EXHIBIT 10.2
PROMISSORY NOTE
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PRINCIPAL AMOUNT: $3,300,000.00 DATE OF NOTE: MAY 7, 2008
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PROMISE TO PAY. Pismo Coast Village, Inc., ("Borrower") promises
to pay to Santa Lucia Bank ("Lender"), or order, in lawful money
of the United States of America, the principal amount of Three
Million Three Hundred Thousand & 00/100 Dollars ($3,300,000.00),
together with interest on the unpaid principal balance from May
7, 2008, until paid in full.
PAYMENT. Subject to any payment changes resulting from changes in
the Index, Borrower will pay this loan in accordance with the
following payment schedule: 12 monthly consecutive interest
payments, beginning June 7, 2008, with interest calculated on the
unpaid principal balances at an interest rate based on the Prime
Rate as Published in the Wall Street Journal (currently 5.000%),
plus a margin of 0.500 percentage points, resulting in an initial
interest rate of 5.500%; 107 monthly consecutive principal and
interest payments in the initial amount of $17,723.08 each,
beginning June 7, 2009, with interest calculated on the unpaid
principal balances at an interest rate based on the Prime Rate as
Published in the Wall Street Journal (currently 5.000%), plus a
margin of 0.500 percentage points, resulting in an initial
interest rate of 5.500%; and one principal and interest payment
of $2,957,221.42 on May 7, 2018, with interest calculated on the
unpaid principal balances at an interest rate based on the Prime
Rate as Published in the Wall Street Journal (currently 5.000%),
plus a margin of 0.500 percentage points, resulting in an initial
interest rate of 5.500%. 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. Interest on this Note is computed on a 365/365
simple interest basis; that is, by applying the ratio of the
annual interest rate over the number of days in a year,
multiplied by the outstanding principal balance, multiplied by
the actual number of days the principal is outstanding. Borrower
will pay Lender at Lender's address or at such other place as
Lender may designate in writing.
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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 Prime Rate as Published in the Wall Street
Journal (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 notifying Borrower. Lender will tell
Borrower the current Index rate upon Borrower's request. The
interest rate change will not occur more often than each Three
Year Period. Borrower understands that Lender may make loans
based on other rates as well. The Index currently is 5.000% per
annum. The interest rate or rates to be applied to the unpaid
principal balance during 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. NOTICE: Under no circumstances will the interest rate on
this Note be less than 5.000% per annum or more than the lesser
of 11.000% 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.
PREPAYMENT: MINIMUM INTEREST CHARGE. Borrower agrees that all
loan fees and other prepaid finance charges are earned fully as
of the date of the loan and will not be subject to refund upon
early payment (whether voluntary or as a result of default),
except as otherwise required by law. In any event, even upon full
prepayment of this Note, Borrower understands that Lender is
entitled to a minimum interest charge of $100.00. Other than
Borrower's obligation to pay any minimum interest charge,
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 Lender in writing, relieve Borrower of Borrower'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.
Borrower agrees not to send Lender payments marked "paid in
full", "without recourse" or similar language. If Borrower sends
such a payment, Lender may accept it without losing any of
Lender'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
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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:
Santa Lucia Bank, Arroyo Grande Office, P O Box 1096, 1530 East
Grand Avenue, Arroyo Grande CA 93421.
LATE CHARGE. If a payment is 11 days or more late, Borrower will
be charged 5.000% of the regularly schedule payment or $5.00,
whichever is greater.
INTEREST AFTER DEFAULT. Upon default, the total sum due under
this Note will continue to accrue interest at the interest rate
under this Note, with the final interest rate described in this
Note applying after maturity, or after maturity would have
occurred had there been no default.
DEFAULT. Each of the following shall constitute an event of
default ("Event of Default") under this Note:
PAYMENT DEFAULT. Borrower fails to make 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 documents or to comply with or to
perform any term, obligation, covenant or condition contained
in any other agreement between the Lender and Borrower.
ENVIRONMENTAL DEFAULT. Failure of any party to comply with or
perform when due any term, obligation, covenant or condition
contained in any environmental agreement executed in
connection with any loan.
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.
INSOLVENCY. The dissolution or termination of Borrower's
existence as a going business, the insolvency of Borrower, the
appointment of a receiver for any part of Borrower'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.
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CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of
foreclosure 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
Borrower's accounts, including deposit accounts, with Lender.
However, this Event of Default shall not apply if there is a
good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor
or forfeiture proceeding and if Borrower gives Lender 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, endorser, surety, or
accommodation party of any of the indebtedness or any
guarantor, endorser, surety, or accommodation party dies or
becomes incompetent, or revokes or disputes the validity of, or
liability under, any guaranty of the indebtedness evidenced by
this Note.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five
percent (25%) or more of the common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's
financial condition, or Lender believes the prospect of
payment or performance of this Note is impaired.
CURE PROVISIONS. If any default, other than a default in
payment is curable and if Borrower has not been given a notice
of a breach of the same provision of this Note within the
preceding twelve (12) months, it may be cured if Borrower,
after receiving written notice from Lender demanding cure of
such default: (1) cures the default within fifteen (15) days;
or (2) if the cure requires more than fifteen (15) days,
immediately initiates steps which Lender deems in Lender's sole
discretion to be sufficient to cure the default and thereafter
continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably
practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire
unpaid principal balance under this Note and all accrued unpaid
interest immediately due, and then Borrower will pay that amount.
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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. Lender's attorney's fees and Lender's legal
expenses, whether or not there is a lawsuit, including attorney's
fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals.
Borrower also will pay any court costs, in addition to all other
sums provided by law.
