EXHIBIT 10qq
NINTH AMENDMENT
TO MASTER LEASE AGREEMENT AND EQUIPMENT SCHEDULES
THIS NINTH AMENDMENT TO MASTER LEASE AGREEMENT AND EQUIPMENT SCHEDULES
("this Ninth Amendment") is made and entered into as of the 29th day of January,
2003, 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, Consolidated Amendment No.3 to Master Lease Agreement and
Equipment Schedules, dated as of September 28, 2001, and an Eighth Amendment to
Master Lease Agreement and Equipment Schedules, dated as of December 31, 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. In addition, on November 30, 2002, a Default occurred and is continuing
under Section XI(a)(iii) (Default) of the Lease Agreement, by reference to
Section XXIII(d) (Consolidated Tangible Net Worth) thereof (the "Existing
Default"), and the Lessee has requested the Lessor to waive the Existing
Default.
D. Subject to the terms and conditions of this Ninth Amendment, the Lessor
has agreed to waive the Existing Default. E. In addition, the Lessee has
requested the Lessor to authorize the Collateral Agent and the Collateral Agent
under the Intercreditor and Collateral Agency Agreement dated September 28,
2001, as amended (the "Collateral Agency Agreement"), on behalf of the Lessor,
to enter into an Intercreditor Agreement with The Bank of Nova Scotia in the
Form of Attachment 9 hereto (the "Scotia Intercreditor Agreement").
F. 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. Amendments to the Lease Agreement. Subject to the terms and conditions
of this Ninth Amendment, including, without limitation, Section 4, below, the
Lease Agreement is hereby amended as follows:
A. The following definitions are added to Paragraph (b) of Section XXV
(Definitions) of the Lease Agreement in proper alphabetical order:
"COLLATERAL AGENCY AGREEMENT" shall mean that certain Intercreditor
and Collateral Agency Agreement dated September 28, 2001, among National
City Bank, as collateral
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agent, the Lessor, and certain other parties, as heretofore and hereafter
amended, supplemented and replaced from time to time.
"COLLATERAL AGENT" shall mean the party from time to time serving as
the Collateral Agent under and pursuant to the Collateral Agency
Agreement.
"MORTGAGE" shall mean any mortgage or deed of trust in form and
substance satisfactory to the Collateral Agent that grants to the
Collateral Agent for the benefit of the Secured Creditors (as defined in
the Collateral Agency Agreement) a Lien on real property owned by any
Credit Party and on the Development Bond Sites, collectively being the
"MORTGAGES".
"SECURITY DOCUMENTS" shall mean the Guaranties, the Collateral
Agency Agreement, the Security Agreement, the Subsidiary Security
Agreement, the Mortgages and each other document pursuant to which any of
the Obligations are guaranteed or any Lien or security interest is
governed or granted by any Borrower or any Subsidiary to the Collateral
Agent or the Collateral Agent as security for any of the Obligations.
"SCOTIA INTERCREDITOR AGREEMENT" shall mean the Intercreditor
Agreement among The Bank of Nova Scotia, the Collateral Agent and the
Collateral Agent entered into contemporaneously with the effectiveness of
the Ninth Amendment to this Agreement, as the same is amended,
supplemented and replaced from time to time.
B. The proviso at the end of the definition of "Consolidated Tangible Net
Worth" in Section XXV(b) (Definitions) of the Lease Agreement (that is, the
proviso immediately following the word "GAAP" and after the semicolon) is
amended and restated in its entirety to provide as follows:
PROVIDED that Consolidated Tangible 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 the Eighth Amendment to this Agreement, such item appearing under the
stockholders' equity category "Foreign Currency Translation Adjustment"),
(ii) without reduction for Directors Deferred Compensation (prior to the
"Delivery Date" of the Eighth Amendment to this Agreement, such item
appearing under the stockholders' equity categories "Other Equity
Transactions - Deferred Directors Shares and Deferred Compensation"),
(iii) without reflecting the effect of any write-offs of any deferred tax
assets effected during the fiscal year of Brush Engineered Materials Inc.
ending December 31, 2002, pursuant to FAS 109, so long as such write-offs
do not exceed $25,000,000 in the aggregate on a consolidated basis, and
(iv) without reflecting the effect of any non-cash charges in respect of
unfunded pension liabilities effected during the fiscal year of Brush
Engineered Materials Inc. ending December 31, 2002, pursuant to FAS 87, so
long as such charges do not exceed $18,000,000 in the aggregate on a
consolidated basis.
