1
EXHIBIT 4.5
CONVERSION AND OFFSET AGREEMENT
This Agreement is made effective as of the 15th day of May, 1997, by
and between The Original Pasta Co., a Texas corporation f/k/a Pasta Acquisition
Co. ("Pasta Co."), Marco's Mexican Restaurants, Inc., a Texas corporation
("Marco's"), both wholly owned subsidiaries of Watermarc Food Management Co.,
Watermarc Food Management Co., a Texas corporation ("Watermarc"), and Ghulam
M. Bombaywala, (hereafter jointly referred to as "the Parties").
WHEREAS, on the 14th day of September 1995, Pasta Co. executed a note
in the principal amount of Two Million Seven Hundred Fifty Thousand Dollars
($2,750,000.00) in favor of Ghulam M. Bombaywala; and
WHEREAS, on the 14th day of September 1995, Pasta Co. executed a note
in the principal amount of One Million Dollars ($1,000,000.00) in favor of
Ghulam M. Bombaywala (both notes hereafter jointly referred to as the "Notes");
and
WHEREAS, the Notes were guaranteed by Watermarc pursuant to a Guaranty
Agreement dated September 14, 1995, in favor of Mr. Bombaywala; and
WHEREAS, the Parties wish to convert the Notes payable by Pasta Co. to
Mr. Bombaywala in the total principal amount of Three Million Seven Hundred
Fifty Thousand Dollars ($3,750,000.00) for Seven Million Five Hundred Thousand
(7,500,000) shares (the "Shares") of the common stock of Watermarc, $.05 par
value (the "Common Stock") and/or the right to receive the Shares at a later
date as hereinafter described in Section 2 hereof (the "Rights"); and
WHEREAS, on the 26th day of January 1996, Pasta Co. executed notes in
the principal amounts of Two Hundred Twenty Four Thousand Two Hundred Two
Dollars ($224,202.00) and Five Hundred Ninety Five Thousand Dollars
($595,000.00) in favor of Ghulam M. Bombaywala (hereafter jointly referred to as
the "Exchange Notes"); and
WHEREAS, on the 31st day of July 1994, Ghulam M. Bombaywala executed a
note in the principal amount of Two Million One Hundred Seventy Five Thousand
Three Hundred Ten Dollars and Forty Cents ($2,175,310.40) in favor of Marco's
(the "Marco's Note"); and
WHEREAS, the Parties wish to offset the Exchange Notes so that the
collective principal amount of Eight Hundred Nineteen Thousand Two Hundred Two
Dollars ($819,202.00) due to Mr. Bombaywala shall be offset against the Marco's
Note due to Marco's; and
2
NOW, THEREFORE, for and in consideration of the premises hereunder,
the Parties agree as follows:
1. Ghulam M. Bombaywala forgives and forever discharges the
following Notes owed to him by Pasta Co. in the total principal sum of Three
Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00), together with all
interest, accrued and unaccrued, and forever releases and discharges Watermarc
from its corporate guarantee of such obligations:
That certain Promissory Note dated September 14, 1995 by and
between Pasta Acquisition Co., as Maker, and Ghulam M.
Bombaywala, as Payee, in the amount of Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000.00) attached
hereto as Exhibit A; and
That certain Promissory Note dated September 14, 1995 by and
between Pasta Acquisition Co., as Maker, and Ghulam M.
Bombaywala, as Payee, in the amount of One Million Dollars
($1,000,000.00) attached hereto as Exhibit B; and
2. Mr. Bombaywala shall have the right to receive Seven Million
Five Hundred Thousand (7,500,000) Shares of Watermarc's Common Stock based upon
a value of Fifty Cents ($.50) per share (hereinafter referred to as "Rights").
The Parties acknowledge and agree that the Shares cannot be issued immediately
due to insufficient authorized shares of Common Stock of Watermarc and
Watermarc's obligation to reserve shares of Common Stock for future issuances
pursuant to outstanding obligations, including those related to its outstanding
Series A Warrants, its 9% Cumulative Convertible Preferred Stock and other
warrant or option agreements. In addition, Watermarc desires to retain a portion
of its authorized but unissued Common Stock for general corporate purposes.
Accordingly, the Parties agree that Watermarc may issue some portion of the
Shares prior to the shareholder's meeting (the "Meeting") referred to below as
determined by the Board of Directors of Watermarc in its sole discretion. All
Shares not approved and issued by the Board of Directors prior to the Meeting
shall be issued if and only if Watermarc receives shareholder approval at the
Meeting of an increase in Watermarc's authorized shares of Common Stock or a
reverse stock split (which would have the effect of increasing Watermarc's
authorized but unissued shares of Common Stock), which Watermarc shall
diligently seek at the next annual or other Meeting of shareholders.
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3. The Rights of Mr. Bombaywala to receive the Shares (or any
unissued portion of the Shares) shall be proportionately adjusted to reflect
any share combinations, divisions, stock splits, reverse stock splits, stock
dividends or other increases or decreases in Common Stock that proportionately
affect all holders of the Common Stock and he shall have, with respect to the
Rights, the right to receive a proportionate share of any consideration or
securities as a result of any exchange, reclassification, reorganization,
merger, business combination or other transaction on the same basis as any
holders of the outstanding shares of Common Stock.
4. Ghulam M. Bombaywala forgives and forever discharges the
Exchange Notes owed to him by Pasta Co. in the total principal sum of Eight
Hundred Nineteen Thousand Two Hundred Two Dollars ($819,202.00), together with
all interest, accrued and unaccrued, specifically:
That certain Promissory Note dated January 26, 1996, by and
between Pasta Acquisition Co., as Maker, and Ghulam M.
Bombaywala, as Payee, in the amount of Two Hundred Twenty
Four Thousand Two Hundred Two Dollars ($224,202.00) attached
hereto as Exhibit C; and
That certain Promissory Note dated January 26, 1996, by and
between Pasta Acquisition Co., as Maker, and Ghulam M.
Bombaywala, as Payee, in the amount of Five Hundred Ninety
Five Thousand Dollars ($595,000.00) attached hereto as
Exhibit D.
5. Watermarc and Marco's agree that the principal amount due
under the Marco's Note, attached hereto as Exhibit E, shall be reduced by the
sum of Eight Hundred Nineteen Thousand Two Hundred Two Dollars ($819,202.00).
6. This Agreement shall be construed according to and be
governed by the laws of the State of Texas. The Parties agree that venue for
any litigation arising out of this Agreement shall lie in Houston, Harris
County, Texas.
7. This Agreement contains the entire agreement of the Parties
with respect to the matters covered by its terms. No other agreement,
statement, or promise made by any party, or to any employee, officer, or agent
of any party, that is not contained in this Agreement shall be of any force or
effect.
