EXHIBIT 4(a)(xxii)
AMENDMENT NO. 2 TO
2001 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 Waiver and Amendment No. 1 to 2001 Amended and
Restated Note Agreement dated as of December 7, 2001 (collectively, the "Note
Agreement"). This Amendment No. 2 to 2001 Amended and Restated Note Agreement is
hereinafter referred to as "Amendment No. 2."
R E C I T A L S
A. The Guarantor and the Company have requested that the
Purchasers agree to amend certain of the financial covenants in the Note
Agreement.
B. The Purchasers are willing to amend the financial covenants,
provided the Note Agreement is amended to, among other things, provide for the
monthly reporting of certain financial information.
NOW, THEREFORE, the parties agree as follows:
1. Definitions. All capitalized terms used in this Amendment No. 2
which are not otherwise defined shall have the meanings given to those terms in
the Note Agreement, except where such terms are amended herein.
2. Amendment of Note Agreement.
2.1 The following defined term is added to Section 5.1 of the Note
Agreement:
"Amendment No. 2 Effective Date" means the date on which all the
conditions to the Amendment No. 2 to 2001 Amended and Restated
Note Agreement dated as of April ___, 2002 have been satisfied.
2.2 The following defined term is added to Section 5.1 of the Note
Agreement: "Capital Expenditures" means, with respect to any
Person for any period, the sum of (a) all expenditures of such
Person in respect of the purchase or other acquisition of fixed or
capital assets (excluding any such asset acquired in connection
with normal replacement and maintenance programs properly charged
to current operations under GAAP) that are paid or due and payable
in cash during such period and (b) all Capitalized Lease
Obligations under which such Person is the lessee.
2.3 The definitions of the terms Subsidiary Guarantees and
Subsidiary Guarantors in Section 5.1 of the Note Agreement are amended and
restated to read as follows:
"Subsidiary Guarantee" means any Subsidiary Guarantee Agreement,
in substantially the form of Exhibit E, executed and delivered by
a Subsidiary Guarantor, as the same may be amended, supplemented,
or otherwise modified from time to time.
"Subsidiary Guarantors" means each of Kenwood Silver Company,
Inc., Buffalo China, Inc., Encore Promotions, Inc., THC Systems,
Inc. (formerly known as Oneida Community China,
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Inc.), Sakura, Inc. (formerly known as Oneida Community China,
Inc.), Delco International Ltd., and each Subsidiary created or
acquired after January 19, 1996, which becomes a "Guarantor" as
such term is defined in the Credit Agreement or which is required
to issue a Subsidiary Guarantee pursuant to Section 7.18.
2.4 The definition of the term Subsidiary Subordination Agreement
in Section 5.1 of the Note Agreement is amended and restated to read as follows:
"Subsidiary Subordination Agreement" means any Subsidiary
Subordination Agreement, in substantially the form of Exhibit D,
executed and delivered by a Subsidiary Guarantor, as the same may
be amended, supplemented, or otherwise modified from time to time.
2.5 Section 5.2 of the Note Agreement is amended by adding the
following sentence at the end thereof:
Notwithstanding the foregoing, the financial covenants in this
Agreement shall be calculated without regard to any impairment of
goodwill recorded by the Company or the Guarantor as a result of
either the Company's or the Guarantor's adoption of FAS 142.
