Exhibit 10.5

PROMISSORY NOTE

(Note 2)

 

$6,300,000.00    Eagan, Minnesota    December 2, 2016

FOR VALUE RECEIVED, the undersigned, FAMOUS DAVE’S OF AMERICA, INC., a Minnesota
corporation, D&D OF MINNESOTA, INC., a Minnesota corporation, FAMOUS DAVE’S RIBS
OF MARYLAND, INC., a Minnesota corporation, FAMOUS DAVE’S RIBS, INC., a
Minnesota corporation, FAMOUS DAVE’S RIBS-U, INC., a Minnesota corporation, and
LAKE & HENNEPIN BBQ & BLUES, INC., a Minnesota corporation (collectively the
“Borrower”), agrees and promises to pay to the order of VENTURE BANK, a
Minnesota banking corporation, its endorsees, successors and assigns (“Lender”),
at its principal office at 2640 Eagan Woods Drive, Eagan, Minnesota or such
other place as the Lender may from time to time designate, the principal sum of
six million three hundred thousand and no/100 dollars ($6,300,000.00) or so much
as may from time to time be disbursed, together with interest, upon the
following terms and conditions:

Section 1. Definitions. For the purposes of this Note the following terms have
the following meanings:

 

  (a) “Basis Points” means an arithmetic expression of a percentage measured in
hundredths of a percent (e.g. 50 Basis Points equals fifty hundredths of one
percent).

 

  (b) “Business Day” means any day in that national banks are open for business
in Minnesota other than a Saturday, Sunday or any federal or State of Minnesota
holiday.

 

  (c) “Collateral” shall mean certain property of the Borrower, as more fully
described in the Security Agreement.

 

  (d) “LIBOR Rate” shall mean the rate of interest from time to time published
in The Wall Street Journal as publicly announced by the British Bankers’
Association on a daily basis as the LIBOR One-Month Rate (London Interbank
Offered Rate). A change in the LIBOR Rate shall be deemed to occur as of the
date of announcement of such change by The Wall Street Journal and the interest
rate shall be adjusted as of that date. If publication of the LIBOR One-Month
Rate in the Wall Street Journal is discontinued, Lender shall select a new rate.

 

  (e) “Loan Agreement” means the loan agreement of even date herewith between
Borrower and Lender together with any amendments or supplements.

 

  (f) “Loan Documents” means this Note, Mortgage, Loan Agreement and any other
documents related to the loan evidenced by this Note.

 

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  (g) “Loan Year” means a 12 month period starting from the date of this Note
and each anniversary date thereafter. For example, Loan Year 2 is the period
from December 2, 2017 through December 2, 2018.

 

  (h) “Maturity Date” means December 2, 2023.

 

  (i) “Note” means this promissory note together with any amendments or
supplements.

 

  (j) “Mortgage” means the mortgage and security agreement and fixture financing
statement(s) of even date herewith given by the Borrower to the Lender
mortgaging the Premises and granting a security interest in the personal
property as described in the mortgage together with any amendments or
supplements.

 

  (k) “Pledge Agreement” shall mean the Pledge Agreement of even date herewith
given by the Borrower to the Lender granting a security interest in the Pledged
Collateral of Borrower.

 

  (l) “Pledged Collateral” shall mean certain property of the Borrower, as more
fully described in the Pledge Agreement.

 

  (m) “Premises” means certain parcel(s) of land and improvements situated in
the City of Coon Rapids, County of Anoka, the Cities of Minnetonka and Plymouth,
County of Hennepin, and the City of Woodbury, County of Washington, State of
Minnesota, all as more fully described in the Mortgage referred to in this Note.

 

  (n) “Principal Balance” means the outstanding sums of money disbursed by the
Lender pursuant to this Note.

 

  (o) “Security Agreement” shall mean the Security Agreement of even date
herewith given by the Borrower to the Lender granting a security interest in the
Collateral of Borrower.

 

  (p) “Term” means the period over which this Note is to be paid.

 

  (q) “Transfer” has the meaning set forth in the Loan Agreement.

Section 2. Disbursements. Disbursements under this Note are to be made pursuant
to the terms and conditions of the Loan Agreement.

