Promissory Note - NERC LP and FFCA Acquisition Corp.
FORM OF PROMISSORY NOTE
Dated as of August 6, 1997
$1,950,000.00 Scottsdale, Arizona
NERC LIMITED PARTNERSHIP, a Delaware limited partnership ("Debtor"), for
value received, hereby promises to pay to FFCA ACQUISITION CORPORATION, a
Delaware corporation ("FFCA"), whose address is 17207 North Perimeter Drive,
Scottsdale, Arizona 85255, or order, on or before September 1, 2017, as herein
provided, the principal sum of ONE MILLION NINE HUNDRED FIFTY THOUSAND AND
00/100 DOLLARS ($1,950,000.00), and interest on the unpaid principal amount of
this Note from the date hereof to maturity at the rate of 9.67% per annum. (the
"Base Interest Rate") on the basis of a 360-day year of twelve 30-day months,
such principal and interest to be paid in immediately available funds and in
lawful money of the United States,
Initially capitalized terms which are not otherwise defined in this Note
shall have the meanings set forth in that certain Loan Agreement dated as of the
date of this Note between Debtor and FFCA (the "Loan Agreement").
Interest on the principal amount of this Note for the period commencing
with the date set forth above through the last day in the month in which this
Note is dated shall be due and payable upon execution of this Note. Thereafter,
principal and interest shall be payable in consecutive monthly installments of
EIGHTEEN THOUSAND THREE HUNDRED NINETY-THREE AND 58/100 DOLLARS ($18,393.58)
commencing on October 1, 1997, and continuing on the first day of each month
thereafter until maturity of this Note on September 1, 2017, at which time, the
outstanding principal and unpaid accrued interest shall be due and payable.
Prior to the fifth anniversary of this Note, except as expressly permitted
below, Debtor may not prepay this Note. From and after the fifth anniversary of
this Note, Debtor may prepay this Note in full, but not in part, including all
accrued but unpaid interest hereunder and all sums advanced by FFCA pursuant to
the Loan Documents, provided that (i) no default is continuing under this Note
and no "Event of Default" is continuing under any of the other Loan Documents,
(ii) any such prepayment shall only be made on a regularly scheduled payment
date upon not less than 30 days prior written notice from Debtor to FFCA, and
(iii) any such prepayment shall be made together with payment of a prepayment
premium equal to:
(a) 5% of the amount prepaid if the prepayment is made on or
following the fifth anniversary of this Note but prior to the sixth
anniversary of this Note;
(b) 4% of the amount prepaid if the prepayment is made on or
following the sixth anniversary of this Note but prior to the seventh
anniversary of this Note;
(c) 3% of the amount prepaid if the prepayment is made on or
following the seventh anniversary of this Note but prior to the eighth
anniversary of this Note;
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(d) 2% of the amount prepaid if the prepayment is made on or
following the eighth anniversary of this Note but prior to the ninth
anniversary of this Note; and
(e) 1% of the amount prepaid if the prepayment is made on or
following the ninth anniversary of this Note but prior to the tenth
anniversary of this Note.
If this Note is prepaid on or following the tenth anniversary of this Note there
shall be no prepayment premium.
The foregoing prepayment premium shall be due and payable if this Note is
prepaid prior to the tenth anniversary of this Note regardless of whether such
prepayment is the result of a voluntary prepayment by Debtor or as a result of
FFCA declaring the unpaid principal balance of this Note, accrued interest and
all other sums due under this Note, the Mortgage encumbering the
Premises corresponding to this Note, the other Loan Documents and any other
document further securing this Note, due and payable as contemplated below (the
"Acceleration"); provided, however, the prohibition on prepayment and such
prepayment premium shall not be applicable with respect to a prepayment of this
Note as a result of the application of condemnation or casualty proceeds as
contemplated by the Mortgage encumbering the Premises corresponding to this Note
or as contemplated by the Loan Agreement as a result of a breach of the Fixed
Charge Coverage Ratio. If this Note is prepaid as a result of an Acceleration
prior to the fifth anniversary of this Note, except as expressly contemplated in
the preceding sentence and in the following paragraph, a prepayment premium of
5% of the principal amount prepaid shall be due and payable to FFCA by Debtor at
the time of such prepayment.
