Exhibit 10.1
 

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Wells Fargo Bank, National Association
One Kaiser Plaza, Suite 850
Oakland, California 94162

Wells Fargo Securities, LLC
600 California Street, 20th Floor
San Francisco, CA 94108

CONFIDENTIAL

November 2, 2009

Peet’s Coffee & Tea, Inc.
1400 Park Avenue
Emeryville, California 94608

Attention:  Tom Cawley, Chief Financial Officer

Re: 
Commitment Letter-Peet’s Coffee & Tea, Inc./Diedrich Acquisition

$140,000,000 Senior Secured Credit Facilities

Ladies and Gentlemen:

You have advised Wells Fargo Bank, National Association (“Wells Fargo Bank”),
and Wells Fargo Securities, LLC (“Wells Fargo Securities” and, together with
Wells Fargo Bank, the “Wells Fargo Parties” or “we” or “us”) that Peet’s Coffee
& Tea, Inc. (the “Borrower” or “you”) seeks financing for the proposed
acquisition of all of the shares of common stock, $0.01 par value per share (the
“Shares”), of Diedrich Coffee, Inc. (the “Acquired Company” or “Diedrich”) from
the shareholders of Diedrich (collectively, the “Seller”) by means of a tender
offer for such Shares followed by a merger of a newly formed acquisition entity
(“Newco”) with and into the Acquired Company pursuant to an agreement and plan
of merger, dated as of the date hereof, between you, Newco, and the Acquired
Company (as amended, supplemented or otherwise modified in accordance with
paragraph (b) of the Conditions Annex (as defined below), the “Acquisition
Agreement”), to refinance certain existing indebtedness (if any) of the Borrower
and its subsidiaries and the Acquired Company and its subsidiaries (the
“Refinancing”), to pay fees, commissions and expenses incurred in connection
with the Transactions (as defined below)
 
 
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
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and for ongoing working capital requirements and other general corporate
purposes, all as more fully described in the Summary of Proposed Terms and
Conditions attached hereto as Annex A (the “Term Sheet”).  This Commitment
Letter (as defined below) describes the general terms and conditions for senior
secured credit facilities of up to $140,000,000 to the Borrower consisting of
(a) a term loan facility of up to $100,000,000 (the “Term Loan Facility”) and
(b) a revolving credit facility of up to $40,000,000 (the “Revolving Credit
Facility” and, collectively with the Term Loan Facility, the “Credit
Facilities”).  Except as the context otherwise requires, references to the
“Borrower and its subsidiaries” shall not include the Acquired Company and its
subsidiaries prior to the consummation of the Merger.
 
As used herein, the terms “Offer” and “Merger” have the meanings ascribed to
such terms in the Acquisition Agreement, the term “Acquisition” means the
collective reference to the Offer (including any extensions and subsequent
offering periods and all purchases of shares pursuant thereto), the exercise, if
any, of the Top-Up Option (as defined in the Acquisition Agreement) and the
Merger, and the term “Transactions” means, collectively, the Acquisition, the
Refinancing, the borrowings under the Credit Facilities and the payment of fees,
commissions and expenses in connection with the foregoing.  This letter,
including the Term Sheet and the Conditions Annex attached hereto as Annex B
(the “Conditions Annex”), is referred to herein as the “Commitment Letter”.  The
date on which the Credit Facilities are closed is referred to as the “Closing
Date”.
 
1.           Commitments.
 
(a)           You have requested that Wells Fargo Bank commit to provide the
Credit Facilities.  Wells Fargo Bank is pleased to advise you of its commitment
to provide to the Borrower 100% of the principal amount of the Credit Facilities
(the “Commitments”), upon the terms and subject to the conditions set forth in
this Commitment Letter.
 
(b)           Wells Fargo Securities reserves the right to secure commitments
for the Credit Facilities from a syndicate of banks, financial institutions and
other entities (such banks, financial institutions and other entities committing
to the Credit Facilities, including Wells Fargo Bank, the “Lenders”) upon the
terms and subject to the conditions set forth in this Commitment Letter. The
Commitments of Wells Fargo Bank hereunder shall be reduced on a dollar for
dollar basis by the amount of any corresponding commitments received through
syndication from the other Lenders; provided that any commitments received on or
prior to the Closing Date shall not relieve Wells Fargo Bank of its obligations
to fund 100% of the principal amount of the Credit Facilities to be funded on
the Closing Date upon the terms and subject to the conditions set forth in this
Commitment Letter.  Wells Fargo Securities, acting alone or through or with
affiliates selected by it, will act as the sole lead bookrunner and sole lead
arranger (in such capacities, the “Lead Arranger”) in arranging and syndicating
the Credit Facilities.  Wells Fargo Bank will act as the sole administrative
agent (in such capacity, the “Administrative Agent”) for the Credit
Facilities.  No additional agents, co-agents or arrangers will be appointed and
no other titles will be awarded without the prior written approval of the Lead
Arranger. The Lead Arranger shall have the right, in consultation with you, to
award the titles to other co-agents or arrangers who are Lenders that provide
(or whose affiliates provide) commitments in respect of the Credit Facilities;
provided, that no other agent, co-agent or arranger other than the Lead Arranger
shall have rights in respect of the management of the syndication of the Credit
Facilities (including, without limitation, in respect of “flex” rights under the
Fee Letter, over which the Lead Arranger shall have sole control).
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
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(c)           Effective upon your agreement to and acceptance of this Commitment
Letter and continuing through the earlier of the completion of a Successful
Syndication (as defined in the Fee Letter) and June 1, 2010, except as expressly
permitted by Section 4(b) of the Fee Letter, you will not solicit, initiate,
entertain or permit, or enter into any discussions with any other bank,
investment bank, financial institution, person or entity in respect of any
structuring, arranging, underwriting, offering, placing, or syndicating of all
or any portion of the Credit Facilities or any other bank or other financing
similar to, or as a replacement of, all or any portion of the Credit Facilities.
 
2.           Conditions to Commitments.  The Commitments of Wells Fargo Bank and
the undertakings of Wells Fargo Securities hereunder are subject to the
satisfaction of each of the following conditions precedent:
 
(a)           your written acceptance, and compliance with the terms and
conditions, of (i) a letter dated the date hereof from the Wells Fargo Parties
to you (the “Fee Letter”) pursuant to which you agree to pay, or cause to be
paid, to the Wells Fargo Parties certain fees and expenses and to fulfill
certain other obligations in connection with the Credit Facilities and (ii) in
all material respects, this Commitment Letter;
 
(b)           after the date hereof and until the earlier of the completion of a
Successful Syndication (as defined in the Fee Letter) and 180 days after the
date the Merger is consummated, none of the Borrower, the Acquired Company nor
any of its/their respective subsidiaries shall have announced, offered,
arranged, syndicated or issued any debt securities (including convertible
securities) or bank financing (other than the Credit Facilities) without our
prior written consent;
 
(c)           from and after the date hereof, there not having occurred a
Company Material Adverse Effect (as defined in the Acquisition Agreement); and
 
(d)           the satisfaction of all other conditions described herein, in the
Term Sheet and in the Conditions Annex.
 
3.           Syndication.

(a)           The Lead Arranger intends and reserves the right to syndicate the
Credit Facilities and you acknowledge and agree that the Lead Arranger intends
to commence syndication efforts promptly following your acceptance of this
Commitment Letter and the Fee Letter.  The Lead Arranger may, at its option,
conduct or conclude such syndication before or after the closing of the Credit
Facilities.
 
(b)           You agree to, and will use your commercially reasonable efforts to
cause appropriate members of management of the Acquired Company to, actively
assist us in achieving a syndication of the Credit Facilities that is
satisfactory to us and you.  To assist us in our syndication efforts, you agree
that you will, and will cause your representatives and non-legal advisors to,
and will use your commercially reasonable efforts to cause appropriate members
of management of the Acquired Company to, (i) promptly provide the Wells Fargo
Parties and the other Lenders upon request with all information reasonably
deemed necessary by the Lead Arranger to assist the Lead Arranger and each
Lender in their evaluation of the Transactions and to complete the syndication,
(ii) make available to prospective Lenders senior management of the Borrower and
(to the extent reasonable and practical) appropriate members of management of
the Acquired Company on reasonable prior notice and at reasonable times and
places, (iii) host, with the Lead Arranger, one or more meetings with
prospective Lenders, (iv) assist, and cause your affiliates and advisors to
assist, the Lead Arranger in the preparation of one or more confidential
information memoranda and other marketing materials to be used in connection
with the syndication, and (v) use your reasonable best efforts to ensure that
the syndication efforts of the Lead Arranger benefit materially from the
existing lending relationships of the Borrower and the Acquired Company.
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
PAGE 3

 
(c)           The Lead Arranger and/or one or more of its affiliates, in
consultation with you, will exclusively manage all aspects of the syndication of
the Credit Facilities, including decisions as to the selection and number of
potential Lenders to be approached, when they will be approached, whose
commitments will be accepted, any titles offered to the Lenders and the final
allocations of the commitments and any related fees among the Lenders, and the
Lead Arranger will exclusively perform all functions and exercise all authority
as is customarily performed and exercised in such capacities.  No Lender shall
receive compensation from the Borrower with respect to the Credit Facilities
outside the terms contained herein and in the Fee Letter in order to obtain its
commitment to participate in the Credit Facilities and the Lead Arranger shall
have sole discretion with respect to the allocation and distribution of fees
among the Lenders.
 
