Attached files
| file | filename |
|---|---|
| 8-K - JAVO BEVERAGE COMPANY, INC. - JAVO BEVERAGE CO INC | javo_8k-111709.htm |
| EX-10.1 - SECURITIES PURCHASE AGREEMENT - JAVO BEVERAGE CO INC | javo_8k-ex1001.htm |
| EX-10.2 - FORM OF SENIOR SUBORDINATED 12% NOTE (INITIAL NOTE) - JAVO BEVERAGE CO INC | javo_8k-ex1002.htm |
| EX-4.1 - AMENDMENT NO. 1 TO RIGHTS AGREEMENT - JAVO BEVERAGE CO INC | javo_8k-ex0401.htm |
EXHIBIT
10.3
THIS
SENIOR SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THIS SENIOR
SUBORDINATED NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE
INDEBTEDNESS EVIDENCED BY THIS SENIOR SUBORDINATED NOTE IS SUBORDINATED TO THE
PRIOR PAYMENT AND SATISFACTION OF CERTAIN SENIOR INDEBTEDNESS AS DESCRIBED MORE
FULLY HEREIN.
THIS
SENIOR SUBORDINATED NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”)
FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE,
AMOUNT OF OID, ISSUE DATE AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED BY
WRITING TO JAVO BEVERAGE COMPANY, INC. AT 1311 SPECIALTY DRIVE, VISTA, CA
92081.
JAVO
BEVERAGE COMPANY, INC.
_______________
SENIOR
SUBORDINATED 12% NOTE
Original
Principal Amount: U.S. $[______________]
Issuance
Date: [____________, __ ____]
FOR VALUE
RECEIVED, Javo Beverage Company, Inc., a Delaware corporation (the “Company”), hereby
promises to pay to the order of COFFEE HOLDINGS LLC, and its successors and
assigns (the “Holder”) the amount
set forth above as the Original Principal Amount (as reduced pursuant to the
terms hereof pursuant to redemption, repayment or otherwise, and together with
the aggregate PIK Interest Amount, the “Principal Amount”)
when due, whether upon the Maturity Date (as defined below), acceleration,
redemption or otherwise (in each case in accordance with the terms hereof) and
to pay interest (“Interest”) on any
outstanding Principal Amount at the rate of twelve percent (12%) per annum (the
“Interest
Rate”) from the date set out above as the Issuance Date (“Issuance Date”) until
the same is repaid.
This
Senior Subordinated Note (this “Note”) has been
issued by the Company pursuant to the Securities Purchase Agreement dated
November 17, 2009 by and between the Company and Coffee Holdings LLC (as the
same may be amended, supplemented or otherwise modified from time to time, the
“Purchase
Agreement”). Certain capitalized terms used herein are defined
in Section 8 below.
1. Payments of Interest and
Principal.
(a) Accrued
and unpaid Interest shall be payable in kind annually in arrears on each
anniversary of the Issuance Date by adding the amount of such Interest due to
the then outstanding Principal Amount (such capitalized interest, a “PIK Interest Amount”)
until the entire Principal Amount outstanding shall be paid in full (whether
upon maturity, acceleration or otherwise). Interest shall be
calculated on the Principal Amount outstanding as of each interest payment date
and on the basis of a 365 day year for the actual number of days
elapsed.
(b) The
Principal Amount, together with all accrued and unpaid interest thereon and any
other amounts which are then owing by the Company to the Holder under this Note,
shall be payable in full on April 17, 2015 (the “Maturity
Date”).
(c) This Note
may be prepaid in whole or in part from time to time and at any time prior to
the Maturity Date without penalty or premium; provided, however, that any
partial prepayment shall be applied first to accrued but unpaid Interest and
then to Principal Amount.
(d) All cash
payments under this Note shall be made in lawful money of the United States and
in immediately available funds by wire transfer pursuant to instructions
provided by the Holder in writing from time to time to the
Company. All cash payments shall be applied first to accrued and
unpaid Interest and then to Principal Amount. All payments of
Principal Amount shall be accompanied by accrued and unpaid Interest
thereon. All payments of Principal Amount and Interest shall be due
on or before 2:00 p.m., New York City time and if received later will be deemed
to have been received on the next calendar day. If a payment of
Principal Amount or Interest is due on a day that is not a Business Day, such
due date shall be deemed to be extended to the next Business Day, but Interest
shall accrue until such payment is made.