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This Agreement is executed by the Parties on the day and year first
above written.
/s/ GHULAM M. BOMBAYWALA
-----------------------------------
Ghulam M. Bombaywala, Individually
Watermarc Food Management Co.
/s/ ANGELO PITILLO
------------------------------------
By: Angelo Pitillo
President and Chief Operating Officer
The Original Pasta Co.
/s/ ANGELO PITILLO
------------------------------------
By: Angelo Pitillo
President
Marco's Mexican Restaurants, Inc.
/s/ ANGELO PITILLO
--------------------------------------
By: Angelo Pitillo
President
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EXHIBIT A
PROMISSORY NOTE
$2,750,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
PASTA ACQUISITION CO., a Texas corporation (hereinafter called
"Maker"), for value received, promises and agrees to pay in installments and
as herein provided unto the order of GHULAM M. BOMBAYWALA, a resident of Fort
Bend County, Texas, whose business address is 10777 Westheimer, Suite 1030,
Houston, Texas 77042 or at such other address as Payee shall designate, in
lawful currency of the United States of America, the principal sum of TWO
MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($2,750,000.00), together with
interest thereon from and after the date hereof at the rate of ten percent
(10%) per annum until maturity. All past due principal and interest shall bear
interest until paid at twelve percent (12%) per annum (but in no event to
exceed the maximum rate of nonusurious interest allowed by law). All sums paid
hereon shall apply first to the satisfaction of accrued interest and the
balance to the unpaid principal.
INTEREST AND PRINCIPAL ON THIS NOTE is payable as follows: interest on
the outstanding principal hereof shall be payable quarterly on the 15th day of
December, March, June and September of each year in which any principal remains
outstanding hereunder; provided, however, commencing September 15, 2000, on
each quarterly interest payment date, Maker shall make quarterly payments of
principal in amount sufficient to amortize and pay all then remaining principal
in pro rata quarterly installments by September 15, 2002. Notwithstanding
anything herein to the contrary, this Note shall not accrue or bear interest
during the "Pre Effective Period" as such term is defined in the Merger
agreement (as herein after defined).
IT IS ESPECIALLY agreed between the parties hereto that time is of the
essence with respect to the payment of this Note and, if an "Event of Default"
(as defined below) occurs, the owner and holder of this Note may, at its
option, declare all sums owing hereon at once due and payable. If default is
made in the payment of this Note at maturity (regardless of how its maturity
may be brought about) and the same is placed in the hands of an attorney for
collection, or suit is filed hereon, or proceedings are had in bankruptcy,
probate, receivership, reorganization, arrangement, or other judicial
proceedings for the establishment or collection of any amount called for
hereunder, or any amount payable or to be payable hereunder is collected
through any such proceedings, Maker agrees and is also to pay to the owner and
holder of this Note all reasonable attorney's or collection fees incurred.
IT IS the intention of Maker and Payee to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under any applicable law (including the laws of the State of
Texas and the laws of the United States of America), then, in that event,
notwithstanding anything to the contrary in any agreement entered into in
connection with or as security for this Note, it is agreed as follow: (i) the
aggregate of all consideration which constitutes interest under applicable law
that is taken, reserved, contracted for, charged or received under this Note or
under any of the other aforesaid agreements or otherwise in connection with this
Note shall under no circumstances exceed the maximum amount of interest allowed
by applicable law, and any excess shall be credited on this Note by the holder
hereof (or,
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$2,750,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
if this Note shall have been paid in full, refunded to Maker); (ii) in the
event that maturity of the Note is accelerated by reason of an election by the
holder hereof resulting from any default hereunder or otherwise, or in the
event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount allowed by
applicable law, and excess interest, if any, provided for in this Note or
otherwise shall be canceled automatically as of the date of such acceleration
or prepayment and, if theretofore prepaid, shall be credited on this Note (or
if this Note shall have been paid in full, refunded to Maker); and (iii) it is
further agreed, without limitation of the foregoing, that all calculations of
the rate of interest contracted for, charged, or received on this Note that are
made for the purpose of determining whether such rate exceeds the maximum
amount of interest allowed by applicable law, shall be made, to the extent
permitted by applicable law, by amortizing, prorating, allocating, and
spreading throughout the full stated term of this Note so that such rate of
interest on account of this Note, as so calculated, is uniform throughout the
term thereof; and (iv) that the Maker and Payee agree that for the purposes of
this paragraph, the applicable interest ceiling is the Highest Lawful Rate
under the laws of any jurisdiction which may be held to apply to this Note.
EVENT OF DEFAULT OR DEFAULT shall mean the occurrence of any of the
following events:
1. Maker's failure to pay principal of, or interest on, this Note as
and when due and payable or the failure of Maker or the Guarantor,
as defined below, to pay when due any installment or payment of
principal or interest owed by Maker or Guarantor to Payee under the
Notes as defined in Section 2.02 of the Merger Agreement;
2. Maker or Guarantor fails to perform or observe any material term,
covenant or agreement contained in the Guaranty Agreement or the
Security Documents referred to below;
3. Maker, Guarantor or any of their material subsidiaries shall
individually or collectively: (a) make an assignment for the
benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or for a
substantial part of its assets; (b) commence any proceeding under
any bankruptcy, reorganization, rearrangement, readjustment of
debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; (c) have had any
such petition or application filed or any such proceeding commenced
against it in which an order for relief is entered or an
adjudication or appointment is made, and which remains undismissed
for a period of thirty (30) days or more; (d) take any board or
shareholder action approving any such petition, application,
proceeding, or order for relief or the appointment of a custodian.
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$2,750,000 HOUSTON, TEXAS SEPTEMBER 14, 1995
receiver or trustee for all or any substantial part of its properties; or
(e) suffer any such custodianship, receivership or trusteeship to continue
undischarged for a period of thirty (30) days or more; or
4. The Guaranty Agreement or Security Documents shall at any time after
execution and delivery thereof and for any reason cease to be in full force
and effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Guarantor or Maker or if
Guarantor or Maker shall deny that it or they have any liability or
obligation under, or shall fail to perform their respective obligations
under, the Guaranty Agreement or Security Agreements.
IF ANY EVENT OF DEFAULT shall occur and be continuing under this Note,
Payee or any owner and holder of this Note agrees to provide Maker and the
Guarantor hereof thirty (30) days prior written notice specifying such default
and providing Maker an opportunity to cure such default within such period
prior to any acceleration of this Note; provided, however, no notice shall be
required upon the occurrence of the Events of Default set forth in clauses (a),
(b) or (d) of number subparagraph 3 of this Note above and sixty (60) days
prior written notice shall be provided upon the occurrence of the Events of
Default set forth in numbered subparagraphs 2 and 4 above. Following such
written notice, if required, and the failure of Maker to cure such default in
every respect all indebtedness represented by this Note shall be immediately
due and payable without further action or notice by Payee or any holder hereof
to Maker. If Maker cures such default after receiving notice thereof, Maker
shall provide written notice to Payee or the owner and holder hereof stating
the steps taken to cure such default and stating that the default is cured
within the specified notice period.
