Document:

exv10w33

Exhibit 10.33

Land O’Lakes, Inc.

SEVERANCE AGREEMENT

     This Severance Agreement (the “Agreement”) was made and entered into effective as of October
1, 2005 (the “Effective Date”), by and between Chris Policinski (the “Executive”) and Land O’Lakes,
Inc., a Minnesota cooperative corporation (the “Company”) and is hereby restated effective as of
January 1, 2009.

RECITALS

     The Land O’Lakes, Inc. Board of Directors (“Board”) has determined that it is in the best
interest of the Company to assure that the Company will have the continued dedication and
objectivity of the Executive, notwithstanding the possibility, threat or occurrence of a
Substantial Change of Circumstances of the Company, as defined below. This agreement describes
certain benefits that will be available to the Executive in the event the Executive’s employment is
adversely affected by reason of a Substantial Change of Circumstances, in the event Executive
otherwise experiences involuntary termination for reasons other than Cause, or in the event
Executive experiences voluntary termination with good reason as defined in this Agreement.

AGREEMENT

     In consideration of the mutual covenants herein contained and the offer of employment of Executive
by the Company, the parties agree as follows:

	1.	 	Definition of Terms. The following terms referred to in this Agreement shall have
the following meanings:

	 	1.1.	 	Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the Executive
in connection with responsibilities as an employee which is intended to result in
substantial personal enrichment of the Executive, (ii) Executive’s conviction of a felony
which the Board reasonably believes has had or will have a material detrimental effect on
the Company’s reputation or business, (iii) a willful act by the Executive which
constitutes misconduct and results in material injury to the Company, or (iv) continued
willful violations by the Executive of the Executive’s material obligations to the Company
after there has been delivered to the Executive a written demand for performance from the
Company which describes the basis for the Company’s belief that the Executive has not
substantially performed the material duties of the position.
	 
	 	1.2.	 	Change of Control. “Change of Control” shall mean the occurrence of either of the
following events: (a) the approval by the Board of a merger or consolidation of the
Company with any other entity, other than a merger or consolidation which would result in
the owners of the Company immediately prior thereto continuing to own more than fifty
percent (50%) of the ownership interest of the Company or the surviving entity immediately
after such merger or consolidation; (b) the approval by the Board of a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the Company of
all or substantially all of the Company’s assets; or (c) any one person, or more than one
person acting as a group, acquires ownership of stock of the Company

 

 

	 	 	 	that, together with stock held by such person or
group, constitutes more than 50 percent of the total fair market value or total voting
power of the Company.
	 
	 	1.3.	 	Involuntary Termination. “Involuntary Termination” shall mean any termination of the
Executive’s employment by the Company which is not effected for Cause.
	 
	 	1.4.	 	Substantial Change of Circumstance. “Substantial Change of Circumstances” means (a) a
Change of Control; or (b) any single sale, spinoff or other divestiture resulting in a
reduction of 35% or more of Company’s assets or revenue.
	 
	 	1.5.	 	Target Annual Variable Pay. “Target Annual Variable Pay” means 80% of Executive’s
annual base pay as of his Termination Date.
	 
	 	1.6.	 	Termination Date. “Termination Date” shall mean the effective date of any notice of
termination of employment delivered by either Company or Executive to the other party.
	 
	 	1.7.	 	Voluntary Termination for Good Reason. “Voluntary Termination for Good Reason” means
termination of employment with the Company initiated by the Executive after any of the
following: (a) a material reduction by the Company of the Executive’s compensation
(including base salary, annual variable pay opportunity, and long-term incentive and/or
equity opportunity); (b) material change in scope of Executive’s responsibilities or
reporting relationship (provided however, the parties acknowledge and agree that a change
in the scope of Company’s operations generally that is not the result of a Substantial
Change of Circumstances shall not constitute a material change in the scope of Executive’s
responsibilities for purposes of this Agreement); (c) relocation of Company headquarters
outside the Minneapolis-St. Paul metropolitan area; or (d) the failure of a successor to
assume this Agreement pursuant to paragraph 9.1.

	2.	 	Term of Agreement. This Agreement shall terminate upon the earlier of the date that
all obligations of the parties hereto under this Agreement have been satisfied, or the date
established by separate written consent of the parties.
	 
	3.	 	At-Will Employment. The Company and the Executive acknowledge that the Executive’s
employment is at-will. Either Executive or the Company can terminate the employment
relationship at any time, with or without cause, subject to their respective continuing
post-employment obligations contained in this Agreement. If the Executive’s employment
terminates for any reason, including the death or disability of the Executive, the Executive
shall not be entitled to any payments, benefits, damages, awards or compensation other than as
provided by this Agreement, or, to the extent not modified by this agreement, as may otherwise
be established under the Company’s then existing employee benefit plans or policies at the
time of termination.
	 
	4.	 	Eligibility for Severance Benefits. The benefits described in Section 5 are subject
to the conditions outlined in this Section 4. If Executive is eligible for Severance Benefits
under paragraphs 5.1 or 5.2 of this Agreement, such benefits will be in lieu of any other
Company plan or practice relating to severance pay.

 

 

	 	4.1.	 	Notification. The Executive must provide notice to Company of Voluntary Termination
with Good Reason within sixty days after the occurrence of the event described in Paragraph 1.7 giving rise to “good reason.” The Effective Termination Date
specified in the notice shall be not more than thirty days after the date of the notice
unless otherwise mutually agreed by the parties.
	 
