FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
.................................................
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 1-13375
.........................................................
TOWER REALTY TRUST, INC.
.......................................................................
(Exact name of registrant as specified in its charter)
Maryland 13-3938558
............................................... ..............................
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
292 Madison Avenue, 3rd Floor, New York, New York 10017
.......................................................................
(Address of principal executive offices)
(Zip Code)
(212) 448-1864
.......................................................................
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
..... .....
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
The number of shares of common stock, par value $0.01 per share,
outstanding on May 12, 1999 was 16,958,355.
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TOWER REALTY TRUST, INC.
Index
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, which
involves certain risks and uncertainties. The Company's actual results in future
periods may be materially different from any future performance anticipated
herein. Each forward-looking statement that the Company believes is material is
accompanied by a cautionary statement or statements identifying important
factors that could cause actual results to differ materially from those
described in the forward-looking statement. In the context of forward-looking
information provided in this Quarterly Report on Form 10-Q and in other reports,
please refer to the discussion of risk factors detailed in, as well as the other
information contained in, the Company's filings with the Securities and Exchange
Commission during the past 12 months.
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PART I -- FINANCIAL INFORMATION Page
Item 1. Financial Statements............................................................................................... 1
Condensed Consolidated Balance Sheets of Tower Realty Trust, Inc. as of March 31, 1999
(Unaudited) and December 31, 1998..................................................................................... 1
Unaudited Condensed Consolidated Statements of Operations of Tower Realty Trust, Inc. for the
Three Months Ended March 31, 1999 and 1998............................................................................ 2
Unaudited Condensed Consolidated Statements of Cash Flows of Tower Realty Trust, Inc. for
the Three Months Ended March 31, 1999 and 1998........................................................................ 3
Notes to Condensed Consolidated Financial Statements........................................................................ 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................. 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk......................................................... 18
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.................................................................................................. 19
Item 2. Changes in Securities and Use of Proceeds.......................................................................... 20
Item 3. Defaults Upon Senior Securities.................................................................................... 20
Item 4. Submission of Matters to a Vote of Security Holders................................................................ 20
Item 5. Other Information.................................................................................................. 20
Item 6. Exhibits and Reports on Form 8-K................................................................................... 20
Signatures.................................................................................................................. S-1
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
TOWER REALTY TRUST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<S> <C> <C>
March 31, December 31,
1999 1998
---------------------- -----------------------
ASSETS: (Unaudited)
Real estate $ 698,868 $ 691,560
Less: accumulated depreciation (22,209) (18,118)
---------------- --------------------
676,659 673,442
Deferred charges, net 13,545 13,692
Receivables, net 11,448 11,288
Cash and cash equivalents 6,793 6,277
Escrowed cash 7,480 3,378
Other assets 5,816 8,962
Investments in joint ventures 2,673 2,708
---------------- --------------------
Total assets $ 724,414 $ 719,747
================ ====================
LIABILITIES AND SHAREHOLDERS' EQUITY:
Debt on real estate 132,005 189,893
Line of credit 138,400 70,400
Accounts payable and accrued liabilities 8,709 11,524
Distributions payable 8,793 8,106
Deferred real estate taxes 9,386 9,155
Other liabilities 10,892 10,316
---------------- --------------------
Total liabilities 308,185 299,394
---------------- --------------------
Minority interest in operating partnership 34,081 34,371
---------------- --------------------
Shareholders' equity:
Preferred shares 50,000,000 shares authorized,
2,169,197 shares issued and outstanding 40,000 40,000
Common shares, $.01 par value, 150,000,000 shares
authorized, 16,958,255 shares issued and outstanding 169 169
Additional paid in capital 364,833 364,833
Distribution in excess of accumulated earnings (22,854) (19,020)
---------------- --------------------
Total shareholders' equity 382,148 385,982
---------------- --------------------
Total liabilities and shareholders' equity $ 724,414 719,747
================ ====================
The accompanying notes are an integral part of these financial statements.
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1
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TOWER REALTY TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share amounts)
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<CAPTION>
For the Three For the Three
Months Ended Months Ended
March 31, 1999 March 31, 1998
-------------------- ----------------------
Revenues:
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Rental income $ 28,305 $ 25,750
Management fees --- ---
Construction, leasing and other fees 200 194
------------ ----------
Total revenues $ 28,505 $ 25,944
------------ ----------
Expenses:
Property operating and maintenance 6,342 5,623
Real estate taxes 3,877 3,612
General and administrative 1,775 2,128
Interest expense 5,052 4,613
Depreciation and amortization 4,658 4,323
Ground rent/air rights expense 171 171
Costs related to sale of Company 1,345 ---
------------ ----------
Total expenses 23,220 20,470
------------ ----------
Equity in unconsolidated entities (35) 203
------------ ----------
Income before minority interest and extraordinary gain (loss)
on early extinguishment of debt 5,250 5,677
Minority interest (474) (496)
------------ ----------
Net income before extraordinary gain (loss) on early
extinguishment of debt 4,776 5,181
------------ ----------
Extraordinary gain (loss) on early extinguishment of debt, net
of minority interest (530) ---
------------ ----------
Net income $ 4,246 $ 5,181
============ ==========
Less: Preferred stock dividend requirements (916) ---
Net income applicable to common shareholders $ 3,330 $ 5,181
============ ==========
Per Share Data -- Basic and diluted:
Income before minority interest and extraordinary gain (loss)
on early extinguishment of debt per common share $ 0.23 $ 0.31
Extraordinary (loss) on early extinguishment of debt, net of
minority interest per common share (.03) ---
------------ ----------
Net income per common share $ 0.20 $ 0.31
============ ==========
Weighted average number of common shares 16,958 16,920
outstanding -- basic and diluted ============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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TOWER REALTY TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended March 31, 1999 Ended March 31, 1998
--------------------- ----------------------
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) $ 4,246 $ 5,181
Adjustments to reconcile net income to net cash provided by operate
activities:
Depreciation and amortization 4,659 4,323
Amortization of deferred financing costs 516 142
Unbilled rental income (1,750) (1,529)
Extraordinary loss on early extinguishment of debt 582 ---
Equity income in joint venture and unconsolidated subsidiaries 35 (203)
Minority interest 421 228
Changes in assets and liabilities:
Receivables 1,590 1,066
Escrowed cash (4,102) (161)
Other assets 2,904 3,325
Deferred real estate taxes 231 259
Accounts payable and other liabilities (2,815) 1,781
Other liabilities and amounts due to affiliates 576 1,362
--------- ---------
Net cash provided by operating activities 7,093 15,774
--------- ---------
Cash flows from investing activities:
Acquisitions of real estate, joint venture, deferred charges
and other Property and tenant improvements (8,069) (21,029)
--------- ---------
Net cash used in investing activities (8,069) (21,029)
--------- ---------
Cash flows from financing activities:
Proceeds from debt on real estate and other debt 70,194 45,900
Repayments of debt on real estate (60,081) (51)
Distributions to Preferred Stockholders (229) ---
Distributions to OP Unitholders (712) (560)
Distributions to Common Stockholders (7,165) (5,983)
Loan Origination Fees (515) ---
--------- ---------
Net cash provided by financing activities 1,492 39,306
--------- ---------
Net increase in cash and cash equivalents 516 34,051
Cash and cash equivalents, beginning of period 6,277 1,347
--------- ---------
Cash and cash equivalents, end of period $ 6,793 $ 35,398
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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TOWER REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation:
Tower Realty Trust, Inc. (collectively with its subsidiaries, the
"Company") was organized in the state of Maryland on March 27, 1997. The Company
operates so as to qualify as a real estate investment trust ("REIT") for federal
income tax purposes. As of October 16, 1997, the Company consummated an initial
public offering (the "Offering") of 13,817,250 shares of common stock, par value
$.01 per share (the "Common Stock") (including the exercise of the underwriters'
over-allotment option of 1,802,250 shares), and effected concurrent private
placements (the "Concurrent Private Placements"), of 1,153,845 shares of Common
Stock at a price of $26.00 per share and realized net proceeds therefrom of
approximately $353.35 million. In addition, in connection with the formation
transactions related to the Offering (the "Formation Transactions"), which
included the acquisition of certain property interests and the cancellation of
certain indebtedness, the Company issued 1,949,360 shares of Common Stock and
other assets. Upon consummation of the Offering, the Company acquired a sole 1%
general partner interest in Tower Realty Operating Partnership, L.P., a Delaware
limited partnership (the "Operating Partnership"), and a 90.4% limited partner
interest in the Operating Partnership. At March 31, 1999, the Company had a 1%
general partnership interest and a 89.9% limited partner interest in the
Operating Partnership.
The Company was formed to continue and expand the commercial real estate
business of Tower Equities & Real Estate Corp. and its affiliates (collectively
with its predecessor entities and affiliates, "Tower Equities"), including
developing, acquiring, owning, renovating, managing, and leasing office
properties in the Manhattan, Phoenix, Tucson, and Orlando markets. Upon
consummation of the Offering and the Formation Transactions, the Operating
Partnership owned or had interests in 21 office properties (the "Initial
Properties"). On December 31, 1997, the Company purchased the approximately
700,000 square foot office tower located at 810 Seventh Avenue in midtown
Manhattan ("810 Seventh Avenue") for approximately $150.0 million, including
closing costs; on January 16, 1998, the Company purchased the approximately
126,000 square foot Blue Cross/Blue Shield office complex located in Phoenix,
Arizona ("Blue Cross/Blue Shield") for $16.9 million. On May 6, 1998, the
Company purchased the approximately 335,000 square foot, 25-story downtown New
York City office building located on 90 Broad Street (the "90 Broad Property")
for approximately $34.3 million. The Initial Properties, together with 810
Seventh Avenue, Blue Cross/Blue Shield and the 90 Broad Property, are
collectively referred to herein as the "Properties." In November 1997, the
Company exercised an option to purchase a parcel of land located in Phoenix,
Arizona for approximately $10.3 million and is in the process of developing
Phase I of this parcel which will consist of an approximately 160,000 square
foot office building and parking facilities. At March 31, 1999, the Phase I
development was 90% completed and of the $9.5 million estimated cost of
completion, the Company has expended $8.5 million. The Company also owns or has
an option to acquire three parcels of land adjacent to the Properties (the
"Development Parcels"), which can support 2.0 million of rentable square feet of
development.
On March 31, 1997 interests in certain partnerships, properties and limited
liability companies were contributed to the Operating Partnership in exchange
for units of limited partnership interest in the Operating Partnership ("OP
Units"). Simultaneously with such contribution of interests, the Company issued
$12.3 million of notes (the "MSAM Notes") to certain investors advised by Morgan
Stanley Dean Witter Investment Management Inc. (formerly known as Morgan Stanley
Asset Management, Inc.) ("MSAM"). The MSAM Notes were collateralized by certain
interests in the Properties. Upon completion of the Offering, all MSAM Notes
were converted into Common Stock of the Company.
4
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TOWER REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(Continued)
The net proceeds from the Offering were contributed to the Operating
Partnership in exchange, in part, for the Company's 91.4% interest therein. The
Operating Partnership used the proceeds received from the Company, the $107.0
million net cash proceeds from the Company's term loan facility (the "Term
Loan"), borrowed concurrent with and subsequent to the Offering and
approximately $12.3 million of proceeds received from MSAM, as follows: (i)
approximately $281.0 million for repayment of certain indebtedness (including
associated prepayment penalties) relating to the Initial Properties (the
"Property Partnerships"); (ii) approximately $137.0 million to acquire certain
equity, debt and fee interests in the Initial Properties; (iii) approximately
$3.1 million to pay for commitment fees and expenses relating to the Term Loan
and the Company's $200.0 million unsecured line of credit with Fleet National
Bank (the "Line of Credit"); (iv) approximately $3.0 million to pay transfer
taxes and other expenses associated with the acquisitions of the Initial
Properties; and (v) the remaining approximately $48.6 million for working
capital.
The Tower Equities management and leasing companies and Properties
Atlantic, Inc. management and leasing company (which, prior to the Offering, was
controlled and operated by Clifford Stein, Managing Director, Southeast Region
of the Company) (collectively the "Predecessor Management Companies")
contributed an undivided 95% interest in the assets of such companies to the
Operating Partnership which, in turn, recontributed such assets to Tower
Equities Management, Inc. (the "Management Company") in exchange for 100% of the
non-voting stock and 5% of the voting stock in the Management Company (which
entitles the Company to receive 95% of the dividends of the Management Company).
The Management Company and investors that hold interests in certain
properties, which continued to be controlled by Tower Equities after the
consummation of the Offering, entered into management agreements with respect to
each of the Properties. In consideration for the services to be provided under
the management agreements, the Management Company will receive a property
management fee and applicable construction fees and leasing commissions which
will be determined by reference to existing market rates for similar
transactions. As the result of a lender foreclosing on three third-party owned
retail properties in the fourth quarter of 1998, at March 31, 1999, the
Management Company held management agreements with only three retail properties.
Management contracts on the remaining retail properties were terminated in April
1999.
Lawrence H. Feldman, the former Chairman of the Board, Chief Executive
Officer and President of the Company, held a 3.8% non-controlling interest in a
partnership controlling the 2800 North Central Avenue Property ("2800 North
Central"). The Company, upon consummation of the Offering, acquired this
interest and the interests of Tower Equities (10% aggregate interest, including
a 1.01% general partnership interest).
In connection with the acquisition of certain property and partnership
interests, the Company also acquired certain assets and liabilities, the
economic and obligations benefits of which were retained by the respective
partners. The net remaining liability of such partners was reflected in the
accompanying financial statements as due to affiliates and aggregated $370,000
as of December 31, 1997. No balance remained as of March 31, 1999. Also in
connection with these transactions the Company issued shares of Common Stock and
OP Units, the proceeds of which were not fully received. The aggregate amount
due of approximately $981,000 has been reflected as a reduction of additional
paid-in-capital in the financial statements. These amounts have been recorded
consistent with the Company's understanding of the related formation
transactions. However, the balances reflected in the financial statements may be
subject to dispute with predecessor entities and their owners. In the opinion of
the Company's management, the ultimate resolution of these potential disputes
will not have a material adverse effect on the accompanying financial
statements.
5
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TOWER REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(Continued)
Basis of Presentation
The condensed consolidated balance sheet of the Company as of March 31,
1999 and the related condensed consolidated statements of operations and cash
flows for the three month periods ended March 31, 1999 and 1998 are unaudited.
The Company's condensed consolidated balance sheet as of December 31, 1998 have
been derived from the Company's audited consolidated financial statements. The
financial statements of the Company have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
they do not include all of the disclosures required by generally accepted
accounting principles for a complete presentation of these financial statements.
In the opinion of management, all adjustments (consisting solely of normal
recurring matters) necessary for a fair presentation of the financial statements
for these interim periods have been included. The results for the three months
ended March 31, 1999 are not necessarily indicative of the results to be
obtained for the full fiscal year. These financial statements should be read in
conjunction with the December 31, 1998 audited financial statements and notes
thereto, included in its annual report on Form 10-K for the fiscal year ended
December 31, 1998.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. The most significant estimates and assumptions are related to the
recoverability and depreciable lives of real estate and the recoverability of
billed and unbilled tenant receivables. Actual results could differ from those
estimates.
Net income per common share basic and dilutive has been computed by
dividing net income applicable to common shareholders by the weighted average
number of Common Shares outstanding (16,958,255). A total of 975,000 shares were
reserved for issuance under stock options. The effect of the outstanding options
has been excluded from the calculation of diluted net income per common share as
these options had an antidilutive effect in the current period.
2. Sale of the Company:
On December 8, 1998, the Company entered into an agreement (the "Merger
Agreement") relating to the merger of the Company with Metropolitan Partners
LLC, a subsidiary of Reckson Associates Realty Corp. ("Reckson"). The Merger
Agreement and the transactions contemplated thereunder (collectively, the
"Merger") were approved by the Company's Board of Directors on December 8, 1998.
Pursuant to the Merger Agreement and the transactions contemplated thereby,
each share of Common Stock of the Company will, at the election of holders
thereof and subject to proration, either (x) be converted into the right to
receive $23.00 in cash payable to the holder thereof, without interest, or (y)
be converted into either (1) .5725 of a share of class B exchangeable common
stock, par value $.01 per share, of Reckson (the "Reckson Class B Common Stock")
and $7.2565 principal amount of 7% senior unsecured notes due 2009 (the "Reckson
OP 7% Notes") of Reckson Operating Partnership ("Reckson OP"), guaranteed by
Reckson, if the Share Issuance Approval (as defined below) is not obtained, or
(2) .8364 of a share of Reckson Class B Common Stock if the Share Issuance
Approval is obtained. If the Reckson board of directors withdraws or amends or
materially modifies or withdraws its approval or recommendation of the Share
Issuance (as defined below) and if the Share Issuance Approval has not been
obtained, in addition to the consideration set forth in clause (x) or (y)(1)
above, each share of Common Stock will be converted into an additional $.8046
principal amount of Reckson OP 7% Notes. As used herein, the "Share Issuance
Approval" is defined as the approval, by a majority
6
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TOWER REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(Continued)
of votes cast at the special meeting of the common stockholders of Reckson, of
the issuance of only Reckson Class B Common Stock as the non-cash portion of the
merger consideration (the "Share Issuance"); provided that the total votes cast
on the Share Issuance represent over 50% in interest of all shares of common
stock of Reckson entitled to vote on the Share Issuance.
In connection with the Merger and other strategic initiatives explored by
the Company (the "Initiatives"), the Company entered into an agreement with
Merrill Lynch & Co. ("Merrill Lynch") on April 16, 1998 whereby Merrill Lynch
acts as the exclusive financial advisor to the Company in connection with the
Initiatives. Pursuant to the terms of this agreement, Merrill Lynch is entitled
to .6% of the aggregate purchase price paid to the Company for its sale upon
closing of the applicable sale agreement. If the Merger does not occur as
anticipated, the Company will be responsible for payments in the amount of
approximately $1.0 million to Merrill Lynch. During 1998, the Company has
charged $1.0 million to operations, representing the retainer and the delivered
fairness opinion under the agreement, which is included in the costs related to
sale of the Company item on the condensed consolidated statements of operations.
Other costs incurred in connection with the Initiatives which have been
included in the costs of Sale of the Company in the accompanying statement of
income for the quarterly period ended March 31, 1999 include legal, accounting
and consulting fees. The Company anticipates that significant additional costs
will be incurred in connection with the Merger. The Company has written
agreements with several key members of management providing for, among other
things, severance and stay bonuses. Payment of such amounts described will be
triggered upon the occurrence of certain events, including a change in control,
as defined in the agreements. The aggregate amounts due upon a change of control
amount to approximately $4.9 million. The Merger constitutes a change in
control.
3. Acquisition of Real Estate:
During the three months ended March 31, 1998, the Company, through the
Operating Partnership, acquired the Blue Cross/Blue Shield office complex, a
126,000 square foot twin office building facility located in the Northwest
submarket of Phoenix, Arizona for $16.9 million. In conjunction with this
acquisition, the Company drew down funds from its Line of Credit Facility (see
Note 4).
4. Line of Credit and Mortgage Debt:
The Company has a revolving credit agreement with a group of lenders. The
revolving credit agreement may be used, among other things, to finance its
acquisition of additional office properties and other costs and expenses
attendant with such acquisitions, to refinance existing indebtedness and for
general working capital requirements. At March 31, 1999 and December 31, 1998,
$138.4 million and $70.4 million was outstanding under the revolving credit
agreement, respectively. The Company pays monthly commitment fees equal to 25
basis points on the undrawn revolving line of credit commitment. In early March,
1999, in connection with the refinancing of 810 Seventh Avenue, the Company
modified its revolving credit agreement by adding 810 Seventh Avenue to the
unencumbered borrowing base. In addition, the Line of Credit was reduced from
$200.0 million to $165.0 million and the Company utilized $60.0 million of the
Line of Credit to pay off the remaining $60.0 million secured mortgage on 810
Seventh Avenue. The Line of Credit has a three-year term and bears interest at
the rate of approximately 150 basis points over LIBOR (London Interbank Offered
Rate). The Company paid approximately $400 thousand to the lenders and
approximately $200 thousand to third parties in connection with the modification
during the period ended March 31, 1999.
7
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TOWER REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(Continued)
The Line of Credit expires in October 2000 but borrowings will become due
upon consummation of the merger. In conjunction with the line of credit, the
Company must maintain certain financial ratios:
i. Total outstanding indebtedness must not exceed 55% of Total
Value (as defined in the Line of Credit Agreement) during
the first year of the facility and must not exceed 50%
thereafter.
ii. Collateral indebtedness must not exceed 40% of Total Value
(as defined) during the first year of the facility and 35%
thereafter.
iii. Recourse Indebtedness cannot exceed 5% of Total Value (as
defined).
iv. Total outstanding unsecured indebtedness must not exceed
60% of total unencumbered asset value (as defined) during
the first year of the facility and must not exceed 55%
thereafter.
v. Other financial covenants that must be met by the Company
include interest expense to debt and fixed charges to debt
ratios, amongst others.
As of March 31, 1999 and December 31, 1998, the Company has complied with
the financial debt covenants.
As a general policy, the Company intends to maintain a debt policy limiting
the Company's total consolidated indebtedness plus its pro rata share of joint
venture debt to 50% of the Company's total market capitalization. As of March
31, 1999 and December 31, 1998 the debt to total market capitalization,
including the Company's 10% interest in the debt of 2800 North Central, was 46%
and 44%.
Interest capitalized for the three months ended March 31, 1999 was
approximately $518,000. No interest was capitalized during the three months
ended March 31, 1998.
5. Distributions:
In March of 1999, the Company declared a cash distribution for the first
quarter of 1999 in the amount of $.4225 per common share, preferred share and
Operating Units outstanding on March 31, 1999. The distributions were paid in
April of 1999 totaling approximately $8.8 million.
In January of 1999, the Company paid the 1998 distribution of approximately
$8.1 million, which was declared in December of 1998.
In March of 1998, the Company declared a cash distribution for the first
quarter of 1998 in the amount of $.4225 per common share and Operating Units
outstanding on March 31, 1998. The distributions were paid in April of 1998
totaling approximately $7.8 million.
In January of 1998, the Company paid the 1997 distribution of approximately
$6.5 million, which was declared in December of 1997.
8
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TOWER REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(Continued)
6. Supplemental Disclosure of Non-Cash Investing and Financing Activities:
The Company issued 129,034 OP Units on March 6, 1998 for the buyout of a
management agreement related to the purchase of 810 Seventh Avenue. See Note 5
for non-cash declaration of distributions as of March 31, 1999 and 1998.
7. Recently Issued Accounting Standards:
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement is effective for all fiscal quarters of
all fiscal years beginning after June 15, 1999. This statement addresses the
accounting for derivative instruments including certain derivative instruments
embedded in other contracts and for activities. The Company does not expect that
adoption of this Statement will have a material impact on its financial
statements.
8. Commitments and Contingencies:
Legal Matters
As a result of the acquisition of the Properties, the Company has become a
successor party-in- interest to certain legal proceedings arising in the
ordinary course of the business of Tower Equities and the other third-party
predecessor entities.
On or about January 21, 1999, an action captioned DBD International
Limited, Inc. v. Tower Realty Trust, Inc., Case No. 99 CV 9 (Cir. Ct. Dunn Co.)
was commenced in the Circuit Court of the State of Wisconsin. The plaintiff
alleges that the Company purportedly breached a contract regarding the
plaintiff's provision of image management services to the Company. The plaintiff
seeks, among other things, compensatory damages in the amount of $798,788,
prejudgment interest and attorneys' fees.
In July 1998, David Miller, a purported stockholder of the Company,
commenced a putative class action against the Company and certain of its then
directors and officers in the Supreme Court of New York, New York County
captioned Miller v. Adams, et al., Index No. 98/113363 (Sup. Ct. N.Y. Co.). This
action challenges, among other things, the process employed by the Company and
its directors in reviewing, approving and assessing the fairness of the Prior
Merger Agreement. Following Tower's press release on November 2, 1998, this
action was discontinued without prejudice. On or about December 18, 1998, David
Miller commenced a putative class action in the Supreme Court of New York, New
York County captioned Miller v. Adams, et al., Index No. 98/606208 (Sup. Ct.
N.Y. Co.) challenging, among other things, the process employed by the Company
and its directors in reviewing, approving and assessing the fairness of the
Merger Agreement. Miller is seeking, among other things, equitable and
declaratory relief and unspecified compensatory damages.
The Company intends to contest these claims vigorously. As with any
litigation, however, it is not possible to predict the resolution of these
pending actions and the Company therefore bears certain risks associated with
these actions. However, although management believes that the ultimate
resolution of these matters will not have a material adverse effect on the
financial position of the Company, the ultimate resolution may have a material
adverse effect on the results of operations of any one period.
9
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TOWER REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(Continued)
On November 2, 1998, the Company commenced an action in New York Supreme
Court against Reckson, Crescent Real Estate Equities Corp. ("Crescent") and
Metropolitan alleging breach of the merger agreement between the Company and
these parties dated July 9, 1998 (the "Prior Merger Agreement"). The Company
sought at least $75 million in compensatory damages, declaratory and other
relief. The Company's press release on November 2, 1998 stated that this action
was filed because the Company had been informed by Crescent, Reckson and
Metropolitan Partners that they would not proceed with the transactions
contemplated by the Prior Merger Agreement. On December 22, 1998, the action was
discontinued. As discussed in the Merger Agreement, under certain limited
circumstances this action can be recommenced following the merger by the Company
against Crescent for the benefit of the Company's stockholders.
9. Segment Reporting:
The Company operates in one business segment: real estate. The Company
provides leasing, management, acquisition, development and construction for its
portfolio. The Company does not have any foreign operations. The accounting
policies of the segment are the same as those described in the summary of
significant accounting policies disclosed in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, except that the Company
excludes straight-line rent adjustments and depreciation and amortization in
evaluating segment performance.
The Company evaluates performance based upon net operating income from the
combined properties in the segment (which excludes straight-line rent
adjustments and depreciation and amortization).
<TABLE>
<CAPTION>
Total Segment Corporate & Other(f) Total Company
------------------- -------------------- -----------------
(dollars in thousands, including footnotes)
Total revenues(a):
The Company(b):
<S> <C> <C> <C>
1999 $ 27,072 $ (39) $ 27,033
1998 24,525 417 24,942
Total operating and interest expenses(c):
The Company(b):
1999 $ 2,879 $ 6,507 $ 9,386
1998 2,394 6,523 8,917
Net operating income (loss)(d):
The Company(b):
1999 $ 24,193 $ (6,546) $ 17,647
1998 22,131 (6,106) 16,025
Total assets (The Company):
1999 $719,723 $ 8,024 $727,747
1998 655,006 52,844 707,850
Total long-lived assets (The Company) (e):
1999 $689,144 $ 72 $689,216
1998 629,789 11,792 641,581
- -----------
(a) Total revenues represent all revenues during the period (including the
Company's equity in earnings of unconsolidated entities), excluding
adjustments for straight-lining of rents and the Company's share of
straight-line rent adjustments from unconsolidated joint ventures. All
interest income is excluded from the segment amounts and is classified
in Corporate and Other for all periods.
10
</TABLE>
<PAGE>
TOWER REALTY TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS--(Continued)
(b) Segment information has been presented for the Company for the three months
ended March 31, 1999 and 1998.
(c) Total operating and interest expenses represents the sum of real estate
taxes, utilities, general and administrative, ground rents/air rights and
interest expense. All interest expense (including property-level mortgages)
is excluded from the segment amounts and is classified in corporate and
other for all periods. Total segment information of the Company includes
$790 and $720 of management fee expenses charged from the Management
Company for the three months ended March 31, 1999 and 1998. Amounts
presented exclude depreciation and amortization of $4,695 and $4,356 for
the Company for the three months ended March 31, 1999 1998, respectively
and non-recurring merger-related charges of $1,345.
(d) Net operating income represents total revenues, as defined in Note (a) less
total operating and interest expenses, as defined in Note (c) for the
period.
(e) Long-lived assets is comprised of total rental property, unbilled rents
receivable and investments in unconsolidated entities.
(f) Corporate and other represents all corporate-level items (including
interest income, interest expense and non-property general and
administrative expense) as well as intercompany eliminations necessary to
reconcile to consolidated Company totals.
10. Subsequent Events:
On May 10, 1999, the Company announced the declaration of a prorated
distribution to common stockholders of $0.250714 per share (subject to reduction
in limited circumstances) for the period April 1, 1999 through and including May
24, 1999, provided that the Merger occurs on May 24, 1999. This distribution
would be payable approximately thirty days after the effectiveness of the Merger
to holders of record on May 21, 1999, the last business day prior to the
proposed effective time of the Merger. This distribution is contingent on the
Merger taking place.
On April 14, 1999, the Company and Reckson filed a joint proxy
statement/prospectus with the Securities and Exchange Commission in connection
with the Merger. A special meeting of stockholders of the Company (the "Special
Meeting") was called for May 14, 1999 approve the transactions contemplated by
the Merger Agreement. On May 10, 1999, the Company announced that, in response
to an announcement by Reckson that it had entered into an agreement to acquire a
$425 million first mortgage note secured by the property located at 919 Third
Avenue, New York, New York, the Special Meeting was postponed until May 24,
1999.
11. Reclassification:
Certain prior year amounts have been reclassified to conform to the current
year presentation.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Overview
The Company was incorporated in the State of Maryland on March 27, 1997.
The Company operates so as to qualify as a REIT for federal income tax purposes.
On March 31, 1997 interests in certain partnerships, properties and limited
liability companies were contributed to the Operating Partnership in exchange
for OP Units. Certain of these interests were owned by the Operating Partnership
after consummation of the Offering. Simultaneously with such contribution of
interests and through the date of the Offering, the Company issued $12.3 million
of notes to certain investors advised by MSAM. The notes were collateralized by
certain of the Properties. Upon completion of the Offering, all notes were
converted into shares of Common Stock of the Company. As of October 16, 1997,
the Company completed the Offering of 13,817,250 shares of common stock
(including the exercise of the underwriters' over-allotment option of 1,802,250
shares) and effected the concurrent private placements of 1,153,845 shares of
common stock at a price of $26.00 per share and realized net proceeds therefrom
of approximately $353.35 million. In addition, in connection with the Formation
Transactions relating to the Offering and the Concurrent Private Placements,
including the acquisition of certain property interests and the cancellation of
certain indebtedness, the Company issued 1,949,360 shares of Common Stock. Upon
consummation of the Offering and the Concurrent Private Placements, the Company
acquired a sole 1% general partner interest in the Operating Partnership and a
90.4% limited partnership interest in the Operating Partnership. At March 31,
1999, the Company had a 1% general partner interest and a 89.9% limited
partnership interest in the Operating Partnership.
