SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Filed Pursuant to Section 113 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 16, 1997
SYRATECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-12624 13-3354944
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
1750 McClellan Highway
East Boston, MA
(Address of principal executive office)
Registrant's telephone number, including area code: (617) 561-2200
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Item 1. Changes in Control of Registrant
(a) On April 16, 1997, THL Transaction I Corp., ("THL I"), a Delaware
corporation, controlled by affiliates of Thomas H. Lee Company ("Lee
Affiliates"), was merged with and into Registrant (the "Merger") pursuant to the
Restated Agreement and Plan of Merger, dated as of November 27, 1996, effective
as of October 23, 1996, as amended on February 14, 1997, between THL I and the
Company (the "Merger Agreement").
Pursuant to the Merger, each share of Registrant's common
stock, par value $0.01 per share ("Common Stock") issued and outstanding
immediately prior to the effective time of the Merger (the "Effective Time")
(other than (i) shares of Common Stock held by Registrant or any wholly-owned
subsidiary thereof, and (ii) 35,232 shares of Common Stock that were contributed
to Registrant by Leonard Florence upon the Merger and which were then canceled
and retired) was converted, at the election of the holder thereof, and subject
to the limitations stated below, into either (a) the right to receive $32.00 in
cash (except that Leonard Florence was entitled to receive $28.00 in cash) or
(b) the right to retain one fully paid and non-assessable share of Registrant's
Common Stock. The right to retain Registrant's Common Stock was limited in the
case of each stockholder (other than Management Stockholders) to 34.75% of such
stockholder's shares of Common Stock. Moreover, because no more than an
aggregate of 868,250 shares of Registrant's Common Stock could be retained by
stockholders (other than Management Stockholders), the right to retain
Registrant's Common Stock was subject to proration as set forth in the Merger
Agreement and
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described in the Proxy Statement/Prospectus circulated in connection with the
meeting at which the Merger Agreement was approved and adopted.
Upon the Merger, the Lee Affiliates acquired an aggregate of
18,000 shares (100%) of Registrant's Cumulative Redeemable Preferred Stock and
2,350,530 shares (60.7%) of Registrant's Common Stock, in exchange for
corresponding stock interests in THL I for which the Lee Affiliates had paid an
aggregate of $93,216,960 in cash, and, accordingly, acquired control of
Registrant.
Pursuant to the Merger Agreement, the existing Board of
Directors of Registrant was replaced by a new Board consisting of four officers
of Registrant (namely: Leonard Florence, Melvin L. Levine, Alan Kanter and E.
Merle Randolph), three of whom had been directors prior to the change of
control, and five designees of the Lee Affiliates, namely: David V. Harkins,
Scott A. Schoen, Thomas M. Hagerty, Seth W. Lawry and Kent R. Weldon.
At the Effective Time, Registrant, the Lee Affiliates and the
Management Stockholders entered into a Stockholders Agreement that (i) provided
for restrictions on transfers of shares of Common Stock of Registrant owned by
the Management Stockholders and the Lee Affiliates, (ii) granted certain
assignable call rights to Registrant in the event of termination of the
employment of certain of the Management Stockholders under specified
circumstances, (iii) provided for certain tag-along, take-along and contractual
preemptive rights, (iv) provided for the size and composition of Registrant's
Board of Directors (i.e., five persons designated by the Lee Affiliates and four
persons designated by the Management Stockholders) and
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(v) obligated all parties to the agreement to vote, or grant proxies to vote,
their shares in favor of certain transactions.
At the Effective Time, Registrant entered into debt financing
arrangements aggregating approximately $295 million, consisting of both Senior
Notes and a senior revolving credit facility (the "Revolving Credit Facility").
The amount invested by the Lee Affiliates in THL I plus proceeds of the Senior
Notes and a portion of the proceeds available pursuant to the Revolving Credit
Facility were used to finance the conversion into cash of the shares of
Registrant's outstanding Common Stock that were not retained by Registrant's
then existing stockholders, and to refinance Registrant's outstanding
indebtedness. The Revolving Credit Facility is also intended to provide for
Registrant's working capital requirements at the time of and following the
Merger.
Under the Revolving Credit Facility, NationsBank, N.A.
("NationsBank") provided Registrant with $130.0 million of revolving credit
borrowings. The Revolving Credit Facility included a $30.0 million sublimit for
the issuance of standby and commercial letters of credit. Borrowings made under
the Revolving Credit Facility will bear interest at a rate equal to, at
Registrant's option, NationsBank's Eurodollar Rate plus 225 basis points or the
Prime Rate plus 50 basis points. The "Prime Rate" is a fluctuating interest rate
equal to the higher of (i) the rate of interest announced publicly by
NationsBank as its prime rate and (ii) a rate equal to 1/2 or 1% per annum above
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
determined for any day by NationsBank. The Eurodollar
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Rate and Prime Rate Margins are subject to step-downs commencing twelve months
from the Effective Time, based on Registrant's performance. Interest based on
the base rate will be payable monthly in arrears. Interest based on the
Eurodollar Rate is payable in arrears at the earlier of the end of (a) the
applicable interest period and (b) month-end. Eurodollar Rate borrowings are
available in 1-, 2-, 3- or 6-month interest periods.
The obligations of Registrant under the Revolving Credit
Facility are secured by inventory, accounts receivable and the proceeds of the
foregoing of Registrant and its domestic subsidiaries.
The Revolving Credit Facility contains customary covenants of
the Registrant and the subsidiary borrowers, including, without limitation,
restrictions on (i) the incurrence of debt, (ii) the sale of assets, (iii)
mergers, acquisitions and other business combinations, (iv) voluntary prepayment
of other debt of Registrant, (v) transactions with affiliates (as defined in the
Revolving Credit Facility) and (vi) investments, as well as prohibitions on the
payment of dividends to, or the repurchase or redemption of stock from,
shareholders and various financial covenants. Pursuant to the terms of the
Revolving Credit Facility, Registrant would be in default under the Revolving
Credit Facility upon the non-payment of principal or interest when due under
notes issued in connection with the Revolving Credit Facility or, subject to
applicable grace periods in certain circumstances (ranging from zero to ten
days), upon the non-fulfillment of the covenants described above, certain
changes in control or ownership of Registrant or various other defaults
described in the Revolving Credit Facility. If such a default occurs, the
lenders are entitled to take all
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actions permitted to be taken by a secured creditor under the Uniform Commercial
Code and to accelerate the amounts due under the Revolving Credit Facility and
may require all such amounts to be immediately paid in full.
Registrant also issued $165 million original principal amount
of 11% Senior Notes due April 15, 2007 (the "Notes"). Interest is payable
semi-annually on April 15 and October 15. The Notes are general unsecured
obligations of Registrant, ranking senior to all existing and future
subordinated indebtedness of Registrant and pari passu in right of payment with
all other existing and future subordinated indebtedness of Registrant, including
the Revolving Credit Facility. The payment of principal, premium, if any, and
interest on the Notes are unconditionally guaranteed on a joint and several
basis by each of Registrant's domestic subsidiaries.
On or after five years from the date of issue, Registrant may
redeem the Notes in whole or in part pursuant to the terms thereof. At any time
on or before three years from the date of issue, Registrant may redeem up to 35%
of the original aggregate principal amount of the Notes at an initial redemption
price of 111% (declining to 109%) of the principal amount thereof, provided that
at least $100.0 million of Notes remain outstanding immediately after the
occurrence of such redemption. Upon a Change of Control (as defined in the
Indenture pursuant to which the Notes were issued (the "Indenture")), Registrant
will be required to make an offer to purchase all outstanding Notes at 101% of
the principal amount thereof plus accrued but unpaid interest. In addition, a
Change of Control would also require Registrant to redeem the Cumulative
Redeemable Preferred Stock and to repay outstanding indebtedness under the
Revolving Credit Facility.
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Registrant will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the Indenture applicable to a Change of Control Offer
made by Registrant and purchases all Notes validly tendered and not withdrawn
under such Change of Control Offer.
The Indenture restricts, among other things, the ability of
Registrant and its subsidiaries to incur additional indebtedness, pay dividends
or make certain other restricted payments, incur liens, engage in any sale and
leaseback transaction, sell stock of subsidiaries, apply net proceeds from
certain asset sales, merge or consolidate with any other person, sell, assign,
transfer, lease, convey or otherwise dispose of substantially all of the assets
of Registrant, enter into certain transactions with affiliates, or incur
indebtedness that is subordinate in right of payment to any Indebtedness and
senior in right of payment to the Debt Securities.
(b) The following table sets forth certain information concerning the
beneficial ownership of Common Stock (i) by each stockholder who owns
beneficially in excess of 5% of Registrant's outstanding Common Stock, (ii) by
each director, and (iii) by all officers and directors as a group. Except as
otherwise indicated in the Stockholder Agreement referred to above, all persons
listed below have (i) sole voting power and investment power with respect to
their shares of Registrant's Common Stock, except to the extent that authority
is shared by spouses under applicable law, and (ii) record and beneficial
ownership with respect to their shares of Registrant's Common Stock.
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<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Name Owned Percentage
- ---- ------------- ----------
<S> <C> <C>
Leonard Florence (a)............................... 528,472 13.65%
E. Merle Randolph.................................. 30,875 *
Melvin L. Levine................................... 41,132 1.06%
Alan R. Kanter..................................... 48,232 1.24%
Faye A. Florence................................... 3,527 *
David V. Harkins (b)............................... 2,350,530 60.72%
Scott A. Schoen (b)................................ 2,350,530 60.72%
Thomas M. Hagerty (b).............................. 2,350,530 60.72%
Seth W. Lawry(b)................................... 2,350,530 60.72%
Kent R. Weldon(b).................................. 2,350,530 60.72%
Thomas H. Lee Equity Fund III, L.P.(c)............. 2,016,567 52.10%
THL Foreign Fund III, L.P.(c)...................... 124,779 3.22%
THL Co-Investors III-A, LLC (d).................... 127,412 3.29%
THL Co-Investors III-B, LLC (d).................... 81,772 2.11%
Officers and Directors as a group (10 persons)..... 3,002,768 77.57%
</TABLE>
* Less than 1% of the issued and outstanding Common Stock of Registrant.
(a) The business address for Leonard Florence is c/o Syratech Corporation,
175 McClellan Highway, East Boston, Massachusetts, 02128-9114.
(b) The business address of this stockholder is c/o Thomas H. Lee Company,
75 State Street, Boston, Massachusetts 02109. All such voting
securities are owned by Thomas H. Lee Equity Fund III, L.P., Thomas H.
Lee Foreign Fund III, L.P., THL Co-Investors III-A, LLC and THL
Co-Investors III-B, LLC and may be deemed to be beneficially owned by
Messrs. Harkins, Hagerty, Schoen, Lawry and Weldon, officers of Thomas
H. Lee Company. Each of such persons disclaims beneficial ownership of
such shares.
(c) THL Equity Advisors III Limited Partnership ("Advisors"), the general
partner of Thomas H. Lee Equity Fund III, L.P. and Thomas H. Lee
Foreign Fund III, L.P., THL Equity Trust III ("Equity Trust"), the
general partner of Advisors, Thomas H. Lee, Messrs. Harkins, Hagerty
and Schoen and other managing directors of Thomas H. Lee Company may be
deemed to be beneficial owners of the shares of Registrant's Common
Stock held by such funds. Each of such persons maintains a principal
business address at Suite 2600, 75 State Street, Boston, Massachusetts
02109. Each of such persons disclaims beneficial ownership of such
shares.
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(d) Lee Affiliates are the members of both THL Co-Investors III-A, LLC and
THL Co-Investors III-B, LLC. Each of the Lee Affiliates maintains a
principal business address at Suite 2600, 75 State Street, Boston,
Massachusetts 02109. Each of such persons disclaims beneficial
ownership of such shares.
Item 7. Financial Statements and Exhibits
(a) ***
(b) ***
(c) Exhibits
4.1 Stockholders' Agreement, dated April 16, 1997 among
Syratech Corporation, Thomas H. Lee Equity Fund III,
L.P., Thomas H. Lee Foreign Fund III, L.P., THL
Co-Investors III-A, LLC, THL Co-Investors III-B, LLC,
Leonard Florence, E. Merle Randolph, Alan R. Kanter,
Melvin L. Levine and Faye A. Florence.
4.2 Form of Indenture dated as of April, 1997 between
Syratech Corporation as Issuer and State Street Bank
and Trust Company, as Trustee. Incorporated by
reference from Exhibit 4.1 to Form S-3 Registration
Statement No. 333-18133.
99.1 $130,000 Loan and Security Agreement dated as of
April 16, 1997 among Syratech Corporation, Towle
Manufacturing Company, Leonard Florence Associates,
Inc., Wallace International Silversmiths, Inc.,
Syratech Holding Corporation, Rauch Industries, Inc.,
Rochard, Inc. Holiday Products, Inc., Farberware
Inc., (the Borrowers) The Financial Institutions
Parties thereto from time to time (the Lenders) and
NationsBank, N.A. (South) (the Administrative Agent)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereto duly authorized.
Date: April 30, 1997 SYRATECH CORPORATION
By: /s/ Faye A. Florence
Name: Faye A. Florence
Title: Vice President, Secretary and
General Counsel
EX 4.1
SYRATECH CORPORATION
STOCKHOLDERS' AGREEMENT
Dated as of April 16, 1997
<PAGE>
SYRATECH CORPORATION
STOCKHOLDERS' AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I Definitions....................................1
ARTICLE II Covenants and Conditions.......................5
2.1 Restrictions on Transfers; Right of First Refusal.......5
2.2 Call by the Company.....................................8
2.3 Come Along.............................................10
2.4 Take Along.............................................12
2.5 Preemptive Rights......................................12
2.6 Synthetic Sales........................................14
2.7 Corporate Governance...................................14
2.8 Redemption of Preferred Stock..........................15
ARTICLE III Miscellaneous.................................16
3.1 Access to Records......................................16
3.2 Remedies...............................................16
3.3 Entire Agreement; Amendment; Waiver....................16
3.4 Severability...........................................17
3.5 Notices................................................17
3.6 Binding Effect; Assignment.............................18
3.7 Governing Law..........................................18
3.8 Termination............................................18
3.9 Recapitalizations, Exchanges, Etc......................19
3.10 Action Necessary to Effectuate the Agreement...........19
3.11 Purchase for Investment; Legend on Certificate.........19
3.12 Effectiveness of Transfers.............................19
3.13 Additional Stockholders................................20
3.14 No Waiver..............................................20
3.15 Counterpart............................................20
3.16 Headings...............................................20
3.17 Number; Gender.........................................20
3.18 Consent to Jurisdiction................................20
3.19 WAIVER OF RIGHT TO JURY TRIAL..........................21
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STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is entered
into as of the 16th day of April, 1997, by and among Syratech Corporation, a
Delaware corporation (the "Company"), those persons listed as Lee Group
Stockholders on the signature pages hereof (collectively, the "Lee Group
Stockholders"), and those persons listed as the Management Stockholders on the
signature pages hereof (the "Management Stockholders"). The Lee Group
Stockholders and the Management Stockholders are sometimes collectively referred
to herein as the "Stockholders."
WHEREAS, upon consummation of the transactions contemplated by
that certain Restated Agreement and Plan of Merger dated as of November 27,
1996, effective as of October 23, 1996, as amended (the "Merger Agreement") by
and between the Company and THL Transaction I Corp., the Stockholders will own
the number of shares of common stock, $.01 par value per share (the "Common
Stock") of the Company set forth opposite their respective names on Exhibit A
hereto; and
WHEREAS, each of the Stockholders desires to enter into this
Agreement for the purpose of regulating certain aspects of the Stockholders'
relationships with regard to the Company and certain restrictions on the Common
Stock owned by the Stockholders; and
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
Definitions
For the purposes of this Agreement, the following terms shall
be defined as follows:
Affiliate. An "Affiliate" of a specified person, corporation
or other entity shall mean a person, corporation or other entity which, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with, the corporation or other entity specified
and when used with respect to the Company or any Subsidiary of the Company,
shall include any holder of at least 5% of the capital stock, or any officer or
director, of the Company.
Associate. "Associate," (i) when used to indicate a
relationship with any Person shall mean, (a) any corporation or organization of
which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of ten percent (10%) or more of any class of equity securities,
(b) any trust or other estate in which
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such Person has a substantial beneficial interest or as to which such Person
serves as a trustee or in a similar fiduciary capacity and (c) any relative of
such Person who has the same home as such Person, is a parent, aunt or uncle,
sibling, spouse, in-law, child, niece or nephew or grandchild of such Person, or
the spouse of any of them, or (ii) when used to indicate a relationship with the
Company, shall also mean a director or officer of the Company or any Subsidiary.
Neither the Company nor any of its Subsidiaries shall be deemed an Associate of
any Stockholder.
Board. The "Board" shall mean the Board of Directors of the
Company as the same shall be constituted from time to time.
Common Stock. "Common Stock" shall mean the Company's common
stock, $.01 par value, that the Company may be authorized to issue from time to
time, any other securities of the Company into which such Common Stock may
hereafter be changed or for which such Common Stock may be exchanged after
giving effect to the terms of such change or exchange (by way of reorganization,
recapitalization, merger, consolidation or otherwise) and shall also include any
common stock of the Company hereafter authorized and any capital stock of the
Company of any other class hereafter authorized which is not preferred as to
dividends or distribution of assets in liquidation over any other class of
capital stock of the Company and which has ordinary voting power for the
election of directors of the Company.
Company. The "Company" shall mean Syratech Corporation, a
Delaware corporation, and its successors and assigns.
Exchange Act. The "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
Merger Agreement. "Merger Agreement" shall have the meaning
set forth in the recitals set forth on the first page of this Agreement.
Permitted Transfer. A "Permitted Transfer" shall mean:
(a) a Transfer of Shares by any Stockholder who is a
natural person to such Stockholder's spouse, children,
grandchildren, parents or siblings or a trust for the benefit
of any of them;
(b) a bona fide pledge of Shares by a Stockholder to
a bank, financial institution or other lender reasonably
acceptable to the Company;
(c) a Transfer of Shares between any Stockholder who
is a natural person and such Stockholder's guardian or
conservator;
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(d) a bona fide gift of Shares by a Stockholder to a
charitable institution as defined in Section 501(c) of the
Internal Revenue Code of 1986, as amended; provided that if
such Transfer, together with all other Transfers by such
Stockholder pursuant to this paragraph (d), aggregates 5% or
less of the Shares owned by such Stockholder as of the date
hereof, such Transfer shall not require the consent of the
Company and the transferee thereof shall not be required to
execute a counterpart of this Agreement or be bound by the
provisions hereof; provided further that if such Transfer,
together with all other Transfers by such Stockholder pursuant
to this paragraph (d), aggregates in excess of 5% of such
Stockholder's Shares as of the date hereof, such Transfer must
be reasonably acceptable to the Company (other than with
respect to Transfers made by Leonard Florence), after notice
thereof, and the transferee thereof shall agree to be bound by
the provisions of Section 2.4 hereof;
(e) a Transfer of Shares from any Stockholder which
is a partnership to its partners, provided such Transfer is
reasonably acceptable to the Company;
(f) a Transfer of Shares from any Stockholder which
is a corporation or partnership to any Affiliate of such
Stockholder, provided such Transfer is reasonably acceptable
to the Company;
(g) a Transfer of Shares by a Lee Group Stockholder
to another Lee Group Stockholder or other employee of Thomas
H. Lee Company; or
(h) within 30 days of the date hereof, a Transfer of
Shares and shares of Preferred Stock (valued at not more than
$10 million in the aggregate), by one or more Lee Group
Stockholders to one or more limited partners of Thomas H. Lee
Equity Fund III, L.P. or one or more affiliates of such
limited partner.
No Permitted Transfer shall be effective unless and until the transferee of the
Shares so transferred, if such transferee is not already a party to this
Agreement, executes and delivers to the Company an executed counterpart of this
Agreement in accordance with the terms of Section 3.13 hereof. No Permitted
Transfer shall conflict with or result in any violation of a judgment, order,
decree, statute, law, ordinance, rule or regulation.
Permitted Transferee. A "Permitted Transferee" shall mean any
person or entity who shall have acquired and who shall hold shares pursuant to a
Permitted Transfer described above.
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Person. "Person" means an individual, corporation,
partnership, trust, or unincorporated association, or a government or any agency
or political subdivision thereof.
Preferred Stock. "Preferred Stock" shall mean the Company's
preferred stock, $.01 par value per share.
Public Offering. A "Public Offering" shall mean the completion
of a sale of Common Stock for the account of the Company in which the aggregate
gross proceeds to the Company equal at least $75,000,000 pursuant to a
registration statement which has been filed and declared effective under the
1933 Act, excluding registration statements on Form S-4, S-8 or similar limited
purpose forms and also excluding the registration of any equity security issued
to non-Affiliates of the Company as part of a bona fide debt offering of units
comprised of such equity security and a debt security of the Company.
Rule 144 Transaction. "Rule 144 Transaction" means a transfer
of Shares (A) complying with Rule 144 under the Securities Act as such Rule or a
successor thereto is in effect on the date of such transfer (but not including a
sale other than pursuant to a "brokers transaction" as defined in clauses (i)
and (ii) of paragraph (g) of Rule 144 as in effect on the date hereof) and (B)
occurring at a time when Shares are registered pursuant to Section 12 of the
Exchange Act.
Schedule. "Schedule' shall refer to the Schedule of
Stockholders attached hereto as Exhibit A.
Securities Act. The "Securities Act" shall mean the Securities
Act of 1933, as amended.
Shares. "Shares" shall mean all (i) shares of Common Stock
held by Stockholders from time to time, (ii) shares of Common Stock subsequently
held by Permitted Transferees who acquire them in one or more Permitted
Transfers, (iii) securities of the Company issued in exchange for, upon
reclassification of, or as a distribution in respect of, any of the foregoing.
Stockholder. "Stockholder" shall have the meaning set forth in
the first paragraph of this Agreement.
Subsidiary. "Subsidiary" with respect to any entity (the
"parent") shall mean any corporation, firm, association or trust of which such
parent, at the time in respect of which such term is used, (i) owns directly or
indirectly more than fifty percent (50%) of the equity or beneficial interest,
on a consolidated basis, and (ii) owns directly or controls with power to vote,
indirectly through one or more Subsidiaries, shares of capital stock or
beneficial interest having the power to cast for the election of directors,
trustees, managers or other officials having powers
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analogous to that of directors of a corporation. Unless otherwise specifically
indicated, when used herein the term Subsidiary shall refer to a direct or
indirect Subsidiary of the Company.
Synthetic Sale. "Synthetic Sale" shall mean any hedge, sale or
purchase of any derivative security or other action (other than Transfers
expressly permitted by the terms hereof) having the effect of reducing a
Stockholder's economic interest in Shares or reducing a Stockholder's exposure
to a decrease in fair market value of Shares.
Third Party. "Third Party" shall mean any person other than
the Company.
Transfer. "Transfer" shall mean to transfer, sell, assign,
pledge, hypothecate, give, create a security interest in or lien on, place in
trust (voting or otherwise), assign or in any other way encumber or dispose of,
directly or indirectly and whether or not by operation of law or for value, any
Shares.
ARTICLE II
Covenants and Conditions
2.1 Restrictions on Transfers; Right of First Refusal. No
Stockholder may Transfer all or any part of the Shares owned by any of them to
anyone other than a Permitted Transferee except in accordance with the following
procedures:
(a) If at any time a Stockholder desires to Transfer
Shares to anyone other than a Permitted Transferee (each, an
"Offeror"), such Offeror shall give notice of such offer (the
"Transfer Notice") to the Company. The Transfer Notice shall
state the terms and conditions of such offer, including the
name of the prospective purchaser, the proposed purchase price
per share of such Shares (the "Offer Price"), payment terms
(including a description of any proposed non-cash
consideration), the type of disposition and the number of such
Shares to be transferred ("Offered Shares"). The Transfer
Notice shall further state (i) that the Company may acquire,
in accordance with the provisions of this Agreement, any of
the Offered Shares for the price and upon the other terms and
conditions, including deferred payment (if applicable), set
forth therein, and (ii) that the Company may not purchase any
of such Offered Shares unless the Company purchases all of
such Offered Shares.
(b) For a period of thirty (30) business days after
receipt of the Transfer Notice (the "Option Period"), the
Company may, by
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notice in writing to the Offeror or Permitted Transferee
delivering such Transfer Notice, elect in writing to purchase
all, but not less than all, of the Offered Shares at the Offer
Price. The closing of the purchase of Offered Shares pursuant
to Section 2.1(b) or Section 2.1(c), as the case may be, shall
take place at the principal office of the Company on the tenth
(10th) day after the expiration of the Option Period. At such
Closing the Company shall deliver to the Offeror against
delivery of certificates duly endorsed and stock powers
representing the Offered Shares being acquired by the Company,
the Offer Price, on the same terms as set forth in the
Transfer Notice (including any non-cash consideration
described therein), payable in respect of the Offered Shares
being purchased by the Company. All of the foregoing
deliveries will be deemed to be made simultaneously and none
shall be deemed completed until all have been completed.
(c) Notwithstanding anything set forth in this
Section 2.1 to the contrary, prior to the termination of the
Option Period, the Board of Directors of the Company (the
"Board") may, in its sole discretion, elect to assign the
Company's right to purchase all, but not less than all, of the
Offered Shares pursuant to this Section 2.1 to the
Stockholders. If the Board so elects, the Company shall give
notice of such assignment to each Stockholder (the "Assignment
Notice"), indicating the number of Shares each such
Stockholder is entitled to purchase (including the right to
over-allotment of Offered Shares, if any), the Offer Price of
such Shares, and any other relevant payment terms. Within five
(5) days of the Assignment Notice, those Stockholders who
intend to purchase the Offered Shares pursuant to this Section
2.1(c) (the "Offered Shares Electing Stockholders") shall
notify the Company in writing of such intention, indicating
the number of Offered Shares (including over-allotments, if
any) they intend to purchase. The right to purchase such
Offered Shares shall be allocated to the Stockholders pro rata
(based on the number of Shares each Stockholder (together with
each such Stockholder's Permitted Transferees) owns in
relation to the total number of Shares owned by all of the
Stockholders); provided, however, that if any Stockholder does
not elect to purchase the number of Offered Shares which such
Stockholder (and its Permitted Transferees) may purchase
pursuant to this Section 2.1(c), then the Offered Shares
Electing Stockholders (and their Permitted Transferees) may
elect to purchase the remaining Offered Shares. The right to
purchase the remaining Offered Shares shall be allocated to
the Offered Shares Electing Stockholders pro rata (based on
the number of Shares each Offered Shares Electing Stockholder
(together with their Permitted Transferees) owns in relation
to the total number of Shares owned by all of the Offered
Shares Electing Stockholders).
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(d) If the Company or the Stockholders, as the case
may be, do not elect to purchase all of the Offered Shares,
all, but not less than all, of the Offered Shares may be
Transferred, but only in accordance with Sections 2.1(e) and
2.1(f) and the terms of the Transfer Notice, within sixty (60)
days after expiration of the Option Period, after which, if
the Offered Shares have not been Transferred, all restrictions
contained herein shall again be in full force and effect.
(e) Five (5) days prior to the closing of the
purchase of any Offered Shares pursuant to Section 2.1(d)
hereof (the "Closing"), the Offeror shall notify the Company
of the disposition of the Offered Shares, including the name
of each purchaser and the number of shares bought by each
purchaser. The Closing shall take place no later than sixty
(60) days after the expiration of the Option Period. At such
Closing, each purchaser of Offered Shares shall deliver to the
Offeror against delivery of certificates duly endorsed and
stock powers representing the Offered Shares being acquired by
such purchaser, the Offer Price, on the same terms as set
forth in the Transfer Notice (including any non-cash
consideration described therein), payable in respect of the
Offered Shares being purchased by such purchaser. All of the
foregoing deliveries will be deemed to be made simultaneously
and none shall be deemed completed until all have been
completed.
(f) Any Transfer of Shares pursuant to this Section
2.1 shall remain subject to the Transfer restrictions of this
Agreement and each intended transferee pursuant to this
Section shall execute and deliver to the Company a counterpart
of this Agreement, which shall evidence such transferee's
agreement that the Shares intended to be transferred shall
continue to be subject to this Agreement and that as to such
Shares the transferee shall be bound by the restrictions of
this Agreement as a Stockholder hereunder.
(g) Any Stockholder who is the subject of an
Involuntary Transfer (as defined below) (the "Transferring
Stockholder"), shall notify the Company in writing within ten
(10) days of such Involuntary Transfer but the failure to give
such notice shall not affect the rights of the parties
hereunder. Upon the Company's receipt of such notice, the
Company shall treat the Involuntary Transfer as an offer under
this Section 2.1. The Company shall act upon the deemed offer
under this Section within the time periods and following the
applicable procedures set forth in this Section 2.1, with the
date of the deemed offer being the later of the date of the
Company's receipt of written notice setting forth the
existence of such an Involuntary Transfer and the date of such
Involuntary Transfer, such later date being the date of
notification for the purpose of Section 2.1.
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(h) The purchase price for the Shares being
transferred as a result of an Involuntary Transfer under
Sections 2.1(g) shall be fair market value, as fair market
value is agreed to by the Company and the transferee in each
such Involuntary Transfer, or if no such agreement is reached,
as determined by an independent appraiser selected by the
Company and reasonably acceptable to the transferee in such
Involuntary Transfer. All costs of any appraisal under this
Section 2.1(h) shall be paid by the Company.
(i) For purposes of this Agreement, the term
"Involuntary Transfer" shall mean any involuntary sale,
transfer, encumbrance or other disposition by or in which any
Stockholder shall be deprived or divested of any right, title
or interest in or to any Shares, including without limitation,
any levy of execution, transfer in connection with bankruptcy,
reorganization, insolvency or similar proceedings or any
transfer to a public officer or agency pursuant to any
abandoned property or escheat law. A Transfer pursuant to
Section 2.2 hereof shall not be deemed to be an Involuntary
Transfer.
(j) Except as otherwise provided herein, for one year
from the date hereof, no Stockholder may sell any Shares in a
Rule 144 Transaction.
(k) The provisions of this Section 2.1 shall not
apply to a Transfer of Shares which is (i) a Permitted
Transfer, (ii) pursuant to a Public Offering, (iii) for any
Lee Group Stockholder, made after a Public Offering, pursuant
to a Rule 144 Transaction, (iv) made by Leonard Florence or
(v) for any Management Stockholder other than Leonard
Florence, made after the later of (A) a Public Offering and
(B) one year from the date hereof, in either case, pursuant to
a Rule 144 Transaction.
2.2 Call by the Company.
(a) If the employment of a Management Stockholder
other than Leonard Florence by the Company or any of its
Subsidiaries shall terminate for Cause (as such term is
defined in such Management Stockholder's employment agreement
with the Company or in the case of Faye A. Florence, as
defined in the Amended and Restated Employment Agreement
between the Company and Leonard Florence) (a "Call Event")
prior to the earlier of (i) three (3) years from the date
hereof or (ii) the completion of the Company's initial Public
Offering, the Company shall have the right to purchase (the
"Call Option"), by delivery of a written notice (the "Call
Notice") to such terminated Management Stockholder no later
than ninety (90) days after the date of
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such Call Event, and such Management Stockholder and such
Management Stockholder's Permitted Transferees (the "Call
Group") shall be required to sell all (but not less than all)
of the Shares which are owned by the members of the Call Group
on the date of such Call Event (collectively, the "Call
Securities") at a price per share equal to the Call Price (as
defined in Section 2.2(c) below) applicable to such Shares.
(b) Notwithstanding anything set forth in this
Section 2.2 to the contrary, prior to the exercise of the Call
Option by the Company, the Board may, in its sole discretion,
elect to assign the Company's right to exercise the Call
Option to purchase all, but not less than all, of the Call
Securities to the Stockholders. If the Board so elects, the
Company shall give notice of such assignment to each
Stockholder (the "Call Assignment Notice"), indicating the
number of Call Securities each such Stockholder is entitled to
purchase (including the right to over-allotment of Call
Securities, if any), the Call Price applicable to such Shares
and the date of the closing of such purchase under this
Section 2.2. Within five (5) days of the Call Assignment
Notice, those Stockholders who intend to purchase Call
Securities pursuant to this Section 2.2(b) (the "Call
Securities Electing Stockholders"), shall notify the Company
in writing of such intention, indicating the number of Call
Securities (including over-allotments, if any) they intend to
purchase. The right to purchase such Call Securities shall be
allocated to the Stockholders pro rata (based on the number of
Shares each Stockholder (together with each such Stockholder's
Permitted Transferees) owns in relation to the total number of
Shares owned by all of the Stockholders); provided, however,
that if any Stockholder does not elect to purchase the number
of Call Securities which such Stockholder (and its Permitted
Transferees) may purchase pursuant to this Section 2.2(b),
then the Call Securities Electing Stockholders (and their
Permitted Transferees) may elect to purchase the remaining
Call Securities. The right to purchase the remaining Call
Securities shall be allocated to the Call Securities Electing
Stockholders pro rata (based on the number of Shares each Call
Securities Electing Stockholder (together with their Permitted
Transferees) owns in relation to the total number of Shares
owned by all of the Call Securities Electing Stockholders).
(c) For purposes of this Section 2.2, the term "Call
Price" shall mean the fair market value (as reasonably
determined by the Board in good faith) of the Shares;
provided, however, that for purposes of this section (c), for
a period of twelve (12) months from the date hereof, the term
"fair market value" shall mean (A) for Shares
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<PAGE>
held as of the date hereof, $32 per Share and (B) for Shares
acquired after the date hereof, the purchase price thereof.
(d) The closing of any purchase of Call Securities by
the Company pursuant to Sections 2.2(a) or 2.2(b) shall take
place at the principal office of the Company on the tenth
(10th) business day after the date of the Call Notice. At such
closing, the Company, the Stockholders or the Designated
Employee, as the case may be, shall deliver to the Call Group,
against delivery of certificates duly endorsed and stock
powers representing the Call Securities, a certified check or
checks payable to the Management Stockholder and/or the
Permitted Transferees, as the case may be, in an amount equal
to the aggregate Call Price payable in respect of such Call
Securities. All of the foregoing deliveries will be deemed to
be made simultaneously and none shall be deemed completed
until all have been completed.
(e) Notwithstanding anything set forth in this
Section 2.2 to the contrary, prior to the exercise by the
Company of its Call Option to purchase Call Securities
pursuant to this Section 2.2, one or more new or existing
employees of the Company or any Subsidiary may, in the sole
discretion of the Board, be designated by the Board
(individually a "Designated Employee" and collectively,
"Designated Employees") who shall have the right, but not the
obligation, to exercise the Call Option and to acquire, in
lieu of the Company, some or all (as determined by the
Company) of the Call Securities that the Company is entitled
to purchase from the Call Group hereunder, for cash and on the
same terms and conditions as set forth in Section 2.2(d) which
apply to the repurchase of Call Securities by the Company.
Concurrently with any such purchase of Call Securities by any
such Designated Employee, such Designated Employee who is not
already a Management Stockholder shall execute a counterpart
of this Agreement whereupon such Designated Employee shall be
deemed a "Management Stockholder" and shall have the same
rights and be bound by the same obligations as a Management
Stockholder hereunder.
(f) If neither the Company nor any Designated
Employee elect to exercise the Call Option and deliver a Call
Notice within 90 days of a Call Event, then the Call Option
provided in this Section 2.2 shall terminate but the
Management Stockholder or his Permitted Transferees shall
continue to hold such Call Securities pursuant to all of the
other provisions of this Agreement.
2.3 Come Along. Except as provided in Section 2.3(c) hereof,
no Stockholder shall Transfer more than 2.5% of the outstanding Common Stock of
the Company to a Third Party who is not a Permitted Transferee without complying
with
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<PAGE>
the terms and conditions set forth in Section 2.3(a) and 2.3(b) below; provided,
however, that this Section 2.3 shall not in any way limit or affect the
restrictions of Section 2.1.
(a) Any Stockholder, when desiring to Transfer Shares
(the "Transferor"), shall give not less than seven (7) days
prior written notice of such intended Transfer to each other
Stockholder and to the Company. Such notice (the
"Participation Notice") shall set forth the terms and
conditions of such proposed Transfer, including the name of
the prospective transferee, the number of Shares proposed to
be transferred (the "Participation Securities") by the
Transferor, the purchase price per share proposed to be paid
therefor and the payment terms and type of transfer to be
effectuated. Within five (5) days following the delivery of
the Participation Notice by the Transferor to each other
Stockholder and to the Company, each Stockholder desiring to
participate in such proposed Transfer (each, a "Participating
Offeree") shall, by notice in writing to the Transferor and to
the Company, have the opportunity and right to sell to the
purchasers in such proposed Transfer (upon the same terms and
conditions as the Transferor) up to that number of Shares
owned by such Participating Offeree as shall equal the product
of (i) a fraction, the numerator of which is the number of
Shares owned by such Participating Offeree as of the date of
such proposed Transfer and the denominator of which is the
number of Shares actually owned as of the date of such
Participation Notice by the Transferor and by all
Participating Offerees multiplied by (ii) the number of
Participation Securities. The amount of Participation
Securities to be sold by the Transferor shall be reduced to
the extent necessary to provide for such sales of Shares by
Participating Offerees.
(b) At the closing of any proposed Transfer in
respect of which a Participation Notice has been delivered,
the Transferor, together with all Participating Offerees,
shall deliver to the proposed transferee certificates
evidencing the Shares to be sold thereto duly endorsed with
stock powers and shall receive in exchange therefor the
consideration to be paid or delivered by the proposed
transferee in respect of such Shares as described in the
Participation Notice.
(c) The provisions of this Section 2.3 shall not
apply to (i) any Permitted Transfer, (ii) any Transfer
pursuant to a Public Offering or (iii) any Transfer pursuant
to Section 2.4.
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2.4 Take Along.
(a) If a Stockholder or a group of Stockholders
owning in excess of 50% of the then outstanding shares of
Common Stock (collectively, the "Take Along Group"), determine
to sell or exchange (in a business combination or otherwise)
in one or a series of bona fide arms-length transactions to a
Third Party who is not an Affiliate of the Take Along Group,
80% or more of the Shares owned by the Take Along Group, when
upon five (5) days written notice by the Take Along Group to
each other Stockholder, which notice shall include reasonable
details of the proposed sale or exchange including the
proposed time and place of closing and the consideration to be
received by the Take Along Group (such notice being referred
to as the "Sale Request"), each other Stockholder (each, a
"Seller") shall be obligated to, and shall sell, transfer, and
deliver, or cause to be sold, transferred and delivered, to
such Third Party on the same terms as the Take Along Group,
that number of Shares owned by such Seller as shall equal the
product of (A) a fraction, the numerator of which is the
number of Shares proposed to be transferred by the Take Along
Group as of the date of such Sale Request and the denominator
of which is the aggregate number of Shares actually owned as
of date of such Sale Request by the Take Along Group,
multiplied by (B) the number of Shares actually owned as of
the date of such Sale Request by such Seller. Each Seller
shall (i) deliver certificates for all of its Shares at the
closing of the proposed Transfer, free and clear of all
claims, liens and encumbrances and (ii) if stockholder
approval of the transaction is required, vote his or her
Shares in favor thereof.
(b) The provisions of this Section 2.4 shall not
apply to (i) any Transfer pursuant to a Public Offering, or
(ii) a Permitted Transfer.
2.5 Preemptive Rights.
(a) Preemptive Right. The Company hereby grants to
each Stockholder so long as it shall own any Shares or, if
sooner, until a Public Offering, the right to purchase up to a
pro rata portion of New Securities (as defined in paragraph
(b) below) which the Company, from time to time, proposes to
sell or issue following the date hereof. A Stockholder's pro
rata portion, for purposes of this Section 2.5, is the product
of (i) a fraction, the numerator of which is the number of
outstanding Shares which such Stockholder then owns and the
denominator of which is the total number of Shares of Common
Stock then actually outstanding on a fully diluted basis after
giving effect to the exercise of all options, warrants and the
like and the conversion of
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<PAGE>
all securities convertible into or exchangeable for Common
Stock, multiplied by (ii) the number of New Securities the
Company proposes to sell or issue.
(b) Definition of New Securities. "New Securities"
shall mean any Common Stock of the Company whether now
authorized or not, any rights, options or warrants to purchase
Common Stock and any indebtedness or preferred stock of the
Company which is convertible into Common Stock (or which is
convertible into a security which is, in turn, convertible
into Common Stock); provided that the term "New Securities"
does not include (i) indebtedness of the Company; (ii) Common
Stock issued as a stock dividend to all holders of Common
Stock pro rata or upon any subdivision or combination of
shares of Common Stock; (iii) the issuance of securities of
the Company pursuant to a Public Offering or merger; (iv) any
employee stock options approved by the Board of Directors of
the Company; (v) Common Stock issued in exchange for the
cancellation or retirement of any debt securities of the
Company or in connection with any restructuring or other
financial workout of the Company; (vi) Common Stock issued to
non-Affiliates of the Company as part of a bona fide debt
offering of units comprised of such Common Stock and a debt
security of the Company; or (vii) the issuance of any Common
Stock upon the exercise or conversion of any rights, options
or warrants to purchase Common Stock.
(c) Notice from the Company. In the event the Company
proposes to issue New Securities, the Company shall give each
Stockholder who has a preemptive right under this Section 2.5
written notice of such proposal, describing the type of New
Securities and the price and the terms upon which the Company
proposes to issue the same. For a period of five (5) days
following the delivery of such notice by the Company, the
Company shall be deemed to have irrevocably offered to sell to
each Stockholder its pro rata share of such New Securities for
the price and upon the terms specified in the notice. Each
Stockholder may exercise its preemptive rights hereunder by
giving written notice to the Company and stating therein the
quantity of New Securities to be purchased.
(d) Sale by the Company. In the event any Stockholder
who has a preemptive right under this Section 2.5 fails to
exercise in full its preemptive right within said five (5) day
period, the Company shall have one hundred twenty (120) days
thereafter to sell the New Securities with respect to which
the preemptive right was not exercised, at a price and upon
terms no more favorable to the purchasers thereof
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<PAGE>
than specified in the Company's notice given pursuant to
Section 2.5(c).