	 	4.2.	 	Confidentiality. Executive has signed an Invention and Trade Secret Agreement and
has other legal and fiduciary obligations to maintain the confidentiality of Company
information, including information relating to potential or planned Substantial Change of
Circumstance events. Executive’s compliance with his obligations of confidentiality is a
condition to receiving any payments or benefits under this Agreement.
	 
	 	4.3.	 	Separation Agreement and Release. As consideration for the benefits provided
pursuant to Section 5 of the agreement, Executive must execute a Separation Agreement and
Release reasonably satisfactory to the Company. The Separation Agreement and Release will
be provided to Executive within seven (7) days of his Termination Date, and shall include
the following provision: 
	 
	 	 	 	Non-competition; Non-solicitation.

	 	(a)	 	Executive agrees that for the two-year period from and after his Termination
Date, he will not, within the Restricted Area (as hereinafter defined) either
directly, alone or with others, own, manage, operate, control, participate in, or be
connected in any manner with the ownership, management, operation, or control of any
business which involves the manufacture, sale, marketing, or distribution of Products
(as hereafter defined) which compete with Products currently produced or sold by Land
O’Lakes or its subsidiaries or affiliates. Executive further agrees that for the
two-year period from and after his Termination Date, he will not solicit, induce, or
attempt to persuade any agent, employee, or customer of Land O’Lakes or its legal
successors to terminate an existing employment, agency, or business relationship with
Land O’Lakes or its legal successors in order to enter into any such relationship
with, or on behalf of, any Competitor (as hereinafter defined), or otherwise knowingly
interfere with the relationship of Land O’Lakes or its legal successors with any of
its employees, contractors, agents, or customers.
	 
	 	(b)	 	For purposes of this non-compete agreement, “Products” means all products and
related services manufactured, marketed, distributed and sold by Land O’Lakes or any
subsidiary or affiliate of Land O’Lakes during the five year period preceding the
Termination Date; “Restricted Area” means the United States; and “Competitor” means
any person or entity that manufactures, sells, markets, or distributes Products within
the Restricted Area.
	 
	 	(c)	 	If, at the time of enforcement of this provision, a court shall hold that the
duration, scope, area, or other restrictions stated herein are unreasonable duration,
scope, area, or other restrictions that are reasonable under such circumstances shall
be substituted for the stated duration, scope, area, or other restrictions.

 

 

	 	(d)	 	The foregoing non-competition provision shall not preclude Executive from
owning less than two percent (2%) of any company, the stock of which is traded on any national or regional exchange or any established over-the-counter
trading market.

	5.	 	Severance Benefits. If the Executive complies with the conditions described in
Section 4 above, the Executive shall be entitled to the following benefits under the limited
and specific circumstances described below:

	 	5.1.	 	Involuntary Termination; Voluntary Termination with Good Reason Following Change of
Control or Other Substantial Change of Circumstances. The benefits described in this
paragraph shall be paid or provided upon the occurrence of any one of the following
events: (a) Executive’s Involuntary Termination; (b) Executive’s Voluntary Termination
with Good Reason following a Change of Control, if an event giving rise to such Voluntary
Termination with Good Reason occurs within twenty-four (24) months after the Change of
Control; or (c) Executive’s Voluntary Termination with Good Reason following a Substantial
Change of Circumstances, if an event giving rise to such Voluntary Termination with Good
Reason occurs within twelve (12) months after a Substantial Change of Circumstances other
than a Change of Control. In any of these events, Company will provide Executive with
Separation Allowance comprised of the following amounts: thirty-six (36) months of the
Executive’s base salary (as in effect immediately prior to the Substantial Change of
Circumstances or Involuntary Termination, as applicable); three times Target Annual
Variable Pay; an amount equivalent to the value of unvested options or units forfeited by
operation of the Cooperative Value Incentive Plan (“CVIP”) determined as of the
Termination Date and payable at the normal time established by the elected distribution
schedule under the terms of the CVIP; an amount equivalent to Long-Term Incentive target
pro-rated as of the Termination Date and payable at the time(s) LTIP payments are normally
made to participants. No payment in this paragraph is intended to duplicate any benefits
payable under the terms of the LTIP or CVIP.
	 
	 	5.2.	 	Other Voluntary Termination with Good Reason. In the event of Executive’s Voluntary
Termination with Good Reason in circumstances other than those described in Paragraph 5.1
above, Company will provide Executive with a Separation Allowance in an amount equal to
twenty-four (24) months of the Executive’s base salary (as in effect immediately prior to
the Substantial Change of Circumstances).
	 
	 	5.3.	 	Timing of Payments. Except for the CVIP and LTIP components described in 5.1 above,
the Separation Allowance will be paid in three equal installments: the first installment
will be paid sixty (60) days after the Termination Date provided the rescission period
described in the Separation Agreement and Release has expired; the rescission period must
end before sixty (60) days after the Termination Date or the payments will not be made.
The second and third installments will be paid on the first and second anniversaries of
the Termination Date, respectively. No part of the Separation Allowance shall be taken
into account to determine any benefit calculation or contribution in any qualified or
non-qualified retirement plan maintained by Company. Executive acknowledges that Company
is required to withhold from the Separation Allowance federal income taxes at the rate
required by law, regardless of any other withholding election that Executive may have made
with respect to his wages.

 

 

	 	5.4.	 	Employee Benefits. On and after the Termination Date, all employee benefits will be
treated as provided in the relevant plan documents or according to Company’s normal
practices and procedures, except that if Executive is entitled to benefits under paragraph
5.1 or paragraph 5.2 above, he shall also be entitled to the benefits described in this
paragraph 5.4, as well as paragraphs 5.5 and 5.6.

