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EXHIBIT 99.(b)(1)(B)
PROMISSORY NOTE
Borrower: WOLOHAN LUMBER CO. (TIN: 38-1746752)
1740 MIDLAND RD.
SAGINAW, MI 48603
Lender: Citizens Bank
Downtown Saginaw - Commercial
328 S. Saginaw St
Flint, MI 48502
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Principal Amount: $15,000,000.00
Initial Rate: 4.600%
Date of Note: June 22, 2001
PROMISE TO PAY. WOLOHAN LUMBER CO. ("Borrower") promises to pay to Citizens
Bank ("Lender"), or order, in lawful money of the United States of America, on
demand, the principal amount of Fifteen Million & 00/100 Dollars
($15,000,000.00) or so much as may be outstanding, together with interest on
the unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this loan immediately upon Lender's demand. Payment
in full is due immediately upon Lender's demand. Borrower will pay regular
monthly payments of all accrued unpaid interest due as of each payment date,
beginning July 31, 2001, with all subsequent interest payments to be due on the
same day of each month after that. Unless otherwise agreed or required by
applicable law, payments will be applied first to accrued unpaid interest, then
to principal, and any remaining amount to any unpaid collection costs and late
charges. The annual interest rate for this Note is computed on a 365/360 basis:
that is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay Lender
at Lender's address shown above or at such other place as Lender may designate
in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an independent index which is the 30-day
London Interbank Offering Rate (LIBOR) as published in the Wall Street Journal
(the "Index"). The Index is not necessarily the lowest rate charged by Lender on
its loans. If the Index becomes unavailable during the term of this loan, Lender
may designate a substitute Index after notice to Borrower. Lender will tell
Borrower the current Index rate upon Borrower's request. The interest rate
change will not occur more often than each month. Borrower understands that
Lender may make loans based on other rates as well. The Index currently is
3.850% per annum. The interest rate to be applied to the unpaid principal
balance of this Note will be at a rate of 0.750 percentage points over the
Index, resulting in an initial rate of 4.600% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law.
PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by Lender
in writing, relieve Borrower of Borrower's obligation to continue to make
payments of accrued unpaid interest. Rather, early payments will reduce the
principal balance due. Borrower agrees not to send Lender payments marked "paid
in full", "without recourse", or similar language. If Borrower sends such a
payment, Lender may accept it without losing any of Lender's rights under this
Note, and Borrower will remain obligated to pay any further amount owed to
Lender. All written communications concerning disputed amounts, including any
check or other payment instrument that indicates that the payment constitutes
"payment in full" of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: Citizens Banking Corporation, Loan Department, PO BOX 1790, Flint,
MI 48501-1790.
LATE CHARGE. If a regularly scheduled interest payment is 10 days or more
late, Borrower will be charged 5.000% of the unpaid portion of the regularly
scheduled payment or $25.00, whichever is greater. If Lender demands payment of
this loan, and Borrower does not pay the loan in full within 10 days after
Lender's demand, Borrower also will be charged either 5.000% of the unpaid
portion of the sum of the unpaid principal plus accrued unpaid interest or
$25.00, whichever is greater.
INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 4.750 percentage points
over the Index. The interest rate will not exceed the maximum rate permitted by
applicable law.
DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in any of
the related documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's ability
to repay this Note or perform Borrower's obligations under this Note or any
of the related documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this Note or
the related documents is false or misleading in any material respect,
either now or at the time made or furnished or becomes false or misleading
at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
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PROMISSORY NOTE
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Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This includes
a garnishment of any of Borrower's accounts, including deposit accounts,
with Lender. However, this Event of Default shall not apply if there is a
good faith dispute by Borrower as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in
its sole discretion, as being an adequate reserve or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any guarantor, endorser, surety, or accommodation party of any
of the indebtedness or any guarantor, endorser, surety, or accommodation
party dies or becomes incompetent, or revokes or disputes the validity of,
or liability under, any guaranty of the indebtedness evidenced by this
Note. In the event of a death, Lender, at its option, may, but shall not be
required to, permit the guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender,
and, in doing so, cure any Event of Default.
Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
this Note is impaired.
Insecurity. Lender in good faith believes itself insecure.
Cure Provisions. If any default, other than a default in payment is
curable and if Borrower has not been given a notice of a breach of the same
provision of this Note within the preceding twelve (12) months, it may be
cured (and no event of default will have occurred) if Borrower, after
receiving written notice from Lender demanding cure of such default: (1)
cures the default within ten (10) days; or (2) If the cure requires more
than ten (10) days, immediately initials steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, and then
Borrower will pay that amount.
ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's reasonable
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including reasonable attorneys' fees and expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction), and
appeals. If not prohibited by applicable law, Borrower also will pay any court
costs in addition to all other sums provided by law.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Michigan. This Note
has been accepted by Lender in the State of Michigan.
CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request
to submit to the jurisdiction of the courts of Genesee County, State of
Michigan.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether
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PROMISSORY NOTE
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checking, savings, or some other account). This includes all accounts Borrower
holds jointly with someone else and all accounts Borrower may open in the
future. However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the debt against any and all such accounts, and, at Lender's option,
to administratively freeze all such accounts to allow Lender to protect
Lender's charge and setoff rights provided in this paragraph.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested orally by Borrower or as provided in this paragraph.
Lender may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Lender's office shown above. The
following persons currently are authorized to request advances and authorize
payments under the line of credit until Lender receives from Borrower, at
Lender's address shown above, written notice of revocation of their authority;
EDWARD J. DEAN, CONTROLLER; AND DAVID G. HONAMAN, VP-ADMINISTRATION/SEC/CFO.
Borrower agrees to be liable for all sums either: (A) advanced in accordance
with the instructions of an authorized person or (B) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs.
LINE OF CREDIT ADVANCES. Advances on this line of credit may be made by
depositing funds into deposit acct.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.
GENERAL PROVISIONS. This Note is payable on demand. The inclusion of specific
default provisions or rights of Lender shall not preclude Lender's right to
declare payment of this Note on its demand. Lender may delay or forgo enforcing
any of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive presentment, demand for payment, and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated
in writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender's security interest in the collateral; and
take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made. The obligations under this Note are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.
BORROWER:
WOLOHAN LUMBER CO.
By: /S/ David G. Honaman
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DAVID G. HONAMAN, VP-ADMINISTRATION, SEC
of WOLOHAM LUMBER CO.