SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-12002
MARK CENTERS TRUST
(Exact name of registrant in its charter)
MARYLAND 23-2715194
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 THIRD AVENUE, KINGSTON, PENNSYLVANIA 18704
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(717) 288-4581
Indicate by check mark whether 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
As of November 11, 1996, there were 8,548,817 common
shares of beneficial interest, par value $.001
per share, outstanding.
MARK CENTERS TRUST
FORM 10-Q
INDEX
Part I: Financial Information Page
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets as of
September 30, 1996 and
as of December 31, 1995 1
Consolidated statements of operations for
the three and nine months ended
September 30, 1996 and 1995 2
Consolidated statements of cash flows for
the nine months ended September 30, 1996
and 1995 3
Notes to consolidated financial statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II: Other Information
Signatures 21
Part I. Financial Information
Item 1. Financial Statements
MARK CENTERS TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1996 1995
ASSETS (audited)
Rental property - at cost:
Land $ 30,179 $ 25,270
Buildings and improvements 258,839 258,827
Construction-in-progress 15,776 7,060
-------- --------
304,794 291,157
Less accumulated depreciation 69,608 61,269
-------- --------
Total rental property 235,186 229,888
Cash and cash equivalents 1,349 3,068
Rents receivable - less allowance
for doubtful accounts of $469 and
$509, respectively 4,811 5,200
Prepaid expenses 1,319 1,352
Due from related parties 211 384
Furniture, fixtures and equipment,
net 618 796
Deferred charges 7,853 4,905
Tenant security and other deposits 1,150 3,922
-------- --------
$252,497 $249,515
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $114,538 $107,975
Lines of credit 46,127 43,853
Accounts payable and accrued expenses 14,839 7,058
Accrued contingent payable to
Principal Shareholder -- 6,156
Note payable to Principal Shareholder 3,182 --
Rents received in advance and tenant
security deposits 1,790 1,466
-------- --------
Total Liabilities 180,476 166,508
-------- --------
Minority interest 11,462 13,228
-------- --------
Shareholders' equity:
Common shares, $.001 par value,
authorized 50,000,000 shares, issued
and outstanding 8,548,817 shares 9 9
Additional paid-in capital 60,550 69,770
Retained earnings -- --
-------- --------
Total Shareholders' Equity 60,559 69,779
-------- --------
$252,497 $249,515
======== ========
See accompanying notes to consolidated financial statements
1
MARK CENTERS TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1995
(in thousands except for per share data)
Three months ended Nine months ended
9/30/96 9/30/95 9/30/96 9/30/95
Revenue:
Minimum rents $ 8,388 $ 8,342 $25,113 $24,386
Percentage rents 581 829 1,797 2,407
Additional rents-
expense reimbursements 1,443 1,570 4,994 4,493
Other 85 183 547 685
------- ------- ------- -------
Total revenue 10,497 10,924 32,451 31,971
------- ------- ------- -------
Expenses:
Property operating 2,273 1,968 7,366 6,248
Real estate taxes 1,282 1,286 3,948 3,581
Depreciation and
amortization 3,487 3,010 9,957 8,795
General and
administrative expenses 642 658 2,114 2,070
------- ------- ------- -------
Total operating expenses 7,684 6,922 23,385 20,694
------- ------- ------- -------
Operating income 2,813 4,002 9,066 11,277
Gain on sale of land 21 -- 21 94
Interest and financing
expenses (3,017) (2,805) (9,067) (7,759)
------- ------- ------- -------
(Loss)income before
minority interest (183) 1,197 20 3,612
Minority interest 4 (209) (69) (652)
------- ------- ------- -------
Net (loss) income $ (179) $ 988 $ (49) $ 2,960
======= ======= ======= =======
Net (loss)income per
common share $ (.02) $ .12 $ (.01) $ .35
======= ======= ======= =======
See accompanying notes to consolidated financial statements
2
MARK CENTERS TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1996 AND 1995
(in thousands)
Sept 30, Sept 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (49) $2,960
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 9,957 8,795
Minority interest 69 652
Provision for bad debts 782 435
Gain on sale of land (21) (94)
Other 56 94
------- -------
10,794 12,842
Changes in assets and liabilities:
Rents receivable (392) (1,083)
Prepaid expenses 33 (1,145)
Due from related parties 173 470
Tenant security and other deposits 758 13
Accounts payable and accrued expenses 4,378 1,111
Rents received in advance and tenant
security deposits 322 (128)
------- -------
Net cash provided by operating activities 16,066 12,080
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for real estate and improvements(16,905) (14,544)
Increase (decrease)in accounts payable
related to construction in progress 3,410 (1,302)
Payment to Principal Shareholder for
acquisition of land -- (1,500)
Net proceeds from sale of land 22 104
Deferred leasing and other charges (3,097) (1,415)
Expenditures for furniture, fixtures and
equipment -- (81)
------- -------
Net cash used in investing activities (16,570) (18,738)
------- -------
3
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgages (2,751) (49,259)
Proceeds received on mortgage notes 11,588 67,750
Reduction in debt service escrow 2,014 --
Payment of deferred financing costs (1,004) (584)
Dividends paid (9,227) (9,221)
Distributions to Principal Shareholder (1,835) (1,847)
------- ------
Net cash (used in) provided by
financing activities (1,215) 6,839
------- ------
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (1,719) 181
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,068 3,021
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,349 $ 3,202
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest, net
of amounts capitalized of $819 and $755,
respectively $ 8,939 $ 7,444
======= =======
Summary of the resolution of certain transactions with the
Principal Shareholder:
Reduction in contingent liability due to
Principal Shareholder $(6,156)
Establishment of note payable to Principal
Shareholder 3,174
------
Net reduction in cost of acquired property $(2,982)
======
Acquisition of the Plaza 15 Shopping Center:
Assumption of mortgage $(1,219)
Application of balance due Company
under the ground lease (196)
Building and equipment 1,389
Operating Partnership Units issued (20)
-------
Cash received $ 46
=======
See accompanying notes to consolidated financial statements
4
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The consolidated financial statements include the consolidated
accounts of Mark Centers Trust (the "Company") and its majority
owned partnerships, including Mark Centers Limited Partnership
(the "Operating Partnership"), and have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with instruction to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. The information furnished in the accompanying
consolidated financial statements reflect all adjustments which
are, in the opinion of management, necessary for a fair
presentation of the aforementioned consolidated financial
statements for the interim periods. Operating results for the
nine month period ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the fiscal
year ending December 31, 1996.
The aforementioned consolidated financial statements should be
read in conjunction with the notes to the aforementioned
consolidated financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
2. ORGANIZATION AND FORMATION OF THE COMPANY
The Company was formed as a Maryland Real Estate Investment Trust
("REIT") on March 4, 1993 by Marvin L. Slomowitz (the "Principal
Shareholder"), the principal owner of Mark Development Group (the
"Predecessor"), to continue the business of the Predecessor in
acquiring, developing, renovating, owning and operating shopping
center properties. The Company effectively commenced operations
on June 1, 1993 with the completion of its initial public
offering, whereby it issued an aggregate of 8,350,000 common
shares of beneficial interest to the public at an initial public
offering price of $19.50 per share (the "Offering"). The
proceeds of the Offering were used to repay certain property-
related indebtedness, for costs associated with the Offering and
transfer of the properties to the Company and for working
capital. The acquisition of the properties was recorded by the
Company at the historical cost reflected in the Predecessor's
financial statements since these transactions were conducted with
entities deemed to be related parties.
5
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Company currently owns and operates forty properties
consisting of thirty-five neighborhood and community shopping
centers, three enclosed malls and two mixed use (retail/office)
properties. All of the Company's assets are held by, and all of
its operations are conducted through, the Operating Partnership.
The Company will at all times be the sole general partner of, and
owner of a 51% or greater interest in, the Operating Partnership.
In excess of 99% of the minority interest in the Operating
Partnership is owned by the Principal Shareholder who is the
principal limited partner of the Operating Partnership.
3. SHAREHOLDERS' EQUITY AND MINORITY INTEREST
The following table summarizes the change in the shareholders'
equity and minority interest since December 31, 1995:
(in thousands)
Shareholders' Minority
Equity Interest
Balance at December 31, 1995 $69,779 $13,228
Loss for the period January 1 through
September 30, 1996 (49) 69
Vesting of restricted shares 56 --
Distributions to Principal Shareholder -- (1,835)
Dividends paid, $.36 per share (9,227) --
------- -------
Balance at September 30, 1996 $60,559 $11,462
======= =======
6
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
4. RELATED PARTY TRANSACTIONS
As of September 30, 1996 amounts due to/from related parties
consisted of the following (in thousands):
Accrued ground rent due from Blackman Plaza
Partners (a limited partnership in which the
Principal Shareholder is a 1% general partner) $ 261
Other amounts (net) due to Principal Shareholder (50)
------
Total due from related parties $ 211
======
Note payable to Principal Shareholder $3,182
======
5. CONSTRUCTION LOAN
On September 27, 1996 the Company completed a closing on a
construction loan with First Western Bank, N.A. in the maximum
amount of $12.0 million which is secured by a mortgage on the
Union Plaza in New Castle, Pennsylvania. As of September 30,
1996, the Company had $4.0 million outstanding on this facility
with an additional $1.0 million available upon the execution of
certain additional leases. The remaining $7.0 million will be
made available upon the Company issuing an irrevocable letter of
credit for $7.0 million. During the construction period, the loan
bears interest at the lender's prime rate plus 1%. Following the
construction period, the Company has the option to convert the
Loan from a variable rate of interest to a fixed rate, upon which
principal will be amortized on a monthly basis over a 15 year
period. The Loan matures on March 1, 2013. The Company is
subject to certain affirmative and negative covenants.
6. PER SHARE DATA
Primary earnings per share are computed based on 8,560,708 and
8,567,672 shares outstanding, which represent the weighted
average number of shares outstanding (including restricted
shares) during the nine month periods ended September 30, 1996
and 1995, respectively. Fully diluted earnings per share is
based on an increased number of shares that would be outstanding
assuming the exercise of share options at the market price at the
end of the period. Since fully diluted earnings per share is not
materially dilutive or is anti-dilutive, such amounts are not
presented.
7
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
7. SUBSEQUENT EVENTS
On October 4, 1996 , the Company closed on $45.9 million in
fixed rate financing from Morgan Stanley Mortgage Capital, Inc.
("Morgan Stanley"). The loan, which matures in November 2021, is
secured by mortgages on 17 of the Company's properties, bears
interest at 8.84% and requires monthly payments of interest and
principal amortized over 25 years. Approximately $33.6 million of
the proceeds were used to retire existing debt, $1.4 million for
financing costs, $6.3 million for escrows, and the remaining
proceeds were used for working capital. The Company is subject to
certain affirmative and negative covenants, including the
maintenance of debt service coverage ratios.
As a result of the Morgan Stanley financing, the Company amended
certain existing facilities. The Company used $8.1 million of the
proceeds of the Morgan Stanley facility to partially repay its
facility with Fleet Bank of Massachusetts, N.A. The Fleet Bank
facility was then amended by reducing the maximum line of credit
to $12,000,000, by releasing three properties formerly mortgaged
as security and by modifying certain covenants. The Company
currently has $10.2 million outstanding under the facility which
is now secured by three properties and matures May 31, 1997. The
remaining $1.8 million under the facility is currently
unavailable as it is subject to certain occupancy requirements at
the Ledgewood Mall.
Following the repayment of $16.6 million with proceeds from the
Morgan Stanley financing, the Company's facility with Mellon Bank
N.A. was amended by reducing the available line of credit to $3.8
million, releasing five properties formerly mortgaged as
security, requiring the amortization of principal through the
extended maturity date of April 2, 1998 and modifying certain
covenants. The Company currently has $3.8 million outstanding
under the facility which is now secured by one property.
Upon the repayment of $5.0 million, three properties formerly
mortgaged as security for the Company's facility with Firstrust
Bank were released and the maximum loan amount was reduced to
$2.5 million. The Company currently has $2.5 million outstanding
under the facility.
8
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
7. SUBSEQUENT EVENTS, continued
In addition, three other mortgage notes payable with various
lenders totalling $3.9 million were paid off in full with
proceeds from the Morgan Stanley financing.
Upon conducting environmental site inspections in connection with
obtaining the Morgan Stanley financing, certain environmental
contamination was identified at two of the collateral properties:
soil contamination at the Troy Plaza in Troy, New York and soil
and ground water contamination at the Cloud Springs Plaza in Fort
Oglethorpe, Georgia. In each case, the contamination was
determined to have originated from dry cleaning operations by a
former tenant, in the case of the contamination at Troy Plaza,
and by a current tenant, in the case of Cloud Springs Plaza. The
environmental consultants estimate that the total cost to
remediate both sites will be approximately $300,000, for which
the Company has recorded a liability as of September 30, 1996.
Morgan Stanley has placed $3.1 million of loan proceeds in escrow
which will be released, net of the estimated cleanup costs,
pending the final determination of the costs of environmental
remediation.
9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion is based on the consolidated financial
statements of Mark Centers Trust (the "Company") as of September
30, 1996 and 1995 and for the three and nine months then ended.
This information should be read in conjunction with the
accompanying consolidated financial statements and notes thereto.
These financial statements include all adjustments which, in the
opinion of management, are necessary to reflect a fair statement
of the results for the interim periods presented, and all such
adjustments are of a normal recurring nature. Operating results
for the nine month period ended September 30, 1996 are not
necessarily indicative of the results that may be expected for
the fiscal year ending December 31, 1996.
RESULTS OF OPERATIONS
Comparison of Three Months Ended September 30, 1996 to Three
Months Ended September 30, 1995
Total revenue decreased approximately $427,000 or 4%, to $10.5
million for the quarter ended September 30, 1996 compared to
$10.9 million for the quarter ended September 30, 1995. Increases
in minimum rents and tenant recoveries associated with
development and acquisition activities totalled $177,000. This
increase was offset by a decrease in minimum rents and tenant
recoveries at comparable centers primarily due to certain tenant
bankruptcies which occurred after September 30, 1995. A decrease
of $248,000 was experienced in percentage rents primarily due to
timing differences affecting the period that tenant sales figures
were received and percentage rent recognized in 1995. Other
income decreased approximately $98,000 primarily due to certain
non-recurring development cost reimbursements received from the
Principal Shareholder in 1995 and a decrease in management income
for 1996 arising from the termination of management services at
properties owned by the Principal Shareholder or his affiliates.
Total operating expenses increased approximately $762,000, or 11%
to $7.7 million during the quarter ended September 30, 1996
compared to $6.9 million for the quarter ended September 30,
1995. Increases in depreciation and amortization of approximately
$477,000 were primarily due to additional depreciation expense
related to retenanting, expansion, acquisition and development
activities. Additionally, a $300,000 liability was established as
of September 30, 1996 for estimated costs associated with
environmental remediation at two properties relating to
contamination identified in connection with the October 1996
financing with Morgan Stanley.
10
Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
Net interest and related financing expenses increased $212,000
for the quarter ended September 30, 1996 compared to the quarter
ended September 30, 1995. This increase was attributable to
higher average outstanding borrowings related to retenanting,
acquisition, expansion and development activities.
As a result of the aforementioned changes in revenues and
expenses, a loss before minority interest of $183,000 for the
quarter ended September 30, 1996 represented a $1.4 million
decrease from income before minority interest of $1.2 million for
the quarter ended September 30, 1995.
Comparison of Nine Months Ended September 30, 1996 to Nine Months
Ended September 30, 1995
Total revenue increased $480,000, or 1.5%, to $32.5 million for
the nine months ended September 30, 1996 compared to $32.0
million for the nine months ended September 30, 1995. Increases
in minimum rent and tenant recoveries as a result of acquisition
and development activities totalled approximately $1.2 million.
Recovery of increased snow removal expenses from tenants at
comparable centers further contributed to the increase in expense
reimbursements. These were partially offset by a decrease in
minimum rents and tenant recoveries at comparable centers
primarily due to certain tenant bankruptcies which occurred after
September 30, 1995. The decrease in percentage rent was primarily
due to timing differences affecting the period that tenant sales
figures were received and percentage rent recognized in 1995. The
decrease in other income was primarily due to certain non-
recurring development cost reimbursements received from the
Principal Shareholder in 1995 and a decrease in management income
in 1996 arising from the termination of management services at
properties owned by the Principal Shareholder or his affiliates.
Total operating expenses increased $2.7 million, or 13%, to $23.4
million for the nine months ended September 30, 1996 compared to
$20.7 million for the nine months ended September 30, 1995.
Increases in property operating expenses and real estate taxes
related to acquisition and development activities following
September 30, 1995 were approximately $173,000 and $119,000,
respectively. The increase in property operating expenses at
comparable centers was primarily attributable to: (i) increased
costs due to the extremely harsh winter experienced in the
Northeast totalling $469,000; (ii) the establishment of a
11
Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
$300,000 liability for estimated environmental remediation costs
to be incurred at two properties as previously discussed and 3) a
$347,000 increase in bad debt expense due to certain tenant
bankruptcies and continued weakness among certain local and
regional tenants.
The increase in depreciation and amortization of approximately
$1.2 million was primarily due to additional depreciation expense
related to retenanting, expansion, acquisition and development
activities.
Net interest and related financing expenses increased $1.3
million for the nine months ended September 30, 1996 compared to
the nine months ended September 30, 1995. This increase was
attributable to higher average outstanding borrowings related to
retenanting, acquisition, expansion and development activities.
As a result of the aforementioned changes in revenues and
expenses, net income before minority interest of $20,000 for the
nine months ended September 30, 1996 represented a $3.6 million
decrease from $3.6 million for the nine months ended September
30, 1995.
Funds from Operations
The Company, along with most industry analysts, consider funds
from operations ("FFO") an appropriate supplemental measure of
operating performance. However, FFO does not represent cash
generated from operations as defined by generally accepted
accounting principles and is not necessarily indicative of cash
available to fund cash needs. It should not be considered as an
alternative to net income for the purpose of evaluating the
Company's performance or to cash flows as a measure of liquidity.
Effective for 1996, NAREIT has established new guidelines
clarifying its definition of FFO. The following table sets forth
the Company's calculation of FFO in accordance with the new
NAREIT guidelines ("Adjusted funds from operations").
12
FUNDS FROM OPERATIONS
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 1996 AND 1995
(in thousands, except per share amounts)
Three months ended Nine months ended
9/30/96 9/30/95 9/30/96 9/30/95
Revenue
Minimum rents (a) $ 8,303 $ 8,267 $24,876 $24,167
Percentage rents 581 829 1,797 2,407
Additional rents-
expense reimbursements 1,443 1,570 4,994 4,493
Other 85 183 547 685
------- ------- ------- -------
Total revenue 10,412 10,849 32,214 31,752
------- ------- ------- -------
Expenses
Property operating (b) 1,944 1,944 6,905 6,108
Real estate taxes 1,282 1,286 3,948 3,581
General and administrative 642 652 2,104 2,052
------- ------- ------- -------
Total operating expenses 3,868 3,882 12,957 11,741
------- ------- ------- -------
Operating income 6,544 6,967 19,257 20,011
Interest and financing
expense 3,017 2,805 9,067 7,759
------- ------- ------- -------
Funds from operations (c) 3,527 4,162 10,190 12,252
Amortization of deferred
financing costs (263) (187) (732) (662)
Depreciation of non-real
estate assets (52) (53) (163) (157)
------- ------- ------- -------
Adjusted funds from
operations (d) $ 3,212 $ 3,922 $ 9,295 $11,433
======= ======= ======= =======
Funds from operations
per share (c)(e) $ .35 $ .41 $ 1.00 $ 1.21
======= ======= ======= =======
Adjusted funds from operations
per share (d)(e) $ .32 $ .39 $ .91 $ 1.12
======= ======= ======= =======
Reconciliation of Adjusted Funds from Operations to Net Income
determined in accordance with Generally Accepted Accounting
Principles (GAAP)
Adjusted funds from
operations above 3,212 3,922 9,295 11,433
Depreciation and
amortization of
leasing costs (3,172) (2,770) (9,062) (7,976)
Straight-line rents and
related write-offs net 67 75 100 219
Reserve for environmental
remediation (300) -- (300) --
Minority interest 4 (209) (69) (652)
Gain on sale of land 21 -- 21 94
Other non-cash adjustments (11) (30) (34) (158)
------- ------- ------- -------
Net (loss) income $ (179) $ 988 $ (49) $ 2,960
======= ======= ======= =======
Net (loss)income per share(f)$ (.02) $ .12 $ (.01) $ .35
======= ======= ======= =======
13
(a) Excludes income from straight-lining of rents.
(b) Represents all expenses other than depreciation,
amortization, write-off of unbilled rent receivables
recognized on a straight-line basis and the non-cash charge
for compensation expense related to the Company's restricted
share plan. Additionally, accrued environmental remediation
costs are excluded as they are significant non-recurring
costs that distort the comparative measurement of
performance between periods.
(c) Funds from operations as defined by NAREIT prior to the 1995
White Paper on Funds from Operations is net income (computed
in accordance with generally accepted accounting principles)
excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint
ventures.
(d) Commencing in 1996, the Company has adopted the new NAREIT
definition of Funds from Operations which does not add back
amortization of deferred financing costs and depreciation of
non-real estate assets.
(e) Assumes full conversion of 1,623,000 and 1,621,000 Operating
Partnership Units into common shares of the Company for the
quarter ended September 30, 1996 and 1995, respectively for
a total of 10,171,817 and 10,166,452 shares, respectively.
(f) Net income per share is computed based on the weighted
average number of shares outstanding for the nine months
ended September 30, 1996 and 1995 of 8,562,846 and
8,567,672, respectively.
14
LIQUIDITY AND CAPITAL RESOURCES
On October 4, 1996, the Company closed on $45.9 million in
fixed rate financing from Morgan Stanley Mortgage Capital, Inc.
("Morgan Stanley"). The loan, which matures in November 2021, is
secured by mortgages on 17 of the Company's properties, bears
interest at 8.84%, requires monthly payments of interest and
principal amortized over 25 years and requires the Company
to comply with certain affirmative and negative covenants.
Approximately $33.6 million of the proceeds were used to retire
existing debt, $1.4 million for financing costs, $6.3 million for
escrows, and the remaining proceeds were used for working capital.
Of these escrows $3.1 million is subject to release to the Company
pending the determination of the costs of environmental remediation at two
properties and $1.1 million on the renewal of certain leases,
both of which are expected to occur before the end of the first
quarter in 1997.
As a result of the Morgan Stanley financing, the Company amended
certain existing facilities. The Company used $8.1 million of the
proceeds of the Morgan Stanley facility to partially repay its
facility with Fleet Bank of Massachusetts, N.A. The Fleet Bank
facility was then amended by reducing the maximum line of credit
to $12,000,000, by releasing three properties formerly mortgaged
as security and by modifying certain covenants. The Company
currently has $10.2 million outstanding under the facility which
is now secured by three properties and matures May 31, 1997. The
remaining $1.8 million under the facility is currently
unavailable as it is subject to certain occupancy requirements at
the Ledgewood Mall.
Following the repayment of $16.6 million with proceeds from the
Morgan Stanley financing, the Company's facility with Mellon Bank
N.A. was amended by reducing the available line of credit to $3.8
million, releasing five properties formerly mortgaged as
security, requiring the amortization of principal through the
extended maturity date of April 2, 1998 and modifying certain
covenants. The Company currently has $3.8 million outstanding
under the facility which is now secured by one property.
15
LIQUIDITY AND CAPITAL RESOURCES, continued
Upon the repayment of $5.0 million, three properties formerly
mortgaged as security for the Company's facility with Firstrust
Bank were released and the maximum loan amount was reduced to
$2.5 million. The Company currently has $2.5 million outstanding
under the facility.
In addition, three other mortgage notes payable with various
lenders totalling $3.9 million were paid off in full with
proceeds from the Morgan Stanley financing.
On September 27, 1996 the Company completed a closing on a
construction loan with First Western Bank, N.A. in the maximum
amount of $12.0 million which is secured by a mortgage on the
Union Plaza in New Castle, Pennsylvania. As of September 30,
1996, the Company had $4.0 million outstanding on this facility
with an additional $1.0 million available upon the execution of
certain additional leases. The remaining $7.0 million will be
made available upon the Company issuing an irrevocable letter of
credit for $7.0 million. During the construction period, the loan
bears interest at the lender's prime rate plus 1%. Following the
construction period, the Company has the option to convert the
Loan from a variable rate of interest to a fixed rate, upon which
principal will be amortized on a monthly basis over a 15 year
period. The Loan matures on March 1, 2013. The Company is
subject to certain affirmative and negative covenants.
At September 30, 1996, the Company had $3.5 million outstanding
on a construction loan from Mellon Bank, N.A. which is secured by
one of the Company's properties. The $4.7 million facility bears
interest equal to the bank's prime rate plus 1/2% or LIBOR plus
225 basis points and matures May 15, 1997.
The Company has additional mortgage indebtedness of $103.0
million outstanding at fixed rates of interest ranging from 7.7%
to 9.11% and have maturities ranging from April 1, 2000 to
December 1, 2008.
16
LIQUIDITY AND CAPITAL RESOURCES, continued
The Company's capitalization as of November 11, 1996, consisted
of $172.9 million of debt and $113.2 million of market equity
(using a November 11, 1996 market price of $11.125 per share).
The Company's interest coverage ratio was 2.1 to 1. Following the
financing with Morgan Stanley Capital, Inc., $148.9 million, or
86%, of the Company's outstanding debt is carried at a fixed
rate.
The Company currently estimates that capital outlays for tenant
improvements, related renovations and other property improvements
will require $2.4 million during the remainder of 1996.
Additionally, capital outlays for ongoing property development in
New Castle, Pennsylvania will be $5.3 million. Of these capital
outlays, $6.7 million has been recorded and is reflected in
accounts payable and accrued expense balances at September 30,
1996. While the Company continues to experience a cash shortfall
relating to the development of its New Castle, Pennsylvania
project, the added working capital realized from the Morgan
Stanley financing in conjunction with funds from additional
sources currently under review by the Company are expected to
adequately fund the ongoing activities and obligations of the
Company.
The Company's current outstanding indebtedness and committed
financings encumbers 37 of its 40 properties. The three
remaining properties, with the exception of one property which
the Company owns as ground lessor under a long-term ground lease,
remain unencumbered, and therefore are available to secure
potential future borrowings.
ENVIRONMENTAL ISSUES
Upon conducting environmental site inspections in connection with
obtaining the Morgan Stanley financing, certain environmental
contamination was identified at two of the collateral properties:
soil contamination at the Troy Plaza in Troy, New York and soil
and ground water contamination at the Cloud Springs Plaza in Fort
Oglethorpe, Georgia. In each case, the contamination was
determined to have originated from dry cleaning operations by a
former tenant, in the case of the contamination at Troy Plaza,
and by a current tenant, in the case of Cloud Springs Plaza.
17
ENVIRONMENTAL ISSUES, continued
The environmental consultants estimate that the total cost to
remediate both sites will be approximately $300,000 for which the
Company has recorded a liability as of September 30, 1996. Morgan
Stanley has placed $3.1 million of loan proceeds in escrow which
will be released, net of the estimated cleanup costs, pending the
final determination of the costs of environmental remediation.
HISTORICAL CASH FLOW
Historically, the principal sources for funding operations,
renovations, expansion, development and acquisitions have been
funds from operations, construction and permanent secured debt
financings, as well as short term construction and line of credit
borrowing from various lenders.
The following discussion of historical cash flow compares the
Company's cash flow for the nine months ended September 30, 1996
with the Company's cash flow for the nine months ended September
30, 1995.
Net cash provided by operating activities increased from $12.1
million for the nine months ended September 30, 1995 to $16.1
million for the nine months ended September 30, 1996. This
increase was primarily attributable to increased cash flow from
accounts payable and prepaid expenses, offset by decreased cash
flow from income before depreciation and amortization.
Investing activities used $16.6 million during the nine months
ended September 30, 1996, a $2.2 million decrease in cash used
from the same period in 1995. This was primarily due to decreased
payments for real estate and improvements offset by an increase
in deferred leasing charges paid as a result of retenanting
activities.
Net cash used in financing activities was $1.2 million for the
nine months ended September 30, 1996 representing a $8.0 million
decrease from net cash provided by financing activities of $6.8
million for the nine months ended September 30, 1995. This
decrease is primarily attributable to a decrease in net proceeds
received on mortgage notes in 1996.
18
INFLATION
The Company's long-term leases contain provisions designed to
mitigate the adverse impact of inflation on the Company's net
income. Such provisions include clauses enabling the Company to
receive percentage rents based on tenants' gross sales, which
generally increase as prices rise, and/or, in certain cases,
escalation clauses, which generally increase rental rates during
the terms of the leases. Such escalation clauses are often
related to increases in the consumer price index or similar
inflation indexes.
In addition, many of the Company's leases are for terms of less
than ten years, which permits the Company to seek to increase
rents upon re-rental at market rates if rents are below the then
existing market rates. Most of the Company's leases require the
tenants to pay their share of operating expenses, including
common area maintenance, real estate taxes, insurance and
utilities, thereby reducing the Company's exposure to increases
in costs and operating expenses resulting from inflation.
19
PART II. OTHER INFORMATION
Items 1-5
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.3(d) Amendment Number Two To First Amended and Restated
Assumption, Extension and Loan Agreement between the
Company and Fleet National Bank
10.17(d) Third Amendment To Revolving Credit Loan Agreement
between the Company and Mellon Bank, N.A.
10.21 Construction Loan Agreement between
the Company and First Western Bank
10.21(a) Mortgage Note between the Company
and First Western Bank
10.22 Indenture of Mortgage, Deed of Trust, Security
Agreement, Financing Statement, Fixture Filing and
Assignment of Leases, Rents and Security Deposits
between the Company and Morgan Stanley Mortgage
Capital, Inc.
10.22(a) Mortgage Note between the Company and
Morgan Stanley Mortgage Capital, Inc.
27 Financial Data Schedule (EDGAR filing only)
(b) Reports on Form 8-K
None
20
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has fully caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
MARK CENTERS TRUST
By: /s/ Marvin L. Slomowitz
Marvin L. Slomowitz
Chief Executive Officer and
Trustee (Principal Executive
Officer)
/s/ Joshua Kane
Joshua Kane
Senior Vice President
Chief Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
Date: November 14, 1996
21
INDEX OF EXHIBITS
10.3(d) Amendment Number Two To First Amended and Restated
Assumption, Extension and Loan Agreement between the
Company and Fleet National Bank
10.17(d) Third Amendment To Revolving Credit Loan Agreement
between the Company and Mellon Bank, N.A.
10.21 Construction Loan Agreement between
the Company and First Western Bank
10.21(a) Mortgage Note between the Company
and First Western Bank
10.22 Indenture of Mortgage, Deed of Trust, Security
Agreement, Financing Statement, Fixture Filing and
Assignment of Leases, Rents and Security Deposits
between the Company and Morgan Stanley Mortgage
Capital, Inc.
10.22(a) Mortgage Note between the Company and
Morgan Stanley Mortgage Capital, Inc.
27 Financial Data Schedule (EDGAR filing only)
22
5
0000899629
MARK CENTERS TRUST
1,000
9-MOS
DEC-31-1996
JAN-01-1996
SEP-30-1996
1,349
0
5,280
469
0
0
304,794
69,608
252,497
0
160,665
0
0
0
60,550
252,497
0
10,497
0
7,684
0
0
0
0
0
(179)
0
0
0
(179)
(.02)
(.02)
AMENDMENT NUMBER TWO TO FIRST AMENDED AND
RESTATED ASSUMPTION, EXTENSION AND LOAN AGREEMENT
This Amendment Number Two to First Amended and Restated
Assumption, Extension and Loan Agreement (the "Amendment") is
made as of October 21, 1996 by and among Fleet National Bank, a
national banking association with a place of business at 111
Westminster Street, Providence, Rhode Island 02903 (the
"Lender"), Marvin L. Slomowitz, individual, with a place of
business at 600 Third Avenue, Kingston, Pennsylvania 18704 (the
"Sponsor"), Mark Centers Limited Partnership, a Delaware limited
partnership, with a place of business at 600 Third Avenue,
Kingston, Pennsylvania 18704 (the "Borrower"), and Mark Centers
Trust, a Maryland real estate investment trust, with a place of
business at 600 Third Avenue, Kingston, Pennsylvania 18704 (the
"REIT"). Capitalized terms used in this Amendment shall have the
same meaning as set forth in the Loan Agreement (hereinafter
defined) unless they are otherwise defined in this Amendment.
Other capitalized terms not contained in the Loan Agreement shall
have the meanings as set forth herein.
WITNESSETH THAT:
WHEREAS, Lender, Borrower, REIT and Sponsor entered into
that First Amended and Restated Assumption, Extension and Loan
Agreement dated as of May 30, 1995, as amended by Amendment
Number One to First Amended and Restated Assumption Extension and
Loan Agreement dated as of December 6, 1995 (the "Loan Agreement"
and collectively with this Amendment, the "Agreement") which
established a so-called revolving line of credit subject to the
terms of the Loan Agreement and the Consolidated Revolving Credit
Note;
WHEREAS, Borrower has requested the release of three (3)
Mortgaged Properties as security for the Loan in exchange for a
payment to Lender of principal in the amount of $8,105,000 and of
accrued interest and for certain modifications to the Loan
Agreement;
WHEREAS, Borrower has paid $8,105,000 to Lender and Lender
has agreed to release Northside Mall, Dothan, Alabama, Midway
Plaza, Opelika, Alabama and Cloud Springs Plaza (Park Plaza),
Fort Oglethorpe, Georgia, as security for the Loan and this
amendment sets forth Modifications of the Loan Agreement agreed
upon by the parties hereto;
NOW, THEREFORE, the parties hereto, in consideration of Ten
Dollars ($10.00) and other valuable consideration paid, the
receipt and sufficiency of which is hereby acknowledged by each,
hereby act and agree as follows:
1. Amendments.
(a) Section 3 of the Loan Agreement entitled "Maximum Loan
Amounts; Revolving Line of Credit Loan" is hereby amended by
striking therefrom the words "$25,000,000 (the "Maximum Loan
Amount") and substituting therefor the words "$12,000,000 (the
"Maximum Loan Amount").
(b) Section 4.6 of the Loan Agreement entitled "Borrowing
Base" is hereby stricken in its entirely and the following is
substituted therefor:
"4.6 Borrowing Base. As used herein, the term "Borrowing Base"
shall mean, as of any date, the lesser of: (a) an amount equal
to forty percent (40%) of the aggregate Fair Market Value as of
such date of the Mortgaged Properties, or, (b) an amount which,
if it were the Outstanding Principal of the Loan as of such date
(including any SBLC's which may be outstanding), would make
Annualized Operating Income (defined in Section 8.11.1 below) as
of such date equal to Projected Debt Service (defined in Section
8.11.4 below) multiplied by 2.25."
(c) Section 5.4 of the Loan Agreement entitled "Certain
Rights" is hereby amended by adding the following paragraph
thereto:
"Sponsor hereby subordinates to the Secured Obligation his
interest in that certain note or notes executed by REIT (and/or
entities controlled by REIT) in the aggregate approximate amount
of $3,030,427 and subordinates as to principal to the prior
payment of the Secured Obligations and REIT hereby agrees not to
make, and Sponsor hereby agrees not to accept, any payments of
principal under said note(s) until all the Secured Obligations
under the Agreement have been paid in full and REIT shall make,
and Sponsor shall accept, no other payments of interest, fees, or
of any other kind under said note(s) if the ratio of (i)
Distributions to shareholders of REIT (including Distributions to
any minority interests) to (ii) Funds from Operations as
currently defined by NAREIT (without adding back to net income
any amortization of deferred financing costs for purposes of this
subordination), shall have exceeded 90% for the quarter most
recently ended, provided, however, notwithstanding the foregoing,
that REIT may pay, and Sponsor may accept, payments of interest
under the note(s) if there exists no defaults by Borrower, REIT
or Sponsor under the Agreement. Said Note in favor of Sponsor
shall be included in calculations of Funded Debt under the
Agreement."
(d) Sections 8.11, 8.11.1 and 8.11.2, entitled "Mortgaged
Property Debt Service Coverage" "Annualized Operating Income" and
"Eligible Revenues", respectively, of the Loan Agreement are
hereby stricken in their entirety and the following are
substituted therefor:
"8.11 Mortgaged Property Debt Service Coverage. Annualized
Operating Income shall be calculated as of the end of each fiscal
quarter and shall at times be equal to or greater than 225% of
Projected Debt Service."
8.11.1 Annualized Operating Income. As used herein, the term
"Annualized Operating Income" as of any date shall mean the
excess, if any, of (i) Eligible Revenues as of such date, less
(ii) Defined Operating Expenses as of such date, annualized by
multiplying the difference by a factor of four.
8.11.2 Eligible Revenues, Etc. As used herein,
(a) the term "Eligible Revenues" as of any date shall mean for
the fiscal quarter ending on such date the sum of (i) Base Rents,
(ii) Percentage Rents, and (iii) Operating Expense Reimbursements
from leases of any portion of the Mortgaged Properties recognized
in accordance with GAAP consistently applied, (but not including
any gains or losses on the sale of assets).
(b) "Base Rents" for the most recently ended fiscal quarter
shall mean the base or minimum fixed rent payments due to the
Borrower during such quarter under any leases of any portion of
the Mortgaged Properties.
(c) "Percentage Rents" from a Mortgaged Property as of any date
shall mean the aggregate of the lowest amount of percentage or
overage rents, net of any operating expense set-offs or other
allowances and accrued in accordance with GAAP consistently
applied.
(d) "Operating Expense Reimbursements" as of any date shall mean
the portion of Defined Operating Expenses as of such date which
are due the Borrower."
(e) Subsection 8.11.3 is hereby amended by striking
therefrom the words "Midway Property 201,976 sq. ft." and
"Northside Property 372,151 sq. ft."
(f) Subsection 8.13 of the Loan Agreement entitled "Funded
Debt to Total Market Capitalization" is hereby amended by
striking therefor the words "sixty percent (60%) and substituting
therefor the words "seventy percent (70%)":
(g) The Loan Agreement is hereby amended by adding thereto
a new Subsection 8.13.1 as follows:
"8.13.1 Funded Debt to Restated Value. The Funded Debt of the
REIT and its Subsidiaries on a consolidated basis shall not at
any time exceed seventy percent (70%) of the Restated Value.
As used herein, "Restated Value" means, as of any date, the
hypothetical value of all shopping center properties owned by the
REIT and its Subsidiaries calculated in accordance with the
following formula:
(i) Annualize the net operating income reported by REIT in its
Consolidated Income Statement contained in its Form 10-Q (10-K)
filed with the SEC for the most recent calendar quarter by
multiplying such net operating income by four (4);
(ii) Adjust this annualized net operating income by subtracting
therefrom an amount equal to seven cents ($.07) per square foot
(based on the total Leasable Area Square Feet listed in the
REIT's most recent Form 10K filed with the SEC, adjusted to
reflect the leasable area of any properties acquired, sold or put
into service from the date of such Form 10K through the end of
the calendar quarter covered by the Form 10K referenced in clause
(i) above; and
(iii) Capitalize this adjusted annualized net operating income
using a capitalization rate equal to 10.29%."
(h) Subsection 8.14 of the Loan Agreement entitled
"Tangible Net Worth" is hereby amended by striking therefrom the
amount "$65,000,000" and substituting therefor the amount
$50,000,000".
(i) Subsection 8.15 of the Loan Agreement entitled
"Liquidity" is hereby amended by striking therefrom the amount of
$2,500,000" and by substituting therefor the amount of $500,000".
(j) Subsection 10.2 of the Loan Agreement entitled "Liens"
is hereby amended by striking therefrom the following words:
"provided, however, that the REIT Group shall at all times
maintain Unencumbered Real Estate with Annualized Operating
Income in excess of $2,500,000".
(k) Subsection 10.2.1 of the Loan Agreement is hereby
stricken in its entirety.
(l) Subsection 10.3 of the Loan Agreement entitled
"Distributions" is hereby stricken in its entirety and the
following substituted therefor:
"10.3 Distributions. The REIT shall not make any
Distribution unless it shall have given the Lender at least ten
(10) days prior written notice thereof identifying such
Distribution, the amount thereof and the Person or persons to
whom it is to be made. Distributions, including Distributions to
the owner(s) of operating partnership units of the Borrower, may
not exceed 115% of Funds from Operation in any one fiscal quarter
or 105% of Funds from Operation for any four consecutive
quarters. As used herein, "Funds from Operations" shall be
defined in accordance with the recommendations of the National
Association of Real Estate Investment Trusts ("NAREIT"); provided
however, that in addition to any other adjustments recommended by
NAREIT, amortization of deferred financing costs shall be added
back to net income to arrive at Funds from Operations for
purposes of this covenant."
(m) Subsection 12.1 of the Loan Agreement entitled
"Valuation" is hereby stricken in its entirety and the following
is substituted therefor:
"12.1 Valuation. In connection with the execution of this
Amendment the Lender has caused to be prepared and has accepted
appraisals of each of the Base Mortgaged Properties. The fair
market value of each Base Mortgaged Property as so determined as
of the valuation dated in each such appraisal is as follows:
Mortgaged Property Value
Wesmark Property $ 4,800,000
Searstown Property $ 3,650,000
Northwood Property $28,000,000
The Borrower hereby agrees that such fair market value shall
constitute the "Fair Market Values" of the Base Mortgaged
Properties for all purposes of the Loan Documents unless and
until modified as herein set forth."
(n) Section 16 of the Loan Agreement entitled "Definitions"
is hereby amended by adding after the definition "Rentable Space
8.11.3" the following definition: "Restated Value Section
8.13.1."
(o) Section 16 of the Loan Agreement entitled "Definitions"
is hereby further amended by striking therefrom the definition of
"Base Mortgaged Property" and by substituting therefor the
following:
"Base Mortgaged Property" shall mean each of the Northwood
Property, Searstown Property and Wesmark Property."
(p) Section 16 of the Loan Agreement entitled "Definitions"
is hereby further amended by striking the list of properties
included in the definition of Unencumbered Real Estate in its
entirety and by substituting therefor the following list:
"Normandale Mall, Montgomery, AL
Blackman Plaza, Wilkes-Barre, PA
Newberry Plaza, Newberry SC
Manahawkin Center, Manahawkin, NJ (exclusive of K-Mart)."
2. Payments. At the time of the execution of this Amendment,
the Borrower shall pay to the Lender any current or previously
outstanding legal, appraisal and title insurance fees, costs or
expenses.
3. Representations and Warranties. To induce Lender to enter
into this Amendment, the Borrower, REIT and Sponsor represent and
warrant to Lender as follows:
(a) The information set forth in this Amendment is true and
correct.
(b) The Borrower, REIT and Sponsor have full power, authority
and legal right to execute and deliver this Amendment, and this
Amendment constitutes the valid and binding obligation of
Borrower, REIT and Sponsor, enforceable against them in
accordance with its terms.
(c) None of the Borrower, the REIT or the Sponsor has any
charge, claim, demand, plea or setoff upon, for or against the
Agreement or any of the Loan Documents. The Outstanding
Principal of the Loan as of the date hereof is $11,895,000, and
such sum remains due and payable in accordance with the terms and
provisions of the Agreement and other Loan Documents.
(d) If the effect of the amendments contained in this Amendment
are taken into account, no Default exists under the Agreement or
any other Loan Document.
(e) The execution, delivery and performance of this Amendment
has been duly authorized by all requisite partnership or trust
action on the part of the Borrower and the REIT, as the case may
be, and will not violate any partnership documents of the
Borrower or trust documents of the REIT or any provision of any
law or any order of any tribunal, and will not conflict with,
result in a breach of or constitute a default under any mortgage,
security agreement, loan or other credit agreement, or any other
agreement or instrument to which the Borrower or the REIT or the
Sponsor is a party, or result in the imposition of any Lien upon
the assets of the Borrower, the REIT or the Sponsor except as
contemplated by this Amendment.
4. Effectiveness of Loan Documents. Except as specifically
amended by this Amendment, the Loan Agreement and the other Loan
Documents remain unmodified and in full force and effect.
References in any of the Loan Documents to the Loan Agreement
shall hereafter be deemed to mean and refer to the Loan Agreement
as amended by this Amendment.
5. Miscellaneous.
(a) This Amendment constitutes the entire understanding among
the Borrower, the REIT, the Sponsor and the Lender concerning the
modification of the Loan Agreement. All prior and
contemporaneous negotiations and understandings are merged in
this Amendment.
(b) The captions preceding the sections of this Amendment are
for convenience of reference only. They are not a part of this
Agreement and shall not be considered in construing its meaning
or effect.
(c) The Borrower, the REIT and the Sponsor shall pay the
attorneys' fees and costs incurred by Lender in connection with
the modification of the Loan Agreement evidenced by this
Amendment.
(d) This Amendment shall be construed in accordance with the
laws of the State of Rhode Island as provided in Section 20 of
the Loan Agreement, and shall be binding upon the parties hereto
and their respective heirs, personal representatives, successors
and assigns.
IN WITNESS WHEREOF, the parties hereof have caused this
Amendment to be duly executed as a sealed instrument the day and
year first above written.
FLEET NATIONAL BANK
By: /s/ Thomas T. Hanold
Name: Thomas T. Hanold
Title: Vice President
MARK CENTERS LIMITED PARTNERSHIP
By: /s/ Joshua Kane
Name: Joshua Kane
Title: Senior Vice President and
Chief Financial Officer
MARK CENTERS TRUST
By: /s/ Joshua kane
Name: Joshua Kane
Title: Senior Vice President and
Chief Financial Officer
/s/ Marvin L. Slomowitz
Marvin L. Slomowitz
THIRD AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT
THIS THIRD AMENDMENT TO REVOLVING CREDIT AGREEMENT ("Third
Amendment") is made the 3rd day of October, 1996 by and among
MARK CENTERS LIMITED PARTNERSHIP, a Delaware limited partnership
("MCLP"), MARK 25TH STREET, L.P., a Pennsylvania limited
partnership ("Mark 25"), MARK CENTERS TRUST, a Maryland business
trust ("MCT") and MELLON BANK, N.A., a national banking
association ("Lender"). MCLP and Mark 25 are sometimes
hereinafter referred to individually as a "Borrower" and
collectively as the "Borrowers".
BACKGROUND
A. Borrowers, MCT and Lender are parties to a Revolving
Credit Loan Agreement dated October 5, 1994, amended by a First
Amendment to Revolving Credit Loan Agreement dated November 15,
1995 (the "First Amendment") and a Second amendment to Revolving
Credit Loan Agreement dated February 29, 1996 (the "Second
Amendment"). The Revolving Credit Loan Agreement, as amended by
the First Amendment and Second Amendment, shall hereinafter be
referred to as the "Loan Agreement". The Loan Agreement, as
amended, sets forth the terms and conditions on which Lender
agreed to provide a revolving secured line of credit facility
(the "Revolving Credit") to Borrowers in the maximum aggregate
principal amount of Twenty Two Million Five Hundred Thousand
Dollars ($22,500,000). Capitalized terms used in this Agreement
without definition shall have the same meanings ascribed to those
terms in the Loan Agreement.
B. The Revolving Credit is secured by, among other things,
the Collateral Properties, which include Auburn Plaza, located in
Auburn, Androscoggin County, Maine ("Auburn Plaza").
C. Borrowers and MCT have requested Lender to agree to (i)
reduce the aggregate principal amount of the Revolving Credit,
(ii) convert the Revolving Credit to a term loan, (iii) release
certain Collateral Properties more particularly described on the
attached Exhibit "A" (the "Release Properties") and (iv)) grant
to Lender as additional collateral assignments of certain
payments anticipated by Borrowers, and Lender has agreed to do so
on the terms and conditions hereinafter set forth.
TERMS AND CONDITIONS
NOW THEREFORE, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Definitions. Capitalized terms not otherwise defined
in this Agreement shall have the meanings ascribed to them in the
Loan Agreement.
2. Reduction in Commitment; Commitment Termination Date;
Principal Repayment. (a) Upon the execution of this Third
Amendment, Borrowers shall pay to Lender the sum of Sixteen
Million Six Hundred Eighty Six Thousand Three Hundred Seventeen
and 44/100 Dollars ($16,686,317.44) (the "Loan Paydown") of which
Sixteen Million Five Hundred Ninety Six Thousand Three Hundred
Seventeen and 44/00 Dollars ($16,596,317.44) shall be applied to
the outstanding indebtedness under the Loan Agreement and Ninety
Thousand Dollars ($90,000) shall be maintained by Lender as the
Cash Deposit (as defined in Section 6 below). Following the
payment of the Loan Paydown, the outstanding principal balance
outstanding under the Loan Agreement shall be Three Million Eight
Hundred Twelve Thousand Dollars ($3,812,000). Borrowers
acknowledge and agree that Lender is not obligated to advance any
additional Loans under the Loan Agreement.
(b) The Commitment Termination Date shall be the date
that is eighteen (18) months from the date of this Third
Amendment.
(c) In addition to payment of interest required by
Section 2.6 of the Loan Agreement, Borrowers shall pay to the
Lender on the first day of each month during the balance of the
term of the Revolving Credit an amount equal to the monthly
payment as set forth on the attached Exhibit "B" for such month
(the "Minimum Payment"), which Minimum Payment shall be applied
against the outstanding principal balance of the Revolving
Credit.
(d) In addition to the monthly Minimum Payments,
within sixty (60) days after the last day of each calendar
quarter Borrowers shall make additional payments on account of
the principal balance of the Revolving Credit in the amount, if
any, by which the Operating Cash Flow received with respect to
Auburn Plaza with respect to the calendar quarter then ended
exceeds the Minimum Payments made with respect to such calendar
quarter.
(e) On the Commitment Termination Date, Borrowers
shall pay in full (A) the aggregate principal amount outstanding
of the Revolving Credit, and (B) all other amounts then
outstanding under the Loan Agreement, the Note or any other Loan
Documents.
3. Release Properties; Release of Mark 25. Upon the
receipt of the Loan Paydown, (i) Mark 25 shall be released from
all obligations and liabilities under the Loan Documents, and
(ii) Lender shall promptly deliver the documents necessary in
accordance with the Loan Documents to evidence the termination of
lender's security interests with respect to the Release
Properties. The release of Mark 25 shall in now way affect the
liability of any other parties to the Loan Documents and such
parties shall remain fully liable for their respective
obligations under the Loan Documents.
4. Financial Reporting. Borrowers shall deliver to Lender
within fifteen (15) days after the end of each month an income
statement and rent roll for Auburn Plaza for such month,
certified as true and correct by the Chief Financial Officer of
MCT.
5. Financial Covenants.
(i) Leverage Ratio. The ratio of total combined
Indebtedness of MCT to Total Market Capitalization of MCT shall
not at any time exceed .70 to 1.
(ii) Liquidity. The unrestricted Cash of MCT shall not
at any time be less than $500,000.
(iii)Loan to Value. Borrowers shall not permit the
Loan to Appraised Value Ratio be greater than .50 to 1.
(iv) Auburn Plaza Operating Cash Flow. The Operating
Cash Flow for Auburn Plaza in any calendar year shall be not less
than $540,000.
6. Cash Collateral. Lender has issued to Borrower for the
benefit of the Commonwealth of Pennsylvania Engineering District
40 its irrevocable Standby Letter of Credit No. S836531 dated
October 24, 1994 in the amount of $648,150 (the "Letter of
Credit"). As of the date hereof, the amount available to be
drawn under the Letter of Credit equals Ninety Thousand Dollars
($90,000). Upon the execution of this Third Amendment, Borrower
shall deposit with Lender the sum of Ninety Thousand Dollars
($90,000)(the "Cash Deposit"), to be held in an interest-bearing
money market account maintained by Lender. The Cash Deposit,
until applied or released as provided in Section 7.5 of the Loan
Agreement, shall constitute additional collateral for the Letter
of Credit.
7. Lease Termination Fee. As of the date hereof, Rich's
Department Stores, Inc. ("Rich's) has vacated its premises in
Auburn Plaza (the "Rich's Premises"). Pursuant to the terms of
that certain Lease Termination Agreement dated January 30, 1996
between Rich's and MCLP, Rich's agreed to pay to MCLP the sum of
Four Hundred Thirty-Two Thousand Dollars ($432,000) (the "Rich's
Termination Payment"). MCLP shall pay to Lender the entire
amount of the Lease Termination Payment, or such lesser portion
thereof as MCLP may receive from time to time, immediately upon
MCLP's receipt thereof. All amounts received by Lender in
connection with the Lease Termination Payment shall be applied to
the principal and interest due under the Revolving Credit. As
additional security for MCLP's obligations hereunder, MCLP hereby
conveys, transfers, assigns, and sets over unto Lender all of
MCLP's right, title, interest and privilege in and to the
Rich's's Termination Payment.
8. Excess Proceeds. As of the date hereof, MCLP is
indebted to the Lender pursuant to the terms of that certain Four
Million Seven Hundred Twenty Five Thousand construction loan (the
"Pittston Plaza Construction Loan") for the construction of
certain improvements to the Pittston Plaza shopping center,
Pittston, Pennsylvania ("Pittston Plaza"). MCLP has received a
commitment for permanent financing for Pittston Plaza (the
"Pittston Plaza Financing"). MCLP shall pay to Lender all excess
proceeds (as defined below) received from the Pittston Plaza
Financing. As additional security for MCLP's obligations
hereunder, MCLP hereby conveys, transfers, assigns and sets over
unto lender all of MCLP's right, title, interest and privilege in
and to all excess proceeds received from the Pittston Plaza
Financing as security for MCLP's obligations hereunder. For
purposes hereof, "excess proceeds" shall mean the difference
between (i) the outstanding principal, interest and all sums due
in connection with the Pittston Plaza Construction Loan and (ii)
the principal amount of the Pittston Plaza Financing, less
customary closing costs, including loan commitment fees, title
insurance premiums, and legal fees actually incurred and paid by
MCLP.