The Company was formed to continue and expand the commercial real estate
business of Tower Equities, including developing, acquiring, owning, renovating,
managing, and leasing office properties in the Manhattan, Phoenix, Tucson, and
Orlando markets. Upon completion of the Offering, the Concurrent Private
Placements and the Formation Transactions, the Operating Partnership owned or
had interests in the 21 Initial Properties. On December 31, 1997 the 810 Seventh
Avenue in midtown Manhattan for approximately $150 million, including closing
costs, on January 16, 1998, the Company purchased Blue Cross/Blue Shield located
in Phoenix, Arizona for approximately $16.9 million and on May 6, 1998, the
Company purchased the 90 Broad Property in New York City for approximately $34.3
million in cash. The Company also owns or has an option to acquire the
Development Parcels, which can support 2.2 million rentable square feet of
development. In November 1997, the Company exercised its option to purchase one
of the optioned Development Parcels located in Phoenix, Arizona for
approximately $10.3 million. This parcel is currently under development.
On December 8, 1998, the Company entered into the Merger Agreement relating
to the Merger. The Merger Agreement and the Merger were approved by the
Company's Board of Directors on December 8, 1998.
Pursuant to the Merger Agreement and the transactions contemplated thereby,
each share of Common Stock of the Company will, at the election of holders
thereof and subject to proration, either (x) be converted into the right to
receive $23.00 in cash payable to the holder thereof, without interest, or (y)
be converted into either (1) .5725 of a share of Reckson Class B Common Stock
and $7.2565 principal amount of Reckson OP 7% Notes, guaranteed by Reckson, if
the Share Issuance Approval is not obtained, or (2) .8364 of a share of Reckson
Class B Common Stock if the Share Issuance Approval is obtained. If the Reckson
board of directors withdraws or amends or materially modifies or withdraws its
approval or recommendation of the Share Issuance and if the Share Issuance
Approval has not been obtained, in addition to the consideration set forth in
clause (x) or (y)(1) above, each share of Common Stock will be converted into an
additional $.8046 principal amount of Reckson OP 7% Notes.
12
<PAGE>
Results of Operations
The following is management's discussion and analysis of certain
significant factors that have affected the financial condition and results of
operations of the Company for the periods indicated below. This discussion and
analysis should be read in conjunction with the Company's Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 31, 1999.
Comparison of Three Months Ended March 31, 1999 to the Three Months Ended March
31, 1998
Total revenues increased by $2.6 million, or 10.0%, to $28.5 million in
1999 as compared to $25.9 million in 1998. Rental income increased by $2.5
million, or 9.7%, to $28.3 million in 1999 as compared to $25.8 million in 1998
primarily as a result of the 90 Broad Property in New York City in May, 1998,
which resulted in $1.8 million of rental income for the three months ended March
31, 1999. The remaining increase in rental income can be attributed to an
increase in base rent, primarily resulting from an increase in leasing activity.
Total expenses for the three months ended March 31, 1999 increased by $2.7
million, or 13.2%, to $23.2 million from $20.5 million in 1998 primarily as a
result of costs related to the sale of the Company, the acquisition of the 90
Broad Property in May, 1998 and interest expense, net of a reduction in other
miscellaneous general and administrative costs. Expenses, excluding interest and
depreciation and amortization, as a percentage of total revenue increased from
44.5% in 1998 to 47.3% in 1999, primarily as a result of costs related to the
sale of the Company, net of a decrease in general and administrative expenses.
The decrease in general and administrative expenses can be primarily attributed
to (i) a decrease in payroll at the Operating Partnership as a result of the
resignations of the former Chief Executive Officer and President and Chief
Financial Officer of the Company, as previously described in the Company's
filings with the Securities and Exchange Commission and other headcount
reductions as a result of resignations and (ii) expenses related to property
acquisitions that were not consummated during the first quarter of 1998. The
components of expenses, excluding interest and depreciation and amortization, as
a percentage of total revenue are as follows:
Three Months
Ended March 31,
-------------------------------
1999 1998
-------------- --------------
Property operating and maintenance............ 22.2 % 21.7 %
Real estate taxes............................. 13.6 13.9
General and administrative.................... 6.2 8.2
Ground rent/air rights........................ 0.6 0.7
Costs related to sale of the Company.......... 4.7 ---
-------------- --------------
Total................................ 47.3 % 44.5 %
============== ==============
Interest expense increased by $0.5 million to $5.1 million in 1999 as
compared to $4.6 million in 1998 as a result of new acquisitions and utilization
of the Line of Credit Facility.
Depreciation and amortization increased by $0.4 million, or 9.3%, to $4.7
million in 1999 as compared to $4.3 million in 1998 due to depreciation of
additional properties in 1999 as compared to 1998.
Equity in joint ventures and unconsolidated subsidiaries decreased by
approximately $0.2 million primarily as a result of the Management Company
losing certain of its retail property management contracts as a result of
property foreclosures.
13
<PAGE>
Minority interest pertains to interests in the Operating Partnership. At
March 31, 1999, minority interest shares of the Operating Partnership was 9.03%.
Net income decreased by $1.0 million to $4.2 million in 1999 as compared to
$5.2 million in 1998, as a result of the costs associated with the sale of the
Company and the extraordinary item on the early extinguishment of debt offset by
the acquisition of the 90 Broad Property.
Funds From Operations
The Company generally considers funds from operations an appropriate
measure of liquidity of an equity REIT because industry analysts have accepted
it as a performance measure of equity REITs. "Funds from Operations," as defined
by the National Association of Real Estate Investment Trusts ("NAREIT"), means
net income (computed in accordance with GAAP), excluding gains (or losses) from
debt restructuring and sales (loss) of property, plus depreciation and
amortization on real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures. Consistent with the NAREIT White Paper, the
Company also adds back costs related to the sale of the Company and other
non-recurring costs. Accordingly, funds from operations as defined by the
Company may not be comparable to definitions used by other REITs. The Company
believes that in order to facilitate a clear understanding of the historical
operating results of the Company, funds from operations should be considered in
conjunction with net income, determined in accordance with GAAP, as presented in
the unaudited consolidated financial statements of the Company and notes thereto
included elsewhere in this Quarterly Report on Form 10-Q. Funds from operations
does not represent cash generated from operating activities in accordance with
GAAP and should not be considered as an alternative to net income, determined in
accordance with GAAP, as an indication of the Company's performance or to cash
flows from operating activities, determined in accordance with GAAP, as a
measure of liquidity or ability to make distributions.
The Company's calculation of Funds From Operations is as follows:
<TABLE>
<CAPTION>
The Company The Company
Consolidated Consolidated
Three Months Three Months
Ended Ended
March 31,1999 March 31,1998
-------------------------- -------------------------
<S> <C> <C>
Net income................................................................. $ 4,246 $ 5,181
Add:
Real estate depreciation and amortization.................................. 4,658 4,323
Real estate depreciation and amortization of
unconsolidated joint venture............................................ 37 8
Minority interest.......................................................... 421 496
Costs related to sale of Company........................................... 1,345 ---
Preferred stock dividend requirement....................................... (916) ---
Other nonrecurring costs................................................... 566 ---
Loss on extinguishment of debt............................................. 582 ---
--------------------- ------------
Funds from Operations............................................... $ 10,939 $ 10,008
===================== ============
Funds from Operations available for Common Shares ................... $ 9,951 $ 9,133
===================== ============
</TABLE>
14
<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents were $6.8 million and $6.3 million at March 31,
1999 and December 31, 1998, respectively. Cash and cash equivalents include cash
on hand and short term and highly liquid investments with original maturities of
three months or less. These financial investments, which potentially subject the
Company to concentrations of credit risk, are invested primarily through
short-term obligations issued or guaranteed by the U.S. government or its
agencies. The Company believes that this mitigates its risk. Included in cash
and cash equivalents at March 31, 1999 and December 31, 1998 are segregated
security deposits amounting to approximately $5.9 million. The increase in cash
and cash equivalents is a result of the net increase in debt outstanding of
$10.1 million and cash flows from operations of $7.1 million, net of
approximately $8.1 million for additions to real estate and deferred charges and
$8.1 million relating to distributions to common stockholders, preferred
stockholders and holders of OP Units.
The Company believes that its principal short-term liquidity needs are to
fund normal recurring expenses, debt service requirements, and deferred real
estate taxes. The Company's properties require periodic investment of capital
for tenant-related capital expenditures and for general capital improvements. In
addition, the Company has adopted a policy of paying regular quarterly
distributions on its Common Stock, Preferred Stock and OP Units. Based upon its
cash and cash equivalents at March 31, 1999 and December 31, 1998, its expected
cash flows from operations and the funds available under the Line of Credit, the
Company expects to meet its cash requirements for the foreseeable future.
As a general policy, the Company intends to maintain a debt policy limiting
the Company's total consolidated indebtedness plus its pro rata share of joint
venture company debt to 50% of the Company's total market capitalization.
However, the Company may from time to time modify its debt policy in light of
current economic conditions, relative costs of debt and equity capital, market
values of its properties, general conditions in the market for debt and equity
securities, fluctuations in the market price for its common stock, growth and
acquisition opportunities and other factors. Accordingly, there can be no
assurance that the Company will not increase its debt to total market
capitalization ratio beyond the limit described above.
At March 31, 1999 and December 31, 1998, the Company had total outstanding
indebtedness of approximately $270.4 and $260.3 million, exclusive of the
Company's ten percent portion of the debt on 2800 North Central of $2.8 million.
This total outstanding indebtedness was collateralized by nine of the Company's
properties and represents 46% and 44% of the Company's total market
capitalization based on the $18.973 and $20.125 closing price of the shares of
Common Stock at March 31, 1999 and December 31, 1998.
Line of Credit
The Line of Credit has a three-year term and bears interest at the rate of
approximately 150 basis points over LIBOR (London Interbank Offered Rate). As of
March 31, 1999 and December 31, 1998, $138.4 million and $70.4 million,
respectively, was outstanding under the Line of Credit. The Line of Credit
matures in October 2000 but will become due upon consummation of the Merger.
In conjunction with its Line of Credit the Company must maintain the
following financial ratios:
i. Total outstanding indebtedness must not exceed 55% of "total
value," as defined in the Line of Credit, during the first
year of the facility and must not exceed 50% thereafter.
ii. Collateral indebtedness must not exceed 40% of total value
during the first year of the facility and 35% thereafter.
iii. Recourse indebtedness cannot exceed five percent of total
value.
15
<PAGE>
iv. The total outstanding unsecured indebtedness must not
exceed 60% of total unencumbered assets value (as defined
in the Line of Credit) during the first year of the
facility and 55% thereafter.
Other financial covenants that must be met by the Company include interest
expense and fixed charges to debt ratios, among others.
As of March 31, 1999 and December 31, 1998, the Company has complied with
the financial debt covenants.
On March 1, 1999, the Company borrowed $60 million under the Line of Credit
and used the proceeds to repay the remaining debt outstanding on 810 Seventh. In
connection with this borrowing, the total amount available to borrow under the
Line of Credit was reduced from $200 million to $165 million.
Mortgage Debt
<TABLE>
<CAPTION>
Principal Interest
Description Amount Rate Maturity
- -----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C> <C>
Term loan............................................... $107,000 6.82% October 16, 2027
Corporate Center........................................ 20,625 7.55% January 1, 2006
Corporate Center........................................ 974 8.37% January 1, 2006
2800 North Central...................................... 2,800 9.41% May 31, 1999
Construction Loan....................................... 3,406 7.75% *
- ------------
* Term of the construction loan is concurrent with the period of construction.
</TABLE>
Inflation
The Company's leases with the majority of its tenants require the tenants
to pay most operating expenses, including insurance and real estate taxes, and
increases in common area maintenance expenditures which partially offsets the
Company's exposure to increases in costs and operating expenses resulting from
inflation.
Year 2000
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the Year 2000 issue. The Year
2000 issue is the result of computer programs being written using two digits
rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. The cost of remediation associated with its computer systems
has been minimal and the remediation was substantially completed at March 31,
1999.
The Company's Year 2000 compliance program focuses on addressing Year 2000
readiness in the following areas:
i. The Company's information technology and software;
ii. Other material technology systems; and
iii. Year 2000 compliance of third parties with which the Company has
a material relationship.
16
<PAGE>
In this regard, the Company has retained consultants to assist in its efforts.
The Company has completed an initial assessment and remediation of its key
information technology systems including its operating systems and critical
financial and nonfinancial applications. Remediation efforts as of the date
hereof have included addressing critical financial applications. Based on this
initial assessment and remediation efforts, the Company believes that at March
31, 1999 these key information technology systems are "Year 2000 compliant."
However, there can be no assurance that coding errors or other defects will not
be discovered in the future. The Company is currently evaluating the remaining
non-critical information technology systems for Year 2000 compliance.
As of March 31, 1999, the Company owned and operated a portfolio of 25
office properties. The Company is continually evaluating whether the material
noninformation technology systems such as security control equipment, fire
suppression equipment and other physical plant and equipment at such properties
are Year 2000 compliant, and has been advised by most of its vendors that such
systems and equipment are or will be compliant. All of the Properties, as a part
of general operating policy, are developing contingency plans that will be
deployed in the event key operational systems, such as security control
equipment, fail (e.g., when a power failure occurs).
The Company depends upon the proper functioning of third-party computer and
noninformation technology systems. These third parties include tenants,
commercial banks and other lenders, construction contractors, and vendors. The
Company has initiated communications with third parties with whom it has
important financial or operational relationships to determine the extent to
which they are vulnerable to the Year 2000 issue. The Company has not yet
received sufficient information from all parties about their remediation plans
to predict the outcome of their efforts.
If third parties with whom the Company or one of its affiliates interacts
have Year 2000 problems that are not remedied, the following problems could
result:
a. In the case of construction contractors and other vendors,
the delayed construction or redevelopment of properties;
b. In the case of vendors, disruption of important services
upon which the Company or its affiliates depend, such as
professional services, including accounting and legal
services, telecommunications and electrical power; and
c. In the case of banks and other lenders, the disruption of
capital flows potentially resulting in liquidity stress.
Due to the nature of the Company's tenants' businesses, the Company does
not believe the Year 2000 issue will materially impact the tenants' ability to
pay rent. However, financial difficulties of significant tenants as a result of
the Year 2000 issues could have a material adverse effect on the Company's
results of operations or financial position. Though the Company does not expect
the Year 2000 issue to have a material adverse effect on its result of
operations or financial position there can be no assurances of that position.
Environmental Matters
The Company is not aware of any environmental issues at any of the
Properties. The Company believes it has sufficient insurance coverage at each of
the Properties.
17
<PAGE>
Subsequent Events
On May 10, 1999, the Company announced the declaration of a prorated
distribution to common stockholders of $0.250714 per share (subject to reduction
in limited circumstances) for the period April 1, 1999 through and including May
24, 1999, provided that the Merger occurs on May 24, 1999. This distribution
would be payable approximately thirty days after the effectiveness of the Merger
to holders of record on May 21, 1999, the last business day prior to the
proposed effective time of the Merger. This distribution is contingent on the
Merger taking place.
On April 14, 1999, the Company and Reckson filed a joint proxy
statement/prospectus with the Securities and Exchange Commission in connection
with the Merger. The Special Meeting was called for May 14, 1999 approve the
transactions contemplated by the Merger Agreement. On May 10, 1999, the Company
announced that, in response to an announcement by Reckson that it had entered
into an agreement to acquire a $425 million first mortgage note secured by the
property located at 919 Third Avenue, New York, New York, the Special Meeting
was postponed until May 24, 1999.
Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement is effective for all fiscal quarters of all fiscal years beginning
after June 15, 1999. This statement addresses the accounting for derivative
instruments including certain derivative instruments embedded in other contracts
and for activities. The Company does not expect that adoption of this Statement
will have a material impact on its financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
18
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As a result of the acquisition of the Properties, the Company has become a
successor party-in- interest to certain legal proceedings arising in the
ordinary course of the business of Tower Equities and the other third-party
predecessor entities.
On or about January 21, 1999, an action captioned DBD International
Limited, Inc. v. Tower Realty Trust, Inc., Index No. 99 CV 9 (Cir. Ct. Dunn Co.)
was commenced in the Circuit Court of the State of Wisconsin. The plaintiff
alleges that the Company purportedly breached a contract regarding the
plaintiff's provision of image management services to the Company. The plaintiff
seeks, among other things, compensatory damages in the amount of $798,788,
prejudgment interest and attorneys' fees.
In July 1998, David Miller, a purported stockholder of the Company,
commenced a putative class action against the Company and certain of its then
directors and officers in the Supreme Court of New York, New York County
captioned Miller v. Adams, et al., Index No. 98/113363 (Sup. Ct. N.Y. Co.). This
action challenged, among other things, the process employed by the Company and
its directors in reviewing, approving and assessing the fairness of the Prior
Merger Agreement (as defined below). Following Tower's press release on November
2, 1998, which indicated that the Prior Merger Agreement was terminated, this
action was discontinued without prejudice. On or about December 18, 1998, David
Miller commenced a putative class action in the Supreme Court of New York, New
York County captioned Miller v. Adams, et al., Index No. 98/606208 (Sup. Ct.
N.Y. Co.) challenging the process employed by the Company and its directors in
reviewing, approving and assessing the fairness of the Merger Agreement. Miller
is seeking, among other things, equitable and declaratory relief and unspecified
compensatory damages.
The Company intends to contest these claims vigorously. As with any
litigation, however, it is not possible to predict the resolution of these
pending actions and the Company therefore bears certain risks associated with
these actions. However, although management believes that the ultimate
resolution of these matters will not have a material effect on the financial
position of the Company, the ultimate resolution may have a material adverse
effect on the results of operations of any one period.
On November 2, 1998, the Company commenced an action in New York Supreme
Court against Reckson, Crescent and Metropolitan alleging breach of the Prior
Merger Agreement. The Company sought $75 million in compensatory damages,
declaratory and other relief. The Company's press release on November 2, 1998
stated that this action was filed because the Company had been informed by
Crescent, Reckson and Metropolitan Partners that they would not proceed with the
transactions contemplated by the Prior Merger Agreement. On December 22, 1998,
the action was discontinued. As discussed in the Merger Agreement, under certain
limited circumstances this action can be recommenced following the Merger by the
Company against Crescent for the benefit of the Company's stockholders.
On or about September 29, 1998, a complaint entitled Stephen Mikolas v.
Lawrence Feldman, Feldman Equities, Tower 45 Asset Management Corporation, 286
Madison LP, 290 Madison LP, 292 Madison LP, Tower Equities and Tower Realty
Trust, Inc., Index No. 98 Civ. 6079 (S.D.N.Y.), was filed in the U.S. District
court for the Southern District of New York in which the plaintiff alleges
unlawful retaliation in violation of federal, state, and city statutes. On or
about March 30, 1999, the parties entered into a settlement agreement and
executed a "Stipulation of Discontinuance With Prejudice," which provided for
the dismissal of the action. The resolution of this action will not have a
material adverse effect on the financial position or results of operations of
the Company.
19
<PAGE>
On or about July 10, 1998, a complaint entitled Karen Schwartz v. Lawrence
Feldman, Feldman Equities, Tower 45 Asset Management Corporation, 286 Madison
LP, 290 Madison LP, 292 Madison LP, Tower Equities and Tower Realty Trust, Inc.,
Index No. 98 Civ. 4918 (S.D.N.Y.) was filed in the U.S. District Court for the
Southern District of New York in which the Plaintiff alleges she was
discriminated against in the terms and conditions of her employment on the basis
of her religion in violation of federal, state and city statutes. On or about
March 31, 1999, the parties entered into a settlement agreement and executed a
"Stipulation of Discontinuance With Prejudice," which provided for the dismissal
of the action. The resolution of this action will not have a material adverse
effect on the financial position or results of operations of the Company.
Item 2. Changes in Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
The exhibits listed in the Exhibit Index immediately preceding the
exhibits are filed as part of this Quarterly Report on Form 10-Q.
b) Reports on Form 8-K:
None.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOWER REALTY TRUST, INC.
(Registrant)
Date: May 17, 1999 By: /s/ Lester S. Garfinkel
------------------------------------
Name: Lester S. Garfinkel
Title: Executive Vice President --
Finance and Administration and Chief
Financial Officer
S-1
<PAGE>
Exhibit Index
The following exhibits are filed as part of this Quarterly Report on Form
10-Q.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.1 First Amendment to Revolving Credit Agreement, made as of March 1, 1999, by and among Tower Realty Operating
Partnership, L.P., Fleet National Bank, as Administrative Agent, Merrill Lynch & Co., as Syndication Agent
and Arranger, Nationsbank, N.A., as Administrative Agent and the Banks listed therein
10.2 Mortgage Loan Agreement, dated as of March 1, 1999, by and among Tower Realty Operating Partnership, L.P.,
the Banks listed on the signature pages thereof, Fleet National Bank, as Administrative Agent, Merrill Lynch
& Co., as Syndication Agent and Arranger and Nationsbank, N.A., as Administrative Agent
10.3 Amended and Restated Mortgage Agreement, made as of March 1, 1999, by Tower Realty Operating Partnership,
L.P. in favor of Fleet National Bank
10.4 Consolidated, Amended and Restated Mortgage Note
27.1 Financial Data Schedule
</TABLE>
Ex. 10.1
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Amendment")
is made as of March 1, 1999, by and among TOWER REALTY OPERATING PARTNERSHIP,
L.P. (the "Borrower"), FLEET NATIONAL BANK, as Administrative Agent (the
"Administrative Agent"), MERRILL LYNCH & CO., as Syndication Agent and Arranger
(the "Syndication Agent and Arranger"), NATIONSBANK, N.A., as Documentation
Agent (the "Documentation Agent") and the BANKS listed on the signature pages
hereof.
W I T N E S S E T H:
WHEREAS, the Borrower and the Banks have entered into the Revolving
Credit Agreement, dated as of October 20, 1997 (the "Credit Agreement"); and
WHEREAS, the parties desire to modify the Credit Agreement upon the
terms and conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Credit Agreement, and the
following terms shall have the respective meanings set forth below:
"810 7th Avenue" means 810 7th Avenue, L.P., a New York limited
partnership and a Wholly-Owned Subsidiary of Borrower, having an
address c/o
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<PAGE>
Tower Realty Trust, Inc., 292 Madison Avenue, 3rd Floor, New
York, New York 10017.
"First Boston" means Credit Suisse First Boston Mortgage Capital
LLC, a Delaware limited liability company.
"First Boston Assignment of Leases and Rents" means the
Assignment of Leases and Rents, dated as of December 31, 1997,
made by 810 7th Avenue, as assignor, in favor of First Boston,
as assignee, securing the First Boston Notes, as assigned to
Norwest.
"First Boston Loan" means, collectively, the loans evidenced by
the First Boston Notes.
"First Boston Loan Agreement" means the Loan Agreement, dated as
of December 31, 1997, by and between 810 7th Avenue, as
borrower, and First Boston, as lender, pursuant to which First
Boston made the First Boston Loan to 810 7th Avenue, as assigned
to Norwest.
"First Boston Loan Documents" means, collectively, the First
Boston Loan Agreement, the First Boston Notes, the First Boston
Mortgage, the First Boston Assignment of Leases and Rents and
all other agreements, documents and instruments evidencing,
securing or perfecting security interests granted in connection
with the First Boston Loan, as assigned to Norwest.
"First Boston Mortgage" means the Mortgage Consolidation,
Modification, Extension and Security Agreement, dated as of
December 31, 1997, by 810 7th Avenue, as mortgagor, in favor of
First Boston, as mortgagee, securing the First Boston Notes, as
assigned to Norwest.
"First Boston Notes" means, the Consolidated, Amended and
Restated Mortgage Note in the original principal amount of
$100,000,000, dated as of December 31, 1997, by 810 7th Avenue,
as maker, in favor of First Boston, as payee, as endorsed to
Norwest.
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<PAGE>
"First Boston Retained Loan Documents" means, collectively, the
First Boston Loan Agreement, the First Boston Notes and the
First Boston Mortgage.
"Norwest" means Norwest Bank Minnesota, National Association, as
trustee under the Pooling and Servicing Agreement dated June 12,
1998 for the Credit Suisse First Boston Mortgage Securities
Corp., Commercial Mortgage Pass-Through Certificates, Series
1998-FL1.
2. Applicable Margin. The definition of "Applicable Margin" is
hereby deleted and the following substituted therefor:
"Applicable Margin" means, with respect to each Euro-Dollar Loan
or Base Rate Loan, the respective percentages per annum
determined as of the Closing Date and thereafter at any time,
based on the Leverage Ratio as of the date of determination, in
accordance with the table set forth below. Any change in the
Leverage Ratio shall be effective as of the financial reporting
dates set forth in Section 5.1 hereof or as of the date of any
Borrowing on which the Leverage Ratio changes.
Applicable Margin Applicble
for Base Rate Margin for Euro-
Loans Dollar Loans
Leverage Ratio (% per annum) (% per annum)
- ------------------- -------------------- ----------------------
<30% 0.000 1.250
30% to <45% 0.125 1.375
45% to <55% 0.375 1.625
Notwithstanding the foregoing, however, if the sale of the
outstanding shares of the Company to Reckson Associates Realty
Corp., or an af-
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<PAGE>
filiate thereof, shall not have closed on or before May 31,
1999, then the Applicable Margin, as of May 31, 1999, shall be
as follows:
Applicable Margin Applicable
for Base Rate Margin for Euro-
Loans Dollar Loans
Leverage Ratio (% per annum) (% per annum)
- ------------------ ------------------ ----------------------
<30% 0.000 1.625
30% to <45% 0.125 1.750
45% to <55% 0.375 2.000
3. Amendment and Commitments. (a) The following definition is
hereby inserted after the definition of "Financial Statements":
"First Amendment to Revolving Credit Agreement" means the First
Amendment to Revolving Credit Agreement, dated as of March 1,
1999, by and among Borrower, Administrative Agent and the Banks,
amending this Agreement.
(b) The definition of "Commitment" is hereby
deleted and the following substituted therefor:
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages of
the First Amendment to Revolving Credit Agreement (and for each
Bank which is an Assignee, the amount set forth in the
Assumption Agreement entered into pursuant to Section 9.6(c) as
the Assignee's Commitment), as such amount may be reduced from
time to time pursuant to Section 2.10(e) or in connection with
an assignment to an Assignee.
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<PAGE>
4. Loan Amount. The definition of "Loan Amount" is hereby deleted
and the following substituted therefor:
"Loan Amount" shall mean the amount of One
Hundred Sixty-Five Million Dollars
($165,000,000).
5. Maximum Loan Amount. The Definition of "Maximum Loan Amount" is
hereby deleted and the following substituted therefor:
"Maximum Loan Amount" means the Loan Amount, as the Loan Amount
may be reduced pursuant to Section 2.10(e), less the amount of
the Mortgage Loan outstanding from time to time under the
Restated Mortgage Note (as split pursuant to the Split Notes).
6. Mortgage Loan. (i) (a) The following definition is hereby
inserted after the definition of "Assignee":
"Assignment of Leases and Rents" means the Assignment of Leases
and Rents, dated as of March 1, 1999, by the
Borrower, as assignor, in favor of Administrative Agent for the
benefit of the Banks, as assignee.
(b) The following definitions are hereby inserted after the
definition of "Minority Holdings":
"Mortgage" means the Amended and Restated Mortgage, dated as of
March 1, 1999, by the Borrower, as mortgagor, in favor of
Administrative Agent for the benefit of the Banks, as mortgagee,
pursuant to which the First Boston Mortgage (as defined in the
First Amendment to Revolving Credit Agreement) has been
restated.
"Mortgage Loan" means the loan, in the principal amount of
$60,000,000, made by the Banks
-5-
<PAGE>
to Borrower as of March 1, 1999, evidenced and secured by the
Mortgage Loan Agreement, the Restated Mortgage Note, the
Mortgage, the Assignment of Leases and Rents and the other
security agreements referred to therein.
"Mortgage Loan Agreement" means the Mortgage Loan Agreement,
dated as of March 1, 1999, by and among Borrower, the Banks and
the Administrative Agent, pursuant to which the Banks have made
the Mortgage Loan to the Borrower.
"Mortgage Loan Guaranty" means the Unconditional Mortgage Loan
Guaranty Agreement, dated as of March 1, 1999, by the Company,
as the same may be amended, supplemented, modified or restated
from time to time.
"Mortgage Loan Title Policy" means the mortgagee's policy of
title insurance issued by Commonwealth Land Title Insurance
Company insuring for the benefit of the Administrative Agent the
Lien of the Mortgage in the amount of $60,000,000 acceptable to
the Administrative Agent and dated the Effective Date.
(c) The following definitions are hereby inserted after the
definition of "Required Banks":
"Restated Mortgage Note" means the Consolidated Amended and
Restated Mortgage Note, in the original principal amount of
$60,000,000.00, dated as of March 1, 1999, by the Borrower, as
maker, in favor of Administrative Agent for the benefit of the
Banks, as payee, pursuant to which the First Boston Notes (as
defined in the First Amendment to Revolving Credit Agreement)
have been consolidated, amended and restated in their entirety.
(d) The following definitions are hereby inserted after the
definition of "Solvent":
"Split Note" means a Split Mortgage Note, dated as of March 1,
1999, by the Borrower, as
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<PAGE>
maker, in favor of a Bank, as payee, pursuant to which a portion
of the Restated Mortgage Note has been split from the
indebtedness thereunder and become payable to such Bank, the
aggregate of the respective principal amounts of each Split Note
being equal to the principal amount of the Restated Mortgage
Note and all of such split notes being referred to herein as the
"Split Notes".
(e) For all purposes under the Credit Agreement, including without
limitation all restrictions on the numbers and types of Borrowings which may be
outstanding under the Credit Agreement, the Mortgage Loan shall be included as a
Base Rate Loan or a Euro-Dollar Loan in accordance with the interest rate
election made by the Borrower under the Mortgage Loan Agreement.
7. Permitted Liens. The definition of "Permitted Liens" is hereby
amended to add the following after clause (f) thereof; "; and (g) the Lien on
the Unencumbered Asset commonly known as 810 Seventh Avenue, New York, New York
created by the Mortgage."
8. Unencumbered Assets. Exhibit B to the Credit Agreement is hereby
deleted and Exhibit B annexed hereto and made a part hereof is substituted
therefor. The fact that the Unencumbered Asset commonly known as 810 Seventh
Avenue, New York, New York is encumbered by the Mortgage and is the subject of
the Mortgage Loan notwithstanding, for all purposes under the Credit Agree-
-7-
<PAGE>
ment such asset is and shall be an Unencumbered Asset. For the avoidance of
doubt, the indebtedness constituting the Mortgage Loan shall be included for the
purpose of determining Total Outstanding Unsecured Indebtedness under the Credit
Agreement. For the purposes of the calculation of the Commitment Fee, the amount
outstanding under the Mortgage Loan shall be deemed to be drawn Commitments
under the Credit Agreement.
9. Dividends. Section 5.9(h) of the Credit Agreement is hereby
deleted and the following substituted therefor:
(h) Dividends. The Company shall not declare or make any
dividends or other payments or distributions other than
dividends at the Company's regular dividend rate from time
to time and stated dividends on the Company's preferred stock;
provided, however, that the Company shall not declare dividends
other than in the ordinary course of its business and provided,
further that such dividends in any fiscal quarter shall not be in
excess of 95% of its "Funds From Operations" (as defined, from
time to time, by NAREIT), provided further, however that the
Company may declare dividends in excess thereof to maintain its
status as a real estate investment trust under the Code.
