exv10w14






Exhibit 10.14




Execution Version




LEASE AND LICENSE FINANCING

AND PURCHASE OPTION AGREEMENT




between




ARABICA FUNDING, INC.




and




CARIBOU COFFEE COMPANY, INC.




February 19, 2010






 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 1. Definitions
	 	 	2	 
	SECTION 2. Agreement for Lease, License and Purchase Option Financing;
Covenant of Quiet Enjoyment
	 	 	19	 
	SECTION 3. Delivery and Acceptance of Assets
	 	 	20	 
	SECTION 4. Term
	 	 	20	 
	SECTION 5. End of Term Delivery of Assets
	 	 	20	 
	SECTION 6. Payments
	 	 	21	 
	SECTION 7. Net Lease and License
	 	 	21	 
	SECTION 8. Arabica’s Title; Grant of Security Interest
	 	 	22	 
	SECTION 9. Use of Assets; Compliance with Laws
	 	 	22	 
	SECTION 10. Maintenance and Repair of the Equipment
	 	 	22	 
	SECTION 11. Replacement of Parts; Alterations; Modifications and
Additions
	 	 	23	 
	SECTION 12. Taxes.
	 	 	23	 
	SECTION 13. Assignment, Sublease, Sublicense or other Transfer
	 	 	25	 
	SECTION 14. Event of Loss; Obsolete and Worn Out Equipment
	 	 	26	 
	SECTION 15. Insurance
	 	 	27	 
	SECTION 16. Illegality
	 	 	27	 
	SECTION 17. General Indemnity
	 	 	27	 
	SECTION 18. Disclaimer
	 	 	29	 
	SECTION 19. Representations and Warranties
	 	 	29	 
	SECTION 20. Financial Covenants
	 	 	36	 
	SECTION 21. Affirmative Covenants
	 	 	36	 
	SECTION 22. Negative Covenants
	 	 	42	 
	SECTION 23. Events of Default
	 	 	46	 
	SECTION 24. Remedies Upon Default
	 	 	48	 
	SECTION 25. Arabica’s Right to Perform for the Company
	 	 	49	 
	SECTION 26. Further Assurances
	 	 	49	 
	SECTION 27. Transaction Costs, Fees and Expenses
	 	 	49	 
	SECTION 28. Notices
	 	 	49	 
	SECTION 29. Call Option
	 	 	50	 
	SECTION 30. Put Option
	 	 	51	 
	SECTION 31. Arabica Agents, Nominees or Representatives
	 	 	51	 
	SECTION 32. Miscellaneous
	 	 	51	 
	SECTION 33. Payments, Set-Off and Subordination
	 	 	52	 
	SECTION 34. Waiver of Jury Trial
	 	 	52	 
	SECTION 35. Effect on Prior Agreement
	 	 	53	 






i 









 






	 	 	 	 	 

	Schedules
	 	 	 	 
	 
	 	 	 	 
	1

	 	-
	 	Quarterly Dates
	1(i)

	 	-
	 	Financial Statements
	2(a)

	 	-
	 	Equipment and Intangible Assets
	3

	 	-
	 	Registration or Licensing Exceptions
	6(a)

	 	-
	 	Rent
	19(i)

	 	-
	 	Intellectual Property Exceptions
	19(o)

	 	-
	 	Capital Stock of Restricted Group
	19(p)

	 	-
	 	Environmental Exceptions
	19(r)(i)

	 	-
	 	UCC Filing Jurisdictions
	19(r)(ii)

	 	-
	 	Real Property; Leasehold Interests
	19(t)

	 	-
	 	Stores and Material Agreements
	19(u)(i)

	 	-
	 	Indebtedness to Remain Outstanding
	19(u)(ii)

	 	-
	 	Liens to Remain Outstanding
	22(g)(ii)

	 	-
	 	Existing Investments
	22(i)

	 	-
	 	Affiliate Agreements
	 
	 	 	 	 
	Exhibits
	 	 	 	 
	 
	 	 	 	 
	A

	 	-
	 	Form of Compliance Certificate
	B

	 	-
	 	Form of Supplement
	C

	 	-
	 	Form of Subsidiary Certificate






ii 









 





LEASE AND LICENSE FINANCING

AND PURCHASE OPTION AGREEMENT




     THIS LEASE AND LICENSE FINANCING AND PURCHASE OPTION AGREEMENT (as supplemented, amended,
modified, restated or replaced from time to time, this “Agreement”), dated as of February 19, 2010
is made by and between ARABICA FUNDING, INC., a Delaware corporation (“Arabica”) and CARIBOU COFFEE
COMPANY, INC., a Minnesota corporation (the “Company”).



     WHEREAS, Arabica and the Company are parties to that certain Second Amended and Restated Asset
Purchase Agreement, dated as of June 29, 2004 (the “2004 Asset Purchase Agreement”), pursuant to
which the Company has sold to Arabica from time to time certain tangible and intangible assets
identified therein; and



     WHEREAS, Arabica and the Company are parties to that certain Second Amended and Restated Lease
and License Financing and Purchase Option Agreement, dated as of June 29, 2004 (the “2004
Agreement”), relating to tangible and intangible assets purchased by Arabica pursuant to the 2004
Asset Purchase Agreement;



     WHEREAS, pursuant to the 2004 Agreement, Arabica has leased and licensed such tangible and
intangible assets to the Company;



     WHEREAS, pursuant to the 2004 Agreement and that certain Second Amended and Restated Call
Option Letter, dated as of June 29, 2004 (the “2004 Call Option Letter”), Arabica has granted to
the Company an option to purchase such tangible and intangible assets on the terms therein
specified;



     WHEREAS, pursuant to the 2004 Agreement and that certain Second Amended and Restated Put
Option Letter, dated as of June 29, 2004 (the “2004 Put Option Letter”), the Company has granted to
Arabica the right to require the Company to purchase such tangible and intangible assets on the
terms therein specified;



     WHEREAS, Arabica and the Company propose to enter into the Asset Purchase Agreement (as
defined herein) in substitution for, and in replacement of, the 2004 Asset Purchase Agreement;



     WHEREAS, pursuant to the Asset Purchase Agreement, the Company may propose to sell additional
tangible and intangible assets from time to time to Arabica and may seek to have Arabica purchase
such assets and thereafter lease and license such assets to the Company hereunder;



     WHEREAS, Arabica and the Company propose to enter into this Agreement to permit the leasing
and licensing of such additional assets to the Company, and this Agreement is intended to be a
substitute for, and to replace, the 2004 Agreement;



     WHEREAS, Arabica and the Company propose to enter into the Call Option Letter and the Put
Option Letter (each as defined herein) and to make such additional assets subject thereto, as
applicable, and the Call Option Letter and Put Option Letter are intended to be substitutes for,
and to replace, the 2004 Call Option Letter and the 2004 Put Option Letter, respectively;



     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Arabica and the Company agree, as of the date hereof, to enter into this
Agreement as a substitute for, and to replace, the 2004 Agreement, as herein provided.



 









 





     SECTION 1. Definitions.



     (a) Unless the context otherwise requires, the following capitalized terms shall have the
following meanings for all purposes of this Agreement and shall be equally applicable to both the
singular and the plural forms of the terms herein defined:



     “Acquisition Cost” means the acquisition cost amount specified in the notice of offer executed
from time to time in connection with the Asset Purchase Agreement (subject to reduction as a result
of any payment of Acquisition Cost hereunder, under the Call Option Letter or under the Put Option
Letter), which sum shall not exceed at any time the Reference Amount.



     “Acquisition Target” means any Person or any division of a Person the outstanding Capital
Stock or the assets of which are proposed to be acquired by the Company or any Wholly-Owned
Subsidiary Guarantor in connection with a Permitted Acquisition.



     “Acquisition Transaction” means any acquisition of all or substantially all of the assets or
Capital Stock of any Person or any division thereof.



     “Administrative Services Agreement” means the Management Agreement, dated as of December,
2000, between Arabica and Global Securitization Services, LLC, a Delaware limited liability
company, as in effect on the Commencement Date.



     “Affiliate” means as to any Person, any other Person that, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10%
or more of the securities having ordinary voting power for the election of directors (or persons
performing similar functions) of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.



     “Applicable Margin” means at any time, for purposes of determining the Rental Rate by
reference to the Base Rate, one and one-quarter (1.25%) percent per annum and for purposes of
determining the Rental Rate by reference to the Eurodollar Rate, two and three-quarters (2.75%)
percent per annum.



     “Asset Purchase Agreement” means that certain Asset Purchase Agreement, dated as of the date
hereof, between the Company and Arabica.



     “Assets” means the Equipment and the Intangible Assets.



     “Available Amount” means on any day the amount by which the Reference Amount exceeds the
unpaid Acquisition Cost on such day.



     “Bank Products” any one or more of the following financial products or accommodations
provided from time to time by the Reference Bank or any of its affiliates to the Company or any of
its Subsidiaries: (i) products under Swap Agreements and similar interest rate hedging
arrangements, (ii) credit cards, (iii) credit card processing services, (iv) debit cards, (v)
stored value cards, (vi) purchase cards (including so-called “procurement cards” or “P-cards”), or
(vii) cash management or related services including treasury, depository, return items, overdraft,
controlled disbursement, merchant store value cards, e-payables services, electronic funds
transfer, interstate depository network, automatic clearing house transfer (including the Automated
Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline
system) and other cash management arrangements. For



- 2 -









 





purposes of clarification, it is the intention of the Restricted Group not to enter into Bank
Products or other financing transactions or obligations that are not acceptable under Islamic
Shari’ah principles.




     “Base Rate” means for any day, the cost to Arabica of funding itself in relation to this
Agreement at such times when the Eurodollar Rate is unavailable or Arabica determines that the
Eurodollar Rate does not accurately reflect the cost of its funding. Such cost to Arabica of
funding itself shall correspond to a fluctuating rate per annum equal to the highest of (a) the
Federal Funds Effective Rate as of the close of business on the immediately preceding Business Day
plus 1.5%, (b) the rate of interest in effect for such day as publicly announced from time to time
by the Reference Bank as its “opening prime rate” and (c) the Eurodollar Base Rate determined for a
one month period plus 1.5% commencing on such date or, if such date is not a Business Day, on the
immediately preceding Business Day. The “opening prime rate” is a rate set by the Reference Bank
based upon various factors including the Reference Bank’s costs and desired return, general
economic conditions and other factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate. Any change in such rate announced by
the Reference Bank shall take effect at the opening of business on the day specified in the public
announcement of such change.



     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to close, provided, that with respect to
notices and determinations in connection with, and payments in respect of, Rent when the Rental
Rate component thereof is determined based on the Eurodollar Rate, such day is also a day for
trading by and between banks in Dollar deposits in the interbank eurodollar market.



     “Call Option” shall have the meaning given to such term in the Call Option Letter.



     “Call Option Letter” shall mean that certain Call Option Letter, dated the date hereof, issued
by Arabica to the Company.



     “Capital Expenditures” means, for any period, the aggregate of all amounts expended or
financed for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or
additions to equipment (including maintenance expenditures, build-out and new store expenditures,
Pre-Opening Expenses and other replacements, capitalized repairs and improvements during such
period) that should be capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.



     “Capitalized Lease Obligations” means, as to any Person, the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes
of this Agreement, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.



     “Capital Stock” means any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants, rights or options to purchase any
of the foregoing.



     “Cash Equivalents” means investments in checking or other similar current accounts with banks
or trust companies organized under the laws of the United States or any state thereof that have
capital and surplus of at least $500,000,000 and that are insured by the Federal Deposit Insurance
Corporation.



     “Change in Control” means for any reason:



- 3 -









 






     (i) Holdings shall own of record less than 51% of the issued and outstanding
Capital Stock or voting power of the Company; or the Persons who own all of the Capital
Stock of Holdings on the date hereof having the ordinary voting power to elect the Board of
Directors of Holdings shall cease to own at least 65% of such Capital Stock;




     (ii) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), excluding
the holders of Capital Stock of Holdings and the Company, respectively, on the date of this
Agreement, shall become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d) 5 under
the Exchange Act), directly or indirectly, of more than 25% of the outstanding Capital Stock
or voting power of Holdings or the Company;




     (iii) during any period of 12 consecutive months, commencing after the date
of this Agreement, Continuing Directors shall cease for any reason other than death or
disability to constitute a majority of the directors of Holdings then in office;




     (iv) the Company shall cease to own of record and beneficially 100% of the
issued and outstanding Capital Stock and voting power in each Person that is as of the date
hereof, or at any time hereafter becomes, a Wholly-Owned Subsidiary of the Company unless
otherwise permitted under the Lease/Purchase Documents);




     (v) GSS Holdings, Inc. or a corporate service company (or an affiliate
thereof) or a charitable trust (any such corporate service company, affiliate or charitable
trust to be reasonably acceptable to Arabica) shall cease to own of record and beneficially
100% of the issued and outstanding Capital Stock and voting power of Arabica on a fully
diluted basis, or any member of the Board of Directors of Arabica shall cease to be an
Independent Director; or




     (vi) any Specified Change of Control shall occur.



     “Code” means the Internal Revenue Code of 1986, as amended from time to time.



     “Coffeehouse Level EBITDA Margin” means the “Coffeehouse Level EBITDA Margin” for the Company
and its Subsidiaries, calculated in the manner set forth on the financial statements attached as
Schedule 1(i).



     “Coffeehouse Level Sales” means the “Coffeehouse Level Sales” for the Company and its
Subsidiaries, calculated in the manner set forth on the financial statements attached as
Schedule 1(i).



     “Collateral” means all property now owned or hereafter acquired by any member of the
Restricted Group, upon which a Lien is purported to be created by any Security Document.



     “Commencement Date” means the date of this Agreement.



     “Commonly Controlled Entity” means an entity, whether or not incorporated, that is under
common control with the Company within the meaning of Section 4001 of ERISA or is part of a group
that includes the Company, as applicable, and that is treated as a single employer under Section
414 of the Code.



- 4 -









 





     “Company Guarantee and Security Agreement” means the Company Guarantee and Security Agreement,
dated as of the date hereof, among the Company, Holdings, each of their respective Subsidiaries and
Arabica.



     “Company Leasehold Mortgage” means the Leasehold Mortgage by the Company in favor of Arabica
covering the Headquarters Building, in form and substance reasonably satisfactory to Arabica.



     “Company Security Documents” means each of the Company Guarantee and Security Agreement, the
Company Leasehold Mortgage (when and if executed), any Mortgage, Leasehold Security Document, and
Intellectual Property Security Agreement and all other security documents from time to time
delivered to Arabica to secure the obligations of the Company under this Agreement and the other
Lease/Purchase Documents.



     “Compliance Certificate” means a certificate duly executed by a Responsible Officer,
substantially in the form of Exhibit A.



     “Consolidated EBITDA” means, for any period, Consolidated Net Income for such period
plus, without duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) the provision for Federal, state, local and
foreign income taxes payable, (b) Consolidated Financing Expense, (c) depreciation and amortization
expense (including amortization of debt acquisition cost), (d) Pre-Opening Expenses, and (e) other
non-recurring expenses reducing such Consolidated Net Income which do not represent a cash item in
such period or any future period (in each case of or by the Company and its Subsidiaries for such
period), and minus the following to the extent included in calculating such Consolidated
Net Income: (i) Federal, state, local and foreign income tax credits, and (ii) all non-cash items
increasing Consolidated Net Income (in each case of or by the Company and its Subsidiaries for such
period).



     “Consolidated EBITDAR” means, for any period, the sum of (a) Consolidated EBITDA for such
period, plus (b) Consolidated Rental Expense for the Company and its Subsidiaries for such period,
in each case determined on a consolidated basis in accordance with GAAP.



     “Consolidated Financing Expense” means, for any period, the total financing expense (including
that attributable to Capital Lease Obligations and excluding amortization of debt acquisition cost)
of the Company and its Subsidiaries for such period with respect to all outstanding Indebtedness of
the Company and its Subsidiaries (including all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers’ acceptance financing and net costs under Swap
Agreements in respect of financing rates to the extent such net costs are allocable to such period
in accordance with GAAP). For purposes of this Agreement, as to the Company and its Subsidiaries,
Consolidated Financing Expense shall include the Obligations. For purposes of clarification, it is
the intention of the Restricted Group not to incur any Consolidated Financing Expense or other
financial obligations that are not acceptable under Islamic Shari’ah principles.



     “Consolidated Funded Indebtedness” means without duplication with respect to the Company and
its Subsidiaries, all Indebtedness of the Company and its Subsidiaries with respect to any of the
following: (i) the principal amount of money borrowed (whether recourse or non-recourse), including
all amounts payable in connection therewith, (ii) obligations evidenced by a bond, debenture, note
or other like written obligation to pay money, (iii) Capital Lease Obligations, (iv) obligations
under conditional sales or other title retention agreements or secured by any Lien, (v) the
aggregate face amount of any letters of credit or similar instruments (including reimbursement
obligations with respect thereto), (vi) the deferred unpaid purchase price of property or services,
except trade payables, accrued expenses and other similar liabilities incurred in the ordinary
course of business, (vii) Indebtedness relating to Swap



- 5 -









 





Agreements, (viii) Indebtedness relating to sale-leaseback obligations, (ix) all obligations
of such Person under take or pay or similar arrangements or under commodities agreements, (x)
Disqualified Stock, (xi) the principal portion of all obligations of such Person under synthetic
leases, (xii) the Indebtedness of any partnership or unincorporated joint venture in which such
Person is a general partner or a joint venturer, (xiii) the outstanding attributed principal amount
under any securitization transaction of such Person, (xiv) all obligations that are immediately due
and payable out of proceeds of or production from property now or hereafter acquired by such Person
and (xv) all Guarantee Obligations of such Person in respect of any or all of the foregoing; in
each case determined on a consolidated basis in accordance with GAAP. The aggregate amount of
Consolidated Funded Indebtedness at any time shall include all accrued amounts which have become
due and payable but has not been paid (whether or not capitalized) and the accreted amount of any
debt issued with original issue discount. For purposes of this Agreement, as to the Company and
its Subsidiaries, Consolidated Funded Indebtedness shall include the Obligations. For purposes of
clarification, it is the intention of the Restricted Group not to incur any Consolidated Funded
Indebtedness or other financial obligations that are not acceptable under Islamic Shari’ah
principles.




     “Consolidated Net Income” means, for any period, the consolidated net income (or loss) of the
Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP; provided
that there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it
becomes a Subsidiary of the Company or is merged into or consolidated with the Company or any of
its Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of the
Company) in which the Company or any of its Subsidiaries has an ownership interest, except to the
extent that any such income is actually received by the Company or such Subsidiary in the form of
dividends or similar distributions and (c) the undistributed earnings of any Subsidiary of the
Company to the extent that the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than
under any Lease/Purchase Document) or Requirement of Law applicable to such Subsidiary.



     “Consolidated Rental Expense” means, for any period, all obligations in respect of base and
contingent rent expensed during such period under any rental agreements or leases of real or
personal property (other than amounts owed to Arabica under the Lease/Purchase Documents),
excluding tenant allowance amortization, all determined on a consolidated basis in accordance with
GAAP.



     “Consolidated Senior Leverage Ratio” shall have the meaning given such term in
Section 20(a).



     “Continuing Directors” means the directors of Holdings on the Commencement Date, and each
other director, if, in each case, such other director’s nomination for election to the board of
directors of Holdings is recommended by at least two thirds of the then Continuing Directors.



     “Contractual Obligation” means, as to any Person, any provision of any security issued by such
Person or of any agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.



     “Control Investment Affiliate” means, as to any Person, any other Person that (a) directly or
indirectly, is in control of, is controlled by, or is under common control with, such Person and
(b) is organized by such Person primarily for the purpose of making equity or debt investments in
one or more companies. For purposes of this definition, “control” of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.



     “Default” means any of the events specified in Section 23, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been satisfied.



- 6 -









 





     “Disposition” means, with respect to any property, any sale, lease, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof, excluding any such dispositions
constituting the leasing or licensing of property pursuant to the Lease/Purchase Documents. The
terms “Dispose” and “Disposed of” shall have correlative meanings.



