Exhibit-99.1
SECOND
AMENDMENT TO FORBEARANCE AGREEMENT
THIS SECOND
AMENDMENT TO FORBEARANCE AGREEMENT (this “ Second
Amendment ”) is made and entered into as of the 31st day
of January, 2005, by and among Syratech Corporation, a Delaware
corporation (the “ Borrower ”), the Lenders
whose signatures appear on the signature pages hereof (the “
Lenders ”), and Bank of America, N.A., as
Administrative Agent for the Lenders (in such capacity, the “
Agent ”).
W I T N E S S E T H :
WHEREAS, Borrower,
the Lenders and the Agent entered into that certain Amended and
Restated Loan and Security Agreement, dated as of March 26, 2004
(as amended, the “ Credit Agreement ”);
and
WHEREAS, Borrower,
the Lenders and the Agent entered into that certain Forbearance
Agreement and Second Amendment, dated as of November 15, 2004 (the
“ Forbearance Agreement ”; capitalized terms
used but not defined herein shall have the respective meanings
assigned to such terms in the Forbearance Agreement, as amended, if
applicable, and otherwise in the Credit Agreement); and
WHEREAS, Borrower,
the Lenders and the Agent entered into that certain First Amendment
to Forbearance Agreement, dated as of December 23, 2004 (the
“ First Amendment ”); and
WHEREAS, Borrower,
Agent and Lenders wish to further amend the Forbearance Agreement,
as set forth herein;
NOW, THEREFORE, in
consideration of the foregoing premises (collectively the “
Recitals ”), and other good and valuable
consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereby agree as
follows:
1.
Acknowledgments by Borrower .
(a) Borrower
hereby acknowledges and agrees that (i) as of the close of business
on January 28, 2005, (A) the outstanding and unpaid principal
balance of the Revolving Credit Loans totaled $13,617,331.30, and
(B) the Letter of Credit Obligations totaled $2,363,724.42, in each
case exclusive of accrued interest, costs and attorney’s fees
chargeable to Borrower under the Loan Documents; (ii) the
Existing Defaults are continuing and have not been cured by
Borrower or waived, released, extinguished or compromised by Agent
or Lenders; and (iii) as a result of the Existing Defaults, all of
the Secured Obligations, at the election of the Agent or the
direction of the Required Lenders, could be declared absolutely and
immediately due and owing by Borrower, and Agent, on behalf of the
Lenders, would have the full legal right to exercise any
and all rights and
remedies under the Loan Documents or otherwise available at law or
in equity with respect thereto.
(b)
Borrower acknowledges and agrees that, notwithstanding the
agreement of Agent and Lenders in the Forbearance Agreement, on the
terms and conditions set forth therein, to (i) on the part of the
Lenders, make additional Revolving Credit Loans and continue to
purchase participations in respect of Letters of Credit and Bankers
Acceptances under the Revolving Facility, and (ii) to continue to
forbear from exercising the rights and remedies available under the
Loan Documents and applicable law, in no event shall any of such
actions by Agent or Lenders be deemed a waiver, release,
extinguishment, compromise or cure of the Existing Defaults or of
any other current or future Default or Event of Default.
2.
Forbearance Period
.
(a)
The first sentence of Section 2(a) of the Forbearance Agreement is
hereby amended by striking the date “January 31, 2005”
and inserting in lieu thereof the date “February 21,
2005”.
(b)
Subsection (iii) of Section 2(f) is hereby amended by striking the
dollar amount “$22,500,000” and inserting in lieu
thereof the dollar amount “$16,500,000”.
(c)
Subsection (vi) of Section 2(f) of the Forbearance Agreement is
hereby modified by striking the text thereof in its entirety and
inserting in lieu thereof the following:
(vi)
During the Forbearance Period, but not thereafter, Section 11.14 of
the Credit Agreement shall be modified by striking the text thereof
in its entirety, and inserting in lieu thereof the following:
Permit Revolving Credit Availability, as of the following
respective dates during the Forbearance Period, to be less than the
following amounts:
(A) On
any date during the period February 1, 2005 through and including
February 10, 2005 an amount equal to $8,775,000;
(B) On
any date during the period February 11, 2005 through and including
February 17, 2005 an amount equal to the greater of (1) $8,775,000
or (2) $9,275,000 minus the Eligible Expenses; and
(C) On
any other date during the Forbearance Period, an amount equal to
the greater of (1) $8,775,000 or (2) $10,000,000 minus the Eligible
Expenses.
As used in this
subsection (vi), the term “Eligible Expenses” shall
mean the aggregate amount of costs and expenses of the Borrower,
first incurred on or after February 1, 2005, that, in the
reasonable credit judgment of the Administrative Agent, were
incurred primarily for the purpose of securing one or more binding
financing commitments for a debtor-in-possession credit facility in
connection with a contemplated bankruptcy case for the Borrower, in
such amount and on such terms that the initial proceeds of such
credit facility will be applied in satisfaction of all of the
Secured Obligations.
2
(d)
A new subsection (vii) is hereby added to Section 2(f) of the
Forbearance Agreement, as follows:
“(vii) During the Forbearance
Period, but not thereafter, the definition of “Borrowing
Base” shall be modified by striking the text of subsection
(a) thereof, and inserting in lieu thereof the
following:
“(a) the least of
(i)
$14,250,000 and
(ii) 75% (or such
lesser percentage as the Administrative Agent may in its reasonable
credit judgment, applying standards customary to institutional
asset-based lenders, determine from time to time following any
adverse change in dilution or other measure of value of the
Receivables (or any of them)) of the face value of Eligible
Receivables due and owing at such time, plus ”
3.
Representations, Warranties, Covenants and Acknowledgments;
Release . To induce the Lenders and the Agent
to enter into this Second Amendment:
(a)
The Borrower represents and warrants that, upon and after giving
effect to this Second Amendment, (i) except for the Existing
Defaults, each of the representations and warranties made by it
under the Loan Documents, other than representations and warranties
that speak only as of an earlier date, are true and correct,
subject to any express qualification or modifier set forth in any
such representation or warranty, (ii) it has the power and
authority and is duly authorized to enter into, deliver and perform
this Second Amendment, (iii) this Second Amendment, the
Forbearance Agreement, the Credit Agreement and each of the other
Loan Documents is the legal, valid and binding obligation thereof,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors’
rights generally and by general principles of equity (regardless of
whether enforcement is sought in equity or in law), and (iv) the
execution, delivery and performance of this Second Amendment in
accordance with its terms do not and will not, with the passage of
time, the giving of notice or otherwise: (A) require approval by
any Governmental Authority or violate any a
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