Exhibit 10.22
SECOND AMENDMENT TO CREDIT AGREEMENT
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THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") is
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entered into by and between 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 New York corporation ("Lender"), as of
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June 29, 2001, with reference to the following facts:
RECITALS
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A. Pursuant to that certain Credit Agreement dated as of September 1, 2000,
as amended by that certain First Amendment dated as of January 19, 2001, 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
First Amendment, the "Credit Agreement"), Lender agreed to provide certain
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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 Second Amendment, (i) capitalized terms or matters of
construction defined or established in Annex A to the Credit Agreement shall be
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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 advised Lender that, in late Fiscal Year 2000,
Borrower discontinued certain aspects of its marketing strategy relating to
internet sales and may wish to adjust its timetable for retail store expansion.
Credit Parties have further advised Lender that these strategic adjustments may
affect Borrower's compliance with certain financial covenants set forth in the
Credit Agreement.
C. Credit Parties have requested the modification of such financial
covenants to accommodate Borrower's revised marketing strategy, and Lender has
agreed to such request on the terms and conditions set forth in this Second
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:
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AGREEMENT
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1. Amendments Effective As of the Date Hereof. Effective as of the date
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of this Second Amendment, the Credit Agreement is hereby amended as follows:
1.1 Section 6.19(b)(ii) is hereby deleted in its entirety and the
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following 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 five (5) new retail locations during any Fiscal Year;
provided, that Credit Parties shall not make any Capital Expenditures in
connection with such new locations exceeding, in the aggregate, $3,000,000
during any such Fiscal Year;
1.2 Article 6 of the Credit Agreement is hereby further amended by
adding after Section 6.20 the following as a new Section 6.21:
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6.21 Commercial Tort Claims. Each Credit Party shall notify Lender
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in writing of any Commercial Tort Claim with respect to which (i) such
Credit Party is the claimant, and (ii) such Credit Party has incurred or
expects to incur damages in excess of $100,000 individually or, together
with all other such claims, $250,000, within thirty (30) days of such
Credit Party's knowledge of the existence of such claim.
1.3 Annex A is hereby amended by deleting the definition of "General
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Intangibles" in its entirety and substituting the following therefor:
"General Intangibles" shall mean, with respect to any Person, all of such
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Person's now owned or hereafter acquired general intangibles, choses in
action and causes of action and all other intangible personal property of
such Person of every kind and nature (other than Accounts), including,
without limitation, all contract rights, Supporting Obligations, Letter of
Credit Rights, Intellectual Property, corporate or other business records,
inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets,
goodwill, copyrights, computer software, customer lists, registrations,
licenses, franchises, tax refund claims, any funds which may become due to
such Person in connection with the termination of any Plan or other
employee benefit plan or any rights thereto and any other amounts payable
to such Person from any Plan or other employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any
similar type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which such Person is beneficiary,
and any letter of credit, guarantee, claim, security interest or other
security held by or granted to such Person.
1.4 Annex A is hereby further amended by inserting the following
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definitions in appropriate alphabetical sequence:
"Commercial Tort Claim" shall mean a claim arising in tort with
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respect to which
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(a) the claimant is an organization; or (b) the claimant is an individual
and the claim (i) arose in the course of the claimant's business or
profession, and (ii) does not include damages arising out of personal
injury to or the death of an individual.
"Letter of Credit Rights" shall mean, with respect to any Person, all
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of such Person's now owned or hereafter acquired "letter of credit rights,"
as such term is defined in the Code, including any right to payment or
performance under any letter of credit.
"Supporting Obligations" shall mean, with respect to any Person, all
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of such Person's now owned or hereafter acquired "supporting obligations,"
as such term is defined in the Code, including all of such Person's
interests in letter-of-credit rights or secondary obligations that support
the payment or performance of an Account, Chattel Paper, a document, a
General Intangible, an instrument, or Investment Property.
