EXHIBIT 10.2
PROMISSORY NOTE
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$1,385,544.00
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Cincinnati, Ohio
August 18 , 2009
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FOR VALUE RECEIVED , the undersigned, NTS/VIRGINIA
DEVELOPMENT COMPANY , a Virginia corporation (“NTS
Virginia”) and NTS/LAKE FOREST II RESIDENTIAL
CORPORATION, a Kentucky corporation (collectively, the
“Borrowers”), hereby unconditionally promise to pay to
the order of NATIONAL CITY BANK , a national banking
association (the “Bank”), as payee, having an office at
One East Fourth Street, Cincinnati, Ohio 45202 or at such other
place as the holder hereof may from time to time designate in
writing, the principal sum of ONE MILLION THREE HUNDRED EIGHTY-FIVE
THOUSAND FIVE HUNDRED FORTY-FOUR AND 00/100 DOLLARS ($1,385,544.00)
or so much as is actually drawn by Borrowers hereunder in lawful
money of the United States of America with interest thereon at the
Libor Loan Rate in accordance with the terms of this
Note.
1.
Definitions . The following terms shall have the following
meanings as used in this Note:
“Advance”
means each disbursement of the proceeds of the Loan evidenced by
this Note made under or pursuant to the Construction Loan
Agreement.
“Banking
Day” means any day other than a Saturday, Sunday, public
holiday or other day on which banking institutions in Cincinnati,
Ohio, are generally closed and do not conduct banking
business.
“Construction
Loan Agreement” means that certain Development Loan
Disbursing Agreement dated of even date herewith, by and between
Borrowers and the Bank, together with all modifications and
amendments thereto.
“Deed
of Trust” means that certain Deed of Trust, Assignment and
Security Agreement dated of even date herewith, granted by NTS
Virginia to the Bank and encumbering certain real property located
in Spotsylvania County, Virginia and more particularly described
therein, together with any and all amendments, modifications or
supplements thereto.
“Default
Rate” means an annual interest rate equal to the lesser of
(a) four percent (4%) plus the LIBOR Loan Rate existing at the time
of calculation of the Default Rate, or (b) the maximum interest
rate which Bank may by law charge Borrowers.
“Eurodollar
Banking Day” means any Banking Day on which banks in the
London Interbank Market deal in United States dollar deposits and
on which banking institutions are generally open for domestic and
international business at Cincinnati, Ohio and in New York, New
York.
“Guarantors”
shall mean NTS Mortgage Income Fund, a Delaware corporation, NTS
Guaranty Corporation, a Kentucky corporation and J.D. Nichols,
their successors and assigns, his heirs, executors, administrators,
personal representatives and assigns.
“Guaranties”
mean the Unconditional and Continuing Guaranties dated of even
date, given by Guarantors in favor of Bank in connection with the
loan evidenced by this Note and all amendments, modifications or
supplements thereof.
“Late
Charge” means an amount equal to the greater of (i) Twenty
and No/100ths Dollars ($20.00), or (ii) five percent (5%) of the
amount of such required but unpaid payment to Bank. Such Late
Charge is imposed to help defray the expenses incurred by Bank in
handling and processing the delinquent payment and to compensate
Bank for the loss of the use of the delinquent payment and the
amount shall be secured by the Deed of Trust and the other Loan
Documents.
“Libor
Loan Rate” means a fluctuating rate which is equal to the sum
of the greater of: (i) four and 00/100 percent (4.00%) per annum,
plus One Month Libor, determined by Bank, as available, at
the end of each Banking Day or (ii) Six and 00/100 percent (6.00%).
Bank shall not be required to notify Borrowers of any adjustment in
the Libor Loan Rate. Borrowers may, however, request a quote of the
prevailing One Month Libor on any Banking Day.
“Loan
Documents” means this Note, the Deed of Trust, the Guaranties
and any other agreement, instrument, certificate or document now or
hereafter executed to evidence or to secure the indebtedness
evidenced by this Note, together with any and all modifications,
amendments and supplements thereof.
“Maturity
Date” means September 1, 2010 (or such earlier date as the
Bank may accelerate the indebtedness evidenced hereby by reason of
Borrowers’ default hereunder or under any other Loan
Document).
“One
Month Libor” means the rate per annum (rounded upwards, if
necessary, to the next higher 1/16 of 1%) determined by Bank and
equal to the average rate per annum at which deposits (denominated
in United States dollars) in an amount similar to the principal
amount of the Note and with a maturity one month after the date of
reference are offered to Bank at 11:00 a.m. London time (or as soon
thereafter as practicable) on the date of reference by banking
institutions in the London, United Kingdom market, as such interest
rate is referenced and reported by the British Bankers Association
in the Bridge Financial Telerate system “Page 3750”
report, or, if the same is unavailable, any other generally
accepted authoritative source of such interest rate as Bank may
reference from time to time.
2.
Applicable Interest Rate. Interest shall be computed at the
Libor Loan Rate on a 360-day year basis and on the actual number of
days elapsed. All sums payable hereunder shall be payable in lawful
money of the United States at the address set forth above or at
such other address as the Bank may specify by written notice to
Borrowers.
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3.
Payments of Interest. Commencing on the date of this Note
and continuing through the Maturity Date, Borrowers shall make
monthly interest payments at the Libor Loan Rate on the outstanding
principal balance of the indebtedness evidenced hereby. The first
such payment shall be due and payable on the 1st day of August,
2009 and subsequently such interest payments shall be due and
payable on the 1st day of each successive calendar month
thereafter. The entire unpaid principal balance of the indebtedness
evidenced hereby, together with all accrued but unpaid interest and
all other sums payable to the Bank pursuant to this Note or any
other Loan Document, shall be due and payable in a single payment
on September 1, 2010.
4.
Prepayments. Borrowers may prepay this Note, in whole or in
part, without premium or penalty at the time of such
prepayment.
5.
Late Charges; Default Rate. If the Borrowers fail to pay, in
full, any interest payment or other sum required hereunder,
including all sums due hereunder at Maturity, and such failure to
pay continues for ten (10) days after Borrowers’ receipt of
written notice of such failure to pay, then, in addition to any
interest which may accrue at the Default Rate, Borrowers shall pay
to Bank, upon demand, a Late Charge. Payment of such Late Charge
shall not be construed as an agreement or privilege to extend the
date of the payment of any interest payment or other sum required
hereunder, nor as a waiver of any other right or remedy accruing to
Lender by reason of the occurrence of any Event of Default. The
payment of a Late Charge will
