Document:

Lease Agreement dated April 20, 1999

 EXHIBIT 10.2 
  
 LEASE AGREEMENT 
  
 This Lease Agreement (“Lease”) is made and entered into this 20th day of April, 1999, by and between Albert H. Gerrans, Jr. and Patricia J.
Gerrans (herein collectively called the “Landlord”) and Bolt Technology Corporation, a Connecticut corporation (herein called “Tenant”), for the terms of which, 
  
 W I T N E S S E T H: 
  
 1. PREMISES 
  
 1.1 For and in consideration of the covenants and agreements herein set forth to be kept and performed by Tenant, and subject to the terms and conditions
set out below, and subject to all matters of record in Harris County, Texas affecting the Premises herein-described, Landlord does hereby demise and lease to Tenant, and Tenant does hereby lease and take from Landlord (for the Term herein
stipulated) the premises (including all land and improvements located thereto), said land containing 4.9693 acres, more or less, described on Exhibit “A” which is attached hereto and made a part hereof for all purposes (said land and
improvements herein called the “Premises”). 
  
 2.
TERM AND OPTION 
  
 2.1 Term. The term (referred to
herein sometimes as “Term” or “Primary Term”) shall be for three (3) years commencing on April 20, 1999, and ending on April 20, 2002, unless sooner terminated pursuant to any provision hereof. 
  
 2.2 Option. Provided Tenant is not in default hereunder, Tenant shall
have an option to extend the Term of this Lease for one (1) additional period (referred to herein as “Extension Term”) of three (3) years; such Extension Term (if the option to extend is exercised) shall commence on the first day following
the expiration of the Primary Term of this Lease and Tenant’s option to extend the Term of this Lease are contingent upon the following conditions being satisfied: 
  
 2.2.1 Tenant shall not be in default under the terms and conditions of this Lease at the time Tenant elects to exercise such
option, and on the date upon which such option becomes effective; and 

 2.2.2 Tenant shall have given written notice to Landlord of the exercise of such option no less than one
hundred eighty (180) days prior to the expiration of the Primary Term. It is understood and agreed that time is of the essence in all provisions of this Lease. Further, if Tenant fails to timely exercise the option to extend, then such option and
rights to extend the Term of this Lease shall be null, void and of no force and effect. 
  
 2.2.3 In the event Tenant effectively exercises such option to extend the Term of this Lease, then all of the terms and provisions of this Lease applicable during the Primary Term hereof shall likewise be applicable
during the Extension Term, except: (i) after the expiration of the Extension Term (if the option to extend the Term is exercised) Tenant shall have no further rights to extend the Term of this Lease, and (ii) the Rent (as herein defined) which shall
be due and payable, in advance, for each month of the Extension Term shall be Ten Thousand and No/100 Dollars ($10,000.00) multiplied by a fraction the numerator of which is the Index Number of the Consumer Price Index (as defined below) for April,
2002, and the denominator of which is the Index Number of the Consumer Price Index for April, 1999. “CPI,” as that term is used herein, means the Consumer Price Index For All Urban Consumers (Houston, Texas) of the Bureau of Labor
Statistics of the U.S. Department of Labor (for which 1982-1984 is 100). “Bureau” shall mean the U.S. Department of Labor, Bureau of Labor Statistics, or any successor agency of the United States that shall issue the indexes or data
referred to in this Article 2.2.3. In the event that (i) the Bureau ceases to use the 1982-1984 average of 100 as the basis of calculation, or (ii) a substantial change is made in the number or character of “market basket” items used in
determining the CPI, or (iii) Landlord and Tenant mutually agree in writing that the CPI does not accurately reflect the purchasing power of the dollar, or (iv) the CPI shall be discontinued for any reason, Landlord shall designate from indexes
supplied by the Bureau an alternative index comparable to the CPI together with information which will make possible the conversion to the alternative index in computing the adjusted rental. If for any reason the Bureau does not furnish such an
index and such information, the parties shall thereafter accept and use such other index of comparable statistics on the cost of living for the county in which the Premises is located, as shall be computed and published by an agency of the United
States or by a responsible financial periodical of recognized authority then to be selected by Landlord (but subject to reasonable approval by Tenant). In no event shall the Rent be reduced. If there is a decrease in the CPI then the Rent in effect
shall remain unchanged. 
  

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 3. RENT 
  
 3.1 Tenant shall pay to Landlord as rent (“Rent”) for the Premises in monthly installments of Ten Thousand and No/100 Dollars ($10,000.00), in
advance, on the first day of each month of the Term hereof. Rent for any period during the Term hereof which is for less than one month shall be a pro rata portion of the monthly installment. Except as expressly set forth in any provision of this
Lease, Rent shall be payable without notice or demand and without any deduction, offset, or abatement in lawful money of the United States of America to Landlord at the address stated herein or to such other persons or at such other places as
Landlord may designate in writing. 
  
 3.2 Additional
Charge. This Lease is what is commonly called a “Net, Net, Net Lease,” it being understood that Landlord shall receive the Rent set forth in Article 3.1 free and clear of any and all impositions, taxes, real estate taxes, liens,
charges or expenses of any nature whatsoever in connection with the ownership and operation of the Premises. In addition to the Rent reserved by Article 3.1, Tenant shall pay to the parties respectively entitled thereto all impositions, taxes, real
estate taxes, insurance premiums, operating charges, maintenance charges, construction costs, and any other charges, costs and expenses which arise or may be contemplated under any provisions of this Lease during the Term hereof. All of such
charges, costs, and expenses shall constitute additional charges, and upon the failure of Tenant to pay any of such costs, charges, or expenses, Landlord shall have the same rights and remedies as otherwise provided in this Lease for the failure of
Tenant to pay Rent. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by the Tenant and that the Tenant shall in no event be entitled to any abatement of or reduction in Rent payable hereunder, except
as herein expressly provided. Any present or future law to the contrary shall not alter this agreement of the parties. Notwithstanding the foregoing, items which are not customarily included as additional charges or Rent in “Triple Net”
leases, such as income taxes and debt service (both principal and interest), are specifically excluded from additional charges pursuant to this paragraph. 
  

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 4. USE 
  
 4.1 Use. The Premises shall be used and occupied only for manufacturing, office and warehouse purposes. 
  
 4.2 Compliance with the Law. Tenant shall obtain, at its sole cost,
all permits and licenses required for the transaction of its business in the Premises. Tenant shall, at Tenant’s expense, comply promptly with all applicable statutes, ordinances, rules, laws, regulations, orders, and requirements in effect
during the Term or any part of the Term hereof regulating the use by Tenant of the Premises. Tenant shall not use or permit the use of the Premises in any manner that will tend to create waste or a nuisance. Tenant represents, warrants and covenants
to Landlord that any future permitted construction, enlargements, replacements, alterations, or modifications to the Premises which are made by Tenant shall comply with the American With Disabilities Act and all amendments promulgated thereto from
time to time at Tenant’s cost. 
  
 4.3 Condition of
Premises. Tenant hereby accepts the Premises in their condition existing as of the date of the possession hereunder, subject to all applicable zoning, municipal, county, and state laws, ordinances and regulations governing and regulating the use
of the Premises, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that Landlord has made no representation or warranty as to the suitability or habitability of the
Premises for the conduct of Tenant’s business. 
  
 4.4
Insurance Cancellation. Notwithstanding the provisions of Article 4.1, hereinabove, no use shall be made or permitted to be made of the Premises nor acts done which will cause the cancellation of any insurance policy covering said Premises;
and, if Tenant’s use of the Premises causes an increase in said insurance rates, Tenant shall pay any such increase. 
  
 4.5 Landlord’s Rules and Regulations. Tenant shall faithfully observe and comply with reasonable rules and regulations that Landlord may from
time to time promulgate. Landlord reserves the right from time to time to make all reasonable modifications to said rules and regulations. The additions and modifications to those rules and regulations shall be binding upon Tenant upon delivery of
copy of them to Tenant. 
  

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 4.6 Landlord represents that to their current actual knowledge, as of the date of this Lease, the
condition of the Premises is in compliance with applicable statutes, ordinances, laws and regulations, including, but not limited to, the Americans With Disabilities Act and applicable municipal, county and state laws, ordinances and regulations.

  
 5. MAINTENANCE, REPAIRS, AND ALTERATIONS 
  
 5.1. Tenant’s Obligations. Tenant shall, during the Term of this
Lease, keep in good order, condition, and repair, (at least as good as that which existed at the commencement of this Lease) the Premises and every part thereof, structural or nonstructural and all adjacent sidewalks, landscaping, driveways, parking
lots, fences, and signs located in the areas which are adjacent to and included with the Premises. Landlord shall incur no expense nor have any obligation of any kind whatsoever in connection with maintenance of the Premises, and Tenant expressly
waives the benefits of any statute now or hereafter in effect which would otherwise afford Tenant the right to make repairs at Landlord’s expense or to terminate this Lease because of Landlord’s failure to keep the Premises in good order,
condition, and repair. 
  
 5.2 Surrender. On the last day
of the Term hereof, or on any sooner termination, Tenant shall surrender the Premises to Landlord in good condition (the same condition that existed at the commencement of this Lease), broom clean, ordinary wear and tear expected. Tenant shall
repair any damage to the Premises occasioned by its use thereof, or by the removal of Tenant’s trade fixtures, furnishings, and equipment pursuant to Article 5.4.3, which repair shall include the patching and filling of holes and repair of
structural damage. 
  
 5.3 Landlord’s Rights. If
Tenant fails to perform Tenant’s obligations under this Article 5, Landlord may at their option (but shall not be required to) enter upon the Premises after twenty (20) days’ prior written notice to Tenant (provided Tenant has not
performed such obligations during such twenty (20) days) and put the same in good order, condition, and repair, and the cost thereof together with interest thereon at the rate of ten percent (10%) per annum shall become due and payable as additional
Rent to Landlord together with Tenant’s next monthly Rent installment. 
  

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 5.4 Alterations, Additions, and Improvements. 
  
 5.4.1 Tenant shall not, without Landlord’s prior written consent, make
any alterations, improvements, or additions in, on, or about the Premises. As a condition to giving such consent, Landlord may require that Tenant remove any such alterations, improvements, additions, or utility installations at the expiration of
the Term, and to restore the Premises to their prior condition. 
  
 5.4.2 Before commencing any work relating to alterations, additions, and improvements affecting the Premises, Tenant shall notify Landlord in writing of the expected date of commencement thereof. Landlord shall then have the right at any
time and from time to time to post and maintain on the Premises such notices as Landlord reasonably deems necessary to protect the Premises and Landlord from mechanics’ liens, materialmen’s liens, or any other liens. In any event, Tenant
shall pay, when due, all claims for labor or materials furnished to or for Tenant at or for use in the Premises. Tenant shall not permit any mechanics’ or materialmen’s liens to be levied against the Premises for any labor or material
furnished to Tenant or claimed to have been furnished to Tenant or to Tenant’s agents or contractors in connection with work of any character performed or claimed to have been performed on the Premises by or at the direction of Tenant.

  
 5.4.3 Unless Landlord requires their removal, as set forth in
Article 5.4.1, all alterations, improvements, or additions which may be made on the Premises shall become the property of Landlord and remain upon and surrendered with the Premises at the expiration of the Term. Notwithstanding the provisions of
this Article 5.4.3, Tenant’s machinery, equipment, and other trade fixtures other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises, shall remain the Property of Tenant and may be
removed by Tenant subject to the provisions of Article 5.2. 
  
 5.4.4 All construction work done by Tenant within the Premises shall be performed in a good and workmanlike manner, in compliance with all applicable laws, regulations, and governmental requirements, and the requirements of any contract or
deed of trust to which the Landlord may be party. Tenant agrees to indemnify Landlord and hold it harmless against any loss, liability or damage resulting from such work, and Tenant shall, if requested by Landlord, furnish a bond or other security
reasonably satisfactory to Landlord against any such loss, liability or damage. 
  

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 5.4.5 Tenant agrees that all venting, opening, sealing, waterproofing or any altering of the roof of the
Premises shall be performed by Landlord’s roofing contractor, or other contractor approved in advance of such work by Landlord. 
  
 5.5 Signs. Tenant shall not place, or affix any signs or other objects upon or to the roof or exterior walls of the Premises or on the interior
which can be seen from the exterior, or paint, or otherwise deface the exterior walls of the Premises without the prior written consent of Landlord. Any signs installed by Tenant shall be maintained and repaired solely by Tenant and shall conform
with applicable laws and other restrictions. Tenant shall remove all signs at the termination of this Lease and shall repair any damage and close any holes caused or revealed by such removal. 
  
 6. INSURANCE, INDEMNITY 
  
 6.1 Liability Insurance. Tenant shall obtain and keep in force during
the Term of this Lease a policy of comprehensive public liability insurance insuring Landlord and Tenant against any liability arising out of the ownership, use, occupancy, or maintenance of the Premises and all areas appurtenant thereto. Such
insurance shall be in an amount of not less than Two Million and No/100 Dollars ($2,000,000.00) for injury to or death of one person in any one accident or an amount of not less than Two Million and No/100 Dollars ($2,000,000.00) for injury to or
death of more than one person in any one accident or occurrence. Such insurance shall further insure Landlord and Tenant against liability for property damage of at least Five Hundred Thousand and No/100 Dollars ($500,000.00). The limits on the
amount of insurance coverage provided above shall not, however, limit the liability of Tenant hereunder. If the Tenant shall fail to procure and maintain said insurance the Landlord may, but shall not be required, to procure and maintain the same,
but at the expense of the Tenant. 
  
 6.2 Property
Insurance. Tenant shall obtain and keep in force during the Term of this Lease a policy or policies of insurance covering loss or damage to the Premises in the amount of $1,000,000.00 providing protection against all perils included within the
classification of fire, extended coverage, vandalism, malicious mischief, special extended perils (all risk) and sprinkler leakage. Said insurance shall provide for 
  

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 payment for loss thereunder to Landlord and to the holder of a first mortgage or deed of trust on the Premises, as their
respective interests may appear. If Tenant shall fail to procure and maintain said insurance, Landlord may, but shall not be required to, procure and maintain the same, but at the expense of the Tenant. 
  
 6.3 Insurance Policies. Insurance required hereunder shall be in
companies approved by Landlord. Tenant shall deliver prior to possession to Landlord copies of policies of such insurance or certificates evidencing the existence and amount of such insurance with loss payable clauses satisfactory to Landlord. No
such policy shall be cancellable or subject to reduction of coverage or other modification except after ten (10) days’ prior written notice to Landlord. Tenant shall within ten (10) days prior to the expiration of such policies furnish Landlord
with renewals or “binders” thereof, or Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be payable by Tenant upon demand. Tenant shall not do or permit to be done anything which shall invalidate
the insurance policies referred to in this Article 6. Tenant shall forthwith, upon Landlord’s demand, reimburse Landlord for any additional premiums attributable to any act or omission or operation of Tenant causing such increase in the cost of
insurance. 
  
 6.4 Waiver of Subrogation. Tenant and
Landlord each waives any and all rights of recovery against the other, or against the officers, employees, agents, and representatives of the other, for loss of or damage to such waiving party or its property or the property of others under its
control, when such loss or damage is insured under any insurance policy in force at the time of such loss or damage. Tenant and Landlord shall, upon obtaining the policies of insurance required hereunder, give notice to the insurance carriers that
the foregoing mutual waiver of subrogation is contained in this Lease. 
  
 6.5 Hold Harmless. Tenant shall indemnify, defend and hold Landlord harmless from any and all claims arising from Tenant’s use of the Premises or from the conduct of its business or from any activity, work, or things which may
be permitted or suffered by Tenant in or about the Premises and shall further indemnify, defend, and hold Landlord harmless from and against any and all claims (including, without limitation, for death or injury to person or persons or property
damage) arising from any breach or default in the performance of any obligation on Tenant’s part to be performed under the provision of this Lease 
  

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 or arising from any act of Tenant or any of its agents, contractors, employees, or invitees, and from any and all costs,
attorney’s fees, expenses, and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon. Tenant hereby assumes all risk of damage to the Premises or injury or death to persons in or about the Premises
from any cause, and Tenant hereby waives all claims in respect thereof against Landlord, excepting where said damage, injury or death, arises out of the gross negligence or wilful misconduct of Landlord. Notwithstanding anything herein to the
contrary, Landlord shall indemnify, defend and hold harmless, Tenant from any claims of any nature or kind which arise from or relate to, or are alleged to arise from or relate to, any use, business, activity, work or other things permitted to have
been done on the Premises prior to the date hereof. 
  
 6.6
Exemption of Landlord from Liability. Tenant hereby agrees that Landlord shall not be liable for injury to Tenant’s business or any loss of income therefrom or for damage to the goods, wares, merchandise, machinery or other property of
Tenant, Tenant’s employees, invitees, customers, or any other person or persons in or about the Premises; nor, unless through their gross negligence or wilful misconduct, shall Landlord be liable for any injury or death to Tenant’s
employees, agents, or contractors, and invitees, whether such damage, injury or death is caused by or results from fire, steam, electricity, gas, water, or rain, or from the breakage, leakage, obstruction, or other defects of pipes, sprinklers,
wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether the said damage, injury or death results from conditions arising upon the Premises, or from other sources or places, and regardless of whether the
cause of such damage, injury or death or the means of repairing the same is inaccessible to Landlord or Tenant. 
  
