EXHIBIT 4(a)(ix)
FIRST AMENDMENT TO AMENDED AND RESTATED
NOTE AGREEMENT DATED AS OF NOVEMBER 15, 1996
Reference is hereby made to that certain Amended and Restated Note
Agreement dated as of November 15, 1996 (the "Agreement") 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 modified pursuant to that certain First Waiver to Amended and
Restated Note Agreement dated as of November 15, 1996 (the "Waiver"). This First
Amendment to Amended and Restated Note dated as of November 15, 1996 is
hereinafter referred to as the "First Amendment."
WHEREAS, the Company and the Guarantor disclosed to the Purchasers in a
letter and accompanying materials dated August 23, 2000 (the "Amendment
Request") certain pre-tax restructuring charges in the amount of $32 million for
the Fiscal Quarter ending July 29, 2000, and are anticipating taking an
additional pre-tax restructuring charge in an amount not to exceed $7 million
(collectively, the "Restructuring Charges") for the Fiscal Quarter ending
October 28, 2000;
WHEREAS, as a result of the Restructuring Charges recorded for the
Fiscal Quarter ended July 29, 2000, the Company's and the Guarantor's
Consolidated Net Worth at the end of such Fiscal Quarter was $115,544,000, in
violation of Section 7.1 of the Agreement;
WHEREAS, as a result of the Restructuring Charges recorded for the
Fiscal Quarter ended July 29, 2000, the Company's and the Guarantor's
Consolidated Leverage Ratio at the end of such Fiscal Quarter was 4.42 to 1.0,
in violation of Section 7.2 of the Agreement;
WHEREAS, each of the Company and the Guarantor has requested that the
Purchasers amend Section 7.1 and Section 7.2 of the Agreement to eliminate the
effect of the Restructuring Charges; and
WHEREAS, the Company and the Guarantor recently completed acquisitions
of Delco International Ltd. ("Delco"), Viners of Sheffield Limited ("Viners")
and Sakura, Inc. ("Sakura"). Each of the Company and the Guarantor has requested
that, whenever the Agreement requires or permits the determination of the pro
forma Consolidated EBITDA of Viners and Delco, the determination be made without
regard to certain one-time non-operating charges totaling $4,800,000 recorded by
Viners and Delco prior to their acquisition by the Company and the Guarantor.
It is therefore agreed that:
1. Definitions.
"Level" shall have the meaning ascribed to such term in the Bank
Agreement as in effect on the date hereof and as reflected in the
definition of Applicable Margin, which definition of "Applicable
Margin" shall have the meaning ascribed to such term in the Bank
Agreement as in effect on the date hereof and as set forth on Exhibit A
attached hereto. All defined terms used in the paragraph of the Bank
Agreement which defines "Applicable Margin" and "Level" shall have the
meanings ascribed to such terms in the Waiver and Amendment No. 1 to
the Bank Agreement dated as of September 12, 2000. All defined terms
used herein shall have the meanings assigned to such terms in the
Agreement.
2. Pro forma Calculation.
Whenever the Agreement requires or permits the determination of the
pro forma Consolidated EBITDA of Viners and Delco for the periods prior
to their acquisition by the Company and the Guarantor, the Purchasers
hereby agree that such determination may be made without regard to (a)
a $1,800,000 pre-
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tax non-recurring employee bonus incurred by Viners in its fiscal
quarter ending April 30, 2000 and (b) a total of $3,000,000 in pre-tax
non-recurring employee bonus and employee compensation charges incurred
by Delco in its fiscal quarter ending July 31, 2000.
