EXHIBIT 4D
THIRD AMENDMENT TO CREDIT AGREEMENT
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AND CONSENT
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THIS THIRD AMENDMENT TO CREDIT AGREEMENT AND CONSENT ("this Third
Amendment") is made and entered into as of the 31st day of December, 2001, by
and among BRUSH ENGINEERED MATERIALS INC., an Ohio corporation (the "Parent"),
and BRUSH XXXXXXX INC., an Ohio corporation and a wholly owned subsidiary of the
Parent ("Brush Xxxxxxx" and, collectively with the Parent, the "Borrowers", with
each being a "Borrower"); the LENDERS listed on the signature pages of this
Third Amendment (collectively, the "Lenders"); and NATIONAL CITY BANK, a
national banking association, as one of the Lenders, as the Lender under the
Swing Line Revolving Facility (herein, together with its successors and assigns,
the "Swing Line Lender"), and as Administrative Agent for the Lenders (the
"Administrative Agent") under the Credit Agreement (hereinafter defined).
RECITALS:
A. The Borrowers, the Lenders (or their predecessors, as the case may
be), the Swing Line Lender and the Administrative Agent, are parties to that
certain Credit Agreement dated as of June 30, 2000, as amended by a First
Amendment dated as of March 30, 2001 and Second Amendment dated as of September
28, 2001 (collectively, the "Credit Agreement"), pursuant to which, among other
things, the Lenders agreed, subject to the terms and conditions thereof, to lend
to the Borrowers up to Sixty-five Million Dollars ($65,000,000) from time to
time.
B. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
C. The Borrowers have requested that the Lenders 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 Lenders care of the Administrative Agent, which letter shall be
approved by all of the Lenders in their 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 9.2 of
the Credit Agreement (by reference to the definition of "Permitted Acquisition"
set forth in Section 1.1 thereof).
D. The Lenders are willing to grant such consent upon and subject to
the terms and conditions hereinafter set forth.
E. In addition, the Borrowers, the Lenders, the Swing Line Lender and
the Administrative Agent have agreed to amend the Credit 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 Third
Amendment, including, without limitation, this Section 1 and Section 3, below,
the Lenders hereby consent to the Acquisition. The foregoing consent of the
Lenders is subject to the Borrowers' 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 1.1 of the
Credit Agreement (other than the condition contained in clause (iv)
thereof, which shall be deemed satisfied upon the effectiveness of this
Third Amendment) shall have been satisfied prior to or concurrently
with the consummation of the Acquisition;
(ii) prior to or concurrently with the Acquisition, the Parent
shall cause the
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Acquired Company to execute and deliver to the Administrative
Agent, for the benefit of the Administrative Agent, the Swing Line
Lender and the Lenders, (i) a Guaranty, in all material respects in the
form of that executed and delivered by each of the Guarantors and (ii)
a Security Agreement in the form of the Subsidiary Security Agreement.
(iii) the aggregate of (A) the aggregate consideration (in
whatsoever form, including, without limitation, liabilities assumed by
any Credit Party and consulting agreements, non-competition agreements,
"golden parachute" agreements and the like) required to be paid in
cash, directly or indirectly, by the Credit Parties, or any of them,
whether at the closing of the 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 Credit Parties,
or any of them, in connection with the Acquisition shall not exceed
Twelve Million Dollars ($12,000,000);
(iv) not later than ten (10) Business Days prior to the date
on which the Acquisition is consummated, the Parent shall deliver to
the Administrative Agent true and complete copies of the definitive
acquisition agreement in respect thereof and all other material
agreements by which the Parent or any other Credit Party will be bound
in connection with the Acquisition (collectively, the "Acquisition
Agreement");
(v) the Acquisition shall be consummated on terms not less
favorable in any material respect to the Parent than the terms therefor
previously disclosed in the Disclosure Letter and the Acquisition
Agreement; and
(vi) the Acquisition shall be consummated no later than
September 30, 2002.
2. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the terms and
conditions of this Third Amendment, including, without limitation, Section 3,
below, the Credit Agreement is hereby
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amended as follows:
A. The following definitions are added to Section 1.1 (Definitions) of
the Credit Agreement in proper alphabetical order:
"ACCOUNTS" shall mean "Receivables", as that term is defined
in, as applicable, the Security Agreement or the Subsidiary Security
Agreement.
"ACCOUNT DEBTOR" shall mean "account debtor" (as defined in
the UCC), including, without limitation, any person who is or becomes
obligated to a Borrower under, with respect to, or on account of an
Account.
"ACQUISITION" shall have the meaning ascribed to such term in
the Third Amendment to this Agreement.
