U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the sixteen weeks ended January 17, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from __________ to ____________
Commission file number 1-12340
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GREEN MOUNTAIN COFFEE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 03-0339228
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
33 Coffee Lane, Waterbury, Vermont 05676
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(Address of principal executive offices) (zip code)
(802) 244-5621
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [ X ] NO [ ]
As of February 27, 1998, 3,530,818 shares of common stock of the registrant were
outstanding.
<PAGE>
Part I. Financial Information
Item I. Financial Statements
GREEN MOUNTAIN COFFEE, INC.
Consolidated Balance Sheet
(Dollars in thousands)
<TABLE>
January 17, 1998 September 27, 1997
---------------- ------------------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents...................................... $ 1,024 $ 831
Receivables, less allowances of $146 at January 17, 1998
and $116 at September 27, 1997............................... 4,540 4,119
Inventories.................................................... 5,278 5,224
Other current assets........................................... 463 376
Deferred income taxes, net..................................... 900 865
------------- -------------
Total current assets........................................ 12,205 11,415
Fixed assets, net.............................................. 11,458 11,258
Other long-term assets, net................................... 398 385
Deferred income taxes, net.................................... 395 486
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Total assets................................................ $ 24,456 $ 23,544
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt.............................. $ 916 $ 943
Current portion of obligation under capital lease.............. 102 132
Accounts payable .............................................. 4,385 4,954
Accrued payroll................................................ 550 616
Accrued expenses............................................... 212 279
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Total current liabilities................................... 6,165 6,924
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Long-term debt................................................. 1,682 1,968
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Obligation under capital lease................................. - 12
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Long-term line of credit........................................ 5,850 3,985
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Commitments
Stockholders' equity:
Common stock, $0.10 par value:
Authorized - 10,000,000 shares; issued and outstanding -
3,530,818 shares at January 17, 1998 and September 27, 1997..... 353 353
Additional paid-in capital...................................... 12,954 12,954
Accumulated deficit............................................. (2,548) (2,652)
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Total stockholders' equity...................................... 10,759 10,655
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Total liabilities and stockholders' equity...................... $ 24,456 $ 23,544
============= =============
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
</FN>
</TABLE>
<PAGE>
GREEN MOUNTAIN COFFEE, INC.
Consolidated Statement of Operations
(Dollars in thousands except per share data)
<TABLE>
Sixteen weeks ended
------------------------------------
January 17, January 18,
1998 1997
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(unaudited)
<S> <C> <C>
Net sales............................... $ 18,476 $ 14,412
Cost of sales........................... 12,079 8,645
---------- ----------
Gross profit........................ 6,397 5,767
Selling and operating expenses.......... 4,832 3,783
General and administrative expenses..... 1,223 973
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Income from operations.............. 342 1,011
Other income............................ 35 -
Interest expense........................ (214) (144)
---------- ---------
Income before income taxes.......... 163 867
Income tax expense...................... (59) (145)
Net income.......................... $ 104 $ 722
========== ==========
Net income per share.................. $ 0.03 $ 0.21
========== ==========
Weighted average shares............... 3,530,818 3,417,306
========== ==========
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
</FN>
</TABLE>
<PAGE>
GREEN MOUNTAIN COFFEE, INC.
Consolidated Statement of Cash Flows
(Dollars in thousands)
<TABLE>
Sixteen weeks ended
------------------------------------
January 17, 1998 January 18, 1997
---------------- ----------------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income........................................ $ 104 $ 722
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................ 825 729
Loss (gain) on disposal of fixed assets...... (17) 15
Provision for accounts....................... 73 30
Deferred income taxes........................ 57 93
Changes in assets and liabilities:
Receivables............................... (494) 131
Inventories............................... (54) (128)
Other current assets...................... (87) 172
Other long-term assets, net............... (14) (78)
Accounts payable.......................... (569) (488)
Accrued payroll........................... (66) (1)
Accrued expenses.......................... (67) (114)
--------- ---------
Net cash provided by (used for)
operating activities....................... (309) 1,083
--------- ---------
Cash flows from investing activities:
Expenditures for fixed assets..................... (1,033) (1,308)
Proceeds from disposals of fixed assets........... 25 28
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Net cash used for investing activities..... (1,008) (1,280)
--------- ---------
Cash flows from financing activities:
Repayment of long-term debt....................... (313) (315)
Principal payments under capital lease obligation. (42) (36)
Net change in revolving line of credit............ 1,865 317
-------- ---------
Net cash provided by (used for)
financing activities..................... 1,510 (34)
-------- ---------
Net increase (decrease) in cash and cash equivalents. 193 (231)
Cash and cash equivalents at beginning of period..... 831 551
--------- ---------
Cash and cash equivalents at end of period............ $ 1,024 $ 320
========= =========
<FN>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
</FN>
</TABLE>
<PAGE>
Green Mountain Coffee, Inc.
Notes to Consolidated Financial Statements
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information, the instructions to Form 10-Q, and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements.
In the opinion of management, all adjustments considered necessary for a fair
statement of the interim financial data have been included. Results from
operations for the sixteen week period ended January 17, 1998 are not
necessarily indicative of the results that may be expected for the fiscal year
ending September 26, 1998.
For further information, refer to the consolidated financial statements and the
footnotes included in the annual report on Form 10-K for Green Mountain Coffee,
Inc. for the year ended September 27, 1997.
Net income per share is computed based upon the weighted average number of
common shares outstanding during the period.
2. Inventories
Inventories consist of the following:
<TABLE>
January 17, 1998 September 27, 1997
---------------- ------------------
<S> <C> <C>
Raw materials and supplies............... $ 2,144,000 $ 2,148,000
Finished goods........................... 3,134,000 3,076,000
-------------- ---------------
$ 5,278,000 $ 5,224,000
============== ===============
</TABLE>
3. Fixed Assets
At the end of fiscal 1996, the Company began a project to implement an
enterprise-wide computer system to support its information processing and access
needs. Capitalized costs will be amortized over the estimated useful life
beginning when each site installation or module is complete and ready for its
intended use. In connection with the implementation of the enterprise-wide
computer system, certain costs considered to be business process reengineering
were expensed as incurred.
4. Line of Credit
On February 20, 1998, the Company amended its credit facility with Fleet Bank -
NH. Under the revised facility, the new line of credit has been expanded from
$6,000,000 to $9,000,000 (the availability of which is subject to the Company's
accounts receivable and inventory levels) and the term was extended to March 31,
2001. The outstanding balance on the line of credit at January 17, 1998 was
$5,850,000. Under the amended facility, the Company is also able to borrow up to
$4,500,000 in term debt with a maturity of March 31, 2003. Borrowings under this
term revolver do not require principal repayments until October 31, 1999, at
which time monthly principal payments of $75,000 will commence. Interest rates
for the entire facility will be equal to the lower of Fleet's base rate or a
margin added to LIBOR rates based on a performance pricing structure.
5. Earnings per share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings per Share". SFAS
128 establishes new standards for computing and presenting earnings per share
and is effective for the Company's first 1998 fiscal quarter. SFAS requires
restatement of all previously reported earnings per share data that are
presented. SFAS 128 replaces primary and fully diluted earnings per share with
basic and diluted earnings per share. Diluted earnings per share information for
the first quarter of fiscal 1998 and fiscal 1997 is not materially different
from basic earnings per share presented herein.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
For the sixteen weeks ended January 17, 1998, Green Mountain Coffee, Inc. (the
"Company" or "Green Mountain") derived approximately 85.6% of its net sales from
its wholesale operation. Green Mountain's wholesale operation sells coffee to
retailers and food service concerns including supermarkets, restaurants,
convenience stores, specialty food stores, hotels, universities and business
offices. The Company also operated twelve retail stores and a direct mail
operation, which accounted for approximately 8.1% and 6.3% of net sales,
respectively, during the same period.
Cost of sales consists of the cost of raw materials including coffee beans,
flavorings and packaging materials, a portion of the Company's rental expense,
the salaries and related expenses of production and distribution personnel,
depreciation on production equipment and freight and delivery expenses. Selling
and operating expenses consist of expenses that directly support the sales of
the Company's wholesale, retail or direct mail channels, including media and
advertising expenses, a portion of the Company's rental expense, and the
salaries and related expenses of employees directly supporting sales. General
and administrative expenses consist of expenses incurred for corporate support
and administration, including a portion of the Company's rental expense and the
salaries and related expenses of personnel not elsewhere categorized.
The Company's fiscal year ends on the last Saturday in September. The Company's
fiscal year normally consists of 13 four-week periods with the first, second and
third "quarters" ending 16 weeks, 28 weeks and 40 weeks, respectively, into the
fiscal year.
Coffee Prices, Availability and General Risk Factors
Twenty-year lows in reported domestic coffee supplies combined with forecasts of
smaller crops in Central America, labor actions and reports of adverse growing
conditions in certain coffee growing countries, among other factors, have caused
a dramatic increase since December 1996 in the "C" price of coffee (the price
per pound quoted by the Coffee, Sugar and Cocoa Exchange). In May 1997, the "C"
price reached a record high of over $3.00, up from $1.04 on December 6, 1996.
The "C" price of coffee has generally declined since then, but remains highly
volatile. At February 26, 1998, the "C" price of coffee for March delivery was
$1.75. In addition to the "C" price, coffee of the quality sought by Green
Mountain also tends to trade on a negotiated basis at a substantial premium or
"differential" above the "C" price. Since December 1996, differentials have also
been volatile and generally rising.
The Company believes that the cost of green coffee will continue to be volatile
throughout fiscal 1998. There can be no assurance that the Company will be
successful in passing any increases in the cost of green coffee on to customers
without losses in sales volume or gross margin. Similarly, rapid sharp decreases
in the cost of green coffee could also force the Company to lower sales prices
before realizing cost reductions in its green coffee inventory. Because Green
Mountain roasts over 25 different types of green coffee beans to produce its
more than 50 varieties of coffee, if one type of green coffee bean were to
become unavailable or prohibitively expensive, management believes Green
Mountain could substitute another type of coffee of equal or better quality
meeting a similar taste profile, in a blend or temporarily remove that
particular coffee from its product line. However, frequent substitutions could
lead to cost increases and fluctuations in gross margins. Furthermore, a
worldwide supply shortage of the high-quality arabica coffees the Company
purchases could have an adverse impact on the Company.
Certain statements contained herein are not based on historical fact and are
"forward-looking statements" within the meaning of the applicable securities
laws and regulations. Owing to the uncertainties inherent in forward-looking
statements, actual results could differ materially from those set forth in
forward-looking statements. Factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are not
limited to, business conditions in the coffee industry and food industry in
general, fluctuations in availability and cost of green coffee, economic
conditions, prevailing interest rates, competition, the management challenges of
rapid growth, variances from budgeted sales mix and growth rate, consumer
acceptance of the Company's new products, weather and special or unusual events,
as well as other risk factors described in the Company's Annual Report on Form
10-K for the year ended September 27, 1997 and other factors described from time
to time in the Company's filings with the Securities and Exchange Commission.
Forward-looking statements reflect management's analysis as of the date of this
document. The Company does not undertake to revise these statements to reflect
subsequent developments
Results of Operations
<TABLE>
Sixteen weeks ended
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January 17, 1998 January 18, 1997
---------------- ----------------
<S> <C> <C>
Net sales............................. 100.0 % 100.0 %
Cost of sales......................... 65.4 % 60.0 %
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Gross profit..................... 34.6 % 40.0 %
Selling and operating expenses........ 26.1 % 26.2 %
General and administrative expenses... 6.6 % 6.8 %
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Income from operations........... 1.9 % 7.0 %
Other income.......................... 0.2 % 0.0 %
Interest expense...................... (1.2)% (1.0)%
-------------- -------------
Income before taxes.............. 0.9 % 6.0 %
Income tax expense.................... (0.3)% (1.0)%
Net income....................... 0.6 % 5.0 %
=============== ==============
</TABLE>
Sixteen weeks ended January 17, 1998 versus sixteen weeks ended January 18, 1997
Net sales increased by $4,064,000, or 28.2%, from $14,412,000 for the sixteen
weeks ended January 18, 1997 (the "1997 period") to $18,476,000 for the sixteen
weeks ended January 17, 1998 (the "1998 period"). Coffee pounds sold, excluding
coffee pounds sold as beverages through the Company's 12 company-owned retail
stores, increased by approximately 339,000 pounds, or 17.0%, from approximately
2,000,000 pounds in the 1997 period to approximately 2,339,000 pounds in the
1998 period. Even though the Company's wholesale prices generally decreased in
the first quarter of fiscal 1998, the difference between the percentage increase
in net sales and the percentage increase in coffee pounds sold relates primarily
to increases in Green Mountain's selling prices for coffee during the second and
third quarters of fiscal 1997 as a result of higher green coffee costs.
The net sales increase is attributable to the wholesale area in which net sales
increased by $4,338,000, or 37.8%, from $11,467,000 for the 1997 period to
$15,805,000 for the 1998 period. The wholesale net sales increase resulted
primarily from growth in the number of wholesale accounts.
Retail net sales decreased $318,000 or 17.5% from $1,818,000 for the 1997 period
to $1,500,000 for the 1998 period. The Company is currently planning not to
renew the lease for one of its stores that is expiring in the second quarter of
fiscal 1998 and is in the process of re-assessing the role of its retail
operation in the context of its overall growth strategy. Net sales in the direct
mail area increased $44,000 or 3.9% from $1,127,000 for the 1997 period to
$1,171,000 for the 1998 period.
Gross profit increased by $630,000, or 10.9%, from $5,767,000 for the 1997
period to $6,397,000 for the 1998 period. As a percentage of net sales, gross
profit decreased 5.4 percentage points from 40.0% for the 1997 period to 34.6%
for the 1998 period. The decrease in gross profit as a percentage of sales was
due primarily to the mathematical impact of higher green coffee costs and higher
sales prices, as well as a change in sales channels mix. The majority of the
sales increase took place in the wholesale channel, which generates a lower
gross margin than the retail and direct mail operation. Within the wholesale
operation, the Company has also experienced a customer category mix change with
a higher percentage of sales to office coffee distributors which carry lower
gross margins.
Selling and operating expenses increased by $1,049,000, or 27.7%, from
$3,783,000 for the 1997 period to $ 4,832,000 for the 1998 period, in support of
the Company's strategic effort to increase its growth rate. Selling and
operating expenses decreased 0.1 percentage points as a percentage of sales from
26.2% for the 1997 period to 26.1% for the 1998 period. The increase in selling
and operating expense was primarily due to increased sales, sales support and
marketing personnel expenses, as well as increased point of purchase promotional
expenses.
General and administrative expenses increased by $250,000 or 25.7% from $973,000
for the 1997 period to $1,223,000 for the 1998 period, but decreased 0.2
percentage points as a percentage of sales from 6.8% for the 1997 period to 6.6%
for the 1998 period. The increase in general and administrative expenses is
primarily the result of personnel additions to support the Company's expansion.
As a result of the foregoing, income from operations decreased by $669,000 or
66.2% from $1,011,000 for the 1997 period to $342,000 for the 1998 period. Net
income decreased by 618,000 or 85.6% from $722,000 for the 1997 period to
$104,000 in the 1998 period.
By the end of the second quarter of fiscal 1998, Green Mountain will have
completed a 45,000 square-foot addition to its central facility. The Company,
which took occupancy of portions of the facility in December 1997, will first
use it for expanded warehousing and distribution space with roasting and
packaging machinery being added as needed. It is estimated that the addition
carries incremental occupancy costs of approximately $400,000 annually.
Furthermore, Green Mountain is presently implementing an enterprise information
system which it expects to use to facilitate growth and improve operations and
customer service. This new enterprise information system also is expected to
address Green Mountain's core "Year 2000" issues. The additional project related
personnel, depreciation and software maintenance expenses (of approximately
$1,000,000 for fiscal 1998) is expected to impact cost of goods sold as well as
operating expenses.
There can be no assurance that future sales increases will be adequate to cover
the additional costs from these two major investments, and earnings in future
periods may be negatively impacted.
Liquidity and Capital Resources
Working capital increased $1,549,000 to $6,040,000 at January 17, 1998 from
$4,491,000 at September 27, 1997. This increase is primarily due to higher
accounts receivable due to increased sales and lower accounts payable.
Cash used for capital expenditures aggregated $1,033,000 during the 1998 period,
and included $372,000 for equipment loaned to wholesale customers, $325,000 for
leasehold improvements and fixtures, $174,000 for production equipment, and
$162,000 for computer hardware and software. During the 1997 period, Green
Mountain had capital expenditures of $1,308,000, including $311,000 for
equipment on loan to wholesale customers, $326,000 for production equipment and
$399,000 for computer hardware and software. Cash used to fund the capital
expenditures in the 1998 period was obtained from net cash provided by financing
activities.
