[PROMISSORY NOTE B]
PROMISSORY NOTE
"EFFECTIVE DATE:" ___________ __, 1999
"BORROWER:" ____________________
"PRINCIPAL AMOUNT:" _____________ DOLLARS ($____________)
"INITIAL RATE:" THE RATE OF _______ PERCENT ( %) PER ANNUM [9% TO 14%]
"STATED RATE:" ________________ PERCENT ( %) PER ANNUM [EQUAL TO THE
INDEX RATE DESIGNATED BY LENDER FOR THE SUBJECT LOAN, PLUS
THREE TO SEVEN PERCENT (3.00-7.00%)]
"TERMS OF PAYMENT:" PAYMENTS OF ALL ACCRUED INTEREST ON THE OUTSTANDING
PRINCIPAL BALANCE OF THIS NOTE SHALL BE DUE AND PAYABLE ON
THE FIRST DAY OF EACH MONTH COMMENCING ON _____ 1, 199__ ,
[THE FIRST DAY OF THE SECOND MONTH FOLLOWING THE EFFECTIVE
DATE] AND CONTINUING UNTIL AND INCLUDING THE FIRST DAY OF
THE MONTH IMMEDIATELY FOLLOWING THE CONVERSION DATE;
____ (__) CONSECUTIVE INSTALLMENTS OF PRINCIPAL AND INTEREST
IN THE PAYMENT AMOUNT (DEFINED BELOW) SHALL BE DUE AND
PAYABLE COMMENCING ON THE FIRST DAY OF THE SECOND MONTH
FOLLOWING THE CONVERSION DATE, AND CONTINUING ON THE FIRST
DAY OF EACH AND EVERY SUCCEEDING MONTH UNTIL AND INCLUDING
______ 1, _____ [THE FIRST DAY OF THE _____(___) MONTH
FOLLOWING THE CONVERSION DATE]; A FINAL PAYMENT OF PRINCIPAL
AND INTEREST IN THE AMOUNT OF________ DOLLARS ($________),
PLUS ANY OTHER UNPAID PRINCIPAL AND INTEREST, SHALL BE DUE
AND PAYABLE IN FULL ON THE FIRST DAY OF THE ______ (____)
MONTH FOLLOWING THE CONVERSION DATE. AS USED HEREIN, THE
TERM "PAYMENT AMOUNT" SHALL MEAN THE AMOUNT OF MONEY
NECESSARY TO BE PAID TO PAY THE ENTIRE AMOUNT OF PRINCIPAL
OUTSTANDING UNDER THIS NOTE ON THE CONVERSION DATE (AFTER
GIVING EFFECT TO ANY ADVANCE MADE ON SUCH DATE), TOGETHER
WITH INTEREST ON THE OUTSTANDING PORTION THEREOF AT THE
APPLICABLE RATE, IN ________ (___) EQUAL MONTHLY
INSTALLMENTS OF PRINCIPAL AND INTEREST. THE PAYMENT AMOUNT
SHALL BE CALCULATED BY LENDER AND SHALL BE DEEMED CORRECT
ABSENT MANIFEST ERROR.
"INDEX RATE:" [THE CURRENT WEEKLY AVERAGE YIELD OF TEN (10)-YEAR U.S.
TREASURY CONSTANT MATURITIES (AS PUBLISHED IN FEDERAL
RESERVE STATISTICAL RELEASE H.15 [519]) ON THE FRIDAY
IMMEDIATELY PRECEDING THE CONVERSION DATE ("T-BILL RATE"),
OR SUCH OTHER INDEX RATE DESIGNATED BY LENDER FOR THE
SUBJECT LOAN]
"COMPLETION DATE:" __________ 1, ______ [SAME AS IN LOAN AGREEMENT]
"NO PREPAYMENT
DATE:" THE FIRST DAY OF THE _____ [1ST - 60TH) MONTH FOLLOWING
THE EFFECTIVE DATE.
"PREMIUM FACTOR:" THE AMOUNT SHOWN ON THE FOLLOWING CHART [BASED ON THE
INDEX RATE BEING THE T-BILL RATE] FOR THE MONTH IN WHICH A
PREPAYMENT OCCURS:
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---------------------------------
NUMBER OF MONTHS PREMIUM
REMAINING IN LOAN TERM FACTOR
---------------------------------
120-109 0.070
---------------------------------
108-97 0.065
---------------------------------
96-85 0.060
---------------------------------
84-73 0.054
---------------------------------
72-61 0.048
---------------------------------
60-49 0.042
---------------------------------
48-37 0.036
---------------------------------
36-25 0.029
---------------------------------
24-13 0.022
---------------------------------
12 OR LESS 0.013
---------------------------------
"MORTGAGE:" THAT CERTAIN COMMERCIAL _____________ [MORTGAGE OR DEED
OF TRUST], SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
RENTS AND FIXTURE FILING, DATED THE EFFECTIVE DATE AND
EXECUTED BY BORROWER IN FAVOR OF LENDER, COVERING THE REAL
PROPERTY AND OTHER ASSETS (THE "PROPERTY") DESCRIBED
THEREIN.
