SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED LEASE AND LICENSE FINANCING AND PURCHASE OPTION AGREEMENT
Exhibit 10.29
SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED LEASE AND LICENSE FINANCING AND
PURCHASE OPTION AGREEMENT
PURCHASE OPTION AGREEMENT
THIS SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED LEASE AND LICENSE FINANCING AND PURCHASE
OPTION AGREEMENT (this “Amendment”), dated as of November 12, 2008, is by and between
ARABICA FUNDING, INC., a Delaware corporation (“Arabica”) and CARIBOU COFFEE COMPANY, INC.,
a Minnesota corporation (the “Company”).
RECITALS
A. Arabica and the Company are parties to the Second Amended and Restated Lease and License
Financing and Purchase Option Agreement dated as of June 29, 2004 (as amended and in effect from
time to time, the “Master Lease”). Capitalized terms used herein without definition have
the meanings assigned to them in the Master Lease.
B. The Company has requested certain amendments to the Master Lease and Arabica is willing to
effect such amendments on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
I. AMENDMENTS TO MASTER LEASE. Subject to the satisfaction of each of the conditions set
forth herein, the Master Lease is hereby amended as follows:
A. Definitions. Section 1 of the Master Lease is hereby amended as follows:
1. By adding the following new definitions of “Base Rate”, “Federal Funds Effective Rate”,
“New Store” and “Reference Bank”, each in proper alphabetical order:
“Base Rate” means for any day, the cost to Arabica of funding itself
in relation to this Agreement at such times when the Eurodollar Rate is
unavailable or Arabica determines that the Eurodollar Rate does not
accurately reflect the cost of its funding. Such cost to Arabica of
funding itself shall correspond to a fluctuating rate per annum equal to
the higher of (a) the Federal Funds Effective Rate plus 1/2 of 1%
and (b) the rate of interest in effect for such day as publicly announced
from time to time by the Reference Bank as its “prime rate”,
provided that notwithstanding anything in this Agreement to the
contrary, at no time shall the Base Rate be less than four (4.0%) percent.
The “prime rate” is a rate set by the Reference Bank based upon various
factors including the Reference Bank’s costs and desired return, general
economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such
announced rate. Any change in such rate announced by the Reference Bank
shall
take effect at
the opening of business on the day specified in the
public announcement of such change.
“Federal Funds Effective Rate” means for any day, the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for the day of such
transactions received by the Reference Bank from three federal funds
brokers of recognized standing selected by it.
“New Store” means any Store not previously in existence at a
location, provided that a relocation of any Store within the same
building, strip mall or retail mall shall not be considered a New Store.
Notwithstanding the foregoing proviso, the definition of New Store shall
at all times be consistent with the Company’s reporting of the opening of
new Stores in all financial statements and reports that any member of the
Restricted Group makes to, or files with, the SEC or provides to the
holders of any class of its debt securities or public equity securities.
“Reference Bank” means Bank of America, N.A., or any successor
thereto.
2. By deleting in their entireties the definitions of “Adjustment Date”, “COF Rate” and
“Pricing Grid”.
3. By amending and restating the definition of “Applicable Margin” in its entirety as
follows:
“Applicable Margin”: at any time, for purposes of
determining the Rental Rate by reference to the Base Rate, two (2.0%)
percent per annum and for purposes of determining the Rental Rate by
reference to the Eurodollar Rate, three and three-quarters (3.75%) percent
per annum.
4. By amending the definition of “Consolidated EBITDA” by deleting the reference to “fiscal
quarter” contained therein and by substituting therefor the phrase “fiscal period”, and by
deleting the reference to “Consolidated Interest Expense” contained therein and by
substituting therefor the phrase “Consolidated Financing Expense”.
5. By inserting the following at the end of the definition of “Eurodollar Base Rate”:
“Notwithstanding anything in this Agreement to the contrary, at no time
shall the Eurodollar Base Rate be less than two and one-quarter (2.25%)
percent.”
6. By amending and restating the definition of “Final Rent Payment Date” in its entirety as
follows:
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“Final Rent Payment Date” means June 29, 2010.