"BORROWING BASE" shall mean at any time and from time to time,
an amount equal to the aggregate of:
(i) an amount equal to eighty percent (80%) of the face
value of the Eligible Accounts at such time, as
reflected on the most recent Borrowing Base
Certificate,
(ii) the lesser of (a) $45,000,000 and (b) an amount equal
to fifty percent (50%) of the value (at the lower of
cost or market value) of the Eligible Inventory at
such time, as reflected on the most recent Borrowing
Base Certificate; and
(iii) the Equipment Amount at such time.
"BORROWING BASE CERTIFICATE" shall have the meaning specified
in Section 8.1(i) of this Agreement.
"DEVELOPMENT BOND SITES" shall mean, collectively, the
following sites leased by a Credit Party:
(a) known as 0000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxx and
subject to the terms of the Industrial Development Variable Rate Demand
Refunding Revenue Bonds, Series 1994 (Brush Xxxxxxx Inc. Tucson,
Arizona Project);
(b) known as 00000 Xxxx Xxxxxxx Xxxxx Xxxxx Xxxx, Xxxxxx, Xxxx
and subject to the terms of the Xxxxxx-Xxxxx County Port Authority
Taxable Project Development Revenue Bonds, Series 1996 (Brush Xxxxxxx
Inc. Project); and
(c) known as 0000 Xxxxxxxxxx Xxxxxxx, Xxxxxx, Xxxx and subject
to the terms of the Lorain Port Authority, Ohio Variable Rate Demand
Industrial Development Revenue Bonds, Series 1996 (Brush Xxxxxxx Inc.
Project).
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"ELIGIBLE ACCOUNTS" shall mean only such Accounts of a Credit
Party as the Administrative Agent, in its reasonable discretion, shall
from time to time consider to be Eligible Accounts and, by way of
example and not limitation, excluding Accounts which:
(a) either (i) remain unpaid more than sixty (60) days after
the original due date of invoice or (ii) have an original due date
greater than ninety (90) days after the original date of invoice;
(b) have arisen from services performed by such Credit Party
to or for the Account Debtor outside the ordinary course of business;
(c) have arisen from the sale by such Credit Party of goods
where such goods have not been shipped or delivered to the Account
Debtor;
(d) have arisen from transactions which are not complete, are
not bona fide, or require further acts on the part of such Credit Party
to make such Account payable by the Account Debtor;
(e) have arisen in connection with sales of goods which were
shipped or delivered to the Account Debtor on other than an absolute
sale basis, such as shipments or deliveries made on consignment, a sale
or return basis, a guaranteed sale basis, a xxxx and hold basis, or on
the basis of any similar understanding;
(f) have arisen in connection with sales of goods which were,
at the time of sale thereof, subject to any Lien, except the security
interest in favor of the Administrative Agent created by the Credit
Documents; PROVIDED, HOWEVER, that Accounts arising from the sale of
goods containing precious or semi-precious metals or copper that are
subject to any Lien (other than pursuant to the Credit Documents) shall
cease to be excluded from eligibility pursuant to this clause (f) if
and when such Lien is terminated or otherwise subordinated to the Lien
created by the Security Documents pursuant to the written agreement of
the holder of such other Lien in form and substance satisfactory to the
Administrative Agent in its sole discretion;
(g) are subject to any provision prohibiting assignment or
requiring notice of or consent to such assignment;
(h) are subject to any Lien other than the Lien in favor of
the Administrative Agent (without limiting the generality of this
clause (h), it being acknowledged and agreed by the Borrowers that none
of the Accounts of Xxxxxxxx Advanced Materials, Inc. shall be Eligible
Accounts unless and until any and all Liens securing its obligations
under precious metals leases, consignments or similar metals
arrangements are terminated or subordinated to the Lien of the Security
Documents in a manner satisfactory to the Administrative Agent);
(i) are subject to any setoff, counterclaim, defense,
allowance, dispute, or adjustment, or have arisen in connection with
the sale of goods which have been returned,
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rejected, repossessed, lost or damaged;
(j) are owed from an Account Debtor of which such Credit Party
or the Administrative Agent has received notice that such Account
Debtor is the "debtor" under a case, voluntary or involuntary,
commenced under the Bankruptcy Code, has made an assignment for the
benefit of its creditors, has suspended normal business operations,
dissolved, liquidated or terminated its existence or for which (or for
the property of which) a receiver, trustee or equivalent party has been
appointed;
(k) are Accounts with respect to which the Account Debtor is
located in any state which requires that such Credit Party, in order to
xxx any Person in such state's courts, either (i) qualify to do
business in such state or (ii) file a report with the taxation division
of such state for the then current year, unless such Credit Party has
fulfilled such requirements to the extent applicable for the then
current year;
(l) are evidenced by chattel paper or any instrument of any
kind (including, without limitation, any promissory notes), unless such
chattel paper or instrument is delivered to the Administrative Agent in
accordance with the Security Agreement or Subsidiary Security
