EXHIBIT 4(a)(ii)
WAIVER AND AMENDMENT NO. 1
TO
2001 AMENDED AND RESTATED NOTE PURCHASE AGREEMENT (1996)
This Waiver and Amendment No. 1 ("Amendment"), dated as of December 7,
2001, is among THC SYSTEMS, INC. (the "Company"), ONEIDA LTD., a New York
corporation (the "Guarantor"), ALLSTATE INSURANCE COMPANY ("Allstate"), ALLSTATE
LIFE INSURANCE COMPANY ("Allstate Life") and PACIFIC LIFE INSURANCE COMPANY
(together with Allstate and Allstate Life, the "Purchasers") under the 2001
Amended and Restated Note Agreement referred to below among the Company, the
Guarantor and the Purchasers.
R E C I T A L S
A. The Company, the Guarantor and the Purchasers are parties to the
2001 Amended and Restated Note Agreement dated as of May 1, 2001 entered into in
connection with $35,000,000 principal amount of Senior Notes due May 31, 2005
(the "Note Agreement").
B. The Company and the Guarantor have advised the Purchasers that (i)
its Consolidated Interest Coverage Ratio for the Fiscal Quarter ended October
27, 2001 is 2.04 to 1.0, in violation of Section 7.12(a) of the Note Agreement
which required a Consolidated Interest Coverage Ratio of not less than 2.20 to
1.0, and (ii) its Consolidated Leverage Ratio for the Fiscal Quarter ended
October 27, 2001 is 5.42 to 1.0 in violation of Section 7.12(b) of the Note
Agreement which required a Consolidated Leverage Ratio of not more than 4.45 to
1.0.
C. The Company and the Guarantor have requested that the Purchasers
waive the Events of Default arising out of the Company's and the Guarantor's
failure to comply with Sections 7.12(a) and (b) of the Note Agreement for the
Fiscal Quarter ended October 27, 2001, and amend the Note Agreement to allow
certain Foreign Subsidiaries to pledge their assets as collateral security for
foreign lines of credit.
D. The Purchasers are willing to grant the waiver requested by the
Company and the Guarantor, provided the Note Agreement is amended, among other
things, (i) to increase the Applicable Margin used in determining interest rates
under the Note Agreement and the Notes, together with certain other provisions
therein, (ii) to require Kenwood Silver Company, Inc., a Subsidiary of the
Guarantor, to execute a Subsidiary Guarantee and Subordination Agreement and to
grant the Collateral Agent, for the ratable benefit of the Secured Parties, a
security interest in substantially all of its assets (other than Deposit
Accounts) upon execution of the further amendment to the Note Agreement
contemplated in the next Recital, and (iii) to require Company and the Guarantor
to grant and to cause Oneida Canada Limited to grant the Collateral Agent, for
the ratable benefit of certain of the Secured Parties, one or more mortgages on
certain of the real property owned by Guarantor or its Subsidiaries in the
United States and Canada upon execution of the further amendment to the Note
Agreement contemplated in the next Recital.
E. The Company, the Guarantor and the Purchasers contemplate that,
subsequent to the execution of this Amendment, they will enter into
discussions regarding, among other things, (i) amending the required levels for
the Company's and Guarantor's Consolidated Interest Coverage Ratio and
Consolidated Interest Coverage Ratio for periods ending after October 27, 2001
and (ii) possibly reducing the amount of Commitments of the Lenders.
NOW, THEREFORE, the parties agree as follows:
8. Definitions. All capitalized terms used in this Amendment which are
not otherwise defined shall have the meanings given to those terms in the Note
Agreement, except where such terms are amended herein.
9. Waiver. The Purchasers hereby waive the Events of Default created as
a result of the Company's and the Guarantor's failure to comply with Sections
7.12(a) and (b) of the Note Agreement for the Fiscal Quarter ended October 27,
2001. This waiver is limited to the failure to comply with Sections 7.12(a) and
(b) at October 27, 2001 and shall not constitute or be construed as a waiver of
any other presently existing or future Events of Default.
