, 1992, File No.
members of the Administrative Committee 1-4288, Exhibit 10.17
of the ESOP
10.4 Form of Amendments of Indemnification Annual Report on Form 10-K for the fiscal
Agreements dated as of July 23, 1992 year ended July 31, 1992, File No.
between the Company and members of the 1-4288, Exhibit 10.18
Administrative Committee of the ESOP
10.5 Form of Deferred Compensation Agreement Annual Report on Form 10-K for the fiscal
year ended July 31, 1989, File No.
1-4288, Exhibit 10.5
10.6 Northwestern Steel and Wire Company Annual Report on Form 10-K for the fiscal
Management Stock Option Plan effective year ended July 31, 1992, File No.
August 12, 1992 1-4288, Exhibit 10.20
10.7 Form of Management Stock Option Agreement Annual Report on Form 10-K for the fiscal
dated as of August 12, 1992 year ended July 31, 1992, File No.
1-4288, Exhibit 10.21
10.8 Fee Agreement dated as of August 12, 1992 Annual Report on Form 10-K for the fiscal
between the Company and Kohlberg year ended July 31, 1992, File No.
1-4288, Exhibit 10.22
10.9 1994 Long Term Incentive Plan Registration Statement on Form S-8 and
Form S-3, No. 33-53471, Exhibit 4(d)
10.10 1994 Director Stock Option Plan Registration Statement on Form S-8 and
Form S-3, No. 33-53471, Exhibit 4(e)
11.1 Computation of Income per share
22.1 The Company has three subsidiaries:
Northwestern Steel and Wire Company
(formerly H/N Steel Company, Inc.), a
Texas corporation, Northwestern Steel and
Wire Company, a Delaware corporation, and
Northwestern Steel and Wire Company --
Kentucky, a Delaware corporation
24 Consent of Coopers & Lybrand L.L.P.
</TABLE>
21
<PAGE> 1
Exhibit 3.3
Amendment and Restatement of Article II, Section 3 of the Corporations By-Laws
Section 3. Place of Meeting. The place of any annual or special meeting of
shareholders shall be the principal place of business of the Corporation in the
State of Illinois or such other place as the board of directors may from time
to time designate and state in the notice of the meeting.
<PAGE> 1
CONFORMED COPY
============================================================
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of August 16, 1988
As Amended and Restated as of April 30, 1996
Among
NORTHWESTERN STEEL AND WIRE COMPANY
(as successor, by merger, to NW Acquisition Corporation),
NORTHWESTERN STEEL AND WIRE COMPANY
(formerly known as H/N Steel Company, Inc.)
THE LENDERS NAMED HEREIN
and
CHEMICAL BANK,
as Administrative Agent and as Collateral Agent
[CS&M Ref. No.: 6700-315]
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
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<S> <C> <C>
I. DEFINITIONS .............................. 2
II. THE LOANS ................................ 35
2.01 Revolving Credit Commitments ...... 35
2.02 Rollover Term Loans ............... 35
2.03 Revolving Credit Loans ............ 36
2.04 Notice of Revolving Credit Loans .. 38
2.05 Notes; Repayment of Loans ......... 38
2.06 Interest Elections ............. 40
2.07 Interest on Loans ................. 42
2.08 Fees .............................. 43
2.09 Alternate Rate of Interest ........ 44
2.10 Extension, Termination and
Reduction of Revolving Credit
Commitments .................. 44
2.11 Interest on Overdue Amounts ....... 48
2.12 Prepayment of Loans ............... 48
2.13 Change in Circumstances ........... 54
2.14 Yield-Maintenance Premium ......... 56
2.15 Break Funding Losses .............. 58
2.16 Pro Rata Treatment ................ 59
2.17 Sharing of Setoffs ................ 59
2.18 Letters of Credit ................. 60
2.19 Taxes.............................. 68
2.20 Mitigation Obligations:
Replacement of Lenders ....... 69
III. REPRESENTATIONS AND WARRANTIES ................ 70
3.01 Organization, Corporate Powers .... 70
3.02 Authorization ..................... 70
3.03 Governmental Approvals ............ 71
3.04 Enforceability .................... 71
3.05 Financial Statements............... 71
3.06 Title to Properties; Receivables... 72
3.07 Litigation; Compliance with Laws;
etc. ......................... 73
3.08 Agreements ........................ 74
3.09 Federal Reserve Regulations ....... 74
3.10 Security Documents ................ 74
3.11 Taxes ............................. 75
3.12 ERISA ............................. 75
3.13 No Material Misstatements ......... 75
</TABLE>
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<TABLE>
<S> <C> <C>
3.14 Investment Company Act; Public
Utility Holding Company Act .. 76
3.15 Solvency .......................... 76
3.16 Labor Matters ..................... 76
3.17 Employment and Management
Agreements ................... 77
3.18 Environmental Matters ............. 77
IV. CONDITIONS OF EFFECTIVENESS AND
LENDING ..................................... 78
4.01 All Events ........................ 78
4.02 Effectiveness ..................... 78
V. AFFIRMATIVE COVENANTS ......................... 82
5.01 Corporate Existence ............... 82
5.02 Businesses and Properties ......... 82
5.03 Insurance ......................... 83
5.04 Obligations and Taxes ............. 83
5.05 Financial Statements; Reports ..... 84
5.06 Litigation and Other Notices ...... 85
5.07 ERISA and Environmental Matters ... 86
5.08 Maintaining Records; Access to
Properties and Inspections ... 87
5.09 Use of Proceeds ................... 87
5.10 Collateral for the Obligations .... 87
5.11 Further Assurances ................ 88
5.12 Fiscal Year; Accounting ........... 88
5.13 Business Notices .................. 88
VI. NEGATIVE COVENANTS ............................ 89
6.01 Indebtedness ...................... 89
6.02 Liens ............................. 90
6.03 No Guarantees ..................... 92
6.04 Sale and Lease-Back Transactions .. 92
6.05 Acquisitions, Consolidations,
Mergers and Sales of Assets .. 93
6.06 Investments, Loans and Advances ... 94
6.07 Transactions with Affiliates ...... 95
6.08 Line of Business .................. 95
6.09 Credit Standards .................. 95
6.10 Dividends ......................... 95
6.11 Priority of Loan Payments ......... 95
6.12 Amendment of Constituent Documents
and Certain Agreements ....... 96
6.13 Plan of Liquidation, etc. ......... 96
</TABLE>
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<TABLE>
<S> <C> <C>
6.14 Current Ratio ..................... 96
6.15 Fixed Charge Coverage Ratio ....... 96
6.16 No Subsidiaries ................... 96
6.17 Capital Expenditures .............. 97
6.18 Leverage Ratio .................... 98
VII. EVENTS OF DEFAULT ............................. 98
VIII. THE ADMINISTRATIVE AGENT AND THE COLLATERAL
AGENT ......................................... 102
IX. MISCELLANEOUS ................................. 106
9.01 Notices ........................... 106
9.02 Survival of Agreement ............. 106
9.03 Successors and Assigns;
Participations ............... 107
9.04 Expenses; Indemnity ............... 111
9.05 Right of Setoff ................... 112
9.06 Applicable Law; Submission to
Jurisdiction; Service of
Process ...................... 113
9.07 Payments on Business Days ......... 114
9.08 Waivers; Amendments ............... 114
9.09 Limitation of Interest ............ 116
9.10 Severability ...................... 116
9.11 Counterparts ...................... 117
9.12 Headings .......................... 117
9.13 Confidentiality ................... 117
9.14 Entire Agreement; Waiver of
Jury Trial, etc. ............. 118
9.15 Effectiveness; Original Credit
Agreement .................... 119
9.16 Joint Obligations ................. 119
9.17 Release of NWS/Texas .............. 120
</TABLE>
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Exhibits
Form of Revolving Credit Note Exhibit A-1
Form of Rollover Term Note Exhibit A-2
Form of Assignment and Acceptance Exhibit B
Form of Borrowing Base Certificate Exhibit C
Request for Extension of Revolving Exhibit D
Credit Maturity Date
Form of Opinion Exhibit E
Form of Administrative Questionnaire Exhibit F
Amended and Restated Security Agreement Exhibit G
Amended and Restated Pledge Agreement Exhibit H
Form of Guarantee Agreement Exhibit I
Form of Indemnity, Subrogation and Exhibit J
Contribution Agreement
Schedules
Guarantors Schedule 1.01(a)
Revolving Credit Commitments Schedule 2.01
Outstanding Rollover Term Loans Schedule 2.02
Governmental Approvals Schedule 3.03
Receivables Schedule 3.06
Filings Schedule 3.10
Liens Schedule 6.02
<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT dated
as of August 16, 1988, as amended and restated as of
April 30, 1996, among NORTHWESTERN STEEL AND WIRE
COMPANY (as successor, by merger, to NW Acquisition
Corporation), an Illinois corporation ("NWS"),
NORTHWESTERN STEEL AND WIRE COMPANY (formerly known
as H/N Steel Company, Inc.), a Texas corporation and
a direct, wholly owned subsidiary of NWS ("NWS/Texas"
and, together with NWS, individually a "Borrower" and
collectively the "Borrowers"), the Lenders (as
defined in Article I), and CHEMICAL BANK, a New York
banking corporation, as issuing bank (in such
capacity, the "Issuing Bank"), as administrative
agent for the Lenders (in such capacity, the
"Administrative Agent") and as collateral agent for
the Lenders (in such capacity, the "Collateral
Agent").
The Borrowers, the Original Lenders and the Administrative
Agent are parties to a Credit Agreement dated as of August 16, 1988, as amended
and restated as of June 21, 1989, as further amended and restated as of July
27, 1992, and as subsequently amended and in effect prior to the effectiveness
of this Agreement (the "Original Credit Agreement"). The Borrowers have
requested that the Lenders, the Administrative Agent, the Collateral Agent and
the Issuing Bank agree to amend and restate the Original Credit Agreement in
order to provide for (a) continuation of the Rollover Term Loans outstanding as
of the Effective Date under and pursuant to the terms of this Agreement,
without any change to the maturity, interest rate or other payment terms
applicable thereto, (b) replacement of the Revolving Credit Commitments under
the Original Credit Agreement with Revolving Credit Commitments hereunder
providing for Revolving Credit Loans to the Borrowers at any time and from time
to time prior to the Revolving Credit Maturity Date, in an aggregate principal
amount at any time outstanding not in excess of $100,000,000, the proceeds of
which shall be used (i) to pay on the Effective Date all indebtedness and other
obligations outstanding under the Original Credit Agreement (other than the
Rollover Term Loans and accrued interest thereon), (ii) to pay fees and
expenses payable in connection with the amendment and restatement of the
Original Credit Agreement and (iii) for working capital and other general
corporate purposes of the Borrowers and their
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Subsidiaries, (c) the issuance of Letters of Credit, in an aggregate face
amount at any time outstanding not in excess of $15,000,000, to support payment
obligations incurred in the ordinary course of business by the Borrowers and
their Subsidiaries and (d) certain other changes to the Original Credit
Agreement. The Lenders, the Administrative Agent, the Collateral Agent and the
Issuing Bank are willing to agree to such amendment and restatement of the
Original Credit Agreement, subject to the terms and conditions hereinafter set
forth. Accordingly, the Borrowers, the Lenders, the Administrative Agent, the
Collateral Agent and the Issuing Bank hereby agree as follows:
I. DEFINITIONS
"ABR Borrowing" shall mean a Borrowing comprised of ABR
Revolving Credit Loans.
"ABR Revolving Credit Loan" shall mean any Revolving Credit
Loan bearing interest at a rate determined by reference to the Alternate Base
Rate in accordance with the provisions of Article II.
"Account Debtor" shall mean any person who is or who may
become obligated to a Borrower or one of its Subsidiaries under, with respect
to, or on account of, an Account.
"Accounts" shall mean any and all rights of the Borrowers and
their Subsidiaries to payment for goods and services sold or leased, including
any such right evidenced by chattel paper, whether due or to become due,
whether or not it has been earned by performance, and whether now or hereafter
acquired or arising in the future, including, without limitation, accounts
receivable from Affiliates.
"Adjusted Indebtedness" shall mean, in respect of NWS and its
consolidated Subsidiaries as at any date of determination, the sum (without
duplication) of all Indebtedness (determined on a consolidated basis) including
without limitation (i) the Senior Notes, (ii) the aggregate amount of Revolving
Credit Exposure at such date (and, if the revolving credit facility under this
Agreement is replaced, in whole or in part, by any other revolving credit
facility, the aggregate amount of loans and letters of credit outstanding
thereunder at such date), and (iii) the aggregate amount of Rollover Term Loans
at such date, including the Capitalized Rollover Interest Amount thereof
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but excluding any portion thereof that is secured by cash collateral or
defeased as provided in Section 2.12.
"Adjusted LIBO Rate" shall mean, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the product of
(a) the LIBO Rate in effect for such Interest Period and (b) Statutory
Reserves.
"Adjusted Stockholders' Equity" shall mean, in respect of NWS
and its consolidated Subsidiaries as at any date of determination, the sum of
(i) the sum of capital stock taken at par or stated value, capital in excess of
par or stated value, retained earnings and any other account which, in
accordance with generally accepted accounting principles, constitutes
stockholders's equity, less (ii) treasury stock (to the extent not deducted in
clause (i)) and any minority interest in Subsidiaries, less (iii) the amount of
all assets reflected as goodwill, patents, research and development and all
other assets required to be classified as intangibles in accordance with
generally accepted accounting principles, less (iv) the amount of any write-up
after January 31, 1993, in the value of any asset above the cost or depreciated
cost thereof; provided, however, that "Adjusted Stockholders' Equity" shall be
determined without giving effect to the adoption by NWS of Statement of
Financial Accounting Standard No. 106 or changes in actuarial calculations
resulting from Financial Accounting Standards Nos. 87 and 106.
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit F hereto, which each Lender shall complete
and return to the Administrative Agent.
"Affiliate" shall mean any person (including any member of the
immediate family of any such natural person) which directly or indirectly
beneficially owns or controls 5% or more of the total voting power of shares of
capital stock of NWS or any of its Subsidiaries having the right to vote for
directors under ordinary circumstances, any person controlling, controlled by
or under common control with any such person (within the meaning of Rule 405
under the Securities Act of 1933), any director or executive officer of such
person, and any person 5% or more of the total voting power of shares of
capital stock (or equivalent equity interests) of which is directly or
indirectly owned
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or controlled by any director or executive officer (or any member of the
immediate family thereof) of NWS or any of its Subsidiaries.
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect
on such day plus 1/2 of 1%. The term "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by Chemical Bank as its
prime rate in effect at its principal office in the City of New York; each
change in the Prime Rate shall be effective on the date such change is publicly
announced as being effective. The term "Base CD Rate" shall mean the sum of
(x) the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (y) the Assessment Rate. The term "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base CD
Rate or the Federal Funds Effective Rate or both for any reason, including,
without limitation, the inability or failure of the Administrative Agent to
obtain sufficient quotations in accordance with the terms of the definition
thereof, the Alternate Base Rate shall be determined without regard to clause
(b) or (c), or both, of the definition of Alternate Base Rate above, as
appropriate, until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate shall be effective
on the effective date of such change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate, respectively.
"Alternate Currency" shall mean Italian Lire or any other
currency (other than U.S. dollars) approved in writing by the Issuing Bank as
an "Alternate Currency" hereunder.
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"Alternate Currency Letter of Credit" shall mean a Letter of
Credit that provides for payments of drawings thereunder in an Alternate
Currency.
"Applicable Margin" shall mean, for any day, with respect to
any Revolving Credit Loan or with respect to the Letter of Credit Participation
Fees, as the case may be, (i) during the 12-month period commencing on the
Effective Date (x) 2.00% with respect to Eurodollar Revolving Credit Loans and
Letter of Credit Participation Fees and (y) 1.00% with respect to ABR Revolving
Credit Loans and (ii) thereafter, the applicable margin set forth below, based
upon the ratio of Adjusted Indebtedness to Consolidated Cash Flow Available for
Fixed Charges as of the most recent date of determination (determined as
provided below):
<TABLE>
Applicable Margin
LC Participation
Eurodollar ABR Fee
Category Ratio Spread Spread Percentage
- -------- -------------- ------- ------ ----------
<S> <C> <C> <C> <C>
(1) Greater than 2.75 to 1.00 2.25% 1.25% 2.25%
(2) Greater than 2.25 to 1.00, but less than
or equal to 2.75 to 1.00 2.00% 1.00% 2.00%
(3) Greater than 2.00 to 1.00 but less than or
equal to 2.25 to 1.00 1.75% 0.75% 1.75%
(4) Less than or equal to 2.00 to 1.00 1.25% 0.25% 1.25%
</TABLE>
For purposes of determining the Applicable Margin, the ratio of Adjusted
Indebtedness to Consolidated Cash Flow Available for Fixed Charges shall be
determined as of, and any change in the Applicable Margin as a result of such
determination shall be effective on and after, the date of delivery to the
Administrative Agent of the financial statements and certificates required by
Section 5.05(a) or (b) indicating such ratio (based upon Adjusted Indebtedness
as of, and Consolidated Cash Flow Available for Fixed Charges for the
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period of four consecutive fiscal quarters ended on, the date of the most
recent consolidated balance sheet of NWS included in such financial statements)
until the date immediately preceding the next date of delivery of such
financial statements and certificates indicating another such ratio.
Notwithstanding the foregoing (i) at any time during which the Borrowers have
failed to deliver the financial statements and certificates required by Section
5.05(a) or (b) and such failure has continued more than five days after the
date such delivery was required, or (ii) at any time after the occurrence and
during the continuance of an Event of Default, the ratio of Adjusted
Indebtedness to Consolidated Cash Flow Available for Fixed Charges shall be
deemed to be in category (1) for purposes of determining the Applicable Margin.
"Applicable Percentage" of any Lender at any time shall mean
the percentage of the Total Revolving Credit Commitment represented by such
Lender's Revolving Credit Commitment.
"Assessment Rate" shall mean for any date the annual rate
(rounded upwards, if necessary, to the next 1/100 of 1%) most recently
estimated by the Administrative Agent as the then current net annual assessment
rate that will be employed in determining amounts payable by Chemical Bank to
the Federal Deposit Insurance Corporation (or any successor thereto) for
insurance by such Corporation (or such successor) of time deposits made in
dollars at Chemical Bank's domestic offices.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of Exhibit B hereto or such other form as
shall be approved by the Administrative Agent.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrowing" shall mean a group of Revolving Credit Loans of a
single Type made by the Lenders on a single date and as to which a single
Interest Period is in effect.
"Borrowing Base" shall mean, at any time, an amount equal to
the sum of (a) 85% of the unpaid aggregate amount of all Eligible Accounts
Receivable of NWS and its Subsidiaries plus (b) 55% of the Eligible Inventory
Value of
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Eligible Inventory (excluding steel plant supplies and rolling stock) plus (c)
25% of the Eligible Inventory Value of Eligible Inventory consisting of steel
plant supplies and rolling stock; provided that, at any time, the Eligible
Inventory Value component of the Borrowing Base (the sum of the amounts
determined pursuant to clauses (b) and (c) above) shall not comprise more than
50% of the Borrowing Base in effect at such time. The Borrowing Base at any
time shall be determined by reference to the most recent Borrowing Base
Certificate delivered to the Administrative Agent, absent any error in such
Borrowing Base Certificate as of the date delivered.
"Borrowing Base Certificate" shall mean a certificate in the
form of Exhibit C hereto, duly completed and executed by a Financial Officer of
each Borrower accompanied by an accounts receivable aging schedule
substantially in the form set forth in such Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or
legal holiday in the State of New York or Illinois, on which banks are open for
substantially all their banking business; provided, however, that when used in
connection with a Eurodollar Revolving Credit Loan, the term "Business Day"
shall also exclude any day on which banks are not open for dealing in dollar
deposits in the London interbank market.
"Capital Expenditure Deduction" shall mean, for any period, an
amount equal to (a) the aggregate amount of Capital Expenditures made by NWS
and its consolidated Subsidiaries during such period (net of the amount of
Indebtedness, other than Indebtedness hereunder, incurred to finance any such
Capital Expenditures) plus (b) the aggregate amount of Capital Expenditures
that, as of the end of such period, NWS and its consolidated Subsidiaries shall
have committed, pursuant to binding agreements as evidenced by issued purchase
orders, to make within three months after the end of such period and that NWS
shall, at its option, elect (by specifying such amounts in reasonable detail in
the certificate delivered pursuant to Section 2.12(e) regarding the calculation
of Excess Cash Flow for such period) to include as a "Capital Expenditure
Deduction" for such period, minus (c) the aggregate amount, if any, included in
the calculation of "Capital Expenditure Deduction" pursuant to clause (b) above
for the immediately preceding period minus (d) the aggregate amount of Capital
Expenditures made by NWS and its consolidated Subsidiaries
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during such period in excess of the amount that would have been permitted
during such period under Section 6.17 (disregarding for this purpose any
increases in the amount of Capital Expenditures permitted under Section 6.17
pursuant to clauses (i) and (ii) of the proviso therein); provided, however,
that the aggregate "Capital Expenditure Deduction" for any period shall not
exceed the aggregate amount of Capital Expenditures permitted during such
period under Section 6.17 (disregarding for these purposes any increases in the
amount of Capital Expenditures permitted under Section 6.17 pursuant to clauses
(i) and (ii) of the proviso therein).
"Capital Expenditures" shall mean, for any person in any
period, all amounts that would, in accordance with generally accepted
accounting principles consistently applied, be included as additions to
property, plant and equipment or as other capital expenditures, in each case on
a consolidated balance sheet for such person, excluding any such amounts
representing expenditures (a) made with insurance proceeds to repair or replace
property that shall have suffered a casualty, (b) in respect of interest
payments that are capitalized (rather than expensed) or (c) consisting of
consideration paid in connection with a Permitted Acquisition.
"Capital Stock" of any person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such persons,
including any preferred stock, but excluding any debt securities convertible in
such equity.
"Capitalized Rollover Interest Amount" of any Rollover Term
Loan shall mean the portion of the outstanding principal amount of such
Rollover Term Loan representing the amount of interest that has been
capitalized and added to the principal of such Rollover Term Loan pursuant to
Section 2.07 of the Original Credit Agreement.
"Capital Lease Obligation" shall mean, as to any person, the
obligations of such person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such person under generally accepted accounting
principles and, for purposes of this Agreement, the amount of such obligations
shall be the
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capitalized amount thereof, determined in accordance with generally accepted
accounting principles.
"Cash Available for Principal Payments" shall mean, for any
period, the Net Income of NWS and its Subsidiaries during such period,
consolidated and determined in accordance with generally accepted accounting
principles, plus, without duplication, (i) the amount of all depreciation,
amortization, stock appreciation right expense and similar noncash charges
deducted from income in determining such Net Income, (ii) the amount of the
deduction from income for such period attributable to the ESOPContributions,
(iii) the amount by which the deferred pension liabilities, the deferred taxes
or the post employment benefit liabilities of NWS and its Subsidiaries
increased from the respective amounts as of the end of the previous period,
(iv) the amount by which the Working Capital of NWS and its Subsidiaries
decreased from the Working Capital of NWS and its Subsidiaries at the end of
the previous period, and (v) the amount of all cash deposits and prepaid costs
of the type referred to in (e) below that were refunded to NWS and its
Subsidiaries during such period and not included in income in determining such
Net Income minus, without duplication, (a) the amount by which the deferred
pension liabilities, the deferred taxes or post- employment benefit liabilities
of NWS and its Subsidiaries decreased from the respective amounts as of the end
of the previous period, (b) the amount by which the Working Capital of NWS and
its Subsidiaries increased from the Working Capital of NWS and its Subsidiaries
at the end of the previous period, (c) the Capital Expenditure Deduction for
such period, (d) the amount of interest and fees paid in cash by NWS and its
Subsidiaries during such period and capitalized, rather than deducted in
determining such Net Income, (e) deposits to secure environmental and workers'
compensation self insurance privileges and other similar deposits, and any
prepaid costs, but in each case only to the extent made in cash during such
period and not deducted in determining such Net Income, (f) the amount paid by
NWS and its Subsidiaries to management employees as reimbursement of their tax
liability attributable to stock appreciation rights, to the extent paid in cash
during such period and not deducted in determining such Net Income, (g) the
amount of any other noncash items included in income in determining such Net
Income, and (h) such other items as shall be requested from time to time by NWS
to be deducted in determining Cash Available for Principal Payments and
approved in writing by the Required Lenders; provided that
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(1) any gain or loss resulting from any Prepayment Event shall be excluded from
such Net Income (to the extent included therein) in determining Cash Available
for Principal Payments and (2) in the event of any closure, sale, lease or
other disposition of the Houston Facility, any increase or decrease in Working
Capital reasonably attributable to such event shall be disregarded for purposes
of clauses (iv) and (b) above.
A "Change in Control" shall be deemed to have occurred if (a)
a majority of the seats (other than vacant seats) on the board of directors of
NWS shall at any time after the Effective Date have been occupied by persons
who were neither (i) nominated by Kohlberg & Co., any of its affiliates or the
board of directors of NWS, nor (ii) appointed by directors so nominated; (b)
any person or group other than Kohlberg & Co. and its affiliates shall
otherwise directly or indirectly Control NWS; (c) Kohlberg & Co., together with
its affiliates, shall for any reason cease to beneficially own shares of Common
Stock representing at least 20% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of NWS; (d) a "Change
of Control", as defined in the Senior Note Documents, occurs; or (e) any person
or group (within the meaning of Rule 13d-5 of the Securities Exchange Act of
1934 as in effect on the Effective Date), other than Kohlberg & Co. and its
affiliates, shall own directly or indirectly, beneficially or of record, shares
representing more than 30% of the aggregate ordinary voting power represented
by the issued and outstanding capital stock of NWS.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the Effective Date, (b) any change in any law, rule or
regulation or in the interpretation or application thereof after the Effective
Date or (c) compliance by any Lender (or by any lending office of such Lender
or by such Lender's holding company, if any) with any request or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the Effective Date.
"Charges" shall have the meaning assigned such term in Section
9.09.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
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"Collateral" shall have the meaning assigned to such term in
the Security Agreement and Pledge Agreement and shall also include the
Mortgaged Property.
"Collateral Agent" shall mean Chemical Bank, as collateral
agent for the Lenders under the Security Documents.
"Commitment" shall mean, with respect to each Lender, the sum
of (i) its Rollover Term Commitment, as defined in the Original Credit
Agreement, and (ii) its Revolving Credit Commitment. The Commitments referred
to in clause (i) above terminated in accordance with the Original Credit
Agreement.
"Commitment Fee" shall have the meaning assigned to such term
in Section 2.08(a).
"Common Stock" shall mean the Common Stock, par value $.01 per
share, of NWS.
"Consolidated Cash Flow Available for Fixed Charges" shall
have the meaning assigned thereto in the Senior Note Documents, as in effect on
the date of issuance of the Senior Notes and disregarding any subsequent
amendment, modification or termination of the Senior Note Documents.
"Consolidated Fixed Charges" shall have the meaning assigned
thereto in the Senior Note Documents, as in effect on the date of issuance of
the Senior Notes and disregarding any subsequent amendment, modification or
termination of the Senior Note Documents.
"Control" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
a person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Current Assets" shall mean, as at any date of determination,
the total assets which would properly be classified as consolidated current
assets of NWS and its Subsidiaries in accordance with generally accepted
accounting principles.
<PAGE> 17
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"Current Liabilities" shall mean, as at any date of
determination, the total liabilities which would properly be classified as
consolidated current liabilities of NWS and its Subsidiaries (other than
current liabilities relating to long-term Indebtedness) in accordance with
generally accepted accounting principles.
"Dollar Equivalent" shall mean, on or as of any particular
date with respect to an amount in an Alternate Currency, the amount in U.S.
dollars, as conclusively determined by the Administrative Agent, which is
required for the Administrative Agent to purchase such Alternate Currency
amount on or as of such date on the basis of the spot exchange rate therefor in
the interbank currency market where the foreign currency and exchange
operations of the Administrative Agent are customarily conducted with respect
to such Alternate Currency.
"Effective Date" shall mean the date on which this Agreement
becomes effective in accordance with Sections 4.02 and 9.15.
"Eligible Accounts Receivable" shall mean at the time of any
determination thereof all Accounts (exclusive of Accounts arising from
transactions between NWS or any of its Subsidiaries, on the one hand, and any
Subsidiary or Affiliate of NWS on the other hand) that meet the following
criteria for an eligible Account at the time of creation and continue to meet
the same at all times relevant to such determination: (i) all payments on the
Account have been invoiced and are due not more than 45 days after the date of
the invoice rendered by NWS or its Subsidiary, except in the case of (A) Wire
Products Other Accounts, for which all payments on such Accounts shall be due
not more than 60 days after the date of invoice so rendered, and (B) Wire
Products Dating Program Accounts (which shall be considered Eligible Accounts
Receivable only to the extent such Accounts do not exceed $7,000,000 in the
aggregate at the time of such determination), for which all payments on such
Accounts shall be due not more than 120 days after the date of invoice so
rendered; (ii) the Account, and at least 50% of the aggregate amount of all
Accounts from the same Account Debtor, are not (A) more than 120 days past the
invoice date in the case of the Wire Products Dating Program Accounts or (B)
more than 90 days past the invoice date in the case of all other Accounts, in
each case, determined with reference to the date which the invoice rendered by
NWS or its Subsidiary to the Account Debtor specifies as the date on
<PAGE> 18
13
which such payment with respect to the Account is due or, if no such date is
specified in such invoice, the date of such invoice; (iii) the Account arose
from a completed, outright and lawful sale of goods by or on behalf of NWS or
one of its Subsidiaries; (iv) the Account is free and clear of all Liens of any
nature whatsoever other than any security interest deemed to be held by NWS or
its Subsidiary or any security interest created pursuant to the Security
Documents or permitted by Section 6.02(d); (v) the Account constitutes an
"account" or "chattel paper" within the meaning of the Uniform Commercial Code
of the state in which the Account is located; (vi) the Account Debtor has not
asserted that the Account, and NWS and each Subsidiary is not aware that the
Account, is subject to any setoff, net-out contract, offset (it being
understood that, for this purpose, the Accounts from an Account Debtor shall be
deemed to be subject to offset to the extent of the amount of accounts payable
or other monetary liabilities owed by NWS or any Subsidiary thereof to the
Account Debtor), deduction, dispute, credit, counterclaim or other defense
arising out of the transactions represented by the Accounts or independently
thereof and the Account Debtor has not objected to its liability thereon or
returned any of the goods from the sale out of which the Account arose, except
for complaints made or goods returned in the ordinary course of business for
which, in the case of goods returned, goods of equal or greater value have been
shipped in return; (vii) the Account arose in the ordinary course of business
of NWS or one of its Subsidiaries and, to the best knowledge of NWS after
reasonable investigation, no event of death, bankruptcy or insolvency (or
notice thereof) with respect to the Account Debtor has occurred (or been
received); (viii) the Account Debtor is not the United States government or the
government of any state or political subdivision thereof or therein, or any
agency or department of any thereof; (ix) the Account Debtor is a United States
person or an obligor in the United States; (x) the Account complies with all
material requirements of all applicable laws and regulations, whether Federal,
state or local (including, without limitation, usury laws and laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy); (xi) to the knowledge of NWS after reasonable investigation, the
Account is in full force and effect and constitutes a legal, valid and binding
obligation of the Account Debtor enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws
<PAGE> 19
14
affecting the enforcement of creditors' rights generally and may be subject to
general equity principles; (xii) the Account is denominated in and provides for
payment by the Account Debtor in United States dollars; (xiii) the Account has
not been and is not required to be charged off or written off as uncollectible
in accordance with generally accepted accounting principles or the customary
business practice of NWS or its Subsidiaries; and (xiv) the Collateral Agent on
behalf of the Lenders possesses a valid first priority (except for Permitted
Encumbrances permitted under clauses (c) and (d) of Section 6.02) perfected
security interest in such Account as security for payment of the Obligations.
Notwithstanding the foregoing, all Accounts of any single Account Debtor which,
in the aggregate, exceed 10% of the total Eligible Accounts Receivables
(without taking into account the deduction for such Account or such Accounts
which would be disqualified by this sentence) at the time of any such
determination shall be deemed not to be Eligible Accounts Receivables to the
extent of such excess; provided, however, that, with the written consent of the
Required Lenders, the Accounts of any single Account Debtor relating to
semifinished steel products may, in the aggregate, constitute up to 20% of the
total Eligible Accounts Receivables.
"Eligible Assignee" shall mean a Qualified Lender which is (i)
a commercial bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $1,000,000,000; (ii) a savings
and loan association or savings bank organized under the laws of the United
States, or any State thereof, and having a net worth of at least $100,000,000,
calculated in accordance with generally accepted accounting principles; (iii) a
commercial bank organized under the laws of any other country which is a member
of the OECD, or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is also a member of the OECD; (iv) the central bank of any
country which is a member of the OECD; (v) any investment company, insurance
company or similar financial institution organized under the laws of the United
States approved by the Administrative Agent; and (vi) any Lender.
"Eligible Inventory" shall mean at the time of any
determination thereof (a) all inventory of finished goods, salable in the
ordinary course of business of NWS and its
<PAGE> 20
15
Subsidiaries, (b) semifinished steel inventory and work-in-progress inventory
of the Wire Products Division, (c) scrap inventory of NWS and its Subsidiaries,
and (d) supplies, including, without limitation, refractories, electrodes,
alloys and chemicals (but excluding all supplies relating to the Wire Products
Division, other than zinc), but in each case only to the extent (i) the
Collateral Agent on behalf of the Lenders possesses a valid first priority
(except for Permitted Encumbrances permitted under clauses (c) and (d) of
Section 6.02) perfected security interest in such inventory as security for
payment of the Obligations and (ii) such inventory is not subject to any Lien
permitted under clause (i) of Section 6.02.
"Eligible Inventory Value" shall mean at the time of any
determination thereof the lower of cost or posted market value of the Eligible
Inventory at such time, net of inventory reserves, determined on a basis
consistent with the financial statements referred to in Section 3.05.
"Employee Stock Option Plan" shall mean the Employee Stock
Purchase and Option Plan as described in the NWS 1995 Form 10-K.
"Environmental Laws" shall mean all laws, rules, regulations,
codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" shall mean any liability, accrued or
contingent (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of either Borrower or any
Subsidiary directly or indirectly resulting from or based upon (a) violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) exposure to any
Hazardous Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
<PAGE> 21
16
"Environmental Permit" shall mean any permit, approval,
authorization, certificate, license, variance, filing or permission required by
or from any Governmental Authority pursuant to any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code, or solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder with
respect to a Plan; (b) the existence with respect to any Plan of an
"accumulated funding deficiency" (as defined in Section 412 of the Code or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence of any liability under Title IV of ERISA with respect to the
termination of any Plan or the withdrawal or partial withdrawal of either
Borrower or any of its ERISA Affiliates from any Plan or Multiemployer Plan;
(e) the receipt by either Borrower or any ERISA Affiliate from the PBGC or a
plan administrator of any notice relating to the intention to terminate any
Plan or Plans or to appoint a trustee to administer any Plan; or (f) the
receipt by either Borrower or any ERISA Affiliate of any notice concerning the
imposition of Withdrawal Liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.
"ESOP" shall mean the Northwestern Steel and Wire Company
Employee Stock Ownership Plan, as in effect on August 16, 1988, with such
amendments thereto as are required to comply with applicable law or as not
prohibited under this Agreement, and the trust forming a part thereof and its
successors.
<PAGE> 22
17
"ESOP Contributions" shall mean, with respect to any period,
the aggregate amount of all contributions made by NWS to the ESOP with respect
to such period.
"ESOP Shares" shall mean the shares of capital stock purchased
by the Trustee on behalf of the ESOP pursuant to the ESOP Stock Purchase
Agreement, as converted pursuant to the merger of NWS in 1988 and reclassified
into Common Stock pursuant to the Recapitalization Transactions.
"ESOP Stock Purchase Agreement" shall mean the Stock Purchase
Agreement dated as of August 16, 1988, between NWS and the Trustee on behalf of
the ESOP providing for the purchase by the Trustee on behalf of the ESOP of the
ESOP Shares for an aggregate purchase price of $25,000,000.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Revolving Credit Loans.
"Eurodollar Revolving Credit Loan" shall mean any Revolving
Credit Loan bearing interest at a rate determined by reference to the Adjusted
LIBO Rate in accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned such term
in Article VII.
"Excess Cash Flow" shall mean, for any period, the excess of
Cash Available for Principal Payments for such period over the sum of the
amount of (a) all principal payments made during such period as required
repayments pursuant to the terms of any Indebtedness of NWS and its
Subsidiaries permitted under this Agreement, including Indebtedness under this
Agreement, but excluding (i) any principal repayments made under Section 2.12
with respect to any Loans, (ii) any required principal repayments made in
respect of any Indebtedness to the extent of the proceeds of any Indebtedness
incurred to refinance such principal repayments, and (iii) any required
principal repayments made in respect of any Indebtedness incurred in reliance
upon clause (e) or (g) of Section 6.01, (b) voluntary prepayments of Rollover
Term Loans made during such period and (c) payments made during such period for
the repurchase of shares of Common Stock in accordance with Section 6.10;
provided, however, that for purposes of determining Excess Cash Flow for any
period, there shall be deducted from the foregoing an amount equal to
$5,000,000.
<PAGE> 23
18
"Excluded Equity Sales" shall mean the issuance and sale by
NWS of equity securities pursuant to (i) the Management Stock Option Plan, (ii)
the Employee Stock Option Plan, (iii) the 1994 Long Term Incentive Plan (as
described in the NWS 1995 Form 10-K) or (iv) the 1994 Director Stock Plan (as
described in the NWS 1995 Form 10-K).
"Excluded Taxes" shall mean, with respect to the
Administrative Agent, the Collateral Agent, the Issuing Bank, any Lender or any
other recipient of any payment to be made by or on account of any obligation of
the Borrowers hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the jurisdiction under the laws of which it is organized,
or the jurisdiction in which its principal office is located or, in the case of
any Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America and (c) in the case of a
Foreign Lender, any U.S. Federal withholding tax imposed on amounts payable to
such Foreign Lender under this Agreement because of its failure or inability to
comply with Section 2.19(e) or otherwise, unless (and to the extent that) (i)
such withholding tax liability arises or is increased by reason of a Change in
Law occurring after such Foreign Lender becomes a Lender under this Agreement
or (ii) such Foreign Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrowers with respect to
such withholding tax liability pursuant to Section 2.19(a).
"Executive Officer" shall mean an executive officer as defined
in Rule 3b-7 of the rules and regulations of the Securities and Exchange
Commission under the Securities and Exchange Act of 1934, as amended.
"Financial Officer" of any corporation shall mean its chief
financial officer, principal accounting officer, treasurer or controller.
"Fixed Rate" shall mean, with respect to each Rollover Term
Loan, the fixed rate of interest per annum that applied to such Rollover Term
Loan immediately prior to the Effective Date. The Administrative Agent shall
maintain a record of the Fixed Rate applicable to each Rollover Term Loan,
which shall be conclusive absent manifest error.
"Fixed Rate Amount" of any Rollover Term Loan shall mean the
portion of the outstanding principal amount
<PAGE> 24
19
of such Rollover Term Loan in excess of the Capitalized Rollover Interest
Amount thereof.
"Fixed Rate Prepayment Account" shall have the meaning
assigned to such term in Section 2.12(g).
"Foreign Lender" shall mean any Lender that is organized under
the laws of a jurisdiction other than the United States of America or any State
thereof.
"Governmental Authority" shall mean the government of the
United States of America, any other nation or any political subdivision
thereof, whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"Guarantee" shall mean any obligation, contingent or
otherwise, of any person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or obligation of any other person (the "primary
obligor") in any manner, whether directly or indirectly, and including, without
limitation, any obligation of such person, direct or indirect, (i) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the purchase of)
any security for the payment of such Indebtedness, (ii) to purchase or lease
property, securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness, or (iii) to maintain working
capital, equity capital, cash flow, fixed charge coverage (or other coverage
ratio) or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness; provided,
however, that the term "Guarantee" shall not include endorsements for
collection or deposit, in either case in the ordinary course of business.
"Guarantee Agreement" shall mean the Guarantee Agreement,
substantially in the form of Exhibit I, made by the Guarantors in favor of the
Collateral Agent.
"Guarantors" shall mean NWS/Delaware, the Kentucky Subsidiary
and each other person that becomes a Subsidiary of NWS after the Effective
Date.
<PAGE> 25
20
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.
"Houston Facility" shall mean the steel rolling mill and
related real estate located in or near Houston, Texas, acquired by NWS/Texas
from Armco, Inc.
"Impianti Notes" shall mean unsecured promissory notes of NWS
in an aggregate principal amount not exceeding 2,719,294,500.00 Italian Lire
and issued by NWS to Impianti Industriali S.P.A. in consideration of the
acquisition of equipment and machinery to be used by NWS in its business
operations.
"Indebtedness" shall mean, with respect to any person, without
duplication, (a) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind, (b) all obligations of such person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such person upon which interest charges are customarily paid,
(d) all obligations of such person under conditional sale or other title
retention agreements relating to property purchased by such person, (e) all
obligations of such person issued or assumed as the deferred purchase price of
property or services (other than trade accounts payable to suppliers and
shippers, incurred in the ordinary course of business and paid when due or
within customary holdback periods), (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by such
person, whether or not the obligations secured thereby have been assumed, (g)
all Capitalized Lease Obligations, (h) all Guarantees of such person, (i) the
outstanding face amount of all letters of credit issued for the account of such
person, (j) the redemption price of all mandatorily redeemable preferred stock
issued after the date hereof of such person and (k) all obligations of such
person in respect of interest rate protection agreements, foreign currency
exchange agreements or other interest or exchange rate hedging arrangements.
The Indebtedness of any person shall include the Indebtedness of any
partnership in which such person is a general partner.
<PAGE> 26
21
"Indemnity, Subrogation and Contribution Agreement" shall mean
the Indemnity, Subrogation and Contribution Agreement, substantially in the
form of Exhibit J hereto, among the Borrowers, the Guarantors and the
Collateral Agent.
"Interest Payment Date" shall mean (a) with respect to any
Rollover Term Loan, the last Business Day of each calendar month and the
Rollover Term Loan Maturity Date, (b) with respect to any ABR Revolving Credit
Loan, the last Business Day of each January, April, July and October and the
Revolving Credit Maturity Date and (c) with respect to any Eurodollar Revolving
Credit Loan, the last day of the Interest Period applicable to the Borrowing of
which such Loan is a part and, in the case of a Eurodollar Revolving Credit
Loan with an Interest Period of more than three months' duration, each day that
would have been an Interest Payment Date had successive Interest Periods of
three months' duration been applicable to such Borrowing, and, in addition, the
date of any prepayment or conversion of such Borrowing.
"Interest Period" shall mean, with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day (or, if there is no numerically corresponding
day, on the last day) in the calendar month that is 1, 2, 3 or 6 months
thereafter, as the Borrower may elect; provided, however, that (a) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (b) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period.
For purposes hereof, the date of a Eurodollar Borrowing initially shall be the
date on which such Borrowing is advanced and, thereafter, shall be the
effective date of the most recent conversion or continuation of such Borrowing.
"Issuing Bank" shall mean Chemical Bank or any other Lender
that shall agree in writing to act as the issuer of Letters of Credit
hereunder, subject to agreement
<PAGE> 27
22
among such Lender and the Borrowers regarding the fees payable to such Lender
pursuant to clause (ii) of Section 2.18(f).
"Kentucky Plant" shall mean the wire mesh plant located in the
State of Kentucky to be constructed, owned and operated by the Kentucky
Subsidiary.
"Kentucky Subsidiary" shall mean Northwestern Steel and Wire
Company - Kentucky, a Delaware corporation and a wholly owned subsidiary of
NWS, established for the purpose of constructing, owning and operating the
Kentucky Plant.
"KNSW" shall mean KNSW Acquisition Company, L.P., a Delaware
limited partnership whose general partner is Kohlberg Associates.
"Kohlberg Associates" shall mean Kohlberg Associates, L.P., a
Delaware limited partnership affiliated with Kohlberg & Co.
"Kohlberg & Co." shall mean Kohlberg & Co., L.P., a Delaware
limited partnership.
"Kohlberg Purchase Agreement" shall mean the Stock Purchase
Agreement dated as of July 27, 1992, between KNSW and NWS.
"Lenders" shall mean the financial institutions listed on
Schedule 2.01 and Schedule 2.02 and any financial institution that has become a
party hereto pursuant to an Assignment and Acceptance, other than any such
financial institution that ceases to be a party hereto pursuant to an
Assignment and Acceptance.
"Letter of Credit" shall mean any letter of credit issued by
the Issuing Bank pursuant to Section 2.18.
"Letter of Credit Disbursement" shall mean a payment or
disbursement made by the Issuing Bank pursuant to a Letter of Credit.
"Letter of Credit Exposure" shall mean at any time the sum of
(i) the aggregate undrawn amount of all outstanding Letters of Credit and (ii)
the aggregate amount of all Letter of Credit Disbursements not yet reimbursed
by the Borrowers as provided in Section 2.18. The Letter of Credit
<PAGE> 28
23
Exposure of any Lender at any time shall mean its Applicable Percentage of the
aggregate Letter of Credit Exposure at such time.
"Letter of Credit Participation Fees" shall mean fees payable
pursuant to clause (i) of Section 2.18(f).
"Leverage Ratio" shall mean, as at any date of determination,
the ratio of (i) Adjusted Indebtedness to (ii) the sum of Adjusted Indebtedness
and Adjusted Stockholders' Equity.
"LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, the rate (rounded upwards, if necessary, to
the next 1/16 of 1%) at which dollar deposits approximately equal in principal
amount the Administrative Agent's portion of such Eurodollar Borrowing and for
a maturity comparable to such Interest Period are offered to the London office
of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
"Lien" shall mean, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest
in or on such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loan" shall mean any Revolving Credit Loan or Rollover Term
Loan.
"Loan Documents" shall mean this Agreement, the Notes, the
Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and
the Security Documents.
"Loan Parties" shall mean the Borrowers, the Guarantors and
any other Subsidiary that is required to be a party to any Security Document.
"Lockbox Agreement" shall have the meaning assigned such term
in the Security Agreement.
<PAGE> 29
24
"Management Stock Option Plan" shall mean the Management Stock
Option Plan as described in the NWS 1995 Form 10-K.
"Management Subscription Agreement" shall mean the Management
Subscription Agreement dated as of July 27, 1992, among NWS and certain
management employees of the Borrowers.
"Margin Stock" shall have the meaning assigned such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse
effect on the business, operations, assets, properties or condition, financial
or otherwise, of NWS and its Subsidiaries taken as a whole, (b) a materially
adverse effect on the ability of the Borrowers to perform any of their material
obligations under any Loan Document to which they are parties or (c) material
impairment of the rights or remedies available to or for the benefit of the
Lenders under any Loan Document.
"Maximum Rate" shall have the meaning assigned such term in
Section 9.09.
"Mortgages" shall mean (a) the Mortgage, Security Agreement
and Assignment of Rents dated August 16, 1988, as modified by the Modification
of Mortgage, Security Agreement and Assignment of Rents dated as of June 21,
1989, between NWS and the Collateral Agent, as amended from time to time, (b)
the Deed of Trust, Security Agreement and Assignment of Leases and Rents dated
as of June 21, 1989, between NWS/Texas and the Collateral Agent, as amended
from time to time and (c) the mortgage to be granted by the Kentucky Subsidiary
to the Collateral Agent with respect to the Kentucky Plant as contemplated by
clause (j) of Section 4.02.
"Mortgaged Property" shall have the meaning assigned thereto
in each Mortgage.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall have the meaning ascribed thereto in
Section 2.12(d).
"Net Income" with respect to any person for any period shall
mean the aggregate net income (or net deficit)
<PAGE> 30
25
of such person for such period equal to net revenues for such period less the
aggregate for such person during such period of, without duplication, (i) cost
of goods sold, (ii) interest expense, (iii) operating expenses, (iv) selling,
general and administrative expenses, (v) taxes, (vi) depreciation, depletion
and amortization of properties and (vii) any other items that are treated as
expenses under generally accepted accounting principles, but excluding from the
definition of Net Income (a) extraordinary gains and losses (provided that
extraordinary gains and losses shall not be excluded from Net Income for
purposes of determining Cash Available for Principal Payments) and (b) any
increase in cost of goods sold or other effect on Net Income resulting from any
write-up in the value of inventory, all computed in accordance with generally
accepted accounting principles.
"Note" or "Notes" shall mean a Revolving Credit Note or
Revolving Credit Notes or a Rollover Term Note or Rollover Term Notes, as the
case may be, of the Borrowers, executed and delivered as provided in Section
2.05.
"NWS" shall have the meaning assigned to such term in the
heading to this Agreement.
"NWS/Delaware" shall mean Northwestern Steel and Wire Company,
a Delaware corporation.
"NWS 1995 Form 10-K" shall mean NWS's Annual Report on Form
10-K for its fiscal year ended July 31, 1995.
"NWS/Texas" shall have the meaning assigned to such term in
the heading to this Agreement.
"Obligations" shall mean the obligations of the Borrowers to
pay principal of and interest on the Notes according to their respective tenor,
purport and effect and to pay the Commitment Fees, Letter of Credit
Participation Fees and to pay all other fees and amounts and to perform all
other obligations under this Agreement, the Notes and the Security Documents,
in each case, as the same may be amended, modified or supplemented, including
without limitation the obligations to perform and observe all covenants and
conditions herein and therein contained and to pay all expenses and
disbursements of the Administrative Agent, the Collateral Agent, the Issuing
Bank and the Lenders or their agents, to pay all reimbursement obligations
(including any annual fee or interest with
<PAGE> 31
26
respect thereto) with respect to any Letter of Credit and the fees and expenses
of the attorneys for the Lenders incurred in connection with the execution and
delivery of the Loan Documents or any amendment or modification thereof or
waiver thereunder or exercise of rights or remedies upon any default or Event
of Default thereunder and required to be paid by either Borrower under the
terms of this Agreement or the Security Documents.
"OECD" shall mean the Organization for Economic Cooperation
and Development.
"Original Credit Agreement" shall have the meaning ascribed
thereto in the preamble to this Agreement.
"Original Lenders" shall mean the "Lenders" under, and as
defined in, the Original Credit Agreement immediately prior to the
effectiveness of this Agreement.
"Other Taxes" shall mean any and all present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution or
delivery of, or otherwise with respect to, this Agreement or any other Loan
Document.
"Permitted Acquisition" shall mean the purchase by NWS of (a)
all (but not less than all) of the outstanding capital stock of another
corporation or (b) the assets and properties of another person comprising a
business, business unit, plant or other facility; provided, however that any
such purchase shall not constitute a "Permitted Acquisition" unless (i)
immediately prior to and after giving effect to such purchase, no Event of
Default, and no event or condition that with notice, lapse of time or both
would constitute an Event of Default, shall have occurred and be continuing,
(ii) such purchase will not result in NWS or any of its Subsidiaries engaging
in any business not permitted by Section 6.08 and (iii) after giving effect to
such purchase, the aggregate amount of consideration for all "Permitted
Acquisitions" shall not exceed the sum of (A) $15,000,000, plus (B) 50% of the
excess, if any, of the amount of Net Cash Proceeds received after the Effective
Date from Prepayment Events described in clauses (2) and (3) of the definition
of the term "Prepayment Event" over the sum of (x) the aggregate principal
amount of Rollover Term Loans prepaid with respect to such Prepayment Events
pursuant to Section 2.12(d) or deposited or applied pursuant
<PAGE> 32
27
to Section 2.12(g) in lieu of such prepayment and (y) the amount by which
Capital Expenditures are increased for any fiscal year in reliance upon clause
(i) of the proviso to Section 6.17 (or in reliance upon clause (iii) of such
proviso, to the extent attributable to such clause (i)), plus (C) the excess,
if any, of the cumulative amount of Excess Cash Flow for each fiscal year of
NWS ending after July 31, 1996, over the sum of (x) the aggregate principal
amount of Rollover Term Loans prepaid pursuant to Section 2.12(e) by reference
to such Excess Cash Flow and (y) the amount by which Capital Expenditures are
increased for any fiscal year in reliance upon clause (ii) of the proviso to
Section 6.17 (or in reliance upon clause (iii) of such proviso, to the extent
attributable to such clause (ii)).
"Permitted Encumbrances" shall mean those Liens expressly
permitted by Section 6.02 of this Agreement.
"Permitted Equity Purchases" shall mean (a) repurchases by NWS
of shares of Common Stock from deceased or retired employees, but only to the
extent required by the ESOP Stock Purchase Agreement (as in effect immediately
prior to the Recapitalization Transactions) or by the Code or ERISA and the
regulations thereunder, and then only after 10 days' prior notice to the
Administrative Agent, (b) repurchases by NWS of Common Stock from former
holders of NWS's Class B Common Shares pursuant to Section 7 of the
Stockholders Agreement referred to in and attached as Exhibit F to the Kohlberg
Purchase Agreement, and (c) repurchases by NWS of equity securities pursuant to
and in accordance with the Employee Stock Option Plan, the Management Stock
Option Plan or the Management Subscription Agreement; provided, however, that
(i) repurchases shall be permitted under the foregoing clause (b) only to the
extent that the aggregate cumulative consideration paid by NWS in connection
therewith shall not exceed the aggregate cash proceeds theretofore received by
NWS from Excluded Equity Sales pursuant to the Employee Stock Option Plan and
(ii) repurchases shall not be permitted under the foregoing clause (c) in
excess of $250,000 during any fiscal year of NWS (plus the excess, if any, of
the amount of such repurchases permitted in the preceding fiscal year over the
amount of such repurchases made in such preceding fiscal year).
<PAGE> 33
28
"Permitted Investments" shall mean:
(i) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations
are backed by the full faith and credit of the United States of
America), which are readily marketable and which mature within one
year from the date of acquisition thereof;
(ii) commercial paper of any corporation with a maturity not
in excess of one year from the date of acquisition thereof and having,
at such date of acquisition, a credit rating by Standard & Poor's
Ratings Group of A1 (or the then equivalent) or better or by Moody's
Investors Service, Inc., of P1 (or the then equivalent) or better; and
(iii) negotiable or nonnegotiable time certificates of deposit
and time deposits with a maturity not in excess of one year from the
date of the acquisition thereof, issued by or placed with, and money
market deposit accounts issued or offered by, any bank which (a) has a
combined capital and surplus and undivided profits of not less than
$200,000,000 and (b) all the rated senior long-term debt securities of
which continue to be rated at least A by either Moody's Investors
Service, Inc. or Standard & Poor's Rating Group and at least one
series of senior long-term debt securities of which continues to be
outstanding and so rated.
"person" shall mean any natural person, corporation, business
trust, association, company, joint venture, partnership or government or any
agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which either
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Amended and Restated Pledge
Agreement between NWS, the Subsidiaries
<PAGE> 34
29
named therein and the Collateral Agent, substantially in the form of Exhibit H
hereto, as amended or supplemented from time to time.
"Prepayment Determination Date" shall have the meaning
assigned thereto in Section 2.12(e).
"Prepayment Event" shall have the meaning assigned thereto in
Section 2.12(d).
"Process Agent" shall have the meaning assigned thereto in
Section 9.06(b).
"Qualified Lender" shall mean any bank, regulated investment
company, insurance company or corporation actively engaged in the business of
lending money as described in Section 133(a) of the Code as in effect on August
16, 1988, or, in the case of an assignment pursuant to Section 9.03, as in
effect on the date of the assignment.
"Recapitalization Transactions" shall mean the execution,
delivery and performance of the Kohlberg Purchase Agreement, including, without
limitation, (i) the amendment and restatement of NWS's certificate of
incorporation and by-laws as contemplated by the Kohlberg Purchase Agreement,
(ii) the reclassification of NWS's outstanding common stock into a single class
of Common Stock, (iii) the issuance by NWS and the purchase by KNSW of shares
of Common Stock representing a majority of the outstanding shares of Common
Stock (on a fully diluted basis) for cash consideration to NWS (when aggregated
with the cash consideration to NWS of the issuance of Common Stock pursuant to
the Management Subscription Agreement) not less than $34,750,000 and (iv) the
execution, delivery and performance of the other agreements and documents
contemplated by the Kohlberg Purchase Agreement.
"Register" shall have the meaning assigned to such term in
Section 9.03(d).
"Regulation D" shall mean Regulation D of the Board, as from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation G" shall mean Regulation G of the Board, as from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
<PAGE> 35
30
"Regulation T" shall mean Regulation T of the Board, as from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation U" shall mean Regulation U of the Board, as from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Regulation X" shall mean Regulation X of the Board, as from
time to time in effect, and all official rulings and interpretations thereunder
or thereof.
"Required Lenders" shall mean at any time Lenders having
Loans, Letter of Credit Exposure and unused Commitments representing at least
51% of the sum of the aggregate principal amount of Loans outstanding (subject
to Section 2.12(g)), Letter of Credit Exposure and unused Commitments, except
that for purposes of determining the Lenders entitled to declare the Notes to
be forthwith due and payable pursuant to Article VII, "Required Lenders" shall
mean Lenders holding at least 51% of the aggregate principal amount of the
Loans at the time outstanding.
"Responsible Officer" shall mean any Executive Officer or
Financial Officer of either Borrower.
"Revolving Credit Borrowing" shall mean a Borrowing comprised
of Revolving Credit Loans.
"Revolving Credit Commitment" shall mean, with respect to any
Lender, the commitment of such Lender to make Revolving Credit Loans hereunder
as set forth in Schedule 2.01, or in the Assignment and Acceptance pursuant to
which such Lender assumed its Revolving Credit Commitment, as applicable, as
the same may be (a) reduced from time to time pursuant to this Agreement and
(b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to this Agreement. The Revolving Credit Commitment of
each Lender shall be deemed permanently terminated on the Revolving Credit
Maturity Date.
"Revolving Credit Exposure" shall mean, with respect to any
Lender at any time, the aggregate principal amount at such time of all
outstanding Revolving Credit Loans of such Lender, plus the aggregate amount at
such time of such Lender's Letter of Credit Exposure.
<PAGE> 36
31
"Revolving Credit Loan" shall mean a revolving credit loan
made by the Lenders to the Borrowers pursuant to Sections 2.01 and 2.03. Each
Revolving Credit Loan shall be a Eurodollar Revolving Credit Loan or an ABR
Revolving Credit Loan.
"Revolving Credit Maturity Date" shall mean April 25, 2001,
subject to Section 2.10(d).
"Revolving Credit Notes" shall mean the Revolving Credit Notes
of the Borrowers, executed and delivered as provided in Section 2.05 in
substantially the form of Exhibit A-1 hereto.
"Rollover Term Loan" shall mean a rollover term loan made
pursuant to Sections 2.02 and 2.03 of the Original Credit Agreement and
outstanding hereunder and shall include, except as otherwise expressly provided
herein, the Capitalized Rollover Interest Amount with respect thereto.
"Rollover Term Loan Maturity Date" shall mean July 31, 1999.
"Rollover Term Notes" shall mean the Rollover Term Notes of
the Borrowers, executed and delivered as provided in Section 2.05 in
substantially the form of Exhibit A-2 hereto.
"Security Agreement" shall mean the Amended and Restated
Security Agreement among the Borrowers, each Subsidiary of the Borrowers and
the Collateral Agent, substantially in the form of Exhibit G hereto, as amended
or supplemented from time to time.
"Security Documents" shall mean the Mortgages, the Security
Agreement, each Lockbox Agreement (if any), the Pledge Agreement and the other
mortgages, deeds of trust, assignments, security agreements and other documents
executed and delivered pursuant to Section 5.11.
"Senior Note Documents" shall mean the Indenture dated as of
June 30, 1993, between NWS and Bank of America Illinois (as successor to
Continental Bank, National Association) in connection with the issuance of the
Senior Notes and any other agreement or instrument evidencing or governing the
Senior Notes.
<PAGE> 37
32
"Senior Notes" shall mean the 9-1/2% Senior Notes Due 2001
issued by NWS, in an aggregate principal amount equal to $115,000,000.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency or
supplemental reserves) expressed as a decimal established by the Board and any
other banking authority, domestic or foreign, to which the Administrative Agent
or any Lender (including any branch, Affiliate, or other fronting office making
or holding a Loan) is subject (a) with respect to the Base CD Rate, for new
nonpersonal negotiable time deposits in dollars of over $100,000 with
maturities of approximately three months and (b) with respect to the Adjusted
LIBO Rate, for Eurocurrency Liabilities (as defined in Regulation D of the
Board). Such reserve percentages shall include, without limitation, those
imposed under such Regulation D. Eurodollar Revolving Credit Loans shall be
deemed to constitute Eurocurrency Liabilities and as such shall be deemed to be
subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Subsidiary" shall mean, with respect to any person (the
"parent"), any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Successor Lender" shall have the meaning assigned thereto in
Section 2.10(d).
"Tamini Notes" shall mean unsecured promissory notes of NWS in
an aggreate principal amount not to exceed $1,462,951 and issued by NWS to
Tamini Costruzioni Elettromeccaniche S.r.1. in consideration of the acquisition
of equipment and machinery to be used by NWS in its business operations.
<PAGE> 38
33
"Taxes" shall mean any and all present or future taxes,
levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority, other than Excluded Taxes.
"Terminating Lender" shall have the meaning assigned thereto
in Section 2.10(d).
"Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate shall
not be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not be a Business Day,
on the next preceding Business Day) by the Administrative Agent from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by it.
"Total Revolving Credit Commitment" shall mean at any time the
sum of the Lenders' Revolving Credit Commitments.
"Type", when used with respect to any Revolving Credit Loan or
Borrowing, shall refer to the Rate by reference to which interest on such Loan
or on the Loans comprising such Borrowing is determined. For purposes hereof,
the term "Rate" shall include the Adjusted LIBO Rate and the Alternate Base
Rate.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Trustee" shall mean LaSalle National Bank, or any successor
trustee, not in its individual capacity but in its capacity as Trustee of the
ESOP.
"Wire Products Division" shall mean a division of NWS engaged
in the production and sale of wire products.
<PAGE> 39
34
"Wire Products Accounts" shall mean all Accounts from sales of
wire products with standard terms of 2%/10 days net 60 days, or in the case of
the construction group of products, namely welded reinforcing fabric sold in
roll or sheet forms, standard terms of 1%/10 days net 30 days.
"Wire Products Dating Program Accounts" shall mean those
Accounts from sales of wire products which have received credit manager
approval and approval of specific annual marketing campaigns from the chief
executive officer in which seasonal shipments are made typically in the winter
months with maximum 120 days net terms.
"Wire Products Other Accounts" shall mean all Accounts from
sales of wire products other than Wire Products Accounts and Wire Products
Dating Program Accounts.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Working Capital" shall mean, as of any date, the excess at
such date of (a) Current Assets (excluding cash and Permitted Investments) over
(b) Current Liabilities (excluding Indebtedness for borrowed money).
