Exhibit 10.02
AMENDED SECURED PROMISSORY NOTE
(the "Note")
Dated to be Effective as of September 1, 2004
Principal Amount: $317,000
A. TERMS OF LOAN
FOR VALUE RECEIVED, BROOKLYN CHEESECAKE & DESSERTS COMPANY, INC. formerly
know as CREATIVE BAKERIES, INC., a New York corporation ("BROOKLYN
CHEESECAKE & DESSERTS"), and J.M. SPECIALTIES, INC., A NEW JERSEY
CORPORATION ("JMS") (BROOKLYN CHEESECAKE & DESSERTS and JMS are
collectively referred to as the "BORROWERS"), with offices at 20 Passaic
Avenue, Fairfield, New Jersey 07004, jointly and severally promise to pay
to the order of RONALD L. SCHUTTE (the "LENDER"), residing at 360
Hollywood Avenue, Yonkers, New York 10707, or at such other place as the
Lender may designate in writing, the principal sum of THREE HUNDRED
SEVENTEEN THOUSAND DOLLARS ($317,000), (the "Loan" or "Principal").
1. INTEREST; PREPAYMENT.
(a) Borrower will pay Interest on the unpaid Principal amount hereof,
computed on the basis of the actual number of days elapsed in a
360-day year, at a rate which shall be equal to thirteen percent
(13.00%) per annum (the "Interest Rate").
(b) The "Interest Rate Factor" shall be calculated by dividing the
annual Interest Rate of 13% by 360 days and then multiplying the
resulting quotient by the Number of Elapsed Days. The "Number of
Elapsed Days" shall be determined by the number of days from the
last day of the previous month (excluding such last day of the
previous month) up until and including the date upon which the
Interest will be due. The "Interest" shall be calculated by
multiplying the applicable Interest Rate Factor by the outstanding
Principal balance of the Loan as of the date each Interest payment
is due unless there has been a modification of the Principal balance
during such period (such as by a payment) in which event Interest
will be calculated based on the outstanding Principal balances from
time to time. Interest on the Loan shall be due and payable on the
last day of each month up to and including the Due Date of the Loan
provided such day is a Business Day ("Business Day"). Business Day
shall mean any day other than Saturday, Sunday, or any other day on
which commercial banks located in the State of New York are required
or authorized by law to be closed for business. Borrower will pay
Interest on any overdue installment of Principal or Interest for the
period for which overdue, on demand, at a rate equal to eighteen
percent (18.00%) per annum. In no event shall Interest exceed the
maximum legal rate permitted by law, and any Interest that exceeds
the maximum legal rate shall be reduced to the maximum legal rate
permitted by law. All payments, including insufficient payments,
shall be credited, regardless of their designation by Borrowers,
first to collection expenses due hereunder, then to outstanding late
charges, then to Interest due and payable but not yet paid, then to
the Yield Maintenance Payment (if any) and the remainder, if any, to
Principal. All payments by Borrowers or any endorser of this Note on
account of Principal, Interest or fees hereunder shall be made in
lawful money of the United States of America.
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(c) Prepayment. The Borrowers may prepay up to (Sixty Two Thousand Five
Hundred ($62,500) Dollars in Principal on each date that Interest is
due pursuant to this Agreement, without penalty or premium.
Borrowers may also prepay all of the Principal of the Loan at any
time provided such prepayment shall include Interest calculated to
the date of prepayment plus fifty (50%) percent of the Interest that
would have been earned had the Loan not been prepaid from the date
of such prepayment to the Due Date of the Loan (the "Yield
Maintenance Payment"). It is acknowledged that the Yield Maintenance
Payment is intended to compensate Lender for utilizing its credit in
order to make the Loan to Borrowers and is not to be deemed
additional Interest for any purpose. The Yield Maintenance Payment
shall also be due in the event of a prepayment as a result of
acceleration of the Loan as a result of an Event of Default.
2. DUE DATE. The Loan together with Interest as provided herein shall be due
on May 20, 2005 (the "Due Date").
B. REPRESENTATIONS AND WARRANTIES
3. Borrowers represents and warrant to the Lender that:
(a) The Note is legal, valid, and contains binding obligations of
Borrowers enforceable against Borrowers in accordance with its
terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors'
rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be
brought.
(b) Borrowers are not in default in the performance, observance or
fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument to which it is a party,
except where such default would not have a material adverse effect
on the assets, liabilities or financial condition of Borrowers (a
"Material Adverse Effect").