MAKER reserves the option of prepaying the principal of this Note, in
whole or in part, at any time after the date hereof without penalty. Accrued
and unpaid interest with respect to such principal amount prepaid is due and
payable on the date of such prepayment. Maker shall be required to prepay the
Note to the extent and in the circumstances set forth in Section 2.02 of the
Plan and Agreement of Merger by and among Maker, Guarantor, Payee and The
Original Pasta Company dated effective as of September 14, 1995 (the "Merger
Agreement"). Payment of this Note is subordinated in the circumstances set
forth in Section 2.02 of the Merger Agreement.
THIS NOTE is entitled to the benefits of and the security afforded by (i)
that certain Security Agreement between Maker and Payee dated September 14,
1995; (ii) Pledge and Security Agreement dated September 14, 1995 between
Watermarc Food Management Co. ("Guarantor") and Payee dated September 14, 1995;
(iii) the Guaranty Agreement executed by the Guarantor in favor of the Payee
dated September 14, 1995; and (iv) any other agreements, instruments or filings
intended to provide security for this Note as provided for in Section 2.02 of
the Merger Agreement (collectively, the "Security Documents").
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$2,750,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
IN THE EVENT OF ANY DISPUTE or litigation between the Payee and the
Maker or Guarantor or any other person or party with respect to this Note, the
Merger Agreement or the Security Documents or with respect to any other matter,
thing, event or occurrence, whether past, present or arising in the future, the
Maker waives all rights of set off, offset and the right to interpose make any
legal claims or counterclaims, the effect of which would be to delay, reduce,
deny, limit or offset its obligations under this Note.
IF THE EVENT OF ANY CONFLICT between the terms and provisions of this
Note, the Security Documents or the Merger Agreement or any other agreement
relating hereto or thereto, the terms and provisions of this Note shall control.
EXCEPT AS EXPRESSLY SET FORTH TO THE CONTRARY HEREIN, Maker and any
endorsers or guarantors of this Note severally waive notice, grace,
presentment and demand for payment, notice of dishonor, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest and notice of
protest and non-payment, bringing of suit, and diligence in taking any action
to collect any sums owing under Note or in proceeding against any of the rights
and properties securing payment of this Note, and indulgences of every kind.
Maker and any endorsers or guarantors of this Note agree that, from time to
time, both before and after the maturity date of this Note and without notice,
Payee may renew the indebtedness evidenced by this Note, extend the time for
any payments on the Note, consent to the substitution of security, accept
additional security, or release any existing security for this Note and accept
partial payments of this Note without in any manner effecting the liability of
maker or any endorser or guarantor under or with respect to this Note, even
though Maker or such endorser or guarantor is not a party to any agreement
regarding such actions.
NEITHER THE Payee's acceptance of partial or delinquent performance or
payment nor any forbearance, failure or delay by Payee or any holder hereof in
exercising any right, power or remedy shall be deemed a waiver of any
obligation of the Maker or any endorser, guarantor or other party liable for
payment of this Note or of any right, power or remedy of the Payee or any
holder hereof or preclude any other or further exercise thereof; and no single
or partial exercise of any right, power or remedy shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
THE PROVISIONS OF THIS NOTE may not be changed, modified or terminated
orally, but only by an agreement in writing, signed by the Maker and Payee or
any holder hereof. If any term or provision of this Note shall be held invalid,
illegal or unenforceability, the validity of all other terms and provisions
shall in no way be effected thereby. Any waiver or forbearance must be in
writing to be effective against the Payee or any holder hereof and shall only
be applicable in the specific instance for which it is given.
THIS NOTE has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas and of the
United States of America.
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$2,750,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
PASTA ACQUISITION CO.
By: /s/ ANGELO PITILLO
___________________________
Angelo Pitillo, President
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EXHIBIT B
PROMISSORY NOTE
$1,000,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
PASTA ACQUISITION CO., a Texas corporation (hereinafter called
"Maker"), for value received, promises and agrees to pay in installments and as
herein provided unto the order of GHULAM M. BOMBAYWALA, a resident of Fort Bend
County, Texas, whose business address is 10777 Westheimer, Suite 1030, Houston,
Texas 77042 or at such other address as Payee shall designate, in lawful
currency of the United States of America, the principal sum of ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00), together with interest thereon from and after
the date hereof at the rate of ten percent (10%) per annum until maturity. All
past due principal and interest shall bear interest until paid at twelve
percent (12%) per annum (but in no event to exceed the maximum rate of
nonusurious interest allowed by law). All sums paid hereon shall apply first to
the satisfaction of accrued interest and the balance to the unpaid principal.
INTEREST AND PRINCIPAL ON THIS NOTE is payable as follows: interest on
the outstanding principal hereof shall be payable quarterly on the 15th day of
December, March, June and September of each year in which any principal remains
outstanding hereunder; $500,000.00 of the principal hereof is due December 31,
1996 and all remaining principal and any interest remaining unpaid on this Note
is due and payable on December 31, 1997. Notwithstanding anything to the
contrary, this Note shall not accrue or bear interest during the "Pre Effective
Period" as such term is defined in the Merger Agreement (as hereinafter
defined).
IT IS ESPECIALLY agreed between the parties hereto that time is of the
essence with respect to the payment of this Note and, if an "Event of Default"
(as defined below) occurs, the owner and holder of this Note may, at its
option, declare all sums owing hereon at once due and payable. If default is
made in the payment of this Note at maturity (regardless of how its maturity
may be brought about) and the same is placed in the hands of an attorney for
collection, or suit is filed hereon, or proceedings are had in bankruptcy,
probate, receivership, reorganization, arrangement, or other judicial
proceedings for the establishment or collection of any amount called for
hereunder, or any amount payable or to be payable hereunder is collected
through any such proceedings, Maker agrees and is also to pay to the owner and
holder of this Note all reasonable attorney's or collection fees incurred.