 7. DAMAGE OR DESTRUCTION 
  
 7.1 In the event the improvements on the Premises are damaged or destroyed, partially or totally, from any cause whatsoever, whether or not such damage or destruction is covered by insurance required to be maintained
under Article 6, the Tenant shall repair, restore, and rebuild the Premises to their condition existing upon the date of commencement of this Lease, excluding any additions or alterations which were made and paid for by the Tenant, and this Lease
shall continue in full force and effect. Such repair, restoration, and rebuilding (all of which are herein called the “repair”) shall be commenced within 
  

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 a reasonable time after such damage or destruction shall be diligently prosecuted to completion. There shall be no
abatement of Rent or any other obligation of Tenant hereunder by reason of such damage or destruction. The proceeds of any insurance maintained under Article 6 shall be made available to Tenant for payment of the cost and expense of the repair,
provided, however, that such proceeds may be made available to Tenant subject to reasonable conditions including, but not limited to, architect’s certification of costs and retention of a percentage of such proceeds pending final notice of
completion. Notwithstanding anything to the contrary set forth herein, in the event that such proceeds are not made available to Tenant within ninety (90) days after such damage or destruction, Tenant shall have the option for thirty (30) days,
commencing on the expiration of such ninety (90) day period of canceling this Lease. In the event that the insurance proceeds are insufficient to cover the cost of the repair, then any amount in excess thereof required to complete the repair shall
be paid by Tenant. Provided, however, that Tenant shall not be required to pay for any insufficiency in insurance proceeds which is the direct result of complying with any provision of any mortgage on the Premises which requires the insurance
proceeds to be paid to the mortgagee and results in the mortgagee electing to apply insurance proceeds to the mortgage debt rather than to be used for repairs. Notwithstanding anything contained herein to the contrary, this Article 7 shall be
subject to the terms of any and all mortgages on the Premises. 
  
 7.2 Damage Near End of Term. If the Premises are partially destroyed or damaged during the last six (6) months of the Term of this Lease, Landlord may, at Landlord’s option, cancel and terminate this Lease, as of the date of
occurrence of such damage, by giving written notice to Tenant of Landlord’s election to do so within thirty (30) days after the date of occurrence of such damage. Landlord’s election to terminate this Lease will not be a termination of
Tenant’s option to purchase the Premises pursuant hereto, if Tenant, after Landlord exercise its right of termination, within ten (10) days thereafter, exercises its option to purchase the Premises and concludes the purchase of the Premises as
herein provided. Upon the closing of such purchase, Landlord agrees to assign all of its right, title and interest in and to any insurance proceeds, which were recovered or are recoverable, by the Landlord to the Tenant at the closing. 

 

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 7.3 Proration. Upon termination of this Lease pursuant to this Article 7, a pro rata adjustment of
Rent based upon a thirty (30) day month shall be made. 
  
 8.
REAL PROPERTY TAXES 
  
 8.1 Payment of Taxes. Tenant
shall pay all real property taxes applicable to the Premises during the Term of this Lease. All such payments shall be made at least ten (10) days prior to the delinquency of such payment. Tenant shall promptly (within ten [10] days after payment)
furnish Landlord with satisfactory evidence that such taxes have been paid. If any such taxes paid by Tenant shall cover any period of the time prior to or after the expiration of the Term hereof. Tenant’s share of such taxes shall be equitably
prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Landlord shall reimburse Tenant to the extent required. If Tenant shall fail to pay any such taxes, Landlord shall have the right to
pay the same, in which case Tenant shall repay such amount to Landlord with Tenant’s next Rent installment together with interest at the rate of ten percent (10%) per annum. 
  
 8.2 Definition of “Real Property” Taxes. As used herein, the term “real property tax” shall
include any form of assessment, license fee, Rent tax, levy, penalty, or tax (other than inheritance or estate taxes), imposed by any authority having the direct or indirect power to tax, including any city, county, state, or federal government, or
any school, agricultural, lighting, drainage, or other improvement district thereof, as against any legal or equitable interest of Landlord in the Premises or in the real property of which the Premises are a part, as against Landlord’s right to
Rent or other income therefrom, or as against Landlord’s business of leasing the Premises; and Tenant shall pay any and all charges and fees which may be imposed by the Environmental Protection Agency or other similar government regulations or
authorities. 
  
 8.3 Personal Property Taxes. Tenant shall
pay prior to the delinquency all taxes assessed against and levied upon leasehold improvements, trade fixtures, furnishings, equipment, trade fixtures, furnishings, equipment, and all other personal property to be assessed and billed separately from
the Premises. 
  

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 9. UTILITIES 
  
 9.1 Tenant shall promptly pay, when due, all charges for electricity, water, gas, telephone service, sewerage service and
other utilities furnished to the Premises. It is expressly agreed that Landlord shall not be liable for any interruption or failure in any utility services, unless caused by the gross negligence or wilful misconduct of the Landlord. Further, no such
interruption or failure shall be construed as either a constructive or actual eviction of Tenant, nor work an abatement of Rent, nor relieve Tenant from fulfilling any covenant or condition of this Lease. If the interruption or failure is caused by
the gross negligence or willful misconduct of Landlord, then the Rent shall be abated during the period of such interruption in services. 
  
 10. ASSIGNMENT AND SUBLETTING 
  
 10.1 Landlord’s Consent Required. Tenant shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise
transfer or encumber all or any part of Tenant’s interest in this Lease or in the Premises without Landlord’s prior written consent. Any assignment to an affiliate of the Tenant, such as a parent or subsidiary company, shall not require
consent, provided Tenant shall still remain liable on this Lease. Any attempted assignment, transfer, mortgage, encumbrances, or subletting without such consent shall be void and shall constitute a breach of the Lease. Any transfer of Tenant’s
interest in this Lease or in the Premises from Tenant by merger, consolidation, or liquidation, or by any subsequent change in the ownership of thirty percent (30%) or more of the capital stock of Tenant shall be deemed a prohibited assignment
within the meaning of this Article 10. 
  
 10.2 No Release of
Tenant. Regardless of Landlord’s consent, no subletting or assignment shall release Tenant of Tenant’s obligations to pay the Rent and to perform all other obligations to be performed by Tenant hereunder for the Term of this Lease. The
acceptance of Rent by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment of subletting. 

 
 10.3 Assignment by Landlord. In the event of the transfer and
assignment by Landlord of its interest in this Lease to a person expressly assuming Landlord’s obligations 
  

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 under this Lease, Landlord shall thereby be released from any further obligations hereunder (but Landlord shall not be
relieved or released from obligations which may have accrued prior to assignment or transfer of this Lease by Landlord), and Tenant agrees to look solely to such successor in interest of the Landlord for performance of such obligations, provided
that Landlord has given Tenant thirty (30) days prior written notice of the identity of the transferee and transferee’s agreement to assume the liability of the Landlord under the Lease. 
  
 10.4 Mortgage of Lease by Tenant. Tenant shall not mortgage, pledge or
otherwise encumber its interest in this Lease or in the Premises. 
  
 10.5 Assignment to Subsidiary(ies). Notwithstanding the foregoing provisions of this Article 10, Tenant shall have the right to assign this Lease to a subsidiary of Tenant, provided that the use of the Premises shall not be changed
and that the Tenant shall not be released from its obligations under this Lease. 
  
 11. DEFAULT AND REMEDIES 
  
 11.1 The following events (any one or more of them) shall be deemed to be “Events of Default” by Tenant under this Lease: 
  
 11.1.1 Tenant shall fail to pay any Rent, additional Rent, or any monthly payment, or any other cost, sum, expense, charge or amounts
(“Payments”) due to Landlord as herein provided, and such failure shall continue for a period of ten (10) days after any such Payments are due. 
  
 11.1.2 Tenant shall fail to make any payment to third parties as required by the terms of this Lease, or shall fail to comply with any other term,
provision or covenant of this Lease [other than the payment of the Payments referred to in Article 11.1.1 above] and shall not cure such failure within thirty (30) days after written notice thereof to Tenant. The Tenant shall not be considered in
default under this Lease if such curative action cannot be completed within such thirty (30) day period, and Tenant has commenced efforts to cure the same within such period and is diligently pursuing the cure of such default. 
  
 11.1.3 Tenant shall become insolvent, or shall make a transfer in fraud of
creditors, or shall make an assignment for the benefit of creditors. 
  

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 11.1.4 Tenant shall file a petition under any section or chapter of the Bankruptcy Code, as amended, or
under any similar law or statute of the United States or any State thereof; or Tenant shall be adjudged bankrupt or insolvent in proceedings filed against Tenant. 
  
 11.1.5 A receiver or Trustee shall be appointed for all of the Premises or for all or substantially all of the assets of
Tenant under this Lease. 
  
 11.1.6 Tenant shall do or permit to
be done anything which creates a lien upon the Premises. 
  
 11.1.7 The business operated by Tenant shall be closed for failure to pay any State sales tax as required, for violation of law, or for any other reason. 
  
 11.1.8 The vacating or abandonment of the Premises by Tenant. 
  
 11.1.9 The making by Tenant it of any general assignment, or general arrangement for the benefit of creditors. 

 
 11.1.10 The attachment, execution, or other judicial seizure of
substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, where such seizure is not discharged within thirty (30) days. 
  
 11.2 Upon the occurrence of any one or more of such Events of Default, Landlord shall have the option to pursue any one or
more of the following remedies, or any other remedy set forth in this Lease or otherwise permitted by law, or in equity, without any notice or demand whatsoever (except as expressly required by the terms of this Lease): 
  
 11.2.1 Terminate this Lease in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rental, enter upon and take possession of the Premises and expel or remove Tenant
and any other person who may be occupying the Premises or any part thereof, by force if necessary, without being liable for prosecution or any claim of damages therefor. 
  
 11.2.2 Terminate Tenant’s right of possession, without terminating this Lease, and enter upon and take 
  

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 possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part
thereof, by force if necessary, without being liable for prosecution or any claim for damages therefor. 
  
 11.2.3 Enter upon the Premises by force if necessary without being liable for prosecution or any claim for damages therefor, and do whatever Tenant is
obligated to do under the terms of this Lease, and Tenant agrees to reimburse Landlord on demand for any expenses which Landlord may incur in thus affecting compliance with Tenant’s obligations under this Lease, and Tenant further agrees that
Landlord shall not be liable for any damages resulting to the Tenant from such action. 
  
 11.2.4 The remedies stated herein for an Event of Default by Tenant are not exclusive, and Landlord shall have the right to pursue any one or more of the remedies stated above or any other remedy provided by law or in
equity. Forbearance by Landlord to enforce one or more of the remedies herein provided upon an Event of Default shall not be deemed or construed to constitute a waiver of such default. 
  
 11.3 Exercise by Landlord of any one or more remedies hereunder granted or otherwise available shall not be deemed to be an
acceptance of surrender of the Premises, whether by agreement or by operation of law, it being understood that such surrender can be effected only by the written agreement of Landlord and Tenant. 
  
 11.4 In the event Tenant fails or refuses to make timely and punctual payment
of any Rent, additional Rent or other sums payable or charges due under this Lease as and when the same shall become due and payable, or in the event of any breach of any of the terms or provisions of this Lease by Tenant, in addition to the other
remedies available to Landlord, Landlord at their option, shall be entitled, and is hereby authorized, without any notice to Tenant whatsoever, to enter into and upon the Premises by any peaceable means, and to change, alter and/or modify the door
locks on all entry doors of the Premises, permanently excluding Tenant and its officers, principals, agents, employees, representatives and invitees therefrom. In the event that Landlord has either permanently repossessed the Premises as aforesaid
or has elected to terminate this Lease by reason of Tenant’s default, Landlord shall not thereafter be obligated to provide Tenant with a key to the Premises at any time, regardless of any amounts subsequently paid by Tenant; provided, however,
that in any such instance, during Landlord’s 
  

 15 

 normal business hours and at the convenience of Landlord, and upon receipt of a written request from Tenant accompanied
by such written waivers and releases as Landlord may require, Landlord may, at their option, (a) escort Tenant or its authorized representative to the Premises to retrieve any personal belongings or other property of Tenant not subject to the
Landlord’s lien or security interest described herein, or (b) obtain a list from Tenant of such personal property Tenant intends to remove, whereupon Landlord shall remove such property and make it available to Tenant at a time and place
designated by Landlord. In the event Landlord elects option (b) above, Tenant shall pay, in cash and in advance, all costs and expenses estimated by Landlord to be incurred in removing such property and making it available to Tenant, including, but
not limited to, all moving and/or storage charges theretofore incurred by Landlord with respect to such property. If Landlord elects to exclude Tenant from the Premises without permanently repossessing the Premises or terminating this Lease pursuant
to the foregoing, then Landlord shall not be obligated to permit Tenant entry into the Premises or provide Tenant with a key to re-enter the Premises until such time as all delinquent Rent and other sums, including interest and late charges thereon,
if any, due under this Lease have been fully paid, and all other defaults, if any, have been completely and timely cured to Landlord’s satisfaction (if such cure occurs prior to actual permanent repossession or termination), and Landlord has
been given assurances by Tenant reasonably satisfactory to Landlord evidencing Tenant’s ability to satisfy its remaining obligations under this Lease. Landlord’s remedies hereunder shall be in addition to, and not in lieu of, any of its
other remedies set forth in this Lease, or otherwise available to Landlord at law or in equity. It is intended that this paragraph, and the provisions herein contained, shall supersede and be paramount to any conflicting provisions of the Texas
Property Code, as well as any successor statute governing the rights of landlords to change locks of commercial tenants. 
  
 11.5 In the event Landlord elects to terminate this Lease by reason of an Event of Default, then notwithstanding such termination, Tenant shall be liable
for and shall pay to Landlord, at the address specified for notice to Landlord herein the sum of all Rent and other indebtedness accrued to date of such termination, plus an amount equal to the difference between (a) the total Rent due plus any
other payment required to be made by Tenant hereunder for the remaining portion of the Lease Term (had such Term not been terminated by Landlord prior to the date of expiration stated in Article 2), and (b) the then present value of the then fair
rental value of the Premises for such period. 
  

 16 

 11.6 In the event that Landlord elects to repossess the Premises without terminating this Lease, then
Tenant shall be liable for and shall pay to Landlord at the address specified for notice to Landlord herein all Rent and other indebtedness accrued to the date of such repossession, plus Rent required to be paid by Tenant to Landlord during the
remainder of the Lease Term until the date of expiration of the Term as stated in Article 2 hereof, diminished by any net sums thereafter received by Landlord through reletting the Premises during said period (after deducting expenses incurred by
Landlord as provided in this Article 11 hereof). In no event shall Tenant be entitled to any excess of any rental obtained by reletting over and above the rental herein reserved. Actions to collect amounts due by Tenant to Landlord as provided in
this Article 11 may be brought from time to time, on one or more occasions, without the necessity of Landlord’s waiting until expiration of the Lease Term. 
  

11.7 In case of any Event of Default or breach by Tenant, Tenant shall also be liable for and shall pay to Landlord, at the address specified for
notice to Landlord herein, in addition to any sum provided to be paid above, broker’s fees incurred by Landlord in connection with reletting the whole or any part of the Premises; the costs of removing and storing Tenant’s or other
occupant’s property; the costs of repairing, altering, remodeling or otherwise putting the Premises into condition acceptable to a new tenant or tenants, and all reasonable expenses incurred by Landlord in enforcing or defending Landlord’s
rights and/or remedies hereunder including reasonable attorneys’ fees incurred by Landlord. 
  
 11.8 In the event of termination or repossession of the Premises for an Event of Default, Landlord shall not have any obligation to relet or attempt to
relet the Premises, or any portion thereof, or to collect rental after reletting; and in the event of reletting, Landlord may relet the whole or any portion of the Premises for any period, for any rental, to any tenant, and for any use and purpose,
which Landlord may desire. 
  
 11.9 If Tenant should fail to make
any payment or cure any default hereunder within the time expressly permitted herein, Landlord, without being under any obligation to do so and without thereby waiving such default, may make such payment and/or remedy such other default for the
account of Tenant (and 
  

 17 

 enter the Premises for such purpose), and thereupon Tenant shall be obligated to, and hereby agrees, to pay Landlord,
upon demand, all costs, expenses and disbursements (including reasonable attorneys’ fees) incurred by Landlord in taking such remedial action. 
  
 11.10 In the event of any default by Landlord, Tenant’s exclusive remedy shall be an action for damages (Tenant hereby waiving the benefit of any
laws granting it a lien upon the property of Landlord, and/or upon Rent due Landlord), but prior to any such action Tenant will give Landlord written notice specifying such default with particularity, and Landlord shall thereupon have thirty (30)
days in which to cure any default; provided, however, Landlord shall not be considered in default under this Lease if such curative action cannot be completed within such thirty (30) day period, and Landlord has commenced efforts to cure within such
period and is diligently pursuing the cure of such default. All obligations of Landlord hereunder will be construed as covenants, not conditions; and all such obligations will be binding upon Landlord only during the period of its ownership of the
Premises, and not thereafter, provided that in the event of a transfer (excepting an involuntary transfer such as a foreclosure) such transferee of Landlord’s ownership interest has assumed all of Landlord’s obligations hereunder and that
notice has been given to Tenant pursuant to Section 10.3. 
  
 11.11 The term “Landlord” shall mean only the owner, for the time being, of the Premises, and in the event of the transfer by such owner of its interest in the Premises, pursuant to Section 10.3 of this Lease, such owner shall
thereupon be released and discharged from all covenants and obligations of the Landlord thereafter accruing. 
  
