EXHIBIT 10.30
AMENDMENT NO. 1 TO CONVERTIBLE NOTE
THIS AMENDMENT NO. 1 TO CONVERTIBLE NOTE (the "Amendment") is entered into
by and between Java Centrale, Inc., a California corporation (the "Borrower")
and Legong Investments, N.V., a Netherlands Antilles corporation ("Legong"), to
be effective as of July 10, 1997 (the "Effective Date").
R E C I T A L S
A. On or about December 15, 1995 the Borrower borrowed Two Million
Dollars ($2,000,000) from Legong pursuant to a Convertible Note (the "Note") and
certain related agreements including a Registration Rights Agreement and a Note
Purchase Agreement (the "Related Agreements").
B. The Note included provisions which allowed Legong to convert portions
of the principal balance thereof into shares of the Borrower's common stock,
pursuant to which Legong has from time to time so converted a total of One
Million Dollars ($1,000,000) in principal balance of the Note, leaving a
remaining principal balance, as of the date of this Amendment, of One Million
Dollars ($1,000,000.00).
C. The parties now wish to amend the Note in several respects. As so
amended, the parties intend to secure the Note, pursuant to a Security Agreement
of even date herewith, by granting Legong a security interest in all of the
outstanding shares of Borrower's wholly-owned subsidiary Paradise Bakery, Inc.,
a Delaware corporation ("PBI").
A G R E E M E N T
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and other conditions contained herein, and for other good and valuable
consideration the receipt and sufficiency of which is by all parties hereto
acknowledged and accepted, the parties do agree as follows:
1. CURRENT PRINCIPAL BALANCE OF THE NOTE; INCREASE IN PRINCIPAL BALANCE.
(a) As of the date of this Amendment the current principal balance
owing on the Note is One Million, One Hundred Thousand Dollars ($1,000,000).
(b) In consideration of this Amendment, the principal balance of the
Note shall for all purposes hereafter be deemed increased by (i) Forty-Four
Thousand, Seven Hundred Dollars ($44,700), which is the amount of all accrued
and unpaid interest on the Note from December 15, 1996 to date, plus (ii) Two
Hundred Fifty Thousand Dollars ($250,000), so that commencing with the date of
this Amendment the principal amount of the Note shall for all purposes be One
Million, Two Hundred Ninety-Four Thousand, Seven Hundred Dollars ($1,294,700)
(the "Adjusted Principal Balance").
2. CHANGE OF MATURITY DATE; EXTENSION.
(a) Except as provided in paragraph (b), below, from and after the
Effective Date of this Amendment the principal balance of the Note shall be due
and payable on October 1, 1997 (the "Adjusted Maturity Date").
(b) Borrower shall have the right, in its sole and absolute
discretion, to extend the Adjusted Maturity Date to a later date; PROVIDED,
HOWEVER, that the Adjusted Maturity Date may not be so extended to a date
falling after January 1, 1998; and PROVIDED, FURTHER, that if the Adjusted
Maturity Date is so extended the Adjusted Note Balance shall be automatically
increased by Fifty-Two Thousand Dollars ($52,000).
3. AMENDMENT TO ARTICLE I.
From and after the Effective Date of this Amendment, Article I,
Section 1.1, of the Note shall be hereby amended and replaced in its entirety,
to read hereafter as follows:
1.1 So long as no Event of Default (as defined herein) shall have
occurred and be continuing, the Borrower shall have the right, exercisable at
any time after the date hereof to prepay this Note in whole or in any part in
accordance with this Section 1.1. Notice of any such prepayment shall be
delivered to the Holder at its registered address appearing on the records of
the Borrower, and shall state (1) that the Borrower is exercising its right to
prepay all or a portion of the principal amount of this Note, (2) the principal
amount to be prepaid and (3) the date of prepayment, which may be the date on
which such notice is given or any later date fixed by the Borrower. On the date
fixed for prepayment, the Borrower shall make payment of accrued and unpaid
interest on the principal amount to be so prepaid.
It is recognized, understood, and agreed that a principal effect of the
foregoing amendment is to eliminate from the terms of the Note any penalty on
the Borrower for prepayments of the Note in the future.
4. ELIMINATION OF ARTICLE II. From and after the Effective Date of this
Amendment, Article II of the Note shall be deleted and eliminated in its
entirety, so that it shall hereafter be of no further force nor effect.
5. AMENDMENT OF ARTICLE III. From and after the Effective Date of this
Amendment, Article III of the Note shall be deemed amended hereby so that,
notwithstanding anything to the contrary in the Note or elsewhere:
(a) If any of the Events of Default enumerated in Article III shall
occur, Lender's sole remedies shall be that (i) the Note shall, at Lender's
option, become immediately due and
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payable and (ii) Lender shall have those additional rights granted to it in that
certain Security Agreement of even date herewith (the "Lender's Security
Agreement").
(b) Section 3.2 of Article III shall be deleted and eliminated in its
entirety so that the said Section shall hereafter be of no further force nor
effect.
(c) Clause (2) of that final portion of Article III which follows
after Section 3.7 thereof (from the words "an amount" through the words "this
Note"), shall be deleted and eliminated in its entirety, so that the said clause
shall hereafter be of no further force nor effect.
6. GRANT OF WARRANTS.
(a) Simultaneously with the execution of this Amendment, Borrower
shall grant to Legong nontransferable stock purchase warrants representing the
right to purchase up to Two Hundred Fifty Thousand (250,000) shares of
Borrower's common stock (the "Warrant Shares") at a warrant exercise price equal
to Seventy-Five Cents ($0.75) per share (the "Legong Warrants"). The Legong
Warrants shall expire on June 1, 2000.
