CONSOLIDATED,
AMENDED AND RESTATED
PROMISSORY NOTE

 

 $5,610,145.32    Louisville, Kentucky
 April 25, 2012

 

WHEREAS, RESIDENTIAL MANAGEMENT COMPANY, a Kentucky corporation having an
address of 10172 Linn Station Road, Louisville, Kentucky, 40223 (the “Lender”)
has made certain loans and advances to NTS/VIRGINIA DEVELOPMENT COMPANY, a
Virginia corporation having an address of 10172 Linn Station Road, Louisville,
Kentucky 40223 (the “Borrower”), which loans and advances are evidenced by the
following promissory notes:
 
(a) that certain Fourth 2011 Consolidated Promissory Note dated December 31,
2011 made by Borrower payable to the order of Lender in the face principal
amount of Five Million Three Hundred Four Thousand Three Hundred Seven Dollars
and Forty Eight Cents ($5,304,307.48) (“Note 2011”); and

(b) that certain Promissory Note dated January 18, 2012 made by Borrower payable
to the order of Lender in the face principal amount of Thirty Nine Thousand One
Hundred Sixty Five Dollars and Eight Nine Cents ($39,165.89) (“Note 2012-1”);
and

(c) that certain Promissory Note dated February 20, 2012 made by Borrower
payable to the order of Lender in the face principal amount of Thirty Four
Thousand Four Hundred Fifty Seven Dollars and Thirty Nine Cents ($34,457.39)
(“Note 2012-2”); and

(d) that certain Promissory Note dated March 23, 2012 made by Borrower payable
to the order of Lender in the face principal amount of Fifty Three Thousand Six
Hundred Thirty Two Dollars and Eight Cents ($53,632.08) (“Note 2012-3”); and

Notes 2011, 2012-1, 2012-2 and 2012-3 are sometimes hereinafter referred to
collectively as the “Notes.”

WHEREAS, Lender has made additional advances or loans to the Borrower during the
month of April 2012 for payroll billings and overhead fees in the aggregate
amount of Twenty Four Thousand Two Hundred Nine Dollars and Thirty Nine Cents
($24,209.39) (the “Advances”); and
 
WHEREAS, Lender has made advances to NTS Mortgage Income Fund, a Delaware
corporation having an address of 10172 Linn Station Road, Louisville, Kentucky
40223 (the “Fund”), in the aggregate amount of Three Thousand Three Hundred
Sixty Dollars and No Cents ($3,360.00), which amount is evidenced by the
following promissory note from the Fund to Lender (the “Fund Note”):

(a)  
that certain Fourth 2011 Consolidated Promissory Note dated December 31, 2011
made by the Fund payable to the order of Lender in the face principal amount of
Three Thousand Three Hundred Sixty Dollars and No Cents ($3,360.00); and

 
 
 
 
WHEREAS, Lender has made advances to NTS/Lake Forest II Residential Corporation,
a Kentucky corporation having an address of 10172 Linn Station Road, Louisville,
Kentucky 40223 (“NTS/LFII”), in the aggregate amount of One Hundred Forty Five
Thousand Seven Hundred Fifty Six Dollars and Twenty One Cents ($145,756.21),
which amount is evidenced by the following promissory note from NTS/LFII to
Lender (the “NTS/LFII Note”):

(a)  
that certain Fourth 2011 Consolidated Promissory Note dated December 31, 2011
made by NTS/LFII payable to the order of Lender in the face principal amount of
One Hundred Forty Five Thousand Seven Hundred Fifty Six Dollars and Twenty One
Cents ($145,756.21); and

WHEREAS, Lender has made additional advances or loans to NTS/LFII during the
months of January – April 2012 for payroll billing and overhead fees in the
aggregate amount of Five Thousand Two Hundred Fifty Six Dollars and Eighty Eight
Cents ($5,256.88) (the “NTS/LFII Advances”); and

WHEREAS, Borrower and NTS/LFII are wholly-owned subsidiaries of the Fund, and in
consideration of the benefits that Borrower has received from the loans and
advances made to the Fund and NTS/LFII pursuant to the Fund Note, the NTS/LFII
Note and the NTS/LFII Advances, Borrower has agreed to assume the Fund Note, the
NTS/LFII Note, and the NTS/LFII Advances; and

WHEREAS, for the convenience of the Borrower and the Lender, Borrower and Lender
have agreed to consolidate the Notes, the Advances, the Fund Note, the NTS/LFII
Note and the NTS/LFII Advances (sometimes hereinafter referred to collectively
as the “Notes/Advances”), in this Consolidated, Amended and Restated Promissory
Note, which consolidation shall in no manner constitute a repayment,
satisfaction or novation of the indebtedness evidenced by the Notes/Advances;

NOW THEREFORE, Borrower makes and grants to Lender this Consolidated, Amended
and Restated Promissory Note (the “Note”) under the following terms:
 
