UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
Commission File No. 0001042810
EQUITY ONE, INC.
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(Exact Name of Small Business Issuer as Specified in its Charter)
1600 N.E. MIAMI GARDENS DRIVE, SUITE 200
N. MIAMI BEACH, FLORIDA 33179
----------------------------------------
(Address of Principal Executive Offices)
(305) 947-1664
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
MARYLAND 52-1794271
- ------------------------------- -----------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Act of 1934 during the past 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of the close of business on November 13, 1998, 10,238,528 shares of the
Company's common stock, par value $0.01 per share, were issued and outstanding.
<PAGE>
EQUITY ONE, INC.
INDEX TO FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets-
As of September 30, 1998 (unaudited) and December 31, 1997
Condensed Consolidated Statements of Operations-
For the three months and nine months ended September 30, 1998 and 1997
(unaudited)
Condensed Consolidated Statements of Stockholders' Equity
For the three months and nine months ended September 30, 1998 and 1997
(unaudited)
Condensed Consolidated Statements of Cash Flows-
For the nine months ended September 30, 1998 and 1997 (unaudited)
Notes to the Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
2
<PAGE>
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997
September 30, December 31,
1998 1997
ASSETS (Unaudited)
<S> <C> <C>
Rental Properties:
Land $ 41,307 $ 40,764
Building and improvements 103,670 83,889
Land held for development 2,372 1,394
Construction in progress 2,375 394
-------- --------
149,724 126,441
Accumulated depreciation (9,272) (7,191)
-------- --------
Rental properties, net 140,452 119,250
Cash and cash equivalents 4,665 2,598
Restricted cash 200
Accounts and other receivables, net 1,141 892
Securities available for sale 1,655 45
Deposits 1,675 1,339
Prepaid and other assets 1,213 1,252
Deferred expenses, net 1,034 1,527
-------- --------
Total assets $ 152,035 $ 126,903
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 62,611 $ 71,004
Accounts payable and accrued expenses 5,151 1,281
Put option liability 2,127
Deposit on rental property held for sale 200
Tenants' security deposits 934 764
Deferred rental income 458 274
-------- --------
Total liabilities 71,481 73,323
-------- --------
Stockholders' equity:
Common stock 102 69
Additional paid-in capital 80,535 55,036
Notes receivable from stock sales (1,525)
Net unrealized holding loss on securities available for sale (83)
Retained earnings
-------- --------
Total stockholders' equity 80,554 53,580
-------- --------
Total liabilities and stockholders' equity $ 152,035 $ 126,903
======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Rental income $ 5,688 $ 4,927 $ 16,855 $ 14,288
Investment revenue 146 260 310 572
------- ------- -------- --------
Total revenues 5,834 5,187 17,165 14,860
------- ------- -------- --------
COSTS AND EXPENSES:
Operating expenses 1,410 1,237 4,133 3,631
Depreciation and amortization 763 603 2,118 1,781
Interest 1,123 1,411 4,020 4,350
Put option expense 1,320
General and administrative expenses 447 339 1,108 929
------- ------- -------- --------
Total costs and expenses 3,743 3,590 12,699 10,691
------- ------- -------- --------
NET INCOME $ 2,091 $ 1,597 $ 4,466 $ 4,169
======= ======= ======== ========
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $ 0.20 $ 0.23 $ 0.52 $ 0.66
======= ======= ======== ========
NUMBER OF SHARES USED IN COMPUTING
BASIC EARNINGS PER SHARE 10,239 6,908 8,555 6,289
======= ======= ======== ========
DILUTED EARNINGS PER SHARE $ 0.20 $ 0.22 $ 0.52 $ 0.61
======= ======= ======== ========
NUMBER OF SHARES USED IN COMPUTING
DILUTED EARNINGS PER SHARE 10,299 7,247 8,616 6,797
======= ======= ======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------
Notes Net Unrealized Total
Additional Receivable Holding Loss Stock-
Common Paid-in From on Securities Retained holders'
Stock Capital Stock Sales Available for Sale Earnings Equity
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended September 30, 1998
BALANCE,
JULY 1, 1998 $ 102 $ 81,003 $ 81,105
Net income $ 2,091 2,091
Net unrealized holding loss
on securites available for sale $ (83) (83)
Accrued dividends (468) (2,091) (2,559)
----- ------- ------- ----- ------- -------
BALANCE,
SEPTEMBER 30, 1998 (Unaudited) $ 102 $ 80,535 $ $ (83) $ $ 80,554
----- ------- ------- ----- ------- -------
Three Months Ended September 30, 1997
BALANCE,
JULY 1, 1997 $ 69 $ 54,950 $ (1,525) $ 53,494
Net income $ 1,597 1,597
Dividends paid (216) (1,597) (1,813)
----- ------- ------- ----- ------- -------
BALANCE,
SEPTEMBER 30, 1997 (Unaudited) $ 69 $ 54,734 $ (1,525) $ $ $ 53,278
===== ======= ======= ===== ======= =======
Nine Months Ended September 30, 1998
BALANCE,
JANUARY 1, 1998 $ 69 $ 55,036 $ (1,525) $ 53,580
Net income $ 4,466 4,466
Net unrealized holding loss
on securites available for sale $ (83) (83)
Issuance of common stock 33 34,088 34,121
Stock issuance costs (1,077) (1,077)
Put option liability (807) (807)
Property distributed (4,758) 1,525 (3,233)
Accrued dividends (468) $ (2,091) (2,559)
Dividends paid (1,479) (2,375) (3,854)
----- ------- ------- ----- ------- -------
BALANCE,
SEPTEMBER 30, 1998 (Unaudited) $ 102 $ 80,535 $ $ (83) $ $ 80,554
===== ======= ======= ==== ======= =======
Nine Months Ended September 30, 1997
BALANCE,
JANUARY 1, 1997 $ 58 $ 44,562 $ (1,525) $ 43,095
Net income $ 4,169 4,169
Issuance of common stock 11 10,596 10,607
Dividends paid (424) (4,169) (4,593)
----- ------- ------- ----- ------- -------
BALANCE,
SEPTEMBER 30, 1997 (Unaudited) $ 69 $ 54,734 $ (1,525) $ $ $53,278
===== ======= ======= ==== ======= =======
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
EQUITY ONE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
Nine Months Ended
September 30,
1998 1997
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 4,466 $ 4,169
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 2,287 1,965
Provision for losses on accounts receivable 42 32
Gain on sales of securities (56)
Put option liability 1,320
Changes in assets and liabilities :
Restricted cash (200)
Accounts and other receivables (243) (417)
Deposits (736) (1,248)
Prepaid and other assets (47) (161)
Accounts payable and accrued expenses 1,674 1,559
Deposit on rental property held for sale 200
Tenants' security deposits 170 84
Deferred rental income 184 17
-------- --------
Net cash provided by operating activities 9,117 5,944
-------- --------
INVESTING ACTIVITIES:
Acquisition of rental property (22,252) (16,934)
Improvements to rental property (2,283) (679)
Construction costs incurred (1,981)
Purchases of securities (1,714) (5,246)
Sales and prepayments of securities 21 6,582
Change in deposits for acquisition of rental property 400
-------- --------
Net cash used in investing activities (27,809) (16,277)
-------- --------
FINANCING ACTIVITIES:
Repayments of mortgage notes payable (16,093) (18,479)
Borrowings under mortgage notes payable 7,700 23,148
Cash dividends paid to stockholders (3,854) (4,593)
Stock subscription and issuance 34,121 10,607
Stock issuance costs (853)
Deferred financing expenses, net (262) (194)
-------- --------
Net cash provided by financing activities 20,759 10,489
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,067 156
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,598 1,951
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,665 $ 2,107
======== ========
SUPPLEMENTAL DISCLOSURE:
Cash paid for interest, net of amount capitalized $ 3,259 $ 4,082
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH
FINANCING ACTIVITIES:
Accrued dividends $ 2,559
========
Change in unrealized depreciation in securities available for sale $ (83)
========
Put option liability charged to stockholders' equity $ 807
========
Property and notes receivable from stock sales distributed $ 4,758
========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
6
<PAGE>
EQUITY ONE, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED) AND DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Equity One,
Inc. and Subsidiaries (collectively, the "Company") as of September 30, 1998
and 1997 and for the nine months and three months then ended, have been
prepared by the Company which is responsible for their integrity and
objectivity and should be read in conjunction with the Company's December
31, 1997 annual consolidated financial statements and the related notes.
To the best of management's knowledge and belief, the statements and related
information were prepared in conformity with generally accepted accounting
principles and are based on recorded transactions and management's best
estimates and judgments. The interim results of operations are not
necessarily indicative of the results which may be expected for the full
year.
The condensed consolidated financial statements as of September 30, 1998 and
1997 and for the nine months and three months then ended, include, in the
opinion of management, all adjustments (which are normal recurring
adjustments) necessary for a fair presentation of the financial condition
and results of operations of the Company for the periods indicated.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of the
condensed consolidated financial statements are identical to those applied
in the preparation of the most recent annual consolidated financial
statements.
PUT OPTION EXPENSE - The Company has granted a former stockholder an option
to put 293,430 shares of common stock issuable upon exercise of the
Company's Series C Warrants to the Company at a price of $15.50 per share or
to put the Series C Warrants to the Company at a price of $7.25 per Warrant,
which equals the put option price of $15.50 per Warrant less the Series C
Warrant exercise price of $8.25 per Warrant. The put option is exercisable
in whole or in part by the former stockholder from December 1, 1999 until
December 15, 1999. The put option would involve a maximum net expenditure of
$2.1 million if the shares of common stock are not sold by the former
stockholder prior to the exercise of such option. For the nine months ended
September 30, 1998, the Company has recognized $1.3 million as a current
period expense and approximately $807,000 as a reduction of paid-in capital
related to the Company's initial public offering.
7
<PAGE>
3. EARNINGS PER SHARE
Basic earnings per share is computed by dividing earnings attributable to
common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted
in the issuance of common stock that then shared in the earnings of the
Company.
4. SUBSEQUENT EVENTS
On October 30, 1998, the Company sold Parker Towne Center, located in Plano,
Texas for approximately $6.85 million to an unrelated third party. The
Company intends to treat this sale as a like-kind exchange for tax purposes.
To date, the Company has not identified replacement property.
Additionally, on October 30, 1998, the Company entered into a 20 year loan
agreement with a life insurance company for $5.0 million at an interest rate
of 6.85% and secured by Atlantic Village shopping center located in
Jacksonville, Florida.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The following should be read in conjunction with the Company's Condensed
Consolidated Financial Statements, including the notes thereto, which are
included elsewhere herein.
(1) RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1997
Total revenues increased by approximately $647,000, or 12.5%, to $5.8 million
for the three months ended September 30, 1998 from $5.2 million for the
comparable period of 1997. The increase resulted primarily from the Company's
acquisition of (i) a new supermarket anchored shopping center located in
Lantana, Florida in January, 1998 ("Lantana Village"), (ii) a new free-standing
restaurant property located in Miami Beach, Florida in April, 1998 ("El
Novillo"), (iii) a new drug store anchored shopping center located in
Jacksonville, Florida in May, 1998 ("Beauclerc Village"), (iv) a new supermarket
anchored shopping center located in Fort Myers, Florida in June, 1998
("Summerlin Square"), (v) a new supermarket anchored shopping center located in
Jacksonville, Florida in January, 1997 ("Monument Pointe"), and (vi) a
redevelopment property located in North Miami Beach, Florida in August, 1997
("Sky Lake").
Operating expenses increased by approximately $173,000, or 14.0%, to $1.4
million for the three months ended September 30, 1998, from $1.2 million for the
comparable period of 1997. The increase is primarily the result of an increase
in real estate taxes of $123,000, an increase in insurance costs of $20,000, and
an increase in other property operating expenses of $30,000 related to the
Company's acquisitions of Lantana Village, El Novillo, Beauclerc Village,
Summerlin Square, Monument Pointe and Sky Lake.
Depreciation and amortization expense increased by approximately $160,000, or
26.7%, to $763,000 for the three months ended September 30, 1998, from $603,000
for the comparable period of 1997. The increase resulted primarily from the
acquisitions of Lantana Village, El Novillo, Beauclerc Village, Summerlin
Square, Monument Pointe and Sky Lake.
Interest expense decreased by approximately $288,000, or 20.5%, to $1.1 million
for the three months ended September 30, 1998, from $1.4 million for the
comparable period of 1997. The decrease resulted primarily from the Company's
use of proceeds from its initial public offering of common stock consummated in
May 1998 (the "IPO") to reduce mortgage indebtedness.
General and administrative expenses increased by $108,000, or 31.8%, to $447,000
for the three months ended September 30, 1998 from $339,000 for the comparable
period of 1997. The increase resulted primarily from an increase in professional
fees of $52,000 and an increase in bad debt expenses of $56,000.
As a result of the foregoing, net income increased by approximately $494,000, or
31.0%, to $2.1 million for the three months ended September 30, 1998, compared
to $1.6 million for the comparable period of 1997.
9
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1997
Total revenues increased by approximately $2.3 million, or 15.5%, to $17.2
million for the nine months ended September 30, 1998 from $14.9 million for the
comparable period of 1997. The increase resulted primarily from the acquisitions
of Lantana Village, El Novillo, Beauclerc Village, Summerlin Square, Monument
Pointe and Sky Lake.
Operating expenses increased by approximately $502,000, or 13.8%, to $4.1
million for the nine months ended September 30, 1998, from $3.6 million for the
comparable period of 1997. The increase is primarily the result of an increase
in real estate tax escrows of $274,000, an increase in insurance costs of
$40,000, an increase in payroll costs of $61,000, an increase in repairs of
$30,000 and an increase in other property operating expenses of $97,000 related
to the Company's acquisition of Lantana Village, El Novillo, Beauclerc
Village, Summerlin Square, Monument Pointe and Sky Lake.
Depreciation and amortization expense increased by approximately $337,000, or
18.9%, to $2.1 million for the nine months ended September 30, 1998, from $1.8
million for the comparable period of 1997. The increase resulted primarily from
the acquisition of Lantana Village, El Novillo, Beauclerc Village, Summerlin
Square, Monument Pointe and Sky Lake.
Interest expense decreased by approximately $330,000, or 7.6%, to $4.0 million
for the nine months ended September 30, 1998 from $4.3 million for the
comparable period of 1997, primarily as a result of the Company's use of
proceeds from its issuance of capital stock during 1998 and 1997 to reduce
mortgage indebtedness.
General and administrative expenses increased by approximately $179,000, or
19.3% to $1.1 million for the nine months ended September 30, 1998 from $929,000
for the comparable period of 1997. The increase resulted primarily from an
increase in professional and consulting fees of $135,000 and an increase in bad
debt expenses of $42,000.
The put option expense of approximately $1.3 million, in the nine months ended
September 30, 1998, resulted from the Company granting Dan Overseas (the Selling
Stockholder in the Company's initial public offering of Common Stock) an option
to put 293,430 Series C warrants to the Company at a price of $7.25 per warrant
which resulted in a one time expense of approximately $1.3 million. Excluding
this put option expense, net income would have been approximately $5.7 million
for the nine months ended September 30, 1998, and basic and diluted earnings per
share would have been $0.67 and $0.67 for the nine months ended September 30,
1998, respectively.
As a result of the foregoing, net income increased by approximately $297,000, or
7.1%, to $4.5 million for the nine months ended September 30, 1998, compared to
$4.2 million for the comparable period of 1997.
10
<PAGE>
FUNDS FROM OPERATIONS
In March, 1995, the National Association of Real Estate Investment Trusts
("NAREIT") adopted the NAREIT White Paper on Funds from Operations (the "White
Paper") which provided additional guidance on the calculation of funds from
operations. The White Paper defines funds from operations as net income (loss)
(computed in accordance with generally accepted accounting principles ("GAAP")),
excluding gains (or losses) from debt restructuring and sales of property, plus
real estate related depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures ("FFO"). Management believes FFO
is a helpful measure of the performance of an equity real estate investment
trust ("REIT") because, along with cash flows from operating activities,
investing activities and financing activities, it provides an understanding of
the ability of the Company to incur and service debt and make capital
expenditures. The Company computes FFO in accordance with standards established
by the White Paper, which may differ from the methodology for calculating FFO
utilized by other REITs, and accordingly, may not be comparable to such other
REITs. Further, FFO does not represent amounts available for management's
discretionary use because of needed capital replacement or expansion, debt
service obligations, or other commitments and uncertainties. The Company
believes that in order to facilitate a clear understanding of the consolidated
historical operating results of the Company, FFO should be examined in
conjunction with the net income as presented in the condensed consolidated
financial statements and information included elsewhere herein. FFO should not
be considered as an alternative to net income (determined in accordance with
GAAP) as an indication of the Company's financial performance or to cash flows
from operating activities (determined in accordance with GAAP) as a measure of
the Company's liquidity, nor is it indicative of funds available to fund the
Company's cash needs, including its ability to make distributions.
The following table illustrates the calculation of FFO for the three months and
nine months ended September 30, 1998 and 1997:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income $ 2,091 $ 1,597 $ 4,466 $ 4,169
Depreciation of real estate assets 745 590 2,075 1,743
Amortization of leasing costs 12 10 37 29
Loan pre-payment penalties 119 21
Put option expense 1,320
Write-off of unamortized loan costs related
to repayment of mortgage indebtedness 88 102
Lease termination fees (4) (15) (450) (34)
------- ------- ------- -------
FUNDS FROM OPERATIONS $ 2,844 $ 2,182 $ 7,655 $ 6,030
======= ======= ======= =======
FUNDS FROM OPERATIONS PER SHARE (Diluted) $ 0.28 $ 0.30 $ 0.89 $ 0.89
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted) 10,299 7,247 8,616 6,797
======= ======= ======= =======
</TABLE>
11
<PAGE>
FFO increased by approximately $662,000 or 30.3%, to $2.8 million for the three
months ended September 30, 1998, from $2.2 million for the comparable period of
1997. FFO increased by approximately $1.6 million, or 27.0% to $7.7 million for
the nine months ended September 30, 1998 from $6.0 million for the comparable
period of 1997. The increase is primarily the result of the acquisitions of
additional properties and the reduction of the Company's mortgage indebtedness.
PRO FORMA RESULTS OF OPERATIONS
The Company completed an initial public offering of an aggregate of 4,700,000
shares of common stock, par value $0.01 per share, on May 19, 1998. Of the
4,700,000 shares of common stock sold in the offering, 3,330,398 shares,
generating net proceeds of approximately $33.0 million, were sold by the Company
and 1,369,602 shares were sold by a stockholder of the Company.
The following pro forma results of operations for the nine months ended
September 30, 1998 and 1997, and the actual results of operations for the three
months ended September 30, 1998, and the pro forma results of operations for the
three months September 30, 1997, respectively, gives effect to the initial
public offering as if it had occurred at the beginning of each period. Pro forma
adjustments assume application of the net proceeds of the offering to purchase
properties, retire mortgage indebtedness and other related adjustments and
exclude the non-recurring put option expense. The following pro forma financial
information is not necessarily indicative of the results of operations which
would have been reported if the offering had occurred on the dates or for the
periods indicated.
The nine months ended September 30, 1998 and 1997 and the three months ended
September 30, 1997 pro forma results of operations would have been as follows:
<TABLE>
<CAPTION>
Three
Months Ended Nine Months Ended
September 30, September 30,
1997 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES:
Rental income $ 5,383 $ 17,613 $ 15,656
Investment revenue 309 376 645
------- -------- --------
Total revenues 5,692 17,989 16,301
------- -------- --------
COSTS AND EXPENSES:
Operating expenses 1,335 4,263 3,925
Depreciation and amortization 674 2,237 1,994
Interest 1,220 3,445 3,775
General and administrative expenses 339 1,108 929
------- -------- --------
Total costs and expenses 3,568 11,053 10,623
------- -------- --------
NET INCOME $ 2,124 $ 6,936 $ 5,678
======= ======== ========
EARNINGS PER SHARE:
BASIC EARNINGS PER SHARE $ 0.21 $ 0.68 $ 0.59
======= ======== ========
NUMBER OF SHARES USED IN COMPUTING
BASIC EARNINGS PER SHARE 10,239 10,239 9,619
======= ======== ========
DILUTED EARNINGS PER SHARE $ 0.20 $ 0.67 $ 0.56
======= ======== ========
NUMBER OF SHARES USED IN COMPUTING
DILUTED EARNINGS PER SHARE 10,577 10,299 10,128
======= ======== ========
</TABLE>
12
<PAGE>
The following table illustrates the calculation of pro forma FFO for the nine
months ended September 30, 1998 and 1997 and the three months ended
September 30, 1997:
<TABLE>
<CAPTION>
Three
Months Ended Nine Months Ended
September 30, September 30,
1997 1998 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Net income $ 2,124 $ 6,936 $ 5,678
Depreciation of real estate assets 661 2,194 1,956
Amortization of leasing costs 10 37 29
Loan pre-payment penalties 21
Write-off of unamortized loan costs related
to repayment of mortgage indebtedness 102
Lease termination fees (15) (450) (34)
------- ------- -------
FUNDS FROM OPERATIONS $ 2,780 $ 8,717 $ 7,752
======= ======= =======
FUNDS FROM OPERATIONS PER SHARE (Diluted) $ 0.26 $ 0.84 $ 0.77
======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted) 10,577 10,299 10,128
======= ======= =======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Historically, the principal sources of funding for the Company's operations,
including the renovation, expansion, development and acquisition of shopping
centers, have been operating cash flows, the issuance of securities and mortgage
loans. The Company's principal demands for liquidity are maintenance, repair and
tenant improvements of existing properties, acquisitions and development
activities, debt service and repayment obligations and distributions to its
stockholders.