Except as otherwise herein specifically provided, each
accounting term used herein shall have the meaning given it under generally
accepted accounting principles in effect from time to time applied on a
consistent basis; provided, however, that each reference in Article VI and in
the definition of any term used in Article VI, as well as in the definition of
any term used for purposes of determining the Applicable Margin, to generally
accepted accounting principles shall mean generally accepted accounting
principles in effect on the Effective Date applied on a basis consistent with
those used in preparing the financial statements referred to in Section
3.05(a)(i).
All other undefined terms contained in this Agreement shall,
unless the context indicates otherwise, have the meanings provided for by the
Uniform Commercial Code as in effect in the State of New York from time to time
and to the extent the same are used or defined therein. The words "herein",
"hereof" and "hereunder" and other words of
<PAGE> 40
35
similar import refer to this Agreement as a whole, including the exhibits and
schedules hereto, as the same may be amended, modified or supplemented and not
to any particular article, section, subsection or clause contained in this
Agreement. Terms defined in this Agreement in the singular include the plural,
and vice versa. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and the neuter gender. As used herein with
respect to any Revolving Credit Commitment, the term "unused" shall refer to
the amount of such Commitment at the time in excess of the Revolving Credit
Exposure in respect of such Commitment at such time, all determined
disregarding any limitation on availability in respect of such Commitment
attributable to the Borrowing Base or any condition to borrowing hereunder, but
giving effect to any previous termination or permanent reduction of such
Commitment. The terms "used" and "usage" shall have correlative meanings when
used with respect to a Revolving Credit Commitment.
II. THE LOANS
SECTION 2.01. Revolving Credit Commitments. Subject to the
terms and conditions and relying upon the representations and warranties herein
set forth, each Lender agrees, severally and not jointly, to make Revolving
Credit Loans to the Borrowers, at any time and from time to time on or after
the Effective Date, and until the earlier of the Revolving Credit Maturity Date
and the termination of the Revolving Credit Commitment of such Lender in
accordance with the terms hereof, in an aggregate principal amount at any time
outstanding that will not result in (i) such Lender's Revolving Credit Exposure
exceeding (ii) the lesser of (x) such Lender's Revolving Credit Commitment and
(y) such Lender's Applicable Percentage of the Borrowing Base in effect at such
time. Within the foregoing limits and subject to the terms, provisions and
limitations set forth herein, the Borrowers may borrow, repay and reborrow, on
or after the Effective Date and prior to the Revolving Credit Maturity Date,
Revolving Credit Loans.
SECTION 2.02. Rollover Term Loans. (a) Subject to the terms
and conditions and relying upon the representations and warranties herein set
forth, each Lender agrees, severally and not jointly, that the Rollover Term
Loans of
<PAGE> 41
36
such Lender outstanding under the Original Credit Agreement on the Effective
Date shall continue to be outstanding hereunder. Amounts paid or prepaid in
respect of the Rollover Term Loans may not be reborrowed.
(b) The Borrowers and the Lenders holding Rollover Term Loans
acknowledge and agree that the amounts set forth opposite the name of each
Lender in Schedule 2.02 hereto are, respectively, the outstanding principal
balance of and the Fixed Rate applicable to the Rollover Term Loans of such
Lender as of the Effective Date, separately identifying the Fixed Rate Amount
and Capitalized Rollover Interest Amount thereof.
SECTION 2.03. Revolving Credit Loans. (a) Each Revolving
Credit Loan shall be made as a part of a Borrowing consisting of Revolving
Credit Loans made by the Lenders ratably in accordance with their applicable
Revolving Credit Commitments; provided, however, that the failure of any Lender
to make any Revolving Credit Loan shall not in itself relieve any other Lender
of its obligation to lend hereunder (it being understood, however, that no
Lender shall be responsible for the failure of any other Lender to make any
Loan required to be made by such other Lender).
(b) Subject to Sections 2.09 and 2.13, each Borrowing shall
be comprised entirely of ABR Revolving Credit Loans or Eurodollar Revolving
Credit Loans as the Borrowers may request pursuant to Section 2.04. Each
Lender may at its option make any Eurodollar Revolving Credit Loan by causing
any domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not affect the obligation of
the Borrowers to repay such Loan in accordance with the terms of this
Agreement.
(c) At all times, including after giving effect to any
partial prepayment or conversion, each Eurodollar Borrowing shall be in an
aggregate principal amount that is an integral multiple of $100,000 and not
less than $1,000,000. At the time that each ABR Borrowing is made, such ABR
Borrowing shall be in an aggregate principal amount that is an integral
multiple of $100,000 and not less than $500,000; provided, that an ABR
Borrowing may be in a different aggregate principal amount that is equal to the
entire available amount of the unused Total Revolving Credit Commitment.
Borrowings of more than one Type may be outstanding at the same time; provided,
however, that the
<PAGE> 42
37
Borrowers shall not be entitled to request any Borrowing that, if made, would
result in more than 10 Eurodollar Borrowings outstanding hereunder at any time.
For purposes of the foregoing, Borrowings having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Borrowings.
(d) Each Lender shall make each Revolving Credit Loan to be
made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds no later than 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. Subject to satisfaction of the conditions
set forth in Article IV, the Administrative Agent shall by 3:00 p.m., New York
City time, credit the amounts so received to the general deposit account of the
Borrowers maintained with the Administrative Agent in New York City or, if a
Borrowing shall not occur because any condition precedent herein specified has
not been met, return the amounts so received to the respective Lenders.
(e) Unless the Administrative Agent shall have received
notice from a Lender prior to the date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (d) above and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrowers on such date a
corresponding amount. If the Administrative Agent shall have so made funds
available then, to the extent that such Lender shall not have made such portion
available to the Administrative Agent, such Lender and the Borrowers severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrowers until the date such amount is
repaid to the Administrative Agent at (i) in the case of the Borrowers, the
interest rate applicable at the time to the Revolving Credit Loans comprising
such Borrowing and (ii) in the case of such Lender, a rate determined by the
Administrative Agent to represent its cost of overnight or short-term funds
(which determination shall be conclusive absent manifest error). If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount shall constitute such
<PAGE> 43
38
Lender's Loan as part of such Borrowing for purposes of this Agreement.
(f) Notwithstanding any other provision of this Agreement, the
Borrowers shall not be entitled to request any Eurodollar Borrowing if the
Interest Period requested with respect thereto would end after the Revolving
Credit Maturity Date.
SECTION 2.04. Notice of Revolving Credit Loans. In order to request
a Borrowing, the Borrowers shall hand deliver or telecopy to the Administrative
Agent a written borrowing request (a) in the case of a Eurodollar Borrowing,
not later than 11:00 a.m., New York City time, three Business Days before a
proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than
10:30 a.m., New York City time, on the day of a proposed Borrowing. Each
borrowing request shall be irrevocable, shall be signed by or on behalf of the
Borrowers and shall specify the following information: (i) whether such
Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of
such Borrowing (which shall be a Business Day); (iii) the number and location
of the account to which funds are to be disbursed (which shall be an account
that complies with the requirements of Section 2.03(d)); (iv) the amount of
such Borrowing; and (v) if such Borrowing is to be a Eurodollar Borrowing, the
initial Interest Period with respect thereto; provided, however, that,
notwithstanding any contrary specification in any borrowing request, each
requested Borrowing shall comply with the requirements set forth in Section
2.03. If no election as to the Type of Borrowing is specified in any such
borrowing request, then the requested Borrowing shall be an ABR Borrowing. If
no Interest Period with respect to any Eurodollar Borrowing is specified in any
such borrowing request, then the Borrowers shall be deemed to have selected an
Interest Period of one month's duration. The Administrative Agent shall
promptly advise the applicable Lenders of any notice given pursuant to this
Section 2.04 (and the contents thereof), and of each Lender's portion of the
requested Borrowing.
SECTION 2.05. Notes; Repayment of Loans. (a) All Revolving Credit
Loans made by a Lender to the Borrowers shall be evidenced by a single
Revolving Credit Note, duly executed on behalf of the Borrowers, dated the
Effective Date, in substantially the form of Exhibit A-1 hereto, delivered and
payable to such Lender in a principal amount equal to its Revolving Credit
Commitment. All Rollover Term
<PAGE> 44
39
Loans outstanding on the Effective Date shall continue to be evidenced by the
Rollover Term Notes previously executed and delivered by the Borrowers under
the Original Credit Agreement, unless and until the applicable Lender exchanges
its Rollover Term Note for one or more new Rollover Term Notes or transfers its
Rollover Term Note. Upon any such exchange or transfer, the Borrowers shall
execute and deliver one or more new Rollover Term Notes, dated the date of and
in the same aggregate principal amount as the original Rollover Term Note so
exchanged or transferred, in substantially the form of Exhibit A-2 hereto.
(b) All Revolving Credit Loans shall mature and be due and payable on
the Revolving Credit Maturity Date. Each Revolving Credit Note shall bear
interest from its date on the outstanding principal balance thereof as provided
in Section 2.07.
(c) Subject to paragraph (e) below, after giving effect to all
repayments and prepayments made prior to the Effective Date, the aggregate
principal amount of the Rollover Term Loans, as evidenced by the Rollover Term
Notes, shall be payable in quarterly installments, payable on the last day of
January, April, July and October of each year, commencing April 30, 1996.
Subject to paragraph (e) below, such installments (excluding the last
installment) shall be payable in the respective amounts set forth below
opposite the respective payment dates (it being understood that the amounts set
forth below have been determined after giving effect to all adjustments under
the Original Credit Agreement in respect of prepayments made prior to the
Effective Date):
<TABLE>
<CAPTION>
Payment Date Amount Payment Date Amount
------------ ------ ------------ ------
<S> <C> <C> <C>
April 30, 1996 $1,574,259 January 31, 1998 $1,852,069
July 31, 1996 $1,574,259 April 30, 1998 $1,852,069
October 31, 1996 $1,852,069 July 31, 1998 $1,852,069
January 31, 1997 $1,852,069 October 31, 1998 $3,981,949
April 30, 1997 $1,852,069 January 31, 1999 $3,981,949
July 31, 1997 $1,852,069 April 30, 1999 $3,981,949
October 31, 1997 $1,852,069
</TABLE>
The final such installment shall be payable on the Rollover Term Loan Maturity
Date in an amount equal to the remaining unpaid principal amount of the
Rollover Term Loans (including the Capitalized Rollover Interest Amount). All
principal payments in respect of the Rollover Term Loans shall be accompanied
by accrued interest on the principal amount being repaid to the date of
payment. Each Rollover
<PAGE> 45
40
Term Note shall bear interest from its date on the outstanding principal
balance thereof as provided in Section 2.07.
(d) Each Lender, or the Administrative Agent on its behalf, shall,
and is hereby authorized by the Borrowers to, endorse on the schedule attached
to the Revolving Credit Note or Rollover Term Note, as applicable, delivered to
such Lender (or on a continuation of such schedule attached to each such Note
and made a part thereof), or otherwise record in such Lender's internal
records, an appropriate notation evidencing the date and amount of each Loan
from the Lender to the Borrowers, as well as the date and amount of each
payment and prepayment with respect thereto; provided, however, that the
failure of any Lender or the Administrative Agent to make such a notation or
any error in such a notation shall not affect the obligations of the Borrowers
hereunder and under such Note.
(e) Each partial prepayment of Rollover Term Loans shall be applied
pro rata to reduce each subsequently scheduled installment of the remaining
outstanding Rollover Term Loans; provided, however, that the Capitalized
Rollover Interest Amount shall be disregarded for purposes of determining such
pro rata reductions unless the Capitalized Rollover Interest Amount was reduced
as a result of such prepayment. Any amount deposited in a Fixed Rate
Prepayment Account or applied to defease any Rollover Term Loan pursuant to
Section 2.12(g) in lieu of the prepayment of any Rollover Term Loan shall be
deemed to be a prepayment of such Rollover Term Loan for purposes of the
preceding sentence.
SECTION 2.06. Interest Elections. (a) Each Borrowing initially shall
be of the Type specified in the applicable borrowing request and, in the case
of a Eurodollar Borrowing, shall have an initial Interest Period as specified
in such borrowing request. Thereafter, the Borrowers may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing, may elect new Interest Periods therefor, all as
provided in this Section. The Borrowers may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Revolving Credit Loans
comprising such Borrowing and the Revolving Credit Loans comprising each such
portion shall be considered a separate Borrowing.
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(b) In order to make an election pursuant to this Section, the
Borrowers shall hand deliver or telecopy to the Administrative Agent a duly
completed interest election request by the time that a borrowing request would
be required under Section 2.04 if the Borrowers were requesting a Borrowing of
the Type resulting from such election to be made on the effective date of such
interest election request.
(c) Each interest election request shall be signed by or on behalf of
the Borrowers and shall specify the following information:
(i) the Borrowing to which such interest election request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be
specified pursuant to clauses (iii) and (iv) below shall be specified
for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
interest election request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period".
Notwithstanding any contrary specification in any interest election request,
each Borrowing resulting from any election hereunder shall comply with the
requirements of Section 2.03.
(d) Promptly following receipt of an interest election request, the
Administrative Agent shall advise each Lender of the contents thereof and of
such Lender's portion of each resulting Borrowing. An interest election
request shall not be revocable after the Lenders are so advised.
(e) If the Borrowers fail to deliver a timely interest election
request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable
<PAGE> 47
42
thereto, then, unless such Borrowing is repaid as provided herein, such
Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of Lenders holding at least 51% of the
outstanding Revolving Credit Loans, so notifies the Borrowers, then, so long as
an Event of Default is continuing (i) no outstanding Borrowing may be converted
to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
SECTION 2.07. Interest on Loans. (a) Subject to the provisions of
Section 2.11, the Revolving Credit Loans comprising each ABR Borrowing shall
bear interest (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be, when the Alternate Base Rate is
determined by reference to the Prime Rate and over a year of 360 days at all
other times) at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin in effect from time to time.
(b) Subject to the provisions of Section 2.11, the Revolving Credit
Loans comprising each Eurodollar Borrowing shall bear interest (computed on the
basis of the actual number of days elapsed over a year of 360 days) at a rate
per annum equal to the Adjusted LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Margin in effect from time to time.
(c) Accrued and unpaid interest on each Revolving Credit Loan shall
be payable on each Interest Payment Date applicable thereto; provided, however
that (i) interest accrued pursuant to Section 2.11 shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Revolving Credit Loan
(other than a prepayment of an ABR Revolving Credit Loan prior to the
termination of the Revolving Credit Commitments), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of a
Eurodollar Borrowing prior to the end of the current Interest Period therefor,
accrued interest on the Revolving Credit Loans included in such Borrowing so
converted shall be payable on the date of such conversion. The applicable
Alternate Base Rate or Adjusted LIBO Rate shall be determined by the
Administrative Agent, and such determination shall be conclusive absent
manifest error.
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(d) Subject to the provisions of Section 2.11, the Fixed Rate Amount
of each Rollover Term Loan shall bear interest at a rate per annum (computed on
the basis of the actual number of days elapsed over a year of 360 days) equal
to the Fixed Rate applicable thereto.
(e) Subject to the provisions of Section 2.11, the Capitalized
Rollover Interest Amount of each Rollover Term Loan shall bear interest at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 365 or 366 days, as the case may be, if based on the Prime Rate, or
over a year of 360 days if based on the Base CD Rate or the Federal Funds
Effective Rate) equal to the Alternate Base Rate plus 1-1/2%.
(f) Accrued and unpaid interest on each Rollover Term Loan shall be
payable on each Interest Payment Date applicable thereto unless otherwise
provided in this Agreement.
(g) Each partial repayment or prepayment of any Rollover Term Loan
shall be applied to reduce the Fixed Rate Amount thereof until the Fixed Rate
Amount has been reduced to zero (or fully secured by cash collateral or
defeased) and then to reduce the Capitalized Rollover Interest Amount thereof.
SECTION 2.08. Fees. (a) The Borrowers shall pay to the
Administrative Agent for the account of each Lender, on the last day of each
January, April, July and October and on the date on which the Revolving Credit
Commitment of such Lender shall expire or be terminated as provided herein, in
immediately available funds, a commitment fee (a "Commitment Fee") of 1/2 of 1%
per annum on the average daily unused amount of the Revolving Credit Commitment
of such Lender during the preceding quarter (or shorter period commencing with
the Effective Date or ending with the Revolving Credit Maturity Date or the
date on which the Revolving Credit Commitments of such Lender shall expire or
be terminated). All Commitment Fees shall be computed on the basis of the
actual number of days elapsed over a year of 360 days. The Commitment Fees due
to each Lender shall commence to accrue on the Effective Date and shall cease
to accrue on the date on which the Revolving Credit Commitment of such Lender
shall expire or be terminated as provided herein.
(b) The Borrowers shall pay to Chemical Bank, for its own account,
such additional fees in such amounts and at
<PAGE> 49
44
such times as NWS and Chemical Bank have separately agreed in writing for
Chemical Bank's services as Administrative Agent and Collateral Agent.
(c) On the Effective Date, the Borrowers shall pay to the
Administrative Agent for the account of the persons entitled thereto (i) all
fees accrued and unpaid under the Original Credit Agreement through and
including the Effective Date (including the "Deferred Fees" referred to
therein) and (ii) the fees payable on the Effective Date for the account of
Chemical Bank and the Lenders extending Revolving Credit Commitments hereunder,
as separately agreed with such persons.
(d) The Borrowers also shall pay fees as provided in Section 2.18(f).
(e) Once paid, none of the Commitment Fees, the Letter of Credit
Participation Fees or any other fees payable to the Administrative Agent, the
Collateral Agent, the Issuing Bank or the Lenders shall be refundable in any
circumstances whatsoever.
SECTION 2.09. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Revolving
Credit Loans comprising such Borrowing are not generally available in the
London interbank market, or that the rates at which such dollar deposits are
being offered will not adequately and fairly reflect the cost to any Lender of
making or maintaining its Eurodollar Revolving Credit Loan during such Interest
Period, or that reasonable means do not exist for ascertaining the Adjusted
LIBO Rate, the Administrative Agent shall, as soon as practicable thereafter,
give telephone or telecopy notice of such determination to the Borrowers and
the Lenders. In the event of any such determination, until the Administrative
Agent shall have advised the Borrowers and the Lenders that the circumstances
giving rise to such notice no longer exist, any request by the Borrowers for a
Eurodollar Borrowing shall be deemed to be a request for an ABR Borrowing.
Each determination by the Administrative Agent hereunder shall be conclusive
absent manifest error.
SECTION 2.10. Extension, Termination and Reduction of Revolving Credit
Commitments. (a) Subject to
<PAGE> 50
45
Section 2.12(b) and upon at least three Business Days' prior written, telecopy
or telex notice to the Administrative Agent, the Borrowers may at any time in
whole permanently terminate, or from time to time permanently reduce, the
Revolving Credit Commitments, ratably among the Lenders in accordance with
their respective Revolving Credit Commitments; provided, however, that (i) each
partial reduction of the Revolving Credit Commitments shall be in a minimum
aggregate principal amount of $5,000,000 and an integral multiple of $1,000,000
and (ii) the Total Revolving Credit Commitment shall not be reduced to an
amount that is less than the Letter of Credit Exposure at the time.
(b) The Revolving Credit Commitments shall automatically terminate on
the Revolving Credit Maturity Date.
(c) Simultaneously with any termination or reduction of Revolving
Credit Commitments pursuant to paragraph (a) or (b) of this Section 2.10, the
Borrowers shall pay to the Administrative Agent for the account of the Lenders
whose Revolving Credit Commitments are being terminated or reduced the
Commitment Fees on the amount of the Revolving Credit Commitments so terminated
or reduced, accrued to but excluding the date of such termination or reduction.
(d) The initial Revolving Credit Maturity Date of April 25, 2001,
shall be accelerated automatically, without the necessity of any consent or
approval of any party hereto, to July 31, 1999, unless, (i) the Rollover Term
Loans are fully repaid on or prior to July 31, 1999, (ii) the total Revolving
Credit Exposure of the Lenders as of July 31, 1999, does not exceed 75% of the
Borrowing Base as of such date and (iii) as of July 31, 1999, the lesser of the
Total Revolving Credit Commitment or the Borrowing Base exceeds the total
Revolving Credit Exposure of the Lenders by $20,000,000 or more. If the
initial Revolving Credit Maturity Date is not so accelerated, then thereafter,
subject to the conditions and procedures of this paragraph, the Borrowers may
from time to time but not more than once each year request that the then-
current Revolving Credit Maturity Date be extended for an additional one-year
period, and (subject to subparagraph (D) below) if 100% of the Lenders with
Revolving Credit Commitments (including any Successor Lenders referred to
below) agree to such request (in their sole and absolute discretion), the
Revolving Credit Maturity Date shall be so extended. Any such
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extension of the Revolving Credit Maturity Date pursuant to the preceding
sentence shall be effected only pursuant to the following procedures:
(A) Not more than 90 days and not less than 60 days prior to
the Revolving Credit Maturity Date then in effect, the Borrowers shall
notify the Administrative Agent and each Lender with a Revolving
Credit Commitment in writing substantially in the form of Exhibit D
hereto of its request to extend the Revolving Credit Maturity Date by
one year to the first anniversary of the Revolving Credit Maturity
Date then in effect. Each Lender with a Revolving Credit Commitment
electing to extend the Revolving Credit Maturity Date shall execute
and deliver to the Borrowers and the Administrative Agent, not later
than 5:00 p.m., New York City time, on the date that is 45 days (or,
if such day is not a Business Day, the next succeeding Business Day)
prior to the Revolving Credit Maturity Date then in effect (which day
shall be set forth in the notice of such request given by the
Borrowers), counterparts of the Borrowers' request to extend the
Revolving Credit Maturity Date. Any Lender which shall not timely
notify the Borrowers and the Administrative Agent of its election
shall be deemed to have elected not to extend the Revolving Credit
Maturity Date.
(B) If any Lender with a Revolving Credit Commitment shall
timely notify the Administrative Agent and the Borrowers pursuant to
subparagraph (A) of this Section 2.10(d) of its election not to extend
the Revolving Credit Maturity Date or is deemed hereunder to have
elected not to extend the Revolving Credit Maturity Date (any such
Lenders being called " Terminating Lenders"), then the Administrative
Agent shall so advise the remaining Lenders, and the Borrowers may,
upon giving written telephonic or telex notice to the Administrative
Agent, at their option arrange to have one or more Eligible Assignees
acceptable to the Administrative Agent, which may include a Lender or
Lenders (each a "Successor Lender"), succeed, not later than 20 days
prior to the Revolving Credit Maturity Date then in effect, to all
(but, subject to subparagraph (D) below, not less than all) of the
Terminating Lenders' aggregate principal amount of all Revolving
Credit Loans and Rollover Term Loans outstanding, if any,
participations in outstanding Letters of Credit (including
unreimbursed
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47
Letter of Credit Disbursements), if any, and interest in this
Agreement with respect to the Revolving Credit Loans, Rollover Term
Loans and Letters of Credit and assume all (but, subject to
subparagraph (D) below, not less than all) of the Terminating Lenders'
Revolving Credit Commitments hereunder. All amounts of Loans and
unreimbursed Letter of Credit Disbursements to be succeeded to shall
be purchased at a price equal to the aggregate outstanding principal
amount thereof plus accrued interest thereon, accrued Commitment Fees
and accrued fees under Section 2.18(f) and the Borrowers shall
indemnify any and all Terminating Lenders for any loss or cost
incurred in connection with the assignment of any Rollover Term Loan
in accordance with Section 2.14 and any Eurodollar Revolving Credit
Loan in accordance with Section 2.15. Each such Successor Lender
shall be deemed to have consented to the extension of the Revolving
Credit Maturity Date pursuant to subparagraph (A) above, and shall,
not later than 20 days prior to the Revolving Credit Maturity Date
then in effect, assume the Revolving Credit Commitments of the
Terminating Lenders to be assumed by it pursuant to the execution and
delivery of an Assignment and Acceptance in accordance with the
provisions of Section 9.03 of this Agreement. Provided that the
entire amount of the Revolving Credit Commitments of the Terminating
Lenders is assumed by the Successor Lenders, each Successor Lender
shall assume such portion of the Revolving Credit Commitments of the
Terminating Lenders as shall be agreed to with the Borrowers and
approved by the Administrative Agent.
(C) If for any reason a Successor Lender or Successor Lenders
do not replace any and all Terminating Lenders in accordance with the
provisions of subparagraph (B) above not later than 20 days prior to
the Revolving Credit Maturity Date then in effect, such that the
Borrowers are unable to obtain the consent to the extension of the
Revolving Credit Maturity Date of 100% of the Lenders with Revolving
Credit Commitments, after giving effect to the assumption of the
Revolving Credit Commitments by any Successor Lenders, the Revolving
Credit Maturity Date shall not be extended. In the event that Lenders
(including, if appropriate, Successor Lenders) having 100% of the
Revolving Credit Commitments have agreed to the extension of the
Revolving Credit Maturity Date not later than 20 days prior to the
Revolving Credit Maturity Date then in
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effect, the Revolving Credit Maturity Date shall be extended to the
first anniversary of the Revolving Credit Maturity Date then in
effect.
(D) Notwithstanding the foregoing, the Borrowers may, at
their option, in lieu of replacing a Terminating Lender with a
Successor Lender as provided above, allow the Revolving Credit
Commitment of the Terminating Lender to terminate on the Revolving
Credit Maturity Date then in effect and extend the Revolving Credit
Maturity Date for less than 100% of the Lenders with Revolving Credit
Commitments; provided that the Revolving Credit Maturity Date shall be
extended only for those Lenders whose consent to such extension has
been obtained; and provided further that the Borrowers may not
exercise the option provided in this subparagraph if, as a result
thereof, the aggregate amount of Revolving Credit Commitments allowed
to terminate pursuant to this subparagraph, on a cumulative basis,
would exceed $10,000,000.
SECTION 2.11. Interest on Overdue Amounts. If the Borrowers shall
default in the payment of the principal of or interest on any Loan or any other
amount becoming due hereunder or under any other Loan Document, by acceleration
or otherwise, the Borrowers shall on demand from time to time pay interest, to
the extent permitted by law, on such defaulted amount to but excluding the date
of actual payment (after as well as before judgment), in the case of principal
or interest on any Loan, at a rate per annum (computed on the basis of the
actual number of days elapsed over a period of 360 days) equal to the rate of
interest otherwise applicable to such Loan, plus 2% per annum, and, in the case
of all other amounts, the rate of interest then applicable to ABR Revolving
Credit Loans under Section 2.07(a) plus 2% per annum.
SECTION 2.12. Prepayment of Loans. (a) The Borrowers shall have the
right at any time and from time to time to voluntarily prepay any Loan, in
whole or in part, subject to the requirements of Section 2.14 in the case of
Rollover Term Loans and Section 2.15 in the case of Eurodollar Revolving Credit
Loans but otherwise without premium or penalty, upon at least three Business
Days' (or, in the case of ABR Revolving Credit Loans, one Business Day's) prior
written, telecopy or telex notice to the Administrative Agent; provided,
however, that (i) each such partial prepayment shall be in an integral multiple
of
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49
$100,000 and a minimum aggregate principal amount of $1,000,000 (or, in the
case of partial prepayment of ABR Revolving Credit Loans, $500,000); (ii) any
voluntary prepayment of Rollover Term Loans shall be made and applied pro rata
in accordance with the respective outstanding principal amounts of all Rollover
Term Loans then outstanding; and (iii) any voluntary prepayment of Rollover
Term Loans in part shall be subject to the option set forth in Section 2.12(h).
(b) On the date of any termination or reduction of the Revolving
Credit Commitment of any Lender pursuant to Section 2.10(a), the Borrowers
shall pay or prepay so much of the Revolving Credit Loans of such Lender as
shall be necessary in order that the Revolving Credit Exposure of such Lender
will not exceed the Revolving Credit Commitment of such Lender following such
termination or reduction.
(c) On any date when the total Revolving Credit Exposure of the
Lenders exceeds the lesser of (i) the Total Revolving Credit Commitment and
(ii) the then-current Borrowing Base, the Borrowers shall make a mandatory
prepayment of the Revolving Credit Loans in such amount as may be necessary so
that the total Revolving Credit Exposure of the Lenders after giving effect to
such prepayment does not exceed the lesser of (i) the Total Revolving Credit
Commitment and (ii) the then-current Borrowing Base.
(d) So long as any Rollover Term Loans are outstanding (other than
Rollover Term Loans fully secured by cash collateral or defeased), in the event
and on each occasion after the Effective Date that a Prepayment Event occurs,
the Borrowers shall, within three Business Days thereafter, make a mandatory
prepayment of the Rollover Term Loans in an amount equal to 100% of the Net
Cash Proceeds from such Prepayment Event (or, in the case of a Prepayment Event
described in clause (2) or (3) of the definition thereof, 50% of such Net Cash
Proceeds). Each such prepayment shall be made and applied pro rata in
accordance with the respective outstanding principal amounts of all Rollover
Term Loans then outstanding; provided, however, that any such prepayments shall
be subject to the option set forth in Section 2.12(g). For purposes hereof,
"Prepayment Event" shall mean (1) any sale, lease, transfer or other
disposition (including pursuant to Sections 7(e) or 9 of the Mortgages) of any
assets or property of NWS or any of its Subsidiaries other than sales of
inventory in the ordinary course of business and other than as permitted by
clause (v)
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of Section 6.05(b), (2) the issuance by NWS or any of its Subsidiaries of any
equity securities, other than Excluded Equity Sales or the issuance by any
Subsidiary of equity securities to NWS, or (3) the receipt by NWS or any of its
Subsidiaries of a capital contribution, other than the receipt by a Subsidiary
of a capital contribution from NWS. For purposes hereof, "Net Cash Proceeds"
shall mean the gross amount of cash consideration received by NWS or any of its
Subsidiaries in respect of any Prepayment Event (including any cash received in
respect of any non-cash consideration, at the time so received), net of any
taxes required to be paid by NWS or any of its Subsidiaries as a result of such
Prepayment Event and reasonable and customary fees, commissions, expenses and
other costs paid by NWS or any Subsidiary to unaffiliated third parties in
connection with such Prepayment Event; provided, however, that, in the event of
a Prepayment Event that includes a sale or other disposition of all the capital
stock of NWS/Texas, or a sale or other disposition of assets of the Houston
Facility that includes inventory and/or Accounts of NWS/Texas, then (i) Net
Cash Proceeds in respect of such Prepayment Event shall be calculated excluding
an amount equal to the book value of the inventory and Accounts (net of
allowances and reserves for doubtful or uncollectible Accounts) of NWS/Texas
included in such sale or disposition and (ii) the Borrowers shall prepare and
deliver, on the date such Prepayment Event is consummated, a Borrowing Base
Certificate reflecting the disposition of assets theretofore included in the
Borrowing Base. The Borrowers shall deliver to the Administrative Agent at the
time of each such prepayment a certificate signed by a Financial Officer of
each Borrower setting forth in reasonable detail the calculation of the Net
Cash Proceeds resulting from any such Prepayment Event, including the amount of
and basis for calculating any Federal, state or local income taxes estimated by
the Chief Financial Officer of NWS to be payable in connection with such
Prepayment Event. In the event that the amount of such income taxes actually
paid is less than the amount set forth in such certificate, the excess of the
amount so certified over the amount actually paid shall become due and payable
hereunder simultaneously with the payment of any such tax.
(e) So long as any Rollover Term Loans are outstanding (other than
Rollover Term Loans fully secured by cash collateral or defeased), within 60
days after the end of each fiscal year of NWS (i) ending prior to the date (the
"Prepayment Determination Date") on which the sum of (A) the unused Revolving
Credit Commitments at such date, (B) the
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aggregate principal amount of the then outstanding Loans and (C) the Letter of
Credit Exposure is reduced to $115,000,000, the Borrowers shall prepay the
Rollover Term Loans as provided below in an aggregate principal amount equal to
85% of the Excess Cash Flow for such fiscal year and (ii) ending on or after
the Prepayment Determination Date, the Borrowers shall prepay the Rollover Term
Loans as provided below in an aggregate principal amount equal to 50% of the
Excess Cash Flow for such fiscal year. Each required prepayment of the
Rollover Term Loans pursuant to this paragraph shall be made and applied to pay
all Rollover Term Loans then outstanding pro rata in accordance with the
respective outstanding principal amounts of all such Rollover Term Loans. The
Borrowers shall deliver to the Administrative Agent at the time of each such
prepayment required under this paragraph a certificate signed by a Financial
Officer of each Borrower setting forth in reasonable detail the calculation of
the amount of such prepayment.
(f) The Borrowers shall deliver to each Lender a notice of each
prepayment to be made under paragraph (a), (d) or (e) of this Section not less
than three Business Days prior to the date of such prepayment (except in the
case of prepayments under paragraph (a) permitted to be made on one Business
Day's notice), and any such notice delivered to a Lender holding a Rollover
Term Loan regarding a partial prepayment under paragraph (a) or any prepayment
under paragraph (d) shall request that such Lender promptly notify the
Administrative Agent whether such Lender exercises the option specified in
paragraph (g) or (h) below, as applicable, in lieu of receiving such
prepayment. Each notice of prepayment shall specify the prepayment date and
the principal amount of each Loan (or portion thereof) to be prepaid, shall be
irrevocable and shall commit the Borrowers to prepay such Loan by the amount
stated therein on the date stated therein. All prepayments shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment, except for prepayments of ABR Revolving Credit Loans
prepaid on a date that is not an Interest Payment Date and is prior to the
termination of the Revolving Credit Commitments.
(g) In the event of any prepayment under paragraph (d) of this
Section that is required to be made in whole or in part in respect of Rollover
Term Loans and that would reduce the Fixed Rate Amount thereof, then at the
option of any Lender holding a Rollover Term Loan (to be
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exercised by notice to the Administrative Agent and the Borrower promptly
following receipt by such Lender of notice of such prepayment) the amount that
would be required to be applied to prepay such Lender's Rollover Term Loan may,
in lieu of such prepayment, be (i) deposited with the Administrative Agent in a
Fixed Rate Prepayment Account, as provided below, as cash collateral securing
such Lender's Rollover Term Loan to which such prepayment would have been
applied or (ii) applied to defease such Lender's Rollover Term Loan in a manner
satisfactory to such Lender; provided, however, that, if any Lender holding a
Rollover Term Loan exercises such option, the portion of such Lender's Rollover
Term Loan equal to the amount applied in accordance with clause (i) or (ii)
above shall not thereafter be deemed to be outstanding for purposes of
allocating payments of principal of the Term Loans among the Lenders pursuant
to Section 2.05 and this Section 2.12 or for purposes of determining the
"Required Lenders" (unless and until the only Loans outstanding are Rollover
Term Loans fully secured by cash collateral or defeased and the Revolving
Credit Commitments have been terminated, at which time such Loans shall be
outstanding for purposes of determining the "Required Lenders"), but shall be
deemed to be outstanding for all other purposes, including calculating and
allocating interest payments. In the event that any Lender holding a Rollover
Term Loan exercises the foregoing option to require funds to be deposited in a
Fixed Rate Prepayment Account, funds shall be deposited in a Fixed Rate
Prepayment Account established by the Administrative Agent as required above,
which shall be maintained by the Administrative Agent in accordance with this
Agreement, and such funds (unless earlier applied to repay such Rollover Term
Loan as provided in this Section or Article VII) shall be applied to repayment
of the portion of such Rollover Term Loan secured by such funds at the times
and in the amounts that such portion of such Rollover Term Loan would have been
paid pursuant to Section 2.05 if such option had not been exercised; provided,
however, that at any time on or after the date that all Loans (other than
Rollover Term Loans fully secured by cash collateral or defeased) have been
repaid or prepaid in full and the Revolving Credit Commitments have been
terminated, the Borrowers shall have the right, upon at least three Business
Days' prior written or telex notice to the Administrative Agent, to prepay all
Rollover Term Loans then outstanding by directing the Administrative Agent in
such notice to apply all funds then in the Fixed Rate Prepayment Account to
repayment of such Rollover Term Loans (and paying to the Administrative Agent
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for the account of the Lenders such additional amount as shall be necessary to
fully pay such Loans, including interest thereon and amounts due under Section
2.14), and such prepayment shall be treated for all purposes hereof (including
for purposes of Section 2.14) as a voluntary prepayment of the Rollover Term
Loans in full pursuant to paragraph (a) of this Section. For purposes of this
Agreement, "Fixed Rate Prepayment Account" shall mean an account established by
the Borrowers with the Administrative Agent, for the benefit of a Lender
holding a Rollover Term Loan exercising the option described in clause (i) of
this paragraph, and over which the Administrative Agent shall have exclusive
dominion and control, including the exclusive right to withdrawal, except that
(A) the Lender holding the Rollover Term Loan for which such Fixed Rate
Prepayment Account is established shall have the right to direct the
Administrative Agent at any time to pay the balance on deposit in such Account
(up to the aggregate amount theretofore deposited in such Account and excluding
any excess amounts attributable to interest or profits on investments) to such
Lender to be applied as a prepayment of such Lender's Rollover Term Loan (it
being understood that such prepayment shall not result in any further
adjustment under Section 2.05(e)) if such Lender shall waive its right to
receive the Yield- Maintenance Premium, if any, that would be due to such
Lender under Section 2.14 as a result of such prepayment and (B) unless an
Event of Default has occurred and is continuing, the Borrowers shall have the
exclusive right to direct the Administrative Agent as to the investment of
amounts on deposit in such account in Permitted Investments maturing prior to
the Rollover Term Loan Maturity Date; provided, however, that the
Administrative Agent shall not be required to make any investment that, in its
sole judgment, would require or cause the Administrative Agent to be, or would
result, in any violation of any law, statute, rule or regulation. The
Borrowers shall indemnify the Administrative Agent for any losses relating to
the investments so that the amount available to repay Rollover Term Loans is
not less than the amount which would have been available had no investments
been made pursuant thereto. Other than any interest earned on such
investments, such account shall not bear interest. Interest or profits, if
any, earned on such investments shall, unless an Event of Default has occurred
and is continuing, be payable to the Borrowers in arrears or credited and
applied against interest obligations of the Borrowers hereunder, at the option
of the Borrowers, within five Business Days after any request by the Borrowers
for
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54
such application. The Borrowers grant the Administrative Agent a lien on and
security interest in any moneys deposited in any Fixed Rate Prepayment Account
and the Administrative Agent shall have the sole control over all moneys so
deposited; provided that such security interest shall secure only the Rollover
Term Loan in respect of which such deposits were made, and accrued interest
thereon.
(h) In the event of any prepayment under paragraph (a) of this
Section that is required to be made in whole or in part in respect of Rollover
Term Loans and that would reduce the Fixed Rate Amount thereof, then (unless
such prepayment would fully repay all outstanding Rollover Term Loans) at the
option of any Lender holding a Rollover Term Loan (to be exercised by notice to
the Administrative Agent and the Borrowers promptly following receipt by such
Lender of notice of such prepayment) such Lender may decline to receive such
prepayment, in which case such Lender's Rollover Term Loan shall not be prepaid
in connection with such prepayment; provided, however, that if any Lender shall
exercise such option, then the amount that otherwise would be required to be
applied to prepay such Lender's Rollover Term Loan shall be applied to prepay
all other Rollover Term Loans then outstanding (excluding only any other
Rollover Term Loans in respect of which the applicable Lender also shall have
exercised the option provided in this paragraph to decline to receive such
prepayment) pro rata in accordance with the respective outstanding principal
amounts of such Rollover Term Loans.
(i) Rollover Term Loans prepaid in accordance with this Section 2.12
may not be reborrowed.
(j) Except as otherwise expressly provided in this Section 2.12,
payments with respect to any paragraph of this Section 2.12 are in addition to
payments made or required to be made under any other paragraph of this Section
2.12.
SECTION 2.13. Change in Circumstances.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve
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55
requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Revolving Credit Loans made by such Lender or any Letter of
Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Revolving Credit Loan or to
increase the cost to such Lender or the Issuing Bank of participating in,
issuing or maintaining, any Letter of Credit or to reduce the amount of any sum
received or receivable by such Lender or the Issuing Bank hereunder (whether of
principal, interest or otherwise) by an amount deemed by such Lender or the
Issuing Bank to be material, then the Borrowers will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or the Issuing Bank determines that any any Change
in Law regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender's or the Issuing Bank's capital or on the
capital of such Lender's or the Issuing Bank's holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's or the Issuing
Bank's policies and the policies of such Lender's or the Issuing Bank's holding
company with respect to capital adequacy) by an amount deemed by such Lender or
the Issuing Bank to be material, then from time to time the Borrower will pay
to such Lender or the Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender or the Issuing Bank or such Lender's
or the Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of any Lender or the Issuing Bank setting forth
such amount or amounts as shall be necessary to compensate such Lender or the
Issuing Bank (or
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56
participating banks or other entities pursuant to Article IX) as specified in
paragraph (a) or (b) above and certifying such amount or amounts are payable by
the Borrowers pursuant to such paragraph (a) or (b) shall be delivered to the
Borrowers and shall be conclusive absent manifest error. The Borrowers shall
pay each Lender or the Issuing Bank, as the case may be, the amount shown as
due on any such certificate within 10 days after its receipt of the same.
(d) Failure on the part of any Lender or the Issuing Bank to demand
compensation for any increased costs or reduction in amounts received or
receivable with respect to any period shall not constitute a waiver of such
Lender's or the Issuing Bank's rights to demand compensation for any increased
costs or reduction in amounts received or receivable in such period or in any
other period; provided, however, that any demand for compensation pursuant to
Section 2.13(a) or (b) with respect to any Loan shall be made not later than
one year following the date upon which the responsible account officer of such
Lender or the Issuing Bank had actual knowledge of such increased costs or
reductions in amounts received or receivable. The protection of this Section
2.13 shall be available to each Lender and the Issuing Bank regardless of any
possible contention of the invalidity or inapplicability of any Change in Law,
which shall give rise to any demand by such Lender or the Issuing Bank for
compensation.
SECTION 2.14. Yield-Maintenance Premium. In the event of any
prepayment or repayment of any Fixed Rate Amount of the Rollover Term Loan of
any Lender, whether as a result of any mandatory or optional prepayment
pursuant to this Agreement, any Event of Default or any other reason, the
Borrowers shall pay to such Lender, at the time of such prepayment or repayment
and in addition to the principal amount of such Rollover Term Loan being
prepaid or repaid and accrued interest thereon, an amount equal to the
Yield-Maintenance Premium (as defined below) with respect to such principal
amount, determined as of the date of such prepayment or repayment; provided,
however, that no Yield-Maintenance Premium shall be payable with respect to any
scheduled repayment of any Rollover Term Loan in accordance with Section
2.05(c), any prepayment or repayment of any Capitalized Rollover Interest
Amount, any mandatory prepayment in accordance
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57
with paragraph (d) (it being understood that payments from the Fixed Rate
Prepayment Account shall not be construed as prepayments in accordance with
paragraph (d)) or (e) of Section 2.12 or any voluntary prepayment (other than a
voluntary prepayment that repays all Rollover Term Loans then outstanding or a
voluntary prepayment of Rollover Term Loans made from the proceeds of
Indebtedness issued or incurred by NWS or any of its Subsidiaries other than as
permitted under Section 6.01) in accordance with paragraph (a) of Section 2.12.
For purposes of the foregoing, (i) "Yield-Maintenance Premium" shall mean, with
respect to the Fixed Rate Amount of any Rollover Term Loan being prepaid or
repaid as of any date, a premium equal to the excess, if any, of (A) the
Discounted Value of such principal amount as of such date over (B) such
principal amount, but in no event shall the Yield-Maintenance Premium be less
than zero; (ii) "Discounted Value" shall mean, with respect to the principal
amount of any Rollover Term Loan being prepaid or repaid as of any date, the
amount calculated by discounting all Remaining Scheduled Payments with respect
to such principal amount from their respective scheduled due dates to such date
in accordance with accepted financial practice and at a discount rate (applied
on a quarterly basis) equal to the Reinvestment Yield with respect to such
principal amount; (iii) "Remaining Scheduled Payments" shall mean, with respect
to the principal amount of any Rollover Term Loan being prepaid or repaid as of
any date, all payments of such principal and interest thereon that would have
been payable after such date if such principal had been amortized as
contemplated by Section 2.05(c) rather than prepaid or repaid; (iv)
"Reinvestment Yield" shall mean, with respect to the principal amount of any
Rollover Term Loan being prepaid or repaid as of any date, the sum of (A) the
Treasury Rate plus (B) 0.75%; (v) "Treasury Rate" shall mean, with respect to
the principal amount of any Rollover Term Loan being prepaid or repaid as of
any date, a rate per annum determined by the Administrative Agent (which
determination shall be conclusive absent manifest error) to be equal to the
approximate yield to maturity (rounded upwards, if necessary, to the next 1/100
of 1%) for United States Treasury fixed-rate securities maturing on the Assumed
Maturity Date with respect to such Rollover Term Loan, determined as of the
date of such prepayment or repayment by interpolation between the most recent
weekly average yields to maturity for two series of United States Treasury
fixed-rate securities, (a) one maturing as close as possible to, but earlier
than, such Assumed Maturity Date and (b) the other maturing as close as
possible to, but later than, such Assumed Maturity Date, in each case as
published in the most recent weekly statistical release
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designed H.15(519), or any successor publication, published by the Board (or,
if a weekly average yield to maturity for United States Treasury fixed-rate
securities maturing on such Assumed Maturity Date is reported in such
publication, the yield so published); and (vi) "Assumed Maturity Date" shall
mean, with respect to the principal amount of any Rollover Term Loan being
prepaid or repaid as of any date, the date that would be the maturity date of
such Rollover Term Loan if such Loan had a maturity date at the end of the
remaining average life of such Rollover Term Loan, determined as of the date of
such prepayment or repayment and based solely upon the then-remaining scheduled
payments with respect to the Fixed Rate Amount of such Loan under Section
2.05(c).
SECTION 2.15. Break Funding Losses. The Borrowers shall reimburse
each Lender for any loss or expense incurred as a consequence of (a) the
payment of any principal of any Eurodollar Revolving Credit Loan other than on
the last day of an Interest Period applicable thereto, (b) the conversion of
Eurodollar Revolving Credit Loan to a Loan of another Type, or conversion of
the Interest Period applicable thereto to a different Interest Period, other
than on the last day of the Interest Period applicable thereto, (c) the failure
to borrow, convert, continue or prepay any Revolving Credit Loan on the date
specified in any notice delivered pursuant to Section 2.04, 2.06 or 2.12 after
the Lenders are advised of such notice (regardless of whether such notice is
permitted to be revocable and is revoked in accordance herewith), (d)
revocation of any notice of termination of the Commitments as contemplated by
Section 2.10 or (e) the assignment of any Eurodollar Revolving Credit Loan
other than on the last day of the Interest Period applicable thereto pursuant
to the request of the Borrowers as contemplated by Section 2.10(d) or Section
2.20. Such losses shall include any loss incurred in obtaining, liquidating or
employing deposits from third parties (based on the assumption that the cost of
deposits for funding a Eurodollar Revolving Credit Loan for any Interest Period
equals the Adjusted LIBO Rate for such Interest Period), but shall exclude loss
of margin. A certificate of any Lender setting forth any amount or amounts
that such Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrowers and shall be conclusive absent manifest error. The
Borrowers shall pay such Lender the amount shown as due in any such certificate
within 10 days after receipt thereof.
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SECTION 2.16. Pro Rata Treatment. Each borrowing of Revolving Credit
Loans, each payment of the Commitment Fees and Letter of Credit Participation
Fees and each reduction of the Revolving Credit Commitments shall be made pro
rata among the Lenders in accordance with their respective Revolving Credit
Commitments (or, if such Commitments shall have expired or been terminated, in
accordance with the respective principal amounts of their outstanding Revolving
Credit Loans). Except as expressly provided otherwise herein, each payment or
prepayment of principal of the Notes, each payment of interest on the Notes and
each other reduction of the principal or interest outstanding under the Notes
shall be made pro rata among the Lenders in accordance with the respective
applicable amounts owed to such Lenders. Each Lender agrees that in computing
such Lender's portion of any Borrowing to be made hereunder, the Administrative
Agent may, in its discretion, round each Lender's percentage of such Borrowing
to the next higher or lower whole dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrowers or any Guarantor, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, obtain payment (voluntary or involuntary) in respect of any
Loan or Loans or Letter of Credit Disbursement as a result of which the unpaid
principal portion of its Rollover Term Loans and Revolving Credit Loans and
participations in Letter of Credit Disbursements shall be proportionately less
than the unpaid principal portion of Rollover Term Loans and Revolving Credit
Loans and participations in Letter of Credit Disbursements held by any other
Lender, it shall simultaneously purchase from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Rollover Term Loans and Revolving Credit Loans and Letter
of Credit Exposure, as the case may be, of such other Lender, so that the
aggregate unpaid principal amount of the Rollover Term Loans and Revolving
Credit Loans and Letter of Credit Exposure and participations in Rollover Term
Loans and Revolving Credit Loans and Letter of Credit Exposure held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Rollover Term Loans and
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Revolving Credit Loans and Letter of Credit Exposure then outstanding as the
principal amount of its Rollover Term Loans and Revolving Credit Loans and
Letter of Credit Exposure prior to such exercise of banker's lien, setoff or
counterclaim was to the principal amount of all Rollover Term Loans and
Revolving Credit Loans and Letter of Credit Exposure outstanding prior to such
exercise of banker's lien, setoff or counterclaim; provided, however, that if
any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.17 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. The Borrowers expressly consent to the foregoing arrangements and
agree that any Lender holding a participation in a Rollover Term Loan or
Revolving Credit Loan or Letter of Credit Disbursement so purchased may
exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing by the Borrowers to such Lender as fully as
if such Lender had made a Loan directly to the Borrowers in the amount of such
participation.
SECTION 2.18. Letters of Credit. (a) The Borrowers may request the
issuance of Letters of Credit, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, appropriately completed, for the
account of the Borrowers, at any time and from time to time while the Revolving
Credit Commitments remain in effect; provided, however, that (i) Letters of
Credit shall be available solely for the general corporate purposes of the
Borrowers and their Subsidiaries and (ii) any Letter of Credit shall be issued
only if, and each request by the Borrowers for the issuance of any Letter of
Credit shall be deemed a representation and warranty of the Borrowers that,
immediately following the issuance of any such Letter of Credit, (A) the total
Letter of Credit Exposure shall not exceed $15,000,000, and (B) the total
Revolving Credit Exposure shall not exceed the lesser of the then current
Borrowing Base and the Total Revolving Credit Commitment at the time. This
Section shall not be construed to impose an obligation upon the Issuing Bank to
issue any Letter of Credit that is inconsistent with the terms and conditions
of this Agreement.
(b) Each Letter of Credit shall expire at the close of business on
the earlier of the date one year after the date of the issuance of such Letter
of Credit (subject
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61
to renewal) and the date that is five Business Days prior to Revolving Credit
Maturity Date (determined as of the date of issuance of such Letter of Credit),
unless such Letter of Credit expires by its terms on an earlier date; provided
that all Letters of Credit shall expire prior to July 31, 1999, unless and
until the conditions specified in the first sentence of Section 2.10(d) are
satisfied such that the Revolving Credit Maturity Date shall not be accelerated
to July 31, 1999. Each Letter of Credit shall provide for payments of drawings
in dollars or an Alternate Currency.
(c) Each issuance of any Letter of Credit shall be made on at least
three Business Days' prior written, telecopy or telex notice from the Borrowers
to the Issuing Bank and the Administrative Agent (which shall give prompt
notice thereof to each Lender) specifying the date of issuance, the date on
which such Letter of Credit is to expire (which shall comply with paragraph (b)
above), the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare
such Letter of Credit.
(d) By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank or the Lenders in respect thereof, the
Issuing Bank hereby grants to each Lender with a Revolving Credit Commitment,
and each such Lender hereby agrees to acquire from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender's Applicable
Percentage of the face amount of such Letter of Credit, effective upon the
issuance of such Letter of Credit. In consideration and in furtherance of the
foregoing, each such Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, on behalf of the Issuing Bank, such Lender's
Applicable Percentage of each Letter of Credit Disbursement made by the Issuing
Bank and not reimbursed by or on behalf of the Borrowers forthwith; provided
that the Lenders shall not be obligated to make any such payment to the Issuing
Bank with respect to any wrongful payment or disbursement made by the Issuing
Bank under any Letter of Credit as a result of the gross negligence or wilful
misconduct of the Issuing Bank.
(e) Each Lender with a Revolving Credit Commitment acknowledges and
agrees that its obligation to acquire participations pursuant to paragraph (d)
above in respect of Letters of Credit is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including the occurrence and
continuance of an Event of Default or an
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event which, with notice or lapse of time or both, would constitute an Event of
Default, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.
(f) The Borrowers shall pay (i) to the Administrative Agent for the
account of the Lenders ratably in proportion to their Revolving Credit
Commitments a participation fee at a rate per annum equal to the Applicable
Margin from time to time in effect on the daily average aggregate undrawn
amount of the outstanding Letters of Credit, and (ii) to the Issuing Bank for
its own account such fees as shall be separately agreed among the Borrowers and
the Issuing Bank (which, in the case of Chemical Bank in its capacity as
Issuing Bank, are hereby agreed to be (A) a fronting fee at a rate per annum
equal to 1/4 of 1% on the daily average aggregate undrawn amount of the
outstanding Letters of Credit and (B) in connection with the issuance,
amendment or transfer of any Letter of Credit or any Letter of Credit
Disbursement, Chemical Bank's customary documentary and processing fees). Such
participation fees and fronting fees shall be computed on the basis of the
actual number of days elapsed over a year of 360 days and shall accrue from and
including the date of issuance of each Letter of Credit to but excluding the
date of its expiration, as such date may be extended or renewed, or earlier
cancellation. Accrued participation fees and fronting fees under this
paragraph shall be payable quarterly in arrears on the last Business Day of
each January, April, July and October and on the Revolving Credit Maturity Date
or earlier termination of the Revolving Credit Commitments.
(g) If the Issuing Bank shall make any Letter of Credit Disbursement
in respect a Letter of Credit, the Borrowers shall pay to the Administrative
Agent, on behalf of the Issuing Bank (and the Lenders that shall have made
payments to the Issuing Bank in respect of such Letter of Credit Disbursement,
as applicable), an amount equal to such Letter of Credit Disbursement before
(i) 12:00 Noon (New York City time), on the day on which the Issuing Bank shall
have notified the Borrowers that payment of such Letter of Credit Disbursement
will be made or (ii) if the Issuing Bank shall have notified the Borrowers of
such payment later than 9:45 a.m. (New York City time) on the Business Day on
which the payment of such Letter of Credit Disbursement will be made, 12:00
Noon (New York City time) on the next Business Day. The Administrative Agent
will promptly pay any such
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amounts received by it to the Issuing Bank (or to such Lenders, as their
interests may appear). If the Borrowers shall fail to pay any amount required
to be paid under clause (i) of the first sentence of this paragraph when due,
or if the Borrowers shall fail to pay an amount equal to the amount of any
Letter of Credit Disbursement on the same day that such Letter of Credit
Disbursement is made by reason of clause (ii) of the first sentence of this
paragraph, then such unpaid amount shall bear interest, for each day from and
including the due date or the date of payment of such draft, as the case may
be, to but excluding the date of payment, at a rate per annum equal to the sum
of the rate of interest then applicable to ABR Revolving Credit Loans for such
day plus 2%.
(h) The Borrowers' obligation to repay the Issuing Bank and the
Lenders for payments and disbursements made by the Issuing Bank under any
Letter of Credit and payments made by the Lenders to the Issuing Bank in
respect thereof shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Agreement, under any
and all circumstances and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrowers, any Subsidiary or other Affiliate thereof or
any other person may at any time have against the beneficiary under
any Letter of Credit, the Issuing Bank, the Administrative Agent or
any Lender (other than the defense of payment in accordance with the
terms of this Agreement) or any other person, whether in connection
with this Agreement, any other Loan Document or any other related or
unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any
respect;
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(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or other document which does not
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
the Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other circumstance or event whatsoever, whether or not
similar to any of the foregoing that might, but for the provisions of
this Section, constitute a legal or equitable discharge of the
Borrowers' obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrowers hereunder to reimburse Letter of Credit Disbursements will not be
excused by the gross negligence or wilful misconduct of the Issuing Bank.
However, the foregoing shall not be construed to excuse the Issuing Bank from
liability to the Borrowers to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrowers to the extent permitted by applicable law) suffered by the Borrowers
that are caused by the Issuing Bank's gross negligence or wilful misconduct in
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof; it is understood that the Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of
Credit (i) the Issuing Bank's exclusive reliance on the documents presented to
it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be forged
or invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall,
in each case, be deemed not to
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constitute wilful misconduct or gross negligence of the Issuing Bank.
(i) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit to ascertain that the same appear on their face to be in
substantial conformity with the terms and conditions of such Letter of Credit.
The Issuing Bank shall as promptly as possible give telephonic notification,
confirmed by telex or telecopy, to the Administrative Agent and the Borrowers
of such demand for payment and the determination by the Issuing Bank as to
whether such demand for payment was in accordance with the terms and conditions
of such Letter of Credit and whether the Issuing Bank has made or will make a
Letter of Credit Disbursement thereunder; provided that the failure to give
such notice shall not relieve the Borrowers of their obligation to reimburse
the Issuing Bank and the Lenders with respect to any such Letter of Credit
Disbursement. The Administrative Agent shall promptly give each Lender with a
Revolving Credit Commitment notice thereof.
(j) In the event that the Borrowers are required pursuant to the
terms of this Agreement or any other Loan Document to provide cash collateral
in respect of the Letter of Credit Exposure, the Borrowers shall deposit in an
account with the Administrative Agent, for the benefit of the Issuing Bank and
the Lenders with Revolving Credit Commitments, an amount in cash equal to the
Letter of Credit Exposure (or such lesser amount as shall be required hereunder
or thereunder). In addition, the Borrowers may elect to provide cash
collateral in order to increase the Borrowing Base by depositing in an account
with the Administrative Agent, for the benefit of the Issuing Bank and the
Lenders with Revolving Credit Commitments, an amount in cash equal to the
desired increase in the Borrowing Base. Any such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations in respect of the Revolving Credit Commitments (including Letters
of Credit). The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over any such account.
Other than any interest earned on the investment of such deposits in Permitted
Investments, which investments shall be selected by the Administrative Agent in
its sole but reasonable discretion (unless an Event of Default shall have
occurred and be continuing, in which case the Administrative Agent shall have
the option, in its sole discretion, to
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decline to invest such deposits), such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall automatically be applied by the
Administrative Agent to reimburse the Issuing Bank for Letter of Credit
Disbursements and, if the maturity of the Loans has been accelerated, may be
applied (at the Administrative Agent's discretion, subject to directions from
the Required Lenders) to satisfy the Obligations secured thereby. If the
Borrowers are required to provide an amount of cash collateral hereunder as a
result of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrowers within three Business Days after
all Events of Default have been cured or waived. If the Borrowers elect to
provide an amount of cash collateral hereunder in order to increase the
Borrowing Base, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrowers upon demand; provided that, after giving effect to
such return, (i) the Revolving Credit Exposure would not exceed the Borrowing
Base and (ii) no Event of Default shall have occurred and be continuing.
(k) In the event that an Alternate Currency Letter of Credit is
issued, the following provisions shall apply:
(i) Such Alternate Currency Letter of Credit shall constitute
a Letter of Credit for all purposes of this Agreement and the other
Loan Documents.
(ii) For purposes of determining the Letter of Credit
Exposure for any purpose other than expressly provided below, the
amount of such Letter of Credit and of any unreimbursed Letter of
Credit Disbursements in respect thereof shall be, as of any date of
determination, the Dollar Equivalent of the Alternate Currency amount
thereof at such date.
(iii) For purposes of calculating Commitment Fees, Letter of
Credit Participation Fees and fronting fees payable to the Issuing
Bank, the amount of such Letter of Credit and of any unreimbursed
Letter of Credit Disbursements in respect thereof shall be the Dollar
Equivalent of the Alternate Currency amount thereof as of the last
Business Day of each January, April, July and October (or the date on
which such Letter of Credit was issued or such Letter of Credit
Disbursement was
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made, if such date is more recent than such last Business Day) during
the period for which such fees are being calculated.
(iv) The obligation of the Borrowers to reimburse Letter of
Credit Disbursements under such Alternate Currency Letter of Credit,
and to pay fees in respect thereof and interest or other amounts
thereon, shall be payable only in U.S. dollars and shall not be
discharged by paying an amount in an Alternate Currency. The
obligation of the Borrowers to reimburse any such Letter of Credit
Disbursement shall be in an amount of U.S. dollars equal to the Dollar
Equivalent of the Alternate Currency amount thereof determined as of
the date on which such Letter of Credit Disbursement is made, and any
interest on the unreimbursed amount thereof shall accrue on the
unreimbursed portion of such Dollar Equivalent amount.
(v) The obligation of each Lender with a Revolving Credit
Commitment to pay its Applicable Percentage of any unreimbursed Letter
of Credit Disbursement under such Alternate Currency Letter of Credit
shall be payable only in U.S. dollars and shall be in an amount equal
to such Applicable Percentage of the Dollar Equivalent amount of such
unreimbursed Letter of Credit Disbursement determined as provided in
clause (iv) above. Under no circumstances shall the provisions hereof
permitting the issuance of Alternate Currency Letters of Credit be
construed, by implication or otherwise, as imposing any obligation
upon any Lender to make any Loan or other payment under any Loan
Document, or to accept any payment from the Borrowers in respect of
any Obligations, in any currency other than U.S. dollars, it being
understood that the parties intend all Obligations to be denominated
and payable only in U.S. dollars.
(vi) As of the date of issuance of any Alternate Currency
Letter of Credit, the Dollar Equivalent of the Letter of Credit
Exposure in respect of all Alternate Currency Letters of Credit shall
not exceed $5,000,000 after giving effect to such issuance.
(l) As of the Effective Date, each letter of credit issued under the
Original Credit Agreement that remains outstanding shall be deemed to
constitute a Letter
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of Credit issued hereunder for all purposes hereof and of the other Loan
Documents.
SECTION 2.19. Taxes. (a) Any and all payments by or an account of
any obligation of the Borrowers hereunder shall be made free and clear of and
without deduction for any Taxes or Other Taxes; provided that if the Borrowers
shall be required to deduct any Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, the Issuing Bank or Lender (as
the case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrowers shall make such deductions and
(iii) the Borrowers shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative Agent, the
Issuing Bank and each Lender, within 10 days after written demand therefor, for
the full amount of any Taxes or Other Taxes (including Taxes or Other Taxes
imposed or asserted on amounts payable under this Section) paid by the
Administrative Agent, the Issuing Bank or such Lender and any liability
(including penalties, interest and reasonable expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted by the relevant Governmental Authority. A certificate as
to the amount of such payment or liability delivered to the Borrowers by the
Issuing Bank, by a Lender, or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Taxes or Other Taxes
by the Borrowers to a Governmental Authority, the Borrowers shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued
by such Governmental Authority evidencing such payment.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of U.S. Federal withholding tax under the Code or any treaty to which
the United States of
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America is a party with respect to payments under this Agreement shall deliver
to the Borrowers (with a copy to the Administrative Agent), at the time or
times prescribed by applicable law, a properly completed and executed Internal
Revenue Service Form 4224, 1001 or other form prescribed by applicable law
(together with such other documentation or certifications as the Borrowers may
reasonably request) that will permit the Borrowers to make such payments
without withholding or at a reduced rate.