FOR VALUE RECEIVED, Borrower promises to pay to Lender, in lawful money of the
United States of America in immediately available funds at its offices located
at 10172 Linn Station Road, Louisville, Kentucky 40223, or at such other
location as the Lender may designate from time to time, the principal sum of
FIVE MILLION SIX HUNDRED TEN THOUSAND ONE HUNDRED FORTY FIVE DOLLARS AND THIRTY
TWO CENTS ($5,610,145.32) (the “Loan”), together with interest accruing on the
outstanding principal balance from the date hereof, as provided below:

1.           Interest Rate.  The principal balance of the Loan will bear
interest at a fixed rate per annum (calculated on the basis of the actual number
of days that principal is outstanding over a year of 360 days) equal to five and
thirty-four one-hundredths percent (5.34%) per annum (the “Fixed Rate”).

In no event will the rate of interest hereunder exceed the maximum rate allowed
by law.

 
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2.           Payment Terms.  Interest shall be due and payable commencing on the
first day of each month beginning May 1, 2012 until June 30, 2012 on which date
all outstanding principal and accrued interest shall be due and payable in full
(the “Maturity Date”).  Payments received will be applied to charges, fees and
expenses (including attorneys’ fees), accrued interest and principal in any
order the Lender may choose, in its sole discretion.

3.           Late Payments; Default Rate.  If a payment is more than 15 days
late, the Borrower shall also pay to the Lender a late charge equal to 5% of the
unpaid portion of the payment or $100, whichever is greater (the “Late
Charge”).  Such 15 day period shall not be construed in any way to extend the
due date of any such payment.  Upon maturity, whether by acceleration, demand or
otherwise, and at the option of the Lender upon the occurrence of any Event of
Default (as hereinafter defined) and during the continuance thereof, this Note
shall bear interest at a rate per annum (calculated on the basis of the actual
number of days that principal is outstanding over a year of 360 days) which
shall be four percentage points (4%) in excess of the Fixed Rate in effect from
time to time but not more than the maximum rate allowed by law (the “Default
Rate”).  The Default Rate shall continue to apply whether or not judgment shall
be entered on this Note.  Both the Late Charge and the Default Rate are imposed
as liquidated damages for the purpose of defraying the Lender’s expenses
incident to the handling of delinquent payments, but are in addition to, and not
in lieu of, the Lender’s exercise of any rights and remedies hereunder, under
the Loan Documents or under applicable law, and any fees and expenses of any
agents or attorneys which the Lender may employ.  In addition, the Default Rate
reflects the increased credit risk to the Lender of carrying a loan that is in
default.  The Borrower agrees that the Late Charge and Default Rate are
reasonable forecasts of just compensation for anticipated and actual harm
incurred by the Lender, and that the actual harm incurred by the Lender cannot
be estimated with certainty and without difficulty.

4.           Prepayment.  The indebtedness evidenced by this Note may be prepaid
in whole or in part at any time without penalty or premium.

5.           Events of Default.  The occurrence of any of the following events
will be deemed to be an “Event of Default” under this Note:

(i)           Borrower fails to make any payment when due hereunder, or fails to
otherwise comply with any term or provision of this Note, and such failure is
not cured within any applicable cure period or fails to comply;

(ii)           The filing by or against Borrower of any proceeding in
bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such proceeding
instituted against any Obligor, such proceeding is not dismissed or stayed
within 30 days of the commencement thereof);

(iii)           Any assignment by Borrower for the benefit of creditors, or any
levy, garnishment, attachment or similar proceeding is instituted against any
property of Borrower;
 
(iv)           A judgment or judgments are entered against Borrower, Borrower
defaults in the payment of any other debts or there is a material adverse change
in the financial condition
 

 
 
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of Borrower, or the Lender in good faith believes the prospects for repayment of
this Note have been impaired; and

(v)           Any material statement made to the Lender about Borrower, or about
Borrower’s financial condition, or about any collateral securing this Note is
false or misleading.

Upon the occurrence of an Event of Default: (a) in an Event of Default specified
in clauses (ii) or (iii) above shall occur, the outstanding principal balance
and accrued interest hereunder together with any additional amounts payable
hereunder shall be immediately due and payable without demand or notice of any
kind; (b) if any other Event of Default shall occur, the outstanding principal
balance and accrued interest hereunder together with any additional amounts
payable hereunder, at the option of the Lender and without demand or notice of
any kind may be accelerated and become immediately due and payable; (c) at the
option of the Lender, this Note will bear interest at the Default Rate from the
date of the occurrence of the Event of Default; and (d) the Lender may exercise
from time to time any of the rights and remedies available to the Lender under
applicable law.