(b) The Legong Warrants shall be redeemable by Borrower at a
redemption price of Five Cents ($0.05) per Warrant Share if the closing sale
price for Borrower's common stock shall have exceeded Two Dollars ($2.00) per
share for not less than twenty (20) trading days immediately prior to the date
on which Borrower shall give Legong written notice of its intent to so redeem
the Legong Warrants. In the event that Borrower shall give Legong notice of its
intent to redeem the Legong Warrants as described in this paragraph (b), Legong
shall have the right to exercise its rights under the Legong Warrants at any
time within the ten (10) business days following the date on which such notice
is first given to Legong.
(c) Borrower will file with the Securities and Exchange Commission
(the "SEC") a form of registration statement on which the Warrant Shares are
eligible to be registered (an "Eligible Registration Statement"), and shall
register the Warrant Shares thereon, on or before (i) January 15, 1998, or (ii)
such earlier date on which Borrower files an Eligible Registration Statement
with the SEC.
7. SECURITY FOR THE NOTE; COVENANTS OF THE BORROWER.
(a) Pursuant to the Lender's Security Agreement, the Note as amended
hereby will be secured by all of Borrower's shares of stock (the "PBI Shares")
in its wholly-owned subsidiary Paradise Bakery, Inc. ("PBI").
(b) Borrower and PBI currently have certain outstanding obligations
secured by the PBI Shares and/or the assets of PBI, including (i) amounts
outstanding under a term loan to PBI from Imperial Bank in the approximate
amount of Seven Hundred Thousand Dollars ($700,000) in principal amount, plus
interest currently due thereon (the "Imperial Bank Loan"),
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(ii) certain trade payables and other accrued liabilities of under One Million
Dollars ($1,000,000) in the aggregate, (iii) amounts outstanding under a loan to
Borrower by Alta Petroleum, Inc. in the principal amount of approximately Five
Hundred Seventy-Five Thousand Dollars ($575,000), secured by both the PBI Shares
and (subject to prior claims arising under the Imperial Bank Loan) all or
substantially all of PBI's assets, and (iv) that certain promissory note of
Borrower held by Chart House Enterprises, Inc., with a current principal balance
of approximately Four Hundred Fifty Thousand Dollars ($450,000), which is
secured by certain purchase-money notes from PBI franchisees.
(c) Borrower hereby covenants and agrees that, until such time as the
Note, as amended hereby, has been paid in full, or Legong agrees otherwise in
writing:
(i) Borrower shall not sell or transfer the PBI Shares, or (except in
the ordinary course of business) any material portion of the assets of PBI, to
any other party.
(ii) Borrower shall not pay any dividends on the PBI Shares.
(iii) The aggregate direct liabilities of PBI, whether or not
secured, shall not exceed at any time One Million Eight Hundred Thousand Dollars
($1,800,000) (the "PBI Debt Limit").
(iv) The aggregate direct liabilities of Borrower which are
specifically secured by any interest in the PBI Shares shall not exceed at any
time One Million Five Hundred Thousand Dollars ($1,500,000) (the "PBI Debt
Limit").
(v) Neither Borrower nor PBI shall hereafter incur new debt
obligations, specifically secured by an interest in the assets of PBI, in excess
of One Hundred Thousand Dollars ($100,000) in principal balance.
(vi) In the event that Borrower shall hereafter succeed in obtaining
any debt or equity funding in excess of One Million, Six Hundred Thousand
Dollars ($1,600,000) any such funding in excess of that amount shall be used to
pay down the outstanding principal balance of, and any interest then due on, the
Note.
(d) Legong hereby covenants and agrees that the Note may be
subordinated to any existing or future debt obligation or obligations of
Borrower which may be secured by the PBI Shares; PROVIDED that following the
date on which such debt is incurred the total amount of Borrower's debt secured
by the PBI Shares does not exceed One Million, Five Hundred Thousand Dollars
($1,500,000) in principal balance.
(e) Any breach of the covenants described in this Section 7 shall be
deemed a breach of the Note within the meaning of Article III, Sections 3.1 and
3.3 thereof.
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8. WAIVER OF DEFAULTS. Borrower and Legong mutually acknowledge and
agree that as of the date of this Amendment there has been no default under,
breach of, or non-compliance with any portion of the Note or the Related
Agreements by any party to them, and waive any such default, breach, or
non-compliance which may have occurred prior to the Effective Date.
9. ABROGATION OF REGISTRATION RIGHTS AGREEMENT. From and after the
Effective Date of this Amendment, the Registration Rights Agreement referred to
in Recital A, above, shall be mutually rescinded, revoked, and eliminated in its
entirety, so that it shall hereafter be of no further force nor effect.
10. Continued Validity of the Terms of the Note Not Amended
HEREBY; AMENDMENT GOVERNED BY ARTICLE IV OF THE NOTE .
(a) Nothing contained in this Amendment shall be construed as
altering, waiving, or supplementing any of the terms or covenants of the Note or
any of the parties thereto, except and only to the extent described above.
(b) This Amendment shall be governed by all of the provisions of
Article IV of the Note.
11. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, Borrower and Legong have caused this Amendment to
be signed in their respective names by their duly authorized officers, to be
effective as of the day and year first above written.
BORROWER: JAVA CENTRALE, INC.
By:
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Name: Xxxx X. Xxxxxx
Title: President
LEGONG: LEGONG INVESTMENTS, N.V.
By:
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Name:
Title:
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