As of September 30, 1998, the Company had total mortgage indebtedness of
approximately $62.6 million, all of which was fixed rate mortgage indebtedness
bearing interest at a weighted average rate of 7.95% and collateralized by 13 of
the Company's existing properties. Future scheduled annual maturities of
mortgage notes payable for the periods ending September 30 are as follows: 1999
- - $1.2 million, 2000 - $0, 2001 - $2.6 million, 2002 - $2.1 million and 2003 -
$5.9 million. The Company also has provided a $1.5 million letter of credit to
secure certain obligations in connection with the acquisition of one of the
Company's properties. This letter of credit is collateralized by a mixed-use
property located in West Palm Beach, Florida.
The Company has a $2.5 million line of credit (the "Line of Credit") with a
financial institution which is currently due on demand and is collateralized by
the Company's principal office building located in Miami Beach, Florida. The
line of credit bears interest at 0.50% over the Citibank, N.A. prime rate. The
purpose of the line of credit is to provide working capital to the Company. As
of September 30, 1998, no amounts were outstanding under the Line of Credit.
The Company has received a commitment for a $15.0 million revolving line of
credit from the same financial institution providing the Line of Credit, which
will be used to fund property acquisitions and development activities (the
"Acquisition Line of Credit") and will be secured by certain of the Company's
unencumbered properties. Advances under the Acquisition Line of Credit will bear
interest at 225 basis points over LIBOR and will mature three years after the
execution of a definitive loan agreement. This Line of Credit will be increased
up to $35.0 million, subject to the financial institution obtaining participants
and the Company contributing additional properties, acceptable to the financial
institution and its participants.
13
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The Company has determined at this time not to pursue obtaining a previously
announced commitment with respect to a $60.0 million revolving line of credit
facility from a different financial institution.
The Company has one major redevelopment project under construction that will add
an additional 240,000 square feet of retail space to the Company's portfolio.
This project is expected to be completed during 1999. It is anticipated that
future funding required for this project is estimated to be $15.0 million and
will come from the proposed Acquisition Line of Credit and other sources of cash
including obtaining permanent debt on certain unencumbered existing properties.
Management expects this development to have a positive effect on cash generated
by operating activities and Funds from Operations.
The Company believes, based on currently proposed plans and assumptions relating
to its operations, that the proceeds from its initial public offering and the
Company's existing financial arrangements, together with cash flows from
operations, will be sufficient to satisfy its cash requirements for a period of
at least 12 months. In the event that the Company's plans change, its
assumptions change or prove to be innacurate or the proceeds from the initial
public offering or available financing arrangements prove to be insufficient to
fund the Company's expansion and development efforts, the Company would be
required to seek additional sources of financing. There can be no assurance that
any additional financing will be available to the Company on acceptable terms,
or at all. If adequate funds are not available, the Company's business
operations could be materially adversely affected.
During the three months ended September 30, 1998, the Company declared a cash
dividend of $0.25 per outstanding share of Common Stock. This dividend was paid
on October 6, 1998 to stockholders of record on September 22, 1998.
YEAR 2000 COSTS
The Company has undertaken a study of its functional application systems to
determine their compliance with year 2000 issues and, to the extent of
noncompliance, the required remediation. As a result of such study, the Company
believes the majority of its systems are year 2000 compliant. To date, the
expenses incurred by the Company in order to become year 2000 compliant,
including computer software costs, have been approximately $25,000. Costs other
than software have been expensed as incurred.
An assessment of the readiness of year 2000 compliance of third party entities
with which the Company has relationships, such as its banking institutions,
tenants and others is ongoing. The Company has inquired, or is in the process of
inquiring, of the significant aforementioned third party entities as to their
readiness with respect to year 2000 compliance and to date has received
indications that many of them are either compliant or in the process of
remediation. The Company will continue to monitor these third party entities to
determine the impact on the business of the Company and the actions the Company
must take, if any, in the event of non-compliance by any of these third parties.
The Company's initial assessment of compliance by third party entities is that
there is not a material business risk to the Company posed by any such
noncompliance and, as such, the Company has not yet developed any related
contingency plans.
14
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INFLATION
Most of the Company's leases contain provisions designed to partially mitigate
the adverse impact of inflation. Such provisions include clauses enabling the
Company to receive percentage rents based on tenant's gross sales above
predetermined levels, which rents generally increase as prices rise, or
escalation clauses which are typically related to increases in the Consumer
Price Index or similar inflation indices. Most of the Company's leases require
the tenant to pay its share of operating expenses, including common area
maintenance, real estate taxes and insurance, thereby reducing the Company's
exposure to increases in costs and operating expenses resulting from inflation.
The Company's financial results are affected by general economic conditions in
the markets in which its properties are located. An economic recession, or other
adverse changes in general or local economic conditions, could result in the
inability of some existing tenants of the Company to meet their lease
obligations and could otherwise adversely affect the Company's ability to
attract or retain tenants. The properties are typically anchored by
supermarkets, drug stores and other consumer necessity and service retailers
which typically offer day-to-day necessities rather than luxury items. These
types of tenants, in the experience of the Company, generally maintain more
consistent sales performance during periods of adverse economic conditions.
CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS
The foregoing Management's Discussion and Analysis contains various "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which represent the Company's expectations or beliefs concerning future
events, including, but not limited to, statements regarding growth in rental
revenues and sufficiency of the Company's cash flow for its future liquidity and
capital resource needs. These forward looking statements are further qualified
by important factors that could cause actual events to differ materially from
those in such forward looking statements. These factors include, without
limitation, increased competition, dependence on key tenants, geographic
concentration, lack of development experience, reliance on key personnel and
maintaining its REIT status. Results actually achieved may differ materially
from expected results included in these forward looking statements as a result
of these or other factors.
15
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported in the Company's Quarterly Report on
Form 10-Q for the three and six months ended June 30, 1998
(the "Prior Report"), Albertsons, Inc. ("Albertsons") filed
a complaint in the Circuit Court for the Eleventh Judicial
District in and for Miami-Dade County, Florida against a
subsidiary of the Company seeking injunctive relief and
amounts representing lost profits arising from an alleged
breach by the subsidiary of a letter agreement between
Albertsons and such subsidiary. As reported in the Prior
Report, the court dismissed with prejudice Albertsons' claim
for specific performance and deferred until a later date a
ruling on the remaining issues raised in Albertsons'
complaint. Although the Company believes that it has
meritorious defenses to the remaining claims and intends to
defend the action fully and vigorously, no assurance can be
given with respect to the outcome of this action or its effect
on the Company. No material developments have occurred with
respect to this action during the three months ended September
30, 1998.
Item 2. Changes in Securities and Use of Proceeds
The Company consummated its initial public offering of an
aggregate of 4,700,000 shares of Common Stock on May 13,
1998. Of the 4,700,000 shares of Common Stock sold in the
Offering, 3,330,398 shares generating proceeds of
approximately $36.6 million, were sold by the Company. After
the payment of approximately $3.6 million in Offering related
expenses, the Company received net proceeds of approximately
$33.0 million. Of the $5.4 million of proceeds available as of
July 1, 1998, the following proceeds were used during the
three months ended September 30, 1988: (i) acquired certain
real estate properties for $1.0 million, and (ii) paid $1.1
million for construction costs and improvements to existing
properties.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
16
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Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
10.1 - Agreement for Purchase and Sale, dated August
19, 1998, between Equity (Parker Towne Center),
Inc. and Dunhill Partners
10.2 - Promissory Note, dated October 30, 1998, in the
amount of $5.0 million from Equity One
(Atlantic Village), Inc. to Southern Farm
Bureau Life Insurance Company
10.3 - Mortgage, Security Agreement and Assignment of
Leases, dated October 30, 1998, between Equity
One (Atlantic Village), Inc. and Southern Farm
Bureau Life Insurance Company
27.1 - Financial Data Schedule
(B) Report on Form 8-K
None
17
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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.
Equity One, Inc.
Date: November 16, 1998 /S/ CHAIM KATZMAN
--------------------------
Chaim Katzman
Chief Executive Officer
(Principal Executive Officer)
/S/ DAVID N. BOOKMAN
-------------------------
David N. Bookman
Vice President and Chief Financial Officer
(Principal Accounting Financial Officer)
18
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
10.1 Agreement for Purchase and Sale, dated August 19, 1998
Between Equity (Parker Towne Center), Inc. and Dunhill
Partners
10.2 Promissory Note, dated October 30, 1998 issued by Equity One
(Atlantic Village), Inc. to Southern Farm Bureau Life
Insurance Company
10.3 Mortgage Security Agreement and Assignment of Leases, dated
October 30, 1998 between Equity One (Atlantic Village), Inc.
and Southern Farm Bureau Life Insurance Company
27.1 Financial Data Schedule
EXHIBIT 10.1
AGREEMENT FOR PURCHASE AND SALE
DATE: AUGUST 19, 1998
NAME OF BUYER: DUNHILL PARTNERS AND/OR ASSIGNS
ADDRESS OF BUYER: 4807 WEST LOVERS LAND
CITY: DALLAS STATE: TEXAS ZIP:
TELEPHONE:___________ FACSIMILE:___________
NAME OF SELLER: EQUITY PARKER TOWNE CENTER, INC.
ADDRESS OF SELLER: 777 17TH STREET PENTHOUSE
CITY: MIAMI BEACH State: FLORIDA ZIP: 33139
1. DESCRIPTION OF PROPERTY: Seller ("Seller") agrees to sell and the above
named Buyer ("Buyer") agrees to purchase, under the terms and conditions set
forth in this Agreement, all right, title and interest of the Seller in and to
the following:
A. The parcel or real property, known as Parker Towne Shopping
Center, located at the northeast corner of Parker Road and Avenue K in Plano,
Texas, consisting of approximately 200,000 square feet of improvements and
approximately 18 acres and more fully described below, and any improvements
situated on such parcel, together with any and all easements, covenants and
other rights appurtenant to such parcels and owned by Seller, (hereinafter the
"Real Property");
See Exhibit A attached hereto
B. Any and all transferable licenses, permits, certificates of
occupancy, and other approvals in effect at the Closing Date and necessary for
the current use and operation of the Real Property or the personal property, any
and all transferable warranties, architectural or engineering plans and
specifications and tests and studies, development rights that exist and are in
Seller's possession, as of the Closing Date and relate to the Real or Personal
Property.
C. All furniture, furnishing, fixtures, equipment and other tangible
personal property that is affixed to and/or located at the Real Property which
is owned by Seller on the Closing Date and used in connection with the
management, operation or repair of the Real Property excluding all tangible
personal property owned by tenants of the Real Property (collectively "Personal
<PAGE>
Property");
D. Intangible Property (collectively "Intangible Property")
consisting of: any and all Leases and Contracts in effect on the Closing Date,
(ii) any and a11 refundable security deposits and other deposits and interest
thereon, if required by law (iii) any and all transferable licenses, permits,
licenses, certificates of occupancy, and other approval in effect at the Closing
Date and necessary for the current use and operation of the real property or the
personal property, (iv) any and all transferable warranties, architectural or
engineering plans and specifications and tests and studies, development rights
that exist and are in Seller's possession, as of the Closing Date and relate to
the Real or Personal Property.
E. Real Property. Personal Property and Intangible Property may
sometimes be herein collectively referred to as the "Property"
2. PURCHASE PRICE: The total purchase price of the Property is
$7,150,000.00 (U.S.) payable as follows:
A. Initial deposit paid to
Alan J. Marcus
Trust Account within
Five (5) days of execution of
Letter of Intent $ 50,000.00
-------------
B. Additional Deposit*: $ 150,000.00
-------------
C. Wire transfer of funds
required at closing: $6,950,000.00
-------------
TOTAL PURCHASE PRICE $7,150,000.00
-------------
* The Additional Deposit shall be delivered to the Trust Account of Alan J.
Marcus on September 11 assuming notification by Seller to Buyer that the
conditions for termination of the Back Up Contract referred to in Article 24,
below, have been satisfied.
The deposits to be paid by Buyer shall be held by ALAN J. MARCUS, ESQUIRE
and shall be refundable to Buyer only as set forth herein and as set forth in
the Escrow Agreement executed in connection herewith.
3. ACCEPTANCE: If this offer is not executed by and delivered to all
parties on or before midnight 15 days from the date of execution of the Letter
of Intent and delivery of the Due
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Diligence Material (as defined below), the Deposit will, at Seller's option, be
returned to Buyer and this offer withdrawn.
4. FACSIMILE:EFFECTIVE DATE: Facsimile copies of this Agreement, signed
and initialed In counterpart, shall be considered for all purposes, including
delivery, as originals. The Effective Date of this Agreement will be (a) the
date when the last one of Buyer and Seller has signed this offer, or (b) if
changes in this offer (after signature) have been made and initialed by the
parties, the date when the last one of Buyer or Seller has initialed those
changes.
5. INSPECTIONS AND CONDITION OF PROPERTY:
A. Buyer shall have until midnight, twenty one (21) days from the
date of execution of the Letter of Intent and delivery of the Due Diligence
Material to complete its due diligence inspection of the Real Property (the
"Inspection Period"). The Due Diligence Material delivered to Buyer with
execution of the Letter of intent shall include, if available, (i) copies of all
leases, lease proposals, renewals or other agreements or correspondence amending
or modifying the foregoing, (ii) income and expense statements for the past
three years; (iii) tenant sales figures for the past three years; (iv) a current
rent roll; (v) a list of all personal property; (vi) copies of all management,
leasing and service contracts; (viii) Seller's most recent title commitment and
survey; and (ix) copies of Seller's most recent environmental report applicable
to the Property.
B. During the Inspection Period, Buyer may conduct such inspections,
at Buyer's sole expense, as Buyer may deem necessary to ascertain the physical
condition of the Real Property. However, Buyer shall arrange for any such
inspections by appointment only coordinated with the Seller. Buyer shall not
interview or speak with any tenants of the Property, unless approved by Seller
in advance.
C. In the event the Real or Personal Property is not acceptable to
Buyer for any reason, Buyer shall provide written notice of same to Seller, at
Seller's address, prior to the expiration of the Inspection Period. In such
event, this Agreement shall be terminated and of no further force and effect and
Buyer and Seller shall be released of all obligations hereunder and Seller shall
be refunded all deposits without further notice. Failure of Buyer to deliver
notice to Seller as required herein shall constitute waiver of Buyer's right to
give such notice and shall be deemed acceptance of the Real and Personal
Property by Buyer.
D. Buyer shall (i) complete its Inspection Period; (ii) not disturb
or interfere with the operation, management or use of the Property by Seller,
Seller's agents, any tenant of the Property or by any such tenant's customers,
invitee or guests; and (iii) not damage or affect the physical structure of the
Property. Buyer shall be responsible for any and all losses, damages, charges
and other costs associated with such inspections and studies, and Buyer
covenants and agrees to return the Property to the same condition as existed
prior to such inspections and studies. Buyer agrees not to allow any liens to
arise against the Property as a result of such inspections and studies
3
<PAGE>
and agrees to indemnify and hold Seller harmless from and against any and all
claims, charges, actions, costs, suits, damages, injuries, or other liabilities
which arise, either directly or indirectly, from Buyer's or its agent's or
employee's entry onto the Property prior to Closing.
E. Upon 24 hour notice, Buyer may have access to all of the original
documents concerning the Property located at the Sellers principal office at 777
17th Street, PH Miami Beach, Florida 33139.
F. Buyer acknowledges that Buyer is purchasing the Property in "AS
IS, WHERE IS" Condition and Buyer further acknowledges that Seller has made no
warranties or representations, express or implied, in respect to the real and
personal property except as set forth herein and further, Buyer has been given
the opportunity and has made an independent investigation of the Property and
Buyer acknowledges that an unqualified standard of caveat emptor applies to the
transaction under this Agreement.
6. CLOSING:
A. The closing for delivery of the deed and payment of the balance
of the purchase price shall take place at Buyer's attorney's office at a
mutually agreeable time on or before October 15, 1998.
B. Subject to Paragraph A. of this Article, possession of the
Property shall be transferred by Seller to Buyer simultaneously with the closing
of title.
7. FINANCING:
This is an all cash transaction.
8. SELLER'S REPRESENTATIONS AND WARRANTIES:
(a) Seller represents and warrants to Buyer that as of the Effective
Date, the person executing this Agreement on behalf of Seller is duly authorized
to do so, that Seller has full right and authority to enter into this Agreement,
and this Agreement constitutes a valid and legally binding obligation of Seller,
enforceable against Seller in accordance with its terms.
(b) Seller is duly organized, validly existing and in good standing,
and authorized to do business within the State of Texas.
(c) To the best of Seller's knowledge, Seller has good, marketable and
insurable fee simple title to the Property.
4
<PAGE>
(d) There are no actions, suits, claims, condemnation proceedings, or
other matters pending, or, to the Seller's best knowledge and belief,
contemplated or threatened against Seller that could affect Seller's ability to
perform its obligations under this Agreement.
(e) Seller has not received notice and has no knowledge of any
violation of the Property concerning zoning, building or fire codes.
(f) All documents and records delivered to Buyer are true and correct,
to Seller's best knowledge and belief
(g) There are no payments for work and/or improvements to the Property
which are unpaid or will become due or owing at Closing.
(h) There are no contracts, commitments, etc. concerning the use
and/or operation of the Property except as disclosed or in that exist in the
ordinary course of business.
9. BUYERS REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants
to Seller that the following are true, accurate and complete as of the Elective
Date:
(a) If Buyer is a corporation or partnership, Buyer is duly organized,
validly existing and in good standing, and authorized to do business within the
applicable jurisdiction.
(b) Each of the persons executing this Agreement on behalf of Buyer is
duly authorized to do so. Buyer has full right and authority to enter into this
Agreement and to contemplate the transaction contemplated herein. This Agreement
constitutes a valid and legally binding obligation of Buyer, enforceable against
Buyer in accordance with its terms.
(c) There are no actions, suits, claims or other matters pending, or,
to the Buyer's best knowledge and belief, contemplated or threatened against
Buyer that could affect Buyer's ability to perform its obligations under this
Agreement.
(d) Buyer has sufficient funds and worthy credit available to
consummate the Closing of the transaction described in this Agreement.
10. LIMITATIONS ON FUTURE LEASES AND RENTALS: Subsequent to the expiration
of the Inspection Period, Seller shall not, without Buyers prior written
consent, enter into any leases or contracts except for (i) contracts to be
completed or that are to terminate at or before closing, or (ii) service
contracts that are terminable on not less than 60 days notice. Buyer shall have
five (5) days to approve any proposed leases. In the event Buyer does not
provide written consent to the proposed lease of contract, Buyer's silence shall
be deemed a refusal to consent to said lease or contract. In any event, Seller
shall pay for the improvements to be made for such tenant or reimburse Buyer for
the cost of such improvements. If the work for such tenant has not been
5
<PAGE>
completed by Closing, Sellers shall assign to Buyer the contract for such work
and Seller shall credit Buyer for the amount paid by Buyer for the cost of the
improvements.
11. CONDITION OF PROPERTY AT CLOSING. Seller shall be obligated to
maintain the Property in the same condition as of the Effective Date, reasonable
wear and tear excepted. Seller shall be obligated to repair and correct any
deficiencies in the condition of the Property occurring subsequent to the
Effective Date hereof.
12. CONDITIONS PRECEDENT TO CLOSING
A. CONDITIONS PRECEDENT FOR BUYER: The obligation of Buyer to
purchase the Property from Seller under this Agreement is, subject to the
satisfaction, at Closing, of each of the following:
(i) The representations and warranties made by Seller in this
Agreement shall be true, accurate and complete in all material respects on and
as of the Closing Date with the same force and effect as if such representations
and warranties were made on and as of such date.
(ii) Seller shall have performed all covenants and obligations
required by this Agreement to be performed by Seller on or before Closing.
