EXHIBIT 10OO
CONSOLIDATED AMENDMENT NO. 3 AND WAIVER
TO
MASTER LEASE AGREEMENT AND EQUIPMENT SCHEDULES
THIS CONSOLIDATED AMENDMENT NO. 3 TO MASTER LEASE AGREEMENT
(this "AMENDMENT"), dated as of September 28, 2001, is entered into by and
between Brush ▇▇▇▇▇▇▇ Inc., an Ohio corporation ("LESSEE"), and National City
Bank, for itself and as agent for certain participants ("LESSOR"),
RECITALS:
A. Lessee and Lessor entered into a Master Lease Agreement,
dated as of December 30, 1996, as amended by the First Amendment to Master Lease
Agreement, dated as of September 2, 1997, the Second Amendment to Master Lease
Agreement and Amendment to Disbursement Schedules, dated as of January 26, 1999,
the Third Amendment to Master Lease Agreement and Amendment to Equipment
Schedules, dated as of September 30, 1999, the Fourth Amendment to Master Lease
and Waiver, dated as of May 16, 2000, and Consolidated Amendment No. 1 to Master
Lease Agreement and Equipment Schedules, dated as of June 30, 2000 and
Consolidated Amendment No. 2 to Master Lease Agreement and Equipment Schedules,
dated as of March 30, 2001 (together with all Exhibits and Schedules thereto,
the "LEASE AGREEMENT"), under which Lessor agreed to lease to Lessee certain
equipment to be used by Lessee at its Elmore, Ohio, facility, subject to certain
conditions and in accordance with the terms thereof; and;
B. The parties desire to amend certain provisions of the
Master Lease Agreement as of the Amendment Effective Date (as defined in Section
2.01 of this Amendment).
AGREEMENT:
IN CONSIDERATION OF THE PREMISES above and the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
SECTION I - AMENDMENTS TO AGREEMENT
1.01 Section IV(a) of the Lease Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"(a) Lessee will promptly notify Lessor in writing after
receipt of notice of any Tax or other mortgage, pledge, security interest,
encumbrance, lien, lease or charge of any kind (including any agreement or
consignment arrangement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature thereof)
(collectively, a "LIEN") shall attach to any Disbursement Equipment or
Equipment, of the full particulars thereof and of the location of such
Disbursement Equipment or Equipment on the date of such notification."
1.02 Section IV(b) of the Lease Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"(b) Lessee will furnish or cause to be furnished to each
Participant and the Lessor:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within 90 days after the close of each fiscal year of the
Parent, the consolidated and consolidating balance
sheets of the Parent and the Subsidiaries as at the end of such fiscal
year and the related consolidated and consolidating statements of
income, of stockholder's equity and of cash flows for such fiscal year,
in each case setting forth comparative figures for the preceding fiscal
year, all in reasonable detail and, solely in the case of the
consolidated financial statements, accompanied by the opinion with
respect to such consolidated financial statements of independent public
accountants of recognized national standing selected by the Parent,
which opinion shall be unqualified and shall state that such
accountants audited such consolidated financial statements in
accordance with generally accepted auditing standards, that such
accountants believe that such audit provides a reasonable basis for
their opinion, and that in their opinion such consolidated financial
statements present fairly in all material respects the financial
position of the Parent and the Subsidiaries as at the end of such
fiscal year and the results of their operations and cash flows for such
fiscal year in conformity with GAAP.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available and
in any event within 45 days after the close of each of the quarterly
accounting periods in each fiscal year of the Parent, the unaudited
consolidated and (commencing with the fiscal quarter ending March 31,
2001) consolidating balance sheets of the Parent and the Subsidiaries
as at the end of such quarterly period and the related unaudited
consolidated and (commencing with the fiscal quarter ending March 31,
2001) consolidating statements of income and of cash flows for such
quarterly period, and setting forth, in the case of such unaudited
statements of income and of cash flows, comparative figures for the
related periods in the prior fiscal year, and which financial
statements shall be certified as true and correct on behalf of the
Parent by a Principal Officer of the Parent, subject to changes
resulting from normal year-end audit adjustments.
(iii) OFFICER'S COMPLIANCE CERTIFICATES. At the time of the
delivery of the financial statements provided for in sections IV(b)(i)
and (ii), a certificate on behalf of a Principal Officer of the Parent
to the effect that no Default or Potential Default exists or, if any
Default or Potential Default does exist, specifying the nature and
extent thereof, which certificate shall set forth the calculations
required to establish compliance with the provisions of Sections
XXIV(m)(e), (o)(c), (p)(k) and Section XXIII of this Agreement,
including an identification of the amounts of any financial items of
persons or business units acquired by the Parent or Lessee or their
Subsidiaries for any periods prior to the date of acquisition which are
used in making such calculations.
(iv) BUDGETS AND FORECASTS. Not later than 60 days after the
commencement of each fiscal year of the Parent and the Subsidiaries, a
consolidated and consolidating budget in reasonable detail for such
entire fiscal year and for each of the fiscal quarters in such fiscal
year, and (if and to the extent prepared by management thereof ) for
any subsequent fiscal years, as customarily prepared by management for
their internal use, setting forth, with appropriate discussion, the
forecasted balance sheet, income statement, operating cash flows and
capital expenditures of the Parent and the Lessee and their
Subsidiaries for the period or periods covered thereby, and the
principal assumptions upon which forecasts and budget are based.
(v) NOTICE OF DEFAULT OR LITIGATION.
(i) Promptly, and in any event within three Business
Days thereof, notice of the occurrence of any event which
constitutes a Default or Potential Default, which notice shall
specify the nature thereof, the period of existence thereof
and what action Lessee or the Parent propose to take with
respect thereto; and
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(ii) Promptly, and in any event within three Business
Days after Lessee or the Parent or any Subsidiary obtains
knowledge thereof, notice of any litigation or governmental or
regulatory investigation or proceeding pending against or
involving the Parent, Lessee or any of the Subsidiaries which
could reasonably be expected to have a Material Adverse
Effect.
(vi) ERISA. Promptly, and in any event within 15 days after
the occurrence of any of the following, Lessee will deliver to Lessor
and each Participant a certificate on behalf of Lessee and the Parent
of an Authorized Officer of setting forth the full details as to such
occurrence and the action, if any, that the Parent, Lessee, such
Subsidiary or such ERISA Affiliate is required or proposes to take,
together with any notices required or proposed to be given to or filed
with or by the Parent, Lessee, the Subsidiary, the ERISA Affiliate, the
PBGC, a Plan participant or the Plan administrator with respect
thereto:
(i) that a Reportable Event has occurred with respect
to any Plan;
(ii) the institution of any steps by the Parent,
Lessee, any ERISA Affiliate, the PBGC or any other person to
terminate any Plan;
(iii) the institution of any steps by the Parent or
Lessee or any ERISA Affiliate to withdraw from any Plan;
(iv) the institution of any steps by the Parent or
Lessee or any Subsidiary to withdraw from any Multiemployer
Plan or Multiple Employer Plan, if such withdrawal could
result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of ERISA) in excess of $5,000,000;
(v) a non-exempt "prohibited transaction" within the
meaning of section 406 of ERISA in connection with any Plan;
(vi) that a Plan has an Unfunded Current Liability
exceeding $5,000,000;
(vii) any material increase in the contingent
liability of the Parent or Lessee or any Subsidiary with
respect to any post-retirement welfare liability; or
(viii) the taking of any action by, or the written
threat of the taking of any action by, the Internal Revenue
Service, the Department of Labor or the PBGC with respect to
any of the foregoing.
(vii) ENVIRONMENTAL MATTERS. Promptly upon, and in any event
within 5 days after the occurrence of any of the following, notice of
any of the following environmental matters which involves or could
reasonably be expected to result in a Material Adverse Effect: (i) any
pending or threatened (in writing) Environmental Claim against the
Parent, Lessee or any of the Subsidiaries or any Real Property owned or
operated by any of them; (ii) any condition or occurrence on or arising
from any Real Property owned or operated by the Parent or Lessee or any
of the Subsidiaries that (A) results in noncompliance by the Parent or
Lessee or any of the Subsidiaries with any applicable Environmental Law
or (B) could reasonably be expected to form the basis of an
Environmental Claim against the Parent or Lessee or any of the
Subsidiaries or any such Real Property; (iii) any condition or
occurrence on any Real Property owned, leased or operated by the Parent
or Lessee or any of the Subsidiaries that could reasonably be expected
to cause such Real Property to be subject to any restrictions on the
ownership, occupancy, use or
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transferability by the Parent or Lessee or any of the Subsidiaries of
such Real Property under any Environmental Law; and (iv) the taking of
any removal or remedial action in response to the actual or alleged
presence of any Hazardous Material on any Real Property owned, leased
or operated by the Parent or Lessee or any of the Subsidiaries as
required by any Environmental Law or any governmental or other
administrative agency. All such notices shall describe in reasonable
detail the nature of the Environmental Claim and the Parent's or
Lessee's or such Subsidiary's response thereto.
(h) SEC REPORTS AND REGISTRATION STATEMENTS. Promptly upon
transmission thereof or other filing with the SEC, copies of all
registration statements and annual, quarterly or current reports that
the Parent or Lessee or any of the Subsidiaries files with the SEC, and
promptly upon transmission thereof, each proxy statement, annual
report, certificate, notice or other document sent by the Parent or
Lessee to the holders of any of its securities (or any trustee under
any indenture which secures any of its securities or pursuant to which
such securities are issued).
(i) OTHER INFORMATION. Such other information or documents
(financial or otherwise) relating to the Parent or Lessee or any of the
Subsidiaries as Lessor or any Participant may reasonably request from
time to time."
1.03 Section XI(a) of the Lease Agreement shall be amended by
deleting Paragraph (v) and by deleting Paragraphs (ii), (iii), (iv), (vi), (vii)
and (ix) and substituting in lieu thereof the following:
"(ii) If any representation, warranty or statement made in
this Agreement or in any Schedule or the Guaranty, the Pledge Agreement
or any other Lease Document or any other certificate, report, notice or
other writing delivered to Lessor in respect of this Agreement shall be
false or erroneous in any Material respect when made or deemed made,
(iii) If Lessee fails to perform or observe (1) any of its
obligations in Section IX or Section XXIII or Section XXIV, (2) any of
its obligations under the Assignment of Purchase Orders or any other
Document or B. W. Alloy, Ltd. shall fail to perform or observe any of
its obligations under the Assignment of Purchase Orders or any other
Document to which it is a party, or (3) any of its other obligations in
this Agreement (other than those referred to in clauses (i) and
(iii)(1) and (iii)(2) above) and that failure shall not have been fully
corrected within thirty (30) days after the giving of written notice to
Lessee by Lessor that it is to be remedied, provided, however, if
during that thirty-day period Lessee shall commence corrective action
that, if begun and prosecuted with due diligence, cannot be completed
within a period of thirty (30) days, then that thirty-day period shall
be extended, but not more than an additional forty (40) days, to the
extent necessary to enable Lessee to diligently complete that
corrective action; or the Pledge Agreement, the Guaranty or any other
Lease Document (once executed and delivered) shall cease for any reason
(other than termination in accordance with its terms) to be in full
force and effect; or any Lease Party shall default in any material
respect in the due performance and observance of any other obligation
under a Lease Document (other than this Agreement) to which it is a
party and such default shall continue unremedied for a period of at
least 30 days (or such other longer cure period permitted under the
applicable Lease Document) after notice by Lessor; or any Lease Party
shall (or seek to) disaffirm or otherwise limit its obligations under a
Lease Document to which it is a party otherwise than in strict
compliance with the terms thereof,
(iv) Lessee, the Parent or any of the Subsidiaries shall (i)
default in any payment with respect to any Indebtedness (other than the
obligations of Lessee under this Agreement) or
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Permitted Precious Metal Consignments in excess, individually, of
$25,000 owed to Lessor or any Participant or any of their Affiliates,
or to any other person, and such default shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness or Permitted Precious Metal
Consignment, or (ii) default in the observance or performance of any
agreement or condition relating to any such Indebtedness or Permitted
Precious Metal Consignment or contained in any instrument or agreement
evidencing, securing or relating thereto (and all grace periods
applicable to such observance, performance or condition shall have
expired), or any other event shall occur or circumstance shall exist,
the effect of which default or other event or circumstance is to cause,
or to permit the holder or holders of such Indebtedness or other party
to a Permitted Precious Metal Consignment (or a trustee or agent on
behalf of such holder or holders or other party) to cause any such
Indebtedness to become due prior to its stated maturity or any
obligation thereunder to become due prior to the date contemplated
therein; or any such Indebtedness of the Parent or Lessee or any of the
Subsidiaries or any obligation under a Permitted Precious Metal
Consignment shall be declared to be due and payable, or shall be
required to be prepaid (other than by a regularly scheduled required
prepayment or redemption, prior to the stated maturity thereof),
(vi) If (a) Lessee or the Parent or any Material Subsidiary
shall discontinue operations, or (b) Lessee or Parent or any Material
Subsidiary shall commence any Insolvency Action of any kind or admit
(by answer, default or otherwise) the Material allegations of, or
consent to any relief requested in, any Insolvency Action of any kind
commenced against Lessee or Parent or such Material Subsidiary by its
creditors or any thereof, or (c) any creditor or creditors shall
commence against Lessee or Parent or any Material Subsidiary any
Insolvency Action of any kind which shall remain in effect (neither
dismissed nor stayed) for thirty (30) consecutive days,
(vii) If there shall occur a Change of Control,
(ix) one or more judgments or decrees shall be entered against
Lessee or the Parent or any of the Subsidiaries involving a liability equal to
or more than $5,000,000 in the aggregate for all such judgments and decrees for
the Parent, Lessee and the Subsidiaries (excluding any judgment covered by
insurance as to which the carrier has adequate claims paying ability and has not
reserved its rights), and any such judgments or decrees shall not have been
vacated, discharged or stayed or bonded pending appeal within 30 days from the
entry thereof,"
1.04 Section XVI(a) of the Lease Agreement shall be amended by
deleting the first sentence therein and substituting in lieu thereof the
following:
"Lessee has adequate power and authority to enter into, and
perform and observe its obligations under, this Agreement, each Schedule, each
Assignment of Purchase Orders to which it is a party and all other agreements,
instruments, documents and other writings related to this Agreement, including,
without limitation, the Lease Documents (collectively, the "DOCUMENTS")."
1.05 Section XIX(j) of the Lease Agreement shall be amended by
deleting the same and inserting the following in lieu thereof:
"(j) Any Rent, Interim Rent or other amount not paid to Lessor
when due hereunder (after any applicable grace period therefor) shall
bear interest, both before and after any judgment or termination
hereof, at the lesser of the Daily Lease Rate Factor then in effect
plus two percent (2%) per annum or the maximum rate allowed by law. In
addition, after the
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occurrence and during the continuance of a Default, the Daily Lease
Rate Factor shall be increased by an amount equal to two percent (2%)
per annum."
1.06 Section XXIII of the Lease Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"XXIII. GENERAL FINANCIAL STANDARDS:
Lessee agrees that so long as this Agreement remains in effect and
thereafter until all obligations of Lessee hereunder shall have been paid and
performed in full, Lessee will observe and cause to be observed each of the
following:
(a) RATIO OF CONSOLIDATED TOTAL DEBT TO CONSOLIDATED TOTAL ADJUSTED
CAPITAL AND MINIMUM EBITDAR. At no time will the ratio, expressed as a
percentage, of (x) the amount of Consolidated Total Debt to (y) Consolidated
Total Adjusted Capital, exceed (i) 50.0% from June 30, 2000, through and
including September 30, 2001, (ii) 43% for the period commencing October 1,
2001, through and including December 31, 2001; (iii) 45% for the period
commencing January 1, 2002, through and including September 30, 2002; and (iv)
50% on and after October 1, 2002. In addition, at no time will the Consolidated
EBITDAR, at the end of each fiscal quarter ending on the dates described below,
and with respect to the fiscal quarters ending on June 30, September 30 and
December 31, 2002, on a cumulative basis for the respective longer periods
indicated in the parenthesis below, to be less than the amount set forth
opposite that fiscal quarter:
Fiscal Quarter Ended Minimum Consolidated Ebitdar
-------------------- ----------------------------
March 31, 2002 (3 months) $ 3,780,000
June 30, 2002 (6 months) $ 12,330,000
September 30, 2002 (9 months) $ 21,960,000
December 31, 2002 (12 months) $ 31,770,000"
(b) RATIO OF CONSOLIDATED TOTAL DEBT TO CONSOLIDATED EBITDAR. The ratio
at any time of (x) the amount of Consolidated Total Debt at such time to (y)
Consolidated EBITDAR for the Testing Period most recently ended, will not exceed
(i) 3.50 to 1.00 for the Testing Period ending June 30, 2000, (ii) 3.25 to 1.00
for the Testing Periods ending September 30, 2000 and ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇)
3.00 to 1.00 for the Testing Periods ending March 31, 2001, June 30, 2001, and
September 30, 2001; and (iv) 2.75 to 1.00 for the Testing Periods ending on and
after December 31, 2001.