3. Amendments.
(a) Section 1.1(a) of the Agreement is hereby deleted and the
following inserted in lieu thereof:
1.1 Description of Notes. (a) This Amended and Restated Note
Agreement (the "Agreement") amends and restates that certain
Note Agreement dated as of November 15, 1996, the notes issued
thereunder between the Company, the Guarantor, and the
Purchasers named therein, and shall not constitute a novation of
such Note Agreement or all or any portion of the indebtedness
evidenced thereby. The Company has authorized the issuance and
sale of $35,000,000 aggregate principal amount of its Senior
Notes (the "Notes"), to be dated the date of issuance. The Notes
shall bear interest from such date of issuance at the rate of:
(i) 7.49% per annum commencing May 1, 1997 up to and
including September 11, 2000 and
(ii) 7.99% per annum from September 12, 2000 until the
earlier of:
(a) the date or dates, as the case may be, of any
increase in the Level in which case the rate of interest
will increase on such date to an amount equal to the sum
of the then existing interest rate plus the amount of such
increase in the Level; or
(b) the date or dates, as the case may be, of a
decrease in the Level in which case the rate of interest
will decrease on such date to an amount equal to the then
existing interest rate minus the amount of such decrease
in the Level, provided that (i) in no event shall the
interest rate fall below 7.49% and (ii) each of the
Company and the Guarantor provides evidence to the
Purchasers satisfactory to the Purchasers that:
(1) the Banks have not received further
compensation in any form as a result of any such
reduction in the Level, (2) the Consolidated Leverage
Ratio is, as of the date of the immediately preceding
Fiscal Quarter, in compliance with Section 7.2 as
amended herein and (3) no Event of Default exists, or
(c) maturity.
All such interest payments shall be payable semi-annually on the
first day of November and May of each year, and at maturity, and
shall bear interest on overdue principal (including any overdue
required or optional prepayment), premium, if any, and (to the
extent legally enforceable) on any overdue installment of
interest at the greater of (a) the rate of interest publicly
announced by The Chase Manhattan Bank (or its successors or
assigns) as its "prime rate" plus one percent (1%) or (b) 9.49%
per annum, to be expressed to mature on November 1, 2008 and to
be substantially in the form attached as Exhibit A. The term
"Notes" as used herein shall include each Note delivered
pursuant to this Agreement and each Note delivered in
substitution or exchange therefor and, where
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applicable, shall include the singular number as well as the
plural. Any reference to you in this Agreement shall in all
instances be deemed to include any nominee of yours or any
separate account or other person on whose behalf you are
purchasing Notes. You are sometimes referred to herein as a
"Purchaser" and, together with the other Purchaser, as the
"Purchasers."
(b) Section 5.1 of the Agreement shall be amended by deleting
therefrom the following definition of "Consolidated EBITDA" and
inserting in lieu thereof the following:
Consolidated EBITDA - For any period, Consolidated Net Income
for such period plus, without duplication and to the extent
reflected as a charge in the statement of such Consolidated Net
Income for such period, the sum of (a) income tax expense, (b)
interest expense, (c) depreciation and amortization expense, and (d)
amortization of intangibles (including, but not limited to,
goodwill) and organization costs, all as determined on a
consolidated basis; provided that (y) in determining Consolidated
EBITDA of the Guarantor and its Restricted Subsidiaries (i) for any
period that includes the Fiscal Quarter ending October 30, 1999,
there shall also be added to Consolidated Net Income the sum of
$8,500,000, representing pre-tax extraordinary and non-recurring
charges incurred in such quarter, (ii) for any period that includes
the Fiscal Quarter ending July 29, 2000, there shall be added to
Consolidated Net Income the sum of $32,000,000, representing pre-tax
extraordinary and non-recurring charges incurred in such quarter,
and (iii) for any period that includes the Fiscal Quarter ending
October 28, 2000, there may be added to Consolidated Net Income
pre-tax extraordinary and non-recurring restructuring charges
incurred in such quarter in an amount not to exceed $7,000,000, and
(z) for purposes of calculating Consolidated EBITDA of the Guarantor
and its Restricted Subsidiaries for any period, the Consolidated
EBITDA of any Person acquired by the Guarantor or its Restricted
Subsidiaries during such period shall be included on a pro forma
basis for such period (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in
connection therewith occurred on the first day of such period) if
the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries as at the end of the period preceding the
acquisition of such Person and the related consolidated statements
of income and stockholders' equity and of cash flows for the period
in respect of which Consolidated EBITDA is to be calculated (i) have
been previously provided to the holders of the Notes and (ii) either
(A) have been reported on without a qualification arising out of the
scope of the audit by independent certified public accountants of
nationally recognized standing or (B) have been found acceptable by
the holders of the Notes.
