Document:

EX-10.1

FORBEARANCE
AGREEMENT AND SECOND AMENDMENT

 

THIS FORBEARANCE
AGREEMENT AND SECOND AMENDMENT (this “Forbearance Agreement”) is made
and entered into as of the 15th day of November, 2004, by and among Syratech
Corporation, a Delaware corporation (the “Borrower”), the Lenders whose
signatures appear on the signature pages hereof (the “Lenders”), and
Bank of America, N.A., as Administrative Agent for the Lenders (in such
capacity, the “Agent”).

W I T N E S S E T
H:

WHEREAS, Borrower,
the Lenders and the Agent entered into that certain Amended and Restated Loan
and Security Agreement, dated as of March 26, 2004, as amended by that certain
Amendment, Acknowledgment and Limited Waiver (the “Limited Waiver”)
dated as of October 15, 2004 (and as further amended by this Forbearance
Agreement, the “Credit Agreement”, capitalized terms used but not
defined herein shall have the meaning assigned to such terms in the Credit
Agreement; and

 

                WHEREAS, the
following events have occurred which constitute Events of Default under the
Credit Agreement: (i) the Payment Event of Default, as defined in the Limited
Waiver, has occurred, which constitutes an Event of Default under Section
12.1(e) of the Credit Agreement (the “Payment Default”), and (ii) as the
results of Borrower’s results of operations and business prospects, among other
matters, both a “material adverse change”, within the meaning of Section
6.1(n)(i) of the Credit Agreement, and a Materially Adverse Effect have
occurred and are continuing, which constitute continuing Events of Default
under Section 12.1(c) of the Credit Agreement (collectively the “Adverse
Change Default”, and, together with the Payment Default, referred to herein
collectively as the “Existing Defaults”); and

WHEREAS, by reason of the
Existing Defaults, Agent, on behalf of the Lenders, is authorized to exercise
all remedies available to it under the Loan Documents, including, but not
limited to, the right to repossess and foreclose upon the Collateral; and

WHEREAS,
despite the Existing Defaults, Borrower desires that Agent and Lenders (a)
forbear from exercising remedies of suit, repossession and foreclosure
otherwise available to  Agent, on behalf
of the Lenders, under the Loan Documents; (b) continue to make available to
Borrower, Revolving Loans under the facility for Revolving Credit Loans
pursuant to Article 2 of the Credit Agreement (the “Revolving Facility”)
and make other concessions, as set forth herein; and

WHEREAS, Agent and
Lenders are willing to (a) forbear from pursuing their

remedies in connection with the Existing Defaults, (b) continue to make
available to Borrower the Revolving Facility, as amended hereby, and as further
modified herein during the Forbearance Period, and make other concessions to
the Borrower, (collectively the “Borrower Benefits”), all on the terms
and conditions contained herein, each of which, individually and in 

 

 

 

the aggregate, and including the performance thereof by Borrower,
constitute the consideration to the Agent and Lenders for entering into this Forbearance
Agreement, and in the absence of any of which Agent and Lenders would not have
entered into this Forbearance Agreement or otherwise extended to Borrower the
Borrower Benefits; and

WHEREAS, Borrower
acknowledges and agrees that the Borrower Benefits

hereunder are of immediate and material benefit, financial and
otherwise, to the Borrower, and that neither Agent nor Lenders were or are
under any obligation to extend to Borrower the Borrower Benefits provided
hereunder.

NOW, THEREFORE, in
consideration of the foregoing premises (collectively the “Recitals”),
and other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:

                1.             Acknowledgments by Borrower.

 

                (a)  Borrower hereby acknowledges and agrees that
(i) as of the close of business on November 12, 2004, (A) the outstanding and
unpaid principal balance of the Revolving Credit Loans totaled $25,864,745.40,
and (B) the Letter of Credit Obligations totaled $3,509,656.22, in each case
exclusive of accrued interest, costs and attorney’s fees chargeable to Borrower
under the Loan Documents; (ii) the Existing Defaults have occurred, as set
forth in the Recitals, (iii) the Existing Defaults are continuing and have not
been cured by Borrower or waived, released, extinguished or compromised by
Agent or Lenders; and (iv) as a result of the Existing Defaults, all of the
Secured Obligations, at the election of the Agent or the direction of the
Required Lenders, could be declared absolutely and immediately due and owing by
Borrower, and Agent, on behalf of the Lenders, would have the full legal right
to exercise any and all rights and remedies under the Loan Documents or
otherwise available at law or in equity with respect thereto.

(b)   Borrower acknowledges and agrees that,
notwithstanding the agreement of Agent and Lenders herein, on the terms and
conditions set forth herein, to (i) on the part of the Lenders, make additional
Revolving Credit Loans and continue to purchase participations in respect
of  Letters of Credit and Bankers
Acceptances under the Revolving Facility, and (ii) to forbear from exercising
the rights and remedies available under the Loan Documents and applicable law,
in no event shall any of such actions by Agent or Lenders be deemed a waiver,
release, extinguishment, compromise or cure of the Existing Defaults or of any
other current or future Default or Event of Default.

2.              Forbearance Period,
Conditions and Waivers.

(a)   Forbearance.  During the period commencing on the date
hereof and ending, immediately and without notice, on the earlier to occur of
(x) December 31, 2004, or (y) the occurrence of an Event of Default specified
in Sections 12.1(f) or 12.1(g) of the Credit Agreement or (z) the date that any
default with respect to, or other failure of, the Forbearance Conditions as
defined in and set forth in Section 2(b) hereof occurs (the “Forbearance 

 

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Period”), Agent and Lenders agree that they
will not, but only by reason of the Existing Defaults:

(i)            exercise any of the rights or
remedies available to them under the Loan Documents or under any applicable law
to foreclose upon their security interest(s) in any of the Collateral; or

(ii)           refuse to make additional Revolving
Credit Loans, or purchase additional participations in Letters of Credit or
Bankers Acceptances issued or created for the account of the Borrower pursuant
to the Credit Agreement; or

(iii)          accelerate the maturity date of any of
the Secured Obligations; or

(iv)          institute suit against the Borrower or
legal proceedings in respect of any of its assets.