2.6 Section 6.1 of the Note Agreement is amended by deleting the
"and" at the end of subparagraph (m) thereof, re-lettering subparagraph (n) as
(o), and by adding the following new subparagraph (n):
(n) Within twenty five (25) days after the end of each fiscal
month, a summary profit and loss statement for the month, with
management discussion of significant developments, together with
(i) a summary account receivable aging report as of the end of the
month along with a schedule showing the ten (10) largest accounts
receivable at such date, (ii) an accounts payable report as of the
end of the month showing the ten (10) largest accounts payable and
their amounts, as well as total accounts payable, and (iii) an
inventory report showing, by product description, the levels of
raw materials and supplies, work-in-process and finished goods as
of the end of the month, and showing changes from the preceding
month and year-to-date; and
2.7 Section 6.11 of the Note Agreement is amended and restated to
read as follows:
Maintenance of Liens of the Security Documents. The Guarantor
shall, and shall cause each Material Domestic Subsidiary to: (a)
promptly, upon the reasonable request of the Noteholders or the
Collateral Agent, at the Guarantor's expense, execute, acknowledge
and deliver any document or instrument supplemental to or
confirmatory of the Security Documents or otherwise reasonably
deemed by the Collateral Agent or the Noteholders necessary or
desirable for the continued validity, perfection and priority of
the Liens in the Collateral covered thereby, and (b) promptly
notify the Collateral Agent and the Noteholders in writing of any
change in (i) its corporate name, (ii) the location of its chief
executive office, its jurisdiction of incorporation, its principal
place of business or any office in which it maintains books or
records relating to Collateral or at which the Collateral is
located (including the establishment of any new office or
facility), (iii) in its identity or corporate structure, (iv) any
newly acquired intellectual property registrations or applications
therefore in the United States owned by it, or (v) in its federal
taxpayer identification number. If at any time following the
Closing Date the Guarantor or any of its Material Domestic
Subsidiaries shall acquire property which is required by the terms
hereof or of any of the Security Documents to be subject to the
Lien created by the Security Documents but is not subject to such
Lien, as soon as possible after the acquisition date of such
property, the Guarantor shall grant or cause to be granted to the
Collateral Agent, for the benefit of the Lenders and the
Noteholders, a first priority Lien in such property pursuant to
documentation reasonably satisfactory in form and substance to the
Collateral Agent and the Noteholders.
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2.8 The following new Section 6.18 is added to the Note Agreement
immediately following Section 6.17:
6.18 Further Actions.
(a) Within thirty (30) days after the Amendment No. 2 Effective
Date, the Guarantor shall use its reasonable efforts to cause the
Oneida County Industrial Development Agency to approve an increase
in the amount of the Mortgage to which it is a party to
$67,220,000 or, in the alternative, to authorize an additional
Mortgage in the aggregate amount of $67,220,000. If such approval
or authorization is not obtained within such 30-day period, the
Guarantor agrees that the Collateral Agent, on behalf of the
Noteholders and the Lenders, is authorized to record an additional
Mortgage in the amount of $6,815,000 covering the Mortgaged
Property which has been executed and delivered to the Collateral
Agent, for the benefit of the Lenders and the Noteholders, in
escrow, together with the New York mortgage recording tax thereon.
(b) Within sixty (60) days after the Amendment No. 2 Effective
Date, the Guarantor shall deliver or cause to be delivered to the
Collateral Agent, for the benefit of the Noteholders and the
Lenders, a Mortgage or mortgage spreader agreement, in form and
substance satisfactory to the Collateral Agent and the
Noteholders, covering the following tax parcels: 332.000-1-1,
332.006-2-72, 332.011-2-28, 332.018-1-1.1, 47.-1-23, 6.73-1-8.
Simultaneously with the delivery of such Mortgage or mortgage
spreader agreement, the Guarantor shall cause to be delivered to
the Collateral Agent, on behalf of the Noteholders and the
Lenders, fully paid mortgagee title insurance policies (or binding
commitments to issue title insurance policies, marked to the
satisfaction of the Collateral Agent and the Noteholders to
evidence the form of such policies to be delivered) in standard
ALTA form, issued by a title insurance company satisfactory to the
Collateral Agent and the Noteholders in an amount not less than
the assessed value of such parcels, insuring the Mortgage (or
spreader agreement, as the case may be) to create a valid Lien on
such parcels with no exceptions which the Collateral Agent or the
Noteholders shall not have approved in writing.