(iii) Title to the property shall conform with the requirements of
Paragraph 17 herein and Buyer shall have received a Written Commitment for Title
Insurance, as described in Paragraph 17, indicating that an owner's title
insurance policy in accordance with the provisions of Paragraph 17 will be
issued after the date of Closing and compliance with any requirements contained
therein.
(iv) Seller shall furnish a written estoppel letter from the tenants
set forth in Paragraph 18 of this Agreement.
B. CONDITIONS PRECEDENT FOR SELLER: The obligation of Seller to sell
the Property to Buyer under this Agreement is, subject to the satisfaction, at
closing, of each of the following:
(i) The representations and warranties made by Buyer in this
Agreement shall be true, accurate and complete in all material respects on and
as of the Closing Date with the same force and effect as if such representations
and warranties were made on and as of such date.
(ii) Buyer shall have performed all covenants and obligations required
by this Agreement to be performed by Buyer on or before Closing.
13. CLOSING; DELIVERIES AT CLOSING: The closing of the transaction
contemplated in this Agreement ("Closing") shall take place on the date set
forth in Paragraph 6 of
6
<PAGE>
this Agreement.
A. At the time of Closing, Seller shall deliver to Buyer the following
items:
1. Special Warranty Deed.
2. Bill of Sale with respect to any Personal Property included in
the sale, containing the equivalent of Special Warranty Deed
warranties for such Personal Property.
3. Mechanics' Lien Affidavit.
4. Title Affidavit.
5. Assignment of Leases, Rents and Security Deposits;
6. Non recourse Assignment of Contracts, if any;
7. Title evidence as set forth in Paragraph 17.
8. A corporate resolution and an incumbency certificate to evidence
the Seller's capacity and authority to consummate Closing, a
certified copy of Articles of Incorporation and bylaws, including
all amendments thereto; and a current Certificate of Good
Standing;
9. Such other documents as may be reasonably required in order to
carry out the purchase and sale.
B. At the time of closing, Buyer shall deliver or cause to be delivered
to Seller the following items:
1. The earnest Deposit to be credited against Purchase Price;
2. If Buyer is a Corporation, a corporate resolution and an
incumbency certificate to evidence Buyer's capacity and authority
to consummate Closing.
3. Acceptance of Assignment of Contracts;
4. Acceptance of the Assignment of Leases and Security Deposits;
5. The balance of the Purchase Price and such other funds necessary
to pay all Closing and other costs and adjustments to be paid by
Buyer
7
<PAGE>
under this Agreement (to be delivered by wire transfer).
C. Each party agrees to execute and deliver at Closing a settlement
statement setting forth the charges, adjustments and credits to each party and
to execute and deliver such other documents and take such actions as either
party or the Escrow Agent might reasonably request to consummate the transaction
herein contemplated.
D. At Closing, the Escrow Agent shall (a) disburse all funds, then
(b) record, among the appropriate Public Records, all documents to be recorded,
and then (c) deliver all original documents and copies thereof, to the
appropriate parties.
14. RISK OF LOSS: Risk of loss prior to closing shall be borne by Seller.
A. If between the time of execution of this Agreement and the time
of closing, the Property is damaged by fire or other casualty the following
shall apply, at Buyers option;
1. Upon receipt of applicable insurance proceeds, Seller shall
have the obligation to repair or replace the damaged improvements built upon the
Real Property. If Buyer requires, Seller shall make such repairs or replacements
and this Agreement shall continue in full force and effect and the Seller shall
be entitled to extend the closing for a reasonable additional period of time so
as to enable Seller to complete such repairs or replacements; or
2. Buyer may notify Seller that Buyer would rather that Seller
not repair or replace any such loss or damage and Seller shall assign all right
to and in any and all proceeds received from insurance or in satisfaction of any
claims or actions in connection with such loss or damage and upon such
assignment Buyer shall close without any purchase price reduction.
3. In the event the cost of repairs is in excess of $100,000.00
Buyer shall have the right to cancel this Agreement in which event, this
Agreement shall be deemed canceled and of no further force or effect. Buyer
shall be refunded its deposit monies, without further notice, and the parties
shall be released and discharged of all claims and obligations hereunder.
B. CONDEMNATION
In the event that all or any substantial portion of the Real Property
is condemned or taken by eminent domain prior to Closing, Buyer may, at its
option, either: (i) terminate this Agreement by written notice thereof to Seller
within five (5) days after Seller notifies Buyer of the condemnation and receive
an immediate refund of the Deposit, and all interest accrued thereon or (ii)
proceed to close the transaction contemplated herein pursuant to the terms
hereof, in which event Seller shall deliver to Buyer at the Closing any proceeds
actually received by Seller attributable to the Real Property from such
condemnation or eminent domain proceeding, net of any costs associated with such
condemnation or eminent domain proceeding, or an assignment of Sellers rights
against the condemning authority, and there shall be no reduction in the
purchase price. In the event Buyer
8
<PAGE>
fails to timely deliver written notice of termination as described in (i) above,
Buyer shall be deemed to have elected to proceed in accordance with (ii) above.
15. EXPENSE OF CLOSING.
A. Seller shall pay the following costs incurred in this sale.
(i) Seller's attorneys fees and costs.
(ii) the cost of recording any releases or corrective title
instruments.
(iii) the costs of delivery of the Evidence of Title, as required
in Paragraph 17B, herein; and
(iv) Any stamp or transfer taxes imposed in connection with the
sale of the Property.
B. Buyer shall pay the following costs incurred in this sale.
(i) Buyer's attorney's fees and costs;
(ii) the costs of recording the deed of conveyance;
(iii) the cost of a certified survey (if Buyer so requires)
certified to the benefit of the Buyer and the Title
Insurer.*
(iv) all Title Insurance Premiums; and *
(v) Any other costs and expenses in connection with the
purchase.
* However, Seller to pay $10,000.00 in title premiums and survey costs via a
credit at closing.
A. PRORATIONS. Current real estate taxes, based on the latest
tax bill than available; personal property taxes and assessments, rents,
maintenance fees and other similar customarily proratable items shall be
prorated as of the Closing Date with Buyer being responsible for and being
credited with those on the day of Closing. Seller shall be credited for all
rents paid through the Closing Date. Any rents that have accrued, but are unpaid
and not past due as of the date of Closing shall not be prorated. Upon
collection of such rent by either party, the party collecting such rents shall
make the appropriate proration and distribute same with 10 days of receipt. The
provisions of the Paragraph are intended to survive Closing. At Closing, Buyer
shall also reimburse to Seller the real
9
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estate tax reimbursements to be due from Minyards, Blockbuster and any other
tenant which similarly reimburses the Landlord.
B. CREDITS: Buyer shall be credited with the amount of any prepaid
rents paid to Seller by tenants of the Property for periods subsequent to the
Closing date and with the amount of any deposits for tenants of the Property,
including rental, cleaning, utility, key, damage and other deposits.
17. TITLE REQUIREMENTS:
A. Title to the property shall be insurable and shall be conveyed
from Seller to Buyer free and clear of all encumbrances except the Permitted
exceptions which are set forth as Exhibit "A" and to the extent not set forth on
Exhibit "A":
1. Covenants, conditions, restrictions, limitations, reservations,
dedications, agreements, and easements of record (including but not limited to,
water, sewer, gas, electric and other utility agreements) at the time of
closing, provided that they do not contain provisions for reversion or
forfeiture of title in the event of violation and do not substantially impair
the use of the property for its customary purposes.
2. General and special taxes and assessments for current and
subsequent years.
3. Regulatory laws and ordinances of all appropriate governmental
authorities including but not limited to zoning restrictions.
4. Rights of parties in possession.
5. Those matters set forth in the existing survey (the "Survey")
delivered to Buyer in connection with Buyer's Inspection Period.
B. Within seven (7) days of the Effective Date, Seller shall deliver
evidence of title consisting of a Commitment to issue Title Insurance from
Commonwealth Land Title Insurance along with copies of all title exceptions for
Buyer to review. Buyer shall have 10 days from receipt of the Evidence of Title
to review same. If any exceptions render title to the Property uninsurable,
Buyer shall advise Seller of same and the provisions of Section 17.E. shall
apply. Buyer shall cause said title insurance to be issued and Buyer shall be
responsible for any and all costs relating to the issuance of the Owners Policy
and any and all endorsements required in connection therewith.
All exceptions for which the Buyer does not object, along with all matters
shown on the Survey, shall be considered to be Permitted Exceptions and shall be
deemed acceptable by Buyer.
C. Except for the Permitted Exceptions, Seller shall be obligated to
deliver the property free and clear of any and all encroachments, overlaps,
boundary line disputes and other
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matters disclosed by a certified survey other than those set forth in the Survey
referenced in Section 17.A.5. of this Agreement. In the event the survey shows
any such encroachment or that the improvements presumed to be located on the
real property in fact encroach on setback lines, easements, or lands of others,
or violate any restrictions of record, covenant or applicable government
regulation, same shall be treated as a title defect.
D. As a further requirement of title, at closing (i) the Title
Insurance Commitment shall be marked to indicate satisfaction of all
requirements set forth necessary in order to deliver Title Association Standard
Form B Owners' Title Insurance Policy customarily issued shall be deleted, i.e.
to wit, parties in possession, GAP, mechanics and or other liens, encroachments,
and easements, etc., liens or assessments not shown in the public records, and
or any exception thereby seeking to impose any lien assessment and or other
encumbrance against the Property. Nothing contained herein shall limit, modify
and/or otherwise effect Seller's obligations to deliver to Buyer, in any event
and at Buyer's expense, upon Closing, insurable title to the Property. Deletion
of the standard survey exception shall not be required unless Buyer procures a
properly certified survey prior to Closing.
E. If the title is not insurable at the time of Closing, Seller
shall have 60 days following the date for Closing within which to remedy such
defect and shall use diligent effort to cure such defect within 90 days of said
notice, however, Seller shall not be obligated to institute litigation to
effectuate such cure. If Seller shall fail to cure such defect within said 60
day period, Buyer shall have the option of either accepting the title as it is
or demanding a refund of the Buyer's deposit Buyer may also allow up to 60
additional days for Seller to cure such defect. Upon any such refund, this
Agreement shall thereupon be terminated and both parties shall be relieved of
further liabilities hereunder.
18. TENANT ESTOPPEL LETTERS: Seller shall deliver to Buyer, prior to
Closing, an estoppel certificate (hereinafter the "Estoppel Certificate") signed
by each tenant of the Property for the tenants known as Minyards, Blockbuster,
Dallas Nephrology, Dollar General, Commerce Land Title and 100% of all remaining
tenants indicating the amount of rend paid, the date last paid, the amount of
security deposits, any prepaid rents, etc. Buyer shall, within thirty (30) days
of the Effective Date, supply such form acceptable to Buyer for Seller's use.
The parties acknowledge the form estoppel certificate for national or credit
tenants is acceptable for purposes of this paragraph. The form estoppel attached
hereto shall be used by Seller.
19. ASSIGNMENT. This Agreement may be assigned to a controlled affiliate
of the Buyer without the consent of Seller. Buyer may elect to change the name
or the Corporate Purchaser and upon such change, shall notify Seller and Lender.
This Agreement may not be assigned to any other Buyer without approval of
Seller, unless said Buyer is qualified in Seller's sole discretion said approval
not to be unreasonably withheld.
* However, Seller any provide an Affidavit in lieu of an Estoppel Certificate if
Seller is unable to obtain same from a tenant.
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20. DEFAULT: Should Buyer fail to purchase on the date on which title is
to close in accordance with this Agreement, or fail to perform any of Buyer's
other obligations under this Agreement and such default is not cured within 10
days after written notice to Buyer, Seller may, at Sellers option, cancel this
Agreement by written notice to Buyer. In such event, Buyer's deposits and all
other sums paid to Seller (including any interest earned thereon) shall be
retained by Seller as liquidated and agreed damages for Buyer's default, and
this Agreement shall terminate. Seller has removed the Property from the market
and has incurred indirect expenses relative to sales, advertising and the like,
and Buyer recognizes that no other method could determine the precise damage
resulting and retention of all sums then paid as liquidated and agreed damages
shall be Seller's sole remedy in the event of Buyer's default. If this Agreement
is so canceled, Seller may sell the Property to any third party as though this
Agreement had never been made (without any obligation to account to Buyer for
any part of the proceeds of such sale). Buyer agrees not to file any action
against Seller seeking the return of any portion of said deposits or seek any
reduction in the amount of the liquidated and agreed upon damages if this
Agreement is terminated for Buyer's default. Should Seller default under this
Agreement or fails to perform any of Seller's other obligations under this
Agreement and such default is not cured within 10 days after written notice to
Seller, Buyer's sole and exclusive remedy shall be to (i) obtain a refund of all
deposits made, whereupon this Agreement shall terminate and neither party shall
have any liability to the other, or (ii) bring an action for specific
performance, without waiving Buyer's right to damages incurred as a result of
Seller's breach.
21. ESCROW AGENT: The Escrow Agent shall hold the deposit funds and
perform such duties as set forth in the Escrow Agreement attached hereto,
consistent with the provisions of this Agreement.
22. MISCELLANEOUS PROVISIONS:
A. All written notices and demands provided under this Agreement
shall be hand delivered or sent via certified or registered mail, return receipt
requested, or by Federal Express or other air carrier service. All notices and
demands shall be deemed properly addressed if addressed as follows and if
mailed, shall be deemed given upon being deposited in the United States mail,
postage prepaid:
To Seller: To Buyer:
Alan J. Marcus, Esquire Kevin Kerr, Esquire
20803 Biscayne Blvd. l616 Gateway Blvd.
Suite 301 Richardson, Texas 75080
Aventura, Florida 33180
B. This Agreement supersedes and any all prior understanding and agreements
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between Seller, its agents and representatives and Buyer. It is mutually
understood and agreed that this Agreement represents the entire understanding
between Buyer and Seller. No representations or inducements made prior to the
signing of this Agreement, which are not expressly included in this Agreement or
imposed by law, shall be of any force or effect.
C. Neither this Agreement nor a memorandum thereof shall be recorded
in the office of the Clerk in any Circuit Court of the State of Texas, or in any
other Public Records of the State of Texas. Any recording of same by Buyer shall
be considered a breach of this Agreement.
D. The acceptance of the deed by Buyer at the closing of this
transaction shall be acknowledgment by Buyer of the full performance by Seller
of all of its agreements and responsibilities hereunder, and no performance of
any agreement, obligation, responsibility or representation of Seller shall
survive closing of this transaction, except those specifically provided for by
statute and those specifically stated in this Agreement to survive the closing.
E. Time shall be of the essence with regard to performance pursuant
to this Agreement.
F. Any disputed arising in connection with this Agreement shall be
settled according to Florida law and venue for any action in connection with
this Agreement shall be in Dade County, Florida.
G. No modification of this Agreement shall be valid unless in
writing and signed by both parties.
H. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument which may be sufficiently evidenced by one such
counterpart.
I. Should any part, clause, provision or condition of this Agreement
be held to be void, invalid or inoperative, the parties agree that such
invalidity shall not affect any other part, clause, provision or condition
thereof and that the remainder of this Agreement shall be effective as though
such void part, clause, provision, or condition had not been contained herein.
J. In the event of any litigation arising from this Agreement the
prevailing party shall be entitled to recover attorneys fees and costs incurred
therewith.
23. BROKER. There are no brokers involved in the sale of the Property
other than BlackRock Realty Advisors, Inc. and Dunhill Partners, Inc. a
commission of $121,000.00 in cash at closing, to whom Seller is obligated to pay
a commission upon closing and funding of the transaction. Seller agrees to
indemnify Buyer and hold Buyer harmless for any and all claims concerning
Commissions that may arise in favor of any person claiming by, through or under
Seller. Buyer agrees to indemnify Seller and hold Seller's harmless for any and
all claim concerning Commissions that may arise in favor if any person claiming
by, through or under Buyer.
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24. BACK UP CONTRACT: Buyer acknowledges that this Agreement is a back up
contract to purchase the Property. This Agreement shall not be effective and in
force between Buyer and Seller until the previous Agreement is terminated, the
deposit funds are returned to Buyer and a mutual release is executed between
Buyer and Seller in connection with said previous Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below.
SELLER: Executed by Seller on August 24, 1998.
EQUITY PARKER TOWNE CENTER, INC.
A Texas Corporation
By: /s/ DORON VALERO
----------------------------
DORON VALERO, Vice President
BUYER: Executed by Buyer on August 20, 1998.
DUNHILL PARTNERS
By: /s/ WILLIAM HUTCHINSON
-----------------------------
William Hutchinson, Authorized Agent
ESCROW AGENT: Executed by Escrow Agent on August 24, 1998.
/s/ ALAN J. MARCUS
- -----------------------
ALAN J. MARCUS
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<PAGE>
ASSIGNMENT OF CONTRACT
This Assignment is made effective as of the 27 day of October, 1998, by and
between DUNHILL PARTNERS, INC. ("Assignor") and PARKER TOWNE CENTRE, LTD., a
Texas limited partnership ("Assignee").
RECITALS:
A. Equity (Parker Towne Centre) Inc., a Texas corporation ("Seller")
and Assignor entered into that certain Agreement for Purchase and Sale dated
August 19, 1998 (the "Original Contract") relating to the sale and purchase of
certain property located in Plano, Collin County, Texas locally known as "Parker
Towne Centre" (the "Property").
B. Seller agreed to extend the closing date from October 15, 1998,
to October 30, 1998, as evidenced by a letter from Alan J. Marcus, the attorney
for Seller, dated September 10, 1998 (the "Extension Agreement") (the Original
Contract, as amended by the Extension Agreement, referred to as the "Contract").
C. Assignor desires to transfer and assign to Assignee all of its
right, title and interest in and to the Contract, and Assignee desires to accept
such transfer and assignment, under the terms and conditions hereof.
AGREEMENTS:
NOW, THEREFORE, in consideration of the agreements contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby confirmed, the parties hereto do hereby agree as follows:
1. Assignor hereby sells, transfers and assigns to Assignee all of its
right, title and interest in and to the Contract, together, with its rights to
any earnest money and other amounts deposited thereunder and any surveys,
reports, documents or other materials provided to Assignor in connection
therewith.
2. Assignor represents that it has deposited a total of $200,000 as
earnest money under the Contract, all of which shall be credited against the
purchase price of the Property upon closing. At closing, Assignee agrees to
deliver $200,000 to Assignor to replace the earnest money that Assignor has
previously deposited with Seller under the Contract, but only if closing
actually occurs.
3. At closing, in addition to the $200,000 delivered to Assignor for the
replacement of the earnest money, Assignee agrees to deliver $150,000 to
Assignor as an Assignment Fee for this Assignment, but only if closing actually
occurs.
4. Assignee hereby assumes, and agrees to be fully bound to perform, all
the obligations of Assignor under the Contract that are first performable on or
after the date of this Assignment.
ASSIGNMENT OF CONTRACT
PAGE 1
<PAGE>
5. Assignor does hereby represent and warrant that (i) the Original
Contract has not been modified or amended except as indicated by the Extension
Agreement; (ii) the rights of the Assignor under the Contract have not been
assigned to any other person; (iii) the Contract is valid and in full force and
effect; and (iv) it has performed all of its obligations under the Contract that
were performable on or before the date hereof, and there has been no default
with respect to the obligations of the purchaser under the Contract.
EXECUTED to be effective as of the date first set forth above.
ASSIGNOR:
DUNHILL PARTNERS, INC.
By: /s/ WILLIAM L. HUTCHINSON
-------------------------
William L. Hutchinson, President
ASSIGNEE:
PARKER TOWNE CENTRE, LTD.
By: Dunhill Management, Inc.,
its General Partner
By: /s/ WILLIAM L. HUTCHINSON
--------------------------
William L. Hutchinson, President
ASSIGNMENT OF CONTRACT
PAGE 2
EXHIBIT 10.2
PROMISSORY NOTE
$5,000,000.00 OCTOBER 30, 1998
FOR VALUE RECEIVED, EQUITY ONE (ATLANTIC VILLAGE) INC., A Florida
corporation ("BORROWER") promises to pay to the order of SOUTHERN FARM BUREAU
LIFE INSURANCE COMPANY, a Mississippi corporation ("LENDER"), at its office at
1401 Livingston Lane (39213), Post Office Box 78, Jackson, Mississippi 39205, or
such other place as the holder of this Note may designate, the principal sum of
Five Million and No/100 Dollars ($5,000,000.00), together with interest thereon
at the rate or rates specified in /Section/2 hereof. Principal and interest
shall be payable at the times set forth in, and in accordance with the other
provisions of, /Section/2, /Section/3 and /Section/4 of this Note.
/Section/1. GENERAL; SECURITY.