SECTION 2.20. Mitigation Obligations; Replacement of Lenders. (a)
If any Lender requests compensation under Section 2.13, or if the Borrowers are
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.19, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.13 or 2.19, as the case may be, in
the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The
Borrowers hereby agree to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if the
Borrowers are required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.19,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrowers may, at their sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.03), all its interests, rights and obligations under this Agreement
(other than any outstanding Rollover Term Loans held by it) to an assignee that
shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Borrowers shall have
received the prior written consent of the Administrative Agent and the Issuing
Bank, which consents shall not unreasonably be withheld, and (ii) such Lender
shall have received payment of an amount equal to the outstanding
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principal of its Loans (other than Rollover Term Loans) and participations in
Letter of Credit Disbursements, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder (including any requested compensation
under Section 2.13 or 2.19), from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrowers (in the
case of all other amounts). A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.
III. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Administrative Agent, the
Collateral Agent, the Issuing Bank and each of the Lenders that:
SECTION 3.01. Organization, Corporate Powers. Each of the Borrowers
and their respective Subsidiaries is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, has the
requisite corporate power to own its property and assets and to carry on its
business as now conducted and is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required, except
where the failure so to qualify would not have a Material Adverse Effect. Each
Borrower has the corporate power to execute, deliver and perform its
obligations under this Agreement, each other Loan Document to which it is or is
to be a party, and each other document contemplated hereby and thereby to which
it is or is to be a party, and to borrow hereunder. Except for NWS/Texas,
NWS/Delaware and the Kentucky Subsidiary, NWS does not have any Subsidiaries as
of the Effective Date.
SECTION 3.02. Authorization. The execution, delivery and performance
of this Agreement and each other Loan Document by each Loan Party that is or is
to be a party thereto and the borrowings hereunder (collectively, the
"Transactions") (a) have been duly authorized by all requisite corporate and,
if required, stockholder action on the part of the Loan Parties and (b) will
not (i) violate (A) any provision of law, statute, rule or regulation or of the
Certificate of Incorporation or the By-laws (or similar governing documents) of
any Loan Party, (B) any order of any court, or any rule, regulation or order of
any other agency
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of government binding upon any Loan Party, or (C) any provisions of any
indenture, agreement or other instrument to which any Loan Party is a party, or
by which any of their respective properties or assets are or may be bound, (ii)
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right to accelerate
or to require the prepayment, repurchase or redemption of any obligation under,
any such indenture, agreement or other instrument referred to in (b)(i)(C)
above or (iii) result in the creation or imposition of any Lien of any nature
whatsoever upon any property or assets of any Loan Party except pursuant to the
Security Documents.
SECTION 3.03. Governmental Approvals. No registration or filing with
or consent or approval of, or other action by, any Federal, state or other
governmental agency, authority or regulatory body is or will be required in
connection with the execution, delivery and performance of this Agreement, the
Notes and the other Loan Documents, the borrowings hereunder or any of the
Transactions other than (i) the filing of financing statements, security
agreements, mortgages and other instruments and documents referred to in
Section 3.10, (ii) such consents, approvals, filings and registrations as are
described on Schedule 3.03, all of which either have been obtained or made or
are not yet required to have been obtained or made and (iii) such consents,
approvals, filings and registrations as, if not obtained or made, do not have a
Material Adverse Effect.
SECTION 3.04. Enforceability. Each of this Agreement, the Notes, the
other Loan Documents and the other agreements contemplated hereby to which the
Loan Parties, or any of them, is a party, has been duly executed and delivered
by each applicable Loan Party and its obligations thereunder constitute legal,
valid and binding obligations of such Loan Party, enforceable in accordance
with their respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium and other similar laws affecting
the enforcement of creditors' rights generally and by general principles of
equity.
SECTION 3.05. Financial Statements. (a) NWS has heretofore
furnished to each of the Lenders consolidated balance sheets and statements of
income and cash flows of NWS (i) as of and for the fiscal year ended July 31,
1995, certified by Coopers & Lybrand L.L.P., independent public accountants for
NWS, and (ii) as of and for the fiscal
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quarters ended October 31, 1995 and January 31, 1996, certified by a Financial
Officer of NWS. Such balance sheets and statements of income and cash flows
present fairly in all material respects the consolidated financial condition
and results of operations of NWS as of the dates and for the periods indicated.
The financial statements referred to in this Section 3.05 have been prepared in
accordance with generally accepted accounting principles consistently applied.
(b) Neither Borrower, as of the date of any balance sheet referred to
in this Section 3.05, had any material monetary obligations, contingent
liabilities or liabilities for taxes, long-term leases or unusual forward or
long-term commitments which are not reflected in such balance sheets or in the
notes or any schedule thereto.
(c) There has been no materially adverse change in the business,
operations, assets, properties or condition (financial or otherwise) of NWS and
its Subsidiaries, taken as a whole, from that reflected in the financial
statements as of and for the fiscal year ended July 31, 1995, referred to in
paragraph (a) above, that has had a Material Adverse Effect.
(d) As of the Effective Date, NWS has disclosed to the Lenders in
writing any and all facts (other than events and circumstances affecting the
industry generally) which materially and adversely affect, or may (insofar as
NWS can now reasonably foresee) materially and adversely affect, the business,
operations, assets, properties or condition (financial or otherwise) of NWS and
its Subsidiaries, considered as a whole.
SECTION 3.06. Title to Properties; Receivables. (a) Each of NWS and
its Subsidiaries has good and marketable (or insurable without material
exceptions by a reputable title company) title to, or valid leasehold interests
in, all its properties and assets except for such properties as are no longer
used or useful in the conduct of its businesses or as have been disposed of in
the ordinary course of business and except for minor Permitted Encumbrances and
defects in title that do not have a Material Adverse Effect. All such material
assets and properties referred to in the preceding sentence are free and clear
of all Liens other than Permitted Encumbrances.
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(b) As of the Effective Date, since December 31, 1995, neither NWS
nor any Subsidiary thereof has taken any action other than in the ordinary
course of business to collect any of its Accounts or has changed in any
material respect its credit criteria or collection policies concerning its
Accounts. As of the date of the most recent Borrowing Base Certificate
delivered on or prior to the Effective Date and except as set forth in such
Borrowing Base Certificate, to the best knowledge of the Borrowers, each
Account of NWS or any Subsidiary thereof constitutes a legal, valid and binding
obligation of the Account Debtor enforceable against the Account Debtor in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and general equity principles, and
is not subject to any Lien or any other claim, defense or right of set-off
except pursuant to this Agreement and the Security Documents. Schedule 3.06
contains a complete and accurate aging from the applicable dates for payment
(on a current, 1-30-day past due, 30-60-day past due, 60-90-day past due and
over-90-day past due basis) of the Accounts of NWS and its Subsidiaries as of
December 31, 1995, and sets forth all applicable allowances as of such date for
doubtful or uncollectible accounts, computed in accordance with generally
accepted accounting principles applied on a basis consistent with NWS's balance
sheet dated July 31, 1995, referred to in Section 3.05(a).
SECTION 3.07. Litigation; Compliance with Laws; etc. (a) Other than
as disclosed in the financial statements delivered pursuant to Section 3.05,
there are not any actions, suits or proceedings at law or in equity or by or
before any governmental instrumentality or other agency or regulatory authority
now pending or, to the knowledge of either Borrower, threatened against or
affecting NWS or its Subsidiaries or the businesses, operations, assets,
properties, or rights of NWS or its Subsidiaries as to which there is a
reasonable likelihood of an adverse determination and which, if adversely
determined, would, individually or in the aggregate (after giving full effect
to such proceedings), have a Material Adverse Effect.
(b) Neither NWS nor any of its Subsidiaries is in violation of any
law, or in default under any material order, writ, injunction, award or decree
of any court, arbitrator, administrative agency or other Governmental Authority
binding upon it or its assets or any indenture,
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mortgage, contract, agreement or other undertaking or instrument to which it is
a party or by which any of its properties may be bound, except for violations
and defaults that do not have a Material Adverse Effect.
SECTION 3.08. Agreements. (a) Neither NWS nor any of its
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that would result in a Material Adverse Effect.
(b) Neither NWS nor any of its Subsidiaries is in default in any
manner that would result in a Material Adverse Effect.
SECTION 3.09. Federal Reserve Regulations. (a) Neither Borrower is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately,
for any purpose which entails a violation of, or which is inconsistent with,
the provisions of the Regulations of the Board (including, without limitation,
Regulation G, T, U or X).
SECTION 3.10. Security Documents. Except as set forth in Schedule
3.10, the security interests created in favor of the Collateral Agent for the
benefit of the Lenders under the Security Documents (including but not limited
to the security interest in the items and amounts deposited in the lockboxes
and accounts established pursuant to the Security Agreement or, if applicable,
the Lockbox Agreement) will at all times constitute first priority (subject
only to Permitted Encumbrances referred to in clauses (c) through (i) of
Section 6.02), perfected security interests in the Collateral as security for
the Obligations, and the Collateral will not be subject to any Liens of any
other person except as permitted thereunder or hereunder. No filings or
recordings are or will be required in order to perfect the security interests
in such Collateral created under the Security Documents except as specified in
Schedule 3.10, which filings and recordings have been made (or, in the case of
the Mortgage with respect to the Kentucky Plant, will be recorded promptly
following the Effective Date).
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SECTION 3.11. Taxes. Except where nonfiling would not have a
Material Adverse Effect, each of NWS and any Subsidiary thereof has filed or
caused to be filed all Federal, state and local tax returns which are required
to be filed by it, and has paid or caused to be paid all taxes shown to be due
and payable on such returns or on any assessments received by it, other than
any taxes or assessments the validity of which NWS or any Subsidiary thereof is
contesting in good faith by appropriate proceedings, and with respect to which
NWS or any Subsidiary thereof shall, to the extent required by generally
accepted accounting principles applied on a consistent basis, have set aside on
its books adequate reserves.
SECTION 3.12. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events,
could reasonably be expected to result in a Material Adverse Effect. The
accumulated benefit obligation under each Plan (based on those assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the last annual valuation date applicable thereto, exceed by more than
$35,000,000 the fair market value of the assets of such Plan, and the
accumulated benefit obligation of all underfunded Plans (based on those
assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the last annual valuation dates applicable thereto,
exceed by more than $35,000,000 the fair market value of the assets of all such
underfunded Plans.
SECTION 3.13. No Material Misstatements. As of the date prepared or
furnished, no information, report, financial statement, financial projection,
exhibit or schedule prepared or furnished by either Borrower to the
Administrative Agent or any Lender in connection with the Transactions, or
included in or delivered pursuant to any Loan Document on or after the
Effective Date, contained or contains any material misstatement of fact or
omitted or omits to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The financial projections delivered to the Lenders in connection
with the Transactions have been and those to be delivered to the Lenders after
the Effective Date pursuant to Section 5.05(f) will be prepared on the basis of
the assumptions stated therein. Such projections represent the Borrowers' good
faith estimate of the Borrowers' future performance after the Effective Date
and such assumptions are believed by the
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Borrowers to be fair and reasonable in light of current business conditions as
of the date made.
SECTION 3.14. Investment Company Act; Public Utility Holding Company
Act. Neither Borrower nor any of its Subsidiaries is an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940. Neither Borrower nor any of its Subsidiaries is a "holding company" as
defined in, or subject to regulation under, the Public Utility Holding Company
Act of 1935.
SECTION 3.15. Solvency. (a) The fair salable value of the assets of
NWS, immediately following the making of each Loan, and at the time of the
creation and perfection of each of the security interests referred to in
Section 3.10, exceeded and will exceed, the amount that will be required to be
paid on or in respect of the existing debts and other liabilities (including
contingent liabilities) of such corporation as they mature.
(b) The assets of NWS immediately following the making of each Loan,
and at the time of the creation and perfection of each of the security
interests referred to in Section 3.10, did not and will not, constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted.
(c) NWS, immediately following the making of each Loan, and at the
time of the creation and perfection of each of the security interests referred
to in Section 3.10, did not and will not intend to, and did not believe that it
will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by it and of amounts
to be payable on or in respect of its debt).
SECTION 3.16. Labor Matters. As of the Effective Date, there are no
strikes or other material labor disputes against either Borrower or any
Subsidiary pending or, to the Borrowers' knowledge, threatened. As of the
Effective Date, the hours worked and payments made to employees of the
Borrowers and the Subsidiaries have not been in violation of the Fair Labor
Standards Act or, to the Borrowers' knowledge, any other applicable law dealing
with such matters. As of the Effective Date, all payments due from Borrowers
and the Subsidiaries, or for which any claim may be made against a Borrower or
any Subsidiary, on account of wages and employee health and welfare insurance
and other
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benefits have been paid or accrued as a liability on the books of the
Borrowers. The consummation of the Transactions will not give rise to a right
of termination or right of renegotiation on the part of any union under any
collective bargaining agreement to which either Borrower or any Subsidiary is a
party or by which either Borrower or any Subsidiary is bound on the Effective
Date.
SECTION 3.17. Employment and Management Agreements. (a) As of the
Effective Date, there are no employment agreements covering the management of
the Borrowers or collective bargaining agreements or other labor agreements
covering any of the employees of the Borrowers and the Subsidiaries other than
as disclosed in the NWS 1995 Form 10-K.
(b) As of the Effective Date, there are no agreements for management
or consulting services to which either Borrower or any Subsidiary is a party or
by which it is bound except as disclosed in the NWS 1995 Form 10-K and except
short-term agreements entered into in the ordinary course of business.
SECTION 3.18. Environmental Matters. Except as set forth in the NWS
1995 Form 10-K and except with respect to any other matters that, individually
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect, neither any Borrower nor any Subsidiary (a) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (b) has
become subject to any Environmental Liability, (c) has received notice of any
claim with respect to any Environmental Liability or (d) knows of any basis for
any Environmental Liability.
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IV. CONDITIONS OF EFFECTIVENESS AND LENDING
The effectiveness of this Agreement and the obligations of the Lenders
to make Loans hereunder and of the Issuing Bank to issue Letters of Credit
hereunder shall be subject to the following conditions precedent:
SECTION 4.01. All Events. On the date of each borrowing of Revolving
Credit Loans hereunder and on the date of each issuance of a Letter of Credit
hereunder:
(a) The Administrative Agent shall have received a notice of
such borrowing or the Issuing Bank shall have received a notice
requesting the issuance of such Letter of Credit, as required by
Section 2.04 or 2.18, as applicable.
(b) The representations and warranties set forth in the Loan
Documents shall be true and correct with the same effect as though
made on and as of such date (except insofar as such representations
expressly relate to an earlier date), NWS and its Subsidiaries shall
be in compliance in all material respects with all the terms and
provisions contained herein and in the other Loan Documents required
to be observed or performed, and at the time of and immediately after
giving effect to such borrowing or issuance, no Event of Default or
event which with notice or lapse of time or both would constitute an
Event of Default shall have occurred and be continuing.
(c) The Lenders shall have received a Borrowing Base
Certificate in accordance with Section 5.05(d). After giving effect to
such new Revolving Credit Loan or the issuance of such Letter of
Credit, the Revolving Credit Exposure shall not exceed the lesser of
(i) the Total Revolving Credit Commitment and (ii) the then current
Borrowing Base.
Each borrowing hereunder and each issuance of a Letter of Credit hereunder
shall be deemed to be a representation and warranty by the Borrowers on the
date of such borrowing or issuance as to the matters specified in paragraph (b)
and the last sentence of paragraph (c) of this Section 4.01.
SECTION 4.02. Effectiveness. The effectiveness of this Agreement and
the obligations of the Lenders to make Loans hereunder and the obligation of
the Issuing Bank to
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issue Letters of Credit on and after the Effective Date are subject to the
following additional conditions precedent:
(a) The Administrative Agent shall have received the
favorable written opinion of Katten Muchin & Zavis, counsel for the
Loan Parties, in substantially the form set forth in Exhibit E hereto
and covering such additional matters relating to the Loan Documents
and the Transactions as the Required Lenders shall reasonably request.
Such opinion shall be dated the Effective Date and addressed to the
Administrative Agent, the Issuing Bank and the Lenders.
(b) The Administrative Agent shall have received (i) copies
of the certificates of incorporation, as amended, of each Loan Party
certified by the Secretary of State of its jurisdiction of
organization, and a certificate or other satisfactory evidence as to
the good standing of such Loan Party from such Secretary of State;
(ii) certificates of the Secretary or an Assistant Secretary of each
Loan Party, dated the Effective Date and certifying (A) that attached
thereto are true and complete copies of the By-laws of such Loan Party
as in effect immediately prior to and at all times since a date prior
to the date of the resolutions described in (B) below, (B) that
attached thereto are true and complete copies of resolutions duly
adopted by the Board of Directors of such Loan Party authorizing the
execution, delivery and performance of the Loan Documents to which it
is or is to be a party and, in the case of the Borrowers, the
borrowings hereunder and all aspects of the Transactions requiring
approval by such Loan Party, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C)
that the certificate of incorporation of such Loan Party has not been
amended since the date of the last amendment thereto shown on the good
standing certificate furnished pursuant to (i) above, and (D) as to
the incumbency and specimen signature of each officer of such Loan
Party executing any Loan Document or any other document delivered or
executed by such Loan Party in connection herewith or therewith; (iii)
a certificate of another officer of each Loan Party as to the
incumbency and specimen signature of the Secretary or such Assistant
Secretary of such Loan Party; and (iv) such other documents as the
Required Lenders or Cravath, Swaine & Moore,
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special counsel for the Administrative Agent, may reasonably request.
(c) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by a Financial
Officer of each Borrower, confirming compliance with the conditions
precedent set forth in paragraph (b) and the last sentence of
paragraph (c) of Section 4.01.
(d) The Administrative Agent shall have received, for the
account of each Lender with a Revolving Credit Commitment, a Revolving
Credit Note duly executed by the Borrowers payable to such Lender's
order and otherwise complying with the provisions of Section 2.05.
(e) The Guarantee Agreement shall have been duly executed by
the Guarantors, shall have been delivered to the Collateral Agent and
shall be in full force and effect.
(f) The Indemnity, Subrogation and Contribution Agreement
shall have been duly executed by the parties thereto, shall have been
delivered to the Collateral Agent and shall be in full force and
effect.
(g) The Security Agreement and the Pledge Agreement shall
have been duly executed by the parties thereto, shall have been
delivered to the Collateral Agent and shall be in full force and
effect and the Collateral Agent on behalf of the holders of the
Obligations shall continue to have a perfected, first priority
security interest in the Collateral as described therein.
(h) The Collateral Agent shall have received a duly completed
and executed Perfection Certificate (as defined in the Security
Agreement) and each document (including, without limitation, each
Uniform Commercial Code financing statement) required by law or
requested by the Collateral Agent to be filed, registered or recorded
in order to create and continue in favor of the Collateral Agent for
the benefit of the holders of the Obligations perfected security
interests in the Collateral under the Security Agreement shall have
been filed, registered or recorded in each jurisdiction in
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which the filing, registration or recordation thereof is so required
or requested.
(i) The Collateral Agent shall have received the results of a
search of the Uniform Commercial Code filings made with respect to
each Loan Party in the jurisdictions in which Uniform Commercial Code
filings were made under the Original Credit Agreement or are to be
made pursuant to paragraph (h) above, which shall not have disclosed
any Lien, except Permitted Encumbrances.
(j) The Collateral Agent shall have received (i) the Mortgage
relating to the Kentucky Plant, in a form reasonably satisfactory to
the Collateral Agent and duly executed by the Kentucky Subsidiary,
(ii) a policy of title insurance, together with such co-insurance and
reinsurance as may be requested by the Collateral Agent, insuring the
Mortgage relating to the Kentucky Plant as a valid first Lien on the
Kentucky Plant, free of all Liens or other exceptions to title other
than Permitted Encumbrances and (iii) such amendments or modifications
to the other Mortgages as the Collateral Agent shall request in order
to provide for the continued protection, perfection and priority of
the Liens granted thereunder securing the Obligations.
(k) The Collateral Agent shall have received written
confirmation, in form and substance reasonably satisfactory to it,
from the title insurer(s) that provided policies of title insurance
insuring the Mortgages as valid first Liens on the Mortgaged
Properties, confirming that such policies of title insurance remain in
full force and effect after giving effect to this Agreement and any
amendment or modification of the Mortgages on the Effective Date.
(l) The Administrative Agent shall have received (i) all fees
payable to the Administrative Agent and the Lenders required to be
paid on or prior to the Effective Date and (ii) payment in respect of
all expenses of the Administrative Agent or the Collateral Agent
required to be paid or reimbursed by the Borrowers hereunder or under
any other Loan Document (to the extent that the amount thereof shall
have been communicated to the Borrowers prior to the Effective Date).
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(m) The Borrowers shall have made arrangements satisfactory
to the Administrative Agent for (i) the termination of all lending
commitments under the Original Credit Agreement on the Effective Date
and (ii) the payment in full on the Effective Date of all
indebtedness, accrued interest thereon, accrued fees (including the
"Deferred Fees" referred to in the Original Credit Agreement) and
other obligations outstanding under the Original Credit Agreement on
the Effective Date (other than the Rollover Term Loans and accrued
interest thereon).
V. AFFIRMATIVE COVENANTS
Each Borrower jointly and severally covenants and agrees with each
Lender that, so long as this Agreement shall remain in effect or the principal
of or interest on any Note, any fee, or any other expense or amount payable
hereunder shall be unpaid, or any Letter of Credit remains outstanding, unless
the Required Lenders shall otherwise consent in writing, it will, and will
cause its Subsidiaries to:
SECTION 5.01. Corporate Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
SECTION 5.02. Businesses and Properties. At all times do or cause to
be done all things necessary to preserve, renew, extend and keep in full force
and effect the rights, licenses, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names then material to the conduct of its
businesses; maintain and operate such businesses in substantially the manner in
which they are presently conducted and operated by it (subject to changes in
the ordinary course of business and changes contemplated by Section 6.05(b));
comply in all material respects with all laws and regulations applicable to the
operation of such businesses (including any zoning, building, Environmental
Law, ordinance, code or approval or any building permits or any restrictions of
record or agreements affecting the Mortgaged Properties) and decrees and orders
of any Governmental Authority whether now in effect or hereafter enacted and
with all other applicable laws and regulations; take all action which may be
required to obtain, preserve, renew and extend all licenses, permits and other
authorizations which may be material to the
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operation of such businesses; and at all times maintain, preserve and protect
all property material to the conduct of such businesses, defend such property
from all claims asserted against it, operate such property in a good and
workmanlike manner and keep such property in good repair, working order and
condition and from time to time make, or cause to be made, all needful and
proper repairs, renewals, additions, improvements and replacements thereto
necessary in the reasonable opinion of the Borrowers' management in order that
the business carried on in connection therewith may be properly conducted at
all times.
SECTION 5.03. Insurance. (i) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers,
(ii) maintain such other insurance, to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies similarly situated and in the same or similar
businesses and as reasonably requested by the Lenders, (iii) maintain in full
force and effect public liability insurance against claims for personal injury
or death or property damage occurring upon, in, about or in connection with the
use of any properties owned, occupied or controlled by it and its Subsidiaries,
in such amount as it shall reasonably deem necessary and as reasonably
requested by the Lenders and (iv) maintain such other insurance as may be
required by any other Loan Document or as may be required by law.
SECTION 5.04. Obligations and Taxes. Pay and discharge all
indebtedness and obligations promptly (subject to any applicable grace period)
when due in accordance with their terms, and pay and discharge promptly when
due all royalties, taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits or in respect of its property
before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise that, if unpaid, might
give rise to Liens upon such properties or any part thereof; provided, however,
that the Borrowers and their Subsidiaries shall not be required to pay and
discharge or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and the Borrowers and their
Subsidiaries shall, to the extent required by generally accepted accounting
principles applied on a consistent basis, have set aside on its books adequate
reserves with respect thereto and such contest operates to
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suspend collection of the contested obligation, tax, assessment or charge and
enforcement of a Lien and, in the case of a Mortgaged Property, there is no
risk of forfeiture of such property.
SECTION 5.05. Financial Statements; Reports. Furnish to each Lender:
(a) within 120 days after the end of each fiscal year of NWS,
consolidated balance sheets of NWS and its Subsidiaries and related
consolidated statements of income and cash flows showing the financial
condition of NWS and its Subsidiaries as of the close of such fiscal
year and the results of their operations and cash flows during such
fiscal year, all audited by Coopers & Lybrand L.L.P. or other
independent certified public accountants of recognized national
standing and accompanied by an opinion of such accountants (which
shall not be qualified in any material respect) to the effect that
such financial statements fairly present the financial condition,
results of operations and cash flows of NWS and its Subsidiaries, in
accordance with generally accepted accounting principles consistently
applied (except for any changes with which such accountants concur in
writing);
(b) within 60 days after the end of each of the first three
fiscal quarters in each fiscal year of NWS, unaudited consolidated
balance sheets and related statements of income and cash flows showing
the financial condition of NWS and its Subsidiaries as of the close of
such quarter and the results of their operations and cash flows for
such quarter and the then elapsed portion of the fiscal year, all
certified by a Financial Officer of NWS as fairly presenting the
financial condition, results of operations and cash flows of NWS and
its Subsidiaries, in accordance with generally accepted accounting
principles applied consistently with those used in preparing the
statements delivered pursuant to (a) above and subject to normal
year-end audit adjustments;
(c) concurrently with any delivery under (a) or (b) above, a
certificate of a Financial Officer of NWS certifying (i) that no Event
of Default, or event or condition which with notice or lapse of time
or both would constitute an Event of Default, has occurred or, if such
an Event of Default or event or condition has
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occurred, specifying the nature and extent thereof and (ii) setting
forth computations in reasonable detail satisfactory to the
Administrative Agent demonstrating (x) compliance with the covenants
contained in Sections 6.14, 6.15, 6.17 and 6.18 and (y) the ratio of
Adjusted Indebtedness to Consolidated Cash Flow Available for Fixed
Charges for purposes of determining the Applicable Margin;
(d) within 12 Business Days after the end of each calendar
month, a Borrowing Base Certificate certified by a Financial Officer
of each Borrower (which certificate the Lenders shall have the right
to audit);
(e) promptly upon their becoming available, copies of all
regular and periodic reports, proxy statements and other materials
filed by NWS with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of or all the functions of
said Commission, or with any national securities exchange, or
distributed to the stockholders of NWS or its Subsidiaries;
(f) prior to the commencement of each fiscal year of NWS,
financial projections for such fiscal year certified by a Financial
Officer to represent a good faith estimate of the Borrowers'
performance for such fiscal year based upon assumptions set forth
therein believed to be fair and reasonable in light of current
business conditions; and copies of any other material financial
projections and budgets prepared by or on behalf of the Borrowers and
approved by the Board of Directors of NWS; and
(g) promptly, from time to time, such other information
regarding the operations, business affairs, assets and financial
condition of NWS and its Subsidiaries as any Lender may reasonably
request including, but not limited to, monthly accounts receivable
aging and inventory schedules.
SECTION 5.06. Litigation and Other Notices. After either Borrower
has knowledge thereof, give each Lender prompt written notice of the following:
(a) the issuance by any court or governmental agency or
authority of any injunction, order or other restraint prohibiting, or
having the effect of prohib-
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iting, the performance of this Agreement, any other Loan Document, or
the making of the Loans or the consummation of any Transaction or the
initiation of any litigation seeking any such injunction, order or
other restraint;
(b) the making of any claim or demand or the filing or
commencement of any other action, suit or proceeding against NWS or
its Subsidiaries, whether at law or in equity or by or before any
court or any Federal, state, municipal or other governmental agency or
authority as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would (after giving
full effect to such determination) have a Material Adverse Effect;
(c) any Event of Default (other than a payment default or
default for failure to provide the financial statements required by
Section 5.05) or event or condition which, upon notice or lapse of
time or both, would constitute an Event of Default (other than a
payment default or default for failure to provide the financial
statements required by Section 5.05), specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with
respect thereto; and
(d) any development in the business or affairs of NWS or its
Subsidiaries (other than events or circumstances affecting the
industry generally) which has resulted in or which is likely, in the
reasonable judgment of either Borrower, to have a Material Adverse
Effect.
SECTION 5.07. ERISA and Environmental Matters. (a) Comply in all
material respects with the applicable provisions of ERISA and the Code and (b)
furnish to the Administrative Agent as soon as possible after, and in any event
within 10 days after any Responsible Officer of either Borrower or any ERISA
Affiliate knows or has reason to know that, any ERISA Event has occurred that,
alone or together with any other ERISA Event could reasonably be expected to
result in liability of the Borrowers and their Subsidiaries in an aggregate
amount exceeding $4,000,000, a statement of a Financial Officer of the Borrower
setting forth details as to such ERISA Event and the action, if any, that the
Borrowers propose to take with respect thereto.
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(b) Comply, and cause all lessees and other persons occupying its
properties to comply, in all material respects with all Environmental Laws
applicable to its operations and properties.
(c) If either Borrower obtains knowledge of any Environmental
Liability (other than as disclosed in the NWS 1995 Form 10-K) that alone, or
together with any other Environmental Liabilities, exceeds $5,000,000, promptly
notify the Administrative Agent thereof and, at the request of the Required
Lenders through the Administrative Agent, provide to the Lenders within 45 days
after such request, at the expense of the Borrowers, an environmental site
assessment report for the properties that are the subject of such Environmental
Liabilities prepared by an environmental consulting firm acceptable to the
Administrative Agent and indicating the presence or absence of Hazardous
Materials and the estimated cost of any compliance or remedial action in
connection with such properties.
SECTION 5.08. Maintaining Records; Access to Properties and
Inspections. Maintain financial records in accordance with generally accepted
accounting principles and, upon reasonable notice, at all reasonable times,
permit any authorized representative designated by the Administrative Agent or
any Lender to visit and inspect the properties of either Borrower or its
Subsidiaries and permit any authorized representative designated by the
Administrative Agent or any Lender access for purposes of auditing any
Borrowing Base Certificate delivered pursuant to Section 5.05(d) and the
existence and condition of the Accounts, inventory and other assets of either
Borrower and its Subsidiaries, reviewing the compliance by the Borrowers and
their Subsidiaries with the terms and conditions of this Agreement and the
other Loan Documents and discussing the affairs, finances and condition of
either Borrower or its Subsidiaries with such officers and employees of and
accountants for either Borrower or its Subsidiaries as the Administrative Agent
or any Lender shall deem appropriate.
SECTION 5.09. Use of Proceeds. Use the proceeds of the Revolving
Credit Loans solely for the purposes set forth in the preamble to this
Agreement.
SECTION 5.10. Collateral for the Obligations. Promptly upon
acquisition thereof, pledge all assets and properties (including all Accounts,
inventory, real property and other assets and properties) of each Borrower and
its Subsidiaries constituting Collateral under the Security Documents in each
case as security for the Obligations, maintain in full force and effect the
lockbox arrangements contemplated by the Security Agreement and perform all
obligations of each Borrower and its
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Subsidiaries set forth in any Lockbox Agreement (including without limitation
issuing irrevocable directions to all Account Debtors to remit payments in
respect of Accounts to the lockboxes or accounts established with the
Collateral Agent or pursuant to any Lockbox Agreement).
SECTION 5.11. Further Assurances. Execute any and all further
documents, agreements and instruments, and take all further actions which may
be required under applicable law, or which the Administrative Agent, the
Collateral Agent or the Required Lenders may reasonably request, in order to
effectuate the transactions contemplated by the Loan Documents and in order to
grant, preserve, protect and perfect the validity and priority of the security
interests intended to be created by the Security Documents and Liens on any
properties and assets acquired pursuant to any Permitted Acquisition. In the
event that any Subsidiary is acquired or organized after the Effective Date,
the Borrowers will cause the capital stock of such Subsidiary to be pledged
pursuant to the Pledge Agreement and will cause such Subsidiary to become a
party to the Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement, the Pledge Agreement and the Security Agreement, to execute and
deliver such other mortgages, deeds of trust, assignments, agreements,
documents and instruments as the Collateral Agent or the Required Lenders
reasonably request to grant Liens on its properties and assets securing the
Obligations and to file and record such documents and instruments as shall be
necessary or appropriate to perfect and protect all Liens so granted.
SECTION 5.12. Fiscal Year; Accounting. Maintain its present method
of accounting and current accounting policies (other than insignificant changes
of method) except as permitted by generally accepted accounting principles and
maintain its present fiscal year.
SECTION 5.13. Business Notices. The Borrowers shall give to Lenders
prompt notice of (a) any strikes or other similar labor disputes, (b) any
employment agreement or amendment thereto entered into after the Effective Date
covering the management of either Borrower or any collective bargaining
agreement or amendment thereto and (c) any
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agreement or amendment thereto entered into for management or consulting
services with any Affiliate.
VI. NEGATIVE COVENANTS
Each Borrower jointly and severally covenants and agrees with each
Lender that, so long as this Agreement shall remain in effect or the principal
of or interest on any Note, any fee, or any other expense or amount payable
hereunder shall be unpaid, or any Letter of Credit remains outstanding, unless
the Required Lenders (or Lenders holding Loans, participations in Letters of
Credit and unused Commitments representing 90% of the sum of all outstanding
Loans, the Letter of Credit Exposure and unused Commitments, in the case of
Section 6.11) shall otherwise consent in writing, it will not, and will not
cause or permit any Subsidiary to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, including pursuant to Guaranties, except:
(a) Indebtedness represented by the Loan Documents;
(b) the Letters of Credit;
(c) purchase money indebtedness not in excess of $4,000,000
aggregate principal amount outstanding at any time incurred in
connection with the purchase of property other than inventory,
recourse for which is limited solely to the assets financed thereby;
(d) vehicle leases or equipment leases in the ordinary course
of business consistent with past practice;
(e) in the case of any Subsidiary other than NWS/ Texas,
Indebtedness owing to one or both of the Borrowers permitted under
Section 6.16 and, in the case of the Borrowers, Indebtedness owing
from NWS to NWS/Texas or from NWS/Texas to NWS;
(f) Indebtedness of the Borrowers in respect of the purchase
price of scrap steel not in excess of $5,000,000 aggregate unpaid
amount at any time, secured
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solely by Liens permitted under clause (i) of Section 6.02;
(g) unsecured Indebtedness (in addition to any unsecured
Indebtedness permitted under any other clause of this Section) not in
excess of $25,000,000 in the aggregate at any time;
(h) unsecured Indebtedness consisting of obligations in
respect of interest rate protection arrangements entered into to hedge
interest rate exposure on Indebtedness permitted hereunder;
(i) Indebtedness of NWS represented by the Senior Notes; and
(j) Indebtedness of NWS represented by the Impianti Notes and
the Tamini Notes;
provided, however, that (i) no Subsidiary (other than NWS/Texas) shall have any
Indebtedness that is not also permitted by Section 6.16 and (ii) without the
prior written consent of the Required Lenders, no Indebtedness shall be
incurred in reliance upon the provisions of the Senior Note Documents that
allow the incurrence of up to $15,000,000 of Indebtedness without regard to
compliance with the limitations thereunder generally applicable to the
incurrence of Indebtedness.
SECTION 6.02. Liens. Incur, create, assume or permit to
exist any Lien on any of its property or assets (including stock or
other securities of any person, including any Subsidiary), whether
owned at the date hereof or hereafter acquired, or assign or convey
any rights to or security interests in any future revenues, except
Liens created pursuant to the Security Documents and the following:
(a) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with workmen's compensation,
unemployment insurance, pensions and other social security benefits;
(b) Liens securing the performance of bids, tenders, leases,
contracts, statutory obligations, surety, customs and appeal bonds and
other obligations of like nature (but in any case not securing
Indebtedness),
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incurred as an incident to and in the ordinary course of business;
(c) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens, incurred in good faith
in the ordinary course of business and securing obligations which are
not yet due or which are being contested in good faith by appropriate
proceedings and as to which NWS and its Subsidiaries shall, to the
extent required by generally accepted accounting principles applied on
a consistent basis, have set aside on their books adequate reserves;
(d) Liens securing the payment of taxes, assessments and
governmental charges or levies, either (i) not delinquent or (ii)
being contested in good faith by appropriate legal or administrative
proceedings and as to which NWS and its Subsidiaries shall, to the
extent required by generally accepted accounting principles applied on
a consistent basis, have set aside on their books adequate reserves;
(e) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
real property or minor irregularities of title to real property (and
with respect to leasehold encumbrances or interests, mortgages,
obligations, liens and other encumbrances incurred, created, assumed
or permitted to exist and arising by, through or under or asserted by
a landlord or owner of the leased property, with or without consent of
the lessee), none of which materially impairs the use of any parcel of
real property material to the operation of the business of either
Borrower or the value of such property for the purpose of such
business;
(f) Liens on property other than Accounts existing at the time
such property is acquired by NWS or a Subsidiary thereof; provided, in
each case, that (i) such Liens were not created in contemplation of
the acquisition by either Borrower or its Subsidiary of such property
and (ii) such Lien does not attach to any other property or assets;
(g) Liens securing purchase money indebtedness permitted by
Section 6.01(c); provided that such Liens shall attach only to the
property financed thereby and
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the purchase price of all such property shall not exceed $6,000,000 in
the aggregate;
(h) Liens existing on the Effective Date and disclosed in the
financial statements referred to in Section 3.05 or the notes thereto
or set forth in Schedule 6.02 hereto;
(i) Liens securing Indebtedness permitted by Section 6.01(f);
provided that such Liens shall attach only to the property financed
thereby and not yet paid for; and
(j) extensions, renewals and replacements of Liens referred to
in paragraphs (a) through (g) of this Section 6.02; provided that any
such extension, renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed or replaced
and that the obligations secured by any such extension, renewal or
replacement Lien shall be in an amount not greater than the amount of
the obligations secured by the Lien extended, renewed or replaced.
SECTION 6.03. No Guarantees. Guarantee, endorse or otherwise
become contingently liable for any obligations or Indebtedness of any other
person, except (a) as otherwise expressly permitted by this Agreement and (b)
guarantees by either Borrower of obligations of each other or their
wholly-owned Subsidiaries; provided, however, that (i) clause (b) of the
foregoing shall not be construed to permit any guarantee of or other contingent
liability with respect to any Indebtedness not permitted under Section 6.01 and
(ii) neither Borrower shall guarantee any Indebtedness of any Subsidiary
acquired pursuant to a Permitted Acquisition if such Indebtedness was incurred
or created prior to such Permitted Acquisition, except that such Indebtedness
may be so guaranteed up to an aggregate principal amount of $5,000,000
outstanding at any time.
SECTION 6.04. Sale and Lease-Back Transactions. Enter into
any arrangement, directly or indirectly, with any person whereby either
Borrower or any Subsidiary thereof shall sell or transfer any property, real or
personal, and used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property which
either Borrower or such Subsidiary intends to use for substantially the same
purpose or purposes as the property being sold or
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transferred, without the prior written consent of the Required Lenders.
SECTION 6.05. Acquisitions, Consolidations, Mergers and Sales
of Assets. (a) Acquire all or substantially all the assets of, merge with or
into or consolidate or combine with, any other person or sell, lease, transfer
or assign to any person or otherwise dispose of (whether in one transaction or
a series of transactions) all or substantially all its assets (whether now
owned or hereafter acquired); provided, however, that the foregoing shall not
be construed to prohibit (i) the sale by NWS of all the outstanding capital
stock of NWS/Texas, or the sale, lease or other disposition by NWS/Texas of all
or substantially all its assets, in a transaction permitted under paragraph (b)
below or (ii) Permitted Acquisitions.
(b) Sell, lease, transfer or assign to any person or
otherwise dispose of any asset (including any stock of any other corporation)
without the prior written consent of the Required Lenders; provided, however,
that, without the prior written consent of the Required Lenders (i) the
Borrowers and their Subsidiaries may sell or otherwise dispose of assets in the
ordinary course of business, (ii) NWS may sell all the outstanding capital
stock of NWS/Texas in an arm's length transaction (in which case Section 9.17
shall apply), (iii) NWS/Texas may sell, lease or otherwise dispose of the
assets of the Houston Facility (including inventory and Accounts associated
therewith) in an arm's length transaction, (iv) the Borrowers may lease real
property to any supplier of scrap steel to the Borrowers for the purpose of
providing such supplier with a location at the site of the Borrowers'
facilities to store scrap steel to be purchased by the Borrowers, (v) the
Borrowers may sell, lease, assign, transfer or otherwise dispose of assets in
arm's length transactions, for cash consideration, with an aggregate fair
market value in any year not in excess of (A) $2,000,000 (in the case of an
arm's length transaction with a non-Affiliate, the fair market value shall be
deemed to be the cash consideration actually received), plus (B) an amount
equal to the excess of $2,000,000 over the fair market value of all assets
actually disposed of pursuant to this sentence in each prior fiscal year that
commenced after the Effective Date, less (C) an amount equal to the excess of
the fair market value of all assets actually disposed of pursuant to this
clause (v) in each prior fiscal year that commenced after the Effective Date
over $2,000,000 and (vi) NWS/Texas may transfer a parcel of vacant land
adjacent
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to the Houston Facility to, or for the benefit of, a local Governmental
Authority to build a fire station, and the Collateral Agent may release such
parcel from the Liens of the Security Documents in connection therewith,
subject only to the satisfaction of the Collateral Agent that such transfer and
release is effected in a manner that does not adversely affect the Lien of the
Security Documents with respect to the Houston Facility.
SECTION 6.06. Investments, Loans and Advances. Make any
loan, advance or capital contribution to, make or hold any investment in,
purchase or commit to purchase or hold any stock or other securities or
evidences of obligations of or interests in, any person or entity, other than:
(i) Accounts in the ordinary course of business;
(ii) Permitted Investments;
(iii) loans and advances in the ordinary course of its
business to employees of NWS or any Subsidiary of NWS in an aggregate
outstanding principal amount not in excess of $1,000,000 on a
consolidated basis;
(iv) loans and advances to suppliers in the ordinary course of
its business in aggregate outstanding principal amount at any time not
in excess of $3,000,000 on a consolidated basis;
(v) capital contributions by NWS to any of its wholly-owned
Subsidiaries other than NWS/Delaware, cash capital contributions to
NWS/Delaware by NWS not in excess of $1,000 on a consolidated basis,
and noncash capital contributions to NWS/Delaware by NWS to the extent
permitted under Section 6.16;
(vi) dated accounts receivable from customers in the ordinary
course of business; provided that the aggregate outstanding amount of
such receivables in excess of 90-day dating shall not exceed
$7,000,000 on a consolidated basis;
(vii) securities of an Account Debtor or any successor thereto
received as settlement or partial settlement of an Account in
connection with the reorganization of such Account Debtor;
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(viii) loans to NWS or a wholly-owned Subsidiary of NWS
permitted under subsection (e) of Section 6.01; and
(ix) Permitted Acquisitions.
SECTION 6.07. Transactions with Affiliates. Enter into any
transaction with any Affiliate except in the ordinary course of business and
upon fair and reasonable terms no less favorable than the Borrowers could, in
the good-faith judgment of the Board of Directors of NWS, obtain or could
become entitled to in an arm's-length transaction with a person or entity which
was not an Affiliate; provided that the foregoing shall not apply to
transactions between or among the Borrowers and their wholly-owned Subsidiaries
not involving any other Affiliate.
SECTION 6.08. Line of Business. Engage in any business other
than the business in which it is presently engaged or materially change the
nature of its business as presently conducted.
SECTION 6.09. Credit Standards. Modify in any material
respect the credit standards and procedures, the collection policies or the
loss recognition procedures with respect to the creation or collection of
Accounts from those in effect at NWS on July 31, 1995.
SECTION 6.10. Dividends. Declare or pay, directly or
indirectly, any dividends (other than in shares of its common stock) or make
any other distribution, whether in cash, property, securities or a combination
thereof, with respect to (whether by reduction of capital or otherwise) any
shares of capital stock, or directly or indirectly redeem, purchase, retire or
otherwise acquire for a consideration, any shares of any class of capital
stock, or set apart any sum for the aforesaid purposes, except that the
Subsidiaries of either Borrower may pay dividends to such Borrower.
Notwithstanding the foregoing, NWS may repurchase shares of its Common Stock
pursuant to Permitted Equity Purchases.
SECTION 6.11. Priority of Loan Payments. Directly or
indirectly make any optional payment, retirement, repurchase or redemption (a)
on account of the principal of any Indebtedness, other than the Loans and the
Indebtedness referred to in clauses (c), (e), (f) and (g) of Section 6.01, or
(b) on account of the par, stated or liquidation value of any preferred stock
or other capital
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stock incurred or issued by NWS whether by prepayment, redemption, refinancing,
exchange, defeasance or otherwise, except Permitted Equity Purchases.
SECTION 6.12. Amendment of Constituent Documents and Certain
Agreements. (a) Permit any amendment or modification adverse to the interests
of the Lenders to be made to the Certificate of Incorporation or By-laws of any
Loan Party.
(b) Permit any amendment or modification to be made to the
Senior Note Documents or the terms and conditions of the Senior Notes.
SECTION 6.13. Plan of Liquidation, etc. Cause or permit any
liquidation of, or the adoption of any plan of liquidation with respect to,
either Borrower or any of its Subsidiaries, or distribute any assets of either
Borrower or any of its Subsidiaries without the prior written consent of the
Required Lenders; provided that the assets of any Subsidiary may be distributed
to NWS.
SECTION 6.14. Current Ratio. On or after the Effective Date,
permit (other than as a direct result of the closure, sale or other disposition
of the Houston Facility or the sale or other disposition by NWS of all the
capital stock of NWS/Texas, and then only to the extent attributable to such
event) at any time the ratio of Current Assets to Current Liabilities to be
less than 1.3 to 1.
SECTION 6.15. Fixed Charge Coverage Ratio. Permit the ratio
of Consolidated Cash Flow Available for Fixed Charges to Consolidated Fixed
Charges, in each case as of the end of any fiscal quarter of NWS ending after
the Effective Date determined for the period of four consecutive fiscal
quarters ending on such date, to be less than 2.0 to 1.
SECTION 6.16. No Subsidiaries. Have any Subsidiaries other
than (a) NWS/Texas; (b) NWS/Delaware, provided that (i) the sole business
activity of NWS/Delaware shall be to perform services for the Borrowers, (ii)
NWS/Delaware shall not own any substantial assets, (iii) NWS/Delaware shall not
incur any Indebtedness other than (A) vehicle leases or equipment leases in the
ordinary course of business, (B) purchase money indebtedness not in excess of
$500,000 aggregate principal amount incurred in connection with the purchase of
property other than
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97
inventory, recourse for which is limited solely to the assets financed thereby,
(C) other Indebtedness owed to NWS or NWS/Texas in an aggregate principal
amount outstanding at any time not to exceed $500,000 and (D) Indebtedness
consisting of a Guarantee of the Obligations and (iv) the Borrowers and their
other Subsidiaries shall not transfer any substantial assets (including any
substantial amount of cash) to NWS/Delaware; (c) the Kentucky Subsidiary,
provided that (i) the sole business activity of the Kentucky Subsidiary shall
be the acquisition, construction, ownership and operation of the assets
comprising the Kentucky Plant and (ii) the Kentucky Subsidiary shall not incur
any Indebtedness other than Indebtedness owed to NWS or NWS/Texas and
Indebtedness consisting of a Guarantee of the Obligations; and (d) any
Subsidiary acquired pursuant to a Permitted Acquisition, provided that any such
Subsidiary shall not incur any Indebtedness other than Indebtedness owed to NWS
or NWS/Texas, Indebtedness consisting of a Guarantee of the Obligations and
Indebtedness that is both outstanding at the time such Subsidiary is acquired
by NWS and is permitted under clause (g) of Section 6.01; provided further that
all the outstanding shares of capital stock of each Subsidiary shall be owned
directly by NWS.
SECTION 6.17. Capital Expenditures. Make or permit Capital
Expenditures during any fiscal year in excess of the amount set forth below
opposite such fiscal year:
<TABLE>
<CAPTION>
Fiscal Period Amount
------------- ------
<S> <C>
Fiscal Year Ending July 31, 1996 $55,000,000
Fiscal Year Ending July 31, 1997 $50,000,000
Fiscal Year Ending July 31, 1998 $35,000,000
Fiscal Year Ending July 31, 1999 $35,000,000
Fiscal Year Ending July 31, 2000 or thereafter $37,000,000
</TABLE>
provided, however, that (i) the amount set forth above with respect to any
fiscal year shall be increased by the amount, if any, by which the Net Cash
Proceeds received during such fiscal year in respect of any Prepayment Event
described in clause (2) or (3) of the definition of such term exceeds the
aggregate principal amount of Rollover Term Loans prepaid with respect to such
Prepayment Event pursuant to Section 2.12(d) or deposited or applied pursuant
to Section 2.12(g) in lieu of such prepayment, (ii) the amount
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98
set forth above with respect to any fiscal year (other than the fiscal year
ending July 31, 1996) shall be increased by the amount, if any, by which the
amount of Excess Cash Flow for the immediately preceding fiscal year exceeds
the aggregate principal amount of Rollover Term Loans prepaid pursuant to
Section 2.12(e) by reference to such Excess Cash Flow, (iii) if Capital
Expenditures made in any fiscal year are less than the applicable maximum
amount set forth above opposite such fiscal year (plus the additional amount,
if any, of Capital Expenditures permitted in such fiscal period pursuant to
clauses (i) and (ii) above, but excluding the additional amount, if any, of
Capital Expenditures permitted in such fiscal period as a result of a carryover
from the preceding fiscal period by reason of this clause), then an amount
equal to the lesser of such shortfall or $15,000,000 shall be carried forward
and added to the amount of Capital Expenditures permitted in the next fiscal
year; provided further, however, that the amount of any consideration paid or
given in connection with a Permitted Acquisition in reliance upon sub- clause
(B) or (C) of clause (iii) of the definition of "Permitted Acquisition" shall
not thereafter be available for Capital Expenditures pursuant to the foregoing
proviso.
SECTION 6.18. Leverage Ratio. Permit the Leverage Ratio to
be greater than (a) 0.66 to 1, at any time on or prior to and including July
31, 1996, or (b) 0.61 to 1, at any time after July 31, 1996.
VII. EVENTS OF DEFAULT
In case of the happening of any of the following events
(herein called "Events of Default"):
(a) any representation or warranty made, or deemed pursuant to
Section 4.01, on or after the Effective Date in or in connection with
this Agreement or the Notes or the other Loan Documents or the
borrowings hereunder or any report, certificate, financial statement
or other instrument furnished in connection with this Agreement or the
execution and delivery of the Notes or the borrowings hereunder shall
prove to have been false or misleading in any material respect when
made, deemed made or furnished;
(b) default shall be made in the payment of any principal of,
or any installment of principal of, any
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99
Note, or any reimbursement obligation in respect of any Letter
of Credit Disbursement, when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made in the payment of (i) any interest
on any Note or any Commitment Fee or any fee payable pursuant to
Section 2.18(f) when and as the same shall become due and payable and
such default shall continue unremedied for a period of five days, or
(ii) any other fee or amount (other than an amount referred to in
paragraph (b) above) due under this Agreement or any other Loan
Document, when and as the same shall become due and payable, and such
default shall continue unremedied for a period of 10 days after demand
for payment thereof shall have been made;
(d) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.01,
5.06 or 5.09 or Article VI; provided, however, in the case of Section
5.06(d), such default shall continue unremedied for a period of 30
days;
(e) at any time that any Letter of Credit or any Revolving
Credit Loans are outstanding, default shall be made in delivering the
Borrowing Base Certificate as required by Section 5.05(d) and such
default shall continue unremedied for five days;
(f) default shall be made in the due observance or performance
of any other covenant, condition or agreement to be observed or
performed pursuant to this Agreement or any other Loan Document and
such default shall continue unremedied for 30 days after written
notice thereof from the Administrative Agent or a Lender;
(g) either Borrower or any Subsidiary thereof shall (i)
voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code or any other Federal
or state bankruptcy, insolvency, liquidation or similar law, (ii)
consent to the institution of, or fail to contravene in a timely and
appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a
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100
receiver, trustee, custodian, sequestrator or similar official for
either Borrower or any Subsidiary or for a substantial part of either
Borrower's or one of its Subsidiaries' property or assets, (iv) file
an answer admitting the material allegations of a petition filed
against it in any such proceeding, (v) make a general assignment for
the benefit of creditors, (vi) become unable, admit in writing its
inability or fail generally to pay its debts as they become due or
(vii) take corporate action for the purpose of effecting any of the
foregoing;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of either Borrower or any
of its Subsidiaries or of a substantial part of the property or assets
of either Borrower or a Subsidiary under Title 11 of the United States
Code or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar official for either
Borrower or a Subsidiary or for a substantial part ofthe property of
either Borrower or a Subsidiary thereof or (iii) thewinding- up or
liquidation of either Borrower or a Subsidiary; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall continue unstayed and
in effect for 60 days;
(i) default shall be made with respect to any Indebtedness of
either Borrower or any Subsidiary in an aggregate amount in excess of
$4,000,000 if the effect of any such default shall be to accelerate,
or to permit the holder or obligee of any Indebtedness (or any trustee
on behalf of such holder or obligee) to accelerate, the maturity of
such Indebtedness; or any payment of principal or interest, regardless
of amount, on any Indebtedness of either Borrower or a Subsidiary in
an aggregate amount in excess of $2,000,000 shall not be paid when
due, whether at maturity, by acceleration or otherwise (after giving
effect to any period of grace specified in the instrument evidencing
or governing such Indebtedness);
(j) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could
<PAGE> 106
101
reasonably be expected to result in liability of the Borrowers
and their ERISA Affiliates in an aggregate amount in excess of
$35,000,000 or requiring payment exceeding $6,000,000 in any year;
(k) a judgment for the payment of money (which alone, or when
aggregated with all such other unpaid judgments to the extent not
fully covered by insurance from financially sound and reputable
insurers against the Borrowers and their Subsidiaries at such time, is
for $5,000,000 or more) shall be rendered by a court or other tribunal
against either Borrower or any of its Subsidiaries and shall remain
unpaid or otherwise undischarged and unstayed for a period of 60 days,
or any action is taken by the judgment creditor in respect of such
judgment to levy thereon;
(l) this Agreement, any Note, the Guarantee Agreement, the
Indemnity, Subrogation and Contribution Agreement or any of the
Security Documents shall for any reason cease to be, or be asserted by
any Loan Party not to be, a legal, valid and binding obligation of any
Loan Party that is a party thereto, enforceable in accordance with its
terms, or any Lien purported to be created by any of the Security
Documents shall for any reason (other than failure of the Collateral
Agent to maintain possession of Collateral delivered to it under the
Pledge Agreement) cease to be, or be asserted by any Loan Party not to
be, a valid, first priority (subject only to Permitted Encumbrances
referred to in clauses (c) through (i) of Section 6.02) perfected
security interest in any Collateral; or
(m) a Change in Control shall occur;
then, and in any such event (other than an event with respect to a Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, but only at the request
of the Required Lenders (and upon such request the Administrative Agent shall),
by written or telegraphic notice to the Borrowers, take either or both of the
following actions at the same or different times (in addition to any other
remedies available under any Security Document or otherwise): (i) terminate
forthwith the Total Revolving Credit Commitments of the Lenders hereunder and
(ii) declare the Notes then outstanding to be forthwith due and payable
whereupon the principal of the Notes, together
<PAGE> 107
102
with accrued interest thereon and any unpaid accrued fees and all other
liabilities of the Borrowers accrued hereunder, shall become forthwith due and
payable both as to principal and interest, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything contained herein or in any Note to the contrary
notwithstanding; and in any event with respect to a Borrower described in
paragraph (g) or (h) above, the Total Revolving Credit Commitments of the
Lenders shall automatically terminate and the Notes shall automatically
become due and payable, both as to principal and interest, together with all
accrued and unpaid fees and all other liabilities of the Borrowers accrued
hereunder, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Borrowers, anything contained herein
or in any Note to the contrary notwithstanding. In addition to the foregoing
remedies the Collateral Agent may, upon and at any time during the continuance
of any Event of Default, exercise remedies under the Security Documents, or any
of them, may (and, at the request of any Lender holding a Rollover Term Loan
secured by funds held in a Fixed Rate Prepayment Account, shall) apply any funds
in the Fixed Rate Prepayment Account to payment of the related Rollover Term
Loans and at the request of the Required Lenders, shall demand that the
Borrowers provide, and thereupon the Borrowers shall provide, cash collateral in
respect of the outstanding Letters of Credit in accordance with Section 2.18(j).
VIII. THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as Administrative Agent and
Collateral Agent on behalf of the Lenders and the Issuing Bank (for purposes of
this Article VIII, the Administrative Agent and the Collateral Agent are
referred to collectively as the "Agents"). Each of the Lenders and the Issuing
Bank hereby irrevocably authorizes the Agents to take such actions on behalf of
such Lender or the Issuing Bank and to exercise such powers as are specifically
delegated to the Agents by the terms and provisions hereof and of the other
Loan Documents, together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby expressly authorized by
the Lenders and the Issuing Bank, without hereby limiting any implied
authority, (a) to receive on behalf of the Lenders and the Issuing Bank all
payments of
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103
principal of and interest on the Loans, all payments in respect of Letter of
Credit Disbursements and all other amounts due to the Lenders hereunder, and
promptly to distribute to each Lender or the Issuing Bank its proper share of
each payment so received; (b) to give notice on behalf of each of the Lenders
to the Borrowers of any Event of Default specified in this Agreement of which
the Administrative Agent has actual knowledge acquired in connection with its
agency hereunder; and (c) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by the Borrowers or any
other Loan Party pursuant to this Agreement or the other Loan Documents as
received by the Administrative Agent. Without limiting the generality of the
foregoing, the Agents are hereby expressly authorized to execute any and all
documents (including releases) with respect to the Collateral and the rights of
the Secured Parties (as defined in the Security Agreement) with respect
thereto, as contemplated by and in accordance with the provisions of this
Agreement and the Security Documents.
Neither the Agents, their affiliates nor any of their respective
directors, officers, employees or agents shall be liable as such for any action
taken or omitted by any of them except for its or his own gross negligence or
wilful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrowers or any other Loan Party of any of the
terms, conditions, covenants or agreements contained in any Loan Document. The
Agents shall not be responsible to the Lenders for the due execution,
genuineness, validity, enforceability or effectiveness of this Agreement or any
other Loan Documents, instruments or agreements. The Agents shall in all cases
be fully protected in acting, or refraining from acting, in accordance with
written instructions signed by the Required Lenders (or such lesser or greater
percentage of the Lenders as may be required in this Agreement under the
circumstances) and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on all
the Lenders. Each Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Agents, their affiliates nor any of
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104
their respective directors, officers, employees or agents shall have any
responsibility to the Borrowers or any other Loan Party on account of the
failure of or delay in performance or breach by any Lender or the Issuing Bank
of any of its obligations hereunder or to any Lender or the Issuing Bank on
account of the failure of or delay in performance or breach by any other Lender
or the Issuing Bank or the Borrowers or any other Loan Party of any of their
respective obligations hereunder or under any other Loan Document or in
connection herewith or therewith. Each of the Agents may execute any and all
duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement or any other Loan Document unless it shall be
requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent gives notice of its resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent which shall be a
bank with an office in New York, New York, having a combined capital and surplus
of at least $500,000,000 or an affiliate of any such bank. Upon the acceptance
of any appointment as Agent hereunder by a successor, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its duties
and obligations hereunder. After the Agent's resignation hereunder, the
provisions of this Article and Section 9.04 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may
<PAGE> 110
105
exercise the same as though it were not an Agent, and the Agents and their
affiliates may accept deposits from, lend money to and generally engage in any
kind of business with either Borrower or any Subsidiary or other Affiliate
thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the amount
of its pro rata share (based on its ratable share of the sum of the Rollover
Term Loans, Revolving Credit Exposure and unused Revolving Credit Commitments)
of any expenses incurred for the benefit of the Lenders by the Agents, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, to the extent required to be reimbursed by the
Borrowers and not so reimbursed and (b) to indemnify and hold harmless each
Agent and any of its directors, officers, employees or agents, on demand, in the
amount of such pro rata share, from and against any and all liabilities, taxes,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against it in its capacity as Agent or any of them
(acting on behalf of the Agent and not on behalf of the Agent in its capacity as
a Lender hereunder) in any way relating to or arising out of this Agreement or
any other Loan Document or any action taken or omitted by it or any of them
under this Agreement or any other Loan Document, to the extent the same is
required to be paid or reimbursed by the Borrowers or any other Loan Party and
is not so paid or reimbursed, provided that no Lender shall be liable to an
Agent or any such other indemnified person for any portion of such liabilities,
taxes, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to have resulted from the gross negligence or
wilful misconduct of such Agent or any of its directors, officers, employees or
agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Agents or any other Lender and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agents or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this
<PAGE> 111
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Agreement or any other Loan Document, any related agreement or any document
furnished hereunder or thereunder.
IX. MISCELLANEOUS
SECTION 9.01. Notices. Except as otherwise expressly provided herein,
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy as follows (or, in the case of telegraphic
communication, delivered by telex, graphic scanning or other telegraphic
communications equipment) addressed,
(a) if to the Borrowers, in care of NWS at 121 Wallace Street,
Sterling, Illinois 61081, Attention of Chief Financial Officer;
(b) if to the Administrative Agent, to Chemical Bank Agency
Services Corporation, Grand Central Tower, 140 East 45th Street, New
York, New York 10017, Attention of Janet Belden (Telecopy No. (212)
270-0002), with a copy to Chemical Bank, at 270 Park Avenue, New York,
New York 10017, Attention of James H. Ramage (Telecopy No.
212-270-2625); and
(c) if to any Lender, at its address set forth in Schedule
2.01 or 2.02, as applicable, or its Administrative Questionnaire.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given upon
receipt, in each case addressed to such party as provided in this Section 9.01
or in accordance with the latest unrevoked direction from such party.
SECTION 9.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by any Loan Party herein, in
any other Loan Document and in the certificates or other instruments prepared
or delivered in connection with this Agreement or any other Loan Document shall
be considered to have been relied upon by the Lenders and the Issuing Bank and
shall survive the making by the Lenders of the Loans and the issuance of
Letters of Credit by the Issuing Bank, regardless of any investigation made by
the Lenders or the Issuing Bank or on their behalf and shall
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107
continue in full force and effect as long as the principal of or any accrued
interest on any Note, any Commitment Fee or any other fee or amount payable
under the Notes or this Agreement or any other Loan Document is outstanding and
unpaid and so long as the Revolving Credit Commitments have not been
terminated.