2. Covenants. So
long as this Note is outstanding:
(a) Operating
Covenant. The Company shall have, on each Dispenser Base
Measurement Date occurring during the Operating Covenant Period, a Dispenser
Base of at least seven thousand five hundred (7,500).
(b) Rank. The
Company shall cause the Principal Amount, Interest and all other obligations
under this Note to rank (i) senior to all Indebtedness of the Company incurred
after the Issuance Date, (ii) senior to the 2008 Notes and the 2009 Notes and
(iii) pari passu with the Initial Note and any other Additional
Notes. The Principal Amount, Interest and all other obligations under
this Note shall be subordinated to any Permitted Senior Indebtedness as set
forth in Section 4 below. This Note is (i) Permitted Senior
Indebtedness under and as defined in the 2009 Notes and (ii) Senior Debt as
defined in the 2008 Notes.
(c) Insurance. The
Company shall obtain and maintain, and cause each of its Subsidiaries to obtain
and maintain, insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried by
companies engaged in similar businesses and owning similar properties in the
same general area in which the Company and such Subsidiary operate.
2
(d) Taxes. The
Company shall pay, and cause each of its Subsidiaries to pay, prior to
delinquency, all material taxes, assessments and governmental levies except
those contested in good faith and by appropriate proceedings.
(e) Corporate Existence,
Etc. The Company shall do or cause to be done, and cause each
Subsidiary of the Company to do or cause to be done, all things necessary to
preserve and keep in full force and effect its corporate existence in accordance
with its organizational documents and the rights (charter and statutory),
licenses and franchises of the Company and such Subsidiary; provided, however, that
Subsidiaries of the Company shall not be required to preserve any such right,
license or franchise if its Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the such Subsidiary and that the loss thereof is not adverse in any material
respect to the Holder.
(f) Compliance with Laws, etc. The
Company shall, and shall cause each of its Subsidiaries to, comply (i) in all
material respects with all applicable laws, rules, regulations and orders and
(ii) with all indentures, or loan or credit agreements or any other agreement,
lease or instrument to which it is a party or by which it or its properties may
be bound or affected, except, in each case, where the failure to so comply would
not have a Material Adverse Effect.
(g) Indebtedness. The
Company will not and will cause its Subsidiaries not to create, incur, assume or
suffer to exist any Indebtedness except Permitted Indebtedness.
(h) Restricted
Payments. The Company shall not make any Restricted
Payment.
(i) Use of
Proceeds. The Company will use the proceeds of this Note (net
of the expenses directly incurred in connection with the transactions
contemplated by the Purchase Agreement) exclusively to pay any accrued interest
and principal amounts when due under the 2009 Notes held by Coffee Holdings
LLC.
3. Representations and
Warranties. The Company represents and warrants to the Holder
that each of the representations and warranties of the Company set forth in the
Purchase Agreement, are true and correct, as of the date hereof (unless such
representation or warranty speaks as of an earlier date, in which case it is
true and correct as of such earlier date).
4. Subordination. The
Holder hereby agrees in the event of any payment or distribution of assets of
the Company of any kind or character, whether in cash, property, or securities
in any Insolvency Proceeding: (i) the Permitted Senior Indebtedness
shall first be paid in full before any payment is made in respect of this Note;
and (ii) any payment in respect of this Note to which the Holder would be
entitled except for the provisions hereof, shall be paid or delivered by the
trustee in bankruptcy, receiver, assignee for the benefit of creditors, or other
liquidating lender making such payment or distribution directly to holders of
the Permitted Senior Indebtedness for application to the payment of the
Permitted Senior Indebtedness in accordance with the terms thereof, giving
effect to any concurrent payment or distribution to lender in respect of such
Senior Permitted Indebtedness.
3
5. Events of Default;
Remedies.
(a) Events of Default.
