Exhibit 10.5
UNSECURED PROMISSORY NOTE
U.S. $1,535,000 DATED October 19, 2003
FOR VALUE RECEIVED, the undersigned, STEAKHOUSE PARTNERS, INC.
("Steakhouse Partners") and PARAGON STEAKHOUSE RESTAURANTS, INC. (collectively
with Steakhouse Partners, the "Borrowers"), jointly and severally HEREBY PROMISE
TO PAY to the order of Critical Capital Growth Fund, L.P. ("Lender") the
principal sum of One Million Five Hundred Thirty Five Thousand United States
Dollars ($1,535,000) together with interest thereon at an annual rate equal to
six percent (6%) subject to the terms and conditions set forth in this Note.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of the First Amended Plan of Reorganization filed
by the Debtors on September 29, 2003 (the "Plan"). Capitalized terms used in
this Note without definition shall have the respective meanings set forth in the
Plan.
This Note and all of the terms and conditions and the obligations of the
parties hereunder are expressly conditioned upon approval by the Bankruptcy
Court of this Note and confirmation of the Plan.
Borrowers will make payments under this Note in accordance with the
payment schedule set forth in Schedule 1 hereto. All payments of principal and
interest on this Note shall be made by check at Critical Capital Growth Fund, LP
c/o Sands Brothers, 00 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 or at such
other place in the United States of America as designated by Lender in writing
or by wire transfer of immediately available funds to an account as designated
by Lender in writing. Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day (as defined in the Plan), such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case not be included in the computation of payment of interest.
Borrowers may, without premium or penalty, at any time and from time to
time, prepay all or any portion of the outstanding principal and/or interest
balance due under this Note.
If Borrowers shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for fifteen (15) days after
Lender notifies Borrowers in writing, Lender may, at its option, (i) by written
notice to Borrowers, declare the entire unpaid principal balance of this Note,
immediately due and payable regardless of any prior forbearance, and (ii)
exercise any and all rights and remedies available to it under applicable law,
including, without limitation, the right to collect from Borrowers all sums due
under this Note. Notwithstanding anything herein to the contrary, in no event
shall interest be charged under this Note which would violate any applicable
law. If the rate of interest provided for herein would otherwise exceed the
maximum rate permitted by applicable law, then the interest rate shall be
reduced to the maximum rate permitted by applicable law.
The rights and remedies of Lender under this Note shall be cumulative and
not alternative. No waiver by Lender of any right or remedy under this Note
shall be effective unless in a writing signed by Xxxxxx. Neither the failure nor
any delay in exercising any right, power or privilege under this Note will
operate as a waiver of such right, power or privilege and no single or partial
exercise of any such right, power or privilege by Xxxxxx will preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right of Lender arising out of this Note can be discharged
by Xxxxxx, in whole or in part, by a waiver or renunciation of the claim or
right unless in a writing; signed by Xxxxxx; (b) no waiver that may be given by
Lender will be applicable except in the specific instance for which it is given;
and (c) no notice to or demand on Borrowers will be deemed to be a waiver of any
obligation of Borrowers or of the right of Lender to take further action without
notice or demand as provided in this Note. Borrowers hereby waive presentment,
demand, protest and notice of dishonor and protest.
All notices and other communications required or permitted hereunder
shall be in writing and shall be conclusively deemed to have been duly given (a)
when hand-delivered to the other party; (b) when received when sent by facsimile
on a Business Day at the address and number set forth below; (c) five (5)
business days after deposit in the U.S. mail with first class or certified mail
receipt requested, postage prepaid, and addressed to the other party as set
forth below; or (d) the next business day after deposit with a national
overnight delivery service, postage prepaid, addressed to the applicable party
as set forth below with next-business-day delivery guaranteed, provided that the
sending party receives a confirmation of delivery from the delivery service
provider.
If to Lender:
Critical Capital Growth Fund, LP
c/o Sands Brothers
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
If to Borrowers:
Steakhouse Partners, Inc.
Attn: Xxxxx Xxxxxxx-Xxxxxxx, Esq.
00000 Xxxxxx Xxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax No: (000) 000-0000
With copies to:
Xxxxxx & Xxxxxxx LLP
Attn: Xxxxx X. Xxxxxxx, Esq.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-2007
Fax No.: (000) 000-0000
A party may change or supplement the addresses given above, or designate
additional addresses, by giving the other party written notice of the new
address in the manner set forth above.
If any provision in this Note is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Note will remain
in full force and effect. Any provision of this Note held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
This Note will be governed by the laws of the State of California without
regard to conflicts of laws principles.
Each party shall pay its own legal fees and expenses incurred in
connection with the execution of this Note. In the event of any action at law,
suit in equity or arbitration proceeding in relation to this Note, the
prevailing party (as determined by the trier of fact) shall be paid by the other
party a reasonable sum for attorney's fees and expenses (as determined by the
trier of fact) of the prevailing party.