SECTION 9.03. Successors and Assigns; Participations. (a)
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Borrowers or
the Lenders that are contained in this Agreement shall bind and inure to the
benefit of their respective successors and assigns. Neither Borrower may
assign or transfer any of its rights or obligations hereunder without the prior
written consent of all the Lenders.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of its Rollover Term Loan or
all or a portion of any of its Revolving Credit Commitment and the same portion
of the related Revolving Credit Loans at the time owing to it and the related
participations in Letters of Credit and the Note or Notes held by it);
provided, however, that (i) except in the case of an assignment to a Lender or
an affiliate of a Lender or for an assignment by a Lender to a Federal Reserve
Bank, the Administrative Agent and NWS must give their prior written consent by
countersigning the Assignment and Acceptance (which consents shall not be
unreasonably withheld), (ii) each such assignment of a Revolving Credit
Commitment or any Revolving Credit Exposure shall be of a constant, and not a
varying, percentage of all the assigning Lender's rights and obligations under
this Agreement in respect of its Revolving Credit Commitment, Revolving Credit
Loans and participations in Letters of Credit to be assigned, (iii) in the case
of a partial assignment, each such assignment shall be in an amount which is
not less than $5,000,000 (unless NWS shall consent to a partial assignment of a
lesser amount) and is an integral multiple of $1,000,000 (provided, however,
that any assignment may in any event be equal to the entire amount of the
Rollover Term Loan or the entire amount of the Revolving Credit Loans,
participations in Letters of Credit and Revolving Credit Commitment of the
assigning Lender), (iv) the parties to each such assignment
<PAGE> 113
108
shall execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
subject to such assignment and a processing and recordation fee of $3,500 and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
Business Days after the execution thereof, (x) the assignee thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and (y) the assigning
Lender thereunder shall, to the extent provided in such assignment, be released
from its obligations under this Agreement (and, in the case of an Assignment
and Acceptance covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto. Assignments in accordance with this paragraph are not required
to be made pro rata as between the assigning Lender's Rollover Term Loan, on
the one hand, and Revolving Credit Commitment and Revolving Credit Exposure, on
the other.
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than the
representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any adverse claim, such Lender
assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto;
(ii) such Lender assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Loan Parties or
the performance or observance by the Loan Parties of any of their obligations
under this Agreement or any other instrument or document furnished pursuant
hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the most recent
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financial statements referred to in Section 3.05 or delivered under Section
5.05 and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into such Assignment and
Acceptance; (v) such assignee will, independently and without reliance upon the
Administrative Agent, the Collateral Agent, such Lender assignor or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (vi) such assignee appoints and authorizes the
Administrative Agent and the Collateral Agent, respectively, to take such
action as agent on its behalf and to exercise such powers under this Agreement
as are delegated to the Administrative Agent or the Collateral Agent by the
terms hereof or any other Loan Document, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its offices in
The City of New York a copy of each Assignment and Acceptance delivered to it
and a register for the recordation of the names and addresses of the Lenders and
the Revolving Credit Commitments of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrowers, the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders may
treat each person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrowers, the Collateral Agent, the Issuing Bank or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee together with any Note subject to such
assignment, and the fee referred to in Section 9.03(b), the Administrative Agent
shall, if such Assignment and Acceptance has been completed and is in the form
of Exhibit B hereto and, if required, the Administrative Agent and NWS have
consented to such assignment as contemplated by paragraph (b) above, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register, and
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(iii) give prompt notice thereof to the Borrowers. Promptly after receipt of
notice, the Borrowers, at their own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes, a new Note
or Notes of the same type to the order of such assignee in an amount equal to
the applicable Revolving Credit Commitment or Rollover Term Loans assigned to
it pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained an interest hereunder, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Revolving Credit Commitment or
Rollover Term Loans retained by it hereunder. Such new Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit A-1 or
Exhibit A-2 hereto, as appropriate. Canceled Notes shall be returned to the
Borrowers.
(f) Each Lender may without the consent of the Borrowers sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Rollover Term Loan or all or a portion of its Revolving
Credit Commitment and the Revolving Credit Loans owing to it and the
participations in Letters of Credit and the Note or Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the participating banks or
other entities shall be entitled to the cost protection provisions contained in
Sections 2.13 through 2.15 and 2.19, (iv) the Borrowers, the Administrative
Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (v) the selling Lender shall retain the sole right to approve
amendments, modifications and waivers under the Loan Documents (other than
amendments, modifications or waivers decreasing any fees payable hereunder or
the amount of principal of or the rate at which interest is payable on the
Loans, extending any scheduled principal payment date or date fixed for the
payment of interest on the Loans, increasing or extending the Commitments or
releasing all or substantially all the Collateral).
<PAGE> 116
111
(g) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 9.03, disclose
to the assignee or participant or proposed assignee or participant any
information relating to the Borrowers furnished to such Lender by or on behalf
of either Borrower; provided that prior to any such disclosure, each such
assignee or participant or proposed assignee or participant shall agree (subject
to customary exceptions) to preserve in the manner set forth in Section 9.13 the
confidentiality of any confidential information relating to the Borrowers
received from such Lender.
SECTION 9.04. Expenses; Indemnity. (a) The Borrowers jointly and
severally agree to pay all out-of-pocket expenses reasonably incurred by the
Administrative Agent, the Collateral Agent and the Issuing Bank in connection
with negotiation and the preparation of this Agreement and the other Loan
Documents or with any amendments, modifications or waivers of, or any consents
with respect to, any of the provisions hereof or thereof (whether or not the
transactions hereby contemplated shall be consummated) or reasonably incurred by
the Administrative Agent, the Collateral Agent or the Issuing Bank in connection
with the administration of this Agreement or any other Loan Document (including,
without limitation, in connection with any audit of the Borrowing Base) or
reasonably incurred by the Administrative Agent, the Collateral Agent, the
Issuing Bank or any Lender in connection with the enforcement or protection of
their rights in connection with this Agreement or any other Loan Document or
with the Loans made or the Notes or Letters of Credit issued hereunder
(excluding, however, those costs and expenses arising from any proceeding solely
between one or more Lenders to which neither Borrower is a party) including, but
not limited to, the reasonable fees and disbursements of Cravath, Swaine &
Moore, special counsel for the Administrative Agent, and, in connection with
such enforcement or protection, the reasonable fees and disbursements of other
counsel for any Lender, including allocated staff counsel costs. The Borrowers
further jointly and severally agree to indemnify the Lenders from and hold them
harmless against any documentary taxes, assessments or charges made by any
Governmental Authority by reason of the execution and delivery of this Agreement
or any of the Notes or any of the other Loan Documents. The provisions of this
Section 9.04 shall be in addition to and not in limitation of or substitution
for NWS's obligations
<PAGE> 117
112
with respect to fees and expenses contained in the separate agreements between
NWS and Chemical Bank.
(b) The Borrowers jointly and severally agree to indemnify each of the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders and
their directors, officers, employees and agents against, and to hold the
Administrative Agent, the Collateral Agent, the Issuing Bank and the Lenders and
such persons harmless from, any and all losses, claims, damages, liabilities and
related expenses, including reasonable counsel fees and expenses, incurred by or
asserted against any of the Administrative Agent, the Collateral Agent, the
Issuing Bank, the Lenders or any such persons arising out of, in any way
connected with, or as a result of (i) this Agreement, the other Loan Documents
and the other documents contemplated hereby, the performance by the parties
hereto and thereto of their respective obligations hereunder and thereunder
(including but not limited to the making of the Commitments) and consummation of
the transactions contemplated hereby and thereby, (ii) any Environmental
Liabilty or any related or unrelated liability attributable to Hazardous
Materials generated, used, handled, transported, stored, treated or disposed of
by or on behalf of any Loan Party or any previous owner of its property or any
Hazardous Materials released from, on or about any property of any Loan Party,
or (iii) any claim, litigation, investigation or proceedings relating to any of
the foregoing, whether or not any such person is a party thereto; provided that
such indemnity shall not, as to any Lender, apply to any such losses, claims,
damages, liabilities or related expenses arising from (A) any unexcused breach
by such Lender of any of its obligations under this Agreement or (B) the gross
negligence or willful misconduct of such Lender.
(c) The provisions of this Section 9.04, Sections 2.13 and 2.19 and
Article VIII shall remain operative and in full force and effect regardless of
the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
invalidity or unenforceability of any term or provision of this Agreement, any
Note or other Loan Document, or any investigation made by or on behalf of any
Lender. All amounts due under this Section 9.04 shall be payable on written
demand therefor.
SECTION 9.05. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender
<PAGE> 118
113
is hereby authorized at any time and from time to time, to setoff 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 Lender to or for
the credit or the account of either Borrower against any of and all the
obligations of the Borrowers now or hereafter existing under this Agreement and
the Notes held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement or such Notes and although such
obligations may be unmatured. Each Lender agrees promptly to notify the
Borrowers after any such setoff and application made by such Lender, but the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which such Lender may have under applicable law and shall be subject to
Section 2.17.
SECTION 9.06. Applicable Law; Submission to Jurisdiction; Service of
Process. (a) THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED IN NEW YORK.
(b) Each Borrower hereby irrevocably submits itself to the jurisdiction
of the Supreme Court of the State of New York, New York County, and to the
jurisdiction of the United States District Court for the Southern District of
New York, for the purpose of any suit, action or other proceeding arising out of
or relating to this Agreement, the Notes or any other Loan Document or any of
the transactions contemplated hereby or thereby, and hereby waives, and agrees
not to assert, by way of motion, as a defense, or otherwise, in any suit, action
or proceeding, any claim that it is not personally subject to the jurisdiction
of the above-named courts for any reason whatsoever, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper or that this Agreement, the Notes or any other
Loan Document or, to the full extent permitted by applicable law, any subject
matter of any thereof may not be enforced in or by such courts.
Each Borrower hereby agrees that process against it may be served by
delivery of service of process in any of the aforesaid actions, suits or
proceedings to C T Corporation System, 1633 Broadway, New York, New York 10019
(here-
<PAGE> 119
114
inafter called the "Process Agent") and each Borrower hereby designates and
appoints the Process Agent as its attorney-in-fact to receive service of
process in any action or proceeding with respect to any matter as to which it
submits to jurisdiction as set forth above, it being agreed that service to the
Process Agent or upon such attorney-in-fact shall constitute valid service upon
such party or its successors or assigns, subject to the sole condition that a
duplicate copy shall have been sent by registered or certified mail to such
Borrower at its address set forth in Section 9.01 or as otherwise specified
pursuant thereto. Each Borrower shall promptly notify the Administrative Agent
of any change in the address of its Process Agent and may, by prior written
notice to the Administrative Agent, change the identity of its Process Agent.
If the Process Agent of either Borrower shall at any time cease to be duly
qualified to do business in the State of New York or cease to exist or maintain
an office in the City of New York, such Borrower shall forthwith designate a
successor Process Agent which maintains an office in the City of New York and
shall give prompt notice of such designation to the Administrative Agent.
SECTION 9.07. Payments on Business Days. Should the principal of or
interest on the Notes or any Commitment Fee or any other fee or amount payable
hereunder become due and payable on other than a Business Day, payment in
respect thereof may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in computing interest, if any,
in connection with such payment.
SECTION 9.08. Waivers; Amendments. (a) No failure or delay of the
Administrative Agent, the Collateral Agent, the Issuing Bank or any Lender in
exercising any power or right hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Collateral Agent, the Issuing Bank or the Lenders
hereunder and under the other Loan Documents are cumulative and not exclusive of
any rights or remedies which they would otherwise have. No waiver of any
provision of this Agreement or the Notes or any other Loan Document or consent
to any departure by the Borrowers therefrom shall in any event be effective
unless the same shall be authorized as
<PAGE> 120
115
provided in paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
No notice or demand on either Borrower in any case shall entitle either
Borrower to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any
amendment, modification, waiver or consent authorized as provided herein,
whether or not such Note shall have been marked to indicate such amendment,
modification, waiver or consent.
(b) Neither this Agreement, the other Loan Documents nor any
provision hereof or thereof may be waived, amended or modified except pursuant
to an agreement or agreements in writing entered into by the Borrower or
Borrowers (or other Loan Parties) party thereto with the written consent of the
Required Lenders; provided, however, that no such agreement shall (i) change
the principal amount of, or extend or advance the maturity of or any date for
the payment of any principal of or interest on, any Loan, or waive or excuse
any such payment or any part thereof, or change the rate of interest on any
Loan, without the written consent of each Lender affected thereby, (ii) change
the Revolving Credit Commitment of any Lender or reduce the Commitment Fees or
Letter of Credit Participation Fees without the written consent of each Lender
affected thereby, (iii) waive, amend or modify the provisions of Section 6.11
or 6.13, without the written consent of Lenders holding in excess of 50% of the
Rollover Term Loans (in addition to the written consent otherwise required of
the Lenders in respect thereof), or (iv) waive, amend or modify the provisions
of this Section 9.08, Section 2.10(d), Sections 2.11 through 2.17 (other than
an amendment or modification to or waiver of Section 2.13 that does not affect
Section 2.12(g) or (h) or otherwise affect the designated allocation among the
Lenders of any prepayments thereunder), Section 2.19, Section 4.02, Section
9.03 or the definition of the "Required Lenders", without the written consent
of each Lender; and provided further that no such agreement shall amend, modify
or otherwise affect the rights or duties of the Administrative Agent, the
Collateral Agent or the Issuing Bank hereunder or under any other Loan Document
without the written consent of the Administrative Agent, the Collateral Agent
or the Issuing Bank, as the case may be. Each Lender and holder of any Note
shall be bound by any modification or amendment authorized by this Section 9.08
regardless of whether its Notes shall be marked to make reference thereto, and
any consent by any Lender or holder
<PAGE> 121
116
of a Note pursuant to this Section 9.08 shall bind any person subsequently
acquiring a Note from it, whether or not such Note shall be so marked.
(c) No Collateral in which the Collateral Agent has been granted a
security interest for the benefit of the Lenders pursuant to any Security
Document may be released other than in accordance with the terms of such
Security Document or in connection with a sale or other disposition of such
Collateral permitted under Section 6.05(b) nor may the definition of "Borrowing
Base" be amended or any Guarantor be released from its obligations under the
Guarantee Agreement, without the prior written consent of the Lenders holding
Loans, participations in Letters of Credit and unused Commitments representing
more than 90% of the sum of the aggregate principal amount of Loans outstanding,
the Letter of Credit Exposure and unused Commitments.
SECTION 9.09. Limitation of Interest. Notwithstanding anything herein
to the contrary, if at any time the applicable interest rate, together with all
fees and charges which are treated as interest under applicable laws
(collectively the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any one of the Lenders in connection with the Loans made by
it hereunder, exceeds the maximum lawful rate (the "Maximum Rate") which may be
contracted for, charged, taken, received or reserved by such Lender in
accordance with applicable laws (including Federal laws of the United States of
America), the rate of interest payable hereunder and under the Notes delivered
to such Lender, together with all Charges payable to such Lender, shall be
limited to the Maximum Rate.
SECTION 9.10. Severability. In the event any one or more of the
provisions contained in this Agreement or in the Notes or any other Loan
Document should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good- faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
<PAGE> 122
117
SECTION 9.11. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract.
SECTION 9.12. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only and are not to affect
the construction of, or to be taken into consideration in interpreting, this
Agreement.
SECTION 9.13. Confidentiality. Each Lender agrees (which
agreement shall survive the termination of this Agreement) that financial
information, information from NWS's books and records, information concerning
NWS's trade secrets and patents and any other information received from the
Borrowers hereunder which at the time of receipt is clearly labeled as
confidential and subject to this Section 9.13 shall be treated as confidential
by such Lender, and each Lender agrees to use its best efforts to ensure that
such information is not published, disclosed or otherwise divulged to anyone
other than employees or officers of such Lender and its counsel and agents;
provided it is understood that the foregoing shall not apply to:
(i) disclosure made with the prior written authorization of a
Borrower;
(ii) disclosure of information (other than that received from
the Borrowers prior to or under this Agreement) already known by, or in
the possession of such Lender without restrictions on the disclosure
thereof at the time such information is supplied to such Lender by the
Borrowers hereunder;
(iii) disclosure of information which is required by
applicable law or to a governmental agency having supervisory
authority over any party hereto or to the National Association of
Insurance Commissioners;
(iv) disclosure of information in connection with any suit,
action or proceeding in connection with the enforcement of rights
hereunder or under any Note or Loan Document or in connection with the
transactions contemplated hereby or thereby;
(v) disclosure to any bank (or other entity) which may acquire
a participation or other interest in the
<PAGE> 123
118
Loans or rights of any Lender hereunder or under the Notes or
Loan Documents; provided that such bank (or other entity) agrees to
maintain any such information to be received in accordance with the
provisions of this Section 9.13;
(vi) disclosure by any party hereto to any other party hereto
or their counsel or agents;
(vii) disclosure by any party hereto to any entity, or to any
subsidiary of such an entity, which owns, directly or indirectly, more
than 50% of the voting stock of such party, or to any subsidiary of
such an entity; or
(viii) disclosure of information that prior to such disclosure
has become public knowledge through no violation of this Agreement.
SECTION 9.14. Entire Agreement; Waiver of Jury Trial, etc.
(a) Except as provided in Sections 2.08(b) and (c)(ii) and 9.04(a), this
Agreement and the other Loan Documents constitute the entire contract between
the parties relative to the subject matter hereof. Any previous agreement
among the parties with respect to the transactions contemplated hereby is
superseded by this Agreement and the other Loan Documents. Except as expressly
provided herein or in the other Loan Documents, nothing in this Agreement or in
the other Loan Documents, expressed or implied, is intended to confer upon any
party, other than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby
waives any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this
Agreement, any of the other Loan Documents or the transactions contemplated
hereby.
(c) Except as prohibited by law, each party hereto hereby
waives any right it may have to claim or recover in any litigation referred to
in paragraph (b) of this Section 9.14 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
<PAGE> 124
119
(d) Each party hereto (i) certifies that no representative,
agent or attorney of any Lender has represented, expressly or otherwise, that
such Lender would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that it has been induced to enter into
this Agreement or the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications herein.
SECTION 9.15. Effectiveness; Original Credit Agreement. This
Agreement shall not be effective until (a) copies hereof which, when taken
together, bear the signatures of each party hereto shall be received by the
Administrative Agent and (b) the conditions to such effectiveness set forth in
Section 4.02 shall have been satisfied. Until this Agreement becomes
effective, the Original Credit Agreement shall remain in full force and effect
and shall not be affected hereby. After this Agreement becomes effective, all
obligations of the Borrowers under the Original Credit Agreement shall become
obligations of the Borrowers hereunder, secured by the Security Documents, any
Original Lender that is not a Lender shall be released from all its obligations
under the Original Credit Agreement, and the provisions of the Original Credit
Agreement shall be superseded by the provisions hereof.
SECTION 9.16. Joint Obligations. All obligations of the
Borrowers under this Agreement and the other Loan Documents shall be joint and
several, including, without limitation, obligations in respect of the payment
of principal of and interest on the Notes, Commitment Fees, Letter of Credit
Participation Fees and all other amounts payable hereunder and under the other
Loan Documents. The obligations of each Borrower under any Loan
<PAGE> 125
120
Document to which it is a party but the other Borrower is not a party are
hereby guaranteed by such other Borrower.
SECTION 9.17. Release of NWS/Texas. In the event of a sale
by NWS of all the outstanding shares of capital stock of NWS/Texas in a
transaction permitted hereunder, then upon such sale, notwithstanding any
contrary provision herein or in any other Loan Document (a) NWS/Texas shall
cease to be a Borrower hereunder for all purposes hereof and shall not be
entitled to borrow hereunder or to obtain Letters of Credit hereunder, (b)
NWS/Texas shall be released from any liability in respect of the Obligations,
(c) NWS shall be the sole Borrower hereunder and shall remain liable for all
the Obligations, (d) all outstanding Loans shall be deemed Loans made to NWS
and all outstanding Letters of Credit shall be for its account and (e) NWS
shall enter into such agreements and instruments as the Administrative Agent or
the Required Lenders shall reasonably request to give effect to the foregoing.
<PAGE> 126
121
IN WITNESS WHEREOF, the Borrowers, the Lenders, the
Administrative Agent, the Collateral Agent and the Issuing Bank have caused
this Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois corporation,
by Robert N. Gurnitz
----------------------------------
Name: Robert N. Gurnitz
Title: Chief Executive
Officer
NORTHWESTERN STEEL AND WIRE
COMPANY, a Texas corporation,
by Robert N. Gurnitz
----------------------------------
Name: Robert N. Gurnitz
Title: Chief Executive
Officer
CHEMICAL BANK,
in its capacity as a Lender
and as Administrative Agent,
Collateral Agent and IssuingBank,
by James Ramage
---------------------------------
Name: James Ramage
Title: Vice President
HSBC BUSINESS LOANS, INC.,
by Michael J. O'Connell
----------------------------------
Name: Michael J. O'Connell
Title: Ass't Vice President
<PAGE> 127
122
WELLS FARGO BANK, N.A.,
by Christine C. Rotter
----------------------------------
Name: Christine C. Rotter
Title: Vice President
MITSUI NEVITT CAPITAL CORP.,
by Peter K. Nevitt
---------------------------------
Name: Peter K. Nevitt
Title: President
THE TRAVELERS INSURANCE COMPANY,
by John W. Petchler
---------------------------------
Name: John W. Petchler
Title: Second Vice President
THE TRAVELERS INDEMNITY COMPANY,
by John W. Petchler
----------------------------------
Name: John W. Petchler
Title: Second Vice President
THE PHOENIX INSURANCE COMPANY,
by John W. Petchler
----------------------------------
Name: John W. Petchler
Title: Second Vice President
<PAGE> 128
123
THE TRAVELERS INSURANCE
COMPANY (AS TO SEPARATE ACCOUNT D),
by John W. Petchler
----------------------------------
Name: John W. Petchler
Title: Second Vice President
HELLER FINANCIAL, INC.,
by Linda W. Wolf
----------------------------------
Name: Linda W. Wolf
Title: Senior Vice President
SOCIETE GENERALE,
by Olivia N. Feldman
----------------------------------
Name: Olivia N. Feldman
Title: Assistant Treasurer
BANK OF AMERICA ILLINOIS,
by Paul A. O'Mara
----------------------------------
Name: Paul A. O'Mara
Title: Senior Vice President
CAISSE NATIONALE DE CREDIT AGRICOLE,
by David Bouhl F.V.P.
--------------------------------
Name: David Bouhl F.V.P.
Title: Head of Corporate
Banking, Chicago
<PAGE> 129
Exhibits
Form of Revolving Credit Note Exhibit A-1
Form of Rollover Term Note Exhibit A-2
Form of Assignment and Acceptance Exhibit B
Form of Borrowing Base Certificate Exhibit C
Request for Extension of Revolving Exhibit D
Credit Maturity Date
Form of Opinion Exhibit E
Form of Administrative Questionnaire Exhibit F
Amended and Restated Security Agreement Exhibit G
Amended and Restated Pledge Agreement Exhibit H
Form of Guarantee Agreement Exhibit I
Form of Indemnity, Subrogation and Exhibit J
Contribution Agreement
<PAGE> 130
EXHIBIT A-1
FORM OF REVOLVING CREDIT NOTE
$ [Insert Amount of Lender's New York, New York
Revolving Credit Commitment] [Date]
FOR VALUE RECEIVED, each of the undersigned, NORTHWESTERN
STEEL AND WIRE COMPANY, an Illinois corporation ("NWS"), and NORTHWESTERN STEEL
AND WIRE COMPANY (formerly known as H/N Steel Company, Inc.), a Texas
corporation ("NWS/Texas"; NWS and NWS/Texas, jointly and severally, - being
the "Maker"), hereby promises to pay to the order of (the
"Lender"), at the office of CHEMICAL BANK (the "Administrative Agent"), at 270
Park Avenue, New York, N.Y. 10017 on the Revolving Credit Maturity Date (as
defined in the Amended and Restated Credit Agreement dated as of August 16,
1988, as amended and restated as of April 30, 1996, and as amended, modified or
supplemented and in effect from time to time (the "Credit Agreement"), among
NWS, NWS/Texas, the Lenders named therein and the Administrative Agent), the
lesser of the principal sum of [insert amount of Lender's Revolving Credit
Commitment] ($ ) and the aggregate unpaid principal amount of all Revolving
Credit Loans made by the Lender to the Maker pursuant to the Credit Agreement,
in lawful money of the United States of America in immediately available funds,
and to pay interest from the date hereof on the principal amount hereof from
time to time outstanding, in like funds, at said office, at a rate or rates per
annum and payable on such dates as determined pursuant to the terms of the
Credit Agreement.
The Maker promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
The Maker hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by the holder of
any of its rights hereunder in any particular instance shall not constitute a
waiver thereof in that or any subsequent instance.
All borrowings evidenced by this Revolving Credit Note and
all payments and prepayments of the principal hereof and interest hereon and
the respective dates thereof shall be endorsed by the holder hereof on the
schedule
<PAGE> 131
2
attached hereto and made a part hereof, or on a continuation thereof which
shall be attached hereto and made a part hereof, or otherwise recorded by such
holder in its internal records; provided, however, that the failure of the
holder hereof to make such a notation or any error in such a notation shall not
in any manner affect the obligation of the Maker to make payments of principal
and interest in accordance with the terms of this Revolving Credit Note and the
Credit Agreement.
This Revolving Credit Note is one of the Revolving Credit
Notes referred to in the Credit Agreement, which, among other things, contains
provisions for the acceleration of the maturity hereof upon the happening of
certain events, for optional and mandatory prepayment of the principal hereof
prior to the maturity hereof and for the amendment or waiver of certain
provisions of the Credit Agreement, all upon the terms and conditions therein
specified. THIS REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND ANY APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. This Revolving Credit Note is secured by and
entitled to the benefits of the Security Documents (as defined in the Credit
Agreement).
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois
corporation,
by __________________________
Title:
NORTHWESTERN STEEL AND WIRE
COMPANY, a Texas corporation,
by __________________________
Title:
<PAGE> 132
3
Loans and Payments
<TABLE>
<CAPTION> Unpaid Name of
Payments Principal Person
Amount of --------------------- Balance of Making
Date Loan Principal Interest Note Notation
---- --------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 133
EXHIBIT A-2
FORM OF ROLLOVER TERM NOTE
$[insert amount of New York, New York
Rollover Term Loan made by Lender] June 22, 1989
FOR VALUE RECEIVED, each of the undersigned, NORTHWESTERN
STEEL AND WIRE COMPANY, an Illinois corporation ("NWS"), and NORTHWESTERN STEEL
AND WIRE COMPANY (formerly known as H/N Steel Company, Inc.), a Texas
corporation ("NWS/Texas"; NWS and NWS/Texas, jointly and severally, being
the "Maker"), hereby promises to pay to the order of (the
"Lender"), at the office of CHEMICAL BANK (the "Administrative Agent"), at 277
Park Avenue, New York, N.Y. 10172, on the Rollover Term Loan Maturity Date (as
defined in the Amended and Restated Credit Agreement dated as of August 16,
1988, as amended and restated as of April 30, 1996, and as amended, modified or
supplemented and in effect from time to time (the "Credit Agreement"), among
NWS, NWS/Texas, the Lenders named therein and the Administrative Agent), the
lesser of the principal sum of
Dollars ($ ) and the aggregate unpaid principal
amount of all Rollover Term Loans (as defined in the Credit Agreement) from the
Lender to the Maker pursuant to the Credit Agreement in lawful money of the
United States of America in immediately available funds, and to pay interest
from the date hereof on the principal amount hereof from time to time
outstanding in like funds, at said office, at a rate or rates per annum and
payable on such dates as determined pursuant to the Credit Agreement.
The Maker promises to pay interest, on demand, on any overdue
principal and, to the extent permitted by law, overdue interest from their due
dates at a rate or rates determined as set forth in the Credit Agreement.
The Maker hereby waives diligence, presentment, demand,
protest and notice of any kind whatsoever. The nonexercise by the holder of any
of its rights hereunder in any particular instance shall not constitute a
waiver thereof in that or any subsequent instance.
All borrowings evidenced by this Rollover Term Note and all
payments and prepayments of the principal hereof and interest hereon and the
respective dates thereof shall be endorsed by the holder hereof on the schedule
attached hereto and made a part hereof, or on a continuation
<PAGE> 134
2
thereof which shall be attached hereto and made a part hereof, or otherwise
recorded by such holder in its internal records; provided, however, that any
failure of the holder hereof to make such a notation or any error in such
notation shall not in any manner affect the obligation of the Maker to make
payments of principal and interest in accordance with the terms of this
Rollover Term Note and the Credit Agreement.
This Rollover Term Note is one of the Rollover Term Notes
referred to in the Credit Agreement which, among other things, contains
provisions for the acceleration of the maturity hereof upon the happening of
certain events, for the scheduled repayment and optional and mandatory
prepayment of the principal hereof prior to the maturity thereof and for the
amendment or waiver of certain provisions of the Credit Agreement, all upon the
terms and conditions therein specified. THIS ROLLOVER TERM NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. This Rollover Term
Note is secured by and entitled to the benefits of the Security Documents (as
defined in the Credit Agreement).
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois
corporation,
by __________________________
Title:
NORTHWESTERN STEEL AND WIRE
COMPANY, a Texas corporation,
by __________________________
Title:
<PAGE> 135
3
Loans and Payments
<TABLE>
<CAPTION>
Capitalized Unpaid Name of
Fixed Rate Rollover Payments Principal Person
Amount of Interest -------- Balance Making
Date Loan Amount Principal Interest of Note Notation
---- --------- ---------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 136
EXHIBIT B
[Form of]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Credit Agreement
dated as of August 16, 1988, as amended and restated as of April 30, 1996, and
as amended, modified or supplemented and in effect from time to time (the
"Credit Agreement"), among Northwestern Steel and Wire Company, an Illinois
corporation ("NWS"), Northwestern Steel and Wire Company (formerly known as H/N
Steel Company, Inc.), a Texas corporation (together with NWS, the "Borrowers"),
the lenders party thereto (the "Lenders") and Chemical Bank, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"), collateral
agent and issuing bank. Terms defined in the Credit Agreement are used herein
with the same meanings.
1. The Assignor hereby sells and assigns, without recourse,
to the Assignee, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the Effective Date set forth below
(but not prior to the registration of the information contained herein in the
Register pursuant to Section 9.03(e) of the Credit Agreement), the interests set
forth below (the "Assigned Interest") in the Assignor's rights and obligations
under the Credit Agreement and the other Loan Documents, including, without
limitation, the amounts and percentages set forth below of (i) the Revolving
Credit Commitment of the Assignor on the Effective Date, (ii) the Loans owing to
the Assignor which are outstanding on the Effective Date and (iii)
participations in Letters of Credit which are outstanding on the Effective Date.
Each of the Assignor and the Assignee hereby makes and agrees to be bound by all
the representations, warranties and agreements set forth in Section 9.03(c) of
the Credit Agreement, a copy of which has been received by each such party.
From and after the Effective Date (i) the Assignee shall be a party to and be
bound by the provisions of the Credit Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and under the Loan Documents and (ii) the
Assignor shall, to the extent of the interests assigned by this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement.
2. This Assignment and Acceptance is being delivered to the
AdministrativeAgent together with (i) if the Assignee is organized under the
laws of a jurisdiction
<PAGE> 137
2
outside the United States, the forms specified in Section 2.19(e) of the Credit
Agreement, duly completed and executed by such Assignee, (ii) if the Assignee
is not already a Lender under the Credit Agreement, an Administrative
Questionnaire in the form of Exhibit F to the Credit Agreement and (iii) a
processing and recordation fee of $3,500.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment):
<TABLE>
<CAPTION>
Percentage Assigned of Applicable
Facility/Commitment (set forth, to at
least 8 decimals, as a percentage of
the Facility and the aggregate
Revolving Credit Commitments or
Principal Amount Assigned Rollover Term Loans of all Lenders
Facility/Commitment Assigned thereunder)
- ------------------- ------------------------- ------------------------
<S> <C> <C>
Revolving Credit $ %
Rollover Term Loans $ %
</TABLE>
The terms set forth above are
hereby agreed to: Accepted */
-
_________________, as Assignor CHEMICAL BANK,
as Administrative Agent
by:___________________________ by:_________________________
Name: Name:
Title: Title:
<PAGE> 138
3
_________________, as Assignee NORTHWESTERN STEEL AND WIRE COMPANY, an
Illinois corporation,
by:___________________________ by:_________________________
Name: Name:
Title: Title:
NORTHWESTERN STEEL AND WIRE COMPANY, a
Texas corporation,
[Issuing Bank]
by:_________________________
Name:
Title:
- ------------------
*/ To be completed to the extent consents are required under Section
9.03(b) of the Credit Agreement.
<PAGE> 139
EXHIBIT C
[FORM OF BORROWING BASE CERTIFICATE]
Pursuant to Section 5.05(d) of the Amended and Restated Credit
Agreement dated as of August 16, 1988, as amended and restated as of April 30,
1996, and as amended, modified or supplemented and in effect from time to time
(the "Credit Agreement"), among NORTHWESTERN STEEL AND WIRE COMPANY, an
Illinois corporation (the "NWS"), NORTHWESTERN STEEL AND WIRE COMPANY (formerly
known as H/N Steel Company, Inc.), a Texas corporation (together with NWS, the
"Borrowers"), the Lenders named therein and CHEMICAL BANK, a New York banking
corporation, as administrative agent for the Lenders, the Borrowers hereby
certify as follows:
<TABLE>
<S> <C>
(1) The Borrowing Base on the date
hereof is computed as follows:
(A) Value of Eligible Accounts
Receivable from Schedule A ...$______________
(B) 85% of line (A) ..............$______________
(C) Eligible Inventory Value
(excluding steel plant
supplies and rolling stock)
from Schedule B (valued on
the lower of cost or posted
market value) net of
inventory reserves ...........$______________
(D) 55% of line (C) ..............$______________
(E) Eligible Inventory Value
(for steel plant supplies
and rolling stock only) from
Schedule C (valued on the
lower of cost or posted
marked value) net of
inventory reserves ...........$______________
(F) 25% of line (E) ..............$______________
(2) The Borrowing Base (line B
plus line D plus line F)
</TABLE>
<PAGE> 140
2
<TABLE>
<S> <C> <C>
on the date hereof is .............$__________ */
-
</TABLE>
The Borrowers hereby represent and warrant that this Borrowing Base
Certificate and attached Schedules are a correct statement regarding the status
of Eligible Accounts Receivable and Eligible Inventory, and that the amounts
set forth herein are in compliance with the provisions of the Credit Agreement.
All accounts of any single Account Debtor on the date hereof which, in the
aggregate, exceed 10% of the total Eligible Accounts Receivable (not counting
any Accounts which would be disqualified by this sentence) have not been
included in the total Eligible Accounts Receivable to the extent of such excess
[except, as consented to in writing by the Required Lenders, the Accounts
relating to the sale of semi-finished steel products to [insert name of Account
Debtor] constitute % **/ of the total Eligible Accounts Receivable]. The
Borrowers further represent and warrant that there is no Event of Default or
any event which with the giving of notice or passage of time or both would
constitute an Event of Default. The Borrowers further understand that the
Lenders' Loans to it will be based upon the Lenders' reliance on the
information contained herein.
Capitalized terms used herein but not otherwise defined herein shall
have the meanings specified in the Credit Agreement.
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois
corporation,
by ________________________________
Title:
____________________
*/ The Borrowing Base may not exceed 200% of Line B.
**/ May not exceed 20% of Eligible Accounts Receivable.
<PAGE> 141
3
NORTHWESTERN STEEL AND WIRE
COMPANY, a Texas corporation,
by _________________________________
Title:
Date: __________________
<PAGE> 142
Schedule A
Accounts Receivable Aging Schedule
Gross Eligible A/R $ _________
Less:
Schedule A-I - Payment not received within
90 Days of invoice
Schedule A-II - Wire Products Dating __
Program Accounts payment not
received within 120 days of
invoice
Schedule A-III - Account Debtors with 50% of
Accounts past due
Schedule A-IV - Affiliated or Subsidiary A/R
Schedule A-V - Setoff (Contra)
Schedule A-VI - Concentration (10% or 20% or
Greater, as applicable)
Schedule A-VII - Payments due past certain
invoice date
Schedule A-VIII - Ineligible Government or non
U.S. account debtor
Total Ineligible A/R _________
Net Eligible A/R $
=========
Supporting schedules attached:
<PAGE> 143
Schedule A-I
A/R - Payment Not Received Within 90 Days of Invoice
Payment not received within 90 days of $
invoice
Total A/R
<PAGE> 144
Schedule A-II
A/R - Payment Not Received Within 120 days
Payment not received within 120 days $
of invoice for Wire Products Dating
Program Accounts
% of Total A/R %
<PAGE> 145
Schedule A-III
Account Debtors with 50% of Accounts Past Due 1/
<TABLE>
Payment not
received within
Account Debtor Total A/R Balance 90 or 120 Days,
- -------------- ----------------- as applicable
-------------
<S> <C> <C>
$ $
____________ ____________
Total $ $
============ ============
</TABLE>
__________________
1/ If 50% or more of Accounts from an Account Debtor are past due as determined
herein, then all Accounts from such Account Debtor shall be excluded.
<PAGE> 146
Schedule A-IV
A/R - Affiliated or Subsidiary A/R
<TABLE>
Account Debtor A/R Balance
- -------------- -----------
<S> <C>
$ __________
Total $
==========
</TABLE>
<PAGE> 147
Schedule A-V
A/R - Setoff (Contra)
<TABLE>
<CAPTION>
Payment not received
Account within 90 or 120
Debtor A/R Balance Days, as applicable Net A/R A/R Balance Reserve
-------- ----------- ------------------- ------- ----------- -------
<S> <C> <C> <C> <C> <C>
$
---------- --------- ------------- -------- --------- ---------
Total $ $ $ $ $ $
========= ========= ============= ======== ========= =========
</TABLE>
<PAGE> 148
Schedule A-VI
(10% or 20% or Greater, as applicable)
<TABLE>
<CAPTION>
Amount in Excess
of 10% or 20%, as Payment not received within 90
Account Debtor applicable or 120 days, as applicable Net A/R
-------------- ----------------- ------------------------------ -------
<S> <C> <C> <C>
$ $ $
------------ ----------- ----------
Total $ $ $
============ =========== ==========
</TABLE>
<PAGE> 149
Schedule A-VII
A/R - Payments Due Past Certain Invoice Date
<TABLE>
<CAPTION>
Wire Products Dating Program
Accounts Due More Than 120 Days
Account Debtor After Invoice Total A/R
-------------- ------------------------------- ---------
<S> <C> <C>
$ $
------------ ------------
Total $ $
============ ============
<CAPTION>
Wire Products Other Accounts Due
More Than 60 Days After Invoice Total A/R
-------------------------------- ---------
<S> <C> <C>
$ $
------------ ------------
Total $ $
============ ============
<CAPTION>
Other Accounts Due
More Than 45 Days
After Invoice Total A/R
------------------ ---------
<S> <C> <C>
$ $
------------ ------------
Total $ $
============ ============
</TABLE>
<PAGE> 150
Schedule A-VIII
A/R - Ineligible Government or Non-U.S. A/R
<TABLE>
<CAPTION>
Contract Balance
-------- -------
<S> <C>
$
----------
Total $
==========
</TABLE>
<PAGE> 151
Schedule B
Eligible Inventory
<TABLE>
<CAPTION>
Value
-----
<S> <C>
$
-------
-------
-------
-------
Deduct: (i) Steel plant supplies,
(ii) rolling stock and (iii) all
supplies relating to the Wire
Products Division (other than zinc) ($ )
=======
$
=======
</TABLE>
<PAGE> 152
Schedule C
Eligible Inventory
(Steel plant supplies and rolling stock only)
<TABLE>
<CAPTION>
Value
-----
<S> <C>
$
-------
-------
-------
-------
$
=======
</TABLE>
<PAGE> 153
EXHIBIT D
FORM OF EXTENSION NOTICE
[To be dated and sent not
more than 90 days and not
fewer than 60 days prior
to the then-current
Revolving Credit Maturity
Date]
[To the Administrative Agent
and each of the Lenders with
a Revolving Credit Commitment
party to the Credit Agreement
referred to below]
Attention:
Dear Sirs:
The undersigned, Northwestern Steel and Wire Company, an
Illinois corporation ("NWS"), and Northwestern Steel and Wire Company (formerly
known as H/N Steel Company, Inc.), a Texas corporation ("NWS/Texas", and
together with NWS, the "Borrowers"), refer to the Amended and Restated Credit
Agreement, dated as of August 16, 1988, as amended and restated as of April 30,
1996, and as amended, modified, or supplemented and in effect from time to time
(the "Credit Agreement"), among NWS, NWS/Texas, the Lenders named therein and
Chemical Bank, as Administrative Agent for the Lenders. Capitalized terms used
herein and not defined shall have the meanings assigned to such terms in the
Credit Agreement. The Borrowers hereby give you notice pursuant to Section
2.10(d) of the Credit Agreement that they request a one-year extension of the
Revolving Credit Maturity Date under the Credit Agreement from [the Revolving
Credit Maturity Date currently in effect] to [the first anniversary of the
Revolving Credit Maturity Date currently in effect].
We hereby represent and warrant that all the representations
and warranties contained in the Loan Documents are correct in all material
respects on and as of the date hereof as if made on such date, except to the
extent they expressly relate to an earlier date.
<PAGE> 154
2
Please indicate your consent to such extension by signing the
enclosed counterparts of this letter and returning one to us and the other to
the Administrative Agent no later than [insert date that is 60 days prior to
the Revolving Credit Maturity Date in effect].
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois corporation,
by ______________________________
Title: [Responsible Officer]
NORTHWESTERN STEEL AND WIRE
COMPANY, a Texas corporation,
by ______________________________
Title: [Responsible Officer]
CONSENTED TO:
[Name of Lender]
____________________________
Title:
<PAGE> 155
EXHIBIT E
April ___, 1996
The Administration Agent, the Collateral
Agent, the Issuing Bank and the Lenders
Who Are Parties to the Credit Agreement
described below
Ladies and Gentlemen:
We are counsel for Northwestern Steel and Wire Company (as successor, by
merger, to NW Acquisition Corporation), an Illinois corporation ("NWS") and
Northwestern Steel and Wire Company (formerly known as H/N Steel Company,
Inc.), a Texas corporation ("NWS/Texas", and together with NWS, individually, a
"Borrower" and collectively, the "Borrowers"), and have represented the
Borrowers in connection with their execution and delivery of that certain
Amended and Restated Credit Agreement dated as of August 16, 1988. As Amended
and Restated as of April __, 1996 among the Borrowers, the Lenders named
therein and Chemical Bank, as Administrative Agent and as Collateral Agent
(hereinafter referred to as the "Credit Agreement"; all capitalized terms used
in this opinion and not otherwise defined herein shall have the meanings
attributed to such terms in the Credit Agreement). We have also represented
Northwestern Steel and Wire Company-Kentucky, a Delaware corporation
("NWS/Kentucky") and Northwestern Steel and Wire Company, a Delaware
corporation ("NWS/Delaware"), in connection with their execution and delivery
of the Loan Documents to which they are party.
In connection with this option, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the
genuineness of all signatures (other than those on behalf of the Loan Parties),
the authenticity of the documents submitted to us as originals and the
conformity to authentic original documents of all documents submitted to us as
certified, conformed or reproduced copies. We have further assumed that:
(i) All natural persons involved in the Transactions
contemplated by the Loan Documents have sufficient legal capacity to
enter into and perform their respective obligations under the Loan
Documents or to carry out their roles in the Transactions.
<PAGE> 156
Administrative Agent, Collateral Agent,
Issuing Bank and Lenders
April ___, 1996
Page 2
(ii) All parties other than the Loan Parties have satisfied
all legal requirements that are applicable to each of them to the extent
necessary to make the Loan Documents and the Transactions enforceable
against each of them.
(iii) All parties other than the Loan Parties have complied
with all legal requirements pertaining to each party's respective
status as such status relates to each party's rights to enforce the
Loan Documents against the Loan Parties.
(iv) The conduct of the parties to the Transactions complies
with any requirement of good faith, fair dealing and conscionability.
(v) There has not been any mutual mistake of fact or
misunderstanding, fraud, duress or undue influence in connection
with the Transactions.
(vi) All statutes, judicial and administrative decisions, and
rules and regulations of governmental agencies, applicable to this
opinion, are generally available to lawyers practicing in the State
of Illinois and are in a format that makes legal research
reasonably feasible.
With respect to factual matters upon which our opinions below are
premised or based, we have, to the extent we have deemed appropriate and have no
actual knowledge to the contrary, relied on and assumed the truthfulness of the
representations and warranties of fact set forth in the Loan Documents and in
written certificates of or letters from the officers of the Loan Parties.
Whenever our opinion herein with respect to the existence or absence of any
fact is qualified by the phrase "to the best of our knowledge", or words of
similar import, it is intended to indicate that during the course of our
representation of the Loan Parties, no information has come to the attention
of those attorneys in this office who are representing or advising the Loan
Parties which would give them actual knowledge of the existence or absence of
any such facts. However, except to the extent expressly set forth herein, we
have not undertaken any independent investigation to determine the existence or
absence of such facts and no inference of our knowledge of the existence or
absence of such facts should be drawn from the fact of our representation of
the Loan Parties.
<PAGE> 157
Administrative Agent, Collateral Agent,
Issuing Bank and Lenders
April ___, 1996
Page 3
This opinion is given only with respect to the laws of the State of
Illinois, the State of New York (solely with respect to the opinions set forth
in paragraphs 3 and 9 below) applicable laws of the General Corporate Law of
the State of Delaware and applicable federal laws of the United States of
America, and this opinion is predicated solely upon statutory and case law in
existence as of the date hereof.
The enforceability opinion set forth in paragraph 3 below is subject to
the following additional qualifications:
(a) the effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium, receivership, fraudulent conveyance or other similar laws
relating to or affecting the rights of creditors generally;
(b) limitations imposed by general principles of equity upon the
availability or enforceability of any of the rights, remedies, waivers,
covenants or other provisions of the Loan Documents, and upon the
availability of specific performance and other equitable remedies generally
(regardless of whether sought in proceedings at law or in equity),
particularly (but without limitation) where (i) the breach of such
provisions imposes restrictions or burdens upon a debtor, including the
acceleration of any indebtedness, and it cannot be demonstrated that the
enforcement of such restrictions or burdens is reasonably necessary for the
protection of the lender, (ii) a lender's enforcement of such provisions
under the then-existing circumstances, or the manner of such enforcement,
would violate a lender's implied covenants of good faith and fair dealing,
or would be commercially unreasonable, or (iii) a court having competent
personal and subject matter jurisdiction finds that such provisions were at
the time made, or are in application, unconscionable as a matter of law or
policy;
(c) provisions (if any) in the Loan Documents that impose penalties,
forfeitures, late payment charges, the payment of interest on interest or an
increase in interest rates upon delinquency in payment or the occurrence of
a default may be unenforceable, void or voidable under Illinois or New York
law;
(d) limitations on the enforceability of cumulative remedies under the
Loan Documents, to the extent such cumulative remedies purport to or would
have the effect of compensating the Lenders in amounts in excess of the
actual loss suffered; and
(e) applicable state and federal laws, court decisions and
constitutional requirements which may limit or render unenforceable certain
of the rights and remedies
<PAGE> 158
Administrative Agent, Collateral Agent,
Issuing Bank and Lenders
April ___, 1996
Page 4
purportedly available to the Lenders under the Loan Documents. It is
our opinion, however, that none of the foregoing laws, decisions or
requirements will materially interfere with the practical and ultimate
realization of the benefits intended to be provided by the Loan Documents,
although such realization may be delayed and rendered more costly as a
result of the invalidity or unenforceability of such provisions.
Based on the foregoing, and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
1. Each Loan Party (a) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate power and authority to own
its property and assets and to carry on its business as now conducted and
as proposed to be conducted, (c) is qualified to do business and is in good
standing in each jurisdiction where such qualification is required, except
where the failure so to qualify could not reasonably be expected to result
in a Material Adverse Effect and (d) has the corporate power and authority
to execute, deliver and perform its obligations under each Loan Document to
which it is a party and, in the case of the Borrowers, to borrow
thereunder.
2. The execution, delivery and performance of each Loan Document by
each Loan Party that is a party thereto, the borrowings thereunder by the
Borrowers and the creation of the security interests contemplated thereby
(a) have been duly authorized by all requisite corporate and, if necessary,
stockholder action on the part of the Loan Parties and will not; (i)
contravene the applicable articles of incorporation or by-laws of any
Loan Party; (ii) violate any law, rule or regulation having the force of
law and applicable to any Loan Party; (iii) to the best of our knowledge,
violate any order, writ, judgment, injunction, decree or award or other
ruling of any court, administrative agency or governmental body of any kind
and applicable to any Loan Party; (iv) result in a breach of any of the
terms and conditions of, or constitute a default under, or give rise to any
right to accelerate or to require the prepayment, repurchase or redemption
of any obligation under, any of the Senior Note Documents or any other
indenture, instrument or agreement binding upon any Loan Party; or (v)
result in, or require the creation or imposition of any Lien pursuant to any
indenture, instrument or agreement by which any Loan Party is bound except
pursuant to the Security Documents.
3. Each of the Credit Agreement, the Notes and the other Loan
Documents has been duly executed and delivered by each Loan Party that is a
party thereto and
<PAGE> 159
Administrative Agent, Collateral Agent,
Issuing Bank and Lenders
April ____, 1996
Page 5
constitutes a legal, valid and binding obligation of such Loan Party,
enforceable in accordance with its terms.
4. No registration or filing with or consent or approval of, or
other action by, any Governmental Authority is or will be required in
connection with the execution, delivery and performance of the Loan
Documents by the Loan Parties party thereto or the consummation of the
transactions contemplated thereby, other than (i) the filing and recording
of financing statements, security agreements and other documents and
instruments necessary in order to perfect liens and security interests
under the Security Documents, (ii) such consents, approval, filings and
registrations as are described in Schedule 3.03 to the Credit Agreement,
all of which either have been obtained or made or are not yet required to
have been obtain or made and (iii) such consents, approvals, filings and
registration, if not obtained or made, do not have a Material Adverse
Effect.
5. There are no actions, suits or proceedings at law or in equity
or by or before any Governmental Authority now pending or, to the best of
our knowledge, threatened against or affecting any Loan Party or any of
their respective businesses, operations, assets, properties or rights (i)
that involve the Credit Agreement or the Transactions contemplated thereby
or (ii) as to which there is a reasonable likelihood of an adverse
determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect.
6. None of the loan Parties is an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940.
7. None of the Loan Parties is a "holding company" or a
"subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935.
8. The making of the Loans to the Borrowers and the application of
the proceeds thereof by the Borrowers pursuant to the terms of the Credit
Agreement will not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
9. The execution and delivery of the Fledge Agreement, together
with delivery to and possession by the Collateral Agent of the stock
certificates and promissory notes evidencing the "Pledge Securities" (as
defined in the Pledge
<PAGE> 160
Administrative Agent, Collateral Agent,
.Issuing Bank and Lenders
April ___, 1996
Page 6
Agreement), create in favor of the Collateral agent for the benefit of the
"Secured Parties" (as defined in the Pledge Agreement) a valid and
perfected security interest in, lien on or pledge of such Pledged
Securities subject to no equal or prior security interest in the Pledge
Securities.
10. Under the Uniform Commercial Code currently in effect in the
State of Illinois (the "UCC"), the Security Agreement creates in favor of
the Collateral Agent for the benefit of the Secured Parties a valid
security interest in, lien on or pledge of those the benefit of the Secured
Parties a valid security interest in, lien on or pledge of those items and
types of "Collateral" (as defined in the Security Agreement) in which a
security interest may be created under Article 9 of the UCC (the "Article 9
Collateral").
11. The financing statements filed pursuant to the Security
Agreement in the State of Illinois (a) are in proper form for filing under
the applicable laws of the State of Illinois, (b) adequately identify the
Collateral described therein to provide sufficient notice to third parties
of the Security interest referenced therein and (c) are required to be
filed with the Office of the Secretary of State of the State of Illinois
(the "Filing Office"). Upon the filing of the financing statements with
the Filing Office, the Collateral Agent for the benefit of the Secured
Parties will have a perfected security interest in that portion of the
Article 9 Collateral in Which a security interest is perfected by filing a
financing statement in the State of Illinois under the UCC.
This opinion is being provided to you in connection with the Loan
Documents and the Transactions contemplated thereby, and may not be relied upon
by you for any other purpose. Except as may be required buy law, order of any
court or governmental body or as requested by any governmental agency or body,
this opinion may not be relied upon or furnished, quoted, copied, distributed,
delivered or disclosed to anyone other than you and any participant in, or
assignee of, the Loan Documents, without our prior written consent.
<PAGE> 161
Administrative Agent, Collateral Agent,
Issuing Bank and Lenders
April ____, 1996
Page 7
This opinion is limited to the matters set forth herein and no opinion
is intended to be implied or may be inferred beyond those expressly stated
herein. This opinion is given as of the date hereof and we assume no
obligation to advise you of changes which may hereafter be brought to our
attention.
Very truly yours,
KATTEN MUCHIN & ZAVIS
<PAGE> 162
EXHIBIT F
[Form of]
NORTHWESTERN STEEL AND WIRE COMPANY
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via Telecopy to
the attention of Janet Belden at Chemical Bank Agency Services Corporation as
soon as possible, at Telecopy No. (212) 622-0002.
LENDER LEGAL NAME TO APPEAR IN DOCUMENTATION:
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
Institution Name: ___________________________________________________________
Street Address: _____________________________________________________________
City, State, Zip Code: ______________________________________________________
GENERAL INFORMATION - EURODOLLAR LENDING OFFICE:
Institution Name: ___________________________________________________________
Street Address: _____________________________________________________________
City, State, Zip Code: ______________________________________________________
POST-CLOSING, ONGOING CREDIT CONTACTS/NOTIFICATION METHODS:
CREDIT CONTACTS:
Primary Contact: ____________________________________________________________
Street Address: _____________________________________________________________
City, State, Zip Code: ______________________________________________________
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Phone Number: _______________________________________________________________
Telecopy Number: ____________________________________________________________
Backup Contact: _____________________________________________________________
Street Address: _____________________________________________________________
City, State, Zip Code: ______________________________________________________
Phone Number: _______________________________________________________________
Telecopy Number: ____________________________________________________________
TAX WITHHOLDING:
Nonresident Alien _______ Y* _______ N
* Form 4224 Enclosed
Tax ID Number _________________________
POST-CLOSING, ONGOING ADMINISTRATIVE CONTACTS/NOTIFICATION METHODS:
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, FEES, ETC.
Contact: ____________________________________________________________________
Street Address: _____________________________________________________________
City, State, Zip Code: ______________________________________________________
Phone Number: _______________________________________________________________
Telecopy Number: ____________________________________________________________
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3
PAYMENT INSTRUCTIONS:
Name of Bank to which funds are to be transferred:
_____________________________________________________________________________
Routing Transit/ABA number of Bank to which funds are to be transferred:
_____________________________________________________________________________
Name of Account, if applicable:
_____________________________________________________________________________
Account Number: _____________________________________________________________
Additional information: _____________________________________________________
_____________________________________________________________________________
MAILINGS:
Please specify the person to whom the Borrowers should send financial and
compliance information received subsequent to the closing (if different from
primary credit contact):
Name: _______________________________________________________________________
Street Address: _____________________________________________________________
City, State, Zip Code: ______________________________________________________
It is very important that all the above information be accurately completed and
that this questionnaire be returned to the person specified in the introductory
paragraph of this questionnaire as soon as possible. If there is someone other
than yourself who should receive this questionnaire, please notify us of that
person's name and telecopy number and we will telecopy a copy of the
questionnaire. If you have any questions about this form, please call Janet
Belden at (212) 622-0011.
<PAGE> 165
EXHIBIT G
AMENDED AND RESTATED SECURITY AGREEMENT dated
as of August 16, 1988, as amended and restated as of
April 30, 1996, among NORTHWESTERN STEEL AND WIRE
COMPANY (as successor, by merger, to NW Acquisition
Corporation), an Illinois corporation ("NWS"),
NORTHWESTERN STEEL AND WIRE COMPANY (formerly known
as H/N Steel Company, Inc.), a Texas corporation
("NWS/Texas" and together with NWS, the "Borrowers"),
each subsidiary of NWS listed on Schedule I hereto
(each such subsidiary individually a "Guarantor" and
collectively, the "Guarantors"; the Guarantors and
the Borrowers are referred to collectively herein as
the "Grantors") and CHEMICAL BANK, a New York banking
corporation ("Chemical Bank"), as collateral agent
(in such capacity, the "Collateral Agent") for the
Secured Parties (as defined herein).
Reference is made to (a) the Amended and Restated Credit
Agreement dated as of August 16, 1988, as amended and restated as of April 30,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrowers, the lenders from time to time party
thereto (the "Lenders"), Chemical Bank, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent") and Collateral Agent and
Chemical Bank, as issuing bank (in such capacity, the "Issuing Bank"), (b) the
Amended and Restated Security Agreement dated as of August 16, 1988, as amended
and restated as of June 21, 1989, among NWS, NWS/Texas and Chemical Bank as
Collateral Agent (the "Existing Security Agreement") and (c) the Guarantee
Agreement dated as of April 30, 1996 (as amended, supplemented or otherwise
modified from time to time, the "Guarantee Agreement"), among the Guarantors
and the Collateral Agent. The parties hereto are entering into this Agreement
to amend and restate the Existing Security Agreement in the form hereof as
contemplated by the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers, and
the Issuing Bank has agreed to issue Letters of Credit for the account of the
Borrowers, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Guarantors has agreed to
guarantee, among other things, all the obligations of the Borrowers under the
Credit Agreement. The obligations of the Lenders to make Loans and of the
Issuing Bank to issue Letters of Credit are conditioned upon, among other
things, the execution and delivery by the Grantors of an agreement in the form
hereof to secure (a) the due and punctual payment by the Borrowers of (i) the
principal of and
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premium, if any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding) on the Loans,
when and as due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) each payment required to be made by the
Borrowers under the Credit Agreement in respect of any Letter of Credit, when
and as due, including payments in respect of reimbursement of disbursements,
interest thereon and obligations to provide cash collateral and (iii) all other
monetary obligations, including fees, costs, expenses and indemnities, whether
primary, secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrowers to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrowers under or pursuant to the Credit Agreement and the other Loan
Documents and (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to this Agreement and the other Loan Documents (including all
obligations of the Grantors to the Collateral Agent or any Sub-Agent in respect
of overdrafts on any General Fund Account maintained by any of the Grantors
with the Collateral Agent or such Sub-Agent; provided, however, that the
aggregate amount of obligations in respect of overdrafts so secured at any time
shall not exceed $500,000) (all the monetary and other obligations described in
the preceding clauses (a) through (c) being collectively called the
"Obligations").
Accordingly, the Grantors and the Collateral Agent, on behalf
of itself and each Secured Party (and each of their respective successors or
assigns), hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the
context otherwise requires, all capitalized terms used but not defined herein
shall have the meanings set forth in the Credit Agreement.
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3
SECTION 1.02. Definition of Certain Terms Used Herein. As used
herein, the following terms shall have the following meanings:
"Account Debtor" shall mean any person who is or who may
become obligated to any Grantor under, with respect to or on account of an
Account.
"Accounts" shall mean any and all right, title and interest of
any Grantor to payment for goods and services sold or leased, including any
such right evidenced by chattel paper, whether due or to become due, whether or
not it has been earned by performance, and whether now or hereafter acquired or
arising in the future, including accounts receivable from Affiliates of the
Grantors.
"Accounts Receivable" shall mean all Accounts and all right,
title and interest in any returned goods, together with all rights, titles,
securities and guarantees with respect thereto, including any rights to
stoppage in transit, replevin, reclamation and resales, and all related
security interests, liens and pledges, whether voluntary or involuntary, in
each case whether now existing or owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable, (b)
Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f) cash and
cash accounts (including the Collection Deposit Accounts and the General Fund
Account) and (g) Proceeds.
"Collection Deposit Account" shall mean a lockbox account of a
Grantor maintained for the benefit of the Secured Parties with the Collateral
Agent or with a Sub-Agent pursuant to a Lockbox Agreement.
"Copyright License" shall mean any written agreement, now or
hereafter in effect, granting any right to any third party under any Copyright
now or hereafter owned by any Grantor or which such Grantor otherwise has the
right to license, or granting any right to such Grantor under any Copyright now
or hereafter owned by any third party, and all rights of such Grantor under any
such agreement.
"Copyrights" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all copyright rights in any work
subject to the copyright laws of the United States or any other country,
whether as author, assignee, transferee or otherwise, and (b) all registrations
and applications for
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registration of any such copyright in the United States or any other country,
including registrations, recordings, supplemental registrations and pending
applications for registration in the United States Copyright Office, including
those listed on Schedule II.
"Credit Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"Documents" shall mean all instruments, files, records, ledger
sheets and documents covering or relating to any of the Collateral.
"Equipment" shall mean all equipment, furniture and
furnishings, and all tangible personal property similar to any of the
foregoing, including tools, parts and supplies of every kind and description,
and all improvements, accessions or appurtenances thereto, that are now or
hereafter owned by any Grantor. The term Equipment shall include Fixtures.
"Financial Officer" of any corporation shall mean its chief
financial officer, principal accounting officer, treasurer or controller.
"Fixtures" shall mean all items of Collateral, whether now
owned or hereafter acquired, of any Grantor that become so related to
particular real estate that an interest in them arises under any real estate
law applicable thereto.
"General Fund Account" shall mean any general fund account
established at the office of any Sub-Agent or at Chemical Bank in the name of
any of the Grantors.
"General Intangibles" shall mean all choses in action and
causes of action and all other assignable intangible personal property of any
Grantor of every kind and nature (other than Accounts Receivable) now owned or
hereafter acquired by any Grantor, including corporate or other business
records, indemnification claims, contract rights (including rights under
leases, whether entered into as lessor or lessee, Interest Rate Protection
Agreements and other agreements), Intellectual Property, goodwill,
registrations, franchises, tax refund claims and any letter of credit,
guarantee, claim, security interest or other security held by or granted to any
Grantor to secure payment by an Account Debtor of any of the Accounts
Receivable.
"Intellectual Property" shall mean all intellectual and
similar property of any Grantor of every kind and nature now
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owned or hereafter acquired by any Grantor, including inventions, designs,
Patents, Copyrights, Licenses, Trademarks, trade secrets, confidential or
proprietary technical and business information, know-how, show-how or other
data or information, software and databases and all embodiments or fixations
thereof and related documentation, registrations and franchises, and all
additions, improvements and accessions to, and books and records describing or
used in connection with, any of the foregoing.
"Interest Rate Protection Agreement" shall mean any interest
rate protection agreement, foreign currency exchange agreement or any other
interest or exchange rate hedging agreement.
"Inventory" shall mean all merchandise intended for sale or
lease by any Grantor, or consumed in any Grantor's business, together with all
raw materials, goods in process, finished goods, semi-finished inventory and
work in progress inventory, scrap inventory, supplies, including, without
limitation, refactories, electrodes, alloys and chemicals, whether now owned or
hereafter arising, and all such property the sale or other disposition of which
has given rise to Accounts and which has been returned to, repossessed, or
stopped in transit by or on behalf of any Grantor.