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. At no time will the
Consolidated Fixed Charge Coverage Ratio be less than 2.00 to 1.00 for any
Testing Period.
(d) CONSOLIDATED TANGIBLE NET WORTH. At no time will the Consolidated
Tangible Net Worth be less than $190,731,000 plus an amount equal to forty
percent (40%) of the Consolidated Net Income of the Parent, Lessee and the
Subsidiaries for the four fiscal quarters ending December 31, 2000 and each
December 31 thereafter; provided, that if such Consolidated Net Income for any
fiscal year is a negative figure, such Consolidated Net Income for the fiscal
year in question shall be treated as zero for the purposes of this section."
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1.07 Section XXIV of the Lease Agreement shall be amended by
deleting the same and substituting in lieu thereof the following:
"XXIV. COVENANTS:
Lessee agrees that so long as this Agreement remains in effect and
thereafter until the Rent and all obligations of Lessee hereunder shall have
been paid and performed in full, Lessee will perform and observe, and will cause
the Parent and each Subsidiary to perform and observe, each of the following
provisions on their respective parts to be complied with, namely:
(a) BOOKS, RECORDS AND INSPECTIONS. (i) keep proper books of record and
account, in which full and correct entries shall be made of all financial
transactions and the assets and business of the Parent, Lessee or the
Subsidiaries, as the case may be, in accordance with GAAP; and (ii) permit
officers and designated representatives of the Lessor or any of the Participants
to visit and inspect any of the properties or assets of the Parent, Lessee and
the Subsidiaries in whomsoever's possession, and to examine (and make copies of
or take extracts from) the books of account of the Parent, Lessee and the
Subsidiaries and discuss the affairs, finances and accounts of the Parent,
Lessee and the Subsidiaries with, and be advised as to the same by, their
officers and independent accountants and independent actuaries, if any, all at
such reasonable times and intervals upon reasonable notice (except that during
the existence of a Default, no notice shall be required) as the Lessor or any of
the Participants may request.
(b) INSURANCE. (i) maintain insurance coverage by insurers having an
A.M. Best rating of "A-" or better and being in a financial size category of
"VII" or larger, or by other companies acceptable to the Lessor, and in such
forms and amounts and against such risks as are generally consistent with the
insurance coverage maintained by the Parent, Lessee and the Subsidiaries at the
date hereof, but at a minimum shall keep themselves and all of their insurable
properties insured at all times to such extent, with such deductibles, by such
insurers and against such hazards and liabilities as is generally done by other
business enterprises respectively similar to the Parent, Lessee and the
Subsidiaries, and (ii) forthwith upon Lessor's or any Participant's written
request, furnish to Lessor or such Participant such information about such
insurance as Lessor or such Participant may from time to time reasonably
request, which information shall be prepared in form and detail satisfactory to
Lessor or such Participant and certified by an Authorized Officer of the Lessee.
(c) PAYMENT OF TAXES AND CLAIMS. Pay and discharge all taxes,
assessments and governmental charges or levies imposed upon Lessee, the Parent
and the Subsidiaries or upon their income or profits, or upon any properties
belonging to them, prior to the date on which penalties attach thereto, and all
lawful claims which, if unpaid, might become a Lien or charge upon any
properties of the Parent, Lessee or any of the Subsidiaries; PROVIDED that none
of the Parent, Lessee or any of the Subsidiaries shall be required to pay any
such tax, assessment, charge, levy or claim which is being contested in good
faith and by proper proceedings if it has maintained adequate reserves with
respect thereto in accordance with GAAP; and PROVIDED, FURTHER, that the Parent,
Lessee and the Subsidiaries will not be considered to be in default of any of
the provisions of this sentence if the Parent, Lessee or any Subsidiary fails to
pay any such amount or amounts that, individually or in the aggregate, do not
exceed $500,000 so long as that matter is being negotiated in good faith with
the applicable taxing authority.
(d) CORPORATE FRANCHISES. Do and cause to be done all things necessary
to preserve and keep in full force and effect the corporate or other
organizational existence, rights, authority and franchises of the Parent, Lessee
and the Subsidiaries, PROVIDED that nothing in this Paragraph (d) shall be
deemed to prohibit any transaction permitted by Paragraph (m) below.
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(e) GOOD REPAIR. Ensure that the properties and equipment of the
Parent, Lessee and the Subsidiaries used or useful in their business in
whomsoever's possession they may be, are kept in good repair, working order and
condition, normal wear and tear excepted.
(f) COMPLIANCE WITH STATUTES, ETC. Comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of the
business of the Parent, Lessee and the Subsidiaries and the ownership of their
property, other than those (i) being contested in good faith by appropriate
proceedings, as to which adequate reserves are established to the extent
required under GAAP, and (ii) the noncompliance with which could not reasonably
be expected to have a Material Adverse Effect.
(g) COMPLIANCE WITH ENVIRONMENTAL LAWS. Notwithstanding, and in
addition to, the covenants contained in Paragraph (f) above:
(a) comply in all respects with all Environmental Laws
applicable to the ownership, lease or use of all Real Property and
personal property now or hereafter owned, leased or operated by the
Parent, Lessee or any of the Subsidiaries, and promptly pay or cause to
be paid all costs and expenses incurred in connection with such
compliance, the noncompliance with which could reasonably be expected
to have a Material Adverse Effect; and (iii) keep or cause to be kept
all such Real Property free and clear of any Liens imposed pursuant to
such Environmental Laws which are not permitted under Paragraph (n)
below.
(b) Without limitation of the foregoing, if the Parent, Lessee
or any of the Subsidiaries shall generate, use, treat, store, release
or dispose of, or permit the generation, use, treatment, storage,
release or disposal of, Hazardous Materials on any Real Property now or
hereafter owned, leased or operated by any of them, or transport or
permit the transportation of Hazardous Materials to or from any such
Real Property, any such action shall be effected in compliance with all
Environmental Laws applicable thereto.
(c) If required to do so under any applicable order of any
governmental agency, take any clean up, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from
any Real Property owned, leased or operated by the Parent, Lessee or
any of the Subsidiaries in accordance with the requirements of all
applicable Environmental Laws and in accordance with such orders of all
governmental authorities, except to the extent that the Parent, Lessee
or such Subsidiary is contesting such order in good faith and by
appropriate proceedings and for which adequate reserves have been
established to the extent required by GAAP.
(h) FISCAL YEARS, FISCAL QUARTERS. Not change its fiscal year or fiscal
quarters, other than the fiscal year or fiscal quarters of a person which
becomes a Subsidiary, made at the time such person becomes a Subsidiary to
conform to Lessee's fiscal year and fiscal quarters.
(i) HEDGE AGREEMENTS, ETC. In the event the Parent, Lessee or any of
the Subsidiaries determine to enter into a Hedge Agreement they may do so,
PROVIDED that such Hedge Agreement, when considered in light of other
outstanding Hedge Agreements to which that person is a party, does not expose
that person to predominantly speculative risks unrelated to the amount of
assets, Indebtedness or other liabilities intended to be subject to coverage on
a notional basis under such Hedge Agreement. The parties to any Financial Hedge
Agreement, the calculation of credit exposure under any Financial Hedge
Agreement, any intercreditor issues with the Lessor and Participants and the
documentation therefor (which shall conform in all respects to ISDA standards)
must be reasonably acceptable to the Lessor in all respects.
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(j) SENIOR DEBT. Ensure that (a) the claims of the Lessor and the
Participants in respect of Rent and the other obligations of Lessee under this
Agreement will not be subordinate to, and will in all respects at least rank
PARI PASSU with, the claims of every other senior unsecured creditor of the
Lessee, and (b) any Indebtedness subordinated in any manner to the claims of any
other senior unsecured creditor of the Lessee will be subordinated in like
manner to such claims of Lessor and the Participants.
(k) SECURITY DOCUMENTS. In order to secure the payment of Rent and the
other obligations of Lessee, the Parent and Lessee will pledge as collateral to
the Lessor, as collateral agent, the capital stock in each of the following
Subsidiaries of the Parent: ▇▇▇▇▇▇▇▇ Advanced Materials Inc., a New York
corporation, Circuits Processing Technologies, Inc., a California corporation,
Technical Materials, Inc., an Ohio corporation, and Brush International, Inc.,
an Ohio corporation. In connection with the foregoing stock pledges, the Parent
and Lessee will deliver for possession by the Lessor, as collateral agent, the
stock certificate(s) representing 100% of the capital stock of, or other equity
or ownership interest in, such Subsidiaries and execute and deliver to the
Lessor, as collateral agent, the Pledge Agreement in the form attached to the
Credit Agreement as in effect on the Effective Date as Exhibit F. The Parent and
Lessee will also pledge as collateral to the Lessor, as collateral agent, the
capital stock of any existing Domestic Subsidiary that becomes a Material
Subsidiary after the date of this Agreement and of any Domestic Subsidiary
created or acquired by the Parent or Lessee or any Domestic Subsidiary after the
date of this Agreement. The above-described pledges of capital stock shall grant
to the Lessor, as collateral agent, a first priority perfected lien on 100% of
the capital stock of each such Domestic Subsidiary that is owned by Lessee or
the Parent or any Domestic Subsidiary of either of them, as the case may be.
(l) CHANGES IN BUSINESS. None of the Parent, Lessee and any of the
Subsidiaries will engage in any business if, as a result, the general nature of
the business which would then be engaged in by that person would be
substantially changed from the general nature of the business engaged in by the
Parent, Lessee or any Subsidiary on the Effective Date.
(m) CONSOLIDATION, MERGER, ACQUISITIONS, ASSET SALES, ETC. None of the
Parent, Lessee or any of the Subsidiaries will (1) wind up, liquidate or
dissolve its affairs, (2) enter into any transaction of merger or consolidation,
(3) make or otherwise effect any Acquisition, (4) sell or otherwise dispose of
any of their property or assets outside the ordinary course of business, or
otherwise make or otherwise effect any Asset Sale, or (5) agree to do any of the
foregoing at any future time, EXCEPT that the following shall be permitted:
(a) CERTAIN INTERCOMPANY MERGERS, ETC. If no Default or
Potential Default shall have occurred and be continuing or would result
therefrom,
(i) the merger, consolidation or amalgamation of any
Subsidiary of Lessee or Parent (other than Lessee) with or
into Lessee or the Parent, PROVIDED Lessee or the Parent is
the surviving or continuing or resulting corporation;
(ii) the Reorganization; or the merger, consolidation
or amalgamation of any Subsidiary of the Parent (other than
Lessee) or any Subsidiary of Lessee that is not a Pledged
Company with or into another Subsidiary of the Parent (other
than Lessee) or another Subsidiary of Lessee, PROVIDED that
the surviving or continuing or resulting corporation is a
Wholly-Owned Subsidiary that is a Domestic Subsidiary directly
owned by the Parent or Lessee or a Pledged Company that is a
Wholly-Owned Subsidiary of the Parent or Lessee;
9
(iii) the liquidation, winding up or dissolution of
any Subsidiary of the Parent (other than Lessee) or any
Subsidiary of Lessee, other than a Material Subsidiary;
(iv) the transfer or other disposition of any
property by any Subsidiary of the Parent or Lessee, other than
Lessee or a Pledged Company, to the Parent or Lessee or to any
Wholly-Owned Subsidiary directly owned by the Parent or
Lessee;
(v) the merger, consolidation or amalgamation of any
Pledged Company with or into another Pledged Company; and
(vi) the transfer or other disposition of any
property by any Pledged Company to the Parent or Lessee or to
another Pledged Company.
(b) ACQUISITIONS. If no Default or Potential Default shall
have occurred and be continuing or would result therefrom, the Parent
or Lessee or any Subsidiary may make any Acquisition that is a
Permitted Acquisition, PROVIDED that all of the conditions contained in
the definition of the term Permitted Acquisition are satisfied.
(c) PERMITTED DISPOSITIONS. If no Default or Potential Default
shall have occurred and be continuing or would result therefrom, the
Parent or Lessee or any of the Subsidiaries may, except with respect to
the Equipment, (i) sell any property, land or building (including any
related receivables or other intangible assets) to any person, or (ii)
sell the entire capital stock (or other equity interests) and
Indebtedness of any Subsidiary, other than Lessee or a Material
Subsidiary, owned by the Parent or Lessee or any other Subsidiary,
other than Lessee or a Material Subsidiary, to any person, or (iii)
permit any Subsidiary, other than Lessee or a Material Subsidiary, to
be merged or consolidated with a person which is not an Affiliate of
the Parent or Lessee, or (iv) consummate any other Asset Sale with a
person who is not a Subsidiary of the Parent or Lessee; PROVIDED that:
(A) the consideration for such transaction (1)
represents fair value (as determined by management of Lessee),
and at least 80% of such consideration consists of cash, and
(2) does not exceed, when aggregated with the consideration of
any other transaction or transactions of the Parent, Lessee or
any Subsidiary during the then current fiscal year permitted
under this Paragraph (m)(c), $10,000,000,
(B) in the case of any such transaction involving
consideration equal to or in excess of $1,000,000, at least
five Business Days prior to the date of completion of such
transaction Lessee shall have delivered to the Lessor an
officer's certificate executed on behalf of Lessee by
Principal Officers of Lessee, which certificate shall contain
(1) a description of the proposed transaction, the date such
transaction is scheduled to be consummated, the estimated
purchase price or other consideration for such transaction,
(2) a certification that no Default or Potential Default has
occurred and is continuing, or would result from consummation
of such transaction, and (3) which shall (if requested by
Lessor) include a certified copy of the draft or definitive
documentation pertaining thereto; and
(C) contemporaneously with the completion of such
transaction the Parent and Lessee prepay their obligations
under the Credit Agreement as and to the extent required by
section 5.2 thereof; and
10
PROVIDED, FURTHER, that sales or other dispositions of
inventory in the ordinary course of business or of obsolete or worn out
equipment or fixtures (other than the Equipment) in the ordinary course
of business may be effected without compliance with the above
provisions and the amount of any such sales or other dispositions shall
be excluded from any computations under this Paragraph (m)(c).
(d) LEASES. The Parent, Lessee and the Subsidiaries may enter
into leases of property or assets not constituting Acquisitions,
PROVIDED such leases are not otherwise in violation or could cause a
violation of Paragraph (u) below or any other provision of this
Agreement.
(e) CAPITAL EXPENDITURES: The Parent, Lessee and the
Subsidiaries shall be permitted to make Consolidated Capital
Expenditures, PROVIDED that (A) expenses for mining property, plant and
equipment shall not exceed $25,000,000 during any consecutive
thirty-six (36) month period, and (B) Consolidated Capital
Expenditures, excluding expenses for mining property, plant or
equipment, do not during any fiscal year of the Parent exceed the
amount specified below:
--------------------------------------- ----------------------
FISCAL YEAR ENDING AMOUNT
--------------------------------------- ----------------------
December 31, 2000 $35,000,000
--------------------------------------- ----------------------
December 31, 2001 $40,000,000
--------------------------------------- ----------------------
December 31, 2002 $45,000,000
--------------------------------------- ----------------------
December 31, 2003 and each fiscal $50,000,000
year thereafter
--------------------------------------- ----------------------
(f) PERMITTED INVESTMENTS. The Parent, Lessee and the
Subsidiaries shall be permitted to make the investments permitted
pursuant to Paragraph (p) below.
