Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - PEETS COFFEE & TEA INC | v164692_8-k.htm |
| EX-2.1 - AGREEMENT AND PLAN OF MERGER - PEETS COFFEE & TEA INC | v164692_ex2-1.htm |
| EX-2.3 - FORM OF STOCKHOLDER AGREEMENT - PEETS COFFEE & TEA INC | v164692_ex2-3.htm |
| EX-2.2 - STOCKHOLDER AGREEMENT - PEETS COFFEE & TEA INC | v164692_ex2-2.htm |
Exhibit
10.1
Wells
Fargo Bank, National Association
One
Kaiser Plaza, Suite 850
Oakland,
California 94162
Wells
Fargo Securities, LLC
600
California Street, 20th Floor
San
Francisco, CA 94108
CONFIDENTIAL
November
2, 2009
Peet’s
Coffee & Tea, Inc.
1400 Park
Avenue
Emeryville,
California 94608
Attention: Tom
Cawley, Chief Financial Officer
|
Re:
|
Commitment
Letter-Peet’s Coffee & Tea, Inc./Diedrich
Acquisition
|
$140,000,000
Senior Secured Credit Facilities
Ladies
and Gentlemen:
You have
advised Wells Fargo Bank, National Association (“Wells Fargo Bank”),
and Wells Fargo Securities, LLC (“Wells Fargo
Securities” and, together with Wells Fargo Bank, the “Wells Fargo Parties”
or “we” or
“us”) that
Peet’s Coffee & Tea, Inc. (the “Borrower” or “you”) seeks financing
for the proposed acquisition of all of the shares of common stock, $0.01 par
value per share (the “Shares”), of Diedrich
Coffee, Inc. (the “Acquired Company” or
“Diedrich”)
from the shareholders of Diedrich (collectively, the “Seller”) by means of
a tender offer for such Shares followed by a merger of a newly formed
acquisition entity (“Newco”) with and into
the Acquired Company pursuant to an agreement and plan of merger, dated as of
the date hereof, between you, Newco, and the Acquired Company (as amended,
supplemented or otherwise modified in accordance with paragraph (b) of the
Conditions Annex (as defined below), the “Acquisition
Agreement”), to refinance certain existing indebtedness (if any) of the
Borrower and its subsidiaries and the Acquired Company and its subsidiaries (the
“Refinancing”),
to pay fees, commissions and expenses incurred in connection with the
Transactions (as defined below)
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
1
and for
ongoing working capital requirements and other general corporate purposes, all
as more fully described in the Summary of Proposed Terms and Conditions attached
hereto as Annex
A (the “Term
Sheet”). This Commitment Letter (as defined below) describes
the general terms and conditions for senior secured credit facilities of up to
$140,000,000 to the
Borrower consisting
of (a) a term loan facility of up to $100,000,000 (the “Term Loan Facility”)
and (b) a revolving credit facility of up to $40,000,000 (the “Revolving Credit
Facility” and, collectively with the Term Loan Facility, the “Credit
Facilities”). Except as the context otherwise requires,
references to the “Borrower and its subsidiaries” shall not include the Acquired
Company and its subsidiaries prior to the consummation of the
Merger.
As used
herein, the terms “Offer” and “Merger” have the
meanings ascribed to such terms in the Acquisition Agreement, the term “Acquisition” means
the collective reference to the Offer (including any extensions and subsequent
offering periods and all purchases of shares pursuant thereto), the exercise, if
any, of the Top-Up Option (as defined in the Acquisition Agreement) and the
Merger, and the term “Transactions” means,
collectively, the Acquisition, the Refinancing, the borrowings under the Credit
Facilities and the payment of fees, commissions and expenses in connection with
the foregoing. This letter, including the Term Sheet and the
Conditions Annex attached hereto as Annex B (the “Conditions Annex”),
is referred to herein as the “Commitment
Letter”. The date on which the Credit Facilities are closed is
referred to as the “Closing
Date”.
1. Commitments.
(a) You
have requested that Wells Fargo Bank commit to provide the Credit
Facilities. Wells Fargo Bank is pleased to advise you of its
commitment to provide to the Borrower 100% of
the principal amount of the Credit Facilities (the “Commitments”), upon
the terms and subject to the conditions set forth in this Commitment
Letter.
(b) Wells
Fargo Securities reserves the right to secure commitments for the Credit
Facilities from a syndicate of banks, financial institutions and other entities
(such banks, financial institutions and other entities committing to the Credit
Facilities, including Wells Fargo Bank, the “Lenders”) upon the
terms and subject to the conditions set forth in this Commitment Letter. The Commitments of Wells
Fargo Bank hereunder shall be reduced on a dollar for dollar basis by the amount
of any corresponding commitments received through syndication from the other
Lenders; provided that any
commitments received on or prior to the Closing Date shall not relieve Wells
Fargo Bank of its obligations to fund 100% of the principal amount of the Credit
Facilities to be funded on the Closing Date upon the terms and subject to the
conditions set forth in this Commitment Letter. Wells Fargo
Securities, acting alone or through or with affiliates selected by it, will act
as the sole lead bookrunner and sole lead arranger (in such capacities, the
“Lead
Arranger”) in arranging and syndicating the Credit
Facilities. Wells Fargo Bank will act as the sole administrative
agent (in such capacity, the “Administrative
Agent”) for the Credit Facilities. No additional agents,
co-agents or arrangers will be appointed and no other titles will be awarded
without the prior written approval of the Lead Arranger. The Lead Arranger shall
have the right, in consultation with you, to award the titles to other co-agents
or arrangers who are Lenders that provide (or whose affiliates provide)
commitments in respect of the Credit Facilities; provided, that no
other agent, co-agent or arranger other than the Lead Arranger shall have rights
in respect of the management of the syndication of the Credit Facilities
(including, without limitation, in respect of “flex” rights under the Fee
Letter, over which the Lead Arranger shall have sole control).
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
2
(c) Effective
upon your agreement to and acceptance of this Commitment Letter and continuing
through the earlier of the completion of a Successful Syndication (as defined in
the Fee Letter) and June 1, 2010, except as expressly permitted by Section 4(b)
of the Fee Letter, you will not solicit, initiate, entertain or permit, or enter
into any discussions with any other bank, investment bank, financial
institution, person or entity in respect of any structuring, arranging,
underwriting, offering, placing, or syndicating of all or any portion of the
Credit Facilities or any other bank or other financing similar to, or as a
replacement of, all or any portion of the Credit Facilities.
2. Conditions to
Commitments. The Commitments of Wells Fargo Bank and the
undertakings of Wells Fargo Securities hereunder are subject to the satisfaction
of each of the following conditions precedent:
(a) your
written acceptance, and compliance with the terms and conditions, of (i) a
letter dated the date hereof from the Wells Fargo Parties to you (the “Fee Letter”) pursuant
to which you agree to pay, or cause to be paid, to the Wells Fargo Parties
certain fees and expenses and to fulfill certain other obligations in connection
with the Credit Facilities and (ii) in all material respects, this Commitment
Letter;
(b) after
the date hereof and until the earlier of the completion of a Successful
Syndication (as defined in the Fee Letter) and 180 days after the date the
Merger is consummated, none of the Borrower, the Acquired Company nor any of
its/their respective subsidiaries shall have announced, offered, arranged,
syndicated or issued any debt securities (including convertible securities) or
bank financing (other than the Credit Facilities) without our prior written
consent;
(c) from
and after the date hereof, there not having occurred a Company Material Adverse
Effect (as defined in the Acquisition Agreement); and
(d) the
satisfaction of all other conditions described herein, in the Term Sheet and in
the Conditions Annex.
3. Syndication.
(a) The
Lead Arranger intends and reserves the right to syndicate the Credit Facilities
and you acknowledge and agree that the Lead Arranger intends to commence
syndication efforts promptly following your acceptance of this Commitment Letter
and the Fee Letter. The Lead Arranger may, at its option, conduct or
conclude such syndication before or after the closing of the Credit
Facilities.
(b) You
agree to, and will use your commercially reasonable efforts to cause appropriate
members of management of the Acquired Company to, actively assist us in
achieving a syndication of the Credit Facilities that is satisfactory to us and
you. To assist us in our syndication efforts, you agree that you
will, and will cause your representatives and non-legal advisors to, and will
use your commercially reasonable efforts to cause appropriate members of
management of the Acquired Company to, (i) promptly provide the Wells Fargo
Parties and the other Lenders upon request with all information reasonably
deemed necessary by the Lead Arranger to assist the Lead Arranger and each
Lender in their evaluation of the Transactions and to complete the syndication,
(ii) make available to prospective Lenders senior management of the Borrower and
(to the extent reasonable and practical) appropriate members of management of
the Acquired Company on reasonable prior notice and at reasonable times and
places, (iii) host, with the Lead Arranger, one or more meetings with
prospective Lenders, (iv) assist, and cause your affiliates and advisors to
assist, the Lead Arranger in the preparation of one or more confidential
information memoranda and other marketing materials to be used in connection
with the syndication, and (v) use your reasonable best efforts to ensure that
the syndication efforts of the Lead Arranger benefit materially from the
existing lending relationships of the Borrower and the Acquired
Company.
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
3
(c) The
Lead Arranger and/or one or more of its affiliates, in consultation with you,
will exclusively manage all aspects of the syndication of the Credit Facilities,
including decisions as to the selection and number of potential Lenders to be
approached, when they will be approached, whose commitments will be accepted,
any titles offered to the Lenders and the final allocations of the commitments
and any related fees among the Lenders, and the Lead Arranger will exclusively
perform all functions and exercise all authority as is customarily performed and
exercised in such capacities. No Lender shall receive compensation
from the Borrower with respect to the
Credit Facilities outside the terms contained herein and in the Fee Letter in
order to obtain its commitment to participate in the Credit Facilities and the
Lead Arranger shall have sole discretion with respect to the allocation and
distribution of fees among the Lenders.
