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EXHIBIT 10.32
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (hereinafter, this
"AGREEMENT") is made this 26th day of September, 2000 by and among:
FLEET NATIONAL BANK, FORMERLY KNOWN AS BANKBOSTON, N.A.
(hereinafter, the "LENDER"), a bank organized under the laws of the
United States of America; and
DIEDRICH COFFEE, INC, (hereinafter, "Diedrich", a Delaware
corporation (the "Parent"), and its Subsidiaries, COFFEE PEOPLE
WORLDWIDE, INC., (hereinafter, "CPW"), a Delaware corporation, COFFEE
PEOPLE, INC., (hereinafter, "CPW"), an Oregon corporation, GLORIA
JEAN'S, INC. (hereinafter, "GJI"), a Delaware corporation, EDGLO
ENTERPRISES, INC. (hereinafter, "EDGLO"), an Illinois corporation,
GLORIA JEAN'S GOURMET COFFEES CORP. (hereinafter, "GJGC"), an Illinois
corporation, AND GLORIA JEAN'S GOURMET COFFEES FRANCHISING CORP.
(hereinafter, "GJGCF"), an Illinois corporation.
Hereinafter, CPW, CPI, GJI, EDGLO, GJGC, and GJGCF shall be referred to
collectively, jointly, and severally, as the "BORROWERS".
BACKGROUND
Reference is hereby made to a certain loan arrangement (hereinafter,
the "LOAN ARRANGEMENT") entered into by and between the Lender and the
Borrowers, evidenced by, among other things, the following documents,
instruments, and agreements (hereinafter, together with this Agreement and all
documents, instruments, and agreements executed incidental hereto, and
contemplated hereby, collectively the "LOAN DOCUMENTS") (Reference to the
"Lender" in Paragraphs 1-7 below refers to BankBoston, N.A.):
1. Revolving Note (hereinafter, the "REVOLVING NOTE") dated
July 7, 1999 in the maximum principal amount of $3,000,000.00 made by
the Borrowers payable to the Lender;
2. Term Note (hereinafter, the "TERM NOTE") dated July 7, 1999
in the original principal amount of $12,000,000.00 made by the
Borrowers payable to the Lender;
3. Credit Agreement (hereinafter, the "CREDIT AGREEMENT")
dated July 7, 1999, entered into by and between the Lender and the
Borrowers;
4. Security Agreement (hereinafter, the "SECURITY AGREEMENT")
dated July 7, 1999 pursuant to which each of the Borrowers granted the
Lender a security interest in the Collateral (as defined in the
Security Agreement);
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5. Trademark Security Agreement (hereinafter, the "TRADEMARK
SECURITY AGREEMENT") dated July 7, 1999 pursuant to which each of the
Borrowers granted the Lender a security interest in the Collateral (as
defined in the Trademark Security Agreement);
6. Securities Pledge Agreement (hereinafter, the "PLEDGE
AGREEMENT") dated July 7, 1999 pursuant to which each of the Borrowers
granted the Lender a security interest in the Ownership Interests (as
defined in the Pledge Agreement); and
7. Letter Agreements dated June 27, 2000 and August 17,
2000(hereinafter, the "LETTER AGREEMENTS") pursuant to which certain
provisions of the Credit Agreement were amended and the Lender agreed
to forbear from exercising its rights and remedies.
Capitalized terms used herein and not otherwise defined shall have the
meanings as set forth in the Credit Agreement.