(n) LIENS. None of the Parent, Lessee or the Subsidiaries will create,
incur, assume or suffer to exist any Lien upon or with respect to any of its
property or assets of any kind (real or personal, tangible or intangible)
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including consignment arrangements and including sales
of accounts receivable or notes with or without recourse to the Parent, Lessee
or any of the Subsidiaries, other than for purposes of collection of delinquent
accounts in the ordinary course of business) or assign any right to receive
income, or file or permit the filing of any financing statement under the UCC or
any other similar notice of Lien under any similar recording or notice statute,
EXCEPT that (i) the foregoing restrictions and the following exceptions in this
paragraph shall not apply to the Equipment, which is subject to the restrictions
set forth in Section V(c), and (ii) the foregoing restrictions shall not apply
to:
(a) STANDARD PERMITTED LIENS: the Standard Permitted Liens and
Liens granted to the Lessor on behalf of the Participants;
(b) EXISTING LIENS, ETC.: Liens (i) in existence on the
Effective Date which are listed, and the Indebtedness secured thereby
and the property subject thereto on the Effective
11
Date described, in Annex IV to the Credit Agreement on the Effective
Date, or (ii) arising out of the refinancing, extension, renewal or
refunding of any Indebtedness secured by any such Liens, PROVIDED that
the principal amount of such Indebtedness is not increased and such
Indebtedness is not secured by any additional assets;
(c) PURCHASE MONEY LIENS: Liens which are placed upon fixed or
capital assets, acquired, constructed or improved by the Parent or
Lessee or any Subsidiary, PROVIDED that (A) such Liens secure
Indebtedness permitted by Paragraph (o)(c) below, (B) such Liens and
the Indebtedness secured thereby are incurred prior to or within 30
days after such acquisition or the completion of such construction or
improvement, (C) the Indebtedness secured thereby does not exceed 100%
of the cost of acquiring, constructing or improving such fixed or
capital assets; and (D) such Liens shall not apply to any other
property or assets of the Parent, Lessee or any Subsidiary;
(d) INVENTORY CONSIGNMENTS: Liens granted in connection with:
(i) any Permitted Precious Metal Consignments; and (ii) the Permitted
Master Copper Lease Agreements; and
(e) SALE OR DISCOUNT OF CERTAIN FOREIGN RECEIVABLES: sales,
without recourse, by any foreign Subsidiaries of Brush International,
Inc., conducted in the ordinary course of its business of its accounts
receivable, provided that such sales are consistent with the customary
practices of the applicable country and that such sales do not exceed
an amount greater than $5,000,000 in the aggregate at any given time.
(o) INDEBTEDNESS. None of the Parent, Lessee or any of the Subsidiaries
will contract, create, incur, assume or suffer to exist any Indebtedness of the
Parent, Lessee or any of the Subsidiaries, EXCEPT:
(a) LEASE DOCUMENTS: Indebtedness incurred under this
Agreement, the Credit Agreement and the other Lease Documents;
(b) EXISTING INDEBTEDNESS: Existing Indebtedness; and any
refinancing, extension, renewal or refunding of any such Existing
Indebtedness not involving an increase in the principal amount thereof
and, if involving a maturity date prior to the Maturity Date or
shortening the maturity date to a date prior to the Maturity Date, not
involving a reduction of more than 10% in the remaining weighted
average life to maturity thereof (computed in accordance with standard
financial practice);
(c) CERTAIN PRIORITY DEBT: to the extent not permitted by the
foregoing clauses,
(i) Indebtedness consisting of Capital Lease
Obligations of the Parent, Lessee and the Subsidiaries,
(ii) Indebtedness consisting of obligations under
Synthetic Leases of the Parent or Lessee and any Subsidiary,
(iii) Indebtedness of the Parent, Lessee and the
Subsidiaries secured by a Lien referred to in Paragraph (n)(c)
above,
(iv) Indebtedness of Foreign Subsidiaries, and
12
(v) any refinancing, extension, renewal or refunding
of any such Indebtedness not involving an increase in the
principal amount thereof or a reduction of more than 10% in
the remaining weighted average life to maturity thereof
(computed in accordance with standard financial practice),
PROVIDED that (A) at the time of any incurrence thereof after the date
hereof, and after giving effect thereto, the Parent and Lessee would be
in compliance with Paragraph (m)(e) above and Section XXIII, and no
Potential Default under Section XI(a)(i) or Default shall have occurred
and be continuing or would result therefrom; and (B) the aggregate
outstanding principal amount (using Capitalized Lease Obligations in
lieu of principal amount, in the case of any Capital Lease, and using
the present value, based on the implicit interest rate, in lieu of
principal amount, in the case of any Synthetic Lease) of Indebtedness
permitted by this clause (c), shall not exceed with respect to the
Parent, Lessee and the Subsidiaries on a consolidated basis,
$10,000,000;
(d) INTERCOMPANY DEBT: unsecured Indebtedness of any of the
Subsidiaries to the Parent or Lessee or to a Wholly-Owned Subsidiary of
the Parent or Lessee;
(e) HEDGE AGREEMENTS: Indebtedness of the Parent, Lessee and
the Subsidiaries under Hedge Agreements that comply with Paragraph (i)
above;
(f) GUARANTY OBLIGATIONS: any Guaranty Obligations permitted
by Paragraph (p) below;
(g) CONSIGNMENT OBLIGATIONS: obligations of Lessee and
Subsidiaries of the Parent in respect of Permitted Precious Metal
Consignments or Permitted Master Copper Lease Agreements;
(h) TAKE OR PAY CONTRACT IN KAZAKHSTAN: Indebtedness incurred
by Lessee in connection with a take or pay arrangement for beryllium
mined in Kazakhstan pursuant to the Sale and Purchase Agreement, dated
as of December 21, 1999, among Lessee, Kazatomprom, Ulba Metallurgical
Plant, and NUKEM, Inc., as amended by an amendment that Lessee expects
to enter into after the Closing Date, provided that such amendment and
any related documents are approved by the Lessor, which approval will
not be unreasonably withheld, and that any Indebtedness arising in
connection therewith, determined in U.S. Dollars, does not in the
aggregate exceed $9,000,000 during any twelve month period;
(i) MEDIUM TERM NOTES: Indebtedness incurred by Lessee under
any Medium-Term Notes issued pursuant to the Issuing and Paying Agency
Agreement, dated as of February 1, 1990, between Lessee and ▇▇▇▇▇▇
Guaranty Trust Company of New York or its successor in interest, as
amended or modified from time to time, not in excess of $10,000,000
aggregate principal amount outstanding at any time without the prior
written consent of the Lessor, PROVIDED that at the time of incurrence
thereof, and after giving effect thereto, (i) Lessee would be in
compliance with Section XXIII; and (ii) no Potential Default under
Section XI(a)(i) or Default shall have occurred and be continuing or
would result therefrom; and
(j) ADDITIONAL UNSECURED DEBT OF THE PARENT AND LESSEE:
additional unsecured Indebtedness of the Parent and Lessee, not in
excess of $5,000,000 aggregate principal amount outstanding at any
time, PROVIDED that at the time of incurrence thereof, and after giving
effect thereto, (i) the Parent and Lessee would be in compliance with
Section XXIII; and (ii) no Potential Default under Section XI(a)(i) or
Default shall have occurred and be continuing or would result
therefrom.
13
(p) ADVANCES, INVESTMENTS, LOANS AND GUARANTY OBLIGATIONS. None of the
Parent, Lessee or any of the Subsidiaries will (1) lend money or credit or make
advances to any person, (2) purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to, or
other investment in, any person, (3) create, acquire or hold any Subsidiary, (4)
be or become a party to any joint venture, member of a limited liability company
or partner of a partnership, or (5) be or become obligated under any Guaranty
Obligations (other than those created in favor of the Participants pursuant to
the Lease Documents), EXCEPT:
(a) the Parent, Lessee or any of the Subsidiaries may invest
in cash and Cash Equivalents;
(b) any endorsement of a check or other medium of payment for
deposit or collection, or any similar transaction in the normal course
of business;
(c) the Parent, Lessee and the Subsidiaries may acquire and
hold receivables owing to them in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms
(including receivables evidenced by a promissory note executed after
the account debtor in question fails to make payments when due and
including the acceptance of notes by Brush ▇▇▇▇▇▇▇ (Japan) Ltd. in
respect of its receivables in the normal course of its business and
consistent with its past practice );
(d) loans and advances to employees for business-related
travel expenses, moving expenses, costs of replacement homes, business
machines or supplies, automobiles and other similar expenses, in each
case incurred in the ordinary course of business and consistent with
past practice;
(e) the existing loans, advances, investments and guarantees
described in Annex V to the Credit Agreement on the Effective Date;
(f) investments of the Parent, Lessee and the Subsidiaries in
Hedge Agreements that comply with Paragraph (i) above;
(g) existing investments in any Subsidiaries shall be
permitted, and the creation and holding of any Wholly-Owned Subsidiary
and any additional investments in any current or future Wholly-Owned
Subsidiary, so long as the Parent and Lessee comply with Paragraph (k)
above in connection with the creation of any Wholly-Owned Domestic
Subsidiary;
(h) intercompany loans and advances permitted by Paragraph
(o)(d) above;
(i) the Acquisitions permitted by Paragraph (m) above; and
loans, advances and investments of any person which are outstanding at
the time such person becomes a Subsidiary of the Parent or Lessee as a
result of an Acquisition permitted by Paragraph (m) above and not
created in contemplation thereof, but not any increase in the amount
thereof;
(j) any unsecured Guaranty Obligation incurred by the Parent,
Lessee or any Subsidiary with respect to (i) Indebtedness of a
Wholly-Owned Subsidiary of the Parent or Lessee which is permitted
under Paragraph (o) above without restriction upon the ability of the
Parent, Lessee or any Subsidiary to guarantee the same, or (ii) other
obligations of a Wholly-Owned Subsidiary of the Parent or Lessee which
are not prohibited by this Agreement;
14
(k) any other loans, advances, investments (whether in the
form of cash or contribution of property, and if in the form of a
contribution of property, such property shall be valued for purposes of
this clause at the fair value thereof as reasonably determined by the
Parent or Lessee), in or to any corporation, partnership, limited
liability company, joint venture or other business entity, not
otherwise permitted by the foregoing clauses, made after the date
hereof (such loans, advances and investments, collectively, "BASKET
INVESTMENTS"), PROVIDED that (i) at the time of making any such Basket
Investment no Default or Potential Default shall have occurred and be
continuing, or would result therefrom, and (ii) the maximum cumulative
amount of Basket Investments which are so made and outstanding at any
time, taking into account the repayment of any loans or advances
comprising such Basket Investments, shall not, when taken together with
the aggregate amount of all Guaranty Obligations of the Parent, Lessee
and the Subsidiaries in respect of Indebtedness of persons other than
Wholly-Owned Subsidiaries of the Parent or Lessee which are then
outstanding, does not exceed $10,000,000 with respect to the Parent,
Lessee and the Subsidiaries on a consolidated basis; and
(l) the Permitted Precious Metal Consignments and the
Permitted Master Copper Lease Agreements.
(q) DIVIDENDS, STOCK REPURCHASES, ETC. (a) The Parent will not directly
or indirectly declare, order, pay or make any dividend (other than dividends
payable solely in capital stock of the Parent) or other distribution on or in
respect of any capital stock of any class of the Parent, whether by reduction of
capital or otherwise, EXCEPT that the Parent may make cash dividend payments in
respect of its capital stock if (i) no Potential Default under Section XI(a)(i)
or Default shall have occurred and be continuing at the time of declaration or
payment thereof; and (ii) after giving effect thereto the Parent and Lessee will
be in compliance, on a PRO FORMA basis, with Section XXIII.
(b) The Parent and Lessee will not directly or indirectly make, or
permit any of the Subsidiaries to directly or indirectly make, any purchase,
redemption, retirement or other acquisition of (x) any of their capital stock of
any class (other than for a consideration consisting solely of capital stock of
that person), or (y) any warrants, rights or options to acquire or any
securities convertible into or exchangeable for any of their capital stock,
EXCEPT that the Parent and Lessee may make cash payments for such purposes so
long as the moneys used for such purposes are not proceeds of any loans under
the Credit Agreement and if (i) no Potential Default under Section XI(a)(i) or
Default shall have occurred and be continuing at the time of payment; (ii) after
giving effect thereto the Parent and Lessee will be in compliance, on a PRO
FORMA basis, with Section XXIII; and (iii) at the time of making any such cash
payment and after giving effect thereto, the cumulative aggregate amount so
expended for such purposes subsequent to the Effective Date does not exceed
$10,000,000.
(r) PREPAYMENTS AND REFINANCINGS OF OTHER DEBT, ETC. None of the
Parent, Lessee or any of the Subsidiaries will make (or give any notice in
respect thereof) any voluntary or optional payment or prepayment or redemption
or acquisition for value of (including, without limitation, by way of depositing
with the trustee with respect thereto money or securities before due for the
purpose of paying when due) or exchange of, or refinance or refund, any
Indebtedness of any of the Parent, Lessee or the Subsidiaries having an
outstanding principal balance (or Capitalized Lease Obligation, in the case of a
Capital Lease, or present value, based on the implicit interest rate, in the
case of any Synthetic Lease) (other than the obligations under this Agreement
and intercompany loans and advances among the Parent, Lessee and the
Subsidiaries permitted by Paragraph (o)(d) above); PROVIDED that the Parent or
Lessee or any Subsidiary may refinance or refund any such Indebtedness not
involving an increase in the principal amount thereof and, if involving a
maturity date prior to the Maturity Date or shortening the maturity date to a
date prior to the Maturity Date, the aggregate principal amount thereof (or
Capitalized Lease
15
Obligation, in the case of a Capital Lease, or present value, based on the
implicit interest rate, in the case of any Synthetic Lease) is not increased and
the weighted average life to maturity thereof (computed in accordance with
standard financial practice) is not reduced by more than 10%.
(s) TRANSACTIONS WITH AFFILIATES. None of the Parent, Lessee and any
Subsidiary that is a Pledged Company will enter into any transaction or series
of transactions with any Affiliate (other than, in the case of the Parent or
Lessee, Lessee or the Parent or any Wholly-Owned Subsidiary that is a Pledged
Company, and in the case of a Subsidiary that is a Pledged Company, the Parent,
Lessee or another Wholly-Owned Subsidiary that is a Pledged Company) other than
pursuant to the reasonable requirements of the Parent's, Lessee's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Parent, Lessee or such Subsidiary than would be obtained in a comparable
arm's-length transaction with a person other than an Affiliate, EXCEPT for the
transactions described in Annex VII to the Credit Agreement on the Effective
Date. No Subsidiary that is not a Pledged Company will enter into any
transaction or series of transactions with any Affiliate (other than the Parent,
Lessee or a Wholly-Owned Subsidiary) other than pursuant to the reasonable
requirements of such Subsidiary's business and upon fair and reasonable terms no
less favorable to such Subsidiary than would be obtained in a comparable
arm's-length transaction with a person other than an Affiliate, EXCEPT for the
transactions described in Annex VII to the Credit Agreement on the Effective
Date.
(t) PLAN TERMINATIONS, MINIMUM FUNDING, ETC. None of the Parent, Lessee
or any ERISA Affiliate will (i) terminate any Plan or Plans so as to result in
liability of the Parent, Lessee or any ERISA Affiliate to the PBGC in excess of,
in the aggregate, the amount which is equal to $5,000,000 as of the date of the
then most recent financial statements furnished to Lessor and the Participants
pursuant to the provisions of this Agreement, (ii) permit to exist one or more
events or conditions which reasonably present a material risk of the termination
by the PBGC of any Plan or Plans with respect to which the Parent, Lessee or any
ERISA Affiliate would, in the event of such termination, incur liability to the
PBGC in excess of such amount in the aggregate, or (iii) fail to comply in any
material respect with the minimum funding standards of ERISA and the Code with
respect to any Plan.
(u) CERTAIN LEASES. None of the Parent, Lessee or any of the
Subsidiaries will permit the aggregate payments (excluding any property taxes,
insurance or maintenance obligations paid by the Parent, Lessee and the
Subsidiaries as additional rent or lease payments) by the Parent, Lessee and the
Subsidiaries on a consolidated basis under agreements to rent or lease any real
or personal property for a period exceeding 12 months (including any renewal or
similar option periods) (other than any leases constituting Capital Leases,
Synthetic Leases or, subject to Paragraph (s) above, leases between the Parent
and Lessee, between Subsidiaries or between the Parent or Lessee and a
Subsidiary), to exceed in any fiscal year of the Parent an amount greater than
3.50% of the Consolidated Net Worth of the Parent and Lessee as of the date of
the financial statements then most recently furnished to Lessor and the
Participants under Section IV(b)(i).
