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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 28, 1996
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 1-1066
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GENERAL HOST CORPORATION
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(Exact name of registrant as specified in its charter)
New York State 13-0762080
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(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
One Station Place, P.O. Box 10045, Stamford, CT 06904
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(Address of principal executive offices) (Zip code)
Registrant's telephone number including area code: (203) 357-9900
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock, $1.00 Par Value New York Stock Exchange
and Pacific Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
and Pacific Stock Exchange
8% Convertible Subordinated New York Stock Exchange
Notes due February 15, 2002
11 1/2% Senior Notes due New York Stock Exchange
February 15, 2002
[Cover page 1 of 2 pages]
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether General Host Corporation, the
Registrant, (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value of General Host Corporation's Common Stock,
$1.00 par value, held by non-affiliates of General Host as of April 1, 1996:
$74,585,116*
Number of voting shares of General Host Corporation's Common Stock
outstanding as of April 1, 1996: 22,140,337.
DOCUMENTS INCORPORATED BY REFERENCE
General Host Corporation Proxy Part III, Items 10, 11, 12 and 13
Statement for Annual Meeting of
Shareholders to be held on
May 16, 1996 (hereinafter "the
Company's 1996 Proxy Statement")
* Does not include the market value of the outstanding Common Stock held by the
directors and officers of General Host which aggregates $9,824,919, since such
directors and officers may be considered affiliates of General Host.
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PART I
ITEM 1. BUSINESS
General Host Corporation ("General Host", the "Company" or the
"Registrant") operates a chain of specialty retail stores devoted to the sale
of lawn and garden products, crafts, Christmas merchandise and pet food and
supplies. Measured by sales and number of stores, the Company believes it is
the largest chain in the United States concentrating on the sale of such
products. As of January 28, 1996, the Company operated 261 stores in 16 states
under the name Frank's Nursery & Crafts(R) and three stores under the name
Frank's SuperCrafts(R). Unless otherwise stated, all statistics in this Item
were compiled as of January 28, 1996.
The Company's executive offices are located at One Station Place,
Stamford, Connecticut. The Company's mailing address is Post Office Box 10045,
Stamford, Connecticut 06904, and its telephone number is (203) 357-9900.
General Host was incorporated under the laws of the State of New York
in 1911 as General Baking Company. The Company has engaged in a number of
businesses since its organization.
With the acquisition of Frank's Nursery & Crafts, Inc. ("Frank's") in
1983, the Company began focusing its resources on developing the first national
chain of garden and crafts stores. At the time of its acquisition, Frank's had
95 stores principally located in the Midwest. In 1984, through the acquisition
of Flower Time, Inc., the Company obtained 17 stores in the New York
metropolitan area. In 1986, the Company further expanded into the eastern
United States when it acquired Scott's Seaboard Corporation, adding 14 stores
in the Washington, D.C. and Baltimore markets. In early 1989, the Company
increased its presence in the Philadelphia metropolitan area through the
acquisition of 12 store leases. Since 1983, the Company has built, leased or
acquired a net of 169 stores in existing and new markets.
In October 1994, the Company sold its interest in Sunbelt Nursery
Group, Inc. (See Note 3 on Page F-9 of this Annual Report on Form 10- K for a
discussion regarding Sunbelt.)
During the fourth quarter of 1993 the Company approved a plan to exit
26 unprofitable Frank's stores primarily in the Nashville, South Florida and
Orlando markets and to dispose of certain other properties. All stores were
closed as of February 7, 1994, with the exception of one store which closed
March 7, 1994.
The national lawn and garden market is highly fragmented, consisting
of thousands of local garden centers plus mass merchandisers who sell lawn and
garden products as part of their overall product lines. In fiscal 1995, the
Company's lawn and garden and nursery sales averaged approximately $1.1 million
per store. In addition to approximately $295 million in lawn and garden and
nursery sales, the Company generated approximately $266
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million in revenues in the last fiscal year from the sale of crafts and
Christmas products and $32 million from the sale of pet food and supplies.
Although no single company directly competes with the Company's
overall product lines, many retailers and mass merchandisers provide
competition with respect to certain of the Company's lines of business. The
Company competes with mass merchandisers, home center chains and many local and
regional garden centers in the lawn and garden and nursery business. The
Company competes in the crafts business with mass merchandisers, crafts store
chains and local craft stores. The Company competes with major department
stores, mass merchandisers, local garden centers and other retailers in the
Christmas business. The Company competes with mass merchandisers,
supermarkets, pet supply chains and local pet supply stores in the pet food and
supply business.
The Company's business is highly seasonal and subject to the impact of
weather conditions, which may affect consumer purchasing patterns. In fiscal
1995, 38% of the Company's sales occurred during the spring season (late March
to mid-June) and 25% occurred at Christmas time (November to late December).
Normally, spring is the most profitable season, and Christmas is the next most
profitable season. Losses usually are experienced during the other periods of
the year. The Company's slowest selling seasons are typically the period from
the beginning of the calendar year until the start of the spring selling
season, and from mid-July to Labor Day.
Live nursery goods, which constitute a significant portion of the
Company's products, have limited shelf lives in some cases. If customer
purchases of live nursery goods are delayed because of adverse weather
conditions, such goods may remain unsold past their shelf life and require
markdowns or disposal.
Lawn and garden and nursery sales are highest in the spring with the
largest impact being in the first fiscal quarter and the early part of the
second fiscal quarter. There is an early fall season in these products that is
of less importance than the spring season, and sales during middle and late
summer are slow. In the winter months, sales of such products are minimal.
Crafts and pet food and supplies sell at a fairly even pace throughout
the year. Craft sales are stimulated by fall and late winter promotions.
During the winter months (other than the Christmas season) crafts constitute
the majority of the Company's sales.
Christmas merchandise is sold almost entirely in November and December.
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The Company's most significant capital requirements are for seasonal
buildup of Christmas and crafts inventories, new stores and the modernization
of existing stores.
Capital expenditures of the Company totalled $5.5 million in fiscal
1995. Expenditures for fiscal 1995 included the purchase of land and building
for one new store to be opened in fiscal 1996 and expenditures for facility
improvements at existing stores. The Company anticipates spending
approximately $6 million for capital expenditures in fiscal 1996.
The Company closed one store in fiscal 1995. In 1996 the Company
plans to open two to three new stores in existing markets, relocate three to
four stores and remodel three to four existing stores. Expansion in existing
markets improves the Company's operating margins by decreasing advertising
costs on a per store basis, permitting more efficient distribution of products
to stores and increasing the utilization of existing supervisory and managerial
staff.
The aggregate cost of any future expansion is dependent upon the
method of financing new stores. Such methods include build-to-suit leases,
conversion of existing buildings, and land purchases with Company-funded
construction. The cost of these methods ranges from approximately $500,000 per
store for build-to-suit leases to $2.5 million per store for land purchases
with Company-funded construction.
In 1990, looking to capitalize on its expertise in the Christmas
decoration business, the Company entered the temporary retail marketplace with
the introduction of "Christmas by Frank's". The "Christmas by Frank's"
boutiques are temporary sites, typically located in high traffic regional malls
and open only during the Christmas shopping season. These boutiques carry a
broad selection of seasonal merchandise and capitalize on the increased mall
traffic during the holidays. During 1995 the Company operated 119 temporary
Christmas boutiques. In addition the Company tested two other temporary
concepts: "Frank's Kids Corner", featuring educational toys for children, and
"In the Garden by Frank's", offering gifts for the gardener. A total of eleven
"Frank's Kids Corner" and four "In the Garden by Frank's" were open in 1995.
The success of the Company's temporary business will depend upon the Company's
ability from year to year to obtain favorable short-term locations in various
malls that are in close proximity to existing stores.
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The principal products sold at the Company's retail garden and crafts
stores are as follows:
<TABLE>
<CAPTION>
Percentage of
Sales In
Product Line Fiscal Year 1995 Description
- ------------ ---------------- -----------
<S> <C> <C>
Lawn and garden 24% Fertilizers, herbicides and pesticides, seeds
and bulbs, mulches, plant accessories, hoses
and garden tools and equipment
Live nursery 26 Trees, shrubs, roses, potted plants, annual
and perennial flowering plants and indoor
plants
Crafts 29 Yarns, macrame, art supplies, needlework and
children's crafts, wood crafts, ribbon, and
artificial and silk flowers and arrangements
Christmas 16 Artificial and live Christmas trees,
decorations and trimmings and Christmas
plants
Pet 5 Pet food and supplies, bird seed and
--- accessories
100%
===
</TABLE>
Substantially all of the plants and products the Company sells are
purchased from approximately 1,200 outside vendors. Alternative sources of
supply are generally available for all products sold by the Company.
As of January 28, 1996, 127 of the Company's stores were leased and
137 were owned (36 of which are subject to ground leases). All store leases
are long-term. If no options are exercised, 108 leases will terminate prior to
December 31, 2006.
Stores are generally located on three-acre sites. A prototype store
in which the overhang area leading to the yard has been
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enclosed includes 18,500 square feet of indoor space (16,000 square feet of
sales area and 2,500 square feet of storage area), 17,000 square feet of
outdoor selling area and ample offstreet parking. The stores are designed in a
"supermarket" format familiar to customers, and shopping is done with carts in
wide aisles with attractive displays. Traffic design is intended to enhance
the opportunity for impulse purchases. Most stores are free-standing and
located adjacent to or near shopping centers; some stores are part of strip
centers.
Typically, stores are open 80 hours per week. The average store has
approximately 20-25 employees, including a store manager, assistant manager and
up to seven department managers responsible for the various product lines of
the business. The in-store staff is supplemented at seasonal peak selling
periods by temporary employees. Overall, the Company had 7,150 employees at
January 28, 1996, including seasonal employees. Approximately 24 warehouse and
distribution center employees in Detroit are members of the Teamsters Union
under a contract which expires January 1, 1997.
The Company operates distribution centers in Detroit, Michigan;
Chicago, Illinois; and Harrisburg, Pennsylvania. The Company owns the Detroit
center which also contains Frank's headquarters, and leases the Chicago and
Harrisburg centers. These centers delivered approximately 49% of all
merchandise to the stores in 1995, primarily using contract carriers. The
balance of the products are delivered directly to stores by vendors.
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ITEM 2. PROPERTIES
Principal operating facilities owned or leased by the Company are
described in Item 1 of this Annual Report on Form 10-K. General Host leases
its executive offices. No material adverse effect is foreseen as a result of
the expiration of leases of the Company's facilities.
ITEM 3. LEGAL PROCEEDINGS
In the normal course of business the Company is subject to various
claims. In the opinion of management, any ultimate liability arising from or
related to these claims should not have a material adverse affect on future
results of operations or the consolidated financial position of the Company.
In 1995 the Company charged to discontinued operations a loss of $3
million, or $.13 per share, as a result of a judgment against the Company in a
1991 saltwater pollution lawsuit. The Company has appealed. The lawsuit
involves claims by farmers in Rice County, Kansas who alleged that saltwater
pollution of the ground water by the American Salt Company, a former subsidiary
of the Company, rendered it unfit for irrigation. In August 1995, a jury
verdict awarded the plaintiffs $.5 million in compensatory damages for the
period 1989 to 1995 and in October 1995 the plaintiffs were awarded $.5 million
in punitive damages and the judgment was entered. The judgment, together with
approximately $1.1 million in legal defense costs, $.5 million in related
costs, principally for technical consulting and expert witnesses, and $.4
million for future legal and related costs, totalled $3 million.
The Company has certain lease obligations which extend to the year
2001 for businesses sold. In the opinion of management, any ultimate liability
arising from or related to these obligations, to the extent not otherwise
provided for, should not have a material adverse effect on future operations or
the consolidated financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The New York Stock Exchange is the principal market on which the
Company's Common Stock is traded. The high and low sales prices per share of
Common Stock as traded on the New York Stock Exchange and cash dividends paid
per share of Common Stock during each quarter of the last two fiscal years are
as follows:
<TABLE>
<CAPTION>
Cash Dividends
High Low Per Share
---- --- ---------
<S> <C> <C> <C>
Fiscal 1995 *
First Quarter $ 7 $ 4-7/8 $ .00
Second Quarter $ 7-5/8 $ 5-5/8 $ .00
Third Quarter $ 6-1/2 $ 4-3/4 $ .00
Fourth Quarter $ 5 $ 3-5/8 $ .00
Fiscal 1994
First Quarter $ 6-7/8 $ 5-1/4 $ .00
Second Quarter $ 6-1/4 $ 4-3/4 $ .00
Third Quarter $ 5-5/8 $ 3-3/4 $ .00
Fourth Quarter $ 5-3/8 $ 4 $ .00
</TABLE>
*Five percent stock dividends were paid on April 7, 1995 and April 5,
1996 and all stock-related data in the financial statements in this Report
reflect the aforementioned stock dividends for all periods presented.
Under the most restrictive provisions of any of the debt and bank
agreements, total shareholders' equity available to pay cash dividends or
purchase treasury stock was below the required minimum level by $10.8 million
at January 28, 1996.
At April 1, 1996, there were approximately 3,845 holders of record of
the Company's Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
Five Year Financial Data concerning the Company is listed on F-23 of
this Annual Report on Form 10-K.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Sales were $593 million for the 1995 fiscal year compared to $568 million for
the 1994 fiscal year. Same-store sales (stores open for a full year in both
years) for 1995 increased 4.5% led by a 25% sales gain in the pet food and
supplies business as well as a strong first half performance in the lawn and
garden business. Also contributing to the sales increase was improved
in-store merchandising, and the sales from the temporary Christmas boutiques of
$14.4 million in 1995 compared to $12.9 million in 1994. Sales were $568
million for the 1994 fiscal year compared to $568.6 million for the 1993 fiscal
year. The 1993 sales included sales of $34.9 million for the 26 stores closed
in February 1994. Eliminating the sales for the closed stores in 1993 would
have resulted in a sales increase for 1994 of 6.4%. Same-store sales for 1994
increased 5.2%. Also contributing to the sales increase was improved in-store
merchandising, and the sales from the temporary Christmas boutiques of $12.9
million in 1994 compared to $11.2 million in 1993.
Other income increased $1.3 million to $3.3 million in 1995. The
increase was due to increased interest income resulting from higher rates of
return in 1995. Other income increased $.7 million to $2 million in 1994. The
increase was due to increased interest income resulting from higher levels of
cash equivalents.
Cost of sales, including buying and occupancy, increased $28.7 million
to $431.5 million or 72.7% of sales. This compares with $402.8 million or
70.9% of sales in 1994. The increase of 1.8 percentage points was due to lower
merchandise margins resulting from increased promotional activity and extremely
hot, dry weather in the second quarter of 1995, the mix of goods sold during
1995 and increased occupancy costs related to the temporary Christmas business.
Cost of sales, including buying and occupancy, decreased $22.9 million to
$402.8 million or 70.9% of sales in 1994. This compares to $425.7 million or
74.9% of sales in 1993. The decrease of 4 percentage points was due to higher
merchandise margins resulting from improved inventory management, in addition
to the benefits from the operations improvement program in 1994 compared with
1993 when the Company underwent an inventory reduction program and closed 26
stores.
Selling, general and administrative expense increased $6 million to
$146.2 million compared to $140.2 million in 1994. The increase was
attributable to the increases in store payroll, advertising and administrative
costs that occurred in the first half of 1995 and increased costs associated
with the temporary Christmas business. As a percentage of sales, selling,
general and
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administrative expense was 24.6% of sales in 1995 and 24.7% of sales in 1994.
Selling, general and administrative expense in 1994 decreased $11.8 million to
$140.2 million compared to $152 million in 1993. The decrease was attributable
to the operations improvement program initiated at the end of 1993, which
resulted in lower administrative costs in 1994. As a percentage of sales,
selling, general and administrative expense decreased 2 percentage points to
24.7% of sales in 1994 compared to 26.7% in 1993.
During the fourth quarter of 1993 the Company approved a plan to exit
26 unprofitable Frank's stores primarily in the Nashville, South Florida and
Orlando markets and to dispose of certain other properties. The decision
resulted in the Company recording a reserve of $22.9 million ($15.1 million,
net of tax benefit) in the 1993 fourth quarter comprised primarily of $20
million for the closing of the 26 stores and $2.9 million primarily for
expected losses on the sale of the other properties. The $20 million store
closing reserve included a provision for termination of lease agreements,
brokers fees and legal costs of $12.9 million representing expected future cash
outflows; a provision of $3.5 million for expected losses from the sale of real
estate and the write-off of leasehold improvements and equipment of the closed
stores; and a provision of $3.6 million representing operating losses for
January 1994 through closure date and employee severance for the closed stores.
All stores were closed as of February 7, 1994, with the exception of one store
which closed March 7, 1994.
Interest and debt expense was $23.8 million in 1995 compared to $22.9
million in 1994. The increase was primarily due to increased interest rates
for the Adjustable Rate First Mortgage Notes (the "mortgage notes") due March
29, 1996 that were repaid as of January 28, 1996. Interest and debt expense
was $22.9 million in 1994 compared to $23.3 million in 1993. The decrease was
primarily due to the redemption of the 7% Subordinated Debentures on February
1, 1994.
The income tax benefit for 1995 included the elimination of income tax
reserves no longer required of $.6 million. In 1995, the tax provision was
unfavorably impacted by an increase in the valuation allowance as a result of
the current year loss not being benefitted. A valuation allowance was provided
in 1993 against the net deferred tax asset resulting from the Company's net
operating loss and the loss from an investment in an unconsolidated affiliate.
Due to the Company's historical operating results prior to 1995, a valuation
allowance for the deferred tax asset balance remained at January 28, 1996. As
a result of the valuation allowance, approximately $21 million of these loss
carryforwards have not been benefitted and utilization will be recognized
against future income. Income taxes included the elimination of income tax
reserves no longer required of $1 million in 1994.
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In April 1993 the Company acquired a 49.5% interest in Sunbelt Nursery
Group, Inc. ("Sunbelt") by exchanging 1.94 million shares of its common stock
for 4.2 million shares of common stock of Sunbelt held by Pier 1 Imports, Inc.
The 4.2 million shares of Sunbelt were subsequently pledged as security for
payment of a $12 million revolving credit facility between Sunbelt and Pier 1
Imports, Inc. which was scheduled to mature in April 1994. The Company
received no assurances that the maturity of this facility would be extended or
that Sunbelt had the ability to repay this facility [which resulted in a going
concern qualification in the audit opinion to Sunbelt's financial statements
for the year ended January 31, 1994]. As a result there existed the
possibility that Pier 1 Imports, Inc. would foreclose on the Sunbelt shares
pledged as security. Consequently, the Company decided to reduce to zero the
carrying value of its investment in Sunbelt as of fiscal year end 1993. This
resulted in a charge of $15.7 million which, when combined with the net equity
losses recognized through the 1993 third quarter of $2 million, amounted to
$17.7 million for fiscal 1993. In October 1994 the Company sold its interest in
Sunbelt and recognized a net gain of $3.6 million.
The loss from continuing operations was $4.3 million, a decline of
$12.9 million compared with 1994. Income for 1994 included $3.6 million from
the sale of the Company's investment in Sunbelt. Income from continuing
operations was $8.6 million in 1994, an improvement of $63.8 million over 1993.
The 1993 loss included a reserve of $22.9 million for the closing of the 26
unprofitable stores and a loss of $17.7 million from the net equity loss and
write-down of the Company's investment in Sunbelt.
The loss from discontinued operations for 1995 of $3 million resulted
from an October 1995 judgment of $1 million against the Company in a 1991
saltwater pollution lawsuit. The judgment, together with approximately $1.1
million in legal defense costs, $.5 million in related costs, principally for
technical consulting and expert witnesses, and $.4 million for future legal and
related costs, totalled $3 million. The Company has appealed the case.
Discontinued operations in 1993 represented a loss reserve of $.8 million for
lease obligations of businesses sold in prior years. These items combined with
the respective income or loss from continuing operations resulted in a net loss
of $7.3 million in 1995, net income of $8.6 million in 1994 and a net loss of
$56.1 million in 1993.
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Liquidity and Capital Resources
Continuing operations used $2.6 million of net cash in 1995 compared to net
cash provided of $38.4 million in 1994. In 1995 the early receipt of Christmas
season merchandise in the 1995 fourth quarter and reduced purchases for the
1996 spring season in the fourth quarter of 1995 resulted in a decrease in
accounts payable for 1995 compared to 1994. The change in accrued expenses for
1995 compared to 1994 is due to the timing of payments. The 1995 loss also
contributed to the utilization of net cash in 1995.
During the fourth quarter of 1993 the Company recorded a noncash
reserve of $22.9 million for the closing of 26 stores. As of January 28, 1996
the Company had terminated leases and entered into sublease arrangements for
all but five stores. The annual sublease income generated approximates the
Company's annual costs. The Company retains its primary obligation under the
prime lease should a sublease tenant default on its sublease obligation. At
January 28, 1996 the remaining reserve of $4.3 million primarily represents
lease termination costs for the remaining five store locations and estimated
losses associated with the sale and or sublease of real estate. In 1995 the
Company utilized net cash of $3.6 million to pay lease termination costs for
leases terminated at the end of 1994 and in 1995 and to pay brokers fees and
legal costs. Net cash of $8.6 million was used in 1994 to terminate lease
arrangements, pay brokers fees, legal costs and severance. Noncash charges of
$2.2 million in 1994 reduced the reserve primarily for asset write-offs.
Discontinued operations used net cash of $1.9 million in 1995
primarily for legal expenditures incurred to defend the Company in a 1991
saltwater pollution lawsuit. Net cash of $.3 million in 1994 related to
payments for operations disposed of in prior years.
In 1994 the Company issued restricted stock grants under the 1986
stock incentive plan, as amended in 1992, to employees of the Company. The
noncash transaction was completed by issuing shares of treasury stock. The
market value of the shares granted amounted to $.3 million and was charged to
selling expense in 1994. On January 28, 1996 the restrictions expired and in
February 1996, 59,301 shares were issued.
In April 1993 the Company acquired a 49.5% interest in Sunbelt. The
noncash acquisition was completed by issuing 1.94 million shares of the
Company's common stock at the then market value of $17.7 million in exchange
for 4.2 million shares of Sunbelt. At fiscal year end 1993 the Company reduced
to zero the carrying value of its investment in Sunbelt due to Sunbelt's lack
of long-term financing. In 1994 the Company sold its interest in Sunbelt for
cash, which resulted in a net gain of $3.6 million.
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Net cash used for investing activities was $5.2 million in 1995. Net
cash provided in 1994 was $1.4 million, which included the net proceeds from
the sale of the Company's interest in Sunbelt.
Net cash used for financing activities was $43.8 million in 1995,
which included the payment of long-term debt and capital lease obligations of
$77.1 million (principally the mortgage notes of $76 million). Offsetting, in
part, the mortgage note repayment was $35 million of new mortgage financings,
which the Company entered into during the third and fourth quarters of 1995.
Interest rates on the new mortgage notes vary from 7.8% to 8.7%, and the notes
mature with balloon payments on varying dates from February 1, 2001 to February
1, 2006. Net cash used for financing activities was $18.9 million in 1994,
which included the repayment of $13.2 million of 7% Subordinated Debentures on
February 1, 1994 and payments of long-term debt.
The weighted average interest rate on debt outstanding at January 28,
1996 was 10%. The Company has a $25 million unsecured credit agreement with a
bank which expires May 31, 1996. The agreement requires the Company, among
other things, to maintain minimum levels of earnings, tangible net worth and
certain minimum financial ratios. The Company was in compliance with all of
its covenants under the agreement at January 28, 1996.
As of February 28, 1996 the Company had $25 million outstanding under
the unsecured credit agreement. The Company plans either to extend the
maturity of the existing credit facility or negotiate a new credit facility
prior to May 31, 1996. If the Company is unable to secure a replacement credit
facility, the Company believes that its cash flow from operations will be
sufficient to meet its working capital requirements. The Company, if
necessary, could raise capital through a) additional mortgage financings
(currently there are 64 properties having a net book value of approximately $95
million available for such financing), b) expense reductions or c) new debt
offerings. The Company is required to maintain a minimum credit facility of
$15 million at all times prior to May 31, 1997 under $5 million of the new
mortgage financings.
Under the most restrictive provisions of any of the Company's debt
agreements, total shareholders' equity available to pay cash dividends or
purchase treasury stock was below the required minimum level by $10.8 million
at January 28, 1996, thus prohibiting the Company from paying cash dividends or
purchasing treasury stock. None of the Company's debt agreements affect its
ability to declare and pay a stock dividend. On February 28, 1996 a 5% stock
dividend for shareholders of record on March 15, 1996 was declared. The stock
dividend is payable on April 5, 1996. The Company was in compliance with all
other covenants.
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Total shareholders' equity in 1995 decreased $7.5 million to $110.2
million from $117.7 million in 1994, due primarily to the 1995 net loss.
Long-term debt as a percentage of total capitalization decreased from 67% in
1994 to 64% in 1995.
In December 1988 the Board of Directors authorized the repurchase, in
open market transactions, of up to 2,000,000 additional shares of the Company's
common stock. As of January 28, 1996 the total remaining authorization was for
628,750 shares. The Company did not repurchase any shares in fiscal 1995 or
1994.
Working Capital
Working capital amounted to $45 million at January 28, 1996 compared to $73
million at January 29, 1995. The ratio of current assets to current
liabilities was 1.5 in 1995 compared to 1.7 in 1994. Working capital included
$30 million of cash and cash equivalents at January 28, 1996 compared to $83
million of cash and cash equivalents at January 29, 1995.
The Company has sufficient cash and cash equivalents and plans to
generate sufficient cash flow from operations to meet its seasonal working
capital needs, pay approximately $20 million in fixed interest charges and to
fund capital expenditures of approximately $6 million for 1996. In 1996 the
Company plans to open two to three new stores, relocate three to four stores
and to remodel three to four existing stores.
Inflation
Inflation has been modest in recent years and has not had a significant effect
on the Company. If merchandise costs were to increase because of inflation,
management believes such increases could be recovered through higher selling
prices, since virtually all retailers would be similarly affected.
Recent Accounting Pronouncements
In March 1995 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets" (SFAS 121). The effect of implementing SFAS 121 is not
expected to be material to the Company's financial position or results of
operations. Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (SFAS 123) issued in October 1995 sets forth
standards for accounting for stock-based compensation or allows companies to
continue to account for stock-based compensation under the requirements of
Accounting Principles Board (APB) Opinion No. 25 and make additional disclosure
in the notes to the financial
13
<PAGE> 16
statements. It is the Company's intention to continue to account for
stock-based compensation in accordance with APB Opinion No. 25 and provide the
additional disclosure in the notes to the financial statements beginning in
1996.
14
<PAGE> 17
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements
The Company's consolidated financial statements and supplementary data are
listed in Item 14 of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
15
<PAGE> 18
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors
Information on Nominee and Incumbent Directors, which
appears on pages 5 and 6 of the Company's 1996 Proxy
Statement, is incorporated by reference in this
Annual Report on Form 10-K.
(b) Executive Officers
<TABLE>
<CAPTION>
POSITION AND OFFICE WITH
NAME AGE THE COMPANY
- ---- --- ------------------------
<S> <C> <C>
Harris J. Ashton 63 Chairman of the Board of Directors, President and
Chief Executive Officer
William C. Boyd 66 Executive Vice President - Frank's
Scott A. Hessler 47 President and Chief Operating Officer - Frank's
Robert M. Lovejoy, Jr. 52 Vice President and Treasurer
James R. Simpson 44 Vice President and Controller
J. Theodore Everingham 56 Vice President, General
Counsel and Secretary
</TABLE>
Mr. Ashton has been Chairman of the Board of Directors and Chief
Executive Officer of the Company since 1970, and President of the Company since
1974. Prior thereto he was President and Chief Executive Officer from October
1969 to June 1970, President and Chief Administrative Officer from December
1967 to October 1969, Secretary from May 1965 to December 1967 and a Director
of the Company since May 1965.
Mr. Boyd has been Executive Vice President of Frank's since June 1987
and prior thereto was employed by Frank's in various capacities since 1949.
Mr. Hessler has been President and Chief Operating Officer of Frank's
since May 1994. He was Senior Vice President, Merchandising/Marketing of
Wherehouse Entertainment, Inc. from 1992 to 1994 and was employed by Broadway
Stores prior thereto from 1986 to 1992, most recently as Senior Vice President,
General Merchandise Manager. Prior thereto he was employed by May
16
<PAGE> 19
Department Stores and R.H. Macy in senior merchandising positions since 1974.
Mr. Lovejoy was named Vice President on February 22, 1991. He has
been Treasurer of the Company since September 1988 and previously he had been
employed by Bankers Trust Company since 1977, most recently as Vice President,
Corporate Finance and Global Markets.
Mr. Simpson was named Vice President on February 22, 1991. He has
been Controller of the Company since July 1989. He was Senior Vice President
and Chief Financial Officer of Consumers Distributing, Inc., from January 1988
to July 1989 and was employed by Herman's Sporting Goods, Inc. from 1973 to
1988, most recently as Vice President and Controller.
Mr. Everingham was named Vice President, General Counsel and Secretary
on July 12, 1995. He was self-employed in the private practice of law from
January 1995 to July 1995 and was a partner of the law firm of Dykema Gossett
PLLC for more than five years prior thereto.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation and Other Information which appears on pages 8
to 15 of the Company's 1996 Proxy Statement is incorporated by reference in
this Annual Report on Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information on the ownership of Company securities by certain
beneficial owners and management which appears on pages 2 through 4 of the
Company's 1996 Proxy Statement is incorporated by reference in this Annual
Report on Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information on transactions with management and others which appears
on pages 6 and 7 and pages 15 and 18-19 of the Company's 1996 Proxy Statement,
is incorporated by reference in this Annual Report on Form 10-K.
17
<PAGE> 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
A. List of documents filed as part of this report:
1. Financial Statements
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
- Report of Independent Accountants. F-1
- Consolidated Balance Sheets - for the years F-2
ended January 28, 1996 and January 29, 1995.
- Consolidated Statements of Income - for the F-3
years ended January 28, 1996, January 29, 1995
and January 30, 1994.
- Consolidated Statements of Changes in F-4
Shareholders' Equity - for the years ended
January 28, 1996, January 29, 1995 and
January 30, 1994.
- Consolidated Statements of Cash Flows - for the F-5
years ended January 28, 1996, January 29, 1995
and January 30, 1994.
- Notes to Consolidated Financial Statements. F-6 - F-21
2. Financial Statement Schedules
Schedules not included have been omitted because
they are not applicable or the required
information is shown in the consolidated financial
statements or notes thereto.
VIII - Valuation and qualifying accounts - F-24
years ended January 28, 1996, January
29, 1995 and January 30, 1994.
</TABLE>
18
<PAGE> 21
<TABLE>
<CAPTION>
3. Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
3. Articles of Incorporation and By-laws
3.01 (a) Restated Certificate of Incorporation of the Company ("Restated Certificate"), filed
November 13, 1968. (Incorporated by reference to the Company's Annual Report on
Form 10-K for its fiscal year ended January 31, 1993, File No. 1-1066 ("1992 Form 10-K"),
Exhibit 3(a))
(b) Certificate of Amendment of the Restated Certificate, filed January 24, 1969. (Incorporated
by reference to the 1992 Form 10-K, Exhibit 3(b))
(c) Certificate of Amendment of the Restated Certificate, filed October 30, 1969. (Incorporated
by reference to the 1992 Form 10-K, Exhibit 3(c))
(d) Certificate of Amendment of the Restated Certificate, filed June 15, 1977. (Incorporated
by reference to the 1992 Form 10-K, Exhibit 3(d))
(e) Certificate of Amendment of the Restated Certificate, filed June 27, 1985. (Incorporated
by reference to the Company's Annual Report on Form 10-K for its fiscal year ended
January 26, 1992, File No. 1-1066 ("1991 Form 10-K"), Exhibit 3(f))
(f) Certificate of Amendment of the Restated Certificate, filed April 14, 1988. (Filed herewith)
3.02 By-Laws of the Company, amended as of November 6, 1986. (Incorporated by reference to the 1992
Form 10-K, Exhibit 3(g))
4. Instruments Defining the Rights of Security Holders, Including Indentures
4.01 (a) Rights Agreement, dated as of March 7, 1990, by and between the Company and Manufactures Hanover
Trust Company. (Incorporated by reference to the Company's Form 8-A Registration Statement, filed
March 23, 1995 ("1995 Form 8-A"), Exhibit 1, 2)
(b) Amendment No. 1 to the Rights Agreement dated as of March 1, 1995 by and between the Company and
Chemical Bank, as successor to Manufactures Hanover Trust Company. (Incorporated by reference to
1995 Form 8-A, Exhibit 1a)
</TABLE>
19
<PAGE> 22
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
4.02*(a) Promissory Note in the original principal amount of $690,000 dated August 31, 1995 from Frank's
Nursery & Crafts, Inc. ("Frank's") to MetLife Capital Financial Corporation ("MetLife").
(Filed herewith)
(b) Commercial Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing
dated as of August 31, 1995 by and between Frank's and MetLife. (Filed herewith)
(c) Security Agreement dated as of August 31, 1995 by and between Frank's and MetLife. (Filed herewith)
(d) Assignment of Rents and Leases dated as of August 31, 1995 by and between Frank's and MetLife.
(Filed herewith)
(e) Guaranty dated as of August 31, 1995 by the Company in favor of MetLife. (Filed herewith)
4.03*(a) Mortgage Note in the original principal amount of $4,950,000 dated January 25, 1996 from Frank's to
People's Bank ("People's"). (Filed herewith)
(b) Mortgage Deed and Security Agreement dated as of January 25, 1996 by and between Frank's and People's.
(Filed herewith)
(c) Assignment of Rents and Leases dated as of January 25, 1996 by and between Frank's and People's.
(Filed herewith)
(d) Guaranty and Indemnity Agreement dated as of January 25, 1996 by the Company in favor of People's.
(Filed herewith)
(e) Escrow Agreement dated as of January 25, 1996 by and among Frank's, People's and Commonwealth Land
Title Insurance Company. (Filed herewith)
</TABLE>
- ---------------
* See Schedule of Substantially Identical Documents filed herewith.
20
<PAGE> 23
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
4.04*(a) Promissory Note in the original principal amount of $682,878 dated March 14, 1996 from Frank's
Nursery & Crafts, Inc. ("Frank's") to Midland Loan Services, L.P. ("Midland"). (Filed herewith)
(b) Mortgage, Security Agreement and Assignment of Leases and Rents dated as of March 14, 1996 by
and between Frank's and Midland. (Filed herewith)
(c) Assignment of Rents and Leases dated as of March 14, 1996 by and between Frank's and Midland.
(Filed herewith)
(d) Guaranty dated as of March 14, 1996 by the Company in favor of Midland. (Filed herewith)
(e) Escrow Agreement dated as of March 14, 1996 by and between Frank's and Midland in its capacities as
lender and escrow agent. (Filed herewith)
4.05 (a) Indenture among the Company, certain guarantors named therein and Bankers Trust Company, as Trustee,
dated as of February 28, 1992. (Incorporated by reference to the Company's Amendment No. 2 to the
Form S-3 Registration Statement, filed January 31, 1992, Exhibit 4(c), File No. 33-43504)
(b) Specimen of 11 1/2% Senior Notes due 2002. (Incorporated by reference to the Company's Form 8-A
Registration Statement, dated February 21, 1992, Exhibit 2(a))
4.06 (a) Indenture among the Company and United States Trust Company of New York, as Trustee, dated as of
February 28, 1992. (Incorporated by reference to the Company's Amendment No. 2 to the Form S-3
Registration Statement, filed January 31, 1992, Exhibit 4(b), File No. 33-43504)
(b) Specimen of 8% Convertible Subordinated Notes due 2002. (Incorporated by reference to the Company's
Form 8-A Registration Statement, dated February 21, 1992, Exhibit 2(a))
</TABLE>
- ---------------
* See Schedule of Substantially Identical Documents filed herewith.
21
<PAGE> 24
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
10. Material Contracts
10.01 Employment Agreement dated as of January 1, 1992 by and between the Company and Harris J. Ashton.
(Incorporated by reference to the 1992 Form 10-K, Exhibit 10(a), File No. 1-1066)
10.02 Agreement between the Company and a Trust established for the benefit of Mr. and Mrs. Ashton's beneficiaries
dated November 1, 1989. (Incorporated by reference to the Company's Annual Report on Form 10-K for its fiscal
year ended January 27, 1991, Exhibit 10(b), File No. 1-1066)
10.03(a) Frank's 1996 Executive Compensation Program.(Filed herewith)
(b) The Company's 1996 Executive Compensation Program. (Filed herewith)
10.04 Amended and Restated 1986 Stock Incentive Plan dated April 8, 1992. (Incorporated by reference to the
Company's Form S-8 Registration Statement dated July 24, 1992, Exhibit 28(a))
10.05(a) 1994 Non-Employee Directors Stock Option Plan adopted October 12, 1994. (Filed herewith)
(b) Directors' Stock Option Plan dated March 20, 1986. (Incorporated by reference to the 1991 Form 10-K,
Exhibit 10(e), File No. 1-1066)
11.01 Statement re: computation of per share earnings. (Filed herewith)
12.01 Statement re: computation of ratios. (Filed herewith)
21.01 Subsidiaries of the Registrant. (Filed herewith)
23.01 Consent of Price Waterhouse LLP. (Filed herewith)
</TABLE>
22
<PAGE> 25
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
24.01 Powers of Attorney. (Filed herewith)
(a) C. Whitcomb Alden, Jr. Director
(b) Christopher A. Forster Director
(c) S. Joseph Fortunato Director
(d) Philip B. Harley Director
(e) Richard W. Haskel Director
(f) Edward H. Hoornstra Director
(g) Charles B. Johnson Director
(h) Kelly Ashton Sant Albano Director
27.01 Financial Data Schedule. (Filed herewith)
Documents referred to in the list of Exhibits will be furnished upon receipt by the Treasurer of the
Company, at the Company's principal executive offices referred to on the cover of this Form 10-K, of
written requests accompanied by a fee covering the Company's reasonable expenses of $3.00 for handling
and postage, plus $.25 per page for photocopying.
</TABLE>
B. Reports on Form 8-K
During the last quarter of the period covered by this report,
the Company did not file a report on Form 8-K.
23
<PAGE> 26
SCHEDULE OF SUBSTANTIALLY IDENTICAL DOCUMENTS
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<S> <C> <C>
4.02 (1) (a) Promissory notes in the original principal amounts of $975,000, $937,000, $825,000 and $825,000; (b) related
Commercial Mortgages on properties located in Merrilville, Indiana, Columbus, Indiana, Michigan City, Indiana and
South Bend, Indiana, respectively; (c) related Security Agreements; (d) related Assignments of Rents
and Leases; and (e) related Guaranties, all dated August 31, 1995 and governed by Indiana law.
(2) (a) Promissory notes in the original principal amounts of $660,000, $675,000 and $825,000; (b) related Commercial
Mortgages on properties located in Waukegan, Illinois, Evergreen Park, Illinois and Naperville, Illinois,
respectively; (c) related Security Agreements; (d) related Assignments of Rents and Leases; and (e) related
Guaranties, all dated August 31, 1995 and governed by Illinois law.
(3) (a) A promissory note in the original principal amount of $855,000; (b) related Commercial Mortgage on property
located in Coon Rapids, Minnesota; (c) related Security Agreement; (d) related Assignment of Rents and Leases;
and (e) related Guaranty, all dated August 31, 1995 and governed by Minnesota law.
(4) (a) A promissory note in the original principal amount of $1,200,000; (b) related Commercial Mortgage on property
located in Franklin, Ohio; (c) related Security Agreement; (d) related Assignment of Rents and Leases; and (e)
related Guaranty, all dated August 31, 1995 and governed by Ohio law.
(5) (a) Promissory notes in the original principal amounts of $1,125,000 and $1,125,000; (b) related Commercial
Mortgages on properties located in Clinton Township, Michigan and Canton Township, Michigan, respectively; (c)
related Security Agreements; (d) related Assignments of Rents and Leases; and (e) related Guaranties, all dated
August 31, 1995 and governed by Michigan law.
4.03 (1) (b) Mortgage and Security Agreement on property located in Kingston, New York; and (c) Assignment of Rents and
Leases, each dated as of January 25, 1996 and governed by New York law.
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<S> <C> <C>
4.04 (1) (a) Promissory notes in the original principal amounts of $867,548, $862,893, $857,318 and $883,802; (b) related
Mortgages on properties located in Libertyville, Illinois, Lake Zurich, Illinois, Crystal Lake, Illinois and
Schaumburg, Illinois, respectively; (c) related Assignments of Rents and Leases; (d) related Guaranties; and (e)
related Escrow Agreements, all dated January 26, 1996 and governed by Illinois law.
(2) (a) Promissory notes in the original principal amounts of $726,793 and $1,330,423; (b) related Mortgages on
properties located in Battle Creek, Michigan and Bloomfield Township, Michigan respectively; (c) related
Assignments of Rents and Leases; (d) related Guaranties; and (e) related Escrow Agreements, all dated
January 26, 1996 and governed by Michigan law.
(3) (a) Promissory notes in the original principal amounts of $956,708, $909,974 and $849,344; (b) related Mortgages
on properties located in Roseville, Minnesota, Eden Prairie, Minnesota and Eagan, Minnesota, respectively; (c)
related Assignments of Rents and Leases; (d) related Guaranties; and (e) related Escrow Agreements, all dated
January 26, 1996 and governed by Minnesota law.
(4) (a) Promissory notes in the original principal amounts of $730,026, $734,319 and $753,432; (b) related Mortgages
on properties located in Bridgeton, Missouri, St. Charles, Missouri and St. Charles, Missouri, respectively; (c)
related Assignments of Rents and Leases; (d) related Guaranties; and (e) related Escrow Agreements, all dated
January 26, 1996 and governed by Missouri law.
(5) (a) Promissory notes in the original principal amounts of $1,280,990, $1,379,474 and $1,316,019; (b) related
Mortgages on properties located in Deptford, New Jersey, Bridgewater, New Jersey and Bricktown, New Jersey,
respectively; (c) related Assignments of Rents and Leases; (d) related Guaranties; and (e) related Escrow
Agreements, all dated January 26, 1996 and governed by New Jersey law.
</TABLE>
25
<PAGE> 28
<TABLE>
<CAPTION>
Exhibit No.
- -----------
<S> <C> <C>
4.04(cont.) (6) (a) A promissory note in the original principal amount of $1,373,432; (b) related Mortgage on property
located in Staten Island, New York; (c) related Assignment of Rents and Leases; (d) related Guaranty;
and (e) related Escrow Agreement, all dated January 26, 1996 and governed by New York law.
(7) (a) A promissory note in the original principal amount of $892,829; (b) related Mortgage on property
located in Brookhaven, Pennsylvania; (c) related Assignment of Rents and Leases; (d) related Guaranty;
and (e) related Escrow Agreement, all dated January 26, 1996 and governed by Pennsylvania law.
(8) (a) Amended and Restated Promissory Note in the original principal amount of $2,583,273.69 dated as of
December 1, 1995 from Frank's to Midland Commercial Financing Corp; (b) related Mortgages dated as of
October 16, 1995, as amended as of December 1, 1995 on properties located in Okemos, Michigan and Joliet,
Illinois; (c) related Assignments of Rents and Leases dated as of October 16, 1995, as amended as of
December 1, 1995; (d) Amended and Restated Guaranty dated as of December 1, 1995 from the Company in
favor of Midland Commercial Financing Corp; and (e) related Escrow Agreements dated as of
October 13, 1995.
</TABLE>
26
<PAGE> 29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
GENERAL HOST CORPORATION
Date: April 24, 1996 By /s/ James R. Simpson
-----------------------------
James R. Simpson
Vice President and Controller
27
<PAGE> 30
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
General Host Corporation
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(A)(1) and (2) on page 18 present fairly, in all
material respects, the financial position of General Host Corporation and its
subsidiaries at January 28, 1996 and January 29, 1995, and the results of their
operations and their cash flows for the three years in the period ended January
28, 1996 in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Price Waterhouse LLP
Detroit, Michigan
February 28, 1996, except as to the
stock dividend described in Note 1
which is as of March 15, 1996
F-1
<PAGE> 31
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
JANUARY 28, 1996 AND JANUARY 29, 1995
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 29,901 $ 83,362
Accounts and notes receivable 3,823 3,682
Merchandise inventory 88,162 87,238
Prepaid expenses and other current assets 9,417 8,589
---------- ----------
Total current assets 131,303 182,871
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION OF $154,830 AND $142,621 237,803 253,311
INTANGIBLES, LESS ACCUMULATED AMORTIZATION
OF $9,783 AND $8,818 16,136 17,101
OTHER ASSETS AND DEFERRED CHARGES 10,543 11,575
---------- ----------
$ 395,785 $ 464,858
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 47,776 $ 56,726
Accrued expenses 33,012 40,623
Provision for store closings
and other costs 3,347 6,379
Current portion of long-term debt 1,974 5,694
---------- ----------
Total current liabilities 86,109 109,422
---------- ----------
LONG-TERM DEBT:
Senior debt 124,898 163,311
Subordinated debt 65,000 65,000
---------- ----------
Total long-term debt 189,898 228,311
---------- ----------
OTHER LIABILITIES AND DEFERRED CREDITS 9,550 9,475
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock $1.00 par value, 100,000,000
shares authorized, 31,752,450 shares issued 31,752 31,752
Capital in excess of par value 81,186 81,163
Retained earnings 79,924 97,802
---------- ----------
192,862 210,717
Cost of 8,505,096 and 9,611,497 shares of
common stock in treasury (80,618) (91,106)
Notes receivable from exercise of
stock options (2,016) (1,961)
---------- ----------
Total shareholders' equity 110,228 117,650
---------- ----------
$ 395,785 $ 464,858
========== ==========
</TABLE>
See accompanying notes.
F-2
<PAGE> 32
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FISCAL YEARS ENDED JANUARY 28, 1996, JANUARY 29, 1995 AND JANUARY 30, 1994
<TABLE>
<CAPTION>
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Sales $ 593,270 $ 567,987 $ 568,602
Other income 3,294 2,007 1,338
---------- --------- ---------
596,564 569,994 569,940
---------- --------- ---------
COSTS AND EXPENSES:
Cost of sales, including
buying and occupancy 431,481 402,839 425,724
Selling, general and
administrative 146,202 140,171 151,995
Provision for store closings
and other costs 22,876
Interest and debt expense 23,845 22,911 23,251
---------- --------- ---------
601,528 565,921 623,846
---------- --------- ---------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES,
NET GAIN, NET EQUITY LOSS AND
INVESTMENT WRITE-DOWN (4,964) 4,073 (53,906)
INCOME TAX BENEFIT (625) (900) (16,389)
NET GAIN ON SALE OF AND NET EQUITY
LOSS AND WRITE-DOWN OF INVESTMENT
IN AN UNCONSOLIDATED AFFILIATE 3,612 (17,703)
---------- --------- ---------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (4,339) 8,585 (55,220)
LOSS FROM DISCONTINUED OPERATIONS (3,000) (840)
---------- --------- ---------
NET INCOME (LOSS) $ (7,339) $ 8,585 $ (56,060)
========== ========= =========
EARNINGS (LOSS) PER SHARE:
Income (loss) from continuing
operations $ (.19) $ .37 $ (2.42)
Loss from discontinued operations (.13) (.03)
---------- --------- ---------
Net income (loss) $ (.32) $ .37 $ (2.45)
========== ========= =========
AVERAGE SHARES OUTSTANDING 23,249 23,244 22,860
========== ========= =========
</TABLE>
See accompanying notes.
F-3
<PAGE> 33
GENERAL HOST CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FISCAL YEARS ENDED JANUARY 28, 1996, JANUARY 29, 1995
AND JANUARY 30, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Shares of Common Stock Common Capital in
---------------------------- Stock Excess of
Issued In Treasury Issued Par Value
---------- ----------- -------- ----------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 31, 1993 31,752,450 (13,676,692) $ 31,752 $ 88,937
Net loss
Cash dividends
Stock dividend 1,000,788 (3,106)
Acquisition of equity interest in
Sunbelt Nursery Group, Inc. 1,940,000 (686)
Note repayments
---------- ----------- -------- ----------
BALANCE AT JANUARY 30, 1994 31,752,450 (10,735,904) 31,752 85,145
Net income
Stock dividend 1,054,307 (3,668)
Restricted stock grants issued 68,300 (306)
Issuance of common stock 1,800 (8)
---------- ----------- -------- ----------
BALANCE AT JANUARY 29, 1995 31,752,450 (9,611,497) 31,752 81,163
Net loss
Stock dividend declared on
February 28, 1996 1,108,751 (6)
Restricted stock grants cancelled (12,350) 54
Stock option exercised 10,000
Income tax effect (net) related to
stock options and grants (25)
---------- ----------- -------- ----------
BALANCE AT JANUARY 28, 1996 31,752,450 (8,505,096) $ 31,752 $ 81,186
========== =========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
Notes
Receivable
Cost of from
Common Exercise Total
Retained Stock in of Stock Shareholders'
Earnings Treasury Options Equity
--------- --------- ---------- ------------
<S> <C> <C> <C> <C>
BALANCE AT JANUARY 31, 1993 $ 165,405 $(129,640) $ (2,096) $ 154,358
Net loss (56,060) (56,060)
Cash dividends (7,422) (7,422)
Stock dividend (6,380) 9,486
Acquisition of equity interest in
Sunbelt Nursery Group, Inc. 18,389 17,703
Note repayments 135 135
--------- --------- --------- -----------
BALANCE AT JANUARY 30, 1994 95,543 (101,765) (1,961) 108,714
Net income 8,585 8,585
Stock dividend (6,326) 9,994
Restricted stock grants issued 648 342
Issuance of common stock 17 9
--------- --------- --------- -----------
BALANCE AT JANUARY 29, 1995 97,802 (91,106) (1,961) 117,650
Net loss (7,339) (7,339)
Stock dividend declared on
February 28, 1996 (10,504) 10,510
Restricted stock grants cancelled (117) (63)
Stock option exercised (40) 95 (55)
Income tax effect (net) related to
stock options and grants 5 (20)
--------- --------- --------- -----------
BALANCE AT JANUARY 28, 1996 $ 79,924 $ (80,618) $ (2,016) $ 110,228
========= ========= ========= ===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 34
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
FISCAL YEARS ENDED JANUARY 28, 1996, JANUARY 29, 1995 AND JANUARY 30, 1994
<TABLE>
<CAPTION>
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $ (4,339) $ 8,585 $ (55,220)
Noncash adjustments:
Depreciation and amortization 22,888 23,836 24,610
Provision for store closings and other costs 22,876
Deferred income taxes (15,983)
Net equity loss and write-down of investment
in an unconsolidated affiliate 17,703
Net gain on sale of investment in an
unconsolidated affiliate (3,612)
Other (585) 1,674 129
---------- --------- ---------
17,964 30,483 (5,885)
Changes in current assets and current liabilities:
Decrease in accounts and notes receivable 2,499 2,751 4,658
(Increase) decrease in inventory (924) 569 33,354
(Increase) decrease in prepaid expenses (828) 1,333 (931)
Increase (decrease) in accounts payable (8,950) 7,175 (3,020)
Increase (decrease) in accrued expenses (8,727) 4,662 3,034
Decrease in provision for store
closings and other costs (3,621) (8,613) (3,655)
---------- --------- --------
Net cash provided by (used for)
continuing operations (2,587) 38,360 27,555
Net cash used for discontinued operations (1,905) (333) (1,286)
---------- --------- --------
(4,492) 38,027 26,269
---------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (5,497) (5,391) (29,946)
Proceeds from sales of property, plant and equipment 342 3,016 430
Net proceeds from the sale of investment in an
unconsolidated affiliate 3,612
Proceeds from the sales of marketable securities 120 26,690
---------- --------- ---------
Net cash provided by (used for) investing activities (5,155) 1,357 (2,826)
---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt 34,984
Debt issue costs (1,681)
Payment of long-term debt and capital lease
obligations (77,117) (18,877) (4,486)
Cash dividends paid on common stock (7,422)
Other 135
---------- --------- ---------
Net cash used for financing activities (43,814) (18,877) (11,773)
---------- --------- ---------
Increase (decrease) in cash and cash equivalents (53,461) 20,507 11,670
Cash and cash equivalents at beginning of year 83,362 62,855 51,185
---------- --------- ---------
Cash and cash equivalents at end of year $ 29,901 $ 83,362 $ 62,855
========== ========= =========
</TABLE>
See accompanying notes.
F-5
<PAGE> 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: ACCOUNTING POLICIES
General Host is the nation's leading specialty retailer of lawn and garden
products, crafts and Christmas merchandise. Below are those accounting
policies considered to be significant.
The fiscal year is comprised of 52 or 53 weeks, ending on the last Sunday in
January. The 1995, 1994 and 1993 fiscal years each reflect a 52-week period.
The consolidated financial statements include the accounts of General Host
Corporation and its subsidiaries (the "Company"). Intercompany balances and
transactions are eliminated. The consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and, as
such, include amounts based on management's best estimates. Actual results
could differ from those estimates. Certain reclassifications have been made to
prior years' financial statements to conform to the 1995 presentation.
Cash equivalents are highly liquid investments, such as U.S. government
securities and bank certificates of deposit having original maturities of three
months or less, and are carried at cost plus accrued interest.
Merchandise inventories are stated at the lower of cost or market, with cost
being determined under the first-in, first-out method.
Pre-Opening costs are costs incurred in the opening of new stores (primarily
payroll costs) that are capitalized prior to the opening of a new store and
amortized over a one year period commencing with the first period after the new
store opens.
Advertising costs are expensed when the advertising first takes place.
Advertising expenditures were $22,073,000 for 1995, $21,721,000 for 1994 and
$22,802,000 for 1993.
Store closing costs include provisions for estimated future net lease
obligations, nonrecoverable investments in fixed assets, and other expenses
directly related to discontinuance of operations and in 1993 included estimated
operating losses through expected closing dates. Provisions for store closings
are charged to operations in the period when the decision is made to close a
retail unit.
F-6
<PAGE> 36
Property, plant and equipment, including significant improvements thereto, are
recorded at cost. Expenditures for repairs and maintenance are charged to
expense as incurred. The cost of plant and equipment is depreciated over the
estimated useful lives using the straight-line method. Estimated useful lives,
including capital leases, are buildings, 10-40 years or, if shorter, the terms
of the lease; equipment, 3-20 years. Leasehold improvements are depreciated
over the terms of the respective leases or, if shorter, the estimated useful
lives. Upon sale or other disposition of assets, the cost and related
accumulated depreciation are removed from the accounts and the resulting gain
or loss, if any, is reflected in the statements of income.
Intangibles, including costs in excess of net assets of acquired businesses,
are amortized over the estimated periods of related benefit, ranging from 10 to
40 years, using the straight-line method. On an annual basis the Company
reviews the recoverability of intangibles, specifically goodwill. The
measurement of possible impairment is based primarily on the ability to recover
the balance of the goodwill from expected future operating cash flows on an
undiscounted basis.
Other postretirement benefits are recognized in the financial statements during
the period in which service is provided.
Leases that meet the accounting criteria for capital leases are recorded as
property, plant and equipment, and the related capital lease obligations (the
aggregate present value of minimum future lease payments, excluding executory
costs such as taxes, maintenance and insurance) are included in long-term debt.
Depreciation and interest are charged to expense, and rent payments are treated
as payments of long-term debt, accrued interest and executory costs. All other
leases are accounted for as operating leases, and rent payments are charged to
expense as incurred.
Deferred income tax assets and liabilities are determined based on the
difference between the financial carrying amounts and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.
Primary earnings per share is based on the weighted average number of common
shares outstanding, which includes 1,108,751 shares representing the 5% stock
dividend described below.
F-7
<PAGE> 37
Fully diluted earnings per share is based on the assumed conversion of all of
the 8% Convertible Subordinated Notes into common stock. Interest expense on
the 8% Convertible Subordinated Notes is added back to net earnings. Fully
diluted earnings per share impacted the first quarters of 1995 and 1994, the
fourth quarter of 1994 and the first quarter of 1993.
Subsequent to fiscal 1995 a 5% stock dividend was declared on February 28, 1996
by the Board of Directors for shareholders of record on March 15, 1996. The
stock dividend is payable on April 5, 1996 and all stock related data in the
consolidated financial statements reflect the stock dividend for all periods
presented.
NOTE 2: PROVISION FOR STORE CLOSINGS
During the fourth quarter of 1993 the Company approved a plan to exit 26
unprofitable Frank's stores primarily in the Nashville, South Florida and
Orlando markets and to dispose of certain other properties. The decision
resulted in the Company recording a reserve of $22,876,000 ($15,098,000 net of
tax benefit) in the 1993 fourth quarter comprised primarily of $19,944,000 for
the closing of the 26 stores and $2,932,000 primarily for expected losses on
the sale of the other properties. The $19,944,000 store closing reserve
included a provision for termination of lease agreements, brokers fees and
legal costs of $12,862,000 representing expected future cash outflows; a
provision of $3,518,000 for expected losses from the sale of real estate and
the write-off of leasehold improvements and equipment of the closed stores; and
a provision of $3,564,000 representing operating losses for January 1994
through closure date and employee severance for the closed stores. All stores
were closed as of February 7, 1994, with the exception of one store which
closed March 7, 1994.
As of January 28, 1996 the Company had terminated leases and entered
into sublease arrangements for all but five stores. The annual sublease income
generated approximates the Company's annual costs. The Company retains its
primary obligation under the prime lease should a sublease tenant default on
its sublease obligation.
At January 28, 1996 the remaining reserve of $4,347,000 primarily
represents lease termination costs for the remaining five store locations and
estimated losses associated with the sale and or sublease of real estate.
During 1995 the Company utilized net cash of $3,621,000 to pay lease
termination costs for leases terminated at the end of fiscal 1994 and in 1995
and to pay brokers fees and legal costs.
F-8
<PAGE> 38
NOTE 3: EQUITY INTEREST IN SUNBELT NURSERY GROUP, INC.
In April 1993 the Company acquired a 49.5% interest in Sunbelt Nursery Group,
Inc. ("Sunbelt") by exchanging 1,940,000 shares of its common stock for
4,200,000 shares of common stock of Sunbelt held by Pier 1 Imports, Inc. The
Sunbelt investment was recorded on the General Host consolidated balance sheet
at the time of acquisition based upon fair value. The 4,200,000 shares of
Sunbelt were subsequently pledged as security for payment of a $12,000,000
revolving credit facility between Sunbelt and Pier 1, Imports, Inc. which was
scheduled to mature in April 1994.
The Company received no assurances that the maturity of this facility would be
extended or that Sunbelt had the ability to repay this facility [which resulted
in a going concern qualification in the audit opinion to Sunbelt's financial
statements for the year ended January 31, 1994]. As a result there existed the
possibility that Pier 1 Imports, Inc. would foreclose on the Sunbelt shares
that were pledged as security. Consequently, the Company decided to reduce to
zero the carrying value of its investment in Sunbelt as of fiscal year end
1993. This resulted in a charge of $15,746,000 which, when combined with the
net equity losses recognized through the 1993 third quarter of $1,957,000,
amounted to $17,703,000 for fiscal 1993. In October 1994 the Company sold its
interest in Sunbelt for cash, which resulted in a net gain of $3,612,000.
F-9
<PAGE> 39
NOTE 4: DISCONTINUED OPERATIONS
In prior years' the Company has sold businesses that have been treated as
discontinued operations for financial statement presentation.
The assets and liabilities for discontinued operations sold in prior years'
were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
(In thousands) 1995 1994
- ------------------------------------------------------------
<S> <C> <C>
Prepaid pension asset (Note 12) $ 501 $ 372
======== ========
Accrued expenses $ 1,721 $ 599
Other liabilities 1,401 1,427
-------- --------
$ 3,122 $ 2,026
======== ========
</TABLE>
In 1995 the Company charged to discontinued operations a loss of
$3,000,000, or $.13 per share, as a result of a judgment against the Company in
a 1991 saltwater pollution lawsuit (Note 15). In 1993 the Company charged to
discontinued operations a loss of $840,000, or $.03 per share, for lease
obligations that extend to the year 2001 for businesses sold in prior years
(Note 15).
NOTE 5: OTHER INCOME
<TABLE>
<CAPTION>
- ------------------------------------------------------------
(In thousands) 1995 1994 1993
- ------------------------------------------------------------
<S> <C> <C> <C>
Interest on cash
equivalents and
marketable securities $ 2,363 $ 1,365 $ 1,046
Miscellaneous 931 642 292
-------- -------- --------
$ 3,294 $ 2,007 $ 1,338
======== ======== ========
</TABLE>
F-10
<PAGE> 40
NOTE 6: INCOME TAXES
The components of the income tax provisions are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
(In thousands) 1995 1994 1993
- -----------------------------------------------------------------------
<S> <C> <C> <C>
CONTINUING OPERATIONS:
Current federal income taxes $ (25) $ (900) $ (1,730)
Current state and other income taxes (600) 1,324
Deferred federal income taxes (13,859)
Deferred state and other income taxes (2,124)
-------- -------- --------
Total income tax benefit $ (625) $ (900) $(16,389)
======== ======== ========
</TABLE>
Differences between income taxes of continuing operations and income
taxes based on statutory federal income tax rates applied to income before
taxes are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes based on
statutory rates $ (2,708) $ 2,613 $(18,867)
Increases (decreases) in rates
resulting from:
Limitation (utilization)
of tax loss carryforwards 2,145 (2,207) 2,262
Elimination of reserves no
longer required (600) (1,000) (528)
Effect of graduated rates 539
Amortization of intangibles
and other acquisition costs 136 136 136
Other 402 (442) 69
-------- -------- --------
$ (625) $ (900) $(16,389)
======== ======== ========
</TABLE>
F-11
<PAGE> 41
The tax effects of the principal temporary deferred tax assets and
liabilities are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
(In thousands) 1995 1994
- ----------------------------------------------------------------------
<S> <C> <C>
LIABILITIES:
Property, plant & equipment $ (16,168) $ (17,004)
--------- ---------
Gross deferred tax liabilities (16,168) (17,004)
--------- ---------
ASSETS:
Inventory 1,043 1,134
Accrued expenses 3,091 2,962
Other 244 717
Loss on equity investment in an
unconsolidated affiliate 721 728
Store closing reserve 1,545 3,148
NOL carryforward 18,029 14,675
--------- ---------
Gross deferred tax assets 24,673 23,364
--------- ---------
Net deferred tax asset 8,505 6,360
Valuation allowance (8,505) (6,360)
--------- ---------
$ -- $ --
========= =========
</TABLE>
In 1995, the tax provision was unfavorably impacted by an increase in
the valuation allowance as a result of the current year loss not being
benefitted. A valuation allowance was provided in 1993 against the net
deferred tax asset resulting from the Company's net operating loss and the loss
from an investment in an unconsolidated affiliate. Due to the Company's
historical operating results prior to 1995, a valuation allowance for the
deferred tax asset balance remained at January 28, 1996.
At January 28, 1996 the federal tax NOL carryforwards approximated
$53,000,000. As a result of the valuation allowance, approximately $20,700,000
of these carryforwards have not been benefitted and utilization will be
recognized against future income. The net operating loss will expire as
follows: in January 2008 -- $5,000,000, January 2009 -- $39,000,000, January
2010 -- $3,000,000 and January 2011 -- $6,000,000.
F-12
<PAGE> 42
NOTE 7: PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
(In thousands) 1995 1994
- ------------------------------------------------------------------
<S> <C> <C>
Land $ 45,928 $ 46,623
Buildings:
Owned 168,964 168,248
Capital leases (Note 11) 17,445 18,050
Equipment 106,610 111,792
Leasehold improvements 48,107 47,291
Construction in progress 5,579 3,928
-------- --------
392,633 395,932
Less accumulated depreciation,
including capital lease amounts
of $10,046 and $9,780 154,830 142,621
-------- --------
$237,803 $253,311
======== ========
</TABLE>
NOTE 8: ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable include amounts payable to brokers for purchases of cash
equivalents of $19,997,000 in 1995 and $14,998,000 in 1994.
Accrued expenses are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
(In thousands) 1995 1994
- -----------------------------------------------------------------
<S> <C> <C>
Income taxes $ 301 $ 1,007
Taxes, other than income taxes 6,580 6,595
Payroll 2,338 4,063
Insurance 3,669 3,943
Interest 6,637 8,013
Litigation 1,336
Other 12,151 17,002
------- -------
$33,012 $40,623
======= =======
</TABLE>
F-13
<PAGE> 43
NOTE 9: LONG-TERM DEBT
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
(In thousands) 1995 1994
- -----------------------------------------------------------------
<S> <C> <C>
SENIOR DEBT:
11 1/2% Senior Notes due
February 15, 2002 $ 78,000 $ 78,000
Adjustable Rate First Mortgage
Notes due March 29, 1996 76,000
Mortgage notes due on varying
dates from February 1, 2001
to February 1, 2006 34,804
Capital leases (Note 11) 13,384 14,172
Other 684 833
-------- --------
126,872 169,005
Less current portion 1,974 5,694
-------- --------
124,898 163,311
-------- --------
SUBORDINATED DEBT:
8% Convertible Subordinated Notes
due February 15, 2002 65,000 65,000
-------- --------
Total long-term debt $189,898 $228,311
======== ========
</TABLE>
The Senior Notes, issued at par, bear interest at 11 1/2%. The Convertible
Subordinated Notes, issued at par, bear interest at 8% and are convertible into
common stock of the Company at a conversion price of $8.96 per share, subject
to adjustments in certain events.
The Company repaid the remaining balance of the Adjustable Rate First
Mortgage Notes due March 29, 1996 during the last half of 1995. As part of the
plan to repay the mortgage notes, the Company entered into new mortgage
financings totalling $34,984,000 during the third and fourth quarters of 1995.
Interest rates on the new mortgage notes vary from 7.8% to 8.7%, and the notes
mature with balloon payments on varying dates from February 1, 2001 to February
1, 2006. The new mortgage notes are secured by 37 nursery and crafts retail
stores having a net book value of $47,260,000 at January 28, 1996.
The Company has a $25,000,000 unsecured credit agreement with a bank.
The credit agreement is committed through May 31, 1996. There is a commitment
fee of 1/2 of 1% on the unused portion. At the Company's option, interest
under the agreement may be based on the London Interbank Offering Rate (LIBOR)
or on
F-14
<PAGE> 44
the bank's prime rate. On November 6, 1995 the Company borrowed $10,000,000
under the agreement, which was repaid on December 6, 1995. As of February 28,
1996, $25,000,000 was outstanding under the agreement.
The bank agreement requires the Company, among other things, to
maintain minimum levels of earnings, tangible net worth and certain minimum
financial ratios. In addition, the Company is required to maintain a minimum
credit facility of $15,000,000 at all times prior to May 31, 1997 under
$4,950,000 of the new mortgage financings. The Company was in compliance with
all of the bank agreement covenants and other restrictions under all other debt
agreements at January 28, 1996.
Under the most restrictive provisions of any of the Company's debt
agreements, total shareholders' equity available to pay cash dividends or
purchase treasury stock was below the required minimum level by $10,799,000 at
January 28, 1996.
Aggregate maturities of long-term debt for the five years subsequent
to 1995, excluding capital lease obligations (Note 11), are $1,054,000 in 1996,
$1,171,000 in 1997, $1,306,000 in 1998, $1,327,000 in 1999 and $1,304,000 in
2000.
NOTE 10: SHAREHOLDERS' EQUITY
The Company's 1986 stock incentive plan, as amended in 1992, provides for the
granting of options to purchase up to 2,500,000 shares of common stock and
expires by its terms on March 19, 1996. Options are granted to key employees
and expire no later than ten years after grant. Effective April 7, 1995 the
exercise prices of all outstanding options under the plan were adjusted to
reflect the 5% stock dividends paid on April 7, 1995 and April 8, 1994. The
1996 stock incentive plan is subject to shareholder approval at the annual
meeting of shareholders in May 1996. In April 1994 the Company issued
restricted stock grants under the plan to employees of the Company. The market
value of the shares granted amounted to $341,500 for fiscal 1994 and was
charged to selling expense. Restrictions on the grants expired on January 28,
1996 and in February 1996, 59,301 shares were issued. The directors' stock
option plan provides for the issuance of options to members of the Board of
Directors who are not employees of the Company; options expire no later than
five years after grant. In October 1994 the Company granted each outside
director options to purchase a total of 25,000 shares of common stock under a
newly created plan that was approved by the shareholders in May 1995 and
therefore have been included in the following option information for fiscal
1994. Effective April 7, 1995 all
F-15
<PAGE> 45
outstanding options under the plan were adjusted to reflect the 5% stock
dividend paid on April 7, 1995 and the resulting additional options of 11,250
were included in options granted for fiscal 1995. Under both plans, options
are granted at prices not less than fair market value on the date of grant.
Changes in stock options during the three years ended January 28, 1996
are as follows:
<TABLE>
<CAPTION>
Shares Option Prices
--------- -------------
<S> <C> <C>
OUTSTANDING AT JANUARY 31, 1993 803,250 $ 5.50-14.38
Options granted 166,150 8.38-10.06
Options cancelled (26,000) 8.50-10.06
--------- ------------
OUTSTANDING AT JANUARY 30, 1994 943,400 5.50-14.38
Options granted 356,000 4.44- 5.75
Options cancelled (64,000) 5.50-14.38
--------- ------------
OUTSTANDING AT JANUARY 29, 1995 1,235,400 4.44-14.38
Options granted 633,038 3.75- 7.25
Options exercised (15,000) 4.96- 5.46
Options cancelled (678,750) 4.44-12.97
--------- -----------
OUTSTANDING AT JANUARY 28, 1996 1,174,688 $ 3.75-12.97
========= ============
</TABLE>
At January 28, 1996 outstanding options for 786,988 shares are
exercisable and 1,440,099 shares are available for granting additional options.
During 1995 the Company cancelled 540,000 options (300,000 at $7.73 and 240,000
at $7.45). These options were reissued at $3.75.
The Company's certificate of incorporation authorizes the issuance of
1,000,000 shares of $1.00 par value preferred stock, none of which have been
issued.
Each share of the Company's common stock carries with it one right to
purchase one additional share of common stock from the Company for $60 upon the
occurrence of certain events, at which time the rights become exercisable.
Separate rights certificates will then be issued and the rights can be traded
separately. In the event the rights become exercisable and thereafter the
Company is acquired in a merger or other business combination, each right will
entitle the holder, upon payment of the exercise price, to receive a number of
shares of the surviving corporation's common stock equal to the exercise price
divided by 50% of the market price. At the Company's option, the rights are
redeemable in their entirety at $.01 per right. The rights are subject to
adjustment to prevent dilution and expire March 7, 2000.
F-16
<PAGE> 46
NOTE 11: LEASES
The Company's capital leases are principally for offices and retail stores, for
periods ranging up to 25 years. The Company's operating leases are principally
for retail store locations.
At January 28, 1996 lease obligations under capital leases, included
in long-term debt (Note 9), and operating leases with lease terms longer than
one year, are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
Capital Operating
(In thousands) Leases Leases
- ----------------------------------------------------------------
<S> <C> <C>
Payable in 1996 $ 2,369 $ 14,401
1997 2,499 13,698
1998 2,422 12,742
1999 2,363 11,960
2000 2,322 11,395
Payable after 2000 12,633 83,569
-------- --------
Total minimum lease obligations 24,608 $147,765
========
Executory costs (43)
Amount representing future interest (11,180)
--------
Present value of net minimum lease
obligations $ 13,385
========
Future sublease rental income $ 4,995
========
</TABLE>
Rent expense was $22,473,000 in 1995, $21,045,000 in 1994 and
$24,602,000 in 1993. Rent expense includes additional rentals based on retail
store sales (in excess of the minimums specified in leases) of $815,000 in
1995, $760,000 in 1994 and $804,000 in 1993 and is reduced by sublease rental
income of $832,000 in 1995, $873,000 in 1994 and $824,000 in 1993.
NOTE 12: PENSION PLAN
Retirement benefits for both salaried and hourly employees are provided through
a noncontributory, defined contribution plan. Contributions are determined by
the Board of Directors based upon assessment of the Company's fiscal year's
profitability as related to pre-established financial objectives. There were
no contributions made to the plan for 1995 and 1993. The 1994 contribution
approved by the Board of Directors was $500,000. The plan also includes a
401(k)component, permitting employees to
F-17
<PAGE> 47
invest from 1% to 10% of their salary in the employee's choice of an equity
fund, a balanced fund or a fixed income fund. The Company does not match
employee contributions.
The Company also sponsors a noncontributory, defined benefit pension
plan, which covers former hourly employees of several discontinued operations
and provides pension benefits of stated amounts multiplied by years of service.
The Company contributes to this plan based on funding requirements determined
by consulting actuaries using the accrued benefit (unit credit) method.
Net periodic pension cost consisted of the following:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
(In thousands) 1995 1994 1993
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Interest cost on projected benefit
obligations $ 2,139 $ 2,065 $ 2,289
Actual return on plan assets (2,269) (2,684) (3,342)
Net amortization and deferrals 610
-------- -------- --------
Net periodic pension income $ (130) $ (619) $ (443)
======== ======== ========
</TABLE>
The following table summarizes the plan's funding status and the asset
recognized in the consolidated balance sheets as of January 28, 1996 and
January 29, 1995:
<TABLE>
<CAPTION>
- ------------------------------------------------------------
(In thousands) 1995 1994
- ------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
pension benefit obligations,
all of which are vested $(27,439) $(26,892)
Plan assets at fair value 29,332 26,906
Unrecognized (gain) loss (1,392) 358
-------- --------
Pension asset in the
consolidated balance sheets $ 501 $ 372
======== ========
</TABLE>
The above amounts were determined as of December 31 each year. The
assumed discount rate for projected benefit obligations was 7.25% for 1995 and
8.5% for 1994. The expected long-term return on plan assets was 9% for 1995
and 1994.
The assets of the plan consist primarily of U.S. government securities
and listed stocks and bonds, including common stock of the Company with a
quoted market value of $1,550,000 at December 31, 1995 and $1,707,000 at
December 31, 1994.
F-18
<PAGE> 48
NOTE 13: OTHER POSTRETIREMENT BENEFITS
The Company provides certain life insurance benefits to eligible retired
employees. The cost of this benefit is not significant to the Company. In
addition, the Company has provided for certain health care and life insurance
benefits which cover former hourly employees of several discontinued
operations.
The Company adopted SFAS No. 106 as of February 1, 1994. The
Statement requires that the cost of such benefits be recognized in the
financial statements during the period employees provide service to the
Company. The Company elected to immediately recognize the accumulated
liability. At the date of adoption, the unrecognized accumulated liability was
not material to the consolidated financial statements of the Company.
The accrued postretirement liability recognized in the consolidated
balance sheets was $1,577,000 at January 28, 1996 and $1,598,000 at January 29,
1995. The net periodic postretirement benefit cost was $105,000 for 1995 and
$119,000 for 1994. The amounts were determined as of December 31 each year.
The discount rate used in determining the accumulated postretirement benefit
obligation was 7.25% for 1995 and 8.5% for 1994. The assumed health care cost
trend rate used in measuring the accumulated postretirement benefit obligation
was 9.9% in 1995 grading down uniformly to 5.25% in 2005. If the health care
cost trend rate assumptions were increased by 1%, the accumulated
postretirement benefit obligation would be increased by 7.2% for 1995. The
effect of this change on the interest cost component of net periodic
postretirement benefit cost for 1995 would be an increase of 6.6%.
NOTE 14: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
Cash and cash equivalents
The carrying value amount approximates fair value because of the short maturity
of those investments.
F-19
<PAGE> 49
Other investments
The Company's other investments represent investments in untraded companies.
Based upon the Company's review of the financial statements of these companies
the carrying amount approximates fair value.
Long-term debt
The fair value of the Company's long-term debt is estimated based upon the
quoted market prices for the same or similar issues or on the current rates
offered to the Company for debt of the same remaining maturities.
The estimated fair values of the Company's financial instruments at
January 28, 1996 and January 29, 1995 are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
(In thousands) 1995 1994
- ----------------------------------------------------------------------------
CARRYING FAIR Carrying Fair
AMOUNT VALUE Amount Value
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 29,901 $ 29,901 $ 83,362 $ 83,362
Other investments 1,088 1,088 3,344 3,344
Long-term debt 191,872 179,083 234,005 216,065
</TABLE>
NOTE 15: LITIGATION AND OTHER CONTINGENCIES
In the normal course of business the Company is subject to various claims. In
the opinion of management, any ultimate liability arising from or related to
these claims should not have a material adverse effect on future results of
operations or the consolidated financial position of the Company.
In 1995 the Company charged to discontinued operations a loss of
$3,000,000, or $.13 per share, as a result of a judgment against the Company in
a 1991 saltwater pollution lawsuit. The Company has appealed. The lawsuit
involves claims by farmers in Rice County, Kansas who alleged that saltwater
pollution of the ground water by the American Salt Company, a former subsidiary
of the Company, rendered it unfit for irrigation. In August 1995, a jury
verdict awarded the plaintiffs $480,000 in compensatory damages for the period
1989 to 1995 and in October 1995 the plaintiffs were awarded $550,000 in
punitive damages and the judgment was entered. The judgment, together with
approximately $1,130,000 in legal defense costs, $470,000 in related costs,
principally for technical consulting and expert witnesses, and $370,000 for
future legal and related costs, totalled $3,000,000.