(b)   Conditions to Forbearance.  Each of the following conditions shall
constitute a forbearance condition (“Forbearance Condition”), the continuing
satisfaction of each and every one of which shall be a continuing condition to
the agreement of Agent and Lenders to forbear as set forth above in this
Section 2:

(i) Except with respect
to the Existing Defaults and except as otherwise expressly provided hereinafter
in Section 2(f) of this Forbearance Agreement, Borrower shall duly observe and
perform each and every obligation and covenant on its part to be performed
under the Loan Documents, this Forbearance Agreement and any agreement,
instrument or document executed in connection with this Forbearance Agreement
including, without limitation, Borrower’s obligations to pay to Agent, on
behalf of the Lenders, all principal, interest, fees, charges, expenses and
premiums, as and when the same are due and payable pursuant to the Credit
Agreement (whether due at stated maturity, upon acceleration or otherwise); and

(ii) No Default or Event
of Default shall exist or shall have occurred under any of the terms,
conditions, provisions or covenants of the Loan Documents, or this Forbearance
Agreement, except the Existing Defaults, the Agent and Lenders acknowledging
and agreeing that the continuing occurrence of the Adverse Change Defaults
shall not constitute additional Events of Default for purposes of satisfying
this Forbearance Condition; and

(iii) The representations
and warranties contained in the Loan Documents, this Forbearance Agreement and
any agreement, instrument or document executed in connection herewith or
pursuant hereto shall be true and correct in all material respects as of the
date of this Forbearance Agreement and shall continue to be true and correct in
all material respects at all times hereafter (except to the extent that any
such representation or warranty (x) by its express terms, relates only to a
prior specific date or period or (y) is untrue as a result of the occurrence or
continuance of any of the Existing Defaults); and

(iv) The Borrower shall
provide to the Agent copies or, in the case of verbal notices information in
respect of, any and all notices and correspondence of any kind 

 

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whatsoever from any inventory vendor, or other
material trade creditor, with respect to any default in payment of the amounts
due such vendor or trade creditor in excess of $10,000, within two (2) Business
Days after the receipt of any such notice or correspondence; and

(v)   The Borrower shall provide to the Agent,
promptly after receipt or the date of any meeting, as applicable, copies of all
notices, correspondence or other communications received from, and complete and
accurate summaries of all meetings (including without limitation telephone
calls and web-based or augmented telephone calls or meetings) of the Borrower
or any representative of the Borrower with, any holders of Senior Notes, any
representative of any such holder(s), and any representative of any official or
unofficial committee of such holders (collectively the “Bondholders”),
including without limitation documents, correspondence, proposals, meetings and
telephone calls (collectively the “Bondholder Communications”) in
respect of any restructuring of the Senior Notes, modification of the Senior
Note Indenture or the full or partial exchange of Senior Notes for new
Indebtedness of or equity in the Borrower (as reorganized or otherwise); provided,
however, that only such Bondholder Communications as constitute either a
material new proposal or a material modification of a prior proposal (whether
previously reported to the Agent or otherwise), either to or from  the Bondholders, shall be required to be
reported to the Agent under this subsection; and

(vi)  The Borrower shall provide to the Agent, on
or before the twentieth (20th) day of each month during the
Forbearance Period, commencing on November 19, 2004, a report describing
Borrower’s actual financial performance for the Fiscal Month most recently
ended and for the Fiscal Year to date through the end of such Fiscal Month and
utilizing income, expense and other categories listed on Schedule I hereto and
a variance analysis of actual versus projected financial performance for the
applicable reporting period.

(c)           Payment of the Obligations:   During the Forbearance Period, for so long
as each of the Forbearance Conditions is satisfied, except to the extent, if
any, modified by Section 2(f) hereunder, the Obligations shall be payable by
Borrower in accordance with the provisions of the Loan Documents, applicable as
though no Default or Event of Default had occurred.  From and after the date on which any of the
Forbearance Conditions shall cease to be satisfied, the Obligations, at the
election of the Agent or the direction of the Required Lenders, may be
collected by whatever means are authorized by the Loan Documents or by
applicable law.

(d)           Effect and Construction of
Forbearance:   Except as otherwise
expressly provided herein, the Credit Agreement and the other Loan Documents
shall remain in full force and effect in accordance with their respective
terms, and neither this Forbearance Agreement nor the making of any Revolving
Credit Loans, nor the issuance or creation of Letters of Credit or Bankers
Acceptances, simultaneously herewith or subsequent hereto shall be construed
to:  (i) impair the validity, perfection
or priority of any lien or security interest securing the Secured Obligations;
(ii) waive or impair any rights, powers or remedies of Agent or Lenders under
the Credit Agreement or any of the other Loan Documents upon termination of the
Forbearance Period, with respect to the Existing Defaults or otherwise; (iii)
constitute an agreement by Agent 

 

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or any Lender, or require Agent or any Lender, to
extend the Forbearance Period or grant additional forbearance periods, extend
the term of the Credit Agreement or the time for payment of any of the Secured
Obligations; (iv) require Agent or any Lender to make any Revolving Credit
Loan, purchase participations in any Letter of Credit or Bankers Acceptance, or
make any  other extensions of credit to
or for the benefit of Borrower after termination of the Forbearance Period,
other than in Agent’s or any such Lender’s sole and absolute discretion; or (v)
constitute a waiver of any right of Agent or any Lender to insist on strict
compliance by Borrower with each and every term, condition and covenant of this
Forbearance Agreement and the Loan Documents, except as expressly provided
herein. Other than as expressly provided in Section 3 hereunder, this
Forbearance Agreement does not constitute an amendment to the Credit Agreement,
but rather, constitutes a supplement thereto. All acknowledgments, terms,
conditions, releases, waivers and other provisions hereof, except to the extent
that the applicability of the same are expressly limited to the Forbearance
Period, shall continue in full force and effect notwithstanding the termination
or other cessation of the Forbearance Period. 
This Forbearance Agreement shall also constitute a Loan Document.

(e)    No Course of Dealing or Performance:  Borrower acknowledges and agrees that the
agreement of Agent and Lenders to forbear from exercising their rights and
remedies under the Loan Documents with respect to the Existing Defaults
pursuant to and as reflected in this Forbearance Agreement, does not and shall not
create (nor shall Borrower rely upon the existence of or claim or assert that
there exists) any obligation of Agent or any Lender to consider or agree to any
waiver or any further forbearance and, in the event that Agent or any Lender
subsequently agrees to consider any waiver or any further forbearance, neither
the existence of any prior forbearance, nor this Forbearance Agreement, nor any
other conduct of the Agent or any Lender, or any of them, shall be of any force
or effect on any consideration or decision with respect to any such requested
waiver or forbearance, and neither Agent nor any Lender shall have any
obligation whatsoever to consider or agree to further forbear from the exercise
of remedies in respect of or to waive any other Default or Event of
Default.  In addition, neither (w) the
execution and delivery of this Forbearance Agreement, (x) the actions of Agent
or any Lender in obtaining or analyzing any information from Borrower, whether
or not related to consideration of any waiver, modification, forbearance or
alteration of the Credit Agreement, any Default or Event of Default thereunder,
or otherwise, including, without limitation, any discussions or negotiations
(heretofore or, if any, hereafter) between Agent or any Lender and Borrower regarding
any potential waiver, modification, forbearance or amendment related to the
Credit Agreement, (y) any failure of Agent or any Lender to exercise any of its
or their rights under, pursuant or with respect to the Credit Agreement or any
other Loan Document, nor (z) any action, inaction, waiver, forbearance,
amendment or other modification of or with respect to the Credit Agreement or
any other Loan Document, shall, unless evidenced by a written agreement (and
then only to the extent provided by the express provisions thereof):