9. Reaffirmation of Guaranty. MCT acknowledges that it is
unconditionally liable and legally and validly indebted to Lender
in accordance with the terms of the Guaranty, and such
indebtedness is not subject to any defense, counterclaim or
offset. MCT consents to the delivery of this Third Amendment and
the modifications made herein, and affirms that the Guaranty is
in full force and effect and includes, without limitation, the
indebtedness, liabilities and obligations arising under or in any
way connected with the Loan Agreement and this Third Amendment,
whether now existing or hereafter arising including, without
limitation, principal, interest, costs and expenses of
collection.
10. Representations and Warranties. To induce Lender to
amend the Loan Agreement as provided herein, Borrowers and MCT
represent and warrant to Lender as follows:
(a) Borrowers and MCT have full power, authority and
legal right to execute and deliver this Amendment, and this
Amendment constitutes the valid and binding obligation of
Borrowers and MCT, enforceable against them in accordance with
its terms.
(b) Neither MCT nor any Borrower has any charge,
claim, demand, plea or setoff upon, for or against the Loan
Agreement or any of the Loan Documents. Upon application of the
Loan Paydown, the outstanding principal balance of the Revolving
Credit will be Three Million Eight Hundred Twelve Thousand
Dollars ($3,812,000), and such sum remains due and payable in
accordance with the terms and provisions of the Loan Agreement
and other Loan Documents, as modified by this Third Amendment.
(c) No Event of Default exists under the Loan
Agreement or any other Loan Document and there is no Unmatured
Event of Default under the Loan Agreement or any other Loan
Document.
(d) The execution, delivery and performance of this
Amendment has been duly authorized by all requisite partnership
action on the part of each Borrower and MCT, and will not violate
the partnership documents of any Borrower or MCT or any provision
of any law or any order of any tribunal, and will not conflict
with, result in a breach of or constitute a default under any
mortgage, security agreement, loan or other credit agreement, or
any other agreement or instrument to which any Borrower or MCT is
a party, or result in the imposition of any lien upon the assets
of any Borrower of MCT except as contemplated by this Amendment.
11. Effectiveness of Loan Documents. Except as
specifically amended by this Third Amendment, the Loan Agreement
and the other Loan Documents remain unmodified and in full force
and effect. References in any of the Loan Documents to the Loan
Agreement shall hereafter be deemed to mean and refer to the Loan
Agreement as amended by this Amendment.
12. Miscellaneous.
(a) This Third Amendment constitutes the entire
understanding among Borrowers, MCT and Lender concerning the
modification of the Loan Agreement. All prior and
contemporaneous negotiations and understandings are merged in
this Third Amendment.
(b) The captions preceding the sections of this Third
Amendment are for convenience of reference only. They are not a
part of this Third Amendment and shall not be considered in
construing its meaning or effect.
(c) Borrowers and MCT shall pay the attorneys' fees
and costs incurred by Lender in connection with the modification
of the Loan Agreement evidenced by this Third Amendment.
(d) This Third Amendment may be executed in any number
of counterparts, each of which shall be an original, and such
counterparts together shall constitute one and the same
instrument. The parties hereto agree that a facsimile
transmission of an executed counterpart of this Third Amendment
shall have the same binding effect upon the signatory as an
executed and delivered original hereof. The parties hereto
further agree, for confirmatory purposes only, to exchange copies
of executed counterpart originals promptly after the aforesaid
facsimile transmission so that each party may have one fully
executed original hereof.
(e) This Third Amendment shall be construed in
accordance with the laws of the Commonwealth of Pennsylvania and
shall be binding upon the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF the parties hereto have caused this Third
Amendment to be duly executed the day and year first above
written.
Borrowers:
MARK CENTERS LIMITED PARTNERSHIP,
a Delaware limited partnership
BY: MARK CENTERS TRUST, a Maryland
business trust, its general partner
BY: /s/ Joshua Kane
Senior Vice President & CFO
MARK 25TH STREET, L.P.,
a Pennsylvania limited partnership
BY: MARK 25TH STREET REALTY CORP.,
a Pennsylvania corporation
its general partner
BY: /s/ Joshua Kane
Senior Vice President & CFO
MARK CENTERS TRUST,
a Maryland business trust
BY: /s/ Joshua Kane
Senior Vice President & CFO
Lender:
MELLON BANK, N.A.,
a national banking association
BY: /s/ D. Charles Felmlee
Title: Vice President
EXHIBIT "A"
Release Properties
1. Birney Plaza, Moosic Borough, Lackawana County,
Pennsylvania
2. Circle Plaza, Shamokin Dam Borough, Snyder County,
Pennsylvania
3. Kingston Plaza, Kingston Borough, Luzerne County,
Pennsylvania
4. Mountainville Plaza, City of Allentown, Lehigh County,
Pennsylvania
5. 25th Street Plaza, Palmer Township, Northampton County,
Pennsylvania
CONSTRUCTION LOAN AGREEMENT
MADE as of the 27th day of September, 1996, by and between
FIRST WESTERN BANK, NATIONAL ASSOCIATION ("Lender"), a national
banking association, and MARK TWELVE ASSOCIATES, L.P. ("Borrower"),
a Pennsylvania limited partnership.
WITNESSETH THAT:
WHEREAS, Borrower is the owner in fee simple of the Land (all
capitalized terms not otherwise defined herein shall have the
meanings set forth in Article 1); and
WHEREAS, Borrower has requested the Loan from Lender to defray
certain costs of constructing and equipping the Improvements and
certain costs of the financing thereof.
NOW, THEREFORE, for good and valuable consideration, receipt of
which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereby covenant and agree as follows:
1. DEFINITIONS
1.1 Definitions. As used herein, and the Exhibits attached
hereto, the following terms shall have the following meanings:
"Agreement" shall mean this Construction Loan Agreement,
including all schedules and Exhibits hereto, as the same may be
amended or supplemented from time to time.
"Architect" shall mean Keeva J. Kekst Architects, Inc., or such
other architect as may be approved in writing by Lender.
"Architect's Agreement" shall mean that certain agreement for
the furnishing of architectural and design services dated July 20,
1995 between Borrower and Architect and all exhibits and
attachments thereto, as the same may be amended from time to time
with the consent of Lender in accordance with the terms of this
Agreement.
"Assignment of Construction Documents" shall mean that certain
Assignment of Construction Documents of even date herewith given by
Borrower to Lender, as the same may be amended, replaced or
supplemented from time to time.
"Assignment of Leases and Rents" shall mean that certain
Assignment of Leases and Rents of even date herewith given by
Borrower to Lender with respect to the Land and Improvements, as
the terms thereof may be amended, supplemented, extended, renewed,
replaced or waived from time to time.
"Commencement of Construction" shall mean the date upon which
any work related to the construction of the Improvements, including
site grading or clearing, began on the Land.
"Commitment" shall mean the commitment letter, if any, issued
by Lender for the making of the Loan, as the same may have been
amended.
"Completion Date" shall mean eighteen (18) months after the
date of this Agreement.
"Conditional Default" shall mean an event or condition which,
with the passage of time or the giving of notice, or both, shall
become an Event of Default.
"Construction Contract" shall mean that certain Standard Form
of Agreement between Owner and Contractor (Stipulated Sum) dated
February 14, 1996 between Borrower and Contractor and all exhibits
and attachments thereto, as the same may be amended from time to
time with the consent of Lender in accordance with this Agreement.
"Construction Documents" shall mean the Construction Contract,
Architect's Agreement, the Plans, all consents, licenses, permits,
authorizations and approvals relating to the construction,
completion, use and occupancy of the Improvements and all other
instruments, documents and rights relating to the design,
construction and development of the Improvements.
"Contractor" shall mean B & B Contractors & Developers, Inc.,
a corporation, or such other contractor as may be approved in
writing by Lender.
"Development Budget" shall mean the Development Budget attached
to this Agreement as Exhibit A, as the same may be amended from
time to time by Lender in accordance with this Agreement.
"Event of Default or Events of Default" shall mean an "Event of
Default" or "Events of Default" as defined in Section 7.1.
"Exhibits" shall mean those exhibits attached hereto and made
a part hereof, including Exhibit A - Development Budget; Exhibit B
- - Form of Request for Disbursement; Exhibit C - Form of
Contractor's Consent; and Exhibit D - Form of Architect's Consent.
"Financing Statements" shall mean the financing statements
which Lender may from time to time require in order to perfect its
security interest in collateral described in the Mortgage and this
Agreement pursuant to the applicable Uniform Commercial Code.
"First Disbursement" shall mean the first disbursement of Loan
proceeds, to be made upon the fulfillment of the conditions set
forth in Section 6.1.
"Force Majeure" shall mean strikes, work stoppages, a general
shortage of labor or materials, acts of God, civil commotion, enemy
act, fire or other casualty.
"Guaranty" shall mean that certain Agreement of Guaranty and
Suretyship, of even date herewith, given by Guarantor to Lender, as
the terms thereof may be amended, supplemented, extended, renewed,
replaced or waived from time to time with the written consent of
Lender.
"Guarantor" shall mean Mark Centers Trust, a Maryland business
trust, and Mark Centers Limited Partnership, a Delaware limited
partnership, jointly and severally.
"Improvements" shall mean all improvements to be constructed on
the Land in accordance with the Plans as provided in this
Agreement.
"Inspecting Architect" shall mean such person or entity as
Lender may designate from time to time to inspect the construction
of the Improvements and to perform other services with respect
thereto on behalf of Lender.
"Land" shall mean that certain parcel or parcels of land
subject to the lien of the Mortgage.
Letter of Credit shall mean that certain automatically
renewable irrevocable letter of credit from an issuer and having
terms acceptable to Lender in an amount of not less than $7,000,000
and which Letter of Credit may reduce annually after the third year
of the Improvements operations (i.e. reduction shall be cumulative
for the first three years, but not cumulative thereafter)
predicated on a ratio of net operating income of the Improvements
to Borrower s total indebtedness of at least 1.4 to 1.0 and further
limited to an amount equal to the amortization of $7,000,000 of
Loan proceeds secured by the Letter of Credit.
"Loan" shall mean the loan to be made pursuant to this
Agreement in the maximum principal amount of $12,000,000.
"Loan Documents" shall mean the Commitment, this Agreement, the
Note, the Mortgage, the Assignment of Leases and Rents, the
Assignment of Construction Documents, the Guaranty, the Financing
Statements, and all other agreements, instruments and documents now
or hereafter executed in connection with the Loan.
"Loan Fee" shall mean (i) Fifty Thousand Dollars ($50,000.00),
$15,000 of which has been paid by Borrower and $35,000 of which
shall be paid by Borrower on the date hereof, and (ii) 1% of each
advance of Loan proceeds secured by the Letter of Credit.
"Mortgage" shall mean that certain Open-End Mortgage and
Security Agreement, of even date herewith, given by Borrower to
Lender with respect, inter alia, to the Land and Improvements, as
the terms thereof may be amended, supplemented, extended, renewed,
replaced or waived from time to time.
"Note" shall mean that certain Mortgage Note, of even date
herewith, given by Borrower to Lender in the principal face amount
of $12,000,000, as the terms thereof may be amended, supplemented,
extended, renewed, replaced or waived from time to time.
"Partners" shall mean Mark Center Trust, being the sole
general partner in Borrower, and Mark Centers Limited Partnership
and Marvin L. Slomowitz, being all the limited partners in
Borrower.
"Permitted Encumbrances" shall mean the liens, assignments and
security interests in favor of Lender; the easements, restrictions,
encumbrances and other matters described in and permitted to exist
under the terms of the Mortgage; such other matters as may be
expressly consented to in writing by Lender; and taxes on the Land
and Improvements not yet due and payable.
"Plans" shall mean the final plans and specifications for the
construction and equipping of the Improvements, including all
schematic and working drawings and designations of all
manufacturers and model numbers of all equipment, and any
improvements to be constructed off the Land, as the same may be
amended from time to time in accordance with this Agreement.
1.2 Construction. All references to article or section numbers
shall refer to this Agreement, unless otherwise stated. The above
recitals and the Commitment are hereby made a part of this
Agreement. To the extent that the Commitment is inconsistent with
the terms of the Loan Documents, the terms of the Loan Documents
shall govern.
REPRESENTATIONS AND WARRANTIES
2.1 Borrower hereby warrants and represents to Lender as
follows:
(a) Due Formation; Capacity. Borrower and each of the Partners
and Guarantor (other than individuals) are each duly organized,
validly existing and in good standing under the laws of the state
in which they were formed; and Borrower, the Partners and Guarantor
each have full power and authority to own and operate their
respective properties, to conduct their respective affairs as now
being conducted, to execute and deliver the Loan Documents and the
Construction Documents to be or purporting to have been executed
and delivered by them, and to perform their respective obligations
hereunder and thereunder.
(b) Compliance with Law; Authority of Signatories. Borrower,
the Partners and Guarantor each have, in connection with the
execution and delivery of the Loan Documents and the Construction
Documents to be or purporting to have been executed and delivered
by them, complied in all respects with the provisions of every
statute, regulation, decision, instrument, agreement or resolution
by which it or he or any of its or his business or property is
bound; and the execution and delivery by Borrower, the Partners and
Guarantor of such Loan Documents and the Construction Documents,
and the performance thereof has been duly authorized by all action
necessary or requisite on the part of Borrower, the Partners and
Guarantor.
(c) No Conflicts or Defaults. Neither the execution, the
delivery, nor the performance by Borrower or any of the Partners or
Guarantor of the provisions of any of the Loan Documents or the
Construction Documents does or will, with notice or lapse of time,
or both, conflict with or constitute a default under any statute,
rule, regulation, decree, decision, resolution, instrument,
document or agreement by which Borrower or any of the Partners or
Guarantor or any of their respective businesses or properties is
bound.
(d) Enforceability. Each of the Loan Documents and the
Construction Documents is in full force and effect and is valid,
binding and enforceable upon the party or parties thereto in
accordance with its terms; and there exists no default or condition
or event which, with notice or passage of time, or both, will
constitute a default under the Construction Documents.
(e) No Litigation or Investigations. There is no pending or
threatened litigation or governmental investigation (or any basis
therefor known to Borrower or Guarantor) which questions the
capacity, ability or authority of Borrower or Guarantor to execute,
deliver and perform the provisions of the Loan Documents or the
Construction Documents; or if determined adversely to Borrower or
Guarantor, would materially and adversely affect the business or
financial condition of Borrower or Guarantor.
(f) Financial Information. The information, financial
statements and other financial data furnished by Borrower, the
Partners and Guarantor to Lender are complete and correct and
present fairly the financial condition of Borrower and Guarantor in
accordance with generally accepted accounting principles applied on
a consistent basis, and the information on the Development Budget
accurately sets forth the costs of each of the categories shown
thereon.
(g) Title Aspects. Borrower has good and marketable fee simple
title in and to the Land and Improvements, free, clear and
unencumbered, of record and in fact, except for and subject only to
the Permitted Encumbrances.
(h)Licenses, etc. All easements, variances, licenses, permits,
consents, approvals and authorizations to construct the
Improvements and to occupy and operate the Land and Improvements
(except to the extent the same are of a nature so as not to be
obtainable until a later stage of construction or completion of the
Improvements) have been obtained and are valid and in full force
and effect, including, without limitation, all licenses, permits,
consents, approvals and authorizations required under federal,
state and/or local laws, statutes, regulations, rules, codes,
ordinances and orders with respect to subdivision, zoning, access
to public streets, curb cuts, drainage, safety, building, fire
protection, environmental and energy matters.
(i) Construction Documents. The only agreements by or on
behalf of Borrower in connection with the provision of labor,
materials, design or supervisory services with respect to the
Improvements are the Construction Documents.
(j) Hazardous Wastes. Neither Borrower, nor, to the best of
Borrower's knowledge, any previous owner of the Land, nor any third
party has used, generated, stored or disposed of any hazardous
waste, toxic substances or related materials ("Hazardous
Materials") on the Land. For the purposes of this representation
and warranty, Hazardous Materials shall include, but shall not be
limited to, any pollutants, dangerous substances or substances
defined as "hazardous substances" or "toxic substances" in the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sec. 1802, The Resource
Conservation and Recovery Act, 42 U.S.C. Sec. 6901 et seq, or any
law, statute, ordinance, rule, regulation, permit, license,
judgment, writ, injunction, decree, award and standard promulgated
by any governmental authority concerning health, safety and
protection of, or regulation of, human health or the environment.
(k) Survival. The representations and warranties made herein
and each and every other provision of this Agreement and the other
Loan Documents shall survive the delivery thereof and shall be
deemed to be made continuously until the Loan shall have been paid
in full.
3. COVENANTS
3.1 Loan Documents. The Loan shall bear interest, be repayable
and mature, all as set forth in the Note which, together with the
other Loan Documents, are incorporated herein by this reference.
3.2 Insurance. Until the Loan is paid in full, Borrower shall
maintain in full force and effect all insurance required by law or
Lender, including, without limitation, public liability, property
damage and workmen's compensation insurance, fire and casualty and
builder's risk insurance, flood and business interruption and rent
insurance. The policies shall be approved by Lender as to amounts,
form, risk coverage, deductibles, insurer and loss payable and
cancellation provisions. Lender's approval, however, will not be
deemed a representation of the solvency of any insurer or the
sufficiency of any amount of insurance.
3.3 Cooperation. Borrower will cooperate at all times with
Lender in bringing about the timely completion of the Improvements,
and Borrower will resolve all disputes arising during the work of
construction in a manner which will allow work to proceed
expeditiously in order to complete the Improvements on or before
the Completion Date.
3.4 Payment of Expenses. Borrower will pay Lender's
reasonable and customary out-of-pocket costs and expenses incurred
in connection with the making, disbursement and administration of
the Loan, the exercise of any of its rights or remedies under the
Loan Documents, and all other matters related to the transactions
contemplated hereby, including, but not limited to, title insurance
and all policy endorsements contemplated hereunder, settlement and
escrow charges, recording charges, transfer, documentary, ad
valorem, business, operating and mortgage taxes, legal fees and
disbursements, the costs and fees of the Inspecting Architect, and
all other reasonable fees and costs for services. The provisions
of this paragraph shall survive the termination of this Agreement
and the repayment of the Loan.
3.5 Accounting; Changes in Condition. Borrower shall keep true
and correct financial books and records in accordance with
generally accepted accounting principles on a consistent basis for
the construction of the Improvements and shall maintain adequate
reserves for all contingencies. If required by Lender, Borrower
shall submit to Lender, at such times as Lender requires, a
statement which accurately details the application of all Loan
proceeds and other funds expended to date as well as Borrower's
best estimate of the funds needed to defray the cost to complete
the Improvements (including all direct and indirect costs
associated therewith) and the source of those funds. Borrower
shall (i) furnish Lender within ninety (90) days after the end of
each fiscal year end of Borrower, a complete set of Borrower s
consolidating and consolidated financial statements, to include a
balance sheet and income and expense statement, prepared in
accordance with general accepted accounting principles consistently
applied by Borrower s independent accountant acceptable to Lender,
and (ii) promptly supply Lender with any financial statements and
other information concerning its affairs and properties as Lender
may reasonably request and shall promptly notify Lender of any
materially adverse change in its financial condition or in the
physical condition of the Land or Improvements.
3.6 Debt Service Coverage Ratio. Upon substantial completion
of construction of the Improvements and stabilized occupancy of the
Improvements, Borrower shall maintain at all times a ratio of the
sum of net income, non-cash expenses and interest to the total of
all annual principal and interest payments required on all loans,
direct or contingent, of Borrower of at least 1.0 to 1.0.
3.7 Anti-Dark Provision. If, prior to the Maturity Date, as
defined in the Note, either Sears Roebuck and Co. or Hills
Department Store vacates its space in the Improvements, Borrower
shall, within twelve (12) months from the first day of such
vacancy, find a suitable replacement tenant therefor, acceptable
to Lender, such approval not to be unreasonably withheld.
3.8 Indemnity.
(a) Borrower shall indemnify and hold Lender harmless from and
against all liabilities, claims, damages, costs and expenses
(including, but not limited to, legal fees and disbursements) in
any actions or proceedings now or hereafter pending or threatened
against Lender arising out of or resulting from any violations of
any laws, regulations, codes, ordinances, permits, orders or the
like or any defective workmanship or materials occurring in the
construction of the Improvements. Upon demand by Lender, Borrower
shall defend any action or proceeding brought against Lender
alleging any defective workmanship or materials or Lender may elect
to conduct its own defense at the expense of Borrower. Any
inspection or approval of the Plans, Improvements or the
Construction Documents shall not be deemed or construed to limit or
impair Lender's rights under any Loan Document in any manner
whatsoever. The provisions of this subsection shall survive the
termination of this Agreement and the repayment of the Loan.
(b) Borrower shall indemnify and hold Lender harmless from and
against all liability, directly or indirectly, arising out of the
use, generation, storage or disposal of Hazardous Materials,
including, without limitation, the cost of any required or
necessary repair, cleanup or detoxification, and the preparation of
any closure or other required plans, whether such action is
required or necessary prior to or following transfer of title to
the Land, to the full extent that such action is attributable,
directly or indirectly, to the use, generation, storage or disposal
of Hazardous Materials on the Land. The foregoing indemnification
shall survive repayment of the Loan.
3.9 Partnership Agreement, Transfers of Partnership Interests,
Etc.
(a) None of the Partners shall sell, assign, give, mortgage,
pledge, hypothecate, encumber or otherwise transfer (except by
operation of law upon death) any interest in Borrower without the
prior written consent of Lender.
(b) Neither Borrower nor any Partner or Guarantor not an
individual shall dissolve or liquidate without the prior written
consent of Lender.
(c) No corporate Partner or Guarantor, if any, shall merge into
or consolidate with any entity except with and/or into such
corporate Partner, Guarantor or Borrower, nor shall any entity
merge into or consolidate with any such Partner or Guarantor except
with and/or into such corporate Partner, Guarantor or Borrower
without the prior written consent of Lender. This restriction
shall continue to apply to all subsequent mergers and
consolidations involving each such corporate Partner, Guarantor and
its successors.
(d) Neither Borrower nor Guarantor which is a limited
partnership shall terminate its partnership agreement without the
prior written consent of Lender.
3.10 Loan Fee. Borrower shall pay the Loan Fee to Lender.
3.11 Construction Documents.
(e) Borrower shall not amend or terminate any of the
Construction Documents or authorize any deletions, additions or
changes to the Improvements or the Plans without the prior written
consent of Lender.
(f) As additional security for the obligations secured by the
Mortgage, Borrower hereby transfers and assigns to Lender, its
successors and assigns, all of Borrower's right, title and interest
in and to the Construction Documents and all copies thereof,
subject to the limitations on Lender's responsibility as
hereinafter set forth.
(g) Anything herein contained to the contrary notwithstanding,
(i) Borrower shall remain liable under the Construction Documents
to perform all of Borrower's obligations thereunder in accordance
with and pursuant to the terms and provisions thereof, (ii)if,
following an Event of Default, Lender performs or causes to be
performed the obligations of Borrower under the Construction
Documents, such performance by Lender or its nominee or other
assignee shall not release Borrower therefrom and shall not result
in any assumption of any obligations by Lender, and (iii) Lender
shall have no obligation or liability under the Construction
Documents by reason of or arising out of this collateral assignment
contained in this Agreement, nor shall Lender be required or
obligated in any manner to perform or fulfill any obligations of
Borrower under or pursuant to the Construction Documents,
including, without limitation, Borrower's obligation to pay
Contractor and Architect.
(h) Borrower hereby constitutes Lender, its successors and
assigns, Borrower's true and lawful attorney-in-fact, irrevocably
with full power in the name of and on behalf of the Borrower or
otherwise, upon the occurrence of an Event of Default: (i) to make,
execute, complete and deliver to Contractor and Architect all such
documents as Lender shall consider necessary or appropriate to
complete construction under the Construction Contract and
performance under the Architect's Agreement; (ii) to make all
payments to Contractor and Architect as Lender shall consider
necessary or appropriate under the Construction Documents; (iii) to
file any claims or take any actions or institute any proceedings
which Lender may deem to be necessary or advisable in connection
with the Construction Documents; and (iv) generally, to do, execute
and perform any other act, matter, or thing whatsoever that, in the
good faith opinion of Lender, ought to be done, executed and
performed in connection with the Construction Documents, as fully
as Borrower could do in such situation.
4. CONSTRUCTION MATTERS
4.1 Construction.
(a) Commencement of Construction occurred November 16, 1995;
construction in accordance with the Plans which shall have been
approved in the manner and by the parties specified below, and the
Improvements shall be completed on or before the Completion Date.
(b) The Plans shall be prepared by Architect and, prior to the
First Disbursement, shall be approved and signed for identification
purposes by Lender, Borrower, Contractor, Architect, Inspecting
Architect, any tenant on the Land, any future tenant of the
Improvements with the right of approval with respect to any portion
thereof, all governmental authorities and all other entities and
persons with a right to approve any aspect of the work. Lender may
approve or disapprove the Plans in its good faith discretion.
(c) No changes in the Plans or the Construction Documents
(including change orders) shall be effective, unless approved in
writing by Lender. Borrower shall obtain all approvals of any
changes in the Construction Documents (including change orders)
that are required by law or under any lease or other agreement with
respect to the Land or Improvements. Lender shall have twenty (20)
days after receipt by it and by Inspecting Architect of all
documentation pertaining to any change referred to in this
subsection (c) within which to evaluate any requested change and
will not be required to consider approving any changes, unless all
other approvals which, in Lender's sole judgment, are required from
other parties shall have been obtained. If Lender, in its sole
judgment, determines that any change may increase the cost of
completion of the Improvements or any category thereof as shown on
the Development Budget, Lender may require Borrower to deposit
additional funds with Lender sufficient to cover the increased
costs as a condition to giving its approval, such funds to be held
by Lender and disbursed in accordance with Section 5.4 of this
Agreement. In the event any such cost increase is so determined,
Borrower shall cause Contractor to revise payment and performance
bonds required by this Agreement to reflect the construction cost
increases.
(d) Notwithstanding anything herein to the contrary, at any
time that Lender's consent or approval is required or at any time
that Lender is permitted to make a judgment or determination under
Articles 4, 5, or 6 hereof, Lender may, but shall not be required
to, rely conclusively on the opinion of Inspecting Architect as to
matters concerning the Construction Documents, the construction of
the Improvements and the cost thereof, and changes in any of the
foregoing.
4.2 Permits and Legal Requirements. Borrower shall comply with
and keep in effect all permits and approvals obtained from any
governmental bodies that relate to the lawful construction of the
Improvements. Borrower shall comply with all existing and future
laws, regulations, orders and requirements of all governmental,
judicial and legal authorities having jurisdiction over the Land or
Improvements and with all restrictions and agreements affecting the
Land or Improvements or Borrower's use or development thereof.
4.3 Lists of Contractors and Subcontractors. Upon the request
of Lender, Borrower shall promptly furnish to Lender, in a form
acceptable to Lender, correct lists of all contractors and
subcontractors employed in connection with the construction of the
Improvements and true and correct copies of all executed contracts
and subcontracts therefor. Lender may contact any contractor or
subcontractor to verify any facts disclosed in the lists and no
such contract or subcontract shall prohibit the disclosure of its
contents to Lender.
4.4 Purchase of Materials and Conditional Sales Contracts. No
materials, equipment, fixtures or articles of personal property
placed in or on the Land or Improvements shall be purchased by or
installed under any security agreement, financing lease or other
agreement whereby the seller reserves or purports to reserve title,
a lien, a security interest, the right of removal or repossession
or the right to consider such items personal property after their
incorporation into the Improvements, unless previously authorized
by Lender in writing.
4.5 Inspection and Right to Stop Work.
(a) Lender and its agents and representatives shall have the
right at any reasonable time to enter the Land and Improvements and
inspect the work of construction and all materials, Plans and other
matters relating to the construction. Lender shall also have the
right to examine, copy and audit the books, records, accounting
data and other documents of Borrower and its contractors relating
to the construction of the Improvements and related costs.
(b) If Lender, in good faith, determines that any work or
materials do not conform to the Plans or sound building practice or
otherwise depart from any of the requirements of this Agreement,
Lender may require the work to be stopped and may withhold
disbursements until the matter is corrected. In such event,
Borrower shall promptly correct the work. No such action by Lender
will affect Borrower's obligations to complete the Improvements on
or before the Completion Date.
(c) Lender shall be under no duty to examine, supervise or
inspect the Construction Documents, the construction of the
Improvements or any other agreements, documents, books, records or
other matters. Any inspection or examination by Lender is for the
sole purpose of protecting Lender's security and preserving
Lender's rights under this Agreement. No default of Borrower will
be waived by any inspection by Lender. In no event will any
inspection by Lender be a representation that there has been or
will be compliance with the Plans or that the construction is free
from defective materials or workmanship or as to any other matters
whatsoever.
(d) If Lender shall require, in its sole judgment, the consent
of any person or entity as to any aspect of the construction of the
Improvements, Lender may require the work to be stopped and may
withhold further disbursements, until all such consents, in
writing, shall have been delivered to Lender.
(e) Lender shall have the right to require the work to be
stopped upon the occurrence of an Event of Default.
4.6 Protection Against Lien Claims. Borrower shall promptly
pay and discharge all charges for labor done and materials and
services furnished in connection with the construction of the
Improvements and shall promptly notify Lender in writing of any
dispute with any contractor or subcontractor. Any lien claimed or
filed against any part of the Improvements for labor done or
materials or services furnished in connection with the construction
of the Improvements shall be discharged, by bond or otherwise,
within ten (10) days after the date of the filing thereof, and
Lender reserves the right to withhold further disbursement of Loan
proceeds until such lien or claim shall have been so discharged.
5. DISBURSEMENT MATTERS
5.1 Procedures.
(a) To receive disbursements of the Loan proceeds, Borrower
shall submit each disbursement request to Lender not more
frequently than once monthly, using Lender's prescribed form of
Request for Disbursement attached as Exhibit B to this Agreement
("Request"). Upon receipt of the Request, Lender may, after
disbursement of $5,000,000 of Loan proceeds, cause an inspection to
be made of the progress of construction. If Lender determines as
a result of such inspection that construction is proceeding
diligently and in accordance with the Plans approved in the manner
required by this Agreement and if all conditions to such
disbursement shall have been fulfilled, Lender will make the
disbursement as provided in this Agreement. Lender may also
require verification of the information contained in the Request by
Contractor, Architect and Inspecting Architect, and may require
separate lien waivers and releases from all contractors and
subcontractors covering the sums requested to be disbursed and all
prior disbursements for which adequate waivers and releases shall
not previously have been received by Lender. In no event shall
Lender be required to advance any Loan proceeds from and after
three (3) months after the Completion Date, provided, however, that
interest shown on the Development Budget may be disbursed, subject
to the other limitations contained in this Agreement, until the
Maturity Date (as defined in the Note). Subject to subsection (b)
of this section, all disbursements will be made, at Lender's
option, into a special disbursement account of Borrower to be
maintained with Lender or advanced directly (or jointly with
Borrower, as Lender may elect) to such party or parties as have
actually supplied labor, material or services in connection with
the construction of the Improvements. Borrower shall pay, upon
being billed therefor, Lender's normal charges for account
maintenance and wiring of funds. All Loan proceeds will be
considered to have been advanced to and received by Borrower upon,
and interest on the Loan proceeds will be payable by Borrower from
and after, the deposit or advance of the Loan proceeds as aforesaid
or the charge against the Loan proceeds as provided in subsection
(b) below.
(b) Notwithstanding the provisions of subsection (a) of this
section, Lender may elect, without further notice to or
authorization by Borrower, to use the Loan proceeds to pay, as and
when due, any Loan fees owing to Lender, interest on the Loan, fees
and disbursements of Inspecting Architect and Lender's attorneys
which are payable by Borrower as provided in the Loan Documents and
such other sums as may be owing from time to time by Borrower to
Lender with respect to the Loan or the transactions contemplated
hereby. Such payments may be made by debiting or charging the Loan
in the amount of such payments.
(c) All advances of the Loan proceeds shall be evidenced by the
Note and secured by the Loan Documents.
5.2 Disbursement Amounts.
Aggregate advances of the Loan shall be limited to the maximum
amount of the Loan. Prior to disbursement of any Loan proceeds,
Borrower shall have expended sums at least equal to the amount
shown as Borrower's equity, if any, on the Development Budget for
costs approved by Lender in the corresponding category shown on the
Development Budget, and such expenditures shall not be reimbursable
from Loan proceeds. Lender shall advance the Loan proceeds as
follows:
(i) $4,000,000, of which $3,000,000 shall be advanced upon (A)
receipt of executed leases satisfactory to Lender from Sears
Roebuck and Co. and Hills Department Stores, (B) acceptance from
each of their respective sites on the Land, and (C) such tenants
obligation to commence rental payments as set forth therein, and of
which $1,000,000 shall be advanced upon receipt of an executed
lease acceptable to Lender with Peebles;
(ii) provided no Conditional Default or Event of Default has
occurred, $1,000,000 upon receipt of an executed lease acceptable
to Lender with Phar-Mor, or another tenant acceptable to Lender;
and
(iii) provided no Conditional Default or Event of Default has
occurred, $7,000,000 upon receipt by Lender of the Letter of
Credit.
5.3 Cost Information. If Borrower becomes aware of any change
in the approved costs set forth in the Development Budget which
would increase, change, or cause a reallocation of the costs as
shown on the Development Budget, Borrower shall immediately notify
Lender in writing and promptly submit a proposed revised
Development Budget to Lender for approval. Lender shall have no
obligation to make further disbursements, unless and until the
revised Development Budget is approved by Lender. Lender reserves
the right to withhold its approval pending the deposit of funds
pursuant to Section 5.4 of this Agreement.
5.4 Deposit of Funds by Borrower. In addition to Lender's
right to require the deposit of funds pursuant to Section 4.1(c) of
this Agreement, if Lender, at any time and from time to time,
determines that (a) the amount of the undisbursed Loan proceeds
will not be sufficient to pay in full all costs required to
complete the construction of the Improvements in accordance with
the Plans and all financing and development costs (including
operating expenses, taxes and interest on the Loan through the
Maturity Date to the extent revenues from the Improvements may not
be sufficient, in Lender's sole judgment, to pay the same) to be
incurred by Borrower, or that (b) any amount shown in any category
on the Development Budget will not be sufficient to pay in full the
items to which such amount is allocated, then Lender may make
demand on Borrower to deposit with Lender funds equal to the amount
so determined by Lender, and Borrower shall deposit the funds
required hereby with Lender within ten (10) days after the date of
Lender's demand, such funds to be held in an account to be
determined by Lender. After such demand, Lender shall have no
obligation to make further disbursements until such funds, together
with any interest earned thereon, shall have been so deposited by
Borrower with Lender. Notwithstanding the foregoing provisions, if
the whole amount allocated to any component of any such category as
set forth in the Development Budget is not, or in Lender s
judgment, will not be expended to complete the work covered by such
category, then, with Lender s approval, Borrower may cause such
excess to be reallocated and used for any other category as set
forth in the Development Budget prior to making any deposit
required by the previous sentence. Whenever Lender has any such
funds on deposit, such funds, together with any interest earned
thereon, shall be additional security for the Loan and all other
obligations from time to time secured by the Mortgage and all
disbursements will be considered to be made by Lender first from
those funds until they are exhausted. At such times that the
Development Budget is revised to reflect increased costs for work
under the Construction Contract, Borrower shall cause Contractor to
revise all payment and performance bonds required by this Agreement
to reflect construction cost increases.
5.5 Additional Security. As additional security for Borrower's
obligations under this Agreement and the other Loan Documents,
Borrower irrevocably assigns and grants to Lender a security
interest in (a) all Loan proceeds now or hereafter held by Lender,
whether or not disbursed, (b) all funds now or hereafter deposited
by Borrower with Lender under this Agreement or any of the other
Loan Documents, (c) all governmental permits and licenses now or
hereafter obtained for the lawful construction and operation of the
Improvements, and (d) all reserves, deferred payments, deposits,
refunds, cost savings and payments of any kind relating to the
construction of the Improvements. Upon the occurrence of an Event
of Default, Lender, in addition to any other rights and remedies it
may have under the Loan Documents or at law or in equity, may apply
any funds held by Lender against any of the obligations of Borrower
to Lender (whether or not the same be then due), in such order as
Lender may determine, and may use any of the other property
referred to above for any purpose for which Borrower could have
used them under this Agreement or with respect to the construction
or financing of the Improvements.
6. DISBURSEMENT CONDITIONS
6.1 First Disbursement. Lender shall not be obligated to make
the First Disbursement until Borrower, at its expense, shall have
fulfilled, to Lender's satisfaction, all provisions of this
Agreement applicable thereto, including, without limitation, the
delivery of the items referred to in the Commitment, and:
(a) No portion of the Improvements shall have been damaged by
fire or other casualty and not repaired to the condition
immediately prior to such casualty and no condemnation or taking of
the Land or the Improvements or any portion thereof shall be
pending or threatened;
(b) Lender shall have received all duly executed Loan Documents
and Construction Documents, and the Mortgage, Assignment of Leases
and Rents, Financing Statements and other documents, if any, to be
placed of record shall have been duly recorded and filed in all
appropriate offices;
(c) Lender's security interest in all personal property
described in the Mortgage, this Agreement and the other Loan
Documents shall have been duly perfected and shall be in a first
lien position;
(d) The Plans shall have been approved to the extent required
under the provisions hereof;
(e) The Loan Fee shall have been paid on or before the date of
this Agreement;
(f) Borrower shall have obtained and delivered to Lender the
consents of Contractor and Architect in the forms attached hereto
as Exhibit C and Exhibit D, respectively;
(g) Lender shall have received effective lien waivers and
releases from Contractor, all other contractors, subcontractors,
suppliers and other persons having a right to file a mechanic's or
materialman's lien with respect to all work, materials and services
for which Loan proceeds are being requested;
(h) All licenses, permits, consents, approvals and
authorizations for the construction of the Improvements shall be in
full force and effect and no notices of violation or revocation
with respect thereto shall have been received;
(i) Lender shall have received satisfactory evidence that the
Land has available to it adequate water, gas and electric supply,
storm and sanitary sewerage facilities, telephone facilities and
other required public utilities, and means of access between the
Land and public highways; and all such facilities comply with all
applicable laws, rules and regulations, and all necessary easements
to provide such utility service to the Land have been obtained;
(j) Lender shall have received, at Borrower's expense, a title
policy endorsement satisfactory to Lender insuring the priority of
the lien of the Mortgage in the amount of the First Disbursement;
(k) Lender shall have received agreements in form and substance
satisfactory to Lender, among each tenant leasing space in the
Improvements, Borrower and Lender pursuant to which each tenant
approves and accepts the leased premises without condition,
confirms that there are no defaults or conditional defaults in
existence under the Lease, subordinates its leasehold interest to
the lien of the Mortgage, agrees to attorn to Lender and
acknowledges such other matters as may be required by Lender; and
(l) No Event of Default or Conditional Default shall have
occurred and be continuing under this Agreement or any of the other
Loan Documents.
6.2 Subsequent Disbursements. Once the First Disbursement
shall have been made by Lender, Lender shall be obligated to make
further disbursements (including the Holdback disbursement referred
to in Section 6.3), subject to the fulfillment of all provisions of
this Agreement applicable thereto and the following conditions:
(a) The conditions of the preceding Section 6.1 shall continue
to be met as of the date of such subsequent disbursement;
(b) Upon the actual location of the Improvements and again upon
completion of the Improvements, the survey to be supplied in
connection with the First Disbursement shall be updated to a
current date and shall show the location of the Improvements and
the absence of any encroachment of the Improvements over any
building, zoning, right-of-way or property boundary lines; and
(c) Lender shall have received a title policy endorsement
satisfactory to Lender insuring the priority of the lien of the
Mortgage in the amount of all disbursements hereunder and insuring
the updated survey referred to above.
6.3 Final Disbursement. The final Loan disbursement by Lender
to Borrower shall be made upon the fulfillment of the following
conditions:
(a) All conditions of Section 6.1 and 6.2 shall continue to be
met as of the date of such final disbursement;
(b) Lender shall have received a certificate of Borrower,
Architect and Contractor to the effect; inter alia, that the
Improvements have been fully completed in accordance with the Plans
approved by Lender and all applicable building, fire, safety and
similar codes and the matters in such certificate shall have been
verified by Inspecting Architect;
(c) A permanent certificate of occupancy for the Improvements
and all other permits required for the use and occupancy of all
aspects of the Improvements shall have been duly issued and Lender
shall have received copies thereof; and
(d) Lender shall have received an endorsement to its title
insurance policy, in a form approved by Lender, insuring that no
encroachments exist over any building, zoning, right-of-way or
property boundary lines.
7. DEFAULTS AND REMEDIES
7.1 Events of Default. The following shall be deemed to be
Events of Default under this Agreement:
(a) Borrower shall fail to make any payment under the Note when
due or within the applicable grace period, if any, set forth
therein;
(b) Borrower shall fail to make any deposit of funds required
under this Agreement within ten (10) days after demand by Lender;
(c) Borrower shall fail to comply with any other covenant
contained in this Agreement or any of the other Loan Documents
which calls for the payment of money and shall not cure that
failure within ten (10) days after demand by Lender;
(d) Borrower shall fail to comply with any covenant contained
in this Agreement or any of the other Loan Documents, other than
those covenants referred to in (a), (b) and (c) above, and shall
not cure that failure within thirty (30) days after written notice
thereof by Lender to Borrower, or such longer period to which
Lender may agree in the case of a default not curable by the
exercise of due diligence within such thirty (30) day period,
provided that Borrower shall have commenced to cure such default
within such thirty (30) day period and shall complete such cure as
quickly as reasonable with the exercise of due diligence;
(e) Borrower or any Partner or Guarantor shall fail to comply
with Section 3.7;
(f) Construction of the Improvements is abandoned or is not
completed on or before the Completion Date;
(g) A default shall occur under any of the Construction
Documents;
(h) Any representation or warranty herein or in any of the
other Loan Documents or in any certificate or other document
delivered in connection herewith shall prove false or misleading in
any material respect;
(i) Any lien or encumbrance, other than a Permitted
Encumbrance, is entered against the Land or Improvements and not
discharged with thirty (30) days after the filing thereof;
(j) Any party shall obtain an order or decree in any court of
competent jurisdiction enjoining the construction of the
Improvements or delaying construction of the same or to enjoining
or prohibiting Lender, Borrower or any Partner from carrying out
the terms and conditions of any of the Loan Documents and such
proceedings are not discontinued or such decree is not vacated
within twenty (20) days after the filing thereof;
(k) Borrower or Guarantor shall make a general assignment for
the benefit of creditors, or file or have filed a petition in
bankruptcy, or a petition or answer seeking a readjustment of
Borrower s or Guarantor s indebtedness under the Bankruptcy Code or
any similar law or code, or Borrower or Guarantor shall consent to
the appointment of a receiver or trustee of any of its respective
properties;
(l) Borrower or Guarantor shall be adjudged bankrupt or
insolvent, or a petition or proceedings for bankruptcy shall be
filed against Borrower or Guarantor, and Borrower or Guarantor
shall admit the material allegations thereof, or an order,
judgment, or decree shall be made approving such a petition, and
such order, judgment or decree shall not be vacated or stayed
within thirty (30) days of its entry, or a receiver or trustee
shall be appointed for Borrower or Guarantor or their respective
properties or any part thereof and remain in possession thereof for
thirty (30) days; or
(m) A default, together with the expiration of any applicable
grace period, shall occur under any of the other Loan Documents.
7.2 Remedies. Upon the occurrence of any one or more of the
Events of Default pursuant to Section 7.1 (k) or (l), all
obligations on the part of Lender to make the Loan, or to make any
further disbursements hereunder shall cease and terminate, and the
Loan and all sums then or thereafter due under any and all of the
Loan Documents shall thereupon become immediately due and payable.
Upon the occurrence of any one or more of the Events of Default
other than pursuant to Section 7.1. (k) or (l), all obligations on
the part of Lender to make the Loan, or to make any further
disbursements hereunder, at Lender s option, shall cease and
terminate, and the Loan and all sums then or thereafter due under
any and all of the Loan Documents, at Lender s option, shall
thereupon immediately become due and payable. If an Event of
Default shall occur, Lender may exercise any right or remedy which
it has under this Agreement or any of the other Loan Documents or
otherwise available at law or in equity or by statute and all of
Lender's rights and remedies will be cumulative. No disbursement
of Loan proceeds by Lender shall be deemed to cure any Event of
Default, unless Lender otherwise expressly agrees in writing.
Lender shall also have the right, in its discretion, to enter the
Land and Improvements and take any and all actions necessary, in
its judgment, to secure, winterize, protect and preserve the
Improvements and any materials or supplies located on the Land, to
complete in part or in full the construction of the Improvements,
including, but not limited to, making changes in the Plans, and
entering into, modifying or terminating the Construction Documents
and other contractual arrangements, subject to Lender's right at
any time to discontinue any work without liability. If Lender
elects to continue with the construction of the Improvements, it
will not assume any liability to Borrower or any other person for
completing the Improvements or for the manner or quality of
construction of the Improvements and Borrower expressly waives any
such liability. Borrower irrevocably appoints Lender as its
attorney-in-fact, with full power of substitution, to complete the
Improvements in Borrower's name or Lender may elect to complete
construction in its own name. In any event, all sums expended by
Lender in completing construction or otherwise exercising its
rights hereunder or under the other Loan Documents will be secured
by the Mortgage and all other instruments or documents securing the
Loan and shall bear interest at the rate applicable to the Loan
from time to time as provided in the Note.
8. MISCELLANEOUS
8.1 No Waiver; Consents. Any waiver by Lender must be in
writing and will not be construed as a continuing waiver. No
waiver will be implied from any delay or failure by Lender to take
action on account of any default of Borrower. Consent by Lender to
any act or omission by Borrower will not be construed to be a
consent to any other or subsequent act or omission or to waive the
requirement for Lender's consent to be obtained in any future or
other instance.
8.2 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and benefit of Lender and
Borrower. No trust fund is created by this Agreement and no other
persons or entities will have any right of action under this
Agreement or any right against Lender to obtain any Loan proceeds.
8.3 Notices. All notices given under this Agreement shall be
given in the manner provided by the Mortgage.
8.4 Authority to File Notices. Borrower irrevocably appoints
Lender as its attorney-in-fact, with full power of substitution, to
file for record, at Borrower's cost and expense and in Borrower's
name, any notices that Lender considers necessary or desirable to
protect its interests or security.
8.5 Actions. Lender will have the right, but not the
obligation, to commence, appear in, and defend any action or
proceeding which might affect its security or its rights, duties or
liabilities relating to the Loan, the Land, the Improvements or
this Agreement. Borrower will pay promptly on demand all of
Lender's reasonable out-of-pocket costs, expenses, and legal fees
and disbursements incurred in those actions or proceedings.
8.6 Applicable Law. This Agreement will be governed by
Pennsylvania law.
8.7 Heirs, Successors and Assigns; Participants. The terms of
this Agreement will bind and benefit the heirs, legal
representatives, successors and assigns of the parties; provided,
however, that Borrower may not assign this Agreement or any Loan
funds or assign or delegate any of its rights or obligations
without the prior written consent of Lender. Lender shall have the
right to sell participations in the Loan to any other persons or
entities without the consent of or notice to Borrower. Lender may
disclose to any participants or prospective participants any
information or other data or material in Lender's possession
relating to Borrower, any Partner, the Loan and the construction
project described herein without the consent of or notice to
Borrower.
8.8 Signs; Publicity. Lender may, at Lender's expense, erect
a sign or signs as approved by Lender upon the Land and
Improvements at any reasonable location indicating the source of
the development and construction financing. The announcement of,
and the issuance of any publicity with respect to, the Loan and the
transactions contemplated hereby shall be at such time and in such
form and manner as Lender shall determine.
8.9 Survival. Except as otherwise may be expressly set forth
herein, all covenants, agreements, warranties and representations
by Borrower herein shall survive the disbursement of the Loan and
shall remain in effect until payment in full of the Loan.
8.10 Severability. The invalidity or unenforceability of any
one or more provisions of this Agreement will in no way affect any
other provisions.
8.11 Interpretation. Whenever the context requires, all words
used in the singular will be construed to have been used in the
plural, and vice versa, and each gender will include any other
gender. The captions of the sections of this Agreement are for
convenience only and do not define or limit any terms or
provisions. Time is of the essence in the performance of this
Agreement by Borrower.
8.12 Amendments. This Agreement may not be modified or
amended, except by a written agreement signed by the parties.
8.13 Counterparts. This Agreement and any attached consents or
Exhibits requiring signatures may be executed in counterparts, but
all counterparts shall constitute but one and the same document.
ATTEST/WITNESS: LENDER:
FIRST WESTERN BANK, NATIONAL
ASSOCIATION
By: /s/ Robert S. Meckey
Title: Vice President
[SEAL]
BORROWER:
WITNESS/ATTEST: MARK TWELVE ASSOCIATES, L.P.,
a Pennsylvania limited
partnership
By: MARK CENTERS TRUST,
a Maryland business trust,
General Partner
/s/ Joshua Kane
Joshua Kane
Senior Vice President and
Chief Financial Officer
MORTGAGE NOTE
$12,000,000.00 As of September 27, 1996
Pittsburgh, Pennsylvania
The undersigned, MARK TWELVE ASSOCIATES, L.P., a
Pennsylvania limited partnership, having a principal office c/o
Mark Centers Trust, 600 Third Avenue, P.O. Box 1679, Kingston,
Pennsylvania (the "Borrower"), promises to pay to the order of
FIRST WESTERN BANK, NATIONAL ASSOCIATION (the "Lender"), a
national banking association, at its principal office at 101 E.
Washington Street, New Castle, Pennsylvania 16101 or at such
other place as the holder hereof may from time to time designate
in writing, the principal sum of TWELVE MILLION DOLLARS
($12,000,000), lawful money of the United States of America, or
so much thereof as shall have been advanced under that certain
Construction Loan Agreement (the "Loan Agreement"), of even date
herewith, between Borrower and Lender; limited, however, to such
lesser amounts as set forth in Section 5.2 of the Loan Agreement.
Borrower agrees to pay interest from the date of the initial
advance on the unpaid balance of the principal sum hereof in like
money at the rates per annum hereinafter set forth, payable as
follows:
A. The rate of interest applicable to this Note shall be a
rate per annum (based on a year of 360 days and actual days
elapsed) equal to the following for the following time periods:
(i) from the date of the initial advance hereunder (the
"Closing Date"), throughout the entire Construction Period (as
hereinafter defined) (and, if Borrower shall not elect to fix the
rate of interest pursuant to Paragraph A (ii)-(iv) below,
throughout the entire Permanent Period (as hereinafter defined)),
a rate of interest per annum equal to one percent (1%) above the
rate per annum announced by Lender at its principal office in New
Castle, Pennsylvania as its "prime rate" (the "Prime Rate"), such
rate to change automatically from time to time effective as of
the effective date of each change in the Prime Rate without
notice to Borrower. Borrower acknowledges that the Prime Rate is
not necessarily the lowest interest rate charged by Lender on
other credit and that the term does not imply or indicate that
the interest rate designated from time to time by Lender as its
Prime Rate is equal to or lower than that applicable to any other
credit extended by Lender.
(ii) Provided (a) there is no Event of Default in existence,
(b) that Borrower pays to Lender a fee equal to one-quarter
percent (.25%) of the then-outstanding principal balance of the
Loan at the time Borrower shall provide notice to Lender of its
election under this subparagraph, and (c) Borrower shall
establish the effective date of the conversion of the interest
rate in such notice (such effective date not to be less than ten
(10) days or more than thirty (30) days after Borrower's notice
to Lender), Borrower may convert the interest rate applicable to
this Note at any one time during the Permanent Period from the
Prime Rate - based rate described above, and from and after such
effective date the rate of interest hereunder shall be equal to
three percent (3%) above the "weekly average yield" on United
States Treasury Securities adjusted to a constant maturity of one
(1), three (3), or five (5) years, as Borrower shall elect in
such notice, rounded to the nearest one-eighth percent (1/8th%),
as published in the Federal Reserve Statistical Release H.15
(519) "Selected Interest Rates" (the "Release") forty-five (45)
days prior to the effective date of the fixing of the interest
rate.
(iii) Upon the expiration of the one (1), three (3)
or five (5) year period, as the case may be, elected by Borrower
in subparagraph (ii) above (such expiration date of such period,
together with each expiration date of each subsequent one (1),
three (3) or five (5) year period, as the case may be, described
in this subparagraph (iii), hereinafter each called a "Change
Date"), the rate of interest applicable to this Note shall be
fixed again for the same number of years initially elected by
Borrower (either one (1), three (3) or five (5) years), and then
as of such Change Date the rate of interest applicable to this
Note shall be equal to three percent (3%) above the "weekly
average yield" on United States Treasury Securities adjusted to a
constant maturity of one (1), three (3) or five (5) years, as
shall have been elected in Borrower's initial notice, rounded to
the nearest one-eighth percent (1/8th%), as published in the
Release forty-five (45) days prior to such Change Date.
(iv) If a fixed rate period of one (1), three (3) or five
(5) years, as the case may be, would end after the Maturity Date
(as hereinafter defined), then that fixed rate period shall be
shortened so the last day of that period shall be the Maturity
Date. Further, if the Release is no longer published, a
substitute therefor as Lender may select in its good faith
discretion shall be utilized, and Lender will then notify
Borrower of such substitute, and further provided that if the
Release is not published on the date of any change of the
interest rate, as aforesaid, then the Release as published on the
most recent date prior thereto shall be utilized.
B. On the first (1st) day of the calendar month after the
date hereof and on the first (1st) day of each of the next
seventeen (17) calendar months thereafter (the "Construction
Period") interest only shall be payable at the rate per annum
applicable to such period set forth above.