(v) LIMITATION ON CERTAIN RESTRICTIVE AGREEMENTS. None of the Parent,
Lessee or any of the Subsidiaries will directly or indirectly, enter into, incur
or permit to exist or become effective, any "negative pledge" covenant or other
agreement, restriction or arrangement that prohibits, restricts or imposes any
condition upon (a) the ability of the Parent or Lessee or any Subsidiary to
create, incur or suffer to exist any Lien upon any of its property or assets as
security for Indebtedness, or (b) the ability of the Parent or Lessee or any
Subsidiary to pay dividends or make any other distributions on its capital stock
or any other interest or participation in its profits owned by the Parent or
Lessee or any Subsidiary of the Parent or Lessee, or pay any Indebtedness owed
to the Parent or Lessee or a Subsidiary of the Parent or Lessee, or to make
loans or advances to the Parent or Lessee or any other Subsidiaries, or transfer
any of its property or assets to the Parent or Lessee or any other Subsidiaries,
EXCEPT for such restrictions existing under or by reason of (i) applicable law,
(ii) this Agreement and the other Lease
16
Documents and the Credit Agreement, (iii) customary provisions restricting
subletting or assignment of any lease governing a leasehold interest, (iv)
customary provisions restricting assignment of any licensing agreement entered
into in the ordinary course of business, (v) customary provisions restricting
the transfer or further encumbering of assets subject to Liens permitted under
Paragraphs (n)(b), (n)(c) or (n)(d) above, (vi) customary restrictions affecting
only a Subsidiary of the Parent or Lessee under any agreement or instrument
governing any of the Indebtedness of a Subsidiary permitted pursuant to
Paragraph (o) above, excluding any restriction on dividends or distributions to
its stockholders (vii) restrictions affecting any Foreign Subsidiary of the
Parent or Lessee under any agreement or instrument governing any Indebtedness of
such Foreign Subsidiary permitted pursuant to Paragraph (o) above, and customary
restrictions contained in "comfort" letters and guarantees of any such
Indebtedness, excluding any restriction on dividends or distributions to its
stockholders (viii) any document relating to Indebtedness secured by a Lien
permitted by Paragraph (n) above, insofar as the provisions thereof limit grants
of junior liens on the assets securing such Indebtedness, and (ix) any operating
lease or Capital Lease, insofar as the provisions thereof limit grants of a
security interest in, or other assignments of, the related leasehold interest to
any other person.
1.08 Section XXV of the Lease Agreement shall be amended as
follows:
(A) The following definitions shall be deleted: "Amendment
Effective Date"; "Accumulated Funding Deficiency"; "Contingent Obligation";
"EBIT"; "EBITDA"; "Eligible Investments"; "Funded Indebtedness" "Indebtedness
for Borrowed Money"; "Net Income"; "Pension Plan"; "Required Multiplier";
"Standard & Poor's"; and "Tangible Net Worth".
(B) The following definitions shall be amended by deleting the
same and inserting the following in lieu thereof the following definitions:
COMPANY refers to Lessee or to the Parent, as the case may be, and
their Subsidiaries and COMPANIES refers to the Parent, Lessee and the
Subsidiaries;
CREDIT AGREEMENT means the Credit Agreement, dated as of June 30, 2000,
among Lessee, Parent, Lessor, in its capacity as Administrative Agent
and as swing line lender, and the lending institutions party thereto,
as the same may be amended, modified, restated or supplemented from
time to time;
ENVIRONMENTAL LAW shall mean any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, binding and
enforceable guideline, binding and enforceable written policy and rule
of common law now or hereafter in effect and in each case as amended,
and any binding and enforceable judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent, decree or judgment issued to or rendered against the Parent,
Lessee or any of the Subsidiaries relating to the environment, employee
health and safety or Hazardous Materials, including, without
limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C.ss.2601 ET SEQ.; the Clean Air Act, 42 U.S.C.ss.7401 ET SEQ.; the
Safe Drinking Water Act, 42 U.S.C.ss.3803 ET SEQ.; the Oil Pollution
Act of 1990, 33 U.S.C.ss.2701 ET SEQ.; the Emergency Planning and the
Community Right-to-Know Act of 1986, 42 U.S.C.ss.11001 ET SEQ., the
Hazardous Material Transportation Act, 49 U.S.C.ss.1801 ET SEQ. and the
Occupational Safety and Health Act, 29 U.S.C.ss.651 ET SEQ. (to the
extent it regulates occupational exposure to Hazardous Materials); and
any state and local or foreign counterparts or equivalents, in each
case as amended from time to time (all terms pertaining to
Environmental Laws not defined in this Agreement shall have the
meanings ascribed thereto in the respective Environmental Laws);
17
ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and
rulings issued thereunder. Section references to ERISA are to ERISA, as
in effect at the Effective Date and any subsequent provisions of ERISA,
amendatory thereof, supplemental thereto or substituted therefor.
GAAP shall mean generally accepted accounting principles in the United
States of America as in effect from time to time; it being understood
and agreed that determinations in accordance with GAAP for purposes of
Sections XXIII and XXIV, including defined terms as used therein, are
subject (to the extent provided therein) to the following: except as
otherwise specifically provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in
effect from time to time; PROVIDED that, if Lessee notifies Lessor that
Lessee requests an amendment to any provision of Section XXIII or XXIV
hereof to eliminate the effect of any change occurring after the
Effective Date in GAAP or in the application thereof to such provision
(or if Lessor notifies Lessee that Lessor requests an amendment to any
such provision hereof for such purposes), regardless of whether any
such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the
basis of GAAP as in effect and applied immediately before such change
shall have become effective until such notice shall have been withdrawn
or such provision amended in accordance with the requirements of this
Agreement;
GUARANTY means the Guaranty Agreement, dated as of May 16, 2000, by the
Parent in favor of Lessor, as the same may be amended, restated,
modified or supplemented from time to time;
MAXIMUM ACQUISITION Cost means with respect to the aggregate
Acquisition Cost of the Equipment under all of the Schedules,
$55,500,000;
PARENT means Brush Engineered Materials Inc., an Ohio corporation and
its successors and assigns;
PORT AUTHORITY BONDS means the ▇▇▇▇▇▇-▇▇▇▇▇ County Port Authority
Taxable Project Development Revenue Bonds, Series 1996 (Brush ▇▇▇▇▇▇▇
Inc. Project) in the principal amount of $13,100,000, and the
▇▇▇▇▇▇-▇▇▇▇▇ County Port Authority Taxable Project Development Revenue
Bonds, Series 1997 (Brush ▇▇▇▇▇▇▇ Inc. Project) in the principal amount
of $2,175,000, both of which were issued, sold and delivered by the
▇▇▇▇▇▇-▇▇▇▇▇ County Port Authority to The Prudential Insurance Company
of America;
PORT AUTHORITY LEASE means the Lease, dated as of October 1, 1996,
between the ▇▇▇▇▇▇-▇▇▇▇▇ County Port Authority, as lessor, and Lessee,
as lessee, as amended by the First Supplemental Lease, dated as of
April 1, 1997, between National City Bank, as trustee, as lessor (as
assignee of all of the lessor's rights from the ▇▇▇▇▇▇-▇▇▇▇▇ County
Port Authority), relating to certain real and personal property located
at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇;
REPORTABLE EVENT shall mean an event described in section 4043 of ERISA
or the regulations thereunder with respect to a Plan, other than those
events as to which the notice requirement is waived under the PBGC
Regulations;
SUBSIDIARY of any person shall mean and include (i) any corporation
more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time stock of any class or classes of such corporation shall have or
might have voting power by reason of the
18
happening of any contingency) is at the time owned by such person
directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture or other entity in which such person
directly or indirectly through Subsidiaries, has more than a 50% equity
interest at the time. Unless otherwise expressly provided, all
references herein to "Subsidiary" shall mean a Subsidiary of the Parent
and/or Lessee;
SYNTHETIC LEASE shall mean any lease (i) which is accounted for by the
lessee as an Operating Lease, and (ii) under which the lessee is
intended to be the "owner" of the leased property for Federal income
tax purposes, including, without limitation, this Agreement;"
(C) The following definitions shall be inserted in proper
alphabetical order:
ACQUISITION shall mean and include (i) any acquisition on a going
concern basis (whether by purchase, lease or otherwise) of any facility and/or
business operated by any person who is not a Subsidiary of the Parent or Lessee,
and (ii) acquisitions of a majority of the outstanding equity or other similar
interests in any such person (whether by merger, stock purchase or otherwise).
AFFILIATE shall mean, with respect to any person, any other person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such person. A person shall be deemed to control a second
person if such first person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors or managers of such second person or (ii) to direct or cause the
direction of the management and policies of such second person, whether through
the ownership of voting securities, by contract or otherwise. Notwithstanding
the foregoing, (x) a director, officer or employee of a person shall not, solely
by reason of such status, be considered an Affiliate of such person; and (y)
neither Lessor nor any Participant shall in any event be considered an Affiliate
of the Parent, Lessee or any of the Subsidiaries.
ASSET SALE shall mean the sale, transfer or other disposition
(including by means of Sale and Lease-Back Transactions, and by means of
mergers, consolidations, and liquidations of a corporation, partnership or
limited liability company of the interests therein of the Parent, Lessee or any
Subsidiary) by the Parent, Lessee or any Subsidiary to any person of any of
their respective assets, but excluding the sale, transfer or other disposition
of the Equipment.
AUTHORIZED OFFICER shall mean any officer or employee of Lessee
designated as such in writing to Lessor by Lessee.
CAPITAL LEASE as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that person.
CAPITALIZED LEASE OBLIGATIONS shall mean all obligations under Capital
Leases of the Parent, Lessee or any of the Subsidiaries in each case taken at
the amount thereof accounted for as liabilities identified as "capital lease
obligations" (or any similar words) on a consolidated balance sheet of the
Parent, Lessee and the Subsidiaries prepared in accordance with GAAP.
CASH EQUIVALENTS shall mean any of the following:
(i) securities issued or directly and fully guaranteed or
insured by the United States of America or any agency or
instrumentality thereof (PROVIDED that the full faith and credit of the
United States of America is pledged in support thereof) having
maturities of not more than one year from the date of acquisition;
19
(ii) U.S. dollar denominated time deposits, certificates of
deposit and bankers' acceptances of (x) Lessor or any Participant or
(y) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from ▇▇▇▇▇'▇ is at least P-1 or
the equivalent thereof (any such bank, an "APPROVED BANK"), in each
case with maturities of not more than 180 days from the date of
acquisition;
(iii) commercial paper issued by Lessor or any Participant or
Approved Bank or by the parent company of Lessor or any Participant or
Approved Bank maturing within 270 days of the date of acquisition,
commercial paper issued by, or guaranteed by, any industrial or
financial company, having a short-term commercial paper rating of at
least A-1 or the equivalent thereof by S&P or at least P-1 or the
equivalent thereof by Moody's, or guaranteed by any industrial company
with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be,
and in each case maturing within 270 days after the date of
acquisition;
(iv) investments in money market funds or mutual funds
substantially all the assets of which are comprised of securities of
the types described in clauses (i) through (iii) above and (v) below;
and
(v) obligations issued or guaranteed by any state or political
subdivision thereof and rated at least A-1 or the equivalent thereof by
S&P or at least P-1 or the equivalent thereof by Moody's (if rated as
short-term obligations) or with a long term unsecured debt rating of at
least A or A2, or the equivalent of each thereof, from S&P or Moody's,
as the case may (if rated as long-term obligations).
CASH PROCEEDS shall mean, with respect to any Asset Sale, the aggregate
cash payments (including any cash received by way of deferred payment pursuant
to a note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, but only as and when so
received) received by the Parent, Lessee and/or any Subsidiary from such Asset
Sale.
CERCLA shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time to
time, 42 U.S.C. ss. 9601 ET SEQ.
CHANGE OF CONTROL shall mean and include any of the following:
(i) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the
Parent's Board of Directors (together with any new directors (x) whose
election by the Parent's Board of Directors was, or (y) whose
nomination for election by the Parent's shareholders was (prior to the
date of the proxy or consent solicitation relating to such nomination),
approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved),
shall cease for any reason to constitute a majority of the directors
then in office;
(ii) any person other than the Parent shall own all of the
issued and outstanding capital stock of Lessee, or any person or group
(as such term is defined in section 13(d)(3) of the 1934 Act), other
than the Parent, Lessee, any trustee or other fiduciary holding
securities under an employee benefit plan of the Parent, or any members
of the Current Holder Group, shall acquire, directly or indirectly,
beneficial ownership (within the meaning of Rule 13d-3 and 13d-5
20
of the ▇▇▇▇ ▇▇▇) of more than 20%, on a fully diluted basis, of the
economic or voting interest in the Parent's capital stock;
(iii) the shareholders of the Parent or Lessee approve a
merger or consolidation by it with any other person, OTHER than a
merger or consolidation which would result in the voting securities of
the Parent or Lessee, as the case may be, outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted or exchanged for voting securities of the surviving or
resulting entity) more than 50% of the combined voting power of the
voting securities of that person or such surviving or resulting entity
outstanding after such merger or consolidation;
(iv) the shareholders of the Parent or Lessee approve a plan
of complete liquidation for that person or an agreement or agreements
for the sale or disposition by that person of all or substantially all
of its assets; and/or
(v) any "change in control" or any similar term as defined in
any indenture, credit agreement, note or securities purchase agreement,
or other agreement or instrument governing any Indebtedness, with
respect to Indebtedness of the Parent or Lessee that has an unpaid
principal amount of $25,000 or greater;
As used in this definition, the term "CURRENT HOLDER GROUP" shall mean (i) those
persons, if any, who as of the Effective Date have disclosed in filings with the
SEC their beneficial ownership of more than 5% of the outstanding shares of
capital stock of the Parent, (ii) those other persons who are officers and
directors of the Parent and Lessee at the Effective Date, (iii) the spouses,
heirs, legatees, descendants and blood relatives to the third degree of
consanguinity of any such person, (iv) the executors and administrators of the
estate of any such person, and any court appointed guardian of any such person,
and (v) any trust, family partnership or similar investment entity for the
benefit of any such person referred to in the foregoing clauses (i), (ii) and
(iii) or any other persons (including for charitable purposes), so long as one
or more members of the Current Holder Group has the exclusive or a joint right
to control the voting and disposition of securities held by such trust, family
partnership or other investment entity;
CODE shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder. Section references to the
Code are to the Code, as in effect at the Effective Date and any subsequent
provisions of the Code, amendatory thereof, supplemental thereto or substituted
therefor;
COMMODITY HEDGE AGREEMENT shall mean any commodity swap agreement,
forward commodity purchase agreement, forward commodity option agreement or
similar agreement or arrangement;
CONSOLIDATED AMORTIZATION EXPENSE shall mean, for any period, all
amortization expenses of the Parent, Lessee and the Subsidiaries, all as
determined for the Parent, Lessee and the Subsidiaries on a consolidated basis
in accordance with GAAP;
CONSOLIDATED CAPITAL EXPENDITURES shall mean, for any period, the
aggregate of all expenditures for property, plant or equipment (whether paid in
cash or accrued as liabilities and including in all events amounts expended or
capitalized under Capital Leases and Synthetic Leases but excluding any amount
representing capitalized interest) by the Parent, Lessee and the Subsidiaries
during that period;
CONSOLIDATED DEPLETION EXPENSE shall mean, for any period, all
depletion expenses of the Parent, Lessee and the Subsidiaries, all as determined
for the Parent, Lessee and the Subsidiaries on a consolidated basis in
accordance with GAAP;
21
CONSOLIDATED DEPRECIATION EXPENSE shall mean, for any period, all
depreciation expenses of the Parent, Lessee and the Subsidiaries, all as
determined for the Parent, Lessee and the Subsidiaries on a consolidated basis
in accordance with GAAP;
CONSOLIDATED EBIT shall mean, for any period, Consolidated Net Income
for such period; PLUS (A) the sum (without duplication) of the amounts for such
period included in determining such Consolidated Net Income of (i) Consolidated
Interest Expense, (ii) Consolidated Income Tax Expense, and (iii) extraordinary
and other non-recurring non-cash losses and charges; minus (B) extraordinary
gains on sales of assets and other extraordinary or other non-recurring gains;
all as determined for the Parent, Lessee and the Subsidiaries on a consolidated
basis in accordance with GAAP;
Notwithstanding anything to the contrary contained herein, the
Consolidated EBIT for any Testing Period shall (x) include the appropriate
financial items for any person or business unit which has been acquired by the
Parent, Lessee or any Subsidiary for any portion of such Testing Period prior to
the date of acquisition, and (y) exclude the appropriate financial items for any
person or business unit which has been disposed of by the Parent, Lessee or any
Subsidiary, for the portion of such Testing Period prior to the date of
disposition.
