EXHIBIT 10.18
FORM OF ADDITIONAL NOTE
THE SECURITY REPRESENTED BY THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS NOTE MAY
NOT BE TRANSFERRED OR SOLD, IN WHOLE OR IN PART, UNLESS REGISTERED OR EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ALL
APPLICABLE STATE SECURITIES LAWS.
Whippany, New Jersey
____________, 1997
FOR VALUE RECEIVED, the undersigned,___________________________, a
___________________________ corporation (the "Company"), hereby unconditionally
promises to pay to the order of the parties listed on Schedule A (each, a
"Lender") or registered assigns (the "Holder"), the aggregate principal amount
of Twenty-Five Dollars ($25.00), as such sum may be increased pursuant to
Section 2 below, to be paid in the percentages indicated on Schedule A, together
with interest, compounded as provided below, at a rate of 7.0% per annum on the
principal amount hereof from time to time outstanding as provided below.
1. Payments.
(a) The Company shall pay the entire unpaid principal amount of this
Note on June 1, 2000 (the "Maturity Date"), unless accelerated as provided
herein.
(b) If any payment hereunder becomes due on a day that is a legal
holiday, such payment or prepayment shall become due on the next succeeding
business day.
2. Principal.
(a) The initial principal amount of this Note shall be Twenty-Five
Dollars ($25.00). The principal amount of this Note shall be adjusted (i) on
such date that the Company files its tax return for its "S Short Year,"
beginning on January 1, 1997 as such term is defined under section 1362(e)(1)(A)
of the Internal Revenue Code of 1986, as amended (the "Code") (a "Short Year
Adjustment Date") or (ii) in the event that any future examination of any tax
return by the Internal Revenue Service (the "IRS") results in a final
determination by the IRS or a court increasing the taxable income of the Company
for the S Short Year beginning on January 1, 1997 (a "Examination Adjustment.")
On the Short Year Adjustment Date, the principal amount of this Note shall be
increased by an amount equal to the excess, if any, of (i) the sum of (A) the
Company's items of separately stated income and gain (within the meaning of
section 1366(a)(1)(A) of the Code reduced, to the extent applicable, by the
Company's separately stated items of deduction and loss (within the meaning of
section 1366(a)(1)(B) of the Code) and (B) the Company's own separately computed
income or loss (within the meaning of section 1366(a)(2)(B) (such sum referred
to as "S Corporation Taxable Income"), over (ii) $__________
[the estimate for the 1997 S Short Year]. At the time of any Examination
Adjustment, the principal amount of this Note shall be increased by an amount
equal to the increase, if any, in S Corporation Taxable Income resulting from
such examination. Notwithstanding the foregoing, in no event shall the
adjustments to principal of this Note, when added to all prior adjustments to
the principal of similar notes issued as of this date by the Constituent
Entities (as such term is defined in the Registration Statement on Form S-1
for 800-JR CIGAR, INC. (No. 333-23401)), exceed $1 million.
(b) On the Maturity Date principal on this Note shall be payable in
an amount equal to the unpaid principal on this Note shall be paid.
3. Interest Rate.
Interest shall accrue (computed on the basis of a 360-day year of
twelve 30-day months) on the outstanding principal of this Note at the rate of
7.0% per annum compounded annually (the "Applicable Rate"), payable on the
Maturity Date. For purposes of calculating interest, any adjustment to principal
pursuant to Section 2(a) hereof shall be deemed to have occurred on the issue
date of this Note. Payments hereunder shall be applied first against accrued and
unpaid interest and then against principal hereof. If the Company shall default
in the payment of the principal of or interest on this Note when due and
payable, the Company shall on demand, from time to time, pay interest on such
defaulted amount from the time of such default until such defaulted amount is
paid at a per annum rate equal to two percent over the Applicable Rate.
Notwithstanding anything contained herein to the contrary, if at any time the
rate of interest charged hereunder, together with all other charges provided for
herein which are treated as interest under applicable law, shall exceed the
maximum lawful rate which may be contracted for, charged or received by a Lender
or a Holder in accordance with applicable law (the "Maximum Rate"), the rate of
interest, if any, payable under this Note, together with all such other charges,
shall be limited to the Maximum Rate.
4. Form of Payments. All Payments hereunder shall be made in lawful
money of this United States of America at the address of each Lender set forth
on Schedule A hereto, or at such other place or places as each Lender may
designate by notice to the Company.
5. Waivers. The Company hereby waives diligence, presentment, demand,
protest and notice of any kind. The non-exercise by Lender of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
6. Subordination. If required pursuant to the terms of any Bank
Indebtedness (as hereinafter defined), the payment of the principal of and
interest on this Note shall be subordinated in right of payment to such Bank
Indebtedness and each Lender and each subsequent Holder or assign, by its
acceptance hereof, if required by the terms of such Bank Indebtedness, agrees to
enter into an appropriate subordination agreement acceptable to the holders of
such Bank Indebtedness. As used herein, "Bank Indebtedness" shall mean all
indebtedness of the Company for money borrowed (including principal, interest,
premium, if
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any, and fees, if any) from banks or other financial institutions, whether
outstanding on the date hereof or hereinafter incurred, as the same may be
extended, modified or renewed.