	 	(a)	 	Health Care Continuation. Company agrees to offer to Executive, and Executive
at his sole option may elect to continue his current health care coverage (including
medical, dental, hearing and/or vision coverage) at active employee rates for up to
the Specified Period following his Termination Date upon the timely payment by
Executive to Company or its designated representative of the amount due for such
coverage; the Company will continue to pay its share of such costs for such coverage
on an active employee basis. That portion of the cost of coverage paid by the Company
will be reported as income to Executive. For purposes of this Agreement, the Specified
Period will be thirty-six (36) months if Executive is eligible for benefits under
paragraph 5.1 above, and twenty-four (24) months if Executive is eligible for benefits
under paragraph 5.2 above. Health care coverage under such plans shall continue until
the earlier of: (i) the effective date on which Executive secures comparable coverage
under another group health plan, or (ii) the expiration of the Specified Period.
Executive shall notify Company as soon as reasonably practicable of the effective date
of any health care coverage he secures following his separation from employment with
Company, provided such coverage is obtained during the Specified Period. Executive
acknowledges that the health care coverage continuation provided under this paragraph
5.4(a) will satisfy Company’s obligations under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), provided that if circumstances occur which would
extend COBRA eligibility beyond the Specified Period, Executive may continue such
coverage for any additional period of COBRA eligibility at normal COBRA rates.
Executive acknowledges and agrees that he is solely responsible for signing and
returning to Company or its designated representative all documents required by
Company in order to effect health care options selected by him.
	 
	 	(b)	 	Life Insurance Continuation. Company agrees to pay on behalf of Executive the
premiums for continuation of his current life insurance coverage for the duration of
the statutory continuation period.

	 	5.5.	 	Executive Outplacement. Executive will be provided with executive outplacement
assistance through a provider of his choice, at a cost not to exceed Twenty Thousand
Dollars ($20,000). No cash payment in lieu of outplacement services will be provided in
the event Executive declines such services. All services must be completed by the end of
the second calendar year following the Termination Date and reimbursement must be provided
no later than the third calendar year following that date.
	 
	 	5.6.	 	Annual Variable Compensation. Executive will be paid a prorated portion of annual
variable compensation for the year in which Termination Date occurs, based on projected

 

 

	 	 	 	results as of Termination Date; such amount will be payable in the next calendar year when
such payments are normally made, not later than two and one half months after the end of
the year in which the Termination Date occurs.

	6.	 	Severance Benefits; Other Termination. If the Executive’s employment with the
Company terminates at any time under circumstances which do not entitle him to the benefits
described in Paragraph 5.1 or 5.2, then the only benefits for which he may be eligible are
those benefits (if any) provided under the Company’s then existing severance and benefits
plans and policies at the Termination Date or under another agreement with the Company.

	7.	 	Accrued Wages and Vacation; Expenses. Without regard to the reason for, or the timing
of, Executive’s termination of employment: (i) the Company shall pay the Executive any unpaid
base salary due for periods prior to the Termination Date; (ii) the Company shall pay the
Executive all of the Executive’s accrued and unused PTO through the Termination Date; and
(iii) following submission of proper expense reports by the Executive, the Company shall
reimburse the Executive for all expenses reasonably and necessarily incurred by the Executive
in connection with the business of the Company prior to the Termination Date. All such
payments will be made in compliance with applicable state law.
	 
	8.	 	Limitation on Payments and Benefits

	 	8.1	 	Limitation. Notwithstanding anything to the contrary contained in this Agreement if,
after taking into account all amounts and benefits to be paid or payable to the Executive
under this Agreement or otherwise, any amount or benefit to be paid or provided under this
Agreement or any other plan or agreement would be a “parachute payment,” within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or
any successor provision thereto, and but for this Section 8 would be subject to the excise
tax imposed by Section 4999 of the Code, then the payments and benefits to be so paid or
provided under this Agreement or any other plan or agreement shall be as follows:

	 	(a)	 	if termination occurs on or before December 31, 2010, the Executive shall be
entitled to receive an additional payment (a “280G Gross-Up Payment”) in an
amount such that, after payment by the Executive of all taxes (and any interest or
penalties imposed with respect to such taxes), including any income and employment
taxes and Excise Taxes imposed upon the 280G Gross-Up Payment, the Executive retains
an amount as if Section 280G did not apply to any of the payments described in Section
5 and 8.1(a).
	 
	 	(b)	 	if termination occurs after December 31, 2010, then such payments and
benefits shall either be:

	 	(1)	 	delivered in full in the amounts and at the times set forth in this
Agreement, or
	 
	 	(2)	 	delivered as to such lesser extent which would result in no portion
of such payments and benefits being subject to excise tax under Section 4999 of
the Code, or any successor provision thereto, or any tax imposed by any
comparable provision of state law, whichever of the foregoing amounts, taking

 

 

	 	 	 	into account the applicable federal, state and local income taxes and the excise
tax imposed by Section 4999 of the Code, or any successor provision thereto, or
any tax imposed by any comparable provision of state
law, results in the receipt by the Executive on an after-tax basis, of the
greatest amount of payments and benefits, notwithstanding that all or some
portion of such payments and benefits may be taxable under Section 4999 of the
Code, or any successor provision thereto, or any tax imposed by any comparable
provision of state law. Any taxes due under Section 4999 of the Code, or any
successor provision thereto, or any tax imposed by any comparable provision of
state law shall be the responsibility of the Executive.