F-20
<PAGE> 50
The Company has certain lease obligations which extend to the year
2001 for businesses sold. In the opinion of management, any ultimate liability
arising from or related to these obligations, to the extent not otherwise
provided for, should not have a material adverse effect on future operations or
the consolidated financial position of the Company.
NOTE 16: SUPPLEMENTAL CASH FLOW INFORMATION
Income tax payments were $449,000 in 1995, $414,000 in 1994 and $922,000 in
1993. Interest payments were $23,286,000 in 1995, $21,431,000 in 1994, and
$20,912,000 in 1993. Noncash investing and financing activities for 1994
included the purchase of land for $891,000 in exchange for a mortgage payable
and the issuance of 68,300 shares of common stock representing restricted stock
grants. In 1993 noncash investing and financing activities included the
issuance of 1,940,000 shares of common stock at the then market value of
$17,703,000 in exchange for an equity investment in an unconsolidated
affiliate.
Net cash used for discontinued operations:
Net cash used for discontinued operations for fiscal 1995, 1994 and 1993 is
primarily for payments related to businesses sold in prior years, which were
treated as discontinued operations.
F-21
<PAGE> 51
<TABLE>
<CAPTION>
QUARTERLY INFORMATION
- --------------------------------------------------------------------------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
(12 wks) (12 wks) (12 wks) (16 wks)
- --------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts)
1995 1,6
<S> <C> <C> <C> <C>
Sales $168,555 $ 95,976 $126,741 $201,998
======== ======== ======== ========
Cost of sales, including buying and occupancy $121,919 $ 75,695 $ 95,450 $138,417
======== ======== ======== ========
Income (loss) from continuing operations
before income taxes $ (478) $(12,782) $ (3,555) $ 11,851
======== ======== ======== ========
Loss from discontinued operations $ (207) $ (2,793) $ $
======== ======== ======== ========
Net income (loss) $ (766) $(14,692) $ (2,915)2 $ 11,034
======== ======== ======== ========
Primary earnings (loss) per share 7:
Income (loss) from continuing operations $ (.02) $ (.51) $ (.13) $ .47
Loss from discontinued operations (.01) (.12)
-------- -------- -------- --------
Net income (loss) $ (.03) $ (.63) $ (.13) $ .47
======== ======== ======== ========
Fully diluted earnings (loss) per share 7:
Income (loss) from continuing operations $ (.02) $ (.51) $ (.13) $ .41
Loss from discontinued operations (.01) (.12)
-------- -------- -------- --------
Net income (loss) $ (.03) $ (.63) $ (.13) $ .41
======== ======== ======== ========
1994 3,6
Sales $169,870 $ 98,022 $114,905 $185,190
======== ======== ======== ========
Cost of sales, including buying and occupancy $115,448 $ 76,217 $ 84,595 $126,579
======== ======== ======== ========
Income (loss) from continuing operations
before income taxes $ 9,674 $(12,528) $ (3,857) $ 10,784
======== ======== ======== ========
Net income (loss) $ 9,574 $ (7,047)4,5 $ (3,373) $ 9,431
======== ======== ======== ========
Primary earnings (loss) per share 7:
Net income (loss) $ .41 $ (.30) $ (.14) $ .41
======== ======== ======== ========
Fully diluted earnings (loss) per share 7:
Net income (loss) $ .35 $ (.30) $ (.14) $ .36
======== ======== ======== ========
</TABLE>
1 Had the actual annual effective tax rate been applied to the quarterly
information, the first quarter net income would have increased by
$817, or $.04 per share, the second quarter net loss would have
increased by $40, with no per share effect, the third quarter net loss
would have increased by $1,090, or $.05 per share, and the fourth
quarter net loss would have decreased by $313, or $.01 per share.
2 Includes $600 of income tax reserves no longer required.
3 Had the actual annual effective tax rate been applied to the quarterly
information, the first quarter net income would have increased by
$1,353, or $.06 per share, the second quarter net loss would have
increased by $484, or $.02 per share, and the third quarter net loss
would have increased by $869, or $.04 per share.
4 Includes a net gain of $3,612 from the sale of the Company's
investment in Sunbelt Nursery Group, Inc.
5 Includes $1,000 of income tax reserves no longer required.
6 Share and per share data have been restated to reflect the 5% stock
dividend declared on February 28, 1996.
7 Due to changes in the number of shares outstanding during the year,
quarterly earnings per share do not necessarily add to the totals for
the year.
F-22
<PAGE> 52
<TABLE>
<CAPTION>
FIVE YEAR FINANCIAL DATA
- ----------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share amounts) 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C>
Sales of continuing operations $593,270 $567,987 $568,602 $557,818 $520,072
Income (loss) from continuing operations before
income taxes $ (4,964) $ 4,073 $(53,906) $ 1,005 $ 14,601 8
Income (loss) from continuing operations $ (4,339) 1 $ 8,585 2,3 $(55,220)4 $ 2,853 6 $ 8,703
Net income (loss) $ (7,339) $ 8,585 $(56,060) $ 5,322 7 $ 13,783 9
Income (loss) per share from continuing operations 10 $ (.19) 1 $ .37 2,3 $ (2.42)4 $ .13 6 $ .41 8
Net income (loss) per share 10 $ (.32) $ .37 $ (2.45) $ .25 7 $ .65 9
Cash dividends per share $ .00 12 $ .00 12 $ .38 $ .36 $ .34
Average shares outstanding 10 23,249 23,244 22,860 21,152 21,184
Working capital $ 45,194 $ 73,499 $ 50,525 $130,542 $ 62,278
Ratio of current assets to current liabilities 1.5-1 1.7-1 1.4-1 2.4-1 1.6-1
Total year-end assets $395,785 $464,858 $478,205 $531,019 $435,304
Long-term debt, including current portion $191,872 $234,005 $256,875 $262,014 $166,043
Shareholders' equity $110,228 $117,650 $108,714 $154,358 $155,389
Long-term debt as a percentage of total capitalization 64% 67% 70% 63% 52%
Ratio of earnings to fixed charges .85 1.27 (.71)5 1.00 1.59
Number of common shares outstanding 10 23,247 23,250 23,180 21,240 21,139
Book value per share 10,11 $ 4.83 $ 5.14 $ 4.77 $ 7.37 $ 7.42
Price range per share as traded on the
New York Stock Exchange $7 5/8-3 5/8 $6 7/8-3 3/4 $10 5/8-5 7/8 $10 1/2-7 3/4 $9 3/4-5 7/8
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Includes $600 of income tax reserves no longer required.
2 Includes a net gain of $3,612 from the sale of the Company's
investment in Sunbelt Nursery Group, Inc.
3 Includes $1,000 of income tax reserves no longer required.
4 Includes $22,876 ($15,098 net of taxes) representing a reserve for
store closings and other costs and $17,703 representing the net equity
loss and write-down of the Sunbelt investment.
5 Pre-tax earnings from continuing operations were inadequate to cover
fixed charges to the extent of $54,266.
6 Includes $1,914 of income tax reserves no longer required.
7 Includes $2,850 representing the cumulative effect of the Company's
adoption of SFAS No. 109, "Accounting for Income Taxes".
8 Includes gain from the sale of Calloway's Nursery, Inc. of
approximately $13,503 ($7,775 net of taxes).
9 Includes $5,940 of income tax reserves no longer required that were
related to discontinued operations.
10 Share and per share data have been restated to reflect the 5% stock
dividend described in Note 1 of the Notes to Consolidated Financial
Statements.
11 Includes notes receivable from exercise of stock options.
12 In lieu of a cash dividend, a 5% stock dividend was distributed.
F-23
<PAGE> 53
Schedule VIII
GENERAL HOST CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEAR ENDED JANUARY 28, 1996
(In thousands)
<TABLE>
<CAPTION>
Additions
-----------------------
Balance, Charged Charged Balance,
Beginning to Costs to Other End
of Year and Expenses Accounts Deductions of Year
--------- ------------ -------- ---------- ---------
<S> <C> <C> <C> <C>
Deducted from accounts receivable:
Allowance for doubtful accounts $ 200 $ 200
Non-current assets:
Accumulated amortization of
intangible assets 8,818 $ 965 $ 9,783
Accumulated amortization of
deferred mortgage costs 3,938 1,138 5,076
Other liabilities and deferred credits:
Estimated liabilities in connection
with discontinued operations 1,427 132 158 (1) 1,401
Other liabilities 6,048 1,100 7,148
</TABLE>
(1) Represents payments of liabilities.
F-24
<PAGE> 54
Schedule VIII
GENERAL HOST CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEAR ENDED JANUARY 29, 1995
(In thousands)
<TABLE>
<CAPTION>
Additions
-----------------------
Balance, Charged Charged Balance,
Beginning to Costs to Other End
of Year and Expenses Accounts Deductions of Year
--------- ------------ -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Deducted from accounts receivable:
Allowance for doubtful accounts $ 200 $ 200
Non-current assets:
Accumulated amortization of
intangible assets 7,881 $ 937 8,818
Accumulated amortization of
deferred mortgage costs 3,258 680 3,938
Other liabilities and deferred credits:
Estimated liabilities in connection
with discontinued operations 1,547 278 398 (1) 1,427
Other liabilities 4,932 1,135 19 (1) 6,048
</TABLE>
(1) Primarily represents reclassification to current assets.
F-25
<PAGE> 55
Schedule VIII
GENERAL HOST CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEAR ENDED JANUARY 30, 1994
(In thousands)
<TABLE>
<CAPTION>
Additions
-----------------------
Balance, Charged Charged Balance,
Beginning to Costs to Other End
of Year and Expenses Accounts Deductions of Year
--------- ------------ -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Deducted from marketable securities:
Valuation allowance for marketable
securities $ 10 $ 10 $ -0-
Deducted from accounts receivable:
Allowance for doubtful accounts 101 $ 100 1 200
Non-current assets:
Accumulated amortization of
intangible assets 6,941 940 7,881
Accumulated amortization of
deferred mortgage costs 2,603 655 3,258
Other liabilities and deferred credits:
Estimated liabilities in connection
with discontinued operations 1,961 189 603 (1) 1,547
Other liabilities 5,998 1,246 2,312 (2) 4,932
</TABLE>
(1) Primarily reclassification to accrued expenses.
(2) Primarily related to the provision for store closings.
F-26
<PAGE> 56
INDEX OF EXHIBITS FILED HEREWITH
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C> <C>
3.01 (f) Certificate of Amendment of the Restated Certificate, filed April 14, 1988.
4.02 (a) Promissory Note in the original principal amount of $690,000 dated August 31, 1995 from Frank's
Nursery & Crafts, Inc. ("Frank's") to MetLife Capital Financial Corporation ("MetLife").
(b) Commercial Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing dated as of
August 31, 1995 by and between Frank's and MetLife.
(c) Security Agreement dated as of August 31, 1995 by and between Frank's and MetLife.
(d) Assignment of Rents and Leases dated as of August 31, 1995 by and between Frank's and MetLife.
(e) Guaranty dated as of August 31, 1995 by the Company in favor of MetLife.
4.03 (a) Mortgage Note in the original principal amount of $4,950,000 dated January 25, 1996 from Frank's to
People's Bank ("People's").
(b) Mortgage Deed and Security Agreement dated as of January 25, 1996 by and between Frank's and People's.
(c) Assignment of Rents and Leases dated as of January 25, 1996 by and between Frank's and People's.
(d) Guaranty and Indemnity Agreement dated as of January 25, 1996 by the Company in favor of People's.
(e) Escrow Agreement dated as of January 25, 1996 by and among Frank's, People's and Commonwealth Land
Title Insurance Company.
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
4.04 (a) Promissory Note in the original principal amount of $682,878 dated March 14, 1996 from Frank's
Nursery & Crafts, Inc. ("Frank's") to Midland Loan Services, L.P. ("Midland").
(b) Mortgage, Security Agreement and Assignment of Leases and Rents dated as of March 14, 1996 by
and between Frank's and Midland.
(c) Assignment of Rents and Leases dated as of March 14, 1996 by and between Frank's and Midland.
(d) Guaranty dated as of March 14, 1996 by the Company in favor of Midland.
(e) Escrow Agreement dated as of March 14, 1996 by and between Frank's and Midland in its capacities as
lender and escrow agent.
10.03 (a) Frank's 1996 Executive Compensation Program.
(b) The Company's 1996 Executive Compensation Program.
10.05 (a) 1994 Non-Employee Directors Stock Option Plan adopted
October 12, 1994.
11.01 Statement re: computation of per share earnings.
12.01 Statement re: computation of ratios.
21.01 Subsidiaries of the Registrant.
23.01 Consent of Price Waterhouse LLP.
24.01 Powers of Attorney
(a) C. Whitcomb Alden, Jr. Director
(b) Christopher A. Forster Director
(c) S. Joseph Fortunato Director
(d) Philip B. Harley Director
(e) Richard W. Haskel Director
(f) Edward H. Hoornstra Director
(g) Charles B. Johnson Director
(h) Kelly Ashton Sant Albano Director
27.01 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 3.01(f)
STATE OF NEW YORK }SS:
DEPARTMENT OF STATE
I hereby certify that I have compared the annexed copy of the original document
filed by the Department of State and that the same is a correct transcript of
said original.
Witness my hand and seal of the Department of State on SEP 28 1995
[SEAL OF STATE OF NEW YORK]
Alexander F. Treadwell
Secretary of State
<PAGE> 2
CERTIFICATE OF CHANGE
OF
GENERAL HOST CORPORATION
UNDER SECTION 805-A OF THE BUSINESS CORPORATION LAW
Pursuant to the provisions of Section 805-A of the Business Corporation
Law, we the undersigned officers of the above corporation hereby certify:
1. The name of the corporation is GENERAL HOST CORPORATION.
2. The Certificate of Incorporation of the above corporation was
filed by the Department of State on June 6, 1911 under the name General Baking
Company.
3. The following was authorized by the Board of Directors:
To change the post office address to which the Secretary of State shall
mail a copy of process in any action or proceeding against the corporation which
may be served on him from c/o CT Corporation System, 277 Park Avenue, New York,
New York 10017 to c/o CT Corporation System, 1633 Broadway, New York, New York
10019.
To change the address of the registered agent in New York upon whom all
process against the corporation may be served from CT Corporation System, 277
Park Avenue, New York, New York 10017 to CT CORPORATION SYSTEM, 1633 Broadway,
New York, New York 10019.
IN WITNESS WHEREOF, we have signed this certificate and we affirm the
statements contained therein as true under penalties of perjury on September
17, 1987.
James C. Hull
-----------------------
James C. Hull
Vice President
Robert G. Kuhbach
-----------------------
Robert G. Kuhbach
Assistant Secretary
<PAGE> 3
................................................
CERTIFICATE OF CHANGE
OF
STATE OF NEW YORK
General Host Corporation DEPARTMENT OF STATE
FILED APR 14 1988
AMT OF CHECK $ 20
--------
FILING FEE $ 20
---------
TAX $
----------------
COUNTY FEE $
UNDER SECTION 805-A OF THE ---------
BUSINESS CORPORATION LAW COPY $
................................................ ---------------
CERT $
---------------
REFUND $
-------------
SPEC HANDLE $
--------
BY:
------------------
Counsel
-------
Name:
- ---- Robert G. Kuhbach, Esq.
c/o General Host Corporation
Address: 22 Gate House Road
- ------- Stamford, CT 06904
<PAGE> 1
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:
<PAGE> 2
<TABLE>
<CAPTION>
Number of
Months
Remaining (Years) Premium Factor
--------- ------- --------------
<S> <C> <C>
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
</TABLE>
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
2
<PAGE> 3
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
3
<PAGE> 4
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;
4
<PAGE> 5
(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
----------------------------
Robert M. Lovejoy,
Vice President
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<PAGE> 1
Exhibit 4.02(b)
AFTER RECORDING, RETURN TO:
METLIFE CAPITAL FINANCIAL CORPORATION
10900 N.E. 4TH STREET, SUITE 500
BELLEVUE, WASHINGTON 98004
ATTENTION: REAL ESTATE DEPARTMENT
LOAN NUMBER: 2406499-001
COMMERCIAL MORTGAGE,
SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS,
AND FIXTURE FILING
THIS MORTGAGE (herein "Instrument") is made as of August 31, 1995, by the
Mortgagor, FRANK'S NURSERY & CRAFTS, INC., a Michigan corporation, whose
address is 6501 E. Nevada, Detroit, Michigan 48234 (herein "Borrower"), in
favor of and for the benefit of the Mortgagee METLIFE CAPITAL FINANCIAL
CORPORATION, a Delaware corporation, whose address is, 10900 N.E. 4th Street,
Suite 500, Bellevue, Washington 98004, Attention: Real Estate Department
(herein "METLIFE").
Borrower, in consideration of the indebtedness herein recited, irrevocably
grants, releases, remises, alienates, mortgages, conveys and assigns unto
METLIFE all of Borrower's estate, right, title and interest, now owned or
hereafter acquired, including any reversion or remainder interest, in the real
property located in Kane County, Illinois described on Exhibit A attached
hereto and incorporated herein including all heretofore or hereafter vacated
alleys and streets abutting the property, and all easements, rights,
appurtenances, tenements, hereditaments, rents, royalties, mineral, oil and gas
rights and profits, water, water rights, and water stock appurtenant to the
property (collectively "Premises");
TOGETHER with all of Borrower's estate, right, title and interest, now
owned or hereafter acquired, in:
a. all buildings, structures, improvements, parking areas, landscaping,
equipment, fixtures and articles of property now or hereafter erected on,
attached to, or used or adapted for use in the operation of the Premises;
including but without being limited to, all heating, air conditioning and
incinerating apparatus and equipment; all boilers, engines, motors, dynamos,
generating equipment, piping and plumbing fixtures, water heaters, ranges,
cooking apparatus and mechanical kitchen equipment, refrigerators, freezers,
cooling, ventilating, sprinkling and vacuum cleaning systems, fire
extinguishing apparatus, gas and electric fixtures, carpeting, floor coverings,
underpadding, elevators, escalators, partitions, mantels, built-in mirrors,
window shades, blinds, draperies, screens, storm sash, awnings, signs,
furnishings of public spaces, halls and lobbies, and shrubbery and plants, and
including also all interest of any owner of the Premises in any of such items
hereafter at any time acquired under conditional sale contract, chattel
mortgage or other title retaining or security instrument, all of which property
mentioned in this clause (a) shall be deemed part of the realty covered by this
Instrument and not severable
<PAGE> 2
wholly or in part without material injury to the freehold of the Premises (all
of the foregoing together with replacements and additions thereto are referred
to herein as "Improvements"); and
b. all compensation, awards, damages, rights of action and proceeds,
including interest thereon and/or the proceeds of any policies of insurance
therefor, arising out of or relating to a (i) taking or damaging of the
Premises or Improvements thereon by reason of any public or private
improvement, condemnation proceeding (including change of grade), sale or
transfer in lieu of condemnation, or fire, earthquake or other casualty, or
(ii) any injury to or decrease in the value of the Premises or the Improvements
for any reason whatsoever;
c. return premiums or other payments upon any insurance any time
provided for the benefit of or naming METLIFE, and refunds or rebates of taxes
or assessments on the Premises;
d. all the right, title and interest of Borrower in, to and under all
written and oral leases and rental agreements (including extensions, renewals
and subleases; all of the foregoing shall be referred to collectively herein as
the "Leases") now or hereafter affecting the Premises including, without
limitation, all rents, issues, profits and other revenues and income therefrom
and from the renting, leasing or bailment of Improvements and equipment, all
guaranties of tenants' performance under the Leases, and all rights and claims
of any kind that Borrower may have against any tenant under the Leases or in
connection with the termination or rejection of the Leases in a bankruptcy or
insolvency proceeding; and the leasehold estate in the event this Instrument is
on a leasehold;
e. plans, specifications, contracts and agreements relating to the
design or construction of the Improvements; Borrower's rights under any
payment, performance, or other bond in connection with the design or
construction of the Improvements; all landscaping and construction materials,
supplies, and equipment used or to be used or consumed in connection with
construction of the Improvements, whether stored on the Premises or at some
other location; and contracts, agreements, and purchase orders with
contractors, subcontractors, suppliers, and materialmen incidental to the
design or construction of the Improvements;
f. all contracts, accounts, rights, claims or causes of action
pertaining to or affecting the Premises or the Improvements, including, without
limitation, all options or contracts to acquire other property for use in
connection with operation or development of the Premises or Improvements,
management contracts, service or supply contracts, deposits, bank accounts,
general intangibles (including without limitation trademarks, trade names and
symbols), permits, licenses, franchises and certificates, and all commitments
or agreements, now or hereafter in existence, intended by the obligor thereof
to provide Borrower with proceeds to satisfy the loan evidenced hereby or
improve the Premises or Improvements, and the right to receive all proceeds due
under such commitments or agreements including refundable deposits and fees;
g. all books, records, surveys, reports and other documents related to
the Premises, the Improvements, the Leases, or other items of collateral
described herein; and
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<PAGE> 3
h. all additions, accessions, replacements, substitutions, proceeds and
products of the real and personal property, tangible and intangible, described
herein.
All of the foregoing described collateral is exclusive of any furniture,
furnishings or trade fixtures owned and supplied by tenants of the Premises.
The Premises, the Improvements, the Leases and all of the rest of the foregoing
property are herein referred to as the "Property."
TO SECURE TO METLIFE (a) the repayment of the indebtedness evidenced by
Borrower's note dated of even date herewith in the principal sum of SIX HUNDRED
NINETY THOUSAND AND NO/100 DOLLARS ($690,000.00), with interest thereon as set
forth in the note, and all renewals, extensions and modifications thereof and
having a final maturity date of September 1, 2005 (herein the "Note"); (b) the
repayment of any future advances, with interest thereon, made by METLIFE to
Borrower pursuant to Section 29 hereof (herein "Future Advances"); (c) the
payment of all other sums, with interest thereon, advanced in accordance
herewith to protect the security of this Instrument or to fulfill any of
Borrower's obligations hereunder or under the other Loan Documents (as defined
below); (d) the performance of the covenants and agreements of Borrower
contained herein or in the other Loan Documents; (e) the repayment of all sums
now or hereafter owing to METLIFE by Borrower pursuant to any instrument which
recites that it is secured hereby, and (f) the payment and performance of all
of Borrower's obligations to METLIFE under the documents evidencing and/or
securing the following loans by METLIFE to Borrower (collectively, the "Other
Loans"):
(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;
(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;
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<PAGE> 4
(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; and
(xi) MetLife Loan No. 2406499-013 in the original principal amount
of $855,000.00.
The indebtedness and obligations described in clauses (a)-(f) above are
collectively referred to herein as the "Indebtedness." The Note, this
Instrument, and all other documents evidencing, securing or guarantying the
Indebtedness (except any Certificate and Indemnity Agreement Regarding
Hazardous Substances), as the same may be modified or amended from time to
time, are referred to herein as the "Loan Documents." The terms of the Note
secured hereby may provide that the interest rate or payment terms or balance
due may be indexed, adjusted, renewed, or renegotiated from time to time, and
this Instrument shall continue to secure the Note notwithstanding any such
indexing, adjustment, renewal or renegotiation.
Borrower represents and warrants that Borrower has good, marketable and
insurable title to, and has the right to grant, convey and assign an
indefeasible fee simple estate in, the Premises, Improvements, rents and leases
(or, if this Instrument is on a leasehold, good, marketable and insurable title
to, and the right to convey the leasehold estate and that the ground lease is
in full force and effect without modification except as noted above and without
default on the part of either lessor or lessee thereunder), and the right to
convey the other Property, that the Property is unencumbered except as
disclosed in writing to and approved by METLIFE prior to the date hereof, and
that Borrower will warrant and forever defend unto METLIFE the title to the
Property against all claims and demands, subject only to the permitted
exceptions set forth in Exhibit B attached hereto.
Borrower represents, warrants, covenants and agrees for the benefit of
METLIFE as follows:
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when
due the principal of and interest on the Indebtedness, any prepayment and other
charges provided in the Loan Documents and all other sums secured by this
Instrument.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Upon the occurrence
of an Event of Default (hereinafter defined), and at METLIFE's sole option at
any time thereafter, Borrower shall pay in addition to each monthly payment on
the Note, one-twelfth of the annual real estate taxes, insurance premiums,
assessments, water and sewer rates, ground rents and other charges (herein
"Impositions") payable with respect to the Property (as estimated by METLIFE in
its sole discretion), to be held by METLIFE without interest to Borrower, for
the payment of such obligations.
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<PAGE> 5
If the amount of such additional payments held by METLIFE ("Funds") at the
time of the annual accounting thereof shall exceed the amount deemed necessary
by METLIFE to provide for the payment of Impositions as they fall due, such
excess shall be at Borrower's option, either repaid to Borrower or credited to
Borrower on the next monthly installment or installments of Funds due. If at
any time the amount of the Funds held by METLIFE shall be less than the amount
deemed necessary by METLIFE to pay Impositions as they fall due, Borrower shall
pay to METLIFE any amount necessary to make up the deficiency within thirty
(30) days after notice from METLIFE to Borrower requesting payment thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Instrument, METLIFE may apply, in any amount and in any order as METLIFE shall
determine in METLIFE's sole discretion, any Funds held by METLIFE at the time
of application (i) to pay Impositions which are now or will hereafter become
due, or (ii) as a credit against sums secured by this Instrument. Upon payment
in full of all sums secured by this Instrument, METLIFE shall refund to
Borrower any Funds held by METLIFE.
3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise,
each complete installment payment received by METLIFE from Borrower under the
Note or this Instrument shall be applied by METLIFE first in payment of amounts
payable to METLIFE by Borrower under Section 2 hereof, then to interest payable
on the Note, then to principal of the Note, and then to interest and principal
on any Future Advances in such order as METLIFE, at METLIFE's sole discretion,
shall determine. Upon Borrower's breach of any covenant or agreement of
Borrower in this Instrument, METLIFE may apply, in any amount and in any order
as METLIFE shall determine in METLIFE's sole discretion, any payments received
by METLIFE under the Note or this Instrument. Any partial payment received by
METLIFE shall, at METLIFE's option, be held in a non-interest bearing account
until METLIFE receives funds sufficient to equal a complete installment
payment.
4. CHARGES, LIENS. Borrower shall pay all Impositions attributable to
the Property in the manner provided under Section 2 hereof or, if not paid in
such manner, by Borrower making payment, when due, directly to the payee
thereof, or in such other manner as METLIFE may designate in writing. With
respect to ad valorem taxes against the Property, Borrower shall pay such taxes
at least thirty (30) days prior to each date on which they become delinquent.
To the extent any such taxes may lawfully be paid in installments without
incurring any penalty or interest, Borrower may pay such taxes in installments
as long as each such installment is paid at least thirty (30) days prior to
delinquency. If requested by METLIFE, Borrower shall promptly furnish to
METLIFE all notices of Impositions which become due, and in the event Borrower
shall make payment directly, Borrower shall promptly furnish to METLIFE
receipts evidencing such payments. Borrower shall promptly discharge any lien
which has, or may have, priority over or equality with, the lien of this
Instrument, and Borrower shall pay, when due, the claims of all persons
supplying labor or materials to or in connection with the Property. Without
METLIFE's prior written permission, Borrower shall not allow any lien inferior
to this Instrument to be perfected against the Property. If any lien inferior
to this Instrument is filed against the Property without METLIFE's prior
written permission and without the consent of Borrower, Borrower shall, within
forty-five (45) days after receiving notice of
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<PAGE> 6
the filing of such lien, cause such lien to be released of record and to
deliver evidence of such release to METLIFE.
5. INSURANCE. Borrower shall obtain and maintain the following types
of insurance upon and relating to the Property:
a. "All Risk" property and fire insurance (with extended coverage
endorsement including malicious mischief and vandalism) in an amount
not less than the full replacement value of the Property (with a
deductible not to exceed $5,000 and with co-insurance limited to a
maximum of 10% of the amount of the policy), naming METLIFE under a
lender's loss payee endorsement (form 438BFU or equivalent) and
including agreed amount, inflation guard, replacement cost and
waiver of subrogation endorsements;
b. Comprehensive general liability insurance in an amount not less
than $2,000,000.00 insuring against personal injury, death and
property damage and naming METLIFE as additional insured;
c. Business interruption insurance covering loss of income for up
to six (6) months; and
d. Such other types of insurance or endorsements to existing
insurance as may be reasonably required from time to time by
METLIFE.
Any insurance coverages required hereunder may be provided under blanket
policies so long as such policies (i) satisfy all of the requirements of this
Section 5, and (ii) are endorsed to specifically name or identify the Property.
Upon each reasonable request of METLIFE, Borrower shall increase the
coverages under any of the insurance policies required to be maintained
hereunder or otherwise modify such policies in accordance with METLIFE's
request. All of the insurance policies required hereunder shall be issued by
corporate insurers licensed to do business in the state in which the Property
is located and rated A:X or better by A.M. Best Company, and shall be in form
acceptable to METLIFE. If and to the extent that the Property is located
within an area that has been or is hereafter designated or identified as an
area having special flood hazards by the Department of Housing and Urban
Development or such other official as shall from time to time be authorized by
federal or state law to make such designation pursuant to any national or state
program of flood insurance, Borrower shall carry flood insurance with respect
to the Property in amounts not less than the maximum limit of coverage then
available with respect to the Property or the amount of the Indebtedness,
whichever is less. Certificates of all insurance required to be maintained
hereunder shall be delivered to METLIFE, along with evidence of payment in full
of all premiums required thereunder, contemporaneously with Borrower's
execution of this Instrument. All such certificates shall be in form
acceptable to METLIFE and shall require the insurance company to give to
METLIFE at least thirty (30) days' prior written notice before canceling the
policy for any reason or materially amending it. Certificates
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<PAGE> 7
evidencing all renewal and substitute policies of insurance shall be delivered
to METLIFE, at least thirty (30) days before termination of the policies being
renewed or substituted. Borrower shall deliver evidence of the payment in full
of the premium for any renewal or substitute policy of insurance to METLIFE
within five (5) days after Borrower's receipt of the invoice for such premium.
If any loss shall occur at any time when Borrower shall be in default
hereunder, METLIFE shall be entitled to the benefit of all insurance policies
held or maintained by Borrower, to the same extent as if same had been made
payable to METLIFE, and upon foreclosure hereunder, METLIFE shall become the
owner thereof. METLIFE shall have the right, but not the obligation, to make
premium payments, at Borrower's expense, to prevent any cancellation,
endorsement, alteration or reissuance of any policy of insurance maintained by
Borrower, and such payments shall be accepted by the insurer to prevent same.
If any act or occurrence of any kind or nature (including any casualty for
which insurance was not obtained or obtainable) shall result in damage to or
destruction of the Property (such event being called a "Loss"), Borrower will
give prompt written notice thereof to METLIFE. All insurance proceeds paid or
payable in connection with any Loss shall be paid to METLIFE. If (i) no Event
of Default has occurred and is continuing hereunder, (ii) Borrower provides
evidence satisfactory to METLIFE of its ability to pay all amounts becoming due
under the Note during the pendency of any restoration or repairs to or
replacement of the Property, and (iii) the available insurance proceeds are, in
METLIFE's judgment, sufficient to fully and completely restore, repair or
replace the Property, Borrower shall have the right to apply all insurance
proceeds received in connection with such Loss either (a) to restore, repair,
replace and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such Loss, or (b) to the payment of the
Indebtedness in such order as METLIFE may elect. If an Event of Default has
occurred and is continuing hereunder at the time of such Loss, if METLIFE
determines that Borrower will be unable to pay all amounts becoming due under
the Note during the pendency of any restoration or repairs to or replacement of
the Property, or if the available insurance proceeds are insufficient, in
METLIFE's judgment, to fully and completely restore, repair or replace the
Property, then all of the insurance proceeds payable with respect to such Loss
will be applied to the payment of the Indebtedness, or if so instructed by
METLIFE, Borrower will promptly, at Borrower's sole cost and expense and
regardless of whether sufficient insurance proceeds shall be available,
commence to restore, repair, replace and rebuild the Property as nearly as
possible to its value, condition, character immediately prior to such Loss.
Borrower shall diligently prosecute any restoration, repairs or replacement of
the Property undertaken by or on behalf of Borrower pursuant to this Section 5.
All such work shall be conducted pursuant to written contracts approved by
METLIFE in writing. Notwithstanding anything contained herein to the contrary,
in the event the insurance proceeds received by METLIFE following any Loss are
insufficient in METLIFE's judgment to fully and completely restore, repair or
replace the Property, and if Borrower has complied with all of the other
conditions described in this Section 5, Borrower may elect to restore, repair
or replace the Property if it first deposits with METLIFE such additional sums
as METLIFE determines are necessary in order to fully and completely restore,
repair or replace the Property. In the event any insurance proceeds remain
following the restoration, repair or replacement of the Property, such proceeds
shall be applied to the Indebtedness in such order as METLIFE may elect.
Notwithstanding the foregoing, in the event of a Loss in which the damage to
the Property (as
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<PAGE> 8
estimated by a qualified insurance adjuster) is less than $10,000.00, then
provided no Event of Default has occurred which is continuing and that no event
has occurred which with notice, the expiration of any cure period, or both
would constitute an Event of Default, Borrower may apply the insurance proceeds
arising therefrom directly to the repair of the Property without first causing
such proceeds to be paid to METLIFE.
6. PRESERVATION AND MAINTENANCE OF PROPERTY; LEASEHOLDS. Borrower (a)
shall not commit waste or permit impairment or deterioration of the Property,
(b) shall not abandon the Property, (c) shall restore or repair promptly and in
a good and workmanlike manner all or any part of the Property to the equivalent
of its condition as of the date of this Instrument, or such other condition as
METLIFE may approve in writing, in the event of any damage, injury or loss
thereto, whether or not insurance proceeds are available to cover in whole or
in part the costs of such restoration or repair, (d) shall keep the Property,
including all improvements, fixtures, equipment, machinery and appliances
thereon, in good repair and shall replace fixtures, equipment, machinery and
appliances on the Property when necessary to keep such items in good repair,
(e) shall comply with all laws, ordinances, regulations and requirements of any
governmental body applicable to the Property, (f) if all or part of the
Property is for rent or lease, then METLIFE, at its option after the occurrence
of an Event of Default, may require Borrower to provide for professional
management of the Property by a property manager satisfactory to METLIFE
pursuant to a contract approved by METLIFE in writing, unless such requirement
shall be waived by METLIFE in writing, (g) shall generally operate and maintain
the Property in a manner to ensure maximum rentals, and (h) shall give notice
in writing to METLIFE of and, unless otherwise directed in writing by METLIFE,
appear in and defend any action or proceeding purporting to affect the
Property, the security of this Instrument or the rights or powers of METLIFE
hereunder. Neither Borrower nor any tenant or other person, without the
written approval of METLIFE, shall remove, demolish or alter any improvement
now existing or hereafter erected on the Property or any fixture, equipment,
machinery or appliance in or on the Property except when incident to the
replacement of fixtures, equipment, machinery and appliances with items of like
kind.
Borrower represents, warrants and covenants that the Property is and shall
be in compliance with the Americans with Disabilities Act of 1990 and all of
the regulations promulgated thereunder, as the same may be amended from time to
time.
7. USE OF PROPERTY. Unless required by applicable law or unless
METLIFE has otherwise agreed in writing, Borrower shall not allow changes in
the use for which all or any part of the Property was intended at the time this
Instrument was executed. Borrower shall not, without METLIFE's prior written
consent, (i) initiate or acquiesce in a change in the zoning classification
(including any variance under any existing zoning ordinance applicable to the
Property), (ii) cause the use of the Property to become a non-conforming use
under applicable zoning ordinances, (iii) file any subdivision or parcel map
affecting the Property, or (iv) amend, modify or consent to any easement or
covenants, conditions and restrictions pertaining to the Property.
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<PAGE> 9
8. PROTECTION OF METLIFE'S SECURITY. Upon the occurrence of an Event
of Default, or if any action or proceeding is commenced which affects the
Property or title thereto or the interest of METLIFE therein, including, but
not limited to, eminent domain, insolvency, code enforcement, or arrangements or
proceedings involving a bankrupt or decedent, then METLIFE at METLIFE's option
may make such appearances, disburse such sums and take such action as METLIFE
deems necessary, in its sole discretion, to protect METLIFE's interest,
including, but not limited to, (i) disbursement of attorneys' fees, (ii) entry
upon the Property to make repairs, and (iii) procurement of satisfactory
insurance as provided in Section 5 hereof.
Any amounts disbursed by METLIFE pursuant to this Section 8, with
interest thereon, shall become additional Indebtedness of Borrower secured by
this Instrument. Unless Borrower and METLIFE agree to other terms of payment,
such amounts shall be immediately due and payable and shall bear interest from
the date of disbursement at the post-maturity rate stated in the Note. Borrower
hereby covenants and agrees that METLIFE shall be subrogated to the lien of any
mortgage or other lien discharged, in whole or in part, by the Indebtedness.
Nothing contained in this Section 8 shall require METLIFE to incur any expense
or take any action hereunder.
9. INSPECTION. METLIFE may make or cause to be made reasonable entries
upon the Property to inspect the interior and exterior thereof.
10. FINANCIAL DATA. Borrower will furnish to METLIFE, and will cause
each guarantor of the Indebtedness to furnish to METLIFE on request, within
ninety (90) days after the close of its fiscal year, (i) the consolidated annual
balance sheet and profit and loss statements of General Host Corporation
("GHC") for the immediately preceding fiscal year, prepared in accordance with
generally accepted accounting principles and practices consistently applied
and, if METLIFE so requires, accompanied by the annual audit report of an
independent certified public accountant reasonably acceptable to METLIFE, (ii)
an annual operating statement for the immediately preceding fiscal year,
together with a complete rent roll and other supporting data reflecting all
material information with respect to the operation of the Property and
Improvements during the period covered thereby, and (iii) all other financial
information and reports that METLIFE may from time to time reasonably request,
including, if METLIFE so requires, income tax returns of Borrower and any
guarantor of the Indebtedness, and financial statements of any tenant of the
Property designated by METLIFE.
11. CONDEMNATION. If the Property, or any part thereof, shall be
condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to METLIFE
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of METLIFE, including
reasonable attorneys' fees incurred in connection with collection of such
amounts, and (b) the balance against the Indebtedness; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder,
(ii) Borrower provides evidence satisfactory to METLIFE of its ability to pay
all amounts becoming due under the Note during the pendency of any restoration
or
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<PAGE> 10
repairs to or replacement of the Property, and (iii) METLIFE determines, in its
sole discretion, that the proceeds of such award are sufficient to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking (or, if the proceeds
of such award are insufficient for such purpose, if Borrower provides
additional sums to METLIFE's satisfaction so that the aggregate of such sums
and the proceeds of such award will be sufficient for such purpose), the
proceeds of such award, together with additional sums provided by Borrower,
shall be placed in a separate account for the benefit of METLIFE and Borrower
to be used to restore, repair, replace and rebuild the Property as nearly as
possible to its value, condition and character immediately prior to such
taking. All work to be performed in connection therewith shall be pursuant to
a written contract therefor, which contract shall be subject to the prior
approval of METLIFE. To the extent that any funds remain after the Property
has been so restored and repaired, the same shall be applied against the
Indebtedness in such order as METLIFE may elect. To enforce its rights
hereunder, METLIFE shall be entitled to participate in and control any
condemnation proceedings and to be represented therein by counsel of its own
choice, and Borrower will deliver, or cause to be delivered to METLIFE such
instruments as may be requested by it from time to time to permit such
participation. In the event METLIFE, as a result of any such judgment, decree
or award, believes that the payment or performance of any of the Indebtedness
is impaired, METLIFE may declare all of the Indebtedness immediately due and
payable.
12. BORROWER AND LIEN NOT RELEASED. From time to time, METLIFE may, at
METLIFE's option, without giving notice to or obtaining the consent of
Borrower, Borrower's successors or assigns or of any junior lienholder or
guarantors, without liability on METLIFE's part and notwithstanding Borrower's
breach of any covenant or agreement of Borrower in this Instrument, extend the
time for payment of the Indebtedness or any part thereof, reduce the payments
thereon, release anyone liable on any of the Indebtedness, accept an extension
or modification or renewal note or notes therefor, modify the terms and time of
payment of the Indebtedness, release from the lien of this Instrument any part
of the Property, take or release other or additional security, reconvey any
part of the Property, consent to any map or plan of the Property, consent to
the granting of any easement, join in any extension or subordination agreement,
and agree in writing with Borrower to modify the rate of interest or period of
amortization of the Note or decrease the amount of the monthly installments
payable thereunder. Any actions taken by METLIFE pursuant to the terms of this
Section 12 shall not affect the obligation of Borrower or Borrower's successors
or assigns to pay the sums secured by this Instrument and to observe the
covenants of Borrower contained herein, shall not affect the guaranty of any
person, corporation, partnership or other entity for payment of the
Indebtedness, and shall not affect the lien or priority of the lien hereof on
the Property. Borrower shall pay METLIFE a service charge, together with such
title insurance premiums and attorneys' fees as may be incurred at METLIFE's
option, for any such action if taken at Borrower's request.
13. FORBEARANCE BY METLIFE NOT A WAIVER. Any forbearance by METLIFE
in exercising any right or remedy hereunder, or otherwise afforded by applicable
law, shall not be a waiver of or preclude the exercise of any other right or
remedy. The acceptance by METLIFE of payment of any sum secured by this
Instrument after the due date of such
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payment shall not be a waiver of METLIFE's right to either require prompt
payment when due of all other sums so secured or to declare a default for
failure to make prompt payment. The procurement of insurance or the payment of
taxes or other liens or charges by METLIFE shall not be a waiver of METLIFE's
right to accelerate the maturity of the Indebtedness secured by this
Instrument, nor shall METLIFE's receipt of any awards, proceeds or damages
under Sections 5 and 11 hereof operate to cure or waive Borrower's default in
payment of sums secured by this Instrument.
14. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is
intended to be a security agreement pursuant to the Uniform Commercial Code for
any of the items specified above as part of the Property which, under
applicable law, may be subject to a security interest pursuant to the Uniform
Commercial Code, and Borrower hereby grants and conveys to METLIFE a first and
prior security interest in all of the Property that constitutes personalty,
whether now owned or hereafter acquired. Borrower agrees that METLIFE may file
this Instrument, or a reproduction thereof, in the real estate records or other
appropriate index, as a financing statement for any of the items specified
above as part of the Property. Any reproduction of this Instrument or of any
other security agreement or financing statement shall be sufficient as a
financing statement. In addition, Borrower agrees to execute and deliver to
METLIFE, upon METLIFE's request, any financing statements, as well as
extensions, renewals and amendments thereof, and reproductions of this
Instrument in such form as METLIFE may require to perfect a security interest
with respect to the foregoing items. Borrower shall pay all costs of filing
such financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all costs and expenses of any record searches for
financing statements METLIFE may require. Without the prior written consent of
METLIFE, Borrower shall not create or suffer to be created pursuant to the
Uniform Commercial Code any other security interest in said items, including
replacements and additions thereto. Upon Borrower's breach of any covenant or
agreement of Borrower contained in this Instrument, including the covenants to
pay when due all sums secured by this Instrument, METLIFE shall have the
remedies of a secured party under the Uniform Commercial Code, and METLIFE may
also invoke the remedies provided in Section 26 of this Instrument as to such
items. In exercising any of said remedies METLIFE may proceed against the
items of real property and any items of personal property specified above
separately or together and in any order whatsoever, without in any way
affecting the availability of METLIFE's remedies under the Uniform Commercial
Code or of the remedies provided in Section 26 of this Instrument. Within ten
(10) days following any request therefor by METLIFE, Borrower shall prepare and
deliver to METLIFE a written inventory specifically listing all of the personal
property covered by the security interest herein granted, which inventory shall
be certified by Borrower as being true, correct, and complete.
15. LEASES OF THE PROPERTY. As used in this Section 15, the word
"Lease" shall include subleases if this Instrument is on a leasehold. Borrower
shall comply with and observe Borrower's obligations as landlord under all
Leases of the Property or any part thereof. All Leases now or hereafter
entered into will be in form and substance subject to the approval of METLIFE.
All Leases of the Property shall specifically provide that such Leases are
subordinate to this Instrument; that the tenant attorns to METLIFE, such
attornment to be effective upon METLIFE's acquisition of title to the Property;
that the tenant agrees to execute
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<PAGE> 12
such further evidences of attornment as METLIFE may from time to time request;
that the attornment of the tenant shall not be terminated by foreclosure; and
that METLIFE may, at METLIFE's option, accept or reject such attornments.
Borrower shall not, without METLIFE's written consent, request or consent to
the subordination of any Lease of all or any part of the Property to any lien
subordinate to this Instrument. If Borrower becomes aware that any tenant
proposes to do, or is doing, any act or thing which may give rise to any right
of set-off against rent, Borrower shall (i) take such steps as shall be
reasonably calculated to prevent the accrual of any right to a set-off against
rent, (ii) immediately notify METLIFE thereof in writing and of the amount of
said set-offs, and (iii) within ten (10) days after such accrual, reimburse the
tenant who shall have acquired such right to set-off or take such other steps
as shall effectively discharge such setoff and as shall assure that rents
thereafter due shall continue to be payable without set-off or deduction. Upon
METLIFE's receipt of notice of the occurrence of any default or violation by
Borrower of any of its obligations under the Leases, METLIFE shall have the
immediate right, but not the duty or obligation, without prior written notice
to Borrower or to any third party, to enter upon the Property and to take such
actions as METLIFE may deem necessary to cure the default or violation by
Borrower under the Leases. The costs incurred by METLIFE in taking any such
actions pursuant to this paragraph shall become part of the Indebtedness, shall
bear interest at the rate provided in the Note, and shall be payable by
Borrower to METLIFE on demand. METLIFE shall have no liability to Borrower or
to any third party for any actions taken by METLIFE or not taken pursuant to
this paragraph. Borrower represents and warrants to METLIFE that there are no
Leases in effect with respect to the Property as of the date hereof.
16. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is
distinct and cumulative to all other rights or remedies under this Instrument or
afforded by law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
17. TRANSFERS OF THE PROPERTY OR BENEFICIAL INTERESTS IN BORROWER;
ASSUMPTION. METLIFE may, at its option, declare all sums secured by this
Instrument to be immediately due and payable, and METLIFE may invoke any
remedies permitted by Section 26 of this Instrument, if title to the Property
is changed without the prior written consent of METLIFE, which consent shall be
at METLIFE's sole discretion. Any transfer of any interest in the Property or
in the income therefrom, by sale, lease (except for leases to tenants in the
ordinary course of managing income property which are approved by METLIFE
pursuant to Section 15 of this Instrument), contract, mortgage, deed of trust,
further encumbrance or otherwise (including any such transfers as security for
additional financing of the Property), and any change in the ownership
interests in Borrower (including any change in the ownership interests of any
legal entities which comprise or control Borrower), except transfers and
changes in ownership by devise or descent, shall be considered a change of
title. METLIFE shall have the right to condition its consent to any proposed
sale or transfer described in this Section 17 upon, among other things,
METLIFE's approval of the transferee's creditworthiness and management ability,
and the transferee's execution, prior to the sale or transfer, of a written
assumption agreement containing such terms as METLIFE may require, including,
if required by METLIFE, the imposition of an assumption fee of one percent
(1%)
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of the then outstanding balance of the Indebtedness. Consent by METLIFE to one
transfer of the Property shall not constitute consent to subsequent transfers
or waiver of the provisions of this Section 17. No transfer by Borrower shall
relieve Borrower of liability for payment of the Indebtedness. Notwithstanding
anything contained herein to the contrary, sales and purchases of the stock of
GHC on public stock exchanges shall not violate this Section 17, so long as no
more than twenty percent (20%) of GHC's stock is purchased by one (1) person or
entity, either in a single transaction or in a series of transactions.
18. NOTICE. Except for any notice required under applicable law to be
given in another manner, any and all notices, elections, demands, or requests
permitted or required to be made under this Instrument or under the Note shall
be in writing, signed by the party giving such notice, election, demand or
request, and shall be delivered personally, by telegram, or sent by registered,
certified, or Express United States mail, postage prepaid, or by Federal
Express or similar service requiring a receipt, to the other party at the
address stated above, or to such other party and at such other address within
the United States of America as any party may designate in writing as provided
herein. The date of receipt of such notice, election, demand or request shall
be the earliest of (i) the date of actual receipt, (ii) three (3) days after
the date of mailing by registered or certified mail, (iii) one (1) day after
the date of mailing by Express Mail or the delivery (for redelivery) to Federal
Express or another similar service requiring a receipt, or (iv) the date of
personal delivery (or refusal upon presentation for delivery).
19. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS;
CAPTIONS. The covenants and agreements herein contained shall bind, and the
rights hereunder shall inure to, the respective heirs, successors and assigns
of METLIFE and Borrower, subject to the provisions of Section 17 hereof. If
Borrower is comprised of more than one person or entity, whether as
individuals, partners, partnerships or corporations, each such person or entity
shall be jointly and severally liable for Borrower's obligations hereunder. In
exercising any rights hereunder or taking any actions provided for herein,
METLIFE may act through its employees, agents or independent contractors as
authorized by METLIFE. The captions and headings of the sections of this
Instrument are for convenience only and are not to be used to interpret or
define the provisions hereof.
20. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right
to assert any statute of limitations as a bar to the enforcement of the lien of
this Instrument or to any action brought to enforce the Note or any other
obligation secured by this Instrument.
21. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Property held by METLIFE or by any other party,
METLIFE shall have the right to determine the order in which any or all of the
Property shall be subjected to the remedies provided herein. METLIFE shall
have the right to determine the order in which any or all portions of the
Indebtedness secured hereby are satisfied from the proceeds realized upon the
exercise of the remedies provided herein. Borrower, any party who consents to
this Instrument and any party who now or hereafter acquires a security interest
in the Property and who has actual or constructive notice hereof hereby waives
any and all right to require the
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<PAGE> 14
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein.
22. HAZARDOUS WASTE. Borrower has furnished to METLIFE a Phase I
Environmental Site Assessment Update dated August, 1995, prepared by CRC
Environmental Risk Management, Inc., and an Environmental Questionnaire dated
August 29, 1995 (collectively, the "Report"). Except as disclosed to METLIFE
in the Report, Borrower has received no notification of any kind suggesting
that the Property or any adjacent property is or may be contaminated with any
hazardous waste or materials or is or may be required to be cleaned up in
accordance with any applicable law or regulation; and Borrower further
represents and warrants that, except as previously disclosed to METLIFE in
writing, to the best of its knowledge as of the date hereof after due and
diligent inquiry, there are no hazardous waste or materials located in, on or
under the Property (except for fertilizer and other materials sold at retail by
Borrower, which materials are stored and sold in accordance with all applicable
laws), or incorporated in any Improvements, nor has the Property ever been used
as a landfill or a waste disposal site, or a manufacturing, handling, storage,
distribution or disposal facility for hazardous waste or materials. As used
herein, the term "hazardous waste or materials" includes any substance or
material defined in or designated as hazardous or toxic wastes, hazardous or
toxic material, a hazardous, toxic or radioactive substance, or other similar
term, by any federal, state or local statute, regulation or ordinance now or
hereafter in effect. Borrower shall promptly comply with all statutes,
regulations and ordinances, and with all orders, decrees or judgments of
governmental authorities or courts having jurisdiction, relating to the use,
collection, treatment, disposal, storage, control, removal or cleanup of
hazardous waste or materials in, on or under the Property or any adjacent
property, or incorporated in any Improvements, at Borrower's expense. In the
event that METLIFE at any time has a reasonable belief that the Property is not
free of all hazardous waste or materials or that Borrower has violated any
applicable environmental law with respect to the Property, then immediately,
upon request by METLIFE, Borrower shall obtain and furnish to METLIFE, at
Borrower's sole cost and expense, an environmental audit and inspection of the
Property from an expert satisfactory to METLIFE. In the event that Borrower
fails to immediately obtain such audit or inspection, METLIFE or its agents may
perform or obtain such audit or inspection at Borrower's sole cost and expense.
METLIFE may, but is not obligated to, enter upon the Property and take such
actions and incur such costs and expenses to effect such compliance as it deems
advisable to protect its interest in the Property; and whether or not Borrower
has actual knowledge of the existence of hazardous waste or materials on the
Property or any adjacent property as of the date hereof, Borrower shall
reimburse METLIFE as provided in Section 23 below for the full amount of all
costs and expenses incurred by METLIFE prior to METLIFE acquiring title to the
Property through foreclosure or acceptance of a deed in lieu of foreclosure, in
connection with such compliance activities. Neither this provision nor any of
the other Loan Documents shall operate to put METLIFE in the position of an
owner of the Property prior to any acquisition of the Property by METLIFE. The
rights granted to METLIFE herein and in the other Loan Documents are granted
solely for the protection of METLIFE's lien and security interest covering the
Property, and do not grant to METLIFE the right to control Borrower's actions,
decisions or policies regarding hazardous waste or materials.
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<PAGE> 15
23. ADVANCES, COSTS AND EXPENSES. Borrower shall pay within ten (10)
days after written demand from METLIFE all sums advanced by METLIFE and all
costs and expenses incurred by METLIFE in taking any actions pursuant to the
Loan Documents including attorneys' fees and disbursements, accountants' fees,
appraisal and inspection fees and the costs for title reports and guaranties,
together with interest thereon at the rate applicable under the Note after an
Event of Default from the date such costs were advanced or incurred. All such
costs and expenses incurred by METLIFE, and advances made, shall constitute
advances under this Instrument to protect the Property and shall be secured by
and have the same priority as the lien of this Instrument. If Borrower fails
to pay any such advances, costs and expenses and interest thereon, METLIFE may
apply any undisbursed loan proceeds to pay the same, and, without foreclosing
the lien of this Instrument, may at its option commence an independent action
against Borrower for the recovery of the costs, expenses and/or advances, with
interest, together with costs of suit, costs of title reports and guaranty of
title, disbursements of counsel and reasonable attorneys' fees incurred therein
or in any appeal therefrom.
24. ASSIGNMENT OF LEASES AND RENTS. Borrower, for good and valuable
consideration, the receipt of which is hereby acknowledged, to secure the
Indebtedness, does hereby absolutely and unconditionally grant, bargain, sell,
transfer, assign, convey, set over and deliver unto METLIFE all right, title
and interest of Borrower in, to and under the Leases of the Property, whether
now in existence or hereafter entered into, and all guaranties, amendments,
extensions and renewals of said Leases and any of them, and all rents, income
and profits which may now or hereafter be or become due or owing under the
Leases, and any of them, or on account of the use of the Property.
Borrower represents, warrants, covenants and agrees with METLIFE as
follows:
a. The sole ownership of the entire lessor's interest in the
Leases is vested in Borrower, and Borrower has not, and shall
not, perform any acts or execute any other instruments which
might prevent METLIFE from fully exercising its rights with
respect to the Leases under any of the terms, covenants and
conditions of this Instrument.
b. The Leases are and shall be valid and enforceable in
accordance with their terms and have not been and shall not be
altered, modified, amended, terminated, canceled, renewed or
surrendered except as approved in writing by METLIFE. The
terms and conditions of the Leases have not been and shall not
be waived in any manner whatsoever except as approved in
writing by METLIFE.
c. Borrower shall not materially alter the term or the amount of
rent payable under any Lease without prior written notice to
METLIFE and METLIFE's consent, which shall not be unreasonably
withheld.
d. To the best of Borrower's knowledge, there are no defaults now
existing under any of the Leases and there exists no state of
facts which, with the
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<PAGE> 16
giving of notice or lapse of time or both, would constitute a
default under any of the Leases.
e. Borrower shall give prompt written notice to METLIFE of any
notice received by Borrower claiming that a default has occurred
under any of the Leases on the part of Borrower, together with a
complete copy of any such notice.
f. Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any
lessee under any of the leases.
g. Borrower will not permit any Lease to become subordinate to any
lien other than the lien of this Instrument.
This assignment is absolute, is effective immediately, and is irrevocable
by Borrower so long as the Indebtedness remains outstanding. Notwithstanding
the foregoing, until a Notice is sent to Borrower in writing that an Event of
Default has occurred (which notice is hereafter called a "Notice"), Borrower
may receive, collect and enjoy the rents, income and profits accruing from the
Property.
Upon the occurrence of an Event of Default hereunder, METLIFE may, at its
option, after service of a Notice, receive and collect all such rents, income
and profits from the Property as they become due. METLIFE shall thereafter
continue to receive and collect all such rents, income and profits, as long as
such default or defaults shall exist, and during the pendency of any
foreclosure proceedings.
Borrower hereby irrevocably appoints METLIFE its true and lawful attorney
with power of substitution and with full power for METLIFE in its own name and
capacity or in the name and capacity of Borrower, from and after service of a
Notice, to demand, collect, receive and give complete acquittances for any and
all rents, income and profits accruing from the Property, either in its own
name or in the name of Borrower or otherwise, which METLIFE may deem necessary
or desirable in order to collect and enforce the payment of the rents, income
and profits of and from the Property. Lessees of the Property are hereby
expressly authorized and directed, following receipt of a Notice from METLIFE,
to pay any and all amounts due Borrower pursuant to the Leases to METLIFE or
such nominee as METLIFE may designate in a writing delivered to and received by
such lessees, and the lessees of the Property are expressly relieved of any and
all duty, liability or obligation to Borrower in respect of all payments so
made.
Upon the occurrence of any Event of Default, from and after service of a
Notice, METLIFE is hereby vested with full power to use all measures, legal and
equitable, deemed by it to be necessary or proper to enforce this Section 24
and to collect the rents, income and profits assigned hereunder, including the
right of METLIFE or its designee, to enter upon the Property, or any part
thereof, and take possession of all or any part of the Property together with
all personal property, fixtures, documents, books, records, papers and accounts
of
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<PAGE> 17
Borrower relating thereto, and METLIFE may exclude Borrower, its agents and
servants, wholly therefrom. Borrower hereby grants full power and authority to
METLIFE to exercise all rights, privileges and powers herein granted at any and
all times after service of a Notice, with full power to use and apply all of
the rents and other income herein assigned to the payment of the costs of
managing and operating the Property and of any indebtedness or liability of
Borrower to METLIFE, including but not limited to the payment of taxes, special
assessments, insurance premiums, damage claims, the costs of maintaining,
repairing, rebuilding and restoring the improvements on the Property or of
making the same rentable, reasonable attorneys' fees incurred in connection
with the enforcement of this Instrument, and of principal and interest payments
due from Borrower to METLIFE on the Note and this Instrument, all in such order
as METLIFE may determine. METLIFE shall be under no obligation to exercise or
prosecute any of the rights or claims assigned to it hereunder or to perform or
carry out any of the obligations of the lessor under any of the Leases and does
not assume any of the liabilities in connection with or arising or growing out
of the covenants and agreements of Borrower in the Leases. It is further
understood that the assignment set forth in this Section 24 shall not operate
to place responsibility for the control, care, management or repair of the
Property, or parts thereof, upon METLIFE, nor shall it operate to make METLIFE
liable for the performance of any of the terms and conditions of any of the
Leases, or for any waste of the Property by any lessee under any of the Leases,
or any other person, or for any dangerous or defective condition of the
Property or for any negligence in the management, upkeep, repair or control of
the Property resulting in loss or injury or death to any lessee, licensee,
employee or stranger.
25. DEFAULT. The following shall each constitute an event of default
("Event of Default"):
a. Failure of or refusal by Borrower to pay any portion of the
sums secured by this Instrument 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 this
Instrument to make any payment for taxes, insurance or for reserves for such
payments, or any other payment necessary to prevent filing of or discharge 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 the 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. Failure by Borrower to observe or perform any of its
obligations under any of the Leases; or
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f. 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
g. If any lien or encumbrance is filed against the Property,
without METLIFE's prior written consent, and the same is not discharged in
accordance with Section 4 hereof; or
h. If any lease agreement covering any portion of the Property
is executed by Borrower without MetLife's prior written consent; or
i. 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 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 Section 4 of this Instrument, or the
giving of notice by Borrower to any governmental body of insolvency or
suspension of operations; or
j. 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
k. The institution of any proceeding for the dissolution or
termination of Borrower voluntarily, involuntarily, or by operation of law,
and, in the event such proceeding is involuntary, if the same is not dismissed
within sixty (60) days after it is commenced; or
l. A material adverse change occurs in the assets, liabilities
or net worth of Borrower or any of the guarantors of the indebtedness evidenced
by the Note from the assets, liabilities or net worth of Borrower or any of the
guarantors of the indebtedness evidenced by the Note previously disclosed to
METLIFE; or
m. Any warranty, representation or statement furnished to
METLIFE by or on behalf of Borrower under the Note, this Instrument, any of the
other Loan Documents or the
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Certificate and Indemnity Agreement Regarding Hazardous Substances,
shall prove to have been false or misleading in any material respect; or
n. Failure of Borrower to observe or perform any other covenant
or condition contained in the Note and such default 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
o. Failure of Borrower to observe or perform any other
obligation under this Instrument, any other Loan Document or the Certificate
and Indemnity Regarding Hazardous Substances when such observance or
performance is due, and such failure shall continue beyond the applicable cure
period set forth in such Loan Document, or if the default cannot be cured
within such applicable cure period, 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
p. Any of the foregoing events described in subparagraphs (i)-(l)
above occur with respect to any guarantor of any of Borrower's obligations in
connection with the Indebtedness; or
q. The occurrence of any Event of Default under any of the
documents evidencing or securing the Other Loans.
26. RIGHTS AND REMEDIES ON DEFAULT.
Upon the occurrence of any Event of Default and at any time thereafter,
METLIFE may exercise any one or more of the following rights and remedies:
a. METLIFE may declare the entire Indebtedness, including the
then unpaid principal balance on the Note, the accrued but unpaid interest
thereon, court costs and attorney's fees hereunder immediately due and payable,
without notice, presentment, protest, demand or action of any nature whatsoever
(each of which hereby is expressly waived by Borrower), whereupon the same
shall become immediately due and payable. Additionally, METLIFE shall not be
required to make any further advances on the Note or other Loan Documents upon
the occurrence of an Event of Default or an event which, with the giving of
notice or passing of time, would constitute an Event of Default.
b. METLIFE may enter upon the Property and take exclusive
possession thereof and of all books, records and accounts relating thereto
without notice and without being guilty of trespass, and hold, lease, manage,
operate or otherwise use or permit the use of the Property, either itself or by
other persons, firms or entities, in such manner, for such time and
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<PAGE> 20
upon such other terms as METLIFE may deem to be prudent and reasonable under
the circumstances (making such repairs, alterations, additions and improvements
thereto and taking any and all other action with reference thereto, from time
to time, as METLIFE shall deem necessary or desirable), and apply all rents and
other amounts collected by METLIFE in connection therewith in accordance with
the provisions of subsection (h) of this Section 26. Borrower hereby
irrevocably appoints METLIFE as the agent and attorney-in-fact of Borrower,
with full power of substitution, and in the name of Borrower, if METLIFE elects
to do so, to (i) endorse the name of Borrower on any checks or drafts
representing proceeds of the insurance policies, or other checks or instruments
payable to Borrower with respect to the Property, (ii) prosecute or defend any
action or proceeding incident to the Property, and (iii) take any action with
respect to the Property that METLIFE may at any time and from time to time deem
necessary or appropriate. METLIFE shall have no obligation to undertake any
of the foregoing actions, and if METLIFE should do so, it shall have no
liability to Borrower for the sufficiency or adequacy of any such actions taken
by METLIFE.
c. METLIFE may foreclose the lien hereof in accordance with the
laws of the State of Illinois, and:
(1) in any suit or proceeding to foreclose the lien
hereof, there shall be allowed and included as additional Indebtedness in the
decree for sale, all expenditures and expenses which may be paid or incurred by
or on behalf of METLIFE for attorneys' fees, appraisers' fees, outlays for
documentary and expert evidence, stenographers' charges, publication costs and
costs (which may be estimated as to items to be expended after entry of the
decree) of procuring all such abstracts of title, title searches and
examinations, title insurance policies, and similar data and assurances with
respect to title, as METLIFE may deem reasonably necessary either to prosecute
such suit or to evidence to bidders at sales which may be had pursuant to such
decree the true conditions of the title or to the value of the Property; and
(2) all expenditures and expenses of the nature mentioned
in this subparagraph c, and such expenses and fees as may be incurred in the
protection of the Property in the maintenance of the lien of this Instrument,
including the fees of any attorney employed by METLIFE in any litigation and
proceedings affecting this Instrument, the Note or the Property or the rights
of METLIFE hereunder or as to which METLIFE may be made a party by virtue of
its interest in the Property pursuant to this Instrument or otherwise,
including probate and bankruptcy proceedings, or in preparation for the
commencement or defense of any proceeding or threatened suit or proceeding,
shall constitute so much additional Indebtedness, and shall be immediately due
and payable by Borrower, with interest thereon at the default rate as indicated
in the Note.
d. After sale of the Property, or any portion thereof, Borrower
will be divested of any and all interest and claim thereto, including any
interest or claim to all insurance policies, bonds, loan commitments and other
intangible property covered hereby. Additionally, Borrower will be considered
a tenant at sufferance of the purchaser of the Property, and said purchaser
shall be entitled to immediate possession thereof, and if Borrower shall fail
to vacate
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<PAGE> 21
the Property immediately, the purchaser may and shall have the right, without
further notice to Borrower, to go into any justice court in any precinct or
county in which the Property is located and file an action in forcible entry
and detainer, which action shall lie against Borrower or its assigns or legal
representatives, as a tenant at sufferance. This remedy is cumulative of any
and all remedies the purchaser may have hereunder or otherwise.
e.(1) Upon, or at any time after, the filing of a complaint to foreclose
this Instrument, the court in which such complaint is filed may appoint a
receiver of the Property. Such appointment shall be a matter of strict right
and Borrower hereby irrevocably consents thereto. Such appointment may be made
either before or after sale, without notice to Borrower, without regard to
solvency or insolvency of Borrower at the time of application of such receiver,
and without regard to the then value of the Property or whether the same shall
be then occupied as a homestead or not, and METLIFE, or any holder of the Note,
may be appointed as such receiver. Such receiver shall have the power to
collect the rents during the pendency of such foreclosure suit and, in case of
a sale and a deficiency, during the full statutory period of redemption, if
any, whether there be a redemption or not, as well as during any further times
when Borrower, except for the intervention of such receiver, would be entitled
to collection of such rents and all other powers which may be necessary or are
usual in such cases for the protection, possession, control, management and
operation of the Property during the whole of said period. Such receiver shall
apply the income from the Property in accordance with the provisions of
subsection (h) of this Section 26.
(2) METLIFE may exercise any and all other rights, remedies and recourses
granted under the Loan Documents or now or hereafter existing in equity, at
law, by virtue of statute or otherwise.
f. METLIFE shall have all rights, remedies and recourses granted in the
Loan Documents and available at law or equity (including specifically those
granted by the Uniform Commercial Code in effect and applicable to the
Property or any portion thereof) and the same (i) shall be cumulative and
concurrent; (ii) may be pursued separately, successively or concurrently
against Borrower, any guarantor of the Indebtedness or others obligated under
the Note, or against the Property, or against any one or more of them at the
sole discretion of METLIFE; (iii) may be exercised as often as occasion
therefor shall arise, it being agreed by Borrower that the exercise or failure
to exercise any of the same shall in no event be construed as a waiver or
release thereof or of any other right, remedy or recourse; and (iv) are
intended to be, and shall be, nonexclusive.
g. To the fullest extent permitted by law, Borrower hereby irrevocably and
unconditionally waives and releases (i) all benefits that might accrue to
Borrower by any present or future laws exempting the Property from attachment,
levy or sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption or extension of time for
payment; (ii) all notices of any Event of Default (except as may be
specifically provided for under the terms hereof), presentment, demand, notice
of intent to accelerate, notice of acceleration and any other notice of
METLIFE's election to exercise or the actual exercise of any right, remedy or
recourse provided for under the Loan Documents; (iii)
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any right to appraisal or marshalling of assets or a sale in inverse order of
alienation; (iv) any and all rights, benefits or exemptions under or by virtue
of the homestead exemption laws of the state of Illinois; and (v) the
administration of estates of decedents, or other matter to defeat, reduce or
affect the right of METLIFE under the terms of this Instrument to sell the
Property for the collection of the Indebtedness secured hereby (without any
prior or different resort for collection) or the right of METLIFE, under the
terms of this Instrument, to receive the payment of the Indebtedness out of the
proceeds of sale of the Property in preference to every other person and
claimant whatever (only reasonable expenses of such sale being first deducted).
Borrower expressly waives and relinquishes any right or remedy which it may
have or be able to assert by reason of the provisions of any laws pertaining to
the rights and remedies of sureties. Without limiting the foregoing: (i)
Borrower hereby expressly waives any and all rights of redemption from sale, if
any, under any order or decree of foreclosure of this Instrument, on its own
behalf and on behalf of each and every person, it being the intent herein that
any and all such rights of redemption of Borrower and all other persons are and
shall be deemed to be hereby waived to the full extent permitted by the
provisions of Chapter 110, Para. 12-124, Para. 12-125 and Para. 15-1601 of the
Illinois Statutes or other applicable law or replacement statutes; (ii)
Borrower will not invoke or utilize any such law or laws or otherwise hinder,
delay or impede the execution of any right, power or remedy herein, or
otherwise granted or delegated to METLIFE but will suffer and permit the
execution of every such right, power and remedy as though no such law or laws
had been made or enacted; and (iii) if Borrower is a trustee, Borrower
represents that the provisions of this Section (including the waiver of
redemption rights) are made at the express direction of Borrower's
beneficiaries and the persons having the power of direction over Borrower, and
are made on behalf of the trust estate of Borrower and all beneficiaries of
Borrower, as well as all other persons mentioned above.
h. The proceeds of any sale of, and the rents, profits and other income
generated by the holding, leasing, operating or other use of the Property,
shall be applied by METLIFE (or the receiver, if one is appointed) to the
extent that funds are so available therefrom in the following orders of
priority: (i) first, to the payment of the costs and expenses of taking
possession of the Property and of holding, using, leasing, maintaining,
repairing, improving and selling the same, including, without limitation, (A)
receiver's fees; (B) costs of advertisement; (C) attorneys' and accountants'
fees; and (D) court costs; if any; (ii) second, to the payment of all amounts,
other than the principal amount and accrued but unpaid interest on the Note
which may be due to METLIFE under the Loan Documents, including all
Indebtedness, together with interest thereon as provided therein, in such order
and manner as METLIFE may determine; (iii) third to the payment of all accrued
but unpaid interest due on the Note in such order and manner as METLIFE may
determine; (iv) fourth to the payment of the principal amount outstanding on
the Note in such order and manner as METLIFE may determine and all other
Indebtedness; and (v) fifth, to Borrower. Borrower, any guarantor of the
Indebtedness and any other party liable on the Indebtedness shall be liable for
any deficiency remaining in the Indebtedness subsequent to any sale referenced
in this subsection (h).
22
<PAGE> 23
i. METLIFE shall have the right to become the purchaser at any sale of
the Property hereunder and shall have the right to be credited on the amount of
its bid therefor all of the Indebtedness due and owing as of the date of such
sale.
j. If METLIFE shall accelerate the Indebtedness following the
occurrence of an Event of Default, any payments received by METLIFE following
such acceleration, whether as the result of voluntary payments made by Borrower
or as a result of the sale of the Property, shall be deemed voluntary
prepayments of the Note and accordingly, the prepayment fee required under the
Note shall also be payable, subject to the terms of the Note.
k. The purchaser at any foreclosure sale hereunder may disaffirm any
easement granted, or rental, lease or other contract made in violation of any
provisions of this Instrument and may take immediate possession of the
Property free from, and despite the terms of, any such grant of easement,
rental, lease or other contract.
27. RECONVEYANCE. Upon payment of all sums secured by this Instrument,
METLIFE shall release the Property from the lien of this Instrument and shall
surrender this Instrument and all notes evidencing Indebtedness secured by this
Instrument. Borrower shall pay the costs incurred in so releasing the
Property.
28. USE OF PROPERTY. The Property is not currently used for
agricultural, farming, timber or grazing purposes. Borrower warrants that
this Instrument is and will at all times constitute a commercial mortgage, as
defined under appropriate state law.
29. FUTURE ADVANCES. Upon request of Borrower, METLIFE, at METLIFE's
option so long as this Instrument secures Indebtedness held by METLIFE, may make
Future Advances to Borrower. Such Future Advances, with interest thereon,
shall be secured by this Instrument when evidenced by promissory notes stating
that said notes are secured hereby. The aggregate of the Indebtedness secured
hereby shall at no time exceed $100,000,000.00.
30. IMPOSITION OF TAX BY STATE.
9. State Taxes Covered. The following constitute state taxes to
which this Section applies:
(1) A specific tax upon mortgages or upon all or any part
of the indebtedness secured by a mortgage.
(2) A specific tax on a grantor which the taxpayer is
authorized or required to deduct from payments on the indebtedness
secured by a mortgage.
(3) A tax on a mortgage chargeable against the Mortgagee or
the holder of the note secured.
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<PAGE> 24
(4) A specific tax on all or any portion of the
indebtedness or on payments of principal and interest made
by a Mortgagor.
b. Remedies. If any state tax to which this Section applies is
enacted subsequent to the date of this Instrument, this shall have the same
effect as an Event of Default, and METLIFE may exercise any or all of the
remedies available to it unless the following conditions are met:
(1) Borrower may lawfully pay the tax or charge imposed by
state tax, and
(2) Borrower pays the tax or charge within thirty (30) days
after it becomes due and payable.
31. ATTORNEYS' FEES. In the event suit or action is instituted to
enforce or interpret any of the terms of this Instrument (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 and after trial and on appeal whether or not taxable as
costs, or in any bankruptcy proceeding including, without limitation,
attorneys' fees, witness fees (expert and otherwise), deposition costs, copying
charges and other expenses. Whether or not any court action is involved, all
reasonable expenses, including but not limited to the costs of searching
records, obtaining title reports, surveyor reports, title insurance, trustee
fees, and other attorney fees, incurred by METLIFE that are necessary at any
time in METLIFE's opinion for the protection of its interest or enforcement of
its rights shall become a part of the Indebtedness payable on demand and shall
bear interest from the date of expenditure until repaid at the interest rate as
provided in the Note. The term "attorneys' fees" as used in the Loan Documents
shall be deemed to mean such fees as are reasonable and are actually incurred.
32. GOVERNING LAW; SEVERABILITY. This Instrument shall be governed by
the law of the State of Illinois applicable to contracts made and to be
performed therein (excluding choice-of-law principles). In the event that any
provision or clause of this Instrument or the Note conflicts with applicable
law, such conflict shall not affect other provisions of this Instrument or the
Note which can be given effect without the conflicting provision, and to this
end the provisions of this Instrument and the Note are declared to be severable.
33. TIME OF ESSENCE. Time is of the essence of this Instrument.
34. CHANGES IN WRITING. This Instrument and any of its terms may only be
changed, waived, discharged or terminated by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. Any agreement subsequently made by Borrower or METLIFE
relating to this Instrument shall be superior to the rights of the holder of
any intervening lien or encumbrance.
35. NO OFFSET. Borrower's obligation to make payments and perform all
obligations, covenants and warranties under this Instrument and under the Note
shall be absolute
24
<PAGE> 25
and unconditional and shall not be affected by any circumstance, including
without limitation any setoff, counterclaim, abatement, suspension, recoupment,
deduction, defense or other right that Borrower or any guarantor may have or
claim against METLIFE or any entity participating in making the loan secured
hereby. The foregoing provisions of this section, however, do not constitute a
waiver of any claim or demand which Borrower or any guarantor may have in
damages or otherwise against METLIFE or any other person, or preclude Borrower
from maintaining a separate action thereon; provided, however, that Borrower
waives any right it may have at law or in equity to consolidate such separate
action with any action or proceeding brought by METLIFE.
36. AUTHORIZATION TO INSERT. Borrower authorizes METLIFE or its agent to
insert in the spaces provided herein the amount of the Note, the mortgagee's
loan policy number, the title company issuing such policy, the total amounts of
the obligations secured, and the last payment due dates, if any of the
foregoing information is not typed in on this document.
37. BUSINESS LOAN. Borrower represents and agrees that the loan
evidenced by the Note and secured hereby is a business loan within the purview
of Section 6404 of Chapter 17 of Illinois Revised Statute (or any substitute,
amended or replacement statutes) and is transacted solely for the purpose of
carrying on and acquiring the business of Borrower.
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.
IN WITNESS WHEREOF, Borrower has executed this Instrument or has caused
the same to be executed by its representatives thereunto duly authorized.
BORROWER:
FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
By: Robert M. Lovejoy
------------------------
Robert M. Lovejoy,
Vice President
25
<PAGE> 26
STATE OF Michigan Section
Section
COUNTY OF Wayne Section
This foregoing instrument was acknowledged before me this 31st day of
August, 1995, by Robert M. Lovejoy, Vice President of FRANK'S NURSERY & CRAFTS,
INC., a Michigan corporation, on behalf of said corporation.