The Borrowers acknowledge and agree that, as of the date hereof the
Borrowers are not in compliance with certain financial covenants contained in
Section 5.1, 5.2, and 5.3 of the Credit Agreement and have requested that the
Lender waive certain Events of Default arising on account of such non-compliance
as of June 30, 2000 and modify certain terms and conditions of the Loan
Documents hereinafter, the "FINANCIAL COVENANT DEFAULTS"). The Lender has agreed
to do so, BUT ONLY upon the terms and conditions set forth herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed by and among
the Lender and the Borrowers, as follows:
ACKNOWLEDGMENT OF INDEBTEDNESS
1. The Borrowers each hereby acknowledge and agree that, in accordance with the
terms and conditions of (i) the Loan Documents, (ii) this Agreement, and (iii)
all documents, instruments, and agreements executed incidental to, and
contemplated by, this Agreement, the Borrowers are jointly and severally liable
to the Lender as of September 25, 2000, as follows:
(a) Revolving Note:
(i) Principal: $0.00
(ii) Interest: $0.00
(b) Legal Fees & Expenses
(Pursuant to Paragraph 11 hereof): $12,747.07
(c) Costs & Expenses (The Recovery Group)
(Pursuant to Paragraph 11 hereof): $88,857.35
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(d) LC Exposure Amount: $293,000.00
(e) Term Note:
(i) Principal: $10,000,000.00
(ii) Interest: $238,557.21
GRAND TOTAL $10,633,161.63
(f) All interest accruing from and after September 25, 2000 under the
Revolving Note, and the Term Note, respectively, and all late fees,
reasonable costs, expenses, and costs of collection (including
reasonable attorneys' fees and the allocated costs of the Lender's
in-house counsel) incurred by the Lender from and after September 25,
2000 in connection the Loan Documents, including, without limitation,
all reasonable attorney's fees and expenses incurred in connection with
the negotiation and preparation of this Agreement and all documents,
instruments, and agreements incidental hereto.
(g) Hereinafter all amounts due as set forth in this Paragraph 1, and
elsewhere payable under this Agreement, shall be referred to
collectively as the "OBLIGATIONS".
WAIVER OF CLAIMS
2. The Borrowers each hereby acknowledge and agree that they have no offsets,
defenses, claims, or counterclaims against the Lender or the Lender's officers,
directors, employees, attorneys, representatives, predecessors, successors, and
assigns with respect to the Obligations, or otherwise, and that if any of the
Borrowers now have, or ever did have, any offsets, defenses, claims, or
counterclaims against the Lender or the Lender's officers, directors, employees,
attorneys, representatives, predecessors, successors, and assigns, whether known
or unknown, at law or in equity, from the beginning of the world through this
date and through the time of execution of this Agreement, all of them are hereby
expressly WAIVED, and the Borrowers each hereby RELEASE the Lender and the
Lender's officers, directors, employees, attorneys, representatives,
predecessors, successors, and assigns from any liability therefor.
RATIFICATION OF LOAN DOCUMENTS; FURTHER ASSURANCES
3. The Borrowers:
(a) Hereby ratify, confirm, and reaffirm all and singular the terms and
conditions of the Loan Documents. The Borrowers further acknowledge and
agree that except as specifically modified in this Agreement, all terms
and conditions of those documents, instruments, and agreements shall
remain in full force and effect; and
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(b) Shall, from and after the execution of this Agreement, execute and
deliver to the Lender whatever additional documents, instruments, and
agreements that the Lender reasonably may require in order to vest or
perfect the Loan Documents and the collateral granted therein more
securely in the Lender and to otherwise give effect to the terms and
conditions of this Agreement.
WAIVER OF DEFAULTS
4. In consideration for the Borrowers promise to perform each and every term and
condition of this Agreement, the Lender hereby waives the Financial Covenant
Defaults. The Borrowers acknowledge and agree that this waiver of the
Financial Covenant Defaults is a one-time waiver and shall apply only to the
defaults specified herein which have occurred under the Loan Documents prior
to the execution of this Agreement, and shall not constitute a waiver of any
default or Event of Default occurring or continuing after the execution of
this Agreement.
SUBORDINATION OF CERTAIN LIENS
5. The Borrowers shall use their best, good faith efforts to obtain, within
sixty (60) days from the date of this Agreement, an executed UCC-1 Amendment
which subordinates that certain UCC-1 Financing Statement naming "Diedrich
Coffee, a Delaware corporation" as Debtor and "Shops at Park Place LLC" as
Secured Party, which was filed with the office of the California Secretary of
State on February 27, 1998 as document number 9806160519, to any and all
UCC-1 Financing Statements filed in favor of the Lender which name any of the
Borrowers as "Debtor". The subordination contemplated hereby shall be on such
terms and conditions as are satisfactory to the Lender in its sole and
exclusive discretion.
LOAN ADVANCES
6. The Borrowers acknowledge and agree that, except as expressly set forth
herein, the Lender has no obligation to make any further Credit Extensions under
the Credit Agreement, and that if, in response to a request from the Borrowers,
the Lender does make any Credit Extension (as determined in its sole and
absolute discretion), the Lender shall not be obligated thereafter to make any
further Credit Extension(s) under the Credit Agreement.
