EXHIBIT 4(a)(xxvii)
SECOND WAIVER TO AMENDED AND RESTATED NOTE AGREEMENT
Reference is hereby made to that certain 2001 Amended and Restated Note
Agreement dated as of May 1, 2001 by and among THC SYSTEMS, INC. (the
"Company"), ONEIDA LTD. (the "Guarantor"), ALLSTATE LIFE INSURANCE COMPANY
("Allstate Life"), ALLSTATE INSURANCE COMPANY ("Allstate") and PACIFIC LIFE
INSURANCE COMPANY (together with Allstate Life and Allstate, the "Purchasers"),
as amended by that certain (i) Waiver and Amendment No. 1 to 2001 Amended and
Restated Note Agreement dated as of December 7, 2001, (ii) Amendment No. 2 to
2001 Amended and Restated Note Agreement dated as of April __, 2002 and (iii)
Amendment No. 3 to 2001 Amended and Restated Note Agreement dated as of August
__, 2002 (collectively, as the same may from time to time be amended, restated,
supplemented or otherwise modified, the "Note Agreement"). This Second Waiver to
Amended and Restated Note Agreement is dated as of December 9, 2002 and
hereinafter referred to as the "Second Waiver."
WHEREAS, the Company and the Guarantor have notified the Purchasers that
the Company and the Guarantor may restate their financial statements for certain
prior periods in order to change the manner in which the Company and the
Guarantor accounted for certain costs arising out of the Guarantor's acquisition
of Delco International Ltd. in August 2000. The potential accounting
adjustments, if implemented, would treat certain bonuses, consulting payments
and inventory and acquisition costs as expenses in the period in which they were
paid. A description of the proposed accounting adjustments, including the
amounts thereof, are set forth in a Memorandum dated November 27, 2002 from the
Guarantor to the Lenders which are parties to that certain Amended and Restated
Credit Agreement dated as of April 27, 2001 (as the same may from time to time
be amended, restated, supplemented or otherwise modified, the "Credit
Agreement") together with the Company and JPMORGAN CHASE BANK (formerly known as
The Chase Manhattan Bank), as Administrative Agent (such Memorandum together
with schedules attached thereto are attached hereto as Exhibit A and referred to
herein as the "Waiver Request");
WHEREAS, the proposed accounting adjustments described in the Waiver
Request, if fully implemented, will result in a reduction of the Company's and
the Guarantor's Consolidated EBITDA for the fiscal quarters from October 28,
2000 through and including October 26, 2002, including reductions of $3,655,000,
$2,845,000, and $2,780,000 in Consolidated EBITDA for the four quarters ended
July 28, 2001, October 27, 2001 and January 26, 2002, respectively;
WHEREAS, the reductions in the Company's and the Guarantor's Consolidated
EBITDA described in the Waiver Request will cause the Company and the Guarantor
to be in violation of (i) the Consolidated Leverage Ratio for each of the Fiscal
Quarters ended July 28, 2001, October 27, 2001 and January 26, 2002, and (ii)
the Consolidated Interest Coverage Ratio for each of the Fiscal Quarters ended
October 27, 2001 and January 26, 2002; and
WHEREAS, the Company and the Guarantor have requested that the Purchasers
waive the violations of these financial covenants for such periods in the event
the Company and the Guarantor elect to make the accounting adjustments described
in the Waiver Request.
NOW THEREFORE, in consideration of the premises herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise noted, all defined terms used herein shall
have the meanings assigned to such terms in the Note Agreement.
2. Waiver. In the event the Company and the Guarantor elect to make some or
all of the accounting adjustments described in the Waiver Request, the
Purchasers hereby waive the Events of Default created as a result of (a) the
Company's and the Guarantor's failure to satisfy the Consolidated Leverage Ratio
for each of the Fiscal
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Quarters ended July 28, 2001, October 27, 2001, and January 26, 2002, and (b)
the Company's and the Guarantor's failure to satisfy the Consolidated Interest
Coverage Ratio for each of the Fiscal Quarters ended October 27, 2001 and
January 26, 2002. This Second Waiver is limited to violations of the
Consolidated Leverage Ratio and the Consolidated Interest Coverage Ratio caused
by the accounting adjustments described in the Waiver Request in amounts not to
exceed the amounts set forth in the Waiver Request. This Second Waiver does not
apply to any other Default or Event of Default (whether or not caused by the
proposed accounting adjustments and whether or not presently existing or arising
in the future) other than the financial covenant violations described above for
the periods described above.
3. Effectiveness. This Second Waiver shall become effective ("Effective
Date") upon the Purchaser's receipt of (a) a signed counterpart of this Second
Waiver duly executed and delivered by the Company and the Guarantor, (b) payment
of a waiver fee in the amount of $5,000 to each Purchaser who executes and
delivers to the Purchasers' counsel a signed counterpart of this Second Waiver
before 5:00 p.m. (EST) on December 9, 2002, which waiver fee shall be fully
earned and nonrefundable when paid, as well as payment in full of any
outstanding legal fees and expenses of counsel to the Purchasers in connection
with prior waivers and/or amendments, (c) an executed copy of that certain
Waiver to Amended and Restated Credit Agreement of any corresponding events of
default under the Credit Agreement, duly executed by the parties thereto and (d)
when all of the conditions precedent set forth in Section 6 hereof have been
met.