CONSOLIDATED EBITDA shall mean, for any period, Consolidated EBIT for
such period; PLUS the sum (without duplication) of the amounts for such period
included in determining Consolidated Net Income of Consolidated Depreciation
Expense, Consolidated Amortization Expense and Consolidated Depletion Expense,
all as determined for the Parent, Lessee and the Subsidiaries on a consolidated
basis in accordance with GAAP;
Notwithstanding anything to the contrary contained herein, the
Consolidated EBITDA for any Testing Period shall (x) include the appropriate
financial items for any person or business unit which has been acquired by the
Parent, Lessee or any Subsidiary for any portion of such Testing Period prior to
the date of acquisition, and (y) exclude the appropriate financial items for any
person or business unit which has been disposed of by the Parent, Lessee or any
Subsidiary, for the portion of such Testing Period prior to the date of
disposition.
CONSOLIDATED EBITDAR shall mean, for any period, Consolidated EBITDA
for such period; PLUS the sum (without duplication) of the amounts for such
period included in determining Consolidated Net Income of Consolidated Rental
Expense, all as determined for the Parent, Lessee and the Subsidiaries on a
consolidated basis in accordance with GAAP;
CONSOLIDATED FIXED CHARGE COVERAGE RATIO means, for any Testing Period,
the ratio of (a) Consolidated EBITDA for that Testing Period to (b) the sum of
(i) Consolidated Interest Expense and Consolidated Income Tax Expense for that
Testing Period, plus (ii) scheduled or mandatory repayments, prepayments or
redemptions during that Testing Period of the principal of Indebtedness
(including Capitalized Lease Obligations and required reductions in committed
credit facilities) with a final maturity date more than one year after the end
of that Testing Period, plus (iii) the sum of all payments for dividends, stock
repurchases or other stock redemptions, and other purposes described in Section
XXIV(q), if any, in each case on a consolidated basis for the Parent, Lessee and
the Subsidiaries for such Testing Period; PROVIDED that, notwithstanding
anything to the contrary contained herein, the Consolidated Fixed Charge
Coverage Ratio for any Testing Period shall (x) include the appropriate
financial items for any person or business unit which has been acquired by the
Parent, Lessee or any Subsidiary for any portion of such Testing Period prior to
the date of acquisition, and (y) exclude the appropriate financial items for any
person or business unit which has been disposed of by the Parent, Lessee or any
Subsidiary, for the portion of such Testing Period prior to the date of
disposition;
22
CONSOLIDATED INCOME TAX EXPENSE shall mean, for any period, all
provisions for taxes based on the net income of the Parent, Lessee and the
Subsidiaries (including, without limitation, any additions to such taxes, and
any penalties and interest with respect thereto), all as determined for the
Parent, Lessee and the Subsidiaries on a consolidated basis in accordance with
GAAP; provided, that if the aggregate net amount of those taxes for any period
in question is a negative figure, the Consolidated Income Tax Expense for the
period in question shall be treated as zero for purposes of this Agreement;
CONSOLIDATED INTEREST EXPENSE shall mean, for any period, total
interest expense (including that which is capitalized, that which is
attributable to Capital Leases (but not to Synthetic Leases) and the pre-tax
equivalent of dividends payable on Redeemable Stock) of the Parent, Lessee and
the Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Parent, Lessee and the Subsidiaries, including, without
limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and net obligations under Financial Hedge
Agreements (except for Financial Hedge Agreements described in clause (ii) of
the definition thereof), BUT EXCLUDING, HOWEVER, any interest expense in respect
of Permitted Precious Metal Consignments, any amortization or write-off of
deferred financing costs and any charges for prepayment penalties on prepayment
of Indebtedness;
CONSOLIDATED NET INCOME shall mean for any period, the net income (or
loss) of the Parent, Lessee and the Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP;
CONSOLIDATED NET WORTH shall mean at any time for the determination
thereof: (i) all amounts which, in conformity with GAAP, would be included under
the caption "total stockholders' equity" (or any like caption) on a consolidated
balance sheet of the Parent, Lessee and the Subsidiaries as at such date (I.E.,
the sum of the entries for (1) the par or stated value of common stock and
preferred stock (but excluding treasury stock and capital stock subscribed and
unissued), (2) paid-in capital and (3) retained earnings (or deficit)), MINUS
(ii) to the extent included in clause (i), all amounts properly attributable to
minority interests, if any, in the stock or other equity of Subsidiaries;
PROVIDED that in no event shall Consolidated Net Worth include any amounts in
respect of Redeemable Stock;
CONSOLIDATED RENTAL EXPENSE shall mean, for any period, total rental
expense for all Synthetic Leases, including the interest portion of all
Synthetic Leases, of the Parent, Lessee and the Subsidiaries, all as determined
for the Parent, Lessee and the Subsidiaries on a consolidated basis.
CONSOLIDATED TANGIBLE NET WORTH shall mean at any time for the
determination thereof: (i) the Consolidated Net Worth of the Parent, Lessee and
the Subsidiaries as at such date, MINUS the aggregate amount of goodwill and
intangible assets of the Parent, Lessee and the Subsidiaries as at such date, as
determined in accordance with GAAP;
CONSOLIDATED TOTAL ADJUSTED CAPITAL shall mean at any time (i)
Consolidated Total Debt at such time; PLUS (ii) Consolidated Tangible Net Worth
as of the end of the most recent fiscal quarter for which the Parent's and
Lessee's consolidated financial statements have been furnished to Lessor and the
Participants under this Agreement; PLUS (iii) to the extent deducted in
determining Consolidated Net Worth for purposes of determining Consolidated
Tangible Net Worth, all amounts properly attributable to minority interests, if
any, in the stock or other equity of Subsidiaries;
CONSOLIDATED TOTAL DEBT shall mean, at any time, the sum (without
duplication) of the principal amount (or Capitalized Lease Obligation, in the
case of a Capital Lease, or present value, based on the implicit interest rate,
in the case of any Synthetic Lease, or the higher of liquidation value or stated
value, in the case of Redeemable Stock) of all Indebtedness of the Parent,
Lessee and of the Subsidiaries,
23
without duplication, all as determined on a consolidated basis, PROVIDED that
for purposes of this definition none of the following obligations shall be
considered in determining Consolidated Total Debt: obligations under (i) Hedge
Agreements, (ii) Permitted Precious Metal Consignments, (iii) the
gold-denominated loan under the Letter Agreement for Loan and Purchase of Gold
to be entered into between ▇▇▇▇▇▇▇▇ Advanced Materials Inc. and The Bank of Nova
Scotia and any other gold-denominated loan to Lessee, or any other Subsidiary
that deals in precious metals, all of which are to be in a form that is approved
by Lessor, which approval will not be unreasonably withheld, but only to the
extent that the aggregate payment obligations of Lessee and any such other
Subsidiaries thereunder do not exceed payments in respect of 23,781 ounces of
gold, and (iv) the obligations of Lessee in respect of the agreement described
in Section XXIV(o)(h) to the extent that those obligations do not exceed
$6,000,000 during any twelve month period;
DOLLARS, U.S. DOLLARS, DOLLARS and the sign "$" each means lawful money
of the United States;
DOMESTIC SUBSIDIARY shall mean any Subsidiary organized under the laws
of the United States of America, any State thereof, the District of Columbia, or
any United States possession, the chief executive office and principal place of
business of which is located in, and which conducts the majority of its business
within, the United States of America and its territories and possessions;
EFFECTIVE DATE shall mean the date on which the conditions set forth in
Article II of the Consolidated Amendment No. 1 to Master Lease Agreement and
Equipment Schedules, dated as of June 30, 2000, between Lessee and Lessor are
satisfied;
ENVIRONMENTAL CLAIMS shall mean any and all administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations or proceedings relating in any way
to any Environmental Law or any permit issued under any such law (hereafter
"CLAIMS"), including, without limitation, (i) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
(ii) any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
the storage, treatment or Release (as defined in CERCLA) of any Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment;
ERISA AFFILIATE shall mean each person (as defined in section 3(9) of
ERISA) which together with the Parent, Lessee or any Subsidiary would be deemed
to be a "single employer" (i) within the meaning of section 414(b),(c), (m) or
(o) of the Code or (ii) as a result of the Parent's, Lessee's or that
Subsidiary's being or having been a general partner of such person;
EXISTING INDEBTEDNESS shall have the meaning provided in section 7.18
of the Credit Agreement as in effect on the Effective Date;
EXISTING INDEBTEDNESS AGREEMENTS shall have the meaning provided in
section 7.18 of the Credit Agreement as in effect on the Effective Date;
FINANCIAL HEDGE AGREEMENT shall mean (i) any interest rate swap
agreement, any interest rate cap agreement, any interest rate collar agreement
or other similar agreement or arrangement; and (ii) any currency swap agreement,
forward currency purchase agreement or similar agreement or arrangement;
FOREIGN SUBSIDIARY shall mean any Subsidiary that is not a Domestic
Subsidiary;
GENERAL PERMITTED LIENS shall mean Liens described in Section XXIV(n);
24
GUARANTY OBLIGATIONS shall mean as to any person (without duplication)
any obligation of such person guaranteeing any Indebtedness ("PRIMARY
INDEBTEDNESS") of any other person (the "PRIMARY OBLIGOR") in any manner,
whether directly or indirectly, including, without limitation, any obligation of
such person, whether or not contingent, (a) to purchase any such primary
Indebtedness or any property constituting direct or indirect security therefor,
(b) to advance or supply funds (i) for the purchase or payment of any such
primary Indebtedness or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary Indebtedness of the
ability of the primary obligor to make payment of such primary Indebtedness, or
(d) otherwise to assure or hold harmless the owner of such primary Indebtedness
against loss in respect thereof, PROVIDED, HOWEVER, that the term Guaranty
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guaranty
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary Indebtedness in respect of which such Guaranty Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof (assuming such person is required to perform
thereunder) as determined by such person in good faith;
HAZARDOUS MATERIALS shall mean (i) any petrochemical or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, and
radon gas; and (ii) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "restricted hazardous materials", "extremely hazardous
wastes", "restrictive hazardous wastes", "toxic substances", "toxic pollutants",
"contaminants" or "pollutants", or words of similar meaning and regulatory
effect, under any applicable Environmental Law;
HEDGE AGREEMENT shall mean any Commodity Hedge Agreement and any
Financial Hedge Agreement;
INDEBTEDNESS of any person shall mean without duplication:
(i) all indebtedness of such person for borrowed money;
(ii) all bonds, notes, debentures and similar debt securities
of such person;
(iii) the deferred purchase price of capital assets or
services which in accordance with GAAP would be shown on the liability
side of the balance sheet of such person;
(iv) the face amount of all letters of credit issued for the
account of such person and, without duplication, all drafts drawn
thereunder;
(v) all obligations, contingent or otherwise, of such person
in respect of bankers' acceptances;
(vi) all Indebtedness of a second person secured by any Lien
on any property owned by such first person, whether or not such
Indebtedness has been assumed;
(vii) all Capitalized Lease Obligations of such person;
25
(viii) the present value, determined on the basis of the
implicit interest rate, of all basic rental obligations under all
Synthetic Leases of such person;
(ix) all obligations of such person to pay a specified
purchase price for goods or services whether or not delivered or
accepted, I.E., take-or-pay and similar obligations;
(x) all net obligations of such person under Hedge Agreements;
(xi) the full outstanding balance of trade receivables, notes
or other instruments sold with full recourse (and the portion thereof
subject to potential recourse, if sold with limited recourse), other
than in any such case any thereof sold solely for purposes of
collection of delinquent accounts;
(xii) the stated value, or liquidation value if higher, of all
Redeemable Stock of such person; and
(xiii) all Guaranty Obligations of such person;
PROVIDED that (x) neither trade payables nor other similar accrued expenses, in
each case arising in the ordinary course of business, nor obligations in respect
of insurance policies or performance or surety bonds which themselves are not
guarantees of Indebtedness (nor drafts, acceptances or similar instruments
evidencing the same nor obligations in respect of letters of credit supporting
the payment of the same) that are no more than forty-five days delinquent, shall
constitute Indebtedness; and (y) the Indebtedness of any person shall in any
event include (without duplication) the Indebtedness of any other entity
(including any general partnership in which such person is a general partner) to
the extent such person is liable thereon as a result of such person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide expressly that such person is not liable
thereon.
LEASE DOCUMENTS shall mean this Agreement, any Security Documents and
the Schedules;
LEASE PARTY shall mean each of the Parent, Lessee and any other person
that is a party to any of the Lease Documents;
LEASEHOLDS of any person means all the right, title and interest of
such person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures;
MATERIAL ADVERSE EFFECT shall mean any or all of the following: (i) any
material adverse effect on the business, operations, property, prospects,
assets, liabilities or condition (financial or otherwise) of, when used with
reference to the Parent, Lessee and/or any of the Subsidiaries, the Parent,
Lessee and the Subsidiaries, taken as a whole, or when used with reference to
any other person, such person and its Subsidiaries, taken as a whole, as the
case may be; (ii) any material adverse effect on the ability of each of the
Lease Parties to perform its obligations under the Lease Documents to which it
is a party; (iii) any material adverse effect on the ability of the Parent,
Lessee and the Subsidiaries, taken as a whole, to pay their liabilities and
obligations as they mature or become due; or (iv) any material adverse effect on
the validity, effectiveness or enforceability, as against any Lease Party, of
any of the Lease Documents to which it is a party;
MATERIAL SUBSIDIARY shall mean, at any time, with reference to any
person, any Subsidiary of such person (i) that has assets at such time
comprising 5% or more of the consolidated assets of such person and the
Subsidiaries, or (ii) whose operations in the current fiscal year are expected
to, or whose
26
operations in the most recent fiscal year did (or would have if such person had
been a Subsidiary for such entire fiscal year), represent 5% or more of the
consolidated earnings before interest, taxes, depreciation and amortization of
such person and the Subsidiaries for such fiscal year. In addition, Material
Subsidiary shall include any Subsidiary as to which any part of the capital
stock thereof is pledged or is required to be pledged to Lessor, as collateral
agent, under the Pledge Agreement;
MATURITY DATE shall mean the Maturity Date as that term is defined in
the Credit Agreement;
MULTIEMPLOYER PLAN shall mean a multiemployer plan, as defined in
section 4001(a)(3) of ERISA to which the Parent, Lessee or any ERISA Affiliate
is making or accruing an obligation to make contributions or has within any of
the preceding five plan years made or accrued an obligation to make
contributions;
MULTIPLE EMPLOYER PLAN shall mean an employee benefit plan, other than
a Multiemployer Plan, to which the Parent, Lessee or any ERISA Affiliate, and
one or more employers other than the Parent, Lessee or an ERISA Affiliate, is
making or accruing an obligation to make contributions or, in the event that any
such plan has been terminated, to which the Parent, Lessee or an ERISA Affiliate
made or accrued an obligation to make contributions during any of the five plan
years preceding the date of termination of such plan;
NET CASH PROCEEDS shall mean, with respect to any Asset Sale, the Cash
Proceeds resulting therefrom net of (i) reasonable and customary expenses of
sale incurred in connection with such Asset Sale, and other reasonable and
customary fees and expenses incurred, and all state, and local taxes paid or
reasonably estimated to be payable by such person, as a consequence of such
Asset Sale and the payment of principal, premium and interest of Indebtedness
secured by the asset which is the subject of the Asset Sale and required to be,
and which is, repaid under the terms thereof as a result of such Asset Sale,
(ii) amounts of any distributions payable to holders of minority interests in
the relevant person or in the relevant property or assets and (iii) incremental
income taxes paid or payable as a result thereof;
OPERATING LEASE as applied to any person shall mean any lease of any
property (whether real, personal or mixed) by that person as lessee which, in
conformity with GAAP, is not accounted for as a Capital Lease on the balance
sheet of that person;
PBGC shall mean the Pension Benefit Guaranty Corporation established
pursuant to section 4002 of ERISA, or any successor thereto;
PERMITTED ACQUISITION shall mean and include any Acquisition as to
which all of the following conditions are satisfied:
(i) such Acquisition involves a line or lines of business
which is complementary to the lines of business in which the Parent,
Lessee or a Subsidiary, as the case may be, making the Acquisition is
engaged on the Effective Date, UNLESS Lessor specifically approve or
consent to such Acquisition in writing;
(ii) such Acquisition is not actively opposed by the Board of
Directors (or similar governing body) of the selling person or the
person whose equity interests are to be acquired, UNLESS Lessor and all
of the Participants specifically approve or consent to such Acquisition
in writing;
(iii) if as a result of an Acquisition a person becomes a
Subsidiary of the Parent or Lessee, such Subsidiary shall be a
Wholly-Owned Subsidiary;
27
(iv) the aggregate consideration for such Acquisition and all
other Permitted Acquisitions completed in within the preceding 12 month
period, including the principal amount of any assumed Indebtedness and
(without duplication) any Indebtedness of any acquired person or
persons, does not exceed $25,000,000, UNLESS Lessor specifically
approves or consents to such Acquisition, such approval or consent not
to be unreasonably withheld; PROVIDED that no such approval or consent
shall be effective to permit an Acquisition which would result in such
aggregate consideration exceeding $30,000,000 unless Lessor and all of
the Participants join in such consent or approval; and
(v) the Parent and Lessee would, after giving effect to such
Acquisition, be in compliance, on a PRO FORMA basis, with the financial
covenants contained in Section XXIII (which compliance shall be
evidenced by the execution and delivery of a PRO FORMA compliance
covenant certificate by Lessee to Lessor at least fourteen days prior
to the closing of the Permitted Acquisition), such PRO FORMA ratios
being determined:
(A) as if (x) such Acquisition had been completed at
the beginning of the most recent period of four consecutive
fiscal quarters of the Parent and Lessee for which financial
information for the Parent and Lessee and the business or
person to be acquired, is available, and (y) any such
Indebtedness incurred to finance such Acquisition had been
outstanding for such period; and
(B) without giving effect to any credit for
unobtained or unrealized gains in connection with such
Acquisition, but taking into account such adjustments to the
overhead of such properties and assets as may reasonably be
determined and specified by Lessee to reflect the overhead
generally applicable to similar properties and assets owned by
the Parent, Lessee and the Subsidiaries, as and to the extent
Lessor determines (acting on instructions from the Required
Participants) such adjustments to be reasonable and
appropriate under the particular circumstances);
PROVIDED, that the term Permitted Acquisition specifically excludes any loans,
advances or minority investments otherwise permitted pursuant to section 9.5.