The occurrence or existence of any one or more of the following events
(regardless of the reason therefor) shall constitute an “Event of Default”
hereunder:
(i) failure
to pay any Principal Amount when due (whether by reason of amortization,
redemption, maturity, acceleration or otherwise) within five (5) Business Days
after it is due;
(ii) failure
to pay any Interest or other amount due under this Note within five (5) Business
Days after it is due;
(iii) a breach
of any obligation under Section 2 (a), (g), or (h);
(iv) a
material breach of any representation, warranty, covenant or other term or
condition of the this Note (other than those described in clause (iii) above) by
the Company or any of its Subsidiaries, except, in the case of a breach or
failure to perform which is curable, only if such breach or failure continues
for a period of at least ten (10) consecutive Business Days;
(v) a
material breach of or failure by the Company or any of its Subsidiaries to
perform in any material respect any covenant or other term or condition of any
other Transaction Document and such default is not remedied or waived within ten
(10) Business Days (or such longer cure period as provided in such Transaction
Document);
(vi) a default
or event of default under any Indebtedness of the Company or any Subsidiary of
the Company (other than this Note) occurs and as a result thereof the holder or
holders of Indebtedness of the Company or its Subsidiaries in a principal
amount, individually or collectively, in excess of One Million Dollars
($1,000,000) have declared, or have the right to declare, the principal thereof
due and payable prior to its scheduled maturity or the Company or any Subsidiary
of the Company fails to fully pay Indebtedness in a principal amount,
individually or collectively, in excess of One Million Dollars ($1,000,000) at
its maturity;
(vii) a final
judgment or judgments for the payment of money in an amount (individually or
collectively) that exceeds One Million Dollars ($1,000,000) (exclusive of amount
covered by insurance from a credit worthy insurer that has admitted in writing
its obligation to pay such excluded amounts) is rendered, entered or filed
against the Company or any of its Subsidiaries and remains undischarged,
unvacated, unbonded or unstayed for a period of thirty (30) days or any action
is taken to execute on or enforce the same.
(viii) the
suspension of trading of the Common Stock on the Principal Market resulting from
any action or omission by the Company or any of its Subsidiaries;
4
(ix) the
Company or any of its Subsidiaries shall commence or acquiesce in the
commencement of any Insolvency Proceeding; or
(x) a court
of competent jurisdiction shall enter a decree or order for relief with respect
to the Company or any Subsidiary in any Insolvency Proceeding, which decree or
order is not stayed or other similar relief is not granted under any applicable
law or the continuance of any of the following events for sixty (60) days unless
dismissed, bonded or discharged.
(b) Default Rate of
Interest. From the date of such Event of Default occurs until
the date such Event of Default is cured or waived in writing by the Holder, the
Principal Amount shall bear interest at a rate two percent (2%) in excess of the
Interest Rate.
(c) Acceleration. Upon
the occurrence of any Event of Default described in Section 5(a)(ix) and 5(a)(x)
the Principal Amount and all accrued and unpaid Interest and all other amounts
due in respect of this Note shall automatically become immediately due and
payable and upon the occurrence and continuance of any other Event of
Default, the Holder may declare the Principal Amount and all accrued
and unpaid Interest and all other amounts due in respect of this Note
immediately due and payable and in such event the same shall immediately be due
and payable, in each case without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company. The Holder may also exercise any rights and remedies provided to
hereunder or at law or equity.
6. Fundamental
Transaction. The Company shall promptly, but in no event later
than ten (10) Business Days prior to the expected closing date thereof, upon
entering into a binding agreement to engage in a Fundamental Transaction,
deliver a written redemption offer to Holder setting forth the details of such
Fundamental Transaction, including the expected closing date and offering to
redeem this Note (the “Redemption
Offer”). If the Holder accepts the Redemption Offer by
delivering a written notice to the Company not later than five (5) Business Days
prior to the expected closing date set forth in the Redemption Offer, then the
entire outstanding Principal Amount, all accrued and unpaid Interest and all
other amount owing in respect of this Note shall become due and payable on the
date such Fundamental Transaction is consummated.
7. Highest Lawful
Rate. Notwithstanding any other provisions herein, if during
any period for which interest is computed hereunder, the amount of interest
computed on the basis provided for in this Note, together with all fees, charges
and other payments or rights which are treated as interest under applicable law,
as provided for herein or in any other document executed in connection herewith,
would exceed the Highest Lawful Rate, the Company shall not be obligated to pay,
and the Holder shall not be entitled to charge, collect, receive, reserve or
take, interest in excess of the Highest Lawful Rate, and during any such period
the obligations hereunder shall bear interest at the Highest Lawful
Rate. In accordance with this Section 7, any amounts received in
excess of the Highest Lawful Rate shall be applied towards the prepayment of
Principal Amount then outstanding until fully paid with any remaining balance to
be returned to the Company.
