<PAGE>
Exhibit 10.72
[EXECUTION COPY]
================================================================================
LIBBEY INC.
WAIVER AND THIRD AMENDMENT TO PARENT GUARANTY AGREEMENT
and
AMENDMENT TO NOTE PURCHASE AGREEMENT
DATED AS OF DECEMBER 29, 2005
Re:
Parent Guaranty Agreement dated as of March 31, 2003,
Note Purchase Agreement dated as of March 31, 2003
and
$25,000,000 3.69% Senior Notes, Series 2003A-1, due March 31,
2008
$55,000,000 5.08% Senior Notes, Series 2003A-2, due March 31,
2013
$20,000,000 Floating Rate Senior Notes, Series 2003B, due March 31,
2010
================================================================================
<PAGE>
LIBBEY INC.
WAIVER AND THIRD AMENDMENT TO PARENT GUARANTY AGREEMENT
and
AMENDMENT TO NOTE PURCHASE AGREEMENT
DATED AS OF DECEMBER 29, 2005
Re:
Parent Guaranty Agreement dated as of March 31, 2003,
Note Purchase Agreement dated as of March 31, 2003
and
$25,000,000 3.69% Senior Notes, Series 2003A-1, due March 31,
2008
$55,000,000 5.08% Senior Notes, Series 2003A-2, due March 31,
2013
$20,000,000 Floating Rate Senior Notes, Series 2003B, due March 31,
2010
To the institutional investors (the "Noteholders")
Named in Schedule I attached hereto
Ladies and Gentlemen:
Reference is made to the Parent Guaranty Agreement dated as of
March 31,
2003, as amended to date (the "Guaranty Agreement") between Libbey
Inc., a
Delaware corporation (the "Guarantor"), and each of the
institutional investors
party thereto, pursuant to which the Guarantor has guaranteed the
obligations of
Libbey Glass Inc., a Delaware corporation (the "Company"), under
the Note
Purchase Agreement dated as of March 31, 2003 (the "Note Purchase
Agreement")
between the Company and the institutional investors party thereto,
under and
pursuant to which the Company originally issued and sold its 3.69%
Senior Notes,
Series 2003A-1, due March 31, 2008 in an aggregate principal amount
of
$25,000,000 (the "Series A-1 Notes"), 5.08% Senior Notes, Series
2003A-2, due
March 31, 2013 in an aggregate principal amount of $55,000,000 (the
"Series A-2
Notes"), and Floating Rate Senior Notes, Series 2003B, due March
31, 2010 in an
aggregate principal amount of $20,000,000 (the "Series 2003B
Notes," and
together with the Series A-1 Notes and the Series A-2 Notes, the
"Notes"). Terms
used but not otherwise defined herein shall have the same meaning
as ascribed to
such terms in the Guaranty Agreement.
The
Company and the Guarantor hereby agree with you in this Waiver
and
Third Amendment to Parent Guaranty Agreement and Amendment to Note
Purchase
Agreement (this or the "Agreement") as follows:
<PAGE>
ARTICLE 1
WAIVER
Section 1.1. Waiver of Section 5.1(a) (Limitation on Debt).
Compliance by
the Guarantor with Section 5.1(a) of the Guaranty Agreement is
hereby waived
for the period beginning September 30, 2005 and ending December 31,
2005,
provided that the Consolidated Leverage Ratio for the period ending
December
31, 2005 shall not exceed 4.5 to 1.00.
Section 1.2. Limited Waiver; Reservation of Rights. The
Guarantor
acknowledges and agrees that the waiver granted in Section 1.1 is
valid only for
the specific purpose for which it is being given and shall not in
any way
obligate any Noteholder to agree to any additional waivers of the
provisions of
the Guaranty Agreement or the Note Purchase Agreement, and, except
as so waived,
shall not constitute or operate as a waiver of any Noteholder's
rights under the
Note Purchase Agreement to exercise remedies resulting from any
Default or Event
of Default which may now exist or which may occur in the
future.