(e) Closing. The Closing for any such issuance shall
take place as proposed by the Company with respect to the
Shares to be issued, at which Closing the Company shall
deliver certificates for the shares in the respective names of
the purchasing Stockholders against receipt of payment
therefor.
2.6 Synthetic Sales. Any Synthetic Sales by a Management
Stockholder then employed by the Company or any of its Subsidiaries shall
require the prior written approval of the Board.
2.7 Corporate Governance. Until the completion of a Public
Offering by the Company:
(a) Election of Directors. The Company's Board of
Directors shall consist of nine (9) members, five (5) of whom
shall be designated by a majority in interest of the Lee Group
Stockholders, and four (4) of whom shall be designated by a
majority in interest of the shares held by the Management
Stockholders (one (1) of which shall be the Chief Executive
Officer of the Company). The initial Board of Directors shall
consist of: (i) David V. Harkins, Thomas M. Hagerty, Scott A.
Schoen, Kent R. Weldon and Seth W. Lawry (as the designees of
the Lee Group Stockholders) and (ii) Leonard Florence, E.
Merle Randolph, Alan R. Kanter and Melvin L. Levine (as the
designees of the Management Stockholders, with Mr. Florence
being the Company's Chief Executive Officer).
(b) Removal and Replacement of Director Designees.
Any Stockholder Group (as defined below) entitled to designate
Directors hereunder shall also be entitled to request that the
director designated by that Stockholder Group pursuant to this
Section 2.7 be removed or replaced and the other Stockholders
hereby agree to take any action, including the voting of their
Shares or instructing their Director designee or designees to
take action to effectuate such request. Each such Stockholder
Group shall be entitled to take any action contemplated by
this Section 2.7(b) by the vote or written consent of a
majority in interest of the Stockholders comprising such
Stockholder Group. For purposes hereof, "Stockholder Group"
shall mean any of (i) the Lee Group Stockholders or (ii) the
Management Stockholders, in each case, with such group's
Permitted Transferees. The Company shall not in any case be
deemed to be a member of any Stockholder Group (whether or not
the Company repurchases any Shares).
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<PAGE>
(c) Restrictions on Other Agreements. No Stockholder
shall grant any proxy or enter into or agree to be bound by
any voting trust with respect to the Shares nor shall any
Stockholder enter into any stockholders agreements or
arrangements of any kind with any person with respect to the
Shares on terms which conflict with the provisions of this
Agreement (whether or not such agreements and arrangements are
with other Stockholders), including but not limited to,
agreements or arrangements with respect to the acquisition,
disposition or voting of Shares inconsistent herewith.
(d) Stockholder Action. Each Stockholder agrees that,
in its capacity as a stockholder of the Company, such
Stockholder will vote, or grant proxies relating to such
Shares to vote, all of its Shares of Common Stock in favor of
any merger, consolidation, sale or transfer of Shares or any
similar transaction pursuant to Section 2.4 hereof if, and to
the extent that, approval of the Company's stockholders is
required in order to effect such transaction.
(e) Related Transactions. Except for agreements dated
prior to the date hereof or agreements of even date herewith
entered into and delivered in connection with the
Recapitalization, or as otherwise approved by a disinterested
majority of the Board of Directors, the Company shall not, and
shall not permit any Subsidiary to, enter into any
transaction, on a basis less favorable than would at the time
be obtainable for a comparable transaction in arm's-length
dealing with a Third Party who is not an Affiliate of the
Company or any Stockholder, with any director, officer,
employee or holder of more than 5% of the outstanding shares
of Common Stock of the Company, member of the family of any
such person, or any Person in which in such person, or members
of the family of any such person, is a director, officer,
trustee, partner or holder of more than 5% of the outstanding
capital stock thereof.
2.8 Redemption of Preferred Stock. The Lee Group Stockholders
agree that, subject to the restrictions in the Company's debt agreements, if in
connection with a proposed public offering of equity securities of the Company,
a majority of the members of the Company's Board of Directors who have been
designated by the Management Stockholders request that the Preferred Stock be
redeemed in accordance with its terms, the Lee Group Stockholders will consent
to such redemption.
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ARTICLE III
Miscellaneous
3.1 Access to Records. The Company agrees to afford to each
Stockholder and their respective employees, counsel and other authorized
representatives, as well as to each director designated by any of them, free and
full access, at all reasonable times, to all books, records and properties of
the Company and to all officers of the corporation and those other employees of
the Company having responsibility for financial or accounting matters generally,
for any reasonable purpose whatsoever. Each Investor shall maintain the
confidentiality of any confidential and proprietary information of the Company
("Proprietary Information") using the same standard of care as it applies to its
own confidential information, except for any Proprietary Information which is
publicly available or a matter of public knowledge generally. Nothing herein
shall prevent any Stockholder from using Proprietary Information to monitor its
investment in the Company or to enforce its rights under this Agreement or from
disclosing a summary of Proprietary Information to the partners of such
Stockholder as to the performance of the Company.
3.2 Remedies. The parties to this Agreement acknowledge and
agree that the covenants of the Company and the Stockholders set forth in this
Agreement may be enforced in equity by a decree requiring specific performance.
In the event of a breach of any material provision of this Agreement, the
aggrieved party will be entitled to institute and prosecute proceeding in any
court of competent jurisdiction to enforce specific performance of such
provision, as well as to obtain damages for breach of this Agreement. Without
limiting the foregoing, if any dispute arises concerning the sale or other
disposition of any of the Shares subject to this Agreement or concerning any
other provisions hereof or the obligations of the parties hereunder, the parties
to this Agreement agree that an injunction may be issued in connection therewith
(including, without limitation, restraining the sale or other disposition of
such Shares or rescinding any such sale or other disposition). Such remedies
shall be cumulative and non-exclusive and shall be in addition to any other
rights and remedies the parties may have under this Agreement or otherwise.
3.3 Entire Agreement; Amendment; Waiver. This Agreement,
together with the Schedule hereto, sets forth the entire understanding of the
parties, and as of the Closing contemplated by the Merger Agreement supersedes
all prior agreements and all other arrangements and communications, whether oral
or written, with respect to the subject matter hereof. The Schedule may be
amended to reflect changes in the composition of the Stockholders and changes in
stock ownership that may occur from time to time as a result of Permitted
Transfers or Transfers permitted under Article II hereof. Amendments to the
Schedule reflecting Permitted Transfers or Transfers permitted under Article II
hereof shall become effective when a copy of the Agreement as executed by any
new transferee, are filed with the Company, except as otherwise provided in
Section 3.13 hereof. Any other amendments to, or the
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termination of, this Agreement shall require the prior written consent of a
majority in interest of each of the Lee Group Stockholders and the Management
Stockholders. Notwithstanding the preceding sentence, no consent by a majority
in interest of any such Stockholder group which owns less than 5% of the fully
diluted Common Stock then outstanding shall be necessary to make such other
amendments to this Agreement; provided, however, that no amendment may adversely
affect the Lee Group Stockholders, or the Management Stockholders at any time,
unless consented to in writing by a majority in interest of such adversely
affected group. Notwithstanding any provisions to the contrary contained herein,
any party may waive any rights with respect to which such party is entitled to
the benefits under this Agreement. No waiver of or consent to any departure from
any provision of this Agreement shall be effective unless signed in writing by
the party entitled to the benefit thereof.
3.4 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if the invalid
or unenforceable provision were omitted.
3.5 Notices. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed to have been duly given three business days after mailing by certified
mail, when delivered by hand upon confirmation of receipt by telecopy, or one
day after sending by overnight delivery service, to the respective addresses of
the parties set forth below:
(a) For notices and communications to the Management
Stockholders, to the respective addresses set forth in the
Schedule, with a copy to in each case to:
Syratech Corporation
175 McClellan Highway
East Boston, MA 02128
Attention: Faye A. Florence
Facsimile: (617) 568-1361
(b)(i) or notices and communications to the Company:
Syratech Corporation
175 McClellan Highway
East Boston, MA 02128
Attention: President
Facsimile: (617) 561-0275
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with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019
Attention: James L. Purcell, Esq.
Facsimile: (212) 373-2145
(ii) for notices and communications to the Lee Group
Stockholders, to the respective addresses set forth in the Schedule;
(iii) in the case of each of (i) and (ii) above, with a copy
to:
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, MA 02110
Attention: James Westra, Esq.
Facsimile: (617) 951-1295
By notice complying with the foregoing provisions of this Section 3.5, each
party shall have the right to change the mailing address for future notices and
communications to such party.
3.6 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and to their
respective transferees, successors and assigns; provided, however, that the
rights under this Agreement may not be assigned except as expressly provided
herein, it being understood that the Company's rights hereunder may be assigned
by the Company to any corporation which is the surviving entity in a merger,
consolidation or like event involving the Company. No such assignment shall
relieve an assignor of its obligations hereunder.
3.7 Governing Law. This Agreement shall be governed by the
laws of the State of Delaware (regardless of the laws that might otherwise
govern under applicable Delaware principles of conflicts of law) as to all
matters, including but not limited to matters of validity, construction, effect,
performance and remedies.
3.8 Termination. Without affecting any other provision of this
Agreement requiring termination of any rights in favor of any Stockholder,
Permitted Transferee or any other transferee of Shares, the provisions of
Article II of this Agreement shall terminate as to such Stockholder, Permitted
Transferee or other transferee, when, pursuant to and in accordance with this
Agreement, such Stockholder, Permitted Transferee or other transferee, as the
case may be, no longer owns any Shares; provided, that termination pursuant to
this Section 3.8 shall only occur in respect of a Stockholder after all
Permitted Transferees in respect thereof also no longer own any Shares. As
provided above, the provisions of Sections 2.3
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and 2.5 shall not apply to the Shares owned by Stockholders following a Public
Offering.
3.9 Recapitalizations, Exchanges, Etc. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect to
Shares, to any and all shares of capital stock of the Company or any successor
or assign of the Company (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Shares, by reason of a stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or otherwise.
3.10 Action Necessary to Effectuate the Agreement. The parties
hereto agree to take or cause to be taken all such corporate and other action as
may be necessary to effect the intent and purposes of this Agreement.
3.11 Purchase for Investment; Legend on Certificate. Each of
the parties acknowledges that all of the Shares held by such party are being (or
have been) acquired for investment and not with a view to the distribution
thereof and that no transfer, hypothecation or assignment of Shares may be made
except in compliance with applicable federal and state securities laws. All the
certificates of Shares of the Company which are now or hereafter owned by the
Stockholders and which are subject to the terms of this Agreement shall have
endorsed in writing, stamped or printed, thereon the following legend:
THESE SECURITIES ARE SUBJECT TO THE TERMS AND CONDITIONS,
INCLUDING RESTRICTIONS ON TRANSFER, OF A STOCKHOLDERS'
AGREEMENT DATED AS OF APRIL 16, 1997 AS AMENDED FROM TIME TO
TIME. A COPY OF THE STOCKHOLDERS' AGREEMENT IS ON FILE WITH
THE SECRETARY OF THE COMPANY AND WILL BE MAILED TO ANY
PROPERLY INTERESTED PERSON WITHOUT CHARGE UPON THE COMPANY'S
RECEIPT OF A WRITTEN REQUEST THEREFOR.
All shares shall also bear all legends required by federal and
state securities laws.
3.12 Effectiveness of Transfers. All Shares transferred by a
Stockholder (other than pursuant to an effective registration statement under
the Securities Act or pursuant to a Rule 144 Transaction) shall, except as
otherwise expressly stated herein, be held by the Transferee thereof pursuant to
this Agreement. Such Transferee shall, except as otherwise expressly stated
herein, have all the rights and be subject to all of the obligations of a
Stockholder under this Agreement (as though such party had so agreed pursuant to
Section 3.13 hereof) automatically and without requiring any further act by such
transferee or by any parties to this
19
<PAGE>
Agreement. Without affecting the preceding sentence, if such transferee is not a
Stockholder on the date of such transfer, then such transferee, as a condition
to such transfer, shall confirm such transferee's obligations hereunder in
accordance with Section 3.13 hereof. No Shares shall be transferred on the
Company's books and records, and no transfer of Shares shall be otherwise
effective, unless any such transfer is made in accordance with the terms and
conditions of this Agreement, and the Company is hereby authorized by all of the
Stockholders to enter appropriate stop transfer notations on its transfer
records to give effect to this Agreement.
3.13 Additional Stockholders. Subject to the restrictions on
transfers of Shares contained herein and except as otherwise set forth in
paragraph (d) of the definition of "Permitted Transfer," any person or entity
who is not already a Stockholder acquiring Shares (except for transferees
acquiring Shares in an offering registered under the Securities Act or in a Rule
144 Transaction), shall, on or before the transfer or issuance to it of Shares,
sign a counterpart signature page hereto in form reasonably satisfactory to the
Company and shall thereby become a party to this Agreement to be bound hereunder
as (i) a Management Stockholder if a Permitted Transferee or an employee of the
Company or any of its Subsidiaries or (ii) a Lee Group Stockholder if a
Permitted Transferee or an employee or affiliate of Thomas H. Lee Company;
provided that a transferee which is a Permitted Transferee under clause (b) of
the definition of Permitted Transferee shall not be obligated to so agree until
foreclosure on its pledge.
3.14 No Waiver. No course of dealing and no delay on the part
of any party hereto in exercising any right, power or remedy conferred by this
Agreement shall operate as waiver thereof or otherwise prejudice such party's
rights, powers and remedies. No single or partial exercise of any rights, powers
or remedies conferred by this Agreement shall preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
3.15 Counterpart. This Agreement may be executed in two or
more counterparts each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and all signatures need
not appear on any one counterpart.
3.16 Headings. All headings and captions in this Agreement are
for purposes of reference only and shall not be construed to limit or affect the
substance of this Agreement.
3.17 Number; Gender. When the context so requires, the
singular shall include the plural and the plural shall include the singular and
the gender of any pronoun shall include the other genders.
3.18 Consent to Jurisdiction. The Company and each of the
Stockholders, by its or his execution hereof, (i) hereby irrevocably submit to
the
20
<PAGE>
exclusive jurisdiction of the state courts of the Commonwealth of Massachusetts
for the purposes of any claim or action arising out of or based upon this
Agreement or relating to the subject matter hereof, (ii) hereby waive, to the
extent not prohibited by applicable law and agree not to assert by way of
motion, as a defense or otherwise, in any such claim or action, any claim that
it or he is not subject personally to the jurisdiction of the above-named
courts, that its or his property is exempt or immune from attachment or
execution, that any such proceeding brought in the above-named court is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court, and (iii) hereby agree not to commence any claim
or action arising out of or based upon this Agreement or relating to the subject
matter hereof other than before the above-named courts nor to make any motion or
take any other action seeking or intending to cause the transfer or removal of
any such claim or action to any court other than the above-named courts whether
on the grounds of inconvenient forum or otherwise. The Company and each of the
Stockholders hereby consent to service of process in any such proceeding in any
manner permitted by Massachusetts law, and agree that service of process by
registered or certified mail, return receipt requested, at its address specified
pursuant to Section 3.4 hereof is reasonably calculated to give actual notice.
3.19 WAIVER OF RIGHT TO JURY TRIAL. THE COMPANY AND EACH OF
THE STOCKHOLDERS, BY ITS OR HIS EXECUTION HEREOF, WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS TRANSACTION AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE COMPANY AND EACH OF
THE STOCKHOLDERS ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN
ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER
IN THEIR RELATED FUTURE DEALINGS. THE COMPANY AND EACH OF THE STOCKHOLDERS
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS OR
HIS, AS THE CASE MAY BE, LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS OR HIS, AS THE CASE MAY BE, JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR TO ANY OTHER DOCUMENTS
21
<PAGE>
OR AGREEMENTS RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
[Remainder of Page Intentionally Left Blank]
22
<PAGE>
SYRATECH CORPORATION
STOCKHOLDERS' AGREEMENT
Counterpart Signature Page
IN WITNESS WHEREOF, the parties have executed this Agreement
as an instrument under SEAL as of the date first above written.
SYRATECH CORPORATION
By: /s/ Faye A. Florence
-------------------------
Title:
LEE GROUP STOCKHOLDERS:
THOMAS H. LEE EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust III, General Partner
By: /s/ Scott A. Schoen
-------------------------
Title:
THOMAS H. LEE FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, General Partner
By: THL Equity Trust III, General Partner
By: /s/ Scott A. Schoen
-------------------------
Title:
THL CO-INVESTORS III-A, LLC
By: /s/ Scott A. Schoen
-------------------------
Title:
THL CO-INVESTORS III-B, LLC
By: /s/ Scott A. Schoen
-------------------------
Title:
23
<PAGE>
MANAGEMENT STOCKHOLDERS:
/s/ Leonard Florence
---------------------------------
Leonard Florence
/s/ E. Merle Randolph
---------------------------------
E. Merle Randolph
/s/ Alan R. Kanter
---------------------------------
Alan R. Kanter
/s/ Melvin L. Levine
---------------------------------
Melvin L. Levine
/s/ Faye A. Florence
---------------------------------
Faye A. Florence
24
<PAGE>
EXHIBIT A
Schedule of Stockholders
No. of Shares of
Name and Address of Stockholder No. of Shares Preferred Stock
- ------------------------------- ------------- ----------------
LEE GROUP STOCKHOLDERS
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
Attention: Scott A. Schoen
Facsimile: (617) 227-3514
Thomas H. Lee Equity Fund III, L.P. 2,016,567 15,443
Thomas H. Lee Foreign Fund III, L.P. 124,779 956
THL Co-Investors III-A, LLC 127,412 975
THL Co-Investors III-B, LLC 81,772 626
MANAGEMENT STOCKHOLDERS
c/o Syratech Corporation
175 McClellan Highway
East Boston, MA 02128
Leonard Florence 528,472
E. Merle Randolph 30,875
Alan R. Kanter 48,232
Melvin L. Levine 41,132
Fay A. Florence 3,527
25
[EXECUTION COPY]
================================================================================
$130,000,000 LOAN AND SECURITY AGREEMENT
Dated as of April 16, 1997
Among
SYRATECH CORPORATION
TOWLE MANUFACTURING COMPANY
LEONARD FLORENCE ASSOCIATES, INC.
WALLACE INTERNATIONAL SILVERSMITHS, INC.
SYRATECH HOLDING CORPORATION
RAUCH INDUSTRIES, INC.
ROCHARD, INC.
HOLIDAY PRODUCTS, INC.
FARBERWARE INC.
SILVESTRI, INC.
(the Borrowers)
THE FINANCIAL INSTITUTIONS PARTIES
HERETO FROM TIME TO TIME
(the Lenders)
and
NATIONSBANK, N.A. (SOUTH)
(the Administrative Agent)
================================================================================
<PAGE>
TABLE OF CONTENTS(1/)
<TABLE>
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS
<S> <C> <C>
Section 1.1 Definitions ................................................................................................ 1
Section 1.2 Other Referential Provisions ............................................................................... 32
Section 1.3 Exhibits and Schedules ..................................................................................... 34
ARTICLE 2
REVOLVING CREDIT FACILITY
Section 2.1 Revolving Credit Loans ..................................................................................... 35
Section 2.2 Manner of Borrowing Revolving Credit Loans ................................................................. 35
Section 2.3 Repayment of Revolving Credit Loans ........................................................................ 37
Section 2.4 Revolving Credit Note ...................................................................................... 38
Section 2.5 Reduction of Facility ...................................................................................... 38
ARTICLE 3
LETTER OF CREDIT FACILITY
Section 3.1 Agreement to Issue ......................................................................................... 39
Section 3.2 Amounts .................................................................................................... 39
Section 3.3 Conditions ................................................................................................. 39
Section 3.4 Issuance of Letters of Credit .............................................................................. 40
Section 3 5 Duties of NationsBank ...................................................................................... 41
Section 3.6 Payment of Reimbursement Obligations ....................................................................... 41
Section 3.7 Participations ............................................................................................. 41
Section 3 8 Indemnification, Exoneration ............................................................................... 43
Section 3.9 Supporting Letter of Credit; Cash Collateral Account ....................................................... 44
</TABLE>
ARTICLE 4
GENERAL LOAN PROVISIONS
- ----------
(1/) This Table of Contents is included for reference purposes only and does not
constitute part of the Loan and Security Agreement.
i
<PAGE>
<TABLE>
<S> <C> <C>
Section 4.1 Interest ................................................................................................... 46
Section 4.2 Certain Fees ............................................................................................... 47
Section 4.3 Manner of Payment .......................................................................................... 49
Section 4.4 General .................................................................................................... 49
Section 4.5 Loan Accounts; Statements of Account ....................................................................... 49
Section 4.6 Termination of Agreement ................................................................................... 50
Section 4.7 Making of Loans ............................................................................................ 51
Section 4.8 Settlement Among Lenders ................................................................................... 52
Section 4.9 Prepayment Fee ............................................................................................. 56
Section 4.10 Payments Not at End of Interest Period; Failure to Borrow .................................................. 56
Section 4.11 Assumptions Concerning Funding of Eurodollar Rate Loans .................................................... 57
Section 4.12 Notice of Conversion or Continuation ....................................................................... 57
Section 4.13 Conversion or Continuation ................................................................................. 58
Section 4.14 Duration of Interest Periods; Maximum Number of Eurodollar
Rate Loans; Minimum Increments ............................................................................. 58
Section 4.15 Changed Circumstances ...................................................................................... 58
Section 4.16 Cash Collateral Account .................................................................................... 61
Section 4.17 Borrowers' Representative .................................................................................. 62
Section 4.18 Joint and Several Liability ................................................................................ 62
Section 4.19 Obligations Absolute ....................................................................................... 63
Section 4.20 Waiver of Suretyship Defenses .............................................................................. 63
Section 4.21 Waiver of Subrocation and Contribution of Borrowers ........................................................ 64
Section 4.22 Right of Contribution of Borrowers ......................................................................... 64
Section 4.23 Funds Transfer Services .................................................................................... 65
ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 Conditions Precedent to Initial Loans ...................................................................... 67
Section 5.2 Conditions to All Loans, Letters of Credit ................................................................. 70
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 6.1 Representations and Warranties ............................................................................. 71
Section 6.2 Survival of Representations and Warranties. etc ............................................................ 79
ARTICLE 7
SECURITY INTEREST
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 7.1 Security Interest .......................................................................................... 80
Section 7.2 Continued Priority of Security Interest .................................................................... 80
ARTICLE 8
COLLATERAL COVENANTS
Section 8.1 Collection of Receivables .................................................................................. 82
Section 8.2 Verification end Notification .............................................................................. 83
Section 8.3 Disputes, Returns and Adjustments .......................................................................... 83
Section 8.4 Invoices ................................................................................................... 83
Section 8.5 Delivery of Instruments .................................................................................... 84
Section 8.6 Sales of Inventory ......................................................................................... 84
Section 8.7 Returned Goods ............................................................................................. 84
Section 8.8 Ownership and Defense of Title ............................................................................. 84
Section 8.9 Insurance .................................................................................................. 84
Section 8.10 Location of Offices and Collateral ......................................................................... 85
Section 8.11 Records Relating to Collateral ............................................................................. 85
Section 8.12 Inspection ................................................................................................. 86
Section 8.13 Pledged Securities ......................................................................................... 86
Section 8.14 Information and Reports .................................................................................... 86
Section 8.15 Power of Attorney .......................................................................................... 87
ARTICLE 9
AFFIRMATIVE COVENANTS
Section 9.1 Punctual Payments .......................................................................................... 88
Section 9.2 Preservation of Corporate Existence and Similar Matters .................................................... 88
Section 9.3 Compliance with Applicable Law ............................................................................. 88
Section 9.4 Maintenance of Property .................................................................................... 88
Section 9.5 Conduct of Business ........................................................................................ 88
Section 9.6 Insurance .................................................................................................. 88
Section 9.7 Payment of Taxes and Claims ................................................................................ 89
Section 9.8 Accounting Methods and Financial Records ................................................................... 89
Section 9.9 Visits and Inspections ..................................................................................... 89
Section 9.10 Use of Proceeds ............................................................................................ 90
Section 9.11 Subsidiary Guaranties ...................................................................................... 90
Section 9.12 Hazardous Waste and Substances ............................................................................. 90
</TABLE>
iii
<PAGE>
<TABLE>
ARTICLE 10
INFORMATION
<S> <C> <C>
Section 10.1 Financial Statements ....................................................................................... 91
Section 10.2 Accountants' Certificate ................................................................................... 92
Section 10.3 Officer's Certificate ...................................................................................... 92
Section 10.4 Copies of Other Reports .................................................................................... 92
Section 10.5 Notice of Litigation and Other Matters ..................................................................... 93
Section 10.6 ERISA ...................................................................................................... 94
Section 10.7 Revisions or Updates to Schedules .......................................................................... 94
ARTICLE 11
NEGATIVE COVENANTS
Section 11.1 Financial Ratios ........................................................................................... 95
Section 11.2 Debt ....................................................................................................... 96
Section 11.3 Guaranties ................................................................................................. 96
Section 11.4 Investments ................................................................................................ 96
Section 11.5 Capital Expenditures ....................................................................................... 97
Section 11.6 Restricted Distributions and Payments, Etc. ................................................................ 97
Section 11.7 Merger, Consolidation and Sale of Assets ................................................................... 97
Section 11.8 Transactions with Affiliates ............................................................................... 97
Section 11.9 Liens ...................................................................................................... 98
Section 11.10 Benefit Plans .............................................................................................. 98
Section 11.11 Change in Business ......................................................................................... 98
Section 11.12 Change in Accounting Policies .............................................................................. 98
Section 11.13 Amendment to Senior Note Documents ......................................................................... 98
Section 11.14 Minimum Availability ....................................................................................... 98
ARTICLE 12
DEFAULT
Section 12.1 Events of Default .......................................................................................... 99
Section 12.2 Remedies ................................................................................................... 102
Section 12.3 Application of Proceeds .................................................................................... 104
Section 12.4 Power of Attorney .......................................................................................... 105
Section 12.5 Miscellaneous Provisions Concerning Remedies ............................................................... 106
Section 12.6 Proprietary Rights License ................................................................................. 106
</TABLE>
iv
<PAGE>
<TABLE>
ARTICLE 13
ASSIGNMENTS
<S> <C> <C>
Section 13.1 Successors and Assigns; Participations ..................................................................... 108
Section 13.2 Representation of Lenders .................................................................................. 110
Section 13.3 Non-U.S. Lenders ........................................................................................... 111
ARTICLE 14
ADMINISTRATIVE AGENT
Section 14.1 Appointment of Agent ....................................................................................... 112
Section 14.2 Delegation of Duties ....................................................................................... 112
Section 14.3 Exculpatory Provisions ..................................................................................... 112
Section 14.4 Reliance by Agent .......................................................................................... 113
Section 14.5 Notice of Default .......................................................................................... 113
Section 14.6 Non-Reliance on Agents and Other Lenders ................................................................... 113
Section 14.7 Indemnification ............................................................................................ 114
Section 14.8 Agent in Its Individual Capacity ........................................................................... 114
Section 14.9 Successor Agent ............................................................................................ 115
Section 14.10 Notices from Agent to Lenders .............................................................................. 115
ARTICLE 15
MISCELLANEOUS
Section 15.1 Notices .................................................................................................... 116
Section 15.2 Expenses ................................................................................................... 117
Section 15.3 Stamp and Other Taxes ...................................................................................... 118
Section l5.4 Setoff ..................................................................................................... 119
Section 15.5 Governing Law: Litigation .................................................................................. 119
Section 15.6 Waiver of Rights ........................................................................................... 119
Section 15.7 Reversal of Payments ....................................................................................... 120
Section 15.8 Accounting Matters ......................................................................................... 120
Section 15.9 Amendments ................................................................................................. 120
Section 15.10 Performance of Borrower's Duties ........................................................................... 122
Section 15.11 Indemnification ............................................................................................ 122
Section 15.12 All Powers Coupled with Interest ........................................................................... 122
Section 15.13 Survival ................................................................................................... 123
Section 15.14 Titles and Captions ........................................................................................ 123
Section 15.15 Severability of Provisions ................................................................................. 123
</TABLE>
v
<PAGE>
EXHIBITS AND SCHEDULES
ANNEX A COMMITMENTS
ANNEX B APPLICABLE MARGINS
ANNEX C WIRE TRANSFER PROCEDURES
EXHIBIT A FORM OF REVOLVING CREDIT NOTE
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C FORM OF OPINION OF COUNSEL FOR BORROWER
EXHIBIT D FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT E FORM OF SETTLEMENT REPORT
Schedule 1.1A Pledged Securities
Schedule 6.1(b) Subsidiaries; Ownership of Stock
Schedule 6.1(d) Compliance with Law; Governmental Approvals
Schedule 6.l(e) Borrowers' Businesses
Schedule 6.l(f) Title to Properties
Schedule 6.1(g) Liens
Schedule 6.1(h) Indebtedness and Guaranties
Schedule 6.l(i) Litigation
Schedule 6.l(j) Proprietary Rights
Schedule 6.l(o) ERISA
Schedule 6.1(u) Location of Offices and Receivables
Schedule 6.1(v) Location of Inventory
Schedule 6.l(x) Employee Relations
Schedule 6.1(y) Trade Names
Schedule 6.1(z) Real Estate
Schedule 6.1(aa) Bank Accounts, Lockboxes, Etc.
Schedule 9.10 Use of Proceeds
<PAGE>
LOAN AND SECURITY AGREEMENT
Dated as of April 16, 1997
SYRATECH CORPORATION, a Delaware corporation, TOWLE MANUFACTURING COMPANY,
a Delaware corporation, LEONARD FLORENCE ASSOCIATES, INC., a Massachusetts
corporation, WALLACE INTERNATIONAL SILVERSMITHS, INC., a Delaware corporation,
SYRATECH HOLDING CORPORATION, an Arkansas corporation, RAUCH INDUSTRIES, INC., a
North Carolina corporation, ROCHARD, INC., a New York corporation, HOLIDAY
PRODUCTS, INC., a North Carolina corporation, FARBERWARE INC., a Delaware
corporation, SILVESTRI, INC., a Delaware corporation, the financial institutions
parties hereto from time to time as Lenders, and NATIONSBANK, N.A. (SOUTH), a
national banking association as the Administrative Agent for the Lenders, agree
as follows:
STATEMENT OF AGREEMENT
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. For the purposes of this Agreement:
Account Debtor means a Person who is obligated on a Receivable.
Acquire or Acquisition, as applied to any Business Unit or Investment,
means the acquisition of such Business Unit or Investment by purchase, exchange,
issuance of stock or other securities, or by merger, reorganization or any other
method.
Administrative Agent means NationsBank and each successor Administrative
Agent appointed in accordance with the provisions of this Agreement.
Affiliate (and with corollary meanings, Affiliated) means, with respect to
a Person, (a) any officer, director, manager, or managing agent of such Person,
(b) any spouse, parents, brothers, sisters, children and grandchildren of such
Person, (c) any association, partnership, trust, entity or enterprise in which
such Person is a director, officer or general partner, (d) any other Person, (i)
that directly or indirectly, through one or more intermediaries, controls, or is
controlled by, or is under common control with, such given Person, (ii) that
directly or indirectly beneficially owns or holds 10% or more of any class of
voting stock, member interest or partnership or other interest of such Person or
any Subsidiary of such Person,
<PAGE>
or (iii) 10% or more of the voting stock, member interest or partnership or
other interest of which is directly or indirectly beneficially owned or held by
such Person or a Subsidiary of such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities or partnership or other interests, by contract or
otherwise.
Agency Account means an account of one or more Borrowers maintained with a
Clearing Bank pursuant to an Agency Account Agreement.
Agency Account Agreement means an agreement among one or more Borrowers,
the Administrative Agent and a Clearing Bank (if other than the Administrative
Agent) concerning the collection of payments which represent the proceeds of
Receivables or other Collateral.
Agent's Office means the office of the Administrative Agent specified in or
determined in accordance with the provisions of Section 15.1.
Agreement means this Agreement, including the Exhibits and Schedules
hereto.
Agreement Date means the date as of which this Agreement is dated.
Anniversary means April 16, 1998 and each April 16 thereafter.
Applicable Law means all applicable provisions of constitutions, statutes,
rules, regulations and orders of all applicable governmental bodies and all
applicable orders and decrees of all courts and arbitrators.
Applicable Margin means (a) as to Prime Rate Loans, 0.50% and (b) as to
Eurodollar Rate Loans, 2.25%, or (c) beginning five days after delivery of the
audited financial statements of Syratech and its Consolidated Subsidiaries for
Fiscal Year 1997, such other percentage indicated on the performance pricing
matrix attached hereto as Annex B7 as may at the time be applicable after taking
into account the Borrowers' consolidated Total Debt Coverage Ratio computed
based on the consolidated financial statements of Syratech and its Consolidated
Subsidiaries for the then most recently ended fiscal quarter of the Borrowers,
timely delivered in accordance with Section 10.1. Each change in the Applicable
Margin shall become effective as of the first day of the month that is at least
10 Business Days after delivery of the relevant financial statements and shall
remain in effect for three consecutive months. If subsequent period financial
statements have not been delivered by the Borrowers at least 10 Business Days
before the last day of such three-month period, or an Event of Default has
occurred and is continuing, then, subject to the provisions of Section 4.1(d),
the Applicable Margin shall again be the applicable percentage set forth in
clause (a) or (b) above, for the following month or until the requirements of
clause (c) above have been satisfied.
<PAGE>
Assignment and Acceptance means an assignment and acceptance in the form
attached hereto as Exhibit D assigning all or a portion of a Lender's interests,
rights and obligations under this Agreement pursuant to Section 13.1.
Authorized Officer has the meaning specified in Section 2.2(a)(iii).
Bankers Acceptance means a draft presented in connection with a drawing
under a Letter of Credit by the beneficiary thereof, maturing not more than 180
days after presentation and accepted by the issuer of the Letter of Credit.
Benefit Plan means an employee benefit plan as defined in Section 3(3) of
ERISA (other than a Multiemployer Plan) in respect of which any Borrower or any
Related Company is, or within the immediately preceding six years was, an
"employer" as defined in Section 3(5) of ERISA, including such plans as may be
established after the Agreement Date.
Borrower means one of Syratech, Towle, LFA, Wallace, Holding, Rauch,
Rochard, Holiday, Farberware or Silvestri and Borrowers means more than one such
Person.
Borrowing means a borrowing of Revolving Credit Loans bearing interest at
the same rate, made by all Lenders on the same date and, in the case of
Eurodollar Rate Loans, having a single Interest Period, and the continuation or
conversion of an existing Loan or Loans in whole or in part.
Borrowing Base means, at any time, an amount equal to the following:
(a) 80% (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
(b) the lesser of
(i) $65,000,000 (or, during the period June 1 through September 30 of
each Fiscal Year, $75,000,000) and
(ii) 60% (or, during the period June 1 through September 30 of each
Fiscal Year, 70%) (or, in either case, 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 quality, composition,
salability or other measure of value of the Inventory) of the Cost of
Eligible Inventory at such time, minus
3
<PAGE>
(c) the sum of (i) the Reimbursement Obligations of the Borrowers at such
time, plus (ii) the aggregate Letter of Credit Amount of standby Letters of
Credit outstanding at such time, plus (iii) 40% of the aggregate Letter of
Credit Amount of Inventory Letters of Credit at such time, plus (iv) the
aggregate Letter of Credit amount of Letters of Credit the issuance of which has
been authorized by the Administrative Agent and NationsBank pursuant to Section
3.4(b) but that have not yet been issued, minus
(d) the Interest Rate Protection Reserve and such other reserves as the
Administrative Agent may determine from time to time, in the exercise of its
reasonable credit judgment, applying standards customary to institutional
asset-based lenders, to be an appropriate response to an adverse change
affecting the value of the Collateral.
Borrowing Base Certificate means a certificate in the form attached hereto
as Exhibit B or in such other form as may be acceptable to the Administrative
Agent from time to time.
Business Day means any day other than a Saturday, Sunday or other day on
which banks in Atlanta, Georgia are authorized to close and, when used with
respect to Eurodollar Rate Loans, means any such day on which dealings are also
carried on in the applicable interbank Eurodollar market.
Business Unit means the assets constituting the business, or a division or
operating unit thereof, of any Person.
Capital Expenditures means, with respect to any Person, all expenditures
made and liabilities incurred for the acquisition of assets (other than assets
which constitute a Business Unit) that are not, in accordance with GAAP, treated
as expense items for such Person in the year made or incurred, or as a prepaid
expense applicable to a future year or years.
Capitalized Lease means a lease that is required to be capitalized for
financial reporting purposes in accordance with GAAP.
Capitalized Lease Obligation means Debt represented by obligations under a
Capitalized Lease, and the amount of such Debt shall be the capitalized amount
of such obligations determined in accordance with GAAP.
Cash Collateral means cash or Cash Equivalents on which the Administrative
Agent, for the benefit of itself as Administrative Agent and the Lenders, has a
first priority Lien.
Cash Collateral Account means a special interest-bearing deposit account
consisting of cash maintained by the Administrative Agent and under the sole
dominion and control of the Administrative Agent, for its benefit and for the
benefit of the Lenders, established pursuant to the provisions of Section
4.16(a) for purposes set forth therein.
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Cash Equivalents means
(a) marketable direct obligations issued or unconditionally guaranteed by
the United States Government or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within one
year from the date of acquisition thereof;
(b) commercial paper maturing no more than one year from the date issued
and, at the time of acquisition thereof, having a rating of at least A-1 from
Standard & Poor's Corporation or at least P-1 from Moody's Investors Service;
(c) certificates of deposit or bankers' acceptances issued in Dollar
denominations and maturing within one year from the date of issuance thereof
issued by any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia having combined capital
and surplus of not less than $100,000,000 and, unless issued by the
Administrative Agent or a Lender, not subject to set-off or offset rights in
favor of such bank arising from any banking relationship with such bank, and
(d) repurchase agreements in form and substance and for amounts
satisfactory to the Administrative Agent.
Chief Financial Officer means the chief financial officer of Syratech.
Clearing Bank means NationsBank and any other banking institution with
which an Agency Account has been established pursuant to an Agency Account
Agreement.
Code means the Internal Revenue Code of 1986, as amended from time to time.
Collateral means and includes all of each Borrower's right, title and
interest in and to each of the following, wherever located and whether now or
hereafter existing or now owned or hereafter acquired or arising:
(a) (i) all rights to the payment of money or other forms of consideration
of any kind (whether classified under the UCC as accounts, contract rights,
chattel paper, general intangibles or otherwise) including, but not limited to,
accounts receivable, letters of credit and the right to receive payment
thereunder, chattel paper, tax refunds, insurance proceeds, any rights under
contracts not yet earned by performance and not evidenced by an instrument or
chattel paper, notes, drafts, instruments, documents, acceptances and all other
debts, obligations and liabilities in whatever form from any Person, (ii) all
guaranties, security and Liens securing payment thereof, (iii) all goods,
whether now owned or hereafter acquired, and whether sold, delivered,
undelivered, in transit or returned, which may be represented by, or the sale or
lease of which may have given rise to, any such right to payment or other debt,
obligation or liability, and (iv) all proceeds of any of the foregoing (the
foregoing, collectively, Receivables);
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(b) (i) all inventory, (ii) all goods intended for sale or lease or for
display or demonstration, (iii) all work in process, (iv) all raw materials and
other materials and supplies of every nature and description used or which might
be used in connection with the manufacture, packing, shipping, advertising,
selling, leasing or furnishing of goods or services or otherwise used or
consumed in the conduct of business, and (v) all documents evidencing and
general intangibles relating to any of the foregoing (the foregoing,
collectively, Inventory);
(c) any demand, time, savings, passbook, money market or like depository
account, and all certificates of deposit, maintained with a bank, savings and
loan association, credit union or like organization, other than an account
evidenced by a certificate of deposit that is an instrument under the UCC (the
foregoing, collectively, Deposit Accounts);
(d) all cash or other property deposited with the Administrative Agent or
any Lender or any Affiliate of the Administrative Agent or any Lender or which
the Administrative Agent, for its benefit and for the benefit of the Lenders, or
any Lender or such Affiliate is entitled to retain or otherwise possess as
collateral pursuant to the provisions of this Agreement or any of the Loan
Documents or any agreement relating to any Letter of Credit, including, without
limitation, amounts on deposit in the Cash Collateral Account;
(e) all Pledged Securities;
(f) all goods and other personal property, whether or not delivered,
(i) the sale or lease of which gives or purports to give rise to any
Receivable, including, but not limited to, all merchandise returned or
rejected by or repossessed from customers, or
(ii) securing any Receivable,
including, without limitation, all rights as an unpaid vendor or lienor
(including, without limitation, stoppage in transit, replevin and
reclamation) with respect to such goods and other properties;
(g) all mortgages, deeds to secure debt and deeds of trust on real or
personal property, guaranties, leases, security agreements and other agreements
and property which secure or relate to any Receivable or other Collateral or are
acquired for the purpose of securing and enforcing any item thereof;
(h) all documents of title, policies and certificates of insurance,
securities, chattel paper and other documents and instruments evidencing or
pertaining to any and all items of Collateral;
(i) all files, correspondence, computer programs, tapes, disks and related
data processing software which contain information identifying or pertaining to
any of the Collateral
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or any Account Debtor or showing the amounts thereof or payments thereon or
otherwise necessary or helpful in the realization thereon or the collection
thereof; and
(j) any and all products and cash and non-cash proceeds of the foregoing
(including, but not limited to, any claims to any items referred to in this
definition and any claims against third parties for loss of, damage to or
destruction of any or all of the Collateral or for proceeds payable under or
unearned premiums with respect to policies of insurance) in whatever form,
including, but not limited to, cash, negotiable instruments and other
instruments for the payment of money, chattel paper, security agreements and
other documents.
Commitment means, as to each Lender, the amount set forth opposite such
Lender's name on Annex A hereto (or, from and after the date hereof, the amount
last set forth in the Register, if different), representing such Lender's
obligation, upon and subject to the terms and conditions of this Agreement, to
make its Proportionate Share of Loans and to acquire participations in Letters
of Credit.