"APPLICABLE STATE:" _____________ [THE STATE WHERE THE PROPERTY IS LOCATED]
(1) FOR VALUE RECEIVED, Borrower, promises to pay to the order of
Schlotzsky's Real Estate, Inc., a Texas corporation (sometimes herein
referred to as "Schlotzsky's" or "Lender") at Lender's office at 203 Colorado
Street, Austin, Texas 78701 Attention: Accounting Department, or at such
other address as the holder hereof may from time to time designate in
writing, the Principal Amount or so much thereof as may be advanced
hereunder, together with interest from the date the proceeds of the loan (the
"Loan") evidenced by this Promissory Note (this "Note") are initially
disbursed until maturity on the principal balance from time to time remaining
unpaid hereon at the interest rates herein provided. This Note is made and
accepted pursuant to the provisions of that certain Loan Agreement ("Loan
Agreement") of even date herewith between Borrower and Lender. Advances made
hereunder shall be made in reliance upon, and subject to, the terms,
conditions, representations and warranties set forth in the Loan Agreement.
(2) From the Effective Date until the date (the "Conversion Date") which is
the earlier to occur of the Initial Conversion Date (as hereinafter defined)
and the Completion Date, this Note shall bear interest at Initial Rate.
Commencing on the Conversion Date and continuing until maturity (whether by
acceleration or otherwise), this Note shall bear interest at a rate (the
"Applicable Rate") equal to the lesser of (a) the Stated Rate or (b) the
maximum rate of interest allowed by applicable law; provided, however, if the
Initial Conversion Date does not occur on or before the Completion Date, the
Applicable Rate shall not be less than the Initial Rate. Each rate of
interest which this Note bears shall be computed on the basis of a 365 or 366
day year, as applicable, and shall be compounded monthly. In no event shall
any rate of interest which this Note bears ever exceed the highest rate
permitted by applicable law. The term "Initial Conversion Date", as used
herein, shall mean the latest date upon which both (i) all conditions
precedent for the Final Advance (as defined in the Loan Agreement), as set
forth in Section 2.8 of the Loan Agreement, have been satisfied and (ii) the
Final Advance has been made.
(3) This Note shall be payable as stated in the Terms of Payment above.
(4) The initial advance of the Loan from Lender to Borrower shall be made on or
about the Effective Date. Borrower shall have the right to receive subsequent
advances from Lender pursuant to
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the terms of the Loan Agreement and subject to Borrower's satisfaction of all
conditions precedent set forth therein. Each advance shall bear interest at
the interest rate described above from and after the date on which Lender
disburses such advance. In no event shall Lender have any obligation to make
any advance after the Conversion Date or the Completion Date.
(5) If any payment shall not be paid when due and shall remain unpaid for
ten business (10) days, Borrower shall pay an additional charge equal to five
percent (5.00%) of the delinquent payment or the highest additional charge
permitted by law, whichever is less, for the purpose of defraying the
expenses incident to handling such delinquent payment.
(6) Upon not less than thirty (30) days advance written notice to Lender at
any time after the No Prepayment Date, and upon payment of the Prepayment
Premium, Borrower shall have the right to prepay all, but not less than all,
of the outstanding balance of this Note on any regularly scheduled principal
and interest payment date. The Prepayment Premium shall be determined by (i)
calculating the decrease (expressed in basis points) in the Index Rate from
the Conversion Date, to the date on which the prepayment is made, (ii)
dividing the decrease by 100, (iii) multiplying the result by the following
described applicable premium factor (the "Premium Factor"), and (iv)
multiplying the product by the principal balance to be prepaid. If the Index
Rate is unchanged or has increased from the Conversion Date to the
prepayment date, no Prepayment Premium shall be due. If the Index Rate
identified herein ceases to be published, then the decrease in the Index Rate
will be determined from another source designated by Lender. Anything
contained herein to the contrary notwithstanding, prepayment prior to the
first day of the sixtieth (60th) month following the Conversion Date will not
be permitted.