7. By amending and restating the definition of “New Store Commitment” in its entirety as
follows:
“New Store Commitment” means an enforceable obligation of the Company or any
of its Subsidiaries to lease, acquire, develop or open a New Store.
8. By deleting “$20,000,000” from the definition of “Reference Amount” and by substituting
therefor the following:
“$9,000,000”
9. By amending and restating the definition of “Store” in its entirety as follows:
“Store” means any store, kiosk, or other retail unit, including
without limitation, any New Store, which is owned or controlled directly
or indirectly by the Company or any of its Subsidiaries.
10. By amending and restating the definition of “Third Rent Component Rate” in its entirety
as follows:
“Third Rate Component Rate” means one (1.0%) percent per annum.
B. Base Rate. The Master Lease is hereby amended by deleting the phrase “COF Rate” in
each place where such phrase appears and by substituting therefor the phase “Base Rate”.
C. Financial Covenants. Section 20 of the Master Lease is hereby amended and restated
in its entirety as follows:
“SECTION 20. Financial Covenants. The Company covenants and agrees that
until all Rent and other amounts payable hereunder and under the Lease/Purchase
Documents have been indefeasibly paid in full in cash:
(a) Maximum Senior Leverage Ratio. The Company will not cause or
permit the ratio (the ‘Consolidated Senior Leverage Ratio’) of the
Consolidated Funded Indebtedness of the Company and its Subsidiaries
(excluding any Subordinated Debt included therein) at September 30, 2008
and at the last day of each calendar month thereafter to the Consolidated
EBITDA of the Company for the twelve-month period ending on such last day
of the calendar month to be greater than 1.00:1.00.
(b) Minimum Consolidated EBITDA. The Company will not cause or
permit the Consolidated EBITDA of the Company for the
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twelve-month period
ending on September 30, 2008 and for the twelve-month period ending on the
last day of each calendar month thereafter to be less than $9,000,000.
(c) Minimum Interest Coverage Ratio. The Company will not cause or
permit the ratio of (i) the Consolidated EBITDAR of the Company for any
Reference Period ending on any Quarterly Date falling in any period
referred to below to (ii) the sum of Consolidated Financing Expense plus
Consolidated Rental Expense of the Company and its Subsidiaries for such
Reference Period to be less than the ratio specified below for the period
during which such date falls.
| Minimum Interest | ||||
| Quarterly Dates | Coverage Ratio | |||
January 1, 2008 through June 30, 2008 |
1.38:1.00 | |||
July 1, 2008 through September 30, 2008 |
1.40:1.00 | |||
October 1, 2008 and thereafter |
1.35:1.00 | |||
(d) Maximum Capital Expenditures. The Company will not cause or
permit the Capital Expenditures made by the Company and its Subsidiaries
in any fiscal year to exceed $10,000,000.
(e) New Store Commitments. The Company shall not enter into any New
Store Commitment if at such time (i) the Coffeehouse Level EBITDA Margin
for the Reference Period ended December 30, 2007 and each Reference Period
thereafter is less than 15% of Coffeehouse Level Sales for such Reference
Period, or (ii) the aggregate Available Amount is less than (A) the
budgeted amount of Capital Expenditures for outstanding New Store
Commitments (including the New Store Commitment in question, and assuming
that the budgeted amount of Capital Expenditures for any New Store
Commitment for which a Capital Expenditure budget has not been determined
is $300,000), less (2) the aggregate amount of Capital
Expenditures made toward New Store Commitments prior to the opening of
each such New Store.”