 11.12 Notwithstanding any other provisions hereof, Landlord shall not have any personal liability hereunder, provided that in the event of a transfer
(excepting an involuntary transfer such as a foreclosure) such transferee of Landlord’s ownership interest has assumed all of Landlord’s obligations hereunder and that notice has been given to Tenant pursuant to Section 10.3. In the event
of any breach or default by Landlord in any term or provision of this Lease, Tenant agrees to look solely to the equity or interest then owned by Landlord in the land and improvements which constitute the Premises; however, in no event shall any
deficiency judgment or any money judgment of any kind be sought or obtained against Landlord, or any of its partners. 
  

 18 

 11.13 In the event that Landlord shall have taken possession of the Premises pursuant to the authority
herein granted, then Landlord shall have the right to keep in place and use all the furniture, fixtures and equipment at the Premises, including that which is owned by or leased to Tenant at all times prior to any foreclosure thereon by Landlord or
repossession thereof by a lessor thereof or third party having a lien thereon. Landlord shall also have the right to remove from the Premises (without the necessity of obtaining a distress warrant, writ of sequestration or other legal process) all
or any portion of such furniture, fixtures, equipment and other property located thereon and place same in storage at any premises within the county in which the Premises is located; and in such event, Tenant shall be liable to Landlord for all
costs incurred by Landlord in connection with such removal and storage. Landlord shall also have the right to relinquish possession of all or any portion of such furniture, fixtures, equipment and other property to any person (“Claimant”)
claiming to be entitled to possession thereof who presents to Landlord a copy of any instrument represented to Landlord by Claimant to have been executed by Tenant (or any predecessor of Tenant) granting Claimant the right to take possession of such
furniture, fixtures, equipment or other property, without the necessity on the part of Landlord to inquire into the authenticity of said instrument’s copy or Tenant’s or Tenant’s predecessor’s signature thereon and without the
necessity of Landlord’s making any nature of investigation or inquiring as to the validity of the factual or legal basis upon which Claimant purports to act; and, Tenant agrees to indemnify and hold Landlord harmless from all cost, expense,
loss, damage and liability incident to Landlord’s relinquishment of possession of all or any portion of such furniture, fixtures, equipment or other property to Claimant. The rights of Landlord herein stated shall be in addition to any and all
other rights which Landlord has or may hereafter have at law or in equity; and Tenant stipulates and agrees that the rights herein granted Landlord are commercially reasonable. 
  
 11.14 Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent and other sums due
hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which
may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of 
  

 19 

 Rent or any other sum due from Tenant shall not be timely received by Landlord or Landlord’s designee, then Tenant
shall pay to Landlord a late charge which shall be additional Rent hereunder equal to ten percent (10%) of such overdue amount. All parties hereby agree that such late charge represents a fair and reasonable estimate of the cost Landlord will incur
by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant’s default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder. 
  
 11.15 LANDLORDS LIEN. IN
ADDITION TO THE STATUTORY LANDLORD’S LIEN, TENANT HEREBY GRANTS TO LANDLORD A SECURITY INTEREST TO SECURE PAYMENT OF ALL RENT AND OTHER SUMS OF MONEY BECOMING DUE HEREUNDER FROM TENANT, UPON ALL GOODS, WARES, EQUIPMENT, FIXTURES, FURNITURE, AND
OTHER PERSONAL PROPERTY OF TENANT SITUATED IN OR UPON THE PREMISES, TOGETHER WITH THE PROCEEDS FROM THE SALE OR LEASE THEREOF, SUCH PROPERTY SHALL NOT BE REMOVED WITHOUT THE CONSENT OF LANDLORD UNTIL ALL ARREARAGES IN RENT AND OTHER SUMS OF MONEY
THEN DUE TO LANDLORD HEREUNDER SHALL FIRST HAVE BEEN PAID AND DISCHARGED. UPON THE OCCURRENCE OF ANY EVENT OF DEFAULT, LANDLORD MAY, IN ADDITION TO ANY OTHER REMEDIES PROVIDED HEREIN OR BY LAW, ENTER UPON THE PREMISES AND TAKE POSSESSION OF ANY AND
ALL GOODS, WARES, EQUIPMENT, FIXTURES, AND OTHER PERSONAL PROPERTY OF TENANT SITUATED ON THE PREMISES WITHOUT LIABILITY OF TRESPASS OR CONVERSION, AND SELL THE SAME AT PUBLIC OR PRIVATE SALE, WITH OR WITHOUT HAVING SUCH PROPERTY AT THE SALE, AFTER
GIVING TENANT REASONABLE NOTICE OF THE TIME AND PLACE OF ANY SUCH SALE. UNLESS OTHERWISE REQUIRED BY LAW, NOTICE TO TENANT OF SUCH SALE SHALL BE DEEMED SUFFICIENT IF GIVEN IN THE MANNER PRESCRIBED IN THIS LEASE AT LEAST TEN (10) DAYS BEFORE THE TIME
OF THE SALE. ANY PUBLIC SALE MADE UNDER THIS PARAGRAPH SHALL BE DEEMED TO HAVE BEEN CONDUCTED IN A COMMERCIALLY REASONABLE MANNER IF HELD IN THE PREMISES OR WHERE THE PROPERTY IS LOCATED, AFTER THE TIME, PLACE, AND METHOD OF SALE AND A GENERAL
DESCRIPTION OF THE TYPES OF PROPERTY TO BE SOLD HAVE BEEN ADVERTISED IN A DAILY NEWSPAPER PUBLISHED IN HARRIS COUNTY, TEXAS, FOR FIVE (5) CONSECUTIVE DAYS BEFORE THE DATE OF THE SALE. LANDLORD OR ITS ASSIGNS MAY PURCHASE AT A PUBLIC SALE AND, UNLESS
PROHIBITED BY LAW, AT A PRIVATE SALE. THE PROCEEDS FROM ANY DISPOSITION DEALT WITHIN THIS PARAGRAPH, LESS ANY AND ALL EXPENSES CONNECTED WITH THE TAKING OF POSSESSION, HOLDING, AND SELLING OF PROPERTY (INCLUDING REASONABLE ATTORNEYS’ FEES AND
LEGAL EXPENSES), SHALL BE APPLIED AS A CREDIT AGAINST THE INDEBTEDNESS SECURED BY THE SECURITY INTEREST GRANTED HEREIN. ANY SURPLUS SHALL BE PAID TO 
  

 20 

 TENANT OR AS OTHERWISE REQUIRED BY LAW; TENANT SHALL PAY ANY DEFICIENCIES FORTHWITH. UPON REQUEST BY LANDLORD, TENANT
AGREES TO EXECUTE AND DELIVER TO LANDLORD A FINANCING STATEMENT IN FORM SUFFICIENT TO PERFECT THE SECURITY INTEREST OF LANDLORD IN THE AFOREMENTIONED PROPERTY AND PROCEEDS THEREOF UNDER THE PROVISIONS OF THE UNIFORM COMMERCIAL CODE IN FORCE IN THE
STATE OF TEXAS. THE STATUTORY LIEN FOR RENT IS EXPRESSLY RESERVED; THE SECURITY INTEREST HEREIN GRANTED IS IN ADDITION AND SUPPLEMENTARY THERETO. NOTWITHSTANDING THE FOREGOING, THIS LANDLORD’S LIEN SHALL BE SUBORDINATE TO ANY LIENS PROVIDED BY
TENANT OR A-G GEOPHYSICAL PRODUCTS, INC. TO LANDLORD RESPECTING THE SECURITY DOCUMENTS EXECUTED OF EVEN DATE HEREWITH BY THE PARTIES IN CONNECTION WITH THE PURCHASE BY TENANT OF THE BUSINESS OF A-G GEOPHYSICAL PRODUCTS, INC., OR FOR ANY LIEN FOR THE
PURCHASE BY TENANT OF ANY FURNITURE, EQUIPMENT, INVENTORY OR PERSONAL PROPERTY. 
  
 12. CONDEMNATION 
  
 12.1
If the Premises or any portion thereof are taken under the power of eminent domain or sold by Landlord under the threat of the exercise of said power (all of which is herein referred to as “condemnation”), this Lease shall terminate as to
the part so taken as of the date the condemning authority takes title or possession, whichever occurs first. If more than twenty-five percent (25%) of the floor area of any buildings which are part of the Premises or more than twenty-five percent
(25%) of the land area of the Premises not covered with buildings is taken by condemnation, either Landlord or Tenant may terminate this Lease as of the date of the condemning authority takes possession by notice in writing of such election within
twenty (20) days after Landlord shall have notified Tenant of the taking or, in the absence of such notice, then within twenty (20) days after the condemning authority shall have taken possession. 
  
 12.2 If this Lease is not terminated by either Landlord or Tenant, then it
shall remain in full force and effect as to the portion of the Premises remaining, provided the Rent shall be reduced in proportion to the floor area of the buildings taken within the Premises as bears to the total floor area of all buildings
located on the Premises. In the event this Lease is not so terminated, then Landlord agrees, at Landlord’s sole cost, to as soon as reasonably possible restore the Premises to a complete unit of like quality and character as existed prior to
the condemnation. All awards for the taking of any part of the Premises or any payment made under the threat of the 
  

 21 

 exercise of power of eminent domain shall be the property of Landlord, whether made as compensation for diminution of
value of the leasehold or for the taking of the fee or as severance damages; provided, however, that Tenant shall be entitled to any award for loss of or damage to Tenant’s trade fixtures and removable personal property. Notwithstanding
anything contained herein to the contrary, this Article 12 shall be subject to the terms of any and all mortgages on the Premises. 
  
 13. GENERAL PROVISIONS 
  
 13.1 Estoppel Certificate. 
  
 13.1.1 Tenant shall at any time upon not less than ten (10) days’ prior written notice from Landlord execute, acknowledge, and deliver to Landlord a
statement in writing (a) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to
which the Rent, security deposit, and other charges are paid in advance, if any, and (b) acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of Landlord hereunder, or specifying such defaults, if any, which
are claimed. Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises. 
  
 13.1.2 Tenant’s failure to deliver such statement within such time shall be conclusive upon Tenant (a) that this Lease is in full force and effect,
without modification except as may be represented by Landlord, (b) that there are no uncured defaults in Landlord’s performance, and (c) that not more than one (1) month’s Rent has been paid in advance. 
  
 13.1.3 If Landlord desires to finance or refinance the Premises, or any part
thereof, Tenant hereby agrees to deliver to any lender designated by Landlord such financial statements of Tenant as may be reasonably required by such lender. Such statements shall include the past three (3) years’ financial statements of
Tenant. All such financial statements shall be received by Landlord in confidence and shall be used only for the purposes herein set forth. Landlord shall give Tenant at least thirty (30) days prior written notice of their intent to refinance the
debt on the Premises. Further, Landlord agrees that they will not place any additional debt on the Premises or increase the outstanding balance of any existing debt without the prior written consent of the Tenant, which consent shall not be
unreasonably withheld. 
  

 22 

 13.2 Landlord’s Interests. In the event of any transfer of such title or interest, Landlord
herein named (and in case of any subsequent transfers the then grantor) shall be relieved from and after the date of such transfer of all liability as respects Landlord’s obligations thereafter to be performed provided that any funds in the
hands of Landlord or the then grantor at the time of such transfer, in which Tenant has an interest, shall be delivered to the grantee. The obligations contained in this Lease to be performed by Landlord shall, subject as aforesaid, be binding on
Landlord’s successors and assigns, only during their respective periods of ownerships. The foregoing provisions of this Section 13.2 shall apply only to transfers made in accordance with the provisions of Section 10.3 hereof. 
  
 13.3 Severability. The invalidity of any provision of this Lease, as
determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 
  
 13.4 Interest on Past-Due Obligations. Except as expressly herein provided, any amount due to Landlord not paid when due shall bear interest at ten
percent (10%) per annum from the date due. Payment of such interest shall not excuse or cure any default by Tenant under this Lease. 
  
 13.5 Time of Essence. Time is of the essence. 
  
 13.6 Captions. Article and paragraph captions are not a part hereof, but are for convenience only. 
  
 13.7 Incorporation of Prior Agreements; Amendments. This Lease
contains all agreements of the parties with respect to any matter mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest
at the time of the modification. 
  
 13.8 Waivers. No
waiver by Landlord of any provision hereof shall be deemed a waiver of any other provision hereof or of any matter subsequent breach by Tenant of the same or any other provision. Landlord’s consent to or approval of any act shall not be deemed
to rendered unnecessary the obtaining of Landlord’s consent to or approval of any subsequent act by 
  

 23 

 Tenant. The acceptance of Rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any
provision hereof, other than the failure of Tenant to pay the particular Rent so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such Rent. 
  
 13.9 Recording. Tenant shall not record this Lease. Any such
recordation shall be a breach under this Lease. 
  
 13.10
Holding Over. If Tenant should remain in possession of the Premises after the expiration or termination of the Term of this Lease, without the execution by Landlord and Tenant of a new Lease, then Tenant shall be deemed to be occupying the
Premises as a tenant-at-sufferance subject to all the covenants and obligations of this Lease and at a daily rental of two (2) times the per-day rental provided hereunder (and which is applicable for the month preceding the month in which the date
of expiration or termination occurs), computed on the basis of a thirty (30) day month. 
  
 13.11 Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall wherever possible be cumulative with all other remedies at law or in equity. 
  
 13.12 Covenants and Conditions. Each provision of this Lease
performable by Tenant shall be deemed both a covenant and a condition. 
  
 13.13 Binding Effect; Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Tenant and subject to provisions of Article 13.2, this Lease shall bind the parties, their heirs, personal representatives,
successors and assigns. This Lease shall be governed by the laws of the State of Texas. 
  
 13.14 Subordination. 
  
 13.14.1 This Lease, at Landlord’s option, shall be subordinate to any mortgage, deed of trust, or any other hypothecation for security now and hereafter placed upon the Premises and to any and all advances made on the security thereof
and to all renewals, modifications, consolidations, replacements, and extensions thereof. Notwithstanding such subordination, Tenant’s right to quiet possession of the Premises shall not be disturbed if Tenant is not in default and so long as
Tenant shall pay the Rent and observe and perform all of the provisions of this Lease unless this Lease is otherwise 
  

 24 

 terminated pursuant to its terms. If any mortgagee or trustee shall elect to have this Lease prior to the lien of its
mortgage or deed of trust, and shall have given written notice thereof to Tenant, this Lease shall be deemed prior to such mortgage or deed of trust, whether this Lease is dated prior or subsequent to the date of said mortgage or deed of trust or
the date of recording thereof. 
  
 13.14.2 Tenant agrees to
execute any documents required to effectuate such subordination or to make this Lease prior to the lien of any mortgage or deed of trust, as the case may be, and failing to do so within ten (10) days after written demand does hereby make,
constitute, and irrevocably appoint Landlord as Tenant it’s attorney-in-fact and in Tenant’s name, place, and stead to do so. 
  
 13.15 Attorney’s Fees. If either party named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing
party in any such action, on trial or appeal, shall be entitled to his reasonable attorney’s fees to be paid by the losing party as fixed by the Court. 
  
 13.16 Venue. Venue for all purposes shall be Harris County, Texas. 
  
 13.17 Landlord’s Access. Landlord and Landlord’s agents shall have the right to enter the Premises during
business hours for the purpose of inspecting the same, showing the same to prospective purchasers or lenders, and making such alterations, repairs, improvements, or additions to the Premises, or to the building of which they are a part, as Landlord
may deem necessary or desirable. Landlord may, at any time, place on or about the Premises any ordinary “For Sale” signs; and Landlord may, at any time, during the last one hundred twenty (120) days of the Term hereof place on or about the
Premises any ordinary “For Sale or Lease” signs, all without rebate of Rent or liability to Tenant. 
  
 13.18 Auctions. Tenant shall not place any auction sign upon the Premises or conduct any auction thereon without Landlord’s prior written
consent. 
  
 13.19 Merger. The voluntary or other surrender
of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or
all of such subtenancies. 
  

 25 

 13.20 Corporate Authority. If Tenant is a corporation, each individual executing this Lease on
behalf of said corporation represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of said corporation in accordance with duly adopted resolution of the Board of Directors and said corporation or in
accordance with a duly adopted resolution of the Board of Directors of said corporation or in accordance with the Bylaws of said corporation, and that this Lease is binding upon said corporation in accordance with its terms. 
  
 13.21 Landlord’s Liability. Tenant agrees to look solely to
Landlord’s estate and interest in the land and building (or the [ground] lease of the building, if applicable) and the Premises for the satisfaction of any right or remedy of Tenant for the collection of any judgment (or other judicial process)
requiring the payment of money by Landlord, in the event of any liability by Landlord, and no other property or assets of Landlord (or the partners or members thereof, if Landlord is other than an individual or corporation) shall be subject to levy,
execution, or attachment or other enforcement procedure for the satisfaction of Tenant’s remedies under or with respect to this Lease, the relationship of Landlord and Tenant hereunder, or Tenant’s use and occupancy of the Premises or the
building, or any other liability of Landlord to Tenant. Upon notification to Tenant of a transfer of this Lease by Landlord, the Landlord shall be and hereby is entirely freed and relieved of any and all covenants, obligations, and liabilities of
Landlord hereunder, and it shall be deemed and construed as a covenant running with the land without further agreement between the parties or their successors in interest or between the parties or any transferee of title to the land and building (or
any applicable ground lease or any lease of the building) that the transferee or the lessee has assumed and agreed to carry out any and all such covenants, obligations, and liabilities of Landlord hereunder. The limitations of liability set forth in
this Section 13.21 shall apply only if they transfer Landlord’s interest is made in accordance with the provisions of Section 10.3 hereof. 
  
