EXHIBIT 10
BRUSH ENGINEERED MATERIALS INC.
AND
BRUSH ▇▇▇▇▇▇▇ INC.
AMENDED AND RESTATED INDUCEMENT AGREEMENT
WITH
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
DATED AS OF MAY 30, 2003
BRUSH ENGINEERED MATERIALS INC.
AND
BRUSH ▇▇▇▇▇▇▇ INC.
AMENDED AND RESTATED INDUCEMENT AGREEMENT
TABLE OF CONTENTS
SECTION PAGE NO.
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PRELIMINARY STATEMENT:............................................................ 1
1. AFFIRMATIVE COVENANTS........................................................ 2
1A. Financial Statements.................................................. 2
1B. Information Required by Rule 144A..................................... 3
1C. Books and Records; Inspection of Property............................. 4
1D. Maintenance of Insurance.............................................. 4
1E. Repurchase Rights..................................................... 4
2. NEGATIVE COVENANTS........................................................... 7
2A. [Intentionally omitted.].............................................. 8
2B. Prepayment............................................................ 8
2C. Most Favored Lender................................................... 8
3. CONDITIONS PRECEDENT TO EFFECTIVENESS........................................ 8
3A. Documents............................................................. 8
3B. Opinions of Counsel................................................... 9
3C. Representations and Warranties; No Potential Default.................. 9
3D. Recording of Lease Modification....................................... 9
3E. Material Adverse Change............................................... 9
3F. Closing Certificates.................................................. 9
3G. Corporate Documents................................................... 10
3H. Fees and Expenses..................................................... 10
3I. Proceedings........................................................... 10
4. EVENTS OF DEFAULT............................................................ 11
5. REPRESENTATIONS, COVENANTS AND WARRANTIES.................................... 12
5A. Organization.......................................................... 12
5B. Power and Authority................................................... 13
5C. Financial Statements.................................................. 13
5D. Actions Pending....................................................... 13
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5E. Outstanding Debt...................................................... 13
5F. Title to Properties................................................... 14
5G. Taxes................................................................. 14
5H. Conflicting Agreements and Other Matters.............................. 14
5I. ERISA................................................................. 14
5J. Governmental Consent.................................................. 15
5K. Environmental Compliance.............................................. 15
5L. Utility Availability and Access....................................... 15
5M. Disclosure............................................................ 15
5N. Regulatory Status..................................................... 16
6. DEFINITIONS.................................................................. 16
6A. Capitalized Terms..................................................... 16
6B. Recitals.............................................................. 23
6C. Accounting Principles, Terms and Determinations....................... 23
7. MISCELLANEOUS................................................................ 23
7A. Consent to Amendments................................................. 23
7B. Expenses.............................................................. 23
7C. Survival of Representations and Warranties; Entire Agreement.......... 24
7D. Successors and Assigns................................................ 24
7E. Disclosure to Other Persons........................................... 24
7F. Notices............................................................... 25
7G. Severability.......................................................... 25
7H. Descriptive Headings.................................................. 25
7I. Satisfaction Requirement.............................................. 25
7J. Governing Law......................................................... 25
7K. Counterparts.......................................................... 25
7L. Independence of Covenants............................................. 25
7M. Binding Agreement..................................................... 26
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AMENDED AND RESTATED INDUCEMENT AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made as of May 30, 2003 by and among
BRUSH ENGINEERED MATERIALS INC., an Ohio corporation ("HOLDINGS"), BRUSH ▇▇▇▇▇▇▇
INC., an Ohio corporation (the "COMPANY"), and THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, a New Jersey insurance company ("PRUDENTIAL"). Reference is made to
paragraph 6 hereof for definitions of capitalized terms used herein and not
otherwise defined.
PRELIMINARY STATEMENT:
A. Subject to the terms and conditions described in the Series
1996 Bond Purchase Agreement and the Indenture, the ▇▇▇▇▇▇-▇▇▇▇▇ County Port
Authority, a port authority and political subdivision organized and existing
under the laws of the State of Ohio (herein called the "AUTHORITY"), has issued,
and Prudential has purchased from the Authority, Series 1996 Bonds in an
aggregate principal amount of $13,100,000.
B. Subject to the terms and conditions described in the Series
1997 Bond Purchase Agreement and the First Supplemental Indenture, the Authority
has issued, and Prudential has purchased from the Authority, Series 1997 Bonds
in an aggregate principal amount of $2,175,000.
C. The proceeds of the Project Bonds have been used to pay a
significant portion of the cost of constructing, equipping, furnishing,
improving and otherwise developing real and personal property, to be leased to
and occupied as a metal processing and manufacturing facility by the Company as
lessee under the Lease.
D. As a condition, among others, to Prudential's willingness to
purchase the Project Bonds, Prudential required that the Company enter into that
certain Inducement Agreement between the Company and Prudential, dated as of
October 1, 1996 (the "SERIES 1996 INDUCEMENT AGREEMENT"), and that certain
Series 1997 Inducement Agreement between the Company and Prudential, dated as of
April 1, 1997 (the "SERIES 1997 INDUCEMENT AGREEMENT"; the Series 1996
Inducement Agreement and the Series 1997 Inducement Agreement are referred to
herein, collectively, as the "EXISTING INDUCEMENT AGREEMENTS").
E. On May 16, 2000, as part of an overall corporate
reorganization, the Company became a wholly-owned subsidiary of Holdings.
F. Holdings and the Company have requested that the Existing
Inducement Agreements be amended and restated to, among other things, amend the
financial reporting requirements as provided below, and Prudential is willing to
agree to such amendments, subject to the terms and conditions set forth herein,
and provided that (i) Holdings becomes a party to the Existing Inducement
Agreements, and (ii) Holdings and the Company agree to other changes to the
Existing Inducement Agreements as set forth herein.
NOW THEREFORE, for value received and in consideration of the
foregoing, in order to induce Prudential to consent to the modifications set
forth herein, and to induce any other Holder
to accept the transfer of all or any part of any of the Project Bonds, effective
as provided in paragraph 3 hereof, Holdings hereby agrees to become a party to
the Existing Inducement Agreements, and each of Prudential, Holdings and the
Company hereby (a) amends and restates the Existing Inducement Agreements and
(b) covenants and agrees with and represents and warrants to the Holders from
time to time of the Project Bonds as follows:
AGREEMENT:
1. AFFIRMATIVE COVENANTS.
1A. FINANCIAL STATEMENTS. Holdings covenants that it will deliver
to each Significant Holder in triplicate:
(i) as soon as practicable and in any event within 45 days after
the end of each quarterly period (other than the last quarterly period) in each
fiscal year, consolidated statements of income, stockholders' equity and cash
flows of Holdings and its Subsidiaries for the period from the beginning of the
current fiscal year to the end of such quarterly period, and a consolidated
balance sheet of Holdings and its Subsidiaries as at the end of such quarterly
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable detail and
certified by an authorized financial officer of Holdings, subject to changes
resulting from year-end adjustments; provided, however, that delivery pursuant
to clause (iii) below of copies of the Quarterly Report on Form 10-Q of Holdings
for such quarterly period filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this clause (i);
(ii) as soon as practicable and in any event within 90 days after
the end of each fiscal year, consolidated statements of income, stockholders'
equity, and cash flows of Holdings and its Subsidiaries for such year, and a
consolidated balance sheet of Holdings and its Subsidiaries as at the end of
such year, setting forth in each case in comparative form corresponding
consolidated figures from the preceding annual audit, all in reasonable detail,
prepared in accordance with generally accepted accounting principles, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing selected by Holdings which opinion shall state that
such financial statements present fairly, in all material respects, the
financial position of the companies being reported upon and their results of
operations and cash flows and have been prepared in accordance with generally
accepted accounting principles, and that the examination of such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances and shall be without limitation as
to scope of the audit; provided, however, that delivery pursuant to clause (iii)
below of copies of the Annual Report on Form 10-K of Holdings for such fiscal
year filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this clause (ii);
(iii) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall send to
its public stockholders and copies of all registration statements (without
exhibits) and all reports which it files with the Securities and Exchange
Commission (or any governmental body or agency succeeding to the functions of
the
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Securities and Exchange Commission), excluding registration statements on Form
S-8 and reports filed under Section 16 of the Securities Exchange Act of 1934;
(iv) promptly upon receipt thereof, a copy of each other report
submitted to Holdings or any Subsidiary by independent accountants in connection
with any annual, interim or special audit made by them of the books of Holdings
or any Subsidiary; and
(v) with reasonable promptness, such other financial data as such
Significant Holder may reasonably request.
