AMENDMENT NO. 1 TO BUSINESS LOAN
AGREEMENT
This Amendment No. 1 (the "Amendment") dated as of April 21, 1997, is between
Bank of America NT & SA (the "Bank") and Coffee People, Inc. (the "Borrower").
RECITALS
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A. The Bank and the Borrower entered into a certain Business Loan Agreement
dated as of September 4, 1996 (the "Agreement").
B. The Bank and the Borrower desire to amend the Agreement.
AGREEMENT
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1. Definitions. Capitalized terms used but not defined in this Amendment shall
have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 A new Article 2A is hereby added to the Agreement as follows:
2A. FACILITY NO. 3: TERM LOAN AMOUNT AND TERMS
2A.1 Loan Amount. The Bank agrees to provide a term loan to the
Borrower in the amount of Six Million Dollars ($6,000,000) (the
"Facility 3 Commitment").
2A.2 Availability Period. The loan is available in one disbursement
from the Bank between the date of this Agreement and June 1, 1997
unless the Borrower is in default.
2A.3 Interest Rate.
(a) Unless the Borrower elects an optional interest rate as described
below the interest rate is the Reference Rate plus 0.50
percentage point.
(b) The Reference Rate is the rate of interest publicly announced
from time to time by Bank of America National Trust and Savings
Association ("BofA California") in San Francisco, California, as
its Reference Rate. The Reference Rate is set based on various
factors, including BofA California's costs and desired return,
general economic conditions and other factors, and is used as a
reference point for pricing some loans. The Bank may price loans
to its customers at, above, or below the Reference Rate. Any
change in the Reference Rate shall take effect at the opening of
business on the days specified in the public announcement of a
change in the Reference Rate.
2A.4 Repayment Terms.
(a) The Borrower will pay interest on June 1, 1997, and then monthly
thereafter until payment in full of any principal outstanding
under this line of credit.
(b) The Borrower will repay the principal amount outstanding on the
Expiration Date in 60 successive equal monthly installments
starting June 1, 1997. On May 1, 2002, the Borrower will repay
the remaining principal balance plus any interest then due.
(c) The Borrower may prepay the loan in full or in part at any time.
The prepayment will be applied to the most remote installment of
principal due under this Agreement.
2A.5 Optional Interest Rates. Instead of the interest rate based on
the Reference Rate, the Borrower may elect to have all or
portions of the loan bear interest at the rate(s) described below
during an interest period agreed to by the Bank and Borrower.
Each interest rate is a rate per year. Interest will be paid on
the last day of each interest period, and on the first day each
month during the interest period. At the end of any interest
period, the interest will revert to the rate based on the
Reference Rate, unless the Borrower has designated another
optional interest rate for the portion.
2A.6 Long Term Rate. The Borrower may elect to have all or portions of
the principal balance of the loan bear interest at the Long Term
Rate, subject to the following requirements:
(a) The interest period during which the Long Term Rate will be in
effect will be one year or more.
(b) The "Long Term Rate" means the fixed interest rate the Bank and
the Borrower agree will apply to the portion during the
applicable interest period.
(c) Each Long Term Rate portion will be for an amount not less than
One Hundred Thousand Dollars ($100,000).
(d) Any portion of the principal balance of the loan already bearing
interest at the Long Term Rate will not be converted to a
different rate during its interest period.
(e) The Borrower may prepay the Long Term Rate portion in whole or in
part in the minimum amount of Five Hundred Thousand Dollars
($500,000). The Borrower will give the Bank irrevocable written
notice of the Borrower's intention to make the prepayment,
specifying the date and amount of the prepayment. The notice must
be received by the Bank at least 5 banking days in advance of the
prepayment. All prepayments of principal on the Long Term Rate
portion will be applied on the most remote principal installment
or installments then unpaid.
(f) Each prepayment of a Long Term Rate portion, whether voluntary,
by reason of acceleration or otherwise, will be accompanied by
payment of all accrued interest on the amount of the prepayment
and the prepayment fee described below.
(g) The prepayment fee will be the sum of fees calculated separately
for each Prepaid Installment, as follows:
(i) The Bank will first determine the amount of interest which
would have accrued each month for the Prepaid Installment
had it remained outstanding until the applicable Original
Payment Date, using the Long Term Rate;
(ii) The Bank will then subtract from each monthly interest
amount determined in (i), above, the amount of interest
which would accrue for that Prepaid Installment if it were
reinvested from the date of prepayment through the Original
Payment Date, using the following rate:
(A) If the Original Payment Date is more than 5 years after
the date of prepayment: the Treasury Rate plus
one-quarter of one percentage point;
(B) If the Original Payment Date is 5 years or less after
the date of prepayment: the Money Market Rate.
(iii)If (i) minus (ii) for the Prepaid Installment is greater
than zero, the Bank will discount the monthly differences to
the date of prepayment by the rate used in (ii) above. The
sum of the discounted monthly differences is the prepayment
fee for that Prepaid Installment.
(h) The following definitions will apply to the calculation of the
prepayment fee:
"Money Market" means the domestic certificate of deposit market,
the eurodollar deposit market or other appropriate money market
selected by the Bank.
"Money Market Rate" means the fixed interest rate per annum which
the Bank determines could be obtained by reinvesting specified
Prepaid Installment in the Money Market from the date of
prepayment through the Original Payment Date.
