EXHIBIT 10.17
PROMISSORY NOTE
Dated as of June 30, 1999
$3,000,000.00 Scottsdale, Arizona
MORTON'S OF CHICAGO/SCHAUMBURG LLC, a Delaware limited liability company
("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 July 1, 2019,
as herein provided, the principal sum of up to THREE MILLION AND 00/100 DOLLARS
($3,000,000.00) or so much thereof as may be advanced by FFCA to Debtor from
time to time (the "Principal Amount"), and interest on the unpaid Principal
Amount from time to time outstanding as hereinafter set forth.
Initially capitalized terms which are not otherwise defined in this Note
shall have the meanings set forth in the Loan Agreement dated as of the date of
this Note among Debtor and FFCA, as such agreement may be amended from time to
time (the "Loan Agreement"). In addition, the following terms shall have the
following meanings for all purposes of this Note:
"Adjustable Rate" means an annual interest rate equal to the sum of
the Adjustable Rate Basis plus the Applicable Margin, which Adjustable
Rate shall at no time during the term of this Note be greater than 13.75%
per annum or less than 5.75% per annum.
"Adjustable Rate Basis" means, for any Interest Period, the annual
interest rate (rounded upwards, if necessary, to the nearest 1/100th of
one percent) appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in dollars at approximately
11:00 a.m. (London time) on the Adjustable Rate Reset Date for a term
comparable to such Interest Period. If for any reason such rate is not
available, the term "Adjustable Rate Basis" shall mean, for any Interest
Period, the annual interest rate (rounded upwards, if necessary, to the
nearest 1/100th of one percent) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in dollars at approximately
11:00 a.m. (London time) on the Adjustable Rate Reset Date for a term
comparable to such Interest Period; provided, however, if more than one
rate is specified on the Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates.
"Adjustable Rate Reset Date" means the fifteenth day of each
calendar month, or the next succeeding Business Day if such day is not a
Business Day, prior to the next Interest Period.
"Applicable Margin" means an annual percentage equal to 2.75%.
"Base Interest Rate" means a fixed rate of interest equal to the
Treasury Rate plus 2.75%.
"Business Day" means any day on which FFCA is open for business in
the State of Arizona, other than a Saturday, Sunday or a legal holiday.
"Interest Period" means (i) initially, the period beginning on the
date of this Note and ending on the last day of the calendar month in
which such date occurs, and (ii) thereafter, the period beginning on the
first day of the calendar month and ending on the last day of such
calendar month.
"Loan Agreement" means that certain Loan Agreement dated as of the
date of this Note between Debtor and FFCA, as such agreement may be
amended from time to time.
"Maturity Date" means July 1, 2019; provided, however, the Maturity
Date shall be amended, as applicable, in the Amended and Restated Note (as
defined below) to be the first day of the month immediately following the
month in which the twentieth anniversary of the Disbursement occurs.
"Treasury Rate" means the 10-year U.S. Treasury Rate in effect as
reported in the Western Edition of The Wall Street Journal on the tenth
calendar day preceding the Disbursement Date. In the event The Wall Street
Journal ceases to publish such Treasury information, FFCA shall select an
alternative publication which publishes comparable information most nearly
approximating such information.
The Principal Amount shall be advanced only in accordance with the terms
and conditions of the Loan Agreement. This Note shall be amended and restated in
its entirety on the date of the Disbursement (the "Disbursement Date") pursuant
to the Amended and Restated Note.
During the period of time between the date of this Note and the
Disbursement Date (the "Interim Term"), interest shall accrue at the Adjustable
Rate on the Principal Amount outstanding from time to time and such interest
shall be compounded monthly (such interest as compounded being referred to
herein as the "Interim Term Interest"); provided, however, the Interim Term
Interest shall not be paid by Debtor to FFCA during the Interim Term, but rather
shall be added to the Principal Amount.
Interest on the outstanding Principal Amount as of the Disbursement Date
(including the Interim Term Interest) for the period commencing with the
Disbursement Date through the last day in the month in which the Disbursement
occurs shall be due and payable upon delivery of the Amended and Restated Note.
Thereafter, fixed equal monthly payments of principal and interest, based on the
amortization of the outstanding Principal Amount as of the Disbursement Date
(including the Interim Term Interest) over a twenty-year period at the Base
Interest Rate, shall be due and payable, commencing on the first day of the
second calendar month following the month in which the Disbursement occurs and
continuing on the first day of each month
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thereafter until the Maturity Date, at which time the outstanding Principal
Amount and unpaid accrued interest shall be due and payable.
Debtor may not prepay this Note in full or in part.
Upon execution of this Note, Debtor shall establish arrangements whereby
all payments of principal and interest hereunder to be made subsequent to the
Disbursement Date 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.
This Note is secured by the Mortgage and guaranteed by the Guarantor
pursuant to the Guaranty. An "Event of Default" shall be deemed to have occurred
under this Note if (a) any principal, interest or certain 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 seven days from the
delivery of such notice shall have elapsed without such past-due sum being paid,
or (b) an Event of Default (as defined under any of the Loan Documents).
During the continuation of an Event of Default under this Note, then, 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 and any Loan Documents which secure this Note, due and payable at once
without 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 contact, or the rate of 13% per annum (the "Default
Rate"), and such Default Rate shall continue to apply following a judgment in
favor of FFCA under this Note; provided, however, the Default Rate shall not be
applicable if all past-due principal and/or interest is paid in full within the
notice and cure periods provided for in the Loan Agreement.
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 of Debtor, 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 amounts are hereby deemed not to
include income taxes, gross receipts taxes, transfer taxes, franchise taxes and
corporate taxes) 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, notice of intent to accelerate, notice of
acceleration and all other notices or
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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: Mr. Thomas Baldwin
Chief Financial Officer
Morton's of Chicago/Schaumburg, LLC
3333 New Hyde Park Road
New Hyde Park, New York 11042
Telephone: (516) 627-1515
Telecopy: (516) 627-2050
with a copy to: Mr. Thomas Baldwin
Chief Financial Officer
Morton's Restaurant Group, Inc.
3333 New Hyde Park Road
New Hyde Park, New York 11042
Telephone: (516) 627-1515
Telecopy: (516) 627-2050
with a copy to: David Gruber, Esq.
Salamon, Gruber, Newman and Blaymore
97 Powerhouse Road
Suite 102
Roslyn Heights, New York 11577
Telephone: (516) 625-1700
Telecopy: (516) 625-1795
If to FFCA: Dennis L. Ruben, Esq.
Executive Vice President and General Counsel
FFCA Acquisition Corporation
17207 North Perimeter Drive
Scottsdale, Arizona 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
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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 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 had 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 other 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
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
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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.
Time is of the essence in the performance of each and every obligation
under this Note.
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 located 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 FFCA 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 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
RELATIONSHIP OF FFCA AND DEBTOR, DEBTOR'S USE OR OCCUPANCY OF THE PREMISES
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 AND FFCA HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT THEY MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL AND INDIRECT
DAMAGES FROM THE OTHER PARTY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY THEM AGAINST THE OTHER
PARTY HERETO 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 AND FFCA OF ANY RIGHT THEY MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND
IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
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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 and delivered this Note effective
as of the date first set forth above.
DEBTOR:
MORTON'S OF CHICAGO/SCHAUMBURG
LLC, a Delaware limited liability company
By: Morton's of Chicago Holding, Inc., its
member
By /s/ Thomas J. Baldwin
---------------------------------------
Thomas J. Baldwin
Executive Vice President
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