4.           Information.
 
(a)           You represent, warrant and covenant that (i) all information
(other than the Projections, as defined below) concerning the Borrower and its
subsidiaries and, to the best of your knowledge, the Acquired Company and its
subsidiaries, and the Transactions that has been or will be made available to
the Wells Fargo Parties or the Lenders by you, or any of your representatives,
subsidiaries or affiliates (or on your or their behalf) (the “Information”) is,
and in the case of Information made available after the date hereof, will be
complete and correct in all material respects and does not, and in the case of
Information made available after the date hereof, will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading and (ii) all financial projections
concerning the Borrower, the Acquired Company and their respective subsidiaries
that have been or will be made available to the Wells Fargo Parties or the
Lenders by you, or any of your representatives, subsidiaries or affiliates (or
on your or their behalf) (the “Projections”) have been and will be prepared in
good faith based upon assumptions believed by you to be reasonable at the time
made, it being understood that actual results may vary materially from the
Projections.  You agree to furnish us with such Information and Projections as
we may reasonably request and to supplement, or cause to be supplemented, the
Information and the Projections from time to time until the Closing Date and, if
requested by the Lead Arranger, after the Closing Date through the completion of
a Successful Syndication (as defined in the Fee Letter) of the Credit Facilities
so that the conditions and representations and warranties contained in the
preceding sentence remain correct.  We will be entitled to use and rely upon,
without responsibility to independently verify, the Information and the
Projections.  You acknowledge that, subject to Section 7 hereof, the Wells Fargo
Parties may share with any of their respective affiliates (it being understood
that such affiliates will be subject to the confidentiality agreements between
you and us), and such affiliates may share with the Wells Fargo Parties, any
information related to the Borrower, the Acquired Company, or any of their
respective subsidiaries or affiliates (including, without limitation, in each
case, information relating to creditworthiness) and the transactions
contemplated hereby.  You represent and warrant as of the date hereof that no
material litigation is pending or to your knowledge, threatened against you or
your subsidiaries or Diedrich and its subsidiaries other than as disclosed in
public SEC filings made prior to the date hereof.
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
PAGE 4

 
(b)           You acknowledge that (i) the Wells Fargo Parties on your behalf
will make available the Information, Projections and other marketing materials
and presentations, including confidential information memoranda (collectively,
the “Informational Materials”), to the potential Lenders by posting the
Informational Materials on DXSyndicateTM or by other similar electronic means
(collectively, the “Electronic Means”) and (ii) certain prospective Lenders
(“Public Lenders”) may not wish to receive material non-public information
(within the meaning of the United States federal securities laws, “MNPI”) with
respect to the Borrower, the Acquired Company or their respective affiliates or
any of their respective securities, and who may be engaged in investment and
other market-related activities with respect to such entities’ securities.  At
the request of the Lead Arranger, (A) you will assist, and cause your
affiliates, advisors, and to the extent possible using your reasonable best
efforts, appropriate representatives of the Acquired Company to assist, the Lead
Arranger in the preparation of Informational Materials to be used in connection
with the syndication of the Credit Facilities to Public Lenders, which will not
contain MNPI (the “Public Informational Materials”), (B) you will identify and
conspicuously mark any Public Informational Materials “PUBLIC”, and (C) you will
identify and conspicuously mark any Informational Materials that include any
MNPI as “PRIVATE AND CONFIDENTIAL”.  Notwithstanding the foregoing, you agree
that the Wells Fargo Parties may distribute the following documents to all
prospective Lenders (including the Public Lenders) on your behalf , unless you
advise the Wells Fargo Parties in writing (including by email) within a
reasonable time prior to their intended distributions that such material should
not be distributed to Public Lenders:  (x) administrative materials for
prospective Lenders such as lender meeting invitations and funding and closing
memoranda, (y) notifications of changes to Credit Facilities’ terms and (z)
other materials intended for prospective Lenders after the initial distribution
of the Informational Materials, including drafts and final versions of
the Financing Documentation.  If you advise us that any of the foregoing items
(other than the Financing Documentation) should not be distributed to Public
Lenders, then the Wells Fargo Parties will not distribute such materials to
Public Lenders without further discussions with you.
 
5.           Indemnification.
 
You agree to indemnify and hold harmless the Wells Fargo Parties and each of
their respective affiliates, directors, officers, employees, partners,
representatives, advisors and agents and each of their respective heirs,
successors and assigns (each, an “Indemnified Party”) from and against any and
all actions, suits, losses, claims, damages, liabilities and expenses of any
kind or nature, joint or several, to which such Indemnified Party may become
subject or that may be incurred or asserted or awarded against such Indemnified
Party, in each case arising out of or in connection with or by reason of
(including, without limitation, in connection with any investigation, litigation
or proceeding or preparation of a defense in connection therewith) (i) any
matters contemplated by this Commitment Letter, the Fee Letter, the Transactions
or any related transaction (including, without limitation, the execution and
delivery of this Commitment Letter, the Financing Documentation (as defined in
the Term Sheet) for the Credit Facilities and the closing of the Transactions)
or (ii) the use or the contemplated use of the proceeds of the Credit
Facilities, and will reimburse each Indemnified Party for all out-of-pocket
expenses (including reasonable attorneys’ fees, expenses and charges) on demand
as they are incurred in connection with any of the foregoing; provided that no
Indemnified Party shall have any right to indemnification for any of the
foregoing to the extent resulting from such Indemnified Party’s own gross
negligence, bad faith or willful misconduct as determined by a final
non-appealable judgment of a court of competent jurisdiction.  In the case of an
investigation, litigation or proceeding to which the indemnity in this paragraph
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by you, your equityholders or creditors or
an Indemnified Party, whether or not an Indemnified Party is otherwise a party
thereto and whether or not the transactions contemplated hereby are
consummated.  You also agree that no Indemnified Party shall have any liability
(whether direct or indirect, in contract or tort, or otherwise) to you or your
affiliates or to your or their respective equity holders or creditors arising
out of, related to or in connection with any aspect of the transactions
contemplated hereby, except to the extent such liability is determined in a
final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party’s gross negligence, bad faith or willful
misconduct.  The Wells Fargo Parties shall only have liability to you (as
opposed to any other person), and Wells Fargo Bank shall be liable solely in
respect of its own Commitment to the Credit Facilities on a several, and not
joint, basis with any other Lender.  No Indemnified Party shall be liable to
you, your affiliates or any other person for any indirect, consequential or
punitive damages that may be alleged as a result of this Commitment Letter or
any element of the Transactions.  No Indemnified Party shall be liable to you,
your affiliates or any other person for any damages arising from the use by
others of Informational Materials or other materials obtained by Electronic
Means.  You shall not, without the prior written consent of each Indemnified
Party affected thereby (which consent will not be unreasonably withheld), settle
any threatened or pending claim or action that would give rise to the right of
any Indemnified Party to claim indemnification hereunder unless such settlement
(a) includes a full and unconditional release of all liabilities arising out of
such claim or action against such Indemnified Party and (b) does not include any
statement as to or an admission of fault, culpability or failure to act by or on
behalf of any Indemnified Party.
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
PAGE 5

 
If any action, suit, proceeding or investigation is commenced, as to which any
of the Indemnified Party proposes to demand indemnification, it shall notify you
with reasonable promptness; provided, however, that any failure by any of the
Indemnified Parties to so notify you shall not relieve you from your obligations
hereunder and shall not result in any liability of any Indemnified Party.  In
connection with any such action, suit, proceeding or investigation to which an
Indemnified Party is a party, the Wells Fargo Parties (as applicable), on behalf
of the Indemnified Parties, shall have the right to retain counsel of its choice
to represent the Indemnified Parties, and you shall pay the fees, expenses, and
disbursement of such counsel, and such counsel shall, to the extent consistent
with its professional responsibilities, cooperate with you and any counsel
designated by you.  For the avoidance of doubt, it is understood that you shall
not be required to reimburse, or indemnify and hold harmless for, the reasonable
and documented legal fees and expenses of more than one outside counsel (in
addition to up to one local counsel in each applicable local jurisdiction and
one regulatory counsel) for all Indemnified Parties unless representation of all
such Indemnified Parties would be inappropriate due to the existence of an
actual, perceived or potential conflict of interest.  You shall not be liable
for any settlement of any claim against any of the Indemnified Parties made
without your prior written consent, which consent shall not be unreasonably
withheld or delayed.  Without the prior written consent of the Wells Fargo
Parties, you shall not settle or compromise any claim of any Indemnified Party,
permit a default or consent to the entry of any judgment in respect thereof
except for settlements that include an unconditional release of such Indemnified
Party from all liability and claims that are the subject matter of such claim
and that do not include any statement as to admission on the part of such
Indemnified Party.
 
6.           Expenses.  You shall reimburse each of the Wells Fargo Parties,
from time to time on demand for all reasonable out-of-pocket costs and expenses
(including, without limitation, (i) reasonable legal fees and expenses, (ii) due
diligence expenses and (iii) expenses incurred in connection with appraisals
(including, without limitation, equipment and real estate appraisals),
environmental reports and an Agribusiness Consultant’s Report) of the Wells
Fargo Parties and all reasonable printing, reproduction, document delivery,
travel, CUSIP, DXSyndicateTM and communication costs incurred in connection with
the syndication and execution of the Credit Facilities and the preparation,
review, negotiation, execution and delivery of this Commitment Letter, the Fee
Letter and the Financing Documentation (as defined in the Term Sheet).  You
shall also reimburse each of the Wells Fargo Parties, from time to time on
demand for all out-of-pocket costs and expenses (including, without limitation,
legal fees and expenses) of the Wells Fargo Parties incurred in connection with
the enforcement of this Commitment Letter and the Fee Letter.
 