"Original Payment Dates" mean the dates on which principal of the
Long Term Rate portion would have been paid if there had been no
prepayment. If a portion of the principal would have been paid
later than the end of the interest period in effect at the time
of prepayment, then the Original Payment Date for that portion
will be the last day of the interest period.
"Prepaid Installment" means the amount of the prepaid principal
of the Long Term Rate portion which would have been paid on a
single Original Payment Date.
"Treasury Rate" means the interest rate yield for U.S. Government
Treasury Securities which the Bank determines could be obtained
by reinvesting a specified Prepaid Installment in such securities
from the date of prepayment through the Original Payment Date.
(i) The Bank may adjust the Treasury Rate and Money Market Rate to
reflect the compounding, accrual basis, or other costs of the
Long Term Rate portion. Each of the rates is the Bank's estimate
only and the Bank is under no obligation to actually reinvest any
prepayment. The rates will be based on information from either
the Telerate or Reuters information services, The Wall Street
Journal, or other information sources the Bank deems appropriate.
2A.7 Offshore Rate. The Borrower may elect to have all or portions of
the principal balance of the loan bear interest at the Offshore
Rate, subject to the following requirements:
(a) The "Offshore Rate" means the interest rate the Bank and the
Borrower agree will apply to the portion during the applicable
interest period.
(b) The interest period during which the Offshore Rate will be in
effect will be no shorter than 30 days and no longer than one
year. The last day of the interest period will be determined by
the Bank using the practices of the offshore dollar inter-bank
market.
(c) Each Offshore Rate portion will be for an amount not less than
Five Hundred Thousand Dollars ($500,000).
(d) The Borrower may not elect an Offshore Rate with respect to any
portion of the principal balance of the loan which is scheduled
to be repaid before the last day of the applicable interest
period.
(e) Any portion of the principal balance of the loan already bearing
interest at the Offshore Rate will not be converted to a
different rate during its interest period.
(f) Each prepayment of an Offshore Rate portion, whether voluntary,
by reason of acceleration or otherwise, will be accompanied by
the amount of accrued interest on the amount prepaid, and a
prepayment fee equal to the amount (if any) by which:
(i) the additional interest which would have been payable on the
amount prepaid had it not been paid until the last day of
the interest period, exceeds
(ii) the interest which would have been recoverable by the Bank
by placing the amount prepaid on deposit in the offshore
dollar market for a period starting on the date on which it
was prepaid and ending on the last day of the interest
period for such portion.
(g) The Bank will have no obligation to accept an election for an
Offshore Rate portion if any of the following described events
has occurred and is continuing:
(i) Dollar deposits in the principal amount, and for periods
equal to the interest period, of an Offshore Rate portion
are not available in the offshore Dollar inter-bank market;
or
(ii) the Offshore Rate does not accurately reflect the cost of an
Offshore Rate portion.
2.2 Subparagraph 8.1(c) is added to the Agreement as follows:
(c) Facility No. 3 To use the proceeds of the credit only for the
acquisition of The Coffee Plantation chain in Arizona.
2.3 A new Article 8.3A is hereby added to the Agreement as follows:
8.3A Total Liabilities to Tangible Net Worth. To maintain a ratio of
total liabilities to tangible net worth not exceeding 1.50:1.0.
"Total liabilities" means the sum of current liabilities plus
long term liabilities.
"Tangible net worth" means the gross book value of the Borrower's
assets (excluding goodwill, patents, trademarks, trade names,
organization expense, treasury stock, unamortized debt discount
and expense, deferred research and development costs, deferred
marketing expenses, and other like intangibles) less total
liabilities, including but not limited to accrued and deferred
income taxes, and any reserves against assets.
2.4 In Paragraph 8.3 of the Agreement the ratio "1.25:1.0" is substituted
for the ratio "2.0:1.0."
2.5 Paragraph 8.4 of the Agreement is amended in its entirety as follows:
8.4 Cash Flow Ratio. To maintain for each quarterly accounting
period, a cash flow ratio of at least 2.0:1.0.
"Cash flow ratio" means the ratio of cash flow to the current
portion of long term debt. "Cash flow" is defined as net income,
plus depreciation and amortization, less non-financed capital
expenditures, plus the cash and cash equivalents balance as of
the last day of the most recent quarterly accounting period.
This ratio will be calculated at the end of each fiscal quarter,
using the result of that quarter and each of the 3 immediately
preceding quarters. The current portion of long term debt will be
measured as of the day of the most recent quarterly accounting
period.
2.6 Subparagraph 8.9(f) is added to the Agreement as follows:
(f) each instance of the Borrower opening more than two stores in a
State of the United States other than Oregon.
3. Conditions. This Amendment will be effective when the Bank receives the
following items, in form and content acceptable to the Bank:
3.1 The Borrower agrees to pay a Fifteen Thousand Dollar ($15,000) fee, or
0.25% of the Commitment amount, due upon execution of this Amendment.
3.2 The Borrower agrees to provide to the Bank a copy of the definitive
agreements related to the purchase of the Coffee Plantation Chain in Arizona,
and a comparative schedule showing the historical same store sales results for
each Coffee Plantation store being purchased by the Borrower.
4. Effect of Amendment. Except as provided in this Amendment, all of the terms
and conditions of the Agreement shall remain in full force and effect.
This Amendment is executed as of the date started at the beginning of this
Amendment.
Bank of America NT & SA Coffee People, Inc.
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxx
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Xxxxxx Xxxxxxx Xxxxxxx X. Xxxx
Vice President Chief Financial Officer