ARTICLE 2
AMENDMENT OF NOTE PURCHASE AGREEMENT
Section 2.1. Amendment of Notes (Form of Notes). From and after the
date of
this Agreement, automatically, and without further action on the
part of either
the Noteholders or the Company, the Notes shall be amended and
restated in their
entirety to read as set forth in Exhibits 1(a), 1(b) and 1(c)
hereto. Accrued
and unpaid interest outstanding in respect of any of the Notes as
of the
effective date shall be due and payable on the next succeeding
interest payment
date applicable to such amended and restated Notes. The term
"Notes" as used
herein and in the Note Purchase Agreement shall include each such
amended and
restated Note and any such notes issued in substitution therefore
pursuant to
Section 13 of the Note Purchase Agreement.
Section 2.2. Amendment of Section 8 (Prepayment of Notes). Section
8 of the
Note Purchase Agreement shall be and is hereby amended by the
addition thereto
of a new Section 8.5 which shall read as follows:
"Section 8.5. Additional Fee; Pro Rata Prepayments. (a) In the
event the Notes shall not have been prepaid in full on or prior to
May
31, 2006, on June 1, 2006, the Company shall pay to each Noteholder
an
amount equal to 25 basis points on the unpaid principal amount of
each
Note held by such Noteholder which shall remain outstanding on
such
date.
(b) Notwithstanding anything to the contrary set forth in this
Section 8, neither the Company nor any Note Party shall prepay
any
Note (other than at the stated maturity of such Note)
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<PAGE>
unless such prepayment is made pro rata among all Notes then
outstanding."
Section 2.3. Amendment of Section 11(c) (Events of Default).
Section 11(c)
of the Note Purchase Agreement shall be and is hereby amended in
its entirety to
read as follows:
"(c) the Company defaults in the performance of or compliance
with any term contained in Sections 8.5 or 10.1 or the Parent
Guarantor defaults in the performance of or compliance with any
term
contained in Sections 4.9, 4.10, 5.1, 5.2, 5.3, 5.4, 5.5 or 5.10
of
the Parent Guaranty Agreement; or"
Section 2.4. Amendment of Section 11(d) (Events of Default).
Section 11(d)
of the Note Purchase Agreement shall be and is hereby amended in
its entirety to
read as follows:
"(d) the Company defaults in the performance of or compliance
with any term contained herein or any other Note Party defaults in
the
performance of or compliance with any term contained in any
Note
Document executed by such Note Party (other than those referred to
in
paragraphs (a), (b) and (c) of this Section 11) and such default
is
not remedied within thirty (30) days after the earlier of (i) a
Senior
Financial Officer obtaining actual knowledge of such default and
(ii)
the Company or the Parent Guarantor receiving written notice of
such
default from any holder of a Note (any such written notice to
be
identified as a "notice of default" and to refer specifically to
this
paragraph (d) of Section 11); or"
Section 2.5. Amendment of Section 11(g) (Events of Default).
Section 11(g)
of the Note Purchase Agreement shall be and is hereby amended by
the addition
thereto of a new clause (iv) immediately following clause (iii)
which shall read
as follows:
",
(iv) any Event of Default shall exist under the Bank Credit
Agreement;
or (v) any "Guarantor Event of Default" shall exist under the
Guaranty executed
by the Guarantor and the Company in connection with the Vitrocrisa
Credit
Agreement; or"
Section 2.6. Amendment of Section 15.1 (Expenses). Section 15.1 of
the Note
Purchase Agreement shall be and is hereby amended by the addition
of new
paragraph which shall read as follows:
"Without limiting the foregoing, the Company agrees to pay all
reasonable fees of the Collateral Agent in connection with the
preparation, execution and delivery of the Intercreditor Agreement
and
the Security Documents and the transactions contemplated
thereby,
including but not limited to reasonable attorneys fees and to pay
to
the
Collateral Agent from time to time
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<PAGE>
all reasonable fees, and expenses and such indemnities and
other
amounts as shall be required to be paid by the Company to the
Collateral Agent in accordance with the terms of the
Intercreditor
Agreement and the Security Documents. The Company shall also pay
the
reasonable fees and expenses of Chapman and Cutler LLP in
connection
with the negotiation and review of the Security Documents and
Intercreditor Agreement on behalf of the holders of the Notes and
(ii)
the reasonable out of pocket expenses of the Noteholders incurred
in
the course of negotiating the Intercreditor Agreement and the
Security
Documents."