/Section/1.1 This Note is issued to evidence a loan made pursuant to that
certain commitment letter from Lender to Borrower, dated September 22, 1998, as
amended by letter dated October 2, 1998 (the ("COMMITMENT") for the purpose of
providing financing in connection with certain parcel(s) of land consisting of
approximately fourteen (14.0) acres located in Neptune Beach, Duval County,
Florida (the "LAND"), improved by a neighborhood shopping center containing
approximately 100,559 square feet of leasable area with on-site parking for 511
vehicles (said buildings, parking areas and related improvements are herein
referred to collectively as the "IMPROVEMENTS").
/Section/1.2 The Land, the Improvements and all other property assigned,
mortgaged or pledged to Lender under the Credit Documents, as hereinafter
defined, are herein referred to collectively as the "SECURITY PROPERTY".
/Section/1.3 This Note is secured by, among other security, a Mortgage,
Security Agreement and Assignment of Leases of even date (the "MORTGAGE") from
Borrower in favor of Lender, covering the Land, the Improvements and certain
personal property relating thereto, and an Assignment of Leases and Rents of
even date (the "ASSIGNMENT OF LEASES") from Borrower to Lender.
/Section/1.4 This Note, the Commitment, the Mortgage, the Assignment of
Leases and all other instruments, documents and agreements that secure, evidence
or otherwise relate to the indebtedness
<PAGE>
evidenced hereby or the loan from Lender to Borrower under the Commitment (the
"LOAN") are herein referred to collectively as the "CREDIT DOCUMENTS".
/Section/1.5 All of the terms, covenants and conditions contained in the
Mortgage and the other Credit Documents are hereby made a part of this Note to
the same extent and with the same force as if they were fully set forth herein.
/Section/2. INTEREST
/Section/2.1 From the date hereof until maturity (whether by acceleration
of the date of maturity upon default or otherwise), the principal sum
outstanding from time to time hereunder shall bear interest at the rate of six
and eighty-five one hundredths percent (6.85%) per annum.
/Section/2.2 For purposes of this Note each "Loan Year" is defined as a
period of twelve (12) months, with the first Loan Year commencing on November 1,
1998.
/Section/2.3 Borrower shall pay interest at closing calculated from the
date the proceeds of the Loan are wired by Lender to the first day of the month
immediately following closing.
/Section/2.4 Interest shall be computed on the basis of a three hundred
sixty (360) day year for the actual number of days the principal sum is
outstanding.
/Section/2.5 After maturity or upon default in the payment of any sum due
hereunder that is not cured within ten (10) days of said default, or upon any
other default or Event of Default under any Credit Document (collectively, an
"Event of Default"), interest shall, without notice, accrue at the rate of
eleven and eighty-five one-hundredths percent (11.85%) per annum or, if lower,
the maximum rate allowed by applicable law (the "DEFAULT RATE").
/Section/3. PAYMENT OF INTEREST AND PRINCIPAL.
/Section/3.1 Borrower shall pay two hundred thirty-nine (239) equal,
consecutive monthly payments of Thirty-Eight Thousand Three Hundred Sixteen and
04/100 Dollars ($38,316.04), based on a 20-year amortization, covering principal
and accrued and unpaid interest, which shall be due and payable monthly, in
arrears, on or before the first day of each calendar month for the preceding
calendar month or portion
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thereof, commencing with the payment due on December 1, 1998, and continuing
thereafter until the maturity of this Note (whether by acceleration of the date
of maturity upon default or otherwise).
/Section/3.2 The two-hundred fortieth (240th) and final payment shall be in
an amount equal to the entire outstanding principal balance, together with all
accrued and unpaid interest and any other unpaid sums hereunder, and shall be
due and payable in full on November 1, 2018 (the "MATURITY DATE").
/Section/3.3 In the event that any monthly installment shall not have been
paid within ten (10) days of its respective due date, then Lender shall charge a
late payment premium of the lesser of five percent (5%) or the maximum rate
allowed by applicable law on said late installment. This late payment premium
shall apply individually to all payments past due. This late payment charge is a
reasonable estimate of compensation to Lender for loss of interest, reasonable
administrative expenses and other damages, costs and expenses arising out of the
late payment, it being agreed that said damages, costs and expenses are
difficult or impossible to ascertain. The provisions of this /Section/3.3 shall
not affect the rights of Lender under /Section/4.1.
/Section/3.4 All payments of principal and interest shall be made in lawful
money of the United States of America which shall be legal tender in payment of
all debts, public and private, at the time of payment.
/Section/3.5 This Note may not be prepaid during the period beginning on
the date of this Note and ending at the expiration of the third (3rd) Loan Year.
Thereafter, this Note may be prepaid in full, but not in part, upon sixty (60)
days prior written notice and only upon payment of the premium required by this
/Section/3.5 as hereinafter set forth. During the fourth (4th) Loan Year, this
Note may be prepaid in full but not in part at the price of one hundred six
percent (106%) of the principal balance of the Loan at the time of said
prepayment. Thereafter this Note may be prepaid in full, but not in part, as
follows:
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<PAGE>
PREPAYMENT AMOUNT EXPRESSED
PREPAYMENT AS PERCENTAGE OF
DURING LOAN YEAR OUTSTANDING PRINCIPAL BALANCE
---------------- -----------------------------
5 105.5%
6 105.0%
7 104.5%
8 104.0%
9 103.5%
10 103.0%
11 102.5%
12 102.0%
13 101.5%
14-20 101.0%
Any such prepayment shall include, but shall not be limited to, the outstanding
principal, together with all accrued and unpaid interest, late payment charges
and any other unpaid sums hereunder and under the Mortgage. This provision
shall, at Lender's election, be applicable whether the prepayment is the result
of Borrower's default or otherwise. If a prepayment is received prior to the
expiration of the third (3rd) Loan Year as a result of the Borrower's default or
otherwise, Lender may, in its sole discretion, elect to collect a premium of
eight percent (8%) of the outstanding principal balance. The restrictions and
premiums on prepayments set forth above shall not be applicable to (a) any
prepayment resulting from Lender's application of any insurance proceeds or
condemnation awards on account of the indebtedness pursuant to the terms of the
Mortgage, or (b) a prepayment in full made during the ninety (90) day period
immediately preceding the Maturity Date.
/Section/3.6 Except as set forth in the preceding paragraph, this Note may
not be prepaid in whole or in part, whether said prepayment is voluntary or
involuntary, including any prepayment effected by Lender's exercise of the right
to accelerate the indebtedness evidenced hereby and secured as provided in the
other Credit Documents. Borrower acknowledges and agrees that the prepayment
provisions contained in this Note are a material term, and that any repayment,
whether voluntary or involuntary, in violation of such prepayment terms will
result in damages to Lender, and that the prepayment provisions
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<PAGE>
contained herein constitute a reasonable estimate of the damages which Lender
will incur if the Loan is repaid other than in accordance with its terms.
/Section/3.7 If, during a period when a prepayment premium is required, a
default or Event of Default under any Credit Document exists and Lender elects
to declare the obligations evidenced hereby to be immediately due and payable as
a result of such default or Event of Default (an "ACCELERATION"), the
Acceleration shall be deemed to constitute an evasion of the prepayment
provisions of this Note, and, as of the date of Acceleration, to the extent
permitted by law, a sum equal to the amount of liquidated damages to which
Lender is entitled (as herein described) shall be added to all other sums due
hereunder, and thereafter the amount of such liquidated damages shall (a) bear
interest at the Default Rate; (b) be secured by the Credit Documents; and (c) be
included within any tender of the amounts payable under the Credit Documents,
or, if no such tender is made prior to foreclosure or sale under the Credit
Documents, be included in the amounts payable to Lender or may, at Lender's sole
option, be bid by Lender pursuant to such foreclosure or other sale. If the
Acceleration occurs during a period when prepayment of this Note is prohibited,
the amount of liquidated damages payable to Lender under this provision shall be
equal to eight percent (8%) of the unpaid principal balance of this Note at the
time of such Acceleration. If the Acceleration occurs during a period when a
prepayment premium is payable hereunder, the amount of liquidated damages
payable to Lender under this provision shall be equal to such prepayment
premium. Borrower acknowledges that in either case Lender's actual damages in
the event of such evasion are now and will then be impossible to ascertain.
/Section/3.8 To the extent permitted by law, Borrower hereby expressly (a)
waives any rights it may have under applicable law to prepay this Note in whole
or in part, without penalty, upon Acceleration of this Note except in compliance
with the terms of this Note and (b) further agrees that upon prepayment of the
balance of the indebtedness secured by the Credit Documents at any time prior to
a sale or foreclosure under the Credit Documents, Borrower or any other party
making any such prepayment shall be obligated to pay, concurrently therewith, as
a prepayment fee, the prepayment premium as liquidated damages, as provided for
in this Note, whether such prepayment is made or occurs (i) as the result of the
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<PAGE>
acceptance by Lender of a prepayment tendered by Borrower; (ii) as the result of
an Acceleration, including, without limitation, an Acceleration as a result of
the sale or further encumbrance of any of the Security Property by Borrower in
violation of the provisions of any of the Credit Documents which violation is
not waived by Lender; (iii) in connection with any reinstatement of this Note
under any trustee's sale or foreclosure proceedings; or (iv) in connection with
any right to redeem or prevent any trustee's sale or foreclosure under any of
the Credit Documents.
/Section/4. DEFAULT; ACCELERATION.
/Section/4.1 If any default shall occur in the payment of any installment
required under /Section/3 hereof or of any other sums due hereunder at the time,
place and manner provided herein and the same shall not be cured within ten (10)
days of said default, or if any other default or Event of Default under any
Credit Document shall occur in the observance or performance of any of the
terms, covenants, conditions or other obligations of Borrower in or under the
Credit Documents, then, at the option of the holder of this Note and without
notice to Borrower, the outstanding principal, together with all accrued and
unpaid interest and any other unpaid sums hereunder, shall immediately become
due and payable.
/Section/5. MISCELLANEOUS.
/Section/5.1 All parties to this Note, including Borrower, Borrower's
partners or principals, and any sureties, endorsers or guarantors, hereby waive
presentment for payment, demand, protest, notice of dishonor, notice of
acceleration of maturity, notice of intention to accelerate, and all defenses on
the ground of extension of time for payment hereof, and jointly and severally
agree to continue and remain bound for the payment of principal, interest and
all other sums payable hereunder, notwithstanding any change or changes by way
of release, surrender, exchange, or substitution of any Security Property or by
way of any extension or extensions of time for the payment of principal and
interest or of either; and all such parties waive all and every kind of notice
of such change or changes and agree that the same may be made without notice to,
or consent of, any of them. The rights and remedies shall be cumulative and
concurrent and may be pursued singularly, successively or together, at the sole
discretion of the holder,
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<PAGE>
and may be exercised as often as occasion therefor shall occur, and the failure
to exercise any such right or remedy shall in no event be construed as a waiver
or release of the same.
/Section/5.2 Nothing herein contained, nor any transaction related hereto,
shall be construed or so operate as to require Borrower, or any party liable for
payment of this Note, to pay interest at a greater rate than the maximum allowed
by applicable law. Should any interest or other charges paid or payable by
Borrower, or any party liable for the payment of this Note, in connection with
this Note or any other Credit Document, result in the computation or earning of
interest in excess of the maximum allowed by applicable law, then any and all
such excess shall be and the same is hereby waived by Lender or the then holder
hereof, and any and all such excess paid shall be automatically credited against
and in reduction of the balance due under this Note, and the portion of said
excess paid which exceeds the balance due under this Note shall be paid by
Lender or the then holder hereof to the person legally entitled thereto.
/Section/5.3 This Note may not be changed orally, but only by an agreement
in writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought. No waiver, change, modification or
discharge of this Note shall be binding and enforceable against Lender unless
duly executed in writing by a Vice President of Lender.
/Section/5.4 Any and all notices, elections, demands, request, and
responses thereto permitted or required to be given under this Note shall be in
writing, signed by or on behalf of the party giving the same, and shall be
deemed to have been properly given and shall be effective upon being personally
delivered, or upon being deposited in the United States mail, postage prepaid,
certified with return receipt requested, or upon being deposited with an
overnight commercial delivery service requiring proof of delivery, to the other
party at the address of such other party set forth below or at such other
address within the continental United States as such other party may designate
by notice specifically designated as a notice of change of address and given in
accordance herewith; provided, however, that the time period in which a response
to any such notice, election, demand or request must be given shall commence on
the date of receipt thereof; and provided further that no notice of change of
address shall be effective until the date of
-7-
<PAGE>
receipt thereof. Personal delivery to a party or to any officer, partner, agent
or employee of such party at said address shall constitute receipt. Rejection or
other refusal to accept or inability to deliver because of changed address of
which no notice has been received shall also constitute receipt. Any such
notice, election, demand, request or response, if given to Borrower, shall be
addressed as follows:
Equity One (Atlantic Village) Inc.
777 17 Street, Penthouse
Miami Beach, Florida 33139
and, if given to Lender, shall be addressed as follows:
Southern Farm Bureau Life Insurance Company
1401 Livingston Lane (39213)(overnight)
Post Office Box 78
Jackson, Mississippi 39205
Attn: Mortgage Loan Administration Department
/Section/5.5 As used herein, the terms "Borrower" and "Lender" shall be
deemed to include their respective heirs, successors, legal representatives and
assigns, whether by voluntary action of the parties or by operation of law. In
the event that more than one person or entity is a Borrower hereunder, then all
references to "Borrower" shall be deemed to refer equally to each of said
persons or entities, all of whom shall be jointly and severally liable for all
of the obligations of Borrower hereunder.
/Section/5.6 Borrower hereby agrees to pay the holder hereof, in addition
to the sums above stated, all costs of collecting, securing or attempting to
collect or secure this Note, including reasonable attorney's fees and other
legal costs, whether same be collected or secured by suit or otherwise, and
throughout all trial and appellate levels.
/Section/5.7 Except as provided in /Section/5.8 hereof, notwithstanding any
other term or provision of this Note or any of the other Credit Documents to the
contrary, by accepting this Note, Lender acknowledges that the promise of
Borrower to pay the principal indebtedness and the interest on this Note is for
the sole purpose of establishing the existence of an indebteness, and Lender's
source of satisfaction of said indebtedness is limited to the Security Property,
and Lender shall not seek to procure payment out of any other assets of
Borrower, or to procure any judgments for any sum of money which is or may be
payable under this Note or under the Credit Documents or for any deficiency
remaining after foreclosure or sale
-8-
<PAGE>
under any of the Credit Documents; PROVIDED, however, that nothing herein
contained shall (a) be deemed to be a release or impairment of (i) said
indebtedness, (ii) the security therefor intended by any of the Credit
Documents, or (iii) any of the Credit Documents; or (b) be deemed to preclude
Lender from foreclosing upon any Security Property or from otherwise enforcing
any of Lender's rights under any of the Credit Documents. It is the intent of
the parties hereto, and Lender by accepting this Note acknowledges, that except
as provided in /Section/5.8 hereof, the obligations of Borrower under this Note
and under any of the other Credit Documents shall be and are nonrecourse as to
Borrower, and Borrower shall not have any personal liability with respect to
this Note or any of the other Credit Documents, except as provided in
/Section/5.8 hereof.
/Section/5.8 Notwithstanding anything contained in this Note or in any of
the other Credit Documents, nothing contained herein or therein shall (a) limit
or impair the rights of Lender to proceed against any of the Security Property
in accordance with the terms of the Credit Documents, (b) limit or impair the
rights of Lender to proceed against any person under any guarantee, indemnity
(including but not limited to any indemnity relating to environmental matters
and access of handicapped or disabled persons) or any other provision of any of
the Credit Documents providing for the personal liability of any such person in
accordance with its terms, or to enforce the rights of Lender under any such
guaranty, indemnity or other provision in accordance with its terms, or (c)
limit or impair the rights of Lender to proceed against Borrower or any other
person to recover or collect, or limit or restrict the personal liability of
Borrower or any other person for the payment to Lender for, any of the
following, including reasonable attorney's fees and costs incurred by Lender in
connection with any such recovery, collection or payment, all of which Borrower
hereby indemnifies Lender against, to-wit:
(i) damages suffered by Lender as a result of (a) fraud or
misrepresentation by Borrower or any other person acting on behalf of
or at the direction of Borrower in connection with the Loan, (b)
intentional waste of any of the Security Property, including the
removal of any property or fixtures from the Security Property which
are not replaced by similar property or fixtures of equal or greater
value, (c) the amendment, modification or termination of any lease
-9-
<PAGE>
(except as permitted by subparagraph 7(h) of the Mortgage) of any of
the Security Property in violation of any provision of the Credit
Documents, (d) failure to observe and comply with all laws, ordinances
and regulations applicable to any of the Security Property, (e)
failure to comply with any of the obligations of Borrower under any of
the Credit Documents or indemnity agreements pertaining to
environmental matters or access of handicapped or disabled persons,
(f) the sale or further encumbrance of any of the Security Property in
violation of any provision of the Credit Documents, (g) failure to
insure the Security Property in accordance with the terms of the
Credit Documents, (h) failure to pay real estate taxes and assessments
and ground lease payments (if applicable) which accrue prior to Lender
taking possession of the Security Property or failure to make
sufficient funds available through escrow payments to Lender to pay
such taxes, assessments and ground lease payments, or (i) any of the
Security Property is lost because of forfeiture to any governmental
agency or third party unrelated or not affiliated with Lender for any
reason;
(ii) any rents, issues or profits of any of the Security Property
collected by or on behalf of Borrower which are not applied to payment
of the Loan or paid to third parties not affiliated with Borrower for
reasonable operating costs related to the Security Property (including
real estate taxes and the establishment of a reasonable reserve for
that purpose) after an uncured default or an uncured Event of Default
or any event or circumstance that with the passage of time, the giving
of notice, or both, could constitute an Event of Default;
(iii) any security deposits or other similar deposits received
from tenants or occupants of the Security Property to the extent that
funds for such security deposits are not obtained by Lender from
Borrower;
(iv) any sums expended by Lender in fulfilling the obligations of
Borrower, as lessor, under any lease of any of the Security Property,
excluding obligations relating to maintenance of the Security Property
and liabilities occurring after Borrower has given up possession of
the Security Property to Lender;
-10-
<PAGE>
(v) any insurance proceeds, condemnation awards or proceeds
resulting from any sale of any of the Security Property which are
misapplied or misappropriated by or on behalf of Borrower or which,
under the terms of the Credit Documents, should have been paid to
Lender; or
(vi) the amount of any valid unpaid mechanic's liens,
materialmen's liens or other liens, whether or not similar, arising
due to work performed or materials furnished in connection with any of
the Security Property which could create liens on any portion of the
Security Property.
/Section/5.9 Time shall be of the essence with respect to this Note.
/Section/5.10 If any provision, or portion thereof, of this Note, or the
application thereof to any persons or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Note, or the application of such
provision, or portion thereof, to any other person or circumstances shall not be
affected thereby, and each provision of this Note shall be valid and enforceable
to the fullest extent permitted by law.
/Section/5.11 This Note shall be governed by, and construed in accordance
with, the laws of the State of Florida. The jurisdiction and venue for all
litigation, bankruptcy action, all other legal proceedings involving this Note,
and any of the other Credit Documents executed in connection herewith shall be
in Duval County, Florida.
IN WITNESS WHEREOF, Borrower has executed this Note under seal as of the
first above-written date.
Equity One (Atlantic Village) Inc., a Florida
corporation
By: /s/ DORON VALERO
-------------------
Name: Doron Valero
Title: Vice President
DOCUMENTARY STAMP TAX IN THE AMOUNT OF $17,500.00 HAS BEEN PAID AND AFFIXED TO
THE MORTGAGE SECURING THIS NOTE.
-11-
<PAGE>
State of Florida
SS:
County of Miami-Dade
The foregoing Promissory Note was acknowledged before me this 30th day of
October, 1998, by Doron Valero, as Vice President of Equity One (Atlantic
Village) Inc., a Florida corporation, on behalf of the corporation. He
personally appeared before me and is personally known to me or produced
___________________________as identification.
[NOTARIAL SEAL] Notary: /s/ ALAN J. MARCUS
------------------------------
Print Name: ALAN J. MARCUS
Notary Public, of FLORIDA
My commission expires: AUGUST 13, 2001
[SEAL]
-12-
EXHIBIT 10.3
Book 9117 Pg 1820
- --------------------------------------------------------------------------------
MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES
MORTGAGOR
EQUITY ONE (ATLANTIC VILLAGE) INC.,
a Florida corporation
and
MORTGAGEE
SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY,
a Mississippi corporation
DATE: October 30, 1998
Mortgagee's Address is:
1401 Livingston Lane, (39213)
Post Office Box 78
Jackson, Mississippi 39205
Attention: Mortgage Loan Administration Department
Mortgagor's Address is:
777 17th Street, Penthouse
Miami Beach, Florida 33139
This Mortgage Prepared By and Record and Return To:
Jerrold A. Wish, Esquire
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
(305) 579-0762
Bk: 9117
Pg: 1820 - 1856
Doc# 98266973
Filed & Recorded
11/02/98
02:09:13 P.M.