C. Commencing on the first (1st) day following the earlier
of (i) the first (1st) calendar month following the Completion
Date (as defined in the Loan Agreement) or (ii) the first (1st)
calendar month following the expiration of the Construction
Period and on the first (1st) day of each calendar month
thereafter to and including the first (1st) day of the calendar
month in which the Maturity Date shall occur (the "Permanent
Period"), principal and interest at the then applicable interest
rate, shall be payable in level monthly installments as
determined by Lender to be sufficient to amortize the outstanding
principal indebtedness hereof over a fifteen (15) year
amortization schedule, such amortization schedule to commence on
the first (1st) day of the Permanent Period. It is provided,
however, that if the interest rate applicable to this Note shall
be adjusted pursuant to paragraph A above (whether by a change in
the Prime Rate or a change in the fixed rate on a Change Date),
then the monthly payments due hereunder shall be adjusted one (1)
calendar month following the effective date of such change in the
Prime Rate or the Change Date, as the case may be, so that
principal and interest at the then-applicable interest rate shall
be payable in level monthly installments in amounts determined by
Lender to be sufficient to amortize the then-outstanding
principal indebtedness hereof over the then-remaining period of
the original fifteen (15) year amortization schedule.
D. The entire outstanding principal hereof, together with
all unpaid interest at the aforesaid rate, shall be due and
payable on the earlier of (1) the date that is fifteen (15) years
after the first (1st) day of the Permanent Period or (2) March 1,
2013 (the "Maturity Date"), unless earlier due by acceleration or
otherwise.
In the event any installment is not received by Lender
within fifteen (15) days after the date on which it is due and
payable as set forth above, then a delinquency charge in an
amount equal to five percent (5%) of such installment shall in
addition to such installment be and become due and payable.
E. If Borrower shall not have elected to fix the rate of
interest applicable to this Note pursuant to paragraph A (ii)-
(iv) above, or if Borrower shall elect one (1) year fixed rate
terms pursuant to paragraph A (ii)-(iv) above, then Borrower may
prepay this Note in whole or in part at any time without premium
or penalty. If Borrower shall have elected to fix the rate of
interest applicable to this Note pursuant to paragraph A (ii)-
(iv) above for three (3) or five (5) year terms, then if at any
time during the Permanent Period, Borrower prepays all or part of
the unpaid principal balance of the Loan, Borrower shall pay to
Lender a prepayment fee together with such prepayment in an
amount representing the following percentage of the amount of
principal being prepaid in excess of $250,000 (the "Prepayment
Amount"):
(i) two percent (2%) of the Prepayment Amount if such
prepayment is made in each of the first (1st) year through fifth
(5th) year of the Permanent Period; and
(ii) one percent (1%) of the Prepayment Amount if such
prepayment is made in each of the sixth (6th) through tenth
(10th) years of the Permanent Period.
During the Construction Period, and in the eleventh (11th)
through the fifteenth (15th) years of the Permanent Period,
Borrower may prepay this Note in whole or in part without premium
or penalty.
If any installment payment under this Note shall become due
on a Saturday, Sunday or public holiday under the laws of the
Commonwealth of Pennsylvania, such payment shall be made on the
next succeeding day and such extension of time shall in such case
be included in computing interest in connection with such
payment.
Simultaneously with the execution and delivery of this Note,
Borrower shall pay to Lender the remaining Thirty-Five Thousand
Dollars ($35,000) of the Fifty Thousand Dollar ($50,000)
commitment fee, in addition to all other sums payable hereunder.
This Note is secured, inter alia, by an Open-End Mortgage
and Security Agreement (the "Mortgage") of even date herewith
covering an approximately 124 acre site owned in fee simple by
Borrower in the Township of Union, Lawrence County, Pennsylvania.
The following shall constitute Events of Default under this
Note:
(a) Borrower shall fail to make any payment of any
installment of interest or principal and interest or any other
sum under this Note when due or within ten (10) days thereafter;
(b) An "Event of Default" as defined in the Loan Agreement
or the Mortgage shall have occurred;
(c) Any proceeding for attachment or garnishment or the like
shall be commenced against Lender by any creditor of Borrower or
of any guarantor of this Note;
(d) A proceeding shall have been instituted in a court
having jurisdiction in the premises seeking a decree or order for
relief in respect of Borrower or any guarantor of this Note in an
involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of Borrower or any
such guarantor or for any substantial part of its, his or her
property, or for the winding-up or liquidation of its, his or her
affairs, and such proceeding shall remain undismissed or unstayed
and in effect for a period of sixty (60) consecutive days or such
court shall enter a decree or order granting any of the relief
sought in such proceeding;
(e) Borrower or any guarantor of this Note shall commence a
voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, shall consent to
the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of itself,
himself or herself or for any substantial part of its, his or her
property, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its, his or her debts
as they become due, or shall admit in writing an inability to pay
any of its, his or her debts as they become due, or shall take
any action in furtherance of any of the foregoing.
Upon the occurrence of an Event of Default specified in
paragraphs (a) or (b) above (other than an Event of Default
defined in the Loan Agreement or Mortgage which is of the type
described in paragraphs (c), (d) or (e) above), then the whole of
the principal of the indebtedness evidenced by this Note, and the
unpaid interest thereon, and any other sums then unpaid by
Borrower under this Note shall, at the option of the holder
hereof and without notice, forthwith become due and payable.
Upon the occurrence of an Event of Default specified in
paragraphs (c), (d) or (e) above (or a similar type of Event of
Default described in the Loan Agreement or Mortgage), then the
whole of the principal of the indebtedness evidenced by this
Note, and the unpaid interest thereon, and any other sums then
unpaid by Borrower under this Note shall automatically and
immediately become due and payable without notice or any other
act. Notwithstanding the above-stated rate or rates of interest,
from and after the Maturity Date of this Note, by acceleration or
otherwise, the outstanding principal balance of this Note shall
bear interest, until paid in full, at the rate per annum (based
on a year of 360 days and actual days elapsed) equal to four
percent (4%) above the Prime Rate (the "Default Rate"), such rate
to change automatically as of the effective date of each change
in the Prime Rate. The interest rates set forth herein,
including without limitation the Default Rate, shall continue to
apply whether or not judgment shall have been entered on this
Note.
Borrower shall pay all costs of Lender (including reasonable
attorneys' fees) in seeking to enforce or collect any
indebtedness evidenced by this Note.
Notwithstanding any provision of this Note to the contrary,
it is the intent of Borrower and Lender that Lender shall not at
any time be entitled to receive, collect or apply, and Borrower
and Lender shall not be deemed to have contracted for, as
interest on the principal indebtedness evidenced hereby, any
amount in excess of the maximum rate of interest permitted to be
charged by applicable law, and in the event Lender ever receives,
collects or applies as interest any such excess, such excess
shall be deemed partial payment of the principal indebtedness
evidenced hereby, and if such principal shall be paid in full,
any such excess shall forthwith be paid to Borrower. In the
event that, but for this paragraph, the rate of interest
applicable to this Note would at any time exceed the maximum
lawful rate, then this Note and all interest hereon shall
thereupon be immediately due and payable.
No delay or omission on the part of Lender or of any holder
in exercising any right hereunder shall operate as a waiver of
such right or of any other right of such holder, nor shall any
delay, omission or waiver on any one occasion be deemed a bar to
or waiver of the same or any other right on any future occasion.
Borrower and every endorser of this Note, regardless of the time,
order or place of signing, consent to any one or more extensions
or postponements of the time of payment or any other indulgences,
to any substitutions, exchanges, renewals or releases of
collateral for this Note, and to the additions or releases of any
other parties or persons primarily or secondarily liable.
The rights and obligations of the parties under this Note
shall be governed by and interpreted and enforced in accordance
with the substantive laws of the Commonwealth of Pennsylvania,
without giving effect to the principles of conflict of laws.
Borrower hereby waives presentment for payment, demand,
protest, notice of protest and notice of dishonor, and notice of
non-payment.
BORROWER DOES HEREBY EMPOWER ANY ATTORNEY OF ANY COURT OF
RECORD WITHIN THE COMMONWEALTH OF PENNSYLVANIA TO APPEAR FOR
BORROWER AND, WITH OR WITHOUT A COMPLAINT OR DECLARATION FILED,
AND AFTER AN EVENT OF DEFAULT, CONFESS A JUDGMENT OR JUDGMENTS
AGAINST BORROWER AND IN FAVOR OF LENDER OR LENDER'S SUCCESSORS OR
ASSIGNS IN ANY COURT OF RECORD WITHIN THE COMMONWEALTH OF
PENNSYLVANIA FOR THE UNPAID PRINCIPAL BALANCE HEREOF, AND ALL
INTEREST HEREON, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY'S
COMMISSION OF 2% FOR COLLECTION. THE AUTHORITY AND POWER TO
APPEAR FOR AND ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE
EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, AND MAY BE EXERCISED
FROM TIME TO TIME AND AS OFTEN AS LENDER OR ITS SUCCESSORS OR
ASSIGNS SHALL DEEM NECESSARY OR DESIRABLE. ANY SUCH JUDGMENT
SHALL BE FULLY ENFORCEABLE UP TO THE AMOUNT DUE FROM BORROWER AT
THE TIME ENFORCEMENT OF THE JUDGMENT IS SOUGHT, PLUS AN
ATTORNEY'S COMMISSION OF 2% FOR COLLECTION. BORROWER HEREBY
FOREVER WAIVES AND RELEASES ANY AND ALL ERRORS IN SAID
PROCEEDINGS, WAIVES STAY OF EXECUTION, STAY, CONTINUANCE OR
ADJOURNMENT OF SALE ON EXECUTION, THE RIGHT TO PETITION TO SET
ASIDE OR ORDER A RESALE, THE RIGHT TO EXCEPT TO THE SHERIFF'S
SCHEDULE OF PROPOSED DISTRIBUTION, THE RIGHT OF INQUISITION AND
EXTENSION OF TIME OF PAYMENT, AND AGREES TO CONDEMNATION OF ANY
PROPERTY LEVIED UPON BY VIRTUE OF ANY EXECUTION ISSUED ON ANY
SUCH JUDGMENT, AND BORROWER SPECIFICALLY WAIVES ALL EXEMPTIONS
FROM LEVY AND SALE OF ANY PROPERTY THAT NOW IS OR MAY HEREAFTER
BE EXEMPT UNDER ANY EXISTING OR FUTURE LAWS OF THE UNITED STATES
OF AMERICA OR THE COMMONWEALTH OF PENNSYLVANIA OR OF ANY OTHER
JURISDICTION.
BORROWER KNOWINGLY, AND AFTER CONSULTATION WITH INDEPENDENT
COUNSEL, WAIVES ITS RIGHT TO BE HEARD PRIOR TO THE ENTRY OF SUCH
JUDGMENT AND UNDERSTANDS THAT UPON ENTRY SUCH JUDGMENT SHALL
BECOME A LIEN ON ALL REAL PROPERTY OF BORROWER IN THE COUNTY IN
WHICH SUCH JUDGMENT IS ENTERED.
BORROWER ACKNOWLEDGES AND AGREES THAT THE ABOVE PARAGRAPHS
OF THIS SECTION CONTAIN PROVISIONS UNDER WHICH LENDER MAY ENTER
JUDGMENT BY CONFESSION AGAINST BORROWER BEING FULLY AWARE OF ITS
RIGHT TO PRIOR NOTICE AND A HEARING ON THE VALIDITY OF ANY
JUDGEMENT OR OTHER CLAIM THAT MAY BE ASSERTED AGAINST IT BY
LENDER HEREUNDER BEFORE JUDGMENT IS ENTERED, BORROWER HEREBY
FREELY, KNOWINGLY AND INTELLIGENTLY WAIVES THESE RIGHTS AND
EXPRESSLY AGREES AND CONSENTS TO LENDER'S ENTERING JUDGMENT
AGAINST IT BY CONFESSION PURSUANT TO THE TERMS HEREOF.
This Note shall bind Borrower and Borrower's successors and
assigns and the benefits hereof shall inure to the benefit of
Lender and Lender's successors and assigns.
This is a sealed instrument.
WITNESS the due execution and sealing hereof as of the date
first above written.
WITNESS/ATTEST: MARK TWELVE ASSOCIATES, L.P.,
a Pennsylvania limited
partnership
By: MARK CENTERS TRUST,
a Maryland business trust,
General Partner
/s/ Joshua Kane
Joshua Kane
Senior Vice President and
Chief Financial Officer
INDENTURE OF MORTGAGE, DEED OF TRUST,
SECURITY AGREEMENT, FINANCING STATEMENT,
FIXTURE FILING AND ASSIGNMENT
OF LEASES, RENTS AND SECURITY DEPOSITS
THIS INDENTURE OF MORTGAGE, DEED OF TRUST, SECURITY
AGREEMENT, FINANCING STATEMENT, FIXTURE FILING AND ASSIGNMENT OF
LEASES, RENTS AND SECURITY DEPOSITS (herein, together with all
amendments and supplements thereto, this "Mortgage"), dated as of
the 4th day of October, 1996, is made by Mark M.P.N.M., Limited
Partnership, an Alabama limited partnership, Mark New Smyrna
Limited Partnership, a Florida limited partnership, Mark Troy,
L.P., a New York limited partnership, Mark Park Plaza, L.P., a
Georgia limited partnership, Mark Martintown, L.P., a South
Carolina limited partnership, Mark Kings Fairground, L.P., a
Virginia limited partnership, Mark Shillington, L.P., a
Pennsylvania limited partnership, Mark 25th Street, L.P., a
Pennsylvania limited partnership, Mark Three Realty, L.P., a
Pennsylvania limited partnership and Mark Four Realty, L.P., a
Pennsylvania limited partnership, (collectively, "Grantor"),
having an address c/o Mark Centers Trust, 600 Third Avenue P.O.
Box 1679, Kingston, Pennsylvania 18704, (as to property in
Virginia) to Craig A. Kawamoto, a resident of Fairfax County,
Virginia ("Trustee"), for the benefit of Secore Financial
Corporation, a Pennsylvania corporation, having an address at
12510 Prosperity Drive, Suite 270, Silver Spring, Maryland,
20904, together with its successors and assigns, "Beneficiary").
W I T N E S S E T H :
WHEREAS, Grantor is the record and beneficial owner of
the fee simple interests in the five Properties (as defined
below), located on and comprising the land described in Exhibit
A-1 through A-5 and Exhibit A-7 attached hereto; and
WHEREAS, Grantor is the record and beneficial owner of
the fee simple interest in the Property located on the land
described in Exhibit A-6.1 attached hereto (collectively with
Exhibits A-1 through A-5 and Exhibit A-7 the "Land") and the
owner of the ground leasehold interest on the land described in
Exhibit A-6.2; and
WHEREAS, Grantor is the owner of the ground leasehold
interests in the eleven Properties, located on the land
described in Exhibit A-8 through A-17 (collectively with Exhibit
A-6.2, the "Ground Leasehold Estate"); and
WHEREAS, Beneficiary has agreed to make loans to
Grantor in the principal amount of Forty Five Million Nine
Hundred Twenty Nine Thousand Eight Hundred Dollars ($45,929,800)
(collectively, the "Loan"), which Loan shall be evidenced by the
Note, of even date herewith (together with all amendments,
modifications, supplements, restatements, substitutions and
replacements thereof or thereto, the "Note"), executed by Grantor
in favor of Beneficiary, payable as specified therein, with a
maturity date of November 1, 2021 or if such date is not a
Business Day, on the next preceding Business Day (the "Maturity
Date") or such earlier date as may be required under the terms of
the Note; and
WHEREAS, the indebtedness evidenced by the Note and the
other obligations of Grantor set forth in the other Loan
Documents (as defined below) shall be secured by this Mortgage
and the other Loan Documents; and
WHEREAS, Grantor and Beneficiary intend these recitals
to be a material part of this Mortgage.
NOW, THEREFORE, in consideration of the Loan to Grantor
evidenced by the Note and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby agrees as follows:
TO SECURE:
(i) payment and performance of all covenants,
conditions, liabilities and obligations of Grantor to Beneficiary
contained in, and payment of the indebtedness evidenced by, the
Note plus all interest payable thereunder; and
(ii) payment and performance of all covenants,
conditions, liabilities and obligations contained in this
Mortgage and any extensions, renewals or modifications hereof;
and
(iii) payment and performance of all covenants,
conditions, liabilities and obligations of Grantor contained in
the Assignment of Leases, Rents and Security Deposits, dated as
of the date hereof (together with any extensions, renewals or
modifications thereof, the "Assignment of Leases"), between
Grantor, as assignor, and Beneficiary, as assignee, and the Cash
Collateral Account, Security, Pledge and Assignment Agreement,
dated as of the date hereof (together with any extensions,
renewals or modifications thereof, the "Cash Collateral
Agreement"), among Grantor, as pledgor, Fleet National Bank, as
agent, and Beneficiary, as pledgee; and
(iv) payment and performance of all covenants, conditions,
liabilities and obligations of Grantor contained in each of the
other Loan Documents (as defined below); and
(v) without limiting the foregoing, payment of all
indebtedness, liabilities, and amounts from time to time incurred
by Beneficiary pursuant to the Note, this Mortgage or such other
Loan Documents, even if the aggregate amount of the monetary
obligation outstanding at any one time exceeds the face amount of
the Note (all of the foregoing indebtedness, monetary liabilities
and obligations set forth in clauses (i)-(iv) above and this
clause (v), collectively, the "Indebtedness"); and
(vi) payment of the Indebtedness together with the payment
and performance of all other covenants, conditions, liabilities
and obligations described and set forth in clauses (i)-(v) above
and in this clause (vi), collectively, the "Obligations."
GRANTING CLAUSES
NOW, THEREFORE, THIS MORTGAGE WITNESSETH: that
Grantor, in consideration of the premises, the Indebtedness
secured by the Note, the acceptance by Beneficiary of the trusts
created hereby, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged (a) has
mortgaged, warranted, granted, bargained, sold, alienated,
released, confirmed, conveyed, pledged, enfeoffed, transferred
and assigned and (b) by these presents does hereby irrevocably
grant and create a first priority Lien (as defined below),
subject to the Permitted Encumbrances and the provisions hereof
and of the other Loan Documents, on and security interest in, and
does hereby MORTGAGE, WARRANT, GRANT A SECURITY INTEREST IN,
GRANT, BARGAIN, SELL, ALIENATE, RELEASE, CONFIRM, CONVEY, PLEDGE,
ASSIGN, ENFEOFF, TRANSFER AND SET OVER to (Beneficiary, in the
case of the Pennsylvania Properties) Trustee (for Properties not
located in the State of Pennsylvania), IN TRUST WITH POWER OF
SALE AND RIGHT OF ENTRY AND POSSESSION, for the benefit and use
of Beneficiary and its successors and assigns forever, in the
trusts created hereby all its estate, right, title and interest
now owned or hereafter acquired in, to and under any and all the
property (collectively, the "Trust Estate") described in the
following Granting Clauses:
(A) the Land;
(B) the Ground Leasehold Estate and all right, title and
interest of Grantor in, to and under the Ground Leases, with all
rights of use, occupancy and enjoyment and in and to all rents,
income and profits arising from or pursuant to the Ground Leases
together with all amendments, extensions, renewals and
modifications of the Ground Leases and all credits, deposits,
options and privileges of Grantor as lessee under the Ground
Leases including, without limitation, the right to renew or
extend the Ground Leases for a succeeding term or terms and all
rights of Grantor under the Ground Leases in connection with any
bankruptcy or insolvency proceeding of the lessor under the
Ground Leases, if any;
(C) all of Grantor's right, title and interest in and to
the buildings, foundations, structures, improvements and fixtures
now or hereafter located or erected on the Land (the
"Improvements");
(D) all of Grantor's right, title and interest, if any, in
and to (i) all streets, avenues, roads, alleys, passages, places,
sidewalks, strips and gores of land and ways, existing or
proposed, public or private, adjacent to the Land, and all
reversionary rights with respect to the vacation of said streets,
avenues, roads, alleys, passages, places, sidewalks and ways in
the land lying thereunder, (ii) all air, lateral support,
drainage, oil, gas and mineral rights, options to purchase or
lease, waters, water courses and riparian rights now or hereafter
pertaining to or used in connection with the Land and/or
Improvements, (iii) all and singular, the tenements,
hereditaments, rights of way, easements, appendages and
appurtenances and property now or hereafter belonging or in any
way appertaining to the Land, and (iv) all estate, right, title,
claim or demand whatsoever, either at law or in equity, in
possession or expectancy, of, in and to the Land (collectively,
the "Appurtenances");
(E) all of Grantor's right, title and interest in and to
all of the machinery, appliances, apparatus, equipment, fittings,
fixtures, materials, articles of personal property and goods of
every kind and nature whatsoever, and all additions to and
renewals and replacements thereof, and all substitutions
therefor, now or hereafter affixed to, attached to, placed upon
or located upon or in the Land, or any part thereof, and used in
connection with the use, ownership, management, maintenance,
enjoyment or operation of the Land in any present or future
occupancy or use thereof and now owned or leased or hereafter
owned or leased (to the extent permitted by the applicable Lease)
by Grantor including, but without limiting the generality of the
foregoing, all heating, lighting, laundry, cooking, incinerating,
loading, unloading and power equipment, boilers, dynamos,
stokers, engines, pipes, pumps, tanks, motors, conduits,
switchboards, plumbing, lifting, cleaning, fire prevention, fire
extinguishing, refrigerating, ventilating, and communications
apparatus, air cooling and air conditioning apparatus, building
materials and equipment, elevators, escalators, carpeting,
shades, draperies, awnings, screens, doors and windows, blinds,
stoves, ranges, refrigerators, dishwashers, cabinets, office
equipment, furniture and furnishings, partitions, ducts and
compressors (other than equipment and personal property of
tenants of the Land or the Improvements, or any part thereof)
(hereinafter collectively called "Building Equipment"), and
Grantor agrees to execute and deliver, from time to time, such
further instruments (including, without limitation, any financing
statements under the Uniform Commercial Code of the applicable
State in which a Property is located (the "UCC")) as may be
reasonably requested by Beneficiary to confirm the lien of this
Mortgage on any Building Equipment or any Intangible;
All such right, title and interest of Grantor in and to
each of the seventeen distinct parcels or sets of parcels of the
Land and the Ground Leasehold Estate, Grantor's interest in and
to the Improvements and Building Equipment located thereon and
such other property with respect thereto described in the
foregoing Granting Clauses is herein called a "Property" and all
such Properties are herein collectively called the "Properties."
(F) all of Grantor's right, title and interest as lessor or
licensor, as the case may be, in, to and under all leases,
underlettings, concession agreements and licenses of the
Properties, or any part thereof, now existing or hereafter
entered into by Grantor including, without limitation, any cash
and securities deposited thereunder (collectively, the "Leases"),
the grant of such cash and securities hereunder being expressly
subject to the provisions of the applicable Leases, and all of
Grantor's right, title and interest, subject to the provisions of
Section 9, in the right to receive and collect the revenues,
income, rents, issues, profits, royalties and other benefits
payable under any of the Leases or otherwise arising from the use
or enjoyment of all or any portion of the Properties
(collectively, the "Rents");
(G) subject to the provisions of Section 6 hereof and to
the Leases, all of Grantor's right, title and interest in and to
all proceeds, judgments, claims, compensation, awards or payments
hereafter made to Grantor for the taking, whether permanent or
temporary, by condemnation, eminent domain, or for any conveyance
made in lieu of such taking, of the whole or any part of the
Properties, including, without limitation, all proceeds,
judgments, claims, compensation awards or payments for changes of
grade of streets or any other injury to or decrease in the value
of the Properties, whether direct or consequential, which said
awards and payments are hereby assigned to Beneficiary, who is
hereby authorized to collect and receive the proceeds thereof and
to give proper receipts and acquittances therefor, and to apply
the same toward the payment of the Indebtedness in such order as
Beneficiary may determine in accordance with the provisions of
this Mortgage without regard to the adequacy of Beneficiary's
security hereunder and notwithstanding the fact that the amount
thereof may not then be due and payable, and toward the payment
of reasonable counsel fees, costs and disbursements incurred by
Beneficiary in connection with the collection of such awards or
payments; and Grantor hereby agrees, upon request, to make,
execute and deliver any and all further assignments and other
instruments sufficient for the purpose of confirming this
assignment of said proceeds, judgments, claims, compensation
awards or payments to Beneficiary, free, clear and discharged of
any encumbrances of any kind or nature whatsoever other than the
Permitted Encumbrances;
(H) subject to the provisions of Section 6 hereof, all of
Grantor's right, title and interest in and to all unearned
premiums paid under insurance policies now or hereafter obtained
by Grantor to the extent the same insure the Properties and any
other insurance policies required to be maintained pursuant to
Section 5 hereof to the extent the same insure the Properties
including, without limitation, liability insurance policies and
Grantor's interest in and to all proceeds of the conversion and
the interest payable thereon, voluntary or involuntary, of the
Trust Estate, or any part thereof, into cash or liquidated claims
including, without limitation, proceeds of casualty insurance,
title insurance (other than liability insurance) or any other
insurance maintained on or with respect to the Properties;
(I) all right, title and interest of Grantor in and to all
extensions, improvements, betterments, renewals, substitutes and
replacements of, and all additions and Appurtenances to, the
Properties, hereafter acquired by or released to Grantor or
constructed, assembled or placed by Grantor on the Properties,
and all conversions of the security constituted thereby;
immediately upon such acquisition, release, construction,
assembling, placement or conversion, as the case may be, and in
each such case, to the extent permitted by law, without any
further mortgage, conveyance, assignment or other act by Grantor,
any of such extensions, improvements, betterments, renewals,
substitutes and replacements shall become subject to the Lien of
this Mortgage as fully and completely, and with the same effect,
as though now owned by Grantor and specifically described herein;
(J) all of Grantor's right, title and interest in, to and
under, to the extent the same may be encumbered or assigned by
Grantor pursuant to the terms thereof without occurrence of a
breach of default thereunder or a violation under applicable law,
and without impairment of the validity or enforceability thereof,
(i) any Operating Agreements (as defined below) and all contracts
and agreements relating to the Properties (other than the
Leases), and other documents, books and records related to the
ownership and operation of the Properties; (ii) to the extent
permitted by law, all consents, licenses (including, to the
extent permitted by law, any licenses held by Grantor permitting
the sale of liquor at any of the Properties the transfer and/or
assignment of which is permitted by law without filing or other
qualification), warranties, guaranties, building permits and
government approvals relating to or required for the
construction, completion, occupancy and operation of the
Properties; (iii) all plans and specifications for the
construction of the Improvements, including, without limitation,
installations of curbs, sidewalks, gutters, landscaping, utility
connections and all fixtures and equipment necessary for the
construction, operation and occupancy of the Improvements; (iv)
all such other contracts and agreements (other than the Leases)
from time to time executed by Grantor relating to the ownership,
leasing, construction, maintenance, operation, occupancy or sale
of the Properties, together with all rights of Grantor to compel
performance of the terms of such contracts and agreements; and
(v) subject to the terms of the Cash Collateral Agreement, the
Accounts (as defined below) and any funds in such Accounts from
time to time (it being understood that at such time as Grantor
shall withdraw any amounts from any Accounts in accordance with
the provisions of the Cash Collateral Agreement, the same shall
cease to constitute part of the Trust Estate);
(K) to the extent the same may be encumbered or assigned by
Grantor pursuant to the terms thereof and to the extent permitted
by law, all of Grantor's right, title and interest in, to and
under escrows, documents, instruments, and general intangibles,
as the foregoing terms are defined in the UCC, in any case which
now or hereafter relate to, are derived from, or are used in
connection with the Properties, and all contract rights,
franchises, books, records, plans, specifications, permits,
licenses, approvals, actions and causes of action which now or
hereafter relate to, are derived from or used in connection with
the Properties or the use, operation, maintenance, occupancy or
enjoyment thereof or the conduct of any business or activities
thereon (collectively, the property described in the foregoing
paragraphs (F), (G), (H), (I) and this paragraph (J), the
"Intangibles"); and
(L) all of Grantor's right, title and interest in all
proceeds, both cash and noncash, of the foregoing which may be
sold or otherwise be disposed of pursuant to the terms hereof.
TO HAVE AND TO HOLD THE TRUST ESTATE hereby conveyed,
or mentioned and intended so to be, whether now owned or held or
hereafter acquired, subject only to the Permitted Encumbrances,
unto Trustee for the benefit and use of Beneficiary, its
successors and assigns, forever, upon the terms and conditions
set forth herein.
IN TRUST FOREVER, WITH POWER OF SALE (to the extent
permitted by applicable law), upon the terms and trusts set forth
herein and to secure the performance of, and compliance with, the
obligations, covenants and conditions of this Mortgage and the
other Loan Documents all as herein set forth.
1. Definitions. Wherever used in this Mortgage, the
following terms, and the singular and plural thereof, shall have
the following meanings. All capitalized terms used but not
otherwise defined herein shall have the meanings assigned to them
in the Note:
Accounts: Shall mean, collectively, the Operating
Account, the Mortgage Escrow Account, the Interest Escrow
Account, the Deferred Maintenance Reserve Account, the
Environmental Reserve Account, the Security Deposit Account and
the Capital Expenditure Reserve Account and any and all of
Grantor's other accounts, general intangibles, chattel paper,
cash or monies, wherever located, whether in the form of cash or
checks, and all cash equivalents including all deposits and
certificates of deposit, instruments, whether negotiable or non-
negotiable, debt notes both certificated and uncertificated,
repurchase obligations for underlying notes of the types
described herein, and commercial paper (it being agreed that all
of the foregoing must at all times qualify as Permitted
Investments (as defined in the Cash Collateral Agreement)), (a)
received in connection with the sale or other disposition of all
or any of the Properties, (b) maintained by Grantor in a
segregated account in trust for the benefit of Beneficiary, or
(c) held by Beneficiary, but not any account maintained by
Grantor or an Affiliate of Grantor or cash or cash equivalents
that have been disbursed to Grantor in accordance with the Cash
Collateral Agreement.
Affiliate: Shall mean, with respect to any specified
Person, any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with, or
any general partner in, such specified Person. For the purposes
of this definition, "control" when used with respect to any
specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities or other beneficial interest,
by contract or otherwise; and the terms "controlling" and
"controlled" have the meanings correlative to the foregoing.
Aggregate Alteration Threshold Amount: Shall mean
$2,000,000.
Aggregate Casualty Amount: As defined in Section 6(b)
hereof.
Alabama Property: As defined in Section 52 hereof.
Allocated Loan Amount: Shall mean the portion of the
Principal Indebtedness allocated, solely for purposes of
performing certain calculations hereunder, to each Property as
set forth in Schedule 1 annexed hereto and made a part hereof, as
such amounts shall be adjusted from time to time as hereinafter
set forth. In the case of a Total Loss in accordance with Section
6(d) where the Proceeds are less than 125% of the Allocated Loan
Amount, each Allocated Loan Amount shall be increased by an
amount equal to the product of (a) the difference between 125% of
the applicable Allocated Loan Amount and the Proceeds, and (b) a
fraction, the numerator of which is the applicable Allocated Loan
Amount (prior to the adjustment in question) and the denominator
of which is the Principal Indebtedness prior to the adjustment to
the Principal Indebtedness resulting in the recalculation of the
Allocated Loan Amount. All calculations made pursuant to this
Mortgage with respect to an Allocated Loan Amount (including
Premium or scheduled interest payments on an Allocated Loan
Amount) shall be certified to Beneficiary by Grantor pursuant to
an Officer's Certificate.
Alteration: As defined in Section 12(c) hereof.
Approved Banks: Shall mean banks or other financial
institutions which have a minimum long-term unsecured debt rating
of at least "AA" by each of the Rating Agencies, or if any such
bank or other financial institution is not rated by all the
Rating Agencies, then a minimum long-term rating of at least "AA"
or its equivalent by two of the Rating Agencies.
Appurtenances: As defined in Granting Clause (D)
hereof.
Assignee: As defined in Section 54 hereof.
Assignment of Leases: As defined in the recitals
hereof.
Beneficiary: As defined in the introductory paragraph
hereof.
Best: As defined in Section 5(b).
Building Equipment: As defined in Granting Clause (E)
hereof.
Business Day: Shall mean any day except a Saturday, a
Sunday or any other day on which commercial banks in the States
of New York or Pennsylvania, are authorized or obligated by law,
governmental decree or executive order to be closed.
Capital Expenditure Reserve Amount: As defined in
Section 48(b) hereof.
Cash: Coin or currency of the government of the United
States of America.
Cash and Cash Equivalents: Shall mean any or a
combination of the following: (i) Cash, and (ii) U.S. Government
Obligations.
Cash Collateral Agreement: As defined in the recitals
hereof.
Casualty Amount: As defined in Section 6(b) hereof.
Closing Date: Shall mean the date the Loan and the
transactions contemplated hereby are consummated.
Code: Shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto, and any temporary or final
regulations promulgated thereunder.
Comparable Class: Shall mean, with respect to any
Property, a standard of operation and maintenance consistent with
properties comparable to and in the same metropolitan area as the
applicable Property.
Debt: Shall mean, with respect to any Person at any
time, (a) indebtedness or liability of such Person for borrowed
money whether or not evidenced by bonds, debentures, notes or
other instruments, or for the deferred purchase price of property
or services (excluding trade obligations); (b) obligations of
such Person as lessee under leases which should have been or
should be, in accordance with GAAP, recorded as capital leases;
(c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d)
obligations issued for, or liabilities incurred on the account
of, such Person; (e) obligations or liabilities of such Person
arising under acceptance facilities; (f) obligations of such
Person under any guarantees or other agreement to become
secondarily liable for any obligation of any other Person,
endorsements (other than for collection or deposit in the
ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest
in any Person or otherwise to assure a creditor against loss; (g)
obligations of such Person secured by any Lien on any property of
such Person, whether or not the obligations have been assumed by
such Person; or (h) obligations of such Person under any interest
rate or currency exchange agreement.
Debt Service: Shall mean the amount of interest and
principal due and payable in accordance with the Note during any
applicable period.
Debt Service Collateral: As defined in Section 62(a)
hereof.
Debt Service Coverage Ratio: Shall mean for any period
the ratio of Net Operating Income to Debt Service on the Note
(based on a debt service constant on the Note equal to the
greater of 10.09% per annum and the actual debt service constant
on the Note) for such period.
Default: Shall mean the occurrence or existence of any
event or condition which, with the giving of notice or the
passage of time, or both, would constitute an Event of Default
hereunder.
Default Rate: Shall have the meaning set forth in the
Note.
Deferred Maintenance Amounts: As defined in Section
48(a).
Direct Beneficial Owner: Shall mean such Persons who
own any direct ownership interest in Grantor.
Environmental Certificate: As defined in Section 40(b)
hereof.
Environmental Claim: Shall mean any claim, action,
cause of action, investigation or written notice by any Person
alleging potential liability (including potential liability for
investigatory costs, cleanup costs, natural resource damages,
property damages, personal injuries or penalties) arising out of,
based upon or resulting from (a) the presence, threatened
presence, release or threatened release into the environment of
any Hazardous Substances from or at the Properties, or (b) the
violation, or alleged violation, of any Environmental Law,
relating to the Properties.
Environmental Event: As defined in Section 40(b)
hereof.
Environmental Laws: Shall mean all present or future
federal, state and local laws, statutes, rules, ordinances, and
regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata),
including, without limitation laws, statutes, rules, ordinances
and regulations relating to emissions, discharges, releases of
Hazardous Substances, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances including, without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sub Sections
9601 et seq.; the Resource Conservation and Recovery Act of 1976,
42 U.S.C. Sub Sections 6901 et seq.; the Toxic Substance Control
Act, 15 U.S.C. Sub Sections 2601 et seq.; the Water Pollution
Control Act (also known as the Clean Water Act), 33 U.S.C. Sub
Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Sub
Section 7401 et seq.; and the Hazardous Materials Transportation
Act, 49 U.S.C. Sub Section 1801 et seq., as the same may be
hereafter amended or modified.
Environmental Reports: As defined in Section 40(a)
hereof.
ERISA: Shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations promulgated thereunder.
Events of Default: Shall mean the occurrence of any of
the following, each of which shall constitute an Event of Default
under this Mortgage:
(a) (i) Failure to make any payment of interest or
principal on the Note when due, or (ii) failure to pay the
principal balance of the Note when due; or
(b) Grantor fails to pay any other amount payable
pursuant to this Mortgage or the Note when due and payable in
accordance with the provisions hereof, with such failure
continuing for ten (10) Business Days after Beneficiary delivers
written notice thereof to Grantor, unless such amount is in
dispute and Grantor has deposited the disputed amount in escrow;
or
(c) (i) Failure to keep in force the insurance
required by Section 5 of this Mortgage, or (ii) failure to comply
with any other covenants set forth in Section 5 with such failure
in this clause (ii) continuing for five (5) Business Days after
Beneficiary delivers written notice thereof to Grantor; or
(d) Any default under the terms of Section 7 (b)
(subject to the terms of Section 7(c) beyond any applicable time
periods set forth therein, with such default continuing for five
(5) days after Beneficiary delivers written notice thereof to
Grantor, or the incurrence of any Debt in violation of Section 11
(c) of this Mortgage or the occurrence of any Transfer in
violation of Sections 11 (a) or 11 (b) (but subject to the terms
of Section 11) of this Mortgage; or
(e) Any attempt by Grantor to assign its rights under
this Mortgage; or
(f) Any other default in the performance or payment,
or breach, of any material covenant, warranty, representation or
agreement of Grantor contained herein or in any other Loan
Document (other than a covenant, representation or agreement, a
default in the performance or payment of or the breach of which
is specifically addressed elsewhere in this definition), which
default is not cured within thirty (30) Business Days after
receipt by Grantor of notice from Beneficiary in writing of such
breach. If cure of such default (a) would require performance of
an Obligation other than payment of Indebtedness to Grantor and
(b) cannot be effected within said 30 Business Day period despite
Grantor's diligence in prosecuting such cure, then, provided
Grantor commences to cure within said thirty (30) Business Day
period and diligently prosecutes said cure to completion, subject
only to Excusable Delays, the cure period provided hereunder
shall be extended to such time as may be reasonably necessary to
cure the default; provided, however, that such extended period
shall in no event exceed 120 days plus time permitted for
Excusable Delays; and provided, further, that Grantor shall
provide Beneficiary with a written report and evidence of the
progress of Grantor's cure efforts 90 days after commencement of
such 120-day cure period. Notwithstanding the foregoing
sentence, the cure period provided hereunder may be extended for
one additional 120-day period, subject to Excusable Delays, if
and only if (x) such default involves breach of a covenant (as
distinct from a representation) and cure of such default would
require physical construction or remedial work, and (y) such cure
cannot with diligence be completed within the initial 120-day
period. Grantor shall provide Beneficiary with an additional
written report and evidence of the progress of Grantor's cure
efforts 90 days after commencement of such additional 120-day
cure period.
(g) The entry by a court of (A) a decree or order for
relief in respect of any Grantor or its General Partner in an
involuntary case or proceeding under any applicable Federal or
state bankruptcy, insolvency, reorganization or other similar law
or (B) a decree or order adjudging any Grantor or its General
Partner a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of any Grantor or its General
Partner under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of any Grantor or its General Partner
or of any substantial part of either of their respective
property, or ordering the winding up or liquidation of either of
their respective affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed
and in effect for a period of more than ninety (90) consecutive
days; or
(h) The commencement by any Grantor or its General
Partner of a voluntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated
a bankrupt or insolvent, or the consent by it to the entry of a
decree or order for relief in respect of it in an involuntary
case or proceeding under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law or to
the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by any Grantor or its
General Partner of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state
bankruptcy, insolvency, reorganization or other similar law, or
the consent by any Grantor or its General Partner to the filing
of such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of any Grantor or its General
Partner or of any substantial part of any of either of their
respective property, or the making by any Grantor or its General
Partner of an assignment for the benefit of creditors, or the
admission by any Grantor or its General Partner in writing of its
inability to pay its debts generally as they become due, or the
taking of official partnership action of any Grantor or corporate
action of its General Partner (or if, at any time, any Grantor
shall no longer be a partnership or the General Partner shall no
longer be a corporation) in furtherance of any such action; or
(i) This Mortgage or any other Loan Document or any
Lien granted hereunder or thereunder shall, in whole or in part,
terminate, cease to be effective or cease to be a legally valid,
binding and enforceable obligation of Grantor, or any Lien
securing the Indebtedness shall, in whole or in part, cease to be
a perfected first priority Lien, subject to the Permitted
Encumbrances (except in any of the foregoing cases in accordance
with the terms hereof or under any other Loan Document); or
(j) Any "Event of Default" as defined in any Loan
Document other than this Mortgage occurs.
Exculpated Parties: As defined in Section 33 hereof.
Excusable Delay: Shall mean a delay due to acts of
God, governmental restrictions, stays, judgments, orders,
decrees, enemy actions, civil commotion, fire, casualty, strikes,
work stoppages, shortages of labor or materials or other causes
beyond the reasonable control of Grantor, but lack of funds in
and of itself shall not be deemed a cause beyond the control of
Grantor.
GAAP: Shall mean the generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such
entity as may be in general use by significant segments of the
U.S. accounting profession, to the extent such principles are
applicable to the facts and circumstances on the date of
determination.
General Partner: Shall mean Mark M.P.N.M. Realty,
Inc., an Alabama corporation; Mark New Smyrna Realty, Inc., a
Florida corporation; Mark Park Plaza Realty, Inc., a Georgia
corporation; Mark Troy Realty, Inc., a New York corporation; Mark
Martintown Realty, Inc., a South Carolina corporation; Mark Kings
Fairground Realty, Inc., a Virginia corporation; Mark Shillington
Realty Corp., a Pennsylvania corporation; Mark 25th Street Realty
Corp., a Pennsylvania corporation; Mark Three Realty Corp., a
Pennsylvania corporation; and Mark Four Realty Corp., a
Pennsylvania corporation, which are the general partners of, Mark
M.P.N.M., L.P., an Alabama limited partnership; Mark New Smyrna
Limited Partnership, a Florida limited partnership; Mark Park
Plaza, L.P., a Georgia limited partnership; Mark Troy, L.P., a
New York limited partnership; Mark Martintown, L.P., a South
Carolina limited partnership; Mark Kings Fairground, L.P., a
Virginia limited partnership; Mark Shillington, L.P., a
Pennsylvania limited partnership; Mark 25th Street, L.P., a
Pennsylvania limited partnership; Mark Three Realty, L.P., a
Pennsylvania limited partnership and Mark Four Realty, L.P., a
Pennsylvania limited partnership respectively.
Governmental Authority: Shall mean any Federal, state
or local government or any other political subdivision thereof
exercising executive, legislative, judicial, regulatory or
administrative functions.
Grantor: As defined in the introductory paragraph
hereof.
Ground Lease or Ground Leases: Shall mean those
certain ground leases set forth on Exhibit B annexed hereto and
made a part hereof.
Ground Leasehold Estate: As defined in the recitals
hereof.
Hazardous Substance: Shall mean any material waste or
material substance which is:
(a) included within the definition of "hazardous
substances," "hazardous materials," "toxic substances," or "solid
waste" in or pursuant to any Environmental Law, or subject to
regulation under any Environmental Law;
(b) listed in the United States Department of
Transportation Optional Hazardous Materials Table, 49 C.F.R. Sub
Section 172.101 enacted as of the date hereof or hereafter
amended, or in the United States Environmental Protection Agency
List of Hazardous Substances and Reportable Quantities, 40 C.F.R.
Part 302, as enacted as of the date hereof or as hereafter
amended; or
(c) an explosive, radioactive, asbestos,
polychlorinated biphenyl, oil or petroleum product.
Impositions: Shall mean all taxes (including all ad
valorem, sales (including those imposed on lease rentals), use,
single business, gross receipts, value added, intangible
transaction, privilege or license or similar taxes), governmental
assessments (including all assessments for public improvements or
benefits, whether or not commenced or completed prior to the date
hereof and whether or not commenced or completed within the term
of this Mortgage), water, sewer or other rents and charges,
excises, levies, fees (including license, permit, inspection,
authorization and similar fees), and all other governmental
charges, in each case whether general or special, ordinary or
extraordinary, or foreseen or unforeseen, of every character in
respect of the Trust Estate and/or any Rents (including all
interest and penalties thereon), which at any time prior to,
during or in respect of the term hereof may be assessed or
imposed on or in respect of or be a Lien upon (a) Grantor
(including all income, franchise, single business or other taxes
imposed on Grantor for the privilege of doing business in the
jurisdiction in which the Trust Estate is located), (b) the Trust
Estate, or any other collateral delivered or pledged to
Beneficiary in connection with the Loan, or any part thereof, or
any Rents therefrom or any estate, right, title or interest
therein, or (c) any occupancy, operation, use or possession of,
or sales from, or activity conducted on, or in connection with
the Trust Estate or the leasing or use of all or any part
thereof. Nothing contained in this Mortgage shall be construed
to require Grantor to pay any tax, assessment, levy or charge
imposed on (i) any tenant occupying any portion of the Property
or (ii) Beneficiary in the nature of a franchise, capital levy,
estate, inheritance, succession, income or net revenue tax.
Improvements: As defined in Granting Clause (C)
hereof.
Indebtedness: As defined in the recitals hereof.
Indemnified Environmental Parties: As defined in
Section 40 (c) hereof.
Indemnified Parties: As defined in Section 37 hereof.
Independent Accountant: Shall mean Ernst & Young, LLP,
or another firm of nationally recognized, independent certified
public accountants selected by Grantor which is reasonably
acceptable to Beneficiary.
Independent Appraiser: Shall mean an independent
appraiser which is a member of the American Institute of Real
Estate Appraisers selected by Grantor and having at least five
(5) years of experience in the applicable real estate market
where the applicable Property is located in the valuation of
properties of the type being appraised.
Independent Architect: Shall mean an independent
architect, engineer or construction consultant selected by
Grantor, licensed to practice in the State where the applicable
Property is located and having at least five (5) years of
experience.
Independent Director: Shall mean an individual
reasonably satisfactory to Beneficiary who shall not have been at
the time of such individual's appointment, and may not have been
at any time during the preceding two years (i) a shareholder of,
or an officer or employee of, Grantor or any of its shareholders,
subsidiaries or affiliates, (ii) a customer of, or supplier to,
Borrower or any of its shareholders, subsidiaries or affiliates,
(iii) a person or other entity controlling any such shareholder,
supplier or customer, or (iv) a member of the immediate family of
any such shareholder, officer, employee, supplier or customer of
any other director of Grantor. As used herein, the term
"control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of a person or entity, whether through ownership of
voting securities, by contract or otherwise.
Individual Threshold Amount: Shall mean, with respect
to each Property, the greater of $250,000 or ten percent (10%) of
the Allocated Loan Amount therefor.
Individual Trustee: Shall mean such person as is
required by applicable state law to perform the functions of
Individual Trustee pursuant to Section 51 hereof.
Insurance Requirements: Shall mean all terms of any
insurance policy required hereunder covering or applicable to any
Property or any part thereof, all requirements of the issuer of
any such policy, and all orders, rules, regulations and other
requirements of which Grantor has notice of the national board of
fire underwriters (or any other body exercising similar
functions) applicable to or affecting any Property or any part
thereof or any use of any Property or any part thereof.
Intangibles: As defined in Granting Clause (K) hereof.
Jurisdictional Trustee: As defined in Section 51
hereof.
Land: As defined in the recitals hereof.
Leases: As defined in Granting Clause (F) hereof.
Legal Requirements: As defined in Section 13(a)
hereof.
Letter of Credit: Shall mean an irrevocable,
unconditional, transferable, clean sight draft letter of credit
in favor of Beneficiary and entitling Beneficiary to draw thereon
in New York, New York, issued by a domestic Approved Bank or the
U.S. agency or branch of a foreign Approved Bank, or if there are
no domestic Approved Banks or U.S. agencies or branches of a
foreign Approved Bank then issuing letters of credit, then such
letter of credit may be issued by a domestic bank, the long term
unsecured debt rating of which is the highest such rating then
given by the Rating Agencies to a domestic commercial bank. If
at any time the bank issuing any such Letter of Credit shall
cease to be an Approved Bank, Beneficiary shall have the right
immediately to draw down the same in full and hold the proceeds
of such draw in accordance with the applicable provisions hereof,
unless Grantor shall deliver a replacement Letter of Credit
within thirty (30) days after Beneficiary delivers written notice
to Grantor that such bank shall have ceased to be an Approved
Bank.
Lien: Shall mean any mortgage, deed of trust, lien,
pledge, hypothecation, assignment, security interest, or any
other encumbrance of, on or affecting the Trust Estate or any
portion thereof or any interest therein, including, without
limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any
financing statement, and mechanic's, materialmen's and other
similar liens and encumbrances.
Loan: As defined in the recitals hereof.
Loan Amount: Shall mean the aggregate Principal Amount
of the Loan, which initially shall be $45,929,800.
Loan Documents: Shall mean this Mortgage, the
Assignment of Leases, the Cash Collateral Agreement, the Note,
and any and all other agreements, instruments or documents
executed by Grantor evidencing, securing or delivered in
connection with the Loan and the transactions contemplated
hereby.
Manager's Consent: Shall mean the Manager's Consent
and Subordination of Management Agreement, dated as of even date
herewith.
Material Adverse Effect: Shall mean any event or
condition that has a material adverse effect on (i) all of the
Properties taken as a whole, (ii) the business, prospects,
profits, operations or condition (financial or otherwise) of
Grantor, or (iii) the ability of Grantor to repay the principal
and interest of the Indebtedness as it becomes due.
Material Alteration: Shall mean any Alteration which,
when aggregated with all related Alterations constituting a
single project, involves an estimated cost exceeding the greater
of the Individual Threshold Amount or $250,000 with respect to
Alterations (including the Alteration in question) being
undertaken at a single Property at such time or the Aggregate
Alteration Threshold Amount with respect to Alterations
(including the Alteration in question) being undertaken at all
the Properties at such time, but in either event, excluding any
Alteration for which a Tenant is obligated to pay directly.
Maturity Date: As defined in the recitals hereof.
Maximum Foreseeable Casualty Loss: As defined in
Section 5 (b) hereof.
Minimum DSCR: As defined in Section 62(b) hereof.
Minimum Release Price: Shall mean an amount sufficient
to pay 125% of the Allocated Loan Amount applicable to the
Property which is the subject of the Property Release and accrued
interest and principal payments thereon assuming an interest rate
on the Note equal to the greater of 10.09% and the actual
interest rate on the Note, through and including the Release
Date, and sufficient to pay the Prepayment Premium (as defined in
the Note).
Mortgage: As defined in the recitals hereof.
Mortgage Escrow Account: As defined in Section 8 (a)
hereof.
Mortgage Escrow Amounts: As defined in Section 8 (a)
hereof.
Mortgage Escrow Security: As defined in Section 8 (b)
hereof.
Net Operating Income: Shall mean, with respect to any
period, the excess of Operating Income over Operating Expenses
for such period.
Nondisqualification Opinion: Shall mean an opinion of
tax counsel, which shall be independent outside counsel, to the
effect that a contemplated action would not materially adversely
affect the federal income tax status as a REMIC, trust or other
vehicle of any REMIC, trust or other vehicle in which the Loan
may be included at the time such opinion is required.
Nondisturbance Agreement: As defined in Section 15(d)
hereof.
Note: As defined in the recitals hereof.
Obligations: As defined in the recitals hereof.
Officer's Certificate: Shall mean a certificate
delivered to Beneficiary and signed by an officer of the General
Partner of Grantor.
Operating Agreements: Shall mean the reciprocal
easement agreements, operating agreements and similar agreements
affecting the ownership, use and operation of the Properties
included in the Permitted Encumbrances listed on Schedule 2
hereto, as such agreements have been or may hereafter be amended,
modified or supplemented.
Operating Expenses: Shall mean, for any period,
without duplication, all expenses paid or to be paid by Grantor
during such period in connection with the operation, management,
maintenance, repair and use of the Trust Estate, determined on an
accrual basis, and, except to the extent otherwise provided in
this definition, in accordance with GAAP. Operating Expenses
specifically shall include (i) all expenses incurred in the
immediately preceding twelve (12) month period based on quarterly
financial statements delivered to Beneficiary in accordance with
Section 14(b) hereof, (ii) all payments required to be made
pursuant to any Operating Agreements, (iii) management fees,
whether or not actually paid, equal to 5% of Operating Income,
(iv) an amount equal to $0.40 per square foot for each Property,
and (v) in the case of real property taxes and assessments
imposed upon the Plaza 15 Property, located in Lewisburg,
Pennsylvania, the actual taxes and assessments, but in no event
less than $87,000. Notwithstanding the foregoing, Operating
Expenses shall not include (1) depreciation or amortization, (2)
income taxes or other Impositions in the nature of income taxes,
(3) any expenses (including legal, accounting and other
professional fees, expenses and disbursements) incurred in
connection with the making of the Loan or the sale, exchange,
transfer, financing or refinancing of all or any portion of the
Trust Estate or in connection with the recovery of insurance or
condemnation proceeds which are applied to prepay the Note, (4)
any expenses which in accordance with GAAP should be capitalized,
(5) Debt Service, and (6) any item of expense which would
otherwise be considered within Operating Expenses pursuant to the
provisions above but is paid directly by any Tenant.