     “Disqualified Stock” means, with respect to any Person, any Capital Stock that by its terms
(or by the terms of any security into which it is convertible or for which it is exchangeable, in
either case at the option of the holder thereof) or otherwise (a) matures or is mandatorily
redeemable pursuant to a sinking fund obligation or otherwise, (b) is or may become redeemable or
repurchaseable at the option of the holder thereof, in whole or in part, or (c) is convertible or
exchangeable at the option of the holder thereof for Indebtedness or Disqualified Stock, on or
prior to, in the case of clause (a), (b) or (c), the date that is 91 days after the date Final Rent
Payment Date, provided, however, that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require such Person to
purchase or redeem such Capital Stock in cash upon the occurrence of an “Asset Sale” or “Change of
Control” (or similar terms having the same meaning) occurring prior to the date that is 91 days
after the Final Rent Payment Date shall not constitute Disqualified Stock if:



     (x) the “asset sale” or “change of control” provisions applicable to such Capital Stock are
not more favorable to the holders of such Capital Stock than the terms of this Agreement; and



     (y) any such requirement only becomes operative after compliance with such terms of this
Agreement and the other Lease/Purchase Documents.



     “Dollars” and “$” means dollars in lawful currency of the United States.



     “Domestic Subsidiary” means with respect to any Person, any Subsidiary of such Person other
than a Foreign Subsidiary.



     “Effective Date” means, as to the Assets identified on Schedule 2(a) hereto, the
Commencement Date and, as to any Assets identified in a Supplement, the date of such Supplement.



     “Environmental Laws” means any and all foreign, Federal, state, local or municipal laws,
rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental
Authority or other Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning protection of human health or the environment, as now
or may at any time hereafter be in effect.



     “Equipment” means the equipment and other tangible assets described in Schedule 2(a)
hereto and any other items of Equipment made subject to this Agreement by the execution and
delivery of a Supplement, and all items of equipment and other assets (including without limitation
replacement Parts) which may from time to time be incorporated in such equipment or other assets
described in Schedule 2(a) or subsequently made subject to this Agreement.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time.



     “Eurocurrency Reserve Requirements” means, for any day, the aggregate (without duplication) of
the maximum rates (expressed as a decimal amount) of reserve requirements in effect on such day
(including basic, supplemental, marginal and emergency reserves) under any regulations of the Board
of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with
respect thereto dealing with reserve requirements prescribed for eurocurrency funding (currently
referred



- 7 -









 





to as “Eurocurrency Liabilities” in Regulation D of the Board of Governors of the Federal
Reserve System) maintained by a member bank of the Federal Reserve System.




     “Eurodollar Base Rate” means with respect to each day during each Rent Period in which the
Rental Rate is determined with reference to the Eurodollar Rate, the rate of interest, rounded
upward to the nearest whole multiple of one-sixteenth of one percent (0.0625%), quoted by the
Reference Bank, from Reuters LIBOR01 Screen or any successor thereto, as the London Inter-Bank
Offered Rate for deposits in Dollars for a one month period, subject to availability, at
approximately 9:00 a.m. California time on the date two (2) Business Days prior to the beginning of
such Rent Period.



     “Eurodollar Rate” means with respect to each day during each Rent Period in which the Rental
Rate is determined with reference to the Eurodollar Rate, a rate per annum determined for such day
in accordance with the following formula (rounded upward to the nearest 1/100th of 1%):



Eurodollar Base Rate

1.00 — Eurocurrency Reserve Requirements





     “Event of Default” shall have the meaning given such term in Section 23.



     “Event of Loss” means (i) the occurrence of any one or more of the following events with
respect to two-thirds or more of the Equipment: (A) loss of such Equipment or of the use thereof
due to theft or disappearance during the Term, (B) destruction, damage beyond repair, or rendition
of such Equipment unfit for normal use for any reason whatsoever either permanently or for longer
than a commercially reasonable period of time, (C) any damage to such Equipment which results in an
insurance settlement with respect to such Equipment on the basis of a total loss, or (D) the
permanent condemnation, confiscation, seizure, or requisition of use or title to any Equipment by
any governmental authority under the power of eminent domain or otherwise; or (ii) the enforcement
and foreclosure by final, unappealable judicial determination, of any Lien created solely by
Arabica through no action, inaction or fault of the Company (other than Permitted Liens in favor of
Arabica) on two-thirds or more of the Assets, the result of which is to permanently deprive the
Company of the use of such Assets.



     “Federal Funds Effective Rate” means for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day that is a Business Day, the average of
the quotations for the day of such transactions received by the Reference Bank from three federal
funds brokers of recognized standing selected by it.



     “Final Rent Payment Date” means February 19, 2013.



     “Foreign Subsidiary” means with respect to any Person, any Subsidiary of such Person that is
not organized or existing under the laws of the United States of America, any state thereof, the
District of Columbia or any territory thereof.



     “GAAP” means generally accepted accounting principles in the United States as in effect from
time to time, except that for purposes of Section 20, GAAP shall be determined on the basis
of such principles in effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements referred to in Section 19(a). In the event
that any “Accounting Change” (as defined below) shall occur and such change results in a change in
the method of calculation of financial covenants, standards or terms in this Agreement, then the
Company and Arabica agree to enter into



- 8 -









 





negotiations in order to amend such provisions of this Agreement so as to reflect equitably
such Accounting Changes with the desired result that the criteria for evaluating the Company’s
financial condition shall be the same after such Accounting Changes as if such Accounting Changes
had not been made. Until such time as such an amendment shall have been executed and delivered by
the Company and Arabica, all financial covenants, standards and terms in this Agreement shall
continue to be calculated or construed as if such Accounting Changes had not occurred. “Accounting
Changes” refers to changes in accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants or, if applicable, the SEC.




     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).



     “Guarantee Obligation” means, as to any Person (the “guaranteeing person”), any obligation of
(a) the guaranteeing person or (b) another Person (including any bank under any letter of credit)
to induce the creation of which the guaranteeing person has issued a reimbursement,
counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third
Person (the “primary obligor”) in any manner, whether directly or indirectly, including any
obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof; provided, however, that the
term Guarantee Obligation shall not include endorsements of instruments for deposit or collection
in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount
of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum
amount for which such guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or determinable, in which case the
amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably
anticipated liability in respect thereof as determined in good faith by such Person.



     “Guarantors” means Holdings and the Subsidiary Guarantors.



     “Headquarters Building” means the premises located at 3900 Lakebreeze Avenue North, Brooklyn
Center, MN 55429.



     “Headquarters Lease” means that certain commercial lease dated as of September 5, 2003 between
Twin Lakes III LLC and the Company, as amended or supplemented from time to time covering the
Headquarters Building.



     “Hedging Agreement” means any commodity swap or other agreement designed to protect against
fluctuations in the price of coffee or coffee-related products. For purposes of clarification, it
is the



- 9 -









 





intention of the Restricted Group not to enter into Hedging Agreements or other financing
transactions that are not acceptable under Islamic Shari’ah principles.




     “Holdings” means Caribou Holding Company Limited, a Cayman Islands limited liability company.



     “Improvement” has the meaning given to such term in Section 11.



     “Indebtedness” means of any Person at any date all obligations, contingent or otherwise, that
should be classified on such Person’s balance sheet as liabilities or to which reference should be
made by footnote, in each case in accordance with GAAP, including, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred
purchase price of property or services (other than current trade payables, accrued expenses and
other similar liabilities incurred in the ordinary course of such Person’s business), (c) all
obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d)
all indebtedness created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and remedies of the seller
or lender under such agreement in the event of default are limited to repossession or sale of such
property), (e) all Capital Lease Obligations of such Person, (f) all obligations of such Person,
contingent or otherwise, as an account party or applicant under or in respect of acceptances,
letters of credit, surety bonds or similar arrangements (including reimbursement obligations
thereunder), (g) the maximum redemption price of all Disqualified Stock of such Person, (h) all
Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses
(a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through (h) above
secured by (or for which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by
such Person, whether or not such Person has assumed or become liable for the payment of such
obligation, and (j) for the purposes of Section 23(e) only, all obligations of such Person
in respect of Swap Agreements. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor. For purposes of this Agreement, as to the Company
and its Subsidiaries, Indebtedness shall, without duplication, include any and all amounts due (or
required to be due) from time to time by the Company to Arabica hereunder. For purposes of
clarification, it is the intention of the Restricted Group not to incur any Indebtedness or other
financial obligations that are not acceptable under Islamic Shari’ah principles.



     “Indemnified Party” shall have the meaning given to such term in Section 17(a).



     “Independent Director” means, with respect to Arabica, an individual who has not been (or was
not) at the time of such individual’s appointment, and may not have been at any time during the
preceding five years (a) an equityholder of, or an officer, director (other than with respect to
such Independent Director’s service as a director of Arabica), employee, supplier (other than GSS
Holdings, Inc., a Delaware corporation, and its Affiliates as a supplier of services pursuant to
the Administrative Services Agreement) or customer of Arabica or its Affiliates, (b) a Person
controlling any such equityholder, supplier or customer, or (c) a member of the immediate family of
any such equityholder, officer, director, employee, supplier or customer or any other equityholder
of Arabica. As used in this definition, the term “control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of
Arabica, whether through ownership of voting securities, by contract or otherwise.



- 10 -









 





     “Insolvency” means, with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA. “Insolvent” has a corresponding meaning.



     “Intangible Assets” means all assets described in Schedule 2(a) hereto and any other
intangible asset made subject to this Agreement by the execution and delivery of a Supplement,
including any accretion of, or attribution of additional rights to, any such assets.



     “Intellectual Property” means all rights, priorities and privileges relating to intellectual
property, whether arising under the United States, multinational or foreign laws or otherwise,
including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses,
technology, know-how and processes, and all rights to sue at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds and damages therefrom.



     “Intellectual Property Security Agreement” shall have the meaning given to such term in the
Company Guarantee and Security Agreement.



     “Late Payment Rate” means a rate equal to the Rental Rate plus 2% (or, if an Event of
Default under Section 23(a) shall have occurred and then be continuing, 3%).



     “Lease/Purchase Documents” means the Asset Purchase Agreement, this Agreement, the
Supplemental Agreement, the Put Option Letter, the Call Option Letter, the Tax Matters Agreement,
the Company Guarantee and Security Agreement, Company Leasehold Mortgage (when and if executed) and
each other document, instrument or certificate delivered by Holdings and its Subsidiaries in
connection with any of the foregoing.



     “Leasehold Security Document” means a landlord consent and waiver (and, if the applicable
member of the Restricted Group holds its leasehold interest in the relevant real property pursuant
to a recorded instrument (in complete or memorandum form), a leasehold assignment or leasehold
mortgage), as may be required by Arabica, in form and substance reasonably satisfactory to Arabica.



     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).



     “Major Maintenance” has the meaning given to such term in Section 10.



     “Margin Stock” has the meaning specified in Section 19(k).



     “Material Adverse Effect” means a material adverse effect on (a) the business, property,
operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a
whole, (b) the validity or enforceability of the material terms of this Agreement or any of the
other Lease/Purchase Documents, (c) the material rights or remedies of Arabica hereunder or
thereunder or (d) the ability of Holdings, the Company, any of their Subsidiaries to fulfill their
material obligations hereunder or thereunder.



     “Materials of Environmental Concern” means any gasoline or petroleum (including crude oil or
any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or
wastes, defined or regulated as such in or under any Environmental Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.



- 11 -









 





     “Mortgage” shall have the meaning given to such term in Section 21(i)(ii).



     “Multiemployer Plan” means a Plan that is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.



     “Net Cash Proceeds” means (i) in connection with any Asset Sale or Recovery Event, the
proceeds thereof in the form of cash and cash equivalents (including any such proceeds received by
way of deferred payment of principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received) of such Asset Sale or Recovery
Event, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be
applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any
asset that is the subject of such Asset Sale or Recovery Event (other than any Lien pursuant to a
Company Security Document) and other customary fees and expenses actually incurred in connection
therewith and net of taxes paid or reasonably estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing arrangements) and
(ii) in connection with any issuance or sale of Capital Stock or any incurrence of Indebtedness,
the cash proceeds received from such issuance or incurrence, net of attorneys’ fees, investment
banking fees, accountants’ fees, underwriting discounts and commissions and other customary fees
and expenses actually incurred in connection therewith.



     “New Store” means any Store not previously in existence at a location, provided that a
relocation of any Store within the same building, strip mall or retail mall shall not be considered
a New Store. Notwithstanding the foregoing provision, the definition of New Store shall at all
times be consistent with the Company’s reporting of the opening of new Stores in all financial
statements and reports that any member of the Restricted Group makes to, or files with, the SEC or
provides to the holders of any class of its debt securities or public equity securities.



     “New Store Commitment” means an enforceable obligation of the Company or any of its
Subsidiaries to lease, acquire, develop or open a New Store.



     “New York UCC” means the Uniform Commercial Code as from time to time in effect in the State
of New York.



     “Non-Excluded Taxes” shall have the meaning given such term in Section 12(a).



     “Obligations” means any and all obligations and liabilities of the Company to Arabica, whether
direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, (i) this Agreement, any other
Lease/Purchase Document or any other document made, delivered or given in connection herewith or
therewith, and (ii) any obligations and liabilities to the Reference Bank or any of its affiliates
relating to Bank Products; in each case whether on account of Rent, Supplemental Payments,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise (including all fees,
charges and disbursements of counsel to Arabica that are required to be paid by the Company
pursuant hereto).



     “Ordinary Maintenance” shall have the meaning given to such term in Section 10.



     “Organizational Documents” means the corporate documents including, without limitation, the
rules and provision of law or the charter documents or by-laws or shareholder agreements of any
member of the Restricted Group.



- 12 -









 





     “Other Taxes” means any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Lease/Purchase Document.



     “Parts” means all appliances, parts, instruments, appurtenances, accessories and miscellaneous
property of whatever nature that may from time to time be incorporated or installed in or attached
to or otherwise made part of the Equipment.



     “PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of
Title IV of ERISA (or any successor).



     “Permitted Acquisition” means an Acquisition Transaction by the Company or a Wholly-Owned
Subsidiary Guarantor, subject to the fulfillment of the following conditions:




     (i) the Company (a) shall have obtained the prior written approval of
Arabica, provided that no approval shall be required if, after giving effect to the
consummation of such Acquisition Transaction, the aggregate Total Purchase Price for all
Acquisition Transactions does not exceed $2,500,000 during any fiscal year, and (b) shall
have delivered to Arabica such documentation, financial statements, and other documents or
information as Arabica may request;




     (ii) Target EBITDA of the Acquisition Target for its most recently ended four
fiscal quarters shall exceed $1.00;




     (iii) all assets and properties acquired in connection with any such
Acquisition Transaction shall be free and clear of any Liens other than Permitted Liens;




     (iv) as a result of the Acquisition Transaction, any new Subsidiary must be a
Wholly-Owned Subsidiary Guarantor, and the Restricted Group shall have complied with all
applicable provisions hereof and of the other Lease/Purchase Documents, including the
execution and delivery of such additional agreements, instruments, certificates, opinions
and other papers as Arabica may reasonably require;




     (v) no Default or Event of Default shall have occurred and be continuing at
the time of, or shall reasonably be expected to result from, such Acquisition Transaction;




     (vi) without limiting the generality of the foregoing, after giving effect to
such Acquisition Transaction, the Company shall be in compliance with the provisions of
Section 20, calculated on a pro forma basis after giving effect to the Acquisition
Transaction; and




     (vii) such Acquisition Transaction shall have been approved by the board of
directors (or equivalent body) of the Acquisition Target.



     “Permitted Liens” means:




     (i) Liens in favor of Arabica under the Lease/Purchase Documents;




     (ii) Liens for taxes, fees, assessments and other governmental charges to the
extent that payment of the same may be postponed or is not required in accordance with the
provisions of the Lease/Purchase Documents;



- 13 -









 






          (iii) landlord’s and lessors’ Liens in respect of rent not in default or
Liens in respect of pledges or deposits under worker’s compensation, unemployment insurance,
social security laws, or similar legislation (other than ERISA) or in connection with appeal
and similar bonds incidental to litigation; mechanics’, laborers’ and materialmen’s and
similar Liens, if the obligations secured by such Liens are not then delinquent or are
released by appropriate statutory release bonds; Liens securing the performance of bids,
tenders, contracts (other than for the payment of money); Liens in favor of the Reference
Bank in the nature of cash collateral securing obligations described in, and permitted
under, Section 22(a)(vi); and statutory obligations incidental to the conduct of its
business and that do not in the aggregate materially detract from the value of its property
or materially impair the use thereof in the operation of its business;




     (iv) judgment Liens that shall not have been in existence for a period of
longer than 30 days after the creation thereof or, if a stay of execution shall have been
obtained, for a period longer than 30 days after the expiration of such stay;




     (v) Liens in respect of Capital Lease Obligations and purchase money
obligations incurred within 90 days of purchase which in the aggregate do not secure
Indebtedness in excess of $1,000,000 (of which not more than $500,000 may consist of
existing capital leases) for new tangible personal property, other than inventory, used in
the business of the Company and its Subsidiaries, provided that any such Liens shall not
extend to property and assets not financed by such capital lease or purchase money
obligation and shall not secure Indebtedness greater than the lesser of the cost or fair
market value of such tangible personal property so acquired;




     (vi) easements, rights of way, restrictions and other similar Liens relating
to real property and not interfering in a material way with the ordinary conduct of business
of the Company and its Subsidiaries or the value of such real property; and




     (vii) Liens of assignments, subleases, licenses, sublicenses or other
transfers of the Company’s and its Subsidiaries’ rights or assets, in each case to the
extent permitted pursuant to Section 13.



     “Person” means an individual, partnership, corporation, limited liability company, business
trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.



     “Plan” means, at a particular time, any employee benefit plan that is covered by ERISA and in
respect of which the Company or a Commonly Controlled Entity is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.



     “Pledged Stock” means the Capital Stock pledged to Arabica pursuant to the Company Security
Documents.



     “Pre-Opening Expenses” means expenses incurred by any member of the Restricted Group prior to
the opening to the general public of a Store for business, determined in accordance with GAAP.



     “Projections” shall have the meaning given such term in Section 21(b)(iii).



     “Properties” shall have the meaning given such term in Section 19(p)(i).



     “Put Option” shall have the meaning given such term in the Put Option Letter.



- 14 -









 





     “Put Option Letter” means that certain Put Option Letter, dated the date hereof, issued by the
Company to Arabica.



     “Qualified Investments” means (i) existing investments and, with Arabica’s prior written
consent (such consent not to be unreasonably withheld), additional investments in Caribou MSP
Airport, a Minnesota joint venture, (ii) existing and additional investments in Caribou Acquisition
Company, Inc., Caribou on Piedmont, Inc. and Caribou Coffee Development Company, (iii) investments
in Wholly-Owned Subsidiaries formed, with the consent of Arabica, after the date hereof, and
(iv) Cash Equivalents.



     “Quarterly Dates” means the dates set forth on Schedule 1 and the last day of each
fiscal quarter of the Company thereafter.



     “Recovery Event” means any settlement of or payment in respect of any property or casualty
insurance claim or any condemnation proceeding relating to any asset of any member of the
Restricted Group, or any receipt by any member of the Restricted Group of any amount as a refund of
any Tax or Other Tax.



     “Reference Amount” means on any day an amount equal to $15,000,000 (or $25,000,000, if so
increased by Arabica and the Company pursuant to an amendment to this Agreement) as such amount may
be reduced from time to time as follows: the Company shall have the right, upon not less than three
Business Days’ notice to Arabica, to reduce the Reference Amount by any amount at least equal to
$1,000,000, or a whole multiple thereof (or any amount which would have the effect of reducing the
Reference Amount to zero); provided that no such reduction of the Reference Amount shall be
permitted if, after giving effect thereto and to any payments under the Call Option Letter made on
the effective date thereof, the unpaid Acquisition Cost would exceed the Reference Amount as so
reduced; provided further that any such reduction shall be in an amount equal to, and shall reduce
permanently the Reference Amount then in effect.



     “Reference Bank” means Wells Fargo Bank, N.A., or any successor thereto.



     “Reference Period” means each period of four consecutive fiscal quarters of the Company ending
on each Quarterly Date on or after the Commencement Date.



