EXHIBIT 10PP
EIGHTH AMENDMENT
TO MASTER LEASE AGREEMENT AND EQUIPMENT SCHEDULES
THIS EIGHTH AMENDMENT TO MASTER LEASE AGREEMENT AND EQUIPMENT
SCHEDULES ("this Amendment") is made and entered into as of the 31st day of
December, 2001, by BRUSH XXXXXXX INC., an Ohio corporation (the "Lessee"), and
NATIONAL CITY BANK, a national banking association, for itself and as agent
for certain participants (the "Lessor").
RECITALS:
A. The Lessee and the Lessor entered into a Master Lease
Agreement, dated as of December 30, 1996, as amended by the First Amendment to
Master Lease Agreement, dated as of September 2, 1997, the Second Amendment to
Master Lease Agreement and Amendment to Disbursement Schedules, dated as of
January 26, 1999, the Third Amendment to Master Lease Agreement and Amendment
to Equipment Schedules, dated as of September 30, 1999, the Fourth Amendment
to Master Lease and Waiver, dated as of May 16, 2000, and Consolidated
Amendment No.1 to Master Lease Agreement and Equipment Schedules, dated as of
June 30, 2000, Consolidated Amendment No.2 to Master Lease Agreement and
Equipment Schedules, dated as of March 30, 2001 and Consolidated Amendment
No.3 to Master Lease Agreement and Equipment Schedules, dated as of September
28, 2001 (collectively, together with all Exhibits and Schedules thereto, the
"Lease Agreement"), under which the Lessor agreed to lease to the Lessee
certain equipment to be used by the Lessee at its Elmore, Ohio, facility,
subject to certain conditions and in accordance with the terms thereof.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Lease Agreement.
C. The Lessee has requested that the Lessor consent to the
Parent's acquisition (the "Acquisition") of all of the issued and outstanding
capital stock of a company (the "Acquired Company") identified and described
in a disclosure letter, to be delivered by the Parent to the Lessor and the
participants care of the Lessor, which letter shall be approved by the Lessor
in its sole discretion (if, as and when so delivered and approved, the
"Disclosure Letter"). Without such consent, the Acquisition would otherwise be
prohibited by the provisions of Section XXIV of the Lease Agreement (by
reference to the definition of "Permitted Acquisition" set forth in Section
XXV thereof).
D. The Lessor is willing to grant such consent upon and subject
to the terms and conditions hereinafter set forth.
E. In addition, the Lessor and the Lessee have agreed to amend
the Lease Agreement as hereinafter set forth.
AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing Recitals and the
mutual agreements hereinafter set forth, the parties hereby agree as follows:
1. Consent. Subject to the terms and conditions of this
Amendment, including, without limitation, this Section 1 and Section 3, below,
the Lessor hereby consents to the Acquisition. The foregoing consent of the
Lessor is subject to the Parent's and the Lessee's performance and satisfaction
of each and all of the following conditions:
(i) all of the terms and conditions contained in the
definition of "Permitted Acquisition" set forth in Section XXV of the
Lease Agreement (other than the condition contained in clause (iv)
thereof, which shall be deemed satisfied upon the effectiveness of this
Amendment) shall have been satisfied prior to the consummation of the
Acquisition;
2
(ii) the aggregate of (A) the aggregate consideration
(in whatsoever form, including, without limitation, liabilities
assumed by any Lease Party and consulting agreements, non-competition
agreements, "golden parachute" agreements and the like) required to
be paid in cash, directly or indirectly, by the Lessor, or any of the
Participants, whether at the closing of such acquisition or on a
deferred basis, in connection with the Acquisition and (B) the
aggregate amount of all fees, commissions, and other expenses
incurred by the Lessor, in connection with the Acquisition shall not
exceed Twelve Million Dollars ($12,000,000);
(iii) not later than ten (10) Business Days prior to the
date on which the Acquisition is consummated, the Parent shall
deliver to the Lessor true and complete copies of the final
acquisition agreement in respect thereof and all other material
agreements by which the Parent or any other Lease Party will be bound
in connection with the Acquisition;
(iv) the Acquisition shall be consummated on terms not
less favorable in any material respect to the Parent than the terms
therefor previously disclosed to the Lessor and the participants; and
(v) the Acquisition shall be consummated no later than
September 30, 2002.
