Exhibit 10.19
TULLY’S COFFEE
CORPORATION
SECURED PROMISSORY
NOTE
DUE OCTOBER 23,
2007
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$4,000,000
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April 26,
2007
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Seattle,
Washington
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FOR VALUE RECEIVED, Tully’s
Coffee Corporation, a Washington corporation with its principal
office at 3100 Airport Way South, Seattle, Washington (the “
Company ”), hereby unconditionally promises to pay to
the order of Benaroya Capital Company, L.L.C., a Washington limited
liability company (the “ Payee ”) with its
principal office at 1100 Olive Way, Suite 1700, Seattle, WA 98101,
or registered assigns at such office as the holder hereof may
designate, in lawful money of the United States, the principal sum
of $4,000,000 (the “ Note Amount ”), together
with interest thereon as provided for below.
1. Interest . Interest
shall accrue on the outstanding principal balance hereof at a rate
equal to fifteen percent (15%) per annum, calculated on a
daily basis and compounded monthly, commencing on April 26, 2007
(the “ Funding Date ”) and payable on the
Maturity Date (as defined below). If all or a portion of the
principal amount of the Note shall not be paid when due (whether at
stated maturity, by acceleration or otherwise), such overdue amount
shall bear interest at a rate per annum which is three percent
(3%) above the rate that would otherwise be applicable
thereto.
Anything contained in this Note to
the contrary notwithstanding, the Payee does not intend to charge
and the Company shall not be required to pay interest or other
charges in excess of the maximum rate (if any) permitted by
applicable law (if any). Any payments in excess of such maximum
shall be refunded to the Company or credited against
principal.
2. Payment of Principal and
Interest . The Company shall pay the unpaid principal,
together with all accrued and unpaid interest, evidenced by this
Note to Payee upon the Maturity Date. The term “ Maturity
Date ” shall mean the earlier to occur of (i) the
day one hundred eighty (180) days after the Funding Date and
(ii) the first business day following the closing of an
initial public offering of equity securities of the
Company.
3. Loan Fee . As part
of the consideration for the loan evidenced by this Note, the
Company shall pay to Payee a fee of $100,000.00, which Payee shall
deduct from the disbursement of the loan proceeds.
4. Subordination . All
claims of the Payee to principal, interest and any other amounts at
any time owed under the Note are hereby expressly subordinated to
the indebtedness or claims arising under, or relating to, the
Contract of Sale and Security Agreement between The Company and
Northrim Funding Services dated as of November 16, 2006 (the
“ Northrim Facility ”).
5. Liquidation Rights
. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the Note shall be
entitled to a claim in liquidation after the payment in full of the
Northrim Facility, but before participation by the holders of
(i) any other indebtedness for borrowed money of the Company
and (ii) any capital stock of the Company. The amount of the
claim in liquidation shall equal the amount to which the Payee of
this Note would be entitled in the case of payment, whether or not
the Note is eligible for payment at the time of
liquidation.
6. Representation and
Warranty . In consideration of the Payee making the loan
evidenced by this Note, the Company represents and warrants to the
Payee as of the Funding Date that the Company’s reports to
the Securities and Exchange Commission pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 do not
contain any material misstatement of fact or omit to state any
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided , that with respect to projected
financial information, the Company represents only that such
information was prepared in good faith based upon assumptions
believed to be reasonable at the time. No representations or
warranties have been made to the Payee with regard to the Company
or this Note other than those contained in this section.
7. Security Interest .
This Note is secured by certain assets of the Company in accordance
with the Security Agreement dated as of the date hereof granted by
the Company to the Payee (the “ Security Agreement
”).
8. Warrant . As
additional consideration for the Payee making the loan to the
Company evidenced by this Note, the Company shall deliver to Payee
no later than fifteen (15) days after the Funding Date a
warrant to purchase 99,291 shares of the Company’s common
stock at an exercise price of $0.33 per share. The warrant (i)
shall first become exercisable on the earliest to occur of the
following: (a) immediately prior to the completion of the
Company’s first underwritten public offering of common stock;
(b) immediately prior to a Change of Control Event (as defined
in the Warrant); or (c) one year from the Funding Date, and
(ii) shall expire on the fifth (5th) anniversary of the
Funding Date. The form of the warrant shall be reasonably
satisfactory to Payee and shall include provisions for
assignability, antidilution protection and a net exercise
provision.
9. Prepayment . The
Company may prepay without penalty the principal hereof and all
interest hereon in whole or in part at any time after five
(5) days’ prior written notice to the Payee of the Note
by payment in cash of the amount prepaid, provided that any
partial prepayment of principal shall be in an integral multiple of
$1,000. At the time of prepayment, all interest owing on the amount
prepaid to the date of payment must simultaneously be
paid.
10. Expenses . The
Company shall pay the Payee, on demand, for all reasonable and
documented costs and expenses, including, but not limited to,
reasonable attorneys’ fees, incurred in the collection,
enforcement, modification or amendment of this Note.
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11. Default; Acceleration
. The occurrence of any of the following shall constitute an
“ Event of Default ”:
(a) The failure of the Company to
pay when due (whether at the Maturity Date, at a date fixed for
prepayment hereof, by acceleration hereof, or otherwise) any
principal due under this Note, and such failure or breach shall
continue unremedied for five (5) business days; or
(b) The failure of the Company to
pay when due (whether at the Maturity Date, at a date fixed for
prepayment hereof, by acceleration hereof, or otherwise) any
interest, charges or other amounts due under this Note, and such
failure or breach shall continue unremedied for five
(5) business days; or
(c) The breach by the Company of any
of the terms or provisions contained in this Note other
than those specified in paragraphs (a) and
(b) above, and such breach shall continue unremedied for
thirty (30) days after the earlier