HENRY W. COOK
CLERK CIRCUIT COURT
DUVAL COUNTY, FL
REC. $ 168.O0
OTHER/MTG/NOTE $ 17,500.00
INTANGIBLE TAX $ 10,000.00
<PAGE>
Book 9117 Pg 1821
(Space reserved for Clerk of Court)
MORTGAGE, SECURITY AGREEMENT AND
ASSIGNMENT OF LEASES
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES (this
"MORTGAGE") is made as of October 30, 1998, by EQUITY ONE (ATLANTIC VILLAGE)
INC., a Florida corporation, whose address is 777 17th Street, Penthouse, Miami,
Beach, Florida 33139 ("MORTGAGOR"), in favor of SOUTHERN FARM BUREAU LIFE
INSURANCE COMPANY, a Mississippi corporation (the "MORTGAGEE").
WITNESSETH:
WHEREAS, Mortgagor is justly and lawfully indebted to Mortgagee for a loan
of money (the "LOAN") in the amount of Five Million and No/100 Dollars
($5,000,000), as evidenced by that certain Promissory Note of even date herewith
given by Mortgagor in favor of Mortgagee as the same may hereafter be amended,
modified, consolidated, extended, renewal or replaced (the "Note"), such Note
having a stated maturity date of November 1, 2018; and
WHEREAS, the obligations secured by this Mortgage (the "OBLIGATIONS") are:
(i) payment and performance of all covenants, conditions, liabilities and
obligations contained in, and payment of the indebtedness evidenced by the Note,
together with interest and any other amounts payable thereunder; (ii) payment
and performance of all covenants, conditions, liabilities and obligations of
Mortgagor contained in this Mortgage and in all other documents now or hereafter
executed by Mortgagor or any other Obligor relating to the Loan or held by
Mortgagee relating to the Loan, as now existing or hereafter amended
(collectively, the "LOAN DOCUMENTS"); (iii) all expenses and charges, including
attorneys' fees, incurred by Mortgagee in collecting or enforcing any of the
Obligations secured hereby; and (iv ) all other indebtedness, obligations and
liabilities of Mortgagor to Mortgagee of every kind and description owing or
which may become owing by Mortgagor to Mortgagee, howsoever evidenced, now or
hereafter existing in favor of Mortgagee, whether direct or indirect, primary or
secondary, joint or several, fixed or contingent, secured or unsecured
(collectively, the "OTHER INDEBTEDNESS"); and
WHEREAS, Mortgagor and all makers, endorsers, sureties, guarantors,
accommodation parties and all parties liable or to become liable with respect to
the Obligations are each referred to herein as an "Obligor";
NOW, THEREFORE, to secure the payment of the Obligations and the full and
faithful performance of the covenants and agreements contained in this Mortgage
and the other Loan Documents, Mortgagor hereby grants, bargains, sells, conveys,
assigns, transfers, mortgages, pledges, delivers, sets over, warrants and
confirms to Mortgagee, and grants Mortgagee a security interest in:
Page 1 of 36
<PAGE>
Book 9117 Pg 1822
(Space reserved for Clerk of Court)
All those certain lots, pieces, or parcels of land lying and being in Duval
County, State of Florida, being legally described in EXHIBIT "A" attached hereto
and made a part hereof (hereinafter referred to as the "LAND"), TOGETHER WITH
the buildings and improvements now or hereafter situated thereon (the
"IMPROVEMENTS").
TOGETHER WITH all and singular the tenements, hereditaments, easements,
rights-of-way, riparian rights and other rights now or hereafter belonging or
appurtenant to the Land, and the rights (if any) in all adjacent roads, ways,
streams, alleys, strips and gores, and the reversion or reversions, remainder
and remainders, rents, royalties, income, issues and profits thereof, and all
the estate, right, title, interest, property, claim and demand whatsoever of
Mortgagor of, in and to the same and every part and parcel thereof, whether now
owned or hereafter acquired by Mortgagor (the "RIGHTS");
TOGETHER WITH any and all tangible property now or hereafter owned by
Mortgagor and now or hereafter located at, affixed to, placed upon or used in
connection with the Land or the Improvements, or any present or future
improvements thereon, including without limitation: all machinery, Collateral,
appliances, fixtures, conduits and systems for generating or distributing air,
water, heat, air conditioning, electricity, light, fuel or refrigeration, or for
ventilating or sanitary purposes, or for the exclusion of vermin or insects, or
for the removal of dust, refuse, sewage or garbage, or for fire prevention or
extinguishing; all elevators, escalators, lifts and dumbwaiters; all motors,
engines, generators, compressors, pumps, lift stations, tanks, boilers, water
heaters, furnaces and incinerators; all furniture, furnishings, fixtures,
appliances, installations, partitions, shelving, cabinets, lockers, vaults and
wall safes; all carpets, carpeting, rugs, underpadding, linoleum, tiles,
mirrors, wall coverings, windows, storm doors, awnings, canopies, shades,
screens, blinds, draperies and related hardware, chandeliers and light fixtures;
all plumbing, sinks, basins, toilets, faucets, pipes, sprinklers, disposals,
laundry appliances and Collateral, and kitchen appliances and Collateral; all
alarm, safety, electronic, telephone, music, entertainment and communications
Collateral and systems; all janitorial, maintenance, cleaning; window washing,
vacuuming, landscaping, pool and recreational Collateral and supplies; and any
other items of property, wherever kept or stored, if acquired by Mortgagor with
the intent of incorporating them in and/or using them in connection with the
Land or the Improvements; together also with all additions thereto and
replacements and proceeds thereof; all of which foregoing items described in
this paragraph are hereby declared to be part of the real estate and encumbered
by this Mortgage (the "COLLATERAL"); and
TOGETHER WITH (a) any and all awards or payments, including interest
thereon and the right to receive the same, growing out of or resulting from any
exercise of the power of eminent domain (including the taking of all or any part
of the Land or the Improvements), or any alteration of the grade of any street
upon which the Land abuts, or any other injury to, taking of, or decrease in the
value of the Land or the Improvements or any part thereof; (b) all rights of
Mortgagor in and to any hazard, casualty, liability, or other insurance policy
carried for the
Page 2 of 36
<PAGE>
Book 9117 Pg 1823
(Space reserved for Clerk of Court)
benefit of Mortgagor and/or Mortgagee with respect to the Improvements or the
Collateral, including without limitation any unearned premiums and all insurance
proceeds or sums payable in lieu of or as compensation for any loss of or damage
to all or any portion of the Improvements or the Collateral; (c) all rights of
Mortgagor in and to all supplies and building materials, wherever located, for
the construction or refurbishing of the Improvements, and any bill of lading,
warehouse receipt or other document of title pertaining to any such supplies and
materials; and (d) all rights of Mortgagor in, to, under, by virtue of, arising
from or growing out of any and all present or future contracts, instruments,
accounts, insurance policies, permits, licenses, trade names, plans, appraisals,
reports, prepaid fees, choses-in-action, subdivision restrictions or
declarations or other general intangibles whatsoever now or hereafter dealing
with, affecting or concerning the Land or the Improvements or any portion
thereof or interest therein, including but not limited to: (i) all contracts,
plans and permits for or related to the Land or its development or the
construction or refurbishing of the Improvements, (ii) any Agreements for the
provision of utilities to the Land or the Improvements, (iii) all payment,
performance and/or other bonds, (iv) any contracts now existing or hereafter
made for the sale by Mortgagor of all or any portion of the Land or the
Improvements, including any security and other deposits paid by any purchasers
or lessees (howsoever such deposits may be held) and any proceeds of such sales
contracts and lease contracts, including any purchase-money notes and mortgages
made by such purchasers, and (v) any other contracts and agreements related to
or for the benefit of the Land, Rights, Collateral and/or Improvements,
including leases, repair and maintenance contracts and/or management agreements,
(vi) all funds, accounts, instruments, documents, accounts receivable, general
intangibles, notes, and chattel paper arising from or by virtue of transactions
related to the Land and Improvements, and (vii) any declaration of condominium,
restrictions, covenants, easements or similar documents now or hereafter
recorded against the title to all or any portion of the Land (the
"INTANGIBLES");
TO HAVE AND TO HOLD the above-described and granted Land, Improvements,
Rights, Collateral and Intangibles (collectively referred to in this Mortgage as
the "SECURITY PROPERTY") unto Mortgagee in fee simple forever.
PROVIDED, HOWEVER, that these presents are upon the condition that if
Mortgagor (a) shall pay or cause to be paid to Mortgagee the principal and all
interest payable in respect of the Obligations at the time and in the manner
stipulated in the Loan Documents, all without any deduction or credit for taxes
or other similar charges paid by Mortgagor, (b) shall punctually perform, keep
and observe all and singular the covenants and promises in the Loan Documents to
be performed, kept and observed by and on the part of Mortgagor, and (c) shall
not permit or suffer to occur any default under this Mortgage or any other Loan
Document, then this Mortgage and all the interests and rights hereby granted,
bargained, sold, conveyed, assigned, transferred, mortgaged, pledged, delivered,
set over, warranted and confirmed shall cease, terminate and be void, but shall
otherwise remain in full force and effect.
Page 3 of 36
<PAGE>
Book 9117 Pg 1824
(Space reserved for Clerk of Court)
To secure payment of the Obligations and the full and faithful performance
of the covenants and agreements in this Mortgage and the other Loan Documents,
Mortgagor hereby grants, bargains, sells, conveys, assigns, transfers, pledges,
sets over, warrants and confirms to Beneficiary a security interest in the
Collateral and the Intangibles.
Mortgagor covenants with and warrants to Mortgagee: (a) that Mortgagor has
good and marketable title to the Security Property, is lawfully seized and
possessed of the Land and Improvements in fee simple and has good right and
authority to grant, sell, assign, mortgage and convey the same and to grant a
security interest therein as provided herein, fully and absolutely waiving and
releasing all rights and claims it may have in or to the Security Property as a
homestead exemption or any federal, state or local law now or hereafter in
effect; (b) that the Security Property is unencumbered and free and clear of all
liens and security interests and title matters whatsoever except for any
easements, restrictions or other title exceptions listed in the title insurance
policy delivered to Mortgagee in connection with this Mortgage (the "PERMITTED
EXCEPTIONS"); and (c) that Mortgagor is now in a solvent condition and no
bankruptcy or insolvency proceedings are pending or contemplated by Mortgagor or
against Mortgagor; and (d) that Mortgagor shall forever warrant and defend the
Security Property unto Mortgagee, and the validity and priority of the lien of
this Mortgage, against the lawful claims and demands of all persons whomsoever.
This warranty of title shall survive the foreclosure of this Mortgage and insure
to the benefit of and be enforceable by any person who may acquire the Security
Property pursuant to foreclosure.
Mortgagor further covenants and agrees with Mortgagee as follows:
1. PAYMENT AND PERFORMANCE. Mortgagor shall pay all sums due Mortgagee at
the time and in the manner provided in the Loan Documents, and Mortgagor shall
otherwise perform, comply with and abide by each and every one of the
stipulations, agreements, conditions and covenants contained in the Loan
Documents.
2. TAXES, ASSESSMENTS AND CHARGES. Mortgagor shall pay all taxes,
assessments (whether general or special) and other charges whatsoever levied,
assessed, placed or made against all or any part of the Security Property or any
interest of Mortgagee therein, or against any Loan Document or any obligation
thereunder. Mortgagor shall make such payment in full (and shall deliver to
Mortgagee the paid receipts) not later than thirty (30) days before the last day
upon which the same may be paid without the imposition of interest (except
interest on special assessments payable by law in installments, in which case
Mortgagor shall pay each such installment when due) or other late charge or
penalty. If Mortgagor shall fail, neglect or refuse to pay any such taxes,
assessments or other charges as aforesaid, then Mortgagee at its option may pay
the same, and any funds so advanced by Mortgagee shall bear interest, shall be
paid and shall be secured as provided in paragraph 14.
Page 4 of 36
<PAGE>
Book 9117 Pg 1825
(Space reserved for Clerk of Court)
3. INSURANCE.
(a) Mortgagor shall maintain property insurance with a reputable insurance
company or companies with a Best's rating of A VIII or better,
licensed in the state in which the Security Property is located and
acceptable to Mortgagee, covering all the Improvements, the Collateral
and all tangible personal property encumbered by this Mortgage, for an
amount not less than their full insurable value on a replacement cost
basis, without contribution or coinsurance (or with co-insurance and
an agreed amount endorsement), but not less than the original amount
of the Note for the benefit of Mortgagor and Mortgagee as their
interests may appear, by policies on such terms, in such form and for
such periods as Mortgagee shall require or approve from time to time,
insuring with all risk or special form coverage against loss or damage
by fire, lightning, flood, windstorm, hail, aircraft, riot, vehicles,
explosion, smoke, falling objects, weight of ice or snow or sleet,
collapse, sudden tearing asunder, breakage of glass, freezing,
electricity, sprinkler leakage, water damage, sinkhole, earthquake,
vandalism and malicious mischief, theft, riot attending a strike,
civil commotion, loss of rents and other income (for no less than
twelve (12) full months) and when and to the extent required by
Mortgagee, against any other risks. Regardless of the types or amounts
of insurance required and approved by Mortgagee, Mortgagor shall
assign and deliver to Mortgagee all policies of insurance which insure
against any loss or damage to the Security Property or any part
thereof, as collateral and further security for the payment of the
Obligations, with loss payable to Mortgagee pursuant to a standard
mortgagee clause acceptable to Mortgagee. Mortgagee is hereby
authorized at its option to settle and adjust any claims arising out
of any insurance coverage so maintained by Mortgagor. Any expense
incurred by Mortgagee in the adjustment and collection of insurance
proceeds shall be reimbursed to Mortgagee first out of any insurance
proceeds.
(b) If Mortgagor fails to maintain such insurance in force, then Mortgagee
at its option may effect such insurance from year to year and pay the
premiums therefor, and any such sums advanced by Mortgagee shall bear
interest, shall be paid and shall be secured as provided in paragraph
14.
(c) If any insurance proceeds are received for loss or damage to the
Improvements or the Collateral, then Mortgagee at its option may
retain such proceeds and apply them toward the payment of the
Obligations (in any order of priority Mortgagee may deem appropriate
in its sole
Page 5 of 36
<PAGE>
Book 9117 Pg 1826
(Space reserved for Clerk of Court)
discretion), or Mortgagee may disburse them to Mortgagor for the
repair or restoration of the damaged Improvements or Collateral in the
same manner as disbursements under a construction loan; Mortgagee
shall not be obligated to see to the proper application by Mortgagor
of any such disbursement.
(d) Mortgagor shall obtain and carry commercial general liability
insurance with a reputable insurance company or companies with a
Best's rating of A VIII or better, licensed in the state in which the
Security Property is located, and acceptable to Mortgagee, which
policy shall name Mortgagor as insured and Mortgagee as additional
insured, with initial limits of not less than One Million Dollars
($1,000,000) as to personal injury or death, and One Hundred Thousand
Dollars ($100,000) with respect to property damage (or such greater or
different limits which Mortgagee may require from time to time) and on
such terms, in such form and for such periods as Mortgagee shall
approve from time to time.
(e) In the event of a foreclosure of this Mortgage, the purchaser of the
Security Property shall succeed to all the rights of Mortgagor in and
to all policies of insurance required under this Mortgage, including
any right to unearned premiums.
(f) Not less than thirty (30) days prior to the expiration date of each
policy required under this Mortgage, Mortgagor shall deliver to
Mortgagee a renewal policy or policies marked "premium paid" or
accompanied by other evidence of payment satisfactory to Mortgagee.
(g) Each policy of insurance required under this Mortgage shall be non-
cancelable without at least thirty (30) days' advance written notice
to Mortgagee.
(h) The insurance coverages required by this paragraph 3 may be included
in a "blanket" policy or policies subject to Mortgagee's written
approval, which approval shall not be unreasonably withheld.
(i) All proceeds paid under any insurance policy will be paid to
Mortgagee. However, Mortgagee agrees that such proceeds may be used
for restoration of damaged Improvements if the following conditions
are fulfilled:
Page 6 of 36
<PAGE>
Book 9117 Pg 1827
(Space reserved for Clerk of Court)
1. No Event of Default has occurred or is continuing under this Mortgage,
and no event has occurred which, with the lapse of time or the giving
of notice, or both, would constitute an Event of Default under this
Mortgage.
2. Such restoration can be fully accomplished within one hundred eighty
(180) days.
3. Such restoration will be performed in accordance with plans and
specifications approved in writing by Mortgagee.
4. The cost of restoration does not exceed thirty percent (30%) of the
outstanding Loan balance. Additionally, Mortgagee must be given
satisfactory evidence that, by expenditure of the insurance proceeds,
the damage to the Security Property can be fully repaired, free and
clear of all liens, except for the lien of this Mortgage.
5. No waiver of payments due under the Note or other Loan Documents
occurs while the Security Property is being restored.
6. No insurer denies liability as to Mortgagor or the Security Property.
If all of the above conditions are not satisfied, the proceeds will be
applied to the outstanding principal balance of the Loan with all terms
(including, but not limited to, repayments terms) remaining the same.
If the above conditions are met, the insurance proceeds received, after
deducting therefrom any expenses incurred in the collection thereof, shall be
disbursed periodically in accordance with procedures established by Mortgagee as
restoration work is completed.
4. ESCROW ACCOUNT. At Mortgagee's option, Mortgagor shall pay to Mortgagee,
together with and in addition to each regular installment of principal and/or
interest payable under the Loan Documents, an amount deemed sufficient by
Mortgagee to provide Mortgagee with funds in an escrow account sufficient to pay
the taxes, assessments, insurance premiums and other charges next due at least
thirty (30) days before the date the same are due. In no event shall Mortgagee
be liable for any interest on any such funds held in the escrow account. At
least thirty (30) days before the date the same are due, Mortgagor shall furnish
to Mortgagee an official statement of the amount of said taxes, assessments,
insurance premiums and other charges, and Mortgagee shall pay the same, but only
if sufficient funds remain in the escrow account. In the event of any deficiency
in the escrow account, Mortgagor shall upon notice from Mortgagee immediately
deposit with Mortgagee such additional funds as Mortgagee may deem necessary to
cure the deficiency, in its sole discretion. If Mortgagee elects to pay any such
taxes, assessments,
Page 7 of 36
<PAGE>
Book 9117 Pg 1828
(Space reserved for Clerk of Court)
insurance premiums or other charges notwithstanding the escrow account
deficiency, then all sums advanced by Mortgagee in excess of the escrow account
balance shall bear interest, shall be paid and shall be secured as provided in
paragraph 14. An official receipt for such sums shall be conclusive evidence of
Mortgagee's payment and of the validity of the tax, assessment, insurance
premium or other charge so paid. In the event of any default under this Mortgage
or any other Loan Document, Mortgagee at its option may apply any or all funds
in the escrow account against the Obligations or any other sums secured by this
Mortgage, in any order of priority Mortgagee may deem appropriate in its sole
discretion. At the time of any permitted transfer of the title to all of the
Security Property then encumbered by this Mortgage, the balance in the escrow
account shall inure to the benefit of such transferee without any specific
assignment of such funds. Upon payment in full of the Obligations, the funds
remaining in the escrow account (if any) shall be paid over to the record owner
of the Security Property encumbered by this Mortgage as of the date of such full
payment. Notwithstanding the foregoing, Mortgagee agrees not to exercise its
right to collect escrows for insurance so long as (i) no Event of Default has
occurred and is continuing; and (ii) all such insurance premiums are paid in a
timely manner as and when due, and evidence of such payment is provided to
Mortgagee no less than ten (10) days prior to any such payment being delinquent
or overdue or beyond any deadline for maximum discounts, as determined by
Mortgagee in Mortgagee's sole discretion.
5. IMPROVEMENTS AND DEVELOPMENT. Without the prior written consent of
Mortgagee, which Mortgagee may grant or withhold in its sole discretion, none of
the Improvements covered by the lien of this Mortgage shall be removed,
demolished or materially altered or enlarged (except as required in the event of
fire, other casualty or condemnation). Notwithstanding the foregoing, Mortgagor
shall have the right to remove and dispose of, free from the lien of this
Mortgage, such Collateral as from time to time may become worn out or obsolete,
provided that, simultaneously with or prior to such removal, Mortgagor shall
have replaced any such Collateral with new Collateral (of at least the same
quality as that of the replaced Collateral when it was new) which shall be free
from any title retention or other security agreement or other encumbrance, and,
by such removal and replacement, Mortgagor shall be deemed to have subjected
such new Collateral to the lien of this Mortgage. Without the prior written
consent of Mortgagee, which Mortgagee may grant or withhold in its sole
discretion, Mortgagor shall not undertake any development of the Land, nor
construct any new Improvements thereon, nor initiate or join in or consent to
any new (or any change in any existing) private restrictive covenant, zoning
ordinance, master plan, site plan, easement, or other public or private
restrictions limiting or defining the uses which may be made of the Security
Property or any part thereof. Mortgagor shall complete and pay for any permitted
development and/or improvements undertaken on the Land within a reasonable time
after commencing the same.