2. Amendments to the Lease Agreement. Subject to the terms and
conditions of this Amendment, including, without limitation, Section 3, below,
the Lease Agreement is hereby amended as follows:
A. Section XXIII (General Financial Standards) is amended and
restated in its entirety to provide as follows:
Lessee agrees that so long as this Agreement remains in effect and thereafter
until all obligations of Lessee hereunder shall have been paid and performed
in full, Lessee will observe and cause to be observed each of the following:
3
(a) RATIO OF CONSOLIDATED TOTAL DEBT TO CONSOLIDATED
TOTAL ADJUSTED CAPITAL AND INTEREST COVERAGE RATIO.
(i) Lessee will not at any time permit the ratio,
expressed as a percentage, of (i) the amount of Consolidated Total
Debt to (ii) Consolidated Total Adjusted Capital, to exceed (A) 50%
from the date of this Agreement through and including September 30,
2001, (B) 43% for the period commencing October 1, 2001, through and
including December 31, 2001; (C) 45% for the period commencing
January 1, 2002, through and including September 30, 2002; and (D)
50% on and after October 1, 2002.
(ii) Lessee shall not permit the Interest Coverage
Ratio, as of the end of either of the fiscal quarters of the Parent
ending on June 30, 2002 and September 30, 2002, to be less than 1.00
to 1.00; provided, however, that (i) if the Acquisition occurs during
the Parent's first fiscal quarter of 2002, the Lessee shall not
permit the Interest Coverage Ratio, as of the end of the fiscal
quarter of the Parent ending on June 30, 2002, to be less than 1.30
to 1.00, and (ii) if the Acquisition occurs during the Parent's
second fiscal quarter of 2002, the Lessee shall not permit the
Interest Coverage Ratio, as of the end of the fiscal quarter of the
Parent ending on September 30, 2002, to be less than 2.25 to 1.00.
(b) RATIO OF CONSOLIDATED TOTAL DEBT TO CONSOLIDATED
EBITDAR. Lessee will not permit the ratio at any time of (x) the
amount of Consolidated Total Debt at such time to (y) Consolidated
EBITDAR for the Testing Period most recently ended, to exceed (i)
3.50 to 1.00 for the Testing Period ending June 30, 2000, (ii) 3.25
to 1.00 for the Testing Periods ending September 30, 2000 and
Xxxxxxxx 00, 0000, (xxx) 3.00 to 1.00 for the Testing periods ending
March 31, 2001, June 30, 2001 and September 30, 2001, and (iv) 3.50
to 1.00 for each Testing Period ending on and after December 31,
2002; provided, however, that for the purposes of this clause (iv),
(A) the term "Testing Period" shall mean, as to each of the fiscal
quarters ending on the following dates only, the respective period
set forth opposite such fiscal quarter:
Fiscal Quarter Ending Testing Period
--------------------- --------------
December 31, 2002 October 1, 2002 through December 31, 2002
March 31, 2002 October 1, 2002 through March 31, 2003, and
June 30, 2003 October 1, 2002 through June 30, 2003.
and (B) in computing such ratio for the Testing Period ending
December 31, 2002, Consolidated EBITDAR shall be deemed to mean an
amount equal to Consolidated EBITDAR for such Testing Period, times
four (4); in computing such ratio for the Testing Period ending March
31, 2003, Consolidated EBITDAR shall be deemed to mean amount equal
to Consolidated EBITDAR for such Testing Period, times two (2); and,
in computing such ratio for the Testing Period ending June 30, 2003,
Consolidated EBITDAR shall be deemed to mean an amount equal to
Consolidated EBITDAR for such Testing Period, times one and one-third
(1 1/3).
