SECOND AMENDMENT TO FORBEARANCE AGREEMENT
THIS SECOND AMENDMENT TO FORBEARANCE AGREEMENT (this "Agreement"),
dated as of August 15, 1997, is by and between BROTHERS GOURMET COFFEES, INC., a
Delaware corporation, as Borrower (the "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. All capitalized
terms used herein shall have the meanings ascribed to such terms in the Loan
Agreement and the Forbearance Agreement.
RECITALS
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A. WHEREAS, Borrower and Lender entered into that certain Forbearance
Agreement dated as of May 15,1997 and agreed to the first amendment thereto
under the terms of correspondence dated June 18,1997 (collectively, the
"Forbearance Agreement").
B. WHEREAS, the Forbearance Agreement terminated by its own terms on
August 15, 1997;
C. WHEREAS, Agent and Lenders have not expressly or impliedly waived the
Current Default and as a result of the occurrence of the Current Default and the
termination of the Forbearance Agreement, Agent and Lenders have the right to
accelerate the Obligations and demand immediate payment thereof and the right to
foreclose upon, and take possession of, and liquidate all Collateral and
Borrower has no setoff, defense or counterclaim based thereon or related
thereto;
D. WHEREAS, Borrower has requested that Agent and Lenders renew their
forbearance in the exercise and enforcement of their rights, powers and remedies
under the Financing Agreements or now existing at law or in equity or by
statute;
E. WHEREAS, the Forbearance Agreement, as amended is a Financing
Agreement; and
F. WHEREAS, Agent and Lenders are willing to renew their forbearance, for
the time period expressly set forth herein, in the exercise and enforcement of
such rights, powers and remedies, but only upon full and complete compliance and
fulfillment by Borrower of the terms and conditions set forth herein in the
manner hereafter stated.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Section 1 is hereby amended to add the following defined terms:
"Commitment" means a written, detailed and enforceable commitment for
the New Financing in a form and substance reasonably acceptable to Lender.
"Commitment Failure" means the failure by the Company to obtain the
Commitment and provide a copy thereof to Lender prior to the end of business on
September 15, 1997.
"Forbearance Fee" means $105,000 payable by Company to Lender pursuant
to the terms hereof.
"New Financing" means new loan or loans and other financial
accommodations to be provided to Borrower by an entity or person other than
Sanwa Business Credit Corporation at such times and in such amounts so as to
permit Borrower to pay in full, retire and otherwise honor all Obligations.
"Supplemental Reports" means each and all of the following:
(a) that certain cash flow statement showing revenue and
expenses on a cash basis for a 13 week period as prepared for Borrower's
consultant, Xxxxxx & Company;(b) cash flow forecasts as referred to at Section
5.3(i) in a format acceptable to Lender; and (c) forecasts of capital
expenditures containing comparisons of actual to the prior forecast.
2. Section 1 is hereby amended to delete from the definition of
"Forbearance Termination Date" the date "August 15, 1997" and replace it with
the date "October 31, 1997."
3. Section 3(a) is hereby deleted in its entirety and replaced with
the following:
(a) During the Forbearance Period, so long as no Forbearance
Event of Default shall have occurred and be continuing and subject to strict
compliance by Borrower with each and every term and condition of each and every
of the Financing Agreements, Agent and Lenders hereby agree that they shall
forbear in the
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exercise of their rights, powers and remedies afforded under the Financing
Agreements or at law or in equity or by statue, except that (i) Agent
specifically reserves its rights under section 3.5 of the Loan Agreement to
issue and deliver Redirection Notices and under section 2(b)(ii) of the
Subordination to issue a Payment Blockage Notice, during the Forbearance
Period, (ii) pursuant to sections 2.6(c) and 9 of the Loan Agreement, Lender
may assess and collect interest at the Default Rate, and (iii) pursuant to
section 2.6(f) of the Loan Agreement, Lender may declare, after Commitment
Failure, that no outstanding Loan may continue as, or be converted into, a
LIBOR Rate Loan. The foregoing forbearance shall not be construed to impair
the ability of Agent and Lenders to enforce any such rights, powers or
remedies after the Forbearance Period regardless of whether or not such
enforcement relates to actions taken or payments received during the
Forbearance Period.
4. Section 3(c) is hereby deleted in its entirety and replaced with
the following:
(c) Unless earlier terminated in accordance with the terms of
this Agreement, Agent and Lenders' forbearance, as provided
herein, shall immediately cease without notice on the Forbearance
Termination Date and Borrower at that time shall be obligated to
comply with and perform all terms, conditions and provisions of
each and every Financing Agreement without giving effect to the
forbearance set forth herein.
5. Section 4 is hereby amended to add a new subsection (c) as
follows:
(c) FORBEARANCE FEE. Payment by Company to Lender of 50% of the
Forbearance Fee.
6. Section 5.4 is hereby amended as follows:
(a) In the first paragraph, the date "May 22, 1997" shall be
deleted in its entirety and replaced with "September 16, 1997" and the date
"June 2, 1997" shall be deleted in its entirety and replaced with "September 23,
1997";
(b) In subsection (c) the date "June 22, 1997" shall be deleted
in its entirety and replaced with "October 10, 1997";
7. Section 5.5 is hereby deleted in its entirety and
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replaced with the following:
"Agent shall waive all prepayment penalties associated with
prepayment arising out of the Commitment provided that payment in
full of the Obligations takes place on or before the Forbearance
Termination Date."
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8. New subsections 5.8 and 5.9 are added as follows:
5.8 CONDITION TO ENGAGEMENT OF CONSULTANT. Notwithstanding the terms
of Section 5.4, in the event Lender determines, after its receipt
of the Commitment in accordance with the terms of this Agreement,
in its reasonable business judgment that Borrower and a new
lender are proceeding to close the New Financing prior to the
Forbearance Termination Date, Lender will waive temporarily the
provisions of Section 5.4.
5.9 DEFERRAL OF PORTION OF FORBEARANCE FEE. The remaining 50%
balance of the Forbearance Fee shall be payable on the first
business day immediately following Commitment Failure; provided,
however, if Commitment Failure does not occur, Lender shall waive
payment of such balance.
9. Section 9 is hereby amended as follows:
(a) subsection (vi) is deleted in its entirety and replaced with
the following:
(vi) Any instrument, document, report, schedule, agreement,
representation or warranty, oral or written, made or delivered to
Lender by Borrower in connection with this Agreement is untrue or
incorrect in any material respect when made or delivered;
(b) new subsections (vii) through (ix) are added as follows:
(vii) Borrower fails prior to August 25, 1997 to provide
Lender a copy of a term sheet for New Financing as executed by
Borrower;
(viii) Borrower fails prior to August 25, 1997 to provide
Lender Supplemental Report (a); and
(ix) Borrower fails to provide Lender Supplemental
Reports (b) and (c) on the periodic basis set forth in Section
5.3 or at such other times as Lender may request.
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10. Borrower warrants and represents as follows:
(a) Other than the Current Default, no other Event of Default
exists; and
(b) No Forbearance Event of Default exists.
11. Borrower hereby ratifies and affirms each and every term and
condition of the Forbearance Agreement and reasserts each and every
acknowledgment, representation and warranty.
IN WITNESS WHEREOF, this Second Amendment to Forbearance Agreement has
been duly executed as of the date first written above.
BROTHERS GOURMET COFFEES, INC.
By:
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Title:
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SANWA BUSINESS CREDIT CORPORATION,
as Agent and Lender
By:
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Title:
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