The Company currently plans to make capital expenditures in fiscal 1998 of
approximately $4,500,000. Management continuously reviews capital expenditure
needs and actual amounts expended may differ from these estimates.
On February 20, 1998, the Company amended its credit facility with Fleet Bank -
NH. Under the revised facility, the new line of credit has been expanded from
$6,000,000 to $9,000,000 (the availability of which is subject to the Company's
accounts receivable and inventory levels) and the term was extended to March 31,
2001. The outstanding balance on the line of credit at January 17, 1998 was
$5,850,000. Under the amended facility, the Company is also able to borrow up to
$4,500,000 in term debt with a maturity of March 31, 2003. Borrowings under this
term revolver do not require principal repayments until October 31, 1999, at
which time monthly principal payments of $75,000 will commence. Interest rates
for the entire facility will be equal to the lower of Fleet's base rate or a
margin added to LIBOR rates based on a performance pricing structure.
Management believes that cash flow from operations, existing cash and available
borrowings under its credit facility and other sources will provide sufficient
liquidity to pay all liabilities in the normal course of business, fund capital
expenditures and service debt requirements in fiscal 1998.
Year 2000
Management has assembled a task force and is in the process of completing its
assessment of the impact of the Year 2000 problem on its operational and
financial reporting systems and has developed a plan to correct critical systems
before they fail. Management expects to have addressed most issues pertaining to
the Year 2000 issue by the beginning of fiscal 1999. However, the Company can
give no assurance that this will occur, and failure to make appropriate systems
changes successfully and on time could have a material adverse impact on the
Company's operations. The Company is also assessing the possible effects of Year
2000 issues on its significant vendors and customers, which could in turn affect
the Company's operations.
Deferred Income Taxes
The Company had net deferred tax assets of $1,295,000 at January 17, 1998. These
assets are reported net of a deferred tax asset valuation allowance at that date
of $2,380,000 (including $2,306,000 primarily related to a Vermont investment
tax credit). The Company had income before taxes of $163,000 and $930,000 in the
1998 period and for all of fiscal 1997, respectively, and has been profitable in
its last ten consecutive fiscal quarters. Presently, the Company believes that
the deferred tax assets, net of deferred tax liabilities and the valuation
allowance, are realizable and represent management's best estimate, based on the
weight of available evidence as prescribed in SFAS 109, of the amount of
deferred tax assets which most likely will be realized. However, management will
continue to evaluate the amount of the valuation allowance based on near-term
operating results and longer-term projections.
Factors Affecting Quarterly Performance
Historically, the Company has experienced significant variations in sales from
quarter to quarter due to the holiday season and a variety of other factors,
including, but not limited to, general economic trends, the cost of green
coffee, competition, marketing programs, weather and special or unusual events.
Because of the seasonality of the Company's business, results for any quarter
are not necessarily indicative of the results that may be achieved for the full
fiscal year. Year over year quarterly earnings comparisons will also show
significant variations due to the release in the second quarter of fiscal 1997
of a large portion of the Company's deferred tax asset valuation allowance.
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Certificate of Incorporation1
3.2 Bylaws1
10.2 (gg) Eleventh Amendment to Commercial Loan Agreement, dated
February 20, 1998, from Green Mountain Coffee Roasters, Inc.,
to Fleet Bank - NH.
10.2 (hh) Replacement Revolving Line of Credit Promissory Note, dated
February 20, 1998, from Green Mountain Coffee Roasters, Inc.,
to Fleet Bank - NH.
10.2 (ii) Revolving Line of Credit/Term Promissory Note, dated
February 20, 1998, from Green Mountain Coffee Roasters, Inc.,
to Fleet Bank - NH.
10.76 Stock Option Agreement, dated October 21, 1997 between the
Company and Robert D. Britt.
10.77 Stock Option Agreement, dated October 21, 1997 between the
Company and Paul Comey.
10.78 Stock Option Agreement, dated October 21, 1997 between the
Company and Jonathan C. Wettstein.
10.79 Stock Option Agreement, dated October 21, 1997 between the
Company and William L. Prost.
10.80 Stock Option Agreement, dated October 21, 1997 between the
Company and Stephen J. Sabol.
11 Computation of Earnings per share.
27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the sixteen weeks ended January
18, 1997.
1Incorporated by reference to the corresponding exhibit number in the
Registration Statement on Form SB-2 (Registration No. 33-66646) filed on July
28, 1993, and declared effective on September 21, 1993.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GREEN MOUNTAIN COFFEE, INC.
Date: 3/3/98 By: /s/ Robert P. Stiller
----------- -------------------------------------------------
Robert P. Stiller,
President and Chief Executive Officer
Date: 3/3/98 By: /s/ Robert D. Britt
----------- -------------------------------------------------
Robert D. Britt, Chief Financial Officer,
Treasurer and Secretary
ELEVENTH AMENDMENT TO FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS
THIS ELEVENTH AMENDMENT TO COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS
(the "Amendment") is made effective February 20, 1998, by and among FLEET BANK
- - NH, a bank organized under the laws of the State of New Hampshire with an
address of Mail Stop NHNA E02A, 1155 Elm Street, Manchester, New Hampshire 03101
(the "Bank"), GREEN MOUNTAIN COFFEE ROASTERS, INC. (f/k/a Green Mountain Coffee,
Inc.), a Vermont corporation with a principal place of business at 33 Coffee
Lane, Waterbury, Vermont 05676 (the "Borrower"), and GREEN MOUNTAIN COFFEE
ROASTERS FRANCHISING CORPORATION, a Delaware corporation (the "Subsidiary").
W I T N E S S E T H:
WHEREAS, the Bank, the Borrower, and the Subsidiary are parties to a
certain Fleet Bank - NH Seventh Amendment and First Restatement of Commercial
Loan Agreement dated April 12, 1996, as amended by Eighth Amendment to Fleet
Bank - NH Commercial Loan Agreement and Loan Documents dated February 19, 1997,
Ninth Amendment to Fleet Bank - NH Commercial Loan Agreement and Loan Documents
dated June 9, 1997, and Tenth Amendment to Commercial Loan Agreement dated
January 15, 1998 (as amended to date, the "Loan Agreement") and certain Loan
Documents of various dates (as defined in the Loan Agreement and as amended
through the date hereof), including, but not limited to a certain Guaranty
Agreement dated October 22, 1992, as amended to date, of the Subsidiary (the
"Guaranty"), and certain Security Agreements of the Borrower dated April 12,
1996 and of the Subsidiary dated October 22, 1992, as amended to date
(collectively, the "Security Agreements");
WHEREAS, pursuant to the Loan Agreement, the Bank has extended to the
Borrower certain credit facilities including a revolving line of credit loan up
to the maximum principal amount of Six Million Dollars ($6,000,000.00) (the
"Revolving Line of Credit Loan"); and
WHEREAS, the Borrower has requested, and the Bank has agreed, to (a)
increase the maximum principal amount available under the Revolving Line of
Credit Loan from Six Million Dollars ($6,000,000.00) to Nine Million Dollars
($9,000,000.00), (b) modify the interest rate provisions applicable to the
Revolving Line of Credit Loan, (c) extend a new revolving line of credit/term
loan in the maximum principal amount of up to Four Million Five Hundred Thousand
Dollars ($4,500,000.00), and (d) make certain other modifications and amendments
to the terms and conditions affecting all of the credit facilities provided
under the Loan Agreement and the Loan Documents. All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Loan
Agreement and/or the Loan Documents, as the case may be.
NOW, THEREFORE, in consideration of the Bank increasing the Revolving Line
of Credit Loan as described above, extending the Revolving Line of Credit/Term
Loan, and amending the Loan Agreement in other respects as provided below, the
Bank, the Borrower, and the Subsidiary hereby agree to amend the Loan Agreement
and the Loan Documents as follows:
I. AMENDMENT OF LOAN AGREEMENT.
A. Increase of Revolving Line of Credit Loan and Establishing of Borrowing
Base. The provisions of Section I of the Loan Agreement and of Section I. A. of
Schedule A of the Loan Agreement shall be and hereby are deleted and in place of
Section I is inserted the following:
I. THE REVOLVING LINE OF CREDIT LOAN. The Bank agrees to extend to the
Borrower a Revolving Line of Credit Loan (the "Revolving Line of Credit
Loan") upon and subject to the terms and conditions set forth below and in
the Revolving Line of Credit Note evidencing such Loan, the other Loan
Documents, and elsewhere in this Agreement.
A. Special Terms and Definitions for Revolving Line of Credit Loan:
Revolving Line of Credit Loan Amount- $9,000,000.00. Applicable
Percentage for Acceptable Accounts - 80% Applicable Percentage for
Acceptable Inventory - 50%
"Acceptable Accounts" means the dollar value of those of the
Borrower's accounts and accounts receivable as the Bank determines in
a commercially reasonable manner to be acceptable to include for
purposes of calculating the Borrowing Base. Subject to the foregoing,
"Acceptable Accounts" shall not include any service charges or sales
or other taxes and shall be accounts of the Borrower: (i) which arise
in the ordinary course of Borrower's business from Borrower's
performance of services or sale of goods which have been performed or
sold; (ii) which are not older than the Acceptable Accounts Age; (iii)
which are not evidenced by a promissory note or other instrument; (iv)
which are payable in U.S. Dollars; (v) which are owed by any customer
whose principal place of business is within the United States or any
foreign account which is FCIA-insured or secured by an acceptable
letter of credit; (vi) which are owed by any corporation or other
entity other than one which is related to the Borrower, or is of
common ownership with the Borrower, or could be treated as a member of
the same controlled group of corporations of which the Borrower is a
member; (vii) which constitute valid, binding, and enforceable
obligations of account debtors which are not subject to any claim,
counterclaim, set off, credit, allowance, or chargeback; (viii) as to
which the Borrower has received no notice and has no knowledge as to
whether the account debtor (or any guarantor or endorser thereof) is
bankrupt or insolvent, or any other facts which make the collection of
the account doubtful; (ix) which are not owed by any person employed
by, or salesman of, the Borrower; (x) which do not arise out of the
sale by the Borrower of goods consigned or delivered to the Borrower
on "sell or return" terms (whether or not compliance has been made
with Section 2-326 of the UCC); and (xi) which do not arise out of any
sale made on a "bill and hold", dating, or delayed shipping basis.
Accounts payable by Borrower to any account debtor shall be netted
against accounts due from such debtor for purposes of determining
Acceptable Accounts. Borrower must issue a separate invoice to the
account debtor with respect to an account for such account to be
included by as an Acceptable Account. The acceptance of or
characterization by the Bank of any account as an Acceptable Account
shall not be deemed a determination by the Bank as to its actual value
nor in any way obligate Bank to accept any account arising
subsequently from such debtor to be, or to continue to deem such
account to be, an Acceptable Account. All accounts of Borrower whether
Acceptable Accounts or not, shall constitute Collateral under the
Security Agreement.
"Acceptable Accounts Age" means with respect to any account receivable
sixty (60) days from due date of the invoice therefor.
"Acceptable Inventory" means the dollar value of Borrower's wholesale
and mail order coffee inventory, and Borrower's grinders, brewers,
flavoring, packaged foods, and accessories inventory, all as
determined at the lower of cost on a "first-in/first-out" basis or
fair market value, which inventory is owned and held by Borrower at
its places of business (including warehouses which are holding the
same subject to written confirmation of the Bank's security interests)
for sale in the ordinary course of Borrower's business as presently
conducted by it and which is subject to a valid and prior, fully
perfected security interest of Bank, free of all security interests or
liens of any other person. The following inventory will not, in any
event, be included for purposes of determining Acceptable Inventory:
(i) inventory which is obsolete, not in good condition, not of
merchantable quality or saleable in the ordinary course of business or
which is subject to defects which would affect its market value; (ii)
supplies and packaging materials and labels; (iii) inventory which
Bank determines in a commercially reasonable manner to be ineligible
because of age, type, category, or quantity; and (iv) inventory in the
possession of any person other than Borrower (or such warehouses as
noted above). The acceptance of or characterization by the Bank of
inventory as Acceptable Inventory shall not be deemed a determination
by the Bank as to its actual value nor in any way obligate Bank to
continue to deem such inventory to be Acceptable Inventory. All
inventory of Borrower whether Acceptable Inventory, or not, shall
constitute Collateral under the Security Agreement.
"Acceptable Accounts Amount" means the amount determined from time to
time equal to the product of the Acceptable Accounts multiplied by the
Applicable Percentage therefor.
"Acceptable Inventory Amount" means the amount determined from time to
time equal to (a) during the period of October through April, the
product of the Acceptable Inventory multiplied by the Applicable
Percentage; and (b) during the period of May through September, the
product of the Acceptable Inventory multiplied by the Applicable
Percentage plus the product of twenty percent (20%) multiplied by the
dollar value of Borrower's wholesale and mail order coffee inventory
which is included in Acceptable Inventory.
"Applicable Percentage" means with respect to each of Acceptable
Accounts and Acceptable Inventory, the applicable percentages set
forth above. The Borrower acknowledges and agrees that the Bank may,
at any time or times, lower the applicable percentage for Acceptable
Accounts or Acceptable Inventory for purposes of determining the
Borrowing Base to such percentage as the Bank may determine in a
commercially reasonable manner to be appropriate based upon any
material deterioration of the Borrower's condition, financial or
otherwise, and/or of the condition or quality of the Acceptable
Accounts or Acceptable Inventory.
"Borrowing Base" means the lesser of (1) Nine Million Dollars
($9,000,000.00), or (2) the amount determined from time to time equal
to the sum of (a) the Acceptable Accounts Amount and (b) Acceptable
Inventory Amount.
"Borrowing Base Certificate" means a certificate substantially in the
form attached hereto as Schedule A-1 pursuant to which the Borrower
shall calculate and report to the Bank the then current Borrowing Base
as of the first day of each Borrowing Base Reporting Period, and which
shall be accompanied by a reconciliation of accounts, accounts
receivable and inventory, and aging reports therefor, all in a form
reasonably acceptable to the Bank.
"Borrowing Base Reporting Period" means each of the thirteen (13)
twenty-eight (28) day periods which comprise a fiscal year of the
Borrower.
"Review Date" means March 31, 2001.
B. Maximum Available Amount of Revolving Line of Credit Loan. The
Borrower may borrow and reborrow from time to time under the Revolving
Line of Credit Loan a maximum principal amount equal to the then
current Borrowing Base. Borrower shall furnish the Bank on or before
the first day of each Borrowing Base Reporting Period with a Borrowing
Base Certificate. The Borrowing Base reported on each such Borrowing
Base Certificate shall remain in effect until the first day of the
next Borrowing Base Period.
C. Advances. The Revolving Line of Credit Loan shall be disbursed,
advanced, readvanced, and repaid as provided in the Note evidencing
the Revolving Line of Credit Loan and in the Agreement. Borrower may
request advances orally or in writing from time to time in accordance
with such procedures as the Bank may from time to time specify in an
amount such that the aggregate amounts of principal outstanding under
the Revolving Line of Credit Loan do not at any time exceed the
Borrowing Base. The Bank shall be under no obligation to make any
advance (automatic or otherwise) at any time or times during which an
Event of Default has occurred or is existing under the Agreement or
the Loan Documents, or if any condition exists which, if not cured,
would with the passage of time or the giving of notice, or both,
constitute such an Event of Default. At the time of each advance and
readvance under the Revolving Line of Credit Loan, Borrower shall
immediately become indebted to the Bank for the amount thereof. Each
such advance or readvance may be credited by the Bank to any deposit
account of Borrower with the Bank, be paid to Borrower, or applied to
any Obligation, as the Bank may in each instance elect. Borrower
authorizes the Bank to charge any account which Borrower maintains
with the Bank for any payments which Borrower may or must make, or
customarily makes, to the Bank from time to time. Bank agrees to first
charge that account of Borrower with Bank which is customarily charged
for such payments before charging any other account of the Borrower
with the Bank.
D. Interest Rate.
(i) Except as provided below, the principal balance outstanding from
time to time under the Revolving Line of Credit Loan, net of amounts
subject to a LIBOR based rate of interest as provided below, shall
bear interest at a variable annual rate equal to the BANK's Base Rate
plus the Applicable Base Rate Margin (as set forth below in Section I.
D (iii)) per annum. The "Base Rate" shall be the Base Rate of the BANK
as established and changed by the BANK from time to time whether or
not such rate shall be otherwise published or BORROWER receives notice
thereof. The BORROWER acknowledges that the Base Rate is used for
reference purposes only as an index and is not necessarily the lowest
interest rate charged by the BANK on commercial loans. Each time the
Base Rate changes the interest rate under the Revolving Line of Credit
Loan shall change contemporaneously with such change in the Base Rate.