Section 2.7. Amendment of Schedule B (Definitions). Schedule B of
the Note
Purchase Agreement shall be and is hereby amended by amending the
definitions
hereinafter set forth in their entirety to read as follows:
"Adjusted LIBOR Rate" for each Interest Period shall be a rate
per annum equal to LIBOR for such Interest Period plus (i)
1.05%
during the portion of any Interest Period ending on or prior to
December 29, 2005, and (ii) 1.55% during all or any portion of
any
Interest Period after December 29, 2005; provided that such
addition
to LIBOR shall be 2.05% if the Consolidated Leverage Ratio was
greater
than 4.25 to 1 as of the last day of the most recently ended
fiscal
quarter (beginning with the fiscal quarter ending December 31,
2005)
provided further that such addition to LIBOR shall be decreased
to
1.55% if the Leverage Ratio is equal to or less than 4.25 to 1 as
of
the last day of any subsequent fiscal quarter. Any increase or
decrease in the addition to LIBOR shall be in effect from and
including the fifth Business Day following the date on which
the
Compliance Certificate is delivered to the Noteholders for the
immediately preceding fiscal quarter of the Guarantor and based
upon
the Leverage Ratio as set forth in such Compliance Certificate. In
the
event no Compliance Certificate shall be delivered on or prior to
the
date such Compliance Certificate is required to be delivered to
the
Noteholders in accordance with Section 3.2(a) of the Guaranty
Agreement then until such time as the applicable Compliance
Certificate is delivered, the addition to LIBOR shall be 2.05%
from
the fifth Business Day after any holder gives notice to the
Guarantor
that it has not received such Compliance Certificate by the due
date.
Except for adjustments in the addition to LIBOR in respect of
any
fiscal quarter as provided in the preceding sentence, after
December
29, 2005, the addition to LIBOR shall be 1.55%.
"Default Rate" means with respect to the Notes of any Series,
that rate of interest that is the greater of (i) 2% per annum
above
the applicable rate of interest required to be paid in
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<PAGE>
accordance with clause (a) of the first paragraph of the Notes of
such
Series or (ii) 2% over the rate of interest publicly announced by
Bank
of America, N.A. in New York, New York as its "base" or "prime"
rate."
Section 2.8. Amendment of Schedule B (Definitions). Schedule B of
the Note
Purchase Agreement shall be and is hereby amended by the addition
thereto of the
following definitions which shall read as follows:
"Compliance Certificate" means the certificate required to be
delivered to the holders of the Notes by a Senior Financial
Officer
pursuant to Section 3.2(a) of the Parent Guaranty Agreement.
"Series 2003 A-1 Applicable Rate" means the rate per annum
equal
to (i) 3.69% on or prior to December 29, 2005, and (ii) 4.19%
after
December 29, 2005; provided that the Series 2003 A-1 Applicable
Rate
shall be 4.69% if the Consolidated Leverage Ratio was greater
than
4.25 to 1 as of the last day of the most recently ended fiscal
quarter
(beginning with the fiscal quarter ending December 31, 2005)
provided
further that such Series 2003 A-1 Applicable Rate shall be
decreased
to 4.19% if the Leverage Ratio is equal to or less than 4.25 to 1
as
of the last day of any subsequent fiscal quarter. Any increase
or
decrease in the Series 2003 A-1 Applicable Rate shall be in
effect
from and including the fifth Business Day following the date on
which
the Compliance Certificate is delivered to the Noteholders for
the
immediately preceding fiscal quarter of the Guarantor and based
upon
the Leverage Ratio as set forth in such Compliance Certificate. In
the
event no Compliance Certificate shall be delivered on or prior to
the
date such Compliance Certificate is required to be delivered to
the
Noteholders in accordance with Section 3.2(a) of the Guaranty
Agreement then until such time as the applicable Compliance
Certificate is delivered the Series 2003 A-1 Notes shall bear
interest
at the rate of 4.69% from the fifth Business Day after any
holder
gives notice to the Guarantor that it has not received such
Compliance
Certificate by the due date. Except for adjustments in the
interest
rate for the Series 2003 A-1 Notes in respect of any fiscal quarter
as
provided in the preceding sentence, after December 29, 2005,
the
interest rate borne by the Series 2003 A-1 Notes shall be 4.19%
per
annum.