IT IS the intention of Maker and Payee to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under any applicable law (including the laws of the State of
Texas and the laws of the United States of America), then, in that event,
notwithstanding anything to the contrary in any agreement entered into in
connection with or as security for this Note, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under applicable law
that is taken, reserved, contracted for, charged or received under this Note or
under any of the other aforesaid agreements or otherwise in connection with
this Note shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be credited on this Note by the
holder hereof (or, if this Note shall have been paid in full, refunded to
Maker); (ii) in the event that maturity of the Note is accelerated by reason of
an election by the holder hereof resulting from any default
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$1,000,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
hereunder or otherwise, or in the event of any required or permitted
prepayment, then such consideration that constitutes interest may never include
more than the maximum amount allowed by applicable law, and excess interest, if
any, provided for in this Note or otherwise shall be canceled automatically as
of the date of such acceleration or prepayment and, if theretofore prepaid,
shall be credited on this Note (or if this Note shall have been paid in full,
refunded to Maker); and (iii) it is further agreed, without limitation of the
foregoing, that all calculations of the rate of interest contracted for,
charged, or received on this Note that are made for the purpose of determining
whether such rate exceeds the maximum amount of interest allowed by applicable
law, shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating, and spreading throughout the full stated term of this
Note so that such rate of interest on account of this Note, as so calculated,
is uniform throughout the term thereof; and (iv) that the Maker and Payee agree
that for the purposes of this paragraph, the applicable interest ceiling is the
Highest Lawful Rate under the laws of any jurisdiction which may be held to
apply to this Note.
EVENT OF DEFAULT OR DEFAULT shall mean the occurrence of any of the
following events:
1. Maker's failure to pay the principal of, or interest on, this Note
as and when due and payable or the failure of Maker or the
Guarantor, as defined below, to pay when due any installment or
payment of principal or interest owed by Maker or Guarantor to Payee
under the Notes as defined in Section 2.02 of the Merger Agreement;
2. Maker or Guarantor fails to perform or observe any material term,
covenant or agreement contained in the Guaranty Agreement or the
Security Documents referred to below;
3. Maker, Guarantor or any of their material subsidiaries shall
individually or collectively: (a) make an assignment for the
benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or for a
substantial part of its assets; (b) commence any proceeding under
any bankruptcy, reorganization, rearrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect; (c) have had any such petition
or application filed or any such proceeding commenced against it in
which an order for relief is entered or an adjudication or
appointment is made, and which remains undismissed for a period of
thirty (30) days or more; (d) take any board or shareholder action
approving any such petition, application, proceeding, or order for
relief or the appointment of a custodian, receiver or trustee for
all or any substantial part of its properties; or (e)
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$1,000,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
suffer any such custodianship, receivership or trusteeship to
continue undischarged for a period of thirty (30) days or more;
or
4. The Guaranty Agreement or Security Documents shall at any time
after execution and delivery thereof and for any reason cease
to be in full force and effect or shall be declared null and
void, or the validity or enforceability thereof shall be
contested by the Guarantor or Maker or if Guarantor or Maker
shall deny that it or they have any liability or obligation
under, or shall fail to perform their respective obligations
under, the Guaranty Agreement or Security Agreements.
IF ANY EVENT OF DEFAULT shall occur and be continuing under this Note,
Payee or any owner and holder of this Note agrees to provide Maker and the
Guarantor hereof thirty (30) days prior written notice specifying such default
and providing Maker an opportunity to cure such default within such period prior
to any acceleration of this Note; provided, however, no notice shall be required
upon the occurrence of the Events of Default set forth in clauses (a), (b) or
(d) of numbered subparagraph 3 of this Note above and sixty (60) days prior
written notice shall be provided upon the occurrence of the Events of Default
set forth in numbered subparagraphs 2 and 4 above. Following such written
notice, if required, and the failure of Maker to cure such default in every
respect all indebtedness represented by this Note shall be immediately due and
payable without further action or notice by Payee or any holder hereof to Maker.
If Maker cures such default after receiving notice thereof, Maker shall provide
written notice to Payee or the owner and holder hereof stating the steps taken
to cure such default and stating that the default is cured within the specified
notice period.
MAKER reserves the option of prepaying the principal of this Note, in
whole or in part, at any time after the date hereof without penalty. Accrued
and unpaid interest with respect to such principal amount prepaid is due and
payable on the date of such prepayment. Maker shall be required to prepay the
Note to the extent and in the circumstances set forth in Section 2.02 of the
Plan and Agreement of Merger by and among Maker, Guarantor, Payee and The
Original Pasta Company dated effective as of September 14, 1995 (the "Merger
Agreement"). Payment of this Note is subordinated in the circumstances set
forth in Section 2.02 of the Merger Agreement.
THIS NOTE is entitled to the benefits of and the security afforded by
(i) that certain Security Agreement between Maker and Payee dated September 14,
1995; (ii) the Pledge and Security Agreement dated September 14, 1995 between
Watermarc Food Management Co. ("Guarantor") and Payee dated September 14, 1995;
(iii) the Guaranty Agreement executed by the Guarantor in favor of the Payee
dated September 14, 1995; and (iv) any other agreements, instruments or filings
intended to provide security for this Note as provided for in Section 2.02 of
the Merger Agreement (collectively the "Security Documents").
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$1,000,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
IN THE EVENT OF ANY DISPUTE or litigation between the Payee and the Maker
or Guarantor or any other person or party with respect to this Note, the Merger
Agreement or the Security Documents or with respect to any other matter, thing,
event or occurrence, whether past, present or arising in the future, the Maker
waives all rights of set off, offset and the right to interpose make any legal
claims or counterclaims, the effect of which would be to delay, reduce, deny,
limit or offset its obligations under this Note.
IN THE EVENT OF ANY CONFLICT between the terms and provisions of this
Note, the Security Documents or the Merger Agreement or any other agreement
relating hereto or thereto, the terms and provisions of this Note shall control.
EXCEPT AS EXPRESSLY SET FORTH TO THE CONTRARY HEREIN, Maker and any
endorsers or guarantors of this Note severally waive notice, grace, presentment
and demand for payment, notice of dishonor, notice of intent to accelerate
maturity, notice of acceleration of maturity, protest and notice of protest and
non-payment, bringing of suit, and diligence in taking any action to collect
any sums owing under this Note or in proceeding against any of the rights and
properties securing payment of this Note, and indulgences of every kind. Maker
and any endorsers or guarantors of this Note agree that, from time to time,
both before and after the maturity date of this Note and without notice, Payee
may renew the indebtedness evidenced by this Note, extend the time for any
payments on the Note, consent to the substitution of security, accept
additional security, or release any existing security for this Note and accept
partial payments of this Note without in any manner effecting the liability of
Maker or any endorser or guarantor under or with respect to this Note, even
though Maker or such endorser or guarantor is not a party to any agreement
regarding such actions.