7. Events of Default. In the case of the happening of any of the
following events (each, an "Event of Default"):
(a) The Company shall default in the payment of principal of and
interest on this Note, as and when due and payable, whether upon the Maturity
Date, by acceleration hereunder or otherwise;
(b) Any obligor under any note issued to Lenders or the other
Existing Stockholders (as defined in the Registration Statement of 800-JR Cigar,
Inc.) on the date hereof shall default in the payment of principal of or
interest on such note, as and when due and payable, whether upon a payment date,
the maturity date, by acceleration thereunder or otherwise;
(c) The Company shall (i) become insolvent or admit in writing its
inability to pay its debts as they mature, (ii) apply for, consent to, or
acquiesce in the appointment of a receiver, trustee, liquidator or similar
official for itself or any of its assets, (iii) make a general assignment for
the benefit of creditors, (iv) be adjudicated as bankrupt or insolvent, (v)
voluntarily commence a proceeding or file a petition under any law relating to
bankruptcy, insolvency, the relief of debtors or the liquidation or adjustment
of indebtedness or (vi) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any petition
described in paragraph (c) below; or
(d) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed under any law relating to bankruptcy, insolvency, the
relief of debtors or the liquidation or adjustment of indebtedness against the
Company, or the assets of the Company, and such proceeding or petition shall not
be dismissed within thirty (30) days;
then, and in every such event, and at any time thereafter during the continuance
of such event, the Lenders may, by five business days' prior written notice to
the Company, declare this Note to be (provided, however, that in the case of an
event described in paragraph (c) or (d) above, this Note shall automatically
become) immediately due and payable, whereupon this Note shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Company, anything
contained herein to the contrary notwithstanding. In addition, upon the
occurrence of an Event of Default, the Lenders may exercise any or all rights,
powers and remedies available to the Lenders at law or in equity or by statute
or otherwise for the protection and enforcement of the rights of Lender.
8. Costs. The Company shall pay to Lenders, on demand, all costs and
expenses incurred to collect any indebtedness evidenced hereby, including,
without limitation, reasonable attorneys' fees.
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9. Severability. In the event any one or more of the provisions of this
Note shall be held to be invalid, illegal or unenforceable, or operate to
invalidate this Note, then only such provision or provisions shall be deemed
null and void and shall not affect any other provision of this Note and the
remaining provisions of this Note, and the remaining provisions of this Note
shall remain operative and in full force and effect.
10. GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED, INTERPRETED AND THE
RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
JERSEY.
11. Titles. The titles, captions or headings of the paragraphs herein
are for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Note.
12. Miscellaneous.
(a) If this Note is mutilated, lost, stolen or destroyed, the
Company may issue a new Note of like form and maturity to the Holder hereof upon
presentment and surrender of the mutilated Note, in the case of mutilation, and
upon receipt of evidence satisfactory to the Company of loss, theft or
destruction in all other cases.
(b) All agreements of the Company in this Note shall bind its
successor.
(c) The terms of this Note may be amended, modified or supplemented
by the Company with the consent of the Lenders and Holders of a majority of the
then outstanding principal amount of this Note; provided, however, that, without
the consent of each Lender and Holder of this Note, the interest rate and the
principal amount of this Note may not be reduced, the date when interest or
principal under this Note becomes due, and this Section 12(c) may not be
amended, modified or supplemented.
[NAME OF CORPORATION]
By:
-----------------------------
Name:
Title:
4
(Corporate Seal)
ATTEST:
By:
--------------------------
Name:
Title:
5
SCHEDULE A
Percentage of
Lender Principal Amount
------ ----------------
Xxxxx Xxxxxx Xxxxxxx..................................... __________%
La Xxxxx Xxxxxxx......................................... __________%
[Xx Xxxxx Xxxxxxx and Xxxxx Xxxxxx
Xxxxxxx, Trustees and Xxxxxx Xxxxxxxxx
as Special Trustee of trust f/b/o Xxxxx
Xxxxxxx created under trust agreement
dated November 1, 1994, Xxxxx Xxxxxxx Grantor](1)........ __________%
[Xx Xxxxx Xxxxxxx and Xxxxx Xxxxxx
Xxxxxxx, Trustees and Xxxxxx Xxxxxxxxx
as Special Trustee of trust f/b/o Xxxx
Xxxxxxx created under trust agreement
dated November 1, 1994, Xxxxx Xxxxxxx Grantor](1)........ __________%
[Xx Xxxxx Xxxxxxx and Xxxxx Xxxxxx
Xxxxxxx, Trustees and Xxxxxx Xxxxxxxxx
as Special Trustee of trust f/b/o Xxxxxxxx
Xxxxxxx created under trust agreement
dated November 1, 1994, Xxxxx Xxxxxxx Grantor](1)........ __________%
La Xxxxx Xxxxxxx and Xxxxx Xxxxxx
Xxxxxxx, Trustees and Xxxxxx Xxxxxxxxx
as Special Trustee of trust f/b/o Xxxxx
Xxxxxxx created under trust agreement
dated November 1, 1994, Xxxxx Xxxxxxx Grantor](1)........ __________%
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(1) To be included on Schedule A to the Note issued by J.R. Statesville, Inc.
only.