7.           Confidentiality.
 
(a)           This Commitment Letter and the Fee Letter (collectively, the
“Commitment Documents”) and the existence and contents hereof and thereof shall
be confidential and may not be disclosed by you in whole or in part to any
person without our prior written consent, except for (i) the disclosure hereof
or thereof on a confidential basis to your directors, officers, employees,
accountants, attorneys and other professional advisors who have agreed to
maintain the confidentiality of the Commitment Documents for the purpose of
evaluating, negotiating or entering into the Transactions, (ii) the disclosure
hereof and the Fee Letter (with fee information redacted) to the directors,
officers, employees, accountants, attorneys and other professional advisors of
the Acquired Company on a confidential basis for the purpose of evaluating,
negotiating or entering into the Transactions, or (iii) as otherwise required by
law; provided that you may disclose, after your acceptance of the Commitment
Documents, (A) this Commitment Letter, but not the Fee Letter, in any required
filings with the Securities and Exchange Commission and other applicable
regulatory authorities and stock exchanges and (B) the Term Sheet to any ratings
agency in connection with the Transactions.
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
PAGE 6

 
Each of the Wells Fargo Parties agrees that material, non-public information
regarding the Borrower, the Acquired Company and their respective subsidiaries,
their operations, assets, and existing and contemplated business plans shall be
treated by such person in a confidential manner, and shall not be disclosed by
such person to persons who are not parties to this Commitment Letter, except for
(i) the disclosure of such information on a confidential basis to potential
Lenders and our and their directors, officers, employees, auditors, examiners,
accountants, attorneys and other professional advisors who have agreed or are
otherwise under a duty to maintain the confidentiality thereof in connection
with the Transactions, (ii) disclosure of such information to regulatory
officials having jurisdiction over us (to the extent such disclosure is
requested by or otherwise required to be provided to such regulatory official),
(iii) after any breach or default by you under the Commitment Documents, to the
extent we determine disclosure is necessary or appropriate for enforcement or
protection of our rights and remedies, or (iv) as otherwise required by law,
court or administrative order; provided that the Wells Fargo Parties shall be
permitted to use information related to the syndication and arrangement of the
Credit Facilities in connection with obtaining a CUSIP number, marketing, press
releases or other transactional announcements or updates provided to investor or
trade publications, subject to confidentiality obligations or disclosure
restrictions reasonably requested by you.  Notwithstanding the foregoing, this
paragraph does not limit the use of Electronic Means as set forth in Section
4(b) above.  Our obligations under this paragraph will be superseded by the
confidentiality provisions in the Financing Documentation (as defined in the
Term Sheet) effective upon the Closing Date.
 
(b)           The Wells Fargo Parties hereby notify you that pursuant to the
requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into
law October 26, 2001) (the “Patriot Act”), each of them is required to obtain,
verify and record information that identifies you and your subsidiaries, which
information includes your and their name and address and other information that
will allow the Wells Fargo Parties and the other Lenders to identify you and
your subsidiaries in accordance with the Patriot Act.
 
8.           Other Services.
 
(a)           Nothing contained herein shall limit or preclude the Wells Fargo
Parties or any of their affiliates from carrying on any business with, providing
banking or other financial services to, or from participating in any capacity,
including as an equity investor, in any party whatsoever, including, without
limitation, any competitor, supplier or customer of you, the Seller, the
Acquired Company or any of your or their respective affiliates, or any other
party that may have interests different than or adverse to such parties.
 
(b)           You acknowledge that the Lead Arranger and its affiliates (the
term “Lead Arranger” as used in this paragraph being understood to include such
affiliates) (i) may be providing debt financing, equity capital or other
services (including financial advisory services) to other companies with which
you, the Seller, the Acquired Company or your or their respective affiliates may
have conflicting interests regarding the Transactions and otherwise, (ii) may
act, without violation of its contractual obligations to you, as it deems
appropriate with respect to such other companies, and (iii) have no obligation
in connection with the Transactions to use, or to furnish to you, the Seller,
the Acquired Company or your or their respective affiliates or subsidiaries,
confidential information obtained from other companies or entities.  In
particular, you acknowledge that the Wells Fargo Parties and their respective
affiliates may be arranging or providing (or contemplating arranging or
providing) a committed form of acquisition financing to other potential
purchasers of the Acquired Company and that, in such capacity, the Wells Fargo
Parties may acquire information about the Acquired Company, the sale thereof,
and such other potential purchasers and their strategies and proposals, but the
Wells Fargo Parties shall have no obligation to disclose to you the substance of
such information or the fact that the Wells Fargo Parties are in possession
thereof.
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
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(c)           In connection with all aspects of the Transactions, you
acknowledge and agree that: (i) the Credit Facilities and any related arranging
or other services described in this Commitment Letter is an arm’s-length
commercial transaction between you and your affiliates, on the one hand, and the
Wells Fargo Parties, on the other hand, and you are capable of evaluating and
understanding and understand and accept the terms, risks and conditions of the
Transactions, (ii) in connection with the process leading to the Transactions,
each of the Wells Fargo Parties is and has been acting solely as a principal and
not as a financial advisor, agent or fiduciary, for you or any of your
affiliates, stockholders, creditors or employees or any other party, (iii) no
Wells Fargo Party has assumed or will assume an advisory, agency or fiduciary
responsibility in your or your affiliates’ favor with respect to any of the
Transactions or the process leading thereto (irrespective of whether any Wells
Fargo Party has advised or is currently advising you or your affiliates on other
matters) and no Wells Fargo Party has any obligation to you or your affiliates
with respect to the Transactions except those obligations expressly set forth in
this Commitment Letter, (iv) the Wells Fargo Parties and their respective
affiliates may be engaged in a broad range of transactions that involve
interests that differ from yours and your affiliates and no Wells Fargo Party
shall have any obligation to disclose any of such interests, and (v) no Wells
Fargo Party has provided any legal, accounting, regulatory or tax advice with
respect to any of the Transactions and you have consulted your own legal,
accounting, regulatory and tax advisors to the extent you have deemed
appropriate.  You hereby waive and release, to the fullest extent permitted by
law, any claims that you may have against any Wells Fargo Party with respect to
any breach or alleged breach of agency or fiduciary duty.
 
9.           Acceptance/Expiration of Commitments.
 
(a)           This Commitment Letter and the Commitments and agreements of Wells
Fargo Bank and the undertakings of Wells Fargo Securities set forth herein,
shall automatically terminate at 5:00 p.m. (Eastern Time, Standard or Daylight,
as applicable) on November 2, 2009 (the “Acceptance Deadline”), without further
action or notice unless signed counterparts of this Commitment Letter and the
Fee Letter shall have been delivered to the Lead Arranger by such time.
 
(b)           In the event this Commitment Letter is accepted by you as provided
in the last paragraph hereof, the Commitments and agreements of Wells Fargo Bank
and the undertakings of Wells Fargo Securities set forth herein shall
automatically terminate without further action or notice upon the earliest to
occur of (i) consummation of the Offer, (ii) termination of the Acquisition
Agreement, (iii) 5:00 p.m. (Eastern Time, Daylight or Standard, as applicable)
on November 6, 2009, if the Borrower has failed to execute and deliver a copy of
the Acquisition Agreement to Wells Fargo Securities by such time, (iv) April 1,
2010, if Newco shall not have accepted for purchase Shares pursuant to the Offer
representing more than 50% of the Adjusted Outstanding Share Number (as defined
in the Acquisition Agreement) on or prior to March 31, 2010, (v) the Additional
Termination Date (as defined in the Fee Letter) and (vi) 5:00 p.m. (Eastern
Time, Daylight or Standard, as applicable) on April 15, 2010.  You agree to
promptly notify us of the occurrence of the circumstances described in
clause (ii) in the prior sentence.
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
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10.           Survival.  The sections of this Commitment Letter relating to
Indemnification, Expenses, Confidentiality, Other Services, Survival and
Governing Law shall survive any termination or expiration of this Commitment
Letter or the Commitments of Wells Fargo Bank or the undertakings of Wells Fargo
Securities set forth herein (regardless of whether definitive Financing
Documentation is executed and delivered), and the Sections relating to
Syndication and Information shall survive until completion of a Successful
Syndication.  The Fee Letter shall survive any termination or expiration of the
Commitment Letter and the closing of the Credit Facilities.
 
11.           Governing Law.  This Commitment Letter and the Fee Letter shall be
governed by, and construed in accordance with, the laws of the State of New
York without regard to principles of conflicts of law to the extent that the
application of the laws of another jurisdiction will be required thereby.  The
parties hereby waive any right to trial by jury with respect to any claim or
action arising out of this Commitment Letter or the Fee Letter.  The parties
hereto hereby agree that any suit or proceeding arising in respect of this
Commitment Letter or the Fee Letter or any of the matters contemplated hereby or
thereby will be tried exclusively in the U.S. District Court for the Southern
District of New York or, if such court does not have subject matter
jurisdiction, in any state court located in the City and County of New York, and
the parties hereto hereby agree to submit to the exclusive jurisdiction of, and
venue in, such court.  The parties hereto hereby agree that service of any
process, summons, notice or document by registered mail addressed to you or each
of the Wells Fargo Parties shall be effective service of process against such
party for any action or proceeding relating to any such dispute.  The parties
hereto irrevocably and unconditionally waive any objection to venue of any such
action or proceeding brought in any such court and any claim that any such
action or proceeding has been brought in an inconvenient forum.  A final
judgment in any such action or proceeding may be enforced in any other courts
with jurisdiction over you or each of the Wells Fargo Parties.
 