6. MAINTENANCE AND REPAIR. Mortgagor shall do everything necessary to
maintain the Security Property in good condition and repair, shall operate the
Security Property in a first-
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Book 9117 Pg 1829
(Space reserved for Clerk of Court)
class manner, shall not commit or suffer any waste, impairment, abandonment or
deterioration of the Security Property, shall promptly pay all utility fees for
services provided to the Security Property, and shall comply with (or cause
compliance with) all applicable restrictive covenants and all statutes,
ordinances and requirements of any governmental authorities having jurisdiction
over the Security Property or the use thereof. In the event of any fire or other
casualty loss or damage to all or any part of the Security Property, Mortgagor
shall notify Mortgagee within forty-eight (48) hours of such occurrence.
Mortgagor shall promptly repair, restore, replace or rebuild any part of the
Security Property which may be damaged or destroyed by any casualty whatsoever
or which may be affected by any condemnation, alteration of grade, or other
public or quasi-public taking or injury, except to the extent precluded by
Mortgagee's retention and application of the insurance or condemnation proceeds
against the Obligations. If Mortgagor shall fail, neglect or refuse to repair or
maintain the Security Property as aforesaid, then Mortgagee may at its option
undertake such repairs or maintenance, and any funds advanced therefor by
Mortgagee shall bear interest, shall be paid and shall be secured as provided in
paragraph 14.
7. ASSIGNMENT OF LEASES AND RENTS AND MANAGEMENT AGREEMENTS. As further
consideration for the making of the Loan evidenced by the Note, Mortgagor hereby
absolutely, presently and unconditionally assigns and transfers to Mortgagee all
rents, income, issues and profits of the Security Property and all right, title
and interest of Mortgagor in and under all leases, tenancies and occupancy
agreements of any nature whatsoever (and any extensions and renewals thereof)
now or hereafter affecting the Security Property (the "LEASES"), together with
any guaranties thereof and any security deposits or prepaid rent or other
deposits or advances thereunder to be applied by Mortgagee in payment of the
Obligations, subject to the license granted to Mortgagor pursuant to Section 7.
As further security for the repayment of the Obligations, Mortgagor hereby
assigns and transfers to Mortgagee all right, title and interest of Mortgagor in
and under all management agreements of any nature whatsoever (and any extensions
and renewals thereof) now or hereafter affecting the Security Property (the
"MANAGEMENT AGREEMENTS").
(a) Mortgagor hereby empowers Mortgagee, its agents or attorneys, to
demand, collect, sue for, receive, settle, compromise and give
acquittances for all of the rents that may become due under the
Leases and to avail itself of and pursue all remedies for the
enforcement of the Leases and Mortgagor's rights thereunder that
Mortgagor could have pursued but for this assignment. Mortgagee is
hereby vested with full power and authority to use all measures,
legal and equitable, deemed necessary or proper by Mortgagee to
enforce this assignment, to collect the rents so assigned, and/or
to cure any default and perform any covenant of Mortgagor as the
landlord under any of the Leases, including without limitation the
right to enter upon all or any part of the Security Property and
to take possession
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Book 9117 Pg 1830
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thereof to the extent necessary to exercise such powers. Mortgagee
shall have the right (but not the obligation) to advance any sums
necessary to exercise such powers, which sums shall bear interest,
shall be paid and shall be secured as provided in paragraph 14.
Mortgagor hereby empowers Mortgagee to use and apply all such
rents and other income of the Security Property to the payment of
the Obligations and all interest thereon and any other
indebtedness or liability of Mortgagor to Mortgagee, and to the
payment of the costs of managing and operating the Security
Property, including without limitation: (i) taxes, special
assessments, insurance premiums, damage claims, and the costs of
maintaining, repairing, rebuilding, restoring and making rentable
the Improvements; (ii) all sums advanced by Mortgagee (with
interest thereon) for the payment of such costs or for any other
reason permitted by this Mortgage or any other Loan Document; and
(iii) all costs, expenses and attorney's fees incurred by
Mortgagee in connection with the enforcement of this Mortgage
and/or any Lease; all in such order of priority as Mortgagee may
deem appropriate in its sole discretion.
(b) Mortgagee shall not be obliged to press any of the rights or
claims of Mortgagor assigned hereby, nor to perform or carry out
any of the obligations of the landlord under any Lease, and
Mortgagee assumes no duty or liability whatsoever in connection
with or arising from or growing out of the covenants of Mortgagor
in any Lease. This Mortgage shall not operate to make Mortgagee
responsible for the control, care, management or repair of all or
any part of the Security Property, nor shall it operate to make
Mortgagee liable for (i) the performance or carrying out of any of
the terms or conditions of any Lease, (ii) any waste of the
Security Property by any tenant or any other person, (iii) any
dangerous or defective condition of the Security Property, nor
(iv) any negligence in the management, upkeep, repair or control
of all or any part of the Security Property resulting in loss or
injury or death to any tenant, licensee, employee or stranger.
Mortgagor hereby indemnifies and holds Mortgagee harmless against
any and all liability, loss, claim, damage, costs and attorney's
fees whatsoever which Mortgagee may or might incur under any Lease
or by reason of this assignment, and against any and all claims or
demands whatsoever (and any related costs and attorney's fees)
which may be asserted against Mortgagee by reason of any alleged
obligations or undertakings on its part to perform or discharge
any of the terms, covenants or agreements contained in any Lease.
Nothing herein contained shall be construed as constituting
Mortgagee a trustee or mortgagee in possession.
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Book 9117 Pg 1831
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(c) Mortgagor, upon request of Mortgagee, shall promptly deliver to
Mortgagee a true, correct and complete copy of each Lease as and
when Mortgagor shall enter into the same, and Mortgagor shall
procure and deliver to Mortgagee estoppel letters or certificates
from each tenant, in form and substance satisfactory to Mortgagee,
within thirty (30) days after Mortgagee's request therefor.
Mortgagor hereby represents and warrants to Mortgagee (and shall
be deemed to have represented and warranted to Mortgagee upon and
as of the date of delivering to Mortgagee a copy of each Lease),
except as previously or concurrently disclosed to and approved by
Mortgagee in writing: (i) that each such copy delivered (or to be
delivered) to Mortgagee is true, correct and complete; (ii) that
Mortgagor is the sole owner of the entire landlord's interest in
each Lease and has not previously assigned or pledged any Lease or
any interest therein to any person other than Mortgagee; (iii)
that all the Leases are in full force and effect and have not been
altered, modified or amended in any manner whatsoever; (iv) that
each tenant thereunder has accepted that tenant's respective
premises and is paying rent on a current basis; (v) that no
default exists on the part of such tenants or on the part of
Mortgagor as landlord in their respective performances of the
terms, covenants, provisions and agreements contained in the
Leases; (vi) that no rent has been paid by any of the tenants for
more than one (1) month in advance; (vii) that Mortgagor is not
indebted to any tenant in any manner whatsoever so as to give rise
to any right of set-off against or reduction of the rents payable
under any Lease; and (viii) that no payment of rents to accrue
under any Lease has been or will be waived, released, reduced,
discounted or otherwise discharged or compromised by Mortgagor
directly or indirectly, whether by assuming any tenant's
obligations with respect to other premises or otherwise.
(d) Mortgagor covenants and agrees with Mortgagee that each Lease
shall remain in full force and effect irrespective of any merger
of the interests of the landlord and tenant thereunder.
(e) Mortgagor shall, at its own cost and expense, do the following
with respect to any Leases of the Security Property: (i)
faithfully abide by, perform and discharge each and every
obligation, covenant and agreement under the Leases to be
performed by the landlord under such Leases; (ii) enforce or
secure the performance of each and every material obligation,
covenant, condition and agreement of the Leases by the tenants
thereunder to be performed; (iii) not borrow against, pledge or
further assign any rental due under the Leases; (iv) not permit
the prepayment of any rents
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Book 9117 Pg 1832
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due under any Lease for more than one (1) month in advance nor for
more than the next accruing installment of rents, nor anticipate,
discount, compromise, forgive, or waive any such rents; (v) not
waive, excuse, condone or in any manner release or discharge any
tenants of or from the obligations, covenants, conditions, and
agreements by said tenants to be performed under the Leases except
in the ordinary and prudent course of business; (vi) not permit
any tenant to assign or sublet its interest in its Lease unless
required to do so by the terms of the Lease, and then only if such
assignment does not work to relieve the tenant of any liability
for payment of and performance of its obligations under the Lease
unless the Lease so requires; (vii) not accept a surrender (unless
required by the terms of a Lease) or terminate any Lease unless
such lease would qualify as a "Permitted Lease" (as defined below)
or the Mortgagor and tenant shall have executed a new Lease
effective upon such surrender or termination for the same terms of
years at a rental not less than as provided in and on terms no
less favorable to the landlord than as in that Lease being
replaced; (viii) not consent to a subordination of the interest of
any tenant to any party other than Mortgagee and then only if
specifically consented to by the Mortgagee; and (ix) not amend or
modify any of the Leases or alter the obligations of the parties
thereunder, except in the ordinary and prudent course of business
which does not reduce the rent or diminish the term thereof or the
obligations of the tenant thereunder or increase the term of the
tenancy or impose additional obligations or burdens on the
landlord.
(f) Although Mortgagor and Mortgagee intend that this instrument shall
be a present assignment of the Leases and the rents, income,
issues and profits of the Security Property, it is expressly
understood and agreed that so long as no Event of Default shall
exist under this Mortgage and no default or event of default shall
exist under any other Loan Document, Mortgagor may collect, and is
hereby granted a license to collect, assigned rents, income,
issues, and profits for not more than one (1) month in advance of
the accrual thereof, but upon the occurrence of any such Event of
Default under this Mortgage or the occurrence of any default or
event of default under any other Loan Document, or at any time
during its continuance, all rights and license of Mortgagor to
collect or receive rents or profits shall wholly terminate upon
notice from Mortgagee, and Mortgagee may apply all rents collected
to the Obligations in such order and priority as Mortgagee so
elects in its sole discretion. The tenants under all the Leases
are hereby irrevocably authorized to rely upon and comply with
(and shall be fully protected in so doing) any notice or demand
by Mortgagee for the
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Book 9117 Pg 1833
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payment to Mortgagee of any rental or other sums which may be or
thereafter become due under the Leases, or for the performance of
any of the tenants' undertakings under the Leases, and none of
them shall have any right or duty to inquire as to whether any
default hereunder or under any other Loan Document shall have
actually occurred or is then existing.
(g) Mortgagor has conditionally assigned to Mortgagee by separate
agreement of even date herewith all Leases and rents with respect
to the Security Property, which assignment is in addition to, and
cumulative with, the assignment and rights granted to Mortgagee
herein. Mortgagee shall have the right to approve any Management
Agreement with respect to the Security Property hereafter entered
into by Mortgagee, and all managers and management companies
thereby selected by Mortgagor and, upon the occurrence of an Event
of Default under this Mortgage or the occurrence of a default or
event of default under any other Loan Document or under the
Management Agreement, such Management Agreement may be terminated
by Mortgagee at no cost to Mortgagee upon prior written notice to
the manager under the Management Agreement. The manager under each
existing Management Agreement has agreed to the foregoing and that
its Management Agreement is subject and subordinate in all
respects to this Mortgage. Any Management Agreement hereafter
entered into by Grantor shall expressly provide that such
Management Agreement may be terminated by Mortgagee at no cost to
Mortgagee upon prior written notice to the manager under the
Management Agreement and that the Management Agreement is subject
and subordinate in all respects to this Mortgage. Mortgagor has
heretofore delivered to Mortgagee a true and complete copy of any
Management Agreements affecting the Security Property and any and
all amendments or modifications thereof. Grantor agrees that it
will not modify or amend any Management Agreement without
Mortgagee's prior written consent.
(h) Mortgagor shall not enter into any new lease with respect to the
Security Property without Mortgagee's prior written consent.
Notwithstanding the foregoing or any other contrary or
inconsistent provision of this Mortgage or any other Loan
Documents, so long as no Event of Default has occurred hereunder,
Mortgagor may, without Mortgagee's consent, enter into new leases,
or modify or amend existing leases, so long as such new or amended
lease (a) has an initial lease term of no more than five (5) years
and a total lease term, including available extensions, of no more
than ten (10) years; and (b) leases space of no more than 7,500
square feet of building space (no vacant land may be leased); and
(c) is entered into at
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Book 9117 Pg 1834
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arms length, in the ordinary course of business, on market rates
and terms, using sound business judgment, and (d) is on a standard
lease form approved by Mortgagee in writing (herein called a
"PERMITTED LEASE").
8. FURTHER ENCUMBRANCES. Mortgagor shall not grant any other lien or
mortgage on all or any part of the Security Property or any interest therein nor
make any further assignment of the Leases and rentals of the Security Property
without the prior written consent of Mortgagee, which Mortgagee may grant or
withhold in its sole discretion; any such unpermitted lien or mortgage or
assignment by Mortgagor, being herein called an "ENCUMBRANCE", shall entitle
Mortgagee to declare the Obligations immediately due and payable and to
foreclose this Mortgage. Any such other lien or mortgage or assignment shall be
junior to this Mortgage and to all permitted tenancies now or hereafter
affecting the Security Property or any portion thereof and shall be subject to
all renewals, extensions, modifications, releases, interest rate increases,
future advances, changes or exchanges permitted by this Mortgage, all without
the joinder or consent of such junior lienholder or mortgagee or assignee and
without any obligation on Mortgagee's part to give notice of any kind thereto.
Mortgagor shall maintain in good standing any other mortgage or encumbrance to
secure debt affecting any part of the Security Property from time to time and
shall not commit or permit or suffer to occur any default thereunder, nor shall
Mortgagor accept any future advance under or modify the terms of any such
mortgage or encumbrance which may then be superior to the lien of this Mortgage.
Except for encumbrances permitted by Mortgagee, Mortgagor shall not commit or
permit or suffer to occur any act or omission whereby any of the security
represented by this Mortgage shall be impaired or threatened, or whereby any of
the Security Property or any interest therein shall become subject to any
attachment, judgment, lien, charge or other encumbrance whatsoever, and
Mortgagor shall immediately cause any such attachment, judgment, lien, charge or
other encumbrance to be discharged or otherwise bonded or transferred to other
security. Mortgagor shall not directly or indirectly do anything or take any
action which might prejudice any of the right, title or interest of Mortgagee in
or to any of the Security Property or impose or create any direct or indirect
obligation or liability on the part of Mortgagee with respect to any of the
Security Property.
9. PROHIBITED TRANSFERS. Mortgagor shall not cause or permit or suffer to
occur any of the following events (a "DISPOSITION") without the prior written
consent of Mortgagee, which Mortgagee may grant or withhold in its sole
discretion, and if any of the same shall occur without such consent, then
Mortgagee shall have the right to declare the Obligations immediately due and
payable and to foreclose this Mortgage: (a) if all or any portion of the legal
or equitable or beneficial title to all or any portion of the Security Property
or any interest therein shall in any manner whatsoever be sold, conveyed or
transferred, either voluntarily or by operation of law; or (b) in the case of
any portion of the Security Property directly or indirectly owned by a
corporation (or a partnership or joint venture or limited liability company or
trust or other business entity), if any stock or partnership interest or joint
venture interest or member interest or beneficial interest in such owner shall
be transferred (whether among the then existing partners,
Page 14 of 36
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Book 9117 Pg 1835
(Space reserved for Clerk of Court)
stockholders, members or other beneficial owners, or otherwise), or if such
stock or partnership interest or joint venture interest or beneficial interest
shall be assigned, pledged, hypothecated, mortgaged or otherwise encumbered. It
is expressly agreed that, in connection with determining whether to grant or
withhold consent to any Disposition or Encumbrance, the determination made by
Mortgagee shall be conclusive and Mortgagee may require as conditions to
granting such consent (1) an increase in the rate of interest payable under the
Note, (2) payment to Mortgagee of a transfer fee, (3) payment of Mortgagee's
reasonable attorneys' fees in connection with such Disposition or Encumbrance,
(4) the express assumption of the payment of the Obligations by the party to
whom such Disposition will be made (with or without, in Mortgagee's sole
discretion, the release of Mortgagor from liability for such Obligations).
The following transfers shall not be in violation of this paragraph 9: (i)
Public utility easements for the benefit of the Security Property; and (ii)
involuntary conveyances which are removed or reconveyed within 90 days; and
(iii) a transfer as the result of the death of an obligor who is a natural
person, provided that a transferee acceptable to the Beneficiary assumes the
liability of the decedent with respect to the Loan within 90 days of the
person's death; and (iv) trades of the publicly traded stock of Equity One,
Inc., a Maryland corporation ("GUARANTOR"), in the ordinary course of business;
and (v) changes in the corporate structure of Guarantor so long as (i) such
changes do not directly affect Mortgagor or any of the Security Property, and
(ii) Guarantor's net worth before and after any such changes is and remains in
excess of $50,000,000.00, as determined by Mortgagee, and in accordance with
generally accepted accounting principles consistently applied.
Notwithstanding the foregoing, Mortgagee will allow a one-time transfer of
the Security Property with all terms of the Note otherwise remaining the same,
if the following conditions are satisfied: (1) the Obligations are current and
not in default of any kind at the time of transfer; (2) the transferee
demonstrates financial credentials, creditworthiness, and management ability
acceptable to Mortgagee in its sole discretion; (3) Mortgagee receives a
transfer fee equal to one percent of the outstanding balance of the Obligations;
(4) the structure of the transaction, including the form of purchasing
transferee entity, secondary financing (if any), third party guarantees and
indemnifications and other fundamental matters, is acceptable to Mortgagee in
its sole discretion; (5) the transferee executes an environmental certificate
and indemnity agreement in form and content satisfactory to Mortgagee; (6) the
transferee executes an assumption agreement and such other documentation
reasonably requested by Mortgagee to evidence such transfer and to preserve and
continue the security interests of Mortgagee in the Security Property and other
collateral for the Obligations, in form and substance satisfactory to Mortgagee
in Mortgagee's reasonable discretion; (7) the purchaser executes an indemnity
agreement protecting Mortgagee against loss or damage because of the Security
Property's failure to comply with applicable laws and governmental regulations,
including those pertaining to access of handicapped or disabled persons; and (8)
Mortgagee receives payment of all taxes, costs and expenses incurred in
connection therewith, including Mortgagee's attorneys' fees.
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Book 9117 Pg 1836
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10. FURTHER ASSURANCES. From time to time and on demand, Mortgagor shall
execute and deliver to Mortgagee (and pay the costs of preparing and recording)
any further instruments required by Mortgagee to reaffirm, correct or perfect
the evidence of the Obligations secured hereby and the lien and security
interest of Mortgagee in all the Security Property and all additions,
replacements and proceeds, including but not limited to mortgages, security
agreements, financing statements, assignments and renewal and substitution
notes.
11. ESTOPPEL LETTERS AND INFORMATION. Within three (3) days after request
in person or within five (5) days after request by mail, Mortgagor shall furnish
to Mortgagee a written statement, duly acknowledged, of the amount of principal
and interest and other sums then owing on the Obligations and whether any
offsets, counterclaims or defenses exist against the Obligations. Mortgagor
shall promptly furnish to Mortgagee any financial or other information regarding
Mortgagor or the Security Property required by any Loan Document or which
Mortgagee may reasonably request from time to time.
12. NOTICES. Whenever Mortgagor or Mortgagee are obliged to give notice to
the other, such notice shall be in writing and shall be given personally, by an
overnight courier which provides for a return receipt or by prepaid certified
mail (return receipt requested), in which latter case notice shall be deemed
effectively made when the receipt is signed or when the attempted initial
delivery is refused or cannot be made because of a change of address of which
the sending party has not been notified. Any notice to Mortgagee shall be
addressed to the attention of a Vice President or higher officer. Until the
designated addresses are changed by notice given in accordance with this
paragraph, notice to either party shall be sent to the respective address set
forth on the first page of this Mortgage.