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Lessee
will not at any time
4
permit the Consolidated Fixed Charge Coverage Ratio to be less than
2.00 to 1.00 for any Testing Period ending on or before September 30,
2001, or permit the Consolidated Fixed Charge Coverage Ratio for any
of the Testing Periods set forth below to be less than the ratio set
forth opposite such Testing Period:
Fiscal Quarter Ended Minimum Fixed Charge Coverage Ratio
-------------------- -----------------------------------
December 31, 2002 1.00 to 1.00
March 31, 2003 1.25 to 1.00
June 30, 2003 and thereafter 1.50 to 1.00;
provided, however, that for the purposes of this Section XXIII (c),
the term "Testing Period" shall mean, as to each of the fiscal
quarters ending on the following dates only, the respective period
set forth opposite such fiscal quarter:
Fiscal Quarter Ending Testing Period
--------------------- --------------
December 31, 2002 October 1, 2002 through December 31, 2002
March 31, 2003 October 1, 2002 through March 31, 2003, and
June 30, 2003 October 1, 2002 through June 30, 2003.
(d) CONSOLIDATED TANGIBLE NET WORTH. Lessee, the
Parent and the Subsidiaries will not permit the Consolidated Tangible
Net Worth to be less than $200,000,000 as of December 31, 2001 or at
any time thereafter.
B. Section XXIV (m)(e) of the Lease Agreement is amended and
restated in its entirety to provide as follows:
(e) CAPITAL EXPENDITURES: The Parent, Lessee and the
Subsidiaries shall be permitted to make Consolidated Capital
Expenditures, provided that (A) expenses for mining property, plant
and equipment shall not exceed $25,000,000 during any consecutive
thirty-six (36) month period, and (B) Consolidated Capital
Expenditures, excluding expense for mining property, plant or
equipment, do not during any fiscal year of the Parent exceed the
amount specified below:
------------------------------------------------------------
Fiscal Year Ending Amount
------------------------------------------------------------
December 31, 2000 $35,000,000
------------------------------------------------------------
December 31, 2001 $40,000,000
------------------------------------------------------------
December 31, 2002 $25,000,000
------------------------------------------------------------
December 31, 2003 $35,000,000
------------------------------------------------------------
C. The following proviso is added to the end of Section XXIV
(n)(e) (Covenant) of the Lease Agreement immediately after the word "time" and
before the period:
5
; provided, however, that the sale by Brush Xxxxxxx Japan, Ltd. of
its Accounts to SMBC Finance Co. Ltd, pursuant to the proposed
Agreement on the Sales of Notes in the form delivered to the Lessor
prior to March 14, 2002 may be with recourse, but only so long as the
aggregate amount for which Brush Xxxxxxx Japan, Ltd. has recourse
liability does not at any time exceed $5,000,000.
D. Section XXIV (q) (Dividends, Stock Repurchase, etc.) of the
Lease Agreement is amended and restated in its entirety to provide as follows:
(q) DIVIDENDS, STOCK REPURCHASE, ETC.
(i) The Parent will not directly or indirectly declare,
order, pay or make any dividend (other than dividends payable solely
in capital stock of the Parent) or other distribution on or in
respect of any capital stock of any class of the Parent, whether by
reduction of capital or otherwise.
(ii) The Parent and Lessee will not directly or
indirectly make, or permit any of the Subsidiaries to directly or
indirectly make, any purchase, redemption, retirement or other
acquisition of (A) any of its capital stock of any class (other than
for a consideration consisting solely of capital stock of that
person), or (B) any warrants, rights or options to acquire or any
securities convertible into or exchangeable for any of its capital
stock.
E. Section XXIV (u) (Certain Leases) of the Lease Agreement is
amended and restated in its entirety to provided as follows:
(u) CERTAIN LEASES. None of the Parent, Lessee or the
Subsidiaries will permit the aggregate payments (excluding any
property taxes, insurance or maintenance obligations paid by the
Parent, Lessee and the Subsidiaries as additional rent or lease
payments) by the Parent, Lessee and the Subsidiaries on a
consolidated basis under agreements to rent or lease any real or
personal property for a period exceeding 12 months (including any
renewal or similar option periods) (other than any leases
constituting Capital Leases, Synthetic Leases or, subject to
Paragraph (s), above, leases between the Parent and Lessee, between
Subsidiaries or between the Parent or Lessee and a Subsidiary), to
exceed in any fiscal year of the Parent an amount greater than 5.00%
of the Consolidated Net Worth of the Parent as of the date of the
financial statements then most recently furnished to Lessor and the
Participants under Section IV(b)(i).