AMENDMENTS TO CREDIT AGREEMENT/REPAYMENT OF THE OBLIGATIONS
7. From and after the execution of this Agreement, the Credit Agreement shall be
amended, and the Borrowers shall repay the principal balance of the
Obligations, as follows:
(a) Section 2.1(a) of the Credit Agreement is hereby amended by deleting
same in its entirety and substituting the following therefor:
(a) REVOLVING LOANS. THE LENDER AGREES, SUBJECT TO THE TERMS OF THIS
AGREEMENT, TO MAKE REVOLVING CREDIT LOANS (THE "REVOLVING LOANS") TO
THE BORROWER FROM TIME TO TIME AND AFTER THE DATE HEREOF UNTIL THE
EXPIRATION DATE IN AN AGGREGATE PRINCIPAL AMOUNT AT ANY TIME
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OUTSTANDING UP TO, BUT NOT EXCEEDING, $1,293,000, MINUS THE LC EXPOSURE
AMOUNT AT SUCH TIME (THE "REVOLVER COMMITMENT"). THE PROCEEDS OF ALL
REVOLVING LOANS SHALL BE USED SOLELY TO SATISFY ANY LC DRAW OBLIGATIONS
IN ACCORDANCE WITH SECTION 2.8(D) OF THIS AGREEMENT. SUBJECT TO THE
TERMS OF THIS AGREEMENT, FROM TIME TO TIME, AND AFTER THE DATE HEREOF
UNTIL THE EXPIRATION DATE, THE BORROWERS MAY BORROW, REPAY AND REBORROW
REVOLVING LOANS. THE REVOLVING LOANS SHALL BE EVIDENCED BY A PROMISSORY
NOTE IN THE FORM OF EXHIBIT 2.1(A) HERETO DELIVERED TO THE LENDER ON
THE DATE HEREOF (AS MAY BE AMENDED, RENEWED, SUBSTITUTED OR REPLACED
FROM TIME TO TIME, THE "REVOLVING NOTE").
(b) The Borrowers shall make scheduled payments in reduction of the
principal balance of the Term Note, in the following amounts during the
corresponding time periods:
TIME PERIOD AMOUNT OF PRINCIPAL PAYMENT
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Commencing February 1, 2001 and continuing
on the like day of each calendar month $ 25,000.00
through and including June 1, 2001:
Commencing July 1, 2001 and continuing on
the like day of each calendar month through $100,000.00
and including August 1, 2002:
(c) In all events, the Borrowers shall make such additional payments in
reduction of the outstanding Obligations in amounts sufficient to
ensure that the outstanding principal balance of the Term Note shall be
no more than the following amounts, by the specified dates:(1)
(b)
AMOUNT OF PRINCIPAL BALANCE
SPECIFIED DATE (TERM NOTE)
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As at March 31, 2001: $9,667,000.00
As at June 30, 2001: $9,167,000.00
As at September 30, 2001: $7,955,100.00
(d) In all events, the entire outstanding balance of the Obligations,
including all principal and interest (accrued and hereafter accruing)
on the Term Note and the Revolving Note, and all costs, expenses, and
costs of collection (including attorneys' fees) shall be due and
payable in full on or before 5:00 P.M. on September 1, 2002, unless
sooner due in accordance with the terms of the Loan Documents.
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(1) Nothing contained herein shall limit the payments required to be made by the
Borrowers under the Credit Agreement or this Agreement.
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(e) Section 2.7(b) of the Credit Agreement is hereby amended by deleting
same in its entirety and substituting the following therefor:
(b) MANDATORY PAYMENTS IN CONNECTION WITH PREPAYMENT EVENTS. IF AT ANY
TIME ANY PORTION OF THE TERM LOAN IS OUTSTANDING, THE BORROWERS
SHALL, NOT LATER THAN 10 DAYS FOLLOWING EACH DAY ANY NET SALE
PROCEEDS ARE RECEIVED BY ANY BORROWER OR ANY OF ITS SUBSIDIARIES
FROM ANY ASSET SALES, PAY TO THE LENDER 50% OF THE AMOUNT OF SUCH
NET SALE PROCEEDS (EACH SUCH PAYMENT TO THE LENDER BEING REFERRED
TO HEREIN AS A "SALE PROCEEDS PAYMENT"), PROVIDED, HOWEVER, THAT
(I) THE NET SALE PROCEEDS NOT PAID TO THE LENDER SHALL BE
REINVESTED IN THE BUSINESS OF THE BORROWERS, AND (II) ASSET SALES
SHALL BE PERMITTED ONLY IF: (X) NO DEFAULT EXISTS AT THE TIME OF
SUCH ASSET SALE, AND (Y) SUCH ASSET SALES ARE MADE IN COMPLIANCE
WITH THE TERMS OF THIS CREDIT AGREEMENT, INCLUDING, WITHOUT
LIMITATION, SECTION 7.4.