D. Monthly Compliance Certificates. Section 21(b)(ii) of the Master Lease is hereby
amended and restated in its entirety as follows:
“(ii) concurrently with the delivery of any financial statements
pursuant to Section 21, (i) a certificate of a Responsible Officer
stating that, to the best of such Responsible Officer’s knowledge, the
Company and each of its Subsidiaries, during such period, have observed or
performed all of its covenants and other agreements, and satisfied every
condition contained in this Agreement and the other
Lease/Purchase Documents to which it is a party to be observed,
performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as
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specified in such certificate, (ii) a Store by Store report substantially
in the form of Exhibit C, and (iii) in the case of quarterly,
annual and monthly financial statements, (A) a Compliance Certificate
containing all information and calculations necessary for determining
compliance by the Company and each of its Subsidiaries, with the
provisions of this Agreement referred to therein as of the last day of the
applicable fiscal period of the Company, and (B) to the extent not
previously disclosed to Arabica, a description of any change in the
jurisdiction of organization of any member of the Restricted Group and a
list of any Intellectual Property or other property as to which action is
required under Section 21(i) hereof, in each case acquired by any
member of the Restricted Group since the date of the most recent report
delivered pursuant to this clause (B);”
E. Foreign Intellectual Property. Section 22(b) of the Master Lease is hereby amended
by inserting the following at the end thereof:
“Without limitation of the foregoing, the Company covenants and agrees that it
will not enter into (and will not suffer or permit any of its Wholly-Owned
Subsidiaries to enter into) any agreement or understanding (each, a ‘Restrictive
Agreement’) with any Person other than Arabica or the Reference Bank which could
prohibit or restrict in any manner the right of the Company or any such
Wholly-Owned Subsidiary to grant to Arabica or to the Reference Bank any Lien on
any of its Intellectual Property arising under laws other than those of the United
States, whether such Intellectual Property is now owned or hereafter acquired.
The Company represents and warrants that, at the date of this Agreement, neither
the Company nor any such Wholly-Owned Subsidiary is party to any such Restrictive
Agreement.”
F. Schedules to Master Lease.
1. Section 1(c) of Schedule 6(a) to the Master Lease is hereby amended by deleting the
reference to “Available Amount” contained therein and by substituting therefor the phrase
“Reference Amount”.
2. Each of Schedule 1, 2(a), 0, 00(x), 00(x), 00(x)(x), 00(x)(xx), 00(x), 00(x)(x),
00(x)(xx), 22(g)(ii) and 22(i) to the Master Lease is amended and restated in its entirety
in the form attached hereto as Annex I by updating each as of the date hereof
G. Form of Compliance Certificate. Exhibit A to the Master Lease is amended
and restated in its entirety in the form attached hereto as Annex II.
H. No Further Amendments. Except as expressly amended herein, the text of the Master
Lease and all other Lease/Purchase Documents shall remain unchanged and in full force and effect.
II. REFERENCES IN THE LEASE/PURCHASE DOCUMENTS; CONFIRMATION OF SECURITY. All references
to the Master Lease in all Lease/Purchase Documents shall, from and after the date hereof, refer to
the Master Lease, as amended by this Amendment, and all
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obligations of the Company under the
Lease/Purchase Documents shall be secured by and be entitled to the benefits of the Company
Security Documents. All Company Security Documents heretofore executed by the Restricted Group
shall remain in full force and effect and such Company Security Documents are hereby ratified and
affirmed.
III. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company hereby represents and warrants
to, and covenants and agrees with, Arabica that:
A. The execution and delivery of this Amendment has been duly authorized by all requisite
action on the part of the Company and does not contravene, conflict with, or constitute a default
under, any provision of: (i) the Company’s articles of incorporation or bylaws, (ii) any law,
judgment, decree or order applicable to the Company or to any other member of the Restricted Group,
or (iii) any provision of any material agreement or instrument binding upon any member of the
Restricted Group or upon any of the respective property of a member of the Restricted Group. The
execution and delivery of this Amendment by the Company do not and will not cause any lien to arise
under any provision of any material agreement or instrument binding upon any member of the
Restricted Group or upon any of the respective property of a member of the Restricted Group.
B. The representations and warranties of each member of the Restricted Group contained in the
Master Lease and the other Lease/Purchase Documents are true and correct in all material respects
on and as of the date of this Amendment as though made at and as of such date, except to the extent
(a) such representations and warranties expressly relate to an earlier date (and the
representations and warranties set forth in Section 19(a) and Section 19(q) (relating solely to the
Confidential Information Memorandum) of the Master Lease shall be construed to relate only to the
date of the Master Lease and to the Closing Date), in which case each such representation and
warranty shall be true and correct in all material respects as of such earlier date, and (b) of
inaccuracies resulting from transactions permitted under the Lease/Purchase Documents. No Default
or Event of Default has occurred and is continuing under the Master Lease or any other
Lease/Purchase Document.