Together with each delivery of financial statements required by clauses (i) and
(ii) above, Holdings will deliver to each Significant Holder an Officer's
Certificate of Holdings demonstrating (with computations in reasonable detail)
compliance by Holdings and its Subsidiaries with the provisions of paragraph 2
and stating that, to the best of their knowledge based upon reasonable inquiry,
there exists no Event of Default, Default, Project Service Agreement Event of
Default or Project Service Agreement Default, or, if any Event of Default,
Default, Project Service Agreement Event of Default or Project Service Agreement
Default, exists, specifying the nature and period of existence thereof and what
action Holdings proposes to take with respect thereto. Together with each
delivery of financial statements required by clause (ii) above, Holdings will
deliver to each Significant Holder a report of such accountants stating that, in
making the audit necessary for their report on such financial statements, they
have obtained no knowledge of any Event of Default, Default, Project Service
Agreement Event of Default or Project Service Agreement Default, or, if they
have obtained knowledge of any Event of Default, Default, Project Service
Agreement Event of Default or Project Service Agreement Default, specifying the
nature and period of existence thereof. Such accountants, however, shall not be
liable to anyone by reason of their failure to obtain knowledge of any Event of
Default, Default, Project Service Agreement Event of Default or Project Service
Agreement Default, which would not be disclosed in the course of an audit
conducted in accordance with generally accepted auditing standards.
Holdings and the Company each also covenant that immediately after any
Responsible Officer of Holdings or the Company, as the case may be, obtains
knowledge of an Event of Default, Default, Project Service Agreement Event of
Default or Project Service Agreement Default, it will deliver to each
Significant Holder an Officer's Certificate of Holdings or the Company, as the
case may be, specifying the nature and period of existence thereof and what
action Holdings or the Company, as the case may be, proposes to take with
respect thereto.
1B. INFORMATION REQUIRED BY RULE 144A. The Company covenants that
it will, upon the request of any Holder, provide such Holder, and any qualified
institutional buyer designated by such Holder, such financial and other
information as such Holder may reasonably determine to be necessary in order to
permit compliance with the information requirements of Rule 144A under the
Securities Act in connection with the resale of Project Bonds, except at such
times as Holdings is subject to the reporting requirements of section 13 or
15(d) of the Exchange Act. For the purpose of this paragraph 1B, the term
"QUALIFIED INSTITUTIONAL BUYER" shall have the meaning specified in Rule 144A
under the Securities Act.
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1C. BOOKS AND RECORDS; INSPECTION OF PROPERTY. Holdings covenants
that it will permit any Person designated by the Required Holder(s) in writing,
at such Required Holders' expense, to visit and inspect any of the properties of
Holdings and its Subsidiaries, to examine the corporate books and financial
records of Holdings and its Subsidiaries and obtain copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of any of such
corporations with the principal officers of Holdings or any such Subsidiary and
its independent public accountants as Holdings or the applicable Subsidiary and
such Required Holder shall agree but in any event within three Business Days
from request and during normal business hours. All inspections shall be made in
strict compliance with Holding's and the applicable Subsidiaries' reasonable
safety and security regulations.
1D. MAINTENANCE OF INSURANCE. Holdings covenants that it and each
Subsidiary shall maintain with financially sound and reputable insurers,
insurance in such amounts and against such liabilities and hazards as is
ordinarily carried by companies similarly situated in the same or similar lines
of business.
1E. REPURCHASE RIGHTS. In the event that a Repurchase Event shall
occur, each Holder of Project Bonds outstanding at the time of the occurrence of
the applicable event described in (A) of the definition of Repurchase Event
shall have the right to require the Company to purchase such Holder's Project
Bonds on the date (the "DATE OF REPURCHASE") that is 45 days after the
occurrence of such Repurchase Event at a price equal to the Repurchase Price.
The "REPURCHASE PRICE" means the aggregate principal amount of the Project Bonds
to be so purchased, together with accrued interest to the Date of Repurchase and
the Yield-Maintenance Premium, if any, with respect to such Project Bonds. A
Holder of Project Bonds shall have the right to require the purchase of all or
only a portion of such Holder's Project Bonds, provided that a Holder shall have
the right to require the purchase of less than all of such Holder's Project
Bonds only if the Project Bonds designated for purchase by such Holder are in
aggregate principal amounts of $1,000 (or any whole multiple thereof) and the
aggregate principal amount of Project Bonds to be held by such Holder after the
purchase by the Company is not less than $500,000.
Within ten days after the occurrence of a Repurchase Event, Holdings
shall mail a notice of the occurrence of such Repurchase Event to all Holders of
Project Bonds and the Trustee. The notice shall state that a Repurchase Event
has occurred, shall specify the date and nature thereof and shall set forth the
Repurchase Price and the date before which a Holder must notify the Company and
Holdings of such Holder's intention to exercise the repurchase right, and the
procedure which such Holder must follow to exercise such right. To exercise the
repurchase rights, the Holder of Project Bonds must deliver on or before the
30th day after the date of the Repurchase Event written notice to the Company
and Holdings (or an agent designated by the Company or Holdings for such
purpose) of the Holder's exercise of such right and the principal amount of
Project Bonds as to which the Holder is exercising such right, together with the
Project Bonds with respect to which the right is being exercised, duly endorsed
for transfer. Once a Holder has exercised his repurchase right in the manner
provided above, such exercise is irrevocable.
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For purposes of this paragraph 1E, the following terms shall have the
following meanings:
The term "APPLICABLE PERCENTAGE" shall mean, (1) in the case of each
distribution referred to in clause (A)(4) of the definition of Repurchase Event,
the percentage determined as of the Calculation Date of each such distribution
by dividing the aggregate fair market value (as determined in good faith by the
directors of Holdings, whose determination shall be conclusive and binding upon
all Holders of the Project Bonds) of such distribution, by the Current Market
Price of all of the common shares of Holdings outstanding on the day immediately
prior to such Calculation Date and (2) in the case of each purchase or
acquisition referred to in clause (A)(4) of the definition of Repurchase Event,
the percentage determined as of the Calculation Date of each such purchase or
acquisition by dividing all amounts expended by Holdings, any Subsidiary or any
ESOP (the amount expended, if other than in cash, to be determined in good faith
by the directors of Holdings, whose determination shall be conclusive and
binding upon all Holders of Project Bonds) for the purchase or acquisition of
any common shares of Holdings, by the Current Market Price of all of the common
shares of Holdings outstanding on the day immediately prior to such Calculation
Date.