(c) The following language is inserted as Section 6.16 of the
Agreement:
6.16 Level Increases. The Company and the Guarantor shall notify
the Purchasers in writing within five (5) days of (a) any increase in
the Level from that which is in effect on September 12, 2000, including
any increase from Level 6 (as defined in the Bank Agreement) to Level 7
(as defined in the Bank Agreement) and (b) any other compensation
requested by the Banks.
(d) Section 7.1 of the Agreement is hereby deleted and the following
inserted in lieu thereof:
7.1 Consolidated Net Worth. As of the last day of any Fiscal
Quarter, the Guarantor will not permit Consolidated Net Worth of the
Guarantor and its Restricted Subsidiaries to be less than the sum of
(i) $110,000,000, plus (ii) 50% of the Consolidated Net Income of the
Guarantor and its Restricted Subsidiaries (which for the purposes of
this covenant shall not be reduced by losses) for the Fiscal Year
ending January 27, 2001 and for each Fiscal Year thereafter.
(e) Section 7.2 of the Agreement is hereby deleted and the following
inserted in lieu thereof:
7.2 Leverage Ratio. The Guarantor will not permit the
Consolidated Leverage Ratio of the Guarantor and its Restricted
Subsidiaries to be greater than (i) 3.0 to 1.0 as of the last day of
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the Fiscal Quarter ending April 29, 2000, (ii) 3.60 to 1.0 as of the
last day of the Fiscal Quarter ending October 28, 2000, (iii) 3.10 to
1.0 as of the last day of the Fiscal Quarters ending January 27, 2001
and April 28, 2001, and (iv) 3.0 to 1.0 as of the last day of each
succeeding Fiscal Quarter.
3. Representations and Warranties.
(a) In order to induce the Purchasers to enter into this First
Amendment, each of the Company and the Guarantor confirms that (i) each of
the representations and warranties set forth in the Agreement is true and
correct as of the date hereof, (ii) to the extent such representation or
warranty is stated to relate solely to an earlier date, such
representation or warranty was true and correct as of such earlier date
and (iii) no Event of Default (which has not been cured pursuant to
amendments made hereunder) has occurred and is continuing.
(b) Each of the Company and the Guarantor represents and warrants that
the information set forth in the Amendment Request (a copy of which is
attached hereto as Exhibit A) is true and correct in all material
respects.
(c) The projected financial statements for the Guarantor and its
Restricted Subsidiaries dated August 23, 2000 delivered to the Purchasers
in connection with this First Amendment were prepared by the Company in
good faith and on the basis of the best information available at that time
and on the assumptions stated therein, which assumptions the Company
believes to be reasonable.
4. Counterparts.
This First Amendment may be executed by the parties hereto individually,
or in any combination of the parties hereto in several counterparts, all of
which taken together shall constitute one and the same First Amendment.
5. Conditions to Effectiveness.
The effectiveness of the Purchasers' agreement to this First Amendment is
subject to the satisfaction on or prior to the date hereof of each of the
following conditions:
(a) Delivery to the Purchasers of copies of this First Amendment
executed by the Company.
(b) The Company shall have paid to the Purchasers fees and expenses of
counsel to the Purchasers.
(c) Delivery by the Company and the Guarantor of a duly executed copy
of that certain Waiver and Amendment No. 1 to Credit Agreement among the
Company, the Chase Manhattan Bank and various lenders party thereto dated
as of September 12, 2000.
(d) The Purchasers shall have received a Subsidiary Guarantee and a
Subordination Agreement executed and delivered by Encore Promotions, Inc.,
Delco, Viners and Sakura (collectively, the "New Guarantors").
(e) The Purchasers shall have received such documents and certificates
as the Purchasers or their counsel may reasonably request relating to the
organization, existence and good standing of each New Guarantor, the
authorization of the Subsidiary Guarantee and Subordination Agreement, the
incumbency of the officers executing any documents on behalf of the New
Guarantors, any other legal matters relating to each New Guarantor or this
First Amendment, all in form and substance satisfactory to Purchasers and
their counsel.
(f) Each of the existing Guarantors shall have executed and delivered
to the Purchasers the Consent of the Guarantors attached to this First
Amendment.
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6. New Notes. Each of the Company and the Guarantor hereby agrees
to issue to Purchasers a new note which reflect the terms and provisions of this
First Amendment if the Purchasers request such new note, and any further
documentation requested by the Purchasers executed or delivered in connection
therewith.
