EXHIBIT 10.2
PROMISSORY NOTE
$1,000,000.00
April____, 2006
Tofutti Brands Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
(Hereinafter referred to as "Borrower")
Wachovia Bank, National Association
Summit, New Jersey 07901
(Hereinafter referred to as "Bank")
Xxxxxxxx promises to pay to the order of Bank, in lawful money of the United
States of America, at its office indicated above or wherever else Bank may
specify, the sum of One Million and No/100 Dollars ($1,000,000.00) or such sum
as may be advanced and outstanding from time to time, with interest on the
unpaid principal balance at the rate and on the terms provided in this
Promissory Note (including all renewals, extensions or modifications hereof,
this "Note").
LOAN AGREEMENT. This Note is subject to the provisions of that certain Loan
Agreement between Bank and Borrower of even date herewith, as modified from
time to time.
LINE OF CREDIT. Borrower may borrow, repay and reborrow, and, upon the request
of Borrower, Bank shall advance and readvance under this Note from time to time
until the maturity hereof (each an "Advance" and together the "Advances"), so
long as the total principal balance outstanding under this Note at any one time
does not exceed the principal amount stated on the face of this Note, subject
to the limitations described in any loan agreement to which this Note is
subject. Bank's obligation to make Advances under this Note shall terminate if
Borrower is in Default. As of the date of each proposed Advance, Borrower shall
be deemed to represent that each representation made in the Loan Documents
is true as of such date.
If Borrower subscribes to Bank's cash management services and such services are
applicable to this line of credit, the terms of such service shall control the
manner in which funds are transferred between the applicable demand deposit
account and the line of credit for credit or debit to the line of credit.
USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by
this Note for the commercial purposes of Borrower, as follows: finance working
capital.
SECURITY. Xxxxxxxx has granted Bank a security interest in the collateral
described in the Loan Documents, including, but not limited to, personal
property collateral described in that certain Security Agreement of even date
herewith.
INTEREST RATE. Interest shall accrue on the unpaid principal balance of this
Note from the date hereof at the Bank's Prime Rate, as that rate may change
from time to time in accordance with changes in the Bank's Prime Rate
("Interest Rate"). "Bank's Prime Rate" means that rate announced by Bank from
time to time as its prime rate and is one of several interest rate bases used by
Bank. Bank lends at rates both above and below Bank's Prime Rate, and Borrower
acknowledges that Bank's Prime Rate is not represented or intended to be the
lowest or most favorable rate of interest offered by Bank.
DEFAULT RATE. In addition to all other rights contained in this Note, if a
Default (as defined herein) occurs and as long as a Default continues, all
outstanding Obligations, other than Obligations under any swap agreements (as
defined in 11 U.S.C. ss. 101, as in effect from time to time) between Borrower
and Bank or its affiliates, shall bear interest at the Interest Rate plus 3%
("Default Rate"). The Default Rate shall also apply from acceleration until the
Obligations or any judgment thereon is paid in full.
INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall
be computed on the basis of a 360-day year for the actual number of days in the
applicable period ("Actual/360 Computation"). The Actual/360 Computation
determines the annual effective interest yield by taking the stated (nominal)
rate for a year's period and then dividing said rate by 360 to determine the
daily periodic rate to be applied for each day in the applicable period.
Application of the Actual/360 Computation produces an annualized effective rate
exceeding the nominal rate.
REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly
payments of accrued interest only, commencing on April 30, 2006, and continuing
on the same day of each month thereafter until fully paid. In any event, all
principal and accrued interest shall be due and payable on April 30, 2007.
AUTOMATIC DEBIT OF CHECKING ACCOUNT FOR LOAN PAYMENT. Borrower authorizes Bank
to debit demand deposit account number XXXXXXXXX or any other account with Bank
(routing number XXXXXXXX) designated in writing by Borrower, beginning April 30,
2006 for any payments due under this Note. Borrower further certifies that
Xxxxxxxx holds legitimate ownership of this account and preauthorizes this
periodic debit as part of its right under said ownership.