12.           Miscellaneous.  This Commitment Letter and the Fee Letter embody
the entire agreement among the Wells Fargo Parties and you and your affiliates
with respect to the specific matters set forth above and supersede all prior
agreements and understandings relating to the subject matter hereof.  Those
matters that are not covered or made clear herein, in the Term Sheet, in the
Conditions Annex or the Fee Letter are subject to mutual agreement of the
parties.  No person has been authorized by any of the Wells Fargo Parties to
make any oral or written statements inconsistent with this Commitment Letter and
the Fee Letter.  This Commitment Letter and the Fee Letter shall not be
assignable by you without the prior written consent of the Wells Fargo Parties,
and any purported assignment without such consent shall be void.  This
Commitment Letter and the Fee Letter are not intended to benefit or create any
rights in favor of any person other than the parties hereto, the Lenders and,
with respect to indemnification, each Indemnified Party.  This Commitment Letter
and the Fee Letter may be executed in separate counterparts and delivery of an
executed signature page of this Commitment Letter and the Fee Letter by
facsimile or electronic mail shall be effective as delivery of manually executed
counterpart hereof; provided that, upon the request of any party hereto, such
facsimile transmission or electronic mail transmission shall be promptly
followed by the original thereof.  Except as set forth in Section 7 of the Fee
Letter, this Commitment Letter and the Fee Letter may only be amended, modified
or superseded by an agreement in writing signed by each of you and the Wells
Fargo Parties that specifically provides such with reference to this Commitment
Letter or the Fee Letter, as applicable.  The obligations of the Wells Fargo
Parties are several and not joint.
 
 
[This Space Intentionally Left Blank]
 
 
 
 
 
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
PAGE 9

 
If you are in agreement with the foregoing, please indicate acceptance of the
terms hereof by signing the enclosed counterpart of this Commitment Letter and
returning it to the Lead Arranger, together with executed counterparts of the
Fee Letter, by no later than the Acceptance Deadline.
 
 
Sincerely,
 
 
WELLS FARGO BANK, NATIONAL ASSOCIATION
 
 
By:  /s/ Todd Tajiri

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Name:  Todd Tajiri
Title: Vice President
 
 
WELLS FARGO SECURITIES, LLC
 
 
By:   /s/ Kevin J. Sanders

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Name:  Kevin J. Sanders
Title:  Vice President
 
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
PAGE 10

 
Agreed to and accepted as of the date first
above written:

PEET’S COFFEE & TEA, INC.

By:  /s/ Tom Cawley

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Name: Tom Cawley
Title: Chief Financial Officer
 
 

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Peet’s Coffee & Tea, Inc. Commitment Letter
PAGE 11

 
ANNEX A
 
$140,000,000
SENIOR SECURED CREDIT FACILITIES
SUMMARY OF PROPOSED TERMS AND CONDITIONS
 
Capitalized terms not otherwise defined herein have the same meanings as
specified therefor in the Commitment Letter to which this Summary of Proposed
Terms and Conditions is attached.

Borrower:
 
Peet’s Coffee & Tea, Inc. (the “Borrower”).  After understanding the corporate
organization structure of Peet’s Coffee & Tea, Inc. and its subsidiaries
following the Merger, the Lead Arranger may require additional co-borrowers.
       
Sole Lead Arranger and Sole Lead Bookrunner:
  Wells Fargo Securities, LLC will act as sole lead arranger and sole lead
bookrunner (in such capacity, the “Lead Arranger”).        
Lenders:
 
Wells Fargo Bank, National Association (“Wells Fargo Bank”) and a syndicate of
financial institutions and other entities (each a “Lender” and, collectively,
the “Lenders”).
       
Administrative Agent, Issuing Bank and Swingline Lender:
 
Wells Fargo Bank, National Association (in such capacity, the “Administrative
Agent”, the “Issuing Bank” or the “Swingline Lender”, as the case may be).
       
Credit Facilities:
  Senior secured credit facilities (the “Credit Facilities”) in an aggregate
principal amount of $140,000,000, such Credit Facilities to consist of:        
    (a)
Revolving Credit Facility.  A five-year revolving credit facility in an
aggregate principal amount of $40,000,000 (the “Revolving Credit Facility”)
(with optional subfacilities for standby letters of credit (each, a “Letter of
Credit”) and swingline loans (each, a “Swingline Loan”), each in a maximum
amount to be mutually determined and on customary terms and conditions
(including with regard to Defaulting or Deteriorating Lenders) with compensation
to be agreed).  Letters of Credit will, at the sole discretion of the Issuing
Bank, be issued by the Issuing Bank and Swingline Loans will, at the sole
discretion of the Swingline Lender, be made available by the Swingline Lender
and each Lender will purchase an irrevocable and unconditional participation in
each Letter of Credit and Swingline Loan extended.

 
 

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Annex A – Term Sheet
PAGE 1

 

    (b) Term Loan Facility.  A five-year term loan facility in an aggregate
principal amount of $100,000,000 (the “Term Loan Facility”).        
Use of Proceeds:
 
The proceeds of the Credit Facilities will be used to (a) provide a portion of
the financing for the Acquisition and the Refinancing and (b) pay fees,
commissions and expenses incurred in connection with the Transactions.  The
proceeds of the Revolving Credit Facility will be used to provide for the
ongoing working capital and other general corporate purposes of the Borrower and
its subsidiaries and the Acquired Company and its subsidiaries; provided that
prior to the Merger (i) at all times the Borrower must maintain the aggregate
amount of Deposited Proceeds (as defined below) and availability under the
Revolving Credit Facility in an amount sufficient to consummate the Acquisition
and (ii) in no event shall the outstandings under the Revolving Credit Facility
used for working capital and other general corporate purposes exceed
$10,000,000. The Borrower shall be required to deposit any Term Loan proceeds
advanced on the Closing Date, but not used in connection with the Acquisition on
the Closing Date in a separate collateral account maintained at Wells Fargo Bank
and such funds shall be used solely for the Acquisition until the day after the
Merger occurs (such deposited amount, plus any other amounts voluntarily
deposited by the Borrower (including revolving loan proceeds) in such account
are referred to herein as the “Deposited Proceeds”). If the Merger does not
occur by June 30, 2010, the Term Loan proceeds in such account shall be applied
to the Term Loan as a mandatory prepayment.
       
Closing Date:
 
The date on which the Credit Facilities are closed (the “Closing Date”).
       
Availability:
 
The Revolving Credit Facility will be available on a revolving basis from and
after the Closing Date until the Revolving Credit Maturity Date (as defined
below). The Term Loan Facility will be available only in a single draw of the
full amount of the Term Loan Facility on the Closing Date.
       
Documentation:
 
The documentation for the Credit Facilities will include, among other items, a
credit agreement, guarantees and appropriate pledge, security, mortgage and
other collateral documents (collectively, the “Financing Documentation”), all
consistent with this Term Sheet.

 
 

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Annex A – Term Sheet
PAGE 2

 
 
Guarantors:
 
The obligations of the Borrower under the Credit Facilities, under any hedging
agreements entered into between any Loan Party (as defined below) and any
counterparty that is a Lender (or any affiliate thereof) at the time such
hedging agreement is executed and under any treasury management arrangements
between any Loan Party and a Lender (or any affiliate thereof) will be
unconditionally guaranteed, on a joint and several basis, by each existing and
subsequently acquired or organized direct and indirect subsidiary of the
Borrower (each a “Guarantor”; and such guarantee being referred to herein as a
“Guarantee”); provided that (a) the Acquired Company and its subsidiaries shall
not be required to become Guarantors prior to the Merger or prior to, or as a
condition to, the making of any of the credit extensions used to fund the
Acquisition, provided that the Acquired Company and its subsidiaries (to the
extent specified herein) shall become Guarantors no later than 10 days after the
Merger and (b) Guarantees by foreign subsidiaries will be required only to the
extent such Guarantees would not have material adverse tax consequences for the
Borrower. All Guarantees shall be guarantees of payment and not of
collection.  The Borrower and the Guarantors are herein referred to as the “Loan
Parties” and, individually, as a “Loan Party.”
       
Security:
 
There will be granted to the Administrative Agent, for the benefit of the
Lenders, any counterparty to any hedging agreement that is a Lender (or any
affiliate thereof) at the time such hedging agreement is executed and any Lender
(or any affiliate thereof) with treasury management arrangements with any Loan
Party, valid and perfected first priority (subject to exceptions set forth in
the Conditions Annex and subject to certain customary exceptions satisfactory to
the Administrative Agent and set forth in the Financing Documentation) liens and
security interests in all of the following (collectively, the “Collateral”):
            (a)
All present and future capital stock or other membership, equity, ownership or
profit interests (collectively, “Equity Interests”) owned or held by each of the
Loan Parties, and 66% of the voting stock (and 100% of the non-voting stock) of
all present and future first-tier foreign subsidiaries of any Loan Party (to the
extent, and for so long as, the pledge of any greater percentage would have
material adverse tax consequences for the Borrower); provided that any
first-tier foreign subsidiary that is disregarded for tax purposes shall not be
deemed to be a foreign subsidiary;

 
 

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Annex A – Term Sheet
PAGE 3

 
 

    (b)
substantially all of the tangible and intangible properties and assets of the
Loan Parties, now owned or hereafter acquired (including, without limitation,
all equipment, inventory, accounts, deposit accounts and all other accounts,
licenses, contract and other intangible rights, investment property, fixtures,
cash, owned real property interests, leased real property interests and
intellectual property; and
            (c) all products and proceeds of the foregoing.            
All such security interests will be created pursuant to, and will comply with,
Financing Documentation reasonably satisfactory to the Administrative Agent.  On
the Closing Date, such security interests will have become perfected (or
arrangements for the perfection thereof reasonably satisfactory to the
Administrative Agent will have been made) (subject to exceptions set forth in
the Conditions Annex).
           