Agreement;
(m) are Accounts with respect to which any of the
representations, warranties, covenants and agreements contained in this
Agreement or any of the Credit Documents are not or have ceased to be
complete and correct or have been breached;
(n) are Accounts with respect to which the Administrative
Agent does not have a first priority, perfected Lien;
(o) represent a progress billing or have had the time for
payment extended by such Credit Party (for the purposes hereof,
"progress billing" means any invoice for goods sold or leased or
services rendered under a contract or agreement pursuant to which the
Account Debtor's obligation to pay such invoice is conditioned upon
such Credit Party's completion of any further performance under the
contract or agreement), unless as to any of the foregoing the
Administrative Agent has, in its sole discretion, approved in writing
such Account to be included as an Eligible Account;
(p) are owed by a Person that is not a citizen of or organized
under the laws of the United States or any State or are owed by any
Person located outside of the United States unless (i) such Accounts
are owed by an Account Debtor located in Canada and the Administrative
Agent has a first priority Lien perfected to its reasonable
satisfaction in such Accounts, or (ii) payment of such Accounts is
guaranteed by a letter of credit in form and substance and issued by a
financial institution reasonably satisfactory to the Administrative
Agent, and which has been transferred or assigned to the Administrative
Agent as security for the Obligations;
(q) are owed by the United States or any department, agency,
or instrumentality thereof unless such Credit Party has complied with
the Federal Assignment of Claims Act
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of 1940, as amended, in respect of the Administrative Agent's security
interest therein as granted under the Security Documents;
(r) are owed by any State or any department, agency, or
instrumentality thereof unless such Credit Party has complied with any
applicable State statutory or regulatory equivalent of the Federal
Assignment of Claim Act of 1940, as Amended, in respect of the
Administrative Agent's security interest therein as granted under the
Security Documents;
(s) are owed by an Affiliate of such Credit Party;
(t) which, when added to any and all other Accounts of the
Account Debtor thereof owing to such Credit Party, produce an aggregate
indebtedness from such Account Debtor of more than twenty-five percent
(25%) of the total of all of such Credit Party's Eligible Accounts,
unless, as to a specified Account Debtor, the Administrative Agent, in
its sole discretion, determines a higher or lower percentage;
(u) are owed by an Account Debtor with respect to which more
than fifty percent (50%) of the balances then outstanding on Accounts
owed by such Account Debtor and its Affiliates to such Credit Party has
remained unpaid for more than ninety (90) days from the dates of their
original due dates, as applicable; or
(v) are, in the Administrative Agent's reasonable credit
judgment, Accounts of an Account Debtor which is deemed to be an
unacceptable credit risk or Accounts which are otherwise deemed
unacceptable.
"ELIGIBLE INVENTORY" shall mean only such raw materials and
finished goods Inventory of a Credit Party, valued at the lower of cost
(on a first in, first out basis) or fair market value, as the
Administrative Agent, in its reasonable discretion, shall from time to
time consider to be Eligible Inventory and, by way of example and not
limitation, excluding Inventory which:
(a) consists of obsolete, damaged, defective, unmerchantable,
spoiled, outdated or unsalable items;
(b) consists of goods not held for sale, such as any labels,
any maintenance items, any supplies and packaging, and any Inventory
used in connection with research and development; provided, that raw
materials shall not be considered goods not held for sale under this
clause (b);
(c) is subject to a Lien other than the Lien created by the
Security Documents; PROVIDED, HOWEVER, that Inventory consisting of or
containing precious or semi-precious metals or copper that are subject
to any Lien (other than pursuant to the Credit Documents) shall cease
to be excluded from eligibility pursuant to this clause (c) if and when
such Lien is terminated or otherwise subordinated to the Lien created
by the Security Documents pursuant to the written agreement of the
holder of such other Lien in form and substance satisfactory to the
Administrative Agent in its sole discretion (without limiting the
generality
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of this clause (c), it is acknowledged and agreed by the Borrowers that
none of the Inventory of Xxxxxxxx Advanced Materials, Inc. shall be
Eligible Inventory unless and until any and all Liens securing its
obligations under precious metals leases, consignments or similar
metals arrangements are terminated or subordinated as provided in the
immediately preceding proviso);
(d) is not subject to a first priority, perfected Lien in
favor of the Administrative Agent;
(e) is located at a location, other than the Development Bond
Sites, not owned by such Credit Party and for which such Credit Party
has not delivered to the Administrative Agent an appropriate landlord
or warehouseman's waiver, in form and substance reasonably satisfactory
to the Administrative Agent; PROVIDED, HOWEVER, that (i) through the
