Document/Exhibit Description Pages Size
1: 8-K Current Report 7 29K
2: EX-4.1 Instrument Defining the Rights of Security Holders 50 192K
3: EX-4.2 Instrument Defining the Rights of Security Holders 20 73K
4: EX-4.3 Instrument Defining the Rights of Security Holders 10 31K
5: EX-4.4 Instrument Defining the Rights of Security Holders 17 76K
6: EX-4.5 Instrument Defining the Rights of Security Holders 24 95K
7: EX-4.6 Instrument Defining the Rights of Security Holders 10 28K
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 27, 1996
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BROTHERS GOURMET COFFEES, INC.
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(Exact Name of Registrant as specified in its charter)
Delaware 0-23024 52-1681708
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(State or other juris- (Commission file (IRS Employer
diction of incorporation) number) Identification No.)
2255 Glades Road
Suite 100 E
Boca Raton, Florida 33431
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(Address of principal (Zip Code)
executive offices)
(407) 995-2600
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On December 27, 1996 (the "Closing Date"), the Company and Dilmun
Financial Services ("Dilmun") entered into a Senior Subordinated Note
Agreement (the "Closing") (the "Subordinated Note Agreement"). On the
Closing Date, the Company drew down the full amount available under the
Subordinated Note Agreement, i.e., $15 million (the "Subordinated Loan").
The Company applied the proceeds of the Subordinated Loan as follows: (a) the
Company paid $3,027,000 to Siena Capital Partners, L.P. ("Siena"),
representing payment in full of the bridge loan facility provided by Siena to
the Company in September 1996 (the "Siena Bridge Facility"), and (b) the
Company applied the remaining $11,973,000 against the outstanding balance due
under the Revolving Credit Facility (the "Revolving Credit Facility") under
its Loan and Security Agreement, dated as of May 29, 1996, with Sanwa
Business Credit Corporation ("Sanwa") (the "Credit Agreement"). For more
information concerning the Siena Bridge Facility and Credit Agreement, see
Note 7 to the Brothers Gourmet Coffees, Inc. Notes to Condensed Consolidated
Financial Statements, September 27, 1996 ("Note 7 to the Third Quarter
Financial Statements"), included in Part I., Item 1. of the Brothers Gourmet
Coffees, Inc. Quarterly Report on Form 10-Q for the Quarter Ended September
27, 1996 (the "Third Quarter Form 10-Q").
In connection with the Closing, the Company:
1. agreed to pay a structuring fee, in the amount $337,500, to Dilmun,
and to reimburse Dilmun for certain costs and expenses (including
attorneys' fees incurred by Dilmun in connection with the negotiation
and documentation of the Subordinated Loan) on January 3, 1997;
2. paid a debt placement fee, in the amount of $750,000, to Dabney
Resnick Imperial, LLC, an affiliate of Siena and the Company's
exclusive debt placement agent ("DRI"); and
3. granted certain warrants to BIB Holdings (Bermuda) Ltd., an affiliate
of Dilmun, and Brothers Warrant Holdings I, an affiliate of DRI
("BWHI") warrants (which are described in more detail below)
to purchase up to 1,245,000 shares and 400,000 shares of Company
common stock, $.0001 par value per share (the "Common Stock"),
respectively.
The term of the Subordinated Loan is six years. The outstanding balance
of the Subordinated Loan is due and payable (absent acceleration thereof in
accordance with the terms of the Subordinated Loan Agreement) on December 26,
2002. The Subordinated Loan bears interest at the rate of 11.25% per annum.
The Subordinated Loan Agreement contains standard and customary affirmative
and negative covenants for a loan of its type, including two financial
covenants, a minimum tangible net worth covenant (starting at $4.388 million
as of September 1996 and increasing to $35.055 million as of December 2001)
and a cash flow coverage ratio (of 1.2:1 throughout the term of the
Subordinated Loan).
As discussed above, in connection with the Closing, the Company and BIB
entered into a Warrant Agreement (the "BIB Warrant Agreement") entitling BIB
to purchase up to 1,245,000 shares (the "BIB Warrant Shares") of Common
Stock, at an exercise price of $.25 per share of Common Stock (the "BIB
Warrant"). The BIB Warrant Shares vested/will vest according to the
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following schedule: (1) 265,600 BIB Warrant Shares vested on the Closing
Date, (2) an additional 265,600 BIB Warrant Shares will vest on the first
anniversary of the Closing Date (for a total of up to 531,200 BIB Warrant
Shares) if the Subordinated Loan is not paid in full on or before that date,
(3) an additional 182,600 BIB Warrant Shares will vest on the second
anniversary of the Closing Date (for a total of up to 713,800 BIB Warrant
Shares) if the Subordinated Loan is not paid in full on or before that date,
(4) an additional 166,000 BIB Warrant Shares will vest on the third
anniversary of the Closing Date (for a total of up to 879,800 BIB Warrant
Shares) if the Subordinated Loan is not paid in full on or before that date,
(5) an additional 182,600 BIB Warrant Shares will vest on the fourth
anniversary of the Closing Date (for a total of up to 1,062,400 BIB Warrant
Shares) if the Subordinated Loan is not paid in full on or before that date
and (6) an additional 182,600 BIB Warrant Shares will vest on the fifth
anniversary of the Closing Date (for a total of up to 1,245,000 BIB Warrant
Shares) if the Subordinated Loan is not paid in full on or before that date.
