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Bank of America
August 12, 1997
Commercial Banking
Mr. Xxx Xxxx
Chief Financial Officer
Coffee People, Inc.
00000 X.X. Koll Parkway, Suite J
Beaverton, OR 97006
Dear Xx. Xxxx:
This letter is to acknowledge that Coffee People, Inc. ("Borrower") has breached
Paragraphs 8.3, 8.3A, 8.4 and 9.12 of its Business Loan Agreement dated
September 4, 1996 ("Agreement") , between Borrower and Bank of America NT&SA
("Bank").
Paragraph 8.3 of the Agreement requires the Borrower maintain a minimum Current
Ratio of 1.25:1. As of June 30, 1997, the Borrower reported a Current Ratio of
0.96:1.
Paragraph 8.3A of the Agreement requires the Borrower maintain a maximum ratio
of Total Liabilities to Tangible Net Worth of 1.50:1. As of June 30, 1997, the
Borrower reported a ratio of 4.41:1.
Paragraph 8.4 of the Agreement requires the Borrower maintain a minimum Cash
Flow Ratio of 2.00:1. As of June 30, 1997, the Borrower reported negative Cash
Flow of $791,000.
Paragraph 9.12 of the Agreement requires the Borrower not incur a Material
Adverse Change in the Borrower's financial position. As of June 30, 1997, the
Borrower reported a Material Adverse Change in the form of a $5,500,000
extraordinary charge to earnings for store closures and related restructuring.
The Bank waives compliance with the breached covenants through June 30, 1997,
upon the following conditions:
The Borrower maintain a Minimum Cash Balance of $2,400,000 as reported on
the Borrower's financial statements.
The Borrower will provide year to date information detailing individual
store revenues and earnings.
The Borrower will provide to the Bank monthly company prepared
interim financial statements.
As of August 12, 1997, the Borrower has met the above conditions.
This waiver applies only to the breached covenants. This waiver does not apply
to any other breach that may now exist or may occur after the date of this
waiver with respect to the breached covenant or any other term, condition, or
covenant of the Agreement. All other terms and conditions of the Agreement
remain unchanged.
Sincerely,
/s/ Xxxxx Xxxxxxxxxxxxxx
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Xxxxx Xxxxxxxxxxxxxx
Credit Manager
