EXHIBIT 10.14
MODIFICATION AGREEMENT
(THIRD AMENDMENT TO LEASE AND OTHER OPERATIVE DOCUMENTS)
This MODIFICATION AGREEMENT (this "AGREEMENT") is made as of June 30,
2001, by BNP PARIBAS LEASING CORPORATION, a Delaware corporation ("BNPPLC"), and
ELECTROGLAS, INC., a Delaware corporation ("ELECTROGLAS")
R E C I T A L S
A. BNPPLC and Electroglas executed a Lease Agreement dated as of March
31, 1997 (as subsequently amended, the "LEASE"), which was amended and
supplemented by a Construction Funding Agreement (First Amendment to Lease
Agreement) dated July 1, 1998 (the "FIRST LEASE AMENDMENT"), and Modification
Agreement (Second Amendment to Lease) dated February 8, 2000 (the "SECOND LEASE
AMENDMENT"), and which Lease covered, among other things, the real property
described therein. (The real property described in Exhibit A to the Lease, save
and except any portion thereof no longer covered by the Lease, and any and all
other real or personal property from time to time covered by the Lease and
included within the "Property" as defined therein are hereinafter collectively
referred to as the "PROPERTY".)
B. BNPPLC and Electroglas executed a Purchase Agreement dated as of
March 31, 1997 (as subsequently amended, the "PURCHASE AGREEMENT"), which Lease
covered, among other things, the Property.
C. BNPPLC, BNP Paribas (as successor in interest to Banque Nationale de
Paris) ("BNP Paribas"), and Electroglas executed a Pledge Agreement dated as of
March 31, 1997 (as subsequently amended, the "Pledge Agreement"). Pursuant to
the Supplement to Pledge Agreement dated July 28, 2000, The Industrial Bank of
Japan ("IBJ") became a party to the Pledge Agreement, and pursuant to the
Supplement to Pledge Agreement dated December 1, 2000, Xxxxx Fargo Bank, N.A.
("Xxxxx Fargo") became a party to the Pledge Agreement.
D. BNPPLC, Electroglas, BNP Paribas, IBJ, and Xxxxx Fargo now desire to
modify the Lease, the Pledge Agreement, and the other Operative Documents, on
and subject to the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Definitions. Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings given to them in the original
Lease and previous amendments thereto.
2. Cash Collateral. The Collateral Percentage under the Pledge Agreement
has been established at 100% and will not under any circumstance be
hereafter reduced, and the
remainder of the Term shall be deemed to be a Mandatory Collateral
Period. Electroglas shall not be entitled to hereafter designate a
lesser Collateral Percentage.
3. Amendment and Restatement of Schedule 2. Schedule 2 attached to the
Lease and the First Lease Amendment is replaced in its entirety by
Schedule 2 attached to this Amendment. Also, from and after the date of
this Amendment, all references in the Pledge Agreement to "Schedule 2"
(regardless of whether such references are followed by "attached to the
Lease") shall constitute references to Schedule 2 attached to this
Amendment.
4. Secured Spread. The definition of "Secured Spread" in the Lease is
amended and restated as follows, effective as of the date hereof:
"SECURED SPREAD" shall equal fifty-five basis points (55/100 of 1%).
5. Fees and Expenses. Electroglas covenants and agrees to pay to or
reimburse BNPPLC, upon demand, for all reasonable out-of-pocket costs
and expenses (including the reasonable fees, charges and disbursements
of counsel) incurred by BNPPLC in connection with the development,
preparation, negotiation, execution and delivery of this Agreement.
Electroglas covenants and agrees to pay to BNPPLC, for payment in turn
by BNPPLC to each Participant (and BNPPLC) which executes and returns
this Agreement to BNPPLC on or prior to August 7, 2001, an amendment fee
equal to twenty basis points of all such Participants' Percentages under
the Participation Agreement multiplied by the Stipulated Loss Value,
such fee to be payable on the date hereof.
6. Ratification. The Lease and the Pledge Agreement, as amended by this
Agreement, are hereby ratified and confirmed in all respects.
7. Entire Agreement. This Agreement and the documents and agreements
referred to herein set forth the entire agreement between the parties
concerning the subject matter hereof and no amendment or modification of
this Agreement shall be binding or valid unless expressed in a writing
executed by both parties hereto.
8. Successors and Assigns. All of the covenants, agreements, terms and
conditions to be observed and performed by the parties hereto shall be
applicable to and binding upon their respective heirs, personal
representatives, successors and, to the extent assignment is permitted
under the Lease, their respective assigns.
9. Further Modifications. From and after the date of this Agreement, in all
documents related to this transaction references to the "Lease",
"Purchase Agreement", "Pledge Agreement", or the "Construction Funding
Agreement" are intended to mean the Lease, Purchase Agreement, Pledge
Agreement, or Construction Funding Agreement, as the case may be, as
amended hereby. In addition, all documents related to this transaction
using capitalized terms, the definitions of which terms are modified
hereby, shall be deemed amended hereby to incorporate the same
modifications to such capitalized terms.