4. Information.
(a) You
represent, warrant and covenant that (i) all information (other than the
Projections, as defined below) concerning the Borrower and its subsidiaries and,
to the best of your knowledge, the Acquired Company and its subsidiaries, and
the Transactions that has been or will be made available to the Wells Fargo
Parties or the Lenders by you, or any of your representatives, subsidiaries or
affiliates (or on your or their behalf) (the “Information”) is, and
in the case of Information made available after the date hereof, will be
complete and correct in all material respects and does not, and in the case of
Information made available after the date hereof, will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading and (ii) all financial projections
concerning the Borrower, the Acquired Company and their respective subsidiaries
that have been or will be made available to the Wells Fargo Parties or the
Lenders by you, or any of your representatives, subsidiaries or affiliates (or
on your or their behalf) (the “Projections”) have
been and will be prepared in good faith based upon assumptions believed by you
to be reasonable at the time made, it being understood that actual results may
vary materially from the Projections. You agree to furnish us with
such Information and Projections as we may reasonably request and to supplement,
or cause to be supplemented, the Information and the Projections from time to
time until the Closing Date and, if requested by the Lead Arranger, after the
Closing Date through the completion of a Successful Syndication (as defined in
the Fee Letter) of the Credit Facilities so that the conditions and
representations and warranties contained in the preceding sentence remain
correct. We will be entitled to use and rely upon, without
responsibility to independently verify, the Information and the
Projections. You acknowledge that, subject to Section 7 hereof, the
Wells Fargo Parties may share with any of their respective affiliates (it being
understood that such affiliates will be subject to the confidentiality
agreements between you and us), and such affiliates may share with the Wells
Fargo Parties, any information related to the Borrower, the Acquired Company, or
any of their respective subsidiaries or affiliates (including, without
limitation, in each case, information relating to creditworthiness) and the
transactions contemplated hereby. You represent and warrant as of the
date hereof that no material litigation is pending or to your knowledge,
threatened against you or your subsidiaries or Diedrich and its subsidiaries
other than as disclosed in public SEC filings made prior to the date
hereof.
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
4
(b) You
acknowledge that (i) the Wells Fargo Parties on your behalf will make available
the Information, Projections and other marketing materials and presentations,
including confidential information memoranda (collectively, the “Informational
Materials”), to the potential Lenders by posting the Informational
Materials on DXSyndicateTM or by
other similar electronic means (collectively, the “Electronic Means”)
and (ii) certain prospective Lenders (“Public Lenders”) may
not wish to receive material non-public information (within the meaning of the
United States federal securities laws, “MNPI”) with respect
to the Borrower, the Acquired Company or their respective affiliates or any of
their respective securities, and who may be engaged in investment and other
market-related activities with respect to such entities’
securities. At the request of the Lead Arranger, (A) you will assist,
and cause your affiliates, advisors, and to the extent possible using your
reasonable best efforts, appropriate representatives of the Acquired Company to
assist, the Lead Arranger in the preparation of Informational Materials to be
used in connection with the syndication of the Credit Facilities to Public
Lenders, which will not contain MNPI (the “Public Informational
Materials”), (B) you will identify and conspicuously mark any Public
Informational Materials “PUBLIC”, and (C) you will
identify and conspicuously mark any Informational Materials that include any
MNPI as “PRIVATE AND
CONFIDENTIAL”. Notwithstanding the foregoing, you agree that
the Wells Fargo Parties may distribute the following documents to all
prospective Lenders (including the Public Lenders) on your behalf , unless you
advise the Wells Fargo Parties in writing (including by email) within a
reasonable time prior to their intended distributions that such material should
not be distributed to Public Lenders: (x) administrative materials
for prospective Lenders such as lender meeting invitations and funding and
closing memoranda, (y) notifications of changes to Credit Facilities’ terms and
(z) other materials intended for prospective Lenders after the initial
distribution of the Informational Materials, including drafts and final versions
of the Financing Documentation. If you advise us that any of the
foregoing items (other than the Financing Documentation) should not be
distributed to Public Lenders, then the Wells Fargo Parties will
not distribute such materials to Public Lenders without further discussions with
you.
5. Indemnification.
You agree
to indemnify and hold harmless the Wells Fargo Parties and each of their
respective affiliates, directors, officers, employees, partners,
representatives, advisors and agents and each of their respective heirs,
successors and assigns (each, an “Indemnified Party”)
from and against any and all actions, suits, losses, claims, damages,
liabilities and expenses of any kind or nature, joint or several, to which such
Indemnified Party may become subject or that may be incurred or asserted or
awarded against such Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or proceeding or preparation of a defense in
connection therewith) (i) any matters contemplated by this Commitment Letter,
the Fee Letter, the Transactions or any related transaction (including, without
limitation, the execution and delivery of this Commitment Letter, the Financing
Documentation (as defined in the Term Sheet) for the Credit Facilities and the
closing of the Transactions) or (ii) the use or the contemplated use of the
proceeds of the Credit Facilities, and will reimburse each Indemnified Party for
all out-of-pocket expenses (including reasonable attorneys’ fees, expenses and
charges) on demand as they are incurred in connection with any of the foregoing;
provided that
no Indemnified Party shall have any right to indemnification for any of the
foregoing to the extent resulting from such Indemnified Party’s own gross
negligence, bad faith or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction. In the
case of an investigation, litigation or proceeding to which the indemnity in
this paragraph applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by you, your equityholders or
creditors or an Indemnified Party, whether or not an Indemnified Party is
otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated. You also agree that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort, or
otherwise) to you or your affiliates or to your or their respective equity
holders or creditors arising out of, related to or in connection with any aspect
of the transactions contemplated hereby, except to the extent such liability is
determined in a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party’s gross negligence,
bad faith or willful misconduct. The Wells Fargo Parties shall only
have liability to you (as opposed to any other person), and Wells Fargo Bank
shall be liable solely in respect of its own Commitment to the Credit Facilities
on a several, and not joint, basis with any other Lender. No Indemnified Party
shall be liable to you, your affiliates or any other person for any indirect,
consequential or punitive damages that may be alleged as a result of this
Commitment Letter or any element of the Transactions. No Indemnified
Party shall be liable to you, your affiliates or any other person for any
damages arising from the use by others of Informational Materials or other
materials obtained by Electronic Means. You shall not, without the
prior written consent of each Indemnified Party affected thereby (which consent
will not be unreasonably withheld), settle any threatened or pending claim or
action that would give rise to the right of any Indemnified Party to claim
indemnification hereunder unless such settlement (a) includes a full and
unconditional release of all liabilities arising out of such claim or action
against such Indemnified Party and (b) does not include any statement as to or
an admission of fault, culpability or failure to act by or on behalf of any
Indemnified Party.
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
5
If any
action, suit, proceeding or investigation is commenced, as to which any of the
Indemnified Party proposes to demand indemnification, it shall notify you with
reasonable promptness; provided, however, that any failure by any of the
Indemnified Parties to so notify you shall not relieve you from your obligations
hereunder and shall not result in any liability of any Indemnified
Party. In connection with any such action, suit, proceeding or
investigation to which an Indemnified Party is a party, the Wells Fargo Parties
(as applicable), on behalf of the Indemnified Parties, shall have the right to
retain counsel of its choice to represent the Indemnified Parties, and you shall
pay the fees, expenses, and disbursement of such counsel, and such counsel
shall, to the extent consistent with its professional responsibilities,
cooperate with you and any counsel designated by you. For the
avoidance of doubt, it is understood that you shall not be required to
reimburse, or indemnify and hold harmless for, the reasonable and documented
legal fees and expenses of more than one outside counsel (in addition to up to
one local counsel in each applicable local jurisdiction and one regulatory
counsel) for all Indemnified Parties unless representation of all such
Indemnified Parties would be inappropriate due to the existence of an actual,
perceived or potential conflict of interest. You shall not be liable
for any settlement of any claim against any of the Indemnified Parties made
without your prior written consent, which consent shall not be unreasonably
withheld or delayed. Without the prior written consent of the Wells
Fargo Parties, you shall not settle or compromise any claim of any Indemnified
Party, permit a default or consent to the entry of any judgment in respect
thereof except for settlements that include an unconditional release of such
Indemnified Party from all liability and claims that are the subject matter of
such claim and that do not include any statement as to admission on the part of
such Indemnified Party.
6. Expenses. You
shall reimburse each of the Wells Fargo Parties, from time to time on demand for
all reasonable out-of-pocket costs and expenses (including, without limitation,
(i) reasonable legal fees and expenses, (ii) due diligence expenses and
(iii) expenses incurred in connection with appraisals (including, without
limitation, equipment and real estate appraisals), environmental reports and an
Agribusiness Consultant’s Report) of the Wells Fargo Parties and all reasonable
printing, reproduction, document delivery, travel, CUSIP, DXSyndicateTM and
communication costs incurred in connection with the syndication and execution of
the Credit Facilities and the preparation, review, negotiation, execution and
delivery of this Commitment Letter, the Fee Letter and the Financing
Documentation (as defined in the Term Sheet). You shall also
reimburse each of the Wells Fargo Parties, from time to time on demand for all
out-of-pocket costs and expenses (including, without limitation, legal fees and
expenses) of the Wells Fargo Parties incurred in connection with the enforcement
of this Commitment Letter and the Fee Letter.