10. Release of 810 Seventh Avenue; Assignment of Mortgage.
Notwithstanding anything contained in the Credit Agreement, including, without
limitation, Section 5.12 and 5.13 thereof, to the contrary, other than in
connection with the repayment in full of the Obligations
-8-
<PAGE>
and the termination of the Commitments and the return of any Letter of Credit,
the consent of the Required Banks shall be required in order for the Borrower to
obtain a release of the property commonly known as 810 Seventh Avenue, New York,
New York from the terms of the Credit Agreement as an Unencumbered Asset, or to
sell the same.
11. Events of Default. Section 6.1 of the Credit Agreement is hereby
amended by deleting the word "or" at the end of clause (o) thereof and the
period (".") at the end of clause (p) thereof and by adding the following after
clause (p) thereof:
"; or
(q) an "Event of Default" (as such term is defined in the
Mortgage Loan Agreement) occurs under the Mortgage Loan
Agreement."
12. Effective Date. This Amendment shall become effective when each
of the following conditions is satisfied (or waived by the Required Banks) (the
date such conditions are satisfied or waived being deemed the "Effective
Date"):
(a) the Borrower shall have executed and delivered to the
Administrative Agent a duly executed original of this Amendment;
(b) the Borrower shall have (i) caused 810 7th Avenue to have
(A) conveyed to the Borrower
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<PAGE>
fee title to the real property and improvements thereon
identified as Block 1024, Lot 38 by the Tax Map of the City of
New York, commonly known as 810 7th Avenue, New York, New York,
and (B) assigned to the Borrower (and the Borrower shall have
assumed) its interest in the Air Rights Leases (as defined in
the Mortgage), in each case subject to the First Boston Loan
(collectively, the "Conveyance") and (ii) assumed the borrower's
obligations under the First Boston Loan and First Boston Loan
Documents (the "Assumption");
(c) the Borrower shall have caused Norwest to terminate the
First Boston Loan Documents other than the First Boston Retained
Loan Documents, shall have caused Norwest to assign the First
Boston Retained Loan Documents to the Administrative Agent for
the benefit of the Banks and shall have caused Norwest to
deliver to the Administrative Agent originals of the First
Boston Retained Loan Documents and the assignments thereof;
(d) the Banks shall have funded in connection with the making of
the Mortgage Loan to pur-
-10-
<PAGE>
chase the First Boston Loan, the amounts equal to the principal
amounts of their respective Split Notes, aggregating
$60,000,000.00;
(e) the Borrower shall have paid to Norwest, from cash on hand
at the Borrower or the Company, an amount sufficient to satisfy
all principal, interest and other monetary obligations owing to
Norwest under the First Boston Loan in excess of $60,000,000.00;
(f) the Borrower shall have delivered to the Administrative
Agent a duly executed original of each of the Mortgage Loan
Agreement, the Restated Mortgage Note, the Mortgage and the
Assignment of Leases and Rents, together with duly executed
originals of any applicable Section 255 Affidavits or other
applicable affidavit, and UCC-1 Financing Statements;
(g) the Borrower shall have delivered to the Administrative
Agent duly executed originals of each of the Split Notes;
(h) the Borrower shall have caused Commonwealth Land Title
Insurance Company to issue the Mortgage Loan Title Policy and
shall have paid the premium therefor;
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<PAGE>
(i) the Required Banks shall have executed and delivered to the
Administrative Agent a duly executed original of this Amendment;
(j) each of the Banks shall have executed and delivered to the
Administrative Agent a duly executed original of the Mortgage
Loan Agreement;
(k) the Company shall have executed and delivered to the
Administrative Agent a duly executed original of the
Confirmation of Guaranty and of the Mortgage Loan Guaranty;
(l) the Borrower shall have delivered to the Administrative
Agent copies of the Air Rights Leases (including the original
leases and all amendments and modifications to date), certified
as true and correct;
(m) the Borrower shall have delivered to the Administrative
Agent the survey of the real property which is the subject of
the Mortgage, a copy of which has previously been delivered to
the Administrative Agent, reflecting the certification of the
registered surveyor which prepared such survey operating to the
benefit of the Administrative Agent, Commonwealth Land
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<PAGE>
Title Insurance Company and their successors and assigns;
(n) the Administrative Agent shall have received opinions of
Battle Fowler, counsel for the Borrower, acceptable to the
Administrative Agent and its counsel with respect to this
Amendment and the Mortgage Loan;
(o) the Administrative Agent shall have received all documents
the Administrative Agent may reasonably request relating to the
existence of the Borrower and 810 7th Avenue, the authority for
and the validity of the Conveyance, the Assumption, this
Amendment, the Mortgage Loan Agreement, the Restated Note, the
Split Notes, the Mortgage, the Assignment of Leases and Rents
and the other documents and instruments executed in connection
therewith, and any other matters relevant hereto or to the
Mortgage Loan, all in form and substance reasonably satisfactory
to the Administrative Agent. Such documentation shall include,
without limitation, the limited partnership agreement,
certificate of incorporation, by-laws and resolutions (or other
orga-
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<PAGE>
nizational documents) of the Borrower, 810 7th Avenue and
the Company, as amended, modified or supplemented prior to the
Effective Date, each certified to be true, correct and complete
by an officer of the Company, as of a date not more than ten
(10) days prior to the Effective Date, together with a good
standing certificate from the Secretary of State (or the
equivalent thereof) of the State of Delaware with respect to the
Borrower, 810 7th Avenue and the Company, each to be dated not
more than ten (10) days prior to the Effective Date;
(p) the Administrative Agent shall have received all
certificates, agreements and other documents and papers referred
to in this Amendment, unless otherwise specified, in sufficient
counterparts, satisfactory in form and substance to the
Administrative Agent in its reasonable discretion;
(q) the Administrative Agent shall have received UCC Searches,
ordered by the Borrower, with respect to the Borrower, 810 7th
Avenue and the Company;
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<PAGE>
(r) the Borrower, 810 7th Avenue and the Company shall have
taken all actions required to authorize (i) the Conveyance and
the Assumption, and (ii) the execution and delivery of this
Amendment, the Mortgage Loan Agreement, the Restated Note, the
Split Notes, the Mortgage, the Assignment of Leases and Rents,
the Mortgage Loan Guaranty, the Confirmation of Guaranty and the
other documents executed in connection herewith and the
performance thereof by the Borrower and the Company;
(s) the Administrative Agent shall have received, for its and
all other Banks' account, a fee equal to 0.25% of the
Commitments (as reduced pursuant to this Amendment), and its
reasonable fees and expenses accrued through the Effective Date,
including, without limitation, those of Skadden, Arps, Slate,
Meagher & Flom LLP;
(t) the representations and warranties of the Borrower contained
in the Credit Agreement shall be true and correct in all
material respects on and as of the Effective Date, both
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<PAGE>
before and after giving effect to the Loans to be funded as of
the Effective Date; and
(u) receipt by the Administrative Agent and the Banks of a
certificate of an officer of the Borrower certifying that the
Borrower is in compliance with all covenants of the Borrower
contained in the Credit Agreement, including, without
limitation, the requirements of Section 5.9, as of the
Effective Date, both before and after giving effect to the Loans
to be funded as of the Effective Date.
13. Estoppel Certificates. Borrower shall use best efforts to
deliver to the Administrative Agent, on or before the date which is thirty (30)
days after the date hereof, estoppel certificates, in the form previously agreed
to by them, duly executed by each of the lessors under the Air Rights Leases. In
the event Borrower fails to deliver such estoppel certificates within such time
period, Borrower shall, on the day immediately following the end of such 30-day
period (and if such day is not a Business Day, then on the next succeeding
Business Day), pay to the Administrative Agent, ratably for the account of the
Banks, a diligence fee equal to $165,000. Additionally, Borrower shall use
commercially
-16-
<PAGE>
reasonable efforts to deliver to the Administrative Agent, on or before the date
which is thirty (30) days after the date hereof, estoppel certificates, in the
form previously agreed to by them, duly executed by each of Borrower's
subtenants for the premises demised under the Air Rights Leases. Borrower shall
not be obligated to pay a diligence fee in the event it fails to deliver such
subtenant estoppel certificates within such time period. Any provision of the
Credit Agreement, as amended hereby, to the contrary notwithstanding, failure of
Borrower to deliver the estoppel certificates (whether from lessors or
subtenants) pursuant to this Section 13 shall not give rise to an Event of
Default; provided, Borrower has made the effort, to the standards set forth in
this Section 13, otherwise required hereby to deliver such estoppel
certificates.
14. Entire Agreement. This Amendment constitutes the entire and
final agreement among the parties hereto with respect to the subject matter
hereof and there are no other agreements, understandings, undertakings,
representations or warranties among the parties hereto with respect to the
subject matter hereof except as set forth herein.
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<PAGE>
15. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the law of the State of New York.
16. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Amendment by signing
any such counterpart.
17. Headings, Etc. Section or other headings contained in this
Amendment are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Amendment.
18. No Further Modifications. Except as modified herein, all of the
terms and conditions of the Credit Agreement, as modified hereby shall remain in
full force and effect and, as modified hereby, the Borrower confirms and
ratifies all of the terms, covenants and conditions of the Credit Agreement in
all respects.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER: TOWER REALTY OPERATING PARTNER-
SHIP, L.P.
By: Tower Realty Trust, Inc.
By: /s/ Lester S. Garfinkel
-------------------------
Name: Lester S. Garfinkel
Title: Executive Vice President
Finance & Administration
and Chief Financial
Officer
<PAGE>
BANKS:
Commitment
$20,625,000 BANK ONE ARIZONA, N.A., as a Bank
By:/s/ Elliot F. Jensen
--------------------
Name: Elliot F. Jensen
Title: Vice President
<PAGE>
Commitment
$20,625,000 FLEET NATIONAL BANK, as a Bank and
as Administrative Agent
By:/s/ James B. McLaughlin
-----------------------
Name: James B. McLaughlin
Title: Vice President
<PAGE>
Commitment
$20,625,000 KEYBANK, NATIONAL ASSOCIATION, as
a Bank
By:/s/ Scott Childs
Name: Scott Childs
Title: AVP
<PAGE>
Commitment
$20,625,000 NATIONSBANK, N.A., as a Bank and
as Documentation Agent
By:/s/ Leslie Furst
----------------
Name: Leslie Furst
Title: Vice President
<PAGE>
Commitment
$20,625,000 SOCIETE GENERALE, as a Bank
By:/s/ Rick Bower
--------------
Name: Rick Bower
Title: Vice President
<PAGE>
Commitment
$16,500,000 FIRST AMERICAN BANK TEXAS,
S.S.B.,as a Bank
By:/s/ Jeffrey C. Schultz
----------------------
Name: Jeffrey C. Schultz
Title: Vice President
<PAGE>
Commitment
$45,375,000 MERRILL LYNCH CAPITAL CORPORATION,
as Bank
By:/s/ David Dysenchuly
--------------------
Name: David Dysenchuly
Title: Vice President
<PAGE>
MERRILL LYNCH & CO., as
Syndication Agent and Arranger
MERRILL LYNCH, PIERCE, FENNER &
SMITH, INCORPORATED
By:/s/ David Dysenchuly
--------------------
Name: David Dysenchuly
Title: Vice President
<PAGE>
EXHIBIT B
UNENCUMBERED ASSETS
286 Madison Avenue, New York, New York
290 Madison Avenue, New York, New York
292 Madison Avenue, New York, New York
100 Wall Street, New York, New York
120 Mineola Boulevard, Mineola, New York
Century Plaza, 3225 North Central Avenue, Phoenix,
Arizona
5151 East Broadway, Tucson, Arizona
5750 Major Boulevard, Orlando, Florida
Maitland Forum, Orlando, Florida
2601 Maitland Center Parkway, Orlando, Florida
2603 Maitland Center Parkway, Orlando, Florida
2605 Maitland Center Parkway, Orlando, Florida
Blue Cross Blue Shield Building, Phoenix, Arizona
90 Broad Street, New York, New York
810 Seventh Avenue, New York, New York
Ex. 10.2
- --------------------------------------------------------------------------------
MORTGAGE LOAN AGREEMENT
dated as of March 1, 1999
among
Tower Realty Operating Partnership, L.P.
The Banks Listed Herein
and
Fleet National Bank,
as Administrative Agent
and
Merrill Lynch & Co.,
as Syndication Agent and Arranger
and
NationsBank, N.A.,
as Documentation Agent
- -------------------------------------------------------------------------------
<PAGE>
MORTGAGE LOAN AGREEMENT
THIS MORTGAGE LOAN AGREEMENT dated as of March 1, 1999 by and among
TOWER REALTY OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
"Borrower"), the BANKS listed on the signature pages hereof FLEET NATIONAL BANK,
as Administrative Agent, MERRILL LYNCH & CO., as Syndication Agent and Arranger,
and NATIONSBANK, N.A., as Documentation Agent.
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used but not defined
herein shall have the meanings ascribed thereto in the Revolving Credit
Agreement and the following terms, as used herein, have the following meanings:
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.4(b).
"Administrative Agent" means Fleet, in its capacity as administrative
agent for the Banks hereunder, and its successors in such capacity.
"Agents" means the Administrative Agent, the Syndication Agent, the
Arranger and the Documentation Agent, and "Agent" means any of them.
"Agreement" means this Mortgage Loan Agreement, as the same may from
time to time hereafter be modified, supplemented or amended, as permitted
herein.
"Applicable Margin" means, with respect to the Mortgage Loan which is
then a Euro-Dollar Loan or Base Rate Loan, as applicable, the respective
percentages per annum determined as of the Closing Date and thereafter at any
time, based on the Leverage Ratio (as determined under the Revolving Credit
Agreement) as of the date of determination, in accordance with the table set
forth below. Any change in the Leverage Ratio shall be effective as of the
financial reporting dates set forth in Section 5.1 of the Revolving Credit
Agreement or as of
<PAGE>
the date of any Borrowing under the Revolving Credit Agreement on which the
Leverage Ratio changes.
Applicable Margin Applicable
for Base Rate Margin for Euro-
Loans Dollar Loans
Leverage Ratio (% per annum) (% per annum)
- ----------------- ------------------- ------------------------
<30% 0.000 1.250
30% to <45% 0.125 1.375
45% to <55% 0.375 1.625
Notwithstanding the foregoing, however, if the sale of the outstanding shares of
the Company to Reckson Associates Realty Corp., or an affiliate thereof, shall
not have closed on or before May 31, 1999, then the Applicable Margin, as of
May 31, 1999, shall be as follows:
Applicable Margin Applicable
for Base Rate Margin for Euro-
Loans Dollar Loans
Leverage Ratio (% per annum) (% per annum)
- ----------------- ------------------ -----------------------
<30% 0.000 1.625
30% to <45% 0.125 1.750
45% to <55% 0.375 2.000
"Arranger" means Merrill Lynch & Co.
"Assignment of Leases and Rents" means the Assignment of Leases and
Rents, dated as of the date hereof, by the Borrower, as assignor, in favor of
Administrative Agent for the benefit of the Banks, as assignee.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to the provisions, as incorporated herein
pursuant to Article V hereof, of Section 9.6(c) of the Revolving Credit
Agreement, and their respective successors.
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day or (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
-3-
<PAGE>
"Base Rate Loan" means the Mortgage Loan designated as or converted to
a Base Rate Loan in accordance with the applicable Notice of Interest Rate
Election or pursuant to the terms of this Agreement.
"Borrower" means Tower Realty Operating Partnership, L.P.
"Closing Date" means the date of this Agreement.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof (and for each Bank
which is an Assignee, the amount set forth in the Assumption Agreement entered
into pursuant to the provisions, as incorporated herein pursuant to Article V
hereof, of Section 9.6(c) of the Revolving Credit Agreement.
"Company" means Tower Realty Trust, Inc., a Maryland corporation
qualified as a real estate investment trust.
"Documentation Agent" means NationsBank, N.A.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in Boston, Massachusetts are authorized by
law to close.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Loan" means the Mortgage Loan designated as or converted
to a Euro-Dollar Loan in accordance with the applicable Notice of Interest
Rate Election.
"Event of Default" has the meaning set forth in Section 4.1.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Feder-
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<PAGE>
al funds brokers on such day, as published by the Federal Reserve Bank of New
York on the Domestic Business Day next succeeding such day, provided that (i) if
such day is not a Domestic Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business Day, and (ii) if no
such rate is so published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to Fleet on
such day on such transactions as determined by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System as constituted from time to time.
"Fleet" means Fleet National Bank.
"Guarantor" means the Company.
"Interest Period" means: (1) with respect to the Mortgage Loan if then
a Euro-Dollar Loan, the period commencing on the date thereof or the applicable
Notice of Interest Rate Election and ending one, two, three or six months
thereafter, as the Borrower may elect on the date hereof or in the applicable
Notice of Interest Rate Election; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business Day of
a calendar month; and
(c) if any Interest Period includes a date on which a payment of
principal of the Loans is re-
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<PAGE>
quired to be made under Section 2.6 but does not end on such date, then (i) the
principal amount (if any) of such Euro-Dollar Loan required to be repaid on such
date shall have an Interest Period ending on such date and (ii) the remainder
(if any) of such Euro-Dollar Loan shall have an Interest Period determined as
set forth above.
(2) with respect to the Mortgage Loan, if then a Base Rate Loan, the period
commencing on the date thereof or in the applicable Notice of Interest Rate
Election and ending 30 days thereafter; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (b) below) which would otherwise end on a day which is not a
Domestic Business Day shall be extended to the next succeeding Domestic Business
Day; and
(b) if any Interest Period includes a date on which a payment of
principal of the Mortgage Loan is required to be made under Section 2.6 but
does not end on such date, then (i) the principal amount (if any) of such Base
Rate Loan required to be repaid on such date shall have an Interest Period
ending on such date and (ii) the remainder (if any) of such Base Rate Loan shall
have an Interest Period determined as set forth above.
"Loan" means the portion the Mortgage Loan made by a Bank pursuant to
this Loan Agreement and further evidenced and secured by the Loan Documents,
whether designated a Base Rate Loan or a Euro-Dollar Loan and "Loans" means each
such Loan, collectively.
"Loan Amount" shall mean the amount of Sixty Million Dollars
($60,000,000).
"Loan Documents" means this Agreement, the Restated Mortgage Note, the
Split Mortgage Notes, the Mortgage, the Assignment of Leases and Rents and the
Mortgage Loan Guaranty.
"London Interbank Offered Rate" has the meaning set forth in Section
2.4(b).
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<PAGE>
"Maturity Date" shall have the meaning set forth in Section 2.5.
"Merrill" means Merrill Lynch Capital Corporation.
"Mortgage" means the Amended and Restated Mortgage Agreement, dated as
of the date hereof, by the Borrower, as mortgagor, in favor of Administrative
Agent for the benefit of the Banks, as mortgagee.
"Mortgage Loan" means the mortgage loan made pursuant to this
Agreement and evidenced and secured by the Restated Mortgage Note (as split by
the Split Mortgage Notes), the Mortgage, and the other Mortgage Loan Documents.
"Mortgage Loan Documents" means the Restated Mortgage Note, the Split
Mortgage Notes, the Mortgage, the Assignment of Leases and Rents, the Mortgage
Loan Guaranty, and all other agreements, documents and instruments now or
hereafter evidencing or securing the Mortgage Loan.
"Mortgage Loan Guaranty" means that certain Unconditional Mortgage
Loan Guaranty Agreement, dated as of the date hereof, by the Company, as the
same may be amended, supplemented, modified or restated from time to time.
"Non-Recourse Party" has the meaning ascribed thereto in Section 9.15
of the Revolving Credit Agreement.
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.11(a). A form of Notice of Interest Rate Election is attached hereto
as Exhibit A.
"Person" means an individual, a corporation, a partnership, an
association, a trust, limited liability company or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
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<PAGE>
"Prime Rate" means the rate of interest publicly announced by Fleet
National Bank in Boston, Massachusetts from time to time as its Prime Rate.
"Restated Mortgage Note" means the Consolidated, Amended and Restated
Mortgage Note, in the original principal amount of $60,000,000.00, dated as of
the date hereof, by the Borrower, as maker, in favor of Administrative Agent for
the benefit of the Banks, as payee.
"Reuters Screen LIBO Page" shall mean the display designated as page
"LIBO" on the Reuters Monitor Money rates Service (or such other page as may
replace the LIBO page on such service) for the purpose of displaying interbank
rates from London in U.S. dollars.
"Revolving Credit Agreement" means the Revolving Credit Agreement,
dated as of October 20, 1997 by and among the Borrower, as borrower, the Banks
listed on the signature pages thereof, Fleet, as Administrative Agent, Merrill
Lynch & Co., as Syndication Agent and Arranger, and NationsBank, N.A., as
Documentation Agent, as amended by the First Amendment to Revolving Credit
Agreement, dated as of the date hereof and as the same may hereafter be further
amended, supplemented, modified or restated from time to time.
"Split Mortgage Note" means a Split Mortgage Note, dated as of the
date hereof, by the Borrower, as maker, in favor of a Bank, as payee, pursuant
to which a portion of the Restated Mortgage Note in the amount of such Bank's
Loan has been split from the indebtedness thereunder and become payable directly
to such Bank, and "Split Mortgage Notes" means each Split Mortgage Note,
collectively.
"Syndication Agent" means Merrill Lynch & Co.
"Telerate Page 3750" means the display designated as "Page 3750" on
the Dow Jones Telerate Service (or such other page as may replace Page 3750 on
that service) or such other service as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying British
Bankers' Association Interest Settlement Rates for U.S. dollar deposits.
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<PAGE>
"Term" has the meaning set forth in Section 2.5.
SECTION 1.2. Type of Loan. The term "Mortgage Loan" denotes the
aggregation of Loans by the Banks to be made to the Borrower comprising the
Mortgage Loan on the date hereof. The Mortgage Loan shall be classified for
purposes of this Agreement by reference to the interest rate election made with
respect thereto (e.g., the Mortgage Loan shall be classified a "Euro-Dollar Rate
Loan" if an election is made by the Borrower for the Mortgage Loan to be a
Euro-Dollar Rate Loan).
ARTICLE II
THE CREDITS
SECTION 2.1. Commitments to Lend. On the Closing Date, each Bank
severally agrees, on the terms and conditions set forth in this Agreement, to
make its respective Loan to the Borrower. The Loans under this Section 2.1 shall
be made from the several Banks ratably in the amounts of their respective
Commitments. Subject to the terms and provisions of this Agreement, the Borrower
shall, to the extent required by Section 2.6, or may, to the extent permitted by
Section 2.7, prepay the Mortgage Loan at any time during the Term. All or any
portion of the Mortgage Loan repaid or prepaid by the Borrower may not be
reborrowed.
SECTION 2.2. Notes. The Mortgage Loan shall initially be evidenced by
the Restated Mortgage Note. The indebtedness evidenced by the Restated Mortgage
Note shall, immediately after issuance thereof, be split so that each portion of
the indebtedness comprising a Loan payable to a Bank shall be evidenced by a
single Split Mortgage Note payable to the order of such Bank for the account of
its Applicable Lending Office in an amount equal to the initial principal amount
of such Bank's Loan. The Split Notes collectively evidence the same
indebtedness, in the aggregate, evidenced by the Restated Mortgage Note and do
not evidence indebtedness which is duplicate, additional, substitute or novated
with respect to the indebtedness evidenced by the Restated Mortgage Note.
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<PAGE>
SECTION 2.3. Maturity of Loans. The Mortgage Loan shall mature, and
the principal amount thereof shall be due and payable, on the Maturity Date.
SECTION 2.4. Interest Rates.
(a) If a Base Rate Loan, the Mortgage Loan shall bear interest on the
outstanding principal amount thereof for each day from the date the Mortgage
Loan is made (or converted to a Base Rate Loan) until the date it is repaid at a
rate per annum equal to the Base Rate plus the Applicable Margin for a Base Rate
Loan for such day. Such interest shall be payable for each Interest Period on
the last day thereof.
(b) If a Euro-Dollar Loan, the Mortgage Loan shall bear interest on
the outstanding principal amount thereof, for each day during the Interest
Period applicable thereto, at a rate per annum equal to the sum of the
Applicable Margin for a Euro-Dollar Loan for such day plus the Adjusted London
Interbank Offered Rate applicable to such Interest Period. Such interest shall
be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than one month, at intervals of thirty days after the
first day thereof.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest Period
means the rate (expressed as a percentage per annum rounded upwards, if
necessary, to the nearest one sixteenth (1/16) of one percent (1%)) for deposits
in U.S. Dollars for a period of time comparable to such Interest Period that
appears on Telerate Page 3750 as of 11:00 a.m., London time, two Euro-Dollar
Business Days before the first day of such Interest Period. If such rate does
not appear on Telerate Page 3750 as of 11:00 a.m., London time, two Euro-Dollar
Business Days before the first day of such Interest Period, the London Interbank
Offered Rate will be the arithmetic mean of the offered rates (expressed as a
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<PAGE>
percentage per annum rounded upwards, if necessary, to the nearest one sixteenth
(1/16) of one percent (1%)) for deposits in U.S. dollars for a one (1) month
period that appear on the Reuters Screen LIBO Page as of 11:00 a.m., London
time, two Euro-Dollar Business Days before the first day of such Interest
Period, if at least two such offered rates so appear. If fewer than two such
offered rates appear on the Reuters Screen LIBO Page as of 11:00 a.m., London
time, on any such date, the Administrative Agent will request the principal
London office of any four (4) major reference banks in the London interbank
market selected by the Administrative Agent to provide such bank's offered
quotation (expressed as a percentage per annum rounded upwards, if necessary, to
the nearest one sixteenth (1/16) of one percent (1%)) to prime banks in the
London interbank market for deposits in U.S. dollars for a period comparable to
such Interest Period as of 11:00 a.m., London time, on such date for amounts
comparable to the then outstanding principal amount of the applicable Loan (if
available). If at least two such offered quotations are so provided, LIBOR will
be the arithmetic mean of such quotations. If fewer than two such quotations
are so provided, the Administrative Agent will request any three (3) major banks
in New York City selected by the Administrative Agent to provide such bank's
rate (expressed as a percentage per annum rounded upwards, if necessary, to the
nearest one sixteenth (1/16) of one percent (1%)) for loans in U.S. dollars to
leading European banks for a period comparable to such Interest Period as of
approximately 11:00 a.m., New York City time, on the date which is two
Euro-Dollar Business Days before the first day of such Interest Period for
amounts comparable to the then outstanding principal amount (if available) of
such Loan. If at least two such rates are so provided, the London Interbank
Offered Rate will be the arithmetic mean of such rates. If fewer than two
rates are so provided, then the London Interbank Offered Rate will be the rate
provided.
"Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
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<PAGE>
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of any Bank to United
States residents). The Adjusted London Interbank Offered Rate shall be adjusted
automatically on and as of the effective date of any change in the Euro-Dollar
Reserve Percentage.
(c) In the event that, and for so long as, any Event of Default shall
have occurred and be continuing, the outstanding principal amount of the
Mortgage Loan, and, to the extent permitted by applicable law, overdue interest
in respect thereof, shall bear interest at the annual rate of the sum of the
Prime Rate and four percent (4%).
(d) The Administrative Agent shall determine each interest rate
applicable to the Mortgage Loan hereunder. The Administrative Agent shall give
prompt notice to the Borrower and the participating Banks of each rate of
interest so determined, and its determination thereof shall be conclusive in the
absence of manifest error.
(e) The Administrative Agent agrees to use its best efforts to obtain
quotations of the London Interbank Offered Rate as contemplated by this Section.
If the Administrative Agent does not obtain a timely quotation, the provisions
of Section 8.1 shall apply.
SECTION 2.5. Mandatory Termination. The term (the "Term") of the
Mortgage Loan shall terminate and expire on October 20, 2000 (or, if such date
is not a Domestic Business Day, then the next succeeding Domestic Business Day)
(the "Maturity Date").
SECTION 2.6. Mandatory Prepayment.
(a) The Mortgage Loan shall immediately mature upon the occurrence of
any Mandatory Prepayment Event (as such term is defined in the Revolving Credit
Agreement).
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<PAGE>
(b) Prepayments of the Mortgage Loan pursuant to this Section 2.6
shall be applied to prepay ratably the Loans of the Banks. In connection with
the prepayment of a Euro-Dollar Loan prior to the maturity thereof, the Borrower
shall also pay any applicable expenses pursuant to Section 2.9.
SECTION 2.7. Optional Prepayments.
(a) The Borrower may, upon at least two (2) Domestic Business Days'
notice to the Administrative Agent, prepay the Mortgage Loan, if then a Base
Rate Loan, in whole at any time, or from time to time in part, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks.
(b) Except as provided pursuant to the terms, as incorporated herein
pursuant to Article V hereof, of Section 8.2 of the Revolving Credit Agreement,
the Borrower may not prepay all or any portion of the principal amount of the
Mortgage Loan, if then a Euro-Dollar Loan, prior to the date applicable for the
payment of interest hereunder with respect to the applicable Interest Period
unless the Borrower shall also pay any applicable expenses pursuant to Section
2.9. Notice of such prepayment shall be delivered to the Administrative Agent by
Borrower, upon at least three (3) Domestic Business Days' notice. Each such op-
tional prepayment shall be applied to prepay ratably the Loans of the Banks.
(c) Any amounts prepaid pursuant to Sections 2.7(a) or (b) may not be
reborrowed.
SECTION 2.8. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and interest
on, the Mortgage Loan and of the fees required hereunder, not later than 11:00
a.m. (New York City time) on the date when due, in Federal or other funds
immediately available to the Administrative Agent at its address referred to in
Section 9.1 of the Revolving Credit Agreement. Whenever any payment of principal
of, or interest on, the Mortgage Loan, if then
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<PAGE>
a Base Rate Loan, or of fees required hereunder shall be due on a day which is
not a Domestic Business Day, the date for payment thereof shall be extended to
the next succeeding Domestic Business Day. Whenever any payment of principal
of, or interest on, the Mortgage Loan, if then a Euro-Dollar Loan, shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Banks
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may (but
shall have no obligation to), in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Administrative Agent forthwith on demand
such amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date such
Bank repays such amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.9. Funding Losses. If the Borrower makes any payment of
principal with respect to the Mortgage Loan, if then a Euro-Dollar Loan
(pursuant to Article II hereof or pursuant to the terms, as incorporated herein
by Article V hereof, of Article VI or VIII of the Revolving Credit Agreement or
otherwise), on any day other than the last day of the Interest Period applicable
thereto (other than the last day of a Euro-Dollar Period as established in
clause (1)(c) of the definition of Interest Period), or the last day of an
applicable period fixed pursuant to Section 2.4(b), or in the event of any
mandatory prepayment under Section 2.6 hereof, then and only then shall Borrower
reimburse
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<PAGE>
each Bank within 15 days after demand therefor for any resulting loss or expense
reasonably incurred by it (or by a Participant in the related Loan), including
(without limitation) any loss incurred in obtaining, liquidating or employing
deposits from third parties, but excluding loss of margin for the period after
any such payment or failure to borrow; provided that such Bank shall have
delivered to the Borrower a certificate signed by an authorized officer of such
Bank as to the amount of such loss or expense reasonably incurred, which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.10. Computation of Interest and Fees. Interest and fees
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day).