close of business on April 15, 2002, Inventory situated at any such
location shall not be excluded from Eligible Inventory solely by reason
of such Credit Party's failure to deliver a waiver in respect of such
location to the Administrative Agent, and (ii) thereafter, Inventory
situated at a site as to which no such waiver has been delivered shall
not be excluded from Eligible Inventory solely by reason of such Credit
Party's failure to deliver such waiver if, at the Borrowers' request,
an amount equal to three (3) months' rent, storage fees or the like has
been reserved from the Borrowing Base;
(f) is in the possession of a bailee or other third Person
including Inventory held by a third party for processing or Inventory
purchased by but not yet delivered to such Credit Party and for which
such Credit Party has not delivered to the Administrative Agent an
appropriate bailee's waiver, in form and substance satisfactory to the
Administrative Agent;
(g) subject to clause (c), above, is held by such Credit Party
on consignment or Inventory held by or placed into the possession of a
third Person for sale or display by that Person;
(h) is located outside of the United States; except, that
Inventory located in Canada shall not be excluded from Eligible
Inventory under this clause (h) unless the Administrative Agent's
security interest therein for the benefit of the Lenders has not been
perfected by filing;
(i) is manufactured, produced or purchased pursuant to any
contract with the United States government, any agency or
instrumentality thereof or prime contractor thereof, which contract
provides for progress or advance payments to the extent such Inventory
is identified to such contract, unless as to any of the foregoing the
Administrative Agent has, in its sole discretion, approved in writing
such Inventory to be included as Eligible Inventory; or
(j) is, in the Administrative Agent's reasonable credit
judgment, Inventory which is otherwise deemed ineligible.
"EQUIPMENT AMOUNT" shall mean, during the period commencing on
the Delivery
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Date of the Third Amendment to this Agreement and ending on the close
of business on June 15, 2002, inclusive, One Million Five Hundred
Thousand Dollars ($1,500,000) and, thereafter, such amount or amounts
as the Administrative Agent (in its sole discretion) from time to time
designates in writing to the Borrowers and the Lenders as the Equipment
Amount, taking into account such appraisals of the Credit Parties
equipment and other factors as the Administrative Agent may in its
discretion deem appropriate; PROVIDED, HOWEVER, it is agreed and
understood that, notwithstanding the appraised value of the Credit
Parties' equipment, the Administrative Agent may in its sole discretion
assign any non-negative amount, including zero ($-0-), to be the
Equipment Amount, it being the original understanding of the Lenders,
the Administrative Agent and the Borrowers that only Accounts and
Inventory would be included in the computation of the Borrowing Base.
"INVENTORY" shall mean "Inventory", as that term is defined
in, as applicable, the Security Agreement or the Subsidiary Security
Agreement.
"INTEREST COVERAGE RATIO" shall mean, 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.
"LETTER OF CREDIT EXPOSURE" shall mean, at any time, as to
each Lender, the product of (i) the General Revolving Facility
Percentage of such Lender at such time, TIMES (ii) the aggregate Letter
of Credit Outstandings at such time.
B. The definitions of "Consolidated Fixed Charge Coverage Ratio" and
"Maturity Date" in Section 1.1 (Definitions) of the Credit Agreement are
amended and restated to provide, respectively, 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 (including
Capitalized Lease Obligations and required reductions in committed
credit facilities) with a final maturity date more than one year after
the end of that Testing Period, PLUS (iii) the sum of all payments for
dividends, stock repurchases or other stock redemptions, and other
purposes described in section 9.6, if any, in each case on a
consolidated basis for the Borrower 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 a Borrower or
any Subsidiary for any portion of such Testing Period prior to
the date of acquisition, and (B) exclude the appropriate financial
items for any person or business unit which has been disposed of by a
Borrower or any Subsidiary, for the portion of such Testing Period
prior to
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the date of disposition.
* * *
"MATURITY DATE" shall mean October 1, 2003, or such earlier
date on which the Total Commitment is terminated.
C. The definition of "Consolidated Net Worth" in Section 1.1
(Definitions) of the Credit Agreement is amended by adding the following clause
to the end of such definition immediately following the word "Stock" and before
the period:
; 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 the Third Amendment to this 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 the Third
Amendment to this Agreement, such item appearing under the
stockholders' equity categories "Other Equity Transactions - Deferred
Directors Shares and Deferred Compensation").
D. The definition of "Permitted Precious Metal Consignments" in Section
1.1 (Definitions) of the Credit 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 $70,000,000 at
any time".
