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
