FIRST AMENDMENT AND CONSENT TO LOAN AND SECURITY AGREEMENT
This FIRST AMENDMENT AND CONSENT TO LOAN AND SECURITY
AGREEMENT (this "Amendment"), dated as of September 20, 1996, is by and between
BROTHERS GOURMET COFFEES, INC., a Delaware corporation, as Borrower, SANWA
BUSINESS CREDIT CORPORATION, a Delaware corporation, as Agent and Lender, and
the other Lenders signatory to the Loan and Security Agreement from time to
time.
RECITALS
A. Borrower, Agent and Lenders are parties to that certain
Loan and Security Agreement dated as of May 29, 1996 (as from time to time
amended, restated, supplemented or otherwise modified, the "Loan Agreement"),
pursuant to which Lenders have made and may hereafter make loans and advances
and other extensions of credit to Borrower.
B. Borrower desires to enter into that certain Securities
Purchase Agreement and the agreements appended thereto, all dated as of
September 20, 1996, with Siena Capital Partners, L.P. (collectively, the
"Securities Purchase Agreement"), certain of which provisions are or may be
prohibited by the Loan Agreement.
C. Agent and Lenders are willing to consent to the
consummation of the Securities Purchase Agreement on the terms and
conditions set forth in this Amendment.
D. Borrower desires, and Agent and Lenders are willing, to
amend certain provisions of the Loan Agreement, all on the terms and conditions
set forth in this Amendment.
E. This Amendment shall constitute a Financing Agreement and
these Recitals shall be construed as part of this Amendment.
F. Capitalized terms used herein and not otherwise defined
herein have the meaning assigned to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree as
follows:
1. AMENDMENT OF LOAN AGREEMENT.
(i) Section 1.1 of the Loan Agreement is hereby amended
by deleting the definition of "Indebtedness" in its entirety
and replacing it with the following:
"INDEBTEDNESS" of a Person shall mean at a particular
time (i) indebtedness for borrowed money or for the deferred
purchase price of property or services (other than current
accounts payable arising in the ordinary course of business on
terms customary in the trade) in respect of which such Person
is liable, contingently or otherwise, as guarantor, obligor or
otherwise or any commitment by which such Person assures a
creditor against loss, including contingent reimbursement
obligations with respect to letters of credit, (ii)
indebtedness guaranteed in any manner by such Person,
including guaranties in the form of an agreement to repurchase
or reimburse; PROVIDED that the amount of indebtedness
represented by any guaranty of limited recourse shall be the
lesser of the amount of indebtedness so guaranteed or the
value of the asset to which the recourse of such indebtedness
is limited, (iii) obligations under leases which shall have
been or should be, in accordance with Generally Accepted
Accounting Principles, recorded as capital leases in respect
of which obligations such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect
of which obligations such Person assures a creditor against
loss, (iv) any unfunded obligation of, or withdrawal liability
incurred but not paid by, such Person with respect to a
Multiemployer Plan, and (v) all accounts payable of such
Person, which are not being contested in good faith by
appropriate proceedings and which are more than ninety (90)
days past due.
(ii) Section 1.1 of the Loan Agreement is hereby amended
by deleting the definition of "Restricted Payment" in its
entirety and replacing it with the following:
"RESTRICTED PAYMENT" of a Person shall mean: (a) any
dividend or other distribution, direct or indirect, on account
of any shares of any class of Stock of such Person now or
hereafter outstanding, except a dividend payable solely in
shares of that class of Stock to the holders of that class;
(b) any redemption, conversion, exchange, retirement, sinking
fund or similar payment, purchase or other acquisition for
value direct or indirect of any shares of any class of Stock
of such Person now or hereafter outstanding; (c) any payment
or prepayment of principal or premium, if any, or interest on,
fees with respect to, redemption, conversion, exchange,
purchase, retirement, defeasance, sinking fund or similar
payment with respect to Subordinated Debt; (d) any payment
made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any
class of Stock of such Person now or hereafter outstanding; or
(e) any payment by such
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Person of any management fees, advisor fees or similar fees
whether pursuant to a management agreement or otherwise to any
Affiliate of such Person.
(iii) Section 1.1 of the Loan Agreement is hereby amended by
inserting the following defined term in its proper alphabetical order:
"SUBORDINATED DEBT" of a Person shall mean any
Indebtedness subordinated to the Obligations in a manner and
form satisfactory to the Agent and the Lenders, as to right
and time of payment and as to any other rights and remedies
thereunder.
(iv) Section 8.2 of the Loan Agreement is hereby amended by
deleting the last sentence thereof and replacing it with the following:
"The Borrower shall not, and shall not permit any Subsidiary
to, voluntarily prepay, defease, purchase, redeem, retire
(other than in accordance with the initial regularly scheduled
amortization payments with respect to such Indebtedness) or
otherwise acquire any Indebtedness other than the Obligations;
PROVIDED that the Obligations owing to the Support Letter of
Credit Obligors may be paid in accordance with the terms and
conditions of the Participation Agreements."