 13.22 Agency or Partnership-Gender. Nothing herein contained shall be deemed or construed by the parties hereto, nor by any third party, as
creating the relationship of principal and agent or of partnership or of joint venture 
  

 26 

 between parties hereto, it being understood and agreed that neither the method of computation of rental, nor any other
provisions contained herein, nor any acts of the parties hereto, shall be deemed to create any relationship between the parties hereto other than the relationship of Landlord and Tenant. Whenever herein the singular number is used, the same shall
include the plural, and words of any gender shall include each other gender. 
  
 13.23 Notice To Mortgagee. At any time when there is outstanding a mortgage, deed of trust or similar security instrument covering Landlord’s interest in the Premises, Tenant may not exercise any remedies
for default by Landlord hereunder unless and until the holder of the indebtedness secured by such mortgage, deed of trust or similar security instrument shall have received written notice of such default and a reasonable time [which shall not be
less than sixty (60) days] for curing such default shall thereafter have elapsed. Landlord agrees that should the Landlord be in default under any such mortgage and the Tenant cures any such default by making payments directly to such mortgagee, any
amounts paid by the Tenant to such mortgagee can be offset against all amounts owed the Tenant by the Landlord hereunder. 
  
 13.24 Quiet Enjoyment. Landlord agrees that if Tenant shall perform all of the covenants and agreements herein required to be performed by Tenant,
Tenant shall, subject to the terms of this Lease, have the peaceable and quiet enjoyment and possession of the Premises. 
  
 13.25 Final Agreement. This Lease contains the entire agreement between the parties, and no agreement shall be effective to change, modify, or
terminate this Lease, in whole or in part, unless such agreement is in writing and duly signed by the party against whom enforcement of such change, modification or termination is sought. 
  
 13.26 Exhibits. All exhibits attached hereto are incorporated herein by reference and made a part of this Lease for
all purposes. 
  
 13.27 Brokers. The parties hereto
acknowledge that neither party hereto were represented by any real estate brokers, and that no commissions are due to any brokers whatsoever respecting this Lease. 
  

 27 

 13.28 Notices. Whenever under this Lease provision is made for any demand, notice, or declaration
of any kind or where it is deemed desirable or necessary by either party to give or serve any such notice, demand, or declaration to the other party, it shall be in writing and served by messenger or sent by United States mail, certified return
receipt, postage prepaid, addressed at the addresses set forth hereinbelow: 
  

					
	To Landlord at:	 	Post Office Box 694
	 	 	Hempstead, Texas 77445
	 	 	Telephone Number: 	 	409.826.6201
	 	 	Facsimile Number: 	 	409.826.2950
		
	with copy to:	 	Albert S. Weycer, Esq.
	 	 	Weycer, Kaplan, Pulaski & Zuber, P.C.
	 	 	Eleven Greenway Plaza
	 	 	1400 Summit Tower
	 	 	Houston, Texas 77046-1104
	 	 	Telephone Number: 	 	713.961.9045
	 	 	Facsimile Number: 	 	713.961.5341
		
	To Tenant at:	 	Four Duke Place
	 	 	Norwalk, Connecticut 06854
	 	 	Telephone Number: 	 	203.853.0700
	 	 	Facsimile Number: 	 	203.854.9601
		
	with copy to:	 	Barbara A. Young, Esq.
	 	 	Levett, Rockwood & Sanders
	 	 	33 Riverside Avenue
	 	 	Post Office Box 5116
	 	 	Westport, Connecticut 06881
	 	 	Telephone Number: 	 	203.222.0885
	 	 	Facsimile Number: 	 	203.226.8025

  
 14. DTPA WAIVER

  
 14.1 As a material consideration for Landlord’s entering
into this Lease, Tenant acknowledges and agrees as follows: 
  
 TENANT HEREBY WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ., TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN
ATTORNEY OF TENANT’S OWN SELECTION, TENANT VOLUNTARILY CONSENTS TO THIS WAIVER. 
  

 28 

 15. ENVIRONMENTAL MATTERS 
  
 15.1 From and after the commencement of the Term of this Lease, Tenant shall prevent the presence, use, generation, release,
discharge, storage, disposal, or transportation of any Hazardous Materials on, under, in, above, to, or from the Premises other than in strict compliance with all applicable federal, state, and local laws, regulations, and order. For the purposes of
this section, “Hazardous Materials” shall refer to any substances, materials, and wastes that are or become regulated as hazardous or toxic substances under any applicable local, state, or federal law, regulation, or order. For occurrences
or events which occur from and after the commencement of the Term of this Lease, Tenant shall indemnify, defend, and hold Landlord harmless from and against: 
  

15.1.1 Any loss, cost, expense, claim, or liability arising out of any investigation, monitoring, clean-up, containment, removal, storage, or
restoration work (“Remedial Work”) required by or incurred by Landlord or any nongovernmental entity or person in a reasonable belief that such work is required by any applicable federal, state, or local law, governmental agency, or
political subdivision; and 
  
 15.1.2 Any claims of third parties
for loss, injury expense, or damage arising out of the presence, release, or discharge of any Hazardous Materials on, under, in, above, to, or from the Premises. In the event any Remedial Work is so required under any applicable federal, state, or
local law, Tenant shall perform or cause to be performed the Remedial Work in compliance with such law, regulation, or order. All Remedial Work shall be performed by one or more contractors under the supervision of a consulting engineer, each
selected by Tenant and approved in advance in writing by Landlord. In the event Tenant shall fail to commence the Remedial Work in a timely fashion or fail to prosecute diligently the Remedial Work to completion, Landlord may, but shall not be
required to, cause the Remedial Work to be performed, subject fully to the indemnification provisions of this paragraph. This Article shall survive the termination of said Lease. 
  
 16. OPTION TO PURCHASE 
  
 16.1 Option to Purchase. 
  
 16.1 Landlord hereby gives Tenant the exclusive option (“Option”) to purchase the Premises at any time during 
  

 29 

 the Term of this Lease, subject to the terms and conditions hereinafter set forth, for a purchase price of One Million
and No/100 Dollars ($1,000,000.00) in cash (“Purchase Price”) to be paid at the Closing (hereinafter defined) in the event Option is exercised by the Tenant. Tenant must exercise its Option to purchase the Premises by providing Landlord
with written notice of such exercise during the Term of this Lease. Should the Tenant fail to exercise its Option for the purchase of the Premises within the Term of the Lease, then such Option shall be considered null and void. 
  
 16.2 Title Approval. Landlord has delivered to Tenant on the date of
this Lease a Commitment for Title Insurance dated March 1, 1999 issued by Stewart Title Company, under G.F. Number 99110602 (the “Commitment”) and survey of the Premises updated as of March 10, 1999 and prepared by E.E. Coon Surveying,
Inc. (the “Survey”). At this time, Tenant has no objections to the Commitment and Survey referred to in the preceding sentence, and makes no objection thereto; however, if Tenant exercises its Option to purchase, Landlord shall cause
Tenant to be furnished with an updated Commitment within ten (10) days after Landlord receives Tenant’s exercise of the Option, and Tenant may within the same ten (10) day period, elect to obtain an updated Survey of the Premises at its sole
cost and expense; and in the event the updated Commitment or the Survey of the Premises shall reveal any material changes from the Commitment and/or the Survey delivered as provided for in the first sentence of this Article 16.2, then Tenant shall
have ten (10) days after receipt to make written objections thereto to Landlord at the address provided herein. Landlord shall, upon receipt of such objections, have a period of thirty (30) days (from receipt) within which to cure such objections,
and Landlord agrees to utilize reasonable efforts and due diligence to cure the same, provided; however, that Landlord shall in no event be required to spend any money or to commence litigation in order to cure Tenant’s objections, except
Landlord shall be obligated to release any additional monetary exceptions created by landlord, judgment liens and tax liens. If Tenant’s objections are not satisfied within such thirty (30) day period, then Tenant may (i) terminate the exercise
of the Option and at that point neither Landlord nor Tenant shall have any further rights or obligations with respect to the Option to purchase granted herein (however, the Lease shall continue in effect if within the Term hereof), or (ii) waive the
unsatisfied objections and close the transaction. In the event Tenant fails to notify Landlord, in writing, of its election from (i) or (ii) in the preceding sentence, Tenant shall be deemed to have 
  

 30 

 elected to waive the unsatisfied objections and shall proceed to the Closing (hereinafter defined) of the purchase of the
Premises as otherwise provided herein. 
  
 16.3 Closing.
The Closing of the sale pursuant to Tenant’s exercise of the Option (the “Closing”) shall take place at a Title Company subject to the following terms: 
  
 16.3.1 The Closing shall occur at a time mutually acceptable to Landlord and Tenant the later to occur of (i) within
forty-five (45) days after Landlord’s receipt of Tenant’s written exercise of the Option, or (ii) when Landlord has removed or released any monetary exceptions created by Landlord, judgment liens and tax liens. 
  
 16.3.2 At the Closing, Landlord shall deliver to Tenant, at Landlord’s
sole cost and expense, the following: 
  
 16.3.2 (a) A duly
executed and acknowledged Special Warranty Deed conveying good and indefeasible title in fee simple to all of the Premises, free and clear of any and all liens, encumbrances, conditions, easements, reservations and restrictions except those noted in
the Schedule B of the Commitment. The form of such Special Warranty Deed shall be as specified in Exhibit “B,” attached hereto and made a part hereof. 
  

16.3.2 (b) An Owner’s Policy of Title Insurance (the “Title Policy”) issued by Stewart Title Company in the full amount of the Purchase
Price, dated as of Closing, insuring Tenant’s fee simple title to the Premises to be good and indefeasible subject only to those title exceptions permitted herein, or as may be approved or waived by Tenant in writing, and the standard printed
exceptions contained in the usual form of the Title Policy, provided, however: 
  
 16.3.2 (b)(i) the exception as to area and boundaries shall be deleted except for “any shortages in area” and if deleted, such deletion shall be an expense of Tenant; 
  
 16.3.2 (b)(ii) the exception as to restrictive covenants shall be endorsed
“None of Record,” unless any existing restrictive covenants are approved (or objection thereto is waived) by Tenant; 
  
 16.3.2 (b)(iii) the exception as to taxes shall be limited to taxes for the current year and subsequent years, and subsequent assessments for prior years
due to changes in land usage or ownership; 
  

 31 

 16.3.2 (c) A Bill of Sale containing special warranties to title, conveying title free and clear of all
liens, to any personal property owned by Landlord and specified herein and an assignment of leases, prepaid rents, and security deposits, and to the extent assignable, licenses and permits, maintenance, management or other contracts, warranties or
guaranties, duly executed by Landlord which pertain to the Premises; 
  
 16.3.2 (d) Furnish evidence of its capacity and authority for the closing of this transaction; 
  
 16.3.2 (e) Execute all other necessary documents to close this transaction. 
  
 16.3.3 At the Closing, Tenant shall perform the following: 
  
 16.3.3 (a) Pay the Purchase Price in cash; 
  
 16.3.3 (b) Furnish evidence of its capacity and authority for the closing of this transaction; and 
  
 16.3.3 (c) Execution of all other necessary documents to close this
transaction. 
  
 16.4 Prorations. Assessments, current
taxes, and any rents, and maintenance fees shall be prorated at the date of Closing. If ad valorem taxes of the year in which the sale is closed are not available on the Closing date, proration of taxes shall be made on the basis of taxes assessed
in the previous year, with a subsequent cash adjustment of such proration to be made between Landlord and Tenant, if necessary, when actual tax figures are available. Any special assessments applicable to the Premises for improvements previously
made to benefit the Premises shall be paid by Landlord. Landlord shall pay to Tenant at Closing in cash the amount of any deposits paid to Landlord by tenants of the Premises, including, but not limited to, all rental security, cleaning, utility,
key, damages, and other deposits. All other income and ordinary operating expenses of the Premises, including, but not limited to, public utility charges, maintenance, management and other normal operating charges shall be prorated as of the date of
Closing. 
  

 32 

 16.5 Closing Costs. 
  
 16.5.1 Landlord’s Expenses. All costs of releasing existing loans and recording the releases; base premium for
Owner’s Title Policy; survey; tax statements 1/2 of any escrow fee; preparation of Deed; other expenses stipulated to be paid by Landlord under other provisions of this Lease. 
  
 16.5.2 Tenant’s Expenses. All expenses incident to any loan obtained by tenant including procurement fees,
preparation of Note, Deed of Trust, and other loan documents, recording fees, Mortgagee’s Title Policy, prepayable interest, credit reports; 1/2 of any escrow fee; copies of restrictions, easements, reservations, or conditions affecting the
Premises; and expenses stipulated to be paid by Tenant under other provisions of this Lease. 
  
 16.6 Existing Mortgage. In the event Tenant desires to assume Landlord’s existing mortgage on the Premises, Tenant shall have the right to do so and Landlord shall utilize their best efforts in order to
obtain approval of said assumption from any existing lending institution holding a lien on the Premises. In the event of an assumption, the cash portion of the Purchase Price to be paid to the Landlord by the Tenant at Closing shall be the
difference between the Purchase Price and the amount of the assumed loan at the time of Closing. In the event of such assumption, Tenant shall execute a deed of trust to secure such assumption. 
  
 16.7 Memorandum. Contemporaneously with the date hereof, Landlord and
Tenant shall enter into a Memorandum of Option in the form attached hereto and made a part hereof as Exhibit “C,” which shall be the only document to be filed of record affecting this Lease. 
  
 17. CROSS DEFAULT 
  
 17. Cross Default. Should Tenant be in default under the promissory
note, guaranty, security agreement, collateral pledge or any other documentation executed by the Tenant or A-G Geophysical Products, Inc. of even date herewith to the Landlord, such default shall likewise constitute an Event of Default hereunder and
the Landlord shall have entitlement to all remedies specified in Article 11 hereof. 
  

 33 

 The parties hereto have executed this Lease on the respective dates specified immediately adjacent to
their respective signatures. 
  

					
	 	 	LANDLORD
		
	Date: April 20, 1999	 	 /s/ Albert H. Gerrans, Jr.

	 	 	Albert H. Gerrans, Jr.
		
	Date: April 20, 1999	 	 /s/ Patricia Gerrans

	 	 	Patricia Gerrans
		
	 	 	TENANT:
		
	 	 	Bolt Technology Corporation,
	 	 	a Connecticut corporation
			
	Date: April 20, 1999	 	By:	 	 /s/ Raymond M. Soto

	 	 	Name:	 	Raymond M. Soto
	 	 	Title:	 	Chairman and President

  

 34Amended and Restated Credit Agreement with Bank of the West

 Exhibit 10.19 
  
 AMENDED AND RESTATED CREDIT AGREEMENT 
  
 by and between 
  
 BANK OF THE WEST, 
 as the lender

  
 and 
  
 DIEDRICH COFFEE, INC., 
 as the borrower 
  
 Dated as of May 10, 2004 

 AMENDED AND RESTATED CREDIT AGREEMENT 
  
 THIS AMENDED AND RESTATED CREDIT AGREEMENT (the “Agreement”) is made and dated as of the 10th day of May, 2004, by
and between BANK OF THE WEST (the “Lender”), and DIEDRICH COFFEE, INC., a Delaware corporation (the “Company”). 
  
 RECITALS 
  
 A. The Company and the Lender are parties to that certain Credit Agreement dated as of September 3, 2002 (as amended to date, the “Existing Credit
Agreement”). 
  
 B. The Company and the Lender have agreed to
modify the Existing Credit Agreement in certain respects and for convenience of reference to amend and restate the Existing Credit Agreement on the terms and subject to the conditions set forth herein. 
  
 NOW, THEREFORE, in consideration of the above Recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 
  
 AGREEMENT 
  
 1. Working Capital Facility 
  
 1(a) Credit Limit. Subject to the terms and conditions set forth herein, from and after the Effective Date, the Lender agrees that it shall from
time to time to but not including the Working Capital Facility Maturity Date make loans (each, a “Loan” and, collectively, the “Loans”) to the Company in an aggregate amount not to exceed at any one time outstanding the Working
Capital Facility Credit Limit. Principal amounts prepaid hereunder prior to the Working Capital Facility Maturity Date may be reborrowed on the terms and subject to the conditions set forth in Paragraph 6(b) below, it being expressly
acknowledged and agreed that the credit facility provided under this Paragraph 1 is a revolving credit facility. Any “Working Capital Loans” (as defined in the Existing Credit Limit) outstanding as of the Effective Date shall
automatically be deemed to be Loans outstanding hereunder. 
  
 1(b) Principal Repayment. The Company shall pay the principal amount of each Loan on the Working Capital Facility Maturity Date. 
  
 1(c) Payment of Interest. Interest on Loans shall be payable at the rates and at the times provided in Paragraphs 3(a) and
3(b) below. 
  
 1(d) Use of Proceeds. The proceeds
of Loans shall be used for working capital purposes. 
  
 2.
Letter of Credit Facility. 
  
 2(a) Credit Limit.
On the terms and subject to the conditions set forth herein, the Lender shall from time to time from and after the Effective Date, issue standby letters of credit in support of various working capital obligations of the Company and in support of the
Company’s workers’ compensation obligations (each a “Letter of Credit” and, collectively, the “Letters of Credit”) for the account of the Company; provided, however that in no event shall the Lender issue any Letter of
Credit 
  

 1 

 hereunder if after giving effect to such issuance the aggregate dollar amount of Outstanding Letters of Credit and
unrepaid L/C Drawings with respect thereto exceeds the Letter of Credit Facility Credit Limit. Any “Outstanding Letter of Credit” (as defined in the Existing Credit Limit) as of the Effective Date shall automatically be deemed to be an
Outstanding Letter of Credit hereunder. 
  