Commitment Percentage means, as to any Lender at the time of determination,
the result, expressed as a percentage, obtained by dividing such Lender's
Commitment at such time by the Revolving Credit Facility at such time
Consolidated Subsidiaries means, as to Syratech, each other Borrower and
each other Subsidiary listed as such on Schedule 6.1(b), and any additional
Subsidiary of Syratech whose accounts are at the time in question, in accordance
with GAAP and pursuant to the written consent of the Administrative Agent, which
consent may be withheld in its absolute discretion or conditioned upon, inter
alia, the execution and delivery of guaranties and security documents or such
Subsidiary becoming a party to this Agreement as a "Borrower," consolidated with
those of Syratech.
Contaminant means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste or any constituent of any such substance or waste.
Controlled Disbursement Account means each account maintained by and in the
name of one or more of the Borrowers with a Disbursing Bank designated as such
on Schedule 6.1 (act) or with NationsBank, for the purpose of disbursing
Revolving Credit Loan proceeds and other amounts deposited thereto pursuant to
Sections 2.2(b)(i) and 8.1(b)(ii).
Cost means, when applied to Inventory of a Borrower, the lower of (a) the
cost thereof computed in accordance with GAAP on a first-in first-out or FIFO
basis, and (b) the fair market value thereof.
Current Assets means, with respect to any Person, the aggregate amount of
assets of such Person which should properly be classified as current assets in
accordance with GAAP,
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>
after deducting adequate reserves in each case where a reserve is appropriate in
accordance with GAAP.
Current Liabilities means, with respect to any Person, the aggregate amount
of all Liabilities of such Person which should properly be classified as current
liabilities in accordance with GAAP.
Debt means
(a) Indebtedness for money borrowed,
(b) Indebtedness, whether or not for money borrowed,
(i) represented by notes payable, and drafts accepted, that represent
extensions of credit,
(ii) constituting obligations evidenced by bonds, debentures, notes or
similar instruments, or
(iii) upon which interest charges are customarily paid or that was
issued or assumed as full or partial payment for property,
(c) Capitalized Lease Obligations,
(d) Indebtedness under Interest Rate Protection Agreements, and
(e) Guaranties of obligations of the types enumerated in clauses (a),
(b), (c) and (d).
Default means any of the events specified in Section 12.1 that, with the
passage of time or giving of notice or both, would constitute an Event of
Default.
Default Margin means 2.0%.
Deposit Account has the meaning specified in the definition "Collateral."
Disbursing Bank means any commercial bank with which a Controlled
Disbursement Account is maintained after the Effective Date.
Dollar and "$" means freely transferable United States dollars.
EBITDA for a specified period means consolidated Net Income of Syratech and
its Consolidated Subsidiaries for such period, before provision for interest
expense, income
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taxes, depreciation expense, amortization, and any extraordinary item(s), all
determined in accordance with GAAP.
ERISA means the Employee Retirement Income Security Act of 1974, as in
effect from time to time, and any successor statute.
ERISA Event means
(a) a "Reportable Event" as defined in Section 4043(c) of ERISA, but excluding
any such event as to which the provision for 30 days' notice to the PBGC is
waived under applicable regulations, (b) the filing of a notice of intent to
terminate a Benefit Plan subject to Title IV of ERISA or the treatment of an
amendment to such a Benefit Plan as a termination under Section 4041 of ERISA,
(c) the institution of proceedings by the PBGC to terminate a Benefit Plan
subject to Title IV of ERISA or the appointment of a trustee to administer any
such Benefit Plan or an event or condition that might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan subject to Section
4042, (d) the imposition of any liability under Title IV of ERISA other than for
PBGC premiums due but not yet payable, (e) the filing of an application for a
minimum funding waiver under Section 412 of the Code, (f) a withdrawal by a
Borrower or any Related Employer from a Benefit Plan subject to Section 4063 of
ERISA during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA), (g) a Benefit Plan intending to qualify under
Section 401 (a) of the Code losing such qualified status, (h) the failure to
make a required contribution to a Benefit Plan, (i) a Borrower or any Related
Company being in "default" (as defined in Section 4219(c)(5) of ERISA) with
respect to payments to a Multiemployer Plan because of its complete or partial
withdrawal (as described in Section 4023 or 4205 of ERISA) from such
Multiemployer Plan, or (j) the occurrence of a non-exempt prohibited transaction
within the meaning of Section 4975 of the Code or Section 406 of ERISA with
respect to any Benefit Plan.
Effective Date means the first date on which all of the conditions set
forth in Section 5.1 shall have been fulfilled by the Borrowers or waived by the
Administrative Agent and the Lenders in accordance with the provisions of
Section 15.10.
Effective Interest Rate means the rate of interest per annum on the Loans
in effect from time to time pursuant to the provisions of Section 4.1(a), (b),
(c), and (d).
Eligible Assignee means (i) a commercial bank organized under the laws of
the United States, or any State thereof, having total assets in excess of
$25,000,000,000; (ii) any commercial finance company or asset based lender,
organized under the laws of the United States or any State thereof, that is an
Affiliate of a commercial bank having total assets in excess of $25,000,000,000;
(iii) any Lender listed on the signature page of this Agreement; and (iv) as to
any Lender, such of its Affiliates as are commercial banks or trust companies,
organized under the laws of an OECD- member country and acting through a branch
or other establishment in the United States; provided in each case that the
representation contained in Section 13.2 shall be applicable with respect to
such institution or Lender.
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Eligible Inventory means items of Inventory of the Borrowers held for sale
in the ordinary course of the business of the Borrowers (but not including
packaging or shipping materials or maintenance supplies) which meet all of the
following requirements:
(a) such Inventory is owned by a Borrower, is subject to the Security
Interest which is perfected as to such Inventory, and is subject to no other
Lien whatsoever other than a Permitted Lien,
(b) such Inventory consists of raw materials or finished goods and does not
consist of work-in-process, supplies or consigned goods;
(c) such Inventory is in good condition and meets all standards applicable
to such goods, their use or sale imposed by any Governmental Authority having
regulatory authority over such matters;
(d) such Inventory is currently either usable or saleable, at prices
approximating at least the cost thereof, in the normal course of such Borrower's
business;
(e) such Inventory is not obsolete or returned (other than in accordance
with a Borrower's policies regarding returns of unsold merchandise) or
repossessed or used goods taken in trade;
(f) such Inventory is located within the United States at one of the
locations listed in Schedule 6.1(v) or is in transit to one of such locations
and the Administrative Agent has received evidence satisfactory to it that such
Inventory in transit is insured for the benefit of the Administrative Agent and
the Lenders, as their interests may appear;
(g) such Inventory is in the possession and control of such Borrower and
not any third party and if located in a warehouse or other facility leased by a
Borrower, the lessor has delivered to the Administrative Agent a waiver and
consent in form and substance satisfactory to the Administrative Agent; and
(h) such Inventory is not deemed to be ineligible by the Administrative
Agent in its reasonable credit judgment, applying standards customary to
institutional asset-based lenders.
Eligible Receivable means the unpaid portion of a Receivable payable in
Dollars to a Borrower net of any returns, discounts, credits or other allowances
and deductions agreed to by such Borrower and net of any amounts owed by a
Borrower to the Account Debtor on such Receivable, which meets all of the
following requirements:
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(a) such Receivable is owned by a Borrower and represents a complete bona
fide transaction which requires no further act under any circumstances on the
part of such Borrower to make such Receivable payable by the Account Debtor;
(b) such Receivable is not unpaid more than 240 days after the date of the
original invoice or past due more than 60 days after its due date;
(c) such Receivable does not arise out of any transaction with any
Subsidiary or Affiliate of any Borrower or out of any transaction in which the
performance of the applicable Borrower has been bonded;
(d) such Receivable is not owing by an Account Debtor or group of related
Account Debtors more than 50% of whose then-existing accounts owing to all
Borrowers do not meet the requirements set forth in clause (b) above;
(e) if the Account Debtor with respect thereto is located outside of the
United States of America (including for purposes of this definition, Puerto
Rico) or Canada, the goods which gave rise to such Receivable were shipped after
receipt by a Borrower from the Account Debtor of an irrevocable letter of credit
that has been confirmed by a financial institution acceptable to the
Administrative Agent and is in form and substance acceptable to the
Administrative Agent, payable in the full face amount of the face value of the
Receivable in Dollars at a place of payment located within the United States and
has been duly assigned to the Administrative Agent, provided that otherwise
Eligible Receivables owing by non-US Account Debtors located outside the United
States (including Puerto Rico) or Canada and not supported by letters of credit
may be included as "Eligible Receivables" in an aggregate amount (x) not to
exceed $500,000 at any time outstanding, (y) with the approval of the
Administrative Agent, not to exceed $2,000,000 at any time outstanding, or (z)
with the approval of the Required Lenders, more than $2,000,000 at any time
outstanding;
(f) the applicable Borrower is not in breach of any express or implied
representation or warranty with respect to the goods the sale of which gave rise
to such Receivable;
(g) the Account Debtor with respect to such Receivable is not located in a
state which imposes conditions on the enforceability of Receivables with which
the applicable Borrower has not complied nor is such Account Debtor insolvent or
the subject of any bankruptcy or insolvency proceedings of any kind or of any
other proceeding or action, threatened or pending, which might, in the
Administrative Agent's sole judgment, have a materially adverse effect on such
Account Debtor;
(h) the goods the sale of which gave rise to such Receivable have been
shipped or delivered to the Account Debtor on an absolute sale basis and not on
a bill and hold sale basis, a consignment sale basis, a guaranteed sale basis, a
sale or return basis or on the basis of any other similar understanding, and
such goods have not been returned or rejected;
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(i) such Receivable is not owing by an Account Debtor or group of related
Account Debtors whose then-existing accounts owing to all Borrowers exceed in
face amount 20% of the Borrowers' total Eligible Receivables;
(j) such Receivable is evidenced by an invoice or other documentation in
form acceptable to the Administrative Agent containing only terms normally
offered by the applicable Borrower, and dated no later than the date of
shipment;
(k) such Receivable is a valid, legally enforceable obligation of the
Account Debtor with respect thereto and is not subject to any present, or
contingent (and no facts exist which are the basis for any future), offset,
deduction or counterclaim, dispute or other defense on the part of such Account
Debtor;
(l) such Receivable is not evidenced by chattel paper or an instrument of
any kind;
(m) such Receivable does not arise from the performance of services,
including services under or related to any warranty obligation of a Borrower or
out of service charges by a Borrower or other fees for the time value of money;
(n) such Receivable is not owing by the United States government or any
other governmental entity subject to the Assignment of Claims Act of 1940, as
amended, or similar state legislation, unless such Receivable or the amount due
thereunder have been assigned to the Administrative Agent in compliance with the
requirements thereof;
(o) such Receivable is subject to the Security Interest which is perfected
as to such Receivable, and is subject to no other Lien whatsoever other than a
Permitted Lien, and the goods giving rise to such Receivable were not, at the
time of the sale thereof, subject to any Lien other than a Permitted Lien; and
(p) such Receivable is not deemed to be ineligible by the Administrative
Agent in its reasonable credit judgment, applying standards customary to
institutional asset-based lenders.
Environmental Laws means all applicable federal, state, local and foreign
laws now or hereafter in effect relating to pollution or protection of the
environment, including applicable laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes into the environment
(including, without limitation, ambient air, surface water, ground water or
land) or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, removal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes,
and any and all applicable regulations, notices or demand letters issued,
entered, promulgated or approved thereunder; such laws and regulations include
but are not limited to the Resource Conservation and Recovery Act, 42 U.S.C. ss.
6901 et seq., as
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amended; the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ss. 9601 et seq., as amended; the Toxic Substances Control Act,
15 U.S.C. ss. 2601 et seq., as amended; the Clean Air Act, 42 U.S.C. ss. 7401 et
seq., as amended; and state and federal lien and environmental cleanup programs.
Environmental Lien means a Lien in favor of any governmental entity for (a)
any liability under Environmental Laws or (b) damages arising from, or costs
incurred by such governmental entity in response to, a Release or threatened
Release of a Contaminant into the environment.
Equipment means and includes, as to any Person, all of such Person's then
owned or existing and future acquired or arising, machinery, apparatus,
equipment, motor vehicles, tractors, trailers, rolling stock, fittings, fixtures
and other tangible personal property (other than Inventory) of every kind and
description used in such Person's business operations or owned by such Person or
in which such Person has an interest and all parts, accessories and special
tools and all increases and accessions thereto and substitutions and
replacements therefor.
Eurodollar Rate means, with respect to any Eurodollar Rate Loan for the
Interest Period applicable thereto, a simple per annum interest rate determined
pursuant to the following formula
Interbank Offered Rate
Eurodollar Rate = ---------------------------------
1 - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
Eurodollar Rate Loan means any Revolving Credit Loan which bears interest
determined with reference to the Eurodollar Rate.
Eurodollar Reserve Percentage means that percentage (expressed as a
decimal) which is in effect from time to time under Regulation D of the Board of
Governors of the Federal Reserve System, as such regulation may be amended from
time to time or any successor regulation, as the maximum reserve requirement
(including, without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency liabilities as that
term is defined in Regulation D (or against any other category of liabilities
that includes deposits by reference to which the interest rate of Eurodollar
Rate Loans is determined), whether or not the Lender has any Eurocurrency
liabilities subject to such reserve requirement at the time in question.
Eurodollar Loans shall be deemed to constitute Eurocurrency liabilities and as
such shall be deemed subject to reserve requirements without benefits of credits
for proration, exceptions or offsets that may be available from time to time to
Lender.
Event of Default means any of the events specified in Section 12.1
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Existing Credit Agreement means the Amended and Restated Loan and Security
Agreement dated as of November 30, 1994 among Syratech, certain of the other
Borrowers, and NationsBank, as amended and in effect from time to time.
Farberware means Farberware Inc., a Delaware corporation and an indirect
wholly owned Subsidiary of Syratech.
Federal Funds Effective Rate means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve system arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by NationsBank from three federal funds brokers of
recognized standing selected by NationsBank.
Financed Capital Expenditures means Capital Expenditures funded with the
proceeds of Permitted Purchase Money Debt (excluding Loans) and those
represented by Capitalized Lease Obligations.
Financing Statements means the Uniform Commercial Code financing statements
executed and delivered by the Borrowers to the Administrative Agent, naming the
Administrative Agent as secured party and one or more Borrowers as debtor(s), in
connection with this Agreement.
Fiscal Month means each consecutive period of four or five weeks, the first
of which begins on January 1 of each calendar year, ending on the Friday nearest
the last day of a calendar month, except that the Fiscal Months that would
otherwise end on the Fridays nearest the last days of March, June, September and
December shall end on the last days of such months.
Fiscal Year means the calendar year and when preceded or followed by the
designation of a calendar year (e.g., 1997 Fiscal Year or Fiscal Year 1997)
means such designated calendar year.
Fixed Charge Coverage means, for any specified accounting period, the ratio
of (a) EBITDA for such period, to (b) the sum, also for such period, of the
following charges of Syratech and its Consolidated Subsidiaries on a
consolidated basis: interest expense, cash income taxes paid, dividends paid in
cash, scheduled principal repayments on Funded Debt, and non-Financed Capital
Expenditures, in each case determined in accordance with GAAP, and excluding,
for avoidance of doubt, any amount paid to redeem Preferred Stock in compliance
with the terms of this Agreement.
Funded Debt means Debt having a maturity of more than 12 months from the
date of the most recent balance sheet of Syratech or having a maturity of less
than 12 months
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from the date of such balance sheet, but by its terms being renewable or
extendable beyond 12 months from the date of such balance sheet at the option of
the Person liable thereon.
GAAP means generally accepted accounting principles consistently applied
and maintained throughout the period indicated and consistent with the prior
financial practices of the Person in connection with which the term is used.
Governmental Approvals means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
applicable governmental bodies, whether federal, state, local, foreign national
or provincial, and all agencies thereof.
Governmental Authority means any applicable government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
Guaranty, Guaranteed or to Guarantee, as applied to any obligation of
another Person shall mean and include, without duplication:
(a) a guaranty (other than by endorsement of negotiable instruments for
collection in the ordinary course of business), directly or indirectly, in any
manner, of any part or all of such obligation of such other Person, and
(b) an agreement, direct or indirect, contingent or otherwise, and whether
or not constituting a guaranty, the practical effect of which is to assure the
payment or performance (or payment of damages in the event of nonperformance) of
any part or all of such obligation of such other Person whether by
(i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or lessor) of property or
the purchase or sale of services primarily for the purpose of enabling the
obligor with respect to such obligation to make any payment or performance
(or payment of damages in the event of nonperformance) of or on account of
any part or all of such obligation or to assure the owner of such
obligation against loss,
(iii) the supplying of funds to, or in any other manner investing in,
the obligor with respect to such obligation,
(iv) repayment of amounts drawn down by beneficiaries of letters of
credit, or
(v) the supplying of funds to or investing in a Person on account of
all or any part of such Person's obligation under a Guaranty of any
obligation or indemnifying or holding harmless, in any way, such Person
against any part or all of such obligation.
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Holding means Syratech Holding Corporation, an Arkansas corporation and a
wholly owned Subsidiary of Syratech.
Holiday means Holiday Products, Inc., a North Carolina corporation and an
indirect wholly owned Subsidiary of Syratech.
Indebtedness of any Person means, without duplication, all Liabilities of
such Person, and to the extent not otherwise included in Liabilities, the
following:
(a) all obligations for money borrowed or for the deferred purchase price
of property or services,
(b) all obligations (including, during the noncancellable term of any lease
in the nature of a title retention agreement, all future payment obligations
under such lease discounted to their present value in accordance with GAAP)
secured by any Lien to which any property or asset owned or held by such Person
is subject, whether or not the obligation secured thereby shall have been
assumed by such Person,
(c) all obligations of other Persons which such Person has Guaranteed,
including, but not limited to, all obligations of such Person consisting of
recourse liability with respect to accounts receivable sold or otherwise
disposed of by such Person,
(d) all obligations of such Person in respect of Interest Rate Protection
Agreements, and
(e) in the case of each Borrower (without duplication) all obligations in
respect of the Loans.
Initial Notice of Borrowing means the Notice of Borrowing given by the
Borrowers with respect to the Initial Loans (which notice may include, at the
Administrative Agent's discretion, a notice containing substantially the same
information as a Notice of Borrowing, but given before the Agreement Date),
which shall also specify the method of disbursement.
Initial Loan means the Revolving Credit Loans made to the Borrowers on the
Effective Date pursuant to the Initial Notice of Borrowing.
Interbank Offered Rate for an Interest Period means the rate per annum
(rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on Telerate
Page 3750 (or any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not available, the term
"Interbank Offered Rate" shall mean, for any Eurodollar Rate Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%)
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appearing on the Reuters Screen LIBO Page as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, that if more than one rate is specified
on the Reuters Screen LIBO Page, the applicable rate shall be the arithmetic
mean of all such rates.
Interest Payment Date means the first day of each calendar month commencing
on May 1, 1997 and continuing thereafter until the Secured Obligations have been
irrevocably paid in full.
Interest Period means, with respect to each Eurodollar Rate Loan, the
period commencing on the date of the making or continuation of or conversion to
such Eurodollar Rate Loan and ending one, two, three or six months thereafter,
as the Borrowers may elect in the applicable Notice of Borrowing or Notice of
Conversion or Continuation; provided, that:
(i) any Interest Period that would otherwise end on a day that is not
a Business Day shall, subject to the provisions of clause (iii) below, be
extended to the next succeeding Business Day, unless such Business Day
falls in the next calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the last calendar month included in such Interest Period) shall,
subject to clause (iii) below, end on the last Business Day of a calendar
month;
(iii) any Interest Period that would otherwise end after the
Termination Date shall end on the Termination Date; and
(iv) notwithstanding clause (iii) above, no Interest Period shall have
a duration of less than one month and if any applicable Interest Period
would be for a shorter period, such Interest Period shall not be available
hereunder.
Interest Rate Protection Agreement means an interest rate swap, cap or
collar agreement or similar arrangement between any Borrower and a Lender or any
Affiliate of a Lender, acceptable to the Administrative Agent in its reasonable
credit judgment, providing for the transfer or mitigation of interest rate risks
either generally or under specific contingencies.
Interest Rate Protection Reserve means, at any time, the aggregate of the
obligations of the Borrowers under all Interest Rate Protection Agreements to
which any Borrower is a party in the event of a termination thereof, on an
estimated "marked-to-market" basis.
Inventory has the meaning specified in the definition "Collateral."
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Inventory Letter of Credit means a Letter of Credit issued for the purpose
of purchasing Inventory of the account party thereon and any Bankers Acceptance
created on presentation of a draft against such a Letter of Credit.
Investment means, with respect to any Person:
(a) any share of capital stock, evidence of Indebtedness or other security
issued by any other Person,
(b) any loan, advance or extension of credit to, or contribution to the
capital of, any other Person, excluding advances to employees in the ordinary
course of business for business expenses,
(c) any Guaranty of the obligations of any other Person,
(d) any other investment (other than the Acquisition of a Business Unit) in
any other Person, and
(e) any commitment or option to make an investment listed at (a) through
(d) above, provided that in the case of an option, the consideration for such
option is greater than $100,000.
IRS means the Internal Revenue Service.
LFA means Leonard Florence Associates, Inc., a Massachusetts corporation
and an indirect wholly owned Subsidiary of Syratech.
Lee means Thomas H. Lee Company, a sole proprietorship.
Lee Affiliates means Lee, Thomas H. Lee Equity Fund III, L.P., Thomas H.
Lee Foreign Fund III, L.P., THC Co-Investors III-A, LLC and THL Co-Investors
III-B, LLC.
Lender means at any time any financial institution party to this agreement
at such time, including any such Person becoming a party hereto pursuant to the
provisions of Article 13, and Lenders means at any time all of the financial
institutions party to this Agreement at such time, including any such Persons
becoming parties hereto pursuant to the provisions of Article 13.
Letter of Credit means any letter of credit issued for the account of a
Borrower (a) by any Lender and outstanding on the Effective Date pursuant to a
Reimbursement Agreement satisfactory to the Administrative Agent or (b) by
NationsBank pursuant to Article 3.
Letter of Credit Amount means, with respect to any Letter of Credit, the
aggregate maximum amount at any time available for drawing under such Letter of
Credit.
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Letter of Credit Availability means, as of the date of determination, the
aggregate face amount of additional Letter of Credit Obligations that would be
permitted to be outstanding hereunder at the time of determination in accordance
with Section 3.2, which shall be an amount equal to the lesser of (i) the Letter
of Credit Facility minus the Letter of Credit Obligations and (ii) Revolving
Credit Availability, on such date.
Letter of Credit Documents means the Master L/C Agreement and each of the
other documents, agreements and other writings required by NationsBank to be
executed and/or delivered in connection with the issuance of a Letter of Credit,
including, without limitation, any letter of credit application and
reimbursement agreement.
Letter of Credit Facility means a subfacility of the Revolving Credit
Facility providing for the issuance of Letters of Credit described in Article 3
and creation of Bankers Acceptances up to an aggregate amount of Letter of
Credit Obligations at any one time outstanding not to exceed $30,000,000.
Letter of Credit Obligations means, at any time, the sum of (a) the
Reimbursement Obligations of the Borrowers at such time, plus (b) the aggregate
Letter of Credit Amount of Letters of Credit outstanding at such time, plus (c)
the aggregate Letter of Credit Amount of Letters of Credit the issuance of which
has been authorized by the Administrative Agent and NationsBank pursuant to
Section 3.4(b) but that have not yet been issued, in each case as determined by
the Administrative Agent.
Letter of Credit Reserve means, at any time, an amount equal to the
aggregate Letter of Credit Obligations at such time, less the aggregate amount
of all Letter of Credit Obligations fully secured by Cash Collateral, provided,
that at the request of the Borrowers, the Administrative Agent may, in its
discretion, maintain the Letter of Credit Reserve in the full amount of the
Letter of Credit Facility less the amount of any Letter of Credit Obligations
secured by Cash Collateral.
Liabilities means all liabilities of a Person determined in accordance with
GAAP and includable on a balance sheet of such Person prepared in accordance
with GAAP.
Lien as applied to the property of any Person means:
(a) any mortgage, deed to secure debt, deed of trust, lien, pledge, charge,
lease constituting a Capitalized Lease Obligation, conditional sale or other
title retention agreement, or other security interest, security title or
encumbrance of any kind in respect of any property of such Person or upon the
income or profits therefrom,
(b) any arrangement, express or implied, under which any property of such
Person is transferred, sequestered or otherwise identified for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to the payment of the general, unsecured creditors of
such Person,
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(c) any Indebtedness which is unpaid more than 30 days after the same shall
have become due and payable and which if unpaid might by law (including, but not
limited to, bankruptcy and insolvency laws) or otherwise be given any priority
whatsoever over general unsecured creditors of such Person,
(d) the filing of, or any agreement to give, any financing statement under
the UCC or its equivalent in any jurisdiction, excluding informational or
precautionary financing statements relating to property leased by a Borrower,
and
(e) in the case of Real Estate, reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and encumbrances.
Loan means any Revolving Credit Loan, whether a Prime Rate Loan or a
Eurodollar Rate Loan, as well as all such loans collectively.
Loan Account and Loan Accounts have the meanings specified in Section 5.5.
Loan Documents means, collectively, this Agreement, the Notes, the Security
Documents, the Letter of Credit Documents, and each other instrument, agreement
and document executed and delivered by a Borrower or any Affiliate or Subsidiary
of a Borrower in connection with this Agreement and each other instrument,
agreement or document referred to herein or contemplated hereby.
Lockbox means the U. S. Post Office Box(es) specified in the Lockbox
Agreement.
Lockbox Agreement means the agreement between a Borrower and a Clearing
Bank concerning the establishment of a Lockbox for the collection of
Receivables.
Master L/C Agreement means the Master Agreement for Letters of Credit dated
on or about September 15, 1995, made by the Borrowers and Syratech Hong Kong in
favor of NationsBank and its Affiliates setting forth certain terms and
conditions of all Letters of Credit, provided that in the case of any conflict
between the terms of the Master L/C Agreement and this Agreement, the provisions
of this Agreement shall control.
Materially Adverse Effect means any act, omission, event or undertaking
which, singly or in the aggregate, would or could be expected, in the reasonable
credit judgment of the Required Lenders, to have a materially adverse effect
upon (a) the business, assets, properties, liabilities, condition (financial or
otherwise), or results of operations of the Borrowers, taken as a whole, (b)
upon the respective ability of the Borrowers to perform any obligations under
this Agreement or any other Loan Document to which it is a party, or (c) the
legality, validity, binding effect, enforceability or admissibility into
evidence of any Loan Document or the ability of the Administrative Agent or any
Lender to enforce any material rights or remedies under or in
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connection with any Loan Document; in any case, whether resulting from any
single act, omission, situation, status, event, or undertaking, together with
other such acts, omissions, situations, statuses, events, or undertakings and in
each case as determined by the Required Lenders in the exercise of its/their
reasonable credit judgment.
Merger means the merger of THL Transaction I Corp., a Delaware corporation,
with and into Syratech Corporation, with Syratech as the survivor, as
contemplated by the Merger Agreement, in furtherance of the Recapitalization.
Merger Agreement means the Restated Agreement and Plan of Merger dated as
of November 27, 1996, effective as of October 23, 1996 as amended effective as
of February 14, 1997, and as further modified or amended with the prior consent
of the Administrative Agent and the Required Lenders.
Multiemployer Plan means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which a Borrowers or a Related Company is required to
contribute or has contributed within the immediately preceding six years.
NationsBank means NationsBank, N.A. (South).
Net Income or Net Loss means, as applied to any Person, the net income (or
net loss) of such Person for the period in question after giving effect to
deduction of or provision for all operating expenses, all taxes and reserves
(including reserves for deferred taxes) and all other proper deductions, all
determined in accordance with GAAP, provided that there shall be excluded:
(a) the net income (or net loss) of any Person accrued prior to the date it
becomes a Subsidiary of, or is merged into or consolidated with, the Person
whose Net Income is being determined or a Subsidiary of such Person,
(b) the net income (or net loss) of any Person in which the Person whose
Net Income is being determined or any Subsidiary of such Person has an ownership
interest, except, in the case of net income, to the extent that any such income
has actually been received by such Person or such Subsidiary in the form of cash
dividends or similar distributions,
(c) any restoration of any contingency reserve, except to the extent that
provision for such reserve was made out of income during such period,
(d) any net gains or losses on the sale or other disposition, not in the
ordinary course of business, of Investments, Business Units and other capital
assets, provided that there shall also be excluded any related charges for taxes
thereon,
(e) any net gain arising from the collection of the proceeds of any
insurance policy,
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(f) any write-up of any asset, and
(g) any other extraordinary item.
Net Outstandings of any Lender means, at any time, the sum of (a) all
amounts paid by such Lender (other than pursuant to Section 14.7) to the
Administrative Agent in respect of Loans by such Lender under the Revolving
Credit Facility, minus (b) all amounts received by the Administrative Agent and
paid by the Administrative Agent to such Lender for application, pursuant to
this Agreement, to reduction of the outstanding principal balance of the Loans
of such Lender.
Net Worth of any Person means the total shareholders' equity or aggregate
partnership capital (including capital stock (including specifically any
Preferred Stock), partners' capital, additional paid-in capital and retained
earnings, after deducting treasury stock) which would appear as such on a
balance sheet of such Person prepared in accordance with GAAP.
Non-Ratable Loan means a Prime Rate Loan made by NationsBank in accordance
with the provisions of Section 4.8(b).
Note means one of the Revolving Credit Notes, and Notes means more than one
of such instruments.
Notice of Borrowing means a written notice, or telephonic notice followed
by a confirming same-day written notice, requesting a Borrowing of either a
Prime Rate Loan or a Eurodollar Rate Loan, which is given by telex or facsimile
transmission in accordance with the applicable provisions of Section 2.2 and
which specifies (i) the amount of the requested Borrowing, (ii) the date of the
requested Borrowing, and (iii) if the requested Borrowing is of a Eurodollar
Rate Loan, the duration of the applicable Interest Period.
Notice of Conversion or Continuation has the meaning specified in Section
4.12.
Operating Lease means any lease (other than a lease constituting a
Capitalized Lease Obligation) of real or personal property.
PBGC means the Pension Benefit Guaranty Corporation and any successor
agency.
Pending Loan has the meaning specified in Section 4.15(b).
Permitted Guaranties means (i) any Guaranty by one Borrower of Indebtedness
of any other Borrower incurred in the ordinary course of business of such other
Borrower, and (ii) Guaranties arising out of the endorsement of negotiable
instruments for deposit or collection and similar transactions in the ordinary
course of business.
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Permitted Investments means:
(a) Investments of the Borrowers in:
(i) negotiable certificates of deposit, time deposits and banker's
acceptances issued by a Lender or any Affiliate of a Lender or by any
United States bank or trust company having capital, surplus and undivided
profits in excess of $250,000,000,
(ii) any direct obligation of the United States of America or any
agency or instrumentality thereof which has a remaining maturity at the
time of purchase of not more than one year and repurchase agreements
relating to the same,
(iii) sales on credit in the ordinary course of business on terms
customary in the industry,
(iv) notes, accepted in the ordinary course of business, evidencing
overdue accounts receivable arising in the ordinary course of business,
(v) the other Borrowers and in their respective non-Borrower
Subsidiaries as existing on the Agreement Date (as the same may increase as
a result of such Subsidiaries' profitable operations), and
(vi) Investments approved by the Administrative Agent or generally
recommended by the Administrative Agent or its Affiliates for purchase by
borrowers similar to the Borrowers; and
(b) other Investments (but not including Acquisitions of Business Units) of
the Borrowers, the net aggregate amount of which does not at any time exceed
$5,000,000.
Permitted Liens means:
(a) Liens securing taxes, assessments and other governmental charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA)
or the claims of materialmen, mechanics, carriers, warehousemen or landlords for
labor, materials, supplies or rentals incurred in the ordinary course of
business, but (i) in all cases, only if payment shall not at the time be
required to be made in accordance with Section 9.7, and (ii) in the case of
warehousemen or landlords controlling locations where Inventory is located, only
if such liens have been waived or subordinated to the Security Interest in a
manner satisfactory to the Administrative Agent;
(b) Liens consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar legislation;
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(c) Liens constituting encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of the Real Estate,
which in the judgment of the Administrative Agent do not materially detract from
the value of such Real Estate or impair the use thereof in the business of the
affected Borrower(s);
(d) Purchase Money Liens securing Permitted Purchase Money Debt;
(e) Liens of the Administrative Agent and any Lender arising under this
Agreement and the other Loan Documents; and
(f) Liens arising out of or resulting from any judgment or award, the time
for the appeal or petition for rehearing of which shall not have expired, or in
respect of which the Borrowers are fully protected by insurance or in respect of
which the Borrowers shall at any time in good faith be prosecuting an appeal or
proceeding for a review and in respect of which a stay of execution pending such
appeal or proceeding for review shall have been secured, and as to which
appropriate reserves have been established on the books of the appropriate
Borrower(s).
Permitted Purchase Money Debt means Purchase Money Debt of the Borrowers
incurred after the Agreement Date, as to which each of the following is true:
(a) such Debt is secured by a Lien at all times confined solely to the
tangible asset (other than Inventory) the purchase price of which was financed
through the incurrence of such Purchase Money Debt;
(b) the aggregate principal amount of such Debt does not exceed the lesser
of
(i) the cost (including the principal amount of such Debt, whether or
not assumed) of the tangible asset (other than Inventory) subject to such
Lien, and
(ii) the fair value of such tangible asset (other than Inventory) at
the time of its acquisition (except that for new property for which there
is an established market, fair value shall equal cost);
(c) such Debt is incurred to acquire property within the limits imposed
pursuant to the provisions of Section 11.5; and
(d) such Debt, when aggregated with the principal amount of all such Debt
and Capitalized Lease Obligations of the Borrowers, does not exceed $10,000,000.
Person means an individual, corporation, limited liability company,
partnership, association, trust or unincorporated organization or a government
or any agency or political subdivision thereof.
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Pledge Agreement means each Stock Pledge Agreement dated as of the
Effective Date or thereafter, between a Borrower and the Administrative Agent,
for the benefit of the Lenders.
Pledged Securities means the securities from time to time subject to a
Pledge Agreement which, as of the Effective Date, shall be at least the
securities described on Schedule 1.1A - Pledged Securities.
Preferred Stock means up to 25,000 shares of Cumulative Redeemable
Preferred Stock issued by Syratech in connection with the consummation of the
Recapitalization.
Prime Rate means on any day the per annum rate of interest publicly
announced by the Administrative Agent at the Agent's Office from time to time as
its "prime rater" in effect on such day. The Prime Rate is a reference used by
the Administrative Agent in determining interest rates on certain loans and is
not intended to be the lowest rate of interest charged on any extension of
credit to any debtor.
Prime Rate Loan means a Revolving Credit Loan bearing interest determined
with reference to the Prime Rate.
Principal Officers means Leonard Florence and E. Merle Randolph, so long as
they are officers of Syratech.
Projections means the forecasted consolidated (a) balance sheets, (b)
statements of operations and (c) cash flow statements of Syratech and the
Consolidated Subsidiaries for five-year period beginning January 1, 1997,
prepared on a monthly basis as to the first year of such period and thereafter
on an annual basis, together with appropriate supporting details and a statement
of underlying assumptions.
Proportionate Share or Ratable Share or Ratable means, as to any Lender,
such Lender's share of an amount in Dollars or other property at the time of
determination equal to (i) the Commitment Percentage of such Lender, or (ii) if
the Commitments are terminated, the result, expressed as a percentage, obtained
by dividing the principal amount of the Loans then owing to such Lender by the
total principal amount of all Loans then owing to all Lenders, or (iii) if no
Loans are outstanding, the result, expressed as a percentage, obtained by
dividing such Lender's participation in the outstanding Letter of Credit
Obligations by the total Letter of Credit Obligations then outstanding.
Proprietary Rights means and includes, as to any Borrower, all of such
Borrower's now owned and hereafter arising or acquired: patents, patent rights,
copyrights, works which are the subject matter of copyrights, trademarks,
service marks, trade names, trade styles, patent, trademark and service mark
applications, and all licenses and rights related to any of the foregoing, all
extensions, renewals, reissues, divisions, continuations and continuations-in-
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part of any of the foregoing and all rights to sue for past, present and future
infringement of any of the foregoing.
Purchase Money Debt means
(a) Debt created to finance the payment of all or any part of the purchase
price of any tangible asset (other than Inventory),
(b) any Debt incurred at the time of or within 10 days prior to or after
the acquisition of any tangible asset (other than Inventory) for the purpose of
financing all or any part of the purchase price thereof, and
(c) any renewals, extensions or refinancings of the foregoing, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien means any Lien securing Purchase Money Debt, but only
if such Lien shall at all times be confined solely to the tangible asset (other
than Inventory) the purchase price of which was financed through the incurrence
of the Purchase Money Debt secured by such Lien.
Rauch means Rauch Industries, Inc., a North Carolina corporation and an
indirect wholly owned Subsidiary of Syratech.
Real Estate means all of the Borrowers' now owned or hereafter acquired
estates in real property, including, without limitation, all fees, leaseholds,
future interests and easements, together with all of the Borrowers' now owned or
hereafter acquired interests in the improvements and emblements thereon, the
fixtures attached thereto and the easements appurtenant thereto.
Recapitalization means the series of substantially simultaneous
transactions described in Registration Statement on Form S-4 filed by Syratech
Corporation with the SEC as amended, including by Amendment No. 3 dated as of
March 11, 1997, including the Merger and the issuance of the Senior Notes.
Receivables has the meaning specified in the definition "Collateral."
Register has the meaning specified in Section 13.1(d).
Reimbursement Agreement means, with respect to a Letter of Credit or
Bankers Acceptance outstanding on the Effective Date, the agreement or other
document pursuant to which the account party under such Letter of Credit is
obligated to reimburse the issuer thereof for any amounts drawn thereunder
(including such amounts as are evidenced from time to time by outstanding
Bankers Acceptances), and with respect to any Letter of Credit issued on or
after the Effective Date, such form of application therefor and form of
reimbursement agreement
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therefor (whether in a single document or several documents) as NationsBank may
employ in the ordinary course of business for its own account, with such
modifications thereto as may be agreed upon by NationsBank and the relevant
Borrower, provided that such application and agreement and any modifications
thereto are not inconsistent with the terms of this Agreement.
Reimbursement Obligations means the reimbursement or repayment obligations
of the Borrowers to NationsBank pursuant to Section 3.6 or pursuant to a
Reimbursement Agreement with respect to amounts that have been drawn under
Letters of Credit (including such amounts as are evidenced from time to time by
outstanding Bankers Acceptances).
Related Company means any (i) corporation or limited liability company
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as a Borrower; (ii) partnership, limited
liability company or other trade or business (whether or not incorporated) under
common control (within the meaning of Section 414(c) of the Code) with a
Borrower; (iii) member of the same affiliated service group (within the meaning
of Section 414(m) of the Code) as a Borrower, any entity described in clause (i)
above or any entity described in clause (ii) above, or (iv) any other entity
required to be aggregated with a Borrower pursuant to Section 141(o) of the
Code.
Release means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any Real Estate, including the movement
of Contaminants through or in the air, soil, surface water or groundwater.
Remedial Action means actions required to (i) clean up, remove, treat or in
any other way address Contaminants in the indoor or outdoor environment; (ii)
prevent the Release or threat of Release or minimize the further Release of
Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (iii) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
Required Lenders means, at any time, any combination of Lenders whose
Commitment Percentages at such time aggregate in excess of 50%.
Reserves means at any time the sum of the Usage Reserves and such other
reserves against the Borrowing Base as the Administrative Agent may determine
from time to time, in the exercise of its reasonable credit judgment, applying
standards customary to institutional asset-based lenders, to be an appropriate
response to an adverse change affecting the value of the Collateral.
Restricted Distribution by any Person means (a) the retirement, redemption,
purchase, or other acquisition for value of any capital stock or other equity
securities or partnership interests issued by such Person, (b) the declaration
or payment of any dividend or distribution on or with respect to any such
securities or partnership interests, (c) any loan or advance by such Person to,
or other investment by such Person in, the holder of any of such securities or
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partnership interests, and (d) any other payment (other than salaries of
employees or advances made in the ordinary course of business to employees for
travel and other expenses incurred in the ordinary course of business) by such
Person with respect to such securities or partnership interests.
Restricted Payment means (a) any redemption, repurchase or prepayment or
other retirement, prior to the stated maturity thereof or prior to the due date
of any regularly scheduled installment or amortization payment with respect
thereto, of any Debt, Subordinated Debt or other Indebtedness that is junior and
subordinate to the Loans, (b) the payment by any Person of the principal amount
of or interest on any Indebtedness (other than trade debt) owing to an Affiliate
of such Person or to any Affiliate of any such Affiliate, and (c) the payment of
any management, consulting or similar fee by any Person to any Affiliate of such
Person.
Revolving Credit Availability means, as of the date of determination, the
aggregate principal amount of Revolving Credit Loans available to be borrowed by
the Borrowers hereunder at the time in accordance with Section 2.1, which shall
be an amount equal to the excess, if any, of (a) the lesser of (i) the Revolving
Credit Facility minus the Reserves and (ii) the Borrowing Base on such date over
(b) the aggregate principal amount of Revolving Credit Loans outstanding on such
date.
Revolving Credit Facility means the principal sum of $130,000,000, as the
same may be reduced from time to time pursuant to the provisions of Section 2.5.
Revolving Credit Loans means loans made to the Borrowers pursuant to
Section 2.1 and refers to a Prime Rate Loan and a Eurodollar Rate Loan (each a
Type of Revolving Credit Loan).
Revolving Credit Note means each Revolving Credit Note made by the
Borrowers payable to the order of a Lender evidencing the joint and several
obligations of the Borrowers to pay the aggregate unpaid principal amount of all
Revolving Credit Loans made to it by such Lender (and any promissory note or
notes that may be issued from time to time in substitution, renewal, extension,
replacement or exchange therefor, whether payable to such Lender or a different
lender, whether issued in connection with a Person becoming a lender after the
Effective Date or otherwise), substantially in the form of Exhibit A hereto,
with all blanks properly completed, either as originally executed or as the same
may from time to time be supplemented, modified, amended, renewed, extended or
refinanced.