PERMITTED MASTER COPPER LEASE AGREEMENTS shall mean the Master Copper
Lease Agreement, dated March 30, 2001, between Lessee and Fleet Precious Metals,
Inc. (the "Fleet Copper Agreement"), and any other master copper lease agreement
arrangement entered into by Lessee that is approved by Lessor, which approval
will not be unreasonably withheld, but only to the extent that the aggregate
value, in U. S. Dollars, of the copper subject to all those master copper lease
agreements (including the Fleet Copper Agreement) does not in the aggregate
exceed an amount greater than $15,000,000;
PERMITTED PRECIOUS METAL CONSIGNMENTS shall mean precious metals
inventory of Lessee or any other Subsidiary that deals in precious metals that
is subject to any precious metal consignment arrangement described in Annex VI
of the Credit Agreement as in effect on the Effective Date (regardless of
whether styled as a lease, consignment, sub-consignment or debt) or that are
approved by Lessor, which approval will not be unreasonably withheld, but only
to the extent that the aggregate value, in U. S. Dollars, of the precious metals
subject to all those consignment arrangements does not exceed an amount greater
than $140,000,000;
PERSON OR PERSON shall mean any individual, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof;
28
PLAN shall mean any pension plan as defined in Section 3(2) of ERISA
and any multiemployer or single-employer plan as defined in section 4001 of
ERISA, which is maintained or contributed to by (or to which there is an
obligation to contribute by) the Parent, Lessee or a Subsidiary or an ERISA
Affiliate, and each such plan for the five year period immediately following the
latest date on which the Parent, Lessee, or a Subsidiary or an ERISA Affiliate
maintained, contributed to or had an obligation to contribute to such plan;
PLEDGE AGREEMENT shall mean the Pledge Agreement, of even date
herewith, between the Parent, Lessee and Lessor, as collateral agent, as the
same may be amended or modified from time to time, which secures the obligations
of Lessee and the Parent under the Credit Agreement and the obligations of
Lessee under this Agreement and the Schedules;
PLEDGED COMPANY shall mean a Material Subsidiary the capital stock of
which, or other equity or ownership interest in which, has been pledged to
Lessor, as collateral agent, under the Pledge Agreement;
PRINCIPAL OFFICER shall mean any officer of the Parent or Lessee whose
title is (including any title which is substantially the same as): (i) Chief
Executive Officer, (ii) President, (iii) Chief Financial Officer or Vice
President-Finance, or (iv) Treasurer;
PROHIBITED TRANSACTION shall mean a transaction with respect to a Plan
that is prohibited under section 4975 of the Code or section 406 of ERISA and
not exempt under section 4975 of the Code or section 408 of ERISA;
RCRA shall mean the Resource Conservation and Recovery Act, as the same
may be amended from time to time, 42 ▇.▇.▇.▇▇. 6901 ET SEQ;
REAL PROPERTY of any person shall mean all of the right, title and
interest of such person in and to land, improvements and fixtures, including
Leaseholds;
REDEEMABLE STOCK shall mean with respect to any person any capital
stock or similar equity interests of such person that (i) is by its terms
subject to mandatory redemption, in whole or in part, pursuant to a sinking
fund, scheduled redemption or similar provisions, at any time prior to the
Maturity Date; or (ii) otherwise is required to be repurchased or retired on a
scheduled date or dates, upon the occurrence of any event or circumstance, or at
the option of the holder or holders thereof, or otherwise, at any time prior to
the Maturity Date, other than any such redemption, repurchase or retirement
occasioned by a "change of control" or similar event;
REORGANIZATION shall mean the transactions described in Annex VIII to
the Credit Agreement as in effect on the Effective Date;
SALE AND LEASE-BACK TRANSACTION shall mean any arrangement with any
person providing for the leasing by the Parent, Lessee or any Subsidiary of any
property (except for temporary leases for a term, including any renewal thereof,
of not more than one year and except for leases between the Parent, Lessee and a
Subsidiary or between Subsidiaries subject to Section XXIV(s), which property
has been or is to be sold or transferred by the Parent, Lessee or such
Subsidiary to such person;
S&P shall mean Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., and its successors;
29
SECURITY AGREEMENT shall mean the Security Agreement, dated as of
September 28, 2001, by Lessee and the Parent in favor of National City Bank, as
Collateral Agent, as the same may be amended, restated, modified or supplemented
from time to time;
SECURITY DOCUMENTS shall mean the Pledge Agreement, the Guaranty, the
Subsidiary Guaranties, the Security Agreement, the Subsidiary Security Agreement
and each other document pursuant to which any Lien or security interest is
granted by the Parent, Lessee or any Subsidiary to Lessor as security for any of
the obligations of Lessee to Lessor under or relating to this Agreement and the
Schedules;
SOLVENT shall mean, with respect to any Person on a particular date,
that on such date (i) the fair value of the property of such Person is greater
than the total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (ii) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (iv) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (v) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
unreasonably small capital after giving due consideration to the prevailing
practice in the industry in which such Person is engaged;
STANDARD PERMITTED LIENS shall mean the following:
(i) Liens for taxes not yet delinquent or Liens for taxes
being contested in good faith and by appropriate proceedings for which
adequate reserves have been established;
(ii) Liens in respect of property or assets imposed by law
which were incurred in the ordinary course of business, such as
carriers', warehousemen's, materialmen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, which do not
in the aggregate detract from the value of such property or assets or
materially impair the use thereof in the operation of the business of
the Parent, Lessee or any Subsidiary;
(iii) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; and mechanic's Liens, carrier's Liens, and other Liens to
secure the performance of tenders, statutory obligations, contract
bids, government contracts, performance and return-of-money bonds and
other similar obligations, incurred in the ordinary course of business
(exclusive of obligations in respect of the payment for borrowed
money), whether pursuant to statutory requirements, common law or
consensual arrangements;
(iv) easements, rights-of-way, zoning or deed restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not adversely affecting in any material respect the
ordinary conduct of the business of the Parent, Lessee or any of the
Subsidiaries considered as an entirety;
(v) Liens arising from judgments, decrees or attachments in
circumstances not constituting a Default under Section XI(a)(ix); and
30
(vi) Leases or subleases granted to others not interfering in
any material respect with the business of the Parent, Lessee or any of
its Subsidiaries and any interest or title of a lessor under any lease
not in violation of this Agreement.
SUBSIDIARY GUARANTIES shall mean, collectively, each Guaranty, both
dated as of [January __, 2001], by Brush Ceramic Products Inc. and Brush
Resources Inc., both in favor of Lessor, as the same may be amended, restated,
modified or supplemented from time to time;
SUBSIDIARY SECURITY AGREEMENT shall mean the Security Agreement, dated
as of September 28, 2001, by Brush Ceramic Products Inc. and Brush Resources
Inc. in favor of National City Bank, as Collateral Agent, as the same may be
amended, restated, modified or supplemented from time to time;
TESTING PERIOD shall mean for any determination, a single period
consisting of the four consecutive fiscal quarters of the Parent and Lessee then
last ended (whether or not such quarters are all within the same fiscal year),
EXCEPT that if a particular provision of this Agreement indicates that a Testing
Period shall be of a different specified duration, such Testing Period shall
consist of the particular fiscal quarter or quarters of the Parent and Lessee
then last ended which are so indicated in such provision; and
UCC shall mean the Uniform Commercial Code.
UNFUNDED CURRENT LIABILITY of any Plan shall mean the amount, if any,
by which the actuarial present value of the accumulated plan benefits under the
Plan as of the close of its most recent plan year exceeds the fair market value
of the assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
UNITED STATES AND U.S. each means United States of America.
WHOLLY-OWNED SUBSIDIARY shall mean each Subsidiary of the Parent or
Lessee at least 95% of whose capital stock, equity interests and partnership
interests, other than director's qualifying shares or similar interests, are
owned directly or indirectly by the Parent or Lessee, as the case may be.
1.09 Exhibit ▇▇. ▇, ▇▇▇▇▇▇▇ ▇▇. ▇ and Exhibit No. 4 to the Lease
Agreement are deleted and Exhibit ▇▇. ▇, ▇▇▇▇▇▇▇ ▇▇. ▇ and Exhibit No. 4
attached to this Amendment are inserted in lieu thereof.
SECTION II - CONDITIONS PRECEDENT
2.01 When the following items shall have been delivered to
Lessor (in form and substance acceptable to Lessor) and the following conditions
precedent have been met, this Amendment shall be effective as of September 28,
2001 (the "Amendment Effective Date"):
(A) Lessee and Parent shall have executed and delivered to
Lessor the Security Agreement in form and substance satisfactory to Lessor
pursuant to which the obligations of Lessee and Parent under the Credit
Agreement, the obligations of Parent under the Guaranty and the obligations of
31
Lessee under this Amendment and other swap agreements and reimbursement
agreements are secured by all of the personal property of Lessee and Parent,
subject to the exceptions set forth therein .
(B) Brush Ceramic Products Inc. and Brush Resources Inc. (the
"Subsidiary Guarantors") shall have executed and delivered to Administrative
Agent one or more Subsidiary Security Agreements in form and substance
satisfactory to Administrative Agent pursuant to which the obligations of
Subsidiary Guarantors under their respective Subsidiary Guaranties are secured
by all of the personal property of Guarantors, subject to the exceptions set
forth therein.
(C) Lessee's secretary or treasurer shall have certified to
Lessor (i) a copy of resolutions duly adopted by Lessee's board of directors in
respect of this Amendment and the Security Agreement, (ii) true and correct
copies of Lessee's current Articles of Incorporation and Code of Regulations,
(iii) the names and true signatures of the officers of Lessee authorized to sign
this Amendment and the Security Agreement on behalf of Lessee, and (iv) that,
after giving effect to the amendments and waivers set forth herein, no "Default"
or "Potential Default" (as those terms are defined in the Lease Agreement)
exists.
(D) The secretary or treasurer each of Parent and each of the
Subsidiary Guarantor's (collectively, the "Guarantors") shall have certified to
Lessor (i) a copy of resolutions duly adopted by that Guarantor's board of
directors in respect of the Security Agreement or Subsidiary Security Agreements
to which it is a party, (ii) true and correct copies of that Guarantor's current
Articles of Incorporation or Certificate of Incorporation and Code of
Regulations or Bylaws, (iii) the names and true signatures of the officers of
that Guarantor authorized to sign the Security Agreement or the Subsidiary
Security Agreements to which it is a party on behalf of that Guarantor, and (iv)
that, after giving effect to the amendments and waivers set forth herein, no
"Default" or "Potential Default" (as those terms are defined in the Credit
Agreement) exists.
(E) Counsel for Lessee and the Guarantors shall have rendered
to Lessor a written opinion as to the enforceability of this Amendment, the
Security Agreement and the Subsidiary Security Agreement, in form and substance
satisfactory to the Lessor.
(F) Lessee shall have delivered or caused to be delivered
certificates of good standing for each of Lessee and the Guarantors issued by
the Secretary of State, or other appropriate office, of the state of its
incorporation.
(G) Lessee shall have caused all Guarantors to execute and
deliver to the Lessor a Reaffirmation of Guaranty in form and substance
satisfactory to the Lessor.
(H) Lessee shall have delivered or caused to be delivered
such other documents as Lessor may reasonably request.
2.02 If Lessor shall consummate the transactions contemplated
hereby prior to the fulfillment of any of the conditions precedent set forth
above, the consummation of such transactions shall constitute only an extension
of time for the fulfillment of such conditions and not a waiver thereof.
SECTION III - REPRESENTATIONS AND WARRANTIES
3.01 Lessee hereby represents and warrants to Lessor as
follows:
32
(A) That all representations and warranties set forth in the
Lease Agreement and the Restated Equipment Schedule, as amended hereby, are true
and correct in all material respects, and that this Amendment and the Security
Agreement and the Subsidiary Security Agreement have been executed and delivered
by duly authorized officers of Lessee, the Parent and the Subsidiaries that are
parties thereto and constitutes the legal, valid and binding obligations of
Lessee, the Parent and the Subsidiaries that are parties thereto, enforceable
against those parties in accordance with their respective terms.
(B) That the execution, delivery and performance by Lessee of
this Amendment and the Security Agreement, the execution, delivery and
performance by the Parent of the Security Agreement, and the execution, delivery
and performance by the Subsidiaries that are parties to the Subsidiary Security
Agreement, and Lessee's performance of the Lease Agreement, the Restated
Equipment Schedule and the other Equipment Schedules, as amended hereby have
been authorized by all requisite corporate action and will not (1) violate (a)
any order of any court, or any rule, regulation or order of any other agency of
government, (b) the Articles of Incorporation, the Code of Regulations or any
other instrument of corporate governance of Lessee, the Parent or those
Subsidiaries, as applicable, or (c) any provision of any indenture, agreement or
other instrument to which Lessee, the Parent or either of those Subsidiaries is
a party, or by which Lessee, the Parent or either of those Subsidiaries or any
of its properties or assets are or may be bound; (2) be in conflict with, result
in a breach of or constitute, alone or with due notice or lapse of time or both,
a default under any indenture, agreement or other instrument referred to in
(1)(c) above; or (3) result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever.
SECTION IV - ACKNOWLEDGMENTS CONCERNING OUTSTANDING OBLIGATIONS
4.01 Lessee acknowledges and agrees that, as of the date
hereof, all of Lessee's outstanding obligations to Lessor under the Lease
Agreement and all Schedules thereto are owed without any offset, deduction,
defense or counterclaim of any nature whatsoever arising out of an act or
omission occurring on or prior to the date hereof.