7. Ratification and Acknowledgment.
All of the representations, warranties, provisions, covenants, terms
and conditions of the Agreement shall remain unaltered and in full force and
effect the Agreement is in all respects agreed to, ratified and confirmed by
each of the Company and the Guarantor. Each of the Company and the Guarantor
acknowledges and agrees that the amendment provided in the First Amendment shall
not be construed as establishing a course of conduct on the part of the
Purchasers upon which the Company or the Guarantor may rely at any time in the
future.
8. Reference to and Effect on the Agreement.
Except as amended by this First Amendment, all the provisions of the
Agreement remain in fully force and effect from and after the date hereof, and
each of the Company and the Guarantor ratifies and confirms the Agreement and
each of the documents executed in connection therewith. Upon the effectiveness
of this First Amendment, each reference in the Agreement and in other documents
describing or referencing the Agreement to "this Agreement," "hereunder,"
"hereof," "herein," or words of like import referring to the Agreement, shall
mean and be a reference to the Agreement as modified by this First Amendment.
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Dated as of this 24 day of October, 2000.
THC SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Its: CEO
ONEIDA LTD.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Its: CEO
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ XXXXXXXX X. XXXXXX
----------------------------------------
By: /s/ XXXXXX X. LEIMBAUCH
----------------------------------------
Authorized Signatories
ALLSTATE INSURANCE COMPANY
By: /s/ XXXXXXXX X. XXXXXX
----------------------------------------
By: /s/ XXXXXX X. LEIMBAUCH
----------------------------------------
Authorized Signatories
PACIFIC LIFE INSURANCE COMPANY
By: /s/ XXXXX XXXXXXXX
----------------------------------------
Its: Assistant Vice President
By: /s/ XXXXX X. XXXXX
----------------------------------------
Its: Assistant Secretary
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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 Agreement
referred to above. Each of the undersigned Guarantors hereby (a) consents to the
foregoing First Amendment, (b) acknowledges that notwithstanding the execution
and delivery of the foregoing First 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 the Subsidiary
Guarantee Agreement.
IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Consent of Guarantors as of the 24 day of October, 2000.
BUFFALO CHINA, INC.
By: /s/ XXXXX X. XXXXX
---------------------------------------
Name:
---------------------------------------
Title: Vice President
THC SYSTEMS INC.
By: /s/ XXXXX X. XXXXXX
----------------------------------------
Name:
----------------------------------------
Title: CEO
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EXHIBIT A
Excerpt from the Bank Agreement(2) defining "Applicable Margin"
"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, with such Level
to be determined on the basis of the Consolidated Leverage
Ratio of Borrower and its consolidated Subsidiaries as of the
last day of each Fiscal Quarter of the Borrower as reflected
on the financial statements for such Fiscal Quarter delivered
by the Borrower pursuant to Section 5.01(b):
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Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 0 Xxxxx 5 Xxxxx 0 Xxxxx 0
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Consolidated Leverage Ratio [ ]2.00 [ ]2.25 [ ]2.50 [ ]2.75 [ ]3.00 [ ]3.25 >3.25
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Eurodollar Margin (bps) 100.0 125.0 150.0 175.0 200.0 250.0 300.0
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ABR Margin (bps) 0.0 0.0 25.0 50.0 75.0 125.0 175.0
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provided that (i) during the period from the Closing Date
through and including September 11, 2000, the Applicable
Margin shall be based on Level 2, (ii) during the period from
September 12, 2000 through and including the date on which
Borrower delivers the financial statements under Section
5.01(b) for the Fiscal Quarter ending January 27, 2001, the
Applicable Margin shall be based on Xxxxx 0, unless the
financial statements delivered for the Fiscal Quarter ending
October 28, 2000 require the Applicable Margin to be increased
to Level 7 at that time, and (iii) if the Borrower shall have
failed to deliver the financial statements required by Section
5.01(b) 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 9.02 hereof, the Applicable Margin shall immediately
be adjusted to Level 7 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 5.01(b) subject to
the proviso set forth in the preceding sentence."
----------------------
(2) Section 4.1 of Waiver and Amendment No. 1 to Credit Agreement dated as of
September 12, 2000 by and among the Guarantor, The Chase Manhattan Bank, and
various banks party thereto.
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