"License" shall mean any Patent License, Trademark License,
Copyright License or other license or sublicense to which any Grantor is a
party, including those listed on Schedule III (other than those license
agreements in existence on the date hereof and listed on Schedule III and those
license agreements entered into after the date hereof, which by their terms
prohibit assignment or a grant of a security interest by such Grantor as
licensee thereunder).
"Lockbox Agreement" shall mean a Lockbox Agreement
substantially in the form of Annex 1 hereto.
"Obligations" shall have the meaning assigned to such term in
the preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to make, use or sell
any invention on which a Patent, now or hereafter owned by any Grantor or which
any Grantor otherwise has the right to license, is in existence, or granting to
any Grantor any right to make, use or sell any invention on which a Patent, now
or hereafter owned by any third party, is in existence, and all rights of any
Grantor under any such agreement.
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6
"Patents" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all letters patent of the United States
or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or any other country,
including registrations, recordings and pending applications in the United
States Patent and Trademark Office or any similar offices in any other country,
including those listed on Schedule IV, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use
and/or sell the inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate
substantially in the form of Annex 2 hereto, completed and supplemented with
the schedules and attachments contemplated thereby, and duly executed by a
Financial Officer of each of the Borrowers.
"Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other disposition of any asset or property
that constitutes Collateral, any value received as a consequence of the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property which
constitutes Collateral, and shall include (a) all cash and negotiable
instruments received by or held on behalf of the Collateral Agent pursuant to
Section 5.01 hereto, (b) any claim of any Grantor against any third party for
(and the right to sue and recover for and the rights to damages or profits due
or accrued arising out of or in connection with) (i) past, present or future
infringement of any Patent now or hereafter owned by any Grantor, or licensed
under a Patent License, (ii) past, present or future infringement or dilution
of any Trademark now or hereafter owned by any Grantor or licensed under a
Trademark License or injury to the goodwill associated with or symbolized by
any Trademark now or hereafter owned by any Grantor, (iii) past, present or
future breach of any License and (iv) past, present or future infringement of
any Copyright now or hereafter owned by any Grantor or licensed under a
Copyright License and (c) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Collateral Agent, (d) the Issuing Bank, (e) the
beneficiaries of each indemnification obligation
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7
undertaken by any Grantor under any Loan Document and (f) the successors and
assigns of each of the foregoing.
"Security Interest" shall have the meaning assigned to such
term in Section 2.01.
"Sub-Agent" shall mean a financial institution which shall
have delivered to the Collateral Agent an executed Lockbox Agreement.
"Trademark License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use any Trademark
now or hereafter owned by any Grantor or which any Grantor otherwise has the
right to license, or granting to any Grantor any right to use any Trademark now
or hereafter owned by any third party, and all rights of any Grantor under any
such agreement.
"Trademarks" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all trademarks, service marks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, trade dress, logos, other source or business identifiers,
designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States or any similar
offices in any other country or any political subdivision thereof, and all
extensions or renewals thereof, including those listed on Schedule V, (b) all
goodwill associated therewith or symbolized thereby and (c) all other assets,
rights and interests that uniquely reflect or embody such goodwill.
SECTION 1.03. Rules of Interpretation. The rules of
interpretation specified in Article I of the Credit Agreement shall be
applicable to this Agreement.
ARTICLE II
Security Interest
SECTION 2.01. Security Interest. As security for the payment
or performance, as the case may be, in full of the Obligations, each Grantor
hereby bargains, sells, conveys, assigns, sets over, mortgages, pledges,
hypothecates and
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8
transfers to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, and hereby grants to the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured Parties, a
security interest in, all of such Grantor's right, title and interest in, to
and under the Collateral (the "Security Interest"). Without limiting the
foregoing, the Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation statements,
filings with the United States Patent and Trademark Office or United States
Copyright Office (or any successor office or any similar office in any other
country) or other documents for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject the Collateral Agent
or any other Secured Party to, or in any way alter or modify, any obligation or
liability of any Grantor with respect to or arising out of the Collateral.
ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to
the Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good and
valid rights in and title to the Collateral with respect to which it has
purported to grant a Security Interest hereunder and has full power and
authority to grant to the Collateral Agent the Security Interest in such
Collateral pursuant hereto and to execute, deliver and perform its obligations
in accordance with the terms of this Agreement, without the consent or approval
of any other person other than any consent or approval which has been obtained.
SECTION 3.02. Filings. (a) The Perfection Certificate has
been duly prepared, completed and executed and the information set forth
therein is correct and complete. Fully executed Uniform Commercial Code
financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of
the Collateral have been delivered to the Collateral Agent for filing in each
governmental, municipal or other office specified in
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Schedule 6 to the Perfection Certificate, which are all the filings, recordings
and registrations (other than filings required to be made in the United States
Patent and Trademark Office and the United States Copyright Office in order to
perfect the Security Interest in Collateral consisting of United States
Patents, Trademarks and Copyrights) that are necessary to publish notice of and
protect the validity of and to establish a legal, valid and perfected security
interest in favor of the Collateral Agent (for the ratable benefit of the
Secured Parties) in respect of all Collateral in which the Security Interest
may be perfected by filing, recording or registration in the United States (or
any political subdivision thereof) and its territories and possessions, and no
further or subsequent filing, refiling, recording, rerecording, registration or
reregistration is necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation statements.
(b) Each Grantor shall ensure and represents and warrants that
fully executed security agreements in the form hereof and containing a
description of all Collateral consisting of Intellectual Property shall have
been received and recorded within three months after the execution of this
Agreement with respect to United States Patents and United States registered
Trademarks (and Trademarks for which United States registration applications
are pending) and within one month after the execution of this Agreement with
respect to United Sates registered Copyrights for recording by the United
States Patent and Trademark Office and the United States Copyright Office
pursuant to 35 U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C.
Section 205 and the regulations thereunder, as applicable, and otherwise as
may be required pursuant to the laws of any other necessary jurisdiction, to
protect the validity of and to establish a legal, valid and perfected security
interest in favor of the Collateral Agent (for the ratable benefit of the
Secured Parties) in respect of all Collateral consisting of Patents, Trademarks
and Copyrights in which a security interest may be perfected by filing,
recording or registration in the United States (or any political subdivision
thereof) and its territories and possessions, or in any other necessary
jurisdiction, and no further or subsequent filing, refiling, recording,
rerecording, registration or reregistration is necessary (other than such
actions as are necessary to perfect the Security Interest with respect to any
Collateral consisting of Patents, Trademarks and Copyrights (or registration or
application for registration thereof) acquired or developed after the date
hereof).
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SECTION 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in all the
Collateral securing the payment and performance of the Obligations, (b) subject
to the filings described in Section 3.02 above, a perfected security interest
in all Collateral in which a security interest may be perfected by filing,
recording or registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its territories and
possessions pursuant to the Uniform Commercial Code or other applicable law in
such jurisdictions and (c) a security interest that shall be perfected in all
Collateral in which a security interest may be perfected upon the receipt and
recording of this Agreement with the United States Patent and Trademark Office
and the United States Copyright Office, as applicable, within the three month
period (commencing as of the date hereof) pursuant to 35 U.S.C. Section 261
or 15 U.S.C. Section 1060 or the one month period (commencing as of the date
hereof) pursuant to 17 U.S.C. Section 205 and otherwise as may be required
pursuant to the laws of any other necessary jurisdiction. The Security
Interest is and shall be prior to any other Lien on any of the Collateral,
other than Liens expressly permitted to be prior to the Security Interest
pursuant to Section 6.02 of the Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is
owned by the Grantors free and clear of any Lien, except for Liens expressly
permitted pursuant to Section 6.02 of the Credit Agreement. The Grantors have
not filed or consented to the filing of (a) any financing statement or
analogous document under the Uniform Commercial Code or any other applicable
laws covering any Collateral, (b) any assignment in which any Grantor assigns
any Collateral or any security agreement or similar instrument covering any
Collateral with the United States Patent and Trademark Office or the United
States Copyright Office or (c) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument covering any
Collateral with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security agreement or
similar instrument is still in effect, except, in each case, for Liens
expressly permitted pursuant to Section 6.02 of the Credit Agreement.
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ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral;
Records; Place of Business. (a) Each Grantor agrees promptly to notify the
Collateral Agent in writing of any change (i) in its corporate name or in any
trade name used to identify it in the conduct of its business or in the
ownership of its properties, (ii) in the location of its chief executive
office, its principal place of business, any office in which it maintains books
or records relating to Collateral owned by it or any office or facility at
which Collateral owned by it is located (including the establishment of any
such new office or facility), (iii) in its identity or corporate structure or
(iv) in its Federal Taxpayer Identification Number. Each Grantor agrees not to
effect or permit any change referred to in the preceding sentence unless all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Collateral Agent to continue at all times following
such change to have a valid, legal and perfected first priority security
interest in all the Collateral. Each Grantor agrees promptly to notify the
Collateral Agent if any material portion of the Collateral owned or held by
such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the Collateral
owned by it as is consistent with its current practices and in accordance with
such prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged, but in any event to include
complete accounting records indicating all payments and proceeds received with
respect to any part of the Collateral, and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and deliver to the
Collateral Agent a duly certified schedule or schedules in form and detail
satisfactory to the Collateral Agent showing the identity, amount and location
of any and all Collateral.
SECTION 4.02. Periodic Certification. Each year, at the time
of delivery of annual financial statements with respect to the preceding fiscal
year pursuant to Section 5.05 of the Credit Agreement, the Borrowers shall
deliver to the Collateral Agent a certificate executed by a Financial Officer
of each of the Borrowers (a) setting forth the information required pursuant to
Section 2 of the Perfection Certificate or confirming that there has been no
change in such information since the date of such certificate or the date of
the most recent certificate
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12
delivered pursuant to this Section 4.02 and (b) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (a) above
to the extent necessary to protect and perfect the Security Interest for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period). Each certificate delivered pursuant to this Section 4.02 shall
identify in the format of Schedule II, III, IV or V, as applicable, all
Intellectual Property of any Grantor in existence on the date thereof and not
then listed on such Schedules or previously so identified to the Collateral
Agent.
SECTION 4.03. Protection of Security. Each Grantor shall, at
its own cost and expense, take any and all actions necessary to defend title to
the Collateral against all persons and to defend the Security Interest of the
Collateral Agent in the Collateral and the priority thereof against any Lien
not expressly permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at
its own expense, to execute, acknowledge, deliver and cause to be duly filed
all such further instruments and documents and take all such actions as the
Collateral Agent may from time to time request to better assure, preserve,
protect and perfect the Security Interest and the rights and remedies created
hereby, including the payment of any fees and taxes required in connection with
the execution and delivery of this Agreement, the granting of the Security
Interest and the filing of any financing statements (including fixture filings)
or other documents in connection herewith or therewith. If any amount payable
under or in connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
Without limiting the generality of the foregoing, each Grantor
hereby authorizes the Collateral Agent, with prompt notice thereof to the
Grantors, to supplement this Agreement by supplementing Schedule II, III, IV or
V hereto or adding additional schedules hereto to specifically identify any
asset or
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item that may constitute Copyrights, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within 10 days
after it has been notified by the Collateral Agent of the specific
identification of such Collateral, to advise the Collateral Agent in writing of
any inaccuracy of the representations and warranties made by such Grantor
hereunder with respect to such Collateral. Each Grantor agrees that it will
use its best efforts to take such action as shall be necessary in order that
all representations and warranties hereunder shall be true and correct with
respect to such Collateral within 30 days after the date it has been notified
by the Collateral Agent of the specific identification of such Collateral.
SECTION 4.05. Inspection and Verification. The Collateral
Agent and such persons as the Collateral Agent may reasonably designate shall
have the right, at the Grantors' own cost and expense, to inspect the
Collateral, all records related thereto (and to make extracts and copies from
such records) and the premises upon which any of the Collateral is located, to
discuss the Grantors' affairs with the officers of the Grantors and their
independent accountants and to verify under reasonable procedures, in
accordance with Section 5.11 of the Credit Agreement, the validity, amount,
quality, quantity, value, condition and status of, or any other matter relating
to, the Collateral, including, in the case of Accounts or Collateral in the
possession of any third person, by contacting Account Debtors or the third
person possessing such Collateral for the purpose of making such a
verification. The Collateral Agent shall have the absolute right to share any
information it gains from such inspection or verification with any Secured
Party.
SECTION 4.06. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes, assessments, charges, fees,
Liens, security interests or other encumbrances at any time levied or placed on
the Collateral and not permitted pursuant to Section 6.02 of the Credit
Agreement, and may pay for the maintenance and preservation of the Collateral
to the extent any Grantor fails to do so as required by the Credit Agreement or
this Agreement, and each Grantor jointly and severally agrees to reimburse the
Collateral Agent on demand for any payment made or any expense incurred by the
Collateral Agent pursuant to the foregoing authorization; provided, however,
that nothing in this Section 4.06 shall be interpreted as excusing any Grantor
from the performance of, or imposing any obligation on the Collateral Agent or
any Secured Party to cure or perform, any covenants or other promises of any
Grantor with respect to taxes, assessments, charges, fees, liens, security
interests or other encumbrances
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and maintenance as set forth herein or in the other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any
time any Grantor shall take a security interest in any property of an Account
Debtor or any other person to secure payment and performance of an Account,
such Grantor shall promptly assign such security interest to the Collateral
Agent. Such assignment need not be filed of public record unless necessary to
continue the perfected status of the security interest against creditors of and
transferees from the Account Debtor or other person granting the security
interest.
SECTION 4.08. Continuing Obligations of the Grantors. Each
Grantor shall remain liable to observe and perform all the conditions and
obligations to be observed and performed by it under each contract, agreement
or instrument relating to the Collateral, all in accordance with the terms and
conditions thereof, and each Grantor jointly and severally agrees to indemnify
and hold harmless the Collateral Agent and the Secured Parties from and against
any and all liability for such performance.
SECTION 4.09. Use and Disposition of Collateral. None of the
Grantors shall make or permit to be made an assignment, pledge or hypothecation
of the Collateral or shall grant any other Lien in respect of the Collateral,
except as expressly permitted by Section 6.02 of the Credit Agreement. None of
the Grantors shall make or permit to be made any transfer of the Collateral and
each Grantor shall remain at all times in possession of the Collateral owned by
it, except that (a) Inventory may be sold in the ordinary course of business
and (b) unless and until the Collateral Agent shall notify the Grantors that an
Event of Default shall have occurred and be continuing and that during the
continuance thereof the Grantors shall not sell, convey, lease, assign,
transfer or otherwise dispose of any Collateral (which notice may be given by
telephone if promptly confirmed in writing), the Grantors may use and dispose
of the Collateral in any lawful manner not inconsistent with the provisions of
this Agreement, the Credit Agreement or any other Loan Document. Without
limiting the generality of the foregoing, each Grantor agrees that it shall not
permit any Inventory to be in the possession or control of any warehouseman,
bailee, agent or processor at any time unless such warehouseman, bailee, agent
or processor shall have been notified of the Security Interest and shall have
agreed in writing to hold the Inventory subject to the Security Interest and
the instructions of the Collateral Agent and to waive and release any Lien held
by it with respect
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to such Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None
of the Grantors will, without the Collateral Agent's prior written consent,
grant any extension of the time of payment of any of the Accounts Receivable,
compromise, compound or settle the same for less than the full amount thereof,
release, wholly or partly, any person liable for the payment thereof or allow
any credit or discount whatsoever thereon, other than extensions, credits,
discounts, compromises or settlements granted or made in the ordinary course of
business and consistent with its current practices and in accordance with such
prudent and standard practices used in industries that are the same as or
similar to those in which such Grantor is engaged.
SECTION 4.11. Insurance. The Grantors, at their own expense,
shall maintain or cause to be maintained insurance covering physical loss or
damage to the Inventory and Equipment in accordance with Section 5.03 of the
Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and
attorney-in-fact) for the purpose, during the continuance of an Event of
Default, of making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of such Grantor on any check,
draft, instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect thereto.
In the event that any Grantor at any time or times shall fail to obtain or
maintain any of the policies of insurance required hereby or to pay any premium
in whole or part relating thereto, the Collateral Agent may, without waiving or
releasing any obligation or liability of the Grantors hereunder or any Event of
Default, in its sole discretion, obtain and maintain such policies of insurance
and pay such premium and take any other actions with respect thereto as the
Collateral Agent deems advisable. All sums disbursed by the Collateral Agent
in connection with this Section 4.11, including reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall be payable,
upon demand, by the Grantors to the Collateral Agent and shall be additional
Obligations secured hereby.
SECTION 4.12. Covenants Regarding Patent, Trademark and
Copyright Collateral. (a) Each Grantor agrees that it will not, nor will it
permit any of its licensees to, do any act, or omit to do any act, whereby any
Patent which is material to the
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16
conduct of such Grantor's business may become invalidated or dedicated to the
public, and agrees that it shall continue to mark any products covered by a
Patent with the relevant patent number as necessary and sufficient to establish
and preserve its maximum rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct of such
Grantor's business, (i) maintain such Trademark in full force free from any
claim of abandonment or invalidity for non-use, (ii) maintain the quality of
products and services offered under such Trademark, (iii) display such
Trademark with notice of Federal or foreign registration to the extent
necessary and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the use of such
Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through licensees) will,
for each work covered by a material Copyright, continue to publish, reproduce,
display, adopt and distribute the work with appropriate copyright notice as
necessary and sufficient to establish and preserve its maximum rights under
applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent
immediately if it knows or has reason to know that any Patent, Trademark or
Copyright material to the conduct of its business may become abandoned, lost or
dedicated to the public, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country) regarding such
Grantor's ownership of any Patent, Trademark or Copyright, its right to
register the same, or to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for any Patent,
Trademark or Copyright (or for the registration of any Trademark or Copyright)
with the United States Patent and Trademark Office, United States Copyright
Office or any office or agency in any political subdivision of the United
States or in any other country or any political subdivision thereof, unless it
promptly informs the Collateral Agent, and, upon request of the Collateral
Agent, executes and delivers any and all agreements, instruments, documents
and papers as the Collateral Agent my request to evidence the
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17
Collateral Agent's security interest in such Patent, Trademark or Copyright,
and each Grantor hereby appoints the Collateral Agent as its attorney-in-fact
to execute and file such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power, being coupled with an
interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each material application
relating to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent and each
registration of the Trademarks and Copyrights that is material to the conduct
of any Grantor's business, including timely filings of applications for
renewal, affidavits of use, affidavits of incontestability and payment of
maintenance fees, and, if consistent with good business judgment, to initiate
opposition, interference and cancellation proceedings against third parties.
(g) In the event that any Grantor has reason to believe that
any Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution, and take
such other actions as are appropriate under the circumstances to protect such
Collateral.
(h) Upon and during the continuance of an Event of Default,
each Grantor shall use its best efforts to obtain all requisite consents or
approvals by the licensor of each Copyright License, Patent License or
Trademark License to effect the assignment of all of such Grantor's right,
title and interest thereunder to the Collateral Agent or its designee.
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ARTICLE V
Collections
SECTION 5.01. Collection Deposit Accounts. (a) On and after
the Effective Date, the Grantors shall establish and maintain one or more
Collection Deposit Accounts with the Collateral Agent. Any such Collection
Deposit Account shall be designated with the title "Chemical Bank, as
Collateral Agent for certain lenders pursuant to the Amended and Restated
Credit Agreement dated as of August 16, 1988, as amended and restated as of
April , 1996, among Chemical Bank, Northwestern Steel and Wire Company, an
Illinois corporation, Northwestern Steel and Wire Company, a Texas corporation,
and certain other parties". In addition, any Grantor may establish and
maintain one or more Collection Deposit Accounts with any other financial
institution that (i) is satisfactory to the Collateral Agent and (ii) enters
into a Lockbox Agreement.
(b) Each Collection Deposit Account is, and shall remain,
under the sole dominion and control of the Collateral Agent. Each Grantor
acknowledges and agrees that (i) such Grantor has no right of withdrawal from
any Collection Deposit Account, (ii) the funds on deposit in each Collection
Deposit Account shall continue to be collateral security for all of the
Obligations and (iii) upon the occurrence and during the continuance of an
Event of Default, at the Collateral Agent's election, the funds on deposit in
each Collection Deposit Account shall be applied as provided in Section 6.02.
So long as no Event of Default has occurred and is continuing, the Collateral
Agent shall promptly remit any funds on deposit in any Collection Deposit
Account maintained with the Collateral Agent to the General Fund Account
maintained with the Collateral Agent (and shall authorize any Sub-Agent to
remit funds on deposit in any Collection Deposit Account maintained with such
Sub-Agent to the General Fund Account maintained with such Sub-Agent) and the
Grantors shall have the right, at any time and from time to time, to withdraw
such amounts from the General Fund Accounts as they shall deem to be necessary
or desirable.
(c) Effective upon notice to the Grantors from the Collateral
Agent after the occurrence and during the continuance of an Event of Default
(which notice may be given by telephone if promptly confirmed in writing), each
Collection Deposit Account will, without any further action on the part of any
Grantor, the Collateral Agent or any Sub-Agent, convert into a closed lockbox
account under the exclusive dominion and control of the Collateral Agent in
which funds are held subject to the rights of
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19
the Collateral Agent hereunder. The Grantors irrevocably authorize the
Collateral Agent to notify each Sub-Agent (i) of the occurrence of an Event of
Default and (ii) of the matters referred to in this paragraph (c). Following
the occurrence of an Event of Default, the Collateral Agent may instruct each
Sub-Agent to transfer immediately all funds held in each Collection Deposit
Account maintained with such Sub-Agent to the Collection Deposit Account
maintained with the Collateral Agent.
SECTION 5.02. Collections. (a) From and after the Effective
Date, each Grantor agrees to notify and direct promptly each Account Debtor and
every other person obligated to make payments on Accounts Receivable or in
respect of any Inventory to make all such payments to a Collection Deposit
Account established by it. Each Grantor shall use all reasonable efforts to
cause each Account Debtor and every other person identified in the preceding
sentence to make all payments with respect to Accounts Receivable and Inventory
directly to such Collection Deposit Account.
(b) In the event that a Grantor directly receives any
remittances on Accounts Receivable or Inventory, notwithstanding the
arrangements for payment directly into the Collection Deposit Accounts, such
remittances shall be held for the benefit of the Collateral Agent and the
Secured Parties and shall be segregated from other funds of such Grantor,
subject to the Security Interest granted hereby, and such Grantor shall cause
such remittances and payments to be deposited into a Collection Deposit Account
as soon as practicable after such Grantor's receipt thereof.
SECTION 5.03. Power of Attorney. The Collateral Agent shall
have the right, as the true and lawful agent and attorney-in-fact of each of
the Grantors, with power of substitution for the Grantors and in each Grantor's
name or otherwise, for the use and benefit of the Collateral Agent and the
Secured Parties, upon the occurrence and during the continuance of an Event of
Default (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment
relating to the Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of all or any of
the Collateral; (c) to sign the name of any Grantor on any invoice or bill of
lading relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce
<PAGE> 184
20
any rights in respect of any Collateral; (f) to settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to all or any of
the Collateral; (g) to notify, or to require the Grantors to notify, Account
Debtors to make payment directly to the Collateral Agent; and (h) to use, sell,
assign, transfer, pledge, make any agreement with respect to or otherwise deal
with all or any of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as fully and completely
as though the Collateral Agent were the absolute owner of the Collateral for
all purposes; provided, however, that nothing herein contained shall be
construed as requiring or obligating the Collateral Agent or any Secured Party
to make any commitment or to make any inquiry as to the nature or sufficiency
of any payment received by the Collateral Agent or any Secured Party, or to
present or file any claim or notice, or to take any action with respect to the
Collateral or any part thereof or the moneys due or to become due in respect
thereof or any property covered thereby, and no action taken or omitted to be
taken by the Collateral Agent or any Secured Party with respect to the
Collateral or any part thereof shall give rise to any defense, counterclaim or
offset in favor of any Grantor or to any claim or action against the Collateral
Agent or any Secured Party. It is understood and agreed that the appointment
of the Collateral Agent as the agent and attorney-in-fact of the Grantors for
the purposes set forth above is coupled with an interest and is irrevocable.
The provisions of this Section shall in no event relieve any of the Grantors of
any of its obligations hereunder or under the Credit Agreement with respect to
the Collateral or any part thereof or impose any obligation on the Collateral
Agent or any Secured Party to proceed in any particular manner with respect to
the Collateral or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further right which it
may have on the date of this Agreement or hereafter, whether hereunder, under
any other Loan Document, by law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, each Grantor agrees to deliver
each item of Collateral to the Collateral Agent on demand, and it is agreed
that the Collateral Agent shall have the right to take any of or all the
following actions at the same or different times: (a) with respect to any
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21
Collateral consisting of Intellectual Property, on demand, to cause the
Security Interest to become an assignment, transfer and conveyance of any of or
all such Collateral by the applicable Grantors to the Collateral Agent, or to
license or sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any such Collateral throughout the world on
such terms and conditions and in such manner as the Collateral Agent shall
determine (other than in violation of any then-existing licensing arrangements
to the extent that waivers cannot be obtained), and (b) with or without legal
process and with or without prior notice or demand for performance, to take
possession of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and
all rights afforded to a secured party under the Uniform Commercial Code or
other applicable law. Without limiting the generality of the foregoing, each
Grantor agrees that the Collateral Agent shall have the right, subject to the
mandatory requirements of applicable law, to sell or otherwise dispose of all
or any part of the Collateral, at public or private sale or at any broker's
board or on any securities exchange, for cash, upon credit or for future
delivery as the Collateral Agent shall deem appropriate. The Collateral Agent
shall be authorized at any such sale (if it deems it advisable to do so) to
restrict the prospective bidders or purchasers to persons who will represent
and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon
consummation of any such sale the Collateral Agent shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of any
Grantor, and each Grantor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Grantor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted.
The Collateral Agent shall give the Grantors 10 days' written
notice (which each Grantor agrees is reasonable notice within the meaning of
Section 9-504(3) of the Uniform Commercial Code as in effect in the State of
New York or its equivalent in other jurisdictions) of the Collateral Agent's
intention to make any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the case of a sale
at a broker's board or on a securities exchange, shall state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or portion thereof,
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22
will first be offered for sale at such board or exchange. Any such public sale
shall be held at such time or times within ordinary business hours and at such
place or places as the Collateral Agent may fix and state in the notice (if
any) of such sale. At any such sale, the Collateral, or portion thereof, to be
sold may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion) determine. The
Collateral Agent shall not be obligated to make any sale of any Collateral if
it shall determine not to do so, regardless of the fact that notice of sale of
such Collateral shall have been given. The Collateral Agent may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
sale, and such sale may, without further notice, be made at the time and place
to which the same was so adjourned. In case any sale of all or any part of the
Collateral is made on credit or for future delivery, the Collateral so sold may
be retained by the Collateral Agent until the sale price is paid by the
purchaser or purchasers thereof, but the Collateral Agent shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such
Collateral may be sold again upon like notice. At any public (or, to the
extent permitted by law, private) sale made pursuant to this Section, any
Secured Party may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of any
Grantor (all said rights being also hereby waived and released to the extent
permitted by law), the Collateral or any part thereof offered for sale and may
make payment on account thereof by using any claim then due and payable to such
Secured Party from any Grantor as a credit against the purchase price, and such
Secured Party may, upon compliance with the terms of sale, hold, retain and
dispose of such property without further accountability to any Grantor
therefor. For purposes hereof, a written agreement to purchase the Collateral
or any portion thereof shall be treated as a sale thereof; the Collateral Agent
shall be free to carry out such sale pursuant to such agreement and no Grantor
shall be entitled to the return of the Collateral or any portion thereof
subject thereto, notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall have been
remedied and the Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may proceed by a
suit or suits at law or in equity to foreclose this Agreement and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court
or courts having competent
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jurisdiction or pursuant to a proceeding by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral Agent
shall apply the proceeds of any collection or sale of the Collateral, as well
as any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity as
such hereunder or under any other Loan Document) in connection with
such collection or sale or otherwise in connection with this Agreement
or any of the Obligations, including all court costs and the fees and
expenses of its agents and legal counsel, the repayment of all
advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy
hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts
so applied to be distributed among the Secured Parties pro rata in
accordance with the amounts of the Obligations owed to them on the
date of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of the Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be
a sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual Property.
For the purpose of enabling the Collateral Agent to exercise rights and
remedies under this Article at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Grantor hereby
grants to the Collateral Agent an irrevocable, non-exclusive license
(exercisable without
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24
payment of royalty or other compensation to the Grantors) to use, license or
sub-license any of the Collateral consisting of Intellectual Property now owned
or hereafter acquired by such Grantor, and wherever the same may be located,
and including in such license reasonable access to all media in which any of
the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof. The use of such license
by the Collateral Agent shall be exercised, at the option of the Collateral
Agent, upon the occurrence and during the continuation of an Event of Default;
provided that any license, sub-license or other transaction entered into by the
Collateral Agent in accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
Miscellaneous
SECTION 7.01. Notices. All communications and notices
hereunder shall (except as otherwise expressly permitted herein) be in writing
and given as provided in Section 9.01 of the Credit Agreement. All
communications and notices hereunder to any Guarantor shall be given to it at
its address or telecopy number set forth on Schedule I, with a copy to the
Borrowers.
SECTION 7.02. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest and all obligations of the
Grantors hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any
departure from the Credit Agreement, any other Loan Document or any other
agreement or instrument, (c) any exchange, release or non-perfection of any
Lien on other collateral, or any release or amendment or waiver of or consent
under or departure from any guarantee, securing or guaranteeing all or any of
the Obligations, or (d) any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Grantor in respect of the
Obligations or this Agreement.
SECTION 7.03. Survival of Agreement. All covenants,
agreements, representations and warranties made by any Grantor
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25
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the Secured Parties and shall survive the making by the Lenders
of the Loans, and the execution and delivery to the Lenders of any notes
evidencing such Loans, regardless of any investigation made by the Lenders or
on their behalf, and shall continue in full force and effect until this
Agreement shall terminate.
SECTION 7.04. Binding Effect; Several Agreement. This
Agreement shall become effective as to any Grantor when a counterpart hereof
executed on behalf of such Grantor shall have been delivered to the Collateral
Agent and a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such Grantor and the
Collateral Agent and their respective successors and assigns, and shall inure
to the benefit of such Grantor, the Collateral Agent and the other Secured
Parties and their respective successors and assigns, except that no Grantor
shall have the right to assign or transfer its rights or obligations hereunder
or any interest herein or in the Collateral (and any such assignment or
transfer shall be void) except as expressly contemplated by this Agreement or
the Credit Agreement. This Agreement shall be construed as a separate
agreement with respect to each Grantor and may be amended, modified,
supplemented, waived or released with respect to any Grantor without the
approval of any other Grantor and without affecting the obligations of any
other Grantor hereunder.
SECTION 7.05. Successors and Assigns. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Grantor or the Collateral Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns.
SECTION 7.06. Collateral Agent's Fees and Expenses;
Indemnification. (a) Each Grantor jointly and severally agrees to pay upon
demand to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees, disbursements and other charges of its counsel
and of any experts or agents, which the Collateral Agent may incur in
connection with (i) the administration of this Agreement (including the
customary fees and charges of the Collateral Agent for any audits conducted by
it or on its behalf with respect to the Accounts Receivable or Inventory), (ii)
the custody or preservation of, or the sale of, collection from or other
realization upon any of the Collateral, (iii) the exercise, enforcement or
protection of any
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26
of the rights of the Collateral Agent hereunder or (iv) the failure of any
Grantor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Grantor jointly and severally agrees to
indemnify the Collateral Agent and the other Secured Parties against, and hold
each of them harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable fees, disbursements and other
charges of counsel, incurred by or asserted against any of them arising out of,
in any way connected with, or as a result of, the execution, delivery or
performance of this Agreement or any claim, litigation, investigation or
proceeding relating hereto or to the Collateral, whether or not any Secured
Party is a party thereto; provided that such indemnity shall not, as to any
Secured Party, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or willful misconduct of such Secured Party.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.06 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term
or provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Collateral Agent or any Lender. All amounts due
under this Section 7.06 shall be payable on written demand therefor.
SECTION 7.07. GOVERNING LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. Waivers; Amendment. (a) No failure or delay
of the Collateral Agent in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Collateral Agent hereunder and of the Collateral Agent, the Issuing Bank, the
Administrative Agent and the Lenders under the other Loan Documents are
cumulative and are not exclusive of any
<PAGE> 191
27
rights or remedies that they would otherwise have. No waiver of any provisions
of this Agreement or any other Loan Document or consent to any departure by any
Grantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
No notice to or demand on any Grantor in any case shall entitle such Grantor or
any other Grantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Collateral Agent and the Grantor or Grantors with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.08 of the Credit Agreement.
SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 7.09.
SECTION 7.10. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7.11 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall
<PAGE> 192
28
constitute an original but all of which when taken together shall constitute
but one contract (subject to Section 7.04), and shall become effective as
provided in Section 7.04. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.
SECTION 7.12. Headings. Article and Section headings used
herein are for the purpose of reference only, are not part of this Agreement
and are not to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION 7.13. Jurisdiction; Consent to Service of Process.
(a) Each Grantor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement shall affect
any right that the Collateral Agent, the Administrative Agent, the Issuing Bank
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement or the other Loan Documents against any Grantor or its
properties in the courts of any jurisdiction.
(b) Each Grantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or the
other Loan Documents in any New York State or Federal court. Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 7.01 or in the
manner provided for in Section 9.06 of the Credit Agreement. Nothing in this
Agreement will affected the
<PAGE> 193
29
right of any party to this Agreement to serve process in any other manner
permitted by law.
SECTION 7.14. Termination. This Agreement and the Security
Interest shall terminate when all the Obligations have been indefeasibly paid
in full, the Lenders have no further commitment to lend, the Letter of Credit
Exposure has been reduced to zero and the Issuing Bank has no further
commitment to issue Letters of Credit under the Credit Agreement, at which time
the Collateral Agent shall execute and deliver to the Grantors, at the
Grantors' expense, all Uniform Commercial Code termination statements
and similar documents which the Grantors shall reasonably request to evidence
such termination. Any execution and delivery of termination statements or
documents pursuant to this Section 7.14 shall be without recourse to or
warranty by the Collateral Agent. A Guarantor shall automatically be released
from its obligations hereunder and the Security Interest in the Collateral of
such Guarantor shall be automatically released in the event that all the
capital stock of such Guarantor shall be sold, transferred or otherwise
disposed of to a person that is not an Affiliate of the Borrowers in accordance
with the terms of the Credit Agreement; provided that the Required Lenders
shall have consented to such sale, transfer or other disposition (to the extent
required by the Credit Agreement) and the terms of such consent did not provide
otherwise.
SECTION 7.15. Additional Grantors. Upon execution and
delivery by the Collateral Agent and a Subsidiary of an instrument in the form
of Annex 3 hereto, such Subsidiary shall become a Grantor hereunder with the
same force and effect as if originally named as a Grantor herein. The
execution and delivery of any such instrument shall not require the consent of
any Grantor hereunder. The rights and obligations of each Grantor hereunder
shall remain in full force and effect notwithstanding the addition of any new
Grantor as a party to this Agreement.
<PAGE> 194
30
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois
corporation
by
--------------------------
Name:
Title:
NORTHWESTERN STEEL AND WIRE
Company, a Texas corporation
by
--------------------------
Name:
Title:
EACH OF THE GUARANTORS LISTED
ON SCHEDULE I HERETO,
by
--------------------------
Name:
Title:
by
--------------------------
Name:
Title:
<PAGE> 195
31
CHEMICAL BANK, as Collateral
Agent,
by
--------------------------
Name:
Title: Authorized Officer
<PAGE> 196
32
SCHEDULE I
GUARANTORS ADDRESS
Northwestern Steel and Wire 121 Wallace Street
Company, a Delaware Sterling, Illinois 61081
corporation Attn.: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
Northwestern Steel and 121 Wallace Street
Wire Company - Kentucky, a Sterling, Illinois 61081
Delaware corporation Attn.: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
<PAGE> 197
33
SCHEDULE II
COPYRIGHTS
<PAGE> 198
34
SCHEDULE III
LICENSES
<PAGE> 199
35
SCHEDULE IV
PATENTS
<PAGE> 200
36
SCHEDULE V
TRADEMARKS
<PAGE> 201
Annex 1 to the
Security Agreement
LOCKBOX AGREEMENT dated as of
[ ], among [Name of Grantor], a
[ ] corporation (the "Grantor"),
CHEMICAL BANK, a New York banking corporation
("Chemical Bank"), as collateral agent (in
such capacity, the "Collateral Agent") for
the Secured Parties (such term, and each
other capitalized term used but not defined
herein, having the meaning given it in the
Security Agreement referred to below) and
[ ], a
[ ] banking
corporation (the "Sub-Agent").
A. The Borrowers, the Guarantors and the Collateral Agent are
parties to an Amended and Restated Security Agreement dated as of August 16,
1988, as amended and restated as of April 30, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Security Agreement"). Pursuant to
the terms of the Security Agreement, the Grantor has granted to the Collateral
Agent, for the ratable benefit of the Secured Parties, a security interest in
its Accounts Receivable and other Collateral (including Inventory, cash, cash
accounts and Proceeds) to secure the payment and performance of the Obligations
and has irrevocably appointed the Collateral Agent as its agent to collect
amounts due in respect of Accounts Receivable and Inventory.
B. The Sub-Agent has agreed to act as collection sub-agent of
the Collateral Agent to receive and forward payments with respect to the
Accounts Receivable and Inventory on the terms and subject to the conditions
set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Collateral Agent hereby appoints the Sub-Agent as its
collection sub-agent under the Security Agreement and authorizes the Sub-Agent,
on the terms and subject to the conditions set forth herein, to receive
payments in respect of Collateral consisting of Accounts Receivable and
Inventory (the "Payments").
2. The Sub-Agent has established and shall maintain (i)
deposit account number [ ] (including all subaccounts thereof) for the
benefit of the Collateral Agent (such account being called the "Collection
Deposit Account") and (ii) a general
<PAGE> 202
2
deposit account in the name of and for the benefit of the Grantor (such account
being called the "General Fund Account"). The Collection Deposit Account shall
be designated with the title "Chemical Bank, as Collateral Agent under the
Northwestern Steel and Wire Company Amended and Restated Security Agreement
dated as of August 16, 1988, as amended and restated as of April 30, 1996" (or
a similar title). All Payments received by the Sub-Agent shall be promptly
deposited in the Collection Deposit Account and shall not be commingled with
other funds. All funds at any time on deposit in the Collection Deposit
Account shall be held by the Sub-Agent for application in accordance with the
terms of this Agreement. The Sub-Agent agrees to give the Collateral Agent
prompt notice if the Collection Deposit Account shall become subject to any
writ, judgment, warrant of attachment, execution or similar process. As
security for the payment and performance of the Obligations, the Grantor hereby
confirms and pledges, assigns and transfers to the Collateral Agent, and hereby
creates and grants to the Collateral Agent, a security interest in the
Collection Deposit Account, all property and assets held therein and all
Proceeds thereof.
3. The Collection Deposit Account shall be under the sole
dominion and control of the Collateral Agent, who shall possess all right,
title and interest in all of the items from time to time in the Collection
Deposit Account and their Proceeds. The Sub-Agent shall be the Collateral
Agent's agent for the purpose of holding and collecting such items and their
Proceeds. Neither the Grantor nor any person or entity claiming by, through or
under the Grantor shall have any right, title or interest in, or control over
the use of, or any right to withdraw any amount from, the Collection Deposit
Account, except that the Collateral Agent shall have the right to withdraw
amounts from the Collection Deposit Account. The Sub-Agent shall be entitled
to rely on, and shall act in accordance with, all instructions given to it by
the Collateral Agent with respect to the Collection Deposit Account.
4. Upon receipt of written, telecopy or telephonic notice
(which, in the case of telephonic notice, shall be promptly confirmed in
writing or by telecopy) from the Collateral Agent, the Sub-Agent shall cease to
transfer funds as provided in paragraph 5 hereof and, if so directed in such
notice (subject to the Sub-Agent's right to request that the Collateral Agent
furnish, in form satisfactory to the Sub-Agent, signature cards and/or other
appropriate documentation), promptly transmit or deliver to the Collateral
Agent at the office specified in paragraph 12 hereof (or such other office as
the Collateral Agent shall specify) (a) all funds, if any, then on deposit in,
or
<PAGE> 203
3
otherwise to the credit of, the Collection Deposit Account (provided that funds
on deposit that are subject to collection may be transmitted promptly upon
availability for withdrawal), (b) all checks, drafts and other instruments in
respect of any Payments received and in the possession of the Sub-Agent,
without depositing such checks, drafts or other instruments in the Collection
Deposit Account or any other account and (c) any checks, drafts and other
instruments in respect of any Payments received by the Sub-Agent after such
notice, in whatever form received, provided that the Sub-Agent may retain a
reasonable reserve in a separate deposit account with the Sub-Agent in respect
of amounts which may be subject to collection.
5. Unless and until the Collateral Agent notifies the
Sub-Agent pursuant to paragraph 4 above that the authorization granted under
this paragraph is terminated, the Collateral Agent hereby authorizes the
Sub-Agent to remit any funds on deposit in the Collection Deposit Account to
the General Fund Account.
6. The Sub-Agent shall furnish the Collateral Agent with
monthly statements setting forth the amounts deposited in the Collection
Deposit Account and all transfers and withdrawals therefrom, and shall furnish
such other information at such times as shall be reasonably requested by the
Collateral Agent.
7. The fees for the services of the Sub-Agent shall be
mutually agreed upon between the Grantor and the Sub-Agent and shall be the
obligation of the Grantor; provided, however, that, notwithstanding the terms
of any agreement under which the Collection Deposit Account shall have been
established with the Sub-Agent, the Grantor and the Sub-Agent agree not to
terminate such Collection Deposit Account for any reason (including the failure
of the Grantor to pay such fees) for so long as this Agreement shall remain in
effect (it being understood that the foregoing shall not be construed to
prohibit the resignation of the Sub-Agent in accordance with paragraph 9
below). Neither the Collateral Agent nor the Secured Parties shall have any
liability for the payment of any such fees. The Sub-Agent may perform any of
its duties hereunder by or through its agents, officers or employees.
8. The Sub-Agent hereby represents and warrants that (a) it
is a banking corporation duly organized, validly existing and in good standing
under the laws of [ ] and has full corporate power and authority under
such laws to execute, deliver and perform its obligations under this Agreement
and (b) the execution, delivery and performance of this Agreement by the
Sub-Agent have been duly and effectively authorized by all necessary
<PAGE> 204
4
corporate action and this Agreement has been duly executed and delivered by the
Sub-Agent and constitutes a valid and binding obligation of the Sub-Agent
enforceable in accordance with its terms.
9. The Sub-Agent may resign at any time as Sub-Agent
hereunder by delivery to the Collateral Agent of written notice of resignation
not less than thirty days prior to the effective date of such resignation. The
Sub-Agent may be removed by the Collateral Agent at any time, with or without
cause, by written, telecopy or telephonic notice (which, in the case of
telephonic notice, shall be promptly confirmed in writing or by telecopy) of
removal delivered to the Sub-Agent. Upon receipt of such notice of removal, or
delivery of such notice of resignation, the Sub-Agent shall (subject to the
Sub-Agent's right to request that the Collateral Agent furnish, in form
satisfactory to the Sub-Agent, signature cards and/or other appropriate
documentation), promptly transmit or deliver to the Collateral Agent at the
office specified in paragraph 12 (or such other office as the Collateral Agent
shall specify) (a) all funds, if any, then on deposit in, or otherwise to the
credit of, the Collection Deposit Account (provided that funds on deposit that
are subject to collection may be transmitted promptly upon availability for
withdrawal), (b) all checks, drafts and other instruments in respect of any
Payments received and in the possession of the Sub-Agent, without depositing
such checks, drafts or other instruments in the Collection Deposit Account or
any other account and (c) any checks, drafts and other instruments in respect
of any Payments received by the Sub-Agent after such notice, in whatever form
received.
10. The Grantor consents to the appointment of the Sub-Agent
and agrees that the Sub-Agent shall incur no liability to the Grantor as a
result of any action taken pursuant to an instruction given by the Collateral
Agent in accordance with the provisions of this Agreement. The Grantor agrees
to indemnify and defend the Sub-Agent against any loss, liability, claim or
expense (including reasonable attorneys' fees) arising from the Sub-Agent's
entry into this Agreement and actions taken hereunder, except to the extent
resulting from the Sub-Agent's gross negligence or willful misconduct.
11. The term of this Agreement shall extend from the date
hereof until the earlier of (a) the date on which the Sub-Agent has been
notified in writing by the Collateral Agent that the Sub-Agent has no further
duties under this Agreement and (b) the date of termination specified in the
notice of removal given by the Collateral Agent, or notice of resignation given
by
<PAGE> 205
5
the Sub-Agent, as the case may be, pursuant to paragraph 9. The obligations of
the Sub-Agent contained in the last sentence of paragraph 9 and in paragraph
15, and the obligations of the Grantor contained in paragraphs 7 and 10, shall
survive the termination of this Agreement.
12. All notices and communications hereunder shall be in
writing and shall be delivered by hand or by courier service, mailed by
certified or registered mail or sent by telecopy (except where telephonic
instructions or notices are authorized herein) and shall be effective on the
day on which received (a) in the case of the Collateral Agent, to Chemical
Bank, 270 Park Avenue, New York, New York 10017, Attention of [Collateral
Monitoring Department], and (b) in the case of the Sub-Agent, addressed to [
], Attention of [ ]. For purposes of this Agreement, any officer of the
Collateral Agent shall be authorized to act, and to give instructions and
notices, on behalf of the Collateral Agent hereunder.
13. The Sub-Agent will not assign or transfer any of its
rights or obligations hereunder (other than to the Collateral Agent) without
the prior written consent of the other parties hereto, and any such attempted
assignment or transfer shall be void.
14. Except as provided in paragraph 5 above, this Agreement
may be amended only by a written instrument executed by the Collateral Agent,
the Sub-Agent and the Grantor, acting by their duly authorized representative
officers.
15. Except as otherwise provided in the Credit Agreement with
respect to rights of set off available to the Sub-Agent in its capacity as a
Lender (if and so long as the Sub-Agent is a Lender thereunder), the Sub-Agent
hereby irrevocably waives any right to set off against, or otherwise deduct
from, any funds held in the Collection Deposit Account and all items (and
Proceeds thereof) that come into its possession in connection with the
Collection Deposit Account any indebtedness or other claim owed by the Grantor
or any affiliate thereof to the Sub-Agent; provided, however, that this
paragraph shall not limit the ability of the Sub-Agent to, and the Sub-Agent
may, (a) charge back and net against the Collection Deposit Account any
returned or dishonored items or other adjustments in accordance with the
Sub-Agent's usual practices and (b) establish the reserves contemplated in
paragraph 4 in respect of amounts which may be subject to collection.
<PAGE> 206
6
16. This Agreement shall inure to the benefit of and be
binding upon the Collateral Agent, the Sub-Agent, the Grantor and their
respective permitted successors and assigns.
17. This Agreement 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. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be effective
as delivery of a manually executed counterpart hereof.
18. EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF [
] GOVERN THE COLLECTION DEPOSIT ACCOUNT, THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
19. The Sub-Agent shall be an independent contractor. This
Agreement does not give rise to any partnership, joint venture or fiduciary
relationship.
20. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a particular
jurisdiction shall not in and of itself affect the validity of such provision
in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
[Name of Grantor],
by
------------------------------
Name:
Title:
<PAGE> 207
7
CHEMICAL BANK,
as Collateral Agent,
by
-------------------------------
Name:
Title:
[Sub-Agent],
by
------------------------------
Name:
Title:
<PAGE> 208
Annex 2 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Amended and Restated Credit
Agreement dated as of August 16, 1988, as amended and restated as of April 30,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrowers, the lenders from time to time party
thereto (the "Lenders"), Chemical Bank, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent") and Collateral Agent and
Chemical Bank, as issuing bank (in such capacity, the "Issuing Bank") and (b)
the Guarantee Agreement dated as of April 30, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee Agreement"), among the
Guarantors and the Collateral Agent. Capitalized terms used herein but not
defined herein shall have the meaning assigned to such terms in the Security
Agreement.
The undersigned, a Financial Officer of each of the Borrowers,
hereby certify to the Collateral Agent and each other Secured Party as follows:
1. Names. (a) The exact corporate name of each Grantor, as
such name appears in its respective certificate of incorporation, is as
follows:
(b) Set forth below is each other corporate name each Grantor
has had in the past five years, together with the date of the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor has
changed its identity or corporate structure in any way within the past five
years. Changes in identity or corporate structure would include mergers,
consolidations and acquisitions, as well as any change in the form, nature or
jurisdiction of corporate organization. If any such change has occurred,
include in Schedule 1 the information required by Sections 1 and 2 of this
certificate as to each acquiree or constituent party to a merger or
consolidation.
(d) The following is a list of all other names (including
trade names or similar appellations) used by each Grantor or any of its
divisions or other business units in connection with the conduct of its
business or the ownership of its properties at any time during the past five
years:
<PAGE> 209
2
(e) Set forth below is the Federal Taxpayer Identification
Number of each Grantor:
2. Current Locations. (a) The chief executive office of
each Grantor is located at the address set forth opposite its name below:
Grantor Mailing Address County State
(b) Set forth below opposite the name of each Grantor are all
locations where such Grantor maintains any books or records relating to any
Accounts Receivable (with each location at which chattel paper, if any, is kept
being indicated by an "*"):
Grantor Mailing Address County State
(c) Set forth below opposite the name of each Grantor are all
the places of business of such Grantor not identified in paragraph (a) or (b)
above:
Grantor Mailing Address County State
(d) Set forth below opposite the name of each Grantor are all
the locations where such Grantor maintains any Collateral not identified above:
Grantor Mailing Address County State
(e) Set forth below opposite the name of each Grantor are the
names and addresses of all persons other than such Grantor that have possession
of any of the Collateral of such Grantor:
Grantor Mailing Address County State
3. Unusual Transactions. All Accounts Receivable have been
originated by the Grantors and all Inventory has
<PAGE> 210
3
been acquired by the Grantors in the ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A) are
true copies of file search reports from the Uniform Commercial Code filing
offices where filings described in Section 5 hereof were made. Attached hereto
as Schedule 4(B) is a true copy of each financing statement or other filing
identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form
UCC-1 in substantially the form of Schedule 5 hereto have been duly filed in
the Uniform Commercial Code filing office in each jurisdiction where a Grantor
has Collateral as identified in Section 2 hereof.
6. Schedule of Filings. Attached hereto as Schedule 6 is a
schedule setting forth, with respect to the filings described in Section 5
above, each filing and the filing office in which such filing was made.
7. Filing Fees. All filing fees and taxes payable in
connection with the filings described in Section 5 above have been paid.
8. Stock Ownership. Attached hereto as Schedule 8 is a true
and correct list of all the duly authorized, issued and outstanding stock of
each Subsidiary and the record and beneficial owners of such stock. Also set
forth on Schedule 8 is each equity Investment of NWS and each Subsidiary that
represents 50% or less of the equity of the entity in which such investment was
made.
9. Notes. Attached hereto as Schedule 9 is a true and
correct list of all intercompany promissory notes between NWS and each
Subsidiary of NWS and between each Subsidiary of NWS and each other such
Subsidiary.
10. Advances. Attached hereto as Schedule 10 is a true and
correct list of all advances made by NWS to any Subsidiary of NWS or made by
any Subsidiary of NWS to NWS or any other Subsidiary of NWS, which advances
will be on and after the date hereof evidenced by one or more intercompany
promissory notes pledged to the Collateral Agent under the Pledge Agreement.
11. Mortgage Filings. Attached hereto as Schedule 11 is a
schedule setting forth, with respect to each Mortgaged
<PAGE> 211
4
Property, (i) the exact corporate name of the corporation that owns such
property as such name appears in its certificate of incorporation, (ii) if
different from the name identified pursuant to clause (i), the exact name of
the current record owner of such property reflected in the records of the
filing office for such property identified pursuant to the following clause and
(iii) the filing office in which a Mortgage with respect to such property must
be filed or recorded in order for the Collateral Agent to obtain a perfected
security interest therein.
IN WITNESS WHEREOF, the undersigned have duly executed this
certificate on this [ ] day of [ ].
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois
Corporation
by
_______________________
Name:
Title: [Financial Officer]
NORTHWESTERN STEEL AND WIRE
COMPANY, a Texas Corporation
by
______________________
Name:
Title: [Financial Officer]
<PAGE> 212
Annex 3 to the
Security Agreement
SUPPLEMENT NO. __ dated as of , to the Amended and
Restated Security Agreement dated as of August 16, 1988, as
amended and restated as of April 30, 1996, among NORTHWESTERN
STEEL AND WIRE COMPANY (as successor, by merger, to NW
Acquisition Corporation), an Illinois corporation ("NWS"),
Northwestern Steel and Wire Company (formerly known as H/N
Steel Company, Inc.) a Texas corporation ("NWS/Texas" and
together with NWS, the "Borrowers"), each subsidiary of NWS
listed on Schedule I thereto (each such subsidiary
individually a "Guarantor" and collectively, the "Guarantors";
the Guarantors and the Borrowers are referred to collectively
herein as the "Grantors") and CHEMICAL BANK, a New York
banking corporation ("Chemical Bank"), as collateral agent (in
such capacity, the "Collateral Agent") for the Secured Parties
(as defined in the Security Agreement).
A. Reference is made to (a) the Amended and Restated Credit
Agreement dated as of August 16, 1988, as amended and restated as of April 30,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrowers, the lenders from time to time party
thereto (the "Lenders"), Chemical Bank, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent") and Collateral Agent and
Chemical Bank, as issuing bank (in such capacity, the "Issuing Bank") and (b)
the Guarantee Agreement dated as of April 30, 1996 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee Agreement"), among the
Guarantors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Security Agreement
and the Credit Agreement.
C. The Grantors have entered into the Security Agreement in
order to induce the Lenders to make Loans and the Issuing Bank to issue Letters
of Credit. Section 7.15 of Security Agreement provides that additional
Subsidiaries of the Borrowers may become Grantors under the Security Agreement
by execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary (the "New Grantor") is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Grantor
under the Security Agreement in order to induce the Lenders to make additional
Loans and the Issuing Bank to issue additional Letters of
<PAGE> 213
2
Credit and as consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Collateral Agent and the New Grantor agree as
follows:
SECTION 1. In accordance with Section 7.15 of the Security
Agreement, the New Grantor by its signature below becomes a Grantor under the
Security Agreement with the same force and effect as if originally named
therein as a Grantor and the New Grantor hereby (a) agrees to all the terms and
provisions of the Security Agreement applicable to it as a Grantor thereunder
and (b) represents and warrants that the representations and warranties made by
it as a Grantor thereunder are true and correct on and as of the date hereof.
In furtherance of the foregoing, the New Grantor, as security for the payment
and performance in full of the Obligations (as defined in the Security
Agreement), does hereby create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties, their
successors and assigns, a security interest in and lien on all of the New
Grantor's right, title and interest in and to the Collateral (as defined in the
Security Agreement) of the New Grantor. Each reference to a "Grantor" in the
Security Agreement shall be deemed to include the New Grantor. The Security
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each of which
shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Grantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants
that (a) set forth on Schedule I attached hereto is a
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3
true and correct schedule of the location of any and all Collateral of the New
Grantor and (b) set forth under its signature hereto, is the true and correct
location of the chief executive office of the New Grantor.
SECTION 5. Except as expressly supplemented hereby, the
Security Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and in the Security Agreement shall not in any way
be affected or impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and of itself
affect the validity of such provision in any other jurisdiction). The parties
hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 7.01 of the Security Agreement. All
communications and notices hereunder to the New Grantor shall be given to it at
the address set forth under its signature below.
<PAGE> 215
4
SECTION 9. The New Grantor agrees to reimburse the Collateral
Agent for its reasonable out-of-pocket expenses in connection with this
Supplement, including the reasonable fees, other charges and disbursements of
counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent
have duly executed this Supplement to the Security Agreement as of the day and
year first above written.
[Name Of New Grantor],
by
-------------------------------
Name:
Title:
Address:
CHEMICAL BANK, as
Collateral Agent,
by
-------------------------------
Name:
Title:
<PAGE> 216
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
<TABLE>
<CAPTION>
Description Location
- ----------- --------
<S> <C>
</TABLE>
<PAGE> 217
EXHIBIT H
AMENDED AND RESTATED PLEDGE AGREEMENT
dated as of June 21, 1989, as amended and restated
as of April 30, 1996, among NORTHWESTERN STEEL AND
WIRE COMPANY (as successor, by merger, to NW
Acquisition Corporation), an Illinois corporation
("NWS"), each Subsidiary of NWS listed on Schedule
I hereto (each such Subsidiary individually a
"Subsidiary Pledgor" and collectively, the
"Subsidiary Pledgors"; NWS and the Subsidiary
Pledgors are referred to collectively herein as
the "Pledgors") and CHEMICAL BANK, a New York
banking corporation ("Chemical Bank"), as
collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined herein).
Reference is made to (a) the Amended and Restated Credit
Agreement dated as of August 16, 1988, as amended and restated as of April 30,
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among NWS, Northwestern Steel and Wire Company (formerly
known as H/N Steel Company, Inc), a Texas corporation ("NWS/Texas" and,
together with NWS, the "Borrowers"), the lenders from time to time party
thereto (the "Lenders"), Chemical Bank, as administrative agent for the Lenders
and Collateral Agent, and Chemical Bank as issuing bank (in such capacity, the
"Issuing Bank"), (b) the Pledge Agreement dated as of June 21, 1989, between
NWS and Chemical Bank as Collateral Agent (the "Existing Pledge Agreement") and
(c) the Guarantee Agreement dated as of April 30, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee
Agreement") among the Guarantors and the Collateral Agent. The parties hereto
are entering into this Agreement to amend and restate the Existing Pledge
Agreement in the form hereof as contemplated by the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers and
the Issuing Bank has agreed to issue Letters of Credit for the account of the
Borrowers, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. The Guarantors have agreed to guarantee,
among other things, all the obligations of the Borrowers under the Credit
Agreement. The obligations of the Lenders to make Loans and of the Issuing
Bank to issue Letters of Credit are conditioned upon, among other things, the
execution and delivery by the Pledgors of a Pledge
<PAGE> 218
2
Agreement in the form hereof to secure (a) the due and punctual payment by the
Borrowers of (i) the principal of and premium, if any, and interest (including
interest accruing during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding) on the Loans, when and as due, whether at
maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrowers under the
Credit Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,
secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of the Borrowers to the Secured Parties under
the Credit Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, obligations and liabilities of the
Borrowers under or pursuant to the Credit Agreement and the other Loan
Documents and (c) the due and punctual payment and performance of all the
covenants, agreements, obligations and liabilities of each Loan Party under or
pursuant to the Guarantee Agreement or the other Loan Documents (including all
obligations of the Borrowers and the Guarantors to the Collateral Agent or any
Sub-Agent (as defined in the Security Agreement) in respect of overdrafts on
any General Fund Account (as defined in the Security Agreement) maintained by
any of the Borrowers and the Guarantors with the Collateral Agent or such
Sub-Agent; provided, however, that the aggregate amount of obligations in
respect of overdrafts so secured at any time shall not exceed $500,000) (all
the monetary and other obligations referred to in the preceding clauses (a)
through (c) being referred to collectively as the "Obligations").
Accordingly, the Pledgors and the Collateral Agent, on
behalf of itself and each Secured Party (and each of their respective
successors or assigns), hereby agree as follows:
SECTION 1. Definitions. (a) Capitalized terms used
herein and not defined herein shall have meanings assigned to such terms in the
Credit Agreement.
<PAGE> 219
3
(b) As used herein, the following terms shall have the
following meanings:
"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Collateral Agent, (d) the Issuing Bank,
(e) the beneficiaries of each indemnification obligation undertaken
by any Pledgor under any Loan Document and (f) the successors and
assigns of each of the foregoing.
SECTION 2. Pledge. As security for the payment and
performance, as the case may be, in full of the Obligations, each Pledgor
hereby transfers, grants, bargains, sells, conveys, hypothecates, pledges, sets
over and delivers unto the Collateral Agent, its successors and assigns, and
hereby grants to the Collateral Agent, its successors and assigns, for the
ratable benefit of the Secured Parties, a security interest in all of the
Pledgor's right, title and interest in, to and under (a) the shares of capital
stock owned by it and listed on Schedule II hereto and any shares of capital
stock of or any Subsidiary obtained in the future by the Pledgor and the
certificates representing all such shares (the "Pledged Stock"); provided that
the Pledged Stock shall not include, to the extent that applicable law requires
that a Subsidiary of the Pledgor issue directors' qualifying shares, such
qualifying shares; (b)(i) the debt securities listed opposite the name of the
Pledgor on Schedule II hereto, (ii) any debt securities in the future issued to
the Pledgor and (iii) the promissory notes and any other instruments evidencing
such debt securities (the "Pledged Debt Securities"); (c) all other property
that may be delivered to and held by the Collateral Agent pursuant to the terms
hereof; (d) subject to Section 6, all payments of principal or interest,
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed, in respect of, in exchange for or upon the
conversion of the securities referred to in clauses (a) and (b) above; (e)
subject to Section 6, all rights and privileges of the Pledgor with respect to
the securities and other property referred to in clauses (a), (b), (c) and (d)
above; and (f) all proceeds of any of the foregoing (the items referred to in
clauses (a) through (f) above being collectively referred to as the
"Collateral"). Upon delivery to the Collateral Agent, (a) any stock
certificates, notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by stock or note
powers
<PAGE> 220
4
duly executed in blank or other instruments of transfer satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request and (b) all other property comprising part of the
Collateral shall be accompanied by proper instruments of assignment duly
executed by the applicable Pledgor and such other instruments or documents as
the Collateral Agent may reasonably request. Each delivery of Pledged
Securities shall be accompanied by a schedule describing the securities
theretofore and then being pledged hereunder, which schedule shall be attached
hereto as Schedule II and made a part hereof. Each schedule so delivered shall
supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all
right, title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Collateral Agent, its successors and assigns, for
the ratable benefit of the Secured Parties, forever; subject, however, to the
terms, covenants and conditions hereinafter set forth.
SECTION 3. Delivery of the Collateral. (a) Each Pledgor
agrees promptly to deliver or cause to be delivered to the Collateral Agent any
and all Pledged Securities, and any and all certificates or other instruments
or documents representing the Collateral.
(b) Each Pledgor will cause any Indebtedness for borrowed
money owed to the Pledgor by any person to be evidenced by a duly executed
promissory note that is pledged and delivered to the Collateral Agent pursuant
to the terms thereof.
SECTION 4. Representations, Warranties and Covenants.
