THIRD AMENDMENT TO
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LOAN AND SECURITY AGREEMENT
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This Third Amendment to Loan and Security Agreement (the "Third Amendment")
is made as of the 16th day of May, 2001 by and among
Back Bay Capital Funding, LLC (the "Lender"), a Delaware limited liability
company with offices at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, and
Harry's Farmers Market, Inc. (the " Borrower"), a Georgia corporation with
its principal executive offices at 0000 Xxxxx Xxxxxxx Xxxx, Xxxxxxx,
Xxxxxxx 00000
in consideration of the mutual covenants herein contained and benefits to be
derived herefrom.
WITNESSETH
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WHEREAS, the Lender and the Borrower has entered into a Loan and Security
Agreement dated as of December 2, 1999 (as amended and in effect, the "Loan
Agreement"); and
WHEREAS, the Borrower has defaulted in the performance of certain of its
obligations under the Loan Agreement and has requested that the Lender waive
such default and modify and amend certain provisions of the Loan Agreement and
the Lender is willing to do so on the terms set forth herein.
NOW THEREFORE, it is hereby agreed as follows:
1. Definitions: All capitalized terms used herein and not otherwise defined
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shall have the same meaning herein as in the Loan Agreement.
2. Amendments to Article 4. The provisions of Article 4 of the Loan Agreement
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are hereby amended as follows:
a. The following new section is hereby added to the Loan Agreement
immediately after Section 4-3:
4-3A Amendment Fees. In addition to any other fee or expense paid
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by the Borrower on account of the Revolving Credit and Term Loan, the
Lender has earned, and the Borrower shall pay the Lender, Amendment
Fees (so referred to herein) as follows:
(a) the sum of $125,000.00 shall be fully earned on the date of
the Third Amendment to Loan and Security Agreement, and shall be
payable in full on the Termination Date or, if earlier the date
that all Liabilities have been paid in full and the obligations
of the Lender to make loans and advances under the Loan Agreement
terminated. Such amount shall be capitalized
(added) to the Term Loan principal balance, shall bear interest
in accordance with Section 3-3 of the Loan Agreement, and such
interest shall be paid in accordance with Section 3-3 of the Loan
Agreement; and
(b) the sum of $50,000.00 payable on October 1, 2001 unless all
Liabilities have then irrevocably been paid in full and the
obligations of the Lender to make loans and advances under the
Loan Agreement terminated; and
(c) the sum of (i) $50,000.00, plus (ii) an additional $25,000.00
for each month subsequent to October, 2001, payable on the first
day of each month thereafter, commencing November 1, 2001 until
all Liabilities have then irrevocably been paid in full and the
obligations of the Lender to make loans and advances under the
Loan Agreement terminated.
b. The provisions of Section 4-5 of the Loan Agreement are hereby amended
by adding the words "Amendment Fees" after the words "Early Termination
Fee" in the second line thereof.
3. Amendment to Exhibits. The provisions of Exhibit 7-12 to the Loan Agreement
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are hereby amended as follows:
a. by deleting the EBITDA requirements set forth in clause (c) in their
entirety and the following substituted in their stead:
c. The Borrower shall not permit EBITDA, calculated on a cumulative
basis commencing on February 1, 2001, to be less than the following
amounts for the following periods:
Fiscal Quarter Ending Minimum Cumulative EBITDA
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April, 2001 $1,000,000
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July, 2001 $2,000,000
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October, 2001 $2,900,000
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January, 2002 $4,300,000
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b. by adding the following proviso at the end of clause (e):
, provided, however, the Borrower may reduce the $4,500,000.00
amount on a dollar for dollar basis by any amounts received by the
Borrower as a result of the sale of any non-perishable Inventory in
connection with the winding down of
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the Borrower's locations described on Annex A to that certain Third
Amendment to Loan and Security Agreement dated May 16, 2001 by and
between the Borrower and the Lender.
