Exhibit 4.2
FORM OF LOCK-UP AGREEMENT
with respect to
SYRATECH CORPORATION
Dated as of November 15, 2004
TABLE OF CONTENTS
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LOCK-UP AGREEMENT
This LOCK-UP AGREEMENT, dated as of
November 15, 2004 (this “ Agreement ”), is
entered into by and among:
(a)
Company . Syratech Corporation and each of its
Subsidiaries (collectively, the “ Company ”);
and
(b)
Noteholders
. The undersigned holders of
Senior Notes who are each identified on the signature page(s)
hereto as a “ Lock-up Noteholder ”
(collectively, the “ Lock-up Noteholders ”), and
each other registered or beneficial owner (or investment managers
or advisors for the beneficial owners) of Senior Notes that
executes a counterpart signature page to this Agreement after the
date hereof (collectively, the “ Other Noteholders
,” and each, individually, an “ Other Noteholder
”; the Lock-up Noteholders and the Other Noteholders are
collectively referred to as the “ Noteholders ”
and each individually as a “ Noteholder
”).
RECITALS:
WHEREAS, the Company issued certain
11% Senior Notes Due 2007 (the “ Senior Notes ”)
pursuant to that certain Indenture, dated as of April 16, 1997
between the Company, the Subsidiaries, and State Street Bank and
Trust Company;
WHEREAS, the current aggregate
outstanding principal amount owed under the Senior Notes totals
approximately $118 million;
WHEREAS, the parties hereto have
engaged in good faith negotiations regarding a financial
restructuring with respect to the Company consistent in all
material respects with the terms set forth in this Agreement and
the Restructuring Term Sheet attached hereto as Annex A (the
“ Financial Restructuring ”); and
WHEREAS, the parties hereto intend
to implement the Financial Restructuring by the commencement of the
Bankruptcy Proceedings and confirmation of the Joint Plan of
Reorganization, including without limitation in each case, the
issuance of the New Securities and the execution of the
Stockholders’ Agreement as provided herein and in the
Restructuring Term Sheet.
NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
Section
1.1
Definitions . As
used in this Agreement, the terms listed in this Section 1.1 shall
have the respective meanings set forth in this Section
1.1.
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“ Accredited Investor
” means “accredited investor” as defined in Rule
501 of Regulation D under the Securities Act.
“ Action ” means
any lawsuit, action, arbitration, investigation, complaint or
legal, administrative or other governmental proceeding before any
Governmental Authority, mediator, judge or arbitrator.
“ Agreement ” has
the meaning specified in the first page of this
Agreement.
“ Agreement Effective
Date ” has the meaning specified in Section 5.1 of this
Agreement.
“ Ancillary Proceedings
” means proceedings commenced by the Company in jurisdictions
other than the United States of America, as the Consenting Lock-Up
Noteholders and the Company may subsequently agree, that are
necessary or appropriate to enforce, and are commenced for the
purpose of enforcing, the orders and judgments of the court with
jurisdiction over the Bankruptcy Proceedings, including but not
limited to enforcing or extending into such jurisdiction (i) the
automatic stay under Section 362 of the Bankruptcy Code, (ii) the
discharge injunction under section 1141 of the Bankruptcy Code,
and/or (iii) relief similar in effect to the foregoing, or
otherwise effectuate the Financial Restructuring.
“ Bankruptcy Code
” means 11 U.S.C. § 101 et seq.
“ Bankruptcy
Proceedings ” means (i) cases commenced by the Company
under chapter 11 of the Bankruptcy Code, (ii) Ancillary Proceedings
and (iii) cases commenced by the Company under such other
insolvency laws and in such other jurisdictions as the Consenting
Lock-Up Noteholders and the Company may subsequently
agree.
“ Company ” has
the meaning given on the first page of this Agreement.
“ Consenting Lock-up
Noteholders ” means Lock-up Noteholders who hold in the
aggregate at least 75% of the principal amount of Senior Notes held
by Lock-up Noteholders.
“ Disclosure Statement
” means a disclosure statement with respect to the Joint Plan
of Reorganization that complies with section 1125 of the Bankruptcy
Code in a form reasonably acceptable to the Consenting Lock-up
Noteholders.
“ Eligible Offeree
” means a Person that is an Accredited Investor.