(f) Section 2.7(c) of the Credit Agreement is hereby amended by deleting
same in its entirety and substituting the following therefor:
(c) MANDATORY PAYMENTS IN CONNECTION WITH DEBT OR EQUITY ISSUANCES. IF
AT ANY TIME ANY PORTION OF THE TERM LOAN IS OUTSTANDING, THE
BORROWERS SHALL, NOT LATER THAN 30 DAYS FOLLOWING SUCH TIME AS WHEN
ANY NET DEBT/EQUITY PROCEEDS ARE RECEIVED BY ANY BORROWER OR ANY OF
ITS SUBSIDIARIES IN EXCESS OF $1,000,000 IN THE AGGREGATE AS TO ALL
DEBT ISSUANCES AND EQUITY ISSUANCES OF ALL COMPANIES IN ANY FISCAL
YEAR, PAY TO THE LENDER THE AMOUNT OF SUCH NET DEBT/EQUITY PROCEEDS
(EACH SUCH PAYMENT TO THE LENDER BEING REFERRED TO HEREIN AS A
"DEBT/EQUITY PROCEEDS PAYMENT").
(g) Section 2.8(b)(i)(B) of the Credit Agreement is hereby amended by
deleting same in its entirety and substituting the following therefor:
(b) AFTER GIVING EFFECT TO SUCH ISSUANCE, EXTENSION OR RENEWAL, (1) THE
AGGREGATE OUTSTANDING PRINCIPAL AMOUNT OF THE REVOLVING LOANS SHALL
NOT EXCEED THE AVAILABLE REVOLVER COMMITMENT AND (2) THE SUMS OF
THE AGGREGATE LC EXPOSURE AMOUNT SHALL NOT EXCEED $1,293,000.
(h) The Borrowers have advised the Lender that they intend to enter into a
Sale Leaseback transaction with respect to two (2) Motor Moka
facilities located in Portland, Oregon, being Unit Nos. 22029 and
22031, respectively, and have requested that the Lender amend the
Credit Agreement to provide for such transactions. Accordingly, the
following text shall be added to the last sentence of Section 7.2 of
the Credit Agreement: "PROVIDED, HOWEVER, THAT COFFEE PEOPLE MAY
CONDUCT A SALE LEASEBACK WITH RESPECT TO TWO (2) CERTAIN "MOTOR MOKA"
FACILITIES LOCATED IN PORTLAND, OREGON, BEING UNIT NOS. 22029 AND
22031, PROVIDED THAT SUCH SALE LEASEBACK SHALL BE IN ACCORDANCE WITH
THE TERMS HEREOF."
(i) The amount "$1,000,000" as it appears in Section 7.3(f) of the Credit
Agreement is deleted and the amount "$2,000,000" shall be inserted in
its stead.
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(j) Section 7.4(b)(ii) of the Credit Agreement is hereby amended by
deleting same in its entirety and substituting the following therefor:
(ii) ANY OTHER SALE OF TANGIBLE ASSETS (OTHER THAN THE SALE OF ALL OR
SUBSTANTIALLY ALL OF THE ASSETS OF ANY COMPANY AND OTHER THAN, IN
ANY FOUR-QUARTER PERIOD, THE SALE OF GREATER THAN 14% OF THE VALUE
OF CONSOLIDATED NET ASSETS AS OF ANY DATE THEREIN) FOR NOT LESS
THAN THE FAIR MARKET VALUE THEREOF (EACH SUCH PERMITTED SALE BEING
REFERRED TO AS A "PERMITTED SALE"), PROVIDED THAT PRIOR NOTICE
THEREOF IS GIVEN TO THE LENDER, IF REQUIRED, PURSUANT TO SECTION
6.1(L) AND THE SALE PROCEEDS PAYMENT WITH RESPECT THERETO IS MADE,
IF AND TO THE EXTENT REQUIRED, PURSUANT TO SECTION 2.7 OF THIS
AGREEMENT.
