FIFTH AMENDMENT TO CREDIT AGREEMENT
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THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Fifth Amendment") is
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entered into by and among PEET'S OPERATING COMPANY, INC. (formerly known as
Peet's Coffee and Tea, Inc.) ("Borrower"), PEET'S TRADEMARK COMPANY, and PEET'S
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COFFEE & TEA, INC. (formerly known as Peet's Companies, Inc.), each a Washington
corporation (each a "Credit Party" and collectively, the "Credit Parties"), and
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GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation ("Lender"), as of
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December 31, 2002, with reference to the following facts:
RECITALS
A. Pursuant to that certain Credit Agreement dated as of September 1,
2000, as amended by that certain First Amendment to Credit Agreement dated as of
January 19, 2001, that certain Second Amendment to Credit Agreement dated as of
June 29, 2001, that certain Third Amendment to Credit Agreement dated as of
March 1, 2002, and that certain Fourth Amendment to Credit Agreement dated as of
April 23, 2002, each by and among Credit Parties and Lender (as the same may
have been further amended, supplemented, or otherwise modified from time to time
prior to the date of this Fifth Amendment, the "Credit Agreement"), Lender
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agreed to provide certain financial accommodations to or for the benefit of
Borrower and the other Credit Parties upon the terms and conditions contained
therein. Unless otherwise defined in this Fifth Amendment, (i) capitalized terms
or matters of construction defined or established in Annex A to the Credit
Agreement shall be applied as defined or established therein, and (ii)
references to Sections, Schedules, and Annexes shall refer, respectively, to
Sections, Schedules, and Annexes of the Credit Agreement.
B. Credit Parties have requested certain modifications to the Credit
Agreement, and Lender has agreed to such request on the terms and conditions set
forth in this Fifth Amendment.
NOW, THEREFORE, in consideration of Credit Parties' performance of
their promises and obligations hereunder, the continued performance by Credit
Parties of their promises and obligations under the Credit Agreement and the
other Loan Documents, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Credit Parties and Lender
hereby agree as follows:
AGREEMENT
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1. AMENDMENTs. The Credit Agreement is hereby amended as follows:
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1.1 Clause (d) of Section 6.2 is hereby deleted and the following is
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substituted in lieu thereof:
(d) so long as no Default or Event of Default shall have occurred and be
continuing and so long as proceeds of the Revolving Loans are not applied,
directly or indirectly, to the purchase of such investments, Borrower may make
investments up to $50,000,000 in the aggregate, subject to Control Letters in
favor of Lender or otherwise subject to a perfected security interest in favor
of Lender, in the following: (i) if the Revolving Loan balance does not exceed
$5,000,000, investments consistent with the guidelines set forth on Exhibit
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6.2(d); and (ii) if the Revolving Loan balance exceeds $5,000,000, (A)
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marketable direct obligations issued or unconditionally guaranteed by the United
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States of America or any agency thereof maturing within one year from the date
of acquisition thereof, (B) commercial paper maturing no more than one year from
the date of creation thereof and currently having the highest rating obtainable
from either Standard & Poor's Rating Group or Moody's Investors Service, Inc.,
(C) certificates of deposit maturing no more than one year from the date of
creation thereof issued by commercial banks incorporated under the laws of the
United States of America, each having combined capital, surplus and undivided
profits of not less than $300,000,000 and having a senior unsecured rating of
"A" or better by a nationally recognized rating agency (an "A Rated Bank"), (D)
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time deposits maturing no more than 30 days from the date of creation thereof
with A Rated Banks, and (E) mutual funds that invest solely in one or more of
the investments described in clauses (A) through (D) above.
1.2 Section 6.19(b)(ii) is hereby deleted in its entirety and the following
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is substituted therefor:
(ii) From and after the Term Loan B Repayment Date, Borrower may engage in
transactions and enter into agreements with respect to the opening of up to ten
(10) new retail locations during any Fiscal Year; provided, that Credit Parties
shall not make any Capital Expenditures in connection with such new retail
locations exceeding, $800,000, individually, or $5,000,000, in the aggregate,
during any such Fiscal Year.
1.3 The definition of "Change of Control" in Annex A to the Credit Agreement
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is hereby amended by deleting the reference to "25%" set forth in clause (a)
thereof and substituting "40%" in lieu thereof.
1.4 Annex C to the Credit Agreement is hereby amended by deleting the
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following from clause (d) thereof: "The Concentration Blocked Account Agreement
shall further provide that from and after the Closing Date, the Concentration
Account Bank shall immediately forward all amounts received in the Concentration
Account to the Collection Account through daily sweeps from the Concentration
Account into the Collection Account"; and substituting the following in lieu
thereof:
"The Concentration Blocked Account Agreement shall further provide that from and
after the Closing Date, the Concentration Account Bank shall, from the after the
date that Lender has delivered a notice, in its sole discretion, to such
Concentration Account Bank, the Concentration Account Bank shall immediately
forward all amounts received in the Concentration Account to the Collection
Account through daily sweeps from the Concentration Account into the Collection
Account."