2
This Note shall bind Borrowers and their successors and assigns. This
Note shall not be assigned or transferred by Lender without the express prior
written consent of Xxxxxxxxx.
This Agreement may be executed by facsimile and in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, Xxxxxxxxx have executed and delivered this Note as
of the date first stated above.
STEAKHOUSE PARTNERS, INC., a Debtor
and Debtor in Possession
By: /s/ X. Xxxxx Xxxxxxxx
-----------------------------------------------------
Name: X. Xxxxx Xxxxxxxx
Title: President and CEO
PARAGON STEAKHOUSE RESTAURANTS, INC., a Debtor
and Debtor in Possession
By: /s/ X. Xxxxx Xxxxxxxx
-----------------------------------------------------
Name: X. Xxxxx Xxxxxxxx
Title: President and CEO
ACKNOWLEDGED AND AGREED:
LENDER:
By: ______________________________
Name: ______________________________
Title:________________________________
3
SCHEDULE 1
Interest
Period # Payments Principal @ 6% Total Due
-------- -------- --------- -------- ---------
$1,535,000.00
1 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
2 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
3 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
4 ($7,675.00) $0.00 ($7.675.00) $1,535,000.00
5 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
6 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
7 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
8 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
9 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
10 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
11 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
12 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
13 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
14 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
15 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
16 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
17 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
18 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
19 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
20 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
21 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
22 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
23 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
24 ($7,675,00) $0.00 ($7,675.00) $1,535,000.00
25 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
26 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
27 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
28 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
29 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
30 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
31 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
32 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
33 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
34 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
35 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
36 ($7,675.00) $0.00 ($7,675.00) $1,535,000.00
37 ($47,000.00) ($39,325.00) ($7,675.00) $1,495,675.00
38 ($47,000.00) ($39,521.63) ($7,478.38) $1,456,153.38
39 ($47,000.00) ($39,719.23) ($7,280.77) $1,416,434.14
40 ($47,000.00) ($39,917.83) ($7,082.17) $1,376,516.31
41 ($47,000.00) ($40,117.42) ($6,882.58) $1,336,398.89
42 ($47,000.00) ($40,318.01) ($6,681.99) $1,296,080.89
43 ($47,000.00) ($40,519.60) ($6,480.40) $1,255,561.29
44 ($47,000.00) ($40,722.19) ($6,277.81) $1,214,839.10
45 ($47,000.00) ($40,925:80) ($6,074.20) $1,173,913.30
46 ($47,000.00) ($41,130.43) ($5,869.57) $1,132,782.86
47 ($47,000.00) ($41,336.09) ($5,663.91) $1,091,446.78
4
48 ($47,000.00) ($41,542.77) ($5,457.23) $1,049,904.01
49 ($47,000.00) ($41,750.48) ($5,249.52) $1,008,153.53
50 ($47,000.00) ($41,959.23) ($5,040.77) $966,194.30
51 ($47,000.00) ($42,169.03) ($4,830.97) $924,025.27
52 ($47,000.00) ($42,379.87) ($4,620.13) $881,645.40
53 ($47,000.00) ($42,591.77) ($4,408.23) $839,053.62
54 ($47,000.00) ($42,804.73) ($4,195.27) $796,248.89
55 ($47,000.00) ($43,018.76) ($3,981.24) $753,230.13
56 ($47,000.00) ($43,233.85) ($3,766.15) $709,996.29
57 ($47,000.00) ($43,450.02) ($3,549.98) $666,546.27
58 ($47,000.00) ($43,667.27) ($3,332.73) $622,879.00
59 ($47,00000) ($43,885,61) ($3,114.39) $578,993.39
60 ($47,000.00) ($44,105.03) ($2,894.97) $534,888.36
61 ($47,000.00) ($44,325.56) ($2,674.44) $490,562.80
62 ($47,000.00) ($44,547.19) ($2,452.81) $446,015.62
63 ($47,000.00) ($44,769.92) ($2,230.08) $401,245.69
64 ($47,000.00) ($44,993.77) ($2,006.23) $356,251.92
65 ($47,000.00) ($45,218.74) ($1,781.26) $311,033.18
66 ($47,000.00) ($45,444.83) ($1,555.17) $265,588.35
67 ($47,000.00) ($45,672.06) ($1,327.94) $219,916.29
68 ($47,000.00) ($45,900.42) ($1,099.58) $174,015.87
69 ($47,000.00) ($46,129.92) ($870.08) $127,885.95
70 ($47,000.00) ($46.360.57) ($639.43) $81,525.38
71 ($47,000.00) ($46,592.37) ($407.63) $34,933.01
72 ($35,107.67) ($34,933.00) ($174.67) $0.00
---------------------------------------------------------------
TOTALS ($1,956,407.67) ($1,535,000.00) ($421,407.67)
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5