Interest shall be calculated and charged daily on the basis of actual
days elapsed over a three hundred sixty (360) day banking year.
(ii) BORROWER may elect from time to time to have amounts outstanding
under the Revolving Line of Credit Loan bear interest for one or more
periods of thirty (30) days to up to three hundred sixty (360) days
each (each such period to be in increments of thirty (30) days) but in
no event beyond the next Review Date) at a rate (the "Revolving
LIBOR-based Rate") equal to the LIBOR rate (as hereinafter defined)
plus the Applicable LIBOR Margin (as set forth below in Section I. D
(iii)) per annum. BORROWER may only elect the Revolving LIBOR-based
Rate with respect to an outstanding principal amount under the
Revolving Line of Credit Loan of not less than Five Hundred Thousand
Dollars ($500,000.00). BORROWER shall notify BANK in writing at least
two (2) banking Days (as hereinafter defined) in advance of the date
upon which the BORROWER desires an election to the Revolving
LIBOR-based Rate to be effective. BORROWER's notice to BANK as
aforesaid shall specify the outstanding amount under the Revolving
Line of Credit Loan that BORROWER desires to bear interest at the
Revolving LIBOR-based Rate, the period selected (i.e., 30, 60, 90,
120, 150, 180, 210, 240, 270, 300, 330, or 360 days), and the date
such election is to be effective (which must be a Banking Day). Any
amounts outstanding under the Revolving Line of Credit Loan as to
which BORROWER has elected the Revolving LIBOR-based Rate shall
hereinafter be referred to as a "LIBOR Advance". All amounts
outstanding under the Revolving Line of Credit Loan which are not
subject to the Revolving LIBOR-based Rate shall bear interest at a
variable annual rate equal to the BANK's Base Rate plus Applicable
Base Rate Margin as provided above. The term "LIBOR rate" shall mean
the rate as determined by the BANK on the basis of the offered rates
for deposits in U.S. dollars for the period selected by the BORROWER
which appear on the Telerate page 3750 or Reuter's LIBO page as of
11:00 a.m. London time on the date that is two (2) Banking Days
preceding the effective date of BORROWER's election of the Revolving
LIBOR-based Rate in respect of a LIBOR Advance. If such rate does not
appear on the Telerate page 3750 or Reuter's LIBO page, the rate for
that date will be determined on the basis of the offered rates for
deposits in U.S. dollars which are offered by four major banks in the
London interbank market at approximately 11:00 a.m. London time on the
date that is two (2) Banking Days preceding the effective date of
BORROWER's election of the Revolving LIBOR-based Rate in respect of a
LIBOR Advance. The principal London office of each of the four major
banks in the London interbank market will be requested to provide a
quotation of its U.S. dollar deposit offered rate. If at least two
such quotations are provided, the rate for that date will be the
arithmetic mean of all such quotations. If fewer than two quotations
are provided as requested, the rate for that date will be determined
on the basis of the rates quoted for loans in U.S. dollars to leading
European banks for the period selected offered by major banks in New
York City at approximately 11:00 a.m., New York City time, on the date
that is two (2) Banking Days preceding the effective date of
BORROWER's election of the Revolving LIBOR-based Rate in respect of a
LIBOR Advance. In the event that the BANK is unable to obtain any such
quotation as provided above, it will be deemed that the LIBOR rate
cannot be determined and that the BORROWER's election for the
applicable LIBOR Advance shall be void. In the event that the Board of
Governors of the Federal Reserve System shall impose a Reserve
Percentage on the BANK with respect to LIBOR deposits of the BANK,
then for any period during which such Reserve Percentage shall apply,
the LIBOR rate shall be equal to the amount determined above divided
by an amount equal to one (1) minus the Reserve Percentage actually
maintained by the BANK. For purposes hereof, "Reserve Percentage"
means the rate (expressed as a decimal) at which the BANK is required
to maintain reserves under Regulation D of the Board of Governors of
the Federal Reserve System against Eurodollar liabilities outstanding.
Notwithstanding the foregoing, if as a result of any change in any
foreign or United States law or regulation (or change in the
interpretation thereof) it is determined by BANK that it is unlawful
to maintain a LIBOR Advance, or if any central bank or governmental
authority (foreign or domestic) shall assert that it is unlawful to
maintain a LIBOR Advance, then such LIBOR Advance shall terminate and
the BORROWER shall have no further right hereunder to elect the
Revolving LIBOR-based Rate. If for any reason a LIBOR Advance is
terminated or prepaid prior to the end of the applicable period for
which the Revolving Libor-based Rate is to be in effect, the BORROWER
shall, upon demand by BANK, pay to BANK any amounts required to
compensate BANK for any losses, costs, or expenses which it may
reasonably incur as a result of such termination or prepayment,
including, without limitation, any losses, costs, or expenses incurred
by reason of the liquidation or redeployment of deposits or other
funds acquired by the BANK to fund or maintain such LIBOR Advance. For
purposes hereof, a "Banking Day" means a day upon which BANKS are open
for business to the general public in Manchester, New Hampshire, and
upon which dealings are carried on and banks are open for business in
the London interbank market.
(iii) For purposes of this Section I. D., the terms "Applicable Base
Rate Margin" and "Applicable LIBOR Margin" shall mean the margins
determined by BANK on a quarterly basis as provided below. The margins
shall be determined by reference to the ratio of BORROWER's Funded
Debt to Cash Flow (each as described and defined in Schedule B
attached hereto) as reported on BORROWER's quarterly financial
covenant compliance certificate (as described on Schedule B attached
hereto) delivered to the BANK and as evidenced by BORROWER's Financial
Statements (as defined and described on Schedule B attached hereto)
delivered to the BANK. The Applicable Base Rate Margin and Applicable
LIBOR Margin for the Revolving Line of Credit Loan are as follows:
If ratio of Funded Debt Then the Applicable Then the Applicable
to Cash Flow is: Base Rate Margin is: LIBOR Margin is:
Greater or equal to 2.5:1 0% 2.50%
Greater or equal to 2.0:1
but less than 2.5:1 0% 2.25%
Greater or equal to 1.5:1
but less than 2.0:1 0% 2.0%
Greater or equal to 1.0:1
but less than 1.5:1 0% 1.75%
Less than 1.0:1 0% 1.50%
Within forty-five (45) days of the end of each of its fiscal quarters,
BORROWER shall (a) deliver to BANK its quarterly Financial Statements
(other than with respect to the fourth fiscal quarter for which
BORROWER shall deliver management prepared financial statements for
purposes hereof), (b) deliver to BANK the quarterly financial covenant
compliance certificate of BORROWER, and (c) certify to BANK the then
ratio of BORROWER's Funded Debt to Cash Flow and the BORROWER's
determination of the Applicable Base Rate Margin and Applicable LIBOR
Margin therefrom on such form as the BANK may from time to time
specify. BORROWER shall also provide to the BANK such other reasonable
information as BANK may request of BORROWER to verify its
determination of the Applicable Base Rate Margin and Applicable LIBOR
Margin. As of the tenth (10th) Banking Day after the BORROWER's
certification to the BANK of BORROWER's delivery of all of the
above-referenced items to the BANK, the BANK shall notify BORROWER of
its determination of the Applicable Base Rate Margin and Applicable
LIBOR Margin. The Applicable Base Rate Margin and Applicable LIBOR
Margin as so determined by the BANK shall be effective as to all
outstanding advances under the Revolving Line of Credit Loan as of the
tenth (10th) Banking Day after the date of the BORROWER's delivery to
the BANK of the above-referenced items through the next date upon
which the determination of a new Applicable Margin becomes effective
in accordance with the above provisions.
E. Review and Repayment. The Revolving Line of Credit Loan shall be
subject to review and, at the sole option and discretion of the Bank,
renewal on the first Review Date and, if renewed, thereafter on each
Review Date through which the Revolving Line of Credit Loan is
renewed. IF THE REVOLVING LINE OF CREDIT LOAN IS NOT RENEWED BY THE
BANK AS AFORESAID ON ANY REVIEW DATE, THE ENTIRE AMOUNT OF OUTSTANDING
PRINCIPAL, ACCRUED INTEREST AND OTHER CHARGES PAYABLE THEREUNDER SHALL
BE DUE AND PAYABLE BY BORROWER ON SUCH REVIEW DATE. BORROWER
ACKNOWLEDGES AND AGREES THAT THE BANK HAS NO OBLIGATION OR COMMITMENT
TO RENEW THE REVOLVING LINE OF CREDIT LOAN ON ANY REVIEW DATE.
NOTWITHSTANDING THE FOREGOING, OR ANY PROVISION OF THE REVOLVING LINE
OF CREDIT NOTE, ANY OF LOAN DOCUMENTS OR HEREIN TO THE CONTRARY, THE
REVOLVING LINE OF CREDIT LOAN SHALL BE A DEMAND OBLIGATION OF BORROWER
TO THE EXTENT THAT THE AMOUNT OUTSTANDING THEREUNDER AT ANY TIME
EXCEEDS THE MAXIMUM AVAILABLE AMOUNT UNDER SUCH REVOLVING LINE OF
CREDIT LOAN AS DETERMINED ABOVE, BUT ONLY TO THE EXTENT OF THE AMOUNT
OUTSTANDING IN EXCESS OF THE MAXIMUM AVAILABLE AMOUNT.
F. Purposes. Amounts advanced and readvanced to Borrower under the
Revolving Line of Credit Loan shall only be used for BORROWER's
ordinary working capital requirements.
The Borrower shall execute and deliver to Bank a replacement Revolving Line of
Credit Loan promissory note in form and substance satisfactory to the Bank to
reflect the increase of the maximum principal amount under the Revolving Line of
Credit Loan.
B. New Revolving Line of Credit/Term Loan. The Loan Agreement shall be and
hereby is amended by inserting the following new Section I-A:
I-A. REVOLVING LINE OF CREDIT/TERM LOAN. The Bank agrees to extend to
the Borrower a Revolving Line of Credit/Term Loan (the "Revolving Line
of Credit/Term Loan"), upon and subject to the terms and conditions
set forth below and in the Revolving Line of Credit/Term Note
evidencing such Loan, the other Loan Documents, and elsewhere in this
Agreement.
A. Maximum Available Amount. The maximum amount available to the
BORROWER under the Revolving Line of Credit/Term Loan shall be up
to Four Million Five Hundred Thousand Dollars ($4,500,000.00).
B. Advances. The Revolving Line of Credit/Term Loan shall be
disbursed, advanced, readvanced, and repaid as provided in the
Revolving Line of Credit/Term Note and this Agreement. The
initial advance under the Revolving Line of Credit/Term Loan
shall be made to pay in full all principal outstanding under the
existing Equipment Line of Credit Loan and New Term Loan and,
after such repayment, no further advances shall be made under the
Equipment Line of Credit or the New Term Loan. After the initial
advance as aforesaid, through and until September 30, 1999 (the
"Conversion Date"), BORROWER may request advances and readvances
orally or in writing from time to time in accordance with such
procedures as BANK may reasonably impose. Each such advance and
readvance shall be in the minimum amount of Two Hundred Thousand
Dollars ($200,000.00), provided that the aggregate amounts of all
advances outstanding under the Revolving Line of Credit/Term Loan
shall not at any time exceed the maximum available amount under
Paragraph A of this Section I-A above. Each request for an
advance hereunder shall be accompanied by a written statement of
the BORROWER as to the capital expenditure to be made with such
advance, which statement describes in detail the capital assets
to be acquired and certifies that such expenditure is consistent
with the capital expenditure budget previously delivered by
BORROWER to BANK for the fiscal year in which such request is
being made. Notwithstanding any other provision hereof, no
advances or readvances shall be made by BANK to BORROWER at any
time an Event of Default (as hereinafter defined) exists under
this Agreement or the Loan Documents, or any condition exists
which, if not cured, would with the passage of time or the giving
of notice, or both, constitute such an Event of Default. At the
time of each advance and readvance under the Revolving Line of
Credit/Term Loan the BORROWER shall immediately become indebted
to the BANK for the amount thereof.
C. Repayment of Principal. On the Conversion Date, the then
outstanding principal balance of the Revolving Line of
Credit/Term Loan shall be converted to a term loan; provided,
however, that the aggregate principal amount of such term loan
shall not exceed the maximum available amount under Paragraph A
of this Section I-A above. Commencing October 31, 1999, and
continuing on the last day of each month thereafter through and
including February 28, 2003, BORROWER shall make equal monthly
payments of principal each in the amount of Seventy-five Thousand
Dollars ($75,000.00), together with monthly payments of accrued
and unpaid interest at the rate set forth herein below. BORROWER
shall pay all remaining outstanding principal and accrued and
unpaid interest under such term loan in full on or before March
31, 2003 (the "Maturity Date"). BORROWER shall have the right to
prepay the Revolving Line of Credit/Term Loan at any time without
payment of any premium or penalty, other than the reimbursement
obligation of BORROWER with respect to any prepayment of
principal which is subject to a LIBOR based rate of interest.
D. Interest. The Revolving Line of Credit/Term Loan shall bear
interest in accordance with the following provisions:
(i) Except as provided below, the principal balance outstanding
from time to time under the Revolving Line of Credit/Term Loan,
net of amounts subject to a LIBOR based rate of interest as
provided below, shall bear interest at a variable annual rate
equal to the BANK's Base Rate plus the Applicable Base Rate
Margin (as set forth below in Section I-A. D (iii)) per annum.
Each time the Base Rate changes the interest rate under the
Revolving Line of Credit/Term Loan shall change contemporaneously
with such change in the Base Rate. Interest shall be calculated
and charged daily on the basis of actual days elapsed over a
three hundred sixty (360) day banking year.
(ii) BORROWER may elect from time to time to have amounts
outstanding under the Revolving Line of Credit/Term Loan bear
interest for one or more periods of thirty (30) days to up to
three hundred sixty (360) days each (each such period to be in
increments of thirty (30) days but in no event beyond the
Maturity Date) at a rate equal to the LIBOR rate as defined and
determined under Section I. D. (ii) above plus the Applicable
LIBOR Margin (as set forth below in Section I-A. D (iii)) per
annum. Outstanding principal under the Revolving Line of
Credit/Term Loan which is not subject to a current election to
bear interest at the LIBOR-based rate shall bear interest at the
Base Rate plus the Applicable Base Rate Margin per annum.
BORROWER shall make elections to have principal outstanding under
the Revolving Line of Credit/Term Loan subject to the LIBOR-based
rate in accordance with the procedures set forth above for the
Revolving Line of Credit Loan in Section I. D. (ii) and, except
as otherwise specifically set forth in this section, the terms
and conditions of Section I. D. (ii) shall apply to all such
elections, and outstanding principal under the Revolving Line of
Credit/Term Loan which is subject to such an election shall
constitute a LIBOR Advance for purposes of Section I. D. (ii)
above.
(iii) For purposes this Section I-A. D., the terms "Applicable
Base Rate Margin" and "Applicable LIBOR Margin" shall mean the
margins determined by BANK on a quarterly basis as provided
below. The margins shall be determined by reference to the ratio
of BORROWER's Funded Debt to Cash Flow (each as described and
defined in Schedule B attached hereto) as reported on BORROWER's
quarterly financial covenant compliance certificate (as described
on Schedule B attached hereto) delivered to the BANK and as
evidenced by BORROWER's Financial Statements (as defined and
described on Schedule B attached hereto) delivered to the BANK.
The Applicable Base Rate Margin and Applicable LIBOR Margin for
the Revolving Line of Credit/Term Loan are as follows:
<TABLE>
If ratio of Funded Debt Then the Applicable Then the Applicable
to Cash Flow is: Base Rate Margin is: LIBOR Margin is:
<S> <C> <C>
Greater or equal to 2.5:1 0% 2.75%
Greater or equal to 2.0:1
but less than 2.5:1 0% 2.50%
Greater or equal to 1.5:1
but less than 2.0:1 0% 2.25%
Greater or equal to 1.0:1
but less than 1.5:1 0% 2.0 %
Less than 1.0:1 0% 1.75%
</TABLE>
Within forty-five (45) days of the end of each of its fiscal
quarters, BORROWER shall (a) deliver to BANK its quarterly
Financial Statements (other than with respect to the fourth
fiscal quarter for which BORROWER shall deliver management
prepared financial statements for purposes hereof), (b) deliver
to BANK the quarterly financial covenant compliance certificate
of BORROWER, and (c) certify to BANK the then ratio of BORROWER's
Funded Debt to Cash Flow and the BORROWER's determination of the
Applicable Base Rate Margin and Applicable LIBOR Margin therefrom
on such form as the BANK may from time to time specify. BORROWER
shall also provide to the BANK such other reasonable information
as BANK may request of BORROWER to verify its determination of
the Applicable Base Rate Margin and Applicable LIBOR Margin. As
of the tenth (10th) Banking Day after the BORROWER's
certification to the BANK of BORROWER's delivery of all of the
above-referenced items to the BANK, the BANK shall notify
BORROWER of its determination of the Applicable Base Rate Margin
and Applicable LIBOR Margin. The Applicable Base Rate Margin and
Applicable LIBOR Margin as so determined by the BANK shall be
effective as to all outstanding advances under the Revolving Line
of Credit/Term Loan as of the tenth (10th) Banking Day after the
date of the BORROWER's delivery to the BANK of the
above-referenced items through the next date upon which the
determination of a new Applicable Margin becomes effective in
accordance with the above provisions.