2. CONSENT. Notwithstanding anything contained in SECTION 8.16
of the Loan Agreement, Agent and Lenders hereby consent to the execution of the
Securities Purchase Agreement and waive any Default or Event of Default caused
by the execution thereof.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to
induce Agent and Lenders to enter into this Amendment, Borrower hereby
represents and warrants to Agent and Lenders that:
(a) NO DEFAULT. After giving effect to this Amendment and the
consent set forth in Section 2 hereof, no Default or Event of Default
shall have occurred or be continuing (which has not been waived or
cured);
(b) REPRESENTATIONS AND WARRANTIES. As of the date hereof and,
after giving effect to this Amendment and the transactions contemplated
hereby, the representations and warranties of Borrower contained in the
Financing Agreements are true, accurate and complete in all respects on
and as of the date hereof to the same extent as though made on and as
of such date except to the extent such representations and warranties
specifically relate to an earlier date; and
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(c) CORPORATE AUTHORITY; ENFORCEABILITY. (i) The execution,
delivery and performance by Borrower of this Amendment are within its
corporate powers and have been duly authorized by all necessary
corporate action on the part of Borrower, (ii) this Amendment is the
legal, valid and binding obligation of Borrower enforceable against
Borrower in accordance with its terms and (iii) neither the execution,
delivery or performance by Borrower of this Amendment nor of the
Securities Purchase Agreement (1) violates any law or regulation, or
any order or decree of any court or Governmental Authority, (2)
conflicts with or results in the breach or termination of, constitutes
a default under or accelerates any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrower is a party or by which Borrower or any of
its property is bound or (3) results in the creation or imposition of
any Lien (other than Permitted Liens) upon any of the Collateral.
4. CONDITIONS TO EFFECTIVENESS. The effectiveness of
this Amendment is subject to the following conditions precedent:
(a) DOCUMENTATION. Borrowers shall have delivered to Agent all
of the following documents, each dated the date hereof, in form and
substance satisfactory to Agent:
(i) AMENDMENT. An executed counterpart of this
Amendment.
(ii) OTHER DOCUMENTS. All other documents,
certificates and agreements as Agent may reasonably request to
accomplish the purposes of this Agreement.
(b) SECURITIES PURCHASE AGREEMENT. Borrower shall have
delivered to Agent a copy of the executed Securities Purchase Agreement
and all other related documents evidencing the transactions
contemplated thereby.
(c) NO DEFAULT. As of the date hereof after giving effect to
this Amendment, no Default or Event of Default under any Financing
Agreement shall have occurred and be continuing (which has not been
waived or cured).
5. REFERENCE TO AND EFFECT ON FINANCING AGREEMENTS.
5.1 RATIFICATION. Except as specifically amended above, the
Loan Agreement and the other Financing Agreements shall remain in full force and
effect and are each hereby ratified and confirmed.
5.2 NO WAIVER. The execution, delivery and effectiveness
of this Amendment shall not operate as a waiver of any right, power
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or remedy of Lenders or Agent under the Loan Agreement or any of the other
Financing Agreements, or, except as set forth in Section 2 hereof, constitute a
waiver of any provision of the Loan Agreement or any of the other Financing
Agreements. Upon the effectiveness of this Amendment each reference in (a) the
Loan Agreement to "this Agreement," "hereunder," "hereof," or words of similar
import and (b) any other Financing Agreements to "the Agreement" or "the Loan
Agreement," shall, in each case and except as otherwise specifically stated
therein, mean and be a reference to the Loan Agreement as amended hereby.
6. MISCELLANEOUS.
6.1 SUCCESSORS AND ASSIGNS. This Amendment shall be binding on
and shall inure to the benefit of Borrower, Agent, Lenders and their respective
successors and assigns. The terms and provisions of this Amendment are for the
purpose of defining the relative rights and obligations of Borrower, Agent and
Lenders with respect to the transactions contemplated hereby and there shall be
no third party beneficiaries of any of the terms and provisions of this
Amendment.
6.2 ENTIRE AGREEMENT. This Amendment constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all other understandings, oral or written, with respect to the
subject matter hereof.
6.3 FEES AND EXPENSES. Borrower agrees to pay on demand all
fees, costs and expenses incurred by Agent and Lenders in connection with the
preparation, execution and delivery of this Amendment.
6.4 HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
6.5 SEVERABILITY. Wherever possible, each provision of this
Amendment shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Amendment shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Amendment.
6.6 COUNTERPARTS. This Amendment may be executed in any number
of separate original counterparts (or telecopied counterparts with original
execution copy to follow) and by the different parties on separate counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one agreement.
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6.7 INCORPORATION OF LOAN AGREEMENT. The provisions
contained in SECTIONS 10.7 and 10.8 of the Loan Agreement are incorporated
herein by reference to the same extent as if reproduced herein in their
entirety.
IN WITNESS WHEREOF, this First Amendment and Consent to Loan
and Security Agreement has been duly executed as of the date first written
above.
BROTHERS GOURMET COFFEES, INC.
By:_____________________________
Title:__________________________
SANWA BUSINESS CREDIT CORPORATION,
as Agent and Lender
By:_____________________________
Title:__________________________
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