(c) There is no pending or threatened action or proceeding against or
affecting Borrowers before any court, governmental agency, or
arbitrator which is reasonably likely to, in any one case or in the
aggregate, have a Material Adverse Effect or materially and
adversely affect the ability of Borrowers to perform their
obligations under this Note.
C. EVENTS OF DEFAULT
4. If any of the following events shall occur and be continuing:
(a) Borrowers shall fail to make any payment of Principal or Interest on
this Note when due, except that Lender may either prospectively or
retroactively waive the date upon which Interest is due in which
case unpaid Interest on Principal, including amounts on overdue
installments of Principal and Interest, shall be added to Principal
and provided that such waiver is given, such non payment of
Principal shall not be considered an event of default;
(b) Borrowers shall be in material default in the performance or
observance of any covenant or agreement contained herein or in the
Loan and Security Agreement securing this Loan following five (5)
business days' written notice thereof;
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(c) Any representation or warranty made by or on behalf of Borrowers in
this Note, or in the Loan and Security Agreement or in any other
agreement, instrument, or statement delivered to the Lender by or on
behalf of Borrowers shall at any time prove to have been incorrect
when made in any material respect;
(d) Brooklyn Cheesecake & Desserts or JMS no longer remain corporations
in good standing in the states of their respective organizations;
(e) The death, disability, resignation or removal of Ronald L. Schutte
("Schutte"), as CEO and/or President of Borrowers, unless in the
case of death or disability there exists "Key Man" or disability
insurance policies with proceeds utilized to pay all amounts due the
Lender within a reasonable period of time. In addition, the Lender
must be named as an additional insured and/or beneficiary on such
policies;
(f) The inability of Borrowers to pay any of their debts in accordance
with past business practice or taxes as they become due;
(g) The filing of any lawsuit in excess of $20,000 against Brooklyn
Cheesecake & Desserts and/or JMS that is not removed or bonded
within 15 days of institution of such lawsuit;
(h) Sales fall below $600,000 in any calendar quarter;
(i) Cash and accounts receivable are below $125,000;
(j) Any judgment against Brooklyn Cheesecake & Desserts or JMS or any
attachment, levy or execution against any of their properties for
any material amount shall remain unpaid, or shall not be released,
discharged, dismissed, stayed or fully bonded for a period of
fifteen (15) days or more after its entry, issue or levy, as the
case may be;
(k) Brooklyn Cheesecake & Desserts or JMS shall make an assignment for
the benefit of creditors, or a trustee, receiver or liquidator shall
be appointed for either of them or for any of their property; or
(l) The commencement of any proceedings by Brooklyn Cheesecake &
Desserts or JMS under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt, receivership, liquidation or
dissolution law or statute or the commencement of any such
proceedings without the consent of Borrower and such involuntary
proceedings shall continue undischarged for a period of sixty (60)
days;
then, and in any such event, (with each of the foregoing events to
constitute an "EVENT OF DEFAULT"), the Lender may declare the entire
unpaid Principal amount of this Note and all Interest and fees accrued and
unpaid hereon to be immediately due and payable, whereupon the same shall
become and be forthwith due and payable, without presentment, demand,
offset, protest or notice of any kind, all of which are hereby expressly
waived by Borrowers.
D. MISCELLANEOUS
5. GOVERNING LAW. This Note shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to its rules on
conflicts of laws.
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6. NOTICES, ETC. All notices and other communications provided for under this
Note shall be in writing (including telegraphic, telex, and facsimile
transmissions) and mailed or transmitted or delivered, if to Borrowers, at
Borrower's address indicated above or by facsimile transmission to (973)
808-0203, and if to the Lender, at its address indicated above or by
facsimile transmission to (914) 961-3896, or, as to each party, at such
other address or facsimile transmission number as shall be designated by
such party in a written notice to the other party complying as to delivery
with the terms of this paragraph. Except as otherwise provided in this
Note, all such notices and communications shall be effective either on
receipt if delivered by hand, telegraphic, telex and facsimile
transmissions, or three (3) Business Days following deposit, postage fully
paid, in the mails by certified mail.
7. NO WAIVER. No failure or delay on the part of the Lender in exercising any
right, power, or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right, power, or remedy
preclude any other or further exercise thereof or the exercise of any
other right, power, or remedy hereunder. The rights and remedies provided
herein are cumulative, and are not exclusive of any other rights, powers,
privileges, or remedies, now or hereafter existing, at law or in equity or
otherwise.