Each Pledgor hereby represents, warrants and covenants, as to itself and the
Collateral pledged by it hereunder, to and with the Collateral Agent and the
other Secured Parties that:
(a) the Pledged Stock represents that percentage as set
forth on Schedule II of the issued and outstanding shares of each
class of the capital stock of the issuer with respect thereto;
(b) except for the security interest granted hereunder, the
Pledgor (i) is and will at all times continue to be the direct owner,
beneficially and of record, of the Pledged Securities indicated on
<PAGE> 221
5
Schedule II, (ii) holds the same free and clear of all Liens, (iii)
will make no assignment, pledge, hypothecation or transfer of, or
create or permit to exist any security interest in or other Lien on,
the Collateral, other than pursuant hereto, and (iv) subject to
Section 6, will cause any and all Collateral, whether for value paid
by the Pledgor or otherwise, to be forthwith deposited with the
Collateral Agent and pledged or assigned hereunder;
(c) the Pledgor (i) has the power and authority to pledge
the Collateral in the manner hereby done or contemplated and (ii)
will defend its title or interest thereto or therein against any and
all Liens (other than the Lien created by this Agreement), however
arising, of all persons whomsoever;
(d) no consent of any other person (including stockholders
or creditors of any Pledgor) and no consent or approval of any
Governmental Authority or any securities exchange was or is necessary
to the validity of the pledge effected hereby;
(e) by virtue of the execution and delivery by the Pledgors
of this Agreement, when the Pledged Securities, certificates or other
documents representing or evidencing the Collateral are delivered to
the Collateral Agent in accordance with this Agreement, the
Collateral Agent will obtain a valid and perfected first lien upon
and security interest in such Pledged Securities as security for the
payment and performance of the Obligations;
(f) the pledge effected hereby is effective to vest in the
Collateral Agent, on behalf of the Secured Parties, the rights of the
Collateral Agent in the Collateral as set forth herein;
(g) all of the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the
Pledged Stock is accurate and complete in all material respects as of
the date hereof; and
(i) the pledge of the Pledged Stock pursuant to this
Agreement does not violate Regulation G, T, U or X
<PAGE> 222
6
of the Federal Reserve Board or any successor thereto as of the date
hereof.
SECTION 5. Registration in Nominee Name; Denominations.
The Collateral Agent, on behalf of the Secured Parties, shall have the right
(in its sole and absolute discretion) to hold the Pledged Securities in its own
name as pledgee, the name of its nominee (as pledgee or as sub-agent) or the
name of the Pledgors, endorsed or assigned in blank or in favor of the
Collateral Agent. Each Pledgor will promptly give to the Collateral Agent
copies of any notices or other communications received by it with respect to
Pledged Securities registered in the name of such Pledgor. The Collateral
Agent shall at all times have the right to exchange the certificates
representing Pledged Securities for certificates of smaller or larger
denominations for any purpose consistent with this Agreement.
SECTION 6. Voting Rights; Dividends and Interest, etc.
(a) Unless and until an Event of Default shall have occurred and be
continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and/or other consensual rights and powers inuring to an owner
of Pledged Securities or any part thereof for any purpose consistent
with the terms of this Agreement, the Credit Agreement and the other
Loan Documents; provided, however, that such Pledgor will not be
entitled to exercise any such right if the result thereof could
materially and adversely affect the rights inuring to a holder of the
Pledged Securities or the rights and remedies of any of the Secured
Parties under this Agreement or the Credit Agreement or any other
Loan Document or the ability of the Secured Parties to exercise the
same.
(ii) The Collateral Agent shall execute and deliver to each
Pledgor, or cause to be executed and delivered to each Pledgor, all
such proxies, powers of attorney and other instruments as such
Pledgor may reasonably request for the purpose of enabling such
Pledgor to exercise the voting and/or consensual rights and powers it
is entitled to exercise pursuant to subparagraph (i) above and to
receive the cash dividends it is entitled to receive pursuant to
subparagraph (iii) below.
<PAGE> 223
7
(iii) Each Pledgor shall be entitled to receive and retain
any and all cash dividends, interest and principal paid on the
Pledged Securities to the extent and only to the extent that such
cash dividends, interest and principal are permitted by, and
otherwise paid in accordance with, the terms and conditions of the
Credit Agreement, the other Loan Documents and applicable laws. All
noncash dividends, interest and principal, and all dividends,
interest and principal paid or payable in cash or otherwise in
connection with a partial or total liquidation or dissolution, return
of capital, capital surplus or paid-in surplus, and all other
distributions (other than distributions referred to in the preceding
sentence) made on or in respect of the Pledged Securities, whether
paid or payable in cash or otherwise, whether resulting from a
subdivision, combination or reclassification of the outstanding
capital stock of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation, acquisition or
other exchange of assets to which such issuer may be a party or
otherwise, shall be and become part of the Collateral, and, if
received by any Pledgor, shall not be commingled by such Pledgor with
any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the
Collateral Agent and shall be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary
endorsement).
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of any Pledgor to dividends, interest or principal
that such Pledgor is authorized to receive pursuant to paragraph (a)(iii) above
shall cease, and all such rights shall thereupon become vested in the
Collateral Agent, which shall have the sole and exclusive right and authority
to receive and retain such dividends, interest or principal. All dividends,
interest or principal received by the Pledgor contrary to the provisions of
this Section 6 shall be held in trust for the benefit of the Collateral Agent,
shall be segregated from other property or funds of such Pledgor and shall be
forthwith delivered to the Collateral Agent upon demand in the same form as so
received (with any necessary endorsement). Any and all money and other
property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the
<PAGE> 224
8
Collateral Agent in an account to be established by the Collateral Agent upon
receipt of such money or other property and shall be applied in accordance with
the provisions of Section 8. After all Events of Default have been cured or
waived, the Collateral Agent shall, within five Business Days after all such
Events of Default have been cured or waived, repay to each Pledgor all cash
dividends, interest or principal (without interest), that such Pledgor would
otherwise be permitted to retain pursuant to the terms of paragraph (a)(iii)
above and which remain in such account.
(c) Upon the occurrence and during the continuance of an
Event of Default, all rights of any Pledgor to exercise the voting and
consensual rights and powers it is entitled to exercise pursuant to paragraph
(a)(i) of this Section 6, and the obligations of the Collateral Agent under
paragraph (a)(ii) of this Section 6, shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have the sole and
exclusive right and authority to exercise such voting and consensual rights and
powers, provided that, unless otherwise directed by the Required Lenders, the
Collateral Agent shall have the right from time to time following and during
the continuance of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived, such Pledgor
will have the right to exercise the voting and consensual rights and powers
that it would otherwise be entitled to exercise pursuant to the terms of
paragraph (a)(i) above.
SECTION 7. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, subject to applicable regulatory
and legal requirements, the Collateral Agent may sell the Collateral, or any
part thereof, at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery as the
Collateral Agent shall deem appropriate. The Collateral Agent shall be
authorized at any such sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent and agree that
they are purchasing the Collateral for their own account for investment and not
with a view to the distribution or sale thereof, and upon consummation of any
such sale the Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so sold. Each
such purchaser at any such sale shall hold the property sold absolutely free
from any claim or right on the part of
<PAGE> 225
9
any Pledgor, and, to the extent permitted by applicable law, the Pledgors
hereby waive all rights of redemption, stay, valuation and appraisal any
Pledgor now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior
written notice (which each Pledgor agrees is reasonable notice within the
meaning of Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions) of the Collateral
Agent's intention to make any sale of such Pledgor's Collateral. Such notice,
in the case of a public sale, shall state the time and place for such sale and,
in the case of a sale at a broker's board or on a securities exchange, shall
state the board or exchange at which such sale is to be made and the day on
which the Collateral, or portion thereof, will first be offered for sale at
such board or exchange. Any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice of such sale. At any such
sale, the Collateral, or portion thereof, to be sold may be sold in one lot as
an entirety or in separate parcels, as the Collateral Agent may (in its sole
and absolute discretion) determine. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do
so, regardless of the fact that notice of sale of such Collateral shall have
been given. The Collateral Agent may, without notice or publication, adjourn
any public or private sale or cause the same to be adjourned from time to time
by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid in full by the purchaser or
purchasers thereof, but the Collateral Agent shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be
sold again upon like notice. At any public (or, to the extent permitted by
applicable law, private) sale made pursuant to this Section 7, any Secured
Party may bid for or purchase, free from any right of redemption, stay or
appraisal on the part of any Pledgor (all said rights being also hereby waived
and released), the Collateral or any part thereof offered for sale and may make
<PAGE> 226
10
payment on account thereof by using any claim then due and payable to it from
such Pledgor as a credit against the purchase price, and it may, upon
compliance with the terms of sale, hold, retain and dispose of such property
without further accountability to such Pledgor therefor. For purposes hereof,
(a) a written agreement to purchase the Collateral or any portion thereof shall
be treated as a sale thereof, (b) the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and (c) such Pledgor shall not be
entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Collateral Agent shall have
entered into such an agreement all Events of Default shall have been remedied
and the Obligations paid in full. As an alternative to exercising the power of
sale herein conferred upon it, the Collateral Agent may proceed by a suit or
suits at law or in equity to foreclose upon the Collateral and to sell the
Collateral or any portion thereof pursuant to a judgment or decree of a court
or courts having competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of this Section
7 shall be deemed to conform to the commercially reasonable standards as
provided in Section 9-504(3) of the Uniform Commercial Code as in effect in the
State of New York or its equivalent in other jurisdictions.
SECTION 8. Application of Proceeds of Sale. The proceeds
of any sale of Collateral pursuant to Section 7, as well as any Collateral
consisting of cash, shall be applied by the Collateral Agent as follows:
FIRST, to the payment of all costs and expenses incurred by
the Collateral Agent in connection with such sale or otherwise in
connection with this Agreement, any other Loan Document or any of the
Obligations, including all court costs and the reasonable fees and
expenses of its agents and legal counsel, the repayment of all
advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Pledgor and any other costs or
expenses incurred in connection with the exercise of any right or
remedy hereunder or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the
amounts so applied to be distributed among the Secured Parties pro
rata in accordance with the amounts
<PAGE> 227
11
of the Obligations owed to them on the date of any such distribution); and
THIRD, to the Pledgors, their successors or assigns, or as
a court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to
the time of application of any such proceeds, moneys or balances in accordance
with this Agreement. Upon any sale of the Collateral by the Collateral Agent
(including pursuant to a power of sale granted by statute or under a judicial
proceeding), the receipt of the purchase money by the Collateral Agent or of
the officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase money paid
over to the Collateral Agent or such officer or be answerable in any way for
the misapplication thereof.
SECTION 9. Reimbursement of Collateral Agent. (a) Each
Pledgor agrees to pay upon demand to the Collateral Agent the amount of any and
all reasonable expenses, including the reasonable fees, other charges and
disbursements of its counsel and of any experts or agents, that the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Collateral Agent hereunder or (iv) the failure by such
Pledgor to perform or observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Pledgor agrees to indemnify the Collateral
Agent, the Administrative Agent, each Lender and the Issuing Bank, each
Affiliate of any of the foregoing persons and each of their respective
directors, officers, employees and agents (each such person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses, including reasonable
counsel fees, other charges and disbursements, incurred by or asserted against
any Indemnitee arising out of, in any way connected with, or as a result of (i)
the execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated hereby
<PAGE> 228
12
or thereby, the performance by the parties hereto of their respective
obligations thereunder or the consummation of the Transactions and the other
transactions contemplated thereby or (ii) any claim, litigation, investigation
or proceeding relating to any of the foregoing, whether or not any Indemnitee
is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee.
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 9 shall remain operative and in full force and
effect regardless of the termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Obligations, the
invalidity or unenforceability of any term or provision of this Agreement or
any other Loan Document or any investigation made by or on behalf of the
Collateral Agent or any other Secured Party. All amounts due under this
Section 9 shall be payable on written demand therefor and shall bear interest
at the rate specified in Section 2.07 of the Credit Agreement.
SECTION 10. Collateral Agent Appointed Attorney-in-Fact.
Each Pledgor hereby appoints the Collateral Agent the attorney- in-fact of such
Pledgor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, the Collateral Agent shall have the right, upon
the occurrence and during the continuance of an Event of Default, with full
power of substitution either in the Collateral Agent's name or in the name of
such Pledgor, to ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due under and by virtue of
any Collateral, to endorse checks, drafts, orders and other instruments for the
payment of money payable to the Pledgor representing any interest or dividend
or other distribution payable in respect of the Collateral or any part thereof
or on account thereof and to give full discharge for the same, to settle,
compromise, prosecute or
<PAGE> 229
13
defend any action, claim or proceeding with respect thereto, and to sell,
assign, endorse, pledge, transfer and to make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing herein contained
shall be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any
payment received by the Collateral Agent, or to present or file any claim or
notice, or to take any action with respect to the Collateral or any part
thereof or the moneys due or to become due in respect thereof or any property
covered thereby. The Collateral Agent and the other Secured Parties shall be
accountable only for amounts actually received as a result of the exercise of
the powers granted to them herein, and neither they nor their officers,
directors, employees or agents shall be responsible to any Pledgor for any act
or failure to act hereunder, except for their own gross negligence or wilful
misconduct.
SECTION 11. Waivers; Amendment. (a) No failure or delay
of the Collateral Agent in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the
Collateral Agent hereunder and of the other Secured Parties under the other
Loan Documents are cumulative and are not exclusive of any rights or remedies
that they would otherwise have. No waiver of any provisions of this Agreement
or consent to any departure by any Pledgor therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on any Pledgor in any case
shall entitle such Pledgor to any other or further notice or demand in similar
or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Collateral Agent and the Pledgor or Pledgors with respect to which
such waiver, amendment or modification is to apply, subject to any consent
required in accordance with Section 9.08 of the Credit Agreement.
<PAGE> 230
14
SECTION 12. Securities Act, etc. In view of the position
of the Pledgors in relation to the Pledged Securities, or because of other
current or future circumstances, a question may arise under the Securities Act
of 1933, as now or hereafter in effect, or any similar statute hereafter
enacted analogous in purpose or effect (such Act and any such similar statute
as from time to time in effect being called the "Federal Securities Laws") with
respect to any disposition of the Pledged Securities permitted hereunder. Each
Pledgor understands that compliance with the Federal Securities Laws might very
strictly limit the course of conduct of the Collateral Agent if the Collateral
Agent were to attempt to dispose of all or any part of the Pledged Securities,
and might also limit the extent to which or the manner in which any subsequent
transferee of any Pledged Securities could dispose of the same. Similarly,
there may be other legal restrictions or limitations affecting the Collateral
Agent in any attempt to dispose of all or part of the Pledged Securities under
applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Each Pledgor recognizes that in light of such restrictions
and limitations the Collateral Agent may, with respect to any sale of the
Pledged Securities, limit the purchasers to those who will agree, among other
things, to acquire such Pledged Securities for their own account, for
investment, and not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that in light of such restrictions and
limitations, the Collateral Agent, in its sole and absolute discretion, (a) may
proceed to make such a sale whether or not a registration statement for the
purpose of registering such Pledged Securities or part thereof shall have been
filed under the Federal Securities Laws and (b) may approach and negotiate with
a single potential purchaser to effect such sale. Each Pledgor acknowledges
and agrees that any such sale might result in prices and other terms less
favorable to the seller than if such sale were a public sale without such
restrictions. In the event of any such sale, the Collateral Agent shall incur
no responsibility or liability for selling all or any part of the Pledged
Securities at a price that the Collateral Agent, in its sole and absolute
discretion, may in good faith deem reasonable under the circumstances,
notwithstanding the possibility that a substantially higher price might have
been realized if the sale were deferred until after registration as aforesaid
or if more than a single purchaser were approached. The provisions of this
Section 12 will apply notwithstanding the existence of a public or private
market upon which the
<PAGE> 231
15
quotations or sales prices may exceed substantially the price at which the
Collateral Agent sells.
SECTION 13. Registration, etc. Each Pledgor agrees that,
upon the occurrence and during the continuance of an Event of Default
hereunder, if for any reason the Collateral Agent desires to sell any of the
Pledged Securities of either Borrower at a public sale, it will, at any time
and from time to time, upon the written request of the Collateral Agent, use
its best efforts to take or to cause the issuer of such Pledged Securities to
take such action and prepare, distribute and/or file such documents, as are
required or advisable in the reasonable opinion of counsel for the Collateral
Agent to permit the public sale of such Pledged Securities. Each Pledgor
further agrees to indemnify, defend and hold harmless the Collateral Agent,
each other Secured Party, any underwriter and their respective officers,
directors, affiliates and controlling persons from and against all loss,
liability, expenses, costs of counsel (including, without limitation,
reasonable fees and expenses to the Collateral Agent of legal counsel), and
claims (including the costs of investigation) that they may incur insofar as
such loss, liability, expense or claim arises out of or is based upon any
alleged untrue statement of a material fact contained in any prospectus (or any
amendment or supplement thereto) or in any notification or offering circular,
or arises out of or is based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the statements in any
thereof not misleading, except insofar as the same may have been caused by any
untrue statement or omission based upon information furnished in writing to
such Pledgor or the issuer of such Pledged Securities by the Collateral Agent
or any other Secured Party expressly for use therein. Each Pledgor further
agrees, upon such written request referred to above, to use its best efforts to
qualify, file or register, or cause the issuer of such Pledged Securities to
qualify, file or register, any of the Pledged Securities under the Blue Sky or
other securities laws of such states as may be requested by the Collateral
Agent and keep effective, or cause to be kept effective, all such
qualifications, filings or registrations. Each Pledgor will bear all costs and
expenses of carrying out its obligations under this Section 13. Each Pledgor
acknowledges that there is no adequate remedy at law for failure by it to
comply with the provisions of this Section 13 and that such failure would not
be adequately compensable in damages, and
<PAGE> 232
16
therefore agrees that its agreements contained in this Section 13 may be
specifically enforced.
SECTION 14. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the grant of a security interest in the Collateral
and all obligations of each Pledgor hereunder, shall be absolute and
unconditional irrespective of (a) any lack of validity or enforceability of the
Credit Agreement, any other Loan Document, any agreement with respect to any of
the Obligations or any other agreement or instrument relating to any of the
foregoing, (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Credit Agreement, any other Loan
Document or any other agreement or instrument relating to any of the foregoing,
(c) any exchange, release or nonperfection of any other collateral, or any
release or amendment or waiver of or consent to or departure from any guaranty,
for all or any of the Obligations or (d) any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Pledgor in
respect of the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 15. Termination or Release. (a) This Agreement
and the security interests granted hereby shall terminate when all the
Obligations have been indefeasibly paid in full and the Lenders have no further
commitment to lend under the Credit Agreement, the Letter of Credit Exposure
has been reduced to zero and the Issuing Bank has no further obligation to
issue Letters of Credit under the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any
Collateral that is permitted under the Credit Agreement to any person that is
not a Pledgor, or, upon the effectiveness of any written consent to the release
of the security interest granted hereby in any Collateral pursuant to Section
9.08(b) of the Credit Agreement, the security interest in such Collateral shall
be automatically released.
(c) In connection with any termination or release pursuant
to paragraph (a) or (b), the Collateral Agent shall execute and deliver to any
Pledgor, at such Pledgor's expense, all documents that such Pledgor shall
reasonably request to evidence such termination or release. Any execution and
delivery of documents pursuant to this
<PAGE> 233
17
Section 15 shall be without recourse to or warranty by the Collateral Agent.
SECTION 16. Notices. All communications and notices
hereunder shall be in writing and given as provided in the Security Agreement.
All communications and notices hereunder to any Subsidiary Pledgor shall be
given to it in care of NWS.
SECTION 17. Further Assurances. Each Pledgor agrees to do
such further acts and things, and to execute and deliver such additional
conveyances, assignments, agreements and instruments, as the Collateral Agent
may at any time reasonably request in connection with the administration and
enforcement of this Agreement or with respect to the Collateral or any part
thereof or in order better to assure and confirm unto the Collateral Agent its
rights and remedies hereunder.
SECTION 18. Binding Effect; Several Agreement;
Assignments. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of
such party; and all covenants, promises and agreements by or on behalf of any
Pledgor that are contained in this Agreement shall bind and inure to the
benefit of its successors and assigns. This Agreement shall become effective
as to any Pledgor when a counterpart hereof executed on behalf of such Pledgor
shall have been delivered to the Collateral Agent and a counterpart hereof
shall have been executed on behalf of the Collateral Agent, and thereafter
shall be binding upon such Pledgor and the Collateral Agent and their
respective successors and assigns, and shall inure to the benefit of such
Pledgor, the Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Pledgor shall have the right
to assign its rights hereunder or any interest herein or in the Collateral (and
any such attempted assignment shall be void), except as expressly contemplated
by this Agreement or the other Loan Documents. If all of the capital stock of
a Pledgor is sold, transferred or otherwise disposed of to a person that is not
an Affiliate of either Borrower pursuant to a transaction permitted by Section
6.05 of the Credit Agreement, such Pledgor shall be released from its
obligations under this Agreement without further action. This Agreement shall
be construed as a separate agreement with respect to each Pledgor and may be
amended, modified, supplemented, waived or released with respect to any Pledgor
<PAGE> 234
18
without the approval of any other Pledgor and without affecting the obligations
of any other Pledgor hereunder
SECTION 19. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by each Pledgor
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit by the Issuing Bank, regardless of any
investigation made by the Secured Parties or on their behalf, and shall
continue in full force and effect as long as the principal of or any accrued
interest on any Loan or any other fee or amount payable under this Agreement or
any other Loan Document is outstanding and unpaid or the Letter of Credit
Exposure does not equal zero and as long as the Commitments and the Letter of
Credit Commitments have not been terminated.
(b) In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 20. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
SECTION 21. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original, but
all of which, when taken together, shall constitute a single contract, and
shall become effective as provided in Section 18. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be as effective as delivery of a manually executed counterpart of this
Agreement.
<PAGE> 235
19
SECTION 22. Rules of Interpretation. The rules of
interpretation specified in Article I of the Credit Agreement shall be
applicable to this Agreement. Section headings used herein are for convenience
of reference only, are not part of this Agreement and are not to affect the
construction of, or to be taken into consideration in interpreting this
Agreement.
SECTION 23. Jurisdiction; Consent to Service of Process.
(a) Each Pledgor hereby irrevocably and unconditionally submits, for itself
and its property, to the nonexclusive jurisdiction of any New York State court
or Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising out
of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that, to the extent permitted by
applicable law, all claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the extent permitted by law,
in such Federal court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that the Collateral
Agent or any other Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any
Pledgor or its properties in the courts of any jurisdiction.
(b) Each Pledgor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 16. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
<PAGE> 236
20
SECTION 24. WAIVER OF JURY TRIAL. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
SECTION 25. Additional Pledgors. Pursuant to Section 5.11
of the Credit Agreement, each Subsidiary of NWS that was not in existence or
not a Subsidiary on the date of the Credit Agreement is required to enter in
this Agreement as a Subsidiary Pledgor upon becoming a Subsidiary if such
Subsidiary owns or possesses property of a type that would be considered
Collateral hereunder. Upon execution and delivery by the Collateral Agent and
a Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall
become a Subsidiary Pledgor hereunder with the same force and effect as if
originally named as a Subsidiary Pledgor herein. The execution and delivery of
such instrument shall not require the consent of any Pledgor hereunder. The
rights and obligations of each Pledgor hereunder shall remain in full force and
effect notwithstanding the addition of any new Subsidiary Pledgor as a party to
this Agreement.
<PAGE> 237
21
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois corporation
by
-----------------------------
Name:
Title:
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I HERETO,
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
by
-----------------------------
Name:
Title:
CHEMICAL BANK, as Collateral Agent,
by
-----------------------------
Name:
Title:
<PAGE> 238
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name Address
---- -------
Northwestern Steel and Wire 121 Wallace Street
Company, a Texas corporation Sterling, Illinois 61081
Attn.: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
Northwestern Steel and Wire 121 Wallace Street
Company - a Delaware Sterling, Illinois 61081
corporation Attn.: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
Northwestern Steel and Wire 121 Wallace Street
Company - Kentucky, a Sterling, Illinois 61081
Delaware corporation Attn.: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
<PAGE> 239
Schedule II to the
Pledge Agreement
CAPITAL STOCK
<TABLE>
<CAPTION>
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
- ------ ----------- ------ ------ ---------
<S> <C> <C> <C> <C>
</TABLE>
DEBT SECURITIES
<TABLE>
<CAPTION>
Principal Date of Maturity
Issuer Amount Note Date
- ------ ---------- -------- ---------
<S> <C> <C> <C>
</TABLE>
<PAGE> 240
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the
AMENDED AND RESTATED PLEDGE AGREEMENT as of June
21, 1989, as amended and restated as of April 30,
1996, among NORTHWESTERN STEEL AND WIRE COMPANY,
an Illinois corporation ("NWS"), and each
subsidiary of NWS listed on Schedule I thereto
(each such subsidiary individually a "Subsidiary
Pledgor" and collectively, the "Subsidiary
Pledgors"; NWS and Subsidiary Pledgors are
referred to collectively herein as the "Pledgors")
and CHEMICAL BANK, a New York banking corporation
("Chemical Bank"), as collateral agent (in such
capacity, the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement
referred to below)
A. Reference is made to (a) the Amended and Restated
Credit Agreement dated as of August 16, 1988, as amended and restated as of
April 30, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrowers, the lenders from time to
time party thereto (the "Lenders"), Chemical Bank, as administrative agent and
Collateral Agent for the Lenders, and as issuing bank (in such capacity, the
"Issuing Bank"), and (b) the Guarantee Agreement dated as of April 30, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Guarantee
Agreement") among the Guarantors and the Collateral Agent.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in
order to induce the Lenders to make Loans and the Issuing Bank to issue Letters
of Credit. Pursuant to Section 5.11 of the Credit Agreement, each Subsidiary
of NWS that was not in existence or not a Subsidiary on the date of the Credit
Agreement is required to enter into the Pledge Agreement as a Subsidiary
Pledgor upon becoming a Subsidiary if such Subsidiary owns or possesses
property of a type that would be considered Collateral under the Pledge
Agreement. Section 25 of the Pledge Agreement provides that such Subsidiaries
may become Subsidiary Pledgors under the Pledge Agreement by execution and
delivery of an instrument in the form of this Supplement. The undersigned
Subsidiary (the "New Pledgor") is executing this Supplement in accordance
<PAGE> 241
2
with the requirements of the Credit Agreement to become a Subsidiary Pledgor
under the Pledge Agreement in order to induce the Lenders to make additional
Loans and the Issuing Bank to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit previously
issued.
Accordingly, the Collateral Agent and the New Pledgor agree
as follows:
SECTION 1. In accordance with Section 25 of the Pledge
Agreement, the New Pledgor by its signature below becomes a Pledgor under the
Pledge Agreement with the same force and effect as if originally named therein
as a Pledgor and the New Pledgor hereby agrees (a) to all the terms and
provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and
(b) represents and warrants that the representations and warranties made by it
as a Pledgor thereunder are true and correct on and as of the date hereof. In
furtherance of the foregoing, the New Pledgor, as security for the payment and
performance in full of the Obligations (as defined in the Pledge Agreement),
does hereby create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors and assigns,
a security interest in and lien on all of the New Pledgor's right, title and
interest in and to the Collateral (as defined in the Pledge Agreement) of the
New Pledgor. Each reference to a "Subsidiary Pledgor" or a "Pledgor" in the
Pledge Agreement shall be deemed to include the New Pledgor. The Pledge
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Supplement shall
become effective when the Collateral Agent shall have received counterparts of
this Supplement that, when taken together, bear the signatures of the New
Pledgor and the Collateral Agent. Delivery of an executed signature page to
this Supplement by
<PAGE> 242
3
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants
that set forth on Schedule I attached hereto is a true and correct schedule of
all its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the
Pledge Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the remaining
provisions contained herein and in the Pledge Agreement shall not in any way be
affected or impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall
be in writing and given as provided in Section 15 of the Pledge Agreement. All
communications and notices hereunder to the New Pledgor shall be given to it in
care of NWS.
<PAGE> 243
4
SECTION 9. The New Pledgor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in connection with
this Supplement, including the reasonable fees, other charges and disbursements
of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral
Agent have duly executed this Supplement to the Pledge Agreement as of the day
and year first above written.
[Name of New Pledgor],
by
-----------------------------
Name:
Title:
Address:
CHEMICAL BANK, as Collateral Agent,
by
-----------------------------
Name:
Title:
<PAGE> 244
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
CAPITAL STOCK
<TABLE>
<CAPTION>
Number and
Number of Registered Class of Percentage
Issuer Certificate Owner Shares of Shares
- ------ ----------- ----- ------ ---------
<S> <C> <C> <C> <C>
</TABLE>
DEBT SECURITIES
<TABLE>
<CAPTION>
Principal Date of Maturity
Issuer Amount Note Date
- ------ ---------- -------- ---------
<S> <C> <C> <C>
</TABLE>
<PAGE> 245
EXHIBIT I
GUARANTEE AGREEMENT dated as of April
30, 1996, among each of the subsidiaries listed on
Schedule I hereto (each such subsidiary individually,
a "Guarantor" and collectively, the "Guarantors") of
NORTHWESTERN STEEL AND WIRE COMPANY (as successor, by
merger, to NW Acquisition Corporation), an Illinois
corporation (" NWS"), and CHEMICAL BANK, a New York
banking corporation, as collateral agent (the
"Collateral Agent") for the Secured Parties (as
defined herein).
Reference is made to the Amended and Restated Credit Agreement
dated as of August 16, 1988, as amended and restated as of April 30, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among NWS, NORTHWESTERN STEEL AND WIRE COMPANY (formerly known as
H/N Steel Company, Inc.), a Texas corporation ("NWS/Texas" and, together with
NWS, the "Borrowers"), the lenders from time to time party thereto (the
"Lenders"), Chemical Bank, as administrative agent and as collateral agent, and
Chemical Bank, as issuing bank (in such capacity, the "Issuing Bank").
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrowers, and
the Issuing Bank has agreed to issue Letters of Credit for the account of the
Borrowers, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Guarantors is a wholly owned
Subsidiary of NWS and acknowledges that it will derive substantial benefit from
the making of the Loans by the Lenders, and the issuance of the Letters of
Credit by the Issuing Bank. The obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit are conditioned on, among other
things, the execution and delivery by the Guarantors of a Guarantee Agreement
in the form hereof. As consideration therefor and in order to induce the
Lenders to make Loans and the Issuing Bank to issue Letters of Credit, the
Guarantors are willing to execute this Agreement.
<PAGE> 246
2
Accordingly, the parties hereto agree as follows:
SECTION 1. Definitions. (a) Capitalized terms used herein
and not defined herein shall have meanings assigned to such terms in the Credit
Agreement.
(b) As used herein, the following terms shall have the
following meanings:
"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Collateral Agent, (d) the Issuing Bank,
(e) the beneficiaries of each indemnification obligation undertaken by
any Pledgor under any Loan Document and (f) the successors and assigns
of each of the foregoing.
SECTION 2. Guarantee. Each Guarantor unconditionally
guarantees, jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii) each
payment required to be made by the Borrowers under the Credit Agreement in
respect of any Letter of Credit, when and as due, including payments in respect
of reimbursement of disbursements, interest thereon and obligations to provide
cash collateral and (iii) all other monetary obligations, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Loan Parties to the Secured Parties under the Credit Agreement and the
other Loan Documents, (b) the due and punctual payment and performance of all
covenants, agreements, obligations and liabilities of the Loan Parties under or
pursuant to the Credit Agreement and the other Loan Documents (including all
obligations of the Borrowers and the Guarantors to the Collateral Agent or any
Sub-Agent (as defined in the Security Agreement) in respect of overdrafts on
any General Fund Account (as defined in the Security Agreement) maintained by
any of the Borrowers and the Guarantors with the Collateral Agent or any
Sub-Agent;
<PAGE> 247
3
provided, however, that the aggregate amount of obligations in respect of
overdrafts so secured at any time shall not exceed $500,000) (all the monetary
and other obligations referred to in the preceding clauses (a) through (b)
being collectively called the "Obligations"). Each Guarantor further agrees
that the Obligations may be extended or renewed, in whole or in part, without
notice to or further assent from it, and that it will remain bound upon its
guarantee notwithstanding any extension or renewal of any Obligation.
Anything contained in this Agreement 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 Transfer Laws"), in each case after giving effect to all other
liabilities of such Guarantor, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however, any liabilities
of such Guarantor (a) in respect of intercompany indebtedness to either
Borrowers or Affiliates of either Borrower to the extent that such indebtedness
would be discharged in an amount equal to the amount paid by such Guarantor
hereunder and (b) under any Guarantee of senior unsecured indebtedness or
Indebtedness subordinated in right of payment to the Obligations which
Guarantee contains a limitation as to maximum amount similar to that set forth
in this paragraph, pursuant to which the liability of such Guarantor hereunder
is included in the liabilities taken into account in determining such maximum
amount) and after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, contribution, reimbursement, indemnity or similar rights of such
Guarantor pursuant to (i) applicable law or (ii) any agreement providing for an
equitable allocation among such Guarantor and other Affiliates of the Borrowers
of obligations arising under Guarantees by such parties (including the
Indemnity, Subrogation and Contribution Agreement).
SECTION 3. Obligations Not Waived. To the fullest extent
permitted by applicable law, each Guarantor waives presentment to, demand of
payment from and protest to the Borrowers of any of the Obligations, and also
waives
<PAGE> 248
4
notice of acceptance of its guarantee and notice of protest for nonpayment. To
the fullest extent permitted by applicable law, the obligations of each
Guarantor hereunder shall not be affected by (a) the failure of the Collateral
Agent or any other Secured Party to assert any claim or demand or to enforce or
exercise any right or remedy against either Borrower or any other Guarantor
under the provisions of the Credit Agreement, any other Loan Document or
otherwise, (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of this Agreement, any other Loan
Document, any Guarantee or any other agreement, including with respect to any
other Guarantor under this Agreement or (c) the failure to perfect any security
interest in, or the release of, any of the security held by or on behalf of the
Collateral Agent or any other Secured Party.
SECTION 4. Security. Each of the Guarantors authorizes the
Collateral Agent and each of the other Secured Parties, to (a) take and hold
security for the payment of this Guarantee and the Obligations and exchange,
enforce, waive and release any such security, (b) apply such security and
direct the order or manner of sale thereof as they in their sole discretion may
determine and (c) release or substitute any one or more endorsees, other
guarantors of other obligors.
SECTION 5. Guarantee of Payment. Each Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not
of collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any of the security held for
payment of the Obligations or to any balance of any deposit account or credit
on the books of the Collateral Agent or any other Secured Party in favor of
either Borrower or any other person.
SECTION 6. No Discharge or Diminishment of Guarantee. The
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim
of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality
<PAGE> 249
5
of the foregoing, the obligations of each Guarantor hereunder shall not be
discharged or impaired or otherwise affected by the failure of the Collateral
Agent or any other Secured Party to assert any claim or demand or to enforce
any remedy under the Credit Agreement, any other Loan Document or any other
agreement, by any waiver or modification of any provision of any thereof, by
any default, failure or delay, wilful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to any extent vary the risk of any Guarantor or that would otherwise operate as
a discharge of each Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
SECTION 7. Defenses of Borrowers Waived. To the fullest
extent permitted by applicable law, each of the Guarantors waives any defense
based on or arising out of any defense of the Borrowers or the unenforceability
of the Obligations or any part thereof from any cause, or the cessation from
any cause of the liability of the Borrowers, other than the final and
indefeasible payment in full in cash of the Obligations. The Collateral Agent
and the other Secured Parties may, at their election, foreclose on any security
held by one or more of them by one or more judicial or nonjudicial sales,
accept an assignment of any such security in lieu of foreclosure, compromise or
adjust any part of the Obligations, make any other accommodation with the
Borrowers or any other guarantor or exercise any other right or remedy
available to them against the Borrowers or any other guarantor, without
affecting or impairing in any way the liability of any Guarantor hereunder
except to the extent the Obligations have been fully, finally and indefeasibly
paid in cash. Pursuant to applicable law, each of the Guarantors waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
either Borrower or any other Guarantor or guarantor, as the case may be, or any
security.
SECTION 8. Agreement to Pay; Subordination. In furtherance
of the foregoing and not in limitation of any other right that the Collateral
Agent or any other Secured Party has at law or in equity against any Guarantor
by virtue hereof, upon the failure of either Borrower or any other Loan Party
to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration,
<PAGE> 250
6
after notice of prepayment or otherwise, each Guarantor hereby promises to and
will forthwith pay, or cause to be paid, to the Collateral Agent or such other
Secured Party as designated thereby in cash the amount of such unpaid
Obligations. Upon payment by any Guarantor of any sums to the Collateral Agent
or any Secured Party as provided above, all rights of such Guarantor against
the applicable Borrower arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise shall in all
respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations. In addition, any
indebtedness of the Borrowers now or hereafter held by any Guarantor is hereby
subordinated in right of payment to the prior payment in full of the
Obligations. If any amount shall erroneously be paid to any Guarantor on
account of (i) such subrogation, contribution, reimbursement, indemnity or
similar right or (ii) any such indebtedness of either Borrower, such amount
shall be held in trust for the benefit of the Secured Parties and shall
forthwith be paid to the Collateral Agent to be credited against the payment of
the Obligations, whether matured or unmatured, in accordance with the terms of
the Loan Documents.
SECTION 9. Information. Each of the Guarantors assumes all
responsibility for being and keeping itself informed of each Borrower's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Obligations and the nature, scope and extent of the
risks that such Guarantor assumes and incurs hereunder, and agrees that none of
the Collateral Agent or the other Secured Parties will have any duty to advise
any of the Guarantors of information known to it or any of them regarding such
circumstances or risks.
SECTION 10. Representations and Warranties. Each of the
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement are true and
correct.
SECTION 11. Termination. The Guarantees made hereunder (a)
shall terminate when all the Obligations have been indefeasibly paid in full
and the Lenders have no further commitment to lend under the Credit Agreement,
the Letter of Credit Exposure has been reduced to zero and the Issuing Bank has
no further obligation to issue Letters of Credit under the Credit Agreement and
(b) shall continue to be effective or be reinstated, as the case may be, if at
any
<PAGE> 251
7
time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by any Secured Party or any Guarantor upon the bankruptcy
or reorganization of either Borrower, any Guarantor or otherwise.
SECTION 12. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Guarantors
that are contained in this Agreement shall bind and inure to the benefit of
each party hereto and their respective successors and assigns. This Agreement
shall become effective as to any Guarantor when a counterpart hereof executed
on behalf of such Guarantor shall have been delivered to the Collateral Agent,
and a counterpart hereof shall have been executed on behalf of the Collateral
Agent, and thereafter shall be binding upon such Guarantor and the Collateral
Agent and their respective successors and assigns, and shall inure to the
benefit of such Guarantor, the Collateral Agent and the other Secured Parties,
and their respective successors and assigns, except that no Guarantor shall
have the right to assign its rights or obligations hereunder or any interest
herein (and any such attempted assignment shall be void). If all of the
capital stock of a Guarantor is sold, transferred or otherwise disposed of
pursuant to a transaction permitted by Section 6.05 of the Credit Agreement,
such Guarantor shall be released from its obligations under this Agreement
without further action. This Agreement shall be construed as a separate
agreement with respect to each Guarantor and may be amended, modified,
supplemented, waived or released with respect to any Guarantor without the
approval of any other Guarantor and without affecting the obligations of any
other Guarantor hereunder.
SECTION 13. Waivers; Amendment. (a) No failure or delay of
the Collateral Agent in exercising any power or right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a right
or power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Collateral Agent
hereunder and of the other Secured Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
<PAGE> 252
8
departure by any Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Guarantor in any case shall entitle such
Guarantor to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Guarantors with respect to which such waiver, amendment or
modification relates and the Collateral Agent, with the prior written consent
of the Required Lenders (except as otherwise provided in the Credit Agreement).
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. Notices. All communications and notices
hereunder shall be in writing and given as provided in the Security Agreement.
All communications and notices hereunder to each Guarantor shall be given to it
in care of NWS.
SECTION 16. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by the Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or any other Loan Document shall
be considered to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit by the Issuing Bank regardless of any
investigation made by the Secured Parties or on their behalf, and shall
continue in full force and effect as long as the principal of or any accrued
interest on any Loan or any other fee or amount payable under this Agreement or
any other Loan Document is outstanding and unpaid or the Letter of Credit
Exposure does not equal zero and as long as the Commitments and the Letter of
Credit Commitment have not been terminated.
(b) In the event any one or more of the provisions contained
in this Agreement or in any other Loan Document should be held invalid, illegal
or unenforceable in
<PAGE> 253
9
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract, and shall become effective
as provided in Section 12. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 18. Rules of Interpretation. The rules of
interpretation specified in Article I of the Credit Agreement shall be
applicable to this Agreement.
SECTION 19. Jurisdiction; Consent to Service of Process. (a)
Each Guarantor hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement shall affect any right that
the Collateral Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against any Guarantor or its properties in the courts of any jurisdiction.
<PAGE> 254
10
(b) Each Guarantor hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or the other
Loan Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 15. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 20. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 20.
SECTION 21. Additional Guarantors. Pursuant to Section 5.11
of the Credit Agreement, each Subsidiary of NWS that was not in existence on
the date of the Credit Agreement is required to enter into this Agreement as a
Guarantor upon becoming a Subsidiary. Upon execution and delivery after the
date hereof by the Collateral Agent and such a Subsidiary of an instrument in
the form of Annex 1, such Subsidiary shall become a Guarantor hereunder with
the same force and effect as if originally named as a Guarantor herein. The
execution and delivery of any instrument adding an additional Guarantor as a
party to this Agreement shall not require the consent of any other Guarantor
hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Agreement.
<PAGE> 255
11
SECTION 22. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Secured Party is hereby authorized at any
time and from time to time, 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
Secured Party to or for the credit or the account of any Guarantor against any
or all the obligations of such Guarantor now or hereafter existing under this
Agreement and the other Loan Documents held by such Secured Party, irrespective
of whether or not such Secured Party shall have made any demand under this
Agreement or any other Loan Document and although such obligations may be
unmatured. The rights of each Secured Party under this Section 22 are in
addition to other rights and remedies (including other rights of setoff) which
such Secured Party may have.
SECTION 23. Other Guarantees. This Agreement supersedes and
replaces any guarantee of the Obligations entered into by any Guarantor under
the Original Credit Agreement.
<PAGE> 256
12
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
by
-----------------------
Name:
Title:
by
-----------------------
Name:
Title:
CHEMICAL BANK, as Collateral
Agent,
by
---------------------
Name:
Title:
<PAGE> 257
SCHEDULE I TO THE
GUARANTEE AGREEMENT
Guarantor Address
--------- -------
Northwestern Steel and 121 Wallace Street
Wire Company, a Sterling, Illinois 61081
Delaware corporation Attn.: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
Northwestern Steel and 121 Wallace Street
Wire Company - Sterling, Illinois 61081
Kentucky, a Delaware Attn.: Chief Financial Officer
corporation Telecopy: (815) 625-8819
Telephone: (815) 625-2331
<PAGE> 258
Annex 1 to the
Guarantee Agreement
SUPPLEMENT NO. dated as of ,
to the Guarantee Agreement dated as of April 30, 1996, among
each of the subsidiaries listed on Schedule I thereto (each
such subsidiary individually, a "Guarantor" and collectively,
the "Guarantors") of NORTHWESTERN STEEL AND WIRE COMPANY (as
successor, by merger, to NW Acquisition Corporation), an
Illinois corporation ("NWS"), and CHEMICAL BANK, a New York
banking corporation, as collateral agent (the "Collateral
Agent") for the Secured Parties (as defined herein).
A. Reference is made to the Amended and Restated Credit Agreement
dated as of August 16, 1988, as amended and restated as of April 30, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among NWS, NORTHWESTERN STEEL AND WIRE COMPANY (formerly known as
H/N Steel Company, Inc.), a Texas corporation ("NWS/Texas" and, together with
NWS, the "Borrowers"), the lenders from time to time party thereto (the
"Lenders"), Chemical Bank, as administrative agent and as collateral agent and
Chemical Bank, as issuing bank (in such capacity, the "Issuing Bank").
Capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Guarantee Agreement and
the Credit Agreement.
C. The Guarantors have entered into the Guarantee Agreement in order
to induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Pursuant to Section 5.11 of the Credit Agreement, each Subsidiary of
NWS that was not in existence or not a Subsidiary on the date of the Credit
Agreement is required to enter into the Guarantee Agreement as a Guarantor upon
becoming a Subsidiary. Section 21 of the Guarantee Agreement provides that
additional Subsidiaries of NWS may become Guarantors under the Guarantee
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of one of the Borrowers (the "New
Guarantor") is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Guarantor under the Guarantee Agreement in
order to induce the Lenders to make additional Loans and the Issuing Bank to
issue
<PAGE> 259
2
additional Letters of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 21 of the Guarantee Agreement,
the New Guarantor by its signature below becomes a Guarantor under the
Guarantee Agreement with the same force and effect as if originally named
therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms
and provisions of the Guarantee Agreement applicable to it as a Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Guarantor thereunder are true and correct on and as
of the date hereof. Each reference to a "Guarantor" in the Guarantee Agreement
shall be deemed to include the New Guarantor. The Guarantee Agreement is
hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received counterparts of this Supplement that, when
taken together, bear the signatures of the New Guarantor and the Collateral
Agent. Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the Guarantee
Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal
<PAGE> 260
3
or unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein and in the Guarantee Agreement shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision hereof in a particular jurisdiction shall
not in and of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in Section 15 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the
Borrowers.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its out-of-pocket expenses in connection with this Supplement, including
the fees, disbursements and other charges of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Guarantee Agreement as of the day and year
first above written.
[Name Of New Guarantor],
by
-------------------------------
Name:
Title:
Address:
----------------------
---------------------------
---------------------------
<PAGE> 261
4
CHEMICAL BANK, as Collateral
Agent,
by
------------------------------
Name:
Title:
<PAGE> 262
EXHIBIT J
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of April 30, 1996, among
NORTHWESTERN STEEL AND WIRE COMPANY (as successor, by
merger, to NW Acquisition Corporation), an Illinois
corporation ("NWS"), NORTHWESTERN STEEL AND WIRE
COMPANY (formerly known as H/N Steel Company, Inc.), a
Texas corporation ("NWS/Texas" and, together with NWS,
the "Borrowers"), each Subsidiary of NWS listed on
Schedule I hereto (the "Guarantors") and CHEMICAL
BANK, a New York banking corporation (" Chemical
Bank"), as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined in the Guarantee Agreement referred to below).
Reference is made to (a) the Amended and Restated Credit
Agreement dated as of August 16, 1988, as amended and restated as of April [ ],
1996 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among NWS, NWS/Texas, the lenders from time to time party
thereto (the "Lenders") and Chemical Bank, as administrative agent for the
Lenders (in such capacity, the "Administrative Agent"), Collateral Agent and
issuing bank (in such capacity, the "Issuing Bank"), and (b) the Guarantee
Agreement dated as of April 30, 1996, among the Guarantors and the Collateral
Agent (the "Guarantee Agreement"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Loans to the Borrowers, and
the Issuing Bank has agreed to issue Letters of Credit for the account of the
Borrowers, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. The Guarantors have guaranteed such Loans
and the other Obligations (as defined in the Guarantee Agreement) of the
Borrowers under the Credit Agreement pursuant to the Guarantee Agreement;
certain Guarantors have granted Liens on and security interests in certain of
their assets to secure such guarantees. The obligations of the Lenders to make
Loans and of the Issuing Bank to issue Letters of Credit are conditioned on,
among other things, the execution and delivery by the Borrowers and the
Guarantors of an agreement in the form hereof.
<PAGE> 263
2
Accordingly, the Borrowers, each Guarantor and the Collateral
Agent agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all
such rights of indemnity and subrogation as the Guarantors may have under
applicable law (but subject to Section 3), each Borrower agrees that (a) in the
event a payment shall be made by any Guarantor under the Guarantee Agreement,
the Borrowers shall indemnify such Guarantor for the full amount of such
payment and such Guarantor shall be subrogated to the rights of the person to
whom such payment shall have been made to the extent of such payment and (b) in
the event any assets of any Guarantor shall be sold pursuant to any Security
Document to satisfy a claim of any Secured Party, the Borrowers shall indemnify
such Guarantor in an amount equal to the greater of the book value or the fair
market value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 3) that, in the event a
payment shall be made by any other Guarantor under the Guarantee Agreement or
assets of any other Guarantor shall be sold pursuant to any Security Document
to satisfy a claim of any Secured Party and such other Guarantor (the "Claiming
Guarantor") shall not have been fully indemnified by the Borrowers as provided
in Section 1, the Contributing Guarantor shall indemnify the Claiming Guarantor
in an amount equal to the amount of such payment or the greater of the book
value or the fair market value of such assets, as the case may be, in each case
multiplied by a fraction of which the numerator shall be the net worth of the
Contributing Guarantor on the date hereof and the denominator shall be the
aggregate net worth of all the Guarantors on the date hereof (or, in the case
of any Guarantor becoming a party hereto pursuant to Section 12, the date of
the Supplement hereto executed and delivered by such Guarantor). Any
Contributing Guarantor making any payment to a Claiming Guarantor pursuant to
this Section 2 shall be subrogated to the rights of such Claiming Guarantor
under Section 1 to the extent of such payment.
SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors under Sections 1
and 2 and all other rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated to the indefeasible
payment in full in cash of the Obligations. No failure on the part of the
Borrowers or any Guarantor to
<PAGE> 264
3
make the payments required by Sections 1 and 2 (or any other payments required
under applicable law or otherwise) shall in any respect limit the obligations
and liabilities of any Guarantor with respect to its obligations hereunder, and
each Guarantor shall remain liable for the full amount of the obligations of
such Guarantor hereunder.
SECTION 4. NWS and NWS/Texas as Guarantor. For purposes of
Sections 1, 2 and 3 above, NWS shall be considered a Guarantor in respect of
all Loans made directly to NWS/Texas to which NWS shall have rendered payment
pursuant to the Credit Agreement and NWS/Texas shall be considered a Guarantor
in respect of all Obligations other than Loans made directly to it to which
NWS/Texas shall have rendered payment pursuant to the Credit Agreement.
SECTION 5. Termination. This Agreement shall survive and be
in full force and effect so long as any Obligation is outstanding and has not
been indefeasibly paid in full in cash, and so long as the Letter of Credit
Exposure has not been reduced to zero or any of the Commitments under the
Credit Agreement have not been terminated, and shall continue to be effective
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any Obligation is rescinded or must otherwise be restored by any
Secured Party or any Guarantor upon the bankruptcy or reorganization of either
Borrower, any Guarantor or otherwise.
SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. No Waiver; Amendment. (a) No failure on the part
of the Collateral Agent or any Guarantor to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy by the Collateral Agent or any Guarantor preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law. None of the Collateral Agent and the Guarantors shall be
deemed to have waived any rights hereunder unless such waiver shall be in
writing and signed by such parties.
<PAGE> 265
4
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Borrowers, the Guarantors and the Collateral Agent, with the prior
written consent of the Required Lenders (except as otherwise provided in the
Credit Agreement).
SECTION 8. Notices. All communications and notices hereunder
shall be in writing and given as provided in the Guarantee Agreement and
addressed as specified therein.
SECTION 9. Binding Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the parties that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns. Neither the Borrowers nor any Guarantor may assign or
transfer any of its rights or obligations hereunder (and any such attempted
assignment or transfer shall be void) without the prior written consent of the
Required Lenders. Notwithstanding the foregoing, at the time any Guarantor is
released from its obligations under the Guarantee Agreement in accordance with
such Guarantee Agreement and the Credit Agreement, such Guarantor will cease to
have any rights or obligations under this Agreement.
SECTION 10. Survival of Agreement; Severability. (a) All
covenants and agreements made by the Borrowers and each Guarantor herein and in
the certificates or other instruments prepared or delivered in connection with
this Agreement or the other Loan Documents shall be considered to have been
relied upon by the Collateral Agent, the other Secured Parties and each
Guarantor and shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Issuing Bank, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loans or any other fee or amount payable under the Credit Agreement or this
Agreement or under any of the other Loan Documents is outstanding and unpaid or
the Letter of Credit Exposure does not equal zero and as long as the
Commitments have not been terminated.
(b) In case any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in any respect,
no party hereto shall be
<PAGE> 266
5
required to comply with such provision for so long as such provision is held to
be invalid, illegal or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 11. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement shall be effective with
respect to any Guarantor when a counterpart bearing the signature of such
Guarantor shall have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.
SECTION 12. Rules of Interpretation. The rules of
interpretation specified in Article I of the Credit Agreement shall be
applicable to this Agreement.
SECTION 13. Additional Guarantors. Pursuant to Section 5.11
of the Credit Agreement, each Domestic Subsidiary (other than any inactive
Subsidiary) of NWS that was not in existence or not such a Subsidiary on the
date of the Credit Agreement is required to enter into the Guarantee Agreement
as a Guarantor upon becoming such a Subsidiary (or upon ceasing to be an
Inactive Subsidiary). Upon execution and delivery, after the date hereof, by
the Collateral Agent and such a Subsidiary of an instrument in the form of
Annex 1 hereto, such Subsidiary shall become a Guarantor hereunder with the
same force and effect as if originally named as a Guarantor hereunder. The
execution and delivery of any instrument adding an additional Guarantor as a
party to this Agreement shall not require the consent of any Guarantor
hereunder. The rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any new Guarantor as a
party to this Agreement.
<PAGE> 267
6
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of the date first
appearing above.
NORTHWESTERN STEEL AND WIRE
COMPANY, an Illinois
corporation
by
----------------------
Name:
Title:
NORTHWESTERN STEEL AND WIRE
COMPANY, a Texas corporation
by
----------------------
Name:
Title:
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I
HERETO, as a Guarantor,
by
----------------------
Name:
Title:
by
----------------------
Name:
Title:
CHEMICAL BANK, as
Collateral Agent,
by
----------------------
Name:
Title:
<PAGE> 268
SCHEDULE I
to the Indemnity, Subrogation
and Contribution Agreement
GUARANTORS
Name Address
---- -------
Northwestern Steel and 121 Wallace Street
Wire Company, a Sterling, Illinois 61081
Delaware corporation Attn.: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
Northwestern Steel and 121 Wallace Street
Wire Company-Kentucky, Sterling, Illinois 61081
a Delaware corporation Attn.: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
<PAGE> 269
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of [ ], to the Indemnity,
Subrogation and Contribution Agreement dated as of April 30,
1996 (as the same may be amended, supplemented or otherwise
modified from time to time, the "Indemnity, Subrogation and
Contribution Agreement"), among NORTHWESTERN STEEL AND WIRE
COMPANY (as successor, by merger, to NW Acquisition
Corporation), an Illinois corporation ("NWS") NORTHWESTERN
STEEL AND WIRE COMPANY (formerly known as H/N Steel Company,
Inc.), a Texas corporation ("NWS/Texas" and, together with
NWS, the "Borrowers"), each Subsidiary of NWS listed on
Schedule I thereto (the "Guarantors"), and CHEMICAL BANK, a
New York banking corporation ("Chemical Bank"), as collateral
agent (the "Collateral Agent") for the Secured Parties (as
defined in the Guarantee Agreement referred to below).
A. Reference is made to (a) the Amended and Restated Credit Agreement
dated as of August 16, 1988, as amended and restated as of April 30, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among NWS, NWS/Texas, the lenders from time to time party thereto
(the "Lenders") and Chemical Bank, as administrative agent for the Lenders (in
such capacity, the "Administrative Agent"), Collateral Agent and issuing bank
(in such capacity, the "Issuing Bank"), and (b) the Guarantee Agreement dated
as of April 30, 1996, among the Guarantors and the Collateral Agent (the
"Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Indemnity, Subrogation
and Contribution Agreement and the Credit Agreement.
C. The Borrowers and the Guarantors have entered into the Indemnity,
Subrogation and Contribution Agreement in order to induce the Lenders to make
Loans and the Issuing Bank to issue Letters of Credit. Pursuant to Section
5.11 of the Credit Agreement, each Domestic Subsidiary (other than any inactive
Subsidiary) of NWS that was not in existence or not such a Subsidiary on the
date of the Credit Agreement is required to enter into the Guarantee Agreement
as a Guarantor upon becoming a Subsidiary (or ceasing to be an Inactive
Subsidiary). Section 12 of the Indemnity,
<PAGE> 270
2
Subrogation and Contribution Agreement provides that additional Subsidiaries of
NWS may become Guarantors under the Indemnity, Subrogation and Contribution
Agreement by execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary of NWS (the "New Guarantor") is
executing this Supplement in accordance with the requirements of the Credit
Agreement to become a Guarantor under the Indemnity, Subrogation and
Contribution Agreement in order to induce the Lenders to make additional Loans
and the Issuing Bank to issue additional Letters of Credit and as consideration
for Loans previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its signature
below becomes a Guarantor under the Indemnity, Subrogation and Contribution
Agreement with the same force and effect as if originally named therein as a
Guarantor and the New Guarantor hereby agrees to all the terms and provisions
of the Indemnity, Subrogation and Contribution Agreement applicable to it as a
Guarantor thereunder. Each reference to a "Guarantor" in the Indemnity,
Subrogation and Contribution Agreement shall be deemed to include the New
Guarantor. The Indemnity, Subrogation and Contribution Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this Supplement has been
duly authorized, executed and delivered by it and constitutes its legal, valid
and binding obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Collateral
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Supplement.
<PAGE> 271
3
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions contained in
this Supplement should be held invalid, illegal or unenforceable in any
respect, neither party hereto shall be required to comply with such provision
for so long as such provision is held to be invalid, illegal or unenforceable,
but the validity, legality and enforceability of the remaining provisions
contained herein and in the Indemnity, Subrogation and Contribution Agreement
shall not in any way be affected or impaired. The parties hereto shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All communications and notices hereunder shall be in
writing and given as provided in Section 7 of the Indemnity, Subrogation and
Contribution Agreement. All communications and notices hereunder to the New
Guarantor shall be given to it at the address set forth under its signature.
SECTION 8. The New Guarantor agrees to reimburse the Collateral Agent
for its reasonable out-of-pocket expenses in connection with this Supplement,
including the reasonable fees, other charges and disbursements of counsel for
the Collateral Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral Agent have
duly executed this Supplement to the Indemnity, Subrogation and Contribution
Agreement as of the day and year first above written.
[Name Of New Guarantor],
by
------------------------
Name:
Title:
<PAGE> 272
4
Address:
CHEMICAL BANK, as
Collateral Agent,
by
------------------------
Name:
Title:
<PAGE> 273
SCHEDULE 1.01 (a)
Guarantors Addresses
---------- ---------
Northwestern Steel and Wire 121 Wallace Street
Company, a Delaware Company Sterling, Illinois 61081
Attn: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
Northwestern Steel and Wire 121 Wallace Street
Company-Kentucky, a Delaware Company Sterling, Illinois 61081
Attn: Chief Financial Officer
Telecopy: (815) 625-8819
Telephone: (815) 625-2331
<PAGE> 274
SCHEDULE 2.01
Revolving Credit Commitments of the Lenders
-------------------------------------------
Percentage of
Name and Address of Lender Commitment Commitment
- -------------------------- ---------- -------------
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: James Ramage
Telecopy: (212) 270-2625
Telephone: (212) 270-1375 $15,000,000 15%
Heller Financial, Inc.
500 West Monroe
Chicago, IL 60661
Attention: Mark Tompkins
Telecopy: (312) 441-7367
Telephone: (312) 441-7517 $15,000,000 15%
HSBC Business Loans, Inc.
190 S. LaSalle, Suite 1100
Chicago, IL 60603
Attention: Liz Murray
Telecopy: (312) 368-4943
Telephone: (312) 368-1351 $15,000,000 15%
Bank of America Illinois
231 South LaSalle Street
Chicago, IL 60697
Attention: Dan Lange
Telecopy: (312) 828-1974
Telephone: (312) 943-1641 $15,000,000 15%
Wells Fargo Bank, N.A.
555 Montgomery Street
17th Floor
San Francisco, CA 94111
Attention: Ms. Kathleen Harrison
Telecopy: (415) 362-5081
Telephone: (415) 396-7509 $15,000,000 15%
<PAGE> 275
3
Name and Address of Lender Percentage of
- -------------------------- Commitment Commitment
---------- ----------
Societe Generale
1221 Avenue of the Americas
New York, NY 10020
Attention: David Brunson
Telecopy: (212) 278-6178
Telephone: (212) 278-6461 $15,000,000 15%
Caisse Nationale de Credit
Agricole
55 East Monroe Street
Suite 4700
Chicago, IL 60603-5702
Attention: Ray Falkenberg
Telecopy: (312) 372-3724
Telephone: (312) 917-7426 $10,000,000 10%
---------------- ----
Total $100,000,000 100%
<PAGE> 276
<TABLE>
<CAPTION>
SCHEDULE 2.02
Rollover Term Loan Commitments of the Lenders
---------------------------------------------
Fixed Rate on
Outstanding Principal Fixed Rate
Name of Lender Amount on Effective Date Amount
-------------- ------------------------------------------ ---------------
Capitalized Rollover
Fixed Rate Amount Interest Amount*
----------------- ---------------
<S> <C> <C> <C>
Chemical Bank
270 Park Avenue
New York, NY 10017
Attention: James Ramage
Telecopy: (212) 270-2625
Telephone: (212) 270-1375 $ 3,389,286.40 $ 500,809.58 13.23%
The Travelers Insurance Company
1 Tower Square
Att: Securities Dept.
Capt. Finance Div 9 P.B.
Hartford, CT 06183-2030
Attention: Cara Cordello
Telecopy: (203) 277-2299
Telephone: (203) 951-4104 $ 6,778,572.80 $ 985,767.99 13.14%
The Travelers Indemnity Company
1 Tower Square
Att: Securities Dept
Capt. Finance Div 9 P.B.
Hartford, CT 06183-2030
Attention: Cara Cordello
Telecopy: (203) 277-2299
Telephone: (203) 951-4104 $ 4,745,000.96 $ 690,037.59 13.14%
The Travelers Insurance Company
(as to Separate Account D)
1 Tower Square
Att: Securities Dept
Capt. Finance Div 9 P.B.
Hartford, CT 06183-2030
Attention: Cara Cordello
Telecopy: (203) 277-2299
Telephone: (203) 951-4104 $ 677,857.28 $ 98,576.80 13.14%
The Phoenix Insurance Company
1 Tower Square
Att: Securities Dept
Capt. Finance Div 9 P.B.
Hartford, CT 06183-2030
Attention: Cara Cordello
Telecopy: (203) 277-2299
Telephone: (203) 951-4104 $ 1,355,714.56 $ 197,153.60 13.14%
Mitsui Nevitt Capital Corp.
1 Embarcadero Center
Suite 3900
San Francisco, CA 94111
Attention: Susan Woo
Telecopy: (415) 397-8505
Telephone: (415) 984-5204 $16,946,432.00 $2,398,367.26 12.99%
---------------------------------------------------------------------------
Total $33,892,864.00 $4,870,712.82
* bears interest at a rate per annum equal to the Alternate Base Rate plus 1-1/2%
</TABLE>
<PAGE> 277
SCHEDULE 3.03
GOVERNMENTAL APPROVALS
None
<PAGE> 278
SCHEDULE 3.06
RECEIVABLES
See pages immediately following
<PAGE> 279
SCHEDULE 3.06
RECEIVABLES
1. See Aged Trial Balance as of March 31, 1996 attached hereto.
2. As of March 31, 1996, NWS's allowance for doubtful or uncollectible
accounts for fiscal 1996 was $1,000,000.