(7) If Lender at any time accelerates this Note after an Event of Default
(defined below), then Borrower shall be obligated to pay the Prepayment
Premium in accordance with the foregoing schedule to the maximum extent
permitted by applicable law. The Prepayment Premium shall not be payable
with respect to condemnation awards or insurance proceeds from fire or other
casualty which Lender applies to prepayment, nor with respect to Borrower's
prepayment of the Note in full during the last three (3) months of the term
of this Note unless an Event of Default has occurred. Borrower expressly
acknowledges that the Prepayment Premium is not a penalty but is intended
solely to compensate Lender for the loss of its bargain and the reimbursement
of internal expenses and administrative fees and expenses incurred by Lender.
(8) The Loan is secured, in part, by the Mortgage covering the Property, and
by certain other documents executed and delivered in connection herewith
(this Note, the Loan Agreement, the Mortgage and such other documents are
collectively called the "Loan Documents").
(9) Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Mortgage, the Loan Agreement and the other
Loan Documents:
(a) Any failure of or refusal by Borrower to make any payment of principal,
interest, or any Prepayment Premium due under this Note when due, and such
failure or refusal shall continue for a period of ten (10) days after written
notice is given to Borrower by Lender specifying such failure; or
(b) The occurrence of any event of default under, or the failure to perform or
comply with any other provision of, any of the Loan Documents and the
continuance of such event of default beyond any applicable cure period provided
in the Loan Documents with respect to such event of default.
(10) Upon the occurrence of any Event of Default, Lender shall have the
option to declare the entire amount of unpaid principal and interest under
this Note immediately due and payable without notice or demand, and Lender
may exercise any of its rights under this Note, under the Mortgage, under the
Loan Agreement and under the other Loan Documents. After acceleration or
maturity, Borrower shall
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pay interest on the outstanding principal balance of this Note at the rate
which is the lower of (i) sixteen percent (16%) per annum or (ii) the maximum
interest rate permitted by law.
(11) All payments of the principal and interest on this Note shall be made in
coin or currency of the United States of America which at the time shall be
the legal tender for the payment of public and private debts.
(12) If this Note is placed in the hands of an attorney for collection,
Borrower agrees to pay reasonable attorneys' fees and costs incurred by
Lender in connection therewith, and in the event suit or action is instituted
to enforce or interpret this Note (including without limitation efforts to
modify or vacate any automatic stay or injunction), Lender shall be entitled
to recover all expenses reasonably incurred at, before or after trial and on
appeal, whether or not taxable as costs, or in any bankruptcy proceeding, or
in connection with post-judgment collection efforts, including, without
limitation, attorneys' fees, witness fees (expert and otherwise), deposition
costs, copying charges and other expenses.
(13) This Note shall be governed and construed in accordance with the laws of
the Applicable State applicable to contracts made and to be performed therein
(excluding choice-of-law principles). Borrower hereby irrevocably submits to
the jurisdiction of any state or federal court sitting in the Applicable
State in any action or proceeding brought to enforce or otherwise arising out
of or relating to this Note, and hereby waives any objection to venue in any
such court and any claim that such forum is an inconvenient forum.
(14) This Note is given in a commercial transaction for business purposes.
Lender's obligation to make any loan or advance hereunder shall be deemed to
be pursuant to a contract to make a loan or extend debt financing or
financial accommodations to Borrower within the meaning of Subsections
365(c)(2) and 365(e)(2)(B) of the Bankruptcy Code of the United States of
America.
(15) This Note may be declared due prior to its expressed maturity date in
the events, on the terms, and in the manner provided for in the Mortgage.
(16) Borrower and all sureties, endorsers, guarantors and other parties now
or hereafter liable for the payment of this Note, in whole or in part, hereby
severally (i) waive demand, notice of demand, presentment for payment, notice
of nonpayment, notice of default (except as specifically provided in Section
9(a) hereof), protest, notice of protest, notice of intent to accelerate,
notice of acceleration and all other notices, and further waive diligence in
collecting this Note or in enforcing any of the security for this Note; (ii)
agree to any substitution, subordination, exchange or release of any security
for this Note or the release of any party primarily or secondarily liable for
the payment of this Note; (iii) agree that Lender shall not be required to
first institute suit or exhaust its remedies hereon against Borrower or
others liable or to become liable for the payment of this Note or to enforce
its rights against any security for the payment of this Note; (iv) consent to
any extension of time for the payment of this Note, or any installment
hereof, made by agreement by Lender with any person now or hereafter liable
for the payment of this Note, even if Borrower is not a party to such
agreement; and (v) agree that Schlotzsky's may transfer, assign, or endorse
this Note, the Mortgage and the other Loan Documents to another person or
entity (a "Subsequent Payee") and, in any such event, Borrower agrees (a) to
look only to Schlotzsky's with respect to any claims, demands or liabilities
existing or alleged to be existing against Schlotzsky's then or thereafter;
and (b) not to assert any claims, demands, defenses, offsets or liabilities
against this Note or against any Subsequent Payee which Borrower may then or
thereafter have against Schlotzsky's, or as a result of any action or failure
to take action by Schlotzsky's.
