Unassociated Document


     

    Exhibit
10.1

     

    
      

    

     

     

     

     

    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)

     

     

     

      
        

      

    

    
      Peet’s
Coffee & Tea, Inc. Commitment Letter

    

    
      
        
        

      

      
        PAGE
1

        
        

      

      
        
        

      

    

     


    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).

     

    
      
        

      

      
        Peet’s
Coffee & Tea, Inc. Commitment Letter

        
          
            
            

          

          
            PAGE
2

            
            

          

          
            
            

          

        

      

    

     

    (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.

     

    
      
        

      

      
        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.

     

    
      
        

      

      
        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.

     

    
      
        

      

      
        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.

     

    
      
        

      

      
        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.

     

    
      
        

      

      
        Peet’s
Coffee & Tea, Inc. Commitment Letter

        
          
            
            

          

          
            PAGE
7

            
            

          

          
            
            

          

        

      

    

     

    (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.

     

    
      
        

      

      
        Peet’s
Coffee & Tea, Inc. Commitment Letter

        
          
            
            

          

          
            PAGE
8

            
            

          

          
            
            

          

        

      

    

     

    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]

     

     

     

     

     

     

    
      
        

      

      
        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


      
        

      

    

    Name:  Todd
Tajiri

    Title:
Vice President

     

     

    WELLS
FARGO SECURITIES, LLC

     

     

    By:   /s/ Kevin J. Sanders


      
        

      

    

    Name:  Kevin
J. Sanders

    Title:  Vice
President

     

     

    
      
        

      

      
        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


      
        

      

    

    Name:
Tom Cawley

    Title:
Chief Financial Officer

     

     

    
      
        

      

      
        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.

            


    

     

     

    
      

    

    
      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.

            


    

     

     

    
      
        

      

      
        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;

            


    

     

     

    
      

    

    
      
        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.


    

     

     

    
      
        

      

      
        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.

            


    

     

     

    
      
        

      

      
        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.

            


    

     

     

    
      
        

      

      
        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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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

            	 


    

     

     

    
      
        

      

      
        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.
 

            


    

     

     

    
      
        

      

      
        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.

            


    

     

     

    
      
        

      

      
        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.

            


    

     

     

    
      

    

    
      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”.

            


    

     

     

    
      
        
          

        

      

      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.

            
	 	 	 	 


    

     

     

    
      
        
          

        

      

      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%

            


    

    


    
       

      
        
          

        

      

      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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      	 	(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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      	 	(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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