SECTION 2.11. Method of Electing Interest Rates.
(a) The Mortgage Loan shall bear interest initially at the type of
rate specified by the Borrower in connection with the closing of the Mortgage
Loan. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne thereby (subject in each case to the
provisions, as incorporated herein by Article V hereof, of Article VIII of the
Revolving Credit Agreement), as follows:
(i) if at the time the Mortgage Loan is a Base Rate Loan, the
Borrower may elect to convert such Mortgage Loan to a Euro-Dollar Loan as of any
Euro-Dollar Business Day;
(ii) if at the time the Mortgage Loan is a Euro-Dollar Loan, the
Borrower may elect to convert such Mortgage Loan to a Base Rate Loan or elect to
continue such Mortgage Loan as a Euro-Dollar Loan for an additional Interest
Period, in each case effective on the last day of the then current Interest
Period applicable to such Mortgage Loan.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Administrative Agent at least three (3) Euro-Dollar
Business Days before the conversion or continuation selected in
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<PAGE>
such notice is to be effective (unless the Mortgage Loan is to be continued as a
Base Rate Loan, in which case such notice shall be delivered to the
Administrative Agent no later than 12:00 Noon (New York City time) at least one
(1) Domestic Business Day before such continuation is to be effective). A
Notice of Interest Rate Election shall apply to the entire Mortgage Loan;
provided that (i) the Mortgage Loan may not be continued as, or converted into,
a Euro-Dollar Loan when any Event of Default has occurred and is continuing,
and (ii) no Interest Period shall extend beyond the Maturity Date.
(b) Each Notice of Interest Rate Election shall specify:
(i) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the provisions of
subsection (a) above;
(ii) if the Mortgage Loan is to be converted, the new type of
Mortgage Loan and, if such new type is a Euro-Dollar Loan, the duration of the
initial Interest Period applicable thereto; and
(iii) if such Mortgage Loan is to be continued as a Euro-Dollar Loan
for an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Administrative Agent shall notify
each Bank on the same day as it receives such Notice of Interest Rate Election
of the contents thereof and such notice shall not thereafter be revocable by the
Borrower. If the Borrower fails to deliver a timely Notice of Interest Rate
Election to the Administrative Agent and the Mortgage Loan is at the time a
Euro-Dollar Loan, such Mortgage Loan shall be converted into a Base Rate Loan on
the last day of the then current Interest Period applicable thereto.
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<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Incorporation of Representations and Warranties from the
Revolving Credit Agreement. All of the representations and warranties of the
Borrower set forth in Article IV of the Revolving Credit Agreement are by this
reference incorporated in this Agreement as though fully set forth herein and
are hereby made by the Borrower.
SECTION 3.2. Inducement. In order to induce the Administrative Agent
and each of the other Banks which may become a party to this Agreement to make
the Mortgage Loan, the Borrower makes the representations and warranties
incorporated by reference pursuant to Section 3.1 as of the Closing Date. Such
representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the other Mortgage Loan Documents and
the making of the Mortgage Loan.
ARTICLE IV
DEFAULTS
SECTION 4.1. Events of Default. The occurrence and continuation of
one or more of the following events (each, an "Event of Default") shall
constitute an event of default hereunder:
(a) the Borrower shall fail to (i) pay when due any principal or
interest on the Mortgage Loan, or (ii) pay when due any fees or any other amount
payable hereunder and such failure to pay fees or other amounts shall continue
for three (3) Domestic Business Days;
(b) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a)
above) for 30 days after written notice thereof has been given to the Borrower
by the Administrative Agent at the request of any Bank;
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<PAGE>
(c) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any Mortgage Loan Document or any
certificate or other document delivered pursuant to this Agreement shall prove
to have been incorrect in any material respect when made (or deemed made);
(d) any default beyond applicable grace and cure shall have occurred
under the Restated Note, the Split Mortgage Notes, the Mortgage, the Assignment
of Leases and Rents, the Mortgage Loan Guaranty or any other Mortgage Loan
Document; or
(e) any "Event of Default" (as such term is defined in the Revolving
Credit Agreement) shall have occurred under the Revolving Credit Agreement.
ARTICLE V
INCORPORATION OF TERMS OF
REVOLVING CREDIT AGREEMENT; CONSTRUCTION AND CONFLICT
SECTION 5.1. Incorporation of Terms. For purposes of (i) the
relationships among the Banks, among the Banks and the Agents and between and
among the Borrower, the Company, the Agents and the Banks, and all or any subset
of such relationships; (ii) the provision, existence and exercise of remedies;
(iii) affirmative and negative covenants; (iv) defined terms; (v) miscellaneous
provisions set forth in Article IX of the Revolving Credit Agreement, including,
without limitation, the recourse provisions of Section 9.15; and (vi) any other
purpose in connection with the course of dealing among the parties hereto and
the making, enforcement and administration of the Mortgage Loan, the provisions
of the Revolving Credit Agreement, excluding the provisions of Article II and
Section 6.1 thereof, are incorporated in this Agreement by this reference and
are hereby made applicable to the Mortgage Loan, subject in any event to the
terms of Section 5.2.
SECTION 5.2. Construction; Conflicts.
(a) To the extent that any provision in this Agreement has a
corresponding provision in the Revolving
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<PAGE>
Credit Agreement, the applicable provisions of this Agreement shall control.
(b) In furtherance of the provisions of Section 5.2(a), to the extent
that any conflict exists between the terms of this Agreement and the terms of
the Revolving Credit Agreement, the terms of this Agreement shall control and
any such conflict shall be resolved by the Administrative Agent in its sole
discretion.
(c) Nothing contained in Section 5.1 shall be construed to effect the
result that the Mortgage Loan shall be converted from a term loan into a
revolving credit facility.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER: TOWER REALTY OPERATING PARTNER-
SHIP, L.P.
By: Tower Realty Trust, Inc.
By: /s/Lester S. Garfinkel
-------------------------
Name: Lester S. Garfinkel
Title: Executive Vice
President Finance &
Administration and
Chief Financial Officer
<PAGE>
BANKS:
Commitment
$7,500,000 BANK ONE ARIZONA, N.A., as a Bank
By: /s/ Elliot F. Jensen
---------------------------
Name: Elliot F.Jensen
Title: Vice President
<PAGE>
Commitment
$7,500,000 FLEET NATIONAL BANK, as a Bank
and as Administrative Agent
By: /s/ James B. McLaughlin
-------------------------
Name: James B. McLaughlin
Title: Vice President
<PAGE>
Commitment
$7,500,000 KEYBANK, NATIONAL ASSOCIATION, as a
Bank
By: /s/ Scott Childs
-----------------------------
Name: Scott Childs
Title: Assistant Vice President
<PAGE>
Commitment
$7,500,000 NATIONSBANK, N.A., as a Bank and
as Documentation Agent
By: /s/ Leslie Furst
-----------------------------
Name: Leslie Furst
Title: VP
<PAGE>
Commitment
$7,500,000 SOCIETE GENERALE, as a Bank
By: /s/ Rick Bower
-------------------------
Name: Rick Bower
Title: Vice President
<PAGE>
Commitment
$6,000,000 FIRST AMERICAN BANK TEXAS,
S.S.B., as a Bank
By: /s/ Jeffrey C. Schultz
---------------------------
Name: Jeffrey C. Schultz
Title: Vice President
<PAGE>
Commitment
$16,500,000 MERRILL LYNCH CAPITAL CORPORATION,
as a Bank
By:/s/ David Dysenchuly
---------------------
Name: David Dysenchuly
Title: Vice President
<PAGE>
MERRILL LYNCH & CO., as
Syndication Agent and Arranger
MERRILL LYNCH, PIERCE, FENNER & SMITH,
INCORPORATED
By:/s/ David Dysenchuly
----------------------
Name: David Dysenchuly
Title: Vice President
<PAGE>
EXHIBIT A
(Form of Notice of Interest Rate Election)
[Date]
To: Fleet National Bank ("Administrative Agent"), as
Administrative Agent for the Banks party to the Mortgage
Loan Agreement dated as of March 1, 1999 (the "Loan -
Agreement") among Tower Realty Operating Partnership,
L.P., and the Banks party thereto, as banks, the
Administrative Agent, and Merrill Lynch & Co., as
Syndication Agent and Arranger, and NationsBank, N.A. as
Documentation Agent
Ladies and Gentlemen:
Reference is hereby made to the Loan Agreement.
The Borrower hereby gives you notice pursuant to Section 2.11(a) of
the Loan Agreement that the Borrower elects to1:
(a) Convert $______ , the current outstanding principal of the
Mortgage Loan from a Base Rate Loan to a Euro-Dollar Loan on ____, 199__.2
The Euro-Dollar Interest Period for such Euro-Dollar Loan is requested to be
[one/two/three/six] months.
(b) Convert $_____ , the current outstanding principal of the Mortgage
Loan with a current Euro-Dollar Interest Period ending on _____, 199__.3 to
Base Rate Loans.
- ------------------------
1 Include those items that are applicable, completed appropriately for
the circumstances.
2 Date of conversion must be a Euro-Dollar Business Day.
3 Date of conversion may only be the last day of the Euro-Dollar Interest
Period for such Euro-Dollar Loans.
<PAGE>
(c) Continue as a Euro-Dollar Loan $________, the current outstanding
principal amount of the Mortgage Loan, which is now a Euro-Dollar Loan with a
current Euro- Dollar Interest Period ending on _______, 199__.4 The succeeding
Euro-Dollar Interest Period for such Euro-Dollar Loan is requested to be
[one/two/three/six] month[s].
The Borrower hereby certifies that no Event of Default has occurred
and is continuing under the Loan Agreement.
Borrower: TOWER REALTY OPERATING PARTNERSHIP, L.P.
By: Tower Realty Trust, Inc., its sole
general partner
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
- -----------------
4 Date of conversion may only be the last day of the Euro-Dollar Interest
Period for such Euro-Dollar Loans.
EX. 10.3
AMENDED AND RESTATED MORTGAGE AGREEMENT
Dated: As of March 1, 1999
Made By
TOWER REALTY OPERATING PARTNERSHIP, L.P.
("Mortgagor")
- in favor of -
FLEET NATIONAL BANK, as administrative agent
("Mortgagee")
LOCATION OF PREMISES
--------------------
Street Address: 810 Seventh Avenue
City or Town of: New York
County of: New York
State of: New York
Block: 1024
Lot: 38
Air Rights Lots: 29 and 131
After recording, please return to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Martha Feltenstein, Esq.
[THIS INSTRUMENT WAS PREPARED BY THE
ABOVE-NAMED ATTORNEY]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
<S> <C> <C>
SECTION 1. Defined Terms...........................................................7
SECTION 2. Payment of and Performance of Obligations..............................11
SECTION 3. Representation of Title, Permitted Liens...............................12
SECTION 4. Maintenance, Repair, Alterations, Etc..................................12
SECTION 5. Liens..................................................................14
SECTION 6. Taxes..................................................................14
SECTION 7. Change in Tax Laws.....................................................16
SECTION 8. Insurance Coverage.....................................................16
SECTION 9. Insurance Policies.....................................................18
SECTION 10. Compliance with Law; Certain Covenants of Mortgagor....................20
SECTION 11. Proceeds of Insurance..................................................21
SECTION 12. Disbursement of Insurance Proceeds.....................................24
SECTION 13. Condemnation and Eminent Domain........................................25
SECTION 14. Assignment of Leases and Rents.........................................27
SECTION 15. Modification; Termination; Etc.........................................28
SECTION 16. Mortgagee's Performance of Mortgagor's Obligations.....................28
SECTION 17. Security Agreement.....................................................30
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<PAGE>
SECTION 18. Restrictions on Transfer; Maintenance of Existence.....................33
SECTION 19. Events of Default......................................................33
SECTION 20. Foreclosure............................................................35
SECTION 21. Right of Possession....................................................37
SECTION 22. Receiver...............................................................39
SECTION 23. Proceeds of Foreclosure Sale...........................................40
SECTION 24. Waiver of Right of Redemption and Other Rights.........................40
SECTION 25. Effect of Releases, Extensions, Amendments, Etc........................41
SECTION 26. Occupancy by Mortgagor.................................................42
SECTION 27. Successors and Assigns.................................................42
SECTION 28. Subrogation............................................................43
SECTION 29. Governing Law..........................................................43
SECTION 30. Servicer or Other Agent................................................43
SECTION 31. Captions and Pronouns..................................................43
SECTION 32. Report of Real Estate Transaction......................................44
SECTION 33. Release................................................................44
SECTION 34. Mortgage Recording Tax.................................................44
SECTION 35. Exempt Transaction Under Truth-in-Lending..............................45
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<PAGE>
SECTION 36. Waiver.................................................................45
SECTION 37. Tax Certiorari.........................................................45
SECTION 38. Lost Note..............................................................45
SECTION 39. Notice.................................................................46
SECTION 40. Waivers, Extensions, Modifications and Amendments......................46
SECTION 41. No Waiver..............................................................46
SECTION 42. Descriptive Headings, etc..............................................46
SECTION 43. Terminology............................................................46
SECTION 44. Waiver of Jury Trial...................................................46
SECTION 45. Severability...........................................................47
SECTION 46. Further Assurances.....................................................47
SECTION 47. Amendment..............................................................47
SECTION 48. Jurisdiction, Venue, Service of Process................................48
SECTION 49. Environmental Indemnity................................................48
SECTION 50. Restriction on Leasing.................................................49
SECTION 51. Construction of Covenants..............................................49
SECTION 52. Lien Law...............................................................49
SECTION 53. Premises Not Improved by More than Six Residential Units..............50
-iii-
<PAGE>
SECTION 54. Effect of This Mortgage................................................50
SECTION 55. Continuation of the Air Rights Leases and the Leases...................50
SECTION 56. Representations and Covenants Concerning the Air Rights Leases.........51
SCHEDULE A - LEGAL DESCRIPTION
SCHEDULE B - EXISTING MORTGAGES
SCHEDULE 1 - DESCRIPTION OF AIR RIGHTS LEASES
</TABLE>
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<PAGE>
AMENDED AND RESTATED MORTGAGE AGREEMENT
THIS AMENDED AND RESTATED MORTGAGE AGREEMENT (as from time to time
amended, modified supplemented and/or replaced, this "Mortgage") is made as of
March 1, 1999, by TOWER REALTY OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership, having an address at 120 West 45th Street, 24th floor, New York,
New York 10036 ("Mortgagor"), in favor of FLEET NATIONAL BANK, a national
banking association, having an office at 111 Westminster, Suite 800, Providence,
Rhode Island 02903, as administrative agent on behalf of the Banks (as
hereinbelow defined) ("Mortgagee").
RECITALS:
--------
A. Mortgagor is the fee owner of that certain piece or parcel of land
located at 810 Seventh Avenue, New York, New York and more particularly
described in Schedule A attached hereto and made a part hereof (the "Land"), and
the buildings and other improvements located thereon.
B. Mortgagor is also the owner of a certain leasehold interest pursuant
to those certain Air Rights Leases (as the same may be amended, renewed,
extended, modified, supplemented and/or restated from time to time, each, an
"Air Rights Lease", and collectively, the "Air Rights Leases"), as more
particularly described in Schedule "1" annexed hereto and made a part hereof,
affecting that portion of the Land and the buildings and improvements located
thereon as more particularly described in the Air Rights Leases (the "Leasehold
Premises").
C. Mortgagee, by assignment or otherwise, is the holder of those
certain mortgages more particularly described on Schedule B attached hereto and
made a part hereof (collectively, the "Existing Mortgages'), together with the
notes secured by the Existing Mortgages (the "Existing Notes").
D. The total aggregate principal indebtedness evidenced by the Existing
Notes and secured by the Existing Mortgages is SIXTY MILLION AND 00/100 DOLLARS
($60,000,000.00).
E. Mortgagor, Mortgagee, the banks listed on the signature pages
thereof (the "Banks") and the Syndication Agent and Arranger and Documentation
Agent therein named are parties to that certain Mortgage Loan Agreement, of even
date herewith (as the same may hereafter be consolidated, extended, modified,
amended
<PAGE>
and/or restated from time to time, the "Loan Agreement"), pursuant to which
the Banks have made a loan (the "Loan") to Mortgagor evidenced by a certain
Consolidated, Amended and Restated Mortgage Note of even date herewith in the
principal amount of Sixty Million and 00/100 Dollars ($60,000,000.00) (the
"Consolidated Note"), and pursuant to which Mortgage has executed one Split
Mortgage Note in favor of each Bank (each, as the same may hereafter be amended,
modified, supplemented and/or replaced, a "Split Note" and collectively, the
"Split Notes"), pursuant to which Split Notes the indebtedness under the
Consolidated Note has been split so that each Bank which has made a loan to
Assignor comprising a portion of the Loan is the direct payee of the portion of
the principal amount of the Loan advanced by such Bank (the Restated Note and
the Split Notes, collectively, the "Note" and, together with the Loan Agreement,
this Mortgage and all other agreements, documents and instruments evidencing and
securing the Loan, the "Loan Documents"), which Note consolidates, amends and
restates the Existing Notes.
F. Mortgagor and Mortgagee desire to amend and restate the terms and
conditions of the Existing Mortgages so as to maintain solely one mortgage and
one lien covering the Premises (as hereinafter defined) in the principal amount
of SIXTY MILLION AND 00/100 DOLLARS ($60,000,000.00) and to restate the terms
and conditions of the Existing Mortgages in their entirety, in the manner
hereinafter set forth, so that all of the terms and conditions contained in this
Mortgage shall supersede and control the terms and conditions of the Existing
Mortgages (it being agreed that the execution of this Mortgage shall not impair
the liens secured by the Existing Mortgages).
G. It is a condition to the performance of Mortgagee's obligations
under the Loan Agreement that Mortgagor's obligations to pay the principal,
interest and any other sums payable in respect of the Note or otherwise payable
under the Loan Agreement and the other Loan Documents and the performance and
observance of all the provisions of the Loan Documents (collectively, the
"Obligations") be secured by, among other things, the Existing Mortgages, as
amended and restated by this Mortgage.
NOW, THEREFORE, in consideration of the sum of TEN DOLLARS ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and to better secure the payment and
-2-
<PAGE>
performance to Mortgagee of the Obligations, Mortgagor and Mortgagee hereby
agree as follows:
THAT the Existing Mortgages are hereby amended and restated in their
entirety, and the liens of the Existing Mortgages, having been modified,
combined, consolidated, extended, spread and restated by the mortgage instrument
identified on Schedule B as item 6 of the Existing Mortgages, are hereby amended
and restated so that all of the terms and conditions contained in this Mortgage
shall supersede and control the terms and conditions of the Existing Mortgages
(it being understood and agreed that the execution of this Mortgage shall not
impair the liens secured by the Existing Mortgages) and that together they shall
continue to constitute but one mortgage and one lien represented by this
Mortgage securing the Note, and creating a single lien on the Premises in the
principal sum of SIXTY MILLION AND 00/100 DOLLARS ($60,000,000.00);
THAT Mortgagor shall pay to Mortgagee the sums due and owing pursuant
to the Note and secured by the Existing Mortgages, as amended and restated by
this Mortgage;
THAT notwithstanding anything contained herein to the contrary the
maximum amount of principal indebtedness secured by this Mortgage at the time of
execution hereof or which under any contingency may become secured by this
Mortgage at any time hereafter is $60,000,000.00, plus (a) taxes, charges or
assessments which may be imposed by law upon the Premises; (b) premiums on
insurance policies covering the Premises; (c) expenses incurred in upholding the
lien of this Mortgage, including, but not limited to (i) the expenses of any
litigation to prosecute or defend the rights and lien created by this Mortgage;
(ii) any amount, cost or charge to which the Mortgagee becomes subrogated, upon
payment, whether under recognized principles of law or equity, or under express
statutory authority and (iii) interest at the Default Rate (or regular interest
rate); and
GRANTING CLAUSES
THAT Mortgagor, by these presents and by the execution and delivery of
this Mortgage DOES HEREBY GRANT, REMISE, RELEASE, ASSIGN, LIEN, MORTGAGE AND
CONVEY unto Mortgagee, its successors and assigns forever, with power of sale,
the Air Rights Leases (and the leasehold estate created thereby), and any and
all reversions or remainders in and to Mortgagor's interest in the Leasehold
Premises, all modifications, extensions, replacements and renewals of the
-3-
<PAGE>
Air Rights Leases, all credits, deposits, options (including any rights of first
refusal or options to purchase or renew set forth in the Air Rights Leases), the
privileges and rights of Mortgagor under the Air Rights Leases and all
guarantees, if any, of the Air Rights Leases (all of the foregoing hereinafter
collectively referred to as the "Leasehold Premises") and the Land; TOGETHER
WITH all right, title and interest of Mortgagor in and to the following
described property, rights and interests all of which are hereby pledged
primarily and on a parity with the Land and the Leasehold Premises and not
secondarily (and are, together with the Land and the Leasehold Premises, the
"Premises"):
All buildings, structures and improvements of every nature whatsoever
now or hereafter situated on the Land and/or the Leasehold Premises (including
but not limited to all underground and other parking facilities located in or on
the Land, all landscaped areas and all areas utilized for recreational
activities) including all extensions, additions, improvements, betterments,
renewals, substitutions, and replacements to and proceeds of any of the
foregoing (collectively, the "Improvements");
All land lying in the bed of any streets, roads or avenues, opened or
proposed, in front of or adjoining the Land to the center line thereof, and in
and to any strips or gores of land adjoining thereto and the air space and right
to use said air space above the Land;
All easements, rights of way, gores of land, streets, ways, alleys,
passages, sewer and drainage rights, waters, water courses, water rights and
powers, air rights, lateral support rights, oil, gas and mineral rights and all
estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments and appurtenances whatsoever, in any way belonging, relating or
appertaining to the Land or the Leasehold Premises, or which hereafter shall in
any way belong, relate or be appurtenant thereto, whether now owned or hereafter
acquired by Mortgagor, and the reversion and reversions, remainder and
remainders, rents, issues and profits thereof, and all the estate, right, title,
interest, property, possession, claim and demand whatsoever, at law as well as
in equity, of Mortgagor in and to the same;
All (to the extent assignable as security) leases now or hereafter on
or affecting the Premises, whether written or oral, (other than the Air Rights
Leases, which is made a part of the "Premises" by another paragraph of the
granting clauses herein) and all licenses and other agreements for use or
occupancy of the Premises
-4-
<PAGE>
(collectively, the "Leases"), together with all security therefor and deposits
thereunder and all guaranties thereof and all monies payable thereunder;
All Receipts, including, without limitation, all rents, awards,
deposits, issues, profits, payments, income, revenues, proceeds reimbursements
and/or accounts receivable derived from the sale, lease, sublease, license,
concession or other grant of the right of the use and occupancy of any portion
of the Premises, or rendering of services by any operator or manager of the
Premises (including, without limiting the generality of the foregoing, from the
rental of any office space, retail space, halls, stores, and offices of every
kind and license, lease, sublease and concession fees and rentals);
All fixtures, machinery, appliances, equipment, furniture, and articles
of personal property of every nature whatsoever now or hereafter located in or
on. attached to, forming a part of or used or intended to be used in connection
with the Premises or the operation thereof (except that this Mortgage shall not
create a lien on any items of personal property which are owned by utilities or
by contractors performing work at the Premises or which are owned by tenants who
are in possession pursuant to a Lease and may be removed by such tenants at or
prior to the expiration or termination of such Lease), including, but without
limitation, all air conditioners, antennae, appliances, apparatus, art work
(including paintings and sculptures), awnings, basins, boilers, bookcases,
cabinets, carpets, coolers, curtains, dehumidifiers, disposals, doors, drapes,
dryers, ducts, dynamos, elevators, engines, equipment, escalators, fans,
fittings, floor coverings, furnaces, furnishings, furniture, hardware, heaters,
humidifiers, incinerators, kitchen equipment and utensils, lighting, machinery,
motor vehicles, motors, ovens, pipes, plumbing, pumps, radiators, ranges,
recreational facilities, refrigerators, screens, security systems, shades,
shelving, sinks, sprinklers, stokers, stoves, toilets, ventilators, wall
coverings, washers, windows, window coverings, wiring, and all renewals,
replacements or proceeds thereof or articles in substitution therefor, whether
or not the same are or shall be attached to the Land or the Improvements in any
manner; it being mutually agreed that all of the aforesaid property placed on
the Land or the Improvements shall, so far as permitted by law, be deemed to be
fixtures, a part of the realty, and security for the Obligations;
notwithstanding the agreement and declaration herein expressed that certain
articles of property form a part of the realty covered by this Mortgage and be
appropriated to its use and deemed to be realty, to the extent that such
agreement and declaration may not be effective and that any of said articles may
constitute goods (as said term is used in the Uniform Commercial Code of the
State of New York, as the same may hereafter be amended from time to time (the
"Code")) or
-5-
<PAGE>
other personal property, this instrument shall constitute a security agreement,
creating a security interest in such goods and other personal property, as
collateral, in Mortgagee as a secured party and Mortgagor as debtor, all in
accordance with said Code or other applicable law as more particularly set forth
in Section 17 hereof;
All rights in and proceeds from policies of insurance maintained with
respect to (or otherwise insuring) Mortgagor or the Premises or the business
conducted thereat;
All refunds of Taxes (as hereinafter defined) which Mortgagor is
presently or hereafter entitled to receive;
All bank accounts maintained by or on behalf of Mortgagor;
All (i) contracts not otherwise included in the granting clauses
foregoing affecting the ownership, possession, operation, alterations,
management and services furnished to the Premises (the "Contracts"), including
all amendments, supplements, and revisions thereof, and all security and other
deposits thereunder, together with all of Mortgagor's rights and remedies
thereunder and the benefit of all covenants and warranties thereon, (ii)
drawings, designs, layouts, surveys, plats, plans, specifications and test
results prepared by any architect, engineer, contractor or other consultant,
including any amendments supplements, and revisions thereof and the right to use
and enjoy the same, (iii) Permits, to the extent assignable as security, and
(iv) rights to appropriate and use any and all trade names used or to be used in
connection with the Premises; provided, however, that permission is hereby given
to Mortgagor, so long as no Event of Default has occurred hereunder, to continue
to exercise the rights and powers under the Contracts and to enjoy the benefits
thereof, subject to such further restrictions with respect thereto as may
otherwise be contained herein or in the other Loan Documents;
All files, books of account and other records, wherever located, used
in connection with the operation of the Premises or the conduct of business
thereat;
All accounts receivable, escrows and reserve accounts (whether or not
required by the Loan Documents), documents, instruments, chattel paper, and
general intangibles, as the foregoing terms are defined in the Code and general
intangibles relating to the Premises;
-6-
<PAGE>
All judgments, awards of damages and settlements hereafter made
resulting from condemnation or the taking of the Premises or any portion thereof
under the power of eminent domain, conversion, voluntary or involuntary, of the
Premises, or any part thereof, into cash or liquidated claims and proceeds of
any sale, option or contract to sell the Premises or any portion thereof (and
any deposit thereunder); and Mortgagor shall not without Mortgagee's prior
consent adjust or compromise any such matters and Mortgagor hereby authorizes
Mortgagee to claim, collect and receive such proceeds, to give proper receipts
and acquittances therefor, and, after deducting expenses of collection, to apply
(unless this Mortgage expressly provides otherwise with respect thereto) the net
proceeds as a credit upon any portion, as selected by Mortgagee, of the
Obligations, notwithstanding the fact that the same may not then be due and
payable or that the Obligations are otherwise adequately secured; and
All proceeds, both cash and non-cash, of the foregoing.
TO HAVE AND TO HOLD the same, unto Mortgagee, its successors and
assigns, forever, for the purposes herein set forth, subject, however, to the
terms and conditions herein.
MORTGAGOR FURTHER COVENANTS AND AGREES AS FOLLOWS:
SECTION 1. Defined Terms.
(a) As used in this Mortgage, capitalized terms used but not otherwise
defined herein have the meanings ascribed thereto in the Loan Agreement
(including such terms as are defined in the Loan Agreement by
incorporation-by-reference of certain of the defined terms of the Revolving
Credit Agreement (as defined therein)), and the terms set forth below shall have
the following meanings:
"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.
-7-
<PAGE>
"Air Rights Lease Rentals" shall mean the rents, additional rents, if
any, and all other sums which are or become payable under the Air Rights Leases.
"Air Rights Leases" shall have the meaning ascribed to such term in the
Recitals hereof.
"Air Rights Lessor" shall mean the lessor under an Air Rights Lease.
"Awards" shall have the meaning ascribed thereto in Section 13(a)
hereof.
"Bankruptcy Code" shall mean Title 11 of the United States Code, 111
U.S.C. Sections 101 et seq., as amended.
"Bankruptcy Law" shall mean the Bankruptcy Code or any similar codes,
laws, statutes or regulations promulgated by any Governmental Authority.
"Code" shall have the meaning ascribed thereto in the Granting Clauses
hereof.
"Collateral" shall have the meaning ascribed thereto in Section 17
hereof.
"Contracts" shall have the meaning ascribed thereto in the Granting
Clauses hereof.
"Debtor" shall have the meaning ascribed thereto in Section 17(vi)
hereof.
"Default Rate" shall mean the rate of interest applicable under the
Loan Agreement in the event an Event of Default has occurred.
"Existing Mortgages" shall have the meaning ascribed thereto in the
Recitals hereof.
"Existing Notes" shall have the meaning ascribed thereto in the
Recitals hereof.
"Event of Default" shall have the meaning ascribed thereto in Section
19 hereof.
-8-
<PAGE>
"Governmental Authority" means the United States, the State of New
York, the City of New York and any political subdivision of any of the
foregoing, and any agency, department, commission, board, court, bureau or
instrumentality of any of them.
"Improvements" shall have the meaning ascribed thereto in the Granting
Clauses hereof.
"Independent Architect" shall mean an Independent architect or
engineer, selected by Mortgagor, licensed or registered to practice in New York
and having at least five years' experience with similar projects.
"Insurance Policies" shall have the meaning ascribed thereto in Section
7 hereof.
"Land" shall have the meaning ascribed thereto in the Granting Clauses
hereof.
"Legal Requirement" means any law, statute, ordinance, order, rule,
regulation decree or other requirement of a Governmental Authority, and all
conditions of any Permit.
"Leasehold Premises" shall have the meaning ascribed to such term in
the Granting Clauses hereof.
"Leases" shall have the meaning ascribed thereto in the Granting
Clauses hereof.
"Legal Requirements" shall have the meaning ascribed thereto in the
Loan Agreement.
"Loan" shall have the meaning ascribed thereto in the Recitals hereof.
"Loan Agreement" shall have the meaning ascribed thereto in the
Recitals hereof.
"Loan Documents" shall have the meaning ascribed thereto in the
Recitals hereof.
-9-
<PAGE>
"Major Lease" means any Lease (y) the tenant under which is an
Affiliate of Assignor or (z) which, when taken together with all other Leases,
if any, to the same tenant or Affiliates thereof demises in excess of ten
percent (10%) of the net rentable square feet in the Improvements);
"Material Alteration" shall have the meaning ascribed thereto in
Section 4 hereof.