“ Financial
Restructuring ” has the meaning given in the Recitals of
this Agreement.
“ Governmental
Authority ” means any national, supranational, federal,
state, province, county, city, municipal or other political
subdivision, whether within or outside the United States, or any
government, department, commission, board, bureau, court, agency or
any other instrumentality of any of them.
“ Informal
Noteholders’ Committee ” means the informal
committee of holders and beneficial owners of the Senior Notes that
have negotiated the terms of the Financial Restructuring with the
Company, who are identified on the signature page(s)
hereto.
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“ Joint Plan of
Reorganization ” means a joint plan of reorganization
concerning the Company consistent in all material respects with the
terms set forth in this Agreement and the Restructuring Term Sheet
which, if confirmed or approved in the Bankruptcy Proceedings, will
implement the Financial Restructuring.
“ Lock-up Noteholder
” and “ Lock-up Noteholders ” has the
meaning given on the first page of this Agreement.
“ Material Adverse
Change ” means any change in the business, condition
(financial, legal or otherwise) or operations of the Company and
its subsidiaries, taken as a whole, that could reasonably be
expected to have a material adverse effect (i) on such business,
condition or operations of the Company, taken as a whole, or (ii)
on the ability of the Company to consummate the Financial
Restructuring or perform fully and punctually its obligations under
and in respect of this Agreement and the Financial Restructuring;
provided that the filing of the Bankruptcy Proceedings shall not
constitute a Material Adverse Change.
“ New Common Stock
” has the meaning set forth in the Restructuring Term
Sheet.
“ New Securities
” means the New Common Stock and the New Senior
Notes.
“ New Senior Notes
” has the meaning set forth in the Restructuring Term
Sheet.
“ Noteholder ”
and “ Noteholders ” has the meaning given on the
first page of this Agreement.
“ Old Indenture ”
means the indenture (as amended, modified or supplemented from time
to time), dated as of April 16, 1997, between Syratech Corporation,
as issuer, and State Street Bank and Trust Company as indenture
trustee.
“ Other Noteholder
” and “ Other Noteholders ” has the
meaning given on the first page of this Agreement.
“ Person ” means
any individual, partnership, corporation, limited liability
company, association, trust, joint venture, unincorporated
organization or other entity.
“ Relevant Claim
” means any amount owed with respect to the Senior
Notes.
“ Reorganized Company
” means the Delaware corporation that will take the place of
and continue the operations of the Company following of the
Financial Restructuring.
“ Reorganized Company
Charter ” means the certificate of incorporation of the
Reorganized Company which authorizes the issuance of the New
Securities and the by-laws of such Reorganized Company.
“ Restructuring
Documents ” means the final, definitive documents that
give effect to the Financial Restructuring including, without
limitation, the Joint Plan of Reorganization, the Disclosure
Statement, the Stockholders’ Agreement, the Reorganized
Company Charter and all other documents executed in connection with
the Financial Restructuring .
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“ Restructuring Term
Sheet ” means that certain Restructuring Term Sheet
attached hereto as Annex A which sets forth the material terms and
conditions of the Financial Restructuring.
“ Securities Act
” means the Securities Act of 1933, as amended.
“ Senior Notes ”
means the 11% Senior Notes Due 2007 issued by the Company
pursuant to the Old Indenture.
“ Stockholders’
Agreement ” means the agreement containing the terms set
forth in the Restructuring Term Sheet to be entered into by and
among the Reorganized Company and each Person who receives New
Securities in the Financial Restructuring.
“ Subsidiary ”
and “ Subsidiaries ” means Wallace International
de P.R., Inc. and CHI International, Inc.
“ Transfer ”
means, in relation to a Relevant Claim, to directly or indirectly
(i) sell, pledge, assign, grant an option with respect to,
transfer or otherwise dispose of any interest (voting or otherwise)
in or (ii) enter into an agreement, commitment or other
arrangement to sell, pledge, assign, grant an option with respect
to, transfer or otherwise dispose of any interest (voting or
otherwise) in such Relevant Claim.
Section
1.2
Other Definitional Provisions.
(a)
The words
“ hereof ”, “ herein ” and
“ hereunder ” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(b)
The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such
terms.