Section 3. Payment. This Note is payable as follows:

 

  (a) Commencing on January 2, 2017 and on the second (2nd) day of each month
thereafter, up to the Maturity Date, Borrower will pay monthly installments of
principal and interest then accrued on the Principal Balance based on a seven
(7) year amortization period as of the date of this Note. Payments are subject
to change quarterly, from loan origination, based upon adjustments to the
interest rate as described in Section 4(b) below and fluctuations in the
principal balance over the term of the loan.

 

  (b) On the Maturity Date, the entire Principal Balance plus accrued interest
and all other charges and sums due under this Note will be due and payable in
full.

 

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Section 4. Interest Rate. The Principal Balance of this Note outstanding at the
close of each day will bear interest at the following per annum rates of
interest:

 

  (a) Interest Rate. Except as set forth to the contrary in this Section 4, from
the date of this Note, the Principal Balance of this Note outstanding at the
close of each day will bear interest at a definite and certain but fluctuating
per annum rate of interest, adjusted monthly, equal to the LIBOR Rate plus three
hundred twenty-five (325) Basis Points. The LIBOR Rate used to determine the
interest rate shall be calculated by using the LIBOR Rate in effect as of the
second (2nd) day of each month.

 

  (b) Variable Interest Rate. Whenever increases occur in the interest rate,
Lender, at its option, may do one or more of the following: (A) increase
Borrower’s payments to ensure Borrower’s loan will pay off on its original final
maturity date, (B) increase Borrower’s payments to cover accruing interest,
(C) increase the number of Borrower’s payments, or (D) continue Borrower’s
payments at the same amount and increase Borrower’s final payment.

 

  (c) Minimum Interest Rate. Notwithstanding anything to the contrary contained
in Section 4(a) above, at no time will the per annum rate of interest payable on
the Principal Balance of this Note be less than a per annum rate of interest of
three and 75/100ths percent (3.75%).

 

  (d) Default Rate. If a Default occurs under this Note then, at the option of
the Lender, the interest rate on this Note shall be increased by adding an
additional 6.000 percentage point margin (“Default Rate Margin”). The Default
Rate Margin shall also apply to each succeeding interest rate change that would
have applied had there been no default whether or not the Lender has exercised
its option to accelerate the maturity of this Note and declare the entire
Principal Balance due and payable. However, in no event will the interest rate
exceed the maximum interest rate limitations under applicable law.

Section 5. Basis of Computation. Interest will be calculated by multiplying the
actual number of days elapsed in the period for which interest is being
calculated by a daily rate based on a 360 day year.

Section 6. Late Charge. If any payment under this Note is ten (10) days or more
late, Borrower acknowledges and agrees to pay Lender a late charge (“Late
Charges”) of five percent (5%) of unpaid portion of the regularly scheduled
payment or $50.00, whichever is greater, to defray the costs of Lender incident
to collecting such late payment. This Late Charge will apply individually to all
payments past due and there will be no daily pro rata adjustment. This provision
will not be deemed to excuse a late payment or be deemed a waiver of any other
rights the Lender may have including the right to declare the entire Principal
Balance and interest immediately due and payable.

 

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Section 7. Application of Payments. Unless otherwise agreed or required by
applicable law, payments will be applied first to any accrued unpaid interest;
then to Principal Balance; then to any prepayment premium; then to any unpaid
Costs of Collection; and then to any Late Charges. Borrower will pay Lender at
Lender’s address shown above or at such other place as Lender may designate in
writing. If any payment of the Principal Balance, interest, Late Charges or
other sum to be made under this Note becomes due and payable on a day other than
a Business Day, the due date of such payment will be extended to the next
succeeding Business Day and interest will be payable at the applicable interest
rate during such extension. Upon a Default, any monies received will, at the
option and direction of the Lender, be applied to any sums due under this Note
or any instrument securing this Note in such order and priority as the Lender
determines.

Section 8. Prepayment. Borrower may voluntarily prepay the entire Principal
Balance of this Note any time without incurring any additional prepayment
premium.

Section 9. Security. This Note is the Note referred to in and secured by (a) the
Mortgage, (b) an Assignment of Rents and Leases given by the Borrower to Lender
(“Assignment”), (c) the Security Agreement, (d) the Pledge Agreement, and
(e) other security agreements, guaranties or instruments described in the Loan
Agreement (“Other Security Instruments”).

Section 10. Default. Each of the following will constitute a “Default” under
this Agreement: any “Event of Default” as defined in the Loan Agreement. Upon
the occurrence of Default, Lender will have all remedies available under the
Loan Agreement, the other Loan Documents, at law or in equity.