	 	8.2.	 	Auditor’s Determination. Any determination as to the amount or timing of payments
required under this Section 8 shall be made in writing by the Company’s independent
accountants or other qualified professional engaged by the Company (the “Auditor”)
immediately prior to the Change of Control, whose determination shall be conclusive and
binding upon the Executive and the Company for all purposes. For purposes of making the
calculations required by this Section 8, the Auditor may, after taking into account the
information provided by the Executive, make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Section 280G and 4999 of the Code. The Company and the
Executive shall furnish to the Auditor such information and documents as the Auditor may
reasonably request in order to make a determination under this Section. If the auditor
identifies more than one option which would meet the requirements of Paragraph 8.1, the
Executive may select among the identified options within 30 days after receiving the
Auditor’s written determination. The Company shall bear all costs the Auditor may
reasonably incur in connection with any calculations contemplated by this Section 8. If,
as a result of any reduction required by Paragraph 8.1, amounts previously paid to the
Executive exceed the amount to which the Executive is entitled, the Executive will
promptly return the excess amount to the Company.
	 
	 	8.3. 	 	Timing of Payment. Any payment made under this Section 8 beyond what is payable
under the other provisions of this Agreement shall be made not later than the due date,
including extension, on which Executive must remit the taxes related to such payments.

	9.	 	Successors.

	 	9.1.	 	Company’s Successors. Any successor to the Company (whether direct or indirect and
whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets shall assume the Company’s
obligations under this Agreement and agree to perform the Company’s obligations under this
Agreement in the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession..
	 
	 	9.2.	 	Executive’s Successors. Without the written consent of the Company, Executive shall
not assign or transfer this Agreement or any right or obligation under this Agreement to
any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and
all rights of Executive hereunder shall inure to the benefit of, and be enforceable by,
Executive’s personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.

 

 

	10.	 	Notices.

	 	10.1.	 	General. Notices and all other communications contemplated by this Agreement shall
be in writing and shall be deemed to have been duly given when personally delivered or
when mailed by U.S. registered or certified mail, return receipt requested and postage
prepaid. In the case of the Executive, mailed notices shall be addressed to him at the
home address which he most recently communicated to the Company in writing. In the case of
the Company, mailed notices shall be addressed to its corporate headquarters, and all
notices shall be directed to the attention of Vice President, Human Resources.
	 
	 	10.2.	 	Notice of Termination. Any Involuntary Termination by the Company or Voluntary
Termination for Good Reason by the Executive shall be communicated by a notice of
termination to the other party hereto given in accordance with this Section. Such notice
shall indicate the specific termination provision in this Agreement relied upon, shall set
forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the Termination Date
(which shall be not less than 30 days after the giving of such notice).

	11.	 	Dispute Resolution. All disputes arising hereunder shall be settled in accordance
with the following dispute resolution process:

	 	11.1.	 	 Negotiation; Mediation. The parties hereto will attempt to settle any claim or
controversy arising out of this Agreement through consultation and negotiation in good
faith and a spirit of mutual cooperation. However, at any time before or during such
negotiations, or following any unsuccessful negotiations, either party may by written
notice to the other demand that the dispute be submitted to mediation. When such a demand
is made, the parties shall within ten (10) days jointly make arrangements for the
mediation of the dispute within the State of Minnesota pursuant to the Model Procedure for
Mediation of Business Disputes produced by the Center for Public Resources (CPR).
	 
	 	11.2.	 	 Effect on other legal proceedings. Neither party shall initiate any litigation or
other formal claim procedure before the parties have in good faith exhausted the
negotiation and mediation steps described in paragraph 11.1; provided, however, nothing in
this Agreement will prevent either party from resorting to judicial proceedings prior to
that time for the limited purposes of seeking a preliminary injunction or to avoid the
barring of the claim under the applicable statute of limitations. In addition, resort by
either party to negotiation or mediation pursuant to this Agreement shall not be construed
under the doctrine of laches, waiver or estoppel to affect adversely the rights of either
party to pursue any such judicial relief; provided, however, that irrespective of the
filing of any such request for judicial relief the party shall continue to participate in
the dispute resolution proceedings required by this Section 11. Any negotiation or
mediation which takes place pursuant to this Agreement shall be confidential and shall
be treated as a compromise and settlement negotiation for purposes of the Federal Rules of
Evidence and State rules of Evidence.

 

 

	12.	 	Miscellaneous Provisions.

	 	12.1.	 	Waiver. No provision of this Agreement may be modified, waived or discharged unless
the modification, waiver or discharge is agreed to in writing and signed by the Executive
and by an authorized officer of the Company (other than the Executive). No waiver by
either party of any breach of, or of compliance with, any condition or provision of this
Agreement by the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.
	 
	 	12.2.	 	Integration. This Agreement represents the entire agreement and understanding
between the parties as to the Company’s obligation to make payments and provide benefits
to the Executive in the event of Involuntary Termination, or in the event of Voluntary
Termination for Good Reason under the circumstances defined herein, and supersedes all
prior or contemporaneous agreements on the subject, whether written or oral.
	 
	 	12.3.	 	Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the internal substantive laws, but not the conflicts of law
rules, of the State of Minnesota.
	 
	 	12.4.	 	Severability. The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other provision
hereof, which shall remain in full force and effect.
	 
	 	12.5.	 	Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together will constitute one and the same instrument.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.

	 	 	 	 	 
	CHRIS POLICINSKI

	 	LAND O’LAKES, INC.
	 	 
	 
	 	 	 	 
	/s/ C J Policinski

 

	 	/s/ Peter S. Janzen
 

Title: SVP & General Counsel	 	 
	 
	 	 	 	 
	 

	 	Acknowledged and agreed to by:	 	 
	 
	 	 	 	 
	 

	 	/s/ Pete Kappelman

 

Pete Kappelman	 	 
	 

	 	Chairman, Land O’Lakes, Inc.	 	 
	 