"Maturity Date" shall have the meaning ascribed thereto in the Loan
Agreement.
"Mortgage" shall have the meaning ascribed thereto in the introductory
paragraph hereto.
"Mortgagee" shall have the meaning ascribed thereto in the introductory
paragraph hereto.
"Mortgagor" shall have the meaning ascribed thereto in the introductory
paragraph hereto.
"Note" shall have the meaning ascribed thereto in the Recitals hereto.
"Obligations" shall have the meaning ascribed thereto in the Recitals
hereof.
"Obsolete Collateral" shall have the meaning ascribed thereto in
Section 4 hereof.
"Permit" shall mean all approvals, consents, registrations, franchises,
permits, licenses, variances, certificates of occupancy and other authorizations
with regard to zoning, landmark, ecological, environmental, air quality,
subdivision, planning, building or land use required by any Governmental
Authority for the construction, lawful occupancy and operation of the
Improvements and the actual and contemplated uses thereof.
"Permitted Liens" shall have the meaning ascribed thereto in the Loan
Agreement.
"Person" shall have the meaning ascribed thereto in the Loan Agreement.
-10-
<PAGE>
"Power of Sale" shall have the meaning ascribed thereto in Section 20
hereof.
"Premises" shall have the meaning ascribed thereto in the Granting
Clauses hereof.
"Receipts" shall mean, for any period, all receipts, revenues, income
(including service charges), fees, payments and proceeds of sales of every kind
received by or on behalf of Borrower directly or indirectly from operating the
Premises for that period, and services rendered to, and rentals, percentage
rentals and other fees, payments and charges received from, tenants,
sub-tenants, licensees, concessionaires and occupants of commercial, public and
retail space located in or at the Premises, calculated on a cash basis, whether
in cash or on credit, including, without limitation, revenues from the rental of
parking at the Premises, the fair market value of any barter transaction, and
other fees and charges resulting from the operations of the Premises by or on
behalf of Borrower in the ordinary course of business, and proceeds, if any,
from business interruption or other loss of income insurance (net of the costs
of collection thereof).
"Restoring" shall have the meaning ascribed thereto in Section 11
hereof.
"Secured Party" shall have the meaning ascribed thereto in the Code.
"Taxes" shall have the meaning ascribed thereto in Section 6 hereof.
"Transfer" shall mean, as a verb, sell, assign, convey, transfer,
pledge or otherwise dispose of, all or any portion of the Premises or any direct
or indirect interest therein or any direct or indirect interest in Mortgagor,
and when used as a noun shall have a correlative meaning; provided, however,
that any provision of this Mortgage prohibiting a Transfer shall be subject in
all events to Transfers which are permitted by the Loan Agreement.
SECTION 2. Payment of and Performance of Obligations. Mortgagor shall
(a) pay the Obligations at the times and in the manner provided in the Note and
the other Loan Documents; and (b) duly and punctually perform and observe, at
the times and in the manner provided therein, all of the terms, provisions,
conditions, covenants and agreements on Mortgagor's part to be performed or
observed as provided in the Note, this Mortgage, the Loan Agreement and the
other Loan Documents. All sums payable by Mortgagor hereunder shall be paid
without
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<PAGE>
demand, counterclaim, offset, deduction or defense. As of the date hereof,
Mortgagor waives all rights now or hereafter conferred by statute or otherwise
to any such demand, setoff or deduction.
SECTION 3. Representation of Title, Permitted Liens. Mortgagor
represents, warrants and covenants that (a) at the time of the delivery of this
Mortgage, Mortgagor is seized of an indefeasible estate in fee simple in the
Land and the Improvements thereon and Mortgagor owns good title to the portion
of the Premises which constitutes personal property, in each case, subject only
to the Permitted Liens; (b) at the time of the delivery of this Mortgage,
Mortgagor is the owner of a good, marketable and insurable, leasehold interest
in the Leasehold Premises, subject only to the Permitted Liens; (c) Mortgagor
has good right, full power and lawful authority to convey and mortgage to
Mortgagee and grant to Mortgagee a security interest in the same, in the manner
and form aforesaid; (d) except for the Permitted Liens and other Liens permitted
pursuant to the Loan Agreement, the same is and at all times shall remain free
and clear of all liens, charges, easements, covenants, conditions, restrictions
and encumbrances whatsoever, including, as to the personal property and
fixtures, security agreements, conditional sales contracts and anything of a
similar nature; (e) except for the Permitted Liens and other Liens permitted
pursuant to the Loan Agreement, the Existing Mortgages and this Mortgage are,
and will remain, a valid and enforceable and, upon recordation, perfected first
mortgage lien on the Premises; (f) Mortgagor shall and will warrant and forever
defend the title to the Premises unto Mortgagee against the claims of all
Persons whomsoever; and (g) the Permitted Liens do not materially and adversely
affect the value of or the use and occupancy of the Premises or Mortgagor's
ability to repay the entire Loan and perform its obligations hereunder and under
the other Loan Documents.
SECTION 4. Maintenance, Repair, Alterations, Etc.
(a) Mortgagor shall (i) keep the Premises in good and safe condition
and repair, free from waste, including, making all repairs and replacements,
structural or nonstructural, foreseen or unforeseen, ordinary or extraordinary,
as the same become necessary or appropriate, to keep the Premises in good and
safe condition and repair, (ii) pay all operating costs of the Premises, (iii)
complete, within a reasonable time, and pay for any building or buildings or
other Improvements now or at any time in the process of erection upon the
Premises, (v) comply with any restrictions and covenants of record with respect
to the Premises and the use thereof, and (v) perform all agreements,
undertakings and functions necessary to operate and maintain the Premises.
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(b) Without the prior written consent of Mortgagee and except as
expressly permitted pursuant to the Loan Agreement, Mortgagor shall not cause,
suffer or permit any (i) (x) Material Alterations of the Premises or the
Improvements except (A) as required by Legal Requirements or, (B) as permitted
or required to be made by the terms of any Leases approved by Mortgagee (with
respect to work in any space demised thereunder), or (y) demolition or removal
of any portion of the Improvements except for the removal of any such portion
which is simultaneously replaced with equivalent materials or which are worn
out, obsolete or no longer useful in connection with the operation of the
Premises ("Obsolete Collateral") and the removal of which shall not adversely
affect the use or operation of the Improvements; (ii) change in the intended use
or occupancy of the Premises for which the Improvements have been constructed
including, without limitation, any change which would increase the risk of fire
or other hazard; (iii) zoning reclassification with respect to the Premises; or
(iv) unlawful use of, or nuisance to exist upon, the Premises. Without limiting
the generality of the foregoing, Mortgagor will not, by act or omission (x)
permit all or any part of the Premises to be availed of, or to qualify for
fulfillment of, any municipal or governmental requirements for the construction
or maintenance of any buildings or other improvements on a premises not part of
the Premises, (y) impair the integrity of the Premises as a single zoning lot
separate and apart from all other premises, or (z) permit or suffer to permit
the Premises to be used by the public or any person or entity in such manner as
might make possible a claim of adverse usage or possession or any implied
dedication or easement. As used herein, the term "Material Alteration" shall
mean any alteration, improvement or replacement (x) the cost of which (including
any related alteration, improvement or replacement) shall exceed the lesser of
one percent (1%) of the outstanding principal balance of the Note and One
Hundred Thousand Dollars ($100,000) (excluding tenant improvement work pursuant
to Leases), or (y) which (A) materially and adversely affects the mechanical,
electrical, heating, ventilating, air-conditioning or other building or
operating systems of any of the Improvements, (B) affects the structure or
structural soundness of any of the Improvements, (C) reduces or materially and
adversely affects the usability of loading docks or parking spaces or the access
to such loading docks or parking spaces from outside the Premises, (D) affects
the exterior of the Improvements or (E) otherwise has a material adverse effect
on the Premises, the liens of the Existing Mortgages, as amended and restated by
this Mortgage or the other Loan Documents or the ability of Mortgagor to perform
the Obligations.
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SECTION 5. Liens.
(a) Except as permitted in the Loan Agreement, Mortgagor shall not
create or suffer or permit any Lien to attach to or be filed against all or any
portion of the Premises (including, without limitation, fixtures and other
personalty).
(b) Without limiting the generality of Section 5(a) hereof and except
as permitted in the Loan Agreement, Mortgagor shall not suffer or permit any
mechanic's lien to be filed or otherwise asserted against the Premises, and will
discharge the same, or cause the same to be discharged, by payment, bonding or
otherwise within thirty (30) days after receiving notice of the filing of such
lien.
SECTION 6. Taxes.
(a) Payment. Subject to Section 6(b) hereof, Mortgagor shall pay or
cause to be paid when due and before any penalty attaches, all general and
special real estate and other taxes, assessments, water charges, sewer charges,
vault charges, excises, levies, fees (including, without limitation, license,
permit and inspection fees) and other fees, taxes, charges and assessments of
every kind and nature whatsoever, general, special, ordinary or extraordinary,
levied or assessed against, or which may become a Lien upon, the Premises or any
part thereof or any interest therein or any Receipts or any obligation or
instrument secured hereby or which may arise in respect of the use, possession
or operation of the Premises and whether or not assessed against Mortgagor, and
all interest and penalties which may be payable with respect thereto,
(collectively, but excluding only income and franchise taxes, "Taxes"). Taxes
may be paid in installments if permitted by Legal Requirements. Subject to
Section 6(b) hereof , Mortgagor shall furnish to Mortgagee receipts therefor as
soon as possible, but in any event within thirty (30) days after the date the
same are due; and shall discharge any claim or Lien relating to Taxes upon the
Premises, other than matters expressly permitted by the terms hereof.
(b) Contest. Mortgagor may, in good faith and with due diligence,
contest or cause to be contested the validity or amount of any such Taxes
without paying the same as provided in Section 6(a) hereof, provided that:
(i) such contest shall have the effect of preventing or
Mortgagor shall otherwise prevent the collection of the Taxes so
contested and the sale or forfeiture of the Premises or any part
thereof or interest therein to satisfy the same;
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(ii) Mortgagor shall have notified Mortgagee in writing of
the intention of Mortgagor to contest the same or to cause the same to
be contested before any of such Taxes have been increased by any
interest, penalties, or costs; and
(iii) Mortgagor shall have deposited with Mortgagee cash, a
bond or other security acceptable to Mortgagee in an amount equal to
100% of the amounts being contested which exceed One Hundred Thousand
Dollars ($100,000) in the aggregate and any additional interest,
charge or penalty arising from such contest.
Mortgagor shall keep Mortgagee generally advised of the status of any contest as
it continues and shall promptly provide any information requested by Mortgagee
with respect thereto. If Mortgagor fails to prosecute such contest with due
diligence or fails to maintain sufficient funds or security on deposit as
hereinabove provided, or, if any of the other conditions to such contest are no
longer being satisfied or if there has been a final disposition of such contest
or if such contest has been discontinued, Mortgagee may, at its option, within
ten (10) days following Mortgagee's written notice to Mortgagor (or such shorter
period of time necessary in Mortgagee's opinion to prevent the collection of
Taxes from, or the sale or forfeiture of, the Premises or any part thereof or
interest therein or the Receipts therefrom), apply the monies and in connection
therewith liquidate any investments of cash deposited with Mortgagee, in payment
of, or on account of, such Taxes, or any portion thereof then unpaid, including
all penalties and interest thereon. If the amount of the money so deposited is
insufficient for the payment in full of such Taxes, including all penalties and
interest thereon, Mortgagor shall forthwith, upon demand, either deposit with
Mortgagee a sum that, when added to such funds then on deposit, is sufficient to
make such payment in full, or, if Mortgagee has applied funds on deposit on
account of such Taxes, restore such deposit to an amount satisfactory to
Mortgagee. Provided that no Event of Default shall then exist hereunder or under
any of the other Loan Documents, Mortgagee shall, if so requested in writing by
Mortgagor, after final disposition of such contest and upon Mortgagor's delivery
to Mortgagee of an official bill for such Taxes, apply the money so deposited in
full payment of such Taxes or that part thereof then unpaid, including all
penalties and interest thereon, and return any excess to Mortgagor, unless
Mortgagor has paid all such Taxes, together with all penalties and interest
thereon, and has provided Mortgagee with evidence satisfactory to Mortgagee of
such payment, in which event Mortgagee shall return such money to Mortgagor. All
monies deposited with Mortgagee pursuant to
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this Section 6(b) are hereby pledged and conveyed to Mortgagee as additional
security for all amounts which now or at any time may be due to Mortgagee under
any of the Loan Documents. Upon the occurrence of an Event of Default hereunder,
Mortgagee shall have the right to apply any and all monies held pursuant to this
Section 6(b) to the payment of the Taxes being contested or to any or all of the
Obligations, in such order and manner as Mortgagee may elect.
(c) Tax Services Contract. If Mortgagee elects, Mortgagor shall
maintain, at Mortgagor's expense while any portion of the Obligations are
outstanding, a tax services contract issued by a tax reporting agency approved
by Mortgagee. If Mortgagee does not so elect to require the tax services
contract referenced in the immediately preceding sentence, Mortgagee may elect
to have annual tax searches made in which event, Mortgagor shall reimburse
Mortgagee on demand for the cost of making such annual tax searches.
SECTION 7. Change in Tax Laws. Except as otherwise provided in the Loan
Agreement, if, by any Legal Requirement of any Governmental Authority having
jurisdiction over Mortgagee, Mortgagor or the Premises, any Tax is imposed or
becomes due in respect of the issuance of the Note or the execution, delivery
and recording of the Existing Mortgages or this Mortgage or any other Loan
Document, Mortgagor shall pay such Tax in the manner required by such Legal
Requirements. Except as otherwise provided in the Loan Agreement, if any Legal
Requirements have the effect of deducting from the value of the Premises for the
purpose of taxation any Lien thereon, or imposing upon Mortgagee the payment of
the whole or any part of the Taxes required to be paid by Mortgagor, or changing
in any way the laws relating to the taxation of Mortgagee, then, and in any such
event, Mortgagor, upon demand by Mortgagee, shall pay such Taxes, or reimburse
Mortgagee therefor on demand, unless Mortgagee determines, in Mortgagee's sole
and exclusive judgment, that such payment or reimbursement by Mortgagor is
unlawful in which event the Obligations shall be due and payable within sixty
(60) days after written demand by Mortgagee to Mortgagor. Nothing in Section 6
hereof or this Section 7 shall require Mortgagor to pay any income, franchise or
excise tax imposed upon Mortgagee, excepting only such which may be levied
against the income of Mortgagee as a complete or partial substitute for Taxes
required to be paid by Mortgagor pursuant hereto.
SECTION 8. Insurance Coverage. Mortgagor will insure the Premises
against such perils and hazards, and in such amounts and with such limits, as
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Mortgagee may from time to time require, and in any event without cost to
Mortgagee, under insurance policies as required below (the "Insurance
Policies"):
(a) Property insurance against loss and damage by all risks of physical
loss or damage, including fire, sprinkler leakage, windstorm, hurricane, flood
and other risks covered by the so-called extended coverage endorsement covering
the Improvements and personal property located on or used in connection with the
Premises from time to time in amounts not less than the full replacement value
thereof and without sublimits, and bearing a replacement cost agreed-amount
endorsement;
(b) Commercial general liability insurance, including death, bodily
injury and broad form property damage coverage with a combined single limit in
an amount not less than Two Million Dollars ($2,000,000) per occurrence and Ten
Million Dollars ($10,000,000) in the aggregate for any policy year;
(c) An umbrella excess liability policy with a limit of not less than
Ten Million Dollars ($10,000,000) over primary insurance, which policy shall
include coverage for water damage, so-called assumed and contractual liability
coverage, premises medical payment and automobile liability coverage, and
coverage for safeguarding of personalty and shall also include such additional
coverages and insured risks which are acceptable to Mortgagee;
(d) Rental and/or business interruption insurance to cover loss of
income in an amount not less than the greater of (i) eighteen (18) months'
projected Receipts from the Premises, at 80% occupancy during such period and
(ii) the amount of such coverage as in effect on the date hereof. The amount of
such insurance shall be increased from time to time in Mortgagee's reasonable
discretion during the term of the Loan as and when Receipts from the premises
increase;
(e) Steam boiler, machinery and pressurized vessel insurance, insuring
against breakdown or explosion of such equipment on a replacement cost value
basis, which shall not contain any exclusions for testing procedures;
(f) Worker's Compensation Insurance in statutory amounts, if any, at
all times;
(g) Unless the Land is not situated in an area designated as having
special flood hazards as defined by the Flood Disaster Protection Act of 1973,
as
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amended, or not designated a wetlands by any governmental entity having
jurisdiction over the Land, flood insurance, if available, with 80% co-insurance
as a minimum;
(h) Insurance against loss or damage from (i) leakage of sprinkler
systems and (ii) explosion of steam boilers, air conditioning equipment, high
pressure piping, machinery and equipment, pressure vessels or similar apparatus
now or hereafter installed in the Improvements (without exclusion for
explosions), in an amount at least equal to the outstanding principal amount of
the Note or Five Million Dollars ($5,000,000), whichever is less;
(i) During any period of constriction, repair or restoration, builder's
"all risk" insurance in an amount equal to not less than the full insurable
value of the Premises against such risks (including, without limitation, fire
and extended coverage and collapse of the Improvements to agreed limits) as
Mortgagee may request;
(j) If the Premises are or become a "non-conforming use" under
applicable zoning and building ordinances, or other Legal Requirements, coverage
to compensate for the cost of demolition and the increased cost of construction;
(k) Such other types and amounts of insurance coverage as are requested
by Mortgagee and are customarily (i) maintained by owners or operators of like
properties, or (ii) required by institutional lenders in like transactions.
SECTION 9. Insurance Policies. All Insurance Policies shall be in
content (including, without limitation, endorsements or exclusions, if any),
form, and amounts, and issued by companies, satisfactory to Mortgagee from time
to time and shall name Mortgagee as an additional insured and shall (except for
Worker's Compensation Insurance) contain a waiver of subrogation clause
acceptable to Mortgagee. An insurance company shall not be satisfactory unless
such insurance company (a) is licensed or authorized to issue insurance of the
applicable type in the State of New York and (b) has a claims paying ability
rating by Standard & Poor's Rating Services, a Division of the McGraw-Hill
Companies, Inc. or another nationally recognized statistical rating agency of AA
(or its equivalent) and an Alfred M. Best Company, Inc. rating of "A" or better
and a financial size category of not less than IX. All Insurance Policies under
Sections 8(a), (d), (e), (i) and (j) hereof shall contain a Non-Contributory
Standard Mortgagee Clause and a Mortgagee's Loss Payable Endorsement (Form 438
BFU NS), or their equivalents (such endorsements
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shall entitle Mortgagee to collect any and all proceeds payable under all such
insurance, with the insurance company waiving any claim or defense against
Mortgagee for premium payment, deductible, self-insured retention or claims
reporting provisions). All Insurance Policies shall provide that the coverage
shall not be modified without (30) days' advance written notice to Mortgagee and
shall provide that no claims shall be paid thereunder to a Person other than
Mortgagee without ten (10) days' advance written notice to Mortgagee. Mortgagor
may obtain any insurance required by Section 8 hereof through blanket policies;
provided, however, that such blanket policies shall separately set forth the
amount of insurance in force with respect to the Premises (which shall not be
reduced by reason of events occurring on property other than the Premises) and
shall afford all the protections to Mortgagee as are required under Section 8
hereof and this Section 9. All policies of insurance required under Section 8
hereof shall contain no annual aggregate limit of liability, other than with
respect to liability insurance. If a blanket policy is issued, a certified copy
of said policy shall be furnished, together with a certificate indicating that
Mortgagee is an additional insured (and, if applicable, loss payee) under such
policy in the designated amount. Mortgagor will deliver duplicate originals of
all Insurance Policies, premium prepaid for a period of not less than three (3)
months, to Mortgagee and, in case of Insurance Policies about to expire,
Mortgagor will deliver duplicate originals of replacement policies satisfying
the requirements of Section 8 hereof and this Section 9 to Mortgagee not less
than thirty (30) days prior to the date of expiration; provided, however, if
such replacement policy is not yet available, Mortgagor shall provide Mortgagee
with an insurance certificate executed by the insurer or its authorized agent
evidencing that the insurance required hereunder is being maintained under such
policy on an interim basis until the duplicate original of the policy is
available. Mortgagor shall furnish Mortgagee receipts for the payment of
premiums on such insurance policies or other evidence of such payment
satisfactory to Mortgagee. The requirements of this Section 9 shall apply to any
separate policies of insurance taken out by Mortgagor concurrent in form or
contributing in the event of loss with the Insurance Policies. Losses shall be
payable to Mortgagee notwithstanding (1) any act, failure to act or negligence
of Mortgagor or its agents or employees, Mortgagee or any other insured party
which might, absent such agreement, result in a forfeiture of all or part of
such insurance payment, other than the willful misconduct of Mortgagee knowingly
in violation of the conditions of such policy, (2) the occupation or use of the
Premises or any part thereof for purposes more hazardous than permitted by the
terms of such policy, (3) any foreclosure or other action or proceeding taken
pursuant to the Existing Mortgages, as amended and restated by this Mortgage or
(4) any change in title to or ownership of the Premises or any part thereof. The
property insurance and the boiler and machinery insurance
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described in Sections 8(a) and (e) hereof shall include "underground hazards"
coverage; "element" coverage by which Mortgagee shall be assured payment of all
amounts due under the Note, this Mortgage and the other Loan Documents; "extra
expense" (i.e., soft costs), clean-up, transit and ordinary payroll coverage;
and "expediting expense" coverage to facilitate rapid repair or restoration of
the Premises. The Insurance Policies shall not contain any deductible in excess
of the lesser of Twenty Five Thousand Dollars ($25,000) and one percent (1%) of
the outstanding principal balance of the Note.
SECTION 10. Compliance with Law; Certain Covenants of Mortgagor.
(a) Mortgagor will, within the time frames provided by such Legal
Requirements, comply with all Legal Requirements applicable to Mortgagor, the
Premises, or the use and operation thereof, including, without limitation, those
applicable to alterations performed thereat and Mortgagor shall furnish
Mortgagee, on demand, proof of compliance satisfactory in all respects to
Mortgagee.
(b) Mortgagor will maintain in full force and effect and within the
time frames provided by applicable Legal Requirements, comply with all
conditions and requirements of all Permits and Mortgagor shall furnish
Mortgagee, on demand, proof of compliance satisfactory in all respects to
Mortgagee.
(c) Mortgagor shall not permit or commit any waste, impairment, or
deterioration of the Premises in any material respect. Mortgagor further
covenants to do all other acts necessary to operate the Premises in a manner
consistent with similar commercial office buildings under normal industry
practice and to protect the security hereof as required hereby, the specific
enumerations herein not excluding the general.
(d) Mortgagor will have the right to contest the validity or
application of any Legal Requirements with respect to the Premises by
appropriate legal proceedings, so long as: (1) such legal proceedings shall be
prosecuted with diligence by Mortgagor and (y) shall operate to prevent, or
Mortgagor shall otherwise prevent, any taking or closing or shutting down of the
Premises or any portion thereof, by any Governmental Authority and (z) has the
effect of staying any type of sale or forfeiture of the Premises or any part
thereof for failure to comply, (2) Mortgagor will have deposited with Mortgagee
cash collateral, a bond or other security acceptable to Mortgage in an amount
equal to one hundred percent (100%) of the amounts being contested which exceed
One Hundred Thousand Dollars
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($100,000) in the aggregate and any additional interest, charge or penalty
arising from such contest which may be awarded or assessed and which may become
a charge or Lien upon the Premises, and subject to increase at the request of
Mortgagee when Mortgagee determines in its sole discretion that a greater amount
may be required to make such payments, (3) such proceeding shall not subject
Mortgagee or Mortgagor to the risk of any civil or criminal liability, (4)
Mortgagor gives Mortgagee (x) continuous written notice upon the commencement
and during the continuation of any such proceeding of the status thereof, and
(y) confirmation on such periodic basis as Mortgagee may request of the
continuing satisfaction of the conditions set forth in clauses (1) through (3)
above, (5) Mortgagor will, upon a final determination of such contest, take all
steps necessary to comply with any requirements arising therefrom, and (6)
Mortgagor shall observe and comply with all other applicable terms and
conditions of the Loan Agreement. If Mortgagor shall fail at any time to comply
with the above conditions to any such contest or the Premises or any part
thereof is, in the sole and absolute judgment of Mortgagee, in any imminent
danger of being forfeited or lost, Mortgagee may require Mortgagor to, and
Mortgagor will, thereupon comply with such Legal Requirement. All monies
deposited with Mortgagee pursuant to this Section 10 are hereby pledged and
conveyed to Mortgagee as additional security for all amounts which now or at any
time may be due to Mortgagee under any of the Loan Documents. Upon the
occurrence of an Event of Default, Mortgagee may, at its option, apply all or
any part of any cash then held by it to any principal, or accrued interest which
is outstanding under, or other amounts which may be payable under the Note, or
any of the other Obligations in such order as Mortgagee may elect.
SECTION 11. Proceeds of Insurance. Mortgagor will give Mortgagee prompt
notice of any loss or damage to the Premises, and:
(a) In case of loss or damage covered by any of the Insurance Polices,
Mortgagee (or, after entry of decree of foreclosure, the purchaser at the
foreclosure sale or decree creditor, as the case may be) (i) is hereby
authorized if an Event of Default has occurred or, if no Event of Default has
occurred but Mortgagor fails to settle and adjust any claim within one-hundred
eighty (180) days after such casualty has occurred, to settle and adjust any
claim under such Insurance Policies without the consent of Mortgagor, and (ii)
if no Event of Default has occurred, Mortgagee shall allow Mortgagor a period
one-hundred eighty (180) days after such casualty to settle and adjust such
claim; provided, however, that any settlement which reasonably should result in
proceeds in excess of Two Hundred Fifty Thousand Dollars ($250,000), may only be
settled by Mortgagor with the consent of
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Mortgagee to be given or withheld in Mortgagee's sole discretion; provided,
further, that in either case Mortgagee shall, and is hereby authorized to,
collect and receive any such insurance proceeds and to retain all or a portion
thereof up to the amount of the Obligations plus the amount of the expenses
incurred by Mortgagee in the adjustment and collection of such insurance
proceeds, and any such expenses shall be reimbursed to Mortgagee upon demand or,
at Mortgagee's option, in the event and to the extent sufficient proceeds are
available, shall be deducted by Mortgagee from said insurance proceeds in such
order of priority as the Mortgagee may determine in its sole discretion. Each
insurance company which has issued an Insurance Policy is hereby authorized and
directed to make payment for all losses covered by such Insurance Policy to
Mortgagee alone, and not to Mortgagee and Mortgagor jointly. Mortgagor agrees to
execute all documents and make all deliveries required in order to permit
adjustment and payment of insurance proceeds as provided above. Notwithstanding
the foregoing, or any other provision of this Section 11 and provided there
shall not have occurred or be continuing an Event of Default hereunder, if in
Mortgagee's reasonable judgment the cost of Restoring the Premises as a result
of any casualty damage thereto is less than Two Hundred Fifty Thousand and
00/100 Dollars ($250,000,00) with respect to any one casualty and such Restoring
can be substantially completed before the date which is three (3) months prior
to the Maturity Date, then Mortgagee, upon request by Mortgagor, shall permit
Mortgagor to apply for and receive the insurance proceeds directly from the
insurer (and Mortgagee shall advise the insurer to pay over such insurance
proceeds directly to Mortgagor), to the extent required to pay for any such
Restoring, with any excess thereof being paid to Mortgagee to be applied against
the Obligations.
(b) In the event the proceeds of Insurance Policies are (i) greater
than Two Hundred Fifty Thousand Dollars ($250,000.00) but less than One Million
Dollars ($1,000,000.00), and in the reasonable judgment of Mortgagee such
restoring, repairing, replacing or rebuilding (collectively, "Restoring") of the
loss or damage caused by such casualty can be substantially completed before the
date which is three (3) months prior to the Maturity Date, then Mortgagee shall
apply the proceeds of such Insurance Policies consequent upon any casualty to
reimburse Mortgagor for or to pay the cost of such Restoring, subject to the
conditions of, and in accordance with, the provisions of Section 12 hereof, or
(ii) greater than One Million Dollars ($1,000,000.00), or in the reasonable
judgment of Mortgagee such Restoring cannot be completed before the date which
is three (3) months prior to the Maturity Date, then Mortgagee shall, in its
sole discretion, apply the proceeds of such Insurance Policies upon the
occurrence of such casualty either (x) to reduce the Obligations, in such order
or manner as Mortgagee may elect; or (y) to reimburse
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Mortgagor for or to pay the cost of Restoring the loss or damage caused by such
casualty, subject to the conditions of, and in accordance with, the provisions
of Section 12 hereof. In either case, any Restoring shall be subject to the
provisions of Section 12 hereof.
(c) Whether or not insurance proceeds are made available to Mortgagor
or are sufficient for such purposes, Mortgagor hereby covenants, within thirty
(30) days after such casualty, to commence and thereafter diligently proceed to
restore, repair, replace or rebuild the Improvements, to be of at least equal
value, and of substantially the same character, as immediately prior to such
loss or damage, all to be effected in accordance with all applicable Legal
Requirements and plans, specifications and procedures to be first submitted to
and approved by Mortgagee, and Mortgagor shall pay all costs of such restoring,
repairing, replacing or rebuilding.
(d) Any portion of the insurance proceeds remaining after payment in
full of the Obligations shall be paid to Mortgagor or as ordered by a court of
competent jurisdiction.
(e) Any insurance proceeds at any time held by Mortgagee may be
invested by Mortgagee and may be commingled with other funds of Mortgagee.
(f) In the event of foreclosure of the Mortgage or other transfer of
title to the Premises in extinguishment of the Obligations, all right, title and
interest of Mortgagor in and to any Insurance Policies (including, without
limitation, the right to a refund of insurance premiums and all rights to the
proceeds thereof) then in force shall pass to the purchaser of the Premises in
foreclosure or the grantee of a deed (or assignment) in lieu of foreclosure, and
Mortgagor hereby appoints Mortgagee its attorney-in-fact (such power being
coupled with an interest), in Mortgagor's name, to assign and transfer all such
policies and proceeds to such purchaser or grantee.
(g) All proceeds of rent or business interruption insurance with
respect to damage to the Premises shall be paid to Mortgagee and shall be
disbursed by Mortgagee for the purpose of paying scheduled interest payments
during the period of loss covered by such proceeds and, provided no Event of
Default has occurred and Mortgages has otherwise complied with the provisions of
Section 11(c) hereof, any remaining portion of such proceeds shall be delivered
by Mortgagee to Mortgagor.
