FORBEARANCE AGREEMENT
This FORBEARANCE AGREEMENT, dated as of February 28, 2024 (as amended, restated, supplemented or otherwise modified from time to time, this "Agreement") is by and among VINTAGE WINE ESTATES, INC., a Nevada corporation ("Holdings"), VINTAGE WINE ESTATES, INC., a California corporation ("Borrower Agent"), each Subsidiary of Borrower Agent party to this Agreement (together with Borrower Agent, each a "Borrower" and, collectively, the "Borrowers"), the Lenders party to this Agreement (constituting "Required Lenders" under the Loan Agreement, the "Consenting Lenders"), and BMO BANK N.A., as successor in interest to BANK OF THE WEST ("BMO"), as administrative agent and collateral agent (in such capacity, together with its successors and assigns in such capacity, the "Agent"), to that Second Amended and Restated Loan and Security Agreement and Waiver, dated of December 13, 2022 (as amended by Amendment No. 1, dated as of February 13, 2023, Amendment No. 2, dated as of March 31, 2023, Amendment No. 3, dated as of May 9, 2023, and Amendment No. 4, dated as of October 12, 2023, and as further amended, restated, amended and restated, supplemented, or otherwise modified from time to time prior to the date hereof, the "Loan Agreement").
W I T N E S S E T H
WHEREAS, Holdings and the Borrowers (collectively, the "Obligors" and each an "Obligor") have requested that the Consenting Lenders and the other Secured Parties forbear from accelerating the Obligations or otherwise exercising any rights or remedies under the Loan Documents, in accordance with and subject to Section 3 of this Agreement, as a result of any Defaults or Events of Default (i) under Section 11.1(c) of the Loan Agreement resulting from the Obligors' failure to maintain Adjusted EBITDA of $17,000,000 for the two Fiscal Quarter period ended December 31, 2023, as required by Section 10.3.3 of the Loan Agreement (the "EBITDA Event of Default"); (ii) under Section 11.1(c) of the Loan Agreement resulting from the Obligors' failure to deliver the Agent and Lenders unaudited balance sheets and the related statements of income and cash flow for the Fiscal Quarter ended December 31, 2023, and for the portion of the Fiscal Year then elapsed within forty-five (45) days after the end of such Fiscal Quarter, as required by Section 10.1.2(c) of the Loan Agreement (the "Reporting Event of Default"); (iii) under Section 11.1(c) of the Loan Agreement resulting from the Obligors' failure to provide an executed Compliance Certificate for the Fiscal Quarter ended December 31, 2023, as required by Section 10.1.2(d) of the Loan Agreement (the "Compliance Certificate Event of Default"); and (iv) resulting from the EBITDA Event of Default, the Reporting Event of Default or the Compliance Certificate Event of Default, including with respect to any representation or warranty given or deemed given as if such EBITDA Event of Default, Reporting Event of Default and Compliance Certificate Event of Default were not in existence or to any notice requirement relating to EBITDA Event of Default, the Reporting Event of Default, the Compliance Certificate Event of Default or any of the foregoing (clauses (i) through (iv), collectively, the "Designated Defaults"); and
WHEREAS, the Obligors have requested that the Consenting Lenders grant a period of forbearance with respect to the Designated Defaults, and the Consenting Lenders party hereto, which constitute the Required Lenders under the Loan Agreement, agree to accommodate such request of Holdings and the Borrowers on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Incorporation of Recitals. Each of the Obligors acknowledges that the recitals set forth above are true and correct in all respects.
SECTION 2. Defined Terms and Other Definitional Provisions. Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Loan Agreement.
SECTION 3. Forbearance.
SECTION 4. Amendment.