	 	Board of DirectorsEX-10.28

Exhibit 10.28

SIXTH AMENDMENT TO CREDIT AGREEMENT

     THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of November 12,
2008, is by and between ARABICA FUNDING, INC., a Delaware corporation (the “Borrower”), the
several banks and other financial institutions or entities from time to time parties to this
Agreement (the “Lenders”), and BANK OF AMERICA, N.A., as successor-by-merger to Fleet
National Bank, as administrative agent (the “Administrative Agent”).

RECITALS

     A. The Borrower, the Lenders and the Administrative Agent are parties to the Credit Agreement
dated as of June 29, 2004 (as amended and in effect from time to time, the “Credit
Agreement”). Capitalized terms used herein without definition have the meanings assigned to
them in the Credit Agreement.

     B. The Borrower has requested certain amendments to the Credit Agreement and the consent of
the Lenders to the Borrower’s execution and delivery of an amendment to the Master Lease. The
Lenders signing below are willing to effect such amendment and consent to such execution and
delivery, on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

I. AMENDMENT TO CREDIT AGREEMENT AND CONSENT. Subject to the satisfaction of each of the
conditions set forth herein, the Credit Agreement is hereby amended as follows:

     A. Definitions. Section 1.1 of the Credit Agreement is hereby amended as follows:

1. By adding the following new definitions of “Base Rate”, “Base Rate Loan” and “New Store”,
each in proper alphabetical order:

     “Base Rate Loan”: any Loan bearing interest based upon the
Base Rate.

     “Base Rate”: for any day, a fluctuating rate per annum equal
to the higher of (a) the Federal Funds Effective Rate plus 1/2 of 1%
and (b) the rate of interest in effect for such day as publicly announced
from time to time by the Reference Lender as its “prime rate”,
provided that notwithstanding anything in this Agreement to the
contrary, at no time shall the Base Rate be less than four (4.0%) percent.
The “prime rate” is a rate set by the Reference Lender based upon various
factors including the Reference 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 such announced
rate. Any change in such rate announced by the Reference Lender shall take
effect at the opening of business on the day specified in the public
announcement of such change.

 

 

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

2. By deleting in their entireties the definitions of “Adjustment Date”, “COF Loan”, “COF
Rate” and “Pricing Grid”.

3. By amending and restating the definition of “Applicable Margin” in its entirety as
follows:

     “Applicable Margin”: at any time, in respect of Base Rate
Loans, two (2.0%) percent per annum and in respect of Eurodollar Loans,
three and three-quarters (3.75%) percent per annum.

4. By amending and restating the definition of Commitment Fee Rate in its entirety as
follows:

     “Commitment Fee Rate”: one (1.0%) percent per annum.

5. By amending the definition of “Consolidated EBITDA” by deleting the reference to “fiscal
quarter” contained therein and by substituting therefor the phrase “fiscal period”.

6. By inserting the following at the end of the definition of “Eurodollar Base Rate”:

“Notwithstanding anything in this Agreement to the contrary, at no time
shall the Eurodollar Base Rate be less than two and one-quarter (2.25%)
percent.”

7. By amending and restating the definition of “New Store Commitment” in its entirety as
follows:

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

8. By amending and restating the definition of “Revolving Termination Date” in its entirety
as follows:

     “Revolving Termination Date”: June 30, 2010.

9. By amending and restating the last sentence in the definition of “Revolving Commitment”
in its entirety as follows:

     “The amount of the Total Revolving Commitments as of November 12, 2008 is
$9,000,000.”

-2-

 

10. By amending and restating the definition of “Store” in its entirety as follows:

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

     B. Base Rate Loans. The Credit Agreement is amended by deleting the phrases “COF
Loan” and “COF Loans” in each place where such phrases appear and by in each case substituting
therefor the phrases “Base Rate Loan” and “Base Rate Loans”, respectively.

     C. Base Rate. The Credit Agreement is amended by deleting the phrase “COF Rate” in
each place where such phrase appears and by substituting therefor the phase “Base Rate”.

     D. Commitment Fees. Section 2.3(a) of the Credit Agreement is hereby amended and
restated in its entirety as follows:

“(a) The Borrower agrees to pay to the Administrative Agent for the account
of each Lender in accordance with its Revolving Percentage, a commitment fee
for the period from and including November 12, 2008 to the last day of the
Revolving Commitment Period, computed at the Commitment Fee Rate on the
amount of the Total Revolving Commitments in effect (regardless of usage) on
the due date of each such payment, payable monthly in advance on the first
Business Day of each calendar month, commencing on the first such date to
occur after the date hereof.”

     E. Interest Rate on Base Rate Loans. Section 2.9(b) of the Credit Agreement is hereby
amended and restated as follows:

          “(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.”

     F. Debit Authorization. Section 2.12(c) of the Credit Agreement is hereby amended by
inserting the following at the end thereof:

“The Borrower hereby irrevocably authorizes the Administrative Agent to
debit any of Borrower’s accounts held with the Reference Bank (any of the
foregoing, a “Borrower Account”), or if the funds therein are
insufficient, to advance to a Borrower Account as a Revolving Loan that is a
Base Rate Loan and simultaneously debit such Borrower Account, a sum
sufficient to pay when due all scheduled payments of principal and all
interest accrued on the Obligations and to pay when due all costs, fees and
expenses at any time owed by the Borrower to the Administrative Agent, the
Lenders and/or the Issuing Lender.”