The term of the BIB Warrant is ten years from the Closing Date.
The BIB Warrant requires the Company to reserve, to the extent it has a
sufficient number of authorized but unissued and otherwise unreserved shares
of Common Stock available, 1,245,000 shares of Common Stock to issue to BIB
upon exercise of the BIB Warrant. The BIB Warrant further provides that, if,
at any time during the exercise period of the BIB Warrant BIB exercises the
BIB Warrant but the Company does not have a sufficient number of authorized
and unissued shares to issue upon such exercise, the Company share shall
issue phantom shares of Common Stock ("Phantom Shares") to BIB in an amount
equal to the number of BIB Warrant Shares the Company was unable to issue to
BIB because the Company did not have a sufficient number of authorized and
unissued shares to fully cover the BIB Warrant exercise. BIB has the right
to sell the Phantom Shares to the Company for cash (the "Phantom Shares
Payment") in an amount equal to the number of Phantom Shares being acquired
upon exercise of the BIB Warrant multiplied by the difference between (1) the
stated percentage (the "Stated Percentage") of the market price of the Common
Stock as of the date of exercise (the "Market Price") less (2) the exercise
price per share of Common Stock under the BIB Warrant. The Stated Percentage
is determined according to the following schedule: (a) 110% of the Market
Price in the case of any exercise during the first two years following the
Closing Date, (b) 115% of the Market Price in the case of any exercise after
the second anniversary of the Closing Date and before two and one-half years
following the Closing Date, (c) 120% of Market Price in the case of any
exercise after the date that is two and one-half years after the Closing Date
and before three years following the Closing Date, (d) 125% of Market Price
in the case of any exercise after the date that is three years after the
Closing Date and before the date that is three and one-half years following
the Closing Date and (e) 130% of Market Price in the case of any exercise
after the date that is three and one-half years after the Closing Date and
before the expiration of the BIB Warrant term. If the Company is unable, for
any reason, to make a Phantom Share Payment in cash when due, the Company may
deliver a senior subordinated promissory note to BIB (a "BIB Warrant Note")
in lieu of such cash payment. A BIB Warrant Note will bear interest at the
rate of 16% per annum and shall be due and payable (absent acceleration
thereof in accordance with the terms of the Subordinated Loan Agreement) on
December 26, 2002. In all other respects, the BIB Warrant Note(s) will be
governed by the terms of the Subordinated Note Agreement.
The BIB Warrant Agreement provides BIB with certain piggyback
registration rights and up to three demand registration rights during the
term of the BIB Warrant. The BIB Warrant
3
also provides BIB with certain anti-dilution protection, which is designed to
preserve BIB's percentage ownership of Common Stock on a fully-diluted basis
upon the occurrence of certain specified corporate restructuring events.
In connection with the Closing, Sanwa, Dilmun and BIB entered into a
Subordination Agreement, and the Company executed and delivered to Sanwa,
Dilmun and BIB an acknowledgment of such Subordination Agreement. Pursuant
to the Subordination Agreement, Dilmun and BIB have agreed, subject to
certain conditions, that the Subordinated Loan will be subordinated and
subject in right of payment to the prior payment in full in cash of the
indebtedness of the Company to Sanwa under the Credit Agreement. The
Subordination Agreement contains standard and customary terms for a financing
of the type contemplated in the Subordinated Note Agreement.
