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Exhibit 5
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT").
BY THE ACCEPTANCE HEREOF, THE PURCHASER OF THIS NOTE REPRESENTS THAT THIS NOTE
IS BEING ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION AND THAT
THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE PLEDGED, HYPOTHECATED OR
TRANSFERRED UNLESS SUCH TRANSACTION IS REGISTERED UNDER THE ACT, AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE OR AN
OPINION OF LEGAL COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED IS RECEIVED.
CIAO CUCINA CORPORATION
PROMISSORY NOTE
U.S. $100,000 Cincinnati, Ohio
May 22, 1998
1. FOR VALUE RECEIVED, the undersigned CIAO CUCINA CORPORATION, an Ohio
corporation (the "Company"), hereby promises to pay to the order of Blue Chip
Capital Fund Limited Partnership, a Delaware limited partnership (including any
successor holder hereof, the "Purchaser"), the principal sum of One Hundred
Thousand Dollars (U.S. $100,000) or, if less, the principal amount outstanding
under this Note. Interest on the principal amount hereof shall accrue from the
date advanced to the date paid at the rate of 14% per annum (provided that upon
and during the continuance of an Event of Default (as defined below), interest
shall accrue at the rate of 18% per annum or, if less, at the highest rate
permitted by law). The outstanding principal amount hereof, together with all
interest accrued thereon, shall be payable on December 31, 1998 or earlier as
provided herein. Upon and during the continuance of an Event of Default and at
and after maturity, interest shall be payable on demand. Principal and interest
shall be paid in lawful money of the United States at the principal office of
the Purchaser or at such other address of which the Purchaser shall have
notified the Company in writing. This Note is issued pursuant to the terms of
the Note Purchase Agreement of even date herewith (the "Note Purchase
Agreement") between the Company and the Purchaser and is entitled to the benefit
thereof and of the security documents referred to therein.
2. The Company agrees that until this Note is paid in full:
(a) Corporate Existence and Compliance with Laws. The Company shall
preserve and maintain its corporate existence in good standing under the laws of
the State of Ohio and comply in all material respects with all laws,
regulations, governmental orders and authorizations, and court orders material
to the continuing conduct of the Company's business or to the Company's
performance of its obligations under this Note. The Company shall not amend its
Articles of Incorporation or Code of Regulations.
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(b) Merger or Transfer of Assets. The Company shall not be a party
to any merger or consolidation or sell, transfer, lease or convey all or
substantially all of its property.
(c) Financial Reporting. The Company shall supply to the Purchaser
such financial and operating information as the Purchaser may reasonably
request.
(d) Dividends and Redemptions. The Company shall not pay any
dividend or make any distribution with respect to its stock or redeem or
purchase any shares of its stock or make any loan to a shareholder, other than
customary expense advances.
(e) Change in Business. The Company shall not engage in any business
other than the business being conducted by it on the date hereof.
(f) Transactions with Affiliates. The Company shall not enter into
any transaction with any shareholder, director, officer, employee, agent or
affiliate other than in the ordinary course of business and on terms no less
favorable to the Company than a similar transaction with an unaffiliated third
party.
(g) Use of Proceeds. The Company shall use the proceeds of the loan
made hereunder for working capital.
(h) Liens and Encumbrances. The Company shall not create or permit
any lien or encumbrance upon any of its assets to secure any indebtedness for
borrowed money or any deferred payment obligation for goods or services.
3. Limited Transferability. This Note has not been registered under the
Securities Act of 1933 and may be transferred only pursuant to an effective
registration thereunder or an exemption from registration thereunder and in
compliance with applicable state securities laws. This Note may not be
transferred if such transfer would require any registration or qualification
under, or cause the loss of exemption from registration or qualification under,
such Act or any applicable state securities law with respect to the Note. This
Note shall bear an appropriate legend with respect to such restrictions on
transfer. This Note is transferable only upon the books which the Company shall
cause to be maintained for such purpose. Any assignment or transfer may be made
by surrendering this Note to the Company together with the attached assignment
form properly executed by the assignor or transferor. Upon such surrender the
Company will execute and deliver, in the case of an assignment or transfer in
whole, a new Note in the name of the assignee or transferee or, in the case of
an assignment or transfer in part, a new Note in the name of the assignee or
transferee named in such instrument of assignment or transfer and a new Note in
the name of the assignor or transferor covering the portion of this Note not
assigned or transferred to the assignee or transferee.
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The Holder may not assign or transfer this Note, other than to an affiliate or
one of its partners, without the consent of the Company, which shall not be
unreasonably withheld.
4. Loss, etc. of Note. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of this Note, and of
indemnity in form and amount reasonably satisfactory to the Company, if lost,
stolen or destroyed, and upon surrender and cancellation of this Note, if
mutilated, and upon reimbursement of the Company's reasonable incidental
expenses, the Company shall execute and deliver to the Holder a new Note of like
date, tenor and denomination.
5. Events of Default. (a) The unpaid principal and interest hereof may
be accelerated and immediate payment hereof may be demanded by the Purchaser
upon the occurrence of an Event of Default as defined below (provided, in the
case of an Event of Default described in clause (ii) below, such acceleration
shall be automatic without any action by the Purchaser). The following are the
Events of Default:
(i) The Company fails to pay the principal of this Note when due.