 2(b) Issuance of
Letters of Credit. Each Letter of Credit, and any amendment, renewal or extension thereof, shall be requested by the Company at least thirty (30) Business Days prior to the proposed issuance, amendment, renewal or extension date by delivery to
the Lender of a duly executed Letter of Credit Application, accompanied by all other L/C Documents which the Lender may require as a condition to the requested action. No Letter of Credit shall have a stated expiration date (or provide for the
extension of such stated expiration date or the issuance of any replacement therefor) later than October 15, 2004. 
  
 2(c) Repayment of L/C Drawings. Each L/C Drawing shall be payable in full by the Company on the date of such L/C Drawing. 
  
 2(d) Absolute Obligation to Repay. The Company’s obligation to
repay L/C Drawings shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and irrespective of any set-off, counterclaim or defense to payment which the Company may have or have had, against any Lender or any
other Person, including, without limitation, any set-off, counterclaim or defense based upon or arising out of: 
  
 (1) Any lack of validity or enforceability of this Agreement or any of the other Loan Documents; 
  
 (2) Any amendment or waiver of or any consent to departure
from the terms of any Letter of Credit; 
  
 (3)
The existence of any claim, setoff, defense or other right which the Company or any other Person may have at any time against any beneficiary or any transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting); 
  
 (4) Any allegation
that any demand, statement or any other document presented under any Letter of Credit is forged, fraudulent, invalid or insufficient in any respect, or that any statement therein is untrue or inaccurate in any respect whatsoever or that variations
in punctuation, capitalization, spelling or format were contained in the drafts or any statements presented in connection with any L/C Drawing; 
  
 (5) Any payment by the Lender under any Letter of Credit against presentation of a draft or certificate that does not strictly comply with
the terms of such Letter of Credit, or any payment made by the Lender under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of any Letter of Credit, including any arising in connection with any insolvency proceeding; 
  
 (6) Any exchange, release or non-perfection of any Collateral; or 
  

 2 

 (7) Any other circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of the Company. 
  
 Nothing contained herein shall constitute a waiver of any rights of the Company against the Lender arising out of the gross negligence or willful misconduct of the Lender
in connection with any Letter of Credit issued hereunder; provided, however, that the exercise of such rights is subject to and conditioned upon the prior payment in full of all Obligations, including, without limitation, unrepaid L/C Drawings, and
termination of the credit facility evidenced hereby. 
  
 2(e)
Uniform Customs and Practice. The Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce most recently at the time of issuance of any Letter of Credit shall (unless otherwise expressly
provided in such Letter of Credit) apply to such Letter of Credit. 
  
 2(f) Relationship to Letter of Credit Applications. In the event of any inconsistency between the terms and provisions of this Agreement and the terms and provisions of the Letter of Credit Applications, the terms and provisions of
this Agreement shall supersede and govern. 
  
 3. Pricing
Provisions. 
  
 3(a) Applicable Interest Rates. The
Company shall pay interest on Loans outstanding from the date disbursed to but not including the date of payment, at a rate per annum equal to, at the option of and as selected by the Company from time to time and subject to provisions set forth in
this Paragraph 3: 
  
 (1) The floating
Reference Rate during the applicable computation period plus one percent (1.00%); or 
  
 (2) The LIBOR Rate for the selected Interest Period plus three and one-quarter percent (3.25%). 
  
 3(b) Interest Billing and Payment Requirements. Interest accruing on
Loans shall be payable monthly, in arrears, for each calendar month on the last Business Day of such calendar month in the amount set forth in an interest billing for such Loans delivered to the Company by the Lender (which delivery may be
telephonic). 
  
 3(c) Requests for and Funding of Loans.

  
 (1) Subject to the timing provisions relating
to the funding of or conversion into LIBOR Rate Loans provided in Paragraph 3(d) below, if the Company desires to request a Loan, the Company shall deliver a Loan Request therefor to the Lender no later than: (i) in the case of a Loan to be
initially funded as a LIBOR Rate Loan, 11:00 a.m. (Los Angeles time) on the proposed funding date, and (ii) in the case of a Loan to be initially funded as a Reference Rate Loan, 2:30 p.m. (Los Angeles time) on the proposed funding date. 

 
 (2) The principal amount of each LIBOR Rate Loan
(including any Reference Rate Loan which is converted into a LIBOR Rate Loan) shall be in the minimum amount of $50,000.00. 
  

 3 

 (3) All Loan Requests shall be irrevocable and shall be delivered in writing (which may
be by facsimile transmission), or telephonically to be promptly confirmed in writing (which may be by facsimile transmission). 
  
 (4) Subject to the conditions set forth in Paragraph 6(b) below, the Lender shall make available each requested Loan by crediting
the amount thereof, in immediately available same day funds, to the Funding Account at the opening of business of the Lender at its Contact Office on the first Business Day immediately following the receipt of such Loan Request. 
  
 3(d) Conversion and Continuation Options. 
  
 (1) The Company may elect from time to time to convert
portions of outstanding LIBOR Rate Loans to Reference Rate Loans or to convert portions of outstanding Reference Rate Loans to LIBOR Rate Loans by giving the Lender irrevocable notice of such election: (i) in the case of LIBOR Rate Loans being
converted into Reference Rate Loans, no later than 2:30 p.m. (Los Angeles time) on the date of the proposed conversion, and (ii) in the case of Reference Rate Loans being converted into LIBOR Rate Loans, no later than 11:00 a.m. (Los Angeles time)
on the date of the proposed conversion. Any conversion of LIBOR Rate Loans to Reference Rate Loans may only be made on the last day of the applicable Interest Period. No Reference Rate Loan may be converted into a LIBOR Rate Loan if an Event of
Default or Potential Default has occurred and is continuing at the requested conversion date. 
  
 (2) The Company may elect from time to time to have outstanding LIBOR Rate Loans continued as LIBOR Rate Loans upon the expiration of the
Interest Period applicable thereto by giving the Lender irrevocable notice of such election no later than 11:00 a.m. (Los Angeles time) on the last day of such Interest Period; provided, however, that no LIBOR Rate Loan may be continued as such when
any Event of Default or Potential Default has occurred and is continuing, but shall be automatically converted to a Reference Rate Loan on the last day of the Interest Period applicable thereto. If the Company shall fail to give notice of its
election to continue a LIBOR Rate Loan as a LIBOR Rate Loan as provided above, the Company shall be deemed to have elected to convert such LIBOR Rate Loan to a Reference Rate Loan on the last day of the applicable Interest Period. 
  
 (3) Each request for the conversion into or continuation of
a LIBOR Rate Loan shall be evidenced by the timely delivery by the Company to the Lender of a duly executed Loan Request (which delivery may be by facsimile transmission) or, but only with the prior agreement of the Lender, telephonically.

  
 3(e) Illegality. Notwithstanding any other provisions
herein, if any law, regulation, treaty or directive or any change therein or in the interpretation (whether by the Lender, in its reasonable judgment, or by any Governmental Authority) or application thereof, shall make it unlawful for the Lender to
make or maintain LIBOR Rate Loans as contemplated by this Agreement: (1) the commitment of the Lender hereunder to make or to continue LIBOR Rate Loans or to convert Reference Rate Loans to LIBOR Rate Loans shall forthwith be canceled and (2) Loans
then outstanding as LIBOR Rate Loans, if any, shall be converted automatically to Reference Rate Loans at the end of their respective Interest Periods or within such earlier period as may be required by law. In the event of a conversion of any LIBOR
Rate Loan prior to the end of its applicable Interest Period the Company hereby agrees promptly to pay the Lender, upon demand, the amounts required pursuant to Paragraph 3(h) below, it being agreed and understood that such conversion shall
constitute a prepayment for all purposes hereof. The provisions hereof shall survive the termination of this Agreement and payment of the outstanding Loans and all other Obligations. 
  

 4 

 3(f) Requirements of Law; Increased Costs. In the event that any applicable law, order,
regulation, treaty or directive issued by any central bank or other governmental authority, agency or instrumentality or in the governmental or judicial interpretation or application thereof, or compliance by the Lender with any request or directive
(whether or not having the force of law) issued by any central bank or other governmental authority, agency or instrumentality: 
  
 (1) Does or shall subject the Lender to any tax of any kind whatsoever with respect to this Agreement or any Loans made hereunder, or
change the basis of taxation of payments to the Lender of principal, fee, interest or any other amount payable hereunder (except for change in the rate of tax on the overall net income of the Lender); 
  
 (2) Does or shall impose, modify or hold applicable any
reserve, capital requirement, special deposit, compulsory loan or similar requirements against assets held by, or deposits or other liabilities in or for the account of, advances or loans by, or other credit extended by, or any other acquisition of
funds by, any office of the Lender which are not otherwise included in the determination of interest payable on the Obligations; or 
  
 (3) Does or shall impose on the Lender any other condition; 
  
 and the result of any of the foregoing is to increase the cost to the Lender of making, renewing or maintaining any Loan or to reduce any
amount receivable in respect thereof or the rate of return on the capital of the Lender or any corporation controlling the Lender, then, in any such case, the Company shall promptly pay to the Lender, upon its written notice and demand made through
the Lender, any additional amounts necessary to compensate the Lender for such additional cost or reduced amounts receivable or rate of return as determined by the Lender with respect to this Agreement or Loans made hereunder. If the Lender becomes
entitled to claim any additional amounts pursuant to this Paragraph 3(f), it shall promptly notify the Company of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to the
foregoing sentence containing the calculation thereof in reasonable detail submitted by the Lender to the Company shall be conclusive in the absence of manifest error. The provisions hereof shall survive the termination of this Agreement and payment
of the outstanding Loans and all other Obligations. 
  
 3(g)
Funding. The Lender shall be entitled to fund all or any portion of the Loans in any manner it may determine in its sole discretion, including, without limitation, in the Grand Cayman inter-bank market, the London inter-bank market and within
the United States. 
  
 3(h) Prepayment Premium. In addition
to all other payment obligations hereunder, in the event: (1) a LIBOR Rate Loan is prepaid prior to the last day of the applicable Interest Period, whether following the occurrence of an Event of Default or otherwise, or (2) the Company shall fail
to continue or to make a conversion to a LIBOR Rate Loan after the Company has given notice thereof as provided in Paragraph 3(d) above, then the Company shall immediately pay to the Lender an additional premium sum compensating the Lender
for losses, costs and expenses incurred by the Lender in connection with such prepayment or such failure to borrow, continue or convert. If the Lender becomes entitled to claim any additional amounts pursuant to this Paragraph 3(h), it shall
promptly notify the Company of the event by reason of which it has become so entitled. A certificate as to any additional 
  

 5 

 amounts payable pursuant to the foregoing sentence containing the calculation thereof in reasonable detail submitted by
the Lender to the Company shall be conclusive in the absence of manifest error. Determination of amounts payable under this Paragraph 3(h) in connection with any LIBOR Rate Loan shall be calculated as though the Lender funded such LIBOR Rate
Loan through the purchase of a deposit of the type and maturity corresponding to the deposit used as a reference in determining the interest rate applicable to such LIBOR Rate Loan, whether in fact that is the case or not. The provisions of this
Paragraph 3(h) shall survive the termination of this Agreement and the payment of all Loans and all other Obligations. 
  
 3(i) Default Interest. Following the occurrence and during the continuance of an Event of Default, all Obligations outstanding shall, unless such
requirement is waived in writing by the Lender, bear interest at a default rate which is three percent (3%) in excess of the rate or rates otherwise payable under this Agreement, in either case until the earlier of (1) the date on which such Event
of Default shall be cured or waived pursuant to the terms of this Agreement, and (2) the date on which all Obligations (including, without limitation, all accrued and unpaid default interest) shall be paid in full, said default interest to be
payable by the Company upon demand of the Lender. 
  
 3(j)
Letter of Credit Fees. The Company shall pay to the Lender: 
  
 (1) On or before the date of issuance by the Lender of a Letter of Credit, a non-refundable issuance fee in an amount equal to the greater of: (i) $410.00, or (ii) the per annum rate of two percent (2.00%) multiplied
by the face amount of such Letter of Credit for the effective term of such Letter of Credit; 
  
 (2) From time to time upon demand by the Lender, such additional fees and charges, including, without limitation, renewal, increase,
extension and transfer fees and miscellaneous charges relating to the Letters of Credit as the Lender customarily charges with respect to similar letters of credit issued by it; and 
  
 (3) All costs incurred and payments made by the Lender by reason of any further assessment, reserve, deposit
or similar requirement or any surcharge, tax or fee imposed upon it or as a result of its compliance with any directive or requirement of any regulatory authority pertaining or relating to any Letter of Credit. 
  
 3(k) Computations. All computations of interest and fees payable
hereunder shall be based upon a year of three hundred and sixty (360) days for the actual number of days elapsed. 
  
 4. Miscellaneous Provisions. 
  
 4(a) Open Book Account. The obligation of the Company to repay the Loans shall be evidenced by notations on the books and records of the Lender. If
requested by the Company from time to time, the Lender shall deliver a statement of account to the Company setting forth the unpaid balance of Loans outstanding hereunder. Such statement shall (absent clerical error) be deemed conclusively correct
and accepted by the Company unless the Company notifies the Lender to the contrary within ten (10) Business Days following delivery of such statement. Upon any advance of any Loan or payment or prepayment of any Loan, the Lender is hereby authorized
to record the date and amount of each such advance made by the Lender, or the date and amount of each such payment or prepayment of principal of the Loans on its books (or by any analogous method the Lender may elect consistent with its customary
practices) and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded absent manifest error. The failure of the Lender to make any such notation shall not affect in any manner or to
any extent the Company’s Obligations hereunder. 
  

 6 

 4(b) Nature and Place of Payments. All payments made on account of the Obligations shall be made
by the Company to the Lender without setoff or counterclaim, in lawful money of the United States of America in immediately available same day funds, free and clear of and without deduction for any taxes, fees or other charges of any nature
whatsoever imposed by any taxing authority and must be received by the Lender by 2:30 p.m. (Los Angeles time) on the day of payment, it being expressly agreed and understood that if a payment is received after the applicable deadline by the Lender,
such payment will be considered to have been made by the Company on the next succeeding Business Day and interest thereon shall be payable by the Company at then applicable rate during such extension. All payments on account of the Obligations shall
be made to the Lender through the Contact Office. If any payment required to be made by the Company hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding Business Day and
interest thereon shall be payable at then applicable rate during such extension. The Lender is hereby irrevocably authorized by the Company, without prior notice to the Company, but is not obligated, to debit any general operating accounts of the
Company maintained with the Lender for the full amount of monthly and periodic interest billings, fees and other Obligations payable hereunder which the Lender is authorized to collect; provided, however, that the failure of the Lender to so debit
such accounts shall not in any manner or to any extent affect the obligation of the Company to pay such Obligations as provided herein and in the other Loan Documents. 
  
 4(c) Prepayments. 
  
 (1) The Company may prepay Loans (other than LIBOR Rate Loans) in whole or in part at any time, it being agreed and understood that LIBOR
Rate Loans outstanding may only be repaid at the end of their respective Interest Periods. 
  
 (2) In the event notwithstanding the prohibition set forth in subparagraph (1) above a LIBOR Rate Loan is prepaid prior to the end of its
Interest Period, the Company shall concurrently pay to the Lender all amounts, if any, required pursuant to Paragraph 3(h) above. 
  
 4(d) Allocation of Payments Received Following Default. Following the occurrence of an Event of Default and acceleration of the Obligations, all
amounts received by the Lender on account of the Obligations shall be applied by the Lender as follows: 
  
 (1) First, to the payment of reasonable expenses incurred by the Lender in connection with the enforcement of its rights under the Loan
Documents, including, without limitation, all costs and expenses of collection, attorneys’ fees, court costs and foreclosure expenses; 
  
 (2) Then, to the Lender until all outstanding Loans, interest accrued thereon, and unrepaid L/C Drawings have been paid in full, said
amounts to be allocated first to interest and then, but only after all accrued interest has been paid in full, to principal; 
  
 (3) Then, to the Lender on account of all other outstanding Obligations until the same have been paid and performed in full; 

 

 7 

 (4) Then, and if but only if there remain Outstanding any Letters of Credit, to the
Lender to hold as cash collateral for the obligation of the Company to reimburse any future L/C Drawings as the same may occur, until there are no further Outstanding Letters of Credit; and 
  
 (5) Then, to such Persons as may be legally entitled
thereto. 
  
 4(e) Telephonic/Facsimile Communications. Any
agreement of the Lender herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Company. The Lender shall be entitled to rely on the authority of any Person reasonably believed by the
Lender to be an authorized Person and the Lender shall not have any liability to the Company or other Person on account of any action taken or not taken by the Lender in reasonable reliance upon such telephonic or facsimile notice. The obligation of
the Company to repay the Loans shall not be affected in any way or to any extent by any failure by the Lender to receive written confirmation of any telephonic or facsimile notice or the receipt by the Lender of a confirmation which is at variance
with the terms understood by the Lender to be contained in the telephonic or facsimile notice. 
  
 5. Collateral and Credit Support Documents. 
  
 5(a) Collateral Security. In connection with the Existing Credit Agreement, the following documents were delivered to the Lender: (1) that certain Security Agreement dated as of September 3, 2002 between the
Company and the Lender, (2) that certain Supplemental Security Agreement (Trademarks) dated as of September 3, 2002 between the Company and the Lender, and (3) that certain Irrevocable Power of Attorney dated as of September 3, 2002 executed by the
Company in favor of the Lender (collectively, the “Existing Company Collateral Documents”). As collateral security for the Obligations, on or before the Effective Date the Company shall execute and deliver to the Lender a reaffirmation of
the Existing Company Collateral Documents in form and substance satisfactory to the Lender (the “Company Reaffirmation”) pursuant to which the Company will affirm the continuing effectiveness of the Existing Company Collateral Documents
and affirm that such documents apply to the Obligations of the Company under the Loan Documents. 
  