The term "CONTINUING DIRECTOR" shall mean, with respect to any Project
Bond, (1) a director of Holdings who either (a) was director of Holdings on May
16, 2000 or (b) became a director of Holdings subsequent to May 16, 2000 and
whose election or nomination for election by the shareholders of Holdings was
duly approved by the Continuing Directors who were at that time directors of
Holdings, either by a specific vote or by approval of the proxy statement issued
by Holdings on behalf of the directors of Holdings, in which such individual was
named as a nominee for director of Holdings.
The term "CURRENT MARKET PRICE" shall mean the average of the daily
closing prices (or, if none, the average of the last daily bid and asked prices)
of the common shares of Holdings as quoted by the primary securities exchange on
which such shares are traded, or, if none, the primary inter-dealer quotation
system which reports quotations for such shares, for the trading days during the
period of 90 consecutive calendar days ending on the day immediately prior to
the Calculation Date.
The term "ESOP" shall mean an Employee Stock Ownership Plan of the
Company, as such term is defined in Section 4975(e)(7) of the Code.
The term "INVESTMENT GRADE RATING" shall mean a rating of BBB- or
higher by S&P or a rating of Baa3 or higher by ▇▇▇▇▇'▇ or, upon any change in
the rating categories of S&P or ▇▇▇▇▇'▇, the equivalent of such respective
ratings by S&P or ▇▇▇▇▇'▇.
The term "▇▇▇▇▇'▇" shall mean ▇▇▇▇▇'▇ Investors Services, Inc. and its
successors and assigns.
The term "REPURCHASE EVENT" shall mean
(A) the occurrence of any one or more of the following
events:
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(1) Holdings shall consolidate with or merge
into any other corporation or convey, transfer or lease all or
substantially all of its assets to any Person (other than to a
Subsidiary);
(2) any Person (other than Holdings, any
Subsidiary or an employee benefit plan of Holdings or any
Subsidiary) shall purchase or otherwise acquire, directly or
indirectly, beneficial ownership of securities of Holdings
and, as a result of such purchase or acquisition, such Person
(together with its associates and affiliates) shall directly
or indirectly beneficially own in the aggregate (a) thirty
percent (30%) or more of the common shares of Holdings or (b)
securities representing thirty percent (30%) or more of the
combined voting power of Holdings' voting securities then
entitled to vote in elections of the directors of Holdings, in
each case outstanding on the date immediately prior to the
date of such purchase or acquisition (or, if there be more
than one, the last such purchase or acquisition);
(3) Holdings purchases or otherwise acquires
common shares of Holdings, if, after giving effect to such
purchase or acquisition, during the 365 day period immediately
preceding such purchase or acquisition, Holdings has acquired
thirty percent (30%) or more of the common shares of Holdings
outstanding on the date of the first such purchase or
acquisition during such period;
(4) on any day (a "CALCULATION DATE") (a)
Holdings shall make any distribution or distributions of cash,
securities or other property (other than regular periodic cash
dividends at a rate which is substantially consistent with
past practice and other than any distribution of common shares
or rights to acquire common shares) to holders of common
shares, whether by means of dividend, reclassification,
recapitalization or otherwise, or (b) Holdings, a Subsidiary
of Holdings or an ESOP shall purchase or otherwise acquire,
directly or indirectly, beneficial ownership of common shares
of Holdings, such that the sum of the Applicable Percentages
of all such distributions, purchases and acquisitions
contemplated by clauses (a) and (b) which have occurred on the
Calculation Date and during the 365-day period immediately
preceding the Calculation Date shall equal or exceed thirty
percent (30%);
(5) Continuing Directors cease to constitute a
majority of the directors of Holdings; or
(6) Holdings shall at any time not own,
beneficially and of record, all of the outstanding shares of
capital stock of the Company;
if, but only if,
(B) either (1) the Required Holders request that a rating
be assigned to the Project Bonds by ▇▇▇▇▇'▇ or
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S&P and, prior to 120 days after such request, ▇▇▇▇▇'▇ or S&P, as the
case may be, has not assigned a rating to the Project Bonds that is an
Investment Grade Rating or (2) during the period commencing with the
first public announcement of the occurrence of such event or the
intention to cause such event to occur and ending 90 days after the
later of (a) such public announcement and (b) the occurrence of such
event (which period shall, in either case, be extended for so long as
the rating of the Project Bonds are under publicly announced
consideration for possible downgrading by ▇▇▇▇▇'▇ or S&P), the rating
assigned to the Project Bonds is reduced by either ▇▇▇▇▇'▇ or S&P from
an Investment Grade Rating to a rating that is not an Investment Grade
Rating.
In the event that Holdings becomes a Subsidiary of any other
corporation, these provisions shall continue to be applied to Holdings and shall
also be applied to such other corporation, in the same manner, to the same
extent and with the same effect as would be the case had they been applied to
Holdings.
The term "S&P" shall mean Standard & Poor's Rating Services, a division
of ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors and assigns.
2. NEGATIVE COVENANTS. Unless the Required Holders shall
otherwise consent in writing, Holdings and the Company, as applicable, each
agrees to observe and perform each of the negative covenants set forth below so
long as any Project Bond shall remain outstanding.
2A. [INTENTIONALLY OMITTED.]
2B. PREPAYMENT. Holdings covenants that it will not, and will not
permit any Subsidiary of Holdings to, directly or indirectly, purchase or
otherwise acquire or otherwise cause any Project Bond to be prepaid or retired
in whole or in part prior to its stated final maturity (other than through
regularly scheduled mandatory prepayments, upon optional redemption pursuant to
Section 4.01(b) of the Original Indenture with respect to the Series 1996 Bonds,
upon optional redemption pursuant to Section 5(d) of the First Supplemental
Indenture with respect to the Series 1997 Project Bonds, pursuant to paragraph
1E hereof, or upon acceleration of such final maturity upon the occurrence of an
"EVENT OF DEFAULT" as defined in the Original Indenture), except pursuant to an
offer to purchase or prepay made pro rata to the Holders of all Project Bonds
outstanding upon the same terms and conditions.
2C. MOST FAVORED LENDER. Unless otherwise specified in writing by
the Required Holder(s), if Holdings, the Company, or any Subsidiary of Holdings,
agrees to or permits to exist at any time on or after April 1, 2003 with or for
the benefit of the holder(s) of any Indebtedness of Holdings, the Company or any
such Subsidiary, any Person(s) with commitments to provide loans or other
financial accommodations to Holdings, the Company or any such Subsidiary, or any
lessor of any personal or real property to Holdings, the Company or any such
Subsidiary, including as a result of any amendment, supplement, restatement or
other modification of any agreement then in effect, any financial covenant,
event of default based on financial matters or any other provision that in
effect functions as a financial covenant, including, without limitation, under
the Credit Agreement, the Equipment Lease or the Refinancing Agreement (as
defined
7
below), which is in addition to, or more restrictive than, any financial
covenant or default contained in this Agreement, whether by incorporation by
reference pursuant to this paragraph 2C or otherwise (a "More Restrictive
Provision"), then effective as of the later of (i) April 1, 2003, or (ii) the
time Holdings, the Company or such Subsidiary first becomes subject to any such
More Restrictive Provision, such More Restrictive Provision shall be
incorporated herein by reference as though fully set forth herein and this
Agreement shall be deemed amended at such time to include such More Restrictive
Provision herein for the benefit of the Holders. Notwithstanding the foregoing,
if at any time on or before December 31, 2003 (i) Holdings and/or the Company
has entered into a financing arrangement (the "REFINANCING AGREEMENT") to
refinance the Credit Agreement, and (ii) the Credit Agreement shall have been
terminated and all obligations thereunder have been satisfied, then any More
Restrictive Provision incorporated herein by reference to the Credit Agreement
shall be deemed deleted. At any time at the request of the Required Holder(s),
Holdings and the Company shall enter into an agreement with the Holders, in form
and substance reasonably satisfactory to the Holders, which memorializes any
amendment to this Agreement pursuant to this paragraph 2C including any More
Restrictive Provision herein. This paragraph 2C shall not apply to any More
Restrictive Provision which exists for the benefit of the holder(s) of
Indebtedness of Holdings, the Company or any Subsidiary of Holdings in an
aggregate amount of $5,000,000 or less.
