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EXHIBIT 4.05(a)
PROMISSORY NOTE
Dated as of April 22, 1996
$741,000.00
FOR VALUE RECEIVED, the undersigned, FRANK'S NURSERY AND CRAFTS, INC.,
a Michigan corporation, (" Maker"), promises to pay to the order of FIRST UNION
NATIONAL BANK OF NORTH CAROLINA, a national banking association ("Payee"), at
the office of Payee at One First Union Center TW- 8, Charlotte, North Carolina
28288, or at such other place as Payee may designate to Maker in writing from
time to time, the principal sum of SEVEN HUNDRED FORTY-ONE THOUSAND AND NO/100
DOLLARS ($741,000.00), together with interest on so much thereof as is
outstanding and unpaid (the "Loan"), from the date of the advance of the
principal evidenced hereby, at the rate of 9.375% per annum (the "Note Rate"),
in lawful money of the United States of America, which shall at the time of
payment be legal tender in payment of all debts and dues, public and private.
ARTICLE I - SECURED NOTE
The indebtedness evidenced by this Promissory Note (the "Note") and
the obligations created hereby are secured by that certain mortgage and
security agreement (the "Security Instrument") from Maker for the benefit of
Payee, dated of even date herewith, concerning property located in Franklin
County, Ohio. The Security Instrument together with this Note and all other
documents to or of which Payee is a party or beneficiary now or hereafter
evidencing, securing, guarantying, modifying or otherwise relating to the
indebtedness evidenced hereby, are herein referred to collectively as the "Loan
Documents". All of the terms and provisions of the Loan Documents are
incorporated herein by reference. Some of the Loan Documents are to be filed
for record on or about the date hereof in the appropriate public records.
ARTICLE II - TERMS AND CONDITIONS
2.1 Computation of Interest. Interest shall be computed hereunder
based on a 360-day year and based on twelve (12) 30-day months for each full
calendar month and on the actual number of days elapsed for any partial month
in which interest is being calculated. In computing the number of days during
which interest accrues, the day on which funds are initially advanced shall be
included regardless of the time of day such advance is made, and
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the day on which funds are repaid shall be included unless repayment is
credited prior to close of business.
2.2 Payment of Principal and Interest. Payments in federal funds
immediately available in the place designated for payment received by Payee
prior to 2:00 p.m. local time at said place of payment shall be credited prior
to close of business, while other payments may, at the option of Payee, not be
credited until immediately available to Payee in federal funds in the place
designated for payment prior to 2:00 p.m. local time at said place of payment
on a day on which Payee is open for business. Such principal and interest
shall be payable in equal consecutive monthly installments of $6,846.72 each,
beginning on the first day of the second full calendar month following the date
of this Note (or on the first day of the first full calendar month following
the date hereof, in the event the advance of the principal amount evidenced by
this Note is the first day of a calendar month), and continuing on the first
day of each and every month thereafter through and including April 1, 2006. On
May 1, 2006 (the "Maturity Date") the entire outstanding principal balance
hereof, together with all accrued but unpaid interest thereon, shall be due and
payable in full.
2.3 Application of Payments. Each such monthly installment shall
be applied first to the payment of accrued interest and then to reduction of
principal.
2.4 Payment of "Short Interest". If the advance of the principal
amount evidenced by this Note is made on a date other than the first day of a
calendar month, then Maker shall pay to Payee contemporaneously with the
execution hereof interest at the Note Rate for a period from the date hereof
through and including the last day of this calendar month.