     “Registered Holder” shall have the meaning given such term in Section 13(b).



     “Regulation U” means Regulation U (12 CFR Part 221) of the Board as in effect from time to
time.



     “Reinvestment Deferred Amount” means with respect to any Reinvestment Event, the aggregate Net
Cash Proceeds received by any member of the Restricted Group in connection therewith that, as a
result of the delivery of a Reinvestment Notice, are not used for purposes of funding the Recovery
Event Purchase Price (as defined in the Put Option Letter) upon exercise by Arabica of its Recovery
Event Option (as defined in the Put Option Letter).



     “Reinvestment Event” means any Recovery Event in respect of which the Company has delivered a
Reinvestment Notice.



     “Reinvestment Notice” means a written notice executed by a Responsible Officer stating that no
Event of Default has occurred and is continuing and that the Company (directly or indirectly
through a Subsidiary) intends and expects to use all or a specified portion of the Net Cash
Proceeds of a Recovery Event to acquire or repair assets useful in its business.



- 15 -









 





     “Rent” means the amounts payable during the Term pursuant to Section 6 of this
Agreement and Schedule 6(a).



     “Rent Payment Date” means each Quarterly Date occurring on or prior to the Final Rent Payment
Date, and the Final Rent Payment Date.



     “Rent Period” means the period commencing on the Commencement Date and ending on the first
Rent Payment Date occurring after the date hereof, and thereafter the consecutive periods
commencing on each Rent Payment Date and ending on the next occurring Rent Payment Date, provided
that:




     (i) the first Rent Period for any Assets that are added to this Agreement
pursuant to a Supplement will commence on the effective date of such Supplement and end on
the next occurring Rent Payment Date;




     (ii) any Rent Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business Day falls in
the next calendar month, in which case such Rent Period shall end on the immediately
preceding Business Day;




     (iii) any Rent Period that begins on the last Business Day of a calendar
month (or on a day for which there is not a numerically corresponding day in the calendar
month at the end of such Rent Period) shall, subject to clause (iv) below, end on the last
Business Day of a calendar month; and




     (iv) any Rent Period that would otherwise end after the Final Rent Payment
Date shall end on the Final Rent Payment Date.



     “Rental Rate” shall have the meaning given to such term in Section 1(b) of
Schedule 6(a).



     “Reorganization” means with respect to any Multiemployer Plan, the condition that such plan is
in reorganization within the meaning of Section 4241 of ERISA.



     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than
those events as to which the thirty day notice period is waived under subsections .27, .28, .29,
..30, .31, .32, .34 or .35 of PBGC Reg. § 4043.



     “Replacement” shall have the meaning given to such term in Section 11.



     “Required Alteration” shall have the meaning given to such term in Section 11.



     “Requirement of Law” means, as to any Person, the Certificate of Incorporation and By-Laws or
other organizational or governing documents of such Person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which such Person or any of
its property is subject.



     “Responsible Officer” means the chief executive officer, president, chief financial officer or
treasurer of the Company, but in any event, with respect to financial matters, the chief financial
officer of the Company.



     “Restricted Group” means the Company, each of its Subsidiaries and Holdings, each of which is
referred to as a “member” of the Restricted Group.



- 16 -









 





     “Restricted Payments” means any distribution or payment of cash or property, or both, directly
or indirectly to the holder of any Capital Stock or to any Affiliates of any such holder for any
reason whatsoever, including without limitation, salaries, loans, debt repayment, consulting fees,
management fees, expense reimbursements and dividends, distributions, put, call or redemption
payments and any other payments in respect of such Capital Stock; provided, however, that
Restricted Payments shall not include reasonable and customary salaries paid to employees of the
Company or any of its Subsidiaries for actual services rendered and reimbursements of bona
fide out of pocket business expenses made to such employees and to other holders of any
equity interest of the Company.



     “SEC” means the Securities and Exchange Commission, any successor thereto and any analogous
Governmental Authority.



     “Single Employer Plan” means any Plan that is covered by Title IV of ERISA, but that is not a
Multiemployer Plan.



     “Solvent” means, when used with respect to any Person, means that, as of any date of
determination, (i) the amount of the “present fair saleable value” of the assets of such Person
will, as of such date, exceed the amount of all “liabilities of such Person, contingent or
otherwise”, as of such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors, (ii) the present fair
saleable value of the assets of such Person will, as of such date, be greater than the amount that
will be required to pay the liability of such Person on its debts as such debts become absolute and
matured, (iii) such Person will not have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (iv) such Person will be able to pay its debts as they
mature. For purposes of this definition, (x) “debt” means liability on a “claim”, and (y) “claim”
means any (I) right to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (II) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.



     “Specified Change of Control” means a “Change of Control” (or any other defined term having a
similar purpose) as defined in any organizational document of Holdings or any agreement relating to
the Capital Stock of Holdings or the Company.



     “Specified Foreign Jurisdiction” means any country other than the United States in which the
Company’s annual revenues or profits (excluding revenues and profits derived from franchising and
similar licensing agreements or mail-order business) exceed $500,000.



     “Store” means any store, kiosk, or other retail unit, including without limitation, any New
Store, which is owned or controlled directly or indirectly by the Company or any of its
Subsidiaries.



     “Subsidiary” means, as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such power only by reason
of the happening of a contingency) to elect a majority of the board of directors or other managers
of such corporation, partnership or other entity are at the time owned, or the management of which
is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. For purposes of
clarification, as of the date hereof, Caribou MSP Airport, a
Minnesota joint venture, shall not be considered to be a Subsidiary of the Company or
Holdings. Notwithstanding anything in this Agreement to the contrary, Caribou Coffee Charitable




- 17 -











 




Foundation, a Minnesota not-for-profit corporation, shall not be deemed a Subsidiary of the
Company so long as it maintains its not-for-profit status and is not consolidated on the Company’s
financial statements.




     “Subsidiary Guarantor” means each Domestic Subsidiary of the Company.



     “Supplement” has the meaning specified in Section 2(b).



     “Supplemental Agreement” means that certain Supplemental Agreement, dated as of the date
hereof, between Arabica and the Company.



     “Supplemental Payments” means all amounts, liabilities and obligations which the Company
assumes or agrees to pay hereunder to Arabica, including without limitation indemnity payments, but
excluding payments of Rent and payments made under the Call Option Letter or the Put Option Letter.



     “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference to, one or more
rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions. For purposes of clarification, it is the
intention of the Restricted Group not to enter into Swap Agreements or other financing transactions
that are not acceptable under Islamic Shari’ah principles.



     “Target EBITDA” means, for any period, as to an Acquisition Target (or consolidated, combined
or related group of Acquisition Targets), net income for such period plus, without
duplication and to the extent reflected as a charge in the statement of such net income for such
period, the sum of (a) income tax expense, (b) interest expense, and (c) depreciation and
amortization expense, all calculated in accordance with generally accepted accounting principles
consistently applied.



     “Tax” shall have the meaning given such term in Section 12.



     “Tax Matters Agreement” means that certain Tax Matters Agreement, dated as of the date hereof,
between Arabica and the Company.



     “Term” shall have the meaning given to such term in Section 4.



     “Third Rent Component” shall have the meaning given such term in Section 1(c) of
Schedule 6(a).



     “Third Rent Component Rate” means one-half (0.50%) percent per annum.



     “Total Purchase Price” means with respect to any Acquisition Transaction, all cash and
non-cash consideration, including without limitation the amount of Indebtedness assumed by the
buyer and the amount of Indebtedness evidenced by notes issued by the buyer to the seller, the
maximum amount payable in connection with any deferred purchase price obligation (including without
limitation any earn-out obligation) and the value of any Capital Stock of the buyer issued to the
seller in connection with such Acquisition Transaction.



     “2004 Agreement” has the meaning specified in the recitals to this Agreement.



     “2004 Call Option Letter” has the meaning specified in the recitals to this Agreement.



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     “2004 Put Option Letter” has the meaning specified in the recitals to this Agreement.



     “United States” means the United States of America.



     “Wholly-Owned Subsidiary” means as to any Person, any other Person all of the Capital Stock of
which (other than directors’ qualifying shares required by law) is owned by such Person directly
and/or through other Wholly Owned Subsidiaries.



     “Wholly-Owned Subsidiary Guarantor” means any Subsidiary Guarantor that is a Wholly Owned
Subsidiary of the Company.



     (b) As used herein and in the other Lease/Purchase Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, (i) accounting terms relating to any member
of the Restricted Group not defined in Section 1(a) and accounting terms partly defined in
Section 1(a), to the extent not defined, shall have the respective meanings given to them
under GAAP, (ii) the words “include”, “includes” and “including” shall be deemed to be followed by
the phrase “without limitation”, (iii) the word “incur” shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words “incurred” and
“incurrence” shall have correlative meanings), (iv) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, (v) references to agreements or other Contractual Obligations shall,
unless otherwise specified, be deemed to refer to such agreements or Contractual Obligations as
amended, supplemented, restated or otherwise modified from time to time and (vi) references to the
“knowledge” of any member of the Restricted Group shall refer to the actual knowledge of the senior
management personnel of such member of the Restricted Group.



     (c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise
specified.



     (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.



     SECTION 2. Agreement for Lease, License and Purchase Option Financing; Covenant of
Quiet Enjoyment.



     (a) Subject to, and upon all of the terms and conditions of this Agreement, Arabica hereby
provides a lease, license and purchase option finance facility to the Company for the Assets by
leasing to the Company each item of Equipment identified on Schedule 2(a) hereto or
subsequently made subject to this Agreement pursuant to a Supplement, licensing to the Company each
Intangible Asset identified on Schedule 2(a) hereto or subsequently made subject to this
Agreement pursuant to a Supplement, and granting to the Company options to purchase the Assets, and
the Company hereby accepts such facility by leasing from Arabica each item of the Equipment and by
licensing from Arabica each item of the Intangible Assets from and including the applicable
Effective Date for the duration of the Term and by granting to Arabica the right to require the
Company to purchase the Assets.



     (b) Arabica and the Company may from time to time agree to add to this Agreement additional
items of Equipment and Intangible Assets to be leased and licensed hereunder, and to be subject to
the Company’s purchase option and Arabica’s right to require the Company to purchase, by the
execution and delivery of a supplement in substantially the form of Exhibit B hereto (each,
a “Supplement”). From and after the Effective Date of a Supplement, the items of Equipment identified therein will
constitute items



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of Equipment hereunder and the Intangible Assets identified therein will constitute Intangible Assets hereunder, subject as to each to all of the terms and conditions of
this Agreement, the Call Option Letter, the Put Option Letter, the Supplemental Agreement and the
Tax Matters Agreement.




     (c) Provided that no Event of Default has occurred and is continuing, Arabica agrees that it
shall not interfere with the Company’s quiet enjoyment and use of the Assets during the Term.



     SECTION 3. Delivery and Acceptance of Assets. The Company has inspected the
Equipment and all documentation and indicia representing the Intangible Assets and, as of the
applicable Effective Date, shall be deemed (i) to have unconditionally and irrevocably accepted the
Assets for all purposes of this Agreement, (ii) to have acknowledged and agreed that, as between
Arabica and the Company, (A) each item of Equipment has been inspected to the Company’s
satisfaction, is in good operating order, repair and condition, and is of a size, design, capacity
and manufacture acceptable to the Company, (B) all documentation and indicia representing the
Assets have been inspected to the Company’s satisfaction and are of the form and type acceptable to
the Company, (C) except as noted on Schedule 3, each Asset is duly registered with and/or
certified or licensed by any governmental entity which is charged with such registration or with
issuing such certificates or licenses, (D) the Company is satisfied that each Asset is suitable for
its intended purpose, (E) Arabica, with respect to each Asset, has made no warranty, expressed or
implied, other than as expressly set forth herein and (F) the Company has unconditionally accepted
each Asset under this Agreement, and (iii) to have waived any defect or other proper objection to
any Asset.



     SECTION 4. Term. The term for the lease and license of the Assets hereunder (the
“Term”) shall commence, and the Rent shall commence to accrue, as to any Assets, on the Effective
Date applicable to such Assets and, unless sooner terminated by Arabica pursuant to Section
24 or upon an Event of Loss, or pursuant to the Put Option Letter or the Call Option Letter,
shall end on the Final Rent Payment Date; provided, however, that notwithstanding the termination,
as to any Assets, of the term of the lease and license provided hereunder, all other obligations of
the Company hereunder and under the other Lease/Purchase Documents and all other rights of Arabica
hereunder and under the other Lease/Purchase Documents shall continue in full force and effect
until all Rent accruing prior to such termination, Supplemental Payments and other amounts due and
payable by the Company have been indefeasibly paid in full in cash. The Company shall not have the
right to terminate this Agreement prior to the Final Rent Payment Date without the prior written
consent of Arabica.



     SECTION 5. End of Term Delivery of Assets. If the Company shall not have elected
to purchase the Assets pursuant to the Call Option, or title shall not have automatically reverted
to the Company pursuant to the last sentence of this Section 5, or Arabica shall not have
required the Company to purchase the Assets pursuant to the Put Option, then at the end of the term
of this Agreement the Company shall deliver, at the Company’s expense, all Assets to Arabica (or to
a third party designated by Arabica) at a location or locations within the continental United
States as specified in writing by Arabica or such third party. At the time of such return to
Arabica or delivery to the third party, each item of Equipment (and each Part or component thereof)
shall be in good operating order, and in the repair and condition as when originally delivered to
the Company, ordinary wear and tear from proper use thereof excepted, and refurbished where
necessary. In addition, each Asset shall (i) be in accordance and compliance with any and all
statutes, laws, ordinances, rules and regulations of any federal, state or local governmental body,
agency or authority applicable to the use and operation of such item of Asset and (ii) be free and
clear of all Liens, other than those granted or placed thereon by Arabica. Notwithstanding the
foregoing, upon the indefeasible payment at the end of the Term, in full and in cash, of all Rent, including any unpaid
Acquisition Cost, Supplemental Payments and other amounts due and payable by the



 - 20 - 









 




Company under the Lease/Purchase Documents, title to the Assets shall automatically revert to the Company.




     SECTION 6. Payments.



     (a) The Company shall pay Rent to Arabica in accordance with this Section 6 and
Schedule 6(a). Rent shall be paid with respect to each Rent Period in the amounts and on
the Rent Payment Dates specified in Schedule 6(a). Unless otherwise specified in
Schedule 6(a), Rent for each Rent Period is due and payable in arrears and in full on each
Rent Payment Date. Unless otherwise agreed, the Company shall pay Rent without deduction or
set-off and without prior notice or demand from Arabica. All payments to be made by the Company
hereunder or under any of the other Lease/Purchase Documents shall be made in Dollars by wire
transfer and in immediately available funds directly to the account of Arabica specified on the
signature page hereof.



     (b) The Company hereby undertakes that it shall pay to Arabica, upon demand, to the extent
permitted by applicable law, a late fee on any Rent, Supplemental Payment or other amount payable
under this Agreement or any of the other Lease/Purchase Documents to which the Company is a party
that is not paid when due, for any period for which any of the same is overdue (without regard to
any grace period) at a rate per annum equal to the Late Payment Rate. Payment or acceptance of the
late fee provided for in this Section 6(b) is not a permitted alternative to timely payment
and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any
rights or remedies of Arabica.



     (c) The parties hereto acknowledge and agree that each Supplemental Payment and each payment
under the other documents entered into in connection with this Agreement shall be integral to this
Agreement.



     SECTION 7. Net Lease and License. Except as otherwise specifically provided
herein, this Agreement is a net lease and license, and the Company acknowledges and agrees that the
Company’s obligations hereunder, including without limitation its obligation to pay all Rent,
Supplemental Payments and other amounts payable hereunder or under any of the other Lease/Purchase
Documents, shall be absolute and unconditional under any and all circumstances and shall be paid
without notice or demand and without any abatement, reduction, diminution, setoff, defense,
counterclaim or recoupment whatsoever, including without limitation any abatement, reduction,
diminution, setoff, defense, counterclaim or recoupment due or alleged to be due to, or by reason
of, any past, present or future claims which the Company may have against Arabica, any Registered
Holder, or the manufacturer or producer of any item of the Assets, any Part or unit or component of
the Equipment, or any other Person for any reason whatsoever. Except to the extent expressly
provided herein, and without in any manner limiting the generality of the foregoing sentence, the
obligations and liabilities of the Company hereunder shall in no way be released, discharged or
otherwise affected for any reason, including without limitation (i) any defect in any item of the
Equipment, any Part or unit or component of the Equipment, or the condition, design, operation or
fitness for use thereof; (ii) any defect in any Asset; (iii) abandonment, salvage, scrapping or
destruction of, any item of the Assets, or any Part or unit or component of the Equipment; (iv) any
Liens or rights of others with respect to any item of the Assets, or any Part or unit or component
of the Equipment (unless the enforcement of such Lien results in an Event of Loss as described in
clause (ii) of the definition of Event of Loss); (v) any prohibition or interruption of or other
restriction against the Company’s use, operation or possession of any item of the Assets, or any
Part or unit or component of the Equipment for any reason whatsoever, or any interference with such
use, operation or possession by any Person; (vi) any other indebtedness or liability, howsoever and
whenever arising, of Arabica or of any Registered Holder or of the Company to any other Person;
(vii) any insolvency, bankruptcy or similar proceedings by or against Arabica, any Registered Holder, any Subsidiary of the Company or any guarantor of the
Company’s obligations; or (viii) any other reason whatsoever, whether similar or



 - 21 - 









 




dissimilar to any of the foregoing, any present or future law to the contrary notwithstanding; it being the intention
of the parties hereto that the Rent and other amounts payable by Company hereunder shall continue
to be payable in all events and in the manner and at the times herein provided, without notice or
demand, unless the obligation to pay the same shall be terminated pursuant to the express
provisions of this Agreement.




     SECTION 8. Arabica’s Title; Grant of Security Interest.



     (a) With the exception of those Assets purchased by the Company upon its exercise of the Call
Option or upon Arabica’s exercise of the Put Option or upon payment by the Company of all Rent and
other amounts due on the Final Rent Payment Date, (i) title to each item of the Assets shall at all
times remain in Arabica and (ii) at no time during the Term shall title to any Asset become vested
in the Company.



     (b) Without prejudice, and in addition to Section 8(a), and notwithstanding anything
to the contrary, this Agreement is to be treated as a security agreement under New York UCC (and
the Uniform Commercial Code of any other state whose laws may govern the perfection and priority of
a security interest in any of the Assets), and the Company hereby grants to Arabica a security
interest in the Assets and all proceeds thereof as collateral security for the payment and
performance of the Obligations.



     SECTION 9. Use of Assets; Compliance with Laws. The Company agrees that (i) each
item of the Assets will be used only for purposes or operations in the ordinary course of its
business and (ii) each item of the Equipment will be used and operated only in the manner set forth
in, and in accordance with, the terms, conditions and provisions of the insurance policy or
policies providing the coverages specified in Section 15. In no event shall the Company
use or operate any Asset, or knowingly permit any Asset to be used or operated, for any purpose for
which such Asset is not designed or reasonably suitable, or in any fashion that may reasonably
subject such Asset to any Liens, other than Permitted Liens, or (as to Equipment) in any area
excluded from coverage by any such insurance policy or policies. The Company further agrees that
each Asset will be used and operated in the conduct of the Company’s business and in compliance
with all statutes, laws, ordinances, rules and regulations of any federal, state, local or foreign
government or governmental authority having jurisdiction with respect to the use, operation,
maintenance and condition of such Asset (including without limitation all zoning, environmental
protection, pollution, sanitary and safety laws). The Company will not load, use, operate, or
store any Asset, or knowingly permit the loading, using, operating or storing of any Asset, in a
negligent manner or otherwise in violation of this Agreement or (as to Equipment) so as to void any
of the insurance coverages specified in Section 15 respecting any Equipment. The Company
shall procure and maintain in effect all licenses, certificates, permits, approvals and consents
required by federal, state, local or foreign laws or by any governmental body, agency or authority,
in connection with the delivery, use, operation, maintenance and condition of each Asset. The
Assets will at all times be and remain in the control of the Company except as the Company’s
relinquishment of control of an Asset is specifically permitted by this Agreement and except while
an Asset is undergoing maintenance. To the extent that any applicable law requires the licensing
or certification of an operator of any item of the Equipment, each such operator shall be duly
licensed and currently certificated and qualified to operate such item of Equipment and authorized
by the terms of (and in accordance with the provisions and requirements of) the insurance policy or
policies providing the coverages specified in Section 15 hereof.