(i)            Constitute a waiver by Agent or any
Lender of, or, except to the extent expressly provided herein, an agreement by
Agent or any Lender to forbear from the exercise of remedies with respect to,
any Default or Event of Default under the Credit Agreement or any other Loan
Document;

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(ii)           Constitute a waiver by or estoppel of
Agent or any Lender as to the satisfaction or lack of satisfaction of any
covenant, term or condition set forth in the Credit Agreement or any other Loan
Document; or

(iii)          Constitute an amendment to or
modification of, or an agreement on the part of Agent or any Lender to enter
into any amendment to or modification of, or an agreement to negotiate or
continue to negotiate with respect to, the Credit Agreement or any other Loan
Document.

                (f)   Temporary Modifications of Credit
Agreement.

                                (i)   During the Forbearance  Period, but not thereafter, the defined term “Revolving
Credit Facility” shall mean $35,000,000 rather than $70,000,000.

                                (ii)   During the Forbearance  Period, but not thereafter, the definition of
Borrowing Base shall be modified as follows: (A) in subsection (a) thereof, the
percentage “80%” shall be replaced by the percentage “75%”, and (B) in
subsection (b)(ii) thereof, the percentage “60%” shall be replaced by the
percentage “55%”.

                                (iii)   During the Forbearance  Period, but not thereafter, the definition of
“Inventory Limit” shall be modified by replacing the dollar amount “$30,000,000”
with the dollar amount “$22,500,000”.

                                (iv)   During the Forbearance  Period, but not thereafter, Section 12.1 of
the Credit Agreement shall be modified by adding thereto the following new
subsection:

                                “(o)   Borrower shall make any payment in respect
of the Senior Notes, or request one or more Revolving Credit Loans for the
purpose of making any such payment.”

                                (v)   During the Forbearance  Period, but not thereafter, (A) Revolving
Credit Loans made on or after the date hereof shall be made only as Base Rate
Loans, and no additional LIBOR Rate Loans shall be available to Borrower, and
(B) as each Interest Period expires in respect of a LIBOR Rate Loan existing as
of the date hereof, Borrower shall be deemed to have requested, pursuant to
Section 4.12 of the Credit Agreement, that such LIBOR Rate Loan be converted to
a Base Rate Loan effective on the last day of the related Interest Period and
(C) subsection (a) of the definition of “Applicable Margin” shall be modified
by striking the percentage “1.00%” and inserting in lieu thereof the percentage
“3.00%”.

                3.             Amendments to Credit Agreement.

                The
Credit Agreement is hereby amended as follows, and the Borrower hereby
acknowledges the prior amendment of the Credit Agreement:

                (a)   The definition of “Eligible Inventory” is
amended by:

                                                                (i)   striking the text of subsection (f) thereof
and inserting in lieu thereof the following:

 

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                                                                                                “(f)  
such Inventory is either (A) located within the United States at one of
the locations listed in Schedule 6.1(v) or is in transit between two such
locations, or (B) is in-transit to a United States port and is Eligible
In-Transit Inventory.”

                                                                                                (ii)  
inserting in subsection (g) thereof, after the words “such Inventory”,
the  words “(other than Eligible
In-Transit Inventory)”.

                (b)   The following new defined term is hereby
added, in appropriate alpha order, to Section 1.1 of the Credit Agreement:

 

“Eligible In-Transit
Inventory” means Inventory in-transit to a United States port that (a) is
fully insured with Agent as the loss payee with respect thereto, (b) is subject
to a first priority security interest in and lien upon such goods in favor of
Agent (except for any possessory lien upon such goods in the possession of (i)
a freight carrier or shipping company securing only the freight charges for the
transportation of such goods to Borrower, or (ii) a customs broker or other
bailee who has entered into a bailee agreement with Agent in such form and
substance as is acceptable to Agent, in its sole discretion), and (c) is
evidenced or deliverable pursuant to one or more non-negotiable bills of lading
that have been delivered to Agent or an agent acting on its behalf, together
with such additional documents as Agent shall determine in its sole discretion
(including, without limitation, additional or supplemental agreements with
Borrower), all in form and substance as determined to be acceptable by Agent in
its sole discretion.

 

(c)           The Borrower acknowledges that
Section 11.14 of the Credit Agreement was amended pursuant to the Limited
Waiver to substitute the dollar amount “$8,500,000” for the dollar amount “$7,500,000”
therein.

                4.             Representations, Warranties,
Covenants and Acknowledgments; Release.  To induce the
Lenders and the Agent to enter into this Forbearance Agreement:

(a)           The Borrower represents and warrants
that, upon and after giving effect to this Forbearance Agreement, (i) except
for the Existing Defaults, each of the representations and warranties made by
it under the Loan Documents, other than representations and warranties that
speak only as of an earlier date, are true and correct, (ii) it has the power
and authority and is duly authorized to enter into, deliver and perform this
Forbearance Agreement, (iii) this Forbearance Agreement, the Credit
Agreement and each of the other Loan Documents is the legal, valid and binding
obligation thereof, enforceable against it in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting creditors’ rights generally and
by general principles of equity (regardless of whether enforcement is sought in
equity or in law), and (iv) the execution, delivery and performance of this
Forbearance Agreement in accordance with its terms do not and will not, with
the passage of time, the giving of notice or otherwise: (A) require approval by
any Governmental Authority or violate any applicable law relating thereto;
(B) conflict with, result in a breach of or constitute a default under (1)
the articles or certificate of incorporation, or the by-laws of the Borrower;
(2) any indenture, material agreement or other material instrument to which it
is a party or by which any of its properties may be bound, or (3) any approval
by any Governmental Authority relating thereto; or (C) result in or require the

 

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creation or imposition of any Lien upon or with
respect to any property now owned or hereafter acquired by it other than
Permitted Liens;

(b)           The Borrower (i) agrees that this
Forbearance Agreement is not intended to be, and is not, a novation of any of
the Loan Documents or any of the Secured Obligations, and (ii)  does hereby reaffirm each of the agreements,
covenants, and undertakings made by it under the Credit Agreement and each and
every other Loan Document executed by it in connection therewith or pursuant
thereto, in each case as if each such Borrower were making said agreements,
covenants and undertakings on the effective date hereof, except with respect to
such agreements, covenants and undertakings which, by their express terms, are
applicable only to a specific prior date or period;