APPLICATION OF PAYMENTS. Monies received by Bank from any source for application
toward payment of the Obligations shall be applied to accrued interest and then
to principal. If a Default occurs, monies may be applied to the Obligations in
any manner or order deemed appropriate by Bank.
If any payment received by Bank under this Note or other Loan Documents is
rescinded, avoided or for any reason returned by Bank because of any adverse
claim or threatened action, the returned payment shall remain payable as an
obligation of all persons liable under this Note or other Loan Documents as
though such payment had not been made.
DEFINITIONS. LOAN DOCUMENTS. The term "Loan Documents", as used in this Note and
the other Loan Documents, refers to all documents executed in connection with or
related to the loan evidenced by this Note and any prior notes which evidence
all or any portion of the loan evidenced by this Note, and any letters of credit
issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in
connection therewith or related thereto, and may include, without limitation, a
commitment letter that survives closing, a loan agreement, this Note, guaranty
agreements, security agreements, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. ss. 101, as in effect from time to time). OBLIGATIONS. The term
"Obligations", as used in this Note and the other Loan Documents, refers to any
and all indebtedness and other obligations under this Note, all other
obligations under any other Loan Document(s), and all obligations under any swap
agreements (as defined in 11 U.S.C. ss. 101, as in effect from time to time)
between Borrower and Bank, or its affiliates, whenever executed. CERTAIN OTHER
TERMS. All terms that are used but not otherwise defined in any of the Loan
Documents shall have the definitions provided in the Uniform Commercial Code.
LATE CHARGE. If any payments are not timely made, Borrower shall also pay to
Bank a late charge equal to 5% of each payment past due for 10 or more days.
This late charge shall not apply to payments due at maturity or by acceleration
hereof, unless such late payment is in an amount not greater than the highest
periodic payment due hereunder.
Acceptance by Bank of any late payment without an accompanying late charge shall
not be deemed a waiver of Bank's right to collect such late charge or to collect
a late charge for any subsequent late payment received.
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ATTORNEYS' FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank's
reasonable expenses actually incurred to enforce or collect any of the
Obligations including, without limitation, reasonable arbitration, paralegals',
attorneys' and experts' fees and expenses, whether incurred without the
commencement of a suit, in any trial, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.
USURY. If at any time the effective interest rate under this Note would, but for
this paragraph, exceed the maximum lawful rate, the effective interest rate
under this Note shall be the maximum lawful rate, and any amount received by
Bank in excess of such rate shall be applied to principal and then to fees and
expenses, or, if no such amounts are owing, returned to Borrower.
DEFAULT. If any of the following occurs, a default ("Default") under this Note
shall exist: NONPAYMENT; NONPERFORMANCE. The failure of timely payment or
performance of the Obligations or Default under this Note or any other Loan
Documents. FALSE WARRANTY. A warranty or representation made or deemed made in
the Loan Documents or furnished Bank in connection with the loan evidenced by
this Note proves materially false, or if of a continuing nature, becomes
materially false. CROSS DEFAULT. At Bank's option, any default in payment or
performance of any obligation under any other loans, contracts or agreements of
Borrower, any Subsidiary or Affiliate of Borrower, any general partner of or the
holder(s) of the majority ownership interests of Borrower with Bank or its
affiliates ("Affiliate" shall have the meaning as defined in 11 U.S.C. ss. 101,
as in effect from time to time, except that the term "Borrower" shall be
substituted for the term "Debtor" therein; "Subsidiary" shall mean any business
in which Borrower holds, directly or indirectly, a controlling interest).
CESSATION; BANKRUPTCY. The death of, appointment of a guardian for, dissolution
of, termination of existence of, loss of good standing status by, appointment of
a receiver for, assignment for the benefit of creditors of, or commencement of
any bankruptcy or insolvency proceeding by or against Borrower, its Subsidiaries
or Affiliates, if any, or any general partner of or the holder(s) of the
majority ownership interests of Borrower, or any party to the Loan Documents.
