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Exhibit 4.02(a)
LOAN NO. 2406499-001
PROMISSORY NOTE
$690,000.00 AUGUST 31, 1995
FOR VALUE RECEIVED, FRANK'S NURSERY & CRAFTS, INC., a Michigan
corporation ("BORROWER"), promises to pay to the order of METLIFE CAPITAL
FINANCIAL CORPORATION ("METLIFE") at METLIFE's office at 10900 N.E. 4th St.,
Suite 500, Bellevue, Washington 98004, Attention: Real Estate Department, or at
such other address as the holder hereof may from time to time designate in
writing, the principal sum of SIX HUNDRED NINETY THOUSAND AND NO/100 DOLLARS
($690,000.00) 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 rate of 8.69% per annum (computed on the basis of a
360-day year of twelve (12) consecutive thirty (30)-day months) in installments
as follows: (i) interest only in advance at the rate of $166.56 per day shall
be due and payable on the date the proceeds of the Loan are initially disbursed
to or for the benefit of BORROWER (including, without limitation, disbursement
into an escrow for the benefit of BORROWER) for the period beginning on the
date of such disbursement and ending on August 31, 1995; (ii) one hundred
nineteen (119) installments of principal and interest in the amount of
$6,871.77 each shall be payable commencing on October 1, 1995, and continuing
on the first day of each and every succeeding month until and including August
1, 2005; and (iii) on September 1, 2005, all then unpaid principal and interest
hereon shall be due and payable.
If any payment shall not be paid when due and shall remain unpaid for
ten (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.
Upon not less than thirty (30) days advance written notice to METLIFE
at any time after October 1, 2000, 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 current weekly
average yield of seven (7)-year U.S. Treasury Notes (as published in Federal
Reserve Statistical Release H.15 [519]) (the "Index") from Friday, May 26,
1995, to the Friday immediately preceding the week in 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
is unchanged or has increased from Friday, May 26, 1995, to the Friday
immediately preceding the prepayment date, no Prepayment Premium shall be due.
The Premium Factor shall be the amount shown on the following chart for the
month in which prepayment occurs:
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Number of
Months
Remaining (Years) Premium Factor
--------- ------- --------------
120 - 109 (10) .063
108 - 97 ( 9) .058
96 - 85 ( 8) .054
84 - 73 ( 7) .049
72 - 61 ( 6) .043
60 - 49 ( 5) .038
48 - 37 ( 4) .032
36 - 25 ( 3) .026
24 - 13 ( 2) .020
12 - 1 ( 1) .013
If the Federal Reserve Board ceases to publish Statistical Release H.15 [519],
then the decrease in the weekly average yield of seven (7)-year U.S. Treasury
Notes will be determined from another source designated by METLIFE. Prepayment
prior to October 1, 2000 will not be permitted.
If METLIFE 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. The Prepayment Premium shall not be
payable with respect to condemnation awards or insurance proceeds from fire or
other casualty which METLIFE 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 METLIFE for the loss of its bargain and the
reimbursement of internal expenses and administrative fees and expenses
incurred by METLIFE.
The Loan is secured, in part, by a certain Commercial Mortgage,
Security Agreement, Assignment of Leases and Rents and Fixture Filing (the
"Mortgage") covering the real property and other assets (the "Property")
described therein, and by certain other documents executed and delivered in
connection herewith (the "Loan Documents").
Each of the following shall constitute an Event of Default ("Event of
Default") hereunder and under the Mortgage:
a. 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 METLIFE specifying such failure; or
b. Failure of BORROWER within the time required by the Mortgage to
make any payment for taxes, insurance or for reserves for such payments, or any
other payment
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necessary to prevent the filing of any lien, and such failure shall continue
for a period of ten (10) days after written notice is given to BORROWER by
METLIFE specifying such failure; or
c. Failure by BORROWER to observe or perform any obligations of
BORROWER to METLIFE on or with respect to any transactions, debts, undertakings
or agreements other than the transaction evidenced by this Note; or
d. Failure of BORROWER to make any payment or perform any
obligation under any superior liens or encumbrances on the Property, within the
time required thereunder, or commencement of any suit or other action to
foreclose any superior liens or encumbrances; or
e. The Property is transferred or any agreement to transfer any
part or interest in the Property in any manner whatsoever is made or entered
into without the prior written consent of METLIFE; or
f. Filing by BORROWER of a voluntary petition in bankruptcy or
filing by BORROWER of any petition or answer seeking or acquiescing in any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief for itself under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, or the seeking, consenting to, or acquiescing by BORROWER in the
appointment of any trustee, receiver, custodian, conservator or liquidator for
BORROWER, any part of the Property, or any of the income or rents of the
Property, or the making by BORROWER of any general assignment for the benefit of
creditors, or the inability of or failure by BORROWER to pay its debts generally
as they become due, or the business failure of BORROWER, or the making or
suffering of a preference within the meaning of federal bankruptcy law or the
making of a fraudulent transfer under applicable federal or state law, or
concealment by BORROWER of any of its property in fraud of creditors, or the
imposition of a lien upon any of the property of BORROWER which is not
discharged in the manner permitted by the Mortgage, or the giving of notice by
BORROWER to any governmental body of insolvency or suspension of operations; or
g. Filing of a petition against BORROWER seeking any
reorganization, arrangement, composition, readjustment, liquidation, or similar
relief under any present or future federal, state or other law or regulation
relating to bankruptcy, insolvency or other relief for debts, or the appointment
of any trustee, receiver, custodian, conservator or liquidator of BORROWER, of
any part of the Property or of any of the income or rents of the Property,
unless such petition shall be dismissed within sixty (60) days after such
filing, but in any event prior to the entry of an order, judgment or decree
approving such petition; or
h. The institution of any proceeding for the dissolution or
termination of BORROWER voluntarily, involuntarily, or by operation of law, and,
in the event any such proceeding is involuntary, if the same is not dismissed
within sixty (60) days after it is commenced; or