(k) Section 8.1 of the Credit Agreement is hereby amended by adding the
following text as an additional Event of Default:
(l) A MATERIALLY ADVERSE CHANGE IN THE FINANCIAL CONDITION OF ANY OF
THE BORROWERS, AS DETERMINED BY THE LENDER IN ITS SOLE AND
EXCLUSIVE DISCRETION.
(l) The definition of "DEBT ISSUANCE" contained in Section 1 of the Credit
Agreement is hereby amended by deleting same in its entirety and
substituting the following therefor:
DEBT ISSUANCE: THE ISSUANCE OF CONSOLIDATED FUNDED INDEBTEDNESS
SUBORDINATED TO THE OBLIGATIONS OF THE BORROWERS WITH RESPECT TO THE
LOANS, THE NOTES AND OTHER OBLIGATIONS, ON SUCH TERMS OF SUBORDINATION
AS ARE SATISFACTORY TO THE LENDER IN ITS SOLE AND EXCLUSIVE DISCRETION,
AND PURSUANT TO DOCUMENTATION CONTAINING TERMS OF SUBORDINATION WITH
RESPECT TO THE RIGHT OF PAYMENT, ACCRUAL AND REPAYMENT OF INTEREST, AND
EXERCISE OF REMEDIES, IN FORM AND SUBSTANCE SATISFACTORY TO THE LENDER
IN ITS SOLE AND EXCLUSIVE DISCRETION.
(m) The definition of "EXPIRATION DATE" contained in Section 1 of the
Credit Agreement is hereby amended by deleting same in its entirety and
substituting the following therefor:
EXPIRATION DATE: SEPTEMBER 1, 2002, OR SUCH EARLIER DATE ON WHICH THE
REVOLVER COMMITMENT OF THE LENDER SHALL TERMINATE IN ACCORDANCE WITH
THE TERMS HEREOF.
(n) The definition of "REFERENCE PERIOD" contained in Section 1 of the
Credit Agreement is hereby amended by deleting same in its entirety and
substituting the following therefor:
REFERENCE PERIOD: EACH PERIOD OF FOUR CONSECUTIVE FISCAL QUARTERS OF
THE BORROWERS ENDING ON OR AFTER THE QUARTERLY DATE FOR THE SECOND
FISCAL QUARTER OF FISCAL YEAR 1999; PROVIDED, HOWEVER, SOLELY WITH
RESPECT TO THE FINANCIAL COVENANTS CONTAINED IN SECTION 5.1, 5.2, AND
5.3, THAT: (i) FOR THE FIRST FISCAL QUARTER OF FISCAL YEAR 2001,
REFERENCE PERIOD SHALL MEAN AND REFER TO THE FIRST FISCAL QUARTER OF
FISCAL YEAR 2001, (ii) FOR THE SECOND QUARTER OF FISCAL YEAR 2001,
REFERENCE PERIOD SHALL REFER TO THE PRIOR TWO FISCAL QUARTERS, (iii)
FOR THE THIRD QUARTER OF FISCAL YEAR 2001, REFERENCE PERIOD SHALL REFER
TO THE PRIOR THREE FISCAL QUARTERS, AND (iv) FOR THE FOURTH QUARTER OF
THE FISCAL YEAR 2001, AND FOR EACH FISCAL QUARTER THEREAFTER, ON A
ROLLING BASIS, REFERENCE PERIOD SHALL REFER TO THE PRIOR FOUR
CONSECUTIVE FISCAL QUARTERS OF THE BORROWERS.
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(o) The definition of "TERM LOAN MATURITY DATE" contained in Section 1 of
the Credit Agreement is hereby amended by deleting same in its entirety
and substituting the following therefor:
TERM LOAN MATURITY DATE: SEPTEMBER 1, 2002, OR SUCH EARLIER DATE ON
WHICH THE REVOLVER COMMITMENT OF THE LENDER SHALL TERMINATE IN
ACCORDANCE WITH THE TERMS HEREOF.
AMENDMENT OF FINANCIAL COVENANTS
8. Section 5.1 of the Credit Agreement is hereby amended by deleting same in its
entirety and substituting the following therefor:
5.1 MAXIMUM LEVERAGE RATIO. THE RATIO OF CONSOLIDATED FUNDED
INDEBTEDNESS AT ANY DATE TO CONSOLIDATED EBITDA FOR THE MOST RECENTLY
ENDED REFERENCE PERIOD ENDING ON THE QUARTERLY DATE FALLING NEAREST TO
THE DATES IDENTIFIED IN THE TABLE BELOW TO BE GREATER THAN THE RATIO
SPECIFIED BELOW OPPOSITE SUCH DATE.
