Promissory Note - Diedrich Coffee Inc. and Palm Trust
PROMISSORY NOTE
MADE BY DIEDRICH COFFEE, INC.
IN FAVOR OF
THE PALM TRUST
$1,500,000 Maximum Principal Amount May 27, 1997
Irvine, California
1. OBLIGATION. FOR VALUE RECEIVED, the undersigned Borrower hereby
promises to pay to the order of The Palm Trust ("Holder") or their
successors or assigns, the principal sum of up to One Million Five
Hundred Thousand Dollars ($1,500,000) or such lesser amount as may be
borrowed under the terms of this Note, together with interest on the
unpaid principal amount from time to time outstanding from the date
hereof until the principal amount of this Note is paid in full, in
accordance with the terms of this Note, at the Note Rate (as defined
below). The principal of this Note, together with all accrued and
unpaid interest, shall become due and payable on January 27, 1998 or
promptly after closing of new financing, debt or equity, in an amount
exceeding $1,500,000 (excluding lease financing). Interest shall
become due and payable monthly as it is accrued, beginning May 27,
1997.
2. INTEREST. The principal amount of this Note shall bear interest at
the Note Rate. The "Note Rate" shall be the prime rate plus three and
one-half percent or the maximum rate allowable by law. The prime rate
as of any date shall be determined by reference to the prime rate as
published in the Wall Street Journal (the base rate on corporate
loans posted by at least 75% of the thirty largest U.S. banks).
Interest shall be computed daily at the Note Rate on the basis of the
actual number of days in which all or any portion of the principal
amount hereof is outstanding computed on the basis of a 360 day year.
3. DISBURSEMENTS. Borrower may borrow any amount up to an aggregate
amount of $1,500,000 by providing notice to Holder prior to the date
of the borrowing, which notice shall include the amount of such
borrowing and the date of such borrowing; provided that each such
borrowing shall be in a minimum principal amount of $25,000 or any
larger multiple of $5,000. Within the limits set forth in this Note,
Borrower may borrow amounts under this Note, provided that the
aggregate principal balance outstanding under this Note at any given
time shall not exceed $1,500,000.
All loans made by Holder and all repayments of the principal thereof
shall be recorded by the Holder and endorsed by an officer of the
Borrower on the Schedule attached hereto, or on a continuation of
such schedule
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attached to and made a part hereof; provided that the failure of
Holder to make any such recordation or of Borrower to make any such
endorsement shall not affect the obligations of Borrower hereunder.
4. EFFECT OF NON-PAYMENT OF PRINCIPAL AND INTEREST. In the event that
any principal and/or interest is not paid when due, without affecting
any of Holder's other rights and remedies, the unpaid principal
amount and, to the extent permitted by applicable law, interest,
shall bear interest at the Note Rate and shall be payable on demand
of Holder until such unpaid amount is paid in full.
5. PAYMENT OF PRINCIPAL AND INTEREST. Principal and interest shall be
payable in lawful money of the United States at Holder's offices
located at 450 Newport Center Drive, #450, Newport Beach, California
92660.
6. PREPAYMENT. This Note may be prepaid at any time without penalty.
7. DEFAULT. Borrower will be deemed to be in default under this Note
upon the occurrence of any event of default as defined below:
(a) Borrower shall fail to pay when due (whether by acceleration
or otherwise) principal or interest on this Note, and such
default unless otherwise cured shall have continued for a
period of fifteen (15) calendar days; or
(b) Any representation or warranty made by or on behalf of
Borrower in the Note or in any statement or certificate
given in writing pursuant thereto or in connection therewith
is false, misleading or incomplete in any material respect
when made (or deemed to have been made); or
(c) Borrower breaches or fails, or neglects to perform, keep
or observe any covenant set forth in the Note and the same
has not been cured within ten (10) calendar days after
Borrower receives notice thereof from Lender; or
(d) Borrower shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding
commenced against it, or shall make a general
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assignment for the benefit of creditors, or shall fail to
pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing; or
(e) An involuntary case or other proceeding shall be commenced
against Borrower seeking liquidation, reorganization or
other relief with respect to its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case
or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be
entered against Borrower under the federal bankruptcy laws
as now or hereafter in effect; or
(f) The Note for any reason (other than the satisfaction in full
of all amounts owing in connection with the Note) ceases to
be, or is asserted by Borrower not to be, a legal, valid and
binding obligation of Borrower, enforceable in accordance
with its terms; of
(g) Borrower has fraudulently conveyed or concealed any material
property to prevent attachment or execution by its
creditors; or
(h) Borrower is insolvent and fails to satisfy or obtain the
release of any judicial lien within 30 days of such lien
coming into existence; or
(i) Borrower has admitted to any person in writing that it is
unable to pay its debts and that it is willing to be
adjudged a bankrupt.
8. REMEDIES OF LENDER. If an Event of Default shall occur and be
continuing or shall exist, the principal amount of the Note and
interest accrued thereon shall be immediately due and payable without
presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived, and an action therefor shall
immediately accrue.
9. GOVERNING LAW. This Note shall be governed by, and construed and
enforced in accordance wit, the internal laws (excluding the laws of
conflict and choice of law) of the State of California.
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11. WAIVER. No failure to exercise and no delay in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
12. AMENDMENT. This Note may be amended or modified only upon the
written consent of both Borrower and Holder. Any amendment must
specifically state the provision or provisions to be amended and the
manner in which such provisions(s) are to be amended.
[Signature Page Follows]
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[SIGNATURE PAGE TO PROMISSORY NOTE]
IN WITNESS WHEREOF, Borrower has executed this Note in favor of The Palm
Trust as of the date and year first above written.
BORROWER:
DIEDRICH COFFEE, INC., a Delaware
corporation
By: /s/ KERRY W. COIN
-----------------------------------------
Name: Kerry W. Coin
---------------------------------------
Title: President and Chief Operating Officer
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PROMISSORY NOTE
MADE BY DIEDRICH COFFEE, INC.
IN FAVOR OF
THE PALM TRUST
MAY 27, 1997
LOANS OF PRINCIPAL
Holder of Borrower
Date Amount of Loan Principal Balance Recordation Endorsement By
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5/27/97 $350,000 $350,000 The Palm Trust
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6/11/97 $600,000 $950,000 The Palm Trust
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6/26/97 $300,000 $1,250,000 The Palm Trust
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8/19/97 $250,000 $1,500,000 The Palm Trust
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