EXHIBIT 10.34
AMENDMENT NO. 3 TO PROMISSORY
NOTE
This Amendment No. 3 to Promissory
Note (this “Amendment No. 3”) is dated for reference
purposes June 24, 2004, and is by and between TULLY’S COFFEE
CORPORATION, a Washington corporation (“Maker”), and
KENT CENTRAL, L.L.C., a Washington limited liability company
(“Holder”).
R E C I T A L S
A. Maker has previously executed
that certain Promissory Note dated November 1, 2002, in favor of
Holder in the original principal amount of up to TWO MILLION EIGHT
HUNDRED NINETY THOUSAND THIRTY SEVEN AND 09/100 DOLLARS
($2,890,037.09) (the “Original Note”). The Original
Note was amended by Amendment to Promissory Note dated March 3,
2003 (“Amendment No. 1”), and Amendment No. 2 to
Promissory Note dated June 26, 2003 (“Amendment No. 2).
Amendment No. 1, among other changes, increased the maximum amount
of the Note to THREE MILLION EIGHT HUNDRED NINETY THOUSAND THIRTY
SEVEN AND 09/100 DOLLARS ($3,890,037.09). The Original Note,
Amendment No. 1 and Amendment No. 2 are collectively referred to
herein as the “Note.”
B. Maker has requested that Holder
amend certain principal repayment dates and amend the maturity
dates of the Note and Holder has, in response to Maker’s
request, agreed to amend the Note in certain respects, all as more
fully set forth below.
NOW, THEREFORE, the parties hereto,
in consideration of their mutual promises contained herein and for
other good and valuable consideration, hereby agree to amend the
Note as follows:
AGREEMENT
1. The portion of paragraph (a) on
the first page of the Original Note that begins with
“Notwithstanding anything to the contrary contained
herein” through the balance of said paragraph (a) of the
Original Note, as previously amended by Amendment No. 2, is hereby
deleted and the following shall be substituted in its
place:
Notwithstanding anything to the
contrary contained herein, in addition to the foregoing monthly
interest payments: (i) commencing July 1, 2003, through June 1,
2004, Maker shall pay the monthly installments of principal as more
fully set forth under the Schedule of Principal Installments shown
in Column B of the Schedule of Principal Installments in Exhibit C
to Amendment No. 2; (ii) commencing July 1, 2004, and on the first
(1 st ) day of each calendar month
thereafter until this Note has been fully repaid, Maker shall make
monthly installment payments of principal in the amount of Seventy
Thousand and 00/100 Dollars ($70,000.00) each month (also herein
called “Principal Installments”); and (iii) if Maker
obtains any equity after the date hereof by way of (A) the sale of
stock, common or preferred, in Maker or any affiliate of Maker, or
(B) the sale of any rights to acquire stock, common or preferred,
in Maker or any affiliate of Maker, Maker shall pay all of the
gross cash proceeds from such sale(s) (i.e., there shall be no
deduction of any costs of such sale(s))
1
to Holder. The entire unpaid
Principal Balance (including any principal outstanding under the
Original Note Amount [as defined in Amendment No. 1] or the
Increased Note Amount [as defined in Amendment No. 1]), plus any
accrued interest which remains unpaid under the Original Note,
Amendment No. 1 and Amendment No. 2, shall be paid in full in the
form of a final balloon payment on August 1, 2005 (the
“Maturity Date”). So long as Maker is not in default
under the terms of the Note, all scheduled payments under clauses
(i) and (ii) above shall be applied in reduction of principal and
all scheduled payments under clause (iii) above shall, in the
absence of a default by Maker under this Note, be applied first to
interest due, and any balance shall be applied in reduction of
principal. The failure to pay a Principal Installment by not later
than the particular date on which such Principal Installment is due
shall be a default under the Note. Maker shall have the right, upon
not less than ten (10) days prior written notice to Holder, to pay
all principal, and accrued but unpaid interest under the Original
Note, Amendment No. 1 and Amendment No. 2 without
penalty.
2. Paragraph (b) on page 2 of the
Original Note is hereby deleted in its entirety and the following
shall be substituted in its place:
(b) From and after the date hereof
through September 30, 2004, Maker shall pay interest on the
outstanding Original Note Amount at a rate (herein called the
“Note Rate”) equal to the per annum rate of interest
from time to time publicly announced by Bank of America as its
Prime Rate minus one-half ( 1 / 2 ) of one percent per annum. The term
“Prime Rate” as used herein means the rate of interest
announced by Bank of America from time to time as its Prime Rate;
provided, however, that Bank of America may lend to its customers
at interest rates that are at, above or below its Prime Rate. The
Note Rate shall adjust on each date any change in the Prime Rate of
Bank of America is announced. In the event Bank of America ceases
announcing a Prime Rate, Holder shall have the right to substitute
a similar index using Holder’s commercially reasonable
business judgment. Commencing on October 1, 2004, and continuing
until the date on which this Note is paid in full, Maker shall pay
interest on the outstanding Original Note Amount and the
outstanding Increased Note Amount at a rate (also herein called the
“Note Rate”) equal to twelve percent (12%) per annum.
All interest on this Note shall be computed on a 360-day year
comprised of twelve 30 day months, but shall be charged for the
actual number of days principal is unpaid. The principal and
interest hereto shall be payable in lawful money of the United
States of America which shall be legal tender for public and
private debts at the time of payment. In no event shall the
interest rate exceed the legal rate of interest provided for under
the laws of the State of Washington.
2
3. Paragraph (c) on page 2 of the
Original Note is hereby deleted in its entirety and the following
shall be substituted in its place:
(c) On November 1, 2002, and
November 1, 2003, Maker shall pay Holder a fee equal to three
percent (3%) of the maximum permitted outstanding balance which
Maker may borrow hereunder for the period commencing on said dates,
disregarding the fact that Maker may not have delivered fully
executed guaranties from all “Guarantors” (described
below).
4. The paragraph on page 3 of the
Original Note which begins with the sentence “This Note
evidences a revolving line of credit” is hereby deleted in
its entirety and the following shall be substituted in its
place:
This Note evidences a revolving line
of credit. Advances under this Note may be requested by Maker no
more frequently than once per week and may be requested only in
writing by a person whom Borrower has authorized in writing to
request advances from Holder. Once an advance under the Original
Note Amount has been repaid, it may be borrowed again under this
Note so long as such ad