DATE MAXIMUM LEVERAGE RATIO
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9/30/00 (153.0):1.0
12/31/00 15.0:1.0
3/31/01 7.0:1.0
6/30/01 4.8:1.0
9/30/01 4.6:1.0
12/31/01 4.8:1.0
3/31/02 4.6:1.0
6/30/02 AND 4.2:1.0
FOR EACH REFERENCE
PERIOD THEREAFTER
9. Section 5.2 of the Credit Agreement is hereby amended by deleting same in its
entirety and substituting the following therefor:
5.2 MINIMUM FIXED CHARGES COVERAGE RATIO. THE RATIO OF CONSOLIDATED
CASH FLOW FOR ANY REFERENCE PERIOD ENDING ON ANY QUARTERLY DATE FALLING
NEAREST TO THE DATES IDENTIFIED IN THE TABLE BELOW TO CONSOLIDATED
FINANCIAL OBLIGATIONS FOR SUCH REFERENCE PERIOD TO BE LESS THAN THE
RATIO SPECIFIED BELOW OPPOSITE SUCH DATE.
MINIMUM FIXED
DATE CHARGES COVERAGE RATIO
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9/30/00 (0.1):1.0
12/31/00 0.5:1.0
3/31/01 0.8:1.0
6/30/01 0.8:1.0
9/30/01 0.9:1.0
12/31/01 0.7:1.0
3/31/02 0.7:1.0
6/30/02 AND 0.8:1.0
FOR EACH REFERENCE
PERIOD THEREAFTER
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10. Section 5.3 of the Credit Agreement is hereby amended by deleting same in
its entirety and substituting the following therefor:
5.3 MINIMUM INTEREST COVERAGE RATIO. THE RATIO OF CONSOLIDATED EBITDAR
FOR ANY REFERENCE PERIOD ENDING ON ANY QUARTERLY DATE FALLING NEAREST
TO THE DATES IDENTIFIED IN THE TABLE BELOW TO CONSOLIDATED INTEREST
EXPENSE FOR SUCH REFERENCE PERIOD TO BE LESS THAN THE RATIO SPECIFIED
BELOW OPPOSITE SUCH DATE.
DATE MINIMUM INTEREST COVERAGE RATIO
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9/30/00 0.8:1.0
12/31/00 1.0:1.0
3/31/01 1.2:1.0
6/30/01 1.2:1.0
9/30/01 1.2:1.0
12/31/01 1.2:1.0
3/31/02 1.2:1.0
6/30/02 AND 1.2:1.0
FOR EACH REFERENCE
PERIOD THEREAFTER
FINANCIAL PROJECTIONS / REPORTING
11. The Borrowers have furnished the Lender with its cash flow projections for
the fiscal year ending 2001 (the "CASH FLOW PROJECTIONS"), a copy of which
projections are attached hereto as Exhibit "A". The Borrowers hereby certify to
the Lender that the Cash Flow Projections are based upon good faith estimates
and assumptions believed by management of the Borrowers to be reasonable at the
time made.
12. In addition to all other reporting requirements contained in the Loan
Documents, the Borrowers shall also submit to the Lender monthly financial
statements, on a consolidating basis, within thirty (30) days of the close of
each calendar month, a statement of income, cash flow, and balance sheet for the
immediately preceding month and year-to-date period. Simultaneously
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with the furnishing of such financial statements, the Borrowers shall submit to
the Lender (i) a detailed reconciliation analysis of the actual monthly and
year-to-date results compared to the projected results to be delivered to the
Lender, and as further amended to reflect any interest and/or fees that are
incurred as a result of this Agreement, and (ii) a detailed written explanation
of any and all material variances.
MODIFICATION FEE
13. In consideration of the Lender's agreement to enter into this Agreement, the
Borrowers shall be obligated to pay to the Lender the sum of $25,000.00 as a
modification fee (hereinafter, the "MODIFICATION FEE").
(a) The Modification Fee shall:
(i) Be fully earned by the Lender upon the execution of this
Agreement;
(ii) Constitute one of the Obligations; and
(iii) Be retained by the Lender under all circumstances and not
applied in reduction of any of the other Obligations.