5
8. Certain Defined
Terms. As used in this Note, the following terms shall have
the meanings specified below:
“2008 Notes” means
those certain Senior Subordinated Notes in the aggregate principal amount of
$10,500,000 issued by the Company in accordance with the Company’s confidential
private placement memorandum dated December 9, 2008 and pursuant to the terms
and conditions of related Securities Purchase Agreements previously provided to
the Holder.
“2009 Notes” means
those certain Senior Subordinated Notes in an original aggregate principal
amount of $12,000,000 issued by the Company to Holder on April 6, 2009 pursuant
to the 2009 Purchase Agreement.
“2009 Purchase
Agreement” means that certain Securities Purchase Agreement dated April
6, 2009 by and between the Company and Holder.
“Additional Notes”
means any Senior Subordinated Notes (including this Note), other than the
Initial Note, in the aggregate original principal amount of up to $3,500,000
issued by Company to Holder pursuant to the Purchase Agreement.
“Affiliate” means,
with respect to any Person, another Person that directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with the Person specified. With respect to the Holder, the
term Affiliate shall not include the Company or any of its Subsidiaries or any
portfolio company of Falconhead Capital, LLC or any of their respective
Subsidiaries.
“Business Day” means
any day other than Saturday, Sunday or other day on which commercial banks in
The City of New York are authorized or required by law to remain
closed.
“Certificate of
Incorporation” means the Company’s certificate of incorporation, as
amended and as in effect on the date hereof.
“Common Stock” means
the Company’s Common Stock, par value $0.001 per share.
6
“Consolidated EBITDA”
means as of any date of determination and with respect to the Company and its
Subsidiaries, the (a) consolidated net income of the Company and its
Subsidiaries for the twelve full calendar month period immediately preceding
such date plus (b) the
sum of, in each case to the extent included in the calculation of such
consolidated net income but without duplication, (i) any provision for income
taxes, (ii) interest expense, (iii) loss from extraordinary items, (iv) any
aggregate net loss from the sale, exchange or other disposition of capital
assets by the Company or any Subsidiary, (v) depreciation, depletion and
amortization expenses and (vi) all other non-cash charges and non-cash losses
for such period, minus
(c) the sum of, in each case to the extent included in the calculation of
such consolidated net income but without duplication, (i) any credit for income
tax, (ii) interest income, (iii) gains from extraordinary items for such period,
(iv) any aggregate net gain (but not any aggregate net loss) from the sale,
exchange or other disposition of capital assets by the Company or any Subsidiary
and (v) any other non-cash gains or other items which have been added in
determining consolidated net income, including any reversal of a charge referred
to in clause (b)(vi) above. To the extent
any items set forth in this definition of Consolidated EBITDA are defined under
GAAP, such items shall be calculated in accordance with GAAP consistently
applied using the accounting principles, polices, procedures, practices,
applications and methodologies used in preparing the Company’s financial
statements and the Company shall not take any actions that do or would
artificially reduce EBITDA for any measurement period.
“Contingent
Obligation” means, as to any Person, any direct or indirect liability,
contingent or otherwise, of that Person with respect to any Indebtedness, lease,
agreement or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto.
“Dispenser Base”
means, as of any Dispenser Base Measurement Date, the aggregate number of
beverage dispensers installed and operating in customer locations on behalf of
the Company, whether or not owned by the Company.
“Dispenser Base Measurement
Date” means July 1, 2010, and each January 1st and
July 1st of
each calendar year thereafter.
“Event of Default”
shall have the meaning assigned to such term in Section 5(a).
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
“Fundamental
Transaction” means that the Company shall, directly or indirectly, in one
or more related transactions (i) consolidate or merge with or into (whether of
not the Company is the surviving corporation) another person or persons or (ii)
sell, assign, transfer, convey or otherwise dispose of all or substantially all
of the properties or assets of the Company to another Person or Persons or (iii)
allow another Person to make a purchase, tender or exchange offer that is
accepted by the holders of more than 50% of the outstanding Voting Stock (not
including any shares of Voting stock held by the Person or Persons making or
party to, or associated or affiliated with any of the Persons making or party
to, such purchase, tender or exchange offer), or (iv) consummate a stock
purchase agreement or other business combination (including without limitation,
a reorganization, recapitalization, spin off or scheme or arrangement) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Voting Stock (not including any shares of Voting Stock
held by the Person or Person making or party to, or associated or affiliated
with the Persons, making or party to such stock purchase or business
combination), or (v) any “person” or ‘group” (as these terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 50% or more of the aggregate Voting Stock of the
Company.