3. CONDITIONS PRECEDENT TO EFFECTIVENESS. The effectiveness of
this Agreement is subject to the satisfaction, on or before the date of this
Agreement of the following conditions:
3A. DOCUMENTS. Prudential shall have received original
counterparts or, if satisfactory to Prudential, certified or other copies of all
of the following, each duly executed and delivered by the party or parties
thereto, dated the date of this Agreement unless otherwise indicated, and on the
date of this Agreement in full force and effect with no event having occurred
and being then continuing that would constitute a default thereunder or
constitute or provide the basis for the termination thereof:
(i) This Agreement;
(ii) The Guaranty in substantially the form of Exhibit A
hereto;
(iii) The 2003 Lease Modification in substantially the form
of Exhibit B hereto;
(iv) The 2003 Indenture Modification in substantially the
form of Exhibit C; and
(v) Such other certificates, documents and agreements
Prudential shall reasonably request.
3B. OPINIONS OF COUNSEL. Prudential shall have received the
following legal opinions dated the date of this Agreement:
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(i) From ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, Esq., staff counsel to the
Authority, an opinion substantially in the form of Exhibit D-1 hereto;
(ii) From ▇▇▇▇▇ Day, special counsel to Holdings and the
Company, an opinion substantially in the form of Exhibit D-2 hereto;
and
(iii) From ▇▇▇▇ ▇▇▇▇▇▇, Esq., Vice President and General
Counsel of Holdings, an opinion substantially in the form of Exhibit
D-3 hereof.
3C. REPRESENTATIONS AND WARRANTIES; NO POTENTIAL DEFAULT. The
representations and warranties of Holdings and the Company contained in
paragraph 5 shall be true in all material respects on and as of the date of this
Agreement; there shall exist on the date of this Agreement no Event of Default,
Default, Project Service Agreement Event of Default or Project Service Agreement
Default (as defined in the Indenture) nor an event which, with the giving of
notice or lapse of time, or both, would give rise to such an Event of Default;
and Holdings shall have delivered to Prudential an Officer's Certificate, dated
the date of this Agreement, to both such effects and to the effect that all of
the conditions set forth in this paragraph 3 have been satisfied.
3D. RECORDING OF LEASE MODIFICATION. The 2003 Lease Modification
has been duly recorded (or provisions satisfactory to Prudential for the filing
and recording thereof shall have been made) in the records of Ottawa County,
Ohio and all taxes, fees and other charges in connection with the execution,
delivery, filing and recording of the foregoing shall have been duly paid in
full.
3E. MATERIAL ADVERSE CHANGE. No material adverse change to the
financial condition, business, condition (financial or otherwise), operations or
prospects of Holdings or the Company and all of their respective Subsidiaries,
taken as a whole, shall have occurred since September 30, 2002, as determined by
Prudential in its discretion exercised in good faith.
3F. CLOSING CERTIFICATES. Prudential shall have received
certificates, dated the date of this Agreement, in form and substance reasonably
satisfactory to Prudential, as follows:
(i) A certificate of an appropriate official of the
Authority as to the due adoption of resolutions by the Board of
Directors of the Authority authorizing the execution of the 2003
Indenture Modification and each other document relating thereto to
which the Authority is a party, and the incumbency and specimen
signatures of any persons executing documents on behalf of the
Authority in connection therewith;
(ii) An Officer's Certificate of Holdings as to the
Articles of Incorporation and Code of Regulations of Holdings, the due
adoption of resolutions authorizing the execution and delivery of this
Agreement, the Guaranty and each other document relating thereto to
which Holdings is a party, and the incumbency and specimen signatures
of any persons executing documents on behalf of Holdings in connection
therewith;
(iii) An Officer's Certificate of the Company as to the
Articles of Incorporation and Code of Regulations of the Company, the
due adoption of resolutions
9
authorizing the execution and delivery of this Agreement, the 2003
Lease Modification and each other document relating thereto to which
the Company is a party, and the incumbency and specimen signatures of
any persons executing documents on behalf of the Company in connection
therewith; and
(iv) An officer's certificate of the Trustee as to its
authority to execute, deliver and perform its obligations under the
2003 Lease Modification and the 2003 Indenture Modification and each
other document executed by the Trustee in connection therewith, its due
authorization, execution and delivery of the 2003 Lease Modification
and the 2003 Indenture Modification and each other document executed by
the Trustee in connection therewith, and the incumbency and specimen
signature of any person executing documents on behalf of the Trustee in
connection therewith.
3G. CORPORATE DOCUMENTS. Prudential shall have received:
(i) a copy of the Certificate of Incorporation of
Holdings certified as of a recent date by the Secretary of State of
Ohio and (ii) a certificate of good standing as of a recent date for
Holdings from the Secretary of State of Ohio; and
(ii) a certificate from an authorized officer of the
Company certifying that there have been no amendments to the
Certificate of Incorporation of the Company since the date of the
certificate of the Secretary of State of Ohio which accompanied the
Certificate of Incorporation of the Company and was issued pursuant to
the Bond Purchase Agreement dated as of October 1, 1996 between the
Authority and Prudential (or, if there have been any such amendments,
copies of each such amendment certified as of a recent date by the
Secretary of State of Ohio) and (ii) a certificate of good standing as
of a recent date for the Company from the Secretary of State of Ohio.
3H. FEES AND EXPENSES. Prudential shall have received payment of
the fees and expenses of Prudential's special counsel reasonably incurred in
connection with the transactions contemplated by this Agreement.
3I. PROCEEDINGS. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby and all
documents incident thereto, shall be satisfactory in substance and form to
Prudential and its special counsel, and Prudential shall have received all such
counterpart originals or certified or other copies of documents related to such
corporate proceedings as it may reasonably request.