7. Confidentiality.
(a) This
Commitment Letter and the Fee Letter (collectively, the “Commitment
Documents”) and the existence and contents hereof and thereof shall be
confidential and may not be disclosed by you in whole or in part to any person
without our prior written consent, except for (i) the disclosure hereof or
thereof on a confidential basis to your directors, officers, employees,
accountants, attorneys and other professional advisors who have agreed to
maintain the confidentiality of the Commitment Documents for the purpose of
evaluating, negotiating or entering into the Transactions, (ii) the disclosure
hereof and the Fee Letter (with fee information redacted) to the directors,
officers, employees, accountants, attorneys and other professional advisors of
the Acquired Company on a confidential basis for the purpose of evaluating,
negotiating or entering into the Transactions, or (iii) as otherwise required by
law; provided
that you may disclose, after your acceptance of the Commitment Documents, (A)
this Commitment Letter, but not the Fee Letter, in any required filings with the
Securities and Exchange Commission and other applicable regulatory authorities
and stock exchanges and (B) the Term Sheet to any ratings agency in connection
with the Transactions.
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
6
Each of
the Wells Fargo Parties agrees that material, non-public information regarding
the Borrower, the Acquired Company and their respective subsidiaries, their
operations, assets, and existing and contemplated business plans shall be
treated by such person in a confidential manner, and shall not be disclosed by
such person to persons who are not parties to this Commitment Letter, except for
(i) the disclosure of such information on a confidential basis to potential
Lenders and our and their directors, officers, employees, auditors, examiners,
accountants, attorneys and other professional advisors who have agreed or are
otherwise under a duty to maintain the confidentiality thereof in connection
with the Transactions, (ii) disclosure of such information to regulatory
officials having jurisdiction over us (to the extent such disclosure is
requested by or otherwise required to be provided to such regulatory official),
(iii) after any breach or default by you under the Commitment Documents, to the
extent we determine disclosure is necessary or appropriate for enforcement or
protection of our rights and remedies, or (iv) as otherwise required by law,
court or administrative order; provided that the
Wells Fargo Parties shall be permitted to use information related to the
syndication and arrangement of the Credit Facilities in connection with
obtaining a CUSIP number, marketing, press releases or other transactional
announcements or updates provided to investor or trade publications, subject to
confidentiality obligations or disclosure restrictions reasonably requested by
you. Notwithstanding the foregoing, this paragraph does not limit the
use of Electronic Means as set forth in Section 4(b) above. Our
obligations under this paragraph will be superseded by the confidentiality
provisions in the Financing Documentation (as defined in the Term Sheet)
effective upon the Closing Date.
(b) The
Wells Fargo Parties hereby notify you that pursuant to the requirements of the
USA Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001)
(the “Patriot
Act”), each of them is required to obtain, verify and record information
that identifies you and your subsidiaries, which information includes your and
their name and address and other information that will allow the Wells Fargo
Parties and the other Lenders to identify you and your subsidiaries in
accordance with the Patriot Act.
8. Other
Services.
(a) Nothing
contained herein shall limit or preclude the Wells Fargo Parties or any of their
affiliates from carrying on any business with, providing banking or other
financial services to, or from participating in any capacity, including as an
equity investor, in any party whatsoever, including, without limitation, any
competitor, supplier or customer of you, the Seller, the Acquired Company or any
of your or their respective affiliates, or any other party that may have
interests different than or adverse to such parties.
(b) You
acknowledge that the Lead Arranger and its affiliates (the term “Lead Arranger” as used in
this paragraph being understood to include such affiliates) (i) may be providing
debt financing, equity capital or other services (including financial advisory
services) to other companies with which you, the Seller, the Acquired Company or
your or their respective affiliates may have conflicting interests regarding the
Transactions and otherwise, (ii) may act, without violation of its contractual
obligations to you, as it deems appropriate with respect to such other
companies, and (iii) have no obligation in connection with the Transactions to
use, or to furnish to you, the Seller, the Acquired Company or your or their
respective affiliates or subsidiaries, confidential information obtained from
other companies or entities. In particular, you acknowledge that the
Wells Fargo Parties and their respective affiliates may be arranging or
providing (or contemplating arranging or providing) a committed form of
acquisition financing to other potential purchasers of the Acquired Company and
that, in such capacity, the Wells Fargo Parties may acquire information about
the Acquired Company, the sale thereof, and such other potential purchasers and
their strategies and proposals, but the Wells Fargo Parties shall have no
obligation to disclose to you the substance of such information or the fact that
the Wells Fargo Parties are in possession thereof.
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
7
(c) In
connection with all aspects of the Transactions, you acknowledge and agree that:
(i) the Credit Facilities and any related arranging or other services described
in this Commitment Letter is an arm’s-length commercial transaction between you
and your affiliates, on the one hand, and the Wells Fargo Parties, on the other
hand, and you are capable of evaluating and understanding and understand and
accept the terms, risks and conditions of the Transactions, (ii) in
connection with the process leading to the Transactions, each of the Wells Fargo
Parties is and has been acting solely as a principal and not as a financial
advisor, agent or fiduciary, for you or any of your affiliates, stockholders,
creditors or employees or any other party, (iii) no Wells Fargo Party has
assumed or will assume an advisory, agency or fiduciary responsibility in your
or your affiliates’ favor with respect to any of the Transactions or the process
leading thereto (irrespective of whether any Wells Fargo Party has advised or is
currently advising you or your affiliates on other matters) and no Wells Fargo
Party has any obligation to you or your affiliates with respect to the
Transactions except those obligations expressly set forth in this Commitment
Letter, (iv) the Wells Fargo Parties and their respective affiliates may be
engaged in a broad range of transactions that involve interests that differ from
yours and your affiliates and no Wells Fargo Party shall have any obligation to
disclose any of such interests, and (v) no Wells Fargo Party has provided any
legal, accounting, regulatory or tax advice with respect to any of the
Transactions and you have consulted your own legal, accounting, regulatory and
tax advisors to the extent you have deemed appropriate. You hereby
waive and release, to the fullest extent permitted by law, any claims that you
may have against any Wells Fargo Party with respect to any breach or alleged
breach of agency or fiduciary duty.
9. Acceptance/Expiration of
Commitments.
(a) This
Commitment Letter and the Commitments and agreements of Wells Fargo Bank and the
undertakings of Wells Fargo Securities set forth herein, shall automatically
terminate at 5:00 p.m. (Eastern Time, Standard or Daylight, as applicable) on
November 2, 2009 (the “Acceptance
Deadline”), without further action or notice unless signed counterparts
of this Commitment Letter and the Fee Letter shall have been delivered to the
Lead Arranger by such time.
(b) In
the event this Commitment Letter is accepted by you as provided in the last
paragraph hereof, the Commitments and agreements of Wells Fargo Bank and the
undertakings of Wells Fargo Securities set forth herein shall automatically
terminate without further action or notice upon the earliest to occur of (i)
consummation of the Offer, (ii) termination of the Acquisition Agreement, (iii)
5:00 p.m. (Eastern Time, Daylight or Standard, as applicable) on November 6,
2009, if the Borrower has failed to execute and deliver a copy of the
Acquisition Agreement to Wells Fargo Securities by such time, (iv) April 1,
2010, if Newco shall not have accepted for purchase Shares pursuant to the Offer
representing more than 50% of the Adjusted Outstanding Share Number (as defined
in the Acquisition Agreement) on or prior to March 31, 2010, (v) the Additional
Termination Date (as defined in the Fee Letter) and (vi) 5:00 p.m.
(Eastern Time, Daylight or Standard, as applicable) on April 15,
2010. You agree to promptly notify us of the occurrence of the
circumstances described in clause (ii) in the prior sentence.
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
8
10. Survival. The
sections of this Commitment Letter relating to Indemnification, Expenses,
Confidentiality, Other Services, Survival and Governing Law shall survive any
termination or expiration of this Commitment Letter or the Commitments of Wells
Fargo Bank or the undertakings of Wells Fargo Securities set forth herein
(regardless of whether definitive Financing Documentation is executed and
delivered), and the Sections relating to Syndication and Information shall
survive until completion of a Successful Syndication. The Fee Letter
shall survive any termination or expiration of the Commitment Letter and the
closing of the Credit Facilities.
11. Governing
Law. This
Commitment Letter and the Fee Letter shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction will be required thereby. The parties hereby waive any right to
trial by jury with respect to any claim or action arising out of this Commitment
Letter or the Fee Letter. The parties hereto hereby agree that
any suit or proceeding arising in respect of this Commitment Letter or the Fee
Letter or any of the matters contemplated hereby or thereby will be tried
exclusively in the U.S. District Court for the Southern District of New York or,
if such court does not have subject matter jurisdiction, in any state court
located in the City and County of New York, and the parties hereto hereby agree
to submit to the exclusive jurisdiction of, and venue in, such
court. The parties hereto hereby agree that service of any process,
summons, notice or document by registered mail addressed to you or each of the
Wells Fargo Parties shall be effective service of process against such party for
any action or proceeding relating to any such dispute. The parties
hereto irrevocably and unconditionally waive any objection to venue of any such
action or proceeding brought in any such court and any claim that any such
action or proceeding has been brought in an inconvenient forum. A
final judgment in any such action or proceeding may be enforced in any other
courts with jurisdiction over you or each of the Wells Fargo
Parties.