     G. Monthly Compliance Certificates. Section 6.2(b) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

          “(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) (A) a certificate of a Responsible Officer
stating that, to the best of such Responsible Officer’s knowledge, each of
Holdings and each
of its Subsidiaries during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition contained in
this

-3-

 

Agreement and the other Transaction Documents to which it is a party to
be observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any “Default” or “Event of Default” (each as
defined in the Master Lease) except as specified in such certificate, and
(B) a certificate of appropriate officer of the Borrower, such officer to be
reasonably acceptable to the Administrative Agent, stating that to the best
of such officer’s knowledge, each of the Borrower and the Securities Pledgor
during such period has observed or performed all of its covenants and other
agreements, and satisfied every condition contained in this Agreement and
the other Transaction Documents to which it is a party to be observed,
performed or satisfied by it, and that such officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate, (ii) a Store by Store report substantially in the form of
Exhibit 6.2(b), and (iii) in the case of quarterly, annual and monthly
financial statements, (x) a Compliance Certificate and (y) to the extent not
previously disclosed to the Administrative Agent, a description of any
change in the jurisdiction of organization of any Loan Party and a list of
any Intellectual Property or other property as to which action is required
under Section 6.10 hereof, in each case acquired by any Loan Party since the
date of the most recent report delivered pursuant to this clause (y), and
(z) the applicable compliance certificate required to be delivered under the
Master Lease;”

     H. Financial Covenants. Section 7.1 of the Credit Agreement is hereby amended and
restated in its entirety as follows:

     “7.1 Financial Condition Covenants; New Stores.

     (a) Maximum Senior Leverage Ratio. Permit the ratio (the
‘Consolidated Senior Leverage Ratio‘) of the Consolidated Funded
Indebtedness of the Company and its Subsidiaries (excluding any Additional
Subordinated Debt included therein) at September 30, 2008 and at the last
day of each fiscal month thereafter to the Consolidated EBITDA of the
Company for the twelve fiscal month period ending on such last day of the
fiscal month to be greater than 1.00:1.00.

     (b) Minimum Consolidated EBITDA. Permit the Consolidated
EBITDA of the Company for the twelve fiscal month period ending on September
30, 2008 and for the twelve fiscal month period ending on the last day of
each fiscal month thereafter to be less than $9,000,000.

     (c) Minimum Interest Coverage Ratio. Permit the ratio of (i)
the Consolidated EBITDAR of the Company for any Reference Period ending on
any Quarterly Date falling in any period referred to below to (ii) the sum
of Consolidated Interest Expense plus Consolidated Rental Expense of the
Company and its Subsidiaries for such Reference Period to be less than the
ratio specified below for the period during which such date falls.

-4-

 

	 	 	 	 	 
	 	 	Minimum Interest
	Quarterly Dates	 	Coverage Ratio
	January 1, 2008 through June 30, 2008
	 	 	1.38:1.00	 
	July 1, 2008 through September 30, 2008
	 	 	1.40:1.00	 
	October 1, 2008 and thereafter
	 	 	1.35:1.00	 

     (d) Maximum Capital Expenditures.

     (i) Make any Capital Expenditures, except to purchase and
lease back assets of the Company and its Subsidiaries in connection
with Loans hereunder (limited in purchase price to the amount of
such Revolving Loans) pursuant to the Lease/Purchase Documents.

     (ii) Permit the Capital Expenditures made by the Company and
its Subsidiaries in any fiscal year to exceed $10,000,000.

     (e) Minimum Rental Payments. Permit the Lease/Purchase
Documents not to provide at all times for rental and other payments from the
Company under the Lease/Purchase Documents in amounts sufficient to cover
all of the Obligations and all of its operating and other expenses, in each
case on or prior to the dates when such Obligations and expenses become due
and payable.

     (f) New Store Commitments. Permit the Company to enter into
any New Store Commitment if at such time (A) the Coffeehouse Level EBITDA
Margin for the Reference Period ended December 30, 2007 and each Reference
Period thereafter is less than 15% of Coffeehouse Level Sales for such
Reference Period, or (B) the aggregate Available Revolving Commitments of
all Lenders are less than (1) the budgeted amount of Capital Expenditures
for outstanding New Store Commitments (including the New Store Commitment in
question, and assuming that the budgeted amount of Capital Expenditures for
any New Store Commitment for which a Capital Expenditure budget has not been
determined is $300,000), less (2) the aggregate amount of Capital
Expenditures made toward New Store Commitments prior to the opening of each
such New Store.”

     I. Foreign Intellectual Property. Section 7.3 of the Credit Agreement is hereby
amended by inserting the following at the end thereof:

“Without limitation of the foregoing, the Borrower covenants and agrees that it will
not enter into (and will not suffer or permit any of its Subsidiaries to enter into)
any agreement or understanding (each, a ‘Restrictive Agreement‘) with any
Person other than the Administrative Agent which could prohibit or restrict in any
manner the right of the Borrower or any such Subsidiary to grant to the
Administrative Agent any Lien on any of its Intellectual Property arising under laws
other than those of the United States, whether such Intellectual Property is now
owned or hereafter acquired. The Borrower represents and warrants that, at the date
of this Agreement, neither the Borrower nor any such Subsidiary is party to any such
Restrictive Agreement.”

-5-

 

     J. Commitments. Schedule 1.1(A) of the Credit Agreement is amended and
restated in its entirety in the form attached hereto as Annex I.