2.9 Section 7.1(c) of the Note Agreement is amended and restated
to read as follows:
(c) Indebtedness of the Guarantor to any Subsidiary and of any
Subsidiary to the Guarantor or to any other Subsidiary, provided
that Indebtedness of Subsidiaries who are not Material Domestic
Subsidiaries owed to the Guarantor or to any Material Domestic
Subsidiary shall not exceed $20,000,000 in the aggregate;
2.10 Subparagraph (iii) of Section 7.3 of the Note Agreement is
amended by deleting the "and" at the end thereof and inserting "and" at the end
of subparagraph (iv) thereof and adding the following new subparagraph (v):
(v) The Guarantor may sell 158,147 shares of common stock of
Prudential Securities, Inc. and approximately nine (9) acres of
property located at Xxxxxxxx Road, Melville, New York, in each
case for cash consideration equal to the fair market value
thereof;
2.11 Section 7.4 of the Note Agreement is amended by replacing the
last sentence thereof with the following language"
"Except as otherwise permitted under the terms and conditions of
the Collateral Agency Agreement, the Guarantor and its
Subsidiaries may sell, transfer, or otherwise dispose of (in one
transaction or a series of transactions), or engage in a
sale/leaseback transaction with respect to, assets if the
consideration received is in cash or cash equivalents at least
equal to the fair market value of such assets and the aggregate
consideration received does not exceed $11,000,000 for all such
sales, transfers, or dispositions after the Amendment No. 2
Effective Date; provided that
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100% of the proceeds received from any such sale, transfer or
disposition permitted above (after deducting the reasonable
expenses of such sale, transfer or disposition) are applied to
prepay, on a pro rata basis, the Loans outstanding under the
Credit Agreement and the Indebtedness outstanding under this
Agreement."
2.12 Section 7.5(g) of the Note Agreement is amended to read as
follows:
(g) Capital Expenditures permitted by Section 7.22 hereof which
are made in the ordinary course of business and do not comprise a
material portion of the assets of another Person.
2.13 Section 7.12(a) of the Note Agreement is amended and restated
to read as follows:
(a) Consolidated Interest Coverage Ratio. For a period of four (4)
consecutive Fiscal Quarters ending with its most recent Fiscal
Quarter, the Guarantor will not permit the Consolidated Interest
Coverage Ratio of the Guarantor and its Subsidiaries to be less
than (i) 2.22 to 1.00 for the Fiscal Quarter ended January 26,
2002, (ii) 2.31 to 1.00 for the Fiscal Quarter ending April 27,
2002, (iii) 2.33 to 1.00 for the Fiscal Quarter ending July 27,
2002, (iv) 2.46 to 1.00 for the Fiscal Quarter ending October 26,
2002, (v) 2.11 to 1.00 for the Fiscal Quarter ending January 25,
2003, (vi) 2.16 to 1.00 for the Fiscal Quarter ending April 26,
2003, (vii) 2.21 to 1.00 for the Fiscal Quarter ending July 26,
2003, (viii) 2.35 to 1.0 for the Fiscal Quarter ending October 25,
2003, and (ix) 2.55 to 1.0 for each succeeding Fiscal Quarter;
2.14 Section 7.12(b) of the Note Agreement is amended and restated
to read as follows:
(b) Leverage Ratio. The Guarantor will not permit the Consolidated
Leverage Ratio of the Guarantor and its Subsidiaries to be greater
than (i) 5.24 to 1.00 for the Fiscal Quarter ended January 26,
2002, (ii) 5.50 to 1.00 for the Fiscal Quarter ending April 27,
2002, (iii) 5.70 to 1.00 for the Fiscal Quarter ending July 27,
2002, (iv) 5.60 to 1.00 for the Fiscal Quarter ending October 26,
2002, (v) 5.70 to 1.00 for the Fiscal Quarter ending January 25,
2003, (vi) 5.50 to 1.00 for the Fiscal Quarters ending April 26,
2003 and July 26, 2003, (vii) 5.40 to 1.0 for the Fiscal Quarter
ending October 25, 2003, and (viii) 4.80 to 1.0 for each
succeeding Fiscal Quarter.
2.15 Section 7.13 of the Note Agreement is amended to read as
follows:
The Guarantor will not, and will not permit any Subsidiary to,
become an account party in respect of, or otherwise incur
obligations under, any letters of credit or bankers' acceptances
except obligations in respect of (i) trade letters of credit and
bankers' acceptances in an amount not to exceed $10,000,000 in the
aggregate and (ii) standby letters of credit in an amount not to
exceed $20,000,000 in the aggregate.