6.           Indemnity.  The Borrower agrees to indemnify each of the Lender,
each legal entity, if any, who controls, is controlled by or is under common
control with the Lender, and each of their respective directors, officers and
employees (the “Indemnified Parties”), and to hold each Indemnified Party
harmless from and against any and all claims, damages, losses, liabilities and
expenses (including all fees and charges of internal or external counsel with
whom any Indemnified Party may consult and all expenses of litigation and
preparation therefor) which any Indemnified Party may incur or which may be
asserted against any Indemnified Party by any person, entity or governmental
authority (including any person or entity claiming derivatively on behalf of the
Borrower), in connection with or arising out of or relating to the matters
referred to in this Note whether (a) arising from or incurred in connection with
any breach of a representation, warranty or covenant by the Borrower, or (b)
arising out of or resulting from any suit, action, claim, proceeding or
governmental investigation, pending or threatened, whether based on statute,
regulation or order, or tort, or contract or otherwise, before any court or
governmental authority; provided, however, that the foregoing indemnity
agreement shall not apply to any claims, damages, losses, liabilities and
expenses solely attributable to an Indemnified Party’s gross negligence or
willful misconduct. The indemnity agreement contained in this Section shall
survive the termination of this Note, payment of any amounts hereunder and the
assignment of any rights hereunder.  The Borrower may participate at its expense
in the defense of any such auction or claim.

7.           Miscellaneous. All notices, demands, requests, consents, approvals
and other communications required or permitted hereunder (“Notices”) must be in
writing (except as may be agreed otherwise above with respect to borrowing
requests) and will be effective upon receipt. Notices may be given in any manner
to which the parties may separately agree, including electronic mail.  Without
limiting the foregoing, first-class mail, facsimile transmission and commercial
courier service are hereby agreed to as acceptable methods for giving
Notices.  Regardless of the manner in which provided, Notices may be sent to a
party’s address as set forth above or to such other address as any party may
give to the other for such purpose in accordance with this section.  No delay or
omission on the Lender’s part to exercise any right or power
 
 
 
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 arising hereunder will impair any such right or power.  The Lender’s rights and
remedies hereunder are cumulative and not exclusive of any other rights or
remedies which the Lender may have under other agreements, at law or in
equity.  No modification, amendment or waiver of, or consent to any departure by
the Borrower from, any provision of this Note will be effective unless made in a
writing signed by the Lender, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given.  The Borrower
agrees to pay on demand, to the extent permitted by law, all costs and expenses
incurred by the Lender in the enforcement of its rights in this Note and in any
security therefor, including without limitation reasonable fees and expenses of
the Lender’s counsel.  If any provision of this Note is found to be invalid,
illegal or unenforceable in any respect by a court, all the other provisions of
this Note will remain in full force and effect.  The Borrower and all other
makers and indorsers of this Note hereby forever waive presentment, protest,
notice of dishonor and notice of non-payment.  The Borrower also waives all
defenses based on suretyship or impairment of collateral.  If this Notice is
executed by more than one Borrower, the obligations of such persons or entities
hereunder will be joint and several.  This Note shall bind the Borrower and its
heirs, executors, administrators, successors and assigns, and the benefits
hereof shall inure to the benefit of the Lender and its successors and assigns;
provided, however, that the Borrower may not assign this Note in whole or in
part without the Lender’s written consent and the Lender at any time may assign
this Note in whole or in part.

This Note has been delivered to and accepted by the Lender and will be deemed to
be made in the State where the Lender’s office indicated above is located.  This
Note will be interpreted and the rights and liabilities of the Lender and the
Borrower determined in accordance with the laws of the State where the Lender’s
office indicated above is located, excluding its conflict of laws rules. The
Borrower hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court in the county or judicial district where the Lender’s office
indicated above is located; provided that nothing contained in this Note will
prevent the Lender from bringing any action, enforcing any award or judgment or
exercising any rights against the Borrower individually, against any security or
against any property of the Borrower within any other county, state or other
foreign or domestic jurisdiction.  The Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Lender and the
Borrower. The Borrower waives any objection to venue and any objection based on
a more convenient forum in any action instituted under this Note.

8.           Waiver of Jury Trial.  The Borrower irrevocably waives any and all
right it may have to a trial by jury in any action, proceeding or claim of any
nature relating to this Note, any documents executed in connection with this
Notice or any transaction contemplated in any of such documents.  The Borrower
acknowledges that the foregoing waiver is knowing and voluntary.

The Borrower acknowledges that it has read and understands all of the provisions
of this Note, including the waiver of jury trial, and has been advised by
counsel as necessary or appropriate.

 
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WITNESS the due execution hereof by an authorized officer of Borrower, with the
intent to be legally bound hereby.

 

 
LENDER:
 
RESIDENTIAL MANAGEMENT COMPANY,
a Kentucky corporation
 
 
By:           /s/ Gregory A. Wells         
Name:      Gregory A. Wells
Title:        Executive Vice President
     
BORROWER:
 
NTS/VIRGINIA DEVELOPMENT COMPANY,
a Virginia corporation
 
 
By:           /s/ Brian F. Lavin         
Name:      Brian F. Lavin
Title:        President

 
 
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