"Series 2003 A-2 Applicable Rate" means the rate per annum
equal
to (i) 5.08% on or prior to December 29, 2005, and (ii) 5.58%
after
December 29, 2005; provided that the Series 2003 A-2 Applicable
Rate
shall be 6.08% if the Consolidated
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<PAGE>
Leverage Ratio was greater than 4.25 to 1 as of the last day of
any
fiscal quarter (beginning with the fiscal quarter ending December
31,
2005) provided further that such Series 2003A-2 Applicable Rate
shall
be 5.58% if the Leverage Ratio is less than or equal to 4.25 to 1
as
of the last day of any subsequent fiscal quarter. Any increase
or
decrease in the Series 2003A-2 Applicable Rate shall be in effect
from
and including the fifth Business Day following the date on which
the
Compliance Certificate is delivered to the Noteholders for the
immediately preceding fiscal quarter of the Guarantor and based
upon
the Leverage Ratio as set forth in such Compliance Certificate. In
the
event no Compliance Certificate shall be delivered on or prior to
the
date such Compliance Certificate is required to be delivered to
the
Noteholders in accordance with Section 3.2(a) of the Guaranty
Agreement then until such time as the applicable Compliance
Certificate is delivered the Series 2003A-2 Notes shall bear
interest
at the rate of 6.08% from the fifth Business Day after any
holder
gives notice to the Guarantor that it has not received such
Compliance
Certificate by the due date. Except for adjustments in the
interest
rate for the Series 2003 A-2 Notes in respect of any fiscal quarter
as
provided in the preceding sentence, after December 29, 2005,
the
interest rate borne by the Series 2003 A-2 Notes shall be 5.58%
per
annum.
"Third Amendment Agreement" means that certain Waiver and Third
Amendment to Guaranty Agreement and Amendment to Note Purchase
Agreement dated as of December 29, 2005 between the Guarantor,
the
Company and the Purchasers, in respect of this Agreement."
ARTICLE 3
AMENDMENT OF GUARANTY AGREEMENT
Section 3.1. Amendment of Section 3 (Information as to Guarantor).
Section
3 of the Guaranty Agreement shall be and is hereby amended by the
addition of
new Sections 3.4, 3.5, 3.6, 3.7, and 3.8 which shall read as
follows:
"Section 3.4. Cash Flow Forecasts. After May 31, 2006, the
Guarantor shall deliver to each Institutional Investor on the
second
Business Day of each week a 13-week rolling cash flow forecast in
form
reasonably acceptable to the Required Holders; and
Section 3.5. Intercreditor Agreement. (i) Concurrently with the
delivery to the Collateral Agent, the Guarantor shall deliver to
each
Institutional Investor copies of all notices,
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<PAGE>
schedules, certificates and reports delivered to the Collateral
Agent
pursuant to or in connection with any Security Document or with
respect to the Collateral, (ii) not less than 5 Business Days prior
to
execution thereof, a copy of (x) each proposed amendment to the
Security Documents, (y) each document or agreement which, if
executed
and delivered would become an additional Security Document,
(iii)
promptly following execution thereof, one copy of each of the
documents referred to in the preceding clause (ii), and (iv)
such
other items pertaining to the Collateral as may be required in
accordance with the terms of the Security Documents.
Section 3.6. Bank Credit Agreement. Concurrently with the
delivery to the Administrative Agent, the Guarantor shall deliver
to
each Institutional Investor (i) copies of all financial and
other
information and certificates (including Compliance Certificates
(as
defined in the Bank Credit Agreement)) and reports delivered to
the
Administrative Agent pursuant to the Bank Credit Agreement or
with
respect to the Collateral, (ii) a summary of the material terms of
any
proposed amendment to the Bank Credit Agreement not later than
the
date a copy of such proposed amendment is delivered to the
Lenders
under the Bank Credit Agreement, and (iii) promptly following
execution thereof, one copy of each of the documents referred to
in
the preceding clause (ii).
Section 3.7. Status of Refinancing. During the last week of
each
month (beginning January, 2006) the Guarantor will hold a
conference
call during normal business hours with Noteholders which are
Institutional Investors to discuss the status of the
Guarantor's
efforts to refinance the Notes.