"Applicable Margin: the per annum margin set forth below:
Time Period |
Revolver Loans |
Unused Line Fee Rate for Revolver Loans |
Term Loan, Equipment Loan, Capital Expenditure Loans and Delayed Draw Term Loans |
Unused Line Fee Rate for Term Loans and Delayed Draw Term Loans |
||
SOFR |
Adjusted Base Rate |
|
SOFR |
Adjusted Base Rate |
|
|
Forbearance Period |
4.00% |
3.00% |
0.20% |
3.00% |
2.00% |
0.25% |
"Notwithstanding the occurrence or continuance of any Trigger Period and anything to the contrary contained herein or in any other Loan Document, the Agent and the other Secured Parties will take no action to sweep any amounts held in the Borrowers' operating bank accounts or any bank account maintained by VWE Captive, LLC. Borrowers agree not to maintain in their operating accounts cash balances in excess of their projected cash needs during the Forbearance Period and any excess cash shall be paid to Agent for application against the outstanding Revolver Loans."
SECTION 5. Confirmation of Loan Documents. Each of the Obligors hereby confirms and ratifies all of its Obligations under the Loan Documents to which it is a party. Each of the Obligors hereby confirms and ratifies that its Obligations under the Loan Agreement are and shall remain secured by the Collateral, pursuant to the terms of the Loan Agreement and the other Loan Documents. By its execution on the respective signature lines provided below, each of the Obligors hereby confirms and ratifies all of its respective Obligations and the Liens granted by it under the Security Documents to which it is a party and confirms that all references in such Security Documents to the "Loan Agreement" (or words of similar import) refer to the Loan Agreement as amended hereby without impairing any such Obligations or Liens in any respect.
SECTION 6. Representations and Warranties.
SECTION 7. Covenants.
For the avoidance of doubt, failure of any Obligor to comply with the foregoing covenants shall be an immediate Event of Default under the Loan Agreement and an immediate termination of the Forbearance Period.
SECTION 8. Conditions to Effectiveness of this Agreement. This Agreement shall be effective as of the date (the "Forbearance Effective Date") when (i) counsel for the Agent has received a counterpart of this Agreement, executed and delivered by the Obligors and Lenders constituting Required Lenders; and (ii) the Agent has received payment of the Forbearance Fee.
SECTION 9. Effects on Loan Documents.
SECTION 10. Amendments; Execution in Counterparts.
SECTION 11. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of each party hereto and their respective successors and assigns.
SECTION 12. No Third-Party Beneficiaries. No Person other than the Obligors, the Agent, and the Consenting Lenders shall have any rights hereunder or be entitled to rely on this Agreement, and all third-party beneficiary rights are hereby expressly disclaimed.
SECTION 13. Severability. If any provision of this Agreement is held to be illegal, invalid, or unenforceable, the legality, validity, and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 14. Time of Essence. Time is of the essence in the performance of each of the obligations of the Obligors hereunder and with respect to all conditions to be satisfied by such parties.
SECTION 15. Prior Negotiations; Entire Agreement. This Agreement, the Loan Agreement, and the other Loan Documents constitute the entire agreement of the parties hereto with respect to the subject matter hereof, and supersede all other prior negotiations, understandings, or agreements with respect to the subject matter hereof, whether oral or written.
SECTION 16. Interpretation. This Agreement is the product of negotiations of the parties and in the enforcement or interpretation hereof, is to be interpreted in a neutral manner, and any presumption with regard to interpretation for or against any party by reason of that party having drafted or caused to be drafted this Agreement, or any portion hereof, shall not be effective in regard to the interpretation hereof.