     SECTION 10. Maintenance and Repair of the Equipment.



     (a) The Company agrees, at its own cost and expense, to be responsible for the performance of
all Ordinary Maintenance required by the Equipment. The term “Ordinary Maintenance” shall mean all
repair, replacement and maintenance required in the ordinary and regular course of the Company’s



 - 22 - 









 




business and operations to keep, repair, maintain and preserve the Equipment in good order and
operating condition, and in compliance with such maintenance and repair standards and procedures as
are set forth in the manufacturer’s manuals pertaining to the Equipment, and as otherwise may be
required to enforce warranty claims against each vendor and manufacturer of each item of Equipment,
and in compliance with the maintenance and repair standards of the Company for similar equipment
and with prudent industry standards and with all requirements of law applicable to the maintenance
and condition of the Equipment.




     (b) Arabica shall be obligated to perform or cause to be performed all Major Maintenance
required by the Equipment. Arabica has entered into the Supplemental Agreement with the Company,
under which the Company has agreed to perform or cause to be performed all Major Maintenance
required by the Equipment, and Arabica and the Company have agreed on the amount to be paid by
Arabica to the Company in reimbursement of the costs incurred by the Company in performing or
causing to be performed such Major Maintenance. The term “Major Maintenance” shall mean all
repair, replacement and maintenance required by the Equipment and not constituting Ordinary
Maintenance.



     SECTION 11. Replacement of Parts; Alterations; Modifications and Additions. In
case any Part, component or unit of the Equipment is required to be altered or modified, or any
equipment or appliance on any item of Equipment is required to be altered, added, replaced or
modified, in either case in order to comply with applicable laws, regulations, requirements or
rules (“Required Alteration”), Arabica shall be obligated to make or cause to be made such Required
Alteration. Arabica has entered into the Supplemental Agreement with the Company, under which the
Company has agreed to make or cause to be made such Required Alterations, and Arabica and the
Company have agreed on the amount to be paid by Arabica to the Company in reimbursement of the
costs incurred by the Company in making or causing to be made such Required Alterations. Such
Required Alterations shall immediately be and become part of the Equipment and subject to the terms
of this Agreement, and title thereto shall vest in Arabica. All Parts, equipment and appliances
incorporated or installed in or attached to any item of Equipment in connection with servicing,
repairing, maintaining and overhauling any item of Equipment pursuant to the requirements of
Sections 10 or 11 hereof (“Replacement”) shall be considered accessions to such item of
Equipment and shall immediately, without further act, be and become part of the Equipment, and
title thereto shall vest in Arabica. The Company may, without the prior written consent of
Arabica, affix or install any accessory, equipment or device on the Equipment or make any
improvement or addition thereto other than a Required Alteration or Replacement (“Improvement”);
provided, that, (i) a nonremovable Improvement may be made to the Equipment only if such
Improvement does not reduce the value of the Equipment and (ii) any other Improvement may be made
to the Equipment only if such Improvement is readily removable without causing damage to the
Equipment or impairing the value, utility or condition the Equipment would have had if such
Improvement had not been so affixed or installed. Nonremovable Improvements shall be considered
accessions to the Equipment and shall immediately without further act, be and become part of the
Equipment, and title thereto shall vest in Arabica. At the time title to any replacement Part,
equipment or appliance has become vested in Arabica pursuant to the provisions of this
Section 11, title to the part, equipment or appliance replaced thereby shall thereupon vest
in the Company and Arabica shall be deemed to have released any Lien thereon and any interest
therein.



     SECTION 12. Taxes.



     (a) All payments made by the Company under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority (any of the
foregoing, a “Tax”), excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on Arabica



 - 23 - 









 




or any Registered Holder as a result of a present or former connection between Arabica or any Registered Holder and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or therein (other than
any such connection arising solely from Arabica or any Registered Holder having executed, delivered
or performed its obligations or received a payment under, or enforced, this Agreement or any other
Lease/Purchase Document). If any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be withheld from
any amounts payable to Arabica or any Registered Holder hereunder, the amounts so payable to
Arabica or any Registered Holder shall be increased to the extent necessary to yield to Arabica or
any Registered Holder (after payment of all Non-Excluded Taxes and Other Taxes) Rent or any such
other amounts payable hereunder at the rates or in the amounts specified in this Agreement,
provided, however, that the Company shall not be required to increase any such amounts payable to
Arabica or any Registered Holder with respect to any Non-Excluded Taxes (i) that are attributable
to Arabica’s or such Registered Holder’s failure to comply with the requirements of subsection (d)
or (e) of this Section or (ii) that are United States withholding taxes imposed on amounts payable
to a Registered Holder at the time such Registered Holder becomes a party to this Agreement, except
to the extent that such Registered Holder’s assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Company with respect to such Non-Excluded Taxes
pursuant to this paragraph.




     (b) In addition, the Company shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.



     (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Company, as promptly as
possible thereafter the Company shall send to Arabica or the relevant Registered Holder, as
applicable, a certified copy of an original official receipt received by the Company showing
payment thereof. If the Company fails to pay any Non-Excluded Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to Arabica or such Registered Holder the required
receipts or other required documentary evidence, the Company shall indemnify Arabica or such
Registered Holder for any incremental taxes, interest or penalties that may become payable by
Arabica or such Registered Holder as a result of any such failure.



     (d) Any Registered Holder that is not a “U.S. Person” as defined in Section 7701(a)(30) of the
Code (a “Non U.S. Person”) shall deliver to the Company two copies of either U.S. Internal Revenue
Service Form W-8BEN or Form W-8ECI, or, in the case of a Non U.S. Person claiming exemption from
U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of
“portfolio interest”, a statement in form and substance reasonably satisfactory to Arabica and a
Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly
executed by such Non U.S. Person claiming complete exemption from, or a reduced rate of, U.S.
federal withholding tax on all payments by the Company under this Agreement and the other
Lease/Purchase Documents. Such forms shall be delivered to the Company by such Non U.S. Person on
or before the date it becomes a party to this Agreement or becomes a Registered Holder. In
addition, such Non U.S. Person shall deliver to the Company such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non U.S. Person. Such Non-U.S.
Person shall promptly notify the Company at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Company (or any other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this paragraph, such Non U.S. Person shall not be
required to deliver any form pursuant to this subsection that such Non U.S. Person is not legally
able to deliver.



     (e) A Registered Holder that is entitled to an exemption from or reduction of non-U.S.
withholding tax under United States law or any treaty to which the United States is a party, with
respect to payments under this Agreement shall deliver to the Company (with a copy to Arabica), at
the time or



 - 24 - 









 




times prescribed by applicable law or reasonably requested by the Company, such
properly completed and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such Registered Holder
is legally entitled to complete, execute and deliver such documentation and in such Registered
Holder’s judgment such completion, execution or submission would not materially prejudice the legal
position of such Registered Holder.




     (f) If Arabica or any Registered Holder determines, in its sole discretion, that it has
received a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified by
the Company or with respect to which the Company has paid additional amounts pursuant to this
Section 12, it shall pay over such refund to the Company (but only to the extent of
indemnity payments made, or additional amounts paid, by the Company under this Section 12
with respect to the Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of Arabica or such Registered Holder and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such refund); provided, that
the Company, upon the request of Arabica or such Registered Holder, agrees to repay the amount paid
over to the Company (plus any amounts imposed by the relevant Governmental Authority) to Arabica or
such Registered Holder in the event Arabica or such Registered Holder is required to repay such
refund to such Governmental Authority. This paragraph shall not be construed to require Arabica or
such Registered Holder to make available its tax returns (or any other information relating to its
taxes which it deems confidential) to the Company or any other Person. Any interest received by
the Company as a result of any such refund will be donated by the Company to charity.



     (g) The agreements in this Section shall survive the termination of this Agreement and the
payment of Rent and all other amounts payable hereunder.



     SECTION 13. Assignment, Sublease, Sublicense or other Transfer.



     (a) Assignment, Sublease, Sublicense or Other Transfer by the Company. Arabica hereby gives
its written consent to the Company to sublicense on a non-exclusive basis (provided that the rights
retained by the Company in respect thereof may be subject to territorial exclusivity rights of the
franchisee or licensee), either indirectly through one or more Subsidiaries of the Company or
directly, to franchisees or similar licensees, the Company’s owned or licensed-in Intellectual
Property to (i) promote and operate retail locations selling the same or similar products,
including beverages, food, whole beans and ground coffee, and merchandise, as those sold at the
Company’s own retail locations and (ii) promote and sell whole beans and ground coffee and other
products through institutional trade channels . Except as provided in the previous sentence, the
Company will not, without the prior written consent of Arabica, assign, sublease, sublicense or
otherwise transfer its rights or obligations with respect to any of the Assets or hereunder, and
any attempted assignment, sublease, sublicense or other transfer by the Company without such
Arabica consent shall be null and void. With respect to any sublease or sublicense for which
Arabica provides its written consent, no such sublease or sublicense by the Company will reduce any
of the obligations of the Company hereunder or the rights of Arabica hereunder, and all of the
obligations of the Company hereunder shall be and remain primary and shall continue in full force
and effect as the obligations of a principal and not of a guarantor or surety. The Company shall
furnish to Arabica not later than the effective date of such sublease or sublicense (i) in respect of Assets other than
Intellectual Property, new insurance certificates from the Company’s insurance broker, in form and
substance satisfactory to Arabica, indicating compliance with the insurance provisions of this
Agreement and (ii) an officer’s certificate from the Company naming the sublessee or sublicensee
and specifying the address for the sublessee or sublicensee’s principal place of business. The
Company shall, and shall cause such sublessee or sublicensee to, execute and deliver such
instruments to the appropriate Person for filing and to deliver copies of the same to Arabica
(including sublease or sublicense agreements and Uniform Commercial Code financing statements) as
may be requested by Arabica in connection with any such



 - 25 - 









 




sublease or sublicense. Without limiting the foregoing, the Company shall be entitled (without the consent of Arabica) to sublease any of
the Assets to any Subsidiary or Affiliate and, in connection therewith, to transfer the location of
any such Asset to the premises of such Subsidiary or Affiliate. The Company shall provide Arabica
with advance written notice of any such sublease. Any sublease of any of the Assets to any
Subsidiary or Affiliate of the Company shall be subject to the agreement of such Affiliate or
Subsidiary to acknowledge that Arabica holds title to such Assets. Any permitted assignment by the
Company pursuant to this Section 13(a) shall (A) be subject to the rights of Arabica under
the Put Option Letter and (B) include an assignment by the Company of the Supplemental Agreement,
the Put Option Letter, the Call Option Letter and any other agreement between Arabica and the
Company relating to the Assets, this Agreement or the foregoing letters and agreements, to the same
assignee, and an assumption by such assignee of the obligations of the Company thereunder, and
Arabica consents to such assignment and assumption of the Supplemental Agreement, the Put Option
Letter, the Call Option Letter and such other agreements.




     (b) Assignments By Arabica. Subject to the prior written consent of the Company, which
consent may not be unreasonably withheld (unless a Default has occurred and is continuing, in which
case no such consent shall be required), Arabica may at any time sell or transfer all, but not less
than all, of Arabica’s right, title and interest in and to the Assets and, in connection therewith,
sell, assign and transfer all, but not less than all, of Arabica’s right, title and interest in, to
and under this Agreement (each assignee in such circumstances and each Person for whom any such
Person may act, either directly or indirectly, being a “Registered Holder”), and may, without the
consent of the Company, and at its sole discretion, collaterally assign to any Person all or any of
its rights hereunder or under any Lease/Purchase Document. Any permitted assignment by Arabica
pursuant to this Section 13(b) shall (i) be subject to the rights of the Company under the
Call Option Letter and (ii) include an assignment by Arabica of the Supplemental Agreement, the Put
Option Letter and the Call Option Letter to the same Registered Holder, and an assumption by such
Registered Holder of the obligations of Arabica thereunder, and the Company consents to such
assignment and assumption of the Supplemental Agreement, the Put Option Letter and the Call Option
Letter.



     SECTION 14. Event of Loss; Obsolete and Worn Out Equipment.



     (a) Termination Upon Event of Loss. Upon the occurrence of an Event of Loss, the Company
shall give prompt notice thereof to Arabica and the lease and license of the Assets hereunder shall
terminate immediately, and all Rent shall cease to accrue with respect to all of the Assets,
provided that Arabica shall be entitled to the payment specified in Section 14(b) with
respect to the Assets; and provided, further, however, that notwithstanding such termination of the
lease, license and purchase option financing provided hereunder, the obligations of the Company
hereunder and under the other Lease/Purchase Documents and the rights of Arabica hereunder and
under the other Lease/Purchase Documents shall continue in full force and effect until all Rent,
Supplemental Payments and other amounts payable by the Company hereunder or under any of the other
Lease/Purchase Documents have been indefeasibly paid in full in cash. Not later than five Business
Days after the occurrence of an Event of Loss, the Company shall pay the Rent applicable to such
Assets to the date of such Event of Loss.



     (b) Event of Loss Payments. Pursuant to the Supplemental Agreement, all insurance and other
payments resulting from an Event of Loss in relation to the Assets to which the Company is entitled
shall be paid or remitted by the Company to Arabica. Upon such payment, the unpaid Acquisition
Cost previously attributable to the Assets shall be deemed to have been paid in full.



     (c) Application of Payments Not Relating to an Event of Loss. Any payments (including without
limitation insurance proceeds) received at any time by Arabica or the Company from any insurer,
governmental authority or other party with respect to any condemnation, confiscation, theft or
seizure of,



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or requisition of title to or use of, or loss or damage to, any item of the Equipment
not constituting an Event of Loss, will be applied directly in payment of repairs or for
replacement of property in accordance with the provisions of Sections 10 and 11 hereof, if
not already paid by the Company, or if already paid by the Company and if no Default or Event of
Default shall have occurred and be continuing, shall be applied to reimburse the Company for such
payment. If an Event of Default shall have occurred and is continuing, any such payment shall be
applied to the unpaid Acquisition Cost of the Assets.




     SECTION 15. Insurance.



     (a) Coverage — Property Damage. Arabica shall be responsible for maintaining or causing to be
maintained property damage insurance coverage (including, without limitation, so-called “all
perils” coverage at the greater of replacement value or Acquisition Cost) for the Equipment.
Arabica shall satisfy this obligation by entering into the Supplemental Agreement.



     (b) Coverage — Liability and Other. The Company shall maintain (i) comprehensive general
public liability insurance, including “broad form” liability coverage blanket contractual, personal
injury, property damage and loss of use of property of others, (ii) fidelity insurance and
(iii) such other insurance with respect to the Equipment in such amounts and against such insurable
hazards as is usually carried by the Company.



     (c) Insurance Policies. All insurance required to be maintained by or on behalf of the
Company or any other member of the Restricted Group pursuant to this Agreement and the other
Lease/Purchase Documents shall (i) provide that no cancellation, material reduction in amount or
material change in coverage thereof shall be effective until at least 30 days (10 days for non
payment of premiums) after receipt by Arabica of written notice thereof, (ii) provide that
Arabica’s interest will be insured regardless of any breach or violation of the underlying policies
by the Company or such other member of the Restricted Group or any other Person, (iii) name Arabica
and its successors and assigns as loss payee pursuant to a loss payable endorsement issued in favor
of and delivered to Arabica and (iv) be reasonably satisfactory in all other respects to Arabica.
If the Company or any member of the Restricted Group fails to provide or cause to be provided such
insurance, Arabica, in its sole discretion, may provide such insurance and charge the cost to the
Company and any member of the Restricted Group.



     SECTION 16. Illegality. Where the introduction of any law, order, regulation or
official directive or any change in the interpretation or application thereof makes it unlawful for
Arabica or the Company to give effect to its respective obligations under this Agreement or the
Supplemental Agreement, then each party shall notify the other of such change in circumstances and,
in consultation with the other party, use all reasonable efforts to avoid the effects of such
introduction, variation or change. If the affected party determines in good faith that it is
unable, within any period which the relevant introduction, variation or change may allow, to avoid
the effects of the same, then the Put Option may be exercised by Arabica in accordance with Section
2 of the Put Option Letter.



     SECTION 17. General Indemnity.



     (a) The Company hereby assumes liability for, and does hereby agree, whether or not any of the
transactions contemplated hereby are consummated, to indemnify, protect, save, defend, exonerate,
pay and hold harmless Arabica, each Registered Holder, each Person claiming by or through any
Registered Holder, and each of their respective officers, directors, stockholders, successors,
assigns, agents and servants, and any beneficiaries of any of the foregoing (each such party may be
referred to herein as an “Indemnified Party”) on a net after-tax basis (at the then highest
marginal federal and applicable state, local and foreign income tax rates) from and against any and
all obligations, fees, liabilities, losses, interest, damages, punitive damages, penalties, fines,
claims, demands, actions, suits, judgments,



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investigations, proceedings, costs and expenses, including without limitation reasonable legal fees and expenses (including without limitation such
legal fees and expenses or disbursements of any kind or nature whatsoever incurred in connection
with the execution, delivery, performance and enforcement of this Agreement and the other
Lease/Purchase Documents, or any amendment, supplement or modification of, or any waiver or consent
in connection thereof and any agreement related to the foregoing), of every kind and nature
whatsoever imposed on, incurred by, or asserted against any Indemnified Party, in any way relating
to or arising out of the Assets or the performance by Arabica or any Indemnified Party of its
obligations hereunder, under any agreement related hereto or under any guaranty or the Company
Security Documents relating to the obligations of the Company hereunder, except as otherwise
provided herein, or (i) the manufacture, construction, ordering, purchase, acceptance or rejection,
ownership, delivery, leasing, re-leasing, subleasing, licensing, re-licensing, sublicensing,
possession, use, operation, maintenance, storage, registration or re-registration, titling or
re-titling, licensing or re-licensing, documentation, removal, return, sale (including without
limitation sale by an Indemnified Party to the Company pursuant to the terms hereof) or other
applications or dispositions thereof, including without limitation any of such as may arise from
(A) loss or damage to any property or death or injury to any Person, (B) patent or latent defects
in the Assets (whether or not discoverable by the Company or any Indemnified Party), (C) any claims
based on strict liability in tort or otherwise, (D) any claims based on patent, trademark or
copyright infringement attributable to the use, possession or operation of the Assets by the
Company, and (E) any claims based on liability arising under any applicable environmental or noise
or pollution control law or regulation, (ii) any failure on the part of the Company to perform or
comply with any of the terms of this Agreement or any document, instrument, agreement or contract
entered into in relation hereto or otherwise in relation to the Assets but excluding any claim
based upon any failure on the part of an Indemnified Party to comply with its obligations under
this Agreement or any document, instrument, agreement or contract entered into by such Indemnified
Party in relation hereto or otherwise in relation to the Assets or (iii) any claims, encumbrances,
security interests, liens or legal processes regarding such Indemnified Party’s title to or
interest in the Assets attributable to the Company’s use of the Assets. The Company shall not be
required to indemnify any Indemnified Party for any claims resulting from acts which would
constitute the willful misconduct or gross negligence of such Indemnified Party. The Company shall
give each Indemnified Party prompt notice of any occurrence, event or condition known to the
Company as a consequence of which any Indemnified Party is or is reasonably likely to be entitled
to indemnification hereunder.




