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
214 Carnegie Center, Suite 302, Princeton, New Jersey 08540,
("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 372
Danbury Road, Wilton, CT 06897.
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.
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