F. The following definition is added to Section XXV (Certain
Definitions) of the Lease Agreement in proper alphabetical order:
Acquisition shall have the meaning ascribed to such term in
the Eighth Amendment to this Lease Agreement.
6
G. The definition of "Consolidated Fixed Charge Coverage Ratio"
in Section XXV (Certain Definitions) of the Lease Agreement is amended and
restated to provide as follows:
Consolidated Fixed Charge Coverage Ratio shall mean, for any
Testing Period, the ratio of (a) Consolidated EBITDA for that Testing
Period to (b) the sum of (i) Consolidated Interest Expense and
Consolidated Income Tax Expense for that Testing Period, PLUS (ii)
scheduled or mandatory repayments, prepayments or redemptions during
that Testing Period of the principal of Indebtedness with a final
maturity date more than one year after the end of that Testing
Period, PLUS (iii) the sum of all payments for dividends, stock
repurchases or other stock redemptions, and other purposes described
in section XXIV, if any, in each case on a consolidated basis for the
Parent, Lessee and the Subsidiaries for such Testing Period; PLUS
(iv) Consolidated Capital Expenditures for that Testing Period;
provided that notwithstanding anything to the contrary contained
herein, the Consolidated Fixed Charge Coverage Ratio for any Testing
Period shall (A) include the appropriate financial items for any
person or business unit which has been acquired by Lessee and the
Parent, or any Subsidiaries for any portion of such Testing Period
prior to the date of acquisition, and (A) exclude the appropriate
financial items for any person or business unit which has been
disposed of by Lessee, the Parent or any Subsidiary, for the portion
of such Testing Period prior to the date of disposition.
H. The definition of "Consolidated Net Worth " in Section XXV
(Certain Definitions) of the Lease Agreement is amended by adding the
following clause to the end of such definition:
and PROVIDED FURTHER that Consolidated Net Worth shall be calculated
(i) before the effect of FAS 133 - Accounting for Derivatives
Instruments and Hedging Activities and FAS 138 - Accounting for
Certain Derivatives Instruments and Certain Hedging Activities (prior
to the "Delivery Date" of this Amendment to the Lease Agreement, such
item appearing under the stockholders' equity category "Foreign
Currency Translation Adjustment") and (ii) without reduction for
Directors Deferred Compensation (prior to the "Delivery Date" of this
Amendment to the Lease Agreement, such item appearing under the
stockholders' equity categories "Other Equity Transactions - Deferred
Directors Shares and Deferred Compensation");
7
I. The following definition is added to Section XXV (Certain
Definitions) of the Lease Agreement in proper alphabetical order:
Interest Coverage Ratio means, as of the end of any fiscal quarter of
the Parent, the ratio of (i) Consolidated EBITDAR for such fiscal
quarter to (ii) an amount equal to the sum of (a) Consolidated Interest
Expense for such fiscal quarter, plus (b) Consolidated Rental Expense
for such fiscal quarter.
J. The definition of "Lease Party" in Section XXV (Certain
Definitions) of the Lease Agreement is amended by inserting the parenthetical
"(other than Lessor)" immediately following the word "person" and before the
world "that".
K. The definition of "Permitted Precious Metal Consignments" in
Section XXV (Certain Definitions) of the Lease Agreement is amended by deleting
therefrom the words and numerals "does not exceed an amount greater than
$140,000,000" and inserting in their stead, immediately following the words
"those consignment arrangements" the words and numerals "(that is, the aggregate
outstanding liability, fixed or contingent, but without duplication, of all
Credit Parties in respect of all such consignment arrangements) does not exceed
B$70,000,000 at any time".