7
“Highest Lawful Rate”
means the maximum non-usurious rate of interest, as in effect from time to time,
which may be charged, contracted for, reserved, received or collected by the
Holder in connection with this Note under applicable law.
“Holder” has the
meaning ascribed to it in the first paragraph of this Note.
“Indebtedness” of any
Person means, without duplication (i) all indebtedness for borrowed money, (ii)
all obligations issued, undertaken or assumed as the deferred purchase price of
property or services (including, without limitation, “capital leases” in
accordance with generally accepted accounting principles) (other than trade
payables entered into in the ordinary course of business on
customary terms), (iii) all reimbursement or payment obligations with respect to
letters of credit, surety bonds and other similar instruments, (iv) all
obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition
of property, assets or businesses, (v) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property), (vi) all indebtedness referred to in
clauses (i) through (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any mortgage, lien, pledge, charge, security interest or other encumbrance upon
or in any property or assets (including accounts and contract rights) owned by
any Person, even though the Person which owns such assets or property has not
assumed or become liable for the payment of such indebtedness, and (vii) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (i) through (vi) above. Indebtedness
shall include all obligations under the 2008 Notes, the 2009 Notes, the Initial
Note and any Additional Notes.
“Initial Note” means
the Senior Subordinated Note in an original principal amount of $4,000,000
issued by Company to Holder on November 17, 2009 pursuant to the Purchase
Agreement.
“Insolvency
Proceeding” means, with respect to any Person, the dissolution, winding
up, or total or partial liquidation or reorganization, readjustment,
arrangement, or similar proceeding relating to such Person or its property,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership,
arrangement, or similar proceedings or upon an assignment for the benefit of
creditors, or upon any other marshaling or composition of the assets and
liabilities of such Person.
“Interest Rate” shall
have the meaning assigned to such term in first paragraph of this
Note.
“Material Adverse
Effect” means any material adverse effect on the business, properties,
assets, results of operations, condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole.
“Maturity Date” shall
have the meaning assigned to such term in Section 1.
8
“Operating Covenant
Period” means the period commencing on the Issuance Date and ending on
the first date Consolidated EBITDA is equal to or greater than
$15,000,000.
“Permitted
Indebtedness” means, without duplication (i) any Indebtedness arising
under the Notes issued pursuant to the Purchase Agreement; (ii) any Indebtedness
outstanding as of the Issuance Date that is described in the SEC Documents and
any extension, renewal or refinancing thereof, provided that the
amount of such Indebtedness (including the maximum commitments thereunder) is
not increased at the time of such refinancing, refunding, renewal or extension
except by the sum of (A) the amount of unpaid accrued interest and premiums,
penalties and fees required by the terms thereof to be paid and (B) reasonable
and documented fees and expenses incurred in connection therewith and not paid
to an Affiliate, (iii) the 2008 Notes and the 2009 Notes; (iv) any Permitted
Senior Indebtedness; (v) Indebtedness arising in connection with endorsement of
checks, drafts or similar instruments of payment for deposit in the ordinary
course of business; (vi) Indebtedness incurred in the ordinary course of
business owed to any Person providing workers’ compensation, health disability
or other employee benefits or property, casualty or liability insurance,
pursuant to reimbursement or indemnification obligations to such Person, (vii)
Indebtedness incurred in the ordinary course of business in the form of bids,
tenders, statutory obligations, customary reimbursement obligations for surety
bonds, performance bonds and appeal and other similar bonds which are not
overdue and not involving borrowed money; (viii) Indebtedness owing to insurance
carriers or finance companies and incurred to finance insurance premiums in an
aggregate amount outstanding at any time not exceeding $300,000; and (ix) any
other Indebtedness incurred after the Issuance Date in the original principal
amount not exceeding $300,000 individually or in the aggregate.