C. No member of the Restricted Group is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any governmental instrumentality
or other agency or any other Person in connection with or as a condition to the execution, delivery
or performance of this Amendment.
D. This Amendment constitutes the legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights and remedies of creditors
generally or the application of principles of equity, whether in any action at law or proceeding in
equity, and subject to the availability of the remedy of specific performance or of any other
equitable remedy or relief to enforce any right thereunder.
E. By the Company’s signature hereto, and Holdings’ and its Subsidiaries’ signatures to the
Consent and Acknowledgement attached hereto, each such party hereby acknowledges and confirms that
(i) it does not have any grounds, and hereby agrees not to challenge (or to allege or to pursue any
matter, cause or claim arising under or with respect to), in any case based upon acts or omissions
of Arabica, the Administrative Agent or the Lenders
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(each as defined in that certain Credit
Agreement dated as of June 29, 2004 by and among Arabica, the financial institutions from time to
time party thereto as lenders, and Bank of America, N.A., as successor by merger to Fleet National
Bank, as administrative agent, as amended), the effectiveness, genuineness, validity,
collectibility or enforceability of the Lease/Purchase Documents, the Obligations, the Grantor
Obligations (as defined in the Company Guarantee and Security Agreement, respectively), the Liens
securing the Obligations and Grantor Obligations, or any of the terms or conditions of any
Lease/Purchase Document, and (ii) it does not possess (and hereby forever waives, remises,
releases, discharges and holds harmless Arabica, each Lender, the Administrative Agent, and their
respective affiliates, stockholders, directors, officers, employees, attorneys, agents and
representatives and each of their respective heirs, executors, administrators, successors and
assigns (collectively, the “Indemnified Parties”) from and against, and agrees not to
allege or pursue) any action, cause of action, suit, debt, claim, counterclaim, cross-claim,
demand, defense, offset, opposition, demand and other right of action whatsoever, whether in law,
equity or otherwise (which it, all those claiming by, through or under it, or its successors or
assigns, have or may have) against the Indemnified Parties, or any of them, by reason of, any
matter, cause or thing whatsoever, with respect to events or omissions occurring or arising on or
prior to the date hereof and relating to the Master Lease or any of the other Lease/Purchase
Documents (including, without limitation, with respect to the payment, performance, validity or
enforceability of the Obligations, the Grantor Obligations, the Liens securing the Obligations and
Grantor Obligations, or any or all of the terms or conditions of any Lease/Purchase Document) or
any transaction relating thereto.
IV. MISCELLANEOUS.
A. As provided in the Master Lease, the Company agrees to reimburse Arabica and the Registered
Holders upon demand for all reasonable fees and disbursements of counsel incurred in connection
with the preparation of this Amendment.
B. This Amendment shall be governed by and construed in accordance with the laws of the State
of New York.
C. This Amendment may be executed by the parties hereto in several counterparts hereof and by
the different parties hereto on separate counterparts hereof, all of which counterparts shall
together constitute one and the same agreement. Delivery of an executed signature page of this
Amendment by facsimile transmission shall be effective as an in-hand delivery of an original
executed counterpart hereof.
[The next pages are the signature pages.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as a
sealed instrument by their duly authorized representatives, all as of the day and year first above
written.
| ARABICA FUNDING, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| CARIBOU COFFEE COMPANY, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
CONSENT AND ACKNOWLEDGEMENT
To the extent necessary, if any, each of the undersigned hereby consents to the execution and
delivery of the foregoing Seventh Amendment to Second Amended and Restated Lease and License
Financing and Purchase Option Agreement (the “Amendment”) and to all of the transactions
contemplated thereby and confirms and agrees with the provisions thereof, including without
limitation all provisions applicable to any of the undersigned.
Executed as a sealed instrument as of the date of such Amendment.
| CARIBOU HOLDING COMPANY LIMITED |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| CARIBOU COFFEE COMPANY, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| CARIBOU ON PIEDMONT, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| CARIBOU ACQUISITION COMPANY |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| CARIBOU COFFEE DEVELOPMENT COMPANY, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
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