4. EVENTS OF DEFAULT.
Upon the occurrence and during the continuance of an Event of Default,
the Holders shall be entitled to exercise any one or more of the remedies
available to the Holders under the Project Documents. The following events shall
constitute Events of Default hereunder whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise:
(i) an "EVENT OF DEFAULT" as defined in the Lease shall occur; or
10
(ii) any payment of principal of, interest on or Yield-Maintenance
Premium with respect to the Project Bonds is not made when due, and such failure
is not cured before the expiration of the grace period, if any, provided
therefor in the Indenture; or
(iii) Holdings or any of its Subsidiaries defaults (whether as
primary obligor or as guarantor or other surety) in any payment of the principal
of or interest on any obligation for money borrowed (or any Capitalized Lease
Obligation, any obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto, or Holdings or any of its
Subsidiaries fails to perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation is created (or, if
any other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause, or the
holder or holders of such obligation (or a trustee on behalf of such holder or
holders) causes, such obligation to become due (or to be repurchased by Holdings
or any of its Subsidiaries) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment default shall
occur and be continuing or such failure or other event causing acceleration (or
resale to Holdings or any of its Subsidiaries) shall occur and be continuing
exceeds $5,000,000; or
(iv) any representation or warranty made by Holdings or the Company
herein or in the Guaranty or by Holdings or the Company or any of its officers
in any writing furnished in connection with or pursuant to this Agreement shall
be false in any material respect on the date as of which made; or
(v) Holdings or the Company fails to perform or observe any
agreement contained in paragraph 1E or paragraph 2; or
(vi) Holdings or the Company fails to perform or observe any other
agreement, term or condition contained herein or in the Guaranty and such
failure shall not be remedied within 45 days after any Responsible Officer
obtains actual knowledge thereof; or
(vii) Holdings or any of its Subsidiaries makes an assignment for
the benefit of creditors or is generally not paying its debts as such debts
become due; or
(viii) Holdings or any of its Subsidiaries shall: (a)(1) admit in
writing its inability to pay its debts generally as they become due; or (2) file
a petition in bankruptcy or a petition to take advantage of any insolvency act;
or (3) make an assignment for the benefit of creditors; or (4) consent to the
appointment of a receiver for itself or of the whole or any substantial part of
its property; or (b) file a petition or answer seeking reorganization or
arrangement under the Federal bankruptcy laws or any other applicable law or
statute of the United States of America or any state thereof; or (c) if a
petition in bankruptcy is filed against it, be adjudicated a bankrupt, or have a
court of competent jurisdiction enter an order or decree appointing, without the
consent of Holdings or such Subsidiary, a receiver or trustee for Holdings or
any of its Subsidiaries or for the whole or substantially all of its property,
or have a court of competent jurisdiction enter an
11
order or decree approving a petition filed against it seeking reorganization or
arrangement of Holdings or such Subsidiary under the Federal bankruptcy laws or
any other applicable law or statute of the United States of America or any state
thereof, if any such adjudication, order or decree under this clause (c) shall
not be vacated or set aside or stayed within 90 days from the date of the entry
thereof; or
(ix) Holdings or any of its Subsidiaries shall fail, within 90 days
after the commencement of any proceeding against Holdings or such Subsidiary
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, to have such proceeding dismissed, or, within 90 days after the
appointment without the consent or acquiescence of Holdings or such Subsidiary,
of any trustee, receiver or liquidator of Holdings or such Subsidiary or any
material part of its properties, to have such appointment vacated, or Holdings
or such Subsidiary shall be adjudicated as a bankrupt or insolvent; or
(x) any order, judgment or decree is entered in any proceedings
against Holdings decreeing the dissolution of Holdings and such order, judgment
or decree remains unstayed and in effect for more than 60 days; or
(xi) the Guaranty shall cease to be in full force and effect, or
Holdings shall contest or deny the validity or enforceability of, or deny that
it has any liability or obligations under, the Guaranty.
5. REPRESENTATIONS, COVENANTS AND WARRANTIES. Holdings
represents, covenants and warrants as follows:
5A. ORGANIZATION. Holdings is a corporation duly organized and
existing in good standing under the laws of the State of Ohio, each Subsidiary
of Holdings is a corporation existing and is validly subsisting or in good
standing, as applicable, under the laws of the jurisdiction in which it is
incorporated, and Holdings has and each of its Subsidiaries has the corporate
power to own its respective property and to carry on its respective business as
now being conducted. The names and jurisdictions of incorporation of each
Subsidiary of Holdings are set forth on Exhibit 5A hereto.
5B. POWER AND AUTHORITY. Holdings and the Company each has full
corporate power and authority to execute, deliver and perform this Agreement and
to enter into and carry out the transactions contemplated by this Agreement. The
execution, delivery and performance, and such entering into and carrying out of
those transactions, do not, and will not, violate any provision of law
applicable to Holdings or the Company, or the Articles of Incorporation or Code
of Regulations of Holdings or the Company, as the case may be, and do not, and
will not, conflict with or result in a conflict with or result in a default
under any agreement or instrument to which Holdings or the Company is a party or
by which it is bound, which would impair its ability to carry out its
obligations contained in this Agreement or resulting from those transactions.
This Agreement has, and to the extent required, the transactions contemplated by
this Agreement have, by proper action, been duly authorized, and this Agreement
has been duly
12
executed and delivered by Holdings and the Company and constitutes a valid and
binding obligation of Holdings and the Company.
5C. FINANCIAL STATEMENTS. Holdings has furnished Prudential with
the following financial statements, identified by a principal financial officer
of the Company: (i) a consolidated balance sheet of Holdings and its
Subsidiaries as of December 31, 2001 and a consolidated statement of income,
stockholders' equity and statement of cash flows of Holdings and its
Subsidiaries for such year, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; and (ii) a
consolidated balance sheet of Holdings and its Subsidiaries as at September 30,
2002 and the comparable quarterly period in the preceding fiscal year and
consolidated statements of income, stockholders' equity and cash flows of
Holdings and its Subsidiaries for the periods from the beginning of the fiscal
years in which such quarterly periods are included to the end of such quarterly
periods, prepared by Holdings. Such financial statements (including any related
schedules and/or notes) are true and correct in all material respects (subject,
as to interim statements, to changes resulting from audits and year-end
adjustments), have been prepared in accordance with generally accepted
accounting principles consistently followed throughout the periods involved
(except as otherwise described in the notes thereto) and show all liabilities,
direct and contingent, of Holdings and its Subsidiaries required to be shown in
accordance with such principles. The balance sheets fairly present the condition
of Holdings and its Subsidiaries as at the dates thereof, and the statements of
income and statements of cash flows fairly present the results of the operations
of Holdings and its Subsidiaries for the periods indicated. There has been no
material adverse change in the business, condition (financial or otherwise) or
operations of Holdings and its Subsidiaries taken as a whole since September 30,
2002.
5D. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of Holdings, threatened against Holdings
or any of its Subsidiaries or any properties or rights of Holdings or any of its
Subsidiaries, by or before any court, arbitrator or administrative or
governmental body which could be reasonably expected to result in any material
adverse change in the business, condition (financial or otherwise) or operations
of Holdings and its Subsidiaries taken as a whole.
5E. OUTSTANDING DEBT. There exists no payment default or other
default in any material respect under the provisions of any instrument
evidencing any Indebtedness of Holdings or the Company or of any agreement
relating thereto.
5F. TITLE TO PROPERTIES. Holdings has, and each of its
Subsidiaries has, good and indefeasible title to its respective real properties
(other than properties which Holdings or any of its Subsidiaries leases) subject
to such restrictions, easements and other encumbrances of record as of the date
of this Agreement or, if unrecorded, do not materially and adversely affect
Holding's or the appropriate Subsidiary's use thereof and good title to all of
its other properties and assets, including the properties and assets reflected
in the most recent audited balance sheet referred to in paragraph 5C (other than
properties and assets disposed of in the ordinary course of business). Holdings
and each of its Subsidiaries enjoys peaceful and undisturbed possession of all
leases necessary in any material respect for the conduct of their respective
businesses, none of which contains provisions which could be reasonably expected
to materially affect or impair the operation of such businesses. All such leases
are valid and subsisting and are in full force and
13
effect. The Lease is in full force and effect, no default on the part of the
Company exists thereunder and, to the knowledge of Holdings, no default on the
part of the Authority exists thereunder.
5G. TAXES. Holdings has, and each of its Subsidiaries has, filed
all Federal, State and other income tax returns which are required to be filed,
and each has paid all taxes as shown on such returns and on all assessments
received by it to the extent that such taxes have become due, except such taxes
as are being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with generally accepted
accounting principles.