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SECTION 12. Disbursement of Insurance Proceeds. Provided that no Event
of Default has occurred and is then continuing, insurance proceeds that
Mortgagee has agreed to apply to Restoring of the Premises in accordance with
Section 11(b) hereof shall be disbursed from time to time (but not more often
than monthly) upon Mortgagee being furnished with (i) evidence satisfactory to
Mortgagee from an Independent Architect or other Person approved by Mortgagee in
its sole discretion of the estimated cost of completion of the Restoring, (ii)
cash sufficient in addition to the proceeds of insurance, to complete and fully
pay for the completion of the Restoring, based on the cost estimate referenced
in clause (i) above, (iii) a request from Mortgagor dated not more than thirty
(30) days prior to the application for such payment, requesting such payment or
reimbursement and setting forth the work performed in Restoring which is the
subject of such request, the parties which performed such work and the actual
cost thereof, and also certifying that such work and materials are free and
clear of Liens other than Permitted Liens, and (iv) such architect's
certificates, waivers of lien, contractor's sworn statements, title insurance
endorsements, plats of survey and such other evidences of cost, payment and
performance as Mortgagee may in its sole discretion require and approve; and
Mortgagee, in any event, may require that all plans and specifications for such
Restoring will be submitted to and approved by Mortgagee and that all required
Permits be obtained prior to commencement of work. Except as provided below, any
cash provided in accordance with clause (ii) above shall be applied as if such
cash were insurance proceeds. No payment made prior to the final completion of
the Restoring shall exceed ninety percent (90%) of the value of the work
performed or materials delivered, as applicable, from time to time, as such
value shall be determined by Mortgagee in its sole and exclusive judgment. Funds
other than proceeds of insurance shall be disbursed prior to disbursement of
such proceeds, except as may otherwise be provided herein; and at all times the
undisbursed balance of such proceeds remaining in the hands of Mortgagee,
together with any cash deposit delivered to Mortgagee in accordance with clause
(ii) above to pay the cost of completion of the Restoring, shall be at least
sufficient in the sole and absolute judgment of Mortgagee to pay the entire
unpaid cost of the completion of the Restoring, free and clear of all Liens or
claims for Lien other than Permitted Liens. In addition to all other conditions
contained in this Section 12, final payment of all insurance proceeds remaining
with Mortgagee shall be made upon receipt by Mortgagee of a certification by an
Independent Architect approved by Mortgagee as to the completion of the
Restoring substantially in accordance with the submitted plans and
specifications, and the filing of a notice of completion (if such filing is
required by applicable Legal Requirements). Any surplus which may remain out of
insurance proceeds (or cash provided in clause (ii) above) held by Mortgagee
after
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payment of such costs of Restoring shall be applied by Mortgagee to reduce the
Obligations. If there is an Event of Default while Mortgagee is holding funds
for Restoring (including for these purposes any cash deposited in accordance
with clause (ii) above), Mortgagee may at its sole option apply such funds
against the Obligations in such order or manner as Mortgagee may in its sole
discretion elect. If the cost to Restore the loss or damage from any casualty is
estimated to exceed Two Hundred Fifty Thousand Dollars ($250,000) or would
otherwise constitute a Material Alteration, Mortgagor shall pay, from time to
time, within five days after demand therefor, the fees and expenses of any
consultant hired by Mortgagee to review the progress of the Restoration and
inspect the work of Restoration, which consultant's approval shall be required
for any disbursement to be made. Mortgagee shall not be obligated to see to the
proper application of funds disbursed to Mortgagor pursuant hereto, whether
pursuant to the above conditions or upon waiver thereof.
SECTION 13. Condemnation and Eminent Domain.
(a) Any and all awards (the "Awards") heretofore or hereafter made or
to be made by any governmental or other lawful authority for the taking by
condemnation or eminent domain, of all or any part of the Premises (including
any award from the United States government at any time after the allowance of a
claim therefor, the ascertainment of the amount thereof, and the issuance of a
warrant for payment thereof), or the proceeds from a transfer in lieu of a
taking in connection with any such condemnation or eminent domain are hereby
assigned by Mortgagor to Mortgagee, which Awards Mortgagee is hereby authorized
to collect and receive from the condemnation authorities, and Mortgagee is
hereby authorized to give appropriate receipts and acquittances therefor, and
Mortgagee is hereby irrevocably appointed as Mortgagor's attorney-in-fact,
coupled with an interest, to collect such Awards. Mortgagor shall give Mortgagee
immediate notice of the actual or threatened commencement of any condemnation or
eminent domain proceedings affecting all or any part of the Premises and shall
deliver to Mortgagee copies of any and all papers served in connection with any
such proceedings. Mortgagor further agrees to make, execute, and deliver to
Mortgagee, at any time upon request, free, clear, and discharged of any
encumbrance of any kind whatsoever, any and all further assignments and other
instruments deemed necessary by Mortgagee for the purpose of validly and
sufficiently assigning all Awards and other compensation heretofore and
hereafter made to Mortgagor for any taking, either permanent or temporary, under
any such proceeding and all proceeds paid from a sale or other transfer in lieu
of or in connection with such taking, and to facilitate Mortgagee's collection
and receipt of the same. If notwithstanding the foregoing provisions any Award
or other compen-
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sation described above is nonetheless paid to Mortgagor, Mortgagor shall hold
such monies in trust for the benefit of Mortgagee, shall not commingle same with
any funds of Mortgagor and shall immediately pay the same to Mortgagee. The
expenses incurred by Mortgagee in the collection and administration of any Award
(or any other compensation or proceeds described above), including attorneys'
fees, shall be included within the Obligations, and shall be reimbursed to
Mortgagee upon demand or, at Mortgagee's option, in the event and to the extent
sufficient Award proceeds are available, shall be deducted by Mortgagee from
said proceeds in such order of priority as Mortgagee shall determine in its sole
discretion. Neither Mortgagor nor Mortgagee may settle or compromise any claim
for or right to receive any Award (or related compensation) or its rights under
any proceeding with respect thereto without the prior written consent of the
other. Notwithstanding any taking (including, without limitation, any transfer
made in lieu of or in connection with such taking), Mortgagor shall continue to
pay the Loan with interest thereon at the time and in the manner provided for in
the Note and the other Loan Documents. Mortgagee shall not be limited to any
interest paid on the Award by the condemning authority but shall be entitled to
receive out of the Award interest at the rate set forth in the Note and Loan
Agreement.
(b) In the event of any partial taking of the Premises or any interest
in the Premises (or transfer in lieu thereof or in connection therewith) which
in the sole judgment of Mortgagee leaves the Premises (after taking into account
any Restoring to be performed) as an architectural and economic unit of the same
character and not materially less valuable than the same was immediately prior
to the taking, and (i) in Mortgagee's reasonable judgment the cost of Restoring
the Premises is less than Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00) and such Restoring can be substantially completed before the date
which is three (3) months prior to the Maturity Date, then Mortgagee, upon
request by Mortgagor, shall permit Mortgagor to apply for and receive the Award
proceeds and other compensation paid in connection therewith directly from the
condemning authority (and Mortgagee shall advise the condemning authority to pay
over such Awards directly to Mortgagor), to the extent required to pay for any
such Restoring, with any excess thereof being paid to Mortgagee to be applied
against the Obligations, (ii) in Mortgagee's reasonable judgment the cost of
Restoring the Premises is greater than Two Hundred Fifty Thousand Dollars
($250,000.00) but less than One Million Dollars ($1,000,000.00) and such
Restoring can be substantially completed before the date which is three (3)
months prior to the Maturity Date), then the Awards and other compensation paid
in connection therewith (after deducting Mortgagee's fees as provided in Section
13(a) hereof) shall be applied to reimburse Mortgagor for the
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cost of Restoring the Premises and Mortgagor shall Restore the Premises in
accordance with Section 12 hereof, or (iii) in Mortgagee's reasonable judgment
the cost of Restoring the Premises is greater than One Million Dollars
($1,000,000.00) or such Restoring cannot be substantially completed before the
date which is three (3) months prior to the Maturity Date), then Mortgagee
shall, in its sole discretion, apply the Awards either (x) to reduce the
Obligations, in such order or manner as Mortgagee may elect; or (y) to reimburse
Mortgagor for or to pay the cost of Restoring the loss or damage caused by such
taking (after deducting Mortgagee's fees as provided in Section 13(a) hereof)
and Mortgagor shall Restore the Premises in accordance with Section 12 hereof,
and in either event, any such Award and other compensation paid in connection
therewith (after deducting Mortgagee's fees as provided in Section 13(a) hereof)
shall be disbursed in the same manner, and subject to the same limitations, as
provided in Section 12 hereof for the application of insurance proceeds;
provided, however, that any surplus after payment of such cost of Restoring
shall, at the election of Mortgagee, be applied against the Obligations, in such
order and manner as Mortgagee shall elect.
SECTION 14. Assignment of Leases and Rents. Mortgagor hereby absolutely
and presently sells, assigns and transfers unto Mortgagee the Leases and all of
the Receipts. Without limiting the foregoing, prior to the occurrence of an
Event of Default, Mortgagee hereby grants to Mortgagor a license to collect the
Receipts and to act under the Leases, subject, however, to the further
conditions and limitations with respect thereto contained herein and in the
other Loan Documents, and provided, further, that, at all times, the Receipts
shall be collected and applied in accordance with applicable provisions of the
Loan Agreement. Upon the occurrence of an Event of Default, and whether or not a
receiver has been sought or appointed and whether or not Mortgagee has taken
possession of the Premises, the aforesaid license shall automatically terminate,
and Mortgagee may collect all Receipts, and apply the Receipts so collected in
their entirety to, at Mortgagee's option, Taxes, insurance premiums, costs of
repair, alteration and/or Restoring of the Premises, utility charges and other
costs of operating, maintaining or leasing the Premises and/or to the
Obligations (in such order and manner as Mortgagee may in its sole discretion
elect), after deducting Mortgagee's costs and expenses of collection of such
Receipts (including, without limitation, attorneys' fees and the costs and
expenses of litigation). Nothing herein contained shall be construed as
constituting Mortgagee a "mortgagee-in-possession" in the absence of the taking
of actual possession of the Premises by Mortgagee pursuant to Section 21 hereof.
Possession by a court-appointed receiver will not be considered possession by
Mortgagee. From time to time, following Mortgagee's written request therefor,
Mortgagor will furnish
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Mortgagee with executed copies of each of the Leases. Neither the assignment set
forth above nor any other provision of this Mortgage or the other Loan Documents
shall impose upon Mortgagee any duty to produce any Receipts or cause Mortgagee
to be (x) responsible for performing any of the obligations of the lessor under
any Lease, or (y) responsible or liable for any waste by any lessees or others,
for any dangerous or defective conditions of the Premises, for negligence in the
management, upkeep, repair, or control of the Premises or any other act of
omission by any other Person. The assignment contained in this Section 14 is
intended to be supplemental to, and not in lieu of, the assignment contained in
the Assignment of Leases and Rents being delivered by Mortgagor to Mortgagee
simultaneously herewith.
SECTION 15. Modification; Termination; Etc. Mortgagor shall neither do
nor neglect to do, nor permit to be done, anything with respect to any Major
Lease which may substantially diminish or impair the value thereof, or the rents
provided for therein or the interest of Mortgagor or Mortgagee therein or
thereunder. Except with the written consent of the Mortgagee, which consent
shall not be unreasonably withheld or delayed, Mortgagor shall not enter into,
modify, amend, terminate or consent to the cancellation or surrender of, any
Major Lease or collect any rent or other payment under any Major Lease more than
one (1) month in advance of the due date thereof.
SECTION 16. Mortgagee's Performance of Mortgagor's Obligations. In
addition to any other rights or remedies of Mortgagee hereunder, under the other
Loan Documents or at law or in equity, upon the occurrence of an Event of
Default (or prior thereto, if Mortgagee determines in its sole but good faith
judgment that the same is necessary to preserve the Premises or the liens of the
Existing Mortgages, as amended and restated by this Mortgage, or the other Loan
Documents thereon or on any other collateral securing the Obligations or is
necessary to protect the life, health or safety of any Persons on or near the
Premises or the property of any such Person) Mortgagee, either before or after
acceleration of the Obligations, may, but shall not be required to, make any
payment or perform any act required to be performed by Mortgagor hereunder or
under any of the other Loan Documents (whether or not Mortgagor is personally
liable therefor) in any form and manner deemed appropriate and expedient to
Mortgagee, including, without limitation, if applicable, paying any Taxes which
remain unpaid; procuring the release, discharge, compromise or settlement of any
Lien filed or otherwise asserted against the Premises which was not discharged
by Mortgagor in accordance with the provisions of this Mortgage, the Loan
Agreement or the other Loan Documents; and obtaining Insurance Policies where
the required evidence that Mortgagor had obtained the
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same has not been delivered to Mortgagee as required hereunder. Upon any such
payment or performance of any such act, Mortgagee shall as soon as possible
provide notice thereof to Mortgagor but its failure to do so shall not affect
the rights of Mortgagee or the obligations of Mortgagor hereunder. Mortgagee
may, but shall not be required to, complete construction, furnishing and
equipping of the Improvements and rent, operate and manage the Premises and such
Improvements and pay operating costs and expenses, including management fees, of
every kind and nature in connection therewith. All monies paid, and all expenses
paid or incurred, in each case in connection with in Mortgagee acting under any
of the provisions of this Section 16, including attorneys' fees and other monies
advanced by Mortgagee to protect the Premises and the liens of the Existing
Mortgages, as amended and restated by this Mortgage, shall automatically be
deemed Obligations, whether or not the Obligations, as a result thereof, shall
exceed the face amount of the Note, and shall become immediately due and payable
on demand, with interest to accrue and be payable thereon from the date such
monies were paid or advanced, as the case may be, at the Default Rate. Inaction
of Mortgagee shall never be considered as a waiver of any right accruing to it
on account of any Event of Default nor shall the provisions of this Section 16
or any exercise by Mortgagee of its rights hereunder prevent any default from
constituting an Event of Default. Mortgagor acknowledges that pursuant to the
Loan Agreement, certain amounts paid and expenses incurred by Mortgagee (or any
servicer on its behalf) thereunder and under the other Loan Documents shall
constitute protective advances and be deemed Obligations hereunder. Mortgagee,
in making any payment hereby or elsewhere in this Mortgage authorized (a)
relating to Taxes, may do so according to any bill, statement or estimate,
without inquiry into the validity of any tax, assessment, sale, forfeiture, tax
lien or title or claim thereof and without inquiry as to whether or not such
Taxes have been paid, any such bill, statement or estimate constituting prima
facie evidence of non-payment thereof, (b) for the purchase, discharge,
compromise or settlement of any Lien, may do so without inquiry as to validity
or amount of any claim for any Lien which may be asserted; or (c) in connection
with the completion of construction, furnishing or equipping of the Premises or
the rental, operation, or management of the Premises or the payment of operating
costs and expenses thereof or the making of any other advance permitted by this
Section 16, may do so on the basis, in such amounts and to such persons as
Mortgagee may in its sole discretion deem appropriate. Nothing herein shall be
construed to require Mortgagee to advance or expend monies for any purpose
mentioned herein, or for any other purpose. In exercising any right or remedy
hereunder or under the other Loan Documents, Mortgagee shall be accountable only
for amounts it actually receives as a result thereof, and for any of its acts or
omissions in connection with the exercise of any such right or remedy
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Mortgagee shall not have any liability to Mortgagor except for its own active
gross negligence or willful misconduct as determined pursuant to a final
non-appealable order of a court of competent jurisdiction.
SECTION 17. Security Agreement. Mortgagee and Mortgagor agree that this
Mortgage shall constitute a Security Agreement within the meaning of the Code
with respect to (i) any and all sums at any time on deposit for the benefit of
Mortgagee or held by Mortgagee (whether deposited by or on behalf of Mortgagor
or anyone else) pursuant to any of the provisions of this Mortgage and (ii) any
personal property included in the granting clauses of this Mortgage (a security
interest in which is governed by the Code) and all replacements, substitutions
for, additions to, and proceeds of such personal property (collectively, the
"Collateral"), and that a security interest in and to the Collateral is hereby
granted to Mortgagee, and the Collateral and all of Mortgagor's right, title and
interest therein are hereby assigned to Mortgagee, all to secure payment of the
Obligations. All of the terms, provisions, conditions and agreements contained
in this Mortgage pertain and apply to the Collateral as fully and to the same
extent as to any other property comprising the Premises; and the following
provisions of this Section 17 shall not limit the applicability of any other
provision of this Mortgage but shall be in addition thereto:
(i) The Collateral is to be used by Mortgagor (being the
debtor as that term is used in the Code the (the "Debtor")) solely for
business purposes.
(ii) The Collateral will be kept at the Premises, and,
except for Obsolete Collateral or as otherwise permitted by the Loan
Agreement or any other Loan Document, will not be removed therefrom
without the consent of Mortgagee (being the secured party as such term
is defined in the Code (the "Secured Party")). The Collateral may be
affixed to the Premises but will not be affixed to any other real
estate.
(iii) Except for financing statements perfecting security
interests permitted under the Loan Agreement or any other Loan
Document, no financing statement (other than financing statements
showing Mortgagee as the sole secured party) covering any of the
Collateral or any proceeds thereof is on file in any public office;
and Mortgagor will at its own cost and expense, execute and deliver to
Mortgagee, upon demand, such financing statements and other documents
in such form as is satisfactory to Mortgagee and will do all such acts
and things as Mortgagee may at any time or from time to time request
or as may be necessary or appropriate to establish and maintain a
first priority perfected security interest in the Collateral as
security for the Obligations; and Mortgagor will pay the cost of
filing or recording such financing statements or other docu-
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<PAGE>
ments, and this instrument, in all public offices wherever filing
or recording is deemed by Mortgagee to be necessary or desirable and
shall pay all costs and expenses of any record searches for financing
statements that Mortgagee may require.
(iv) Upon an Event of Default hereunder, Mortgagee shall
have, in addition to any other remedies set forth herein or available
at law or in equity, the remedies of a secured party under the Code,
including, without limitation, the right to take immediate and
exclusive possession of the Collateral, or any part thereof, and for
that purpose may, so far as Mortgagor can give authority therefor,
with or without judicial process, enter (if this can be done without
breach of the peace), upon any place which the Collateral or any part
thereof may be situated and remove the same therefrom (provided,
however, that if the Collateral is affixed to real estate, such
removal shall be subject to the conditions stated in the Code); and
Mortgagee shall be entitled to hold, maintain, preserve and prepare
the Collateral for sale, until disposed of, or may propose to retain
the Collateral subject to Mortgagor's right of redemption in
satisfaction of Mortgagor's obligations, as provided in the Code. Upon
an Event of Default hereunder, Mortgagee may render the Collateral
unusable without removal and may dispose of the Collateral on the
Premises. Upon an Event of Default hereunder, Mortgagee may require
Mortgagor to assemble the Collateral and make it available to
Mortgagee for its possession at a place to be designated by Mortgagee.
Mortgagee will give Mortgagor notice of the time and place of any
public sale of the Collateral or of the time after which any private
sale or any other intended disposition thereof is to be made. The
requirements of notice shall be met if such notice is mailed, by
United States mail or equivalent, postage prepaid, to the address of
Mortgagor herein set forth at last ten (10) days before the time of
the sale or disposition. Mortgagee may buy at any public sale and, if
the Collateral is of a type customarily sold in a recognized market or
is of a type which is
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the subject of widely distributed standard price quotations,
Mortgagee may buy at private sale. Any such sale may be held as part
of and in conjunction with any foreclosure sale of the Premises, the
Premises including all or any portion of the Collateral to be sold as
one lot if Mortgagee so elects. The net proceeds realized upon any
such disposition, after deduction for the actual expenses of
retaking, holding fees and legal expenses incurred by preparing for
sale, selling or the like and the attorney, Mortgagee, shall be
applied against the Obligations, in such order and manner as
Mortgagee shall in its sole discretion elect.
(v) The terms and provisions contained in this Section 17
shall, unless the context otherwise requires, have the meanings and be
construed as provided in the Code.
(vi) This Mortgage is intended to be a financing statement
within the purview of Section 9-402(6) of the Code with respect to the
Collateral and the goods described herein, which goods are or may
become fixtures relating to the Premises. The addresses of Mortgagor
(Debtor) and Mortgagee (Secured Party) are as first set forth above.
(vii) The filing of any financing statement with respect to
the Collateral (or any portion thereof) and the provisions of this
Section 17 (and similar provisions elsewhere in this Mortgage or the
other Loan Documents relating to the Collateral) shall never be
construed as in anywise derogating from or impairing this declaration
and hereby stated intention of the parties hereto, that everything
used in connection with the production of income from the Premises
and/or adapted for use therein and/or which is described or reflected
in this Mortgage is, and at all times and for all purposes and in all
proceedings, both legal and equitable, shall be regarded as part of
the real estate irrespective of whether any such item is physically
attached to the Improvements. However, the filing of any financing
statements and the provisions of this Section 17 are intended to cover
any Collateral to the extent that the above-stated intention and
declaration may not be fully effective or to the extent Mortgagee
otherwise determines that it is in its best interest to proceed
against all or any portion of the Collateral as personal property
rather than real estate.
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SECTION 18. Restrictions on Transfer; Maintenance of Existence.
(a) Except as expressly permitted under the Loan Agreement, Mortgagor
shall not, without the prior written consent of Mortgagee, create, effect,
consent to, suffer to exist or permit any Transfer.
(b) Except as provided in the Loan Agreement, Mortgagor will, and will
cause each general partner or managing member to, at all times preserve its
existence and will obtain and maintain in full force and effect all franchises,
privileges, rights, licenses and permits and all other consents, approvals and
authorizations of any Governmental Authority with authority over such entity or
the Premises and its qualification to do business in the State of New York and
in each other jurisdiction in which the nature of its business or the character
of its assets makes such qualification necessary.
SECTION 19. Events of Default. If one or more of the following events
(each an "Event of Default" and collectively, "Events of Default")) shall occur
for any reason whatsoever, and whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any Governmental Authority or otherwise:
(a) an Event of Default shall occur under the Loan Agreement
(including, without limitation, by reason of any cross-default provision
thereof); or
(b) any casualty insurance required to be maintained with respect to
the Premises pursuant to Sections 8 and 9 hereof shall not be in effect or shall
otherwise expire without being replaced by insurance satisfying the requirements
of Sections 8 and 9 hereof (or Mortgagor fails to deliver to Mortgagee evidence
satisfying the provisions of Section 9 hereof that such replacement insurance
was obtained); or
(c) Mortgagor shall otherwise, to the extent not covered in (b), above,
default in complying with its obligations under Sections 8 and 9 hereof and such
default continues for a period of ten (10) days after notice is given by
Mortgagee to Mortgagor thereof; or
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(d) Any attempt by Mortgagor to assign its rights under this Mortgage;
or
(e) Any other default in the performance or payment, or breach, of any
material covenant, warranty, representation or agreement of Mortgagor 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 section), which default is not cured
within thirty (30) Business Days after receipt by Mortgagor of notice from
Mortgagee in writing of such breach. If cure of such default (a) would require
performance of an Obligation other than payment of indebtedness and (b) cannot
be effected within said 30 Business Day period despite Mortgagor's diligence in
prosecuting such cure, then, provided Mortgagor commences to cure within said
thirty (30) Business Day period and diligently prosecutes said cure to
completion, 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; provided, further, that
Mortgagor shall provide Mortgagee with a written report and evidence of the
progress of Mortgagor's cure efforts 90 days after commencement of such 120-day
cure period; or
(f) 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
Mortgagor, or any Lien securing the Obligations shall, in whole or in part,
cease to be a perfected first priority Lien, subject to the Permitted Liens
(except in any of the foregoing cases in accordance with the terms hereof or
under any other Loan Document); or
(g) any "Event of Default" as defined in any Loan Document other than
this Mortgage occurs.
(h) any Governmental Authority shall issue an order or decree declaring
unlawful or suspending the current operation of the Premises or any material
portion thereof, which order or decree remains undischarged or unstayed for a
period of thirty (30) days after issuance thereof; or
(i) formal charges are filed against Mortgagor or any of its
Affiliates, under any Legal Requirement which could lead to a forfeiture of the
Premises or any part thereof or other material adverse effect on the liens
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of the Existing Mortgages, as amended and restated by this Mortgage and the
other Loan Documents, thereon, and such charges remain undismissed or unstayed
for a period of at least sixty (60) days after the initial filing thereof;
then, Mortgagee is hereby authorized and empowered, at its option and without
affecting the liens of the Existing Mortgages, as amended and restated by this
Mortgage or the priority of said consolidated liens or any other right of
Mortgagee hereunder, (i) to declare, without further notice, all Obligations to
be immediately due and payable with interest thereon at the Default Rate,
whether or not such Event of Default shall be thereafter remedied by Mortgagor,
and (ii) to exercise any right, power or remedy provided by this Mortgage, the
Note, the Loan Agreement, any of the other Loan Documents or by law or in equity
(including, without limitation, by suit for the specific performance of any
covenant or agreement contained herein or in the other Loan Documents).
SECTION 20. Foreclosure.
(a) When an Event of Default shall have occurred and is continuing or
the Obligations shall become due, whether at maturity, by acceleration or
otherwise, Mortgagee shall have the right to foreclose the consolidated lien of
the Existing Mortgages, as amended and restated by this Mortgage in accordance
with the laws of the State of New York. In any suit to foreclose the
consolidated lien of the Existing Mortgages, as amended and restated by this
Mortgage, there shall be allowed and included as additional Obligations in the
decree of sale, all expenditures and expenses which may be paid or incurred by
or on behalf of Mortgagee for attorneys' fees, appraisers' fees, outlays for
documentary and expert evidence, stenographer's charges, publication costs, and
costs (which may be estimated as to items to be expended after entry of the
decree) of procuring all abstracts of title, title searches and examinations,
title insurance policies, environmental review or testing of the Premises, and
similar data and assurances with respect to title and the Premises' condition as
Mortgagee may in its sole discretion deem necessary either to prosecute such
suit or to evidence to bidders at sales which may be had pursuant to such decree
the true conditions of the title to or the value or condition of the Premises
and the right to such fees and expenses shall be deemed to have accrued on
commencement of such action and shall be enforceable whether or not such action
is prosecuted to judgment. All expenditures and expenses of the nature mentioned
in this Section 20(a) shall be included in the Obligations and shall be
immediately due and payable by Mortgagor, with interest thereon at the Default
Rate until paid.
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(b) In connection with any foreclosure sale permitted hereunder,
Mortgagee is hereby authorized and empowered to: (i) to the extent permitted by
and in accordance with the applicable provisions of law with respect to real
property, sell, assign, transfer and deliver the whole or, from time to time,
any part of the Premises, or any interest in any part thereof, at any private
sale or by public auction, with or without demand, advertisement or notice of
the time or place of sale or adjournment thereof or otherwise, for cash, on
credit or for other property, for immediate or future delivery, and for such
price or prices and on such terms as Mortgagee in its sole and absolute
discretion may determine (such empowerment and procedure being hereinafter
referred to as the "Power of Sale"), or (ii) foreclose the consolidated lien of
the Existing Mortgages, as amended and restated by this Mortgage, for such
indebtedness, or such part thereof, by judicial action. With respect to the
Power of Sale, Mortgagee may postpone sale of all or any portion of the Premises
by announcement at the time and place of sale, and, from time to time
thereafter, may further postpone such sale by announcement at the time and place
fixed at the preceding postponement. Mortgagee shall deliver to the purchaser
its deed or other appropriate instrument transferring title to the Premises, or
the interest therein so sold, but without any covenant or warranty, express or
implied. The recitals in such instrument of any matter or act shall be
conclusive proof of the truthfulness thereof. In case of any sale under this
Mortgage, by virtue of judicial proceedings, Power of Sale, or otherwise, the
Premises may be sold in one parcel and as an entirety or in such parcels, manner
or order as Mortgagee in its sole discretion may elect.
(c) If a foreclosure sale is made as to part, but not all of the
Obligations, such sale may be subject to the continuing consolidated lien of the
Existing Mortgages, as amended and restated by this Mortgage for the unmatured
part of the Obligations. Any sale pursuant to a partial foreclosure shall not in
any manner affect the unmatured or otherwise unsatisfied part of the Obligations
(and Mortgagee's rights to conduct subsequent foreclosure sales with respect
thereto), but, as to such unmatured or otherwise unsatisfied part this Mortgage,
the consolidated lien of the Existing Mortgages, as amended and restated by this
Mortgage shall remain in full force and effect as if no foreclosure sale had
been made under the provisions of this Section 20. Notwithstanding the filing of
any action for partial foreclosure or entry of a decree of sale therein,
Mortgagee may elect at any time prior to a foreclosure sale pursuant to such
decree, to discontinue such partial foreclosure and to accelerate the entire
Obligations by reason of the Event of Default or Events of Default upon which
such partial foreclosure was predicated or by reason of any other Event of
Default, and proceed with full foreclosure proceedings.
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(d) In any action to foreclose the consolidated lien of the Existing
Mortgages, as amended and restated by this Mortgage, including a partial
foreclosure, no defense, counterclaim or setoff shall be available to Mortgagor
other than one which denies the existence or sufficiency of the facts upon which
the foreclosure action is grounded. If any defense, counterclaim or setoff,
other than one permitted by the preceding sentence, is raised in such
foreclosure action, such defense, counterclaim or setoff shall be dismissed;
provided, however, if such defense, counterclaim or setoff is based on a claim
which could be tried in an action for money damages, such claim may be brought
in a separate action which shall not thereafter be consolidated with the
foreclosure action. The bringing of any such separate action for money damages
shall not be deemed to afford any grounds for staying the foreclosure action.
(e) Mortgagee, or any nominee of Mortgagee, may be a purchaser of the
Premises or a portion thereof or any interest therein at any sale thereof, and
may apply to the purchase price all or any part of the Obligations in lieu of
payment in cash of the amount of such Obligations applied. Any such purchaser
shall, upon any such purchase, acquire good title to the properties so
purchased, free of the consolidated lien of the Existing Mortgages, as amended
and restated by this Mortgage to the extent of the amount of Obligations so
applied, if less than all, and free in any event of all rights of redemption in
Mortgagor.