SECTION V - REFERENCES
5.01 On and after the Amendment Effective Date, as used in the
Lease Agreement, the terms "Master Lease Agreement", "Lease Agreement",
"Agreement", "this Agreement", "herein", "hereinafter", "hereto", "hereof", and
words of similar import shall, unless the context otherwise requires, mean the
Lease Agreement as amended and modified by this Amendment. The Lease Agreement,
as amended by this Amendment, together with the other Documents, is and shall
continue to be in full force and effect and is hereby ratified and confirmed in
all respects. To the extent any amendment set forth in the First Amendment, the
Second Amendment, the Third Amendment, the Fourth Amendment, or Consolidated
Amendment No. 1 is omitted from this Amendment, the same shall be deemed
eliminated as between Lessee and Lessor effective as of the Amendment Effective
Date.
SECTION VI - WAIVERS
6.01 Subject to the conditions set forth in Section II herein,
the Lessor hereby waives the Lessee's failure to comply with Section XXIII(b) of
the Lease Agreement, regarding the Ratio of Consolidated Total Debt to
Consolidated EBITDAR, for each of the Testing Periods ending September 30, 2001,
December 31, 2001, March 31, 2002, June 30, 2002, and September 30, 2002. Such
waiver shall apply only to the Lessee's compliance with such Section for and at
the Testing Periods ending on the dates set forth in the immediately preceding
sentence and not to any past or future Testing Period and not to any other
covenants and agreements contained in the Lease Agreement or the other related
Documents.
33
6.02 Subject to the conditions set forth in Section II herein,
the Lessor hereby waives the Lessee's failure to comply with Section XXIII(c) of
the Lease Agreement, regarding the Consolidated Fixed Charge Coverage Ration,
for each of the Testing Periods ending December 31, 2001, March 31, 2002, June
30, 2002, and September 30, 2002. Such waiver shall apply only to the Lessee's
compliance with such Section for and at the Testing Periods ending on the dates
set forth in the immediately preceding sentence and not to any past or future
Testing Period and not to any other covenants and agreements contained in the
Lease Agreement or the other related Documents.
SECTION VII - MISCELLANEOUS
7.01 This Amendment may be executed in any number of
counterparts, each counterpart to be executed by one or more of the parties but,
when taken together, all counterparts shall constitute one agreement. This
Amendment, and the respective rights and obligations of the parties hereto,
shall be construed in accordance with and governed by Ohio law, without
reference to principles of conflict of laws.
7.02 Lessee agrees to pay in connection with this Amendment,
an amendment fee in an aggregate amount equal to $89,655. In addition, Lessee
agrees to pay on demand all costs and expenses of Lessor, including reasonable
attorneys' fees and expenses, incurred in connection with the preparation,
execution and delivery of this Amendment and the related documents.
7.03 This Amendment is executed in accordance with and subject
to Section XIX(g) of the Lease Agreement. Except as expressly set forth in
Section 3 of this Amendment, (1) the execution, delivery and performance by
Lessee of this Amendment shall not constitute, or be deemed to be or construed
as, a waiver of any right, power or remedy of Lessee, or a waiver of any
provision of the Lease Agreement, and (2) none of the provisions of this
Amendment shall constitute, or be deemed to be or construed as, a waiver of any
"Default" or any "Potential Default," as those terms are defined in the Lease
Agreement.
[Remainder of Page Intentionally Left Blank]
34
IN WITNESS WHEREOF, the parties have caused this Amendment to
be duly executed as of the day and year first above written.
LESSOR: LESSEE:
NATIONAL CITY BANK, BRUSH ▇▇▇▇▇▇▇ INC.
FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS
By: By:
-------------------------------------------------- --------------------------------------------------
Name: Name:
------------------------------------------------ ------------------------------------------------
Title: Title:
----------------------------------------------- -----------------------------------------------
THE FOREGOING AMENDMENT is hereby acknowledged, consented and agreed to by each of the undersigned
by their respective duly authorized officers as of the day and year first above written.
Address: FIFTH THIRD BANK, an Ohio banking corporation, f/k/a
Fifth Third Bank, Northeastern Ohio
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ By:
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ --------------------------------------------------
Title:
-----------------------------------------------
Address: ▇▇▇▇▇▇ TRUST AND SAVINGS BANK
▇.▇. ▇▇▇ ▇▇▇ (▇▇▇/▇▇▇)
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ By:
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ --------------------------------------------------
Title:
-----------------------------------------------
Address: FIRSTAR BANK, N.A.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ By:
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ --------------------------------------------------
Title:
-----------------------------------------------
35
Address: LASALLE NATIONAL LEASING
CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By:
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ --------------------------------------------------
Title:
-----------------------------------------------
Address: MANUFACTURERS AND TRADERS TRUST
COMPANY
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ By:
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ --------------------------------------------------
Title:
-----------------------------------------------
36
EXHIBIT NO. 2
EQUIPMENT SCHEDULE
SCHEDULE NO. ______
DATED THIS ________ DAY OF _____________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
Lessor & Mailing Address: Lessee & Mailing Address:
NATIONAL CITY BANK, BRUSH ▇▇▇▇▇▇▇ INC.
FOR ITSELF AND AS AGENT FOR ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ PARTICIPANTS ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
This Equipment Schedule is executed pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement;" said Agreement and this Schedule being collectively referred to as
"Lease"). This Equipment Schedule, incorporating by reference the Agreement,
constitutes a separate instrument of lease.
A. EQUIPMENT.
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease
to Lessee the Equipment listed on Annex A attached hereto and made a part
hereof.
B. FINANCIAL TERMS.
1. Capitalized Lessor's Cost:
$____________________________________ (being an amount equal
to funds disbursed and Interim Rent accrued and unpaid in
respect of the Equipment and its parts and components during
the Interim Lease Period).
2. Daily Lease Rate Factor: LIBOR Rate plus the Applicable Margin
per annum.
3. Basic Term: The thirty-three month period commencing on the
Basic Term Commencement Date.
4. Basic Term Commencement Date: March 15, 1999.
5. Equipment Location: Lessee's plant in ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
6. Lessee Federal Tax ID No.: ▇▇-▇▇▇▇▇▇▇
7. Lessee agrees and acknowledges that the Capitalized Lessor's
Cost of the Equipment as stated on the Schedule is equal to
the fair market value of the Equipment on the date hereof.
8. Renewal Term: Each Renewal Term will consist of a one-year
period, and subject to Section XVIII(b), Lessee may elect up
to seven (7) Renewal Terms.
9. Maximum Lease Term: The Term shall not exceed twelve (12)
years.
10. Stipulated Loss Values: See Annex D.
11. Termination Values: See Annex D.
12. Assumed Interest Rate: __________% (which will be determined
three (3) Business Days before the date of execution of this
Schedule).
13. Last Delivery Date: February 15, 1999.
C. TERM AND RENT.
1. Basic Term and Renewal Term Rent. Commencing on the Basic Term
Commencement Date and payable, in arrears, on the same day of each quarter
thereafter (each, a "Rent Payment Date") during the Basic Term ("Basic Term
Rent") and any Renewal Term ("Renewal Term Rent"), Lessee shall pay as Rent
quarterly installments of (a) interest on the unamortized portion of the unpaid
Capitalized Lessor's Cost as of the immediately preceding Rent Payment Date
(after application of the Rent paid on such date) at the Daily Lease Rate Factor
for the Interest Period following such immediately preceding Rent Payment Date
and (b) of principal in the principal amounts described on the Amortization
Schedule attached as Annex E. Interest shall be calculated on the basis of a 360
day year for the actual number of days elapsed. Said Rent consists of principal
and interest components, such principal components being as provided in the
Amortization Schedule attached hereto as Annex E.
As used herein, the following terms shall have the following meanings:
"APPLICABLE MARGIN" the particular rate per annum determined by the
Lessor in accordance with the Pricing Grid Table which appears below, based on
the ratio of Consolidated Total Debt to Consolidated EBITDAR and such Pricing
Grid Table, and the following provisions:
(i) Initially, until changed hereunder in accordance with the
following provisions, the Applicable Margin will be 250 basis points
per annum.
(ii) Commencing with the fiscal quarter of the Lessee ended on
or nearest to June 30, 2000, and continuing with each fiscal quarter
thereafter, the Lessor will determine the Applicable Margin in
accordance with the Pricing Grid Table, based on the ratio of (x)
Consolidated Total Debt as of the end of the fiscal quarter, to (y)
Consolidated EBITDAR for the Testing Period ended on the last day of
the fiscal quarter, and identified in such Pricing Grid Table. Changes
in the Applicable Margin based upon changes in such ratio shall become
effective on the first day of the month following the receipt by the
Lessor pursuant to section IV(b)(i) or (ii), as applicable, of the
financial statements of the Lessee and the Parent, accompanied by the
certificate and calculations referred to in section IV(b)(iii),
demonstrating the computation of such ratio, based upon the ratio in
effect at the end of the applicable period covered (in whole or in
part) by such financial statements.
(iii) Notwithstanding the above provisions, during any period
when (A) the Lessee has failed to timely deliver or caused to be
delivered the financial statements referred to in section IV(b)(i) or
(ii), accompanied by the certificate and calculations referred to in
section IV(b)(iii), (B) a Potential Default under section XI(a)(1) has
occurred and is continuing, or (C) a Default has occurred and is
continuing, the Applicable Margin shall each be the highest rate per
annum indicated therefor in the Pricing Grid Table, regardless of the
ratio of Consolidated Total Debt to Consolidated EBITDAR at such time,
plus 200 basis points.
(iv) Any changes in the Applicable Margin shall be determined
by the Lessor in accordance with the above provisions and the Lessor
will promptly provide notice of such determinations to the Lessee. Any
such determination by the Lessor pursuant to these provisions shall be
conclusive and binding absent manifest error.
PRICING GRID TABLE
(EXPRESSED IN BASIS POINTS)
-------------------------------------------- ---------------------------
RATIO OF APPLICABLE MARGIN
CONSOLIDATED TOTAL DEBT
TO
CONSOLIDATED EBITDAR
---------------------------------------------------------- -------------
Greater than or equal to 4.00 to 1.00 325.00
---------------------------------------------------------- -------------
> 3.50 to 1.00 and < 4.00 to 1.00 275.00
---------------------------------------------------------- -------------
> 3.00 to 1.00 and (less than or equal to) 3.50 to 1.00 225.00
---------------------------------------------------------- -------------
> 2.50 to 1.00 and (less than or equal to) 3.00 to 1.00 200.00
---------------------------------------------------------- -------------
(less than or equal to) 2.50 to 1.00 175.00
---------------------------------------------------------- -------------
Notwithstanding the above provisions, from September 28, 2001, through
and including September 30, 2001, and thereafter until changed hereunder in
accordance with the provisions set forth above, for all purposes hereof, the
Applicable Margin will be 325 basis points per annum.
"INTEREST PERIOD" shall mean the period beginning on the Basic Term
Commencement Date and ending on the next Rent Payment Date, and each subsequent
quarterly period.
"LIBOR RATE" shall mean, with respect to any Interest Period occurring
during the term of the Lease, (i) the rate per annum which appears on page 3750
of the Telerate Screen (or on any successor or substitute page, or on any
electronic publication of a recognized service organization providing comparable
rate quotations, in any case as determined from time to time by the Lessor) for
deposits of $1,000,000 in same day funds for a maturity corresponding to such
Interest Period as of 11:00 A.M. (London time) on the date which is two Business
Days prior to the commencement of such Interest Period, divided (and rounded
upward to the nearest 1/16th of 1%) by (ii) a percentage equal to 100% minus the
then stated maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves and
without benefit of credits for proration, exceptions or offsets which may be
available from time to time) applicable to any member bank of the Federal
Reserve System in respect of Eurocurrency liabilities as defined in Regulation D
(or any successor category of liabilities under Regulation D).
In the event that such rate is not available at such time for any
reason, the rate referred to in clause (i) above shall be the interest rate per
annum equal to the average (rounded upward to the nearest 1/16th of 1% per
annum), of the rate per annum at which U.S. Dollar deposits of $1,000,000 for a
maturity corresponding to the Interest Period are offered to each of the
Reference Banks by prime banks in the London interbank Eurodollar market,
determined as of 11:00 A.M. (London time) on the date which is two Business Days
prior to the commencement of such Interest Period.
"Reference Banks" shall mean (i) National City Bank, and (ii) any other
bank or banks selected as a Reference Bank by National City Bank.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve (or any successor thereto), as amended or supplemented from time
to time.
If at any time Lessor or any Participant (or, without duplication, the
bank holding company of which such Participant is a subsidiary) determines that
either adequate and reasonable means do not exist for ascertaining the LIBOR
Rate, or it becomes impractical for Lessor or any Participant to obtain funds to
make or maintain the financing hereunder with interest at the LIBOR Rate, or
Lessor or any Participant reasonably determines that, as a result of changes to
applicable law after the date of execution of the Agreement, or the adoption or
making after such date of any interpretations, directives or regulations
(whether or not having the force of law) by any court, governmental authority or
reserve bank charged with the interpretation or administration thereof, it shall
be or become unlawful or impossible to make, maintain, or fund the transaction
hereunder at the LIBOR Rate, then Lessor promptly shall give notice to Lessee of
such determination and Lessor and Lessee shall negotiate in good faith a
mutually acceptable alternative method of calculating the Daily Lease Rate
Factor and shall execute and deliver such documents as reasonably may be
required to incorporate such alternative method of calculating the Daily Lease
Rate Factor in this Schedule, within thirty (30) days after the date of Lessor's
notice to Lessee. If the parties are unable mutually to agree to such
alternative method of calculating the Daily Lease Rate Factor in a timely
fashion, (a) effective on the commencement of the next succeeding Interest
Period or the date that it becomes impractical for Lessor or any Participant to
maintain the financing hereunder with interest at the LIBOR Rate as aforesaid,
as case may be, the Daily Lease Rate Factor shall become a floating rate equal
to the Federal Funds Rate plus sixty (60) basis points, and (b) on the Rent
Payment Date next succeeding the expiration of such thirty (30) day period
Lessee shall purchase all (but not less than all) of the Equipment described on
all Schedules executed pursuant to the Agreement and shall pay to Lessor, in
cash, the purchase price for the Equipment so purchased, determined as
hereinafter provided. (As used herein, "Federal Funds Rate" means the rate of
interest, as reasonably determined by Lessor, paid by or available to Lessor for
the purchase of "federal funds" at the time or times in question on a daily
overnight basis.) The purchase price of the Equipment shall be an amount equal
to the Stipulated Loss Value of such Equipment calculated in accordance with
Annex D as of the date of payment, together with all rent and other sums then
due on such date, plus all taxes and charges upon sale and all other reasonable
and documented expenses incurred by Lessor in connection with such sale. Upon
satisfaction of the conditions specified in this Paragraph, Lessor will
transfer, on an AS IS, WHERE IS BASIS, all of Lessor's interest in and to the
Equipment. Lessor shall not be required to make and may specifically disclaim
any representation or warranty as to the condition of the Equipment and other
matters (except that Lessor shall warrant that it conveyed whatever interest it
received in such Equipment free and clear of any Lien created by Lessor). Lessor
shall execute and deliver to Lessee such Uniform Commercial Code statements of
termination as reasonably may be required in order to terminate any interest of
Lessor in and to the Equipment.
2. If the Rent Payment Date or any Rent Payment Date is not a Business
Day, the Rent otherwise due on such date shall be payable on the immediately
preceding Business Day.
3. Lessee shall pay to Lessor, for the account of each Participant,
from time to time the amounts as such Participant may determine to be necessary
to compensate it for any costs which such Participant determines are
attributable to its making or maintaining its interest in the Lease and the
Equipment (the "Interest") or any reduction in any amount receivable by such
Participant in respect of any such Interest (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
resulting from any Regulatory Change (as defined below) which:
(i) changes the basis of taxation of any amounts payable to
Lessor for the account of such Participant in respect of such
Interest (other than taxes imposed on or measured by the
overall net income of such Participant in respect of the
interest by the jurisdiction in which such Participant has its
principal office or its lending office); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements relating to any extensions of credit or
other assets of, or any deposits with or other liabilities of,
such Participant; or
(iii) imposes any other condition affecting this Lease or any
Interest.
For purposes hereof, "Regulatory Change" shall mean any change after the date of
this Lease in United States federal, state or foreign law or regulations
(including, without limitation, Regulation D or the adoption or making after
such date of any interpretation, directive or request applying to a class of
banks including any Participant or under any United States federal, state or
foreign law and whether or not failure to comply therewith would be unlawful) by
any court or governmental or monetary authority charged with the interpretation
or administration thereof.