5H. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the
execution nor delivery of this Agreement or any of the other Project Documents
to which Holdings or any of its Subsidiaries is a party, nor the fulfillment of
nor compliance with the terms and provisions hereof and of any of the other
Project Documents to which it or any of its Subsidiaries is a party will
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, or result in any violation of, or, except as
contemplated hereby, result in the creation of any Lien upon any of the
properties or assets of Holdings or any of its Subsidiaries pursuant to, the
charter or code of regulations of Holdings or any of its Subsidiaries, any award
of any arbitrator or any agreement (including any agreement with stockholders),
nor any instrument, order, judgment, decree, statute, law, rule or regulation to
which Holdings or any of its Subsidiaries is subject. Neither Holdings nor any
of its Subsidiaries is a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness of Holdings or any of its
Subsidiaries, any agreement relating thereto or any other contract or agreement
(including its charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, obligations of Holdings of the type to be
undertaken hereunder and under the other Project Documents except as set forth
in the agreements listed in Exhibit 5H hereto.
5I. ERISA. The execution and delivery of the 2003 Project
Documents will be exempt from, or will not involve any transaction which is
subject to, the prohibitions of Section 406 of ERISA and will not involve any
transaction in connection with which a penalty could be imposed under Section
502(i) of ERISA or a tax could be imposed pursuant to Section 4975 of the Code.
No accumulated funding deficiency (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, exists with respect to any Plan
(other than a Multiemployer Plan). No liability to the Pension Benefit Guaranty
Corporation has been or is expected by Holdings or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan) by Holdings,
any of its Subsidiaries or any ERISA Affiliate which is or would be materially
adverse to the business, condition (financial or otherwise) or operations of
Holdings and its Subsidiaries taken as a whole. None of Holdings, any Subsidiary
or any ERISA Affiliate has incurred or presently expects to incur any withdrawal
liability under Title IV of ERISA with respect to any Multiemployer Plan which
is or would be materially adverse to Holdings and its Subsidiaries taken as a
whole.
5J. GOVERNMENTAL CONSENT. Neither the nature of Holdings or of any
of its Subsidiaries, nor any of their respective businesses or properties, nor
any relationship between Holdings or any of its Subsidiaries and any other
Person, nor any circumstance in connection
14
with the execution, delivery and performance of the Project Documents, is such
as to require any authorization, consent, approval or other action by or notice
to or filing with any court or administrative or governmental body (other than
(i) the recording of the 2003 Lease Modification in the office of the Recorder
of Ottawa County, Ohio, (ii) routine filings after the date of closing with the
Securities and Exchange Commission and/or state Blue Sky authorities, and (iii)
notices or filings required to be given to the parties to the Project Documents
under the terms of the Project Documents) in connection with the execution and
delivery of this Agreement and the other 2003 Project Documents to which it or
any of its Subsidiaries is a party, or fulfillment of or compliance with the
terms and provisions of this Agreement and the other 2003 Project Documents.
5K. ENVIRONMENTAL COMPLIANCE. To the knowledge of the Responsible
Officers based upon reasonable inquiry, Holdings and its Subsidiaries and all of
their respective properties and facilities have complied at all times and in all
respects with all federal, state, local and regional statutes, laws, ordinances
and judicial or administrative orders, judgments, rulings and regulations
relating to protection of the environment except, in any such case, where
failure to comply would not result in a material adverse effect on the business,
condition (financial or otherwise) or operations of Holdings and its
Subsidiaries taken as a whole.
5L. UTILITY AVAILABILITY AND ACCESS. Subject only to the payment
of fees, all utilities required for the use of the Project during the term of
the Ground Lease, including, but not limited to, water supply, gas, electric and
telephone facilities and services, and sewerage facilities and services, are
available for use directly from the utility providers thereof at the boundaries
of the Project Site, and the Project includes all easements, rights-of-way and
licenses necessary to access the Project Facilities from public roadways.
5M. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to Prudential by or on behalf of Holdings or
any of its Subsidiaries in connection herewith contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
peculiar to Holdings or any of its Subsidiaries which materially adversely
affects or in the future may (so far as Holdings can now foresee) materially
adversely affect the business, property or assets, or financial condition of
Holdings and its Subsidiaries taken as a whole and which has not been set forth
in this Agreement or in the other documents, certificates and statements
furnished to Prudential by Holdings or any of its Subsidiaries prior to the date
hereof in connection with the transactions contemplated hereby.
5N. REGULATORY STATUS. Holdings nor any Subsidiary of Holdings is
(i) an "investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, (ii) a
"holding company" or a "subsidiary company" or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended, or (iii) a "public
utility" within the meaning of the Federal Power Act, as amended.
6. DEFINITIONS. For the purpose of this Agreement, (a) terms used
herein that are defined in the Indenture (including those defined in the
Indenture by reference to the Project
15
Service Agreement) and not otherwise defined herein shall have the meanings
assigned to such terms by the Indenture, (b) the terms defined in the
introductory paragraph and preliminary statement to this Agreement, shall have
the respective meanings specified therein, and (c) the following terms shall
have the meanings specified with respect thereto below:
6A. CAPITALIZED TERMS.
"ASSIGNMENT" shall mean the Assignment of Lease dated as of October 1,
1996 from the Authority to the Trustee, as amended, modified or otherwise
supplemented from time to time in accordance with its terms.
"AUTHORIZED OFFICER" shall mean Holdings' or the Company's, as the case
may be, chief executive officer, chief operating officer, chief financial
officer, treasurer, corporate secretary, or any vice president of Holdings or
the Company, as the case may be, designated as an "AUTHORIZED OFFICER" of
Holdings or the Company, as the case may be.
"BUSINESS DAY" shall mean any day other than (i) a Saturday or a Sunday
and (ii) a day on which commercial banks in New York City are required or
authorized to be closed.
"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 Holdings, the Company 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
Holdings, the Company and the Subsidiaries prepared in accordance with GAAP.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMMODITY HEDGE AGREEMENT" shall mean any commodity swap agreement,
forward commodity purchase agreement, forward commodity option agreement or
similar agreement or arrangement.
"CREDIT AGREEMENT" shall mean the Amended and Restated Credit
Agreement, dated as of June 30, 2000, among the Company, Holdings, National City
Bank, 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.
"EQUIPMENT LEASE" shall mean the Master Lease Agreement, dated as of
December 30, 1996, among the Company, National City Bank, for itself and as
agent for certain participants, as the same may be amended, modified, restated
or supplemental from time to time, and shall also include the schedules attached
thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
16
"ERISA AFFILIATE" shall mean any corporation which is a member of the
same controlled group of corporations as Holdings within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
Holdings within the meaning of section 414(c) of the Code.
"EVENT OF DEFAULT" shall mean any of the events specified in paragraph
4, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "DEFAULT" shall mean any of such
events, whether or not any such requirement has been satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"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.
"FIRST SUPPLEMENTAL INDENTURE" shall mean the First Supplemental Trust
Indenture dated as of April 1, 1997, between the Authority and the Trustee.
"FIRST SUPPLEMENTAL LEASE" shall mean the First Supplemental Lease
dated as of April 1, 1997, between the Authority and the Company.
"FIRST SUPPLEMENTAL FIRST MORTGAGE" shall mean the First Supplemental
First Mortgage dated as of April 1, 1997, between the Authority and the Trustee.
"FIRST SUPPLEMENTAL PROJECT SERVICE AGREEMENT" shall mean the First
Supplemental Project Service and Indemnity Agreement dated as of even date
herewith, among the Authority, the Company and the Trustee.
"GUARANTY" shall mean that certain Guaranty dated of even date
herewith, by Holdings in favor of the Authority, the Trustee, the Director and
the Holders, as the same may be amended, modified or supplemented from time to
time in accordance with the provisions thereof.
"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
17
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.