     K. Borrower Schedules. Each of Schedule 1.1B, 1.1C, 4.4, 4.9, 4.15, 4.17, 4.19(a),
4.24, 4.25(a) and 4.25(d) to the Credit Agreement is amended and restated in its entirety in the
form attached hereto as Annex II by updating each as of the date hereof

     L. Amendment to Lease/Purchase Documents. The Lenders hereby agree to the form of the
Seventh Amendment to Second Amended and Restated Lease and License Financing and Purchase Option
Agreement attached hereto as Exhibit A (the “Amendment to Lease/Purchase
Documents”).

     M. No Further Amendments. Except as specifically amended hereby, the text of the
Credit Agreement and all other Loan Documents shall remain unchanged and in full force and effect.

II. REFERENCES IN LOAN DOCUMENTS; CONFIRMATION OF SECURITY. All references to the “Credit
Agreement” in all Loan Documents shall, from and after the date hereof, refer to the Credit
Agreement, as amended by this Amendment, and all obligations of the Borrower under the Loan
Documents shall be secured by and be entitled to the benefits of the Security Documents. All
Security Documents heretofore executed by the Restricted Group shall remain in full force and
effect and, by the Borrower’s signature hereto, and Holdings’ and the Company’s and its
Subsidiaries’ signatures to such Amendment to Lease/Purchase Documents, such Security Documents are
hereby ratified and affirmed.

III. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower hereby represents and
warrants to, and covenants and agrees with the Lenders that:

     A. The execution and delivery of this Amendment has been duly authorized by all requisite
action on the part of the Borrower and does not contravene, conflict with, or constitute a default
under, any provision of: (i) the Borrower’s articles of incorporation or bylaws, (ii) any law,
judgment, decree or order applicable to the Borrower or to any other Loan Party, or (iii) any
provision of any material agreement or instrument binding upon any Loan Party or upon any of the
respective property of a Loan Party. The execution and delivery of this Amendment by the Borrower
do not and will not cause any lien to arise under any provision of any material agreement or
instrument binding upon any Loan Party or upon any of the respective property of a Loan Party.

     B. The representations and warranties of the Borrower contained in the Credit Agreement and
the other Loan Documents are true and correct in all material respects on and as of the date of
this Amendment as though made at and as of such date, except to the extent (a) such representations
and warranties expressly relate to an earlier date (and the representations and warranties set
forth in Section 4.1 and Section 4.18 (relating solely to the Confidential Offering Memorandum) of
the Credit Agreement and Section 19(a) and Section 19(q) (relating solely to the Confidential
Offering Memorandum) of the Master Lease shall be construed to relate only to the date of the
Credit Agreement and the Master Lease, respectively, and to the
Closing Date), in which case each such representation and warranty shall be true and correct in all
material respects as of such earlier date and (b) of inaccuracies resulting from transactions

-6-

 

expressly permitted under the Loan Documents. No Default or Event of Default has occurred and is
continuing under the Credit Agreement or any other Loan Document.

     C. Attached hereto as Exhibit A is a true, correct and complete copy of the Amendment
to Lease/Purchase Documents.

     D. No member of the Restricted Group is required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any governmental instrumentality
or other agency or any other person or entity in connection with or as a condition to the
execution, delivery or performance of this Amendment.

     E. This Amendment constitutes the legal, valid and binding obligation of the Borrower,
enforceable against it in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights and remedies of creditors
generally or the application of principles of equity, whether in any action at law or proceeding in
equity, and subject to the availability of the remedy of specific performance or of any other
equitable remedy or relief to enforce any right thereunder.

     F. $3,000,000 in Total Revolving Extensions of Credit are outstanding as of September 12,
2008.

     G. By the Borrower’s signature hereto, and Holdings’, the Company’s and its Subsidiaries’
signatures to the Amendment to Lease/Purchase Documents, each such party hereby acknowledges and
confirms that (i) it does not have any grounds, and hereby agrees not to challenge (or to allege or
to pursue any matter, cause or claim arising under or with respect to), in any case based upon acts
or omissions of the Administrative Agent or the Lenders, the effectiveness, genuineness, validity,
collectibility or enforceability of the Credit Agreement or any of the other Loan Documents, the
Lease/Purchase Documents, the Obligations, the Grantor Obligations (as defined in the Borrower
Security Agreement and the Company Guarantee and Security Agreement, respectively), the Liens
securing the Obligations and Grantor Obligations, or any of the terms or conditions of any Loan
Document or any Lease/Purchase Document, and (ii) it does not possess (and hereby forever waives,
remises, releases, discharges and holds harmless each Lender, the Administrative Agent, and their
respective affiliates, stockholders, directors, officers, employees, attorneys, agents and
representatives and each of their respective heirs, executors, administrators, successors and
assigns (collectively, the “Indemnified Parties”) from and against, and agrees not to
allege or pursue) any action, cause of action, suit, debt, claim, counterclaim, cross-claim,
demand, defense, offset, opposition, demand and other right of action whatsoever, whether in law,
equity or otherwise (which it, all those claiming by, through or under it, or its successors or
assigns, have or may have) against the Indemnified Parties, or any of them, by reason of, any
matter, cause or thing whatsoever, with respect to events or omissions occurring or arising on or
prior to the date hereof and relating to the Credit Agreement, any of the other Loan Documents or
any of the other Lease/Purchase Documents (including, without limitation, with respect to the
payment, performance, validity or enforceability of the Obligations, the Grantor Obligations, the
Liens securing the Obligations and Grantor Obligations, or any or all of the terms or conditions of
any Loan Document or any
Lease/Purchase Document) or any transaction relating thereto.