10. Amendment of Note Agreement.
10.1. The following defined terms are added to Section 5.1 of the
Note Agreement:
"Amendment No. 1 Effective Date" means the date on which all
the conditions to the Waiver and Amendment No. 1 dated as of
December 7, 2001 have been satisfied.
"Bullet Loan" means the non-revolving Loan under the Credit
Agreement in the principal amount of $40,000,000 to be made on
January 4, 2002.
"Mortgages" means one or more mortgages on the Mortgaged
Property granted to the Collateral Agent, for the ratable benefit
of the Purchasers and the Lenders, securing the obligations under
the Bullet Loan, the Note Agreement and the 1992 Note Agreement,
provided that the Mortgages on Mortgaged Property subject to the
payment of New York mortgage recording tax will be limited in
amount to the sum of (a) the orderly liquidation value of the
Guarantor's main plant and knife plant located in Sherrill, New
York, and the Buffalo China, Inc. main plant located in Buffalo,
New York, as determined from an appraisal conducted by an
independent appraisal firm satisfactory to the Collateral Agent,
and (b) the current assessed value of any other such Mortgaged
Property determined from the appropriate tax assessment records,
as adjusted to full value in the case of any taxing jurisdiction
with assessments at less than full value.
"Mortgaged Property" means the real property described on
Schedule I hereto.
10.2. The definition of the term "Applicable Margin" in Section
5.1 is amended by deleting such definition in its entirety and
inserting in lieu thereof the following:
"Applicable Margin" means for any day, with respect to any
Loans, the Applicable Margin (expressed in terms of basis points
(bps)) as determined according to the applicable level ("Level")
as indicated by the following grid, as set forth in the Credit
Agreement as in effect on December 7, 2001 (as such Level may
change as described in Section 7.21 hereof), with such Level to be
determined on the basis of the Consolidated Leverage Ratio of the
Guarantor and its consolidated Subsidiaries as of the last day of
each Fiscal Quarter of the Company as reflected on the financial
statements for such Fiscal Quarter delivered by the Company and
the Guarantor pursuant to Section 6.1:
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Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 5 Xxxxx 0 Xxxxx 0 Xxxxx 0
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Consolidated <=2.50 <=2.75 <=3.00 <=3.25 <=3.50 <=4.00 <=4.50 >4.50
Leverage Ratio
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Eurodollar Margin 150.0 175.0 200.0 250.0 300.0 320.0 335.0 350.0
(bps)
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provided that, (i) during the period from the Amendment No. 1
Effective Date through and including the date on which the Company
and the Guarantor deliver the financial statements under Section
6.1 for the Fiscal Quarter ended October 27, 2001, the Applicable
Margin shall be based on Xxxxx 0, and (ii) if the Company and the
Guarantor shall have failed to deliver the financial statements
required by Section 6.1 when due (without giving effect to any
grace period or notice requirement) or there shall have occurred
an Event of Default which has not been waived in the manner
provided in Section 8.1 hereof, the Applicable Margin shall
immediately be adjusted to Level 8 until such time delivery of
such financial statements shall have been made or the Event of
Default shall have been cured or waived, as the case may be. Each
change in the Applicable Margin shall be effective on the first
Business Day following delivery of the most recent financial
statements pursuant to Section 6.1 subject to the proviso set
forth in the preceding sentence.
10.3. The definition of the term Loan Party in Section 5.01 is
amended to read as follows:
"Loan Party" means the Guarantor and each Subsidiary of the
Guarantor which is a party to a Transaction Document, and any
other Person which guarantees, or grants a Lien on any of its
assets to secure, the obligations under this Agreement, the 1992
Agreement, the Credit Agreement or any of the other Transaction
Documents.