     (b) The indemnification provided in this Section 17 shall specifically apply to and
include claims or actions brought by or on behalf of employees of the Company and the Company
hereby expressly waives, as against any Indemnified Party, any immunity to which the Company may
otherwise be entitled under any industrial or worker’s compensation laws. The Company shall
promptly upon request of any such Indemnified Party (but in any event within 30 days of such
request) reimburse such Indemnified Party for amounts expended by it in connection with any of the
foregoing or pay such amounts directly. The Company shall be subrogated to an Indemnified Party’s
rights in any matter with respect to which the Company has actually reimbursed such Indemnified
Party for amounts expended by it or has actually paid such amounts directly pursuant to this
Section 17. If any action, suit or proceeding is brought against any Indemnified Party in
connection with any claim indemnified against hereunder, such Indemnified Party will, after receipt of notice of the commencement of such action, suit or proceeding, notify
the Company thereof, enclosing a copy of all papers served upon such Indemnified Party. The
Company may, and upon such Indemnified Party’s request will, at the Company’s expense, resist and
defend such action, suit or proceeding, or cause the same to be resisted or defended by counsel
selected by the Company and reasonably satisfactory to such Indemnified Party and in the event of
any failure by the Company to do so, the Company shall pay all costs and expenses (including
without limitation reasonable attorney’s fees and expenses) incurred by such Indemnified Party in
connection with such action, suit or proceeding. The provisions of this Section 17, and
all of the indemnities and the obligations of the Company under this



 - 28 - 









 




Section 17, shall apply to the Assets and each component thereof and shall apply from the date of the execution of
this Agreement and shall survive the expiration or earlier termination of this Agreement and all
documents, instruments, agreements and contracts entered into in relation hereto or otherwise in
relation to the Assets or any component of the Assets and are expressly made for the benefit of,
and shall be enforceable by, each Indemnified Party.




     (c) All amounts due under this Section 17 shall be payable not later than 10 days
after written demand therefor. Demands for payments pursuant to this Section 17 shall be
submitted to Timothy Hennessy (Telephone No. 763-592-2222) (Telecopy No. 612-359-2730) or to such
other Person or address as may be hereafter designated by the Company in a written notice to
Company. The agreements in this Section 17 shall survive payment of all Obligations
hereunder.



     SECTION 18. Disclaimer. ARABICA, NOT BEING A SELLER (AS SUCH TERM IS DEFINED IN
THE UNIFORM COMMERCIAL CODE IN EFFECT IN ANY APPLICABLE JURISDICTION AND FOR THE PURPOSES OF SUCH
CODE), OR A SELLER’S AGENT, AND INASMUCH AS THE COMPANY HAS ACCEPTED DELIVERY OF THE ASSETS AFTER
SATISFYING ITSELF AS TO THE CONDITION, QUALITY, FITNESS FOR ANY PARTICULAR PURPOSE OR OTHERWISE OF
SUCH ASSETS, HEREBY EXPRESSLY DISCLAIMS AND MAKES TO THE COMPANY OR ANY SUBSIDIARY OR AFFILIATE OF
THE COMPANY NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OF MERCHANTABILITY OR FITNESS FOR
ANY PARTICULAR PURPOSE OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO: THE FITNESS FOR USE, DESIGN OR
CONDITION OF THE ASSETS; THE QUALITY OR CAPACITY OF THE ASSETS; THE WORKMANSHIP OF THE ASSETS; THAT
THE ASSETS WILL SATISFY THE REQUIREMENTS OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING
THERETO, AND ANY GUARANTY OR WARRANTY AGAINST PATENT INFRINGEMENT OR LATENT DEFECTS, IT BEING
AGREED THAT ALL SUCH RISKS, AS BETWEEN ARABICA AND THE COMPANY OR ANY SUBSIDIARY OR AFFILIATE OF
THE COMPANY, ARE TO BE BORNE BY THE COMPANY. ARABICA IS NOT RESPONSIBLE FOR ANY DIRECT, INDIRECT,
INCIDENTAL OR CONSEQUENTIAL DAMAGE TO OR LOSSES RESULTING FROM THE INSTALLATION, OPERATION OR USE
OF THE ASSETS OR ANY PRODUCTS MANUFACTURED THEREBY. ARABICA HEREBY ASSIGNS TO THE COMPANY ALL
ASSIGNABLE WARRANTIES MADE BY THE SUPPLIER TO ARABICA FOR AND DURING THE TERM OF THIS AGREEMENT AND
THE COMPANY AGREES TO RESOLVE ALL SUCH CLAIMS DIRECTLY WITH THE SUPPLIER. ARABICA SHALL COOPERATE
FULLY WITH THE COMPANY WITH RESPECT TO THE RESOLUTION OF SUCH CLAIMS, IN GOOD FAITH AND BY
APPROPRIATE PROCEEDINGS AT THE COMPANY’S EXPENSE. ANY SUCH CLAIM SHALL NOT AFFECT IN ANY MANNER THE
UNCONDITIONAL OBLIGATION OF THE COMPANY TO MAKE RENT AND OTHER PAYMENTS HEREUNDER. So long and
only so long as an Event of Default shall not have occurred and be continuing, and so long and only
so long as any of the Assets shall be subject to this Agreement and the Company shall be entitled
to possession of the Assets hereunder, Arabica authorizes the Company, at the Company’s sole
expense, to assert for Arabica’s account, all rights and powers of Arabica under any
manufacturer’s, vendor’s or dealer’s warranty on any item of Assets; provided, however, that the Company shall indemnify, protect, save, defend and
hold harmless Arabica from and against any and all claims, and all costs, expenses, damages, losses
and liabilities incurred or suffered by Arabica in connection therewith, as a result of, or
incident to, any action by the Company pursuant to the foregoing authorization.



     SECTION 19. Representations and Warranties. In order to induce Arabica to enter
into this Agreement and to lease and license the Assets to the Company hereunder, the Company
hereby confirms (i) the representations and warranties of each member of the Restricted Group set
forth in the other



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Lease/Purchase Documents (which are incorporated by reference herein) and (ii) the following representations and warranties (which representations and warranties assume the
leasing and licensing to the Company of Assets existing on the Commencement Date and shall survive
the execution and delivery of this Agreement and the leasing and licensing of such Assets):




     (a) Financial Condition. The audited consolidated balance sheets of the Company and its
Subsidiaries as at December 28, 2008, and the related consolidated statements of income and of
cash flows for the fiscal year ended on such date, reported on by and accompanied by an unqualified
report from Ernst & Young LLP, present fairly the consolidated financial condition of the Company
and its Subsidiaries as at such date, and the consolidated results of its operations and its
consolidated cash flows for the fiscal year then ended. The unaudited consolidated balance sheet
of the Company and its Subsidiaries as at December 28, 2009 and the related unaudited consolidated
statements of income and cash flows for the twelve-month period ended on such date, present fairly
the consolidated financial condition of the Company as at such date, and the consolidated results
of its operations and its consolidated cash flows for the twelve-month period then ended (subject
to normal year-end audit adjustments). All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm of accountants and
disclosed therein). No member of the Restricted Group has any material Guarantee Obligations,
contingent liabilities, liabilities for taxes, or any long-term leases (other than pursuant to the
Lease/Purchase Documents) or unusual forward or long-term commitments, including any rate or
foreign currency swap or exchange transaction or other obligation in respect of derivatives, that
are not reflected in the most recent financial statements referred to in this paragraph. During
the period from December 28, 2008 to and including the date hereof there has been no Disposition by
any member of the Restricted Group of any material part of its business or property. No
subordinated Indebtedness of any member of the Restricted Group is outstanding as of the date
hereof.



     (b) No Change. Since December 28, 2008, there has been no development or event that has had or
could reasonably be expected to have a Material Adverse Effect.



     (c) Existence; Compliance with Law. Each member of the Restricted Group (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization, (b)
has the power and authority, and the legal right, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is currently engaged, (c) is
duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of its business requires such
qualification and (d) is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.



     (d) Power; Authorization; Enforceable Obligations. Each member of the Restricted Group has the
power and authority, and the legal right, to execute, deliver and perform the Lease/Purchase
Documents to which it is a party. Each member of the Restricted Group has taken all necessary
organizational action to authorize the execution, delivery and performance of the Lease/Purchase
Documents to which it is a party. No consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is required in connection
with the execution, delivery, performance, validity or enforceability of any of the Lease/Purchase
Documents. Each Lease/Purchase Document has been duly executed and delivered on behalf of each
member of the Restricted Group party thereto and constitutes the legal, valid and binding
obligation of such member of the Restricted Group, enforceable against each such member in
accordance with its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles (whether enforcement is sought by proceedings
in equity or at law).



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     (e) No Legal Bar. The execution, delivery and performance of the Lease/Purchase Documents will not
violate in any material respect any Requirement of Law or any Contractual Obligation of any member
of the Restricted Group and will not result in, or require, the creation or imposition of any Lien
on any of their respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Lease/Purchase Documents). There are
no Requirements of Law or Contractual Obligations applicable to any member of the Restricted Group
that, individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.



     (f) Litigation. No litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of any member of the Restricted Group,
threatened by or against any member of the Restricted Group or against any of their respective
properties or revenues (a) with respect to any of the Lease/Purchase Documents or any of the
transactions contemplated hereby or thereby, or (b) that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.



     (g) No Default. No member of the Restricted Group is in default under or with respect to any of
its Contractual Obligations in any respect that could, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.



     (h) Ownership of Property; Liens. Each member of the Restricted Group has title in fee simple to,
or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to any Lien except for
Permitted Liens.



     (i) Intellectual Property. Except as otherwise described on Schedule 19(i), (a) Arabica
owns all service marks used by the Company and its Subsidiaries in their business and (b) each
member of the Restricted Group owns, or is licensed to use, all other Intellectual Property
necessary for the conduct of its business as currently conducted. Except as otherwise described on
Schedule 19(i), no material claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property or the validity or effectiveness of
any Intellectual Property, nor does any member of the Restricted Group have knowledge of any valid
basis for any such claim. The use of Intellectual Property by each member of the Restricted Group
does not infringe on the rights of any Person except for instances which could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as provided in
Schedule 19(i), no interest in any of the Intellectual Property has been licensed by any
member of the Restricted Group to any other Person (except for licenses permitted pursuant to
Section 13).



     (j) Taxes. Each member of the Restricted Group has filed or caused to be filed all federal, state
and other material tax returns that are required to be filed and has paid all taxes shown to be due
and payable on said returns or on any assessments made against it or any of its property and all
other taxes, fees or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been provided on the
books of the relevant member of the Restricted Group; no tax Lien has been filed, and, to the
knowledge of the members of the Restricted Group, no claim is being asserted, with respect to any
such tax, fee or other charge. No member of the Restricted Group has executed any waiver having
the effect of extending any applicable statute of limitations in respect of tax liabilities.



     (k) Federal Regulations. No portion of any amount paid to any member of the Restricted Group under
the Lease/Purchase Documents will be used for “buying” or “carrying” any “margin stock” within the
respective meanings of each of the quoted terms under Regulation U as now and from time to time



 - 31 - 









 




hereafter in effect or for any purpose that violates the provisions of Regulations T, U or X of the
Board. If requested by Arabica, the Company will furnish to Arabica a statement to the foregoing
effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred
to in Regulation U.




     (l) Labor Matters. (a) There are no collective bargaining agreements or other labor contracts
covering any member of the Restricted Group; (b) to the knowledge of the members of the Restricted
Group, no union or other labor organization is seeking to organize, or to be recognized as
bargaining representative for, a bargaining unit of employees of any member of the Restricted
Group; (c) there is no material labor dispute pending or threatened against or affecting any member
of the Restricted Group; (d) there has not been, during the five year period prior to the date
hereof, any material labor dispute against or affecting any member of the Restricted Group, other
than employee grievances arising in the ordinary course of business which are not, in the
aggregate, material; and (e) each member of the Restricted Group has complied in all material
respects with (or corrected in full any prior noncompliance) and is in material compliance with the
provisions of the Fair Labor Standards Act of 1938, as amended, and regulations thereunder.



     (m) ERISA. Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning
of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior
to the date on which this representation is made or deemed made with respect to any Plan, and each
Plan has complied in all material respects with the applicable provisions of ERISA and the Code.
No termination of a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or deemed made, exceed
the value of the assets of such Plan allocable to such accrued benefits by a material amount.
Neither the Company nor any Commonly Controlled Entity has had a complete or partial withdrawal
from any Multiemployer Plan that has resulted or could reasonably be expected to result in a
material liability under ERISA, and neither the Company nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if the Company or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made. No such
Multiemployer Plan is in Reorganization or Insolvent.



     (n) Investment Company Act; Other Regulations. No member of the Restricted Group is an “investment
company”, or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. No member of the Restricted Group is subject to
regulation under any Requirement of Law (other than Regulation X of the Board) that limits its
ability to incur Indebtedness.



     (o) Subsidiaries; Capital Stock. Except as disclosed to Arabica in writing from time to time after
the Commencement Date:




     (i) Holdings has only the Subsidiaries set forth on, and the authorized, issued and
outstanding Capital Stock of each member of the Restricted Group is as set forth on,
Schedule 19(o), (ii) the Capital Stock of each member of the Restricted Group are
duly authorized, validly issued, fully paid and nonassessable, and (iii) the Capital Stock
of each of Holdings and each Subsidiary of the Company are owned beneficially and of record
by the Persons set forth on Schedule 19(o), free and clear of all Liens.




     (ii) Except as set forth on Schedule 19(o), no member of the Restricted Group
has issued any securities convertible into, or options or warrants for, any common or
preferred equity



 - 32 - 









 







securities thereof and there are no agreements, voting trusts or understandings binding upon any member of the Restricted Group with respect to the voting
securities of any member of the Restricted Group or affecting in any manner the sale,
pledge, assignment or other disposition thereof, including any right of first refusal,
option, redemption, call or other right with respect thereto, whether similar or dissimilar
to any of the foregoing.



     (p) Environmental Matters. Except as disclosed on Schedule 19(p) and as, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect:




     (i) the facilities and properties owned, leased or operated by any member of the
Restricted Group (the “Properties”) do not contain, and have not previously contained, any
Materials of Environmental Concern in amounts or concentrations or under circumstances that
constitute or constituted a violation of, or could give rise to liability under, any
Environmental Law;




     (ii) no member of the Restricted Group has received or is aware of any notice of
violation, alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any of the
Properties or the business operated by any member of the Restricted Group (the “Business”),
nor does any member of the Restricted Group have knowledge or reason to believe that any
such notice will be received or is being threatened;




     (iii) Materials of Environmental Concern have not been transported or disposed of from
the Properties in violation of, or in a manner or to a location that could give rise to
liability under, any Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties in violation
of, or in a manner that could give rise to liability under, any applicable Environmental
Law;




     (iv) no judicial proceeding or governmental or administrative action is pending or, to
the knowledge of the members of the Restricted Group, threatened, under any Environmental
Law to which any member of the Restricted Group is or will be named as a party with respect
to the Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the Properties or the
Business;




     (v) there has been no release or threat of release of Materials of Environmental
Concern at or from the Properties, or arising from or related to the operations of any
member of the Restricted Group in connection with the Properties or otherwise in connection
with the Business, in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws;




     (vi) the Properties and all operations at the Properties are in compliance, and have in
the last five years been in compliance, with all applicable Environmental Laws, and there is
no contamination at, under or about the Properties or violation of any Environmental Law
with respect to the Properties or the Business; and




     (vii) no member of the Restricted Group has assumed any liability of any other Person
under Environmental Laws.



     (q) Accuracy of Information, etc. No statement or information contained in this Agreement, any
other Lease/Purchase Document, or any other document, certificate or statement furnished by or on
behalf



 - 33 - 









 




of the Company or any of its Subsidiaries to Arabica or any Registered Holder, for use in
connection with the transactions contemplated by this Agreement or the other Lease/Purchase
Documents, contains any untrue statement of a material fact or omits any material fact necessary to
make the statements contained herein or therein not misleading. The projections and pro
forma financial information contained in the materials referenced above are based upon good
faith estimates and assumptions believed by management of the Company to be reasonable at the time
made, it being recognized that such financial information as it relates to future events is not to
be viewed as fact and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a material amount. No
member of the Restricted Group has knowledge of any fact that could reasonably be expected to have
a Material Adverse Effect that has not been expressly disclosed herein, in the other Lease/Purchase
Documents or in any other documents, certificates and statements furnished to Arabica or any
Registered Holder for use in connection with the transaction contemplated hereby and by the other
Lease/Purchase Documents.




     (r) Company Security Documents, Real Property.




     (i) Each Company Security Document is effective to create in favor of Arabica a legal,
valid and enforceable security interest in the Collateral described therein and proceeds
thereof. In the case of the Pledged Stock described in the Company Security Documents, when
stock certificates representing such Pledged Stock are delivered to Arabica, and in the case
of the other Collateral described in the Company Security Documents, when financing
statements and other filings specified on Schedule 19(r)(ii) in appropriate form are
filed in the offices specified on Schedule 19(r)(i), each Company Security Document
shall constitute a fully perfected Lien on, and security interest in, all right, title and
interest of the members of the Restricted Group in such Collateral and the proceeds thereof,
as security for the Obligations (as defined in the applicable Security Document), in each
case prior and superior in right to any other Person (except, in the case of Collateral
other than Pledged Stock, Permitted Liens).




     (ii) Schedule 19(r)(ii) lists, as of the Commencement Date, each parcel of
owned real property and each leasehold interest in real property held by the members of the
Restricted Group.



     (s) Solvency. Each member of the Restricted Group is, and after giving effect to this Agreement
and the other Lease/Purchase Documents, and the incurrence of all Indebtedness and obligations
being incurred in connection herewith and therewith will be and will continue to be, Solvent.



     (t) Stores; Material Agreements. Schedule 19(t) accurately and completely lists all Stores
owned or operated by the Company or any of its Subsidiaries (with the owner and operator and
address of each Store listed thereon) and all material agreements (including all real estate
leases) to which any member of the Restricted Group is a party. Each of the material agreements
listed on Schedule 19(t) is in full force and effect and constitutes the legally valid and
binding obligation of the Company or its Subsidiary, as the case may be, identified thereon as being a party to such agreement and, to the
knowledge of the Restricted Group, the other parties thereto, enforceable against each of them in
accordance with its respective terms. No member of the Restricted Group is in violation under any
material agreements, where such violations in the aggregate could reasonably be expected to have a
Material Adverse Effect. To the knowledge of the members of the Restricted Group, except as
disclosed in Schedule 19(t), third parties to any material agreements are not in material
violation thereof to the extent that such violations in the aggregate could reasonably be expected
to have a Material Adverse Effect.



     (u) Indebtedness Outstanding.



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     (i) Set forth on Schedule 19(u)(i) hereto is a list and description of all
Indebtedness of any member of the Restricted Group that will be outstanding immediately
after the Commencement Date.




     (ii) Set forth on Schedule 19(u)(ii) hereto is a list and description of all
Liens of any member of the Restricted Group that will be outstanding immediately after the
Commencement Date.




(v) Anti-Terrorism Laws.




     (i) No member of the Restricted Group and, to the knowledge of the Restricted Group, no
Affiliate of any member of the Restricted Group, is in violation of any United States laws
applicable to such member of the Restricted Group or such Affiliate relating to terrorism or
money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, Public Law 107-56.




     (ii) No member of the Restricted Group and, to the knowledge of any member of the
Restricted Group, no Affiliate of any member of the Restricted Group is any of the
following:




     (A) a Person or entity that is listed in the annex to, or is
otherwise subject to the provisions of, the Executive Order;




     (B) a Person or entity owned or controlled by, or acting for or on
behalf of, any Person or entity that is listed in the annex to, or is otherwise
subject to the provisions of, the Executive Order;




     (C) a Person or entity with which any party is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;




     (D) a Person or entity that commits, threatens or conspires to commit
or supports “terrorism” as defined in the Executive Order; or




     (E) a Person or entity that is named as a “specially designated
national and blocked person” on the most current list published by the U.S. Treasury
Department Office of Foreign Assets Control at its official website or any
replacement website or other replacement official publication of such list.




     (iii) No member of the Restricted Group and, to the knowledge of any member of the
Restricted Group, no Affiliate of any member of the Restricted Group (A) conducts any
business or engages in making or receiving any contribution of funds, goods or services to
or for the benefit of any Person described in clause (ii) above, (B) deals in, or otherwise
engages in any transaction relating to, any property or interests in property blocked
pursuant to the Executive Order, or (C) engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in any Anti-Terrorism Law.




     (iv) No Person is acting for any member of the Restricted Group or any Affiliate of any
thereof as a broker or other agent acting or benefiting in any capacity in connection with
this Agreement.



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     (w) Use of Proceeds. The Company shall use the sale proceeds received under the Asset Purchase
Agreement for the acquisition and/or construction of new facilities, operating facility upgrades,
working capital and other general corporate purposes.