(c)           The Borrower does hereby acknowledge
and agree that, as of the date hereof, no right of offset, defense,
counterclaim, claim, cause of action or objection in favor of Borrower against
any of the Lenders or the Agent exists arising out of or with respect to (i)
the Secured Obligations, this Forbearance Agreement, the Credit Agreement or
any of the other Loan Documents, (ii) any other documents evidencing, securing
or in any way relating to the foregoing, or (iii) the administration or funding
of the Loans or any of the other  Secured
Obligations; and

(d)   As a material inducement to Agent and
Lenders to enter into this Forbearance Agreement and to continue to make
Revolving Credit Loans under the Revolving Facility, all in accordance with and
subject to the terms and conditions of this Forbearance Agreement and the Credit
Agreement, and all of which are to the direct advantage and benefit of
Borrower, the Borrower, for itself and its successors and assigns, (i) does
hereby remise, release, waive, relinquish, acquit, satisfy and forever
discharge Agent (including in its capacity as an issuer of Letters of Credit or
creator of Bankers Acceptances) and each Lender, and all of the respective
past, present and future officers, directors, employees, agents, affiliates,
attorneys, representatives, participants, heirs, successors and assigns of
Agent and each Lender (collectively the “Discharged Parties” and each a “Discharged
Party”), from any and all manner of debts, accountings, bonds, warranties,
representations, covenants, promises, contracts, controversies, agreements,
liabilities, obligations, expenses, damages, judgments, executions, actions,
suits, claims, counterclaims, demands, defenses, setoffs, objections and causes
of action of any nature whatsoever, whether at law or in equity, either now
accrued or hereafter maturing and whether known or unknown, including, but not
limited to, any and all claims which may be based on allegations of breach of
contract, failure to lend, fraud, promissory estoppel, libel, slander, usury,
negligence, misrepresentation, breach of fiduciary duty, bad faith, lender
malpractice, undue influence, duress, tortious interference with contractual
relations, interference with management, or misuse of control which Borrower
now has or hereafter can, shall or may have by reason of any matter, cause, thing
or event occurring at any time on or prior to the date of this Forbearance
Agreement arising out of, in connection with or relating to (i) the Secured
Obligations, including, but not limited to, the administration or funding
thereof, (ii) any of the Loan Documents or the indebtedness evidenced and
secured thereby, and (iii) any other agreement or transaction between Borrower
and any Discharged Party relating to or in connection with the Loan Documents
or the transactions contemplated therein; and (b) does  hereby covenant and agree never to institute
or cause to be instituted or continue prosecution of any suit or other form of
action or proceeding of any kind or nature whatsoever against any 

 

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Discharged Party, by reason of or in connection with
any of the foregoing matters, claims or causes of action, provided, however,
that the foregoing release and covenant not to sue shall not apply to any
claims that first arise after the date of this Forbearance Agreement with
respect to acts, occurrences or events after the date of this Forbearance
Agreement.

5.             Conditions Precedent. 
The effectiveness of this Forbearance Agreement is subject to the
following conditions precedent:

(a)           Delivery of Documents.  The Agent shall have received from the
Borrower executed originals of this Forbearance Agreement and such other
documents and instruments as the Agent or any Lender may reasonably request.

(b)           No Events of Default.  After giving effect to this Forbearance
Agreement, no Default or Event of Default, other than in the Existing Defaults,
shall have occurred and be continuing under the Credit Agreement or any other
Loan Document.

6.             Additional Acknowledgments.  Borrower expressly acknowledges and agrees
that the waivers, estoppels and releases in favor of Agent and each Lender
contained in this Forbearance Agreement shall not be construed as an admission
of any wrongdoing, liability or culpability on the part of Agent or any Lender,
or as an admission by Agent or any Lender of the existence of any claims by
Borrower against Agent or any Lender. 
The Borrower further acknowledges and agrees that, to the extent that
any such claims exist, they are of a speculative nature so as to be incapable
of objective valuation and that, to the extent that any such claims may exist
and may have value, such value would constitute primarily “nuisance” value or “leverage”
value in adversarial proceedings between Borrower and Agent or any Lender.  In any event, the Borrower acknowledges and agrees
that the value to Borrower of the covenants and agreements on the part of Agent
and Lenders contained in this Forbearance Agreement substantially and
materially exceeds any and all value of any kind or nature whatsoever of any
claims or other liabilities waived or released by Borrower.

7.             Fees and Expenses.

(a)           In consideration of the forbearances
of the Agent and Lenders hereunder, and in further consideration of the
provision to the Borrower of the Borrower Benefits, the Borrower agrees to pay
to the Agent for the benefit of the Lenders a fee in the amount of $50,000 (the
“Forbearance Fee”), which shall be fully earned and due and payable when
this Forbearance Agreement becomes effective in accordance with the express
provisions hereof.

(b)           In addition to the fees, costs and
expenses recoverable by the Agent and the Lenders under, but without limiting
the generality of, Section 15.2 of the Credit Agreement, the Borrower agrees to
pay on demand, without duplication, all reasonable and actual costs and
expenses incurred by the Agent or any Lender in connection with the
preparation, execution, delivery and enforcement of this Forbearance Agreement
and any other documents, instruments and agreements entered into in connection
herewith and in connection with any other transactions contemplated hereby,
including, without limitation, the reasonable fees and out-of-pocket expenses
of legal counsel the Agent (collectively the “Expenses”).  The Borrower authorizes and directs the
Agent, for the benefit of the Agent and the Lenders, to charge the 

 

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Expenses to the Revolving Facility by increasing the
outstanding principal amount of the Revolving Credit Loans by the amount of the
Expenses.

7.             Miscellaneous. 
The Borrower agrees to take such further action as the Agent shall
reasonably request in connection herewith to evidence or implement the
agreements herein contained.  This
Forbearance Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same
instrument.  This Forbearance Agreement
shall be binding upon and inure to the benefit of the successors and permitted
assigns of the parties hereto.  This
Forbearance Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Georgia, but without giving
effect to principles of conflicts of laws thereof.  This Forbearance Agreement may not be
modified, altered or amended except by agreement in writing signed by all of
the parties hereto.  Borrower
acknowledges that it has consulted with counsel and with such other expert
advisors as it deemed necessary in connection with the negotiation, execution
and delivery of this Forbearance Agreement. This Forbearance Agreement shall
constitute a Loan Document and, among other matters, any claim or cause of
action based upon or arising out of or related to this Forbearance Agreement
shall be subject to the waiver of jury trial set forth in Section 15.6 of the
Credit Agreement. This Forbearance Agreement shall be construed without regard
to any presumption or rule requiring that it be construed against the party
causing this Forbearance Agreement or any part hereof to be drafted.  Nothing in this Forbearance Agreement shall
be construed to alter the debtor-creditor relationship between Borrower, on the
one hand, and the Lenders and Agent, on the other.  This Forbearance Agreement is not intended
as, nor shall it be construed to create, a partnership or joint venture
relationship between or among any of the parties.  This Forbearance Agreement together with the
other Loan Documents embodies the entire understanding and agreement between
and among the parties hereto and thereto with respect to the subject matter
hereof and thereof and supersedes all prior agreements, understandings and
inducements, whether express or implied, oral or written.