1. Execution in Counterparts. To facilitate execution, this Agreement may
be executed in as many identical counterparts as may be required. It
shall not be necessary that the signature of, or on behalf of, each
party, or that the signature of all persons required to bind any party,
appear on each counterpart. All counterparts, taken together, shall
collectively constitute a single instrument. It shall not be necessary
in making proof of this Agreement to produce or account for more than a
single counterpart containing the respective signatures of, or on behalf
of, each of the parties hereto. Any signature page to any counterpart
may be detached from such counterpart without impairing the legal effect
of the signatures thereon and thereafter attached to another counterpart
identical thereto except having attached to it additional signature
pages.
1. Recitals. The recitals contained herein are incorporated by this
reference.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BNP PARIBAS LEASING CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxx
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Xxxxx X. Xxx, Managing Director
ELECTROGLAS, INC., a Delaware corporation
By: /s/ Xxx Xxxxxxx
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Xxx Xxxxxxx, Chief Financial Officer
CONSENT AND AGREEMENT OF PARTICIPANT
The undersigned Participant hereby consents to the execution and
delivery of this Agreement and the modifications and amendments provided
therein. Participant hereby ratifies and confirms in all respects the
Participation Agreement, and agrees that its obligations and covenants
thereunder shall continue in full force and effect.
BNP PARIBAS
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
Title: Vice President
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Vice President
CONSENT AND AGREEMENT OF PARTICIPANT
The undersigned Participant hereby consents to the execution and
delivery of this Agreement and the modifications and amendments provided
therein. Participant hereby ratifies and confirms in all respects the
Participation Agreement, and agrees that its obligations and covenants
thereunder shall continue in full force and effect.
XXXXX FARGO BANK, N.A.
By: /s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx, Vice President
CONSENT AND AGREEMENT OF PARTICIPANT
The undersigned Participant hereby consents to the execution and
delivery of this Agreement and the modifications and amendments provided
therein. Participant hereby ratifies and confirms in all respects the
Participation Agreement, and agrees that its obligations and covenants
thereunder shall continue in full force and effect.
THE INDUSTRIAL BANK OF JAPAN
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Vice President and
General Manager
Schedule 2
FINANCIAL COVENANTS
This Schedule 2 is attached to and made a part of (a) the Lease
Agreement (as amended, the "LEASE") dated effective March 31, 1997, between BNP
Paribas Leasing Corporation, a Delaware corporation ("BNPPLC") and Electroglas,
Inc., a Delaware corporation ("ELECTROGLAS"), and (b) the Pledge Agreement (as
amended, the "PLEDGE AGREEMENT") dated effective March 31, 1997, among BNPPLC,
Electroglas, BNP Paribas, as a Participant and as agent for any financial
institutions that become Participants thereunder from time to time, Xxxxx Fargo
Bank, N.A. and The Industrial Bank of Japan, as Participants.
PART I - DEFINED TERMS
In this Schedule 2, capitalized terms used but not defined herein shall
have the meaning assigned to them in the Lease or the List of Defined Terms
attached to the Lease; and the following capitalized terms shall have the
following meanings:
"COLLATERAL" shall have the meaning assigned to it in the body of the
Pledge Agreement.
"CONSOLIDATED TANGIBLE NET WORTH" means, with respect to any Person, the
excess of the total assets of such Person and its Subsidiaries
(determined on a consolidated basis) over the total Liabilities of such
Person and its Subsidiaries (determined on a consolidated basis);
provided, however, that Intangible Assets on such date shall be excluded
from any determination of consolidated total assets on such date.
"CURRENT LIABILITIES" means, with respect to any Person, all liabilities
of such Person treated as current liabilities in accordance with GAAP,
including without limitation (a) all obligations payable on demand or
within one year after the date in which the determination is made and
(b) installment and sinking fund payments required to be made within one
year after the date on which determination is made, but excluding all
such liabilities or obligations which are renewable or extendable at the
option of such Person to a date more than one year from the date of
determination.
"INTANGIBLE ASSETS" means, as of the date of any determination thereof,
the total amount of all assets of Electroglas and its consolidated
Subsidiaries that are properly classified as "INTANGIBLE ASSETS" in
accordance with GAAP and, in any event, shall include, without
limitation, goodwill, patents, trade names, trademarks, copyrights,
franchises, experimental expense, organization expense, unamortized debt
discount and expense, and deferred charges other than prepaid insurance
and prepaid taxes and current deferred taxes which are classified on the
balance sheet of Electroglas and its consolidated Subsidiaries as a
current asset in accordance with GAAP and in which classification
Electroglas' independent public accountants concur.