12. Miscellaneous. This
Commitment Letter and the Fee Letter embody the entire agreement among the Wells
Fargo Parties and you and your affiliates with respect to the specific matters
set forth above and supersede all prior agreements and understandings relating
to the subject matter hereof. Those matters that are not covered or
made clear herein, in the Term Sheet, in the Conditions Annex or the Fee Letter
are subject to mutual agreement of the parties. No person has been
authorized by any of the Wells Fargo Parties to make any oral or written
statements inconsistent with this Commitment Letter and the Fee
Letter. This Commitment Letter and the Fee Letter shall not be
assignable by you without the prior written consent of the Wells Fargo Parties,
and any purported assignment without such consent shall be void. This
Commitment Letter and the Fee Letter are not intended to benefit or create any
rights in favor of any person other than the parties hereto, the Lenders and,
with respect to indemnification, each Indemnified Party. This
Commitment Letter and the Fee Letter may be executed in separate counterparts
and delivery of an executed signature page of this Commitment Letter and the Fee
Letter by facsimile or electronic mail shall be effective as delivery of
manually executed counterpart hereof; provided that, upon
the request of any party hereto, such facsimile transmission or electronic mail
transmission shall be promptly followed by the original
thereof. Except as set forth in Section 7 of the Fee Letter, this
Commitment Letter and the Fee Letter may only be amended, modified or superseded
by an agreement in writing signed by each of you and the Wells Fargo Parties
that specifically provides such with reference to this Commitment Letter or the
Fee Letter, as applicable. The obligations of the Wells Fargo Parties
are several and not joint.
[This
Space Intentionally Left Blank]
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
9
If you
are in agreement with the foregoing, please indicate acceptance of the terms
hereof by signing the enclosed counterpart of this Commitment Letter and
returning it to the Lead Arranger, together with executed counterparts of the
Fee Letter, by no later than the Acceptance Deadline.
Sincerely,
WELLS
FARGO BANK, NATIONAL ASSOCIATION
By:
/s/ Todd Tajiri
Name: Todd
Tajiri
Title:
Vice President
WELLS
FARGO SECURITIES, LLC
By: /s/ Kevin J. Sanders
Name: Kevin
J. Sanders
Title: Vice
President
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
10
Agreed to
and accepted as of the date first
above
written:
PEET’S
COFFEE & TEA, INC.
By:
/s/ Tom Cawley
Name:
Tom Cawley
Title:
Chief Financial Officer
Peet’s
Coffee & Tea, Inc. Commitment Letter
PAGE
11
ANNEX A
$140,000,000
SENIOR
SECURED CREDIT FACILITIES
SUMMARY
OF PROPOSED TERMS AND CONDITIONS
Capitalized terms not otherwise
defined herein have the same meanings as specified therefor in the Commitment
Letter to which this Summary of Proposed Terms and Conditions is
attached.
|
Borrower:
|
Peet’s
Coffee & Tea, Inc. (the “Borrower”). After understanding
the corporate organization structure of Peet’s Coffee & Tea, Inc. and
its subsidiaries following the Merger, the Lead Arranger may require
additional co-borrowers.
|
||
|
Sole
Lead Arranger and Sole Lead Bookrunner:
|
Wells Fargo Securities, LLC will act as sole lead arranger and sole lead bookrunner (in such capacity, the “Lead Arranger”). | ||
|
Lenders:
|
Wells
Fargo Bank, National Association (“Wells
Fargo Bank”) and a syndicate of financial institutions and other
entities (each a “Lender” and,
collectively, the “Lenders”).
|
||
|
Administrative
Agent, Issuing Bank and
Swingline Lender:
|
Wells
Fargo Bank, National Association (in such capacity,
the “Administrative Agent”, the
“Issuing Bank” or the “Swingline Lender”, as the case may
be).
|
||
|
Credit
Facilities:
|
Senior secured credit facilities (the “Credit Facilities”) in an aggregate principal amount of $140,000,000, such Credit Facilities to consist of: | ||
| (a) |
Revolving Credit Facility. A
five-year revolving credit facility in an aggregate principal amount of
$40,000,000 (the “Revolving Credit
Facility”) (with optional subfacilities for standby letters of
credit (each, a “Letter of Credit”)
and swingline loans (each, a “Swingline
Loan”), each in a maximum amount to be mutually determined and on
customary terms and conditions (including with regard to Defaulting or
Deteriorating Lenders) with compensation to be agreed). Letters
of Credit will, at the sole discretion of the Issuing Bank, be issued
by the
Issuing Bank and Swingline Loans will, at the sole discretion of the
Swingline Lender, be made available by the Swingline Lender and each
Lender will purchase an irrevocable and unconditional participation in
each Letter of Credit and Swingline Loan
extended.
|
||
Annex
A – Term Sheet
PAGE
1
| (b) | Term Loan Facility. A five-year term loan facility in an aggregate principal amount of $100,000,000 (the “Term Loan Facility”). | ||
|
Use
of Proceeds:
|
The
proceeds of the Credit Facilities will be used to (a) provide a portion of
the financing for the Acquisition and the Refinancing and (b) pay fees,
commissions and expenses incurred in connection with the
Transactions. The proceeds of the Revolving Credit Facility
will be used to provide for the ongoing working capital and other general
corporate purposes of the Borrower and its subsidiaries and the Acquired
Company and its subsidiaries; provided that prior to the Merger (i) at
all times the Borrower must maintain the aggregate amount of Deposited
Proceeds (as defined below) and availability under the Revolving Credit
Facility in an amount sufficient to consummate the Acquisition and (ii) in
no event shall the outstandings under the Revolving Credit Facility used
for working capital and other general corporate purposes exceed
$10,000,000. The
Borrower shall be required to deposit any Term Loan proceeds advanced on
the Closing Date, but not used in connection with the Acquisition on the
Closing Date in a separate collateral account maintained at Wells Fargo
Bank and such funds shall be used solely for the Acquisition until the day
after the Merger occurs (such deposited amount, plus any other amounts
voluntarily deposited by the Borrower (including revolving loan proceeds)
in such account are referred to herein as the “Deposited Proceeds”). If
the Merger does not occur by June 30, 2010, the Term Loan proceeds in such
account shall be applied to the Term Loan as a mandatory
prepayment.
|
||
|
Closing
Date:
|
The
date on which the Credit Facilities are closed (the “Closing Date”).
|
||
|
Availability:
|
The
Revolving Credit Facility will be available on a revolving basis from and
after the Closing Date until the Revolving Credit Maturity Date (as
defined below). The
Term Loan Facility will be available only in a single draw of the full
amount of the Term Loan Facility on the Closing Date.
|
||
|
Documentation:
|
The
documentation for the Credit Facilities will include, among other items, a
credit agreement, guarantees and appropriate pledge, security, mortgage
and other collateral documents (collectively, the “Financing Documentation”), all consistent
with this Term Sheet.
|
||
Annex
A – Term Sheet
PAGE
2
|
Guarantors:
|
The
obligations of the Borrower under the Credit Facilities, under any hedging
agreements entered into between any Loan Party (as defined below) and any
counterparty that is a Lender (or any affiliate thereof) at the time such
hedging agreement is executed and under any treasury management
arrangements between any Loan Party and a Lender (or any affiliate
thereof) will be unconditionally guaranteed, on a joint and several basis,
by each existing and subsequently acquired or organized direct and
indirect subsidiary of the Borrower (each a “Guarantor”; and such guarantee being
referred to herein as a “Guarantee”);
provided that (a) the Acquired
Company and its subsidiaries shall not be required to become Guarantors
prior to the Merger or prior to, or as a condition to, the making of any
of the credit extensions used to fund the Acquisition, provided that the Acquired Company and its
subsidiaries (to the extent specified herein) shall become Guarantors no
later than 10 days after the Merger and (b) Guarantees by foreign
subsidiaries will be required only to the extent such Guarantees would not
have material adverse tax consequences for the Borrower. All Guarantees shall
be guarantees of payment and not of collection. The Borrower
and the Guarantors are herein referred to as the “Loan Parties” and, individually, as a
“Loan Party.”
|
||
|
Security:
|
There
will be granted to the Administrative Agent, for the benefit of the
Lenders, any counterparty to any hedging agreement that is a Lender (or
any affiliate thereof) at the time such hedging agreement is executed and
any Lender (or any affiliate thereof) with treasury management
arrangements with any Loan Party, valid and perfected first priority
(subject to exceptions set forth in the Conditions Annex and subject to
certain customary exceptions satisfactory to the Administrative Agent and
set forth in the Financing Documentation) liens and security interests in
all of the following (collectively, the “Collateral”):
|
||
| (a) |
All
present and future capital stock or other membership, equity, ownership or
profit interests (collectively, “Equity
Interests”) owned or held by each of the Loan Parties, and 66% of
the voting stock (and 100% of the non-voting stock) of all present and
future first-tier foreign subsidiaries of any Loan Party (to the extent,
and for so long as, the pledge of any greater percentage would have
material adverse tax consequences for the Borrower); provided that any first-tier foreign
subsidiary that is disregarded for tax purposes shall not be deemed to be
a foreign subsidiary;
|
||
Annex
A – Term Sheet
PAGE
3
| (b) |
substantially
all of the tangible and intangible properties and assets of the Loan
Parties, now owned or hereafter acquired (including, without limitation,
all equipment, inventory, accounts, deposit accounts and all other
accounts, licenses, contract and other intangible rights, investment
property, fixtures, cash, owned real
property interests, leased real property interests and intellectual
property; and
|
||
| (c) | all products and proceeds of the foregoing. | ||
|
All
such security interests will be created pursuant to, and will comply with,
Financing Documentation reasonably satisfactory to the Administrative
Agent. On the Closing Date, such security interests will have
become perfected (or arrangements for the perfection thereof reasonably
satisfactory to the Administrative Agent will have been made) (subject to
exceptions set forth in the Conditions Annex).
|
|||
|
The
Administrative Agent may, in its reasonable discretion, agree to exclude
such other Collateral as is not material to the Collateral taken as a
whole to the extent that the burden to the Borrower or relevant Guarantor
of delivering such Collateral outweighs the benefits of obtaining such
Collateral that would be provided to the
Lenders.