 

[Signature Page Follows

 

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                IN WITNESS WHEREOF, Borrower, the Agent and the
Lenders have caused this Forbearance Agreement to be duly executed, all as of
the date first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  SYRATECH CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory W. Hunt

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Gregory W. Hunt

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Executive V.P. and C.F.O

  
	
   

  	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as the

  
	
   

  	
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Matthew T. O’Keefe

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:  

  	
  Matthew T. O’Keefe

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   Senior Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Matthew T. O’Keefe

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Matthew T. O’Keefe

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
  CONGRESS FINANCIAL CORPORATION

  
	
   

  	
  (SOUTHWEST), as a Lender

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Paul Truax

  
	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  Paul Truax

  
	
   

  	
   

  	
   

  
	
   

  	
  Title: 

  	
  Vice PresidentExhibit 10.61

 

MRS. FIELDS’ COMPANIES, INC.

PHANTOM STOCK PLAN

 

1.                                      Purpose
of the Plan.

 

The purpose of the Mrs. Fields’ Companies, Inc.
Phantom Stock Plan (the “Plan”) is to provide long-term incentives to
certain key employees of Mrs. Fields’ Companies, Inc., a Delaware corporation (“Mrs.
Fields”).  Awards under the Plan will
be granted to a Participant (as defined below) in the form of performance units
(“Performance Units”).

 

2.                                      Authorized
Performance Units; Non-Transferability.

 

(a)                                  Authorized
Performance Units.  The maximum
number of Performance Units that may be awarded under the Plan shall not exceed
an aggregate of one million Performance Units. 
If any Performance Units awarded under the Plan are forfeited or
cancelled, those Performance Units may again be awarded under the Plan.

 

(b)                                 Adjustments.  If Mrs. Fields effects a subdivision or split
of the outstanding common stock of Mrs. Fields (the “Common Stock”), the
Performance Units in effect immediately before that subdivision or split will
be proportionally increased.  Conversely,
if Mrs. Fields at any time or from time to time combines the outstanding shares
of Common Stock, the Performance Units in effect immediately before the
combination shall be proportionately decreased. 
Any adjustment under this section is effective at the close of
business on the date the subdivision, split or combination becomes
effective.  Participants have no
anti-dilution protection other than as set forth in this section.

 

(c)                                  Vesting.  Except as otherwise expressly provided in the
applicable Performance Unit Grant Agreement (as defined below), all Performance
Units shall be fully vested upon grant.

 

(d)                                 Non-Transferability.  Performance Units, and any rights and
privileges pertaining thereto, may not be transferred, assigned, pledged or
hypothecated in any manner, by operation of law or otherwise, and shall not be
subject to execution, attachment or similar process.  In the event of a Participant’s death or
disability, payment of any amount due under the Plan shall be made to the duly
appointed and qualified executor or other personal representative of the
Participant to be distributed in accordance with the Participant’s will or
applicable intestacy law.

 

(e)                                  No
Voting and Dividend Rights.  No
Participant shall be entitled to any voting rights, to receive any dividends,
or to have his Account (as defined below) credited or increased as a result of
any dividends or other distribution with respect to the Common Stock.

 

 

3.                                      Administration
of the Plan.

 

(a)                                  General.  The Plan shall be administered by the
compensation committee (the “Committee”) of the board of directors (the “Board”)
of Mrs. Fields or, if there is no compensation committee or similarly
constituted committee, by the Board.  The
term “Committee” shall, for all purposes of the Plan, be deemed to refer to the
Board if the Board is administering the Plan. 
Subject to the provisions of the Plan, the Committee shall have
exclusive power to select the key employees to be granted Performance Units, to
determine the number of Performance Units to be granted to each key employee
selected, to determine the time or times when Performance Units will be
granted, and to determine the time or times, and the conditions subject to
which any Performance Units may become payable.

 

(b)                                 Interpretation.  The Committee is entitled to interpret the
Plan, to adopt and revise rules and regulations relating to the Plan, to
determine the conditions subject to which any awards may be made or payable,
and to make any other determinations that it believes necessary or advisable
for the administration of the Plan. 
Determinations by the Committee are final and binding on all parties
with respect to all matters relating to the Plan.

 

(c)                                  Amendment
of the Plan.  The Board may alter or
amend the Plan from time to time without obtaining the approval of the
shareholders of Mrs. Fields or any Participants.  No amendment to the Plan may materially
alter, impair or reduce the number of Performance Units granted under the Plan
prior to the effective date of the amendment without the written consent of any
affected Participant; provided, however, that no Participant’s consent shall be
required with respect to the Board’s termination of the Plan.

 

(d)                                 Funding
of the Plan.  The Plan shall at all
times be entirely unfunded, and no provision shall at any time be made with
respect to segregating assets of Mrs. Fields for payment of any benefits
hereunder.  No Participant or other
person shall have any interest in any particular assets of Mrs. Fields by
reason of the right to receive a benefit under the Plan and any such
Participant or other person shall have only the rights of a general unsecured
creditor of Mrs. Fields with respect to any rights under the Plan.

 

(e)                                  Expiration
and Termination of Plan.  The Plan shall
expire on the date as of which the Board, in its sole discretion, determines
that the Plan shall terminate.  No
Performance Units shall be granted pursuant to the Plan on or after the date of
termination of the Plan, although after such date, payments shall be made
pursuant to the terms of the Plan with respect to Performance Units granted
prior to the date of termination.

 

4.                                      Participation
in Plan.

 

Employees will be selected for participation in the
Plan by the Committee.  The term “employee”
means any person (including any officer) employed by Mrs. Fields or any of its
affiliates, and no employee shall be excluded from participation in the Plan
because of his or her status as a director of Mrs. Fields.  An employee may be granted more than one
award of Performance Units under the Plan.

 

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5.                                      Grants
of Performance Units.

 

(a)                                  General.  Performance Units shall be granted to such
employees of Mrs. Fields or its affiliates as the Committee shall determine.  The chief executive officer of Mrs. Fields
shall make a recommendation to the Committee regarding the allocation of
Performance Units, which recommendation will include the employees (other than
the chief executive officer) designated to receive Performance Units and the
number of Performance Units to be granted to each employee.  The Committee is not bound by any
recommendation of the chief executive officer. 
Employees who receive a grant of Performance Units under the Plan are
referred to as “Participants.”