E. Clause (vi) of Section 2.1(a) (General Revolving Facility) of the
Credit Agreement is amended and restated in its entirety to provide as follows:
(vi) shall not exceed for any Lender at any time outstanding that
aggregate principal amount which, when added to the Letter of Credit
Exposure of such Lender at such time, equals the LESSER of (A) the
General Revolving Commitment of such Lender at such time or (B) an
amount equal to the product of (1) the Borrowing Base at such time,
TIMES (2) the General Revolving Facility Percentage of such Lender at
such time.
F. Clause (vii) of Section 2.1(b) (Swing Line Revolving Facility) of
the Credit
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Agreement is amended and restated in its entirety to provide as follows:
(vi) may only be made if, after giving effect thereto, both (A) the
Unutilized Total General Revolving Commitment, less the aggregate
Letter of Credit Outstandings, at such time exceeds the outstanding
Swing Line Revolving Loans, and (B) the Borrowing Base at such time
exceeds an amount equal to the aggregate of, at such time (1) the
aggregate outstanding General Revolving Loans, PLUS (2) the aggregate
Letter of Credit Outstandings, PLUS (3) the outstanding Swing Line
Revolving Loans;
G. The Pricing Grid Table and the last sentence of Section 2.8(h)
(Interest Margins) of the Credit Agreement 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 APPLICABLE EURODOLLAR APPLICABLE PRIME RATE APPLICABLE FACILITY FEE
TO CONSOLIDATED EBITDAR MARGIN FOR GENERAL MARGIN RATE
REVOLVING LOANS
------------------------------------ -------------------------- -------------------------- --------------------------
Greater than or equal to 5.00 to 350 100 50
1.00
------------------------------------ -------------------------- -------------------------- --------------------------
Greater than 4.00 to 1.00 and less 300 75 50
than 5.00 to 1.00
------------------------------------ -------------------------- -------------------------- --------------------------
Greater than 3.50 to 1.00 and less 250 50 40
than or equal to 4.00 to 1.00
------------------------------------ -------------------------- -------------------------- --------------------------
Greater than 3.00 to 1.00 and less 200 25 30
than or equal to 3.50 to 1.00
------------------------------------ -------------------------- -------------------------- --------------------------
Greater than 2.50 to 1.00 and less 175 0 30
than or equal to 3.00 to 1.00
------------------------------------ -------------------------- -------------------------- --------------------------
Less than or equal to 2.50 to 1.00 150 0 25
------------------------------------ -------------------------- -------------------------- --------------------------
(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 Agreement, the Applicable Eurodollar Margin for General
Revolving Loans shall be three hundred fifty (350) basis points per
annum, the Applicable Prime Rate Margin shall be one hundred (100)
basis points per annum, and the Applicable Facility Fee Rate shall be
fifty (50) basis points per annum; and (ii) the charging of interest
and fees 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 Section 9.8, below, or limit any right or remedy of the
Administrative Agent or
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the Lenders by reason thereof.
H. Clause (i) of Section 2A.1(b) (Letters of Credit) of the Credit
Agreement is amended and restated in its entirety to provide as follows:
(i) no Letter of Credit shall be issued if, after giving effect
thereto, either (A) the Letter of Credit Outstandings would exceed
$5,000,000, or (B) the Letter of Credit Outstandings, when added to the
aggregate principal amount of all General Revolving Loans and all Swing
Line Revolving Loans then outstanding, would exceed the lesser of (1)
the Total General Revolving Commitment at such time or (2) the
Borrowing Base at such time;
I. The title and first sentence of Section 5.2(a) (If Outstanding
General Revolving Loans and Swing Line Loans Exceed Total General Revolving
Commitment) of the Credit Agreement are amended and restated in their entirety
to provide as follows:
(a) IF OUTSTANDING GENERAL REVOLVING LOANS AND SWING LINE
LOANS AND LETTER OF CREDIT OUTSTANDINGS EXCEED TOTAL GENERAL REVOLVING
COMMITMENT OR BORROWING BASE. If on any date (after giving effect to
any other payments on such date) the sum of (i) the aggregate
outstanding principal amount of General Revolving Loans and the Letter
of Credit Outstandings, PLUS (ii) the aggregate outstanding principal
amount of Swing Line Revolving Loans, EXCEEDS the lesser of (A) the
Total General Revolving Commitment in effect on such date or (B) the
Borrowing Base on such date, the Borrowers shall prepay on such date
that principal amount of Swing Line Revolving Loans and, after Swing
Line Revolving Loans have been paid in full, Unpaid Drawings and
General Revolving Loans, in an aggregate amount at least equal to such
excess and conforming, in the case of partial prepayments of any Loans,
to the applicable requirements as to the amounts of partial prepayments
which are contained in Section 5.1.