Rochard means Rochard, Inc., a New York corporation and an indirect wholly
owned Subsidiary of Syratech.
SEC means the Securities and Exchange Commission (and any successor
agency).
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Schedule of Inventory means a schedule delivered by the Borrowers to the
Administrative Agent pursuant to the provisions of Section 8.14(b).
Schedule of Receivables means a schedule delivered by the Borrowers to the
Administrative Agent pursuant to the provisions of Section 8.14(a)
Secured Obligations means, in each case whether now in existence or
hereafter arising,
(a) the principal of and interest and premium, if any, on the Revolving
Credit Loans,
(b) reimbursement and other obligations arising under Letter of Credit
Documents or otherwise relating to Letters of Credit,
(c) obligations from time to time under Interest Rate Protection
Agreements, and
(d) all other indebtedness, liabilities, obligations, overdrafts, covenants
and duties of the Borrowers or any of them, to the Administrative Agent or any
Lender or any of their respective Affiliates of every kind, nature and
description, direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated and whether or not evidenced
by any note and whether or not for the payment of money, under or in respect of
this Agreement, any Note, any Letter of Credit Documents or any of the other
Loan Documents.
Security Documents means each of the following:
(a) the Financing Statements,
(b) the Pledge Agreements, and
(c) each other writing executed and delivered by any Person securing the
Secured Obligations or evidencing such security.
Security Interest means the Liens of the Administrative Agent, for its
benefit and the benefit of the Lenders, on and in the Collateral effected hereby
or by any of the Security Documents or pursuant to the terms hereof or thereof.
Senior Note Indenture means the Indenture dated as of April 16, 1997
between Syratech and State Street Bank and Trust Company, Trustee.
Senior Notes means up to $205,000,000 in original principal amount of
Syratech's 11% Senior Notes due 2007, issued pursuant to the Senior Note
Indenture.
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Settlement Date means each Business Day after the Effective Date selected
by the Administrative Agent in its sole discretion subject to and in accordance
with the provisions of Section 4.8(c)(i) as of which a Settlement Report is
delivered by the Administrative Agent and on which settlement is to be made
among the Lenders in accordance with the provisions of Section 4.8.
Settlement Report means each report, substantially in the form attached
hereto as Exhibit E, prepared by the Administrative Agent and delivered to each
Lender and setting forth, among other things, as of the Settlement Date
indicated thereon and as of the next preceding Settlement Date, the aggregate
principal balance of all Revolving Credit Loans outstanding, each Lender's
Proportionate Share thereof, each Lender's Net Outstandings and all Non-Ratable
Loans made, and all payments of principal, interest and fees received, by the
Administrative Agent from the Borrowers during the period beginning on such next
preceding Settlement Date and ending on such Settlement Date.
Silvestri means Silvestri, Inc., a Delaware corporation and an indirect
wholly owned Subsidiary of Syratech.
Solvent means, as to any Borrower, that such Borrower has capital
sufficient to carry on its business and transactions in which it is about to
engage and is able to pay its Indebtedness as it matures and owns property
having a value, both at fair valuation and at present fair salable value,
greater than the amount required to pay its Indebtedness.
Subordinated Debt means any Debt of the Borrowers or any of them which is
subordinated to the Secured Obligations on terms and conditions acceptable to
the Required Lenders.
Subsidiary, when used to determine the relationship of a Person to another
Person, means a Person of which an aggregate of 50% or more of the stock of any
class or classes or 50% or more of other ownership interests is owned of record
or beneficially by such other Person or by one or more Subsidiaries of such
other Person or by such other Person and one or more Subsidiaries of such
Person, (a) if the holders of such stock or other ownership interests (i) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or other individuals performing similar
functions) of such Person, even though the right so to vote has been suspended
by the happening of such a contingency, or (ii) are entitled, as such holders,
to vote for the election of a majority of the directors (or individuals
performing similar functions) of such Person, whether or not the right so to
vote exists by reason of the happening of a contingency, or (b) in the case of
such other ownership interests, if such ownership interests constitute a
majority voting interest.
Syratech means Syratech Corporation, a Delaware corporation and the
survivor of the Merger.
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Syratech Hong Kong means Syratech (H.K.) Limited, a corporation organized
under the laws of Hong Kong, the common stock of which is owned by Syratech and
LFA.
Taxes means, with respect to any Person, any and all present or future
taxes, including any change in the basis of taxation (except a change in the
rate of taxation on the overall net income of such Person, by the jurisdiction,
or by any political subdivision or taxing authority of any such jurisdiction, in
which such Person has its principal office), levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including, without limitation, income, gross receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States of America, or any state,
local or foreign government or by any department, agency or other political
subdivision or taxing authority thereof and all interest, penalties, additions
to tax or similar liabilities with respect thereto.
Termination Date means the earlier of
(a) April 15, 2002, or such later date to which the termination of the
Revolving Credit Facility is extended pursuant to Section 2.5, and
(b) the date on which all Secured Obligations shall have been irrevocably
paid in full and the Revolving Credit Facility terminated.
Total Funded Debt to EBITDA means, for any specified accounting period, the
ratio of (a) the sum of the daily average outstanding principal amount of the
Loans (and, if any portion of such specified accounting period precedes the
Effective Date, the "Loans" under as defined in the Existing Credit Agreement)
during such period, plus the outstanding principal amount of all other Funded
Debt of Syratech and its Consolidated Subsidiaries, on a consolidated basis
(exclusive of the Loans) as of the last day of such period, to (b) EBITDA for
such period.
Towle means Towle Manufacturing Company, a Delaware corporation and a
indirect wholly owned Subsidiary of Syratech.
Type means a Prime Rate Loan or a Eurodollar Rate Loan.
Unfunded Vested Accrued Benefits means at any time, with respect to any
Benefit Plan that is a pension plan within the meaning of Section 3(2) of ERISA,
the amount (if any) by which (a) the present value of all vested nonforfeitable
benefits under such Benefit Plan exceeds (b) the fair market value of all such
Benefit Plan assets allocable to such benefits, as determined using such
reasonable actuarial assumptions and methods as are specified in the Schedule B
(Actuarial Information) to the most recent Annual Report (Form 5500) filed with
respect to such Benefit Plan.
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UCC means the Uniform Commercial Code as in effect from time to time in the
State of Georgia.
Unused Portion means on any date the amount by which the Revolving Credit
Facility in effect on such date exceeds the sum of (i) the outstanding principal
balance of all Loans on such date, plus (ii) the Letter of Credit Reserve (or
lesser amount of Letter of Credit Obligations) on such date if such date is the
last day of a month and, if not, on the last day of the month immediately
preceding such date.
Usage Reserves means, at any time, the sum of the Letter of Credit Reserve
and the Interest Rate Protection Reserve.
Valuable Transfer means and shall be deemed to have occurred with respect
to a Borrower, if proceeds of any Loan, Letter of Credit or other extension of
credit are used, directly or indirectly, to (i) make a loan, advance or capital
contribution to such Borrower, (ii) acquire from such Borrower debt securities
or other obligations of such Borrower, (iii) acquire property, any interest in
which is transferred to such Borrower (but only to the extent of the economic
benefit to such Borrower of the interest so transferred), (iv) purchase equity
securities of such Borrower, or (v) otherwise confer, directly or indirectly, an
economic benefit on such Borrower (but only to the extent of such benefit).
Wallace means Wallace International Silversmiths, Inc., a Delaware
corporation and an indirect wholly owned Subsidiary of Syratech.
Section 1.2 Other Referential Provisions.
(a) All terms in this Agreement, the Exhibits and Schedules hereto shall
have the same defined meanings when used in any other Loan Documents, unless the
context shall require otherwise.
(b) Except as otherwise expressly provided herein, all accounting terms not
specifically defined or specified herein shall have the meanings generally
attributed to such terms under GAAP including, without limitation, applicable
statements and interpretations issued by the Financial Accounting Standards
Board and bulletins, opinions, interpretations and statements issued by the
American Institute of Certified Public Accountants or its committees.
(c) All personal pronouns used in this Agreement, whether used in the
masculine, feminine or neuter gender, shall include all other genders; the
singular shall include the plural, and the plural shall include the singular.
(d) 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 provisions of this Agreement.
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(e) Titles of Articles and Sections in this Agreement are for convenience
only, do not constitute part of this Agreement and neither limit nor amplify the
provisions of this Agreement, and all references in this Agreement to Articles,
Sections, Subsections, paragraphs, clauses, subclauses, Schedules or Exhibits
shall refer to the corresponding Article, Section, Subsection, paragraph, clause
or subclause of this Agreement, or to the corresponding Schedule or Exhibit
attached to this Agreement, unless specific reference is made to the articles,
sections or other subdivisions or schedules or exhibits of or to another
document or instrument.
(f) References to any document or agreement (including this Agreement)
shall include references to such document or agreement as amended, novated,
supplemented, modified or replaced from time to time, so long as and to the
extent that such amendment, novation, supplement, modification or replacement is
either not prohibited by the terms of this Agreement or is consented to by the
Required Lenders and the Administrative Agent (or otherwise in accordance with
the terms hereof).
(g) Except where specifically restricted, reference to a party to a Loan
Document includes that party and its successors and assigns permitted hereunder
and under such Loan Document.
(h) References to the time of day are to the time of day in the city in
which the Agent's Office is located.
(i) The terms "payment", "prepayment", "distribution" and similar terms
used in the definitions "Restricted Distribution" and "Restricted Payment" and
in Section 11.6, shall include payment by means of the transfer of funds or of
property and, in the event of a transfer of property, the payment shall be
deemed to be in an amount equal to the greater of the fair market value and the
book value of the property at the time of the transfer.
(j) Whenever from the context it appears appropriate, the term "Loan",
including such term as used as part of a defined term including the term "Loan",
shall mean and include a Loan made by all Lenders to the Borrowers as well as a
Lender's Proportionate Share of any such Loan.
(k) Each reference herein to "reasonable attorneys' fees" or "reasonable
counsel fees" shall mean and refer to the reasonable fees (and expenses)
actually incurred by the party retaining such attorneys or counsel, computed on
the basis customarily employed by such attorneys or counsel and not on the basis
of a percentage of recovery or percentage of claim or other similar basis. Each
party hereto knowingly and intentionally waives any benefit of any otherwise
applicable statutory provision that would entitle it to recover attorneys' fees
on such a percentage of basis.
(1) Whenever the phrase "to the knowledge of the Borrowers," or words of
similar import relating to the knowledge of the Borrowers are used herein, such
phrase shall mean and refer to (i) the actual knowledge of the Principal
Officers or (ii) the knowledge that the
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Principal Officers would have obtained if they had engaged in good faith in the
diligent performance of their duties, including the making of such reasonable
specific inquiries as may be necessary of the appropriate persons in a good
faith attempt to ascertain the accuracy of the matter as to which such phrase
relates.
(m) The terms accounts, chattel paper, contract rights, documents,
equipment, instruments, general intangibles, inventory and proceeds, as and when
used in this Agreement (without being capitalized) or the Security Documents,
shall have the meanings given those terms in the UCC.
(n) Unless otherwise specified herein, any Lien created or purported to be
created hereby or by or pursuant to any Loan Document in favor of the
Administrative Agent and each payment made to the Administrative Agent, is and
shall be deemed to have been created in favor of the Administrative Agent, for
its benefit as Administrative Agent and for the Ratable benefit of the Lenders,
or made to and received by the Administrative Agent for the Ratable benefit of
the Lenders.
(o) When used without other designation of ownership, the term "Subsidiary"
means a Subsidiary of Syratech.
Section 1.3 Exhibits and Schedules. All Exhibits and Schedules attached
hereto are by reference made a part hereof.
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ARTICLE 2
REVOLVING CREDIT FACILITY
Section 2.1 Revolving Credit Loans. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, each Lender agrees, severally but not jointly, to make
Revolving Credit Loans to the Borrowers from time to time from the Effective
Date to but not including the Termination Date, as requested or deemed
requested by the Borrowers in accordance with the provisions of Section 2.2, in
amounts equal to such Lender's Proportionate Share of each Revolving Credit Loan
requested or deemed requested hereunder, up to an aggregate amount at any one
time outstanding equal to such Lender's Commitment Percentage of the lesser of
(i) the Revolving Credit Facility less the Reserves and (ii) the Borrowing Base;
provided, however, that no Borrowing of a Revolving Credit Loan shall exceed the
Revolving Credit Availability at the time and the aggregate principal amount of
all outstanding Loans under the Revolving Credit Facility (after giving effect
to the Loans requested) shall not exceed the Borrowing Base. It is expressly
understood and agreed that the Lenders may and intend to use the Borrowing Base
as a maximum ceiling on Loans made to the Borrowers under the Revolving Credit
Facility; provided, however, that it is agreed that should the aggregate
outstanding amount of such Loans exceed the ceiling so determined or any other
limitation set forth in this Agreement, such Loans shall nevertheless constitute
Secured Obligations and, as such, shall be entitled to all benefits thereof and
security therefor. The principal amount of any Loan made under the Revolving
Credit Facility which is repaid may, subject to the terms and conditions of this
Agreement, be reborrowed by the Borrowers in accordance with the terms of this
Section 2.1. The Administrative Agent's and each Lender's books and records
reflecting the date and the amount of each Loan made under the Revolving Credit
Facility and each repayment of principal thereof shall constitute prima facie
evidence of the accuracy of the information contained therein, subject to the
provisions of Section 4.8.
Section 2.2 Manner of Borrowing Revolving Credit Loans. Borrowings under
the Revolving Credit Facility shall be made as follows:
(a) Requests for Borrowing.
(i) Prime Rate Loans. Unless the Borrowers shall previously have
requested a Eurodollar Rate Loan and authorized the application of the
proceeds thereof to any purpose described in clauses (A) through (E) below
and the Lenders shall have disbursed such Eurodollar Rate Loan for such
purpose, a request for the Borrowing of a Prime Rate Loan shall be made, or
shall be deemed to be made, in the following manner:
(A) With respect to the Initial Loan (which may only be a Prime
Rate Loan), the Borrowers shall give the Administrative Agent an
Initial Notice of Borrowing at least two Business Days prior to the
proposed date of the Borrowing, and, with respect to each subsequent
Borrowing, the Borrowers may
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request a Prime Rate Loan by giving the Administrative Agent a Notice
of Borrowing, before 11:30 a.m. on the proposed date of the
Borrowing, provided that if such notice is received after 11:30 a.m.
on the proposed date of Borrowing, the proposed Borrowing may be
postponed to the next Business Day.
(B) Whenever a check or other item is presented to a Disbursing
Bank for payment against a Controlled Disbursement Account in an
amount greater than the then available balance in such account, such
Disbursing Bank shall, and, is hereby irrevocably authorized by the
Borrowers to, give the Administrative Agent notice thereof, which
notice shall be deemed to be a request for a Prime Rate Loan on the
date of such notice in an amount equal to the excess of such check or
other item over such available balance, and such request shall be
irrevocable.
(C) Unless payment is otherwise made by the Borrowers (or any of
them), the coming due of any amount required to be paid under this
Agreement or any of the Notes as interest shall be deemed to be a
request for a Prime Rate Loan on the due date in the amount required
to pay such interest, and such request shall be irrevocable.
(D) Unless payment is otherwise made by the Borrowers (or any of
them), the coming due of any other Secured Obligation shall be deemed
to be a request for a Prime Rate Loan on the due date in the amount
then so due, and such request shall be irrevocable.
(E) The receipt by the Administrative Agent of notification from
NationsBank to the effect that a drawing has been made under a Letter
of Credit and that the Borrowers have failed to reimburse NationsBank
therefor in accordance with the terms of the Letter of Credit, any
applicable Reimbursement Agreement and Article 3, shall be deemed to
be a request for a Prime Rate Loan on the date such notification is
received in the amount of such drawing which is unreimbursed.
(ii) Eurodollar Rate Loans. At any time after the Effective Date, the
Borrowers may request a Eurodollar Rate Loan under the Revolving Credit
Facility by giving the Administrative Agent a Notice of Borrowing (which
notice shall be irrevocable) not later than 11:00 a.m. on the date three
Business Days before the day on which the requested Eurodollar Rate Loan is
to be made.
(iii) Written Confirmations. Each written confirmation of a Notice of
Borrowing shall be signed by an officer or agent of the requesting Borrower
or Borrowers' representative in accordance with the provisions of Section
4.17 designated to give such notice by its Board of Directors, and the
Borrowers shall notify the Administrative Agent in writing of the names of
such officers and shall provide the
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Administrative Agent with specimen signatures of such officers (the
Authorized Officers). The Administrative Agent shall be entitled to rely
conclusively on each such Authorized Officer's authority to request
Revolving Credit Loans on behalf of the Borrowers until the Administrative
Agent receives from the Borrowers written notice to the contrary. The
Administrative Agent shall have no duty to verify the authenticity of the
signature appearing on any such notice.
(iv) Notification of Lenders. In the case of each Eurodollar Rate Loan
and, unless the Administrative Agent has elected periodic settlements
pursuant to Section 4.8, in the case of each Prime Rate Loan, the
Administrative Agent shall promptly notify the Lenders of any Notice of
Borrowing given or deemed given pursuant to this Section 2.2(a) by 12:00
noon on the proposed Borrowing date (in the case of Prime Rate Loans) or by
3:00 p.m. two Business Days before the proposed Borrowing date (in the case
of Eurodollar Rate Loans). Not later than 2:30 p.m. on the proposed
Borrowing date, each Lender will make available to the Administrative
Agent, for the account of the Borrowers, at the Agent's Office in funds
immediately available to the Administrative Agent, such Lender's
Proportionate Share of such Prime Rate Loan or Eurodollar Rate Loan, as the
case may be.
(b) Disbursement of Loans. Each Borrower hereby irrevocably authorizes the
Administrative Agent to disburse the proceeds of each Borrowing requested, or
deemed to be requested, pursuant to Section 2.2(a) as follows:
(i) the proceeds of each Borrowing requested under Section
2.2(a)(i)(A) (other than the Borrowing of the Initial Loans), 2.2(a)(i)(B)
or 2.2(a)(ii) shall be disbursed by the Administrative Agent in Dollars in
immediately available funds by wire transfer to a Controlled Disbursement
Account or, in the absence of a Controlled Disbursement Account, by wire
transfer to such other account as may be agreed upon by the Borrowers and
the Administrative Agent from time to time, and the proceeds of the Initial
Loans under Section 2.2(a)(i)(A) shall be disbursed in accordance with the
Initial Notice of Borrowing;
(ii) the proceeds of each Borrowing deemed requested under Section
2.2(a)(i)(C) or (D) shall be disbursed by the Administrative Agent by way
of direct payment of the relevant interest or Secured Obligation; and
(iii) the proceeds of each Borrowing deemed requested under Section
2.2(a)(i)(E) shall be disbursed by the Administrative Agent directly to
NationsBank on behalf of the Borrowers.
Section 2.3 Repayment of Revolving Credit Loans. The Revolving Credit Loans
will be repaid as follows:
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(a) The outstanding principal amount of all the Revolving Credit Loans is
due and payable, and shall be repaid by the Borrowers in full together with
accrued and unpaid interest on the amount repaid to the date of repayment, on
the Termination Date.
(b) If at any time the aggregate outstanding unpaid principal amount of the
Revolving Credit Loans then outstanding exceeds the lesser of the amounts
referred to in clauses (i) and (ii) of Section 2.1, the Borrowers shall repay
the Revolving Credit Loans in an amount sufficient to reduce the aggregate
unpaid principal amount of such Loans by an amount equal to such excess,
together with accrued and unpaid interest on the amount repaid to the date of
repayment.
(c) The Borrowers hereby instruct the Administrative Agent to repay the
Revolving Credit Loans outstanding on any day in an amount equal to the amount
received by the Administrative Agent on such day pursuant to Section 8.1(b);
provided that the amount received pursuant to Section 8.1(b) shall be applied
first to repayment of Prime Rate Loans and then, subject to the provisions of
Section 4.16 to repayment of Eurodollar Rate Loans.
Section 2.4 Revolving Credit Note. Each Lender's Revolving Credit Loans and
the joint and several obligation of the Borrowers to repay such Loans shall also
be evidenced by a single Revolving Credit Note payable to the order of such
Lender. Each Revolving Credit Note shall be dated the Effective Date (or later
"effective date" under any Assignment and Acceptance) and be duly and validly
executed and delivered by each Borrower.
Section 2.5 Reduction of Facility. The amount of the Revolving Credit
Facility may be permanently reduced by the Borrowers from time to time, without
premium or penalty, on not less than five Business Days' notice to the
Administrative Agent, Ratably as to the Lenders' respective Commitments, in an
amount equal to $5,000,000 or an integral multiple of $1,000,000 in excess
thereof and the Revolving Credit Facility shall be automatically reduced to zero
on the Termination Date.
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ARTICLE 3
LETTER OF CREDIT FACILITY
Section 3.1 Agreement to Issue. Upon the terms and subject to the
conditions of, and in reliance upon the representations and warranties made
under, this Agreement, NationsBank agrees to issue for the account of any
Borrower one or more Letters of Credit in accordance with this Article 3, from
time to time during the period commencing on the Effective Date and ending on
the Termination Date.
Section 3.2 Amounts. NationsBank shall not have any obligation to issue any
Letter of Credit:
(a) in a face amount greater than Letter of Credit Availability at such
time; or
(b) which has a stated term longer than one calendar year (but which may
include a renewal or "evergreen" provision that could, subject to the provisions
of Section 3.4(d), result in such Letter of Credit remaining outstanding for
more than one year) or an expiration date (or final maturity date of any time
draft permitted to be presented thereunder) after the last Business Day that is
more than 30 days prior to the Termination Date.
Section 3.3 Conditions. The obligation of NationsBank to issue any Letter
of Credit is subject to the satisfaction of (a) the applicable conditions
precedent contained in Article 5 and (b) the following additional conditions
precedent in a manner satisfactory to the Administrative Agent and NationsBank:
(i) the Borrowers shall have delivered to NationsBank and the
Administrative Agent at such times and in such manner as NationsBank or the
Administrative Agent may prescribe (including by electronic submission) an
application in form and substance satisfactory to NationsBank and the
Administrative Agent for the issuance of the Letter of Credit, a
Reimbursement Agreement (which may be a master reimbursement agreement
applicable to more than one Letter of Credit) and such other documents as
may be required pursuant to the terms thereof, and the form and terms of
the proposed Letter of Credit shall be satisfactory to NationsBank and the
Administrative Agent; and
(ii) as of the date of issuance, no order of any Governmental
Authority shall purport by its terms to enjoin or restrain banks generally
from issuing letters of credit of the type and in the amount of the
proposed Letter of Credit, and no law, rule or regulation applicable to
banks generally and no request or directive (whether or not having the
force of law) from any Governmental Authority shall prohibit the issuance
or request that NationsBank refrain from the issuance of letters of credit
generally or the issuance of such Letter of Credit.
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Section 3.4 Issuance of Letters of Credit.
(a) Request for Issuance. The Borrowers shall give NationsBank written
notice of the Borrowers' request for the issuance of any standby Letter of
Credit no later than two Business Days prior to the proposed date of issuance
and of any commercial or documentary Letter of Credit no later than the Business
Day prior to the date of issuance. Such notice shall be irrevocable and shall
specify the original face amount of the Letter of Credit requested, the
effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in multiple draws, the date on which such requested Letter of Credit
is to expire (which date shall be a Business Day earlier than the 30th day prior
to the Termination Date), the purpose for which such Letter of Credit is to be
issued and the beneficiary of the requested Letter of Credit. The Borrowers
shall attach to such notice the form of the Letter of Credit that the Borrowers
request to be issued.
(b) Responsibilities of the Agent; Issuance. The Administrative Agent shall
determine (including at the request of NationsBank, as issuer), as of the
Business Day immediately preceding the requested effective date of issuance of
the Letter of Credit set forth in the notice from the Borrowers pursuant to
Section 3.4(a), the amount of the Letter of Credit Availability, provided, that
if NationsBank has been advised by the Administrative Agent that the Letter of
Credit Reserve is being maintained in the full amount of the Letter of Credit
Facility, then NationsBank may make such determination with reference to the
Letter of Credit Facility alone. If (i) the form of the Letter of Credit
delivered by the Borrowers to NationsBank is acceptable to NationsBank and, as
to any standby Letter of Credit, the Administrative Agent in their sole,
reasonable discretion, (ii) the undrawn face amount of the requested Letter of
Credit is less than or equal to the Letter of Credit Availability and (iii) the
Administrative Agent has received a certificate from the Borrowers stating that
the applicable conditions set forth in Article 5 have been satisfied (and,
absent prior written notice to the contrary, submission of a duly executed
(including by tested electronic submission) Letter of Credit application shall
constitute a representation by the Borrower(s) to such effect), then NationsBank
will cause the Letter of Credit to be issued.
(c) Notice of Issuance. Promptly after the issuance of any standby Letter
of Credit in a face amount greater than $250,000, NationsBank shall give the
Administrative Agent written or facsimile notice, or telephonic notice confirmed
promptly thereafter in writing, of the issuance of such Letter of Credit, and
the Administrative Agent shall give each Lender written or facsimile notice, or
telephonic notice confirmed promptly thereafter in writing, of the issuance of
such Letter of Credit. NationsBank shall furnish a monthly report of Letter of
Credit and Bankers Acceptance activity to the Administrative Agent not later
than the 10th day of each month with respect to the preceding calendar month
showing Letters of Credit issued and outstanding and Bankers Acceptances created
and outstanding by account party, face amount and expiration date or maturity
date.
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(d) No Extension or Amendment. No Letter of Credit shall be extended or
amended unless the requirements of this Section 3.4 are met as though a new
Letter of Credit were being requested and issued.
Section 3.5 Duties of NationsBank. Any action taken or omitted to be taken
by NationsBank under or in connection with any Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct, shall not
result in any liability of NationsBank to any Lender or relieve any Lender of
its obligations hereunder to NationsBank. In determining whether to pay under
any Letter of Credit, NationsBank shall have no obligation to any Lender other
than to confirm that any documents required to be delivered under such Letter of
Credit in connection with such drawing have been presented and appear on their
face to comply with the requirements of such Letter of Credit.
Section 3.6 Payment of Reimbursement Obligations.
(a) Payment to Issuer. Notwithstanding any provisions to the contrary in
any Reimbursement Agreement, the Borrowers, jointly and severally, agree to
reimburse NationsBank for any drawings (whether partial or full) under each
Letter of Credit issued by NationsBank, including, without being limited to but
without duplication paying the amount of any Bankers Acceptance upon
presentation thereof at maturity, and agree to pay to NationsBank the amount of
all other Reimbursement Obligations and other amounts payable to NationsBank
under or in connection with such Letter of Credit immediately when due,
irrespective of any claim, set-off, defense or other right which any Borrower
may have at any time against NationsBank or any other Person.
(b) Recovery or Avoidance of Payments. In the event any payment by or on
behalf of the Borrowers with respect to any Letter of Credit (or any
Reimbursement Obligation relating thereto) received by NationsBank, or by the
Administrative Agent and distributed by the Administrative Agent to the Lenders
on account of their respective participations therein, is thereafter set aside,
avoided or recovered from NationsBank or the Administrative Agent in connection
with any receivership, liquidation or bankruptcy proceeding, the Lenders shall,
upon demand by the Administrative Agent, pay to the Administrative Agent, for
the account of the Administrative Agent or NationsBank, their respective
Proportionate Shares of such amount set aside, avoided or recovered together
with interest at the rate required to be paid by the Administrative Agent (or
NationsBank) upon the amount required to be repaid by it.
Section 3.7 Participations.
(a) Purchase of Participations. On the Effective Date with respect to any
Letters of Credit or Bankers Acceptances outstanding on such date and
immediately upon issuance by NationsBank of a Letter of Credit or creation by
NationsBank of a Bankers Acceptance with respect to all other Letters of Credit,
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received without recourse or warranty, an undivided interest and
participation in such Letter of Credit or Bankers Acceptance, equal to
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such Lender's Proportionate Share of the face amount thereof (including, without
limitation, all obligations of the Borrowers with respect thereto, other than
amounts owing to NationsBank under Section 4.2(c), and any security therefor or
guaranty pertaining thereto).
(b) Sharing of Letter of Credit Payments. In the event that NationsBank
makes a payment under any Letter of Credit and NationsBank shall not have been
repaid such amount pursuant to Section 3.6, then NationsBank shall be deemed to
have made a Non-Ratable Loan in the amount of such payment, and notwithstanding
the occurrence or continuance of a Default or Event of Default at the time of
such payment, such Non-Ratable Loan shall be subject to the provisions of
Section 4.8(b) and the absolute obligations of the Lenders to pay for their
respective participation interests therein.
(c) Sharing of Reimbursement Obligation Payments. Whenever NationsBank
receives a payment from or on behalf of the Borrowers on account of a
Reimbursement Obligation as to which the Administrative Agent has previously
received for the account of NationsBank payment from a Lender pursuant to this
Section 3.7, NationsBank shall promptly pay to the Administrative Agent, for the
benefit of such Lender, such Lender's Proportionate Share of the amount of such
payment from the Borrowers in Dollars. Each such payment shall be made by
NationsBank on the Business Day on which NationsBank receives immediately
available funds from the Administrative Agent pursuant to the immediately
preceding sentence, if received prior to 12:00 noon on such Business Day, and
otherwise on the next succeeding Business Day.
(d) Documentation. Upon the request of any Lender, the Administrative Agent
shall furnish to such Lender copies of any Letter of Credit, Reimbursement
Agreement or application for any Letter of Credit and such other documentation
as may reasonably be requested by such Lender.
(e) Obligations Irrevocable. The obligations of each Lender to make
payments to the Administrative Agent with respect to any Letter of Credit and
their participations therein pursuant to the provisions of Section 4.8(c) hereof
or otherwise and the obligations of the Borrowers to make payments to
NationsBank or to the Administrative Agent, for the account of the Lenders,
shall be irrevocable, shall not be subject to any qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of this
Agreement (assuming, in the case of the obligations of the Lenders to make such
payments, that the Letter of Credit has been issued in accordance with Section
3.4), including, without limitation, any of the following circumstances:
(i) Any lack of validity or enforceability of this Agreement or any of
the other Loan Documents;
(ii) The existence of any claim, set-off, defense or other right which
any Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of any Letter of Credit (or any Person for whom
any such transferee may be
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acting), any Lender, NationsBank or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying transactions
between any Borrower or any other Person and the beneficiary named in any
Letter of Credit);
(iii) Any draft, certificate or any other document presented under the
Letter of Credit upon which payment has been made in good faith and
according to its terms proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) The surrender or impairment of any Collateral, Real Estate or any
other security for the Secured Obligations or the performance or observance
of any of the terms of any of the Loan Documents;
(v) The occurrence of any Default or Event of Default; or
(vi) NationsBank's or the Administrative Agent's failure to deliver
the notice provided for in Section 3.4(c).
Section 3.8 Indemnification. Exoneration.
(a) Indemnification. In addition to amounts payable as elsewhere provided
in this Article 3, the Borrowers agree, jointly and severally, to protect,
indemnify, pay and save the Lenders and the Administrative Agent harmless from
and against any and all claims, demands liabilities, damages, losses, costs,
charges and expenses (including reasonable attorneys' fees) which any Lender or
the Administrative Agent may incur or be subject to as a consequence, directly
or indirectly, of
(i) the issuance of any Letter of Credit or creation of any Bankers
Acceptance, other than as a result of its gross negligence or willful
misconduct, as determined by a court of competent jurisdiction, or
(ii) the failure of NationsBank to honor a drawing under any Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto governmental authority (all such
acts or omissions being hereinafter referred to collectively as Government
Acts).
(b) Assumption of Risk by the Borrowers. As among the Borrowers, the
Lenders and the Administrative Agent, the Borrowers assume all risks of the acts
and omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, subject to the provisions of the applications for the issuance of
Letters of Credit, the Lenders and the Administrative Agent shall not be
responsible for:
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(i) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with respect to
any of the Letters of Credit, even if it should prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part,
which may prove to be invalid or ineffective for any reason;
(iii) the failure of the beneficiary of any Letter of Credit to comply
duly with conditions required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher;
(v) errors in interpretation of technical terms,
(vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or
of the proceeds thereof;
(vii) the misapplication by the beneficiary of any Letter of Credit of
the proceeds of any drawing under such Letter of Credit, or
(viii) any consequences arising from causes beyond the control of the
Lenders or the Administrative Agent, including, without limitation, any
Government Acts.
None of the foregoing shall affect, impair or prevent the vesting of any of the
Administrative Agent's rights or powers under this Section 3.8.
(c) Exoneration. In furtherance and extension, and not in limitation, of
the specific provisions set forth above, any action taken or omitted by the
Administrative Agent, NationsBank or any Lender under or in connection with any
of the Letters of Credit or any related certificates, if taken or omitted in
good faith, shall not result in any liability of any Lender or the
Administrative Agent to the Borrowers (or any of them) or relieve the Borrowers
(or any of them) of any of their obligations hereunder to any such Person.
Section 3.9 Supporting Letter of Credit; Cash Collateral Account. Upon the
occurrence of an Event of Default or, if, notwithstanding the provisions of
Section 3.2(b), any Letter of Credit or Bankers Acceptance is outstanding on the
Termination Date, then on or prior to the Termination Date, the Borrowers shall,
promptly on demand by the Administrative Agent, deposit with the Administrative
Agent, for the ratable benefit of the Lenders, with respect to each Letter of
Credit and Bankers Acceptance then outstanding, as the Administrative Agent
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shall specify, either (a) a standby letter of credit (a Supporting Letter of
Credit) in form and substance satisfactory to the Administrative Agent, issued
by an issuer satisfactory to the Administrative Agent in its reasonable judgment
in an amount equal to 100% of the greatest amount for which such Letter of
Credit may be drawn or the face amount of such Bankers Acceptance, as the case
may be, under which Supporting Letter of Credit the Administrative Agent shall
be entitled to draw amounts necessary to reimburse the Administrative Agent and
the Lenders for payments made by the Administrative Agent and the Lenders under
such Letter of Credit, such Bankers Acceptance or under any reimbursement or
guaranty agreement with respect thereto, or (b) Cash Collateral in an amount
equal to 100% of the amount necessary to reimburse the Administrative Agent and
the Lenders for payments made by the Administrative Agent and the Lenders under
such Letter of Credit, such Bankers Acceptance or under any reimbursement or
guaranty agreement with respect thereto. Such Supporting Letter of Credit or
Cash Collateral shall be held by the Administrative Agent for the benefit of the
Lenders, as security for, and to provide for the payment of, the Reimbursement
Obligations. In addition, the Administrative Agent may at any time after the
occurrence of such an Event of Default that is continuing or the Termination
Date apply any or all of such Cash Collateral to the payment of any or all of
the Secured Obligations then due and payable. The Cash Collateral shall be
deposited in the Cash Collateral Account or an Investment Account and shall be
administered in accordance with the provisions of Section 4.16. If the
Administrative Agent has demanded and received Cash Collateral by reason of the
occurrence of an Event of Default and such Event of Default has been cured or
waived by the requisite Lenders (as evidenced by a written acknowledgement
thereof by the Administrative Agent) and no other Default or Event of Default
has occurred and is continuing or would exist after giving effect to any
requested release of such Cash Collateral, and the Borrowers have certified such
fact to the Lenders and the Administrative Agent, then the Administrative Agent
shall release to the Borrowers, upon their request, such Cash Collateral.
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ARTICLE 4
GENERAL LOAN PROVISIONS
Section 4.1 Interest.
(a) Prime Rate Loans. Subject to the provisions of Section 4.1(d), the
Borrowers will pay interest on the unpaid principal amount of each Prime Rate
Loan, for each day from the day such Loan is made until such Loan is paid
(whether at maturity, by reason of prepayment or acceleration, or otherwise) or
is converted to a Loan of a different Type, at a rate per annum equal to the sum
of (i) the Applicable Margin and (ii) the Prime Rate, payable monthly in arrears
as it accrues on each Interest Payment Date.
(b) Eurodollar Rate Loans. Subject to the provisions of Section 4.1(d), the
Borrowers will pay interest on the unpaid principal amount of each Eurodollar
Rate Loan for the applicable Interest Period at a rate per annum equal to the
sum of (i) the Applicable Margin and (ii) the Eurodollar Rate, payable in
arrears as it accrues on each Interest Payment Date, on the last day of such
Interest Period, when such Eurodollar Rate Loan is due (whether at maturity, by
reason of prepayment or acceleration or otherwise) or is continued or converted
to a Loan of a different Type.
(c) Other Secured Obligations. The Borrowers will, to the extent permitted
by Applicable Law, pay interest on the unpaid principal amount of any Secured
Obligation that is due and payable, other than the Loans, in accordance with
Section 4.1(a) or (d), as applicable, as if such Secured Obligation were a Prime
Rate Loan.
(d) Default Rate. If there shall occur and be continuing an Event of
Default, at the election of the Required Lenders, the unpaid principal amount of
the Loans and other Secured Obligations shall no longer bear interest in
accordance with the terms of Section 4.1(a), 4.1(b) or 4.1(c), but shall bear
interest for each day from the date of such Event of Default until such Event of
Default shall have been cured or waived at a rate per annum equal to the sum of
(i) the Default Margin and (ii) the rate otherwise applicable to such Loan or
other Secured Obligation, payable on demand. The interest rate provided for in
the preceding sentence shall, to the extent permitted by Applicable Law, apply
to and accrue on the amount of any judgment entered with respect to any Secured
Obligation and shall continue to accrue at such rate during any proceeding
described in Section 12.1(f) or (g).
(e) Calculation of Interest. The interest rates provided for in Sections
4.1(a), (b), (c) and (d) shall be computed on the basis of a year of 360 days
and the actual number of days elapsed. Each interest rate determined with
reference to the Prime Rate shall be adjusted automatically as of the opening of
business on the effective date of each change in the Prime Rate.
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(f) Maximum Rate. It is not intended by the Lenders, and nothing contained
in this Agreement or the Notes shall be deemed, to establish or require the
payment of a rate of interest in excess of the maximum rate permitted by
Applicable Law (the Maximum Rate). If, in any month, the Effective Interest
Rate, absent such limitation, would have exceeded the Maximum Rate, then the
Effective Interest Rate for that month shall be the Maximum Rate, and, if in
future months, the Effective Interest Rate would otherwise be less than the
Maximum Rate, then the Effective Interest Rate shall remain at the Maximum Rate
until such time as the amount of interest paid hereunder equals the amount of
interest which would have been paid if the same had not been limited by the
Maximum Rate. In the event that, upon payment in full of the Secured
Obligations, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would have been
paid or accrued if the Effective Interest Rate had at all times been in effect,
then the Borrowers shall, to the extent permitted by Applicable Law, pay to the
Lenders an amount equal to the excess, if any, of (i) the lesser of (ii) the
amount of interest which would have been charged if the Maximum Rate had, at all
times, been in effect (iii) the amount of interest which would have accrued had
the Effective Interest Rate, at all times, been in effect and (iv) the amount of
interest actually paid or accrued under this Agreement. In the event the Lenders
receive, collect or apply as interest any sum in excess of the Maximum Rate,
such excess amount shall be applied to the reduction of the principal balance of
the Secured Obligations, and if no such principal is then outstanding, such
excess or part thereof remaining, shall be paid to the Borrowers. For the
purposes of computing the Maximum Rate, to the extent permitted by applicable
law, all interest and charges, discounts, amounts, premiums or fees deemed to
constitute interest under applicable law, shall be amortized, prorated,
allocated and spread in substantially equal parts throughout the full term of
this Agreement. The provisions of this Section 4.1(f) shall be deemed to be
incorporated into every Loan Document (whether or not any provision of this
Section 4.1(f) is specifically referred to therein).
Section 4.2 Certain Fees.
(a) Agent Fee. For administration and other services performed by the
Administrative Agent in connection with its continuing administration of this
Agreement, the Borrowers shall pay to the Administrative Agent, for its own
account and not for the account of the Lenders, an annual fee of $75,000,
payable on the Effective Date and on each anniversary thereof thereafter for so
long as any Secured Obligation shall remain outstanding or the Revolving Credit
Facility shall not have been terminated.
(b) Commitment Fee. In connection with and as consideration for the holding
available for the use of the Borrowers hereunder the full amount of the
Revolving Credit Facility, the Borrowers will pay a fee to the Administrative
Agent, for the Ratable benefit of the Lenders, for each day from the Effective
Date until the Termination Date, in an amount equal to l/2 of 1% per annum of
the Unused Portion of the Revolving Credit Facility for such day. Such fee shall
be payable in arrears on each Interest Payment Date and on the date of any
permanent reduction in the Revolving Credit Facility.
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(c) Letter of Credit and Acceptance Fees.
(i) The Borrowers agree to pay to the Administrative Agent, for the
Ratable benefit of the Lenders, Letter of Credit fees equal to (A) 1/4 of
1% on the face amount of each commercial or documentary Letter of Credit
and (B) the Applicable Margin applicable from time to time to Eurodollar
Rate Loans on the average daily aggregate Letter of Credit Amount of all
standby Letters of Credit from time to time outstanding during the term of
this Agreement. Such fees shall be payable to the Administrative Agent for
the Ratable benefit of the Lenders (x) as to commercial or documentary
Letters of Credit, on the date of the first drawing thereunder or if the
Letter of Credit expires undrawn, on the date of expiration and (y) as to
standby Letters of Credit, annually in advance, on the date of issuance and
annually thereafter so long as such standby Letter of Credit is
outstanding, and all such fees shall be calculated based on a year of 360
days and the actual number of days in the stated term thereof. On the
Effective Date, the Borrowers shall pay to the Administrative Agent for the
Ratable benefit of the Lenders, an additional fee on standby Letters of
Credit outstanding on the Effective Date at a rate equal to the Applicable
Margin applicable on such date to Eurodollar Rate Loans, less 1%, on the
Letter of Credit Amount of each such Letter of Credit, for the period from
the Effective Date to the expiration date of such Letter of Credit (or such
earlier date to which all fees due on such Letter of Credit as of its
issuance had already been paid). As of the Effective Date, a fee in an
amount equal to 1/4 of 1% on the face amount of each commercial or
documentary Letter of Credit outstanding on the Effective Date shall accrue
and be payable as provided in clause (x) above. In the event any standby
Letter of Credit is reduced, canceled or terminated prior to the expiration
of its stated term, the Lenders will make appropriate adjustments in such
fees based on the actual average daily face amount of outstanding standby
Letters of Credit and will refund to the Borrowers the amount of any excess
fee paid pursuant to this Section 4.2(c).