ARTICLE II
GENERAL RESTRUCTURING OBLIGATIONS
Section
2.1
Commercially Reasonable Best Efforts . Each party hereto agrees, severally and
not jointly, to use commercially reasonable best efforts to
complete the Financial Restructuring through (i) the execution and
delivery of the Restructuring Documents, as each is described
herein or in the Restructuring Term Sheet and (ii) the
confirmation, enactment and/or approval in the Bankruptcy
Proceedings of the Joint Plan of Reorganization.
Section
2.2
Voting . Each
Noteholder represents and warrants, severally and not jointly,
that, as of the date hereof, it is the legal owner, beneficial
owner and/or the investment adviser, representative or manager for
the beneficial owner (with the power to vote and dispose of such
claims on behalf of such beneficial owner) of such beneficial
owner’s Relevant Claim. Each Noteholder agrees for
itself, except as otherwise provided in Section 3.5, that it shall
not vote its Relevant Claim to reject the Joint Plan of
Reorganization provided that the terms of the Joint Plan of
Reorganization and Disclosure Statement with respect thereto are
consistent in all material respects with the terms described in the
Restructuring Term Sheet and the information
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provided in the Disclosure Statement contains
information not materially different from that previously provided
to the Lock-up Noteholders. For so long as this Agreement
shall remain in effect, the Noteholders shall oppose any action,
objection or motion by any party that would result in termination
of this Agreement or the Financial Restructuring, subject to the
provisions of Section 3.5 and Article VIII of this
Agreement.
Section
2.3
Documentation .
Notwithstanding anything to the contrary contained in this
Agreement, the obligations of the parties hereto to consummate the
Financial Restructuring shall be subject to the preparation of
definitive documents (in form and substance reasonably satisfactory
to each of the parties hereto and their respective counsel)
relating to the transactions contemplated by this Agreement,
including, without limitation, the documents relating to the Joint
Plan of Reorganization, Disclosure Statement, the Restructuring
Documents, the Reorganized Company Charter and each other
Restructuring Document, which documents shall be in all respects
consistent with this Agreement (including the Restructuring Term
Sheet).
Section
2.4
Good Faith . Each
of the parties hereto agrees to cooperate in good faith with each
other party hereto to facilitate the performance by the parties of
their respective obligations hereunder and the purposes of this
Agreement.
ARTICLE III
COMPANY RESTRUCTURING OBLIGATIONS
Section
3.1
Commencement of Bankruptcy Proceedings . If the required consents of the
Noteholders are received to make the Restructuring Term Sheet
effective by its terms, then within 45 days after such date (or
such later date as the Consenting Lock-up Noteholders may agree),
the Company shall file the Bankruptcy Proceedings including,
substantially simultaneously therewith, the Joint Plan of
Reorganization, Disclosure Statement and such “
first-day ” motions and papers as are necessary or
appropriate and seek confirmation of the Joint Plan of
Reorganization. The Joint Plan of Reorganization,
accompanying Disclosure Statement and all “ first-day
” motions and papers shall be in form and substance
reasonably satisfactory to the Company and counsel to the
Consenting Lock-Up Noteholders.
Section
3.2
Modification of Financial Restructuring . The Company shall not, without the prior
written consent of the Consenting Lock-up Noteholders seek to
restructure the Company or any of its subsidiaries except through
the Financial Restructuring in accordance with the Restructuring
Term Sheet.
Section
3.3
Performance of Obligations . The Company shall perform all its
obligations hereunder and under the Restructuring Term
Sheet.
Section
3.4
No Opposition to Financial Restructuring . The Company further agrees that it will
not object to, or otherwise commence any proceeding to oppose, the
Financial Restructuring and shall not take any action that is
inconsistent with, or that would unreasonably delay the
consummation of, the Financial Restructuring, or the execution,
delivery, and performance of the obligations of the Company under
this Agreement (including the Restructuring Term Sheet).
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Section
3.5
Impact of Appointment of Creditors Committee
. If an official committee of
holders of unsecured claims or similar body is appointed in the
Bankruptcy Proceedings, the Company shall cooperate with the
members of the Informal Noteholders’ Committee in seeking to
cause the appointment of the members of the Informal
Noteholders’ Committee to be members of such committee or
body if the Informal Noteholders’