2.5 Prepayment.
(a) This Note may be prepaid in whole but not in part
(except as otherwise specifically provided herein) at any time after the fourth
(4th) anniversary of this Note provided (i) written notice of such prepayment
is received by Payee not more than ninety (90) days and not less than sixty
(60) days prior to the date of such prepayment, (ii) such prepayment is
accompanied by all interest accrued hereunder and all other sums due hereunder
or under the other Loan Documents, and (iii) if such prepayment occurs after
the fourth (4th) anniversary of this Note but before the date that is nine (9)
years and six (6) months after the date of this Note Payee is paid a prepayment
fee in an amount equal to the greater of (A) one percent (1.0%) of the
principal amount being prepaid, and (B) the positive excess of (1) the present
value ("PV") of all future installments of principal and interest due under
this Note absent any such prepayment including the principal amount due at
maturity (collectively, "All Future Payments"),
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discounted at an interest rate per annum equal to the sum of (a) the Treasury
Constant Maturity Yield Index published during the second full week preceding
the date on which such premium is payable for instruments having a maturity
coterminous with the remaining term of this Note, and (b) fifty (50) basis
points, over (2) the then outstanding principal balance hereof immediately
before such prepayment [(PV of All Future Payments) - (principal balance at
time of prepayment) = prepayment fee]. "Treasury Constant Maturity Yield
Index" shall mean the average yield for "This Week" as reported by the Federal
Reserve Board in Federal Reserve Statistical Release H.15(519). If there is no
Treasury Constant Maturity Yield Index for instruments having a maturity
coterminous with the remaining term of this Note, then the index shall be equal
to the weighted average yield to maturity of the Treasury Constant Maturity
Yield Indices with maturities next longer and shorter than such remaining
average life to maturity, calculated by averaging (and rounding upward to the
nearest whole multiple of 1/100 of 1% per annum, if the average is not such a
multiple) the yields of the relevant Treasury Constant Maturity Yield Indices
(rounded, if necessary, to the nearest 1/100 of 1% with any figure of 1/200 of
1% or above rounded upward). In the event that any prepayment fee is due
hereunder, Payee shall deliver to Maker a statement setting forth the amount
and determination of the prepayment fee, and, provided that Payee shall have in
good faith applied the formula described above, Maker shall not have the right
to challenge the calculation or the method of calculation set forth in any such
statement in the absence of manifest error, which calculation may be made by
Payee on any day during the fifteen (15) day period preceding the date of such
prepayment. Payee shall not be obligated or required to have actually
reinvested the prepaid principal balance at the Treasury Constant Maturity
Yield Index or otherwise as a condition to receiving the prepayment fee. No
prepayment fee or premium shall be due or payable in connection with any
prepayment of the indebtedness evidenced by this Note made on or after the date
that is nine (9) years and six (6) months after the date of this Note. In
addition to the aforesaid prepayment fee if, upon any such prepayment (whether
prior to or after the date that is nine (9) years and six (6) months after the
date of this Note, the aforesaid prior written notice has not been received by
Payee, the prepayment fee shall be increased by an amount equal to the lesser
of (i) thirty (30) days' unearned interest computed on the outstanding
principal balance of this Note so prepaid and (ii) unearned interest computed
on the outstanding principal balance of this Note so prepaid for the period
from, and including, the date of prepayment through the otherwise stated
maturity date of this Note.
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(b) Partial prepayments of this Note shall not be
permitted.
(c) The prepayment fees provided above shall be due, to
the extent permitted by applicable law, under any and all circumstances where
all or any portion of this Note is paid prior to the Maturity Date, whether
such prepayment is voluntary or involuntary, even if such prepayment results
from Payee's exercise of its rights upon Maker's default and acceleration of
the maturity date of this Note (irrespective of whether foreclosure proceedings
have been commenced), and shall be in addition to any other sums due hereunder
or under any of the other Loan Documents (as hereinafter defined); provided,
however, that no prepayment fee shall be due or payable in connection with any
prepayment of the indebtedness evidenced by this Note that results from Payee's
election to apply insurance or condemnation proceeds as provided in the
Mortgage to the prepayment of such indebtedness at any time during the loan
term. No tender of a prepayment of this Note with respect to which a
prepayment fee is due shall be effective unless such prepayment is accompanied
by the prepayment fee. If the indebtedness of this Note shall have been
declared due and payable by Payee pursuant to Article III hereof, due to a
default by Maker, then any tender of payment of such indebtedness made prior to
the first anniversary date hereof must include a prepayment fee computed as
provided in this Article II plus an additional prepayment fee of three percent
(3%) of the principal balance of this Note.