SECTION 21. Right of Possession. When an Event of Default has occurred
and is continuing or when the Obligations shall otherwise become due, whether by
maturity, acceleration or otherwise, Mortgagor shall, forthwith upon demand of
Mortgagee, surrender to Mortgagee, and Mortgagee shall be entitled to take
actual possession of, the Premises or any part thereof, personally, by its agent
or attorneys or have a receiver placed in possession pursuant to court order,
and Mortgagee, in its discretion, personally, by its agents or attorneys or the
receiver, if any, may enter upon and take and maintain possession of all or any
part of the Premises, together with all documents, books, records, papers, and
accounts of Mortgagor, and may exclude Mortgagor, and any agents and servants
thereof wholly therefrom and may, on behalf of Mortgagor, or in its own name as
Mortgagee and under the powers herein granted take any and all actions in
connection with the operation, maintenance, management and use of the Premises
including, without limitation, to:
(a) hold, operate, manage, and control all or any part of the Premises
and conduct the business thereof, if any, with full power to use such
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measures, legal or equitable, as in its discretion may be deemed proper or
necessary to enforce the payment or security of the Receipts, including without
limitation actions for recovery of rent, actions in forcible detainer, and
actions in distress for rent, all without notice to Mortgagor;
(b) cancel or terminate any Lease or sublease of all or any part of the
Premises for any cause or on any ground that would entitle Mortgagor to cancel
the same;
(c) elect to disaffirm any Lease or sublease of all or any part of the
Premises made subsequent to this Mortgage in violation of the terms of the Loan
Agreement;
(d) extend or modify any then existing Leases and make new Leases of
all or any part of the Premises, which extensions, modifications, and new Leases
may provide for terms to expire, or for options to lessees to extend or renew
terms to expire, beyond the Maturity Date, it being understood and agreed that
any such Leases, and the options or other such provisions to be contained
therein, shall be binding upon Mortgagor, all persons whose interests in the
Premises are subject to the consolidated lien of the Existing Mortgages, as
amended and restated by this Mortgage, and the purchaser or purchasers at any
foreclosure sale, notwithstanding any redemption, reinstatement, discharge of
the Obligations, satisfaction of any foreclosure decree, or issuance of any
certificate of sale or deed to any such purchaser;
(e) make all necessary or proper repairs, decoration renewals,
replacements, alterations, additions, betterments, and improvements in
connection with the Premises as may seem judicious to Mortgagee in its sole
discretion, insure and reinsure the Premises and all risks incidental to
Mortgagee's possession, operation, and management thereof, and receive all
Receipts;
(f) cancel or modify any management agreement affecting the Premises;
(g) cancel or modify or replace any agreement affecting the Premises
with any Affiliate of Mortgagor;
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(h) enter into any management, leasing or brokerage agreements covering
the Premises in accordance with the terms of the Loan Agreement and the other
Loan Documents; or
(i) after allowing a fee for the collection thereof (including lease
commissions and other compensation and expenses of seeking and procuring tenants
and entering into Leases) and for the management of the Premises, apply the net
income to the payment of Taxes, insurance premiums, costs of the matters
described in clause (e) above, costs of operating and maintaining the Premises
and other charges applicable to the Premises, or in reduction of the Obligations
in such order and manner as Mortgagee shall in its sole discretion select.
Nothing herein contained shall be construed as constituting Mortgagee a
"mortgagee-in-possession" in the absence of the actual taking of possession of
the Premises. Mortgagor shall and does hereby agree to indemnify and hold
harmless Mortgagee of and from any and all liability, loss or damage which it
may or might incur by reason of its performance of any action authorized under
this Section 21 (other than liability, loss or damage caused by the gross
negligence or willful misconduct of Mortgagee) and of and from any and all
claims and demands whatsoever which may be asserted against it by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the terms, covenants or agreements of Mortgagor. Should Mortgagee incur any such
liability, loss or damage by its performance or nonperformance of actions
authorized by this Section 21, or in the defense of any such claims or demands,
the amount thereof, including costs, expenses and attorneys' fees and
disbursements, together with interest on any such amount at the Default Rate,
shall be Obligations and Mortgagor shall reimburse Mortgagee therefor
immediately upon demand.
SECTION 22. Receiver. Mortgagee as a matter of right may appoint or
secure the appointment of a receiver, trustee, liquidator or similar official of
the Premises or any portion thereof, and Mortgagor hereby without notice to
Mortgagor and without regard to the value of the Premises or adequacy of the
security for the Obligations and without regard to the solvency of Mortgagor,
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 Mortgagee to receive
the Receipts with respect to any of the Premises pursuant to this Mortgage or
any other Loan Documents. Without limiting the generality of the foregoing, such
receiver shall have, as permitted by the court
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ordering the same, the power to make Leases to be binding upon all parties,
including Mortgagor, the purchaser at a sale pursuant to a judgment of
foreclosure and any person acquiring an interest in the Premises after entry of
a judgment of foreclosure and the power to extend or modify any then existing
Leases, which extensions and modifications may provide for terms to expire, or
for options for lessees to extend or renew beyond the Maturity Date, it being
understood and agreed that any such Leases, and the options or other provisions
to be contained therein, shall be binding upon Mortgagor and all the persons
whose interest in the Premises are subject to the consolidated lien of the
Existing Mortgages, as amended and restated by this Mortgage, and upon the
purchaser or purchasers at any foreclosure sale, notwithstanding any redemption,
reinstatement, discharge of the Obligations, satisfaction of any foreclosure
judgment, or issuance of any certificate of sale or deed to any purchaser. In
addition, such receiver shall have, as permitted by the court ordering the same,
all other powers which may be necessary or are usual in such cases for the
protection, possession, control, management and operation of the Premises during
the whole of the period of such receivership.
SECTION 23. Proceeds of Foreclosure Sale. The proceeds of any
foreclosure sale of the Premises shall be distributed and applied in the
following order of priority: (a) First, to payment of all costs and expenses
incident to the foreclosure proceedings; (b) Second, to all sums expended under
the terms hereof, not then repaid, with accrued interest at the rate provided
herein or, if none is provided, at the Default Rate; (c) Third, to all other
sums which under the terms hereof constitute Obligations other than the
principal and interest payable under the Note and the Loan Agreement thereto in
such order as Mortgagee shall in its sole discretion elect, with interest
thereon as herein provided; (d) Fourth, to all principal and interest payable
under the Note and the Loan Agreement thereto in such order as Mortgagee shall
in its sole discretion elect; and (f) Fifth, the remainder, if any, to the
person or persons legally entitled thereto.
SECTION 24. Waiver of Right of Redemption and Other Rights. To the full
extent permitted by law, Mortgagor hereby covenants and agrees that it will not
at any time insist upon or plead, or in any manner whatsoever claim or take any
advantage of, any stay, exemption or extension law or any so-called "moratorium
law now or at any time hereafter in force, nor claim, take or insist upon any
benefit or advantage of or from any law now or hereafter in force providing for
the valuation or appraisement of the Premises, or any part thereof, prior to any
sale or sales thereof to be made pursuant to any provisions herein contained, or
to any decree, judgment or order of any court of competent jurisdiction, or
claim or exercise any rights under
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any statute now or hereafter in force to redeem the property, or any part
thereof, or relating to the marshaling thereof, upon foreclosure sale or other
enforcement hereof. To the fullest extent permitted by law, Mortgagor hereby
expressly waives any and all rights to reinstatement and redemption, on its own
behalf, on behalf of all persons claiming or having an interest (direct or
indirect) by, through or under Mortgagor and on behalf of each and every person
acquiring any interest in or title to the Premises subsequent to the date
hereof, it being the intent hereof that any and all such rights of reinstatement
and redemption of Mortgagor and such other persons, are and shall be deemed to
be hereby waived to the fullest extent permitted by applicable law. To the
fullest extent permitted by law, Mortgagor hereby waives any statute of
limitations applicable to this Mortgage or the other Loan Documents. To the
fullest extent permitted by law, Mortgagor agrees that it will not, by invoking
or utilizing any applicable law or laws or otherwise, hinder, delay or impede
the exercise of any right, power or remedy herein or otherwise granted or
delegated to Mortgagee, but will suffer and permit the exercise of every such
right, power and remedy as though no such law or laws have been or will have
been made or enacted. To the fullest extent permitted by law, Mortgagor hereby
agrees that no action for the enforcement of the consolidated lien of the
Existing Mortgages, as amended and restated by this Mortgage or any provision
hereof shall be subject to any defense which would not be good and valid in an
action at law upon the Note.
SECTION 25. Effect of Releases, Extensions, Amendments, Etc. If the
payment of the Obligations, or any part thereof, be extended or varied, or if
any part of the security or guaranties therefor or if any other person or entity
obligated therefor be released, Mortgagor and all other parties now or at any
time hereafter liable therefor, if any, or having an interest in the Premises,
shall be held to assent to such extension, variation or release, and their
liability, if any, and the consolidated lien of the Existing Mortgages, as
amended and restated by this Mortgage, and all provisions hereof, shall continue
in full force and effect; the right of recourse against Mortgagor and all such
other parties (other than any person or entity so expressly released) being
expressly reserved by Mortgagee, notwithstanding any such extension, variation
or release. Any person, firm or corporation taking a junior mortgage, or other
lien upon the Premises or any part thereof or any interest therein, shall take
said lien subject to the rights of Mortgagee to amend, modify, extend or release
the Note, this Mortgage, or any other document or instrument evidencing,
securing or guarantying the Obligations, in each and every case without
obtaining the consent of the holder of such junior lien and without the
consolidated lien of the Existing Mortgages, as amended and restated by this
Mortgage losing their priority over the rights of any such junior lien except as
may otherwise be expressly provided in a
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separate subordination agreement, if any, by and between Mortgagee and the
holder of such junior lien.
SECTION 26. Occupancy by Mortgagor. If a receiver has been appointed to
collect the Receipts or if Mortgagee enters the Premises in the exercise of its
remedies under this Mortgage and if Mortgagor is allowed to remain in actual
occupancy of the Premises, Mortgagor shall become a tenant-at-will and Mortgagor
will thereafter pay to Mortgagee or to any receiver so appointed, in advance, a
reasonable rental for any part of the Premises occupied by Mortgagor. If
Mortgagor fails to pay such rental, Mortgagor may be dispossessed by the usual
legal proceedings available against any defaulting tenant of real estate.
SECTION 27. Successors and Assigns.
(a) Holder of the Note. This Mortgage and each and every covenant,
agreement and other provision hereof shall be binding upon Mortgagor and its
successors and permitted assigns (including, without limitation, each and every
record owner from time to time of the Premises or any other Person having an
interest therein), and shall inure to the benefit of Mortgagee and its
successors and assigns. Wherever herein "Mortgagee" is referred to, such
reference shall be deemed to include the holder from time to time of the Note
and the Existing Notes, whether so expressed or not and each such holder from
time to time of the Note and the Existing Notes shall have and enjoy all of the
rights, privileges, powers, options and benefits afforded hereby and hereunder,
and may enforce all and every of the terms and provisions hereof, as fully and
to the same extent and with the same effect as if such holder of the Note and
the Existing Notes from time to time were herein by name specifically granted
such rights, privileges, powers, options and benefits and was herein by name
designated "Mortgagee".
(b) Covenants Run With Land, Successor Owners. All of the covenants of
this Mortgage shall run with the Land and be binding on any successor owners of
the Premises or any portion thereof. If the ownership of the Premises or any
portion thereof becomes vested in a person or persons other than Mortgagor,
Mortgagee may, without notice to Mortgagor, deal with such successor- or
successors-in-interest of Mortgagor with reference to this Mortgage and the
Obligations in the same manner as with Mortgagor without in any way releasing or
discharging Mortgagor from its obligations hereunder. The word "Mortgagor" when
used herein shall include the original Mortgagor named in the first paragraph
hereof, the original Mortgagor's successors and permitted assigns and all owners
from time
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to time of the Premises or any portion thereof claiming by, through or under
Mortgagor. Mortgagor will give immediate written notice to Mortgagee of any
conveyance, transfer or change of ownership of the Premises, but nothing in this
Section 27 shall be deemed to permit any such transfer not otherwise expressly
permitted by the Loan Agreement.
SECTION 28. Subrogation. If any part of the Obligations is used
directly or indirectly to pay off, discharge or satisfy, in whole or in part,
any prior lien or encumbrance upon the Premises or any part thereof, then, to
the extent permitted by law, Mortgagee shall be subrogated to the rights of the
holder thereof in and to such other lien or encumbrance and any additional
security held by such holder, and shall have the benefit of the priority of the
same.
SECTION 29. Governing Law. The place of negotiation, execution and
delivery of this Mortgage is the State of New York. This Mortgage shall be
governed by and construed and enforced in accordance with the laws of the State
of New York. It is the intent of the parties hereto that the provisions of
Section 5-1401 of the General Obligations Law of the State of New York apply to
this Mortgage.
SECTION 30. Servicer or Other Agent. All rights and remedies of
Mortgagee under this Mortgage and under any other Loan Document may be exercised
by a servicer or other agent appointed by Mortgagee to exercise the same and any
action taken by such servicer or other agent on behalf of Mortgagee hereunder or
under any other Loan Document shall have the same force and effect as if taken
by Mortgagee.
SECTION 31. Captions and Pronouns.
(a) The captions and headings of the various sections of this Mortgage
are for convenience only, and are not to be construed as confining or limiting
in any way the scope or intent of the provisions hereof. Whenever the context
requires or permits, the singular shall include the plural, the plural shall
include the singular, and the masculine, feminine and neuter shall be freely
interchangeable.
(b) Wherever reference is made in this Mortgage to the Note, Existing
Notes, Mortgage, Existing Mortgages, or any other Loan Document, the same shall
be deemed to refer to such document as the same may have been or be amended or
modified from time to time.
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SECTION 32. Report of Real Estate Transaction. Mortgagor has made or
provided for making, on a timely basis, any reports or returns required under
Section 6045(e) of the Internal Revenue Code of 1986 (and any similar reports or
returns required by state or local law) relating to the Premises,
notwithstanding the fact that the primary reporting responsibility may fall on
Mortgagee, counsel for Mortgagee, or any other party. Mortgagor's obligations
under this Section 32 will be deemed to be satisfied if proper and timely
reports and returns required under this Section 32 are filed by a title company
or real estate broker involved in the real estate transaction relating to the
Premises, but nothing contained herein shall be construed to require such
returns or reports to be filed by Mortgagee or counsel for Mortgagee.
SECTION 33. Release. If Mortgagor shall fully pay to Mortgagee all
principal outstanding under the Note, all interest accrued thereon, all
prepayment premiums, if any, with respect thereto, all advances made hereunder
together with interest thereon as provided herein and all other sums owing
hereunder or under any of the other Loan Documents whether deemed Obligations or
otherwise, and provided, that with respect to any payment made prior to the
Maturity Date, such prepayment is permitted under the Note, Mortgagee, at
Mortgagor's option, shall either (i) release this Mortgage and the consolidated
lien of the Existing Mortgages, as amended and restated by this Mortgage by
proper instrument(s) or (ii) assign this Mortgage and the consolidated lien of
the Existing Mortgages, as amended and restated by this Mortgage by proper
instrument(s) to such party as Mortgagor shall reasonably request and Mortgagor
shall pay all fees in connection with the preparation, recordation and filing of
such instruments.
SECTION 34. Mortgage Recording Tax. Mortgagor agrees that if, by the
laws of the United States of America, or of any state or political subdivision
having jurisdiction over Mortgagor or the Premises or any portion thereof, any
stamp, mortgage recording or other tax (other than real estate taxes) is due or
becomes due in respect of the issuance of the Note, the execution and delivery
of the Loan Agreement or the execution, delivery or recording of this Mortgage
(or any mortgage consolidated hereby) including, but not limited to the Existing
Mortgages or any assignment of leases and rents given as security for the Note,
or is otherwise required to be paid in order to enforce this Mortgage or to
foreclose the consolidated lien of the Existing Mortgages, as amended and
restated by this Mortgage, Mortgagor covenants and agrees to pay such tax at the
time and in the manner required by any such law. Mortgagor further covenants to
defend and hold harmless and agrees
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to indemnify Mortgagee, its successors or assigns, against any liability
incurred by reason of any such imposition of any such tax or any claim therefor.
SECTION 35. Exempt Transaction Under Truth-in-Lending. Mortgagor and
Mortgagee agree that the obligations secured hereby are an exempt transaction
under the Truth-in-Lending Act, 15 U.S.C., Section 1601 et seq.
SECTION 36. Waiver. Mortgagee's failure in one or more instances to
exercise the option for acceleration of maturity and/or foreclosure or sale
following an Event of Default or to exercise any other of Mortgagee's rights,
privileges or options hereunder or under the other Loan Documents, or
Mortgagee's acceptance of partial payments under the Loan Documents, or any
course of conduct between Mortgagor and Mortgagee does and shall not constitute
a waiver of the Event of Default or of any right, privilege or option, or extend
or affect any grace period, but rather such rights, privileges and options will
remain continuously in force. Mortgagee's waiver of any option, right or remedy
will only be valid if made in writing and only for the instance given.
Acceleration of maturity, once claimed by Mortgagee under this Mortgage, may be
rescinded, at Mortgagee's option, by Mortgagee's written acknowledgment to that
effect. The tender and acceptance of partial payments alone will not in any way
affect or rescind an acceleration of maturity, extend or affect any grace period
or constitute a waiver of a default.
SECTION 37. Tax Certiorari. From and during the continuance of an Event
of Default, Mortgagee shall have the right to settle, on Mortgagor's behalf, any
and all tax certiorari proceedings relating to the Premises and Mortgagor hereby
irrevocably appoints Mortgagee as its attorney-in-fact, with full power of
substitution, to settle such proceedings, which power of attorney is irrevocable
and coupled with an interest.
SECTION 38. Lost Note. If Mortgagee provides evidence by a properly
executed and acknowledged affidavit of a duly authorized officer or
representative that the Note (or any note comprising the Note) is mutilated,
destroyed, lost, or stolen, Mortgagor shall promptly deliver to Mortgagee, in
substitution therefor, a new promissory note containing the same terms and
conditions as the Note (or any note comprising the Note) with a notation thereon
(i) of the unpaid principal and accrued and unpaid interest and (ii) stating
that such promissory note is a duplicate original of the Note (or any note
comprising the Note), intended to replace the Note (or any note comprising the
Note).
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SECTION 39. Notice. All notices, consents, approvals and requests
required or permitted hereunder shall be given to the parties hereto at their
respective addresses set forth above in accordance with the applicable
provisions of the Loan Agreement.
SECTION 40. Waivers, Extensions, Modifications and Amendments. This
Mortgage can be extended, modified or amended only in writing executed by
Mortgagor and Mortgagee, and that none of the rights or benefits of Mortgagee
can be waived permanently except in a written document executed by Mortgagee.
SECTION 41. No Waiver. Mortgagee's rights, powers, privileges and
remedies under or in connection with this Mortgage are cumulative and not
exclusive and shall not be waived, precluded or limited by any failure or delay
in the exercise thereof or by the parties exercise thereof or by any course of
dealing between Mortgagor and Mortgagee. No notice to or demand on Mortgagor in
any case shall entitle Mortgagor to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of Mortgagee
to any other or further action in any circumstances without notice or demand.
SECTION 42. Descriptive Headings, etc. The descriptive headings used in
this Mortgage are for convenience only and shall not be deemed to affect the
meaning or construction of any provision hereof.
SECTION 43. Terminology. All personal pronouns used in this Mortgage,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the plural shall
include the singular. Titles of Sections in this Mortgage are for convenience
only, and neither limit nor amplify the provisions of this Mortgage, and all
references in this Mortgage to Sections, Subsections, paragraphs, clauses or
subclauses shall refer to the corresponding Section, Subsection, paragraph,
clause or subclause of this Mortgage, unless specific reference is made to the
articles, sections or other subdivisions of another document or instrument.
SECTION 44. Waiver of Jury Trial. EACH OF MORTGAGOR AND MORTGAGEE,
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL RIGHTS ANY
SUCH PERSON MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS MORT-
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GAGE OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN), OR ACTIONS OF MORTGAGOR OR MORTGAGEE RELATING TO THE LOAN AND/OR THE
LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS MORTGAGE. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR MORTGAGEE ACCEPTING THIS MORTGAGE.
SECTION 45. Severability. In the event that any of the covenants,
agreements, terms or provisions contained herein shall be found to be invalid,
illegal or unenforceable in any respect, (a) the validity of the remaining
covenants, agreements, terms and provisions contained herein shall remain in
full force and effect and in no way be affected, prejudiced or disturbed
thereby, and (b) such provisions found to be invalid, illegal or unenforceable
shall be deemed modified to the extent necessary to render such provisions
valid, legal and enforceable giving effect as nearly as possible to the
intention of the parties hereto evidenced by such provisions and such
provisions, as so modified, shall be effective hereunder.
SECTION 46. Further Assurances. At any time, and from time to time,
upon Mortgagee's request, Mortgagor shall make, execute and deliver, or cause to
be made, executed and delivered, to Mortgagee and, where appropriate, shall
cause to be recorded or filed, and from time to time thereafter to be
re-recorded and refiled, at such time and in such offices and places as shall be
deemed desirable by Mortgagee as Mortgagee may consider necessary or desirable
in order to effectuate, or to continue and preserve the obligations of Mortgagor
under this Mortgage, such documents and/or instruments as Mortgagee may request.
Upon any failure by Mortgagor to do so, Mortgagee may make, execute, record,
file, re-record or refile any and all such documents and/or instruments for and
in the name of Mortgagor, and Mortgagor hereby irrevocably appoints (which
appointment is irrevocable and coupled with an interest with full power of
substitution) Mortgagee the agent and attorney-in-fact of Mortgagor to do so;
and Mortgagor shall reimburse Mortgagee, on demand, for all costs and expenses
(including attorneys' fees and expenses) incurred by Mortgagee in connection
therewith.
SECTION 47. Amendment. Neither this Mortgage nor any provision hereof
may be changed, waived, discharged, modified or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement is sought.
Nothing contained in this Mortgage shall be construed to amend, modify, alter,
change or supersede the terms and provisions of the Loan Agreement or any of the
other Loan Documents.
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SECTION 48. Jurisdiction, Venue, Service of Process. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS MORTGAGE SHALL BE BROUGHT, AT MORTGAGEE'S
OPTION, IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK. MORTGAGOR HEREBY
ACCEPTS AND SUBMITS TO, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.
MORTGAGOR AND MORTGAGEE 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 THEM AT
THEIR RESPECTIVE ADDRESSES AS SET FORTH ABOVE. MORTGAGOR 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 MORTGAGE 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 CONTAINED HEREIN SHALL AFFECT THE RIGHT OF MORTGAGEE
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST MORTGAGOR IN ANY OTHER JURISDICTION.
SECTION 49. Environmental Indemnity. (a) Mortgagor shall protect,
indemnify, save, defend, and hold harmless Mortgagee 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 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 the Premises or any portion thereof; (b) the violation of any
Environmental Law in connection with the Premises or any portion thereof; (c)
any release, spill, or the presence of any Hazardous Substances affecting the
Premises or any portion thereof or any real property adjoining the Premises;
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and (d) the presence at, in, on or under, or the release, escape, seepage,
leakage, discharge or migration at or from, the Premises or any portion thereof
of any Hazardous Substances, whether or not such condition was known or unknown
to Mortgagor provided that, in each case, Mortgagor 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 the Premises or the
applicable portion thereof, (2) the delivery by Mortgagor to Mortgagee of a
deed- or assignment-in-lieu of foreclosure with respect to the Premises or the
applicable portion thereof, or (3) Mortgagee's taking possession and control the
Premises or the applicable portion thereof 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 Mortgagee, upon written notice from Mortgagor to Mortgagee (given
reasonably promptly following Mortgagee's notice to Mortgagor of such action or
proceeding), Mortgagor shall be entitled to assume the defense thereof, at
Mortgagor's expense, with counsel reasonably acceptable to Mortgagee; provided,
however, that Mortgagee may, at its own expense, retain separate counsel to
participate in such defense, but such participation shall not be deemed to give
Mortgagee a right to control such defense, which right Mortgagor expressly
retains. Notwithstanding the foregoing, each Indemnified Environmental Party
shall have the right to employ separate counsel at Mortgagor's expense if, in
the reasonable opinion of legal counsel to such Indemnified Environmental Party,
a conflict or potential conflict exists between the Indemnified Environmental
Party and Mortgagor that would make such separate representation advisable.
(b) Mortgagor covenants that it shall diligently pursue to completion
the recommendations made in that certain Phase I Environmental Site Assessment
dated June 18, 1998, prepared by General Consolidated Industries, Inc.
SECTION 50. Restriction on Leasing. Reference is hereby made to Section
291-f of the Real Property Law of the State of New York for purposes of
obtaining for Mortgagee the benefit of said Section in connection with this
Mortgage.
SECTION 51. Construction of Covenants. All covenants hereof shall be
construed as affording to Mortgagee rights additional to and not exclusive of
the
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rights conferred under the provisions of Sections 254 and 273 of the Real
Property Law of the State of New York, or any other applicable law.
SECTION 52. Lien Law. Mortgagor, in compliance with Section 13 of the
Lien Law of the State of New York, will receive the advances secured by the
Existing Mortgages, as amended and restated by this Mortgage, and will hold the
right to receive such advances as a trust fund to be applied first for the
purpose of paying the cost of improvement and will apply the same first to the
payment of the cost of improvement before using any part of the total of the
same for any other purpose.
SECTION 53. Premises Not Improved by More than Six Residential Units.
This Mortgage covers real property principally improved or to be improved by one
or more structures containing in the aggregate not more than six (6) residential
dwelling units, each having their own separate cooking facilities.
SECTION 54. Effect of This Mortgage. It is expressly understood and
agreed that this Mortgage is given and recorded for the purposes of amending and
restating the consolidated lien of the Existing Mortgages and modifying the
terms, provisions, covenants and conditions thereof. The terms, provisions,
covenants, and conditions of the Existing Mortgages (and all other documents
evidencing and/or securing the loan secured thereby) are modified and superseded
in their entirety by the terms, provisions, covenants and conditions of this
Mortgage. No part of the indebtedness evidenced by the Existing Notes and
secured by the Existing Mortgages shall be disturbed, discharged, canceled or
impaired by the execution of this Mortgage or the delivery of the Note in
exchange for the Existing Notes, it being the intention of the parties hereto
that no such exchange shall create any new or further principal indebtedness
other than the principal indebtedness secured by, or which under any contingency
may become secured by, the Existing Mortgages.
SECTION 55. Continuation of the Air Rights Leases and the Leases.
(a) Upon the foreclosure of the lien or liens created by the Existing
Mortgages, as amended and restated by this Mortgage, on the Premises as herein
provided, any Leases then existing shall not be destroyed or terminated as a
result of such foreclosure unless Mortgagee or any purchaser at a foreclosure
sale shall so elect by notice to the lessee in question.
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(b) If both the lessor's and the lessee's interest under any Air Rights
Lease which constitutes a part of the Premises shall at any time become vested
in any one Person, this Mortgage and the liens and security interests created by
the Existing Mortgages, as amended and restated by this Mortgage, shall not be
destroyed or terminated by the application of the doctrine of merger and, in
such event, Mortgagee shall continue to have and enjoy all of the rights and
privileges of Mortgagee hereunder as to each separate estate.
(c) In the event that Mortgagor acquires the fee or any other interest
in the land underlying the Air Rights Leases (or any of them) such interest
shall, immediately upon such acquisition, become subject to the consolidated
lien of the Existing Mortgages, as amended and restated by this Mortgage, as
fully and completely, and with the same effect, as though now owned by Mortgagor
and specifically described herein, without need for the delivery and/or
recording of a supplement to this Mortgage or any other instrument.
SECTION 56. Representations and Covenants Concerning the Air Rights
Leases. Mortgagor hereby represents, warrants, covenants and agrees that:
(a) To Mortgagor's actual knowledge (i) the Air Rights Leases are now
valid and subsisting leases and are in full force and effect in accordance with
the terms thereof and have not been modified except as set forth in Schedule I
annexed hereto; (ii) all of the Air Rights Leases Rentals payable under the Air
Rights Leases prior to the execution hereof have been paid, and (iii) Mortgagor
enjoys the quiet and peaceful possession of the leasehold estate created by the
Air Rights Leases and all of the terms, conditions and agreements contained in
the Air Rights Leases have been performed, and no default, or circumstance which
with the giving of notice, passage of time or both may become a default, exists
under any of the Air Rights Leases. This Mortgage is lawfully executed and
delivered in conformity with the Air Rights Leases, and the Existing Mortgages,
as amended and restated by this Mortgage, are and will be kept a valid
consolidated lien on the respective interests of Mortgagor therein.
(b) Mortgagor has not delivered or received any notices of default
under any of the Air Rights Leases. To the actual knowledge of Mortgagor, no
predecessor of Mortgagor has delivered or received any notices of default under
any of the Air Rights Leases which have not been cured or waived in accordance
with the provisions of the Air Rights Leases or which have not been settled by
the parties thereto. To the actual knowledge of Mortgagor, Mortgagor is not in
default beyond
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any applicable notice or cure period under any of the terms of any of the Air
Rights Leases, and there are no events or circumstances which, with the passage
of time or the giving of notice or both, would constitute a default under the
Air Rights Leases.
(c) To the actual knowledge of Mortgagor, the Air Rights Lessor is not
in default under any of the terms of the Air Rights Leases on its part to be
observed or performed, and there are no events which, with the passage of time
or the giving of notice or both, would constitute such a default under the Air
Rights Leases.
(d) Mortgagor has delivered to the Lender a true, accurate and complete
copy of the Air Rights Leases.
(e) Mortgagor will pay when due and payable all Air Rights Leases
Rentals mentioned in and payable under the Air Rights Leases.
(f) Mortgagor will perform and observe in all material respects all of
the terms, covenants and conditions required to be performed and observed by
Mortgagor as lessee under the Air Rights Leases and will do all things necessary
to preserve and to keep unimpaired its rights under the Air Rights Leases.
Mortgagor will enforce the obligations of the lessor under the Air Rights Leases
to the end that Mortgagor may enjoy all of the rights granted to it as lessee
under the Air Rights Leases.
(g) Mortgagor will (i) promptly notify the Mortgagee in writing of any
notice from the lessor under any of the Air Rights Leases of default by
Mortgagor in the performance or observance of any of the terms covenants or
conditions on the part of Mortgagor to be performed or observed under any of the
Air Rights Leases, (ii) promptly notify the Mortgagee of the receipt by
Mortgagor of any notice from the lessor under any of the Air Rights Leases of
termination of the Air Rights Leases pursuant to the provisions thereof and
(iii) promptly cause a copy of each such notice received by Mortgagor from the
lessor under any of the Air Rights Leases to be delivered to Mortgagee.
(h) Mortgagor will promptly notify Mortgagee of any request made by
either party to the Air Rights Leases for arbitration proceedings pursuant to
any of the Air Rights Leases and of the institution of any arbitration
proceedings, and will promptly deliver to Mortgagee a copy of the determination
of the arbitrators in each such arbitration proceeding.
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(i) Mortgagor will not, without the prior written consent of Mortgagee,
(1) fail or refuse to take timely and appropriate action to renew each of the
Air Rights Leases pursuant to the provisions thereof, (2) consent or refuse to
consent to any action taken or to be taken by the lessor or anyone else under
any of the Air Rights Leases the result of which would diminish or impair the
security of the Existing Mortgages, as amended and restated by this Mortgage,
(3) further encumber the Leasehold Premises, or (4) subordinate or consent to
the subordination of any of the Air Rights Leases to any mortgage or deed of
trust on the lessor's interest in the premises demised by the Air Rights Leases.
(j) If the lessor under any of the Air Rights Leases (or any receiver,
trustee, custodian or other party who succeeds to the rights of such lessor)
seeks to reject or disaffirm any of the Air Rights Leases pursuant to any
Bankruptcy Law and Mortgagee elects in its absolute discretion to have Mortgagor
exercise its right remain in possession under any legal or equitable right
Mortgagor may have to continue to occupy the premises leased pursuant to any of
the Air Rights Leases, then (i) Mortgagor shall remain in such possession and
shall perform all acts necessary for Mortgagor to retain its right to remain in
such possession for the unexpired term of such Air Rights Leases (including all
renewals thereto, whether such acts are required under the then existing terms
and provisions of such Air Rights Leases or otherwise, and (ii) Mortgagor shall
not elect to treat such Air Rights Leases as terminated under 11 U.S.C. Section
365(h) or any similar or successor law or right, and hereby assigns to Mortgagee
the sole and exclusive right to make or refrain from making any such election,
and Mortgagor agrees that any such contrary election, if made by Mortgagor,
shall be void and of no force or effect, and (iii) all of the terms and
provisions of this Mortgage and the liens created by the Existing Mortgages, as
heretofore consolidated and as amended and restated by this Mortgage, shall
remain in full force and effect and shall be extended automatically to such
possession, occupancy and interest of Mortgagor.