Operating Income: Shall mean, for any period, all
income of Grantor during such period from the operation of the
Trust Estate or, as applicable, a Property as follows:
(i) all amounts payable to Grantor by any Person
under Leases, license agreements, occupancy agreements or
other agreements relating to the Trust Estate or, as
applicable, a Property, as (A) annual "base" or "fixed" rent
(including rent insurance proceeds), equal to the lesser of
the projected "base" or "fixed" rent for the following
twelve (12) months based solely upon leases actually signed
and in effect and the actual "base" or "fixed" rent
collected for the immediately preceding twelve (12) month
period pursuant to financial statements provided by Borrower
and (B) percentage rent collected for the immediately
preceding twelve (12) month period pursuant to financial
statements provided by Borrower;
(ii) all amounts payable to Grantor by any Person
under Leases or otherwise, as reimbursement for real estate
taxes, assessments, escalations, operating expenses,
utilities or such other charges paid by Grantor and
collected pursuant to the certified financial statements
provided by Borrower, excepting therefrom amounts collected
for one-time, non-recurring reimbursements; and
(iii) all other amounts which have been collected
and are included in Grantor's annual financial statements as
operating income attributable to the Trust Estate or, as
applicable, a Property, excepting therefrom amounts
collected for one-time, non-recurring payments;
less, however, the amounts payable to Grantor as a
result of the percentage increase of the occupancy rate of
the Properties over a base occupancy rate of ninety-five
percent (95%) multiplied by the sum of (i), (ii) and (iii)
above.
Notwithstanding the foregoing, Operating Income shall
not include (a) any condemnation or insurance proceeds (other
than rent insurance proceeds or condemnation proceeds with
respect to a temporary taking and, in either such case, only to
the extent allocable to the applicable reporting period), (b) any
proceeds resulting from the Transfer of all or any portion of a
Property, (c) any rent attributable to a Lease prior to the date
on which the actual payment of rent is required to commence
thereunder, (d) any item of income otherwise includable in
Operating Income but paid directly by any tenant to a Person
other than Grantor, provided such item of income is an item of
expense (such as payments for utilities paid directly to a
utility company) and is otherwise excluded from the definition of
Operating Expenses pursuant to clause (6) of the definition
thereof, or (e) security deposits received from Tenants until
forfeited. Operating Income shall be calculated on the accrual
basis of accounting and, except to the extent otherwise provided
in this definition, in accordance with GAAP.
In addition, for purposes of calculating Operating
Income in connection with the calculation of the Debt Service
Coverage Ratio, rent payable under any Lease executed from and
after the date hereof shall be deemed to be equal to the lesser
of (x) the actual rent paid thereunder, and (y) the total base
rent (including fixed escalations) payable thereunder for the
original term thereof calculated on a straight-line basis.
Opinion of Counsel: Shall mean an opinion of counsel
of a nationally recognized law firm or other law firm reasonably
acceptable to Beneficiary and, at any time that the Loan is
included in any securitization transaction, the Rating Agencies,
procured by Grantor and rendered at Grantor's sole cost and
expense.
Pennsylvania Property: As defined in Section 56
hereof.
Permitted Debt: As defined in Section 11 (c) hereof.
Permitted Encumbrances: Shall mean:
(i) Liens for Impositions not yet due and payable or Liens
arising after the date hereof which are being contested in good
faith by appropriate proceedings promptly instituted and
diligently conducted in accordance with Section 7(c) hereof;
(ii) In the case of Liens arising after the date hereof,
statutory Liens of carriers, warehousemen, mechanics, materialmen
and other similar Liens arising by operation of law, which are
incurred in the ordinary course of business for sums which are
being contested in good faith in accordance with Section 7(c);
(iii) All immaterial easements, rights-of-way, restrictions
and other similar charges or non-monetary encumbrances against
real property and other agreements which do not materially and
adversely affect (A) the ability of Borrower to pay any of its
obligations to any Person as and when due, (B) the marketability
of title to the Trust Estate, (C) the fair market value of the
Trust Estate, or (D) the use or operation of the Trust Estate as
of the Closing Date and thereafter;
(iv) Those matters set forth in the "marked-up" commitments
for Beneficiary's loan policy of title insurance concerning the
Properties issued by the Title Company and agreed to by
Beneficiary in Beneficiary's sole discretion;
(v) Liens in favor of Beneficiary under this Mortgage and
the other Loan Documents;
(vi) Rights of existing and future Tenants, as tenants only,
pursuant to Leases; and
(vii) Such other title exceptions as Beneficiary and the
applicable Rating Agencies may approve in writing in their sole
discretion.
Person: Shall mean any individual, corporation,
partnership, joint venture, estate, trust, unincorporated
association, and any federal, state, county or municipal
government or any political subdivision thereof.
Premium: Shall have the meaning set forth in the Note.
Principal Amount: Shall mean the principal amount of
the Note, as defined therein.
Principal Indebtedness: Shall mean the Principal
Amount payable by Grantor under the Note.
Proceeds: As defined in Section 6(b) hereof.
Properties: As defined in Granting Clause (E) hereof.
Property Release: Shall mean the release one or more
of the Specified Properties from the lien and security interest
of Beneficiary in this Mortgage and other Loan Documents relating
to such Specified Property, and the execution and delivery by
Beneficiary of any agreements reasonably requested by Grantor to
release and terminate or reconvey and reassign, such Mortgage;
provided that such release and termination or reconveyance and
reassignment shall be without recourse to Beneficiary and without
any representation and warranty and Grantor shall be released
from its obligations under the Loan Documents with respect to the
Specified Property; provided, further, that upon the release and
termination or reconveyance and reassignment of Beneficiary's
security interest in this Mortgage relating to the Specified
Property, all references herein to this Mortgage relating to the
Specified Property shall be deemed deleted; and provided,
further, that upon any Property Release, Grantor shall cause to
be delivered to Beneficiary in form and substance reasonably
satisfactory to Beneficiary, at Grantor's sole cost and expense,
an original title insurance policy endorsement, insuring
Beneficiary's perfected first priority interest under this
Mortgage in and to the remaining Properties in the Trust Estate
following the Property Release.
Qualifying Manager: As defined in Section 19 (a)
hereof.
Rating Agencies: Shall mean Standard & Poor's Ratings
Services, Duff & Phelps Credit Rating Co., Moody's Investors
Services, Inc. and Fitch Investor Services, L.P. or, if such
corporation shall for any reason no longer perform the functions
of a securities rating agency, any other nationally recognized
statistical rating agency designated by Beneficiary, provided,
however, that at any time during which the Loan is an asset of a
securitization, "Rating Agencies" shall mean the rating agencies
that from time to time rate the securities issued in connection
with such securitization
Release Date: As defined in Section 38 hereof.
Renewal Lease: As defined in Section 15(b) hereof.
Replacement Collateral: As defined in Section 61(a)
hereof.
Replacement Tenant: As defined in Section 61(a) hereof.
Rents: As defined in Granting Clause (F) hereof.
Single Purpose Entity: Shall mean a Person, other than
an individual, which (i) is formed or organized solely for the
purpose of holding, directly, an ownership interest in the
Properties, (ii) does not engage in any business unrelated to the
Properties and the financing thereof, (iii) has not and will not
have any assets other than those related to its interest in the
Properties or the financing thereof or any indebtedness other
than the Loan and trade payables incurred in the ordinary course
of business and paid within the time periods set forth in the
Loan Documents, and in amounts not to exceed those set forth in
the Loan Documents, (iv) maintains its own separate books and
records and its own accounts, in each case which are separate and
apart from the books and records and accounts of any other
Person, (v) holds itself out as being a Person, separate and
apart from any other Person, (vi) does not and will not commingle
its funds or assets with those of any other Person, (vii)
conducts its own business in its own name; (viii) maintains a
separate general ledger footnoted with property specific
information, (ix) pays its own liabilities out of its own funds,
(x) observes all partnership formalities or corporate formalities
or limited liability company formalities, as applicable, (xi)
maintains an arm's-length relationship with its Affiliates, (xii)
pays the salaries of its own employees and maintains a sufficient
number of employees in light of its contemplated business
operations, (xiii) does not guarantee or otherwise obligate
itself with respect to the debts of any other Person or hold out
its credit as being available to satisfy the obligations of any
other Person, (xiv) does not acquire obligations or securities of
its partners, members or shareholders, (xv) allocates fairly and
reasonably shared expenses, including, without limitation, any
overhead for shared office space, (xvi) uses separate stationery,
invoices, and checks, (xvii) does not and will not pledge its
assets for the benefit of any other Person or make any loans or
advances to any other Person, (xviii) does and will correct any
known misunderstanding regarding its separate identity, (xix)
maintains adequate capital in light of its contemplated business
operations, and (xx) has and will have a partnership or operating
agreement, certificate of incorporation or other organizational
document which complies with the standards and requirements for a
Single Purpose Entity set by the Rating Agencies at such time.
In addition, if such Person is a limited partnership, (1) all
general partners of such Person shall be Single Purpose Entities,
and (2) if such Person has more than one general partner, then
the organizational documents shall provide that such Person shall
continue (and not dissolve) for so long as a solvent general
partner exists. In addition, if such Person is a corporation,
then, at all times: (a) such Person shall have at least two (2)
Independent Directors, and (2) the board of directors of such
Person may not take any action requiring the unanimous
affirmative vote of 100% of the members of the board of directors
unless all of the directors, including the Independent Directors,
shall have participated in such vote. In addition, if such
Person is a limited liability company, (1) the managing member
shall be a Single Purpose Entity, (2) its articles of
organization, certificate of formation and/or operating
agreement, as applicable, shall provide that such entity will
dissolve only upon the bankruptcy of the managing member, and (3)
if such Person has more than one managing member, then the
organizational documents shall provide that such Person shall
continue (and not dissolve) for so long as a solvent managing
member exists. In addition, such Person (1) without the unanimous
consent of all of the partners, directors or members, as
applicable, has not and will not with respect to itself or to any
other Person in which it has a direct or indirect legal or
beneficial interest (a) seek or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator, custodian
or other similar official for such Person or all or any portion
of such Person's properties, or (b) take any action that might
cause such Person to become insolvent, (2) has and will maintain
its books, records, resolutions and agreements as official
records, (3) has held and will hold its assets in its own name,
(4) has and will maintain its financial statements, accounting
records and other entity documents separate and apart from any
other Person, (5) has not and will not identify its partners,
members or shareholders, or any affiliates of any of them as a
division or part of it.
Specified Properties: As defined in Section 38(b)
hereof.
Taking: Shall mean a temporary or permanent taking by
any Governmental Authority as the result or in lieu or in
anticipation of the exercise of the right of condemnation or
eminent domain, of all or any part of the Trust Estate, or any
interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting a Property or
any part thereof.
Tax Opinion: Shall mean an Opinion of Counsel to the
effect that a contemplated action (a) will not result in any
deemed exchange, pursuant to Section 1001 of the Code, of the
Note; and (b) will not adversely affect the Note's or such other
note's status as indebtedness for federal income tax purposes.
Tenant: Shall mean any Person leasing, subleasing or
otherwise occupying any portion of a Property.
Title Company: Shall mean Commonwealth Land Title
Insurance Company.
Total Loss: Shall mean (i) a casualty, damage or
destruction of a Property, the cost of restoration of which
(calculated in accordance with the provisions of Section 6
hereof) would exceed fifty percent (50%) of the applicable
Allocated Loan Amount, and with respect to which Grantor is not
required, under the applicable Leases to apply Proceeds to the
restoration of such Property or (ii) a permanent Taking of
twenty-five percent (25%) or more of the gross leasable area of a
Property or so much of a Property, in either case, such that it
would be impracticable, in Beneficiary's sole discretion, even
after restoration, to operate such Property as an economically
viable whole and with respect to which the applicable Lease does
not require such restoration.
Transfer: Shall mean sell, assign, convey, transfer,
pledge or otherwise dispose of, or where used as a noun, a sale,
assignment, conveyance, transfer, pledge or other disposition.
Trust Estate: As defined in the Granting Clauses
hereof.
Trustee: As defined in the recitals hereof.
Trustees: Shall mean the Trustee, the Individual
Trustee together with the Jurisdictional Trustee, all separate
trustees and co-trustees appointed as provided in Section 51
hereof.
UCC: As defined in Granting Clause (E) hereof.
U.S. Government Obligations: Any direct obligations of
the United States Government, including, without limitation,
treasury bills, notes and bonds.
Work: As defined in Section 6(b) hereof.
All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein,
the term "financial statements" shall include the notes and
schedules thereto. Unless otherwise specified herein or therein,
all terms defined in this Mortgage shall have the defined
meanings when used in any other Loan Document or in any
certificate or other document made or delivered pursuant thereto.
The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Mortgage shall refer to this
Mortgage as a whole and not to any particular provision of this
Mortgage, and section, schedule and exhibit references are to
this Mortgage unless otherwise specified. The words "includes"
and "including" are not limiting and mean "including without
limitation."
In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including;" the words "to" and "until" each mean "to but
excluding," and the word "through" means "to and including."
References to agreements and other documents shall be
deemed to include all subsequent amendments and other
modifications thereto executed in writing by all of the parties
thereto and, if Beneficiary's consent was required for the
original of any such document, consented to by Beneficiary. All
references in this Mortgage to the plural of any document
described herein shall mean all of such documents collectively.
References to statutes or regulations are to be
construed as including all statutory and regulatory provisions
consolidating, amending, or replacing the statute or regulation.
The captions and headings of this Mortgage are for
convenience of reference only and shall not affect the
construction of this Mortgage.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Grantor represents and warrants to, and covenants and
agrees with, Beneficiary as follows:
(2 Warranty. Grantor owns good, indefeasible and)
insurable fee simple title to the Land and the Improvements and
good, indefeasible and insurable leasehold title to the Ground
Leasehold Estate, subject only to the Permitted Encumbrances.
This Mortgage upon its due execution and proper recordation is
and will remain a valid and enforceable (and, with respect to all
personalty (as to which security interests are governed by the
UCC), upon proper recordation and the filing of a financing
statement) perfected first Lien on and security interest on the
Land, Improvements, the Ground Leasehold Estate and such
personalty subject to the Permitted Encumbrances. Grantor
represents and warrants that none of the Permitted Encumbrances
will affect (i) the ability of Borrower to pay any of its
obligations to any Person as and when due, (ii) the marketability
of title to the Trust Estate, (iii) the fair market value of the
Trust Estate, or (iv) the use or operation of the Trust Estate as
of the Closing Date and thereafter. Grantor will preserve its
fee simple title to the Trust Estate for so long as the Note
remains outstanding and will warrant and defend same and the
validity and priority of the Lien hereof from and against any and
all claims whatsoever other than the Permitted Encumbrances.
(b) This Mortgage and each of the Loan Documents executed
by Grantor, is the legal, valid and binding obligation of
Grantor, enforceable against Grantor in accordance with their
terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws affecting
creditor's rights generally in effect from time to time.
(c) On the date hereof, no portion of the Improvements at
any Property has been materially damaged, destroyed or injured by
fire or other casualty which is not now fully restored or in the
process of being restored;
(d) Grantor has, and will maintain in effect at all times
until the Indebtedness and Obligations are satisfied in full, (i)
all necessary material licenses, permits, authorizations,
registrations and approvals to own, use, occupy and operate each
of the Properties as a shopping center; (ii) full power and
authority to carry on its business at each of the Properties as
currently conducted; and (iii) not received any written notice of
any violation of any such licenses, permits, authorizations,
registrations or approvals that materially impair the value of
the Property for which such notice was given or which would
affect the use or operation of any Property in any material
respect;
(e) As of the date hereof, Grantor has not received any
written notice of any Taking or threatened Taking of any Property
or any portion thereof;
(f) Each Property and the Equipment located on such
Property constitutes all of the real property, equipment and
fixtures currently owned by Grantor or used in the operation of
the business located on such Property;
(g) Each Property has adequate access to public streets,
roads or highways;
(h) Each Property constitutes a separate tax lot, with a
separate tax assessment, independent of any other land or
improvements, except as previously disclosed to Beneficiary in
writing;
(i) All utility services necessary for the operation of
each Property have been connected and are available in adequate
capacities directly from utility lines and without the need for
private easements not presently existing; and
(j) For so long as the Note remains unpaid, Grantor is not
and shall not be an "employee benefit plan" (within the meaning
of Section 3(3) of ERISA) to which ERISA applies and Grantor's
assets do not and will not constitute plan assets.
(k) Grantor is and shall remain a Single Purpose Entity.
3. Payment and Performance of Obligations Secured.
Grantor shall promptly pay when due the principal of and interest
on the Indebtedness and all other payment Obligations secured by
this Mortgage, all in lawful money of the United States of
America, and shall further perform fully and in a timely manner
all Obligations of Grantor. All sums payable by Grantor
hereunder shall be paid without demand, counterclaim, offset,
deduction (except as required by law) or defense. Grantor waives
all rights now or hereafter conferred by statute or otherwise to
any such demand, counterclaim (other than mandatory
counterclaims), setoff, deduction or defense.
4. Negative Covenants. Grantor covenants and agrees
that it shall not:
(a) incur, create or assume any indebtedness for borrowed
money or Transfer or lease the Trust Estate or any interest
therein, except as permitted under Sections 11 and 15 hereof;
(b) engage, directly or indirectly, in any business other
than that of entering into this Mortgage and the other Loan
Documents to which Grantor is a party and the ownership,
management, leasing, construction, development, operation and
maintenance of the Trust Estate for its present and related uses;
(c) make advances or make loans to any Persons or entities
(including Affiliates of Grantor) or hold any investments (other
than Permitted Investments and Cash and Cash Equivalents) under
this Mortgage;
(d) partition any Property;
(e) commingle its assets with the assets of any of its
Affiliates except in connection with the Cash Collateral
Agreement [or the Contribution Agreement];
(f) guarantee any obligations of any Person;
(g) enter into any management agreement for any of the
Properties without Beneficiary's consent;
(h) enter into any agreement for the sale of any asset or
transfer of any interest except as may be permitted hereby;
(i) amend or modify any of its organizational documents
without Beneficiary's consent;
(j) dissolve, wind-up, terminate, liquidate, merge with or
consolidate into another Person, except as expressly permitted
pursuant to this Mortgage;
(k) engage in any activity that would subject it to
regulation under ERISA; or
(l) voluntarily file or consent to the filing of a petition
for bankruptcy, insolvency, reorganization, assignment for the
benefit of creditors or similar proceeding under any Federal or
state bankruptcy, insolvency, reorganization or other similar law
or otherwise seek any relief under any laws relating to the
relief of debts or the protection of debtors generally, without
the unanimous consent of its general partner(s)) (including the
unanimous consent of the directors of the corporate general
partner or shareholders, as the case may be, which at all times
shall include the consent of the Independent Directors).
5. Insurance.
(a) Insurance Coverage Requirements. Grantor shall, at its
sole cost and expense, keep in full force and effect insurance
coverage of the types and minimum limits as follows during the
term of this Mortgage:
(i) Property Insurance. Insurance with respect to the
Improvements and the Building Equipment against any peril
included within the classification "All Risks of Physical Loss"
with extended coverage in amounts at all times sufficient to
prevent Grantor from becoming a co-insurer within the terms of
the applicable policies, but in any event such insurance shall be
maintained in an amount equal to the full insurable value of the
Improvements and the Building Equipment (and must provide
coverage of any additional costs associated with applicable Legal
Requirements), and such policies shall be subject only to
exclusions that are standard and customary for properties
comparable to the applicable Property and acceptable to the
Rating Agencies and Beneficiary. The term "full insurable value"
means the actual replacement cost of the Improvements and the
Building Equipment (without taking into account any depreciation,
and exclusive of excavations, footings and foundations,
landscaping and paving) (but in no event less than 125% of the
applicable Allocated Loan Amount) determined annually by an
insurer, a recognized independent insurance broker or an
Independent Appraiser selected and paid by Grantor and in no
event less than the coverage required pursuant to the terms of
any Lease; provided, however, if the terms of the applicable
insurance policies expressly provide for insurance to be provided
in the amount of the actual replacement cost of the Improvements
and the Building Equipment or such policies contain a replacement
cost endorsement, no such annual determination will be necessary;
(ii) Liability Insurance. Comprehensive general
liability insurance, including bodily injury, contractual injury,
death and property damage liability, and excess and/or umbrella
liability insurance against any and all claims, including all
legal liability that could be imposed upon Beneficiary, to the
extent insurable, and all court costs and attorneys' fees and
expenses, arising out of or connected with the possession, use,
leasing, operation, maintenance or condition of each Property in
such amounts as are generally required by institutional lenders
for properties comparable to the Properties written on a per
occurrence basis with a per occurrence limit of not less than
$1,000,000 and with an aggregate limit of not less than
$5,000,000 per Property;
(iii) Workers' Compensation Insurance. Statutory
workers' compensation insurance (to the extent the risks to be
covered thereby are not already covered by other policies of
insurance maintained by Grantor), with respect to any work by or
for Grantor performed on or about any Property;
(iv) Loss of Rental Value. Loss of "rental value" or
"business interruption" insurance in an amount sufficient to
avoid any co-insurance penalty and to provide Proceeds which will
cover the loss of rents sustained during the period of at least
eighteen (18) months following the date of casualty. Such
policies of insurance shall be subject only to exclusions that
are acceptable to Beneficiary and the Rating Agencies. The term
"rental value" means the sum of (A) the total then ascertainable
Rents payable under the Leases and (B) the total ascertainable
amount of all other amounts to be received by Grantor from third
parties which are the legal obligation of Tenants, reduced to the
extent such amounts would not be received because of Operating
Expenses not incurred during a period of non-occupancy of that
portion of such Property then not being occupied;
(v) Builder's All-Risk Insurance. During any period
of repair or restoration, builder's "all risk" insurance in an
amount equal to not less than the full insurable value of the
applicable Property against such risks (including fire and
extended coverage and collapse of the Improvements), in form and
substance acceptable to Beneficiary.
(vi) Boiler and Machinery Insurance. To the extent
applicable, broad form boiler and machinery insurance (without
exclusion for explosion) covering all boilers or other pressure
vessels, machinery and equipment, if any, located in, on or about
each Property and insurance against loss of occupancy or use
arising from any such breakdown in such amounts as are generally
available at commercially reasonable premiums and are generally
required by institutional lenders for properties comparable to
each Property;
(vii) Flood Insurance. If any Improvement on any
Property is located within an area designated as "flood prone" or
a "special flood hazard area" (as defined under the regulations
adopted under the National Flood Insurance Act of 1968 and the
Flood Disaster Protection Act of 1973), flood insurance if
available, in an amount equal to the lesser of the Allocated Loan
Amount for the applicable Property and the maximum limit of
coverage available with respect to the applicable Property,
acceptable to Beneficiary, provided, however, that if flood
insurance shall be unavailable from private carriers, flood
insurance provided by the federal or state government, if
available;
(viii) FLORIDA PROPERTY ONLY - Windstorm Insurance.
Windstorm coverage with such limits and deductibles as are
generally required by institutional lenders for similar
properties in the geographic area where the Properties are
located, in any event at least equal to the lesser of the
Allocated Loan Amount for the applicable Property and the maximum
limit of coverage available with respect to the applicable
Property. Such coverage shall be placed with one or more
reputable insurers and may insure additional properties on a
pooled risk basis; and
(ix) Other Insurance. At Beneficiary's reasonable
request, such other insurance, including but not limited to
earthquake insurance, with respect to the Trust Estate against
loss or damage of the kinds from time to time customarily insured
against and in such amounts as are generally required by
institutional lenders on loans of similar amounts and secured by
properties comparable to the Properties.
(b) Ratings of Insurers. Grantor will maintain the
insurance coverage described in Section 5(a) above, in all cases,
with one or more domestic primary insurers acceptable to
Beneficiary, having both (x) a claims-paying-ability rating by
Standard & Poor's Ratings Services of not less than "AA" and its
equivalent by any other Rating Agency, and (y) an Alfred M. Best
Company, Inc. ("Best") rating of "A" or better and a financial
size category of not less than IX. All insurers providing
insurance required by this Mortgage shall be authorized to issue
insurance in the state where the Property insured is located.
For the purposes hereof, "Maximum Foreseeable Casualty
Loss" shall mean the estimate of a qualified fire protection
engineer in connection with Grantor's existing insurance package
of the maximum probable casualty loss which would be suffered in
respect of the Improvements and Building Equipment for any
Property as a result of damage caused by the perils covered by
the insurance described in Section 5 (a)(i).
The insurance coverage required under Section 5(a) may
be effected under a blanket policy or policies covering the Trust
Estate and other properties and assets not constituting a part of
the Trust Estate; provided that any such blanket policy shall
specify, except in the case of public liability insurance, the
portion of the total coverage of such policy that is allocated to
the Trust Estate, and any sublimits in such blanket policy
applicable to the Trust Estate, which amounts shall not be less
than the amounts required pursuant to Section 5(a) and which
shall in any case comply in all other respects with the
requirements of this Section 5.
(c) Form of Insurance Policies; Endorsements. All
insurance policies shall be in such form and with such
endorsements and in such amounts satisfactory to Beneficiary (and
Beneficiary shall have the right to approve amounts, form, risk
coverage, deductibles, loss payees and insureds). A certificate
of insurance with respect to all of the above-mentioned insurance
policies has been delivered to Beneficiary and originals or
certified copies of all such policies shall be delivered to
Beneficiary when the same are available and shall be held by
Beneficiary. Grantor shall deliver to Beneficiary annually,
simultaneously with the renewal of the insurance policies
required hereunder, (A) an Officer's Certificate stating that the
insurance policies required to be delivered to Beneficiary
pursuant to this Section 5(c) are maintained with insurers who
comply with the terms of Section 5(b) hereof, setting forth a
schedule describing all premiums required to be paid by Grantor
to maintain the policies of insurance required under this Section
5, and stating that Grantor has paid such premiums. All such
policies shall name Beneficiary as an additional named insured,
shall provide that all Proceeds (except with respect to Proceeds
of general liability and workers' compensation insurance) be
payable to Beneficiary as and to the extent set forth in Section
6 hereof, and shall contain: (i) a standard "non-contributory
mortgagee" endorsement or its equivalent relating, inter alia, to
recovery by Beneficiary notwithstanding the negligent or willful
acts or omissions of Grantor; (ii) a waiver of subrogation
endorsement in favor of Beneficiary; (iii) an endorsement
providing that no policy shall be impaired or invalidated by
virtue of any act, failure to act, negligence of, or violation of
declarations, warranties or conditions contained in such policy
by Grantor, Beneficiary or any other named insured, additional
insured or loss payee, except for the willful misconduct of
Beneficiary knowingly in violation of the conditions of such
policy; (iv) an endorsement providing for a deductible per loss
of an amount not more than that which is customarily maintained
by prudent owners of Comparable Class properties comparable to
and in the general vicinities of the Properties, but in no event
in excess of [$100,000], except in the case of earthquake
coverage, for all applicable Properties, for which such
deductible shall not be in excess of that generally required by
institutional lenders on loans of similar amounts secured by
comparable properties; and (v) a provision that such policies
shall not be cancelled, terminated or expired without at least
thirty (30) days' prior written notice to Beneficiary, in each
instance. Certificates of insurance with respect to all
replacement policies shall be delivered to Beneficiary not less
than ten (10) Business Days prior to the expiration date of any
of the insurance policies required to be maintained hereunder
which certificates shall bear notations evidencing payment of
applicable premiums. Originals (or certified copies) of such
replacement insurance policies shall be delivered to Beneficiary
promptly after Grantor's receipt thereof but in any case within
thirty (30) days after the effective date thereof. If Grantor
fails to maintain and deliver to Beneficiary the certificates of
insurance required by this Mortgage, upon five (5) Business Days'
prior notice to Grantor, Beneficiary may, in accordance with the
provisions of Section 8 hereof, procure such insurance, and all
costs thereof (and interest thereon at the Default Rate) shall be
added to the Indebtedness.
Beneficiary shall not, by the fact of approving,
disapproving, accepting, preventing, obtaining or failing to
obtain any insurance, incur any liability for or with respect to
the amount of insurance carried, the form or legal sufficiency of
insurance contracts, solvency of insurance companies, or payment
or defense of lawsuits, and Grantor hereby expressly assumes full
responsibility therefor and all liability, if any, with respect
thereto.
(d) Compliance with Insurance Requirements. Grantor shall
comply with all Insurance Requirements and shall not bring or
keep or permit to be brought or kept any article upon any of the
Property or cause or permit any condition to exist thereon which
would be prohibited by any Insurance Requirement, or would
invalidate insurance coverage required hereunder to be maintained
by Grantor on or with respect to any part of any Property
pursuant to this Section 5. Notwithstanding anything to the
contrary, it is expressly understood and agreed that any
insurance which Grantor shall cause any Tenant to provide that
shall otherwise be in compliance with all of the terms and
conditions of this Section 5 shall satisfy Grantor's obligations
with respect thereto hereunder.
(e) Separate Insurance. Grantor will not take out separate
insurance contributing in the event of loss with that required to
be maintained pursuant to this Section 5 unless such insurance
complies with this Section 5.
(f) Blanket Policies. Except in the case of public
liability insurance, upon Beneficiary's request, Grantor shall
deliver to Beneficiary an Officer's Certificate setting forth (i)
the number of properties covered by such policy, (ii) the
location by city (if available, otherwise, county) and state of
the properties, (iii) the average square footage of the
properties (or the aggregate square footage), (iv) a brief
description of the typical construction type included in the
blanket policy and (v) such other information as Beneficiary may
reasonably request.
6. Condemnation and Insurance Proceeds.
(a) Grantor will promptly notify Beneficiary in writing
upon obtaining knowledge of (i) the institution of any
proceedings relating to any Taking, or (ii) the occurrence of any
casualty, damage or injury to, any Property or any portion
thereof the restoration of which is estimated by Grantor in good
faith to cost more than the Individual Threshold Amount. In
addition, notice of any casualty, damage, injury or Taking, the
restoration of which is estimated by Grantor in good faith to
cost more than the Individual Threshold Amount, shall set forth
such good faith estimate of the cost of repairing or restoring
such casualty, damage, injury or Taking in reasonable detail if
the same is then available and, if not, as soon thereafter as it
can reasonably be provided.
(b) In the event of any Taking of or casualty or other
damage or injury to any Property, Grantor's rights, titles and
interests in and to all compensation, awards, proceeds, damages,
claims, insurance recoveries, causes and rights of action
(whether accrued prior to or after the date hereof) and payments
which Grantor may receive or to which Grantor may become entitled
with respect to the Trust Estate or any part thereof other than
payments received in connection with any liability or loss of
rental value or business interruption insurance (collectively,
"Proceeds"), in connection with any such Taking of, or casualty
or other damage or injury to, any Property or any part thereof
are hereby assigned to Beneficiary, and shall be paid to,
Beneficiary. Subject to the terms of the Leases, such Proceeds
shall be applied by Beneficiary to prepay the Note in accordance
with the provisions thereof if (i) the Proceeds shall equal or
exceed the Allocated Loan Amount with respect to the applicable
Property, (ii) an Event of Default shall have occurred and be
continuing, (iii) a Total Loss with respect to the applicable
Property shall have occurred, (iv) the Work is not capable of
being completed before the earlier to occur of the date which is
six (6) months prior to the Maturity Date, and the date on which
the business interruption insurance carried by Grantor with
respect to the applicable Property shall expire, (v) the
applicable Property is not capable of being restored
substantially to its condition prior to such Taking or casualty,
or (vi) as of the date of the expiration of the business
interruption insurance carried by Grantor with respect to the
applicable Property, more than twenty percent (20%) of Leases at
the Property have been terminated or have expired since the date
of the Taking, casualty or damage to the Property.
Notwithstanding anything to the contrary set forth in this
Mortgage, however, and excluding situations requiring prepayment
of the Note, to the extent such Proceeds with respect to such
Property do not exceed the greater of $250,000 and ten percent
(10%) of the Allocated Loan Amount, and to the extent such
Proceeds with respect to the Property located at Easton,
Pennsylvania do not exceed $500,000 (each, the "Casualty
Amount"), or, if less than the Casualty Amount but when
aggregated with all other then unapplied Proceeds with respect to
any Property, do not exceed $2,000,000 in the aggregate (the
"Aggregate Casualty Amount"), such Proceeds are to be paid
directly to Grantor to be applied to restoration of the Trust
Estate in accordance with the terms hereof. Subject to the
provisions of this Section 6(b) and Sections 6(d) and 6(g) hereof
(except that Proceeds paid in respect of the insurance described
in Section 6(a)(iv) shall be deposited directly into the
Operating Account (as defined in the Cash Collateral Agreement),
promptly after the occurrence of any damage or destruction to all
or any portion of such Property or a Taking of a portion of such
Property, in either case which shall not constitute a Total Loss,
Grantor shall either cause such Property to be released from the
lien of this Mortgage in accordance with Section 38 hereof, or
shall commence and diligently prosecute to completion, subject to
Excusable Delays, the repair, restoration and rebuilding of such
Property (in the case of a partial Taking, to the extent it is
capable of being restored) (such repair, restoration and
rebuilding are sometimes hereinafter collectively referred to as
the "Work") so damaged, destroyed or remaining after such Taking
in full compliance with all material Legal Requirements and free
and clear of any and all Liens except Permitted Encumbrances; it
being understood, however, that Grantor shall not be obligated to
restore such Property to the precise condition of such Property
prior to any partial Taking of, or casualty or other damage or
injury to such Property, if the Work actually performed, if any,
or failed to be performed, shall have no material adverse effect
on the value of such Property from the value that such Property
would have had if the same had been restored to its condition
immediately prior to such Taking or casualty. Grantor will, in
good faith and in a commercially reasonable manner, file and
prosecute the adjustment, compromise or settlement of any claim
for Proceeds and, subject to Grantor's right to receive the
direct payment of any Proceeds as provided above, and, with
respect to Proceeds from a Total Loss, subject to the provisions
below and subject to the applicable terms of the Leases, will
cause the same to be paid directly to Beneficiary, to be held and
applied in accordance with the provisions of this Mortgage.
Except upon the occurrence and during the continuance of an Event
of Default, Grantor may settle any insurance claim with respect
to Proceeds which does not exceed the Casualty Amount. If an
Event of Default shall have occurred and be continuing, or if
Grantor fails to file and/or prosecute any insurance claim for a
period of thirty (30) Business Days following Grantor's receipt
of written notice from Beneficiary, Grantor hereby irrevocably
empowers Beneficiary, in the name of Grantor as its true and
lawful attorney-in-fact, to file and prosecute such claim
(including settlement thereof) with counsel satisfactory to
Beneficiary and to collect and to make receipt for any such
payment, all at Grantor's expense (including payment of interest
at the Default Rate for any amounts advanced by Beneficiary
pursuant to this Section 6 (b). In the event of (i) a Total Loss
resulting from a casualty, damage or destruction, if either (A)
the cost to repair the Property as estimated by the Independent
Architect would exceed the Casualty Amount and the restoration of
the Property cannot reasonably be completed before the date which
is the later to occur of the date of expiration of any business
interruption insurance or the date of expiration of any Letter of
Credit posted in lieu thereof or in addition thereto and under
such circumstances Grantor is not required under any Lease to
make Proceeds available for restoration of the Property, or (B)
Beneficiary elects not to permit Grantor to restore such Property
or (ii) a Total Loss resulting from a Taking, Grantor shall be
required to comply with the provisions of Section 6(j) below and
Beneficiary shall apply such Proceeds, first toward reimbursement
of Beneficiary's reasonable costs and expenses in connection with
recovery of the Proceeds (as further described below), including,
without limitation, reasonable administrative costs and
inspection fees, and then as required by Section 6(j) hereof.
Any Proceeds remaining after prepayment in part as set forth in
Section 6(j) hereof shall be paid to Grantor or as it may direct
in writing. Whether or not an Event of Default shall have
occurred and be continuing, Beneficiary shall have the right to
approve, such approval not to be unreasonably withheld, any
settlement which might result in any Proceeds in excess of the
Casualty Amount and Grantor will deliver or cause to be delivered
to Beneficiary all instruments reasonably requested by
Beneficiary to permit such approval. Grantor will pay all
reasonable costs, fees and expenses reasonably incurred by
Beneficiary (including all reasonable attorneys' fees and
expenses, the reasonable fees of insurance experts and adjusters
and reasonable costs incurred in any litigation or arbitration),
and interest thereon at the Default Rate to the extent not paid
within five (5) Business Days after delivery of a request for
reimbursement by Beneficiary, in connection with the settlement
of any claim for insurance or Taking Proceeds and seeking and
obtaining of any payment on account thereof in accordance with
the foregoing provisions. If any Proceeds are received by
Grantor and may be retained by Grantor pursuant to this Section
6, such Proceeds shall, until the completion of the related Work,
be held in trust for Beneficiary and shall be segregated from
other funds of Grantor to be used to pay for the cost of the Work
in accordance with the terms hereof, and in the event such
Proceeds exceed the Casualty Amount, such Proceeds shall be
forthwith paid directly to and held by Beneficiary in a
segregated account in trust for Grantor, in each case to be
applied or disbursed in accordance with this Section 6.
(c) In the event that any Proceeds (other than Proceeds
paid with respect to the insurance described in Section 5(a)(iv))
are in excess of the Casualty Amount, then all Proceeds (other
than any portion of any Proceeds paid with respect to the
insurance described in Section 5(a)(iv) which shall be deposited
directly into the Operating Account) shall be paid over to
Beneficiary and shall be applied as follows: first, toward
reimbursement of Beneficiary's or its agent's reasonable costs
and expenses in connection with recovery of the Proceeds and
disbursement of the Proceeds (as further described below),
including, without limitation, reasonable administrative costs
and inspection fees, and then, to the prepayment of the
Indebtedness secured hereby (which prepayment shall be made on
the next Payment Date occurring after an elected or required
prepayment hereunder), without prepayment premium or penalty,
only if:
(i) (A) the amount of the Proceeds is equal to or greater
than the outstanding principal amount of the Note, or
(B) the casualty or Taking occurs on a date which is
less than one hundred eighty (180) days prior to the Maturity
Date (as defined in the Note), or
(C) more than twenty-five percent (25%) of the rentable
area of the applicable Property shall have been the subject of a
casualty or shall have been taken,
or
(ii) such Proceeds were the result of a Taking, and after
restoration is completed, there are excess Proceeds which were
not required to effect such restoration, in which event
prepayment shall be made to the extent of such unneeded Proceeds.
Any excess Proceeds shall be applied to the prepayment of the
Indebtedness secured hereby (which prepayment shall be made on
the next Payment Date occurring after completion of the Work,
without penalty or premium).
(d) Upon the occurrence and during the continuance of an
Event of Default hereunder, or in the event that any Proceeds are
required to be paid to Beneficiary pursuant to subparagraph (b)
above, then all Proceeds while an Event of Default exists, and
any such Proceeds so required to be paid to Beneficiary shall be
paid over to Beneficiary (if not paid directly to Beneficiary)
and shall be applied first toward reimbursement of Beneficiary's
reasonable costs and expenses (plus interest thereon at the
Default Rate to the extent not paid within five (5) Business Days
after delivery of a request for reimbursement by Beneficiary)
actually incurred in connection with recovery of the Proceeds and
disbursement of the Proceeds (as further described below),
including reasonable administrative costs and inspection fees,
and then to be applied or disbursed in accordance with this
Section 6.
Subject to Grantor's rights pursuant to Section 38(b)
to cause a Property to be released from the Lien of this
Mortgage, Grantor shall be obligated to restore, or cause the
applicable Tenant to restore, each Property suffering a casualty
or which has been subject to a partial Taking in accordance with
the provisions of this Section 6, whether or not the Proceeds
shall be sufficient, provided that, if applicable, the Proceeds
shall be made available to Grantor by Beneficiary in accordance
with this Mortgage.
(e) Except as otherwise provided in Section 6(j) below, in
the event that any portion of such Proceeds is applied toward the
repayment of the Indebtedness (in which event Grantor shall not
be obligated to restore pursuant to subparagraph (c) above),
Grantor shall be entitled to obtain from Beneficiary a release
without representation or warranty (in the form provided by
Grantor) of the applicable Property from the Lien and security
interests created by this Mortgage and the other Loan Documents
and a release without representation or warranty (in the form
provided by Grantor) of Grantor from all liability with respect
to the other Loan Documents as they relate to the Property
released from the Lien of this Mortgage, provided that (i) no
Event of Default exists, (ii) Grantor shall comply with the
provisions hereof, and (iii) Grantor pays to Beneficiary the
amount, if any, by which one hundred twenty five percent (125%)
of the Allocated Loan Amount for such Property exceeds the
Proceeds received by Beneficiary and applied to repayment of the
Indebtedness, in which case the Allocated Loan Amount for such
Property shall be reduced to zero. If any Proceeds are applied
to reduce the Indebtedness, Beneficiary shall apply the same in
accordance with the provisions of the Note. In the event that
Proceeds are used for the Work, any excess Proceeds remaining
after completion of such Work shall be paid to Grantor.
(f) Upon the occurrence and during the continuance of an
Event of Default hereunder, all Proceeds shall be paid over to
Beneficiary and shall be applied first toward reimbursement of
Beneficiary's reasonable costs and expenses actually incurred in
connection with recovery of the Proceeds and disbursement of the
Proceeds (as further described below), including, without
limitation, reasonable administrative costs and inspection fees,
and then to the payment or prepayment of the Indebtedness secured
hereby in accordance with Sections 20 and 21.
(g) If Proceeds are not required to be applied towards
payment of the Indebtedness pursuant to the terms hereof, then
Beneficiary shall make the Proceeds which it is holding pursuant
to the terms hereof (after payment of any reasonable expenses
actually incurred by Beneficiary in connection with the
collection thereof plus interest thereon at the Default Rate to
the extent the same are not paid within five (5) Business Days
after request for reimbursement by Beneficiary) available to
Grantor for payment of or reimbursement of Grantor's or the
applicable Tenant's expenses incurred with respect to the Work,
upon the terms and subject to the conditions set forth below and
in Section 6(h) hereof:
(i) at the time of loss or damage or at any time
thereafter while Grantor is holding any portion of the Proceeds,
there shall be no continuing Event of Default hereunder;
(ii) if the estimated cost of the Work (as estimated
by the Independent Architect referred to in clause (iii) below)
shall exceed the Proceeds, Grantor shall, at its option (within a
reasonable period of time after receipt of such estimate) either
deposit with or deliver to Beneficiary (and promptly following
any such deposit or delivery, Grantor shall provide written
notice of same to the Rating Agencies) (A) Cash and Cash
Equivalents, (B) a Letter or Letters of Credit in an amount equal
to the estimated cost of the Work less the Proceeds available, or
(C) such other evidence of Grantor's ability to meet such excess
costs and which is satisfactory to Beneficiary and the Rating
Agencies; and
(iii) Beneficiary shall, within a reasonable period of time
prior to request for initial disbursement, be furnished with an
estimate of the cost of the Work accompanied by an Independent
Architect's certification as to such costs and appropriate plans
and specifications for the Work. The plans and specifications
shall require that the Work be done in a first-class workmanlike
manner at least equivalent to the quality and character of the
original work in the Improvements (provided, however, that in the
case of a partial Taking, the Property restoration shall be done
to the extent reasonably practicable after taking into account
the consequences of such partial Taking), so that upon completion
thereof, the Property shall be at least equal in value and
general utility to the Property prior to the damage or
destruction; it being understood, however, that neither Grantor
shall be obligated to restore such Property to the precise
condition of such Property prior to any partial Taking of, or
casualty or other damage or injury to, such Property, if the Work
actually performed, if any, or failed to be performed, shall have
no material adverse effect on the value of such Property from the
value that such Property would have had if the same had been
restored to its condition immediately prior to such Taking or
casualty. Grantor shall restore all Improvements such that when
they are fully restored and/or repaired, such Improvements and
their contemplated use fully comply with all applicable material
Legal Requirements including zoning, environmental and building
laws, codes, ordinances and regulations.
(d) Disbursement of the Proceeds in Cash or Cash
Equivalents to Grantor shall be made from time to time (but not
more frequently than once in any month) by Beneficiary but only
for so long as no Event of Default shall have occurred and be
continuing, as the Work progresses upon receipt by Beneficiary of
(i) an Officer's Certificate dated not more than ten (10) days
prior to the application for such payment, requesting such
payment or reimbursement and describing the Work performed that
is the subject of such request, the parties that performed such
Work and the actual cost thereof, and also certifying that such
Work and materials are or, upon disbursement of the payment
requested to the parties entitled thereto, will be free and clear
of Liens other than Permitted Encumbrances and (ii) an
Independent Architect's certificate certifying performance of the
Work together with an estimate of the cost to complete the Work.
No payment made prior to the final completion of the Work, except
for payment made to contractors whose Work shall have been fully
completed and from which final lien waivers have been received,
shall exceed ninety-five percent (95%) of the value of the Work
performed and materials furnished and incorporated into the
Improvements from time to time, and at all times the undisbursed
balance of said Proceeds together with all amounts deposited,
bonded, guaranteed or otherwise provided for pursuant to clause
6(d)(ii) above, shall be at least sufficient to pay for the
estimated cost of completion of the Work; final payment of all
Proceeds remaining with Beneficiary shall be made upon receipt by
Beneficiary of a certification by an Independent Architect, as to
the completion of the Work substantially in accordance with the
submitted plans and specifications, final lien releases, and the
filing of a notice of completion and the expiration of the period
provided under the law of the State in which the applicable
Property is located for the filing of mechanic's and
materialmen's liens which are entitled to priority as to other
creditors, encumbrances and purchasers, as certified pursuant to
an Officer's Certificate, and delivery of a certificate of
occupancy with respect to the Work, or, if not applicable, an
Officer's Certificate to the effect that a certificate of
occupancy is not required.
(i) If, after the Work is completed and all costs of
completion have been paid, there are excess Proceeds, then upon
ten (10) days' prior written notice from Grantor to Beneficiary,
provided no Event of Default has occurred and is then continuing,
the Grantor shall (A) have the right to retain the Proceeds if
the initial Proceeds prior to the Work do not exceed the Casualty
Amount, or (B) have the option of directing Beneficiary, if the
Proceeds prior to the Work exceed the Casualty Amount, to either
(1) retain such Proceeds in the Capital Expenditure Reserve
Account to be applied by Grantor to the cost of capital
improvements at any of the Properties, or (2) apply such excess
Proceeds with respect to the Taking of or damage or injury to the
Trust Estate to the payment or prepayment of all or any portion
of the Indebtedness secured hereby without penalty or premium,
provided, however, that any such prepayment shall not reduce any
Allocated Loan Amount.
(j) If (i) there is any casualty as to a Property that
constitutes a Total Loss and Beneficiary elects not to permit
Grantor to restore such Property, or (ii) there is any Taking as
to a Property that constitutes a Total Loss and Beneficiary
elects to apply the Proceeds against the Indebtedness, or (iii)
Grantor is otherwise required to comply with this Section 6(j),
then Grantor, in any such instance, must prepay the Note to the
extent of the Proceeds received up to an amount equal to 125% of
the original Allocated Loan Amount with respect to the relevant
Property without payment of any Prepayment Premium, and the
Allocated Loan Amounts for all other Properties shall be
increased or decreased in the manner provided in the definition
of Allocated Loan Amount.
7. Impositions, Liens and Other Items.
(a) Grantor shall deliver to Beneficiary annually, no later
than fifteen (15) Business Days after the first day of each
fiscal year of Grantor, and shall update as new information is
received, a schedule describing all Impositions payable or
estimated to be payable during such fiscal year attributable to
or affecting the Trust Estate or Grantor. Subject to Grantor's
right of contest set forth in Section 7(c) hereof, as set forth
in the next two sentences, Beneficiary on behalf of Grantor shall
pay all Impositions which are attributable to or affect the Trust
Estate or Grantor, prior to the date such Impositions shall
become delinquent or late charges may be imposed thereon,
directly to the applicable taxing authority with respect thereto.
Beneficiary shall direct the Agent under the Cash Collateral
Agreement to pay to the taxing authority such amounts to the
extent funds in the Mortgage Escrow Account are sufficient to pay
such Impositions. If Grantor has delivered Mortgage Escrow
Security in lieu of maintaining the Mortgage Escrow Account,
Grantor shall either deposit in the Mortgage Escrow Account not
less than three (3) Business Days prior to the date the same are
due an amount sufficient to pay such Impositions, or Beneficiary
shall draw down on the Mortgage Escrow Security in such amount.
Nothing contained in this Mortgage shall be construed to require
Grantor to pay any tax, assessment, levy or charge imposed on
Beneficiary in the nature of a franchise, capital levy, estate,
inheritance, succession, income or net revenue tax.
(b) Subject to its right of contest set forth in Section
7(c) hereof and its rights set forth in Sections 11(c) and 11(d)
hereof, Grantor shall at all times keep the Trust Estate free
from all Liens (other than the Lien hereof and Permitted
Encumbrances) and shall pay when due and payable all claims and
demands of mechanics, materialmen, laborers and others which, if
unpaid, might result in or permit the creation of a Lien on the
Trust Estate or any portion thereof and shall in any event cause
the prompt, full and unconditional discharge of all Liens imposed
on or against the Trust Estate or any portion thereof within
thirty (30) days after receiving written notice of the filing
(whether from Beneficiary, the lienor or any other Person)
thereof. Grantor shall do or cause to be done, at the sole cost
of Grantor, everything reasonably necessary to fully preserve the
first priority of the Lien of this Mortgage against the Trust
Estate subject to the Permitted Encumbrances. Upon the
occurrence of an Event of Default with respect to its Obligations
as set forth in this Section 7, Beneficiary may (but shall not be
obligated to) make such payment or discharge such Lien, and
Grantor shall reimburse Beneficiary on demand for all such
advances pursuant to Section 16 hereof (together with interest
thereon at the Default Rate).
(c) Nothing contained herein shall be deemed to require
Grantor to pay, or cause to be paid, any Imposition, to satisfy
any Lien, or to comply with any Legal Requirement or Insurance
Requirement, so long as Grantor is in good faith, and by proper
legal proceedings, where appropriate, diligently contesting the
validity, amount or application thereof, provided that in each
case, at the time of the commencement of any such action or
proceeding, and during the pendency of such action or proceeding
(i) no Event of Default shall exist and be continuing hereunder,
(ii) Grantor shall keep Beneficiary apprised of the status of
such contest; (iii) if Grantor is not providing security as
provided in clause (vi) below, adequate reserves with respect
thereto are maintained on Grantor's books in accordance with GAAP
or in the Mortgage Escrow Account, (iv) such contest operates to
suspend collection or enforcement as the case may be, of the
contested Imposition or Lien and such contest is maintained and
prosecuted continuously and with diligence or the Imposition or
Lien is bonded, (v) in the case of any Insurance Requirement, the
failure of Grantor to comply therewith shall not impair the
validity of any insurance required to be maintained by Grantor
under Section 5 hereof or the right to full payment of any claims
thereunder, and (vi) in the case of Impositions and Liens in
excess of $250,000 individually, or in the aggregate, during such
contest, Grantor, subject to the terms and conditions of the
applicable Lease, shall provide security in the form required by
Section 6(g)(ii) hereof in an amount equal to 125% of (A) the
amount of Grantor's obligations being contested plus (B) any
additional interest, charge, or penalty arising from such
contest. Notwithstanding the foregoing, the creation of any such
reserves or the furnishing of any bond or other security, Grantor
promptly shall comply with any contested Legal Requirement or
Insurance Requirement or shall pay any contested Imposition or
Lien, and compliance therewith or payment thereof shall not be
deferred, if, at any time the Trust Estate or any portion thereof
shall be, in Beneficiary's reasonable judgment, in imminent
danger of being forfeited or lost or Beneficiary is likely to be
subject to civil or criminal damages as a result thereof. If
such action or proceeding is terminated or discontinued adversely
to Grantor, Grantor shall deliver to Beneficiary reasonable
evidence of Grantor's compliance with such contested Imposition,
Lien, Legal Requirements or Insurance Requirements, as the case
may be.
8. Funds for Taxes and Insurance.
(a) Grantor shall pay into a segregated account (the
"Mortgage Escrow Account"), amounts sufficient to discharge the
obligations of Grantor under Sections 5 and 7 (a) hereof as and
when they become due (such amounts, the "Mortgage Escrow
Amounts"). As of the date hereof, Beneficiary shall initially
require payment into the Mortgage Escrow Account of a sum equal
to one-twelfth of the annual insurance premiums for all insurance
being maintained by Grantor as of the Closing Date. During each
month thereafter, Beneficiary shall require payment with respect
to the annual Mortgage Escrow Amounts of a sum equal to one-
twelfth thereof, so that as each installment of such premiums and
Impositions shall become due and payable, Grantor shall have paid
a sum sufficient to pay the same. If the amount of such premiums
and Impositions has not been definitely ascertained by Grantor at
the time when any such monthly deposits are to be paid,
Beneficiary shall require payment of Mortgage Escrow Amounts
based upon the amount of such premiums and Impositions paid for
the preceding year, subject to adjustment as and when the amount
of such premiums and Impositions are ascertained by Grantor.
(b) At any time, Grantor may elect to replace any Mortgage
Escrow Amounts then being retained by Agent and satisfy its
obligations under this Section 8 by delivery of a Letter of
Credit (which Letter of Credit shall be either an "evergreen"
Letter of Credit or shall not expire until a date two months
after the Maturity Date (as defined in the Note) or Cash and Cash
Equivalents (any such security, "Mortgage Escrow Security") in an
amount reasonably estimated by Grantor to be one-half of the
amount sufficient (including the amount of any remaining Mortgage
Escrow Amounts) to discharge the Impositions and insurance
premiums which shall become due during the twelve (12) month
period immediately after the date of delivery of such Mortgage
Escrow Security (and for each twelve (12) month period thereafter
for so long as Grantor elects to post such security in lieu of
Beneficiary's retention of such amounts). Cash Equivalents shall
have maturities corresponding to the respective due dates of such
obligations. Notwithstanding the foregoing, it shall be a
condition to Grantor's delivery of any Mortgage Escrow Security
(other than Cash) in satisfaction of its obligations under this
Section 8, that Grantor, at its expense, execute, acknowledge and
deliver or cause to be delivered to Beneficiary such additional
security agreements, financing statements and other documents or
instruments including an Opinion of Grantor's Counsel, and take
all such actions which in the reasonable opinion of Beneficiary
or its counsel may be necessary to grant and convey to
Beneficiary a perfected security interest in and to any and all
of the Mortgage Escrow Security.