The Administrative Agent may, in its reasonable discretion, agree to exclude
such other Collateral as is not material to the Collateral taken as a whole to
the extent that the burden to the Borrower or relevant Guarantor of delivering
such Collateral outweighs the benefits of obtaining such Collateral that would
be provided to the Lenders.
       
Final Maturity:
 
The final maturity of the Revolving Credit Facility will occur on the fifth
anniversary of the Closing Date (the “Revolving Credit Maturity Date”) and the
commitments with respect to the Revolving Credit Facility will automatically
terminate on such date. The final maturity of the Term Loan Facility will occur
on the fifth anniversary of the Closing Date (the “Term Loan Maturity Date”).
       
Amortization:
 
The Term Loan Facility will amortize in equal quarterly installments on the last
business day of each fiscal quarter of the Borrower, commencing with the second
quarter of FY 2010, in an amount equal to $3,703,703.70, with the then unpaid
principal amount due on the Term Loan Maturity Date.
       
Interest Rates and Fees:
  Interest rates and fees in connection with the Credit Facilities will be as
specified in the Fee Letter and on Schedule I attached hereto.

 
 

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Annex A – Term Sheet
PAGE 4

 
Mandatory Prepayments and Commitment Reductions:
  Subject to the next paragraph, the Credit Facilities will be required to be
prepaid with:             (a)
100% of the net cash proceeds of the issuance or incurrence of debt by the
Borrower or any of its subsidiaries, subject to baskets and other exceptions to
be mutually agreed upon;
            (b)
25% of the net cash proceeds from any issuance of equity securities of, or from
any capital contribution to the Borrower or any of its subsidiaries, subject to
exceptions to be mutually agreed upon; and
            (c)
100% of the net cash proceeds of any asset sale, insurance or condemnation
recovery or other asset disposition with a value in excess of $1,000,000 by the
Borrower or any of its subsidiaries, subject to baskets and other exceptions to
be mutually agreed upon; provided that such proceeds may be reinvested: (i) for
any proceeds from any insurance or condemnation recovery with respect to the
Borrower’s or the Acquired Company’s roasting facility, within 365 days so long
as such reinvestment commences within 180 days and (ii) with respect to all
other proceeds under this clause (c), within 180 days, in each case subject to
customary reinvestment provisions.
           
All such mandatory prepayments will be applied first, to prepay outstanding
loans under the Term Loan Facility and second, to prepay outstanding loans under
the Revolving Credit Facility (with, when no loans are outstanding under the
Term Loan Facility, a permanent reduction in the aggregate commitment under the
Revolving Credit Facility).  All such mandatory prepayments of the Term Loan
Facility will be applied to the remaining scheduled amortization payments on a
pro rata basis.
       
Optional Prepayments and Commitment Reductions:
 
Loans under the Credit Facilities may be prepaid and unused commitments under
the Revolving Credit Facility may be reduced at any time, in whole or in part,
at the option of the Borrower, upon notice and in minimum principal amounts and
in multiples to be agreed upon, without premium or penalty (except LIBOR
breakage costs).  Any optional prepayment of the Term Loan Facility will be
applied to the remaining scheduled amortization payments on a pro rata basis.

 
 

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Annex A – Term Sheet
PAGE 5

 
 
Conditions to Initial Extensions of Credit:
 
The making of the initial extensions of credit under the Credit Facilities will
be subject to satisfaction of the conditions precedent set forth in Section 2 of
the Commitment Letter and in the Conditions Annex attached hereto as Annex B.
       
Conditions to All Extensions of Credit
(other than on the Closing Date):
 
Each extension of credit under the Credit Facilities for working capital
purposes and all other extensions of credit under the Credit Facilities that
will not be used to fund the Acquisition will be subject to satisfaction of the
following conditions precedent: (a) all of the representations and warranties in
the Financing Documentation shall be true and correct in all material respects
(except to the extent that such representation and warranty is qualified by
materiality) as of the date of such extension of credit, (b) no event of default
under the Credit Facilities or unmatured default shall have occurred and be
continuing or would result from such extension of credit, (c) no material
adverse change in the business, operations, condition (financial or otherwise),
assets, liabilities (whether actual or contingent) or prospects of the Borrower
and its subsidiaries having occurred since December 31, 2008.
       
Representations and Warranties:
 
Usual and customary for facilities of this type and such others as may be
reasonably requested by the Lead Arranger based on information received after
November 1, 2009, including, without limitation, the following (which will be
applicable to the Borrower and its subsidiaries and not the Acquired Company or
its subsidiaries prior to the Merger): corporate status; financial statements;
capital structure; corporate power and authority; no default; no conflict with
laws or material agreements; enforceability; absence of material litigation,
environmental regulations and liabilities; ERISA; necessary consents and
approvals; compliance with all applicable laws and regulations including,
without limitation, Regulations T, U and X, Investment Company Act, the Patriot
Act, environmental laws and Office of Foreign Assets Control; payment of taxes
and other obligations; ownership of properties; intellectual property; liens;
insurance; solvency; absence of any material adverse effect; senior debt status;
collateral matters including, without limitation, perfection and priority of
liens (including an express representation and warranty that after the Merger,
the Administrative Agent’s lien on the K-Cup License is a first priority
perfected lien); labor matters; material contracts; no burdensome restrictions;
and accuracy of disclosure.
       
Affirmative Covenants:
 
Usual and customary for facilities of this type and such others as may be
reasonably requested by the Lead Arranger based on information received after
November 1, 2009, including, without limitation, the following (which will be
applicable to the Borrower and its subsidiaries and not the Acquired Company or
its subsidiaries prior to the Merger): use of proceeds; payment of taxes and
other indebtedness; continuation of business and maintenance of existence and
rights and privileges; maintenance of all material contracts; necessary
consents, approvals, licenses (including the K-Cup license) and permits;
compliance with laws and regulations (including environmental laws, ERISA and
the Patriot Act); maintenance of property and insurance (including hazard and
business interruption insurance); maintenance of books and records; right of the
Administrative Agent and the Lenders to inspect property and books and records;
notices of defaults, litigation and other material events; financial and
collateral reporting (including annual audited consolidated and consolidating
financial statements within 90 days after the end of each fiscal year (together
with the unqualified opinion of Borrower’s independent certified public
accountants of recognized national standing acceptable to the Required Lenders)
and quarterly unaudited consolidated and consolidating financial statements
within 45 days after the end of each quarter (in each case, accompanied by
covenant compliance certificates), annual updated budgets and projections within
30 days after the beginning of the applicable fiscal year, the sales and
operating profit of each store of the Borrower and its subsidiaries for each
quarter within 45 days after the end of such quarter, copies of all SEC and
related filings within five days after filing and other information reasonably
requested by any Lender); management letters; additional Guarantors and
Collateral; other collateral matters; and further assurances (including, without
limitation, with respect to security interests in after-acquired property); the
Loan Parties shall use commercially reasonable efforts to consummate the Merger
as soon as possible and in any event cause the Merger to be consummated no later
than June 30, 2010; the Loan Parties shall use commercially reasonable efforts
to cause the Acquired Company and its subsidiaries to comply with the terms of
the Credit Documents.

 
 

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Annex A – Term Sheet
PAGE 6

 
 
Negative Covenants:
 
Usual and customary for facilities of this type and such others as may be
reasonably requested by the Lead Arranger based on information received after
November 1, 2009, including, without limitation, the following (which will be
applicable to the Borrower and its subsidiaries and not the Acquired Company or
its subsidiaries prior to the Merger): limitation on debt; limitation on liens;
limitation on negative pledges; limitation on loans, advances, acquisitions and
other investments, including with respect to foreign subsidiaries; limitation on
dividends, distributions, issuances of equity interests, redemptions and
repurchases of equity interests; limitation on fundamental changes and asset
sales (including, without limitation, sale-leaseback transactions); limitation
on prepayments, redemptions and purchases of subordinated and certain other
debt; limitation on transactions with affiliates; limitation on dividend and
other payment restrictions affecting subsidiaries; limitation on changes in line
of business, fiscal year and accounting practices; limitation on amendment of
organizational documents and material contracts; and limitation on capital
expenditures.
           
The credit agreement governing the Credit Facilities will contain the following
financial covenants (which, subject to Section 7 of the Fee Letter, will be the
only financial covenants):
            (a)
Maximum Total Leverage Ratio: initially not to exceed 4.25:1.00 at any time with
quarterly step downs to be determined (however such step downs to be no more
than 0.25 per quarter in 2010) and annual step downs as of the first day of the
last fiscal quarter of each year as follows:
                 
 
Maximum Total
       
Period
Leverage Ratio
                   
Q4 2010
3.50:1.00        
Q4 2011
2.25:1.00        
Q4 2012
and thereafter
1.75:1.00           Financial Covenants:  
“Total Leverage Ratio” means, at any time, (a) Total Funded Debt at such time to
(b) EBITDAR for the four fiscal quarter period most recently ended.
         