Notwithstanding the foregoing, if, prior to the fifth anniversary of the
date of this Note, Debtor and NE Restaurant Company, Inc., a Delaware
corporation ("Company"), complete the sale or transfer of all or substantially
all of their assets to an independent third party or complete the sale or
transfer of all of the partnership interests of Debtor and the stock of company
to an independent third party, Debtor may prepay this Note in full, but not in
part, including all accrued but unpaid interest hereunder and all sums advanced
by FFCA pursuant to the Loan Documents, provided that (i) no default is
continuing under this Note and no "Event of Default" is continuing under any of
the other Loan Documents, (ii) any such prepayment shall only be made on a
regularly scheduled payment date upon not less than 30 days prior written notice
from Debtor to FFCA, and (iii) any such prepayment shall be made together with
payment of a prepayment premium equal to the Yield Maintenance Amount. "Yield
Maintenance Amount" means the difference between (a) the present value computed
at the Reinvestment Rate (as defined below) of the stream of monthly principal
and interest payments calculated at the Base Interest Rate from the date of
prepayment through the scheduled maturity date and (b) the unpaid principal
amount of this Note; provided, however, if such difference is a negative number,
the Yield Maintenance Amount shall be zero. "Reinvestment Rate" means an
interest rate equal to 100 basis points above the current yield of United States
Treasury Bonds, Notes and Bills having a weighted average life to maturity
closest to the regularly scheduled maturity date of this Note.
Upon execution of this Note, Debtor shall establish arrangements whereby
all payments of principal and interest hereunder are transferred by wire or
other means directly from Debtor's bank account to such account as FFCA may
designate or as FFCA may otherwise designate. Each payment of principal and
interest hereunder shall be applied first toward any past due payments under
this Note (including payment of in costs (as herein defined)), then to accrued
interest, and the balance, after the payment of such accrued interest, if any,
shall be applied to the unpaid principal balance of this Note; provided,
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however, each payment hereunder while a default under this Note has occurred and
is continuing shall be applied towards any of Debtor's obligations under the
Loan Documents or with respect to the Premises in such priority and amounts as
FFCA in its sole discretion may determine.
This Note is secured by the Mortgages. If any principal, interest or other
monetary sum due under this Note is not paid within five days after the date
when due and FFCA shall have given Debtor notice thereof and a period of five
days from the delivery of such notice shall have elapsed without such past-due
sum being paid, or upon the occurrence of an "Event of Default" under any of the
Loan Documents, then, in any of such events, time being of the essence hereof,
FFCA may declare the entire unpaid principal balance of this Note, accrued
interest, if any, and all other sums due under this Note, the Mortgages, the
other Loan Documents and any other document further securing this Note, due and
payable at once without written notice to Debtor.
All past-due principal and/or interest shall bear interest from the
due date to the date of actual payment at the lesser of the highest rate for
which the undersigned may legally contract, or the rate of 18% per annum (the
"Default Rate"), and such Default Rate shall continue to apply following a
judgment in favor of FFCA under this Note. If Debtor fails to make any payment
or installment due under this Note within five days of its due date, Debtor
shall pay to FFCA in addition to any other sum due FFCA under this Note or any
other Loan Document a late charge equal to 5% of such past-due payment or
installment.
All payments of principal and interest due hereunder shall be made (i)
without deduction of any present and future taxes, levies, imposts, deductions,
charges or withholdings, which amounts shall be paid by Debtor, and (ii) without
any other right of abatement, reduction, setoff, defense, counterclaim,
interruption, deferment or recoupment for any reason whatsoever. Debtor will pay
the amounts necessary such that the gross amount of the principal and interest
received by FFCA is not less than that required by this Note.
No delay or omission on the part of FFCA in exercising any remedy, right or
option under this Note shall operate as a waiver of such remedy, right or
option. In any event, a waiver on any one occasion shall not be construed as a
waiver or bar to any such remedy, right or option on a future occasion.
Debtor hereby waives presentment, demand for payment, notice, of dishonor,
notice of protest, and protest, and all other notices or demands in connection
with delivery, acceptance, performance, default or endorsement of this Note.
All notices, consents, approvals or other instruments required or
permitted to be given by either party pursuant to this Note shall be in writing
and given by (i) hand delivery, (ii) facsimile, (iii) express overnight delivery
service or (iv) certified or registered mail, return receipt requested, and
shall, be deemed to have been delivered upon (a) receipt, if hand delivered, (b)
transmission, if delivered by facsimile, (c) the next business day, if delivered
by express overnight delivery service, or (d) the third business day following
the day of deposit of such notice with the United States Postal Service, if sent
by certified or registered mail, return receipt requested. Notices shall be
provided to the parties and addresses (or facsimile numbers, as applicable)
specified below:
If to Debtor: 300 Pond Street
Randolph, MA 02368
Attention: Mr. Paul Hoagland
Telephone: (617) 986-4600
Telecopy: (617) 986-0358
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with a copy to: Brown, Rudnick, Freed and Gesmer
One Financial Center
Boston, MA 02111
Attention: Carl E. Axelrod, Esq.
Telephone: (617) 856-8200
Telecopy: (617) 856-8201
If to FFCA: Dennis L. Ruben, Esq.
Executive Vice President and General
Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
or to such other address or such other person as either party may from time to
time hereafter specify to the other party in a notice delivered in the manner
provided above.