 

(b)                                 Initial
Grant.  As soon as practicable after
the Effective Date (as defined below), the Committee shall grant 392,418
Performance Units to employees of Mrs. Fields to be allocated among those
employees based upon the discretion of the Committee.  In anticipation of such grants, the chief
executive officer of Mrs. Fields shall make an appropriate recommendation to
the Committee as described in Section 5(a) above.

 

(c)                                  Performance
Unit Accounts.  Performance Units
granted to a Participant shall be credited to a Performance Unit account (an “Account”)
established and maintained for that Participant.  The Account of a Participant will be the
record of Performance Units granted to him or her under the Plan.  The Account shall exist solely for accounting
purposes and shall not require a segregation of any assets of Mrs. Fields to
satisfy any obligations of Mrs. Fields hereunder.  Upon request by the Participant, or at such
times as determined by the Committee, Mrs. Fields shall furnish each Participant
with a statement setting forth the number of Performance Units in his or her
Account.  Such statement shall be deemed
to be correct unless written notice of a dispute is delivered to the Committee
within 30 days of the receipt of such statement by the Participant.

 

(d)                                 Performance
Unit Grant Agreements.  Each grant of
Performance Units shall be evidenced by a written agreement (a “Performance
Unit Grant Agreement”), containing non-compete and non-solicitation
provisions and such other terms and conditions and in such form, not
inconsistent with the Plan, as the Committee shall, in its sole discretion,
provide.  The form of Performance Unit
Grant Agreement approved by the Committee as of the date hereof is set forth on
Exhibit A attached hereto.  Each
Performance Unit Grant Agreement shall be executed by Mrs. Fields and the
Participant.

 

3

 

6.                                      Payment
of Value of Performance Units.

 

(a)                                  Payout.  Upon the completion of a transaction
constituting a Triggering Event (as defined below) and Mrs. Fields’ receipt of
all, or substantially all, of the consideration payable to Mrs. Fields in
connection therewith, Mrs. Fields shall pay, in accordance with the provisions
of this Section 6, each Participant an amount equal to the Performance
Unit Value multiplied by the number of Performance Units held by the
Participant on the date of the Triggering Event.

 

(b)                                 Triggering
Events.  A “Triggering Event” occurs
upon the first to occur of any of the following events:

 

(i)                                     Mrs.
Fields completes the sale of all or substantially all of its assets in any
single transaction or any series of related transactions.

 

(ii)                                  Mrs.
Fields completes any stock sale, merger, consolidation or other transaction
pursuant to which the owners of Common Stock immediately before the transaction
do not own in excess of 50% of the common stock of the entity surviving such
merger, consolidation or other transaction. Any distribution of cash or equity
(and its effect on beneficial ownership of Common Stock) to Capricorn Investors
II, L.P. or Capricorn Investors III, L.P., is specifically excluded from the
definition of a Triggering Event.

 

(iii)                               Mrs. Fields completes
the sale of any of its Common Stock in a public offering under the Securities
Act of 1933 pursuant to which Mrs. Fields receives proceeds, net of any
underwriter’s discount and underwriter’s expense allowance, of not less than
$50 million.

 

(1)                                  Form of
Payment.  Any amount payable
by Mrs. Fields to a Participant hereunder may be paid in cash or through the
issuance of equity securities of Mrs. Fields, as determined appropriate by the
Committee, subject to compliance with all applicable laws, including federal
and state securities laws.  In the event
the Committee elects to issue to the Participant equity securities of Mrs.
Fields, the Board may condition such issuance upon the Participant’s execution
and delivery to Mrs. Fields of documentation the Board determines necessary to
comply with applicable laws (including federal and state securities laws) and
as otherwise determined appropriate by the Board to maintain an orderly trading
market for the securities of Mrs. Fields.

 

(c)                                  Determination
of Performance Unit Value.  The
Performance Unit Value means the value of one share of Common Stock as determined
in good faith by the Board upon consideration of the merger consideration, the
sales price, or the public offering price, as the case may be; and if the Board
determines the need, upon the advice of a reputable, independent investment
banking firm or business valuation firm with expertise in valuing businesses of
similar size to Mrs. Fields.

 

(d)                                 Withholding
of Taxes.  Mrs. Fields may, in its
discretion, withhold from any payment under the Plan an amount sufficient to
satisfy all current or estimated future federal, state and local income tax
withholding and the Participant’s portion of any employment taxes relating
thereto.

 

4

 

(e)                                  Satisfaction
of Obligations.  Upon any payout of
the amounts contemplated by Section 6(a) above, all obligations of Mrs.
Fields to pay any amounts required under the Plan shall be deemed satisfied,
and Mrs. Fields shall have no further obligation to make any payment in
connection with the Performance Units or perform any other obligation
hereunder.

 

7.                                      Forfeiture
of Performance Units.

 

Performance Units granted to a Participant shall be
forfeited and shall be of no further force or effect as to that Participant as
of the date a Participant’s employment with Mrs. Fields is terminated
voluntarily by the Participant or terminated by Mrs. Fields for “cause,” unless
not later than 30 days after such termination date, the Committee determines,
in its sole discretion, that the Participant’s Performance Units (or any
portion thereof) shall not be forfeited. 
For purposes of the Plan only, termination for “cause” means the
Participant’s employment with Mrs. Fields (or any of its affiliates) is
terminated as a result of (i) the Participant committing a criminal offense
classified as a felony, (ii) the Participant’s failure to perform the
Participant’s duties that is not cured within 20 days after written notice of
the failure to perform is given to the Participant, or (iii) the Participant’s
breach of any agreement to which Mrs. Fields (or its affiliates) is a party
that is not cured within 20 days after written notice of the breach is given to
the Participant.  Except as expressly set
forth in the Plan or the Performance Unit Grant Agreement, the Performance
Units granted to a Participant cannot be forfeited for any reason, including
without limitation upon death, or disability. 
For purposes of this Section 7, the Committee, in its discretion,
shall determine the conditions and circumstances that shall constitute a “disability.”

 

8.                                      Miscellaneous
Provisions.

 

(a)                                  No
Right of Employment.  No employee or
other person shall have any claim or right to be granted an award under the
Plan.  Neither the Plan nor any action
taken hereunder shall be construed as giving any employee any right to be retained
in the employ of Mrs. Fields.

 

(b)                                 Effective
Date of Plan.  The Plan is adopted by
the Board and effective as of May 25, 2004 (the “Effective Date”).

 

(c)                                  Captions.  The use of captions in the Plan is for
convenience only.  The captions are not
intended to provide substantive rights.