(c) The Mortgage Escrow Amounts shall be held by Agent
pursuant to the Cash Collateral Agreement (and any Mortgage
Escrow Security posted in lieu thereof pursuant to Section 8(b)
hereof shall be held by Beneficiary), and shall be applied in
accordance with the Cash Collateral Agreement to the payment of
the obligations in respect of which such Mortgage Escrow Amounts
were retained. Upon the occurrence of an Event of Default and
the acceleration of the Note, all or any portion of such Mortgage
Escrow Amounts (or any Mortgage Escrow Security posted in lieu
thereof) may be applied to the Indebtedness in such order or
priority as Beneficiary may elect (subject to Sections 20 and 21
hereof) and Beneficiary may exercise any of its rights or
remedies with respect to same hereunder, at law or in equity. In
the absence of such acceleration, any Mortgage Escrow Amounts
held by Agent (or Mortgage Escrow Security posted with
Beneficiary) that exceed the actual obligations for which they
were retained, shall be held and applied to the next due
obligations or otherwise applied by Beneficiary in accordance
with the terms hereof. Nothing herein contained shall be deemed
to affect any right or remedy of Beneficiary under this Mortgage
or otherwise at law or in equity, to pay any such amount and to
add the amount so paid to the Indebtedness hereby secured. Any
such application of said amounts or any portion thereof to any
Indebtedness secured hereby shall not be construed to cure or
waive any Default or notice of Default hereunder (or invalidate
any act done pursuant to any such Default or notice) until such
amounts have been repaid to Beneficiary by Grantor.
(d) Grantor shall deliver to Beneficiary all tax bills,
bond and assessment statements, statements of insurance premiums,
and statements for any obligations referred to above as soon as
the same are received by Grantor, and Beneficiary shall cause the
same to be paid when due to the extent of Mortgage Escrow Amounts
or Mortgage Escrow Security available therefor. It is expressly
acknowledged and agreed that Beneficiary shall have no obligation
whatsoever to advance from its own funds any amounts in payment
of all or any portion of such obligations.
9. License to Collect Rents. Beneficiary and Grantor
hereby confirm that Beneficiary has granted to Grantor a license
to collect and use the Rents as they become due and payable under
the Leases in accordance with the provisions of the Assignment of
Leases and the Cash Collateral Agreement, until an Event of
Default has occurred and is continuing provided that the
existence of such right shall not operate to subordinate this
assignment of Leases to any subsequent assignment, in whole or in
part by Grantor, and any such subsequent assignment shall be
subject to Beneficiary's rights under this Mortgage. Grantor
further agrees to execute and deliver such assignments of leases
as Beneficiary may from time to time reasonably request in order
to better assure, transfer and confirm to Beneficiary the rights
intended to be granted to Beneficiary with respect thereto. In
accordance with the provisions of the Assignment of Leases, upon
the occurrence and during the continuance of an Event of Default
(1) Grantor agrees that Beneficiary may, but shall not be
obligated to, assume the management of the real property, and
collect the Rents, applying the same upon the Obligations and (2)
Grantor hereby authorizes and directs all tenants, purchasers or
other persons occupying or otherwise acquiring any interest in
any part of the real property to pay the Rents due under the
Leases to Beneficiary upon Beneficiary's request. In the event
Beneficiary actually receives such Rents, after an Event of
Default, any application of the Rents by Beneficiary shall not
constitute a misappropriation of the Rents by Grantor pursuant to
Section 33 hereof. Beneficiary shall have and hereby expressly
reserves the right and privilege (but assumes no obligation) to
demand, collect, sue for, receive and recover the Rents, or any
part thereof, now existing or hereafter made, and apply the same
in accordance with this Mortgage, the Assignment of Leases, and
applicable law.
10. Security Agreement.
(a) Security Intended. Notwithstanding any provision of
this Mortgage to the contrary, the parties intend that this
document constitutes security for the payment and performance of
the Obligations and shall be a "mortgage" or "deed of trust"
under applicable law. If, despite that intention, a court of
competent jurisdiction determines that this document does not
qualify as a "trust deed" or "deed of trust" under applicable
law, then ab initio, this instrument shall be deemed a realty
mortgage under applicable law and shall be enforceable as a
realty mortgage, and Grantor shall be deemed a "mortgagor,"
Beneficiary shall be deemed a "mortgagee," and Trustee shall have
no capacity (but shall be disregarded and all references to
"Trustee" shall be deemed to refer to the "mortgagee" to the
extent not inconsistent with interpreting this instrument as
though it were a realty mortgage). As a realty mortgage,
Grantor, as mortgagor, shall be deemed to have conveyed the
Property ab initio to Beneficiary as mortgagee, such conveyance
as a security to be void upon condition that Grantor pay and
perform all its Obligations. The remedies for any violation of
the covenants, terms and conditions of the agreements herein
contained shall be as prescribed herein or by general law, or, as
to that part of the security in which a security interest may be
perfected under the UCC, by the specific statutory consequences
now or hereafter enacted and specified in the UCC, all at
Beneficiary's sole election.
(b) Fixture Filing. This Mortgage constitutes a financing
statement and, to the extent required under UCC Sub Section 9-
402(f) because portions of the Property may constitute fixtures,
this Mortgage is to be filed in the office where a mortgage for
the Land would be recorded. Beneficiary also shall be entitled
to proceed against all or portions of the Trust Estate in
accordance with the rights and remedies available under UCC Sub
Section 9-501(d). Grantor is, for the purposes of this Mortgage,
deemed to be the Debtor, and Beneficiary is deemed to be the
Secured Party, as those terms are defined and used in the UCC.
Grantor agrees that the Indebtedness and Obligations secured by
this Mortgage are further secured by security interests in all of
Grantor's right, title and interest in and to fixtures,
equipment, and other property covered by the UCC, if any, which
are used upon, in, or about the Trust Estate (or any part) or
which are used by Grantor or any other person in connection with
the Trust Estate. Grantor grants to Beneficiary a valid and
effectual security interest in all of Grantor's right, title and
interest in and to such personal property (but only to the extent
permitted in the case of leased personal property), together with
all replacements, additions, and proceeds. Except for Permitted
Encumbrances, Grantor agrees that, without the written consent of
Beneficiary, no other security interest will be created under the
provisions of the UCC and no lease will be entered into with
respect to any goods, fixtures, equipment, appliances, or
articles of personal property now attached to or used or to be
attached to or used in connection with the Trust Estate except as
otherwise permitted hereunder. Grantor agrees that all property
of every nature and description covered by the lien and charge of
this Mortgage together with all such property and interests
covered by this security interest are encumbered as a unit, and
upon and during the continuance of an Event of Default by
Grantor, all of the Trust Estate, at Beneficiary's option, may be
foreclosed upon or sold in the same or different proceedings or
at the same or different time, subject to the provisions of
applicable law. The filing of any financing statement relating
to any such property or rights or interests shall not be
construed to diminish or alter any of Beneficiary's rights of
priorities under this Mortgage.
11. Transfers, Indebtedness and Subordinate Liens.
Unless such action is permitted by the provisions of this Section
11 or Section 38 hereof, Grantor will not (i) Transfer all or any
part of the Trust Estate, (ii) incur indebtedness for borrowed
money, (iii) mortgage, hypothecate or otherwise encumber or grant
a security interest in all or any part of the Trust Estate, (iv)
permit any transfer of any interest in Grantor (except as set
forth in clause (b) of this Section 11), or (iv) file a
declaration of condominium with respect to any Property. Grantor
shall deliver to Beneficiary written notice pursuant to the
provisions of Section 26 hereof of any such Transfer permitted
pursuant to the provisions of this Section 11 or Section 15
hereof.
In connection with any Transfer or any series of
Transfers that affects (on a cumulative basis) more than 10% of
the value of the Trust Estate, a Tax Opinion and a
Nondisqualification Opinion shall be furnished to Beneficiary.
(a) Sale of the Trust Estate. Grantor may transfer or
dispose of Building Equipment which is being replaced or which is
no longer necessary in connection with the operation of a
Property free from the Lien of this Mortgage provided that such
transfer or disposal will not materially adversely affect the
value of the Trust Estate taken as a whole, will not materially
impair the utility of such Property, and will not result in a
reduction or abatement of, or right of offset against, the Rents
payable under any Lease, in either case as a result thereof, and
provided that any new Building Equipment acquired by Grantor (and
not so disposed of) shall be subject to the Lien of this
Mortgage. Beneficiary shall, from time to time, upon receipt of
an Officer's Certificate requesting the same and confirming
satisfaction of the conditions set forth above, execute a written
instrument in form reasonably satisfactory to Beneficiary to
confirm that such Building Equipment which is to be, or has been,
sold or disposed of is free from the Lien of this Mortgage.
(b) Transfer of Interests in Grantor. Notwithstanding
anything contained herein to the contrary, Beneficiary's consent
shall not be required with respect to Transfers of direct or
indirect beneficial interests in Grantor, provided that (i) no
Event of Default shall have occurred and be continuing, (ii)
Grantor (or the transferor of such interest) shall deliver notice
thereof to Beneficiary and the Rating Agencies at least fifteen
(15) Business Days prior to the effective date of such Transfer,
(iii) Grantor shall remain a Single Purpose Entity, (iv) no
transfer of limited partner, non-managing member or shareholder
interests shall result in any one Person (or any group of
Affiliates) owning, directly or indirectly, 50% or more of the
beneficial ownership interests of Grantor, and (v) Mark Centers
Limited Partnership shall at all times directly or indirectly own
not less than 51% of the beneficial interests in Grantor, and if
Grantor shall be a partnership, all general partners thereof
shall be wholly-owned subsidiaries of Mark Centers Trust. If 10%
or more of direct beneficial interests in Grantor are Transferred
or if any Transfer shall result in a Person or a group of
Affiliates acquiring more than a 50% interest as set forth above,
Grantor shall deliver or cause to be delivered to the Rating
Agencies and Beneficiary (x) an Opinion of Counsel addressed to
the Rating Agencies and Beneficiary and dated as of the date of
the Transfer to the effect that in a properly presented case, a
bankruptcy court in a case involving such transferee, or any
Affiliate thereof, would not disregard the corporate or
partnership forms of such entity, their Affiliates and/or their
partners, as the case may be, so as to consolidate the assets and
liabilities of such entity or entities and/or their Affiliates
with those of Grantor or their respective general partners, and
(y) an Officer's Certificate certifying that such Transfer is not
an Event of Default.
(c) Indebtedness. Grantor shall not incur, create or
assume any Debt or incur any liabilities without the consent of
Beneficiary; provided, however, that if no Event of Default shall
have occurred and be continuing, Grantor may, without the consent
of Beneficiary, incur, create or assume any or all of the
following indebtedness (collectively, "Permitted Debt"):
(i) the Note and the other obligations,
indebtedness and liabilities specifically provided for in
any Loan Document and secured by this Mortgage and the other
Loan Documents;
(ii) amounts, not secured by Liens on the Trust
Estate not to exceed $2,296,490 [5% of Loan Amount] (other
than liens (A) being properly contested in accordance with
the provisions of this Mortgage, (B) for outstanding real
estate taxes being reserved in accordance with Section 8
hereof and (C) for capital expenditures being reserved in
accordance with Section 48(b) hereof), payable by or on
behalf of Grantor for or in respect of the operation of the
Trust Estate in the ordinary course of operating Grantor's
business, provided that (but subject to the terms of the
next sentence) each such amount shall be paid within sixty
(60) days following the date on which each such amount was
incurred. Nothing contained herein shall be deemed to
require Grantor to pay any amount, so long as Grantor is in
good faith, and by proper legal proceedings, diligently
contesting the validity, amount or application thereof,
provided that in each case, at the time of the commencement
of any such action or proceeding, and during the pendency of
such action or proceeding (i) no Event of Default shall
exist and be continuing hereunder, (ii) adequate reserves
with respect thereto are maintained on the books of Grantor
in accordance with GAAP (as determined by the Independent
Accountant), and (iii) such contest operates to suspend
collection or enforcement, as the case may be, of the
contested amount and such contest is maintained and
prosecuted continuously and with diligence. Notwithstanding
anything set forth herein, in no event shall Grantor be
permitted under this provision to enter into a note or other
instrument for borrowed money; and
(iii) amounts, not secured by Liens on the Trust
Estate (other than liens being properly contested in
accordance with the provisions of this Mortgage), payable or
reimbursable to any Tenant on account of work performed at a
Property by such Tenant or for costs incurred by such Tenant
in connection with its occupancy of space in the Property,
including for tenant improvements (provided, however, that
notwithstanding the foregoing, in no event shall Grantor be
permitted under this provision to enter into a note or other
instrument for borrowed money).
(d) Additional Permitted Transfers. Notwithstanding the
above provisions of this Section 11, Grantor may, without the
consent of Beneficiary, (i) make immaterial transfers of portions
of a Property to Governmental Authorities for dedication or
public use (subject to the provisions of Section 6 hereof) or,
portions of such Property to third parties, including owners of
outparcels, or other properties for the purpose of erecting and
operating additional structures whose use is integrated with the
use of such Property, (ii) grant easements, restrictions,
covenants, reservations and rights of way in the ordinary course
of business for access, water and sewer lines, telephone and
telegraph lines, electric lines or other utilities or for other
similar purposes or amend the Operating Agreements, and (iii)
transfer or ground lease to a retail or other compatible user (by
conveyance, ground lease or otherwise) one or more pads subject
to existing leases, subject, however, to written reaffirmation by
the Rating Agencies that such transfer or ground lease shall not
adversely affect the then ratings of any securities backed in
part by this Mortgage, provided that no such transfer, conveyance
or encumbrance set forth in the foregoing clauses (i), (ii), and
(iii) shall materially impair the utility and operation of the
applicable Property or materially adversely affect the value of
the applicable Property taken as a whole. In addition, it shall
be a condition to any transfer set forth in clauses (iii), or
(iv) that Grantor shall deliver to Beneficiary and the Rating
Agencies an Opinion of Counsel that the applicable Property has
been subdivided (to the extent required by law) and that the
Property, after any such transfer, shall be in compliance with
all laws, Leases, and Operating Agreements and that such transfer
shall not cause an Event of Default to occur. If Grantor shall
receive any net proceeds in connection with any such transfer or
other conveyance, Grantor shall have the right to use any such
proceeds in connection with any Alterations performed in
connection with, or required as a result of, such conveyance.
Except as provided below with respect to any Taking, the amount
of any net proceeds received by Grantor in excess of the cost of
such Alterations shall be deposited in the Capital Expenditure
Reserve Account (which amounts shall be in addition to, and not
in lieu of, amounts otherwise required to be deposited pursuant
to Section 48(b) hereof, and shall be available to Grantor for
use in performing any further or other Alterations or with
respect to the Properties. Any amounts held in such account
shall be invested in accordance with [Section 3(j)] of the Cash
Collateral Agreement. Any amounts received by Grantor pursuant
to clause (v) shall be paid to Beneficiary upon no less than
thirty (30) days notice for application in prepayment of the Note
in accordance with Section 5 thereof, together with any
applicable prepayment premium. In connection with any transfer,
conveyance or encumbrance permitted pursuant to this Section
11(d) Beneficiary shall execute and deliver any instrument
reasonably necessary or appropriate, in the case of the transfers
referred to in clauses (i), (iii) and (iv) above, to release the
portion of a Property affected by such Taking or such transfer
from the Lien of this Mortgage or, in the case of clause (ii)
above, to subordinate the Lien of this Mortgage to such
easements, restrictions, covenants, reservations and rights of
way or other similar grants by receipt by Beneficiary of:
(i) a copy of the instrument of transfer; and
(ii) an Officer's Certificate stating (x) with respect to
any Transfer, the consideration, if any, being paid for the
Transfer and (y) that such Transfer does not materially impair
the utility and operation of the affected Property or materially
reduce its value.
In addition, in the case of a release pursuant to clauses (iii)
and (iv) above, Grantor shall deliver to Beneficiary a
Nondisqualification Opinion.
All Taking Proceeds shall be applied in accordance with
the provisions of Section 6 hereof.
(e) Not less than fifteen (15) Business Days prior to the
closing of any transaction subject to the provisions of this
Section 11 or of any transfer of a ten percent (10%) direct or
indirect beneficial interest in Grantor or of any transfer that
shall result in a Person acquiring a greater than 50% interest in
Grantor or of any transfer that shall result in a Person that had
a greater than 50% interest in Grantor having less than a 50%
interest in Grantor, Grantor shall deliver to Beneficiary and the
Rating Agencies (i) an Officer's Certificate describing the
proposed transaction and stating that such transaction is
permitted by this Section 11, together with any appraisal or
other documents upon which such Officer's Certificate is based,
and (ii) an Opinion of Counsel to the transferee, addressed to
the Rating Agencies and Beneficiary and dated as of the date of
the Transfer, to the effect that, in a properly presented case, a
bankruptcy court in a case involving such transferee would not
disregard the corporate or partnership form of such transferee so
as to consolidate the assets and liabilities of such transferee
with those of Grantor or their respective general partners. In
addition, Grantor shall provide Beneficiary and the Rating
Agencies with copies of executed deeds, assignments of Direct
Beneficial Owner interests in Grantor, mortgages or other similar
closing documents within ten (10) days after such closing.
12. Maintenance of Trust Estate; Alterations;
Inspection; Utilities.
(a) Maintenance of Trust Estate. Grantor shall keep and
maintain the Trust Estate and every part thereof in good
condition and repair, subject to ordinary wear and tear, and,
subject to Excusable Delays and the provisions of this Mortgage
with respect to damage or destruction caused by casualty events
or Takings, shall not permit or commit any waste, impairment, or
deterioration of any portion of the Trust Estate in any material
respect. Grantor further covenants to do all other acts which
from the character or use of the Trust Estate may be reasonably
necessary to protect the security hereof, the specific
enumerations herein not excluding the general. Grantor shall not
remove or demolish any Improvement on any Property except as the
same may be necessary in connection with an Alteration or a
restoration in connection with a Taking or casualty in accordance
with the terms and conditions hereof or in order to make portions
of the Property suitable for occupancy by Tenants.
(b) No Changes in Use. Except as may be necessary in
connection with an Alteration permitted by Section 12(c) hereof,
Grantor shall not make any changes or allow any changes to be
made in the nature of the use of any Property or any part thereof
or initiate or take any action in furtherance of any change in
any zoning or other land use classification affecting all or any
portion of a Property.
(c) Conditions to Alteration. Provided that no Event of
Default shall have occurred and be continuing hereunder, Grantor
shall have the right, without Beneficiary's consent, to undertake
any alteration, improvement, demolition or removal of any
Property or any portion thereof (any such alteration,
improvement, demolition or removal, an "Alteration") so long as
(i) Grantor provides Beneficiary with prior written notice of any
Material Alteration, and (ii) any Alteration is undertaken in
accordance with the applicable provisions of this Mortgage and
the other Loan Documents, is not prohibited by any relevant
Operating Agreements and the Leases and shall not upon completion
(giving credit to rent and other charges attributable to Leases
executed upon such completion) materially adversely (A) affect
the value, use or operation of such Property taken as a whole or
(B) reduce the Net Operating Income for such Property from the
level available immediately prior to commencement of such
Alteration. Any Material Alteration with respect to any one
Property shall be conducted under the supervision of an
Independent Architect and no such Material Alteration shall be
undertaken until five (5) Business Days after there shall have
been filed with Beneficiary, for information purposes only and
not for approval by Beneficiary, detailed plans and
specifications and cost estimates therefor, prepared by such
Independent Architect, as well as an Officer's Certificate
stating that such Alteration will involve an estimated cost of
more than (I) the greater of the Individual Threshold Amount with
respect to Alterations being undertaken at a single Property at
such time, or (II) the Aggregate Alteration Threshold Amount for
Alterations at all the Properties. Such plans and specifications
may be revised at any time and from time to time by such
Independent Architect provided that material revisions of such
plans and specifications are filed with Beneficiary, for
information purposes only. All work done in connection with any
Alteration shall be performed with due diligence in a good and
workmanlike manner, all materials used in connection with any
Alteration shall not be less than the standard of quality of the
materials currently used at such Property and all materials used
shall be in accordance with all applicable material Legal
Requirements and Insurance Requirements.
(c) Costs of Alteration. Notwithstanding anything to the
contrary contained in Section 12(c) hereof, no Material
Alteration nor any Alteration which when aggregated with all
other Alterations (other than Material Alterations) then being
undertaken by Grantor (exclusive of Alterations being directly
paid for by Tenants) at the Properties exceeds the Aggregate
Alteration Threshold Amount, shall be performed by or on behalf
of Grantor unless Grantor shall have delivered to Beneficiary
Cash and Cash Equivalents and/or a Letter of Credit as security
in an amount not less than the estimated cost (exclusive of costs
to be funded from amounts held in any Account) of the Material
Alteration or the Alterations in excess of the Alteration
Threshold Amount (as set forth in the Independent Architect's
written estimate referred to above). In addition to payment or
reimbursement from time to time of Grantor's expenses incurred in
connection with any Material Alteration or any such Alteration,
the amount of such security shall be reduced on any given date to
the Independent Architect's written estimate of the cost to
complete the Material Alterations or the Alterations (including
any retainages), free and clear of Liens, other than Permitted
Encumbrances. Costs which are subject to retainage (which in no
event shall be less than 5%) shall be treated as due and payable
and unpaid from the date they would be due and payable but for
their characterization as subject to retainage. In the event
that any Material Alteration or Alteration shall be made in
conjunction with any restoration with respect to which Grantor
shall be entitled to withdraw Proceeds pursuant to Sections 6(g)
and 6(h) hereof, the amount of the Cash and Cash Equivalents
and/or Letter of Credit to be furnished pursuant hereto need not
exceed the aggregate cost of such restoration and such Material
Alteration or Alteration (as estimated by the Independent
Architect), less the sum of the amount of any Proceeds which
Grantor may be entitled to withdraw pursuant to Sections 6(g)and
6(h) hereof and which are held by Beneficiary in accordance with
Section 6 hereof. Payment or reimbursement of Grantor's expenses
incurred with respect to any Material Alteration or any such
Alteration shall be accomplished upon the terms and conditions
specified in Sections 6(g) through 6(h) hereof. At any time
after substantial completion of any Material Alteration or any
such Alteration in respect whereof Cash and Cash Equivalents
and/or a Letter of Credit was deposited pursuant hereto, the
whole balance of any Cash and Cash Equivalents so deposited by
Beneficiary and then remaining on deposit (together with earnings
thereon), as well as all retainages, may be withdrawn by Grantor
and shall be paid by Beneficiary to Grantor, and any other Cash
and Cash Equivalents and/or a Letter of Credit so deposited or
delivered shall, to the extent it has not been called upon,
reduced or theretofore released, be released to Grantor, within
ten (10) days after receipt by Beneficiary of an application for
such withdrawal and/or release together with an Officer's
Certificate, and signed also (as to the following clause (i)) by
the Independent Architect, setting forth in substance as follows:
(i) that the Material Alteration or Alteration in respect
of which such Cash and Cash Equivalents and/or a Letter of Credit
was deposited has been substantially completed in all material
respects in accordance with any plans and specifications therefor
previously filed with Beneficiary under Section 12(c) hereof and
that, if applicable, a certificate of occupancy has been issued
with respect to such Material Alteration or Alteration by the
relevant Governmental Authority(ies) or, if not applicable, that
a certificate of occupancy is not required; and
(ii) that to the knowledge of the certifying Person all
amounts which Grantor is or may become liable to pay in respect
of such Material Alteration or Alteration through the date of the
certification have been paid in full or adequately provided for
or are being contested in accordance with Section 7(c) hereof and
that lien waivers have been obtained from the general contractor
and major subcontractors performing such Material Alterations or
Alterations (or such waivers are not customary and reasonably
obtainable by prudent managers in the area where such Property is
located).
(e) Right to Inspect. Beneficiary and any Persons
authorized by it may at all reasonable times and upon reasonable
notice enter and examine such Property and may inspect all work
done, labor performed and materials furnished in and about such
Property subject in all instances to the rights of Tenants under
Leases. Beneficiary shall have no duty to make any such
inspection and shall have no liability or obligation for making
(except for its negligence or willful misconduct) or not making
any such inspection.
13. Legal Compliance. (a) Grantor and the Trust
Estate and the use thereof materially comply with all Legal
Requirements (as defined below). Grantor represents and warrants
that, as of the date hereof, it has not received notice of any
violation of any Legal Requirement that remains outstanding.
Subject to Grantor's right to contest pursuant to Section 7(c)
hereof, Grantor shall comply with all present and future laws,
statutes, codes, ordinances, orders, judgments, decrees,
injunctions, rules, regulations and requirements, and
irrespective of the nature of the work to be done, of every
Governmental Authority including, without limitation,
Environmental Laws, consumer protection laws and all covenants,
restrictions and conditions now or hereafter of record which may
be applicable to it or to any Property and the Building Equipment
thereon, or to the use, manner of use, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction of
any Property and the Building Equipment thereon including,
without limitation, building and zoning codes and ordinances
(collectively, the "Legal Requirements"), except where the
failure is not reasonably likely to have a Material Adverse
Effect.
(b) Grantor currently holds all certificates of
occupancy, licenses, registrations, permits, consents, franchises
and approvals of any Governmental Authority which are necessary
for Grantor's ownership and operation of the Properties or which
are necessary for the conduct of Grantor's business thereon. All
such certificates of occupancy, licenses, registrations, permits,
consents, franchises and approvals are current and will be kept
current and in full force and effect.
14. Books and Records, Financial Statements, Reports
and Other Information.
(a) Books and Records. Grantor will keep and maintain
on a fiscal year basis proper books and records separate from any
other Person, in which accurate and complete entries shall be
made of all dealings or transactions of or in relation to the
Note, the Trust Estate and the business and affairs of Grantor
relating to the Trust Estate, in accordance with GAAP.
Beneficiary and its authorized representatives shall have the
right at reasonable times and upon reasonable notice to examine
the books and records of Grantor relating to the operation of the
Trust Estate and to make such copies or extracts thereof as
Beneficiary may reasonably require.
(b) Financial Statements.
(i) Quarterly Reports. Not later than forty-five
(45) days following the end of each calendar quarter (other than
the fourth (4th) quarter of any calendar year), Grantor will
deliver to Beneficiary (with a copy to the Rating Agencies)
unaudited financial statements, internally prepared, in
accordance with GAAP, consistently applied, including a balance
sheet as of the end of such quarter, and a statement of revenues
and expenses through the end of such quarter, a statement of Net
Operating Income for such quarter, and, only upon the request of
either the Rating Agencies or Beneficiary, a statement of profits
and losses as to each Property. Such statements for each quarter
shall be accompanied by an Officer's Certificate certifying to
the best of the signer's knowledge, (A) that such statements
fairly represent the financial condition and results of
operations of Grantor in accordance with GAAP consistently
applied, (B) that as of the date of such Officer's Certificate,
no Default exists under this Mortgage, the Note or any other Loan
Document or, if so, specifying the nature and status of each such
Default and the action then being taken by Grantor or proposed to
be taken to remedy such Default, (C) the Debt Service Coverage
Ratio for the preceding calendar quarter and calendar year, and
(D) that as of the date of each Officer's Certificate, no
litigation exists involving Grantor or the Trust Estate in which
the amount involved is $100,000 or more, or, if so, specifying
such litigation and the actions being taking in relation thereto
in accordance with Section 23 hereof. Such financial statements
shall contain such other information as shall be reasonably
requested by Beneficiary for purposes of calculations to be made
by Beneficiary pursuant to the terms hereof.
(ii) Annual Reports. Not later than ninety (90)
days after the end of each fiscal year of Grantor's operations,
Grantor will deliver to Beneficiary (with a copy to the Rating
Agencies) audited financial statements certified by an
Independent Accountant in accordance with GAAP consistently
applied, including a balance sheet as of the end of such year, a
statement of Net Operating Income for the year and for the fourth
quarter thereof and a statement of revenues and expenses for such
year, and stating in comparative form the figures for the
previous fiscal year, as well as the supplemental schedule of net
income or loss presenting the net income or loss for each
Property and occupancy statistics for each Property. Such annual
financial statements shall also be accompanied by an Officer's
Certificate in the form required pursuant to Section 14(b)
hereof.
(c) Leasing Reports. (i) Monthly Reports. Not
later than twenty (20) days after the end of each month, Grantor
will deliver to Beneficiary (with a copy to the Rating Agencies)
a true and complete rent roll for each Property.
(ii) Quarterly Reports. Not later than
forty-five (45) days after the end of each fiscal quarter of
Grantor's operations, Grantor will deliver to Beneficiary (with a
copy to the Rating Agencies) a true and complete rent roll for
each Property (and aggregating the occupancy rate with respect
to all the Properties), dated as of the last month of such fiscal
quarter, showing the percentage of gross leasable area of each
Property (and in the aggregate) leased as of the last day of the
preceding calendar quarter, the percentage of lease roll-overs
for each Property (and in the aggregate) for the preceding
calendar quarter, a summary of new lease signings (including
tenant name, square footage occupied and designation of the
tenant's operations as national, regional or local) and lease
terminations for the preceding calendar quarter, the current
annual rent for each Property, the expiration date of each lease,
the various options, if any, available to the tenant with respect
to renewal (including the amount of the rent in the event of
renewal), whether to Grantor's knowledge any portion of the
Property has been sublet, and if it has, the name of the
subtenant, and such rent roll shall be accompanied by an
Officer's Certificate certifying that such rent roll is true,
correct and complete in all respects as of its date and stating
whether Grantor, within the past three months, has issued a
notice of default with respect to any Lease which has not been
cured and the nature of such default.
(d) Capital Expenditures Summaries. Grantor shall,
within forty-five (45) days after the end of each calendar year
during the term of the Notes, deliver to Beneficiary and the
Rating Agencies an annual summary of any and all capital
expenditures made at each Property during the prior twelve (12)
month period.
(e) Other Information. Grantor will, promptly after
written request by Beneficiary or the Rating Agencies, furnish or
cause to be furnished to Beneficiary, in such manner and in such
detail as may be reasonably requested by Beneficiary, such
reasonable additional information as may be reasonably requested
by Beneficiary with respect to the Trust Estate.
15. Compliance with Leases and Agreements.
(a) Leases and Operating Agreements. The Leases and
the Operating Agreements, if any, are in full force and effect.
Grantor has neither given to, nor received any notice of default
from, any party to any of the Operating Agreements, if any, or
any Lease which remains uncured. To the best of Grantor's
knowledge, except as set forth in estoppel certificates delivered
to Beneficiary and the Rating Agencies prior to the date hereof,
no events or circumstances exist which with or without the giving
of notice, the passage of time or both, may constitute a default
under any of the Operating Agreements or the Leases on the part
of Grantor, or party thereunder. Grantor has complied with and
performed all of its material construction, improvement and
alteration obligations with respect to each Property required
under the Operating Agreements and the Leases. Grantor will
promptly after receipt thereof deliver to Beneficiary a copy of
any notice received with respect to the Operating Agreements and
the Leases, claiming that Grantor is in default in the
performance or observance of any of the material terms, covenants
or conditions of any of the Operating Agreements or the Leases.
(b) New Leases. Grantor may, at all times, lease to
any Person space within each Property in a manner consistent with
other Comparable Class properties comparable to the applicable
Property and then current market conditions existing in the
applicable market area in which such Property is located, and
otherwise in accordance with this Mortgage. Each Lease entered
into after the date hereof (including the renewal or extension on
or after the date hereof of any Lease entered into prior to the
date hereof if the rent payable during such renewal or extension,
or a formula or other method to compute such rent, is not
provided for in such Lease (such a renewal or extension a
"Renewal Lease")) (A) shall provide for payment of rent and all
other material amounts payable thereunder at rates at least equal
to the fair market rental value (taking into account the type and
creditworthiness of the tenant, the length of tenancy, free rent
periods and all other concessions to be granted to the tenant by
the landlord thereunder, and the location and size of the unit so
rented), as of the date such Lease is executed by Grantor, of the
space covered by such Lease or Renewal Lease for the term
thereof, including any renewal options, and (B) shall not contain
any provision whereby the rent payable thereunder would be based,
in whole or in part, upon the net income or profits derived by
any Person from the Property (provided, however, that it may
contain a provision in which a portion of rent may be payable
based on a percentage of gross income), and (C) shall not
prevent Proceeds from being held and disbursed by Beneficiary in
accordance with the terms hereof, and (D) shall not entitle any
tenant to receive and retain Proceeds except those that may be
specifically awarded to it in condemnation proceedings because of
the Taking of its trade fixtures and its leasehold improvements
which have not become part of the realty and such business loss
as tenant may specifically and separately establish. Grantor may
not, without the consent of Beneficiary, amend, modify or waive
the provisions of any Lease or terminate, reduce rents under or
shorten the term of any Lease (x) in any manner which would have
a material adverse effect on the applicable Property taken as a
whole, or (y) affecting 15,000 or more rentable square feet.
Grantor shall deliver irrevocable written instructions, in the
form attached to the Cash Collateral Agreement as Exhibit B, to
each Tenant under each Lease to deposit all Rents (whether by
check or wire transfer) when due directly into the Operating
Account.
(c) No Default Under Leases. Grantor shall (i)
promptly perform and observe all of the material terms, covenants
and conditions required to be performed and observed by Grantor
under the Leases and the Operating Agreements, if the failure to
perform or observe the same would materially and adversely affect
the value of any Property; (ii) exercise, within fifteen (15)
Business Days after a written request by Beneficiary, any right
to request from the Tenant under any Lease or the party to any
Operating Agreement a certificate with respect to the status
thereof; and (iii) not collect any of the Rents under the Leases
more than one (1) month in advance (except that Grantor may
collect such security deposits as are permitted by Legal
Requirements and are commercially reasonable in the prevailing
market and collect other charges in accordance with the terms of
each Lease).
(d) Subordination, Non-Disturbance and Attornment.
All Leases entered into by Grantor after the date hereof, if any,
shall be subject and subordinate to this Mortgage; provided that,
Beneficiary shall enter into, and, if required by applicable law
to provide constructive notice, record in the county where the
subject Property is located, a subordination, attornment and non-
disturbance agreement, in form and substance substantially
similar to the form attached hereto as Exhibit C (a
"Nondisturbance Agreement"), with any Tenant entering into a
Lease after the date hereof or, within ten (10) Business Days
after written request therefor by Grantor, with any other Tenant
under any Lease or prospective Lease (other than a Lease to an
Affiliate of Grantor) existing on the date hereof or made or to
be made in accordance with the provisions of this Section 15,
provided that, with respect to any Lease entered into after the
date hereof, such request is accompanied by an Officer's
Certificate stating that such Lease complies in all respects with
this Section 15. All reasonable costs and expenses of
Beneficiary in connection with the negotiation, preparation,
execution and delivery of any Nondisturbance Agreement including,
without limitation, reasonable attorneys' fees and disbursements
shall be paid by Grantor. Beneficiary shall enter into a
Nondisturbance Agreement or an agreement in any other form
reasonably requested by such Tenant, provided that the same does
not materially increase the obligations or liabilities of
Beneficiary from what the same would have been under the form of
Nondisturbance Agreement attached hereto.
(e) Security Deposits. On the Closing Date, Grantor
shall deposit all security deposits required under the Leases,
with interest thereon, if any, into the Security Deposit Account
(as defined in the Cash Collateral Agreement). For each Lease
entered into after the date hereof (including Renewal Leases),
Grantor shall deliver irrevocable written instructions to each
Tenant to deposit the security deposit required under the Lease,
if any, directly into the Security Deposit Account. Within five
(5) Business Days after receipt of an Officer's Certificate
stating that, pursuant to the terms of the particular Lease or
upon termination of the Lease as provided thereunder, the
security deposit shall be released to the Tenant thereunder,
Beneficiary will instruct Agent to disburse funds in the amount
of the Tenant's security deposit from the Security Deposit
Account directly to Tenant.
16. Beneficiary's Right to Perform. Upon the
occurrence and during the continuance of an Event of Default with
respect to the performance of any of the Obligations contained
herein, Beneficiary may, without waiving or releasing Grantor
from any Obligation or Default under this Mortgage, but shall not
be obligated to, at any time perform the same, and the cost
thereof, with interest at the Default Rate from the date of
payment by Beneficiary to the date such amount is paid by
Grantor, shall immediately be due from Grantor to Beneficiary and
the same shall be secured by this Mortgage and shall be a Lien on
the Trust Estate prior to any right, title to, interest in or
claim upon the Trust Estate attaching subsequent to the Lien of
this Mortgage (subject to the provisions of Section 11(d)
hereof). No payment or advance of money by Beneficiary under
this Section 16 shall be deemed or construed to cure Grantor's
Default or waive any right or remedy of Beneficiary hereunder.
17. Grantor's Existence; Organization and Authority.
For so long as this Mortgage remains of record with respect to
any of the Properties, Grantor shall do all things necessary to
preserve and keep in full force and effect its existence, rights
and privileges as a limited partnership and its right to own
property or transact business in all states in which the
Properties are located. For so long as any portion of the
Indebtedness shall remain outstanding, Grantor shall do all
things necessary to continue to be, a Single Purpose Entity
(including without limitation, ensuring that each general partner
continues as a Single Purpose Entity), and shall prevent any
general partner of Grantor from amending such general partner's
articles of incorporation or bylaws, or other formation
documents, in any manner that would enable such general partner
to expand Grantor's business purposes beyond those specified in
such documents as of the date hereof. Grantor hereby represents
and warrants that each of Mark M.P.N.M., Limited Partnership, an
Alabama limited partnership; Mark New Smyrna Limited Partnership,
a Florida limited partnership; Mark Park Plaza, L.P., a Georgia
limited partnership; Mark Troy, L.P., a New York limited
partnership; Mark Martintown, L.P., a South Carolina limited
partnership; Mark Kings Fairground, L.P., a Virginia limited
partnership; Mark Shillington, L.P., a Pennsylvania limited
partnership; Mark 25th Street, L.P., a Pennsylvania limited
partnership; Mark Three Realty, L.P., a Pennsylvania limited
partnership and Mark Four Realty, L.P., a Pennsylvania limited
partnership (i) is a duly organized and validly existing limited
partnership under the laws of the state under which it was
formed, (ii) has the power and authority to own its properties
and to carry on its business as now being conducted and as
proposed to be conducted and is qualified to do business in all
States in which the Properties are located, and (iii) has the
requisite power to execute and deliver and perform its
obligations under this Mortgage, the Note and each of the other
Loan Documents. The execution and delivery by Grantor of this
Mortgage, the Note and each of the other Loan Documents to be
executed by Grantor, Grantor's performance of its respective
obligations thereunder and the creation of the security interest
and Liens provided for in this Mortgage have been duly authorized
by all requisite action on the part of Grantor, and will not
violate in any material respect any Legal Requirement, any order
of any court or other Governmental Authority, Grantor's
certificate of limited partnership or partnership agreement or
any material indenture, agreement or other instrument to which
Grantor is a party, or by which Grantor is bound; and will not
conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under any of the
foregoing, or result in the creation or imposition of any Lien,
of any nature whatsoever, upon any of the property or assets of
Grantor except the Liens created hereunder. Grantor is not
required to obtain any consent, approval or authorization from or
to file any declaration or statement with, any Governmental
Authority in connection with or as a condition to the execution,
delivery or performance of this Mortgage, the Note or the other
Loan Documents by Grantor other than those which have already
been obtained or filed. Grantor further represents and warrants
that it is and, so long as any portion of the Indebtedness shall
remain outstanding, shall do all things necessary to continue to
be, a Single-Purpose Entity.
18. Protection of Security; Costs and Expenses.
Grantor shall appear in and defend any action or proceeding of
which it has notice purporting to affect the security hereof or
the rights or powers of Beneficiary or Trustee hereunder and
shall pay all costs and expenses, including, without limitation,
cost of evidence of title and reasonable attorneys' fees and
disbursements, in any such action or proceeding, and in any suit
brought by Beneficiary to foreclose this Mortgage or to enforce
or establish any other rights or remedies of Beneficiary
hereunder upon the occurrence and during the continuance of an
Event of Default. If an Event of Default occurs under this
Mortgage, or if any action or proceeding is commenced in which it
becomes necessary to defend or uphold the Lien or priority of
this Mortgage or which adversely affects Beneficiary or
Beneficiary's interest in the Trust Estate or any part thereof,
including, but not limited to, eminent domain, enforcement of, or
proceedings of any nature whatsoever under any Legal Requirement
affecting the Trust Estate or involving Grantor's bankruptcy,
insolvency, arrangement, reorganization or other form of debtor
relief, then Beneficiary, upon reasonable notice to Grantor, may,
but without obligation to do so and without releasing Grantor
from any obligation hereunder, make such appearances, disburse
such reasonable sums and take such action as Beneficiary
reasonably deems necessary or appropriate to protect
Beneficiary's interest in the Trust Estate, including, but not
limited to, disbursement of reasonable attorneys' fees, entry
upon the Trust Estate to make repairs or take other action to
protect the security hereof, and payment, purchase, contest or
compromise of any encumbrance, charge or lien which in the
reasonable judgment of Beneficiary appears to be prior or
superior hereto; provided, however, that the foregoing shall be
subject to Grantor's rights to contest under Section 7(c) hereof
and Beneficiary shall not pay or discharge any lien, encumbrance
or charge being contested by Grantor in accordance with Section
7(c) hereof. Grantor further agrees to pay all reasonable costs
and expenses of Beneficiary or Trustee including reasonable
attorneys' fees and disbursements incurred by Beneficiary or
Trustee in connection with (a) the negotiation, preparation,
execution, delivery and performance of this Mortgage, the Note
and the other Loan Documents, and (b) the performance of its
obligations and exercise of its rights under this Mortgage, the
Note, and the other Loan Documents. All of the costs, expenses
and amounts set forth in this Section 18 shall be payable by
Grantor, on demand and, together with interest thereon at the
Default Rate, if the same are not paid within five (5) Business
Days after demand therefor by Beneficiary (or Trustee), until the
date of repayment by Grantor, shall be deemed to be Indebtedness
hereunder and shall be a Lien on the Trust Estate prior to any
right, title, interest or claim upon the Trust Estate (subject to
the provisions of Section 11(d) hereof). Nothing contained in
this Section 18 shall be construed to require Beneficiary to
incur any expense, make any appearance, or take any other action.
19. Management of the Trust Estate.
(a) For purposes hereof, a "Qualifying Manager" shall
mean any property manager acceptable to Beneficiary. Grantor
shall notify Beneficiary and the Rating Agencies in writing (and
shall deliver a copy of the proposed management agreement) of any
entity proposed to be designated as a Qualifying Manager of all
or any of the Properties no less than 30 days before such
Qualifying Manager begins to manage such Property(ies) and shall
obtain prior to any appointment of a Qualifying Manager a written
confirmation from the Rating Agencies that retention of such
other Person as Manager shall not result in a downgrade,
withdrawal or qualification of the then ratings of any securities
backed in part by this Mortgage.
(b) It is acknowledged and agreed that a Qualifying
Manager may be retained at Beneficiary's direction at any time
following the occurrence and during the continuance of an Event
of Default and at any time following the tenth (10th) anniversary
hereof.
(c) Upon the retention of a Qualifying Manager,
Beneficiary shall have the right to approve (which approval shall
not be unreasonably withheld or delayed) any new management
agreement with such Qualifying Manager. Grantor shall provide a
copy of such new management agreement to the Rating Agencies.
(d) It is acknowledged and agreed that, pursuant to
the provisions of the Manager's Consent, Beneficiary has certain
rights to terminate the existing management agreement.
20. Remedies. Upon the occurrence and during the
continuation of an Event of Default, Beneficiary may take such
actions against Grantor, subject to Section 33 hereof, and/or
against Trust Estate or any portion thereof as Beneficiary
determines is necessary to protect and enforce its rights
hereunder, without notice or demand except as set forth below or
as required under applicable law. Any such actions taken by
Beneficiary shall be cumulative and concurrent and may be pursued
independently, singly, successively, together or otherwise, at
such time and in such order as Beneficiary may determine in its
sole discretion, to the fullest extent permitted by law, without
impairing or otherwise affecting the other rights and remedies of
Beneficiary permitted by law, equity or contract or as set forth
herein or in the other Loan Documents. Beneficiary's
determination of appropriate action may be based on an
appropriate real estate or other consultant and/or counsel, and
Beneficiary may rely conclusively on such advice. Grantor shall
pay such consultant's and attorney's fees and expenses incurred
by Beneficiary pursuant to this Section 20. Such actions may
include, without limitation, the following:
(a) Acceleration. Subject to any applicable
provisions of the Note and the other Loan Documents, Beneficiary
may declare all or any portion of the unpaid principal balance
under the Note, together with all accrued and unpaid interest
thereon, and all other unpaid Indebtedness, to be immediately due
and payable.
(b) Entry. Subject to the provisions and restrictions
of applicable law, Beneficiary, personally, or by its agents or
attorneys, at Beneficiary's election, may enter into and upon all
or any part of the Trust Estate (including any Property and any
part thereof), and may exclude Grantor, its agents and servants
therefrom (but such entry shall be subject to any Nondisturbance
Agreements then in effect); and Beneficiary, having and holding
the same, may use, operate, manage and control the Trust Estate
or any part thereof and conduct the business thereof, either
personally or by its superintendents, managers, agents, servants,
attorneys or receiver. Upon every such entry, Beneficiary may,
at the reasonable expense of the Trust Estate and/or Grantor,
from time to time, either by purchase, repair or construction,
maintain and restore the Trust Estate or any part thereof, and
may insure and reinsure the same in such amount and in such
manner as may seem to them to be advisable. Similarly, from time
to time, Beneficiary may, at the expense of Grantor (which
amounts may be disbursed by Beneficiary from the Trust Estate on
behalf of Grantor), make all necessary or proper repairs,
renewals, replacements, alterations, additions, betterments and
improvements to and on the Trust Estate or any part thereof as it
may seem advisable. Beneficiary or its designee shall also have
the right to manage and operate the Trust Estate or any part
thereof and to carry on the business thereof and exercise all
rights and powers of Grantor with respect thereto, either in the
name of Grantor or otherwise, as may seem to them to be
advisable. In confirmation of the grant made in Granting Clause
(E) hereof, in the case of the occurrence and continuation of an
Event of Default, Beneficiary shall be entitled to collect and
receive all earnings, revenues, rents, issues, profits and income
of the Trust Estate or any part thereof (i.e., the "Rents") to be
applied in the order of priorities and amounts as shall be
provided for in Section 21 hereof. Beneficiary shall be liable
to account only for rents, issues and profits and other proceeds
actually received by Beneficiary.
All actions which may be taken by Beneficiary pursuant to this
Section 20(b) may be taken by the Jurisdictional Trustee, upon
the direction of Beneficiary. Beneficiary or the Jurisdictional
Trustee, as applicable, shall be liable to account only for
rents, issues and profits and other proceeds actually received by
Beneficiary or the Jurisdictional Trustee.
(c) Foreclosure. Prior to taking title to any
Property (whether by foreclosure, deed in lieu or otherwise),
Beneficiary shall obtain, in each instance, at Grantor's
reasonable expense a new phase I environmental report with
respect to each Property, and such additional environmental
studies as may be recommended in such phase I reports.
(i) Beneficiary, with or without entry,
personally or by its agents or attorneys, insofar as applicable,
and in addition to any and every other remedy, may (i) sell or
instruct the Jurisdictional Trustee, if applicable, to sell, to
the extent permitted by law and pursuant to the power of sale
granted herein, all and singular the Trust Estate, and all
estate, right, title and interest, claim and demand therein, and
right of redemption thereof, at one or more sales, as an entirety
or in parcels, and at such times and places as required or
permitted by law and as are customary in any county or parish in
which a Property is located and upon such terms as Beneficiary
may fix and specify in the notice of sale to be given to Grantor
(and on such other notice published or otherwise given as
provided by law), or as may be required by law; (ii) institute
(or instruct the Jurisdictional Trustee to institute) proceedings
for the complete or partial foreclosure of this Mortgage under
the provisions of the laws of the jurisdiction or jurisdictions
in which the Trust Estate or any part thereof is located, or
under any other applicable provision of law; or (iii) take all
steps to protect and enforce the rights of Beneficiary, whether
by action, suit or proceeding in equity or at law (for the
specific performance of any covenant, condition or agreement
contained in this Mortgage, or in aid of the execution of any
power herein granted, or for any foreclosure hereunder, or for
the enforcement of any other appropriate legal or equitable
remedy), or otherwise, as Beneficiary, being advised by counsel
and its financial advisor, shall deem most advisable to protect
and enforce any of their rights or duties hereunder.
(ii) Beneficiary (or the Jurisdictional Trustee,
as applicable), may conduct any number of sales from time to
time. The power of sale shall not be exhausted by any one or
more such sales as to any part of the Trust Estate remaining
unsold, but shall continue unimpaired until the entire Trust
Estate shall have been sold.
(iii) With respect to any Property, this Mortgage
is made upon any statutory conditions of the State in which such
Property is located, and, for any breach thereof or any breach of
the terms of this Mortgage, Beneficiary shall have the statutory
power of sale, if any, provided for by the laws of such State.
(d) Specific Performance. Beneficiary, in its sole
and absolute discretion, or the Jurisdictional Trustee, at
Beneficiary's election, may institute an action, suit or
proceeding at law or in equity for the specific performance of
any covenant, condition or agreement contained herein or in the
Notes or any other Loan Document, or in aid of the execution of
any power granted hereunder or for the enforcement of any other
appropriate legal or equitable remedy.
(e) Enforcement of Note. Subject to Section 33 hereof
and to the extent permitted under the provisions of applicable
law, Beneficiary or the Jurisdictional Trustee, at Beneficiary's
election, may recover judgment on the Note (or any portion of the
Indebtedness evidenced thereby), either before, during or after
any proceedings for the foreclosure (or partial foreclosure) or
enforcement of this Mortgage.
(f) Sale of Trust Estate; Application of Proceeds.
(i) Beneficiary (or the Jurisdictional Trustee,
if applicable), may postpone any sale of all or any part of the
Trust Estate to be made under or by virtue of this Section 20 by
public announcement at the time and place of such sale, or by
publication, if required by law, and, from time to time,
thereafter, may further postpone such sale by public announcement
made at the time of sale fixed by the preceding postponement.
(ii) Upon the completion of any sale made by
Beneficiary or the Jurisdictional Trustee under or by virtue of
this Section 20, Beneficiary shall execute and deliver to the
accepted purchaser or purchasers a good and sufficient deed or
deeds or other appropriate instruments, conveying, assigning and
transferring all its estate, right, title and interest in and to
the property and rights so sold. Beneficiary or the
Jurisdictional Trustee, as applicable, is hereby appointed the
true and lawful irrevocable attorney-in-fact of Grantor in its
name and stead or in the name of Beneficiary to make all
necessary conveyances, assignments, transfers and deliveries of
the property and rights so sold, and, for that purpose,
Beneficiary or the Jurisdictional Trustee, as applicable, may
execute all necessary deeds and other instruments of assignment
and transfer, and may substitute one or more persons with like
power, Grantor hereby ratifying and confirming all that such
attorney or attorneys or such substitute or substitutes shall
lawfully do by virtue hereof. Grantor shall, nevertheless, if so
requested in writing by Beneficiary, ratify and confirm any such
sale or sales by executing and delivering to Beneficiary or to
such purchaser or purchasers all such instruments as may be
advisable, in the judgment of Beneficiary, for such purposes and
as may be designated in such request. Any such sale or sales
made under or by virtue of this Section 20 shall operate to
divest all the estate, right, title, interest, claim and demand,
whether at law or in equity, of Grantor in and to the property
and rights so sold, and shall be a perpetual bar, at law and in
equity, against Grantor, its successors and assigns and any
Person claiming through or under Grantor and its successors and
assigns.
(iii) The receipt of Beneficiary or the
Jurisdictional Trustee, as applicable, for the purchase money
paid as a result of any such sale shall be a sufficient discharge
therefor to any purchaser of the property or rights, or any part
thereof, so sold. No such purchaser, after paying such purchase
money and receiving such receipt, shall be bound to see to the
application of such purchase money upon or for any trust or
purpose of this Mortgage, or shall be answerable, in any manner,
for any loss, misapplication or non-application of any such
purchase money or any part thereof, nor shall any such purchaser
be bound to inquire as to the authorization, necessity,
expediency or regularity of such sale.
(iv) Upon any sale made under or by virtue of
this Section 20, Beneficiary may bid for and acquire the Trust
Estate or any part thereof and, in lieu of paying cash therefor,
may make settlement for the purchase price by crediting upon the
Note secured by this Mortgage the net proceeds of sale, after
deducting therefrom the expense of the sale and the costs of the
action and any other sums which Beneficiary is authorized to
deduct under this Mortgage. The person making such sale shall
accept such settlement without requiring the production of the
Note or this Mortgage, and without such production there shall be
deemed credited to the Indebtedness and Obligations under this
Mortgage the net proceeds of such sale. Beneficiary, upon
acquiring the Trust Estate or any part thereof, shall be entitled
to own, hold, lease, rent, operate, manage or sell the same in
any manner permitted by applicable laws.