(ii) The Borrowers agree to pay to the Administrative Agent, for the
account of NationsBank, a fee in the amount of 1/8 of 1% of the face amount
of each standby Letter of Credit issued on or after the Effective Date,
payable in advance on the date of issuance, and, as to all Letters of
Credit, the usual and customary letter of credit fees of NationsBank, as
and when assessed.
(iii) The Borrowers agree to pay to the Administrative Agent, for the
Ratable account of the Lenders, on the face amount of each Bankers
Acceptance, an acceptance commission at a rate equal to the Applicable
Margin applicable to Eurodollar Rate Loans (A) as of the Effective Date as
to Bankers Acceptances outstanding on the Effective Date or (B) at the time
of creation of such Bankers Acceptance as to all Bankers Acceptances
created after the Effective Date, for the period from the Effective Date or
the later date of its creation, as applicable, to the stated maturity date
thereof, payable on said maturity date.
(d) Collection Fee. During the period from and including the Effective Date
to and including the Termination Date, the Borrowers will pay to the
Administrative Agent for
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its own account on each Interest Payment Date an amount computed at the
Effective Interest Rate applicable to Prime Rate Loans on each remittance (other
than a remittance received by the Administrative Agent via wire transfer or
otherwise received in immediately available funds) received by the
Administrative Agent against Receivables (as contemplated by Section 8.1 hereof)
during the preceding month, from the close of business on the date of receipt of
each such remittance until the close of business on the Business Day following
the receipt of the remittance, as compensation for delays in the collection and
clearance of checks and other remittances.
(e) General. All fees provided for herein and in any separate fee letter to
which the Administrative Agent is a party shall be computed based on a year of
360 days for the actual number of days elapsed and shall be fully earned by the
identified recipient thereof when due and payable and, except as otherwise set
forth herein or required by Applicable Law, shall not be subject to refund or
rebate. All fees provided for in this Section 4.2 and in any such separate
letter are compensation for services and are not, and shall not be deemed to be,
interest or a charge for the use of money.
Section 4.3 Manner of Payment.
(a) Except as otherwise expressly provided in Section 8.1(b), each payment
(including prepayments) by the Borrowers on account of the principal of or
interest on the Loans or of any other amounts payable to the Administrative
Agent or the Lenders under this Agreement or any Note shall be made not later
than 12:00 noon on the date specified for payment under this Agreement to the
Administrative Agent, for its own account or the account of the Lenders, as the
case may be, at the Agent's Office, in Dollars, in immediately available funds
and shall be made without any setoff, counterclaim or deduction whatsoever. Any
payment received after such time but before 4:00 p.m. on such day shall be
deemed a payment on such date for the purposes of Section 12.1, but for all
other purposes shall be deemed to have been made on the next succeeding Business
Day.
(b) Each Borrower hereby irrevocably authorizes each Lender and each
Affiliate of such Lender and each participant herein to charge any account of
such Borrower maintained with such Lender or such Affiliate or participant with
such amounts as may be necessary from time to time to pay any Secured
Obligations (whether or not owed to such Lender, Affiliate or participant) which
are not paid when due.
Section 4.4 General. If any payment under this Agreement or any Note shall
be specified to be made on a day which is not a Business Day, it may, at the
Administrative Agent's discretion, be made on the next succeeding day which is a
Business Day and any such extension of time shall be included in computing
interest, if any, payable in connection with such payment.
Section 4.5 Loan Accounts; Statements of Account.
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(a) Each Lender shall open and maintain on its books at least one loan
account in the Borrowers' name (each, a Loan Account and collectively, the Loan
Accounts). Each such Loan Account shall show as debits thereto each Loan made
under this Agreement by such Lender to the Borrowers and as credits thereto all
payments received by such Lender and applied to principal of such Loans, so that
the balance of the Loan Account at all times reflects the principal amount due
such Lender from the Borrowers.
(b) The Administrative Agent shall maintain on its books a control account
for the Borrowers in which shall be recorded (i) the amount of each disbursement
made hereunder, (ii) the amount of any principal or interest due or to become
due from the Borrowers hereunder, and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrowers and each Lender's share
therein.
(c) The entries made in the accounts pursuant to subsections (a) and (b)
shall be prima facie evidence, in the absence of manifest error, of the
existence and amounts of the obligations of the Borrowers therein recorded and
in case of discrepancy between such accounts, in the absence of manifest error,
the accounts maintained pursuant to subsection (b) shall be controlling.
(d) The Administrative Agent will account to the Borrowers monthly with a
statement of Loans, charges and payments made to and by the Borrowers pursuant
to this Agreement, and such accounts rendered by the Administrative Agent shall
be deemed final, binding and conclusive, save for manifest error, unless the
Administrative Agent is notified by the Borrowers in writing to the contrary
within 30 days of the date the account to the Borrowers was so rendered. Such
notice by the Borrowers shall be deemed an objection to only those items
specifically objected to therein. Failure of the Administrative Agent to render
such account shall in no way affect the rights of the Administrative Agent or of
the Lenders hereunder.
Section 4.6 Termination of Agreement. Subject to the provisions of Section
4.10, the Borrowers shall have the right, at any time, to terminate this
Agreement upon not less than 30 Business Days' prior written notice, which
notice shall specify the effective date of such termination. Upon receipt of
such notice, the Administrative Agent shall promptly notify each Lender thereof.
On the date specified in such notice, such termination shall be effected,
provided, that the Borrowers shall, on or prior to such date, pay to the
Administrative Agent, for its account and the account of the Lenders, in same
day funds, an amount equal to all Secured Obligations (other than with respect
to Letter of Credit Obligations) outstanding on such date, including, without
limitation, all (i) accrued interest thereon, (ii) all accrued fees provided for
hereunder, and (iii) any amounts payable to the Lenders pursuant to Sections
4.9, 4.10, 4.16, 15.2, 15.3 and 15.11, and, in addition thereto, shall deliver
to the Administrative Agent, in respect of each outstanding Letter of Credit and
Bankers Acceptance, either a Supporting Letter of Credit or Cash Collateral as
provided in Section 3.9. Additionally, the Borrowers shall provide the
Administrative Agent and the Lenders with indemnification in form and substance
satisfactory to the Administrative Agent in its reasonable judgment with respect
to such matters as the Administrative Agent and the Lenders shall reasonably
require and a general release of all
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claims. Following a notice of termination as provided for in this Section 4.6(b)
and upon payment in full of the amounts specified in this Section 4.6(b), and
execution and delivery of any required indemnification and release, this
Agreement shall be terminated and the Administrative Agent, the Lenders and the
Borrowers shall have no further obligations to any other party hereto, except
for the obligations to the Administrative Agent and the Lenders pursuant to
Section 15.11 hereof, which shall survive any termination of this Agreement.
Section 4.7 Making of Loans.
(a) Nature of Obligations of Lenders to Make Loans. The obligations of the
Lenders under this Agreement to make the Loans are several and are not joint or
joint and several.
(b) Assumption by Agent. Subject to the provisions of Section 4.8 and
notwithstanding the occurrence or continuance of a Default or Event of Default
or other failure of any condition to the making of Loans under the Revolving
Credit Facility hereunder subsequent to the Initial Loans, unless the
Administrative Agent shall have received notice from a Lender in accordance with
the provisions of Section 4.7(c) prior to a proposed Borrowing date that such
Lender will not make available to the Administrative Agent such Lender's
Proportionate Share of the Revolving Credit Loan to be borrowed on such date,
the Administrative Agent may assume that such Lender will make such
Proportionate Share available to the Administrative Agent in accordance with
Section 2.2(a), and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrowers on such date a corresponding amount.
If and to the extent such Lender shall not make such Proportionate Share
available to the Administrative Agent, such Lender and the Borrowers severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon for each day from the date
such amount is made available to the Borrowers until the date such amount is
repaid to the Administrative Agent at the Effective Interest Rate or, if lower,
subject to Section 4.1(f), the Maximum Rate if repaid by the Borrowers or at the
Federal Funds Effective Rate, if paid by such Lender. If such Lender shall repay
to the Administrative Agent such corresponding amount, the amount so repaid
shall constitute such Lender's Proportionate Share of the Loan made on such
Borrowing date for purposes of this Agreement. The failure of any Lender to make
its Proportionate Share of any Loan available shall not (without regard to
whether a Borrower shall have returned the amount thereof to the Administrative
Agent in accordance with this Section 4.7) relieve it or any other Lender of its
obligation, if any, hereunder to make its Proportionate Share of the Loan
available on such Borrowing date, but no Lender shall be responsible for the
failure of any other Lender to make its Proportionate Share of a Loan available
on the Borrowing date.
(c) Delegation of Authority to Agent. Without limiting the generality of
Section 15.1, each Lender expressly authorizes the Administrative Agent to
determine on behalf of such Lender (i) any reduction or increase of advance
rates applicable to the Borrowing Base, so long as such advance rates do not at
any time exceed the applicable rates set forth in the definition "Borrowing
Base," (ii) the creation or elimination of any reserves (other than the
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Usage Reserves) against the Revolving Credit Facility and the Borrowing Base and
(iii) the designation of any Inventory or Receivables as not constituting
Eligible Inventory or Eligible Receivables. Such authorization may be withdrawn
by the Required Lenders by giving the Administrative Agent written notice of
such withdrawal signed by the Required Lenders; provided, however, that unless
otherwise agreed by the Administrative Agent such withdrawal of authorization
shall not become effective until the 30th Business Day after receipt of such
notice by the Administrative Agent. Thereafter, the Required Lenders shall
jointly instruct the Administrative Agent in writing regarding such matters with
such frequency as the Required Lenders shall jointly determine. Unless and until
the Administrative Agent shall have received written notice from the Required
Lenders as to the existence of a Default, an Event of Default or some other
circumstance which would relieve the Lenders of their respective obligations to
make Loans hereunder, which notice shall be in writing and shall be signed by
the Required Lenders and shall expressly state that the Required Lenders do not
intend to make available to the Administrative Agent such Lenders' Ratable Share
of Loans made after the effective date of such notice, the Administrative Agent
shall be entitled to continue to make the assumptions described in Section
4.7(b). After receipt of the notice described in the preceding sentence, which
shall become effective on the third Business Day after receipt of such notice by
the Administrative Agent unless otherwise agreed by the Administrative Agent,
the Administrative Agent shall be entitled to make the assumptions described in
Section 4.7(b) as to any Loans as to which it has not received a written notice
to the contrary prior to 11:00 a.m. on the Business Day next preceding the day
on which the Loan is to be made. The Administrative Agent shall not be required
to make any Loan as to which it shall have received notice by a Lender of such
Lender's intention not to make its Ratable Share of such Loan available to the
Administrative Agent. Any withdrawal of authorization under this Section 4.7(c)
shall not affect the validity of any Loans made prior to the effectiveness
thereof.
(d) Agent's Additional Authority. Any provision of this Agreement or any
other Loan Document to the contrary notwithstanding, each Lender hereby
authorizes the Administrative Agent, in its sole discretion and for the Ratable
account of each such Lender, to request that NationsBank make Prime Rate Loans
entitled to all the benefits of this Agreement available to Non-Ratable Loans to
the Borrowers in excess of Revolving Credit Availability at the time such Loans
are made, provided, that the aggregate outstanding principal amount of all Loans
shall not exceed the Borrowing Base (i) by an amount greater than $5,000,000 or
(ii) for more than five consecutive Business Days in any Fiscal Year or (iii)
for more than 10 days in any Fiscal Year and provided, further, that in no event
shall the aggregate outstanding principal amount of all Loans exceed the
Revolving Credit Facility less the Reserves.
Section 4.8 Settlement Among Lenders.
(a) Revolving Credit Loans. It is agreed that each Lender's Net
Outstandings are intended by the Lenders to be equal at all times to such
Lender's Ratable Share of the aggregate principal amount of all Revolving Credit
Loans outstanding. Notwithstanding such agreement, the several and not joint
obligation of each Lender to make its Ratable Share of
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Loans under the Revolving Credit Facility in accordance with the terms of this
Agreement and each Lender's right to receive its Ratable Share of principal
payments on Revolving Credit Loans, the Lenders agree that in order to
facilitate the administration of this Agreement and the Loan Documents that
settlement among them may take place on a periodic basis in accordance with the
provisions of this Section 4.8.
(b) Settlement Procedures as to Revolving Credit Loans. To the extent and
in the manner hereinafter provided in this Section 4.8, settlement among the
Lenders as to Prime Rate Loans may occur periodically on Settlement Dates
determined from time to time by the Administrative Agent, which may occur before
or after the occurrence or during the continuance of a Default or Event of
Default and whether or not all of the conditions set forth in Section 6.2 have
been met. On each Settlement Date payments shall be made by or to NationsBank
and the other Lenders in the manner provided in this Section 4.8 in accordance
with the Settlement Report delivered by the Administrative Agent pursuant to the
provisions of this Section 4.8 in respect of such Settlement Date so that as of
each Settlement Date, and after giving effect to the transactions to take place
on such Settlement Date, each Lender's Net Outstandings shall equal such
Lender's Ratable Share of the Revolving Credit Loans.
(i) Selection of Settlement Dates. If the Administrative Agent elects,
in its discretion, but subject to the consent of NationsBank, to settle
accounts among the Lenders with respect to principal amounts of Prime Rate
Loans less frequently than each Business Day, then the Administrative Agent
shall designate periodic Settlement Dates which may occur on any Business
Day after the Effective Date; provided, however, that (A) the
Administrative Agent shall designate as a Settlement Date any Business Day
which is an Interest Payment Date and (B) a Settlement Date shall occur not
less often than every five Business Days. The Administrative Agent shall
designate a Settlement Date by delivering to each Lender a Settlement
Report not later than 12:00 noon on the proposed Settlement Date, which
Settlement Report will be in the form of Exhibit E hereto and shall be with
respect to the period beginning on the next preceding Settlement Date and
ending on such designated Settlement Date.
(ii) Non-Ratable Loans and Payments. Between Settlement Dates, the
Administrative Agent shall request and NationsBank may (but shall not be
obligated to) advance to the Borrowers out of NationsBank's own funds, the
entire principal amount of any Prime Rate Loan requested or deemed
requested pursuant to Section 2.2(a) (any such Prime Rate Loan being
referred to as a Non-Ratable Loan). The making of each Non-Ratable Loan by
NationsBank shall be deemed to be a purchase by NationsBank of a 100%
participation in each other Lender's Proportionate Share of such
Non-Ratable Loan. All payments of principal, interest and any other amount
with respect to such Non-Ratable Loan shall be payable to and received by
the Administrative Agent for the account of NationsBank. Upon demand by
NationsBank, with notice thereof to the Administrative Agent, each other
Lender shall pay to NationsBank, as the repurchase of such participation,
an amount equal to 100% of such Lender's Proportionate Share of the
principal amount of such Non-Ratable Loan. Any payments received by the
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Administrative Agent between Settlement Dates which in accordance with the
terms of this Agreement are to be applied to the reduction of the
outstanding principal balance of Revolving Credit Loans, shall be paid over
to and retained by NationsBank for such application, and such payment to
and retention by NationsBank shall be deemed, to the extent of each other
Lender's Proportionate Share of such payment, to be a purchase by each such
other Lender of a participation in the Revolving Credit Loans (including
the repurchase of participations in Non-Ratable Loans) held by NationsBank.
Upon demand by another Lender, with notice thereof to the Administrative
Agent, NationsBank shall pay to the Administrative Agent, for the account
of such other Lender, as a repurchase of such participation, an amount
equal to such other Lender's Proportionate Share of any such amounts (after
application thereof to the repurchase of any participations of NationsBank
in such other Lender's Proportionate Share of any Non-Ratable Loans) paid
only to NationsBank by the Administrative Agent.
(iii) Settlement. On each Settlement Date each Lender shall transfer
to the Administrative Agent and the Administrative Agent shall transfer to
each Lender such amounts as are necessary to insure that, after giving
effect to all such transfers, each Lender's Net Outstandings are equal to
such Lender's Proportionate Share of the aggregate principal amount of all
Revolving Loans then outstanding.
(iv) Return of Payments. If any amounts received by NationsBank in
respect of the Secured Obligations are later required to be returned or
repaid by NationsBank to the Borrowers or any other obligor or their
respective representatives or successors in interest, whether by court
order, settlement or otherwise, in excess of NationsBank's Proportionate
Share of all such amounts required to be returned by all Lenders, each
other Lender shall, upon demand by NationsBank with notice to the
Administrative Agent, pay to the Administrative Agent for the account of
NationsBank, an amount equal to the excess of such Lender's Proportionate
Share of all such amounts required to be returned by all Lenders over the
amount, if any, returned directly by such Lender.
(v) Payments to Agent, Lenders.
(A) Payment by any Lender to the Administrative Agent shall be
made not later than 1:30 p.m. on the Business Day such payment is due,
provided that if such payment is due on demand by another Lender, such
demand is made on the paying Lender not later than 10:00 a.m. on such
Business Day. Payment by the Administrative Agent to any Lender shall
be made by wire transfer, promptly following the Administrative
Agent's receipt of funds for the account of such Lender and in the
type of funds received by the Administrative Agent, provided that if
the Administrative Agent receives such funds at or prior to 1:00 p.m.,
the Administrative Agent shall pay such funds to such Lender by 2:00
p.m. on such Business Day. If a demand for payment is made after the
applicable time set forth above, the payment due shall be made by 2:00
p.m. on the first Business Day following the date of such demand.
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(B) If a Lender shall, at any time, fail to make any payment to
the Administrative Agent required hereunder, the Administrative Agent
may, but shall not be required to, retain payments that would
otherwise be made to such Lender hereunder and apply such payments to
such Lender's defaulted obligations hereunder, at such time, and in
such order, as the Administrative Agent may elect in its sole
discretion.
(C) With respect to the payment of any funds under this Section
4.8(b), whether from the Administrative Agent to a Lender or from a
Lender to the Administrative Agent, the party failing to make full
payment when due pursuant to the terms hereof shall, upon demand by
the other party, pay such amount together with interest on such amount
at the Federal Funds Effective Rate.
(c) Settlement of Other Secured Obligations. All other amounts received by
the Administrative Agent on account of, or applied by the Administrative Agent
to the payment of, any Secured Obligation owed to the Lenders (including,
without limitation, fees payable to the Lenders pursuant to Sections 4.2(b), (c)
and (d) and proceeds from the sale of, or other realization upon, all or any
part of the Collateral following an Event of Default) that are received by the
Administrative Agent at or prior to 1:00 p.m. on a Business Day will be paid by
the Administrative Agent to each Lender on the same Business Day, and any such
amounts that are received by the Administrative Agent after 1:00 p.m. will be
paid by the Administrative Agent to each Lender on the following Business Day,
except, that fees payable in respect of commercial or documentary Letters of
Credit upon issuance thereof pursuant to Section 4.2(c)(i)(A) shall be paid by
the Administrative Agent to the Lenders Ratably, payable monthly in arrears on
each Interest Payment Date. On the Effective Date, the Administrative Agent will
cause to be paid to each Lender other than NationsBank (without any increase in
any amount payable by the Borrowers), an amount equal to 2.25% per annum on such
Lender's Ratable Share of each standby Letter of Credit outstanding on the
Effective Date, for the period from the Effective Date to the expiration date of
such standby Letter of Credit (or such earlier date to which all fees due on
such Letter of Credit as of its issuance had already been paid). Unless
otherwise stated herein, the Administrative Agent shall distribute to each
Lender such Lender's share of fees payable to the Lenders pursuant to Section
4.2(b) based on such Lender's unused Commitment, and such Lender's Proportionate
Share of fees payable to the Lenders pursuant to Sections 4.2(c) and (d) and
shall distribute to each Lender such Lender's Proportionate Share (or if
different, such Lender's share based upon the amount of the Secured Obligations
then owing to each Lender) of the proceeds from the sale of, or other
realization upon, all or any part of the Collateral following an Event of
Default.
(d) Allocation of Payments from Borrowers. All monies to be applied to the
Secured Obligations, whether such monies represent voluntary payments by the
Borrowers or are received pursuant to demand for payment or realized from any
disposition of Collateral, shall be allocated among the Administrative Agent and
such of the Lenders and other holders of the Secured Obligations as are entitled
thereto (and, with respect to monies allocated to the Lenders, on a Ratable
basis unless otherwise provided in this Section 4.8(e)): (i) first, to
NationsBank to
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pay principal and accrued interest on any portion of any Non-Ratable Loan which
NationsBank may have advanced on behalf of any Lender (other than itself) and
for which NationsBank has not been reimbursed by such Lender or the Borrowers,
(ii) second, to the Administrative Agent to pay the amount of expenses that have
not been reimbursed to the Administrative Agent by the Borrowers or the Lenders,
together with interest accrued thereon; (iii) third, to the Administrative Agent
to pay any indemnified amount that has not been paid to the Administrative Agent
by the Borrowers or the Lenders, together with interest accrued thereon; (iv)
fourth, to the Lenders for any indemnified amount that they have paid to the
Administrative Agent and for any expenses that they have reimbursed to the
Administrative Agent; (v) fifth, to the Administrative Agent to pay any fees due
and payable to the Administrative Agent under this Agreement; (vi) sixth, to the
Lenders in payment of the unpaid principal and accrued interest in respect of
the Loans and any other Secured Obligations then outstanding and held by any
Lender to be shared among Lenders on a Ratable basis, or on such other basis as
may be agreed upon in writing by all of the Lenders (which agreement or
agreements may be entered into without notice to or the consent or approval of
the Borrowers); and (vii) seventh, to the holders of the other Secured
Obligations who are not Lenders on a pro rata basis. The allocations set forth
in this Section 4.8(e) are solely to determine the rights and priorities of the
Administrative Agent and the Lenders as among themselves and may be changed by
the Administrative Agent and the Lenders without notice to or the consent or
approval of the Borrowers or any other Person. Whenever allocation is made
pursuant to this Section 4.8(e) to the holder of Secured Obligations in which
another Lender acquires a participation, the monies received by such holder
shall be shared as between such holder and such participants on a Ratable basis.
Section 4.9 Prepayment Fee. If the Borrowers prepay the Loans in whole and
terminate this Agreement prior to the first Anniversary other than from the
proceeds of a primary offering of equity securities of Syratech or the sale of
the Company as a whole, the Borrowers shall pay to the Administrative Agent for
the Ratable benefit of the Lenders on such date of termination, as liquidated
damages and compensation for the costs of making funds available to the
Borrowers under this Agreement, and not as a penalty, an amount equal to 2% of
the amount of the Revolving Credit Facility on the Effective Date.
Section 4.10 Payments Not at End of Interest Period; Failure to Borrow. If
for any reason any payment of principal with respect to any Eurodollar Rate Loan
is made on any day prior to the last day of the Interest Period applicable to
such Eurodollar Rate Loan or, after having given a Notice of Borrowing with
respect to any Eurodollar Rate Loan or a Notice of Conversion or Continuation
with respect to any Loan to be continued as or converted into a Eurodollar Rate
Loan, such Loan is not made or is not continued as or converted into a
Eurodollar Rate Loan due to the Borrowers' failure to borrow or to fulfill the
applicable conditions set forth in Article 5, the Borrowers shall pay to each
Lender upon the request of the Administrative Agent or such Lender, in addition
to any amounts that may be due under Section 4.9, an amount (if a positive
number) computed pursuant to the following formula:
L = (R-T) x P x D
-------------
360
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L = amount payable
R = interest rate applicable to the Eurodollar Rate Loan not borrowed,
continued or converted, or prepaid
T = effective interest rate per annum at which any readily marketable
bonds or other obligations of the United States, selected at the
Administrative Agent's sole discretion, maturing on or near the last
day of the then applicable or requested Interest Period for such Loan
and in approximately the same amount as such Loan, can be purchased by
such Lender on the day of such payment of principal or failure to
borrow, continue or convert
P = the amount of principal paid or the amount of the Loan requested or
to have been continued or converted
D = the number of days remaining in the Interest Period as of the date
of such payment or the number of days in the requested Interest Period
The Borrowers shall pay such amount upon presentation by the Administrative
Agent (or as to any Lender, by such Lender) of a statement setting forth the
amount and the Administrative Agent's (or such Lender's) calculation thereof
pursuant hereto, which statement shall be deemed true and correct absent
manifest error.
Section 4.11 Assumptions Concerning Funding of Eurodollar Rate Loans.
Calculation of all amounts payable to the Lenders under this Article 4 shall be
made as though each Lender had actually funded or committed to fund its
Eurodollar Rate Loans through the purchase of an underlying deposit in an amount
equal to the amount of such ratable share and having a maturity comparable to
the relevant Interest Period for such Eurodollar Rate Loan, provided, however,
each Lender may fund its Eurodollar Rate Loans in any manner it deems fit and
the foregoing assumption shall be utilized only for the calculation of amounts
payable under this Article 4.
Section 4.12 Notice of Conversion or Continuation. Whenever the Borrowers
desire, subject to the provisions of Section 4.7, to convert an outstanding Loan
into a Loan or Loans of a different Type or to continue all or a portion of an
outstanding Eurodollar Rate Loan for a subsequent Interest Period, the Borrowers
shall notify the Administrative Agent by telephone or in writing (which notice
shall be irrevocable) not later than 11:00 a.m. (London time) on the date two
Business Days before the day on which such proposed conversion or continuation
is to be effective (and such effective date of any continuation shall be the
last day of the Interest Period for the applicable Eurodollar Rate Loan). Each
such notice (a Notice of Conversion or Continuation) shall (i) identify the Loan
to be converted or continued, the aggregate outstanding principal balance
thereof and, if a Eurodollar Rate Loan, the last day of the Interest Period
applicable to such Loan, (ii) specify the effective date of such conversion or
continuation, (iii) specify the principal amount of such Loan to be converted or
continued and, if converted, the Type or Types into which the same is to be
converted, and (iv) the Interest Period to be applicable to the Eurodollar Rate
Loan as converted or continued, and shall, if notice
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thereof was originally given by telephone, be immediately followed by a signed,
written confirmation thereof by the Borrowers in a form acceptable to the
Administrative Agent, provided that if such written confirmation differs in any
respect from the action taken by the Lenders, the records of the Administrative
Agent shall control absent manifest error.
Section 4. 13 Conversion or Continuation. Provided that no Event of Default
shall have occurred and be continuing (but subject to the provisions of Sections
4.12 and 4.15), the Borrowers may request that all or any part of any
outstanding Loan be converted into a Loan or Loans of a different Type or be
continued as a Loan or Loans of the same Type, in the same aggregate principal
amount, on any Business Day (which, in the case of continuation of a Eurodollar
Rate Loan, shall be the last day of the Interest Period applicable to such
Loan), upon notice (which notice shall be irrevocable) given in accordance with
Section 4.12.
Section 4.14 Duration of Interest Periods: Maximum Number of Eurodollar
Rate Loans: Minimum Increments.
(a) Subject to the provisions of the definition "Interest Period," the
duration of each Interest Period applicable to a Eurodollar Rate Loan shall be
as specified in the applicable Notice of Borrowing or Notice of Conversion or
Continuation. The Borrowers may elect a subsequent Interest Period to be
applicable to any Eurodollar Rate Loan by giving a Notice of Conversion or
Continuation with respect to such Loan in accordance with Section 4.12.
(b) If the Administrative Agent does not receive a notice of election in
accordance with Section 4.12 with respect to the continuation of any Eurodollar
Rate Loan within the applicable time limits specified in said Section 4.12, or
if, when such notice must be given, an Event of Default exists or such Type of
Loan is not available, the Borrowers shall be deemed to have elected to convert
such Eurodollar Rate Loan in whole into a Prime Rate Loan on the last day of the
Interest Period therefor.
(c) Notwithstanding the foregoing, the Borrowers may not select an Interest
Period that would end, but for the provisions of the definition "Interest
Period," after the Termination Date.
(d) In no event shall there be more than six Eurodollar Rate Loans
outstanding hereunder at any time. For the purpose of this subsection (d), each
Eurodollar Rate Loan having a distinct Interest Period shall be deemed to be a
separate Loan hereunder.
(e) Each Eurodollar Rate Loan shall be in a minimum amount of $1,000,000 or
an integral multiple of $250,000 in excess thereof.
Section 4.15 Changed Circumstances.
(a) If the introduction of or any change in or in the interpretation of (in
each case, after the date hereof) any law or regulation makes it unlawful, or
any Governmental
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Authority asserts, after the date hereof, that it is unlawful, for any Lender to
perform its obligations hereunder to make Eurodollar Rate Loans or to fund or
maintain Eurodollar Rate Loans hereunder, such Lender shall notify the
Administrative Agent of such event and the Administrative Agent shall notify the
Borrowers of such event, and the right of the Borrowers to select Eurodollar
Rate Loan for any subsequent Interest Period or in connection with any
subsequent conversion of any Loan shall be suspended until the Administrative
Agent shall notify the Borrowers that the circumstances causing such suspension
no longer exist, and the Borrowers shall forthwith prepay in full all Eurodollar
Rate Loans then outstanding and shall pay all interest accrued thereon through
the date of such prepayment or conversion, unless the Borrowers, within three
Business Days after such notice from the Administrative Agent, request the
conversion of all Eurodollar Rate Loans then outstanding into Prime Rate Loans,
provided, that if the date of such repayment or proposed conversion is not the
last day of the Interest Period applicable to such Eurodollar Rate Loan, the
Borrowers shall also pay any amount due pursuant to Section 4.10.
(b) If the Administrative Agent shall, at least one Business Day before the
date of any requested Revolving Credit Loan or the effective date of any
conversion or continuation of an existing Loan to be made or continued as or
converted into a Eurodollar Rate Loan (each such requested Revolving Credit Loan
made and Loan to be converted or continued, a Pending Loan), notify the
Borrowers that the Eurodollar Rate will not adequately reflect the cost to the
Lenders of making or funding such Pending Loan as a Eurodollar Rate Loan or that
the Interbank Offered Rate is not reasonably determinable, including from any
interest rate reporting service of recognized standing, then the right of the
Borrowers to select Eurodollar Rate Loans for such Pending Loan, any subsequent
Revolving Credit Loan or in connection with any subsequent conversion or
continuation of any Loan shall be suspended until the Administrative Agent shall
notify the Borrowers that the circumstances causing such suspension no longer
exist, and each Pending Loan and each such subsequent Loan requested to be made,
continued or converted shall be made or continued as or converted into a Prime
Rate Loan.
(c) If, due to either (i) the introduction of or any change (other than any
change by way of imposition or increase of reserve requirements included in the
Eurodollar Reserve Percentage) in or in the interpretation of, in each case
after the date hereof, any law or regulation (except to the extent such
introduction, change or interpretation affects taxes measured by net income), or
(ii) the compliance with any guideline or request (except to the extent such
guideline or request affects taxes measured by net income) from any central bank
or other governmental authority (whether or not having the force of law) made
after the date hereof, there shall be any increase in the cost to any Lender of
agreeing to make or making, funding or maintaining Eurodollar Rate Loans (other
than as separately provided for in Section 4.15(d)), then the Borrowers shall
from time to time, within 30 days after demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost.
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(d) If (i) the adoption of or change in, after the date hereof, any law,
rule, regulation or guideline regarding capital requirements for banks or bank
holding companies, or any change, after the date hereof, in the interpretation
or application thereof by any governmental authority charged with the
interpretation or administration thereof, or (ii) compliance by such Lender with
any guideline, request or directive, made or promulgated after the date hereof,
of any such entity regarding capital adequacy (whether or not having the force
of law), has the effect of reducing the return on a Lender's capital as a
consequence of its maintaining its Loans or commitment to make Revolving Credit
Loans hereunder to a level below that which such Lender could have achieved but
for such adoption, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy immediately before such adoption,
change or compliance and assuming the full utilization of such Lender's capital
immediately before such adoption, change or compliance) or if any change in law
regulation, treaty or official directive or the interpretation or application
thereof by any court or by any governmental authority charged with the
administration thereof or the compliance with any guideline or request of any
central bank or other governmental authority (whether or not having the force of
law) subjects a Lender to any tax with respect to payments of principal or
interest or any other amounts payable hereunder by the Borrowers or otherwise
with respect to the transactions contemplated hereby (except for taxes on the
overall net income of such Lender imposed by the United States of America or any
political subdivision thereof), in each case by any amount deemed by such Lender
to be material, then such Lender shall promptly after its determination of such
occurrence notify the Borrowers and the Administrative Agent thereof. The
Borrowers agree to pay to the Administrative Agent, for the account of such
Lender, as an additional fee from time to time, within 30 days after demand by
such Lender, such amount as such Lender certifies to be the amount that will
compensate it for such reduction.
(e) Before giving any notice pursuant to Section 4.15(a) or making any
demand pursuant to Section 4.15(c) or (d), each Lender agrees to use its best
efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different lending office if the making of such a
designation would avoid the need for such notice or demand, or reduce the amount
of such increased cost or reduction in return and would not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to such Lender.
(f) A certificate of a Lender claiming compensation under Section 4.15(c)
or (d) shall be conclusive in the absence of manifest error. Such certificate
shall set forth the nature of the occurrence giving rise to such compensation,
the additional amount or amounts to be paid to it hereunder and the method by
which such amounts were determined. In determining such amount, a Lender may use
any reasonable averaging and attribution methods.
(g) If, within 60 days after a Lender makes demand (which is not withdrawn)
for compensation pursuant to Section 4.14(c) or (d), the Borrowers identify an
Eligible Assignee willing to acquire by assignment, pursuant to an Assignment
and Acceptance and otherwise in accordance with the provisions of Article 13,
all (but not less than all) of the interests of such Lender hereunder, such
Lender shall promptly consummate such transfer of its interests hereunder in
conformity with the applicable provisions of Article 13.
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Section 4.16 Cash Collateral Account.
(a) Cash Collateral Account. The Borrowers shall establish a Cash
Collateral Account in which to deposit Collateral consisting of cash or Cash
Equivalents from time to time,
(i) representing payments received pursuant to Section 2.3(b) or (c)
or Section 4.15 in excess of then outstanding Revolving Credit Loans or on
account of Eurodollar Rate Loans which would otherwise result in repayment
of such Loans prior to the end of the Interest Period applicable thereto,
(ii) with respect to Letter of Credit Obligations (x) at the request
of the Administrative Agent upon the occurrence of an Event of Default, or
(y) for the purposes set forth in Section 4.6 in the event of termination
of this Agreement, or
(iii) for any other purpose appropriate under this Agreement to
provide security for the Secured Obligations.
On the last day of the applicable Interest Period as to any amounts deposited to
the Cash Collateral Account pursuant to clause (i) above or if a drawing under a
Letter of Credit occurs with respect to any amounts deposited to the Cash
Collateral Account pursuant to clause (ii) above, each Borrower hereby
authorizes the Administrative Agent to use the monies deposited in the Cash
Collateral Account to make payment to the payee with respect to such Loan or
drawing. The Cash Collateral Account shall be in the name of the Administrative
Agent and the Administrative Agent shall have sole dominion and control over,
and sole access to, the Cash Collateral Account. Neither any Borrower nor any
Person claiming on behalf of or through any Borrower shall have any right to
withdraw any of the funds held in the Cash Collateral Account. Each Borrower
agrees that it will not at any time (x) sell or otherwise dispose of any
interest in the Cash Collateral Account or any funds held therein or (y) create
or permit to exist any Lien upon or with respect to the Cash Collateral Account
or any funds held therein, except as provided in or contemplated by this
Agreement. The Administrative Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Cash Collateral Account and
shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Administrative Agent accords other
funds deposited with the Administrative Agent, it being understood that the
Administrative Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any funds held in
the Cash Collateral Account. Subject to the right of the Administrative Agent to
withdraw funds from the Cash Collateral Account as provided herein, the
Administrative Agent will, so long as no Default or Event of Default shall have
occurred and be continuing, from time to time invest funds on deposit in the
Cash Collateral Account, reinvest proceeds of any such investments which may
mature or be sold, and invest interest or other income received from any such
investments, in each case, in Cash Equivalents, as the Borrowers may direct
prior to the occurrence of a Default or Event of Default and as the
Administrative Agent may select after the occurrence and during the continuance
of a Default or Event of Default. Such proceeds, interest and income which are
not so invested or reinvested in Cash
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Equivalents shall be deposited and held by the Administrative Agent in the Cash
Collateral Account. The Administrative Agent makes no representation or warranty
as to, and shall not be responsible for, the rate of return, if any, earned in
any Cash Collateral. Any earnings on Cash Collateral shall be held as additional
Cash Collateral on the terms set forth in this Section 4.16.
Section 4.17 Borrowers' Representative. Each of LFA, Holding, Wallace,
Towle, Silvestri, Rauch, Rochard, Holiday and Farberware hereby appoints
Syratech and Syratech shall act under this Agreement as, the representative of
such other Borrowers for all purposes, including, without being limited to,
requesting Borrowings and receiving account statements and other notices and
communications to the Borrowers (or any of them) from the Administrative Agent
or any Lender. The Administrative Agent and the Lenders may rely, and shall be
fully protected in relying, on any Notice of Borrowing, Notice of Conversion or
Continuation, disbursement instruction, report, information or any other notice
or communication made or given by Syratech, whether in its own name, on behalf
of any other Borrower or on behalf of "the Borrowers," and neither the
Administrative Agent nor any Lender shall have any obligation to make any
inquiry or request any confirmation from or on behalf of any other Borrower as
to the binding effect on it of any such Notice, instruction, report,
information, other notice or communication, nor shall the joint and several
character of the Borrowers' liability for the Secured Obligations be affected,
provided that the provisions of this Section 4.17 shall not be construed so as
to preclude any Borrower from directly requesting Borrowings or taking other
actions permitted to be taken by "a Borrower" hereunder. The Administrative
Agent and each Lender intend to maintain a single Loan Account in the name of
"Syratech Corporation" hereunder and each Borrower expressly agrees to such
arrangement and confirms that such arrangement shall have no effect on the joint
and several character of its liability for the Secured Obligations.
Section 4.18 Joint and Several Liability.
(a) Joint and Several Liability. The Secured Obligations shall constitute
one joint and several direct and general obligation of all of the Borrowers.
Notwithstanding anything to the contrary contained herein, each of the Borrowers
shall be jointly and severally, with each other Borrower, directly and
unconditionally liable to the Administrative Agent and the Lenders for all
Secured Obligations and shall have the obligations of co-maker with respect to
the Revolving Credit Loans, the Revolving Credit Notes and the Secured
Obligations, it being agreed that the advances to each Borrower inure to the
benefit of all Borrowers, and that the Administrative Agent and the Lenders are
relying on the joint and several liability of the Borrowers as co-makers in
extending the Loans hereunder. Each Borrower hereby unconditionally and
irrevocably agrees that upon default in the payment when due (whether at stated
maturity, by acceleration or otherwise) of any principal of, or interest on, any
Revolving Credit Loan or other Secured Obligation payable to the Administrative
Agent or any Lender, it will forthwith pay the same, without notice or demand.
(b) No Reduction in Obligations. No payment or payments made by any of the
Borrowers or any other Person or received or collected by the Administrative
Agent or any
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Lender from any of the Borrowers or any other Person by virtue of any action or
proceeding or any set-off or appropriation or application at any time or from
time to time in reduction of or in payment of the Secured Obligations shall be
deemed to modify, reduce, release or otherwise affect the liability of each
Borrower under this Agreement, which shall remain liable for the Secured
Obligations until the Secured Obligations are paid in full and the Revolving
Credit Facility is terminated.
Section 4.19 Obligations Absolute. Each Borrower agrees that the Secured
Obligations will be paid strictly in accordance with the terms of the Loan
Documents, regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any Lender with respect thereto. All Secured Obligations
shall be conclusively presumed to have been created in reliance hereon. The
liabilities under this Agreement shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any Loan Documents or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payments of, or in any other
term of, all or any part of the Secured Obligations, or any other amendment or
waiver thereof or any consent to departure therefrom, including, but not limited
to, any increase in the Secured Obligations resulting from the extension of
additional credit to any Borrower or otherwise;
(c) any taking, exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any guaranty
for all or any of the Secured Obligations;
(d) any change, restructuring or termination of the corporate structure or
existence of any Borrower; or
(e) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, any Borrower or a guarantor.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by the Administrative Agent or any Lender upon the
insolvency, bankruptcy or reorganization of any Borrower or otherwise, all as
though such payment had not been made.
Section 4.20 Waiver of Suretyship Defenses. Each Borrower agrees that the
joint and several liability of the Borrowers described in Section 4.19 shall not
be impaired or affected by any modification, supplement, extension or amendment
or any contract or agreement to which the other Borrowers may hereafter agree
(other than an agreement signed by the Administrative Agent and the Lenders
specifically releasing such liability), nor by any delay, extension of time,
renewal, compromise or other indulgence granted by the Administrative Agent or
any Lender with respect to any of the Secured Obligations, nor by any other
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agreements or arrangements whatever with the other Borrowers or with anyone
else, each Borrower hereby waiving all notice of such delay, extension, release,
substitution, renewal, compromise or other indulgence, and hereby consenting to
be bound thereby as fully and effectually as if it had expressly agreed thereto
in advance. The liability of each Borrower is direct and unconditional as to all
of the Secured Obligations, and may be enforced without requiring the
Administrative Agent or any Lender first to resort to any other right, remedy or
security. Each Borrower hereby expressly waives promptness, diligence, notice of
acceptance and any other notice (except to the extent expressly provided for
herein or in another Loan Document) with respect to any of the Secured
Obligations, the Revolving Credit Notes, this Agreement or any other Loan
Document and any requirement that the Administrative Agent or any Lender
protect, secure, perfect or insure any Lien or any property subject thereto or
exhaust any right or take any action against any Borrower or any other Person or
any collateral, including any rights any Borrower may otherwise have under
O.C.G.A. ss. 10-7-24 or any successor statute or any analogous statute in any
jurisdiction under the laws of which any Borrower is incorporated or in which
any Borrower conducts business.
