Contract
THIS FORBEARANCE AND MODIFICATION
AGREEMENT, dated as of January 30, 2009 by and between Sovereign Business Capital, division
of Sovereign Bank, a federal savings bank (formerly the Business Alliance
Capital Company, division of Sovereign Bank) with a place of business at 000
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx 00000, ("Bank"), and Drinks Americas, Inc., a
Delaware corporation (“DAI”), Drinks Global Imports, LLC, a
New York limited liability company (“DGI”), and D.T. Drinks, LLC, a New York
limited liability company (“DTD”, and together with DAI and DGI individually and
collectively “Borrower”) each with its chief executive office at 000 Xxxxxxx
Xxxx, Xxxxxx, XX 00000.
RECITALS
WHEREAS, Business Alliance
Capital Company, division of Sovereign Bank (“BACC”) and Borrower entered into a
Loan and Security Agreement dated as of June 2, 2006 (said agreement as amended,
modified or extended from time to time the "Loan Agreement") which sets forth
the terms and conditions of a revolving credit facility by BACC. to Borrower;
and
WHEREAS, the commercial
finance group of the Sovereign Business Capital division of Bank no longer uses
the Business Alliance Capital Company name, but instead is part of, and uses
Sovereign Business Capital, division of Sovereign Bank; and
WHEREAS, a certain Event of
Default exist under the Loan Agreement as a consequence of DAI acquiring ninety
percent (90%) of the capital stock of Olifant USA, Inc. (“Olifant”) without the
prior written consent of Bank as required by the Loan Agreement;
and
WHEREAS, Borrower has applied
to Bank for the agreement by Bank to forbear from exercising rights and remedies
as a consequence of the aforesaid Event of Default; and
WHEREAS, Bank has approved the
application of the Borrower on the terms and condition set forth
herein.
NOW, THEREFORE, in
consideration of the premises and other good and valuable consideration, the
parties hereto adopt the above recitals and agree as follows:
1.
Capitalized terms not defined herein but defined in the Loan Agreement shall
have the same meanings ascribed to such terms in the Loan
Agreement.
2. All
references in the Loan Agreement and other Loan Documents to BACC are deemed
modified to be references to Bank, which shall include Sovereign Bank, through
the Sovereign Business Capital division, and its successors and
assigns.
3.
Borrower acknowledges that an Event of Default exist under the Loan Agreement as
a consequence of DAI acquiring ninety percent (90%) of the capital stock of
Olifant pursuant to a Stock Purchase Agreement dated as of January 6, 2009
(hereinafter referred to as the "Olifant Stock Acquisition Event of Default")
and as a consequence thereof Bank is entitled to enforce its rights and remedies
under the Loan Agreement and other Loan Documents.
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Bank hereby agrees to forbear from
exercising any of its rights and remedies provided for in the Loan Agreement and
other Loan Documents or otherwise available under applicable law, solely as a
consequence of only the Olifant Stock Acquisition Event of Default, such
forbearance to be effective as of the date hereof and to terminate on the
earlier of (a) the existence of any Event of Default other than the Olifant
Stock Acquisition Event of Default, whether any such other Event of Default
exists on the date hereof and is not set forth above, or arises hereafter, or
(b) April 3, 2009.
Notwithstanding the aforesaid
forbearance, Borrower shall continue to be required to comply with all of the
terms, conditions and covenants set forth in the Loan Agreement as modified
hereby. The Borrower acknowledges and agrees that (i) Bank is not, by
virtue of this Agreement or otherwise, waiving any Default or Event of Default
under the Loan Documents and (ii) Bank is not abandoning, waiving or releasing
any claim, right or remedy Bank has under any of the Loan Documents
Bank also hereby agrees that
notwithstanding any terms of the Loan Agreement to the contrary, Olifant may
obtain financing from a third party, and grant liens on its assets to such third
party to secure its obligations relating to said
financing. Said agreement shall NOT act as the consent by Bank
to Borrower granting liens on any of their assets to secure the obligations of
Olifant to said third party, and each Borrower agrees it shall not grant any
liens on any of its assets to secure the obligations of Olifant to said third
party.
4. The
definition of Termination Date in section 1.1 of the Loan Agreement is hereby
modified to read as follows:
Termination Date means (a)
April 3, 2009 unless such date is extended with the written consent of Bank and
Borrower, and if so extended on one or more occasions the last date of the last
such extension, or (b) if earlier terminated by Bank pursuant to section 9.1
hereof, the date of such termination.
5.
Section 2.1 of the Loan Agreement is hereby modified so that from the date
hereof the Advance Limit (the maximum outstanding principal balance of Advances
under the Revolving Credit Facility provided for in Section 2.1) is Three
Hundred Thousand Dollars ($300,000.00) instead of the current Advance Limit of
Ten Million Dollars ($10,000,000.00).
6.
Borrower acknowledges that Bank has informed Borrower that inadvertently the
amount of interest charged on the Obligations through October 2008 was
miscalculated and undercharged in the aggregate sum of One Hundred Thirteen
Thousand Two Hundred Five and 41/100 Dollars ($113,205.41) (the “Undercharged
Interest Amount). Bank hereby waives and releases Borrower from any
liability with respect to the Undercharged Interest Amount.
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7. Bank
hereby agrees that the One Million Dollar ($1,000,000.00) minimum Daily Balance
for the purpose of calculating the monthly interest and monthly servicing fee is
eliminated as of January 1, 2009 and accordingly the last sentence of Section
2.4(B) of the Loan Agreement, and the last sentence of Section 2.8 of the Loan
Agreement, are deleted in their entirety as of January 1, 2009.