______________________________________
Notary Public State of
_______________________________________
Printed Name
My Commission Expires: A. COLETTE MEZZA
Notary Public, Macomb County, MI.
______________________ Acting in Wayne County.
My Commission Expires July 6, 1997.
26
<PAGE> 27
File No. 95K0361 Page 2
EXHIBIT A
Parcel One:
Lot One in St. Charles Commercial Center Unit No. One pursuant to Plat of
Subdivision recorded in the Recorder's Office of Kane County, Illinois on
August 17, 1982 as Document No. 1614147, also legally described as follows:
That part of the Southwest Quarter of Section 33, Township 40 North, Range 8
East of Third Principal Meridian described as follows: Commencing at the
Southeast corner of Joe Keim's Randall Road Subdivision, St. Charles Township,
Kane County, Illinois; thence Southeasterly along the Northeasterly line of
Illinois State Route 38, 1440.0 feet; thence Northeasterly at right angles to
the last described course 210.0 feet for a point of beginning; thence
continuing Northeasterly along the prolongation of the last described course
450.0 feet; thence Southeasterly at right angles to the last described course
310.0 feet; thence Southwesterly at right angles to the last described course
450.0 feet; thence Northwesterly at right angles to the last described course
310.0 feet to the point of beginning in the City of St. Charles, Kane County,
Illinois.
Parcel Two:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian, described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 210.0 feet for a
point of beginning; thence continuing Northeasterly along the prolongation of
the last described course 18.0 feet; thence Southeasterly at right angles to
the last described course 457.0 feet; thence Southwesterly at right angles to
the last described course 18.0 feet; thence Northwesterly at right angles to
the last described course 457.0 feet to the point of beginning in the City of
St. Charles, Kane County, Illinois.
Parcel Three:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 210.0 feet for a
point of beginning; thence Southwesterly along the last described course 18.0
feet; thence Southeasterly at right angles to the last described course 457.0
feet; thence Northeasterly at right angles to the last described course 18.0
feet; thence Northwesterly at right angles to the last described course 457.0
feet to the point of beginning in the City of St. Charles, Kane County,
Illinois.
Parcel Four:
Easement for ingress and egress as contained in Construction and Maintenance
Agreement as Document 1614587, dated July 28, 1982 and recorded August 23,
1982, described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described as
follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence Southeasterly
along the Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a
point of beginning; thence Northeasterly at right angles to the last described
course 660.0 feet; thence Northwesterly at right angles to the last described
course 50.0 feet; thence Southwesterly at right angles to the last described
course 660.0 feet to said Northeasterly line; thence Southeasterly along said
Northeasterly line 50.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
<PAGE> 28
File No. 95K0361 Page 3
Parcel Five:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 192.0 feet; thence
Southeasterly at right angles to the last described course 196.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course to said Northeasterly line; thence Northwesterly
along said Northeasterly line to a line drawn parallel with the last described
course from the point of beginning; thence Northeasterly to the point of
beginning in the City of St. Charles, Kane County, Illinois.
Parcel Six:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 192.0 feet; thence
Southeasterly at right angles to the last described course 409.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course 202.80 feet to said Northeasterly line; thence
Northwesterly along said Northeasterly line 28.08 feet to a line drawn parallel
with the last described course from the point of beginning; thence
Northeasterly 200.63 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Seven:
Easement for ingress and egress truncations, Westerly as contained in
Declaration of Easements as Document 1614585, dated July 27, 1982 and recorded
August 23, 1982, described as follows: That part of the Southwest Quarter of
Section 33, Township 40 North, Range 8 East of the Third Principal Meridian
described as follows: Commencing at the Southeast corner of Joe Keim's Randall
Road Subdivision, St. Charles Township, Kane County, Illinois; thence
Southeasterly along the Northeasterly line of Illinois State Route No. 38,
1440.0 feet; thence Northeasterly at right angles to the last described course
192.0 feet; thence Southeasterly at right angles to the last described course
176.0 feet for a point of beginning; thence continuing Southeasterly along the
prolongation of the last described course 20.0 feet; thence Southwesterly at
right angles to the last described course 20.0 feet; thence Northerly to the
point of beginning and also that part of said Quarter described by commencing
at the most Easterly corner of the aforesaid tract; thence Southeasterly along
the Northeasterly line extended Southeasterly of said tract 48.0 feet for a
point of beginning; thence Northwesterly along the last described course 20.0
feet; thence Southwesterly at right angles to the last described course 20.0
feet; thence Easterly to the point of beginning, all in the City of St.
Charles, Kane County, Illinois.
<PAGE> 29
File No. 95K0361 Page 4
Parcel Eight:
Easement for ingress and egress truncations, Easterly as contained in
Declaration of Easements as Document 1614585, dated July 27, 1982 and recorded
August 23, 1982, described as follows: That part of the Southwest Quarter of
Section 33, Township 40 North, Range 8 East of the Third Principal Meridian
described as follows: Commencing at the Southeast corner of Joe Keim's Randall
Road Subdivision, St. Charles Township, Kane County, Illinois; thence
Southeasterly along the Northeasterly line of Illinois State Route No. 38,
1440.0 feet; thence Northeasterly at right angles to the last described course
192.0 feet; thence Southeasterly at right angles to the last described course
389.0 feet for a point of beginning; thence continuing Southeasterly along the
prolongation of the last described course 20.0 feet; thence Southwesterly at
right angles to the last described course 20.0 feet; thence Northerly to the
point of beginning and also that part of said Quarter described by commencing
at the most Easterly corner of the aforesaid tract; thence Southeasterly along
the Northeasterly line extended Southeasterly of said tract 48.0 feet for a
point of beginning; thence Northwesterly along the last described course 20.0
feet; thence Southwesterly at right angles to the last described course 20.0
feet; thence Easterly to the point of beginning, all in the City of St.
Charles, Kane County, Illinois.
Parcel Nine:
Easement for sign purposes as contained in Construction and Maintenance
Agreement as Document 1614587, dated July 28, 1982 and recorded August 23,
1982, described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described as
follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence Southeasterly
along the Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a
point of beginning; thence Northeasterly at right angles to the last described
course 30.0 feet; thence Southeasterly at right angles to the last described
course 20.0 feet; thence Southwesterly at right angles to the last described
course 30.0 feet to said Northeasterly line; thence Northwesterly along said
Northeasterly line 20.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Ten:
Easement for detention basin purposes as contained in Declaration of Easements
as Document 1614585, dated July 27, 1982 and recorded August 23, 1982,
described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described as
follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence Southwesterly
along the Northeasterly line of Illinois State Route No. 38, 1440.0 feet;
thence Northeasterly at right angles to the last described course 210.0 feet;
thence continuing Northeasterly along the prolongation of the last described
course 450.0 feet; thence Southeasterly at right angles to the last described
course 310.0 feet; thence Southwesterly at right angles to the last described
course 265.64 feet for a point of beginning; thence Northeasterly along the
last described course 265.64 feet; thence Northwesterly at right angles to the
last described course 100.0 feet; thence Northeasterly at right angles to the
last described course 124.0 feet; thence Easterly along a line forming an angle
of 126 degrees 50 minutes 43 seconds with the last described course (measured
counter-clockwise therefrom) 209.44 feet to the West line of Fourteenth Street
South; thence Southerly along said West line 511.94 feet; thence Westerly at
right angles to the last described course 155.76 feet; thence Northwesterly
along a line forming an angle of 147 degrees 24 minutes 40 seconds with the
last described course (measured counter-clockwise therefrom) 212.11 feet to
the point of beginning in the City of St. Charles, Kane County, Illinois.
<PAGE> 30
File No. 95K0361 Page 5
Parcel Eleven:
Easement for storm sewer purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 228.0 feet; thence
Southeasterly at right angles to the last described course 320.0 feet for a
point of beginning; thence Northwesterly along the last described course 10.0
feet; thence Northeasterly at right angles to the last described course 166.36
feet; thence Easterly along a line forming an angle of 70 degrees 00 minutes
with the prolongation of the last described course (measured clockwise
therefrom) 10.64 feet to a line drawn parallel with the last described course
from the point of beginning; thence Southwesterly along said parallel line
170.0 feet to the point of beginning in the City of St. Charles, Kane County,
Illinois.
Parcel Twelve:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1455.0 feet; thence
Northeasterly at right angles to the last described course 228.0 feet for point
of beginning; thence continuing Northeasterly along the prolongation of the
last described course 10.0 feet; thence Southeasterly at right angles to the
last described course 442.0 feet; thence Southwesterly at right angles to the
last described course 10.0 feet; thence Northwesterly at right angles to the
last described course 443.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Thirteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 182.0 feet for a
point of beginning; thence continuing Northeasterly along the prolongation of
the last described course 10.0 feet; thence Southeasterly at right angles to
the last described course 457.0 feet; thence Southwesterly at right angles to
the last described course 10.0 feet; thence Northwesterly at right angles to
the last described course 457.0 feet to the point of beginning in the City of
St. Charles, Kane County, Illinois.
<PAGE> 31
Filel No. 95K0361 Page 6
Parcel Fourteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 182.0 feet; thence
Southeasterly at right angles to the last described course 305.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 10.0 feet; thence Southwesterly at right angles to
the last described course 185.13 feet to said Northeasterly line; thence
Northwesterly along said Northeasterly line 10.01 feet to a line drawn parallel
with the last described course from the point of beginning; thence
Northeasterly 184.70 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Fifteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a point of
beginning; thence Northeasterly at right angles to the last described course
660.0 feet; thence Southeasterly at right angles to the last described course
15.0 feet; thence Southwesterly at right angles to the last described course
660.0 feet to said Northeasterly line; thence Northwesterly along said
Northeasterly line 15.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Sixteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1455.0 feet; thence
Northeasterly at right angles to the last described course 238.0 feet; thence
Southeasterly at right angles to the last described course 442.0 feet for a
point of beginning; thence Southwesterly at right angles to the last described
course 56.0 feet; thence Southeasterly at right angles to the last described
course 91.24 feet; thence Easterly along a line forming an angle of 147 degrees
24 minutes 40 seconds with the last described course (measured clockwise
therefrom) 248.12 feet to the West line of Fourteenth Street South; thence
Northerly along said West line at right angles to the last described course
56.0 feet; thence Westerly at right angles to the last described course 231.75
feet; thence Northwesterly along a line forming angle of 147 degrees 24 minutes
40 seconds with the last described course (measured counter-clockwise
therefrom) 74.87 feet to the point of beginning in the City of St. Charles,
Kane County, Illinois.
<PAGE> 32
File No. 95K0361 Page 7
Parcel Seventeen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southwest corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 660.0 feet; thence
Southeasterly at right angles to the last described course 210.0 feet; thence
Northeasterly at right angles to the last described course 124.0 feet; thence
Westerly along a line forming an angle of 126 degrees 50 minutes 43 seconds
with the prolongation of the last described course (measured counter-clockwise
therefrom) 108.43 feet for a point of beginning; thence Easterly along the last
described course and said course extended 317.87 feet to the West line of
Fourteenth Street South; thence Northerly along said West line 20.06 feet;
thence Westerly parallel with penultimate described course 314.80 feet; thence
Westerly along a line forming an angle of 154 degrees 19 minutes 43 seconds
with the last described course (measured counter-clockwise therefrom) 67.49
feet; thence Northwesterly along a line forming an angle of 168 degrees 49
minutes 34 seconds with the last described course (measured counter-clockwise
therefrom) 48.67 feet; thence Southwesterly at right angles to the last
described course 30.0 feet; thence Southeasterly 125.61 feet to the point of
beginning in the City of St. Charles, Kane County, Illinois.
Parcel Eighteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles, Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 660.0 feet; thence
Southeasterly at right angles to the last described course 210.0 feet; thence
Northeasterly at right angles to the last described course 124.0 feet; thence
Westerly along a line forming an angle of 126 degrees 50 minutes 43 seconds
with the prolongation of the last described course (measured counter-clockwise
therefrom) 103.40 feet for a point of beginning; thence continuing Westerly
along the prolongation of the last described course 5.03 feet; thence
Northwesterly along a line forming an angle of 154 degrees 19 minutes 43
seconds with the last described course (measured counter-clockwise therefrom)
16.28 feet; thence Southwesterly along a line forming an angle of 101 degrees
10 minutes 26 seconds with the last described course (measured clockwise
therefrom) 55.82 feet; thence Southeasterly at right angles to the last
described course 20.0 feet; thence Northeasterly at right angles to the last
described course 62.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
<PAGE> 33
EXHIBIT B
SCHEDULE B - PART II
COMMITMENT NUMBER 95K0361
GENERAL EXCEPTIONS:
Note: Any Policy issued in connection with this Commitment for title insurance
will contain the following preprinted General Exceptions:
SPECIAL EXCEPTIONS:
3. General Real Estate Taxes on the land for the years 1994, 1995 and
subsequent years. Permanent Tax Index Number(s): 09-33-329-013
Note: 1994 final installment taxes in the amount of $13,687.94 are due and
payable September 5, 1995, but not yet delinquent.
4. Covenants, conditions, restrictions and easements in the Declaration of
Easements and Agreement for use and maintenance of Storm Damage System
recorded February 13, 1979 as Document 1494073 made by State Bank of St.
Charles, Trustee of Trust T -303, Kent W. Shodeen and Joan G. Shodeen and
St. Charles Savings and Loan Association, relating to easements for storm
waster distribution system, to the common use, care, maintenance,
replacement and reconstruction of said system, to allocation of costs
thereof by future owners of the land, to real estate taxes, insurance and to
other provisions as therein contained. First Addendum to said Declaration
recorded December 17, 1981 as Document 1595256. (For particulars, see
record), and as shown on Survey of Hagensee Surveying Group, Ltd. dated
August 11, 1995, Job No. 583801.
5. Rights of adjoining owners, public utilities Companies, and City of St.
Charles in and to the concurrent use of easements listed as Parcels Two,
Three, Four, Nine and Eleven.
<PAGE> 34
SCHEDULE B - PART II
COMMITMENT NUMBER 95K0361
7. Rights of City of St. Charles "Grantee" in Grant of Easement, dated August
11, 1982 and recorded August 17, 1982 as Document 1614146. (Affects
Easement Parcels Two, Three and Five), and as shown on Survey of Hagensee
Surveying Group, Ltd. dated August 11, 1995, Job No. 583801.
8. Restrictions contained in Ordinance No. 1982-2-6, recorded August 17, 1982
as Document 1614145.
9. Terms, Provisions and Conditions of Declaration of Easements recorded
August 17, 1982 and August 23, 1982 as Document Numbers 1614146 and
1614585. (For particulars, see record), and as shown on Survey of Hagensee
Surveying Group, Ltd. dated August 11, 1995, Job No. 583801.
10. Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982,
described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described
as follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence
Southeasterly along the Northeasterly line of Illinois State Route No. 38,
1455.0 feet; thence Northeasterly at right angles to the last described
course 228.0 feet for point of beginning; thence continuing Northeasterly
along the prolongation of the last described course 10.0 feet; thence
Southeasterly at right angles to the last described course 442.0 feet;
thence Southwesterly at right angles to the last described course 10.0
feet; thence Northwesterly at right angles to the last described course
443.0 feet to the point of beginning in the City of St. Charles, Kane
County, Illinois, and as shown on Survey of Hagensee surveying Group, Ltd.
dated August 11, 1995, Job No. 583801.
11. Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982,
described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described
as follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence
Southeasterly along the Northeasterly line of Illinois State Route No. 38,
1440.0 feet for a point of beginning; thence Northeasterly at right angles
to the last described course 660.0 feet; thence Southeasterly at right
angles to the last described course 15.0 feet; thence Southwesterly at
right angles to the last described course 660.0 feet to said Northeasterly
line; thence Northwesterly along said Northeasterly line 15.0 feet to the
point of beginning in the City of St. Charles, Kane County, Illinois, and
as shown on Survey of Hagensee Surveying Group, Ltd. dated August 11, 1995,
Job No. 583801.
12. Terms, Provisions and Conditions contained in Easement, Construction and
Maintenance Agreement, dated July 28, 1982 and recorded August 23, 1982 as
Document 1614587. (For particulars, see record)
13. Terms, Provisions and Conditions contained in Easement, dated January 30,
1979 and recorded February 13, 1979 as Document 1494081, amended by First
Amendment dated December 30, 1981 and recorded April 30, 1982 as Document
1605393. (For particulars, see record) (Affects Parcel Four).
14. Portion of storm sewer described in Document Number 1595256, located
within Easement Parcel 4, as shown on Plat of Survey by Hagensee Surveying
Group, Ltd, dated March 21, 1994 and revised August 11, 1995 as Job No.
583801.
15. Unrecorded lease in favor of Federal Express for building and drop box
located in the Southwest corner of Parcel 1, as shown on Plat of Survey by
Hagensee Surveying Group, Ltd, dated March 21, 1994 and revised August 11,
1995 as Job No. 583801.
<PAGE> 1
Exhibit 4.02(c)
LOAN NO. 2406499-001
SECURITY AGREEMENT
Debtor:
Name: FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
Address: 6501 E. Nevada
Detroit, Michigan 48234
Secured Party:
Name: METLIFE CAPITAL FINANCIAL CORPORATION,
a Delaware corporation
Address: 10900 N.E. 4th St., Suite 500
Bellevue, Washington 98004
Attention: Real Estate Department
Debtor, for valuable consideration, hereby grants to Secured Party a
security interest in the property listed on Exhibit B hereto, and any and all
additions and substitutions thereto (the "Collateral") (i) to secure payment of
the indebtedness evidenced by that certain promissory note of even date
herewith, payable to the order of Secured Party, in the principal amount of SIX
HUNDRED NINETY THOUSAND NO/100 DOLLARS ($690,000.00) (the "Note"), (ii) to
secure all other obligations of Debtor arising under all documents securing or
executed in connection with the Note, except any Certificate and Indemnity
Agreement Regarding Hazardous Substances or Environmental Indemnity Agreement
(the "Loan Documents"), and (iii) to secure the payment and performance by
Debtor of the obligations of Debtor to Secured Party under the documents
evidencing and/or securing the following loans by Secured Party to Debtor:
(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;
(v) MetLife Loan No. 2406499-006 in the
original principal amount of $1,125,000.00;
<PAGE> 2
(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; and
(xi) MetLife Loan No. 2406499-013 in the
original principal amount of $855,000.00.
Debtor expressly warrants and covenants:
1. Except for the security interest granted hereby, Debtor is, or
to the extent that this Security Agreement states that the
Collateral is to be acquired after the date hereof, will be,
the owner of the Collateral free from any lien, security
interest or encumbrance. Debtor shall defend the Collateral
against all claims and demands of all persons at any time
claiming the same or any interest therein.
2. The Collateral is used or bought primarily for use in the
business of Debtor.
3. Debtor's business address is as stated above. The Collateral
is located at or on or is used or owned for or in connection
with the real estate situated in Kane County, Illinois, and
described on the attached Exhibit A herein incorporated by
this reference (the "Property").
4. Debtor shall notify Secured Party of any change in the
location of the Collateral or any change in Debtor's principal
place of business.
5. Debtor shall pay all taxes and assessments of every nature
which may be levied or assessed against the Collateral.
6. Debtor shall not permit the Collateral to be attached or
replevied. If any lien, security interest or other
encumbrance is filed or placed against the Collateral (other
than liens and security interests in favor of Secured Party),
Debtor shall cause the same to be released and discharged
within forty-five (45) days after the date such lien, security
interest or other encumbrance is filed or placed against the
Collateral.
2
<PAGE> 3
7. The Collateral is in good condition and Debtor shall keep the
Collateral in good condition and from time to time, forthwith,
replace and repair all such parts of the Collateral as may be
broken, worn out, or damaged without allowing any lien to be
created upon the Collateral on account of such replacement or
repairs. Secured Party may examine and inspect the Collateral
at any time, wherever located.
8. Debtor will not use the Collateral in violation of any
applicable statutes, regulations or ordinances.
Until the occurrence of any Event of Default, Debtor may have
possession of the Collateral and use it in any lawful manner, and upon the
occurrence of any Event of Default, Secured Party shall have the immediate
right to the possession of the Collateral.
Debtor shall be in default under this Security Agreement upon the
happening of any of the following events (an "Event of Default"):
(a) the occurrence of an Event of Default as defined
under the Note, any instrument securing the Note,
including the Mortgage securing the Note (the
"Mortgage"), any other Loan Document, or the
Certificate and Indemnity Agreement Regarding
Hazardous Substances or the Environmental Indemnity
Agreement; or
(b) loss, theft, damage or destruction to or of any of
the Collateral which shall materially and
substantially diminish the aggregate value of the
Collateral, the sale or encumbrance of any of the
Collateral, or the making of any levy, seizure or
attachment on or to the Collateral.
Upon an Event of Default and at any time thereafter, Secured Party may
declare the Note immediately due and payable and shall have the remedies of a
secured party under the Articles of the Illinois Uniform Commercial Code (the
"Code"). Secured Party may require Debtor to assemble the Collateral and
deliver or make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties.
Secured Party may require that the Collateral be sold at a public sale
at the same time and place as the sale of the Property, or Secured Party may
sell the Collateral at one or more other public or private sales in accordance
with the Code. The Collateral shall not be required to be exhibited, presented
or displayed at any sale. In the event that the Collateral is sold under the
Mortgage, Secured Party hereby assigns its security interest in the Collateral
to the trustee or Sheriff selling the Property under the Mortgage. Debtor
agrees that a sale of the Collateral under the Mortgage and the notices
required under the laws of Illinois for the sale of real property are
commercially reasonable and adequate under the Code.
Debtor agrees to pay to Secured Party in addition to the indebtedness
secured hereby, all expenses of retaking, holding, preparing for sale and
selling incurred by Secured Party in
3
<PAGE> 4
connection with realization on the Collateral including reasonable attorneys'
fees and costs. In addition, in the event suit or action is instituted to
enforce or interpret this Agreement (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, including, without limitation, attorneys' fees, witness fees
(expert and otherwise), deposition costs, copying charges and other expenses.
No waiver by Secured Party of an Event of Default shall operate as a
waiver of any other default or of the same default on a future occasion. The
taking of this Security Agreement shall not waive or impair any other security
said Secured Party may have or hereafter acquire for the payment of the Note
nor shall the taking of any such additional security waive or impair this
Security Agreement. Secured Party may resort to any security it may have in
the order it may deem proper.
All rights of Secured Party hereunder shall inure to the benefit of
its successors and assigns. All promises and duties of Debtor shall bind its
successors and assigns.
Any and all notices, elections, demands, or requests permitted or
required to be made under this Security Agreement shall be in writing, signed
by the party giving such notice, election, demand or request, and shall be
delivered personally, by telegram, or sent by registered, certified, or Express
United States mail, postage prepaid, or by Federal Express or similar service
requiring a receipt, to the other party at the address set forth above or to
such other party and at such other address within the United States of America
as any party may designate as provided herein. The date of receipt of such
notice, election, demand or request shall be the earliest of (i) the date of
actual receipt, (ii) three (3) days after the date of mailing by registered or
certified mail, (iii) one (1) day after the date of mailing by Express Mail, or
the delivery (for redelivery) to Federal Express or another similar service
requiring a receipt, or (iv) the date of personal delivery (or refusal upon
presentation for delivery).
This Security Agreement shall be governed and construed in accordance
with the laws of the State of Illinois.
This Security Agreement is dated as of August 31, 1995.
DEBTOR:
FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
By: Robert M. Lovejoy,
------------------------------
Robert M. Lovejoy,
Vice President
4
<PAGE> 5
File No. 95K0361 Page 2
EXHIBIT A
Parcel One:
Lot One in St. Charles Commercial Center Unit No. One pursuant to Plat of
Subdivision recorded in the Recorder's Office of Kane County, Illinois on
August 17, 1982 as Document No. 1614147, also legally described as follows:
That part of the Southwest Quarter of Section 33, Township 40 North, Range 8
East of Third Principal Meridian described as follows: Commencing at the
Southeast corner of Joe Keim's Randall Road Subdivision, St. Charles Township,
Kane County, Illinois; thence Southeasterly along the Northeasterly line of
Illinois State Route 38, 1440.0 feet; thence Northeasterly at right angles to
the last described course 210.0 feet for a point of beginning; thence
continuing Northeasterly along the prolongation of the last described course
450.0 feet; thence Southeasterly at right angles to the last described course
310.0 feet; thence Southwesterly at right angles to the last described course
450.0 feet; thence Northwesterly at right angles to the last described course
310.0 feet to the point of beginning in the City of St. Charles, Kane County,
Illinois.
Parcel Two:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian, described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 210.0 feet for a
point of beginning; thence continuing Northeasterly along the prolongation of
the last described course 18.0 feet; thence Southeasterly at right angles to
the last described course 457.0 feet; thence Southwesterly at right angles to
the last described course 18.0 feet; thence Northwesterly at right angles to
the last described course 457.0 feet to the point of beginning in the City of
St. Charles, Kane County, Illinois.
Parcel Three:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 210.0 feet for a
point of beginning; thence Southwesterly along the last described course 18.0
feet; thence Southeasterly at right angles to the last described course 457.0
feet; thence Northeasterly at right angles to the last described course 18.0
feet; thence Northwesterly at right angles to the last described course 457.0
feet to the point of beginning in the City of St. Charles, Kane County,
Illinois.
Parcel Four:
Easement for ingress and egress as contained in Construction and Maintenance
Agreement as Document 1614587, dated July 28, 1982 and recorded August 23,
1982, described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described as
follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence Southeasterly
along the Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a
point of beginning; thence Northeasterly at right angles to the last described
course 660.0 feet; thence Northwesterly at right angles to the last described
course 50.0 feet; thence Southwesterly at right angles to the last described
course 660.0 feet to said Northeasterly line; thence Southeasterly along said
Northeasterly line 50.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
<PAGE> 6
File No. 95K0361 Page 3
Parcel Five:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 192.0 feet; thence
Southeasterly at right angles to the last described course 196.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course to said Northeasterly line; thence Northwesterly
along said Northeasterly line to a line drawn parallel with the last described
course from the point of beginning; thence Northeasterly to the point of
beginning in the City of St. Charles, Kane County, Illinois.
Parcel Six:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 192.0 feet; thence
Southeasterly at right angles to the last described course 409.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course 202.80 feet to said Northeasterly line; thence
Northwesterly along said Northeasterly line 28.08 feet to a line drawn parallel
with the last described course from the point of beginning; thence
Northeasterly 200.63 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Seven:
Easement for ingress and egress truncations, Westerly as contained in
Declaration of Easements as Document 1614585, dated July 27, 1982 and recorded
August 23, 1982, described as follows: That part of the Southwest Quarter of
Section 33, Township 40 North, Range 8 East of the Third Principal Meridian
described as follows: Commencing at the Southeast corner of Joe Keim's Randall
Road Subdivision, St. Charles Township, Kane County, Illinois; thence
Southeasterly along the Northeasterly line of Illinois State Route No. 38,
1440.0 feet; thence Northeasterly at right angles to the last described course
192.0 feet; thence Southeasterly at right angles to the last described course
176.0 feet for a point of beginning; thence continuing Southeasterly along the
prolongation of the last described course 20.0 feet; thence Southwesterly at
right angles to the last described course 20.0 feet; thence Northerly to the
point of beginning and also that part of said Quarter described by commencing
at the most Easterly corner of the aforesaid tract; thence Southeasterly along
the Northeasterly line extended Southeasterly of said tract 48.0 feet for a
point of beginning; thence Northwesterly along the last described course 20.0
feet; thence Southwesterly at right angles to the last described course 20.0
feet; thence Easterly to the point of beginning, all in the City of St.
Charles, Kane County, Illinois.
<PAGE> 7
File No. 95K0361 Page 4
Parcel Eight:
Easement for ingress and egress truncations, Easterly as contained in
Declaration of Easements as Document 1614585, dated July 27, 1982 and recorded
August 23, 1982, described as follows: That part of the Southwest Quarter of
Section 33, Township 40 North, Range 8 East of the Third Principal Meridian
described as follows: Commencing at the Southeast corner of Joe Keim's Randall
Road Subdivision, St. Charles Township, Kane County, Illinois; thence
Southeasterly along the Northeasterly line of Illinois State Route No. 38,
1440.0 feet; thence Northeasterly at right angles to the last described course
192.0 feet; thence Southeasterly at right angles to the last described course
389.0 feet for a point of beginning; thence continuing Southeasterly along the
prolongation of the last described course 20.0 feet; thence Southwesterly at
right angles to the last described course 20.0 feet; thence Northerly to the
point of beginning and also that part of said Quarter described by commencing
at the most Easterly corner of the aforesaid tract; thence Southeasterly along
the Northeasterly line extended Southeasterly of said tract 48.0 feet for a
point of beginning; thence Northwesterly along the last described course 20.0
feet; thence Southwesterly at right angles to the last described course 20.0
feet; thence Easterly to the point of beginning, all in the City of St.
Charles, Kane County, Illinois.
Parcel Nine:
Easement for sign purposes as contained in Construction and Maintenance
Agreement as Document 1614587, dated July 28, 1982 and recorded August 23,
1982, described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described as
follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence Southeasterly
along the Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a
point of beginning; thence Northeasterly at right angles to the last described
course 30.0 feet; thence Southeasterly at right angles to the last described
course 20.0 feet; thence Southwesterly at right angles to the last described
course 30.0 feet to said Northeasterly line; thence Northwesterly along said
Northeasterly line 20.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Ten:
Easement for detention basin purposes as contained in Declaration of Easements
as Document 1614585, dated
July 27, 1982 and recorded August 23, 1982, described as follows: That part of
the Southwest Quarter of
Section 33, Township 40 North, Range 8 East of the Third Principal Meridian
described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southwesterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 210.0 feet; thence
continuing Northeasterly along the prolongation of the last described course
450.0 feet; thence Southeasterly at right angles to the last described course
310.0 feet; thence Southwesterly at right angles to the last described course
265.64 feet for a point of beginning; thence Northeasterly along the last
described course 265.64 feet; thence Northwesterly at right angles to the last
described course 100.0 feet; thence Northeasterly at right angles to the last
described course 124.0 feet; thence Easterly along a line forming an angle of
126 degrees 50 minutes 43 seconds with the last described course (measured
counter-clockwise therefrom) 209.44 feet to the West line of Fourteenth Street
South; thence Southerly along said West line 511.94 feet; thence Westerly at
right angles to the last described course 155.76 feet; thence Northwesterly
along a line forming an angle of 147 degrees 24 minutes 40 seconds with the
last described course (measured counter-clockwise therefrom) 212.11 feet to
the point of beginning in the City of St. Charles, Kane County, Illinois.
<PAGE> 8
File No. 95K0361 Page 5
Parcel Eleven:
Easement for storm sewer purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 228.0 feet; thence
Southeasterly at right angles to the last described course 320.0 feet for a
point of beginning; thence Northwesterly along the last described course 10.0
feet; thence Northeasterly at right angles to the last described course 166.36
feet; thence Easterly along a line forming an angle of 70 degrees 00 minutes
with the prolongation of the last described course (measured clockwise
therefrom) 10.64 feet to a line drawn parallel with the last described course
from the point of beginning; thence Southwesterly along said parallel line
170.0 feet to the point of beginning in the City of St. Charles, Kane County,
Illinois.
Parcel Twelve:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1455.0 feet; thence
Northeasterly at right angles to the last described course 228.0 feet for point
of beginning; thence continuing Northeasterly along the prolongation of the
last described course 10.0 feet; thence Southeasterly at right angles to the
last described course 442.0 feet; thence Southwesterly at right angles to the
last described course 10.0 feet; thence Northwesterly at right angles to the
last described course 443.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Thirteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 182.0 feet for a
point of beginning; thence continuing Northeasterly along the prolongation of
the last described course 10.0 feet; thence Southeasterly at right angles to
the last described course 457.0 feet; thence Southwesterly at right angles to
the last described course 10.0 feet; thence Northwesterly at right angles to
the last described course 457.0 feet to the point of beginning in the City of
St. Charles, Kane County, Illinois.
<PAGE> 9
File No. 95K0361 Page 6
Parcel Fourteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 182.0 feet; thence
Southeasterly at right angles to the last described course 305.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 10.0 feet; thence Southwesterly at right angles to
the last described course 185.13 feet to said Northeasterly line; thence
Northwesterly along said Northeasterly line 10.01 feet to a line drawn parallel
with the last described course from the point of beginning; thence
Northeasterly 184.70 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Fifteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a point of
beginning; thence Northeasterly at right angles to the last described course
660.0 feet; thence Southeasterly at right angles to the last described course
15.0 feet; thence Southwesterly at right angles to the last described course
660.0 feet to said Northeasterly line; thence Northwesterly along said
Northeasterly line 15.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Sixteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1455.0 feet; thence
Northeasterly at right angles to the last described course 238.0 feet; thence
Southeasterly at right angles to the last described course 442.0 feet for a
point of beginning; thence Southwesterly at right angles to the last described
course 56.0 feet; thence Southeasterly at right angles to the last described
course 91.24 feet; thence Easterly along a line forming an angle of 147 degrees
24 minutes 40 seconds with the last described course (measured clockwise
therefrom) 248.12 feet to the West line of Fourteenth Street South; thence
Northerly along said West line at right angles to the last described course
56.0 feet; thence Westerly at right angles to the last described course 231.75
feet; thence Northwesterly along a line forming angle of 147 degrees 24 minutes
40 seconds with the last described course (measured counter-clockwise
therefrom) 74.87 feet to the point of beginning in the City of St. Charles,
Kane County, Illinois.
<PAGE> 10
File No. 95K0361 Page 7
Parcel Seventeen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southwest corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 660.0 feet; thence
Southeasterly at right angles to the last described course 210.0 feet; thence
Northeasterly at right angles to the last described course 124.0 feet; thence
Westerly along a line forming an angle of 126 degrees 50 minutes 43 seconds
with the prolongation of the last described course (measured counter-clockwise
therefrom) 108.43 feet for a point of beginning; thence Easterly along the last
described course and said course extended 317.87 feet to the West line of
Fourteenth Street South; thence Northerly along said West line 20.06 feet;
thence Westerly parallel with penultimate described course 314.80 feet; thence
Westerly along a line forming an angle of 154 degrees 19 minutes 43 seconds
with the last described course (measured counter-clockwise therefrom) 67.49
feet; thence Northwesterly along a line forming an angle of 168 degrees 49
minutes 34 seconds with the last described course (measured counter-clockwise
therefrom) 48.67 feet; thence Southwesterly at right angles to the last
described course 30.0 feet; thence Southeasterly 125.61 feet to the point of
beginning in the City of St. Charles, Kane County, Illinois.
Parcel Eighteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles, Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 660.0 feet; thence
Southeasterly at right angles to the last described course 210.0 feet; thence
Northeasterly at right angles to the last described course 124.0 feet; thence
Westerly along a line forming an angle of 126 degrees 50 minutes 43 seconds
with the prolongation of the last described course (measured counter-clockwise
therefrom) 103.40 feet for a point of beginning; thence continuing Westerly
along the prolongation of the last described course 5.03 feet; thence
Northwesterly along a line forming an angle of 154 degrees 19 minutes 43
seconds with the last described course (measured counter-clockwise therefrom)
16.28 feet; thence Southwesterly along a line forming an angle of 101 degrees
10 minutes 26 seconds with the last described course (measured clockwise
therefrom) 55.82 feet; thence Southeasterly at right angles to the last
described course 20.0 feet; thence Northeasterly at right angles to the last
described course 62.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
<PAGE> 11
EXHIBIT B
a. All buildings, structures, improvements, parking areas,
landscaping, equipment, fixtures and articles of property now or hereafter
erected on, attached to, or used or adapted for use in the operation of the
real property described on Exhibit A attached to the Security Agreement which
this Exhibit B is attached (the "Premises"); including but without being
limited to, all heating, air conditioning and incinerating apparatus and
equipment; all boilers, engines, motors, dynamos, generating equipment, piping
and plumbing fixtures, water heaters, ranges, cooking apparatus and mechanical
kitchen equipment, refrigerators, freezers, cooling, ventilating, sprinkling
and vacuum cleaning systems, fire extinguishing apparatus, gas and electric
fixtures, carpeting, floor coverings, underpadding, elevators, escalators,
partitions, mantels, built-in mirrors, window shades, blinds, draperies,
screens, storm sash, awnings, signs, furnishings of public spaces, halls and
lobbies, and shrubbery and plants, and including also all interest of any owner
of the Premises in any of such items hereafter at any time acquired under
conditional sale contract, chattel mortgage or other title retaining or
security instrument, all of which property mentioned in this clause (a) shall
be deemed part of the realty constituting the Premises and not severable wholly
or in part without material injury to the freehold of the Premises (all of the
foregoing together with replacements and additions thereto are referred to
herein as "Improvements"); and
b. All compensation, awards, damages, rights of action and
proceeds, including interest thereon and/or the proceeds of any policies of
insurance therefor, arising out of or relating to a (i) taking or damaging of
the Premises or Improvements thereon by reason of any public or private
improvement, condemnation proceeding (including change of grade), sale or
transfer in lieu of condemnation, or fire, earthquake or other casualty, or
(ii) any injury to or decrease in the value of the Premises or the Improvements
for any reason whatsoever;
c. Return premiums or other payments upon any insurance any time
provided for the benefit of or naming Secured Party, and refunds or rebates of
taxes or assessments on the Premises;
d. All the right, title and interest of Debtor in, to and under
all written and oral leases and rental agreements (including extensions,
renewals and subleases; all of the foregoing shall be referred to collectively
herein as the "Leases") now or hereafter affecting the Premises including,
without limitation, all rents, issues, profits and other revenues and income
therefrom and from the renting, leasing or bailment of Improvements and
equipment, all guaranties of tenants' performance under the Leases, and all
rights and claims of any kind that Debtor may have against any tenant under the
Leases or in connection with the termination or rejection of the Leases in a
bankruptcy or insolvency proceeding; and the leasehold estate in the event this
Instrument is on a leasehold;
e. Plans, specifications, contracts and agreements relating to
the design or construction of the Improvements; Debtor's rights under any
payment, performance, or other
<PAGE> 12
bond in connection with the design or construction of the Improvements; all
landscaping and construction materials, supplies, and equipment used or to be
used or consumed in connection with construction of the Improvements, whether
stored on the Premises or at some other location; and contracts, agreements,
and purchase orders with contractors, subcontractors, suppliers, and
materialmen incidental to the design or construction of the Improvements;
f. All contracts, accounts, rights, claims or causes of action
pertaining to or affecting the Premises or the Improvements, including, without
limitation, all options or contracts to acquire other property for use in
connection with operation or development of the Premises or Improvements,
management contracts, service or supply contracts, deposits, bank accounts,
general intangibles (including without limitation trademarks, trade names and
symbols), permits, licenses, franchises and certificates, and all commitments
or agreements, now or hereafter in existence, intended by the obligor thereof
to provide Debtor with proceeds to satisfy the loan evidenced hereby or improve
the Premises or Improvements, and the right to receive all proceeds due under
such commitments or agreements including refundable deposits and fees;
g. All books, records, surveys, reports and other documents
related to the Premises, the Improvements, the Leases, or other items of
collateral described herein; and
h. All additions, accessions, replacements, substitutions,
proceeds and products of the real and personal property, tangible and
intangible, described herein.
All of the foregoing described collateral is exclusive of any
furniture, furnishings or trade fixtures owned and supplied by tenants of the
Premises.
<PAGE> 1
Exhibit 4.02(d)
AFTER RECORDING RETURN TO:
METLIFE CAPITAL FINANCIAL CORPORATION
10900 N.E. 4TH STREET, SUITE 500
BELLEVUE, WASHINGTON 98004
ATTENTION: REAL ESTATE DEPARTMENT
LOAN NO. 2406499-001
ASSIGNMENT OF RENTS AND LEASES
THIS ASSIGNMENT is made as of August 31, 1995, by FRANK'S NURSERY &
CRAFTS, INC., a Michigan corporation, with a mailing address of 6501 E. Nevada,
Detroit, Michigan 48234 (hereinafter called "Assignor"), in favor of METLIFE
CAPITAL FINANCIAL CORPORATION, a Delaware corporation, with a mailing address
of 10900 N.E. 4th Street, Suite 500, Bellevue, Washington 98004, Attention:
Real Estate Department (hereinafter called "METLIFE").
WITNESSETH
Assignor, for good and valuable consideration, the receipt of which is
hereby acknowledged, does hereby absolutely and unconditionally grant, bargain,
sell, transfer, assign, convey, set over and deliver unto METLIFE all right,
title and interest of Assignor in, to and under all written and oral leases and
rental agreements of the real estate described in Exhibit A attached hereto and
incorporated herein (the "Property"), whether now in existence or hereafter
entered into, and all guaranties, amendments, extensions, renewals and
subleases of said leases and any of them, all of which are hereinafter called
the "Leases," all rents, income and profits which may now or hereafter be or
become due or owing under the Leases, and any of them, or on account of the use
of the Property, any award hereafter made in any bankruptcy, insolvency or
reorganization proceeding in any state or federal court involving any of the
tenants of the Leases, and any and all payments made by such tenants in lieu of
rent.
This Assignment is made for the purpose of securing:
A. The payment of the indebtedness (including any extensions or
renewals thereof) evidenced by a certain Note ("Note") of
Assignor of even date herewith in the principal sum of Six
Hundred Ninety Thousand and No/100 Dollars ($690,000.00) and
secured by a certain Commercial Mortgage, Security Agreement,
Assignment of Leases and Rents and Fixture Filing (the
"Mortgage") of even date herewith encumbering the Property;
B. The payment of all other sums with interest thereon becoming
due and payable to METLIFE under the provisions of the
Mortgage and any other instrument constituting security for
the Note;
<PAGE> 2
C. The performance and discharge of each and every term, covenant
and condition contained in the Note, Mortgage and any other
instrument constituting security for the Note;
D. The payment of the following loans by METLIFE to Assignor
(collectively, the "Other Loans"):
(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;
(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; and
(xi) MetLife Loan No. 2406499-013 in the original
principal amount of $855,000.00; and
E. The performance of Assignor's covenants, obligations,
representations and warranties under the documents evidencing
and/or securing the Other Loans.
Assignor represents, warrants, covenants and agrees with METLIFE as
follows:
2
<PAGE> 3
A. The sole ownership of the entire lessor's interest in the
Leases is or shall be vested in Assignor, and Assignor has
not, and shall not, perform any acts or execute any other
instruments which might prevent METLIFE from fully exercising
its rights under any of the terms, covenants and conditions of
this Assignment.
B. The Leases are and shall be valid and enforceable in
accordance with their terms and have not been altered,
modified, amended, terminated, canceled, renewed or
surrendered nor have any of the terms and conditions thereof
been waived in any manner whatsoever except as approved in
writing by METLIFE.
C. Assignor shall not materially alter the term or the amount of
rent payable or the term of any Lease without notice to
METLIFE and METLIFE's consent, which shall not be unreasonably
withheld.
D. To the best of its knowledge, there are no defaults now
existing under any of the Leases and there exists no state of
facts which, with the giving of notice or lapse of time or
both, would constitute a default under any of the Leases.
E. Assignor shall give prompt notice to METLIFE of any notice
received by Assignor claiming that a default has occurred
under any of the Leases on the part of Assignor, together with
a complete copy of any such notice.
F. Each of the Leases shall remain in full force and effect
irrespective of any merger of the interest of lessor and any
lessee under any of the leases.
G. Assignor will not permit any Lease to become subordinate to
any lien other than the lien of the Mortgage.
H. All existing Leases are described on Exhibit B attached hereto
and incorporated herein. Assignor has delivered to Assignee
true and correct copies of all existing Leases and all
amendments and modifications thereto.
The parties further agree as follows:
This Assignment is an absolute, present assignment from Assignor to
METLIFE, effective immediately, and is not merely an assignment for security
purposes. Notwithstanding the foregoing, until a notice is sent to the
Assignor in writing that a default has occurred under the terms and conditions
of the Note or any other instrument constituting additional security for the
Note (which notice is hereafter called a "Notice"), Assignor is granted a
license to receive, collect and enjoy the rents, income and profits accruing
from the Property.
In the event of any default at any time in the Note, Mortgage or any
other Loan Document as defined in the Mortgage constituting additional security
for the Note, METLIFE may, at its option, after service of a Notice, receive
and collect all such rents, income and
3
<PAGE> 4
profits as they become due, from the Property. METLIFE shall thereafter
continue to receive and collect all such rents, income and profits, as long as
such default or defaults shall exist, and during the pendency of any
foreclosure proceedings, and if there is a deficiency, during any redemption
period. All sums received by Assignor after service of such Notice shall be
deemed received in trust and shall be immediately turned over to METLIFE.
Assignor hereby irrevocably appoints METLIFE its true and lawful
attorney with power of substitution and with full power for METLIFE in its own
name and capacity or in the same and capacity of Assignor, from and after
service of Notice, to demand, collect, receive and give complete acquittances
for any and all rents, income and profits accruing from the Property, either in
its own name or in the name of Assignor or otherwise, which METLIFE may deem
necessary or desirable in order to collect and enforce the payment of the
rents, income and profits. Such appointment is coupled with an interest and is
irrevocable. Assignor also hereby irrevocably appoints METLIFE as its true and
lawful attorney to appear in any state or federal bankruptcy, insolvency, or
reorganization proceeding in any state or federal court involving any of the
tenants of the Leases. Lessees of the Property are hereby expressly authorized
and directed to pay any and all amounts due Assignor pursuant to the Leases to
METLIFE or such nominee as METLIFE may designate in writing delivered to and
received by such lessees who are expressly relieved of any and all duty,
liability or obligation to Assignor in respect of all payments so made.
In the event of default, from and after service of a Notice METLIFE is
hereby vested with full power to use all measures, legal and equitable, deemed
by it necessary or proper to enforce this Assignment and to collect the rents,
income and profits assigned hereunder, including the right of METLIFE or its
designee, to enter upon the Property, or any part thereof, and take possession
of all or any part of the Property together with all personal property,
fixtures, documents, books, records, papers and accounts of Assignor relating
thereto, and may exclude the Assignor, its agents and servants, wholly
therefrom. Assignor hereby grants full power and authority to METLIFE to
exercise all rights, privileges and powers herein granted at any and all times
after service of a Notice, with full power to use and apply all of the rents
and other income herein assigned to the payment of the costs of managing and
operating the Property and of any indebtedness or liability of Assignor to
METLIFE, including but not limited to the payment of taxes, special
assessments, insurance premiums, damage claims, the costs of maintaining,
repairing, rebuilding and restoring the improvements on the Property or of
making the same rentable, reasonable attorneys' fees incurred in connection
with the enforcement of this Assignment, and of principal and interest payments
due from Assignor to METLIFE on the Note and the Mortgage, all in such order as
METLIFE may determine. METLIFE shall be under no obligation to exercise or
prosecute any of the rights or claims assigned to it hereunder or to perform or
carry out any of the obligations of the lessor under any of the Leases and does
not assume any of the liabilities in connection with or arising or growing out
of the covenants and agreements of Assignor in the leases. It is further
understood that this Assignment shall not operate to place responsibility for
the control, care, management or repair of the Property, or parts thereof, upon
METLIFE, nor shall it operate to make METLIFE liable for the performance of any
of the terms and conditions of any of the Leases, or for any waste of the
Property by any lessee under any of the Leases or any other person, or for any
dangerous or defective condition
4
<PAGE> 5
of the Property or for any negligence in the management, upkeep, repair or
control of the Property resulting in loss or injury or death to any lessee,
licensee, employee or stranger.
Waiver of or acquiescence by METLIFE in any default by the Assignor,
or failure of the METLIFE to insist upon strict performance by the Assignor of
any covenants, conditions or agreements in this Assignment, shall not
constitute a waiver of any subsequent or other default or failure, whether
similar or dissimilar.
The rights and remedies of METLIFE under this Assignment are
cumulative and are not in lieu of, but are in addition to any other rights or
remedies which METLIFE shall have under the Note or any other instrument
constituting security for the Note, or at law or in equity.
If any term of this Assignment, or the application thereof to any
person or circumstances, shall, to any extent, be invalid or unenforceable, the
remainder of this Assignment, or the application of such term to persons or
circumstances other than those as to which it is invalid or unenforceable,
shall not be affected thereby, and each term of this Assignment shall be valid
and enforceable to the fullest extent permitted by law.
Any and all notices, elections, demands, or requests permitted or
required to be made under this Assignment, including without limitation a
Notice, shall be in writing, signed by the party giving such notice, election,
demand or request, and shall be delivered personally, by telegram, or sent by
registered, certified, or Express United States mail, postage prepaid, or by
Federal Express or similar service requiring a receipt, to the other party at
the address set forth above, or to such other party and at such other address
within the United States of America as any party may designate as provided
herein. The date of receipt of such notice, election, demand or request shall
be the earliest of (i) the date of actual receipt, (ii) three (3) days after
the date of mailing by registered or certified mail, (iii) one (1) day after
the date of mailing by Express Mail, or the delivery (for redelivery) to
Federal Express or another similar service requiring a receipt, or (iv) the
date of personal delivery (or refusal upon presentation for delivery).
Assignor hereby authorizes METLIFE to give written notice of this
Assignment, which may include a copy hereof, at any time to any tenant under
any of the Leases.
The terms "Assignor" and "METLIFE" shall be construed to include the
legal representatives, successors and assigns thereof. The gender and number
used in this Assignment are used as a reference term only and shall apply with
the same effect whether the parties are of the masculine or feminine gender,
corporate or other form, and the singular shall likewise include the plural.
This Assignment may not be amended, modified or changed nor shall any
waiver of any provisions hereof be effective, except only by an instrument in
writing and signed by the party against whom enforcement of any waiver,
amendment, change, modification or discharge is sought.
5
<PAGE> 6
Notwithstanding anything contained herein to the contrary, in no event
shall this Assignment be deemed to reduce the indebtedness evidenced by the
Note by an amount in excess of the actual amount of cash received by METLIFE
under the Leases, whether before, during or after the occurrence of an Event of
Default, and Assignor acknowledges that in no event shall the indebtedness
secured hereby be reduced by the value from time to time of the rents, income
and profits of or from the Property. In addition, METLIFE reserves the right,
at any time, whether before or after the occurrence of an Event of Default, to
recharacterize this Assignment as merely constituting security for the
indebtedness of Assignor to METLIFE, which recharacterization shall be made by
written notice delivered to Assignor. METLIFE's receipt of any rents, issues,
and profits pursuant to this Assignment after the institution of foreclosure
proceedings, either by court action or by the private power of sale contained
in any mortgage or other security agreement now or hereafter securing the Note,
shall not cure an Event of Default, as defined in the Note, or affect such
proceedings or sale.
IN WITNESS WHEREOF, the said Assignor has caused this instrument to be
signed and delivered as of the date first above written.
ASSIGNOR:
FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
By: Robert M. Lovejoy
----------------------------
Robert M. Lovejoy,
Vice President
6
<PAGE> 7
STATE OF Michigan Section
Section
COUNTY OF Michigan Section
The foregoing instrument was acknowledged before me this 31st day of
August, 1995, by Robert M. Lovejoy, Vice President of FRANK'S NURSERY & CRAFTS,
INC., a Michigan corporation, on behalf of said corporation.
A. Colette Mezza
--------------------------------
Notary Public State of Michigan
My Commission Expires:
--------------------------------
Printed Name
- --------------------------
A. Collette Mezza
Notary Public, Macomb County, MI.
Acting in Wayne County.
My Commission Expires July 6, 1997.
7
<PAGE> 8
File No. 95K0361 Page 2
EXHIBIT A
Parcel One:
Lot One in St. Charles Commercial Center Unit No. One pursuant to Plat of
Subdivision recorded in the Recorder's Office of Kane County, Illinois on
August 17, 1982 as Document No. 1614147, also legally described as follows:
That part of the Southwest Quarter of Section 33, Township 40 North, Range 8
East of Third Principal Meridian described as follows: Commencing at the
Southeast corner of Joe Keims's Randall Road Subdivision, St. Charles Township,
Kane County, Illinois; thence Southeasterly along the Northeasterly line of
Illinois State Route 38, 1440.0 feet; thence Northeasterly at right angles to
the last described course 210.0 feet for a point of beginning; thence
continuing Northeasterly along the prolongation of the last described course
450.0 feet; thence Southeasterly at right angles to the last described course
310.0 feet; thence Southwesterly at right angles to the last described course
450.0 feet; thence Northwesterly at right angles to the last described course
310.0 feet to the point of beginning in the City of St. Charles, Kane County,
Illinois.
Parcel Two:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian, described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 210.0 feet for a
point of beginning; thence continuing Northeasterly along the prolongation of
the last described course 18.0 feet; thence Southeasterly at right angles to
the last described course 457.0 feet; thence Southwesterly at right angles to
the last described course 18.0 feet; thence Northwesterly at right angles to
the last described course 457.0 feet to the point of beginning in the City of
St. Charles, Kane County, Illinois.
Parcel Three:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keims's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 210.0 feet for a
point of beginning; thence Southwesterly along the last described course 18.0
feet; thence Southeasterly at right angles to the last described course 457.0
feet; thence Northeasterly at right angles to the last described course 18.0
feet; thence Northwesterly at right angles to the last described course 457.0
feet to the point of beginning in the City of St. Charles, Kane County,
Illinois.
Parcel Four:
Easement for ingress and egress as contained in Construction and Maintenance
Agreement as Document 1614587, dated July 28, 1982 and recorded August 23,
1982, described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described as
follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence Southeasterly
along the Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a
point of beginning; thence Northeasterly at right angles to the last described
course 660.0 feet; thence Northwesterly at right angles to the last described
course 50.0 feet; thence Southwesterly at right angles to the last described
course 660.0 feet to said Northeasterly line; thence Southeasterly along said
Northeasterly line 50.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
<PAGE> 9
File No. 95K0361 Page 3
Parcel Five:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 192.0 feet; thence
Southeasterly at right angles to the last described course 196.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course to said Northeasterly line; thence Northwesterly
along said Northeasterly line to a line drawn parallel with the last described
course from the point of beginning; thence Northeasterly to the point of
beginning in the City of St. Charles, Kane County, Illinois.
Parcel Six:
Easement for ingress and egress as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 192.0 feet; thence
Southeasterly at right angles to the last described course 409.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 28.0 feet; thence Southwesterly at right angles to
the last described course 202.80 feet to said Northeasterly line; thence
Northwesterly along said Northeasterly line 28.08 feet to a line drawn parallel
with the last described course from the point of beginning; thence
Northeasterly 200.63 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Seven:
Easement for ingress and egress truncations, Westerly as contained in
Declaration of Easements as Document 1614585, dated July 27, 1982 and recorded
August 23, 1982, described as follows: That part of the Southwest Quarter of
Section 33, Township 40 North, Range 8 East of the Third Principal Meridian
described as follows: Commencing at the Southeast corner of Joe Keim's Randall
Road Subdivision, St. Charles Township, Kane County, Illinois; thence
Southeasterly along the Northeasterly line of Illinois State Route No. 38,
1440.0 feet; thence Northeasterly at right angles to the last described course
192.0 feet; thence Southeasterly at right angles to the last described course
176.0 feet for a point of beginning; thence continuing Southeasterly along the
prolongation of the last described course 20.0 feet; thence Southwesterly at
right angles to the last described course 20.0 feet; thence Northerly to the
point of beginning and also that part of said Quarter described by commencing
at the most Easterly corner of the aforesaid tract; thence Southeasterly along
the Northeasterly line extended Southeasterly of said tract 48.0 feet for a
point of beginning; thence Northwesterly along the last described course 20.0
feet; thence Southwesterly at right angles to the last described course 20.0
feet; thence Easterly to the point of beginning, all in the City of St.
Charles, Kane County, Illinois.
<PAGE> 10
File No. 95K0361 Page 4
Parcel Eight:
Easement for ingress and egress truncations, Easterly as contained in
Declaration of Easements as Document 1614585, dated July 27, 1982 and recorded
August 23, 1982, described as follows: That part of the Southwest Quarter of
Section 33, Township 40 North, Range 8 East of the Third Principal Meridian
described as follows: Commencing at the Southeast corner of Joe Keim's Randall
Road Subdivision, St. Charles Township, Kane County, Illinois; thence
Southeasterly along the Northeasterly line of Illinois State Route No. 38,
1440.0 feet; thence Northeasterly at right angles to the last described course
192.0 feet; thence Southeasterly at right angles to the last described course
389.0 feet for a point of beginning; thence continuing Southeasterly along the
prolongation of the last described course 20.0 feet; thence Southwesterly at
right angles to the last described course 20.0 feet; thence Northerly to the
point of beginning and also that part of said Quarter described by commencing
at the most Easterly corner of the aforesaid tract; thence Southeasterly along
the Northeasterly line extended Southeasterly of said tract 48.0 feet for a
point of beginning; thence Northwesterly along the last described course 20.0
feet; thence Southwesterly at right angles to the last described course 20.0
feet; thence Easterly to the point of beginning, all in the City of St.
Charles, Kane County, Illinois.
Parcel Nine:
Easement for sign purposes as contained in Construction and Maintenance
Agreement as Document 1614587, dated July 28, 1982 and recorded August 23,
1982, described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described as
follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence Southeasterly
along the Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a
point of beginning; thence Northeasterly at right angles to the last described
course 30.0 feet; thence Southeasterly at right angles to the last described
course 20.0 feet; thence Southwesterly at right angles to the last descri ed
course 30.0 feet to said Northeasterly line; thence Northwesterly along said
Northeasterly line 20.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Ten:
Easement for detention basin purposes as contained in Declaration of Easements
as Document 1614585, dated July 27, 1982 and recorded August 23, 1982,
described as follows: That part of the Southwest Quarter of Section 33,
Township 40 North, Range 8 East of the Third Principal Meridian described as
follows: Commencing at the Southeast corner of Joe Keim's Randall Road
Subdivision, St. Charles Township, Kane County, Illinois; thence Southwesterly
along the Northeasterly line of Illinois State Route No. 38, 1440.0 feet;
thence Northeasterly at right angles to the last described course 210.0 feet;
thence continuing Northeasterly along the prolongation of the last described
course 450.0 feet; thence Southeasterly at right angles to the last described
course 310.0 feet; thence Southwesterly at right angles to the last described
course 265.64 feet for a point of beginning; thence Northeasterly along the
last described course 265.64 feet; thence Northwesterly at right angles to the
last described course 100.0 feet; thence Northeasterly at right angles to the
last described course 124.0 feet; thence Easterly along a line forming an angle
of 126 degrees 50 minutes 43 seconds with the last described course (measured
counter-clockwise therefrom) 209.44 feet to the West line of Fourteenth Street
South; thence Southerly along said West line 511.94 feet; thence Westerly at
right angles to the last described course 155.76 feet; thence Northwesterly
along a line forming an angle of 147 degrees 24 minutes 40 seconds with the
last described course (measured counter-clockwise therefrom) 212.11 feet to
the point of beginning in the City of St. Charles, Kane County, Illinois.
<PAGE> 11
File No. 95K0361 Page 5
Parcel Eleven:
Easement for storm sewer purposes as contained in Declaration of Easements as
Document 1614585, dated July 27,1982 and recorded August 23, 1982, described as
follows: That part of the Southwest Quarter of Section 33, Township 40 North,
Range 8 East of the Third Principal Meridian described as follows: Commencing
at the Southeast corner of Joe Keim's Randall Road Subdivision, St. Charles
Township, Kane County, Illinois; thence Southeasterly along the Northeasterly
line of Illinois State Route No. 38, 1440.0 feet; thence Northeasterly at right
angles to the last described course 228.0 feet; thence Southeasterly at right
angles to the last described course 320.0 feet for a point of beginning; thence
Northwesterly along the last described course 10.0 feet; thence Northeasterly
at right angles to the last described course 166.36 feet; thence Easterly along
a line forming an angle of 70 degrees 00 minutes with the prolongation of the
last described course (measured clockwise therefrom) 10.64 feet to a line drawn
parallel with the last described course from the point of beginning; thence
Southwesterly along said parallel line 170.0 feet to the point of beginning in
the City of St. Charles, Kane County, Illinois.
Parcel Twelve:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1455.0 feet; thence
Northeasterly at right angles to the last described course 228.0 feet for point
of beginning; thence continuing Northeasterly along the prolongation of the
last described course 10.0 feet; thence Southeasterly at right angles to the
last described course 442.0 feet; thence Southwesterly at right angles to the
last described course 10.0 feet; thence Northwesterly at right angles to the
last described course 443.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Thirteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 182.0 feet for a
point of beginning; thence continuing Northeasterly along the prolongation of
the last described course 10.0 feet; thence Southeasterly at right angles to
the last described course 457.0 feet; thence Southwesterly at right angles to
the last described course 10.0 feet; thence Northwesterly at right angles to
the last described course 457.0 feet to the point of beginning in the City of
St. Charles, Kane County, Illinois.
<PAGE> 12
File No. 95K0361 Page 6
Parcel Fourteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 182.0 feet; thence
Southeasterly at right angles to the last described course 305.0 feet for a
point of beginning; thence continuing Southeasterly along the prolongation of
the last described course 10.0 feet; thence Southwesterly at right angles to
the last described course 185.13 feet to said Northeasterly line; thence
Northwesterly along said Northeasterly line 10.01 feet to a line drawn parallel
with the last described course from the point of beginning; thence
Northeasterly 184.70 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Fifteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet for a point of
beginning; thence Northeasterly at right angles to the last described course
660.0 feet; thence Southeasterly at right angles to the last described course
15.0 feet; thence Southwesterly at right angles to the last described course
660.0 feet to said Northeasterly line; thence Northwesterly along said
Northeasterly line 15.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
Parcel Sixteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1455.0 feet; thence
Northeasterly at right angles to the last described course 238.0 feet; thence
Southeasterly at right angles to the last described course 442.0 feet for a
point of beginning; thence Southwesterly at right angles to the last described
course 56.0 feet; thence Southeasterly at right angles to the last described
course 91.24 feet; thence Easterly along a line forming an angle of 147 degrees
24 minutes 40 seconds with the last described course (measured clockwise
therefrom) 248.12 feet to the West line of Fourteenth Street South; thence
Northerly along said West line at right angles to the last described course
56.0 feet; thence Westerly at right angles to the last described course 231.75
feet; thence Northwesterly along a line forming an angle of 147 degrees 24
minutes 40 seconds with the last described course (measured counter-clockwise
therefrom) 74.87 feet to the point of beginning in the City of St. Charles,
Kane County, Illinois.
<PAGE> 13
File No. 95K0361 Page 7
Parcel Seventeen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southwest corner of Joe Keim's Randall Road Subdivision, St.
Charles Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 660.0 feet; thence
Southeasterly at right angles to the last described course 210.0 feet; thence
Northeasterly at right angles to the last described course 124.0 feet; thence
Westerly along a line forming an angle of 126 degrees 50 minutes 43 seconds
with the prolongation of the last described course (measured counter-clockwise
therefrom) 108.43 feet for a point of beginning; thence Easterly along the last
described course and said course extended 317.87 feet to the West line of
Fourteenth Street South; thence Northerly along said West line 20.06 feet;
thence Westerly parallel with penultimate described course 314.80 feet; thence
Westerly along a line forming an angle of 154 degrees 19 minutes 43 seconds
with the last described course (measured counter-clockwise therefrom) 67.49
feet; thence Northwesterly along a line forming an angle of 168 degrees 49
minutes 34 seconds with the last described course (measured counter-clockwise
therefrom) 48.67 feet; thence Southwesterly at right angles to the last
described course 30.0 feet; thence Southeasterly 125.61 feet to the point of
beginning in the City of St. Charles, Kane County, Illinois.
Parcel Eighteen:
Easement for utility purposes as contained in Declaration of Easements as
Document 1614585, dated July 27, 1982 and recorded August 23, 1982, described
as follows: That part of the Southwest Quarter of Section 33, Township 40
North, Range 8 East of the Third Principal Meridian described as follows:
Commencing at the Southeast corner of Joe Keim's Randall Road Subdivision, St.
Charles, Township, Kane County, Illinois; thence Southeasterly along the
Northeasterly line of Illinois State Route No. 38, 1440.0 feet; thence
Northeasterly at right angles to the last described course 660.0 feet; thence
Southeasterly at right angles to the last described course 210.0 feet; thence
Northeasterly at right angles to the last described course 124.0 feet; thence
Westerly along a line forming an angle of 126 degrees 50 minutes 43 seconds
with the prolongation of the last described course (measured counter-clockwise
therefrom) 103.40 feet for a point of beginning; thence continuing Westerly
along the prolongation of the last described course 5.03 feet; thence
Northwesterly along a line forrning an angle of 154 degrees 19 minutes 43
seconds with the last described course (measured counter-clockwise therefrom)
16.28 feet; thence Southwesterly along a line forming an angle of 101 degrees
10 minutes 26 seconds with the last described course (measured clockwise
therefrom) 55.82 feet; thence Southeasterly at right angles to the last
described course 20.0 feet; thence Northeasterly at right angles to the last
described course 62.0 feet to the point of beginning in the City of St.
Charles, Kane County, Illinois.
<PAGE> 14
EXHIBIT B
LIST OF LEASES
NONE
<PAGE> 1
Exhibit 4.02(e)
LOAN NO. 2406499-001
GUARANTY
THIS GUARANTY ("Guaranty") is made as of August 31, 1995, by GENERAL
HOST CORPORATION, a New York corporation (hereinafter called "Guarantor"), in
favor of METLIFE CAPITAL FINANCIAL CORPORATION, a Delaware corporation
(hereinafter "METLIFE").
R E C I T A L S:
A. METLIFE has agreed to lend to FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation ("Borrower"), the sum of SIX HUNDRED NINETY THOUSAND AND
NO/100 DOLLARS ($690,000.00) (the "Loan") in accordance with the terms and
provisions of a promissory note of even date herewith (the "Note"), to be
secured by a mortgage (the "Mortgage") and other security instruments of even
date herewith (the Note, the Mortgage and all other documents executed by
Borrower in connection with the Loan including, without limitation, a certain
Certificate and Indemnity Agreement Regarding Hazardous Substances, are
collectively called the "Loan Documents").
B. As a condition precedent to making the Loan, METLIFE requires
that Borrower obtain the execution of this Guaranty by Guarantor and METLIFE
will be relying on the terms hereof in making the Loan.
C. The making of the Loan by METLIFE to Borrower is of value to
Guarantor, is reasonably expected to benefit Guarantor, directly or indirectly,
and is in furtherance of the personal and business interests of Guarantor.
In consideration of METLIFE making the Loan, and as an inducement to
METLIFE to do so, Guarantor hereby agrees, warrants and covenants as follows:
1. Guarantor hereby unconditionally, irrevocably and absolutely
guarantees without demand by METLIFE the full and prompt payment when due,
whether by acceleration or otherwise, of (a) the entire amount of principal and
accrued interest under the Note, and (b) all other indebtedness, obligations
and liabilities of Borrower under the Loan Documents, including, without
limitation, all costs of collection, attorneys' fees, court costs, and other
advances and extensions thereunder whether such indebtedness, obligations or
liabilities have been incurred prior to the date hereof or are incurred from
time to time hereafter and all without set-off, counterclaim, recoupment, or
deduction of any amounts owing or alleged to be owing by METLIFE to Borrower.
It is expressly understood that this Guaranty covers, without limitation, (y)
any and all amendments, extensions, modifications, rearrangements and renewals
of the Loan or any of the Loan Documents; and (z) all interest, default
interest and other amounts that would have accrued under the Loan Documents but
for the commencement of a case under the Federal Bankruptcy Code or any other
similar federal or state law. Without limiting the foregoing,
<PAGE> 2
Guarantor specifically guarantees payment of any judgment entered against
Borrower and any damages that may be awarded in any action brought against
Borrower by METLIFE arising out of or relating to the Loan or any Loan
Document. All of the indebtedness, obligations and liabilities described in
this paragraph are referred to herein as the "Guaranteed Obligations." This
Guaranty is a guaranty of payment and not merely of collection.
2. This Guaranty shall take effect when received by METLIFE
without the necessity of any acceptance by METLIFE or of any notice to
Guarantor or to Borrower, shall be continuing and irrevocable, and shall remain
in full force and effect until the Guaranteed Obligations are full and finally
paid. If payment is made by Borrower, whether voluntarily or otherwise, or by
any third party, on the Guaranteed Obligations and thereafter METLIFE is forced
to remit, rescind or restore the amount of that payment under any federal or
state bankruptcy law or law for the relief of debtors, or for any other reason,
(a) the amount of such payment shall be considered to have been unpaid at all
times for the purposes of enforcement of this Guaranty, (b) the obligations of
Borrower guarantied herein shall be automatically reinstated to the extent of
such payment, and (c) Guarantor will, on demand, indemnify and hold METLIFE
harmless from all losses and all reasonable costs and expenses, including legal
fees, incurred by METLIFE in connection with such remission, rescission or
restoration. In the event this Guaranty is preceded or followed by any other
agreement of suretyship or guaranty by Guarantor or others, all shall be deemed
to be cumulative, and the obligations of Guarantor hereunder shall be in
addition to those stated in any other suretyship or guaranty agreement.
3. The obligations of Guarantor hereunder are separate and
independent of the obligations of Borrower. Guarantor expressly agrees that a
separate action may be brought against Guarantor whether or not Borrower is
joined in such action.
4. Guarantor represents, warrants, and covenants to METLIFE that
(a) the financial statements of Guarantor heretofore delivered to METLIFE are
true and correct in all material respects and fairly present the financial
condition of Guarantor as of the respective dates thereof, and no material
adverse change has occurred in the financial condition of Guarantor since the
date of the most recent of such financial statements of Guarantor; (b)
Guarantor has derived or expect to derive financial and other advantages and
benefits, directly or indirectly, from the making of this Guaranty and the
Guaranteed Obligations; (c) no representations or agreements of any kind have
been made to Guarantor which would limit or qualify in any way the terms of
this Guaranty; (d) this Guaranty is executed at Borrower's request and not at
the request of METLIFE; (e) METLIFE has made no representation to Guarantor as
to the creditworthiness of Borrower; (f) Guarantor has established adequate
means of obtaining from Borrower on a continuing basis information regarding
Borrower's financial condition; (g) Guarantor will keep adequately informed of
any facts, events or circumstances which might in any way affect the risks of
Guarantor under this Guaranty; (h) METLIFE shall have no obligation to disclose
to Guarantor any information or documents (financial or otherwise) heretofore
or hereafter acquired by METLIFE in the course of its relationship with
Borrower; and (i) Guarantor will not, without the prior written consent of
METLIFE, sell, lease, assign, encumber, hypothecate, transfer, or otherwise
dispose of all or substantially all of their respective assets, or take any
other action
2
<PAGE> 3
which might reasonably be expected to have a material adverse effect on the
financial condition of Guarantor.
5. Guarantor hereby consents to all terms and conditions of
agreements heretofore or hereafter made between METLIFE and Borrower (including
without limitation the Note and other Loan Documents) and further agrees that
METLIFE may without further consent or disclosure and without affecting or
releasing the obligations of Guarantor hereunder: (a) surrender, exchange,
release, assign, or sell any collateral or waive, release, assign, sell, or
subordinate any security interest, in whole or in part; (b) waive, delay the
exercise of, release, compromise, or grant indulgences in respect of any rights
or remedies of METLIFE against Borrower or any surety or guarantor (including,
without limitation, rights or remedies of METLIFE against Guarantor under this
Guaranty); (c) waive or delay the exercise of any rights or remedies of METLIFE
in respect of any collateral or security interest now or hereafter held; (d)
renew, extend, waive, extend, accelerate, or modify the terms of any
Guaranteed Obligation or the obligations of any surety or guarantor, including,
without limitation, changes to the rate of interest, or any instrument or
agreement (including, without limitation, the Loan Documents) evidencing or
relating to the same; (e) realize on any security interest, judicially or
nonjudicially, with or without preservation of a deficiency judgment; (f) apply
payments received from Borrower or any surety or guarantor (including
Guarantor) or from any collateral, to any indebtedness, liability, or
obligations of Borrower or such sureties or guarantors whether or not a
Guaranteed Obligation hereunder; or (g) adjust, compromise or receive less than
the amount due upon any collateral or the Guaranteed Obligations, and enter
into any accord and satisfaction or novation agreement with respect to the same
as METLIFE shall deem advisable.
6. Guarantor waives notice of (a) METLIFE's acceptance of this
Guaranty or its intention to act or its actions in reliance hereon; (b) the
present existence or future incurring of any Guaranteed Obligations or any
terms or amounts thereof or any change therein; (c) any default by Borrower or
any surety or guarantor; (d) the obtaining of any guaranty or surety agreement
(in addition to this Guaranty); (e) the obtaining of any pledge, assignment or
other security for any Guaranteed Obligations; (f) the release of Borrower or
any surety or guarantor; (g) the release of any collateral; (h) any change in
the business or financial condition of Guarantor; (i) any renewal, extension or
modification of the terms of any Guaranteed Obligation or of the obligations or
liabilities of any surety or guarantor or of any instruments or agreements
evidencing the same; (j) any acts or omissions of METLIFE consented to in
Section 5 hereof; and (k) any other demands or notices whatsoever with respect
to the Guaranteed Obligations or this Guaranty. Guarantor further waives
notice of presentment, demand, protest, notice of nonpayment, notice of intent
to accelerate, and notice of protest in relation to any instrument or agreement
evidencing any Guaranteed Obligation.
7. Guarantor expressly waives any and all rights to defenses
arising by reason of (a) any "one-action" or "anti-deficiency" law or any other
law which may prevent METLIFE from bringing any action, including a claim for
deficiency against Guarantor, before or after METLIFE's commencement or
completion of any foreclosure action, either judicially or by exercise of a
power of sale; (b) any election of remedies by METLIFE which destroys or
otherwise adversely affects the subrogation rights of Guarantor or the rights
of Guarantor to
3
<PAGE> 4
proceed against Borrower for reimbursement, including without limitation any
loss of rights Guarantor may suffer by reason of any law limiting, qualifying,
or discharging the Guaranteed Obligations; (c) any disability or other defense
of Borrower, Guarantor, or of any other person, or by reason of the cessation
of Borrower's liability from any cause whatsoever, other than full and final
payment in legal tender of the Guaranteed Obligations; or (d) any right to
claim discharge of the Guaranteed Obligations on the basis of unjustified
impairment of any collateral for the Guaranteed Obligations. Guarantor further
waives (a) to the extent permitted by law, the defense of any statute of
limitations in any action to enforce this Guaranty and agree that any part
payment by Borrower or other circumstance which operates to toll any statute of
limitations as to Borrower shall toll the statute of limitations as to
Guarantor, (b) any right to cause a marshalling of Borrower's assets, (c) all
exemptions and homestead laws, and (d) all rights of set-off and counterclaims.
Guarantor agrees that METLIFE may proceed against any collateral securing the
Guaranteed Obligations by way of either judicial or nonjudicial foreclosure.
Guarantor understands that a nonjudicial foreclosure of any deed of trust or
mortgage securing the Guaranteed Obligations could impair or eliminate any
subrogation or reimbursement rights Guarantor may have against Borrower,
nevertheless Guarantor hereby waives and relinquishes any defense based upon
the loss of any such reimbursement or subrogation rights or any other defense
which may otherwise arise therefrom and any defense that may arise out of
election of remedies, discharge or satisfaction of the Guaranteed Obligations.
In the event any such deed of trust or mortgage is foreclosed judicially or
nonjudicially, the liability of Guarantor under this Guaranty shall be that
portion of the Guaranteed Obligations representing a deficiency resulting from
a judicial or nonjudicial sale, i.e., the difference between the amount due and
owing on the Guaranteed Obligations on the day of the foreclosure sale
(including without limitation principal, accrued interest, attorneys' fees,
late payments, if any, and costs of foreclosure) and the amount of the
successful bid at any such judicial or nonjudicial foreclosure sale. Guarantor
hereby waives the right to object to the amount which may be bid by METLIFE at
such foreclosure sale.