Section 4.21 Waiver of Subrogation and Contribution of Borrowers. Except as
expressly provided in Section 4.22, each Borrower hereby irrevocably waives any
claims or other rights that it may now have or hereafter acquire against any
other Borrower that arise from the existence, payment, performance or
enforcement of the Secured Obligations or any Loan Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution
or indemnification and any right to participate in any claim or remedy of the
Administrative Agent or any Lender against any other Borrower or any collateral
that the Administrative Agent or any Lender now has or hereafter acquires,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from any other Borrower, directly or indirectly, in cash or other
property or by setoff or in any other manner, payment or security on account of
such claim, remedy or right. If any amount shall be paid to a Borrower in
violation of the preceding sentence at any time prior to the later of the
payment in full of the Secured Obligations and the Termination Date, such amount
shall be deemed to have been paid to such Borrower for the benefit of, and held
in trust for the benefit of, the Administrative Agent, for its own benefit and
the benefit of the Lenders, and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Secured Obligations, whether matured or
unmatured, in accordance with the terms of this Agreement, or to be held as
collateral for any Secured Obligations or other amounts payable under this
Agreement thereafter arising. Each Borrower acknowledges that it will receive
direct and indirect benefits from the financing arrangements contemplated by
this Agreement and that the waiver set forth in this Section 4.21 is knowingly
made in contemplation of such benefits.
Section 4.22 Right of Contribution of Borrowers. Each Borrower hereby
agrees that to the extent that any other Borrower shall have paid in respect of
the Secured Obligations more than the aggregate amount of all Valuable Transfers
to it hereunder, it shall be entitled to seek and receive contribution from and
against any other Borrower which has paid less in respect of the Secured
Obligations than the aggregate amount of all Valuable Transfers to it hereunder.
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The provisions of this Section 4.22 shall not limit the obligations and
liabilities of any Borrower to the Administrative Agent or any Lender, and each
Borrower shall remain liable to the Administrative Agent and the Lenders for the
full amount as to which such Borrower is obligated hereunder.
Section 4.23 Funds Transfer Services
(a) The Borrowers acknowledge that the Administrative Agent has made
available to it as Annex C hereto a description of security procedures regarding
funds transfers executed by NationsBank or an Affiliated bank at the request of
the Borrowers (the Security Procedures). The Borrowers and the Administrative
Agent agree that the Security Procedures are commercially reasonable. The
Borrowers further acknowledge that the full scope of the Security Procedures
which NationsBank and its Affiliated banks offer and strongly recommend for
funds transfers is available only if the Borrowers communicate directly with
NationsBank or such Affiliated bank as applicable in accordance with said
procedures. If the Borrowers attempt to communicate by any other method or
otherwise not in accordance with the Security Procedures, NationsBank or such
Affiliated bank, as applicable, shall not be required to execute such
instructions, but if NationsBank or such Affiliated bank, as applicable, does
so, the Borrowers will be deemed to have refused the Security Procedures that
NationsBank and its Affiliated banks offer and strongly recommend, and the
Borrowers will be bound by any funds transfer, whether or not authorized, which
is issued in the name of the Borrowers (or any of them) and accepted by
NationsBank or such Affiliated bank, as applicable, in good faith. NationsBank
or any Affiliated bank, as applicable, may modify the Security Procedures at
such time or times and in such manner as NationsBank or such Affiliated bank, as
applicable, in its sole discretion, deems appropriate to meet prevailing
standards of good banking practice. By continuing to use NationsBank's or such
Affiliated bank's, as applicable, wire transfer services after receipt of any
modification of the Security Procedures, the Borrowers agree that the Security
Procedures, as modified, are likewise commercially reasonable. The Borrowers
further agree to establish and maintain procedures to safeguard the Security
Procedures and any information related thereto.
(b) NationsBank and its Affiliated banks will generally use the Fedwire
funds transfer system for domestic funds transfers, and the funds transfer
system operated by the Society for Worldwide International Financial
Telecommunication (SWIFT) for international funds transfers. International funds
transfers may also be initiated through the Clearing House InterBank Payment
System (CHIPs) or international cable. However, NationsBank or any of its
Affiliated banks may use any means and routes that NationsBank or such
Affiliated bank, as applicable, in its sole discretion, may consider suitable
for the transmission of funds. Each payment order, or cancellation thereof,
carried out through a funds transfer system or a clearinghouse will be governed
by all applicable funds transfer system rules and clearing house rules and
clearing arrangements, whether or not NationsBank or such Affiliated bank, as
applicable, is a member of the system, clearinghouse or arrangement and the
Borrowers acknowledge that NationsBank's or such Affiliated bank's, as
applicable, right to reverse, adjust,
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stop payment or delay posting of an executed payment order is subject to the
laws, regulations, rules, circulars and arrangements described herein.
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ARTICLE 5
CONDITIONS PRECEDENT
Section 5.1 Conditions Precedent to Initial Loans. Notwithstanding any
other provision of this Agreement, the obligations of the Lenders to make Loans
hereunder are subject to the satisfaction of each of the following conditions,
prior to or contemporaneously with the making of the Initial Loans:
(a) Closing Documents. The Administrative Agent shall have received each of
the following (in sufficient copies, other than the Notes, for all Lenders), all
of which shall be satisfactory in form and substance to the Administrative Agent
and its special counsel:
(1) This Agreement, duly executed and delivered by each Borrower.
(2) The Revolving Credit Notes to the order of each Lender, duly
executed and delivered by each Borrower.
(3) Certified copies of the articles of incorporation and by-laws of
each Borrower as in effect on the Effective Date.
(4) Certified copies of all corporate action and shareholder action,
if necessary, taken by each Borrower or its shareholders, as the case may
be, to authorize the execution, delivery and performance of this Agreement
and the Loan Documents to which it is a party and the borrowings under this
Agreement.
(5) Certificates of incumbency and specimen signatures with respect to
each of the officers of each Borrower authorized to execute and deliver
this Agreement and the Loan Documents on its behalf or any certificate or
instrument to be delivered in connection with this Agreement or to request
borrowings under this Agreement.
(6) A signed opinion of each of (i) the General Counsel of Syratech,
(ii) Hutchins, Wheeler & Dittmar, special counsel for the Borrowers and
(iii) such local counsel as the Administrative Agent may deem desirable, as
to such matters in connection with this Agreement and the Loan Documents as
any Lender through the Administrative Agent, may reasonably request.
(7) A Certificate of the Chief Financial Officer stating that, to the
best of his knowledge and based on an examination sufficient to enable him
to make an informed statement,
(A) all of the representations and warranties made or deemed to
be made under this Agreement are true and correct as of the Effective
Date, both
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with and without giving effect to the Initial Loans and the
application of the proceeds thereof, and
(B) no Default or Event of Default exists, and the Administrative
Agent shall be satisfied as to the accuracy thereof.
(8) The Financing Statements duly executed and delivered by the
Borrowers, and evidence satisfactory to the Administrative Agent that the
Financing Statements have been filed in each jurisdiction where such filing
may be necessary or appropriate to perfect the Security Interest.
(9) Landlord's waiver and consent agreements duly executed on behalf
of each landlord of real property on which any Collateral is located.
(10) A report from a qualified engineering firm or other qualified
consultant acceptable to the Administrative Agent with respect to a "phase
I" investigation and assessment of all owned Real Estate, which shall be
based on a thorough review of past and present uses, occupants, ownership
and tenancy of the property and/or adjacent properties and/or adjacent
properties regarding compliance with Environmental Laws.
(11) An appraisal of all Inventory, prepared by an appraiser
satisfactory to the Administrative Agent, establishing values at levels
satisfactory to the Administrative Agent.
(12) A certification or opinion as to the Solvency of Syratech and
its Subsidiaries, prepared by Murray Devine & Company or another reputable,
independent firm acceptable to the Administrative Agent, prepared on a
basis (including, giving pro forma effect to the Merger and the
transactions contemplated by this Agreement) and otherwise in form and
substance satisfactory to the Administrative Agent.
(13) A Schedule of Inventory and a Schedule of Receivables, each
prepared as of a recent date.
(14) Certificates or binders of insurance relating to each of the
policies of insurance covering any of the Collateral together with loss
payable clauses which comply with the terms of Section 9.8(b).
(15) Such Agency Account Agreements as shall be required by the
Administrative Agent duly executed by the applicable Clearing Bank and the
relevant Borrower.
(16) A Borrowing Base Certificate prepared as of a date within five
Business Days prior to the Effective Date duly executed and delivered by
the Chief Financial Officer.
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(17) An Initial Notice of Borrowing from the Borrowers to the
Administrative Agent requesting the Initial Loans and specifying the method
of disbursement.
(18) Copies of all the financial statements referred to in Section
6.1(m) and meeting the requirements thereof.
(19) Evidence satisfactory to the Administrative Agent of the release
and termination of (or agreement to release and terminate) or, at its
discretion, assignments of all Liens other than Permitted Liens, including,
without being limited to, a payoff letter from Nations Bank as the lender
under the Existing Credit Agreement.
(20) A certification from the Principal Officers of the Borrowers as
to such factual matters as shall be required by the Administrative Agent.
(21) One or more Pledge Agreements, duly executed and delivered by
Syratech and, as to certain indirect Subsidiaries of Syratech, other
Borrowers, together with stock transfer powers, duly executed by Syratech
(or other shareholder) in blank, and stock certificates representing 100%
of the issued and outstanding capital stock of each of Syratech's United
States Subsidiaries and 65% of the issued and outstanding capital stock of
each of Syratech's non-United States Subsidiaries; a Pledge Agreement, duly
executed and delivered by Holding (and, as necessary, other
Borrower-shareholders), together with stock transfer powers, duly executed
by Holding (or such other shareholders) in blank, and stock certificates
representing 100% of the originally issued and outstanding capital stock of
each of Holdings' Subsidiaries.
(22) Such other documents and instruments as the Agent, or any Lender,
may reasonably request.
(b) Fees. The Borrowers shall have paid all of the fees payable on the
Effective Date to the Administrative Agent or any Lender referred to herein or
provided for in the separate letter dated January 31, 1997 to which the
Administrative Agent is a party.
(c) Recapitalization. The Merger and the other transactions contemplated by
the Recapitalization shall have been consummated in accordance with the terms
and provisions of the Merger Agreement, without the waiver of any material term
thereof; the Administrative Agent shall have received evidence satisfactory to
it of the issuance of the Senior Notes in accordance with the terms of the
Senior Note Indenture and the receipt by the Borrowers of gross cash proceeds of
the Senior Notes in an amount not less than $155,000,000; the Administrative
Agent shall have received evidence satisfactory to it that, after giving effect
to the Merger, Lee Affiliates will own not less than 51% of the voting common
stock of Syratech; the Administrative Agent shall have received evidence
satisfactory to it that after giving effect to the Merger, the value of
contributed equity of Syratech is not less than $121,000,000, including at least
$75,000,000 of cash paid by Lee Affiliates for shares of THL Transaction I Corp.
exchanged for shares of common stock of Syratech and that Preferred Stock has
been issued by
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Syratech and purchased by Lee Affiliates for cash in an amount not less than
$18,000,000; and, the Administrative Agent shall have received evidence
satisfactory to it that Mr. Leonard Florence has retained shares of the common
stock of Syratech representing at least 10% of the voting power thereof on a
fully diluted basis. Such evidence shall include copies of the Merger Agreement,
the Senior Note Indenture and the other instruments, certificates and other
documents issued in connection with the consummation of the transactions
contemplated thereby, as well as reliance letters for the benefit of the
Administrative Agent and the Lenders as to the legal opinions delivered in
connection with the consummation of such transactions.
(d) Security Interests. The Administrative Agent shall have received
satisfactory evidence that the Administrative Agent (for the benefit of the
Lenders) has a valid and perfected first priority Lien as of such date in all of
the Collateral, subject only to Permitted Liens.
(e) Materially Adverse Effect. The Lenders and the Administrative Agent
shall be satisfied that no Materially Adverse Effect has occurred since January
31, 1997.
Section 5.2 Conditions to All Loans, Letters of Credit. The Lenders'
obligations to make any Loan, including the Initial Loans and all subsequent
Loans, and Nations Bank's obligation to issue any Letter of Credit shall be
subject to satisfaction of the following additional conditions:
(a) all of the representations and warranties made or deemed to be made
under this Agreement shall be true and correct at such time in all material
respects, both with and without giving effect to the Loans to be made at such
time and the application of the proceeds thereof or the issuance of such Letter
of Credit, and
(b) the corporate actions I ,f the Borrower referred to in Section
5.1(a)(4) shall remain in full force and effect and the incumbency of officers
shall be as stated in the certificates of incumbency delivered pursuant to
Section 5.1(a)(5) or as subsequently modified and reflected in a certificate of
incumbency delivered to the Administrative Agent.
Each request or deemed request for any borrowing hereunder shall be deemed to be
a certification by the Borrowers to the Administrative Agent and the Lenders as
to the matters set forth in Section 5.2(a) and (b) and the Administrative Agent
may, without waiving either condition, consider the conditions specified in
Sections 5.2(a) and (b) fulfilled and a representation by the Borrowers to such
effect made, if no written notice to the contrary is received by the
Administrative Agent prior to the making of the Loan then to be made.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
Section 6.1 Representations and Warranties. Each Borrower represents and
warrants to the Administrative Agent and the Lenders as follows:
(a) Organization; Power: Qualification. Each such Borrower and each of its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has the power
and authority to own its properties and to carry on its business as now being
and proposed to be conducted hereafter and is duly qualified and authorized to
do business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization, except for
jurisdictions where the failure to be so qualified or authorized will not have a
Materially Adverse Effect.
(b) Subsidiaries. Schedule 6.1(b) correctly sets forth the name of each
Subsidiary of such Borrower, its jurisdiction of incorporation, the name of its
immediate parent or parents, and the percentage of its issued and outstanding
securities owned by such Borrower or any other Subsidiary of such Borrower and
indicating whether such Subsidiary is a Consolidated Subsidiary. Except as set
forth on Schedule 6.1(b),
(i) no Subsidiary has issued any securities convertible into shares of
such Subsidiary's capital stock or any options, warrants or other rights to
acquire any shares or securities convertible into such shares,
(ii) the outstanding stock and securities of each such Subsidiary are
owned by such Borrower or a wholly owned Subsidiary of such Borrower or as
otherwise indicated on Schedule 6.1(b), or by such Borrower and one or more
of its wholly owned Subsidiaries, free and clear of all Liens, warrants,
options and rights of others of any kind whatsoever, and
(iii) such Borrower has no Subsidiaries.
The outstanding stock of such Borrower and each of its Subsidiaries has been
duly and validly issued and is fully paid and nonassessable by the issuer. As of
the Effective Date, the securities described on Schedule 1.1B - Pledged
Securities, constitute 100% of the issued and outstanding capital stock of each
Subsidiary organized under the laws of a jurisdiction within the United States
and at least 65% of the issued and outstanding capital stock of each other
Subsidiary. Inclusion of a Subsidiary in Schedule 6.1(b) shall not have the
effect of making such Subsidiary a party to this Agreement or any other Loan
Document.
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(c) Authorization of Agreement and Loan Documents. Such Borrower and each
of its Subsidiaries has the right and power, and has taken all necessary action
to authorize it, to execute, deliver and perform this Agreement and each of the
Loan Documents to which it is a party in accordance with their respective terms.
This Agreement and each of the Loan Documents to which it is a party have been,
or will be, duly executed and delivered by a duly Authorized Officer of such
Borrower and each Subsidiary a party thereto and each is, or when executed and
delivered will be, a legal, valid and binding obligation of such Borrower and
each Subsidiary a party thereto, enforceable in accordance with its terms.
(d) Compliance with Law; Governmental Approvals.
(i) Except as set forth in Schedule 6.1(d), such Borrower
(A) has all Governmental Approvals, including permits relating to
federal, state and local Environmental Laws, ordinances and
regulations required by any Applicable Law for it to conduct its
business, each of which is in full force and effect, is final and not
subject to review on appeal and is not the subject of any pending or,
to the knowledge of such Borrower, threatened attack by direct or
collateral proceeding,
(B) is in compliance with each Governmental Approval applicable
to it and in compliance with all other Applicable Laws relating to it,
including, without being limited to, all Environmental Laws and all
occupational health and safety laws applicable to such Borrower or its
properties, and
(C) may execute, deliver and perform its obligations under the
Loan Documents to which it is a party, without conflict with, a breach
of or default under any material provisions of any indenture,
agreement or other instrument to which such Borrower or any of its
Subsidiaries is a party or by which such Borrower, any of its
Subsidiaries or any of its or their property may be bound,
except for instances of noncompliance which would not, singly or in
the aggregate, cause a Default or Event of Default or have a
Materially Adverse Effect and in respect of which adequate reserves
have been established on the books of such Borrower.
(ii) Without limiting the generality of the above, except with respect
to matters which could not reasonably be expected to have in the aggregate
a Materially Adverse Effect and except as disclosed by the Borrowers to the
Lenders prior to the Agreement Date, to the knowledge of such Borrower:
(A) Neither such Borrower nor any of its present property or
operations, nor its past property or operations, is subject to any
order from or agreement with any public authority or private party
respecting (x) any
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environmental, health or safety requirements of Applicable Law, (y)
any Remedial Action, or (z) any liabilities or costs arising from the
Release or threatened Release of a Contaminant into the environment;
(B) None of the operations of such Borrower is subject to any
judicial or administrative proceeding alleging a violation of any
environmental, health or safety requirement of Applicable Law;
(C) None of the present nor past operations of such Borrower is
the subject of any investigation by any public authority evaluating
whether any Remedial Action is needed to respond to a Release or
threatened Release of a Contaminant into the environment;
(D) Such Borrower has not filed any notice under any requirement
of Applicable Law indicating past or present treatment, storage or
disposal of a hazardous waste, as that term is defined under 40 CFR
Part 261 or any state equivalent;
(E) Such Borrower has not filed any notice under any requirement
of Applicable Law reporting a Release of a Contaminant into the
environment;
(F) Except in compliance in all material respects with applicable
Environmental Laws, during the course of such Borrower's operations on
the Real Estate, there have been no (w) generation, treatment,
recycling, storage or disposal of hazardous waste, as that term is
defined under 40 CFR Part 261 or any state equivalent, (x) use of
underground storage tanks or surface impoundments, (y) use of
asbestos-containing materials, or (z) use of polychlorinated biphenyls
(PCB) used in hydraulic oils, electrical transformers or other
equipment;
(G) Such Borrower has not received any notice or claim to the
effect that it is or may be liable to any Person as a result of the
Release or threatened Release of a Contaminant into the environment;
(H) The presence and condition of all asbestos-containing
material which is on or part of the Real Estate (excluding any raw
materials used in the manufacture of products or products themselves)
do not violate in any material respect any currently applicable
requirement of Applicable Law; and
(I) Such Borrower does not manufacture, distribute or sell, nor
has it ever manufactured, distributed or sold, products which contain
asbestos-containing material; and
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(iii) Such Borrower has notified the Lenders of its receipt
of any notice of a material violation of any Environmental Laws
and occupational health and safety laws applicable to such
Borrower or its properties.
(e) Business. The business of such Borrower and each of its Subsidiaries is
as described on Schedule 6.1(e).
(f) Titles to Properties. Except as set forth in Schedule 6.1(f), each of
such Borrower and its Subsidiaries has good, marketable and legal title to, or a
valid leasehold interest in, its real properties and valid and legal title to
all personal property and assets, including, but not limited to, those reflected
on the Consolidated balance sheet of Syratech and its Consolidated Subsidiaries
delivered pursuant to Section 6.1(m), except those which have been disposed of
subsequent to such date in the ordinary course of business.
(g) Liens. Except as set forth on Schedule 6.1(g), none of the properties
and assets of such Borrower or any of its Subsidiaries is subject to any Lien,
except Permitted Liens. No financing statement under the Uniform Commercial Code
of any State which names such Borrower or any Subsidiary of such Borrower as
debtor has been filed in any State or other jurisdiction and neither such
Borrower nor any of its Subsidiaries has signed any such financing statement or
any security agreement authorizing any secured party thereunder to file any such
financing statement, any of which financing statements or security agreements
remain in effect and unterminated after the Effective Date, except to perfect or
protect Permitted Liens.
(h) Indebtedness and Guaranties. Schedule 6.1(h) is a complete and correct
listing of all (i) Debt and (ii) Guaranties of each of such Borrower and each of
its Subsidiaries as of the Effective Date. Each of such Borrower and each of its
Subsidiaries has performed and is in compliance with all of the terms of such
Debt and Guaranties and all instruments and agreements relating thereto, and no
default or event of default, or event or condition which with notice or lapse of
time or both would constitute such a default or event of default, exists with
respect to any such Debt or Guaranty.
(i) Litigation. Except as set forth on Schedule 6.1(i), there are no
actions, suits or proceedings pending (nor, to the knowledge of such Borrower,
are there any actions, suits or proceedings threatened) against or in any other
way relating adversely to or affecting any of such Borrower or any of its
Subsidiaries or any of its or their property in any court or before any
arbitrator of any kind or before or by any governmental body except actions,
suits or proceedings of the character normally incident to the kind of business
conducted by such Borrower or Subsidiary, as the case may be, which, if
adversely determined, would not in the aggregate have a Materially Adverse
Effect, and there are no strikes or walkouts in progress relating to any labor
contracts to which such Borrower or any of its Subsidiaries is a party.
(j) Proprietary Rights. Schedule 6.1(j) sets forth a correct and complete
list of all of the Proprietary Rights of such Borrower. None of the Proprietary
Rights is subject to any licensing agreement or similar arrangement except as
set forth on Schedule 6.1(j) or as
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entered into in the sale or distribution of such Borrower's Inventory in the
ordinary course of business. To the best of such Borrower's knowledge, none of
the Proprietary Rights infringes on or conflicts with any other Person's
property, and no other Person's property infringes on or conflicts with the
Proprietary Rights. The Proprietary Rights described on Schedule 6.1(j)
constitute all of the material property of such type necessary to the current
and continued conduct of such Borrower's business as presently conducted.
(k) Tax Returns and Payments. All federal, state and other
tax returns of each of such Borrower and its Subsidiaries required by law to be
filed have been duly filed, and all federal, state and other taxes, assessments
and other governmental charges or levies upon such Borrower or its Subsidiaries
and their property, income, profits and assets which are due and payable have
been paid, except any such nonpayment which is at the time permitted under
Section 9.7. The charges, accruals and reserves on the books of each of such
Borrower and each of its Subsidiaries in respect of federal and state taxes are
in the judgment of such Borrower adequate, and such Borrower knows of no reason
to anticipate any additional assessments which, singly or in the aggregate,
might have a Materially Adverse Effect.
(l) Burdensome Provisions. Neither such Borrower nor any Subsidiary is a
party to any indenture, agreement, lease or other instrument, or subject to any
charter or corporate restriction, Governmental Approval or Applicable Law,
compliance with the terms of which might have a Materially Adverse Effect, nor
is such Borrower or any Subsidiary subject to any contractual restrictions which
limit the amount of dividends payable by any Subsidiary.
(m) Financial Statements and Projections. (i) The Borrowers have furnished
to the Lenders copies of the consolidated balance sheet of Syratech and its
Consolidated Subsidiaries as at December 31, 1996 and the related consolidated
statements of earnings, cash flow and retained earnings for the twelve-month
period then ended, reported on by Deloitte & Touche. Such financial statements
are complete and correct, and present fairly in all material respects in
accordance with GAAP the consolidated financial position and results of
operations of Syratech and its Consolidated Subsidiaries as of their date and
for the fiscal year ended on such date. Except as disclosed or reflected in such
financial statements as at such date, and except as disclosed in writing to the
Administrative Agent and the Lenders prior to the Effective Date, as of the
Effective Date such Borrower has no material liabilities, contingent or
otherwise, and there were no material unrealized or anticipated losses of such
Borrower.
(ii) The Borrowers have furnished the Projections to the Lenders. The
opening balance sheet included in the Projections presents fairly and accurately
the Borrowers' financial condition as of the Effective Date after giving effect
to the Merger and the other transactions constituting the Recapitalization. The
balance of the Projections represent the Borrowers' best estimate of their
future financial performance for the periods set forth therein, and have been
prepared on the basis of the assumptions set forth therein, which assumptions
the Borrowers believe are reasonable in the light of current and reasonably
foreseeable business conditions.
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(n) Adverse Change. Since the date of the financial statements described in
Section 6.1(m)
(i) no material adverse change in the business, assets, liabilities,
financial condition, results of operations or business prospects of
Syratech and its Consolidated Subsidiaries has occurred, and
(ii) no event has occurred or failed to occur which has had, or may
have, a Materially Adverse Effect.
(o) ERISA. Neither the Borrower nor any Related Company maintains or
contributes to any Benefit Plan other than those listed on Schedule 6.1(o). Each
such Benefit Plan is in substantial compliance with ERISA and the Code,
including but not limited to those provisions thereof relating to reporting and
disclosure, and neither the Borrower nor any Related Company has received any
notice asserting that a Benefit Plan is not in compliance with ERISA. No
material liability to the PBGC or to a Multiemployer Plan has been, or is
expected to be, incurred by the Borrower or any Related Company. Each Benefit
Plan intended to qualify under Section 401(a) of the Code so qualifies and any
related trust is exempt from federal income tax under Section 501(a) of the
Code. A favorable determination letter from the IRS has been issued (or applied
for) with respect to each such plan and trust and nothing has occurred since the
date of any such determination letter issued, that would adversely affect such
qualification or tax-exempt status. No Benefit Plan subject to the minimum
funding standards of the Code has failed to meet such standards. Neither the
Borrower nor any Related Company has transferred any pension plan liability in a
transaction that could be subject to Sections 4069 or 4212(c) of ERISA. Neither
the Borrower nor any Related Company has any liability, direct or contingent,
with respect to any Benefit Plan other than to make payments to the Benefit Plan
in accordance with its terms, and there are no pending or threatened claims
against any Benefit Plan. No nonexempt prohibited transaction with the meaning
of Section 4975 of the Code or Section 406 of ERISA has occurred with respect to
a Benefit Plan. No employee or former employee of the Borrower or any Related
Company is or may become entitled to any benefit under a Benefit Plan that is a
"welfare plan" within the meaning of Section 3(1) of ERISA following such
employee's termination of employment. Each such welfare plan that is a group
health plan has been operated in compliance with the provisions of Section 4980B
of the Code and Sections 601-609 of ERISA and any applicable provisions of
state law that are similar.
(p) Absence of Defaults. Neither such Borrower nor any Subsidiary of such
Borrower is in default under its certificate or articles of incorporation or
by-laws and no event has occurred, which has not been remedied, cured or waived,
(i) which constitutes a Default or an Event of Default, or
(ii) which constitutes, or which with the passage of time or giving of
notice or both would constitute, a default or event of default by such
Borrower or any Subsidiary of such Borrower under any material agreement
(other than this Agreement) or judgment,
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decree or order to which such Borrower or any such Subsidiary is a party or
by which such Borrower or any such Subsidiary or any of their respective
properties may be bound, except, in the case only of any such agreement,
for alleged defaults which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves have been
established on the books of such Borrower or such Subsidiary, as the case
may be, and except for defaults that have been disclosed and consented to
by the Administrative Agent and the Lenders, as appropriate.
(q) Accuracy and Completeness of Information. All written information,
reports and other papers and data produced by or on behalf of the Borrowers and
furnished to the Administrative Agent and the Lenders on or prior to the
Effective Date, were, at the time the same were so furnished, complete and
correct in all material respects, to the extent necessary to give the recipient
a true and accurate knowledge of the subject matter. As of the Effective Date,
no fact is known to such Borrower which has had, or may in the future have (so
far as such Borrower can reasonably foresee), a Materially Adverse Effect, which
has not been set forth in the financial statements referred to in Section 6.1(m)
or in such information, reports or other papers or data or otherwise disclosed
in writing to the Administrative Agent and the Lenders prior to the Effective
Date. No document furnished or written statement made to the Administrative
Agent or the Lenders or prior to the Effective Date, in connection with the
negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains any untrue statement of a fact material to the
creditworthiness of such Borrower or any Subsidiary or omits or will omit to
state a material fact necessary in order to make the statements contained
therein not misleading.
(r) Solvency. In each case after giving effect to the Debt represented by
the Loans outstanding and to be incurred and the transactions contemplated by
the Recapitalization and this Agreement, each of such Borrower and each
Subsidiary is solvent, having assets of a fair salable value which exceeds the
amount required to pay its debts, and each of such Borrower and each Subsidiary
is able to and anticipates that it will be able to meet its debts as they mature
and has adequate capital to conduct the business in which it is, or proposes to
be, engaged.
(s) Federal Regulations. Neither such Borrower nor any Subsidiary is
engaged or will engage, principally or as one of its important activities, in
the business of extending credit for the purpose of "purchasing" or "carrying"
any "margin stock" (as each of such terms is defined or used in Regulations G
and U of the Board of Governors of the Federal Reserve System).
(t) Investment Company Act. Neither such Borrower nor any Subsidiary other
than Syratech Securities Corporation, which is inactive, is an "investment
company" or a company "controlled" by an "investment company" (as each of such
terms is defined or used in the Investment Company Act of 1940, as amended).
(u) Receivables.
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(i) Status. Each Receivable reflected in the computations included in
any Borrowing Base Certificate meets the criteria enumerated in clauses (a)
through (o) of the definition "Eligible Receivables," except as disclosed
in such Borrowing Base Certificate or as disclosed in a timely manner in a
subsequent Borrowing Base Certificate or otherwise in writing to the
Administrative Agent and the Lenders.
(ii) Chief Executive Office. The chief executive office of such
Borrower and the books and records relating to the Receivables of such
Borrower are located at the address or addresses set forth on Schedule
6.1(u).
(v) Inventory.
(i) Status. All Inventory included in any Borrowing Base Certificate
meets the criteria enumerated in clauses (a) through (g) of the definition
of "Eligible Inventory," except as disclosed in such Borrowing Base
Certificate or in a subsequent Borrowing Base Certificate or as otherwise
specifically disclosed in writing to the Administrative Agent and the
Lenders.
(ii) Condition. All Inventory of such Borrower is in good condition,
meets all standards imposed by any governmental agency or department or
division thereof having regulatory authority over such goods, their use or
sale, and is currently either usable or saleable in the normal course of
such Borrower's business, except to the extent reserved against in the
financial statements delivered pursuant to Article 10 or as disclosed on a
Schedule of Inventory delivered to the Administrative Agent pursuant to
Section 8.14(b).
(iii) Location. All Inventory is located on premises listed on
Schedule 6.1(v) or is Inventory in transit to one of such locations, except
as otherwise disclosed in writing to the Administrative Agent and the
Lenders.
(w) Equipment. All Equipment is in good order and repair in all
material respects.
(x) Employee Relations. Such Borrower is not, except as set forth on
Schedule 6.1(x), party to any collective bargaining agreement nor has any labor
union been recognized as the representative of such Borrower's employees; such
Borrower knows of no pending, threatened or contemplated strikes, work stoppage
or other labor disputes involving its employees or those of its Subsidiaries.
(y) Trade Names. All trade names or styles under which such Borrower sells
Inventory or creates Receivables, or to which instruments in payment of
Receivables are made payable, are listed on Schedule 6.1(y).
(z) Real Property. No Borrower owns any Real Estate nor leases any Real
Estate other than that described on Schedule 6.1(z).
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(aa) Bank Accounts, Lockboxes, Etc. Schedule 6.1(aa) is a complete and
correct list of all checking accounts, deposit accounts, lockboxes and other
bank accounts maintained by any Borrower.
Section 6.2 Survival of Representations and Warranties, etc. All
representations and warranties set forth in this Article 6 and all statements
contained in any certificate, financial statement, opinion or other instrument
delivered by or on behalf of each Borrower or any of its Subsidiaries pursuant
to or in connection with this Agreement or any of the Loan Documents (including,
but not limited to, any such made in or in connection with any amendment
thereto) shall constitute representations and warranties made under this
Agreement. All representations and warranties made under this Agreement shall be
made or deemed to be made at and as of the Agreement Date, at the Effective Date
and at and as of the date of making each Loan. All representations and
warranties made or deemed to be made under this Agreement shall survive and not
be waived by the execution and delivery of this Agreement, any investigation
made by or on behalf of the Administrative Agent or any Lender, or any borrowing
hereunder.
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ARTICLE 7
SECURITY INTEREST
Section 7.1 Security Interest.
(a) To secure the payment, observance and performance of the Secured
Obligations, each Borrower hereby mortgages, pledges and assigns all of the
Collateral owned by it or in which it has an interest to the Administrative
Agent and grants to the Administrative Agent a continuing security interest in,
and a continuing Lien upon, all of such Collateral.
(b) As additional security for all of the Secured Obligations, each
Borrower grants to the Administrative Agent a security interest in, and assigns
to the Administrative Agent all of such Borrower's right, title and interest in
and to, any deposits or other sums at any time credited by or due from each
Lender and each Affiliate of a Lender to such Borrower, or credited by or due
from any participant of any Lender to such Borrower, with the same rights
therein as if the deposits or other sums were credited by or due from the
Administrative Agent. Each Borrower hereby authorizes each Lender and each
Affiliate of such Lender and each participant to pay or deliver to the
Administrative Agent, for the account of the Lenders, without any necessity on
the Administrative Agent's or any Lender's part to resort to other security or
sources of reimbursement for the Secured Obligations, at any time during the
continuation of any Event of Default or in the event that the Administrative
Agent, on behalf of the Lenders, should make demand for payment hereunder and
without further notice to such Borrower (such notice being expressly waived),
any of the aforesaid deposits (general or special, time or demand, provisional
or final) or other sums for application to any Secured Obligation, irrespective
of whether any demand has been made or whether such Secured Obligation is
mature, and the rights given the Administrative Agent, the Lenders, their
Affiliates and participants hereunder are cumulative with each such Person's
other rights and remedies, including other rights of set-off. The Administrative
Agent will promptly notify the Borrowers of its receipt of any such funds for
application to the Secured Obligations, but failure to do so will not affect the
validity or enforceability thereof. The Administrative Agent may give notice of
the above grant of a security interest in and assignment of the aforesaid
deposits and other sums and authorization to, and make any suitable arrangements
with, any Lender or any such Affiliate or participant of any Lender for
effectuation thereof, and each Borrower hereby irrevocably appoints the
Administrative Agent as its attorney to collect any and all such deposits or
other sums to the extent any such payment is not made to the Administrative
Agent or any Lender by such Lender, Affiliate or participant.
Section 7.2 Continued Priority of Security Interest.
(a) The Security Interest granted by each Borrower shall at all times be
valid, perfected and enforceable against such Borrower and all third parties in
accordance with the terms of this Agreement, as security for the Secured
Obligations, and the Collateral shall not at
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any time be subject to any Liens that are prior to, on a parity with or junior
to the Security Interest, other than Permitted Liens.
(b) Each Borrower shall, at its sole cost and expense, take all action that
may be necessary or desirable, or that the Administrative Agent may reasonably
request, so as at all times to maintain the validity, perfection, enforceability
and rank of the Security Interest in the Collateral in conformity with the
requirements of Section 7.2(a) or to enable the Administrative Agent to exercise
or enforce its rights hereunder, including, but not limited to:
(i) paying all taxes, assessments and other claims lawfully levied or
assessed on any of the Collateral, except to the extent that such taxes,
assessments and other claims constitute Permitted Liens,
(ii) diligently seeking to obtain, after the Agreement Date,
landlords', mortgagees' or mechanics' releases, subordinations or waivers,
(iii) delivering to the Administrative Agent, endorsed or accompanied
by such instruments of assignment as the Administrative Agent may specify,
and stamping or marking in such manner as the Administrative Agent may
specify, any and all chattel paper, instruments, letters and advices of
guaranty and documents evidencing or forming a part of the Collateral, and
(iv) executing and delivering financing statements, pledges,
designations, hypothecations, notices and assignments, in each case in form
and substance satisfactory to the Administrative Agent, relating to the
creation, validity, perfection, maintenance or continuation of the Security
Interest under the UCC or other Applicable Law.
(c) The Administrative Agent is hereby authorized to file one or more
financing or continuation statements or amendments thereto without the signature
of or in the name of the Borrowers (or any of them) for any purpose described in
Section 7.2(b). A carbon, photographic or other reproduction of this Agreement
or of any of the Security Documents or of any financing statement filed in
connection with this Agreement is sufficient as a financing statement to the
fullest extent permitted by Applicable Law.
(d) If and to the extent specifically requested by the Administrative
Agent, each Borrower shall mark its books and records as may be necessary or
appropriate to evidence, protect and perfect the Security Interest and shall
cause its financial statements to reflect the Security Interest.
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ARTICLE 8
COLLATERAL COVENANTS
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been indefeasibly paid in full, unless the Lenders shall
otherwise consent in the manner provided in Section 15.10:
Section 8.1 Collection of Receivables.
(a) Each Borrower will cause all moneys, checks, notes, drafts and other
payments relating to or constituting proceeds of Receivables, or of any other
Collateral, to be forwarded to a Lockbox for deposit in an Agency Account in
accordance with the procedures set out in the corresponding Agency Account
Agreement, and in particular each Borrower will:
(i) advise each Account Debtor to address all remittances with respect
to amounts payable on account of any Receivables to a specified Lockbox,
and
(ii) stamp all invoices relating to any such amounts with a legend
satisfactory to the Administrative Agent indicating that payment is to be
made to such Borrower via a specified Lockbox.
(b) Each Borrower and the Administrative Agent shall cause all collected
balances in each Agency Account to be transmitted daily by wire transfer or
depository transfer check in accordance with the procedures set forth in the
corresponding Agency Account Agreement to the Administrative Agent at the
Agent's Office,
(i) for application, on account of the Secured Obligations, as
provided in Section 2.3(c), 12.2 and 12.3, such credits to be entered upon
receipt thereof and to be conditioned upon final payment in cash or solvent
credits of the items giving rise to them (provided, however, that for the
purposes of determining the outstanding principal amount of Secured
Obligations from time to time, among other things, in order to determine
Availability, such credits shall be deemed entered on the day of receipt
thereof), and
(ii) with respect to any balance remaining after such application, so
long as no Default or Event of Default has occurred and is continuing, for
transfer to the Controlled Disbursement Account or such other account of
the Borrowers as the Borrowers and the Administrative Agent may agree.
(c) Any moneys, checks, notes, drafts or other payments referred to in
subsection (a) of this Section 8.1 which are received by or on behalf of the
Borrowers will be held in trust for the Administrative Agent and will be
delivered to the Administrative Agent at
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the Agent's Office as promptly as possible in the exact form received, together
with any necessary endorsements.
Section 8.2 Verification and Notification. The Administrative Agent shall
have the right
(a) at any time and from time to time, in the name of the Administrative
Agent or the Lenders, or in the name of the Borrowers, to verify the validity,
amount or any other matter relating to any Receivables by mail, telephone,
telegraph or otherwise, and
(b) after a demand for payment or an Event of Default, to notify the
Account Debtors or obligors under any Receivables of the assignment of such
Receivables to the Administrative Agent and to direct such Account Debtors or
obligors to make payment of all amounts due or to become due thereunder directly
to the Administrative Agent and, upon such notification and at the expense of
the Borrowers, to enforce collection of any such Receivables and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as the Borrowers might have done, provided that if such demand
is withdrawn or such Event of Default is cured or waived (as evidenced by a
written acknowledgement to that effect by the Administrative Agent), the
Administrative Agent shall cease so to notify new Account Debtors.
Section 8.3 Disputes. Returns and Adjustments.
(a) In the event any amounts due and owing under any Receivable for an
amount in excess of $500,000 are in material dispute in the judgment of the
Borrowers between the Account Debtor and a Borrower, such Borrower shall provide
the Administrative Agent with prompt written notice thereof.
(b) Each Borrower shall notify the Administrative Agent promptly of all
material returns and credits in excess of $250,000 in respect of any
Receivables, which notice shall specify the Receivables affected.
(c) Each Borrower may, in the ordinary course of business and prior to a
Default or an Event of Default, grant any extension of time for payment of any
Receivable or compromise, compound or settle the same for less than the full
amount thereof or release wholly or partly any Person liable for the payment
thereof or allow any credit or discount whatsoever thereon; provided that (i) no
such action results in the reduction of more than $500,000 in the amount payable
with respect to all Receivables in any Fiscal Month of the Borrowers, and (ii)
the Administrative Agent is promptly notified of the amount of such adjustments
and the Receivable(s) affected thereby.
Section 8.4 Invoices. Upon the request of the Administrative Agent, each
Borrower shall deliver to the Administrative Agent, at such Borrower's expense,
copies of customers' invoices or the equivalent, original shipping and delivery
receipts or other proof of
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delivery, customers' statements, the photocopy of all documents, including,
without limitation, repayment histories and present status reports, relating to
Receivables and such other documents and information relating to the Receivables
as the Administrative Agent shall specify.
Section 8.5 Delivery of Instruments. In the event any Receivable in an
amount in excess of $100,000 is, or Receivables in excess of $500,000 in the
aggregate are, at any time evidenced by a promissory note or notes, trade
acceptance or any other instrument for the payment of money, the applicable
Borrowers will immediately upon demand by the Administrative Agent, deliver such
instruments to the Administrative Agent, appropriately endorsed to the
Administrative Agent.
Section 8.6 Sales of Inventory. All sales of Inventory will be made in
compliance with all requirements of Applicable Law.
Section 8.7 Returned Goods. The Security Interest in the Inventory shall,
without further act, attach to the cash and non-cash proceeds resulting from the
sale or other disposition thereof and to all Inventory which is returned to the
Borrowers by customers or is otherwise recovered.
Section 8.8 Ownership and Defense of Title.
(a) A Borrower shall at all times be the sole owner of each and every item
of Collateral and shall not create any Lien, except for Permitted Liens, on, or,
except as permitted by Section 11.7, sell, lease, exchange, assign, transfer,
pledge, hypothecate, grant a security interest or security title in or otherwise
dispose of, any of the Collateral or any interest therein, except for sales of
Inventory in the ordinary course of business, for cash or on open account or on
terms of payment ordinarily extended to its customers and except as otherwise
expressly contemplated herein. The inclusion of "proceeds" of the Collateral
under the Security Interest shall not be deemed a consent by the Administrative
Agent or any Lender to any other sale or other disposition of any part or all of
the Collateral.