     (x) Regulation H. No Mortgage encumbers improved real property that is located in an area
that has been identified by the Secretary of Housing and Urban Development as an area having
special flood hazards and in which flood insurance has been made available under the National Flood
Insurance Act of 1968.



     SECTION 20. Financial Covenants. The Company covenants and agrees that until all
Rent and other amounts payable hereunder and under the Lease/Purchase Documents have been
indefeasibly paid in full in cash:



     (a) Maximum Senior Leverage Ratio. The Company will not cause or permit the ratio (the
“Consolidated Senior Leverage Ratio“) of the Consolidated Funded Indebtedness of the Company and
its Subsidiaries at December 28, 2009 and at any Quarterly Date thereafter to the Consolidated
EBITDA of the Company for the Reference Period ending on such Quarterly Date to be greater than
1.50:1.00.



     (b) Minimum Interest Coverage Ratio. The Company will not cause or permit the ratio of
(i) the Consolidated EBITDAR of the Company for each Reference Period ending on any Quarterly Date
to (ii) the sum of Consolidated Financing Expense plus Consolidated Rental Expense of the Company
and its Subsidiaries for such Reference Period to be less than 1.35:1.00.



     (c) Maximum Capital Expenditures. The Company will not cause or permit the aggregate amount
of Capital Expenditures made by the Company and its Subsidiaries in any fiscal year to exceed the
sum of (A) $30,000,000 minus (B) the aggregate amount of Restricted Payments made pursuant
to Section 22(f)(iii) of this Agreement during such fiscal year that is in excess of $5,000,000.



     (d) New Store Commitments. The Company shall not enter into any New Store Commitment if at
such time (i) the Coffeehouse Level EBITDA Margin for the most recently completed Reference Period
for which financial statements have been delivered pursuant to Section 21(a)(ii) is less
than 15% of Coffeehouse Level Sales for such Reference Period, or (ii) the aggregate Available
Amount is less than (A) the budgeted amount of Capital Expenditures for outstanding New Store
Commitments (including the New Store Commitment in question, and assuming that the budgeted amount
of Capital Expenditures for any New Store Commitment for which a Capital Expenditure budget has not
been determined is $300,000), less (2) the aggregate amount of Capital Expenditures made
toward New Store Commitments prior to the opening of each such New Store.



     SECTION 21. Affirmative Covenants. The Company covenants and agrees that until all
Rent and other amounts payable hereunder and under the Lease/Purchase Documents have been
indefeasibly paid in full in cash:


     (a) Financial Reporting. The Company will furnish to Arabica the following financial statements,
each of which shall be complete and correct in all material respects and shall be prepared in
reasonable detail and in accordance with GAAP:





     (i) as soon as available, but in any event within 90 days after the end of each fiscal
year a copy of the audited consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of such year and the related audited consolidated statements of
income and of cash flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a “going concern” or like qualification
or exception, or



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qualification arising out of the scope of the audit, by Ernst & Young or
other independent certified public accountants of nationally recognized standing;




     (ii) as soon as available, but in any event not later than 45 days after the end of
each quarterly period of each fiscal year, the unaudited consolidated balance sheet of the
Company and its consolidated Subsidiaries as at the end of such quarter and, in each case,
the related unaudited consolidated statements of income for such quarter and statements of
income and cash flows for the portion of the fiscal year through the end of such quarter,
setting forth in each case in comparative form the figures for the previous year, certified
by a Responsible Officer as being fairly stated in all material respects (subject to normal
year-end audit adjustments); and




     (iii) as soon as available, but in any event not later than 30 days after the end of
each month occurring during each fiscal year (other than the last month of each fiscal
quarter), the unaudited consolidated balance sheets of the Company and its consolidated
Subsidiaries as at the end of such month and the related unaudited consolidated statements
of income for such month and statements of income and cash flows for the portion of the
fiscal year through the end of such month, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as being fairly stated
in all material respects (subject to normal year-end audit adjustments).




(b) Certificates; Other Information. The Company will furnish to Arabica:




     (i) concurrently with the delivery of the financial statements referred to in
Section 21(a), a certificate of the independent certified public accountants
reporting on such financial statements stating that in making the examination necessary
therefor no knowledge was obtained of any Default or Event of Default, except as specified
in such certificate;




     (ii) concurrently with the delivery of the financial statements pursuant to
Sections 21(a)(i) and 21(a)(ii): (i) a certificate of a Responsible Officer stating
that, to the best of such Responsible Officer’s knowledge, the Company and each of its
Subsidiaries, during such period, have observed or performed all of its covenants and other
agreements, and satisfied every condition contained in this Agreement and the other
Lease/Purchase Documents to which it is a party to be observed, performed or satisfied by
it, and that such Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate, (ii) a Store by Store report and a Market
report, (iii) a Compliance Certificate, (iv) to the extent not previously disclosed to
Arabica, a description of any change in the jurisdiction of organization of any member of
the Restricted Group and a list of any Intellectual Property or other property as to which
action is required under Section 21(i) hereof, in each case acquired by any member
of the Restricted Group since the date of the most recent report delivered pursuant to this
clause (iv), and (v) a list of all third party locations where any Equipment is located in
connection of the sale of inventory in the ordinary course of the Company’s business
including the approximate aggregate book value of such Equipment; provided however that, the
information specified in clause (v) of this Section 21(b)(ii) shall only be required
to be provided concurrently with the delivery of the quarterly financial statements for the
second and fourth fiscal quarters of each fiscal year pursuant to Section 21(a)(ii);




     (iii) as soon as available, and in any event no later than 30 days prior to the
beginning of each fiscal year of the Company, a detailed consolidated budget for the
following fiscal year (including a projected consolidated balance sheet of the Company and
its Subsidiaries as of the end of the following fiscal year, the related consolidated
statements of projected cash flow, projected changes in financial position and projected
income and a description of the underlying



 - 37 - 









 







assumptions applicable thereto), and, as soon as
available, significant revisions, if any, of such budget and projections with respect to
such fiscal year (collectively, the “Projections”), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer stating that such Projections are
based on reasonable estimates, information and assumptions and that such Responsible Officer
has no reason to believe that such Projections are incorrect or misleading in any material
respect;




     (iv) within 45 days after the end of each fiscal quarter, a narrative discussion and
analysis of the financial condition and results of operations of the Company and its
Subsidiaries for such fiscal quarter and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter, as compared to the portion of the
Projections covering such periods and to the comparable periods of the previous year;




     (v) no later than 10 Business Days (or, in the case of amendments or supplements to
this Agreement and the other Lease/Purchase Documents effected solely to facilitate the sale
and leaseback of additional Assets hereunder and thereunder, three Business Days) prior to
the effectiveness thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Lease/Purchase Documents;




     (vi) within five days after the same are sent, copies of all financial statements and
reports that any member of the Restricted Group send to the holders of any class of its debt
securities or public equity securities and, within five days after the same are filed,
copies of all financial statements and reports that any member of the Restricted Group may
make to, or file with, the SEC;




     (vii) as soon as available, but in any event no later than 20 days after the
Commencement Date, all certificates representing the shares of the Pledged Stock, together
with an undated stock power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof; and




     (viii) as soon as available, but in any event no later than 20 days after the
Commencement Date, using best efforts, an amendment to the Lease of Retail Space dated May
25, 1993, as amended, by and between the Company and Brookfield LD DB Inc., in form and
substance reasonably acceptable to Arabica; and




     (ix) promptly, such additional financial and other information as Arabica may from time
to time reasonably request.



     (c) Payment of Obligations. Each member of the Restricted Group will pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Company or any of its Subsidiaries, when
relevant.



     (d) Maintenance of Existence; Compliance; Conduct of Business. Each member of the Restricted Group
will (i) preserve, renew and keep in full force and effect its organizational existence and take
all reasonable action to maintain all rights, privileges and franchises necessary or desirable in
the normal conduct of its business; (ii) comply with all Contractual Obligations and Requirements
of Law except to the extent that failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; (iii) maintain and keep in full force and
effect all material licenses and permits necessary to the proper conduct of its business; and (iv)
remain or engage in the business of (A) owning,



 - 38 - 









 




operating and promoting, directly or indirectly (including through licensees and franchisees), the Stores and other retail locations wherever
located selling the same or similar products, including beverages, food, whole beans and ground
coffee, and merchandise, as those currently sold by the Company and its Subsidiaries through the
Stores or otherwise and (B) selling and promoting, directly or indirectly (including through
licensees or franchisees), whole beans and ground coffee and other products through institutional
trade channels, and in no other business.




     (e) Maintenance of Property; Insurance. Subject to Sections 10, 11 and 15, each member of
the Restricted Group will (a) keep all property useful and necessary in its business in good
working order and condition, ordinary wear and tear excepted and (b) maintain with financially
sound and reputable insurance companies insurance on all its property as required under the Company
Security Documents and, without limiting the provisions thereof, in at least such amounts and
against at least such risks (but including in any event public liability, product liability and
business interruption) as are usually insured against in the same general area by companies engaged
in the same or a similar business.



     (f) Inspection of Property; Books and Records; Discussions. Each member of the Restricted Group
will (a) keep proper books of records and account in which full, true and correct entries in
conformity with GAAP (in respect of the Company and its Subsidiaries only) and all Requirements of
Law shall be made of all dealings and transactions in relation to its business and activities and
(b) permit representatives of Arabica or its designees to visit and inspect any of its properties
and examine and make abstracts from any of its books and records at any reasonable time and as
often as may reasonably be desired and to discuss the business, operations, properties and
financial and other condition of members of the Company and its Subsidiaries with officers and
employees of members of the Restricted Group and with their independent certified public
accountants. Upon receipt of Arabica’s notice requesting to inspect certain Equipment or other
Assets or books and records, such member of the Restricted Group shall promptly notify Arabica of
the location thereof and shall make all necessary arrangements to facilitate the inspection.
Without limiting the foregoing, Arabica may conduct up to four (4) commercial credit examinations
of the Company and its Subsidiaries per year so long as no Event of Default exists, and during any
period when an Event of Default is continuing, as many commercial credit examinations of the
Company and its Subsidiaries as it reasonably deems necessary. One such examination per year while
no Event of Default has occurred and is continuing, and all such examinations during the
continuance of any Event of Default, shall be all at the expense of the Company.



     (g) Notices. Promptly give notice to Arabica of:




     (i) the occurrence of any Default or Event of Default;




     (ii) any (A) default or event of default under any Contractual Obligation of any member
of the Restricted Group, or (B) litigation, investigation or proceeding that may exist at
any time between any member of the Restricted Group and any Governmental Authority, that in
either case, if not cured or if adversely determined, as the case may be, could reasonably
be expected to have a Material Adverse Effect;




     (iii) any litigation or proceeding affecting any member of the Restricted Group, (A) in
which the amount involved that is not covered by insurance is $1,000,000 or more, (B) in
which injunctive or similar relief is sought or (C) which relates to any Lease/Purchase
Document or any agreement relating thereto;




     (iv) the following events, as soon as possible and in any event within 30 days after
any member of the Restricted Group, knows or has reason to know thereof: (A) the occurrence
of any Reportable Event with respect to any Plan, a failure to make any required
contribution to a



 - 39 - 









 







Plan, the creation of any Lien in favor of the PBGC or a Plan or any
withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan
or (B) the institution of proceedings or the taking of any other action by the PBGC, the
Company or any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, Reorganization or Insolvency of, any Plan;




     (v) no more than five Business Days after becoming aware of any investigative
proceedings by a Governmental Authority commenced or threatened against any member of the
Restricted Group regarding any potential violation of Environmental Laws, any spill,
release, discharge or disposal of any Materials of Environmental Concern or any event
required to be reported to any such Governmental Authority, written notice thereof and of
the action being proposed to be taken with respect thereto;




     (vi) any development or event that has had or could reasonably be expected to have a
Material Adverse Effect; and




     (vii) promptly, and in any event within five days after receipt thereof by any member
of the Restricted Group, copies of each notice or other correspondence received from the SEC
concerning any investigation or possible investigation or other inquiry by the SEC regarding
financial or other operational results of any member of the Restricted Group.


Each notice pursuant to this Section 21(g) shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein and stating what
action the Company or any of its Subsidiaries, as relevant, proposes to take with respect thereto.




     (h) Environmental Laws.




     (i) Each member of the Restricted Group will comply in all material respects with, and
ensure compliance in all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply in all material respects with and
maintain, and ensure that all tenants and subtenants obtain and comply in all material
respects with and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws.




     (ii) Each member of the Restricted Group conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful orders
and directives of all Governmental Authorities regarding Environmental Laws.



     (i) Additional Collateral, Etc.




     (i) With respect to any property acquired after the Commencement Date by any member of
the Restricted Group that is not a Foreign Subsidiary (other than (x) any property described
in paragraph (ii) or (iii) below, (y) any property listed in clause (v) of the definition of
“Permitted Liens” and (z) any Intellectual Property, to the extent of any filings required
outside of the United States (unless such filings are in a Specified Foreign Jurisdiction))
as to which Arabica does not have a perfected Lien, promptly (and not less frequently than
quarterly, in the case of any Collateral constituting Intellectual Property) (A) execute and
deliver to Arabica such amendments to the Security Documents or such other documents
(including any Leasehold Security Document) as Arabica deems necessary or advisable to grant
to Arabica a security interest in such property and (B) take all actions necessary or
advisable to grant to Arabica a



 - 40 - 









 







perfected first priority security interest in such property,
including the filing of Uniform Commercial Code financing statements in such jurisdictions
as may be required by the Company Security Documents or by law or as may reasonably be
requested by Arabica in respect of such property.




     (ii) With respect to any fee interest in any real property having a value (together
with improvements thereon) of at least $250,000 acquired after the Commencement Date by any
member of the Restricted Group that is not a Foreign Subsidiary, promptly (A) execute and
deliver a first priority mortgage reasonably satisfactory to Arabica (each, a “Mortgage”),
in favor of Arabica covering such real property, (B) if requested by Arabica, provide
Arabica and any Registered Holders with (1) title and extended coverage insurance covering
such real property in an amount at least equal to the purchase price of such real property
(or such other amount as shall be reasonably specified by Arabica) as well as a current ALTA
survey thereof, together with a surveyor’s certificate and (2) any consents or estoppels
reasonably deemed necessary or advisable by Arabica in connection with such Mortgage, each
of the foregoing in form and substance reasonably satisfactory to Arabica and (C) if
requested by Arabica, deliver to Arabica legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to Arabica.




     (iii) With respect to any new Subsidiary created or acquired after the Commencement
Date by any member of the Restricted Group, promptly (A) execute and deliver to Arabica such
amendments to the Company Security Documents as Arabica deems necessary or advisable to
grant to Arabica a perfected first priority security interest in (1) 100% of the Capital
Stock of any such new Domestic Subsidiary that is owned by any member of the Restricted
Group, and (2) 65% of the Capital Stock of any such new Foreign Subsidiary that is owned by
any member of the Restricted Group, (B) deliver to Arabica the certificates representing
such Capital Stock, together with undated stock powers, in blank, executed and delivered by
a duly authorized officer of the relevant member or members of the Restricted Group, (C) if
such new Subsidiary is a Domestic Subsidiary cause such new Subsidiary (a) to become a party
to the Company Guarantee and Security Agreement, (b) to take such actions necessary or
advisable to grant to Arabica a perfected first priority security interest in the Collateral
described in the Company Security Documents with respect to such new Domestic Subsidiary,
including the filing of Uniform Commercial Code financing statements in such jurisdictions
as may be required by the Company Security Documents or by law or as may reasonably be
requested by Arabica (other than in respect of property listed in clause (v) of the
definition of “Permitted Liens” and Intellectual Property, to the extent of any filings
required outside of the United States and the European Union) and (c) to deliver to Arabica a certificate of such Domestic Subsidiary,
substantially in the form of Exhibit C, with appropriate insertions and attachments,
and (D) if requested by Arabica, deliver to Arabica legal opinions relating to the matters
described above, which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to Arabica.




     (iv) Promptly upon any member of the Restricted Group undertaking any business or
operations in any Specified Foreign Jurisdiction (other than entering into agreements with
franchisees and similar licensees in any such jurisdiction and other than in respect of
property subject to a Lien expressly permitted by clause (e) of the definition of “Permitted
Liens”) notify Arabica thereof and, if reasonably requested by Arabica, promptly furnish to
Arabica an opinion of counsel, such opinion and such counsel to be reasonably satisfactory
to Arabica, as to the satisfaction of the requirements of subsections (i) through (iii)
above.



     (j) Leasehold Security Documents. On or prior to the Commencement Date, the Company shall
deliver to Arabica (i) an estoppel certificate executed by its landlord as contemplated by Section
20.2 of



 - 41 - 









 




the Headquarters Lease, and (ii) a landlord consent executed by its landlord under the
Headquarters Lease; with each of (i) and (ii) in form and substance reasonably satisfactory to
Arabica. Promptly upon the written request of Arabica (i) the Company shall execute and deliver to
Arabica the Company Leasehold Mortgage and shall use reasonable efforts to cause the owner of the
Headquarters Building to consent thereto in writing, (ii) after the occurrence and during the
continuance of an Event of Default, the Company shall, and shall cause the landlord under each
other lease of real property to which any member of the Restricted Group is a party as lessee, and
such lessee, to execute and deliver a landlord consent in form and substance reasonably
satisfactory to Arabica, and (iii) the Company shall, and shall cause any bailee, consignee or
warehouseman with respect to any site where Collateral of the Company or any member of the
Restricted Group is stored or located, and such member of the Restricted Group, to execute and
deliver a bailee, warehouseman’s or similar waiver in form and substance reasonably satisfactory to
Arabica.




     (k) Accounting System. The Company and its Subsidiaries will maintain an accurate system of
accounting in accordance with GAAP. Neither the Company nor its Subsidiaries will change its
fiscal year from the fiscal year accounting used in the preparation of the financial statements
referred to in Section 19(a).



     (l) Further Assurance. From time to time hereafter, the Company will execute and deliver, or cause
to be executed and delivered, such additional instruments, certificates and documents, and take all
such actions, as Arabica shall reasonably request for the purpose of implementing or effectuating
the provisions of the Lease/Purchase Documents and upon the exercise by Arabica of any power,
right, privilege or remedy pursuant to the Lease/Purchase Documents which requires any consent,
approval, registration, qualification or authorization of any Governmental Authority or
instrumentality, exercise and deliver, or cause to be executed and delivered, all applications,
certifications, instruments and other documents and papers that Arabica may be so required to
obtain.



     (m) Use of Proceeds. The Company shall use the sale proceeds received under the Asset Purchase
Agreement for the acquisition and/or construction of new facilities, operating facility upgrades,
working capital and other general corporate purposes.



     (n) Accounts. The Company shall cause at least seventy (70%) percent of the Company’s total
number of Stores located in the United States to utilize the Reference Bank for their primary cash
management functions and shall cause all of the Company’s and its Wholly-Owned Subsidiaries’
operating accounts to be maintained with the Reference Bank. If Arabica shall so request, the
Company shall take, or cause to be taken, any action deemed necessary by Arabica to obtain and
maintain “control” (as defined in the Uniform Commercial Code as in effect in any applicable jurisdiction) of
each deposit account, securities account or other account of the Company and/or any of its
Wholly-Owned Subsidiaries, including without limitation, the delivery of control agreements in form
and substance satisfactory to Arabica.