In connection with the Closing, the Company and Sanwa entered into the
Second Amendment and Consent to Loan and Security Agreement (the "Second
Amendment"). Pursuant to the Second Amendment:
(1) Sanwa consented to, among other things, certain technical amendments
to (a) the Cash Flow Coverage Ratio definition (to exclude certain
Slotting Fee Payments and certain Capital Expenditures to be made by
the Company in 1997 from such ratio calculation), (b) the Slotting Fee
Payments definition, (c) the Event of Default definition (to exclude
certain payments made by the Company in connection with the settlement
of, or entry of a judgment against the Company in, the Lindgren
Litigation (as defined in the Second Amendment) and (d) the
Subordinated Debt definition (to specifically include the Subordinated
Note Agreement, the BIB Warrant and other documents related to the
Subordinated Note Agreement (the "Subordinated Note Documents"),
(2) the Company agreed to delete the Term Loan B in its entirety from the
Credit Agreement,
(3) Sanwa and the Company agreed to, among other things, certain technical
amendments to the Permitted Indebtedness, Permitted Liens, Restricted
Payments, Securities repurchase restrictions, Changes in Charter,
Bylaws or Fiscal Year and Impairment Agreements covenants in the
Credit Agreement to conform such covenants to the terms of the
Subordinated Note Documents,
(4) Sanwa consented to an increase in the Capital Expenditures limit to
$10 million per year,
(5) Sanwa added a Subordinated Debt negative covenant (which, among other
things, prohibits (a) the amendment or modification of the terms of
the Subordinated Note Documents without Sanwa's consent, (b) prohibits
payments to Dilmun/BIB (other than the Phantom Shares Payment(s)),
except in accordance with the terms of the Subordinated Note
Documents, (c) prohibits Phantom Stock Payment(s), except in
accordance with the terms of the Subordinated Note Documents, and (d)
restricts prepayment, repurchases, redemptions or retirements of the
Subordinated Loan, except in accordance with its terms (with the
exception that the Company
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may prepay up to $5 million of the Subordinated Loan, provided certain
conditions are satisfied at the time of the prepayment),
(6) Sanwa consented to the execution of the Subordinated Note Documents,
and
(7) Sanwa consented to the termination of the Credit Support Agreements
and agreed to return the Credit Support Letters of Credit to the
Providers thereof. For more information concerning the Credit Support
Agreement, the Credit Support Letters of Credit and the Providers, see
Note 7 to the Third Quarter Financial Statements.
Upon payment in full of the outstanding balance of the Siena Bridge
Facility, that facility terminated. As of the Closing Date, only one of the
four warrants granted to Siena by the Company in connection with the closing
of the Siena Bridge Facility (covering a total of 100,000 shares of Common
Stock) had vested. Upon repayment of the Siena Bridge Facility, Siena's
other three warrants (covering another 180,000 shares of Common Stock)
expired. For more information concerning the Siena Bridge Facility and the
warrants granted to Siena in connection therewith, see Note 7 to the Third
Quarter Financial Statements.
In connection with the Closing, the Company and Brothers Warrant Holdings
I, an affiliate of DRI, entered into a Warrant Agreement (the "DRI Warrant
Agreement"), entitling BWHI to acquire 400,000 shares of Common Stock at an
exercise price of $3.4375 per share of Common Stock (the "DRI Warrant"). The
DRI Warrant Agreement provides BWHI with certain piggyback registration rights
and one demand registration right during the term of the DRI Warrant. The
DRI Warrant provides BWHI with certain anti-dilution protection, which is
designed to preserve BWHI's percentage ownership of Common Stock on a
fully-diluted basis upon the occurence of certain specified corporate
restructuring events.
At the Closing and effective with the execution of the Second Amendment,
the Credit Support Agreement terminated and Sanwa agreed to return the Credit
Support Letters of Credit to the Providers thereof. For more information
concerning the Credit Support Agreement, the Credit Support Letters of Credit
and the Providers, see Note 7 to the Third Quarter Financial Statements. As
of the Closing Date, only two tranches of the first of the three warrants
granted to each of the Providers by the Company at the closing of the Credit
Agreement and Credit Support Agreement (covering a total of 103,624 shares of
Common Stock with respect to all of the Providers) had vested. Upon
termination of the Credit Support Agreement, the balance of the Providers'
first warrant and all of their second and third warrants (covering another
253,580 shares of Common Stock with respect to all of the Providers) expired.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
4.1 Senior Subordinated Note Agreement By and Between Brothers Gourmet Coffees,
Inc. as Borrower and Dilmun Financial Services, An Unlimited Irish Company,
as Lender Dated, December 27, 1996
4.2 Subordination Agreement by and among Sanwa Business Credit Corporation, a
Delaware corporation as Senior Lender and Agent, and Dilmun Financial
Services as Unlimited
5
Irish Company, and BIB Holdings (Bermuda) Ltd., a Bermuda corporation,
Dated December 27, 1996
4.3 Second Amendment and Consent to Loan and Security Agreement.
4.4 Warrant Agreement between Brothers Gourmet Coffees, Inc. and BIB Holdings
(Bermuda) Ltd. for the purchase of up to 1,245,000 shares of Common Stock
4.5 Warrant Agreement between Brothers Gourmet Coffees, Inc. and Brothers
Warrant Holdings I for the purchase of 400,000 shares of Common Stock
4.6 Common Stock Purchase Warrant between Brothers Gourmet Coffees, Inc. and
Brothers Warrant Holdings I for the purchase of 400,000 shares of Common
Stock
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BROTHERS GOURMET COFFEES, INC.
(Registrant)
/s/ DONALD D. BREEN
---------------------------
Date: January 10, 1997 By: Donald D. Breen
Title: President, Chief Executive Officer
and Chief Financial Officer
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Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘8-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 12/26/02 | | 2 | | 3 |
| Filed on: | | 1/10/97 | | 7 |
| | 1/3/97 | | 2 |
| For Period End: | | 12/27/96 | | 1 | | 6 | | | 10-K |
| | 9/27/96 | | 2 | | | | | 10-Q |
| | 5/29/96 | | 2 |
| List all Filings |
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