(17) All agreements between Borrower and Lender, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in
no contingency, whether by reason of demand or acceleration of the final
maturity of this Note or otherwise, shall the interest contracted for,
charged, received, paid or agreed to be paid to Lender exceed the maximum
amount permissible under the
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applicable law. If, from any circumstance whatsoever, interest would
otherwise be payable to Lender in excess of the maximum amount permissible
under applicable law, the interest payable to Lender shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance
Lender shall ever receive anything of value deemed interest by applicable law
in excess of the maximum amount permissible under applicable law, an amount
equal to the excessive interest shall be applied to the reduction of the
principal hereof and not to the payment of interest, or if such excessive
amount of interest exceeds the unpaid balance of principal hereof, such
excess shall be refunded to Borrower. All interest paid or agreed to be paid
to Lender shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full period (including any
renewal or extension) until payment in full of the principal so that the
interest hereon for such full period shall not exceed the maximum amount
permissible under applicable law. Lender expressly disavows any intent to
contract for, charge or receive interest in an amount which exceeds the
maximum amount permissible under applicable law. This paragraph shall
control all agreements between Borrower and Lender.
(18) If Borrower (as identified on the first page hereof) includes more than
one individual or entity, the obligations of Borrower hereunder shall be
joint and several, and each of such individuals and entities constituting
Borrower agrees that Lender, in its discretion, may (a) bring suit against
all of them jointly and severally or against any of them, (b) compromise or
settle with any of them for such consideration as Lender may deem proper, and
(c) release any of them from liability hereunder, and that no such actions
shall impair the rights of Lender against the individuals or entities not so
sued, settled with or released.
(19) As used herein, the term "Lender" shall include the successors and
assigns of Lender and any subsequent owner and holder of this Note.
(20) THIS NOTE AND THE OTHER LOAN DOCUMENTS WHICH ARE IN EXISTENCE ON THE
DATE HEREOF REFLECT THE ENTIRE UNDERSTANDINGS AND AGREEMENTS OF BORROWER AND
LENDER WITH RESPECT TO THE SUBJECT MATTER OF THE LOAN DOCUMENTS. ANY AND ALL
PRIOR UNDERSTANDINGS AND AGREEMENTS AND ANY AND ALL CONTEMPORANEOUS
UNDERSTANDINGS AND AGREEMENTS ARE INCORPORATED IN THE TRANSACTION DOCUMENTS.
EXCEPT AS SPECIFICALLY SET FORTH IN THE LOAN DOCUMENTS, THERE ARE NO
UNDERSTANDINGS OR AGREEMENTS, EXPRESS OR IMPLIED, WITH RESPECT TO THE SUBJECT
MATTER OF THE LOAN DOCUMENTS. BORROWER UNDERSTANDS THAT LENDER HAS MADE NO
COMMITMENT TO RENEW, REFINANCE, EXTEND OR REARRANGE THE LOAN, NOR TO ADVANCE
ADDITIONAL FUNDS TO OR ON BEHALF OF BORROWER, EXCEPT (IF AT ALL) AS
SPECIFICALLY PROVIDED IN THE LOAN AGREEMENT. BORROWER REPRESENTS AND WARRANTS
TO LENDER THAT NO OFFICER, EMPLOYEE, REPRESENTATIVE OF, OR ATTORNEY FOR,
LENDER HAS MADE ANY ORAL COMMITMENTS OR REPRESENTATIONS WHICH ARE NOT
INCORPORATED IN THE LOAN DOCUMENTS.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THE LOAN DOCUMENTS
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE
ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THE
LOAN DOCUMENTS MAY BE LEGALLY ENFORCED. BORROWER MAY CHANGE THE TERMS
OF THE LOAN DOCUMENTS ONLY BY ANOTHER WRITTEN AGREEMENT SIGNED BY BOTH
BORROWER AND LENDER.
BORROWER:
- - ----------------------------------
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