E. Purposes. Amounts advanced to BORROWER under the Revolving Line of
Credit/Term Loan shall be used solely for financing BORROWER's capital
expenditures made in the ordinary course of business and which expenditures are
consistent with the capital expenditure budget previously delivered by BORROWER
to BANK for the fiscal year in which the advance is to be made.
C. Amendment of Fees. Section I of Schedule B of the Loan Agreement shall
be and hereby is replaced with the following:
Annual Revolving Line of Credit Facility Fee: $4,000.00 per
annum, payable in quarterly installments of $1,000.00 on January
1st, April 1, July 1st, and October 1st.
Unused Revolving Line of Credit/Term Loan Commitment Fee: 0.125%
per annum of daily average of unadvanced amounts under Revolving
Line of Credit/Term Loan (based upon full availability of
$4,500,000.00), determined and payable quarterly in arrears.
Cash Management Fees: BANK's standard monthly fees as the same
may be adjusted from time to time for target balance management
and additional fees to be determined upon basis of scope of
monthly services (e.g. lockboxes, zero balance account, etc.).
D. Amendment of Financial Covenants. Effective as of the end of the Borrower's
second fiscal quarter of its 1998 fiscal year with respect to the Financial
Covenants set forth in paragraphs A., C., D., E. and F., and as of the end of
the Borrower's third fiscal quarter of its 1998 fiscal year with respect to the
Financial Covenants set forth in paragraphs B, the Financial Covenants of the
Borrower set forth in Section IV of Schedule B of the Loan Agreement shall be
and hereby are replaced with the following: "IV. Description of Additional
Financial and other Covenants:
A. BORROWER and the Subsidiary on a consolidated basis shall have a ratio
of Funded Debt (as hereinafter defined) to Cash Flow (as hereinafter
defined) as of the end of each fiscal quarter which does not exceed 3.0:1.
"Funded Debt" means all indebtedness of the BORROWER and the Subsidiary
other than ordinary trade accounts payable and accrued liabilities, all as
determined at the end of each fiscal quarter from BORROWER's and the
Subsidiary' financial statements delivered to the BANK in accordance with
the covenants of the BORROWER herein above (the "Financial Statements").
"Cash Flow" means the BORROWER's and Subsidiary's earnings for the relevant
period, before reduction for interest, depreciation, and amortization
expense, and after reduction or increase for non-cash items, all as
determined in accordance with generally accepted accounting principles from
the Financial Statements. The relevant periods for purposes of the
determination of Cash Flow as of the end of each of BORROWER's fiscal
quarters shall be the prior four (4) fiscal quarters (including the quarter
then ending).
B. The BORROWER and the Subsidiary on a consolidated basis shall have a
minimum "Debt Service Coverage" (as hereinafter defined) of 2.4:1 as at the
end of each fiscal quarter. For purposes hereof, "Debt Service Coverage"
shall mean the ratio of Cash Flow for the relevant period to the aggregate
amount of interest and current maturities on Funded Debt payable by
BORROWER and the Subsidiary for such period, all as determined in
accordance with generally accepted accounting principles from the Financial
Statements. The relevant periods for purposes of the determination of Debt
Service Coverage as of the end of each of BORROWER's fiscal quarters shall
be the prior four (4) fiscal quarters (including the quarter then ending).
C. BORROWER and the Subsidiary on a consolidated basis shall have a ratio
of Adjusted Total Liabilities (as hereinafter defined) to Tangible Net
Worth (as hereinafter defined) of not greater than 1.75:1 as of end of each
fiscal quarter. "Adjusted Total Liabilities" means the total liabilities of
BORROWER and the Subsidiary, less Excess Cash (as hereinafter defined), all
as determined in accordance with generally accepted accounting principles
from the Financial Statements. "Excess Cash" means the sum of BORROWER's
and the Subsidiary's cash balances in investment and depository accounts
which exceeds Four Hundred Thousand Dollars ($400,000.00). "Tangible Net
Worth" means total shareholders' equity, plus Permitted Subordinated Debt
(as hereinafter defined), plus deferred tax liabilities, and less
intangible assets (unamortized product development costs, goodwill, and
unamortized debt issuance costs), all as determined from the Financial
Statements. Deferred tax assets are considered tangible assets for purposes
of this calculation. "Permitted Subordinated Debt" means indebtedness of
the BORROWER and the Subsidiary that is subordinated in writing to the BANK
on terms of subordination acceptable to the BANK, all as determined from
the Financial Statements.
D. BORROWER and the Subsidiary shall have on a consolidated basis Net
Profits (as hereinafter defined) (i) of at least Seven Hundred Fifty
Thousand Dollars ($750,000.00) as of the end of their 1998 fiscal year for
the relevant period then ending; and (ii) of at least One Million Dollars
($1,000,000.00) as of the end of each fiscal quarter beginning with the
first quarter of their 1999 fiscal year for the relevant period then
ending. "Net Profits" means net profits as determined in accordance with
generally accepted accounting principles from the Financial Statements. The
relevant period for purposes of the determination of Net Profits shall be
the prior four (4) fiscal quarters (including the quarter then ending).
E. BORROWER shall not make expenditures for capital assets or capital
improvements (as determined in accordance with generally accepted
accounting principles) in any fiscal year in excess of the sum of Five
Million Dollars ($5,000,000.00) plus the amount of cash received in such
fiscal year by BORROWER from the sale of capital assets.
F. BORROWER shall report and certify to BANK its compliance with the
financial covenants hereinabove within forty-five (45) days after each
fiscal quarter end on such form or forms as may from time to time be
specified by the BANK."
E. Commitment Fee. For and in consideration of the Bank entering into this
Amendment, the Borrower shall pay the Bank a commitment fee in the amount of
$15,000.00 on the date of execution hereof.
II. AMENDMENT OF SECURITY AGREEMENTS. The Revolving Line of Credit Loan, as
increased hereby, and the Revolving Line of Credit/Term Loan shall each be
secured in accordance with the terms, conditions, and priorities under the Loan
Agreement and Loan Documents for the Revolving Line of Credit Loan prior to
increase hereunder. The Security Agreements of each of the Borrower and the
Subsidiary included among the Loan Documents shall be and hereby are amended by
including each of the Revolving Line of Credit Loan, as increased hereby, and
the Revolving Line of Credit/Term Loan as Secured Obligations under each of the
Security Agreements secured by the security interests in the Collateral granted
to the Bank by the Borrower and the Subsidiary thereunder.
III. AMENDMENT OF SUBSIDIARY'S GUARANTY AGREEMENT. The Guaranty shall be
and hereby is amended such that each of the Revolving Line of Credit Loan, as
increased hereby, and the Revolving Line of Credit/Term Loan shall be included
as a Guaranteed Obligations thereunder.
IV. REPRESENTATIONS AND WARRANTIES. Except as set forth in Schedule I
hereto, and except to the extent affected by the amendments hereunder or by
previous amendments, or otherwise consented to or acknowledged by the Bank in
writing, each of the Borrower and the Subsidiary, jointly and severally,
confirm, reassert, and restate all of the representations and warranties under
the Loan Agreement and the Loan Documents as of the date hereof.
V. AFFIRMATIVE COVENANTS. Except as set forth in Schedule II hereto and
except to the extent affected by the amendments hereunder or by previous
amendments, or otherwise consented to or acknowledged by the Bank in writing,
each of the Borrower and the Subsidiary, jointly and severally, hereby confirm,
reassert, and restate their respective affirmative covenants as set forth in the
Loan Agreement and Loan Documents as of the date hereof.
VI. AFFIRMATION OF NEGATIVE COVENANTS. Except as set forth on Schedule III
hereto and except to the extent affected by the amendments hereunder or by
previous amendments, or otherwise consented to or acknowledged by the Bank in
writing, each of the Borrower and the Subsidiary, jointly and severally, hereby
confirm, reassert, and restate their respective negative covenants as set forth
in the Loan Agreement and the Loan Documents as of the date hereof.
VII. FURTHER REPRESENTATION AND WARRANTY. Each of the Borrower and the
Subsidiary represent and warrant to the Bank that no consent, authorization or
approval is required of any third party, including, but not limited to, the
Vermont Economic Development Authority and the United States Small Business
Administration, for any of the Borrower or the Subsidiary to enter into this
Agreement and to consummate the transactions contemplated hereunder.
VIII. NO FURTHER EFFECT. Except as specifically amended hereby, the terms
and conditions of the Loan Agreement and the Loan Documents as set forth therein
and as amended through the date hereof shall remain in full force and effect.
IN WITNESS WHEREOF, the Bank, the Borrower and the Subsidiary have executed
this agreement effective as of the date and year first above written.
FLEET BANK-NH
/s/ Catherine Consentino /s/ Andre P. Pelletier
- ------------------------ By: ---------------------------------------
Witness Andre P. Pelletier, Vice President
GREEN MOUNTAIN COFFEE ROASTERS, INC.
/s/ Betty Omansky /s/ Robert D. Britt
- ------------------------ By: ----------------------------------------
Witness Robert D. Britt, Chief Financial Officer
GREEN MOUNTAIN COFFEE ROASTERS
FRANCHISING CORPORATION
/s/ Betty Omansky /s/ Robert D. Britt
- ------------------------ By: ----------------------------------------
Witness Robert D. Britt, Chief Financial Officer
STATE OF New Hampshire
COUNTY OF Hillsborough
On this, the 20th day of February, 1998, before me, the undersigned officer,
personally appeared Andre P. Pelletier, who acknowledged himself to be a Vice
President of Fleet Bank - NH, a bank and that he, as such Vice President, being
authorized so to do, executed the foregoing instrument for the purposes therein
contained on behalf of said bank.
Before me,
/s/ Catherine A. Consentino
------------------------------------
Justice of the Peace
STATE OF Vermont
COUNTY OF Washington
On this, the 20th day of February, 1998, before me, the undersigned officer,
personally appeared Robert D. Britt, who acknowledged himself to be the Chief
Financial Officer of Green Mountain Coffee Roasters, Inc., a corporation and
that he, as such officer, being authorized so to do, executed the foregoing
instrument for the purposes therein contained on behalf of said corporation.
Before me,
/s/ Betty Omansky
----------------------------------
Notary Public
STATE OF Vermont
COUNTY OF Washington
On this, the 20th day of February, 1998, before me, the undersigned officer,
personally appeared Robert D. Britt, who acknowledged himself to be the Chief
Financial Officer of Green Mountain Coffee Roasters Franchising Corporation, a
corporation and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained on behalf of said
corporation.
Before me,
/s/ Betty Omansky
----------------------------------
Notary Public
<PAGE>
ELEVENTH AMENDMENT TO FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS
Schedule I
None
<PAGE>
ELEVENTH AMENDMENT TO FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS
Schedule II
None
<PAGE>
ELEVENTH AMENDMENT TO FLEET BANK - NH
COMMERCIAL LOAN AGREEMENT AND LOAN DOCUMENTS
Schedule III
None
<PAGE>
SCHEDULE A-1
FLEET BANK - NH
BORROWING BASE CERTIFICATE
Borrower: Green Mountain Coffee Roasters, Inc.
The undersigned hereby certifies to Fleet Bank - NH (the "Bank), pursuant
to Section I of the Seventh Amendment and First Restatement of Commercial Loan
Agreement dated April 12, 1996, as amended by Eighth Amendment to Commercial
Loan Agreement and Loan Documents dated February 19, 1997, by Ninth Amendment to
Commercial Loan Agreement and Loan Documents dated June 9, 1997, by Tenth
Amendment to Commercial Loan Agreement dated January 15, 1998, and by Eleventh
Amendment to Commercial Loan Agreement and Loan Documents dated February 20,
1998 (the "Agreement"), as follows:
Calculation of Borrowing Base:
Accounts Receivable:
1. Total Accounts Receivable
as of __________ , 199__,
as per attached Aging Report
("Certified Accounts") $_______
2. Disqualified Accounts:
Accounts over 60 days
from invoice due date $_______
Intercompany accounts $_______
Other non-qualifying accounts $_______
Total Disqualified Accounts $_______ $_______
3. Item 1 minus item 2 ("Acceptable Accounts") $______
4. Advance Rate on Acceptable Accounts per Agreement 80%
5. Item 3 times item 4 $_______
6. Total Acceptable Inventory as of
________, 199__, as per attached Inventory Statement $_______
7. Advance Rate on Acceptable Inventory
during October through April and 50%
during May through September 50% + 20% of coffee
8. Lesser of Item 6 times Item 7 $________
9. Borrowing Base under Revolving
Line of Credit (Lesser of Item 5
plus Item 8, or $9,000,000) $________
Based upon the foregoing calculation made as of the close of business on the
date indicated below, the undersigned hereby requests that the Bank make
advances under the Revolving Line of Credit Loan to Borrower in accordance with
the provisions of Loan Agreement and the Loan Documents, which advances, when
added to the outstanding principal amount of all other advances under the
Revolving Line of Credit Loan does not and shall not exceed the Borrowing Base.
Except as set forth in the accompanying letter, the undersigned hereby reasserts
and restates all representations and warranties set forth in the Agreement as of
the date hereof and certifies that no Event of Default under the Agreement, or
any event which with the passage of time or the giving of notice, or both, would
constitute an Event of Default, has occurred and is continuing. Each capitalized
term used, but not defined herein, shall have the respective meaning set forth
in the Agreement.
WITNESS the execution hereof on the 20th day of February, 1998.
BORROWER:
GREEN MOUNTAIN COFFEE ROASTERS, INC.
By:
--------------------------------
Robert D. Britt,
Chief Financial Officer
REPLACEMENT REVOLVING LINE OF CREDIT PROMISSORY NOTE
$9,000,000.00 Manchester, NH February 20, 1998
FOR VALUE RECEIVED, GREEN MOUNTAIN COFFEE ROASTERS, INC., a Vermont
corporation with a principal place of business at 33 Coffee Lane, Waterbury,
Vermont 05676 (the "Borrower"), promises to pay to the order of FLEET BANK - NH,
a bank organized under the laws of the State of New Hampshire with an address of
Mail Stop NHNA E02A, 1155 Elm Street, Manchester, New Hampshire 03101 (the
"Bank"), at such address, or such other place or places as the holder hereof may
designate in writing from time to time hereafter, the maximum principal sum of
NINE MILLION DOLLARS ($9,000,000.00), or so much thereof as may be advanced or
readvanced by the Bank to the Borrower from time to time hereafter (such amounts
defined as the "Debit Balance" below), together with interest as provided for
hereinbelow, in lawful money of the United States of America.
The Borrower's "Debit Balance" shall mean the debit balance in an account
on the books of the Bank, maintained in the form of a ledger card, computer
records or otherwise in accordance with the Bank's customary practice and
appropriate accounting procedures wherein there shall be recorded the principal
amount of all advances made by the Bank to the Borrower, all principal payments
made by the Borrower to the Bank hereunder, and all other appropriate debits and
credits.
Under the Revolving Line of Credit Loan evidenced by this Note (the "Line
of Credit"), the Bank agrees to lend to the Borrower, and the Borrower may
borrow, up to the lesser of (a) the maximum principal sum provided for in this
Note or (b) the Borrower's Borrowing Base, all in accordance with and subject to
the terms, conditions, and limitations of this Note and the Seventh Amendment
and First Restatement of Commercial Loan Agreement dated April 12, 1996, as
amended by Eighth Amendment to Commercial Loan Agreement and Loan Documents
dated February 19, 1997, by Ninth Amendment to Commercial Loan Agreement and
Loan Documents dated June 9, 1997, by Tenth Amendment to Commercial Loan
Agreement dated January 15, 1998, and by Eleventh Amendment to Commercial Loan
Agreement and Loan Documents of even date herewith, entered into by and between
the Borrower, its subsidiary, Green Mountain Coffee Roaster Franchising
Corporation, and the Bank, and as said agreement may be further amended from
time to time (collectively, as amended, the "Loan Agreement"). The holder of
this Note is entitled to all of the benefits and rights of the Bank under the
Loan Agreement. However, neither this reference to the Loan Agreement nor any
provision thereof shall impair the absolute and unconditional obligation of the
Borrower to pay the principal and interest of this Note as herein provided.