J. Section 8.1(i) (Other Information) is re-designated as Section
8.1(j), and the following provision is inserted as a new Section 8.1(i):
(i) MONTHLY FINANCIAL STATEMENTS; BORROWING BASE CERTIFICATE;
INSPECTION.
(i) No later than March 25, 2002 with respect to the monthly
period ending February 28, 2002 and thereafter as soon as available and
in any event within twenty (20) days after the close of each of the
monthly accounting periods in each fiscal year of the Parent (that is,
ending March 31, 2002 and thereafter), the unaudited consolidated and
consolidating balance sheets of the Parent and the Subsidiaries as at
the end of such monthly period and the related unaudited consolidated
and consolidating statements of income and cash flows for such monthly
period, and setting forth, in the case of such unaudited statements of
income and of cash flows, comparative figures for the related periods
in the prior fiscal year, and which financial statements shall be
certified as true and correct on
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behalf of the Parent by a Principal Officer of the Parent, subject to
changes resulting from normal year-end audit adjustments.
(ii) On the "Delivery Date" of the Third Amendment to this
Agreement, no later than March 25, 2002 with respect to the monthly
period ending February 28, 2002 and thereafter as soon as available and
in any event within twenty (20) days after the close of each of the
monthly accounting periods in each fiscal year of the Parent (that is,
ending March 31, 2002 and thereafter): (A) a certificate reflecting the
calculation of each Credit Party's Eligible Accounts and Eligible
Inventory, in form and content reasonably satisfactory to the
Administrative Agent (each a "Borrowing Base Certificate"), (B) a
summary aged trial balance of each Credit Party's Accounts dated as of
the date of the Borrowing Base Certificate reconciled to the respective
general ledger balance (and upon the Administrative Agent's request, a
detailed aged trial balance of all then existing Accounts specifying
the names, face value and dates of invoices for each Account Debtor
obligated on an Account so listed), and (C) an Inventory record and
trial balance for each Credit Party, broken down into such detail and
with such categories as the Administrative Agent shall reasonably
require (including, but not limited to, a report indicating the type,
location and amount of raw materials and finished goods and all other
information deemed reasonably necessary by the Administrative Agent to
determine the Eligible Inventory of such Credit Party.
(iii) The Administrative Agent and each Lender (through any of
their respective officers, employees, or agents) shall have the right,
from time to time, upon reasonable notice and during normal business
hours, to inspect the books and records of the Credit Parties and to
check, test, and appraise the Collateral in order to verify each Credit
Party's financial condition or the amount, quality, value, condition
of, or any other matter relating to, the Collateral; provided, that, to
the extent reasonably possible, any such inspection, check, test or
appraisal shall not unreasonably interfere with the daily operations of
any Credit Party. The Borrowers agree to reimburse the Administrative
Agent for such costs and expenses as the Administrative Agent may
reasonably incur in connection with any inspection, audit or
verification of the Credit Parties' financial or other records, the
Collateral or the premises upon which the Collateral is located or any
other security for the Obligations; provided, however, that (i) so long
as no Default or Event of Default has occurred and is continuing, the
Borrowers shall be required to make reimbursement for the costs and
expenses arising out of no more than two (2) Collateral audits/field
examinations in any calendar year, and (ii) the Administrative Agent
shall provide to the Borrowers reasonable substantiation of the costs
and expenses required to be reimbursed hereunder.
K. Section 9.2(e) of the Credit Agreement is amended and restated in
its entirety to provide as follows:
(e) CAPITAL EXPENDITURES: The Borrowers 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
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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
----------------------------- --------------------------------------
L. The following proviso is added to the end of Section 9.3(e) of the
Credit Agreement immediately after the word "time" and before the period:
; 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 Administrative Agent
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.
M. Section 9.6 (Dividends, Stock Repurchase, etc.) of the Credit
Agreement is amended and restated in its entirety to provide as follows:
9.6 DIVIDENDS, STOCK REPURCHASE, ETC.
(a) The Parent will not directly or indirectly declare, order,
pay or make any dividend (other than dividends payable solely in
capital stock of the Parent) or other distribution on or in respect of
any capital stock of any class of the Parent, whether by reduction of
capital or otherwise.
(b) Neither Borrower will directly or indirectly make, or
permit any of the Subsidiaries to directly or indirectly make, any
purchase, redemption, retirement or other acquisition of (i) any of its
capital stock of any class (other than for a consideration consisting
solely of capital stock of that person), or (ii) any warrants, rights
or options to acquire or any securities convertible into to
exchangeable for any of its capital stock.
N. Section 9.7 (Ratio of Consolidated Total Debt to Consolidated Total
Adjusted Capital and Minimum EBITDAR) of the Credit Agreement is amended and
restated in its entirety to provide as follows:
9.7 RATIO OF CONSOLIDATED TOTAL DEBT TO CONSOLIDATED TOTAL
ADJUSTED CAPITAL AND INTEREST COVERAGE RATIO.
