1
EXHIBIT 10.27
FORM OF SECURED PROMISSORY NOTE
$____________ Principal Amount ____________, 1997
Irvine, California
FOR VALUE RECEIVED, the undersigned, Diedrich Coffee, Inc., a
Delaware corporation ("Borrower") hereby promises to pay to the order of
_______, ("Holder") or its successors or assigns, the principal sum of
_______________, ($__________) 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 ________, 2002.
Interest shall become due and payable monthly as it is accrued, beginning
________, 1997.
1. LOAN AGREEMENT. Borrower and Holder have entered into a Term
Loan Agreement of even date (the "Agreement") and this Note shall be entitled to
all of rights and benefits under such Agreement. Reference is made to the
Agreement for a more complete statement of the terms and conditions under which
the loan evidenced hereby is made and is to be repaid.
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 allowed by law, whichever is less. 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. DISBURSEMENT. Holder shall advance $___________ to Borrower
upon the execution hereof. 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 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.
2
4. EFFECT OF NON-PAYMENT OF PRINCIPAL AND INTEREST. If 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 address located at
___________ _____________________________________________, or at such other
place as is directed by Holder in writing.
6. PREPAYMENT.
(a) MANDATORY PREPAYMENTS. Borrower shall prepay the entire
principal balance of this Note (plus all interest then due hereunder)
immediately upon the issuance, offer or sale of any shares of Borrower's capital
stock pursuant to a secondary offering to the public with net proceeds of
greater than Ten Million Dollars ($10,000,000); excluding, however, any offering
of Borrower's common stock pursuant to a stock option, bonus, award or other
employee benefit plan and existing options to purchase any of Borrower's common
stock which are presently held by officers, directors or employees of Borrower.
(b) OPTIONAL PREPAYMENT. Borrower may prepay any portion of the
principal balance of this Note in any amount which is an integral multiple of
$10,000 at any time without penalty.
7. SECURITY. This Note and all of Borrower's obligations hereunder
are secured by the security interest granted by Borrower to Holder by the
Security Agreement of even date in which Borrower is the Debtor and Holder is
the Secured Party (the "Security Agreement").
8. DEFAULT. Each of the following shall constitute an event of
default ("Event of Default") under this Note:
(a) Borrower shall fail to pay when due (whether by
acceleration or otherwise) principal or interest on this Note, and such default
shall have continued for a period of five (5) days; or
(b) Any representation or warranty made by or on behalf of
Borrower in this Note, the Agreement, the Security Agreement or in any other
Loan Document (as defined in the Agreement) or in any statement or certificate
given in writing pursuant
-2-
3
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 this Note, the Agreement, the Security
Agreement, or any other Loan Document (other than Borrower's obligation to make
all payments due under this Note which is governed by subparagraph (a) above)
and the same has not been cured within ten (10) calendar days after Borrower
receives notice thereof from Holder; 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 assignment for the
benefit of creditors, or shall fail generally 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 it 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, 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) This Note, the Agreement, the Security Agreement or any
other Loan Document for any reason (other than the satisfaction in full of all
amounts owing in connection with the Loan) 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, and such occurrence has not been cured
to Holder's satisfaction within five (5) calendar days after Borrower receives
notice thereof from Holder; or
(g) Borrower has fraudulently conveyed or concealed its
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
-3-
4
(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.
If an Event of Default shall occur and be continuing or shall
exist, the principal amount of this Note and interest accrued hereon 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 with, the internal laws (including the laws of
conflict and choice of law) of the State of California.
10. 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.
11. 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
provision(s) are to be amended.
12. FEES AND EXPENSES. Borrower promises to pay all the cost and
expenses, including reasonable attorneys' fees, incurred in the collection and
enforcement of this Note. Borrower and each surety, endorser, guarantor, and
other party ever liable for payment of any sums of money payable under this
Note, hereby, jointly and severally, consent to renewal and extension of time at
or after the maturity hereof, without notice, and hereby, jointly and severally
waive diligence, presentment, protest, demand and notice of every kind and, to
the full extent permitted by law, the right to plead any statute of limitations
as a defense to any demand hereunder.
13. AGREEMENT. This Note incorporates by reference all the
provisions of the Agreement, including but not limited to all provisions
contained therein with respect to Events of Default, waivers, remedies and
covenants, and the description of the benefits, rights and obligation of each of
the Borrower and Holder under the Agreement.
(Signature Page Follows)
-4-
5
[SIGNATURE PAGE - NOTE]
IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year
first above written.
DIEDRICH COFFEE, INC., a Delaware
corporation
By:
------------------------------
Kerry Coin, President
-5-
6
PROMISSORY NOTE
LOAN AND REPAYMENT OF PRINCIPAL
Amount of Principal Holder Borrower
Date Loan/Repayment Balance Recordation By Endorsement By
- -----------------------------------------------------------------------------------------------------------------
$ $
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-6-