 

(d)                                 Governing
Law.  The validity and construction
of the Plan and the instruments evidencing the Performance Units granted
hereunder shall be governed by and construed in accordance with the domestic
laws of the State of Utah without giving effect to any choice or conflict of
law provision or rule that would cause the application of the laws of any
jurisdiction other than the State of Utah.

 

5

 

EXHIBIT A

 

PERFORMANCE UNIT GRANT AGREEMENT

 

This Performance Unit Grant Agreement (this “Agreement”)
is dated as of                                 between
Mrs. Fields’ Companies, Inc., a Delaware corporation (“Mrs. Fields”),
and                                          
(the “Participant”).

 

BACKGROUND

 

A.                                   Mrs.
Fields has adopted the Mrs. Fields’ Companies, Inc. Phantom Stock Plan (the “Plan”).

 

B.                                     Mrs.
Fields has, pursuant to the Plan, named the Participant as a participant in the
Plan and desires to award certain Performance Units to the Participant.

 

C.                                     It
is a requirement of the Plan that this Agreement be delivered to and executed
by both parties to evidence the Performance Units granted to the Participant.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual
covenants hereinafter set forth and for other good and valuable consideration,
the parties hereto have agreed, and do hereby agree, as set forth below.

 

1.                                      Defined
Terms.

 

Capitalized terms used herein and not otherwise
defined herein have the respective meanings set forth in the Plan.

 

2.                                      Grant
of Award.

 

Effective on the date hereof, Mrs. Fields hereby
grants to the Participant                           
Performance Units under the Plan (the “Award”).  The Award will be credited to the Account to
be maintained by Mrs. Fields for the Participant.  No Award of Performance Units under the Plan
or this Agreement entitles the Participant to any dividend or voting rights or
any other rights of a shareholder with respect to any Common Stock.

 

3.                                      Term
of the Award.

 

The term of the Award shall be subject to the Plan.

 

4.                                      Amount,
Manner and Form of Payment.

 

The amount, manner, and form of payment are governed
by the Plan.

 

 

5.                                      Covenant
Not to Compete.

 

(a)                                  Covenant.  The Participant hereby covenants and agrees
that, while the Participant is employed by Mrs. Fields or any of its affiliates
and during a period of twelve months following the date the Participant’s
employment with Mrs. Fields or any of its affiliates is terminated and the
Participant is no longer employed by Mrs. Fields or any of its affiliates (the
date of such termination shall be identified in this Agreement as the “Termination
Date”), the Participant will not directly or indirectly compete (as defined
in Section 5(b)below) with Mrs. Fields or its affiliates in any geographic
area in the United States in which Mrs. Fields or its affiliates now do
business or in which Mrs. Fields does business as of the effective date of the
termination of the Participant’s employment. 
It is the intention of Mrs. Fields and the Participant that this
provision be interpreted to only prevent actual competitive harm to Mrs. Fields
and not otherwise hinder or restrict the Participant in the Participant’s
efforts to find continued employment in the Participant’s field of training and
expertise.

 

(b)                                 Direct
and Indirect Competition.  As used
herein, the phrase “directly or indirectly compete” shall include owning,
managing, operating or controlling, or participating in the ownership,
management, operation or control of, or being connected with or having any
interest in, as a stockholder, director, officer, employee, agent, consultant,
assistant, advisor, sole proprietor, partner or otherwise, any business (other
than Mrs. Fields’) which is the same as, or similar to, or competitive with any
business conducted or to be conducted by Mrs. Fields or any of Mrs. Fields’
subsidiaries as of the Termination Date; provided, however, that this
prohibition shall not apply to ownership of less than five percent (5%) of the
voting stock in companies whose stock is traded on a national securities
exchange or in the over-the-counter market.

 

(c)                                  Non-solicitation,
Non-Hire, and Non-Disparagement.  The
Participant hereby agrees that, while the Participant is employed by Mrs.
Fields or any of its affiliates, and, during a period of twelve months
following the Termination Date, the Participant will not, directly or
indirectly, through an affiliate or otherwise, for the Participant’s account or
the account of any other person, (i) solicit business substantially similar to
the business of Mrs. Fields from any person that as of the Termination Date is
or was a customer, franchisee, vendor, supplier, agent, advisor or consultant
of Mrs. Fields, whether or not the Participant had personal contact with such
person during and by reason of the Participant’s employment with Mrs. Fields or
its affiliates; (ii) in any manner induce or attempt to induce any employee of
Mrs. Fields or its affiliates to terminate his or her employment with Mrs.
Fields or any of its affiliates; (iii) hire, employ or in any other manner
attempt to engage the services of any person formerly employed by Mrs. Fields
if the period of time since the termination of such person’s employment with
Mrs. Fields is, as of the date of the subject hiring, employment or other
attempt to engage the services of such person, less than 12 months; (iv)
materially and adversely interfere with the relationship between Mrs. Fields or
its affiliates and any employee, contractor, franchisee, supplier, vendor,
customer, agent, advisor, consultant, representative or shareholder of Mrs.
Fields or any of its affiliates; or (v) disparage, denigrate or defame Mrs.
Fields, its affiliates and/or related persons, or any of their business
products or services.

 

(d)                                 Jurisdiction.  For the sole purpose of enforcement of Mrs.
Fields’ rights under this Section 5, Mrs. Fields and the Participant
intend to and hereby confer jurisdiction to enforce the restrictions set forth
in this Section 5 (the “Restrictions”) upon the courts of any

 

2

 

jurisdiction within the geographical scope of the Restrictions.  If the courts of any one or more of such
jurisdictions hold the Restrictions unenforceable by reason of the breadth of
such scope or otherwise, it is the intention of Mrs. Fields and the Participant
that such determination not bar or in any way affect Mrs. Fields’ rights to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of the Restrictions, as to breaches of such covenants in
such other respective jurisdictions, such covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.  In the event of any litigation
between the parties under this Section 5, the court shall award reasonable
attorneys fees to the party which prevails by enforcing the provisions of this
Agreement.

 

6.                                      Confidential
Information.

 

(a)                                  Definition.  The term “Confidential Information”
shall mean and include any information, including a formula, pattern,
compilation, program, source code, device, method, technique, or process, that
(i) derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and
(ii) that is the subject of efforts that are reasonable under the circumstance
to maintain its secrecy.  Information
that may be included in Confidential Information includes matters of a
technical nature (including know-how, computer programs, software, source-code,
accounting methods, and documentation), matters of a business nature (such as
information about contract forms, costs, profits, Mrs. Fields’ or its
affiliates’ employees, promotional methods, markets, market or marketing plans,
sales, and client accounts), plans for further development, and any other
information meeting the definition of Confidential Information set forth
above.  Confidential information may also
include any such information developed by the Participant for Mrs. Fields or
its affiliates while an employee of Mrs. Fields or its affiliates.  “Confidential Information” does not include
(i) information that is in the public domain at the time the information is
acquired by the Participant, or (ii) information that later becomes public
through no act or omission of the Participant.