10.4. The definition of the term Transaction Documents in Section
5.1 is amended to read as follows:
"Transaction Documents" means, collectively, this Agreement,
the 1992 Note Agreement, the Credit Agreement, any promissory note
delivered to a Lender evidencing the Loans, the Subsidiary
Guarantees, the Subsidiary Subordination Agreements, the Security
Documents, the Mortgages, any agreement between the Company, the
Guarantor and the Collateral Agent or the Administrative Agent
with respect to the payment of fees, any Hedging Agreement entered
into with a Lender or an Affiliate of the Lender, the Chase
Working Capital Facility, as such term is defined in the Security
Agreement, the Scotiabank Metal Line, as such term is defined in
the Security Agreement, the LC's, as such term is defined in the
Security Agreement, and each other document, agreement or
instrument delivered pursuant to the terms of any of the
foregoing, as the same may be amended, supplemented or otherwise
modified from time to time.
10.5. The following new Section 6.18 is added to the Note
Agreement:
Section 6.18 Additional Collateral. The Company and the
Guarantor shall use their best efforts to deliver or cause to be
delivered to the Collateral Agent the following items on or before
February 1, 2002, and in any event shall deliver or cause to be
delivered to the Collateral Agent the following items on or before
the later of (a) February 23, 2002 or (b) the date that Company,
the Guarantor and the holders of at least 66-2/3% in aggregate
principal amount of outstanding Notes have entered into an
amendment to this Note Agreement amending the Consolidated
Interest Coverage Ratio and the Consolidated Leverage Ratio to
levels which are mutually satisfactory and which amendment may
contain such other terms and conditions as may be required by the
Purchasers: (i) a Subsidiary Guarantee and Subsidiary
Subordination Agreement executed by Kenwood Silver Company, Inc.,
(ii) instruments in form and substance reasonably satisfactory to
the Collateral Agent pursuant to which Kenwood Silver Company,
Inc. shall become a party to the Security Documents granting to
the Collateral Agent a perfected first priority security interest
in or pledge of all of its tangible and intangible assets (other
than Deposit Accounts), (iii) Mortgages executed by Guarantor and
any Subsidiary owning Mortgaged Property granting the Collateral
Agent a mortgage Lien on all Mortgaged Property, (iv) fully paid
mortgagee title insurance policies (or binding commitments to
issue title insurance policies, marked to the satisfaction of the
Collateral Agent to evidence the form of such policies to be
delivered with respect to the Mortgages) in standard ALTA form,
issued by a title insurance company satisfactory to the Collateral
Agent in an amount not less than the amount of the Mortgages
(except as the Collateral Agent may otherwise agree), insuring the
Mortgages to create valid Liens on the Mortgaged Property with no
exceptions which the Collateral Agent shall not have approved in
writing, (v) instrument surveys dated within sixty (60) days of
delivery of all Mortgaged Property prepared by land surveyors
acceptable to the Collateral Agent showing the courses and
distances of all boundaries of the Mortgaged Property and the
location of all improvements, fences, driveways, encroachments and
easements affecting or appurtenant to the Mortgaged Property, with
the surveys certified to the Collateral Agent and the title
insurance company, (vi) a report from an independent real estate
appraisal firm acceptable to the Collateral Agent certifying to
the Collateral Agent the orderly liquidation value of Guarantor's
main plant and knife plant in Sherrill, New York and the main
plant of Buffalo China, Inc. in Buffalo, New York, (vii) insurance
certificates in form satisfactory to the Collateral Agent naming
the Collateral Agent a loss payee or mortgagee (as the case may
be) with
respect to the assets of Kenwood Silver Company, Inc. and
the Mortgaged Property, and (viii) such other instruments and
documents as the Collateral Agent may reasonably request
incidental to any of the foregoing. Provided the Company, the
Guarantor and the holders of at least 66-2/3% in aggregate
principal amount of outstanding Notes have entered into a mutually
acceptable amendment amending the Consolidated Interest Coverage
Ratio and the Consolidated Leverage Ratio, the Company and the
Guarantor shall deliver or cause to be delivered to the Collateral
Agent the foregoing items as and when they become available,
including, without limitation, Mortgages on each parcel comprising
the Mortgaged Property without the necessity of waiting until the
title insurance policies, surveys and other required documents
with respect to all Mortgaged Property shall become available.