(g) Voluntary Appearance; Receivers. After the
happening, and during the continuance of, any Event of Default,
and immediately upon commencement of (i) any action, suit or
other legal proceeding by Beneficiary to obtain judgment for the
principal and interest on the Notes and any other sums required
to be paid pursuant to this Mortgage, or (ii) any action, suit or
other legal proceeding by Beneficiary of any other nature in aid
of the enforcement of the Loan Documents or any of them, Grantor
will (a) enter their voluntary appearance in such action, suit or
proceeding, and (b) if required by Beneficiary, consent to the
appointment of one or more receivers of the Trust Estate and of
the earnings, revenues, rents, issues, profits and income
thereof. After the happening of any Event of Default, or upon
the filing of a bill in equity to foreclose this Mortgage or to
enforce the specific performance hereof or in aid thereof, or
upon the commencement of any other judicial proceeding to enforce
any right of Beneficiary, Beneficiary shall be entitled, as a
matter of right, if it shall so elect, without notice to any
other party and without regard to the adequacy of the security of
the Trust Estate, forthwith, either before or after declaring the
principal and interest on the Notes to be due and payable, to the
appointment of such a receiver or receivers. Any receiver or
receivers so appointed shall have such powers as a court or
courts shall confer, which may include, without limitation, any
or all of the powers which Beneficiary is authorized to exercise
by the provisions of this Section 20, and shall have the right to
incur such obligations and to issue such certificates therefor as
the court shall authorize. Notwithstanding the foregoing,
Beneficiary as a matter of right may appoint or secure the
appointment of a receiver, trustee, liquidator or similar
official of the Trust Estate or any portion thereof, and Grantor
hereby irrevocably consents and agrees to such appointment,
without notice to Grantor and without regard to the value of the
Trust Estate or adequacy of the security for the Indebtedness and
without regard to the solvency of the Grantor or any other Person
liable for the payment of the Indebtedness, and such receiver or
other official shall have all rights and powers permitted by
applicable law and such other rights and powers as the court
making such appointment may confer, but the appointment of such
receiver or other official shall not impair or in any manner
prejudice the rights of Beneficiary to receive the Rents with
respect to any of the Trust Estate pursuant to this Mortgage, the
Assignment of Leases or the Cash Collateral Agreement.
(h) UCC Remedies. Beneficiary may exercise any or all
of the remedies granted to a secured party under the UCC,
specifically including, without limitation, the right to recover
the attorneys' fees and other expenses incurred by Beneficiary in
the enforcement of this Mortgage or in connection with Grantor's
redemption of the Improvements or Building Equipment.
Beneficiary may exercise its rights under this Mortgage
independently of any other collateral or guaranty that Grantor
may have granted or provided to Beneficiary in order to secure
payment and performance of the Obligations, and Beneficiary shall
be under no obligation or duty to foreclose or levy upon any
other collateral given by Grantor to secure any Obligation or to
proceed against any guarantor before enforcing its rights under
this Mortgage.
(i) Leases. Beneficiary may, at its option, before
any proceeding for the foreclosure (or partial foreclosure) or
enforcement of this Mortgage, treat any Lease which is
subordinate by its terms to the Lien of this Mortgage, as either
subordinate or superior to the Lien of this Mortgage.
(j) Other Rights. Beneficiary may pursue against
Grantor any other rights and remedies of Beneficiary permitted by
law, equity or contract or as set forth herein or in the other
Loan Documents.
(k) Retention of Possession. Notwithstanding the
appointment of any receiver, liquidator or trustee of Grantor, or
any of its property, or of the Trust Estate or any part thereof,
Beneficiary or the Jurisdictional Trustee, as applicable, to the
extent permitted by law, shall be entitled to retain possession
and control of all property now or hereafter granted to or held
by Beneficiary or the Jurisdictional Trustee, as applicable,
under this Mortgage.
(l) Suits by Beneficiary. All rights of action under
this Mortgage may be enforced by Beneficiary without the
possession of the Note and without the production thereof or this
Mortgage at any trial or other proceeding relative thereto. Any
such suit or proceeding instituted by Beneficiary shall be
brought in the name of Beneficiary and any recovery of judgment
shall be subject to the rights of Beneficiary.
(m) Remedies Cumulative. Subject to Section 33
hereof, no remedy herein conferred upon or reserved to
Beneficiary shall exclude any other remedy, and each such remedy
shall be cumulative and in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity. No
delay or omission of Beneficiary to exercise any right or power
accruing upon any Event of Default shall impair any such right or
power, or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein. Every power and remedy given
to Beneficiary by this Mortgage to the Jurisdictional Trustee
and/or Beneficiary may be exercised from time to time and as
often as the Jurisdictional Trustee (at Beneficiary's discretion)
and Beneficiary and each of them may deem expedient. Nothing in
this Mortgage shall affect Grantor's obligations to pay the
principal of, and interest on, the Notes in the manner and at the
time and place expressed in the Notes.
(n) Waiver of Rights. Grantor agrees that, to the
fullest extent permitted by law, it will not at any time, (1)
insist upon, plead or claim or take any benefit or advantage of
any stay, extension or moratorium law, wherever enacted, now or
at any time hereafter in force, which may affect the covenants
and terms of performance of this Mortgage, (2) claim, take or
insist upon any benefit or advantage of any law, now or at any
time hereafter in force, providing for valuation or appraisal of
the Trust Estate, or any part thereof, prior to any sale or sales
thereof which may be made pursuant to any provision herein
contained, or pursuant to the decree, judgment or order of any
court of competent jurisdiction, or (3) after any such sale or
sales, claim or exercise any right, under any statute heretofore
or hereafter enacted by the United States of America, any State
thereof or otherwise, to redeem the property and rights sold
pursuant to such sale or sales or any part hereof. Grantor
hereby expressly waives all benefits and advantages of such laws,
and covenants, to the fullest extent permitted by law, not to
hinder, delay or impede the execution of any power herein granted
or delegated to Beneficiary or the Trustees, but will suffer and
permit the execution of every power as though no such laws had
been made or enacted. Grantor for itself and all who may claim
through or under it, waives, to the extent it lawfully may do so,
any and all homestead rights and, any and all rights to
reinstatement, any and all right to have the property comprising
the Trust Estate marshaled upon any foreclosure of the Lien
hereof or to have the mortgaged property hereunder and the
property covered by any other mortgage, deed to secure debt or
deed.
21. Application of Proceeds.
(a) Sale Proceeds. The proceeds of any sale or
foreclosure of the Trust Estate or any portion thereof shall be
applied to the following in the following order of priority the
payment of: (i) the costs and expenses of the foreclosure
proceedings with respect to such Property (including reasonable
counsel fees and disbursements actually incurred and advertising
costs and expenses), liabilities and advances made or incurred
under this Mortgage, and reasonable receivers' and trustees' fees
and commissions and fees and expenses incurred by Beneficiary,
together with interest at the Default Rate to the extent payable,
(ii) any other sums advanced by Beneficiary (or any advancing
agent on its behalf) in accordance with the terms hereof and not
repaid to it by Grantor, together with interest at the Default
Rate to the extent payable, (iii) all sums due under the Note in
the order of priority set forth therein, and (iv) any surplus to
Grantor or other party legally entitled thereto.
(b) Other Proceeds. All Proceeds or other amounts
collected by Beneficiary and applied to pay interest or principal
of the Note or other amounts due on this Mortgage following an
Event of Default and acceleration of the Note shall be applied
(1) first, to reimburse any expenses related to such collection
and (2) thereafter, as provided in Section 21(a) hereof. If the
Note has not been accelerated, any amount available to make
payments or applied in lieu of such payments thereon shall be
applied (1) first, to interest due or overdue on the Note, (2)
then, any amounts applied to pay or applied in lieu of paying
principal on the Note then due shall be applied to pay or applied
in lieu of paying each Note in order of priority, and (3)
thereafter, to Grantor.
22. CERTAIN WAIVERS. TO INDUCE BENEFICIARY TO
CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THE NOTES AND THIS
MORTGAGE, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, GRANTOR
AND EACH OF THE PARTNERS COMPRISING GRANTOR EXPRESSLY AND
IRREVOCABLY HEREBY WAIVES THE FOLLOWING RIGHTS, IN ADDITION TO
AND NOT IN DEROGATION OF ALL OTHER WAIVERS CONTAINED IN THE NOTE,
THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS:
(a) WAIVER OF RIGHT TO TRIAL BY JURY. GRANTOR HEREBY
WAIVES AND SHALL WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BROUGHT BY, OR COUNTERCLAIM ASSERTED BY BENEFICIARY WHICH ACTION,
PROCEEDING OR COUNTERCLAIM ARISES OUT OF OR IS CONNECTED WITH
THIS MORTGAGE, THE NOTE OR ANY OTHER LOAN DOCUMENTS.
23. Notice of Certain Occurrences. In addition to all
other notices required to be given by Grantor hereunder, Grantor
shall give notice to Beneficiary and the Rating Agencies promptly
upon the occurrence of: (a) any Default or Event of Default; (b)
any litigation or proceeding affecting Grantor or the Trust
Estate or any part thereof in which the amount involved is Two
Hundred Fifty Thousand Dollars ($250,000) or more and not covered
by insurance or in which injunctive or similar relief is sought
and likely to be obtained; (c) a material adverse change in the
business, operations, property or financial condition of Grantor
or the Trust Estate; and (d) together with the quarterly
financial statements required to be delivered hereunder, a list
of all litigation and proceedings affecting Grantor or the Trust
Estate or any part thereof in which the amount involved is Two
Hundred Fifty Thousand Dollars ($250,000) or more, whether or not
covered by insurance and whether or not relief is being sought.
24. Trust Funds. To the extent required by applicable
law, all security deposits paid under the Leases shall be treated
as trust funds and not commingled with any other funds of
Grantor. Within ten (10) days after request by Beneficiary,
Grantor shall furnish Beneficiary with satisfactory evidence of
compliance with this Section 24, together with a statement of all
security deposits by Tenants under the Leases, which statement
shall be certified by Grantor.
25. Taxation. In the event a law is passed after the
date hereof of the United States or of any state in which a
Property is located either (a) changing in any way the laws for
the taxation of mortgages or debts secured thereby for federal,
state or local purposes, or the manner of collection of any such
taxes, or (b) imposing a tax, either directly or indirectly, on
mortgages or debts secured thereby, in each case other than
income taxes, franchise taxes, or withholding taxes, that
materially adversely affects Beneficiary, Beneficiary shall have
the right to declare the Note due on a date to be specified by
not less than thirty (30) days' written notice to be given to
Grantor unless within such thirty (30) day period Grantor shall
assume as an obligation hereunder the payment of any tax so
imposed until full payment of the Note provided such assumption
shall be permitted by law.
26. Notices. Any notice, election, request or demand
which by any provision of this Mortgage is required or permitted
to be given or served hereunder shall be in writing and shall be
given or served by hand delivery against receipt, by any
nationally recognized overnight courier service providing
evidence of the date of delivery or by certified mail return
receipt requested, postage prepaid, addressed to Grantor at: c/o
Mark Centers Trust 600 Third Avenue, P.O. Box 1679, Kingston,
Pennsylvania 18704, Attention: Steven M. Pomerantz Esq., with a
copy to Gold & Wachtel, 110 East 59th Street, New York, New York
10022, Attention: Marvin J. Levine, Esq.; if to Trustee at:
Fairfax County, Virginia; if to Beneficiary, to Secore Financial
Corporation, 12510 Prosperity Drive, Suite 270, Silver Spring,
Maryland 20904, or at such other address as shall be designated
from time to time by Grantor, Trustee or Beneficiary by notice
given in accordance with the provisions of this Section 26. Any
such notice or demand given hereunder shall be effective upon
receipt. All notices, elections, requests and demands required
or permitted under this Mortgage shall be in the English
language.
27. No Oral Modification. This Mortgage may not be
waived, altered, amended, modified, changed, discharged or
terminated orally but only by a written agreement signed by the
party against which enforcement is sought.
28. Partial Invalidity. In the event any one or more
of the provisions contained in this Mortgage shall for any reason
be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect
any other provision hereof, but each shall be construed as if
such invalid, illegal or unenforceable provision had never been
included hereunder.
29. Successors and Assigns. All covenants of Grantor
contained in this Mortgage are imposed solely and exclusively for
the benefit of Beneficiary and its successors and assigns, and no
other Person shall have standing to require compliance with such
covenants or be deemed, under any circumstances, to be a
beneficiary of such covenants, any or all of which may be freely
waived in whole or in part by Beneficiary at any time if in its
sole discretion it deems it advisable to do so. All such
covenants of Grantor shall run with the land and bind Grantor,
the successors and assigns of Grantor (and each of them) and all
subsequent owners, encumbrancers and Tenants of the Trust Estate,
and shall inure to the benefit of Beneficiary, its successors and
assigns.
30. Governing Law. This Mortgage and the obligations
arising hereunder shall be governed by and construed in
accordance with, the laws of the State of New York applicable to
contracts made and performed in the State of New York and any
applicable laws of the United States of America except that at
all times the provisions for the creation, perfection and
enforcement of the Liens and security interest created pursuant
to this Mortgage with respect to any Property and pursuant to the
Assignment of Leases shall be governed by the laws of the State
in which such Property is located. Whenever possible, each
provision of this Mortgage shall be interpreted in such a manner
as to be effective and valid under applicable law, but if any
provision of this Mortgage shall be prohibited by, or invalid
under, applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the
remaining provisions of this Mortgage. Nothing contained in this
Mortgage or in any Loan Document shall require either Grantor to
pay or Beneficiary to accept any sum in any amount which would,
under applicable law, subject Beneficiary, or any Trustee to
penalty or adversely affect the enforceability of this Mortgage.
In the event that the payment of any sum due hereunder or under
any Loan Document would have such result under applicable law,
then, ipso facto, the obligation of Grantor to make such payments
shall be reduced to the highest sum then permitted under
applicable law and appropriate adjustment shall be made by
Grantor and Beneficiary.
31. Certain Representations, Warranties and Covenants.
(a) Recording Fees, Taxes, Etc. Grantor hereby agrees
to take all such further reasonable actions, and to pay all
taxes, recording fees, charges, costs and other expenses
including, without limitation, reasonable attorneys' and
professional fees and disbursements which are currently or in the
future shall be imposed, and which may be required or necessary
to establish, preserve, protect or enforce the Lien of this
Mortgage.
(b) No Offsets. Grantor warrants, covenants and
represents to Beneficiary that there exists no cause of action at
law or in equity that would constitute any offset, counterclaim
or deduction against the Indebtedness or Obligations.
(c) Full and Accurate Disclosure. To the best of
Grantor's knowledge, no statement of fact made by or on behalf of
Grantor in this Mortgage or in any of the other Loan Documents
contains any untrue statement of a material fact or omits to
state any material fact necessary to make statements contained
herein or therein not misleading as of the date made. There is
no fact presently known to Grantor which has not been disclosed
which adversely affects, nor as far as Grantor can foresee, might
adversely affect, the business, operations or condition
(financial or otherwise) of Grantor.
(d) Tax Filings. Grantor has filed all federal, state
and local tax returns required to be filed prior to the date
hereof and has paid or made adequate provision for the payment of
all federal, state and local taxes, charges and assessments shown
to be due from Grantor on such tax returns.
(e) No Litigation. No litigation is pending or, to
Grantor's best knowledge, threatened against Grantor which, if
determined adversely to Grantor, would have a material adverse
effect on any Property or the security created hereby and no
Taking has been commenced or, to Grantor's best knowledge, is
contemplated with respect to all or any portion of the Trust
Estate or for the relocation of roadways providing access to the
Trust Estate. Grantor has delivered to Beneficiary and the
Rating Agencies a certificate setting forth all litigation
affecting Grantor or any Property.
(f) Solvency. The fair saleable value of Grantor's
assets exceeds and will, immediately following the issuance and
sale of the Note and the consummation of the other transactions
contemplated to take place simultaneously therewith, exceed
Grantor's liabilities, including subordinated, unliquidated,
disputed and contingent liabilities. Grantor's assets do not
and, immediately following the issuance and sale of the Note and
the consummation of the other transactions contemplated to take
place simultaneously therewith will not, constitute unreasonably
insufficient capital to carry out its business as conducted or as
proposed to be conducted. Grantor does not intend to, and does
not believe that it will, incur debts and liabilities (including,
without limitation, contingent liabilities) beyond its ability to
pay such debts as they mature.
(g) ERISA. Grantor is not an "employee benefit plan"
(within the meaning of Section 3(3) of ERISA) to which ERISA
applies and Grantor's assets do not constitute plan assets. No
actions, suits or claims under any laws and regulations
promulgated pursuant to ERISA are pending or, to Grantor's
knowledge, threatened against Grantor. Grantor has no knowledge
of any material liability incurred by Grantor which remains
unsatisfied for any taxes or penalties with respect to any
employee benefit plan or any Multiemployer Plan, or of any lien
which has been imposed on Grantor's assets pursuant to Section
412 of the Code or Sections 302 or 4068 of ERISA.
(h) Claims. No claims, actions, suits, proceedings or
investigations whether judicial or otherwise are pending or, to
the best knowledge of Grantor, threatened against Grantor before
any domestic or foreign court or administrative, arbitral,
governmental or regulatory authority or agency which, if
determined adversely to Grantor, would have a material adverse
effect on the security created hereby. Grantor has delivered to
Beneficiary and the Rating Agencies a certificate setting forth
all claims pending against Grantor.
(i) Liens. No Lien, other than Permitted
Encumbrances, which remains outstanding as of the date hereof,
including, without limitation, any tax lien, has been levied
against the Trust Estate.
(j) Outstanding Liabilities. No outstanding
liabilities of Grantor exist which, individually or in the
aggregate, would have a material adverse effect on the security
created hereby or would materially adversely affect the condition
(financial or otherwise) of Grantor. Grantor has delivered to
Beneficiary and the Rating Agencies a certificate setting forth
all liabilities of Grantor.
(k) Creditors' Claims. To Grantor's best knowledge,
no claim of any creditor of Grantor would have a material adverse
effect on the security created hereby or would materially
adversely affect the condition (financial or otherwise) of
Grantor. Grantor has delivered to Beneficiary and the Rating
Agencies a certificate setting forth all such claims of creditors
of Grantor.
(l) Enforceability of Loan Documents. This Mortgage
and the other Loan Documents are the legal, valid and binding
obligations of Grantor, enforceable against Grantor in accordance
with their terms.
(m) Contingent Liabilities. Grantor does not have any
known material contingent liabilities.
(n) No Other Debt. Grantor has not borrowed or
received debt financing (other than financing evidenced by the
Note) that has not been heretofore repaid in full.
(o) Fraudulent Conveyance. Grantor represents and
warrants as follows: (i) it has not entered into this Mortgage or
the other Loan Documents or the transactions contemplated hereby
or thereby with the actual intent to hinder, delay, or defraud
any creditor, and (ii) it has received reasonably equivalent
value in exchange for its obligations under this Mortgage and the
other Loan Documents. Giving effect to the transactions
contemplated by this Mortgage and the other Loan Documents, the
fair saleable value of the assets of Grantor exceeds and will,
immediately following the execution and delivery of this Mortgage
and the other Loan Documents, exceed the total liabilities of
Grantor, including, without limitation, subordinated,
unliquidated, disputed or contingent liabilities. The fair
saleable value of the assets of Grantor is and will, immediately
following the execution and delivery of this Mortgage and the
other Loan Documents, be greater than Grantor's probable
liabilities, including the maximum amount of the contingent
liabilities of Grantor or their debts as such debts become
absolute and matured. The assets of Grantor do not and,
immediately following the execution and delivery of this Mortgage
and the other Loan Documents will not, constitute unreasonably
small capital to carry out the business of Grantor as conducted
or as proposed to be conducted. Grantor does not intend to, and
does not believe that it will, incur debts and liabilities
(including, without limitation, contingent liabilities and other
commitments) beyond its ability to pay such debts as they mature
(taking into account the timing and amounts to be payable on or
in respect of obligations of Grantor).
(p) Access/Utilities. The Properties have adequate
rights of access to public ways and is served by adequate water,
sewer, sanitary sewer and storm drain facilities. All public
utilities necessary to the continued use and enjoyment of each
Property as presently used and enjoyed are located in the public
right-of-way abutting the applicable Property, and all such
utilities are connected so as to serve the applicable Property
without passing over other property. All roads necessary for the
full utilization of each Property for its current purpose have
been completed and dedicated to public use and accepted by all
governmental authorities or are the subject of access easements
for the benefit of the applicable Property.
(q) Special Assessments. Except to the extent set
forth or Schedule 3, there are no pending or, to the knowledge of
Grantor, proposed special or other assessments for public
improvements or otherwise affecting any Property, nor, to the
knowledge of Grantor, are there any contemplated improvements to
any Property that may result in such special or other
assessments.
(r) Flood Zone. The Properties listed on Schedule 4
are located in a flood hazard area as defined by the Federal
Insurance Administration.
(s) Separate Business; Corporate Formalities.
(i) Grantor shall maintain its own deposit
account or accounts, separate from those of any Affiliate, with
commercial banking institutions. The funds of Grantor will not
be diverted to any other Person or for other than business uses
of Grantor, nor will such funds be commingled with the funds of
any other Affiliate;
(ii) To the extent that Grantor shares the same
officers or other employees as any of its partners or Affiliates,
the salaries of and the expenses related to providing benefits to
such officers and other employees shall be fairly allocated among
such entities, and each such entity shall bear its fair share of
the salary and benefit costs associated with all such common
officers and employees;
(iii) To the extent that Grantor jointly contracts
with any of its partners or Affiliates to do business with
vendors or service providers or to share overhead expenses, the
costs incurred in so doing shall be allocated fairly among such
entities, and each such entity shall bear its fair share of such
costs. To the extent that Grantor contracts or does business
with vendors or service providers where the goods and services
provided are partially for the benefit of any other Person, the
costs incurred in so doing shall be fairly allocated to or among
such entities for whose benefit the goods and services are
provided, and each such entity shall bear its fair share of such
costs. All material transactions between Grantor and any of its
Affiliates shall be only on an arm's length basis.
(iv) To the extent that Grantor and any of its
constituent partners or Affiliates have offices in the same
location, there shall be a fair and appropriate allocation of
overhead costs among them, and each such entity shall bear its
fair share of such expenses.
(v) Grantor shall conduct its affairs strictly in
accordance with its organizational documents, and observe all
necessary, appropriate and customary partnership formalities,
including, but not limited to, obtaining any and all partners'
consents necessary to authorize actions taken or to be taken, and
maintaining accurate and separate books, records and accounts,
including, but not limited to, payroll and intercompany
transaction accounts.
(vi) In addition, Grantor shall: (a) maintain
books and records separate from those of any other person; (b)
maintain its assets in such a manner that it is not costly or
difficult to segregate, identify or ascertain such assets; (c)
hold regular meetings of its board of directors, shareholder,
partners or members, as the case may be, and observe all other
corporate, partnership or limited liability company, as the case
may be, formalities; (d) hold itself out to creditors and the
public as a legal entity separate and distinct from any other
entity; (e) prepare separate tax returns and financial
statements, or if part of a consolidated group, then it will be
shown as a separate member of such group; (f) transact all
business with Affiliates on an arm's-length basis and pursuant to
enforceable agreements; (g) conduct business in its name and use
separates stationary, invoices and checks; (h) not commingle its
assets or funds with those of any other person; and (i) not
assume, guarantee or pay the debts or obligations of any other
person.
(t) Director Consents. The General Partner of
Grantor shall obtain the consent of all its directors, including
the Independent Directors, to (i) file a bankruptcy or insolvency
petition or otherwise institute insolvency proceedings or to
authorize Grantor to do so, (ii) dissolve, liquidate,
consolidate, merge or sell all or substantially all of Grantor's
assets, (iii) engage in any other business activity, or (iv)
amend its organizational documents.
(u) No Default. As of the date hereof, Grantor
is not in material default under the terms and provisions of any
Operating Agreement or any Material Lease.
(v) Collateral As Entirety of Property. Each
Property and the Personalty located thereon constitutes all of
the real property, equipment and fixtures currently owned by
Grantor or currently used in the operation of the business
located on such Property.
(w) No Property Damage. As of the date hereof,
to Grantor's knowledge, no portion of the Improvements at any
Property has been materially damaged, destroyed or injured by
fire or other casualty which is not now fully restored or in the
process of being restored.
(x) Separate Tax Parcels. Each Property
constitutes one or more separate tax lots, with a separate tax
assessment, independent of any other land or improvements.
(y) Title Insurance. Grantor shall cause to be
delivered to Beneficiary a mortgagee's title insurance policy,
issued by the Title Company, for each Property in an amount not
less than the Allocated Loan Amount (except in the case of the
Properties located in the states of New York and Florida, such
amount shall be not less than 115% of the Allocated Loan Amounts
for such Properties), which title insurance policy shall be dated
as of the date hereof, and the title insurance coverage afforded
under such policies shall aggregate the insurance coverage for
the properties located in the State of Pennsylvania to an
effective title insurance coverage of up to $29,433,200, and
shall aggregate the insurance coverage for the Properties located
in the states of Alabama, Georgia, South Carolina and Virginia to
an effective title insurance coverage of up to $12,511,000 and
the title insurance policies shall insure that this Mortgage is a
valid first priority lien on the Land and Improvements, subject
only to Permitted Encumbrances, standard exceptions contained in
the current ALTA printed form policy issued by the Title Company,
and any other matter consented to by Beneficiary.
32. No Waiver. No failure by Beneficiary to insist
upon the strict performance of any term hereof or to exercise any
right, power or remedy consequent upon a breach thereof shall
constitute a waiver of any such term or right, power or remedy or
of any such breach. No waiver of any breach shall affect or
alter this Mortgage, which shall continue in full force and
effect, or shall affect or alter the rights of Beneficiary with
respect to any other then existing or subsequent breach.
33. Non-Recourse Obligations. Notwithstanding
anything in this Mortgage (other than as set forth in Section 41
hereof), the Note or the other Loan Documents, no personal
liability shall be asserted or enforceable against (i) Grantor,
(ii) any Affiliate of Grantor, (iii) any Person owning directly
or indirectly, any legal or beneficial interest in Grantor or any
Affiliate of Grantor, or (iv) any partner, principal, officer,
controlling person, beneficiary, trustee, advisor, shareholder,
employee, agent, Affiliate or director of any Persons described
in clauses (i) through (iii) above (collectively, the "Exculpated
Parties") by Beneficiary or Trustee in respect of the
Obligations, this Mortgage, the Note or any other Loan Document,
or the making, issuance or transfer thereof, all such liability,
if any, being expressly waived by Beneficiary, Trustee, and each
successive holder of any Note and this Mortgage shall accept the
Note and this Mortgage upon the express condition of this
provision and limitation that in the case of the occurrence and
continuance of an Event of Default, Beneficiary's remedies in its
sole discretion shall be any or all of:
(i) Foreclosure of the lien of this Mortgage in
accordance with the terms and provisions set forth in this
Mortgage;
(ii) Action against any other security at any time
given to secure the payment of the Note and under the other Loan
Documents; and
(iii) Exercise of any other remedy set forth in
this Mortgage or any other Loan Document.
The lien of any judgment against Grantor and any
proceeding instituted on, under or in connection with the Note or
this Mortgage, or both, shall not extend to any property now or
hereafter owned by Grantor or any Exculpated Party other than the
Net Operating Income from, and the ownership interest of Grantor
in, the Trust Estate and the other security for the payment of
the Note or this Mortgage.
Notwithstanding anything to the contrary in this
Mortgage or any of the Loan Documents, Beneficiary shall not be
deemed to have waived any right which Beneficiary may have under
Section 506(a), 506(b), 1111(b) or any other provisions of the
Bankruptcy Code to file a claim for the full amount of the Debt
secured by this Mortgage or to require that all collateral shall
continue to secure all of the Debt owing to Beneficiary in
accordance with the Loan Documents.
Notwithstanding anything in this Mortgage to the
contrary, there shall at no time be any limitation on Grantor's
liability for the payment to Beneficiary of: (1) condemnation
proceeds or insurance proceeds which Grantor has received and to
which Beneficiary is entitled pursuant to the terms of this
Mortgage or any of the Loan Documents to the extent the same have
not been applied toward payment of sums due under the Note or
under this Mortgage, or used for the repair or replacement of the
Trust Estate pursuant to this Mortgage, or (2) all loss, damage
and expense as incurred by Beneficiary and arising from any
fraud, or intentional misrepresentation of Grantor, or (3) any
misappropriation of Rents or security deposits by Grantor or any
Affiliate of Grantor.
34. Further Assurances. Grantor, at its own expense,
will execute, acknowledge and deliver all such reasonable further
acts, documents or instruments including security agreements on
any building equipment included or to be included in the Trust
Estate and a separate assignment of each Lease and take all such
actions as Beneficiary from time to time may reasonably request
to better assure, transfer and confirm unto Beneficiary the
rights now or hereafter intended to be granted to Beneficiary
under this Mortgage or the other Loan Documents. Grantor shall
notify Beneficiary no less than thirty (30) days prior to a
change of address.
35. Estoppel Certificates. Grantor and Beneficiary
each will, from time to time, upon twenty (20) days' prior
written request by the other party, execute, acknowledge and
deliver to the requesting party, in the case of a request to
Beneficiary, a certificate signed by an authorized officer or
officers and in the case of a request to Grantor, an Officer's
Certificate, stating that this Mortgage is unmodified and in full
force and effect (or, if there have been modifications, that this
Mortgage is in full force and effect as modified and setting
forth such modifications) and stating the amount of accrued and
unpaid interest and the outstanding principal amount of the Note.
The estoppel certificate from Beneficiary shall also state either
that, to Grantor's best knowledge and based on no independent
investigation, no Default exists hereunder or, if any Event of
Default shall exist hereunder, specify any Event of Default of
which Grantor has actual knowledge and the steps being taken to
cure such Event of Default.
36. Ground Leases.
(a) Grantor hereby represents and warrants as follows
with respect to each Ground Lease:
(i) the Ground Lease is in full force and effect,
unmodified by any writing or otherwise except as specifically set
forth herein;
(ii) all rent, additional rent and/or other charges
reserved in or payable under the Ground Lease, have been paid to
the extent that they are payable to the date hereof;
(iii) Grantor enjoys the quiet and peaceful possession of
the Ground Leasehold Estate;
(iv) there are no defaults under any of the material terms
of the Ground Lease;
(v) Grantor has delivered to Beneficiary a true, accurate
and complete copy of the Ground Lease;
(vi) this Mortgage is secured by the Ground Leasehold
Estate; upon the occurrence of an Event of Default, Beneficiary
has the right to foreclose or otherwise exercise its rights with
respect to the fee interest in the Trust Estate within a
commercially reasonable time;
(vii) the Ground Lease or a memorandum thereof has been
duly recorded, the Ground Lease permits the interest of the
lessee thereunder to be encumbered by this Mortgage, and there
has not been a material change in the terms of the Ground Lease
since its recordation;
(viii) Except for the Permitted Exceptions, Grantor's
interest in the Ground Lease is not subject to any liens or
encumbrances superior to, or of equal priority with, this
Mortgage;
(ix) Grantor's interest in the Ground Lease is assignable
to Beneficiary upon notice to, but without the consent of, the
lessor thereunder, and in the event that such leasehold interest
is so assigned, it is further assignable by Beneficiary and its
successors and assigns upon notice to, but without a need to
obtain the consent of, the lessor under the Ground Lease;
(x) the Ground Lease requires the lessor thereunder to give
notice of any default by Grantor to Beneficiary; and the Ground
Lease further provides that notice of termination given under the
Ground Lease is not effective against Beneficiary unless a copy
of such notice has been delivered to Beneficiary in the manner
described in the Ground Lease;
(xi) Beneficiary is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain possession
of the interest of Grantor under the Ground Lease) to cure any
default under the Ground Lease, which is curable after the
receipt of notice of any such default before the lessor
thereunder may terminate the Ground Lease;
(xii) the Ground Lease has a term which extends not less
than ten (10) years beyond the Maturity Date;
(xiii) the Ground Lease requires the lessor thereunder to
enter into a new lease with Beneficiary upon termination of the
Ground Lease for any reason, including rejection of the Ground
Lease in a bankruptcy proceeding;
(xiv) under the terms of the Ground Lease and this
Mortgage, taken together, any related insurance proceeds will be
applied either to the repair or restoration of all or part of the
related Property, with Beneficiary having the right to hold and
disburse the proceeds as the repair or restoration progresses, or
to the payment of the outstanding principal balance of the Note
together with any accrued interest thereon; and
(xv) the Ground Lease does not impose any restrictions on
subletting.
Further, with respect to each Ground Lease, Grantor
covenants and agrees as follows: (i) to promptly and faithfully
observe, perform and comply with all the terms, covenants and
provisions of the Ground Lease, on its part to be observed,
performed and complied with, within the applicable grace periods,
if any; (ii) to refrain from doing anything, as a result of
which, there could be a material default under or a breach of any
of the terms of the Ground Lease; (iii) not to do, permit or
suffer any event or omission as a result of which there is likely
to occur a default or breach under the Ground Lease after the
passing of the applicable grace periods, if any; (iv) not to
cancel, terminate, surrender, modify, amend or in any way alter
or permit the alteration of any of the provisions of the Ground
Lease or grant any consents or waivers thereunder, and further
agrees not to exercise any right it may have under the Ground
Lease to cancel or surrender the same; (v) to give Beneficiary
notice of any default by any party under the Ground Lease, within
three (3) Business Days subsequent to learning of such default,
and promptly to deliver to Beneficiary a copy of each notice of
default and all responses to default notices, similar instruments
received or delivered by Beneficiary, in connection with the
Ground Lease; (vi) to furnish within a reasonable period of time,
except in connection with a notice of default which is governed
by the previous clause, to Beneficiary copies of such information
and evidence as Beneficiary may reasonably request concerning the
due observance, performance and compliance by Grantor with the
terms, covenants and provisions of the Ground Lease; and (vii)
that any failure by Grantor, as tenant under the Ground Lease, to
perform within any applicable grace period its obligations under
the Ground Lease shall constitute an Event of Default by Grantor
under this Mortgage.
(b) In the event of the occurrence of any event which,
with the giving of notice, the passage of time or both, would
constitute an Event of Default (as defined in the Ground Lease)
by Grantor in the performance of its obligations under the Ground
Lease, and which is not cured within any applicable grace period,
including, without limitation, any default in the payment of any
sums payable thereunder, then, in each and every case,
Beneficiary may, at its option cause the default or defaults to
be remedied and otherwise exercise any and all of the rights of
Grantor thereunder in the name of and on behalf of Grantor.
Grantor shall, within five (5) Business Days after written
demand, reimburse Beneficiary for all advances made and expenses
reasonably incurred by Beneficiary in curing any such default
(including, without limitation, reasonable attorneys' fees),
together with interest thereon from the date that such advance is
made, to and including the date the same is paid to Beneficiary.
The provisions of this subsection (b) are in addition to any
other remedy given to or allowed Beneficiary under the Ground
Lease.
(c) If the Ground Lease is cancelled or terminated by
reason of an Event of Default (as defined in the Ground Lease)
that Beneficiary was unable to cure (following a good faith
effort to so cure), then, if Beneficiary or its nominee shall
acquire an interest in any new lease of the Ground Leasehold
Estate following such Event of Default, Grantor shall have no
right, title or interest in or to the new lease or the leasehold
estate created by such new lease.
(d) Grantor shall obtain and deliver to Beneficiary,
within thirty (30) days after written demand therefor by
Beneficiary, an estoppel certificate stating (1) that the Ground
Lease is in full force and effect and has not been modified or,
if it has been modified, the date of each modification (together
with copies of each such modification), (2) the date to which the
fixed rent has been paid under the Ground Lease, (3) whether a
notice of default has been sent to the tenant under the Ground
Lease which has not been cured, and if such notice has been sent,
the date it was sent and the nature of the default, (4) whether
any parties under the Ground Lease are in default in keeping,
observing or performing any material term covenant, agreement,
provision, condition or limitation contained in the Ground Lease,
(5) if the tenant under the Ground Lease shall be in default, the
default, (6) the name of the tenant entitled to possession of the
Ground Leasehold Estate under the Ground Lease, (7) whether to
the best of Grantor's knowledge there has occurred any event
which, with the giving of notice or the passage of time or both
would constitute a default under the Ground Lease, and, if there
has occurred any such event, setting forth the nature thereof in
reasonable detail.
(e) Notwithstanding anything to the contrary contained
herein, this Mortgage shall not constitute an assignment of the
Ground Lease within the meaning of any provision thereof
prohibiting its assignment and Beneficiary shall have no
liability or obligation thereunder by reason of its acceptance of
this Mortgage. Beneficiary shall be liable for the obligations
of the tenant arising under the Ground Lease for only that period
of time during which Beneficiary is in possession of the Ground
Leasehold Estate or has acquired, by foreclosure or otherwise,
and is holding, all of the right, title and interest of Grantor
therein.
37. Indemnification by Grantor.
Subject to the provisions of Section 33 hereof,
Grantor will protect, indemnify and save harmless Beneficiary,
and all officers, directors, stockholders, partners, employees,
agents, successors and assigns thereof (collectively, the
"Indemnified Parties") from and against all liabilities,
obligations, claims, damages, penalties, causes of action, costs
and expenses (including all reasonable attorneys' fees and
expenses actually incurred) imposed upon or incurred by or
asserted against the Indemnified Parties or the Trust Estate or
any part of its interest therein, by reason of the occurrence or
existence of any of the following (to the extent Insurance
Proceeds payable on account of the following shall be inadequate;
it being understood that in no event will the Indemnified Parties
be required to actually pay or incur any costs or expenses as a
condition to the effectiveness of the foregoing indemnity) prior
to (i) the acceptance by Beneficiary of a deed-in-lieu of
foreclosure with respect to the applicable Property, or (ii) the
Indemnified Parties taking possession or control of the
applicable Property, unless caused solely by the actual willful
misconduct or gross negligence of the Indemnified Parties (other
than such willful misconduct or gross negligence imputed to the
Indemnified Parties because of their interest in the Trust
Estate): (1) ownership of Grantor's interest in the Trust
Estate, or any interest therein, or receipt of any Rents or other
sum therefrom, (2) any accident, injury to or death of any
persons or loss of or damage to property occurring on or about
the Trust Estate or any Appurtenances thereto, (3) any design,
construction, operation, repair, maintenance, use, non-use or
condition of the Trust Estate or Appurtenances thereto, including
claims or penalties arising from violation of any Legal
Requirement or Insurance Requirement, as well as any claim based
on any patent or latent defect, whether or not discoverable by
Beneficiary, any claim the insurance as to which is inadequate,
and any Environmental Claim, (4) any Default under this Mortgage
or any of the other Loan Documents or any failure on the part of
Grantor to perform or comply with any of the material terms of
any Lease or Operating Agreement within the applicable notice or
grace periods, (5) any performance of any labor or services or
the furnishing of any materials or other property in respect of
the Trust Estate or any part thereof, (6) any negligence or
tortious act or omission on the part of Grantor or any of its
agents, contractors, servants, employees, sublessees, licenses or
invitees, (7) any contest referred to in Section 7(c) hereof, (8)
any obligation or undertaking relating to the performance or
discharge of any of the terms, covenants and conditions of the
landlord contained in the Leases or (9) the presence at, in or
under any Property or the Improvements thereon of any Hazardous
Substance in violation of any Legal Requirement. Any amounts the
Indemnified Parties are legally entitled to receive under this
Section 37 which are not paid within ten (10) Business Days after
written demand therefor by the Indemnified Parties or
Beneficiary, setting forth in reasonable detail the amount of
such demand and the basis therefor, shall bear interest from the
date of demand at the Default Rate, and shall, together with such
interest, be part of the Indebtedness and secured by this
Mortgage. In case any action, suit or proceeding is brought
against the Indemnified Parties by reason of any such occurrence,
Grantor shall at Grantor's expense resist and defend such action,
suit or proceeding or will cause the same to be resisted and
defended by counsel at Grantor's reasonable expense for the
insurer of the liability or by counsel designated by Grantor
(unless reasonably disapproved by Beneficiary promptly after
Beneficiary has been notified of such counsel); provided,
however, that nothing herein shall compromise the right of
Beneficiary (or any Indemnified Party) to appoint its own counsel
at Grantor's expense for its defense with respect to any action
which in its reasonable opinion presents a conflict or potential
conflict between Beneficiary and Grantor that would make such
separate representation advisable; provided further that if
Beneficiary shall have appointed separate counsel pursuant to the
foregoing, Grantor shall not be responsible for the expense of
additional separate counsel of any Indemnified Party unless in
the reasonable opinion of Beneficiary a conflict or potential
conflict exists between such Indemnified Party and Beneficiary.
So long as Grantor is resisting and defending such action, suit
or proceeding as provided above in a prudent and commercially
reasonable manner, Beneficiary and the Indemnified Parties shall
not be entitled to settle such action, suit or proceeding and
claim the benefit of this Section 37 with respect to such action,
suit or proceeding and Beneficiary agrees that it will not settle
any such action, suit or proceeding without the consent of
Grantor; provided, however, that if Beneficiary reasonably
determines that Grantor is not diligently defending such action,
suit or proceeding in a prudent and commercially reasonable
manner as provided above, and has provided Grantor with thirty
(30) days' prior written notice, or shorter period if mandated by
the requirements of applicable law, and opportunity to correct
such determination, Beneficiary may settle such action, suit or
proceeding subject only to Grantor's consent which shall not be
unreasonably withheld or delayed, and claim the benefit of this
Section 37 with respect to settlement of such action, suit or
proceeding. Any Indemnified Party will give Grantor prompt
notice after such Indemnified Party obtains actual knowledge of
any potential claim by such Indemnified Party for indemnification
hereunder.
38. Release of Property. (a) If Grantor shall pay or
cause to be paid, the principal of and interest on the Note in
full at maturity or as permitted in accordance with the terms
thereof and all other Indebtedness payable to Beneficiary
hereunder by Grantor or secured hereby or by the other Loan
Documents and all of the payment Obligations shall have been
performed, then this Mortgage and all the other Loan Documents
shall be discharged and satisfied or assigned (to Grantor or to
any other Person at Grantor's direction and without
representation or warranty by, or recourse to, Beneficiary), at
Grantor's option, without warranty (except that Beneficiary shall
be deemed to have represented that such release and termination
or reassignment has been duly authorized and that it has not
assigned or encumbered this Mortgage or the other Loan
Documents), at the expense of Grantor upon its written request.
Concurrently with such release and satisfaction or assignment of
this Mortgage and all the other Loan Documents, Beneficiary will
return to Grantor the Note and all insurance policies relating to
the Trust Estate which may be held by Beneficiary, any amounts
held in escrow pursuant to this Mortgage or the Cash Collateral
Agreement, if applicable, or otherwise, and any part of the Trust
Estate or other Collateral that may be in its possession and, on
the written request and at the expense of Grantor, will execute
and deliver such instruments of conveyance, assignment and
release (including appropriate UCC-3 termination statements)
prepared by Grantor and as may reasonably be requested by Grantor
to evidence such release and satisfaction, or assignment, and any
such instrument, when duly executed by Beneficiary and, if
appropriate, duly recorded by Grantor in the places where this
Mortgage and each other Loan Document is recorded, shall
conclusively evidence the release and satisfaction or assignment
of this Mortgage and the other Loan Documents.
(b) Grantor shall be entitled to release one (1)
of the Specified Properties identified in Pool A and four (4) of
the Specified Properties identified in Pool B listed on Schedule
5 attached hereto (collectively, the "Specified Properties") from
the Lien of this Mortgage, from and after October 4, 1999 in
connection with a delivery of a Minimum Release Price (provided
that all of the conditions set forth below have been satisfied.
The release of any of the Specified Properties shall be subject
to the satisfaction of the following conditions:
(i) Beneficiary shall have received from Grantor at least
sixty (60) days' prior written notice of the date proposed for
such release (the "Release Date"), which Release Date shall be a
Payment Date (as defined in the Note);
(ii) No Event of Default shall have occurred and be
continuing as of the date of such notice and the Release Date;
(iii)Grantor shall pay to Beneficiary on the Release Date a
Minimum Release Price;
(iv)Grantor shall have delivered to Beneficiary an Officer's
Certificate, dated the Release Date, confirming the matters
referred to in clause (ii) above, certifying that the provisions
of clause (iii) above have been complied with and certifying that
all conditions precedent for such release contained in this
Mortgage have been complied with;
(v) Grantor, at its sole cost and expense, shall have
delivered to Beneficiary, one or more endorsements to the
mortgagee policy of title insurance delivered to Beneficiary on
the date hereof in connection with this Mortgage insuring that,
after giving effect to such release, (x) the Liens created hereby
and insured thereunder are first priority Liens on the respective
remaining Properties subject only to the Permitted Encumbrances
applicable to the remaining Properties and (y) that such policy
is in full force and effect and unaffected by such release;
(vi) After giving effect to such proposed release, the Debt
Service Coverage Ratio would be equal to the greater of 1.28:1
and the Debt Service Coverage Ratio with respect to the twelve
(12) month period immediately preceding the release;
(vii) Grantor, at its sole cost and expense, shall have
delivered to Beneficiary, (i) evidence showing that the fair
market value of the Properties that will remain subject to the
lien of this Mortgage as of the date of the proposed release
shall not be less than the fair market value of such Properties
as of the date of this Mortgage (as evidenced by appraisals
prepared by Independent Appraisers selected by Beneficiary) or
(ii) an Opinion of (Tax) Counsel to the effect that the
contemplated release would not materially adversely affect the
federal income tax status of the REMIC acceptable to Lender in
its sole discretion;
(viii) Beneficiary and the Rating Agencies shall have
received from Grantor with respect to the matters referred to in
clause (vi), (x) statements of the Net Operating Income and Debt
Service (both on a consolidated basis and separately for the
applicable Property(ies) to be released) for the applicable
measuring period, and (y) based on the foregoing statements of
Net Operating Income and Debt Service, calculations of the Debt
Service Coverage Ratio both with and without giving effect to the
proposed release, and (z) calculations of the ratios referred to
in such clause (vi), accompanied by an Officers' Certificate
stating that such statements, calculations and information are
true, correct, and complete in all material respects.
Upon or after the delivery of the Release Price in
accordance with Section 38(b)(iii) hereof, Beneficiary shall
effectuate the following (hereinafter referred to as a "Property
Release"): the security interest of Beneficiary in this Mortgage
and other Loan Documents relating to the released Property shall
be released from the Lien of this Mortgage and Beneficiary will
execute and deliver any agreements reasonably requested by
Grantor to release and terminate or reassign, at Grantor's
option, this Mortgage as to the released Property; provided, that
such release and termination or reassignment shall be without
recourse to Beneficiary (except as contemplated hereby) and
without any representation or warranty except that Beneficiary
shall be deemed to have represented that such release and
termination or reassignment has been duly authorized and that it
has not assigned or encumbered this Mortgage or the other Loan
Documents relating to the released Property (except as
contemplated hereby) and Beneficiary shall return the originals
of any Loan Documents that relate solely to the released Property
to Grantor; provided, further, that upon the release and
termination or reassignment of Beneficiary's security interest in
this Mortgage relating to the released Property all references
herein to this Mortgage relating to the released Property shall
be deemed deleted, except as otherwise provided herein with
respect to indemnities.
39. Rating Agency Monitoring. Until the Obligations
are paid in full, Grantor shall provide the Rating Agencies with
all financial reports required hereunder and such other
information as it shall reasonably request, including copies of
any notices delivered to and received from Beneficiary hereunder,
to enable it to continuously monitor the creditworthiness of
Grantor and to permit an annual surveillance of the implied
credit rating of certain securities secured by a pledge of the
Note and shall pay all Rating Agencies monitoring fees.
40. Environmental Matters.
(a) Representations. Grantor hereby represents and
warrants that except as set forth in the reports listed on
Exhibit D hereto (the "Environmental Reports"), (i) Grantor has
not engaged in or knowingly permitted any operations or
activities upon, or any use or occupancy of any Property, or any
portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal of any
Hazardous Substances on, under, in or about the Property, or
transported any Hazardous Substances to, from or across the
Property, except in all cases in material compliance with
Environmental Requirements and only in the course of legitimate
business operations at the Property; (ii) to Grantor's knowledge,
no tenant, occupant or user of any Property, nor any other
person, has during Grantor's ownership of such Property, engaged
in or permitted any operations or activities upon, or any use or
occupancy of the Property, or any portion thereof, for the
purpose of or in any material way involving the handling,
manufacture, treatment, storage, use, generation, release,
discharge, refining, dumping or disposal of any Hazardous
Substances on, in or about the Property, or transported any
Hazardous Substances to, from or across the Property, except in
all cases in material compliance with Environmental Requirements
and only in the course of legitimate business operations at the
Property; (iii) to Grantor's knowledge, no Hazardous Substances
are presently constructed, deposited, stored, or otherwise
located on, under, in or about any Property except in material
compliance with Environmental Requirements; (iv) to Grantor's
knowledge, no Hazardous Substances have migrated from any
Property upon or beneath other properties which would reasonably
be expected to result in material liability for Grantor; and (v)
to Grantor's knowledge, no Hazardous Substances have migrated or
threaten to migrate from other properties upon, about or beneath
any Property which would reasonably be expected to result in
material liability for Grantor.
(b) Covenants. Subject to Grantor's right to contest under
Section 7(c) hereof, Grantor covenants and agrees with
Beneficiary that it shall comply with all Environmental Laws. If
at any time during the continuance of the Lien of this Mortgage,
a Governmental Authority having jurisdiction over the Trust
Estate requires remedial action to correct the presence of
Hazardous Materials in, around, or under any Property (an
"Environmental Event"), Grantor shall deliver prompt notice of
the occurrence of such Environmental Event to Beneficiary.
Within (30) thirty days after Grantor has knowledge of the
occurrence of an Environmental Event, Grantor shall deliver to
Beneficiary an Officer's Certificate (an "Environmental
Certificate") explaining the Environmental Event in reasonable
detail and setting forth the proposed remedial action, if any.
(c) Environmental Indemnification. Grantor shall
protect, indemnify, save, defend, and hold harmless Beneficiary
and all officers, directors, stockholders, partners, employees,
agents, successors and assigns thereof (collectively, the
"Indemnified Environmental Parties") from and against any and all
liability, loss, damage, actions, causes of action, costs or
expenses whatsoever (including reasonable attorneys' fees and
expenses) and any and all claims, suits and judgments which any
Indemnified Environmental Party may suffer, as a result of or
with respect to: (a) any Environmental Claim relating to or
arising from such Property; (b) the violation of any
Environmental Law in connection with such Property; (c) any
release, spill, or the presence of any Hazardous Substances
affecting such Property; and (d) the presence at, in, on or
under, or the release, escape, seepage, leakage, discharge or
migration at or from, such Property of any Hazardous Substances,
whether or not such condition was known or unknown to Grantor
provided that, in each case, Grantor may be relieved of its
obligation under this subsection if any of the matters referred
to in clauses (a) through (d) above did not occur (but need not
have been discovered) prior to (1) the foreclosure of this
Mortgage with respect to such Property, (2) the delivery by
Grantor to Beneficiary of a deed-in-lieu of foreclosure with
respect to such property, or (3) Beneficiary's taking possession
and control of such Property after the occurrence of an Event of
Default hereunder and such obligation is a result of the acts or
omissions of any Indemnified Party. If any such action or other
proceeding shall be brought against Beneficiary, upon written
notice from Grantor to Beneficiary (given reasonably promptly
following Beneficiary's notice to Grantor of such action or
proceeding), Grantor shall be entitled to assume the defense
thereof, at Grantor's expense, with counsel reasonably acceptable
to Beneficiary; provided, however, Beneficiary may, at its own
expense, retain separate counsel to participate in such defense,
but such participation shall not be deemed to give Beneficiary a
right to control such defense, which right Grantor expressly
retains. Notwithstanding the foregoing, each Indemnified
Environmental Party shall have the right to employ separate
counsel at Grantor's expense if, in the reasonable opinion of
legal counsel, a conflict or potential conflict exists between
the Indemnified Environmental Party and Grantor that would make
such separate representation advisable.
41. Recourse Nature of Certain Indemnifications.
Notwithstanding anything to the contrary provided in this
Mortgage or in any other Loan Document, the indemnification
provided in Section 40(c) hereof shall be fully recourse to
Grantor (but not to (i) any Affiliate of Grantor, (ii) any Person
owning directly or indirectly, any legal or beneficial interest
in Grantor or any Affiliate of Grantor, or (iii) any partner,
principal, officer, controlling person, beneficiary, trustee,
advisor, shareholder, employee, agent, Affiliate or director of
Grantor or of any Persons described in clauses (i) through (ii)
above) and shall be independent of, and shall survive, the
discharge of the Indebtedness, the release of the Lien created
under this Mortgage, and/or the conveyance of title to any
Property to Beneficiary or any purchaser or designee in
connection with a foreclosure of this Mortgage or conveyance in
lieu of foreclosure.
42. Counterparts. This Mortgage may be executed in
one or more counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the
same instrument.
43. Merger, Conversion, Consolidation or Succession to
Business of Beneficiary. Any corporation into which Beneficiary
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which Beneficiary shall be a party, or any
corporation succeeding to all or substantially all the corporate
trust business of Beneficiary, shall be the successor of
Beneficiary hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties
hereto. Beneficiary shall provide the Rating Agencies with
written notice of any merger or conversion to be undertaken
pursuant to this Section 43 no less than 30 days prior to such
merger or conversion.
44. No Endorsement. Beneficiary shall not become or
be considered to be an endorser, co-maker or co-obligor on any
Note or on any obligation of Grantor secured by this Mortgage or
otherwise.
45. Intentionally omitted.
46. Intentionally omitted.
47. Intentionally omitted.
48. Reserves. (a) On the Closing Date, a portion of
the Loan in the amount of Five Hundred Fifty Six Thousand Twenty
Nine Dollars ($556,029) will be deposited into the Deferred
Maintenance Reserve Account (as defined in the Cash Collateral
Agreement) held by the Agent (as defined in the Cash Collateral
Agreement) for Beneficiary. Such funds, together with all
investment income earned thereon, are referred to herein as the
"Deferred Maintenance Amounts." Within five (5) Business Days
after receipt of an Officer's Certificate stating that certain
deferred maintenance items set forth on Schedule 6 have been
substantially completed, and, upon an inspection of the
remediation work at the discretion of Beneficiary, provided that
no Event of Default shall have occurred and be continuing,
Beneficiary will instruct Agent to disburse funds from the
Deferred Maintenance Reserve Account to pay specified contractors
in accordance with invoices approved by Beneficiary or to
reimburse Grantor for funds disbursed by Grantor for the
remediation of the deferred maintenance. Upon full disbursement
to Grantor of all Deferred Maintenance Amounts, the Deferred
Maintenance Reserve Account shall be closed by Beneficiary.