ARTICLE III - DEFAULT
3.1 Events of Default. It is hereby expressly agreed that should
any default occur in the payment of principal or interest as stipulated above
and such payment is not made within five (5) days of the date such payment is
due (provided that no grace period is provided for the payment of principal and
interest due on the Maturity Date), or should any other default occur under any
of the Loan Documents that is not cured within any applicable grace or cure
period, then a default shall exist hereunder, and in such event the
indebtedness evidenced hereby, including all sums advanced or accrued hereunder
or under any other Loan Document, and all unpaid interest accrued thereon,
shall, at the option of Payee and without notice to Maker, at once become due
and payable and may be collected forthwith, whether or not there has been a
prior demand for payment and regardless of the stipulated date of maturity.
3.2 Late Charges. In the event that any payment is not received
by Payee on the date when due (subject to the applicable grace period), then in
addition to any default interest payments due hereunder, Maker shall also pay
to Payee a late charge in an
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amount equal to five percent (5%) of the amount of such overdue payment.
3.3 Default Interest Rate. So long as any default exists
hereunder, regardless of whether or not there has been an acceleration of the
indebtedness evidenced hereby, and at all times after maturity of the
indebtedness evidenced hereby (whether by acceleration or otherwise), interest
shall accrue on the outstanding principal balance of this Note at a rate per
annum equal to three percent (3%) in excess of the Note Rate, or if such
increased rate of interest may not be collected under applicable law, then at
the maximum rate of interest, if any, which may be collected from Maker under
applicable law (the "Default Interest Rate"), and such default interest shall
be immediately due and payable.
3.4 Maker's Agreements. Maker acknowledges that it would be
extremely difficult or impracticable to determine Payee's actual damages
resulting from any late payment or default, and such late charges and default
interest are reasonable estimates of those damages and do not constitute a
penalty. The remedies of Payee in this Note or in the Loan Documents, or at
law or in equity, shall be cumulative and concurrent, and may be pursued
singly, successively or together, in Payee's discretion.
3.5 Maker to Pay Costs. In the event this Note, or any part
hereof, is collected by or through an attorney-at-law, Maker agrees to pay all
costs of collection, including, but not limited to, reasonable attorneys' fees.
3.6 Intentionally omitted.
ARTICLE IV - GENERAL CONDITIONS
4.1 No Waiver; Amendment. No failure to accelerate the debt
evidenced hereby by reason of default hereunder, acceptance of a partial or
past due payment, or indulgences granted from time to time shall be construed
(i) as a novation of this Note or as a reinstatement of the indebtedness
evidenced hereby or as a waiver of such right of acceleration or of the right
of Payee thereafter to insist upon strict compliance with the terms of this
Note, or (ii) to prevent the exercise of such right of acceleration or any
other right granted hereunder or by any applicable laws; and Maker hereby
expressly waives the benefit of any statute or rule of law or equity now
provided, or that may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing. No extension of the time for
the payment of this Note or any installment due hereunder, made by agreement
with any person now or hereafter liable for the payment of this Note shall
operate to release, discharge, modify, change or affect the original liability
of Maker under this Note, either in whole or in part
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unless Payee agrees otherwise in writing. This Note may not be changed orally,
but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
4.2 Waivers. Presentment for payment, demand, protest and notice
of demand, protest and nonpayment and all other notices are hereby waived by
Maker. Maker hereby further waives and renounces, to the fullest extent
permitted by law, all rights to the benefits of any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption, appraisement,
exemption and homestead now or hereafter provided by the Constitution and laws
of the United States of America and of each state thereof, both as to itself
and in and to all of its property, real and personal, against the enforcement
and collection of the obligations evidenced by this Note or the other Loan
Documents.