8. No act of commission or omission of any kind or at any time on
the part of METLIFE with respect to any matter whatsoever shall in any way
affect or impair this Guaranty. Without limiting the foregoing, the
obligations, covenants, agreements and duties of Guarantor under this Guaranty
shall not be released or impaired in any manner whatsoever, without the written
consent of METLIFE, on account of any or all of the following: (a) any act or
omission of METLIFE consented to in Section 5 hereof; (b) the failure to
receive any notice, demand, presentment or protest waived in Sections 4 and 6
hereof; (c) the occurrence of any event as to which Guarantor has provided
their waiver under Section 7 hereof: (d) any failure by Borrower or any other
guarantor or surety to perform or comply with the Guaranteed Obligations or the
terms of any instrument or agreement relating thereto; (e) any change in the
name, purpose, capital stock or constitution of Borrower or any other guarantor
or surety; (f) any irregularity, defect or unauthorized action by METLIFE,
Borrower or any other guarantor or surety or any of their respective officers,
directors or other agents in executing and delivering any instrument or
agreements relating to the Guaranteed Obligations or in carrying out or
attempting to carry out the terms of any such agreements; (g) any receivership,
insolvency, bankruptcy, reorganization or similar proceeding by or against
Borrower, METLIFE, Guarantor or any other surety or guarantor; (h) any setoff,
counterclaim,
4
<PAGE> 5
recoupment, deduction, defense or other right which Guarantor may have against
METLIFE, Borrower or any other person for any reason whatsoever whether related
to the Guaranteed Obligations or otherwise; (i) any assignment, endorsement or
transfer, in whole or in part, of the Guaranteed Obligations, whether made with
or without notice to or the consent of Guarantor; (j) the voluntary or
involuntary liquidation, sale or other disposition of all or substantially all
of the assets of Borrower or any guarantor; (k) the acceptance of additional or
substitute property as security for or any additional guaranty as surety for
any Guaranteed Obligation; (l) the operation of law or any other cause, whether
similar or dissimilar to the foregoing; (m) the failure by METLIFE to file or
enforce a claim against the estate (either in administration, bankruptcy or
other proceeding) of Borrower or any other person or entity (including, without
limitation, any guarantor); (n) if the recovery from Borrower or any other
person or entity (including, without limitation, any other guarantor) becomes
barred by any statute of limitations or is otherwise prevented; (o) any
impairment, modification, change, release or limitation of liability of, or
stay of actions of lien enforcement proceedings against Borrower, Borrower's
property, or its estate in bankruptcy resulting from the operation of any
present or future provision of the Federal Bankruptcy Code or any other similar
federal or state statute, or from the decision of any court; or (p) any
neglect, delay, omission, failure or refusal of METLIFE to take or prosecute
any action for the collection of any of the Guaranteed Obligations or to
foreclose or take or prosecute any action in connection with any lien or right
of security (including perfection thereof) existing or to exist in connection
with, or as security for, any of the Guaranteed Obligations, it being the
intention hereof that Guarantor shall remain liable as principals on the
Guaranteed Obligations notwithstanding any act, omission or event which might,
but for the provisions hereof, otherwise operate as a legal or equitable
discharge of Guarantor. Guarantor hereby waives all defenses of a surety to
which it may be entitled by statute or otherwise.
9. If METLIFE should simultaneously or hereafter elect to attempt
to take additional guaranty agreements or collateral to secure repayment of the
Guaranteed Obligations and if its efforts to do so should fail in any respect
including, without limitation, a determination that the agreement purporting to
provide such additional guaranty or security interest is invalid or
unenforceable for any reason, this Guaranty shall, nonetheless, remain in full
force and effect.
10. Guarantor hereby irrevocably waives all claims they have or
may acquire against Borrower in respect of the Guaranteed Obligations,
including rights of exoneration, reimbursement and subrogation. Guarantor has
received no indemnification or other agreement of reimbursement from Borrower
in connection with the execution and delivery of this Guaranty.
11. This Guaranty shall inure to the benefit of METLIFE, and
METLIFE's successors and assigns, and shall be binding upon Guarantor and its
respective heirs, personal or legal representatives, administrators, executors,
successors and assigns. METLIFE may, without any notice whatsoever to
Guarantor, or to anyone else, sell, assign or transfer the Note, with or
without any security therefore, and in that event each and every immediate and
successive assignee, transferee or holder of all or any part of the Loan and
the Note shall have the right to enforce this Guaranty, by suit or otherwise,
for the benefit of such assignee, transferee or
5
<PAGE> 6
holder as though such parties were herein by name specifically given those
rights, powers and benefits.
12. Guarantor agrees to pay all costs and expenses which may be
incurred by METLIFE in the enforcement or interpretation of this Guaranty,
including reasonable attorneys' fees (to be determined by the court and not by
a jury), and including all costs and reasonable attorneys' fees incurred in any
bankruptcy or insolvency proceeding or on appeal to one or more appellate
courts.
13. This Guaranty shall be governed by and construed and enforced under the
laws of the State of Illinois.
14. No delay on the part of METLIFE in exercising any right, power
or privilege under this Guaranty shall operate as a waiver of any such right,
power or privilege, nor shall any exercise or waiver of any privilege or right
preclude any other or further exercise of such privilege or right or the
exercise of any other right, power or privilege. All of METLIFE's rights and
remedies shall be cumulative. In the event METLIFE in its sole discretion
elects to give notice of any action with respect to the sale of collateral, if
any, securing the Guaranteed Obligations or any part thereof, Guarantor agrees
that ten (10) days prior written notice shall be deemed reasonable notice of
any matters contained in such notice.
15. Any indebtedness of Borrower now or hereafter held by
Guarantor is hereby subordinated to the Guaranteed Obligations. If METLIFE so
requests, such indebtedness of Borrower to Guarantor shall be collected,
enforced and received by Guarantor in trust for METLIFE, and be paid over to
METLIFE on account of the Guaranteed Obligations, but without reducing or
affecting in any manner the liability of Guarantor under the other provisions
of this Guaranty. Guarantor shall file all claims against Borrower in any
bankruptcy or other proceeding in which the filing of claims is required by law
upon any indebtedness of Borrower to Guarantor and will assign to METLIFE all
rights of Guarantor thereunder. If Guarantor does not file any such claim,
Guarantor hereby appoints and constitutes METLIFE as the attorney-in-fact of
Guarantor and hereby authorize METLIFE to do so in the name of Guarantor or, in
METLIFE's discretion, to assign the claim and to cause the claim to be filed in
the name of METLIFE's nominee. In all such cases, whether in administration,
bankruptcy or otherwise, the person or persons authorized to pay such claim
shall pay to METLIFE the full amount thereof, and Guarantor hereby assigns to
METLIFE, to the full extent necessary for that purpose, all of the rights of
Guarantor to any such payments or distributions to which Guarantor would
otherwise be entitled. Nothing in this paragraph shall be construed to create
a duty in METLIFE to take any action whatsoever to protect any right Guarantor
may have as to Borrower.
16. If any provision of this Guaranty or any portion of any
provision of this Guaranty shall be deemed to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability shall not alter
the remaining portion of such provision, or any other provision hereof, as each
provision of this Guaranty shall be deemed severable from all other provisions
hereof.
6
<PAGE> 7
17. Guarantor represents and warrants to METLIFE that Borrower is a
wholly-owned subsidiary of Guarantor.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the
date written above.
GUARANTOR:
GENERAL HOST CORPORATION,
a New York corporation
By: Rober M. Lovejoy, Jr.
----------------------------
Print: Robert M. Lovejoy, Jr.
----------------------------
Its: VP Tresurer
----------------------------
7
<PAGE> 1
EXHIBIT 4.03(a)
MORTGAGE NOTE
$4,950,000.00 Stamford, Connecticut
January 25, 1996
FOR VALUE RECEIVED, FRANK'S NURSERY & CRAFTS, INC., a Michigan
corporation having an address at 6501 East Nevada, Detroit, Michigan 48243
("Maker") promises to pay to the order of PEOPLE'S BANK, a Connecticut banking
corporation having an office at Bridgeport Center, 850 Main Street, Bridgeport,
Connecticut 06604-4913 ("Payee"), or any subsequent assignee or holder hereof
(Payee or any subsequent assignee or holder hereof sometimes being hereinafter
referred to as "Holder"), at the office of Payee, or at such other place as
Holder may designate from time to time in writing, the principal sum of FOUR
MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($4,950,000.00),
together with: (i) interest on the principal balance of this Note outstanding
from time to time, from the date hereof until said balance shall have been paid
in full, at the rate or rates and in the manner hereinafter provided; (ii) all
amounts other than principal and interest which Maker shall be obligated to pay
under this Note; (iii) all amounts which may be or become due under the
Mortgage (as hereinafter defined) or any of the other Loan Documents (as
defined in the Mortgage); (iv) all costs and expenses, including reasonable
attorneys' and appraisers' fees, incurred by Holder in collecting or attempting
to collect the indebtedness evidenced by this Note, or in enforcing any of the
Loan Documents or protecting or sustaining the lien thereof or in any
litigation or controversy arising from or connected with this Note or any of
the other Loan Documents; and (v) all taxes or duties assessed upon the
indebtedness evidenced by this Note or by any of the other Loan Documents or
upon the Mortgaged Property (as hereinafter defined). All amounts owing under
this Note shall be payable in legal tender of the United States of America.
1. Interest Accrual. The principal balance of the indebtedness
evidenced by this Note outstanding from time to time shall bear interest at a
fixed rate per annum (the "Interest Rate") equal to seven and eight-tenths
percent (7.8%). Interest shall be calculated on the daily unpaid principal
balance of the indebtedness evidenced by this Note based on a 360-day year,
provided that interest shall be due for the actual number of days elapsed
during each period for which interest is being charged.
2. Interest and Principal Payments. Equal monthly payments of
principal and interest in the amount of Forty Six Thousand Seven Hundred
Thirty-Five and 03/100 Dollars ($46,735.03) per month, which monthly payment
amount is based on
<PAGE> 2
-2-
an assumed fifteen (15) year amortization schedule, shall be due and payable on
the first day of March, 1996, and on the first day of each and every month
thereafter until the Maturity Date (as hereinafter defined). If not sooner
paid, all accrued and unpaid interest shall be due and payable at the earlier
to occur of the Maturity Date or the acceleration by Holder of all indebtedness
evidenced by this Note following the occurrence of an Event of Default (as
hereinafter defined).
3. Maturity Date. All indebtedness evidenced by this Note, and
all other sums payable hereunder, if not sooner paid in accordance with this
Note, shall be due and payable in full on the earlier to occur of (i) February
1, 2001, or (ii) acceleration by Holder following the occurrence of an Event of
Default (the "Maturity Date").
4. Business Days. Any payment under this Note which is stated to
be due on a day other than a "Business Day" (a day on which banks are open for
business in Bridgeport, Connecticut) shall be made on the next succeeding
Business Day, and any such extension of time shall be included in the
computation of the amount of interest to be paid; provided, however, that, if
any such extension would cause any payment to be payable in the next following
calendar month, such payment shall be made on the next preceding Business Day.
5. Prepayments. (a) Maker may prepay the indebtedness evidenced
by this Note, in whole or in part, at any time upon thirty (30) days prior
written notice to Holder (the "Prepayment Notice") only if Maker shall
indemnify Holder and hold Holder harmless from and against, and pay to Holder,
at any time of such prepayment, the Prepayment Fee (as hereinafter defined).
The "Prepayment Fee" shall be the greater of (i) any Net Loss (as hereinafter
defined) that Holder sustains or incurs as a result of such prepayment; and
(ii) one percent (1%) of the principal amount of the indebtedness evidenced by
this Note which is prepaid. As used herein, the term "Net Loss" means the
Discounted Cost of Funds Differential (as hereinafter defined).
(b) The "Discounted Cost of Funds Differential" shall be computed by
Holder as follows:
(i) Holder shall first determine the Original Cost of Funds
Rate (as hereinafter defined). The "Original Cost of Funds Rate"
shall mean five and 83/100 percent (5.83%) per annum.
<PAGE> 3
-3-
(ii) Holder shall calculate the monthly interest that would be
earned on the principal amount being prepaid at the Original Cost of
Funds Rate for each month remaining until February 1, 2001 (the
"Termination Date"). The result is the "Monthly Cost of Funds
Payment."
(iii) Holder shall then calculate the monthly interest that
would be earned by reinvesting the principal portion of the amount
being prepaid at the Reinvestment Rate (as hereinafter defined) for
each month remaining until the Termination Date. The result is the
"Monthly Reinvestment Payment". The "Reinvestment Rate" shall mean
the rate identified by Holder, as of the date Holder receives the
Prepayment Notice, as the rate available to Holder and other money
center banks doing business in Connecticut (as published in the
applicable Federal Reserve statistical release designated by Holder)
for the investment in U.S. Treasury Obligations ("Treasury
Obligations") equal to the principal amount prepaid, with maturities
closest to, or coterminous with, the Termination Date. If, for any
reason, a quotation is unavailable for the Termination Date,
quotations for the next preceding date for which such quotations are
available shall be used. If Holder identifies more than one Treasury
Obligation having the same maturity date, the Treasury Obligation
having a coupon interest rate closest to the Original Cost of Funds
Rate shall be used.
(iv) Each Monthly Reinvestment Payment shall then be
subtracted from the corresponding Monthly Cost of Funds Payment. The
result, if positive, is the "Monthly Payment Differential." The
Monthly Payment Differential shall in no event be less than zero.
(v) Each Monthly Payment Differential from the prepayment
date to the Termination Date shall then be discounted to present value
at the Reinvestment Rate on a monthly basis. The result is the
"Discounted Monthly Payment Differential."
(vi) All of the Discounted Monthly Payment Differential
amounts shall then be added together and such aggregated amount shall
constitute the Discounted Cost of Funds Differential.
(c) Maker shall be responsible, in addition to the Prepayment Fee, for
the payment of any reasonable administrative
<PAGE> 4
-4-
costs incurred by Holder in connection with such prepayment. If the
indebtedness evidenced by this Note shall be accelerated for any reason
whatsoever, the applicable Prepayment Fee in effect as of the date of such
acceleration shall be paid. When calculating the Prepayment Fee applicable to
a prepayment resulting from (i) the application by Holder of insurance proceeds
or condemnation proceeds toward the prepayment of the indebtedness evidenced by
this Note, and (ii) any additional prepayment which Maker may elect to make in
accordance with the terms of Section 22 of the Mortgage in order to obtain a
partial release of the Mortgage encumbering the portion of the Mortgaged
Property which was the subject of the casualty or condemnation which resulted
in Holder's application of insurance proceeds or condemnation proceeds toward
the prepayment of the indebtedness evidenced by this Note, the Prepayment Fee
shall be equal to the Net Loss that Holder sustains or incurs as a result of
said prepayment and shall not be equal to the greater of said Net Loss and 1%
of the amount prepaid. All partial prepayments of principal hereunder shall be
accompanied by and applied first to the payment of costs and expenses related
thereto, unpaid late charges, then to accrued and unpaid interest and the
balance on account of the unpaid principal in the inverse order of maturity.
Such partial prepayments shall not affect Maker's obligation to make the
regular monthly installments of principal and interest required pursuant to
Section 2 above until the indebtedness evidenced by this Note is fully paid.
6. Events of Default. If an Event of Default shall occur then,
at the option of Holder, all amounts remaining unpaid under this Note shall
immediately become due and payable. Any failure to exercise any such option or
any other right under this Note or under any of the other Loan Documents, or
any delay in such exercise, shall not constitute a waiver of the right to
exercise such option or such other right at a later time so long as such Event
of Default shall remain uncured, and shall not constitute a waiver of the right
to exercise such option or other right if any other Event of Default shall
occur. The acceptance by Holder of payment of any sum payable under this Note
after the due date of such payment shall not be a waiver of Holder's right to
require prompt payment when due of all other sums payable under this Note or of
Holder's right to declare a default for failure to make prompt payment in full.
7. Default Rate and Late Charge. (a) Upon the occurrence of any
Event of Default, whether or not the Maturity Date of this Note shall have been
accelerated, the entire principal indebtedness evidenced by this Note shall
bear interest from the
<PAGE> 5
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date of occurrence of such Event of Default until collection (including any
period of time occurring after judgment), at the "Default Rate," which shall
mean and be the lower of (i) the highest interest rate per annum allowed by
applicable law, or (ii) the interest rate per annum equal to the sum of five
percent (5%) plus the Interest Rate.
(b) If Holder shall not receive the full amount of any
payment due under the terms of this Note within ten (10) days after the due
date of such payment (and, solely with respect to the final payment of
principal and interest which is due and payable on the Maturity Date, within
thirty (30) days following the Maturity Date), then Maker shall pay to Holder,
upon demand, a late charge equal to five percent (5%) of such payment, which is
intended, without exclusion, to cover the additional expenses involved in
handling such overdue payment. Such charge shall be in addition to, and not in
lieu of, any other remedy Holder may have and shall be in addition to, and not
in lieu of, Maker's obligation to pay any reasonable fees and charges of any
agents or attorneys employed in the event of any default hereunder.
8. Event of Default. For purposes of this Note, the term "Event
of Default" (i) shall mean the failure by Maker to pay Holder any sum owed
hereunder on or prior to the tenth (10th) day following the due date thereof,
and (ii) shall have the meaning ascribed to such term in, and shall include any
event which would constitute an Event of Default under, the Mortgage. The
Connecticut Mortgage (as hereinafter defined) and the New York Mortgage (as
hereinafter defined) are cross defaulted.
9. Waivers and Consents. Maker and each endorser, guarantor and
surety of this Note, and each other person liable or who shall become liable
for all or any part of the indebtedness evidenced by this Note shall:
(a) waive demand, presentment, protest, notice of protest,
notice of dishonor, diligence in collection, notice of nonpayment and
all notices of a like nature; and
(b) consent to (i) all renewals, extension or modifications of
this Note or the other Loan Documents (including any affecting the
time of payment), (ii) all advances under this Note or the other Loan
Documents, (iii) the release, surrender, exchange or substitution of
all or any part of the security for the indebtedness evidenced by this
Note, or the taking of any additional security, (iv) the release of
any or all other persons from liability,
<PAGE> 6
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whether primary or contingent, for the indebtedness evidenced by this
Note or for any related obligations, and (v) the granting of any other
indulgences to any such person.
Any such renewal, extension, modification, advance, release, surrender,
exchange, substitution, taking or indulgence may take place without notice to
any such person and, whether or not any such notice is given, shall not impair
the liability of any such person.
10. Lien and Right of Setoff. Maker and each endorser, guarantor and
surety of this Note, and each other person liable or who shall become liable
for all or any part of the indebtedness evidenced by this Note, hereby give
Holder a lien and right of setoff for all of their respective liabilities in
respect of such indebtedness upon and against all of their respective deposits,
certificates of deposit, credits and property (other than the Mortgaged
Property), now or hereafter in the possession or control of Holder or in
transit to Holder. Holder may at any time apply the same, or any part thereof,
to any liability of Maker or any such other person, whether matured or
unmatured.
11. Partial Invalidity. If any one or more of the provisions of this Note
shall for any reason be held to be invalid, illegal or unenforceable, in whole
or in part, or in any respect, or if any one or more of the provisions of this
Note shall operate, or would prospectively operate, to invalidate this Note,
then such provision or provisions only shall be deemed to be null and void and
of no force or effect and shall not affect any other provision of this Note,
including, without limitation, the obligation of Maker to pay the indebtedness
evidenced by this Note, and the remaining provisions of this Note shall remain
operative and in full force and effect, shall be valid, legal and enforceable,
and shall in no way be affected, prejudiced or disturbed thereby.
12. Modification or Termination; Time of Essence; Governing Law. This
Note may not be modified or terminated orally, but only by a written instrument
signed by the party against whom enforcement of any such modification or
termination is sought. Time is and shall be of the essence in the performance
of all obligations under this Note. This Note shall be governed by and
construed in accordance with the laws of the State of Connecticut.
<PAGE> 7
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13. Gender. As used in this Note, words of any gender shall be deemed to
apply equally to any other gender, the plural shall include the singular and
the singular shall include the plural (as the context shall require), and the
word "person" shall refer to individuals, entities, authorities and other
natural and juridical persons of every type.
14. Joint and Several Obligation. If this Note is now or hereafter shall
be, signed by more than one person, it shall be the joint and several
obligation of all such persons (including, without limitation, all makers,
endorsers, guarantors and sureties, if any) and shall be binding on all such
persons and their respective heirs, executors, administrators, legal
representatives, successors and assigns. This Note and all covenants,
agreements and provisions set forth in this Note shall inure to the benefit of
Holder and its successors and assigns.
15. Usury. It is the intention of Maker and Holder to conform strictly to
the Usury Law (as hereinafter defined). Accordingly, it is agreed that,
notwithstanding any provisions to the contrary in this Note, in any of the
other Loan Documents or in any documents otherwise relating hereto, the
aggregate of all interest, or consideration constituting interest under the
Usury Law, that is taken, reserved, contracted for, charged or received under
this Note or under any of the aforesaid documents or otherwise in connection
with this loan transaction shall under no circumstances exceed the maximum
amount of interest allowed by the Usury Law. If any excess interest is
provided for in this Note, in any of the other Loan Documents or in any
documents relating hereto, then (a) the provisions of this paragraph shall
govern and control, (b) neither Maker nor Maker's successors or assigns shall
be obligated to pay the amount of such interest to the extent that it is in
excess of the maximum amount of interest allowed by the Usury Law, (c) any such
excess shall be deemed a mistake and canceled automatically and, if theretofore
paid, shall be applied as hereinafter set forth or, to the extent such
application shall violate the Usury Law and exceed the Maximum Legal Rate of
Interest (as hereinafter defined), refunded to Maker, and (d) the effective
rate of interest shall be automatically reduced to the Maximum Legal Rate of
Interest. To the extent permitted by the Usury Law and to the extent the
Maximum Legal Rate of Interest is not exceeded, all sums paid or agreed to be
paid to Holder for the use, forbearance or detention of the indebtedness
evidenced by this Note shall be amortized, prorated, allocated and spread
throughout the full term of this Note. For purposes of this Note, "Usury Law"
shall mean any present or future law of the State of Connecticut (meaning the
<PAGE> 8
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internal laws of said state and not the laws of said state relating to choice
of law), the United States of America or any other jurisdiction, which is
applicable to the interest and other charges under this Note, under any of the
Loan Documents or under any documents otherwise relating hereto and to the
classification of Maker under such law. For purposes of this Note, the
"Maximum Legal Rate of Interest" shall mean the maximum effective contract rate
of interest that Holder may from time to time, by agreement with Maker, legally
charge Maker and in regard to which Maker would be prevented successfully from
raising the claim or defense of usury under the Usury Law as now or hereafter
construed by courts of appropriate jurisdiction.
16. Certification as a Business Transaction. TO INDUCE HOLDER TO ENTER
INTO THE COMMERCIAL LOAN TRANSACTION EVIDENCED BY AND SECURED BY THE LOAN
DOCUMENTS, MAKER AGREES THAT THE SAID TRANSACTION IS COMMERCIAL AND NOT A
CONSUMER TRANSACTION AND, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, WAIVES
ANY RIGHT TO NOTICE OF AND HEARING OF THE RIGHT OF HOLDER UNDER CHAPTER 903a OF
THE CONNECTICUT GENERAL STATUTES, REVISION OF 1958, AS AMENDED, OR OTHER
STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZES HOLDER'S
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
17. Taxes on Note. Maker agrees to pay all taxes or duties assessed upon
this Note against the Holder or other owner of this Note or the debt evidenced
hereby, or the Mortgage or the Mortgaged Property.
18. Security. The indebtedness evidenced by this Note is secured, in
part, by that certain Mortgage Deed and Security Agreement (the "Connecticut
Mortgage") and by that certain Mortgage and Security Agreement (the "New York
Mortgage"), both encumbering certain real property located at and commonly
known as 479 East Main Street, Branford, Connecticut, 361 Scott Swamp Road,
Farmington, Connecticut, 400 Talcottville Road, Vernon, Connecticut, 1198 Queen
Street, Southington, Connecticut, 656 Silver Lane, East Hartford, Connecticut
and Route 9, West Kieffer Lane, Kingston, New York. The term "Mortgage," as
used herein, shall mean the Connecticut Mortgage and the New York Mortgage
collectively. The term "Mortgaged Property," as used herein, shall have the
meaning ascribed to such term in the Mortgage, and the term "Loan Documents,"
as used herein, shall have the meaning ascribed to such term in the Mortgage.
<PAGE> 9
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IN WITNESS WHEREOF, the undersigned has caused this instrument to be
duly executed as of the date first written above.
FRANK'S NURSERY & CRAFTS, INC.
By: Robert M. Lovejoy, Jr.
-------------------------------
Name: Robert M. Lovejoy, Jr.
Title: Vice President
<PAGE> 1
EXHIBIT 4.03(b)
MORTGAGE DEED
AND SECURITY AGREEMENT
THIS MORTGAGE DEED AND SECURITY AGREEMENT (this "Mortgage") is made as
of January 25, 1996, by FRANK'S NURSERY & CRAFTS, INC., a Michigan corporation
with a principal place of business at 6501 East Nevada, Detroit, Michigan 48243
("Mortgagor"), in favor of PEOPLE'S BANK, a Connecticut banking corporation
with a principal place of business at Bridgeport Center, 850 Main Street,
Bridgeport, Connecticut 06604-4913 ("Mortgagee").
W I T N E S S E T H :
That for good and valuable consideration and to secure the payment of
the indebtedness evidenced by (a) that certain Mortgage Note from Mortgagor to
Mortgagee of even date herewith in the original principal amount of FOUR
MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($4,950,000.00) (the
"Note"), a copy of which is attached hereto as Schedule B; and to secure the
payment of all amounts, sums and expenses paid or to be paid thereunder or
hereunder by Mortgagor according to the terms hereof and the performance of all
other duties, obligations and liabilities (except contingent liabilities) of
Mortgagor under this Mortgage, the Note and the other Loan Documents (as
hereinafter defined), together with all interest on said indebtedness,
obligations, liabilities, amounts, sums and expenses (all of the aforesaid,
collectively, the "Liabilities"), Mortgagor does hereby mortgage, give, grant,
bargain, sell and confirm unto Mortgagee, its successors and assigns forever,
(i) all that certain real property located at 479 East Main Street, Branford,
Connecticut and more particularly described in Schedule A-1 attached hereto and
incorporated herein by reference, (ii) all that certain real property located
at 361 Scott Swamp Road, Farmington, Connecticut and more particularly
described in Schedule A-2 attached hereto and incorporated herein by reference,
(iii) all that certain real property located at 400 Talcottville Road, Vernon,
Connecticut and more particularly described in Schedule A-3 attached hereto and
incorporated herein by reference, (iv) all that certain real property located
at 1198 Queen Street, Southington, Connecticut and more particularly described
in Schedule A-4 attached hereto and incorporated herein by reference, and (v)
all that certain real property located at 656 Silver Lane, East Hartford,
Connecticut and more particularly described in Schedule A-5 attached hereto and
incorporated herein by reference (all of the foregoing real property,
individually and collectively, the "Property").
<PAGE> 2
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TOGETHER WITH (a) all buildings and improvements of every kind or
nature whatsoever now or hereafter situated on the Property, (b) all easements,
including utility and drainage easements, rights, appurtenances, rents,
royalties, mineral, oil and gas rights and profits, water, water rights, and
water stock relating to the Property, (c) all proposed public or private
roadways or portions thereof relating to the Property, (d) all building
materials, supplies and other property attached to the Property or stored at or
delivered to the Property or any other location for incorporation into the
improvements located or to be located on the Property, (e) all elevators,
pipes, oil burners, furnaces, heaters, radiators, hot water heaters, ranges,
refrigerators, refrigerating apparatus, plumbing, gas and electric fixtures,
screens, screen doors, storm doors and windows, mantels, shades, awnings,
cabinets, sprinklers which are incorporated into the building systems at the
Property, ventilating and air conditioning apparatus and equipment, plants and
shrubbery which are permanently planted at the Property and are not part of
Mortgagor's inventory, located at, on or attached to the Property, (f) all
revenues, income, rents, cash or security deposits, advance rental deposits,
insurance or condemnation proceeds and other benefits thereto or arising from
the use or enjoyment of all or any portion of the Property, (g) all permits,
licenses, approvals and other certificates now or hereafter relating to the
Property and all of Mortgagor's right, title and interest in and to all
preliminary and final plans and specifications now or hereafter relating to the
Property, (h) all of Mortgagor's contract rights, rents receivable, general
intangibles, actions and rights in action relating to the Property (but not
those relating to the operation of Mortgagor's retail business at the
Property), (i) all other equipment, fixtures and other personal property at
present or hereafter installed in or on the Property in a manner, except for
personal property of tenants of the Property, which renders such articles
usable in connection therewith so far as the same are a part of the realty (all
of the foregoing, including all proceeds, products, additions, replacements and
substitutions thereof, thereto and therefor, and all Collateral, as defined in
Paragraph 12, shall be deemed covered by this Mortgage and are individually and
collectively referred to herein, along with the Property, as the "Mortgaged
Property"); provided, however, that the Mortgaged Property shall not include
any types or items of personal property which relate to Mortgagor's retail
sales business operated at the Property, including, without limitation,
Mortgagor's inventory, accounts receivable, trade fixtures, computer systems
and telephone systems.
<PAGE> 3
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TO HAVE AND TO HOLD the herein granted and bargained Mortgaged
Property, with the privileges and appurtenances thereof, with MORTGAGE
COVENANTS, unto Mortgagee, its successors and assigns forever, to its and their
proper use and advantage.
NOW, THEREFORE, if the Liabilities shall be promptly and fully paid,
performed and satisfied according to their tenor, and all agreements, duties
and obligations contained in this Mortgage, the Note and the other Loan
Documents are fully kept and performed by Mortgagor, then this Mortgage shall
be void, otherwise to remain in full force and effect.
Mortgagor, in order to more fully protect the security of this
Mortgage, does hereby covenant and agree that:
1. Obligation to Satisfy Liabilities and to Abide by Loan Documents.
Mortgagor shall pay, perform and satisfy the Liabilities in accordance with
their terms and shall keep, perform and comply with all of the terms of the
Loan Documents.
2. Taxes and Assessments on Mortgaged Property.
(a) Real Estate Taxes and Assessments. Mortgagor shall pay
all taxes and assessments levied against the Mortgaged Property or any part
thereof on or before the date on which they become delinquent; provided,
however, that Mortgagor shall not be required to pay such tax, assessment,
charge, levy or claim, if the validity or amount thereof shall concurrently be
contested in good faith by appropriate proceedings, and if such contest shall
not result, during its pendency, in the levy or foreclosure of any lien against
the property in question or expose Mortgagor or Mortgagee to criminal
prosecution, and provided, further, that (i) Mortgagor has made such payments
to the extent required by law in order to contest such tax or assessment, (ii)
Mortgagor shall in such event set aside on its books reserves with respect
thereto, which reserves, in the reasonable opinion of Mortgagee, are adequate
to cover the payment of such tax or assessment with interest; and, shall pay
any amount adjudged by a court of competent jurisdiction to be due, with all
interest thereon, including any deficiency, no later than the date such
judgment becomes final, and (iii) the foregoing provisions shall not limit the
right of Mortgagee to require Mortgagor to pay such funds in escrow pursuant to
the provisions of Paragraph 4 hereof. Mortgagor shall deliver to Mortgagee
true and correct copies of the original receipts or other reasonably
satisfactory proof of
<PAGE> 4
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payment of all taxes and assessments within thirty (30) days after the last
date on which each such tax or assessment is payable hereunder without interest
or penalty.
(b) Other Taxes and Assessments. Mortgagor shall pay and
discharge all taxes (except income taxes payable by Mortgagee) and assessments
of every kind and nature that may accrue, be levied, or be assessed upon the
Mortgaged Property, this Mortgage, the Loan Documents, or the Liabilities,
without regard to any law heretofore or hereafter enacted which imposes payment
of the whole or any part thereof upon Mortgagee, including, without limitation,
sewer rents, utility charges, permit, inspection and license fees and all other
charges imposed upon the Mortgaged Property or the income and profits therefrom
or the use and occupancy thereof.
(c) Mortgagee's Right to Discharge. In the event that
Mortgagor, at any time hereafter, shall fail to pay any such taxes or
assessments or promptly to obtain the discharge of such taxes or assessments,
Mortgagor shall so advise Mortgagee in writing and Mortgagee may (but shall be
under no obligation to do so), whether or not it receives the requisite notice
from Mortgagor and without waiving or releasing any obligation or default of
Mortgagor hereunder or any Event of Default (as hereinafter defined), in its
sole discretion, at any time thereafter, make such payment, or any part
thereof, or obtain such discharge and take any other action with respect
thereto which Mortgagee deems advisable. Notwithstanding the foregoing, so
long as no Event of Default shall exist and there is no threat of damage to or
loss of the Mortgaged Property, Mortgagee shall provide Mortgagor with ten (10)
days prior written notice of any such payment by Mortgagee. All sums so paid
by Mortgagee and all costs and expenses incurred or paid by Mortgagee in
connection therewith, including, without limitation, reasonable attorneys' fees
and court costs, together with interest thereon at the Default Rate (as
hereinafter defined) from the date incurred until paid by Mortgagor, shall be
due and payable by Mortgagor to Mortgagee, upon demand, payment of which shall
be secured by the lien of this Mortgage.
3. Insurance.
(a) Property Insurance. Mortgagor, at its sole cost and
expense, shall obtain for, deliver to and maintain for the benefit of the
Mortgagee, during the operation of this Mortgage, insurance policies (or
certificates evidencing and confirming the
<PAGE> 5
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coverage under such policies) in such amounts as the Mortgagee may reasonably
require, insuring the Mortgaged Property against loss or damage by fire, theft,
explosion, sprinklers, vandalism, malicious mischief, loss of rent in an amount
not less than the aggregate rental value thereof for a period of one year if
the Mortgaged Property is leased to a third party or to an Affiliate of
Mortgagor, and all other hazards and risks as are customarily insured against
under present and future standard forms of Special and Additional Coverage
Insurance policies for similar properties, including, without limitation, (i)
fire and extended coverage insurance including vandalism and malicious
mischief, broadened to the so-called "All Risk of Physical Loss" coverage
basis, in an amount, after application of any deductibles acceptable to
Mortgagee, of not less than one hundred percent (100%) of the full replacement
value of the Property at the time of issuance of such policy or policies and at
each renewal date thereof, exclusive of land, excavations, foundations and
other items normally excluded from such policies (Mortgagee acknowledges that
Mortgagor's current deductible of $50,000 per occurrence is acceptable to
Mortgagee), (ii) commercial general liability insurance in an amount not less
than $5,000,000 (under Mortgagor's combined primary and umbrella policies) and
(iii) during any period during which construction of improvements is proceeding
on the Property and the cost of such improvements exceeds $50,000, extended
coverage casualty insurance in the form of a "Builder's Risk 100% Completed
Value Non-Reporting Form" policy in an amount to be determined by Mortgagee as
the difference between the full replacement value of the improvements and
$50,000.
(b) Flood Insurance. In the event any improvements located
on the Mortgaged Property are located in a special flood hazard zone as shown
on the applicable Flood Hazard Boundary Map or Flood Insurance Rate Map
(published, as applicable, by the Federal Emergency Management Administration
or its successor) then Mortgagor shall, at its sole cost and expense, obtain
and maintain, until the Liabilities have been satisfied in full, flood
insurance for the Mortgaged Property under the National Flood Insurance
Program. Mortgagor further covenants and agrees that, upon the request of
Mortgagee made from time to time hereafter and to the extent such insurance is
customarily required for similar properties and is commercially available to
Mortgagor, Mortgagor will promptly obtain and thereafter continuously maintain
additional insurance against such other risks or hazards as Mortgagee may deem
necessary, including, but not limited to, (i) earthquake, including subsidence,
and (ii)
<PAGE> 6
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contingent liability for loss resulting from the operation of any building laws
or regulations pertaining to non-conforming property.
(c) Workers' Compensation Insurance. During the course of
any construction or repair of buildings and improvements on the Mortgaged
Property, Mortgagor, at its sole cost and expense, shall keep and maintain
workers' compensation insurance (including employer's liability insurance if
requested by Mortgagee) for all employees of Mortgagor engaged on or with
respect to the Mortgaged Property in such amount as is reasonably satisfactory
to Mortgagee or, if such limits are established by law, in such amounts.
(d) Insurance Policies and Company. Each such policy of
insurance shall be subject to the reasonable approval of Mortgagee with respect
to the insurance company (which shall be rated "A-" or higher by Best's or, if
Best's shall revise or terminate such ratings, the equivalent thereof and
licensed to do business in the State of Connecticut), the form of the policy,
expiration date, and the amount of coverage, and Mortgagor shall provide to
Mortgagee, at each renewal of all insurance policies required hereunder,
certificates evidencing that said policies are in full force and effect.
Mortgagee, by its acceptance of this Mortgage, acknowledges that (i) it has
approved Mortgagor's current insurer, which approval is subject to review at
any future date by Mortgagee, and (ii) it has approved Mortgagor's current
insurance coverage in blanket form.
(e) Endorsement in Favor of the Mortgagee. Such policies of
insurance shall contain an endorsement, in form and substance satisfactory to
Mortgagee, showing Mortgagee as "first mortgagee" and, showing loss payable to
Mortgagee as loss payee. All policies and endorsements shall be endorsed as
follows: People's Bank/its successors and assigns/ ATIMA, P.O. Box 7097,
Bridgeport, Connecticut 06601, Loan # ___________. Such endorsement or any
independent instrument furnished to Mortgagee shall provide that the insurance
company or companies will give Mortgagee at least thirty (30) days prior
written notice before any such policy or policies of insurance shall be altered
or canceled and that no misrepresentation, act, or default of Mortgagor or any
other person shall affect the right of Mortgagee to recover under such policy
or policies of insurance in case of loss or damage. All notices required to be
sent to Mortgagee by any insurance company shall be sent by certified mail,
postage prepaid, to the address set forth above.
<PAGE> 7
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(f) Administration of Claims. In the event of any loss or
damage to the Mortgaged Property, there shall be no abatement or reduction in
the amount payable by Mortgagor hereunder or under any of the Liabilities, and
Mortgagor shall continue to make all such payments. Mortgagor hereby directs
all insurers under such policies of insurance to pay all proceeds payable
thereunder directly to Mortgagee, and Mortgagor irrevocably makes, constitutes
and appoints Mortgagee (and such officers, employees or agents of Mortgagee as
may, from time to time, be designated by Mortgagee) as Mortgagor's true and
lawful attorney-in-fact (and agent-in-fact) to act severally in Mortgagor's
name, place and stead, but only following the occurrence of an Event of
Default, in any way in which Mortgagor itself could do, for the purpose of
making, settling and adjusting claims under such policies of insurance,
endorsing the name of Mortgagor on any check, draft, instrument or other item
of payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance. Such
proceeds, at the sole option of Mortgagee, may be held by Mortgagee and
expended for the repair or restoration of the Mortgaged Property or applied
toward the Liabilities in such manner as Mortgagee may determine; provided,
however, if no Event of Default exists, Lender shall apply such proceeds first
to all accrued and unpaid interest, late charges and other sums which have
accrued but not been paid by Mortgagor and then to the repayment of principal
under the Loan, the Release Price (as defined in Section 22) below for the
Mortgaged Property which has been damaged or destroyed shall be deemed to be
the difference between: (i) the stated Release Price therefor, and (ii) the
amount of such repayment of principal with insurance proceeds. Notwithstanding
the foregoing provisions of this Section 3(f), so long as no Event of Default
shall have occurred and be continuing, (i) Mortgagee shall not make, settle or
adjust any such claims, and Mortgagor may make, settle and adjust claims under
such policies of insurance with the prior written consent of Mortgagee, which
consent shall not be unreasonably withheld, and (ii) Mortgagee shall make such
insurance proceeds available for the repair or restoration of the Mortgaged
Property if Mortgagee's reasonable estimate of the cost of such repair or
restoration does not exceed $250,000 (per Mortgaged Property) and said
restoration work can be completed not less than 90 days prior to the Maturity
Date (as defined in the Note).
<PAGE> 8
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(g) Mortgagee's Right to Obtain Insurance. In the event
Mortgagor, at any time hereafter, shall fail to obtain or maintain any of the
policies of insurance required above or to pay any premium in whole or in part
relating thereto, then Mortgagee, without waiving or releasing any obligation
or default by Mortgagor hereunder, may (but shall be under no obligation to do
so), at any time thereafter, obtain and maintain such policies of insurance and
pay such premium and take such other action with respect thereto which
Mortgagee deems advisable. All sums so paid by Mortgagee, together with
interest thereon at the Default Rate from the date incurred until paid by
Mortgagor, shall be due and payable by Mortgagor to Mortgagee, upon demand, and
the payment of them shall be secured by the lien of this Mortgage. Mortgagee
shall endeavor, but shall have no obligation to, provide Mortgagor with written
notice of any insurance policies obtained by Mortgagee pursuant to this
Paragraph 3(g).
(h) Additional Insurance. From time to time, upon the
occurrence of any change in the use, operation or value of the Mortgaged
Property, or in the availability of insurance in the area in which the
Mortgaged Property are located, Mortgagor shall, within ten (10) days after
written demand by Mortgagee, take out such additional amounts and/or such other
kinds of insurance as Mortgagee may reasonably require, but only to the extent
the same is customarily required for similar properties and is commercially
available to Mortgagor. Otherwise, Mortgagor shall not take out any separate
or additional insurance which is contributing in the event of loss, unless it
is properly endorsed and otherwise satisfactory to Mortgagee in all respects.
The proceeds of insurance paid on account of any damage or destruction to the
Mortgaged Property or any part thereof shall be paid over to Mortgagee or
Mortgagor to be applied as herein provided.
(i) Waiver of Subrogation. Mortgagor waives any and all
right to claim or recover against Mortgagee, its officers, employees, agents
and representatives, for loss of or damage to Mortgagor, the Mortgaged
Property, Mortgagor's personal property or the property of others under
Mortgagor's control from any cause insured against or required to be insured
against by the provisions of this Mortgage.
4. Escrows. Mortgagor hereby agrees that it shall escrow with
Mortgagee or shall pay to Mortgagee, concurrently with each installment of
interest payable on any of the Liabilities or, if applicable, upon such
schedule as Mortgagee shall reasonably
<PAGE> 9
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determine, (i) an amount which shall be equal to one-twelfth (1/12) of the
annual sums payable by Mortgagor for all taxes, assessments and similar charges
affecting the Mortgaged Property, and (ii) such additional sums as in
Mortgagee's sole judgment will enable Mortgagee to pay (out of the funds so
escrowed or paid to Mortgagee by Mortgagor), at least thirty (30) days before
due, the items set forth in (i) above. Mortgagor hereby agrees that, upon the
written request of Mortgagee following the occurrence of an Event of Default,
it shall escrow with Mortgagee or shall pay to Mortgagee, concurrently with
each installment of interest payable on any of the Liabilities or, if
applicable, upon such schedule as Mortgagee shall reasonably determine, an
amount which shall be equal to one-twelfth (1/12) of the annual sums payable by
Mortgagor for all insurance premiums on or affecting the Mortgaged Property.
Mortgagor agrees that any funds deposited with or paid to Mortgagee pursuant to
this provision shall create only an indebtedness, and not a trust or agency
relationship between Mortgagor and Mortgagee, which shall be liquidated to the
extent of Mortgagee's payments as provided above. Unless otherwise required by
law, the escrow deposits may be commingled with Mortgagee's other funds and no
interest shall be payable to Mortgagor on such funds held by Mortgagee. So
long as Mortgagee is holding sufficient funds in said escrow fifteen (15) days
prior to the date such taxes are due and provided no Event of Default then
exists, Mortgagee shall be responsible for late charges, interest and penalties
which become payable to the applicable taxing authority as a result of
Mortgagee's failure to make such payment from such escrow.
5. Repair and Maintenance.
(a) General Repair and Maintenance. Mortgagor shall keep and
maintain the Mortgaged Property in good operating condition and repair and
shall make all necessary repairs and replacements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved.
Mortgagor shall not permit, commit or suffer any waste of the Mortgaged
Property or any part thereof, nor do anything or suffer or permit anything to
be done on the Mortgaged Property which will increase the risk of fire or other
hazard to the Mortgaged Property or any part thereof. Mortgagee and its
designated agents may, following reasonable notice to Mortgagor (except in the
case of an emergency, when no such prior notice shall be required), enter upon
and inspect the Mortgaged Property at any reasonable time while this Mortgage
remains in effect.
<PAGE> 10
-10-
(b) Repair of Damage or Destruction. In the event of damage
or destruction to the Mortgaged Property, Mortgagor shall give prompt written
notice thereof to Mortgagee and shall, so long as Mortgagee has agreed to make
the insurance proceeds available to pay for the Work (as defined below)
promptly commence and diligently continue to perform repairs, restoration and
rebuilding (the "Work") of the Mortgaged Property so damaged or destroyed so
that the Mortgaged Property shall be in full compliance with all legal
requirements and shall be at least equal in value and general utility as the
Mortgaged Property were prior to the damage or destruction, and if the Work to
be done is structural or if the cost of the Work as estimated by Mortgagee, in
its sole discretion, shall exceed $100,000 per Mortgaged Property (all
structural Work and all Work estimated to cost in excess of $100,000 per
Mortgaged Property, "Major Work"), then Mortgagor shall, prior to the
commencement of the Major Work, furnish to Mortgagee: (1) complete plans and
specifications for the Major Work (approved by all governmental authorities
whose approval is required) for Mortgagee's approval, which plans and
specifications shall be prepared by and bear the certification and seal of an
architect reasonably satisfactory to Mortgagee and shall be accompanied by said
architect's signed estimate of the entire cost of completing the Major Work,
(2) certified or photostatic copies of all permits and approvals required by
law in connection with the commencement and conduct of the Major Work, and (3)
if requested by Mortgagee following the occurrence of an Event of Default, a
surety bond for and/or guaranty of the payment for and completion of the Major
Work, which bond or guaranty shall be in form satisfactory to Mortgagee and
shall be signed by a surety or sureties, or guarantor or guarantors, as the
case may be, or acceptable to Mortgagee and in an amount not less than said
architect's estimate of the entire cost of completing the Major Work, less the
amount of any insurance proceeds which Mortgagee has elected may be applied
toward the cost of the Major Work. All insurance proceeds paid to Mortgagee
and to be disbursed by Mortgagee to Mortgagor to pay for the Work shall be
disbursed pursuant to Mortgagee's then current construction loan disbursement
guidelines.
(c) Eminent Domain or Condemnation. If any part of the
Mortgaged Property is lost, physically damaged or destroyed by right of eminent
domain or condemnation, then Mortgagor shall promptly restore, repair or alter
the remaining Mortgaged Property in a manner satisfactory to Mortgagee and, if
said restoration, repair or alteration is Major Work, then Mortgagor
<PAGE> 11
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shall, prior to the commencement of such Major Work, furnish to Mortgagee the
items set forth in (1), (2), and (3) of subparagraph (b) of this Paragraph 5.
If Mortgagee, in its sole discretion, determines that said eminent domain or
condemnation materially impairs the applicable Mortgaged Property, Mortgagor
shall pay to Mortgagee the Release Price (less any award or condemnation
proceeds which Mortgagee may have applied to the repayment of principal under
the Loan), and Mortgagee shall, so long as no Event of Default exists, release
and discharge this Mortgage with respect to said Mortgaged Property.
6. Covenants of Mortgagor.
(a) No Sale, Transfer or Other Encumbrance. Mortgagor
covenants and agrees that while this Mortgage remains in effect, without the
prior express written consent of Mortgagee, Mortgagor (i) shall not sell,
assign, lease or otherwise transfer title to or any ownership interest in the
Mortgaged Property (except as contemplated by, and after satisfying the
requirements of, Paragraph 22 hereof), (ii) permit any Change of Control (as
hereinafter defined) with respect to Mortgagor or any guarantor ("Guarantor")
of the Note, including, without limitation, General Host Corporation, pursuant
to that certain Guaranty and Indemnity Agreement of even date herewith in favor
of Mortgagee (the "Guaranty"), or (iii) cause or permit the Mortgaged Property
to be subject to any mortgages, liens or encumbrances, including a so-called
"wrap-around mortgage", a "sale-leaseback" financing or similar financings,
other than (A) the lien of this Mortgage, and (B) the liens and encumbrances
set forth in Schedule C attached hereto, and any such sale, assignment, lease
or transfer shall be void ab initio. Upon any transfer, sale, assignment,
lease or change of control in violation of this Paragraph 6, Mortgagee shall
have the option of accelerating the indebtedness due under the Note and all
Liabilities then due under the mortgage shall be immediately due and payable to
Mortgagee, including, without limitation, the Prepayment Fee (as defined in the
Note).
(b) Change of Control. A "Change of Control" with
respect to Mortgagor shall mean the transfer of greater than twenty percent
(20%) of the outstanding common stock of Mortgagor. A "Change of Control" with
respect to Guarantor shall be deemed to have occurred if: (i) any person or
group within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934 (the "Exchange Act"), together with any affiliates of any such person or
group, shall beneficially own, directly or indirectly, (within the meaning of
Rule 13d-3 under the Exchange
<PAGE> 12
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Act) at least twenty-five percent (25%) of the total voting power of all
classes of capital stock of Guarantor entitled to vote generally in the
election of directors of Guarantor, (ii) the current members of the Board of
Directors of Guarantor shall no longer constitute a majority of the members of
the Board of Directors of Guarantor, provided, however, Mortgagor may, at any
time following the appointment or election of a new director of Guarantor,
request that Mortgagee deem said director to be a "current member of the Board
of Directors" for purposes of this subsection (ii), and Mortgagee shall not
unreasonably withhold its consent to such request, (iii) Guarantor consolidates
with, merges into or sells, leases or conveys all or substantially all of its
assets to, any other person or entity; or (iv) Guarantor is liquidated or
dissolved or the stockholders of Guarantor adopt a plan for the liquidation or
dissolution of Guarantor.
(c) Environmental Covenants. Mortgagor, after having
conducted an appropriate investigation, consistent with customary commercial
practice, of the Mortgaged Property, hereby represents and warrants that, (A)
except for Hazardous Substances (as hereinafter defined) which are sold, stored
in inventory or used by Borrower in the ordinary course of Borrower's retail
business at the Mortgaged Property and which Hazardous Substances are sold,
stored or used strictly in accordance with all applicable Hazardous Substances
Laws (as hereinafter defined), and (B) except as expressly disclosed in the
following reports: (i) Phase I Environmental Site Assessment Frank's Nursery
and Crafts Store 1198 Queen Street, Southington, Connecticut dated October
1995, Project No. C-2675, (ii) Phase I Environmental Site Assessment Frank's
Nursery and Crafts Store 361 Scott Swamp Road, Farmington, Connecticut dated
October 1995, Project No. C-2674, (iii) Phase I Environmental Site Assessment
Frank's Nursery and Crafts Store 656 Silver Lane, East Hartford, Connecticut
dated October 1995, Project No. C-2671, (iv) Phase I Environmental Site
Assessment Frank's Nursery and Crafts Store 400 Talcottville Road, Vernon,
Connecticut dated October 1995, Project No. C-2672, (v) Phase I Environmental
Site Assessment Frank's Nursery and Crafts Store 479 East Main Street,
Branford, Connecticut dated October 1995, Project No. C-2668, each prepared by
Heymen Teale Engineering for Mortgagee, and (vi) Limited Phase II Subsurface
Investigation prepared by Land Tech Remedial, Inc., dated December 13, 1995,
for the property located at 479 East Main Street, Branford, Connecticut
(collectively, the "Report") (a) that no substances, including, without
limitation, asbestos or any substance containing asbestos and deemed hazardous
under any Hazardous Substances Law (as defined below), the group of
<PAGE> 13
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organic compounds known as polychlorinated biphenyls, flammable explosives,
radioactive materials, chemicals known to cause cancer or reproductive
toxicity, pollutants, effluents, contaminants, emissions or related materials
and any items included in the definition of hazardous or toxic waste, materials
or substances ("Hazardous Substances") under any law relating to environmental
conditions and industrial hygiene, including, without limitation, the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq.,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), 42 U.S.C. Section 9601 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 6901 et seq., the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42 U.S.C.
Section 741 et seq., the Clean Water Act, 33 U.S.C. Section 7401, et seq., the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Safe
Drinking Water Act, 42 U.S.C. Section 300f et seq., as the same may be amended
from time to time, and all similar federal, state and local environmental laws,
statutes, ordinances and the regulations, orders and decrees now or hereafter
promulgated thereunder (collectively, the "Hazardous Substances Laws"), have
been, are or shall be installed, used, generated, manufactured, treated,
handled, refined, produced, processed, stored, disposed of, or otherwise
deposited or located in, on or under the Mortgaged Property; (b) that no
activity has been, is or shall be undertaken on the Mortgaged Property which
has caused or would cause (i) the Mortgaged Property to become a hazardous
waste treatment, storage or disposal facility or "establishment" as such
terminology is defined and classified under any Hazardous Substances Law, (ii)
a release or threatened release of Hazardous Substances from the Mortgaged
Property in violation of any Hazardous Substances Law, or (iii) the discharge
of Hazardous Substances into the atmosphere or into any watercourse, body of or
surface or subsurface water or wetland which would require a permit under any
Hazardous Substances Law and for which no such permit has been issued; (c) that
no activity has been, is or shall be undertaken or permitted to be undertaken
on the Mortgaged Property, by Mortgagor or any tenant or other occupant of the
Mortgaged Property which would result in a violation under any Hazardous
Substances Law; (d) that neither Mortgagor, nor any tenant or other occupant of
the Mortgaged Property, nor any other party has caused or suffered to occur,
and Mortgagor will not hereafter cause or suffer to occur, a discharge,
spillage, uncontrolled loss, seepage or filtration of oil or petroleum or
chemical liquids or solids, liquid or gaseous products or hazardous waste (a
"spill"), as those terms are used in Chapter 446k of the Connecticut General
Statutes Revision of 1958, as the
<PAGE> 14
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same may be amended from time to time, at, upon, under or within the Mortgaged
Property or any contiguous real estate which has been included in the property
description of the Mortgaged Property within the preceding three years, and
neither Mortgagor, nor any tenant or other occupant of the Mortgaged Property,
nor any other party, has been, is or will be involved in operations at or
adjacent to the Mortgaged Property, nor are there or will there be any
substances or conditions in or on the Mortgaged Property, which could support a
claim or cause of action or lead to the imposition on Mortgagor or any other
owner or operator of the Mortgaged Property of liability or the creation of a
lien on the Mortgaged Property under the Hazardous Substances Laws; and (e)
that Mortgagor shall comply, and shall cause all tenants or other occupants of
the Mortgaged Property to comply, strictly and in all respects with the
requirements of the Hazardous Substances Laws and shall notify Mortgagee
promptly in the event of any spill upon the Mortgaged Property, and shall
promptly forward to Mortgagee copies of all orders, notices, permits,
applications or other communications and reports in connection with any such
spill or any other matters relating to the Hazardous Substances Laws as they
may affect the Mortgaged Property.
(d) Title to Mortgaged Property. Mortgagor warrants
that: (i) it has fee simple title to the real property described in Schedule
A-1 through Schedule A-5 and good indefeasible title to the balance of the
Mortgaged Property, free and clear of liens and encumbrances, except those
exceptions to title set forth in Schedule B-1 through Schedule B-5 hereto; (ii)
it has full power and lawful authority to encumber the Mortgaged Property in
the manner and form herein set forth; (iii) this Mortgage is and will remain a
valid and enforceable lien on the Mortgaged Property; and (iv) it will preserve
such title and will forever WARRANT AND DEFEND the above granted and bargained
Mortgaged Property to Mortgagee against all claims and demands whatsoever,
except as set forth in said Schedule B-1 through Schedule B-5 and will forever
WARRANT AND DEFEND the validity and priority of the lien hereof to and for the
benefit of Mortgagee against the claims of all persons and parties whomsoever.
(e) Books and Records. During the term of the loan
evidenced by the Note, Mortgagor shall provide or cause to be provided to
Mortgagee: (i) within forty-five (45) days following the end of each fiscal
quarter of Guarantor, quarterly financial statements for Guarantor prepared by
an independent certified public accountant reasonably satisfactory to Mortgagee
(a "CPA") or Guarantor's 10-Q reports, (ii) within ninety (90) days
<PAGE> 15
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following the end of each fiscal year of Guarantor, annual financial statements
for Guarantor prepared by a CPA or Guarantor's 10-K report, and (iii) annual
projections for Guarantor for the subsequent fiscal year which may be prepared
internally by Mortgagor, Guarantor or by a CPA. Notwithstanding the foregoing,
if Guarantor shall obtain an extension for the filing of its 10-Q or 10-K
reports, Mortgagor shall provide or cause to be provided to Mortgagee
preliminary quarterly or annual, as applicable, reports within 45 or 90 days,
as applicable following the end of the quarter or fiscal year in question, and
the 10-Q or 10-K report in question shall be provided to Mortgagee when filed
with the Securities Exchange Commission. All financial statements shall be in
form reasonably satisfactory to Mortgagee. If requested by Mortgagee,
Mortgagor shall also provide to Mortgagee by the dates set forth above
uncertified annual and quarterly financial statements and projections for
Mortgagor.
7. Payment in Full. Mortgagee shall not be compelled to release, or
be prevented from foreclosing or enforcing this Mortgage upon all or any part
of the Mortgaged Property, unless the Liabilities shall be fully paid,
performed and satisfied. Mortgagee shall not be required to accept any part or
parts of the Mortgaged Property, as distinguished from the entire whole
thereof, as payment of or upon the Liabilities to the extent of the value of
such part or parts, nor be compelled to accept or allow such apportionment of
the Liabilities to or among any separate parts of the Mortgaged Property.
8. Waivers. No waiver by Mortgagee of any Event of Default hereunder
shall extend to or affect any other Event of Default then existing or any
subsequent Event of Default, or impair any of Mortgagee's rights, powers or
remedies. If Mortgagee (a) extends the time for payment of any of the
Liabilities, (b) takes additional security for the payment of the Liabilities
or substitutes other security therefor, (c) waives or does not exercise any
right, power, option or remedy granted in any Loan Document, (d) releases any
part of the Mortgaged Property from the lien of this Mortgage, or (e) makes or
consents to any agreement changing the terms of this Mortgage or subordinating
the lien or any charge hereof, no such act or omission shall release,
discharge, modify, change or affect the original Liabilities under this
Mortgage or otherwise of Mortgagor or any maker, endorser, surety or guarantor
of any of the Loan Documents. The rights, options, powers and remedies herein
provided shall be cumulative and no one or more of them shall be
<PAGE> 16
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exclusive of the other or others, or of any right or remedy now or hereafter
given or allowed by law or in equity.
9. Involuntary Taking of Mortgaged Property.
(a) No Abatement. There shall be no abatement or reduction
in the amount payable by Mortgagor upon any of the Liabilities in the event of
the commencement of any eminent domain or condemnation proceeding (or
conveyance in lieu thereof) affecting the Mortgaged Property, and Mortgagor
shall continue to be obligated to make all such payments. In the event that
the whole or any part of the Mortgaged Property shall be taken by the exercise
of the right of condemnation or eminent domain or conveyed in lieu thereof to
those authorized to exercise such right, all awards and other monies payable to
Mortgagor on account of such taking shall be deposited with Mortgagee. All
such awards and monies shall be applied by Mortgagee on account of the
Liabilities in such manner as Mortgagee, in its sole discretion, shall deem
advisable including, without limitation, a prepayment thereof. Mortgagee shall
have the right to intervene and participate in any proceedings for and in
connection with any taking referred to in this Paragraph 9; provided, however,
that if such intervention shall not be permissible or permitted by the court,
Mortgagor shall, at its expense, consult with Mortgagee, its attorneys and
experts, and make all reasonable efforts to cooperate with them in any
presentation or participation in such proceedings. Mortgagor shall not enter
into any agreement for the taking of the Mortgaged Property or any part thereof
with any person or persons authorized to acquire the same by condemnation or
eminent domain, unless Mortgagee shall have consented thereto in writing. So
long as no Event of Default shall exist, Mortgagee shall not enter into any
agreement for the taking of the Mortgaged Property or any part thereof with any
person or persons authorized to acquire the same by condemnation or eminent
domain, unless Mortgagor shall have consented thereto in writing.
(b) Assignment of Awards. For the purpose of effecting the
provisions of this Paragraph 9, Mortgagor hereby assigns to Mortgagee all of
his right, title, and interest in and to any and all awards for any taking or
pursuant to any conveyance referred to in this Paragraph 9, subject to the
provisions of this Paragraph 9 and the provisions of Paragraph 10 hereof.
Mortgagor hereby covenants and agrees, upon request of Mortgagee, to make,
execute and deliver any and all assignments and other instruments deemed by
Mortgagee necessary or desirable for the purpose of confirming or further
evidencing such
<PAGE> 17
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assignment by Mortgagor of his share of such awards to Mortgagee, free, clear,
and discharged of any and all encumbrances of any kind or nature whatsoever
created by Mortgagor.
10. Payment in Event of Eminent Domain, Etc. Notwithstanding any
taking by eminent domain or conveyance in lieu thereof, alteration of the grade
of any highway or street or other injury to or decrease in value of the
Mortgaged Property by any public or quasi-public authority or corporation, the
Liabilities secured hereby shall continue to bear interest at the rate set
forth in the applicable Loan Documents until any such award or payment shall
have been actually received by Mortgagee and any reduction in the Liabilities
resulting from the application by Mortgagee of such award or payment as
hereinafter set forth shall be deemed to take effect only on the date of such
receipt. Such award or payment shall, pursuant to the provisions of this
Paragraph 10, at the option of Mortgagee, be applied by Mortgagee against the
Liabilities in such manner as Mortgagee, in its sole discretion, shall deem
advisable. If, prior to the receipt by Mortgagee of such award or payment, the
Mortgaged Property shall have been sold on foreclosure of this Mortgage,
Mortgagee shall have the right to receive such award or payment to the extent
of any deficiency found by the court to be due upon such sale, with interest
thereon at the rate set forth in the applicable Loan Documents, and reasonable
attorneys' fees, costs and disbursements incurred by Mortgagee in connection
with the collection of such award or payment.
11. Assignment of Rents and Leases.
(a) Assignment. Mortgagor hereby assigns, transfers and
sets over to Mortgagee all rents, royalties, issues, profits, revenues, income
and other benefits to which Mortgagor may now or hereafter be entitled from the
Mortgaged Property (the "Rents") to be applied against the Liabilities.
Mortgagor hereby agrees that Mortgagee is, following the occurrence of an Event
of Default, hereby authorized and empowered to enter upon the Mortgaged
Property and to collect and receive all Rents, whether then due and payable or
thereafter becoming due and payable, and to apply the same against the costs of
managing the Mortgaged Property, including, but not limited to, the expenses
and fees of any receiver appointed for such purposes, premiums on any
receivers' bonds, reasonable attorneys' fees in connection with such management
and collection, and against the Liabilities in such manner as Mortgagee may
deem advisable. Nothing contained in this Paragraph 11 shall in any way impair
or affect any right
<PAGE> 18
-18-
or remedy which Mortgagee might now or hereafter have if not for the provisions
of this Paragraph 11, but the rights and remedies given by the provisions of
this Paragraph 11 shall be in addition to all other rights and remedies which
Mortgagee may have. Neither the exercise of any rights under this Paragraph 11
by Mortgagee nor the application of any Rents to the Liabilities shall cure or
waive any Event of Default.
(b) Separate Assignment Document. Mortgagor hereby
covenants and agrees that in the event a separate assignment of rents and
leases document is executed and recorded in connection herewith (the
"Assignment"), and to the extent of any conflict with this Mortgage, the terms
of such separate Assignment shall govern.
12. Security Agreement. In addition to such rights as are created in
favor of Mortgagee under this Mortgage and the other Loan Documents, it is the
intent of the parties hereto that this instrument shall constitute a security
agreement within the meaning of the Uniform Commercial Code, as then in effect
(the "Uniform Commercial Code"), and Mortgagor (as Debtor) hereby grants to
Mortgagee (as Creditor and Secured Party) a security interest in all building
materials, supplies, machinery, furniture, fixtures, equipment and personal
property attached to the Property or stored at or delivered to the Property or
any other location for incorporation into the improvements located or to be
located on the Property and all replacements thereof, substitutions therefor
and additions and accessions thereto; provided, however, that the foregoing
personal property shall not include any types or items of personal property
which relate to Mortgagor's retail sales business operated at the Property,
including, without limitation, Mortgagor's inventory, accounts receivable,
trade fixtures, computer systems and telephone systems (the "Excluded
Collateral") (all of the foregoing personal property, excluding the Excluded
Collateral being sometimes hereinafter referred to as the "Collateral") and
that a security interest shall attach thereto for the benefit of Mortgagee to
secure the Liabilities and all other sums and charges which may become due
under any of the Loan Documents. Mortgagor hereby authorizes Mortgagee to file
financing and continuation statements with respect to the Collateral without
the signature of Mortgagor whenever lawful. Upon the occurrence of any Event
of Default, Mortgagee, pursuant to the Uniform Commercial Code, shall have the
option of proceeding as to both real and personal property in accordance with
its rights and remedies in respect of the real property, in which event the
<PAGE> 19
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default provisions of the Uniform Commercial Code shall not apply. The parties
agree that in the event Mortgagee elects to proceed with respect to the
Collateral separately from the real property, ten (10) days notice of the sale
of the Collateral shall be reasonable notice. Mortgagor agrees that, without
the written consent of Mortgagee, Mortgagor will not remove or permit to be
removed from the Mortgaged Property any of the Collateral. Any replacements,
renewals and additions to or for the Collateral shall become and be immediately
subject to the security interest of Mortgagee and be covered thereby.
Mortgagor shall, from time to time, on request of Mortgagee, deliver to
Mortgagee a listing of the Collateral in reasonable detail, including an
itemization of all items leased to Mortgagor or subject to a conditional bill
of sale, security agreement or other title retention agreement.
13. Right to Enter, Etc. In addition to such rights as Mortgagee may
have under the Loan Documents and under law, Mortgagor does hereby grant to
Mortgagee the license, upon the occurrence of an Event of Default, to enter
upon the Mortgaged Property, take possession of all Collateral, store the
Collateral at the Mortgaged Property under the control of Mortgagee, dispose of
the Collateral at the Mortgaged Property and perform all acts on the Mortgaged
Property reasonably necessary to effect such storage and disposition and to
protect and secure the Collateral. In taking any action hereunder, Mortgagee
shall act in a commercially reasonable manner.
14. Events of Default.
(a) List of Events of Default. Each of the following
events or conditions shall constitute an "Event of Default" hereunder:
(i) Mortgagor shall fail to make one or more payments
required by the Note on or prior to the tenth (10th)
day following the due date thereof;
(ii) Mortgagor shall fail, within thirty (30) days
following written notice from Mortgagee, to comply in
any material respect with any covenant, term,
condition, duty or obligation contained in this
Mortgage, or such longer time (not to exceed an
additional thirty (30) days) if such default is not
capable of being cured within thirty (30) days,
provided Mortgagor commences such cure
<PAGE> 20
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within the initial 30 day period and diligently
pursues the completion of same;
(iii) Mortgagor shall fail, within thirty (30) days
following written notice from Mortgagee, to comply in
any material respect with any covenant, term,
condition, duty or obligation contained in any other
Loan Documents, or there shall occur an event or
condition which constitutes a default or an Event of
Default under any other Loan Documents, or such
longer time (not to exceed an additional thirty (30)
days) if such default is not capable of being cured
within thirty (30) days, provided Mortgagor commences
such cure within the initial 30 day period and
diligently pursues the completion of same;
(iv) All or any part of the Mortgaged Property, including
the land and any buildings, fixtures or improvements
now or hereafter situated thereon, is demolished,
removed, or substantially altered, without the prior
written consent of Mortgagee;
(v) All or any part of the Mortgaged Property, including
the land and any buildings, fixtures or improvements
now or hereafter situated thereon, is destroyed or
substantially damaged and such damage or destruction
is not insured in accordance with the terms of
Section 3 above;
(vi) All or any part of the Mortgaged Property, including
the land and any buildings, fixtures or improvements
now or hereafter situated thereon, is destroyed or
substantially damaged and such damage or destruction
is not repaired or replaced pursuant to the terms of
this Mortgage;
(vii) The Mortgaged Property, or any part thereof which is
material to the operations of Mortgagor, are
condemned, or are taken by condemnation proceedings
or are conveyed in lieu thereof so as to materially
impair said Mortgaged Property, and Mortgagor fails
to make any required payment of the Release Price in
accordance with Section 5(c) above;
<PAGE> 21
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(viii) Mortgagor further encumbers the Mortgaged Property or
the Collateral by granting any mortgage or other
security interest without the prior written consent
of Mortgagee;
(ix) Mortgagor or any Guarantor shall have made any
material misrepresentation to Mortgagee. A material
misrepresentation shall be any representation,
warranty, statement, certificate, schedule and/or
report made or furnished to Mortgagee in connection
with this Mortgage or any other Loan Documents which
is false or misleading in any material respect as of
the date made or furnished;
(x) Mortgagor or any Guarantor shall default under any
other loan, note, mortgage, line of credit or any
other agreement with Mortgagee (after the giving of
any required notice and the expiration of any
applicable cure period), but only with respect to
payment defaults, and not with respect to
non-monetary defaults involving financial covenants;
(xi) General Host Corporation shall default under the
Guaranty;
(xii) Mortgagor shall cease to conduct its business as
presently conducted for any reason, including but not
limited to, any merger, consolidation or dissolution
of Mortgagor or any Guarantor;
(xiii) If Mortgagor or any Guarantor files or consents to
the filing of, or commences or consents to the
commencement of, any proceeding, action, petition or
filing under the Federal Bankruptcy Code or any
similar state or federal law now or hereafter in
effect relating to bankruptcy, reorganization or
insolvency, or the arrangement or adjustment of debts
(a "Bankruptcy Proceeding") with respect to Mortgagor
or such Guarantor;
(xiv) If any Bankruptcy Proceeding shall have been filed
against Mortgagor or any Guarantor and the same is
not withdrawn, dismissed, canceled or terminated
within ninety (90) days of such filing;
<PAGE> 22
-22-
(xv) If a receiver, liquidator or trustee of Mortgagor or
any Guarantor or of the Mortgaged Property shall be
appointed;
(xvi) If Mortgagor or any Guarantor shall make an
assignment for the benefit of its or his creditors or
shall admit in writing the inability to pay its or
his debts generally as they become due;
(xvii) If a default or event of default shall occur under
any mortgage or security agreement encumbering all or
any portion of the Mortgaged Property (other than
portions of the Mortgaged Property which have been
sold and released from the lien of this Mortgage
pursuant to Paragraph 22 hereof) which is subordinate
or superior to the lien of this Mortgage or if the
mortgagee or secured party under any such subordinate
or superior mortgage or security agreement shall
commence a foreclosure or other collection or
enforcement action in connection therewith, provided
that this provision shall not be deemed to be a
waiver of the provisions of Paragraph 6(a)
prohibiting further encumbrances or of any other
provision of this Mortgage;
(xviii) If there shall occur a Change of Control without the
prior written consent of Mortgagee;
(xix) If there shall occur an Event of Default under that
certain Mortgage and Security Agreement from
Mortgagor to Mortgagee of even date herewith
encumbering Mortgagor's property located at Route 9
and West Kieffer Lane, Kingston, New York, which
mortgage is recorded or to be recorded in the land
records for Ulster County, New York (the "New York
Mortgage");
(xx) If there shall occur any monetary event of default
under any line of credit from Mortgagee (or any
syndicate of Lenders which includes Mortgagee) to
Mortgagor or any event of default under any other
loan from Mortgagee to Mortgagor; and
<PAGE> 23
-23-
(xxi) The breach of any financial covenant under Section
9.4 of the Comerica Agreement caused by Mortgagor's
financial interest for its fiscal year ending January
28, 1996.
(b) Remedies. Upon the occurrence of an Event of Default,
and while it continues, Mortgagee may declare all of the Liabilities to be
immediately due and payable, without the necessity for demand or notice, and,
in addition, Mortgagee shall have all of the rights and remedies contained
herein and in the other Loan Documents, as well as all rights and remedies
provided by law and by equity, which rights and remedies shall be cumulative
and not exclusive. Such rights and remedies shall include, without limitation,
the POWER OF SALE if and to the extent available in the future under the laws
of the State of Connecticut.
15. Changes, Etc. Neither this Mortgage nor any term hereof may be
changed, waived, discharged or terminated orally or by any action or inaction,
but only by an instrument in writing, signed by the party against whom
enforcement of the charge, waiver, discharge or termination is sought. Any
agreement hereafter made by Mortgagor and Mortgagee relating to this Mortgage
shall be superior to the rights of the holder of any intervening lien or
encumbrance, to the extent permitted by applicable law.
16. Successors, Etc. All the covenants, conditions and agreements
hereof shall bind, as applicable, the executor(s), administrator(s) and the
successors and assigns of Mortgagor and shall inure to the benefit of and be
available to the successors and assigns of Mortgagee.
17. Specific Waivers. A waiver, in one or more instances, of any of
the terms and provisions hereof shall apply to the particular instance or
instances and at the particular time or times only, and shall not be a
continuing waiver, but all the terms, covenants and agreements herein and all
of the terms, covenants and agreements of the Loan Documents shall survive and
continue to remain in full force and effect.
18. Remedies Not Exclusive. No right or remedy herein conferred upon
or reserved to Mortgagee is intended to be exclusive of any other remedy
provided for herein, or in the other Loan Documents or any other agreement
between Mortgagor and Mortgagee or by law or by equity provided or permitted,
but all
<PAGE> 24
-24-
such rights and remedies shall be cumulative and shall be in addition to every
other right and remedy given hereunder, or now or hereafter existing at law or
in equity. If any clause or provision in this Mortgage shall be invalid or
unenforceable under any circumstances, that fact in no way invalidates or
impairs the enforceability of this Mortgage or any other provision herein.
19. Default Rate. For the purposes of this Mortgage, the "Default
Rate" shall have the same meaning as set forth in the Note.
20. COMMERCIAL TRANSACTION. MORTGAGOR HEREBY ACKNOWLEDGES THAT THE
TRANSACTION OF WHICH THIS MORTGAGE IS A PART IS A COMMERCIAL TRANSACTION, AS
THAT TERM IS DEFINED IN SECTION 52-278a OF THE CONNECTICUT GENERAL STATUTES,
AS AMENDED, AND MORTGAGOR HEREBY VOLUNTARILY AND KNOWINGLY WAIVES AND
RELINQUISHES ANY AND ALL RIGHTS WHICH IT MAY HAVE, PURSUANT TO ANY LAW OR
CONSTITUTIONAL PROVISION, INCLUDING, WITHOUT LIMITATION, SECTION 52-278a ET SEQ
OF THE CONNECTICUT GENERAL STATUTES, TO ANY NOTICE OR HEARING PRIOR TO ANY
ATTEMPT BY MORTGAGEE TO OBTAIN A PREJUDGMENT REMEDY AGAINST MORTGAGOR IN
CONNECTION WITH SUCH TRANSACTION AND AUTHORIZES MORTGAGEE'S ATTORNEY TO ISSUE A
WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL
SET FORTH A COPY OF THIS WAIVER.
21. Estoppel Certificates. Mortgagor shall, within ten (10) days
after written request from Mortgagee, furnish to Mortgagee a written statement,
duly acknowledged, setting forth whether any offsets or defenses exist against
the indebtedness evidenced by the Note, and secured by this Mortgage and, if
any are alleged to exist, the nature thereof in detail.
22. Partial Release of Property. So long as there does not exist
an Event of Default and/or no event has occurred which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default,
at any time during the term of the loan evidenced by the Note and secured by
this Mortgage, upon payment of the applicable Prepayment Fee and the Release
Price (as hereinafter defined) and satisfaction of the conditions precedent set
forth in Subparagraphs (a) through (d) below, Mortgagor shall release the lien
of this Mortgage with respect to the applicable portions of the Mortgaged
Property as set forth below. As used herein, the "Release Price" shall mean
the
<PAGE> 25
-25-
following amounts for each of the following portions of the Mortgaged Property:
<TABLE>
<S> <C>
Branford, CT (as described in Schedule A-1) $ 840,000
Farmington, CT (as described in Schedule A-2) $ 945,000
Vernon, CT (as described in Schedule A-3) $1,050,000
Southington, CT (as described in Schedule A-4) $1,050,000
East Hartford, CT (as described in Schedule A-5) $ 910,000
</TABLE>
(a) All instruments and documents executed and delivered
in connection with any release made pursuant to this
Paragraph 22 shall be in form and substance
reasonably satisfactory to the Mortgagee.
(b) All costs and expenses incurred by Mortgagee in
connection with each release made pursuant to this
Paragraph 22, including, without limitation,
reasonable fees and expenses of Mortgagee's counsel
and Mortgagee's standard administrative fees, shall
be paid by Mortgagor prior to such release.
(c) So long as no Event of Default shall have occurred,
all payments of the Release Price received by
Mortgagee under this Paragraph 22 shall be applied
in reduction of the outstanding principal balance of
the Note, otherwise said sums shall be applied in
reduction of the Liabilities in such order and
priority as Mortgagee may determine.
(d) Notwithstanding anything set forth herein to the
contrary, in no event shall Mortgagor provide
purchase money financing in connection with the sale
of any portion of the Mortgaged Property, without the
prior written consent of Mortgagee.
23. No Liens. Mortgagor will not suffer or permit any claims or
liens to secure claims for labor, material or supplies to remain against the
Mortgaged Property or any portion thereof or against any funds due to any
contractor, subcontractor, supplier or materialman. Mortgagor will promptly
seek to dissolve any lien or attachment upon the Mortgaged Property or any
portion thereof and will cause any said encumbrance to be removed within thirty
(30) days of its creation.