“Total Funded Debt” means, at any time, without duplication, the sum of the
following with respect to Borrower and its subsidiaries: (a) obligations
evidenced by notes, bonds, debentures or similar instruments and obligations for
borrowed money including but not limited to senior bank debt and subordinated
debt; (b) obligations for the deferred purchase price of property or services
(other than trade payables incurred in the ordinary course of business and not
more than 60 days past due and time-based licenses); (c) obligations under
conditional sale or other title retention agreements with respect to acquired
property; (d) capital lease obligations and all off-balance sheet financing; (e)
obligations under or with respect to surety instruments; (f) unfunded pension
liabilities; (g) obligations arising under acceptance facilities or under
facilities for the discount of accounts receivable; (h) obligations with respect
to issued and outstanding letters of credit; (i) contingent obligations; (j)
last twelve month (1) operating lease expenses (excluding any operating leases
of Diedrich existing as of the Closing Date) and (2) lease rent expenses
(including common area maintenance expenses), in each case multiplied by a
factor of six; (k) guarantees of the foregoing; and (l) all obligations of the
type described above to the extent secured by a lien on any property of any such
person, even if such person has not assumed or become liable for the payment of
such obligation (to the extent of the greater of such obligation and the value
of such property).

 
 

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Annex A – Term Sheet
PAGE 7

 
 

   
“EBITDAR” means, for any period, net income for such period plus, to the extent
deducted in determining net income for such period, the sum of the following for
such period: (a) extraordinary losses (minus, to the extent added in determining
net income for such period, extraordinary gains), (b) interest expense,
(c) provisions for income taxes, (d) depreciation and amortization, (e)
operating lease expenses (excluding any operating leases of Diedrich existing as
of the Closing Date), (f) lease rent expenses (including common area maintenance
expenses), (g) to the extent incurred during Q4 2009, Q1 2010 or Q2 2010, costs
and expenses incurred in connection with the Transactions (including a stock
appreciation payment to the chief financial officer of Diedrich) in an aggregate
amount not to exceed $10,000,000 and (h) to the extent incurred during Q4 2009,
Q1 2010 or Q2 2010, restructuring costs and expenses in an aggregate amount not
to exceed $2,000,000; provided, that the EBITDAR of the Borrower for the fiscal
quarter ended December 28, 2008, March 29, 2009, June 28, 2009 and September 27,
2009, was $15,351,000, $13,890,000, $14,521,000 and $13,396,000, respectively
and, subject to adjustment as set forth in the following sentence, the EBITDAR
of the Acquired Company for the fiscal quarter ended December 10, 2008, March 4,
2009, June 24, 2009 and September 16, 2009, was $-40,000, $2,370,000, $2,418,000
and $1,403,000, respectively.
         
Notwithstanding the foregoing, the net income and EBITDAR attributable to a
non-wholly-owned subsidiary shall only be included in the calculation of EBITDAR
at no greater than the lesser of (i) the amount of the EBITDAR of such
non-wholly-owned subsidiary times the Borrower’s direct or indirect percentage
ownership interest in such non-wholly-owned subsidiary and (ii) the aggregate
amount of distributions such non-wholly-owned subsidiary made or could have made
to the Borrower or a Guarantor during the applicable period after giving effect
to all contractual and legal restrictions applicable to such non-wholly-owned
subsidiary; provided that this sentence shall not apply to any non-wholly-owned
subsidiary that is a Guarantor and that has pledged collateral as contemplated
herein.
            (b)
Minimum Fixed Charge Coverage Ratio as of the last day of any fiscal quarter:
initially 1.25:1.00 with quarterly step ups, beginning March 31, 2011 to be
determined and annual step ups as follows:
                   
Minimum Fixed Charge
       
Fiscal Year
Coverage Ratio
                    At the end of FY 2010
1.35:1.00
        At the end of FY 2011 and thereafter
1.75:1.00
           
“Fixed Charge Coverage Ratio” means, as of the last day of any fiscal quarter,
(a) EBITDAR for the four quarter period ending thereon plus (without
duplication) lease expenses resulting from operating leases of Diedrich existing
as of the Closing Date minus provisions for income taxes, distributions and
maintenance capital expenditures to (b) interest expense plus scheduled
principal payments (including capital leases) plus operating lease expenses plus
lease rent expenses (including common area maintenance expenses).
          (c)
Minimum Adjusted Net Income as of the last day of any fiscal quarter for the
four quarter period ending thereon: initially $11,400,000, with quarterly step
ups to be determined and annual step ups (or step downs) as follows:
             
Fiscal Year Ending
Minimum Adjusted Net Income
        At the end of FY 2010
$18,600,000
        At the end of FY 2011
$40,000,000
       
At the end of FY 2012
(and thereafter)
$60,000,000
 

 
 

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Annex A – Term Sheet
PAGE 8

 
 

 
“Adjusted Net Income” means, for any period, net income plus, to the extent
deducted in determining net income for such period, the sum of the following for
such period: (i) for fiscal year 2010 and each fiscal year thereafter, an add
back for amortization of any amortizable intangible assets acquired in the
Acquisition (excluding capitalized transaction fees and expenses related to the
Acquisition), adjusted for taxes using the applicable tax rate for such period,
(ii) to the extent incurred during Q4 2009, Q1 2010 or Q2 2010, costs and
expenses incurred in connection with the Transactions (including a stock
appreciation payment to the chief financial officer of Diedrich) in an aggregate
amount not to exceed $10,000,000 and (iii) to the extent incurred during Q4
2009, Q1 2010 or Q2 2010, restructuring costs and expenses in an aggregate
amount not to exceed $2,000,000.
            (d)
In no event shall the Borrower permit quarterly net income to be negative for
any two consecutive fiscal quarters.
           
The financial covenants, including for purposes of paragraph (f) of the
Conditions Annex, will apply to the Borrower and its subsidiaries on a
consolidated basis after giving pro forma effect to the portion of the
Transactions consummated during such period or any acquisition or any
disposition of business or assets consummated during such period, in each case
as if such portion of the Transactions or such transaction occurred on the first
day of such period.  Components measured on a four quarter basis shall not be
annualized.
           
Notwithstanding the foregoing, all financial covenants and other financial
calculations contained herein shall be calculated without giving effect to any
election made by any applicable person to value its financial liabilities or
indebtedness at the fair value thereof pursuant to the Statement of Financial
Accounting Standards No. 159 (or any similar accounting principle).
     
Required Interest Rate Hedging:
 
The Borrower will obtain interest rate protection from one or more Lenders or
others acceptable to the Lead Arranger in respect of not less than 50% of the
Term Loan Facility.
       
Events of Default:
 
Usual and customary for facilities of this type, including, without limitation,
the following (which, except as expressly noted below, will not apply to the
Acquired Company and its subsidiaries prior to the Merger and certain of which
will be subject to materiality thresholds, exceptions and grace or cure periods
to be mutually agreed upon): non-payment of obligations; inaccuracy of
representation or warranty; non-performance of covenants and obligations;
default on other material debt (including hedging agreements); change of
control; bankruptcy or insolvency; impairment of security; ERISA; material
judgments; actual or asserted invalidity or unenforceability of any Financing
Documentation or liens securing obligations under the Financing Documentation;
material uninsured loss; termination of the License and Distribution Agreement
dated as of July 29, 2003 between Keurig, Incorporated and the Acquired Company
as in effect on the date hereof (the “Keurig License Agreement”) (provided that
prior to the earlier of the consummation of the Merger and June 30, 2010, such
termination shall not permit the Administrative Agent or the Lenders to prevent
the Borrower from withdrawing the Deposited Proceeds to the extent necessary to
consummate the Merger); and from and after the Merger, any material breach under
the Keurig License Agreement that entitles Keurig, Incorporated to terminate the
Keurig License Agreement.  

 
 

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Annex A – Term Sheet
PAGE 9

 
 
 
Defaulting Lender Provisions,
Yield Protection and Increased Costs:
 
Customary for facilities of this type, including, without limitation, in respect
of breakage or redeployment costs incurred in connection with prepayments, cash
collateralization for Letters of Credit or Swingline Loans in the event any
lender under the Revolving Credit Facility becomes a Defaulting Lender or
Deteriorating Lender (as such terms shall be defined in the definitive financing
documentation), changes in capital adequacy and capital requirements or their
interpretation, illegality, unavailability, reserves without proration or offset
and payments free and clear of withholding or other taxes.
           
The Borrower shall have customary rights to replace a Lender (a) for availing
itself of yield maintenance and tax gross up provisions for a reason not
applicable to all Lenders, (b) for being a Defaulting Lender (as such term shall
be defined in the Financing Documentation), and (c) for being a non-consenting
Lender in a scenario where only the consent of the Required Lenders has been
obtained but unanimous Lender consent is required.
        Assignments and Participations:   (a)
Revolving Credit Facility:  Subject to the consents described below (which
consents will not be unreasonably withheld or delayed), each Lender will be
permitted to make assignments to eligible financial institutions in respect of
the Revolving Credit Facility in a minimum amount equal to $5,000,000.
            (b)
Term Loan Facility:  Subject to the consents described below (which consents
will not be unreasonably withheld or delayed), each Lender will be permitted to
make assignments to eligible financial institutions in respect of the Term Loan
Facility in a minimum amount equal to $5,000,000.
            (c)
Consents:  The consent of the Borrower will be required for any assignment
unless (i) an Event of Default has occurred and is continuing, (ii) the
assignment is to a Lender or an affiliate of a Lender or (iii) a Successful
Syndication (as defined in the Fee Letter) of the Credit Facilities has not
occurred.  The consent of the Administrative Agent will be required for any
assignment.  The consent of the Issuing Bank and the Swingline Lender will be
required for any assignment under the Revolving Credit Facility.  Participations
will be subject to customary conditions.
            (d)
No Assignment or Participation to Certain Persons.  No assignment or
participation may be made to natural persons or the Borrower or any of its
affiliates or subsidiaries.
       