|
|||
|
Final
Maturity:
|
The
final maturity of the Revolving Credit Facility will occur on the fifth
anniversary of the Closing Date (the “Revolving Credit Maturity Date”) and the
commitments with respect to the Revolving Credit Facility will
automatically terminate on such date. The
final maturity of the Term Loan Facility will occur on the fifth
anniversary of the Closing Date (the “Term
Loan Maturity Date”).
|
||
|
Amortization:
|
The
Term Loan Facility will amortize in equal quarterly installments on the
last business day of each fiscal quarter of the Borrower, commencing with
the second quarter of FY 2010, in an amount equal to $3,703,703.70,
with the then unpaid principal amount due on the Term Loan Maturity
Date.
|
||
|
Interest
Rates and Fees:
|
Interest rates and fees in connection with the Credit Facilities will be as specified in the Fee Letter and on Schedule I attached hereto. | ||
Annex
A – Term Sheet
PAGE
4
|
Mandatory
Prepayments and Commitment
Reductions:
|
Subject to the next paragraph, the Credit Facilities will be required to be prepaid with: | ||
| (a) |
100%
of the net cash proceeds of the issuance or incurrence of debt by the
Borrower or any of its subsidiaries, subject to baskets and other
exceptions to be mutually agreed upon;
|
||
| (b) |
25%
of the net cash proceeds from any issuance of equity securities of, or
from any capital contribution to the Borrower or any of its subsidiaries,
subject to exceptions to be mutually agreed upon;
and
|
||
| (c) |
100%
of the net cash proceeds of any asset sale, insurance or condemnation
recovery or other asset disposition with a value in excess of $1,000,000
by the Borrower or any of its subsidiaries, subject to baskets and other
exceptions to be mutually agreed upon; provided that such proceeds may be
reinvested: (i) for any proceeds from any insurance or condemnation
recovery with respect to the Borrower’s or the Acquired Company’s roasting
facility, within 365 days so long as such reinvestment commences within
180 days and (ii) with respect to all other proceeds under this clause
(c), within 180 days, in each case subject to customary reinvestment
provisions.
|
||
|
All
such mandatory prepayments will be applied first, to prepay outstanding
loans under the Term Loan Facility and second, to prepay
outstanding loans under the Revolving Credit Facility (with, when no loans
are outstanding under the Term Loan Facility, a permanent reduction in the
aggregate commitment under the Revolving Credit Facility). All
such mandatory prepayments of the Term Loan Facility will be applied to
the remaining scheduled amortization payments on a pro rata basis.
|
|||
|
Optional
Prepayments and Commitment Reductions:
|
Loans
under the Credit Facilities may be prepaid and unused commitments under
the Revolving Credit Facility may be reduced at any time, in whole or in
part, at the option of the Borrower, upon notice and in minimum principal
amounts and in multiples to be agreed upon, without premium or penalty
(except LIBOR breakage costs). Any optional prepayment of the
Term Loan Facility will be applied to the remaining scheduled amortization
payments on a pro rata basis.
|
||
Annex
A – Term Sheet
PAGE
5
|
Conditions
to Initial Extensions of Credit:
|
The
making of the initial extensions of credit under the Credit Facilities
will be subject to satisfaction of the conditions precedent set forth in
Section 2 of the Commitment Letter and in the Conditions Annex attached
hereto as Annex B.
|
||
|
Conditions
to All Extensions of Credit
(other
than on the Closing Date):
|
Each
extension of credit under the Credit Facilities for working capital
purposes and all other extensions of credit under the Credit Facilities
that will not be used to fund the Acquisition will be subject to
satisfaction of the following conditions precedent: (a) all of the
representations and warranties in the Financing Documentation shall be
true and correct in all material respects (except to the extent that such
representation and warranty is qualified by materiality) as of the date of
such extension of credit, (b) no event of default under the Credit
Facilities or unmatured default shall have occurred and be continuing or
would result from such extension of credit, (c) no material adverse change
in the business, operations, condition (financial or otherwise), assets,
liabilities (whether actual or contingent) or prospects of the Borrower
and its subsidiaries having occurred since December 31,
2008.
|
||
|
Representations
and Warranties:
|
Usual
and customary for facilities of this type and such others as may be
reasonably requested by the Lead Arranger based on information received
after November 1, 2009, including, without limitation, the following
(which will be applicable to the Borrower and its subsidiaries and not the
Acquired Company or its subsidiaries prior to the Merger): corporate
status; financial statements; capital structure; corporate power and
authority; no default; no conflict with laws or material agreements;
enforceability; absence of material litigation, environmental regulations
and liabilities; ERISA; necessary consents and approvals; compliance with
all applicable laws and regulations including, without limitation,
Regulations T, U and X, Investment Company Act, the Patriot Act,
environmental laws and Office of Foreign Assets Control; payment of taxes
and other obligations; ownership of properties; intellectual property;
liens; insurance; solvency; absence of any material adverse effect; senior
debt status; collateral matters including, without limitation, perfection
and priority of liens (including an express representation and warranty
that after the Merger, the Administrative Agent’s lien on the K-Cup
License is a first priority perfected lien); labor matters; material
contracts; no burdensome restrictions; and accuracy of
disclosure.
|
||
|
Affirmative
Covenants:
|
Usual
and customary for facilities of this type and such others as may be
reasonably requested by the Lead Arranger based on information received
after November 1, 2009, including, without limitation, the following
(which will be applicable to the Borrower and its subsidiaries and not the
Acquired Company or its subsidiaries prior to the Merger): use of
proceeds; payment of taxes and other indebtedness; continuation of
business and maintenance of existence and rights and privileges;
maintenance of all material contracts; necessary consents, approvals,
licenses (including the K-Cup license) and permits; compliance with laws
and regulations (including environmental laws, ERISA and the Patriot Act);
maintenance of property and insurance (including hazard and business
interruption insurance); maintenance of books and records; right of the
Administrative Agent and the Lenders to inspect property and books and
records; notices of defaults, litigation and other material events;
financial and collateral reporting (including annual audited consolidated
and consolidating financial statements within 90 days after the end of
each fiscal year (together with the unqualified opinion of Borrower’s
independent certified public accountants of recognized national standing
acceptable to the Required Lenders) and quarterly unaudited consolidated
and consolidating financial statements within 45 days after the end of
each quarter (in each case, accompanied by covenant compliance
certificates), annual updated budgets and projections within 30 days after
the beginning of the applicable fiscal year, the sales and operating
profit of each store of the Borrower and its subsidiaries for each quarter
within 45 days after the end of such quarter, copies of all SEC and
related filings within five days after filing and other information
reasonably requested by any Lender); management letters; additional
Guarantors and Collateral; other collateral matters; and further
assurances (including, without limitation, with respect to security
interests in after-acquired property); the Loan Parties shall use
commercially reasonable efforts to consummate the Merger as soon as
possible and in any event cause the Merger to be consummated no later than
June 30, 2010; the Loan Parties shall use commercially reasonable efforts
to cause the Acquired Company and its subsidiaries to comply with the
terms of the Credit Documents.
|
||
Annex
A – Term Sheet
PAGE
6
|
Negative
Covenants:
|
Usual
and customary for facilities of this type and such others as may be
reasonably requested by the Lead Arranger based on information received
after November 1, 2009, including, without limitation, the following
(which will be applicable to the Borrower and its subsidiaries and not the
Acquired Company or its subsidiaries prior to the Merger): limitation on
debt; limitation on liens; limitation on negative pledges; limitation on
loans, advances, acquisitions and other investments, including with
respect to foreign subsidiaries; limitation on dividends, distributions,
issuances of equity interests, redemptions and repurchases of equity
interests; limitation on fundamental changes and asset sales (including,
without limitation, sale-leaseback transactions); limitation on
prepayments, redemptions and purchases of subordinated and certain other
debt; limitation on transactions with affiliates; limitation on dividend
and other payment restrictions affecting subsidiaries; limitation on
changes in line of business, fiscal year and accounting practices;
limitation on amendment of organizational documents and material
contracts; and limitation on capital expenditures.
|
||||
|
The
credit agreement governing the Credit Facilities will contain the
following financial covenants (which, subject to Section 7 of the Fee
Letter, will be the only financial
covenants):
|
|||||
| (a) |
Maximum
Total Leverage Ratio: initially not to exceed 4.25:1.00 at any time with
quarterly step downs to be determined (however such step downs to be no
more than 0.25 per quarter in 2010) and annual step downs as of the first
day of the last fiscal quarter of each year as
follows:
|
||||
|
|
Maximum Total
|
||||
|
Period
|
Leverage
Ratio
|
||||
|
Q4
2010
|
3.50:1.00 | ||||
|
Q4
2011
|
2.25:1.00 | ||||
|
Q4
2012
and
thereafter
|
1.75:1.00 | ||||
| Financial Covenants: |
“Total
Leverage Ratio” means, at any time, (a) Total Funded Debt at such
time to (b)
EBITDAR for the four fiscal quarter period most recently
ended.
|
||||
|
“Total
Funded Debt” means, at any time, without duplication, the sum of the
following with respect to Borrower and its subsidiaries: (a) obligations
evidenced by notes, bonds, debentures or similar instruments and
obligations for borrowed money including but not limited to senior bank
debt and subordinated debt; (b) obligations for the deferred purchase
price of property or services (other than trade payables incurred in the
ordinary course of business and not more than 60 days past due and
time-based licenses); (c) obligations under conditional sale or other
title retention agreements with respect to acquired property; (d) capital
lease obligations and all off-balance sheet financing; (e) obligations
under or with respect to surety instruments; (f) unfunded pension
liabilities; (g) obligations arising under acceptance facilities or under
facilities for the discount of accounts receivable; (h) obligations
with respect to issued and outstanding letters of credit; (i) contingent
obligations; (j) last twelve month (1) operating lease expenses
(excluding any operating leases of Diedrich existing as of the Closing
Date) and (2) lease rent expenses (including common area maintenance
expenses), in each case multiplied by a factor of six; (k) guarantees of
the foregoing; and (l) all obligations of the type described above to the
extent secured by a lien on any property of any such person, even if such
person has not assumed or become liable for the payment of such obligation
(to the extent of the greater of such obligation and the value of such
property).