(a) The Borrowers 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
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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.
(b) The Borrowers 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 Borrowers 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 Borrowers 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.
O. Clause (iv) of Section 9.8 of the Credit Agreement (Ratio of
Consolidated Total Debt to Consolidated EBITDAR) is amended and restated in its
entirety to provide as follows:
(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, 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 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 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).
P. Section 9.9 (Consolidated Fixed Charge Coverage Ratio) of the Credit
Agreement is amended and restated in its entirety to provide as follows:
9.9. CONSOLIDATED FIXED CHARGE COVERAGE RATIO. The Borrowers
will not at any time 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
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the ratio set forth opposite such Testing Period:
Fiscal Quarter Ending 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 9.9, 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.
Q. Section 9.10 (Consolidated Tangible Net Worth) of the Credit
Agreement is amended and restated in its entirety to provide as follows:
9.10 CONSOLIDATED TANGIBLE NET WORTH. The Borrowers 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.
R. Section 9.14 (Certain Leases) of the Credit Agreement is amended and
restated in its entirety to provided as follows:
9.14 CERTAIN LEASES. The Borrowers will not permit the
aggregate payments (excluding any property taxes, insurance or
maintenance obligations paid by the Borrowers and the Subsidiaries as
additional rent or lease payments) by the Borrowers 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
section 9.12, leases between the Borrowers, between Subsidiaries or
between a Borrower and a Subsidiary), to exceed in any fiscal year of
the Borrowers an amount greater than 5.00% of the Consolidated Net
Worth of the Borrowers as of the date of the financial statements then
most recently furnished to the Lenders under section 8.1(a).
S. The parenthetical "(including, without limitation, any prepayment
required by the provisions of Section 5.2, above)" is inserted at the end of
clause (i) of Section 10.1(a) (Payments) of the Credit Agreement, immediately
following the word "Loans" and before the semi-colon.
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3. DELIVERY DATE; CONDITIONS PRECEDENT. The consent set forth in
Section 1, above, and the modifications to the Credit Agreement set forth in
Section 2, above, are subject to the Borrowers' performance of the following
(the date on which all have been performed being the "Delivery Date"):
A. Each Borrower's secretary or treasurer shall have certified to each
Lender (i) a copy of the resolutions duly adopted by that Borrower's board of
directors in respect of this Amendment; (ii) true and correct copies of that
Borrower's current Charter or Articles of Incorporation and By-laws or Code of
Regulations; (iii) the names and true signatures of the officers of that
Borrower authorized to sign this Third Amendment and the amendment to the
Security Agreement on behalf of that Borrower; (iv) that, after giving effect to
the amendments set forth herein, no Event of Default or Default exists; and (v)
the representations and warranties of the Borrowers under the Credit Agreement
are reaffirmed as of the Delivery Date, subject only to variance therefrom
acceptable to the Administrative Agent.
B. Each Guarantor's secretary or treasurer shall have certified to each
Lender (i) a copy of the resolutions duly adopted by that Guarantor's board of
directors in respect of this Amendment, (ii) true and correct copies of that
Guarantor's current Charter or Articles of Incorporation and By-laws or Code of
Regulations, (iii) the names and true signatures of the officers of that
Guarantor authorized to sign this Amendment and the Amendment to the Security
Agreement on behalf of that Guarantor; and (iv) that, after giving effect to the
amendments set forth herein, no Event of Default or Default exists (provided,
however, that at the option of the Borrowers, the documents described in clause
(ii), above, in respect of Xxxxxxxx Acquisition, LLC may be delivered to the
Administrative Agent not later than 30 days after the Delivery Date).
C. Counsel to the Borrowers and the Guarantors shall have delivered to
each Lender a
17
written opinion as to the due authorization, execution, delivery and
enforceability of this Third Amendment and the other documents described in
paragraphs E, G and J, inclusive, of this Section 3, in form and substance
satisfactory to the Administrative Agent (provided, however, that at the option
of the Borrowers, the opinions in respect of Xxxxxxxx Acquisition, LLC and the
documents described in paragraph J, below, may be delivered to the
Administrative Agent promptly following the date on which such counsel is able
to obtain the Articles of Organization of Xxxxxxxx Acquisition, LLC, certified
by the Secretary of State of New York, and a certificate of valid existence, or
its equivalent in New York, in respect of Xxxxxxxx Acquisition, LLC).
D. The Borrowers shall have paid to the Administrative Agent, for the
ratable benefit of the Lenders, an amendment fee in the amount of One Hundred
Sixty-two Thousand Five Hundred Dollars ($162,500).