"HEDGE AGREEMENT" shall mean any Commodity Hedge Agreement and any
Financial Hedge Agreement.
"HOLDER" or "HOLDER OF A PROJECT BOND" shall mean the Person in whose
name a Project Bond is registered in the Register.
"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;
(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
18
(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.
"INDENTURE" shall mean the Trust Indenture dated as of October 1, 1996
between the Authority and the Trustee, as supplemented by the First Supplemental
Indenture, as modified by the 2003 Indenture Modification and as further
amended, modified and supplemented from time to time in accordance with the
terms thereof.
"INSTITUTIONAL INVESTOR" shall mean Prudential, any Prudential
Affiliate or any bank, bank affiliate, financial institution, insurance company,
pension fund, endowment or other organization which regularly acquires debt
instruments for investment.
"LEASE" shall mean the Lease dated as of October 1, 1996, between the
Authority and the Company, as amended and supplemented by the First Supplemental
Lease, as modified by the 2003 Lease Modification and as further amended and
supplemented from time to time in accordance with the terms thereof and pursuant
to the Assignment.
"LIEN" shall mean any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the payment
or performance of an obligation.
"MORTGAGE" shall mean the Open-End Leasehold First Mortgage and
Security Agreement dated as of October 1, 1996, between the Authority and the
Trustee, as amended and supplemented by the First Supplemental First Mortgage
and as further amended and supplemented from time to time.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a "MULTIEMPLOYER
PLAN" (as such term is defined in section 4001(a)(3) of ERISA).
"NON-DISTURBANCE AND ATTORNMENT AGREEMENT" shall mean the
Non-Disturbance and Attornment Agreement dated as of October 1, 1996 among the
Authority, the Trustee, Prudential and the Company, as amended, modified and
supplemented from time to time in accordance with the terms thereof.
19
"OFFICER'S CERTIFICATE" shall mean a certificate signed in the name of
Holdings or the Company, as the case may be, by an Authorized Officer of
Holdings or the Company, as the case may be.
"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.
"ORIGINAL INDENTURE" shall mean the Trust Indenture dated as of October
1, 1996, between the Authority and the Trustee.
"PERSON" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"PLAN" shall mean any "EMPLOYEE PENSION BENEFIT PLAN" (as such term is
defined in section 3 of ERISA) which is or has been established or maintained,
or to which contributions are or have been made, by Holdings or any ERISA
Affiliate.
"PROJECT" shall have the meaning assigned to such term in the Lease.
"PROJECT BOND" and "PROJECT BONDS" shall mean, collectively, the Series
1996 Bonds and the Series 1997 Project Bonds.
"PROJECT DOCUMENTS" shall mean this Agreement, the Project Bonds, the
Guaranty, the Lease, the Ground Lease, the Easement Agreement, the Indenture,
the Project Service Agreement, the Assignment, the Non-Disturbance and
Attornment Agreement, the Security Documents, the State Loan Note, the State
Loan Agreement, the Second Mortgage, the Security Agreement, and each other
agreement relating to the issuance of the Project Bonds or the transactions
contemplated thereby, each as amended, modified or supplemented from time to
time in accordance with the respective terms thereof.
"PROJECT SERVICE AGREEMENT EVENT OF DEFAULT" shall mean an "EVENT OF
DEFAULT," as defined in the Project Service Agreement, and "PROJECT SERVICE
AGREEMENT DEFAULT" shall mean any event which, with notice, lapse of time or the
happening of any further condition, event or act, would become a "PROJECT
SERVICE AGREEMENT EVENT OF DEFAULT".
"PROJECT SERVICE AGREEMENT" shall mean the Project Service and
Indemnity Agreement, dated as of October 1, 1996, among the Authority, the
Company, and the Trustee, as supplemented by the First Supplemental Project
Service Agreement and as amended and supplemented from time to time.
"PRUDENTIAL" shall have the meaning specified in the introductory
paragraph of this Agreement.
20
"PRUDENTIAL AFFILIATE" shall mean any corporation or other entity all
of the Voting Stock (or equivalent voting securities or interests) of which is
owned by Prudential either directly or through Prudential Affiliates.
"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 during the term of
the Project Bonds; 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 during
the term of the Project Bonds, other than any such redemption, repurchase or
retirement occasioned by a "change of control" or similar event.
"REGISTER" shall mean the books kept and maintained by the Registrar
for registration and transfer of Series 1997 Bonds pursuant to Section 3.06 of
the Original Indenture.
"REQUIRED HOLDER(S)" shall mean, at any time, (a) the holder or holders
of more than fifty percent of the aggregate principal amount of the Series 1996
Bonds outstanding at such time and (b) the holder or holders of more than fifty
percent of the aggregate principal amount of the Series 1997 Bonds outstanding
at such time.
"RESPONSIBLE OFFICER" shall mean the chief executive officer, chief
operating officer, chief financial officer or chief accounting officer of
Holdings or the Company, as the case may be, or any other senior executive
officer of Holdings or the Company, as the case may be, involved principally in
its financial administration or its controllership function.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITY DOCUMENTS" shall mean the Lease, the Ground Lease, the
Assignment, the Non-Disturbance and Attornment Agreement, the Mortgage, and all
other instruments, agreements or conveyances at any time delivered to either the
Trustee or the Holders of the Project Bonds to create or evidence Liens to
secure the obligations under the Project Bonds.
"SERIES 1996 BOND" and "SERIES ▇▇▇▇ ▇▇▇▇▇" shall mean the $13,100,000
principal amount of the Authority's Taxable Project Development Revenue Bonds,
Series 1996 (Brush ▇▇▇▇▇▇▇ Project) issued by the Authority pursuant to the
Series 1996 Bond Purchase Agreement and the Indenture and any bond given in
substitution or exchange therefor pursuant to the terms of the Indenture.
"SERIES 1996 BOND PURCHASE AGREEMENT" shall mean the Bond Purchase
Agreement dated as of October 1, 1996 between the Authority and Prudential as
amended, modified or otherwise supplemented from time to time in accordance with
its terms.
"SERIES 1997 BOND" and "SERIES ▇▇▇▇ ▇▇▇▇▇" shall mean the $2,175,000
principal amount of the Authority's Taxable Project Development Revenue Bonds,
Series 1997 (Brush ▇▇▇▇▇▇▇ Project) issued by the Authority pursuant to the
Series 1997 Bond Purchase Agreement
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and the First Supplemental Indenture and any bond given in substitution or
exchange therefor pursuant to the terms of the Indenture.
"SERIES 1997 BOND PURCHASE AGREEMENT" shall mean the Series 1997 Bond
Purchase Agreement dated as of April 1, 1997, between the Authority and
Prudential as amended, modified or otherwise supplemented from time to time in
accordance with its terms.
"SIGNIFICANT HOLDER" shall mean Prudential or any Prudential Affiliate
or any other Holder, so long as Prudential or any Prudential Affiliate or such
other Holder shall hold at least 10% of the aggregate principal amount from time
to time outstanding of (a) the Series 1996 Bonds and (b) the Series 1997 Project
Bonds. To the extent that any notice or document is required to be delivered to
the Significant Holders under this Agreement, such requirement shall be
satisfied with respect to Prudential and all Prudential Affiliates by giving
notice, or delivery of a copy of any such document, to Prudential (addressed to
Prudential and each such Prudential Affiliate).
"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
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 Holdings.
"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, the Equipment Lease.
"TRANSFEREE" shall mean any direct or indirect transferee of all or any
part of any Project Bond purchased by any Purchaser under this Agreement.