 5(b) Guarantor Credit Support. In connection with the Existing Credit Agreement, the following documents were delivered to the Lender: (1)
Guaranties dated as September 3, 2002 executed by each of the Initial Guarantors in favor of the Lender, (2) Guarantor Security Agreements dated as of September 3, 2002 between each of the Initial Guarantors and the Lender, (3) that certain
Supplemental Security Agreement (Trademarks) dated as of September 3, 2002 between Coffee People, Inc. and the Lender, (4) that certain Irrevocable Power of Attorney dated as of September 3, 2002 executed by Coffee People, Inc. in favor of the
Lender, (5) that certain Supplemental Security Agreement (Trademarks) dated as of September 3, 2002 between Gloria Jean’s Gourmet Coffees Corp. and the Lender, and (6) that certain Irrevocable Power of Attorney dated as of September 3, 2002
executed by Gloria Jean’s Gourmet Coffees Corp. in favor of the Lender (collectively, the “Existing Guarantor Credit Support Documents”). As additional credit support for the Obligations, on or before the Effective Date, the Company
shall cause each of the Initial Guarantors to execute and deliver to the Lender a reaffirmation of the Existing Guarantor Credit Support Documents in form and substance satisfactory to the Lender (the “Guarantor Reaffirmation”) pursuant to
which each of the Guarantors will affirm that such documents apply to the Obligations under the Loan Documents. The Guarantor Reaffirmation shall also amend the Guarantor Security Agreement executed by Gloria Jean’s Gourmet Coffees Corp. to
release the Lien of the Lender on certain trademarks granted thereunder. 
  

 8 

 5(c) Additional Guarantor Credit Support. As additional credit support for the Obligations, the
Company shall cause each Subsidiary of the Company formed or acquired after the Effective Date to execute and deliver to the Lender, on the date of the formation or acquisition of such Subsidiary, each of the following: (1) a Guaranty, (2) a
Guarantor Security Agreement, (3) if required by the Lender, Supplemental PTO Agreements, and (4) such authorizations to file UCC financing statements as the Lender shall request. 
  
 5(d) Additional Documents. The Company agrees to execute and deliver and to cause to be executed and delivered to the
Lender on or before the Effective Date and from time to time thereafter, such additional documents, instruments and agreements, including, without limitation, notices to and consents of third parties, as are in the Lender’s judgment necessary
or desirable to obtain for the Lender the benefit of the Collateral and the Loan Documents. 
  
 6. Conditions Precedent. 
  
 6(a) Effective Date. As conditions precedent to the effectiveness of this Agreement: 
  
 (1) The Company shall have delivered or shall have had delivered to the Lender, in form and substance satisfactory to the Lender and its
counsel and duly executed and certified as required, each of the following: 
  
 (i) This Agreement; 
  
 (ii) The Company Reaffirmation; 
  
 (iii) The Guarantor Reaffirmation; 
  
 (iv) All UCC financing statements and other documents, instruments and agreements deemed necessary or appropriate by the Lender to confirm, obtain and maintain in favor of the Lender a first priority, perfected security interest in and lien
upon the Collateral, accompanied by such evidence as the Lender may reasonably require that after the filing of such UCC financing statements and other documents, as applicable, the Lender will have a first priority, perfected security interest in
the Collateral to the extent required by the Lender; 
  
 (v) Corporate resolutions relating to the authorization of this Agreement and the transactions contemplated hereby and incumbency certificates for the Company and the Guarantors, as the Lender may request; and 
  
 (2) All acts and conditions (including, without limitation,
the obtaining of any necessary regulatory approvals and the making of any required filings, recordings or registrations) required to be done and performed and to have happened precedent to the execution, delivery and performance of the Loan
Documents and to constitute the same legal, valid and binding obligations, enforceable in accordance with their respective terms, shall have been done and performed and shall have happened in due and strict compliance with all applicable laws.

  
 If the conditions precedent set forth in this Paragraph 6(a) shall not
have occurred on or before may 10, 2004, then any agreement on the part of the Lender hereunder shall, at the option of the Lender, as evidenced by written notice to such effect given by the Lender to the Company, terminate and be of no further
force or effect. 
  

 9 

 6(b) All Credit Events. As conditions precedent to the Lender’s obligation to fund any Loan
or issue any Letter of Credit on or after the Effective Date or to permit the continuation of any LIBOR Rate Loan as such or the conversion of any Loan to a LIBOR Rate Loan, at and as of the date of such funding, continuation or conversion:

  
 (1) In the case of a Loan, the Company shall
have delivered a written Loan Request therefore, and the Company shall be in compliance with the limits set forth in Paragraph 1(a) above; 
  
 (2) In the case of the issuance of a Letter of Credit, there shall have been delivered to the Lender a Letter of Credit Application and
all required L/C Documents relating thereto, and the Company shall be in compliance with the limits set forth in Paragraph 2(a) above; 
  
 (3) The representations and warranties of the Company and its Subsidiaries contained in the Loan Documents shall be accurate and complete
in all material respects as if made on and as of the date of such funding, continuation or conversion; and 
  
 (4) There shall not have occurred and be continuing an Event of Default or Potential Default. 
  
 By delivering a Loan Request to the Lender hereunder, the Company shall be deemed to have
represented and warranted the accuracy and completeness of the statements set forth in subparagraphs (b)(1) through (b)(4) above, as applicable. 
  
 7. Representations and Warranties. As an inducement to the Lender to enter into this Agreement and to fund Loans as provided herein, the Company
represents and warrants to the Lender that: 
  
 7(a) Financial
Condition. The financial statements, dated the Statement Date and the Interim Date, copies of which have heretofore been furnished to the Lender by the Company, are complete and correct in all material respects and present fairly in accordance
with GAAP the consolidated and consolidating financial condition of the Company and its Subsidiaries at such dates and the results of its operations and changes in financial position for the fiscal periods then ended, subject, in the case of the
financial statements dated as of the Interim Date, to normal year-end audit adjustments. 
  
 7(b) No Change. Since the Statement Date there has been no Material Adverse Effect. 
  
 7(c) Corporate Existence; Compliance with Law. The Company and each of its Subsidiaries: (1) is duly organized, validly existing and in good
standing as a corporation under the laws of the jurisdiction of its organization and is qualified to do business in each jurisdiction where its ownership of property or conduct of business requires such qualification and where failure to qualify is
reasonably likely to have a Material Adverse Effect, (2) has the corporate power and authority and the legal right to own and operate its property and to conduct business in the manner in which it does and proposes so to do, and (3) is in material
compliance with all Requirements of Law and Contractual Obligations, the failure to comply with which could have a Material Adverse Effect. 
  

 10 

 7(d) Corporate Power; Authorization; Enforceable Obligations. The Company and each of its
Subsidiaries has the power and authority and the legal right to execute, deliver and perform the Loan Documents to which it is a party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and
performance of such Loan Documents. The Loan Documents to which the Company and each of its Subsidiaries are party have been duly executed and delivered on behalf of such Person and constitute legal, valid and binding obligations of such Person,
enforceable against such Person in accordance with their respective terms, subject to the effect of applicable bankruptcy and other similar laws affecting the rights of creditors generally and the effect of equitable principles whether applied in an
action at law or a suit in equity. 
  
 7(e) No Legal Bar.
The execution, delivery and performance of the Loan Documents to which the Company and each of its Subsidiaries is party, the borrowing hereunder and the use of the proceeds thereof, will not violate any Requirement of Law or any Contractual
Obligation of the Company or any of its Subsidiaries in any material respect or create or result in the creation of any Lien on any assets of the Company or any of its Subsidiaries (other than the Liens created by the Loan Documents). 
  
 7(f) No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator, court or Governmental Authority is pending or, to the knowledge of the Company or any of its Subsidiaries, threatened by or against the Company or any of its Subsidiaries or against its or their properties or
revenues which is likely to be adversely determined and which, if adversely determined, is likely to have a Material Adverse Effect. 
  
 7(g) Taxes. The Company and each of its Subsidiaries has filed or caused to be filed all U.S. 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 other than taxes which are being contested in good faith by appropriate proceedings and as to which the Company
or such Subsidiary, as applicable, has established adequate reserves in conformity with GAAP. 
  
 7(h) Investment Company Act. Neither the Company nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” within the meaning of
the Investment Company Act of 1940, as amended. 
  
 7(i)
Subsidiaries. Set forth on Schedule 7(i) is an accurate and complete list of the Subsidiaries of the Company, their respective jurisdictions of incorporation and the percentage of their capital stock owned by the Company or
Subsidiaries of the Company. All of the issued and outstanding share of capital stock of such Subsidiaries have been duly authorized and issued and are fully paid and non-assessable. 
  
 7(j) Federal Reserve Board Regulations. Neither the Company nor any of its Subsidiaries is engaged nor will it
engage, principally or as one of its important activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” within the respective meanings of such terms under
Regulation U. No part of the proceeds of any Loan issued hereunder will be used for “purchasing” or “carrying” “margin stock” as so defined or for any purpose which violates, or which would be inconsistent with, the
provisions of the Regulations of the Board of Governors of the Federal Reserve System. 
  

 11 

 7(k) ERISA. The Company and each of its Subsidiaries is in compliance in all material respects
with the requirements of ERISA and, to the knowledge of the Company, no Reportable Event has occurred under any Plan maintained by the Company and any of its Subsidiaries which is likely to result in the termination of such Plan for purposes of
Title IV of ERISA. 
  
 7(l) Assets. The Company and each of
its Subsidiaries has good and marketable title to all property and assets reflected in the financial statements dated the Statement Date referred to in Paragraph 7(a) above, except property and assets sold or otherwise disposed of in the
ordinary course of business subsequent to the Statement Date. Neither the Company nor any of its Subsidiaries has outstanding Liens on any of its properties or assets nor are there any security agreements to which the Company or any of its
Subsidiaries, including the Company, is a party, or title retention agreements, whether in the form of leases or otherwise, of any personal property except as permitted under Paragraph 9(a) below. 
  
 7(m) Securities Acts. Neither the Company nor any of its Subsidiaries
has issued any unregistered securities in violation of the registration requirements of Section 5 of the Securities Act of 1933, as amended, or any other law, and is not in material violation of any rule, regulation or requirement under the
Securities Act of 1933, as amended, or the Securities and Exchange Act of 1934, as amended. The Company is not required to qualify an indenture under the Trust Indenture Act of 1939, as amended, in connection with its execution and delivery of the
Loan Documents. 
  
 7(n) Consents, Etc. No consent,
approval, authorization of, or registration, declaration or filing with any Governmental Authority or any other Person is required in connection with the execution and delivery of the Loan Documents (other than filings to perfect the Liens granted
pursuant to the Loan Documents) or the performance of or compliance with the terms, provisions and conditions hereof or thereof other than such as have been obtained prior to the Effective Date. 
  
 7(o) Hazardous Materials. Neither the Company nor, to the knowledge of
the Company, any other Person has: (1) caused or permitted any Hazardous Materials to be disposed of in, on, under or about any Property or any part thereof, and neither any Property, nor any part thereof, has ever been used (whether by the Company
or, to the knowledge of the Company, by any other Person) for activities involving, directly or indirectly, the disposal of any Hazardous Materials; (2) caused or permitted to be incorporated into or utilized in the construction of any improvements
located on any Property any chemical, material, or substance to which exposure is prohibited, limited or regulated by any Hazardous Materials Laws or which, even if not so regulated, is known to pose a hazard (either in its present form or if
disturbed or removed) to the health and safety of the occupants of any Property or of property adjacent to any Property; or (3) discovered any occurrence or condition on any Property that could cause any Property or any part thereof to be in
violation of any Hazardous Materials Laws. 
  
 7(p) Regulated
Entities. Neither the Company nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or
state statute or regulation limiting its ability to incur Indebtedness. 
  
 7(q) Copyrights, Patents, Trademarks and Licenses, Etc. The Company and each of its Subsidiaries or is licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights used by such Person in the conduct of its business. To the knowledge of the Company, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any of its Subsidiaries infringes upon any rights held by any other 
  

 12 

 Person in any material respect. No claim or litigation regarding any of the foregoing is pending or, to the
Company’s knowledge, threatened and, to the knowledge of the Company, no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or proposed, which, in either case, could reasonably
be expected to have a Material Adverse Effect. 
  
 7(r)
Insurance. The properties and assets of the Company and each of its Subsidiaries are insured with financially sound and reputable insurance companies (not Affiliates) acceptable to the Lender, in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Company and such Subsidiaries operate. 
  
 8. Affirmative Covenants. The Company hereby covenants and agrees with the Lender that, as long as any Obligations
remain unpaid or the Lender has any obligation to make Loans hereunder, the Company shall: 
  
 8(a) Financial Statements and Reports. Furnish or cause to be furnished to the Lender: 
  
 (1) Within one hundred twenty (120) days after the last day of each Fiscal Year, a copy of the Form 10-K the Company has submitted for
filing with the Securities and Exchange Commission for such Fiscal Year; 
  
 (2) Within sixty (60) days after the last day of each fiscal quarter, a copy of the Form 10-Q the Company has submitted for filing with the Securities and Exchange Commission for such fiscal quarter; 
  
 (3) Within sixty (60) days after the last day of each fiscal
quarter, same store sales and EBITDA reports as of the end of such fiscal quarter in form and detail satisfactory to the Lender; 
  
 (4) Upon the request of the Lender (but in no event more than once every 30 days), such receivables aging reports, payables aging reports,
and inventory reports for the Company and its Subsidiaries as the Lender may reasonably request; 
  
 (5) Copies of all proxy statements, financial statements, and reports which the Company sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements under the Act which the Company files with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor, or with any national securities
exchange; and 
  
 (6) Promptly upon request of
the Lender, such additional financial and other information, including, without limitation, financial statements of the Company and its Subsidiaries as the Lender may from time to time reasonably request, including, without limitation, such
information as is necessary to enable the Lender to assign or participate out any of its interests in the Loans and other Obligations hereunder. 
  
 8(b) Payment of Indebtedness. And shall cause each of its Subsidiaries to, pay, discharge or otherwise satisfy at or before maturity or before it
becomes delinquent, defaulted or accelerated, as the case may be, all its Indebtedness (including taxes), except Indebtedness being contested in good faith and for which provision is made to the satisfaction of the Lender for the payment thereof in
the event the Company or such Subsidiary is found to be obligated to pay such Indebtedness and which Indebtedness is thereupon promptly paid by the Company or such Subsidiary. 
  

 13 

 8(c) Maintenance of Existence and Properties. And shall cause each of its Subsidiaries to: (1)
maintain its corporate existence (except, subject to the requirements of Paragraph 9(c) below, a merger into the Company or another Subsidiary), (2) maintain all rights, privileges, licenses, approvals, franchises, properties and assets
necessary or desirable in the normal conduct of its business (except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect), and (3) comply in all material respects with all Contractual Obligations
and Requirements of Law the failure to comply with which could reasonably expected to have a Material Adverse Effect. 
  
 8(d) Inspection of Property; Books and Records; Discussions. And shall cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries in conformity with GAAP and all Requirements of Law and permit representatives of the Lender to visit and inspect any of its or their properties and examine and make abstracts from any of its or their books
and records at any reasonable time and as often as may reasonably be desired by the Lender and to discuss the business, operations, properties and financial and other condition of the Company and its Subsidiaries with officers and employees of the
Company, and with its or their independent certified public accountants. As long as there has not occurred and is continuing an Event of Default or Potential Default, such inspections shall be at no cost to the Company. 
  
 8(e) Notices. Promptly give written notice to the Lender of:

  
 (1) The occurrence of any Potential Default
or Event of Default; 
  
 (2) Any litigation or
proceeding affecting the Company or any of its Subsidiaries or the Collateral which litigation or proceeding, individually, involves amounts in excess of $100,000.00; and 
  
 (3) Any other event which, in the reasonable business judgment of the Company, could have a Material Adverse
Effect. 
  
 8(f) Expenses. Pay all reasonable out-of-pocket
expenses (including reasonable fees and disbursements of outside counsel and allocated reasonable costs of internal counsel) of incurred by or assessed against the Lender incident to: (1) the preparation, negotiation and closing of the transaction
contemplated hereby and the administration of the Loan Documents; and (2) the protection of the rights of the Lender under the Loan Documents and the enforcement of payment of the Obligations, whether by judicial proceedings or otherwise, including,
without limitation, in connection with bankruptcy, insolvency, liquidation, reorganization, moratorium or other similar proceedings involving the Company or a “workout” of the Obligations. The Obligations of the Company under this
Paragraph 8(f) shall be effective and enforceable whether or not any Loan is funded and shall survive payment of all other Obligations. 
  
 8(g) Loan Documents. Comply with and observe all terms and conditions of the Loan Documents. 
  
 8(h) Insurance. And shall cause each of its Subsidiaries to, obtain
and maintain insurance, including, without limitation, property insurance, casualty insurance and general liability 
  

 14 

 insurance, with responsible companies, in such amounts and against such risks as are usually carried by corporations
engaged in similar businesses similarly situated, and furnish the Lender upon request with certificates evidencing such insurance. 
  