2.16 The following new Section 7.22 is added to the Note Agreement
immediately following Section 7.21:
7.22. Capital Expenditures.
The Guarantor will not, and will not permit any Subsidiary to,
make Capital Expenditures exceeding $10,000,000 in the aggregate
in any Fiscal Year. Notwithstanding the foregoing, if, at the end
of any Fiscal Year, the Consolidated Leverage Ratio is 3.0 to 1.0
or lower, the limit on Capital Expenditures shall be increased to
$15,000,000 for the next succeeding Fiscal Year.
2.17 The following new Section 7.23 is added to the Note Agreement
immediately following the new Section 7.22 added above:
7.23 Dividends.
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Neither the Guarantor nor any Subsidiary shall declare or pay any
dividends on shares of any class of capital stock, whether now or
hereafter outstanding, except (a) the Guarantor or any Subsidiary
may declare dividends payable solely in common stock of the
Guarantor or such Subsidiary, (b) any Subsidiary may declare and
pay cash dividends to the Guarantor, and (c) so long as no Default
or Event of Default shall have occurred and be continuing,
commencing with the second Fiscal Quarter in 2002 the Guarantor
may declare cash dividends on its capital stock not to exceed
$375,000 per quarter, provided that the net income for the four
Fiscal Quarters ended with the Fiscal Quarter which immediately
precedes the Fiscal Quarter in which such dividend is declared
exceeds $4,000,000. Commencing with the second Fiscal Quarter in
2003, so long as no Default or Event of Default shall have
occurred and be continuing, the maximum amount of cash dividends
permitted to be declared by the Guarantor under clause (c) above
shall be (i) $375,000 per quarter if the net income for the four
Fiscal Quarters ended with the Fiscal Quarter which immediately
precedes the Fiscal Quarter in which such dividend is declared
exceeds $4,000,000, or (ii) $750,000 per quarter if the net income
for the four Fiscal Quarters ended with the Fiscal Quarter which
immediately precedes the Fiscal Quarter in which such dividend is
declared exceeds $12,000,000 and the Leverage Ratio is not greater
than 4.0 to 1.0, or (ii) $1,775,000 per quarter if the net income
for the four Fiscal Quarters ended with the Fiscal Quarter which
immediately precedes the Fiscal Quarter in which such dividend is
declared exceeds $20,000,000 and the Leverage Ratio is not greater
than 3.0 to 1.0. Dividends which are permitted under this Section
must be paid within one hundred (100) days after the close of the
Fiscal Quarter for which such dividends are declared.
2.18 Schedule 1 to the Note Agreement, added by the Waiver and
Amendment No. 1 to 2001 Amended and Restated Note Purchase Agreement, is amended
to delete the reference to the property located at 0000 Xxxxxxx Xxx., Xxxxxxx
Xxxxx, Xxxxxxx owned by Oneida Canada, Ltd.
3. Representations and Warranties. Each of the Company and the
Guarantor represents and warrants to the Purchasers that the following
statements are true, correct and complete:
3.1 Consolidated Interest Coverage Ratio. The Consolidated
Interest Coverage Ratio for the Fiscal Year ended January 26, 2002, as reflected
in the audited financial statements required to be delivered pursuant to Section
6.1(b) of the Note Agreement, will not be less than 2.25 to 1.00.
3.2 Consolidated Leverage Ratio. The Consolidated Leverage Ratio
for the Fiscal Year ended January 26, 2002, as reflected in the audited
financial statements required to be delivered pursuant to Section 6.1(b) of the
Note Agreement, will not exceed 5.15 to 1.00.
3.3 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 No. 2.
3.4 No Default or Event of Default. No Default or Event of Default
has occurred and is continuing.
3.5 Execution, Delivery and Enforceability. This Amendment No. 2
has been duly and validly executed and delivered by each of the Company and the
Guarantor and constitutes their legal, valid and binding obligation, enforceable
against the Company and the Guarantor in accordance with its terms.
4. Conditions to Effectiveness of Amendment No. 2. This Amendment No. 2
shall be effective only when and if each of the following conditions is
satisfied:
4.1 Secretary's Certificate. The Purchasers shall have received a
certificate executed by the Secretary or Assistant Secretary of each of the
Company and the Guarantor certifying the due authorization of this
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Amendment No. 2 by the Company and the Guarantor, the incumbency of the officer
executing this Amendment No. 2, and any other legal matters relating to this
Amendment No. 2, all in form and substance satisfactory to the Purchasers and
their counsel.
