EXHIBIT 10.17
PROMISSORY NOTE
BORROWER: OCM Development, LLC LENDER: Independent Bank West Michigan
0000 X. Xxxxxxxx Xxxxxx, 0000 X. Xxxxxxxx XX
Xxxxx 000 Xxxxx Xxxxxx, XX 00000
Xxxxx Xxxxxx, XX 00000 (000) 000-0000
PRINCIPAL AMOUNT: _________ INITIAL RATE: _________ DATE OF NOTE: __________
PROMISE TO PAY. OCM Development, LLC ("Borrower") promises to pay Independent
Bank West Michigan ("Lender"), or order, in lawful money of the United States of
America, the principal amount of __________________ ($___________) or so much as
may be outstanding, together with interest on the unpaid outstanding principal
balance of each advance. Interest shall be calculated from the date of each
advance until repayment of each advance. The interest rate will not increase
above 24.000%.
PAYMENT: Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in accordance with the following payment schedule: 6
monthly consecutive interest payments, beginning ____________, with interest
calculated on the unpaid principal balances at an interest rate based on the
National Prime Rate, as published in the Wall Street Journal from time to time,
{if published in a range, the highest number in the range will be used}
(currently ______), resulting in an initial interest rate of _____%; and one
principal and interest payment of $_________ on ___________ with interest
calculated on the unpaid principal balances at an interest rate based on the
National Prime Rate, as published in the Wall Street Journal from time to time,
{if published in a range, the highest number in the range will be used}
(currently _____%), resulting in an initial interest rate of _____%. This
estimated final payment is based on the assumption that all payments will be
made exactly as scheduled and that the Index does not change; the actual final
payment will be for all principal and accrued interest not yet paid, together
with any other unpaid amounts under this Note. Unless otherwise agreed or
required by applicable law, payments will be applied first to any accrued unpaid
interest; then to principal; then to any unpaid collection costs; and then to
any late charges. The annual interest rate for this Note is computed on a
365/360 basis; that is, by applying the ratio of the annual interest rate over a
year of 360 days, multiplied by the outstanding principal balance, multiplied by
the actual number of days the principal balance is outstanding. Borrower will
pay Lender at Xxxxxx's address shown above or at such other place as Lender may
designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the National
Prime Rate, as published in the Wall Street Journal from time to time, {if
published in a range, the highest number in the range will be used} (the
"Index"). The Index is not necessarily the lowest rate charged by Lender on its
loans. If the Index becomes unavailable during the term of this loan, Lender may
designate a substitute index after notice to Borrower. Lender will tell Borrower
the current index rate upon Xxxxxxxx's request. The interest rate change will
not occur more often than each day. Borrower understands that Lender may make
loans based on other rates as well. The Index currently is ______% per annum.
The interest rate or rates to be applied to the unpaid principal balance of this
Note will be the rate or rates set forth herein in the "Payment" section.
Notwithstanding any other provision of this Note, after the first payment
stream, the interest rate for each subsequent payment stream will be effective
as of the last payment date of the just-ending payment stream. Notwithstanding
the foregoing, the variable interest rate or rates provided for in this Note
will be subject to the following maximum rate. NOTICE: Under no circumstances
will the interest rate on this Note be more than (except for any higher default
rate shown below) the lesser of 24.000% per annum or the maximum rate allowed by
applicable law. 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 by its original final maturity date, (B)
increase Borrower's payments to cover accruing interest, (C) increase the number
of Borrower's payments, and (D) continue Borrower's payments at the same amount
and increase Borrower's final payment.
PROMISSORY NOTE
(CONTINUED)
PAGE 2
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due. Early payments will not, unless agreed to by Xxxxxx in
writing, relieve Xxxxxxxx of Xxxxxxxx's obligation to continue to make payments
under the payment schedule. Rather, early payments will reduce the principal
balance due and may result in Borrower's making fewer payments. Xxxxxxxx agrees
not to send Lender payments marked "paid in full", "without recourse", or
similar language. If Borrower sends such a payment, Xxxxxx may accept it without
losing any of Xxxxxx's rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument
that indicates that the payment constitutes "payment in full" of the amount owed
or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: Independent Bank West
Michigan, 0000 X. Xxxxxxxx XX, Xxxxx Xxxxxx, XX 00000.
LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged
5.000% of the regularly scheduled payment or $15.00, whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 24.000% per annum. The
interest rate will not exceed the maximum rate permitted by applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
PAYMENT DEFAULT. Borrower fails to make any payment when due under this Note.
OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related docuemtns or to comply with or to perform any term, obligation, covenant
or condition contained in any other agreement between Lender and Borrower.
FALSE STATEMENTS. Any warranty, representation or statement made or furnished to
Lender by Borrower or on Borrower's behalf under this Note or the related
documents is false or misleading in any material respect, either now or at the
time made or furnished or becomes false or misleading at any time thereafter.
DEATH OR INSOLVENCY. The dissolution of Borrower (regardless of whether election
to continue is made), any member withdraws from Borrower, or any other
termination of Borrower's existence as a going business or the death of any
member, the insolvency of Borrower, the appointment of a receiver for any part
of Xxxxxxxx's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of
Xxxxxxxx's accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Xxxxxxxx as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Xxxxxx written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect to
any Guarantor of any of the indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
guaranty of the indebtedness evidenced by this Note.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Xxxxxx believes the prospect of payment or performance of this
Note is impaired.
INSECURITY. Lender in good faith believes itself insecure.
PROMISSORY NOTE
(CONTINUED)
PAGE 3
LENDER'S RIGHTS. Upon default, Xxxxxx may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, and then
Borrower will pay that amount.
ATTORNEY'S FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Xxxxxx's reasonable
attorneys' fees and Xxxxxx's legal expenses whether or not there is a lawsuit,
including reasonable attorneys' fees and expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction), and
appeals. If not prohibited by applicable law, Xxxxxxxx also will pay any court
costs, in addition to all other sums provided by law.
JURY WAIVER. Xxxxxx and Xxxxxxxx hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Xxxxxx or Borrower against
the other.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Michigan. This note has
been accepted by Xxxxxx in the State of Michigan.
RIGHT OF SETOFF. 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 Xxxxx accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Xxxxxx, 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 Xxxxxx's option, to
administratively freeze all such accounts to allow Lender to protect Xxxxxx's
charge and setoff rights provided in this paragraph.
COLLATERAL. Borrower acknowledges this Note is secured by a Construction
Mortgage. (_____________________), Commercial Security Agreement (furniture and
fixtures), Unlimited Corporate Guaranty of Meritage Hospitality Group Inc. and
Unlimited Guaranty of OCM Food Service, LLC DBA O'Charley's of Michigan secured
by a Commercial Security Agreement for Reassignment of Liquor License all of
even date.
LINE OF CREDIT. This Note evidences a straight line of credit. Once the total
amount of principal has been advanced, Borrower is not entitled to further loan
advances. Xxxxxxxx agrees to be liable for all sums either: (A) advanced in
accordance with the instructions of an authorized person or (B) credited to any
of Xxxxxxxx's accounts with Xxxxxx. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Xxxxxx's
internal records, including daily computer print-outs.
ADDITIONAL PROVISIONS. Draws are to be insured by a title insurance company and
supported by contractor's sworn statements and appropriate waiver's of lien.
Draws must also be approved by an independent third party Inspector.
CONDITIONS FOR ADVANCES. Draws will be limited to the first 6 months, no draws
shall be taken after ___________________, at which time this shall be considered
a term Note.
FIXED RATE OPTION. Borrower will have a one time option to fix the interest rate
at the Federal Home Loan Bank Advance Rate for the remaining term plus 2.65%.
Option to fix will carry a cost of .15% of the loan amount and will carry
prepayment penalty as outlined below.
5 year fixed rate 3% in year 1, 2% in year 2, 1% in year 3
7 year fixed rate 3% in years 1-2, 2% in years 3-4, and 1% in year 5
10 year fixed rate 3% in years 1-2, 2% in years 3-4, and 1% in years 5-6
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Xxxxxxxx, and
upon Xxxxxxxx's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
PROMISSORY NOTE
(CONTINUED)
PAGE 4
NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.
Please notify us if we report any inaccurate information about your account(s)
to a consumer reporting agency. Your written notice describing the specific
inaccuracy(ies) should be sent to us at the following address: Independent Bank
West Michigan, 0000 X. Xxxxxxxx XX, Xxxxx Xxxxxx, XX 00000.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
Xxxxxx's security interest in the collateral; and take any other action deemed
necessary by Xxxxxx without the consent of or notice to anyone. All such parties
also agree that Xxxxxx may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, XXXXXXXX READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. XXXXXXXX AGREES TO
THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
OCM DEVELOPMENT, LLC
BY:
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