Section 3.8. Financial Advisor. In the event that the Notes
have
not been prepaid in full on or prior to May 31, 2006, the
Noteholders
shall engage Conway, Del Genio, Gries & Co. LLC, or another
financial
advisor selected by the Required Holders, to perform, inter alia,
a
detailed review of the Guarantor's business plan, financial
statements, projections and strategies, such review to commence
no
later than June 9, 2006. No later than August 9, 2006 such
financial
advisor shall provide to the Noteholders a written report
satisfactory
in scope and detail to the Noteholders setting forth the results
of
such review. Such financial advisor shall also provide such
other
financial advisory services relating to the business and
financial
condition of the Note Parties and their Subsidiaries as shall
be
requested by the Noteholders and agreed between the Noteholders
and
such financial advisor. During the engagement of such financial
advisor the Guarantor
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<PAGE>
shall provide the financial advisor with such financial and
other
information (to the extent that such information is reasonably
available or can be reasonably obtained by the Guarantor)
regarding
the Guarantor, its Subsidiaries, affiliates and investments as
shall
be reasonably requested by the financial advisor, including
reasonable
access to the books and records of the Guarantor, its
Subsidiaries,
affiliates and investments during normal business hours; provided
that
(i) in the case of commercially sensitive information (e.g.
customer
lists and channel of distribution information), no such
information
shall be furnished to the financial advisor unless the
financial
advisor shall have first agreed in writing with the Guarantor
that
only summaries created in consultation with the Company of such
information shall be distributed to the Noteholders, (ii) no
such
financial and other information or access to books and records
shall
be furnished for stockholders of the Guarantor, and (iii) such
financial information and access to the books and records of
other
affiliates and investments shall be furnished only to the
extent
permitted by any such affiliate or the terms of any instrument
pursuant to which any such investment has been made; provided,
further, that in the case of this clause (iii) the Company shall
use
commercially reasonable efforts to ensure that such information can
be
furnished to the financial advisor. During the engagement of
such
financial advisor, which shall continue for so long as the
Required
Holders shall deem appropriate, the Noteholders shall request
the
financial advisor to use its best efforts to coordinate its work
with
the work of any financial advisor retained by the Banks under the
Bank
Credit Agreement to avoid redundant work product. All fees (in
an
amount not to exceed $150,000 per month) and reasonable out of
pocket
expenses of the financial advisor retained pursuant to this
Section
3.8 shall be paid by the Guarantor or the Company."
Section 3.2. Amendment
of Section 4.6 (Designation of Subsidiaries).
Section 4.6 of the Guaranty Agreement shall be and is hereby
amended by the
addition of a new paragraph which shall read as follows:
"Notwithstanding the foregoing, no direct or indirect
Subsidiary
of the Guarantor shall be designated or considered an
Unrestricted
Subsidiary without the consent of the Required Holders other
than
Unrestricted Subsidiaries as of December 29, 2005 (which
Unrestricted
Subsidiaries are Libbey Asia Limited and Libbey Glassware (China)
Co.,
Ltd.)."
Section 3.3. Amendment of Section 4 (Additional Covenants). Section
4 of
the Guaranty Agreement shall be and is hereby amended by the
addition of new
Sections 4.9 and 4.10 to read as follows:
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<PAGE>
"Section 4.9. Collateral. To secure full and complete payment
and
performance of the Notes, the Guarantor shall execute and deliver
or
cause to be executed and delivered the documents described
below
covering the property and collateral described in this Section
4.9
(which, together with any other property and collateral which may
now
or hereafter secure the Notes or any part thereof, is sometimes
herein
called the "Collateral") as follows:
(a) On or before January 31, 2006, the Guarantor will, and will
cause each of the Company and the Subsidiary Guarantors to, grant
to
Collateral Agent, for the benefit of the Secured Parties, a
first
priority security interest in substantially all of its personal
property, including but not limited to, accounts, chattel
paper,
instruments, documents, books, records, inventory, machinery,
equipment, trademarks, patents, copyrights, other intellectual
property, payment intangibles, other general intangibles,
commercial
tort claims, Equity Interests in its Subsidiaries (provided that
not
more than 65% of the Equity Interests of any Pledged Foreign
Subsidiary shall be required to be subject to such security
interest
except as otherwise provided in the Security Agreement), other
investment property and other personal property described in
the
Security Agreement, whether now owned or hereafter acquired, and
all
products and cash and noncash proceeds thereof, pursuant to the
Security Agreement and the Security Documents, which shall be in
form
and substance reasonably satisfactory to the Required Holders.