<PAGE> 26
-26-
24. Notices. (a) Mortgagor shall notify Mortgagee promptly of
the occurrence of any of the following:
(i) a default or threatened or potential default or event
which with the passage of time or the giving of
notice, or both, would become a default by Mortgagor
under the terms of this Mortgage, the New York
Mortgage or any other Loan Documents with respect to
which default Mortgagor has knowledge;
(ii) a fire or other casualty causing damage (exceeding
$50,000 in value) to the Mortgaged Property;
(iii) receipt of notice of eminent domain proceedings or
condemnation of the Mortgaged Property;
(iv) receipt of written notice from any governmental
authority relating to the violation of any applicable
law affecting the Mortgaged Property or Mortgagor's
use of the Mortgaged Property, and receipt of any
written notice or correspondence from the Connecticut
Department of Environmental Protection, the New York
Department of Environmental Conservation or the
United States Environmental Protection Agency;
provided, however, Mortgagor shall not be required to
notify Mortgagee of written notices received relating
to minor or immaterial violations of laws or
ordinances relating to Mortgagor's use of the
Mortgaged Property so long as Mortgagor remedies or
cures such violation within 30 days following its
receipt of said notice;
(v) receipt of any notice from any tenant of all or any
portion of the Mortgaged Property asserting that
Mortgagor is in breach of an obligation to such
tenant;
(vi) substantial change in the use of the Mortgaged
Property;
(vii) commencement of any litigation affecting the
Mortgaged Property;
<PAGE> 27
-27-
(viii) receipt of any notice of default under any agreement
or contract relating to the construction of any
contemplated improvements at the Mortgaged Property
or the operation of Mortgagor's business at the
Mortgaged Property;
(ix) any contract or agreement with respect to any sale,
lease, partition or other transfer of all or any part
of the Mortgaged Property;
(x) any material fact or representation contained in any
certificate, notice, opinion (written or oral), or
other document furnished to Mortgagee which ceases to
be true and correct, which notification shall set
forth the untrue or incorrect statement or
misrepresentation, and the action being taken by
Mortgagor in connection therewith; or
(xi) receipt of any notice of default under (or expiration
or termination of) the Credit Facility prior to
May 31, 1997.
(b) Any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be in writing and shall be sent by
Federal Express, or other reputable courier services, or by postage pre-paid
registered or certified mail, return receipt requested, and shall be deemed
given when received or refused (as indicated on the receipt) and addressed as
follows:
If to Mortgagor:
Frank's Nursery & Crafts, Inc.
c/o General Host Corporation
6501 East Nevada Street
Detroit, Michigan 48243
Attn: General Counsel
<PAGE> 28
-28-
With copies to:
Frank's Nursery & Crafts, Inc.
c/o General Host Corporation
6501 East Nevada Street
Detroit, Michigan 48243
Attn: Treasurer
and
Dykema Gossett
400 Renaissance Center
Detroit, Michigan 48243-1668
Attn: Wilfred A. Steiner, Jr., Esq.
If to Mortgagee:
People's Bank
350 Bedford Street, 2nd Floor
Stamford, Connecticut 06901-1741
Attn: Marjan N. Murray, Vice President
Commercial Mortgage Department
With copies to:
People's Bank
Bridgeport Center
850 Main Street
Bridgeport, Connecticut 06604-4913
Attn: Commercial Mortgage Department
and
Day, Berry & Howard
One Canterbury Green
Stamford, Connecticut 06901
Attn: Michael P. Byrne, Esq.
25. Sale of Loan Documents. Mortgagor recognizes that Mortgagee may
sell and transfer its interest in the Note, this Mortgage or any other Loan
Document to one or more participants and that all documentation, financial
statements, appraisals and other data, and copies thereof, relevant to
Mortgagor, any Guarantor or the Loan Documents, may be exhibited to and
retained by any such participant or prospective participant.
<PAGE> 29
-29-
26. Brokerage. Mortgagor covenants and agrees that no brokerage
commission or other fee, commission or compensation is to be paid by Mortgagee
in connection with the loan evidenced by the Note, and Mortgagor shall
indemnify and hold harmless Mortgagee from and against any harm, loss,
liability or cost or expense (including reasonable legal fees and expenses)
incurred in connection with any claim by a broker or finder for a fee or other
compensation with respect to the loan evidenced by the Note, which claim is
made by, through or under Mortgagor or Guarantor or which alleges that a
commission or other compensation is payable as a result of the claimant's
dealings with Mortgagor or Guarantor or any employee, representative or agent
of Mortgagor or Guarantor. So long as Mortgagor causes the release and
discharge of any lien or encumbrance affecting the Mortgaged Property which
relates to a pending brokerage commission claim, Mortgagor may defend all such
claims with counsel reasonably satisfactory to Mortgagee, and Mortgagor shall
provide copies of all pleadings to Mortgagee.
27. Paragraph Headings. The paragraph headings of this Mortgage
are for convenience of reference only, do not form a part hereof and do not in
any way modify, interpret or construe the intentions of the parties.
28. Legal Construction. This Mortgage shall be governed by, and
construed in accordance with, the internal laws of the State of Connecticut.
<PAGE> 30
-30-
IN WITNESS WHEREOF, Mortgagor has executed and delivered this Mortgage
as of the day and year first above written.
Signed and delivered
in the presence of:
Heidi Flusser
- ---------------------------- FRANK'S NURSERY AND CRAFTS, INC.
Heidi Flusser
Vt A Lt J
- ---------------------------- By Robert M. Lovejoy Jr
Vincent A. Laurentino Jr. --------------------------------
Name: Robert M. Lovejoy, Jr.
Title: Vice President
STATE OF CONNECTICUT)
) ss.: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 25 day of
January, 1996, by Robert M. Lovejoy, Jr., Vice President of Frank's Nursery &
Crafts, Inc., a Michigan corporation, on behalf of the corporation.
Vt A Lt J
------------------------------
Vincent A. Laurentino Jr.
Commissioner of Superior Court
<PAGE> 31
SCHEDULE A-1
479 East Main Street, Branford, Connecticut
All that certain piece or parcel of land situated in the Town of Branford,
County of New Haven and State of Connecticut, bounded and described as follows:
Commencing at a point, said point being located at the northwest corner
of land now or formerly of Anthony J. Massaro and Frances A. Massaro, on
the southerly line of East Main Street, said point being a Connecticut
Highway Department Monument.
Thence southeasterly, bounded northeasterly by land now or formerly of
Anthony J. & Frances A. Massaro, the following four (4) courses:
S-19-15-51-E, 59.61 feet to a fence post,
S-20-17-10-E, 159.67 feet to a fence post,
S-21-42-22-E, 32.08 feet to the easterly face of a stone wall,
S-20-13-30-E, 146.09 feet along said easterly face to a point.
Thence, S-79-28-10-W,
bounded southeasterly by land now or formerly of Todds Hill Investment
Circle, Trustee, and land now or formerly of G. M. Associates, each in
part, a distance of 434.36 feet to a point.
Thence, N-10-31-50-W,
bounded southwesterly by Business Park Drive, a distance of 410.34 feet to
a point.
Thence, northeasterly,
bounded by the intersection of Business Park Drive and East Main Street,
following the arc of a curve to the right having a radius of 30.00 feet,
and an arc length of 51.44 feet to a point.
Thence, N-87-42-50-E,
bounded northwesterly by East Main Street, a distance of 336.61 feet to the
point and place of commencement.
<PAGE> 32
SCHEDULE A-2
361 Scott Swamp Road, Farmington, Connecticut
A certain piece or parcel of land situated in the Town of Farmington,
County of Hartford and State of Connecticut, as more particularly
described as follows:
Beginning at a Connecticut Highway Department Monument at the northwesterly
corner of the parcel herein described, said monument is located on the
southeasterly highway line of U.S. Route 6, also known as Scott Swamp Road.
Thence S 66 degrees-33'-03" E 320.60' to a iron pin.
Thence S 01 degrees-58'-40" W 464.00' to a iron pin on the northerly property
line of Rejean Carrier.
The previous two courses are along the westerly and southerly property lines of
Southwest Village of Farmington, Limited Partnership.
Thence S 81 degrees-17'-29" W 384.71' to a iron pin on the northerly property
line of Rejean Carrier.
Thence N 12 degreees-57'-58" W 466.00' to a iron pin on the easterly property
line of Rejean Carrier.
Thence N 46 degrees-57'-25" E 283.47' along the southeasterly side of United
States Route 6 to the point and place of beginning.
Together with a permanent right-of-way for ingress and egress, in
common with others, as set forth in a Permanent Right-of-Way Easement and
Maintenance Agreement from Stephen Realty & Development, Inc. to Farmington
Colonnade Associates and Flower Time, Inc. dated May 19, 1988 and recorded in
the Farmington Land records in Volume 382, Page 327.
<PAGE> 33
SCHEDULE A-3
400 Talcottville Road, Vernon, Connecticut
A certain piece or parcel of land situated in the Town of Vernon,
County of Tolland, and State of Connecticut being more particularly bounded and
described as follows:
Beginning at an iron pin set at the northwesterly corner of the parcel
herein described, said iron pin is located on the easterly highway line of
Connecticut Route 83 also known as Talcottville Road, said iron pin being
further described as marking the southwesterly property corner of land of Gerald
and Marsha Stevenson.
Thence N 79-06'-21" E 528.16' to an iron pin found at the northeasterly
property corner of the tract herein described, said iron pin is located on the
westerly property line of land of Richard J. Jr. and Carolyn Tischofer. The
previously described line runs along the southerly property line of said
Stevenson and land of Richard B. Dion.
Thence S 01-57'-24" W 106.08' to an iron pin found, said iron pin marks
the southwesterly property corner of land of said Tischofer and the
northwesterly property corner of land of Archangelo A. and Joann H. Damato.
Thence S 04-00'-57" W 85.39' to a point on the westerly property line
of said Damato.
Thence S 02-06'-35" W 304.5' to an iron pin set on the westerly
property line of Cherie A. Alexander. The previous course runs along the
westerly property line of said Damato, Oakmoor Drive and said Alexander.
Thence S 10-27'-44" W 258.98' to an iron pin set at the southeasterly
corner of the tract herein described, said iron pin along marks the
northeasterly property corner of land of Alice C. Jarvis, the previously
described line runs along the westerly property line of said Alexander and land
of Patrick and Unda M. Hennessey.
Thence N 74-10'15" W 692.81' to an iron pin set at the southwesterly
property corner of the tract herein described. Said iron pin being on the
easterly highway line of Connecticut Route 83, a/k/a Talcottville Road. The
previously described line runs along the northerly property line of Alice C.
Jarvis.
Thence N 25-04'-32" E 509.00' to an iron pin set at the northwesterly
property corner of the tract herein described and being the point and place of
beginning. The previously described line runs along the easterly highway line
of Connecticut Route 83, a/k/a Talcottville Road.
<PAGE> 34
SCHEDULE A-4
198 Queen Street, Southington, Connecticut
A certain piece or parcel of land situated in the Town of Southington, County
of Hartford and State of Connecticut as more particularly described as follows:
Commencing at a point, said point being distant 644.80 feet
southwesterly of the southerly street line of Town Line Road, as
measured along the northwesterly right of way line of Queen Street
(Conn. Route 10). Said point also being the northeasterly corner of the
parcel herein described;
thence southwesterly bounded southeasterly by Queen St. (Conn. Rte. 10)
the following two courses:
S 36-40-00 W, 350.21 feet and
S 43-34-00 W a distance of 176.75 feet to a point;
thence N 78-47-50 W bounded southwesterly by land now or formerly
Janet Likley a distance of 349.61 feet to a point;
thence N 26-35-40 E bounded northwesterly by Penn Central Railroad a
distance of 618.08 feet to a point;
thence southeasterly bounded northeasterly by land now or formerly of
Harwinton High View Acres, Gagnon Trucking Co. and Donald Bilodeau each
in part the following two courses:
S 62-01-30 E, 165.75 feet and
S 61-54-30 E a distance of 284.31 feet to the point of commencement
<PAGE> 35
SCHEDULE A-5
656 Silver Lane, East Hartford, Connecticut
A certain piece or parcel of land situated in the Town of East Hartford
County of Hartford and State of Connecticut, being more particularly
described as follows:
Beginning at the southeasterly corner of the tract herein described, said point
is 128.09' westerly, as measured along the northerly highway line of Silver
Lane from a C.H.D. monument.
Then S 79 degrees-02'-30" W, 402.00' along the northerly highway line of Silver
Lane to a point.
Thence N 10 degrees-57'-30" W, 150.00' along the easterly property line of land
N/F DiBattista to a point.
Thence S 79 degrees-01'-10" W, 210.57' along the northerly property line of land
N/F DiBattista, N/F DiBattista, Leavitt, Lemire, and Pompa, in part by each to
a point.
Thence N 10 degrees-58'-50" W, 184.80' along the easterly property line of land
N/F Pasek, Colon, and Kearns in part by each to a point.
Thence N 79 degrees-01'-10" E, 145.50' along the southerly property line of
land N/F Shea to a point.
Thence S 00 degrees-37'-03" W, 27.34' along the westerly street line of Gould
Circle to a point.
Thence in a general easterly direction by an arc of a curve to the left along
Gould Circle, having a radius of 50.00', a central angle of 180
degrees-00'-00' and length of 157.08' to a point.
Thence N 22 degrees-34'-57' W, 83.50' along the easterly street line of Gould
Circle to a point.
Thence N 74 degrees-58'-35" E, 172.54' along the southerly property line of
land N/F Weingartner to a point.
Thence S 73 degrees-57'-50" E, 42.99' along the southerly property line of land
N/F Publiese to a point.
Thence N 79 degrees-02'-30" E, 179.03' along the southerly property line of
land N/F William F. Grant Jr. Trust to a point.
Thence S 10 degrees-57'-30" E, 382.53' along the westerly property line of land
N/F William F. Grant Jr. Trust to the point and place of beginning.
Together with an easement within the property for ingress and egress in favor
of Frank's Nursery & Crafts, Inc., in common with others.
Said easement is reflected in the Mutual Easement Agreement as recorded in
Volume 1019, Page 215 and also described as follows: 25 Feet wide and
parallel to the easterly boundary line extending from Silver Lane northerly
382.53' to the southerly boundary line of N/F William F. Grant Jr.
Trust.
<PAGE> 36
SCHEDULE B
MORTGAGE NOTE
$4,950,000.00 Stamford, Connecticut
January 25, 1996
FOR VALUE RECEIVED, FRANK'S NURSERY & CRAFTS, INC., a Michigan
corporation having an address at 6501 East Nevada, Detroit, Michigan 48243
("Maker") promises to pay to the order of PEOPLE'S BANK, a Connecticut banking
corporation having an office at Bridgeport Center, 850 Main Street, Bridgeport,
Connecticut 06604-4913 ("Payee"), or any subsequent assignee or holder hereof
(Payee or any subsequent assignee or holder hereof sometimes being hereinafter
referred to as "Holder"), at the office of Payee, or at such other place as
Holder may designate from time to time in writing, the principal sum of FOUR
MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($4,950,000.00),
together with: (i) interest on the principal balance of this Note outstanding
from time to time, from the date hereof until said balance shall have been paid
in full, at the rate or rates and in the manner hereinafter provided; (ii) all
amounts other than principal and interest which Maker shall be obligated to pay
under this Note; (iii) all amounts which may be or become due under the
Mortgage (as hereinafter defined) or any of the other Loan Documents (as
defined in the Mortgage); (iv) all costs and expenses, including reasonable
attorneys' and appraisers' fees, incurred by Holder in collecting or attempting
to collect the indebtedness evidenced by this Note, or in enforcing any of the
Loan Documents or protecting or sustaining the lien thereof or in any
litigation or controversy arising from or connected with this Note or any of
the other Loan Documents; and (v) all taxes or duties assessed upon the
indebtedness evidenced by this Note or by any of the other Loan Documents or
upon the Mortgaged Property (as hereinafter defined). All amounts owing under
this Note shall be payable in legal tender of the United States of America.
1. Interest Accrual. The principal balance of the indebtedness
evidenced by this Note outstanding from time to time shall bear interest at a
fixed rate per annum (the "Interest Rate") equal to seven and eight-tenths
percent (7.8%). Interest shall be calculated on the daily unpaid principal
balance of the indebtedness evidenced by this Note based on a 360-day year,
provided that interest shall be due for the actual number of days elapsed
during each period for which interest is being charged.
2. Interest and Principal Payments. Equal monthly payments of
principal and interest in the amount of Forty Six Thousand Seven Hundred
Thirty-Five and 03/100 Dollars ($46,735.03) per month, which
monthly payment amount is based on
<PAGE> 37
-2-
an assumed fifteen (15) year amortization schedule, shall be due and payable on
the first day of March, 1996, and on the first day of each and every month
thereafter until the Maturity Date (as hereinafter defined). If not sooner
paid, all accrued and unpaid interest shall be due and payable at the earlier
to occur of the Maturity Date or the acceleration by Holder of all indebtedness
evidenced by this Note following the occurrence of an Event of Default (as
hereinafter defined).
3. Maturity Date. All indebtedness evidenced by this Note, and all
other sums payable hereunder, if not sooner paid in accordance with this Note,
shall be due and payable in full on the earlier to occur of (i) February 1,
2001, or (ii) acceleration by Holder following the occurrence of an Event of
Default (the "Maturity Date").
4. Business Days. Any payment under this Note which is stated to be
due on a day other than a "Business Day" (a day on which banks are open for
business in Bridgeport, Connecticut) shall be made on the next succeeding
Business Day, and any such extension of time shall be included in the
computation of the amount of interest to be paid; provided, however, that, if
any such extension would cause any payment to be payable in the next following
calendar month, such payment shall be made on the next preceding Business Day.
5. Prepayments. (a) Maker may prepay the indebtedness evidenced by
this Note, in whole or in part, at any time upon thirty (30) days prior written
notice to Holder (the "Prepayment Notice") only if Maker shall indemnify Holder
and hold Holder harmless from and against, and pay to Holder, at any time of
such prepayment, the Prepayment Fee (as hereinafter defined). The "Prepayment
Fee" shall be the greater of (i) any Net Loss (as hereinafter defined) that
Holder sustains or incurs as a result of such prepayment; and (ii) one percent
(1%) of the principal amount of the indebtedness evidenced by this Note which
is prepaid. As used herein, the term "Net Loss" means the Discounted Cost of
Funds Differential (as hereinafter defined).
(b) The "Discounted Cost of Funds Differential" shall be computed by
Holder as follows:
(i) Holder shall first determine the Original Cost of Funds Rate
(as hereinafter defined). The "Original Cost of Funds Rate" shall mean
five and 83/100 percent (5.83%) per annum.
<PAGE> 38
-3-
(ii) Holder shall calculate the monthly interest that would be
earned on the principal amount being prepaid at the Original Cost of Funds Rate
for each month remaining until February 1, 2001 (the "Termination Date"). The
result is the "Monthly Cost of Funds Payment."
(iii) Holder shall then calculate the monthly interest that
would be earned by reinvesting the principal portion of the amount being prepaid
at the Reinvestment Rate (as hereinafter defined) for each month remaining until
the Termination Date. The result is the "Monthly Reinvestment Payment". The
"Reinvestment Rate" shall mean the rate identified by Holder, as of the date
Holder receives the Prepayment Notice, as the rate available to Holder and other
money center banks doing business in Connecticut (as published in the applicable
Federal Reserve statistical release designated by Holder) for the investment in
U.S. Treasury Obligations ("Treasury Obligations") equal to the principal amount
prepaid, with maturities closest to, or coterminous with, the Termination Date.
If, for any reason, a quotation is unavailable for the Termination Date,
quotations for the next preceding date for which such quotations are available
shall be used. If Holder identifies more than one Treasury Obligation having
the same maturity date, the Treasury Obligation having a coupon interest rate
closest to the Original Cost of Funds Rate shall be used.
(iv) Each Monthly Reinvestment Payment shall then be
subtracted from the corresponding Monthly Cost of Funds Payment. The result, if
positive, is the "Monthly Payment Differential." The Monthly Payment
Differential shall in no event be less than zero.
(v) Each Monthly Payment Differential from the prepayment
date to the Termination Date shall then be discounted to present value at the
Reinvestment Rate on a monthly basis. The result is the "Discounted Monthly
Payment Differential".
(vi) All of the Discounted Monthly Payment Differential
amounts shall then be added together and such aggregated amount shall constitute
the Discounted Cost of Funds Differential.
(c) Maker shall be responsible, in addition to the Prepayment Fee, for
the payment of any reasonable administrative
<PAGE> 39
-4-
costs incurred by Holder in connection with such prepayment. If the
indebtedness evidenced by this Note shall be accelerated for any reason
whatsoever, the applicable Prepayment Fee in effect as of the date of such
acceleration shall be paid. When calculating the Prepayment Fee applicable to
a prepayment resulting from (i) the application by Holder of insurance proceeds
or condemnation proceeds toward the prepayment of the indebtedness evidenced by
this Note, and (ii) any additional prepayment which Maker may elect to make in
accordance with the terms of Section 22 of the Mortgage in order to obtain a
partial release of the Mortgage encumbering the portion of the Mortgaged
Property which was the subject of the casualty or condemnation which resulted
in Holder's application of insurance proceeds or condemnation proceeds toward
the prepayment of the indebtedness evidenced by this Note, the Prepayment Fee
shall be equal to the Net Loss that Holder sustains or incurs as a result of
said prepayment and shall not be equal to the greater of said Net Loss and 1%
of the amount prepaid. All partial prepayments of principal hereunder shall be
accompanied by and applied first to the payment of costs and expenses related
thereto, unpaid late charges, then to accrued and unpaid interest and the
balance on account of the unpaid principal in the inverse order of maturity.
Such partial prepayments shall not affect Maker's obligation to make the
regular monthly installments of principal and interest required pursuant to
Section 2 above until the indebtedness evidenced by this Note is fully paid.
6. Events of Default. If an Event of Default shall occur then, at the
option of Holder, all amounts remaining unpaid under this Note shall
immediately become due and payable. Any failure to exercise any such option
or any other right under this Note or under any of the other Loan Documents, or
any delay in such exercise, shall not constitute a waiver of the right to
exercise such option or such other right at a later time so long as such Event
of Default shall remain uncured, and shall not constitute a waiver of the right
to exercise such option or other right if any other Event of Default shall
occur. The acceptance by Holder of payment of any sum payable under this Note
after the due date of such payment shall not be a waiver of Holder's
right to require prompt payment when due of all other sums payable under this
Note or of Holder's right to declare a default for failure to make prompt
payment in full.
7. Default Rate and Late Charge. (a) Upon the occurrence of any
Event of Default, whether or not the Maturity Date of this Note shall have been
accelerated, the entire principal indebtedness evidenced by this Note shall
bear interest from the
<PAGE> 40
-5-
date of occurrence of such Event of Default until collection (including any
period of time occurring after judgment), at the "Default Rate," which shall
mean and be the lower of (i) the highest interest rate per annum allowed by
applicable law, or (ii) the interest rate per annum equal to the sum of five
percent (5%) plus the Interest Rate.
(b) If Holder shall not receive the full amount of any payment
due under the terms of this Note within ten (10) days after the due date of
such payment (and, solely with respect to the final payment of principal and
interest which is due and payable on the Maturity Date, within thirty (30) days
following the Maturity Date), then Maker shall pay to Holder, upon demand, a
late charge equal to five percent (5%) of such payment, which is intended,
without exclusion, to cover the additional expenses involved in handling such
overdue payment. Such charge shall be in addition to, and not in lieu of, any
other remedy Holder may have and shall be in addition to, and not in lieu of,
Maker's obligation to pay any reasonable fees and charges of any agents or
attorneys employed in the event of any default hereunder.
8. Event of Default. For purposes of this Note, the term "Event of
Default" (i) shall mean the failure by Maker to pay Holder any sum owed
hereunder on or prior to the tenth (10th) day following the due date thereof,
and (ii) shall have the meaning ascribed to such term in, and shall include any
event which would constitute an Event of Default under, the Mortgage. The
Connecticut Mortgage (as hereinafter defined (and the New York Mortgage (as
hereinafter defined) are cross defaulted.
9. Waivers and Consents. Maker and each endorser, guarantor and
surety of this Note, and each other person liable or who shall become liable
for all or any part of the indebtedness evidenced by this Note shall:
(a) waive demand, presentment, protest, notice of protest,
notice of dishonor, diligence in collection, notice of nonpayment and
all notices of a like nature; and
(b) consent to (i) all renewals, extension or modifications of
this Note or the other Loan Documents (including any affecting the time
of payment), (ii) all advances under this Note or the other Loan
Documents, (iii) the release, surrender, exchange or substitution of
all or any part of the security for the indebtedness evidenced by this
Note, or the taking of any additional security, (iv) the release of any
or all other persons from liability,
<PAGE> 41
-6-
whether primary or contingent, for the indebtedness evidenced by this
Note or for any related obligations, and (v) the granting of any other
indulgences to any such person.
Any such renewal, extension, modification, advance, release, surrender,
exchange, substitution, taking or indulgence may take place without notice to
any such person and, whether or not any such notice is given, shall not impair
the liability of any such person.
10. Lien and Right of Setoff. Maker and each endorser, guarantor
and surety of this Note, and each other person liable or who shall become
liable for all or any part of the indebtedness evidenced by this Note, hereby
give Holder a lien and right of setoff for all of their respective liabilities
in respect of such indebtedness upon and against all of their respective
deposits, certificates of deposit, credits and property (other than the
Mortgaged Property), now or hereafter in the possession or control of Holder or
in transit to Holder. Holder may at any time apply the same, or any part
thereof, to any liability of Maker or any such other person, whether matured or
unmatured.
11. Partial Invalidity. If any one or more of the provisions of
this Note shall for any reason be held to be invalid, illegal or unenforceable,
in whole or in part, or in any respect, or if any one or more of the provisions
of this Note shall operate, or would prospectively operate, to invalidate this
Note, then such provision or provisions only shall be deemed to be null and
void and of no force or effect and shall not affect any other provision of this
Note, including, without limitation, the obligation of Maker to pay the
indebtedness evidenced by this Note, and the remaining provisions of this Note
shall remain operative and in full force and effect, shall be valid, legal and
enforceable, and shall in no way be affected, prejudiced or disturbed thereby.
12. Modification or Termination; Time of Essence; Governing Law.
This Note may not be modified or terminated orally, but only by a written
instrument signed by the party against whom enforcement of any such
modification or termination is sought. Time is and shall be of the essence in
the performance of all obligations under this Note. This Note shall be
governed by and construed in accordance with the laws of the State of
Connecticut.
<PAGE> 42
-7-
13. Gender. As used in this Note, words of any gender shall be
deemed to apply equally to any other gender, the plural shall include the
singular and the singular shall include the plural (as the context shall
require), and the word "person" shall refer to individuals, entities,
authorities and other natural and juridical persons of every type.
14. Joint and Several Obligation. If this Note is now or
hereafter shall be, signed by more than one person, it shall be the joint and
several obligation of all such persons (including, without limitation, all
makers, endorsers, guarantors and sureties, if any) and shall be binding on all
such persons and their respective heirs, executors, administrators, legal
representatives, successors and assigns. This Note and all covenants,
agreements and provisions set forth in this Note shall inure to the benefit of
Holder and its successors and assigns.
15. Usury. It is the intention of Maker and Holder to conform
strictly to the Usury Law (as hereinafter defined). Accordingly, it is agreed
that, notwithstanding any provisions to the contrary in this Note, in any of
the other Loan Documents or in any documents otherwise relating hereto, the
aggregate of all interest, or consideration constituting interest under the
Usury Law, that is taken, reserved, contracted for, charged or received under
this Note or under any of the aforesaid documents or otherwise in connection
with this loan transaction shall under no circumstances exceed the maximum
amount of interest allowed by the Usury Law. If any excess interest is
provided for in this Note, in any of the other Loan Documents or in any
documents relating hereto, then (a) the provisions of this paragraph shall
govern and control, (b) neither Maker nor Maker's successors or assigns shall
be obligated to pay the amount of such interest to the extent that it is in
excess of the maximum amount of interest allowed by the Usury Law, (c) any such
excess shall be deemed a mistake and canceled automatically and, if theretofore
paid, shall be applied as hereinafter set forth or, to the extent such
application shall violate the Usury Law and exceed the Maximum Legal Rate of
Interest (as hereinafter defined), refunded to Maker, and (d) the effective
rate of interest shall be automatically reduced to the Maximum Legal Rate of
Interest. To the extent permitted by the Usury Law and to the extent the
Maximum Legal Rate of Interest is not exceeded, all sums paid or agreed to be
paid to Holder for the use, forbearance or detention of the indebtedness
evidenced by this Note shall be amortized, prorated, allocated and spread
throughout the full term of this Note. For purposes of this Note, "Usury Law"
shall mean any present or future law of the State of Connecticut (meaning the
<PAGE> 43
-8-
internal laws of said state and not the laws of said state relating to choice
of law), the United States of America or any other jurisdiction, which is
applicable to the interest and other charges under this Note, under any of the
Loan Documents or under any documents otherwise relating hereto and to the
classification of Maker under such law. For purposes of this Note, the
"Maximum Legal Rate of Interest" shall mean the maximum effective contract rate
of interest that Holder may from time to time, by agreement with Maker, legally
charge Maker and in regard to which Maker would be prevented successfully from
raising the claim or defense of usury under the Usury Law as now or hereafter
construed by courts of appropriate jurisdiction.
16. Certification as a Business Transaction. TO INDUCE HOLDER TO
ENTER INTO THE COMMERCIAL LOAN TRANSACTION EVIDENCED BY AND SECURED BY THE LOAN
DOCUMENTS, MAKER AGREES THAT THE SAID TRANSACTION IS COMMERCIAL AND NOT A
CONSUMER TRANSACTION AND, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, WAIVES
ANY RIGHT TO NOTICE OF AND HEARING OF THE RIGHT OF HOLDER UNDER CHAPTER 903a OF
THE CONNECTICUT GENERAL STATUTES, REVISION OF 1958, AS AMENDED, OR OTHER
STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZES HOLDER'S
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
17. Taxes on Note. Maker agrees to pay all taxes or duties
assessed upon this Note against the Holder or other owner of this Note or the
debt evidenced hereby, or the Mortgage or the Mortgaged Property.
18. Security. The indebtedness evidenced by this Note is secured,
in part, by that certain Mortgage Deed and Security Agreement (the "Connecticut
Mortgage") and by that certain Mortgage and Security Agreement (the "New York
Mortgage") , both encumbering certain real property located at and commonly
known as 479 East Main Street, Branford, Connecticut, 361 Scott Swamp Road,
Farmington, Connecticut, 400 Talcottville Road, Vernon, Connecticut, 1198 Queen
Street, Southington, Connecticut, 656 Silver Lane, East Hartford, Connecticut
and Route 9, West Kieffer Lane, Kingston, New York. The term "Mortgage," as
used herein, shall mean the Connecticut Mortgage and the New York Mortgage
collectively. The term "Mortgaged Property," as used herein, shall have the
meaning ascribed to such term in the Mortgage, and the term "Loan Documents,"
as used herein, shall have the meaning ascribed to such term in the Mortgage.
<PAGE> 44
-9-
IN WITNESS WHEREOF, the undersigned has caused this instrument to be
duly executed as of the date first written above.
FRANK'S NURSERY & CRAFTS, INC.
By: /s/:
--------------------------
Name: Robert M. Lovejoy, Jr.
Title: Vice President
<PAGE> 45
SCHEDULE C-1
------------
PERMITTED ENCUMBRANCES
----------------------
BRANFORD, CONNECTICUT - STORE NO. 631
-------------------------------------
1. Real Estate Taxes and Assessments (including liens not yet due and
payable) as follows:
Taxes to the Town of Branford on the List of October 1, 1995, not yet
due and payable.
2. Water use charges to the South Central Connecticut Regional Water
Authority, when due and payable.
3. Grant of permanent easement from Henry E. Miller and Theresia J.
Miller to Southern New England Telephone Company dated April 15, 1948
and recorded in Volume 126 at Page 218 of the Branford Land Records.
4. Agreement and Easement from Cosgrove Company, Inc. to Sewer Authority
of the Town of Branford dated September 16, 1970 and recorded in
Volume 231 at Page 236 of the Branford Land Records.
5. Electrical Distribution Easement from Todds Hill Investment Circle to
The Connecticut Light and Power Company dated July 20, 1983 and
recorded in Volume 351 at Page 758 of the Branford Land Records.
6. Notice of Variance from the Town of Branford Planning and Zoning
Commission dated March 1, 1984 and recorded in Volume 358 at Page 161
of the Branford Land Records.
<PAGE> 46
SCHEDULE C-2
------------
PERMITTED ENCUMBRANCES
----------------------
FARMINGTON, CONNECTICUT - STORE NO. 636
---------------------------------------
1. Taxes to the Town of Farmington on the Grand List of October 1, 1995,
not yet due and payable.
2. Water Use Charges to the Unionville Water Company, payments of which
are current.
3. Easement in favor of the Unionville Water Company dated December 29,
1986 and recorded in Volume 359, Page 315 of the Farmington Land
Records.
4. Agreement by and between Flower Time, Inc., Farmington Colonnade
Associates and Stephen Realty & Development, Inc. dated May 19, 1988
and recorded August 19, 1988 in Volume 382, Page 331 of the Farmington
Land Records.
5. Permanent Right of Way and Maintenance Agreement by and between
Stephen Realty & Development, Inc., Farmington Colonnade Associates
and Flower Time, Inc. dated May 19, 1988 and recorded August 19, 1988
in Volume 382, Page 327 of the Farmington Land Records.
<PAGE> 47
SCHEDULE C-3
------------
PERMITTED ENCUMBRANCES
----------------------
VERNON, CONNECTICUT - STORE NO. 632
-----------------------------------
1. Taxes to the Town of Vernon on the Grand List of October 1, 1995, not
yet due and payable.
2. Water Use charges to Connecticut Water Company not yet due and
payable.
3. Sewer Use charges to the Town of Vernon not yet due and payable.
4. Hold Harmless Agreement from Flower Time, Inc. to the Planning and
Zoning Commission of the Town of Vernon dated July 16, 1985 and
recorded July 18, 1985 in Volume 529, Page 25 of the Vernon Land
Records.
5. Water Main Easement from Flower Time, Inc. to The Connecticut Water
Company dated October 17, 1985 and recorded November 1, 1985 in Volume
542, Page 49 of the Vernon Land Records.
6. Developers Permit Agreement between Water Pollution Control Authority
and Flower Time, Inc. dated September 17, 1985 and recorded on
November 15, 1985 in Volume 543, Page 326 of the Vernon Land Records.
7. Perpetual Right-of-Way Easement in favor of Alice C. Jarvis granted by
Frank's Nursery & Crafts, Inc. dated June 20, 1991 and recorded August
5, 1991 in Volume 842, Page 42 of the Vernon Land Records.
NOTE: Special Permit from Planning and Zoning Commission of the Town
of Vernon to John J. Giulietti and Alma Lentz Giulietti dated May 22,
1985 and recorded May 30, 1985 in Volume 523, Page 164 of the Vernon
Land Records.
<PAGE> 48
SCHEDULE C-4
------------
PERMITTED ENCUMBRANCES
----------------------
SOUTHINGTON, CONNECTICUT - STORE NO. 633
----------------------------------------
1. Taxes to the Town of Southington on the Grand List of October 1, 1995,
not yet due and payable.
2. Sewer Use charges to the Town of Southington, not yet due and payable.
3. Right of Way Easement from Rose Joseph and Joseph Joseph to American
Telephone and Telegraph company dated April 2, 1973 and recorded in
Volume 253, Page 238 of the Southington Land Records.
<PAGE> 49
SCHEDULE C-5
------------
PERMITTED ENCUMBRANCES
----------------------
EAST HARTFORD, CONNECTICUT - STORE NO. 643
------------------------------------------
1. Taxes to the Town of East Hartford on the Grand List of October 1,
1995, not yet due and payable.
2. Water Use Charges to the Metropolitan District Commission, the payment
of which are current.
3. Mutual Easement by and between William F. Grant and Diana I. Grant,
Augie & Ray's of Silver Lane, Inc. and Flower Time, Inc. dated
December 23, 1986 and recorded in Volume 1019, Page 215 of the East
Hartford Land Records.
4. Certificate of Certain Rights in favor of the Metropolitan District
Commission dated July 21, 1958 and recorded in Volume 283, Page 329 of
the East Hartford Land Records.
5. Easement along Silver Lane dated January 19, 1954 and recorded in
Volume 213, Page 453 of the East Hartford Land Records.
6. Agreement with the Metropolitan District dated April 15, 1987 and
recorded in Volume 1055, Page 198 of the East Hartford Lana Records.
<PAGE> 1
EXHIBIT 4.03(c)
ASSIGNMENT OF RENTS AND LEASES
THIS ASSIGNMENT OF RENTS AND LEASES (this "Assignment") is made as of
the 25th day of January, 1996, by FRANK'S NURSERY & CRAFTS, INC., a Michigan
corporation, having a place of business at 6501 East Nevada, Detroit,
Michigan 48243 ("Assignor"), to and for the benefit of PEOPLE'S BANK, a
Connecticut banking corporation having a mailing address of Bridgeport Center,
850 Main Street, Bridgeport, Connecticut 06604- 4913 ("Assignee"),
FOR VALUE RECEIVED, Assignor hereby grants, transfers and assigns to
Assignee, its successors and assigns, all of the right, title and interest of
Assignor in and to any and all leases, subleases, licenses, sublicenses or
rental agreements of any nature whatsoever, and all extensions, amendments,
renewals and guarantees thereof, now or at any time during the term of this
agreement (collectively, the "Leases") affecting or demising portions or all of
the premises described in Exhibit A-1 through Exhibit A-5 attached hereto and
made a part hereof (individually and collectively, the "Premises"),
TOGETHER WITH ALL RENTS, INCOME, AND PROFITS ARISING FROM THE LEASES
AND ANY AND ALL EXTENSIONS, AMENDMENTS, RENEWALS AND GUARANTEES THEREOF,
FOR THE PURPOSE OF SECURING:
1. Payment of the indebtedness evidenced by that certain Mortgage
Note (the "Note") of even date herewith (including any extensions, renewals or
modifications thereof) in the original principal sum of FOUR MILLION NINE
HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($4,950,000.00) made by Assignor,
payable to the order of Assignee and secured by, among other things, (i) that
certain Mortgage Deed and Security Agreement encumbering the Premises (the
"Mortgage") from Assignor to Assignee of even date herewith and recorded
herewith.
2. Payment of all advances and other sums with interest thereon
becoming due and payable to Assignee under the provisions hereof or under the
provisions of the Note or the Mortgage or any sums secured by said instruments
or any other instrument evidencing or securing the loan evidenced by the Note.
3. Performance and discharge of each and every obligation,
covenant and agreement of Assignor herein or arising under the Note, the
Mortgage or any other such instrument.
TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns
forever, to its and their own proper use and behoof.
<PAGE> 2
-2-
ASSIGNOR WARRANTS that Assignor is the owner of each of the Leases,
there has been no prepayment or anticipation of rent provided for in the Leases
(except for security deposits, if any), the Leases have not been amended or
modified, except as set forth herein, and no default or grounds for
counterclaim or setoff exist under the Leases.
ASSIGNOR AGREES:
4. Faithfully to abide by, perform, and discharge each and every
obligation, covenant, and agreement of the Leases by lessor to be performed; at
the sole cost and expense of Assignor, to enforce or secure the performance of
each and every obligation, covenant, condition, and agreement of the Leases by
the lessees to be performed; not to enter into any Leases or to modify, extend,
or in any way alter the terms of any Leases or accept a surrender thereof; not
to anticipate the rents thereunder, or to waive, excuse, condone, or in any
manner release or discharge the lessees thereunder of or from the obligations,
covenants, conditions and agreements by said lessees to be performed, including
the obligation to pay the rental called for thereunder in the manner and at the
place and time specified therein, except with the prior express written consent
of Assignee, and Assignor does by these presents expressly release, relinquish,
and surrender unto Assignee all its right, power, and authority to amend,
modify, cancel, or in any way alter the terms or provisions of the Leases.
5. At Assignor's sole cost and expense, to appear in and defend
any action or proceeding arising under, growing out of or in any manner
connected with the Leases or the obligations, duties, or liabilities of lessor
and lessees thereunder, and to pay all costs and expenses of Assignee,
including attorneys' fees in a reasonable sum in any action or proceeding
concerning the Leases in which Assignee may appear.
6. That Assignee, if Assignor fails to make any payment or to do
any act as herein provided, may, but without obligation so to do, and following
reasonable notice to Mortgagor (except in the case of an emergency, when no
such prior notice shall be required), and without releasing Assignor from any
obligation hereof, make or do the same in such manner and to such extent as
Assignee may deem necessary to protect the security hereof, including
specifically, without limiting its general powers, the right to appear in and
defend any action or proceeding purporting to affect the security hereof or the
rights or powers of
<PAGE> 3
-3-
Assignee, and also the right to perform and discharge each and every
obligation, covenant and agreement of lessor in the Leases contained; and in
exercising any such powers to pay necessary costs and expenses, employ counsel
and incur and pay reasonable attorneys' fees.
7. To pay promptly upon demand all sums expended by Assignee
under the authority hereof, together with interest thereon at an interest rate
equal to the lesser of the Default Rate as defined in the Mortgage or the
highest interest rate permitted by law.
IT IS MUTUALLY AGREED THAT:
8. As long as Assignor's warranties herein shall be true and
Assignor shall not have defaulted in the payment of any indebtedness secured
hereby or in the performance of any obligation, covenant, or agreement herein
or in the Note, or the Mortgage, Assignor shall have a revocable license to
collect, but not more than one month prior to accrual, all rents, issues and
profits from the Premises. Such license may be revoked by Assignee, without
further notice to Assignor, upon the occurrence of an Event of Default as
defined in the Mortgage, or upon default by Assignor of any of the agreements
and obligations hereunder. Unless and until such license is so revoked,
Assignor shall hold such rents, issues and profits as a trust fund to be
applied first to pay all sums due promptly when due under the Note and the
Mortgage and then to pay all such operating expenses, including, without
limitation real property taxes and assessments, and water and sewer charges, of
the said property and then to perform all of its other obligations and
responsibilities under the Note and the Mortgage, whether before or after the
occurrence of an Event of Default, and the balance, if any, may be applied by
Mortgagor for its general purposes.
This Assignment is intended by Assignor and Assignee to create, and
shall be construed to create, an absolute assignment to Assignee subject only
to the terms and provisions hereof, and not as an assignment as security for
the performance of the obligations evidenced or secured by the Note or the
Mortgage, or any other indebtedness of Assignor.
9. Assignee may, at its option, without further notice and
without regard to the adequacy of security for the indebtedness hereby secured,
either in person or by agent, with or without bringing any action or
proceedings, or by a receiver to be appointed by a court, enter upon, take
possession of, manage and
<PAGE> 4
-4-
operate the Premises or any part thereof; make, cancel, enforce or modify any
of the Leases; obtain and evict tenants, and fix or modify rents, and do any
acts which Assignee deems proper to protect the security hereof, and either
with or without taking possession of said property, in its own name sue for or
otherwise collect and receive such rents, issues, and profits, including those
past due and unpaid, and apply the same, less costs and expenses of operation
and collection, including reasonable attorneys' fees, upon any indebtedness
secured hereby, and in such order as Assignee may determine. The entering upon
and taking possession of said property or the collection of such rents, issues
and profits and the application thereof as aforesaid, shall not cure or waive
any default or waive, modify or effect notice of default under the Notes or the
Mortgage or invalidate any act done pursuant to such notice. The exercise of
such rights shall not constitute a waiver of any of the remedies of Assignee
under the Note or the Mortgage or any other document or agreement.
10. Assignee shall not be obligated to perform or discharge, nor does
it hereby undertake to perform or discharge, by reason of this Assignment, and
Assignor shall and does hereby agree to indemnify and to hold Assignee harmless
from any and all liability, loss or damage which it may or might incur under
said leases or under or by reason of this Assignment and of and from any and
all claims and demands whatsoever which may be asserted against it by reason of
any alleged obligations or undertaking on its part to perform or discharge any
of the terms, covenants or agreements contained in the Leases; should Assignee
incur any such liability, loss, or damage under said leases or under or by
reason of this Assignment, or in the defense of any such claims or demands, the
amount thereof, including costs, expenses, and reasonable attorneys' fees,
shall be secured hereby, and Assignor shall reimburse Assignee therefor
immediately upon demand, together with interest as specified in paragraph 7
above.
11. Until the indebtedness secured hereby shall have been paid in
full, Assignor covenants and agrees to transfer and assign to Assignee any and
all subsequent leases of all or any part of the Premises upon the same or
substantially the same terms and conditions as are herein contained, and to
make, execute and deliver to Assignee upon demand, any and all instruments that
may be necessary therefor.
12. Upon the payment in full of all indebtedness secured hereby
and the recording of a full release of the Mortgage duly executed by Assignee,
this Assignment shall become and be void
<PAGE> 5
-5-
and of no effect without the necessity of any recorded release or reassignment
hereof, but the affidavit of any officer of Assignee, prior to the recording of
such a full release of the Mortgage, showing any part of said indebtedness
remaining unpaid shall be and constitute conclusive evidence of the validity,
effectiveness and continuing force of this Assignment, and any person may and
is hereby authorized to rely thereon.
13. This Assignment applies to, inures to the benefit of, and
binds all parties hereto, their heirs, legatees, devisees, administrators,
executors, successors and assigns. The term "lease" or "Lease" as used herein
means the lease or leases hereby assigned or any extension or renewal thereof
or any lease subsequently executed by Assignor covering the Premises or any
part thereof. In this Assignment, whenever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural, and conversely. All obligations of each Assignor
hereunder are joint and several.
14. All notices, demands, or documents of any kind which Assignee
may be required to or may desire to serve upon Assignor hereunder may be served
in accordance with the provisions of the Mortgage.
15. Assignor shall do, execute, acknowledge and deliver, at the
sole cost and expense of Assignor, all and every such further acts, deeds,
conveyances, mortgages, assignments, estoppel certificates, notices of
assignment, surveys, supplementary mortgages, financing statements, other
chattel instruments, transfers and assurances as Assignee may reasonably
require from time to time in order to better assure, convey, secure, assign,
transfer and confirm unto Assignee, the rights now or hereafter intended to be
granted to Assignee under this Assignment, any other instrument executed in
connection with this Assignment or any other instrument under which Assignor
may be or may hereafter become bound to convey, mortgage or assign to Assignee
for carrying out the intention or facilitating the performance of the terms of
this Assignment. Assignor hereby irrevocably appoints Assignee its
attorney-in-fact, coupled with an interest, to execute, acknowledge and deliver
for and in the name of Assignor any and all of the instruments mentioned in
this paragraph 15.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
<PAGE> 6
-6-
IN WITNESS WHEREOF, Assignor has executed this Assignment as of the
date first above written.
Witnesses: FRANK'S NURSERY & CRAFTS, INC.
Heidi Flusser
- ------------------------
Heidi Flusser
By: Robert M. Lovejoy Jr.
Vt A Lt J --------------------------------
- ------------------------- Name: Robert M. Lovejoy, Jr.
Vincent A. Laurentino Jr. Title: Vice President
<PAGE> 7
-7-
STATE OF CONNECTICUT)
) ss.: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 25 day of
January, 1996, by Robert M. Lovejoy, Jr., Vice President of Frank's Nursery &
Crafts, Inc., a Michigan corporation, on behalf of the corporation.
Vt A Lt J
---------------------------------
Vincent A. Laurentino Jr.
Commissioner of Superior Court
<PAGE> 8
EXHIBIT A-1
479 East Main Street, Branford, Connecticut
All that certain piece or parcel of land situated in the Town of Branford,
County of New Haven and State of Connecticut, bounded and described as follows:
Commencing at a point, said point being located at the northwest corner
of land now or formerly of Anthony J. Massaro and Frances A. Massaro, on
the southerly line of East Main Street, said point being a Connecticut
Highway Department Monument.
Thence southeasterly, bounded northeasterly by land now or formerly of
Anthony J. & Frances A. Massaro, the following four (4) courses:
S-19-15-51-E, 59.61 feet to a fence post,
S-20-17-10-E, 159.67 feet to a fence post,
S-21-42-22-E, 32.08 feet to the easterly face of a stone wall,
S-20-13-30-E, 146.09 feet along said easterly face to a point.
Thence, S-79-28-10-W,
bounded southeasterly by land now or formerly of Todds Hill Investment
Circle, Trustee, and land now or formerly of G. M. Associates, each in
part, a distance of 434.36 feet to a point.
Thence, N-10-31-50-W,
bounded southwesterly by Business Park Drive, a distance of 410.34 feet to
a point.
Thence, northeasterly,
bounded by the intersection of Business Park Drive and East Main Street,
following the arc of a curve to the right having a radius of 30.00 feet,
and an arc length of 51.44 feet to a point.
Thence, N-87-42-50-E,
bounded northwesterly by East Main Street, a distance of 336.61 feet to the
point and place of commencement.
<PAGE> 9
EXHIBIT A-2
361 Scott Swamp Road, Farmington, Connecticut
A certain piece or parcel of land situated in the Town of Farmington,
County of Hartford and State of Connecticut, as more particularly
described as follows:
Beginning at a Connecticut Highway Department Monument at the northwesterly
corner of the parcel herein described, said monument is located on the
southeasterly highway line of U.S. Route 6, also known as Scott Swamp Road.
Thence S 66 degrees-33'-03" E 320.60' to a iron pin.
Thence S 01 degrees-58'-40" W 464.00' to a iron pin on the northerly property
line of Rejean Carrier.
The previous two courses are along the westerly and southerly property lines of
Southwest Village of Farmington, Limited Partnership.
Thence S 81 degrees-17'-29" W 384.71' to a iron pin on the northerly property
line of Rejean Carrier.
Thence N 12 degrees-57'-58" W 466.00' to a iron pin on the easterly property
line of Rejean Carrier.
Thence N 46 degrees-57'-25" E 283.47' along the southeasterly side of United
States Route 6 to the point and place of beginning.
Together with a permanent right-of-way for ingress and egress, in
common with others, as set forth in a Permanent Right-of-Way Easement and
Maintenance Agreement from Stephen Realty & Development, Inc. to Farmington
Colonnade Associates and Flower Time, Inc. dated May 19, 1988 and recorded in
the Farmington Land records in Volume 382, Page 327.
<PAGE> 10
EXHIBIT A-3
400 Talcottville Road, Vernon, Connecticut
A certain piece or parcel of land situated in the Town of Vernon,
County of Tolland, and State of Connecticut being more particularly bounded and
described as follows:
Beginning at an iron pin set at the northwesterly corner of the parcel
herein described, said iron pin is located on the easterly highway line of
Connecticut Route 83 also known as Talcottville Road, said iron pin being
further described as marking the southwesterly property corner of land of Gerald
and Marsha Stevenson.
Thence N 79-06'-21" E 528.16' to an iron pin found at the northeasterly
property corner of the tract herein described, said iron pin is located on the
westerly property line of land of Richard J. Jr. and Carolyn Tischofer. The
previously described line runs along the southerly property line of said
Stevenson and land of Richard B. Dion.
Thence S 01-57'-24" W 106.08' to an iron pin found, said iron pin marks
the southwesterly property corner of land of said Tischofer and the
northwesterly property corner of land of Archangelo A. and Joann H. Damato.
Thence S 04-00'-57" W 85.39' to a point on the westerly property line
of said Damato.
Thence S 02-06'-35" W 304.5' to an iron pin set on the westerly
property line of Cherie A. Alexander. The previous course runs along the
westerly property line of said Damato, Oakmoor Drive and said Alexander.
Thence S 10-27'-44" W 258.98' to an iron pin set at the southeasterly
corner of the tract herein described, said iron pin along marks the
northeasterly property corner of land of Alice C. Jarvis, the previously
described line runs along the westerly property line of said Alexander and land
of Patrick and Unda M. Hennessey.
Thence N 74-10'15" W 692.81' to an iron pin set at the southwesterly
property corner of the tract herein described. Said iron pin being on the
easterly highway line of Connecticut Route 83, a/k/a Talcottville Road. The
previously described line runs along the northerly property line of Alice C.
Jarvis.
Thence N 25-04'-32" E 509.00' to an iron pin set at the northwesterly
property corner of the tract herein described and being the point and place of
beginning. The previously described line runs along the easterly highway line
of Connecticut Route 83, a/k/a Talcottville Road.
<PAGE> 11
EXHIBIT A-4
198 Queen Street, Southington, Connecticut
A certain piece or parcel of land situated in the Town of Southington, County
of Hartford and State of Connecticut as more particularly described as follows:
Commencing at a point, said point being distant 644.80 feet
southwesterly of the southerly street line of Town Line Road, as
measured along the northwesterly right of way line of Queen Street
(Conn. Route 10). Said point also being the northeasterly corner of the
parcel herein described;
thence southwesterly bounded southeasterly by Queen St. (Conn. Rte. 10)
the following two courses:
S 36-40-00 W, 350.21 feet and
S 43-34-00 W a distance of 176.75 feet to a point;
thence N 78-47-50 W bounded southwesterly by land now or formerly
Janet Likley a distance of 349.61 feet to a point;
thence N 26-35-40 E bounded northwesterly by Penn Central Railroad a
distance of 618.08 feet to a point;
thence southeasterly bounded northeasterly by land now or formerly of
Harwinton High View Acres, Gagnon Trucking Co. and Donald Bilodeau each
in part the following two courses:
S 62-01-30 E, 165.75 feet and
S 61-54-30 E a distance of 284.31 feet to the point of commencement
<PAGE> 12
EXHIBIT A-5
656 Silver Lane, East Hartford, Connecticut
A certain piece or parcel of land situated in the Town of East Hartford
County of Hartford and State of Connecticut, being more particularly
described as follows:
Beginning at the southeasterly corner of the tract herein described, said point
is 128.09' westerly, as measured along the northerly highway line of Silver
Lane from a C.H.D. monument.
Then S 79 degrees-02'-30" W, 402.00' along the northerly highway line of Silver
Lane to a point.
Thence N 10 degrees-57'-30" W, 150.00' along the easterly property line of land
N/F DiBattista to a point.
Thence S 79 degrees-01'-10" W, 210.57' along the northerly property line of land
N/F DiBattista, N/F DiBattista, Leavitt, Lemire, and Pompa, in part by each to
a point.
Thence N 10 degrees-58'-50" W, 184.80' along the easterly property line of land
N/F Pasek, Colon, and Kearns in part by each to a point.
Thence N 79 degrees-01'-10" E, 145.50' along the southerly property line of
land N/F Shea to a point.
Thence S 00 degrees-37'-03" W, 27.34' along the westerly street line of Gould
Circle to a point.
Thence in a general easterly direction by an arc of a curve to the left along
Gould Circle, having a radius of 50.00', a central angle of 180
degrees-00'-00' and length of 157.08' to a point.
Thence N 22 degrees-34'-57' W, 83.50' along the easterly street line of Gould
Circle to a point.
Thence N 74 degrees-58'-35" E, 172.54' along the southerly property line of
land N/F Weingartner to a point.
Thence S 73 degrees-57'-50" E, 42.99' along the southerly property line of land
N/F Publiese to a point.
Thence N 79 degrees-02'-30" E, 179.03' along the southerly property line of
land N/F William F. Grant Jr. Trust to a point.
Thence S 10 degrees-57'-30" E, 382.53' along the westerly property line of land
N/F William F. Grant Jr. Trust to the point and place of beginning.
Together with an easement within the property for ingress and egress in favor
of Frank's Nursery & Crafts, Inc., in common with others.
Said easement is reflected in the Mutual Easement Agreement as recorded in
Volume 1019. Page 215 and also described as follows: 25 Feet wide and
parallel to the easterly boundary line extending from Silver Lane northerly
382.53' to the southerly boundary line of N/F William F. Grant Jr.
Trust.
<PAGE> 1
EXHIBIT 4.03(d)
GUARANTY AND INDEMNITY AGREEMENT
THIS GUARANTY AND INDEMNITY AGREEMENT (this "Agreement") is made as of
the 25th day of January, 1996, by GENERAL HOST CORPORATION, a New York
corporation with an address and principal place of business at 6501 East
Nevada, Detroit, Michigan 48243 ("Guarantor"), to and for the benefit of
PEOPLE'S BANK, a Connecticut banking corporation having an office at Bridgeport
Center, 850 Main Street, Bridgeport, Connecticut 06604-4913 ("Lender").
RECITALS:
A. Lender has this day made a loan (the "Loan") to FRANK'S
NURSERY & CRAFTS, INC., a Michigan corporation ("Borrower"), which Loan is
evidenced by that certain Mortgage Note of even date herewith in the original
principal amount of FOUR MILLION NINE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($4,950,000.00) (the "Note"), and which Loan is secured by, inter alia, that
certain Hazardous Substances Indemnity Agreement (the "Environmental
Indemnity") of even date herewith by Borrower and Guarantor in favor of Lender
and by that certain Mortgage Deed and Security Agreement (the "Connecticut
Mortgage") and by that certain Mortgage and Security Agreement (the "New York
Mortgage") encumbering certain real property located at 479 East Main Street,
Branford, Connecticut, 361 Scott Swamp Road, Farmington, Connecticut, 400
Talcottville Road, Vernon, Connecticut, 1198 Queen Street, Southington,
Connecticut, 656 Silver Lane, East Hartford, Connecticut and Route 9, West
Kieffer Lane, Kingston, New York. The term "Mortgage," as used herein, shall
mean the Connecticut Mortgage and the New York Mortgage together. The Note,
the Environmental Indemnity, the Mortgage and every other document, instrument
and agreement evidencing or securing the Loan are hereinafter sometimes
collectively referred to as the "Loan Documents").
B. Guarantor will directly benefit from the making of the Loan to
Borrower.
C. Lender is unwilling to make the Loan without the execution and
delivery of this Agreement by Guarantor.
NOW, THEREFORE, to induce Lender to make the Loan and in consideration
of One Dollar ($1.00) and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Guarantor, intending to be
legally bound, hereby agrees as follows:
<PAGE> 2
-2-
1. Liabilities. (a) Notwithstanding any provision contained in
the Note, the Mortgage or any other Loan Document to the contrary, Guarantor
hereby absolutely, primarily, unconditionally, irrevocably guarantees to
Lender, its successors and assigns, (i) the full, prompt and absolute payment,
performance, observance and discharge by Borrower of Borrower's obligations and
liabilities arising under the Note, the Environmental Indemnity, the Mortgage
and all of the other Loan Documents (all of which matters are collectively
hereinafter referred to as the "Liabilities"). All terms used and not
otherwise defined herein shall have the meanings given to them in the Mortgage.
(b) The validity of this Agreement and the obligations of
Guarantor hereunder shall in no way be terminated, abated, affected or impaired
by the happening from time to time of any event or condition, including,
without limitation, any of the following: (i) the assertion or non-assertion
by Lender of any of the rights or remedies available to Lender pursuant to the
provisions of the Loan Documents or pursuant to any applicable statutes; (ii)
the waiver by Lender of, or the failure of Lender to enforce, or the lack of
diligence by Lender in connection with, the enforcement of any of its rights or
remedies under the Loan Documents; (iii) the granting by Lender of any
indulgence or extension of time; (iv) the exercise by Lender of any so-called
self-help remedies; (v) any other act, omission or conditions which might in
any manner or to any extent vary the risk to Guarantor or might otherwise
operate as a discharge or release of Guarantor under applicable law; (vi) the
invalidity or unenforceability of all or any portion or provision of the Note;
(vii) any release or discharge of or accord and satisfaction with Borrower or
any other person or entity, by variation of the terms of the Note or otherwise;
(viii) the impairment, modification, change, release, discharge or limitation
of the liability of Borrower or Guarantor or any of their estates in
bankruptcy, resulting from or pursuant to the application of the bankruptcy or
insolvency laws of or any decision of any court of the United States or any
state thereof; (ix) any present or future law or order of any government (de
jure or de facto ) or of any agency thereof purporting to reduce, amend or
otherwise affect the Liabilities or to vary any terms of payment, satisfaction
or discharge thereof; (x) the waiver, compromise, settlement, release,
extension, amendment, change, modification or termination of the terms of the
Liabilities or any or all of the obligations, covenants or agreements of
Borrower under the Loan Documents (except by satisfaction in full of all
Liabilities) or of Guarantor under this Agreement; (xi) the extension of the
time
<PAGE> 3
-3-
for satisfaction, discharge or payment of the Liabilities or any part thereof
owing or payable by Borrower under the Loan Documents or of the time for
performance of any other obligations, covenants or agreements under or arising
out of this Agreement or the extension or renewal of any thereof; (xii) the
existence of any other guaranty of the Liabilities in favor of Lender, or the
enforcement or attempted enforcement of such other guaranty; and (xiii) any
event or action that would in the absence of this paragraph result in the
release or discharge of Guarantor from the performance or observance of any
obligation, covenant or agreement contained in this Agreement or any other
Agreement.
2. Waivers. Guarantor hereby waives all notice, of any default
in the payment of or non-performance of any Liabilities, all protest, demands,
notices or presentments of any kind, notice of any acceptance of this Agreement
and all matters and rights which may be raised in avoidance of, or in defense
against, any action to enforce the obligations of Guarantor hereunder;
provided, however, that nothing herein shall waive Guarantor's right to assert
payment or performance of any Liabilities as a defense to a claim relating to
such Liabilities under this Agreement, to the extent of such payment or
performance. Guarantor hereby waives any and all suretyship defenses or
defenses in the nature thereof without in any manner limiting any other
provisions of this Agreement. Notwithstanding anything to the contrary
contained herein, Guarantor hereby irrevocably waives all rights Guarantor may
have at law or in equity, including, without limitation, any law subrogating
Guarantor to the rights of Lender, to seek contribution, indemnification or any
other form of reimbursement from Borrower and any other person now or hereafter
primarily or secondarily liable for any obligations of Borrower to Lender,
including, without limitation, the Liabilities, for any payment or performance
made by Guarantor under or in connection with this Agreement, unless and until
payment in full of the Note has been received by Lender.
3. Primary Liability. (a) Guarantor's liability under this
Agreement shall be primary, and with respect to any right of action which shall
accrue to Lender relating to any Liabilities, Lender may at its sole option
and, except as otherwise expressly provided in the Loan Documents, without
notice or demand, proceed directly against Guarantor without having proceeded
against Borrower or any other person or entity liable to any extent for any of
the Liabilities or against the collateral under the Loan Documents.
Guarantor's liability hereunder shall continue without regard to whether or not
Lender may have instituted or
<PAGE> 4
-4-
prosecuted or obtained or realized any judgment in any suit, action or
proceeding or shall have exhausted any of its remedies or taken any steps to
enforce any of its rights under or pursuant to the Loan Documents or at law or
in equity, or otherwise, and without regard to any other condition or
contingency, so long as any of the Liabilities remains unsatisfied to any
extent. This Agreement is an Agreement of payment and performance and not
merely of collection.
(b) Each default on any of the Liabilities shall give
rise to a separate cause of action and separate suits may be brought hereunder
as each cause of action arises or, at Lender's option, any or all causes of
action which arise prior to or after any suit is commenced hereunder may be
included in such suit.
4. Representations. Guarantor further represents to Lender, as
an inducement to making the Loan, that there is not presently pending or
threatened any litigation, arbitration, administrative or governmental
proceeding against Guarantor which would in any way prohibit or impede the
adoption, execution, or performance of this Agreement by Guarantor or which
would affect any of the undertakings herein; that compliance by Guarantor with
Guarantor's obligations under this Agreement has not resulted and will not
result in the violation of this Agreement or any agreement or other instrument
to which Guarantor is a party or by which any Guarantor or any of Guarantor's
assets are bound; that this Agreement and all actions contemplated to be taken
by Guarantor hereunder have been duly authorized; and that this Agreement and
such actions and undertakings are valid and binding upon Guarantor and
enforceable against Guarantor in accordance with their terms.
5. Borrower's Actions. No encumbrance, assignment, leasing,
subletting, sale or other transfer by Borrower of any of Borrower's assets
shall operate to extinguish or diminish the liability of Guarantor under this
Agreement.
6. Bankruptcy. If Borrower becomes insolvent or files a petition
for reorganization, arrangement, composition or similar relief under any
present or future provision of the Federal Bankruptcy Code, or if such a
petition is filed against Borrower and in any such proceeding some or all of
the obligations and liabilities of Borrower are terminated or rejected or any
obligation or liability of Borrower is modified or abrogated (each, a
"Bankruptcy Event"), Guarantor (i) agrees that Guarantor's liability hereunder
shall not thereby be affected or modified and such liability shall continue in
full force and
<PAGE> 5
-5-
effect as if no such action or proceeding had occurred, and (ii) shall
indemnify, defend and hold harmless Lender from and against any and all loss,
cost, liability, damage and expense (including with limitation attorneys' fees
and expenses) sustained by Lender in connection with any Bankruptcy Event.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if any payment of the obligations and liabilities of Borrower or any
payment of the Liabilities must be returned by Lender upon the insolvency,
bankruptcy or reorganization of Borrower, Guarantor, or otherwise, as though
such payment had not been made.
7. No Reliance. Guarantor assumes the responsibility for being
and keeping itself informed of the financial condition of Borrower and of all
other circumstances bearing upon the risk of failure to pay, perform or
discharge any of the obligations and liabilities of Borrower which diligent
inquiry would reveal, and Lender shall have no duty to advise Guarantor of
information known to Lender regarding such condition or any such circumstance.
8. Payment of Expenses. Guarantor shall be responsible to Lender
for all expenses (including reasonable attorneys' fees), incurred by Lender in
enforcing any obligations of Guarantor under this Agreement.
9. Successors and Assigns. All references to Lender and
Guarantor shall be deemed to include references to the successors and assigns
of Lender and Guarantor.
10. Governing Law. In all respects, including, without
limitation, matters of construction and performance of this Agreement and the
obligations arising hereunder, this Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Connecticut
applicable to contracts and obligations made and performed in such state and
any applicable laws of the United States of America. Interpretation and
construction of this Agreement shall be according to the contents hereof and
without presumption or standard of construction in favor of or against
Guarantor or Lender.
11. Severability. If any term or provision of this Agreement or
the application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Agreement shall be
<PAGE> 6
-6-
valid and enforced to the fullest extent permitted by law; provided, however,
all rights, powers and remedies provided herein may be exercised only to the
extent that the exercise thereof does not violate any applicable law, and are
intended to be limited to the extent necessary so that they will not render
this Agreement invalid or unenforceable under any applicable law.
12. No Waiver. The waiver of any provision of this Agreement by
Lender shall constitute a waiver of that provision on that occasion only, and
shall not constitute a waiver of any other provision of this Agreement, or that
provision with respect to any other occasion.
13. Commercial Transaction. (a) TO INDUCE LENDER TO ENTER INTO
THE COMMERCIAL LOAN TRANSACTION EVIDENCED BY AND SECURED BY THE LOAN DOCUMENTS,
GUARANTOR AGREES THAT THE SAID TRANSACTION IS COMMERCIAL AND NOT A CONSUMER
TRANSACTION AND, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, WAIVES ANY RIGHT
TO NOTICE OF AND HEARING OF THE RIGHT OF LENDER UNDER CHAPTER 903a OF THE
CONNECTICUT GENERAL STATUTES, REVISION OF 1958, AS AMENDED, OR OTHER STATUTE OR
STATUTES AFFECTING PREJUDGMENT REMEDIES UNDER NEW YORK OR CONNECTICUT LAW AND
AUTHORIZES LENDER'S ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
(b) Each of the waivers set forth in this Agreement is
made with knowledge of its significance and consequences, and under the
circumstances, the waivers are reasonable. If any of said waivers is
determined to be contrary to any applicable law or public policy, such waiver
shall be effective only to the maximum extent permitted by law.
14. Jury Trial. GUARANTOR HEREBY WAIVES THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT MATTER
OF THIS AGREEMENT. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY
MADE BY GUARANTOR, AND GUARANTOR ACKNOWLEDGES THAT LENDER HAS NOT MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO
MODIFY OR NULLIFY ITS EFFECT. GUARANTOR FURTHER ACKNOWLEDGES THAT GUARANTOR
HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF ALL WAIVERS CONTAINED HEREIN BY
INDEPENDENT LEGAL COUNSEL, SELECTED BY GUARANTOR, AND THAT GUARANTOR HAS HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
15. Consent to Jurisdiction. Guarantor hereby submits to
personal jurisdiction in the States of Connecticut and New York
<PAGE> 7
-7-
for the enforcement of the provisions of this Agreement and irrevocably waives
any and all rights to object to such jurisdiction for the purposes of
litigation to enforce any provision of this Agreement. Guarantor hereby
consents to the jurisdiction of either (i) the Connecticut District Court or
the United States District Court for the District of Connecticut, or (ii) the
New York State Supreme Court or the United States District Court for the
Southern District of New York in any action, suit, or proceeding which
Guarantor or Lender may at any time wish to file in connection with this
Agreement or any related matter. Guarantor hereby agrees that any action, suit
or proceeding to enforce this Agreement may be brought in any state or federal
court in Fairfield County, Connecticut or in any other county in the States of
Connecticut or New York in which a property which is subject to the Mortgage is
situated, and hereby irrevocably waives any objection which Guarantor may have
to the laying of the venue of any such action, suit, or proceeding in any such
court and hereby further irrevocably waives any claim that any such action,
suit or proceeding brought in such a court has been brought in an inconvenient
forum; provided, however, that the provisions of this Section 15 shall not be
deemed to preclude any party from filing any such action, suit or proceeding in
any other appropriate forum if the courts above decline jurisdiction.
Guarantor hereby consents that service of process in any action, suit or
proceeding may be made by personal service upon Guarantor, or by delivery to
Guarantor at the address set forth in the first paragraph of this Agreement in
accordance with the notice requirements of Paragraph 24 of the Mortgage.
16. Miscellaneous. (a) This Agreement may not be modified,
altered or amended nor may any provision hereof or rights hereunder be waived,
except by an instrument in writing signed by the person or entity against which
such modification, alteration, amendment or waiver is sought to be enforced.
(b) Except as provided in Section 6 above, this Agreement
shall terminate upon the payment by Borrower to Lender of all indebtedness
evidenced by the Loan Documents.
<PAGE> 8
-8-
IN WITNESS WHEREOF, the undersigned has caused this
instrument to be duly executed as of the date first written above.
GUARANTOR:
GENERAL HOST CORPORATION
By: Robert M. Lovejoy Jr.
-----------------------------------
Name: Robert M. Lovejoy, Jr.
Title: Vice President
STATE OF CONNECTICUT)
) ss.: Stamford
COUNTY OF FAIRFIELD )
The foregoing instrument was acknowledged before me this 25 day of
January, 1996, by Robert M. Lovejoy, Jr., Vice President of General Host
Corporation, a New York corporation, on behalf of the corporation.
Vt A Lt J
---------------------------------
Commissioner of Superior Court
Vincent A. Laurentino, Jr.
<PAGE> 1
EXHIBIT 4.03(e)
January 25, 1996
VIA FACSIMILE
(810) 362-4494 AND
VIA UPS OVERNIGHT
Commonwealth Land Title Insurance Company
900 Wilshire Drive
Suite 305
Troy, Michigan 48084
Attn: Maxine J. Lievois, Esq.
Re: FRANK'S NURSERY & CRAFTS, INC.
1. 479 EAST MAIN STREET, BRANFORD, CT
2. 361 SCOTT SWAMP ROAD, FARMINGTON, CT
3. 400 TALCOTTVILLE ROAD, VERNON, CT
4. 1198 QUEEN STREET, SOUTHINGTON, CT
5. 656 SILVER LANE, EAST HARTFORD, CT
6. ROUTE 9, WEST KIEFFER LANE, KINGSTON, NY
(COLLECTIVELY, THE "PROPERTY")
Dear Maxine:
People's Bank ("Lender") is about to lend to Frank's Nursery & Crafts, Inc.
("Borrower") the principal amount of $4,950,000 (the "Loan") to be secured by,
among other things, first priority mortgage liens encumbering the Property.
In connection with the closing of the Loan, the following executed original
documents have been or are being delivered by Lender herewith to you or at your
direction as indicated below to George Browne in your Connecticut office or to
Ken Auser in your White Plains, New York office, to be held in trust under the
escrow conditions described below:
1. Five fully executed originals of the Mortgage Deed and Security
Agreement dated as of January 25, 1996 from Borrower to Lender
(the "Connecticut Mortgage"); (sent to G. Browne)
<PAGE> 2
Commonwealth Land Title Insurance Company
January 25, 1996
Page 2
2. Five fully executed originals of the Assignment of Leases and
Rents dated as of January 25, 1996 from Borrower to Lender (the
"Connecticut Assignment"); (sent to G. Browne)
3. One UCC-1 Financing Statement naming Borrower, as debtor and
naming Lender as secured party for filing with the Office of the
Secretary of the State of Connecticut (the "Financing Statement
for Connecticut Filing"); (sent to G. Browne)
4. Five UCC-1 Financing Statement naming Borrower as debtor and
naming Lender as secured party for filing with the Town Clerks in
the following towns: Branford, Farmington, Vernon, Southington
and East Hartford, Connecticut (collectively, the "Financing
Statements for Local Filing in Connecticut"); (sent to G. Browne)
5. One fully executed original of the Mortgage and Security Agreement
dated as of January 25, 1996 from Borrower to Lender (the "New
York Mortgage"); (sent to K. Auser)
6. One fully executed original of the Assignment of Leases and Rents
dated as of January 25, 1996 from Borrower to Lender (the "New
York Assignment"); (sent to K. Auser)
7. One UCC-1 Financing Statement naming Borrower as debtor and naming
Lender as secured party for filing with the Office of the
Secretary of the State of New York (the "Financing Statement for
New York Filing"); (sent to K. Auser) and
8. One UCC-1 Financing Statement naming Borrower as debtor and naming
Lender as secured party for filing with the Office of the Ulster
County (NY) Clerk's Office (the "Financing Statement for Local
Filing in New York") (sent to K. Auser).
The foregoing documents are hereinafter sometimes collectively referred to
as the "Lender Documents").
<PAGE> 3
Commonwealth Land Title Insurance Company
January 25, 1996
Page 3
Upon receipt of the Lender Documents, you will review each document to
confirm that it has been properly executed and to the extent appropriate,
attested, witnessed and/or acknowledged, so as to allow the Lender Documents to
be recorded or filed, as appropriate.
In addition, the sum of $4,950,000.00 (the "Disbursement Amount"),
representing the Loan proceeds to be disbursed as set forth below, will be sent
to you by wire transfer, to the following bank account:
Comerica Bank
ABA No. 072000096
211 Fort Street
Detroit, MI
Phone Advise: (313) 222-3325
Credit to: Commonwealth Land Title Insurance
Company
Account No. 240100718-8
You are hereby authorized and directed to disburse the Disbursement Amount
to The Bank of New York, as Trustee, as Borrower has directed you in separate
written instructions from Borrower to you, after, and only after, the following
conditions have been satisfied:
A. Borrower shall have provided to you sufficient additional funds
necessary to pay (i) your costs and expenses in connection with
the Loan (including all recording fees, filing fees and release
fees), and (ii) all title insurance premiums in connection with
the Loan;
B. Borrower has provided you with (all necessary affidavits,
certificates, statements and tax forms as you may require as a
condition to issuing the Title Policies (as defined below);
C. You have issued or unconditionally committed to issue to Lender
the six (6) title insurance policies (the "Title Policies") in the
form of Exhibits A-1 through A-6 attached hereto. The Title
Policies must be dated no earlier than the date and time funds are
disbursed by you from the escrow established hereby and must show
no prior liens, encumbrances or exceptions to title other than
those shown in the Title Policies;
<PAGE> 4
Commonwealth Land Title Insurance Company
January 25, 1996
Page 4
D. You affirm that, notwithstanding the actual date and time of
recording and filing of the Lender Documents, the Title Policies
shall be effective as of the date and time set forth in Subsection
C above, and the Company (as that term is defined in the Title
Policies) insures against loss or damage suffered by Lender
pursuant thereto;
E. There are to be no outstanding current assessments or taxes as to
the Property which are due and payable;
F. You have signed and are holding for delivery to each of the
undersigned a copy of this letter and have sent via facsimile to
the attorneys for Lender a signed copy of this letter and have
received acknowledgment of receipt thereof;
G. You have received telephonic and facsimile confirmation from
Michael P. Byrne that all conditions to releasing the Disbursement
Amount have been satisfied;
H. You are in a position to satisfy each of the conditions set forth
in paragraphs I. through VI. below; and
I. You are holding at least $55,929,061, inclusive of the
Disbursement Amount (plus sufficient funds to pay all accrued
interest on the Master Mortgage Loan), and have been authorized by
Borrower and by all necessary third parties to pay said funds to
The Bank of New York, as Trustee, in full satisfaction of the
Master Mortgage Loan from The Bank of New York, as Trustee, to
Borrower.
If, for any reason, the conditions for disbursement of the Disbursement
Amount have not been satisfied by 3:00 p.m. EST on January 29, 1996, you shall
notify Michael P. Byrne, Esq., attorney for Lender, at (203) 977-7300, who
shall either (i) notify you to return the Disbursement Amount and the Lender
Documents to Lender, or (ii) authorize the extension of the time period for the
escrow established hereby. In addition, on the date of the disbursement of the
Disbursement Amount, you shall:
<PAGE> 5
Commonwealth Land Title Insurance Company
January 25, 1996
Page 5
I. Record with the Office of the Town Clerks for the Towns of
Branford, Farmington, Vernon, Southington and East Hartford the
following instruments in the following order: (a) the Connecticut
Mortgage; (b) the Connecticut Assignment; and (c) the Financing
Statements for Local Filing in Connecticut and pay all necessary
taxes, fees and charges in connection therewith.