4. Restated Financial Statements. In the event the Company and the
Guarantor restate their financial statements for one or more prior periods in
order to reflect the accounting adjustments described in the Waiver Request, the
Company and the Guarantor shall promptly furnish to the Purchasers true and
correct copies of such restated financial statements, together with the
certificate of a Financial Officer of the Company and the Guarantor required by
Section 6.1(c) of the Note with respect to such restated financial statements,
which Financial Officer may take into account the effect of this Second Waiver
in making the certifications required by Section 6.1(c) of the Note Agreement.
5. Representations and Warranties. The Company and the Guarantor hereby
represent and warrant to the Purchasers that the following statements are true,
correct and complete:
5.1 Representations and Warranties. Each of the representations and
warranties made by the Company and the Guarantor in the Note Agreement is true
and correct on and as of the date of this Second Waiver.
5.2 No Default or Event of Default. No Default or Event of Default has
occurred and is continuing except for the Events of Default referenced in
Paragraph 2 above.
5.3 Execution, Delivery and Enforceability. This Second Waiver has
been duly and validly executed and delivered by the Company and the Guarantor
and constitutes the Company's and the Guarantor's legal, valid and binding
obligations, enforceable against the Company and the Guarantor in accordance
with its terms.
6. Conditions to Effectiveness of Second Waiver. In addition to the
conditions set forth in Section 3 hereof, this Second Waiver shall be effective
only when and if each of the following conditions is satisfied:
6.1 Secretary's Certificate. The Purchasers shall have received a
certificate executed by the Secretary or Assistant Secretary of the Company and
the Guarantor certifying the due authorization of this Second Waiver by the
Company, the incumbency of the officer executing this Second Waiver, and any
other legal matters relating to this Second Waiver, all in form and substance
satisfactory to the Purchasers and their counsel.
6.2 Consent of Subsidiary Guarantors. Each of the Subsidiary
Guarantors shall have executed and delivered to the Purchasers the Consent of
Guarantors attached to this Amendment.
6.3 No Default or Event of Default; Accuracy of Representations and
Warranties. After giving effect to this Second Waiver, no Default or Event of
Default shall exist and each of the representations and warranties made by the
Company or any of its Restricted Subsidiaries and the Guarantor herein and in or
pursuant to
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the Subsidiary Guarantees, the Subordination Agreement or any of the Notes shall
be true and correct in all material respects as if made on and as of the date on
which this Second Waiver becomes effective.
7. Confirmation of Agreement. Except as amended by this Second Waiver, all
the provisions of the Note Agreement remain in full force and effect from and
after the date hereof, and the Company and the Guarantor hereby ratify and
confirm the Note Agreement and each of the documents executed in connection
therewith. From and after the date hereof, all references in the Note Agreement
to "this Agreement", "hereof", "herein", or similar terms, shall refer to the
Note Agreement as amended by this Second Waiver.
8. Counterparts. This Second Waiver may be signed in any number of
counter6parts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Delivery of an executed
signature page to this Second Waiver by facsimile transmission shall be as
effective as delivery of a manually signed counterpart.
9. Governing Law. This Second Waiver shall be governed by and construed in
accordance with the internal laws of the State of Illinois.
[SIGNATURE PAGE FOLLOWS]
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Dated as of this 6th day of December, 2002.
THC SYSTEMS, INC.
By: /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
ONEIDA LTD.
By: /s/ XXXXX X. XXXXX
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Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------
By: /s/ XXXXX X. XXXXXXX
-------------------------------
Authorized Signatories
ALLSTATE INSURANCE COMPANY
By: /s/ XXXXXX X. XXXXXXXX
-------------------------------
By: /s/ XXXXX X. XXXXXXX
-------------------------------
Authorized Signatories
PACIFIC LIFE INSURANCE COMPANY
By: /s/ XXXXX XXXXXXXX
-------------------------------
Its: Assistant Vice President
By: /s/ XXXXX X. XXXXX
-------------------------------
Its: Assistant Secretary
Authorized Signatories
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CONSENT OF SUBSIDIARY GUARANTORS
Each of the undersigned is a party to a Subsidiary Guarantee and is a
Subsidiary Guarantor of the obligations of the Company and the Guarantor under
the Note Agreement referred to in the foregoing Second Waiver. Each of the
undersigned Subsidiary Guarantors hereby (a) consents to the foregoing Second
Waiver, (b) acknowledges that, notwithstanding the execution and delivery of the
foregoing Second Waiver, the obligations of each of the undersigned Subsidiary
Guarantors are not impaired or affected, and the Subsidiary Guarantee continues
in full force and effect, and (c) ratifies and affirms the terms and provisions
of the Subsidiary Guarantee.
IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Consent of Subsidiary Guarantors as of the 6th day of December, 2002.
BUFFALO CHINA, INC. DELCO INTERNATIONAL LTD.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
ENCORE PROMOTIONS, INC. SAKURA, INC.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
THC SYSTEMS INC. KENWOOD SILVER COMPANY, INC.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXX X. XXXXX
--------------------------------- ---------------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
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EXHIBIT A
Waiver Request
(See attached)
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