“Permitted Senior
Indebtedness” means, without duplication (i) any Indebtedness incurred
prior to or following the Issuance Date hereof for the purpose of funding the
purchase and placement of beverage dispensing equipment and accessories thereto,
(ii) any Indebtedness incurred prior to or following the date hereof for the
purpose of funding the addition of facility equipment or infrastructure and
(iii) any other Indebtedness incurred prior to or following the date hereof in
an aggregate principal amount outstanding at any time not to exceed an amount
(not less than $0) equal to (A) $5,000,000 plus (B) any amount owed by
the Company to Accord Financial, Inc. pursuant to that certain Master Purchase
and Sale Agreement by and among the Company and Accord Financial, Inc.,
Promissory Note and other related documents each dated October 6, 2008 minus (C) the sum of (up to a
maximum of $4,000,000) (1) the aggregate principal amount of the Initial Note
and (2) the aggregate principal amount of any Additional Notes; provided, however, prior to the
date that Consolidated EBITDA is equal to or greater than $7,500,000, the
aggregate principal amount of all Permitted Senior Indebtedness outstanding at
any one time shall not exceed $30,000,000 minus the sum of (A) the
aggregate principal amount of the Initial Note and (B) the aggregate principal
amount of any Additional Notes. The 2008 Notes and the 2009 Notes are
not Permitted Senior Indebtedness.
“Person” any natural
person, corporation, business trust, joint venture, association, company,
limited liability company, partnership, governmental authority or other
entity.
“PIK Interest Amount”
shall have the meaning ascribed to it in Section 1(a).
“Principal Market”
means the NASDAQ Over-the-Counter Bulletin Board.
9
“Restricted Payment”
means (i) any dividend or other distribution, direct or indirect, on account of
any class of equity securities or equivalent, now or hereafter outstanding; (ii)
any redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any class of equity securities or
equivalent, now or hereafter outstanding from the holders thereof; and (iii) any
payment made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire any class of equity securities or equivalent,
now or hereafter outstanding; provided, however, that
Restricted Payment shall not include (y) payments required to be made to the
holders of the Company’s Series B Preferred Stock pursuant to the Certificate of
Designation for such Series B Preferred Stock in effect as of the Issuance Date
(provided that the Company agrees that if any such payments may be made in cash
or in additional shares of Series B Preferred Stock, then such payments shall be
made in additional shares of Series B Preferred Stock) or (z) any other payments
referred to in clauses (ii) or (iii) above not exceeding $300,000 individually
or in the aggregate.
“SEC” means the
Securities and Exchange Commission.
“SEC Documents” means
all reports, schedules, forms, statements and other documents required to be
filed by the Company with the SEC pursuant to the reporting requirements of the
Exchange Act filed prior to the date hereof and all exhibits included therein
and financial statements, notes and schedules thereto and documents incorporated
by reference therein.
“Securities Act” means
the Securities Act of 1933, as amended.
“Subsidiary” means,
with respect to any Person, any corporation, partnership, association or other
business entity in which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or
more than 50% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such
Person.
“Transaction
Documents” means, collectively, the Purchase Agreement, this Note, the
other Notes issued pursuant to the Purchase Agreement, and each of the other
agreements entered into by the parties hereto in connection with the
transactions contemplated by the Purchase Agreement.
“Voting Stock” of a
Person means capital stock of, or other equity interest in, such Person of the
class or classes pursuant to which the holders thereof have the general voting
power to elect, or the general power to appoint, at least a majority of the
board of directors, managers or trustees of such Person (irrespective of whether
or not at the time capital stock of any other class or classes shall have or
might have voting power by reason of the happening of any
contingency).
9. Notice. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient; if not, then on the next Business Day, (iii) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to
the party at the address set forth on the signature pages attached hereto (or at
such other addresses as shall be specified by notice given in accordance with
this Section 9).
10
If to the
Company, at
Javo
Beverage Company, Inc.
Attn: William
Marshall
1311
Specialty Drive
Vista, CA
92081
Fax:
(760) 597-9793
email
address: wmarshall@javobeverage.com
If to the
Holder, at the most recent address provided to the Company by the Holder for
such purpose; or, in each case, to the most recent address, specified by written
notice, given to the sender pursuant to this paragraph.