8. COSTS AND EXPENSES. Borrowers shall reimburse the Lender for all costs and
expenses incurred by the Lender and shall pay the reasonable fees and
disbursements of counsel to the Lender in connection with the preparation
of this Secured Promissory Note and any documents related thereto with a
maximum amount of $5,000 plus disbursements, and shall also pay all costs
including reasonable fees incurred by Lender in enforcement of the
Lender's rights hereunder. Borrowers shall also pay any and all taxes
(other than taxes on or measured by net income of the holder of this Note)
incurred or payable in connection with the execution and delivery of this
Note.
9. AMENDMENTS. No amendment, modification, or waiver of any provision of this
Note nor consent to any departure by Borrowers therefrom shall be
effective unless the same shall be in writing and signed by the Lender and
then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it is given. Borrowers
hereby waive demand, presentment, notice of dishonor, and protest of
nonpayment and agree that any time and from time to time and with or
without consideration, Lender may, without notice to or further consent of
Borrowers, and without in any manner releasing, or affecting the
obligations of Borrowers: (a) release, surrender, waive, add, substitute,
settle, exchange, compromise, modify, extend, or grant indulgences with
respect to (i) this Note, and (ii) all or any part of any collateral or
security for this Note; and (b) grant any extension or other postponements
of the time of payment hereof.
10. SUCCESSORS AND ASSIGNS. This Note shall be binding upon Borrowers and its
heirs, legal representatives, successors and permitted assigns and the
terms hereof shall inure to the benefit of the Lender and its successors
and permitted assigns, including subsequent holders hereof. This Note is
freely transferable and assignable by the Lender and each subsequent
holder hereof and any reference to Lender herein shall be deemed to refer
to any subsequent transferee or assignee of this Note. Notwithstanding the
foregoing, Borrowers may not assign their rights or obligations under this
Note whether by voluntary assignment or transfer, operation of law, or
otherwise without the consent of Lender.
11. SEVERABILITY. The provisions of this Note are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall not in
any manner affect such provision in any other jurisdiction or any other
provision of this Note in any jurisdiction.
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12. ENTIRE AGREEMENT. This Note sets forth the entire agreement of Borrowers
and the Lender with respect to this Note and may be modified only by a
written instrument executed by Borrower and the Lender.
13. HEADINGS. The headings herein are for convenience only and shall not limit
or define the meaning of the provisions of this Note.
14. JURISDICTION; SERVICE OF PROCESS. Borrowers agree that in any action or
proceeding brought on or in connection with this Note (i) the state courts
of the State of New York, or (in a case involving diversity of
citizenship) the United States District Court in New York, New York, shall
have jurisdiction of any such action or proceeding, (ii) service of any
summons and complaint or other process in any such action or proceeding
may be made by the Lender upon Borrowers by registered or certified mail
directed to Borrowers at their address referenced herein, Borrowers hereby
waiving personal service thereof, and (iii) within thirty (30) days after
such mailing Borrowers shall appear or answer to any summons and complaint
or other process, and should Borrowers fail to appear to answer within
said thirty (30) day period, it shall be deemed in default and judgment
may be entered by the Lender against Borrowers for the amount as demanded
in any summons or complaint or other process so served.
15. WAIVER OF THE RIGHT TO TRIAL BY JURY. Borrowers hereby irrevocably waive
the right to trial by jury in any action, proceeding, claim, or
counterclaim, whether in contract or tort, at law or in equity, in any
manner connected with this note or any transactions hereunder.
IN WITNESS WHEREOF, Borrowers have caused this Note to be executed and delivered
as of the day and year and at the place first above written.
BROOKLYN CHEESECAKE & DESSERTS, INC.,
formerly known as CREATIVE BAKERIES, INC.
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By: Anthony Merante, Chief Financial Officer
J.M. SPECIALTIES, INC.,
A NEW JERSEY CORPORATION
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By:
CONFIRMATION
IN WITNESS WHEREOF, on behalf of and upon due authorization from the Board of
Directors of Brooklyn Cheesecake & Desserts, Inc., formerly known as Creative
Bakeries, Inc. ("Corporation"), the director below has read and understands, and
hereby approves, confirms, and ratifies this Note on behalf of the Board of
Directors as of the date first written above; and the director below further
approves, confirms, and ratifies on behalf of the Board of Directors the
execution and delivery of this Note and all the acts by Anthony Merante
performed on behalf of the Corporation in connection with this Note.
By:
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Name: Carmelo L. Foti
Title: Director
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