(b) On the Closing Date, a portion of the Loan in the
amount of $29,144.04 will be deposited into the Capital
Expenditure Reserve Account (as defined in the Cash Collateral
Agreement) held by Agent for Beneficiary. Grantor shall deposit
into the Capital Expenditure Reserve Account an annual amount,
payable in monthly installments, equal to $0.15 per square foot
for each Property (the "Capital Expenditure Reserve Amount"), in
an initial aggregate amount as set forth on Schedule 7 hereto.
Portions of the Capital Expenditure Reserve Account shall be
disbursed by Agent to Grantor pursuant to instructions from
Beneficiary, provided no Event of Default shall have occurred and
be continuing, upon delivery by Grantor to Beneficiary of an
Officer's Certificate stating that Grantor has incurred costs
associated with capital expenditures pursuant to invoices
attached thereto, other than those set forth on Schedule 6, and
upon approval and inspection of Work deemed material by
Beneficiary. Within five (5) Business Days of receipt of such
certification, Beneficiary shall instruct Agent to disburse to
Grantor an amount equal to that requested by Grantor.
(c) On the Closing Date, a portion of the Loan in the
amount of $3,000,000 will be deposited into the Environmental
Reserve Account (as defined in the Cash Collateral Agreement) and
held by the Agent (as defined in the Cash Collateral Agreement)
for Beneficiary. Within five (5) Business Days after receipt of
an Officer's Certificate stating that certain environmental
remediation work set forth on Schedule 8 has been substantially
completed, provided that no Event of Default shall have occurred
and be continuing, Beneficiary will instruct Agent to disburse
funds from the Environmental Reserve Account to reimburse Grantor
for the environmental remediation. Upon such disbursement to
Grantor, the Environmental Reserve Account shall be closed by
Beneficiary.
49. Substitute or Successor Trustee. Trustee may
resign by an instrument in writing addressed to Beneficiary, or
Trustee may be removed at any time with or without cause by
Beneficiary. In case of death, resignation, removal or
disqualification of Trustee or if for any reason Beneficiary
shall deem it desirable to appoint a substitute or successor
trustee to act instead of the herein named trustee or any
substitute or successor trustee, then Beneficiary shall have the
right and is hereby authorized and empowered to appoint a
successor trustee, or a substitute trustee, without other
formality than appointment and designation in writing executed
and acknowledged by Beneficiary and, if required by applicable
law to provide constructive notice, recorded in the county or
counties where the Properties are located, and the authority
hereby conferred shall extend to the appointment of other
successor and substitute trustees successively until the
indebtedness secured hereby has been paid in full or until the
Properties are sold hereunder. In the event the indebtedness
secured hereby is owned by more than one person or entity, the
holder or holders of not less than a majority in the amount of
such indebtedness shall have the right and authority to make the
appointment of a successor or substitute trustee provided for in
the preceding sentence. Such appointment and designation by
Beneficiary or by the holder or holders of not less than a
majority of the indebtedness secured hereby shall be full
evidence of the right and authority to make the same and of all
facts therein recited. If Beneficiary is a corporation or a
nationally chartered bank and such appointment is executed in its
behalf by an officer of such corporation or nationally chartered
bank, such appointment shall be conclusively presumed to be
executed with authority and shall be valid and sufficient without
proof of any action by the board of directors or any superior
officer of the corporation. Upon the making of any such
appointment and designation, all of the estate and title of
Trustee in the Properties shall vest in the named successor or
substitute trustee and he shall thereupon succeed to and shall
hold, possess and execute all the rights, powers, privileges,
immunities and duties herein conferred upon Trustee; but
nevertheless, upon the written request of Beneficiary or of the
successor or substitute trustee, Trustee ceasing to act shall
execute and deliver an instrument transferring to such successor
or substitute trustee all of the estate and title in the
Properties of Trustee so ceasing to act, together with all
rights, powers, privileges, immunities and duties herein
conferred upon Trustee, and shall duly assign, transfer and
deliver any of the properties and monies held by said Trustee
hereunder to said successor or substitute trustee. All
references herein to Trustee shall be deemed to refer to Trustee
(including any successor or substitute appointed and designated
as herein provided) from time to time acting hereunder. Grantor
hereby ratifies and confirms any and all acts which the herein
named Trustee or his successor or successors, substitute or
substitutes, in this trust, shall do lawfully by virtue hereof.
50. Liability of Trustee. Trustee shall not be liable
for any error of judgment or act done by Trustee in good faith,
or be otherwise responsible or accountable under any
circumstances whatsoever, except for Trustee's gross negligence
or willful misconduct. Trustee shall have the right to rely on
any instrument, document or signature authorizing or supporting
any action taken or proposed to be taken by him hereunder,
believed by him in good faith to be genuine. All monies received
by Trustee shall, until used or applied as herein provided, be
held in trust for the purposes for which they were received, and
shall be segregated from all other monies, and Trustee shall be
under no liability for interest on any monies received by him
hereunder. Grantor will reimburse Trustee for, and indemnify and
save him harmless against, any and all liability and expenses
which may be incurred by him in the performance of his duties
hereunder.
51. Beneficiary and Trustee.
(a) The Trustees accept the trusts hereby created and
agree to perform the duties herein required of them upon the
terms and conditions hereof.
The duties and obligations of the Trustees in respect
of this Mortgage shall be as set forth in this Section 51.
(i) Except upon the occurrence and during the
continuance of an Event of Default actually known to Beneficiary:
(A) The Trustees shall undertake to perform such
duties and obligations and only such duties and obligations as
are specifically set forth in this Mortgage and the other Loan
Documents or as otherwise directed by a letter of direction from
Beneficiary, and no implied covenants or obligations shall be
read into this Mortgage or the other Loan Documents against the
Trustees; and
(B) In the absence of bad faith, the Trustees may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustees and conforming to the
requirements of this Mortgage and the other Loan Documents; but
in the case of any such certificates or opinions which by any
provision hereof or thereof are specifically required to be
furnished to Beneficiary, the Trustees shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Mortgage and the other Loan Documents.
(ii) In case an Event of Default known to
Beneficiary has occurred and is continuing, the Trustees shall
exercise the rights and powers vested in the Trustees by this
Mortgage and the other Loan Documents, with reasonable care.
(iii) No provision of this Mortgage shall be
construed to relieve the Trustees from liability for their own
negligence or willful misconduct, except that:
(A) Section 51(a) hereof shall not be construed
to limit the effect of Section 51(b) hereof;
(B) The Trustees shall not be liable for any
error of judgment made in good faith by an officer of the
Trustees, unless it shall be proved that the Trustees were
negligent in ascertaining the pertinent facts; and
(C) The Trustees shall not be liable with respect
to any action taken or omitted to be taken in good faith in
accordance with the direction of Beneficiary relating to the
time, method and place of conducting any proceeding for any
remedy available to the Trustees, or exercising any trust or
power conferred upon the Trustees under this Mortgage.
(iv) Whether or not therein expressly so provided,
every provision of this Mortgage relating to the conduct or
affecting the liability of or affording protection to the
Trustees shall be subject to the provisions of this Section
51(b).
(v) No provision of this Mortgage shall require
the Trustees to expend or risk their own funds or otherwise incur
any personal financial liability in the performance of any of
their duties hereunder, or in the exercise of any of their rights
or powers, if they shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to them.
(b) At any time or times for the purpose of
meeting the Legal Requirements of any jurisdiction in which any
part of a Trust Estate may at the time be located, Beneficiary
shall have the power to appoint and, upon the written request of
Beneficiary, Grantor shall for such purpose join with Beneficiary
in the execution, delivery and performance of all instruments and
agreements reasonably necessary or proper to appoint one or more
Persons reasonably approved by Beneficiary to act as trustee
pursuant to this Mortgage in such jurisdiction for such portion
of the Trust Estate located in such jurisdiction (the
"Jurisdictional Trustee") with such powers as are provided in the
instrument of appointment which shall expressly designate the
Property affected and the capacity of the appointee as a
Jurisdictional Trustee, and to vest in such Person or Persons in
the capacity aforesaid, any property, title, right or power
deemed necessary or desirable, subject to the other provisions of
this Section 51. If Grantor does not join in such appointment
within fifteen (15) days after the receipt by it of a request so
to do, or in case an Event of Default has occurred and is
continuing, Beneficiary alone shall make such appointment.
Should any written instrument from Grantor be reasonably required
by any Jurisdictional Trustee so appointed for more fully
confirming to such Jurisdictional Trustee such property, title,
right or power, any and all such instruments shall, on request,
be executed, acknowledged and delivered by Grantor.
(i) Every Jurisdictional Trustee shall, to the
extent permitted by law, but to such extent only, be appointed
subject to the terms set forth in Section 51(b)(iii) hereof.
(ii) As of the date hereof First American Title,
or any agency thereof, is hereby appointed Jurisdictional Trustee
for the States of California, Oregon, Nevada and Tennessee.
(iii) To the extent permitted by law, but to such
extent only, the Jurisdictional Trustee is appointed herein
subject to the following terms, namely:
(A) Subject to the terms hereof and to the extent
permitted by law, all rights, powers, duties and obligations
under this Mortgage granted to or imposed upon Beneficiary and
the Jurisdictional Trustee shall be exercised solely by
Beneficiary.
(B) The rights, powers, duties and obligations
hereby conferred or imposed upon Beneficiary and the
Jurisdictional Trustee in respect of any Property covered by such
appointment shall be exercised or performed by Beneficiary
separately, or at the election of Beneficiary by Beneficiary and
the Jurisdictional Trustee jointly, except to the extent that (i)
under any law of any jurisdiction in which any particular act is
to be performed by Beneficiary and/or the Jurisdictional Trustee,
Beneficiary shall be incompetent or unqualified to perform such
act or (ii) Beneficiary shall deem it inconvenient or undesirable
to perform such act, then in any such event such rights, powers,
duties and obligations shall be exercised and performed by the
Jurisdictional Trustee at the written direction of Beneficiary.
(C) Beneficiary at any time, by an instrument in
writing executed by it, may accept the resignation of or remove
any Jurisdictional Trustee. Upon the written request of
Beneficiary, Grantor shall join with Beneficiary in the
execution, delivery and performance of all instruments and
agreements reasonably necessary or proper to effectuate such
resignation or removal. A successor to the Jurisdictional
Trustee so resigned or removed may be appointed in the manner
provided in this Section 51.
(D) Upon the resignation or removal of any
Jurisdictional Trustee, Beneficiary shall have the power to
appoint and, upon the written request of Beneficiary, Grantor
shall, for such purpose, join with Beneficiary in the execution,
delivery and performance of all instruments and agreements
reasonably necessary or proper to appoint one or more Persons
reasonably approved by Beneficiary to act as successor
Jurisdictional Trustee together with Beneficiary of all or any
part of the Trust Estate so designated, with such power as
provided for in this Section 51, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or
power deemed necessary or desirable, subject to the other
provisions of this Section 51. If Grantor does not join in such
appointment, within fifteen (15) days after the receipt by it of
a request so to do, or in case an Event of Default has occurred
and is continuing, Beneficiary acting alone shall make such
appointment. Should any written instrument from Grantor be
required by any successor Jurisdictional Trustee so appointed for
more fully confirming to such trustee such property, title, right
or power, any and all such instruments shall, on request, be
executed, acknowledged and delivered by Grantor.
(E) No Jurisdictional Trustee hereunder shall be
personally liable by reason of any act or omission of Beneficiary
or any other trustee hereunder and Beneficiary shall not be
personally liable by reason of any act or omission of the
Jurisdictional Trustee; neither shall knowledge of Beneficiary be
imputed to the Jurisdictional Trustee nor shall knowledge of the
Jurisdictional Trustee be imputed to Beneficiary.
(F) Any notice delivered to Beneficiary shall be
deemed to have been sufficiently delivered without any delivery
to the Jurisdictional Trustee.
(G) Any obligation of Grantor to file or give
notices, reports or information to Beneficiary hereunder shall be
satisfied by the delivery thereof to Beneficiary.
(H) Any successor to the Jurisdictional Trustee
(herein, called the "Successor Jurisdictional Trustee") shall
execute, acknowledge and deliver to its predecessor (herein
called the "Predecessor Jurisdictional Trustee"), Beneficiary and
Grantor, an instrument accepting such appointment. Thereupon,
the Successor Jurisdictional Trustee shall, without any further
act, deed or conveyance, become vested with the estates,
properties, rights, powers, duties and trusts of the Predecessor
Jurisdictional Trustee in the trusts created by this Mortgage,
with the same effect as if originally named as Jurisdictional
Trustee. At the written request of Grantor, Beneficiary or the
Successor Jurisdictional Trustee, the Predecessor Jurisdictional
Trustee shall execute and deliver an instrument, in recordable
form, transferring to the Successor Jurisdictional Trustee, upon
the trusts herein expressed, the Trust Estate and shall duly
assign transfer, deliver and pay over to the Successor
Jurisdictional Trustee, any property and money subject to the
Lien hereof held by it. If any written instrument from Grantor
or Beneficiary be required by the Successor Jurisdictional
Trustee for more fully and certainly vesting in and confirming to
the Successor Jurisdictional Trustee such estates, properties,
rights, powers and trusts, then, at the request of the Successor
Jurisdictional Trustee, all such instruments shall be made,
executed, acknowledged and delivered by Grantor or Beneficiary to
the Successor Jurisdictional Trustee.
(c) Grantor covenants and agrees:
(i) to pay to the Trustees from time to time
reasonable compensation for all services rendered by them
hereunder;
(ii) to reimburse each of Beneficiary (subject to
Section 18) and the Trustees upon request for all reasonable
expenses, disbursements and advances incurred or made by it or
them in accordance with any provision of this Mortgage (including
reasonable compensation, expenses and disbursements of agents and
counsel), except any such expense, disbursement or advance as may
be attributable to its negligence or bad faith; and
(iii) to indemnify the Trustees for, and to hold
each harmless against, any loss, liability or expense incurred
without negligence, willful misconduct or bad faith on its part,
arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder or the
enforcement of remedies hereunder including the costs and
expenses of defending against any claim or liability in
connection with the exercise or performance of any of the powers
or duties hereunder or thereunder (except any liability incurred
by Trustee and the Jurisdictional Trustee with negligence,
willful misconduct or bad faith on its or their part).
The obligations of Grantor under this Section 51(c) to compensate
or indemnify the Trustees and to pay or reimburse the Trustees
for expenses, disbursements and advances shall constitute
additional Indebtedness hereunder and shall survive the
satisfaction and discharge of this Mortgage. When the Trustees
or Beneficiary incur expenses or render services after an
occurrence of an Event of Default hereunder, the expenses and
compensation for services are intended to constitute expenses of
administration under any bankruptcy law.
(d) To the extent permitted by law, but to such
extent only, the Individual Trustee is appointed herein by
Beneficiary subject to the following terms, namely:
(i) Subject to the terms hereof and to the extent
permitted by law, all the rights, powers, duties and obligations
under this Mortgage granted to or imposed upon the Individual
Trustee shall be exercised solely by Beneficiary except as herein
provided.
(ii) The rights, powers, duties and obligations
hereby conferred or imposed upon the Individual Trustee in
respect of any property covered by such appointment shall be
exercised or performed by Beneficiary separately, or at the
election of Beneficiary by Beneficiary and the Individual Trustee
jointly, except to the extent that (i) under any law of any
jurisdiction in which any particular act is to be performed by
the Individual Trustee, Beneficiary shall be incompetent or
unqualified to perform such act or (ii) Beneficiary shall deem it
inconvenient or undesirable to perform such act, then in any such
event such rights, powers, duties and obligations shall be
exercised and performed by the Individual Trustee at the written
direction of Beneficiary.
(iii) Beneficiary at any time, by an instrument
in writing executed by it, may accept the resignation of or
remove any Individual Trustee. Upon the written request of
Beneficiary, Grantor shall join with Beneficiary in the
execution, delivery and performance of all instruments and
agreements reasonably necessary or proper to effectuate such
resignation or removal. A successor to the Individual Trustee so
resigned or removed may be appointed in the manner provided in
this Section 51.
(iv) Upon the death, resignation or removal of
any Individual Trustee, Beneficiary shall have power to appoint
and, upon the written request of Beneficiary, Grantor shall, for
such purpose, join with Beneficiary in the execution, delivery
and performance of all instruments and agreements reasonably
necessary or proper to appoint, one or more persons approved by
Beneficiary to act as Successor Individual Trustee together with
Beneficiary of all or any part of the Trust Estate, with such
powers as provided for in this Section 51, and to vest in such
person or persons in the capacity aforesaid, any property, title,
right or power deemed necessary or desirable, subject to the
other provisions of this Section 51. If Grantor does not join in
such appointment, within fifteen (15) days after the receipt by
it of a request so to do, or in case an Event of Default has
occurred and is continuing, Beneficiary acting alone shall make
such appointment.
(v) Should any written instrument from Grantor be
reasonably required by any successor Individual Trustee so
appointed for more fully confirming to such trustee such
property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by
Grantor.
(vi) No Individual Trustee hereunder shall be
personally liable by reason of any act or omission of Beneficiary
or any other Trustee hereunder and Beneficiary shall not be
personally liable by reason of any act or omission of the
Individual Trustee; neither shall knowledge of Beneficiary be
imputed to the Individual Trustee nor shall knowledge of the
Individual Trustee be imputed to Beneficiary.
(vii) Any notice delivered to Beneficiary shall
be deemed to have been sufficiently delivered without any
delivery to the Individual Trustee.
(viii) Any obligation of Grantor to file or give
notices, reports or information to the Trustees hereunder shall
be satisfied by the delivery thereof to Beneficiary.
Any successor to the Individual Trustee (herein, in
this subsection called the "Successor Individual Trustee") shall
execute, acknowledge and deliver to his predecessor (herein, in
this subsection, called the "Predecessor Individual Trustee"),
Beneficiary and Grantor, an instrument accepting such
appointment. Thereupon, the Successor Individual Trustee shall,
without any further act, deed or conveyance, become vested with
the estates, properties, rights, powers, duties and trusts of the
Predecessor Individual Trustee in the trusts created by this
Mortgage, with the same effect as if originally named as
Individual Trustee. At the written request of Grantor,
Beneficiary or the Successor Individual Trustee, the Predecessor
Individual Trustee shall execute and deliver an instrument
transferring to the Successor Individual Trustee, upon the trusts
herein expressed, the Trust Estate and shall duly assign,
transfer, deliver and pay over to the Successor Individual
Trustee, any property and money subject to the Lien hereof held
by him. If any written instrument from Grantor or Beneficiary be
reasonably required by the Successor Individual Trustee for more
fully and certainly vesting in and confirming to the Successor
Individual Trustee such estates, properties, rights, powers and
trusts, then, at the request of the Successor Individual Trustee,
all such instruments shall be made, executed, acknowledged and
delivered by Grantor or Beneficiary to the Successor Individual
Trustee.
(e) At any time or times, (i) for the purpose of
meeting the Legal Requirements of any jurisdiction in which any
part of a Trust Estate may at the time be located or (ii) if
Beneficiary deems it to be necessary or desirable for the
protection of its interests, Beneficiary shall have the power to
appoint, and upon written request of Beneficiary, Grantor shall
for such purpose join with Beneficiary in the execution, delivery
and performance of all instruments and agreements reasonably
necessary or proper to appoint, one or more Persons approved by
Beneficiary either to act as co-trustee, jointly with
Beneficiary, of all or any part of the Trust Estate, or to act as
separate trustee of any such property, in either case with such
powers as may be provided in the instrument of appointment which
shall expressly designate the property affected and the capacity
of the appointee as either a co-trustee or separate trustee, and
to vest in such person or persons in the capacity aforesaid, any
property, title, right or power deemed necessary or desirable,
subject to the other provisions of this Section 51. If Grantor
does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case an Event of
Default has occurred and is continuing, Beneficiary alone shall
make such appointment.
Should any written instrument from Grantor be required
by any co-trustee or separate trustee so appointed for more fully
confirming to such co-trustee or separate trustee such property,
title, right or power, any and all such instruments shall, by
request, be executed, acknowledged and delivered by Grantor.
Every co-trustee or separate trustee shall, to the
extent permitted by law, but to such extent only, be appointed
subject to the same terms as hereinabove set forth for the
Individual Trustee.
(f) Grantor and Beneficiary intend that the
relationship created under this Mortgage be solely that of
mortgagor and mortgagee. Nothing herein is intended to create a
joint venture, partnership, tenancy-in-common or joint tenancy
relationship between Grantor and Beneficiary.
52. As to Property in Alabama. Notwithstanding
anything to the contrary elsewhere in this Mortgage, as to any
property of the Trust Estate as is located in the State of
Alabama (the "Alabama Property"):
(a) This Mortgage is intended to be a Financing
Statement within the purview of Alabama Uniform Commercial Code
with respect to the personal property described herein. The
addresses of the Mortgagor (Debtor) and the Beneficiary (Secured
Party) are set forth below. This Mortgage is to be filed of
record in the Offices of the Judges of Probate of the Counties
where the mortgaged property is located.
Name of Debtor/Mortgagor Address
Mark M.P.N.M., Limited Partnership c/o Mark Centers Trust
600 Third Avenue
P.O. Box 1679
Kingston, Pennsylvania
18704
Name of Secured Party/Beneficiary
Secore Financial Corporation 12510 Prosperity Drive
Suite 270
Silver Spring, Maryland
20904
(b) This Mortgage shall constitute a Security
Agreement within the meaning of the Alabama Uniform Commercial
Code with respect to (i) any and all sums at any time on deposit
for the benefit of the Secured Party/Beneficiary or held by the
Secured Party/Beneficiary (whether deposited by or on behalf of
the Debtor/Mortgagor or anyone else) pursuant to any of the
provisions of the Mortgage and (ii) with respect to any personal
property included in the Granting Clauses of this Mortgage, and
all replacements of such personal property, and the proceeds
thereof. Upon default, without limitation of any other remedies,
the Secured Party/Beneficiary shall have the remedies of a
secured party under the Alabama Uniform Commercial Code and those
remedies described in paragraph (h) of Section 20 hereof. The
Debtor/Mortgagor hereby authorizes the Secured Party/Beneficiary
to execute, deliver, file or refile as Secured Party without
joinder of the Debtor/Mortgagor, any Financing Statement,
Continuation Statement or other instruments the Secured
Party/Beneficiary may reasonably require from time to time to
perfect or renew such security interest under the Alabama Uniform
Commercial Code.
(c) This Mortgage shall be deemed to be and shall be
construed as a mortgage as well as a Security Agreement and
assignment of leases, rents and revenues. With respect to the
Alabama Property, the term Grantor herein shall be deemed a
mortgagor and a debtor and the term Beneficiary shall be deemed a
mortgagee and a secured party. The Trustee shall have no
capacity and shall be disregarded. All references to "Trustee"
shall be deemed to refer to the "Mortgagee" to the extent not
inconsistent with interpreting this instrument as a real estate
mortgage. Each of the remedies set forth herein, including
without limitation, the remedies involving a power of sale or
power of attorney with respect to the Alabama Property and the
right of Beneficiary to execute self-help in connection with the
enforcement of the terms of this Mortgage shall be exercisable if
and to the extent permitted by the laws of the State of Alabama
in force at the time of the exercise of such remedies without
regard to the enforceability of such remedies at the time of the
execution and delivery of this Mortgage.
(d) Sections 49, 50 and 51 hereof are deleted in their
entirety as to the Alabama Property, and all references to
"Jurisdictional Trustee", "Individual Trustee", "Successor
Trustee", "Co-Trustee" and "Separate Trustee" in this Mortgage
are deleted in their entirety as to the Alabama Property. It is
the intention of the parties that this Mortgage shall be a
mortgage and not a deed of trust with respect to the Alabama
Property and that the Beneficiary shall have all of the rights
and remedies that a mortgagee would have under the law or in
equity in addition to those granted herein to the above-
identified trustee.
(e) Foreclosure. If an Event of Default shall have
occurred and be continuing, Beneficiary/Mortgagee may, in
additional to other rights it has under Section 20 hereof, sell
the Trust Estate to the highest bidder at public auction in front
of the courthouse door in the county or counties, as may be
required, where the Trust Estate is located, either in person or
by auctioneer, after having first given notice of the time, place
and terms of sale, together with a description of the property to
be sold, by publication once a week for three (3) successive
weeks prior to said sale in some newspaper published in said
county or counties, as may be required, and, upon payment of the
purchase money, Beneficiary/Mortgagee or any person conducting
the sale for Beneficiary/Mortgagee is authorized to execute to
the purchaser at said sale a deed to the Trust Estate so
purchased. Beneficiary/Mortgagee may bid at said sale and
purchase the Trust Estate, or any part thereof, if the highest
bidder therefor. At the foreclosure sale the Trust Estate may be
offered for sale and sold as a whole without first offering it in
any other manner or may be offered for sale and sold in any other
manner as Beneficiary/Mortgagee may elect.
(f) The proceeds of any foreclosure sale pursuant to
Paragraph (e) of Section 52 shall be applied as follows:
(i) First, to the expenses of making the sale, including
a reasonable attorneys' fee for such services as may be necessary
in the collection of the indebtedness secured by this Mortgage or
the foreclosure of this Mortgage;
(ii) Second, to the repayment of any money, with interest
thereon, which Beneficiary/Mortgagee may have paid, or become
liable to pay, or which it may then be necessary to pay for
taxes, insurance, assessments or other charges, liens, or debts
as hereinabove provided, and as may be provided in the Loan
Documents;
(iii) Third, to the payment and satisfaction of the
Indebtedness (including but not limited to the Loan secured
hereby with interest to date of sale, whether or not all of such
indebtedness be then due);
(iv) Fourth, the balance, if any, shall be paid to the
party or parties appearing of record to be the owner of the Trust
Estate at the time of the sale, after deducting any expense of
ascertaining who is such owner, or as may otherwise be provided
by law.
(g) Beneficiary/Mortgagee's Option on Foreclosure. At the
option of the Beneficiary/Mortgagee, this Mortgage may be
foreclosed as provided by law or in equity, in which event a
reasonable attorneys' fee shall, among other costs and expenses,
be allowed and paid out of the proceeds of the sale. In the
event Beneficiary/Mortgagee exercises its option to foreclose
this Mortgage in equity, Beneficiary/Mortgagee may, at its
option, foreclose this Mortgage subject to the rights of any
tenants of the Trust Estate, and the failure to make any such
tenants parties defendants to any such foreclosure proceeding and
to foreclose their rights will not be, nor be asserted to be by
the Beneficiary/Mortgagee, a defense to any proceedings
instituted by the Beneficiary/Mortgagee to collect the sums
secured hereby, or to collect any deficiency remaining unpaid
after the foreclosure sale of the Trust Estate.
(h) The Indebtedness secured by this Mortgage matures on
November 1, 2021.
53. As to Property in Florida. Notwithstanding
anything to the contrary elsewhere in this Mortgage, as to any
property of the Trust Estate as is located in the State of
Florida (the "Florida Property").
(a) The reference, in Section E of the Granting
Clauses, to the Uniform Commercial Code shall be deemed to refer
to Florida Statutes Section 679.313 and Section 679.402, as
amended, respectively. This Mortgage is intended to be a
Financing Statement within the purview of Florida Statute Section
679.402 with respect to the personal property described herein.
The addresses of the Mortgagor (Debtor) and the Beneficiary
(Secured Party) are herein set forth. This Mortgage is to be
filed of record with the Clerk of the Circuit Court of the County
or Counties where the mortgaged property is located.
(b) This Mortgage shall constitute a Security
Agreement within the meaning of the Florida Uniform Commercial
Code with respect to (i) any and all sums at any time on deposit
for the benefit of the Beneficiary or held by the Beneficiary
(whether deposited by or on behalf of the Mortgagor or anyone
else) pursuant to any of the provisions of the Mortgage and (ii)
with respect to any personal property included in the Granting
Clauses of this Mortgage, and all replacements of such personal
property, and the proceeds thereof. Upon default, without
limitation of any other remedies, the Beneficiary shall have the
remedies of a Secured Party under the Florida Uniform Commercial
Code. The Debtor/Mortgagor hereby authorizes the Secured
Party/Beneficiary to execute, deliver, file or refile as Secured
Party without joinder of the Borrower, any Financing Statement,
Continuation Statement or other instruments the Beneficiary may
reasonably require from time to time to perfect or renew such
security interest under the Uniform Commercial Code.
(c) This Mortgage shall be deemed to be and shall
be construed as a Mortgage as well as a Security Agreement and
Collateral Assignment of leases, Rents and Revenues. Each of the
remedies set forth herein, including without limitation the
remedies involving a power of sale or power of attorney with
respect to the Florida Property and the right of Beneficiary to
exercise self-help in connection with the enforcement of the
terms of this Mortgage shall be exercisable if and to the extent
permitted by the laws of the State of Florida in force at the
time of the exercise of such remedies without regard to the
enforceability of such remedies at the time of the execution and
delivery of this Mortgage.
(d) Sections 49, 50 and 51 are deleted in their
entirety as to the Florida Property, and all reference to
"Jurisdictional Trustee", "Individual Trustee", "Successor
Trustee", "Co-Trustee" and "Separate Trustee" in this Mortgage
are deleted in their entirety as to the Florida Property. It is
the intention of the parties that this mortgage shall be a
mortgage and not a deed of trust with respect to the Florida
Property and that the Beneficiary shall have all of the rights
and remedies respectively granted herein to the above-identified
trustee.
(e) In any suit to foreclose the lien of this
Mortgage there shall be allowed and included as additional
indebtedness hereby secured in the final judgment decree all
expenditures and expenses which may be paid or incurred by or on
behalf of the Beneficiary for attorneys' and paralegals' fees,
appraisers' fees, outlays for documentary and expert evidence,
stenographer charges, publication costs, costs (which may be
estimated as to items to be expended after entry of the decree)
of procuring all title searches and examinations and policies,
and similar date and assurance with respect to title as
Beneficiary amy 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 condition of the title to or the
value of the mortgaged property.
(f) The definition of Environmental Laws in this
Mortgage shall, with respect to the Florida Property, be deemed
to include the Florida Pollutant Spill prevention and Control
Act, Chapter 376. Florida Statutes, and the Florida Air and
Water Pollution Control Act, Chapter 403, part I of the Florida
Statutes, together with any and all other environmental laws in
effect from time to time in the State of Florida, as the same may
be hereafter amended or modified.
(g) The indebtedness secured by this Mortgage
matures on November 1, 2021.
(h) Maximum Principal Indebtedness. The amount
of principal indebtedness this Mortgage secures against Property
located in the State of Florida and, for purposes of the Tax Law
of the State of Florida (relating to taxation of mortgages), the
maximum amount of the principal amount of the principal
indebtedness secured by this Mortgage, or which by any
contingency may be secured by this Mortgage, and for which this
Mortgage may be foreclosed or otherwise enforced against the
Property located in the State of Florida, is the $1,551,800
principal amount of this Mortgage.
54. As to Property in Georgia. With respect to such
of the Mortgaged Property as is located in the State of Georgia
(the "Georgia Property"):
(a) The Mortgagor hereby does grant, bargain,
sell, assign and convey unto the Beneficiary and the successors,
successors-in-title and assigns of the Beneficiary, to have and
to hold subject to the Permitted Encumbrances. With respect to
the Georgia Property, this instrument is intended to operate and
to be construed as a deed passing fee simple or leasehold title
to the Georgia Property to the Beneficiary, as well as an
assignment of leases and rents and security agreement, and not as
a mortgage and is made under those provisions of the existing
laws of the State of Georgia related to deeds to secure debt.
Should the Obligations be paid according to the
tenor and effect thereof when the same shall become due and
payable, and should the Mortgagor perform all covenants herein
contained in a timely manner, then this Mortgage shall be
cancelled and surrendered.
(b) Section E of the Granting Clauses is hereby
amended to add the following at the end of such Section:
Upon request by the Beneficiary, at any time and
from time to time, a financing statement or statements reciting
this Mortgage to be a security agreement affecting all of such
property shall be executed by the Mortgagor and the Beneficiary
and appropriately filed. The remedies for any violation of the
covenants, terms and conditions of the security agreement
contained in this Mortgage shall be (i) as prescribed herein, or
(ii) as prescribed by general law, or (iii) as prescribed by the
specific statutory consequences now or hereafter enacted and
specified in the Uniform Commercial Code, all at the
Beneficiary's sole election except as limited by applicable law.
The Mortgagor and the Beneficiary agree that the filing of any
such financing statement or statements in the records normally
having to do with personal property shall not in any way affect
the agreement of the Mortgagor and the Beneficiary that the
personal property used in connection with the production of
income form the Trust Estate or adapted for use therein or which
is described or reflected in this Mortgage, is, and at all times
for all purposes and in all proceedings, both legal or equitable,
shall be regarded as part of the real estate conveyed hereby
regardless of whether (i) any such item is physically attached to
the improvements, (ii) serial numbers are used for the better
identification of certain items capable of being thus identified
in an exhibit to this Mortgage, or (iii) any such item is
referred to or reflected in any such financing statement or
statements so filed at any time; provided, however, the
aforegoing shall not be construed in conflict with the laws of
Georgia defining and regulating personal vs. real property, all
of which such laws shall control. Similarly, the mention in any
such financing statement or statements of the rights in and to
(i) the proceeds of any fire and/or hazard insurance policy, or
(ii) any award in eminent domain proceedings for a taking or for
loss of value, or (iii) the Mortgagor's interest as lessor in any
present or future lease or rights to income growing out of the
use and/or occupancy of the Mortgaged Property, whether pursuant
to the lease or otherwise, shall not in any way alter any of the
rights of the Beneficiary as determined by this Mortgage or
affect the priority of the Beneficiary's security interest
granted hereby or by any other recorded document, it being
understood and agreed that such mention in such financing
statement or statements is solely for the protection of the
Beneficiary in the event any court shall at any time hold with
respect to the foregoing clauses (i), (ii) or (iii) of this
sentence, that notice of the Beneficiary's priority of interest,
to be effective against a particular class of persons, must be
filed in the Uniform Commercial Code records.
(c) Section 20 is hereby amended to add the
following at the end of Subsection 20(c):
In the event of (i) above, with respect to the Georgia Property,
the Beneficiary, at its option, may sell the Georgia Property or
any part of the Georgia Property at public sale or sales before
the door of the courthouse of the county in which the Georgia
Property or the subject portion of the Georgia Property is
situated to the highest bidder for cash, in order to pay the
Indebtedness secured hereby and accrued interest thereon and
insurance premiums, liens, assessments, taxes and charges,
including utility charges, if any, with accrued interest thereon,
and all expenses of the sale and of all proceedings in connection
therewith, including incurred attorneys' fees, after advertising
the time, place and terms of sale once a week for four (4) weeks
immediately preceding such sale (but without regard to the number
of days) in a newspaper in which Sheriff's sales are advertised
in said county. At any such public sale, the Beneficiary may
execute and deliver to the purchaser a conveyance of the Georgia
Property or any part of the Georgia Property in fee simple with
full warranties of title and to this end, the Mortgagor hereby
constitutes and appoints the Beneficiary the agent and attorney-
in-fact of the Mortgagor to make such sale and conveyance, and
thereby to divest the Mortgagor of all right, title or equity
that the Mortgagor may have in and to the Georgia Property or the
subject portion thereof and to vest the same in the purchaser or
purchasers at such sale or sales, and all the acts and doings of
said agent and attorney-in-fact are hereby ratified and confirmed
and any recitals in said conveyance or conveyances as to facts
essential to a valid sale shall be binding upon the Mortgagor.
The aforesaid power of sale and agency hereby granted are coupled
with an interest and are irrevocable by death or otherwise, are
granted as cumulative of the other remedies provided hereby and
shall not be exhausted by one exercise thereof but may be
exercised until full payment of all Indebtedness secured hereby.
In the event of any such foreclosure sale by the Beneficiary, the
Mortgagor shall be deemed a tenant holding over and shall
forthwith deliver possession to the purchaser or purchasers at
such sale or be summarily dispossessed according to provisions of
law applicable to tenants holding over.
(d) Section 20(b) is hereby amended and restated
as follows:
(i) If an Event of Default shall have occurred and be
continuing, the Mortgagor upon demand of the Beneficiary shall
forthwith surrender to the Beneficiary the actual possession of
the Georgia Property and if, and to the extent, permitted by law,
the Beneficiary itself, or by such officers or agents as it may
appoint, may enter and take possession of all the Georgia
Property without the appointment of a receiver, or an application
therefor, and may exclude the Mortgagor and its agents and
employees wholly therefrom, and may have joint access with the
Mortgagor to the books, papers and accounts of the Mortgagor.
(ii) If the Mortgagor shall for any reason fail to
surrender or deliver the Georgia Property or any part thereof
after such demand by the Beneficiary, the Beneficiary may obtain
a judgment or decree conferring upon the Beneficiary the right to
immediate possession or requiring the Mortgagor to deliver
immediate possession of the Georgia Property to the Beneficiary,
to the entry of which judgment or decree the Mortgagor hereby
specifically consents. The Mortgagor will pay to the
Beneficiary, upon demand, all expenses of obtaining such judgment
or decree, including reasonable compensation to the Beneficiary,
its attorneys and agents; and all such expenses and compensation
shall, until paid, be secured by the lien of this Mortgage.
(iii) Upon every such entering upon or taking of
possession, the Beneficiary may hold, store, use, operate, manage
and control the Georgia Property and conduct the business
thereof, and, from time to time (i) make all necessary and proper
maintenance, repairs, renewals, replacements, additions,
betterments and improvements thereto and thereon and purchase or
otherwise acquire additional fixtures, personalty and other
property; (ii) insure or keep the Georgia Property insured; (iii)
manage and operate the Georgia Property and exercise all the
rights and powers of the Mortgagor to the same extent as the
Mortgagor could in its own name or otherwise with respect to the
same; and (iv) enter into any and all agreements with respect to
the exercise by others of any of the powers herein granted the
Beneficiary, all as the Beneficiary from time to time may
determine to be in its best interest. The Beneficiary may
collect and receive all the Rents from the Georgia Property,
including those past due as well as those accruing thereafter,
and, after deducting (aa) all expenses of taking, holding,
managing and operating the Georgia Property (including
compensation for the services of all persons employed for such
purposes); (bb) the cost of all such maintenance, repairs,
renewals, replacements, additions, betterments, improvements,
purchases and acquisitions; (cc) the cost of such insurance; (dd)
such taxes, assessments and other similar charges as the
Beneficiary may at its option pay; (ee) other proper charges upon
the Georgia Property or any part thereof; and (ff) the reasonable
compensation, expenses and disbursements of the attorneys and
agents of the Beneficiary, the Beneficiary shall apply the
remainder of the moneys and proceeds so received by the
Beneficiary, first to the payment of accrued interest and second
to the payment of overdue installments of principal. Anything in
this Section 20(b) to the contrary notwithstanding, the
Beneficiary shall not be obligated to discharge or perform the
duties of a landlord to any tenant or incur any liability as a
result of the exercise by the Beneficiary of its rights under
this Mortgage, and the Beneficiary shall be liable to account
only for the Rents actually received by the Beneficiary, except
as may be otherwise required under the terms of any presently
existing lease.
(iv) Whenever all that is due upon such interest,
deposits and principal installments and under any of the terms,
covenants, conditions and agreements of this Mortgage, shall have
been paid and all Events of Default made good, the Beneficiary
shall surrender possession of the Georgia Property to the
Mortgagor, its successors or assigns. The same right of taking
possession, however, shall exist if any subsequent Event of
Default shall occur and be continuing.
(e) Section 20 is hereby amended to add the
following at the end of Subsection 20(c):
In the event of (ii) above, the Beneficiary, at its option,
is authorized to foreclose this Mortgage subject to the rights of
any tenants of the Georgia Property, and the failure to make any
such tenants parties to any such foreclosure proceedings and to
foreclose their rights will not be, nor be asserted to be by the
Mortgagor, a defense to any proceedings instituted by the
Beneficiary to collect the Indebtedness.
55. As to Property in New York. This instrument shall
be deemed a mortgage and not a deed of trust and as to property
of the Trust Estate located in the State of New York, this
investment shall be entitled "Consolidated and Restated Indenture
of Mortgage, Security Agreement, Financing Statement, Fixture
Filing and Assignment of Leases, Rents and Security Deposits".
Beneficiary shall be entitled to all rights and remedies that a
mortgagee would have under the law or in equity in addition to
all rights and remedies it may have hereunder.
(a) Consolidation with Existing Mortgage and
Maximum Indebtedness Secured. Beneficiary is now the lawful
owner and holder of that certain Mortgage, dated June 14, 1996,
made by Mark Centers Limited Partnership ("MCLP") and delivered
to Firstrust Savings Bank ("Bank") which mortgage was recorded on
June 24, 1996, in the County of Rensselaer in Liber 2747, Page
311 ("Original Mortgage"). The Original Mortgage was given to
secure payment of up to Two Million Five Hundred Thousand and
00/100 ($2,500,000.00) Dollars of a certain Master Note, dated
December 21, 1995, given by MCLP to Bank in the original
principal amount of Six Million and 00/100 ($6,000,000.00)
Dollars which Master Note was first modified by that certain Note
Modification Agreement, dated June 14, 1996, and subsequently
modified by a Second Note Modification Agreement, dated September
27, 1996, in which MCLP and the Bank agreed to divide the then
existing indebtedness owing from MCLP to the Bank and
simultaneously MCLP executed and delivered to the Bank the
Restated Troy Note, dated September 27, 1996, and the Bank and
MCLP agreed that the Original Mortgage would thereafter secure
all of the obligations in the Restated Troy Note. The Original
Mortgage and the Restated Troy Note have heretofore been assigned
by the Bank to Beneficiary and the obligations contained in the
Restated Troy Note have been merged into and become part of the
obligations contained in the Note of even date herewith given by
Grantor to Beneficiary and Grantor and Beneficiary agree that the
Original Mortgage is hereby consolidated with this Mortgage so
that together they shall constitute in law, but one mortgage, a
single, first fee mortgage upon the Property described in Exhibit
A - 3 securing to Beneficiary the repayment of all Obligations.
Other than for the lien, conveyance and grant of the Original
Mortgage as consolidated herein, the terms, representations,
covenants and conditions of the Original Mortgage shall be and
hereby are superseded and replaced by the terms, representations,
covenants and conditions contained herein and the parties certify
that this instrument secures the same indebtedness evidenced and
secured by the Original Mortgage and secures no further or other
indebtedness.
The amount of principal indebtedness this Mortgage
secures against the Property located in the State of New York
and, for purposes of Sections 253, 256 and 260 of the Tax Law of
the State of New York (relating to the taxation of mortgages),
the maximum amount of the principal indebtedness secured by this
Mortgage, or which by any contingency may be secured by this
Mortgage, and for which this Mortgage may be foreclosed or
otherwise enforced against, the Property located in the State of
New York, is the $2,500,000 principal amount of this Mortgage.
(b) Lien Law. (i) This Mortgage is made
subject to Section 13 of the New York Lien Law and, in compliance
with Section 13 of the New York Lien Law, the Mortgagor will
receive the loan secured by this Mortgage and the right to
receive such advances as a trust fund to be applied first for the
purpose of paying any unpaid costs of the Improvements; and the
Mortgagor has applied and will apply the same first to the
payment of any unpaid costs of the Improvements before using any
part of the total of the same for any other purpose.
(ii) The Mortgagor will indemnify and hold Beneficiary
harmless against any loss, liability, cost or expense, including
any judgments, attorneys' fees, costs of appeal bonds or printing
costs, arising out of or relating to any proceedings instituted
by any claimant alleging a violation by the Mortgagor of Article
3-A of the New York Lien Law.
(c) Real Property Law. (i) Sections 5 and 6
hereof shall be construed according to subdivision 4 of Section
254 of the New York Real Property Law as amended by Chapter 886
of the Laws of 1945 but not as amended by Chapter 830 of the Laws
of 1965 or as otherwise thereafter amended.
(ii) For purposes of Section 291-f of the New
York Real Property Law, Tenant and every tenant or subtenant
who after the recording of this Mortgage, enters into a
Lease upon the premises of any of the Property or who
acquires by instrument of assignment or by operation of law
a leasehold estate upon the premises located in the State of
New York in existence on the date of recording of this
Mortgage is hereby notified that the Mortgagor shall not,
without obtaining Beneficiary's prior consent in each
instance, cancel, abridge or otherwise modify any Leases
upon the premises located in the State of New York or accept
prepayments for more than thirty (30) days of installments
of rent to become due with respect to any Lease thereof
having an unexpired term on the date of this Mortgage of
five years or more, except as expressly permitted under this
Mortgage or the Assignment of Leases, and that any such
cancellation, abridgement, modification or prepayment made
by any such tenant or subtenant without either being
expressly permitted under this Mortgage or receiving
Beneficiary's prior consent shall be voidable by Beneficiary
at its option.
(d) RPAPL. If an Event of Default shall occur
and be continuing, Beneficiary may elect to sell (and, in the
case of any default of any purchaser, resell) any Property or any
part of any Property by exercise of the power of foreclosure or
of sale granted to Beneficiary by Articles 13 or 14 of the New
York Real Property Actions and Proceedings Law (the "RPAPL").
In such case, Beneficiary may commence a civil action to
foreclose this Mortgage pursuant to Article 13 of the RPAPL, or
it may proceed and sell the Property pursuant to Article 14 of
the RPAPL to satisfy the Note and all other amounts secured
hereby.
(e) No Residential Units. This Mortgage does not
encumber real property principally improved or to be improved by
one or more structures containing in the aggregate six or fewer
residential dwelling units having their own separate cooking
facilities.
56. As to Property in Pennsylvania. Notwithstanding
anything to the contrary elsewhere in this Mortgage, as to any
property of the Trust Estate located in the Commonwealth of
Pennsylvania ("Pennsylvania Property"):
(a) This instrument is intended to be a realty
mortgage and not a deed of trust and shall be enforceable as
such. The Grantor shall be deemed a "mortgagor," Beneficiary
shall be deemed a "mortgagee" and Trustee shall have no capacity
(but shall be disregarded and all references to "Trustee" shall
be deemed to refer to the "mortgagee" to the extent not
inconsistent with interpreting this instrument as a realty
mortgage). Beneficiary as mortgagee shall be entitled to the
rights and remedies available to a mortgagee at law or in equity,
or under this Mortgage. Sections 49, 50, and 51 hereof are
hereby deleted in their entirety as to the Pennsylvania Property.
As a realty mortgage, the Mortgagor, as mortgagor, shall convey
all Pennsylvania Property ab initio to Beneficiary, as mortgagee.
(b) Upon the occurrence and during the
continuation of an Event of Default, Beneficiary may institute
any one or more actions of mortgage foreclosure against all or
any part of the Pennsylvania Property, or take such other action
at law or in equity for the enforcement of this Mortgage and
realization on the security herein or elsewhere provided for, as
law may allow, and may proceed therein to final judgment and
execution for the entire amount of the outstanding Indebtedness.
Beneficiary shall have the option to proceed with foreclosure of
the lien and security interests evidenced by this Mortgage in
satisfaction of the Loan through the courts, all without
declaring the Indebtedness due, and provided that if a sale of
the Pennsylvania Property is because of default in the payment of
part of the Indebtedness, such sale may be made subject to the
unmatured part of the Indebtedness; and such sale, if so made,
shall not in any manner affect the unmatured part of the
Indebtedness, but as to such unmatured part of the Indebtedness,
this Mortgage shall remain in full force and effect just as
though no sale had been made.
(c) FOR THE PURPOSE OF PROCURING POSSESSION OF
THE PENNSYLVANIA PROPERTY, UPON THE OCCURRENCE AND CONTINUANCE OF
AN EVENT OF DEFAULT, THE GRANTOR HEREBY AUTHORIZES AND EMPOWERS
ANY ATTORNEY OF ANY COURT OF RECORD IN THE COMMONWEALTH OF
PENNSYLVANIA, DESIGNATED BY BENEFICIARY, AS ATTORNEY FOR THE
MORTGAGOR AND ALL PERSONS CLAIMING UNDER OR THROUGH THE
MORTGAGOR, TO SIGN AN AGREEMENT FOR ENTERING IN ANY COURT OF
COMPETENT JURISDICTION A PRECIPE FOR WRIT OF SUMMONS OR A
COMPLAINT PROVIDING FOR CONFESSION OF JUDGMENT IN EJECTMENT FOR
POSSESSION OF SAID PROPERTY AND TO APPEAR FOR AND CONFESS
JUDGMENT AGAINST THE MORTGAGOR, AND AGAINST ALL PERSONS CLAIMING
UNDER OR THROUGH THE GRANTOR, FOR THE RECOVERY BY BENEFICIARY OF
POSSESSION OF SAID PROPERTY, WITHOUT ANY STAY OF EXECUTION, FOR
WHICH THIS MORTGAGE, OR A COPY HEREOF VERIFIED BY AFFIDAVIT,
SHALL BE A SUFFICIENT WARRANT; AND THEREUPON A WRIT OF POSSESSION
MAY BE ISSUED FORTHWITH, WITHOUT ANY PRIOR WRIT OR PROCEEDING
WHATSOEVER. IF FOR ANY REASON AFTER SUCH ACTION HAS BEEN
COMMENCED THE SAME SHALL BE DISCONTINUED OR POSSESSION OF SAID
PROPERTY SHALL REMAIN IN OR BE RESTORED TO THE GRANTOR,
BENEFICIARY SHALL HAVE THE RIGHT FOR THE SAME EVENT OF DEFAULT OR
ANY SUBSEQUENT EVENT OF DEFAULT TO BRING ONE OR MORE FURTHER
ACTIONS AS ABOVE PROVIDED TO RECOVER POSSESSION OF SAID PROPERTY.
BENEFICIARY MAY BRING SUCH ACTION IN EJECTMENT BEFORE OR AFTER
THE INSTITUTION OF FORECLOSURE PROCEEDINGS UPON THE MORTGAGE, OR
AFTER JUDGMENT THEREON OR AFTER SALE OF SAID PROPERTY BY THE
SHERIFF.
(d) THE MORTGAGOR HEREBY IRREVOCABLY AUTHORIZES
AND EMPOWERS ANY ATTORNEY OR ATTORNEYS OR THE PROTHONOTARY OR
CLERK OF ANY COURT IN THE COMMONWEALTH OF PENNSYLVANIA, OR
ELSEWHERE, AT ANY TIME FOLLOWING AN EVENT OF DEFAULT HEREUNDER TO
APPEAR FOR AND CONFESS JUDGMENT AGAINST THE MORTGAGOR FOR THE
AMOUNT FOR WHICH THE MORTGAGOR MAY BE OR BECOME LIABLE TO
BENEFICIARY, NOT TO EXCEED $29,433,200, UNDER THIS MORTGAGE OR
THE NOTE, AND PAYMENT OF WHICH IS SECURED BY THE PENNSYLVANIA
PROPERTY, AS EVIDENCED BY AN AFFIDAVIT SIGNED BY AN OFFICER OF
BENEFICIARY, SETTING FORTH THE AMOUNT THEN DUE, PLUS ATTORNEYS'
FEES AND COSTS OF SUIT, WITH RELEASE OF ERRORS AND WITHOUT RIGHT
OF APPEAL AND FOR SO DOING THIS MORTGAGE OR A COPY HEREOF
VERIFIED BY AFFIDAVIT SHALL BE SUFFICIENT WARRANT, IT BEING
AGREED THAT THE FOREGOING AUTHORIZATION IS A POWER COUPLED WITH
AN INTEREST. THE MORTGAGOR WAIVES THE RIGHT TO BENEFIT OF ALL
EXEMPTION LAWS NOW OR HEREAFTER IN EFFECT. NO SINGLE EXERCISE OF
THE FOREGOING WARRANT AND POWER TO CONFESS JUDGMENT SHALL BE
DEEMED TO EXHAUST THE POWER, WHETHER OR NOT ANY SUCH EXERCISE
SHALL BE HELD TO BE INVALID, VOIDABLE OR VOID, BUT THE POWER
SHALL CONTINUE UNDIMINISHED AND MAY BE EXERCISED FROM TIME TO
TIME AS OFTEN AS THE AGENT OR SUCH BANK SHALL ELECT UNTIL ALL
OBLIGATIONS OF THE MORTGAGOR TO BENEFICIARY HAVE BEEN PAID IN
FULL.
(e) The Mortgagor acknowledges that it has had
the assistance of counsel in the review and execution of this
Mortgage and further acknowledges that the meaning and effect of
the foregoing confession of judgment have been fully explained to
Grantor by such counsel.
(f) If, as provided in Section 38(a) hereof, the
Mortgagor shall pay or cause to be paid, the principal of and
interest on the Note in full at maturity or as permitted in
accordance with the terms thereof and all other Indebtedness
payable to Beneficiary hereunder by the Mortgagor or secured
hereby or by the other Loan Documents and all of the payment
Obligations shall have been performed, then in addition to the
provisions of Section 38(a), the estate hereby granted,
transferred and assigned shall cease, terminate and become void.
(g) The references to the UCC in the Granting
Clauses of this Mortgage shall be deemed to be references to the
Pennsylvania Uniform Commercial Code in 13 Pa. C.S.A. Sub
Section 1101 et seq.
(h) This instrument shall constitute a security
agreement and continuously perfected fixture filing and financing
statement. The Mortgagor hereby authorizes Beneficiary, after
ten (10) days' notice to the Mortgagor and the Mortgagor's
failure to execute such financing statements, to execute,
deliver, file or refile as Secured Party, without joinder of the
Mortgagor, as Debtor, any financing statement, continuation
statement, or other instruments Beneficiary may reasonably
require from time to time to perfect or renew such security
interest under the UCC. The Mortgagor is, for the purposes of
this agreement, deemed to be the Debtor, and Beneficiary is
deemed to be the Secured Party, as those terms are used in the
UCC. The addresses of secured party and debtor from which
information concerning the security agreement may be obtained are
set forth in the initial paragraph of this Mortgage.