MATERIAL CAPITAL STRUCTURE OR BUSINESS ALTERATION. Without prior written consent
of Bank, (i) a material alteration in the kind or type of Borrower's business or
that of Borrower's Subsidiaries or Affiliates, if any; (ii) the sale of
substantially all of the business or assets of Borrower, any of Borrower's
Subsidiaries or Affiliates or any guarantor, or a material portion (10% or more)
of such business or assets if such a sale is outside the ordinary course of
business of Borrower, or any of Borrower's Subsidiaries or Affiliates or any
guarantor, or more than 50% of the outstanding stock or voting power of or in
any such entity in a single transaction or a series of transactions; (iii) the
acquisition of substantially all of the business or assets or more than 50% of
the outstanding stock or voting power of any other entity; or (iv) should any
Borrower or any of Borrower's Subsidiaries or Affiliates or any guarantor enter
into any merger or consolidation. MATERIAL ADVERSE CHANGE. Bank determines in
good faith, in its sole discretion, that the prospects for payment or
performance of the Obligations are impaired or there has occurred a material
adverse change in the business or prospects of Borrower, financial or otherwise.
REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan
Documents, Bank may at any time thereafter, take the following actions: BANK
LIEN. Foreclose its security interest or lien against Xxxxxxxx's accounts
without notice. ACCELERATION UPON DEFAULT. Accelerate the maturity of this Note
and, at Bank's option, any or all other Obligations, other than Obligations
under any swap agreements (as defined in 11 U.S.C. ss. 101, as in effect from
time to time) between Borrower and Bank, or its affiliates, which shall be due
in accordance with and governed by the provisions of said swap agreements;
whereupon this Note and the accelerated Obligations shall be immediately due and
payable; provided, however, if the Default is based upon a bankruptcy or
insolvency proceeding commenced by or against Borrower or any guarantor or
endorser of this Note, all Obligations (other than Obligations under any swap
agreement as referenced above) shall automatically and immediately be due and
payable. CUMULATIVE. Exercise any rights and remedies as provided under the Note
and other Loan Documents, or as provided by law or equity.
FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information
as Bank may reasonably request from time to time, including without limitation,
financial statements and information pertaining to Borrower's financial
condition. Such information shall be true, complete, and accurate.
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WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and
other Loan Documents shall be valid unless in writing and signed by an officer
of Bank. No waiver by Bank of any Default shall operate as a waiver of any other
Default or the same Default on a future occasion. Neither the failure nor any
delay on the part of Bank in exercising any right, power, or remedy under this
Note and other Loan Documents shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
Except to the extent otherwise provided by the Loan Documents or prohibited by
law, each Borrower and each other person liable under this Note waives
presentment, protest, notice of dishonor, demand for payment, notice of
intention to accelerate maturity, notice of acceleration of maturity, notice of
sale and all other notices of any kind. Further, each agrees that Bank may (i)
extend, modify or renew this Note or make a novation of the loan evidenced by
this Note, and/or (ii) grant releases, compromises or indulgences with respect
to any collateral securing this Note, or with respect to any Borrower or other
person liable under this Note or any other Loan Documents, all without notice to
or consent of each Borrower and other such person, and without affecting the
liability of each Borrower and other such person; provided, Bank may not extend,
modify or renew this Note or make a novation of the loan evidenced by this Note
without the consent of the Borrower, or if there is more than one Borrower,
without the consent of at least one Borrower; and further provided, if there is
more than one Borrower, Bank may not enter into a modification of this Note
which increases the burdens of a Borrower without the consent of that Borrower.