10. Entire Agreement; Waiver;
Amendment. This Note and the Purchase Agreement constitute the
full and entire understanding and agreement between the parties with regard to
the Indebtedness evidenced hereby. This Note may be amended and the
observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of both the Company and the Holder. Any waiver or
amendment effected in accordance with this Section 10 shall be binding upon any
Holder of this Note.
11. Successors and
Assigns. This Note applies to, inures to the benefit of, and
binds the successors and assigns of the parties hereto.
12. Governing Law; Jurisdiction,
Waiver of Jury.
(a)
The
provisions of this Note and all of the documents delivered pursuant hereto,
their execution, performance or nonperformance, interpretation, termination,
construction and all matters based upon, arising out of or related to this Note
or the negotiation, execution or performance of this Note (whether in equity,
law or statute) shall be governed by, and construed in accordance with, the
laws, both procedural and substantive, of the State of New York without regard
to its conflicts of laws provisions that if applied might require the
application of the laws of another jurisdiction.
(b) All actions and proceedings arising
out of or relating to this Note shall be heard and determined in the state or
federal courts of the State of New York, and the Company hereby irrevocably
submits to the exclusive jurisdiction of such courts (and, in the case of
appeals, appropriate appellate courts therefrom) in any such action or
proceeding and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding.
(c) THE
HOLDER AND THE COMPANY EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
NOTE OR ANY RELATED INSTRUMENT OR TRANSACTION DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS NOTE OR ANY OF THE OTHER TRANSACTION DOCUMENTS
OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR
ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE
BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE HOLDER OR THE COMPANY,
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.
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13. Replacement
Note. Upon receipt of a lost note affidavit containing
indemnity provisions reasonably satisfactory to the Company indicating the loss,
theft, destruction or mutilation of this Note, the Company shall issue a
replacement Note, of like tenor and amount,
14. Severability;
Reinstatement.
(a) If any
one or more of the provisions of this Note is unenforceable, in whole or in part
or in any respect it shall not affect any other provision of this Note and the
remaining provisions of this Note shall remain operative and in full force and
effect and in no way shall be affected, prejudiced, or disturbed
thereby.
(b) If any
payment in respect of this Note or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied and all right and
remedies in respect thereof, shall be revived and continued in full force and
effect as if such payment had not been made.
15. Waivers.
(a) No
failure on the part of the Holder to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law, in
equity or otherwise.
(b) Presentment,
demand, protest or notice of any kind are hereby expressly waived by the
Company.
16. Costs and
Expenses. The Company agrees upon demand to pay, or reimburse
the Holder for all of the Holder’s reasonable and documented out-of-pocket costs
and expenses of every type and nature (including the reasonable fees, expenses
and disbursements of counsel) incurred by the Holder in connection with any
collection or enforcement of any obligation in respect of this Note or any
exercising or enforcing any right or remedy available by reason of an Event of
Default.
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17. Limitation of
Liability. The Company agrees that the Holder and each of its
Affiliates, and each of the directors, officers, employees, agents, trustees,
representatives, attorneys, consultants and advisors of or to any of the
foregoing (collectively, the “Released Parties”)
shall not have any liability (whether in contract, tort or otherwise) to any the
Company or any of its Subsidiaries or any of its equity holders or creditors for
or in connection with this Note, except to the extent such liability is
determined in a final non-appealable judgment by a court of competent
jurisdiction to have resulted primarily from such Released Party’s gross
negligence or willful misconduct. In no event, however, shall any of
the Released Parties be liable on any theory of liability for any special,
indirect, consequential or punitive damages (including, without limitation, any
loss of profits, business or anticipated savings) for or in connection with this
Note. The Company hereby waives, releases and agrees (each for itself
and on behalf of its Subsidiaries) not to sue upon any such claim for any
special, indirect, consequential or punitive damages, whether or not accrued and
whether or not known or suspected to exist in its favor for or in connection
with this Note.
18. Section
Titles. The section titles contained in this Note are and
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto, except when used to
reference a section.
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Blank]
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IN
WITNESS WHEREOF, the undersigned have caused this Note to be executed by its
duly authorized officers as of the date first above written.
| JAVO BEVERAGE COMPANY, INC. | |
| By: _______________________________ | |
| Name: _____________________________ | |
| Title: ______________________________ |
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