FIFTH AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.28
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of February 13,
2008, is by and between ARABICA FUNDING, INC., a Delaware corporation (the “Borrower”), the
several banks and other financial institutions or entities from time to time parties to this
Agreement (the “Lenders”), and BANK OF AMERICA, N.A., as successor-by-merger to Fleet
National Bank, as administrative agent (the “Administrative Agent”).
RECITALS
A. The Borrower, the Lenders and the Administrative Agent are parties to the Credit Agreement
dated as of June 29, 2004 (as amended and in effect from time to time, the “Credit
Agreement”). Capitalized terms used herein without definition have the meanings assigned to
them in the Credit Agreement.
B. The Borrower has requested certain amendments to the Credit Agreement and the consent of
the Lenders to the Borrower’s execution and delivery of an amendment to the Master Lease. The
Lenders signing below are willing to effect such amendment and consent to such execution and
delivery, 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. AMENDMENT TO CREDIT AGREEMENT AND CONSENT. Subject to the satisfaction of each of the
conditions set forth herein, the Credit Agreement is hereby amended as follows:
A. Definitions. Section 1.1 of the Credit Agreement is hereby amended as follows:
1. By amending and restating the definition of “Consolidated EBITDA” in its entirety as
follows:
“Consolidated EBITDA”: for any period, Consolidated Net Income
for such period plus, without duplication and to the extent
reflected as a charge in the statement of such Consolidated Net Income for
such period, the sum of (a) income tax expense, (b) Consolidated Interest
Expense, (c) depreciation and amortization expense (including amortization
of debt acquisition cost), (d) earnings attributable to minority interests,
(e) any extraordinary expenses, charges or losses, (f) other non-cash
charges, and (g) Pre-Opening Expenses, and minus, (a) to the extent
included in the statement of such Consolidated Net Income
for such period,
the sum of (i) any extraordinary, unusual or non-recurring income or gains
(including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets outside of the ordinary
course of business) and (ii) any other non-cash income or credits and
(b) any cash payments made during such period in respect of items described
in clause (e) and/or (f) above subsequent to the fiscal quarter in which the
relevant non-cash expenses, charges or losses were reflected as a charge in
the statement of Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Subsidiaries.
2. By amending and restating the table set forth in the definition of “Pricing Grid” in its
entirety as follows:
Consolidated
Senior |
Applicable Margin for | Applicable Margin for | ||||||||||
Leverage
Ratio |
Eurodollar Loans | COF Loans | Commitment Fee Rate | |||||||||
Greater than or equal to
1.0 to 1.0 |
3.00 | % | 4.00 | % | 0.500 | % | ||||||
Greater than or equal
to 0.5 to 1.0 but less
than 1.0 to 1.0 |
2.50 | % | 3.50 | % | 0.375 | % | ||||||
Less than 0.5 to 1.0 |
2.25 | % | 3.25 | % | 0.375 | % | ||||||
3. By amending and restating the last sentence in the definition of “Revolving Commitment” “
in its entirety as follows:
The amount of the Total Revolving Commitments as of February 13, 2008 is
$20,000,000.
B. Financial Covenants. Section 7.1 of the Credit Agreement is hereby amended as
follows:
| 1. | By amending and restating Section 7.1(a) in its entirety as follows: |
(a) Maximum Senior Leverage Ratio. Permit the ratio (the
“Senior Leverage Ratio”) of the Consolidated Funded Indebtedness of
the Company and its Subsidiaries (excluding any Additional Subordinated Debt
included therein) at March 30, 2008 and each Quarterly Date thereafter to
the Consolidated EBITDA of the Company for the Reference Period ending on
such Quarterly Date to be greater than 1.75:1.00.
| 2. | By amending and restating Section 7.1(b) in its entirety as follows: |
(b) Minimum Consolidated EBITDA. Permit the Consolidated
EBITDA of the Company for the Reference Period ending on March 30, 2008 and
for the Reference Period ending on each Quarterly Date thereafter to be less
than $9,000,000.
| 3. | By amending and restating Section 7.1(c) in its entirety as follows: |
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(c) Minimum Interest Coverage Ratio. 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 Interest 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 |
1.45:1.00 | |||
| 4. | By amending and restating Section 7.1(d)(ii) in its entirety as follows: |
(ii) Permit the Capital Expenditures made by the Company and its
Subsidiaries in any fiscal year to exceed $12,500,000.
| 5. | By amending and restating Section 7.1(f) in its entirety as follows: |
(f) New Store Commitments. Permit the Company to enter into
any New Store Commitment if at such time (A) 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 (B) the aggregate Available Revolving Commitments of
all Lenders are less than (1) 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 store.