13. DEFAULT. At Mortgagee's option, all of the principal and interest and
other sums secured by this Mortgage shall immediately or at any time thereafter
become due and payable without notice to any Obligor, and Mortgagee shall
immediately have all the rights accorded Mortgagee by law and hereunder to
foreclose this Mortgage or otherwise to enforce this Mortgage and any other Loan
Document, upon the occurrence of any of the following defaults (an "EVENT OF
DEFAULT"): (a) failure to pay any sum due under any Loan Document and the
expiration of the grace period (if any) provided therein; or (b) failure to pay
any tax, assessment, utility charge, or other charge against the Security
Property or any part thereof as and when required by this Mortgage; or (c) any
waste, impairment, abandonment, deterioration, removal, demolition, material
alteration or enlargement of any existing Improvements, or the commencement of
construction of any new Improvements, in either case without the prior written
consent of Mortgagee, which Mortgagee may grant or withhold in its sole
discretion; or (d) failure to keep in force the policies of insurance required
by this Mortgage or any other Loan Document; or (e) Mortgagor's failure or
refusal to provide any estoppel certificate within the time required by this
Mortgage; or (f) Mortgagor's recordation of any notice limiting the amount of
future advances that may be secured by this Mortgage; or (g) any unpermitted
sale, transfer
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Book 9117 Pg 1837
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(whether voluntary or by operation of law), conveyance or further encumbering of
all or any part of the Security Property or any interest therein, or the
additional assignment of all or any part of the rents, income or profits arising
therefrom; or (h) Mortgagor's failure to remove any involuntary lien on the
Security Property or any part thereof within twenty (20) days after its filing,
or the filing of any suit against the Security Property upon any claim or lien
other than this Mortgage (whether superior or inferior to this Mortgage); or (i)
Mortgagor's failure to comply within ten (10) days with a requirement, order or
notice of violation of a law, ordinance, or regulation issued or promulgated by
any political subdivision or governmental department claiming jurisdiction over
the Security Property or any operation conducted on the Security Property (or,
if such order or notice provides a time period for compliance, Mortgagor's
failure to comply within such period), or, in the case of a curable
noncompliance requiring longer than the applicable time period for its cure,
Mortgagor's failure to commence to comply with said order or notice within said
period or failure thereafter to pursue such cure diligently to completion; or
(j) the issuance of any order by the state in which the Security Property is
located, or any subdivision, instrumentality, administrative board or department
thereof, declaring unlawful or suspending any operation conducted on the
Security Property; or (k) if any representation, warranty, affidavit,
certificate or statement made or delivered to Mortgagee by or on behalf of any
Obligor from time to time in connection with the Obligations or this Mortgage or
any other Loan Document shall prove false, incorrect or misleading in any
respect deemed material by Mortgagee; or (l) the dissolution or merger or
consolidation or termination of existence of any other Obligor, or the failure
or cessation or liquidation of the business of any Obligor, or if the person(s)
controlling any Obligor which is a business entity shall take any action
authorizing or leading to the same; or (m) any default by any Obligor in the
payment of any indebtedness for borrowed money (whether direct or contingent and
whether matured or accelerated) to Mortgagee, or if any Obligor shall become
insolvent or unable to pay such Obligor's debts as they become due; or (n) the
disposition or transfer or exchange of all or substantially all of any Obligor's
assets for less than fair market value, or the issuance of any levy, attachment,
charging order, garnishment or other process against the Security Property, or
the filing of any lien against the Security Property (and the expiration of any
grace period provided in any Loan Document for the discharge of such lien); or
(o) if any Obligor shall make an assignment for the benefit of creditors, file a
petition in bankruptcy, apply to or petition any tribunal for the appointment of
a custodian, receiver, intervenor or trustee for such Obligor or a substantial
part of such Obligor's assets, or if any Obligor shall commence any proceeding
under any bankruptcy, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect, or if any Obligor shall by act or omission approve, consent to or
acquiesce in the filing of any such petition or application against such Obligor
or the appointment of any such custodian, receiver, intervenor or trustee or the
commencement of any such proceeding against such Obligor or the entry of an
order for relief with respect to such Obligor, or if any such petition or
application shall have been filed or proceeding commenced against any Obligor
which remains undismissed for thirty (30) days or more or in which an order for
relief is entered, or if any Obligor shall suffer any such appointment of a
custodian, receiver, intervenor or trustee to
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continue undischarged for thirty (30) days or more; or (p) if any Obligor while
insolvent shall have concealed, transferred, removed, or permitted to be
concealed or transferred or removed, any part of such Obligor's property with
intent to hinder, delay or defraud any of such Obligor's creditors, or if any
Obligor shall have made or suffered a transfer of any of such Obligor's
properties which may be invalid under any bankruptcy, fraudulent conveyance,
preference or similar law, or if any Obligor while insolvent shall have made any
transfer of such Obligor's properties to or for the benefit of any creditor at a
time when other creditors similarly situated have not been paid; or (q)
Mortgagor's failure to provide the documents required by paragraph 29 after 15
days' written notice; or (r) the existence of any uncured default under any
other mortgage or encumbrance affecting any part of the Security Property then
encumbered by this Mortgage (in the case of a default for which such mortgage or
other encumbrance provides a grace period, if the default remains uncured after
the expiration of that grace period), or Mortgagor's acceptance of any future
advance under, or modification of the terms of, any such other mortgage or
encumbrance which may then be superior to the lien of this Mortgage; or (s)
Mortgagee's election to declare the Obligations due and payable under the
provisions of any other Loan Document; or (t) any default in the observance or
performance of any other covenant or agreement of any Obligor in this Mortgage
or any other Loan Document, the occurrence of any other event prohibited by the
terms of this Mortgage or any other Loan Document, or the violation of any other
provision of this Mortgage or any other Loan Document. No consent or waiver
expressed or implied by Mortgagee with respect to any default under this
Mortgage shall be construed as a consent or waiver with respect to any further
default of the same or a different nature; and no consent or waiver shall be
deemed or construed to exist by reason of any curative action initiated by
Mortgagee or any other course of conduct or in any other manner whatsoever
except by a writing duly executed by Mortgagee, and then only for the single
occasion to which such writing is addressed. In order to declare the Obligations
due and payable because of Mortgagor's failure to pay any tax, assessment,
insurance premium, charge, liability, obligation or encumbrance upon the
Security Property as required by this Mortgage, or because of any other default,
Mortgagee shall not be required to pay the same or to advance funds to cure the
default, notwithstanding Mortgagee's option under this Mortgage or any other
Loan Document to do so; no such payment or advance by Mortgagee shall be deemed
or construed a waiver of Mortgagee's right to declare the Obligations due and
payable on account of such failure or other default.
Notwithstanding the foregoing to the contrary, no non-monetary default
shall be deemed an Event of Default if (a) the default is curable; and (b) such
default is cured within fifteen (15) days after Mortgagor's receipt of written
notice thereof or, if not curable with due diligence within fifteen (15) days,
Mortgagor commences such cure within such fifteen (15) days and diligently
prosecutes such cure to completion, as determined by Mortgagee.
14. ADVANCES BY MORTGAGEE. In the event of any default in the performance
of any of Mortgagor's covenants or agreements contained in this Mortgage or any
other Loan Document or the violation of any term thereof, Mortgagee shall have
the right (but in no event the
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Book 9117 Pg 1839
(Space reserved for Clerk of Court)
obligation) at its option to cure the default or take any other action Mortgagee
deems necessary or desirable to protect its security (including without
limitation the payment of any taxes, assessments, insurance premiums, charges,
liens or encumbrances required of Mortgagor under this Mortgage), without
thereby waiving any rights or remedies otherwise available to Mortgagee. If
Mortgagee shall elect to advance at any time any sum(s) for the protection of
its security or for any other reason permitted or provided by any of the terms
of this Mortgage or any other Loan Document, then such sum(s) shall be deemed
Obligations, shall be repaid by Mortgagor on demand, shall be secured by this
Mortgage and shall bear interest until paid at the lesser of the non-default
interest rate provided for in /Section/2 of the Note plus five percent (5%) per
annum, or at the highest rate allowed by applicable law, commencing on the date
they are advanced by Mortgagee. Mortgagee's lien on the Security Property for
such advances shall be superior to any right or title to, interest in, or claim
upon all or any portion of the Security Property junior to the lien of this
Mortgage.
15. RECEIVER. In addition to all other remedies herein provided for,
Mortgagor agrees that upon the occurrence of an Event of Default, the Mortgagee
shall, as a matter of right, be entitled to an ex parte appointment of a
receiver or receivers for all or any part of the Security Property without
regard to the value of the Security Property or the solvency of any person or
persons liable for the payment of the indebtedness secured hereby, and Mortgagor
does hereby consent to the appointment of such receiver or receivers, waives any
and all defenses to such appointment and agrees not to oppose any application
therefor by the Mortgagee, but nothing herein is to be construed to deprive the
Mortgagee of any other right, remedy or privilege it may now have under the law
to have a receiver appointed; provided, however, that the appointment of such
receiver, trustee or other appointee by virtue of any court order, statute or
regulation shall not impair or in any manner prejudice the rights of the
Mortgagee to receive payment of the rents and income. Any money advanced by the
Mortgagee in connection with any such receivership shall be a demand obligation
owing by Mortgagor to the Mortgagee and shall bear interest from the date of
making such advancement by the Mortgagee until paid at the default rate provided
in the Note and shall be a part of the Obligations and shall be secured by this
Mortgage and by every other instrument securing the Obligations. The receiver or
his agents shall be entitled to enter upon and take possession of any and all of
the Security Property. The receiver, personally or through its agents or
attorneys, may exclude Mortgagor and its agents, servants and employees wholly
from the Security Property and have, hold, use, operate, manage and control the
same and each and every part thereof, and keep insured, the properties,
equipment and apparatus provided or required for use in connection with the
business or business operated on the Security Property, and make all such
necessary and proper repairs, renewals and replacements and all such useful
alterations, additions, betterments and improvements as the receiver may deem
judicious. Such receivership shall, at the option of the Mortgagee, continue
until full payment of all sums, hereby secured, then due and payable or until
title to the Security Property shall have passed by foreclosure sale under this
Mortgage and the period of redemption, if any, shall have expired.
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16. REMEDIES.
(a) Upon the occurrence of an Event of Default, the remedies available
to Mortgagee shall include, but not necessarily be limited to, any
one or more of the following:
(i) Mortgagee may declare the entire unpaid balance of the Note
and all accrued interest thereon, together with the prepayment premium (as
defined in the Note), immediately due and payable without further notice;
(ii) Mortgagee may take immediate possession of the Security
Property or any part thereof (which Mortgagor agrees to surrender to Mortgagee)
and manage control or lease the same to such person or persons and at such
rental as it may deem proper and collect all the rents, issues and profits
therefrom, including those past due as well as those thereafter accruing, with
the right in the Mortgagee to cancel any lease or sublease for any cause which
would entitle Mortgagor to cancel the same; to make such expenditures for
maintenance, repairs and costs of operation as it may deem advisable; and after
deducting the cost thereof and a commission of five (5%) percent upon the gross
amounts of rents collected, to apply the residue to the payment of any sums
which are unpaid hereunder or under the Note. The taking of possession under
this paragraph shall not prevent concurrent or later proceedings for the
foreclosure sale of the Security Property as provided elsewhere herein;
(iii) Mortgagee shall have the right to foreclose this Mortgage
and in case of sale in action or proceeding to foreclose this Mortgage, the
Mortgagee shall have the right to sell the Security Property covered hereby in
parts or as an entirety. It is intended hereby to give to the Mortgagee the
widest possible discretion permitted by law with respect to all aspects of any
such sale or sales;
(iv) Without declaring the entire unpaid principal balance due,
the Mortgagee may foreclose only as to the sum past due, without injury to this
Mortgage the displacement or impairment of the remainder of the lien thereof,
and at such foreclosure sale the Premises shall be sold subject to all remaining
items of indebtedness; and Mortgagee may again foreclose, in the same manner, as
often as there may be any sum past due;
(v) Mortgagor hereby waives any appraisement before sale of any
portion of the Security Property, commonly known as appraisement laws, the
benefit of any laws now or hereafter enacted which in any way may extend the
time for enforcement of the collection of the indebtedness secured hereby or
creating or extending any period of redemption from any sale made in collecting
said indebtedness, commonly known as stay laws and redemption laws, all rights
of marshalling in the event of foreclosure of any lien or security interest
created by this Mortgage and;
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Book 9117 Pg 1841
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(vi) The Note provides that in the event the Mortgagee must
accelerate the debt secured hereunder because of Mortgagor's default, including
the unauthorized transfer sale or assignment of the Security Property as
specified in Section 9 above, Mortgagee shall be entitled to the prepayment
premium (as defined in the Note) as agreed liquidated damages to compensate the
Mortgagee hereof for its failure to receive the stated interest rate yield for
the stated term of the Note.
(b) Mortgagor expressly agrees on behalf of itself, its successors and
assigns and any future owner of the Security Property, or any part
thereof or interest therein as follows:
(i) All remedies available to Mortgagee with respect to this
Mortgage shall be cumulative and may be pursued concurrently or successively. No
delay by Mortgagee in exercising any such remedy shall operate as a waiver
thereof or preclude the exercise thereof during the continuance of that or any
subsequent default;
(ii) The obtaining of a judgment or decree on the Note, whether in
the State of Florida or elsewhere, shall not in any manner affect the lien of
this Mortgage upon the Premises covered hereby, and any judgment or decree so
obtained shall be secured hereby to the same extent as said Note is now secured;
(iii) In event of any foreclosure sale hereunder, all net proceeds
shall be available for application to the indebtedness hereby secured whether or
not such proceeds may exceed the value of the Security Property for recordation
tax, mortgage tax, insurance or other purposes; and
(iv) The only limitation upon the foregoing instruments as to the
exercise of Mortgagee's remedies is that there shall be but one full and
complete satisfaction of the indebtedness secured hereby.
(c) Mortgagee shall be entitled to enforce payment and performance of
any indebtedness or obligations secured hereby and to exercise all
rights and powers under this Mortgage or the Note secured hereby
or under any other agreement or any laws now or hereafter in
force, notwithstanding some or all of the said indebtedness and
obligations secured hereby may now or hereafter be otherwise
secured, where by mortgage, deed or trust, pledge, lien,
assignment or otherwise. Neither the acceptance of this Mortgage
nor its enforcement shall prejudice or in any manner affect
Mortgagee's right to realize upon or enforce any other security
now or hereafter held by Mortgagee, it being agreed that Mortgagee
shall be entitled to enforce this Mortgage and any other security
now or hereafter held by Mortgagee in such order and manner as
Mortgagee may in its absolute discretion
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Book 9117 Pg 1842
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determine. No remedy herein conferred upon or reserved by
Mortgagee is intended to be exclusive of any other remedy herein
or by law provided or permitted, but each shall be cumulative and
shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute. every
power or remedy given to Mortgagee or to which it may be otherwise
entitled, may be exercised, concurrently or independently from
time to time and as often as may be deemed expedient by Mortgagee
and it may pursue inconsistent remedies.
17. NO JURY TRIAL. Mortgagee, Mortgagor and each Obligor hereby severally,
voluntarily, knowingly and intentionally WAIVE ANY AND ALL RIGHTS TO TRIAL BY
JURY in any legal action or proceeding arising under or in connection with this
Mortgage or any other Loan Document or concerning the Obligations and/or the
Security Property or pertaining to any transaction related to or contemplated in
this Mortgage, regardless of whether such action or proceeding concerns any
contractual or tortuous or other claim. Each Obligor severally acknowledges that
this waiver of jury trial is a material inducement to Mortgagee in extending the
credit described herein, that Mortgagee would not have extended such credit
without this jury trial waiver, and that such Obligor has been represented by an
attorney or has had an opportunity to consult with an attorney regarding this
Mortgage and understands the legal effect of this jury trial waiver.
18. FEES AND EXPENSES. Mortgagor shall pay any and all costs, expenses and
attorney's fees incurred by Mortgagee (regardless of whether in connection with
any action, proceeding or appeal) to sustain the lien of this Mortgage or its
priority, to protect or enforce any of Mortgagee's rights under this Mortgage or
under any other Loan Document, to recover any indebtedness secured hereby, to
contest or collect any award or payment in connection with the taking or
condemnation of all or any part of the Security Property, or for any title
examination or abstract preparation or appraisal or title insurance policy
relating to the Security Property, and all such sums shall bear interest, shall
be paid and shall be secured as provided in paragraph 14.
19. CONDEMNATION. Immediately upon obtaining knowledge of the institution
or pending institution of any proceedings for the condemnation of the Security
Property or any portion thereof, Mortgagor shall notify Mortgagee thereof.
Mortgagee may participate in any such proceedings and may be represented therein
by counsel of its selection, and Mortgagor will deliver to Mortgagee all
instruments requested by Mortgagee from time to time to permit or facilitate
such participation. In the event of any such condemnation proceedings, the award
or compensation payable is hereby assigned to and shall be paid to Mortgagee,
and Mortgagee shall not be obligated to question the amount of any such award or
compensation. At Mortgagee's option, all or any portion of the award or
compensation shall be applied toward payment of the Obligations (in any order of
priority Mortgagee may deem appropriate in its sole discretion) or shall be
disbursed to Mortgagor from time to time for the restoration of the Security
Property in
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Book 9117 Pg 1843
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the same manner as disbursements under a construction loan; Mortgagee shall not
be obligated to see to the proper application by Mortgagor of any such
disbursement. Notwithstanding any such condemnation award or compensation or the
rate of interest payable thereon, Mortgagor shall continue to pay interest on
the Obligations except to the extent that Mortgagee shall have actually received
and applied the award or compensation against the Obligations. If all of the
Security Property is so taken but the award or compensation is insufficient to
pay the Obligations in full, then at Mortgagee's option the unpaid balance shall
be immediately due and payable.
All proceeds paid under any condemnation will be paid to Mortgagee.
However, notwithstanding the foregoing to the contrary, Mortgagee agrees that
such proceeds may be used for restoration of damaged Improvements if the
following conditions are fulfilled:
1. No Event of Default has occurred or is continuing under this
Mortgage, and no event has occurred which, with the lapse of time
or the giving of notice, or both, would constitute an Event of
Default under this Mortgage.
2. Such restoration can be fully accomplished within one hundred
eighty (180) days.
3. Such restoration will be performed in accordance with plans and
specifications approved in writing by Mortgagee.
4. The cost of restoration does not exceed thirty percent (30%) of
the outstanding Loan balance. Additionally, Mortgagee must be
given satisfactory evidence that, by expenditure of the
condemnation proceeds, the damage to the Security Property can be
fully repaired, free and clear of all liens, except for the lien
of this Mortgage.
5. No waiver of payments due under the Note or other Loan Documents
occurs while the Security Property is being restored.
If all of the above conditions are not satisfied, the proceeds will be
applied to the outstanding principal balance of the Loan with all terms
(including, but not limited to, repayments terms) remaining the same.
If the above conditions are met, the condemnation proceeds received, after
deducting therefrom any expenses incurred in the collection thereof, shall be
disbursed periodically in accordance with procedures established by Mortgagee as
restoration work is completed.
20. DOCUMENTARY STAMPS AND INTANGIBLE TAXES. If at any time the state in
which the Security Property is located shall determine that an intangible tax,
documentary tax or other similar tax shall be paid in connection with this
Mortgage is insufficient or that additional
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Book 9117 Pg 1844
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intangible or other tax should be paid, then Mortgagor shall pay for the same,
together with any interest or penalties imposed in connection with such
determination, and Mortgagor hereby agrees to indemnify and hold Mortgagee
harmless therefrom. If any such sums shall be advanced by Mortgagee, they shall
bear interest, shall be paid and shall be secured as provided in paragraph 14.
21. NO SHIFT OF TAXES. If any federal, state or local law shall hereafter
be enacted which (a) for the purpose of ad valorem taxation shall deduct the
amount of any lien from the value of real property, or (b) shall impose on
Mortgagee the payment of all or any part of the taxes or assessments or charges
required to be paid hereunder by Mortgagor, or (c) shall change in any way the
laws for the taxation of mortgages or debts secured thereby or Mortgagee's
interest in the Security Property, or shall change the manner of collecting such
taxes, so as to affect this Mortgage or the debt secured hereby or the holder
thereof, then upon demand Mortgagor shall pay such taxes or assessments or
charges imposed on Mortgagee or shall reimburse Mortgagee therefor; provided,
however, that if in the opinion of Mortgagee's counsel the requirement that
Mortgagor make such payments might be unlawful or might result in the imposition
of interest in excess of the maximum lawful rate, then Mortgagee shall have the
right to declare the Obligations to be due and payable thirty (30) days after
notice thereof to Mortgagor.