4.3 Limit of Validity. The provisions of this Note and of all
agreements between Maker and Payee with respect to the Loan, whether now
existing or hereafter arising and whether written or oral, including, but not
limited to, the Loan Documents, are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of demand or acceleration of
the maturity of this Note or otherwise, shall the amount contracted for,
charged, taken, reserved, paid or agreed to be paid ("Interest") to Payee for
the use, forbearance or detention of the money loaned under this Note exceed
the maximum amount permissible under applicable law. If, from any circumstance
whatsoever, performance or fulfillment of any provision hereof or of any
agreement between Maker and Payee shall, at the time performance or fulfillment
of such provision shall be due, exceed the limit for Interest prescribed by law
or otherwise transcend the limit of validity prescribed by applicable law, then
ipso facto the obligation to be performed or fulfilled shall be reduced to such
limit, and if, from any circumstance whatsoever, Payee shall ever receive
anything of value deemed Interest by applicable law in excess of the maximum
lawful amount, an amount equal to any excessive Interest shall be applied to
the reduction of the principal balance owing under this Note in the inverse
order of its maturity (whether or not then due) or at the option of Payee be
paid over to Maker, and not to the payment of Interest. All Interest
(including any amounts or payments judicially or otherwise under the law deemed
to be Interest) contracted for, charged, taken, reserved, paid or agreed to be
paid to Payee shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of this Note, including
any extensions and renewals hereof until payment in full of the principal
balance of this Note so that the Interest thereon for such full term will not
exceed at any time the maximum amount permitted by applicable law. To the
extent United States federal law permits a greater amount of interest than is
permitted under the law of the State in which the Mortgaged Property is
located, Payee will rely on United Stated federal law for the purpose of
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determining the maximum amount permitted by applicable law. Additionally, to
the extent permitted by applicable law now or hereafter in effect, Payee may,
at its option and from time to time, implement any other method of computing
the maximum lawful rate under the law of the State in which the Mortgaged
Property is located or under other applicable law by giving notice, if
required, to Maker as provided by applicable law now or hereafter in effect.
This Section 4.3 will control all agreements with respect to the Loan between
Maker and Payee.
4.4 Use of Funds. Maker hereby warrants, represents and covenants
that no funds disbursed hereunder shall be used for personal, family or
household purposes.
4.5 Unconditional Payment. Maker is and shall be obligated to pay
principal, interest and any and all other amounts that become payable hereunder
or under the other Loan Documents absolutely and unconditionally and without
any abatement, postponement, diminution or deduction and without any reduction
for counterclaim or setoff. In the event that at any time any payment received
by Payee hereunder shall be deemed by a court of competent jurisdiction to have
been a voidable preference or fraudulent conveyance under any bankruptcy,
insolvency or other debtor relief law, then the obligation to make such payment
shall survive any cancellation or satisfaction of this Note or return thereof
to Maker and shall not be discharged or satisfied with any prior payment
thereof or cancellation of this Note, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof, and
such payment shall be immediately due and payable upon demand.
4.6 Governing Law. THIS NOTE SHALL BE INTERPRETED, CONSTRUED AND
ENFORCED ACCORDING TO THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED.
ARTICLE V - MISCELLANEOUS PROVISIONS
The terms and provisions hereof shall be binding upon and inure to the
benefit of Maker and Payee and their respective heirs, executors, legal
representatives, successors, successors-in-title and assigns, whether by
voluntary action of the parties or by operation of law. As used herein, the
terms "Maker" and "Payee" shall be deemed to include their respective heirs,
executors, legal representatives, successors, successors-in-title and assigns,
whether by voluntary action of the parties or by operation of law. If Maker
consists of more than one person or entity, each shall be jointly and severally
liable to perform the obligations of Maker under this Note. All personal
pronouns used herein, whether used in the masculine, feminine or neuter gender,
shall include all other genders; the singular shall include the plural and vice
versa. Titles of articles and sections are for convenience only and in no way
define, limit, amplify or describe the scope or
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intent of any provisions hereof. Time is of the essence with respect to all
provisions of this Note. This Note and the other Loan Documents contain the
entire agreements between the parties hereto relating to the subject matter
hereof and thereof and all prior agreements relative hereto and thereto that
are not contained herein or therein are terminated.
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Maker's Tax Identification No.:
38-156-1374
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IN WITNESS WHEREOF, Maker has executed this Note as of the date first
written above.
MAKER:
FRANK'S NURSERY AND CRAFTS, INC., a
Michigan corporation
By: Robert M. Lovejoy, Jr.
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Name: Robert M. Lovejoy, Jr.
Title: Vice President and Treasurer