II. Send for filing by overnight courier for next day delivery and
have filed on the following day with the Office of the Secretary
of the State of Connecticut the Financing Statements for
Connecticut filing and pay all necessary taxes, fees and charges
in connection therewith.
III. Record with the Office of the Clerk of Ulster County (NY) the
following instruments in the following order: (a) the New York
Mortgage; (b) the New York Assignment; and (c) the Financing
Statements for Local Filing in New York and pay all necessary
taxes, fees and charges in connection therewith.
IV. Send for filing via overnight courier for next day delivery and
have filed on the following day with the Office of the Secretary
of the State of New York the Financing Statements for New York
Filing and pay all necessary taxes, fees and charges in connection
therewith.
V. Mark all of the Lender Documents for return to Day, Berry &
Howard, One Canterbury Green, Stamford, Connecticut 06901-2047,
Attention: Michael P. Byrne, Esq.
VI. Send by overnight courier for next day delivery to Michael P.
Byrne, Esq. at the aforesaid address: (i) the original Title
Policies, (ii) a fully signed copy of this letter.
Please indicate your acknowledgment of and agreement to comply with these
instructions by signing a copy of this letter in the space provided below and
returning it as provided herein.
<PAGE> 6
Commonwealth Land Title Insurance Company
January 25, 1996
Page 6
This letter may be executed in counterparts and delivered by facsimile
transmission, which together shall constitute but one agreement binding upon
the parties hereto.
Very truly yours,
PEOPLE'S BANK
By: Day, Berry & Howard
Its Attorney
By: Michael P. Byrne
---------------------
Michael P. Byrne
FRANK'S NURSERY & CRAFTS, INC.
By: Robert M. Lovejoy Jr.
-------------------------
Robert M. Lovejoy, Jr.
Its Vice President
Acknowledged and agreed
this 25th day of January 1996.
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By: Maxine Lievois
------------------
Maxine Lievois
Its Vice President
MPB:rcc
cc: William Edwards
George Browne, Esq.
Lauren Cato, Esq.
Hildi E. Todrin
Marjan N. Murray
<PAGE> 7
Commonwealth Land Title Insurance Company
January 25, 1996
Page 6
This letter may be executed in counterparts and delivered by facsimile
transmission, which together shall constitute but one agreement binding upon
the parties hereto.
Very truly yours,
PEOPLE'S BANK
By: Day, Berry & Howard
Its Attorney
By: Michael P. Byrne
---------------------
Michael P. Byrne
FRANK'S NURSERY & CRAFTS, INC.
By: Robert M. Lovejoy Jr.
-------------------------
Robert M. Lovejoy, Jr.
Its Vice President
Acknowledged and agreed
this 25th day of January 1996.
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By:Maxine Lievois
Maxine Lievois
Its Vice President
MPB:rcc
cc: William Edwards
George Browne, Esq.
Lauren Cato, Esq.
Hildi E. Todrin
Marjan N. Murray
<PAGE> 1
EXHIBIT 4.04(a)
CERTIFIED TO BE A
TRUE COPY
BY MAXINE J. LIEVOIS
PROMISSORY NOTE Loan No.:
94-0903604
Store 25
$682,878.00 Michigan
March 14, 1996
FOR VALUE RECEIVED Frank's Nursery & Crafts, Inc., a Michigan corporation
("Borrower"), having its principal place of business at 6501 East Nevada,
Detroit, Michigan 48234, promises to pay to the order of Midland Loan Services,
L.P., a Missouri limited partnership ("Lender"), at the following address:
210 West 10th Street, 6th Floor, Kansas City, Missouri 64105; or such other
place as the holder hereof may from time to time designate in writing, the
principal sum of Six Hundred Eighty-two Thousand Eight Hundred Seventy-eight
and No/100 Dollars ($682,878.00) in lawful money of the United States of
America, with interest thereon to be computed from the date of disbursement
under this Promissory Note (the "Note") at the Applicable Interest Rate
(hereinafter defined), and to be paid in installments as follows:
A. A payment, on the date hereof, in the amount of $3,168.54 representing
interest from the date of disbursement through the last day of the
calendar month in which such disbursement is made;
B. A constant payment of $6,267.54 on the first day of May, 1996 and on the
first day of each calendar month thereafter up to and including the first
day of March, 2006, each of such payments to be applied: (a) to the
payment of interest computed at the Applicable Interest Rate; and (b) the
balance applied toward the reduction of the principal sum; and
C. The balance of said principal sum, all unpaid interest thereon and all
other amounts owed pursuant to this Note, the Mortgage (hereinafter
defined), the Other Security Documents (hereinafter defined), or
otherwise in connection with the loan evidenced by this Note shall be due
and payable on the first day of April, 2006 (the "Maturity Date").
All payments to be made by Borrower to Lender shall be deemed received by
Lender only upon Lender's actual receipt of same.
1. Applicable Interest Rate. Interest on the principal sum of this
Note shall be calculated on the basis of a three hundred sixty (360) day year
composed of twelve (12) months of thirty (30) days each except that interest
due and payable for a period less than a full month shall be calculated by
multiplying the actual number of days elapsed in such period by a daily rate
based on said 360 day year. The term "Applicable Interest Rate" as used in
this Note shall mean, from the date of this Note through and including the
Maturity Date, a rate of Nine and 28/100 percent (9.28%) per annum.
2. Late Charge. If any sum payable under this Note is not received
by Lender by close of business on the tenth (10th) day after the date on which
it was due, Borrower shall pay to Lender an amount (the "Late Charge") equal to
the lesser of five percent (5%) of the full amount of such
<PAGE> 2
sum, or the maximum amount permitted by applicable law, to defray the expenses
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment and any
such Late Charges shall be secured by the Mortgage and Other Security
Documents.
3. Security; Defined Terms; Incorporation by Reference. This Note is
secured by the Mortgage and the Other Security Documents. The term "Mortgage"
as used in this Note shall mean either the Mortgage, Security Agreement and
Assignment of Leases and Rents, or the Deed of Trust, Security Agreement and
Assignment of Leases and Rents, executed and delivered by Borrower
contemporaneously with this Note, which encumbers certain property located in
Kent County, Michigan, and which secures the Debt (hereinafter defined). The
term "Other Security Documents" means all documents other than this Note or the
Mortgage now or hereafter executed and/or delivered by Borrower and/or others
and to or in favor of Lender, which wholly or partially secure, evidence or
guarantee payment of the Debt, provide for any indemnity in favor of or payment
to Lender related to the Debt, the Note or the Mortgaged Property, provide for
any escrow/holdback arrangements or for any actions to be completed by Borrower
subsequent to the date hereof, or are otherwise related to the loan evidenced
by this Note. All amounts due and payable under the Note, together with all
sums due under the Mortgage and the Other Security Documents, including any
applicable Prepayment Consideration (hereinafter defined) and all applicable
attorney fees and costs, are collectively referred to herein as the "Debt."
Where appropriate, the singular number shall include the plural, the plural
shall include the singular, and the words "Lender" and "Borrower" shall include
their respective successors, assigns, heirs, personal representatives,
executors and administrators. The terms, covenants, and conditions of the
Mortgage and Other Security Documents are hereby incorporated herein by
reference and are made a part of this Note to the same extent as if they were
fully set forth herein.
4. Prepayment.
(a) When Permitted. Except as set forth in this Section,
Borrower shall not have the right to prepay all or any portion of the Debt at
any time during the term of this Note. Borrower may prepay the Debt in whole,
but not in part (except for any prepayment permitted under the Mortgage in the
event of a casualty or condemnation) if: (i) no Event of Default (hereinafter
defined) then exists; (ii) any applicable Prepayment Consideration (hereinafter
defined) is tendered with such prepayment; and (iii) the required notice of
prepayment required hereby is timely received by Lender. Notwithstanding
anything to the contrary contained herein, no prepayments will be allowed
during the period from the sixteenth (16th) day through and including the last
day of any calendar month.
(b) Notice. Borrower shall give written notice to Lender
specifying the date on which prepayment is to be made (the "Prepayment Date").
The designated Prepayment Date must fall within the first fifteen (15) calendar
days of a month during the term of this Note. Lender shall receive this notice
not more than sixty (60) days and not less than (30) days prior to the
Prepayment Date. If any such notice of prepayment is given, the entire Debt,
including any applicable Prepayment Consideration, shall be due and payable on
the Prepayment Date.
(c) Prepayment Consideration. Lender shall not be obligated to
accept any prepayment of the principal balance of this Note unless it is
accompanied by all Prepayment Consideration due in connection therewith.
Except as otherwise set forth in the Mortgage, no Prepayment Consideration will
be due for involuntary prepayments resulting from any Casualty (as defined in
the
2
<PAGE> 3
Mortgage) or Condemnation (as defined in the Mortgage). The "Prepayment
Consideration" shall be computed as follows:
Month 1 through 114: The greater of: (i) one percent (1%) of the
outstanding principal balance of the Note
at the time of prepayment; or (ii) the
Yield Maintenance Amount (hereinafter
defined).
Months 115 through
maturity: No Prepayment Consideration.
Borrower acknowledges that the Prepayment Consideration is a bargained for
consideration and not a penalty, and Borrower recognizes that Lender would
incur substantial additional costs and expenses in the event of a prepayment of
the Debt and that the Prepayment Consideration compensates Lender for such
costs and expenses (including without limitation, the loss of Lender's
investment opportunity during the period from the Prepayment Date until the
Maturity Date). Borrower agrees that Lender shall not, as a condition to
receiving the Prepayment Consideration, be obligated to actually reinvest the
amount prepaid in any treasury obligation or in any other manner whatsoever.
(d) Yield Maintenance Amount. The "Yield Maintenance Amount" shall mean the
present value, as of the Prepayment Date, of the remaining scheduled payments
(including any balloon payment) of principal amount being prepaid and interest
on such amount from the Prepayment Date through the Maturity Date (assuming no
prepayment were made), determined by discounting such payments at the Discount
Rate (hereinafter defined), and subtracting therefrom the amount of principal
being prepaid. The term "Discount Rate" shall mean the rate which, when
compounded monthly, is equivalent to the Treasury Rate (hereinafter defined)
when compounded semi-annually. The term "Treasury Rate" shall mean the yield
calculated by the linear interpolation of the yields, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to
the Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date. (In
the event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Treasury Rate.) Lender shall notify Borrower of
the amount and the basis of determination of the required Prepayment
Consideration.
(e) Prepayment After Event of Default. If following the occurrence of any
Event of Default, Borrower shall tender payment of an amount sufficient to
satisfy the Debt at any time prior to a sale of the "Mortgaged Property" (as
defined in the Mortgage), either through foreclosure or the exercise of the
other remedies available to Lender under the Mortgage or the Other Security
Documents, such tender by Borrower shall be deemed to be a voluntary prepayment
under this Note in the amount tendered and in such case Borrower shall also pay
to Lender, with respect to the amount tendered, the applicable Prepayment
Consideration set forth in this Note, if any, which Prepayment Consideration
shall be immediately due and payable.
5. Default. An "Event of Default" shall occur if:
(a) the Borrower fails to make the full and punctual payment of any amount
payable hereunder or under the Mortgage on a monthly basis, which failure is
not cured on or before the fifth (5th) day after the date of written notice
from Lender to Borrower of such failure;
3
<PAGE> 4
(b) the Borrower fails to pay the entire outstanding principal balance
hereunder, together with all accrued and unpaid interest, on the date when due,
whether on the Maturity Date, upon acceleration or prepayment or otherwise;
(c) the Borrower fails to make the full and punctual payment of any Late
Charges, costs and expenses due hereunder or any other sum of money required to
be paid hereunder (other than any payment described in subclauses (a) and (b)
immediately above) or under the Mortgage or Other Security Documents which
failure is not cured on or before the twentieth (20th) day after Lender's
written notice to Borrower that such payment is required; or
(d) an Event of Default (as defined in the Mortgage or any of the Other
Security Documents) shall have occurred under the Mortgage and/or Other
Security Documents.
6. Acceleration. The whole of the Debt, including without limitation, the
principal sum of this Note, all accrued interest and all other sums due under
this Note, the Mortgage and the Other Security Documents, together with any
applicable Prepayment Consideration, shall become immediately due and payable
at the option of Lender, without notice, at any time following the occurrence
of an Event of Default.
7. Default Interest. Upon the occurrence of an Event of Default (including
without limitation, the failure of Borrower to pay the Debt in full on the
Maturity Date), Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal balance at the rate (the "Default
Rate") equal to the greater of: (a) four (4)% above the Applicable Interest
Rate; or (b) four (4)% above the Prime Rate (hereinafter defined) in effect at
the time of the occurrence of the Event of Default; provided, however, that
notwithstanding the foregoing, in no event shall the Default Rate exceed the
Maximum Rate (hereinafter defined). The term "Prime Rate" shall mean the prime
rate reported in the Money Rates section of The Wall Street Journal for the
date (the "Default Rate Calculation Date") upon which the Event of Default
occurred, or if no publication occurs upon such date, then the date of
publication immediately preceding the date of the Event of Default. In the
event that The Wall Street Journal should cease or temporarily interrupt
publication, the term "Prime Rate" shall mean the daily average prime rate
published upon the Default Rate Calculation Date in another business newspaper,
or business section of a newspaper, of national standing chosen by Lender. In
the event that a prime rate is no longer generally published or is limited,
regulated or administered by a governmental or quasi-governmental body, then
Lender shall select a comparable interest rate index which is readily available
and verifiable to Borrower but is beyond Lender's control. The Default Rate
shall be computed from the occurrence of the Event of Default until the actual
payment in full of the Debt. This charge shall be added to the Debt, and shall
be deemed secured by the Mortgage. This clause, however, shall not be
construed as an agreement or privilege to extend the Maturity Date, nor as a
waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default.
8. Attorney Fees. In the event that Lender employs attorney(s) to collect
the Debt, to enforce the provisions of this Note or to protect or foreclose the
security herefor, Borrower agrees to pay Lender's attorney fees and
disbursements, whether or not suit be brought. Such fees shall be immediately
due and payable.
9. Limit of Validity. This Note is subject to the express condition that at
no time shall Borrower be obligated or required to pay interest or other
charges on the Debt at a rate which may subject Lender to civil or criminal
liability as a result of such rate exceeding the maximum interest
4
<PAGE> 5
rate which Borrower is permitted to pay by applicable law (the "Maximum Rate").
If by the terms of this Note, Borrower is at any time required or obligated to
pay interest or other charges on the Debt at a rate in excess of the Maximum
Rate, the rate of interest due under this Note shall be deemed to be
immediately reduced to the Maximum Rate and any previous payments in excess of
the Maximum Rate shall be deemed to have been payments in reduction of
principal and not on account of the interest due hereunder.
10. No Oral Amendments. This Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
11. Assignment. This Note may be freely transferred and assigned by Lender.
Borrower's right to transfer its rights and obligations with respect to the
Debt, and to be released from liability under this Note, shall be governed by
the Mortgage.
12. Applicable Law; Jurisdiction. This Note shall be governed and construed
in accordance with the laws of the state in which the real property encumbered
by the Mortgage is located, without regard to conflict of law provisions
thereof. Borrower hereby submits to personal jurisdiction in the state courts
located in said state and the federal courts of the United States of America
(and any appellate courts taking appeals thereof) located in said state for the
enforcement of Borrower's obligations hereunder and waives any and all personal
rights under the law of any other state to object to jurisdiction within such
state for the purposes of any action, suit, proceeding or litigation to enforce
such obligations of Borrower. Borrower hereby waives and agrees not to assert,
as a defense in any action, suit, proceeding or litigation arising out of or
relating to this Note, the Mortgage and/or any of the Other Security Documents:
(a) that it is not subject to such jurisdiction or that such action, suit,
proceeding or litigation may not be brought or is not maintainable in those
courts or that this Note, the Mortgage and/or any of the Other Security
Documents may not be enforced in or by those courts or that it is exempt or
immune from execution; (b) that the action, suit, proceeding or litigation is
brought in an inconvenient forum; or (c) that the venue of the action, suit,
proceeding or litigation is improper.
13. Joint and Several Liability. If Borrower consists of more than one person
or entity, the obligations and liabilities of each such person or entity shall
be joint and several.
14. Waiver of Presentment, Etc. Borrower and all others who may become
liable for the payment of all or any part of the Debt do hereby severally waive
presentment and demand for payment, notice of dishonor, protest, notice of
protest, and notice of intent to accelerate the maturity hereof (and of such
acceleration), except to the extent that specific notices are required by this
Note, the Mortgage or the Other Security Documents.
15. Full Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute, deliver and perform its obligations pursuant to this Note,
the Mortgage and the Other Security Documents and that this Note, the Mortgage
and the Other Security Documents constitute valid and binding obligations of
Borrower.
16. No Waiver. Any failure by Lender to insist upon strict performance by
Borrower or any of the provisions of this Note, the Mortgage or the Other
Security Documents shall not be
5
<PAGE> 6
deemed to be a waiver of any of the terms or provisions of this Note, the
Mortgage or the Other Security Documents, and Lender shall have the right
thereafter to insist upon strict performance by Borrower of any and all of the
terms and provisions of this Note, the Mortgage or the Other Security
Documents.
17. Notices. Except as otherwise specified herein, any notice, consent,
request or other communication required or permitted to be given hereunder
shall be in writing, addressed to the other party as set forth below (or to
such other address or person as either party or person entitled to notice may
by notice to the other party specify), and shall be: (a) personally delivered;
(b) delivered by Federal Express or other comparable overnight delivery
service; or (c) transmitted by United States certified mail, return receipt
requested with postage prepaid; to:
Lender: Midland Loan Services, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Borrower: Frank's Nursery & Crafts, Inc.
6501 East Nevada
Detroit, MI 48234
Attention: Robert M. Lovejoy, Jr.
Unless otherwise specified, all notices and other communications shall be
deemed to have been duly given on the first to occur of actual receipt of the
same or: (i) the date of delivery if personally delivered; (ii) one (1)
business day after depositing the same with the delivery service if by
overnight delivery service; and (iii) three (3) days following posting if
transmitted by mail.
BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON
THE LOAN EVIDENCED BY THIS NOTE OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE, THE MORTGAGE OR ANY OF THE OTHER SECURITY DOCUMENTS, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION
OF BORROWER OR LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER'S
MAKING OF THE LOAN SECURED BY THE MORTGAGE AND THE OTHER SECURITY DOCUMENTS.
IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note to be
effective the day and year first above written.
"Borrower"
FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
By: Robert M. Lovejoy, Jr.
------------------------------
Robert M. Lovejoy, Jr.,
Vice President and Treasurer
6
<PAGE> 7
Pay to the order of Midland Commercial Financing Corp., without recourse.
Midland Loan Services, L.P.,
a Missouri limited partnership
By: Midland Data Systems, Inc.
a Missouri corporation,
its sole General Partner
By: ________________________
Print Name: ________________
Title: _____________________
Pay to the order of _________________________________________, without recourse.
Midland Commercial Financing Corp.,
a Missouri corporation
By: _______________________________
Print Name: _______________________
Title: ____________________________
7
<PAGE> 1
Exhibit 4.04(b)
CERTIFIED TO BE A
TRUE COPY
BY MAXINE J. LIEVOIS
FRANK'S NURSERY & CRAFTS, INC.
(Borrower)
in favor of
MIDLAND LOAN SERVICES, L.P.
(Lender)
MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
Dated: March 14, 1996
Locations: 2450 28th Street SE
Grand Rapids, Michigan 49508
RECORD AND RETURN TO:
MIDLAND LOAN SERVICES, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Attention: MCF Closing Department
Loan No.: 94-0903604
Store No. 25
THIS INSTRUMENT WAS DRAFTED BY:
Michael B. Hickman
Morrison & Hecker
2600 Grand Avenue
Kansas City, Missouri 64108-4606
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements...... 2
2. Warranty of Title.............................................................. 3
3. Insurance Requirements......................................................... 3
4. Casualty Loss.................................................................. 4
5. Payment of Taxes and Other Charges............................................. 6
6. Escrowed Funds................................................................. 6
7. Condemnation................................................................... 7
8. Leases and Rents............................................................... 8
9. Maintenance, Use and Management of Mortgaged Property.......................... 10
10. Sale of Mortgaged Property or Change in Borrower............................... 11
11. No Other Encumbrances Permitted................................................ 12
12. Estoppel Certificates and No Default Affidavits................................ 12
13. Cooperation.................................................................... 13
14. Books and Records; Reporting Requirements...................................... 13
15. Performance of Other Agreements................................................ 14
16. Further Acts, etc.............................................................. 14
17. Recording of Mortgage, etc..................................................... 14
18. Prepayment..................................................................... 15
19. Events of Default.............................................................. 15
20. Default Interest............................................................... 16
21. Right to Cure Defaults......................................................... 16
22. Prepayment After Event of Default.............................................. 16
23. Lender's Remedies.............................................................. 17
24. Additional Lender's Remedies................................................... 18
25. Late Charges................................................................... 20
26. Changes in the Laws Regarding Taxation......................................... 20
27. No Credits on Account of the Debt.............................................. 21
28. Documentary Stamps............................................................. 21
29. Usury Laws..................................................................... 21
30. Right of Entry................................................................. 21
31. Reasonable Use and Occupancy................................................... 21
32. Security Agreement............................................................. 21
33. Actions and Proceedings........................................................ 22
34. Waiver of Counterclaim......................................................... 22
35. Recovery of Sums Required to Be Paid........................................... 22
36. Marshalling and Other Matters.................................................. 22
37. Hazardous Waste................................................................ 22
38. Access Laws.................................................................... 23
39. Indemnification................................................................ 24
40. Notices........................................................................ 25
41. Authority...................................................................... 25
42. Waiver of Notice............................................................... 25
43. Remedies of Borrower........................................................... 25
44. Sole Discretion of Lender...................................................... 25
45. Nonwaiver...................................................................... 26
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
46. No Oral Change................................................................. 26
47. Liability...................................................................... 26
48. Inapplicable Provisions........................................................ 26
49. Headings, etc.................................................................. 26
50. Duplicate Originals............................................................ 26
51. Definitions.................................................................... 26
52. Homestead...................................................................... 27
53. Assignments.................................................................... 27
54. Exculpation.................................................................... 27
55. Integration.................................................................... 27
56. Applicable Law; Jurisdiction................................................... 27
57. Additional Terms and Provisions................................................ 27
</TABLE>
ii
<PAGE> 4
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS (the
"Mortgage") is made as of the 14th day of March, 1996, by Frank's Nursery &
Crafts, Inc., a Michigan corporation ("Borrower"), having its principal place
of business (or residing) at 6501 East Nevada, Detroit, Michigan 48234 in favor
of Midland Loan Services, L.P., a Missouri limited partnership ("Lender"),
having its principal place of business at 210 West 10th Street, 6th Floor,
Kansas City, Missouri 64105.
WITNESSETH:
To secure the payment of an indebtedness in the principal sum of Six
Hundred Eighty-two Thousand Eight Hundred Seventy-eight and No/100 Dollars
($682,878.00), lawful money of the United States of America, to be paid with
interest according to a certain contemporaneously executed Promissory Note made
by Borrower to the order of Lender in substantially the form of Exhibit B
attached hereto, and future advances, if any (said Promissory Note, together
with all extensions, renewals or modifications thereof, is referred to as the
"Note", and said indebtedness, interest, future advances, if any, and all other
sums due hereunder, and under the Note and the Other Security Documents
(hereinafter defined), including applicable attorney fees and costs, is
collectively referred to as the "Debt"), Borrower hereby irrevocably deeds,
mortgages and warrants, gives, grants, bargains, sells, aliens, enfeoffs,
conveys, confirms, pledges, assigns, grants a security interest in, and
hypothecates to Lender, its successors and assigns, with the right to entry and
possession, all of its estate, right, title and interest in, to, and under any
and all of the following described property (collectively the "Mortgaged
Property"), whether now owned or held or hereafter acquired:
(a) The real property described in Exhibit A attached hereto (the
"Premises") and the buildings, structures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter located
thereon (the "Improvements");
(b) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights and
powers, air rights and development rights, and all estates, rights, titles,
interests, privileges, liberties, tenements, hereditaments and appurtenances of
any nature whatsoever, in any way belonging, relating or pertaining to the
Premises and the Improvements and the reversion and reversions, remainder and
remainders, and all land lying in the bed of any street, road or avenue, opened
or proposed, in front of or adjoining the Premises, to the center line thereof
and all the estates, rights, titles, interests, dower and rights of dower,
curtesy and rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the Premises
and the Improvements and every part and parcel thereof, with the appurtenances
thereto;
(c) all machinery, equipment, fixtures (including but not limited to
all heating, air conditioning, plumbing, lighting, communications and elevator
fixtures), building equipment, materials and supplies, and other property of
every kind and nature, whether tangible or intangible, owned by Borrower, or in
which Borrower has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, and usable in connection
with the present or future operation and occupancy of the Premises and the
Improvements (hereinafter collectively called the "Equipment"), including the
proceeds of any sale or transfer of the foregoing, and, without limiting the
generality of the foregoing, if any such Equipment is subject to any prior
security interest or prior security agreement (as such terms are defined in the
Uniform Commercial Code, as adopted and enacted in the State or States in which
any of the Mortgaged Property is located), then the Mortgaged Property shall
include all of the right, title and interest of Borrower in and to any such
<PAGE> 5
Equipment, together with all deposits and payments now or hereafter made by
Borrower with respect to such Equipment;
(d) all awards, payments or compensation, including interest thereon,
heretofore or hereafter made with respect to the Mortgaged Property for any
injury or decrease in the value of the Mortgaged Property related to any
exercise of the right of eminent domain or condemnation (including without
limitation, any transfer made in lieu of or in anticipation of the exercise of
said rights or for a change of grade);
(e) all leases, reciprocal easement agreements, and other agreements
and arrangements affecting the use, enjoyment or occupancy of, or the conduct of
any activity upon or at the Premises and the Improvements heretofore or
hereafter entered into (the "Leases"), all income, rents (including, without
limitation, all percentage rents), issues, profits and revenues (including all
oil and gas or other mineral royalties and bonuses) from the Mortgaged Property
(the "Rents") and all proceeds from the sale or other disposition of the Leases
and the right to receive and apply the Rents to the payment of the Debt;
(f) all proceeds of, and any unearned premiums on, any insurance
policies covering the Mortgaged Property, including, without limitation, the
right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Mortgaged Property; and
(g) the right, in the name and on behalf of Borrower, to appear in and
defend any action or proceeding brought with respect to the Mortgaged Property
and to commence any action or proceeding to protect the interest of Lender in
the Mortgaged Property;
TO HAVE AND TO HOLD the Mortgaged Property unto and to the use and benefit
of Lender, and the successors and assigns of Lender, forever to secure the
payment to Lender of the Debt at the time and in the manner provided for its
payment in the Note, in this Mortgage or in the Other Security Documents;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall pay to Lender the Debt at the time and in the manner provided in
the Note, in this Mortgage or in the Other Security Documents, and shall abide
by and comply with each and every covenant and condition set forth herein and
in the Note in a timely manner, these presents and the estate hereby granted
shall cease, terminate and be void, and Lender shall execute and deliver to
Borrower a satisfaction or discharge of this Mortgage, in recordable form.
Borrower hereby represents and warrants to and covenants and agrees with
Lender as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and Agreements.
Borrower will pay the Debt at the time and in the manner provided in the Note,
this Mortgage and the Other Security Documents. All the covenants, conditions
and agreements contained in: (a) the Note; and (b) all and any documents (other
than the Note, this Mortgage, the Other Loan Documents or the Additional Loan
Documents) (collectively the "Other Security Documents") now or hereafter
executed by Borrower and/or others in favor of Lender, which wholly or
partially secure or guaranty payment of the Note, provide for any indemnity in
favor of or payment to Lender related to the Debt, the Note or the Mortgaged
Property, provide for any escrow/holdback arrangements or for any actions to be
completed by Borrower subsequent to the date hereof, or are otherwise related
to the loan secured by this Mortgage (the "Loan"); are hereby made a part of
this Mortgage to the same
2
<PAGE> 6
extent and with the same force as if fully set forth herein. Notwithstanding
anything herein to the contrary, neither this Mortgage nor any of the Other
Security Documents shall secure the payment of any Post-Foreclosure Transfer
Environmental Losses (as defined in that certain Environmental Indemnity
Agreement executed by Borrower in favor of Lender contemporaneously herewith).
2. Warranty of Title. Borrower warrants that Borrower has good title to the
Mortgaged Property and has the right to deed, mortgage, give, grant a security
interest in, bargain, sell, alien, enfeoff, convey, confirm, pledge, assign and
hypothecate the same and that Borrower possesses an unencumbered fee estate in
the Premises and the Improvements and that it owns the Mortgaged Property free
and clear of all liens, encumbrances and charges whatsoever except for those
exceptions shown in the title insurance policy in favor of the Lender insuring
the lien of this Mortgage. Borrower shall forever warrant, defend and preserve
such title and the validity and priority of the lien of this Mortgage to Lender
against the claims of all persons whomsoever.
3. Insurance Requirements.
(a) Borrower, at its sole cost and expense, will keep the Mortgaged
Property insured during the entire term of this Mortgage for the mutual
benefit of Borrower and Lender against loss or damage by fire and against
loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy including, but not limited to, fire, lightning,
windstorm, hail, explosion, riot attending a strike, riot, civil
commotion, aircraft, vehicles, smoke, vandalism, malicious mischief,
burglary and theft, and to the extent required by Lender, earthquake or
any other risks insured against by persons operating like properties in
the locality of the Mortgaged Property. Such insurance shall be in an
amount not less than the lesser of (i) the then full replacement cost of
the Mortgaged Property, without deduction for physical depreciation, or
(ii) the outstanding principal balance of the Debt; but in any event an
amount sufficient to ensure that the insurer issuing said policies would
not deem Borrower a co-insurer under said policies. The policies of
insurance carried in accordance with this paragraph shall be paid annually
in advance and shall contain the "Replacement Cost Endorsement" with a
waiver of depreciation.
(b) Borrower, at its sole cost and expense, for the mutual benefit of
Borrower and Lender, shall also obtain and maintain during the entire term
of this Mortgage the following policies of insurance:
(i) Flood insurance (meeting the current requirement of the
Federal Insurance Administration) if any part of the Mortgaged
Property is located in an area identified by the Federal Emergency
Management Agency as an area having special flood hazards and in
which flood insurance has been made available under the National
Flood Insurance Act of 1968 (and any successor act thereto) in an
amount at least equal to the lesser of (A) the stated principal
amount of the Note; or (B) the maximum amount of coverage
available to the Borrower under the Flood Disaster Protection Act
of 1973 (and any successor act thereto).
(ii) Comprehensive public liability insurance on an "occurrence
basis", in the amount of at least $3,000,000.00 per occurrence,
including broad form property damage, blanket contractual and
personal injuries (including death resulting therefrom) coverages.
3
<PAGE> 7
(iii) Business interruption and/or rental loss insurance (for
all losses regardless of cause, and with no exclusions) in an
amount equal to the aggregate annual amount of all rents,
additional rents (including, without limitation, percentage rents)
payable by all of the tenants under the Leases (whether or not
such Leases are terminable in the event of a fire or casualty) and
profits or other income from the Mortgaged Property, which
business interruption insurance and/or rental loss insurance shall
cover such losses for a period of at least twelve (12) months
after the date of the fire or other casualty in question. The
amount of such insurance shall be increased from time to time
during the term of this Mortgage as and when Lender requires, to
reflect all rent, additional rent, increased rent and increased
additional rent payable by all new or renewal tenants, and all
increased profits or other income from the Mortgaged Property.
(iv) Insurance against loss or damage from explosion of steam
boilers, air conditioning equipment, high pressure piping,
machinery and equipment, pressure vessels or similar apparatus now
or hereafter installed in the Improvements (excepting any such
apparatus located within and serving individual residential units
of the Improvements, if any).
(v) Such other insurance as may from time to time be reasonably
required by Lender in order to protect its interests.
(c) All policies of insurance (individually, a "Policy", and
collectively the "Policies") required pursuant to this Mortgage: (i) shall
be issued by an insurer satisfactory to Lender, in its sole discretion;
(ii) shall contain a mortgagee non-contribution clause satisfactory to
Lender, in its sole discretion, naming Lender as the person to which all
payments made by such insurance company shall be paid; (iii) shall be
maintained throughout the term of this Mortgage without cost to Lender;
(iv) shall be assigned and delivered to Lender; (v) shall contain such
provisions as Lender deems necessary or desirable to protect its interest
including, without limitation, endorsements providing that neither
Borrower, Lender nor any other party shall be a co-insurer under said
Policies and that Lender shall receive at least thirty (30) days prior
written notice of any modification, termination or cancellation of the
applicable Policy; and (vi) shall be satisfactory in form and substance to
Lender and shall be approved by Lender as to amounts, form, risk coverage,
deductibles, loss payees and insureds. Borrower shall pay the premiums
for such Policies (the "Insurance Premiums") as the same become due and
payable. Not later than thirty (30) days prior to the expiration date of
each of the Policies, Borrower will deliver to Lender satisfactory
evidence of the renewal of each expiring Policy.
4. Casualty Loss.
(a) If the Mortgaged Property is damaged or destroyed, in whole or in
part, by fire or other casualty (a "Casualty"), Borrower shall give prompt
notice thereof to Lender. Borrower hereby authorizes and empowers Lender
to settle, adjust or compromise any claims for any insurance proceeds
arising from any Casualty (the "Insurance Proceeds"), to receive such
Insurance Proceeds and to retain and apply such Insurance Proceeds as set
forth herein. If no Event of Default (hereinafter defined), or event
which with the giving of notice or passage of time, or both, would give
rise to an Event of Default, has occurred as of the date of the Casualty,
then:
4
<PAGE> 8
(i) If the aggregate amount of any Insurance Proceeds resulting
from a Casualty is equal to $15,000.00 or less, such Insurance
Proceeds shall be paid directly to Borrower and shall be applied
by Borrower to the prompt repair and replacement of the Mortgaged
Property;
(ii) If the aggregate amount of any Insurance Proceeds resulting
from a Casualty (or series of related Casualties) exceeds
$15,000.00 and the value of the Mortgaged Property immediately
following such Casualty remains greater than fifty percent (50%)
of its value immediately prior to such Casualty, then all
Insurance Proceeds from such Casualty shall be paid to Lender;
provided, however, that so long as no Event of Default exists and
subject to the requirements set forth herein, Lender shall
disburse such amounts of the Insurance Proceeds (after deduction
for Lender's costs and expenses of collection) as Lender
reasonably deems necessary for the repair or replacement of the
Mortgaged Property, with any balance remaining after such
disbursement being applied by Lender to the Debt in such priority
and proportions as Lender deems proper;
(iii) If the value of the Mortgaged Property immediately
following any Casualty (or series of related Casualties) does not
exceed fifty percent (50%) of its value immediately prior to such
Casualties, then all Insurance Proceeds from such Casualties shall
be paid directly to Lender and Lender, at its discretion: (A) may
declare the entire Debt to be immediately due and payable and
apply all such Insurance Proceeds, after deduction for Lender's
costs and expenses of collection, to the Debt in such priority and
proportions as Lender deems proper; or (B) subject to the
requirements set forth herein, may disburse such amounts of the
Insurance Proceeds as Lender reasonably deems necessary for the
repair or replacement of the Mortgaged Property, with any balance
remaining after such disbursement being applied by Lender to the
Debt in such priority and proportions as Lender deems proper; and
(iv) If no Event of Default (as hereinafter defined) has
occurred, and no event has occurred that with notice and/or the
passage of time, or both, would constitute an Event of default,
then no Prepayment Consideration (as defined in the Note) will be
due with respect to any Insurance Proceeds paid to Lender pursuant
to subclauses (ii) or (iii) above. If an Event of Default has
occurred, or an event has occurred that with notice and/or the
passage of time, or both, would constitute an Event of Default,
then Prepayment Consideration will be due with respect to any
Insurance Proceeds paid to Lender pursuant to Subclauses (ii) and
(iii) above. An Event of Default which existed but which was
completely cured prior to the date of Casualty shall not in itself
give rise to any Prepayment Consideration under this subsection.
(b) All disbursements of any portion of any Insurance Proceeds held by
Lender shall be subject to all terms and conditions deemed necessary by
Lender, including: (i) Lender's receipt of satisfactory requests for
disbursements, paid bills and lien waivers, architect certificates or
other certificates, and certificates or endorsements from title insurance
companies; (ii) Borrower's deposit with Lender of any additional funds
necessary to supplement the Insurance Proceeds, so as to cover, in
advance, the entire cost of the necessary repairs or replacements to the
Mortgaged Property as established by the certificate of an architect or
engineer (employed by Lender at Borrower's expense); (iii) such
architect's or engineer's determination that such repairs or replacements
may be effected within a period
5
<PAGE> 9
of six (6) months or less; and (iv) Borrower's prompt and diligent
completion of such repairs or replacements in accordance with plans and
specifications submitted to and approved by Lender. Lender, whether in
possession of the Premises or not, shall not have any obligation to
advance or make funds other than the Insurance Proceeds available for the
repair or replacement of the Mortgaged Property.
5. Payment of Taxes and Other Charges.
(a) Borrower shall pay or cause to be paid and discharged all taxes,
assessments, water rates and sewer rents now or hereafter levied or
assessed or imposed against the Mortgaged Property or any part thereof
(collectively the "Taxes"), and all ground rents, utility charges,
maintenance charges, other governmental impositions, and all other liens
or charges whatsoever which may be or become a lien or charge against the
Mortgaged Property (including without limitation, mechanics and
materialmen's liens, vault charges and license fees for the use of vaults,
chutes and similar areas adjoining the Premises), now or hereafter related
to, or levied, assessed or imposed against, the Mortgaged Property or any
part thereof (collectively the "Other Charges") as the same become due and
payable. Borrower will deliver to Lender, promptly upon Lender's request,
evidence satisfactory to Lender that the Taxes and Other Charges have been
paid prior to the same becoming delinquent.
(b) After prior written notice to Lender, Borrower, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the amount or validity or
application in whole or in part of any of the Taxes or Other Charges,
provided that: (i) no Event of Default has occurred and shall be
continuing; (ii) Borrower is permitted to do so under the provisions of
any mortgage, deed of trust, ground lease, or other instrument which
creates a superior or junior lien to this Mortgage (it being understood
that no such superior or junior liens will be permitted unless
specifically allowed, in writing, by Lender); (iii) such proceeding shall
be permitted under and be conducted in accordance with the provisions of
any other instrument to which Borrower is subject and shall not
constitute a default thereunder; (iv) neither the Mortgaged Property nor
any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost; (v) Borrower shall have set
aside adequate reserves (which Lender may at its option require to be
placed in escrow with Lender) for the payment of the Taxes or Other
Charges, together with all interest and penalties; and (vi) Borrower
shall have furnished such security as may be required in the proceeding,
or as may be requested by Lender to insure the payment of any such Taxes
or Other Charges, together with all interest and penalties thereon.
(c) The failure of the Borrower to pay any taxes or assessments assessed
against the Mortgaged Property, or any installment thereof, or any
premiums payable with respect to any insurance policy covering the
Mortgaged Property, shall constitute waste, as provided by Act No. 236 of
the Michigan Public Acts of 1961 as amended (MCL Section 600.2927). The
Borrower further hereby consents to the appointment of a receiver under
said statute, should the Lender elect to seek such relief thereunder.
6. Escrowed Funds. Borrower shall, at the option of Lender or its designee,
pay to Lender or its designee on the first day of each calendar month
one-twelfth of an amount which would be sufficient to pay all Insurance
Premiums, Taxes and Other Charges payable, or estimated by Lender to be
payable, during the next ensuing twelve (12) months. (The aggregate of said
amounts so held
6
<PAGE> 10
by Lender is hereinafter called the "Escrowed Funds"). Borrower hereby pledges
to Lender any and all Escrowed Funds now or hereafter held by Lender as
additional security for the payment of the Debt. Lender will apply the Escrowed
Funds to payments of Taxes, Other Charges and Insurance Premiums required to be
made by Borrower pursuant hereto. If the amount of the Escrowed Funds held by
Lender shall exceed the amounts required for the payment of the Taxes, Other
Charges and Insurance Premiums described above, Lender shall, in its discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Escrowed Funds. In allocating such excess, Lender may deal with
the person shown on the records of Lender to be the owner of the Mortgaged
Property. If, at any time, the Escrowed Funds are not sufficient to pay the
Taxes, Other Charges and Insurance Premiums described above, Borrower shall
promptly pay to Lender, upon demand, an amount which Lender shall estimate as
sufficient to make up the deficiency. Upon the occurrence of an Event of
Default, Lender may apply any Escrowed Funds held by it to the payment of the
following items in any order in its sole discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the Note;
(iv) Amortization of the unpaid principal balance of the Note; and
(v) All other sums payable pursuant to the Note, this Mortgage and
the Other Security Documents, including without limitation
advances made by Lender pursuant to the terms of this
Mortgage and any applicable Prepayment Consideration.
Until expended or applied as above provided, the Escrowed Funds shall constitute
additional security for the Debt. The Escrowed Funds shall not constitute a
trust fund and may be commingled with other monies held by Lender. No earnings
or interest on the Escrowed Funds shall be payable to Borrower.
To the extent Borrower timely deposits all required Escrowed Funds with
Lender, Borrower shall be relieved of any further obligation to directly pay, or
to deliver to Lender any evidence of the payment of (prior to their expiration
or delinquency), any Insurance Premiums, Taxes or Other Charges.
7. Condemnation. Borrower shall promptly give Lender written notice of the
actual or threatened commencement of any exercise of a right of condemnation or
eminent domain affecting all or any part of the Mortgaged Property (each such
event being hereinafter referred to as a "Condemnation"), and shall deliver to
Lender copies of any and all papers served in connection with any such
Condemnation. Notwithstanding any taking (including but not limited to any
transfer made in lieu of or in anticipation of the exercise of such taking) of
all or any part of the Mortgaged Property through a Condemnation, Borrower
shall continue to pay the Debt at the time and in the manner provided for its
payment in the Note, this Mortgage and the Other Security Documents, and the
Debt shall not be reduced until any award or payment therefor shall have been
actually received and applied by Lender (after deducting any expenses of
collection) to the Debt. Lender shall not be limited to the rate of interest
paid on any such award or payment from a Condemnation but shall be entitled to
receive out of such award or payment interest at the rate then applicable under
the Note. Borrower shall cause any award or payment payable to Borrower in any
Condemnation to be paid directly to Lender. Lender shall apply any such award
or payment (after deducting any expenses of collection) to the reduction or
discharge of the Debt (whether or not then due and payable). No Prepayment
Consideration shall be payable solely in connection with such application;
provided, however, that notwithstanding the foregoing, if an Event of Default
is existing as of the date of the
7
<PAGE> 11
Condemnation, or an event has occurred as of the date of the Condemnation that
with notice and/or the passage of time, or both, would constitute an Event of
Default hereunder, then any Condemnation awards or proceeds applied to the Debt
pursuant to this section shall be subject to the Prepayment Consideration
computed in accordance with the terms of the Note. If the Mortgaged Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of any
such award or payment, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive
said award or payment in an amount sufficient to fully satisfy the Debt.
8. Leases and Rents.
(a) Borrower does hereby assign to Lender all current and future Leases
and Rents. Notwithstanding any provision in this Mortgage providing that
an absolute assignment of rents is created, the assignment of rents in
this Mortgage assigns the rents only as security for the indebtedness
evidenced by the Note and the covenants and agreements contained in this
Mortgage, and shall be so construed whenever the contrary intent shall
appear, and whenever possible to carry out the intent of this assignment
of rents. Lender shall be entitled to all of the rights and benefits
conferred, and this assignment of rents shall be governed, by Act 210 of
Michigan Public Acts of 1953 as amended (MCL 554.231 et seq.).
(b) Borrower warrants that: (i) Borrower is the sole owner of the entire
lessor's interest in the Leases; (ii) the Leases are in all material
respects valid and enforceable and have not been altered, modified or
amended in any manner since copies of same were last delivered to Lender;
(iii) none of the Rents reserved in the Leases have been assigned or
otherwise pledged or hypothecated; (iv) none of the Rents have been
collected for more than one (1) month in advance; (v) Borrower has full
power and authority to execute and deliver the Assignment of Rents and
Leases dated of even date herewith from Borrower in favor of Lender (the
"Lease Assignment") and the execution and delivery of the Lease
Assignment has been duly authorized and does not conflict with or
constitute a default under any law, judicial order or other agreement
affecting Borrower or the Mortgaged Property; (vi) the premises demised
under the Leases have been completed and the tenants under the Leases
have accepted the same and have taken possession of the same on a
rent-paying basis; (vii) to the best of Borrower's knowledge, there exist
no offsets or defenses to the payment of any portion of the Rents; and
(viii) other than Leases for all or any part of the Mortgaged Property
for residential purposes, for congregate care services or for
mini-warehouse storage rentals (except for storage rentals of ten percent
(10%) or more of the rentable square footage of such storage facility)
(collectively "Residential Leases"), true and correct copies of all
Leases in existence as of the date hereof have been delivered to Lender.
(c) Nothing herein shall be construed to bind Lender to the performance
of any of the covenants, conditions, or provisions contained in any of
the Leases or otherwise to impose any obligation upon Lender. Borrower
agrees to execute and deliver to Lender such additional instruments, in
form and substance satisfactory to Lender, as Borrower may hereinafter
require to further evidence and confirm the Lease Assignment.
(d) With respect to all Leases, Borrower shall: (i) observe and perform
all the obligations imposed upon Borrower as landlord; (ii) not do or
permit to be done anything to impair the value of any of the Leases as
security for the Debt; (iii) other than Residential Leases, promptly send
to Lender copies of all notices of default which Borrower shall send or
receive
8
<PAGE> 12
thereunder; (iv) enforce all of the material terms, covenants and
conditions which are to be performed by any tenant, short of termination
thereof; (v) not collect any of the Rents more than one (1) month in
advance; (vi) not execute any other assignment of Borrower's interest in
any of the Leases or the Rents; (vii) execute and deliver at the request
of Lender all such further assurances, confirmations and assignments in
connection with the Mortgaged Property as Lender shall from time to time
require; and (xi) not extend any Lease or enter into any new or renewal
Lease affecting the Mortgaged Property except as allowed pursuant to this
Mortgage and the Lease Assignment.
(e) Without obtaining Lender's prior written approval (which shall not
be unreasonably withheld), Borrower shall not:
(i) extend any Lease or enter into any new or renewal Lease
affecting the Mortgaged Property; provided, however, that no such
approval is required if: (A) such Lease is written on a standard
form of lease approved in writing by Lender with no material
changes to such standard form; (B) all of the terms of such Lease
equal or exceed the requirements set forth in the then applicable
Leasing Report (as defined below); (C) such Lease is an
arm's-length transaction with an unrelated third party tenant; (D)
an executed copy of such Lease (other than Residential Leases,
unless requested by Lender) shall be furnished to Lender within ten
(10) days after its execution; (E) such Lease provides that upon
Borrower's request the tenant thereunder shall subordinate such
Lease to the Mortgage and shall agree to attorn to Lender and such
subordination and attornment shall be evidenced by a written
agreement executed by such tenant in form and substance
satisfactory to Lender;
(ii) other than Residential Leases, consent to any assignment
of or subletting by any tenant under any of the Leases (except in
accordance with the terms of such tenant's Lease);
(iii) alter, modify, change, cancel or terminate any guaranty
of any of the Leases;
(iv) other than Residential Leases, materially alter, modify,
change the terms of, cancel, terminate or accept a surrender of any
of the Leases; or
(v) transfer or permit a transfer of the Mortgaged Property
or of any interest therein, even if such a transfer is permitted
under the Mortgage, if such transfer would effect a merger of the
estates and rights of, or a termination or diminution of the
obligations of, tenants under any of the Leases.
(f) Notwithstanding anything to the contrary contained in Paragraph
8(e), Borrower agrees that: (i) Borrower shall not modify, amend,
supplement or replace the approved standard form of lease referred to in
Paragraph 8(e)(i) without Lender's prior written approval, which approval
shall not be unreasonably withheld; and (ii) Borrower shall not enter
into, materially modify, extend, renew or terminate any Lease in respect
of forty (40%) percent or more of the rentable space at the Mortgaged
Property without Lender's prior written approval, which approval may be
withheld or granted in Lender's sole discretion. Any request for approval
under this Paragraph 8(f) shall be made in accordance with Paragraph 40
hereof.
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(g) Lender shall not be liable for any loss sustained by Borrower
resulting from Lender's failure to let the Mortgaged Property after an
Event of Default or from any other act or omission of Lender in managing
the Mortgaged Property after an Event of Default unless such loss is
caused by the willful misconduct and bad faith of Lender. Lender shall
not be obligated to perform or discharge any obligation, duty or liability
under the Leases or under or by reason of this Mortgage or the Lease
Assignment. Borrower hereby agrees to hold Lender harmless from any and
all liability, loss or damage (including attorney fees and the costs of
defense) from any and all claims and demands whatsoever asserted against
Lender pursuant to the Leases, this Mortgage or the Lease Assignment,
including, without limitation, any claims or demands related to any
alleged obligations or alleged undertakings on Lender's part to perform or
discharge any of the terms, covenants or agreements contained in the
Leases. Borrower shall reimburse Lender immediately upon demand for the
amount of any such liability, loss or damage, the payment of which shall
be secured by this Mortgage, the Lease Assignment and by the Other
Security Documents. Upon the failure of Borrower to reimburse Lender,
Lender may, at its option, declare the entire Debt immediately due and
payable. Nothing contained herein or in the Lease Assignment shall
obligate or make Lender liable for (i) the control, care, management or
repair of the Mortgaged Property, (ii) the carrying out of any of the
terms and conditions of the Leases, (iii) any waste committed on the
Mortgaged Property by the tenants or any other parties, (iv) any dangerous
or defective condition of the Mortgaged Property, including without
limitation the presence of any Hazardous Substances (as defined in the
Mortgage), or (v) any negligence in the management, upkeep, repair or
control of the Mortgaged Property resulting in loss or injury or death to
any tenant, licensee, employee or stranger.
9. Maintenance, Use and Management of Mortgaged Property.
(a) Borrower shall cause the Mortgaged Property to be maintained in a
good and safe condition and repair. The Improvements and the Equipment
shall not be removed, demolished or materially altered (except for normal
replacement of the Equipment) without the consent of Lender, not to be
unreasonably withheld. Borrower shall promptly comply with all laws,
orders and ordinances affecting the Mortgaged Property, or the use
thereof, except that Borrower shall be permitted to contest any change or
proposed change thereto under the same terms and conditions as permitted
in paragraph 5(b), above. Borrower shall promptly repair, replace or
rebuild any part of the Mortgaged Property which may be destroyed by any
Casualty, become damaged, worn or dilapidated or which may be affected by
any Condemnation, and shall also complete and pay for any structure at any
time in the process of construction or repair on the Premises. Unless
Lender otherwise consents in writing, Borrower shall not initiate, join
in, acquiesce in or consent to any change in any private restrictive
covenant, replat, easement, zoning law or other public or private
restriction, limiting or defining the uses which may be made of the
Mortgaged Property or any part thereof. If under applicable zoning
provisions the use of all or any portion of the Mortgaged Property is or
shall become a nonconforming use, Borrower will not cause or permit such
nonconforming use to be discontinued or abandoned without the express
written consent of Lender.
(b) Borrower shall use and continuously operate and permit the use and
continuous operation of the Premises and the Improvements as provided for
in Borrower's original loan application to Lender.
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(c) Unless Lender otherwise consents in writing, Borrower shall not
initiate, join in, acquiesce in or consent to the removal or resignation
of the managing agent for the Mortgaged Property or the transfer of
ownership, management or control of such managing agent to a person or
entity other than Borrower or the general partner or managing partner of
Borrower.
10. Sale of Mortgaged Property or Change in Borrower.
(a) Borrower acknowledges that Lender has examined and relied on the
creditworthiness and experience of Borrower in agreeing to make the loan
secured hereby, and that Lender has a valid interest in maintaining the
value of the Mortgaged Property so as to ensure that should Borrower
default in the repayment of the Debt, Lender can recover the Debt by a
sale of the Mortgaged Property.
(b) Borrower may not Transfer (hereinafter defined) the Mortgaged
Property, nor allow any Change in Ownership (hereinafter defined), unless
all of the following conditions shall have been satisfied: (i) Lender has
received Borrower's written request for a Transfer, or for a Change in
Ownership (or any other request resulting in a new obligor under the
Loan) and Lender shall have expressly approved such request in writing,
subject to the satisfaction of all requirements hereunder; (ii) no Event
of Default has occurred and is continuing; (iii) the proposed new
owner/assignee of the Mortgaged Property (the "New Borrower") meets all
of the Lender's Underwriting Standards (hereinafter defined); (iv) the
Mortgaged Property meets all of the Lender's Underwriting Standards
related to its financial condition, cash flow, operating income, physical
condition, management and operation; (v) Borrower reimburses Lender for
all underwriting costs incurred by Lender in connection with such
Transfer or Change in Ownership (including without limitation,
engineering and/or architect's fees, environmental studies, title
searches, credit checks, attorney fees), whether or not any requested
Transfer or Change in Ownership is approved or consummated; (vi) Borrower
remits to Lender an assumption fee in the amount of one percent (1%) of
the outstanding balance of the Debt as of the date of such Transfer or
Change in Ownership, not as a penalty, but as compensation to Lender for
administrative costs and loss of Prepayment Consideration. A failure to
comply with any of the terms of this paragraph 10 shall constitute an
Event of Default, and Lender may then declare the entire Debt immediately
due and payable upon any such Transfer or Change in Ownership.
(c) "Lender's Underwriting Standards" shall mean the actual commercial
loan underwriting standards of Midland Loan Services, L.P. (or any
successor entity that is then servicing the Loan) in effect at the time
of the proposed Transfer or Change in Ownership, or, if no such standards
exist, such standards which are then customary for a commercial lender in
connection with a mortgage loan of the size and type of the Borrower's
loan from Lender secured hereby.
(d) A "Transfer" is defined as any sale, conveyance, alienation,
mortgage, encumbrance, pledge or other transfer of the Mortgaged Property
or any part thereof or interest therein, whether voluntary or involuntary
or otherwise. Without limiting the generality of the foregoing, a
Transfer is deemed to include: (i) an installment sales agreement wherein
Borrower agrees to sell the Mortgaged Property or any part thereof for a
price to be paid in installments; (ii) an agreement by Borrower leasing
all or a substantial part of the Mortgaged Property for other than actual
occupancy by a space tenant thereunder; or (iii)
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<PAGE> 15
a sale, assignment or other transfer of, or the grant of a security
interest in, Borrower's right, title and interest in and to any Leases or
any Rents.
(e) A "Change in Ownership" is defined as follows: (i) if Borrower, any
Guarantor (hereinafter defined), or any general partner in Borrower or any
Guarantor is a corporation, the voluntary or involuntary sale, conveyance
or transfer of any of such corporation's stock (or any of the stock of any
corporation directly or indirectly controlling such corporation by
operation of law or otherwise), or the creation or issuance of any new
stock in one or a series of transactions, by which an aggregate of more
than forty percent (40%) any of such corporation's stock shall be vested
in a party or parties who are not now stockholders (where appropriate, a
corporation shall be deemed to include a limited liability company, co-op,
business trust, joint venture or other entity, and the rules applicable to
shares of stock will apply with equal force to membership shares or
similar indicia of ownership, or actual ownership interest in these other
entities); and (ii) if Borrower, any Guarantor or any general partner of
Borrower or any Guarantor is a limited or general partnership or joint
venture, the change, removal or resignation of a general partner or
managing partner. Except as set forth above, involuntary changes in
ownership resulting from a death or physical or mental disability shall
not be considered a Change in Ownership.
(f) Borrower shall be released from liability for the Debt only after:
(i) all conditions for a Transfer or Change in Ownership have been
satisfied; (ii) all security documents deemed necessary by Lender have
been executed, delivered, recorded and perfected; (iii) Lender has
received a policy of title insurance (or similar assurance) reflecting the
new ownership and the priority and perfection of Lender's security; (iv)
the New Borrower has assumed all required personal liability; and (v) all
other reasonable requirements of Lender are satisfied.
11. No Other Encumbrances Permitted. Except for financing liens placed
against the Borrower's inventory in the normal course of business, Borrower
shall not, directly or indirectly, mortgage, pledge, hypothecate, encumber,
assign or otherwise place a lien or security interest against the Mortgaged
Property without in each instance obtaining the prior written consent of Lender,
which consent may be given or withheld by Lender in each instance in its sole
discretion. If Lender does consent to any additional mortgages or liens, it may
require the modification of this Mortgage, payment of an administrative fee in
an amount determined by Lender and such other conditions as Lender shall
determine in its sole discretion. Lender shall not be required to demonstrate
any actual impairment of its security or any increased risk of default hereunder
in order to declare the Debt immediately due and payable upon such encumbrance.
This provision shall apply to every sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property regardless of whether
voluntary or not, or whether or not Lender has consented to any previous sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property.
12. Estoppel Certificates and No Default Affidavits.
(a) After request by Lender, Borrower shall within ten (10) business
days furnish Lender with a statement, duly acknowledged and certified by
Borrower, setting forth: (i) the amount of the original principal amount
of the Note; (ii) the unpaid principal amount of the Note; (iii) the rate
of interest of the Note; (iv) the date installments of interest and/or
principal were last paid; (v) any offsets or defenses to the payment of
the Debt, if any; and (vi) that the Note, this Mortgage and the Other
Security Documents are valid, legal and binding obligations and have not
been modified, or if modified, giving particulars of such modification.
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(b) Within ten (10) business days after request by Lender, Borrower will
furnish Lender with estoppel certificates, in form and content
satisfactory to Lender, from all tenants specified by Lender (other than
tenants under Leases for residential purposes, congregate care services or
mini-warehouse storage rentals (unless such storage rental exceeds ten
percent (10%) of the rentable square footage of such storage facility)
(collectively "Residential Leases")), or, if any tenant fails to provide
such estoppel certificate, Borrower shall provide a certificate with
respect to the tenancy of such tenant, in form and substance satisfactory
to Lender.
13. Cooperation. Borrower acknowledges that Lender and its successors and
assigns may: (a) sell or assign this Mortgage, the Note and any of the Other
Security Documents to one or more investors as a whole loan; (b) sell or assign
a participation interest in the Debt to one or more investors; (c) deposit this
Mortgage, the Note and any of the Other Security Documents with a trust, which
trust may sell certificates to investors evidencing an ownership interest in
the trust assets; or (d) otherwise sell or assign the Debt, the Note, this
Mortgage and any of the Other Security Documents, or any interest therein to
investors (the transactions referred to in subparagraphs (a) through (d) above
are hereinafter referred to as "Secondary Market Transactions"). Borrower
shall cooperate in good faith with Lender in effecting any such Secondary
Market Transaction and in addressing such matters as any party involved in a
Secondary Market Transaction may require, including the provision of such
information and documents relating to Borrower, any Guarantors, the Mortgaged
Property and any tenants of the Improvements as Lender may reasonably request
in connection with a Secondary Market Transaction. Lender shall have the right
to provide to prospective investors any information in its possession,
including, without limitation, financial statements relating to Borrower, any
Guarantors, the Mortgaged Property and any tenant of the Improvements.
Borrower acknowledges that certain information regarding the Loan and the
parties thereto and the Mortgaged Property may be included in a private
placement memorandum, prospectus or other disclosure documents.
14. Books and Records; Reporting Requirements.
(a) Borrower and Guarantor(s), if any, shall keep complete and accurate
books and records of account in accordance with generally accepted
accounting principles consistently applied. Borrower shall deliver, or
cause to be delivered, the reports and financial statements described
below, all in form acceptable to Lender (collectively the "Reports"),
within the time period required.
(i) Within ninety (90) days after the close of each fiscal year of
Borrower, Borrower shall deliver, or cause to be delivered to
Lender: (A) an annual rent roll, certified by the Borrower's chief
financial officer (or other person acceptable to Lender); (B) an
annual operating statement of the Mortgaged Property, certified by
the Borrower's chief financial officer (or other person acceptable
to Lender); and (C) an annual balance sheet and profit and loss
statement of Borrower certified by the Borrower's chief financial
officer (or other person acceptable to Lender).
(ii) Within ninety (90) days after the close of the separate
individual fiscal years of any Guarantor, Borrower shall deliver,
or cause to be delivered to Lender, an annual balance sheet and
profit and loss statement of each Guarantor, if any, certified by
such Guarantor's chief financial officer (or other person
acceptable to Lender).
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<PAGE> 17
(iii) Within thirty (30) days after the close of each calendar
quarter, Borrower shall deliver, or cause to be delivered the
following, all to be certified by the Borrower's chief financial
officer (or other person acceptable to Lender): (A) a quarterly rent
roll; (B) a quarterly operating statement of the Mortgaged Property;
(C) a quarterly balance sheet and profit and loss statement of
Borrower.
(b) Annually, no later than each February 1 during the term of the Note,
Borrower shall deliver to Lender, for Lender's approval in its sole
discretion, a report (the "Leasing Report") setting forth the minimum
economic terms which Borrower proposes for use in connection with the
standard lease form for Leases of portions of the Mortgaged Property
during the twelve month period beginning upon such anniversary date. The
terms set forth in the Leasing Report shall reflect the prevailing market
conditions for like properties in the locality of the Mortgaged Property.
(c) Borrower shall supplement the required Reports and Leasing Reports
and provide such other financial information in respect of Borrower, any
Guarantor and the Mortgaged Property as Lender, from time to time, may
request. Borrower acknowledges that, without timely delivery of complete
and accurate Reports and Leasing Reports, Lender may not be able to
execute a Secondary Market Transaction. Borrower agrees that failure to
timely deliver any of the Reports or the Leasing Reports shall be an
Event of Default hereunder.
15. Performance of Other Agreements. Borrower shall observe and perform each
and every term to be observed or performed by Borrower pursuant to the terms of
any agreement or recorded instrument affecting or pertaining to the Mortgaged
Property.
16. Further Acts, etc. Borrower will, at the cost of Borrower, and without
expense to Lender, do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, transfers and assurances as Lender shall, from time to time,
require for the better assuring, conveying, assigning, transferring and
confirming unto Lender the property and rights hereby mortgaged, warranted,
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
pledged, assigned and hypothecated or intended now or hereafter so to be, or
which Borrower may be or may hereafter become bound to convey or assign to
Lender, or for carrying out the intent of or facilitating the performance of
the terms of this Mortgage or for filing, registering or recording this
Mortgage. Borrower, on demand, will execute and deliver and hereby authorizes
Lender to execute in the name of Borrower or without the signature of Borrower
to the extent Lender may lawfully do so, one or more financing statements,
chattel mortgages or other instruments, to evidence or perfect more effectively
the security interest of Lender in the Mortgaged Property. Borrower grants to
Lender an irrevocable power of attorney coupled with an interest for the
purpose of exercising and perfecting any and all rights and remedies available
to Lender under the Note, this Mortgage, the Other Security Documents, at law
or in equity, including without limitation the rights and remedies described in
this paragraph.
17. Recording of Mortgage, etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Borrower shall cause this Mortgage,
the Lease Assignment and any other instrument creating or evidencing a lien or
security interest in Lender's favor upon the Mortgaged Property, and each
instrument of further assurance to be filed, registered or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and protect Lender's interest in and lien or
security interest upon the Mortgaged Property. Except where otherwise
prohibited by law, Borrower will pay all filing, registration or recording
fees,
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<PAGE> 18
`
and all expenses incident to the preparation, execution, acknowledgment,
and subsequent release or reconveyance of this Mortgage and the Note, any deed
of trust or mortgage supplemental hereto, any security instrument with respect
to the Mortgaged Property, any instrument of further assurance and all federal,
state, county and municipal, taxes, duties, imposts, assessments and charges
arising out of or in connection with the same. Borrower shall hold harmless
and indemnify Lender, its successors and assigns, against any liability
incurred by reason of the imposition of any tax on the making and recording of
this Mortgage.
18. Prepayment. The Debt may only be prepaid in accordance with the terms of
the Note.
19. Events of Default. The Debt shall become immediately due and payable at
the option of Lender, without notice or demand, upon the occurrence of any one
or more of the followings events ("Events of Default"):
(a) if Borrower fails to make the full and punctual payment of any
amount payable pursuant to the Note or hereunder on a monthly basis, which
failure is not cured on or before the fifth (5th) day after written notice
from Lender to Borrower of such failure;
(b) if Borrower fails to pay the entire outstanding principal balance of
the Note, together with all accrued and unpaid interest, on the date when
due, whether on the Maturity Date (as defined in the Note), or upon
acceleration, or on the Prepayment Date (as defined in the Note);
(c) if Borrower fails to make the full and punctual payment of any
portion of the Debt (other than payments described in subparagraphs (a)
and (b) immediately above) which failure is not cured on or before the
twentieth (20th) day after written notice from Lender to Borrower of such
failure;
(d) if Borrower fails to make the full and punctual payment of Taxes or
Other Charges as required hereby;
(e) if Borrower fails to keep the Policies of insurance required hereby
in full force and effect, or fails to promptly deliver copies thereof to
Lender upon request;
(f) if a Transfer or a Change in Ownership occurs in violation of the
provisions of this Mortgage, or if Borrower violates or does not comply
with the provisions of the Lease Assignment, or paragraphs 37 or 39 of
this Mortgage;
(g) if any representation or warranty of Borrower, or of any person
guaranteeing payment of the Debt or any portion thereof or performance by
Borrower of any of the terms of this Mortgage, the Note or the Other
Security Documents (a "Guarantor"), made herein, in any guaranty, or in
any certificate, report, financial statement or other instrument or
document furnished to Lender shall have been false or misleading in any
material respect when made;
(h) if Borrower shall make an assignment for the benefit of creditors or
if Borrower is not paying debts as and when the same become due;
(i) if a receiver, liquidator or trustee of Borrower shall be appointed
or if Borrower is adjudicated bankrupt or insolvent, or if any petition
for bankruptcy, reorganization or
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<PAGE> 19
arrangement pursuant to federal bankruptcy law, or any similar federal or
state law, shall be filed by or against, consented to, or acquiesced in
by, Borrower or if any proceeding for the dissolution or liquidation of
Borrower shall be instituted; however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented to by Borrower,
then upon the same not being discharged, stayed or dismissed within sixty
(60) days;
(j) if Borrower shall be in default under any other deed of trust,
mortgage or security agreement covering any part of the Mortgaged
Property whether it be superior or junior in priority to this Mortgage
(it not being implied by this clause that any such encumbrance will be
permitted);
(k) if the Mortgaged Property becomes subject to any mechanic's,
materialman's or other lien (other than a lien for local real estate
taxes and assessments not then due and payable, or any lien being
contested by Borrower pursuant to its rights hereunder) and such lien
shall remain undischarged of record (by payment, bonding or otherwise)
for a period of thirty (30) calendar days;
(l) if Borrower fails to promptly and diligently cure any material
violations of laws or ordinances affecting the Mortgaged Property; or
(m) if for more than thirty (30) days after written notice from Lender,
Borrower shall fail to perform any other term, covenant or condition of
the Note, this Mortgage or any of the Other Security Documents; provided,
however, that if such failure to perform is of a type which cannot be
cured within such thirty (30) day period and Borrower diligently
commences and prosecutes such cure, Lender shall allow a reasonable
additional time period (not to exceed sixty (60) additional days) to
complete such cure.
20. Default Interest. Upon the occurrence of any Event of Default (including,
without limitation, the failure of Borrower to pay the Debt in full on the
Maturity Date), Borrower shall pay interest on the unpaid principal balance of
the Note at the Default Rate (as defined in the Note).
21. Right to Cure Defaults. Upon the occurrence of any Event of Default, or
if Borrower fails to make any payment or to do any act as herein required,
Lender may do such acts or make such payments in Borrower's stead, in such
manner and to the extent that Lender may deem necessary to protect the security
hereof. Any such acts or payments by Lender shall be at Lender's sole
discretion, may be taken without notice to or demand on Borrower, and will not
release Borrower from any obligation hereunder. Lender is authorized to enter
upon the Mortgaged Property for such purposes, or appear in, defend or bring any
action or proceeding to protect its interest in the Mortgaged Property, to cause
this Mortgage to be foreclosed or to collect the Debt. All such costs and
expenses (including attorney fees) incurred by Lender in remedying any such
Event of Default, in acting or making payments in Borrower's stead, or in
appearing in, defending or bringing any of the foregoing actions or proceedings,
shall bear interest at the Default Rate from the date incurred by Lender until
the date of payment to Lender. All such costs and expenses incurred by Lender
together with interest thereon calculated at the above rate shall be deemed to
constitute a portion of the Debt and be secured by this Mortgage and the Other
Security Documents and shall be immediately due and payable upon demand by
Lender therefor.
22. Prepayment After Event of Default. If following the occurrence of any
Event of Default, Borrower shall tender payment of an amount sufficient to
satisfy the Debt at any time prior to a sale
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<PAGE> 20
of the Mortgaged Property, either through foreclosure or the exercise of other
remedies available to Lender under this Mortgage or the Other Security
Documents, such tender by Borrower shall be deemed to be a voluntary prepayment
under the Note and all applicable Prepayment Consideration shall be immediately
due and payable.
23. Lender's Remedies.
(a) Upon the occurrence of any Event of Default, Lender may take such
action, without notice or demand, as it deems advisable to protect and
enforce its rights against Borrower and in and to the Mortgaged Property,
including, without limitation, the following actions:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute proceedings to foreclose this Mortgage, in which
case the Mortgaged Property or any interest therein may be sold for
cash or upon credit in one or more parcels or in several interests
or portions and in any order or manner;
(iii) with or without entry, to the extent permitted and pursuant
to the procedures provided by applicable law, institute proceedings
for the partial foreclosure of this Mortgage for the portion of the
Debt then due and payable, subject to the continuing lien of this
Mortgage for the balance of the Debt not then due;
(iv) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement
contained herein, in the Note or the Other Security Documents;
(v) recover judgment on the Note either before, during or after
any proceedings for the enforcement of this Mortgage;
(vi) apply for the appointment of a trustee, receiver, liquidator
or conservator of the Mortgaged Property, without notice and without
regard for the adequacy of the security for the Debt or the solvency
of the Borrower, any Guarantor or of any person, firm or other
entity liable for the payment of the Debt;
(vii) enforce Lender's interest in the Leases and Rents and enter
into or upon the Mortgaged Property, either personally or by its
agents, nominees or attorneys and dispossess Borrower and its
agents and servants therefrom, and thereupon Lender may: (A) use,
operate, manage, control, insure, maintain, repair, restore and
otherwise deal with all and every part of the Mortgaged Property
and conduct the business thereat; (B) complete any construction on
the Mortgaged Property in such manner and form as Lender deems
advisable; (C) make alterations, additions, renewals, replacements
and improvements to or on the Mortgaged Property; (D) exercise all
rights and powers of Borrower with respect to the Mortgaged
Property, whether in the name of Borrower or otherwise, including,
without limitation, the right to make, cancel, enforce or modify
Leases, obtain and evict tenants, and demand, sue for, collect and
receive all earnings, revenues, rents, issues, profits and other
income of the Mortgaged Property and every part thereof; and (E)
apply the receipts from the Mortgaged Property to the payment of
the Debt, after deducting therefrom all expenses (including
reasonable attorney fees) incurred in connection with the
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<PAGE> 21
aforesaid operations and all amounts necessary to pay the Taxes,
assessments, Insurance Premiums and Other Charges in connection with
the Mortgaged Property, as well as just and reasonable compensation
for the services of Lender, its counsel, agents and employees; or
(viii) pursue such other rights and remedies as may be available
at law and in equity.
In the event of a sale, by foreclosure or otherwise, of less than all of
the Mortgaged Property, this Mortgage shall continue as a lien on the
remaining portion of the Mortgaged Property.
(b) Upon the completion of any sale or sales made under or by virtue of
this Mortgage, an officer of any court empowered to do so shall execute
and deliver to the purchaser or purchasers a good and sufficient
instrument, or good and sufficient instruments, conveying, assigning and
transferring all estate, right, title and interest in and to the property
and rights sold. Lender is hereby irrevocably appointed the true and
lawful attorney of Borrower, in its name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the Mortgaged
Property and rights so sold, and for that purpose Lender may execute all
necessary instruments of conveyance, assignment and transfer, and may
substitute one or more persons with like power, Borrower hereby ratifying
and confirming all that Lender shall lawfully do by virtue hereof. Any
such sale or sales made under or by virtue of this Mortgage pursuant to
any proceedings to foreclose this Mortgage or any judgment or decree of
foreclosure and sale, shall operate to divest all the estate, right,
title, interest, claim and demand whatsoever, whether at law or in
equity, of Borrower in and to the properties and rights so sold, and
shall be a perpetual bar both at law and in equity against Borrower and
against any all persons claiming or who may claim the same, or any part
thereof from, through or under Borrower.
(c) Upon any sale made under or by virtue of this Mortgage pursuant to
any proceedings to foreclose this Mortgage or any judgment or decree of
foreclosure and sale, Lender may bid for and acquire the Mortgaged
Property or any part thereof and in lieu of paying cash therefor may make
settlement for the purchase price by crediting upon the Debt the net
sales price after deducting therefrom (to the extent allowed by
applicable law) the expenses of the sale and costs of the action and any
other sums which Lender is authorized to deduct under this Mortgage.
(d) No recovery of any judgment by Lender and no levy of an execution
under any judgment upon the Mortgaged Property or upon any other property
of Borrower shall affect in any manner or to any extent the lien of this
Mortgage upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Lender hereunder, but such liens, rights,
powers and remedies of Lender shall continue unimpaired as before.
24. Additional Lender's Remedies. If an Event of Default shall have occurred,
Lender shall have the following rights and remedies, which shall be in addition
to and not in limitation of any other rights and remedies set forth in this
Mortgage:
(a) Lender may commence foreclosure proceedings against the
Mortgaged Property, as an entirety (including personal property) or
otherwise as the Lender may determine, through judicial proceedings
or by advertisement, at the option of the
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Lender, pursuant to the statutes in such case made and provided, and sell
the Mortgaged Property or cause the same to be sold at public sale and
convey the same to the purchaser, in accordance with said statutes, in a
single parcel or in several parcels at the option of the Lender. By
execution of this Mortgage, Borrower has granted to Lender the power to
sell and convey any or all of the Mortgaged Property at public sale in
accordance with the statutes providing therefor, or as otherwise provided
herein. Borrower agrees that no notice of any sale other than as
specifically required by applicable law need be given by Lender or any
other person. Lender shall have the privilege of selling the Mortgaged
Property together or in lots or parcels, as to it shall seem expedient,
and shall receive the proceeds of such sale;
(b) Lender may collect and receive all earnings, revenues, rents,
issues, profits and income of the Mortgaged Property and every part
thereof, all of which shall for all purposes constitute property of the
Lender; and after deducting the expenses of conducting the business
thereof and of all maintenance, repairs, renewals, replacements,
alterations, additions, betterments and improvements and amounts necessary
to pay for taxes, assessments, insurance and prior or other proper charges
upon the Mortgaged Property or any part thereof, as well as just and
reasonable compensation for the services of the Lender and for all
attorneys, counsel, agents, clerks, servants and other employees properly
engaged and employed by Lender, the Lender shall apply the monies arising
as aforesaid to the Debt in such manner and order as Lender shall
determine in its sole and absolute discretion. In connection with the
Lender's right to possession of the Mortgaged Property the Borrower
acknowledges that it has been advised that there is a significant body of
law in Michigan which purportedly provides that in the absence of a
showing of waste of a character sufficient to endanger the value of the
Mortgaged Property (or of other special factors) a person in the role of
the Borrower is entitled to remain in possession of the Mortgaged Property
and to enjoy the earnings, revenues, rents, issues, profits and income of
the Mortgaged Property during the pendency of foreclosure proceedings and
until the expiration of the redemption period, notwithstanding that the
mortgage expressly provides to the contrary. The Borrower further
acknowledges that it has been advised that the Lender considers that the
value of the security granted hereby is inextricably intertwined with the
effectiveness of the management, maintenance and general operation of the
Mortgaged Property and that the Lender would not make the loan secured
hereby unless it could be assured that it would have the right to take
possession of the Mortgaged Property and manage or control management
thereof and enjoy the earnings, revenues, rents, issues, profits and
income of the Mortgaged Property therefrom immediately upon an Event of
Default notwithstanding that foreclosure proceedings may not have been
instituted or are pending or that the redemption period, if any, may not
have expired. The Borrower hereby knowingly, intelligently and
voluntarily waives all rights to possession of the Mortgaged Property from
and after the occurrence of an Event of Default and upon demand for
possession by the Lender the Borrower agrees not to assert any objection
or defense to the Lender's request or to petition to a court for
possession, and hereby consents to the appointment of a receiver for the
Mortgaged Property. The rights hereby conferred upon the Lender have been
agreed upon prior to the occurrence of an Event of Default and the
exercise by the Lender of these rights shall not be deemed to put the
Lender in the status of a "mortgagee in possession". The
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Borrower acknowledges that this provision is material to this
transaction and that the Lender would not make the loan secured hereby
but for this Paragraph 24(b);
(c) To the extent permitted by applicable law, the Lender shall have all
of the remedies of a secured party under the Uniform Commercial Code (as
defined herein), including, without limitation, the right and power to
sell, or otherwise dispose of, the Collateral (as defined herein), or any
part thereof, and for that purpose may take immediate and exclusive
possession of the Collateral, or any part thereof, and with or without
judicial process, enter upon any premises on which the Collateral, or any
part thereof, may be situated and remove the same therefrom without being
deemed guilty of trespass and without liability for damages thereby
occasioned, or at the Lender's option, the Borrower shall assemble the
Collateral and make it available to the lender at the place and at the
time designated in the demand. The Lender shall be entitled to hold,
maintain, preserve and prepare the Collateral for sale. To the extent
permitted by law, the Borrower expressly waives any right or remedy of the
Lender existing after default hereunder, other than notice of sale or
other disposition of the Collateral required by law, and the Borrower
agrees that as it relates to this Paragraph 24(c) only, if such notice is
mailed, postage prepaid, to the Borrower at the above address at least
five (5) days before the time of the sale or disposition, such notice
shall be deemed reasonable and shall fully satisfy any requirement for
giving of said notice; or
(d) Lender may receive and collect the rents, issues, profits and
revenues of the Mortgaged Property personally or through a receiver so
long as such Event of Default shall exist and during the pendency of any
foreclosure proceedings and during any redemption period, and the Borrower
agrees to consent to a receiver if this is believed necessary or desirable
by the Lender to enforce its rights hereunder. The Lender shall be
entitled to all of the rights and benefits conferred by Act No. 210 of the
Michigan Public Acts of 1953 as amended by Act No. 151 of the Michigan
Public Acts of 1966 (MCL Section E554.231 et seq.). The collection of
rents, issues, profits or revenues of the Mortgaged Property by the Lender
shall in no way waive the right of the Lender to foreclose this Mortgage
in the event of any said Event of Default.