1.5 Annex G is hereby amended by deleting paragraph (a) in its entirety and
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substituting the following in lieu thereof:
(a) Maximum Capital Expenditures. Credit Parties shall not make Capital
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Expenditures on a consolidated basis (i) during the period from August 1, 2000,
through December 31, 2000, in excess of $3,000,000, (ii) during the period from
January 1, 2001, through December 31, 2001, in excess of $6,500,000 (excluding
$2.84 million applied in satisfaction of Borrower's obligations under the Heller
Loan Documents), or (iii) during any Fiscal Year of Borrower commencing during
or after January 2002, in excess of $12,000,000.
1.6 A new Exhibit 6.2(d) is hereby added to the Credit Agreement is attached
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hereto as Exhibit A.
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1.7 An updated version of Disclosure Schedule (3.19) to the Credit Agreement
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is attached hereto as Exhibit B.
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2. EFFECTIVENESS. This Fifth Amendment shall be effective as of
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October 31, 2002, upon Lender's receipt of an original of this Fifth Amendment
duly executed by the Credit Parties and Lender.
3. REPRESENTATIONS AND WARRANTIES. Each Credit Party hereby represents
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and warrants that (a) as of the date of this Fifth Amendment, it has no
Commercial Tort Claims, (b) at all times from the Closing Date through and until
the date of this Fifth Amendment WBG has remained inactive and (c) the
representations and warranties contained in the Credit Agreement were true and
correct in all material respects when made and, after giving effect to this
Fifth Amendment, shall remain true and correct in all material respects as of
the date hereof and thereof, except to the extent that a particular
representation or warranty by its terms expressly applies only to an earlier
date, or is the subject of an updated disclosure schedule attached hereto. The
Credit Agreement and the other Loan Documents, as modified and amended by this
Fifth Amendment, constitute legal, valid and binding obligations of each Credit
Party that is a party thereto, enforceable against such Credit Party in
accordance with their respective terms.
4. RATIFICATION. Except as specifically modified by this Fifth
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Amendment, the parties acknowledge that the Credit Agreement shall remain
binding upon Credit Parties and Lender and all provisions of the Credit
Agreement shall remain in full force and effect. Credit Parties expressly ratify
and affirm their respective obligations to Lender under the Credit Agreement and
the other Loan Documents.
5. MISCELLANEOUS .
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5.1 Entire Agreement; Amendment. This Fifth Amendment, together with the
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Credit Agreement and the other Loan Documents, is the entire agreement between
the parties hereto with respect to the subject matter hereof. This Fifth
Amendment supersedes all prior and contemporaneous oral and written agreements
and discussions with respect to the subject matter hereof or thereof. No
amendment, modification, or waiver of any of the provisions of this Fifth
Amendment shall be valid or enforceable unless set forth in a writing signed by
Credit Parties and Lender.
5.2 Recitals. The recitals set forth at the beginning of this Fifth
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Amendment are true and correct, and such recitals are incorporated into and are
a part of this Fifth Amendment.
5.3 Headings. Section headings used herein are for convenience of reference
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only, are not part of this Fifth Amendment, and are not to be taken into
consideration in interpreting this Fifth Amendment.
5.4 Counterparts. This Fifth Amendment may be executed in identical
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counterpart copies, each of which shall be an original, but all of which shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Fifth Amendment by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this Fifth
Amendment. Any party delivering this Fifth Amendment by facsimile shall send
the original manually executed counterpart of this Fifth Amendment to the other
party promptly after such facsimile transmission.
5.5 GOVERNING LAW. THIS FIFTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
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AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE
TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
THEREOF REGARDING CONFLICT OF LAWS.
5.6 No Waiver. Except as specifically set forth in this Fifth Amendment,
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the execution, delivery and effectiveness of this Fifth Amendment shall not (a)
limit, impair, constitute a waiver of or otherwise affect any right, power or
remedy by Lender under the Credit Agreement or any other Loan Document, (b)
constitute a waiver of any provision in the Credit Agreement or any other Loan
Document, or (c) alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect.
5.7 Conflict of Terms. In the event of any inconsistency between the
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provisions of this Fifth Amendment and any provision of the Credit Agreement,
the terms and provisions of this Fifth Amendment shall govern and control.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, this Fifth Amendment to Credit Agreement has been duly
executed as of the date first written above.
"CREDIT PARTIES"
PEET'S COFFEE & TEA, INC.