 

(b)                                 Nondisclosure
and Non-Use of Confidential Information. 
The Participant agrees that all files, records (including electronic or
digitals records), documents, and the like relating to any Confidential
Information, whether prepared by the Participant or otherwise coming into the
Participant’s possession, shall remain the exclusive property of Mrs. Fields,
and the Participant hereby agrees to promptly disclose such Confidential
Information to Mrs. Fields upon request and hereby assigns to Mrs. Fields any
rights which he or she may acquire in any Confidential Information.  The Participant further agrees not to
disclose or use any Confidential Information and to use the Participant’s best
efforts to prevent the disclosure or use of any Confidential Information either
during the term of the Participant’s employment or consultancy or at any time
thereafter, except as may be necessary in the ordinary course of performing the
Participant’s duties to Ms. Fields. 
After the Participant’s employment with Mrs. Fields or any of its
affiliates is terminated and the Participant is no longer employed by Mrs.
Fields or any of its affiliates, the Participant shall promptly deliver to Mrs.
Fields all materials, documents, data, equipment, and other physical property
of any nature containing or pertaining to any Confidential Information, and the
Participant shall not take from Mrs. Fields’ or its affiliates’ premises any
such material or equipment or any reproduction thereof without the written
consent of Mrs. Fields.

 

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7.                                      Consideration; Enforceability.

 

The Participant
acknowledges and agrees that his/her participation in the Plan and the
opportunity to receive Awards thereunder constitutes full, fair and sufficient
consideration for the obligations of the Participant hereunder, specifically
including the covenants of the Participant set forth in Section 5 and Section 6
hereof.  If any of the provisions of
Sections 5 or 6 hereof is held unenforceable, the remaining provisions shall
nevertheless remain enforceable, and the court making such determination shall
modify, among other things, the scope, duration, or geographic area of Section 5
or 6 hereof to preserve the enforceability hereof to the maximum extent then
permitted by law.  In addition, the
enforceability of Sections 5 and 6 hereof is also subject to the injunctive and
other equitable powers of a court.

 

8.                                      No
Rights as a Holder of Common Stock.

 

The Participant shall not have any rights or
privileges of a holder of Common Stock with respect to any Performance Units.

 

9.                                      Participant’s
Employment.

 

Nothing in this Agreement or the Plan confers upon the
Participant any right to be employed by Mrs. Fields or interfere in any way
with the right of Mrs. Fields, as the case may be, to terminate the Participant’s
employment or to increase or decrease the Participant’s compensation at any
time.

 

10.                               Remedies.

 

In the event of the Participant’s breach of any
provision of this Agreement or failure to comply with any provision of the
Plan, the Committee, in its discretion, may, at any time, terminate the
Participant’s participation in the Plan. 
Upon such termination, the Participant shall forfeit all Awards and any
rights or privileges to which the Participant would otherwise be entitled under
the Plan.  The decision of the Committee
to terminate the Participant’s participation in the Plan (and the associated
forfeiture of Awards granted to the Participant) shall not constitute an
election of remedies and shall not limit or restrict the right or ability of
the Committee, the Board or Mrs. Fields to exercise any other right or remedy
to which it may be entitled, whether at law or in equity.

 

4

 

11.                               Notices.

 

All notices, claims, certificates, requests, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given and delivered if personally delivered or if sent by
nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:

 

(a)                                  if
to Mrs. Fields, at:

 

Mrs.
Fields’ Companies, Inc.

2855
East Cottonwood Parkway, Suite 400

Salt
Lake City, UT 84121

Attention:  General Counsel

Facsimile:
801-736-5944

Telephone:
801-736-5710

 

(b)                                 if
to the Participant, at the address (or facsimile number, if any) set forth on
the signature page hereto;

 

or to such other address as the party to whom notice
is to be given may have furnished to the other party in writing in accordance
herewith.  Any such notice or
communication will be deemed to have been received (i) in the case of personal
delivery, on the date of such delivery (or if such date is not a business day,
on the next business day after the date sent), (ii) in the case of
nationally-recognized overnight courier, on the next business day after the
date sent, (iii) in the case of facsimile transmission, when received (or if
not sent on a business day, on the next business day after the date sent), and
(iv) in the case of mailing, on the third business day after the date on which
the piece of mail containing such communication is posted.

 

12.                               Miscellaneous

 

(a)                                  Waiver
of Breach.  The waiver by either
party of a breach of any provision of this Agreement must be in writing and
shall not operate or be construed as a waiver of any other or subsequent
breach.

 

(b)                                 Modification
of Rights.  The rights of the
Participant are subject to modification and termination only as provided in
this Agreement and the Plan.

 

(c)                                  Governing
Law.  This Agreement is executed and
delivered in, and shall be governed by and construed in accordance with the
laws of, the state of Utah without giving effect to any choice or conflicts of
law provisions (whether in the state of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
state of Utah.

 

(d)                                 Mutual
Waiver Of Jury Trial.  THE PARTIES
HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.

 

5

 

(e)                                  Taxes.
The Participant acknowledges that it is his/her obligation to satisfy any and
all federal, state and local taxes attributable to the Participant’s
participation in the Plan, and the receipt of any benefit thereunder.  

 

(f)                                    Counterparts
and Facsimile Execution.  This
Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered (by
facsimile or otherwise) to the other party, it being understood that all
parties need not sign the same counterpart. 
Any counterpart or other signature hereupon delivered by facsimile shall
be deemed for all purposes as constituting good and valid execution and
delivery of this Agreement by such party.

 

(g)                                 Entire
Agreement; the Plan.  This Agreement
and the Plan constitute the entire agreement between the parties with respect
to the subject matter hereof and supersede all prior written or oral
negotiations, commitments, representations and agreements with respect
thereto.  All of the provisions of the
Plan, pursuant to which this Award is granted, are hereby incorporated by
reference and made a part hereof as if specifically set forth herein, and to
the extent of any conflict between this Agreement and the Plan, the Plan shall
control.  The Participant hereby
acknowledges receipt of a copy of the Plan.

 

(h)                                 Severability.  In the event any one or more of the
provisions of this Agreement should be held invalid, illegal or unenforceable
in any respect in any jurisdiction, such provision or provisions shall be
automatically deemed amended, but only to the extent necessary to render such
provision or provisions valid, legal and enforceable in such jurisdiction, and
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.

 

6

 

IN WITNESS WHEREOF, the parties hereto have executed
this Performance Unit Grant Agreement as of the date first written above.

 

MRS. FIELDS:

 

	
   

  	
  MRS. FIELDS’
  COMPANIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  	
   

  
							

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]