NEITHER THE Payee's acceptance of partial or delinquent performance or
payment nor any forebearance, failure or delay by Payee or any holder hereof in
exercising any right, power or remedy shall be deemed a waiver of any
obligation of the Maker or any endorser, guarantor or other party liable for
payment of this Note or of any right, power or remedy of the Payee or any
holder hereof or preclude any other or further exercise thereof; and no single
or partial exercise of any right, power or remedy shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
THE PROVISIONS OF THIS NOTE may not be changed, modified or terminated
orally, but only by an agreement in writing, signed by the Maker and Payee or
any holder hereof. If any term or provision of this Note shall be held
invalid, illegal or unenforceability, the validity of all other terms and
provisions shall in no way be effected thereby. Any waiver or forbearance must
be in writing to be effective against the Payee or any holder hereof and shall
only be applicable in the specific instance for which it is given.
--------
Page 4 of 5 INITIALS
14
$1,000,000.00 HOUSTON, TEXAS SEPTEMBER 14, 1995
THIS NOTE has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas and of the
United States of America.
PASTA ACQUISITION CO.
By: /s/ ANGELO PITILLO
___________________________
Angelo Pitillo, President
________
Page 5 of 5 INITIALS
15
EXHIBIT C
PROMISSORY NOTE
$224,202.00 HOUSTON, TEXAS January 26, 1995
PASTA ACQUISITION CO., a Texas corporation (hereinafter called "Maker"),
for value received, promises and agrees to pay in installments and as herein
provided unto the order of GHULAM M. BOMBAYWALA, a resident of Fort Bend County,
Texas, whose business address is 10777 Westheimer, Suite 1030, Houston, Texas
77042 or at such other address as Payee shall designate, in lawful currency of
the United States of America, the principal sum of TWO HUNDRED TWENTY FOUR
THOUSAND TWO HUNDRED TWO AND NO/100 DOLLARS ($224,202.00), together with
interest thereon from and after the date hereof at the rate of six percent (6%)
per annum until maturity. All past due principal and interest shall bear
interest until paid at twelve percent (12%) per annum (but in no event to exceed
the maximum rate of nonusurious interest allowed by law). All sums paid hereon
shall apply first to the satisfaction of accrued interest and the balance to the
unpaid principal.
INTEREST AND PRINCIPAL ON THIS NOTE is payable one (1) year from the
date hereof.
IT IS ESPECIALLY agreed between the parties hereto that time is of the
essence with respect to the payment of this Note and, if an "Event of Default"
(as defined below) occurs, the owner and holder of this Note may, at its
option, declare all sums owing hereon at once due and payable. If default is
made in the payment of this Note at maturity (regardless of how its maturity
may be brought about) and the same is placed in the hands of an attorney for
collection, or suit is filed hereon, or proceedings are had in bankruptcy,
probate, receivership, reorganization, arrangement, or other judicial
proceedings for the establishment or collection of any amount called for
hereunder, or any amount payable or to be payable hereunder is collected
through any such proceedings, Maker agrees and is also to pay to the owner and
holder of this Note all reasonable attorney's or collection fees incurred.
IT IS the intention of Maker and Payee to conform strictly to applicable
usury laws. Accordingly, if the transactions contemplated hereby would be
usurious under any applicable law (including the laws of the State of Texas and
the laws of the United States of America), then, in that event, notwithstanding
anything to the contrary in any agreement entered into in connection with or as
security for this Note, it is agreed as follow: (i) the aggregate of all
consideration which constitutes interest under applicable law that is taken,
reserved, contracted for, charged or received under this Note or under any of
the other aforesaid agreements or otherwise in connection with this Note shall
under no circumstances exceed the maximum amount of interest allowed by
applicable law, and any excess shall be credited on this Note by the holder
hereof (or, if this Note shall have been paid in full, refunded to Maker); (ii)
in the event that maturity of the Note is accelerated by reason of an election
by the holder hereof resulting from any default hereunder or otherwise, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount allowed by
applicable law, and excess interest, if any, provided for in this Note or
otherwise shall be canceled automatically as of the date of such
--------
Page 1 of 5 INITIALS
16
$224,202.00 HOUSTON, TEXAS JANUARY 26, 1996
acceleration or prepayment and, if theretofore prepaid, shall be credited on
this Note (or if this Note shall have been paid in full, refunded to Maker);
and (iii) it is further agreed, without limitation of the foregoing, that all
calculations of the rate of interest contracted for, charged, or received on
this Note that are made for the purpose of determining whether such rate
exceeds the maximum amount of interest allowed by applicable law, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating, and spreading throughout the full stated term of this Note so that
such rate of interest on account of this Note, as so calculated, is uniform
throughout the term thereof; and (iv) that the Maker and Payee agree that for
the purposes of this paragraph, the applicable interest ceiling is the Highest
Lawful Rate under the laws of any jurisdiction which may be held to apply to
this Note.
EVENT OF DEFAULT OR DEFAULT shall mean the occurrence of any of the
following events:
1. Maker's failure to pay principal of, or interest on, this Note as
and when due and payable or the failure of Maker or the Guarantor,
as defined below, to pay when due any installment or payment of
principal or interest owed by Maker or Guarantor to Payee under the
Notes as defined in Section 2.02 of the Merger Agreement;
2. Maker or Guarantor fails to perform or observe any material term,
covenant or agreement contained in the Guaranty Agreement or the
Security Documents referred to below;
3. Maker, Guarantor or any of their material subsidiaries shall
individually or collectively: (a) make an assignment for the
benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or for a
substantial part of its assets; (b) commence any proceeding under
any bankruptcy, reorganization, rearrangement, readjustment of
debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; (c) have had any
such petition or application filed or any such proceeding commenced
against it in which an order for relief is entered or an
adjudication or appointment is made, and which remains undismissed
for a period of thirty (30) days or more; or (d) take any board or
shareholder action approving any such petition, application,
proceeding, or order for relief or the appointment of a custodian,
receiver or trustee for all or any substantial part of its
properties; or (e) suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of thirty (30)
days or more; or
Page 2 of 5
17
$224,202.00 HOUSTON, TEXAS JANUARY 26, 1996
4. The Guaranty Agreement or Security Documents shall at any time
after execution and delivery thereof and for any reason cease to
be in full force and effect or shall be declared null and void, or
the validity or enforceability thereof shall be contested by the
Guarantor or Maker or if Guarantor or Maker shall deny that it or
they have any liability or obligation under, or shall fail to
perform their respective obligations under the Guaranty Agreement
or Security Agreements.