By: /s/ Mark N. Rudolph
Name: Mark N. Rudolph
Title: CFO
PEET'S OPERATING COMPANY, INC.
By: /s/ Mark N. Rudolph
Name: Mark N. Rudolph
Title: CFO
PEET'S TRADEMARK COMPANY
By: /s/ Mark N. Rudolph
Name: Mark N. Rudolph
Title: CFO
"LENDER"
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Todd Gronski
Name: Todd Gronski
Duly Authorized Signatory
Exhibit A
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EXHIBIT 6.2(D) TO THE CREDIT AGREEMENT
Peet's Coffee & Tea, Inc.
Investment Guidelines
I. STATEMENT OF PURPOSE
The purpose of this policy is to institute proper guidelines for the ongoing
management of the Company's short-term investments.
II. INVESTMENT OBJECTIVES
The assets represent the liquid and working funds for the present and future
operations of the Company. These assets are to be invested in a manner that
preserves capital, provides liquidity, maintains appropriate diversification and
generates returns relative to these guidelines and prevailing market conditions.
III. RESPONSIBILITIES
A. It is the responsibility of the Investment Committee/Board of Directors
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of the Company to adopt the Investment Policy.
B. It is the responsibility of the President or the Chief Financial Officer
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to implement the Investment Policy of the Company including the direction of
purchases and sales of securities.
C. The approval of either the President or the Chief Financial Officer shall
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be required to transfer Company funds to Company banks or investment accounts.
All other transfers will require the approval of both the President and the
Chief Financial Officer.
D. The President and Chief Financial Officer may employ the services of a
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Registered Investment Advisor to direct a portion or all of the investment
activities of the Company consistent with the guidelines set forth in the
Investment Policy.
E. The Chief Financial Officer will monitor ongoing investment activities to
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insure that proper liquidity is being maintained and that the investment
strategy is consistent with Company objectives.
F. The Chief Financial Officer will report to the Board of Directors
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quarterly concerning the investment performance during the most recent quarter.
G. The assigned Investment Manager will communicate with the President or
Chief Financial Officer before investing the portfolio within the guidelines of
this Corporate Investment Policy.
Investment Guidelines
A. Appropriate Investments and Concentration Limits
MAXIMUM MAXIMUM % SINGLE ISSUER
TYPE MATURITY OF PORTFOLIO % OF PORTFOLIO
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U.S. Treasury Securities 5 year 100% N/A
U.S. Federal Agency Securities 3 year 75% N/A
U.S. Government only Money Market
Funds N/A 25% 100%
Guaranteed Student Loan Obligations,
Fully Collateralized to Principal and
Interest 1 year 35% 10%
B. Maturity Limits and Benchmarks
The Chief Financial Officer will establish, from time to time, the maximum
allowable maturity and the average maturity of the portfolio. The initial
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maximum allowable maturity for any investment is five (5) years. The weighted
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average maturity of the portfolio should not exceed two (2) year, or such
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shorter period, as determined by the Chief Financial Officer based on current
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business environment and expected future cash flows.
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Appropriate benchmarks will be established for the respective portfolio classes.
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C. Credit Quality
In all categories described above, the emphasis will be on securities of high
credit quality.
All short-term investments (or applicable underlying collateral) shall bear,
from at least two of the following securities, a rating of at least: A-1 from
Standard & Poor's, P-1 from Moody's, and/or F-1 from Fitch.
Long-term investments shall bear from at least two of the following services, a
rating of at least: A from Standard & Poor's, A2 from Moody's, and/or A from
Fitch.
Municipal Obligations - Investments shall bear from at least one of the
following services a rating of: short term SP-1/MIG1, A-1/VMIG1, A-1/P-1, long
term AA/AA2 or better, Money Market Mutual funds - AAA
D. Marketability
Investments should be of sufficient size (minimum $1 million block preferred)
and be held in issues that are traded actively to facilitate transactions at a
minimum cost and accurate market valuation.
E. Classification of Portfolio
Investments will generally be made with the intention of holding to maturity/
keeping them available for sale. Investments may be sold prior to maturity in
the event of unanticipated cash needs, deterioration of the financial situation
of the issuer, or for other general portfolio considerations (i.e. decision to
shorten or lengthen average portfolio maturity, etc.)
V. COMMUNICATION
The Fund Managers will contact the CFO immediately upon the occurrence of any of
the following:
1. Any significant adverse unfavorable event or shifts in the market place.
2. An issuer is placed on negative credit watch whereby any action taken
would result in the investment's credit rating being below the minimum
acceptable credit rating stated in this policy.
3. A decline in the issuer's credit rating below the minimum credit quality
standards stated in this Investment policy.
Exhibit B
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DISCLOSURE SCHEDULE (3.19) TO THE CREDIT AGREEMENT