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Exhibit 10.5
PROMISSORY NOTE
$5,250,000.00 Cincinnati, Ohio
November 26, 1996
This Promissory Note ("Note") is made and entered into on the date set
forth above by GRAND HARBOR YACHT CLUB INC., MERITAGE HOSPITALITY GROUP INC.,
and MHG FOOD SERVICE INC. to the order of GREAT AMERICAN LIFE INSURANCE COMPANY,
an Ohio corporation, (hereinafter, together with its permitted successors and
assigns, "Lender").
This Note has been executed and delivered in connection with a certain Loan
Agreement dated as of November 26, 1996, as of this date, among each of the
undersigned, Thomas Edison Inn, Incorporated, Grand Harbor Resort Inc., St.
Clair Inn, Inc. and Lender (the "Loan Agreement") and is subject to the terms
and conditions of the Loan Agreement. All capitalized terms used herein shall
have the meanings assigned to them in the Loan Agreement unless the context
hereof requires otherwise.
FOR VALUE RECEIVED, the undersigned, jointly and severally, hereby promises
to pay to the order of Lender the principal sum of Five Million Two Hundred
Fifty Thousand and 00/100 Dollars ($5,250,000), together with interest at the
annual rate equal to eight percent (8%) in excess of the rate of interest
announced from time to time by The Provident Bank, Cincinnati, Ohio, as its
prime rate ("Prime Rate"); provided, however, in the event and during the
continuation of a violation by the Borrowers of certain financial covenants
contained in the Loan Agreement, such interest rate shall be increased as
provided in Section 2.5 of the Loan Agreement. A rate based on the Prime Rate
will change each time and as of the date the Prime Rate changes. Interest only
shall be due and payable monthly in arrears on the first day of each month
commencing on January 1, 1997 and continuing on the first day of each month
thereafter through and including November 1, 1997. Payments of accrued interest
plus principal payments of Fifty Thousand and 00/100 Dollars ($50,000.00) shall
be due and payable on the first day of each month commencing on December 1, 1997
and continuing on the same day of each month thereafter until March 1, 1998 and
thereafter payments of accrued interest plus principal payments of One Hundred
Thousand and 00/100 Dollars ($100,000.00) shall be due and payable on the first
day of each month commencing on April 1, 1998 until June 1, 2002 ("Maturity
Date") when the entire remaining unpaid principal balance and all accrued and
unpaid interest shall be due and payable.
Any amount of principal and interest which is not paid when due, whether at
stated maturity, by acceleration or otherwise, shall bear interest, payable on
demand at the Default Rate, or such lesser amount as shall be the maximum rate
legally enforceable.
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Principal and interest payments shall be made in lawful money of the United
States of America and shall be divided equally and payable 50% to the Lender at
Bank of New York, Acct. No. 141001 and, 50% to Great American Insurance Company
at Bankers Trust Company, Acct. No. 97-960, or at such other address as the
holder hereof may give to the Borrower, in immediately available funds.
This Note is secured by mortgages on real estate and improvements owned by
the undersigned and located in St. Clair and Ottawa Counties, Michigan and more
fully described in the Open-End Mortgages and Assignments of Rents and Profits
dated of even date herewith and the other Loan II Collateral described in the
Loan Agreement, and is initially further secured by the Loan I Collateral as
described in the Loan Agreement.
Except as otherwise provided herein, all payments received by Lender from
the undersigned shall be applied as provided in the Loan Agreement.
The undersigned may, at their option, voluntarily prepay this Note in whole
at any time, or in part as provided for in Section 2.5 of the Loan Agreement.
In case of an Event of Default, the entire unpaid principal amount of this
Note, and all interest due hereon, may become immediately due and payable.
Each of the undersigned hereby: (i) waives presentment, demand, notice of
demand, protest, notice of protest and notice of nonpayment and any other notice
required to be given by law in connection with the delivery, acceptance,
performance, default or enforcement of this Note, of any indorsement or guaranty
of this Note; and (ii) consents to any and all delays, extensions, renewals or
other modifications of this Note or waivers of any term hereof or the failure to
act on the part of Lender or any indulgence shown by Lender, from time to time
and in one or more instances, (without notice to or further assent from the
undersigned) and agrees that no such action, failure to act or failure to
exercise any right or remedy, on the part of Lender shall in any way affect or
impair the obligations of the undersigned or be construed as a waiver by Lender
of, or otherwise affect, any of Lender's rights under this Note, under any
indorsement or guaranty of this Note.
This Note is made and delivered in the City of Cincinnati, Ohio and shall
be governed by and construed in accordance with the laws of the State of Ohio.
The undersigned hereby designates all courts of record sitting in Cincinnati,
Ohio and having jurisdiction over the subject matter, state and federal, as
forums where any action, suit or proceeding in respect of or arising from or out
of this Note, its making, validity or performance, may be prosecuted as to all
parties, their successors and assigns, and by the foregoing designation the
undersigned consents to the jurisdiction and venue of such courts.
EACH OF THE UNDERSIGNED HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF HAMILTON, STATE OF OHIO AND
IRREVOCABLY AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
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NOTE, THE OTHER LOAN DOCUMENTS OR ANY OBLIGATION SHALL BE LITIGATED IN SUCH
COURTS. EACH OF THE UNDERSIGNED ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY OTHER LOAN DOCUMENT OR SUCH OBLIGATION. EACH OF THE
UNDERSIGNED DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AND SUCH OTHER PERSONS
AS MAY HEREAFTER BE SELECTED BY THE UNDERSIGNED WHICH IRREVOCABLY AGREE IN
WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL PROCESS
IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY THE UNDERSIGNED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL
TO EACH OF THE UNDERSIGNED AT THEIR ADDRESSES PROVIDED IN THE LOAN AGREEMENT
EXCEPT THAT UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL
SUCH COPY SHALL NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT
APPOINTED BY THE UNDERSIGNED REFUSES TO ACCEPT SERVICE, THE UNDERSIGNED HEREBY
AGREES THAT SERVICE UPON IT BY MAIL SHALL CONSTITUTE VALID SERVICE OF PROCESS.
NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST
THE UNDERSIGNED IN THE COURTS OF ANY OTHER JURISDICTION.
EACH OF THE UNDERSIGNED AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
NOTE, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP
THAT IS BEING ESTABLISHED. EACH OF THE UNDERSIGNED AND LENDER ALSO WAIVE ANY
BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF LENDER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH OF THE UNDERSIGNED AND LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS NOTE AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF THE
UNDERSIGNED AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND
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THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS NOTE, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOAN OR THE NOTE. IN THE EVENT OF LITIGATION, THIS
NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
IN WITNESS WHEREOF, Borrower has caused this Note to be executed by its
duly authorized officer on the day and year first above written.
MERITAGE HOSPITALITY GROUP INC.
By:/s/ Christopher B. Hewett
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Christopher B. Hewett, President
GRAND HARBOR YACHT CLUB INC.
By:/s/ Christopher B. Hewett
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Christopher B. Hewett, President
MHG FOOD SERVICE INC.
By:/s/ Christopher B. Hewett
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Christopher B. Hewett, President