Exhibit 10.1
FORBEARANCE
AGREEMENT
THIS FORBEARANCE AGREEMENT (this
“Agreement”) is dated for reference purposes September
5, 2008, and is by and between BENAROYA CAPITAL COMPANY, L.L.C., a
Washington limited liability company (“Lender”), and
TULLY’S COFFEE CORPORATION, a Washington corporation
(“Borrower”).
RECITALS
A. Borrower has previously executed
that certain Secured Promissory Note dated April 26, 2007, in
favor of Lender in the original principal amount of FOUR MILLION
AND 00/100 DOLLARS ($4,000,000.00), as amended by that certain
Amendment to Secured Promissory Note and Security Agreement dated
July 12, 2007 (collectively herein call the
“Note”). The Note evidences a loan from Lender to
Borrower in the amount of up to TEN MILLION AND 00/100 DOLLARS
($10,000,000.00) plus accrued interest (the “Loan”). To
secure repayment of the Note, Borrower executed and delivered to
Lender that certain Security Agreement dated April 26, 2007,
also as amended by that certain Amendment to Secured Promissory
Note and Security Agreement dated July 12, 2007 (collectively,
the “Security Agreement”). A UCC-1 Financing Statement
was filed with the Washington State Department of Licensing, UCC
Division, on April 27, 2007 under File
No. 2007-117-1708-6 (the “Financing Statement”).
The Note, the Security Agreement and the Financing Statement are
herein called the “Loan Documents”. All words beginning
with a capital letter in this Agreement that are defined in the
Loan Documents shall have the same meaning in this Agreement as in
the Loan Documents.
B. The Maturity Date of the Note is
August 31, 2008, and Borrower has requested that Lender
forbear from commencing collection efforts after the Maturity Date,
to which request Lender has agreed upon the terms and conditions
set forth below.
C. Tom T. O’Keefe
(“O’Keefe”) has guaranteed repayment of the Note
pursuant to that certain Guaranty Agreement dated as of
April 25, 2007, as amended by that certain Amendment to
Guaranty Agreement dated as of July 12, 2007 (collectively,
the “O’Keefe Guaranty”). Mary Kay McCaw
(“McCaw” and together with O’Keefe herein called
the “Guarantors”) has guaranteed repayment of a portion
of the Note pursuant to that certain Guaranty Agreement dated as of
July 12, 2007 (the “McCaw Guaranty” and together
with the O’Keefe Guaranty herein called the
“Guaranties”).
AGREEMENT
NOW, THEREFORE, In consideration of
the foregoing recitals and the covenants set forth below the
parties hereby agree as follows:
1. Subject to the terms and
conditions of this Agreement, Lender agrees to forbear from taking
any action to foreclose on the Security Agreement, bring action to
collect on the Notes, or take other action to realize on any
security for the Loan or to otherwise effect remedies permitted to
be taken by Lender.
2. Nothing in this Agreement shall
prohibit Lender from:
a. executing, publishing, filing or
otherwise delivering to any person or other entity including,
without limitation, any governmental office or agency any notice to
secure, perfect, renew or otherwise evidence or establish any
security interest of Lender in or to the property securing
repayment of the Note;
b. the defense of any claim, action
or proceeding brought against Lender which in any manner arises out
of or in connection with the Loan or any security given for the
Loan; or
c. exercising its rights under the
Warrant or the New Warrant.
3. Each of the following shall be a
condition to the obligation of Lender to forebear in accordance
with Section 1 above (the
“Conditions”):
a. Except for the failure to pay the
Note on the Maturity Date, there are no defaults of any of
Borrower’s obligations under the Loan Documents or of
Guarantors’ obligations under the Guaranties;
b. No claim, litigation or other
proceeding is made or instituted against Lender by any person or
other entity which disputes the indebtedness evidenced by the Note,
asserts any offset against said indebtedness, or any claim against
Lender arising out of or in connection with said
indebtedness;
c. No bankruptcy proceeding or other
federal or state proceeding is commenced by any party that has the
purpose or effect of seeking a moratorium against, or
reorganization of, or liquidation of, the assets or liabilities of
Borrower or the Guarantors;
d. No lien or other encumbrance,
whether voluntary or involuntary, arises to affect title to the
Collateral;
e. There is no breach by Borrower of
this Agreement; and
f. Within ten (10) days after
mutual execution of this Agreement Borrower shall have paid all of
Lender’s costs and fees incurred in connection with the
preparation, negotiation and execution of this
Agreement.
If any one or more of the foregoing
Conditions occurs at any time, the obligations of Lender to forbear
hereunder shall immediately terminate and Lender shall have no
further obligations pursuant to Section 1 above. Borrower
shall immediately notify Lender in writing if it becomes aware of
the occurrence of any of the foregoing Conditions.
2
4. As a material inducement to cause
Lender to enter into this Agreement, Borrower hereby agrees that if
any of the foregoing Conditions occur and if either (a) the
same result from the affirmative act of Borrower, or
(b) Borrower fails to immediately notify Lender of the
existence of the same upon learning of the occurrence o
