Development Advance Promissory Note - NRT Inc. and Coldwell Banker Real Estate Corp.
DEVELOPMENT ADVANCE PROMISSORY NOTE
$18,750,000 Parsippany, New Jersey
Dated: September 1, 1997
1. FOR GOOD AND VALUABLE CONSIDERATION, the undersigned NRT INCORPORATED
("Maker") promises to pay to COLDWELL BANKER REAL ESTATE CORPORATION or its
successors or assigns ("Holder"), or order, on August 14, 2037, at 6 Sylvan Way,
Parsippany, New Jersey, or at such other place as Holder may from time to time
designate, in writing, the principal sum of $18,750,000 (the "Principal"), which
amount shall, except as set forth below, bear no interest.
2. If Maker is not in material default with respect to its obligations under
any franchise or membership agreement with Holder or any affiliate thereof
(including Century 21 Real Estate Corporation and ERA Franchise Systems, Inc.),
as each may be amended from time to time (the "Franchise Agreements") (including
payment of Royalties and Advertising Fees thereunder) $39,062.50 of the
Principal (the "Monthly Principal") shall be forgiven on September 14, 1997 and
on the fourteenth day of each month until August 14, 2037. On each such date,
to the extent no Monthly Principal has been forgiven on such date as provided
for herein, an amount of Principal equal to the Monthly Principal shall become
due and payable. In the event Maker fails to make any payment when due,
including any payment due upon acceleration of this Note, the entire outstanding
Principal shall thereafter bear simple interest at a rate equal to the lesser of
fifteen percent (15%) per annum or the highest rate allowed by law from its due
date until paid in full.
3. All payments shall be made in lawful money of the United States of America
without set-off, offset, recoupment, deduction or counterclaim of any kind
whatsoever. Payments, when made, shall first be applied to accrued and unpaid
interest, if any, and then to Principal.
4. Maker may prepay this Note in whole or in part on any date without premium
or penalty. No partial prepayment shall extend or postpone the due date of any
subsequent installment payment or change the amount of the installment payment.
Prepayments will be applied without notation on this Note.
5. Holder of this Note may determine that Maker is in default and may
accelerate the unpaid Principal and all interest accrued thereon to become
immediately due and payable, without presentment for payment or any notice or
demand, (A) if Maker (i) suspends business; (ii) becomes insolvent or offers
settlement to any creditors; (iii) files a petition in bankruptcy, either
voluntary or involuntary; (iv) institutes any proceeding under any bankruptcy or
insolvency laws relating to the relief of debtors or (v) makes an assignment for
the benefit of creditors, (B) upon material breach of any of the Franchise
Agreements or (C) upon termination of any of the Franchise Agreements. For the
purposes of this Note, a material breach of a Franchise Agreement shall mean
that Maker shall have been given notice of a default thereunder which would
constitute grounds for termination under such agreement in accordance with the
terms of such agreement, and, as to those defaults for which the Maker is
afforded an opportunity to cure pursuant to such agreement, Maker shall have
failed to make such cure within the applicable period provided. Maker's
obligation to pay the Principal and interest thereon, if accelerated, shall be
absolute and unconditional, and shall not be subject to any rights of set-off,
offset or recoupment.
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6. Holder of this Note may determine that Maker is in default and may
accelerate the unpaid Principal and all interest accrued thereon to become
immediately due and payable, without presentment for payment or any notice or
demand, if Maker fails to maintain a minimum gross commission income in any
continuous rolling twelve month period during the term of this Note of
$425,000,000. The rolling twelve month average will be calculated commencing on
the date hereof and include the previous twelve months; thereafter the GCI test
will be calculated on the same basis each following month. For purposes of this
paragraph only, Maker will receive credit for GCI from Maker's offices that are
sold during the term of this Note so long as the sold offices remain affiliated
with one or more of the franchised real estate brands owned by HFS Incorporated
(currently Coldwell Banker, Century 21 and ERA). Maker will only receive credit
under this paragraph for GCI earned on offices that were operating as of May 31,
1996 (it being understood that such offices were at such time being operated by
National Realty Trust) (the "Measurement Offices"). Commencing on September 30,
1997 and continuing on the thirtieth day of each month thereafter, Holder will
review the GCI for each of the Measurement Offices to ensure that the combined
GCI for all such offices maintains the required twelve month rolling average.
7. Maker agrees to pay all expenditures made in any attempt to collect any
amounts due pursuant to this Note. If any legal action is necessary to enforce
or collect this Note, the prevailing party shall be entitled to reasonable
attorney's fees (including in-house attorneys) and court costs and all costs of
collection in addition to any other relief to which that party may be entitled.
8. Maker hereby waives, to the fullest extent permitted by law, diligence,
demand, notice of demand, presentment for payment, notice of non-payment, notice
of dishonor, protest and notice of protest. The claiming of any statute of
limitations as a defense to any demand against Maker is expressly waived by
Maker.
9. This Note shall be construed and enforced in accordance with the laws of the
State of New Jersey. The terms of this Note are confidential and will not be
disclosed to any third party by Maker without the prior written consent of
Holder, unless otherwise required by law.
10. This Note shall be binding upon Maker and its heirs, executors, personal
representatives, successors and assigns and shall inure to the benefit of Holder
and its successors and assigns. This Note shall not be assignable by Maker
without the prior written consent of Holder.
IN WITNESS WHEREOF, the undersigned Maker has executed this Note as of the
date first set forth above.
NRT INCORPORATED
By: /s/ Thomas J. Freeman
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Name: Thomas J. Freeman
Title: Senior Vice President
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Holder acknowledges that this Note replaces the Promissory Note, dated January
14, 1997, executed by National Realty Trust and Coldwell Banker Residential
Brokerage Corporation in favor of Coldwell Banker Residential Affiliates, Inc.,
in the principal amount of $20,000,000, which promissory note is hereby
cancelled with no further obligations thereunder.
Coldwell Banker Real Estate Corporation (formerly
Coldwell Banker Residential Affiliates, Inc.)
By: /s/ John Kornfeind
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Name: John Kornfeind
Title:
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