 8(i) Hazardous Materials. And shall cause each of its Subsidiaries to: 
  
 (1) Conduct its operations and keep and maintain its Properties in material compliance with all applicable
Environmental Laws. 
  
 (2) Give prompt written
notice to the Lender, but in no event later than ten (10) days after becoming aware thereof, of the following: (i) any enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Company
or any of its Affiliates or any of their respective properties pursuant to any applicable Environmental Laws where the potential liability to the Company or any of its Subsidiaries could reasonably be expected to be in excess of $100,000.00 in the
aggregate for all such cases, (ii) all other Environmental Claims, and (iii) any environmental or similar condition on any real property adjoining or in the vicinity of the property of the Company or its Affiliates that could reasonably be
anticipated to cause such property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws. 
  
 (3) Upon the written request of the Lender, submit to the
Lender, at the Company’s sole cost and expense, at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice required pursuant to this
Paragraph 8(i). 
  
 (4) At all times
indemnify and hold harmless the Lender from and against all liability arising out of any Environmental Claims, except those Environmental Claims caused as a primary and direct result of the gross negligence or willful misconduct of the Lender.

  
 8(j) ERISA. Furnish to the Lender promptly and in any
event within ten (10) days after the Company knows or has reason to know of the occurrence of a Reportable Event with respect to a Plan with regard to which notice must be provided to the PBGC, a copy of such materials required to be filed with the
PBGC with respect to such Reportable Event and in each such case a statement of the chief financial officer of the Company setting forth details as to such Reportable Event and the action which the Company proposes to take with respect thereto.

  
 8(k) Compliance with Laws. And shall cause each of its
Subsidiaries to, comply, in all material respects with all Requirements of Law and Contractual Obligations the failure to comply with which could reasonably be expected to have a Material Adverse Effect. 
  
 9. Negative Covenants. The Company hereby agrees that, as long as any
Obligations remain unpaid or the Lender has any obligation to make Loans hereunder, the Company shall not, directly or indirectly: 
  
 9(a) Liens. Nor permit any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property and assets, including,
without limitation, property and assets included in the Collateral, except Liens securing the Obligations and: 
  
 (1) Liens or charges for current taxes, assessments or other governmental charges which are not delinquent or which remain payable without
penalty, or the validity of which are contested in good faith by appropriate proceedings upon stay of execution of the enforcement thereof, provided the Company or such Subsidiary shall have set aside on its books and shall maintain adequate
reserves for the payment of same in conformity with GAAP; 
  

 15 

 (2) Liens, deposits or pledges made to secure statutory obligations, surety or appeal
bonds, or bonds to obtain, or to obtain the release of, attachments, writs of garnishment or for stay of execution, or to secure the performance of bids, tenders, contracts (other than for the payment of borrowed money), leases or for purposes of
like general nature in the ordinary course of the business of the Company and its Subsidiaries; 
  
 (3) Statutory Liens of landlord’s, carriers, warehousemen, mechanics, materialmen and other similar Liens imposed by law and created
in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves are being maintained in conformity with GAAP; 
  
 (4) Attachment and judgment Liens not otherwise constituting
an Event of Default each of which Lien is in existence less than thirty (30) days after the entry thereof or with respect to which execution has been stayed, payment is covered in full by insurance, or the Borrowers shall in good faith be
prosecuting an appeal or proceedings for review and shall have set aside on its books such reserves as may be required by GAAP with respect to such judgment or award; and 
  
 (5) Liens existing on the Effective Date shown on the financial statements referred in Paragraph 7(a)
above. 
  
 9(b) Consolidation and Merger. Nor permit any of
its Subsidiaries to: (1) liquidate or dissolve or enter into any consolidation, merger, partnership, joint venture, syndicate or other combination other than mergers and consolidations of Subsidiaries into the Company or other Subsidiaries, or (2)
acquire any going business or all or substantially all of the assets of any other Person for a total consideration in excess of $250,000.00 during any Fiscal Year, unless both before and after giving effect to any transaction described in
subparagraphs (1) and (2) above: (i) there shall not exist an Event of Default or Potential Default, and (ii) the Effective Tangible Net Worth of the Company on a consolidated basis is greater than $5,000,000, as evidenced in each case, if
requested by the Lender, by pro forma projections prepared by a responsible financial officer of the Company; provided, however, that in all cases involving the Company, the Company shall be the surviving corporation. 
  
 9(c) Payment of Dividends. Declare or pay any dividends upon its
shares of stock now or hereafter outstanding or make any distribution of assets to its stockholders as such, whether in cash, property or securities, except dividends payable in shares of capital stock, unless both before and after giving effect
thereto: (1) there shall not exist an Event of Default or Potential Default, and (2) the Effective Tangible Net Worth of the Company on a consolidated basis is greater than $5,000,000, as evidenced in each case, if requested by the Lender, by
pro forma projections prepared by a responsible financial officer of the Company. 
  

 16 

 9(d) Repurchase of Stock. Nor permit any of its Subsidiaries to acquire, purchase, redeem or
retire any shares of its capital stock now or hereafter outstanding, in one transaction or a series of transactions, unless both before and after giving effect thereto: (1) there shall not exist an Event of Default or Potential Default, and
(2) the Effective Tangible Net Worth of the Company on a consolidated basis is greater than $5,000,000, as evidenced in each case, if requested by the Lender, by pro forma projections prepared by a responsible financial officer of the Company.

  
 9(e) Sale of Assets. Nor permit any of its Subsidiaries
to sell, lease, assign, transfer or otherwise dispose of any of its assets, whether now owned or hereafter acquired, other than: (1) dispositions of inventory in the ordinary course of business (which dispositions may be made free from the Liens of
the Loan Documents), 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 with other equipment of at least equal utility and value (provided that, except for purchase money security interests and rights of lessors of equipment if permitted hereunder, the Lender’s Lien upon such newly-acquired equipment
shall have the same priority as the Lender’s Lien upon the replaced equipment), (2) the liquidation of assets of retail stores which have been closed, (3) the sale of retail stores in the ordinary course of business, and (4) the sale or retail
store outside the ordinary course of business with the prior written consent of the Lender, unless both before and after giving effect thereto: (1) there shall not exist an Event of Default or Potential Default, and (2) the Effective Tangible
Net Worth of the Company on a consolidated basis is greater than $5,000,000, as evidenced in each case, if requested by the Lender, by pro forma projections prepared by a responsible financial officer of the Company. 
  
 9(f) Limitation on Transactions with Affiliates. Nor permit any of its
Subsidiaries to purchase, acquire or lease any property from, or sell, transfer or lease any property to, or lend or advance any money to, or borrow any money from, or guarantee any obligation of, or acquire any stock, obligations or securities of,
or enter into any merger or consolidation agreement, or any management or similar fee, agreement with, any Affiliate, or enter into any other transaction or arrangement or make any payment to or otherwise deal with, in the ordinary course of
business or otherwise, any Affiliate other than: (1) on terms no less favorable to the Company or such Subsidiary as would be obtained in an arms-length transaction with a non-Affiliate, and (2) if but only if such transaction, arrangement, payment
or other dealing would not violate any other term or provision of this Agreement or the other Loan Documents. 
  
 9(g) Accounting Changes. Make any significant change in accounting treatment or reporting practices, except as required by GAAP, or change its
fiscal year. 
  
 9(h) Loans; Advances. Nor permit any of
its Subsidiaries to, directly or indirectly, make or commit to make any advance, loan or extension of credit (other than extensions of credit to customers in the ordinary course of business) or capital contribution to any Person other than: (1)
trade credit extended in the ordinary course of business, (2) loan and advances to employees in an aggregate amount not to exceed $50,000.00 at any time outstanding, and (3) intercompany loans and investments in other Subsidiaries or the Company.

  
 9(i) Leverage Ratio. Permit as of the end of any fiscal
quarter, the ratio of Indebtedness of the Company and its Subsidiaries on a consolidated basis to the Effective Tangible Net Worth of the Company and its Subsidiaries on a consolidated basis to be more than 1.75:1.00. 
  

 17 

 9(j) Minimum EBITDA. Permit as of the end of any fiscal quarter, calculated for such fiscal
quarter and the immediately preceding three fiscal quarters, EBITDA of the Company and its Subsidiaries on a consolidated basis to be less than $2,000,000.00. 
  

10. Events of Default. Upon the occurrence of any of the following events (an “Event of Default”): 
  
 10(a) The Company shall fail to pay any principal or interest on the Loans
or fees on the date when due or shall fail to pay within five (5) days of the date when due any other Obligation under the Loan Documents; or 
  
 10(b) Any representation or warranty made by the Company or any of the Guarantors in any Loan Document shall be inaccurate or incomplete in any material
respect on or as of the date made; or 
  
 10(c) The Company shall
fail to maintain its corporate existence or shall default in the observance or performance of any covenant or agreement contained in Paragraphs 9(a) through 9(j) above; 
  
 10(d) The Company or any of the Guarantors shall fail to observe or perform any other term or provision contained in the
Loan Documents and such failure shall continue thirty (30) days after delivery by the Lender to the Company of written notice of such failure; or 
  
 10(e) (1) The Company or any of the Guarantors shall default in any payment of principal of or interest on any Indebtedness in an amount in excess of
$200,000.00 (other than the Obligations) or (2) any Person shall default in the payment of any Indebtedness in an amount in excess of $200,000.00 upon which the Company or any of the Guarantors is contingently liable, or (3) any other event shall
occur, the effect of which is to permit such Indebtedness to be declared or otherwise to become due prior to its stated maturity; or 
  
 10(f) (1) The Company or any of the Guarantors shall commence any case, proceeding or other action (i) 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 (ii) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its assets, or the Company or any of the Guarantors shall make a general assignment for the benefit of its creditors; or (2) there shall be commenced against the Company or any of the Guarantors any case, proceeding or other
action of a nature referred to in clause (1) above which (i) results in the entry of an order for relief or any such adjudication or appointment, or (ii) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (3) there
shall be commenced against the Company or any of the Guarantors any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or substantially all of its assets which results in
the entry of an order for any such relief which shall not have been vacated, discharged, stayed, satisfied or bonded pending appeal within sixty (60) days from the entry thereof; or (4) the Company or any of the Guarantors shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence in (other than in connection with a final settlement), any of the acts set forth in clause (1), (2) or (3) above; or (5) the Company or any of the Guarantors shall generally
not, or shall be unable to, or shall admit in writing its inability to pay its debts as they become due; or 
  

 18 

 10(g) (1) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan, (2) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or nor waived, shall exist with respect to any Plan, (3) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or institution of proceedings is, in the reasonable opinion of
the Lender, likely to result in the termination of such Plan for purposes of Title IV of ERISA, and, in the case of a Reportable Event, the continuance of such Reportable Event unremedied for ten days after notice of such Reportable Event pursuant
to Section 4042(a), (c) or (d) of ERISA is given or the continuance of such proceedings for ten days after commencement thereof, as the case may be, (4) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (5) any withdrawal
liability to a Multiemployer Plan shall be incurred by the Company or (6) any other event or condition shall occur or exist; and in each case in clauses (1) through (6) above, such event or condition, together with all other such events or
conditions, if any, is likely to subject the Company to any tax, penalty or other liabilities in the aggregate material in relation to the business, operations, property or financial or other condition of the Company; or 
  
 10(h) One or more judgments or decrees in excess of $500,000.00 in the
aggregate shall be entered against the Company or any of the Guarantors and such judgments or decrees shall not have been vacated, discharged, stayed, satisfied or bonded pending appeal within sixty (60) days from the entry thereof; or 

 
 10(i) Any of the Guarantors shall fail to observe or perform any provision
of its Guaranty, or any other Loan Document to which it is party, or shall attempt to rescind or revoke its Guaranty or any other such Loan Document, with respect to future transactions or otherwise; or 
  
 10(j) There shall occur following the Effective Date any event which is
reasonably likely to have a Material Adverse Effect; or 
  
 10(k)
The Lien of the Lender upon any of the Collateral shall cease to be perfected or shall cease to have the priority required pursuant to the Loan Documents; 
  
 THEN, automatically upon the occurrence of an Event of Default under Paragraph 10(f) above and, in all other cases, at the option of the Lender: (1) the
Lender’s obligation to make Loans or issue Letters of Credit shall terminate and the principal balance of outstanding Loans and interest accrued but unpaid thereon and all other Obligations shall become immediately due and payable, without
demand upon or presentment to the Company, which are expressly waived by the Company, and (2) the Lender may immediately exercise all rights, powers and remedies available to it at law, in equity or otherwise, including, without limitation, under
the Collateral Documents and the Guaranties. 
  
 11.
Miscellaneous Provisions. 
  
 11(a) No Assignment.
The Company may not assign its rights or obligations under this Agreement or any other Loan Document without the prior written consent of the Lender. Any purported assignment in violation of this Paragraph 11(a) shall automatically be deemed
null and void. Subject to the foregoing, all provisions contained in this Agreement and in any document or agreement referred to herein or relating hereto shall inure to the benefit of the Lender, its successors and assigns, and shall be binding
upon the Company, its successors and assigns. 
  

 19 

 11(b) Amendment. Neither this Agreement nor any other Loan Document may be amended or terms or
provisions hereof waived unless such amendment or waiver is in writing and signed by the Lender and the Company. 
  
 11(c) Cumulative Rights; No Waiver. The rights, powers and remedies of the Lender under this Agreement and the other Loan Documents are cumulative
and in addition to all rights, power and remedies provided under any and all agreements between the Company and the Lender relating hereto, at law, in equity or otherwise. Any delay or failure by the Lender to exercise any right, power or remedy
shall not constitute a waiver thereof by the Lender, and no single or partial exercise by the Lender of any right, power or remedy shall preclude other or further exercise thereof or any exercise of any other rights, powers or remedies. 

 
 11(d) Entire Agreement. This Agreement and the documents and
agreements referred to herein embody the entire agreement and understanding between the parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof and thereof. 
  
 11(e) Survival. All representations, warranties, covenants and
agreements contained in this Agreement and in the other Loan Documents on the part of the Company shall survive the termination of this Agreement and shall be effective until the Obligations are paid and performed in full or longer as expressly
provided herein. 
  
 11(f) Notices. All notices given by
any party to the others under this Agreement and the other Loan Documents shall be in writing unless otherwise provided for herein, delivered by facsimile transmission, by personal delivery or by overnight courier, addressed to the party as set
forth on Annex 1 attached hereto, as such Annex 1 may be amended from time to time. Any party may change the address to which notices are to be sent by notice of such change to each other party given as provided herein. Such notices
shall be effective on the date received. 
  
 11(g) Governing
Law. This Agreement and the other Loan Documents shall be governed by and construed in accordance with the internal laws of the State of California. 
  
 11(h) Assignments, Participations, Etc. 
  
 (1) The Lender may at any time with, but only so long as there does not exist an Event of Default, the consent of the Company (such
consent not to be unreasonably withheld), assign and delegate to one or more financial institutions (each an “Assignee”) all, or any part of its rights and obligations hereunder and under the other Loan Documents 
  
 (2) In addition, the Lender may at any time sell to one or
more financial institutions or other Persons participating interests in any Loans, the funding commitment of the Lender (including any commitment to fund future Loans) and the other interests of the Lender hereunder and under the other Loan
Documents; provided, however, that (i) the Lender’s obligations under this Agreement shall remain unchanged, (ii) the Lender shall remain solely responsible for the performance of such obligations, and (iii) the Company shall continue to deal
solely and directly with the Lender in connection with this Agreement and the other Loan Documents. 
  
 (3) Notwithstanding any other provision contained in this Agreement or any other Loan Document to the contrary, the Lender may assign all
or any 
  

 20 

 portion of the Loans held by it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any Operating Circular issued by such Federal Reserve Bank. 
  
 11(i) Counterparts. This Agreement and the other Loan Documents may be executed in any number of counterparts, all of which together shall
constitute one agreement. 
  
 11(j) Consent to
Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY AND THE LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY AND THE LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY AND THE LENDER EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW. 
  

11(k) Waiver of Jury Trial. THE COMPANY AND THE LENDER EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY
OR ANY PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY AND THE LENDER EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THE COMPANY WAIVES ITS RIGHT TO NOTICE OR HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 
  
 11(l) Indemnity. Whether or not the transactions contemplated hereby are consummated, the Company shall indemnify and hold the Lender and each of its officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an “Indemnified Person”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including reasonable
attorney’s fees and expenses, including the documented cost of internal counsel) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Loans) be imposed on, incurred by or asserted against any
such Person in any way relating to or arising out of the inaccuracy or incompleteness of any representation or warranty made by the Company or the Guarantor in any Loan Document or otherwise relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions 
  

 21 

 contemplated hereby or any action taken or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding (including any insolvency proceeding or appellate proceeding) related to or arising out of this Agreement or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”); provided, however, that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Paragraph 11(l) shall survive payment of all other Obligations and the termination of this Agreement. 
  
 11(m) Marshalling; Payments Set Aside. The Lender shall not be under
any obligation to marshall any assets in favor of the Company or any other Person or against or in payment of any or all of the Obligations. To the extent that the Company makes a payment or payments to the Lender or the Lender enforces the Liens
under the Collateral Documents or exercises its rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or
required (including pursuant to any settlement entered into by the Lender in its discretion) to be repaid to a trustee, receiver or any other party in connection with any insolvency proceeding, or otherwise, then, to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred. 
  
 11(n) Set-off. In addition to any rights and remedies of the Lender
provided by law, if an Event of Default exists, the Lender is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company 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 by, and other indebtedness at any time owing to, the Lender to or for the credit or the account of the Company against any and all Obligations owing to
the Lender, now or hereafter existing, irrespective of whether or not the Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. The Lender agrees promptly to notify the
Company after any such set-off and application made by the Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. 
  