8
L. The Pricing Grid Table and the last sentence of the
definition of Applicable Margin contained in Exhibit No. 2 Equipment Schedules
are amended and restated in their entirety to provide as follows:
PRICING GRID TABLE
(expressed in basis points per annum)
--------------------------------------------------------------------
RATIO OF CONSOLIDATED TOTAL DEBT TO
CONSOLIDATED EBITDAR APPLICABLE MARGIN
--------------------------------------------------------------------
Greater than or equal to 5.00 to 1.00 375
--------------------------------------------------------------------
Greater than 4.00 to 1.00 and less than 325
5.00 to 1.00
--------------------------------------------------------------------
Greater than 3.50 to 1.00 and less than or 275
equal to 4.00 to 1.00
--------------------------------------------------------------------
Greater than 3.00 to 1.00 and less than or 225
equal to 3.50 to 1.00
--------------------------------------------------------------------
Greater than 2.50 to 1.00 and less than or 200
equal to 3.00 to 1.00
--------------------------------------------------------------------
Less than or equal to 2.50 to 1.00 175
--------------------------------------------------------------------
(i) Notwithstanding anything to the contrary contained in the
foregoing, from April 1, 2002, through and including December 31,
2002, and thereafter until changed hereunder in accordance with the
provisions of the Pricing Grid Table set forth above, for all
purposes of this Lease Agreement, the Applicable Margin shall be
three hundred seventy-five (375) basis points per annum; and (ii) the
charging of Applicable Margin based upon the foregoing Pricing Grid
Table based upon the first three ratio levels (reading from top to
bottom) set forth therein shall not be construed to waive any Event
of Default which may exist under paragraph (b) Section XXIII hereof
or limit any right or remedy of the Lessor by reason thereof.
3. Delivery Date; Conditions Precedent. The consent set forth
in Section 1, above, and the modifications to the Lease Agreement set forth in
Section 2, above, are subject to the Parent and Lessee's performance of the
following (the date on which all have been performed being the "Delivery
Date"):
A. The Lessee's secretary or treasurer shall have certified to
the Lessor (i) a copy of the
9
resolutions duly adopted by the Lessee's board of directors in respect of this
Amendment; (ii) true and correct copies of the Lessee's current Charter or
Articles of Incorporation and By-laws or Code of Regulations; (iii) the names
and true signatures of the officers of the Lessee authorized to sign this
Amendment on behalf of the Lessee; (iv) that, after giving effect to the
amendments set forth herein, no Default or Potential Default exists; and (v)
the representations and warranties of the Lessee under the Lease Agreement are
reaffirmed as of the Delivery Date, subject only to variance therefrom
acceptable to the Lessor.
B. The respective secretary or treasurer of the Parent and of
Brush Ceramic Products, Inc. and Brush Resources, Inc. (the "Subsidiary
Guarantors") shall have certified to the Lessor (i) a copy of the resolutions
duly adopted by its board of directors in respect of this Amendment; (ii) true
and correct copies of its current Charter or Articles of Incorporation and
By-laws or Code of Regulations; (iii) the names and true signatures of its
officers authorized to sign the Reaffirmation of Guaranty and Security
Documents and Amendment to Intercreditor and Collateral Agency Agreement
described below on behalf of it; and (iv) that, after giving effect to the
amendments set forth herein, no Default or Potential Default exists.
C. Counsel to the Lessee, the Parent and the Subsidiary
Guarantors shall have delivered to the Lessor a written opinion as to the due
authorization, execution, delivery and enforceability of this Amendment and
the other documents described in paragraphs G and H of this Section 3, in form
and substance satisfactory to the Lessor.
D. The Lessee shall have paid to the Lessor, for the benefit of
the Lessor and its participants, an amendment fee in the amount of One Hundred
Fifty Thousand Dollars ($150,000).
E. The Lessee, the Parent, and the Subsidiary Guarantors shall
have executed and delivered to the Lessor such Security Documents, and shall
have taken or caused to be taken such
10
other actions, if any, as the Lessor may reasonably deem necessary or
appropriate to cause the Lessor's Lien on the Lease Parties' patents and
registered marks and applications therefor to be registered with the Office of
Patents and Trademarks of the United States Department of Commerce.