2. Amendments Effective as of April 30, 2001. Effective as of April 30,
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2001, the Credit Agreement is hereby further amended as follows:
2.1 Part (b) of Annex G is hereby deleted in its entirety and the
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following is substituted therefor:
(b) Minimum Fixed Charge Coverage Ratio. Credit Parties shall have, on a
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consolidated basis, at the end of each Fiscal Month set forth below, a Fixed
Charge Coverage Ratio, measured cumulatively as of the last day of each such
Fiscal Month for the immediately preceding twelve (12) Fiscal Months, or such
lesser number of Fiscal Months as shall have elapsed since August 1, 2000, of
not less than the following:
Fixed Charge
Fiscal Month Ending Coverage Ratio
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April 30, 2001 0.50
May 31, 2001 0.50
June 30, 2001 0.50
July 31, 2001 0.50
August 31, 2001 0.50
September 30, 2001 0.50
October 31, 2001 1.15
November 30, 2001 1.25
December 31, 2001 1.30
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March 31, 2002 1.30
June 30, 2002 1.30
September 30, 2002 1.30
December 31, 2002 1.30
March 31, 2003 1.30
June 30, 2003 1.30
September 30, 2003 1.30
December 31, 2003 1.30
March 31, 2004 1.30
June 30, 2004 1.30
September 30, 2004 1.30
December 31, 2004 1.30
March 31, 2005 1.30
June 30, 2005 1.30
2.2 Part (c) of Annex G is hereby deleted in its entirety and the following
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is a substituted therefor:
(c) Minimum EBITDA. Credit Parties shall have EBITDA on a consolidated
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basis at the end of each Fiscal Month set forth below, measured cumulatively for
the period of twelve (12) prior Fiscal Months through and including such Fiscal
Month, of not less than the following:
Fiscal Month Ending EBITDA
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April 30, 2001 $ 5,800,000
May 31, 2001 $ 5,800,000
June 30, 2001 $ 6,000,000
July 31, 2001 $ 6,000,000
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August 31, 2001 $ 6,000,000
September 30, 2001 $ 6,000,000
October 31, 2001 $ 6,000,000
November 30, 2001 $ 6,200,000
December 31, 2001 $ 6,100,000
January 31, 2002 $ 6,500,000
February 28, 2002 $ 6,700,000
March 31, 2002 $ 6,900,000
June 30, 2002 $ 7,300,000
September 30, 2002 $ 7,800,000
December 31, 2002 $ 8,300,000
March 31, 2003 $ 9,100,000
June 30, 2003 $ 9,800,000
September 30, 2003 $10,600,000
December 31, 2003 $11,500,000
March 31, 2004 $11,500,000
June 30, 2004 $11,500,000
September 30, 2004 $11,500,000
December 31, 2004 $11,500,000
March 31, 2005 $11,500,000
June 30, 2005 $11,500,000
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3. Certain Additional Documents. Within thirty days of the date of this
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Second Amendment, each Credit Party shall execute and deliver to Lender, in form
and substance satisfactory to Lender, an amendment to the Security Agreement,
amended or additional financing statements, and such other and further
documents, instruments and agreements as are necessary to maintain the
perfection of Lender's Liens in all Collateral under the Code consistent with
the amendments to Annex A set forth in this Second Amendment (collectively, the
"Security Amendments").
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4. Effectiveness. This Second Amendment shall become effective upon receipt
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by Lender of an original of this Second Amendment that bears the signatures of
Credit Parties and Lender.
5. Representations and Warranties. Each Credit Party hereby represents and
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warrants that (a) as of the date of this Second Amendment, it has no Commercial
Tort Claims, and (b) 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 Second Amendment and the Security Amendments, 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. The Credit Agreement and the other
Loan Documents, as modified and amended by this Second Amendment and the
Security Amendments, 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.
6. Ratification. Except as specifically modified by this Second Amendment,
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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.
7. Miscellaneous.
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7.1 Entire Agreement; Amendment. This Second 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 Second
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 Second
Amendment shall be valid or enforceable unless set forth in a writing signed by
Credit Parties and Lender.
7.2 Recitals. The recitals set forth at the beginning of this Second
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Amendment are true and correct, and such recitals are incorporated into and are
a part of this Second Amendment.
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7.3 Headings. Section headings used herein are for convenience of
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reference only, are not part of this Second Amendment, and are not to be taken
into consideration in interpreting this Second Amendment.
7.4 Counterparts. This Second 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 Second Amendment by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this Second
Amendment. Any party delivering this Second Amendment by facsimile shall send
the original manually executed counterpart of this Second Amendment to the other
party promptly after such facsimile transmission.
7.5 GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE GOVERNED BY, AND
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CONSTRUED 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.
7.6 No Waiver. Except as specifically set forth in this Second Amendment,
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the execution, delivery and effectiveness of this Second 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.
7.7 Conflict of Terms. In the event of any inconsistency between the
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provisions of this Second Amendment and any provision of the Credit Agreement,
the terms and provisions of this Second Amendment shall govern and control.
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IN WITNESS WHEREOF, this Second Amendment has been duly executed as of the
date first written above.
"Credit Parties"
PEET'S COFFEE & TEA, INC.
By: /s/ Mark N. Rudolph
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Name: Mark N. Rudolph
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Title: CFO
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PEET'S OPERATING COMPANY, INC.
By: /s/ Mark N. Rudolph
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Name: Mark N. Rudolph
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Title: CFO
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PEET'S TRADEMARK COMPANY
By: /s/ Mark N. Rudolph
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Name: Mark N. Rudolph
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Title: CFO
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"Lender"
GENERAL ELECTRIC CAPITAL
CORPORATION
By:/s/ Todd Gronski
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Name Todd Gronski
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Duly Authorized Signatory
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