|
|||||
Annex
A – Term Sheet
PAGE
7
|
“EBITDAR”
means, for any period, net income for such period plus, to the extent deducted in determining
net income for such period, the sum of the following for such period: (a)
extraordinary losses (minus, to the
extent added in determining net income for such period, extraordinary
gains), (b) interest expense, (c) provisions for income taxes, (d)
depreciation and amortization, (e) operating lease expenses (excluding any
operating leases of Diedrich existing as of the Closing Date), (f) lease
rent expenses (including common area maintenance expenses), (g) to the
extent incurred during Q4 2009, Q1 2010 or Q2 2010, costs and expenses
incurred in connection with the Transactions (including a stock
appreciation payment to the chief financial officer of Diedrich) in an
aggregate amount not to exceed $10,000,000 and (h) to the extent incurred
during Q4 2009, Q1 2010 or Q2 2010, restructuring costs and expenses in an
aggregate amount not to exceed $2,000,000; provided, that the EBITDAR of the Borrower
for the fiscal quarter ended December 28, 2008, March 29, 2009, June 28,
2009 and September 27, 2009, was $15,351,000, $13,890,000, $14,521,000 and
$13,396,000, respectively and, subject to adjustment as set forth in the
following sentence, the EBITDAR of the Acquired Company for the fiscal
quarter ended December 10, 2008, March 4, 2009, June 24, 2009 and
September 16, 2009, was $-40,000, $2,370,000, $2,418,000 and $1,403,000,
respectively.
|
|||||
|
Notwithstanding
the foregoing, the net income and EBITDAR attributable to a
non-wholly-owned subsidiary shall only be included in the calculation of
EBITDAR at no greater than the lesser of (i) the amount of the EBITDAR of
such non-wholly-owned subsidiary times the Borrower’s direct or indirect
percentage ownership interest in such non-wholly-owned subsidiary and (ii)
the aggregate amount of distributions such non-wholly-owned subsidiary
made or could have made to the Borrower or a Guarantor during the
applicable period after giving effect to all contractual and legal
restrictions applicable to such non-wholly-owned subsidiary; provided that this sentence shall not apply
to any non-wholly-owned subsidiary that is a Guarantor and that has
pledged collateral as contemplated herein.
|
|||||
| (b) |
Minimum
Fixed Charge Coverage Ratio as of the last day of any fiscal quarter:
initially 1.25:1.00 with quarterly step ups, beginning March 31, 2011 to
be determined and annual step ups as follows:
|
||||
|
Minimum Fixed Charge
|
|||||
|
Fiscal
Year
|
Coverage
Ratio
|
||||
| At the end of FY 2010 |
1.35:1.00
|
||||
| At the end of FY 2011 and thereafter |
1.75:1.00
|
||||
|
“Fixed
Charge Coverage Ratio” means, as of the last day of any fiscal quarter,
(a) EBITDAR for the four quarter period ending thereon plus (without duplication) lease expenses
resulting from operating leases of Diedrich existing as of the Closing
Date minus provisions for income
taxes, distributions and maintenance capital expenditures to (b) interest
expense plus scheduled principal
payments (including capital leases) plus operating lease expenses plus lease rent expenses (including common
area maintenance expenses).
|
|||||
| (c) |
Minimum Adjusted Net Income as of the last day of any fiscal
quarter for the four quarter period ending thereon: initially $11,400,000,
with quarterly step ups to be determined and annual step ups (or step
downs) as follows:
|
||||
|
Fiscal Year
Ending
|
Minimum
Adjusted Net Income
|
||||
| At the end of FY 2010 |
$18,600,000
|
||||
| At the end of FY 2011 |
$40,000,000
|
||||
|
At the end of FY 2012
(and
thereafter)
|
$60,000,000
|
||||
Annex
A – Term Sheet
PAGE
8
|
“Adjusted
Net Income” means, for any period, net income plus, to the extent deducted in determining
net income for such period, the sum of the following for such period: (i)
for fiscal year 2010 and each fiscal year thereafter, an add back for
amortization of any amortizable intangible assets acquired in the
Acquisition (excluding capitalized transaction fees and expenses related
to the Acquisition), adjusted for taxes using the applicable tax rate for
such period, (ii) to the extent incurred during Q4 2009, Q1 2010 or Q2
2010, costs and expenses incurred in connection with the Transactions
(including a stock appreciation payment to the chief financial officer of
Diedrich) in an aggregate amount not to exceed $10,000,000 and (iii) to
the extent incurred during Q4 2009, Q1 2010 or Q2 2010, restructuring
costs and expenses in an aggregate amount not to exceed
$2,000,000.
|
|||
| (d) |
In
no event shall the Borrower permit quarterly net income to be negative for
any two consecutive fiscal quarters.
|
||
|
The
financial covenants, including for purposes of paragraph (f) of the
Conditions Annex, will apply to the Borrower and
its subsidiaries on a consolidated basis after giving pro forma effect to
the portion of the Transactions consummated during such period or any
acquisition or any disposition of business or assets consummated during
such period, in each case as if such portion of the Transactions or such
transaction occurred on the first day of such
period. Components measured on a four quarter basis shall not
be annualized.
|
|||
|
Notwithstanding
the foregoing, all financial covenants and other financial calculations
contained herein shall be calculated without giving effect to any election
made by any applicable person to value its financial liabilities or
indebtedness at the fair value thereof pursuant to the Statement of
Financial Accounting Standards No. 159 (or any similar accounting
principle).
|
|||
|
Required
Interest Rate Hedging:
|
The
Borrower will obtain interest rate protection from one or more Lenders or
others acceptable to the Lead Arranger in respect of not less than 50% of
the Term Loan Facility.
|
||
|
Events
of Default:
|
Usual
and customary for facilities of this type, including, without limitation,
the following (which, except as expressly noted below, will not apply to
the Acquired Company and its subsidiaries prior to the Merger and certain
of which will be subject to materiality thresholds, exceptions and grace
or cure periods to be mutually agreed upon): non-payment of obligations;
inaccuracy of representation or warranty; non-performance of covenants and
obligations; default on other material debt (including hedging
agreements); change of control; bankruptcy or insolvency; impairment of
security; ERISA; material judgments; actual or asserted invalidity or
unenforceability of any Financing Documentation or liens securing
obligations under the Financing Documentation; material uninsured loss;
termination of the License and Distribution Agreement dated as of July 29,
2003 between Keurig, Incorporated and the Acquired Company as in effect on
the date hereof (the “Keurig License
Agreement”) (provided that prior to the earlier of the consummation
of the Merger and June 30, 2010, such termination shall not permit the
Administrative Agent or the Lenders to prevent the Borrower from
withdrawing the Deposited Proceeds to the extent necessary to consummate
the Merger); and from and after the Merger, any material breach under the
Keurig License Agreement that entitles Keurig, Incorporated to terminate
the Keurig License Agreement.
|
||
Annex
A – Term Sheet
PAGE
9
|
Defaulting
Lender Provisions,
Yield
Protection and Increased Costs:
|
Customary
for facilities of this type, including, without limitation, in respect of
breakage or redeployment costs incurred in connection with prepayments,
cash collateralization for Letters of Credit or Swingline Loans in the
event any lender under the Revolving Credit Facility becomes a Defaulting
Lender or Deteriorating Lender (as such terms shall be defined in the
definitive financing documentation), changes in capital adequacy and
capital requirements or their interpretation, illegality, unavailability,
reserves without proration or offset and payments free and clear of
withholding or other taxes.
|
||
|
The
Borrower shall have customary rights to replace a Lender (a) for availing
itself of yield maintenance and tax gross up provisions for a reason not
applicable to all Lenders, (b) for being a Defaulting Lender (as such term
shall be defined in the Financing Documentation), and (c) for being a
non-consenting Lender in a scenario where only the consent of the Required
Lenders has been obtained but unanimous Lender consent is
required.
|
|||
| Assignments and Participations: | (a) |
Revolving Credit
Facility: Subject to the consents described below (which
consents will not be unreasonably withheld or delayed), each Lender will
be permitted to make assignments to eligible financial institutions in
respect of the Revolving Credit Facility in a minimum amount equal to
$5,000,000.
|
|
| (b) |
Term Loan
Facility: Subject to the consents described below (which
consents will not be unreasonably withheld or delayed), each Lender will
be permitted to make assignments to eligible financial institutions in
respect of the Term Loan Facility in a minimum amount equal to
$5,000,000.
|
||
| (c) |
Consents: The
consent of the Borrower will be required for any assignment unless (i) an
Event of Default has occurred and is continuing, (ii) the assignment is to
a Lender or an affiliate of a Lender or (iii) a Successful Syndication (as
defined in the Fee Letter) of the Credit Facilities has not
occurred. The consent of the Administrative Agent will be
required for any assignment. The consent of the Issuing Bank
and the Swingline Lender will be required for any assignment under the
Revolving Credit Facility. Participations will be subject to
customary conditions.
|
||
| (d) |
No Assignment or
Participation to Certain Persons. No assignment or
participation may be made to natural persons or the Borrower or any of its
affiliates or subsidiaries.
|
||
|
Required
Lenders:
|
On
any date of determination, two or more Lenders who collectively hold more
than 50% of the outstanding commitments under the Credit Facilities, or if
the commitments under Credit Facilities have been terminated, those
Lenders who collectively hold more than 50% of the aggregate outstandings
under the Credit Facilities (the “Required
Lenders”); provided, however, that if any Lender shall be a
Defaulting Lender (to be defined in the Financing Documentation) at such
time, then the outstanding loans and unfunded commitments under the Credit
Facilities of such Defaulting Lender shall be excluded from the
determination of Required Lenders.