(b) The Borrowers shall pay the Modification Fee at such time as the
Borrowers shall remit to the Lender the first Sale Proceeds Payment (in
accordance with Section 2.7(b) of the Credit Agreement, which payment
shall be in addition to the payment of the Sale Proceeds Payment) after
the date hereof; provided, however, that the Modification Fee shall be
paid to the Lender by no later than March 31, 2001.
COSTS / EXPENSES
14. The Borrowers shall pay to the Lender:
(a) On or before the execution of this Agreement the sum of $12,747.07 in
reimbursement for reasonable costs, expenses, and costs of collection
(including reasonable attorneys' fees and expenses) incurred by the
Lender to Riemer & Braunstein, LLP through September 22, 2000, in
connection with the protection, preservation, and enforcement by the
Lender of its rights and remedies under the Loan Documents, including,
without limitation, the negotiation and preparation of this Agreement;
(b) The sum of $88,857.35 (the "RECOVERY GROUP FEES") in reimbursement of
costs and expenses incurred by the Lender through September 15, 2000,
in connection with services rendered by The Recovery Group, Inc. The
Borrowers hereby expressly acknowledge and agree that the Recovery
Group Fees are absolutely due and owing to the Lender, and constitute
one of the Obligations under the Credit Agreement. The Recovery Group
Fees shall be paid to the Lender by the Borrowers in four equal
installments of $22,214.34 due on or before the last
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Business Day of October 2000, November 2000, December 2000, and January
2001, and the failure of the Borrowers to pay the Recovery Group Fees,
as and when due, shall constitute an Event of Default under the Credit
Agreement.
(c) On demand for any and all other reasonable costs, expenses, and costs
of collection (including reasonable attorneys' fees and expenses)
incurred by the Lender in connection with the protection, preservation,
and enforcement by the Lender of its rights and remedies under the Loan
Documents, including, without limitation, reimbursement of all costs
and expenses for: (i) services rendered by The Recovery Group, Inc.
from and after September 15, 2000, and (ii) all attorneys' fees and
expenses incurred by the Lender from and after September 22, 2000.
NOTICES
15. If to the Lender: Fleet National Bank
100 Federal Street
Providence, Rhode Island 02110
Attn.: Mr. Anthony D. Healey
Vice President
Telecopier No. (617) 434-1508
With a copy to: Steven T. Greene, Esquire
Riemer & Braunstein LLP
Three Center Plaza
Boston, Massachusetts 02108
Telecopier No. (617) 880-3456
If to the Borrowers: Diedrich Coffee, Inc.
2144 Michelson Drive
Irvine, California 92612
Attn: Matthew McGuinness
Telecopier No. (949) 756-1144
With a copy to: John M. Williams, Esquire
Gibson, Dunn & Crutcher, LLP
4 Park Plaza
Irvine, California 92614
Telecopier No. (949) 451-4220
WAIVERS
16. NON-INTERFERENCE. From and after the occurrence of any Event of Default, the
Borrowers agree not to interfere with the exercise by the Lender of any of its
rights and remedies. The Borrowers further agree that they shall not seek to
distrain or otherwise hinder,
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delay, or impair the Lender's efforts to realize upon any of the collateral
granted to the Lender under the Loan Documents, or otherwise to enforce the
Lender's rights and remedies pursuant to the Loan Documents. This provision
shall be specifically enforceable by the Lender. 2.
17. AUTOMATIC STAY. The Borrowers hereby expressly assent to any motion filed by
the Lender seeking relief from the automatic stay in connection with any
Petition for Relief filed by or against any one or more of the Borrowers under
the United States Bankruptcy Code.
18. JURY TRIAL. The Borrowers hereby make the following waiver knowingly,
voluntarily, and intentionally, and understand that the Lender, in entering into
this Agreement, is relying on such a waiver: THE BORROWERS EACH HEREBY
IRREVOCABLY WAIVE ANY PRESENT OR FUTURE RIGHT TO A JURY IN ANY TRIAL OF ANY CASE
OR CONTROVERSY IN WHICH ANY OF THE BORROWERS BECOME A PARTY (WHETHER SUCH CASE
OR CONTROVERSY IS INITIATED BY OR AGAINST THE BORROWERS OR IN WHICH THE
BORROWERS ARE JOINED AS A PARTY LITIGANT), WHICH CASE OR CONTROVERSY ARISES OUT
OF, OR IS IN RESPECT OF, ANY RELATIONSHIP BETWEEN THE BORROWERS, OR ANY OTHER
PERSON, AND THE LENDER.