Terms not otherwise defined herein shall have the meanings ascribed to them in
the Loan Agreement.
The Borrower shall make requests for advances under this Note as provided
in the Loan Agreement. The Borrower agrees that the Bank may make all advances
under this Note by direct deposit to any demand account of the Borrower with the
Bank or in such other manner as may be provided in the Loan Agreement, and that
all such advances shall represent binding obligations of the Borrower.
The Borrower acknowledges that this Note is to evidence the Borrower's
obligation to pay its Debit Balance, plus interest and any other applicable
charges as determined from time to time, and that it shall continue to do so
despite the occurrence of intervals when no Debit Balance exists because the
Borrower has paid the previously existing Debit Balance in full.
Interest shall be calculated and charged daily, based on the actual days
elapsed over a three hundred sixty (360) day banking year, on the unpaid
principal balance outstanding from time to time. Except as provided hereinbelow,
the unpaid principal balance outstanding hereunder from time to time shall bear
interest at a variable annual rate equal to the Bank's Base Rate, so called,
plus the Applicable Base Rate Margin for the Revolving Line of Credit Loan as
determined under the Loan Agreement from time to time. The Base Rate shall be
the Base Rate of the Bank as established and changed by the Bank from time to
time whether or not such rate shall be otherwise published or Borrower is
provided with notice thereof. Each time the Base Rate changes, the interest rate
hereunder shall change contemporaneously with such change in the Base Rate
effective as of the opening of business on the date of change. The Borrower
acknowledges that the Base Rate is used for reference purposes only as an index
and is not necessarily the lowest interest rate charged by the Bank on
commercial loans. Notwithstanding the foregoing, the Borrower may elect from
time to time the Revolving LIBOR-based Rate to apply to some or all of the
outstanding principal hereunder in accordance with, and subject to the
limitations of, the Loan Agreement.
Pending an Event of Default as provided in the Loan Agreement and herein
below, the Bank shall extend the Line of Credit through and until March 31, 2001
(the "Review Date"), and, if the Line of Credit is renewed and extended by the
Bank pursuant to the Loan Agreement, through and until each anniversary of such
date with respect to which the Line of Credit is renewed and extended. The
Borrower shall (i) make payments of principal from time to time as provided in
the Loan Agreement and (ii) make payments of interest monthly in arrears
commencing thirty (30) days from the date hereof (or on any day within 30 days
of the date hereof agreed to by the Borrower and the Bank to provide for a
convenient payment date) and continuing on the same date of each month
thereafter through and until the earlier of the acceleration of this Note upon
an Event of Default as provided herein below or the Review Date or any
anniversary thereof with respect to which the Line of Credit is not renewed by
the Bank, whereupon all principal, accrued and unpaid interest, and any other
charges provided for hereunder, shall be due and payable in full. In the event
that the Line of Credit is renewed pursuant to the Loan Agreement as of the
Review Date or any anniversary thereof, this Note shall thereafter continue to
evidence amounts advanced and due under the Line of Credit as renewed.
This Note is being executed and delivered in accordance with the terms of
the Loan Agreement and the documents defined therein as the "Loan Documents".
The payment and performance of the obligations contained in the Loan Documents
are secured by the collateral granted to the Bank therein (the "Collateral") and
the security granted to the Bank in the Loan Documents.
At the option of the Bank, this Note shall become immediately due and
payable in full, without further demand or notice, if any payment of interest or
principal is not made when due hereunder or upon the occurrence and during the
continuance of any other Event of Default under the terms hereof, under the Loan
Agreement, or under any of the other Loan Document.
The holder may impose upon the Borrower a delinquency charge of five
percent (5%) of the amount of interest not paid on or before the tenth (10th)
day after such installment is due. The entire principal balance hereof, together
with accrued interest, shall after the occurrence and during the continuance of
an Event of Default under the Loan Agreement or maturity, whether by demand,
acceleration or otherwise, bear interest at the Base Rate plus an additional
five percent (5%) per annum.
The Borrower agrees that any other property upon or in which the Borrower
has granted or hereafter grants the holder a mortgage or security interest,
securing the payment and performance of any other liability of the Borrower to
the holder, shall also constitute Collateral. As additional Collateral, the
Borrower grants (1) a security interest in, or pledges, assigns and delivers to
the holder, as appropriate, all deposits, credits and other property now or
hereafter due from the holder to the Borrower; and (2) the right to set off and
apply (and a security interest in said right), from time to time hereafter and
without demand or notice of any nature, all, or any portion, of such deposits,
credits and other property, against the indebtedness evidenced by this Note
whether the other Collateral, if any, is deemed adequate or not.
The Borrower, and every maker, endorser, or guarantor of this Note, jointly
and severally, agree to pay on demand all reasonable out-of-pocket costs of
collection hereof, including reasonable attorneys' fees, whether or not any
foreclosure or other action is instituted by the holder in its discretion.
No delay or omission on the part of the holder in exercising any right,
privilege or remedy shall impair such right, privilege or remedy or be construed
as a waiver thereof or of any other right, privilege or remedy. No waiver of any
right, privilege or remedy or any amendment to this Note shall be effective
unless made in writing and signed by the holder. Under no circumstances shall an
effective waiver of any right, privilege or remedy on any one occasion
constitute or be construed as a bar to the exercise of or a waiver of such
right, privilege or remedy on any future occasion.
The acceptance by the holder hereof of any payment after any default
hereunder shall not operate to extend the time of payment of any amount then
remaining unpaid hereunder or constitute a waiver of any rights of the holder
hereof under this Note.
All rights and remedies of the holder, whether granted herein or otherwise,
shall be cumulative and may be exercised singularly or concurrently, and the
holder shall have, in addition to all other rights and remedies, the rights and
remedies of a secured party under the Uniform Commercial Code of New Hampshire.
The holder shall have no duty as to the collection or protection of the
Collateral or of any income thereon, or as to the preservation of any rights
pertaining thereto beyond the safe custody thereof. Surrender of this Note, upon
payment or otherwise, shall not affect the right of the holder to retain the
Collateral as security for the payment and performance of any other liability of
the Borrower to the holder in accordance with the provisions of the Loan
Documents.
The Borrower, and every maker, endorser, or guarantor of this Note, hereby
jointly waive, to the fullest extent permitted by law, presentment, notice,
protest and all other demands and notices and assents (1) to any extension of
the time of payment or any other indulgence, (2) to any substitution, exchange
or release of Collateral, and (3) to the release of any other person primarily
or secondarily liable for the obligations evidenced hereby.
This Note and the provisions hereof shall be binding upon the Borrower and
the Borrower's heirs, administrators, executors, successors, legal
representatives and assigns and shall inure to the benefit of the holder, the
holder's heirs, administrators, executors, successors, legal representatives and
assigns.
The word "holder" as used herein shall mean the payee or endorsee of this
Note who is in possession of it, or the bearer, if this Note is at the time
payable to the bearer.
This Note may not be amended, changed or modified in any respect except by
a written document which has been executed by each party. This Note constitutes
a New Hampshire contract to be governed by the laws of such state and to be paid
and performed therein.
The provisions of this Note are expressly subject to the condition that in
no event shall the amount paid or agreed to be paid to the holder hereunder and
deemed interest under applicable law exceed the maximum rate of interest on the
unpaid principal balance hereunder allowed by applicable law, if any, (the
"Maximum Allowable Rate"), which shall mean the law in effect on the date
hereof, except that if there is a change in such law which results in a higher
Maximum Allowable Rate being applicable to this Note, then this Note shall be
governed by such amended law from and after its effective date. In the event
that fulfillment of any provisions of this Note results in the interest rate
hereunder being in excess of the Maximum Allowable Rate, the obligation to be
fulfilled shall automatically be reduced to eliminate such excess. If
notwithstanding the foregoing, the holder receives an amount which under
applicable law would cause the interest rate hereunder to exceed the Maximum
Allowable Rate, the portion thereof which would be excessive shall automatically
be applied to and deemed a prepayment of the unpaid principal balance hereunder
and not a payment of interest.
This Note is executed and delivered in replacement of, but not in novation
or discharge of, the Replacement Revolving Line of Credit Promissory Note of the
undersigned payable to the order of the Bank in the principal amount of Six
Million Dollars ($6,000,000.00) dated June 9, 1997 (the "Old Note"). All
references to the Old Note in the Loan Agreement or any other Loan Document
shall be deemed to refer to this Note.
Executed and delivered this 20th day of February, 1998.
GREEN MOUNTAIN COFFEE ROASTERS, INC.
/s/ Betty Omansky By: /s/ Robert D. Britt
- ----------------------- -------------------------------------
Witness Robert D. Britt,
Chief Financial Officer
STATE OF Vermont
COUNTY OF Washington
On this the 20th day of February, 1998, before me, the undersigned notary or
justice, personally appeared Robert D. Britt, who acknowledged himself to be the
Chief Financial Officer of Green Mountain Coffee Roasters, Inc., a corporation,
and that he, as such authorized officer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by himself as such authorized officer.
/s/ Betty Omansky
----------------------------------
Justice of the Peace/Notary Public
REVOLVING LINE OF CREDIT/TERM PROMISSORY NOTE
$4,500,000.00 U.S. Manchester, NH February 20, 1998
FOR VALUE RECEIVED, GREEN MOUNTAIN COFFEE ROASTERS, INC., a Vermont
corporation with a principal place of business at 33 Coffee Lane, Waterbury,
Vermont 05676 (the "Borrower"), promises to pay to the order of FLEET BANK - NH,
a bank organized under the laws of the State of New Hampshire with an address of
Mail Stop NHNA E02A, 1155 Elm Street, Manchester, New Hampshire 03101 (the
"Bank"), at such address, or such other place or places as the holder hereof may
designate in writing from time to time hereafter, the maximum principal sum of
FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000.00), or so much thereof
as may be advanced or readvanced by the Bank to the Borrower from time to time
hereafter (such amounts defined as the "Debit Balance" below), together with
interest as provided for herein below, in lawful money of the United States of
America.
The Borrower's "Debit Balance" shall mean the debit balance in an account
on the books of the Bank, maintained in the form of a ledger card, computer
records or otherwise in accordance with the Bank's customary practice and
appropriate accounting procedures wherein there shall be recorded the principal
amount of all advances and readvances made by the Bank to the Borrower, all
principal payments made by the Borrower to the Bank hereunder, and all other
appropriate debits and credits to principal. The Bank shall render to the
Borrower a statement of account with respect thereto on a monthly basis. The
statement shall be considered correct and be considered accepted by the
Borrower, and shall conclusively bind the Borrower, unless Borrower notifies the
Bank to the contrary within thirty (30) days after the date of Borrower's
receipt of the statement.
The Bank agrees to lend to the Borrower, and the Borrower may borrow and
reborrow from time to time, up to the maximum principal sum provided for in this
Note in accordance with and subject to the terms, conditions, and limitations of
this Note and the Seventh Amendment and First Restatement of Commercial Loan
Agreement dated April 12, 1996, as amended by Eighth Amendment to Commercial
Loan Agreement and Loan Documents dated February 19, 1997, by Ninth Amendment to
Commercial Loan Agreement and Loan Documents dated June 9, 1997, by Tenth
Amendment to Commercial Loan Agreement dated January 15, 1998, and by Eleventh
Amendment to Commercial Loan Agreement and Loan Documents of even date herewith,
entered into by and between the Borrower, its subsidiary, Green Mountain Coffee
Roaster Franchising Corporation, and the Bank, and as said agreement may be
further amended from time to time (collectively, as amended, the "Loan
Agreement"). The holder of this Note is entitled to all of the benefits and
rights, and is subject to all of the obligations, of the Bank under the Loan
Agreement. However, neither this reference to the Loan Agreement nor any
provision thereof shall impair the absolute and unconditional obligation of the
Borrower to pay the principal and interest of this Note as herein provided.
Terms not otherwise defined herein shall have the meanings ascribed to them in
the Loan Agreement.
The Borrower agrees that the Bank may deliver all advances under this Note
by direct deposit to any demand account of the Borrower with the Bank or in such
other reasonable manner as may be designated in writing by the Bank to the
Borrower, and that all such advances shall represent binding obligations of the
Borrower.
The Borrower acknowledges that this Note is to evidence the Borrower's
obligation to pay its Debit Balance, plus interest and any other applicable
charges as determined from time to time, and that it shall continue to do so
despite the occurrence of intervals when no Debit Balance exists because the
Borrower has paid the previously existing Debit Balance in full.
Interest shall be calculated and charged daily, based on the actual days
elapsed over a three hundred sixty (360) day banking year, on the unpaid
principal balance outstanding from time to time. Except as provided hereinbelow,
the unpaid principal balance outstanding hereunder from time to time shall bear
interest at a variable annual rate equal to the Bank's Base Rate, so called,
plus the Applicable Base Rate Margin for the Revolving Line of Credit/Term Loan
as determined under the Loan Agreement from time to time. The Base Rate shall be
the Base Rate of the Bank as established and changed by the Bank from time to
time whether or not such rate shall be otherwise published or Borrower is
provided with notice thereof. Each time the Base Rate changes, the interest rate
hereunder shall change contemporaneously with such change in the Base Rate
effective as of the opening of business on the date of change. The Borrower
acknowledges that the Base Rate is used for reference purposes only as an index
and is not necessarily the lowest interest rate charged by the Bank on
commercial loans. Notwithstanding the foregoing, the Borrower may elect from
time to time the a LIBOR-based variable rate of interest to apply to some or all
of the outstanding principal hereunder in accordance with, and subject to the
limitations of, the Loan Agreement.
Accrued interest only on the outstanding Debit Balance hereunder shall be
payable monthly in arrears commencing February 28, 1998 and continuing on the
last day of each month thereafter through and including September 30, 1999 (the
"Conversion Date") and thereafter shall be payable monthly as provided herein
below. Through the Conversion Date, the Borrower shall only be obligated to make
payments of principal hereunder such that the outstanding Debit Balance does not
exceed the maximum amount available to the Borrower under the Revolving Line of
Credit/Term Loan evidenced hereby as provided in the Loan Agreement. On the
Conversion Date, all accrued and unpaid interest on the Debit Balance hereunder
shall be paid and the entire outstanding Debit Balance hereunder shall be
converted to a term loan in accordance with the provisions of the Loan
Agreement. The entire Debit Balance hereunder so converted shall be repaid in
equal monthly payments of principal, each in the amount of Seventy-five Thousand
Dollars ($75,000.00), together with a monthly payment of accrued and unpaid
interest, such payments to commence on October 31, 1999 and to continue on the
last day of each month thereafter through and including February 28, 2003. On
March 31, 2003, all remaining outstanding principal and accrued and unpaid
interest shall be due and payable in full. The Debit Balance converted to a term
loan hereunder, and the Borrower's obligation to repay the same, shall continue
to be evidenced by this Note after the Conversion Date.
The Borrower may prepay this Note in whole or in part at any time without
premium or penalty; provided, however, that such prepayment shall be subject to
the terms and conditions of the Loan Agreement and the charges provided
thereunder payable by Borrower to Bank. In the event that any such prepayment
shall be made by the Borrower, the amount thereof shall be applied first to
accrued interest and thereafter to principal.
At the option of the Bank, this Note shall become immediately due and
payable in full, without further demand or notice, if any installment of
principal or interest is not paid when due hereunder or upon the occurrence of
any other Event of Default under the terms hereof, under the Loan Agreement, or
under any other Loan Document.
The holder may impose upon the Borrower a delinquency charge of five
percent (5%) of the amount of the principal and/or interest not paid on or
before the tenth (10th) day after such installment is due. The entire principal
balance hereof, together with accrued interest, shall after an Event of Default
or maturity, whether by demand, acceleration or otherwise, bear interest at the
Base Rate plus an additional five percent (5%) per annum.
The Borrower grants to Bank the right to set off and apply, upon an Event
of Default and without demand or notice of any nature, all, or any portion, of
deposits, credits and other property now or hereafter due from the holder to the
Borrower, against the indebtedness evidenced by this Note.
The Borrower agrees to pay on demand all reasonable out-of-pocket costs of
collection hereof, including reasonable attorneys' fees, whether or not any
action is instituted by the holder in its discretion.