|
||
Annex
A – Term Sheet
PAGE
10
|
Amendments
and Waivers:
|
Amendments
and waivers of the provisions of the Financing Documentation will require
the approval of the Required Lenders, except that (a) the consent of all
Lenders directly adversely affected thereby will be required with respect
to (i) increases in the commitment of such Lenders, (ii) reductions of
principal, interest or fees, (iii) extensions of scheduled maturities or
times for payment and (iv) reductions in the voting percentages and (b)
the consent of all Lenders will be required with respect to (i) releases
of all or substantially all of the Collateral or of any of the Guarantees
(other than in connection with transactions permitted pursuant to the
Financing Documentation) and (ii) any increase in the aggregate principal
amount of the Credit Facilities.
|
||
|
Indemnification:
|
The
Loan Parties will indemnify the Lead Arranger, the Administrative Agent,
each of the Lenders and their respective affiliates, partners, directors,
officers, agents and advisors and hold them harmless from and against all
liabilities, damages, claims, costs, expenses (including reasonable fees,
disbursements, settlement costs and other charges of counsel) relating to
the Transactions or any transactions related thereto and the Borrower’s
use of the loan proceeds or the commitments; provided that such indemnity will not, as
to any indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence, bad faith or willful misconduct of
such indemnitee. This indemnification shall survive and
continue for the benefit of all such persons or
entities.
|
||
|
Expenses:
|
The
Loan Parties will reimburse the Lead Arranger and the Administrative Agent
for all reasonable out-of-pocket costs and expenses in connection with the
syndication, negotiation, preparation, due diligence, execution, delivery
and administration of the Financing Documentation and any amendment or
waiver with respect thereto (including, without limitation, (i) reasonable
fees and expenses of counsel, (ii) out of pocket syndication expenses and
IntraLinks, The Debt Exchange, Inc. or similar fees, and (iii) expenses
incurred in connection with appraisals (including, without limitation,
equipment and real estate appraisals), environmental reports and an
Agribusiness Consultant’s Report). The Loan Parties will also
pay all documentary taxes of the Lead Arranger, the Administrative Agent
and the Lenders. The Loan Parties will also pay all costs and
expenses of the Lead Arranger, the Administrative Agent and the Lenders in
connection with the enforcement of any loan documentation for the Credit
Facilities, including, without limitation, the legal fees and expenses of
each counsel to the Administrative Agent and the
Lenders.
|
||
|
Governing
Law and Forum:
|
New York. | ||
|
Waiver
of Jury Trial and Punitive and Consequential Damages:
|
All parties to the Financing Documentation waive the right to trial by jury and the right to claim punitive or consequential damages. | ||
|
Counsel
for the Lead Arranger and the Administrative Agent:
|
Orrick, Herrington & Sutcliffe LLP | ||
|
Other:
|
This
Term Sheet is intended as an outline of certain of the material terms of
the Credit Facilities and does not purport to summarize all of the
conditions, covenants, representations, warranties and other provisions
which would be contained in Financing Documentation for the Credit
Facilities; provided that no additional conditions precedent to closing
the Credit Facilities will be added and, subject to Section 7 of the Fee
Letter, no additional financial covenants will be
added.
|
||
Annex
A – Term Sheet
PAGE
11
SCHEDULE
I
INTEREST
AND FEES
| Interest: | At the Borrower’s option, loans (other than Swingline Loans) will bear interest based on the Base Rate or LIBOR, as described below: | ||
| A. | Base Rate Option | ||
|
Interest
will be at the Base Rate plus the
applicable Interest Margin (as described below). The “Base Rate” is defined as the highest of (a)
the Federal Funds Rate, as published by the Federal Reserve Bank of New
York plus 1.50%, (b) the prime
commercial lending rate of the Administrative Agent, as established from
time to time at its principal U.S. office (which such rate is an index or
base rate and will not necessarily be its lowest or best rate charged to
its customers or other banks) and (c) the daily LIBOR (as defined
below) for a one month Interest Period (as defined below) plus 1.50%. Interest shall
be payable quarterly in arrears and (i) with respect to Base Rate Loans
based on the Federal Funds Rate and LIBOR, shall be calculated on the
basis of the actual number of days elapsed in a year of 360 days and (ii)
with respect to Base Rate Loans based on the prime commercial lending rate
of the Administrative Agent, shall be calculated on the basis of the
actual number of days elapsed in a year of 365/366 days. Any
loan bearing interest at the Base Rate is referred to herein as a “Base Rate
Loan”.
|
|||
| Base Rate Loans will be made on same day notice and will be in minimum amounts to be agreed upon. | |||
| B. | LIBOR Option | ||
|
Interest
will be determined for periods (“Interest
Periods”) of three or six months as selected by the
Borrower and will be at an annual rate equal to the London Interbank
Offered Rate (“LIBOR”) for the
corresponding deposits of U.S. dollars plus the applicable Interest Margin (as
described below). LIBOR will be determined by the
Administrative Agent at the start of each Interest Period and, other than
in the case of LIBOR used in determining the Base Rate, will be fixed
through such period. Interest will be paid at the end of each
Interest Period or, in the case of Interest Periods longer than three
months, quarterly, and will be calculated on the basis of the actual
number of days elapsed in a year of 360 days. LIBOR will be
adjusted for maximum statutory reserve requirements (if
any). Any loan bearing interest at LIBOR (other than a Base
Rate Loan for which interest is determined by reference to LIBOR) is
referred to herein as a “LIBOR Rate
Loan”.
|
|||
Schedule
I to Annex A
PAGE
1
|
LIBOR
Rate Loans will be made on three business days’ prior notice and, in each
case, will be in minimum amounts to be agreed
upon.
|
|||
|
Swingline
loans will bear interest at the Base Rate plus the applicable Interest
Margin.
|
|||
|
Default
Interest:
|
(a)
Automatically upon the occurrence and during the continuance of any
payment event of default or upon a bankruptcy event of default of the
Borrower or any other Loan Party or (b) at the election of the Required
Lenders, upon the occurrence and during the continuance of any other event
of default, all outstanding principal, fees and other obligations under
the Credit Facilities shall bear interest at a rate per annum of four
percent (4.00%) in excess of the rate then applicable to such loan or
other obligation including the applicable Interest Margin (or if no
interest rate is stated, four percent (4.00%) in excess of the Base Rate
plus the highest Interest Margin applicable to Base Rate Loans) and shall
be payable on demand of the Administrative Agent.
|
||
|
Interest
Margins:
|
The
initial applicable Interest Margin shall be based on the Total Leverage
Ratio as of the Closing Date after giving pro forma effect to the Transactions pursuant
to the Pricing Grid set forth below until the first calculation date
following the receipt by the Administrative Agent and the Lenders of the
financial information and related compliance certificate for the
first full
fiscal quarter ending after the Closing Date.
|
||
|
Commitment
Fee:
|
A
commitment fee (the “Commitment Fee”)
will accrue on the unused amounts of the commitments under the Revolving
Credit Facility. Swingline loans will, for purposes of the
Commitment Fee calculations only, not be deemed to be a utilization of the
Revolving Credit Facility. Such Commitment Fee will initially
be based on the Total Leverage Ratio as of the Closing Date after giving
pro forma effect to the Transactions pursuant
to the Pricing Grid set forth below until the first calculation date
following the receipt by the Administrative Agent and the Lenders of the
financial information and related compliance certificate for the
first full
fiscal quarter ending after the Closing Date. All accrued
Commitment Fees will be payable quarterly in arrears (calculated on a
360-day basis) for the account of the Lenders under the Revolving Credit
Facility and will accrue from the Closing Date.
|
||
Schedule
I to Annex A
PAGE
2
|
Letter of Credit Fees:
|
The Borrower will pay to the Administrative Agent,
for the account of the Lenders under the Revolving Credit Facility, letter
of credit participation fees equal to the Interest Margin for LIBOR
Rate Loans under the Revolving Credit
Facility, in each case, on the undrawn amount of all outstanding letters
of credit. Fronting, issuance, presentation,
documentation, amendment, transfer, negotiation and other fees will also
be payable by Borrower for the account of the Issuing Bank as determined
in accordance with the Issuing Bank’s then current fee
policy.
|
||
|
Other Fees:
|
The Lead Arranger and the Administrative Agent
will receive such other fees as will have been agreed in a fee letter
between them and the Borrower.
|
||
|
Pricing Grid:
|
The
applicable Interest Margins and the Commitment Fee with respect to the
Credit Facilities shall be based on the Total Leverage Ratio pursuant to
the following grid:
|
||
|
Level
|
Total
Leverage
Ratio
|
Interest
Margin
for
LIBOR
Rate
Loans
|
Interest
Margin
for
Base
Rate
Loans
|
Commitment
Fee
|
|
I
|
Greater
than 4.00 to 1.00
|
3.750%
|
2.750%
|
0.500%
|
|
II
|
Greater
than or equal to 3.50 to 1.00 but less than 4.00 to 1.00
|
3.500%
|
2.500%
|
0.500%
|
|
III
|
Greater
than or equal to 3.00 to 1.00 but less than 3.50 to 1.00
|
3.250%
|
2.250%
|
0.375%
|
|
IV
|
Greater
than or equal to 2.50 to 1.00 but less than 3.00 to 1.00
|
3.000%
|
2.000%
|
0.375%
|
|
V
|
Less
than 2.50 to 1.00
|
2.750%
|
1.750%
|
0.250%
|
Schedule
I to Annex A
PAGE
3
ANNEX B
$140,000,000
SENIOR
SECURED CREDIT FACILITIES
SUMMARY
OF PROPOSED TERMS AND CONDITIONS
Capitalized terms not otherwise
defined herein have the same meanings as specified therefor in the Commitment
Letter to which this Summary of Proposed Terms and Conditions is
attached.