(b) On or before January 31, 2006, the Guarantor will, and will
cause the Company and each Subsidiary Guarantor to deliver to
the
Administrative Agent certificates of insurance and endorsements
to
insurance policies naming the Collateral Agent as loss
payee/mortgagee
and/or additional insured, as applicable, with respect to all
Collateral
and as may be required by Section 4.2 of this Agreement (to
the extent available) and the Security Documents.
(c) On or before January 31, 2006, the Guarantor will, and will
cause the Company and each Subsidiary Guarantor, to deliver to
the
Administrative Agent counterparts of the Intercreditor
Agreement
executed by the Note Parties, each of the Secured Parties and
the
Collateral Agent.
(d) On or before March 31, 2006, the Guarantor will, and will
cause the Company and each Subsidiary Guarantor to, grant to
Collateral Agent, for the benefit of the Secured Parties, a
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<PAGE>
first priority security interest in all of its Real Property
pursuant
to the Mortgages and other Security Documents related to the
Mortgages
and the Real Property, to include, without limitation, loan or
mortgagee title commitments, flood certificates, and tax
affidavits,
together with payment of all related taxes and fees, all of
which
shall be in form and substance reasonably satisfactory to the
Required
Holders.
(e) To the extent that the real property located at Dane,
Wisconsin, owned in connection with Traex Company has not been sold
on
or before June 30, 2006, the Guarantor will, and will cause the
Company and any applicable Subsidiary Guarantor, to grant a lien
in
such real property in the manner contemplated by Section 4.9(d) on
or
prior to July 15, 2006.
(f) On or before January 31, 2006, certificates of resolutions
or
other action, incumbency certificates and/or other certificates
of
Responsible Officers of each Note Party, all in form and
substance
reasonably satisfactory to the Required Holders, which establish
the
identity and verify the authority and capacity of each
Responsible
Officer thereof authorized to act as a Responsible Officer in
connection with the Note Documents to which such Note Party is
a
party.
(g) On January 31, 2006, the Guarantor shall cause special
counsel to the Guarantor to deliver to the Noteholders an opinion
of
counsel (which shall be in customary form) with respect to the
Security Documents executed and delivered on or prior to January
31,
2005 together with such board resolutions, officer's
certificates,
corporate and other documents and opinions of counsel relative to
such
Security Documents as the Required Holders shall reasonably
request.
Upon the earlier of (x) May 31, 2006 or (y) as soon as
practicable
(but in no event more than thirty days) after the occurrence of
an
Event of Default the Guarantor shall deliver to the Noteholders
an
opinion of counsel in the applicable foreign jurisdiction (which
shall
be in customary
form) with respect to Security Documents executed and
delivered on or prior to such date which pertain to the Pledged
Foreign Subsidiaries.
(h) The Guarantor will, and will cause each of the Company and
the Subsidiary Guarantors to execute and deliver and cause to
be
executed and delivered such further documents and instruments as
the
Required Holders reasonably deem necessary or desirable to
evidence
and perfect their Liens in the Collateral as set forth in the
Security
Documents.
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<PAGE>
Section 4.10. Additional Subsidiaries. (a) At any time
following
January 31, 2006, within ten days after the time that any
Person
becomes a Domestic Subsidiary as a result of the creation of
such
Subsidiary, an Acquisition permitted by Section 5.9 of this
Agreement
or otherwise, (i) if such Domestic Subsidiary is a Restricted
Material
Subsidiary, it shall become a party to the Security Agreement
to
secure obligations held by the Secured Parties, pursuant to
joinder
agreements in form and substance satisfactory to the Required
Holders,
(ii) 100% of such
Subsidiary's Equity Interests shall be pledged to
secure the obligations held by the Secured Parties under the
Security
Documents, and (iii) the Noteholders shall receive such board
resolutions, officer's certificates, corporate and other documents
and
opinions of counsel as the Required Holders shall reasonably
request
in connection with the actions described in clauses (i) and
(ii)
above.