Required Lenders:
 
On any date of determination, two or more Lenders who collectively hold more
than 50% of the outstanding commitments under the Credit Facilities, or if the
commitments under Credit Facilities have been terminated, those Lenders who
collectively hold more than 50% of the aggregate outstandings under the Credit
Facilities (the “Required Lenders”); provided, however, that if any Lender shall
be a Defaulting Lender (to be defined in the Financing Documentation) at such
time, then the outstanding loans and unfunded commitments under the Credit
Facilities of such Defaulting Lender shall be excluded from the determination of
Required Lenders.

 
 

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Annex A – Term Sheet
PAGE 10

 
 
Amendments and Waivers:
 
Amendments and waivers of the provisions of the Financing Documentation will
require the approval of the Required Lenders, except that (a) the consent of all
Lenders directly adversely affected thereby will be required with respect to (i)
increases in the commitment of such Lenders, (ii) reductions of principal,
interest or fees, (iii) extensions of scheduled maturities or times for payment
and (iv) reductions in the voting percentages and (b) the consent of all Lenders
will be required with respect to (i) releases of all or substantially all of the
Collateral or of any of the Guarantees (other than in connection with
transactions permitted pursuant to the Financing Documentation) and (ii) any
increase in the aggregate principal amount of the Credit Facilities.
     
Indemnification:
 
The Loan Parties will indemnify the Lead Arranger, the Administrative Agent,
each of the Lenders and their respective affiliates, partners, directors,
officers, agents and advisors and hold them harmless from and against all
liabilities, damages, claims, costs, expenses (including reasonable fees,
disbursements, settlement costs and other charges of counsel) relating to the
Transactions or any transactions related thereto and the Borrower’s use of the
loan proceeds or the commitments; provided that such indemnity will not, as to
any indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence, bad faith or willful misconduct of such indemnitee.  This
indemnification shall survive and continue for the benefit of all such persons
or entities.
       
Expenses:
 
The Loan Parties will reimburse the Lead Arranger and the Administrative Agent
for all reasonable out-of-pocket costs and expenses in connection with the
syndication, negotiation, preparation, due diligence, execution, delivery and
administration of the Financing Documentation and any amendment or waiver with
respect thereto (including, without limitation, (i) reasonable fees and expenses
of counsel, (ii) out of pocket syndication expenses and IntraLinks, The Debt
Exchange, Inc. or similar fees, and (iii) expenses incurred in connection with
appraisals (including, without limitation, equipment and real estate
appraisals), environmental reports and an Agribusiness Consultant’s
Report).  The Loan Parties will also pay all documentary taxes of the Lead
Arranger, the Administrative Agent and the Lenders.  The Loan Parties will also
pay all costs and expenses of the Lead Arranger, the Administrative Agent and
the Lenders in connection with the enforcement of any loan documentation for the
Credit Facilities, including, without limitation, the legal fees and expenses of
each counsel to the Administrative Agent and the Lenders.
       
Governing Law and Forum:
  New York.        
Waiver of Jury Trial and Punitive and Consequential Damages:
  All parties to the Financing Documentation waive the right to trial by jury
and the right to claim punitive or consequential damages.        
Counsel for the Lead Arranger and the Administrative Agent:
  Orrick, Herrington & Sutcliffe LLP        
Other:
 
This Term Sheet is intended as an outline of certain of the material terms of
the Credit Facilities and does not purport to summarize all of the conditions,
covenants, representations, warranties and other provisions which would be
contained in Financing Documentation for the Credit Facilities; provided that no
additional conditions precedent to closing the Credit Facilities will be added
and, subject to Section 7 of the Fee Letter, no additional financial covenants
will be added.

 
 

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Annex A – Term Sheet
PAGE 11

 
 
SCHEDULE I

INTEREST AND FEES
 

Interest:   At the Borrower’s option, loans (other than Swingline Loans) will
bear interest based on the Base Rate or LIBOR, as described below:            
A. Base Rate Option            
Interest will be at the Base Rate plus the applicable Interest Margin (as
described below).  The “Base Rate” is defined as the highest of (a) the Federal
Funds Rate, as published by the Federal Reserve Bank of New York plus 1.50%, (b)
the prime commercial lending rate of the Administrative Agent, as established
from time to time at its principal U.S. office (which such rate is an index or
base rate and will not necessarily be its lowest or best rate charged to its
customers or other banks) and (c) the daily LIBOR (as defined below) for a one
month Interest Period (as defined below) plus 1.50%.   Interest shall be payable
quarterly in arrears and (i) with respect to Base Rate Loans based on the
Federal Funds Rate and LIBOR, shall be calculated on the basis of the actual
number of days elapsed in a year of 360 days and (ii) with respect to Base Rate
Loans based on the prime commercial lending rate of the Administrative Agent,
shall be calculated on the basis of the actual number of days elapsed in a year
of 365/366 days.  Any loan bearing interest at the Base Rate is referred to
herein as a “Base Rate Loan”.
            Base Rate Loans will be made on same day notice and will be in
minimum amounts to be agreed upon.             B. LIBOR Option          
Interest will be determined for periods (“Interest Periods”) of three or six
months as selected by the Borrower and will be at an annual rate equal to the
London Interbank Offered Rate (“LIBOR”) for the corresponding deposits of U.S.
dollars plus the applicable Interest Margin (as described below).  LIBOR will be
determined by the Administrative Agent at the start of each Interest Period and,
other than in the case of LIBOR used in determining the Base Rate, will be fixed
through such period.  Interest will be paid at the end of each Interest Period
or, in the case of Interest Periods longer than three months, quarterly, and
will be calculated on the basis of the actual number of days elapsed in a year
of 360 days.  LIBOR will be adjusted for maximum statutory reserve requirements
(if any).  Any loan bearing interest at LIBOR (other than a Base Rate Loan for
which interest is determined by reference to LIBOR) is referred to herein as a
“LIBOR Rate Loan”.

 
 

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Schedule I to Annex A
PAGE 1

 
 

           
LIBOR Rate Loans will be made on three business days’ prior notice and, in each
case, will be in minimum amounts to be agreed upon.
           
Swingline loans will bear interest at the Base Rate plus the applicable Interest
Margin.
       
Default Interest:
 
(a) Automatically upon the occurrence and during the continuance of any payment
event of default or upon a bankruptcy event of default of the Borrower or any
other Loan Party or (b) at the election of the Required Lenders, upon the
occurrence and during the continuance of any other event of default, all
outstanding principal, fees and other obligations under the Credit Facilities
shall bear interest at a rate per annum of four percent (4.00%) in excess of the
rate then applicable to such loan or other obligation including the applicable
Interest Margin (or if no interest rate is stated, four percent (4.00%) in
excess of the Base Rate plus the highest Interest Margin applicable to Base Rate
Loans) and shall be payable on demand of the Administrative Agent.
       
Interest Margins:
 
The initial applicable Interest Margin shall be based on the Total Leverage
Ratio as of the Closing Date after giving pro forma effect to the Transactions
pursuant to the Pricing Grid set forth below until the first calculation date
following the receipt by the Administrative Agent and the Lenders of the
financial information and related compliance certificate for the first full
fiscal quarter ending after the Closing Date.
       
Commitment Fee:
 
A commitment fee (the “Commitment Fee”) will accrue on the unused amounts of the
commitments under the Revolving Credit Facility.  Swingline loans will, for
purposes of the Commitment Fee calculations only, not be deemed to be a
utilization of the Revolving Credit Facility.  Such Commitment Fee will
initially be based on the Total Leverage Ratio as of the Closing Date after
giving pro forma effect to the Transactions pursuant to the Pricing Grid set
forth below until the first calculation date following the receipt by the
Administrative Agent and the Lenders of the financial information and related
compliance certificate for the first full fiscal quarter ending after the
Closing Date.  All accrued Commitment Fees will be payable quarterly in arrears
(calculated on a 360-day basis) for the account of the Lenders under the
Revolving Credit Facility and will accrue from the Closing Date.
       

 
 

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Schedule I to Annex A
PAGE 2

 
 
Letter of Credit Fees:
 
The Borrower will pay to the Administrative Agent, for the account of the
Lenders under the Revolving Credit Facility, letter of credit participation fees
equal to the Interest Margin for LIBOR Rate Loans under the Revolving Credit
Facility, in each case, on the undrawn amount of all outstanding letters of
credit.  Fronting, issuance, presentation, documentation, amendment, transfer,
negotiation and other fees will also be payable by Borrower for the account of
the Issuing Bank as determined in accordance with the Issuing Bank’s then
current fee policy.
       
Other Fees:
 
The Lead Arranger and the Administrative Agent will receive such other fees as
will have been agreed in a fee letter between them and the Borrower.
       
Pricing Grid:
 
The applicable Interest Margins and the Commitment Fee with respect to the
Credit Facilities shall be based on the Total Leverage Ratio pursuant to the
following grid:

Level
Total
Leverage
Ratio
Interest
Margin for
LIBOR Rate
Loans
Interest
Margin for
Base Rate
Loans
Commitment
Fee
I
Greater than 4.00 to 1.00
3.750%
2.750%
0.500%
II
Greater than or equal to 3.50 to 1.00 but less than 4.00 to 1.00
3.500%
2.500%
0.500%
III
Greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00
3.250%
2.250%
0.375%
IV
Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00
3.000%
2.000%
0.375%
V
Less than 2.50 to 1.00
2.750%
1.750%
0.250%

 

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Schedule I to Annex A
PAGE 3

 
ANNEX B

 
$140,000,000
SENIOR SECURED CREDIT FACILITIES
SUMMARY OF PROPOSED TERMS AND CONDITIONS
 
Capitalized terms not otherwise defined herein have the same meanings as
specified therefor in the Commitment Letter to which this Summary of Proposed
Terms and Conditions is attached.
 