(b) Each Borrower shall defend its title in and to the Collateral and shall
defend the Security Interest in the Collateral against the claims and demands of
all Persons.
Section 8.9 Insurance.
(a) Each Borrower shall at all times maintain insurance on its Inventory
against loss or damage by fire, theft, burglary, pilferage, loss in transit and
such other hazards as the Administrative Agent shall reasonably specify, in
amounts and under policies issued by insurers acceptable to the Administrative
Agent in its reasonable judgment. All premiums on such insurance shall be paid
by the Borrowers and copies of the policies delivered to the Administrative
Agent. The Borrowers will not use or permit the Inventory to be used in
violation of any Applicable Law or in any manner which might render inapplicable
any insurance coverage.
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(b) All insurance policies required under Section 8.9(a) with respect to
Inventory shall name the Administrative Agent as an additional named insured and
shall contain "New York standard" loss payable clauses in the form submitted to
the Borrowers by the Administrative Agent, or otherwise in form and substance
satisfactory to the Administrative Agent, naming the Administrative Agent as
loss payee as its interests may appear, and providing that (i) all proceeds
thereunder shall be payable to the Administrative Agent, (ii) no such insurance
shall be affected by any act or neglect of the insured or owner of the property
described in such policy, and (iii) such policy and loss payable clauses may not
be canceled, amended or terminated unless at least 30 days' prior written notice
is given to the Administrative Agent.
(c) Any proceeds of insurance referred to in this Section 8.9 which are
paid to the Administrative Agent shall be applied, first, to the repayment of
the Revolving Credit Loans until paid in full and then, so long as no Event of
Default shall exist, to the Borrowers or as they may direct.
Section 8.10 Location of Offices and Collateral.
(a) No Borrower will change the location of its chief executive office or
the place where it keeps its books and records relating to the Collateral or
change its name, identity or corporate structure without giving the
Administrative Agent 30 days' prior written notice thereof.
(b) All Inventory, other than Inventory in transit to any such location,
will at all times be kept by the applicable Borrower at one of its locations set
forth in Schedules 6.1(u), and shall not, without the prior written consent of
the Administrative Agent, be removed therefrom, except for sales of Inventory
permitted under Section 8.8.
(c) If any Inventory is in the possession or control of any Borrower's
agents or processors, such Borrower shall notify such agents or processors of
the Security Interest and, upon the occurrence of an Event of Default, shall
instruct them (and cause them to acknowledge such instruction) to hold all such
Inventory for the account of the Administrative Agent, subject to the
instructions of the Administrative Agent.
Section 8.11 Records Relating to Collateral.
(a) Each Borrower will at all times (i) keep complete and accurate records
of Inventory on a basis consistent with past practices of such Borrower,
itemizing and describing the kind, type and quantity of Inventory and such
Borrower's cost therefor and a current price list for such Inventory, and (ii)
keep complete and accurate records of all other Collateral.
(b) Each Borrower will take a physical listing of all Inventory, wherever
located, at least annually.
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Section 8.12 Inspection. The Administrative Agent (by any of its officers,
employees or agents) shall have the right, to the extent that the exercise of
such right shall be within the control of the Borrowers, at any time or times to
inspect the Collateral, all files relating thereto and the premises upon which
any of the Collateral is located, to discuss the Borrowers' affairs and
finances, insofar as the same are reasonably related to the rights of the
Administrative Agent or any Lender hereunder or under any of the Loan Documents,
with any Person, to verify the amount, quantity, value and condition of, or any
other matter relating to, any of the Collateral and in this connection to
review, audit and make extracts from all records and files related to any of the
Collateral. The Borrowers will deliver to the Administrative Agent any
instrument necessary for it to obtain records from any service bureau
maintaining records on behalf of the Borrowers.
Section 8.13 Pledged Securities. All of the equity securities of each
Subsidiary of Syratech organized under the laws of a jurisdiction within the
United States and at least 65% of the equity securities of each other Subsidiary
of Syratech are subject to a Pledge Agreement that is in effect.
Section 8.14 Information and Reports.
(a) Schedule of Receivables. The Borrowers shall deliver to the
Administrative Agent not later than the 10th day of each calendar month a
Schedule of Receivables which
(i) shall be as of the last day of the immediately preceding Fiscal
Month,
(ii) shall be reconciled to the Borrowing Base Certificate as of such
last day,
(iii) shall set forth a summary aged trial balance of all its then
existing Receivables, specifying the names and balance due for each Account
Debtor obligated on a Receivable so listed, and
(iv) shall include on such schedule delivered for the months of March
and September of each year an Account Debtor address list including all
Account Debtors on Receivables reflected on such schedule.
(b) Schedule of Inventory. The Borrowers shall deliver to the
Administrative Agent not later than the 10th day of each calendar month, except
for the first month of each Fiscal Year, in which month the Borrowers shall
deliver to the Administrative Agent by the last day of the month, a Schedule of
Inventory as of the last day of the immediately preceding Fiscal Month, in the
form and manner satisfactory to the Administrative Agent.
(c) Borrowing Base Certificate. The Borrowers will deliver to the
Administrative Agent not later than the 10th day of each month a Borrowing Base
Certificate prepared as of the close of business on the last day of the prior
Fiscal Month.
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(d) Notice of Diminution of Value. The Borrowers shall give prompt notice
to the Administrative Agent of any matter or event which has resulted in, or may
result in, the actual or potential diminution in the value of any of the
Collateral in an amount which in the reasonable judgment of the Borrowers is
material, except for any diminution in the value of any Receivables or Inventory
in the ordinary course of business which has been appropriately reserved
against, as reflected in the financial statements previously delivered to the
Administrative Agent and the Lenders pursuant to Article 10.
(e) Certification. Each of the schedules delivered to the Administrative
Agent pursuant to this Section 8.14 shall be certified by the Chief Financial
Officer to be true, correct and complete as of the date indicated thereon.
(f) Other Information. The Administrative Agent may in its discretion from
time to time, require the Borrowers to deliver the schedules described in
Section 8.14(a), (b) and (c), more or less often and on different schedules than
specified in such Section, and the Borrowers will comply with such requests. The
Borrowers shall also furnish to the Administrative Agent such other information
with respect to the Collateral as the Administrative Agent may from time to time
reasonably request.
Section 8.15 Power of Attorney. Each Borrower hereby appoints the
Administrative Agent as its attorney, with power
(a) to endorse the name of such Borrower on any checks, notes, acceptances,
money orders, drafts or other forms of payment or security that may come into
the Administrative Agent's possession, including on any drafts related to
letters of credit supporting the obligations of Account Debtors, and to sign the
name of such Borrower on notices of assignment, financing statements and other
public records relating to the perfection or priority of the Security Interest
or verifications of account, and
(b) from and after the occurrence of an Event of Default (which has not
been cured or waived, as evidenced by a written acknowledgement thereof by the
Administrative Agent), to sign the name of such Borrower on any invoice or bill
of lading relating to any Receivables, Inventory or other Collateral, on
schedules and assignments of Receivables furnished to the Administrative Agent
by such Borrower, and on notices to or from customers.
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ARTICLE 9
AFFIRMATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been indefeasibly paid in full, unless the Lenders shall
otherwise consent in the manner provided for in Section 15.10, each Borrower
will and, as appropriate, will cause each of its Subsidiaries to:
Section 9.1 Punctual Payments. Pay when due (i) interest, principal, and
premium, if any, on the Loans at the times and place and in the manner specified
herein and (ii) any fees and other Secured Obligations at the times and place
and in the manner specified with respect thereto.
Section 9.2 Preservation of Corporate Existence and Similar Matters.
Preserve and maintain its corporate existence, rights, franchises, licenses and
privileges in the jurisdiction of its incorporation and qualify and remain
qualified as a foreign corporation and authorized to do business in each
jurisdiction in which the character of its properties or the nature of its
business requires such qualification or authorization, except where the failure
to maintain such corporate existence, qualification or authorization would not,
either singly or in the aggregate, have a Materially Adverse Effect, except that
the existence of any such Subsidiary that is not a Borrower may be terminated
(by dissolution, merger or any other means) upon the good faith determination of
such Subsidiary's board of directors that such termination is in the best
interest of the Subsidiary and its various constituencies and the taking of
appropriate action by the shareholder(s) of such Subsidiary.
Section 9.3 Compliance with Applicable Law. Comply with all Applicable Law,
if the failure to comply therewith would have a Materially Adverse Effect.
Section 9.4 Maintenance of Property. Protect and preserve all properties
material to its business, including all Proprietary Rights, and maintain in good
repair, working order and condition in all material respects all tangible
properties, and from time to time make or cause to be made all needed and
appropriate repairs, renewals, replacements and additions to such properties
necessary for the conduct of its business, so that the business carried on in
connection therewith may be properly and advantageously conducted at all times.
Section 9.5 Conduct of Business. At all times engage only in businesses in
substantially the same fields as the businesses conducted on the Agreement Date
or as otherwise expressly contemplated herein.
Section 9.6 Insurance. Maintain insurance with responsible insurance
companies against such risks and in such amounts as is customarily maintained by
similar businesses or as may be required by Applicable Law, and from time to
time deliver to the Administrative Agent upon its request a detailed list of the
insurance then in effect, stating the
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names of the insurance companies, the amounts and rates of the insurance, the
dates of the expiration thereof and the properties and risks covered thereby.
Section 9.7 Payment of Taxes and Claims. Pay or discharge when due:
(a) all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or profits or upon any properties belonging to it, and
(b) all lawful claims of materialmen, mechanics, carriers, warehousemen and
landlords for labor, materials, supplies and rentals which, if unpaid, are
reasonably likely to become a Lien on any of its properties;
except that this Section 9.7 shall not require the payment or discharge of any
such tax, assessment, charge, levy or claim which is being contested in good
faith by appropriate proceedings and for which adequate reserves have been
established on the appropriate books.
Section 9.8 Accounting Methods and Financial Records. Maintain a system of
accounting, and keep such books, records and accounts (which shall be true and
complete), as may be required or as may be necessary to permit the preparation
of financial statements in accordance with GAAP consistently applied. In
addition, the Borrowers shall at all times maintain detailed accounting records
relating to intercompany advances and repayments resulting from borrowings and
repayments of Revolving Credit Loans.
Section 9.9 Visits and Inspections. Permit representatives of the
Administrative Agent from time to time, as often as may be reasonably requested,
but only during normal business hours and, if no Default or Event of Default has
occurred, upon prior notice, to
(a) visit and inspect its properties,
(b) inspect and make extracts from its relevant books and records,
including, but not limited to, management letters prepared by independent
accountants, and
(c) after reasonable prior notice of its intent to do so, discuss with its
principal officers and its independent accountants, its business, assets,
liabilities, financial condition, results of operations and business prospects.
Representatives of the Lenders may accompany the Administrative Agent on such
visits and, if the Administrative Agent shall have furnished to the Lenders
fewer than two reports of field examinations conducted with respect to a
Borrower within the previous 12 months, any Lender may, subject to the other
terms and conditions of this Section 9.9 applicable to the Administrative Agent,
make such visits to such Borrower on its own. The Administrative Agent and the
Lenders will take all reasonable steps to minimize any disruption of the
Borrowers' operations that might be caused by the Lenders' exercising any such
inspection privileges and
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will coordinate with and through the Administrative Agent, any visits to any
Borrower's premises.
Section 9.10 Use of Proceeds.
(a) Use the proceeds of all Loans only to finance the Merger, to refinance
outstanding Debt of pre-Merger Syratech Corporation and to pay fees and expenses
related to the Merger as and to the extent set forth on Schedule 9.10, and for
working capital and general business purposes, and
(b) not use any part of such proceeds for any purpose which would involve a
violation of Regulation G or U or T or X of the Board of Governors of the
Federal Reserve System, or for any other purpose prohibited by law or by the
terms and conditions of this Agreement.
Section 9.11 Subsidiary Guaranties. Upon the request of the Administrative
Agent or the Required Lenders, cause any Person which is, or becomes after the
Effective Date, a Subsidiary organized under the laws of any jurisdiction within
the United States, to execute and deliver a guaranty of the Secured Obligations
(or any part thereof specified by the Administrative Agent) and a security
agreement, each in form and substance satisfactory to the Administrative Agent,
unless such Subsidiary is expressly prohibited by statute from issuing a
guaranty or security agreement.
Section 9.12 Hazardous Waste and Substances. In addition to, and not in
derogation of, the requirements of Section 9.2 and of the Security Documents,
comply with all laws, governmental standards and regulations applicable to such
Borrower or to any of its assets in respect of occupational health and safety
laws, rules and regulations and Environmental Laws (unless such laws, rules,
standards or regulations are being contested by a Borrower in good faith by
appropriate proceedings and adequate reserves therefor have been established on
the books of the relevant Borrowers [or, in the case of non-compliance with
Environmental Laws existing on the Effective Date, unless such Borrower has
remedied any such non-compliance which is immediately remediable and is
diligently proceeding to remedy remaining instances of noncompliance in
accordance with accepted practice and as rapidly as is practicable!), promptly
notify the Administrative Agent of its receipt of any notice of a violation of
any such law, rule, standard or regulation and indemnify and hold the
Administrative Agent and each Lender harmless from all loss, cost, damage,
liability, claim and expense incurred by or imposed upon the Administrative
Agent or any Lender on account of such Borrower's failure to perform its
obligations under this Section 9.12.
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ARTICLE 10
INFORMATION
All written information, reports, statements and other papers and data
furnished to the Administrative Agent or any Lender, whether pursuant to this
Article 10 or any other provision of this Agreement or any of the other Loan
Documents, shall be, at the time the same is so furnished, complete and correct
in all material respects to the extent necessary to give the Administrative
Agent or such Lender true and accurate knowledge of the subject matter. Until
the Revolving Credit Facility has been terminated and all the Secured
Obligations have been indefeasibly paid in full, unless the Lenders shall
otherwise consent in the manner set forth in Section 15.10, the Borrowers will
furnish to the Administrative Agent and to each Lender at its office then
designated for notices pursuant to Section 15.1:
Section 10.1 Financial Statements.
(a) Audited Year-End Statements. As soon as available, but in any event
within 90 days after the end of each Fiscal Year, copies of (i) the consolidated
balance sheet of Syratech and its Consolidated Subsidiaries as at the end of
such Fiscal Year and the related consolidated statements of income,
shareholders' equity and cash flows of Syratech and its Consolidated
Subsidiaries for such Fiscal Year setting forth in each case in comparative form
the figures for the previous Fiscal Year and reported on, without qualification,
by Deloitte & Touche or other "Big 6" independent certified public accountants
selected by Syratech, which report shall be prepared in accordance with GAAP;
(ii) consolidating balance sheets of the Borrowers as at the end of such Fiscal
Year, and consolidating statements of income, shareholders equity and cash flow
of the Borrowers for such Fiscal Year, setting forth in each in comparative form
the figures for the previous Fiscal Year in such form and detail as reasonably
required by the Administrative Agent.
(b) Monthly Financial Statements. As soon as available, but in any event
within 30 days after the end of each of the first two Fiscal Months of each
fiscal quarter of Syratech and within 45 days after the end of each fiscal
quarter of Syratech, copies of the unaudited consolidated and consolidating
balance sheets of Syratech and its Consolidated Subsidiaries as at the end of
such period and the related unaudited consolidated and consolidating statements
of income and cash flow of Syratech and its Consolidated Subsidiaries for such
period and for the portion of the Fiscal Year through such Fiscal Month or
quarter (and with respect to such consolidated financial statements for any
fiscal quarter, setting forth in each case in comparative form the figures for
the corresponding period of the previous Fiscal Year) in such form and detail as
is reasonably required by the Administrative Agent and certified by the Chief
Financial Officer to the best of his knowledge as presenting fairly the
financial condition and results of operations of the Borrowers as at the date
thereof and for the periods ended on such date, subject to normal year-end
adjustments.
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All such financial statements shall be complete and correct in all material
respects and prepared in accordance with GAAP (except, with respect to interim
financial statements, for the omission of notes) applied consistently throughout
the periods reflected therein.
(c) Annual Projections. As soon as available, but in any event not later
than December 15 of each year, forecasted, consolidated balance sheets, income
statements and cash flow statements of Syratech and its Consolidated
Subsidiaries, prepared on a monthly basis, for the succeeding Fiscal Year.
Section 10.2 Accountants' Certificate. Together with each delivery of
financial statements required by Section 10.1(a), Syratech shall deliver a
certificate of the accountants who performed the audit in connection with such
statements
(a) stating that they have reviewed this Agreement and that, in making the
audit necessary to the issuance of a report on such financial statements, they
have obtained no knowledge of any Default or Event of Default or, if such
accountants have obtained knowledge of a Default or Event of Default, specifying
the nature and period of existence thereof, and
(b) setting forth the calculations necessary to establish whether or not
the Borrowers were in compliance with the covenants contained in Sections 11.1,
11.2, 11.5 and 11.6 as of the date of such statements.
The Borrowers authorize the Administrative Agent to discuss the financial
condition of the Borrowers with the Borrowers' independent certified public
accountants and agree that such discussion or communication shall be without
liability to either the Administrative Agent or the Borrowers' independent
certified public accountants. Syratech shall deliver a letter addressed to such
accountants authorizing them to comply with the provisions of this Section 10.2.
Section 10.3 Officer's Certificate. Together with each delivery of
financial statements required by Section 10.1(a) or (b), Syratech shall also
furnish a certificate of the Chief Financial Officer stating that, based on an
examination sufficient to enable him to make an informed statement, (i) no
Default or Event of Default exists or, if such is not the case, specifying such
Default or Event of Default and its nature, when it occurred, and the steps
being taken by the Borrowers with respect to such Default or Event of Default
and (ii) setting forth the calculations necessary to establish whether or not
the Borrowers were in compliance with the covenants contained in Sections 11.1,
11.2, 11.5 and 11.6 as of the date of such statements.
Section 10.4 Copies of Other Reports.
(a) Promptly upon receipt thereof, copies of all reports, if any, submitted
to a Borrower or its Board of Directors by its independent public accountants,
including, without limitation, all management reports.
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(b) As soon as practicable, copies of all financial statements and reports
that Syratech sends to its shareholders generally or to holders of the Senior
Notes or any other Debt of Syratech or any other Borrower (other than the
Loans), and all registration statements (including amendments thereto) and all
regular or periodic reports which Syratech files with the SEC.
(c) From time to time and promptly upon each request, such forecasts, data,
certificates, reports, statements, opinions of counsel, documents or further
information regarding the business, assets, liabilities, financial condition,
results of operations or business prospects of the Borrowers as the
Administrative Agent or any Lender through the Administrative Agent may
reasonably request and which the Borrowers without unreasonable expense (other
than any legal opinion as to the perfected status or priority of the Security
Interest in any Collateral) may obtain. The rights of the Administrative Agent
and the Lenders under this Section 10.4(c) are in addition to and not in
derogation of its rights under any other provision of this Agreement or any Loan
Document.
(d) If requested by any Lender, the Borrowers will furnish to such Lender
statements in conformity with the requirements of Federal Reserve Form G-1 or
U-l referred to in Regulations G and U, respectively, of the Board of Governors
of the Federal Reserve System.
Section 10.5 Notice of Litigation and Other Matters. Prompt notice of:
(a) the commencement, to the extent a Borrower is aware of the same, of all
proceedings and investigations by or before any governmental or nongovernmental
body and all actions and proceedings in any court or before any arbitrator
against or in any other way relating adversely to, or adversely affecting, any
Borrower or any Affiliate of a Borrower or any of their respective property,
assets or businesses which might, in the aggregate, cause a Default or an Event
of Default or have a Materially Adverse Effect,
(b) any amendment of the articles or certificate of incorporation or
by-laws of a Borrower,
(c) any change in the business, assets, liabilities, financial condition or
results of operations of a Borrower or any Affiliate of a Borrower which has had
or may have any Materially Adverse Effect and any change in the executive
officers of a Borrower, and
(d) any (i) Default or Event of Default or (ii) event that constitutes or
that, with the passage of time or giving of notice or both, would constitute a
default or event of default by a Borrower under any material agreement (other
than this Agreement) to which a Borrower is a party or by which a Borrower or
any of its property may be bound if the exercise of remedies thereunder by the
other party to such agreement would have a Materially Adverse Effect.
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Section 10.6 ERISA. As soon as possible and in any event within 30 days
after a Borrower knows, or has reason to know, that:
(a) any ERISA Event with respect to a Benefit Plan has occurred or will
occur, or
(b) the aggregate present value of the Unfunded Vested Accrued Benefits
under all Benefit Plans has increased to an amount in excess of $4,000,000, or
(c) a Borrower is in "default" (as defined in Section 4219(c)(5) of ERISA)
with respect to payments to a Multiemployer Plan required by reason of its
complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA)
from such Multiemployer Plan,
a certificate of the president or the Chief Financial Officer setting forth the
details of such of the events described in clauses (a) through (c) as applicable
and the action which is proposed to be taken with respect thereto and,
simultaneously with the filing thereof, copies of any notice or filing that any
agency of the United States government may require with respect to such of the
events described in clauses (a) through (c) as applicable.
Section 10.7 Revisions or Updates to Schedules. Should any of the
information or disclosures provided on any of the Schedules originally attached
hereto become outdated or incorrect in any material respect, the Borrowers shall
provide promptly, and in any event with 10 Business Days after a Borrower has
knowledge thereof, to the Administrative Agent such revisions or updates to such
Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s); provided that no such revisions or updates to any Schedule(s) shall
be deemed to have cured any breach of warranty or representation resulting from
the inaccuracy or incompleteness of any such Schedule(s) unless and until the
Required Lenders, in their sole discretion, shall have accepted in writing such
revisions or updates to such Schedule(s). From and after such acceptance, all
representations and warranties make with reference to any such Schedule, shall
be deemed to be made with reference to such Schedule as corrected or updated.
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ARTICLE 11
NEGATIVE COVENANTS
Until the Revolving Credit Facility has been terminated and all the Secured
Obligations have been indefeasibly paid in full, unless the Lenders shall
otherwise consent in the manner set forth in Section 15.10, the Borrowers will
not, nor will they permit any Subsidiary to, directly or indirectly:
Section 11.1 Financial Ratios Permit:
(a) Minimum Consolidated Net Worth. The Consolidated Net Worth of Syratech
and its Consolidated Subsidiaries on September 30, 1997 or at any time
thereafter to be less than $1.00.
(b) Total Funded Debt to EBITDA. Total Funded Debt to EBITDA for any period
of four consecutive Fiscal Quarters ending on or after a date specified below,
to be greater than the ratio specified opposite such date:
Date Ratio
---- -----
9/30/97 8.0 to 1
12/31/97 5.5 to 1
12/31/98 5.0 to 1
12/31/99 4.5 to 1
12/31/00
and thereafter 4.25 to 1
(c) Fixed Charge Coverage. Fixed Charge Coverage for (i) the period of two
consecutive Fiscal Quarters ending September 30, 1997 to be less than .65 to 1,
(ii) for the period of three consecutive Fiscal Quarters ending December 31,
1997 to be less than .74 to 1, or (iii) for any period of four consecutive
Fiscal Quarters ending on or after a date specified below, to be less than the
ratio specified opposite such date:
Date Ratio
---- -----
03/31/98 .74 to 1
06/30/98 .81 to 1
09/30/98 .95 to 1
12/31/98 1.15 to 1
12/31/99 1.20 to 1
12/31/00
and thereafter 1.30 to 1
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Section 11.2 Debt. Create, assume, or otherwise become or remain obligated
in respect of, or permit or suffer to exist or to be created, assumed or
incurred or to be outstanding any Debt, except that this Section 11.2 shall not
apply to:
(a) the Secured Obligations,
(b) the Senior Notes to the extent of $180,000,000 in principal amount
thereof outstanding on or before delivery to the Administrative Agent and the
Lenders, in accordance with the provisions of Section 10.1(a), of the audited
annual financial statements of Syratech and its Consolidated Subsidiaries for
Fiscal Year 1997, and thereafter to the extent of $205,000,000 in principal
amount thereof outstanding,
(c) Indebtedness set forth on Schedule 6.1(h) - Existing Debt and
Guaranties and any extension, replacement or refinancing thereof that does not
increase the principal amount of such Debt outstanding immediately prior to such
extension, replacement or refinancing,
(d) Permitted Purchase Money Indebtedness,
(e) Debt assumed or issued in connection with Acquisitions of Business
Units or Subsidiaries permitted pursuant to the provisions of Section 11.4, and
(f) Debt of foreign Subsidiaries of the Borrowers.
Section 11.3 Guaranties. Except as set forth on Schedule 6.1(h) - Existing
Debt and Guaranties or otherwise, as to Syratech, in the ordinary course of its
business, become or remain liable with respect to any Guaranty of any obligation
of any other Person other than Permitted Guaranties, provided that no Borrower
shall Guaranty the obligations of any entity that is not a Borrower.
Section 11.4 Investments. Acquire, after the Effective Date, any Business
Unit or Investment or, after such date, permit any Investment to be outstanding,
other than Permitted Investments, provided, however, that the Borrowers may
Acquire a Business Unit or Subsidiary, if (i) the aggregate consideration paid
in connection with all such acquisitions, inclusive of Indebtedness assumed or
secured by any of the assets so acquired, does not exceed $40,000,000 in any
Fiscal Year (or $10,000,00 in any Fiscal Year with respect to assets located
outside the United States, Canada or Puerto Rico), (ii) both before and after
giving pro forma effect to such Acquisition, no Default or Event of Default
exists, (iii) such Acquired Subsidiary or such Business Unit, if the same is to
be acquired by or through a separate United States entity, becomes a party to
this Agreement as a "Borrower" or if through a separate non-US entity, a stock
pledge agreement acceptable to the Administrative Agent in its reasonable
judgment is delivered with respect to the shares of such separate entity, and
(iv) in connection with such Acquisition, such entity (or the appropriate
Borrower) executes such security agreements,
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consents, promissory notes and other agreements and instruments as the
Administrative Agent may reasonably require.
Section ll.5 Capital Expenditures. Make or incur any Capital Expenditures;
provided, however, that the Borrowers may make or incur Capital Expenditures (a)
in connection with the construction of a warehouse and distribution facility in
Ontario, California in Fiscal Years 1997 and l998 in an aggregate amount not
greater than $15,000,000, and (b) in an additional amount during each Fiscal
Year ending after the Effective Date not greater than $7,500,000, plus any
amount up to $3,000,000 by which $7,500,000 exceeded actual Capital Expenditures
in the preceding Fiscal Year (excluding Capital Expenditures contemplated by
clause (a)).
Section l1.6 Restricted Distributions and Pavments. Etc. Declare or make
any Restricted Distribution or Restricted Payment, provided, however, that so
long as no Default or Event of Default has occurred and is continuing or would
exist after giving effect thereto,
(a) any Debt owing by any Subsidiary (other than a Borrower) to another
Subsidiary, may be repaid,
(b) any wholly owned Subsidiary may pay cash dividends to any Borrower,
(c) Syratech may pay management fees to Lee and its Affiliates not in
excess of $450,000 in the aggregate in any Fiscal Year,
(d) any Borrower may repurchase shares of its own stock held by management
employees upon such employees' termination of employment for an amount not
greater than $750,000 in any Fiscal Year ending after the Effective Date,
provided that any portion of such amount that is not so applied in any Fiscal
Year may be applied in future Fiscal Years, up to an aggregate amount of
$1,500,000 in any Fiscal Year, and
(e) Syratech may redeem the Preferred Stock in whole or in part from time
to time, provided that the conditions to such redemption set forth in the Senior
Note Indenture as in effect on the Effective Date are satisfied with respect to
each such redemption and, after giving effect to such redemption, Revolving
Credit Availability is not less than $45,000,000.
Section 11.7 Merger Consolidation and Sale of Assets. Merge or consolidate
with any other Person or sell, lease or transfer or otherwise dispose of all or
a substantial portion of its assets to any Person; provided, however, that any
Borrower (other than Syratech) shall be permitted to merge or consolidate with
or to sell its assets to any other Borrower.
Section 11.8 Transactions with Affiliates. Except as to any such
transactions in place on the Effective Date and listed on Schedule 11.8, effect
any transaction with any Affiliate on a basis less favorable to a Borrower than
would be the case if such transaction had been effected with a Person not an
Affiliate.
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Section 11.9 Liens. Create, assume or permit or suffer to exist or to be
created or assumed any Lien on any of the property or assets of any Borrower,
real, personal or mixed, tangible or intangible, other than Permitted Liens,
Liens set forth on Schedule 6.1(g) - Existing Liens and Liens securing Debt of
any Business Unit or Subsidiary Acquired after the Effective Date, to the extent
such Liens encumber exclusively property of such Business Unit or Subsidiary,
were in place at the time of (and were not created in contemplation of) the
relevant Acquisition and do not affect the Receivables, Inventory, Deposit
Accounts, or shares (or other evidence of ownership) of such Business Unit or
Subsidiary, or the proceeds of any thereof.
Section 11.10 Benefit Plans. Permit, or take any action which would result
in, an ERISA Event or the aggregate present value of the Unfunded Vested Accrued
Benefits under all Benefit Plans of the Borrowers to exceed $4,500,000.
Section 11.11 Chance in Business. Engage in any line of business other
than that set forth on Schedule 6.1(e) - Business.
Section 11.12 Change in Accounting Policies. Change the fiscal year of any
Borrower from a year ending on December 31 or account for Inventories, other
than silver inventory, on other than a FIFO basis.
Section 11.13 Amendment to Senior Note Documents. Amend the Senior Notes,
the Senior Indenture or any related documents without the prior written consent
of the Required Lenders.
Section 11.14 Minimum Availabilitv. Permit Revolving Credit Availability to
be less than $45,000,000 during the period February 1 through March 31 of any
year.
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ARTICLE 12
DEFAULT
Section 12.1 Events of Default. Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body:
(a) Default in Payment of Loans. The Borrowers shall default in any payment
of principal of, or interest on, any Loan or Note when and as due (whether upon
demand, at maturity, by reason of acceleration or otherwise).
(b) Other Payment Default. The Borrowers shall default in the payment, as
and when due, of principal of or interest on, any other Secured Obligation, and
such default shall continue for five days after written notice thereof has been
given to the Borrowers by the Administrative Agent.
(c) Misrepresentation. Any representation or warranty made or deemed to be
made by the Borrowers under this Agreement, any other Loan Document or any
amendment hereto or thereto shall at any time prove to have been incorrect or
misleading in any material respect when made.
(d) Default in Performance. The Borrowers shall default in the performance
or observance of any term, covenant, condition or agreement contained in
(i) Article 7 or Section 11.1 or 11.14, and the Administrative Agent
shall have notified the Borrowers of the Required Lenders' intention to
declare such Default as an Event of Default, or
(ii) this Agreement (other than as specifically provided for otherwise
in this Section 12.1) and such default shall continue for a period of 30
days after written notice thereof has been given to the Borrowers by the
Administrative Agent.
(e) Cross Default. The occurrence of any "Event of Default" as defined in
the Senior Note Indenture or the Borrowers (or any of them) or any Subsidiary
shall fail to pay when due and payable the principal of or interest on any Debt
(other than the Loans) outstanding in a principal amount in excess of
$5,000,000, or the maturity of any such Debt shall have (i) been accelerated
(declared to be due and payable) in accordance with the provisions of any
indenture, contract or instrument providing for the creation of or concerning
such Debt, or (ii) been required to be prepaid prior to the stated maturity
thereof, or any event shall have occurred and be continuing which would permit
any holder or holders of such Debt, any trustee or agent acting on behalf of
such holder or holders or any other Person so to accelerate such maturity, and
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the Borrowers shall have failed to cure such default prior to the expiration of
any applicable cure or grace period.
(f) Voluntary Bankruptcy Proceeding. Any Borrower or Subsidiary shall
(i) commence a voluntary case under the federal bankruptcy laws (as
now or hereafter in effect),
(ii) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or composition for adjustment of debts,
(iii) consent to or fail to contest in a timely and appropriate manner
any petition filed against it in an involuntary case under such
bankruptcy laws or other laws,
(iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee Or liquidator of itself or of a substantial
part of its property, domestic or foreign,
(v) admit in writing its inability to pay its debts as they become
due,
(vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate or other action for the purpose of
authorizing any of the foregoing.
(g) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
commenced against any Borrower or Subsidiary in any court of competent
jurisdiction seeking
(i) relief under the federal bankruptcy laws (as now or hereafter in
effect) or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts,
or
(ii) the appointment of a trustee, receiver, custodian, liquidator or
the like of such Borrower or Subsidiary or of all or any substantial part
of the assets, domestic or foreign, of such Borrower or Subsidiary,
and such case or proceeding shall continue undismissed or unstayed for a period
of 60 consecutive calendar days, or an order grant ng the relief requested in
such case or proceeding against such Borrower or Subsidiary (including, but not
limited to, an order for relief under such federal bankruptcy laws) shall be
entered.
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(h) Failure of Agreements. Any material provision of this Agreement, or of
any other Loan Document after delivery thereof hereunder, shall for any reason
cease to be validand binding on the Borrowers, other than a nonmaterial
provision rendered unenforceable by operation of law, or the Borrowers shall so
state in writing, or this Agreement or any other Loan Document, after delivery
thereof hereunder, shall for any reason (other than any action taken
independently by the Administrative Agent or a Lender and except to the extent
permitted by the terms thereof) cease to create a valid, perfected and, except
as otherwise expressly permitted herein, first priority Lien on, or security
interest in, any of the Collateral purported to be covered thereby and, in each
case, such condition shall continue to exist for 10 days after written notice
thereof has been given to the Borrowers by the Administrative Agent.
(i) Judgment. A final judgment or order for the payment of money, not
covered by insurance, which when aggregated with all other such judgments or
orders, warrants, writs of attachment, execution or similar process described in
Section 12.1(k) below, exceeds $1,000,000 in amount, shall be entered against
any Borrower or any Subsidiary by any court and such judgment or order shall
continue undischarged, unpaid or unstayed for 60 days.
(j) Attachment. A warrant or writ of attachment or execution or similar
process, which when aggregated with all other such warrants, writs of
attachment, execution or similar process and judgments and orders for the
payment of money described in Section 12.1(j) above, exceeds $1,000,000, shall
be issued against any property of a Borrower and such warrant or process shall
continue undischarged or unstayed for 60 days.
(k) ERISA. Any ERISA Event shall occur and the Required Lenders determine
in good faith that such occurrence is reasonably likely to have a Materially
Adverse Effect.
(1) Loan Documents. Any "Event of Default" under any other Loan Document
shall occur or a Borrower shall default in the performance or observance of any
material term, covenant, condition or agreement contained in, or the payment of
any other sum covenanted to be paid by such Borrower under, any such Loan
Document.
(m) Change of Control. (i) Syratech shall cease to own, directly or
indirectly, 100% of the capital stock of each other Borrower or (ii) a "Change
of Control," as defined in the Senior Note Indenture, shall occur or (iii) prior
to a primary offering by Syratech of equity securities that produces at least
$35,000,000 in net proceeds to Syratech, (A) Lee Affiliates shall have ceased to
control at least a majority of the voting stock of Syratech or (B) Lee
Affiliates shall not have the ability to elect at least a majority of the
members of the Board of Directors of Syratech or (C) Lee Affiliates shall have
sold more than 50% of the shares of capital stock of Syratech owned by them
immediately after giving effect to the Merger and related Recapitalization
transactions or (iv) at any time after the effective date, any person (as such
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended), other than Lee Affiliates, Leonard Florence and E. Merle Randolph,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under said Securities Exchange Act, except that a
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person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more than 35% of the voting capital stock
of Syratech (measured by voting power, rather than by number of shares).
(n) Change in Principal Officers. Leonard Florence and E. Merle Randolph
shall both cease to be actively involved in the management of the Borrowers in
substantially their present capacities, and replacements for both, satisfactory
in their reasonable judgment to the Required Lenders, shall not have been
appointed or elected within 90 days thereafter.
Section 12.2 Remedies.
(a) Automatic Acceleration and Termination of Facilities. Upon the
occurrence of an Event of Default specified in Section 12.1(f) or (g), (i) the
principal of and the interest on the Loans and the Notes at the time
outstanding, and all other amounts owed to the Administrative Agent and the
Lenders under this Agreement or any of the Loan Documents and all other Secured
Obligations, shall thereupon become due and payable without presentment, demand,
protest or other notice of any kind, all of which are expressly waived, anything
in this Agreement or any of the Loan Documents to the contrary notwithstanding,
and (ii) the Revolving Credit Facility and the right of the Borrowers to request
borrowings and Letters of Credit under this Agreement shall immediately
terminate.
(b) Other Remedies. If any Event of Default shall have occurred and be
continuing, the Administrative Agent may, and at the request of the Required
Lenders shall, do any of the following:
(i) declare the principal of and interest on the Loans and the Notes
at the time outstanding, and all other amounts owed to the Administrative
Agent or any Lender under this Agreement or any of the Loan Documents and
all other Secured Obligations, to be forthwith due and payable, whereupon
the same shall immediately become due and payable without presentment,
demand, protest or other notice of any kind, all of which are expressly
waived, anything in this Agreement or the Loan Documents to the contrary
notwithstanding;
(ii) terminate the Revolving Credit Facility and any right of the
Borrowers to request borrowings and Letters of Credit hereunder;
(iii) notify, or request the Borrowers to notify, in writing or
otherwise, any Account Debtor or obligor with respect to any one or more of
the Receivables to make payment to the Administrative Agent or any agent or
designee of the Administrative Agent, at such address as may be specified
by the Administrative Agent, and, if, notwithstanding the giving of any
notice, any Account Debtor or other such obligor shall make payments to a
Borrower, such Borrower shall hold all such payments it receives in trust
for the Administrative Agent, without commingling the same with other funds
or
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property of, or held by, such Borrower and shall deliver the same to the
Administrative Agent or any such agent or designee immediately upon receipt
by such Borrower in the identical form received, together with any
necessary endorsements;
(iv) settle or adjust disputes and claims directly with Account
Debtors and other obligors on Receivables for amounts and on terms which
the Administrative Agent considers advisable and in all such cases only the
net amounts received by the Administrative Agent in payment of such
amounts, after deductions of costs and attorneys' fees, shall constitute
Collateral, and the Borrowers shall have no further right to make any such
settlements or adjustments or to accept any returns of merchandise;
(v) enter upon any premises on which Inventory may be located and,
without resistance or interference by the Borrowers, take physical
possession of any or all thereof and maintain such possession on such
premises or move the same or any part thereof to such other place or places
as the Administrative Agent shall choose, without being liable to the
Borrowers on account of any loss, damage or depreciation that may occur as
a result thereof, so long as the Administrative Agent shall act reasonably
and in good faith;
(vi) require the Borrowers to and the Borrowers shall, without charge
to the Administrative Agent, assemble the Inventory and maintain or deliver
it into the possession of the Administrative Agent or any agent or
representative of the Administrative Agent at such place or places as the
Administrative Agent may designate;
(vii) at the expense of the Borrowers, cause any of the Inventory to
be placed in a public or field warehouse, and the Administrative Agent
shall not be liable to the Borrowers on account of any loss, damage or
depreciation that may occur as a result thereof, so long as the
Administrative Agent shall act reasonably and in good faith;
(viii) without notice, demand or other process, and without payment of
any rent or any other charge, enter any of the Borrowers' premises and,
without breach of the peace, until the Administrative Agent completes the
enforcement of its rights in the Collateral, take possession of such
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any of the Borrowers' equipment, for the
purpose of (A) completing any work in process, preparing any Inventory for
disposition and disposing thereof, and (B) collecting any Receivable, and
the Administrative Agent and the Lenders are hereby granted a non-exclusive
license or sublicense and all other rights as may be necessary, appropriate
or desirable to use the Proprietary Rights in connection with the
foregoing, and the rights of the Borrowers under all licenses and franchise
agreements shall inure to the Administrative Agent's benefit (provided,
however, that any use of any federally registered trademarks as to any
goods shall be subject to the control as to the quality of such goods of
the owner of such trademarks and the goodwill of the business symbolized
thereby);
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(ix) exercise any and all of its rights under any and all of the
Security Documents;
(x) apply any cash Collateral to the payment of the Secured
Obligations in any order in which the Administrative Agent may elect or use
such cash in connection with the exercise of any of its other rights
hereunder or under any of the Security Documents;
(xi) establish or cause to be established one or more Lockboxes or
other arrangement for the deposit of proceeds of Receivables, and, in such
case, the Borrowers shall cause to be forwarded to the Administrative Agent
at the Administrative Agent's Office, on a daily basis, copies of all
checks and other items of payment and deposit slips related thereto
deposited in such Lockboxes, together with collection reports in form and
substance satisfactory to the Administrative Agent; and
(xii) exercise all of the rights and remedies of a secured party under
the UCC and under any other Applicable Law, including, without limitation,
the right, without notice except as specified below and with or without
taking the possession thereof, to sell the Collateral or any part thereof
in one or more parcels at public or private sale, at any location chosen by
the Administrative Agent, for cash, on credit or for future delivery and at
such price or prices and upon such other terms as the Administrative Agent
may deem commercially reasonable. The Borrowers agree that, to the extent
notice of sale shall be required by law, at least 10 days' notice to the
Borrowers of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification,
but notice given in any other reasonable manner or at any other reasonable
time shall also constitute reasonable notification The Administrative Agent
shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Administrative Agent may adjourn any public
or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjoumed.
Section 12.3 Application of Proceeds. Except as otherwise provided by
Applicable Law, all proceeds from each sale of, or other realization upon, all
or any part of the Collateral following an Event of Default shall be applied or
paid over as follows:
(a) First: to the payment of all costs and expenses incurred in connection
with such sale or other realization, including attorneys' fees,
(b) Second: to the payment of the Secured Obligations (with the Borrowers
remaining liable for any deficiency) in any order which the Administrative Agent
may elect, provided that, without the consent of the Lenders, principal of
Revolving Credit Loans shall not be repaid before all interest accrued and
unpaid on such Loans has been paid, and
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(c) Third: the balance (if any) of such proceeds shall be paid to the
Borrowers or, subject to any duty imposed by law or otherwise, to whomsoever is
entitled thereto.