 11(o) Severability. The illegality or unenforceability of any provision of this Agreement or any other Loan Document
or any instrument or agreement required hereunder or thereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions hereof or thereof. 
  
 11(p) No Third Parties Benefited. This Agreement and the other Loan Documents are made and entered into for the sole
protection and legal benefit of the Company and the Lender and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection
with, this Agreement or any of the other Loan Documents. The Lender shall not have any obligation to any Person not a party to this Agreement or other Loan Documents. 
  
 11(q) No Further Commitment. THE COMPANY EXPRESSLY ACKNOWLEDGES AND AGREES THAT NOTHING CONTAINED IN THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS SHALL IN ANY MANNER OR TO ANY EXTENT CONSTITUTE OR BE IMPLIED TO CONSTITUTE ANY AGREEMENT OF THE LENDER TO EXTEND THE MATURITY DATE OF ANY CREDIT FACILITY BEING PROVIDED TO THE COMPANY BY THE LENDER BEYOND THE DATE SET
FORTH HEREIN, NOTWITHSTANDING THE COMPLIANCE OF THE COMPANY WITH ALL TERMS AND CONDITIONS SET FORTH HEREIN. THE COMPANY HEREBY 
  

 22 

 REPRESENTS AND WARRANTS TO THE LENDER THAT IT IS TAKING SUCH ACTIONS AS ARE NECESSARY TO ASSURE THE AVAILABILITY TO THE
COMPANY OF FINANCING FOR ITS OPERATIONS FROM AND AFTER SUCH DATES FROM SOURCES OTHER THAN THE LENDER. 
  
 12. Definitions. For purposes of this Agreement, the terms set forth below shall have the following meanings: 
  
 “Affiliate” shall mean, as to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect common control with, such Person. “Control” as used herein means with respect to any business entity the power to direct the management and policies of such
business entity. 
  
 “Agreement” shall mean this
Credit Agreement, as the same may be amended, extended or replaced from time to time. 
  
 “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banks in Los Angeles, California are authorized or obligated to close their regular banking business. 
  
 “Collateral” shall mean, collectively and severally, all
property and assets of the Company which is at any time subject to a Lien in favor of the Lender under the Collateral Documents. 
  
 “Collateral Documents” shall mean, collectively and severally, the Security Agreement (as such term is defined in the Existing Security
Agreement), each of the Guarantor Security Agreements (as such term is defined herein and in the Existing Credit Agreement), and all other documents, instruments and agreements at any time executed and delivered to the Lender relating to the
Collateral, and shall include any and all amendments, extensions, replacements, and reaffirmations thereof. 
  
 “Commonly Controlled Entity” of a Person shall mean a Person, whether or not incorporated, which is under common control with such Person
within the meaning of Section 411(c) of the Internal Revenue Code. 
  
 “Contact Office” shall mean the Lender’s office located at 4400 Mac Arthur Boulevard, Suite 150, Newport Beach, California 92660, or such other office as the Lender may notify the Company from time to time in writing.

  
 “Contractual Obligation” as to any Person
shall mean any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound. 
  
 “EBITDA” shall mean, with respect to any Person for any
fiscal period, earnings (exclusive of extraordinary gains and non-cash credits to income) and before deductions for interest, income taxes, non-cash impairment charges from intangibles that exist as of the end of the third fiscal quarter of FYE 2004
and other non-cash charges from intangibles that exist as of the end of the third fiscal quarter of FYE 2004, depreciation and amortization of the Company and its Subsidiaries on a consolidated basis. 
  
 “Effective Date” shall mean the date on which all of the
conditions precedent set forth in Paragraph 10(a) above shall have been met to the satisfaction of the Lender. 
  

 23 

 “Effective Tangible Net Worth” shall mean, with respect to any Person, total assets
(exclusive of goodwill, patents, trademarks, trade names, copyrights, organization expense, investments in and all amounts due from Affiliates, officers, or employees), plus Subordinated Debt, less Total Liabilities (excluding Subordinated Debt), at
such time. 
  
 “Environmental Claims” shall mean
all claims, however asserted, where the potential liability to the Company and its Subsidiaries could reasonably be expected to be in excess of $250,000.00 in the aggregate with respect to all such claims, by any governmental authority or other
person alleging potential liability or responsibility for violation of any Environmental Law or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural
resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief resulting
from or based upon (a) the presence, placement, discharge, emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental placement, spills, leaks, discharges, emissions
or releases) of any Hazardous Materials at, in, or from property owned, operated or controlled by the Company, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. 
  
 “Environmental Laws” shall mean all federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requested, licenses, authorizations and permits of, and agreements with, any governmental authorities, in each
case relating to environmental, health, safety and land use matters; including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”), the Clean Air Act, the Federal Water Pollution
Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency Planning and Community Right-to-Know Act, the California Waste Control Law, the California Solid
Waste Management, Resource, Recovery and Recycling Act, the California Water Code and the California Health and Safety Code. 
  
 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same may from time to time be supplemented or amended.

  
 “Event of Default” shall have the meaning
given such term in Paragraph 10 above. 
  
 “Existing Credit Agreement” shall have the meaning given such term in Recital A above. 
  
 “Fiscal Year” shall mean each fiscal year of the Company, with each such fiscal year ending on the Wednesday closest to the last calendar
day of each June. 
  
 “Funding Account” shall
mean account no. 106116938 maintained in the Company’s name with the Lender. 
  
 “FYE” shall mean the Fiscal Year of the Company ending in the calendar year specified. 
  
 “GAAP” shall mean generally accepted accounting principles in the United States of America in effect from time to time. 
  
 “Governmental Authority” shall mean any nation or
government, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. 
  

 24 

 “Guarantors” shall mean, collectively and severally, each of the Initial Guarantors and
each Subsidiary of the Company formed or acquired following the Effective Date. 
  
 “Guarantor Security Agreement” shall mean: (a) any of the Guarantor Security Agreements (as defined in the Existing Credit Agreement) delivered in connection with the Existing Credit Agreement, and
(b) a Security Agreement in the form and substance of the Guarantor Security Agreements delivered to the Lender by the Initial Guarantors in connection with the Existing Credit Agreement, and shall include, in each case, any and all amendments,
extensions, replacements, and reaffirmations thereof. 
  
 “Guaranty” shall mean: (a) any of the Guaranties (as defined in the Existing Credit Agreement) delivered in connection with the Existing Credit Agreement, and (b) a Guaranty in the form and substance of the Guaranties
delivered to the Lender by the Initial Guarantors in connection with the Existing Credit Agreement, and shall include, in each case, any and all amendments, extensions, replacements, and reaffirmations thereof. 
  
 “Hazardous Materials” shall mean: (a) “hazardous
substances”, “hazardous wastes,” “hazardous materials,” or “toxic substances,” as defined in any of the Hazardous Material Laws; (b) any pollutant or contaminant, or hazardous, dangerous or toxic chemical,
material, waste or substance (“pollutant”) which Hazardous Material Laws prohibit, limit or otherwise regulate as to use, exposure, release, generation, manufacture, sale, transport, handling, storage, treatment, reuse, presence, disposal
or recycling; (c) petroleum, crude oil or any fraction of petroleum or crude oil; (d) any radioactive material, including any source, special nuclear or by-product material, as defined at 42 U.S.C. §2011 et seq., and amendments
thereto and reauthorizations thereof; (e) asbestos-containing materials in any form or condition; and (f) polychlorinated biphenyls. 
  
 “Indebtedness” of any Person shall mean all obligations for borrowed money, accounts payable, accrued compensation, accrued expenses and
capitalized lease obligations of such Person as of the date as of which Indebtedness is to be determines, and shall also include all indebtedness and liabilities of others assumed or guaranteed by such Person or in respect of which such Person is
secondary or contingently liable (other than by endorsement of instruments in the course of collection) whether by reason of any agreement to acquire such indebtedness or to supply or advance sums or otherwise. 
  
 “Initial Guarantors” shall mean each of the following,
collectively and severally: (1) Coffee People Worldwide, Inc., a Delaware corporation, (2) Coffee People, Inc., an Oregon corporation, (3) Gloria Jean’s, Inc., a Delaware corporation, (4) Edglo Enterprises, Inc., an Illinois corporation, (5)
Gloria Jean’s Gourmet Coffees Corp., an Illinois corporation, and (6) Gloria Jean’s Gourmet Coffees Franchising Corp., an Illinois corporation. 
  
 “Interim Date” shall mean March 10, 2004. 
  
 “Interest Period” shall mean, with respect to any LIBOR Rate Loan, the period commencing on the date such Loan is advanced and ending
one, two, three, four, five, or six months thereafter, as designated in the related Loan Request; provided, however, that: (1) any Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next
succeeding Business Day; and (2) no Interest Period shall end after the Working Capital Facility Maturity Date. 
  

 25 

 “L/C Documents” shall mean any and all documents, instruments and agreements as the
Lender may require be delivered to it as a condition precedent to the issuance by the Lender of a Letter of Credit. 
  
 “L/C Drawing” shall mean any drawing under a Letter of Credit. 
  
 “Lender” shall have the meaning given such term in the introductory paragraph hereof. 
  
 “Letter of Credit” or “Letters of Credit”
shall mean have the meaning given such term in Paragraph 2(a) above. 
  
 “Letter of Credit Application” shall mean an application for the issuance of a Letter of Credit in form satisfactory to the Lender. 
  
 “Letter of Credit Facility Credit Limit” shall mean $750,000.00. 
  
 “LIBOR Rate” shall mean, with respect to any Interest Period
for a LIBOR Rate Loan, the rate for the applicable Interest Period determined by the Lender’s Treasury Desk as being the arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple of one-sixteenth of one percent (1/16%)) of
the U.S. dollar London Interbank Offered Rates for such period appearing on Page 3750 (or such other page as may replace page 3750) of the Telerate screen at or about 11:00 a.m. (London time) on the second Business Day prior to the first days of
such Interest Period (adjusted for any and all assessments, surcharges and reserve requirements. 
  
 “LIBOR Rate Loan” shall mean a Loan during such time as it is made and/or being maintained at a rate of interest based upon the LIBOR
Rate. 
  
 “Lien” shall mean any security
interest, mortgage, pledge, lien, claim on property, charge or encumbrance (including any conditional sale or other title retention agreement), any lease in the nature thereof, and the filing of or agreement to give any financial statement under the
Uniform Commercial Code of any jurisdiction. 
  
 “Loan
Documents” shall mean this Agreement, the Collateral Documents, the Guaranties (as such term is defined herein and in the Existing Credit Agreement) and each other document, instrument or agreement executed by the Company or the Guarantors
in connection herewith or therewith, as any of the same may be amended, extended or replaced from time to time. 
  
 “Loan Request” shall mean a request for a Loan in form satisfactory to the Lender. 
  
 “Loan” or “Loans” shall have the meaning
given such term in Paragraph 1(a) above. 
  
 “Material Adverse Effect” shall mean a material adverse change in, or a material adverse effect upon, any of: (a) the operations, business, properties, condition (financial or otherwise) or prospects of the Company; (b) a
material impairment of the ability of the Company or the Guarantor to perform under any Loan Document to which it is party and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or
enforceability of any Loan Document or the perfection or priority of the Lender’s security interest in the Collateral. 
  
 “Multiemployer Plan” as to any Person shall mean a Plan of such Person which is a multiemployer plan as defined in Section 4001(a)(3) of
ERISA. 
  

 26 

 “Obligations” shall mean any and all debts, obligations and liabilities of the Company
to the Lender (whether now existing or hereafter arising, voluntary or involuntary, whether or not jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to time decreased or
extinguished and later increased, created or incurred), arising out of or related to the Loan Documents. 
  
 “Outstanding” shall mean with respect to Letters of Credit, any Letter of Credit which has not been canceled, expired, unutilized or
fully drawn upon and reference to the “amount” of any Outstanding Letter of Credit shall be deemed to mean the amount available for drawing thereunder. 
  
 “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV
of ERISA and any successor thereto. 
  
 “Person”
shall mean any corporation, natural person, firm, joint venture, partnership, limited liability company, trust, unincorporated organization, government or any department or agency of any government. 
  
 “Plan” shall mean as to any Person, any pension plan that is
covered by Title IV of ERISA and in respect of which such Person or a Commonly Controlled Entity of such Person is an “employer” as defined in Section 2(5) of ERISA. 
  
 “Potential Default” shall mean an event which but for the lapse of time or the giving of notice, or both,
would constitute an Event of Default. 
  
 “Property” shall mean, collectively and severally, any and all real property, including all improvements and fixtures thereon, owned or occupied by the Company, including all real properties which are the subject of
franchise agreements. 
  
 “Reference Rate” shall
mean the fluctuating per annum rate announced from time to time by the Lender in Los Angeles, California, as its “Reference Rate”. The Reference Rate is a rate set by the Lender based upon various factors including the Lender’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 the Reference Rate. 
  
 “Reference Rate Loans” shall mean Loans or portions thereof during such time as they are made and/or being
maintained at a rate of interest based upon the Reference Rate. 
  
 “Regulation U” shall mean Regulation U of the Board of Governors of the Federal Reserve System (12 C.F.R. § 221), as the same may from time to time be amended, supplemented or superseded. 
  
 “Reportable Event” shall mean a reportable event as defined
in Title IV of ERISA, except actions of general applicability by the Secretary of Labor under Section 110 of ERISA. 
  
 “Requirements of Law” shall mean as to any Person the Certificate/Articles of Incorporation and ByLaws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or a final and binding determination of an arbitrator or a determination of 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. 
  

 27 

 “Security Agreement” shall mean the Security Agreement (as defined in the Existing
Credit Agreement), and shall include any and all amendments, extensions, replacements, and reaffirmations thereof. 
  
 “Single Employer Plan” shall mean as to any Person any Plan of such Person which is not a Multiemployer Plan. 
  
 “Statement Date” shall mean July 2, 2003. 
  
 “Subordinated Debt” shall mean for any Person Indebtedness
of such Person subordinated to the Obligations pursuant to a written subordination agreement in form and substance acceptable to the Lender, in its sole and absolute discretion. 
  
 “Subsidiary” shall mean with respect to any Person, any corporation, partnership or joint venture more than
fifty percent (50%) of the stock or other ownership interest of which having by the terms thereof ordinary voting power to elect the board of directors, managers or trustees of such corporation, partnership or joint venture shall, at the time as of
which any determination is being made, be owned by such Person, either directly or through Subsidiaries of such Person (irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency). 
  
 “Total Liabilities” shall mean for any Person at any time of determination, all liabilities of such Person which in accordance with GAAP would be shown on the liability side of a balance sheet of such Person, as determined
in accordance with GAAP. 
  
 “Working Capital Facility
Credit Limit” shall mean $250,000.00. 
  
 “Working Capital Facility Maturity Date” shall mean October 15, 2004. 
  
 [Signature Page Following] 
  

 28 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year
first above written. 
  

			
	 DIEDRICH COFFEE, INC.,

	 a California corporation

		
	 By:
	 	 /s/ Roger M. Laverty

	 Name:
	 	Roger M. Laverty
	 Title:
	 	Chief Executive Officer
		
	 By:
	 	 /s/ Martin A. Lynch

	 Name:
	 	Martin A. Lynch
	 Title:
	 	Chief Financial Officer
	
	 BANK OF THE WEST

		
	 By:
	 	 /s/ Bruce Young

	 	 	 Bruce Young, Vice President

  

 29 

 LIST OF ANNEXES, SCHEDULES, AND EXHIBITS 
  

			
	 ANNEXES:
	  	 
		
	         1
	  	Addresses for Notices, Etc.
		
	 SCHEDULES:
	  	 
		
	       7(i)
	  	Schedule of Existing Subsidiaries

  

 1 

 ANNEX 1 
  
 ADDRESSES FOR NOTICE, ETC. 
  
 Company: 
  
 Diedrich Coffee, Inc. 
 28 Executive Park, Suite 200 
 Irvine, California 92614 
 Attn: Marty Lynch, Chief Financial Officer 
 Tel: (949) 260-6788 
 Fax: (949) 756-1144 
  
 Lender: 
  
 Bank of the West 
 4400 MacArthur Boulevard,
Suite 150 
 Newport Beach, California 92660 
 Attn: Bruce Young,
Vice President 
 Tel: (949) 797-1942 
 Fax: (949) 797-1959

  

 1 

 SCHEDULE 7(i) 
  
 SCHEDULE OF EXISTING SUBSIDIARIES 
  

							
	 Name

	 	 Type of
 Organization

	 	 Jurisdiction

	 	 Percentage Ownership

	 Coffee People Worldwide, Inc.
	 	Corporation	 	Delaware	 	Owned 100% by Diedrich Coffee, Inc.
				
	 Coffee People, Inc.
	 	Corporation	 	Oregon	 	Owned 100% by Coffee People Worldwide, Inc.
				
	 Gloria Jean’s, Inc.
	 	Corporation	 	Delaware	 	Owned 100% by Coffee People, Inc.
				
	 Edglo Enterprises, Inc.
	 	Corporation	 	Illinois	 	Owned 100% by Gloria Jean’s, Inc.
				
	Gloria Jean’s Gourmet Coffees Corp.	 	Corporation	 	Illinois	 	Owned 100% by Edglo Enterprises, Inc.
				
	Gloria Jean’s Gourmet Coffees Franchising Corp.	 	Corporation	 	Illinois	 	Owned 100% by Edglo Enterprises, Inc.

  

 1

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