IF ANY EVENT OF DEFAULT shall occur and be continuing under this Note,
Payee or any owner and holder of this Note agrees to provide Maker and the
Guarantor hereof thirty (30) days prior written notice specifying such default
and providing Maker an opportunity to cure such default within such period prior
to any acceleration of this Note; provided, however, no notice shall be required
upon the occurrence of the Events of Default set forth in clauses (a), (b) or
(d) of number subparagraph 3 of this Note above and sixty (60) days prior
written notice shall be provided upon the occurrence of the Events of Default
set forth in numbered subparagraphs 2 and 4 above. Following such written
notice, if required, and the failure of Maker to cure such default in every
respect, all indebtedness represented by this Note shall be immediately due and
payable without further action or notice by Payee or any holder hereof to Maker.
If Maker cures such default after receiving notice thereof, Maker shall provide
written notice to Payee or the owner and holder hereof stating the steps taken
to cure such default and stating that the default is cured within the specified
notice period.
MAKER reserves the option of prepaying the principal of this Note, in
whole or in part, at any time after the date hereof without penalty. Accrued
and unpaid interest with respect to such principal amount prepaid is due and
payable on the date of such prepayment. Maker shall be required to prepay the
Note to the extent and in the circumstances set forth in Section 2.02 of the
Plan and Agreement of Merger by and among Maker, Guarantor, Payee and The
Original Pasta Company dated effective as of September 14, 1995 (the "Merger
Agreement"). Payment of this Note is subordinated in the circumstances set
forth in Section 2.02 of the Merger Agreement.
THIS NOTE is entitled to the benefits of and the security afforded by
(I) that certain Security Agreement between Maker and Payee dated September 14,
1995; (ii) Pledge and Security Agreement dated September 14, 1995 between
Watermarc Food Management Co. ("Guarantor") and Payee dated September 14, 1995;
(iii) the Guaranty Agreement executed by the Guarantor in favor of the Payee
dated September 14, 1995; and (iv) any other agreements, instruments or filings
intended to provide security for this Note as provided for in Section 2.02 of
the Merger Agreement (collectively, the "Security Documents").
IN THE EVENT OF ANY DISPUTE or litigation between the Payee and the
Maker or Guarantor or any other person or party with respect to this Note, the
Merger Agreement or the Security Documents or with respect to any other matter,
thing, event or occurrence, whether past, present or arising in the future, the
Maker waives all rights of set off, offset and the right to interpose
Page 3 of 5
18
$224,202.00 HOUSTON, TEXAS JANUARY 26, 1996
any legal claims or counterclaims, the effect of which would be to delay,
reduce, deny, limit or offset its obligations under this Note.
IF THE EVENT OF ANY CONFLICT between the terms and provisions of this
Note, the Security Documents or the Merger Agreement or any other agreement
relating hereto or thereto, the terms and provisions of this Note shall control.
EXCEPT AS EXPRESSLY SET FORTH TO THE CONTRARY HEREIN, Maker and any
endorsers or guarantors of this Note severally waive notice, grace,
presentment and demand for payment, notice of dishonor, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest and notice of
protest and non-payment, bringing of suit, and diligence in taking any action
to collect any sums owing under Note or in proceeding against any of the rights
and properties securing payment of this Note, and indulgences of every kind.
Maker and any endorsers or guarantors of this Note agree that, from time to
time, both before and after the maturity date of this Note and without notice,
Payee may renew the indebtedness evidenced by this Note, extend the time for
any payments on the Note, consent to the substitution of security, accept
additional security, or release any existing security for this Note and accept
partial payments of this Note without in any manner effecting the liability of
maker or any endorser or guarantor under or with respect to this Note, even
though Maker or such endorser or guarantor is not a party to any agreement
regarding such actions.
NEITHER THE Payee's acceptance of partial or delinquent performance or
payment nor any forbearance, failure or delay by Payee or any holder hereof in
exercising any right, power or remedy shall be deemed a waiver of any
obligation of the Maker or any endorser, guarantor or other party liable for
payment of this Note or of any right, power or remedy of the Payee or any
holder hereof or preclude any other or further exercise thereof; and no single
or partial exercise of any right, power or remedy shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
THE PROVISIONS OF THIS NOTE may not be changed, modified or terminated
orally, but only by an agreement in writing, signed by the Maker and Payee or
any holder hereof. If any term or provision of this Note shall be held invalid,
illegal or unenforceability, the validity of all other terms and provisions
shall in no way be effected thereby. Any waiver or forbearance must be in
writing to be effective against the Payee or any holder hereof and shall only
be applicable in the specific instance for which it is given.
Page 4 of 5
19
$224,202.00 HOUSTON, TEXAS JANUARY 26, 1996
THIS NOTE has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas and of the
United States of America.
PASTA ACQUISITION CO.
By: /s/ THOMAS BUCKLEY
---------------------------
Thomas Buckley, Treasurer
Page 5 of 5
20
EXHIBIT D
PROMISSORY NOTE
$595,000.00 HOUSTON, TEXAS JANUARY 26, 1996
PASTA ACQUISITION CO., a Texas corporation (hereinafter called "Maker"),
for value received, promises and agrees to pay in installments and as herein
provided unto the order of GHULAM M. BOMBAYWALA, a resident of Fort Bend
County, Texas, whose business address is 10777 Westheimer, Suite 1030, Houston,
Texas 77042 or at such other address as Payee shall designate, in lawful
currency of the United States of America, the principal sum of FIVE HUNDRED
NINETY FIVE THOUSAND AND NO/100 DOLLARS ($595,000.00), together with interest
thereon from and after the date hereof at the rate of ten percent (10%) per
annum until maturity. All past due principal and interest shall bear interest
until paid at twelve percent (12%) per annum (but in no event to exceed the
maximum rate of nonusurious interest allowed by law). All sums paid hereon
shall apply first to the satisfaction of accrued interest and the balance to
the unpaid principal.
INTEREST AND PRINCIPAL ON THIS NOTE is payable one (1) year from the date
hereof.
IT IS ESPECIALLY agreed between the parties hereto that time is of the
essence with respect to the payment of this Note and, if an "Event of Default"
(as defined below) occurs, the owner and holder of this Note may, at its
option, declare all sums owing hereon at once due and payable. If default is
made in the payment of this Note at maturity (regardless of how its maturity
may be brought about) and the same is placed in the hands of an attorney for
collection, or suit is filed hereon, or proceedings are had in bankruptcy,
probate, receivership, reorganization, arrangement, or other judicial
proceedings for the establishment or collection of any amount called for
hereunder, or any amount payable or to be payable hereunder is collected
through any such proceedings, Maker agrees and is also to pay to the owner and
holder of this Note all reasonable attorney's or collection fees incurred.