Conditions to Closing and Initial Extensions of Credit:
  Closing and the making of the initial extensions of credit are subject to the
satisfaction of each of the following conditions precedent:             (a)
(i) Financing Documentation reflecting and consistent with the terms and
conditions set forth herein and otherwise reasonably satisfactory to the
Borrower and the Lenders, will have been executed and delivered (including, to
the extent applicable, subordination agreements), (ii) the Administrative Agent
will have received (A) such customary legal opinions (including, without
limitation, opinions of special counsel and local counsel as may be reasonably
requested by the Administrative Agent) which such opinions shall permit reliance
by permitted assigns of each of the Administrative Agent and the Lenders, (B)
flow of funds and organizational documents, (C) notice of loan borrowing and (D)
closing documents, certificates (including, but not limited to secretary’s and
incumbency certificates), good standing certificates and other instruments as
are customary for transactions of this type including, without limitation, a
certificate of the chief financial officer of the Borrower as to the solvency
of  each of the Borrower individually, Peet’s Operating Company individually,
and the Borrower and its subsidiaries on a consolidated basis, in each case
after giving effect to the Transactions, (iii) evidence that the Administrative
Agent shall have a valid and perfected first priority security interest (subject
to certain exceptions to be set forth in the Financing Documentation) in the
Collateral (which shall have been executed, delivered and/or in proper form for
filing, to the extent applicable, and which shall include: all certificates
evidencing pledged capital stock with accompanying executed stock powers, and
all promissory notes and similar instruments with accompanying executed
allonges/indorsements, UCC and other lien searches, intellectual property
filings, title reports and policies (including ALTA indorsements insuring the
first priority of the lien subject to customary exceptions), UCC financing
statements, deeds of trust or mortgages for fee owned real property, a
collateral assignment agreement for all leased real property (it being
understood that no landlord consents or real property recordings will be
required with respect to such leased real property, margin stock shall not be
pledged to the extent the pledge of such margin stock would violate Regulation U
and no DMV filings or similar filings will be required for motor vehicles), (iv)
there shall not have occurred a Company Material Adverse Effect (as defined in
the Acquisition Agreement) as of the Closing Date and the funding of the initial
loans, (v) delivery of insurance certificates in compliance with the Financing
Documentation (with endorsements naming the Administrative Agent as loss payee
and mortgagee and the Administrative Agent and the Lenders as additional
insureds and with a lenders loss payable endorsement), (vi) each of the Borrower
and the Guarantors shall have obtained all governmental authorizations and
board, shareholder and third party consents necessary or advisable to have been
obtained prior to the Closing Date in connection with the transactions under the
Financing Documentation, and each such governmental authorization or consent
shall be in full force and effect except in a case where failure to obtain or
maintain any such authorization or consent either individually or in the
aggregate could not have a material adverse effect, (vii) all representations
and warranties made by the Acquired Company in the Acquisition Agreement shall
be true and correct other than any breaches thereof that do not, individually or
in the aggregate, relieve the Borrower or Newco from their respective
obligations with respect to the initial funding, to accept for exchange and
deliver consideration for Shares validly tendered (and not withdrawn) pursuant
to the Offer, (viii) the representations and warranties set forth in the
Financing Documents of the Borrower and the Guarantors (but not the Acquired
Company and its subsidiaries) relating to (A) due formation, organization,
existence and good standing, (B) power and authority, (C) due authorization,
execution, delivery and enforceability of the Financing Documentation and the
Acquisition Agreement, (D) non-contravention with respect to the Financing
Documentation, the borrowing of the loans and granting of liens, (E) all
approvals and consents with respect to the Financing Documentation, (F)
solvency, (G) Federal Reserve Bank margin regulations, (H) the Investment
Company Act, (I) no violation or default of the Financing Documentation, (J)
financial statements, (K) accuracy of information furnished, (L) foreign assets
control and anti-terrorism laws, (M) consummation of transactions under the
Financing Documentation in compliance with applicable law and (N) the priority
and perfection of the security interest granted in the Collateral securing the
Credit Facilities, (ix) no event of default under the Credit Facilities or
unmatured default shall have occurred and be continuing or would result from
such extension of credit, (x) to the extent applicable, all principal, interest
and other amounts outstanding in connection with existing debt for borrowed
money of the Loan Parties shall have been paid in full and all liens securing
such debt shall be released other than debt for borrowed money in an amount not
to exceed $1,000,000 and indebtedness of the Acquired Company and its
subsidiaries not to exceed $1,000,000 and (xi) all fees and expenses due to the
Lenders, the Lead Arranger, the Administrative Agent and counsel to the Lead
Arranger and the Administrative Agent under the Commitment Letter and as
otherwise set forth in the Financing Documentation shall have been paid.  The
Borrower shall use its commercially reasonable efforts to provide the following
items prior to the Closing Date, but in any event shall provide all such items
no later than 60 days after the Closing Date: (i) control agreements with
respect to each deposit, securities and similar account of the Loan Parties
(excluding health care reimbursement accounts and payroll accounts), (ii)
surveys, (iii) appraisals (including, without limitation, equipment and real
estate appraisals), (iv) environmental reports and (v) an Agribusiness
Consultant’s Report.

 
 

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Annex B
PAGE 1

 
 

    (b)
The definitive agreement relative to the Acquisition and all other documentation
associated with the Acquisition (collectively, as amended or modified in
accordance with this paragraph (b), the “Acquisition Documentation”) shall be in
the form of the Acquisition Agreement (including schedules thereto) delivered to
the Administrative Agent prior to signing the Commitment Letter on  November 2,
2009, as such Acquisition Documentation, including the Acquisition Agreement,
may be amended, supplemented or otherwise modified from time to time or for
which provisions thereof may be consented to or waived; provided that any such
amendment, supplement or other modification or any consent or waiver with
respect thereto that materially adversely affects the interest of the Lenders or
that increases the proportional amount of the Cash Component above 70% in
relation to the share consideration under the Acquisition Agreement shall , in
each case, require the prior written consent of the Lead Arranger, not to be
unreasonably withheld; provided, further that on the proposed closing date of
the Offer, any waiver of any of the conditions precedent to Newco’s obligations
to accept for exchange and deliver consideration for Shares validly tendered
(and not withdrawn) pursuant to the Offer set forth in the Acquisition
Documentation shall require the prior written consent of the Lead Arranger, not
to be unreasonably withheld. The Acquisition Agreement shall be in full force
and effect.
            (c)
The conditions to Newco’s obligations to purchase the Shares pursuant to the
Offer in accordance with the Acquisition Agreement shall have been satisfied
except to the extent the failure to so satisfy such conditions do not relieve
the Borrower or Newco from their respective obligations to close the
transactions under the Acquisition Agreement, with no waiver, modification or
consent thereunder without the prior written consent of the Lead Arranger,
except as otherwise provided pursuant to paragraph (b) of this Conditions Annex.
            (d)
Newco shall have accepted for purchase Shares pursuant to the Offer representing
more than 50% of the Adjusted Outstanding Share Number (as defined in the
Acquisition Agreement), and to the extent the exercise of the Top-Up Option
would result in Newco owning Shares sufficient to allow a short form merger to
be consummated, Newco shall have exercised its Top-Up Option for Shares
sufficient in number to allow a short form merger to be consummated immediately
upon issuance thereof (after giving effect to any preemptive rights and
contractual or other restrictions) (the “Requisite Number of Shares”) and shall
have delivered its note in respect of such purchase and Diedrich shall have the
Requisite Number of Shares authorized but unissued and shall be obligated to
comply with the Top-Up Option.
       

 
 

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Annex B
PAGE 2

 

    (e)
The Lead Arranger will have received a balance sheet, income statement, and
statement of cash flows for each of the Borrower and its subsidiaries and the
Acquired Company and its subsidiaries, in each case for any fiscal year that has
ended at least 90 days prior to the Closing Date and for any fiscal quarter
(other than the fourth quarter of any fiscal year) since the most recently ended
fiscal year that has ended at least 45 days prior to the Closing Date.
            (f)
The Lead Arranger will be reasonably satisfied that, after giving pro forma
effect to the Transactions (to the extent consummated as of the Closing Date)
(i) the ratio of Total Funded Debt of the Borrower and its subsidiaries as of
the Closing Date to consolidated EBITDAR of the Borrower and its subsidiaries
will not exceed 4.25:1.00 and (ii) consolidated EBITDAR of the Borrower and its
subsidiaries will be at least $55,900,000 for the twelve months ended as of the
most recent fiscal quarter end for which financial statements are available
prior to the Closing Date.
            (g)
To the extent not previously satisfied, the Loan Parties shall have provided the
documentation and other information to the Lenders that is required by
regulatory authorities under applicable “know your customer” and
anti-money-laundering rules and regulations, including, without limitation, the
Patriot Act.
            (h)
No temporary restraining order, preliminary or permanent injunction or other
order preventing the Credit Facilities from closing or any extensions of credit
thereunder shall have been issued by any court of competent jurisdiction or
other governmental authority having authority over any of the parties to the
Financing Documentation and remains in effect, and no applicable legal
requirement shall be enacted or deemed applicable to the Credit Facilities by a
governmental authority having authority over any of the parties to the Financing
Documentation that makes the closing of the Credit Facilities or any extensions
of credit thereunder illegal.

 
 

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Annex B
 
PAGE 3