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, 90 Park
Avenue, 39th Floor, New York, NY 10016 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 Lender. 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 Lender 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 Lender, in whole or in
part, by a waiver or renunciation of the claim or
right unless in a writing;
signed by Lender; (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.
<PAGE>
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 Bus