25. Late Charges. If any portion of the Debt is not actually received by
Lender by close of business on the tenth (10th) day after the date on which it
was due, Borrower shall pay to Lender an amount (the "Late Charge") equal to
the lesser of five percent (5%) of such unpaid portion of the Debt or the
maximum amount permitted by applicable law, to defray the expenses incurred by
Lender in handling and processing such delinquent payment and to compensate
Lender for the loss of the use of such delinquent payment. All such Late
Charges shall be automatically due and payable without any notice or demand and
shall be secured by this Mortgage and the Other Security Documents.
26. Changes in the Laws Regarding Taxation. If any law is enacted or adopted
or amended after the date of this Mortgage which deducts the Debt from the
value of the Mortgaged Property for the purpose of taxation or which imposes a
tax, either directly or indirectly, on the Debt or Lender's interest in the
Mortgaged Property, Borrower will pay such tax, with interest and penalties
thereon, if any. In the event Lender is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Borrower would be unlawful
or taxable to Lender or unenforceable or provide the basis for a defense of
usury, then in any such event, Lender shall have the option, by
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written notice of not less than ninety (90) days, to declare the entire Debt
immediately due and payable; provided, however, that no Prepayment Consideration
shall be required solely as a result of a prepayment required by any such
declaration.
27. No Credits on Account of the Debt. Borrower will not claim or demand or
be entitled to any credit or credits on account of the Debt for any part of the
Taxes or Other Charges assessed against the Mortgaged Property, or any part
thereof, and no deduction shall otherwise be made or claimed from the assessed
value of the Mortgaged Property, or any part thereof, for real estate tax
purposes by reason of this Mortgage or the Debt. In the event such claim,
credit or deduction shall be required by law, Lender shall have the option, by
written notice of not less than ninety (90) days, to declare the entire Debt
immediately due and payable; provided, however, that no Prepayment Consideration
shall be required solely as a result of a prepayment required by any such
declaration.
28. Documentary Stamps. If at any time the United States of America, any
State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Borrower will pay for the same, with interest and
penalties thereon, if any.
29. Usury Laws. This Mortgage, the Other Security Documents and the Note are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the Debt or any other charges at a rate which could
subject Lender to either civil or criminal liability as a result of being in
excess of the maximum interest rate which Borrower is permitted by law to
contract or agree to pay. If by the terms of this Mortgage, the Other Security
Documents or the Note, Borrower is at any time required or obligated to pay any
such amounts at a rate in excess of such maximum rate, the rate of interest
under the Note shall be deemed to be immediately reduced to such maximum rate
and the interest payable shall be computed at such maximum rate and all
previous payments in excess of such maximum rate shall be deemed to have been
payments in reduction of the principal and not on account of the interest due
hereunder.
30. Right of Entry. Lender and its agents shall have the right to enter and
inspect the Mortgaged Property at all reasonable times.
31. Reasonable Use and Occupancy. In addition to the rights which Lender may
have herein, upon the occurrence of any Event of Default, Lender, at its
option, may require Borrower to pay monthly in advance to Lender, or any
receiver appointed to collect the Rents, the fair and reasonable rental value
for the use and occupation of such part of the Mortgaged Property as may be
occupied by Borrower, or may require Borrower to vacate and surrender
possession of the Mortgaged Property to Lender or to such receiver and, in
default thereof, Borrower may be evicted by summary proceedings or otherwise.
32. Security Agreement. This Mortgage is both a real property mortgage and a
"security agreement" within the meaning of the Uniform Commercial Code adopted
and enacted by the State or States where any of the Mortgaged Property is
located (the "Uniform Commercial Code"), made by and between Borrower, as
debtor, and Lender, as secured party. Borrower by executing and delivering
this Mortgage has granted and hereby grants to Lender, as security for the
Debt, a security interest in the Mortgaged Property to the full extent that the
Mortgaged Property may be subject to the Uniform Commercial Code (said portion
of the Mortgaged Property so subject to the Uniform Commercial Code being
herein referred to as the "Collateral"). If an Event of Default shall occur,
Lender, in addition to any other rights and remedies which it may have, shall
have and may exercise
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immediately and without demand any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing, the right to take possession of the
Collateral or any part thereof, and to take such other measures as Lender may
deem necessary for the care, protection and preservation of the Collateral.
Upon request or demand of Lender, Borrower shall at its expense assemble the
Collateral and make it available to Lender at a convenient place acceptable to
Lender. Borrower shall pay to Lender on demand any and all expenses, including
legal expenses and attorney fees, incurred or paid by Lender in protecting the
interest in the Collateral and in enforcing Lender's rights hereunder with
respect to the Collateral. Any notice of sale, disposition or other intended
action by Lender with respect to the Collateral sent to Borrower in accordance
with the provisions hereof at least five (5) days prior to such action, shall
constitute commercially reasonable notice to Borrower. The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Lender to
the payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper.
33. Actions and Proceedings. Lender has the right to appear in and defend any
action or proceeding brought with respect to the Mortgaged Property and to
bring any action or proceeding, in the name and on behalf of Borrower, which
Lender, in its discretion, decides should be brought to protect its interest in
the Mortgaged Property. Lender shall, at its option, be subrogated to the lien
of any deed of trust, mortgage or other security instrument discharged in whole
or in part by the Debt, and any such subrogation rights shall constitute
additional security for the payment of the Debt.
34. Waiver of Counterclaim. Borrower hereby waives the right to assert a
counterclaim, other than a mandatory or compulsory counterclaim, in any action
or proceeding brought against it by Lender, and, to the extent permitted by
law, waives trial by jury in any action or proceeding brought by either party
hereto against the other or in any counterclaim asserted by Lender against
Borrower, or in any matters whatsoever arising out of or in any way connected
with this Mortgage, the Note, any of the Other Security Documents or the Debt.
35. Recovery of Sums Required to Be Paid. Lender shall have the right from
time to time to take action to recover any sum or sums which constitute a part
of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of Lender
thereafter to bring an action of foreclosure, or any other action, for a
default or defaults by Borrower existing at the time such earlier action was
commenced.
36. Marshalling and Other Matters. Borrower hereby waives, to the extent
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement, redemption and similar laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Mortgaged
Property or any part thereof or any interest therein. Further, Borrower hereby
expressly waives any and all rights of redemption from sale under any order or
decree of foreclosure of this Mortgage on behalf of Borrower, and on behalf of
each and every person acquiring any interest in or title to the Mortgaged
Property subsequent to the date of this Mortgage and on behalf of all persons
to the extent permitted by applicable law.
37. Hazardous Waste. Borrower hereby represents and warrants to Lender that,
to the best of Borrower's knowledge, after due inquiry and investigation: (a)
except as disclosed to Lender in the environmental report specifically referred
to in an addendum (if any) attached hereto, the Mortgaged Property is not in
violation of any local, state, federal or other governmental authority,
statute, ordinance, code, order, decree, law, rule or regulation pertaining to
or imposing liability or standards of conduct concerning environmental
regulation, contamination or cleanup including, without
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limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended ("CERCLA"), the Resource Conservation and Recovery Act, as
amended ("RCRA"), and any state superlien and environmental cleanup statutes
(collectively, "Environmental Laws"); (b) the Mortgaged Property is not subject
to any private or governmental lien or judicial or administrative notice or
action relating to hazardous and/or toxic, dangerous and/or regulated,
substances, wastes, materials, pollutants or contaminants, petroleum, petroleum
by-products, friable asbestos, tremolite, anthlophylie or actinolite or
polychlorinated biphenyls (including, without limitation, any raw materials
which include hazardous constituents) and any other substances or materials
which are included under or regulated by Environmental Laws (collectively,
"Hazardous Substances"); (c) except as disclosed to Lender in the environmental
report specifically referred to in an addendum (if any) attached hereto, no
Hazardous Substances are or have been discharged, generated, treated, disposed
of or stored on, incorporated in, or removed or transported from the Mortgaged
Property otherwise than in compliance with all Environmental Laws; and (d)
except as disclosed to Lender in the environmental report specifically referred
to in an addendum (if any) attached hereto, no underground storage tanks exist
on any of the Mortgaged Property.
Notwithstanding anything previously disclosed to Lender, so long as
Borrower owns or is in possession of the Mortgaged Property, Borrower shall keep
or cause the Mortgaged Property to be kept free from Hazardous Substances and in
compliance with all Environmental Laws and shall notify Lender within five (5)
business days after Borrower becomes aware of the existence of any Hazardous
Substances on, or any alleged or actual violation of any Environmental Laws with
respect to, the Mortgaged Property. Borrower shall remove any such Hazardous
Substances and/or cure any such violations, as applicable, as required by law,
promptly after Borrower becomes aware of same, at Borrower's sole expense.
Additionally, Borrower shall obtain and implement an asbestos-containing
material operations and maintenance program for all identified and presumed
asbestos-containing materials on or in the Mortgaged Property. Nothing herein
shall prevent Borrower from recovering such expenses from any other party
(excluding Lender) that may be liable for such removal or cure. If, at any time
and from time to time while this Mortgage is in effect, Lender has reasonable
cause to believe that Borrower has violated, or permitted any violations, under
this paragraph 37, then Borrower shall provide, at Borrower's sole expense, an
inspection or audit of the Mortgaged Property prepared by a licensed
hydrogeologist or licensed environmental engineer approved by Lender indicating
the presence or absence of Hazardous Substances on, or violation of
Environmental Laws at the Mortgaged Property. If Borrower fails to provide such
inspection or audit within thirty (30) days after such request, Lender may order
same, and Borrower hereby grants to Lender and its employees and agents access
to the Mortgaged Property to undertake such inspection or audit. The cost of
such inspection or audit shall be immediately due and payable, shall be added to
the Debt and shall bear interest at the Default Rate from the date expended by
Lender until paid by Borrower. The obligations and liabilities of Borrower
under this paragraph 37 shall survive any termination, satisfaction, or
assignment of this Mortgage and the exercise by Lender of any of its rights or
remedies hereunder, including but not limited to, the acquisition of the
Mortgaged Property by foreclosure or a conveyance in lieu of foreclosure.
38. Access Laws.
(a) Borrower agrees that the Mortgaged Property shall at all times
comply with the requirements of the Americans with Disabilities Act of
1990, the Fair Housing Amendments Act of 1988, all similar state and local
laws and ordinances related to access and all rules, regulations, and
orders issued pursuant thereto including, without limitation, the
Americans
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with Disabilities Act Accessibility Guidelines for Buildings and
Facilities (collectively the "Access Laws").
(b) Notwithstanding any provisions set forth herein or in any other
document regarding Lender's approval of alterations of the Mortgaged
Property, Borrower shall not alter the Mortgaged Property in any manner
which would increase Borrower's responsibilities for compliance with the
applicable Access Laws without the prior written approval of Lender. The
foregoing shall apply to tenant improvements constructed by Borrower or by
any of its tenants. Lender may condition any such approval upon receipt
of a certificate of an architect, engineer or other person acceptable to
Lender regarding compliance with applicable Access Laws.
(c) Borrower agrees to give prompt notice to Lender of the receipt by
Borrower of any complaints related to any violations of any Access Laws
and of the commencement of any proceedings or investigations which relate
to compliance with applicable Access Laws.
39. Indemnification. In addition to any other indemnifications provided herein
or in the Other Security Documents, Borrower shall protect, defend, indemnify
and save harmless Lender from and against all liabilities, obligations, claims,
demands, damages, penalties, causes of action, losses, fines, costs and
expenses (including without limitation reasonable attorney fees and expenses),
imposed upon, incurred by or asserted against Lender by reason of: (a)
ownership of this Mortgage, the Mortgaged Property or any interest therein or
receipt of any Rents; (b) any accident, injury to or death of persons or loss
of or damage to property occurring in, on or about the Mortgaged Property or
any part thereof or on the adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (c) any use, nonuse or condition in,
on or about the Mortgaged Property or any part thereof or on adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(d) any failure on the part of Borrower to perform or comply with any of the
terms of this Mortgage; (e) performance of any labor or services or the
furnishing of any materials or other property in respect of the Mortgaged
Property or any part thereof; (f) the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or threatened release of any
Hazardous Substance on, from or affecting: (I) the Mortgaged Property; or (II)
any other property by reason of any use or ownership of the Mortgaged Property
or any action or inaction by Borrower; (g) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to any Hazardous Substance; (h) any lawsuit brought or threatened, settlement
reached, or government order relating to any Hazardous Substance on, from or
affecting: (I) the Mortgaged Property; or (II) any other property by reason of
any use or ownership of the Mortgaged Property or any action or inaction by
Borrower; (i) any violation of the Environmental Laws, which are based upon or
in any way related to any Hazardous Substance including, without limitation,
the costs and expenses of any remedial action, attorney and consultant fees,
investigation and laboratory fees, court costs, and litigation expenses; and
(j) any failure of the Mortgaged Property to comply with any Access Laws. Any
amounts payable to Lender by reason of the application of this indemnification
shall be secured by this Mortgage and the Other Security Documents, shall
become immediately due and payable and shall bear interest at the Default Rate
from the date loss or damage is sustained by Lender until paid. The
obligations and liabilities of Borrower under this paragraph 39 shall survive
any termination, satisfaction or assignment of this Mortgage and the exercise
by Lender of any of its rights or remedies hereunder, including, but not
limited to, the acquisition of the Mortgaged Property by foreclosure or a
conveyance in lieu of foreclosure.
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40. Notices. Except as otherwise specified herein, any notice, consent,
request or other communication required or permitted to be given hereunder
shall be in writing, addressed to the other party as set forth below (or to
such other address or person as either party or person entitled to notice may
by notice to the other party specify), and shall be: (a) personally delivered;
(b) delivered by Federal Express or some comparable overnight delivery service;
or (c) transmitted by United States certified mail, return receipt requested
with postage prepaid; to:
Lender: Midland Loan Services, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Borrower: Frank's Nursery & Crafts, Inc.
6501 East Nevada
Detroit, MI 48234
Attention: Robert M. Lovejoy, Jr.
Unless otherwise specified, all notices and other communications shall be
deemed to have been duly given on the first to occur of actual receipt of the
same or: (i) the date of delivery if personally delivered; (ii) one (1)
business day after depositing the same with the delivery service if by
overnight delivery service; and (iii) three (3) business days following posting
if transmitted by mail.
41. Authority.
(a) Borrower (and the undersigned representative of Borrower, if any)
has full power, authority and right to execute, deliver and perform its
obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep
and observe all of the terms of this Mortgage on Borrower's part to be
performed.
(b) Borrower represents and warrants that Borrower is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue
Code of 1986, as amended, and the related Treasury Department
regulations, including temporary regulations.
42. Waiver of Notice. Borrower shall not be entitled to any notices of any
nature whatsoever from Lender except with respect to matters for which this
Mortgage specifically and expressly provides for the giving of notice by Lender
to Borrower and except with respect to matters for which Lender is required by
applicable law to give notice, and Borrower hereby expressly waives the right
to receive any other notice.
43. Remedies of Borrower. In the event that a claim or adjudication is made
that Lender has acted unreasonably or unreasonably delayed acting in any case
where by law or under the Note, this Mortgage or the Other Security Documents,
it has an obligation to act reasonably or promptly, Lender shall not be liable
for any monetary damages, and Borrower's remedies shall be limited to
injunctive relief or declaratory judgment.
44. Sole Discretion of Lender. Wherever pursuant to this Mortgage, Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide that arrangements or terms are satisfactory
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or not satisfactory shall be in the sole and absolute discretion of Lender and
shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
45. Nonwaiver. The failure of Lender to insist upon strict performance of any
term hereof shall not be deemed to be a waiver of any term of this Mortgage.
Borrower shall not be relieved of Borrower's obligations hereunder by reason
of: (a) the failure of Lender to comply with any request of Borrower or any
Guarantor to take any action to foreclose this Mortgage or otherwise enforce
any of the provisions hereof, of the Note or the Other Security Documents; (b)
the release, regardless of consideration, of the whole or any part of the
Mortgaged Property, or of any person liable for the Debt or any portion
thereof; or (c) any agreement or stipulation by Lender extending the time of
payment or otherwise modifying or supplementing the terms of the Note, this
Mortgage or the Other Security Documents. Lender may resort for the payment of
the Debt to any other security held by Lender in such order and manner as
Lender, in its discretion, may elect. Lender may take action to recover the
Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Lender thereafter to foreclose this Mortgage. The
rights and remedies of Lender under this Mortgage and the Other Security
Documents shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Lender shall be construed as
an election to proceed under any one provision herein to the exclusion of any
other provision. Lender shall not be limited exclusively to the rights and
remedies herein stated but shall be entitled to every right and remedy now or
hereafter afforded at law or in equity.
46. No Oral Change. This Mortgage, and any provisions hereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally
or by any act or failure to act on the part of Borrower or Lender, but only by
an agreement in writing signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
47. Liability. If Borrower consists of more than one person, the obligations
and liabilities of each such person hereunder shall be joint and several. This
Mortgage shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and assigns forever.
48. Inapplicable Provisions. If any term, covenant or condition of the Note
or this Mortgage is held to be invalid, illegal or unenforceable in any respect,
the Note and this Mortgage shall be construed without such provision.
49. Headings, etc. The headings and captions of various paragraphs of this
Mortgage are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.
50. Duplicate Originals. This Mortgage may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to be an
original.
51. Definitions. Unless the context clearly indicates a contrary intent or
unless otherwise specifically provided herein, words used in this Mortgage
(including pronouns) shall include the corresponding masculine, feminine or
neuter forms, and the singular form such words shall include the plural and
vice versa. The word "Borrower" shall mean "each Borrower and any subsequent
owner or owners of the Mortgaged Property or any part thereof or any interest
therein"; the word "Lender" shall mean "Lender and any subsequent holder of the
Note"; the word "Note" shall mean "the Note and any other evidence of
indebtedness secured by this Mortgage"; the word "person" shall
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include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority and any other entity; and the
words "Mortgaged Property" shall include any portion of the Mortgaged Property
and any interest therein.
52. Homestead. Borrower hereby waives and renounces all homestead and
exemption rights provided by the constitution and the laws of the United States
and of any state, in and to the Mortgaged Property as against the collection of
the Debt, or any part hereof.
53. Assignments. Lender shall have the right to assign or transfer its rights
under this Mortgage without limitation. Any assignee or transferee shall be
entitled to all the benefits afforded Lender under this Mortgage.
54. Exculpation. Notwithstanding anything to the contrary contained in this
Mortgage, the liability of Borrower and its general partners (if any) for the
payment of the Debt and for the performance of the other agreements, covenants
and obligations contained herein, in the Note or in any of the Other Security
Documents shall be limited as set forth in Paragraph 12 of the Note.
55. Integration. This Mortgage, the Note and the Other Security Documents
embody the entire agreement by and between Borrower and Lender with respect to
the Loan, and any and all prior correspondence, discussions or negotiations are
deemed merged therein; provided, however, that except to the extent
inconsistent with the specific terms and provisions of this Mortgage, the Note
and the Other Security Documents, all representations, warranties, statements,
covenants and agreements of Borrower contained in any loan commitment and/or
loan application executed in connection with the Loan shall survive the funding
of the Loan, any termination, satisfaction, or assignment of this Mortgage and
the exercise by Lender of any of its rights or remedies hereunder, including
but not limited to, the acquisition of the Mortgaged Property by foreclosure or
a conveyance in lieu of foreclosure.
56. Applicable Law; Jurisdiction. This Mortgage shall be governed and
construed in accordance with the laws of the state in which the Premises and
Improvements encumbered by this Mortgage is located, without regard to conflict
of law provisions thereof. Borrower hereby submits to personal jurisdiction in
the state courts located in said state and the federal courts of the United
States of America (and any appellate courts taking appeals thereof) located in
said state for the enforcement of Borrower's obligations hereunder and waives
any and all personal rights under the law of any other state to object to
jurisdiction within such state for the purposes of any action, suit, proceeding
or litigation to enforce such obligations of Borrower. Borrower hereby waives
and agrees not to assert, as a defense in any action, suit, proceeding or
litigation arising out of or relating to this Mortgage, the Note and/or any of
the Other Security Documents: (a) that it is not subject to such jurisdiction
or that such action, suit, proceeding or litigation may not be brought or is
not maintainable in those courts or that this Mortgage, the Note and/or any of
the Other Security Documents may not be enforced in or by those courts or that
it is exempt or immune from execution; (b) that the action, suit, proceeding or
litigation is brought in an inconvenient forum; or (c) that the venue of the
action, suit, proceeding or litigation is improper.
57. Additional Terms and Provisions. Certain additional and supplemental
terms and provisions of this Mortgage are set forth in the Addendum to Mortgage,
Security Agreement and Assignment of Leases and Rents attached hereto and
incorporated herein by this reference.
27
<PAGE> 31
IN WITNESS WHEREOF, Borrower has executed this Mortgage, Security
Agreement and Assignment of Leases and Rents to be effective as of the day and
year first above written.
In the presence of: "Borrower"
Lauren J. Cato FRANK'S NURSERY & CRAFTS, INC.,
- -------------------------------- a Michigan corporation
Print Name: Lauren J. Cato
--------------------
Maxine J. Lievois By: Robert M. Lovejoy, Jr.
- -------------------------------- ---------------------------
Print Name: Maxine J. Lievois Robert M. Lovejoy, Jr.
-------------------- Vice President and Treasurer
ACKNOWLEDGEMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF Wayne )
---------
The foregoing instrument was acknowledged before me this 14th day of
March, 1996, by Robert M. Lovejoy, Jr., the Vice President and Treasurer of
Frank's Nursery & Crafts, Inc. , a Michigan corporation, on behalf of the
corporation.
SHERRY L. RYGWELSKI
-------------------------------------------
Notary Public, Wayne County, Michigan
-----------
My Commission Expires: 12-27-98
---------------------
[Notary Seal]
Mortgage - Michigan
Last Revised May 18, 1995
28
<PAGE> 32
EXHIBIT A
LEGAL DESCRIPTION
The real property situated in the County of Kent, State of Michigan,
described as follows:
Parcel 1:
Part of the West 1/2 of the Northwest 1/4, Section 15, T6N, R11W, City of Grand
Rapids, Kent County, Michigan, commencing at the Northeast corner thereof;
thence North 89 degrees 36 minutes 30 seconds West 480.0 feet along the North
section line; thence South 02 degrees 52 minutes East 54.6 feet parallel with
the West 1/8 line to the South line of 28th Street (100 feet wide) and
beginning of this description; thence South 02 degrees 52 minutes East to a
line 450 feet South from and parallel with the South line of 28th Street;
thence 90 degrees 00 minutes West along said line to the East line of the West
348 feet of the Northwest 1/4; thence North 02 degrees 57 minutes 30 seconds
West along said East line to a point 192.25 feet South from the South line of
28th Street; thence North 90 degrees 00 minutes East 93.11 feet; thence North
00 degrees 00 minutes 159.00 feet; thence North 90 degrees 00 minutes East 36.0
feet; thence North perpendicular to the South line of 28th Street to the South
line of the North 15 feet of that part of the Northwest 1/4 lying South of the
South line of 28th Street; thence East along said South line to the East line
of the West 548 feet of the Northwest 1/4; thence North along said East line to
the South line of 28th Street; thence East along the South line of 28th Street
to beginning; except commencing 494.46 feet North 89 degrees 36 minutes 30
seconds West along the North section line and 54.68 feet South 0 degrees 05
minutes East from the Northeast corner of the West 1/2 of the Northwest 1/4;
thence South 00 degrees 05 minutes East 410.90 feet; thence South 89 degrees 55
minutes West 100.0 feet; thence North 00 degrees 05 minutes West 376.04 feet;
thence 90 degrees 00 minutes East 10.0 feet; thence North 0 degrees 05 minutes
West 35.0 feet; thence North 90 degrees 00 minutes East 90.0 feet along the
South line of 28th Street to beginning.
Parcel 2:
Easement for pedestrian and vehicular passage and vehicular parking on, over
and across that certain property described in Exhibit D to that certain
Reciprocal Easement Grant dated September 6, 1984, and filed for record in
Liber 2440 at Page 569, appurtenant to and for the benefit of the property
described above as Parcel 1.
Parcel 3:
Easement for pedestrian and vehicular passage and vehicular parking on, over
and across that certain property described in Exhibit D to that certain
Reciprocal Easement Grant dated July 18, 1983, and filed for record in Liber
2406 at Page 915, appurtenant to and for the benefit of the property described
above as Parcel 1.
29
<PAGE> 33
EXHIBIT B
PROMISSORY NOTE
30
<PAGE> 34
Loan No.: 94-0903604
PROMISSORY NOTE Store 25
$682,878.00 Michigan
March 14, 1996
FOR VALUE RECEIVED Frank's Nursery & Crafts, Inc., a Michigan corporation
("Borrower"), having its principal place of business at 6501 East Nevada,
Detroit, Michigan 48234, promises to pay to the order of Midland Loan Services,
L.P., a Missouri limited partnership ("Lender"), at the following address:
210 West 10th Street, 6th Floor, Kansas City, Missouri 64105; or such other
place as the holder hereof may from time to time designate in writing, the
principal sum of Six Hundred Eighty-two Thousand Eight Hundred Seventy-eight
and No/100 Dollars ($682,878.00) in lawful money of the United States of
America, with interest thereon to be computed from the date of disbursement
under this Promissory Note (the "Note") at the Applicable Interest Rate
(hereinafter defined), and to be paid in installments as follows:
A. A payment, on the date hereof, in the amount of $3,168.54
representing interest from the date of disbursement through the
last day of the calendar month in which such disbursement is made;
B. A constant payment of $6,267.54 on the first day of May, 1996 and
on the first day of each calendar month thereafter up to and
including the first day of March, 2006, each of such payments to be
applied: (a) to the payment of interest computed at the Applicable
Interest Rate; and (b) the balance applied toward the reduction of
the principal sum; and
C. The balance of said principal sum, all unpaid interest thereon and
all other amounts owed pursuant to this Note, the Mortgage
(hereinafter defined), the Other Security Documents (hereinafter
defined), or otherwise in connection with the loan evidenced by
this Note shall be due and payable on the first day of April, 2006
(the "Maturity Date").
All payments to be made by Borrower to Lender shall be deemed received by
Lender only upon Lender's actual receipt of same.
1. Applicable Interest Rate. Interest on the principal sum of this
Note shall be calculated on the basis of a three hundred sixty (360) day year
composed of twelve (12) months of thirty (30) days each except that interest
due and payable for a period less than a full month shall be calculated by
multiplying the actual number of days elapsed in such period by a daily rate
based on said 360 day year. The term "Applicable Interest Rate" as used in
this Note shall mean, from the date of this Note through and including the
Maturity Date, a rate of Nine and 28/100 percent (9.28%) per annum.
2. Late Charge. If any sum payable under this Note is not received
by Lender by close of business on the tenth (10th) day after the date on which
it was due, Borrower shall pay to Lender an amount (the "Late Charge") equal to
the lesser of five percent (5%) of the full amount of such
<PAGE> 35
sum, or the maximum amount permitted by applicable law, to defray the expenses
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent payment and any
such Late Charges shall be secured by the Mortgage and Other Security
Documents.
3. Security; Defined Terms; Incorporation by Reference. This Note is
secured by the Mortgage and the Other Security Documents. The term "Mortgage"
as used in this Note shall mean either the Mortgage, Security Agreement and
Assignment of Leases and Rents, or the Deed of Trust, Security Agreement and
Assignment of Leases and Rents, executed and delivered by Borrower
contemporaneously with this Note, which encumbers certain property located in
Kent County, Michigan, and which secures the Debt (hereinafter defined). The
term "Other Security Documents" means all documents other than this Note or the
Mortgage now or hereafter executed and/or delivered by Borrower and/or others
and to or in favor of Lender, which wholly or partially secure, evidence or
guarantee payment of the Debt, provide for any indemnity in favor of or payment
to Lender related to the Debt, the Note or the Mortgaged Property, provide for
any escrow/holdback arrangements or for any actions to be completed by Borrower
subsequent to the date hereof, or are otherwise related to the loan evidenced
by this Note. All amounts due and payable under the Note, together with all
sums due under the Mortgage and the Other Security Documents, including any
applicable Prepayment Consideration (hereinafter defined) and all applicable
attorney fees and costs, are collectively referred to herein as the "Debt."
Where appropriate, the singular number shall include the plural, the plural
shall include the singular, and the words "Lender" and "Borrower" shall include
their respective successors, assigns, heirs, personal representatives,
executors and administrators. The terms, covenants, and conditions of the
Mortgage and Other Security Documents are hereby incorporated herein by
reference and are made a part of this Note to the same extent as if they were
fully set forth herein.
4. Prepayment.
(a) When Permitted. Except as set forth in this Section, Borrower shall
not have the right to prepay all or any portion of the Debt at any time during
the term of this Note. Borrower may prepay the Debt in whole, but not in part
(except for any prepayment permitted under the Mortgage in the event of a
casualty or condemnation) if: (i) no Event of Default (hereinafter
defined) then exists; (ii) any applicable Prepayment Consideration (hereinafter
defined) is tendered with such prepayment; and (iii) the required notice of
prepayment required hereby is timely received by Lender. Notwithstanding
anything to the contrary contained herein, no prepayments will be allowed
during the period from the sixteenth (16th) day through and including the last
day of any calendar month.
(b) Notice. Borrower shall give written notice to Lender specifying the
date on which prepayment is to be made (the "Prepayment Date"). The
designated Prepayment Date must fall within the first fifteen (15) calendar
days of a month during the term of this Note. Lender shall receive this notice
not more than sixty (60) days and not less than (30) days prior to the
Prepayment Date. If any such notice of prepayment is given, the entire Debt,
including any applicable Prepayment Consideration, shall be due and payable on
the Prepayment Date.
(c) Prepayment Consideration. Lender shall not be obligated to
accept any prepayment of the principal balance of this Note unless it is
accompanied by all Prepayment Consideration due in connection therewith.
Except as otherwise set forth in the Mortgage, no Prepayment Consideration will
be due for involuntary prepayments resulting from any Casualty (as defined in
the Mortgage) or Condemnation (as defined in the Mortgage). The "Prepayment
Consideration" shall be computed as follows:
2
<PAGE> 36
Month 1 through 114: The greater of: (i) one percent (1%) of the
outstanding principal balance of the Note
at the time of prepayment; or (ii) the
Yield Maintenance Amount (hereinafter
defined).
Months 115 through
maturity: No Prepayment Consideration.
Borrower acknowledges that the Prepayment Consideration is a bargained for
consideration and not a penalty, and Borrower recognizes that Lender would
incur substantial additional costs and expenses in the event of a prepayment of
the Debt and that the Prepayment Consideration compensates Lender for such
costs and expenses (including without limitation, the loss of Lender's
investment opportunity during the period from the Prepayment Date until the
Maturity Date). Borrower agrees that Lender shall not, as a condition to
receiving the Prepayment Consideration, be obligated to actually reinvest the
amount prepaid in any treasury obligation or in any other manner whatsoever.
(d) Yield Maintenance Amount. The "Yield Maintenance Amount" shall mean the
present value, as of the Prepayment Date, of the remaining scheduled payments
(including any balloon payment) of principal amount being prepaid and interest
on such amount from the Prepayment Date through the Maturity Date (assuming no
prepayment were made), determined by discounting such payments at the Discount
Rate (hereinafter defined), and subtracting therefrom the amount of principal
being prepaid. The term "Discount Rate" shall mean the rate which, when
compounded monthly, is equivalent to the Treasury Rate (hereinafter defined)
when compounded semi-annually. The term "Treasury Rate" shall mean the yield
calculated by the linear interpolation of the yields, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates under the heading U.S.
Government Securities/Treasury Constant Maturities for the week ending prior to
the Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date. (In
the event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Treasury Rate.) Lender shall notify Borrower of
the amount and the basis of determination of the required Prepayment
Consideration.
(e) Prepayment After Event of Default. If following the occurrence of any
Event of Default, Borrower shall tender payment of an amount sufficient to
satisfy the Debt at any time prior to a sale of the "Mortgaged Property" (as
defined in the Mortgage), either through foreclosure or the exercise of the
other remedies available to Lender under the Mortgage or the Other Security
Documents, such tender by Borrower shall be deemed to be a voluntary prepayment
under this Note in the amount tendered and in such case Borrower shall also pay
to Lender, with respect to the amount tendered, the applicable Prepayment
Consideration set forth in this Note, if any, which Prepayment Consideration
shall be immediately due and payable.
5. Default. An "Event of Default" shall occur if:
(a) the Borrower fails to make the full and punctual payment of any amount
payable hereunder or under the Mortgage on a monthly basis, which failure is
not cured on or before the fifth (5th) day after the date of written notice
from Lender to Borrower of such failure;
(b) the Borrower fails to pay the entire outstanding principal balance
hereunder, together with all accrued and unpaid interest, on the date when due,
whether on the Maturity Date, upon acceleration or prepayment or otherwise;
3
<PAGE> 37
(c) the Borrower fails to make the full and punctual payment of any Late
Charges, costs and expenses due hereunder or any other sum of money required to
be paid hereunder (other than any payment described in subclauses (a) and (b)
immediately above) or under the Mortgage or Other Security Documents which
failure is not cured on or before the twentieth (20th) day after Lender's
written notice to Borrower that such payment is required; or
(d) an Event of Default (as defined in the Mortgage or any of the Other
Security Documents) shall have occurred under the Mortgage and/or Other
Security Documents.
6. Acceleration. The whole of the Debt, including without limitation, the
principal sum of this Note, all accrued interest and all other sums due under
this Note, the Mortgage and the Other Security Documents, together with any
applicable Prepayment Consideration, shall become immediately due and payable
at the option of Lender, without notice, at any time following the occurrence
of an Event of Default.
7. Default Interest. Upon the occurrence of an Event of Default (including
without limitation, the failure of Borrower to pay the Debt in full on the
Maturity Date), Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal balance at the rate (the "Default
Rate") equal to the greater of: (a) four (4)% above the Applicable Interest
Rate; or (b) four (4)% above the Prime Rate (hereinafter defined) in effect at
the time of the occurrence of the Event of Default; provided, however, that
notwithstanding the foregoing, in no event shall the Default Rate exceed the
Maximum Rate (hereinafter defined). The term "Prime Rate" shall mean the prime
rate reported in the Money Rates section of The Wall Street Journal for the
date (the "Default Rate Calculation Date") upon which the Event of Default
occurred, or if no publication occurs upon such date, then the date of
publication immediately preceding the date of the Event of Default. In the
event that The Wall Street Journal should cease or temporarily interrupt
publication, the term "Prime Rate" shall mean the daily average prime rate
published upon the Default Rate Calculation Date in another business newspaper,
or business section of a newspaper, of national standing chosen by Lender. In
the event that a prime rate is no longer generally published or is limited,
regulated or administered by a governmental or quasi-governmental body, then
Lender shall select a comparable interest rate index which is readily available
and verifiable to Borrower but is beyond Lender's control. The Default Rate
shall be computed from the occurrence of the Event of Default until the actual
payment in full of the Debt. This charge shall be added to the Debt, and shall
be deemed secured by the Mortgage. This clause, however, shall not be
construed as an agreement or privilege to extend the Maturity Date, nor as a
waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default.
8. Attorney Fees. In the event that Lender employs attorney(s) to collect
the Debt, to enforce the provisions of this Note or to protect or foreclose the
security herefor, Borrower agrees to pay Lender's attorney fees and
disbursements, whether or not suit be brought. Such fees shall be immediately
due and payable.
9. Limit of Validity. This Note is subject to the express condition that at
no time shall Borrower be obligated or required to pay interest or other
charges on the Debt at a rate which may subject Lender to civil or criminal
liability as a result of such rate exceeding the maximum interest
rate which Borrower is permitted to pay by applicable law (the "Maximum Rate").
If by the terms of this Note, Borrower is at any time required or obligated to
pay interest or other charges on the Debt at a rate in excess of the Maximum
Rate, the rate of interest due under this Note shall be deemed to be
immediately reduced to the Maximum Rate and any previous payments in excess of
the
4
<PAGE> 38
Maximum Rate shall be deemed to have been payments in reduction of
principal and not on account of the interest due hereunder.
10. No Oral Amendments. This Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Borrower or Lender, but only by an agreement in writing
signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
11. Assignment. This Note may be freely transferred and assigned by Lender.
Borrower's right to transfer its rights and obligations with respect to the
Debt, and to be released from liability under this Note, shall be governed by
the Mortgage.
12. Applicable Law; Jurisdiction. This Note shall be governed and construed
in accordance with the laws of the state in which the real property encumbered
by the Mortgage is located, without regard to conflict of law provisions
thereof. Borrower hereby submits to personal jurisdiction in the state courts
located in said state and the federal courts of the United States of America
(and any appellate courts taking appeals thereof) located in said state for the
enforcement of Borrower's obligations hereunder and waives any and all personal
rights under the law of any other state to object to jurisdiction within such
state for the purposes of any action, suit, proceeding or litigation to enforce
such obligations of Borrower. Borrower hereby waives and agrees not to assert,
as a defense in any action, suit, proceeding or litigation arising out of or
relating to this Note, the Mortgage and/or any of the Other Security Documents:
(a) that it is not subject to such jurisdiction or that such action, suit,
proceeding or litigation may not be brought or is not maintainable in those
courts or that this Note, the Mortgage and/or any of the Other Security
Documents may not be enforced in or by those courts or that it is exempt or
immune from execution; (b) that the action, suit, proceeding or litigation is
brought in an inconvenient forum; or (c) that the venue of the action, suit,
proceeding or litigation is improper.
13. Joint and Several Liability. If Borrower consists of more than one person
or entity, the obligations and liabilities of each such person or entity shall
be joint and several.
14. Waiver of Presentment, Etc. Borrower and all others who may become
liable for the payment of all or any part of the Debt do hereby severally waive
presentment and demand for payment, notice of dishonor, protest, notice of
protest, and notice of intent to accelerate the maturity hereof (and of such
acceleration), except to the extent that specific notices are required by this
Note, the Mortgage or the Other Security Documents.
15. Full Authority. Borrower (and the undersigned representative of
Borrower, if any) represents that Borrower has full power, authority and legal
right to execute, deliver and perform its obligations pursuant to this Note,
the Mortgage and the Other Security Documents and that this Note, the Mortgage
and the Other Security Documents constitute valid and binding obligations of
Borrower.
16. No Waiver. Any failure by Lender to insist upon strict performance by
Borrower or any of the provisions of this Note, the Mortgage or the Other
Security Documents shall not be deemed to be a waiver of any of the terms or
provisions of this Note, the Mortgage or the Other Security Documents, and
Lender shall have the right thereafter to insist upon strict performance by
Borrower of any and all of the terms and provisions of this Note, the Mortgage
or the Other Security Documents.
5
<PAGE> 39
17. Notices. Except as otherwise specified herein, any notice, consent,
request or other communication required or permitted to be given hereunder
shall be in writing, addressed to the other party as set forth below (or to
such other address or person as either party or person entitled to notice may
by notice to the other party specify), and shall be: (a) personally delivered;
(b) delivered by Federal Express or other comparable overnight delivery
service; or (c) transmitted by United States certified mail, return receipt
requested with postage prepaid; to:
Lender: Midland Loan Services, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Borrower: Frank's Nursery & Crafts, Inc.
6501 East Nevada
Detroit, MI 48234
Attention: Robert M. Lovejoy, Jr.
Unless otherwise specified, all notices and other communications shall be
deemed to have been duly given on the first to occur of actual receipt of the
same or: (i) the date of delivery if personally delivered; (ii) one (1)
business day after depositing the same with the delivery service if by
overnight delivery service; and (iii) three (3) days following posting if
transmitted by mail.
BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON
THE LOAN EVIDENCED BY THIS NOTE OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE, THE MORTGAGE OR ANY OF THE OTHER SECURITY DOCUMENTS, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION
OF BORROWER OR LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR LENDER'S
MAKING OF THE LOAN SECURED BY THE MORTGAGE AND THE OTHER SECURITY DOCUMENTS.
IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note to be
effective the day and year first above written.
"Borrower"
FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
By:
------------------------------
Robert M. Lovejoy, Jr.,
Vice President and Treasurer
6
<PAGE> 40
Pay to the order of Midland Commercial Financing Corp., without recourse.
Midland Loan Services, L.P.,
a Missouri limited partnership
By: Midland Data Systems, Inc.
a Missouri corporation,
its sole General Partner
By: ________________________
Print Name: ________________
Title: _____________________
Pay to the order of _________________________________________, without recourse.
Midland Commercial Financing Corp.,
a Missouri corporation
By: _______________________________
Print Name: _______________________
Title: ____________________________
7
<PAGE> 41
ADDENDUM TO MORTGAGE,
SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
This Addendum to Mortgage, Security Agreement and Assignment of Leases and
Rents contains certain additional and supplemental terms and provisions of the
Mortgage, Security Agreement and Assignment of Leases and Rents (the
"Mortgage") dated as of March 14, 1996, executed by Frank's Nursery & Crafts,
Inc., as Borrower, in favor of Midland Loan Services, L.P., as Lender. The
terms and provisions of this Addendum control and supersede any conflicting
terms and provisions contained in the body of such Mortgage.
1. Environmental Report. The environmental report referred to in the Mortgage
is the Phase I Environmental Site Assessment of the Mortgaged Property dated
October 24, 1995 prepared by ATEC Associates, Inc. in favor of Lender.
2. The following phrase is hereby inserted at the end of paragraph (c) on page
2: "provided, however, that the aforesaid Mortgaged Property shall not
include: (i) trade fixtures or trade equipment, including but not limited to
shelving, computers, cash registers, communications equipment, signage, facing
and furniture, or (ii) inventory;".
3. The phrase "Lender's interest in" is hereby inserted after the term
"defend" in paragraph (g) on page 2.
4. The term "reasonably" is hereby inserted after the term "risks" in the
seventh line of paragraph 3(a).
5. The phrase "with a waiver of depreciation" contained in the last line of
paragraph 3(a) is hereby deleted.
6. Paragraph 3(b)(ii) is hereby deleted and inserted in lieu thereof is the
following:
(ii) Comprehensive public or commercial general liability insurance on an
"occurrence basis", in the amount of at least $2,000,000.00 per occurrence,
including broad form property damage, blanket contractual and personal
injuries (including death resulting therefrom) coverages, and an additional
umbrella liability insurance policy in the amount of at least
$1,000,000.00.
7. The phrase "and/or rental loss" contained in the first and sixth lines of
paragraph 3(b)(iii) is hereby deleted in each instance. Paragraph 3(b)(iii) is
hereby further amended by inserting the following phrase at the end of said
paragraph: "such increases shall be effective on the next anniversary date of
the Policy immediately following Lender's imposition of such increases."
8. The following phrase is hereby inserted after the term "Lender" in
paragraph 3(b)(v): "under the then applicable Lender's Underwriting Standards
(as defined in paragraph 10(c) hereof)."
9. The term "thirty (30)" contained in the last sentence of paragraph 3(c) is
hereby deleted and inserted in lieu thereof is the term "twenty (20)". The
phrase "in its sole discretion" contained in paragraph 3(c)(i) is hereby
deleted and inserted in lieu thereof is the phrase "with Borrower's current
insurers or with insurers having a rating of A- or better by A.M. Best Company.
Paragraph 3(c)(iv)
31
<PAGE> 42
is hereby amended by inserting the following phrase before the term "delivered":
"a copy thereof certified by an officer of the Borrower".
10. The references to the amount "$15,000.00" contained in paragraphs 4(a)(i)
and (ii) are hereby deleted and inserted in lieu thereof in each instance is
the amount "$50,000.00".
11. The term "reasonable" is hereby inserted after the term "Lender's" in the
seventh line of paragraph 4(a)(ii).
12. Notwithstanding anything contained in this Mortgage, the Note or the Other
Security Documents to the contrary, any application of Insurance Proceeds to
the Debt under paragraph 4(a)(iii)(A) or (B), or payment of the Debt by
Borrower after an acceleration by Lender under paragraph 4(a)(iii)(A), shall be
without Prepayment Consideration.
13. Notwithstanding anything contained in paragraph 6 to the contrary,
Borrower shall not be required to escrow for Insurance Premiums so long as no
Event of Default has occurred and is continuing. The tenth and eleventh
sentences of paragraph 6 are hereby deleted and inserted in lieu thereof is the
following:
The Escrowed Funds shall be kept by Lender in one (1) or more segregated
accounts and shall bear interest for the account of Borrower; provided,
however, that escrowed funds held by Lender in connection with other
loans to Borrower may be kept by Lender in the same account or accounts
in which Lender is keeping the Escrowed Funds.
14. Notwithstanding anything contained in paragraph 7, upon any Condemnation
and Lender's application of any Condemnation award or payment to the reduction
or discharge of the Debt (whether or not then due and payable), such
application shall be without Prepayment Consideration so long as no Event of
Default has occurred and is continuing. Upon such application, and so long as
no Event of Default has occurred and is continuing, Borrower shall be entitled
to prepay the Debt without Prepayment Consideration.
15. Clause (i)(B) of paragraph 8(e) is hereby deleted and inserted in lieu
thereof is the following clause: (B) such Lease covers not more than
twenty-five percent (25%) of the Mortgaged Property and rent for the leased
portion of Mortgaged Property is no less than the pro rata market rent for such
portion as specified in the Appraisal.
16. The following phrase is hereby inserted after the term "Premises" in the
eleventh line of paragraph 9(a): "to the extent Borrower receives any payment
as a result of any Casualty or Condemnation, but only if Borrower does not make
a payment of the Debt allowed under Paragraphs 12 or 14 of the Addendum to this
Mortgage".
17. The parenthetical phrase "(if any)" is hereby inserted after the term
"agent" in the second line of paragraph 9(c).
18. Paragraph 10(e) shall not apply to any Guarantor.
19. The term "ten (10)" contained in paragraph 12(b) is hereby deleted and
inserted in lieu thereof is the term "twenty (20)".
32
<PAGE> 43
20. The term "thirty (30)" contained in paragraph 14(a)(iii) is hereby deleted
and inserted in lieu thereof is the term "forty-five (45)".
21. Paragraph 14(b) only shall apply if more than twenty-five percent (25%) of
the Premises is leased to a person or entity unrelated to Borrower.
22. The last sentence of paragraph 14(c) is hereby deleted.
23. The phrase "after notice to Borrower" is hereby inserted at the end of
paragraph 19(k).
24. The phrase "or protest" is hereby inserted after the term "cure" in
paragraph 19(l).
25. The phrase "after providing Borrower with reasonable prior notice of such
entry" is hereby inserted after the term "times" in paragraph 30.
26. Paragraph 38(a) is hereby deleted and inserted in lieu thereof is the
following:
(a) Borrower agrees that with respect to the Mortgaged Property, it
shall cure any violation of the Americans with Disabilities Act of 1990,
the Fair Housing Amendments Act of 1988, all similar state and local laws
and ordinances related to access and all rules, regulations, and orders
issued pursuant thereto including, without limitation, the Americans with
Disabilities Act Accessibility Guidelines for Buildings and Facilities
(collectively the "Access Laws").
27. Notwithstanding anything contained in paragraph 37 to the contrary, the
Borrower and all tenants of the Mortgaged Property shall be permitted to sell,
store and use those certain Hazardous Substances on the Mortgaged Property which
they sell, store or use in the ordinary course of their business so long as such
storage and use comply with all Environmental Laws.
28. The phrase "or about" in the seventh line of paragraph 39 is hereby
deleted. The terms "adjoining" and "adjacent" are hereby deleted in each
instance from the eighth and ninth lines of paragraph 39. The following phrases
are hereby inserted after the term "foreclosure" at the end of paragraph 39: ";
provided, however, that Borrower's obligations and liabilities hereunder only
shall extend to events occurring during Borrower's possession of the Mortgaged
Property".
29. Paragraph 54 is hereby deleted.
30. If any non-monetary Event of Default occurs hereunder, and thereafter on
the fifteenth (15th) day through the last day of any calendar month Borrower
receives notice from Lender that Lender has elected to accelerate the full
outstanding balance of the Debt as a result of such Event of Default, the full
accelerated Debt shall not be due and payable until the first business day of
the month next following the date on which such notice is received, if and only
if Borrower provides to Lender United States treasury securities acceptable to
Lender in its reasonable discretion with a combined face amount of at least the
full accelerated Debt determined as of the first business day of the month next
following the date on which such notice is received, maturing on said business
day. Nothing contained in this Addendum Paragraph shall constitute or effect a
release of the lien of this Mortgage.
31. Lender has made the following loans to Borrower:
33
<PAGE> 44
<TABLE>
<CAPTION>
Loan No. Store Location of Property Loan Amount
---------- -------- ----------------------------------- ------------------
<S> <C> <C> <C>
94-0903449 277 Bloomfield, Michigan 1,330,423.00
94-0903450 168 Battle Creek, Michigan 726,793.00
94-0903447 163 Crystal Lake, Illinois 857,318.00
94-0903445 106 Libertyville, Illinois 867,548.00
94-0903446 140 Lake Zurich, Illinois 862,893.00
94-0903448 167 Schaumburg, Illinois 883,802.00
94-0903354 99 Brookhaven, Pennsylvania 892,829.00
94-0903355 65 Roseville, Minnesota 956,708.00
94-0903356 244 Eden Prairie, Minnesota 909,974.00
94-0903357 245 Eagan, Minnesota 849,344.00
94-0903358 623 Staten Island, New York 1,373,432.00
94-0903359 628 Bridgewater, New Jersey 1,379,474.00
94-0903360 101 Deptford, New Jersey 1,280,990.00
94-0903340 626 Bricktown, New Jersey 1,316,019.00
94-0903361 139 St. Charles, Missouri 734,319.00
94-0903442 265 St. Charles, Missouri 753,432.00
94-0903441 135 Bridgeton, Missouri 730,026.00
94-0901885 34 & 100 Okemos, Michigan & Joliet, Illinois 2,583,273.69
</TABLE>
The foregoing loans shall be referred to herein collectively as the "Other
Loans". Each of the Other Loans is evidenced by a Promissory Note
(collectively the "Other Notes") executed and delivered by Borrower to the
order of Lender in the Loan Amount referenced above. Each of the Other Notes
is secured by certain liens and security interests in favor of Lender
encumbering certain real estate and other property of Borrower, which liens and
security interests are evidenced by: (a) a Mortgage, Security Agreement and
Assignment of Leases and Rents or a Deed of Trust, Security Agreement and
Assignment of Leases and Rents (collectively the "Other Mortgages"); and (b)
certain Other Security Documents (as such term is defined in each of the Other
Mortgages). The Other Notes, Other Mortgages and Other Security Documents
related thereto are referred to herein collectively as the "Other Loan
Documents". Each of the Other Loan Documents secures a certain "Debt" as such
term is defined in the related Other Mortgage, which respective "Debts" are
referred to herein collectively as the "Other Debt". Borrower and Lender
intend that the Loan and all of the Other Loans be cross-collateralized and
cross-defaulted as hereinafter described:
(a) In addition to securing the payment of the Debt, this Mortgage and
the Other Security Documents specifically related to the Loan also
secure the payment of the Other Debt and the performance of the
Other Loan Documents; provided, however, that no owner and holder of
all or any part of the Other Debt may enforce such
cross-collateralization unless such owner and holder is also the
same person or entity which is the owner and holder of the Note,
this Mortgage and the Other Security Documents related to the Loan.
(b) Any Event of Default under any of the Other Loan Documents (an
"Other Event of Default") shall also constitute an Event of Default
under this Mortgage and the Note; provided, however, that no Event
of Default under this Mortgage or the Note may be declared based
solely upon the occurrence of any Other Event of Default unless
34
<PAGE> 45
the owner and holder of this Mortgage and the Note is also the owner
and holder of the Other Loan Document(s) under which the Other Event
of Default has occurred.
The limits upon the enforceability of the cross-collateralization and
cross-default provisions contained in the foregoing paragraphs (a) and (b)
shall not be deemed to terminate such cross-collateralization and
cross-default, which shall continue until the Lender has executed and delivered
a specific written release or waiver of the same.
32. Lender may make certain additional loans to Borrower to be secured by real
property owned by Borrower that Borrower and Lender may agree to
cross-collateralize and cross-default with this Mortgage (the "Additional
Loans"). The loan and security documents, instruments and agreements related
to or evidencing the Additional Loans shall be referred to herein collectively
as the "Additional Loan Documents". The debt and obligations of Borrower under
the Additional Loan Documents shall be referred to herein collectively as the
"Additional Debt". Borrower and Lender intend that the Loan and all Additional
Loans be cross-collateralized and cross-defaulted as hereinafter described,
and, notwithstanding any limits upon the enforceability of such
cross-collateralization and cross-default set forth herein, that such
cross-collateralization and cross-default shall not be terminated and shall
continue until Lender has executed and delivered a specific written release or
waiver of the same.
(a) In addition to securing the payment of the Debt, this Mortgage and
the Other Security Documents specifically related to the Loan also
secure the payment of the Additional Debt and the performance of the
Additional Loan Documents; provided, however, that no owner and
holder of all or any part of the Additional Debt may enforce such
cross-collateralization unless such owner and holder is also the
same person or entity which is the owner and holder of the Note,
this Mortgage and the Other Security Documents related to the Loan.
(b) Any breach, default or failure to perform, and the expiration of any
applicable cure period, under any of the Additional Loan Documents
(an "Additional Event of Default") shall also constitute an Event of
Default under this Mortgage and the Note; provided, however, that no
Event of Default under this Mortgage or the Note may be declared
based solely upon the occurrence of any Additional Event of Default
unless the owner and holder of this Mortgage and the Note is also
the owner and holder of the Additional Loan Document(s) under which
the Additional Event of Default has occurred.
33. Lender shall not be obligated to record a release or satisfaction of this
Mortgage until the earlier of the following occurs:
(a) Payment in full of the Debt, the Other Debt and the Additional Debt;
or
(b) Payment in full of the Debt, so long as immediately prior to or at
the time of such payment, none of the following exist and are
continuing (collectively "Defaults"): (i) an Event of Default, (ii)
an Other Event of Default, (iii) an Additional Event of Default, or
(iv) an event that with notice, the passage time or both, would
constitute an Event of Default, Other Event of Default or Additional
Event of Default.
35
<PAGE> 46
Notwithstanding foregoing subparagraph (b), if there is a Default at or
immediately prior to the time when Borrower makes payment in the full of the
Debt, Lender may, in its sole and absolute discretion, elect to record a
release or satisfaction of this Mortgage.
34. Lender's approval required under Paragraph 10(b)(i), subject to Borrower's
satisfaction of all other requirements under Paragraph 10(b), shall not be
unreasonably withheld.
36
<PAGE> 1
EXHIBIT 4.04(c)
CERTIFIED TO BE A
TRUE COPY
BY MAXINE J. LIEVOIS
FRANK'S NURSERY & CRAFTS, INC.
(Assignor)
to
MIDLAND LOAN SERVICES, L.P.
(Assignee)
ASSIGNMENT OF RENTS AND LEASES
Dated: March 14, 1996
Location: 250 28th Street SE
Grand Rapids, Michigan 49508
RECORD AND RETURN TO:
MIDLAND LOAN SERVICES, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Attention: MCF Closing Department
Loan No. 94-0903604
Store No. 25
THIS INSTRUMENT WAS DRAFTED BY:
Michael B. Hickman
Morrison & Hecker
2600 Grand Avenue
Kansas City, Missouri 64108-4606
<PAGE> 2
ASSIGNMENT OF RENTS AND LEASES
FOR VALUE RECEIVED, Frank's Nursery & Crafts, Inc., a Michigan corporation
("Assignor"), the address of which is 6501 East Nevada, Detroit, Michigan
48234, hereby grants, assigns, transfers and sets over unto Midland Loan
Services, L.P., a Missouri limited partnership ("Assignee"), the address of
which is 210 West 10th Street, 6th Floor, Kansas City, Missouri 64105, and
grants to Assignee a security interest in, (a) all of the rents, issues,
profits and income whatsoever arising from or which may be had under any
leases, occupancy agreements or storage or space agreements (the "Rents") now
existing or which may be hereafter created, as the same may be extended,
modified or renewed (such leases, occupancy agreements and storage agreements,
together with all extensions, modifications and renewals thereof, are
collectively referred to herein as the "Leases"), relating to all or any part
of the (i) real estate described in Exhibit A attached hereto and by this
reference made a part hereof or (ii) buildings or improvements now or hereafter
located thereon (said real estate, buildings and improvements shall be
hereinafter collectively referred to as the "Property"), (b) all right, title
and interest of Assignor in and to all Leases, and (c) all security deposits,
guaranties, letters of credit and other assurances of the lessee's or tenant's
indebtedness under the Leases, together with any extensions and renewals
thereof (the "Assurances"), as additional collateral security for (i) the
payment of the Debt (as defined in the Mortgage [said document, as defined in
the Note and as the same may be amended and modified from time to time
hereafter, is herein called the "Mortgage"]), including, without limitation,
the Debt now or hereafter evidenced by the Note (as defined in the Mortgage) in
the principal amount of $682,878.00 of even date herewith, (ii) the payment of
the Other Debt (as defined in the Mortgage) and the Additional Debt (as defined
in the Mortgage), in the current original principal amounts of $19,288,597.69,
and (ii) the performance and observance of all the covenants, warranties,
representations, terms and conditions of the Note, Mortgage, Other Loan
documents (as defined in the Mortgage), Additional Loan Documents (as defined
in the Mortgage), this document and all other documents securing, evidencing or
executed in connection with said Debt (collectively, the "Loan Documents").
1. Assignor's Obligations. Assignor shall observe and perform all of the
covenants, conditions, and agreements in any Lease or in any assignment in fact
given by Assignor to Assignee of any particular Lease on the part of the
Assignor or the landlord to be observed and performed thereunder. Assignor
shall not, without the prior written consent of Assignee, (a) accept any
payment of Rents or installment of Rents for more than one (1) month in advance
except as otherwise provided in the Mortgage, (b) except in the ordinary course
of the business of a mini-self-storage facility of less than ten percent (10%)
of the rentable square footage of such storage facility ("Storage Facility"),
amend, cancel, abridge, terminate, or modify any Lease, (c) except in the
ordinary course of the business of a Storage Facility, enter into any Lease not
existing as of the date hereof, (d) except in the ordinary course of the
business of a Storage Facility, take any action or exercise any right or option
which would permit the lessee or tenant under any Lease to cancel or terminate
said Lease, (e) permit any Lease to be or become subordinate to any lien other
than the lien of the Mortgage or any lien to which the Mortgage is now or may
pursuant to their respective terms become subordinate, or (f) except in the
ordinary course of the business of a Storage Facility, permit any assignment or
sublease; provided, however, that the Assignee's right to approve any such
assignment or sublease shall be co-extensive with the Assignor's right to
approve such assignment or sublease as contained in the Lease to which the
assignment or sublease relates and which Lease has been approved by the
Assignee. As used in this Assignment of Rents and Leases, the terms "Lease"
and "Leases" shall include, without limitation, all agreements for the
management, maintenance, or operation of any part of the Property.
<PAGE> 3
2. Events of Default.
(a) Upon the occurrence of an Event of Default (as defined in the Mortgage),
Assignee may thereafter receive and collect the Rents and Assurances
personally or through a receiver so long as such Event of Default shall exist
and during the pendency of any foreclosure proceedings and during any
redemption period, and Assignor agrees to consent to a receiver if this is
believed necessary or desirable by Assignee to enforce its rights under this
Assignment. Assignee shall be entitled to all of the rights and benefits
conferred by Act No. 210 of the Michigan Public Acts of 1953 as amended by
Act No. 151 of the Michigan Public Acts of 1966 (MCL 554.231 et seq). The
collection of Rents and Assurances by the Assignee shall in no way waive the
right of Assignee to foreclose the Mortgage in the event of any said Event of
Default.
(b) Upon the occurrence of an Event of Default, Assignee shall be entitled
forthwith to take possession and control of the Property and shall have the
sole and exclusive right and authority to manage and operate the same, with
full power to employ agents to manage the premises, and to do all acts
relating to such management, including, but not limited to, contracting and
paying for such repairs and replacements to the buildings and fixtures,
equipment and personal property located therein and used in any way in the
operation, use, and occupancy of the Property as in the sole judgment and
discretion of Assignee may be necessary to maintain the same in an
operational condition, purchasing and paying for such additional materials
and equipment as in sole judgment of Assignee may be necessary to maintain a
proper income from the Property, employing necessary operational employees,
maintenance employees, providing utilities and paying for all other necessary
expenses incurred in the operation of the premises, maintaining adequate
insurance coverage over hazards customarily insured against and paying the
premiums therefor, and applying the Rents collected upon the Debt (as defined
in the Mortgage and which includes any and all expenses incurred by the
Assignee in entering, taking possession of, managing or operating the
Property or collecting and receiving the Rents and Assurances), allocating
the same as the Assignee in its sole and absolute discretion shall determine.
(c) The occurrence of an Event of Default shall immediately vest in the
Assignee the exclusive right to own and possess the Rents and Assurances
regardless of whether it has served notices of default on lessees or tenants
under the Leases. Any Rents received by Assignor after the occurrence of an
Event of Default are received in trust for the benefit of the Assignee, and
shall be applied to the actual, reasonable and necessary expenses of
operation, management and maintenance of the Property; and the payment of the
Debt; and Assignor shall account therefor to Assignee. The application of
the Rents in accordance with this Assignment of Rents and Leases (this
"Assignment") shall not constitute a defense to or bar to the exercise of all
or any of the rights and remedies of the Assignee afforded by this Assignment
or otherwise at law or in equity.
3. Limitation of Assignee Liability. It is further understood that this
Assignment shall not operate to place responsibility for the control, care,
management or repair of the Property upon Assignee, nor for the performance of
any of the terms and conditions of any Leases or other agreements assigned
hereunder, nor shall it operate to make Assignee responsible or liable for any
waste committed on the Property by the lessees or tenants or any other party or
for any dangerous or defective condition of the Property or for any negligence
in the management, upkeep, repair or
2
<PAGE> 4
control of the Property resulting in loss or injury to any lessee or tenant,
invitee, licensee, employee or stranger.
4. Obstruction. If the Assignor obstructs the Assignee in its efforts to
collect the Rents or Assurances, or, after requested by the Assignee,
unreasonably refuses, fails or neglects to assist the Assignee in collecting
the Rents or Assurances, the Assignee shall be entitled to the appointment of a
receiver of the Property and of the Rents and Assurances, the receiver to have
whatsoever powers as the court making the appointment may confer.
5. Further Assignment. Assignor hereby assigns to Assignee (a) any award or
other payment which Assignor may hereafter become entitled to receive with
respect to a Lease or other agreement relating or pertaining to the operation
of the Property as a result of or pursuant to any bankruptcy, insolvency, or
reorganization or similar proceedings involving any other party under such
Lease or other agreement and (b) any and all payments made by or on behalf of
any other party. Assignor hereby irrevocably appoints Assignee as its attorney
to appear in any such proceeding and/or collect any such award or payment.
6. Notice of Assignment. Assignee may, at its option, notify any lessees or
tenants or other parties of the existence of this Assignment.
7. Remedies Cumulative. The remedies of Assignee hereunder are cumulative
and the exercise of any one or more of the remedies provided for herein shall
not be construed as a waiver of any of the other remedies of Assignee as long
as any obligation under the Loan Documents remains unsatisfied.
8. Other Security. Assignee may take or release other security for the
payment of the Debt, may release any party primarily or secondarily liable
therefor and may apply any other security held by it to the reduction or
satisfaction of the Debt without prejudice to any of its rights under this
Assignment.
9. No Mortgagee-in-Possession. Nothing herein contained shall be construed
as constituting Assignee a "mortgagee-in-possession" or
"beneficiary-in-possession" in the absence of the taking of actual possession
of the Mortgaged Property by Assignee. Assignor hereby expressly waives and
releases all claims and liability against Assignee in Assignee's exercise of
its rights and powers hereunder.
10. Notices. Except as otherwise specified herein, any notice, consent,
request or other communication required or permitted to be given hereunder
shall be in writing, addressed to the other party as set forth below (or to
such other address or person as either party or person entitled to notice may
by notice to the other party specify), and shall be: (a) personally delivered;
(b) delivered by Federal Express or other comparable overnight delivery
service; or (c) transmitted by United States certified mail, return receipt
requested with postage prepaid; to:
Assignee: Midland Loan Services, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
3
<PAGE> 5
Assignor: Frank's Nursery & Crafts, Inc.
6501 East Nevada
Detroit, MI 48234
Attention: Robert M. Lovejoy, Jr.
Unless otherwise specified, all notices and other communications shall be
deemed to have been duly given on the first to occur of actual receipt of the
same or: (i) the date of delivery if personally delivered; (ii) one (1)
business day after depositing the same with the delivery service if by
overnight delivery service; and (iii) three (3) days following posting if
transmitted by mail.
Assignee and its duly authorized agents shall be entitled to enter the
Property for the purpose of delivering any and all notices and other
communications to the lessees, tenants or subtenants and occupiers thereof as
shall be necessary or desirable in the Assignee's discretion to exercise its
rights hereunder; and the Assignee and its agents shall have absolutely no
liability to the Assignor in this connection; provided, however, that the
Assignee shall not be obligated to give any lessee, tenant, subtenant or
occupier of the Property any notice by personal delivery and the Assignee may
in its sole discretion deliver any notices and communications by ordinary
first-class U.S. mail, postage prepaid, or in any other permitted under this
Paragraph.
11. Conflict of Terms. In case of any conflict between the terms of this
Assignment and the terms of either the Note or the Mortgage, the terms of the
Note and the Mortgage shall prevail.
12. No Oral Change. This Assignment and any provisions hereof may not be
modified, amended, waived, extended, changed, discharged or terminated orally,
or by any act or failure to act on the part of Assignor or Assignee, but only
by an agreement in writing signed by the party against whom the enforcement of
any modification, amendment, waiver, extension, change, discharge or
termination is sought.
13. Certain Definitions. Unless the context clearly indicates a contrary
intent or unless otherwise specifically provided herein, words used in this
Assignment (including pronouns) shall include the corresponding masculine,
feminine or neuter forms, and the singular form of such words shall include the
plural and vice versa. The word "Assignor" shall mean "each Assignor and any
subsequent owner or owners of the Mortgaged Property or any part thereof or any
interest therein"; the word "Assignee" shall mean "Assignee and any subsequent
holder of the Note"; the word "Note" shall mean "the Note and any other
evidence of indebtedness secured by the Mortgage"; the word "person" shall
include an individual, corporation, partnership, trust, unincorporated
association, government, governmental authority and any other entity; the words
"Property" shall include any portion of the Property and any interest therein;
and the word "Debt" shall mean all amounts due and payable under the Note,
together with all sums due under the Mortgage and the Loan Documents, including
applicable attorney fees and costs.
14. Non-Waiver. The acceptance of this Assignment and the collection of the
Rents and Assurances in the event of an Event of Default, as referred to above,
shall be without prejudice to and shall not constitute a waiver on the part of
Assignee of any of Assignee's rights or remedies under the terms and conditions
of the Loan Documents, at law or in equity, or otherwise. The failure of
Assignee to insist upon strict performance of any term hereof shall not be
deemed to be a waiver of any term of this Assignment. Assignor shall not be
relieved of Assignor's obligations hereunder by reason of (i) failure of
Assignee to comply with any request of Assignor or any other party to take any
action to enforce any of the provisions hereof or of the Mortgage, the Note or
the Loan
4
<PAGE> 6
Documents; (ii) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or (iii) any agreement or stipulation by
Assignee extending the time of payment or otherwise modifying or supplementing
the terms of this Assignment, the Note, the Mortgage or the Loan Documents.
Assignee may resort for the payment of the Debt to any other security held by
Assignee in such order and manner as Assignee, in its sole and absolute
discretion, may elect. Assignee may take any action to recover the Debt, or
any portion thereof or to enforce any covenant hereof without prejudice to the
right of Assignee thereafter to enforce its rights under this Assignment. The
rights of Assignee under this Assignment shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No
act of Assignee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision.
15. Inapplicable Terms, Covenants or Conditions. If any term, covenant or
condition of this Assignment is held to be invalid, illegal or unenforceable in
any respect, this Assignment shall be construed without such term, covenant or
condition.
16. Duplicate Originals. This Assignment may be executed in any number of
duplicate originals, each of which shall be deemed to be an original.
17. Applicable Law; Jurisdiction. This Assignment shall be governed and
construed in accordance with the laws of the state in which the real property
encumbered by the Mortgage is located, without regard to conflict of law
provisions thereof. Assignor hereby submits to personal jurisdiction in the
state courts located in said state and the federal courts of the United States
of America (and any appellate courts taking appeals thereof) located in said
state for the enforcement of Assignor's obligations hereunder and waives any
and all personal rights under the law of any other state to object to
jurisdiction within such state for the purposes of any action, suit, proceeding
or litigation to enforce such obligations of Assignor. Assignor hereby waives
and agrees not to assert, as a defense in any action, suit, proceeding or
litigation arising out of or relating to this Assignment, the Note, the
Mortgage and/or any of the Other Loan Documents: (a) that it is not subject to
such jurisdiction or that such action, suit, proceeding or litigation may not
be brought or is not maintainable in those courts or that this Assignment, the
Note, the Mortgage and/or any of the Other Loan Documents may not be enforced
in or by those courts or that it is exempt or immune from execution; (b) that
the action, suit, proceeding or litigation is brought in an inconvenient forum;
or (c) that the venue of the action, suit, proceeding or litigation is
improper.
18. Termination of Assignment. Upon payment in full of the Debt and the
delivery and recording of a satisfaction, conveyance or discharge of the
Mortgage duly executed by Assignee, this Assignment shall be deemed null and
void and of no further effect.
19. Successors and Assigns. This Assignment, together with the covenants
and warranties herein contained, shall inure to the benefit of Assignee and any
subsequent holder of the Note and beneficiary under the Mortgage and shall be
binding upon Assignor, its heirs, executors, administrators, successors and
assigns and any subsequent owner of the Mortgaged Property.
20. WAIVER OF JURY TRIAL. ASSIGNOR AND ASSIGNEE HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION IN CONNECTION WITH THIS ASSIGNMENT, THE NOTE, THE
MORTGAGE OR ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF ASSIGNOR OR
ASSIGNEE. THIS
5
<PAGE> 7
PROVISION IS A MATERIAL INDUCEMENT FOR ASSIGNEE'S MAKING OF THE LOAN SECURED BY
THE MORTGAGE AND THE LOAN DOCUMENTS.
IN WITNESS WHEREOF, Assignor has executed this Assignment of Rents and Leases
as of the 14th day of March, 1996.
In the Presence of: "Assignor"
Lauren J. Cato FRANK'S NURSERY & CRAFTS, INC.,
- --------------------------- a Michigan corporation
Print Name: Lauren J. Cato
----------------
Maxine J. Lievois By: Robert M. Lovejoy, Jr.
- ------------------------------- ----------------------------
Print Name: Maxine J. Lievois Print Name: Robert M. Lovejoy, Jr.
-------------------- Title: Vice President & Treasurer
ACKNOWLEDGEMENT
STATE OF MICHIGAN )
) ss.
COUNTY OF WAYNE )
The foregoing instrument was acknowledged before me this 14th day of March,
1996, by Robert M. Lovejoy, Jr., the Vice President and Treasurer of Frank's
Nursery & Crafts, Inc. , a Michigan corporation, on behalf of the corporation.
Sherry L. Rygwelski
-------------------------------------
Notary Public, Wayne County, Michigan
My Commission Expires: 12/27/98
[NOTARY SEAL]
6
<PAGE> 8
EXHIBIT A
LEGAL DESCRIPTION
The real property situated in the County of Kent, State of Michigan,
described as follows:
Parcel 1:
Part of the West 1/2 of the Northwest 1/4, Section 15, T6N, R11W, City of Grand
Rapids, Kent County, Michigan, commencing at the Northeast corner thereof;
thence North 89 degrees 36 minutes 30 seconds West 480.0 feet along the North
section line; thence South 02 degrees 52 minutes East 54.6 feet parallel with
the West 1/8 line to the South line of 28th Street (100 feet wide) and
beginning of this description; thence South 02 degrees 52 minutes East to a
line 450 feet South from and parallel with the South line of 28th Street;
thence 90 degrees 00 minutes West along said line to the East line of the West
348 feet of the Northwest 1/4; thence North 02 degrees 57 minutes 30 seconds
West along said East line to a point 192.25 feet South from the South line of
28th Street; thence North 90 degrees 00 minutes East 93.11 feet; thence North
00 degrees 00 minutes 159.00 feet; thence North 90 degrees 00 minutes East 36.0
feet; thence North perpendicular to the South line of 28th Street to the South
line of the North 15 feet of that part of the Northwest 1/4 lying South of the
South line of 28th Street; thence East along said South line to the East line
of the West 548 feet of the Northwest 1/4; thence North along said East line to
the South line of 28th Street; thence East along the South line of 28th Street
to beginning; except commencing 494.46 feet North 89 degrees 36 minutes 30
seconds West along the North section line and 54.68 feet South 0 degrees 05
minutes East from the Northeast corner of the West 1/2 of the Northwest 1/4;
thence South 00 degrees 05 minutes East 410.90 feet; thence South 89 degrees 55
minutes West 100.0 feet; thence North 00 degrees 05 minutes West 376.04 feet;
thence 90 degrees 00 minutes East 10.0 feet; thence North 0 degrees 05 minutes
West 35.0 feet; thence North 90 degrees 00 minutes East 90.0 feet along the
South line of 28th Street to beginning.
Parcel 2:
Easement for pedestrian and vehicular passage and vehicular parking on, over
and across that certain property described in Exhibit D to that certain
Reciprocal Easement Grant dated September 6, 1984, and filed for record in
Liber 2440 at Page 569, appurtenant to and for the benefit of the property
described above as Parcel 1.
Parcel 3:
Easement for pedestrian and vehicular passage and vehicular parking on, over
and across that certain property described in Exhibit D to that certain
Reciprocal Easement Grant dated July 18, 1983, and filed for record in Liber
2406 at Page 915, appurtenant to and for the benefit of the property described
above as Parcel 1.
7
<PAGE> 1
EXHIBIT 4.04 (d)
CERTIFIED TO BE A
TRUE COPY
BY MAXINE J. LIEVOIS
GENERAL HOST CORPORATION
(Guarantor)
to
MIDLAND LOAN SERVICES, L.P.
(Lender)
GUARANTY
Dated: March 14, 1996
Loan No.: 94-0903604
Store No. 25
<PAGE> 2
THIS GUARANTY (the "Guaranty") is entered into as of March 14, 1996,
by the undersigned ("Guarantor") in favor of Midland Loan Services, L.P., a
Missouri limited partnership ("Lender").