(i) Subject to any Nondisturbance Agreements then
in effect, if Beneficiary exercises its right of entry under
Section 20(b) hereof and the tenant fails to surrender possession
of the Pennsylvania Property, Beneficiary shall be entitled to
institute and maintain an action of ejectment with respect to the
Pennsylvania Property in the county or counties in which such
property, or any part thereof, is situated.
57. As to Property in South Carolina.
(a) With respect to the Property as is located in the
State of South Carolina, this instrument shall be deemed a
mortgage and not a deed of trust.
(b) Any remedies set forth herein, including the
remedies involving a power of sale of the South Carolina Property
in connection with the enforcement of the terms of this Mortgage,
shall be exercisable if, and to the extent, permitted by the laws
of the State of South Carolina in force at the time of execution
and delivery of this Mortgage.
(c) The Grantor shall be deemed a Mortgagor, the
Beneficiary/Trustee shall be deemed a Mortgagee and the Trust
Estate-as herein referenced shall be deemed the Mortgaged
Property.
(d) To secure the performance and observance by
Mortgagor of all covenants and conditions contained in the Note,
in any renewal, extension or modification thereof, in this First
Mortgage and Security Agreement and in all other instruments
securing the Note; and,
(e) also to secure in accordance with Section 29-3-50,
Code of Laws of South Carolina 1976, as amended: (i) all future
advances and re-advances that may subsequently be made to
Mortgagor by Mortgagee, evidenced by the aforesaid Note, or any
other promissory Note, and all renewals and extensions thereof;
provided, however, that nothing contained herein shall create an
obligation on the part of Mortgagee to make future advances or
re-advances to Mortgagor and (ii) all other indebtedness of
Mortgagor to Mortgagee, now or hereafter existing, whether direct
or indirect, the maximum amount of all indebtedness outstanding
at any one time secured hereby not to exceed twice the face
amount of the Note, plus interest thereon, all charges and
expenses of collection incurred by Mortgagee, including court
costs, and reasonable attorneys' fees, and any other such
indebtedness as provided herein, as permitted under the laws of
the State of South Carolina; and,
(f) also in order to charge the properties, interests
and rights hereinafter described with such payment, performance
and observance; and,
(g) for and in consideration of the sum of One and
No/100 Dollar ($1.00) paid by Mortgagee to Mortgagor this date,
and for other valuable consideration, the receipt of which is
acknowledged, Mortgagor does hereby grant, bargain, sell, alien,
remise, release, convey, assign, transfer, mortgage, hypothecate,
pledge, deliver, set over, warrant and confirm unto Mortgagee,
its successors and assigns forever, all right, title and interest
of Mortgagor in and to the Mortgaged Property outlined in the
Granting Clauses.
(h) As to the Granting Clause (E), the following
language is added as to the South Carolina Property:
Mortgagor (Debtor) hereby grants to Mortgagee (Secured Party) a
security interest in all fixtures, rights in action and personal
property described herein. This Mortgage is a self-operative
security agreement with respect to such property, but Mortgagor
agrees to execute and deliver on demand such other security
agreements, financing statements and other instruments as
Mortgagee may reasonably request in order to perfect its security
interest or to impose the lien hereof more specifically upon any
of such property. Mortgagor agrees to pay Mortgagee's charge, to
the maximum amount permitted by law, for any statement by
Mortgagee regarding the obligations secured by this Mortgage and
Security Agreement requested by Mortgagor or on behalf of
Mortgagor. On demand, Mortgagor will promptly pay all costs and
expenses of filing statements, continuation statements, partial
releases, and termination statements deemed necessary or
appropriate by Mortgagee to establish and maintain the validity
and priority of the security interest of Mortgagee, or any
modification thereof, and all costs and expenses of any searches
reasonably required by Mortgagee, Mortgagee may exercise any or
all of the remedies of a secured party available to it under the
Uniform Commercial Code (South Carolina) with respect to such
property, and it is expressly agreed in accordance with the
provisions of the Uniform Commercial Code (South Carolina), ten
(10) days' notice by Mortgagee to Mortgagor shall be deemed to be
reasonable notice under any provision of the Uniform Commercial
Code (South Carolina) requiring such notice; provided, however,
that Mortgagee may at its option dispose of the collateral in
accordance with Mortgagee's rights and remedies in respect to the
real property pursuant to the provisions of this Mortgage and
Security Agreement, in lieu of proceeding under the Uniform
Commercial Code (South Carolina).
Some of the items of property described herein arc goods that are
or are to become fixtures related to the real estate described
herein, and it is intended that, as to those goods, this Mortgage
and Security Agreement shall be effective as a financing
statement filed as a fixture filing from the date of its filing
for record in the real estate records of the count%, in which the
Land is located. Information concerning the security interest
created by this instrument may be obtained from the Mortgagee, as
Secured Party, or the Mortgagor, as Debtor, at the address first
shown above.
Everything referred to in the Granting Clauses hereof and any
additional property hereafter acquired by Mortgagor and subject
to the lien of this Mortgage or intended to be so is herein
referred to as the "Mortgaged Property".
(i) TO HAVE AND TO HOLD the Mortgaged Property and all
parts thereof unto Mortgagee, its successors and assigns, to its
own proper use and benefit forever, subject, however, to the
terms and conditions herein.
(j) The indebtedness secured by this Mortgage matures
on November 1, 2021.
58. As to Property in Virginia. Notwithstanding
anything herein to the contrary, with respect to the Trust Estate
located in the Commonwealth of Virginia (the "Virginia
Property"):
(a) Section 20(c)(iii) of this Mortgage shall be
deemed to read:
With respect to the Virginia Property, this Mortgage shall be
construed as a deed of trust made and entered into by the grantor
hereof under the laws of the Commonwealth of Virginia. The
grantor, in addition to the covenants and agreements set forth
herein, covenants and agrees to the provisions set forth in
section 55-59 of the Code of Virginia (1950), as amended (the
Virginia Code), and for any breach thereof, or any breach of the
terms hereof, the Beneficiary may direct the Jurisdictional
Trustee appointed with respect to the Virginia Property (or any
successor thereto) to sell the Virginia Property in accordance
with the laws of the Commonwealth of Virginia or the Beneficiary
may seek, or direct the Jurisdictional Trustee to seek, such
other remedies as may be available under the laws of the
Commonwealth of Virginia.
(b) The following provision of sections 55-59.2
and 55-60 of the Virginia Code is hereby incorporated herein by
reference:
Advertisement required: Sale to be for cash or on terms suitable
to the Trustee in its discretion at the Virginia Property or at
such other place as the Trustee shall select, after first
advertising the time, place and terms of sale three (3) times
(which may occur on consecutive days) in some newspaper having a
general circulation in the City of Danville, Virginia.
(c) The Grantor hereby waives the benefit of his
exemptions as to the debt hereby secured and as to all other
obligations which may be imposed upon him by the provisions of
this Mortgage.
(d) Should default be made in the payment of any
part of the debt hereby secured, principal or interest, at the
maturity of such part, or in the event of the breach of any of
the covenants entered into or imposed upon the grantor, then the
entire obligation of this Mortgage and the whole debt hereby
secured shall, at the option of the Beneficiary, become forthwith
due and payable.
(e) The Grantor hereby consents and agrees that
the debt hereby secured, or any part thereof, may be renewed or
extended beyond maturity as often as may be desired by agreement
between the Beneficiary and any subsequent owner of the property,
and no such renewal or extension shall in any way affect the
Grantor's responsibility, whether as surety or otherwise. The
Grantor and any other party assuming liability hereunder hereby
consent and agree that if the property conveyed hereby or a
substantial portion thereof is transferred to any subsequent
owner, and the Beneficiary exercises the right to accelerate the
debts secured hereby, the Beneficiary may accept any delinquent
payments or other cure of default giving rise to such
acceleration from the then owner of the property or any other
person and reinstate the indebtedness in accordance with the
schedule of maturity as of the time of acceleration or upon such
new schedule as may be agreed if renewal or extension are
otherwise permitted and no such reinstatement shall in any way
affect the liability of such prior parties, whether as surety or
otherwise.
(f) Grantor grants unto Beneficiary the right and
power under the provisions of Sub Section 26-49, to appoint a
Substitute Trustee or Trustees.
(g) The Grantor, and all interested in the
obligations hereby secured, by accepting the benefits hereof,
agree that all authority, power and discretion hereinabove
granted to the Trustee or Trustees may be exercised by any of
them, without any other, with the same effect as if exercised
jointly by all of them.
59. Liability of Assignees of Beneficiary. No
assignee of Beneficiary (an "Assignee") shall have any personal
liability, directly or indirectly, under or in connection with
this Mortgage or any amendment or amendments hereto made at any
time or times, heretofore or hereafter, any liability being
limited to the assets pledged as security pursuant to this
Mortgage and Grantor hereby forever and irrevocably waives and
releases any and all such personal liability. In addition, no
Assignee shall have at any time or times hereafter any personal
liability, directly or indirectly, under or in connection with or
secured by any agreement, lease, instrument, encumbrance, claim
or right affecting or relating to the Properties or to which the
Properties are now or hereafter subject. The limitation of
liability provided in this Section 59 is (i) in addition to, and
not in limitation of, any limitation of liability applicable to
the assignee provided by law or by any other contract, agreement
or instrument, and (ii) shall not apply to any Assignee's
negligence or willful misconduct.
60. Securitization.
(a) Sale of Note and Securitization. At the request of
the holder of the Note and, to the extent not already required to
be provided by Grantor under this Mortgage, Grantor shall use
reasonable efforts to satisfy the market standards to which the
holder of the Note customarily adheres or which may be reasonably
required in the marketplace or by the Rating Agencies in
connection with the sale of the Note or participation therein or
the first successful securitization (such sale and/or
securitization, the "Securitization") of rated single or
multi-class securities (the "Securities") secured by or
evidencing ownership interests in the Note and the Mortgage,
including:
(A) (i) provide such financial and other information
with respect to the Properties, Grantor and its affiliates, the
Manager and any Tenants of the Properties, (ii) provide business
plans and budgets relating to the Properties and (iii) to perform
or permit or cause to be performed or permitted at Beneficiary's
sole cost and expense such site inspection, appraisals, market
studies, environmental reviews and reports (Phase I's and, if
appropriate, Phase II's), engineering reports and other due
diligence investigations of the Properties, as may be reasonably
requested by the holder of the Note or the Rating Agencies or as
may be necessary or appropriate in connection with the
Securitization (the "Provided Information"), together, if
customary, with appropriate verification and/or consents of the
Provided Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to Beneficiary and
the Rating Agencies;
(B) at Beneficiary's expense, cause counsel to render
opinions as to fraudulent conveyance, and true sale or any other
opinion customary in securitization transactions with respect to
the Properties and Grantor and its affiliates, including, without
limitation, a Bankruptcy Opinion and a 10b-5 Opinion, which
counsel and opinions shall be reasonably satisfactory to the
holder of the Note and the Rating Agencies; for the purposes
hereof, (i) "Bankruptcy Opinion" shall mean an opinion to the
effect that if the Grantor or the general partner of the Grantor
were a debtor under the U.S. Bankruptcy Code, a court would not
have valid legal grounds to cause the Grantor to be substantively
consolidated with any other Person and (ii) the "10b-5 Opinion"
shall mean an opinion or other written assurance of counsel
acceptable to Beneficiary and its counsel regarding the absence
of any misstatement of a material fact, or the omission to state
a material fact in any materials provided by the Grantor to the
Beneficiary in connection with the origination of the Loan.
(C) make such representations and warranties as of the
closing date of the Securitization with respect to the
Properties, Grantor, and the Loan Documents as are customarily
provided in securitization transactions and as may be reasonably
requested by the holder of the Note or the Rating Agencies and
consistent with the facts covered by such representations and
warranties as they exist on the date thereof, including the
representations and warranties made in the Loan Documents; and
(D) execute such amendments to the Loan Documents and
Grantor's organizational documents, enter into a lock-box or
similar arrangement with respect to the rents and establish and
fund such reserve funds (including reserve funds for deferred
maintenance and capital improvements) as may be requested by the
holder of the Note or the Rating Agencies or otherwise to effect
the Securitization, provided, that nothing contained in this
subsection (D) shall result in a material economic change in the
transaction.
(b) Cooperation with Rating Agencies. In the event
this Loan becomes an asset of a securitization underwritten by
Beneficiary or any of its Affiliates, Grantor, prior to such
securitization, shall implement any and all operations and
maintenance plans recommended for asbestos or other environmental
matters recommended in any environmental report and complete all
surveys in connection therewith; provided, however, that nothing
contained in this paragraph (b) shall limit the obligations of
Grantor contained in this Mortgage or the other Loan Documents.
In addition, Grantor shall (i) gather any environmental
information required by the Rating Agencies in connection with
such a securitization, (ii) at Beneficiary's request, meet with
representatives of such Rating Agencies to discuss the business
and operations of the Trust Estate, and (iii) cooperate with the
requests of the Rating Agencies in connection with all of the
foregoing as well as in connection with all other matters,
including, without limitation, entering into any amendments or
modifications to this Mortgage or to any other Loan Document as
may be required by the Rating Agencies provided that such
modifications do not increase Grantor's obligations or have a
materially adverse economic impact on Grantor.
(c) Securitization Financial Statements. Grantor
covenants and agrees that, upon Beneficiary's written request
therefor in connection with a securitization in which this
Mortgage is to be included as an asset, Grantor shall, at
Beneficiary's sole cost and expense, promptly deliver audited
financial statements and related documentation prepared by an
independent certified public accountant that satisfy applicable
federal securities law requirements for use in a Public
Registration Statement (which may include up to three (3) years
of historical audited financial statements). A "Public
Registration Statement" shall mean a registration statement
meeting the requirements of Section 5 of the Securities Act of
1933, as amended.
(c) Securitization Indemnification. Grantor
understands that certain of the Provided Information and the
information required to be delivered by Grantor hereunder (the
"Required Records") may be included in disclosure documents in
connection with the Securitization, including a prospectus or
private placement memorandum (each, a "Disclosure Document") and
may also be included in filings with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended
(the "Securities Act"), or the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), or provided or made
available to investors or prospective investors in the
Securities, the Rating Agencies, and service providers relating
to the Securitization. In the event that the Disclosure
Document is required to be revised prior to the sale of all
Securities, Grantor will cooperate with the holder of the Note in
updating the Provided Information or Required Reports for
inclusion or summary in the Disclosure Document by providing all
current information pertaining to Grantor and the Properties
necessary to keep the Disclosure Document accurate and complete
in all material respects with respect to such matters.
(i) In connection with each of (x) a preliminary and a
private placement memorandum or (y) a preliminary and final
prospectus, as applicable, Grantor agrees to provide an
indemnification certificate:
(A) certifying that Grantor has carefully examined those
portions of such memorandum or prospectus, as applicable,
pertaining to Grantor, the Properties and the Loan including
applicable portions of the sections entitled "Special
Considerations", "Description of the Mortgages", "Description of
the Mortgage Loans and Mortgaged Properties", "The Manager", "The
Grantor" and "Certain Legal Aspects of the Mortgage Loan", and
such sections (and any other sections reasonably requested and
pertaining to Grantor, the Properties or the Loan) do not contain
any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not
misleading, provided that Grantor is free to make any changes
necessary to make such documents accurate;
(B) indemnifying Beneficiary and the affiliates of Morgan
Stanley ("MS"), that has filed the registration statement
relating to the securitization (the "Registration Statement"),
each of its directors, each of its officers who have signed the
Registration Statement and each person or entity who controls MS
within the meaning of Section 15 of the Securities Act or
Section 30 of the Exchange Act of 1933, as amended (the
"Securities Act") (collectively, the "MS Group"), and MS, each of
its directors and each person who controls MS, within the meaning
of Section 15 of the Securities Act and Section 20 of the
Exchange Act (collectively, the "Underwriter Group") for any
losses, claims, damages or liabilities (the "Liabilities") to
which Beneficiary, the MS Group or the Underwriter Group may
become subject insofar as the Liabilities arise out of or are
based upon any untrue statement or alleged untrue statement of
any material fact contained in the applicable portions of such
sections applicable to Grantor, the Properties or the Loan, or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated in the
applicable portions of such sections or necessary in order to
make the statements in the applicable portions of such sections
or in light of the circumstances under which they were made, not
misleading, provided that Grantor has reviewed and approved any
such memorandum or prospectus; and
(C) agreeing to reimburse Beneficiary and MS for any legal
or other expenses reasonably incurred by Beneficiary and MS in
connection with investigating or defending the Liabilities.
Grantor's Liability under clauses (A) or (B) above shall be
limited to Liabilities arising out of or based upon any such
untrue statement or omission made therein in reliance upon and in
conformity with information furnished to Beneficiary by or on
behalf of Grantor in connection with the preparation of those
portions of the memorandum or prospectus pertaining to Grantor,
the Properties or the Loan or in connection with the underwriting
of the debt, including financial statements of Grantor, operating
statements, rent rolls, environmental site assessment reports and
property condition reports with respect to the Properties. This
indemnity agreement will be in addition to any liability which
Grantor may otherwise have.
(iii) In connection with filings under the Exchange
Act, Grantor agrees to (i) indemnify Beneficiary, MS Group and
the Underwriter Group for any Liabilities to which Beneficiary,
the MS Group or the Underwriter Group may become subject insofar
as the Liabilities arise out of or are based upon the omission or
alleged omission to state in the Provided Information or Required
Records a material fact required to be stated in the Provided
Information or Required Records in order to make the statements
in the Provided Information or Required Records, in light of the
circumstances under which they were made not misleading and
(ii) reimburse Beneficiary or MS for any legal or other expenses
reasonably incurred by Beneficiary and MS in connection with
defending or investigating the Liabilities.
(iv) Promptly after receipt by an indemnified party
under this Section 55 of notice of the commencement of any
action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 55, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the
indemnifying party will not relieve the indemnifying party from
any liability which the indemnifying party may have to any
indemnified party hereunder except to the extent that failure to
notify causes prejudice to the indemnifying party. In the event
that any action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled, jointly with any other
indemnifying party, to participate therein and, to the extent
that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with
counsel satisfactory to such indemnified party. After notice
from the indemnifying party to such indemnified party under this
Section 55 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however,
if the defendants in any such action include both the indemnified
party and the indemnifying party shall have reasonably concluded
that there are any legal defenses available to it and/or other
indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or
parties. The indemnifying party shall not be liable for the
expenses of more than one separate counsel unless an indemnified
party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to
those available to another indemnified party.
(v) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement
provided for in Section 55 is for any reason held to be
unenforceable by an indemnified party in respect of any losses,
claims, damages or liabilities (or action in respect thereof)
referred to therein which would otherwise be indemnifiable under
Section 55, the indemnifying party shall contribute to the amount
paid or payable by the indemnified party as a result of such
losses, claims, damages or liabilities (or action in respect
thereof); provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective
parties are entitled, the following factors shall be considered:
(i) the MS Group's and Grantor's relative knowledge and access to
information concerning the matter with respect to which claim was
asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable
considerations appropriate in the circumstances. Beneficiary and
Grantor hereby agree that it may not be equitable if the amount
of such contribution were determined by pro rata or per capita
allocation.
(e) Retention of Servicer. Beneficiary reserves the
right to retain a servicer to act as its agent hereunder with
such powers as are specifically delegated to the servicer by
Beneficiary, whether pursuant to the terms of this Mortgage, the
Cash Collateral Agreement or otherwise, together with such other
powers as are reasonably incidental thereto.
(f) Separate Loans. Beneficiary reserves the right,
exercisable at any time on or before the first anniversary
hereof, to modify the Loan Documents to provide for two or more
mortgage notes, secured by separate mortgages and other loan
documents, which are not cross-defaulted or cross-collateralized,
creating Liens upon two or more pools of the Properties, such
pools to be determined at the sole discretion of the Beneficiary.
In the event such right is exercised by Beneficiary, such amended
and restated notes, mortgages and other loan documents shall be
on the same terms and conditions as the Note, this Mortgage and
the other Loan Documents, except that (i) Grantor's right to
release Specified Properties pursuant to Section 38(b) hereof
shall be modified to permit the release of a total of five of the
Properties, subject to the absolute discretion of the Beneficiary
as to the specific Properties to be released; and (ii) the
Aggregate Alteration Threshold and the Aggregate Casualty Amount
shall be reduced in proportion to the number of pools of
Properties created (e.g., if two (2) pools are created, the
Aggregate Alteration Threshold and the Aggregate Casualty Amount
shall be reduced by one-half of the amount provided for in this
Mortgage).
61. Replacement Leases.
(a) Replacement Requirements. As additional security for
the Loan, at Closing Grantor shall deposit in the Additional
Collateral Account (as defined in the Cash Collateral Agreement)
Cash and Cash Equivalents in the amount of $1,110,000 (the
"Replacement Collateral"). Beneficiary shall release/reduce the
Replacement Collateral to Grantor in such amounts, and upon the
satisfaction of the conditions, as hereinafter set forth:
(i) With respect to those premises located at those
Properties set forth on Schedule 9, Grantor shall enter into (A)
leases with new tenants, on terms and conditions reasonably
acceptable to Beneficiary in its sole discretion and consistent
with other Comparable Class properties in the area of the
applicable Property resulting in a net effective rental revenue,
as reasonably determined by Beneficiary (taking into account,
among other matters, leasing commissions, tenant improvements,
work letters, free rent, lease takeover payments and other
concessions) with respect to such premises (inclusive of base
rent, percentage rent, common area maintenance charges, real
estate tax escalations and other escalations) of not less than
the net effective rental revenue in place as of the date hereof
with respect to such premises, or (B) Renewal Leases with
existing tenants on terms set forth in the original Lease (each
such new or existing tenant, a "Replacement Tenant");
(ii) the Replacement Tenant shall be in occupancy of
the applicable premises and open for business and shall have made
its first payment of rent required under its lease and shall not
otherwise be in default thereunder;
(iii) Grantor shall have delivered an estoppel
certificate from the Replacement Tenant, acceptable to
Beneficiary in its sole discretion, certifying to Beneficiary or
to any other person designated by Beneficiary: (i) that the lease
is in full force and effect; (ii) the dates to which the rent and
other sums and payments due under the lease have been paid; (iii)
that the Replacement Tenant has accepted possession of the
applicable premises and is open for business, and (iv) whether
the Grantor has breached the performance of any covenants, terms
and conditions on Grantor's part to be performed under the
respective lease; and
(iv) The Debt Service Coverage Ratio with respect to the
twelve (12) month period immediately preceding any request for
release/reduction of the Replacement Collateral shall not be less
than 1.28:1.
Upon the satisfaction of all of the above conditions,
Grantor may request in writing that Beneficiary release/reduce
the Replacement Collateral in an amount equal to that set forth
on Schedule 9 with respect to the applicable premises, and
Beneficiary promptly shall so release/reduce the Replacement
Collateral.
(b) Application of Replacement Collateral. The balance of
any Replacement Collateral on deposit in the Additional
Collateral Account and not released to Grantor as of the second
anniversary of the date hereof date hereof, or at any time that
an Event of Default shall have occurred and be continuing, shall
be applied, as of the next succeeding Payment Date, to the
payment of principal on the Note (including any Prepayment
Premium thereon), in accordance with the provisions thereof.
62. Debt Service Coverage.
(a) Debt Service Coverage Requirement. For the period
(the "Initial Period") commencing on the Closing Date and
terminating on the earlier to occur of (a) the first anniversary
thereof, and (b) the sale of the Loan by Morgan Stanley Mortgage
Capital, Inc. to an unaffiliated third party, Grantor shall
maintain a Debt Service Coverage Ratio, determined as of the last
day of each calendar quarter with respect to the preceding four
quarters, greater than 1.225:1 with respect to each of the
Properties, with the exception of the Properties located at
Opelika, Alabama and New Smyrna, Florida, which shall maintain a
Debt Service Coverage Ratio of 1.28:1 (the "Minimum DSCR").
(b) If at any time during the Initial Period, the Debt
Service Coverage Ratio shall not be greater than the Minimum DSCR
with respect to any of the Properties, then simultaneously with
the delivery by Grantor of the applicable quarterly financial
statement in accordance with the provisions hereof, but in no
event later than the sixtieth (60th) day after the end of the
applicable quarter, Grantor shall deliver to Beneficiary Cash
and/or Cash Equivalents or a Letter of Credit (the "Debt Service
Collateral") in an amount, as determined by Beneficiary, equal to
that amount that would be required to pay down the Loan and the
applicable Allocated Loan Amount so that the Debt Service
Coverage Ratio for the applicable four quarter period would have
been greater than the Minimum DSCR. The Debt Service Collateral
shall be held by Beneficiary as additional collateral for the
Loan and shall be released by Beneficiary only as hereinafter set
forth. If an Event of Default shall occur prior to such time as
the Debt Service Collateral shall have been released, Beneficiary
may apply the same to the payment of principal and interest on
the Note (including any Prepayment Premium thereon), as well as
to the payment of any other amounts due thereon,in accordance
with the provisions thereof.
(c) Release of Debt Service Collateral. The Debt Service
Collateral shall be released by Beneficiary to Grantor, provided
no Event of Default shall have occurred and be continuing, at
such time as the Debt Service Coverage Ratio for any consecutive
four quarter period with respect to all of the Properties shall
be greater than 1.28:1.
63. Subordination of Fee Interest. Mark Centers
Limited Partnership hereby agrees, for itself and its successors,
that the fee simple estate in those certain Properties located in
Catoosa County, Georgia, and in the counties of Northumberland
County, Lackawanna, Luzerne, Snyder, Monroe, Lehigh, Union,
Berks, in the State of Pennsylvania, shall be subject and
subordinate in all respects to the Lien of this Mortgage, and
that in connection with a foreclosure of the Lien of this
Mortgage in accordance with the provisions hereof, Beneficiary
may name and join in Mark Centers Limited Partnership in any such
proceeding and foreclose on the fee simple estate therein.
IN WITNESS WHEREOF, this Mortgage has been duly
executed by Grantor on the date first hereinabove written.
Signed and acknowledged
in the presence of:
GRANTOR:
Mark M.P.N.M., Limited Partnership, an
Alabama limited partnership
By: Mark M.P.N.M. Realty, Inc.,
Name: an Alabama corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Mark New Smyrna Limited
Partnership, a Florida
limited partnership
By: Mark New Smyrna Realty, Inc.,
Name: a Florida corporation, its
general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Mark Troy, L.P., a New York limited
partnership
By: Mark Troy Realty, Inc., a
Name: New York corporation, its
general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Signed and acknowledged
in the presence of:
Mark Park Plaza, L.P., a Georgia
limited partnership
By: Mark Park Plaza Realty, Inc.
Name: a Georgia corporation, its
general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Mark Martintown, L.P., a South
Carolina limited partnership
By: Mark Martintown Realty Inc.,
Name: a South Carolina corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Mark Kings Fairground, L.P., a
Virginia limited partnership
By: Mark Kings Fairground Realty,
Name: Inc., a Virginia corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Mark Shillington, L.P., a Pennsylvania
limited partnership
By: Mark Shillington Realty
Corp., a Pennsylvania
corporation, its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Signed and acknowledged
in the presence of:
Mark 25th Street, L.P., a Pennsylvania
limited partnership
By:Mark 25th Street Realty Corp., Inc.
Name: a Pennsylvania corporation, its
general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Mark Three Realty, L.P., a Pennsylvania
limited partnership
By: Mark Three Realty Corp., a
Name: Pennsylvania corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Mark Four Realty, L.P., a Pennsylvania
limited partnership
By: Mark Four Realty Corp., a
Name: Pennsylvania corporation
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
As to Section 63, the Mark Centers Limited Partnership
agrees that its fee simple interest shall be subject and subordinate
to the Lien of this Mortgage.
MARK CENTERS LIMITED PARTNERSHIP,
Signed and acknowledged a Delaware limited partnership
in the presence of:
By: Mark Centers Trust
By: /s/ Joshua Kane
Print Name: Name: Joshua Kane
Title: Senior Vice President &
CFO
Print Name:
MORTGAGE NOTE
New York, New York
$45,929,800 October 4, 1996
FOR VALUE RECEIVED, Mark M.P.N.M., Limited Partnership, an
Alabama limited partnership, Mark New Smyrna Limited Partnership,
a Florida limited partnership, Mark Troy, L.P., a New York
limited partnership, Mark Park Plaza, L.P., a Georgia limited
partnership, Mark Martintown, L.P., a South Carolina limited
partnership, Mark Kings Fairground, L.P., a Virginia limited
partnership, Mark Shillington, L.P., a Pennsylvania limited part-
nership, Mark 25th Street, L.P., a Pennsylvania limited
partnership, Mark Three Realty, L.P., a Pennsylvania limited
partnership and Mark Four Realty, L.P., a Pennsylvania limited
partnership, each having its principal office c/o Mark Centers
Trust, 600 Third Avenue, P.O. Box 1679, Kingston, Pennsylvania
18704 (collectively, the "Maker") promises to pay to the order of
Secore Financial Corporation, or its assigns ("Payee") having its
principal office at 12510 Prosperity Drive, Suite 270, Silver
Spring, Maryland 20904, the Principal Amount (as defined below),
together with interest from the date hereof at the Applicable
Interest Rate (as defined below). Interest accruing hereunder
shall be calculated on the basis of a 360-day year of twelve 30-
day months.
WHEN USED HEREIN, the following capitalized terms shall have
the following meanings:
"Applicable Interest Rate" shall mean (a) from the date of
this Note through but not including the Reset Date (as
hereinafter defined), a rate of 8.84 percent (8.84%) per annum
(the "Initial Interest Rate") and (b) from and after the Reset
Date through and including the date this Note is paid in full, a
rate per annum equal to the greater of (i) the Initial Interest
Rate plus five percent (5%) or (ii) the Treasury Rate (as
hereinafter defined) plus five percent (5%) (the "Revised
Interest Rate"). For purposes of this Note, (A) the term "Reset
Date" shall mean October 31, 2006 and (B) the term "Treasury
Rate" shall mean, as of the Reset Date, the yield, calculated by
linear interpolation (rounded to the nearest one-thousandth of
one percent) of the yields of noncallable United States
Treasury obligations with terms (one longer and one shorter) most
nearly approximating the period from the Reset Date to the
Maturity Date, as determined by Payee on the basis of Federal
Reserve Statistical Release H.15 Selected Interest Rates under
the heading U.S. Governmental Security/Treasury Constant
Maturities or other recognized source of financial market
information selected by Payee for the week prior to the Reset
Date.
"Commencement Date" shall be December 1, 1996.
"Closing Date" shall be October 4, 1996.
"Default Rate" shall be Applicable Interest Rate plus five
percent per annum.
"Lockout Period" shall be the period from the Closing Date
through November 1, 1999.
"Maturity Date" shall be November 1, 2021.
"Monthly Amount" shall be $380,421.43.
"Payment Date" shall be the first business day of each month
commencing on the first business day of the second full month
after the Closing Date and continuing to and including the
Maturity Date.
"Principal Amount" shall be $45,929,800.
(1) The Principal Amount and interest thereon shall be due
and payable in lawful money of the United States as follows:
(a) On the date hereof, all interest on the unpaid
balance through the end of the month in which the Closing Date
occurs shall be due and payable. Thereafter, commencing on the
Commencement Date and continuing until the Maturity Date, 300
equal monthly installments of principal and interest at the
Monthly Amount each shall be due and payable. Each installment of
the Monthly Amount shall be applied first to the interest at the
Initial Interest Rate and the remainder thereof to reduction of
principal. Each monthly installment shall be due on each Payment
Date. In addition, all amounts advanced by Payee pursuant to
applicable provisions of the Loan Documents (as hereinafter
defined), together with any interest at the Default Rate or other
charges as therein provided, shall be immediately due and payable
hereunder. In the event any such advance is not so repaid by
Maker, Payee may, at its option, first apply any payments
received hereunder to repay said advances together with any
interest thereon or other charges as provided in the Loan
Documents, and the balance, if any, shall be applied in payment
of any installment then due. The entire remaining unpaid balance
of principal of this Note, all interest accrued thereon and all
other sums payable hereunder or under the Loan Documents
(collectively, the "Debt") shall be due and payable in full on
the Maturity Date.
(b) In the event that the Maker does not prepay the entire
principal balance of this Note and any other amounts outstanding
on or before the Reset Date, the following subparagraphs shall
also apply:
(i) From and after the Reset Date, interest shall
accrue on the unpaid principal balance from time to time
outstanding on this Note at the Revised Interest Rate. Subject
to the provisions of this subparagraph (b), Maker shall continue
to make payments in the Monthly Amount on each Payment Date. Each
Monthly Amount paid on and after the Reset Date shall be applied
first to the payment of interest computed at the Initial Interest
Rate with the remainder of the Monthly Amount applied to the
reduction of the outstanding principal balance of this Note.
Interest accrued at the Revised Interest Rate and not paid
pursuant to the preceding sentence shall be deferred and added to
the Debt and shall earn interest at the Revised Interest Rate to
the extent permitted by applicable law (such accrued interest
in hereafter defined as "Accrued Interest"). All of the Debt,
including Accrued Interest, shall be due and payable at the
Maturity Date.
(ii) Maker shall pay on the Reset Date and on each
Payment Date thereafter up to and including the Maturity Date the
following payments from the Rents (as defined in the Mortgage)
received on or before such day, in the listed order of priority:
(1) First to payment of rent, additional rent
and/or other charges due under those certain Ground Leases listed
on Exhibit 2 hereto;
(2) Second, to payment of the amounts due
pursuant to Section 8(a) of the Mortgage;
(3) Third, to payment of the Monthly Amount,
including interest accruing at the Default Rate, and late payment
charges, if any;
(4) Fourth, to payment of Monthly Cash Expenses
(defined in paragraph 18 below) pursuant to the terms and
conditions of the related approved Annual Budget (defined in
paragraph 18, below):
(5) Fifth, to payment of the Capital Expenditure
Reserve Amount in accordance with Section 48(b) of the Mortgage;
(6) Sixth, to payment of Extraordinary Expenses
(defined in paragraph 18, below) approved by Payee, if any:
(7) Seventh, to payments to the Payee to be
applied against the outstanding principal due under this Note
until such principal amount is paid in full:
(8) Eighth, to payments to the Payee for Accrued
Interest, including interest thereon, if any, accruing at the
Default Rate:
(9) Ninth, to payments to the Payee of any other
amounts due under the Loan Documents; and
(10) Lastly, to payment to the Maker of any excess
amounts.
(c) Amounts due on this Note shall be payable, without
any counterclaim, setoff or deduction whatsoever, at the office
of Payee or its agent or designee at the address set forth in
Exhibit 1 or at such other place as Payee or its agent or
designee may from time to time designate in writing.
(2) This Note is secured by an Indenture of Mortgage, Deed
of Trust, Security Agreement, Financing Statement, Fixture Filing
and Assignment of Leases, Rents and Security Deposits, of even
date herewith (the "Mortgage") from Maker to Craig A. Kawamoto,
as trustee, for the benefit of Payee, and by an Assignment of
Rents and Leases of even date herewith (the "Assignment") from
Maker to Payee. The Mortgage, the Assignment, and any other
instrument given at any time to secure this Note are hereinafter
collectively called the "Loan Documents."
(3) Maker has the right to prepay the principal of this
Note in full or in part on any Payment Date from and after the
end of the Lockout Period, upon sixty days' prior written notice
and payment, together with the portion of the principal to be
prepaid, of a prepayment premium (the "Prepayment Premium") in an
amount calculated as specified in Appendix 1. The calculation of
the Prepayment Premium shall be made by Payee and shall, absent
manifest error, be conclusive. In no event shall the Prepayment
Premium as computed hereunder be less than one percent (1%) of
the portion of the principal amount of this Note that is being
prepaid. As of October 4, 1998, and upon sixty days' prior
written notice, Maker shall have the right to apply the
outstanding balance held in the Additional Collateral Account in
accordance with Section 61 of the Mortgage to partial prepayment
of the principal, together with a Prepayment Premium in an amount
calculated as specified in Appendix 1. Notwithstanding the
foregoing, this Note may be prepaid without a prepayment premium
commencing with the 180 day period prior to the Reset Date. Upon
acceleration of this Note in accordance with its terms and the
terms of the Loan Documents, Maker agrees to pay the Prepayment
Premium described above in the amount that would be due if a
voluntary payment were made on the date of such acceleration. A
tender of payment of the amount necessary to pay and satisfy the
entire unpaid principal balance of this Note or any portion
thereof at any time after an Event of Default under the Mortgage
or an acceleration by Payee of the indebtedness evidenced hereby,
whether such payment is tendered voluntarily, during or after
foreclosure of the Mortgage, or pursuant to realization upon
other security, shall constitute a purposeful evasion of the
prepayment terms of this Note, shall be deemed to be a voluntary
prepayment hereof, and Maker shall be required to pay the
prepayment premium as described above. Partial prepayments of
principal shall not change the Payment Dates or amounts of
subsequent monthly installments, unless Payee shall otherwise
agree in writing.
(4) If Maker defaults in the payment of any installment of
principal and interest on the date on which it shall fall due or
in the performance of any of the agreements, conditions,
covenants, provisions or stipulations contained in this Note or
in the Loan Documents, and if such default shall continue beyond
any grace period provided for in the Mortgage so as to constitute
an Event of Default thereunder, then Payee, at its option and
without further notice to Maker, may declare immediately due and
payable the entire unpaid principal balance of this Note,
together with interest thereon at an annual rate after the date
of such default equal to the Default Rate, together with all sums
due by Maker under the Loan Documents, anything herein or in the
Loan Documents to the contrary notwithstanding. The foregoing
provision shall not be construed as a waiver by Payee of its
right to pursue any other remedies available to it under the
Mortgage, this Note or any other Security Document, nor shall it
be construed to limit in any way the application of the Default
Rate. Any payment hereunder may be enforced and recovered in
whole or in part at such time by one or more of the remedies
provided to Payee in this Note or in the Loan Documents. In the
event that: (i) this Note or any Security Document is placed in
the hands of an attorney for collection or enforcement or is
collected or enforced through any legal proceeding; (ii) an
attorney is retained to represent Payee in any bankruptcy,
reorganization, receivership, or other proceedings affecting
creditors' rights and involving a claim under this Note or any
Security Document; (iii) an attorney is retained to protect or
enforce the lien of the Mortgage or any Security Document; or
(iv) an attorney is retained to represent Payee in any other
proceedings whatsoever in connection with this Note, the
Mortgage, any of the Loan Documents or any portion of the
Mortgaged Property subject thereto, then Maker shall pay to Payee
all reasonable attorney's fees, costs and expenses incurred in
connection therewith, including costs of appeal, together with
interest on any judgment obtained by Payee at the Default Rate.
(5) If Maker defaults in the payment of any monthly
installment on the Payment Date, then Maker shall pay to Payee a
late payment charge in an amount equal to five percent (5%) of
the amount of the installment not paid as aforesaid. An
additional late charge equal to five percent (5%) of the monthly
payment due will be charged for each successive month the payment
remains outstanding. Said late charge payments, if payable,
shall be secured by the Mortgage and the other Loan Documents,
shall be payable without notice or demand by Payee, and are
independent of and have no effect upon the rights of Payee under
paragraph 4 above.
(6) Maker and all endorsers, sureties and guarantors hereby
jointly and severally waive all applicable exemption rights,
valuation and appraisement, presentment for payment, demand,
notice of demand, notice of nonpayment or dishonor, protest and
notice of protest of this Note, and all other notices in
connection with the delivery, acceptance, performance, default or
enforcement of the payment of this Note. Maker and all
endorsers, sureties and guarantors consent to any and all
extensions of time, renewals, waivers or modifications that may
be granted by Payee with respect to the payment or other
provisions of this Note and to the release of the collateral or
any part thereof, with or without substitution, and agree that
additional makers, endorsers, guarantors or sureties may become
parties hereto without notice to them or affecting their
liability hereunder.
(7) Payee shall not be deemed, by any act of omission or
commission, to have waived any of its rights or remedies
hereunder unless such waiver is in writing and signed by Payee,
and then only to the extent specifically set forth in writing. A
waiver of one event shall not be construed as continuing or as a
bar to or waiver of any right or remedy to a subsequent event.
(8) This Note shall be governed by and construed in
accordance with the laws of the State of New York (the "State").
(9) The parties hereto intend and believe that each
provision in this Note comports with all applicable law.
However, if any provision in this Note is found by a court of law
to be in violation of any applicable law, and if such court
should declare such provision of this Note to be unlawful, void
or unenforceable as written, then it is the intent of all parties
hereto that such provision shall be given full force and effect
to the fullest possible extent that is legal, valid and
enforceable, that the remainder of this Note shall be construed
as if such unlawful, void or unenforceable provision were not
contained therein, and that the rights, obligations and interest
of Maker and the holder hereof under the remainder of this Note
shall continue in full force and effect; provided, however, that
if any provision of this Note which is found to be in violation
of any applicable law concerns the imposition of interest
hereunder, the rights, obligations and interests of Maker and
Payee with respect to the imposition of interest hereunder shall
be governed and controlled by the provisions of the following
paragraph.
(10) It being the intention of Payee and Maker to comply
with the laws of the State with regard to the rate of interest
charged hereunder, it is agreed that, notwithstanding any
provision to the contrary in this Note, the Mortgage, or any of
the other Loan Documents, no such provision, including without
limitation any provision of this Note providing for the payment
of interest or other charges, shall require the payment or permit
the collection of any amount ("Excess Interest") in excess of the
maximum amount of interest permitted by law to be charged for the
use or detention, or the forbearance in the collection, of all or
any portion of the indebtedness evidenced by this Note. If any
Excess Interest is provided for, or is adjudicated to be provided
for, in this Note, the Mortgage, or any of the other Loan
Documents, then in such event:
(i) the provisions of this paragraph shall govern;
(ii) Maker shall not be obligated to pay any Excess
Interest;
(iii) any Excess Interest that Payee may have received
hereunder shall, at the option of Payee, be (x) applied as a
credit against the unpaid principal balance then due under this
Note, accrued and unpaid interest thereon not to exceed the
maximum amount permitted by law, or both, (y) refunded to the
payor thereof or (z) any combination of the foregoing;
(iv) the applicable interest rate or rates provided
for herein shall be automatically subject to reduction to the
maximum lawful rate allowed to be contracted for in writing under
the applicable usury laws of the aforesaid State, and this Note,
the Mortgage and the other Loan Documents shall be deemed to have
been, and shall be, reformed and modified to reflect such
reduction in such interest rate or rates; and
(v) Maker shall not have any action or remedy against
Payee for any damages whatsoever or any defense to enforcement of
this Note, the Mortgage or any other Security Document arising
out of the payment or collection of any Excess Interest.
(11) Upon any endorsement, assignment, or other transfer of
this Note by Payee or by operation of law, the term "Payee," as
used herein, shall mean such endorsee, assignee, or other
transferee or successor to Payee then becoming the holder of this
Note. This Note shall inure to the benefit of Payee and its
successors and assigns and shall be binding upon the undersigned
and its successors and assigns. The term "Maker" as used herein
shall include the respective successors and assigns, legal and
personal representatives, executors, administrators, devisees,
legatees and heirs of Maker.
(12) Any notice, demand or other communication which any
party may desire or may be required to give to any other party
shall be in writing and shall be given as provided in the
Mortgage.
(13) To the extent that Maker makes a payment or Payee re-
ceives any payment or proceeds for Maker's benefit, which are
subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver, custodian or any other party
under any bankruptcy law, common law or equitable cause, then, to
such extent, the obligations of Maker hereunder intended to be
satisfied shall be revived and continue as if such payment or
proceeds had not been received by Payee.
(14) Maker shall execute and acknowledge (or cause to be
executed and acknowledged) and deliver to Payee all documents,
and take all actions, reasonably required by Payee from time to
time to confirm the rights created or now or hereafter intended
to be created under this Note and the Loan Documents, to protect
and further the validity, priority and enforceability of this
Note and the Loan Documents, to subject to the Loan Documents any
property of Maker intended by the terms of any one or more of the
Loan Documents to be encumbered by the Loan Documents, or
otherwise carry out the purposes of the Loan Documents and the
transactions contemplated thereunder; provided, however, that no
such further actions, assurances and confirmations shall increase
Maker's obligations under this Note.
(15) No modification, amendment, extension, discharge,
termination or waiver (a "Modification") of any provision of this
Note, or any one or more of the other Loan Documents, nor consent
to any departure by Maker therefrom, shall in any event be
effective unless the same shall be in a writing signed by the
party against whom enforcement is sought, and then such waiver or
consent shall be effective only in the specific instance, and for
the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on, Maker shall entitle
Maker to any other or future notice or demand in the same,
similar or other circumstances. Payee does not hereby agree to,
nor does Payee hereby commit itself to, enter into any Modifica-
tion.
(16) Maker hereby expressly and unconditionally waives, in
connection with any suit, action or proceeding brought by Payee
on this Note, any and every right it may have to (a) a trial by
jury, (b) interpose any counterclaim therein (other than a
counterclaim which can only be asserted in the suit, action or
proceeding brought by Payee on this Note and cannot be maintained
in a separate action) and (c) have the same consolidated with any
other or separate suit, action or proceeding.
(17) Notwithstanding any provision to the contrary in the
Mortgage or this Note, Payee shall not have any recourse to any
asset of Maker or its partners other than the Mortgaged Property
in order to satisfy the indebtedness for payment of the principal
and interest evidenced by this Note, and Payee's sole recourse
for satisfaction of the payment of principal and interest
evidenced by this Note shall be to exercise its rights against
the Mortgaged Property encumbered by the Mortgage and the other
collateral securing this Note. The foregoing sentence shall not
be deemed or construed to be a release of the indebtedness
evidenced by this Note or in any way impair, limit or otherwise
affect the lien of the Mortgage or any such other instrument
securing repayment of this Note or prevent Payee from naming
Maker, its partners, or their successors or assigns as a
defendant to any action to enforce any remedy for default so long
as there is no personal or deficiency money judgment sought or
entered against Maker, its partners, or their successors or
assigns for payment of principal and interest evidenced by this
Note. Notwithstanding the foregoing provisions of this paragraph
17, it is expressly understood and agreed that the aforesaid
limitation of liability shall in no way affect or apply to
Maker's continued personal liability for the payment to Payee of:
(i) any loss or damage occurring by reason of all or
any part of the Mortgaged Property being encumbered by a
voluntary lien (other than the Mortgage) granted by Maker;
(ii) any Rents, issues, profits and/or income
collected by Maker in excess of normal and verifiable operating
expenses from the Mortgaged Property after default by Maker
hereunder, under the Mortgage or under any other instrument
securing or referring to this Note;
(iii) unrefunded security deposits made by tenants of
the Mortgaged Property;
(iv) payment of Impositions, as defined in the
Mortgage, and insurance premiums, payment of which is required to
be made by Maker under the Mortgage;
(v) Rents, security deposits with respect to leases of
the Mortgaged Property, insurance proceeds, condemnation awards
and any other payments or consideration which Maker receives and
to which Payee is entitled pursuant to the terms of the Mortgage
or of any other Security Document;
(vi) damage to the Mortgaged Property from waste
committed or permitted by Maker;
(vii) loss or damage occurring by reason of the
failure of Maker to comply with any of the provisions of Section
40 of the Mortgage;
(viii) any loss or claim incurred by or asserted
against Payee as a result of fraud or misrepresentation by Maker
or any of the partners thereof with respect to any certification,
representation or warranty made by Maker or such other persons to
Payee herein or in any of the Loan Documents; and
(ix) reasonable attorney's fees incurred by Payee in
connection with suit filed on account of any of the foregoing
clauses (i) through (viii).
(18) Maker has executed the Cash Collateral Agreement (as
defined in the Mortgage). Commencing on the Reset Date, for each
calendar year, the Maker shall submit to the Payee for the
Payee's written approval an annual budget (an "Annual Budget")
not later than sixty (60) days prior to the commencement of such
calendar year, in form satisfactory to Payee setting forth in
reasonable detail budgeted monthly operating income and monthly
operating capital and other expenses for the Mortgaged Property.
Each Annual Budget shall contain, among other things, limitations
on management fees, third party service fees, and other expenses
as the Maker may reasonably determine. Payee shall have the
right to approve such Annual Budget and in the event that Payee
objects to the proposed Annual Budget submitted by Maker, Payee
shall advise Maker of such objections within fifteen (15) days
after receipt thereof (and deliver to Maker a reasonably detailed
description of such objections) and Maker shall within three (3)
days after receipt of notice of any such objections revise such
Annual Budget and resubmit the same to Payee. Payee shall advise
Maker of any objections to such revised Annual Budget within ten
(10) days after receipt thereof (and deliver to Maker a
reasonably detailed description of such objections) and Maker
shall promptly revise the same in accordance with the process
described in this subparagraph until the Payee approves an Annual
Budget, provided, however, that if Payee shall not advise Maker
of its objections to any proposed Annual Budget within the
applicable time period set forth in this paragraph, then such
proposed Annual Budget shall be deemed approved by Payee. Each
such Annual Budget approved by Payee in accordance with terms
hereof shall hereinafter be referred to as an "Approved Annual
Budget." Until such time that Payee approves a proposed Annual
Budget, the most recently Approved Annual Budget shall apply
provided that, such Approved Annual Budget shall be adjusted to
reflect actual increases in real estate taxes, insurance premiums
and utilities expenses.
In the event that the Maker must incur an extraordinary
operating expense or capital expense not set forth in the Annual
Budget (each an, "Extraordinary Expense"), the Maker shall
promptly deliver to Payee a reasonably detailed explanation of
such proposed Extraordinary Expense for the Payee's approval.
For the purposes of this Note, "Cash Expenses" shall mean, for
any period, the operating expenses for the operation and
maintenance of the Mortgaged Property as set forth in an Approved
Annual Budget to the extent that such expenses are actually
incurred by Maker minus Mortgage Escrow Amounts (as defined in
the Mortgage) for such period.
(19) Any legal action or proceeding with respect to this
Note and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or
of the United States of America for the Southern District of New
York, and, by execution and delivery of this Note, Maker hereby
accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid
courts and appellate courts from any thereof. Maker irrevocably
consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail,
postage prepaid, to Maker at the address for notices set forth
herein. Maker hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection
with this Maker brought in the courts referred to above and
hereby further irrevocably waives and agrees not to plead or
claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient
forum. Nothing herein shall affect the right of Payee to serve
process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Maker in any other
jurisdiction.
IN WITNESS WHEREOF, Maker has caused this Note to be
executed and delivered as of the day and year first above
written.
MAKER
Signed and acknowledged
in the presence of:
Mark M.P.N.M., Limited Partnership, an
Alabama limited partnership
By: Mark M.P.N.M. Realty, Inc.,
Name: an Alabama corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Mark New Smyrna Limited
Partnership,
a Florida limited partnership
By: Mark New Smyrna Realty, Inc.,
Name: a Florida corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Signed and acknowledged
in the presence of:
Mark Troy, L.P., a New York limited
partnership
By: Mark Troy Realty, Inc., a
Name: New York corporation, its
general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Mark Park Plaza, L.P., a Georgia
limited partnership
By: Mark Park Plaza Realty, Inc.
Name: a Georgia corporation, its
general partner
By: /s/Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Mark Martintown, L.P., a South
Carolina limited partnership
By: Mark Martintown Realty Inc.,
Name: a South Carolina corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Signed and acknowledged
in the presence of: Mark Kings Fairground, L.P., a
Virginia limited partnership
By: Mark Kings Fairground Realty,
Name: Inc., a Virginia corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Mark Shillington, L.P. a
Pennsylvania limited partnership
By: Mark Shillington Realty Corp.,
Name: a Pennsylvania corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Mark 25th Street, L.P., a
Pennsylvania limited partnership
By: Mark 25th Street Realty, Inc.
Name: a Pennsylvania corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Signed and acknowledged
in the presence of:
Mark Three Realty, L.P., a
Pennsylvania limited partnership
By: Mark Three Realty Corp., a
Name: Pennsylvania corporation,
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
Mark Four Realty, L.P., a
Pennsylvania limited partnership
By: Mark Four Realty Corp., a
Name: Pennsylvania corporation
its general partner
By: /s/ Joshua Kane
Name: Name: Joshua Kane
Title: Senior Vice President
& CFO
APPENDIX 1
Calculation of Prepayment Premium
The prepayment premium shall be equal to the greater of
(a) one percent (1%) of the portion of the principal amount of
the Note being repaid and (b) the product of (i) a fraction whose
numerator is an amount equal to the portion of the principal
balance of this Note being prepaid and whose denominator is the
entire outstanding principal balance of this Note on the date of
such prepayment (after subtracting the amount of any scheduled
principal payment due on such Payment Date), multiplied by (ii)
an amount equal to the remainder obtained by subtracting (x) an
amount equal to the entire outstanding principal balance of this
Note as of the date of such prepayment (after subtracting the
amount of any scheduled principal payment due on such Payment
Date) from (y) the present value as of the date of such
prepayment of the remaining scheduled payments of principal and
interest on this Note (including any final installment of
principal payable on the Maturity Date) determined by discounting
such payments at the Discount Rate (as hereinafter defined).
For purposes of this Note, "Discount Rate" shall mean the rate
which, when compounded monthly, is equivalent to the Treasury
Rate as of the date of the proposed prepayment.
EXHIBIT 1
Amounts due on this note shall be payable to Morgan Stanley
Mortgage Capital Inc. at the following address or as otherwise
directed:
Morgan Stanley Mortgage Capital Inc.
1585 Broadway
New York, New York 10036