"LIABILITIES" means, with respect to any Person, the sum (without
duplication of any item) of (A) all liabilities of such Person and its
Subsidiaries (determined on a consolidated basis), determined in
accordance with GAAP, and (B) the obligations of such Person and its
Subsidiaries (determined on a consolidated basis), contingent or
otherwise, under any lease of real property or related documents
(including a separate purchase agreement) which provide that such Person
or its Subsidiaries must purchase or cause another to purchase any
interest in the leased property and thereby guarantee a minimum residual
value of the leased property to the lessor. For purposes of this
definition (and for purposes of determining the amount of "Debt"
relevant to any requirements established by this Schedule 2), the amount
of the obligations described in clause (B) of the preceding sentence
with respect to any lease classified according to GAAP as an "operating
lease," shall equal the sum of (1) the present value of rentals and
other minimum lease payments required in connection with such lease
[calculated in accordance with FASB Statement 13 and other GAAP relevant
to the determination of the whether such lease must be accounted for as
an operating lease or capital lease], plus (2) the fair value of the
property covered by the lease; provided, however, that such amount shall
not exceed the price for which the lessee can purchase the leased
property pursuant to any valid ongoing purchase option if, upon such a
purchase, the lessee shall be excused from paying rentals or other
minimum lease payments that would otherwise accrue after the purchase.
"LONG-TERM INVESTMENTS" means those investments described below (to the
extent that they are not classified as short term investments in
accordance with GAAP), provided that such investments shall have
maturities of not longer than two years, and shall be rated not less
than A- by Standard & Poor's Corporation or less than A by Xxxxx'x
Investors Service, Inc.:
(1) Securities issued or fully guaranteed or fully insured by the
United States government or any agency thereof and backed by the full
faith and credit of the United States;
(2) Certificates of deposit, time deposits, eurodollar time
deposits, repurchase agreements, or banker's acceptances that are issued
by either one of the 50 largest (in assets) banks in the United States
or by one of the 100 largest (in assets) banks in the world; and
(3) Notes and municipal bonds.
"MANDATORY COLLATERAL PERIOD" means the remainder of the Term, during
which, notwithstanding any contrary designation of a Collateral
Percentage by Electroglas under the Pledge Agreement, the Collateral
Percentage for purposes of the Pledge Agreement shall be one hundred
percent (100%).
"QUICK ASSETS" means the sum (without duplication of any item) of the
Collateral held subject to a Qualified Pledge under and as defined in
the Pledge Agreement, plus unencumbered cash, plus unencumbered short
term cash investments, plus other unencumbered marketable securities
which are classified as short term investments according to GAAP, plus
the fair market value of unencumbered Long-Term Investments, plus
unencumbered current net accounts receivable.
PART II - FINANCIAL COVENANTS FOR LEASE AGREEMENT
1. Quick Ratio. Electroglas shall maintain a ratio of (a) Quick Assets of
Electroglas and its Subsidiaries (determined on a consolidated basis) to
(b) Current Liabilities of Electroglas and its Subsidiaries (determined
on a consolidated basis), of not less than 2.50 to 1.00.
2. Maximum Ratio of Liabilities to Tangible Net Worth. Electroglas shall
maintain a ratio of (a) the Liabilities of Electroglas to (b) the
Consolidated Tangible Net Worth of Electroglas, of not more than 0.70 to
1.00.
3. Minimum Tangible Net Worth. Electroglas shall not permit its
Consolidated Tangible Net Worth, at the end of any fiscal quarter of
Electroglas, to be less than the sum of: (a) $155,347,000; plus (b)
seventy-five percent of Electroglas' net income (computed without
deduction for net losses in any fiscal quarter) earned in each fiscal
quarter of Electroglas after June 30, 2001; plus (c) one-hundred percent
of the net proceeds of sales of stock in Electroglas after June 30,
2001; less (d) non-cash charges relating to acquisitions after June 30,
2001 that do not exceed an aggregate, cumulative amount of fifteen
percent of Electroglas' Consolidated Tangible Net Worth at the end of
such fiscal quarter.
4. Minimum Unencumbered Cash and Cash Equivalents. Electroglas shall not
permit the sum (without duplication of any item) of all unencumbered and
unrestricted cash, short term cash investments and marketable securities
classified as short term investments according to GAAP of Electroglas
and its Subsidiaries (determined on a consolidated basis) to be less
than $40,000,000.
5. No Repurchase of Stock. Electroglas shall not redeem, retire, repurchase
or otherwise acquire any shares of any class of Electroglas stock now or
hereafter outstanding unless Electroglas has attained positive net
income in each of the preceding two consecutive quarters, and
Electroglas has provided BNPLC satisfactory prior written evidence
thereof. In addition, if Electroglas has satisfied the conditions of the
preceding sentence, Electroglas shall nevertheless not redeem, retire,
repurchase or otherwise acquire more than $10,000,000 worth of any
shares of any class of Electroglas stock now or hereafter outstanding in
any twelve month period.
PART III - MANDATORY COLLATERAL PERIODS
1. Commencing on June 30, 2001, the remainder of the Term shall constitute
a Mandatory Collateral Period.