<PAGE> 280
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 1
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 A A A SUPPLY CORP SCHERERVILLE IND
.00 .00 .00 19,483.37 .00 .00 .00 .00 19,483.37
11 A586/A572 STEEL CO PITTSBURGH PA
.00 .00 .00 52,100.93 .00 .00 .00 .00 52,100.93
39 A & L MANUFACTURING LOUISVILLE KY
.00 .00 .00 9,992.86 .00 .00 .00 .00 9,992.86
39 A & L PRODUCTS CO CHICAGO IL
.00 .00 .00 84,577.91 .00 .00 .00 .00 84,577.91
45 A B C BALING WIRE & SUP CO INC TEANECK NEW JERSEY
149.52 .00 .00 44,861.96 .00 .00 .00 .00 45,011.48
60 A B CHANCE CO CENTRALIA MO
.00 .00 .00 128,544.00 .00 .00 .00 .00 128,544.00
16 ABC RAIL PRODUCTS CORPORATION CHICAGO HEIGHTS IL
.00 .00 .00 2,567.54- 6,458.68 .00 .00 .00 3,891.14
120 ACE HARDWARE CORPORATION OAK BROOK ILLINOIS
45,906.12 1,212.54 11,674.11 1,579,177.59 1,402.00 .00 .00 .00 1,639,572.36
140 ACE IRON & STEEL CORP MILWAUKEE WISCONSIN
.00 .00 .00 8,528.64 .00 .00 .00 .00 8,528.64
148 ACIER CMC DIVISION CANADA J4G 1E6
.00 .00 .00 8,298.26 8,187.42 .00 .00 .00 16,485.68
153 ANCAR DIV ACF IND HUNTINGTON W VA
.00 .00 .00 42,223.12 .00 .00 .00 .00 42,223.12
196 ACME WIRE PRODUCTS BROADVIEW IL
.00 .00 47,966.60 .00 9,059.60 .00 .00 .00 57,026.20
202 ACTION STEEL SUPPLY, INC INDIANAPOLIS IN
8,909.69 .00 .00 454,926.97 59,325.05 .00 .00 .00 523,161.71
206 ACTRON STEEL INC TRAVERSE CITY MI
.00 .00 .00 7,084.80 .00 .00 .00 .00 7,084.80
233 ADCON WIRE NICHOLASVILLE KY
.00 .00 .00 973,335.43 .00 .00 .00 .00 973,335.43
292 ADRIAN FABRICATORS INC ADRIAN MI
.00 .00 94,174.50 9,418.50 .00 .00 .00 .00 103,593.00
443 AIRCON FILTER SALES & SERVICE PHILADELPHIA PA
</TABLE>
<PAGE> 281
<TABLE>
<CAPTION>
04-02-96 PAGE: 2
NORTHWESTERN STEEL AND WIRE COMPANY
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 3,308.00 .00 .00 .00 .00 3,308.00
461 AJAK MANUFACTURING CO INC HILLSBORO NJ
.00 .00 .00 10,190.84 .00 .00 .00 .00 10,190.84
550 ALBANY STEEL INC ALBANY NY
.00 .00 .00 20,494.86 12,142.08 .00 .00 .00 32,636.94
915 J. ALLAN STEEL CO PITTSBURGH PA
.00 .00 .00 419,403.26 40,443.15 .00 .00 .00 459,846.41
1037 ALLIED LOCKE INDUSTRIES INC DIXON ILLINOIS
.00 .00 .00 4,570.90 .00 .00 .00 .00 4,570.90
1038 ALLIED BUILDING STORES INC MONROE LA
.00 .00 .00 24,962.98 .00 .00 .00 .00 24,962.98
1048 ALLIED MIDWEST MERCH INC SIOUX FALLS SO DAK
.00 .00 .00 11,776.69 .00 .00 .00 .00 11,776.69
1072 ALLIED STEEL CORPORATION N CHARLESTON SC
.00 .00 .00 9,186.36 .00 .00 .00 .00 9,186.36
1298 ALMET INC NFW HAVEN INDIANA
.00 .00 .00 6,758.64 .00 .00 .00 .00 6,758.64
1273 ALPHA INDUSTRIES INC MC KINNEY TX
.00 .00 .00 9,632.19 9,416.71 .00 .00 .00 19,048.90
1279 ALPHA STEEL CORPORATION HAMMOND IN
4,792.64 .00 450,109.97 897,922.83 169,583.97 .00 .00 .00 1,522,409.31
1320 ALRO STEEL CORP JACKSON MICH
4,842.75 .00 .00 587,277.74 .00 .00 .00 .00 592,120.48
1341 ALTAMONT WHOLESALE COMPANY INC ALTAMONT IL
.00 .00 .00 15,843.44 .00 .00 .00 .00 15,843.44
1392 AMANA REFRIGERATION INC AMANA IOWA
.00 .00 .00 32,106.75 .00 .00 .00 .00 32,106.75
1435 AMERICAN DESIGN & ENG INC MUNCIE IN
.00 .00 .00 8,290.00 .00 .00 .00 .00 8,290.00
1445 AMERICAN EAGLE STEEL CORP ANNAPOLIS MD
.00 .00 .00 33,886.52 .00 .00 .00 .00 33,856.52
1485 SERVISIAR CORPORATION #6861 BUTLER PENN
18,180.01 .00 .00 117,244.22 .00 .00 .00 .00 135,424.23
</TABLE>
<PAGE> 282
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 3
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1565 AMERICAN METALS CORP WEST SACRAMENTO CA
.00 .00 .00 6,018.76 .00 .00 .00 .00 6,018.76
1587 AMERICAN SPRING WIRE CORP CLEVELAND OH
.00 .00 .00 51,645.06 3,971.00 .00 .00 .00 55,616.06
1607 AMERICAN STEEL & ALUM CORP RI CUMBERLAND R.I.
.00 .00 .00 23,991.43 2,589.00 .00 .00 .00 26,580.43
1608 AMERICAN STL & ALUM CORP (NV) LIVERPOOL NV
.00 .00 .00 68,421.68 12,324.04 .00 .00 .00 80,745.72
1609 AMERICAN STL & ALUMINUM (PA) HARRISBURG PA
.00 .00 .00 41,115.72 9,000.24 .00 .00 .00 50,115.96
1612 AMERICAN STL AND IND SUPP CO MINNEAPOLIS MINN
.00 .00 .00 46,390.99 .00 .00 .00 .00 46,390.99
1663 AMERICAN STRUCTURAL METALS HUGO NH
.00 .00 .00 75,963.68 .00 .00 .00 .00 75,963.68
1689 AMERICAN UNDERGROUND STRUCT BRISTOL VA
.00 .00 .00 9,623.12 .00 .00 .00 .00 9,623.12
1710 AMERI-FORGE CORPORATION HOUSTON TX
.00 .00 .00 241,743.23 .00 .00 .00 .00 241,743.23
1720 ANTEX STEEL INC CHICAGO ILL
.00 .00 .00 25,013.16 .00 .00 .00 .00 25,013.16
1725 ANTHOR STEEL INC ERIE PA
.00 .00 .00 68,576.71 .00 .00 .00 .00 68,576.71
1840 ANDERSON BUILDING MATERIALS CO ST JOSEPH MICHIGAN
.00 .00 .00 19,301.76 .00 .00 .00 .00 19,301.76
1972 THE ANDERSON'S MAUMEE OHIO
1,245.40 866.53 .00 9,114.16 .00 .00 .00 .00 11,226.09
2200 ANTHONY SUPPLY CO INC GREENVILLE ILL
.00 .00 12,312.00 33,741.15 .00 .00 .00 .00 46,053.15
2280 A.P.I. SUPPLY CO MINNEAPOLIS MN
6,524.48 .00 579,408.16 31,793.33 18,514.63 .00 .00 .00 636,238.60
2360 ARKANSAS STEEL PROCESSING INC ARNDREL AR
.00 .00 .00 1,665.55- .00 .00 .00 .00 1,665.55-
2361 AFCU STEEL, INC. LITTLE ROCK ARKANSAS
</TABLE>
<PAGE> 283
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 4
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 181,876.60 .00 .00 .00 .00 181,876.60
2362 AFCO METALS INC NORCROSS GA
.00 .00 .00 26,903.00 .00 .00 .00 .00 26,903.00
2375 ARLINGTON STRUCT STEEL CO INC ARLINGTON HGTS ILL
.00 .00 .00 124,261.02 .00 .00 .00 .00 124,261.02
2379 ARMCO STEEL HOUSTON HOUSTON TX
.00 .00 .00 1,534.56 .00 .00 .00 .00 1,534.56
2425 ARNOLD STEEL CO., INC LAKEWOOD NJ
.00 .00 .00 19,374.09 .00 .00 .00 .00 19,374.09
2519 A.R.T. CONCRETE & TOOL SUPPLY ST CHARLES MD
.00 .00 .00 .00 7,424.58 .00 .00 .00 7,424.58
2520 ABQ COMBUSTION ENGINEERING INC CHATTANOOGA TN
.00 .00 .00 32,610.00- .00 .00 .00 .00 32,610.00-
2550 ART IRON INC TOLEDO OHIO
141.66 .00 .00 220,086.30 .00 .00 .00 .00 220,227.96
2790 ATLAS CONSTRUCTION SUPPLY CO PITTSFIELD ILL
.00 .00 .00 175.88- .00 .00 .00 .00 175.88-
2802 ATLAS STEEL & WIRE DIV NEW ORLEANS LA
.00 .00 .00 43,209.60 .00 .00 .00 .00 43,209.60
3045 AVONDALE SHIPYARDS DIV. NEW ORLEANS LA
.00 .00 .00 18,748.61 .00 .00 .00 .00 18,748.61
3064 AZCO STEEL COMPANY SADDLE BROOK N J
2,072.61 1,351.86 .00 222,818.86 27,625.89 .00 .00 .00 253,869.22
3130 BABCOCK FENCE & STONE CO PITTSBURGH PENN
.00 .00 .00 5,705.12 .00 .00 .00 .00 5,705.12
3160 BADGER CORRUGATING CO LA CROSSE WISC
.00 .00 .00 7,965.00 .00 .00 .00 .00 7,965.00
3240 RUSSEL METALS-BANCALL GROUP APPLETON WISC
.00 .00 .00 295,251.66 80,374.29 .00 .00 .00 375,625.95
3267 BAINESTEEL DIV SAMUEL SON & CO CANADA L3R 2N8
.00 .00 .00 .00 15,537.16 .00 .00 .00 15,537.16
3595 STRUCTURAL STEEL FAB DIV LINTHICUM HEIGHTS MD
.00 .00 .00 21,657.32 10,320.25 .00 .00 .00 31,977.57
</TABLE>
<PAGE> 284
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 5
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3597 B & B FORM TIE CO INC ST PETERS MD
.00 .00 .00 .00 7,830.00 .00 .00 .00 7,830.00
3690 BARBOUR BROS STEEL CO INC PENNINGTON NEW JER
.00 .00 .00 11,331.55 .00 .00 .00 .00 11,331.55
3825 BARNES & SWEENEY NOVI MI
.00 .00 .00 7,918.96 .00 .00 .00 .00 7,918.96
3982 J BARTHOLOMEW ENGR CO CHICAGO IL
.00 .00 .00 16,762.82 .00 .00 .00 .00 16,762.82
4088 BASIC MARINE INC ESCANABA MI
.00 .00 .00 8,293.42 .00 .00 .00 .00 8,293.42
4212 BAY STEEL CORPORATION MOBILE AL
.00 .00 .00 16.83- .00 .00 .00 .00 16.83-
4341 BNG METALS INC RICHMOND VA
.00 .00 .00 22,870.06 .00 .00 .00 .00 22,870.06
4425 BECKLEY STEEL INC CRAB ORCHARD WV
.00 .00 .00 10,421.44 .00 .00 .00 .00 10,421.44
4683 BEHLEN INDUSTRIES DIV CANADA T3E 1T9
.00 .00 .00 .00 91,928.48 .00 .00 .00 91,928.48
4694 BEHR IRON & STEEL CO ROCKFORD IL
10,437.29 .00 .00 67,290.09 .00 .00 .00 .00 77,727.38
4769 H BELMER CO INC CINCINNATI OHIO
.00 .00 .00 920.48 .00 .00 .00 .00 920.48
4786 BELT LINE PRODUCTS CHICAGO ILL
200.00 .00 .00 31,735.95 .00 .00 .00 .00 31,935.95
4867 BENJAMIN STEEL CO SPRINGFIELD OHIO
50.49 .00 .00 211,987.66 .00 .00 .00 .00 212,038.15
5261 BETHLEHEM STEEL CORP SPARROWS POINT MD
.00 .00 .00 .00 3,917.40 .00 .00 .00 3,917.40
5296 BGB TRANSPORT INC ELIZABETH NJ
.00 .00 .00 1,710.00 .00 .00 .00 .00 1,710.00
5402 BIG BLUE STORES INC SEYMOUR IN
110.90 .00 .00 16,475.05 .00 .00 .00 .00 16,585.95
5445 BIG SANDY HARDWARE CO INC HAGERHILL KY
</TABLE>
<PAGE> 285
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 6
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 14,785.54 .00 .00 .00 .00 14,785.54
5655 BLAIN SUPPLY INC JANESVILLE WISC
.00 .00 13,042.43 22,575.01 .00 .00 .00 .00 35,617.44
5715 BLEIGH READY MIX CO DIV BLEIGH HANNIBAL MISSOURI
.00 .00 .00 8,544.06 .00 .00 .00 .00 8,544.06
5750 W. G. BLOCK CO DAVENPORT IOWA
.00 .00 .00 9,095.45 .00 .00 .00 .00 9,095.45
5760 BLOCK IRON & SUPPLY CO DIV OSHKOSH WISCONSIN
.00 .00 .00 8,845.29 .00 .00 .00 .00 8,845.29
5900 BLOUNT STEEL SUPPLY INC MARYVILLE TN
.00 .00 .00 464.26- .00 .00 .00 .00 464.26-
6019 BLUEGRASS STEEL CO DAVENPORT PA
.00 .00 .00 40,772.80 .00 .00 .00 .00 40,772.80
6417 BORYN STEEL INC DETROIT MI
.00 .00 .00 10,088.51- .00 .00 .00 .00 10,088.51-
6680 ALBRIGHT STEEL & WIRE CO OKLAHOMA CITY OKLA
.00 .00 .00 18,623.08 .00 .00 .00 .00 18,623.08
6725 THE HOME DEPOT, INC. ATLANTA GA
40,942.50 2,385.37 .00 878,365.67 10,167.29 3,894.78 189.80 1,440.86 937,386.27
6767 BRACING SYSTEMS INC BLOOMINGDALE IL
.00 .00 .00 8,053.50 .00 .00 .00 .00 8,053.50
7040 BRECHEEN PIPE & STEEL CO INC BATON ROUGE LA
.00 .00 .00 4,318.00 .00 .00 .00 .00 4,318.00
7316 BROAD RACK STRUCTURES INC RIVER ROUGE MI
.00 .00 .00 17,075.93 .00 .00 .00 .00 17,075.93
7385 BROCK-WHITE CO ST. PAUL MINN
.00 .00 .00 9,014.50 .00 .00 .00 .00 9,014.50
7790 BROWN STEEL DIV. COLUMBUS OHIO
.00 .00 .00 8,464.78 .00 .00 .00 .00 8,464.78
7840 BROWN-STRAUSS STEEL DIV AURORA COLORADO
3,211.80 .00 .00 1,295,988.78 638,122.35 .00 .00 .00 1,937,322.93
7873 BRUNSWICK ENTERPRISES LTD CANADA R2C 2Z2
.00 .00 .00 29,781.90 .00 .00 .00 .00 29,781.90
</TABLE>
<PAGE> 286
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE 7
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7990 B-S STEEL OF KANSAS INC KANSAS CITY KANSAS
123.20 .00 27,697.48 336,724.81 74,775.76 .00 .00 .00 439,321.25
8122 BUFFALO STRUCTURAL STEEL INC TITUSVILLE PA
.00 .00 .00 18,724.79 .00 .00 .00 .00 18,724.79
8147 BUILDER MARTS OF AMERICA INC. GREENVILLE S.C.
.00 .00 .00 8,657.84 .00 .00 .00 .00 8,657.84
6250 BUILDERS STEEL CO N KANSAS CITY MO
.00 .00 .00 18,552.43 .00 .00 .00 .00 18,552.43
8268 BUILDERS STEEL SERVICE INC TOLEDO OH
.00 .00 .00 10,068.14 .00 .00 .00 .00 10,068.14
8399 BUILDING PRODUCTS OF IA WATERTOWN SD
2,264.98 .00 .00 3,772.36- .00 .00 .00 .00 1,507.38-
8540 THE BURGER IRON CO AKRON OHIO
.00 .00 .00 223,265.90 .00 .00 .00 .00 223,265.90
8541 BURGER STRUCTURAL STEEL CO AKRON OHIO
.00 .00 .00 83.52- .00 .00 .00 .00 83.52-
8545 BUILDERS REBAR INC SPRINGFIELD MD
.00 .00 .00 6,693.22 .00 .00 .00 .00 6,693.22
8926 BUSHWICK IRON & STEEL CO INC GREAT NECK NY
4,068.90 .00 .00 146,595.38 .00 .00 .00 .00 150,664.26
9230 CAIN STEEL & SUPPLY CO INC TUSCALOOSA ALA
.00 .00 .00 9,834.75 .00 .00 .00 .00 9,834.75
9387 CAMPBELL & SHAW STEEL FAB INC MARYSVILLE MICHIGAN
.00 .00 .00 9,222.07 .00 .00 .00 .00 9,222.07
9388 R E CAMPBELL CO INC HOUSTON TX
.00 .00 .00 6,028.66- .00 .00 .00 .00 6,028.66-
9443 CANAN STEEL CORP POINT OF ROCKS ND
.00 .00 .00 .00 9,312.93 .00 .00 .00 9,312.93
9460 CANADIAN TIRE CORP LTD CANADA N4P 2V8
.00 .00 .00 30,764.16 .00 .00 .00 .00 30,764.16
9498 CANRON INC EASTERN STR DIV CANADA N9W 1H2
.00 .00 .00 6,221.57 .00 .00 .00 .00 6,221.57
9671 CARDINAL METALS INC IRVING TEXAS
</TABLE>
<PAGE> 287
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 6
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 40,053.97 .00 .00 .00 .00 40,053.97
9672 CARDINAL FABRICATING CORP MILWAUKEE WISC
.00 .00 .00 18,052.49 .00 .00 .00 .00 18,052.49
9674 CARDINAL SCALE MGG CO WEBB CITY MO
.00 .00 .00 .00 8,596.13 .00 .00 .00 8,596.13
9676 CARDINAL STEEL SUPPLY INC ST LOUIS MISSOURI
.00 .00 .00 85,455.98 30,787.79 .00 .00 .00 116,243.77
9678 CARDINAL METALS INC POUNDING MILL VA
.00 .00 .00 63,201.48 .00 .00 .00 .00 63,201.48
9697 CARLSTROM STEEL SUPPLY MANKATO MINN
.00 .00 .00 18,483.69 .00 .00 .00 .00 18,483.69
9740 CAROLINA STL SERVICE CENTER GREENSBORO N C
.00 .00 .00 11,281.60 .00 .00 .00 .00 11,281.60
9915 CARTER STL & FABRICATING CO BELLEFONTAINE OHIO
.00 .00 .00 164,615.38 5,262.13 .00 .00 .00 169,877.51
9925 CARTER-WATERS CORP KANSAS CITY MISSOURI
.00 .00 .00 10,120.47 .00 .00 .00 .00 10,120.47
10567 C.C.C. STEEL INC COMPTON CA
12,549.09 .00 .00 267,892.51 37,598.45 6,245.17 .00 .00 324,285.22
10850 CENTRAL FARM SUPPLY OF KY INC LOUISVILLE KY
.00 .00 .00 72.79- .00 .00 .00 .00 72.79-
11064 CENTRAL PLAINS STEEL CO DIV KANSAS CITY KS
.00 .00 .00 27,484.17 .00 .00 .00 .00 27,484.17
11110 CENTRAL STATES WIRE PROD INC ST PAUL MINNESOTA
1,184.75 .00 .00 27,937.82 .00 .00 .00 .00 29,122.57
11120 CENTRAL STEEL & WIRE CO CHICAGO ILL
.00 .00 .00 439,198.97 2,341.51 .00 .00 .00 441,540.48
11127 CENTRAL STEEL SERVICE INC PELHAM ALA
.00 .00 .00 65,589.03 .00 .00 .00 .00 65,589.03
11128 CENTRAL STEEL SUPPLY CO INC SOMERVILLE MA
.00 .00 .00 24,297.01 11,301.60 .00 .00 .00 35,598.61
11150 CENTRAL TEXAS IRON WORKS WACO TEXAS
665.00 .00 .00 284,232.83 .00 .00 .00 .00 284,897.83
</TABLE>
<PAGE> 288
<TABLE>
<CAPTION>
04-02-96 PAGE: 9
NORTHWESTERN STEEL AND WIRE COMPANY
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
11152 CENTRAL TRACTOR FARM & FAMILY DES MOINES IOWA
.00 .00 .00 4,788.00 .00 .00 .00 .00 4,788.00
11272 CERTIFIED STEEL DIV TRENTON NEW JERSEY
4,062.65 .00 .00 135,807.14 .00 .00 .00 .00 139,869.79
11280 GIBSON'S DISCOUNT CENTERS INC DODGE CITY KS
.00 .00 .00 7,117.20 .00 .00 .00 .00 7,117.20
11404 CHAPARRAL STEEL MIDLOTHIAN TX
.00 .00 .00 45,717.68 .00 .00 .00 .00 45,717.68
11540 CHARTER WIRE DIV MILWAUKEE WISCONSIN
.00 .00 75,020.38 .00 47,103.00 .00 .00 .00 122,123.30
11598 CHATHAN STEEL CORP SAVANNAH GEORGIA
2,793.33 .00 .00 326,653.15 10,269.27 .00 .00 .00 339,712.75
11800 CHICAGO HARDWARE & FIXTURE CO. FRANKLIN PARK ILL
.00 .00 .00 19,641.13 .00 .00 .00 .00 19,641.13
11979 CIMARRON LBR SUPPLY CO KANSAS CITY MISSOURI
2,462.49 .00 .00 134,729.71 .00 .00 .00 .00 137,192.20
12004 CIVES CORPORATION ROSEDALE MISSISSIPPI
3,555.06 .00 .00 27,962.41 .00 .00 .00 .00 31,517.47
12006 CIVES STEEL COMPANY GOUVERNEUR N Y
.00 .00 .00 13,850.33 .00 .00 .00 .00 13,850.33
12008 CIVES STEEL COMPANY THOMASVILLE GA
4,746.52 .00 .00 4,625.07- .00 .00 .00 .00 121.45
12009 CANRON CONSTRUCTION CORP CONKLIN N.Y.
.00 .00 .00 9,967.70 .00 .00 .00 .00 9,967.70
12336 CLEAVER FARN SUPPLY INC CHANUTE KS
76.50 .00 .00 16.34- .00 .00 .00 .00 60.16
12434 C. M. F. INC. CLARE MICHIGAN
.00 .00 .00 33,259.09 .00 .00 .00 .00 33,259.09
12455 SERVISTAR/COAST TO COAST CORP DENVER CO
6,000.90 .00 .00 10,318.37 .00 .00 .00 .00 16,319.27
12459 COASTAL STEEL CO INC BALTIMORE MARYLAND
.00 .00 .00 339,973.62 .00 .00 .00 .00 339,973.62
12520 C B & K SUPPLY INC JANESVILLE WIS
</TABLE>
<PAGE> 289
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 10
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 7,216.90 9,974.64 .00 .00 .00 17,191.54
12580 COLE'S HARDWARE INC DANVILLE PA
.00 .00 .00 8,675.15 .00 .00 .00 .00 8,675.15
12590 COLLADAY HARDWARE COMPANY HUTCHINSON KANSAS
.00 .00 .00 561.67- 10,667.13 .00 .00 .00 10,105.46
12610 COLLIS INC CLINTON IOWA
.00 .00 247,663.48 36,298.97 .00 .00 .00 .00 283,962.43
12666 COLORADO GARDEN SUPPLY DENVER COLORADO
.00 .00 .00 5,618.70 .00 .00 .00 .00 5,618.70
12740 COLUMBUS PIPE & EQUIP CO COLUMBUS OHIO
.00 .00 .00 10,296.50 .00 .00 .00 .00 10,296.50
12760 COMMERCE CORPORATON BALTIMORE MD
.00 .00 64,143.24 .00 .00 .00 .00 .00 64,143.24
12816 COMMERCIAL FABRICATORS INC BRIDGEVIEW ILL
.00 .00 .00 .00 8,934.07 .00 .00 .00 8,934.07
12875 COMPLEX STEEL & WIRE CORP WAYNE MICHIGAN
.00 .00 .00 24,248.00 .00 .00 .00 .00 24,248.00
12915 CONCRETE INDUSTRIES INC LINCOLN NE
.00 .00 .00 19,130.47 .00 .00 .00 .00 19,130.47
13224 CONSOLIDATED METAL PROD INC CINCINNATI OHIO
90.72 .00 .00 .00 .00 .00 .00 .00 90.72
13312 CONSTRUCTION ANCHORS INC KANSAS CITY MO
.00 .00 .00 12,540.56 .00 .00 .00 .00 12,540.56
13398 CONSTRUCTION SUP & ERECTION GERMANTOWN WI
.00 .00 .00 19,769.30 .00 .00 .00 .00 19,769.30
13544 CONSUMERS STEEL PRODUCTS CO CLEVELAND OHIO
.00 .00 .00 37,317.60 .00 .00 .00 .00 37,317.60
13579 CONTINENTAL METAL PRODUCTS CO INDIANAPOLIS IN
.00 .00 .00 10,010.25 10,032.60 .00 .00 .00 20,042.85
13558 CONTRACTORS STEEL CORP DES MOINES IOWA
.00 .00 .00 9,101.63 .00 .00 .00 .00 9,101.63
13668 CONTRACTORS STEEL CO LIVONIA MICH
13,622.92 .00 .00 1,083,133.69 94,670.86 .00 .00 .00 1,191,427.47
</TABLE>
<PAGE> 290
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 11
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
13676 CONTRACTORS WAREHOUSE CINCINNATI OH
1,486.39 1,244.46 9,230.09 930.98 1,877.05 6,251.01 .00 557.50 21,577.48
13785 CODSA STEEL CORPORATION ROME GEORGIA
.00 .00 .00 20,900.30 .00 .00 .00 .00 20,900.30
13845 COREY STEEL COMPANY, THE CHICAGO IL
.00 .00 .00 20,783.40 .00 .00 .00 .00 20,783.40
13893 CORNELIUS MANUFACTURING INC ELNORA IN
.00 .00 .00 8,059.51 .00 .00 .00 .00 8,059.51
13900 CORPORATE METALS INC CLAREMORE OK
.00 .00 .00 10,940.00 10,425.99 .00 .00 .00 21,365.99
13960 COTTER AND COMPANY 00-526-3157 CHICAGO ILLINOIS
.00 .00 2,067.53 .00 .00 .00 .00 .00 2,067.53
14227 CRAWFORD METALS CORP SUITE 200 CANADA H3H 1S6
3,177.68 .00 .00 33,222.37 .00 .00 .00 .00 36,400.05
14298 CREST STEEL CORP CARSON CALIFORNIA
439.03 .00 .00 214,673.04 .00 .00 .00 .00 215,112.07
14450 CROWN STEEL RAIL COMPANY WEST BLOOMFIELD MI
.00 .00 .00 .00 7,471.19 .00 .00 .00 7,471.19
14460 CROWN STEEL SALES INC CHICAGO IL
3,686.10 110.94 .00 59,871.32 .00 .00 .00 .00 63,668.36
14482 CSR QUINN MARSHALL MO
.00 .00 .00 31,061.22 .00 .00 .00 .00 31,061.22
14720 DAIRYMANS SUPPLY CO INC MAYFIELD KENTUCKY
.00 .00 .00 42,639.34 .00 .00 .00 .00 42,639.34
14850 DAKOTA STEEL & SUPPLY CO DIV RAPID CITY SOUTH DAK
.00 .00 .00 75,846.06 .00 .00 .00 .00 75,846.06
15045 DANVILLE STL DIV MERVIS INC DANVILLE ILLINOIS
1,776.16 .00 .00 464.40- .00 .00 .00 .00 1,311.76
15070 DARE PRODUCTS INC BATTLE CREEK MICH
.00 .00 16,556.40 18,818.70 16,678.80 .00 .00 .00 52,053.90
15159 DAVE STEEL CO INC ASHEVILLE NO CAR
.00 .00 .00 746.85- .00 .00 .00 .00 746.85-
15236 DAVIS STEEL & IRON CO MATTHEWS NC
</TABLE>
<PAGE> 291
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 12
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 312.69- .00 .00 .00 .00 312.69-
15291 DAYTON SUPERIOR CORPORATION MIAMISBURG OH
.00 .00 257,363.75 28,301.69 .00 .00 .00 .00 285,665.44
15457 DEBRO STEEL DIV PREMETALCO INC CANADA L6T 2H4
.00 .00 .00 80,999.20 .00 .00 .00 .00 80,999.20
15461 DE CANIO BUILDERS SUPPLY CHICAGO IL
.00 .00 .00 18,068.73 .00 .00 .00 .00 18,068.73
15620 JOHN DEERE DES MOINES WORKS DES MOINES IOWA
4,173.89 .00 .00 33,779.78 .00 .00 .00 .00 37,953.67
15880 DE KALB IRON & METAL DE KALB ILLINOIS
.00 .00 .00 24,295.24 12,391.13 .00 .00 .00 36,686.37
15940 DELONGS INC JEFFERSON CITY MD
.00 .00 .00 24,764.76 .00 .00 .00 .00 24,764.76
16050 DELTA STEEL INC HOUSTON TEXAS
3,412.31 .00 .00 534,592.02 53,467.66 .00 .00 .00 591,471.99
16140 THE DENISTON COMPANY ALSIP IL
.00 .00 .00 .00 8,346.00 .00 .00 .00 8,346.00
16197 DELTA STEEL CO INC JACKSON MISS
.00 .00 .00 1,026.79 .00 .00 .00 .00 1,026.79
16208 DENNAN & DAVIS CLIFTON NJ
164.13 .00 .00 32,629.99 9,222.61 .00 .00 .00 42,016.73
16623 D.M.I. INC GOODFIELD ILLINOIS
.00 .00 .00 10,768.76 .00 .00 .00 .00 10,768.76
16640 DI HIGHWAY SIGN & STRUCT CORP NEW YORK MILLS N.Y.
.00 .00 .00 10,713.12 .00 .00 .00 .00 10,713.12
16658 DILL'S BEST BUILDING CENTERS BREWSTER NY
.00 .00 .00 20,572.32 .00 .00 .00 .00 20,572.32
16675 DIRECT DISTRIBUTORS INC OF N C GARNER NC
2,503.98 .00 .00 222.14- .00 .00 .00 .00 2,281.84
16710 NAHASCO DIV TAMPA FL
.00 .00 .00 113,539.14 .00 .00 .00 .00 113,539.14
16925 DONAHUE CORPORATION DURHAM KANSAS
.00 .00 .00 30,069.78 .00 .00 .00 .00 30,069.78
</TABLE>
<PAGE> 292
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 13
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
17050 DOUGLAS STEEL FABRICATING CORP LANSING MICHIGAN
.00 .00 .00 23.54- .00 .00 .00 .00 23.54-
17075 DOWN TO EARTH RECYCLING NORTHBROOK IL
.00 .00 .00 890.00 133.20 .00 .00 .00 1,023.20
17088 DRACHMAN STRUCTURALS INC WALL NJ
1,913.43 .00 415,488.87 4,315.80- .00 .00 .00 .00 413,086.50
17140 DRAKE WILLIAMS STEEL INC OMAHA NEBRASKA
.00 .00 .00 53,938.45 32,922.65 .00 .00 .00 86,861.10
17182 P H DREW INC INDIANAPOLIS IN
.00 .00 .00 .00 9,325.90 .00 .00 .00 9,325.90
17295 DUBOSE STL INC OF NO. CAROLINA ROSEBORO N.C.
.00 .00 .00 78,610.20 30,262.52 .00 .00 .00 108,872.72
17297 STEEL WAREHOUSING-DUBUQUE DIV PEOSTA IA
.00 .00 .00 952,862.69 47,096.43 .00 .00 .00 999,959.12
17298 DUKANE PRECAST INC NAPERVILLE IL
.00 .00 .00 13,819.23 .00 .00 .00 .00 13,819.23
17365 DULUTH STEEL FABRICATORS INC DULUTH MINNESOTA
.00 .00 .00 7,364.99 .00 .00 .00 .00 7,364.99
17603 DUR-O-WAL, INC ARLINGTON HGTS IL
.00 .00 30,264.30 15,995.10 23,687.40 .00 .00 .00 69,946.80
17610 DURRETT-SHEPPARD STEEL CO INC BALTIMORE MD
.00 .00 .00 77,120.04 8,519.87 .00 .00 .00 85,639.91
17750 DYNIDAG SYSTEMS INTL USA INC BOLINGBROOK IL
.00 .00 .00 35,799.99 .00 .00 .00 .00 35,799.99
17866 E & H STEEL CORP MIDLAND CITY AL
.00 .00 .00 8,419.79 .00 .00 .00 .00 8,419.79
17959 EASTON WHOLESALE CO INC EASTON MD
.00 .00 .00 34.15- .00 .00 .00 .00 34.15-
17962 ELCO INDUSTRIES, INC ROCKFORD IL
.00 .00 .00 17,665.76 .00 .00 .00 .00 17,665.76
17963 EBENEZER RAILCAR SERVICE WEST SENECA NY
.00 .00 .00 10,630.21 .00 .00 .00 .00 10,630.21
17970 ELENBAAS STEEL SUPPLY COMPANY GREENVILLE MI
</TABLE>
<PAGE> 293
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 14
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 21,870.09 .00 .00 .00 .00 21,870.09
18156 EDGCOMB METALS COMPANY PHILADELPHIA PA
.00 .00 .00 64,075.99 .00 .00 .00 .00 64,075.99
18265 EGGER STEEL COMPANY SIOUX FALLS SO DAK
.00 .00 .00 61,536.87 .00 .00 .00 .00 61,536.87
18267 THE EGGING CO GURLEY NE
.00 .00 .00 12,512.77 .00 .00 .00 .00 12,512.77
18645 ELLER & WILLEY BLOCK CO DIXON ILLINOIS
.00 .00 .00 .00 6,549.22 5,640.55 .00 .00 12,189.77
18871 EMPIRE IRON WORKS CANADA R2X 0A1
.00 .00 .00 157.85- .00 .00 .00 .00 157.85-
18935 ENDRES MANUFACTURING CO WAUNAKEE WISCONSIN
.00 .00 .00 60,081.76 .00 .00 .00 .00 60,081.76
18945 ENGBAR PIPE & STEEL CO DENVER COLORADO
.00 .00 .00 67,207.65 .00 .00 .00 .00 67,207.65
19016 ENNIS STEEL INDUSTRIES ENNIS TX
.00 .00 .00 103,841.16 .00 .00 .00 .00 103,841.16
19030 ENCO INDUSTRIES INC DES MOINES IA
.00 .00 .00 95,433.88 32,581.15 .00 .00 .00 128,015.03
19191 MARSHALL ERDMAN & ASSOCIATES MADISON WISCONSIN
.00 .00 .00 18,502.61 .00 .00 .00 .00 18,502.61
19198 ERIE CONCRETE & STEEL SUP CO ERIE PA
.00 .00 .00 18,135.43 .00 .00 .00 .00 18,135.43
19200 ERIE HAVEN INC FORT WAYNE INDIANA
.00 .00 .00 8,062.96 .00 .00 .00 .00 8,062.96
19257 ERNST HOME CENTER INC SEATTLE WA
300.00 .00 .00 .00 .00 .00 .00 .00 300.00
19647 EVERGLADES STEEL CORP MIAMI FL
.00 .00 .00 40,146.88 .00 .00 .00 .00 40,146.88
19504 FABARC STEEL & SUPPLY INC ANNISTON AL
.00 .00 .00 66,774.27 41,692.20 .00 .00 .00 108,466.47
19860 NID AMERICA STEEL INC FARGO NORTH DAKOTA
.00 .00 .00 95,001.59 .00 .00 .00 .00 95,001.59
</TABLE>
<PAGE> 294
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 15
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
19875 FARGO TANK COMPANY FARGO NO DAK
.00 .00 .00 14,558.07 .00 .00 .00 .00 14,558.07
20400 FARMER'S COPPER & IND SUP INC. GALVESTON TEXAS
.00 .00 .00 2,460.85 .00 .00 .00 .00 2,460.85
21410 FARR COMPANY CRYSTAL LAKE IL
.00 .00 .00 8,261.01 .00 .00 .00 .00 8,261.01
21465 FARNEST STEEL CORP EUGENE OREGON
226.01 .00 .00 25,380.18 .00 .00 .00 .00 25,606.19
21492 FAULTLESS CASTER DIVISION EVANSVILLE IN
.00 .00 13,114.50 .00 4,380.60 .00 .00 .00 17,495.10
21590 FEDERAL PIPE & STEEL CORP PLYMOUTH MI
8,219.06 .00 .00 414,544.27 229,013.50 .00 .00 .00 651,776.83
21597 FEDERAL PIPE & SUPPLY CO DETROIT MICHIGAN
.00 .00 .00 8,541.91 .00 .00 .00 .00 8,541.91
21612 CONTAINER STAPLING COMPANY HERPIN ILLINOIS
.00 .00 .00 59,532.60 30,350.10 .00 .00 .00 89,882.70
21624 RUSSEL METALS INC CANADA L5N 3C9
.00 .00 .00 .00 .00 78,184.65 .00 .00 78,184.65
21720 FENSTER STEEL CORP ST LOUIS MISSOURI
.00 .00 .00 27,086.73 .00 .00 .00 .00 27,086.73
21726 FERGUSON STEEL CO INDIANAPOLIS INDIANA
333.04 .00 .00 27,869.54 .00 .00 .00 .00 28,202.58
21737 FERROMETAL DE BAJA CALIF AV TIJUANA MEXICO
.00 .00 .00 25,736.03- .00 .00 .00 .00 25,736.03-
21740 FERRO UNION INC TORRANCE CA
376.45 .00 .00 204,476.85 57,637.66 111,586.96 .00 .00 374,077.92
21770 FIDLER INC GOSHEN INDIANA
.00 .00 .00 16,300.00 .00 .00 .00 .00 16,300.00
21773 JD FIELDS & CO INC HOUSTON TX
371.91 .00 .00 96,203.24 .00 .00 .00 .00 96,575.15
21785 FERROSTAAL METALS CORP BRISBANE CA
.00 .00 .00 327,648.91 .00 .00 .00 .00 327,648.91
21955 FISCHER STEEL CORP MEMPHIS TENNESSEE
</TABLE>
<PAGE> 295
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 16
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 13,361.34 .00 .00 .00 .00 13,361.34
21936 FISHER BROS STEEL CORP ENGLEWOOD NJ
.00 .00 .00 20,351.37 .00 .00 .00 .00 20,351.37
22164 FLEET WHOLESALE SUPPLY CO INC BRAINERD MN
.00 .00 .00 358,340.77 9,399.29 .00 .00 .00 367,740.06
22310 F J FOLZ CO INC EVANSVILLE IND
.00 .00 .00 8,789.09 .00 .00 .00 .00 8,789.09
22440 FORT DODGE STEEL INC FORT DODGE IOWA
.00 .00 .00 7,904.46 .00 .00 .00 .00 7,904.46
22460 FORT HOWARD STEEL INC GREEN BAY WI
.00 .00 .00 91,826.75 .00 .00 .00 .00 91,826.75
22579 L B FOSTER CO - FOSTER PLAZA PITTSBURGH PA
.00 .00 .00 752,179.22 117,551.05 .00 .00 .00 869,730.27
22615 FOSTER'S INC WATERLOO IOWA
.00 .00 .00 1,650.24 .00 .00 .00 .00 1,650.24
22652 4-D, INC MIDLAND MI
.00 .00 .00 8,880.47 .00 .00 .00 .00 8,880.47
22655 FOUR STATES SUPPLY CO JOPLIN MO
.00 .00 .00 15,351.69 .00 .00 .00 .00 15,351.69
22656 4 X CONCRETE INC APPLETON WI
.00 .00 .00 10,048.52 .00 .00 .00 .00 10,048.52
22920 STERLING STEEL BALL STERLING ILLINOIS
.00 .00 .00 318.80 .00 .00 .00 .00 318.80
22950 FRAZER MFG CORP STERLING ILLINOIS
.00 .00 .00 30,762.60 .00 .00 .00 .00 30,762.60
22960 FRAZIER INDUSTRIAL CO LONG VALLEY N J
.00 .00 .00 9,629.02 .00 .00 .00 .00 9,629.02
22990 FREDERICK STEEL CO CINCINNATI OHIO
5,333.70 .00 .00 142,793.84 5,129.01 .00 .00 .00 153,256.55
23100 FREIGHT CLAIM ACCOUNT STERLING ILLINOIS
.00 .00 .00 90,250.77 .00 .00 .00 .00 90,250.77
23252 FRIEDMAN BROS HARDWARE SANTA ROSA CA
.00 .00 .00 339.30- .00 .00 .00 .00 339.30-
</TABLE>
<PAGE> 296
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 17
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
24070 GARBE IRON WORKS INC AURORA ILLINOIS
.00 .00 .00 35,694.45 .00 .00 .00 .00 35,694.45
24111 GARDNER STEEL CORP NEW CASTLE PA
.00 .00 .00 41,469.51 .00 .00 .00 .00 41,469.51
24247 GATE CITY STEEL INC STERLING ILLINOIS
.00 .00 .00 891.85 .00 .00 .00 .00 891.85
24262 GATEWAY BUILDING PRODUCTS DIV CHICAGO ILLINOIS
.00 .00 .00 23,471.50 .00 .00 .00 .00 23,471.50
24296 GAYLE MFG CO WOODLAND CA
.00 .00 .00 37,630.32 .00 .00 .00 .00 37,630.32
24410 GEIGER & PETERS INC INDIANAPOLIS IND
.00 .00 .00 94,640.08 .00 .00 .00 .00 94,640.08
24423 THE GENERAL CORPORATION ELWOOD IN
.00 .00 .00 9,503.61 .00 .00 .00 .00 9,503.61
24427 GENERAL CHAIN & MFG CO CINCINNATI OHIO
.00 .00 12,254.30 .00 11,841.30 .00 .00 .00 24,095.60
24446 GENERAL ELECTRIC COMPANY FT MYERS FL
.00 .00 .00 219,037.00 .00 60,424.00 .00 .00 279,481.00
24546 GENERAL METAL MFG CO INC EAST HANOVER NJ
.00 .00 .00 12,718.66 .00 .00 .00 .00 12,718.66
24777 GENERAL STEEL CORPORATION VANCOUVER WA
1,451.18 .00 .00 61,669.12 .00 .00 .00 .00 63,120.30
24942 GENZINK STL SUP & WELDING CO HOLLAND MICHIGAN
.00 .00 .00 9,830.74 .00 .00 .00 .00 9,830.74
24953 GEORGIA PACIFIC CORPORATION ATLANTA GA
1,410.61 .00 8,672.31 1,299,447.51 450.08 .00 .00 .00 1,309,980.51
25360 GLAZER STEEL CORP NEW ORLEANS LA
.00 .00 .00 19,570.80 .00 .00 .00 .00 19,570.80
25554 GLOBE IRON CONSTRUCTION CO INC NORFOLK VIRGINIA
.00 .00 .00 21,477.94 .00 .00 .00 .00 21,477.94
25559 N GLOSSER & SONS INC JOHNSTOWN PA
.00 .00 .00 34,782.63 .00 .00 .00 .00 34,782.63
25623 VERNON L GOEDECKE CO INC ST LOUIS MO
</TABLE>
<PAGE> 297
<TABLE>
<CAPTION>
04-02-96 PAGE: 18
NORTHWESTERN STEEL AND WIRE COMPANY
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 1,293.23 8,189.00 .00 .00 .00 9,482.23
25677 GOLDEN STAR INC NO KANSAS CITY MO
.00 .00 .00 20,225.84 .00 .00 .00 .00 20,225.84
25681 GOLDEN ACRE GARDEN SENTRES LTD CANADA T2K 5K3
.00 .00 .00 5,634.56 .00 .00 .00 .00 5,634.56
25722 GOLDKIST INC #463 RAINSVILLE AL
.00 .00 .00 15,600.00 .00 .00 .00 .00 15,600.00
25766 GOODMAN STEEL SUPPLY LOUISVILLE IL
.00 .00 .00 18,309.04 .00 .00 .00 .00 18,309.04
25772 GOLD KIST #351 HENAGER AL
.00 .00 .00 15,600.00 .00 .00 .00 .00 15,600.00
25776 GORDON BROS IRON & METAL CHICAGO IL
.00 .00 .00 9,201.36 .00 .00 .00 .00 9,201.36
25872 GRACE & WYLIE FABRICATORS INC BRENTWOOD TN
.00 .00 .00 71,495.76 32,325.55 .00 .00 .00 103,821.31
25875 THE GRADALL COMPANY NEW PHILADELPHIA OH
1,239.00 .00 .00 21,121.06 .00 .00 .00 .00 22,360.06
25971 GRAHAN STEEL CORP KIRKLAND WA
729.71 .00 .00 519.53- .00 .00 .00 .00 210.18
25976 GRANHER DEMPSEY & HUDSON INC NEWARK NJ
.00 .00 .00 .00 9,589.14 10,048.97 .00 .00 19,638.11
26015 GRAND RAPIDS WILBERT GRAND RAPIDS MI
.00 .00 .00 6,937.68 .00 .00 .00 .00 6,937.68
26230 GREAT PLAINS STEEL INC LUBBOCK TX
.00 .00 .00 5,966.98 .00 .00 .00 .00 5,966.98
26430 GREMP STEEL COMPANY POSEN IL
.00 .00 .00 7,208.88 .00 .00 .00 .00 7,208.88
26590 ALLIED TUBE & CONDUIT DIV HARVEY IL
.00 .00 .00 44,084.22 .00 .00 .00 .00 44,084.22
26895 GULF REDUCTION CORPORATION HOUSTON TEXAS
.00 .00 .00 60,248.10 .00 .00 .00 .00 60,248.10
26925 BOWES INDUSTRIES INC INDIANAPOLIS IN
.00 55.13 .00 .00 12,574.20 9,462.00 .00 .00 22,091.33
</TABLE>
<PAGE> 298
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 19
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
26940 HAAKINSON & BEATY CO SIOUX CITY IOWA
.00 .00 .00 8,959.68 .00 .00 .00 .00 8,959.68
27009 HAGAN C STONE WHOLESALE INC TOMPKINSVILLE KY
.00 .00 .00 28,801.48 .00 .00 .00 .00 28,801.48
27115 HAGER DISTRIBUTION GRAND RAPIDS MI
.00 .00 .00 7,897.50 .00 .00 .00 .00 7,897.50
27120 HAGER HINGE COMPANY ST LOUIS MISSOURI
.00 .00 .00 4,112.40 .00 .00 .00 .00 4,112.40
27140 HAGERTY BROTHERS COMPANY PEORIA ILLINOIS
680.96 .00 .00 29,062.95 .00 .00 .00 .00 29,743.91
27185 HAHNE & CO INC DANVILLE IL
.00 .00 .00 66.32- .00 .00 .00 .00 66.32-
27206 TRINITY MARINE CORP GULFPORT MS
.00 .00 .00 6,100.38 .00 .00 .00 .00 6,100.38
27450 HANNERTS IRON WORKS ST. LOUIS MISSOURI
.00 .00 .00 50,277.31 .00 .00 .00 .00 50,277.31
27548 HANDY HARDWARE WHOLESALE INC HOUSTON TEXAS
321.10 .00 .00 18,916.00 .00 .00 .00 .00 19,237.10
27558 HANGER BOLT & STAN CO INC GREENFIELD IN
.00 .00 .00 34,633.20 .00 .00 .00 .00 34,633.20
27663 HARBOR STEEL & SUPPLY CORP MUSKEGON MICHIGAN
.00 .00 .00 74.82- .00 .00 .00 .00 74.82-
27903 HARDWARE DISTRIBUTORS INC MUSKEGON HTS MI
414.98 .00 .00 .00 .00 .00 .00 .00 414.98
27960 HARDWARE WHOLESALERS INC #5610 FORT WAYNE INDIANA
1,168.66 .00 117,630.97 585,122.20 5,888.07 .00 .00 .00 709,609.90
28408 HARRINGTON & CO SALT LAKE CITY UTAH
.00 1,189.44 .00 .00 .00 .00 .00 .00 1,189.44
28446 THE HARRISON STEEL CASTINGS CO ATTICA IN
.00 .00 .00 20,711.22 .00 .00 .00 .00 20,711.22
28655 HAUSMAN STEEL CORP CARMEL INDIANA
.00 .00 .00 17,680.56 .00 .00 .00 .00 17,680.56
28725 HAVENS STEEL CO KANSAS CITY MISSOURI
</TABLE>
<PAGE> 299
<TABLE>
<CAPTION>
04-02-96 PAGE: 20
NORTHWESTERN STEEL AND WIRE COMPANY
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2,259.73 .00 .00 919.19- .00 .00 .00 .00 1,340.54
28800 HAWCO MANUFACTURING CO LLC SLAUGHTER LA
.00 .00 .00 34,296.75 .00 .00 .00 .00 34,296.75
29225 HECKETT COMPANY BUTLER PA
.00 .00 .00 6,259.83 .00 .00 .00 .00 6,259.83
29525 HELMARK STEEL INC WILMINGTON DELAWARE
.00 .00 .00 7,715.05 .00 .00 .00 .00 7,715.05
29630 HENDERSON STEEL & TUBULAR PROD HENDERSON CO
.00 .00 .00 75,011.72 .00 .00 .00 .00 75,011.72
29635 HENDERSON STEEL CORP MERIDIAN MISSISSIPPI
.00 .00 .00 36,258.05 .00 .00 .00 .00 36,258.05
29730 HERCULES STEEL CO INC FAYETTEVILLE NO CAR
.00 .00 .00 10,006.01 .00 .00 .00 .00 10,006.01
29842 H E HEUCK COMPANY CINCINNATI OH
.00 .00 .00 2,777.70 .00 .00 .00 .00 2,777.70
29852 HEWITT BROTHERS MORAVIA NV
.00 .00 .00 40,176.00 .00 .00 .00 .00 40,176.00
29938 HIGH STEEL STRUCTURES INC LANCASTER PENN
.00 .00 .00 68,604.32 .00 .00 .00 .00 68,604.32
29939 HIGH STEEL SERVICE CENTER INC LANCASTER PA
1,253.03 .00 .00 4,623.89 .00 .00 .00 .00 5,876.92
29941 HICKSVILLE STEEL CORP HICKSVILLE NY
.00 .00 .00 85.75- .00 .00 .00 .00 85.75-
29960 HIGHWAY SAFETY CORP GLASTONBURY CT
.00 .00 .00 11,930.63 .00 .00 .00 .00 11,930.63
30021 HILDOR WIRE PRODUCTS DIV COLUMBIA PA
.00 .00 .00 16,454.38 .00 .00 .00 .00 16,454.38
30025 A R HILL EQUIP CO HOMER GA
.00 .00 .00 21.58- .00 .00 .00 .00 21.58-
30150 HILLSDALE BUILDING MATL CO INC ST LOUIS MISSOURI
.00 .00 .00 22,697.04 .00 .00 .00 .00 22,697.04
30268 HINCKLEY CONCRETE PRODUCTS CO HINCKLEY ILL
.00 .00 .00 6,167.28 .00 .00 .00 .00 6,167.28
</TABLE>
<PAGE> 300
<TABLE>
<CAPTION>
04-02-96 PAGE: 21
NORTHWESTERN STEEL AND WIRE COMPANY
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30363 HIRSCHFELD STEEL CO INC SAN ANGELO TEXAS
96.22 .00 .00 139,693.25 27,554.56 .00 .00 .00 167,344.03
30639 HOLLYWOOD STEEL INC HOUSTON TX
.00 .00 .00 14,017.85 .00 .00 .00 .00 14,017.85
30940 HOOVER PRECISION PRODUCTS INC WASHINGTON IN
.00 .00 .00 81,830.23 .00 .00 .00 .00 81,830.23
31385 STAN HOUSTON EQUIP CO INC SIOUX FALL SD
.00 .00 .00 8,732.38 .00 .00 .00 .00 8,732.38
31394 HOU-TEX METALS CO HOUSTON TX
.00 .00 .00 131,237.64- .00 .00 .00 .00 131,237.64-
32010 HUTCHISON LBR & BLDG PROD MANCHESTER IA
.00 .00 .00 4,699.74 .00 .00 .00 .00 4,699.74
32035 WEST CENTRAL STEEL INC WILLHAR MINN
.00 .00 .00 509,075.07 .00 .00 .00 .00 510,614.35
32215 ILLINOIS BRICK CO DIV PRAIRIE BRIDGEVIEW IL
.00 .00 .00 15,768.00 .00 .00 .00 .00 15,768.00
32357 I H S STEEL COMPANY DIV CCC SALT LAKE CITY UTAH
457.46 .00 .00 199,721.72 .00 .00 .00 .00 200,179.18
32535 INGALLS SHIPBLDG INC PASCAGOULA MISS
.00 .00 .00 8,044.86 .00 .00 .00 .00 8,044.86
32580 INDIANA STEEL FABRICATING INC INDIANAPOLIS IND
.00 .00 .00 10,783.25 .00 .00 .00 .00 10,783.25
32624 INDUSTRIAL STEEL WHSE INC LONGVIEW TEXAS
.00 .00 .00 22,488.38 .00 .00 .00 .00 22,488.38
32625 INDUSTRIAL STL SERVICE CTR INC ADDISON ILLINOIS
.00 .00 .00 7,674.61 .00 .00 .00 .00 7,674.61
32634 INFRA-METALS DIVISION WALLINGFORD CT
7,742.06 .00 .00 329,083.72 .00 .00 .00 .00 336,825.78
32635 INFRA-METALS CO DIV LANGHORNE PA
15,795.79 .00 .00 296,720.55 .00 .00 .00 .00 312,516.34
32673 INLAND STEEL PLANO TX
.00 .00 .00 43,779.57 .00 .00 .00 .00 43,779.57
32841 SIGU INDUSTRIAL EL PASO TX
</TABLE>
<PAGE> 301
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 22
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 10,803.00- .00 .00 .00 .00 10,803.00-
32846 INTERSTATE IRON WORKS CORP WHITEHOUSE NJ
.00 .00 .00 48,754.45- .00 .00 .00 .00 48,754.45-
32870 INTERSTATE STEEL SUPPLY CO PHILADELPHIA PA
418.80 .00 .00 1,731,941.25 .00 .00 .00 .00 1,732,360.05
32875 INTERSTATE STEEL & METALS INC TULSA OK
.00 .00 .00 9,500.68 .00 .00 .00 .00 9,500.68
32882 INTERSTATE WELDING & TERRE HAUTE INDIANA
.00 .00 .00 19,366.17 .00 .00 .00 .00 19,366.17
32088 INTSEL SOUTHWEST DIV PECHINEY HOUSTON TEXAS
16,799.82 .00 .00 553,654.29 .00 .00 .00 .00 570,454.11
32985 IOWA STEEL & WIRE CO CENTERVILLE IA
.00 .00 .00 201,126.00 .00 .00 .00 .00 201,126.00
33065 SHOP & STEEL INC ELKHART INDIANA
.00 .00 .00 7,605.00 .00 .00 .00 .00 7,605.00
33084 SEAPORT STEEL COMPANY SEATTLE WASH
.00 .00 .00 80,836.59 .00 .00 .00 .00 80,836.59
33140 JACKES-EVANS MFG CO ST LOUIS MO
.00 .00 .00 5,831.10 .00 .00 .00 .00 5,831.10
33197 JACKSON METAL SERVICES INC JACKSON IN
.00 .00 .00 17,350.41 .00 .00 .00 .00 17,350.41
33506 J & N CONSTRUCTION PROD BURR RIDGE IL
.00 .00 .00 18,313.78 1,501.53 .00 .00 .00 19,815.31
33525 JARCO STEEL INC HOUSTON TX
.00 .00 .00 7,942.44 .00 .00 .00 .00 7,942.44
33534 JARVIS STEEL & LBR CO INC BALTIMORE MD
1,884.23 .00 .00 .00 .00 .00 .00 .00 1,884.23
33650 JEFFREYS STEEL CO INC MOBILE ALABAMA
.00 .00 .00 323,718.09 .00 .00 .00 .00 323,718.09
33720 JENSEN BRIDGE & SUPPLY CO SANDUSKY MICH
.00 .00 .00 10,498.66 .00 .00 .00 .00 10,498.66
33888 JOHANNESSEN TRADING CO LOS ANGELES CA
4,886.38 .00 .00 355,558.69 34,651.34 .00 .00 .00 395,096.41
</TABLE>
<PAGE> 302
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 23
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
33896 WHEELABRATOR WATER TECH INC ST PAUL MN
.00 .00 77,256.43 .00 .00 .00 .00 .00 77,256.43
34282 DENNIS JONES TWINE CO WICHITA KS
.00 .00 .00 11,448.00 .00 .00 .00 .00 11,448.00
34343 EARLE M JORGENSEN CO LOS ANGELES CA
3,888.49 .00 .00 323,249.91 216,589.15 7,785.32 .00 .00 551,512.87
34363 THE DAVID J JOSEPH COMPANY DEERFIELD IL
.00 .00 .00 142,688.91- .00 .00 .00 .00 142,688.91-
34367 J R DISTRIBUTING COMPANY DENVER CO
.00 .00 .00 26,043.75 .00 .00 .00 .00 26,043.75
34570 L KAHN AND SON HAVANA ILLINOIS
.00 .00 .00 8,197.89 .00 .00 .00 .00 8,197.89
34581 KALAMAZOO HILL SUPPLY CO KALAMAZOO MICHIGAN
.00 .00 .00 .00 9,236.74 .00 .00 .00 9,236.74
34596 KANE STEEL CO OF PENNSYLVANIA POTTSVILLE PA
.00 .00 .00 90.39- .00 .00 .00 .00 90.39-
34733 M KATCH & CO TOPEKA KANSAS
.00 .00 .00 18,862.38 .00 .00 .00 .00 18,862.38
35177 KENNEL-AIRE MFG CO MOUNTAIN LAKE MINN
.00 .00 .00 9,966.35 .00 .00 .00 .00 9,966.35
35365 KEWANNA METAL SPECIALTIES INC KEWANNA INDIANA
.00 .00 .00 8,991.90 .00 .00 .00 .00 8,991.90
35382 KEY WHLSE BLDG PROD INC MASON CITY IOWA
176.75 .00 .00 138.43- .00 .00 .00 .00 38.32
35390 KEYSTONE STEEL & WIRE CO DIV PEORIA ILL
2,048.80 .00 .00 3,693.20 .00 .00 .00 .00 5,742.00
35520 KILROY STRUCTURAL STEEL CO CLEVELAND OHIO
.00 .00 .00 332.40- .00 .00 .00 .00 332.40-
35550 KIMCO STL SALES LTD CANADA K7L 4W1
151.82 .00 .00 16,805.59 .00 .00 .00 .00 16,937.41
35640 KINGERY STEEL FABRICATORS INC LANSING ILL
.00 .00 .00 31,150.97 7,377.47 .00 .00 .00 38,528.44
35735 KINZE MANUFACTURING INC WILLIAMSBURG IOWA
</TABLE>
<PAGE> 303
04-02-96 PAGE: 24
NORTHWESTERN STEEL AND WIRE COMPANY
AGED TRIAL BALANCE
<TABLE>
<CAPTION>
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 35,216.51 .00 .00 .00 .00 35,216.51