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i. A material adverse change occurs in the assets, liabilities or
net worth of BORROWER or any of the guarantors of the indebtedness evidenced by
this Note from the assets, liabilities or net worth of BORROWER or any of the
guarantors of the indebtedness evidenced by this Note previously disclosed to
METLIFE; or
j. Any warranty, representation or statement furnished to METLIFE
by or on behalf of BORROWER under this Note, the Mortgage, or any of the Loan
Documents shall prove to have been false or misleading in any material respect;
or
k. Failure of BORROWER to observe or perform any other covenant or
condition contained in this Note and such failure shall continue for thirty (30)
days after notice is given to BORROWER specifying the nature of the failure. No
notice of default and no opportunity to cure shall be required if during the
prior twelve (12) months METLIFE has already sent two (2) notices to BORROWER
concerning default in performance of the same obligation; or
l. Failure of BORROWER to observe or perform any other obligation
under the Mortgage or any of the Loan Documents when such observance or
performance is due, and such failure shall continue beyond the applicable cure
period set forth in the Mortgage or in the Loan Documents, as the case may be,
or if the default cannot be cured within such applicable cure period, if
BORROWER fails within such time to commence and pursue curative action with
reasonable diligence or fails at any time after expiration of such applicable
cure period to continue with reasonable diligence all necessary curative
actions. No notice of default and no opportunity to cure shall be required if
during the prior twelve (12) months METLIFE has already sent two (2) notices to
BORROWER concerning default in performance of the same obligation; or
n. Any of the foregoing events described in subparagraphs (f)-(i)
above occur with respect to any guarantor of any of BORROWER's obligations in
connection with the indebtedness evidenced by this Note; or
o. The occurrence of any Event of Default under any of the
documents evidencing or securing the following loans by METLIFE to Borrower:
(i) MetLife Loan No. 2406499-002 in the original
principal amount of $825,000.00;
(ii) MetLife Loan No. 2406499-003 in the original
principal amount of $975,000.00;
(iii) MetLife Loan No. 2406499-004 in the original
principal amount of $660,000.00;
(iv) MetLife Loan No. 2406499-005 in the original
principal amount of $675,000.00;
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(v) MetLife Loan No. 2406499-006 in the original
principal amount of $1,125,000.00;
(vi) MetLife Loan No. 2406499-007 in the original
principal amount of $937,000.00;
(vii) MetLife Loan No. 2406499-009 in the original
principal amount of $1,125,000.00;
(viii) MetLife Loan No. 2406499-010 in the original
principal amount of $825,000.00;
(ix) MetLife Loan No. 2406499-011 in the original
principal amount of $825,000.00;
(x) MetLife Loan No. 2406499-012 in the original
principal amount of $1,200,000.00; or
(xi) MetLife Loan No. 2406499-013 in the original
principal amount of $855,000.00.
Upon the occurrence of any Event of Default, METLIFE shall have the
option to declare the entire amount of principal and interest due under this
Note immediately due and payable without notice or demand, and METLIFE may
exercise any of its rights under this Note, under the Mortgage and under the
Loan Documents. After acceleration or maturity, BORROWER shall pay interest on
the outstanding principal balance of this Note at the rate of five percent
(5.00%) per annum above Chase Manhattan Bank's prime interest rate in effect
from time to time, or fifteen percent (15.00%) per annum, whichever is higher,
provided that such interest rate shall not exceed the maximum interest rate
permitted by law. In the event Chase Manhattan Bank is no longer in existence
or ceases to publish its prime interest rate, the prime interest rate of
another bank shall be designated by METLIFE for the purpose of the immediately
preceding sentence.
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.
If this Note is placed in the hands of an attorney for collection,
BORROWER agrees to pay reasonable attorneys' fees and costs incurred by METLIFE
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), the prevailing party 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.
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This Note shall be governed and construed in accordance with the laws of the
State of Illinois 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 Illinois 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.
This Note is given in a commercial transaction for business purposes.
BORROWER represents that the indebtedness evidenced hereby is a business loan
within the purview and intent of the Illinois Interest Act (Ill. Rev. Stat. ch.
17 para. 6404), transacted solely for the purpose of owning and operating the
business of BORROWER.
This Note may be declared due prior to its expressed maturity date, all in
the events, on the terms, and in the manner provided for in the Mortgage.
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, 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 METLIFE 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; and (iv) consent
to any extension of time for the payment of this Note, or any installment
hereof, made by agreement by METLIFE with any person now or hereafter liable for
the payment of this Note, even if BORROWER is not a party to such agreement.
BORROWER authorizes METLIFE or its agent to insert in the spaces
provided herein the appropriate interest rate and the payment amounts as of the
date of the initial advance hereunder.
All agreements between BORROWER and METLIFE, 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 METLIFE exceed the maximum amount
permissible under the applicable law. If, from any circumstance whatsoever,
interest would otherwise be payable to METLIFE in excess of the maximum amount
permissible under applicable law, the interest payable to METLIFE shall be
reduced to the maximum amount permissible under applicable law; and if from any
circumstance METLIFE 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
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to BORROWER. All interest paid or agreed to be paid to METLIFE 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.
METLIFE 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 METLIFE.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING
ARE ENFORCEABLE. NO OTHER TERMS OR ORAL PROMISES NOT
CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER
WRITTEN AGREEMENT.
BORROWER:
FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
By: Robert M. Lovejoy
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Robert M. Lovejoy,
Vice President
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