E. All of the parties to the Intercreditor and Collateral Agency
Agreement dated September 28, 2001 shall have executed and delivered to
Administrative Agent a First Amendment to Intercreditor and Collateral Agency
Agreement in the form of Attachment 1 hereto.
F. The Borrowers and the Guarantors shall have executed and delivered
to the Administrative Agent such Security Documents, and shall have taken or
caused to be taken such other actions, if any, as the Administrative Agent may
reasonably deem necessary or appropriate to cause the Administrative Agent's
Lien on the Credit 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.
G. Each of the Guarantors shall have executed a confirmation of its
Guaranty and Security Documents in the form of Attachment 2 hereto.
H. All of the parties to the Synthetic Lease shall have executed and
delivered an
18
amendment thereto in form and substance satisfactory to the Administrative
Agent, and all conditions to its effectiveness shall have been satisfied.
I. The Borrowers shall have executed and delivered to the
Administrative Agent a Borrowing Base Certificate as of January 31, 2002.
J. The Borrowers shall have caused Xxxxxxxx Acquisition, LLC (a New
York limited liability company doing business as "Pure Tech") to execute and
deliver to the Administrative Agent a Guaranty (substantially in the form of the
Guaranties) and to join in the Subsidiary Security Agreement as an "Assignor"
thereunder pursuant to a joinder satisfactory to the Administrative Agent in
form and substance.
K. The Borrowers shall have delivered or caused to be delivered such
other documents as Administrative Agent or any of the Lenders may reasonably
request.
4. NO OTHER MODIFICATIONS; SAME INDEBTEDNESS. Except as expressly
provided in this Third Amendment, all of the terms and conditions of the Credit
Agreement and the other Credit Documents remain unchanged and in full force and
effect. The modifications effected by this Third Amendment and by the other
instruments contemplated hereby shall not be deemed to provide for or effect a
repayment and re-advance of any of the Loans now outstanding, it being the
intention of both the Borrowers and the Lenders hereby that the indebtedness
owing under the Credit Agreement, as amended by this Third Amendment, be and
hereby is the same Indebtedness as that owing under the Credit Agreement
immediately prior to the effectiveness hereof.
5. GOVERNING LAW; BINDING EFFECT. This Third 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 Borrowers, the Lenders,
the Administrative Agent and the Swing Line Lender and their respective
successors and assigns.
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6. COUNTERPARTS. This Third 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.
7. MISCELLANEOUS.
A. The Borrowers jointly and severally agree to pay on demand all costs
and expenses of the Lenders and the Administrative Agent, including reasonable
attorneys' fees and expenses, incurred in connection with the preparation,
execution and delivery of this Third Amendment and the other documents
contemplated hereby, including, without limitation, the Amendment to
Intercreditor and Collateral Agency Agreement.
B. This Third Amendment is executed in accordance with and subject to
Section 12.12 of the Credit Agreement. The execution, delivery and performance
by the Lenders, the Swing Line Lender and the Administrative Agent of this Third
Amendment shall not constitute, or to be deemed to be or construed as, a waiver
of any right, power or remedy of the Lenders, the Swing Line Lender or the
Administrative Agent, or a waiver of any provision of the Credit Agreement,
except as expressly stated herein. None of the provisions of this Third
Amendment shall constitute, or to be deemed to be or construed as, a waiver of
any Event of Default or any Default.
20
IN WITNESS WHEREOF, the Borrowers, the Lenders, the Administrative
Agent and the Swing Line Lender have hereunto set their hands as of the date
first above written.
BORROWERS: ADMINISTRATIVE AGENT:
--------- --------------------
BRUSH XXXXXXX INC. . NATIONAL CITY BANK,
AS ADMINISTRATIVE AGENT
By:_______________________________ By:_________________________________
________________, _____________ Xxxxxx X. Xxxxx, Senior Vice President
BRUSH ENGINEERED MATERIALS INC.
By:________________________________
__________________, _______________
[Signatures continued on the following page]
LENDERS:
FIFTH THIRD BANK, an Ohio banking
corporation,/k/a FIFTH THIRD BANK,
NORTHEASTERN OHIO
By:___________________________________
__________________, _______________
NATIONAL CITY BANK, as Lender
and Swing Line Lender
By:_________________________________
Xxxxxx X. Xxxxx, Senior Vice President
XXXXXX TRUST AND SAVIGNS BANK
By:___________________________________
__________________, _______________
U.S. BANK NATIONAL ASSOCIATION
21
F/k/a Firstar Bank
By: ________________________________
__________________, _______________
MANUFACTURES AND TRADERS
TRUST COMPANY
By: ________________________________
__________________, _______________
LASALLE BANK NATIONAL ASSOCIATION
By: __________________________________
__________________, _______________
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