4.2 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 No. 2.
4.3 No Default or Event of Default; Accuracy of Representations
and Warranties. After giving effect to this Amendment No. 2, no Default or Event
of Default shall exist and each of the representations and warranties made by
the Company and the Guarantor or any of its Material Domestic Subsidiaries
herein and in or pursuant to the Subsidiary Guarantees, the Subsidiary
Subordination Agreements 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 Amendment No. 2
becomes effective.
4.4 Expense Reimbursements. The Company and the Guarantor shall
have paid or agreed to pay all invoices presented to Company and the Guarantor
for expense reimbursements due to the Purchasers including but not limited to
fees of counsel pursuant to Section 11.1 of the Note Agreement.
4.5 Execution of Amendment No. 2. The Purchasers shall have
received a counterpart of this Amendment No. 2 duly executed and delivered by
the Company, the Guarantor and the Purchasers.
4.6 Amendment Fee. The Guarantor and the Company shall have paid
to the Purchasers an amendment fee equal to one quarter of one percent (0.25%)
of the aggregate principal balance of the Notes outstanding of each Purchaser on
the effective date of this Amendment No. 2. Such fee shall be fully earned and
nonrefundable when paid.
4.7 Additional Subsidiary Guarantee and Subsidiary Subordiantion
Agreement. Kenwood Silver Company, Inc. shall have executed and delivered to the
Purchasers a Subsidiary Guarantee and Subsidiary Subordination Agreement.
4.8 Collateral. The Guarantor and the Company shall have delivered
or caused to be delivered to the Collateral Agent, for the benefit of the
Lenders and the Noteholders, the Mortgages and additional collateral required to
be delivered pursuant to the Amendment No. 1, in form and substance reasonably
satisfactory to the Collateral Agent and the Noteholders and their counsel.
4.9 Credit Agreement. The Purchasers shall have received a copy of
any amendment amending the Credit, duly executed by the Company, Guarantor and
the Lenders described therein.
5. Confirmation of Note Agreement. Except as amended by this Amendment
No. 2, 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 the Amendment No. 1 and this Amendment No. 2. 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 No. 2.
6. Counterparts. This Amendment No. 2 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 No. 2 by facsimile transmission shall be as
effective as delivery of a manually signed counterpart.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to be
duly executed as of the day and year first above written.
THC SYSTEMS, INC.
By: /s/ XXXXX X. XXXXX
------------------
Its: Vice President, Finance
ONEIDA LTD.
By: /s/ XXXXX X. XXXXX
------------------
Its: Chief Financial Officer
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ XXXXXX X. XXXXXX
--------------------
Authorized Signatory
By: /s/ XXXXXX X. XXXXXXXX
----------------------
Authorized Signatory
ALLSTATE INSURANCE COMPANY
By: /s/ XXXXXX X. XXXXXX
--------------------
Authorized Signatory
By: /s/ XXXXXX X. XXXXXXXX
----------------------
Authorized Signatory
PACIFIC LIFE INSURANCE COMPANY
By: /s/ XXXXX X. XXXXX
------------------
Its: Assistant Vice President
By: /s/ XXXXX X. LIEK
-----------------
Its: Assistant Secretary
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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 Amendment No. 2 to 2001 Amended
and Restated Note Agreement. Each of the undersigned Subsidiary Guarantors
hereby (a) consents to the foregoing Amendment No. 2, (b) acknowledges that,
notwithstanding the execution and delivery of the foregoing Amendment No. 2, 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 23rd day of April, 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: Vice President, Finance Title: Vice President, Finance
ENCORE PROMOTIONS, INC. SAKURA, INC.
By: /s/ XXXXX X. XXXXX By: /s/ XXXXX X. XXXXX
------------------ ------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Vice President, Finance Title: Vice President, Finance
THC SYSTEMS INC.
By: /s/ XXXXX X. XXXXX
------------------
Name: Xxxxx X. Xxxxx
Title: Vice President, Finance
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