SECTION 17. RELEASE BY XXXXXXXXX AND GUARANTOR. The Obligors, for themselves, and for their respective agents, servants, officers, directors, shareholders, members, employees, heirs, executors, administrators, agents, successors and assigns forever release and discharge Agent and Xxxxxxx and their agents, servants, employees, accountants, attorneys, shareholders, subsidiaries, officers, directors, heirs, executors, administrators, successors and assigns from any and all claims, demands, liabilities, accounts, obligations, costs, expenses, liens, actions, causes of action, rights to indemnity (legal or equitable), rights to subrogation, rights to contribution and remedies of any nature whatsoever, known or unknown, which Obligors have, now have, or have acquired, individually or jointly, at any time prior to the date of the execution of this Amendment, including specifically, but not exclusively, and without limiting the generality of the foregoing, any and all of the claims, damages, demands and causes of action, known or unknown, suspected or unsuspected by Obligors which:
As further consideration for the above release, each Obligor specifically agrees, represents, and warrants that the matters released herein are not limited to matters which are known or disclosed, and such Obligor hereby waives any and all rights and benefits which it now has, or in the future may have, by virtue of the provisions of Section 1542 of the Civil Code of the State of California which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE LENDER OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
Each Obligor is aware that it may later discover facts in addition to or different from those which it now knows or believes to be true with respect to the releases given herein, and that it is nevertheless such Xxxxxxx's intention to settle, release, and discharge fully, finally, and forever all of these matters, known or unknown, suspected or unsuspected, which previously existed, now exist, or may exist. In furtherance of such intention, each Obligor specifically acknowledges and agrees that the releases given in this Amendment shall be and shall remain in effect as full and complete releases of the matters being released, notwithstanding the discovery or existence of any such additional or different facts and that such releases shall not be subject to termination or rescission by reason of any such additional or different facts.
SECTION 18. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA. EACH PARTY HERETO HEREBY AGREES AS SET FORTH FURTHER IN SECTIONS 14.13, 14.14, and 14.15 OF THE CREDIT AGREEMENT AS IF SUCH SECTIONS WERE SET FORTH IN FULL HEREIN, Mutatis mutandis.
SECTION 19. Notice of Designated Defaults. This Agreement and the matters set forth herein shall constitute written notice of the Designated Defaults for purposes of satisfaction of any disclosure requirement in the Loan Agreement or any other Loan Document requiring that the Obligors give notice of, certify as to the absence of, or otherwise disclose in writing the occurrence and/or continuance of any Default or Event of Default and the failure of any Obligor prior to, on, or after the date hereof to deliver any such notice, certification, or other disclosure of the Designated Defaults shall not constitute a Default or Event of Default under the Loan Agreement.
[Remainder of page intentionally left blank; signatures follow.]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written.
HOLDINGS:
a Nevada corporation
By:/s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Chief Financial Officer
BORROWERS:
a California corporation
By:/s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Chief Financial Officer
GROVE ACQUISITION, LLC,
a California limited liability company
By:/s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Chief Financial Officer
XXXXXX WINERY LLC,
a California limited liability company
By:/s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Chief Financial Officer
MILDARA BLASS INC.,
a California corporation
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Chief Financial Officer
SPLINTER GROUP NAPA, LLC,
a California limited liability company
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Manager
SABOTAGE WINE COMPANY, LLC,
a California limited liability company
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Manager
VWE CAPTIVE, LLC,
a Nevada limited liability company
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Manager
CALIFORNIA CIDER CO., INC.,
a California corporation
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Vice President, Secretary and Treasurer
THAMES AMERICA TRADING COMPANY LTD.,
a California corporation
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Vice President, Secretary and Treasurer
VINESSE, LLC,
a California limited liability company
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Vice President, Secretary and Treasurer
XXXXX'X WINE CELLARS, INC.,
an Ohio corporation
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Chief Financial Officer
XXXXX'X WINE CELLARS ACQUISITION,
LLC,
a Delaware limited liability company
By: /s/ Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx Xxxxxxxx
Title: Secretary and Treasurer
AGENT AND LENDERS:
BMO BANK N.A., as successor in interest to BANK OF THE WEST,
as Agent and Lender
By:/s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Director
AgCountry Farm Credit Services, PCA,
as Lender
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Vice President Capital Markets
Greenstone Farm Credit Services, ACA,
as Lender
By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: VP of Capital Markets Lending
Greenstone Farm Credit Services, FLCA,
as Lender
By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: VP of Capital Markets Lending
RABO AGRIFINANCE LLC,
as Lender
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: VP-LFR
Compeer Financial, PCA,
as Lender
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Principal Credit Officer Risk
FARM CREDIT MID-AMERICA, PCA,
as Lender
By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: Credit Officer Food & Agribusiness
HTLF Bank,
as Lender
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: SVP/Director
FARM CREDIT BANK OF TEXAS,
as Lender
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Managing Director – Capital Markets
COMERICA BANK,
as Lender
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: Vice President