(ii) The Company or any guarantor of this Note is the debtor in a
bankruptcy, receivership, Chapter XI or other insolvency proceeding,
is generally unable to pay its debts when due, or makes an assignment
for the benefit of creditors.
(iii) The Company violates in any material respect any other
covenant, agreement or condition contained in this Note or in the Note
Purchase Agreement or any document executed pursuant thereto.
(iv) The Company does not pay any principal or interest on any
borrowed money obligation or capitalized lease with an aggregate
unpaid principal amount of $10,000 or more when due and any applicable
grace period expires or the holder of such other obligation is
entitled to declare such obligation due prior to its stated maturity
because of the occurrence of an event of default by the Company with
respect thereto.
(v) Any representation or warranty made by the Company in the
Note Purchase Agreement or any document executed pursuant thereto was
incorrect in any material respect when made.
(vi) The Company is liquidated, dissolved or ceases to operate
its business.
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(vii) The Company is in default under the terms of any other
agreement to which it is a party, which default is reasonably likely
to have a material adverse effect on the Company's assets, business,
results of operations, financial condition or prospects.
(viii) Any final judgment of a court in excess of $25,000 is
rendered against the Company and is not stayed or discharged within 30
days.
(ix) Any person or group of persons other than the shareholders
of the Company on the date hereof acquires more than 25% of the voting
power of the Company.
(x) Neither Stephen J. Kent nor a representative of The Glazier
Group shall be serving as chief executive officer of the Company.
(xi) In the good faith opinion of the Purchaser, there shall
occur any material adverse change in the earnings, assets, financial
condition, business or prospects of the Company or the Purchaser shall
deem itself to be insecure.
(b) The Company shall immediately give notice to the Purchaser
in writing upon the occurrence of an Event of Default or any event which, with
notice or lapse of time or both, would become an Event of Default.
6. Miscellaneous. (a) This Note shall be governed by and construed in
accordance with the laws of the State of Ohio applicable to agreements made and
to be performed therein.
(b) The Company waives presentment, protest and notice of
dishonor of this Note.
(c) If the Purchaser commences any action to enforce its rights
under this Note, the Company shall pay to the Purchaser all reasonable
attorneys' fees and expenses incurred by the Purchaser in connection with such
action.
(d) The Company may at any time prepay this Note in full or in
part, on not less than five business days' prior notice. Any such prepayment
shall be accompanied by accrued interest on the principal so repaid to the date
of payment. Any amount so prepaid may not be reborrowed.
(e) If from any circumstances whatsoever the fulfillment of any
provision of this Note involves transcending the limit of validity prescribed by
any applicable usury statute or any other applicable law, with regard to
obligations of like character and amount, then the obligation to be fulfilled
will be reduced to the limit of such validity as provided in such statute or
law, so that in no event shall any exaction of interest be
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possible under this Note in excess of the limit of such validity. In no event
shall the Company be bound to pay interest of more than the legal limit for the
use, forbearance or detention of money and the right to demand any such excess
is hereby expressly waived by the holder.
(f) No delay or omission of the Purchaser to exercise any right
or power arising from any default shall impair any such right or power or be
considered to be a waiver of any such default or any acquiescence therein nor
shall the action or non-action of the holder in case of default on the part of
the Company impair any right or power resulting therefrom.
(g) Wherever possible each provision of this Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Note shall be prohibited by or invalid under such
law, such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Note.
(h) THE COMPANY AGREES THAT ANY ACTION, SUIT OR PROCEEDING IN
RESPECT OF OR ARISING OUT OF THIS NOTE, ITS VALIDITY OR PERFORMANCE, AT THE SOLE
OPTION OF THE PURCHASER, ITS SUCCESSORS AND ASSIGNS, SHALL BE INITIATED AND
PROSECUTED AS TO ALL PARTIES AND THEIR HEIRS, SUCCESSORS AND ASSIGNS AT
CINCINNATI, OHIO. THE PURCHASER AND THE COMPANY EACH CONSENTS TO AND SUBMITS TO
THE EXERCISE OF JURISDICTION OVER HIS OR ITS PERSON BY ANY COURT SITUATED AT
CINCINNATI, OHIO HAVING JURISDICTION OVER THE SUBJECT MATTER, WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON HIM OR IT AND CONSENTS THAT ALL SUCH SERVICE
OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO THE COMPANY AND THE PURCHASER
AT THEIR RESPECTIVE ADDRESSES AS SET FORTH ABOVE (OR SUCH OTHER ADDRESS AS A
PARTY MAY FROM TIME TO TIME DESIGNATE FOR ITSELF BY NOTICE TO THE OTHER PARTY)
OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF OHIO. THE COMPANY AND
THE PURCHASER EACH WAIVES TRIAL BY JURY, ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT.
IN WITNESS WHEREOF, this Note has been duly executed by the Company as of
the 22nd day of May, 1998.
CIAO CUCINA CORPORATION
By: /s/ Stephen J. Kent
-------------------------
President
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ASSIGNMENT
FOR VALUE RECEIVED ___________________ hereby sells, assigns and
transfers unto ______________________ the foregoing Note and all rights
evidenced thereby, and does irrevocably constitute and appoint
____________________, attorney, to transfer said Note on the books of CIAO
CUCINA CORPORATION _________ hereby agrees to be bound by the terms of the Note
as defined therein.
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SCHEDULE A
Principal
Balance
Date Amount Advanced Amount Repaid Outstanding
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May 22, 1998 $100,000 $100,000