8. To
induce Bank to enter into this Forbearance and Modification Agreement, and in
consideration of Bank entering into this Forbearance and Modification Agreement,
Borrower agrees to pay to Bank a Forbearance Fee of Fifty Thousand
Dollars, Ten Thousand Dollars ($10,000.00) of which shall be payable on February
16, 2009, and Twenty Thousand Dollars ($20,000.00) of which shall be payable on
March 1, 2009 and on April 3, 2009 (or such earlier date as Borrower otherwise
satisfies its Obligations to Bank and terminates the Loan
Agreement).
9.
Borrower acknowledges that the Loan Agreement and all other Loan Documents
remain in full force and effect. Borrower hereby irrevocably and
unconditionally releases and forever discharges Bank and its shareholders,
directors, officers, employees, representatives, attorneys, agents, successors
and assigns, and all persons acting by, through, under or in concert with any of
them from any and all claims, charges, complaints, liabilities, obligations,
promises, contracts, agreements, rights, benefits, options, damages, actions,
causes of action, suits, demands, costs, losses, debts and expenses, including
attorneys' fees and costs of any nature whatsoever, known or unknown, suspected
or unsuspected, which against them Borrower or its successor and/or assigns ever
had, now have or hereafter can, shall or may have (either directly, derivatively
or in any representative capacity whatsoever) (hereinafter referred to
collectively as "Claims") by reason of any matter, cause or thing whatsoever
from the beginning of the world to the date of this Forbearance and Modification
Agreement, arising out of or in any way related to any transaction, cause or
thing by and between Borrower and Bank.
10.
Borrower represents that:
(a) each and every representation
heretofore made by Borrower in the Loan Agreement is true and correct as of the
date of this Forbearance and Modification Agreement;
(b) no consent or approval of, or
exemption by any Person is required to authorize, or is otherwise required in
connection with the execution and delivery of this Forbearance Agreement and the
other Loan Documents provided for herein, which has not been obtained and which
remains in full force and effect; and
(c) Borrower has the power to execute,
deliver and carry out this Forbearance and Modification Agreement and all
documents executed in connection herewith, and this Forbearance and Modification
Agreement and such other documents are valid, binding and enforceable as against
Borrower in accordance with their terms.
11.
Borrower hereby confirms the security interests and liens granted by Borrower to
Bank in and to the Collateral in accordance with the Loan Agreement and other
Loan Documents as security for its Obligations to Bank.
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12.
Borrower agrees to pay any and all expenses, including reasonable counsel fees,
including allocated fees of in-house counsel, and disbursements, incurred by
Bank in connection with the preparation and execution of this Forbearance and
Modification Agreement and the other documents relating hereto.
13.
Miscellaneous:
(A) Borrower agrees that no
delay on the part of Bank in exercising any power or right under the Loan
Agreement, hereunder or any other Loan Document shall operate as a waiver of any
such power or right, nor act as a consent to any departure by Borrower from any
of the terms or conditions hereof or thereof, preclude other or further exercise
thereof, or the exercise of any other power or right. No waiver
whatsoever shall be valid unless in writing signed by Bank and then only to the
extent set forth therein.
(B) This Forbearance and Modification
Agreement and the other Loan Documents constitute the sole agreement of the
parties with respect to the subject matter hereof and thereof and supersede all
oral negotiations and prior writings with respect to the subject matter hereof
and thereof. There have been no representations, warranties,
promises, inducements or considerations of any kind made my on party hereto to
the other with respect to the agreements set forth herein except as are
expressly memorialized in this Forbearance and Modification
Agreement.
(C) This Forbearance and
Modification Agreement is entered into without force or duress, is the free will
of the parties, and in consideration of the receipt of substantial
consideration. Bank and Borrower acknowledge that they have not
entered into this Agreement in reliance upon any inducement or promise by the
other party hereto not otherwise contained herein. Bank and the
Borrower have had the opportunity to consult with their respective counsel
regarding the terms of this Agreement and are aware of all legal and other
ramifications of the execution of this Agreement.
14. This
Forbearance and Modification Agreement is intended to supplement the Loan and
Security Agreement dated as of as of as of June 2, 2006, as amended or modified,
between Bank and Borrower and the rights and obligations of the parties under
said Loan and Security Agreement and other Loan Documents shall not in any way
be vacated, modified or terminated except as herein provided. All
terms and conditions contained in each and every agreement or promissory note or
other evidence of indebtedness of Borrower to Bank are incorporated herein by
reference.
15. This
Forbearance and Modification Agreement shall be construed in accordance with the
substantive laws of the State of New Jersey without regard to conflict of
laws.
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IN WITNESS WHEREOF, the
parties hereto have caused this Forbearance and Modification Agreement to be
executed and delivered as of the day and year first above written.
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DRINKS
AMERICAS INC.
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a
Delaware corporation
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Signed
by: ________________________
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Print
Name:
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Title/Capacity:
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DRINKS
GLOBAL IMPORTS, LLC
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a
New York limited liability company
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Signed
by: ________________________
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Print
Name:
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Title/Capacity:
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D.T.
DRINKS, LLC
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a
New York limited liability company
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Signed
by: ________________________
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Print
Name:
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Title/Capacity:
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SOVEREIGN
BUSINESS CAPITAL
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DIVISION
OF SOVEREIGN BANK
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Signed
by: ________________________
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Print
Name:
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Title/Capacity:
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