(b) Within thirty days after the time that any Person becomes a
Pledged Foreign Subsidiary as a result of the creation of such
Subsidiary, an Acquisition permitted by Section 5.9 of this
Agreement
or otherwise, 65% of such Subsidiary's Equity Interests shall
be
pledged to secure the obligations held by the Secured Parties
under
the Security Documents. Subject to the limitations set forth in
Section 4.9(g), the opinions and certificates required by
Section
4.9(g) shall also be furnished to the Noteholders concurrently
with
such pledge."
Section 3.4. Amendment of Section 5.1 (Limitation on Debt). Section
5.1 of
the Guaranty Agreement shall be and is hereby amended in its
entirety to read as
follows:
"Section 5.1. Limitation on Debt. (a) The Company will not at
anytime permit the Leverage Ratio, to exceed the ratio set forth
below
opposite the applicable period:
<TABLE>
<CAPTION>
FISCAL
QUARTER ENDING
RATIO
---------------------
-----
<S>
<C>
December 31, 2005
4.50 to 1.00
January 1, 2006 to and including 4.85 to 1.00
September 30, 2006
October 1, 2006 to and including 4.00 to 1.00
December 31, 2006
January 1, 2007 and at all times 3.25 to 1.00
thereafter
</TABLE>
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<PAGE>
(b) From and after the date of the Third Amendment Agreement,
the
Guarantor and its Restricted Subsidiaries shall not incur any
Debt
(including Debt incurred or assumed in connection with any
Acquisition) other than (i) Debt incurred under the Bank Credit
Agreement not to exceed at any time $195,000,000 in an
aggregate
principal amount outstanding; provided that no more than
$105,000,000
in aggregate principal amount shall be borrowed under the Bank
Credit
Agreement by Libbey Europe B.V., (ii) Debt of Libbey Europe B.V.
and
Royal Leerdam B.V. incurred pursuant to a Euro working capital
facility not to exceed at any time 10,000,000 Euros in an
aggregate
principal amount outstanding, (iii) Debt of the Company
incurred
pursuant to a working capital facility not to exceed at any
time
$10,000,000 in an aggregate principal amount outstanding, (iv)
a
Guaranty of Debt of Libbey Glassware (China) Co., Ltd. relating to
a
construction facility not to exceed at any time $35,000,000 (or
the
equivalent amount in foreign currency) in an aggregate
principal
amount outstanding, (v) Intercompany Indebtedness; provided, that
in
the case of Intercompany Indebtedness consisting of a loan or
advance
to a Note Party, each such loan or advance shall be unsecured
and
shall be subordinated to the indefeasible payment in full of all
of
such Note Party's obligations pursuant to this Agreement and the
other
Note Documents, (vi) other Debt not to exceed at any time
$1,000,000
in an aggregate amount outstanding and (vii) debt in respect of
capital leases, Synthetic Lease Obligations and purchase money
obligations for fixed or capital assets in an aggregate
principal
amount at any one time outstanding not to exceed $10,000,000."
Section 3.5. Amendment of Section 5.2 (Consolidated Interest
Coverage
Ratio). Section 5.2 of the Guaranty Agreement shall be and is
hereby amended in
its entirety to read as follows:
"Section 5.2. Consolidated Interest Coverage Ratio. The
Guarantor
will not permit the Consolidated Interest Coverage Ratio to be
less
than 3.00 to 1.00 as of the end of the most recently ended
fiscal
quarter."
Section 3.6. Amendment to Section 5.3 of Guaranty Agreement.
Section 5.3 of
the Guaranty Agreement shall be amended by (i) amending
subparagraph (h) to add
the parenthetical "(including the Liens of Capitalized Leases and
Synthetic
Lease Obligations)" immediately following the word "Lien" in the
first line of
such subparagraph (h), and (ii) adding the following proviso at the
end of
subparagraph (m) thereof and a new subparagraph (n) immediately
following
subparagraph (m):
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"provided, further, that (i) no Liens shall be created, incurred
or
assumed under this Section 5.3(m) if, at such time or after
giving
effect thereto, any Default or Event of Default shall have
occurred
and be continuing, and (ii) from the date of the Third Amendment,
the
Guarantor will not and will not permit any of its Restricted
Subsidiaries to create, incur or assume any Liens under this
subsection (m) securing Debt in excess of $1,000,000; and
(n) the Liens of the Security Documents so long as the Notes
shall be equally and ratably secured thereby and the
Intercreditor
Agreement shall be in full force and effect."