Without limiting the effect of the foregoing Paragraph (but without
duplication), Lessee shall pay to Lessor, for the account of each Participant,
from time to time on request such amounts as such Participant may determine to
be necessary to compensate such Participant (or, without duplication, the bank
holding company of which such Participant is a subsidiary) for any costs which
it determines are attributable to the maintenance by such Participant (or any
lending office or such bank holding company), pursuant to any law or regulation
or any interpretation, directive or request (whether or not having the force of
law) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing any risk-based capital guideline or
requirement (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) heretofore or hereafter issued by
any government or governmental or supervisory authority implementing at the
national level the Basle Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 208, Appendix A; ▇▇ ▇.▇.▇. ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇) and the
Final Risk-Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 C.F.R. Part 3, Appendix A)), of capital in respect of such
Participant's Interest (such compensation to include, without limitation, an
amount equal to any reduction of the rate of return on assets or equity of such
Participant (or any lending office or bank holding company) to a level below
that which such Participant (or any lending office or bank holding company)
could have achieved but for such law, regulation, interpretation, directive or
request). For purposes of this Paragraph, "Basle Accord" shall mean the
proposals for risk-based capital framework described by the Basle Committee on
Banking Regulations and Supervisory Practices in its paper entitled
"International Convergence of Capital Measurement and Capital Standards" dated
July 1988, as amended, modified and supplemented and in effect from time to time
or any replacement thereof.
Each Participant shall notify Lessee of any event occurring after the
date of this Lease that will entitle such Participant to compensation under the
preceding two Paragraphs as promptly as practicable, but in any event within
thirty (30) days, after such Participant obtains actual knowledge thereof;
provided, that (i) if such Participant fails to give such notice within thirty
(30) days after it obtains actual knowledge of such an event, such Participant
shall, with respect to compensation payable pursuant to the preceding two
Paragraphs in respect of any costs resulting from such event, only be entitled
to payment under the referenced Paragraphs for costs incurred from and after the
date thirty (30) days prior to the date that such Participant does give such
notice, and (ii) such Participant will designate a different lending office for
the Interest if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the sole opinion of such Participant, be
disadvantageous to such Participant. Each Participant will furnish to Lessee a
certificate setting forth the basis and amount of each request by such
Participant for compensation under the preceding two Paragraphs. Determinations
and allocations by each Participant for purposes of the preceding two Paragraphs
shall be conclusive, absent manifest error.
D. INSURANCE.
1. Public Liability: $1,000,000 total liability per occurrence and
$2,000,000 in the aggregate, with excess liability in umbrella form of
$10,000,000 per occurrence and in the aggregate, with a maximum deductible
amount of (a) $1,500,000 per occurrence or (b) an amount equal to $1,500,000 per
occurrence plus the amount of any reserves specifically allocated by Lessee for
this type of liability that are satisfactory to Lessor, but in no event greater
than $2,500,000 per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment, with a
maximum deductible amount of $1,000,000 per occurrence.
E. FIXED PURCHASE PRICE AND RESIDUAL RISK AMOUNT
Fixed Purchase Price Residual Risk Amount
(Percent of Capitalized (Percent of Capitalized
End of Lessor's Cost) Lessor's Cost)
------ ---------------- ----------------
Basic Term 100.0000% 13.2500%
Renewal Term 1 92.1681% 11.4000%
Renewal Term 2 83.7655% 10.5000%
Renewal Term 3 74.7508% 9.5000%
Renewal Term 4 64.8705% 8.6500%
Renewal Term 5 54.0542% 7.3000%
Renewal Term 6 42.4499% 6.2500%
Renewal Term 7 30.0000% 4.7000%
The Fixed Purchase Price and Residual Risk Amount are each expressed as a
percentage of the Capitalized Lessor's Cost of the Equipment.
This Schedule is not binding or effective with respect to the Agreement
or Equipment until executed on behalf of Lessor and Lessee by an authorized
representative of Lessor and Lessee, respectively.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
NATIONAL CITY BANK, BRUSH ▇▇▇▇▇▇▇ INC.
FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS
By: By:
---------------------------------- ----------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
------------------------------- -------------------------------
ANNEX A
TO
SCHEDULE NO. ______
DATED THIS ______ DAY OF ______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
DESCRIPTION OF EQUIPMENT
Type and
Serial Model of Number Cost per
Vendor Numbers Equipment of Units Unit
------ ------- --------- -------- ----------
Initials:__________ __________
Lessor Lessee
ANNEX B
TO
SCHEDULE NO. ______
DATED THIS ______ DAY OF _______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
ASSIGNMENT OF PURCHASE ORDERS
[See Exhibit No. 6 to Master Lease Agreement]
ANNEX C
TO
SCHEDULE NO. ______
DATED THIS _______ DAY OF __________________, 199___
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
CERTIFICATE OF ACCEPTANCE
To: National City Bank,
for Itself and as Agent for Certain Participants
Pursuant to the provisions of the above Schedule and Master Lease
Agreement (collectively, the "LEASE"; capitalized terms used but not defined
herein have the meanings ascribed thereto in the Lease), Lessee hereby certifies
and warrants that (a) all equipment listed in the attached invoice or invoices
(the "Equipment") is in good condition, installed (if applicable), and in
working order; and (b) Lessee accepts the Equipment for all purposes of the
Lease, each Purchase Order relating to the Equipment and all attendant
documents.
Lessee does further certify that as of the date hereof (i) no Default
or Potential Default has occurred; and (ii) the representations and warranties
made by Lessee pursuant to or under the Lease are true and correct on the date
hereof.
BRUSH ▇▇▇▇▇▇▇ INC.
By:
----------------------------------------
Name:
--------------------------------------
Authorized Representative
Dated: _________________, 199__
ANNEX D
TO
SCHEDULE NO. _________
DATED THIS ______ DAY OF ______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
STIPULATED LOSS AND TERMINATION VALUE TABLE
NO. OF RENT PAYMENT DATE STIPULATED LOSS AND
(after Basic Term Commencement Date) TERMINATION VALUE*
1 100.0000%
2 100.0000%
3 100.0000%
4 100.0000%
5 100.0000%
6 100.0000%
7 100.0000%
8 100.0000%
9 100.0000%
10 100.0000%
11 100.0000%
12 98.0934%
13 96.1529%
14 94.1780%
15 92.1681%
16 90.1225%
17 88.0407%
18 85.9219%
19 83.7655%
20 81.5709%
21 79.3374%
22 77.0642%
23 74.7508%
24 72.3963%
25 70.0000%
26 67.4578%
27 64.8705%
28 62.2373%
29 59.5574%
30 56.8300%
31 54.0542%
32 51.2292%
33 48.3540%
34 45.4279%
35 42.4499%
36 39.4190%
37 36.3344%
NO. OF RENT PAYMENT DATE STIPULATED LOSS AND
(after Basic Term Commencement Date) TERMINATION VALUE*
38 33.1950%
39 30.0000%
Initials: ________ _________
Lessor Lessee
------------------------
*The Stipulated Loss Value and Termination Value for any unit of
Equipment shall be equal to the Capitalized Lessor's Cost of such unit
multiplied by the appropriate percentage derived from the above table. In the
event that the Lease is for any reason extended, then the last percentage figure
shown above shall control throughout any such extended term.
ANNEX E
TO
SCHEDULE NO. _________
DATED THIS _____ DAY OF ______________, 199__
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
AMORTIZATION SCHEDULE
NO. OF RENT
PAYMENT DATE PERCENT OF PERCENT OF
(after Basic Term PRINCIPAL REMAINING PRINCIPAL
Commencement Date) PAYABLE* BALANCE*
1 0.0000% 100.0000%
2 0.0000% 100.0000%
3 0.0000% 100.0000%
4 0.0000% 100.0000%
5 0.0000% 100.0000%
6 0.0000% 100.0000%
7 0.0000% 100.0000%
8 0.0000% 100.0000%
9 0.0000% 100.0000%
10 0.0000% 100.0000%
11 0.0000% 100.0000%
12 1.9066% 98.0934%
13 1.9405% 96.1529%
14 1.9749% 94.1780%
15 2.0099% 92.1681%
16 2.0456% 90.1225%
17 2.0818% 88.0407%
18 2.1188% 85.9219%
19 2.1564% 83.7655%
20 2.1946% 81.5709%
21 2.2335% 79.3374%
22 2.2732% 77.0642%
23 2.3135% 74.7508%
24 2.3545% 72.3963%
25 2.3963% 70.0000%
26 2.5422% 67.4578%
27 2.5873% 64.8705%
28 2.6332% 62.2373%
29 2.6799% 59.5574%
30 2.7274% 56.8300%
31 2.7758% 54.0542%
32 2.8250% 51.2292%
33 2.8751% 48.3540%
34 2.9261% 45.4279%
35 2.9780% 42.4499%
36 3.0309% 39.4190%
37 3.0846% 36.3344%
38 3.1393% 33.1950%
NO. OF RENT
PAYMENT DATE PERCENT OF PERCENT OF
(after Basic Term PRINCIPAL REMAINING PRINCIPAL
Commencement Date) PAYABLE* BALANCE*
39 3.1950% 30.0000%
Initials:________ _________
Lessor Lessee
------------------------
*The Principal, and the Outstanding Principal Balance as of any Rent
Payment Date payment (assuming the principal payments due on each Rental Payment
Date are paid when due), shall be equal to the Capitalized Lessor's Cost of the
Equipment multiplied by the appropriate percentage derived from the above table.
ANNEX F
TO
SCHEDULE NO. _________
DATED THIS ______ DAY OF ______________, 199___
TO MASTER LEASE AGREEMENT DATED AS OF December 30, 1996
RETURN PROVISIONS: In addition to the provisions provided for in
Section X of this Lease, and provided that Lessee has elected not to exercise
its purchase option pursuant to Section XVIII(d) of the Lease, Lessee shall, at
its expense:
(a) at least one hundred eighty (180) days and not more than three
hundred sixty-five (365) days prior to expiration or earlier termination of the
Lease, provide to Lessor a detailed inventory of all components of the
Equipment. The inventory should include, but not be limited to, a listing of
models and serial numbers for all components comprising the Equipment;
(b) at least one hundred eighty (180) days prior to expiration or
earlier termination of the Lease, upon receiving reasonable notice from Lessor,
provide or cause the vendor(s) or manufacturer(s) to provide to Lessor the
following documents: (i) one set of service manuals, blueprints, process flow
diagrams and operating manuals including replacements and/or additions thereto,
such that all documentation is completely up-to-date; (ii) one set of documents,
detailing Equipment configuration, operating requirements, maintenance records,
and other mechanical data concerning the set-up and operation of the Equipment,
including replacements and/or additions thereto, such that all documentation is
completely up-to-date;
(c) at least one hundred eighty (180) days prior to expiration or
earlier termination of the Lease, upon receiving reasonable notice from Lessor,
make the Equipment available for on-site operational inspections by potential
purchasers, under power, and provide personnel, power and other requirements
necessary to demonstrate electrical and mechanical systems for each item of the
Equipment;
(d) at least ninety (90) days prior to expiration or earlier
termination of the Lease, cause the manufacturer's representative or qualified
equipment maintenance provider, acceptable to Lessor (the "Authorized
Inspector"), to perform a comprehensive physical inspection, including testing
all material and workmanship of the Equipment and if during such inspection,
examination and test, the Authorized Inspector finds any of the material or
workmanship to be defective or the Equipment not operating within the
manufacturer's specifications, then Lessee shall repair or replace such
defective material and, after corrective measures are completed, Lessee will
provide for a follow-up inspection of the Equipment by the Authorized Inspector
as outlined in the preceding Paragraph;
(e) have each item of Equipment returned with an in-depth field service
report detailing said inspection as outlined in Subsection (d) above. The report
shall certify that the Equipment has been properly inspected, examined and
tested and is operating within the manufacturer's specifications;
(f) permit Lessor to videotape the Equipment "under power" at Lessee's
or at any facility where any Equipment is located at a time during normal
working hours mutually agreeable to Lessor and Lessee prior to deinstallation;
(g) have any repairs made to the Equipment in a professional and
workmanlike manner. Any Equipment enhancements or additions will revert to
Lessor upon expiration or earlier termination of the Lease and shall not affect,
in an adverse manner, the Fair Market Value of the Equipment at Lease
expiration. Such additions or enhancements shall be made only with prior written
approval of Lessor (whose approval shall not unreasonably be withheld);
(h) have the Equipment returned in good appearance with adequate
protective coatings over all surfaces as originally painted or coated, and the
Equipment shall be free from rust, and shall be in good, complete working order;
(i) have the Equipment cleaned (including the removal of all beryllium)
and approved by the necessary governmental agencies which regulate the use and
operation of such Equipment so as to be available for immediate use;
(j) properly remove all Lessee installed markings which are not
necessary for the operation, maintenance or repair of the Equipment; and
(k) provide for the deinstallation and packing of the Equipment to
include, but not be limited to, the following: (i) all process fluids shall be
removed from the Equipment and disposed of in accordance with the then current
waste disposal laws and regulations. At no time are materials which could be
considered hazardous waste by any regulatory authority to be shipped with
machinery; (ii) all internal fluids such as lube oil and hydraulic fluid are to
be filled to operating levels; filler caps are to be secured and disconnected
hoses are to be sealed to avoid spillage; (iii) the manufacturer's
representative shall deinstall and match ▇▇▇▇ all Equipment in accordance with
the specifications of the manufacturer; (iv) the Equipment shall be packed
properly and in accordance with the manufacturer's recommendations; (v) Lessee
shall provide for the transportation of the Equipment in a manner consistent
with the manufacturer's recommendations and practices to any locations within
the United States of America as Lessor shall direct; and shall have the
Equipment unloaded at such locations; and (vi) Lessee shall obtain and pay for a
policy of transit insurance for the redelivery period in an amount equal to the
replacement value of the Equipment, and Lessor shall be named as the loss payee
on all such policies of insurance.
EXHIBIT NO. 3
COMPLIANCE CERTIFICATE
-----------, ----
To: National City Bank, for itself and as
Agent for certain Participants
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Subject: Master Lease Agreement, dated as of December 30, 1996, as
amended, between National City Bank, for itself and as Agent
for certain Participants, as lessor, and Brush ▇▇▇▇▇▇▇ Inc.,
as lessee (the "Lease Agreement")
Greetings:
Pursuant to Section IV(b)(iii) of the Lease Agreement and in my
capacity as the chief financial officer of Brush ▇▇▇▇▇▇▇ Inc., I hereby certify
that to the best of my knowledge and belief (capitalized terms used, but not
defined herein shall have the meanings ascribed thereto in the Lease Agreement):
[Form to be agreed upon by Lessee and Lessor based on Section XXIII]
BRUSH ▇▇▇▇▇▇▇ INC.
By:
---------------------------------------
Title:
------------------------------------
EXHIBIT NO. 4
LIST OF EQUIPMENT AND ACQUISITION COST
============= ================================ =========================================== =========================
TOTAL
PURCHASE ORDER NO. ACQUISITION
EQUIPMENT AND VENDOR COST
------------- -------------------------------- ------------------------------------------- -------------------------
1. Walking Beam Furnace EX90006/Seco-Warwick $2,200,000.00
------------- -------------------------------- ------------------------------------------- -------------------------
2. Hot Mill EX90003/▇▇▇▇▇▇ Engineering $12,400,000.00
------------- -------------------------------- ------------------------------------------- -------------------------
3. ▇▇▇▇ Aging Furnace EX90012/RAD-CON Inc. $1,550,000.00
------------- -------------------------------- ------------------------------------------- -------------------------
4. Slab Mill EX90007/Integrated Industrial Systems $7,350,000.00
------------- -------------------------------- ------------------------------------------- -------------------------
5. Finish Pickle Line EX90010/SMS Process Lines $7,100,000.00
------------- -------------------------------- ------------------------------------------- -------------------------
6. Four-High Rolling Mill EX90002/▇▇▇▇▇▇ Engineering $9,200,000.00
------------- -------------------------------- ------------------------------------------- -------------------------
7. Anneal/Pickle Line 1. EX90009/SMS Process $13,400,000.00
Lines
Anneal/Pickle Line
2. EX90008/Drever Company
Cont. Anneal Line
------------- -------------------------------- ------------------------------------------- -------------------------
8. Degreasing Line EX90011/SMS Process Lines $2,300,000.00
------------- -------------------------------- ------------------------------------------- -------------------------
TOTAL $55,500,000.00
============= ================================ =========================================== =========================