IT IS the intention of Maker and Payee to conform strictly to applicable
usury laws. Accordingly, if the transactions contemplated hereby would be
usurious under any applicable law (including the laws of the State of Texas and
the laws of the United States of America), then, in that event, notwithstanding
anything to the contrary in any agreement entered into in connection with or as
security for this Note, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under applicable law that is taken,
reserved, contracted for, charged or received under this Note or under any of
the other aforesaid agreements or otherwise in connection with this Note shall
under no circumstances exceed the maximum amount of interest allowed by
applicable law, and any excess shall be credited on this Note by the holder
hereof (or, if this Note shall have been paid in full, refunded to Maker); (ii)
in the event that maturity of the Note is accelerated by reason of an election
by the holder hereof resulting from any default hereunder or otherwise, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount allowed by
applicable law, and excess interest, if any, provided for in this Note or
otherwise shall be canceled automatically as of the date of such acceleration
or prepayment and, if theretofore prepaid, shall be credited on this Note (or
if this Note
----------
Page 1 of 5 INITIALS
21
$595,000.00 HOUSTON, TEXAS JANUARY 26, 1996
shall have been paid in full, refunded to Maker); and (iii) it is further
agreed, without limitation of the foregoing, that all calculations of the rate
of interest contracted for, charged, or received on this Note that are made for
the purpose of determining whether such rate exceeds the maximum amount of
interest allowed by applicable law, shall be made, to the extent permitted by
applicable law, by amortizing, prorating, allocating, and spreading throughout
the full stated term of this Note so that such rate of interest on account of
this Note, as so calculated, is uniform throughout the term thereof, and (iv)
that the Maker and Payee agree that for the purposes of this paragraph, the
applicable interest ceiling is the Highest Lawful Rate under the laws of any
jurisdiction which may be held to apply to this Note.
EVENT OF DEFAULT OR DEFAULT shall mean the occurrence of any of the
following events:
1. Maker's failure to pay the principal of, or interest on, this Note
as and when due and payable or the failure of Maker or the
Guarantor, as defined below, to pay when due any installment or
payment of principal or interest owed by Maker or Guarantor to
Payee under the Notes as defined in Section 2.02 of the Merger
Agreement;
2. Maker or Guarantor fails to perform or observe any material term,
covenant or agreement contained in the Guaranty Agreement or the
Security Documents referred to below;
3. Maker, Guarantor or any of their material subsidiaries shall
individually or collectively: (a) make an assignment for the
benefit of creditors or petition or apply to any tribunal for the
appointment of a custodian, receiver or trustee for it or for a
substantial part of its assets; (b) commence any proceeding under
any bankruptcy, reorganization, rearrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect; (c) have had any such petition
or application filed or any such proceeding commenced against it in
which an order for relief is entered or an adjudication or
appointment is made, and which remains undismissed for a period of
thirty (30) days or more; (d) take any board or shareholder action
approving any such petition, application, proceeding, or order for
relief or the appointment of a custodian, receiver or trustee for
all or any substantial part of its properties; or (e) suffer any
such custodianship, receivership or trusteeship to continue
undischarged for a period of thirty (30) days or more; or
________
Page 2 of 5 INITIALS
22
$595,000.00 HOUSTON, TEXAS JANUARY 26, 1996
4. The Guaranty Agreement or security Documents shall at any time
after execution and delivery thereof and for any reason cease to be
in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by the
Guarantor or Maker or if Guarantor or Maker shall deny that it or
they have any liability or obligation under, or shall fail to
perform their respective obligations under the Guaranty Agreement
or Security Agreements.
IF ANY EVENT OF DEFAULT shall occur and be continuing under this Note,
Payee or any owner and holder of this Note agrees to provide Maker and the
Guarantor hereof thirty (30) days prior written notice specifying such default
and providing Maker an opportunity to cure such default within such period
prior to any acceleration of this Note; provided, however, no notice shall be
required upon the occurrence of the Events of Default set forth in clauses (a),
(b) or (d) of numbered subparagraph 3 of this Note above and sixty (60) days
prior written notice shall be provided upon the occurrence of the Events of
Default set forth in numbered subparagraphs 2 and 4 above. Following such
written notice, if required, and the failure of Maker to cure such default in
every respect, all indebtedness represented by this Note shall be immediately
due and payable without further action or notice by the Payee or any holder
hereof to Maker. If Maker cures such default after receiving notice thereof,
Maker shall provide written notice to Payee or the owner and holder hereof
stating the steps taken to cure such default and stating that the default is
cured within the specified notice period.
MAKER reserves the option of prepaying the principal of this Note, in
whole or in part, at any time after the date hereof without penalty. Accrued
and unpaid interest with respect to such principal amount prepaid is due and
payable on the date of such prepayment. Maker shall be required to prepay the
Note to the extent and in the circumstances set forth in Section 2.02 of the
Plan and Agreement of Merger by and among Maker, Guarantor, Payee and The
Original Pasta Co. dated effective as of September 14, 1995 (the "Merger
Agreement"). Payment of this Note is subordinated in the circumstances set
forth in Section 2.02 of the Merger Agreement.
THIS NOTE is entitled to the benefits of and the security afforded by
(I) that certain Security Agreement between Maker and Payee dated September 14,
1995; (ii) the Pledge and Security Agreement dated September 14, 1995 between
Watermarc Food Management Co. ("Guarantor") and Payee dated September 14, 1995;
(iii) the Guaranty Agreement executed by the Guarantor in favor of the Payee
dated September 14, 1995; and (iv) any other agreements, instruments or filings
intended to provide security for this Note as provided for in Section 2.02 of
the Merger Agreement (collectively the "Security Documents").
IN THE EVENT OF ANY DISPUTE or litigation between the Payee and the
Maker or Guarantor or any other person or party with respect to this Note, the
Merger Agreement or the Security Documents or with respect to any other matter,
thing, event or occurrence, whether past, present or arising in the future, the
Maker waives all rights of set off, offset and the right to interpose
Page 3 of 5
23
$595,000.00 HOUSTON, TEXAS JANUARY 26, 1996
any legal claims or counterclaims, the effect of which would be to delay,
reduce, deny, limit or offset its obligations under this Note.
IN THE EVENT OF ANY CONFLICT between the terms and provisions of this
Note, the Security Documents or the Merger Agreement or any other agreement
relating hereto or thereto, the terms and provisions of this Note shall
control.
EXCEPT AS EXPRESSLY SET FORTH TO THE CONTRARY HEREIN, Maker and any
endorsers or guarantors of this Note severally waive notice, grace, presentment
and demand for payment, notice of dishonor, notice of intent to accelerate
maturity, notice of acceleration of maturity, protest and notice of protest and
non-payment, bringing of suit, and diligence in taking any action to collect
any sums owing under this Note, and indulgences of every kind. Maker and any
endorsers or guarantors of this Note Agree that, from time to time, both before
and after the maturity date of this Note and without notice, Payee may renew
the indebtedness evidenced by this Note, extend the time for any payments on
the Note, consent to the substitution of security, accept additional security,
or release any existing security for this Note and accept partial payments of
this Note without in any manner effecting the liability of Maker or any
endorser or guarantor under or with respect to this Note, even though Maker or
such endorser or guarantor is not a party to any agreement regarding such
actions.