Section 11. Time of Essence. Time is of the essence. No delay or omission on the
part of the Lender in exercising any right under this Note will operate as a
waiver of such right or of any other remedy under this Note. A waiver on any one
occasion will not be construed as a bar to or waiver of any such right or remedy
on a future occasion.

Section 12. Costs of Collection. In the event of any Default, the Borrower
agrees to pay the costs of collection including reasonable attorney’s fees and
costs, all other costs and fees incurred in litigation, mediation, bankruptcy
and administrative proceedings and all appeals and all other costs and expenses
incurred in the collection of the amounts due under this Note (“Costs of
Collection”).

Section 13. Waiver of Presentment, Etc. Presentment for payment, protest and
notice of non-payment are waived. Consent is given to any extension or
alteration of the time or terms of payment, any renewal, any release of any part
or all of the security, any acceptance of additional security of any kind, and
any release of, or resort to any party liable for payment under this Note. To
the extent permitted by law, all rights and benefits of any statute of
limitations, and any moratorium, reinstatement, marshaling, forbearance,
valuation, stay, extension, redemption, appraisement, exemption and homestead
laws are waived.

 

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Section 14. Savings Clause. It is expressly stipulated and agreed to be the
intent of Borrower and Lender at all times to comply with applicable state law
or applicable United States federal law (to the extent that it permits Lender to
contract for, charge, take, reserve, or receive a greater amount of interest
than permitted under state law) and that this section controls every other
covenant and agreement in this Note and any other Loan Documents. If the
applicable law is ever judicially interpreted so as to render usurious any
amount called for under this Note or under any other Loan Documents, or
contracted for, charged, taken, reserved, or received with respect to the
indebtedness evidenced by this Note (“Indebtedness”), or if Lender’s exercise of
the option to accelerate the maturity of this Note, or if any prepayment by
Borrower results in Borrower having paid any interest in excess of that
permitted by applicable law, then it is Borrower’s and Lender’s express intent
that all excess amounts previously collected by Lender will be credited on the
Principal Balance of this Note and all other Indebtedness (or, if this Note and
all other Indebtedness have been or would have been paid in full, refunded to
Borrower), and the provisions of this Note and the other Loan Documents will
immediately be deemed reformed and the amounts collectible after the reformation
will be reduced, without the necessity of the execution of any new documents, so
as to comply with the applicable law, but so as to permit the recovery of the
fullest amount otherwise called for under the documents. All sums paid or agreed
to be paid to Lender for the use, forbearance, or detention of the Indebtedness
will, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full stated term of the Indebtedness until
payment in full so that the rate or amount of interest on account of the
Indebtedness does not exceed the maximum lawful rate from time to time in effect
and applicable to the Indebtedness for so long as the Indebtedness is
outstanding. Notwithstanding anything to the contrary contained in this Note or
in any of the other Loan Documents, it is not the intention of Lender to
accelerate the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.

Section 15. Acceleration on Sale or Encumbrance. In the event of a Transfer
without the written consent of the Lender being first obtained, whether
voluntarily, involuntarily or by operation of law, then at the sole option of
the Lender, the Lender may upon notice to the Borrower declare the entire
Principal Balance together with accrued interest, due and payable in full. A
consent by the Lender as to any one Transfer will not be deemed to be a waiver
of the right to require consent to a future Transfer. Whether or not consented
to by Lender, Borrower must give Lender written notice of any Transfer within
fifteen (15) days after a Transfer.

Section 16. Consent to Jurisdiction. The Borrower submits and consents to
personal jurisdiction of the Courts of the State of Minnesota and Courts of the
United States of America sitting in such State for the enforcement of this
instrument and waives any and all personal rights under the laws of any state or
the United States of America to object to jurisdiction in the State of
Minnesota. Litigation may be commenced in any state court of general
jurisdiction for the State of Minnesota or the United States District Court
located in that state, at the election of the Lender. Nothing contained in this
Note will prevent Lender from bringing any action against any other party or
exercising any rights against any security given to Lender, or against the
Borrower personally, or against any property of the Borrower, within any other
state. Commencement of any such action or proceeding in any other state will not
constitute a waiver of consent to jurisdiction or of the submission made by the
Borrower to personal jurisdiction within the State of Minnesota.