ENTIRE AGREEMENT
19. This Agreement shall be binding upon the Borrowers and the Borrowers'
respective employees, representatives, successors, and assigns, and shall inure
to the benefit of the Lender and the Lender's successors and assigns. This
Agreement and all documents, instruments, and agreements executed in connection
herewith incorporate all of the discussions and negotiations between the
Borrowers and the Lender, either expressed or implied, concerning the matters
included herein and in such other documents, instruments and agreements, any
statute, custom, or usage to the contrary notwithstanding. No such discussions
or negotiations shall limit, modify, or otherwise affect the provisions hereof.
No modification, amendment, or waiver of any provision of this Agreement, or any
provision of any other document, instrument, or agreement between the Borrowers
and the Lender shall be effective unless executed in writing by the party to be
charged with such modification, amendment, or waiver, and if such party be the
Lender, then by a duly authorized officer thereof.
CONSTRUCTION OF AGREEMENT
20. In connection with the interpretation of this Agreement and all other
documents, instruments, and agreements incidental hereto:
(a) All rights and obligations hereunder and thereunder, including matters
of construction, validity, and performance, shall be governed by and
construed in accordance with the law of the Commonwealth of
Massachusetts and are intended to take effect as sealed instruments.
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(b) The captions of this Agreement are for convenience purposes only, and
shall not be used in construing the intent of the Lender and the
Borrowers under this Agreement.
(c) In the event of any inconsistency between the provisions of this
Agreement and any other document, instrument, or agreement entered into
by and between the Lender and the Borrowers, the provisions of this
Agreement shall govern and control.
(d) The Lender and the Borrowers have prepared this Agreement and all
documents, instruments, and agreements incidental hereto with the aid
and assistance of their respective counsel. Accordingly, all of them
shall be deemed to have been drafted by the Lender and the Borrowers
and shall not be construed against either the Lender or the Borrowers.
ILLEGALITY OR UNENFORCEABILITY
21. Any determination that any provision or application of this Agreement is
invalid, illegal, or unenforceable in any respect, or in any instance, shall not
affect the validity, legality, or enforceability of any such provision in any
other instance, or the validity, legality, or enforceability of any other
provision of this Agreement.
INFORMED EXECUTION
22. The Borrowers warrant and represent to the Lender that the Borrowers:
(a) Have read and understand all of the terms and conditions of this
Agreement;
(b) Intend to be bound by the terms and conditions of this Agreement;
(c) Are executing this Agreement freely and voluntarily, without duress,
after consultation with independent counsel of their own selection; and
(d) Acknowledge and agree that the modifications provided to the Borrowers
by the Lender pursuant to this Agreement constitute a fair and
reasonable time frame within which all Obligations are to be paid in
full.
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IN WITNESS WHEREOF, this First Amendment to Credit Agreement has been
executed this 26th day of September, 2000.
FLEET NATIONAL BANK DIEDRICH COFFEE, INC.
By: /s/ ANTHONY D. HEALEY By: /s/ MATHEW C. McGUINNESS
---------------------------------- -------------------------------
Title: Vice President Title: Sr. Vice President and
Chief Financial Officer
COFFEE PEOPLE WORLDWIDE, INC.
By: /s/ MATHEW C. McGUINNESS
-------------------------------
Title: Sr. Vice President and
Chief Financial Officer
COFFEE PEOPLE, INC.
By: /s/ MATHEW C. McGUINNESS
-------------------------------
Title: Sr. Vice President and
Chief Financial Officer
GLORIA JEAN'S, INC.
By: /s/ MATHEW C. McGUINNESS
-------------------------------
Title: Sr. Vice President and
Chief Financial Officer
EDGLO ENTERPRISES, INC.
By: /s/ MATHEW C. McGUINNESS
-------------------------------
Title: Sr. Vice President and
Chief Financial Officer
[CONTINUATION OF SIGNATURE PAGE]
GLORIA JEAN'S GOURMET COFFEES CORP.
By: /s/ MATHEW C. McGUINNESS
-------------------------------
Title: Sr. Vice President and
Chief Financial Officer
GLORIA JEAN'S GOURMET COFFEES
FRANCHISING CORP.
By: /s/ MATHEW C. McGUINNESS
-------------------------------
Title: Sr. Vice President and
Chief Financial Officer
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