|
Conditions
to Closing and Initial Extensions of Credit:
|
Closing and the making of the initial extensions of credit are subject to the satisfaction of each of the following conditions precedent: | ||
| (a) |
(i)
Financing Documentation reflecting and consistent with the terms and
conditions set forth herein and otherwise reasonably satisfactory to the
Borrower and the Lenders, will have been executed and delivered
(including, to the extent applicable, subordination agreements), (ii) the
Administrative Agent will have received (A) such customary legal opinions
(including, without limitation, opinions of special counsel and local
counsel as may be reasonably requested by the Administrative Agent) which
such opinions shall permit reliance by permitted assigns of each of the
Administrative Agent and the Lenders, (B) flow of funds and organizational
documents, (C) notice of loan borrowing and (D) closing documents,
certificates (including, but not limited to secretary’s and incumbency
certificates), good standing certificates and other instruments as are
customary for transactions of this type including, without limitation, a
certificate of the chief financial officer of the Borrower as to the
solvency of each of the Borrower individually, Peet’s Operating
Company individually, and the Borrower and its subsidiaries on a
consolidated basis, in each case after giving effect to the Transactions,
(iii) evidence that the Administrative Agent shall have a valid and
perfected first priority security interest (subject to certain exceptions
to be set forth in the Financing Documentation) in the Collateral (which
shall have been executed, delivered and/or in proper form for filing, to
the extent applicable, and which shall include: all certificates
evidencing pledged capital stock with accompanying executed stock powers,
and all promissory notes and similar instruments with accompanying
executed allonges/indorsements, UCC and other lien searches, intellectual
property filings, title reports and policies (including ALTA indorsements
insuring the first priority of the lien subject to customary exceptions),
UCC financing statements, deeds of trust or mortgages for fee owned real
property, a collateral assignment agreement for all leased real property
(it being understood that no landlord consents or real property recordings
will be required with respect to such leased real property, margin stock
shall not be pledged to the extent the pledge of such margin stock would
violate Regulation U and no DMV filings or similar filings will be
required for motor vehicles), (iv) there shall not have occurred a Company
Material Adverse Effect (as defined in the Acquisition Agreement) as of
the Closing Date and the funding of the initial loans, (v) delivery of
insurance certificates in compliance with the Financing Documentation
(with endorsements naming the Administrative Agent as loss payee and
mortgagee and the Administrative Agent and the Lenders as additional
insureds and with a lenders loss payable endorsement), (vi) each of the
Borrower and the Guarantors shall have obtained all governmental
authorizations and board, shareholder and third party consents necessary
or advisable to have been obtained prior to the Closing Date in connection
with the transactions under the Financing Documentation, and each such
governmental authorization or consent shall be in full force and effect
except in a case where failure to obtain or maintain any such
authorization or consent either individually or in the aggregate could not
have a material adverse effect, (vii) all representations and warranties
made by the Acquired Company in the Acquisition Agreement shall be true
and correct other than any breaches thereof that do not, individually or
in the aggregate, relieve the Borrower or Newco from their respective
obligations with respect to the initial funding, to accept for exchange
and deliver consideration for Shares validly tendered (and not withdrawn)
pursuant to the Offer, (viii) the representations and warranties set forth
in the Financing Documents of the Borrower and the Guarantors (but not the
Acquired Company and its subsidiaries) relating to (A) due formation,
organization, existence and good standing, (B) power and authority,
(C) due authorization, execution, delivery and enforceability of the
Financing Documentation and the Acquisition Agreement, (D)
non-contravention with respect to the Financing Documentation, the
borrowing of the loans and granting of liens, (E) all approvals and
consents with respect to the Financing Documentation, (F) solvency,
(G) Federal Reserve Bank margin regulations, (H) the Investment
Company Act, (I) no violation or default of the Financing Documentation,
(J) financial statements, (K) accuracy of information furnished,
(L) foreign assets control and anti-terrorism laws,
(M) consummation of transactions under the Financing Documentation in
compliance with applicable law and (N) the priority and perfection of the
security interest granted in the Collateral securing the Credit
Facilities, (ix) no event of default under the Credit Facilities or
unmatured default shall have occurred and be continuing or would result
from such extension of credit, (x) to the extent applicable, all
principal, interest and other amounts outstanding in connection with
existing debt for borrowed money of the Loan Parties shall have been paid
in full and all liens securing such debt shall be released other than debt
for borrowed money in an amount not to exceed $1,000,000 and indebtedness
of the Acquired Company and its subsidiaries not to exceed $1,000,000 and (xi) all
fees and expenses due to the Lenders, the Lead Arranger, the
Administrative Agent and counsel to the Lead Arranger and the
Administrative Agent under the Commitment Letter and as otherwise set
forth in the Financing Documentation shall have been paid. The
Borrower shall use its commercially reasonable efforts to provide the
following items prior to the Closing Date, but in any event shall provide
all such items no later than 60 days after the Closing Date: (i) control
agreements with respect to each deposit, securities and similar account of
the Loan Parties (excluding health care reimbursement accounts and payroll
accounts), (ii) surveys, (iii) appraisals (including, without limitation,
equipment and real estate appraisals), (iv) environmental reports and (v)
an Agribusiness Consultant’s
Report.
|
||
Annex
B
PAGE
1
| (b) |
The
definitive agreement relative to the Acquisition and all other
documentation associated with the Acquisition (collectively, as amended or
modified in accordance with this paragraph (b), the “Acquisition Documentation”) shall be in the
form of the Acquisition Agreement (including schedules thereto) delivered
to the Administrative Agent prior to signing the Commitment Letter
on November 2, 2009, as such Acquisition Documentation,
including the Acquisition Agreement, may be amended, supplemented or
otherwise modified from time to time or for which provisions thereof may
be consented to or waived; provided
that any such amendment, supplement or other modification or any consent
or waiver with respect thereto that materially adversely affects the
interest of the Lenders or that increases the proportional amount of the
Cash Component above 70% in relation to the share consideration under the
Acquisition Agreement shall , in each case, require the prior written
consent of the Lead Arranger, not to be unreasonably withheld; provided, further that on the proposed
closing date of the Offer, any waiver of any of the conditions precedent
to Newco’s obligations to accept for exchange and deliver consideration
for Shares validly tendered (and not withdrawn) pursuant to the Offer set
forth in the Acquisition Documentation shall require the prior written
consent of the Lead Arranger, not to be unreasonably withheld. The
Acquisition Agreement shall be in full force and
effect.
|
||
| (c) |
The
conditions to Newco’s obligations to purchase the Shares pursuant to the
Offer in accordance with the Acquisition Agreement shall have been
satisfied except to the extent the failure to so satisfy such conditions
do not relieve the Borrower or Newco from their respective obligations to
close the transactions under the Acquisition Agreement, with no waiver,
modification or consent thereunder without the prior written consent of
the Lead Arranger, except as otherwise provided pursuant to paragraph (b)
of this Conditions Annex.
|
||
| (d) |
Newco
shall have accepted for purchase Shares pursuant to the Offer representing
more than 50% of the Adjusted Outstanding Share Number (as defined in the
Acquisition Agreement), and to the extent the exercise of the Top-Up
Option would result in Newco owning Shares sufficient to allow a short
form merger to be consummated, Newco shall have exercised its Top-Up
Option for Shares sufficient in number to allow a short form merger to be
consummated immediately upon issuance thereof (after giving effect to any
preemptive rights and contractual or other restrictions) (the “Requisite
Number of Shares”) and shall have delivered its note in respect of such
purchase and Diedrich shall have the Requisite Number of Shares authorized
but unissued and shall be obligated to comply with the Top-Up
Option.
|
||
Annex
B
PAGE
2
| (e) |
The
Lead Arranger will have received a balance sheet, income statement, and
statement of cash flows for each of the Borrower and its subsidiaries and
the Acquired Company and its subsidiaries, in each case for any fiscal
year that has ended at least 90 days prior to the Closing Date and for any
fiscal quarter (other than the fourth quarter of any fiscal year) since
the most recently ended fiscal year that has ended at least 45 days prior
to the Closing Date.
|
||
| (f) |
The
Lead Arranger will be reasonably satisfied that, after giving pro forma effect to the Transactions (to the
extent consummated as of the Closing Date) (i) the ratio of Total Funded
Debt of the Borrower and its subsidiaries as of the Closing Date to
consolidated EBITDAR of the Borrower and its subsidiaries will not exceed
4.25:1.00 and (ii) consolidated EBITDAR of the Borrower and its
subsidiaries will be at least $55,900,000 for the twelve months ended as
of the most recent fiscal quarter end for which financial statements are
available prior to the Closing Date.
|
||
| (g) |
To
the extent not previously satisfied, the Loan Parties shall have
provided the documentation and other information to the Lenders that is
required by regulatory authorities under applicable “know your customer”
and anti-money-laundering rules and regulations, including, without
limitation, the Patriot Act.
|
||
| (h) |
No
temporary restraining order, preliminary or permanent injunction or other
order preventing the Credit Facilities from closing or any extensions of
credit thereunder shall have been issued by any court of competent
jurisdiction or other governmental authority having authority over any of
the parties to the Financing Documentation and remains in effect, and no
applicable legal requirement shall be enacted or deemed applicable to the
Credit Facilities by a governmental authority having authority over any of
the parties to the Financing Documentation that makes the closing of the
Credit Facilities or any extensions of credit thereunder
illegal.
|
Annex
B
PAGE
3