WITNESSETH
A. Contemporaneously with this Guaranty, Lender is making a loan
to Frank's Nursery & Crafts, Inc., a Michigan corporation ("Borrower") in the
principal amount of Six Hundred Eighty-two Thousand Eight Hundred Seventy-eight
Dollars ($682,878.00) (the "Loan"), which Loan is evidenced by a Promissory
Note (the "Note") of even date herewith executed by Borrower to the order of
Lender. The Note is secured by, among other security: (i) the Mortgage (as
defined in the Note), which Mortgage encumbers the property (real and personal)
described in the Mortgage (the "Mortgaged Property"); and (ii) the Other
Security Documents (as defined in the Mortgage). The Note, the Mortgage, the
Other Security Documents and the Environmental Indemnity Agreement executed by
Borrower in favor of Lender contemporaneously herewith, are hereinafter
collectively referred to as the "Loan Documents".
NOW, THEREFORE, in consideration of the foregoing, of Lender making
the Loan and other valuable consideration, the receipt and adequacy of which is
hereby acknowledged, Borrower agrees as follows:
1. Certain Defined Terms. Unless otherwise expressly herein
provided, each defined term in this Guaranty, as indicated by the initial
capitalization thereof, shall have the meaning set forth in the Loan Documents.
2. Guaranty of Payment. Guarantor unconditionally guarantees to
Lender (and to any assignee or purchaser of all or any interest in the Note and
the Mortgage) the fun and prompt payment, whether at maturity, upon
acceleration or otherwise, of the full amount of the Debt (as defined in the
Note) for which Borrower at any time may be personally liable pursuant to the
Loan Documents.
3. Absolute Guaranty; Waiver of Subrogation and Other Rights.
This Guaranty is an absolute, unconditional, present and continuing guaranty of
payment and is in no way conditioned or contingent upon any attempt to enforce
Lender's rights against Borrower or to collect from Borrower or upon any other
condition or contingency. Accordingly, Lender shall have the right to proceed
against Guarantor without taking any prior action to enforce the obligations of
Borrower under the Loan Documents, or the obligations of any other guarantor
under any guaranty. Furthermore, Lender in its sole discretion, without prior
notice to or consent of Guarantor, may elect to: (a) foreclose either
judicially or nonjudicially by against any real or personal property security
it may hold for the Loan; (b) accept a transfer of any such security in lieu of
foreclosure; (c) compromise or adjust the Loan or any part of it or make any
other accommodation with Borrower or Guarantor; or (d) exercise any other
remedy against Borrower or any security. No such action by Lender shall
release or limit the liability of Guarantor, who shall remain liable under this
Guaranty after the action, even if the effect of the action is to deprive
Guarantor of any subrogation rights, rights of indemnity, or other rights to
collect reimbursement from Borrower for any sums paid to Lender, whether
contractual or arising by operation of law or otherwise. Guarantor expressly
agrees that
<PAGE> 3
under no circumstances shall it be deemed to have any right, title, interest or
claim in or to any real or personal property to be held by Lender or any third
party after any foreclosure or transfer in lieu of foreclosure of any security
for the Loan.
Regardless of whether Guarantor may have made any payments to Lender,
Guarantor forever waives: (I) all rights of subrogation, all rights of
indemnity, and any other rights to collect reimbursement from Borrower for any
sums paid to Lender, whether contractual or arising by operation of law or
otherwise; (II) all rights to enforce any remedy that Lender may have against
Borrower; and (III) all rights to participate in any security now or later to
be held by Lender for the Loan.
4. Extent of Liability; Waivers. Guarantor's liability
hereunder shall not be affected by: (a) any amendment or modification of the
Loan Documents; or (b) any extensions of time for performance under the Loan
Documents, whether prior to or after maturity; or (c) the release of any
collateral securing the Loan, or the release (by operation of law or otherwise)
of Borrower or any other guarantor from performance or observance of any of the
agreements, covenants, terms or conditions contained in any of the Loan
Documents (whether such amendments, modifications, extensions or releases are
made with or without notice to Guarantor); or (d) the failure to give Guarantor
any notices of acceptance, default or otherwise; or (e) any other guaranty now
or hereafter executed by any other person in connection with the Loan; or (f)
any rights, powers or privileges Lender may now or hereafter have against any
person, entity or collateral; or (g) any assignment for the benefit of
creditors by Borrower or, if Borrower is a partnership, any general partner of
Borrower; or (h) any appointment of a receiver, liquidator or trustee (other
than any receiver appointed at Lender's request) for Borrower or, if Borrower is
a partnership, any general partner of Borrower or for any of the properties of
Borrower; or (i) any filing of a petition by or against Borrower or, if
Borrower is a partnership, any general partner of Borrower, for relief pursuant
to the Federal Bankruptcy Code or any similar statute; or (j) the institution
of any proceedings for the dissolution or liquidation of Borrower or, if
Borrower is a partnership, any general partner of Borrower; or (k) the fact
that Borrower may or may not be personally liable, in whole or in part, under
the terms of the Loan Documents to pay any money judgment. Under no
circumstances shall any payment received by Lender, from Borrower or otherwise,
which is returned by Lender by reason of the avoidance powers granted pursuant
to any federal or state bankruptcy or similar law or for any other reason,
regardless of whether Lender contested the order requiring the return of such
payment, result in any reduction of Guarantor's liability hereunder. Guarantor
hereby covenants that it will cause Borrower to maintain and preserve the
priority and enforceability of the Loan Documents as the same may be modified,
changed, varied, released, amended and/or extended, and will not permit
Borrower to take or fail to take action of any kind which might give rise to a
claim that Guarantor has any defense to its obligations hereunder. Guarantor
agrees to indemnify Lender against all losses, costs or expenses incurred by
Lender by reason of Guarantor's assertion of any defense to its obligations
hereunder based upon any action or inaction of Borrower or of Lender.
Guarantor waives any right or claim of right to cause a marshalling of
Borrower's assets or to cause Lender to proceed at any time or in any
particular order against Borrower, Guarantor, any other person or entity and/or
any collateral securing the Loan. Guarantor agrees that any payments required
to be made by Guarantor hereunder shall become due on demand in accordance with
the terms hereof. To the extent allowed by applicable law, Guarantor expressly
waives and relinquishes all rights and remedies now or hereafter accorded by
applicable law to guarantors or sureties, including, without
2
<PAGE> 4
limitation: (I) any extension of time for payment; (II) notice of acceptance
of this Guaranty by Lender and any and all notices and demands of
every kind which may be required to be given by any statute, rule or law; (III)
any defense, right of offset or other claim which Guarantor may have against
Borrower or which Guarantor or Borrower may have against Lender or the holder
of the Note; (IV), presentment for payment, demand for payment, notice of
nonpayment or dishonor, protest and notice of protest, diligence in collection
and any and all formalities which otherwise might be legally required to charge
Guarantor with liability; (V) any failure by Lender to inform Guarantor of any
facts Lender may now or hereafter know about Borrower, the Mortgaged Property,
the Loan or the transactions contemplated by the Loan Documents, it being
understood and agreed that Lender has no duty so to inform; and (VI) all rights
of redemption, homestead, dower, and other rights or exemptions of every kind,
whether under common law or by statute.
5. Financial Reports. All of the financial statements and
information delivered to Lender in connection with the Loan are true and
correct in all respects, and unless otherwise set forth in the certificate
attached thereto, fairly present Guarantor's financial condition as of the
dates thereof; and no adverse change has occurred in Guarantor's financial
condition reflected in such financial statements since the date thereof.
Guarantor agrees to deliver, or cause to be delivered to Lender any and all
future financial statements or other financial information required by the
Mortgage or any other Loan Document. Guarantor has disclosed to Lender all
events, conditions, and facts known to Guarantor which are likely to have an
adverse effect on the financial condition of Guarantor. No representation or
warranty by Guarantor contained herein, nor any schedule, certificate or other
document furnished by Guarantor to Lender in connection with this Guaranty or
the Loan contains any misstatement of fact or omits to state any fact necessary
to make the statements contained therein not misleading.
6. No Waiver by Lender. No delay on Lender's part in exercising
any right, power or privilege under any of the Loan Documents, this Guaranty or
any other document executed by Guarantor in connection with the Loan shall
operate as a waiver of any such right, power or privilege.
7. Additional Waivers. Guarantor waives any defense to its
obligations hereunder based on: (a) the claim that the Loan Documents were
not duly authorized and executed by Borrower and are not legal, valid and
binding instruments, enforceable against Borrower in accordance with their
respective terms; or (b) an avoidance action.
8. Rights of Action. Lender shall have the right to join
Borrower and/or Guarantor in any action or proceeding commenced by Lender
pursuant to the rights, powers and privileges Lender now or hereafter may
possess under this Guaranty or, at Lender's option, Lender may commence any
action or proceeding directly against Guarantor without joining Borrower or
anyone else in such action or proceeding. In the event any such action or
proceeding arising on, under, out of or by reason of or relating in any way to
this Guaranty or the interpretation, breach or enforcement thereof is brought
against Guarantor, service of process may be made on Guarantor by certified
mail, return receipt requested, at the address set forth herein or such other
address as Lender is notified of by notice similarly sent.
3
<PAGE> 5
9. Costs and Expenses. If: (a) this Guaranty is placed in the
hands of an attorney for collection of any payment due hereunder or is
collected through any legal proceeding; (b) an attorney is retained to
represent Lender in any bankruptcy, reorganization, receivership, or other
proceedings affecting creditors' rights and involving a claim under this
Guaranty or any other Loan Document; (c) an attorney is retained to protect or
enforce the lien of the Mortgage or any of the other Loan Documents, or to
provide advice or other representation with respect to the Mortgaged Property
or any of the Loan Documents; or (d) an attorney is retained to provide advice
to or represent Lender in any other proceeding whatsoever in connection with
this Guaranty, the Note or any other Loan Document; then Guarantor shall pay
all costs and expenses incurred by Lender in connection therewith, including,
without limitation, attorney fees, court costs, filing fees, recording costs,
expenses of foreclosure, premiums, survey costs and minutes of foreclosure, in
addition to all other amounts due hereunder, regardless of whether all or a
portion of such enforcement costs are in a single proceeding brought to enforce
this Guaranty as well as the other Loan Documents. The terms "attorney fees",
"counsel fees" and the like, as used herein, shall include all fees for the
attorneys' services whether outside or within judicial proceedings, including
any appellate and bankruptcy court proceedings, together with all costs and
disbursements incurred by such attorneys.
10. Entire Agreement. This Guaranty contains Guarantor's sole and
entire understanding and agreement with respect to its entire subject matter,
and all prior negotiations, discussions, commitments, representations,
agreements and understandings with respect thereto are merged herein.
11. Successors and Assigns. All stipulations, obligations,
liabilities and undertakings hereunder shall be binding upon Guarantor and the
heirs, legal representatives, successors and assigns of Guarantor and shall
inure to Lender's benefit and to the benefit of Lender's successors and assigns
and to the benefit of each and every holder of any of the Loan Documents and to
the benefit of anyone claiming title to any collateral sold by Lender pursuant
to Lender's rights, powers and privileges under the Loan Documents and shall
not be discharged or affected by the death of Guarantor.
12. Waiver of Jury Trial. Guarantor hereby waives trial by jury
and the right thereto in any action or proceeding of any kind arising on,
under, out of, by reason of or relating in any way to this Guaranty, or the
interpretation, breach or enforcement thereof.
13. Applicable Law; Jurisdiction. This Guaranty shall be
governed and construed in accordance with the laws of the state in which the
real property encumbered by the Mortgage is located without regard to conflict
of law provisions thereof. Guarantor hereby submits to personal jurisdiction
in the state courts located in said state and the federal courts of the United
States of America (and any appellate courts taking appeals thereof) located in
said state for the enforcement of Guarantor's obligations hereunder and waives
any and all personal rights under the law of any other state to object to
jurisdiction within such state for the purposes of any action, suit, proceeding
or litigation to enforce such obligations of Guarantor. Guarantor hereby
waives and agrees not to assert, as a defense in any action, suit, proceeding
or litigation arising out of or relating to this Guaranty, the Note, the
Mortgage and/or any of the Other Security Documents: (a) that it is not subject
to such jurisdiction or that such action, suit, proceeding or litigation may
not be brought or is not maintainable in those courts or that this Guaranty,
the Note, the Mortgage and/or any of the
4
<PAGE> 6
Other Security Documents may not be enforced in or by those courts or that it
is exempt or immune from execution; (b) that the action, suit, proceeding or
litigation is brought in an inconvenient forum; or (c) that the venue of the
action, suit, proceeding or litigation is improper.
14. Duplicate Originals. This Guaranty may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument.
15. Notices. Except as otherwise specified herein, any notice,
consent, request or other communication required or permitted to be given
hereunder shall be in writing, addressed to the other party as set forth below
(or to such other address or person as either party or person entitled to
notice may by notice to the other party specify), and shall be: (a) personally
delivered; (b) delivered by Federal Express or other comparable overnight
delivery service; or (c) transmitted by United States certified mail, return
receipt requested with postage prepaid; to:
Lender: Midland Loan Services, L.P.
210 West 10th Street, 6th Floor
Kansas City, MO 64105
Guarantor: General Host Corporation
6501 East Nevada
Detroit, Michigan 48234
Unless otherwise specified, all notices and other communications shall be
deemed to have been duly given on the first to occur of actual receipt of the
same or: (I) the date of delivery if personally delivered; (II) one (1)
business day after depositing the same with the delivery service if by
overnight delivery service; and (III) three (3) days following posting if
transmitted by mail.
16. Subordinate Debt. Any indebtedness of Borrower to Guarantor now
or hereafter existing is hereby subordinated to the Debt/Guarantor agrees that,
until the Debt has been paid in full, Guarantor will not seek, accept, or
retain for Guarantor's own account, any payment from Borrower on account of
such subordinated debt. Any such payments received by Guarantor shall be held
in trust for Lender and shall be paid over to Lender on account of the Debt
without reducing, impairing or releasing the obligations of Guarantor
hereunder.
17. Application of Payments. Any amounts received by Lender from
any source on account of the Loan may be applied by Lender toward the Debt in
such order and manner of application as Lender may deem appropriate.
18. No Conflict with Other Agreements. The execution, delivery
and performance by Guarantor of this Guaranty does not and will not contravene
or conflict with: (a) the corporate charter, by-laws, partnership agreement or
other organizational documents of Guarantor; (b) any law, order, rule,
regulation, writ, injunction, or decree applicable to Guarantor; or (c) any
contractual restriction binding on or affecting Guarantor or any of Guarantor's
property or assets.
5
<PAGE> 7
19. Binding Obligation. This Guaranty creates legal, valid, and
binding obligations of Guarantor, enforceable against Guarantor in accordance
with its terms.
20. No Actions; No Defaults. Except as previously disclosed in
writing to Lender, there is no action, proceeding or investigation pending or,
to the knowledge of Guarantor, threatened or affecting Guarantor, which may
adversely affect Guarantor's ability to fulfill Guarantor's obligations under
this Guaranty. There are no judgments or orders for payment of money against
Guarantor. Guarantor is not in default under any agreement which default may
adversely affect Guarantor's ability to fulfill Guarantor's obligations under
this Guaranty. Guarantor shall, within five (5) business days after receipt
thereof, deliver to Lender copies of any notices of default served on Guarantor
pursuant to the terms of any agreement to which Guarantor is a party.
21. No Oral Change. No termination, modification or waiver of any
provisions of this Guaranty shall be binding upon Lender except as expressly set
forth in writing duly signed and delivered by Lender.
22. Terms of Payments. Any and all amounts required to be paid by
Guarantor hereunder shall be paid to Lender in United States currency at
Lender's office in Kansas City, Missouri, or such other place as shall be
designated by Lender.
23. Additional Terms and Provisions. Certain additional and
supplemental terms and provisions of this Guaranty are set forth in the
Addendum to Guaranty attached hereto and incorporated herein by this reference.
IN WITNESS WHEREOF, this Guaranty is executed to be effective as of the
day and year first written above.
"GUARANTOR"
GENERAL HOST CORPORATION
a New York corporation
By: Robert M. Lovejoy, Jr.
-----------------------------------
Robert M. Lovejoy, Jr., Vice President
and Treasurer
6
<PAGE> 8
ACKNOWLEDGEMENT
STATE OF MICHIGAN
SS.
COUNTY OF WAYNE
The foregoing instrument was acknowledged before me this 14th day of
March, 1996, by Robert M. Lovejoy, Jr., the Vice President and Treasurer of
General Host Corporation, a New York corporation, on behalf of the corporation.
Sherry L. Rygwelski
-------------------------------------
Notary Public, Wayne County, Michigan
My Commission Expires: 12-27-98
[NOTARY SEAL]
7
<PAGE> 9
ADDENDUM TO GUARANTY
This Addendum to Guaranty contains certain additional and supplemental
terms and provisions of the Guaranty dated as of March 14, 1996, executed by
General Host Corporation, as Guarantor, in favor of Midland Loan Services,
L.P., as Lender. The terms and provisions of this Addendum control and
supersede any conflicting terms and provisions contained in the body of such
Guaranty.
1. The term "an" contained in the eighth line of paragraph 5 is hereby
deleted and inserted in lieu thereof is the phrase "a material".
2. The references to the phrase "adversely affect" in paragraph 20 are
hereby deleted and inserted in lieu thereof in each instance is the phrase
"have a material adverse effect on".
8
<PAGE> 1
Exhibit 4.04 (e)
Loan No. 94-0903604
Taxpayer ID No. 38-1561374
Store No. 25
CERTIFIED TO BE A
TRUE COPY
BY MAXINE J. LIEVOIS
ESCROW AGREEMENT
THIS AGREEMENT, made as of this 14th day of March, 1996, between
Midland Loan Services, L.P., a Missouri limited partnership, in its capacities
as lender and escrow agent ("MLS"), and Frank's Nursery & Crafts, Inc., a
Michigan corporation ("Borrower").
WITNESSETH:
WHEREAS, contemporaneously herewith, MLS is making a loan to Borrower
in the amount of $682,878.00 (the "Loan"), which Loan is secured in part by a
Mortgage, Security Agreement, and Assignment of Leases and Rents (the
"Mortgage") encumbering certain property located in Grand Rapids, Michigan (the
"Property"); and
WHEREAS, as a condition to making the Loan, MLS has required that
Borrower deposit with MLS (a) Three Thousand Seven Hundred Fifty and NO/100
Dollars ($3,750.00 (the "Repair Funds" and (b) a monthly payment as provided
in paragraph 1 (the "Tenant Funds").
NOW, THEREFORE, in consideration of the premises and the due
performance of the commitments and agreements hereinafter set forth, and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Escrow of Funds. Borrower has deposited with MLS Three Thousand
Seven Hundred Fifty and NO/100 Dollars ($3,750.00) which represents the Repair
Funds and Borrower agrees to deposit with MLS on the first day of May, 1996 and
on the first day of each calendar month during the term of this Loan, an
additional Seven Hundred Forty Two and NO/100 Dollars ($742.00) which amount is
referred to as the Tenant Funds. All of the funds now or hereafter deposited
with MLS pursuant to this Agreement shall be held in escrow by MLS (the
"Escrow") according to the terms of this Agreement. MLS agrees to hold such
funds in an interest bearing Eligible Account (as hereinafter defined) selected
by MLS from time to time in the exercise of its sole discretion (the "Escrow
Account"). The amount deposited hereunder is hereinafter referred to as the
"Escrow Funds". Interest on the Escrow Funds shall be deemed part of the
Escrow Funds. The
1
<PAGE> 2
Escrow Account shall be held in the name of MLS, all funds deposited therein
shall be for the account of MLS, and Borrower shall have no right thereto or
interest therein and shall have no authority to withdraw funds from the Escrow
Account, such account to be within the sole and exclusive control of MLS. The
funds on deposit in the Escrow Account shall be disbursed or applied only as
specified in this Agreement. Without limitation of the foregoing provisions,
Borrower hereby acknowledges and agrees that MLS has taken all actions
necessary to obtain, and MLS now has, a valid and perfected first priority lien
on, and security interest in, any funds now or hereafter held in the Escrow
Account in which Borrower may have an interest. An Eligible Account shall mean
either (i) an account maintained with a depository institution or trust
company, the long term unsecured debt obligations of which are rated in one of
the three highest rating categories by either Standard & Poor's Rating Group,
Fitch Investors Service, L.P., Moody's Investors Service, Inc. or Duff and
Phelps Credit Rating Co. at the time of any deposit therein or (ii) a
segregated trust account maintained with a federally or state-chartered
depository institution or trust company acting in its fiduciary capacity,
subject to regulations regarding fiduciary funds on deposit similar to 12
C.F.R. Section 9.10(b).
2. Repairs. Borrower agrees, within six (6) months from the date hereof,
to make the repairs to the Property which are specified under Section 8.1
titled "Immediate Repairs" of Section 8 titled "Cost Estimates" of the Property
Condition Assessment of Frank's Nursery & Crafts Store # 25 (Grand Rapids,
Michigan) dated September 9, 1995 prepared by Aaron & Wright Technical Services
Incorporated (the "Repairs"). Subject to the provisions of this Agreement, at
such time as Borrower has completed the Repairs, then MLS shall disburse the
Repair Funds as provided in paragraph 4 hereof. Borrower's failure to complete
the Repairs within the time period hereinabove provided shall constitute an
"Event of Default" hereunder and under the Loan Documents (as hereinafter
defined).
3. Tenant Leases. MLS shall have the right to continue to hold the
Tenant Funds until the Loan has been paid in full at which time any amount
remaining shall be returned to Borrower. Borrower shall have the right to be
reimbursed from the Tenant Funds for the amounts paid by Borrower for tenant
improvements and leasing commissions in connection with a new lease(s) of all
or part of the Property, as provided in paragraph 5 hereof, when Borrower has
delivered to MLS the following:
(a) Evidence satisfactory to MLS that Borrower has vacated the
portion of the Property being leased and is no longer
conducting its business thereon; and
(b) A new lease(s) for part or all of the space currently occupied
by Borrower which is (i) for a term acceptable to MLS,
(ii) at an effective gross rent of no less than $8.00 per
square foot for the space currently occupied by Borrower,
(iii) pursuant to a written lease(s) approved by MLS and (iv)
in compliance with the Mortgage and the Other Security
Documents; and
2
<PAGE> 3
(c) an estoppel certificate from each tenant, which shall be in a
form acceptable to MLS.
4. Disbursement of Repair Funds to Borrower. MLS shall disburse the
Repair Funds, in whole or in part, to Borrower as provided in paragraph 2 upon
satisfaction of the following terms and conditions:
(a) The Repair Funds shall not be disbursed until Borrower has
provided to MLS an affidavit from Borrower certifying that the
Borrower has completed the Repairs and that all costs in
connection therewith have been paid. Simultaneously with
submitting such affidavit Borrower shall also submit copies
of lien waivers from the general contractor, any
subcontractors and all materialmen and suppliers showing that
they have been paid for all work and that no liens are claimed.
(b) MLS shall have the right, but not the obligation, at
Borrower's cost and expense, to inspect the Property to verify
that the repairs for which reimbursement is being sought have
been completed in a good and workmanlike manner and otherwise
acceptable to MLS.
(c) Borrower shall also furnish to MLS, at Borrower's cost, copies
of building permits, any Certificate of Occupancy or
other certificates issued by governmental authorities in
connection with any work performed for which reimbursement is
being sought under this Agreement and an endorsement to MLS's
loan policy of title insurance obtained in connection with the
Loan, insuring MLS against any mechanic's liens in connection
with such improvements.
(d) Borrower has delivered to MLS such other documents as MLS
shall reasonably require to confirm the satisfaction of
the conditions contained herein and the completion of the work
required to be done under this Agreement.
(e) Within fifteen (15) days of Borrower submitting all items
required in this paragraph 4, MLS shall advise Borrower
if any additional information is needed to satisfy the
requirements hereof. When MLS has approved the items
submitted, MLS shall disburse to Borrower from the Escrow
Funds the Repair Funds.
5. Disbursement of Tenant Funds to Borrower. MLS shall disburse the
Tenant Funds to Borrower as provided in paragraph 3 upon satisfaction of the
conditions provided in said paragraph 3 and upon satisfaction of the following
terms and conditions:
3
<PAGE> 4
(a) Borrower has provided to MLS an affidavit from Borrower
certifying that Borrower has satisfied the requirements
of paragraph 3 above, which affidavit shall include a copy of
the executed lease and shall summarize the rental payable
under such lease.
(b) MLS shall have the right, but not the obligation, at
Borrower's cost and expense, to verify the execution of
the lease(s) which is being used to satisfy the requirements
of paragraph 3 above and that the tenant under the lease(s)
has taken possession of the leased property and is paying
rent.
(c) Borrower has delivered to MLS evidence reasonably satisfactory
to MLS that (i) Borrower has completed all tenant
finish for any of such space which is required to be done by
Borrower and has paid all costs in connection therewith, (ii)
the tenant has any tenant finish required to be completed by
tenant the cost of which is to be paid by Borrower and that
Borrower has paid such cost, and (ii) all leasing commissions
in connection with such lease have been paid.
(d) Borrower has delivered to MLS such other documents as MLS
shall reasonably require to confirm the satisfaction of
the conditions contained in paragraph 3 and herein.
(e) Within fifteen (15) days of Borrower submitting all items
required in this paragraph 5 for a disbursement, MLS
shall advise Borrower if such information satisfies the
requirements hereof. When all the requirements of this
paragraph 5 have been satisfied to MLS's reasonable
satisfaction, MLS shall disburse from the Tenant Funds an
amount equal to the total paid by Borrower for tenant finish
and leasing commission in connection with such lease provided
no such disbursement shall be made more often than once in any
calendar month.
6. Alterations and Improvements. In addition to the right to receive the
Tenant Funds contained in paragraph 3, Borrower shall have the right to use the
Tenant Funds for alterations and improvements to the Property provided MLS has
approved, in its sole discretion, the use of the Tenant Funds for such
alterations and improvements, the cost thereof, the contractor and all other
terms of the contract and completion of such work. Borrower shall have the
right to receive a partial disbursement from the Tenant Funds for amounts owed
under this paragraph 6 provided Borrower shall otherwise have satisfied all the
conditions of paragraph 4 and of this paragraph 6. Notwithstanding anything
contained herein to the contrary, Borrower shall only be entitled to one
disbursement
4
<PAGE> 5
from the Tenant Funds in any calendar month whether such disbursement is
pursuant to this paragraph, paragraph 3 hereof or both.
7. Restrictions on Disbursement. MLS shall have no duty or obligation to
disburse the Escrow Funds except in accordance with this Agreement and only
upon satisfaction of all obligations of Borrower in connection therewith.
8. Default by Borrower. Upon the occurrence and during the continuation
of an Event of Default (as defined in the Mortgage), MLS shall have the right,
but not the obligation, to disburse and apply the Escrow Funds to the
satisfaction of any of Borrower's obligations hereunder or under the Promissory
Note evidencing the Loan (the "Note") or any of the Other Security Documents
(as defined in the Mortgage) (all such instruments, agreements and documents,
as amended from time to time, shall be referred to herein as the "Loan
Documents"). Any disbursement made by MLS shall continue to be part of the
Loan and secured by the Loan Documents. No further direction or authorization
from Borrower shall be necessary to warrant such direct disbursement by MLS and
all such disbursements shall satisfy the obligation of MLS hereunder and shall
be secured by the Loan Documents as fully as if made directly to Borrower.
9. Indemnity. Borrower represents and warrants to MLS that as of the
date hereof, any work which has been performed on the Property has been paid or
will be paid in the ordinary course and there are no liens or outstanding claims
for which a lien could be recorded against the Property. Borrower hereby agrees
to indemnify and hold MLS harmless of and from any and all loss, costs, damage
and expense of every kind, including attorneys' fees, which MLS shall or may
suffer or incur or become liable for due to any breach of this Agreement or any
breach of the foregoing representation and warranty. Borrower agrees to
indemnify and hold MLS harmless of and from any and all claims, liens or damages
alleged against MLS of the Property arising due any capital improvements
performed on the Property.
10. Disbursement of Disputed Escrow Funds. If any disagreement or dispute
shall arise between the parties hereto and/or any other person resulting in
adverse claims and demands being made of MLS for the Escrow Funds, then, at
MLS's option (a) MLS shall not deliver the Escrow Funds to any person and shall
refuse to comply with any claims or demands on it and shall continue to hold
the Escrow Funds until (i) MLS, Borrower and any other person who may have
asserted a claim to, or made a demand for, the Escrow Funds shall agree in
writing to a delivery of the Escrow Funds, in which event MLS shall then
deliver the Escrow Funds in accordance with such written agreement, or (ii) MLS
receives a certified copy of a final and nonappealable judgment or order of a
court of competent jurisdiction directing the delivery of the Escrow Funds, in
which event MLS shall then deliver the Escrow Funds in accordance with such
judgment or order, or (b) if MLS shall receive a written notice advising that
litigation over entitlement to the Escrow Funds has been commenced, MLS may
deposit the Escrow Funds with the Clerk of the
5
<PAGE> 6
Court in which such litigation is pending; or (c) MLS may take such affirmative
steps as it may, in its sole discretion, elect, to substitute for itself an
impartial party reasonably satisfactory to MLS and Borrower, to deposit the
Escrow Funds with a court of competent jurisdiction, or to commence an action
for interpleader, the costs thereof to be borne by Borrower.
11. Limitation of Liability of MLS.
(a) MLS shall not be or become liable to any person for any
damages, losses or expenses that may be incurred as a result
of MLS's error in judgment, the performance of its duties
under this Agreement, upon the claimed failure to perform its
duties hereunder or for any act done or step taken or omitted
in good faith or for any mistake of fact or law; provided that
MLS shall be liable for damages arising out of its willful
misconduct or bad faith under this Agreement. MLS shall be
automatically released from all obligation, responsibility and
liability hereunder upon MLS's disbursement, delivery or
deposit of the Escrow Funds in accordance with the provisions
of this Agreement.
(b) It is expressly understood that in its capacity as escrow
agent hereunder, MLS acts as a stakeholder for the convenience
and accommodation of Borrower and as a depository only and is
not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of any
instrument received by or deposited with MLS and reasonably
believed by MLS to be genuine, or for the form of execution of
such instruments, or for the identity, authority or right of
any person executing or depositing the same, or for the terms
and conditions of any instrument pursuant to which MLS may
act.
(c) The duties of MLS in its capacity as escrow agent
hereunder are purely ministerial. MLS shall not have
any duties or responsibilities in respect of the Escrow Funds
except those set forth in this Agreement and shall not incur
any liability in acting upon any signature, notice, request,
waiver, consent, receipt or other paper or document reasonably
believed by MLS to be genuine, and MLS may assume that any
person purporting to give it any notice on behalf of Borrower
in accordance with the provisions hereof has been duly
authorized to do so.
(d) MLS shall not be responsible in any manner for the validity or
sufficiency of any cash, instruments, wire transfer or
any other property delivered to it hereunder, or for the value
or collectibility of any check or other instrument so
delivered or for any representation made or obligations
assumed by Borrower or any other party to the Loan Documents.
Nothing herein
6
<PAGE> 7
contained shall be deemed to obligate MLS to deliver
any cash or any other funds or property referred to herein,
unless the same shall have first been received by MLS pursuant
to this Agreement.
(e) In no event whatsoever shall MLS be liable for the loss
of principal or interest resulting from an investment
of Escrow Funds made pursuant to and in accordance with the
terms hereof.
12. Assignment. Borrower hereby collaterally assigns to MLS, as
additional security for the Note and the other Loan Documents, its rights under
any contract entered into by Borrower for completion of any repairs or
remediation on any of the Property for which reimbursement will be sought by
Borrower under this Agreement. Any such contract shall provide that MLS shall
have the right to require performance of such contract but shall have no
liability for any amounts owed by Borrower and incurred prior to the date MLS
exercises its rights herein provided to require performance.
13. Notices. Any notice or other communication required or permitted
under or given in connection with this Agreement shall be in writing and shall
be given in the manner provided for in the Mortgage and shall be deemed given
in the manner therein provided.
14. Governing Law. The terms and provisions hereof shall be governed by
and construed in accordance with the laws of the State of Michigan.
15. Binding Agreement. This Agreement shall be binding upon the heirs,
executors, administrators, personal representatives, successors and assigns of
the parties hereto, including any assignee of the Note or any of the other Loan
Documents; provided, however, the foregoing shall not be deemed or construed to
(i) permit the assignment by Borrower of any of Borrower's rights or
obligations hereunder or (ii) confer any right, title, benefit, cause of action
or remedy upon any person or entity not a party hereto except for assignees of
the Note or any of the other Loan Documents.
16. Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit, amplify
or modify the terms and provisions hereof.
17. Rule of Construction. The parties acknowledge that each party and its
counsel have reviewed and have had input in the drafting of this Agreement, and
the parties hereby agree that normal rules of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments or exhibits
hereto. For purposes of this Agreement the word "person" shall include an
individual, corporation, limited liability company, partnership, trust,
unincorporated association, government, governmental authority and any other
entity.
7
<PAGE> 8
18. No Third Party Beneficiaries. No person not a party to this Agreement
shall have any third party beneficiary claim or other right hereunder or with
respect thereto.
19. Amendment. This Agreement shall not be amended except by a writing
signed by the party to be bound thereby.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective the day and year set forth above.
BORROWER:
FRANK'S NURSERY & CRAFTS, INC.,
a Michigan corporation
By: Robert M. Lovejoy, Jr.
--------------------------------
Print Name: Robert M. Lovejoy, Jr.
Title: Vice President and Treasurer
MLS:
MIDLAND LOAN SERVICES, L.P., a Missouri
limited partnership
By: Midland Data Systems, Inc.,
a Missouri corporation, its
sole General Partner
By: Clarence A. Krantz
------------------------------
Print Name: Clarence A. Krantz
Title: Senior Vice President
8
<PAGE> 1
EXHIBIT 10.03(a)
FRANK'S NURSERY & CRAFTS, INC.
EXECUTIVE
COMPENSATION PROGRAM
FISCAL 1996
[FRANK'S NURSERY & CRAFTS LOGO]
<PAGE> 2
FRANK'S NURSERY & CRAFTS, INC.
EXECUTIVE COMPENSATION PROGRAM
I. ELIGIBILITY AND PARTICIPATION
<TABLE>
<S> <C>
Individuals eligible to participate are the following: PLAN ENTRY APPROVAL
GROUP 1: Senior Executive Board of General Host
Executive Vice President Chairman/President
Senior Vice President, Merchandising
Vice President, Merchandising/GMM-Livegoods
Vice President, Merchandising/GMM-Crafts
Vice President, Stores
Vice President, Human Resources
Vice President, Marketing
Vice President, Distribution
GROUP 2 Line Executives Chairman/President
Regional Vice Presidents V.P., Human Resources
Asst. Vice Pres., Real Estate
Asst. Vice Pres., Operations Administration & Temporary Retail
GROUP 3 Staff Executives Chairman/President
Asst. Vice Pres., Inventory Management V.P., Human Resources
Asst. Vice Pres., Facilities Management
Controller
Director, I.S. Applications
Director, I.S. Operations
Director, Transportation
Director, Taxes
Director, Loss Prevention
Director, Employee Relations
Director, Benefits
Assistant General Counsel
Real Estate Attorney
Assistant Treasurer
Director, Real Estate
Director, Planning & Analysis
Director, Advertising
Assistant Controllers
</TABLE>
The basis of participation (Group and effective date) for individuals who are
permitted to enter the Program during the year will be determined at the time
of entry by the Chairman.
- Page 1 -
<PAGE> 3
IIA. PROGRAM DESIGN - GROUP 1 PARTICIPANTS
The Program is designed to pay a bonus that ranges up to 48% of base
salary. The amount of the bonus award will be based on the achievement of
Frank's Nursery & Crafts Operating Income Objectives and achievement of
Business Objectives.
1) ACHIEVEMENT OF OPERATING INCOME OBJECTIVES
Participants can earn bonuses ranging up to 25% of base salary,
based on the relationship between reported operating income and
the operating income objectives established by the Chairman. See
Appendix A. Operating income objectives will be set for the 3%,
20% and 25% payment levels; (percentage achievement for operating
income levels between the objectives established for the 3% and
20% levels, and the 20% and 25% levels, will be interpolated to
the nearest percent). Reported operating income will, in all
cases, be computed (1) before interest expense, (2) before
provisions for federal and state income taxes, and (3) after
provisions for payment of bonuses to the participants payable
under this or any other incentive program covering employees not
included in this program, and (4) will be adjusted to reflect any
variance for the year between actual and budgeted interest expense
(both inter-Company interest and outside interest expense).
In determining the extent to which an individual has met his
profit objectives, the Chairman will have the discretion to reduce
reported operating profit appropriately, for purposes of the
Program, where reported profits were achieved by actions
significantly at variance with planned profit achievement and
which actions did not receive prior review and approval of the
Chairman.
In addition, at the discretion of the Chairman, reported operating
profit for the performance year will be increased or decreased by
an amount equal to 20% of the difference between the assets
employed in the business at the beginning and end of the current
performance year.
2) ACHIEVEMENT OF BUSINESS OBJECTIVES
Up to 10% of base salary will be paid for the achievement of
specific objectives. Operating profit levels will be established
for each participant below which no bonus will be paid for
specific objective achievement.
The specific objectives will be developed between the participant
and his immediate superior, and approved by the Chairman.
Objectives shall not be more than five (preferably four) specific
items; these items will have a weighed value approved by the
Chairman and recorded by the Program Administrator.
Within two weeks following the close of the year, each
participant, in conjunction with the Program Administrator, is to
submit a written summary of his degree of accomplishment of his
specific objectives. This statement together with a recommended
award shall then be submitted to the Chairman.
During the year, revisions to objectives, where warranted, are to
be submitted to the President and approved by the Chairman as
deemed appropriate.
3) ACHIEVEMENT OF CORPORATE TARGET
When the General Host Corporate Target is achieved, any bonus
otherwise earned pursuant to the above Operating Income and
Business Objectives shall be increased by 20%. The Corporate
Target will be computed after provision for bonus payments under
this program.
- Page 2 -
<PAGE> 4
At the beginning of each year, the Chief Executive Officer
determines the Corporate Target (expressed as an Earnings Per
Share objective), subject to the approval of the Compensation
Committee of the Board of Directors. The Corporate Target will be
recorded with the Administrator along with the Operating Income
Objectives and Business Objectives of each participant.
IIB. PROGRAM DESIGN - GROUP 2 PARTICIPANTS
The Program is designed to pay a bonus that ranges up to a maximum of 48%
of base salary. The amount of the bonus of award will be based on the
achievement of Frank's Nursery & Crafts Operating Income Objectives and
achievement of Business Objectives.
1) ACHIEVEMENT OF OPERATING INCOME
Participants can earn bonuses ranging up to 15% of base salary,
based on the relationship between reported operating income and
the operating income objectives established by the Chairman.
Profit objectives will be set for the 3%, 10% and 15% payment
levels; (percentage achievement for profits between objectives
established for the 3% and 10% levels, and the 10% and 15% levels,
will be interpolated to the nearest percent). Reported profits
will, in all cases, be computed after provisions for payments of
bonuses under this Program and under any other bonus program in
effect for Home Office employees.
For purposes of this paragraph, provisions will be made for
payment of bonuses pursuant to Paragraph IIA (1) and (2), before
determining the extent to which the Corporate Target has been
achieved.
2) ACHIEVEMENT OF BUSINESS OBJECTIVES
Up to a maximum of 25% of base salary will be paid for the
achievement of specific objectives (see Paragraph IIA (2)
regarding establishment of specific objectives). Any bonus payable
under this paragraph is also subject to the following limitations:
(1) if less than 75% of the Corporate Target Result is achieved,
any bonus otherwise earned is reduced by 50%; (2) the Chairman
will establish a profit objective level below which no bonus will
be paid.
3) ACHIEVEMENT OF CORPORATE TARGET
When the General Host Corporate Target is achieved, any bonus
otherwise earned pursuant to the above Operating Income and
Business Objectives shall be increased by 20%. The Corporate
Target Result will be computed after provision for bonus payments
under this program.
At the beginning of each year, the Chief Executive Officer
determines the Corporate Target (expressed as an Earnings Per
Share objective), subject to the approval of the Compensation
Committee of the Board of Directors. The Corporate Target will be
recorded with the Administrator along with the Operating Income
Objectives and Business Objectives of each participant.
- Page 3 -
<PAGE> 5
IIC. PROGRAM DESIGN - GROUP 3 PARTICIPANTS
The Program is designed to pay a bonus that ranges up to a maximum of 36%
of base salary. The amount of the bonus award will be based on the
achievement of Frank's Nursery & Crafts Operating Income Objectives and
achievement of Business Objectives.
1) ACHIEVEMENT OF OPERATING INCOME OBJECTIVES
Participants can earn bonuses ranging up to 15% of base salary,
based on the relationship between reported operating income and
the operating income objectives established by the Chairman.
Profit objectives will be set for the 3%, 10% and 15% payment
levels; (percentage achievement for profits between objectives
established for the 3% and 10% levels, and the 10% and 15% levels,
will be interpolated to the nearest percent). Reported profits
will, in all cases, be computed after provisions for payments of
bonuses under this Program and under any other bonus program in
effect for Home Office employees.
For purposes of this paragraph, provisions will be made for
payment of bonuses pursuant to Paragraph IIA (1) and (2), before
determining the extent to which the Corporate Target has been
attained.
2) ACHIEVEMENT OF BUSINESS OBJECTIVES
Up to a maximum of 15% of base salary will be paid for the
achievement of specific objectives (see Paragraph IIA (2)
regarding establishment of specific objectives). Any bonus payable
under this paragraph is also subject to the following limitations:
(1) if less than 75% of the Corporate Target is achieved, any
bonus otherwise earned is reduced by 50%; (2) the Chairman will
establish a profit objective level below which no bonus will be
paid.
3) ACHIEVEMENT OF CORPORATE TARGET
When the General Host Corporate Target is achieved, any bonus
otherwise earned pursuant to the above Operating Income and
Business Objectives shall be increased by 20%. The Corporate
Target Result will be computed after provision for bonus payments
under this program.
At the beginning of each year, the Chief Executive Officer
determines the Corporate Target (expressed as an Earnings Per Share
objective), subject to the approval of the Compensation Committee
of the Board of Directors. The Corporate Target will be
recorded with the Administrator along with the Operating Income
Objectives and Business Objectives of each participant.
- Page 4 -
<PAGE> 6
III. GENERAL PROGRAM CONTROLS
1. No awards will be paid with respect to achievement of
specific objectives in a year when dividends (cash or common stock
in lieu of cash) on General Host's Common Stock are not paid. If a
dividend is paid for a portion of the year, any specific objective
achievement bonus otherwise earned will be pro-rated.
2. Any bonus otherwise payable under this Program will be
reduced proportionately to the extent necessary, if any, to prevent
the Corporation from reporting a loss for the fiscal year in
question.
3. Anything herein to the contrary notwithstanding, no bonus
will be paid to any individual whose overall performance during the
year, in the judgement and discretion of his supervisor, and the
Chairman of the Board, was unsatisfactory.
4. In the event that profit targets are not attained, the
President will have the discretion to recommend the payment of a
reasonable and appropriate bonus for performance that was otherwise
outstanding.
IV. ADMINISTRATION
1. Individual awards will be computed on base salary as of
February 1 of the current fiscal year.
2. The Program must be approved by the Compensation Committee
and the Board of Directors. The Chairman's objectives and the
Corporate Target result must also be approved by the Compensation
Committee of the Board of Directors.
3. The President and Vice President, Human Resources will be the
Administrators of the Program. In concert with the Chairman, they
will prepare a report for the Compensation Committee by the end of
February of each year, documenting last year's results and listing
the current year's:
a) Program Participants
b) Operating Income Objectives
c) Specific Business Objectives for Each Participant
d) Corporate Target
e) Bonus Possibilities for Each Participant
4. The Chairman will have full and final discretion to determine
the amount of bonus, if any, to be paid to any participant who dies,
retires or is disabled during the year, or whose responsibilities
are changed during the year, subject to the approval of the Board of
Directors. Participants whose employment is terminated for any other
reason up to and including the date the awards are distributed
(check date) will be ineligible for any award.
5. In the event there is any dispute as to the amount of any
bonus payable under this Program, the Compensation Committee will
have full and final discretion to resolve the matter as it deems
equitable and appropriate.
6. All bonuses payable under this Program will be payable within
a reasonable time after audited financial statements for the current
fiscal year are available. All bonuses are subject to applicable
payroll taxes.
7. Any bonus payable under this Program may, at the Company's
discretion, be paid in General Host's common stock in lieu of cash,
which stock may be subject to certain restrictions in accordance
with Federal Securities laws. In such event, the Company will
consider the tax effects and either provide low cost tax loans or a
cash payment to cover Participants' additional tax liability.
- Page 5 -
<PAGE> 7
FRANK'S NURSERY & CRAFTS, INC.
EXECUTIVE COMPENSATION PROGRAM
Bonus Potential Matrix
Operating Income Objective (Fiscal Year 1996)
<TABLE>
<CAPTION>
- ------------ ---------------- ---------------- ------------------- ---------------- ------------------------ --------------------
PARTICIPANTS OPERATING INCOME ACHIEVEMENT OF ACHIEVEMENT OF ACHIEVEMENT OF MAXIMUM BONUS MAXIMUM BONUS
OBJECTIVE OPERATING INCOME BUSINESS OBJECTIVES CORPORATE TARGET CORP TARGET NOT ACHIEVED CORP TARGET ACHIEVED
- ------------ ---------------- ---------------- ------------------- ---------------- ------------------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
Group 1 $31.8 mm (Minimum) 3% 10% -- 13% 13%
$39.0 mm (Target) 20% 10% 6% 30% 36%
$40.6 mm (Maximum) 25% 15% 8% 40% 48%
Group 2 $31.8 mm (Minimum) 3% 10% -- 13% 13%
$39.0 mm (Target) 10% 20% 6% 30% 36%
$40.6 mm (Maximum) 15% 25% 8% 40% 48%
Group 3 $31.8 mm (Minimum) 3% 7% -- 10% 10%
$39.0 mm (Target) 10% 10% 4% 20% 24%
$40.6 mm (Maximum) 15% 15% 6% 30% 36%
</TABLE>
Notes: Bonus awards will not be granted if FNC operating income is less than
$31.8 mm.
Corporate Target established at $.54 Earnings Per Share.
<PAGE> 1
EXHIBIT 10.03(b)
GENERAL HOST CORPORATION
EXECUTIVE
COMPENSATION PROGRAM
FISCAL 1996
[GENERAL HOST CORPORATION LOGO]
<PAGE> 2
GENERAL HOST CORPORATION
EXECUTIVE COMPENSATION PROGRAM
I. ELIGIBILITY AND PARTICIPATION
Individuals eligible to participate are the following:
- Chief Executive Officer
- Operating Company Presidents
- Designated Corporate Staff Members
The basis of participation for individuals who are permitted to enter the
Program during the year will be determined at time of entry by the Chief
Executive Officer.
II. PROGRAM DESIGN
A. GROUP 1 - CEO AND OPERATING COMPANY PRESIDENTS
The Program is designed to pay a bonus that ranges up to 60% of base
salary. The amount of the bonus award will be based on three factors:
- Operating Profit Objective Attainment
- Specific Objective Achievement
- Corporate Target Result Attainment
1. Corporate Profit Objective Attainment
The Chief Executive Officer and Operating Company Presidents can
earn bonuses ranging up to 30% of base salary, based on the
relationship between reported operating income and the operating
income objectives established by the Board's Compensation
Committee. Operating income objectives will be set for the 3%,
15% and 30% payment levels. (Percentage achievement for operating
income levels between the objectives established for the 3% and
15% levels, and the 15% and 30% levels, will be interpolated to
the nearest percent.) Reported operating income will, in all
cases, be computed (1) before interest expense, (2) before
provisions for federal and state income taxes, (3) after
provisions for payment of bonuses to the operating company
president payable under this Program and to other operating
company employees under any bonus program in effect for such
operating company covering employees not covered by this Program,
and (4) will be adjusted to reflect any variances for the year
between actual and budgeted interest expense (both intercompany
interest and outside interest expense). In the case of the Chief
Executive Officer and Senior Executives of the corporation, profit
objectives will be based upon net income per share, as reported in
the Consolidated Audited Financial Statements for each fiscal
year, and will be after appropriate provisions for payment of
bonuses under this Program.
- Page 1 -
<PAGE> 3
In determining the extent to which an individual has met his
profit objectives, the Chief Executive Officer will have the
discretion to reduce reported operating profit appropriately, for
purposes of this Program, where reported profits were achieved by
actions significantly at variance with planned profit achievement
and which actions did not receive prior review and approval of the
Chief Executive Officer.
In addition, at the discretion of the Chief Executive Officer,
reported operating profit for the performance year will be
increased or decreased by an amount equal to 20% of the difference
between the assets employed in the business at the beginning and
end of the current performance year.
2. Specific Objective Achievement
Up to 24% of base salary will be paid for the achievement of
specific objectives. Operating profit levels will be established
for each participant below which no bonus will be paid for
specific objective achievement.
The specific objectives will be developed between the participant
and his immediate superior, and approved by the Chief Executive
Officer. Objectives shall not be more than five (preferably four)
specific items; these items will have a weighted value approved by
the Chief Executive Officer and recorded with the Program
Administrator.
Within two weeks following the close of the year, each
participant, in conjunction with the Program Administrator, is to
submit a written summary of his degree of accomplishment of his
specific objectives. This statement, together with a recommended
award, shall then be submitted to the Chief Executive Officer.
During the year, revisions to objectives, where appropriate, are
to be submitted and approved by the Chief Executive Officer.
- Page 2 -
<PAGE> 4
B. GROUP 2 - CORPORATE STAFF EXECUTIVES
The Program is designed to pay a bonus that ranges up to a maximum of 48%
of base salary. The amount of the bonus award will be based on corporate
profit objective attainment, specific objective achievement, and
corporate target result attainment.
1. Corporate Profit Objective Attainment
Participants can earn bonuses ranging up to 20% of base salary,
based on the relationship between reported profit and the profit
objectives established by the Chief Executive Officer. Profit
objectives will be set for the 3%, 10% and 20% payment levels.
(Percentage achievement for profits between the objectives
established for the 3% and 10% levels, and the 10% and 20% levels,
will be interpolated to the nearest percent.) Reported profits
will, in all cases, be computed after provisions for payments of
bonuses under this Program and under any other bonus program in
effect for Corporate staff employees.
For purposes of this Paragraph IIB (1), provisions will be made
for payment of bonuses (other than to the Chief Executive Officer)
pursuant to Paragraphs IIA (1) and (2), before determining the
extent to which the Corporate Target Result has been attained.
2. Specific Objective Achievement
Up to 24% of base salary will be paid for the achievement of
specific objectives (see Paragraph IIA (2) regarding establishment
of specific objectives). Any bonus payable under this Paragraph
is also subject to the following limitations: (1) if less than
75% of the Corporate Target Result is achieved, any bonus
otherwise earned is reduced by 50%; (2) the Chief Executive
Officer will establish a profit objective level for the Corporate
Staff below which no bonus will be paid.
C. CORPORATE TARGET RESULT ATTAINMENT
When the Corporate Target Result is achieved, any Profit Objective bonus
otherwise earned pursuant to IIA and IIB above shall be increased by 20%.
The Corporate Target Result will be computed after provision for bonus
payments under this Program.
At the beginning of each year, the Chief Executive Officer determines the
Corporate Target Result, subject to the approval of the Compensation
Committee of the Board of Directors. The Corporate Target Result will
be recorded with the Administrator along with the profit objectives and
specific objectives of each participant.
- Page 3 -
<PAGE> 5
III. GENERAL PROGRAM CONTROLS
1. No awards will be paid with respect to achievement of
specific objectives in a year when dividends (cash or stock in lieu
of cash) on the Company's Common Stock are not paid. If a dividend
is paid for a portion of the year, any specific objective
achievement bonus otherwise earned will be pro-rated.
2. Any bonus otherwise payable under this Program to the Chief
Executive Officer or any Corporate Staff Member will be reduced
proportionately to the extent necessary, if any, to prevent the
Corporation from reporting a loss for the fiscal year in question.
3. Anything herein to the contrary notwithstanding, no bonus
will be paid to any individual whose overall performance during the
year, in the judgment and at the discretion of his supervisor and
the CEO, was unsatisfactory.
4. In the event that profit targets are not attained, the Chief
Executive Officer will have the discretion to recommend the payment
of a reasonable and appropriate bonus for performance that was
otherwise outstanding.
IV. ADMINISTRATION
1. Individual awards will be computed on base salary as of
February 1 of the current fiscal year.
2. The Program must be approved by the Compensation Committee of
the Board of Directors. The CEO's objectives and the Corporate
Target Result must also be approved by the Compensation Committee.
3. The Chief Executive Officer and the Vice President, Human
Resources will be the Administrators of the Program. They will
prepare a report for the Compensation Committee by the end of
February of each year, documenting last year's results and listing
the year's:
a. Program Participants
b. Corporate Profit Objectives
c. Specific Objectives for Each Participant
d. Corporate Target Result
e. Bonus Possibilities for Each Participant
4. The Chief Executive Officer will have full and final
discretion to determine the amount of bonus, if any, to be paid to
any Participant who dies or retires during the year, or whose
responsibilities are changed during the year, subject to the
approval of the Board of Directors.
In the event there is any dispute as to the amount of any bonus
payable under this Program, the Board of Directors will have full
and final discretion to resolve the matter as it deems equitable
and appropriate.
- Page 4 -
<PAGE> 6
5. Any bonuses payable under this Program will be payable within
a reasonable time after audited financial statements for the current
fiscal year are available. All bonuses are subject to applicable
payroll taxes.
6. Any bonus payable under this Program may, at the Company's
discretion, be paid in General Host's common stock in lieu of cash,
which stock may be subject to certain restrictions in accordance
with Federal Securities laws. In such event, the Company will
consider the tax effects and either provide low cost tax loans or a
cash payment to cover Participant's additional tax liability.
- Page 5 -
<PAGE> 7
GENERAL HOST CORPORATION
EXECUTIVE COMPENSATION PROGRAM
Bonus Potential Matrix
Earnings Per Share Objective (Fiscal Year 1996)
<TABLE>
<CAPTION>
EPS $0.26 (MINIMUM) EPS $0.54 (TARGET)
------------------------------------ ------------------------------------------------
PROFIT SPECIFIC MAXIMUM PROFIT SPECIFIC CORPORATE MAXIMUM
PARTICIPANTS OBJECTIVE OBJECTIVES POTENTIAL OBJECTIVE OBJECTIVES TARGET POTENTIAL
- ------------ --------- ---------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Group 1 3% 24% 27% 15% 24% 3% 42%
Group 2 3% 24% 27% 10% 24% 2% 36%
<CAPTION>
EPS $0.60 (MAXIMUM)
------------------------------------------------
PROFIT SPECIFIC CORPORATE MAXIMUM
PARTICIPANTS OBJECTIVE OBJECTIVES TARGET POTENTIAL
- ------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Group 1 30% 24% 6% 60%
Group 2 20% 24% 4% 48%
</TABLE>
<PAGE> 1
EXHIBIT 10.05(a)
GENERAL HOST CORPORATION
1994 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
SECTION 1. PURPOSES
The purposes of this 1994 Non-Employee Directors Stock Option Plan
(the "Plan") are to assist General Host Corporation (the "Company") in
attracting and retaining individuals of exceptional ability to serve as
directors of the Company and to more closely align their interests with those
of the Company's shareholders, through one-time grants of options to purchase
shares of the Company's common stock, par value $1.00 per share ("Company
stock").
SECTION 2. AVAILABLE SHARES
Subject to adjustment as provided in Section 8, the aggregate maximum
number of shares of Company stock available for settlement of options granted
under the Plan is 300,000 shares. Shares of Company stock delivered in
settlement of any exercised Plan option may be authorized but theretofore
unissued shares, previously issued shares held in the Company's treasury, or
both. There shall be reserved at all times for issuance under the Plan a
number of shares of Company stock equal to the aggregate maximum number of
shares that may be issued in settlement of options then outstanding and which
thereafter may be granted under the Plan. If a Plan option shall expire or be
terminated or canceled for any reason without having been exercised in full,
the shares subject to the option immediately prior to such expiration,
termination, or cancellation shall become available for other options under the
Plan.
SECTION 3. ELIGIBILITY
The only persons who shall be granted options under the Plan are those
individuals who at time of grant are members of the Board of Directors of the
Company (the "Board") and are not officers or employees of the Company or any
subsidiary (each, a "non-employee director"). No person may be granted more
than one option under the Plan.
SECTION 4. ADMINISTRATION
4.1 The Plan shall be administered by the Board or such Board
committee as the Board hereafter may designate (the "Administrator"). The
Administrator shall have full power and authority to (a) prescribe and amend
the forms of option agreements, notices, and all other documents or instruments
required under or determined by the Administrator to be advisable with respect
to the Plan; (b) establish, revise, suspend, and waive such rules and
procedures and appoint such agents as it deems appropriate for the
administration or operation of the Plan; (c) construe and interpret the Plan,
any option agreement, and any other instrument or document relating to the Plan
or a Plan option; (d) decide any question and settle any dispute which may
arise in connection with the Plan or any Plan option; and (e) make any other
determination and take any other action that the Administrator deems necessary
or desirable for the administration or operation of the Plan. All
interpretations, determinations or other decisions of the Administrator
concerning the Plan or any Plan option shall be conclusive and binding upon all
interested parties.
4.2 Notwithstanding the foregoing or any other provision of the
Plan to the contrary, however, it being the intention that all options granted
under the Plan shall satisfy all then applicable criteria for "formula awards"
under Securities and Exchange Commission Rule 16b-3 (or any successor
regulation) as in effect and applicable with respect to plans of the Company at
a relevant time ("Rule 16b-3"), the Administrator shall
A-1
<PAGE> 2
have no authority or discretion at any time to make any determination
or take any other action which would cause any Plan option, whether then
outstanding or which thereafter may be granted, to fail to meet such criteria.
4.3 All costs and expenses involved in administering the Plan as
provided for herein, or incident thereto, shall be borne by the Company.
SECTION 5. CERTAIN TERMS OF OPTIONS
5.1 Subject to approval of the Plan by the Company's shareholders
(and subject to adjustment as contemplated by Section 8): (a) as of October 14,
1994, each individual then serving as a non-employee director automatically
shall receive and be granted an option to purchase 25,000 shares of Company
stock and (b) as of the date on which any new non-employee director first
becomes a Company director, such non-employee director shall receive and be
granted an option to purchase 25,000 shares of Company stock (or such lesser
number of whole shares as is then available for options under the terms of the
Plan); provided, however, that if any new non-employee director first becomes a
non-employee director other than by means of election by the shareholders, then
the grant to such non-employee director shall be subject to the condition that
the director be elected by the shareholders at the next annual meeting of
shareholders. If at any time the aggregate maximum number of shares then
available for Plan options is insufficient for grants as contemplated in clause
(b) of the preceding sentence, then no options shall be granted.
5.2 Each option granted under the Plan shall be evidenced by a
written option agreement in form approved by the Administrator, which agreement
shall identify the option as one granted under the Plan, the optionee, and the
date of grant; provide that in the event of any inconsistency between the Plan
and the agreement the terms of the Plan shall govern; and set forth the number
of shares subject to option, the exercise price per share, and (either
expressly or by reference to the Plan) the other terms and conditions of the
option.
5.3 The per share exercise price for each option granted under the
Plan shall be the Fair Market Value of a share of Company stock on the date the
option is granted. For purposes of the Plan, "Fair Market Value" for any given
date means: (a) if Company stock is then listed on one or more national
securities exchanges (including, for this purpose, the National Market of the
National Association of Securities Dealers Automated Quotation System
("NASDAQ")), the average on such date of the highest and lowest sale prices for
a share of Company stock on the principal such exchange (or, if no Company
stock traded on such exchange on such date, the next preceding date on which
such trading occurred); (b) if (a) is then inapplicable but bid and asked
prices for shares of Company stock are quoted through NASDAQ, the average on
such date of the highest bid and lowest asked prices so quoted for a share of
Company stock (or, if no prices for Company stock were quoted on such date, the
next preceding date on which they were quoted); and (c) if both (a) and (b) are
inapplicable, the fair market value of a share of Company stock on the date in
question as determined in good faith by the Board.
5.4 Each option granted under the Plan shall consist of five
tranches (hereinafter referred to as tranches "A,""B,""C,""D,""E"), with each
such tranche relating to 20% of the aggregate number of shares subject to the
option. Except as otherwise hereafter provided in this Section 5.4 or Section
9, each option tranche shall first be exercisable, in whole or in part, and (to
the extent not earlier exercised or terminated) shall expire, in accordance
with the following schedule:
Tranche A: first exercisable at first anniversary of grant;
expiration on fifth anniversary of grant
Tranche B: first exercisable at second anniversary of grant;
expiration on sixth anniversary of grant
A-2
<PAGE> 3
Tranche C: first exercisable at third anniversary of grant;
expiration on seventh anniversary of grant
Tranche D: first exercisable at fourth anniversary of grant;
expiration on eighth anniversary of grant
Tranche E: first exercisable at fifth anniversary of grant;
expiration on ninth anniversary of grant.
However, upon the death of the grantee of a Plan option, any and all then
outstanding but unexercisable tranches of the option immediately shall become
exercisable.
5.5 During the lifetime of the grantee of a Plan option, the
option shall be exercisable only by such optionee. A Plan option shall be
exercisable only while the optionee continues to serve as a Company director
and for the 90 days following cessation of such service, whereupon the option
shall terminate (except that, upon the death of an optionee, each tranche of
the optionee's then outstanding Plan option shall be exercisable until the
earlier of the first anniversary of the optionee's death and the expiration
date of such tranche, whereupon such tranche shall terminate).
SECTION 6. EXERCISE PROCEDURES AND PAYMENT
Whenever exercisable, any tranche of an option granted under the Plan
may be exercised by delivery to the Secretary of the Company (or any of such
other Company officers or employees as the Administrator from time to time may
designate) of a written notice of exercise in form acceptable to the
Administrator and payment in full of the aggregate exercise price for the
number of shares for which the option is being exercised. Payment may be made
in any one or more of the following forms: (a) cash, (b) shares of Company
stock (valued at their aggregate Fair Market Value for the date immediately
preceding the date of delivery), and (c) if authorized by the Administrator in
its discretion exercised on a case by case basis, a promissory note evidencing
a Company loan pursuant to Section 7 and all collateral and/or security
documents (if any) required by the Administrator in connection with such loan.
SECTION 7. FINANCING
In connection with the exercise of a Plan option tranche by an
optionee then still a director of the Company, the Administrator, in its
discretion, may approve and authorize a loan to the optionee by the Company to
finance some or all of the aggregate exercise price payable and/or income taxes
incurred by the optionee in respect of such exercise; provided, that the
aggregate principal amount of such loan shall not exceed the aggregate Fair
Market Value on the loan date of the number of shares being purchased by such
exercise. The debt for any such loan shall be evidenced by a negotiable
promissory note in form prescribed by the Administrator, shall bear interest at
such fixed or floating rate as shall be specified by the Administrator, shall
have a term not in excess of five years, and shall have such other terms and be
subject to such conditions (including, at the Administrator's discretion, the
provision of collateral security) as the Administrator may determine.
SECTION 8. STOCK ADJUSTMENT AND NUMBER OF SHARES
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, exchange of shares, merger, consolidation,
rights offering, or any other change in the corporate structure or shares of
the Company, the Board shall, at the time of such event or at a subsequent
time, make such adjustment or adjustments as it deems appropriate in the number
and kind of shares authorized by the Plan and covered by outstanding options;
provided, however, that such adjustments must be in the nature of pro rata
anti-dilution adjustments which provide for the equivalent treatment of all
holders of options, provided
A-3
<PAGE> 4
that the aggregate exercise prices of all unexercised options shall not change.
Without limiting the preceding sentence in any respect, in the event of any
merger, consolidation, or combination of the Company with or into another
corporation (other than a merger, consolidation, or combination in which the
Company is the surviving corporation and which does not result in any
reclassification or change of outstanding Company stock), the Board prior
thereto may in its discretion provide that each holder of an option granted
pursuant to the Plan shall have the right thereafter and during the term of
such option to receive upon exercise of such option, or any portion thereof,
for each share of Company stock as to which the option shall be exercised, the
kind and amount of shares of the surviving or new corporation, cash,
securities, evidences of indebtedness, other property, or any combination
thereof, which would have been received upon such merger, consolidation, or
combination by a party holding one share of Company stock immediately prior to
such merger, consolidation, or combination. In the event of a merger,
consolidation or combination in which the consideration issued with respect to
shares of Company stock is a combination of different types of property, the
Board may designate the property or combination of property to be received upon
the exercise of an option outstanding under the Plan.
SECTION 9. EFFECT OF CHANGE IN CONTROL
In the event of a change in control of the Company, unless otherwise
directed by resolution of the Board adopted by the affirmative votes of a
majority consisting entirely of directors who were directors before the change
in control occurred, all then outstanding but theretofore unexercisable Plan
option tranches shall become exercisable. For purposes of the Plan, "change in
control" means that:
(a) 20% or more of the Company's voting stock has been
acquired by any person (as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended) other than directly from
the Company;
(b) there has been a merger or equivalent combination in
which 49% or more of the voting stock of the surviving corporation is
issued for reasons other than that the recipients were shareholders of
the Company; or
(c) 20% or more of the directors elected by shareholders
to the Board are persons who were not nominated by management in the
then most recent proxy statement of the Company.
SECTION 10. MISCELLANEOUS
10.1 The Board may at any time and from time to time amend, modify,
suspend, or terminate the Plan, with or without the approval of shareholders of
the Company, except that: (a) those provisions of this Plan of the nature
described in Rule l6b-3(c)(ii)(A) shall not be amended more often than once
every six months, other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules thereunder; (b)
no amendment or modification of the Plan shall be effective without shareholder
approval at any time at which such approval is required, either by the
applicable rules of the New York Stock Exchange or any other securities
exchange on which Company stock is then principally traded, or by Rule 16b-3;
and (c) none of the foregoing actions by the Board shall adversely affect any
then outstanding Plan option without the holder's consent.
10.2 The Plan has been adopted by the Board, subject to shareholder
approval. Options granted under the Plan prior to such approval also shall be
subject to shareholder approval and shall be of no effect unless and until such
approval is obtained.
A-4
<PAGE> 5
10.3 If at any time the Board shall determine, in its discretion,
that the listing, registration or qualification of any shares covered by the
Plan upon any national securities exchange or under any Federal, state, local
or foreign law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the
issuance of shares under the Plan, then, notwithstanding any other provision of
the Plan to the contrary, no shares will be delivered unless and until such
listing, registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any conditions not
acceptable to the Board.
10.4 The holder of any option granted under the Plan shall not have
any rights as a shareholder with respect to any shares subject to the option
until such shares have been issued to him or her upon due exercise of the
option.
10.5 The Company shall have the right to require the holder of a
Plan option to make payments in cash or Company stock (valued at Fair Market
Value on the payment date) upon the exercise of the option, in connection with
any obligation of the Company to withhold taxes upon such exercise. Any such
required payment shall be a condition precedent to settlement of such option.
10.6 The Plan and all actions taken under it shall be governed by
the laws of the State of New York.
A-5
<PAGE> 1
Exhibit 11.01
GENERAL HOST CORPORATION
ADDITIONAL EARNINGS PER SHARE INFORMATION
FISCAL YEARS ENDED JANUARY 28, 1996, JANUARY 29, 1995
AND JANUARY 30, 1994
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Earnings (loss) for full dilution:
Income (loss) from continuing operations $ (4,339) $ 8,585 $(55,220)
Add interest on 8% Convertible Debentures,
net of tax effect 5,200 5,200 3,640
-------- -------- --------
Income (loss) from continuing operations,
as adjusted 861 13,785 (51,580)
Loss from discontinued operations (3,000) (840)
-------- -------- --------
Net income (loss), as adjusted $ (2,139) $ 13,785 $(52,420)
======== ======== ========
Shares used for calculating
primary earnings per share 23,249 23,244 22,860
Additional shares from assumed conversion
of 8% Convertible Debentures 7,254 7,254 7,254
Additional shares resulting from
assumed exercise of stock options 0 0 2
-------- -------- --------
30,503 30,498 30,116
======== ======== ========
Fully diluted earnings (loss) per share:
Income (loss) from continuing operations $ .03 $ .45 $ (1.71)
Loss from discontinued operations (.10) (.03)
-------- -------- --------
Net income (loss) $ (.07)1 $ .45 1 $ (1.74)1
======== ======== ========
</TABLE>
1 This calculation is submitted in accordance with Regulation S-K item
601 (b)(11) although it is contrary to paragraph 40 of APB Opinion 15
because it produces an anti-dilutive result.
<PAGE> 1
Exhibit 12.01
GENERAL HOST CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings:
Income (loss) from continuing
operations before income taxes ($4,964) $ 7,685 ($53,906) $ 1,005 $14,601
Fixed charges against earnings 31,064 29,672 31,183 30,679 24,839
Amortization of capitalized interest 217 215 182 130 129
------- ------- ------- ------- -------
Total earnings $26,317 $37,572 ($22,541) $31,814 $39,569
======= ======= ======= ======= =======
Fixed Charges:
Interest and debt $23,845 $22,911 $23,251 $23,232 $18,063
33 1/3% of net minimum rent expense 7,219 6,761 7,932 7,447 6,776
------- ------- ------- ------- -------
Fixed charges against earnings 31,064 29,672 31,183 30,679 24,839
Interest capitalized 76 28 542 1,000 38
------- ------- ------- ------- -------
Total fixed charges $31,140 $29,700 $31,725 $31,679 $24,877
======= ======= ======= ======= =======
Excess (defiency) ($4,823) $7,872 ($54,266) $135 $14,692
======= ======= ======= ======= =======
Ratio 0.85 1.27 (0.71) 1.00 1.59
======= ======= ======= ======= =======
Minimum rent expense $21,658 $20,285 $23,798 $22,342 $20,330
======= ======= ======= ======= =======
</TABLE>
<PAGE> 1
Exhibit 21.01
Subsidiaries
<TABLE>
<CAPTION>
STATE OF OTHER NAMES FOR
COMPANY INCORPORATION TRANSACTING BUSINESS
- ------- ------------- --------------------
<S> <C> <C>
AMS Industries, Inc.
(formerly Cudahy Company) Delaware -------
Frank's Nursery &
Crafts, Inc. Michigan -------
General Host Holding
Corp. New York -------
</TABLE>
The names of all other subsidiaries are omitted since, considered in the
aggregate as a single subsidiary, they would not have constituted, as of the
fiscal year ended January 28, 1996, a "significant subsidiary," as that term is
defined in Rule 1.02(w) of Regulation S-X.
<PAGE> 1
Exhibit 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-50020) of General Host Corporation of our report
dated February 28, 1996 appearing on page F-1 of this Form 10-K.
Price Waterhouse LLP
Detroit, Michigan
April 24, 1996
<PAGE> 1
EXHIBIT 24.01(a)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that C. Whitcomb Alden, Jr. a director
of General Host Corporation, a New York corporation (the "Corporation"), hereby
constitutes and appoints Harris J. Ashton, James R. Simpson, Robert M. Lovejoy,
Jr. and J. Theodore Everingham, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, to sign, execute and affix his
name thereto and file the Corporation's Annual Report on Form 10-K for the
fiscal year ended January 28, 1996 with the Securities and Exchange Commission
and any other appropriate authority, granting unto said attorneys and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he himself might or
could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22nd day
of March, 1996.
C. Whitcomb Alden, Jr.
------------------------------
C. Whitcomb Alden, Jr.
<PAGE> 1
EXHIBIT 24.01(b)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that Christopher A. Forster, a director
of General Host Corporation, a New York corporation (the "Corporation"), hereby
constitutes and appoints Harris J. Ashton, James R. Simpson, Robert M. Lovejoy,
Jr. and J. Theodore Everingham, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, to sign, execute and affix his
name thereto and file the Corporation's Annual Report on Form 10-K for the
fiscal year ended January 28, 1996 with the Securities and Exchange Commission
and any other appropriate authority, granting unto said attorneys and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he himself might or
could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th day
of March, 1996.
Christopher A. Forster
------------------------------
Christopher A. Forster
<PAGE> 1
EXHIBIT 24.01(c)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that S. Joseph Fortunato, a director of
General Host Corporation, a New York corporation (the "Corporation"), hereby
constitutes and appoints Harris J. Ashton, James R. Simpson, Robert M. Lovejoy,
Jr. and J. Theodore Everingham, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, to sign, execute and affix his
name thereto and file the Corporation's Annual Report on Form 10-K for the
fiscal year ended January 28, 1996 with the Securities and Exchange Commission
and any other appropriate authority, granting unto said attorneys and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he himself might or
could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this day
of March 23, 1996.
S. Joseph Fortunato
------------------------------
S. Joseph Fortunato
<PAGE> 1
EXHIBIT 24.01(d)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that Philip B. Harley, a director of
General Host Corporation, a New York corporation (the "Corporation"), hereby
constitutes and appoints Harris J. Ashton, James R. Simpson, Robert M. Lovejoy,
Jr. and J. Theodore Everingham, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, to sign, execute and affix his
name thereto and file the Corporation's Annual Report on Form 10-K for the
fiscal year ended January 28, 1996 with the Securities and Exchange Commission
and any other appropriate authority, granting unto said attorneys and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he himself might or
could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd day
of March, 1996.
Philip B. Harley
------------------------------
Philip B. Harley
<PAGE> 1
EXHIBIT 24.01(e)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that Richard W. Haskel, a director of
General Host Corporation, a New York corporation (the "Corporation"), hereby
constitutes and appoints Harris J. Ashton, James R. Simpson, Robert M. Lovejoy,
Jr. and J. Theodore Everingham, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, to sign, execute and affix his
name thereto and file the Corporation's Annual Report on Form 10-K for the
fiscal year ended January 28, 1996 with the Securities and Exchange Commission
and any other appropriate authority, granting unto said attorneys and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he himself might or
could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22nd day
of March, 1996.
Richard W. Haskel
------------------------------
Richard W. Haskel
<PAGE> 1
EXHIBIT 24.01(f)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that Edward H. Hoornstra, a director of
General Host Corporation, a New York corporation (the "Corporation"), hereby
constitutes and appoints Harris J. Ashton, James R. Simpson, Robert M. Lovejoy,
Jr. and J. Theodore Everingham, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, for him and
on his behalf and in his name, place and stead, to sign, execute and affix his
name thereto and file the Corporation's Annual Report on Form 10-K for the
fiscal year ended January 28, 1996 with the Securities and Exchange Commission
and any other appropriate authority, granting unto said attorneys and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he himself might or
could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd day
of March, 1996.
Edward H. Hoornstra
------------------------------
Edward H. Hoornstra
<PAGE> 1
EXHIBIT 24.01(g)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that Charles B. Johnson, a director of
General Host Corporation, a New York corporation (the "Corporation"), hereby
constitutes and appoints Harris J. Ashton, James R. Simpson, Robert M. Lovejoy,
Jr. and J. Theodore Everingham, and each of them (with full power to each of
them to act alone), her true and lawful attorney-in-fact and agent, for her and
on her behalf and in h name, place and stead, to sign, execute and affix his
name thereto and file the Corporation's Annual Report on Form 10-K for the
fiscal year ended January 28, 1996 with the Securities and Exchange Commission
and any other appropriate authority, granting unto said attorneys and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as she herself might
or could do if personally present, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 23rd day
of March, 1996.
Charles B. Johnson
------------------------------
Charles B. Johnson
<PAGE> 1
EXHIBIT 24.01(h)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that Kelly Ashton Sant Albano, a
director of General Host Corporation, a New York corporation (the
"Corporation"), hereby constitutes and appoints Harris J. Ashton, James R.
Simpson, Robert M. Lovejoy, Jr. and J. Theodore Everingham, and each of them
(with full power to each of them to act alone), her true and lawful
attorney-in-fact and agent, for her and on her behalf and in h name, place and
stead, to sign, execute and affix his name thereto and file the Corporation's
Annual Report on Form 10-K for the fiscal year ended January 28, 1996 with the
Securities and Exchange Commission and any other appropriate authority,
granting unto said attorneys and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises in order to effectuate the same as fully to all intents
and purposes as she herself might or could do if personally present, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 28th day
of March, 1996.
Kelly Ashton Sant Albano
------------------------------
Kelly Ashton Sant Albano
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-28-1996
<PERIOD-START> JAN-30-1995
<PERIOD-END> JAN-28-1996
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<SECURITIES> 0
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<INVENTORY> 88,162
<CURRENT-ASSETS> 131,303
<PP&E> 392,633
<DEPRECIATION> 154,830
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<BONDS> 189,898
0
0
<COMMON> 31,752
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<TOTAL-LIABILITY-AND-EQUITY> 395,785
<SALES> 593,270
<TOTAL-REVENUES> 596,564
<CGS> 431,481
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<INTEREST-EXPENSE> 23,845
<INCOME-PRETAX> (4,964)
<INCOME-TAX> (625)
<INCOME-CONTINUING> (4,339)
<DISCONTINUED> (3,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,339)
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<EPS-DILUTED> (.32)
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