The Borrowers shall remain liable and will pay, on demand, any deficiency
remaining in respect of the Secured Obligations, together with interest thereon
at a rate per annum equal to the highest rate then payable hereunder on such
Secured Obligations, which interest shall constitute part of the Secured
Obligations.
Section 12.4 Power of Attorney. In addition to the authorizations granted
to the Administrative Agent under Section 8.15 or under any other provision of
this Agreement or any of the Loan Documents, upon and after an Event of Default,
the Borrowers hereby irrevocably designate, make, constitute and appoint the
Administrative Agent (and all Persons designated by the Administrative Agent
from time to time) as the Borrowers' true and lawful attorney and agent in fact,
and the Administrative Agent or any agent of the Administrative Agent may,
without notice to the Borrowers, and at such time or times as the Administrative
Agent or any such agent in its sole discretion may determine, in the name of the
Borrowers, the Lenders or the Administrative Agent,
(a) demand payment of the Receivables,
(b) enforce payment of the Receivables by legal proceedings or otherwise,
(c) exercise all of the Borrowers' rights and remedies with respect to the
collection of Receivables,
(d) settle, adjust, compromise, extend or renew any or all of the
Receivables,
(e) settle, adjust or compromise any legal proceedings brought to collect
the Receivables,
(f) discharge and release the Receivables or any of them,
(g) prepare, file and sign the name of the Borrowers on any proof of claim
in bankruptcy or any similar document against any Account Debtor,
(h) prepare, file and sign the name of the Borrowers on any notice of Lien,
assignment or satisfaction of Lien or similar document in connection with any of
the Collateral,
(i) endorse the name of the Borrowers upon any chattel paper, document,
instrument, notice, freight bill, bill of lading or similar document or
agreement relating to the Receivables, the Inventory or any other Collateral,
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(j) use the stationery of the Borrowers and sign the name of the Borrowers
to verifications of the Receivables and on any notice to the Account Debtors,
(k) open the Borrowers' mail,
(1) notify the post offce authorities to change the address for delivery of
the Borrowers' mail to an address designated by the Administrative Agent, and
(m) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Receivables,
Inventory or other Collateral to which the Borrowers or any Subsidiary of a
Borrower has access.
Section 12.5 Miscellaneous Provisions Concerning Remedies.
(a) Rights Cumulative. The rights and remedies of the Administrative Agent
and the Lenders under this Agreement, the Notes and each of the Loan Documents
shall be cumulative and not exclusive of any rights or remedies which it would
otherwise have. In exercising such rights and remedies, the Administrative Agent
may be selective and no failure or delay by the Administrative Agent or any
Lender in exercising any right shall operate as a waiver of such right nor shall
any single or partial exercise of any power or right preclude its other or
further exercise or the exercise of any other power or right.
(b) Waiver of Marshalling. The Borrowers hereby waive any right to require
any marshalling of assets and any similar right.
(c) Limitation of Liability. Nothing contained in this Article 12 or
elsewhere in this Agreement or in any of the Loan Documents shall be construed
as requiring or obligating the Administrative Agent or any agent or designee of
the Administrative Agent to make any demand or to make any inquiry as to the
nature or sufficiency of any payment received by it or to present or file any
claim or notice or take any action with respect to any Receivable or any other
Collateral or the moneys due or to become due thereunder or in connection
therewith or to take any steps necessary to preserve any rights against prior
parties, and neither the Administrative Agent nor any of its agents or designees
nor any Lender shall have any liability to the Borrowers for actions taken
pursuant to this Article 12, any other provision of this Agreement or any of the
Loan Documents, so long as the Administrative Agent or such agent or designee
shall act reasonably and in good faith.
(d) Appointment of Receiver. In any action under this Article 12, the
Administrative Agent shall be entitled to the appointment of a receiver, to the
extent permitted by Applicable Law, without notice of any kind whatsoever, to
take possession of all or any portion of the Collateral and to exercise such
power as the court shall confer upon such receiver.
Section 12.6 Proprietary Rights License. Each Borrower hereby grants to the
Administrative Agent the nonexclusive right and license to use the Proprietary
Rights of the
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Borrowers for the purposes set forth in Section 12.2(b) and for the purpose of
enabling the Administrative Agent to process and realize on the Collateral and
to permit any purchaser of any portion of the Collateral through a foreclosure
sale or any other exercise of the Administrative Agent's and the Lenders' rights
and remedies under this Agreement and the other Security Documents to use, sell
or otherwise dispose of the Collateral. Such right and license is granted free
of charge, without the requirement that any monetary payment whatsoever be made
to the Borrowers or any other Person by the Administrative Agent or any
purchaser or purchasers of the Collateral. Each Borrower hereby represents,
warrants, covenants and agrees that it presently has, and shall continue to
have, the right, without the approval or consent of others (other than the other
Borrowers), to grant the license set forth in this Section 12.6, and each
Borrower hereby consents to the granting of such license by the other Borrowers.
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ARTICLE 13
ASSIGNMENTS
Section l3.l Successors and Assigns; Participations.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrowers, the Lenders, the Administrative Agent, all future holders of the
Notes, and their respective successors and assigns, except that no Borrower may
assign or transfer any of its rights or obligations under this Agreement (other
than pursuant to a transaction permitted by the provisions of Section 11.7)
without the prior written consent of each Lender.
(b) Each Lender may, with the prior consent of the Administrative Agent and
(so long as no Default or Event of Default shall have occurred and be
continuing) of Syratech (which consent will not be unreasonably withheld or
delayed), or without consent as part of a sale of all or substantially all of
such Lender's assets of a similar type or in respect of a sale of such Lender's
entire interest hereunder to any Affiliate of such Lender that is an Eligible
Assignee, assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including, without
limitation, all or a portion of the Loans at the time owing to it and the Notes
held by it); provided, however, that (i) each such assignment shall be of a
constant and not a varying percentage of all the assigning Lender's rights and
obligations under this Agreement, (ii) the amount of the Commitment of the
assigning Lender that is subject to each such assignment, made to a Person that
is not a Lender other than by reason of such assignment, shall not be less than
$10,000,000 (or the entire remaining Commitment of the assigning Lender, if
less), (iii) in the case of a partial assignment, the amount of the Commitment
that is retained by the assigning Lender (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall in no event be less than $10,000,000, (iv) the
parties to each such assignment shall execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register an Assignment and
Acceptance, together with any Note or Notes subject to such assignment and such
assignee's pro rata share of the Administrative Agent's syndication expenses,
(v) such assignment shall not, without the consent of the Borrowers, require any
Borrower to file a registration statement with the SEC or apply to or qualify
the Loans or the Notes under the blue sky laws of any state, and (vi) the
representation contained in Section 13.2 hereof shall be true with respect to
any such proposed assignee. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof, (A) the assignee thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder, and (B) the Lender assignor thereunder shall,
to the extent provided in such assignment, be released from its obligations
under this Agreement.
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(c) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim, such Lender assignor makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such Lender assignor makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrowers (or any of them) or the performance or observance by the
Borrowers (or any of them) of any of their obligations under this Agreement or
any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 6.1(m) and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee will,
independently and without reliance upon the Administrative Agent, such Lender
assignor or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Administrative Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders and the Commitment and Proportionate Share of, and
principal amount of the Loans and other Secured Obligations owing to, each
Lender from time to time (the Register). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the
Administrative Agent and the Lenders may treat each person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by any Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Eligible Assignee together with any Note or Notes
subject to such assignment and a fee in an amount equal to $3,500, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in the form of Exhibit D, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register, (iii) give prompt
notice thereof to the Lenders and the Borrowers, and (iv) promptly deliver a
copy of such Acceptance and Assignment to the Borrowers. Within five Business
Days after receipt of notice, the Borrowers shall execute and deliver to the
Administrative Agent in
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exchange for the surrendered Note or Notes a new Note or Notes to the order of
such Eligible Assignee in amounts equal to the Commitment assumed by such
Eligible Assignee pursuant to such Assignment and Acceptance and a new Note or
Notes to the order of the assigning Lender in an amount equal to the Commitment
retained by it hereunder. Such new Note or Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of such surrendered
Note or Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the assigned
Notes. Each surrendered Note or Notes shall be canceled and returned to the
Borrowers.
(f) Each Lender may sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitment hereunder and
the Loans owing to it and the Notes held by it); provided, however, that (i)
each such participation shall be in an amount not less than $5,000,000, (ii)
such Lender's obligations under this Agreement (including, without limitation,
its Commitment hereunder) shall remain unchanged, (iii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iv) such Lender shall remain the holder of the Notes held by it
for all purposes of this Agreement, (v) the Borrowers, the Administrative Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement, provided, that such Lender may agree with any participant that such
Lender will not, without such participant's consent, agree to or approve any
waivers or amendments which would reduce the principal of or the interest rate
on any Loans, extend the term or increase the amount of the commitments of such
participant, reduce the amount of any fees to which such participant is
entitled, extend any scheduled payment date for principal or release Collateral
securing the Loans (other than Collateral disposed of pursuant to Section 8.6
hereof or otherwise in accordance with the terms of this Agreement or the
Security Documents), and (vi) any such disposition shall not, without the
consent of the Borrowers, require any Borrower to file a registration statement
with the SEC or to apply to qualify the Loans or the Notes under the blue sky
laws of any state. Any Lender selling a participation to any bank or other
entity that is not an Affiliate of such Lender shall give prompt notice thereof
to the Borrowers.
(g) Any Lender may, in connection with any assignment, proposed assignment,
participation or proposed participation pursuant to this Section 13.1, disclose
to the assignee, participant, proposed assignee or proposed participant, any
information relating to the Borrowers furnished to such Lender by or on behalf
of the Borrowers.
(h) Any Lender may pledge the Note payable to its order to the applicable
Federal Reserve Bank.
Section 13.2 Representation of Lenders. Each Lender hereby represents that
it will make each Loan hereunder as a commercial loan for its own account in the
ordinary course of its business; provided, however, that subject to Section 13.1
hereof, the disposition of the Notes or other evidence of the Secured
Obligations held by any Lender shall at all times be within its exclusive
control.
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Section 13.3 Non-U.S. Lenders. Prior to the Agreement Date or, with respect
to any Lender that becomes a Lender after the Agreement Date, prior to the
"Effective Date" of the Assignment and Acceptance pursuant to which such Lender
becomes a Lender, each Lender which is not incorporated under the laws of the
United States of America or a state thereof agrees that it will deliver to the
Administrative Agent (i) a letter in duplicate and two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224 or successor applicable
form, as the case may be, certifying in each case that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, and (ii) an Internal Revenue Service Form
W-8 or W-9 or successor applicable form, as the case may be, to establish an
exemption from United States backup withholding tax. Each such Lender which
delivers a copy of a Form 1001 or 4224 and Form W-8 or W-9 pursuant to the next
preceding sentence further undertakes to deliver to the Administrative Agent two
further copies of the said letter and Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms, or other manner of certification, as the case may
be, on or before the date that any such letter or form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent letter and form previously delivered by it to the Administrative Agent,
and such extensions or renewals thereof as may reasonably be requested by the
Administrative Agent, certifying in the case of a Form 1001 or 4224 that such
Lender is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless in any such case
an event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such letter or form with respect
to it and such Lender advises the Administrative Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal
income tax, and in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax, in which case, all payments by the
Borrowers hereunder and under any Note shall be increased by the amount
necessary to pay to such Lender, net of any such withholding tax(es) the amount
of each payment provided for hereunder.
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ARTICLE 14
ADMINISTRATIVE AGENT
Section 14.1 Appointment of Agent. Each of the Lenders hereby irrevocably
designates and appoints NationsBank, N.A. (South) as the Administrative Agent of
such Lender under this Agreement and the other Loan Documents, and each Lender
irrevocably authorizes the Administrative Agent, as the Administrative Agent for
such Lender, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement and such other Loan Documents, including, without limitation,
to make determinations as to the eligibility of Inventory and Receivables and to
adjust the advance rates contained in the definition "Borrowing Base" (so long
as such advance rates, as adjusted, do not exceed those set forth in the
definition "Borrowing Base") and to establish reserves against the Borrowing
Base, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement or the
other Loan Documents, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the
Administrative Agent.
Section 14.2 Delegation of Duties. The Administrative Agent may execute any
of its duties under this Agreement and the other Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent shall
not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
Section 14.3 Exculpatory Provisions. Neither the Administrative Agent nor
any of its trustees, officers, directors, employees, agents, attorneys-in-fact
or Affiliates shall be (i) liable to any Lender (or any Lender's participants)
for any action lawfully taken or omitted to be taken by it or such Person under
or in connection with this Agreement or the other Loan Documents (except for its
or such Person's own gross negligence or willful misconduct), or (ii)
responsible in any manner to any Lender (or any Lender's participants) for any
recitals, statements, representations or warranties made by the Borrowers (or
any of them) or any officer thereof contained in this Agreement or the other
Loan Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or the other Loan Documents or for the
existence, value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the other Loan Documents or any Collateral or
Lien or other interest therein or for any failure of the Borrowers (or any of
them) to perform their obligations hereunder or thereunder. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire
as to the observance or performance of any of the agreements contained
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in, or conditions of, this Agreement, or to inspect the properties, books or
records of the Borrowers (or any of them), provided that the Administrative
Agent shall perform a field examination of the Collateral, in accordance with
the Administrative Agent's customary standards and practices for such
examinations, at least annually and shall make the results thereof available to
the Lenders.
Section 14.4 Reliance by Agent. The Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any Note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the
Borrowers), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless such Note shall have been
transferred in accordance with Section 13.1. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement
and the other Loan Documents unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and shall be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement and the Notes in
accordance with a request of the Required Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
Section 14.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Administrative Agent has received notice from a
Lender or the Borrowers referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default" or the
Lender that is the Administrative Agent (which is NationsBank on the Effective
Date) has actual knowledge of such Default or Event of Default, in which case
the Administrative Agent shall be deemed to have received such a notice. In the
event that the Administrative Agent receives or is deemed to have received such
a notice, the Administrative Agent shall promptly give notice thereof to the
Lenders. The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) continue making Revolving Credit Loans to the Borrowers on behalf
of the Lenders in reliance on and subject to the provisions of Section 4.7 and
take such other action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Lenders.
Section 14.6 Non-Reliance on Agents and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
respective officers, directors, counsel, employees, agents, attorneys-in-fact or
Affiliates has made any
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representations or warranties to it and that no act by the Administrative Agent
thereafter taken, including any review of the affairs of the Borrowers, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial (and other) condition and creditworthiness of
the Borrowers and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial (and other) condition and creditworthiness of
the Borrowers. Except for notices, reports and other documents expressly
required to be furnished to the Lenders by the Administrative Agent hereunder or
under the other Loan Documents, the Administrative Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial (and other) condition
or creditworthiness of the Borrowers which may come into the possession of the
Administrative Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates.
Section 14.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrowers and without limiting any obligation of the Borrowers to do so),
ratably according to their respective Commitment Percentages, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of this Agreement or
the other Loan Documents, or any documents contemplated by or referred to herein
or therein or the transactions contemplated hereby or thereby or any action
taken or omitted by the Administrative Agent under or in connection with any of
the foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from the
Administrative Agent's gross negligence or willful misconduct or resulting
solely from transactions or occurrences that occur at a time after the
"Effective Date" of any assignment by such Lender of all of its interests,
rights and obligations under this Agreement pursuant to Section 13.1 or, in the
case of a Lender to which an assignment is made hereunder pursuant to Section
13.1, at a time before the "Effective Date" of any such assignment. The
agreements in this subsection shall survive the payment of the Notes, the
Secured Obligations and all other amounts payable hereunder and the termination
of this Agreement.
Section 14.8 Agent in Its Individual Capacity. The institution at the time
acting as the Administrative Agent and its Affiliates may make loans to, accept
deposits from and
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generally engage in any kind of business with the Borrowers and their respective
Subsidiaries as if it were not the Administrative Agent hereunder. With respect
to its Commitment, the Loans made or renewed by it, any Note issued to it and
any Letter of Credit issued by it, such institution shall have and may exercise
the same rights and powers under this Agreement and the other Loan Documents and
shall be subject to the same obligations and liabilities as and to the extent
set forth herein and in the other Loan Documents for any other Lender. The terms
"Lenders" and "Required Lenders" or any other term shall, unless the context
clearly otherwise indicates, include such institution in its individual capacity
as a Lender or one of the Required Lenders.
Section 14.9 Successor Agent. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders and, if the Commitment
Percentage of the Lender that is the Administrative Agent has been reduced to
less than 10%, may be removed by a vote of the Required Lenders. Any such
resignation shall be effective on the date specified in the Administrative
Agent's notice of resignation, provided that if no successor agent has been
appointed in accordance with the provisions of this Section 14.9 on or before
such date, such effective date may be extended until a successor has been so
appointed, but not for more than 30 days; and any such removal shall be
effective upon the appointment of a successor agent in accordance with the
provisions of this Section 14.9. If the Administrative Agent resigns or is
removed as Administrative Agent under this Agreement, then the Required Lenders
shall appoint from among the Lenders a successor agent for the Lenders, subject,
so long as no Default or Event of Default has occurred and is continuing, to the
Borrowers' approval (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon its appointment, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring or removed Administrative Agent's
resignation or removal hereunder as Administrative Agent becomes effective, the
provisions of Section 14.7 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent under this
Agreement.
Section 14.10 Notices from Agent to Lenders. The Administrative Agent shall
promptly, upon receipt thereof, forward to each Lender copies of any written
notices or reports supplied to it by the Borrowers (but which the Borrowers are
not required to supply directly to the Lenders) and of reports furnished by
NationsBank pursuant to Section 3.4(c).
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ARTICLE 15
MISCELLANEOUS
Section 15.1 Notices.
(a) Method of Communication. Except as specifically provided in this
Agreement or in any of the Loan Documents, all notices and the communications
hereunder and thereunder shall be in writing or by telephone subsequently
confirmed in writing. Notices in writing shall be delivered personally or sent
by certified or registered mail, postage pre-paid, or by overnight courier, or
by telegraph, telex or facsimile transmission and shall be deemed received, in
the case of personal delivery, when delivered, in the case of mailing, on the
third Business Day after mailing, in the case of overnight courier, on the
Business Day following timely delivery to such courier, in the case of
telegraph, on the day after delivery to the telegraph office and, in the case of
telex or facsimile transmission, upon transmittal; provided that in the case of
notices to the Administrative Agent pursuant to Articles 2 and 3, the
Administrative Agent shall be charged with knowledge of the contents thereof
only when such notice is actually received by the Administrative Agent. A
telephonic notice to the Administrative Agent as understood by the
Administrative Agent will be deemed to be the controlling and proper notice in
the event of a discrepancy with or failure to receive a confirming written
notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
following addresses, or any other address of which all the other parties are
notified in writing.
If to the Borrowers: Syratech Corporation
175 McClellan Highway
East Boston, Massachusetts 02128
Attention: E. Merle Randolph
Facsimile No.: (617) 561-0275
With copies to: Faye A. Florence, Esq.
Secretary and General Counsel
Syratech Corporation
175 McClellan Highway
East Boston, Massachusetts 02128
Facsimile No.: (617)
James Westra, Esq.
Hutchins, Wheeler & Dittmar
101 Federal Street
Boston, Massachusetts 02110
Facsimile No.: (617) 951-6600
If to the Administrative Agent: NationsBank, N.A. (South)
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c/o NationsBank Business Credit
600 Peachtree Street, 13th Floor
Atlanta, Georgia 30308
Attn: John C. Glazebrook
Facsimile No.: (404) 607-6439
With a copy to: Hunton & Williams
NationsBank Plaza - Suite 4100
600 Peachtree Street, NE
Atlanta, Georgia 30308-2216
Attn: Dana Kull, Esq.
Facsimile No.: (404) 888-4190
If to any Lender: At such Lender's address appearing
on the signature pages hereof
(c) Agent's Office. The Administrative Agent hereby designates its office
located at 600 Peachtree Street, 13th Floor, Atlanta, Georgia 30308, or any
subsequent office which shall have been specified for such purpose by written
notice to the Borrowers and the Lenders, as the office to which payments due are
to be made and at which Loans will be disbursed.
Section 15.2 Expenses. The Borrowers agree, jointly and severally, to pay
or reimburse on demand all costs and expenses incurred by the Administrative
Agent, including, without limitation, the reasonable fees and disbursements of
counsel, in connection with:
(a) the negotiation, preparation, execution, delivery, administration,
enforcement and termination of this Agreement and each of the other Loan
Documents, whenever the same shall be executed and delivered, including, without
limitation
(i) the out-of-pocket costs and expenses incurred in connection with
the administration and interpretation of this Agreement and the other Loan
Documents;
(ii) the costs and expenses of appraisals of the Collateral;
(iii) the costs and expenses of lien searches;
(iv) taxes, fees and other charges for filing the Financing Statements
and continuations and the costs and expenses of taking other actions to
perfect, protect, and continue the Security Interest;
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(b) as to the preparation, execution and delivery of any waiver, amendment,
supplement or consent by the Administrative Agent and the Lenders relating to
this Agreement or any of the Loan Documents;
(c) sums paid or incurred to pay any amount or take any action required of
the Borrowers (or any of them) under the Loan Documents that the Borrowers fail
to pay or take;
(d) costs of inspections and verifications of the Collateral, including,
without limitation, standard per diem fees charged by the Administrative Agent,
travel, lodging, and meals for inspections of the Collateral and the Borrowers'
operations and books and records by the Administrative Agent's agents up to four
times per year and whenever an Event of Default exists (provided that so long as
no Event of Default has occurred and is continuing, such cost shall not exceed
$25,000 per year);
(e) costs and expenses of forwarding loan proceeds, collecting checks and
other items of payment, and establishing and maintaining each Controlled
Disbursement Account, Agency Account and Lockbox;
(f) costs and expenses of preserving and protecting the Collateral;
(g) consulting, after the occurrence of a Default, with one or more
Persons, including appraisers, accountants and lawyers, concerning the value of
any Collateral for the Secured Obligations or related to the nature, scope or
value of any right or remedy of the Administrative Agent or any Lender hereunder
or under any of the Loan Documents, including any review of factual matters in
connection therewith, which expenses shall include the fees and disbursements of
such Persons; and
(h) costs and expenses paid or incurred to obtain payment of the Secured
Obligations, enforce the Security Interest, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
prosecute or defend any claim in any way arising out of, related to or connected
with, this Agreement or any of the Loan Documents, which expenses shall include
the reasonable fees and disbursements of counsel and of experts and other
consultants retained by the Administrative Agent or any Lender.
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrowers. Each
Borrower hereby authorizes the Administrative Agent and the Lenders to debit
such Borrower's Loan Accounts (by increasing the principal amount of the
Revolving Credit Loan) in the amount of any such costs and expenses owed by the
Borrowers when due.
Section 15.3 Stamp and Other Taxes. The Borrowers will pay any and all
stamp, registration, recordation and similar taxes, fees or charges and shall
indemnify the Administrative Agent and the Lenders against any and all
liabilities with respect to or resulting from any delay in the payment or
omission to pay any such taxes, fees or charges, which may be
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payable or determined to be payable in connection with the execution, delivery,
performance or enforcement of this Agreement and any of the Loan Documents or
the perfection of any rights or security interest thereunder, including, without
limitation, the Security Interest.
Section 15.4 Setoff. In addition to any rights now or hereafter granted
under Applicable Law and not by way of limitation of any such rights, during the
continuance of any Default or Event of Default, each Lender, any participant
with such Lender in the Loans and each Affiliate of each Lender are hereby
authorized by each Borrower at any time or from time to time, without notice to
the Borrowers or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness at any time held or owing by any Lender or any Affiliate of any
Lender or any participant to or for the credit or the account of any Borrower
against and on account of the Secured Obligations irrespective or whether or not
(a) the Administrative Agent or such Lender shall have made any demand
under this Agreement or any of the Loan Documents, or
(b) the Administrative Agent or such Lender shall have declared any or all
of the Secured Obligations to be due and payable as permitted by Section 12.2
and although such Secured Obligations shall be contingent or unmatured.
Section 15.5 Governing Law: Litigation. This Agreement and the other
documents and agreements executed in connection herewith (unless specifically
stipulated to the contrary in such document or agreement), and the rights and
obligations of the parties hereunder and thereunder, shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Georgia
without regard to conflicts of laws principles. Each Borrower hereby irrevocably
submits to the nonexclusive jurisdiction of any United States federal or state
court sitting in Atlanta, Georgia, in any action or proceeding arising out of or
relating to this Agreement or any of the other documents or agreements described
or contemplated herein, and each Borrower hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such United States federal or state court. Service of copies of the summons
and complaint and any other process which may be served in any such action or
proceeding may be made by mailing or delivering a copy of such process to each
Borrower in accordance with Section 15.1 hereof. Each Borrower, the
Administrative Agent and each Administrative Agent and each Lender waive, to the
fullest extent permitted by Applicable law of the forum state (notwithstanding
the choice of governing law set forth above), all rights to a trial by jury in
any action or proceeding relating to transactions arising out of or relating to
this Agreement or any of the other documents described or contemplated herein.
Section 15.6 Waiver of Rights. Each Borrower hereby acknowledges that the
Secured Obligations arose out of a "Commercial Transaction" as that term is
defined
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in O.C.G.A. ss. 44-14-260(1) concerning foreclosure of mortgages on personally,
and agrees that in the event of any Default, the Administrative Agent shall have
the right to an immediate writ of possession without notice of hearing. Each
Borrower knowingly and intelligently waives any and all rights it may have to
any notice and posting of a bond by the Administrative Agent prior to seizure by
the Administrative Agent, its transferees, assigns or successors in interest, of
the Collateral or any portion thereof. This is intended by each Borrower as a
"waiver" as that term is defined in O.C.G.A. ss. 44-14-260(3) relating to
foreclosure of mortgages on personaly.
Section 15.7 Reversal of Payments. The Administrative Agent and each Lender
shall have the continuing and exclusive right to apply, reverse and re-apply any
and all payments to any portion of the Secured Obligations in a manner
consistent with the terms of this Agreement. To the extent a Borrower makes a
payment or payments to the Administrative Agent, for the account of the Lenders,
or any Lender receives any payment or proceeds of the Collateral for the
Borrowers' benefit, which payment(s) or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the Secured Obligations or part
thereof intended to be satisfied shall be revived and continued in full force
and effect, as if such payment or proceeds had not been received by the
Administrative Agent or such Lender.
Section 15.8 Accounting Matters. All financial and accounting calculations,
measurements and computations made for any purpose relating to this Agreement,
including, without limitation, all computations utilized by the Borrowers to
determine whether it is in compliance with any covenant contained herein, shall,
unless there is an express written direction by the Required Lenders to the
contrary, be performed in accordance with GAAP.
Section 15.9 Amendments. Except as set forth in subsection (b) below, any
term, covenant, agreement or condition of this Agreement or any of the other
Loan Documents may be amended or waived, and any departure therefrom may be
consented to by the Required Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Required Lenders and, in the case of an
amendment (other than an amendment described in Section 15.9(c)), by the
Borrowers, provided that no such amendment, unless consented to by the
Administrative Agent, shall alter or affect the rights or responsibilities of
the Administrative Agent, and in any such event, the failure to observe, perform
or discharge any such term, covenant, agreement or condition (whether such
amendment is executed or such waiver or consent is given before or after such
failure) shall not be construed as a breach of such term, covenant, agreement or
condition or as a Default or an Event of Default. Unless otherwise specified in
such waiver or consent, a waiver or consent given hereunder shall be effective
only in the specific instance and for the specific purpose for which given. In
the event that any such waiver or amendment is requested by the Borrowers, the
Administrative Agent and the Lenders may require and charge a fee in connection
therewith and consideration thereof in such amount as shall be determined by the
Administrative Agent and the Required Lenders in their discretion.
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(a) Without the prior unanimous written consent of the Lenders,
(i) no amendment, consent or waiver shall (a) affect the amount or
extend the time of the obligation of any Lender to make Loans or (b) extend
the originally scheduled time or times of payment of the principal of any
Loan or (c) alter the time or times of payment of interest on any Loan or
of any fees payable for the account of the Lenders or (d) alter the amount
of the principal of any Loan or decrease the rate of interest thereon or
(e) decrease the amount of any commitment fee or other fee payable
hereunder for the account of the Lenders or (f) permit any subordination of
the principal of or interest on any Loan or (g) permit the subordination of
the Security Interest in any Collateral,
(ii) no Collateral having an aggregate value greater than $500,000
shall be released by the Administrative Agent in any 12-month period other
than as specifically permitted in this Agreement or the Security Documents
nor shall any Collateral be released at a time when the Administrative
Agent is entitled to exercise remedies hereunder upon default, nor shall
the Borrowers (or any of them) be released from liability for the Secured
Obligations,
(iii) except to the extent expressly provided in Sections 4.7 and
14.1, the definition "Borrowing Base" shall not be amended,
(iv) none of the provisions of this Section 15.9, of Section 4.8(e),
of the definitions "Lenders," "Proportionate Share," "Ratable Share" or
"Required Lenders" or, if it alters the effect of such definitions or other
provisions enumerated in this clause (iv), of any other defined term used
in such definitions or provisions, or the provisions of Article 12 shall be
amended, and
(v) neither the Administrative Agent nor any Lender shall consent to
any amendment to or waiver of the amortization, deferral or subordination
provisions of any instrument or agreement evidencing or relating to
obligations of the Borrowers (or any of them) that are expressly
subordinated to any of the Secured Obligations if such amendment or waiver
would be adverse to the Lenders in their capacities as Lenders hereunder;
provided, however, that anything herein to the contrary notwithstanding, the
Required Lenders shall have the right to waive any Default or Event of Default
and the consequences hereunder of such Default or Event of Default provided only
that such Default or Event of Default does not arise under Section 12.1(f) or
(g) or out of a breach of or failure to perform or observe any term, covenant or
condition of this Agreement or any other Loan Document (other than the
provisions of Article 12 of this Agreement) the amendment of which requires the
unanimous consent of the Lenders. The Required Lenders shall have the right,
with respect to any Default or Event of Default that may be waived by them, to
enter into an agreement with the Borrowers providing for the forbearance from
the exercise of any remedies provided hereunder or under the other Loan
Documents without thereby waiving any such Default or Event of Default.
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(b) The making of Loans hereunder by the Lenders during the existence of a
Default or Event of Default shall not be deemed to constitute a waiver of such
Default or Event of Default.
(c) Notwithstanding any provision of this Agreement or the other Loan
Documents to the contrary, no consent, written or otherwise, of the Borrowers
(or any of them) shall be necessary or required in connection with any amendment
to Article 14 or Section 4.8, and any amendment to such provisions may be
effected solely by and among the Administrative Agent and the Lenders, provided
that no such amendment shall impose any obligation on the Borrowers.
Section 15.10 Performance of Borrower's Duties.
(a) The Borrowers' obligations under this Agreement and each of the Loan
Documents shall be performed by the Borrowers at their sole cost and expense.
(b) If the Borrowers shall fail to do any act or thing which it has
covenanted to do under this Agreement or any of the Loan Documents, the
Administrative Agent may (but shall not be obligated to) do the same or cause it
to be done either in the name of the Administrative Agent, in the name of the
Lender(s) or in the name and on behalf of the Borrowers, and the Borrowers
hereby irrevocably authorize the Administrative Agent so to act.
Section 15.11 Indemnification. The Borrowers, jointly and severally, agree
to reimburse the Administrative Agent and each Lender for all reasonable costs
and expenses, including reasonable fees and disbursements of outside counsel or
reasonable allocations and disbursements of in-house counsel, incurred and to
indemnify and hold harmless the Administrative Agent and each Lender from and
against all losses suffered by the Administrative Agent or any Lender, other
than losses resulting from the Administrative Agent's or such Lender's gross
negligence or willful misconduct, in connection with
(a) the exercise by the Administrative Agent or any Lender of any right or
remedy granted to it under this Agreement or any of the Loan Documents,
(b) any claim, and the prosecution or defense thereof, arising out of or in
any way connected with this Agreement or any of the Loan Documents, except in
the case of a dispute between the Borrowers and the Administrative Agent or any
Lender in which the Borrowers prevail in a final unappealed or unappealable
judgment, and
(c) the collection or enforcement of the Secured Obligations or any of
them.
Section 15.12 All Powers Coupled with Interest. All powers of attorney and
other authorizations granted to the Administrative Agent and the Lenders and any
Persons designated by the Administrative Agent or the Lenders pursuant to any
provisions of this Agreement or any of the Loan Documents shall be deemed
coupled with an interest and shall be
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irrevocable so long as any of the Secured Obligations remain unpaid or
unsatisfied. All powers of attorney and other authorizations granted to the
Administrative Agent and any Persons designated by the Lender pursuant to any
provisions of this Agreement or any of the Loan Documents shall be deemed
coupled with an interest and shall be irrevocable so long as any of the Secured
Obligations remain unpaid or unsatisfied or the Revolving Credit Facility has
not been terminated.
Section 15.13 Survival. Notwithstanding any termination of this Agreement,
(a) until all Secured Obligations have been paid in full and the Revolving
Credit Facility terminated, the Administrative Agent shall retain its Security
Interest and shall retain all rights under this Agreement and each of the
Security Documents with respect to the Collateral as fully as though this
Agreement had not been terminated, and
(b) the indemnities to which the Administrative Agent and the Lenders are
entitled under the provisions of this Article 15 and any other provision of this
Agreement and the Loan Documents shall continue in full force and effect and
shall protect the Administrative Agent and the Lenders against events arising
after such termination as well as before, and
(c) in connection with the termination of this Agreement and the release
and termination of the Security Interest, the Administrative Agent, on behalf of
itself as agent and the Lenders, may require such assurances and indemnities as
it shall reasonably deem necessary or appropriate to protect the Administrative
Agent and the Lenders against loss on account of such release and termination,
including, without limitation, with respect to credits previously applied to the
Secured Obligations that may subsequently be reversed or revoked.
Section 15.14 Titles and Captions. Titles and captions of Articles,
Sections and subsections in this Agreement are for convenience only and neither
limit nor amplify the provisions of this Agreement.
Section 15.15 Severability of Provisions. Any provision of this Agreement
or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 15.16 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and shall be binding
upon all parties, their successors and assigns, and all of which taken together
shall constitute one and the same agreement.
Section 15.17 Reproduction of Documents. This Agreement, each of the Loan
Documents and all documents relating thereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed, (b)
documents received by the
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Administrative Agent or any Lender, and (c) financial statements, certificates
and other information previously or hereafter furnished to the Administrative
Agent or any Lender, may be reproduced by the Administrative Agent or such
Lender by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and such Person may destroy any original
document so produced. Each party hereto stipulates that, to the extent permitted
by Applicable Law, any such reproduction shall be as admissible in evidence as
the original itself in any judicial or administrative proceeding (whether or not
the original shall be in existence and whether or not such reproduction was made
by the Administrative Agent or such Lender in the regular course of business),
and any enlargement, facsimile or further reproduction of such reproduction
shall likewise be admissible in evidence.
Section 15.18 Pro-Rata Participation.
(a) Each Lender agrees that if, as a result of the exercise of a right of
setoff, banker's lien or counterclaim or other similar right or the receipt of a
secured claim it receives any payment in respect of the Secured Obligations, it
shall promptly notify the Administrative Agent thereof (and the Administrative
Agent shall promptly notify the other Lenders). If, as a result of such payment,
such Lender receives a greater percentage of the Secured Obligations owed to it
under this Agreement than the percentage received by any other Lender, such
Lender shall purchase a participation (which it shall be deemed to have
purchased simultaneously upon the receipt of such payment) in the Secured
Obligations then held by such other Lenders so that all such recoveries of
principal and interest with respect to all Secured Obligations owed to each
Lender shall be pro rata on the basis of its respective amount of the Secured
Obligations owed to all Lenders, provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered by or on behalf of the Borrowers from such Lender, such purchase shall
be rescinded and the purchase price paid for such participation shall be
returned to such Lender to the extent of such recovery, but without interest.
(b) Each Lender which receives such a secured claim shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 15.18 to
share in the benefits of any recovery on such secured claim.
(c) Each Borrower expressly consents to the foregoing arrangements and
agrees that any holder of a participation in any Secured Obligation so purchased
or otherwise acquired of which such Borrower has received notice may exercise
any and all rights of banker's lien, set-off or counterclaim with respect to any
and all monies owing by such Borrower to such holder as fully as if such holder
were a holder of such Secured Obligation in the amount of the participation held
by such holder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers in several counterparts all as of the
day and year first written above.
BORROWERS:
SYRATECH CORPORATION
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: President
-----------------------
TOWLE MANUFACTURING COMPANY
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: President
-----------------------
LEONARD FLORENCE ASSOCIATES, INC.
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: President
-----------------------
WALLACE INTERNATIONAL SILVERSMITHS, INC.
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: President
-----------------------
SYRATECH HOLDING CORPORATION
By: /s/ Richard Freiman
------------------------------
Name: Richard Freiman
-----------------------
Title: President
-----------------------
125
<PAGE>
RAUCH INDUSTRIES, INC.
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: President
-----------------------
ROCHARD, INC.
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: Chairman
-----------------------
HOLIDAY PRODUCTS, INC.
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: Chairman
-----------------------
FARBERWARE INC.
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: President
-----------------------
SILVESTRI, INC.
By: /s/ Leonard Florence
------------------------------
Name: Leonard Florence
-----------------------
Title: President
-----------------------
126
<PAGE>
ADMINISTRATIVE AGENT:
NATIONSBANK, N.A. (SOUTH)
By: /s/ John C. Glazebrook
------------------------------
Name: ________________________
Title: _______________________
LENDERS:
NATIONSBANK, N. A. (SOUTH)
By: /s/ John C. Glazebrook
------------------------------
Name: ________________________
Title: _______________________
Address: 600 Peachtree Street, N.E.
13th Floor
Atlanta, Georgia 30308
ATTN:
Facsimile: (404) 607-6439
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By: ______________________________
Name: ________________________
Title: _______________________
Address: One N. LaSalle Street
9th Floor
Chicago, Illinois 60690
ATTN:
Facsimile: (312) 661-6929
127
<PAGE>
ADMINISTRATIVE AGENT:
NATIONSBANK, N.A. (SOUTH)
By: ______________________________
Name: ________________________
Title: _______________________
LENDERS:
NATIONSBANK, N.A. (SOUTH)
By: ______________________________
Name: ________________________
Title: _______________________
Address: 600 Peachtree Street, N.E.
13th Floor
Atlanta, Georgia 30308
ATTN:
Facsimile; (404) 607-6439
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By: /s/ Elizabeth J. Limpert
------------------------------
Name: Elizabeth J. Limpert
Title: First Vice President
Address: One N. LaSalle Street
9th Floor
Chicago, Illinois 60690
ATTN: Elizabeth J. Limpert
Facsimile: (312) 661-6929
128
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Andrew A. Doherty
------------------------------
Name: Andrew A. Doherty
Title: Vice President
Address: 100 Federal Street
MA DED 74-02-05L
Boston, Massachusetts 02110
ATTN: Barbara McKelligan
with a copy to:
115 Perimeter Center Place
Suite 500
Atlanta, Georgia 30346
ATTN: Andrew A. Doherty
Facsimile: (770) 393-4166
FLEET NATIONAL BANK
By: ______________________________
Name: ________________________
Title: _______________________
Address: One Pederal Street
MAOFD04G
Boston, Massachusetts 02110
ATTN:
Facsimile: (617) 346-4827
129
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By: ______________________________
Name: ________________________
Title: _______________________
Address: 100 Federal Street
MA BOS 01-19-03
Boston, Massachusetts 02110
ATTN: Barbara McKelligan
with a copy to:
115 Perimeter Center Place
Suite 500
Atlanta, Georgia 30346
ATTN: Andrew Doherty
Facsimile: (770) 393-4l66
FLEET NATIONAL BANK
By: /s/ Scott E. Carpenter
------------------------------
Name: Scott E. Carpenter
Title: Vice President
Address: One Federal Street
MAOFD04G
Boston, Massachusetts 02110
ATTN:
Facsimile: (617) 346-4827
130
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Greg F. Ennis
------------------------------
Name: Greg F. Ennis
Title: Vice President
Address: 100 Pringle Avenue
Suite 650
Walnut Creek, California 94596
ATTN:
Facsimile: (510) 943-7442
BHF-BANK AKTIENGESELLSCHAFT
By: ______________________________
Name: ________________________
Title: _______________________
Address: 590 Madison Avenue
New York, New York 10022
ATTN:
Facsimile: (212) 756-5536
SANWA BUSINESS CREDIT CORPORATION
By: ______________________________
Name: ________________________
Title: _______________________
Address: One South Wacker
28th Floor
Chicago, Illinois 60606
ATTN:
Facsimile: (312) 782-6035
131
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By: ______________________________
Name: ________________________
Title: _______________________
Address: 100 Pringle Avenue
Suite 650
Walnut Creek, California 94596
ATTN:
Facsimile: (510) 943-7442
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ John Sykes /s/ Tony Heyman
---------------------------------
Name: John Sykes Tony Heyman
Title: AVP AT
Address: 590 Madison Avenue
New York, New York 10022
ATTN:
Facsimile: (212) 756-5536
SANWA BUSINESS CREDIT CORPORATION
By: ______________________________
Name: ________________________
Title: _______________________
Address: One South Wacker
28th Floor
Chicago, Illinois 60606
ATTN:
Facsimile: (312) 782-6035
132
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By: ______________________________
Name: ________________________
Title: _______________________
Address: 100 Pringle Avenue
Suite 650
Walnut Creek, California 94596
ATTN:
Facsimile: (510) 943-7442
BHF-BANK AKTIENGESELLSCHAFT
By: ______________________________
Name: ________________________
Title: _______________________
Address: 590 Madison Avenue
New York, New York 10022
ATTN:
Facsimile: (212) 756-5536
SANWA BUSINESS CREDIT CORPORATION
By: /s/ Lawrence J. Placek
---------------------------------
Name: Lawrence J. Placek
Title: Vice Pres
Address: One South Wacker
28th Floor
Chicago, Illinois 60606
ATTN:
Facsimile: (312) 782-6035
133