(k) Mortgagor, immediately upon obtaining actual knowledge of a breach
by the lessor under any of the Air Rights Leases (or by any receiver, trustee,
custodian or other party who succeeds to the rights of such lessor) or any
inability of such lessor (or any such receiver, trustee, custodian or other
party) to perform the terms and provisions of such Air Rights Leases (including
by reason of a rejection or disaffirmance of the Air Rights Leases pursuant to
any Bankruptcy Law), will notify Mortgagee of any such breach or inability.
Mortgagor hereby collaterally assigns as security to Mortgagee the proceeds of
any claim that Mortgagor may have against
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<PAGE>
such lessor (or such receiver, trustee, custodian or other party) for any such
breach or inability. Mortgagee shall have the sole right to elect either (i)
upon the failure of Mortgagor to do so to Mortgagee's reasonable satisfaction,
to proceed, upon at least three (3) days' prior written notice to Mortgagor,
against such lessor (or such receiver, trustee, custodian or other party) as if
it were the named lessee thereunder, in Mortgagor's name or in Mortgagee's name
as agent for Mortgagor, and Mortgagor agrees to cooperate reasonably with
Mortgagee in such action and shall execute any and all documents reasonably
required in furtherance of such action, or (ii) to have Mortgagor proceed in
Mortgagor's and Mortgagee's behalf in which event Mortgagee may participate in
any such proceedings, and Mortgagor from time to time will deliver to Mortgagee
all instruments reasonably requested by Mortgagee or as may be required to
permit such participation. Mortgagor shall, at its expense, diligently prosecute
any such proceedings, shall deliver to Mortgagee copies of all papers served in
connection therewith and shall consult and cooperate with Mortgagee and its
attorneys and agents, in carrying on the defense of any such proceedings;
provided, that no settlement of any such proceeding shall be made by Mortgagor
without Mortgagee's written consent, which consent shall not be unreasonably
withheld provided no Event of Default shall be continuing.
(l) In the event Mortgagor becomes the debtor in any voluntary or
involuntary bankruptcy or similar proceeding under any federal, state or local
bankruptcy insolvency or similar law, Mortgagor covenants that (i) it shall not
reject or disaffirm any of the Air Rights Leases without the prior written
consent of Mortgagee, and (ii) at the direction of Mortgagee it shall, in a
timely fashion, (A) take all actions (including curing all existing defaults and
providing assurance of future performance) as may be required to permit
Mortgagor to assume each of the Air Rights Leases and (B) assume the Air Rights
Leases.
(m) Mortgagor shall diligently observe and perform or cause to be
diligently observed and performed each and every material term to be observed or
performed by Mortgagor pursuant to the terms of any agreement or recorded
instrument affecting or pertaining to the Premises, including, without
limitation, the Air Rights Leases.
(n) Mortgagor shall not surrender the leasehold estate, or any part
thereof, created by any of the Air Rights Leases, or agree to any modification,
change, supplement, alteration or amendment of any of the Air Rights Leases, in
either event without the prior written consent of Mortgagee (which consent shall
not be unreasonably withheld or delayed only in the case of a non-material
modification,
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<PAGE>
change, supplement alteration or amendment of any of the Air Rights Leases, but
may be withheld by Mortgagee in its sole and absolute discretion in the case of
a surrender of the leasehold estate or any part thereof, created by any of the
Air Rights Leases). Any such surrender of the leasehold estate, or any part
thereof, created by any of the Air Rights Leases, or any termination or
cancellation of any of the Air Rights Leases, or any part thereof, or any
modification, change, supplement, alteration or amendment of any of the Air
Rights Leases in violation of the foregoing provisions of this Section 56(n)
shall be void ab initio and of no force and effect. If Mortgagor shall be given
notice of a default in the performance or observance of any term, covenant or
condition of any of the Air Rights Leases on the part of Mortgagor, as tenant
thereunder, to be performed or observed, then, without limiting the generality
of the other provisions of this Mortgage, and without waiving or releasing
Mortgagor from any of its obligations hereunder, Mortgagee shall have the right,
upon the giving of at least two (2) Domestic Business Days' prior written notice
to Mortgagor, but shall be under no obligation, to pay any sums and to perform
any act or take any action as may be appropriate to cause all of the terms,
covenants and conditions of such Air Rights Leases on the part of Mortgagor, as
tenant thereunder, to be performed or observed to be promptly performed or
observed on behalf of Mortgagor, to the end that the right of Mortgagor in, to
and under such Air Rights Leases shall be kept unimpaired and free from default.
If Mortgagee shall make any payment or perform any act or take any action in
accordance with the preceding sentence, Mortgagee will notify Mortgagor promptly
after the making of any such payment, the performance of any such act, or taking
of any such action. In any such event, subject to the rights of lessees,
sublessees and other occupants, Mortgagee and any person designated by Mortgagee
shall have, and are hereby granted the right upon the giving of at least five
(5) days' prior written notice to Mortgagor to enter upon the Premises at any
time and from time to time for the purposes of taking any such action. Mortgagor
shall use its reasonable good faith efforts to obtain from the landlord under
each of the Air Rights Leases such certificates of estoppel with respect to
compliance by Mortgagor with the terms of the Air Rights Leases as may be
reasonably requested by Mortgagee from time to time and to obtain such
certificates to the extent required by the Air Rights Leases; provided, however,
that if Mortgagor is unable to obtain such certificates Mortgagor shall certify
to the best of Mortgagor's knowledge and belief that Mortgagor and the landlord
under each of the Air Rights Leases are not in default under any of the Air
Rights Leases, or if any defaults exist, the nature thereof and the period of
time such defaults have existed. Mortgagor shall exercise each individual
option, if any, to extend or renew the term of each of the Air Rights Leases
which extension or renewal of the term of the Air Rights Leases occurs prior to
the Maturity Date, upon demand by Mortgagee made
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at any time within one (1) year prior to the last day upon which any such option
may be exercised, and Mortgagor hereby expressly authorizes and appoints
Mortgagee its attorney-in-fact to exercise any such option in the name of and on
the behalf of Mortgagor, which power of attorney shall be irrevocable and shall
be deemed to be coupled with an interest.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Mortgagor has executed and delivered this Mortgage
or has caused the same to be executed and delivered by its duly authorized
representative as of the date first above written.
MORTGAGOR:
TOWER REALTY OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
By: Tower Realty Trust, Inc., a Maryland
corporation, its general partner
By: /s/ Lester S. Garfinkel
-------------------------------------------
Name: Lester S. Garfinkel
Title: Executive Vice President Finance &
Administration and Chief Financial
Officer
MORTGAGEE:
FLEET NATIONAL BANK
By:
---------------------------------
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, Mortgagor has executed and delivered this Mortgage
or has caused the same to be executed and delivered by its duly authorized
representative as of the date first above written.
MORTGAGOR:
TOWER REALTY OPERATING PARTNERSHIP,
L.P., a Delaware limited partnership
By: Tower Realty Trust, Inc., a Maryland
corporation, its general partner
By:
------------------------
Name:
Title:
MORTGAGEE:
FLEET NATIONAL BANK
By: /s/ James B. McLaughlin
-----------------------------
Name: James B. McLaughlin
Title: Vice President
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1999, before me personally came Lester S.
Garfinkel, to me known, and who, being duly sworn, did depose and say that s/he
resides at 292 Madison Avenue, NY, NY, that s/he is the Executive Vice President
Finance & Administration and Chief Financial Officer of Tower Realty Trust,
Inc., a Maryland corporation, the sole general partner of Tower Realty Operating
Partnership, L.P., a Delaware limited partnership, the limited partnership
described in and which executed the foregoing instrument; and that s/he signed
her/his name thereto by order of the Board of Directors of Tower Realty Trust,
Inc., as the general partner of, and as the act and deed of Tower Realty
Operating Partnership, L.P. for the uses and purposes therein mentioned.
/s/ Kristen M. Simat
--------------------------------
Notary Public
STATE OF __________ )
) ss:
COUNTY OF ________ )
On the day of ________, 1999, before me personally came to
me known to be the individual who executed the foregoing instrument, and who,
being duly sworn by me, did depose and say that s/he is the of Fleet
National Bank, a national banking association; and that s/he had authority to
sign the same; and that s/he acknowledged to me that s/he executed the same as
the act and deed of said limited liability company for the uses and purposes
therein mentioned.
--------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the 1st day of March, 1999, before me personally came___________, to
me known, and who, being duly sworn, did depose and say that s/he resides
at__________, that s/he is the ____________ of Tower Realty Trust, Inc., a
Maryland corporation, the sole general partner of Tower Realty Operating
Partnership, L.P., a Delaware limited partnership, the limited partnership
described in and which executed the foregoing instrument; and that s/he signed
her/his name thereto by order of the Board of Directors of Tower Realty Trust,
Inc., as the general partner of, and as the act and deed of Tower Realty
Operating Partnership, L.P. for the uses and purposes therein mentioned.
--------------------------------
Notary Public
STATE OF Rhode Island )
) ss:
COUNTY OF Providence )
On the 24th day of February, 1999, before me personally came James B.
McLaughlin to me known to be the individual who executed the foregoing
instrument, and who, being duly sworn by me, did depose and say that s/he is the
Vice President of Fleet National Bank, a national banking association; and that
s/he had authority to sign the same; and that s/he acknowledged to me that s/he
executed the same as the act and deed of said limited liability company for the
uses and purposes therein mentioned.
/s/ Judith Darwell
--------------------------------
Notary Public
<PAGE>
SCHEDULE A
LOT 38:
- ------
ALL that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, County, City and State of New York, bounded and described
as follows:
BEGINNING at a point on the northerly side of West 52nd Street opposite the
center of a certain party wall standing partly on the premises and partly on the
premises adjoining on the easterly side thereof, which point is distant 74 feet
4 inches westerly from the northwesterly comer of Seventh Avenue and West 52nd
Street; and
RUNNING THENCE northerly parallel with the westerly side of Seventh Avenue and
for part of the distance through the center of said party wall, 75 feet 5
inches;
THENCE easterly and parallel with the said northerly side of West 52nd Street,
74 feet 3-3/4 inches to the westerly side of Seventh Avenue;
THENCE northerly along the said westerly side of Seventh Avenue, 125 feet 5
inches to the corner formed by the intersection of the said westerly side of
Seventh Avenue and the southerly side of West 53rd Street;
THENCE westerly along the said southerly side of West 53rd Street, 195 feet
2-3/8 inches to the intersection of the said southerly side of West 53rd Street
and the easterly side of Broadway;
THENCE southerly along the said easterly side of Broadway, 126 feet 1-1/2 inches
more or less, to a point in a line parallel to the northerly side of West 52nd
Street, 75 feet 5 inches northerly therefrom measured on a line at right angles
to the northerly side of West 52nd Street;
THENCE easterly parallel with the said northerly side of West 52nd Street, 69
feet 11 inches;
<PAGE>
SCHEDULE A - continued
THENCE southerly at right angles to the said northerly side of West 52nd Street,
75 feet 5 inches to the said northerly side of West 52nd Street; and
THENCE easterly along the said northerly side of West 52nd Street, 37 feet 7
inches to the point or place of BEGINNING.
AIR RIGHTS LOT 29 LEASE:
- -----------------------
The Air Rights Lot 29 Lease covers premises more particularly bounded and
described as follows:
ALL that certain lot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York bounded and described
as follows:
BEGINNING at a point formed by the intersection of the northerly side of West
52nd Street with the westerly side of Seventh Avenue; and
RUNNING THENCE westwardly along the northerly side of West 52nd Street, 74 feet
4 inches to a point opposite the center line of a 16 inch party wall;
THENCE northwardly parallel with Seventh Avenue and part of the distance through
the center of said party wall, 75 feet 5 inches;
THENCE eastwardly parallel with West 52nd Street, 74 feet 4 inches to the
westerly side of Seventh Avenue; and
THENCE southwardly along the westerly side of Seventh Avenue, 75 feet 5 inches
to the point or place of BEGINNING.
<PAGE>
SCHEDULE A - continued
AIR RIGHTS LOT 131 LEASE:
- ------------------------
The Air Rights Lot 131 Lease covers premises more particularly bounded and
described as follows:
ALL that certain lot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at the corner formed by the intersection of the northerly side of 52nd
Street with the easterly side of Broadway as now laid down;
RUNNING THENCE easterly along the northerly side of 52nd Street, 61 feet 10
inches to the center line of the westerly wall of building erected in the
premises adjoining on the east of the premises hereby described;
RUNNING THENCE northerly parallel with the westerly side of Seventh Avenue and
along said line of said wall and a line in prolongation thereof, 75 feet 5
inches;
RUNNING THENCE westerly parallel with the northerly side of 52nd Street, 69 feet
11 inches to the said easterly side of Broadway; and
RUNNING THENCE southerly along the easterly side of Broadway, 75 feet 11 inches
to the point or place of BEGINNING.
BE said several distances and dimensions more or less.
<PAGE>
SCHEDULE B
EXISTING MORTGAGES
1. Mortgage made by 810 Seventh Corp. -to- Bankers Trust Company, in the
amount of $20,000,000.00, dated February 21, 1969 and recorded on
February 25, 1969 in Reel 132 Page 488.
(a) Assignment of Mortgage from Bankers Trust Company
-to- The New York State Teachers' Retirement
System dated December 20, 1972 and recorded on
December 22, 1972 in Reel 263 Page 39. Assigns
mortgage 1.
2. Mortgage made by Abraham Sommer -to- K.A.T.H. Properties Corp., in the
amount of $244,500.00, dated June 22, 1971 and recorded on 6/24/71 in
Reel 208 Page 454.
(a) As corrected by Mortgage Correction Agreement
dated as of December 18, 1972 and recorded
December 22, 1972 in Reel
263 Page 15.
(b) Assignment of Mortgage from K.A.T.H. Properties
Corp., -to- The New York State Teachers'
Retirement System dated December 19, 1972 and
recorded on December 22, 1972 in Reel 263 Page
33. Assigns mortgage 2.
3. Mortgage made by Abraham Sommer -to- K.A.T.H. Properties Corp., in the
amount of $2,755,500.00, dated June 22, 1971 and recorded on June 24,
1971 in Reel 208 Page 462.
(a) As corrected by Mortgage Correction Agreement
dated as of December 18, 1972 and recorded
December 22, 1972 in Reel 263 Page 21.
(b) Assignment of Mortgage from K.A.T.H. Properties
Corp., -to- The New York State Teachers'
Retirement System dated December 19, 1972 and
recorded on December 22, 1972 in Reel 263 Page
27. Assigns mortgage 3.
<PAGE>
(c) Consolation and Extension Agreement between
810 Seventh Corp. -and- New York State Teachers'
Retirement System dated as of December 20, 1972
and recorded on January 4, 1973 in Reel 264 Page
513. Consolidates mortgage nos. 1, 2 and 3 to form
a single lien in the amount of $23,000,000.00 and
spreads said lien to cover the Air Rights Lease
recorded in Record Liber 294 Page 49, Record Liber
294 Page 70, Record Liber 185 Page 27 and Liber
4940 Page 609.
(d) Assignment of Mortgage from New York State
Teachers' Retirement System -to- Credit Suisse
First Boston Mortgage Capital LLC dated as of
October 23, 1997 and recorded on April 15, 1998,
in Reel 2563 Page 1085. Assigns mortgages 1 to
no. 3.
4. Gap Mortgage made by 810 Partners LLC -to- Credit Suisse
First Boston Mortgage Capital LLC, in the amount of
$49,465,508.29, dated as of October 23, 1997 and recorded
on April 15, 1998 in Reel 2563, Page 1093.
(a) Mortgage Consolidation, Modification and
Extension Agreement between Credit Suisse First
Boston Mortgage Capital LLC -and- 810 Partners
LLC dated as of 10/23/97 and recorded on April
15, 1998, in Reel 2563 Page 1101. Consolidates
mortgages nos. 1 to 4 into one lien of
$60,000,000.00.
5. Mortgage made by 810 7th Avenue, L.P. -to- Credit Suisse
First Boston Mortgage Capital LLC in the amount of
$40,000,000.00, dated December 31, 1997 and recorded on
July 9, 1998, in Reel 2615, Page 1780.
6. Mortgage Consolidation, Modification, Extension and
Security Agreement made by 810 7th Avenue, L.P. to Credit
Suisse First Boston Mortgage Capital LLC, in the amount of
$100,000,000.00, dated as of December 31, 1997, and
recorded on July 9, 1998, in Reel 2615, Page 1790.
Consolidates mortgages nos. 1 to 5 into one lien of
$100,000,000.00.
(a) Assignment of Mortgage from Credit Suisse
First Boston Mortgage Capital LLC to Norwest Bank
Minnesota, National Association, as trustee under
the Pooling and Servicing Agreement dated June 12,
1998 for the Credit Suisse First Boston Mortgage
Securities Corp., Commercial Mortgage Pass-Through
Certificates, Series 1998-FL1 ("Norwest"), dated
as of June 12, 1998 and intended to be recorded
prior hereto. Assigns mortgages 1 through 5, as
consolidated by mortgage 6.
(b) Assignment of Mortgage from Norwest to Fleet
National Bank, as agent, dated as of March 1, 1999
and intended to be recorded prior hereto. Assigns
mortgages 1 through 5, as consolidated by mortgage
6.
<PAGE>
Schedule 1
Air Rights Lease over Lot 29
That certain Lease dated March 28, 1967 by and between Moses Dyckman, as lessor
and Abraham Sommer, as lessee, a memorandum of which was recorded on May 29,
1967 in the City Register's Office, New York County (the "Register's Office") in
Record Liber 185, Page 27.
WITH RESPECT THERETO:
a. Agreement between Abraham Sommer and Moses Dyckman, dated
March 28, 1967 and recorded May 29,1967 in the Register's
Office in Record Liber 185, Page 144.
b. Assignment of Lease made by Abraham Sommer to Croydon
Office Building, Inc., dated February 21, 1969 and recorded
February 26, 1969 in the Register's Office in Reel 132,
Page 394.
c. Assignment of Lease made by Croydon Office Building, Inc to
Abraham Sommer, dated February 21, 1969 and recorded
February 26, 1969 in the Register's Office in Reel 132,
Page 583.
d. Assignment of Lease made by Abraham Sommer to Croydon
Office Building, Inc., dated September 9, 1969 and recorded
September 12, 1969 in the Register's Office in Reel 150,
Page 1951.
e. Assignment of Lease made by Croydon Office Building, Inc to
Abraham Sommer, dated September 10, 1969 and recorded
September 16, 1969 in the Register's Office in Reel 151,
Page 425.
f. Assignment of Lease made by Beverly Sommer and Harold
Kantor, as Trustees of the Trust under Article Fifth of the
Will of Abraham Sommer, and Amy Sommer to 810 Seventh
Avenue LLC, dated September 22, 1995 and recorded December
15, 1995 in the Register's Office in Reel 2271, Page 2237.
<PAGE>
g. Assignment of Air Rights Lease from 810 Seventh Avenue LLC
to 810 Partners, LLC, dated October 23, 1997 and recorded
on April 15, 1998 in the Register's Office in Reel 2563,
Page 1074.
h. Assignment of Air Rights Lease from 810 Partners, LLC to
Bhone Inc., dated December 31, 1997, and recorded July 9,
1998 in the Register's Office in Reel 2615, Page 1868.
i. Assignment of Air Rights Lease from 810 Partners, LLC and
Bhone Inc. to 810 7th Avenue, L.P., dated December 31,
1997, and recorded July 9, 1998 in the Register's Office in
Reel 2615, Page 1762.
j. Assignment of Air Rights Lease from 810 7th Avenue, L.P. to
Tower Realty Operating Partnership, L.P., dated ________,
1999 and to be recorded in the Register's Office prior
hereto.
<PAGE>
Air Rights Lease over Lot 29 Continued
That certain Sublease dated October 19, 1955 by and between Moses Dyckman, as
lessor and 800 Estates Corp., as lessee, which lease was recorded on November 2,
1955 in the City Register's Office, New York County (the "Register's Office") in
Record Liber 4940, Page 609.
WITH RESPECT THERETO:
A. Agreement between Moses Dyckman, Abraham Sommer and 800
Estates Corp., dated March 28, 1967 and recorded May
29,1967 in the Register's Office in Record Liber 185, Page
30.
B. Agreement between Moses Dyckman, Abraham Sommer, and 800
Estates Corp., dated March 28, 1967 and recorded May 13,
1981 in the Register's Office in Reel 566, Page 1.
C. Amendment of Lease dated March 28, 1967 by and between 800
Estates Corp. and Abraham Sommer, which was not recorded.
D. Assignment of Lease made by 800 Estates Corp. to Tydel
Holding Corp., dated May 5, 1981 and recorded May 22, 1981
in the Register's Office in Reel 567, Page 507.
E. Amendment to Lease made by and between Beverly Sommer and
Robert S. Puder, as Trustees under Article Fifth of the
Last Will and Testament of Abraham Sommer, and Beverly
Sommer and Robert S. Puder, as Trustees under Article Ninth
of the Last Will and Testament of Abraham Sommer, and Tydel
Holding Corp., dated April 17, 1986 and recorded May 28,
1986 in the Register's Office in Reel 1069, Page 817.
<PAGE>
Air Rights Lease over Lot 131
That certain Lease dated April 10, 1968 by and between Chatham Associates, Inc.,
as landlord and Abraham Sommer, as tenant, which lease was recorded on April 11,
1968 in the City Register's Office, New York County (the "Register's Office") in
Record Liber 294, Page 49.
WITH RESPECT THERETO:
a. Amendment of Lease made between Chatham Associates, Inc.
and Abraham Sommer, dated as of February 13, 1969 and
recorded February 25, 1969 in the Register's Office in Reel
132, Page 171.
b. Assignment of Lease made by Abraham Sommer to Croydon
Office Building, Inc., dated February 21, 1969 and recorded
February 26, 1969 in the Register's Office in Reel 132,
Page 390.
c. Assignment of Lease made by Croydon Office Building, Inc to
Abraham Sommer, dated February 21, 1969 and recorded
February 26, 1969 in the Register's Office in Reel 132,
Page 587.
d. Subordination and Non-disturbance Agreement made between
Rosenthal and Rosenthal, Inc., Chatham Associates, Inc. and
Abraham Sommer, dated February 26, 1969 and recorded
February 28, 1969 in Reel 132, Page 1276.
e. Assignment of Lease made by Abraham Sommer to Croydon
Office Building, Inc., dated September 9, 1969 and recorded
September 12, 1969 in the Register's Office in Reel 150,
Page 1947.
f. Assignment of Lease made by Croydon Office Building, Inc to
Abraham Sommer, dated September 10, 1969 and recorded
September 16, 1969 in the Register's Office in Reel 151,
Page 421.
g. Assignment of Lease made by Beverly Sommer and Harold
Kantor, as Trustees of the Trust under Article Fifth of the
Will of Abraham Sommer, and Amy Sommer to 810 Seventh
Avenue LLC, dated September 22, 1995 and recorded December
15, 1995 in the Register's Office in Reel 2271, Page 2237.
<PAGE>
Air Rights Lease over Lot 131 Continued
h. Assignment of Air Rights Lease from 810 Seventh Avenue LLC
to 810 Partners, LLC, dated October 23, 1997 and recorded
April 15, 1998 in the Register's Office in Reel 2563, Page
1074.
i. Assignment of Air Rights Lease from 810 Partners, LLC to
Bhone, Inc., dated December 31, 1997 and recorded July 9,
1998 in the Register's Office in Reel 2615, Page 1876.
j. Assignment of Air Rights Lease from 810 Partners, LLC and
Bhone Inc. to 810 7th Avenue, L.P., dated December 31, 1997
and recorded July 9, 1998 in the Register's Office in Reel
2615, Page 1771.
k. Assignment of Air Rights Lease from 810 7th Avenue, L.P. to
Tower Realty Operating Partnership, L.P., dated ________,
1999 and to be recorded in the Register's Office prior
hereto.
l. Together with lessor's interest in Agreement of Sublease of
Air Rights Lot 131, made by and between Abraham Sommer, as
sublandord, and Chatham Associates, Inc., as subtenant,
dated April 10, 1968 as referenced in the Memorandum of
Lease recorded April 11, 1968 in Liber 294, Page 70.
Ex. 10.4
CONSOLIDATED, AMENDED AND RESTATED MORTGAGE NOTE
$60,000,000.00 New York, New York
March 1, 1999
WHEREAS, TOWER REALTY OPERATING PARTNERSHIP, L.P. (the "Borrower") has
acquired title to the Premises (as defined in the Mortgage defined and described
in the Loan Agreement (defined below)) subject to the indebtedness evidenced by
the notes described in Exhibit A attached hereto and made a part hereof by this
reference, (each, an "Existing Mortgage Note" and collectively, the "Existing
Mortgage Notes"; and the indebtedness evidenced thereby, in the aggregate, the
"Existing Mortgage Loan");
WHEREAS, the Banks (as hereinafter defined) have acquired the Existing
Mortgage Loan, the interests of the Banks therein being more particularly
described in the Mortgage Loan Agreement (the "Loan Agreement"), of even date
herewith, among the Borrower, Fleet National Bank, as administrative agent (the
"Administrative Agent"), Merrill Lynch & Co., as syndication agent and arranger
(the "Syndication Agent and Arranger"), NationsBank, N.A., as documentation
agent (the "Documentation Agent") and the banks listed on the signature pages
thereof (the "Banks");
WHEREAS, the Borrower, the Banks, the Administrative Agent, the Syndication
Agent and Arranger and the Documentation Agent desire to consolidate, amend and
restate the terms by which the Existing Mortgage Loan is governed as set forth
in this Consolidated, Amended and Restated Mortgage Note (this "Restated
Mortgage Note"; and the indebtedness evidenced by this Restated Mortgage Note,
the "Restated Mortgage Loan");
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
A. the Borrower, the Banks, the Administrative Agent, the
Syndication Agent and Arranger and
<PAGE>
the Documentation Agent acknowledge and agree that the Existing Mortgage
Notes, as amended and restated hereby, constitute a single indebtedness in
the current principal amount of $60,000,000.00.
B. From and after the date hereof, the terms, covenants and provisions
of the Existing Mortgage Notes are hereby modified, consolidated, amended
and restated in their entirety so that henceforth the terms, covenants and
provisions of the Existing Mortgage Notes shall be read as herein set
forth, and the Existing Mortgage Notes, as so modified, consolidated,
amended and restated are hereby ratified and confirmed in all respects by
the Borrower.
C. Neither this Restated Mortgage Note nor anything contained herein
shall be construed as a substitution or novation of the Borrower's
indebtedness to the Banks under the Existing Mortgage Notes, which
indebtedness shall remain outstanding under the Existing Mortgage Notes as
the same are confirmed, modified, consolidated, amended and restated in
their entirety by this Restated Mortgage Note.
D. When used herein, all capitalized terms not otherwise defined
herein shall have the respective meanings ascribed to them in the Loan
Agreement.
For value received, the Borrower assumes the obligation to pay the
indebtedness under the Existing Mortgage Loan evidenced by the Existing Mortgage
Notes, agrees to the amendment and restatement thereof hereby, and promises to
pay to the order of each of the Banks, pro rata in accordance with its
respective interests as set forth in the Loan Agreement, for the account of its
Applicable Lending Office, the unpaid principal amount of the Restated Mortgage
Loan made by such Bank to the Borrower pursuant to the Loan Agreement on the
Maturity Date. The Borrower promises to pay interest on the unpaid principal
amount of the Restated Mortgage Loan on the dates and at the rate or rates
provided for in the Loan Agreement. All such payments of principal and interest
shall be made in lawful money of the United States in Federal or other
immediately available funds at the office of Fleet National Bank.
-2-
<PAGE>
The Restated Mortgage Loan made by the Banks, the type and interest periods
thereof from time to time and all repayments of the principal thereof shall be
recorded by the Administrative Agent and, if the Administrative Agent so elects
in connection with any transfer or enforcement hereof, appropriate notations to
evidence the foregoing information with respect to such Restated Mortgage Loan
may be endorsed by the Administrative Agent on the schedule attached hereto, or
on a continuation of such schedule attached to and made a part hereof; provided
that the failure of the Administrative Agent to make any such recordation or
endorsement shall not affect the obligations of the Borrower hereunder or under
the Loan Agreement.
This note is the Restated Mortgage Note referred to in the Loan Agreement.
Reference is hereby made to the Loan Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof.
All obligations, covenants and agreements contained or evidenced in
this Restated Mortgage Note, shall be fully recourse to Borrower and each and
every asset of Borrower. Notwithstanding the foregoing, no recourse under or
upon any obligation, covenant, agreement contained in this Restated Mortgage
Note shall be had against any Non-Recourse Party and no such Non-Recourse Party
shall be personally liable for payment of the Restated Mortgage Loan or other
amounts due in respect thereof (all such liability being expressly waived and
released by each Bank and the Administrative Agent).
TOWER REALTY OPERATING PARTNER-
SHIP, L.P.
By: TOWER REALTY TRUST, INC.,
its sole general partner
By/s/ Lester S. Garfinkel
---------------------------
Name: Lester S. Garfinkel
Title: Executive Vice President
Finance & Administration
and Chief Financial Officer
-3-
<PAGE>
Exhibit A
(Existing Mortgage Notes)
The Consolidated, Amended and Restated Mortgage Note in the original
principal amount of $100,000,000, dated as of December 31, 1997, by 810
7th Avenue, L.P., as maker, in favor of Credit Suisse First Boston
Mortgage Capital LLC as payee, as endorsed to Norwest Bank Minnesota,
National Association, as trustee under the Pooling and Servicing
Agreement dated June 12, 1998 for the Credit Suisse First Boston
Mortgage Securities Corp., Commercial Mortgage Pass-Through
Certificates, Series 1998-FL1, together with the notes that are
consolidated, amended and restated thereby (collectively, the
"Existing Notes")
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements of Tower Realty Trust, Inc. for the period ended March
31, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-Mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<CASH> 6,793
<SECURITIES> 0
<RECEIVABLES> 11,448
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 698,868
<DEPRECIATION> 22,209
<TOTAL-ASSETS> 724,414
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
40,000
<COMMON> 169
<OTHER-SE> 341,979
<TOTAL-LIABILITY-AND-EQUITY> 724,414
<SALES> 0
<TOTAL-REVENUES> 28,505
<CGS> 0
<TOTAL-COSTS> 23,220
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,052
<INCOME-PRETAX> 4,776
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,776
<DISCONTINUED> 0
<EXTRAORDINARY> (530)
<CHANGES> 0
<NET-INCOME> 4,246
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