C. Commitments. Schedule 1.1(A) of the Credit Agreement is amended and
restated in its entirety in the form attached hereto as Annex I.
D. Amendment to Lease/Purchase Documents. The Lenders hereby agree to the form of the
Sixth Amendment to Second Amended and Restated Lease and License Financing and Purchase Option
Agreement attached hereto as Exhibit A (the “Amendment to Lease/Purchase
Documents”).
E. No Further Amendments. Except as specifically amended hereby, the text of the
Credit Agreement and all other Loan Documents shall remain unchanged and in full force and effect.
II. REFERENCES IN LOAN DOCUMENTS; CONFIRMATION OF SECURITY. All references to the “Credit
Agreement” in all Loan Documents shall, from and after the date hereof, refer to the Credit
Agreement, as amended by this Amendment, and all obligations of the Borrower under the Loan
Documents shall be secured by and be entitled to the benefits of the
Security Documents. All Security Documents heretofore executed by the Restricted Group shall
remain in full force and effect and, by the Borrower’s signature hereto, and Holdings’ and the
Company’s and its Subsidiaries signatures to such Amendment to Lease/Purchase Documents, such
Security Documents are hereby ratified and affirmed.
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III. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower hereby represents and
warrants to, and covenants and agrees with the Lenders that:
A. The execution and delivery of this Amendment has been duly authorized by all requisite
action on the part of the Borrower.
B. The representations and warranties of the Borrower contained in the Credit Agreement and
the other Loan 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 4.1 and Section 4.18 (relating solely to the Confidential Offering Memorandum) of
the Credit Agreement and Section 19(a) and Section 19(q) (relating solely to the Confidential
Offering Memorandum) of the Master Lease shall be construed to relate only to the date of the
Credit Agreement and the Master Lease, respectively, 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 Loan
Documents.
C. Attached hereto as Exhibit A is a true, correct and complete copy of the Amendment
to Lease/Purchase Documents.
D. 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 or entity in connection with or as a condition to the
execution, delivery or performance of this Amendment.
E. This Amendment constitutes the legal, valid and binding obligation of the Borrower,
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.
IV. CONDITIONS.
A. This Amendment shall become effective on the first date on which the Borrower shall have
executed and delivered to the Administrative Agent (or shall have caused to be executed and
delivered to the Administrative Agent by the appropriate persons) the following:
1. This Amendment;
2. The Amendment to Lease/Purchase Documents between the Borrower and the Company;
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3. Payment in immediately available funds of all fees agreed to be paid by the
Borrower in connection with this Amendment, including without limitation, a
fully-earned and non-refundable amendment fee in the amount of Seventy-Five Thousand
Dollars ($50,000.00), which amendment fee shall be payable to the Administrative
Agent for pro rata distribution to Bank of America, N.A., in its capacity as a
Lender (“BANA”), and Xxxxx Fargo Bank, N.A (“Xxxxx Fargo”); and
4. Such other supporting documents and certificates as the Administrative Agent or
its counsel may reasonably request.
B. There shall have been executed and delivered to the Administrative Agent (i) an Assignment
and Assumption Agreement by and between M&I Xxxxxxxx & Xxxxxx Bank (“M&I”) and BANA, and
(ii) an Assignment and Assumption Agreement by and between M&I and Xxxxx Fargo, each in form and
substance satisfactory to the Administrative Agent, pursuant to which M&I sells and assigns to BANA
and Xxxxx Fargo respectively, and each purchases from M&I and assumes the Assigned Interest
described and defined in their respective Assignment and Assumption Agreements (the collective
Assigned Interests being all of M&I’s Revolving Commitment), such that after giving effect to such
Assignment and Assumption Agreements, BANA shall hold 50% of the Total Revolving Commitments and
Xxxxx Fargo shall hold 50% of the Total Revolving Commitments.
C. All legal matters incident to the transactions contemplated hereby shall be satisfactory to
counsel for the Administrative Agent.
V. MISCELLANEOUS.
A. As provided in the Credit Agreement, the Borrower agrees to reimburse the Administrative
Agent 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 page is the signature page.]