 

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Section 17. Notices. Any notices and other communications permitted or required
by the provisions of this Note (except for telephonic notices expressly
permitted) must be in writing and will be deemed to have been properly given or
served by depositing the same with the United States Postal Service, or any
official successor, designated as Certified Mail, Return Receipt Requested,
bearing adequate postage, or deposited with reputable private courier or
overnight delivery service, and addressed as provided below. Each such notice
will be effective upon being deposited or delivered as aforesaid. The time
period within which a response to any such notice must be given, however, will
commence to run from the date of receipt of the notice by the addressee.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given will be deemed to be receipt of the
notice sent. By giving to the other party at least ten (10) days’ notice, either
party will have the right from time to time to change its address and will have
the right to specify as its address any other address within the United States
of America.

Each notice to Lender will be addressed as follows:

Venture Bank

2640 Eagan Woods Drive

Eagan, MN 55121

Attn: Bryan Frandrup

Phone No:         (651) 289-2222

Fax No.:            (651) 289-0200

Each notice to Borrower will be addressed as follows:

Famous Dave’s of America, Inc.

D&D of Minnesota, Inc.

Famous Dave’s Ribs of Maryland, Inc.

Famous Dave’s Ribs, Inc.

Famous Dave’s Ribs-U, Inc.

Lake & Hennepin BBQ & Blues, Inc.

12701 Whitewater Drive, Suite 200

Minnetonka, MN 55343

Attn: Chief Executive Officer

Phone No:         (952) 294-1300

Fax No.:            (        )                     

Section 18. Governing Law. Notwithstanding the place of execution of this
instrument, the parties to this instrument have contracted for Minnesota law to
govern this instrument and it is agreed that this instrument is made pursuant to
and will be construed and governed by the laws of the State of Minnesota without
regard to principles of conflicts of laws. The extension of credit under this
Note is made under Section 47.59 of Minnesota Statutes.

Section 19. Adjustable Rate. This Note provides for adjustments in its interest
rate.

 

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Section 20. Waiver of Jury Trial. THE BORROWER WAIVES TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING TO WHICH ANY PARTIES TO THIS INSTRUMENT ARE INVOLVED
DIRECTLY OR INDIRECTLY AND ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO OR
CONNECTED WITH THIS INSTRUMENT OR THE RELATIONSHIP ESTABLISHED UNDER THIS
INSTRUMENT, AND WHETHER ARISING OR ASSERTED BEFORE OR AFTER THE DATE OF THIS
INSTRUMENT.

Section 21. Right of Set-Off. To the extent permitted by applicable law, Lender
reserves a right of setoff in all Borrower’s accounts with Lender (whether
checking, savings, or some other account). This includes all accounts Borrower
holds jointly with someone else and all accounts Borrower may open in the
future. However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the indebtedness against any and all such accounts, and, at Lender’s
option, to administratively freeze all such accounts to allow Lender to protect
Lender’s charge and setoff rights provided in this paragraph.

(signature page follows)

 

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IN WITNESS WHEREOF, Borrower has caused this Promissory Note to be duly executed
by its authorized representative, all on the date and year first written above.

 

BORROWER:

FAMOUS DAVE’S OF AMERICA, INC.,

a Minnesota corporation,

By:  

/s/ Dexter Newman

  Dexter Newman, its Chief Financial Officer

D&D OF MINNESOTA, INC.,

a Minnesota corporation,

By:  

/s/ Dexter Newman

  Dexter Newman, its Chief Financial Officer

FAMOUS DAVE’S RIBS OF MARYLAND, INC.,

a Minnesota corporation,

By:  

/s/ John P. Beckman

  John P. Beckman, its President

FAMOUS DAVE’S RIBS, INC.,

a Minnesota corporation,

By:  

/s/ Dexter Newman

  Dexter Newman, its Chief Financial Officer

signature page to Promissory Note 2

-re: Famous Dave’s Loan

 

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FAMOUS DAVE’S RIBS-U, INC.,

a Minnesota corporation,

By:  

/s/ Dexter Newman

  Dexter Newman, its Chief Financial Officer

LAKE & HENNEPIN BBQ & BLUES, INC.,

a Minnesota corporation,

By:  

/s/ Dexter Newman

  Dexter Newman, its Chief Financial Officer

signature page to Promissory Note 2

-re: Famous Dave’s Loan

 

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