10.6. Section 7.1(h) of the Note Agreement is amended to read as
follows:
(h) Indebtedness of the Guarantor's Subsidiaries which does
not exceed, in the aggregate, $25,000,000 outstanding at any time,
exclusive of Indebtedness of Subsidiaries listed on Schedule 7.1.
10.7. Section 7.2 is amended by deleting the word "and" at the end
of subparagraph (h), adding the word "and" at the end of subparagraph
(i), and inserting the following new subparagraph (j) immediately
following subparagraph (i):
(j) any Lien existing or created on any property or asset of
a Subsidiary organized under the laws of Australia, China, Italy
or the United Kingdom to secure Indebtedness under working capital
lines of credit permitted under Section 7.1.
10.8. Section 7.14 of the Note Agreement is amended to read as
follows:
The Guarantor will not, and will not permit any of its
Material Domestic Subsidiaries to, open or maintain any Deposit
Account with a Person other than one of the Lenders unless the
Collateral Agent shall have a perfected first priority Lien
therein, except that the Guarantor may maintain Deposit Accounts
at Oneida Savings Bank solely for payroll purposes.
10.9. Section 8.1(d) of the Note Agreement is amended to read as
follows:
(d) Default in the observance or performance of (i) any
negative covenant under Section 7 or (ii) any covenant under
Sections 6.1(i), 6.1(m), 6.10, 6.16, 6.17, 6.18 or 8.7;
11. Representations and Warranties. The Company and the Guarantor
represent and warrant to the Purchasers that the following statements are true,
correct and complete:
11.1. Consolidated Interest Coverage Ratio. The Consolidated
Interest Coverage Ratio for the Fiscal Quarter ended October 27, 2001,
as reflected on the unaudited financial statements for the Fiscal
Quarter then
ended required to be delivered pursuant to Section 6.1(a) of the Note
Agreement, is 2.04 to 1.00.
11.2. Consolidated Leverage Ratio. The Consolidated Leverage Ratio
for the Fiscal Quarter ended October 27, 2001, as reflected on the
unaudited financial statements for the Fiscal Year then ended required
to be delivered pursuant to Section 6.1(b) of the Note Agreement, is
5.42 to 1.0.
11.3. 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 Amendment.
11.4. 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.
11.5. Execution, Delivery and Enforceability. This Amendment has
been duly and validly executed and delivered by the Company and the
Guarantor and constitutes its legal, valid and binding obligation,
enforceable against the Company and the Guarantor in accordance with
its terms.
12. Conditions to Effectiveness of Amendment. This Amendment shall be
effective only when and if each of the following conditions is satisfied:
12.1. Secretary's Certificate. The Purchasers shall have received
a certificate executed by the Secretary or Assistant Secretary of the
Company and of the Guarantor certifying the due authorization of this
Amendment by the Company and the Guarantor, the incumbency of the
officer executing this Amendment, and any other legal matters relating
to this Amendment, all in form and substance satisfactory to the
Purchasers and its counsel.
12.2. Consent of Guarantors. Each of the Guarantors shall have
executed and delivered to the Purchasers the Consent of Guarantors
attached to this Amendment.
12.3. No Default or Event of Default; Accuracy of Representations
and Warranties. After giving effect to this Amendment, no Default or
Event of Default shall exist and each of the representations and
warranties made by the Company or the Guarantor or any of its
Subsidiaries herein and in or pursuant to the Loan Documents shall be
true and correct in all material respects as if made on and as of the
date on which this Amendment becomes effective.
12.4. Expense Reimbursements. The Company and the Guarantor shall
have paid or agreed to pay all invoices presented to the Company and
the Guarantor for expenses reimbursement of the Purchasers including
but not limited to fees of counsel, pursuant to Section 11.1 of the
Note Agreement.