Section 3.7. Amendment of Section 5.4 (Sale of Assets). Section 5.4
of the
Guaranty Agreement shall be and is hereby amended in its entirety
to read as
follows:
"Section 5.4. Sales of Assets. The Guarantor will not, and will
not permit any Restricted Subsidiary to, make any Disposition or
enter
into any agreement to make any Disposition (other than
agreements
making the applicable Disposition subject to the prior payment in
full
of the Notes, together with the Make-Whole Amount, if any, or to
being
consented to by the Required Holders), except:
(a) Dispositions of obsolete or worn out property, whether now
owned or hereafter acquired, in the ordinary course of
business;
(b) Dispositions of inventory in the ordinary course of
business;
(c) Dispositions of equipment or real property to the extent
that
such property is exchanged for credit against the purchase price
of
similar replacement property owned by the Guarantor or a
Restricted
Subsidiary;
(d) Dispositions by the Guarantor and its Restricted
Subsidiaries
of property pursuant to sale-leaseback transactions; provided that
(i)
the aggregate Net Proceeds from all such sale and leaseback
transactions shall not exceed $10,000,000 in any fiscal year, and
(ii)
to the extent that any such Net Proceeds shall be applied to
reduce
amounts outstanding under the Bank Credit Agreement, such
amounts
shall be shared with the Noteholders in the manner provided in
the
Intercreditor Agreement;
(e) Dispositions permitted by Section 5.5 of this Agreement;
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(f) Dispositions by any Note Party to the Company or any
Guarantor;
(g) Dispositions of property from Restricted Subsidiaries that
are not Note Parties to Restricted Subsidiaries which are not
Guarantors and Dispositions of property by Restricted
Subsidiaries
which are not Guarantors to any Note Party;
(h) Dispositions that are Investments or dividends or
distributions which in each case are (i) in the ordinary course
of
business, (ii) consistent with past practice, and (iii) not
prohibited
by this Agreement;
(i) Dispositions of the business presently conducted by the
Traex
Company;
provided that to the extent that any such Net Proceeds shall
be applied to reduce amounts outstanding under the Bank Credit
Agreement, such amounts shall be shared with the Noteholders in
the
manner provided in the Intercreditor Agreement;
(j) Dispositions of equipment by the Guarantor and its
Restricted
Subsidiaries to Libbey Glassware (China) Co., Ltd. in which no
Net
Proceeds are received by the Company or any Restricted Subsidiary;
and
(k) other Dispositions of property not otherwise permitted
hereunder; provided that (i) the consideration received for
such
assets shall have a value at least equal to the fair market value
of
such assets, in each case as determined in good faith by the
Guarantor
or the applicable Restricted Subsidiary; and (ii) if either (x)
the
amounts of the Net Proceeds of such Dispositions in any fiscal year
of
the Guarantor exceeds $5,000,000 or (y) the sum of (A) Net
Proceeds
received pursuant to Dispositions permitted by clause (i) of
this
Section 5.4, (B) the fair market value of equipment transferred
pursuant to clause (j) of this Section 504 and (C) the Net
Proceeds
received in any fiscal year pursuant to this clause (k) exceeds
$40,000,000, then in the case of either (x) or (y), the
Aggregate
Commitments under the Bank Credit Agreement and the aggregate
principal amount of the Notes shall be reduced as provided in
the
Intercreditor Agreement.
Notwithstanding the foregoing, neither the Guarantor nor any
Subsidiary will sell any Accounts Receivable, except for any
such
Accounts Receivable in respect of which the debtor is involved
in
insolvency proceedings, (or transfer or otherwise dispose of
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Accounts Receivable except in the ordinary course of business)
or
create any Receivables Subsidiary."
Section 3.8. Amendment of Section 5 (Additional Covenants). Section
5 of
the Guaranty Agreement shall be and is hereby amended by the
addition of a new
Sections 5.9 and 5.10 to read as follows:
"Section 5.9. Acquisitions. The Company will not, nor will it
suffer or permit any of its Subsidiaries to, make any
Acquisition
unless, after giving effect to such Acquisition (the "subject
Acquisition"), all of the following requirements are satisfied:
(i)
such Acquisitions are undertaken in accordance with all
applicable
laws, (ii) the prior, effective written consent or approval to
such
Acquisition of the board of directors or equivalent governi
