together with any outstanding indebtedness under the New Restaurant Loans (as defined below) (collectively, the “Hearthstone Indebtedness”). The estimated aggregate of the Hearthstone Indebtedness outstanding as of November 3, 2014, is approximately $10,421,057, comprised of the amounts described below.
The Partner Note refers to the Term Note dated March 20, 2009, made by Robert J. Dourney, as borrower, in favor of Shawn C. Ryan, as lender, in the principal amount of $3,350,000.00, provided that such Partner Note has been transferred to Hearthstone Associates prior to the consummation of the Hearthstone Merger. The Partner Note accrues interest at the rate of five percent (5%) per annum, and the maturity date of the Partner Note is March 30, 2016 (the PN Maturity Date). Commencing on June 30, 2009 and until the PN Maturity Date, Mr. Dourney agreed to make quarterly payments of accrued interest in arrears at the annual rate of five percent (5%), quarterly principal payments of $30,000 from June 30, 2011, through March 30, 2012, quarterly principal payments of $60,000 from June 30, 2012 through December 30, 2015, and a final balloon payment of the remaining outstanding balance on March 31, 2016. Past due principal and interest, to the extent permitted by law, will accrue interest at twelve percent (12%). The Partner Note is secured by all of the assets of Mr. Dourney and is non-assignable. The note contains other customary terms and conditions. As of November 3, 2014, the outstanding principal indebtedness under the Partner Note was $3,170,000.
Private Investor Notes collectively refers to the Promissory Note dated June 1, 2013, made by the Hearthstone Subsidiary, as borrower, in favor of John E. Pepper, Jr., as lender, in the principal amount of $1,500,000.00, and the Promissory Note dated June 1, 2013, made by the Hearthstone Subsidiary, as borrower, in favor of John S. Pepper, in the principal amount of $500,000.00. The maturity date of the Private Investor Notes is May 31, 2016 (the PIN Maturity Date). The Private Investor Notes accrue interest at a rate equal to LIBOR plus eight percent (8%) per annum. Interest is due to be paid quarterly. No principal payments are due under the Private Investor Notes until the PIN Maturity Date. If the Private Investor Notes are not paid in full on or before the PIN Maturity Date, interest will accrue on the unpaid balance at the rate of eighteen percent (18%) per annum. The Private Investor Notes can be prepaid at any time. However, if the Hearthstone Subsidiary is sold on or before the PIN Maturity Date for gross proceeds greater than $20,000,000, then the Hearthstone Subsidiary is required to pay 5.0% of gross sale proceeds in excess of $20,000,000.00 to the lender. The Private Investor Notes contain other customary terms and conditions. As of November 3, 2014, the aggregate outstanding principal indebtedness under the Private Investor Notes was $2,000,000.
FFCC Notes collectively refers to the Secured Promissory Notes dated on or about May 9, 2013, made by the Hearthstone Subsidiary, as borrower, in favor of First Franchise Capital Corporation (FFCC), as lender, in the aggregate principal amount of $5,400,000.00. The FFCC Notes have a term of 60 months, commencing on June 10, 2013, and accrue interest on the outstanding balance at the rate of 5.93%. Payments of principal and interest of $59,761.42 are due monthly within one balloon payment of $3,156,165.45 due June 10, 2018. Under each of the FFCC Notes, a late fee equal to 10% of the amount past due will be assessed on any late payments, reduced to 5% on any amount paid after the maturity date. The FFCC Notes are secured by all of the assets of the Hearthstone Subsidiary, including, without limitation, the restaurants it operates. The FFCC Notes may be prepaid; however, if prepayment occurs prior to June 10, 2015, the Hearthstone Subsidiary will be required to pay a prepayment fee of 4.0% of the outstanding principal balance, and if prepayment occurs thereafter, the Hearthstone Subsidiary will be required to pay a prepayment fee of 1.0% of the outstanding principal balance. The FFCC Notes are guaranteed by Robert J. Dourney and Hearthstone Associates. If the Hearthstone Subsidiary requests that a co-obligor be added to the FFCC Notes or that the FFCC Notes be assumed by any party, FFCC, in its sole and exclusive discretion, may agree to such co-obligor or assumption, provided that (a) the Hearthstone Subsidiary must pay to FFCC a fee equal to 1% of the total then-outstanding balance, (b) such co-obligor or assuming party must meet all of the credit criteria of FFCC and any regulatory standards, and (c) the parties must enter into such contracts as FFCC deems necessary. The FFCC Notes contain other customary terms and conditions. As of November 3, 2014, the aggregate outstanding principal indebtedness under the FFCC Notes was $4,851,057.
New Restaurant Loans refers to borrowings to be made by Hearthstone Associates or the Hearthstone Subsidiary of up to $1,000,000 pursuant to commitments by third parties for construction of and equipment for a new franchise restaurant expected to be open for business by the end of the 2014 fiscal year. Approximately $400,000 was outstanding under the New Restaurant Loans as of November 3, 2014.