12.5. Execution by Purchasers. The Purchasers shall have received
a counterpart of this Amendment duly executed and delivered by the
Company and the Guarantor.
12.6. Amendment Fee. The Company and the Guarantor shall have paid
to the Purchasers a nonrefundable amendment fee equal to .10% of the
amount of the principal amount of the Notes outstanding on the
effective date of this Amendment of each Purchaser, a counterpart of
this Amendment executed by such Purchaser.
12.7. Credit Agreement. The Purchasers shall have received copies
of any waivers and/or amendments waiving or amending the Credit
Agreements duly executed by Company, the Guarantor and the Lenders
described therein.
13. Confirmation of Note Agreement. Except as amended by this
Amendment, all the provisions of the Note Agreement remain in full force and
effect from and after the date hereof, and each of the Company and the Guarantor
hereby ratifies and confirms 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 Amendment. Each of the
Company and the Guarantor also ratifies and confirms that the Security Documents
remain in full force and effect in accordance with their terms and are not
impaired or affected by this Amendment.
14. Counterparts. This Amendment may be signed in any number of
counterparts, 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 Amendment by facsimile transmission shall be as effective
as delivery of a manually signed counterpart.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the day and year first above written.
THC SYSTEMS, INC.
By: /s/ XXXXX XXXXX
---------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
ONEIDA LTD.
By: /s/ XXXXX XXXXX
---------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
ALLSTATE INSURANCE COMPANY
By: /s/ XXXXXX XXXXXXX
---------------------------------------
Name: Xxxxxx Xxxxxxx
By: /s/ XXXXXXX X. XXXXX
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Authorized Signatories
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ XXXXXX XXXXXXX
---------------------------------------
Name: Xxxxxx Xxxxxxx
By: /s/ XXXXXXX X. XXXXX
---------------------------------------
Name: Xxxxxxx X. Xxxxx
Authorized Signatories
PACIFIC LIFE INSURANCE COMPANY
By: /s/ XXXXX XXXXXXXX
---------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice President
By: /s/ XXXXX X. XXXXX
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Assistant Secretary
CONSENT OF GUARANTORS
Each of the undersigned is a party to a Subsidiary Guarantee Agreement
and is a Guarantor of the obligations of the Company under the Note Agreement
referred to in the foregoing Waiver and Amendment No. 1 to the 2001 Amended and
Restated Note Agreement. Each of the undersigned Guarantors hereby (a) consents
to the foregoing Amendment, (b) acknowledges that, notwithstanding the execution
and delivery of the foregoing Amendment, the obligations of each of the
undersigned Guarantors are not impaired or affected and the Subsidiary Guarantee
Agreement continues in full force and effect, and (c) ratifies and affirms the
terms and provisions of the Subsidiary Guarantee Agreement.
IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Consent of Guarantors as of the 7th day of December, 2001.
BUFFALO CHINA, INC. DELCO INTERNATIONAL LTD.
By: /S/ XXXXX XXXXX By: /S/ XXXXX XXXXX
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ENCORE PROMOTIONS, INC. SAKURA, INC.
By: /S/ XXXXX XXXXX By: /S/ XXXXX XXXXX
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THC SYSTEMS INC.
By: /S/ XXXXX XXXXX
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SCHEDULE I
Mortgaged Property
Owner Description
----- -----------
Oneida Ltd. Main and Knife Plants
Sherrill, NY
Oneida Ltd. Warehouse
000 Xxxxxxxxxx Xx.
Xxxxxxxx, XX
Oneida Ltd. Administration Building
Kenwood Ave.
Oneida, NY
Oneida Ltd. Xxxxx Pt
Canastota
Oneida Ltd. Golf Course
Oneida/Sherrill, NY
Buffalo China, Inc. 000 Xxxxxx Xxxxxx
Xxxxxxx, XX
Xxxxxx Xxxxxx Ltd. 0000 Xxxxxxx Xxx.
Xxxxxxx Xxxxx, Xxxxxxx