No delay or omission on the part of the holder in exercising any right,
privilege or remedy shall impair such right, privilege or remedy or be construed
as a waiver thereof or of any other right, privilege or remedy. No waiver of any
right, privilege or remedy or any amendment to this Note shall be effective
unless made in writing and signed by the holder. Under no circumstances shall an
effective waiver of any right, privilege or remedy on any one occasion
constitute or be construed as a bar to the exercise of or a waiver of such
right, privilege or remedy on any future occasion.
The acceptance by the holder hereof of any payment after any default
hereunder shall not operate to extend the time of payment of any amount then
remaining unpaid hereunder or constitute a waiver of any rights of the holder
hereof under this Note.
All rights and remedies of the holder, whether granted herein or otherwise,
shall be cumulative and may be exercised singularly or concurrently.
The Borrower hereby waives, to the fullest extent permitted by law,
presentment, notice, and protest. Borrower assents to any extension of the time
of payment or any other indulgence.
This Note and the provisions, hereof shall be binding upon the Borrower and
the Borrower's successors and assigns and shall inure to the benefit of and
shall bind the holder, the holder's heirs, administrators, executors,
successors, legal representatives and assigns.
The word "holder" as used herein shall mean the payee or endorsee of this
Note who is in possession of it, or the bearer, if this Note is at the time
payable to the bearer.
This Note may not be amended, changed or modified in any respect except by
a written document which has been executed by each party. This Note constitutes
a New Hampshire contract to be governed by the laws of such state and to be paid
and performed therein.
The provisions of this Note are expressly subject to the condition that in
no event shall the amount paid or agreed to be paid to the holder hereunder and
deemed interest under applicable law exceed the maximum rate of interest on the
unpaid principal balance hereunder allowed by applicable law, if any, (the
"Maximum Allowable Rate"), which shall mean the law in effect on the date
hereof, except that if there is a change in such law which results in a higher
Maximum Allowable Rate being applicable to this Note, then this Note shall be
governed by such amended law from and after its effective date. In the event
that fulfillment of any provisions of this Note results in the interest rate
hereunder being in excess of the Maximum Allowable Rate, the obligation to be
fulfilled shall automatically be reduced to eliminate such excess. If
notwithstanding the foregoing, the holder receives an amount which under
applicable law would cause the interest rate hereunder to exceed the Maximum
Allowable Rate, the portion thereof which would be excessive shall automatically
be applied to and deemed a prepayment of the unpaid principal balance hereunder
and not a payment of interest.
Executed and delivered this 20th day of February, 1998.
BORROWER:
GREEN MOUNTAIN COFFEE ROASTERS, INC.
/s/ Betty Omansky By: /s/ Robert D. Britt
- ----------------- ----------------------------------------
Witness Robert D. Britt, Chief Financial Officer
STATE OF Vermont
--------------------
COUNTY OF Washington
--------------------
On this the 20th day of February, 1997, before me, the undersigned notary or
justice, personally appeared Robert D. Britt, who acknowledged himself to be the
Chief Financial Officer of Green Mountain Coffee Roasters, Inc., a corporation,
and that he, as such authorized officer, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name of
the corporation by himself as such authorized officer.
/s/ Betty Omansky
----------------------------------
Justice of the Peace/Notary Public
GREEN MOUNTAIN COFFEE, INC.
STOCK OPTION AGREEMENT
UNDER 1993 STOCK OPTION PLAN
INCENTIVE STOCK OPTION
As of October 21, 1997
AGREEMENT entered into by and between Green Mountain Coffee, Inc., a
Delaware corporation with its principal place of business in Waterbury, Vermont
(together with its subsidiaries, the "Company"), and the undersigned employee of
the Company (the "Optionee").
WHEREAS, the Company desires to grant the Optionee an incentive stock
option under the Company's 1993 Stock Option Plan, as amended (the "Plan") to
acquire shares of the Company's Common Stock, par value $.10 per share (the
"Shares").
WHEREAS, the Plan provides that each option is to be evidenced by an option
agreement, setting forth the terms and conditions of the option.
ACCORDINGLY, in consideration of the premises and of the mutual covenants
and agreements contained herein, the Company and the Optionee hereby agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee an incentive
stock option (the "Option") to purchase all or any part of the number of Shares
shown at the end of this Agreement on the terms and conditions hereinafter set
forth. This option is intended to be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price.
The purchase price ("Purchase Price") for the Shares covered by the Option
shall be the dollar amount per Share shown at the end of this Agreement.
3. Time of Exercise of Option.
Subject to Section 4 below, the Option shall be first exercisable as
follows:
(i) as to 3,333 Shares October 21, 1998;
(ii) as to 3,333 Shares October 21, 1999; and
(iii) as to 3,334 Shares October 21, 2000.
To the extent the Option is not exercised by the Optionee when it becomes
exercisable, it shall not expire, but shall be carried forward and shall be
exercisable, on a cumulative basis, until the Expiration Date, as hereinafter
defined, subject to the other terms of this Agreement.
4. Term of Options; Exercisability.
(a) Term.
(i) If not earlier terminated as provided below, each Option
shall expire on the date shown at the end of this Agreement
(the "Expiration Date"), as determined by the Board of
Directors of the Company (the "Board"). (ii) Except as
otherwise provided in this Section 4, if the Optionee's
employment by the Company is terminated, the Option granted
to the Optionee hereunder shall terminate on the earlier of
ninety days after the date the Optionee's employment by the
Company is terminated, or (ii) the date on which the Option
expires by its terms.
(iii)If the Optionee's employment is terminated by the Company
for cause or because the Optionee is in breach of any
employment agreement, the Option will terminate on the date
the Optionee's employment is terminated by the Company.
(iv) If the Optionee's employment is terminated by the Company
because the Optionee has become permanently disabled (within
the meaning of Section 22(e)(3) of the Code), such Option
shall terminate on the earlier of (i) one year after the
date such Optionee's employment by the Company is
terminated, or (ii) the date on which the Option expires by
its terms.
(v) In the event of the death of the Optionee, the Option
granted to such Optionee shall terminate on the earlier of
(i) one year after the date such Optionee's employment by
the Company is terminated; or (ii) the date on which the
Option expires by its terms.
(b) Exercisability.
(i) Except as provided below, if the Optionee's employment by
the Company is terminated, the Option granted to the
Optionee hereunder shall be exercisable only to the extent
that the right to purchase shares under such Option has
accrued and is in effect on the date the Optionee's
employment by the Company is terminated.
(ii) If the Optionee's employment is terminated by the Company
because he or she has become permanently disabled, as
defined above, the option granted to the Optionee hereunder
shall be immediately exercisable as to the full number of
Shares covered by such Option, whether or not under the
provisions of Section 3 hereof such Option was otherwise
exercisable as of the date of disability.
(iii)In the event of the death of the Optionee, the Option
granted to such Optionee may be exercised to the full number
of Shares covered thereby, whether or not under the
provisions of Section 3 hereof the Optionee was entitled to
do so at the date of his or her death, by the executor,
administrator or personal representative of such Optionee,
or by any person or persons who acquired the right to
exercise such Option by bequest or inheritance or by reason
of the death of such Optionee.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares exercised and
accompanied by payment in full for such Shares. No partial exercise may be
made for less than one hundred (100) full shares of Common Stock. Payment
may be either wholly in cash or in whole or in part in Shares already owned
by the person exercising the option, valued at fair market value as of the
date of exercise; provided, however, that payment of the exercise price by
delivery of Shares already owned by the person exercising the Option may be
made only if such payment does not result in a charge to earnings for
financial accounting purposes as determined by the Board. Upon such
exercise, delivery of a certificate for paid-up, non-assessable Shares
shall be made at the principal office of the Company to the person
exercising the option, not less than thirty (30) and not more than ninety
(90) days from the date of receipt of the notice by the Company.
(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the option.
6. Non-Transferability.
The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and the Option may be exercised during
the lifetime of the Optionee only by him or her. The Option shall be null
and void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by
operation of law, pledge, hypothecation or other disposition contrary to
the provisions hereof, or levy of execution, attachment, trustee process or
similar process, whether legal or equitable, upon the Option.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the
Securities Act of 1933, as amended (the "1933 Act"), upon any date on which
the option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form
attached hereto as Exhibit 1 and the Company shall place an "investment
legend", so-called, as described in Exhibit 1, upon any certificate for the
Shares issued by reason of such exercise. (b) The Company shall be under no
obligation to qualify Shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for
the purposes of covering the issue of Shares.
8. Adjustments on Changes in Capitalization.
Adjustments on changes in capitalization and the like shall be made in
accordance with the Plan, as in effect on the date of this Agreement.
9. No Special Employment Rights.
Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind the Company to continue the
employment of the Optionee for the period within which this Option may be
exercised. However, during the period of the Optionee's employment, the Optionee
shall render diligently and faithfully the services which are assigned to the
Optionee from time to time by the Board or by the executive officers of the
Company and shall at no time take any action which directly or indirectly would
be inconsistent with the best interests of the Company.
10. Rights as a Shareholder.
The Optionee shall have no rights as a shareholder with respect to any
Shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such Shares are duly issued and
delivered to the Optionee. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
11. Withholding Taxes.
Whenever Shares are to be issued upon exercise of this Option, the Company
shall have the right to require the Optionee to remit to the Company an amount
sufficient to satisfy all Federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such Shares. The
Company may agree to permit the Optionee to withhold Shares purchased upon
exercise of this Option to satisfy the above-mentioned withholding requirement.
IN WITNESS HEREOF, the Company has caused this Agreement to be executed,
and the Optionee has hereunto set his or her hand and seal, all as of the day
and year first above written.
GREEN MOUNTAIN COFFEE, INC. OPTIONEE
By: /s/ Robert P. Stiller /s/ Robert D. Britt
______________________ ________________________
Robert P. Stiller Robert D. Britt
President
10,000
________________________
Number of Shares
$10.00
________________________
Purchase Price Per Share
October 21, 2007
________________________
<PAGE>
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me as to ________ shares of Common
Stock, $.10 per share par value, of Green Mountain Coffee, Inc. (the "Company")
under the incentive stock option agreement dated as of October 21, 1997, granted
to me under the 1993 Stock Option Plan, as amended, I hereby acknowledge that I
have been informed as follows:
1. The shares of common stock of the Company to be issued to me pursuant to
the exercise of said option have not been registered under the Securities Act of
1933 (the "1933 Act"), and accordingly, must be held indefinitely unless such
shares are subsequently registered under the 1933 Act, or an exemption from such
registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
1933 Act can be made only after the holding period and in limited amounts in
accordance with the terms and conditions provided by that Rule, and in any sale
to which that Rule is not applicable, registration or compliance with some other
exemption under the 1933 Act will be required.
3. The Company is under no obligation to me to register the shares or to
comply with any such exemptions under the 1933 Act.
4. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to the Rule, the Company may neither wish nor
be able to comply with such requirement.
In consideration of the issuance of certificates for the shares to me, I
hereby represent and warrant that I am acquiring such shares for my own account
for investment, and that I will not sell, pledge or transfer such shares in the
absence of an effective registration statement covering the same, except as
permitted by the provisions of Rule 144, if applicable, or some other applicable
exemption under the 1933 Act. In view of this representation and warranty, I
agree that there may be affixed to the certificates for the shares to be issued
to me, and to all certificates issued hereafter representing such shares (until
in the opinion of counsel, which opinion must be reasonably satisfactory in form
and substance to counsel for the Company, it is no longer necessary or required)
a legend as follows:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and were
acquired by the registered holder, pursuant to a representation and warranty
that such holder was acquiring such shares for his own account and for
investment, with no intention to transfer or dispose of the same, in violation
of the registration requirements of the Act. These shares may not be sold,
pledged, or transferred in the absence of an effective registration statement
under the Act, or an opinion of counsel, which opinion is reasonably
satisfactory to counsel to the Company, to the effect that registration is not
required under the Act."
I further agree that the Company may place a stop order with its Transfer
Agent, prohibiting the transfer of such shares, so long as the legend remains on
the certificates representing the shares.
Very truly yours,
Robert D. Britt
<PAGE>
GREEN MOUNTAIN COFFEE, INC.
STOCK OPTION AGREEMENT
UNDER 1993 STOCK OPTION PLAN
INCENTIVE STOCK OPTION
As of October 21, 1997
AGREEMENT entered into by and between Green Mountain Coffee, Inc., a
Delaware corporation with its principal place of business in Waterbury, Vermont
(together with its subsidiaries, the "Company"), and the undersigned employee of
the Company (the "Optionee").
WHEREAS, the Company desires to grant the Optionee an incentive stock
option under the Company's 1993 Stock Option Plan, as amended (the "Plan") to
acquire shares of the Company's Common Stock, par value $.10 per share (the
"Shares").
WHEREAS, the Plan provides that each option is to be evidenced by an option
agreement, setting forth the terms and conditions of the option.
ACCORDINGLY, in consideration of the premises and of the mutual covenants
and agreements contained herein, the Company and the Optionee hereby agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee an incentive
stock option (the "Option") to purchase all or any part of the number of Shares
shown at the end of this Agreement on the terms and conditions hereinafter set
forth. This option is intended to be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price.
The purchase price ("Purchase Price") for the Shares covered by the Option
shall be the dollar amount per Share shown at the end of this Agreement.
3. Time of Exercise of Option.
Subject to Section 4 below, the Option shall be first exercisable as
follows:
(i) as to 3,333 Shares October 21, 1998;
(ii) as to 3,333 Shares October 21, 1999; and
(iii) as to 3,334 Shares October 21, 2000.
To the extent the Option is not exercised by the Optionee when it becomes
exercisable, it shall not expire, but shall be carried forward and shall be
exercisable, on a cumulative basis, until the Expiration Date, as hereinafter
defined, subject to the other terms of this Agreement.
4. Term of Options; Exercisability.
(a) Term.
(i) If not earlier terminated as provided below, each Option
shall expire on the date shown at the end of this Agreement
(the "Expiration Date"), as determined by the Board of
Directors of the Company (the "Board"). (ii) Except as
otherwise provided in this Section 4, if the Optionee's
employment by the Company is terminated, the Option granted
to the Optionee hereunder shall terminate on the earlier of
ninety days after the date the Optionee's employment by the
Company is terminated, or (ii) the date on which the Option
expires by its terms.
(iii)If the Optionee's employment is terminated by the Company
for cause or because the Optionee is in breach of any
employment agreement, the Option will terminate on the date
the Optionee's employment is terminated by the Company.
(iv) If the Optionee's employment is terminated by the Company
because the Optionee has become permanently disabled (within
the meaning of Section 22(e)(3) of the Code), such Option
shall terminate on the earlier of (i) one year after the
date such Optionee's employment by the Company is
terminated, or (ii) the date on which the Option expires by
its terms.
(v) In the event of the death of the Optionee, the Option
granted to such Optionee shall terminate on the earlier of
(i) one year after the date such Optionee's employment by
the Company is terminated; or (ii) the date on which the
Option expires by its terms.
(b) Exercisability.
(i) Except as provided below, if the Optionee's employment by
the Company is terminated, the Option granted to the
Optionee hereunder shall be exercisable only to the extent
that the right to purchase shares under such Option has
accrued and is in effect on the date the Optionee's
employment by the Company is terminated.
(ii) If the Optionee's employment is terminated by the Company
because he or she has become permanently disabled, as
defined above, the option granted to the Optionee hereunder
shall be immediately exercisable as to the full number of
Shares covered by such Option, whether or not under the
provisions of Section 3 hereof such Option was otherwise
exercisable as of the date of disability.
(iii)In the event of the death of the Optionee, the Option
granted to such Optionee may be exercised to the full number
of Shares covered thereby, whether or not under the
provisions of Section 3 hereof the Optionee was entitled to
do so at the date of his or her death, by the executor,
administrator or personal representative of such Optionee,
or by any person or persons who acquired the right to
exercise such Option by bequest or inheritance or by reason
of the death of such Optionee.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares exercised and
accompanied by payment in full for such Shares. No partial exercise may be
made for less than one hundred (100) full shares of Common Stock. Payment
may be either wholly in cash or in whole or in part in Shares already owned
by the person exercising the option, valued at fair market value as of the
date of exercise; provided, however, that payment of the exercise price by
delivery of Shares already owned by the person exercising the Option may be
made only if such payment does not result in a charge to earnings for
financial accounting purposes as determined by the Board. Upon such
exercise, delivery of a certificate for paid-up, non-assessable Shares
shall be made at the principal office of the Company to the person
exercising the option, not less than thirty (30) and not more than ninety
(90) days from the date of receipt of the notice by the Company.
(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the option.