"TRUSTEE" shall mean National City Bank, a national banking
association, until a successor Trustee shall have become such pursuant to the
applicable provisions of the Indenture, and thereafter, "TRUSTEE" shall mean the
successor Trustee.
"2003 INDENTURE MODIFICATION" shall mean that certain Indenture
Modification dated as of even date herewith between the Authority and the
Trustee.
"2003 LEASE MODIFICATION" shall mean that certain Lease Modification
dated as of even date herewith between the Authority and the Company.
"2003 PROJECT DOCUMENTS" shall mean this Agreement, the Guaranty, the
2003 Lease Modification and the 2003 Indenture Modification.
22
"VOTING STOCK" shall mean, with respect to any corporation, any shares
of stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
6B. RECITALS. The recitals of this Agreement are incorporated by
reference into this Agreement.
6C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All
references in this Agreement to "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or
"GAAP" shall be deemed to refer to generally accepted accounting principles in
effect in the United States at the time of application thereof. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all unaudited financial statements and certificates and reports as to financial
matters required to be furnished hereunder shall be prepared, in accordance with
generally accepted accounting principles applied on a basis consistent with the
most recent audited consolidated financial statements of Holdings and its
Subsidiaries delivered pursuant to clause (ii) of paragraph 1A or, if no such
statements have been so delivered, the most recent audited financial statements
referred to in clause (i) of paragraph 5C.
7. MISCELLANEOUS.
7A. CONSENT TO AMENDMENTS. This Agreement may be amended, and
Holdings or the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if Holdings or the
Company shall obtain the written consent to such amendment, action or omission
to act, of the Required Holder(s) of the Project Bonds. Each Holder of any
Project Bond at the time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 7A, whether or not such Project Bond shall have
been marked to indicate such consent, but any Project Bonds issued thereafter
may bear a notation referring to any such consent. No course of dealing between
Holdings or the Company and the Holder of any Project Bond nor any delay in
exercising any rights under any of the Project Documents shall operate as a
waiver of any rights of any Holder of any Project Bond. As used herein, the term
"THIS AGREEMENT" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
7B. EXPENSES. Holdings agrees to pay, or cause one of its
Subsidiaries to pay, and save Prudential, and any Holder harmless against
liability for the payment of, all reasonable out-of-pocket expenses arising in
connection with any (i) proposed modification of, or proposed consent under,
this Agreement, whether or not such proposed modification shall be effected or
proposed consent granted, and (ii) the costs and expenses, including reasonable
attorneys' fees, incurred by Prudential or any Holder in enforcing (or
determining on and after the occurrence of a Default whether or how to enforce)
any rights under this Agreement or the Project Bonds or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement or the transactions contemplated hereby or by
reason of Prudential's or any Holder's having acquired any Project Bonds,
including without limitation costs and expenses incurred in any bankruptcy case.
The obligations of Holdings under this
23
paragraph 7B shall survive the transfer of any Project Bonds or portion thereof
or interest therein by Prudential or any Holder and the payment of any Project
Bonds.
7C. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein or made in writing by or on
behalf of Holdings and the Company in connection herewith shall survive the
execution and delivery of this Agreement and the other Project Documents, the
transfer by any Holder of any Project Bond or portion thereof or interest
therein and the payment of any Project Bond, and may be relied upon by any
Transferee, regardless of any investigation made at any time by or on behalf of
any Holder or any Transferee. Subject to the preceding sentence, the Project
Documents embody the entire agreement and understanding among Prudential,
Holdings and the Company and supersede all prior agreements and understandings
relating to the subject matter hereof.
7D. SUCCESSORS AND ASSIGNS. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee) whether so expressed or
not.
7E. DISCLOSURE TO OTHER PERSONS. Each Holder agrees to use
reasonable efforts to hold in confidence and not disclose any written
information delivered or made available to it by or on behalf of Holdings or any
of its Subsidiaries in connection with or pursuant to this Agreement or the
other Project Documents that is clearly marked or labeled as being confidential
information, other than information (a) that was publicly known or otherwise
known to such Holder at the time of disclosure (except pursuant to disclosure in
connection with this Agreement or the other Project Documents), (b) that
subsequently becomes publicly known through no act or omission by such Holder,
or (c) that otherwise becomes known to such Holder, other than through
disclosure by Holdings or any of its Subsidiaries, and provided that nothing in
this Agreement or the other Project Documents shall prevent any Holder from
delivering copies of any financial statements and other documents delivered to
such Holder, or from disclosing any other information disclosed to such Holder,
by or on behalf of Holdings or any of its Subsidiaries in connection with or
pursuant to this Agreement or the other Project Documents to (i) its directors,
officers, employees, agents and professional consultants, (ii) any Holder of any
Project Bond, (iii) any Institutional Investor to which it offers to sell any
Project Bond or any part thereof, (iv) any Institutional Investor to which it
sells or offers to sell a participation in all or any part of any Project Bond,
(v) any federal or state regulatory authority having jurisdiction over it, (vi)
the National Association of Insurance Commissioners or any similar organization,
or (vii) any other Person to which such delivery or disclosure may be necessary
(A) in compliance with any law, rule, regulation or order applicable to it, (B)
in response to any subpoena or other legal process or informal investigative
demand, (C) in connection with any litigation to which it is a party or (D) in
order to enforce its rights under the Lease and the other Project Documents
(provided that, in connection with disclosure of such confidential information
to any Person described in clause (iii) or (iv), such Person has agreed to the
provisions of this paragraph 7E).
7F. NOTICES. All written communications provided for hereunder
shall be sent by first class mail or nationwide overnight delivery service (with
charges prepaid) or by hand delivery or telecopy and (i) if to Prudential,
addressed to Prudential at the address specified for such
24
communications in the Bond Purchase Agreement or to such other address as
Prudential shall have specified in writing to the Company, and (ii) if to any
Holder (other than Prudential), addressed to such Holder at the address
specified by such Holder therefor in writing pursuant to the Bond Purchase
Agreement, (iii) if to Holdings, addressed to it at Brush Engineered Materials
Inc., ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer, or at
such other address in the United States as Holdings shall have specified to the
Holder of each Project Bond in writing, and (iv) if to the Company, addressed to
it at Brush ▇▇▇▇▇▇▇ Inc., ▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
Attention: Treasurer, or at such other address in the United States as the
Company shall have specified to the Holder of each Project Bond in writing.
7G. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
7H. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
7I. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Holder of Project Bonds or to the
Required Holder(s), the determination of such satisfaction shall be made by such
Holder or the Required Holder(s), as the case may be, in the reasonable judgment
(exercised in good faith) of the Person or Persons making such determination.
7J. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF OHIO.
7K. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7L. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is
prohibited by any one of such covenants, the fact that it would be permitted by
an exception to, or otherwise be in compliance within the limitations of,
another covenant shall not avoid (i) the occurrence of a Default or Event of
Default if such action is taken or such condition exists or (ii) in any way
prejudice an attempt by the Holder of any Project Bond to prohibit through
equitable action or otherwise the taking of any action by Holdings or any
Subsidiary which would result in a Default or Event of Default.
7M. BINDING AGREEMENT. When this Agreement is executed and
delivered by Holdings, the Company and Prudential, subject to the provisions of
paragraph 3, it shall become a binding agreement between Holdings, the Company
and Prudential.
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Very truly yours,
BRUSH ENGINEERED MATERIALS INC.
By: ____________________________________
Title: _________________________________
BRUSH ▇▇▇▇▇▇▇ INC.
By: ____________________________________
Title: _________________________________
The foregoing Inducement Agreement is
hereby accepted as of the date first above
written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: ___________________________________
Vice President