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C. Paragraph (b) of Section XXIII of the Lease Agreement (Ratio of
Consolidated Total Debt to Consolidated EBITDAR) is amended and restated in its
entirety to provide as follows:
(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 each Testing Period ending on and after
March 31, 2003; provided, however, that for the purposes of this paragraph (a),
(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
--------------------- --------------
March 31, 2003 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 March 31,
2003, Consolidated EBITDAR shall be deemed to mean an 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)
D. Paragraph (c) of Section XXIII (Consolidated Fixed Charge Coverage
Ratio) of the Lease Agreement is amended and restated in its entirety to provide
as follows:
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Lessee will not at
any time 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 Ending Minimum Fixed Charge Coverage Ratio
--------------------- -----------------------------------
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
--------------------- --------------
March 31, 2003 October 1, 2002 through March 31, 2003, and
June 30, 2003 October 1, 2002 through June 30, 2003.
E. Paragraph (d) of Section XXIII (Consolidated Tangible Net Worth) of the
Lease
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Agreement is amended and restated in its entirety to provide as
follows:
(d) CONSOLIDATED TANGIBLE NET WORTH. The Lessee will not permit the
Consolidated Tangible Net Worth to be less than $185,000,000 as of
December 31, 2002 or at any time thereafter.
F. The following provisions are added as new Sections XXIV(w) and XXIV(x)
of the Lease Agreement immediately following Section XXIV(v) and before Section
XXV:
(w) ENVIRONMENTAL SITE ASSESSMENTS. No later than March 31, 2003,
the Lessee shall deliver to the Collateral Agent a Phase I environmental
site assessment in respect of each real property site encumbered by the
Mortgages. Such site assessments shall be conducted by qualified
environmental consultants of recognized standing reasonably approved by
the Collateral Agent and shall be in form and content reasonably
satisfactory to the Collateral Agent.
(x) SURVEYS. No later than March 31, 2003, the Lessee shall deliver
to the Collateral Agent an ALTA/ACSM survey in respect of each real
property site encumbered by the Mortgages (unless, as to the Delta, Utah
site of Brush Resources, Inc. only, waived by the Collateral Agent, in its
discretion). Such surveys shall be conducted and prepared by qualified and
licensed surveyors of recognized standing reasonably approved by the
Collateral Agent and shall be in form and content reasonably satisfactory
to the Collateral Agent.
G. The definition of Applicable Margin contained in Exhibit No. 2
Equipment Schedules is amended and restated in its entirety to provide as
follows:
"Applicable Margin" shall mean Four Hundred Fifty (450) basis points.
2. Conditional Waiver.
A. Subject to the terms and conditions of this Ninth Amendment, including,
without limitation, Section 4, below, the Lessor hereby waives the Lessee's
breach, as of November 30, 2002, of the covenant contained in Section XXIII(d)
(Consolidated Tangible Net Worth) of the Lease Agreement (and the resulting
Existing Default), but only to the extent that the Consolidated Tangible Net
Worth as of such date was not less than $198,000,000.
B. The foregoing waiver is limited to its express terms and shall not be
deemed to be a waiver of any other Default
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which may have existed on or prior to the date hereof or any Default which may
hereafter arise under any of the foregoing Section or under any other provision
of the Lease Agreement or any of the other Lease Documents. Further, the
granting of this waiver shall not be construed as an agreement or understanding
by the Lessor to grant any other waiver or other accommodation in the future
with respect to the foregoing Section or any other provision of the Lease
Agreement or any of the other Lease Documents.
3. Authorization. Subject to the terms and conditions of this Ninth
Amendment, including, without limitation, Section 4, below, in accordance with
Section 8.4 of the Collateral Agency Agreement, the Lessor hereby authorizes the
Collateral Agent, on behalf of the Lessor, to enter into the Scotia
Intercreditor Agreement.
4. Delivery Date; Conditions Precedent. The modifications to the Lease
Agreement set forth in Section 1, above, the waiver set forth in Section 2,
above, and the authorization set forth in Section 3, above, are subject to the
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 resolutions duly adopted by the Lessee's board of directors in
respect of this Amendment and the other Lease Documents contemplated hereby;
(ii) true and correct copies of the Lessee's current Charter or Articles of
Incorporation and By-laws or Code of Regulations (or, if applicable, that no
modifications thereof have been made since they were most recently certified to
the Lessor); (iii) the names and true signatures of the officers of the Lessor
authorized to sign this Ninth Amendment and any Mortgage required hereby on
behalf of the Lessor; (iv) that, after giving effect to the amendments set forth
herein, no Default or Potential Default exists; and (v) that 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 Collateral
Agent.
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B. Each Guarantor's secretary or treasurer shall have certified to the
Lessor (i) a copy of the resolutions duly adopted by that Guarantor's board of
directors in respect of this Amendment and the other Lease Documents
contemplated hereby; (ii) true and correct copies of that Guarantor's current
Charter or Articles of Incorporation and By-laws or Code of Regulations (or, if
applicable, that no modifications thereof have been made since they were most
recently certified to the Lessor); (iii) the names and true signatures of the
officers of that Guarantor authorized to sign this Amendment and any Mortgage
required hereby on behalf of that Guarantor; and (iv) that, after giving effect
to the amendments set forth herein, no Default exists.