     SECTION 22. Negative Covenants. The Company covenants and agrees that until all
Rent and other amounts payable hereunder and under the Lease/Purchase Documents have been
indefeasibly paid in full in cash:



     (a) Indebtedness; Contingent Liabilities. The Company will not, and will not permit any of its
Wholly-Owned Subsidiaries to, create, issue, incur, assume, suffer, or become liable with respect
to any Consolidated Funded Indebtedness except:




     (i) Consolidated Funded Indebtedness of the Company and its Subsidiaries hereunder and
under the other Lease/Purchase Documents;



 - 42 - 









 






     (ii) without limiting clause (iv) of this Section 22(a), Indebtedness of the
Company and its Subsidiaries in the amounts existing on the date hereof and described in
Schedule 19(u)(i) (but no re-financings, renewals or extensions thereof without
Arabica’s prior written consent);




     (iii) Guarantee Obligations of the Company and its Subsidiaries in respect of
endorsements of negotiable instruments for collections in the ordinary course of business;




     (iv) without limiting clause (ii) of this Section 22(a), Capital Lease
Obligations and purchase money Indebtedness of the Company and its Subsidiaries not
exceeding $1,000,000 (of which not more than $500,000 may consist of existing Capital Lease
Obligations) in the aggregate, in each case secured by Permitted Liens described in clause
(v) of the definition of “Permitted Liens”;




     (v) unsecured Consolidated Funded Indebtedness of the Subsidiaries of the Company to
the Company, evidenced by intercompany notes pledged and delivered to Arabica pursuant to
the Security Agreement; and




     (vi) reimbursement obligations (both contingent and otherwise) in respect of letters of
credit (which for the avoidance of doubt are not, and shall not constitute, Letters of
Credit) issued by the Reference Bank on behalf of the Company and its Subsidiaries to
support leases of real property entered into by the Company and its Subsidiaries,
provided that such contingent and other obligations incurred on and after the
Commencement Date (A) shall not exceed at any time an aggregate amount of $1,000,000, (B)
shall be subject to the credit approval of the Reference Bank, and (C) shall be evidenced by
documentation in form and substance satisfactory to the Reference Bank.



     (b) Liens. The Company will not, and will not permit any of its Wholly-Owned Subsidiaries to,
create, incur, assume or suffer to exist any Liens upon any of its property, whether now owned or
hereafter acquired, except for Permitted Liens. Without limitation of the foregoing, the Company
covenants and agrees that it will not enter into (and will not suffer or permit any of its
Wholly-Owned Subsidiaries to enter into) any agreement or understanding (each, a “Restrictive
Agreement”) with any Person other than Arabica or the Reference Bank which could prohibit or
restrict in any manner the right of the Company or any such Wholly-Owned Subsidiary to grant to
Arabica or to the Reference Bank any Lien on any of its Intellectual Property arising under laws
other than those of the United States, whether such Intellectual Property is now owned or hereafter
acquired. The Company represents and warrants that, at the Commencement Date, neither the Company nor any such Wholly-Owned Subsidiary is party
to any such Restrictive Agreement.



     (c) Disposition of Assets, Etc. The Company will not, and will not permit any of its Wholly-Owned
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its properties, assets,
rights, licenses or franchises to any Person, except for (i) the sale by the Company of assets from
time to time to Arabica, and leaseback thereof from Arabica, pursuant to this Agreement and the
other Lease/Purchase Documents; (ii) the disposition of inventory in the ordinary course of
business (which dispositions may be made free from the Liens of the Lease/Purchase Documents),
(iii) the disposition in the ordinary course of business, without replacement, of equipment which
is obsolete or no longer needed in the conduct of its business and the disposition and replacement
in the ordinary course of business of equipment or other tangible personal property with other
equipment of at least equal utility and value, (iv) the disposition in the ordinary course of
business in any year of equipment or other tangible personal property having an aggregate value of
not more than $1,000,000 and (v) provided no Default or Event of Default shall have occurred and be
continuing or would result therefrom, transfers of cash and Cash Equivalents to Caribou



 - 43 - 









 




Coffee Charitable Foundation in an aggregate amount not to exceed $250,000 from and after the date of this
Agreement.



     (d) Amendment to Organizational Documents. The Company will not, and will not permit any of its
Wholly-Owned Subsidiaries to, permit or suffer any amendment of its Organizational Documents which
could materially and adversely affect its financial condition or adversely affect the rights of
Arabica hereunder or under the Lease/Purchase Documents or of any party providing financing to
Arabica (it being expressly agreed that the inclusion in such charter documents of any provision
similar to those set forth in Section 102(b)(2) of Title 8 of the Delaware General Corporation Law
is prohibited under this Section).



     (e) Mergers; Consolidations; Issuance of Securities; Etc. The Company will not, and will not
permit any of its Wholly-Owned Subsidiaries to, dissolve, liquidate, merge or consolidate into or
with any other Person; provided that any Wholly-Owned Subsidiary of the Company may merge into the
Company or any Wholly-Owned Subsidiary Guarantor so long as the Company or such Wholly-Owned
Subsidiary Guarantor, as the case may be, is the surviving entity of such merger. The Company will
not, and will not permit any of its Wholly-Owned Subsidiaries to, issue or sell or permit to be
issued any additional Capital Stock, except pursuant to its stock option plan as in effect as of
the date hereof.



     (f) Restricted Payments. The Company will not, and will not permit any of its Wholly-Owned
Subsidiaries to, directly or indirectly declare, order, pay or make any Restricted Payment or set
aside any sum or property therefore except as follows:





     (i) the Subsidiaries of the Company may (A) pay dividends and make distributions to the
Company and (B) repay indebtedness owed to the Company;




     (ii) the Subsidiaries of the Company may make distributions to the Company to enable
the Company to pay as and when due amounts owed from time to time hereunder and under the
other Lease/Purchase Documents; and




     (iii) the Company may repurchase shares of its Capital Stock and/or pay dividends to
Holdings, provided (A) no Default or Event of Default shall have occurred and be continuing
at the time of such payment or would result therefrom, (B) the Company and its Subsidiaries
will be in pro forma compliance with the financial covenants set forth in Section 20
of this Agreement as of the most recently ended period for which financial statements were
delivered pursuant to Section 21(a) of this Agreement on a pro forma basis both
before and after giving effect to any Restricted Payments made hereunder as if such Restricted Payments were made on the last
day of such period, (C) the aggregate amount of Restricted Payments made hereunder from and
after the Commencement Date shall not exceed (i) $10,000,000 in the aggregate during any
fiscal year, and (ii) $20,000,000 in the aggregate during the term of this Agreement, (D) in
the event that the aggregate amount of the Restricted Payments made hereunder shall exceed
$5,000,000 in any fiscal year, the aggregate amount of Capital Expenditures permitted under
this Agreement in such fiscal year shall be reduced by the amount of such excess, and (E)
the Coffeehouse Level EBITDA Margin for the most recently completed Reference Period for
which financial statements have been delivered pursuant to Section 21(a)(ii) of this
Agreement must be 15% or greater of Coffeehouse Level Sales for such Reference Period.



     (g) Investments, Loans and Acquisitions. The Company will not, and will not permit any of its
Wholly-Owned Subsidiaries to, (i) purchase or acquire any Indebtedness or Capital Stock of any
other Person, (ii) acquire all or substantially all of the assets, or any division, of any Person,
(iii) make any loan, advance or extension of credit to, or contribution to the capital of, or other
investment in, any other



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Person, (iv) purchase any real estate for sale or investment, (v) purchase any commodities futures contracts, (vi) form any Subsidiary, or (vii) make any commitment or
acquisition of any option or enter into any other arrangement for the purpose of making any of the
foregoing investments, loans or acquisitions (the foregoing, “Investments”), except the following:





     (i) Qualified Investments;




     (ii) the existing investments referred to in Schedule 22(g)(ii);




     (iii) Hedging Agreements in connection with bona fide hedging transactions in the
ordinary course of business;




     (iv) loans from the Company to its Wholly-Owned Subsidiary Guarantors that are
evidenced by intercompany notes that are pledged and delivered to Arabica pursuant to the
Security Agreement;




     (v) other Investments, including Permitted Acquisitions, in an aggregate amount not
exceeding $2,500,000 in any fiscal year, provided that at the time of any Investment no
Default or Event of Default shall have occurred and be continuing.



     (h) Sale and Leaseback. Except as contemplated by this Agreement and the other Lease/Purchase
Documents, the Company will not, and will not permit any of its Wholly-Owned Subsidiaries to, enter
into any arrangement, directly or indirectly, whereby it shall sell or transfer any of its property
acquired prior to the date of this Agreement in order to lease such property or lease other
property that it intends to use for substantially the same purpose as such property being sold or
transferred.



     (i) Transaction with Affiliates. The Company will not, and will not permit any of its Wholly-Owned
Subsidiaries to, enter, directly or indirectly, into any purchase, sale, lease or other transaction
with any Affiliate, except in the ordinary course of business and on terms that are no less
favorable to the Company or its Wholly-Owned Subsidiary, as applicable, than those which could be
obtained at the time in a comparable arm’s length transaction with any Person who is not an
Affiliate. The Company will not, and will not permit any of its Wholly Owned Subsidiaries to,
incur Indebtedness to any Affiliate except as permitted under Section 22(a) of this
Agreement. All transactions of the Company and its Wholly-Owned Subsidiaries with Affiliates
existing on the date of this Agreement are described on Schedule 22(i) hereto.



     (j) ERISA. The Company will not permit any Plan maintained by the Company and its Subsidiaries to
(i) engage in any “prohibited transaction” (as defined in Section 4975 of the Code), (ii) incur an
“accumulated funding deficiency” (as defined in Section 302 of ERISA), or (iii) terminate (or
suffer to be terminated) any Plan in a manner that could result in the imposition of a Lien on the
assets of any member of the Restricted Group pursuant to Section 4068 of ERISA.



     (k) Amendment of Certain Agreements. The Company will not, and will not permit any member of the
Restricted Group to, amend or modify any of its organizational documents or any of the
Lease/Purchase Documents without the prior written consent of Arabica, which will not be
unreasonably withheld or delayed. The Company will not, and will not permit any of its Wholly
Owned Subsidiaries to, amend any material agreement if the same would be reasonably likely to
result in a Material Adverse Effect.



     (l) Margin Stock. The Company will not, and will not permit its Wholly-Owned Subsidiaries to, use
or permit the use of any of the proceeds of any amounts received by it under the Lease/Purchase



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Documents, directly or indirectly, for the purpose of purchasing or carrying, or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase or carry, any
Margin Stock or for any other purpose which might constitute a “purpose credit” within the meaning
of Regulation U, or cause this Agreement to violate Regulation T, U or X of the Board or the
Securities Exchange Act of 1934, as amended, or any rules or regulations promulgated under such
statutes.




     (m) Negative Pledges, Etc. The Company will not, and will not permit its Wholly-Owned
Subsidiaries to, enter into any agreement, amendment or arrangement (excluding this Agreement or
any other Lease/Purchase Document) prohibiting or restricting (i) it from amending or otherwise
modifying this Agreement or any other Lease/Purchase Document, (ii) the creation or assumption of
any Liens upon its properties, revenues or assets, whether now owned or hereafter acquired, or
(iii) the ability of any Subsidiary to make any payment or distribution, directly or indirectly, to
the Company. The Company will not, and will not permit its Wholly-Owned Subsidiaries to, renew or
enter into any material agreement without using commercially reasonable efforts to obtain the
written consents of such third parties necessary to effect the collateral assignments thereof and
grants of security interests therein in accordance with the Lease Purchase Documents.



     SECTION 23. Events of Default. Any of the following events shall constitute an
“Event of Default” (whether any such event shall be voluntary or involuntary, or come about or be
effected by operation of law or pursuant to or in compliance with any judgment, decree or order of
any court or any order, rule or regulation of any administrative or governmental body):



     (a) The Company shall fail to pay any Rent or amount payable under Sections 29 or 30
when due in accordance with the terms hereof; or any expense or other Supplemental Payment within
three days of the date when due in accordance with the terms hereof; or



     (b) any representation or warranty made or deemed made by any member of the Restricted Group
herein or in any other Lease/Purchase Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection with this Agreement
or any such other Lease/Purchase Document shall prove to have been inaccurate in any material
respect on or as of the date made or deemed made; or



     (c) The Company (i) shall default in the observance or performance of any agreement contained
in Sections 21(b)(v), (vi), (vii) or (viii), 21(d), 21(e), 21(f) or 21(g) or Section 22
hereof, or in Section 4 of the Supplemental Agreement, or any member of the Restricted Group shall
default in the observance or performance of any agreement contained in Sections 5.2 or 5.5
of the Company Guarantee and Security Agreement, or (ii) shall default in the observance or
performance of any agreement contained in Section 21(a) or Sections 21(b)(i), (ii), (iii), (iv)
or (ix) hereof and such default shall continue unremedied for a period of 5 days;



     (d) Any member of the Restricted Group shall default in the observance or performance of any
other agreement contained in this Agreement or any other Lease/Purchase Document to which it is a
party (other than as provided in paragraphs (a) through (c) of this Section), and such default
shall continue unremedied for a period of 30 days after notice to the Company from Arabica; or



     (e) (i) any member of the Restricted Group shall (i) default in making any payment of any
principal of any Indebtedness (including any Guarantee Obligation, but excluding any payment under
the Lease/Purchase Document) on the scheduled or original due date with respect thereto; or (ii)
default in making any payment of any interest on any such Indebtedness beyond the period of grace,
if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii)
default in the observance or performance of any other agreement or condition relating to any such
Indebtedness or



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contained in any instrument or agreement evidencing, securing or relating thereto,
or any other event shall occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or
agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity or (in the case of any such
Indebtedness constituting a Guarantee Obligation) to become payable; provided, that a default,
event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any
time constitute an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have
occurred and be continuing with respect to Indebtedness the outstanding principal amount of which
exceeds in the aggregate $500,000; or




     (f) (i) any member of the Restricted Group shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any substantial part of its
assets, or any member of the Restricted Group shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against any member of the Restricted Group any
case, proceeding or other action of a nature referred to in clause (i) above that (A) results in
the entry of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced
against any member of the Restricted Group any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process against all or any substantial
part of its assets that results in the entry of an order for any such relief that shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) any member of the Restricted Group shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) any member of the Restricted Group shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they become due; or



     (g) Any member of the Restricted Group or any Commonly Controlled Entity shall fail to pay
when due an amount or amount that it shall have become liable to pay to the PBGC or to a Plan under
Title IV of ERISA and which, together with all such amounts, exceeds $500,000 in the aggregate; or
notice of intent to terminate a Plan or Plans shall be filed under Title IV of ERISA by any member
of the Restricted Group, any Commonly Controlled Entity, any plan administrator or any combination
of the foregoing; or a condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any such Plan or Plans must be terminated; or



     (h) one or more judgments or decrees shall be entered against any member of the Restricted
Group involving in the aggregate a liability (not paid or fully covered by insurance as to which
the relevant insurance company has acknowledged coverage) of $1,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal
within 30 days from the entry thereof; or



     (i) any of the Company Security Documents or any of the Lease/Purchase Documents shall cease,
for any reason, to be in full force and effect, or any member or Affiliate of any member of the
Restricted Group shall so assert, or any Lien created by any of the Company Security Documents
shall cease to be enforceable and of the same effect and priority purported to be created thereby,
or any member or Affiliate of any member of the Restricted Group shall so assert; or



 - 47 - 









 





     (j) the guarantee contained in Section 2 of the Company Guarantee and Security Agreement shall
cease, for any reason, to be in full force and effect or any member or Affiliate of any member of
the Restricted Group shall so assert; or



     (k) a Change of Control shall occur; or



     (l) Holdings shall (i) conduct, transact or otherwise engage in, or commit to conduct,
transact or otherwise engage in, any business or operations other than those incidental to its
ownership of the Capital Stock of the Company, (ii) incur, create, assume or suffer to exist any
Indebtedness or other liabilities or financial obligations, except (x) nonconsensual obligations
imposed by operation of law, (y) obligations pursuant to the Lease/Purchase Documents to which it
is a party and (z) obligations with respect to its Capital Stock, or (iii) own, lease, manage or
otherwise operate any properties or assets other than the ownership of shares of Capital Stock of
the Company.



     SECTION 24. Remedies Upon Default.



     (a) Upon the occurrence of any Event of Default, Arabica may undertake one or more of the
following actions: (i) exercise the Put Option and require the Company to purchase, and upon such
exercise the Company shall be obligated to purchase and pay for the Assets in accordance with the
terms of the Put Option Letter, (ii) terminate as to some or all of the Assets the lease, license
and purchase option financing provided hereunder, (iii) exercise all or any of its rights under any
of the Lease/Purchase Documents and the Collateral provided to it thereunder, (iv) exercise any and
all rights available to Arabica at law or in equity, and proceed to protect and enforce Arabica’s
rights by any action at law, in equity or other appropriate proceeding. In the event that Arabica
shall apply for the appointment of, or the taking of possession by, a trustee, receiver or
liquidator of the Company or any Store or of any other similar official to hold or liquidate all or
any substantial part of the properties or assets of the Company or any Store following the
occurrence of a default in payment of any amount owed hereunder and following any applicable notice
or cure period, the Company hereby consents, and will cause each of its Wholly-Owned Subsidiaries
to consent, to such appointment and taking of possession and agrees to execute and deliver any and
all documents requested by Arabica relating thereto (whether by joining in a petition for
the voluntary appointment of, or entering no contest to a petition for the appointment of,
such an official or otherwise, as appropriate under applicable law).



     (b) Without limiting the foregoing, upon the occurrence and during the continuance of an Event
of Default hereunder, whether or not Arabica has taken any of the actions set forth in (a) above,
Arabica may require, at its option: (i) the Company to use its reasonable commercial efforts to
obtain an absolute assignment in form and substance reasonably satisfactory to Arabica of all of
the right, title and interest of the Company and its Wholly-Owned Subsidiaries in their respective
real estate leases (provided any such assignment shall be subject to the condition that Arabica
shall sublease the covered premises back to the Company or its Subsidiary, as applicable, on the
same terms as the assigned lease), (ii) the Company and Caribou to cause its Wholly-Owned
Subsidiaries to use reasonable commercial efforts to obtain real estate leasehold mortgages in form
and substance reasonably satisfactory to Arabica with respect to each of the real estate leaseholds
of the Company and its Wholly-Owned Subsidiaries (in the event absolute assignments are not
required pursuant to clause (i) immediately above) and/or (iii) the Company and its Wholly-Owned
Subsidiaries to enter into agency account agreements with respect to each of their respective
deposit and other accounts in form and substance similar to the form attached to the Company
Guarantee and Security Agreement and otherwise reasonably satisfactory to Arabica, requiring all of
such depository banks to sweep such accounts daily and wire such funds into a concentration account
pledged to Arabica.



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     (c) In addition, the Company shall be liable for all Rent accrued through the date of
termination hereof or, if Arabica exercises the Put Option, through the Exercise Price Payment Date
(as defined in the Put Option Letter), and any and all Supplemental Payments and other amounts due
hereunder and under any of the other Lease/Purchase Documents before or after any termination
hereof, including all costs and expenses (including without limitation reasonable attorney’s fees
and disbursements) incurred by reason of the occurrence of any Event of Default or the exercise of
Arabica’s remedies with respect thereto.



     (d) No failure to exercise and no delay in exercising, on the part of Arabica or any
Registered Holder, any right, remedy, power or privilege hereunder or under the other
Lease/Purchase Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any rights, remedies,
powers and privileges provided by law. To the extent permitted by applicable law, the Company, for
itself and on behalf of its Wholly Owned Subsidiaries, hereby waives any rights now or hereafter
conferred by statute or otherwise which may require Arabica to sell the Assets in mitigation of
Arabica’s damages or otherwise to limit or modify any of Arabica’s rights or remedies under this
Section 24.



     SECTION 25. Arabica’s Right to Perform for the Company. If the Company fails to
make any Supplemental Payment required to be made by it hereunder or fails to perform or comply
with any of its agreements contained herein, Arabica may itself make such payment or perform or
comply with such agreement, and the amount of such payment and the amount of the expenses of
Arabica incurred in connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with an amount thereon computed at the Late Payment Rate in
accordance with Section 6(b), shall, if not paid by the Company to Arabica on demand, be
deemed a Supplemental Payment hereunder; provided, however, that no such payment, performance or
compliance by Arabica shall be deemed to cure any Event of Default hereunder.



     SECTION 26. Further Assurances. Arabica and the Company agree to cooperate in good
faith and to execute and deliver such documents and further assurances consistent with and in clarification of the characterization and intent
of the parties with respect to this Agreement, the Supplemental Agreement, the Put Option Letter
and the Call Option Letter.