6. Non-Transferability.
The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and the Option may be exercised during
the lifetime of the Optionee only by him or her. The Option shall be null
and void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by
operation of law, pledge, hypothecation or other disposition contrary to
the provisions hereof, or levy of execution, attachment, trustee process or
similar process, whether legal or equitable, upon the Option.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the
Securities Act of 1933, as amended (the "1933 Act"), upon any date on which
the option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form
attached hereto as Exhibit 1 and the Company shall place an "investment
legend", so-called, as described in Exhibit 1, upon any certificate for the
Shares issued by reason of such exercise. (b) The Company shall be under no
obligation to qualify Shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for
the purposes of covering the issue of Shares.
8. Adjustments on Changes in Capitalization.
Adjustments on changes in capitalization and the like shall be made in
accordance with the Plan, as in effect on the date of this Agreement.
9. No Special Employment Rights.
Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind the Company to continue the
employment of the Optionee for the period within which this Option may be
exercised. However, during the period of the Optionee's employment, the Optionee
shall render diligently and faithfully the services which are assigned to the
Optionee from time to time by the Board or by the executive officers of the
Company and shall at no time take any action which directly or indirectly would
be inconsistent with the best interests of the Company.
10. Rights as a Shareholder.
The Optionee shall have no rights as a shareholder with respect to any
Shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such Shares are duly issued and
delivered to the Optionee. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
11. Withholding Taxes.
Whenever Shares are to be issued upon exercise of this Option, the Company
shall have the right to require the Optionee to remit to the Company an amount
sufficient to satisfy all Federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such Shares. The
Company may agree to permit the Optionee to withhold Shares purchased upon
exercise of this Option to satisfy the above-mentioned withholding requirement.
IN WITNESS HEREOF, the Company has caused this Agreement to be executed,
and the Optionee has hereunto set his or her hand and seal, all as of the day
and year first above written.
GREEN MOUNTAIN COFFEE, INC. OPTIONEE
By: /s/ Robert P. Stiller /s/ Paul Comey
______________________ ________________________
Robert P. Stiller Paul Comey
President
10,000
________________________
Number of Shares
$10.00
________________________
Purchase Price Per Share
October 21, 2007
________________________
<PAGE>
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me as to ________ shares of Common
Stock, $.10 per share par value, of Green Mountain Coffee, Inc. (the "Company")
under the incentive stock option agreement dated as of October 21, 1997, granted
to me under the 1993 Stock Option Plan, as amended, I hereby acknowledge that I
have been informed as follows:
1. The shares of common stock of the Company to be issued to me pursuant to
the exercise of said option have not been registered under the Securities Act of
1933 (the "1933 Act"), and accordingly, must be held indefinitely unless such
shares are subsequently registered under the 1933 Act, or an exemption from such
registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
1933 Act can be made only after the holding period and in limited amounts in
accordance with the terms and conditions provided by that Rule, and in any sale
to which that Rule is not applicable, registration or compliance with some other
exemption under the 1933 Act will be required.
3. The Company is under no obligation to me to register the shares or to
comply with any such exemptions under the 1933 Act.
4. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to the Rule, the Company may neither wish nor
be able to comply with such requirement.
In consideration of the issuance of certificates for the shares to me, I
hereby represent and warrant that I am acquiring such shares for my own account
for investment, and that I will not sell, pledge or transfer such shares in the
absence of an effective registration statement covering the same, except as
permitted by the provisions of Rule 144, if applicable, or some other applicable
exemption under the 1933 Act. In view of this representation and warranty, I
agree that there may be affixed to the certificates for the shares to be issued
to me, and to all certificates issued hereafter representing such shares (until
in the opinion of counsel, which opinion must be reasonably satisfactory in form
and substance to counsel for the Company, it is no longer necessary or required)
a legend as follows:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and were
acquired by the registered holder, pursuant to a representation and warranty
that such holder was acquiring such shares for his own account and for
investment, with no intention to transfer or dispose of the same, in violation
of the registration requirements of the Act. These shares may not be sold,
pledged, or transferred in the absence of an effective registration statement
under the Act, or an opinion of counsel, which opinion is reasonably
satisfactory to counsel to the Company, to the effect that registration is not
required under the Act."
I further agree that the Company may place a stop order with its Transfer
Agent, prohibiting the transfer of such shares, so long as the legend remains on
the certificates representing the shares.
Very truly yours,
Paul Comey
GREEN MOUNTAIN COFFEE, INC.
STOCK OPTION AGREEMENT
UNDER 1993 STOCK OPTION PLAN
INCENTIVE STOCK OPTION
As of October 21, 1997
AGREEMENT entered into by and between Green Mountain Coffee, Inc., a
Delaware corporation with its principal place of business in Waterbury, Vermont
(together with its subsidiaries, the "Company"), and the undersigned employee of
the Company (the "Optionee").
WHEREAS, the Company desires to grant the Optionee an incentive stock
option under the Company's 1993 Stock Option Plan, as amended (the "Plan") to
acquire shares of the Company's Common Stock, par value $.10 per share (the
"Shares").
WHEREAS, the Plan provides that each option is to be evidenced by an option
agreement, setting forth the terms and conditions of the option.
ACCORDINGLY, in consideration of the premises and of the mutual covenants
and agreements contained herein, the Company and the Optionee hereby agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee an incentive
stock option (the "Option") to purchase all or any part of the number of Shares
shown at the end of this Agreement on the terms and conditions hereinafter set
forth. This option is intended to be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price.
The purchase price ("Purchase Price") for the Shares covered by the Option
shall be the dollar amount per Share shown at the end of this Agreement.
3. Time of Exercise of Option.
Subject to Section 4 below, the Option shall be first exercisable as
follows:
(i) as to 3,333 Shares October 21, 1998;
(ii) as to 3,333 Shares October 21, 1999; and
(iii) as to 3,334 Shares October 21, 2000.
To the extent the Option is not exercised by the Optionee when it becomes
exercisable, it shall not expire, but shall be carried forward and shall be
exercisable, on a cumulative basis, until the Expiration Date, as hereinafter
defined, subject to the other terms of this Agreement.
4. Term of Options; Exercisability.
(a) Term.
(i) If not earlier terminated as provided below, each Option
shall expire on the date shown at the end of this Agreement
(the "Expiration Date"), as determined by the Board of
Directors of the Company (the "Board"). (ii) Except as
otherwise provided in this Section 4, if the Optionee's
employment by the Company is terminated, the Option granted
to the Optionee hereunder shall terminate on the earlier of
ninety days after the date the Optionee's employment by the
Company is terminated, or (ii) the date on which the Option
expires by its terms.
(iii)If the Optionee's employment is terminated by the Company
for cause or because the Optionee is in breach of any
employment agreement, the Option will terminate on the date
the Optionee's employment is terminated by the Company.
(iv) If the Optionee's employment is terminated by the Company
because the Optionee has become permanently disabled (within
the meaning of Section 22(e)(3) of the Code), such Option
shall terminate on the earlier of (i) one year after the
date such Optionee's employment by the Company is
terminated, or (ii) the date on which the Option expires by
its terms.
(v) In the event of the death of the Optionee, the Option
granted to such Optionee shall terminate on the earlier of
(i) one year after the date such Optionee's employment by
the Company is terminated; or (ii) the date on which the
Option expires by its terms.
(b) Exercisability.
(i) Except as provided below, if the Optionee's employment by
the Company is terminated, the Option granted to the
Optionee hereunder shall be exercisable only to the extent
that the right to purchase shares under such Option has
accrued and is in effect on the date the Optionee's
employment by the Company is terminated.
(ii) If the Optionee's employment is terminated by the Company
because he or she has become permanently disabled, as
defined above, the option granted to the Optionee hereunder
shall be immediately exercisable as to the full number of
Shares covered by such Option, whether or not under the
provisions of Section 3 hereof such Option was otherwise
exercisable as of the date of disability.
(iii)In the event of the death of the Optionee, the Option
granted to such Optionee may be exercised to the full number
of Shares covered thereby, whether or not under the
provisions of Section 3 hereof the Optionee was entitled to
do so at the date of his or her death, by the executor,
administrator or personal representative of such Optionee,
or by any person or persons who acquired the right to
exercise such Option by bequest or inheritance or by reason
of the death of such Optionee.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares exercised and
accompanied by payment in full for such Shares. No partial exercise may be
made for less than one hundred (100) full shares of Common Stock. Payment
may be either wholly in cash or in whole or in part in Shares already owned
by the person exercising the option, valued at fair market value as of the
date of exercise; provided, however, that payment of the exercise price by
delivery of Shares already owned by the person exercising the Option may be
made only if such payment does not result in a charge to earnings for
financial accounting purposes as determined by the Board. Upon such
exercise, delivery of a certificate for paid-up, non-assessable Shares
shall be made at the principal office of the Company to the person
exercising the option, not less than thirty (30) and not more than ninety
(90) days from the date of receipt of the notice by the Company.
(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the option.
6. Non-Transferability.
The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and the Option may be exercised during
the lifetime of the Optionee only by him or her. The Option shall be null
and void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by
operation of law, pledge, hypothecation or other disposition contrary to
the provisions hereof, or levy of execution, attachment, trustee process or
similar process, whether legal or equitable, upon the Option.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the
Securities Act of 1933, as amended (the "1933 Act"), upon any date on which
the option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form
attached hereto as Exhibit 1 and the Company shall place an "investment
legend", so-called, as described in Exhibit 1, upon any certificate for the
Shares issued by reason of such exercise. (b) The Company shall be under no
obligation to qualify Shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for
the purposes of covering the issue of Shares.
8. Adjustments on Changes in Capitalization.
Adjustments on changes in capitalization and the like shall be made in
accordance with the Plan, as in effect on the date of this Agreement.
9. No Special Employment Rights.
Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind the Company to continue the
employment of the Optionee for the period within which this Option may be
exercised. However, during the period of the Optionee's employment, the Optionee
shall render diligently and faithfully the services which are assigned to the
Optionee from time to time by the Board or by the executive officers of the
Company and shall at no time take any action which directly or indirectly would
be inconsistent with the best interests of the Company.
10. Rights as a Shareholder.
The Optionee shall have no rights as a shareholder with respect to any
Shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such Shares are duly issued and
delivered to the Optionee. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
11. Withholding Taxes.
Whenever Shares are to be issued upon exercise of this Option, the Company
shall have the right to require the Optionee to remit to the Company an amount
sufficient to satisfy all Federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such Shares. The
Company may agree to permit the Optionee to withhold Shares purchased upon
exercise of this Option to satisfy the above-mentioned withholding requirement.
IN WITNESS HEREOF, the Company has caused this Agreement to be executed,
and the Optionee has hereunto set his or her hand and seal, all as of the day
and year first above written.
GREEN MOUNTAIN COFFEE, INC. OPTIONEE
By: /s/ Robert P. Stiller /s/ Jonathan C. Wettstein
______________________ ________________________
Robert P. Stiller Jonathan C. Wettstein
President
10,000
________________________
Number of Shares
$10.00
________________________
Purchase Price Per Share
October 21, 2007
________________________
Expiration Date
<PAGE>
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me as to ________ shares of Common
Stock, $.10 per share par value, of Green Mountain Coffee, Inc. (the "Company")
under the incentive stock option agreement dated as of October 21, 1997, granted
to me under the 1993 Stock Option Plan, as amended, I hereby acknowledge that I
have been informed as follows:
1. The shares of common stock of the Company to be issued to me pursuant to
the exercise of said option have not been registered under the Securities Act of
1933 (the "1933 Act"), and accordingly, must be held indefinitely unless such
shares are subsequently registered under the 1933 Act, or an exemption from such
registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
1933 Act can be made only after the holding period and in limited amounts in
accordance with the terms and conditions provided by that Rule, and in any sale
to which that Rule is not applicable, registration or compliance with some other
exemption under the 1933 Act will be required.
3. The Company is under no obligation to me to register the shares or to
comply with any such exemptions under the 1933 Act.
4. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to the Rule, the Company may neither wish nor
be able to comply with such requirement.
In consideration of the issuance of certificates for the shares to me, I
hereby represent and warrant that I am acquiring such shares for my own account
for investment, and that I will not sell, pledge or transfer such shares in the
absence of an effective registration statement covering the same, except as
permitted by the provisions of Rule 144, if applicable, or some other applicable
exemption under the 1933 Act. In view of this representation and warranty, I
agree that there may be affixed to the certificates for the shares to be issued
to me, and to all certificates issued hereafter representing such shares (until
in the opinion of counsel, which opinion must be reasonably satisfactory in form
and substance to counsel for the Company, it is no longer necessary or required)
a legend as follows:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and were
acquired by the registered holder, pursuant to a representation and warranty
that such holder was acquiring such shares for his own account and for
investment, with no intention to transfer or dispose of the same, in violation
of the registration requirements of the Act. These shares may not be sold,
pledged, or transferred in the absence of an effective registration statement
under the Act, or an opinion of counsel, which opinion is reasonably
satisfactory to counsel to the Company, to the effect that registration is not
required under the Act."
I further agree that the Company may place a stop order with its Transfer
Agent, prohibiting the transfer of such shares, so long as the legend remains on
the certificates representing the shares.
Very truly yours,
Jonathan C. Wettstein
<PAGE>
GREEN MOUNTAIN COFFEE, INC.
STOCK OPTION AGREEMENT
UNDER 1993 STOCK OPTION PLAN
INCENTIVE STOCK OPTION
As of October 21, 1997
AGREEMENT entered into by and between Green Mountain Coffee, Inc., a
Delaware corporation with its principal place of business in Waterbury, Vermont
(together with its subsidiaries, the "Company"), and the undersigned employee of
the Company (the "Optionee").
WHEREAS, the Company desires to grant the Optionee an incentive stock
option under the Company's 1993 Stock Option Plan, as amended (the "Plan") to
acquire shares of the Company's Common Stock, par value $.10 per share (the
"Shares").
WHEREAS, the Plan provides that each option is to be evidenced by an option
agreement, setting forth the terms and conditions of the option.
ACCORDINGLY, in consideration of the premises and of the mutual covenants
and agreements contained herein, the Company and the Optionee hereby agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee an incentive
stock option (the "Option") to purchase all or any part of the number of Shares
shown at the end of this Agreement on the terms and conditions hereinafter set
forth. This option is intended to be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price.
The purchase price ("Purchase Price") for the Shares covered by the Option
shall be the dollar amount per Share shown at the end of this Agreement.
3. Time of Exercise of Option.
Subject to Section 4 below, the Option shall be first exercisable as
follows:
(i) as to 3,333 Shares October 21, 1998;
(ii) as to 3,333 Shares October 21, 1999; and
(iii) as to 3,334 Shares October 21, 2000.
To the extent the Option is not exercised by the Optionee when it becomes
exercisable, it shall not expire, but shall be carried forward and shall be
exercisable, on a cumulative basis, until the Expiration Date, as hereinafter
defined, subject to the other terms of this Agreement.
4. Term of Options; Exercisability.
(a) Term.
(i) If not earlier terminated as provided below, each Option
shall expire on the date shown at the end of this Agreement
(the "Expiration Date"), as determined by the Board of
Directors of the Company (the "Board"). (ii) Except as
otherwise provided in this Section 4, if the Optionee's
employment by the Company is terminated, the Option granted
to the Optionee hereunder shall terminate on the earlier of
ninety days after the date the Optionee's employment by the
Company is terminated, or (ii) the date on which the Option
expires by its terms.
(iii)If the Optionee's employment is terminated by the Company
for cause or because the Optionee is in breach of any
employment agreement, the Option will terminate on the date
the Optionee's employment is terminated by the Company.
(iv) If the Optionee's employment is terminated by the Company
because the Optionee has become permanently disabled (within
the meaning of Section 22(e)(3) of the Code), such Option
shall terminate on the earlier of (i) one year after the
date such Optionee's employment by the Company is
terminated, or (ii) the date on which the Option expires by
its terms.
(v) In the event of the death of the Optionee, the Option
granted to such Optionee shall terminate on the earlier of
(i) one year after the date such Optionee's employment by
the Company is terminated; or (ii) the date on which the
Option expires by its terms.
(b) Exercisability.
(i) Except as provided below, if the Optionee's employment by
the Company is terminated, the Option granted to the
Optionee hereunder shall be exercisable only to the extent
that the right to purchase shares under such Option has
accrued and is in effect on the date the Optionee's
employment by the Company is terminated.
(ii) If the Optionee's employment is terminated by the Company
because he or she has become permanently disabled, as
defined above, the option granted to the Optionee hereunder
shall be immediately exercisable as to the full number of
Shares covered by such Option, whether or not under the
provisions of Section 3 hereof such Option was otherwise
exercisable as of the date of disability.