C. Counsel to the Lessee and the Guarantors shall have delivered to the
Lessor a written opinion as to the due authorization, execution, delivery and
enforceability of this Ninth Amendment and the other documents described in
paragraphs E through J, inclusive, of this Section 4, in form and substance
satisfactory to the Collateral Agent; provided that no opinion with respect to
the enforceability of any document described in paragraph F below shall be
required.
D. The Lessee shall have paid to the Collateral Agent in immediately
available funds, for the ratable benefit of the Lessor, an amendment fee in the
amount of Eighty-four Thousand Five Hundred Thirty-six Dollars ($84,536).
E. All of the parties to the Collateral Agency Agreement shall have
executed and delivered to Collateral Agent a Second Amendment to Intercreditor
and Collateral Agency Agreement in the form of Attachment 1 hereto.
F. The Lessee and each Guarantor (including new Guarantors pursuant to
Paragraph I, below) that owns real property or holds a leasehold interest in a
Development Bond Site (said real property and the Development Bond Sites being,
collectively, the "Mortgaged Property") shall have executed and delivered to the
Collateral Agent a Mortgage substantially in the form of Attachment
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2 hereto (as to the Lessee) or Attachment 3 hereto (as to a Guarantor) on all
Mortgaged Property owned by the Lessee or such Guarantor or in which the Lessee
or such Guarantor holds a leasehold interest, shall have taken or caused to be
taken such other actions, if any, as the Collateral Agent may reasonably deem
necessary or appropriate to cause the Collateral Agent's Lien on the Mortgaged
Property to be duly perfected and subject only to such matters as are approved
by the Collateral Agent, and shall have accompanied each such Mortgage with an
ALTA loan policy of title insurance in form and substance reasonably
satisfactory to the Collateral Agent; provided, however, that no such Mortgage
shall encumber any Mortgaged Property if the grant of such Mortgage would cause
a default under, or accelerate the maturity of indebtedness secured by, any
mortgage, deed of trust, ground lease or other lien or lease instrument that
encumbers such Mortgaged Property on the Effective Date (each a "Prior
Encumbrance") until such time as the Lessee or such Guarantor, as applicable,
has obtained the consent of the holder of such Prior Encumbrance; provided
further that the Lessee shall, or shall cause such Guarantor to use its best
efforts (subject to commercial reasonableness) to obtain such consent promptly
following the Effective Date.
G. Each of the existing Guarantors shall have executed a confirmation of
its Guaranty in the form of Attachment 4 hereto.
H. The Lessee and the Parent shall have executed and delivered to the
Collateral Agent an amendment to the Security Agreement in the form of
Attachment 5 hereto; and each of the other Guarantors shall have executed and
delivered to the Collateral Agent an amendment to the Subsidiary Lease Security
Agreement in the form of Attachment 6 hereto.
I. Each of BEM Services, Inc; Zentrix Technologies Inc.; Brush
International, Inc.; Xxxxxxxx Advanced Materials Inc.; Circuits Processing
Technologies, Inc.; Technical Materials, Inc.; and Xxxxxxxx Acquisition, LLC
shall have executed and delivered to the Collateral Agent a
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Guaranty (substantially in the form of the Guaranties) and shall have joined in
the Subsidiary Lease Security Agreement as an "Assignor" thereunder pursuant to
a joinder in the form of Attachment 7 hereto.
J. 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.
K. The Lessee shall have delivered or caused to be delivered such other
documents as Collateral Agent or the Lessor may reasonably request.
5. No Other Modifications. Except as expressly provided in this Ninth
Amendment, all of the terms and conditions of the Lease Agreement remain
unchanged and in full force and effect.
6. Governing Law; Binding Effect. This Ninth 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.
7. Counterparts. This Ninth Amendment may be executed in separate
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed a fully executed agreement.
8. 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 Ninth Amendment
and the other documents contemplated hereby, including, without limitation, the
Second Amendment to Intercreditor and Collateral Agency Agreement.
B. This Ninth 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 Ninth
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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 Ninth 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
________________, ______________
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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
Fax: (000) 000-0000 By: _______________________________
Title: ______________________________
Address: XXXXXX TRUST AND SAVINGS BANK
X.X. Xxx 000 (000/00X)
Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000 By:_________________________________
Title: ______________________________
Address: U.S. BANK NATIONAL ASSOCIATION,
f/k/a Firstar Bank, N.A.
X.X. Xxx 000
Xxxxxxxx XX-XX-00XX
Xx. Xxxxx, XX 00000-0000
Fax: (000) 000-0000 By: ________________________________
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: ______________________________
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