NEITHER THE Payee's acceptance of partial or delinquent performance or
payments nor any forebearance, failure or delay by Payee or any holder hereof
in exercising any right, power or remedy shall be deemed a waiver of any
obligation of the Maker or any endorser, guarantor or other party liable for
payment of this Note or of any right, power or remedy of the Payee or any
holder hereof or preclude any other or further exercise thereof, and no single
or partial exercise of any right, power or remedy shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
THE PROVISIONS OF THIS NOTE may not be changed, modified or terminated
orally, but only by an agreement in writing, signed by the Maker and Payee or
any holder hereof. If any term or provision of this Note shall be held invalid,
illegal or unenforceable, the validity of all other terms and provisions shall
in no way be effected thereby. Any waiver or forbearance must be in writing to
be effective against the Payee or any holder hereof and shall only be
applicable in the specific instance for which it is given.
--------
Page 4 of 5 INITIALS
24
$595,000.00 HOUSTON, TEXAS JANUARY 26, 1996
THIS NOTE has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas and of the
United States of America.
PASTA ACQUISITION CO.
By: /s/ THOMAS BUCKLEY
---------------------------------
Thomas Buckley, Treasurer
--------
Page 5 of 5 INITIALS
25
Exhibit E
PROMISSORY NOTE
$2,175,310.40 HOUSTON, TEXAS JULY 31, 1994
GHULAM M. BOMBAYWALA, a resident of Harris county, Texas (hereinafter
called "Maker") for value received, promises and agrees to pay in installments
and as herein provided unto the order of MARCO'S MEXICAN RESTAURANTS, INC., a
Texas corporation (hereinafter called "Payee") at its offices in Houston,
Harris County, Texas, or at such other location in Harris County, Texas as
Payee shall designate, in lawful money of the United States of America, the
principal sum of TWO MILLION ONE HUNDRED SEVENTY-FIVE THOUSAND THREE HUNDRED
TEN AND 40/100 DOLLARS ($2,175,310.40), together with interest thereon from and
after the date hereof at the rate of six percent (6%) per annum until maturity,
payable as it accrues on the maturity date of each of the hereinafter mentioned
installments, on the then unpaid principal amount hereof. All past due
principal and interest shall bear interest until paid at the highest rate
allowed by law (but in no event to exceed the maximum rate of nonusurious
interest allowed by law). All sums paid hereon shall apply first to the
satisfaction of accrued interest and the balance to the unpaid principal.
INTEREST ON THIS NOTE shall be due and payable annually on July 1 of
each year beginning July 31, 1995. Principal payments of $200,000 each shall be
due on July 1, 1996, 1997 and 1998 and all remaining principal and interest
shall be due on July 31, 1999. Notwithstanding the foregoing, mandatory
prepayments of principal shall be payable within thirty (30) days of receipt by
Maker of proceeds from the sale of all shares of Billy Blues Food Corporation
by him, but only to the extent Maker has previously sold and received cash
proceeds from the sale of 2,000,000 shares of Billy Blues Food Corporation
which may be retained by him and not applied to prepayment of this Note.
IF default is made in the payment of any installment of principal or
interest hereof, as and when the same is or becomes due, or if default occurs
under any instrument securing the payment hereof or executed in connection
herewith, the owner and holder of this note may, at its option, with thirty
(30) days written notice, declare all sums owing hereon at once due and
payable. If default is made in the payment of this note at maturity (regardless
of how its maturity may be brought about) and the same is placed in the hands
of an attorney for collection, or suit is filed hereon, or proceedings are had
in bankruptcy, probate, receivership, reorganization, arrangement, or other
judicial proceedings for the establishment or collection of any amount called
for hereunder, or any amount payable or to be payable hereunder is collected
through any such proceedings, Maker agrees and is also to pay to the owner and
holder of this note a reasonable amount as attorney's or collection fees.
IT IS the intention of Maker and Payee to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law (including the laws of the State of
Texas and the laws of the United States of America), then, in that event,
notwithstanding anything to the contrary in any agreement entered into in
connection with or
-----------
INITIALS
Page 1 of 2
26
$2,175,310.40 HOUSTON, TEXAS JULY 31, 1994
as security for this note, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under applicable law that is taken,
reserved, contracted for, charged or received under this note or under any of
the other aforesaid agreements or otherwise in connection with this note shall
under no circumstances exceed the maximum amount of interest allowed by
applicable law, and any excess shall be credited on this note by the holder
hereof (or, if this note shall have been paid in full, refunded to Maker); (ii)
in the event that maturity of the note is accelerated by reason of an election
by the holder hereof resulting from any default hereunder or otherwise, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest may never include more than the maximum amount allowed by
applicable law, and excess interest, if any, provided for in this note or
otherwise shall be cancelled automatically as of the date of such acceleration
or prepayment and, if theretofore prepaid, shall be credited on this note (or
if this note shall have been paid in full, refunded to Maker) and (iii) it is
further agreed, without limitation of the foregoing, that all calculations of
the rate of interest contracted for, charged, or received on this note that are
made for the purpose of determining whether such rate exceeds the maximum
amount of interest allowed by applicable law, shall be made, to the extent
permitted by applicable law, by amortizing, prorating, allocating, and
spreading throughout the full stated term of this note so that such rate of
interest on account of this note, as so calculated, is uniform throughout the
term thereof; and (iv) that the Maker and Payee agree that for the purposes of
this paragraph, the applicable interest ceiling is the Highest Lawful Rate.
MAKER reserves the option of prepaying the principal of this note, in
whole or in part, at any time after the date hereof without penalty. Accrued
and unpaid interest with respect to such principal amount prepaid is due and
payable on the date of such prepayment.
THIS NOTE is entitled to the benefits and security afforded by a Pledge
Agreement executed by Maker to Payee of even date herewith.
NOTWITHSTANDING ANYTHING in this Agreement to the contrary, Maker shall
have no personal liability on this Note and the sole and exclusive recourse of
any owner or holder of this Note for nonpayment hereof is to exercise its
rights with respect to the collateral set forth in the above-referenced Pledge
Agreement.
THIS NOTE has been executed and delivered in and shall be construed in
accordance with and governed by the laws of the State of Texas and the United
States of America.
By: /s/ GHULAM M. BOMBAYWALA
----------------------------------
GHULAM M. BOMBAYWALA
--------
Page 2 of 2 INITIALS