35855 KLEIN STEEL SERVICE INC ROCHESTER N Y
.00 .00 .00 31,372.60 .00 .00 .00 .00 31,372.60
35863 KLEMP CORP CHICAGO ILL
.00 .00 .00 24,846.50 8,127.00 .00 .00 .00 32,973.50
35870 KLINE IRON & STEEL CO INC COLUMBIA S. C.
.00 .00 .00 20,767.53 10,658.77 .00 .00 .00 31,426.30
36068 KNIGHT MANUFACTURING CORP BROADHEAD WISCONSIN
.00 .00 .00 6,961.68 .00 .00 .00 .00 6,961.68
36110 KNOWLES MANUFACTURING CO INC GLENBEULAH WISC
.00 .00 .00 14,344.11 .00 .00 .00 .00 14,344.11
36290 KOONS STEEL INC NORRISTOWN, PA
.00 .00 .00 150,227.32 10,490.38 .00 .00 .00 160,717.70
36640 KRUEGER AND COMPANY ELMHURST ILLINOIS
.00 .00 .00 14,692.30 .00 .00 .00 .00 14,692.30
36710 KULLY PIPE & STEEL SUPPLY CO HASTINGS NEBRASKA
.00 .00 .00 7,366.20 .00 .00 .00 .00 7,366.20
36874 LACLEDE STEEL ATT: ARCHIE PRICE ALTON IL
94.25 .00 .00 94.25- .00 .00 .00 .00 .00
36875 LA CLEDE STEEL CO ST LOUIS MO
.00 .00 .00 7,234.50 .00 .00 .00 .00 7,234.50
36970 LAIDLAW CORP SCOTTSDALE AZ.
.00 .00 .00 113,129.10 .00 .00 .00 .00 113,129.10
37064 LAKE STEEL INC AMARILLO TX
.00 .00 .00 23,412.37 .00 .00 .00 .00 23,412.37
37175 LAMPROS STEEL INC PORTLAND OREGON
5,095.31 .00 .00 298,689.40 .00 .00 .00 .00 303,784.71
37237 LANCE CONSTRUCTION SUPP INC CHICAGO ILLINOIS
.00 .00 .00 .00 1.068.86 .00 .00 .00 1,068.86
37280 LANCASTER STL SERV CO DIV LANCASTER N Y
68.54 .00 .00 58,219.15 .00 .00 .00 .00 58,287.69
37377 LANGER MFG CO CEDAR RAPIDS IOWA
.00 .00 .00 77,414.50 .00 .00 .00 .00 77,414.50
</TABLE>
<PAGE> 304
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 25
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
37339 GEO A LANKON PILING SALES, INC FAIRVIEW HEIGHTS ILL
.00 .00 .00 355,511.85 .00 .00 .00 .00 355,511.85
37344 LAPHAM-HICKEY STEEL CORP OSHKOSH WI
.00 .00 .00 8,037.23- .00 .00 .00 .00 8,037.23-
37353 LAREDO HARDWARE CO LAREDO TX
243.06 .00 .00 .00 .00 .00 .00 .00 243.06
37460 CHAS O LARSON CO STERLING ILLINOIS
.00 .00 21,905.48 .00 .00 .00 .00 .00 21,905.48
37660 LAWRENCE BROS INC STERLING ILLINOIS
.00 .00 .00 24,002.86 .00 .00 .00 .00 24,002,86
37768 RAPISTAN DEMAG CORP GRAND RAPIDS MICH
.00 .00 .00 52,529.40 .00 .00 .00 .00 52,529.40
37778 LE BLANC COMMUNICATIONS INC SIOUX CITY IA
.00 75.28 .00 18,167.32 .00 .00 .00 .00 18,242.60
37841 LEE MASONRY PRODUCTS INC OWENSBORO KY
.00 .00 .00 8,024.00 .00 .00 .00 .00 8,024.00
37843 LEE STEEL CORPORATION BLUE BELL PA
.00 .00 .00 7,547.68 .00 .00 .00 .00 7,547.68
37846 LEGGETT & PLATT INC WIRE MILL CARTHAGE MO
.00 .00 .00 220,984.30 .00 .00 .00 .00 220,984.30
37847 LEETS SERVICES INC ADDISON IL
.00 .00 .00 7,443.01 .00 .00 .00 .00 7,443.01
37868 LEHIGH-LANCASTER DIV LANCASTER SC
.00 .00 .00 19,791.20 .00 .00 .00 .00 19,791.20
37875 LEIFER BROS STEEL CO INC LONG ISLAND CITY NY
.00 .00 .00 9,086.87 .00 .00 .00 .00 9,086.87
37930 LE JEUNE STEEL COMPANY MINNEAPOLIS MINN
.00 .00 .00 94,621.44 .00 .00 .00 .00 94,621.44
38045 LES ACIERS CANAM DIV 115 BOUL CANADA G0M 1T0
.00 .00 .00 130,608.54 .00 16,444.08 .00 .00 147,052.62
38255 LEVINSON STEEL CO PITTSBURGH PENN
.00 .00 .00 504,364.71 310,493.67 .00 .00 .00 814,858.38
38265 MDSE LEVY CO, INC. WASHINGTON IOWA
</TABLE>
<PAGE> 305
<TABLE>
<CAPTION>
04/02/96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 26
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 36,860.40 .00 .00 .00 .00 34,860.40
38325 LEWIS ENGINEERING CO CHASKA MN
.00 .00 .00 10,560.00 .00 .00 .00 .00 10,560.00
38327 PGL BLDG PRODS DIV HUTTIG SASH SACRAMENTO CA
1,110.69 1,387.19 .00 42,820.02 .00 .00 .00 .00 45,317.90
38378 DISTRIBUTION AMERICA DES PLAINES ILL
33,503.27 2,449.70 .00 932,788.42 7,830.00 .00 .00 .00 976,573.39
38400 LIEBOVICH BROS INC ROCKFORD ILLINOIS
.00 .00 .00 405,183.54 .00 .00 .00 .00 405,183.54
38510 LINCOLN STORAGE INC MERRILL WI
.00 .00 .00 9,509.00 .00 .00 .00 .00 9,509.00
38650 LINDSAY MFG CO LINDSAY NEBRASKA
.00 .00 .00 7,350.28 .00 .00 .00 .00 7,350.28
38960 LITTELL STEEL CO NEW BRIGHTON PENN
.00 .00 .00 52,215.86 .00 .00 .00 .00 52,215.86
39095 LNP STEEL & WIRE COMPANY MARYVILLE MD
1,581.10 .00 .00 273,177.71 20,813.73 .00 .00 .00 295,572.54
39225 LOCHELD INC CANADA J5R 1J5
.00 .00 .00 158,020.15 .00 .00 .00 .00 158,020.15
39233 LODE KING INDUSTRIES CANADA R6W 4B2
.00 .00 .00 7,558.20 .00 .00 .00 .00 7,558.20
39327 LONDON STEEL DIVISION ONTARIO CAN N5W 1J1
.00 .00 .00 6,756.48 .00 .00 .00 .00 6,756.48
39320 LONG-AIRDOK CO DIV OAK HILL WEST VA
.00 .00 .00 10,408.08 .00 .00 .00 .00 10,408.08
39997 BUILDING PROD INC OF SO DAKOTA WATERTOWN SD
.00 .00 .00 7,881.53 .00 .00 .00 .00 7,881.53
40070 LURIA BROS DIV CONNELL LTD ARLINGTON HEIGHTS IL
715.48 .00 .00 154,413.75- .00 .00 .00 .00 153,698.27-
40095 LYNCHBURG STL & SPEC CO., INC MONROE VA
.00 .00 .00 10,332.10 .00 .00 .00 .00 10,332.10
40235 MC FARLANE MFG CO SAUK CITY WISC
.00 .00 .00 47,040.90 .00 .00 .00 .00 47,040.90
</TABLE>
<PAGE> 306
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 27
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
40253 MacMILLAN BLOEDEL BLDG NATL'S CANADA R2X 1O7
.00 .00 .00 15,335.00 .00 .00 .00 .00 15,335.00
40613 MANIONS WHOLESALE BLDG SPLVINE SUPERIOR WI
.00 .00 .00 23,458.59 .00 .00 .00 .00 23,458.59
40616 MANIONS WHOLESALE BLDG SUPPLY ST CLOUD MN
.00 .00 .00 14,737.51 .00 .00 .00 .00 14,737.51
40893 MARLBORO WIRE LTD QUINCY IL
.00 .00 .00 12,910.31 .00 .00 .00 .00 12,910.31
41040 MARSH PRODUCTS DIV DURAND MI
.00 .00 .00 67,669.20 8,629.20 .00 .00 .00 76,298.40
41220 MARTIN & JONES INC RONCEVERTE WEST VA
.00 .00 .00 34.56- .00 .00 .00 .00 34.56-
41240 MARTIN STEEL INC HUNTINGTON WEST VA
.00 .00 .00 9,356.72 .00 .00 .00 .00 9,356.72
41304 MARYLAND STADIUM AUTHORITY BALTIMORE ND
.00 214.88 .00 .00 .00 .30 .00 .00 214.88
41307 MARYSVILLE STEEL INC MARYSVILLE OHIO
.00 .00 .00 2,704.90 .00 .00 .00 .00 2,704.90
41345 MASON STRUCT STEEL INC WALTON HILLS OHIO
.00 .00 .00 20,600.11 .00 .00 .00 .00 20,600.11
41445 MASTER KORNER LINWOOD MI
.00 .00 .00 1,194.07 .00 .00 .00 .00 1,194.07
41485 MATERIAL DISTRIBUTORS INC MARSHALL MINNESOTA
.00 .00 .00 11,402.40 .00 .00 .00 .00 11,402.40
41506 MATHEWS CONVEYOR CO DIV DANVILLE KY
.00 .00 .00 8,971.40 .00 .00 .00 .00 8,971.40
41513 MATHIS-KELLEY CONST SUPPLY CO MORTON ILLINOIS
.00 .00 .00 10,869.36 .00 .00 .00 .00 10,869.36
41730 EARL MAY SEED & NURSERY L P SHENANDDAH IOWA
.00 .00 .00 3,344.64 .00 .00 .00 .00 3,344.64
41830 W. H. MAZE COMPANY PEAU ILLINOIS
.00 .00 .00 73,009.90 .00 .00 .00 .00 73,009.90
41860 MAZEL & COMPANY CHICAGO ILLINOIS
</TABLE>
<PAGE> 307
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 28
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
116.30 .00 .00 167,381.06 .00 .00 .00 .00 167,497.36
42050 MC CANN CONSTRUCTION SPEC CO ADDISON ILLINOIS
.00 .00 .00 16,228.37 .00 .00 .00 .00 16,228.37
42550 MC GREGOR HARDWARE INC SPRINGFIELD MISSOURI
.00 .00 .00 130.60- .00 .00 .00 .00 130.60-
42692 MC NEILUS STEEL INC DODGE CENTER MINN
.00 .00 .00 157,204.54 10,940.47 .00 .00 .00 168,145.01
42836 DURAFORM LTD MADISON WI
.00 .00 .00 33,426.01 .00 .00 .00 .00 33,426.01
42875 MEIJER INC. GRAND RAPIDS MICH
182.57 .00 .00 13,286.59 .00 .00 .00 .00 13,469.16
42976 MENARDS CASHWAY LUMBER DIV EAU CLAIRE, WISC
573.24 .00 15,006.08 31,307.58 .00 .00 .00 .00 46,886.90
43003 MERCHANTS METALS INC NEW PARIS IN
.00 .00 .00 749,256.70 .00 .00 .00 .00 749,256.70
43101 MERIT STEEL INC KOUTS IN
.00 .00 .00 65,508.50 .00 .00 .00 .00 65,508.50
43109 MERRILL IRON & STEEL INC MERRILL WI
.00 .00 .00 82,405.95 17,931.16 15,392.11 .00 .00 115,729.22
43120 MERRILL MFG CORP MERRILL WISCONSIN
498.37 .00 .00 15,689.03 .00 .00 .00 .00 16,187.40
43173 METAL FABRICATORS INC ROCKFORD ILLINOIS
.00 .00 .00 27,900.96 .00 .00 .00 .00 27,900.96
43179 METROLINA STEEL INC CHARLOTTE NO CAR
.00 .00 .00 .00 11,443.80 .00 .00 .00 11,443.80
43187 METALTECH STEEL CORP MARIETTA OH
.00 .00 .00 8,922.16 .00 .00 .00 .00 8,922.16
43191 METRO FRAMEING SYSTEMS INC MILWAUKEE WI
.00 .00 .00 .00 7,154.00 .00 .00 .00 7,154.00
43195 METRON STEEL DIV PRIMARY CHICAGO ILLINOIS
250.00 .00 .00 189,578.95 25,511.21 .00 .00 .00 215,340.16
43205 METALS SUPPLY CO CLUTE TX
.00 .00 .00 8,231.85 .00 .00 .00 .00 8,231.85
</TABLE>
<PAGE> 308
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 29
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
43785 HFA FARM SUPPLY DIV MISSOURI COLUMBIA MISSOURI
321.88 .00 .00 20,715.62 .00 .00 .00 .00 21,037.50
43301 H G INDUSTRIES MENOMONEE FALLS WI
.00 .00 .00 42,831.80 .00 .00 .00 .00 42,851.80
43339 MICHELMAN CANCELLIERE IRON WKS LEHIGH VALLEY PA
.00 .00 .00 2,705.47- .00 .00 .00 .00 2,705.47-
43343 MID-AM BLDG SUP INC MOBERLY MISSOURI
1,628.40 .00 .00 56,068.47 .00 .00 .00 .00 57,694.87
43347 MID-AMERICA FORT WAYNE IN
.00 .00 .00 12,122.15 .00 .00 .00 .00 12,122.15
43355 MIDAS-INTERNATIONAL CORP HARTFORD WI
.00 .00 .00 8,365.65 .00 .00 .00 .00 8,365.65
43519 MIDLAND STEEL CO MATHENA KANSAS
.00 .00 .00 31,165.42 .00 .00 .00 .00 31,165.42
43620 MID-STATES STEEL CORP BOONE IOWA
.00 .00 .00 19,145.69 .00 .00 .00 .00 19,145.69
43635 MID STATES WIRE CRAWFORDSVILLE IND
.00 .00 .00 63,528.24 .00 .00 .00 .00 63,528.24
43682 MID-WEST FABRICATING CO AMANDA OHIO
.00 .00 .00 67,036.20 .00 .00 .00 .00 67,036.20
43691 MIDWEST HANGER COMPANY KANSAS CITY MO
.00 .00 .00 218,777.00 37,524.50 .00 .00 .00 256,301.50
43725 MIDWEST IRON & METAL CO HUTCHINSON KANSAS
.00 .00 .00 9,782.30 .00 .00 .00 .00 9,782.30
43752 MIDWEST METALS INC DAVENPORT PA
.00 .00 .00 9,618.83 .00 .00 .00 .00 9,618.83
43770 MIDWEST PIPE & STEEL INC FT WAYNE INDIANA
.00 .00 .00 41,025.61 18,067.85 .00 .00 .00 59,093.46
43927 THE CLOROX CO. OAKLAND CA
.00 .00 .00 24,690.40 .00 .00 .00 .00 24,690.40
44556 HENDT BUILDERS SUPPLY ASSN MINDY NO DAKOTA
.00 .00 .00 142.00- .00 .00 .00 .00 142.00-
44564 MISSION LUMBER OLATHE KANSAS
</TABLE>
<PAGE> 309
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 30
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 15,862.70 .00 .00 .00 .00 15,862.70
44790 MISSOURI THREADED PRODUCTS INC ST LOUIS MISSOURI
.00 .00 .00 89,189.41 .00 .00 .00 .00 89,189.41
44820 MISSOURI VALLEY STEEL CO DIV SIOUX CITY IOWA
.00 .00 .00 57,183.79 .00 .00 .00 .00 57,183.79
45015 NDEAKE DISPLAY & MFG CO UNION GROVE WISC
.00 .00 .00 16,104.39 .00 .00 .00 .00 16,104.39
45060 NDLINE CONSUMERS CO MOLINE ILLINOIS
.00 .00 .00 9,725.25 .00 .00 .00 .00 9,725.25
45386 MONROE TRACTOR IMPLEMENT HENRIETTA NEW YORK
.00 .00 .00 13,176.00 .00 .00 .00 .00 13,176.00
45627 NONY LEVINE INC FAIRMONT W VIRG
.00 .00 .00 9,790.10 .00 .00 .00 .00 9,790.10
45660 MOORE-HANDLEY INC BIRMINGHAM ALABAMA
.00 .00 .00 86,191.36 .00 .00 .00 .00 86,191.36
45908 MORGAL MACHINE TOOL CO INC SPRINGFIELD OH
.00 .00 .00 8,308.00 .00 .00 .00 .00 8,308.00
46266 TRINITY INDUSTRIES INC DALLAS TX
.00 31.68 .00 16,665.54 .00 .00 .00 .00 16,697.22
46449 MULACH STEEL CORP BRIDGEVILLE PA
.00 .00 .00 1,387,970.58 335,527.59 329,589.75 .00 .00 2,053,087.92
46452 MULTIPLE CONCRETE ACCESSORIES PALATINE IL
.00 .00 .00 37,552.84 .00 .00 .00 .00 37,552.84
46455 MUNSTER STEEL CO INC MUNSTER INDIANA
.00 .00 .00 15,679.91 .00 .00 .00 .00 15,679.91
46492 MURPHY STEEL INC NEWARK DE
.00 .00 .00 319.39- .00 .00 .00 .00 319.39-
46581 MUTUAL STEEL CORP OF USA PLATTSBURGH NY
.00 .00 .00 1,540.41 .00 .00 .00 .00 7,540.41
46582 HAMMER & STEEL INC HAZELWOOD MD
.00 .00 .00 34,420.30 .00 .00 .00 .00 34,420.30
46720 NAPCO STEEL INC WEST CHICAGO ILL
.00 .00 .00 10,285.14 .00 .00 .00 .00 10,285.14
</TABLE>
<PAGE> 310
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 31
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
46827 NATIONAL EASTERN CORPORATION PLAINVILLE CT
.00 .00 .00 .00 .00 20,044.80 .00 .00 20,044.80
46829 NATIONAL CONCRETE PIPE CO IN FRANKLIN PARK IL
.00 .00 .00 17,845.20 .00 .00 .00 .00 17,845.20
46879 NATIONAL NAIL CORP GRAND RAPIDS MI
.00 .00 85,977.50 .00 .00 .00 .00 .00 85,977.50
46880 NATIONAL MFG CO STERLING IL
601.30 .00 .00 15,948.22 .00 .00 .00 .00 16,549.52
46920 NATIONAL STEEL & SHIPBUILDING SAN DIEGO CALIF
1,601.30 .00 .00 17,627.29 .00 .00 .00 .00 19,228.59
47140 NEILL-LAVIELLE SUPPLY CO 36701 LOUISVILLE KY
.00 .00 .00 9,957.78 .00 .00 .00 .00 9,957.78
47383 NEW ENGLAND CA INC MILWAUKEE WI
.00 .00 .00 6,505.00 12,058.66 .00 .00 .00 18,563.66
47384 NEW DIMENSION METALS CORP DAYTON OHIO
.00 .00 .00 18,441.85 .00 .00 .00 .00 18,441.85
47520 NEWPORT NEWS SHIPBUILDING & NEWPORT NEWS VA
3,779.10 54.61 .00 .00 .00 .00 .00 .00 3,833.71
47800 NIVERT METAL SUPPLY INC THROOP PENNSYLVANIA
.00 .00 .00 34,205.41 .00 .00 .00 .00 34,205.41
47801 NIXA HARDWARE CO., INC NIXA MO
.00 .00 .00 141.45- .00 .00 .00 .00 141.45-
47940 NORFOLK IRON & METAL CO NORFOLK NEBRASKA
312.00 .00 .00 585,619.15 9,074.18 .00 .00 .00 595,005.33
48020 NORTH SECOND STREET STEEL MINNEAPOLIS MN
.00 .00 .00 17,269.01 .00 .00 .00 .00 17,269.01
48021 NORTH SHORE SUPPLY CO INC HOUSTON TX
.00 .00 .00 15,829.53 .00 .00 .00 .00 15,829.53
48050 NORTH STAR STEEL MINNESOTA ST PAUL MINNESOTA
.00 .00 .00 1,537.41 .00 .00 .00 .00 1,537.41
48051 NORTH STAR STEEL-KENTUCKY INC CALVERT CITY KY
5,632.00 .00 .00 3,387,142.06 959,775.58 .00 .00 .00 4,352,549.64
48060 NORTH TEXAS STEEL CO INC FT WORTH TEXAS
</TABLE>
<PAGE> 311
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 32
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 464.15- .00 .00 .00 .00 464.15-
48190 NORTHERN ILLINOIS STEEL SUP CO JOLIET ILLNOIS
.00 .00 .00 7,708.77 .00 .00 .00 .00 7,708.77
48380 NORTHERN WIRE PRODUCTS DIV ST CLOUD MINNESOTA
.00 .00 .00 12,733.20 .00 .00 .00 .00 12,733.20
48570 SPENAK DIV SHELBYVILLE INDIANA
.00 .00 43,113.80 .00 .00 .00 .00 .00 43,113.80
48588 NUCOR-YAMATO STEEL CO BLYTHEVILLE AR
.00 .00 .00 1,392,289.19 .00 5,108.11 .00 .00 1,397,766.56
48663 NU-WAY CONCRETE FORMS INC ST LOUIS MISSOURI
.00 .00 .00 37,813.69 .00 .00 .00 .00 37,813.69
48680 OAKLEY STEEL PROD CO BELLWOOD ILL
.00 .00 .00 7,674.61 18,346.74 .00 .00 .00 26,021.35
48705 O'BRIEN STEEL SERVICE CO PEORIA ILL
2,768.56 .00 .00 430,010.29 .00 .00 .00 .00 432,776.85
48890 OHIO METAL & MANUFACTURING CO DAYTON OHIO
.00 .00 .00 8,506.97 .00 .00 .00 .00 8,506.97
48894 R W CONKLIN STEEL SUPPLY INC CINCINNATI OH
.00 .00 .00 142,431.88- .00 .00 .00 .00 142,431.88-
48959 OHIO STEEL INDUSTRIES SUMMIT STATION OH
.00 .00 .00 22,894.35 .00 .00 .00 .00 22,894.35
48964 OIL STATES INDUSTRIES DIV ARLINGTON TX
.00 .00 .00 12,608.68 .00 .00 .00 .00 12,608.68
49265 OLYMPIC PIPE & TUBE CORP ST LOUIS MO
.00 .00 .00 48,092.86 .00 .00 .00 .00 48,092.86
49370 O'NEAL STEEL INC BIRMINGHAM ALA
.00 332.32 .00 1,098,284.07 .00 .00 .00 .00 1,098,616.39
49440 OREGON WIRE PRODUCTS CO INC PORTLAND OR
.00 .00 .00 254.52- .00 .00 .00 .00 254.52-
49475 HARRY E ORKIN, INC SLATINGTON PA
1,287.86 .00 .00 101.92- .00 .00 .00 .00 1,185.94
49510 ORLEANS MATERIALS & EGO CO INC NEW ORLEANS LA
.00 .00 .00 29,459.90 .00 .00 .00 .00 29,459.90
</TABLE>
<PAGE> 312
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 33
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
49316 ORSCHELN FARM & HOME SUP INC MOBERLY MISSOURI
310.86 .00 .00 169,117.31 .00 .00 .00 .00 169,428.17
49318 HERBERT E ORR CO INC PAULDING OH
.00 .00 .00 27,023.35 9,653.65 .00 .00 .00 36,077.00
49848 SHI-OWEN STEEL CO INC COLUMBIA SO CAROLINA
.00 42.35 .80 .00 .00 .00 .00 .00 42.35
49865 PACIFIC STEEL & SUPPLY SAN LEANDRO CALIF
1,119.00 414.45 .00 53,785.49 .00 .00 .00 .00 55,318.94
49890 PADEN ENGINEERING CO INC HOPE IN
.00 .00 .00 74,119.91 .00 .00 .00 .00 74,119.91
49968 PALMER INDUSTRIES DIV ALEXANDRIA NH
.00 .00 .00 62,717.83 .00 .00 .00 .00 62,717.83
50020 PAN AMERICAN INTL TRADING CORP KEY BISCAYNE FL
.00 .00 .00 10,940.00 .00 .00 .00 .00 10,940.00
50065 PANDROL INCORPORATED BRIDGEPORT N.J.
.00 .00 .00 6,790.75 .00 .00 .00 .00 6,790.75
50075 P&N STEEL COMPANY SIOUX FALLS SO OAK
.00 .00 .00 193.44- .00 .00 .00 .00 193.44-
50460 PAXTON & VIERLING STEEL CO DIV OHAHA NEB
.00 .00 .00 462,776.89 .00 .00 .00 .00 462,776.89
50524 PDN STROCAL INC STOCKTON CA
.00 .00 .00 102,802.29 .00 .00 .00 .00 102,802.29
50361 PEAVEY INDUSTRIES LTD CANADA T4P 2H9
.00 .00 .00 25,982.44 .00 .00 .00 .00 25,982.44
50682 PEERLESS CHAIN CO WINONA MINNESOTA
.00 .00 .00 339,416.47 .00 .00 .00 .00 362,185.34
50810 PEORIA MANUFACTURING INC TINLEY PARK IL
448.87 .00 .00 8,758.02 .00 .00 .00 .00 9,206.89
50818 PERFECTION AUTOMOTIVE PROD DIV LIVONIA MI
.00 .00 26,747.00 .00 .00 .00 .00 .00 26,747.90
50960 PERSINGER SUPPLY CO PRICHARD W VA
.00 .00 .00 670.23- .00 .00 .00 .00 670.23-
51699 PIPE & PILING SUPPLIES LTD CANADA J3V 2S3
</TABLE>
<PAGE> 313
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 34
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 93,502.48 .00 .00 .00 .00 93,502.48
51743 PIPS IRON WORKS INC KNOXVILLE TENNESSEE
.00 .00 .00 38,583.90 .00 .00 .00 .00 38,583.90
51870 PITT-DES MOINES INC CEDAR RAPIDS IA
.00 .00 .00 627,349.67 119,078.05 .00 .00 .00 746,427.72
51871 PDN BRIDGE DIV EAU CLAIRE WI
.00 .00 .00 19,492.11 37,272.91 .00 .00 .00 51,765.02
51874 PITT-DES MOINES INC MELROSE PARK IL
.00 .00 .00 8,001.90 .00 .00 .00 .00 8,001.90
51885 PKH STEEL SERVICES INC SALINA KS
.00 .00 .00 26,376.51 .00 .00 .00 .00 26,376.51
52004 P. M. S. INC JACKSON MD
.00 .00 .00 19,696.15 .00 .00 .00 .00 19,696.15
52291 PORTLAND STONE WARE CO CAMBRIDGE MA
.00 .00 .00 55,487.40 .00 .00 .00 .00 55,487.40
52381 POSEY SUPPLY CO INC DOUBLE SPRINGS AL
.00 .00 .00 16,314.00 .00 .00 .00 .00 16,314.00
52529 PRECISION BRAND PRODUCTS INC DOWNERS GROVE IL
.00 .00 .00 52,832.75 .00 .00 .00 .00 52,832.75
52533 PRECISION BEND & MACHINE CO WALCOTT IA
388.13 .00 .00 .00 .00 .00 .00 .00 388.13
52614 PRICE STEEL LTD CANADA T5W 1O3
.00 .00 .00 52,956.91 .00 31,764.11 .00 .00 84,721.02
52650 PRINCE MANF. CO., INC QUINCY IL
.00 .00 .00 501.90 .00 .00 .00 .00 501.90
52855 Q & T PLATE SALES LTD PORTLAND OR
.00 .00 .00 766.81- .00 .00 .00 .00 766.81-
52859 QUALITY BLDG SPLY FOR IND INC GRAND RAPIDS OH
.00 .00 .00 1,221.58 .00 .00 .00 .00 1,271.02
52864 QUALITY MARKETING CO FEDERAL WAY WA.
.00 .00 .00 147.36- .00 .00 .00 .00 147.36-
52566 QUALICO STEEL CO WEBB ALA
.00 .00 .00 174,984.87 .00 .00 .00 .00 174,984.87
</TABLE>
<PAGE> 314
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 35
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
52869 QUALITY STORES INC NORTH MUSKEGON MICH
6,367.51 .00 5,304.15 275,769.06 .00 .00 .00 .00 287,440.72
52920 QUEENSBORO STEEL CORP WILMINGTON NO CAR
.00 .00 .00 113,291.82 30,660.07 .00 .00 .00 143,951.89
53006 R & F METALS INC CLINTON MD
.00 .00 .00 9,721.92 .00 .00 .00 .00 9,721.92
53019 R & S STEEL DENVER CO
247.29 .00 .00 108,754.76 8,796.38 .00 .00 .00 117,798.43
53040 J H BOTTS INC JOLIET IL
.00 .00 .00 7,103.62 .00 .00 .00 .00 7,103.62
53460 RAYNOA MFG CO DIXON ILLINOIS
.00 .00 .00 7,749.12 .00 .00 .00 .00 7,749.12
53563 REBARCO INC HOBERLY MD
.00 .00 .00 10,048.62 .00 .00 .00 .00 10,048.62
53568 REBARS & STEEL CO MC HENRY ILLINOIS
.00 .00 .00 .00 8,387.72 .00 .00 .00 8,387.72
53630 REDMORE PRODUCTS CO PALATINE IL
.00 .00 .00 13,667.53 .00 .00 .00 .00 13,667.53
53671 REGAL STEEL SUPPLY INC STOCKTON CA
4,520.79 .00 .00 396,787.01 .00 .00 .00 .00 401,307.80
53881 RELIANCE STEEL & ALUMINUM CO LOS ANGELES CALIF
86.70 .00 .00 143,734.94 .00 .00 .00 .00 143,821.64
53888 REMINGTON STEEL INC SPRINGFIELD OHIO
.00 .00 .00 18,151.42 .00 .00 .00 .00 18,151.42
54090 RESOURCE ALLOYS & METALS INC WEST PALM BEACH FL
.00 .00 .00 316.30- .00 .00 .00 .00 316.30-
54250 RICHARDS & CONOVER STEEL CO KANSAS CITY MO
.00 .00 .00 185,478.64 66,446.83 .00 .00 .00 251,925.47
54440 RIGGS SUPPLY CO KENNETT MISSOURI
.00 .00 .00 71.64- .00 .00 .00 .00 71.64-
54592 RIVERPORT STEEL INC LOUISVILLE KY
.00 .00 .00 17,306.24 7,971.91 .00 .00 .00 25,278.15
54597 RIVERFRONT STEEL CINCINNATI OH
</TABLE>
<PAGE> 315
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 36
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 10,055.23 .00 .00 .00 .00 10,055.23
54672 R.K.D CONST SUP & EQUIP INC NORTHLAKE IL
.00 .00 .00 12,934.99 .00 .00 .00 .00 12,934.99
54860 ROBERTSON'S FARM SUP. DIV. BIG EAST ST LOUIS IL
.00 .00 .00 15,798.63 .00 .00 .00 .00 15,798.63
55012 ROCKFORD BOLT & STEEL CO ROCKFORD IL
7,882.00 .00 .00 95,060.08 24,561.90 .00 .00 .00 127,503.58
55019 ROCKFORD FABRICATORS INC ROCKFORD ILLINOIS
.00 .00 .00 10,613.69 .00 .00 .00 .00 10,613.69
55025 ROCKFORD MFG GROUP INC ROSCOE IL
.00 .00 .00 1,057.90 .00 .00 .00 .00 1,057.90
55315 ROGLRS BROS CORP ALBION PENNSYLVANIA
.00 .00 .00 9,534.62 .00 .00 .00 .00 9,534.62
55320 T H ROGERS LBR CO EDMOND OK
.00 .00 .00 300.00- .00 .00 .00 .00 300.00-
55511 RO-NAR PIPE & RAIL CO HOUSTON TX
.00 .00 .00 26,840.61 .00 .00 .00 .00 26,840.61
55562 ROSCOE STEEL & CULVERT COMPANY BILLINGS MONTANA
.00 .00 .00 7,863.93 .00 .00 .00 .00 7,863.93
55842 ROUNDS & PORTER CO DIV SALINA KS
.00 .00 .00 12.50- .00 .00 .00 .00 12.50-
55875 ROYAL STEEL INC NIAGARA FALLS NY
.00 .00 .00 21,435.81 .00 .00 .00 .00 21,435.81
55900 J RUBIN & CO ROCKFORD ILLINOIS
344.96 .00 .00 93,320.60 32,353.25 .00 .00 .00 126,018.81
56108 RUSSEL METALS CANADA S4N 4Z3
.00 .00 .00 11,445.00 .00 .00 .00 .00 11,445.00
56111 RUSSEL METALS INC CANADA T6E 4T2
.00 .00 .00 9,192.10 .00 .00 .00 .00 9,192.10
56115 RUSSELLVILLE STL CO INC RUSSELLVILLE ARK
.00 .00 .00 36,730.76 .00 .00 .00 .00 36,730.76
56160 JOSEPH T RYERSON & SON INC CHICAGO ILLINOIS
.00 739.60 .00 1,175,833.92 12,635.52 .00 .00 .00 1,189,209.04
</TABLE>
<PAGE> 316
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 37
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
56161 JOSEPH T RYERSON & SON INC WEST CHESTER PA
250.00 36.70 .00 83,883.43 .00 .00 .00 .00 84,170.13
56162 JOSEPH T RYERSON & SON INC SEATTLE WA
.00 758.39 .00 39,956.12 .00 .00 .00 .00 40,714.51
56169 SSHP TRADING COMPANY SAND SPRINGS OK
.00 .00 .00 33,044.79 .00 .00 .00 .00 33,044.79
56170 SABEL INDUSTRIES INC MONTGOMERY ALABAMA
.00 .00 .00 9,343.56 .00 .00 .00 .00 9,343.56
56295 ST CROIX FORGE INC FOREST LAKE MN
.00 .00 .00 122,644.05 .00 .00 .00 .00 122,644.05
56526 SALINA STEEL SUPPLY INC SALINA KANSAS
.00 .00 .00 46,586.79 9,581.68 .00 .00 .00 56,168.47
56637 SAMUELS RECYCLING COMPANY MADISON WI
1,424.86 .00 .00 372,323.47 77,711.18 .00 .00 .00 451,459.51
56970 SCANSTEEL SERVICE CENTER INC CLARKSVILLE IN
.00 .00 .00 126,282.46 17,663.36 .00 .00 .00 143,945.82
57573 SCHUETTE METAL DIVISION WAUSAU WI
.00 .00 .00 10,657.20 .00 .00 .00 .00 10,657.20
57574 SCHUFF STEEL CO PHOENIX AZ
.00 .00 .00 9,607.49 .00 .00 .00 .00 9,607.49
57645 SCHULER STEEL DIV- BIRMINGHAM ALABAMA
.00 .00 .00 112.70 .00 .00 .00 .00 112.70
57647 SCHULTE CORP CINCINNATI OH
.00 .00 .00 41,940.00 .00 .00 .00 .00 41,940.00
57822 SCION INC WARREN MI
1,532.34 .00 .00 243,015.76 .00 .00 .00 .00 244,548.10
57860 SEABOARD STEEL & IRON CORP BALTIMORE MARYLAND
.00 .00 .00 21,524.65 .00 .00 .00 .00 21,524.65
57869 ABE SEBULSKY STEEL INC ST CLAIRSVILLE OHIO
.00 .00 .00 20,806.36 .00 .00 .00 .00 20,806.36
58020 SEIBEL MODERN MFG & WLDG CORP LANCASTER NY
2,252.30 .00 .00 .00 .00 .00 .00 .00 2,252.30
58128 SENCO PRODUCTS INC CINCINNATI OHIO
</TABLE>
<PAGE> 317
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 38
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 7,697.85- .00 .00 .00 .00 7,697.85-
58155 SENNETT STEEL CORP. MADISON HEIGHTS MICH
.00 .00 .00 25,346.72 .00 .00 .00 .00 25,346.72
58169 SENTINEL INDUSTRIES,INC ASHLAND MD
.00 .00 .00 12,212.32 .00 .00 .00 .00 12,212.32
58170 SERVICE IRON WORKS, INC LIVONIA MI
.00 .00 .00 17,842.20 .00 .00 .00 .00 17,842.20
58182 SERVICE STEEL WAREHOUSE CO INC HOUSTON TEXAS
.00 .00 .00 4,167.26 .00 .00 .00 .00 4,167.26
58492 CORLE BUILDING SYSTEMS IMLER PA
.00 .00 .00 10,465.28 .00 .00 .00 .00 10,465.28
58668 SHELBY MANUFACTURING IND SHELBY MI
.00 .00 .00 7,686.75 .00 .00 .00 .00 7,686.75
58669 SHELBY STEEL FACRICATORS, INC VINCENT ALA
.00 .00 .00 8,659.48 .00 .00 .00 .00 8,659.48
58743 SHERMAN WIRE DIV CO SHERMAN TX
.00 .00 .00 141,445.52 .00 .00 .00 .00 141,445.52
58780 SHINE BROTHERS CORPORATION SPENCER IOWA
.00 .00 .00 8,927.87 .00 .00 .00 .00 8,927.87
58840 D A SHORT STEEL CO INC INDIANAPOLIS IN
3,644.54 .00 .00 13,928.60 .00 .00 .00 .00 17,573.14
58870 TOTE CART CO ROCKFORD ILLINOIS
.00 .00 17,366,800 .00 .00 .00 .00 .00 17,366.80
59156 SIMPLEX NAIL INC AMERICUS GA
.00 .00 .00 12,904.01 .00 .00 .00 .00 12,904.01
59790 STATE STEEL SUPPLY CO SIOUX CITY IOWA
.00 .00 .00 224.91- .00 .00 .00 .00 224.91-
59300 SIOUX CITY FOUNDRY CO SIOUX CITY IOWA
.00 .00 .00 18,769.48 .00 .00 .00 .00 18,769.48
59346 SISKIN STEEL & SUPPLY CO INC CHATTANOOGA TENN
1,970.72 .00 745,280.66 .00 .00 .00 .00 747,251.38
59387 SKYLINE STEEL CORPORATION EAST RUTHERFORD NJ
.00 .00 .00 18,103.68 .00 .00 .00 .00 18,103.68
</TABLE>
<PAGE> 318
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 11
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
59520 SLIGO INC ST LOUIS MISSOURI
.00 .00 .00 8,853.98 .00 .00 .00 .00 8,853.98
59567 SMITH & RICHARDSON MFG CO GENEVA ILLINOIS
.00 .00 .00 17,006.64 .00 .00 .00 .00 17,006.64
59987 SONNER METALCRAFT CORP CRAWFORDSVILLE IND
.00 .00 .00 21,920.23 .00 .00 .00 .00 21,920.25
60280 SO-CAL COMMERCIAL LOS ANGELES CALIF
352.94 .00 .00 .00 .00 .00 .00 .00 352.94
60287 SOUTH CAROLINA STL CORP GREENVILLE S.C.
.00 .00 .00 8,982.51 .00 .00 .00 .00 8,982,51
60315 SOUTH ST PAUL STEEL SUP CO INC SOUTH ST PAUL MN
.00 .00 .00 9,815.20 .00 .00 .00 .00 9.815.20
60367 SOUTHERN FABRICATORS INC MEMPHIS TENNESSEE
.00 .00 .00 18,979.90 .00 .00 .00 .00 18,979.90
60415 SISTEEL CORP PADUCAH KY
.00 .00 .00 32,170.49- .00 .00 .00 .00 32,170.49-
60439 SOUTHERN STATES CORP INC RICHMOND VIRGINA
226.08 56.08 .00 138,884.65 .00 .00 .00 .00 139,167.53
60493 SOUTHERN STEEL SUPPLY CO MEMPHIS TENNESSEE
.00 .00 .00 65,864.94 .00 .00 .00 .00 65,864.94
60571 SOUTHWEST COOPERATIVE WHSLE PHOENIX AZ
.00 .00 .00 19,846.48 1,830.23 .00 .00 .00 21,676.71
61046 SPRINGIELD STL SUP DIV SPRINGFIELD MISSOURI
.00 .00 .00 7,723.50 .00 .00 .00 .00 7,723.50
61440 STANDARD IRON WORKS LA VISTA NE
.00 .00 .00 60,616.33 .00 .00 .00 .00 60,616.33
61441 STANDARD IRON WORKS SCRANION PA
.00 .00 .00 .00 19,093.52 .00 .00 .00 19,093.52
61663 STAN-NAR INC DENVER CO
.00 .00 .00 16,000.03 44,486.75 .00 .00 .00 60,486.78
61917 STEARNS AIRPORT EQUIPMENT CO FORT WORTH TX
.00 .00 .00 7,725.60 .00 .00 .00 .00 7,725.60
61921 STEEL CITIES STEELS INC BURNS HARBOR IN
</TABLE>
<PAGE> 319
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 40
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 9,933.16 .00 .00 .00 .00 9,933.16
61929 NAHASCO DIV HOUSTON, TEXAS
556.45 .00 .00 81,500.06 .00 .00 .00 .00 82,056.51
61940 STEEL INC COMMERCE CITY COLO
.00 .00 .00 9,970.56 28,396.17 .00 00 .00 38,366.73
61945 STEEL INC SCOTTDALE GEORGIA
.00 .00 .00 41,046.35 .00 .00 .00 .00 41,046.35
61955 STEELE & PIPE SUPPLY MANHATTAN KANSAS
.00 .00 .00 213,894.60 .00 .00 .00 .00 213,894.60
61956 STEEL & WIRE PRODUCTS CO BALTIMORE MARYLAND
.00 .00 .00 36,040.41 8,129.71 .00 .00 .00 44,170.12
61957 STEEL MFG & WAREHOUSE CO INC KANSAS CITY MO
.00 .00 .00 .00 7,644.81 .00 .00 .00 7,644.81
61959 STEELOX SYSTEMS INC WASH COURT HOUSE OH
.00 .00 .00 7,843.01 8,520.12 .00 .00 .00 16,363.13
61960 STEEL & WIRE DIV MNP CORP UTICA MI
.00 .00 .00 15,117.30 .00 .00 .00 .00 15,117.30
62021 STEEL SERVICE CO CLAREMORE OKLA
.00 .00 .00 7,497.31 .00 .00 .00 .00 7,497.31
62032 STEEL SERVICE CORP JACKSON MISS
.00 .00 .00 9,637.19 .00 .00 .00 .00 9,637.19
62044 STEEL STRUCTURES INC KANKAKEE ILL
.00 .00 .00 43,741.50 .00 .00 .00 .00 43,741.50
62051 STEEL SUPPLY CO INC LA CROSSE WISCONSIN
.00 .00 .00 7,661.23 .00 .00 .00 .00 7,661.23
62250 STEIN STEEL & SUPPLY COMPANY ATLANTA GEORGIA
.00 .00 .00 10,004.10 .00 .00 .00 .00 10,004.10
62256 STEINBERG MFG CO INC CLINTONVILLE WI
.00 .00 .00 8,199.78 .00 .00 .00 .00 8,199.78
62260 STELLITE COATINGS DIV GOSHEN IN
.00 .00 .00 8,625.00 .00 .00 .00 .00 8,625.00
62266 STENMCOR USA INC NEW YORK NY
.00 .00 .00 1,446.40- .00 .00 .00 .00 1,446.40-
</TABLE>
<PAGE> 320
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 41
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
62491 STERLING WIRE PRODUCTS INC ROCK FALLS ILL
.00 .00 .00 8,283.15 .00 .00 .00 .00 8,283.15
62574 STEWARD STEEL SUPPLY CO SIKESTON MD
189.40 .00 .00 .00 .00 .00 .00 .00 189.40
62780 STONE STEEL CORP BALTIMORE MARYLAND
.00 .00 .00 11,243.90 .00 .00 .00 .00 11,243.90
62855 SHE INDUSTRIES INC WEST JORDAN UT
.00 .00 .00 8,984.40 .00 .00 .00 .00 8,984.40
63284 STRUCTURAL STEEL SERVICE MERIDIAN MS
.00 .00 .00 93,543.11 .00 .00 .00 .00 93,543.11
63295 STUD WELDING INC CENTERVILLE IN
.00 .00 .00 .00 8,040.38 .00 .00 .00 8,040.38
63325 STOPP METALS DIV ST LOUIS MO
487.08 .00 .00 165,245.84 .00 .00 .00 .00 165,732.92
63343 SUBURBAN STEEL SUPPLY CO PATASKALA OH
.00 .00 .00 86,016.25 10,587.86 .00 .00 .00 96,604.11
63349 SUGAR STEEL CORP MONEE IL
4,005.15 .00 .00 674,726.64 .00 .00 .00 .00 678,731.79
63473 SUN METAL PRODUCTS INC WARSAW INDIANA
.00 .00 .00 9,485.62 .00 .00 .00 .00 9,485.62
63595 SUPERIOR STEEL CORP CAMBRIDGE OHIO
.00 .00 .00 42,283.92 .00 .00 .00 .00 42,283.92
63622 SUPREME SCREW PROUDCTS INC COUNTRYSIDE IL
.00 .00 .00 4,890.35 .00 .00 .00 .00 4,890.35
63766 SWEEPSTER JENKINS EQUIP CO INC DEXTER MI
413.96 .00 .00 1,930.53 .00 .00 .00 .00 2,344.49
63770 R. L. SWEET LUMBER COMPANY OLATHE KS
.00 .00 .00 882.37- .00 .00 .00 .00 882.37-
63870 SYRACUSE CASTINGS SALES CORP CICERO NEW YORK
.00 .00 .00 39,452.12 .00 .00 .00 .00 39,452.12
63965 C Y TAUGER & SON LANCASTER PA
.00 .00 .00 17,380.81 .00 .00 .00 .00 17,380.81
63977 TARWATER FARM & HOME SUPPLY TOPEKA KANSAS
</TABLE>
<PAGE> 321
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 42
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 9,721.70 .00 .00 .00 .00 9,721.70
64250 TERRAZZO & MARBLE SUPPLY CO CHICAGO ILLINOIS
.00 269.08 .00 .00 .00 .00 .00 .00 269.08
64260 TEWS COMPANY MILWAUKEE WISC
.00 .00 .00 8,245.34 .00 .00 .00 .00 8,245.34
64269 T F C CANOPY ASHLEY IN
.00 .00 .00 10,493.20 .00 .00 .00 .00 10,493.20
64321 THEISEN SUPPLY INC DUBUQUE IOWA
.00 .00 .00 69,591.59 27.46 .00 .00 .00 69,619.05
64391 THOMAS PIPE & STEEL INC BATON ROUGE LA
.00 .00 .00 805.48 .00 .00 .00 .00 805.48
64813 THRALL CAR MFG CO CARTERSVILLE GA
.00 .00 .00 54.96- 10,719.47 .00 .00 .00 10,664.51
64815 THRALL CAR MFG CO CHICAGO HEIGHTS ILL
.00 .OO .00 16,284.14 .00 .00 .00 .00 16,284.14
64817 THREADED ROD CO INC INDIANAPOLIS INDIANA
.00 .00 .00 118,095.71 .00 .00 .00 .00 118,095.71
64818 3-G'S SUPPLY CO CLEVELAND OHIO
118.66 .00 69,322.04 47,391.87 .00 .00 .00 .00 116,832.57
64819 THREE RIVERS CRANE INC OAKDALE PA
.00 .00 .00 12,341.00 .00 .00 .00 .00 12,341.00
64820 THREE STATES SUPPLY CO MEMPHIS TENN
146.40 .00 .00 .00 .00 .00 .00 .00 146.40
64821 3-M ST PAUL MN
.00 .00 .00 3,677.63 .00 .00 .00 .00 3,677.63
64859 THYPIN STEEL CO LONG ISLAND CITY NY
3,471.44 .00 .00 30,639.88 .00 .00 .00 .00 34,111.32
64938 TINDLE MILLS INC SPRINGFIELD MD
.00 .00 .00 14,969.98 .00 .00 .00 .00 14,969.98
64939 TINSLEY SUPPLY CO PELL CITY AL
.00 .00 1,808.18- .00 .00 .00 .00 1,808.18-
65042 TITAN STEEL COMPANY DETROIT MICHIGAN
.00 .00 .00 7,834.85 .00 .00 .00 .00 7,834.85
</TABLE>
<PAGE> 322
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 43
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
65060 TOLEDO FENCE & SUPPLY CO TOLEDO OHIO
812.55 .00 .00 .00 .00 .00 .00 .00 812.55
65290 TOWER MANUFACTURING COMPANY MADISON INDIANA
.00 .00 .00 962.88 .00 .00 .00 .00 962.88
65340 TSC INDUSTRIES INC NASHVILLE TENNESSEE
952.88 .00 .00 469,757.36 55,724.15 .00 .00 .00 526,434.39
65448 TRIAD METALS INTERNATIONAL WILLOW GROVE PA
2,308.23 .00 .00 82,080.44 .00 .00 .00 .00 84,388.67
65475 TRINITY IND INC ATTN: RAIL CAR DALLAS TEXAS
.00 .00 .00 112,492.99 .00 .00 .00 .00 112,492.99
65481 TRINITY IND INC GREENVILLE PA
.00 .00 .00 334.70- .00 .00 .00 .00 334.70-
65501 TRIPLE S STEEL & SUPPLY HOUSTON TX
114.94 .00 .00 30,411.53 .00 .00 .00 .00 30,526,47
65520 TROJAN STEEL CO CHARLESTON WEST VA
.00 .00 .00 9,445.25 7,625.09 .00 .00 .00 17,070.34
65570 TRU-WELD GRATING INC WEXFORD PA
.00 .00 .00 27,075.54 .00 .00 .00 .00 27,075.54
65625 TUDOR SALES LTD ANNACIS ISLAND CANADA V3N 5R5
234.26 .00 .00 .00 .00 21,353.22 .00 .00 21,587.48
65635 J M TULL METALS CO INC NORCROSS GEORGIA
.00 .00 .00 24,823.44 .00 .00 .00 .00 24,823.44
65803 MARK TWAIN REDI-MIX INC HANNIBAL MO
.00 .00 .00 8,699.46 .00 .00 .00 .00 8,699.46
65921 TYS CONSTRUCTION SERVICES INC CINCINNATI OH
.00 .00 .00 1,789.57- .00 .00 .00 .00 1,789.57-
66140 UNION PACIFIC RAILROAD CO OMAHA NEBR
.00 .00 .00 139,482.00 .00 .00 .00 .00 139,617.00
66180 AZCON DIV BLUETEE CORP UNIT 15 GARY IN
.00 .00 .00 12,182.23 .00 .00 .00 .00 12,182.23
66215 UNITED BUILDING CENTERS WINONA MINNESOTA
.00 .00 .00 6,450.83 .00 .00 .00 .00 6,450.83
66234 UNITED CONSTRUCTION PROD INC NAPERVILLE IL
</TABLE>
<PAGE> 323
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 44
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 29,111.28 .00 .00 .00 .00 .00 29,111.28
66313 UNITED MACHINE & TOOL CO DES MOINES IA
.00 .00 .00 19,550.30 .00 .00 .00 .00 19,550.30
66376 UNITED SOURCES INC CHICAGO IL
.00 .00 .00 15,277.67 .00 .00 .00 .00 15,227.67
66377 USL PRODUCTS INC MINNEAPOLIS MN
.00 .00 .00 8,035.20 .00 .00 .00 .00 8,035.20
66411 UNITED STEEL SERVICE INC BROOKFIELD OHIO
.00 .00 .00 363,391.99 165,477.11 .00 .00 .00 528,869.10
66429 ACEROS COREY S A DE C V 44440 MEXICO
.00 .00 .00 10,116.02- .00 .00 .00 .00 10,116.02-
66441 UNITED STEEL FABRICATORS INC INDIANAPOLIS IN
286.20 .00 .00 54,398.50 28,809.31 .00 .00 .00 83,494.01
66488 UNIVERSAL STEEL INC ROANOKE VIRGINIA
.00 .00 .00 21,021.04 .00 .00 .00 .00 21,021.04
66511 UNVERFERTH MFG CO INC KALIDA OH
.00 49.58 .00 6,829.59 .00 .00 .00 .00 6,879.17
66516 UNR-ROHN DIV PEORIA ILLINOIS
.00 84.11 .00 58,144.81 .00 .00 .00 .00 58,228.92
66554 UTICA STEEL INC CHESTERFIELD MI
.00 .00 .00 32,174.59 .00 .00 .00 .00 32,174.59
66725 VALLEY STEEL & WIRE CO FORT COLLINS COLO
.00 .00 .00 175.49- .00 .00 .00 .00 175.49-
66740 VALLEY SUPPLY CO ELKINS WEST VA
.00 .00 .00 7,014.42 .00 .00 .00 .00 7,014.42
66832 VARCO-PRUDEN DIV EVANSVILLE WISC
.00 .00 .00 6,932.28 7,106.76 .00 .00 .00 14,039.04
66938 VARSTEEL LTD CANADA T1J 4J7
.00 .00 .00 81.00- 31,411.46 .00 .00 .00 31,330.46
67063 VERNON'S ANTIQUES & ODIN IL
.00 .00 .00 8,747.38 .00 .00 .00 .00 8,747.38
67084 VERSA STEEL INC PORTLAND OR
.00 .00 .00 44,769.92 .00 .00 .00 .00 44,769.92
</TABLE>
<PAGE> 324
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 45
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
67140 VICTORY STEEL SUPPLY CO WEST ALLIS WISC
.00 .00 .00 18,391.95 .00 .00 .00 .00 18,391.95
67193 VINCENNES STEEL CORP VINCENNES INDIANA
.00 .00 .00 9,527.13 .00 .00 .00 .00 9,527.13
67280 VOYAGER INC ELKHART IN
.00 .00 .00 10,256.50 .00 .00 .00 .00 10,256.50
67306 VULCAN INC HAYWARD CA
.00 .00 .00 13,824.00 .00 .00 .00 .00 13,824.00
67360 WADDELL'S REBAR FAB INC INDEPENDENCE MO
.00 .00 .00 12,260.35 .00 .00 .00 .00 12,260.35
67381 WADY INDUSTRIES INC NAQUOXETA IOWA
.00 .00 .00 84,777.30 15,093.00 .00 .00 .00 99,870.30
67460 THE WAGNER HARDWARE CO-V 369 MANSFIELD OHIO
.00 .00 .00 18,768.64 .00 .00 .00 .00 18,768.64
67700 WALKER WIRE & STEEL CO FERNDALE MICH
.00 .00 .00 239,472.75 7,750.40 .00 .00 .00 247,223.15
67807 WALLACE HARDWARE CO INC MORRISTOWN TN
401.06 .00 .00 905.45 .00 .00 .00 .00 1,306.51
67879 WARE MANUFACTURING INC PHOENIX AZ
.00 .00 .00 .00 19,625.40 .00 .00 .00 19,625.40
68100 W & W STEEL CO OKLAHOMA CITY OKLA
.00 .00 .00 203,364.32 .00 .00 .00 .00 203,364.32
68102 W & W STEEL CO LUBBOCK TEXAS
.00 .00 .00 51,034.22 .00 .00 .00 .00 51,034.22
68273 THE WARREN COMPANY ERIE PENN
.00 .00 .00 20,380.95 .00 .00 .00 .00 20,380.95
68420 FANSTEEL WASHINGTON HFG WASHINGTON IOWA
.00 .00 97,197.02 23,782.69 23,689.64 .00 .00 .00 144,669.35
68465 W.A.S.P. INC GLENWOOD MN
.00 .00 .00 36,451.08 .00 .00 .00 .00 36,451.08
68553 WATSON BOWMAN ACME CORP AMHERST N.Y.
2,907.00 .00 .00 .00 23,340.66 12,546.00 .00 .00 38,793.66
68640 WAUKEGAN STEEL SALES INC WAUKEGAN ILL
</TABLE>
<PAGE> 325
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 46
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
.00 .00 .00 7,767.35 .00 .00 .00 .00 7,767.35
68675 WAUSAU STEEL CORP WAUSAU WISCONSIN
.00 .00 .00 316,178.34 .00 .00 .00 .00 316,178.34
69100 WELCH BROS INC ELGIN IL
.00 .00 .00 16,202.35 .00 .00 .00 .00 16,202.35
69237 BANKS MILLER SUPPLY BECKLEY WEST VIR
.00 .00 .00 21,132.74 .00 .00 .00 .00 21,132.74
69260 WEST-HUDSON LUMBER CO CREIGHTON NEBRASKA
.00 .00 .00 19.67- .00 .00 .00 .00 19.67-
69365 WEST VIRGINIA STEEL CORP CHARLESTON W VA
.00 33.69 .00 28,769.39 .00 .00 .00 .00 28,803.08
69388 WESTERNAN COMPANIES BREMEN OH
.00 .00 .00 .00 .00 12,528.39 .00 .00 12,528.39
69453 WESTERN-CHAIN CO CHICAGO IL
.00 .00 .00 .00 12,786.20 .00 .00 .00 12,786.20
69633 WESTERN STEEL CO CORPUS CHRISTI TEXAS
.00 .00 .00 17,977.80 .00 .00 .00 .00 17,977.80
69637 WESTFIELD STEEL INC WESTFIELD INDIANA
1,452.29 .00 .00 8,400.71 10,038.70 .00 .00 .00 19,891.70
69670 WEYERHAEUSER COMPANY TACOMA WASH
.00 .00 .00 6,755.00 .00 .00 .00 .00 6,755.00
69706 WHEATBELT INC-025860 KANSAS CITY MO
500.00 .00 .00 170,160.45 .00 .00 .00 .00 170,660.45
69720 WHEELER & WILLIAMS HOWE CO INC ASHLAND KENTUCKY
.00 .00 .00 17,648.63 .00 .00 .00 .00 17,648.63
69770 CONAGRA, INC/COUNTRY GENERAL GRAND ISLAND NEBR
.00 77.89 103,957.96 9,279.79 .00 .00 .00 .00 113,315.64
70320 WIEDENBECK, INC. MADISON WI
.00 .00 .00 16,474.08 .00 .00 .00 .00 16,474.08
70387 WILHELM & KRUSE INC RANKIN PA
.00 .00 .00 374.53- .00 .00 .00 .00 374.53-
70389 WILKINSON STEEL METALS DIV CANADA T6E 0C3
.00 .00 .00 .00 .00 36,125.78 .00 .00 36,125.78
</TABLE>
<PAGE> 326
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 47
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
70433 WILLHOTTE'S INC JUNCTION CITY KS
.00 .00 .00 150.50- .00 .00 .00 .00 150.50-
70520 WILLIAMS STEEL & HARDWARE MINNEAPOLIS MINN
.00 .00 .00 30,077.64 .00 .00 .00 .00 30,077.64
70560 WILLIAMS STEEL & SUPPLY CO INC MILWAUKEE WISC
.00 .00 .00 131,919.32 43,760.37 .00 .00 .00 175,679.69
70597 WILLIAMSON SUPPLY CO DIV WILLIAMSON W.V.
.00 .00 .00 19,475.16 .00 .00 .00 .00 19,475.16
70827 WILSON STEEL & WIRE CO CHICAGO ILLINOIS
.00 .00 .00 73,945.60 .00 .00 .00 .00 73,945.60
70956 FRANK W WINNE & SON INC PHILADELPHIA PA
.00 .00 .00 13,392.00 .00 .00 .00 .00 13,392.00
70990 WINDGRADS STEEL & SUPPLY DIV GREELEY COLO
.00 .00 .00 46,567.44 .00 .00 .00 .00 46,567.44
71020 OSCAR WINSKI INC LAFAYETTE IND
2,775.36 .00 .00 8,371.66 .00 .00 .00 .00 11,147.02
71050 JONES & BROWN CO INC C/O SWIFT ADDISON ILLINOIS
.00 .00 .00 140,341.63 .00 .00 .00 .00 140,341.63
71095 WIRE MAID MFG LTD SCHOFIELD WISC
.00 .00 .00 8,982.70 9,703.90 .00 .00 .00 18,686.60
71140 D & K AMERICAN CORP CHICAGO ILL
.00 .00 .00 1,079.76- .00 .00 .00 .00 1,079.76-
71283 WISCONSIN METAL SALES INC REEDSBURG WI
.00 .00 .00 16,362.06 .00 .00 .00 .00 16,362.06
71380 WITTE HARDWARE CORP 749846 ST. LOUIS MO
157.50 .00 .00 27,217.85 .00 .00 .00 .00 27,375.35
71410 STEEL WAREHOUSING DIV KLOCKNER DES MOINES IOWA
6,625.76 .00 .00 404,445.98 16,202.90 .00 .00 .00 427,274.64
71734 WORTH IRON WORKS NORTH ILLINOIS
.00 .00 .00 54,682.59 .00 .00 .00 .00 54,682.59
71758 WOOLF DISTRIBUTING CO INC HAZELWOOD MO
.00 .00 .00 13,950.33 .00 .00 .00 .00 13,950.33
71759 WOOLF DISTRIBUTING CO INC PEORIA IL
</TABLE>
<PAGE> 327
<TABLE>
<CAPTION>
04-02-96 NORTHWESTERN STEEL AND WIRE COMPANY PAGE: 48
AGED TRIAL BALANCE
SHORT DATING CURRENT PAST DUE BALANCE ACCOUNT
CLAIMS DISCOUNT TERMS OTHER 6-30 DAYS 31-60 DAYS 61-90 DAYS OVER 90 DAYS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
91.11 .00 .00 79,621.58 .00 .00 .00 .00 79,427.84
71760 WOOLF DISTRIBUTING CO INC CRYSTAL LAKE IL
28.80 .00 .00 80,176.29 .00 .00 .00 .00 80,435.46
71765 WOOLF DISTRIBUTING CO INC JOLIET IL
.00 .00 .00 2,029.55- .00 .00 .00 .00 1,975.07-
71858 NORTH STEEL & MACHINE CORP BLUE ISLAND IL
.00 .00 .00 192.15 .00 .00 .00 .00 192.15-
71885 ROBERT P WRIGHT INC SHAWNEE MISSION KS
.00 .00 .00 11,408.25 .00 .00 .00 .00 11,408.25
71987 WYATT DRAINAGE PROD INC FULSHEAR TX
.00 .00 .00 27,412.90 .00 .00 .00 .00 27,412.90
71992 YAFFE STEEL DIV ENID OK
.00 .00 .00 93,402.87 17,575.78 .00 .00 .00 110,978.65
72145 YOUNGSTOWN PIPE & SUPPLY INC YOUNGSTOWN OH
.00 .00 .00 14,906.89 .00 .00 .00 .00 14,906.89
72245 ZALK JOSEPHS FABRICATORS INC STOUGHTON WISCONSIN
.00 .00 .00 204,674.59 .00 .00 .00 .00 204,674.59
72397 ZINC CORPORATION OF AMERICA MONACA PA
2,434.80 .00 .00 6,708.54 .00 .00 .00 .00 9,143.34
GRAND TOTAL
437,448.74 16,123.28 3,098,319.69 59,859,999.68 5,775,780.98 800,419.76 189.80 1,998.36 69,990,280.29
</TABLE>
<PAGE> 328
SECTION 3.10
FILINGS
1. Office of the Secretary of State
UCC Division
Centennial Building
Room 30
Springfield, Illinois 62756
2. Recorder of Deeds of Whiteside County
Whiteside County Courthouse
200 East Knox Street
Morrison, Illinois 61270
3. Secretary of State
UCC Division
1019 Brazos Street
Room B-31
Austin, Texas 78701
4. Clerk of Harris County
1001 Preston
Houston, Texas 77002
5. Secretary of State's Office
UCC Division
Capital Building
700 Capital Avenue
Room 79
Frankfort, Kentucky 40601
6. Fulton County Clerk
P.O. Box 126
Hickman, Kentucky 42050
7. Box Assignment
Commissioner of Patents and Trademarks
Washington, D.C. 20231
<PAGE> 1
EXHIBIT 11.1
NORTHWESTERN STEEL AND WIRE COMPANY
COMPUTATION OF INCOME PER SHARE
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Net income............................................ $20,670,000 $26,978,000 $10,010,000
=========== =========== ===========
Weighted average shares outstanding................... 24,838,556 24,763,402 24,679,249
Net additional shares outstanding assuming dilutive
stock options exercised and proceeds used to
purchase treasury stock at average market price..... 200,217 388,813 506,140
----------- ----------- -----------
Shares outstanding for net income per share
calculation......................................... 25,038,773 25,152,215 25,185,389
=========== =========== ===========
Net income per share.................................. $ 0.83 $ 1.07 $ 0.40
=========== =========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
of Northwestern Steel and Wire Company on Form S-8 (File No. 33-56412, 33-67788
and 33-53471) of our reports dated September 12, 1996 on our audits of the
consolidated financial statements and financial statement schedule of
Northwestern Steel and Wire Company as of July 31, 1996 and 1995 and for the
years ended July 31, 1996, 1995 and 1994, which reports are included in this
annual report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
October 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> JUL-31-1996
<CASH> 5,558
<SECURITIES> 0
<RECEIVABLES> 68,004
<ALLOWANCES> 825
<INVENTORY> 98,401
<CURRENT-ASSETS> 190,279
<PP&E> 407,395
<DEPRECIATION> 166,206
<TOTAL-ASSETS> 442,518
<CURRENT-LIABILITIES> 105,742
<BONDS> 0
0
0
<COMMON> 123,786
<OTHER-SE> (17,770)
<TOTAL-LIABILITY-AND-EQUITY> 442,518
<SALES> 661,069
<TOTAL-REVENUES> 661,232
<CGS> 588,774
<TOTAL-COSTS> 625,482
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,583
<INCOME-PRETAX> 17,167
<INCOME-TAX> (3,503)
<INCOME-CONTINUING> 20,670
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,670
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0.83
</TABLE>