     SECTION 27. Transaction Costs, Fees and Expenses. The Company shall pay promptly
all out-of-pocket costs, fees and expenses of Arabica and its agents and representatives in
connection with the negotiation, preparation, execution, delivery, administration and enforcement
of this Agreement and any of the Lease/Purchase Documents (and all amendments, modifications and
supplements hereto and thereto) and any agreements or instruments entered into or executed in
connection herewith, including without limitation all costs, fees and expenses of outside legal
counsel or the allocated costs of in-house legal counsel, accounting, consulting, brokerage or
other similar professional fees or expenses, and any fees or expenses associated with any travel or
other costs relating to any appraisals or credit or other examinations conducted in connection with
the Obligations or any collateral therefor, and if all such expenses are not paid within five
Business Days after demand therefor, in addition to the amount of such expenses, a late fee
computed pursuant to Section 6(b) shall be payable.



     SECTION 28. Notices. All notices provided for or required under the terms and
provisions hereof shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid and properly
addressed (i) if to Arabica or the Company, at their



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respective addresses as set forth on the signature page hereof or at such other address as either of them shall, from time to time,
designate in writing to the other, and (ii) if to any Registered Holder, to the address of such
Registered Holder as such Registered Holder shall designate, from time to time, in writing to
Arabica and the Company.




     SECTION 29. Call Option.



     (a) Company Call Option. Provided the Company has paid all Rent, all Supplemental Payments
and all other amounts then due hereunder or under any of the other Lease/Purchase Documents, the
Company shall have the right and option to purchase, pursuant to the Call Option Letter, all, or a
pro rata portion of all, of the Assets from Arabica on any Rent Payment Date occurring after the
first anniversary of the date hereof for an aggregate price of $10.00, payable in connection with
each such purchase, plus the other amounts specified in the Call Option Letter. The Company shall
notify Arabica of its exercise of the Call Option not less than thirty (30) days prior to the Rent
Payment Date on which the purchase is to be effected, any such notice to be irrevocable and to be
provided in accordance with the terms of the Call Option Letter. If the Company exercises the Call
Option under this Section 29(a), Arabica undertakes to sell the Assets to the Company at
such price and on the terms and conditions provided herein and in the Call Option Letter. The Call
Option may be utilized on more than one Rent Payment Date.



     (b) Settlement Terms. In the event that the Company purchases the Assets from Arabica
pursuant to Section 29(a) above and the Call Option Letter, Arabica and the Company hereby
agree that the following provisions shall apply:




     (i) Representations and Warranties of the Company. The Company shall
represent, warrant, covenant and agree with Arabica as of the date of any sale of the Assets
by Arabica to the Company, except where specific reference is made to another date or dates,
that:




     (A) The Company has the full right, power and authority to purchase
such Assets from Arabica as provided in this Agreement and to carry out the
Company’s obligations under this Agreement (as such pertain to the sale of such Assets), and all
requisite action necessary to authorize the Company to enter into the purchase of
the Assets and to carry out the Company’s obligations with respect thereto has been,
or on or before the date of any sale of the Assets to the Company, will have been,
taken;




     (B) The Company acknowledges that:




     (1) The Company is purchasing the Assets, and the Assets
shall be conveyed and transferred to the Company, “HAVING BEEN INSPECTED TO
THE SATISFACTION OF CARIBOU, AS-IS, WHERE-IS, AND WITH ALL FAULTS AND
SPECIFICALLY AND EXPRESSLY WITHOUT ANY RECOURSE OR WARRANTIES,
REPRESENTATIONS, COVENANTS OR GUARANTEES, EXPRESSED OR IMPLIED, OF ANY KIND,
NATURE, OR TYPE WHATSOEVER FROM OR ON BEHALF OF ARABICA”; provided, that
Arabica shall represent that there are no Liens on the Assets which have
arisen because of Arabica’s action or inaction. The Company acknowledges
that it has not relied, and is not relying, on any information, document,
sales brochure, or other literature, sketch, projection, pro forma,
statement, representation, guarantee, or warranty (whether express or
implied, or oral or written, or material or immaterial) that may have been
given by, or made by, or on behalf of, Arabica;



 - 50 - 









 






     (2) The Company shall not be entitled to, and shall not rely
on, Arabica or Arabica’s agents as to (a) the quality, nature, adequacy, or
physical condition of the Assets; or (b) the quality of any labor or
materials relating in any way to the Assets;




     (3) EXCEPT AS EXPRESSLY SET FORTH IN THE PROVISO IN
SUBPARAGRAPH (1) ABOVE (WITH RESPECT TO VOLUNTARILY INCURRED LIENS), ARABICA
HAS NOT, DOES NOT, AND WILL NOT, WITH RESPECT TO THE ASSETS, MAKE ANY
WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, OR ARISING BY OPERATION
OF LAW, INCLUDING BUT NOT IN ANY WAY LIMITED TO, ANY WARRANTY OF CONDITION,
MERCHANTABILITY, HABITABILITY, OR FITNESS FOR A PARTICULAR USE, OR WITH
RESPECT TO THE VALUE, PROFITABILITY, OR MARKETABILITY OF THE ASSETS; and




     (4) Without in any way limiting the generality of the
preceding subparagraphs (1) through (3), the Company specifically
acknowledges and agrees that the Company hereby waives, releases, and
discharges any claim the Company has, might have had, or may have against
Arabica with respect to the condition of the Assets, patent or latent, the
actual or potential income or profits to be derived from the Assets, and any
other state of facts which exists with respect to such Assets.




     (ii) Survival Beyond Closing. The representations and warranties of the
Company contained in this Agreement as set forth in Section 29(b)(i) shall survive
the closing of the sale of the Assets to the Company.




     (iii) Seller. At the sale of any Assets to the Company, Arabica shall deliver
or cause to be delivered to the Company, at the Company’s sole cost and expense, a bill of
sale of such Assets, duly executed by Arabica.




     (iv) Payment. On the closing date of the sale, the Company shall pay $10 to
Arabica plus the other amounts required to be paid pursuant to the Call Option Letter.



     SECTION 30. Put Option. Upon the occurrence of any event specified in Sections 1,
2, 3, 4, 5, 6 or 7 of the Put Option Letter, Arabica may exercise the Put Option and require the
Company to purchase, and upon such exercise the Company shall be obligated to purchase and pay for,
Assets in accordance with the terms of the Put Option Letter.



     SECTION 31. Arabica Agents, Nominees or Representatives. In fulfilling any of its
obligations or exercising any of its rights under this Agreement, the Supplemental Agreement, the
Put Option Letter, the Call Option Letter or any agreement entered into in connection herewith,
Arabica may designate and utilize an agent, nominee or representative, which shall, unless
otherwise indicated by Arabica, have right and authority to act on behalf of Arabica.



     SECTION 32. Miscellaneous. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating or diminishing Arabica’s rights under the
remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or



 - 51 - 









 




render unenforceable such provision in any other jurisdiction. No term or
provision of this Agreement may be amended, altered, waived, discharged or terminated orally, but
only by an instrument in writing signed by a duly authorized officer of the party against which the
enforcement of the amendment, alteration, waiver, discharge or termination is sought. A waiver on
any one occasion shall not be construed as a waiver on a future occasion. All of the covenants,
conditions and obligations contained in this Agreement shall be binding upon and shall inure to the
benefit of the respective successors and assigns of Arabica and (subject to the restrictions of
Section 13(a) hereof) the Company. This Agreement may be executed in as many counterparts
as shall be determined by the parties hereto when so executed, each such counterpart shall be
binding on both parties hereto, notwithstanding that both parties are not signatories to the same
counterpart. This Agreement and each related instrument, document, agreement and certificate
collectively constitute the entire agreement of Arabica and the Company with respect to the
financing of the Assets, and cancel and supersede any and all prior oral or written understandings
with respect thereto. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING WITHOUT LIMITATION ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. THE COMPANY HEREBY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AS WELL AS TO THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL
MAY BE TAKEN OR OTHER REVIEW SOUGHT FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION
OR OTHER PROCEEDING ARISING OUT OF THE COMPANY’S OR ANY OF ITS WHOLLY-OWNED SUBSIDIARIES’
OBLIGATIONS UNDER OR WITH RESPECT TO THIS AGREEMENT OR ANY LEASE/PURCHASE DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY
HAVE AS TO VENUE IN ANY OF SUCH COURTS.




     SECTION 33. Payments, Set-Off and Subordination.



     (a) If any payment hereunder is due and payable on a day that is not a Business Day, such
payment shall be due and payable in the next preceding Business Day.



     (b) Upon the occurrence and during the continuance of any Event of Default, Arabica is hereby
authorized at any time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional or final) at any
time held and any other indebtedness at any time owing by Arabica to or for the credit or the
account of the Company against any and all of the Obligations now or hereafter existing hereunder
or under any Lease/Purchase Document.



     (c) The Company acknowledges that Arabica is financed with financing provided by a credit
provider and that the Assets and the Company’s rights under this Agreement and the other
Lease/Purchase Documents and the lease, license and purchase option financing and other
transactions contemplated hereunder are subject and subordinate to the Lien on the Assets granted
by Arabica to such credit provider. The Company further acknowledges that the Obligations are
secured by a Lien granted by the Company to Arabica, pursuant to this Agreement and the
Lease/Purchase Documents, on the Assets and the other assets of the Company not leased and licensed
hereunder.



     SECTION 34. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS ENTERED INTO IN CONNECTION HEREWITH OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR THE



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RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and all other common law
and statutory claims. Each party hereto acknowledges that this waiver is a material inducement to
enter into a business relationship, that each has already relied on this waiver in entering into
this Agreement, and that each will continue to rely on this waiver in their related future
dealings. Each party hereto further warrants and represents that it has reviewed this waiver with
its legal counsel and that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SECTION 34 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER
DOCUMENT ENTERED INTO IN CONNECTION WITH THIS AGREEMENT. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.




     SECTION 35. Effect on Prior Agreement. The terms of this Agreement shall
substitute for and replace the terms of the 2004 Agreement without constituting a novation thereof.
The respective rights of Company and Arabica with respect to any transactions under the 2004
Agreement shall not in any circumstance be terminated, extinguished or discharged hereby but shall
hereafter be governed by the terms of this Agreement.



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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized representatives as of the date first above written.



	 	 	 	 	 
	 	ARABICA FUNDING, INC.

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Address

c/o Global Securitization Services, LLC

68 South Service Road, Suite 120

Melville, NY 11747




CARIBOU COFFEE COMPANY, INC.

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Address

3900 Lakebreeze Avenue North

Brooklyn Center, MN 55429

 	 




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SCHEDULE 6(a)




RENT



     SECTION 1. Rent Calculation Methodology. The Company hereby agrees to pay Rent to
Arabica according the following methodology:




	 	(a)	 	The Rent shall be paid in installments payable on each Rent Payment Date, each
of which shall be in an amount equal to the aggregate of (i) the Rental Rate (as
defined below) for the Rent Period ending on such Rent Payment Date, calculated in
accordance with Section 1(b), below, plus (ii) the Third Rent Component
computed in accordance with Section 1(c) below, plus (iii) the amount
of $100,000, plus (iv) the amount of $6,000, plus (v) on each Rent
Payment Date that occurs on the last day of the second fiscal quarter of the Company
only, the amount of $35,000, provided that the Rent payable on the Final Rent Payment
Date shall equal the foregoing aggregate amount plus the unpaid Acquisition Cost.
	 
	 	(b)	 	The Rental Rate (the “Rental Rate”) payable on any Rent Payment Date shall be
an amount (determined by the Company) equal to the sum of:






	 	(i)	 	the Primary Rate Component, which shall apply to Assets that
are subject to this Agreement on the first day of a Rent Period, and which
equals the product of (A) the aggregate unpaid Acquisition Cost of such Assets
multiplied by (B) the Eurodollar Rate applicable to such Rent Period
plus the Applicable Margin multiplied by (C) a fraction equal
to the number of days in such Rent Period divided by 360, plus
	 
	 	(ii)	 	the Additional Rate Component, which shall apply to Assets that
are added to this Agreement during such Rent Period pursuant to a Supplement,
and which equals the product of (A) the Acquisition Cost of such Assets
multiplied by (B) the Eurodollar Rate applicable to the period from the
date such Assets are added to this Agreement to the end of such Rent Period,
plus the Applicable Margin multiplied by (C) a fraction equal
to the number of days from the date such Assets are added to this Agreement to
the end of such Rent Period divided by 360. The Additional Rate Component
shall be computed for each group of Assets added to this Agreement during a
Rent Period.






	 	(c)	 	The “Third Rent Component” referenced in Section 1(a)(ii) of this
Schedule shall be determined for each day during a Rent Period and shall equal the
product of (i) the Reference Amount on such day, multiplied by (ii) the Third Rent
Component Rate, multiplied by (iii) a fraction the numerator of which is one and the
denominator of which is 360.
	 
	 	(d)	 	Arabica and the Company agree that the amount set out in clause (iii) of
Section 1(a) of this Schedule represents the initial estimate of the cost that
will be incurred by Arabica during each Rent Period to obtain or cause to be obtained
property insurance for the Equipment and to perform or cause to be performed Major
Maintenance and Required Alterations for the Equipment. Arabica and the Company agree
that, except as otherwise provided in this Schedule 6(a), any change in any
component of the Rent, including such estimated cost, shall be subject to the written
agreement of Arabica and the Company, and




 









 






	 	 	 	that any such change shall apply only to Rent Periods commencing after the date of
such agreement.





     SECTION 2. Supplemental Payments. The Company agrees to pay Arabica all
Supplemental Payments promptly as the same shall become due and owing.



     SECTION 3. Method of Payment; Full Recourse. If the date that the Rent is due is
other than a Business Day, the Rent otherwise payable on such date shall be computed to, and shall
be payable on, the next succeeding Business Day unless such next succeeding Business Day occurs in
the next calendar month, in which case the Rent shall be payable on the next preceding Business
Day. All Rent payments required to be made by the Company to Arabica hereunder shall be made in
immediately available funds and in Dollars to an account of Arabica specified by Arabica. In the
event of any assignment to a Registered Holder pursuant to Section 13 of the Agreement, all
payments which are assigned to such Registered Holder shall be paid in the same manner specified
herein for payments to Arabica at such address as shall be designated by such Registered Holder.
Time is of the essence in connection with the payment of Rent. The obligation of the Company to
pay Rent, Supplemental Payments and all other amounts payable under the Agreement, this
Schedule 6(a), the Put Option Letter and the Call Option Letter shall be full recourse
obligations of the Company. Arabica and the Company agree, for income tax purposes, that the
obligation of the Company to pay the component of the Rent specified in Section 1(a)(iv),
above, shall be offset and discharged, dollar-for-dollar, by the obligation of Arabica to pay
amounts to the Company pursuant to the Supplemental Agreement.



     SECTION 4. Increased Costs.



     (a) Arabica shall promptly notify the Company and Arabica of each determination of any Rental
Rate hereunder and the effective date thereof. Any change in the Rental Rate resulting from a
change in the Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the first day of the Rent Period next succeeding the day on which such change becomes
effective. The Company also agrees to pay to Arabica on the last day of such next occurring Rent
Period an amount, calculated by Arabica, intended to compensate Arabica for any increased costs,
reduction in income or additional expense resulting from such change in the Eurocurrency Reserve
Requirements for the period from the effective date thereof to the beginning of such next occurring
Rent Period (and may include the cost of deferring payment of such amount by the Company until the
last day of such next occurring Rent Period). Arabica shall provide the Company with a statement
of its calculation of such increased cost, reduction in income or additional expense and of its
increased Applicable Margin, which statement shall be prima facie evidence of the correctness of
such calculation, absent manifest error.



     (b) If the adoption of or any change in any Requirement of Law or in the interpretation or
application thereof or compliance by Arabica with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made subsequent to the date
hereof shall:




	 	(i)	 	increase the cost to, or impose an additional cost on, Arabica
as a result of Arabica performing its obligations under the Agreement; and/or
	 
	 	(ii)	 	reduce the amount payable or the effective return to Arabica
pursuant to the Agreement; and/or
	 
	 	(iii)	 	reduce the rate of return of Arabica on its overall capital by
reason of a change in the manner in which it is required to allocate capital
resources to its obligations pursuant to the Agreement or the Supplemental
Agreement; and/or




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	 	(iv)	 	require Arabica to make a payment or forego a return on or
calculated by reference to any amount received or receivable by it under the
Agreement,




then, in any such case, Arabica shall promptly notify the Company (with a copy to Arabica) of the
event by reason of which it has become so entitled. Commencing with the next occurring Rent
Period, Arabica may increase the Applicable Margin by an amount necessary to compensate Arabica for
the amount of such increase in cost, reduction in income or additional expense. Such increased
Applicable Margin shall apply for so long as such increased cost, reduction in income or additional
expense is incurred by Arabica, and Arabica agrees to notify the Company when such increased cost,
reduction income or additional expense is no longer applicable. The Company also agrees to pay on
the last day of such next occurring Rent Period an amount, calculated by Arabica, intended to
compensate Arabica for such increased cost, reduction in income or additional expense for the
period from the date of the initial incurrence of such cost, reduction or expense by Arabica to the
beginning of such next occurring Rent Period (and may include the cost of deferring payment of such
amount by the Company until the last day of such next occurring Rent Period). Arabica shall
provide the Company with a statement of its calculation of such increased cost, reduction in income
or additional expense and of its increased Applicable Margin, which statement shall be prima facie
evidence of the correctness of such calculation, absent manifest error.




     Notwithstanding the foregoing, unless the Company consents, Arabica shall not be entitled to
adjust the Rental Rate or collect from the Company any other payments, reimbursements or
compensation pursuant to this Section 4 as a result of any increase in the cost to Arabica
of performing or causing to be performed any Major Maintenance or Required Alterations pursuant to
the Agreement, or maintaining or causing to be maintained property damage insurance coverage for
the Equipment pursuant to the Agreement.



     SECTION 5. Payments Before End of Rent Period. If the Company for any reason makes
any payment of Rent on any day other than the last day of the applicable Rent Period, or if payment
under the Call Option or the Put Option is made on a day other than the last day of a Rent Period,
the Company shall pay to Arabica a make whole payment pursuant to the following formula:



	 	 	 	 	 

	 
	 	L =	 	(R - T) x P x D
	 
	 	 	 
	 
	 	 	 	        360
	 
	 	 	 	 
	 
	 	L =	 	amount payable to Arabica
	 
	 	 	 	 
	 
	 	R =	 	Rental Rate (excluding the Applicable Margin)
	 
	 	 	 	 
	 
	 	T =	 	effective interest rate per annum at which any readily marketable bond
	 
	 	 	 	or other obligation of the United States, selected at Arabica’s sole
	 
	 	 	 	discretion, maturing on or near the last day of the then applicable
	 
	 	 	 	Rent Period and in approximately the same amount as such amount of
	 
	 	 	 	Rent can be purchased by Arabica on the day of such payment of Rent prepaid
	 
	 	 	 	 
	 
	 	P =	 	the amount of Rent prepaid
	 
	 	 	 	 
	 
	 	D =	 	the number of days remaining in the Rent Period as of the date of such
	 
	 	 	 	payment






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The Company shall pay such amount on the last day of the next occurring Rent Period, unless the
Company is purchasing all of the Assets pursuant to the Call Option or the Put Option, in which
case such amount shall be paid on the date of such payment. Arabica shall, on or prior to the
first date of such next occurring Rent Period or such date of payment, as applicable, present to
the Company a statement setting forth Arabica’s calculation of such amount pursuant hereto, which
statement shall be deemed true and correct absent manifest error.




     SECTION 6. Funding. If and whenever, at any time, Arabica notifies the Company that
adequate and fair means do not exist for ascertaining the Eurodollar Rate under this Agreement
and/or for calculating the Rental Rate under this Agreement, then Arabica shall give notice (a
“Eurodollar Notice”) thereof to the Company. From and after the date specified in such Eurodollar
Notice (which shall be the last day of the current Rent Period), the Rental Rate shall be computed
using the Base Rate as may be established by Arabica from time to time in accordance with this
Agreement and notified to the Company prior to the beginning of each Rent Period (and prior to each
time that additional Assets are added to this Agreement pursuant to a Supplement). Utilization of
the Base Rate shall continue until Arabica provides notice to the Company that the circumstances
giving rise to the Eurodollar Notice have terminated and it is again in a position to calculate the
Rental Rate based on the Eurodollar Rate.




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