F. The Lessee shall have delivered or caused to be delivered
certificates of good standing for the Lessee, the Parent and the Subsidiary
Guarantors issued by the Secretary of State, or other appropriate office, of
the state of its incorporation.
G. The Lessee shall cause the Parent and the Subsidiary
Guarantors to execute and deliver to the Lessor a confirmation of Guaranty and
Security Documents in form of Attachment 1 hereto.
H. All of the parties to the Intercreditor and Collateral
Agency Agreement dated September 28, 2001 shall have executed and delivered to
the Lessor a First Amendment to Intercreditor and Collateral Agency Agreement
in the form of Attachment 2 hereto.
I. All of the parties to the Credit Agreement shall have
executed and delivered an amendment thereto in form and substance satisfactory
to the Lessor, and all conditions to its effectiveness shall have been
satisfied.
J. The Lessee shall have delivered or caused to be delivered
such other documents as the Lessor may reasonably request.
4. No Other Modifications. Except as expressly provided in
this Amendment, all of the terms and conditions of the Lease Agreement remain
unchanged and in full force and effect.
5. Governing Law; Binding Effect. This Amendment shall be
governed by and construed in accordance with the laws of the State of Ohio and
shall be binding upon and inure to the benefit of the Lessee, the Lessor, and
their respective successors and assigns.
6. Counterparts. This Amendment may be executed in separate
counterparts, each of
11
which shall be deemed to be an original, and all of which together shall be
deemed a fully executed agreement.
7. Miscellaneous.
A. The Lessee agrees to pay on demand all costs and expenses of
the Lessor, including reasonable attorneys' fees and expenses, incurred in
connection with the preparation, execution and delivery of this Amendment and
the other documents contemplated hereby, including, without limitation, the
Amendment to Intercreditor and Collateral Agency Agreement.
B. This Amendment is executed in accordance with and subject to
Section XIX(g) of the Lease Agreement. The execution, delivery and performance
by the Lessor of this Amendment shall not constitute, or be deemed to be or
construed as, a waiver of any right, power or remedy of the Lessor or a waiver
of any provision of the Lease Agreement, except as expressly stated herein.
None of the provisions of this Amendment shall constitute, or be deemed to be
or construed as, a wavier of any Default or Potential Default.
IN WITNESS WHEREOF, the Lessee, the Lessor and its participants have
hereunto set their hands as of the date first above written.
LESSEE: LESSOR:
------ ------
BRUSH XXXXXXX INC. NATIONAL CITY BANK,
FOR ITSELF AND AS AGENT FOR CERTAIN PARTICIPANTS
By: By:
-------------------------------- --------------------------------------
, Xxxxxx X. Xxxxx, Senior Vice President
--------------- ----------------
12
THE FOREGOING AMENDMENT is hereby acknowledged, consented and agreed
to by each of the undersigned by their respective duly authorized officers as
of the day and year first above written.
Address: FIFTH THIRD BANK, an Ohio banking corporation,
f/k/a Fifth Third Bank, Northeastern Ohio
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000 By:
Fax: (000) 000-0000 -------------------------------
Title:
-------------------------------
Address: XXXXXX TRUST AND SAVINGS BANK
X.X. Xxx 000 (000/00X)
Xxxxxxx, XX 00000-0000 By:
Fax: (000) 000-0000 -------------------------------
Title:
-------------------------------
Address: U.S. BANK NATIONAL ASSOCIATION, f/k/a Firstar
Bank, N.A.
0000 Xxxxxx Xxxxxx, XX 0000
Xxxxxxxxx, Xxxx 00000 By:
Fax: (000) 000-0000 -------------------------------
Title:
-------------------------------
Address: LASALLE NATIONAL LEASING CORPORATION
Xxx Xxxx Xxxxxxxxxxxx Xxxxxx
Xxxxx 0000 Xx:
Xxxxxx, Xxxxxxxx 00000 -------------------------------
Fax: (000) 000-0000 Title:
-------------------------------
Address: MANUFACTURERS AND TRADERS TRUST COMPANY
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000 By:
Fax: (000) 000-0000 -------------------------------
Title:
-------------------------------
13