MISCELLANEOUS PROVISIONS. ASSIGNMENT. This Note and the other Loan Documents
shall inure to the benefit of and be binding upon the parties and their
respective heirs, legal representatives, successors and assigns. Bank's
interests in and rights under this Note and the other Loan Documents are freely
assignable, in whole or in part, by Bank. In addition, nothing in this Note or
any of the other Loan Documents shall prohibit Bank from pledging or assigning
this Note or any of the other Loan Documents or any interest therein to any
Federal Reserve Bank. Borrower shall not assign its rights and interest
hereunder without the prior written consent of Bank, and any attempt by Xxxxxxxx
to assign without Bank's prior written consent is null and void. Any assignment
shall not release Borrower from the Obligations. APPLICABLE LAW; CONFLICT
BETWEEN DOCUMENTS. This Note and, unless otherwise provided in any other Loan
Document, the other Loan Documents shall be governed by and construed under the
laws of the state named in Bank's address on the first page hereof without
regard to that state's conflict of laws principles. If the terms of this Note
should conflict with the terms of any loan agreement or any commitment letter
that survives closing, the terms of this Note shall control. BORROWER'S
ACCOUNTS. Except as prohibited by law, Borrower grants Bank a security interest
in all of Xxxxxxxx's accounts with Bank and any of its affiliates. SWAP
AGREEMENTS. All swap agreements (as defined in 11 U.S.C. ss. 101, as in effect
from time to time), if any, between Borrower and Bank or its affiliates are
independent agreements governed by the written provisions of said swap
agreements, which will remain in full force and effect, unaffected by any
repayment, prepayment, acceleration, reduction, increase or change in the terms
of this Note, except as otherwise expressly provided in said written swap
agreements, and any payoff statement from Bank relating to this Note shall not
apply to said swap agreements except as otherwise expressly provided in such
payoff statement. JURISDICTION. Borrower irrevocably agrees to non-exclusive
personal jurisdiction in the state named in Bank's address on the first page
hereof. SEVERABILITY. If any provision of this Note or of the other Loan
Documents shall be prohibited or invalid under applicable law, such provision
shall be ineffective but only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note or other such document. NOTICES. Any notices to Borrower shall be
sufficiently given, if in writing and mailed or delivered to the Borrower's
address shown above or such other address as provided hereunder, and to Bank, if
in writing and mailed or delivered to Wachovia Bank, National Association, Mail
Code VA7628, P. O. Box 00000, Xxxxxxx, XX 00000 or Wachovia Bank, National
Association, Mail Code VA7628, 00 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000 or
such other address as Bank may specify in writing from time to time. Notices to
Bank must include the mail code. In the event that Xxxxxxxx changes Xxxxxxxx's
address at any time prior to the date the Obligations are paid in full, Xxxxxxxx
agrees to promptly give written notice of said change of address by registered
or certified mail, return receipt requested, all charges prepaid. PLURAL;
CAPTIONS. All references in the Loan Documents to Borrower,
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guarantor, person, document or other nouns of reference mean both the singular
and plural form, as the case may be, and the term "person" shall mean any
individual, person or entity. The captions contained in the Loan Documents are
inserted for convenience only and shall not affect the meaning or interpretation
of the Loan Documents. ADVANCES. Bank may, in its sole discretion, make other
advances which shall be deemed to be advances under this Note, even though the
stated principal amount of this Note may be exceeded as a result thereof.
POSTING OF PAYMENTS. All payments received during normal banking hours after
2:00 p.m. local time at the office of Bank first shown above shall be deemed
received at the opening of the next banking day. JOINT AND SEVERAL OBLIGATIONS.
If there is more than one Borrower, each is jointly and severally obligated.
FEES AND TAXES. Borrower shall promptly pay all documentary, intangible
recordation and/or similar taxes on this transaction whether assessed at closing
or arising from time to time. LIMITATION ON LIABILITY; WAIVER OF PUNITIVE
DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES
THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR
CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR BE IN ANY WAY
CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR
DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED
HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER
FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY
DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO
PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN
CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS
RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. PATRIOT ACT NOTICE.
To help fight the funding of terrorism and money laundering activities, Federal
law requires all financial institutions to obtain, verify, and record
information that identifies each person who opens an account. For purposes of
this section, account shall be understood to include loan accounts. FINAL
AGREEMENT. This Note and the other Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
BORROWER BY EXECUTION HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS NOTE, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED
IN CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO BANK TO ACCEPT THIS NOTE.
EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY
PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED
IN ANY LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN
CONNECTION WITH, RELATED TO OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR
MODIFIED BY, THIS NOTE.
IN WITNESS WHEREOF, Xxxxxxxx, on the day and year first above written, has
caused this Note to be executed under seal.
Tofutti Brands Inc.
By:___________________________________(SEAL)
Xxxxxx Xxxx, Chief Financial & Accounting Officer
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