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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: | /s/ Xxxxxxxx X. Xxxxxx | |||
| Name: Xxxxxxxx X. Xxxxxx | ||||
| Title: Vice Preident | ||||
| BANK OF AMERICA, N.A., successor-by-merger to Fleet National Bank, as Administrative Agent | ||||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: Xxxxxx Xxxxxx | ||||
| Title: Assistant Vice President | ||||
| BANK OF AMERICA, N.A., successor-by-merger to Fleet National Bank, as a Lender | ||||
| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: Xxxx X. Xxxxxxx | ||||
| Title: Vice President | ||||
| XXXXX FARGO BANK, N.A. | ||||
| By: | /s/ J. Xxxxxxxx Xxxx | |||
| Name: J. Xxxxxxxx Xxxx | ||||
| Title: Managing Director | ||||
ANNEX I
Schedule 1.1(A)
Commitments
| Lenders | Amount | |||
Bank of America, N.A., as Administrative Agent for the Lenders |
$ | 10,000,000 | ||
Xxxxx Fargo Bank, N.A. |
$ | 10,000,000 | ||
Total Revolving Commitment Amount |
$ | 20,000,000 | ||
EXHIBIT A
Amendment to Lease/Purchase Documents
SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED LEASE AND
LICENSE FINANCING AND PURCHASE OPTION AGREEMENT
LICENSE FINANCING AND PURCHASE OPTION AGREEMENT
THIS SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED LEASE AND LICENSE FINANCING AND PURCHASE
OPTION AGREEMENT (this “Amendment”), dated as of February 13, 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 the consent of
Arabica to certain actions of the Company, and Arabica is willing to effect such amendments, and
consent to such actions, 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 AND CONSENT. 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 amending and restating the definition of “Consolidated EBITDA” in its entirety as
follows:
“Consolidated EBITDA”: for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as
a charge in the statement of such Consolidated Net Income for such period,
the sum of (a) income tax expense, (b) Consolidated Interest Expense,
(c) depreciation and amortization expense (including amortization of debt
acquisition cost), (d) earnings attributable to minority interests, (e) any
extraordinary expenses, charges or losses, (f) other non-cash charges, and
(g) Pre-Opening Expenses, and minus, (a) to the extent included in
the statement of such Consolidated Net Income for such period, the sum of
(i) any extraordinary, unusual or non-recurring income or gains (including,
whether or not otherwise includable as a separate item in the statement of
such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary
course of business) and (ii) any other non-cash income or credits and
(b) any cash payments made during such period in respect of items described
in clause (e) and/or (f) above subsequent to the fiscal quarter in which the
relevant non-cash expenses, charges or losses were reflected as a charge in
the statement of Consolidated Net Income, all as determined on a
consolidated basis for the Company and its Subsidiaries.
2. By amending and restating the table set forth in the definition of “Pricing Grid” in its
entirety as follows:
| Applicable Margin for | Applicable Margin for | |||||||||||
Consolidated
Senior |
Eurodollar Rate based | COF Rate based Rental | Third Rent | |||||||||
Leverage
Ratio |
Rental Rate Calculations | Rate Calculations | Component Rate | |||||||||
Greater than or equal to
1.0 to 1.0 |
3.00 | % | 4.00 | % | 0.500 | % | ||||||
Greater than or equal
to 0.5 to 1.0 but less
than 1.0 to 1.0 |
2.50 | % | 3.50 | % | 0.375 | % | ||||||
Less than 0.5 to 1.0 |
2.25 | % | 3.25 | % | 0.375 | % | ||||||
3. By deleting the phrase “$55,000,000 (or $60,000,000, if so increased by Arabica and the
Company)” from the definition of “Reference Amount” and by substituting therefor the
following:
“$20,000,000”
B. Financial Covenants. Section 20 of the Master Lease is hereby amended as follows:
| 1. | By amending and restating Section 20(a) in its entirety as follows: |
(a) Maximum Consolidated 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 March 30, 2008 and
each Quarterly Date thereafter to the Consolidated EBITDA of the Company for
the Reference Period ending on such Quarterly Date to be greater than
1.75:1.00.
| 2. | By amending and restating Section 20(b) in its entirety as follows: |
(b) Minimum Consolidated EBITDA. The Company will not cause or permit
the Consolidated EBITDA of the Company for the Reference Period ending on
March 30, 2008 and for the Reference Period ending on each Quarterly Date
thereafter to be less than $9,000,000.
| 3. | By amending and restating Section 20(c) in its entirety as follows: |
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(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 |
1.45:1.00 | |||
| 4. | By amending and restating Section 20(d) in its entirety as follows: |
(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 $12,500,000.
| 5. | By amending and restating Section 20(e) in its entirety as follows: |
(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 store.
C. 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.
III. 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 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.
IV. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Company hereby represents and
warrants to, and covenants and agrees with, Arabica that:
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A. The execution and delivery of this Amendment has been duly authorized by all requisite
action on the part of the Company.
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.
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.
V. 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 Sixth 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: | ||||