(iii)In the event of the death of the Optionee, the Option
granted to such Optionee may be exercised to the full number
of Shares covered thereby, whether or not under the
provisions of Section 3 hereof the Optionee was entitled to
do so at the date of his or her death, by the executor,
administrator or personal representative of such Optionee,
or by any person or persons who acquired the right to
exercise such Option by bequest or inheritance or by reason
of the death of such Optionee.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares exercised and
accompanied by payment in full for such Shares. No partial exercise may be
made for less than one hundred (100) full shares of Common Stock. Payment
may be either wholly in cash or in whole or in part in Shares already owned
by the person exercising the option, valued at fair market value as of the
date of exercise; provided, however, that payment of the exercise price by
delivery of Shares already owned by the person exercising the Option may be
made only if such payment does not result in a charge to earnings for
financial accounting purposes as determined by the Board. Upon such
exercise, delivery of a certificate for paid-up, non-assessable Shares
shall be made at the principal office of the Company to the person
exercising the option, not less than thirty (30) and not more than ninety
(90) days from the date of receipt of the notice by the Company.
(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the option.
6. Non-Transferability.
The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and the Option may be exercised during
the lifetime of the Optionee only by him or her. The Option shall be null
and void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by
operation of law, pledge, hypothecation or other disposition contrary to
the provisions hereof, or levy of execution, attachment, trustee process or
similar process, whether legal or equitable, upon the Option.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the
Securities Act of 1933, as amended (the "1933 Act"), upon any date on which
the option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form
attached hereto as Exhibit 1 and the Company shall place an "investment
legend", so-called, as described in Exhibit 1, upon any certificate for the
Shares issued by reason of such exercise. (b) The Company shall be under no
obligation to qualify Shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for
the purposes of covering the issue of Shares.
8. Adjustments on Changes in Capitalization.
Adjustments on changes in capitalization and the like shall be made in
accordance with the Plan, as in effect on the date of this Agreement.
9. No Special Employment Rights.
Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind the Company to continue the
employment of the Optionee for the period within which this Option may be
exercised. However, during the period of the Optionee's employment, the Optionee
shall render diligently and faithfully the services which are assigned to the
Optionee from time to time by the Board or by the executive officers of the
Company and shall at no time take any action which directly or indirectly would
be inconsistent with the best interests of the Company.
10. Rights as a Shareholder.
The Optionee shall have no rights as a shareholder with respect to any
Shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such Shares are duly issued and
delivered to the Optionee. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
11. Withholding Taxes.
Whenever Shares are to be issued upon exercise of this Option, the Company
shall have the right to require the Optionee to remit to the Company an amount
sufficient to satisfy all Federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such Shares. The
Company may agree to permit the Optionee to withhold Shares purchased upon
exercise of this Option to satisfy the above-mentioned withholding requirement.
IN WITNESS HEREOF, the Company has caused this Agreement to be executed,
IN WITNESS HEREOF, the Company has caused this Agreement to be executed,
and the Optionee has hereunto set his or her hand and seal, all as of the day
and year first above written.
GREEN MOUNTAIN COFFEE, INC. OPTIONEE
By: /s/ Robert P. Stiller /s/ William L. Prost
______________________ ________________________
Robert P. Stiller William L. Prost
President
10,000
________________________
Number of Shares
$10.00
________________________
Purchase Price Per Share
October 21, 2007
________________________
Expiration Date
<PAGE>
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me as to ________ shares of Common
Stock, $.10 per share par value, of Green Mountain Coffee, Inc. (the "Company")
under the incentive stock option agreement dated as of October 21, 1997, granted
to me under the 1993 Stock Option Plan, as amended, I hereby acknowledge that I
have been informed as follows:
1. The shares of common stock of the Company to be issued to me pursuant to
the exercise of said option have not been registered under the Securities Act of
1933 (the "1933 Act"), and accordingly, must be held indefinitely unless such
shares are subsequently registered under the 1933 Act, or an exemption from such
registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
1933 Act can be made only after the holding period and in limited amounts in
accordance with the terms and conditions provided by that Rule, and in any sale
to which that Rule is not applicable, registration or compliance with some other
exemption under the 1933 Act will be required.
3. The Company is under no obligation to me to register the shares or to
comply with any such exemptions under the 1933 Act.
4. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to the Rule, the Company may neither wish nor
be able to comply with such requirement.
In consideration of the issuance of certificates for the shares to me, I
hereby represent and warrant that I am acquiring such shares for my own account
for investment, and that I will not sell, pledge or transfer such shares in the
absence of an effective registration statement covering the same, except as
permitted by the provisions of Rule 144, if applicable, or some other applicable
exemption under the 1933 Act. In view of this representation and warranty, I
agree that there may be affixed to the certificates for the shares to be issued
to me, and to all certificates issued hereafter representing such shares (until
in the opinion of counsel, which opinion must be reasonably satisfactory in form
and substance to counsel for the Company, it is no longer necessary or required)
a legend as follows:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and were
acquired by the registered holder, pursuant to a representation and warranty
that such holder was acquiring such shares for his own account and for
investment, with no intention to transfer or dispose of the same, in violation
of the registration requirements of the Act. These shares may not be sold,
pledged, or transferred in the absence of an effective registration statement
under the Act, or an opinion of counsel, which opinion is reasonably
satisfactory to counsel to the Company, to the effect that registration is not
required under the Act."
I further agree that the Company may place a stop order with its Transfer
Agent, prohibiting the transfer of such shares, so long as the legend remains on
the certificates representing the shares.
Very truly yours,
William L. Prost
<PAGE>
GREEN MOUNTAIN COFFEE, INC.
STOCK OPTION AGREEMENT
UNDER 1993 STOCK OPTION PLAN
INCENTIVE STOCK OPTION
As of October 21, 1997
AGREEMENT entered into by and between Green Mountain Coffee, Inc., a
Delaware corporation with its principal place of business in Waterbury, Vermont
(together with its subsidiaries, the "Company"), and the undersigned employee of
the Company (the "Optionee").
WHEREAS, the Company desires to grant the Optionee an incentive stock
option under the Company's 1993 Stock Option Plan, as amended (the "Plan") to
acquire shares of the Company's Common Stock, par value $.10 per share (the
"Shares").
WHEREAS, the Plan provides that each option is to be evidenced by an option
agreement, setting forth the terms and conditions of the option.
ACCORDINGLY, in consideration of the premises and of the mutual covenants
and agreements contained herein, the Company and the Optionee hereby agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee an incentive
stock option (the "Option") to purchase all or any part of the number of Shares
shown at the end of this Agreement on the terms and conditions hereinafter set
forth. This option is intended to be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price.
The purchase price ("Purchase Price") for the Shares covered by the Option
shall be the dollar amount per Share shown at the end of this Agreement.
3. Time of Exercise of Option.
Subject to Section 4 below, the Option shall be first exercisable as
follows:
(i) as to 3,333 Shares October 21, 1998;
(ii) as to 3,333 Shares October 21, 1999; and
(iii) as to 3,334 Shares October 21, 2000.
To the extent the Option is not exercised by the Optionee when it becomes
exercisable, it shall not expire, but shall be carried forward and shall be
exercisable, on a cumulative basis, until the Expiration Date, as hereinafter
defined, subject to the other terms of this Agreement.
4. Term of Options; Exercisability.
(a) Term.
(i) If not earlier terminated as provided below, each Option
shall expire on the date shown at the end of this Agreement
(the "Expiration Date"), as determined by the Board of
Directors of the Company (the "Board"). (ii) Except as
otherwise provided in this Section 4, if the Optionee's
employment by the Company is terminated, the Option granted
to the Optionee hereunder shall terminate on the earlier of
ninety days after the date the Optionee's employment by the
Company is terminated, or (ii) the date on which the Option
expires by its terms.
(iii)If the Optionee's employment is terminated by the Company
for cause or because the Optionee is in breach of any
employment agreement, the Option will terminate on the date
the Optionee's employment is terminated by the Company.
(iv) If the Optionee's employment is terminated by the Company
because the Optionee has become permanently disabled (within
the meaning of Section 22(e)(3) of the Code), such Option
shall terminate on the earlier of (i) one year after the
date such Optionee's employment by the Company is
terminated, or (ii) the date on which the Option expires by
its terms.
(v) In the event of the death of the Optionee, the Option
granted to such Optionee shall terminate on the earlier of
(i) one year after the date such Optionee's employment by
the Company is terminated; or (ii) the date on which the
Option expires by its terms.
(b) Exercisability.
(i) Except as provided below, if the Optionee's employment by
the Company is terminated, the Option granted to the
Optionee hereunder shall be exercisable only to the extent
that the right to purchase shares under such Option has
accrued and is in effect on the date the Optionee's
employment by the Company is terminated.
(ii) If the Optionee's employment is terminated by the Company
because he or she has become permanently disabled, as
defined above, the option granted to the Optionee hereunder
shall be immediately exercisable as to the full number of
Shares covered by such Option, whether or not under the
provisions of Section 3 hereof such Option was otherwise
exercisable as of the date of disability.
(iii)In the event of the death of the Optionee, the Option
granted to such Optionee may be exercised to the full number
of Shares covered thereby, whether or not under the
provisions of Section 3 hereof the Optionee was entitled to
do so at the date of his or her death, by the executor,
administrator or personal representative of such Optionee,
or by any person or persons who acquired the right to
exercise such Option by bequest or inheritance or by reason
of the death of such Optionee.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares exercised and
accompanied by payment in full for such Shares. No partial exercise may be
made for less than one hundred (100) full shares of Common Stock. Payment
may be either wholly in cash or in whole or in part in Shares already owned
by the person exercising the option, valued at fair market value as of the
date of exercise; provided, however, that payment of the exercise price by
delivery of Shares already owned by the person exercising the Option may be
made only if such payment does not result in a charge to earnings for
financial accounting purposes as determined by the Board. Upon such
exercise, delivery of a certificate for paid-up, non-assessable Shares
shall be made at the principal office of the Company to the person
exercising the option, not less than thirty (30) and not more than ninety
(90) days from the date of receipt of the notice by the Company.
(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of the option.
6. Non-Transferability.
The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than by will or the
laws of descent and distribution, and the Option may be exercised during
the lifetime of the Optionee only by him or her. The Option shall be null
and void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by
operation of law, pledge, hypothecation or other disposition contrary to
the provisions hereof, or levy of execution, attachment, trustee process or
similar process, whether legal or equitable, upon the Option.
7. Representation Letter and Investment Legend.
(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the
Securities Act of 1933, as amended (the "1933 Act"), upon any date on which
the option is exercised in whole or in part, the person exercising the
Option shall give a written representation to the Company in the form
attached hereto as Exhibit 1 and the Company shall place an "investment
legend", so-called, as described in Exhibit 1, upon any certificate for the
Shares issued by reason of such exercise. (b) The Company shall be under no
obligation to qualify Shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for
the purposes of covering the issue of Shares.
8. Adjustments on Changes in Capitalization.
Adjustments on changes in capitalization and the like shall be made in
accordance with the Plan, as in effect on the date of this Agreement.
9. No Special Employment Rights.
Nothing contained in the Plan or this Agreement shall be construed or
deemed by any person under any circumstances to bind the Company to continue the
employment of the Optionee for the period within which this Option may be
exercised. However, during the period of the Optionee's employment, the Optionee
shall render diligently and faithfully the services which are assigned to the
Optionee from time to time by the Board or by the executive officers of the
Company and shall at no time take any action which directly or indirectly would
be inconsistent with the best interests of the Company.
10. Rights as a Shareholder.
The Optionee shall have no rights as a shareholder with respect to any
Shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such Shares are duly issued and
delivered to the Optionee. Except as otherwise expressly provided in the Plan,
no adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
11. Withholding Taxes.
Whenever Shares are to be issued upon exercise of this Option, the Company
shall have the right to require the Optionee to remit to the Company an amount
sufficient to satisfy all Federal, state and local withholding tax requirements
prior to the delivery of any certificate or certificates for such Shares. The
Company may agree to permit the Optionee to withhold Shares purchased upon
exercise of this Option to satisfy the above-mentioned withholding requirement.
IN WITNESS HEREOF, the Company has caused this Agreement to be executed,
and the Optionee has hereunto set his or her hand and seal, all as of the day
and year first above written.
GREEN MOUNTAIN COFFEE, INC. OPTIONEE
By: /s/ Robert P. Stiller /s/ Stephen J. Sabol
______________________ ________________________
Robert P. Stiller Stephen J. Sabol
President
10,000
________________________
Number of Shares
$10.00
________________________
Purchase Price Per Share
October 21, 2007
________________________
Expiration Date
<PAGE>
EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me as to ________ shares of Common
Stock, $.10 per share par value, of Green Mountain Coffee, Inc. (the "Company")
under the incentive stock option agreement dated as of October 21, 1997, granted
to me under the 1993 Stock Option Plan, as amended, I hereby acknowledge that I
have been informed as follows:
1. The shares of common stock of the Company to be issued to me pursuant to
the exercise of said option have not been registered under the Securities Act of
1933 (the "1933 Act"), and accordingly, must be held indefinitely unless such
shares are subsequently registered under the 1933 Act, or an exemption from such
registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
1933 Act can be made only after the holding period and in limited amounts in
accordance with the terms and conditions provided by that Rule, and in any sale
to which that Rule is not applicable, registration or compliance with some other
exemption under the 1933 Act will be required.
3. The Company is under no obligation to me to register the shares or to
comply with any such exemptions under the 1933 Act.
4. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to the Rule, the Company may neither wish nor
be able to comply with such requirement.
In consideration of the issuance of certificates for the shares to me, I
hereby represent and warrant that I am acquiring such shares for my own account
for investment, and that I will not sell, pledge or transfer such shares in the
absence of an effective registration statement covering the same, except as
permitted by the provisions of Rule 144, if applicable, or some other applicable
exemption under the 1933 Act. In view of this representation and warranty, I
agree that there may be affixed to the certificates for the shares to be issued
to me, and to all certificates issued hereafter representing such shares (until
in the opinion of counsel, which opinion must be reasonably satisfactory in form
and substance to counsel for the Company, it is no longer necessary or required)
a legend as follows:
"The shares of common stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"), and were
acquired by the registered holder, pursuant to a representation and warranty
that such holder was acquiring such shares for his own account and for
investment, with no intention to transfer or dispose of the same, in violation
of the registration requirements of the Act. These shares may not be sold,
pledged, or transferred in the absence of an effective registration statement
under the Act, or an opinion of counsel, which opinion is reasonably
satisfactory to counsel to the Company, to the effect that registration is not
required under the Act."
I further agree that the Company may place a stop order with its Transfer
Agent, prohibiting the transfer of such shares, so long as the legend remains on
the certificates representing the shares.
Very truly yours,
Stephen J. Sabol
GREEN MOUNTAIN COFFEE, INC.
Exhibit 11
Computation of Earnings Per Share
(unaudited)
<TABLE>
Sixteen weeks ended
January 17, 1998 January 18, 1998
---------------- ----------------
<S> <C> <C>
Net income................................... $ 104,000 $ 722,000
================ ================
Primary weighted common shares outstanding:
Common stock.............................. 3,530,818 3,417,306
Dilutive effect of outstanding common
stock options........................... 18,588 26,912
---------------- ----------------
Weighted average common and common
equivalent shares......................... 3,549,406 3,444,218
================ ================
Diluted income per share..................... $ 0.03 $ 0.21
================ ================
<FN>
This exhibit should be read in conjunction with the accompanying unaudited
consolidated financial statements and the notes thereto.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet dated 1/17/98 and the Statement of Operations for the
sixteen weeks ended 1/17/98 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-26-1998
<PERIOD-START> SEP-28-1997
<PERIOD-END> JAN-17-1998
<CASH> 1,024
<SECURITIES> 0
<RECEIVABLES> 4,686
<ALLOWANCES> 146
<INVENTORY> 5,278
<CURRENT-ASSETS> 12,205
<PP&E> 21,133
<DEPRECIATION> 9,675
<TOTAL-ASSETS> 24,456
<CURRENT-LIABILITIES> 6,165
<BONDS> 7,532
0
0
<COMMON> 353
<OTHER-SE> 10,406
<TOTAL-LIABILITY-AND-EQUITY> 24,456
<SALES> 18,476
<TOTAL-REVENUES> 18,476
<CGS> 12,079
<TOTAL-COSTS> 12,079
<OTHER-EXPENSES> 4,832
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 214
<INCOME-PRETAX> 163
<INCOME-TAX> 59
<INCOME-CONTINUING> 104
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