-7-

 

     H. Attached hereto as Annex III is a true and correct list of all deposit accounts,
securities accounts, commodities accounts and similar accounts maintained by the Borrower and each
other Loan Party as of the date hereof. On or before January 15, 2009, the Borrower will obtain
and maintain, or cause to be obtained and maintained, control agreements in form and substance
satisfactory to the Administrative Agent with respect to each such account set forth on Annex
III and shall take, or cause to be taken, any other actions deemed necessary by the
Administrative Agent to obtain and maintain “control” of each such account (as such term is defined
in Section 9-104 of the Uniform Commercial Code in the applicable jurisdiction), and the Borrower
shall thereafter in connection with the opening of any new deposit, securities, commodities or
similar account, deliver or cause to be delivered a control agreement in form and substance
satisfactory to the Administrative Agent simultaneously with the opening of such new account;
provided that so long as no Default or Event of Default shall have occurred and be
continuing, the Borrower and the other Loan Parties shall be permitted to maintain those accounts
expressly designated on Annex III hereto not subject to the Administrative Agent’s control
(the “Unrestricted Accounts”) if (i) the total amount of funds on deposit in all
Unrestricted Accounts does not exceed $200,000 in the aggregate at any given time and (ii) such
Unrestricted Accounts are used solely for petty cash purposes. Failure to comply with this Section
III.H. shall constitute an Event of Default under the Credit Agreement.

     I. On or before January 31, 2009, the Borrower will use its reasonable efforts to obtain and
maintain, or cause to be obtained and maintained, landlord waivers, warehouseman’s waivers or other
similar agreements, each in form and substance reasonably satisfactory to the Administrative Agent,
with respect to those locations which are requested by the Administrative Agent in its sole
discretion and are listed on Schedule 2.6 of the Perfection Certificate of the Company delivered in
connection herewith and designated thereon as “food” or “green coffee storage” sites. Failure to
comply with this Section III.I. shall, if unremedied for a period of 30 days after notice to the
Borrower from the Administrative Agent, constitute an Event of Default under the Credit Agreement.

     J. As of the date hereof, at least fifty (50%) percent of the Company’s total number of Stores
located in the United States utilize a Lender for their primary cash management functions and the
Borrower will cause at least such percentage to be maintained at all times hereafter. In the event
that Wachovia Corporation and/or its Affiliates with commercial banking operations (collectively,
“Wachovia”) are merged with any Lender by March 31, 2009, then at all times thereafter, the
Borrower will cause at least seventy (70%) percent of the Company’s total number of Stores located
in the United States to utilize a Lender for their primary cash management functions (inclusive of
Wachovia). On or before March 31, 2009 and at all times thereafter, the Borrower shall cause all
of the Borrower’s, the Company’s and its Subsidiaries’ operating accounts to be maintained with a
Lender. Failure to comply with this Section III.J. shall constitute an Event of Default under the
Credit Agreement.

IV. CONDITIONS.

     A. This Amendment shall become effective on the first date on which the Borrower shall have
executed and delivered to the Administrative Agent (or shall have caused to be executed and
delivered to the Administrative Agent by the appropriate persons) the following:

1. This Amendment;

-8-

 

2. The Amendment to Lease/Purchase Documents between the Borrower and the Company;

3. Completed Perfection Certificates for the Borrower and each other Loan Party,
each in form and substance satisfactory to the Administrative Agent;

4. Trademark Security Agreements and any other intellectual property security
agreements deemed necessary by the Administrative Agent with respect to the
Borrower’s and the Company’s domestic intellectual property not already subject to
such an agreement; such documents to be in form and substance satisfactory to the
Administrative Agent and to be suitable for filing with the United States Patent and
Trademark or Copyright Office, as applicable;

5. Payment in immediately available funds of all fees agreed to be paid by the
Borrower in connection with this Amendment, including without limitation, a
fully-earned and non-refundable amendment fee in the amount of Fifty Thousand
Dollars ($50,000.00), which amendment fee shall be payable to the Administrative
Agent for pro rata distribution to the Lenders; and

6. Such other supporting documents and certificates as the Administrative Agent or
its counsel may reasonably request.

     B. All legal matters incident to the transactions contemplated hereby shall be satisfactory to
counsel for the Administrative Agent.

V. MISCELLANEOUS.

     A. As provided in the Credit Agreement, the Borrower agrees to reimburse the Administrative
Agent upon demand for all reasonable fees and disbursements of counsel incurred in connection with
the preparation of this Amendment.

     B. This Amendment shall be governed by and construed in accordance with the laws of the State
of New York.

     C. This Amendment may be executed by the parties hereto in several counterparts hereof and by
the different parties hereto on separate counterparts hereof, all of which counterparts shall
together constitute one and the same agreement. Delivery of an executed signature page of this
Amendment by facsimile transmission shall be effective as an in-hand delivery of an original
executed counterpart hereof.

[The next pages are the signature pages.]

-9-

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as a
sealed instrument by their duly authorized representatives, all as of the day and year first above
written.

	 	 	 	 	 
	 	ARABICA FUNDING, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signatures continue on next page]

Signature Page to Sixth Amendment to Credit Agreement

 

 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., successor-by-merger to
 Fleet
National Bank, as Administrative Agent

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signatures continue on next page]

Signature Page to Sixth Amendment to Credit Agreement

 

 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A., successor-by-merger to
 Fleet
National Bank, as a Lender

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signatures continue on next page]

Signature Page to Sixth Amendment to Credit Agreement

 

 

	 	 	 	 	 
	 	WELLS FARGO BANK, N.A.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:

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