4. Sale of Certain Locations. The Borrower has notified the Lender that
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the Borrower may investigate the closing or relocation of one (1) or more of the
six (6) locations set forth on Annex A attached hereto and incorporated herein
by reference and liquidate the Equipment, Inventory, furniture, Fixtures and
machinery associated with each such location (collectively, the "Proposed
Closings"). The Borrower acknowledges and agrees that the consummation of the
Proposed Closings without the Lender's consent, would among other things, result
in the Borrower's breach of certain provisions of Loan Agreement, including,
without limitation, certain provisions of Section 6-6 and 6-14 of the Loan
Agreement. The Borrower has requested that the Lender consent to and waive the
provisions of 6-6 and 6-14 of the Loan Agreement solely as they relate to the
Proposed Closings. The Lender hereby consents to the Proposed Closings, and
solely with respect to such Proposed Closings, waives the following sections of
the Loan Agreement: 6-6(a)(ii), 6-6(b), 6-6(c)(i), and 6-14(d), provided,
however:
a. the Borrower shall have delivered to the Lender at least thirty (30)
days prior to the consummation of any Proposed Closing, an estimate of
all costs and expenses which the Borrower will incur in connection with
each such Proposed Closing (which estimate shall be in form and
substance acceptable to the Lender), including, without limitation, any
and all payments required to be made to any landlord under any leases;
b. after giving effect to the Proposed Closing singly or in the aggregate,
the costs incurred by the Borrower singly, or in the aggregate for such
Proposed Closings, shall not exceed the proceeds received from such
sales singly or in the aggregate (i.e. the effect of such Proposed
Closings on the Borrower's balance sheet shall at all times be either
cash neutral or cash positive);
c. the Net Proceeds, if any, received by the Borrower in connection with
each Proposed Closing shall be immediately delivered to the Lender and
applied in reduction of the Liabilities as provided for in the Loan
Agreement; and
d. at the time of any such Proposed Closing no Suspension Event or Event of
Default shall have occurred and be continuing, and after giving effect
to any Proposed Closing no Suspension Event or Event of Default shall
occur.
Upon the consummation of each Proposed Closing, Exhibit 6-6 to the Loan
Agreement shall be deemed amended to delete the reference to the subject
location.
Except for the limited waiver and consent provided for herein, which relate
only to the matters specifically referenced herein, and shall not be deemed to
constitute continuing waivers, all terms and conditions of the Loan Agreement
remain in full force and effect.
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5. Limited Waiver. The Lender hereby waives any Event of Default
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occasioned by the Borrower's failure to have complied with the minimum EBITDA
covenant set forth on Exhibit 7-12 (as in effect prior to the date of this Third
Amendment) at January 31, 2001 and at April 30, 2001. This waiver is a one-time
waiver and is not a continuing waiver. The Borrower shall remain obligated to
comply with the provisions of such covenant, as amended hereby.
6. Conditions to Effectiveness. This Third Amendment shall not be
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effective until each of the following conditions precedent have been fulfilled
to the satisfaction of the Lender:
a. This Third Amendment shall have been duly executed and delivered by the
Borrower and the Lender. The Lender shall have received a fully executed
copy hereof.
b. All action on the part of the Borrower necessary for the valid
execution, delivery and performance by the Borrower of this Third
Amendment shall have been duly and effectively taken. The Lender shall
have received from the Borrower true copies of its certificate of the
resolutions authorizing the transactions described herein, each
certified by its secretary or other appropriate officer to be true and
complete.
c. No Default or Event of Default shall have occurred and be continuing,
after giving effect to this Third Amendment.
d. The Borrower shall have provided such additional instruments and
documents to the Lender as the Lender and its counsel may have
reasonably requested.
7. Miscellaneous.
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a. Except as provided herein, all terms and conditions of the Loan
Agreement and the other Loan Documents remain in full force and effect.
The Borrower hereby ratifies, confirms, and reaffirms all of the
representations, warranties and covenants therein contained. The
Borrower acknowledges and agrees that it does not have any offsets,
defenses, or counterclaims against the Lender with respect to the Loan
Agreement and other Loan Documents, or otherwise, and to the extent that
any such offsets, defenses or counterclaims may exist, the Borrower
hereby WAIVES and RELEASES same. The Borrower shall execute and deliver
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to the Lender such releases as the Lender may request to confirm the
foregoing.
b. The Borrower shall pay all costs and expenses incurred by the Lender in
connection with this Third Amendment, including, without limitation, all
reasonable attorneys' fees.
c. This Third Amendment may be executed in several counterparts and by each
party on a separate counterpart, each of which when so executed and
delivered, each shall be an original, and all of which together shall
constitute one instrument.
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d. This Third Amendment expresses the entire understanding of the parties
with respect to the matters set forth herein and supersedes all prior
discussions or negotiations hereon.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be executed and their seals to be hereto affixed as the date first above
written.
HARRY'S FARMERS MARKET, INC.
("Borrower")
By /s/ Xxxxx X. Blazer
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Print Name: Xxxxx X. Blazer
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Title: President and CEO
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BACK BAY CAPITAL FUNDING LLC
("Lender")
By /s/
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Print Name:
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Title:
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Annex A
Locations to be closed
1. Buckhead
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
2. Xxxxxx Xxxxx Square
0000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
3. Dunwoody
0000 Xxxxxxxx Xxxxxxx, Xxxxx X
Xxxxxxxx, Xxxxxxx 00000
4. Xxxxx de Xxxx
0000 Xxxxx xx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
5. Roswell
0000 Xxxxxxx Xxxx XX
Xxxxxxx, Xxxxxxx 00000
6. Peachtree City
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
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