GOVERNING LAW. This Note will be governed by federal law
applicable to Lender and, to the extent not preempted by federal
law, the laws of the State of California without regard to its
conflicts of law provisions. This Note has been accepted by
Lender in the State of California.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of
San Luis Obispo County, State of California.
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 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.
COLLATERAL. Borrower acknowledges this Note is secured by the
following collateral described in the security instruments listed
herein:
(A) a Deed of Trust dated May 7, 2008, to a trustee in favor of
Lender on real property described as "Real Property located at
775 Sheridan Road, Arroyo Grande, CA 93420" and located in San
Luis Obispo County, State of California. That agreement
contains the following due on sale provision: Lender may, at
Lender's option, declare immediately due and payable all sums
secured by the Deed of Trust upon the sale or transfer,
without Lender's prior written consent, of all or any part of
the Real Property, or any interest in the Real Property. A
"sale or transfer" means the conveyance of Real Property or any
right, title or interest in the Real Property; whether legal,
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beneficial or equitable; whether voluntary or involuntary;
whether by outright sale, deed, installment sale contract, land
contract, contract for deed, leasehold interest with a term
greater than three (3) years, lease-option contract, or by
sale, assignment, or transfer of any beneficial interest in or
to any land trust holding title to the Real Property, or by any
other method of conveyance of an interest in the Real Property.
If any Borrower is a corporation, partnership or limited
liability company, transfer also includes any change in
ownership of more than twenty-five percent (25%) of the voting
stock, partnership interests or limited liability company
interests, as the case may be, of such Borrower. However, this
option shall not be exercised by Lender if such exercise is
prohibited by applicable law.
(B) a Deed of Trust dated May 7, 2008, to a trustee in favor of
Lender on real property described as "Real Property located at
974 Sheridan Road, Arroyo Grande CA 93420" and located in San
Luis Obispo County, State of California. That agreement
contains the following due on sale provision: Lender may, at
Lender's option, declare immediately due and payable all sums
secured by the Deed of Trust upon the sale or transfer,
without Lender's prior written consent, of all or any part of
the Real Property, or any interest in the Real Property. A
"sale or transfer" means the conveyance of Real Property or any
right, title or interest in the Real Property; whether legal,
beneficial or equitable; whether voluntary or involuntary;
whether by outright sale, deed, installment sale contract, land
contract, contract for deed, leasehold interest with a term
greater than three (3) years, lease-option contract, or by
sale, assignment, or transfer of any beneficial interest in or
to any land trust holding title to the Real Property, or by any
other method of conveyance of an interest in the Real Property.
If any Borrower is a corporation, partnership or limited
liability company, transfer also includes any change in
ownership of more than twenty-five percent (25%) of the voting
stock, partnership interests or limited liability company
interests, as the case may be, of such Borrower. However, this
option shall not be exercised by Lender if such exercise is
prohibited by applicable law.
ARBITRATION. Borrower and Lender agree that all disputes, claims
and controversies between them whether individual, joint, or
class in nature, arising from this Note or otherwise, including
without limitation contract and tort disputes, shall be
arbitrated pursuant to the Rules of the American Arbitration
Association in effect at the time the claim is filed, upon
request of either party. No act to take or dispose of any
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collateral securing this Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration
agreement. This includes, without limitation, obtaining
injunctive relief or a temporary restraining order; invoking a
power of sale under any deed of trust or mortgage; obtaining a
writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or
disposing of such property with or without judicial process
pursuant to Article 9 of the Uniform Commercial Code. Any
disputes, claims, or controversies concerning the lawfulness or
reasonableness of any act, or exercise of any right, concerning
any collateral securing this Note, including any claim to
rescind, reform, or otherwise modify any agreement relating to
the collateral securing this Note, shall also be arbitrated,
provided however, that no arbitrator shall have the right or the
power to enjoin or restrain any act of any party. Borrower and
Lender agree that in the event of any action for judicial
foreclosure pursuant to California Code of Civil Procedure
Section 726, or any similar provision in any other state, the
commencement of such an action will not constitute a waiver of
the right to arbitrate and the court shall refer to arbitration
as much of such action, including counterclaims, as lawfully may
be referred to arbitration. Judgement upon any award rendered by
any arbitrator may be entered in any court having jurisdiction.
Nothing in this Note shall preclude any party from seeking
equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar
doctrines which would otherwise be applicable in an action
brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of an action for these purposes.
The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
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. The following person or
persons authorized to request advances and authorize payments
under the line of credit until Lender receives from Borrower, at
Lender's address, written notice of revocation of such authority:
Jay N. Jamison, CEO/General Manager of Pismo Coast Village, Inc.
and Ronald L. Nunlist, Vice President of Pismo Coast Village,
Inc. Borrower agrees to be liable for all sums either: 1.
advanced in accordance with the instructions of any authorized
person or 2. credited to any of Borrower's accounts with Lender.
The unpaid principal balance owing on this Note at any time may
be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs.
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SUCCESSOR INTERESTS. The terms of this Note shall be binding upon
Borrower, and upon Borrower's heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender
and its successors and assigns.
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 specific inaccuracy(ies) should be
sent to us at the following address: Santa Lucia Bank, PO box
6047, Atascadero CA 93423.
GENERAL PROVISIONS. If any part of this Note cannot be enforced,
this fact will not affect the rest of the Note. 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 any applicable statute of limitations, 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 Lender's security interest in the collateral; and take
any other action deemed necessary by Lender without the consent
of or notice to anyone. All such parties also agree that Lender
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, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE
PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
PROMISSORY NOTE.
BORROWER:
PISMO COAST VILLAGE, INC.
By: JAY N. JAMISON By: RONALD L. NUNLIST
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Jay N. Jamison, CEO/General Ronald L. Nunlist, Vice
Manager of Pismo Coast President of Pismo Coast
Village, Inc. Village, Inc.
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