Should any indebtedness represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection after default, Debtor shall pay, in
addition to the principal and interest due and payable hereon, all costs of
collecting or attempting to collect this Note (the "Costs"), including
reasonable attorneys' fees and expenses of FFCA (including those fees and
expenses incurred in connection with any appeal and those expenses (but not
fees) of FFCA's in-house counsel) whether or not a judicial action is commenced
by FFCA.
This Note may not be amended or modified except by a written agreement duly
executed by Debtor and FFCA. In case any one or more of the provisions contained
in this Note shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Note, and this Note shall be construed as if such
provision bad never been contained herein or therein.
Notwithstanding anything to the contrary contained in any of the Loan
Documents, the obligations of Debtor to FFCA under this Note and any Loan
Documents are subject to the limitation that payments of interest and late
charges to FFCA shall not be required to the extent that receipt of any such
payment by FFCA would be contrary to provisions of applicable law limiting the
maximum rate of interest that may be charged or collected by FFCA. The portion
of any such payment received by FFCA that is in excess of the maximum interest
permitted by such provisions of law shall be credited to the principal balance
of this Note or if such excess portion exceeds the outstanding principal balance
of this Note, then such excess portion shall be refunded to Debtor. All interest
paid or agreed to be paid to FFCA shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and/or spread throughout the full term of
this Note (including, without limitation, the period of any renewal or extension
thereof) so that interest for such full term shall not exceed the maximum amount
permitted by applicable law.
It is the intent of the parties hereto that the business relationship
created by this Note and the other Loan Documents is solely that of creditor and
debtor and has been entered into by both parties in reliance upon the economic
and legal bargains contained in the Loan Documents. None of the agreements
contained in the Loan Documents is intended, nor shall the same be deemed or
construed, to create a partnership between FFCA and Debtor, to make them joint
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venturers, to make Debtor an agent, legal representative, partner, subsidiary or
employee of FFCA, nor to make FFCA in any way responsible for the debts,
obligations or losses of Debtor. Debtor acknowledges that FFCA (or any affiliate
of FFCA) and Franchisor are not affiliates, agents, partners or joint venturers,
nor do they have any other legal, representative or fiduciary relationship other
than debtor/creditor and/or landlord/tenant relationships unrelated to the
transactions contemplated by the Loan Documents.
FFCA, by accepting this Note, and Debtor acknowledge and warrant to each
other that each has been represented by independent counsel and Debtor has
executed this Note after being fully advised by said counsel as to its effect
and significance. This Note shall be interpreted and construed in a fair and
impartial manner without regard to such factors as the party which prepared the
instrument, the relative bargaining powers of the parties or the domicile of any
party.
Debtor acknowledges that this Note was substantially negotiated in the
State of Arizona, the executed Note was delivered in the State of Arizona, all
payments under this Note will be delivered in the State of Arizona and there are
substantial contacts between the parties and the transactions contemplated
herein and the State of Arizona. For purposes of any action or proceeding
arising out of this Note, the parties hereto expressly submit to the
jurisdiction of all federal and state courts locked in the State of Arizona.
Debtor consents that it may be served with any process or paper by registered
mail or by personal service within or without the State of Arizona in accordance
with applicable law. Furthermore, Debtor waives and agrees not to assert in any
such action, suit or proceeding that it is not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum or that venue of the action, suit or proceeding is
improper. It is the intent of Debtor and PFCA that all provisions of this Note
shall be governed by and construed under the laws of the State of Arizona.
Nothing contained in this paragraph shall limit or restrict the right of FFCA to
commence any proceeding in the federal or state courts located in the state in
which the Premises corresponding to this Note is located to the extent FFCA
deems such proceeding necessary or advisable to exercise remedies available
under the Loan Documents.
FFCA, BY ACCEPTING THIS NOTE, AND DEBTOR HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM
BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH
RESPECT TO ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS NOTE, THE
RELAT1ONSHIP OF FFCA AND DEBTOR, DEBTOR'S USE OR OCCUPANCY OF THE PREMISES
CORRESPONDING TO THIS NOTE, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT
EITHER MAY HAVE TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL
ASPECT OF THEIR BARGAIN. FURTHERMORE, DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES FROM FFCA WITH RESPECT TO ANY AND ALL ISSUES
PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY DEBTOR
AGAINST FFCA OR ITS SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS NOTE OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO.
THE WAIVER BY DEBTOR OF ANY RIGHT IT MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL,
SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
This obligation shall bind Debtor and its successors and assigns, and the
benefits hereof shall inure to FFCA and its successors and assigns. FFCA may
assign its rights under this Note as set forth in the Loan Agreement.
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IN WITNESS WHEREOF, Debtor has executed delivered this Note under seal
effective as of the date first set forth above.
DEBTOR:
NERC LIMITED PARTNERSHIP,
a Delaware limited partnership
By NERC SPE Inc.,
a Delaware corporation,
its general partner
By
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[SEAL] Paul V. Hoagland
Vice President Finance and
Assistant Treasurer