22. UNIFORM COMMERCIAL CODE. This Mortgage is a "security agreement" and
creates a "security interest" in favor of Mortgagee as a "secured party" with
respect to all property included in the Security Property which is covered by
the Uniform Commercial Code, including but not limited to the Collateral and
Intangibles. Upon default under this Mortgage or any other Loan Document,
Mortgagee may at its option pursue any and all rights and remedies available to
a secured party with respect to any portion of the Security Property so covered
by the Uniform Commercial Code, or Mortgagee may at its option proceed as to all
or any part of the Security Property in accordance with Mortgagee's rights and
remedies in respect of real property to the extent permitted by law. Mortgagor
and Mortgagee agree that the mention of any portion of the Security Property in
a financing statement filed in the records normally pertaining to personal
property shall never derogate from or impair in any way their declared intention
that all items of collateral described in this Mortgage are part of the real
estate encumbered hereby to the fullest extent permitted by law, regardless of
whether any such item is physically attached to the Improvements or whether
serial numbers are used for the better identification of certain items of
Collateral. Specifically, the mention in any such financing statement of (a) the
rights in or the proceeds of any insurance policy, (b) any award in eminent
domain proceedings for a taking or for loss of value, (c) Mortgagor's interest
as lessor in any present or future Lease or right to income growing out of the
use or occupancy of the Land or Improvements, whether pursuant to Lease or
otherwise, or (d) any other item included in the definition of the Security
Property shall never be construed to alter any of the rights of Mortgagee as
determined by this Mortgage or to impugn the priority of Mortgagee's lien and
security interest with respect to the Security
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Book 9117 Pg 1845
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Property; such mention in a financing statement is declared to be for the
protection of Mortgagee in the event any court shall hold that notice of
Mortgagee's priority of interest with respect to any such portion of the
Security Property must be filed in the Uniform Commercial Code records in order
to be effective against or to take priority over any particular class of
persons, including but not limited to the federal government and any subdivision
or instrumentality of the federal government.
23. PAYMENTS TO MORTGAGEE. Any payment made in accordance with the terms of
the Loan Documents by any person at any time liable for the payment of the whole
or any part of the Obligations, by any subsequent owner of the Security
Property, or by any other person whose interest in the Security Property might
be prejudiced in the event of a failure to make such payment (or by any partner,
stockholder, officer or director of any such person), shall be deemed, as
between Mortgagee and all such persons who at any time may be so liable or may
have an interest in the Security Property, to have been made on behalf of all
such persons. Mortgagee's acceptance of any payment which is less than full
payment of all amounts then due and payable to Mortgagee, even if made by one
other than the person liable therefor, shall not constitute a waiver of any
rights or remedies of Mortgagee.
24. CONSENT TO CHANGES. Mortgagor consents and agrees that, at any time and
from time to time without notice, (a) Mortgagee and the owner(s) of any
collateral then securing the Obligations may agree to release, increase, change,
substitute or exchange all or any part of such collateral, and (b) Mortgagee and
any person(s) then primarily liable for the Obligations may agree to renew,
extend or compromise the Obligations in whole or in part or to modify the terms
of the Obligations in any respect whatsoever. Mortgagor agrees that no such
release, increase, change, substitution, exchange, renewal, extension,
compromise or modification, no sale of the Security Property or any part
thereof, no forbearance on the part of Mortgagee, nor any other indulgence given
by Mortgagee (whether with or without consideration) shall relieve or diminish
in any manner the liability of any Obligor, nor adversely affect the priority of
this Mortgage, nor limit or prejudice or impair any right or remedy of
Mortgagee. All Obligors and all those claiming by, through or under any of them
hereby jointly and severally waive any and all right to prior notice of, and any
and all defenses or claims based upon, any such release, increase, change,
substitution, exchange, renewal, extension, compromise, modification, sale,
forbearance or indulgence.
25. GOVERNING LAW. This Mortgage shall be governed by, and construed and
enforced in accordance with, the laws of the State of Florida, excepting only
that federal law shall govern to the extent it may permit Mortgagee to charge,
from time to time, interest on the Obligations at a rate higher than may be
permissible under applicable law.
26. NO USURY. All amounts paid on this Note which are deemed interest
shall, for the purpose of the calculation provided for herein, be deemed and
considered to be spread over the
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Book 9117 Pg 1846
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entire period from the date hereof to the date of final payment of the Note. In
no event shall any agreed to or actual exaction charged, reserved or taken as an
advance or forbearance by Mortgagee as consideration for the Obligations exceed
the limits (if any) imposed or provided by the law applicable from time to time
to the Obligations for the use or detention of money or for forbearance in
seeking its collection; Mortgagee hereby waives any right to demand any such
excess. In the event that the interest provisions of the Loan Documents or any
exactions required thereunder shall result at any time or for any reason in an
effective rate of interest that transcends the maximum interest rate permitted
by applicable law (if any), then without further agreement or notice the
obligation to be fulfilled shall automatically be reduced to such limit and all
sums received by Mortgagee in excess of those lawfully collectible as interest
shall be applied against the principal of the Obligations immediately upon
Mortgagee's receipt thereof, with the same force and effect as though the payor
had specifically designated such extra sums to be so applied to principal and
Mortgagee had agreed to accept such extra payment(s) as a premium-free
prepayment or prepayments.
27. SEVERABILITY. Any provision of this Mortgage which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction only, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
28. INSPECTION AND WATCHMEN. Mortgagee and any persons authorized by
Mortgagee shall have the right, from time to time at the discretion of
Mortgagee, to enter and inspect the Security Property. At any time after default
under the terms of this Mortgage or any other Loan Document, if any of the
Improvements or Collateral shall be unprotected or unguarded, or if any of the
Improvements shall be allowed to remain vacant or deserted, then at its option
Mortgagee may employ watchmen for the Security Property and expend any monies
deemed necessary by Mortgagee to protect the same from waste, vandalism and
other hazards, depredation or injury, and any sums expended by Mortgagee for
such purpose shall bear interest, shall be paid and shall be secured as provided
in paragraph 14.
29. OPERATING STATEMENTS. Mortgagor will keep accurate books and records in
accordance with accounting principles consistently applied in which full, true
and correct entries shall be promptly made as to all operations on the Security
Property. Within 90 days after the end of each fiscal year, Mortgagor will
furnish Mortgagee with annual operating and financial statements covering the
Security Property, together with a rent roll, all certified by a principal of
Mortgagor, and all in form satisfactory to Mortgagee. Mortgagor shall be charged
a fee of Five Hundred Dollars ($500) for the failure to provide any of the
foregoing within the prescribed time period, provided, however, that Mortgagee
shall give Mortgagor fifteen (15) days' notice and opportunity to provide the
foregoing before imposing such fee.
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30. INDEMNITY. In the event Mortgagee shall be named as a party to any
lawsuit brought at any time against Mortgagor or with respect to the Security
Property or this Mortgage or the Obligations, or if any claim shall be made
against Mortgagee in connection with the Security Property, then regardless of
the merits of such lawsuit Mortgagor shall defend Mortgagee and indemnify and
hold Mortgagee fully harmless from any and all claims, demands, damages,
liabilities, judgments, penalties, losses, costs, expenses and attorney's fees
arising out of or resulting from any such lawsuit or any appeal in connection
therewith.
31. NO PARTNERSHIP. Mortgagor and Mortgagee hereby acknowledge and agree
that Mortgagee is not, has never been, and shall not be deemed a partner or
joint venturer of Mortgagor or any other Obligor with respect to the Security
Property, and that the relationship of Mortgagee to said parties is, has always
been, and shall continue to be strictly the role of a lender. Mortgagor hereby
(a) waives and relinquishes any and all claims, demands, counterclaims and/or
defenses alleging the existence of any partnership, joint venture or other
fiduciary relationship between any of them and Mortgagee, and (b) agrees to
indemnify and hold Mortgagee harmless against any and all losses, damages,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other fees, costs and expenses that Mortgagee may sustain as the result of any
such allegation by any person whomsoever.
32. ENVIRONMENTAL LAWS; GOVERNMENTAL REQUIREMENTS. Mortgagor represents and
warrants to Mortgagee that Mortgagor has undertaken an appropriate inquiry into
the previous ownership and uses of the Security Property consistent with good
commercial or customary practice in an effort to minimize liability with respect
to any Hazardous Substances (as hereinafter defined). To the best of Mortgagor's
knowledge and except as disclosed in the environmental report provided by
Mortgagor to Mortgagee, or as otherwise disclosed to Mortgagee in writing,
Mortgagor represents and warrants that (i) neither the Security Property nor the
operations or activities conducted thereon violate any local, state or federal
law, rule or regulation or duty under applicable common law pertaining to human
health, safety, protection of the environment, natural resources, conservation,
waste management or pollution (the "Environmental Laws"), including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (42 U.S.C. /Section/9601 ET SEQ.), the Resource Conservation and
Recovery Act of 1976 (42 U.S.C. /Section/6901 ET SEQ.), the Clean Air Act (42
U.S.C. /Section/7401 et seq.), the Federal Water Pollution Control Act (33
U.S.C. /Section/1251 ET SEQ.), the Emergency Planning and
Community-Right-to-Know Act (42 U.S.C. /Section/11001 ET SEQ.), the Endangered
Species Act (16 U.S.C. /Section/1531 et seq.), the Toxic Substances Control Act
(15 U.S.C. /Section/2601 et seq.), the Occupational Safety and Health Act (29
U.S.C. /Section/651 ET SEQ.) and the Hazardous Materials Transportation Act (49
U.S.C. /Section/1801 ET SEQ.), regulations promulgated pursuant to said laws,
all as amended from time to time the Federal Water Pollution Control Act (33
U.S.C. /Section/1251 ET SEQ.); (ii) no hazardous substances, toxic substances or
harmful substances, hazardous wastes, hazardous materials, pollutants or
contaminants (including, without limitation, asbestos or asbestos-containing
materials, lead based paint, polychlorinated biphenyls, petroleum or
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petroleum products or byproducts, flammable explosives, radioactive materials,
or infectious substances) or any other substances or materials which are
included under or regulated by the Environmental Laws (collectively, "Hazardous
Substances") are located on, in or under or have been handled, generated,
stored, processed or disposed of on or released or discharged from the Security
Property (including underground contamination), except for those substances used
by Mortgagor or any tenant under a Lease in the ordinary course of businesses in
compliance with all Environmental Laws and under circumstances where no
liability under any Environmental Law could reasonably be anticipated; (iii) the
Security Property is presently free from contamination by Hazardous Substances
and that the Security Property and the activities conducted thereon do not pose
any significant hazard to human health or the environment, and (iv) the Security
Property complies in all respects with all laws applicable to access to
handicapped or disabled persons, including, without limitation, the "Americans
with Disabilities Act" and any current or future governmental law, regulation or
ruling applicable to or, if applicable, concerning lead-based paint
("Governmental Requirements"). Mortgagor shall not cause or permit the Security
Property to be used for the generation, handling, storage, transportation,
disposal or release of any Hazardous Substances except as exempted or permitted
under applicable Environmental Laws, and Mortgagor shall not cause or permit the
Security Property or any activities conducted thereon to be in violation of any
applicable Environmental Laws or Governmental Requirements. Mortgagor agrees to
indemnify Mortgagee and hold Mortgagee and its directors, officers, employees,
successors and assigns harmless from and against any and all claims, losses,
damages (including all foreseeable and unforeseeable consequential damages),
liabilities, fines, penalties, charges, interest, administrative or judicial
proceedings and orders, judgments, remedial action requirements, enforcement
actions of any kind, and all costs and expenses incurred in connection therewith
(including without limitation attorneys' fees and expenses), directly or
indirectly resulting in whole or in part from the violation of any Environmental
Laws or Governmental Requirements applicable to the Security Property or any
activity conducted thereon, or from any past, present or future use, generation,
handling, storage, transportation, disposal or release of Hazardous Substances
at or in connection with the Security Property, or any decontamination,
detoxification, closure, cleanup or other remedial measures required with
respect to the Security Property under any Environmental Laws. All sums paid and
costs incurred by Mortgagee with respect to the foregoing matters shall bear
interest, shall be paid and shall be secured as provided in paragraph 14. This
indemnity shall survive the full payment and performance of the Obligations and
the satisfaction of this Mortgage, and it shall inure to the benefit of any
transferee of title to the Security Property through foreclosure of this
Mortgage or through deed in lieu of foreclosure.
33. SUBROGATION. Mortgagee is hereby subrogated (a) to the lien(s) of each
and every mortgage, lien or other encumbrance on all or any part of the Security
Property which is fully or partially paid or satisfied out of the proceeds of
the Obligations, and (b) to the rights of the owner(s) and holder(s) of any
such mortgage, lien or other encumbrance. The respective rights under and
priorities of all such mortgages, liens or other encumbrances shall be preserved
and
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shall pass to and be held by Mortgagee as security for the Obligations, to the
same extent as if they had been duly assigned by separate instrument of
assignment and notwithstanding that the same may have been canceled and
satisfied of record.
34. REPRESENTATIONS AND WARRANTIES. In order to induce Mortgagee to extend
the credit secured hereby, Mortgagor represents and warrants that: (a) except as
previously or concurrently disclosed in writing to Mortgagee, there are no
actions, suits or proceedings pending or threatened against or affecting any
Obligor or any portion of the Security Property or involving the validity or
enforceability of this Mortgage or the priority of its lien, before any court of
law or equity or any tribunal, administrative board or governmental authority,
and no Obligor is in default under any other indebtedness or with respect to any
order, writ, injunction, decree, judgment or demand of any court or any
governmental authority; (b) the execution and delivery of this Mortgage and all
other Loan Documents do not and shall not (i) violate any provisions of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to any Obligor, nor (ii) result in a breach of, or constitute a
default under, any indenture, bond, mortgage, Lease, instrument, credit
agreement, undertaking, contract or other agreement to which any Obligor is a
party or by which any of them or their respective properties may be bound or
affected; (c) this Mortgage and all other Loan Documents constitute valid and
binding obligations of the Obligor(s) executing the same, enforceable against
such Obligor(s) in accordance with their respective terms; (d) all financial
statements of the Obligors previously delivered to Mortgagee have been prepared
in accordance with accounting principles consistently applied and fairly present
the correct respective financial conditions of the Obligors as of their
respective dates, and the foregoing shall be true with respect to all financial
statements of the Obligors delivered to Mortgagee hereafter; (e) there is no
fact that the Obligors have not disclosed to Mortgagee in writing that could
materially adversely affect their respective properties, businesses or financial
conditions or the Security Property or any other collateral for the Obligations;
(f) the Obligors have duly obtained all permits, licenses, approvals and
consents from, and made all filings with, any governmental authority (and the
same have not lapsed nor been rescinded or revoked) which are necessary in
connection with the execution or delivery or enforcement of this Mortgage or any
other Loan Document or the performance of any Obligor's obligations thereunder;
(g) the Land and Improvements fully comply with all applicable restrictive
covenants, zoning ordinances, subdivision and building codes, applicable health
and environmental laws and regulations and, to the best of Grantor's knowledge,
all other ordinances, orders and requirements issued by any state, federal or
municipal authorities having jurisdiction over the Security Property; (h) the
Land is served by electric, gas, sewer, water, telephone and other utilities
required for its intended use and final certificates of occupancy have been or
prior to occupancy will be issued by such governmental authorities as have
jurisdiction over the construction and use of the Security Property; (i) the
proceeds of the Obligations are not being used to purchase or carry any "margin
stock" within the meaning of Regulation "U" of the Board of Governors of the
Federal Reserve System, nor to extend credit to others for that purpose; and (j)
each extension of credit secured by this Mortgage is exempt from the provisions
of the
Page 29 of 36
<PAGE>
Book 9117 Pg 1850
(Space reserved for Clerk of Court)
Federal Consumers Credit Protection Act (Truth-in-Lending Act) and Regulation
"Z" of the Board of Governors of the Federal Reserve System, because Mortgagor
is a person fully excluded therefrom, and/or because said extension of credit is
only for business or commercial purposes of Mortgagor and is not being used for
personal, family, household or agricultural purposes; (k) except for the
security interest granted hereby, Mortgagor is, and as to portions of the
Collateral and Intangibles to be acquired after the date hereof will be, the
sole owner (or lessee in the case of Collateral leased by Mortgagor) of the
Collateral and Intangibles, free from any adverse lien, security interest,
encumbrance or adverse claim thereon of any kind whatsoever; (l) the Collateral
will be kept on or at the Land and Improvements; and (m) Mortgagor has its
principal place of business in the State where the Land is located at the
address set forth at the beginning of this Mortgage and Mortgagor will
immediately notify Mortgagee in writing of any change in its principal place of
business as set forth in the beginning of this Mortgage.
35. BUSINESS ENTITY. If Mortgagor is a corporation, partnership or other
business entity, or if Mortgagor consists of more than one person and any such
person is such a business entity, then each such business entity hereby
represents and warrants as to itself, in order to induce Mortgagee to extend the
credit secured hereby, that: (a) it is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its creation and the state
in which the Security Property is located; (b) it has all requisite power and
authority (corporate or otherwise) to conduct its business, to own its
properties, to execute and deliver this Mortgage and all other Loan Documents
executed by it, and to perform its obligations under the same; (c) its
execution, delivery and performance of this Mortgage and all other such Loan
Documents have been duly authorized by all necessary actions (corporate or
otherwise) and do not require the consent or approval of its stockholders (if a
corporation) or of any other person or entity whose consent has not been
obtained; and (d) the execution, delivery and performance of this Mortgage and
all other Loan Documents do not and shall not conflict with any provision of its
by-laws or articles of incorporation (if a corporation), partnership agreement
(if a partnership) or trust agreement or other document pursuant to which it was
created and exists.
36. RIGHTS NOT IMPAIRED. The lien, security interest and other security
rights of the Mortgagee hereunder shall not be impaired by any indulgence,
moratorium or release granted by the Mortgagee, including, but not limited to:
(a) any renewal, extension or modification which the Mortgagee may grant with
respect to any of the Obligations; (b) any surrender, compromise, release,
renewal, extension, exchange or substitution which the Mortgagee may grant in
respect of the Security Property, or any part thereof or any interest therein;
or (c) any release or indulgence granted to any endorser, guarantor or surety of
any of the Obligations. In the event the ownership of the Security Property or
any part thereof becomes vested in a person or entity other than Mortgagor, the
Mortgagee may, without notice to Mortgagor, deal with such successor or
successors in interest with reference to this Mortgage and to the indebtedness
secured hereby in the same manner as with Mortgagor, without in any way
discharging Mortgagor's liability
Page 30 of 36
<PAGE>
Book 9117 Pg 1851
(Space reserved for Clerk of Court)
hereunder or for the payment of the indebtedness secured hereby. No sale of the
Security Property, no forbearance on the part of the Mortgagee and no extension
of the time for the payment of the indebtedness secured hereby given by the
Mortgagee shall operate to release, discharge, modify, change or affect, in
whole or in part, the liability of Mortgagor hereunder or for the payment of the
indebtedness secured hereby or the liability of any other person hereunder or
for the payment of the indebtedness secured hereby, except as agreed to in
writing by the Mortgagee.
37. ERISA. Mortgagor covenants and agrees that:
(a) it shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise
by Mortgagee of any of its rights under the Note, this Mortgage and
the Loan Documents) to be a non-exempt (under a statutory or
administrative class exemption) prohibited transaction under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
(b) Mortgagor further covenants and agrees to deliver to Mortgagee such
certifications or other evidence from time to time throughout the term
of this Mortgage, as requested by Mortgagor in its sole discretion,
that (i) Mortgagor is not an "employee benefit plan" as defined in
Section 3(32) of ERISA, which is subject to Title I of ERISA, or a
"governmental plan" within the meaning of Section 3(3) of ERISA; (ii)
Mortgagor is not subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans; and (iii)
one or more of the following circumstances is true:
(i) Equity interests in Mortgagor are publicly offered securities,
within the meaning of 29 C.F.R. /Section/2510.3-101(b)(2);
(ii) Less than 25 percent of each outstanding class of equity
interests in Mortgagor are held by "benefit plan investors" within the meaning
of 29 C.F.R. /Section/2510.3-101(f)(2); or
(iii) Mortgagor qualifies as an "operating company" or a "real estate
operating company" within the meaning of 29 C.F.R. /Section/2510.3-101(c) or (e)
or an investment company registered under The Investment Company Act of 1940.
38. FUTURE ADVANCES. This Mortgage shall secure such future advances as may
be made by Mortgagee, at its option and for any purpose, within twenty (20)
years from the date of this Mortgage. All such future advances shall be included
within the term "Obligations", shall be secured to the same extent as if made on
the date of the execution of this Mortgage, and shall take priority as to third
persons without actual notice from the time this Mortgage is filed for
Page 31 of 36
<PAGE>
Book 9117 Pg 1852
(Space reserved for Clerk of Court)
record as provided by law. The total amount of indebtedness secured by this
Mortgage may decrease or increase from time to time, but the total unpaid
balance so secured at any one time shall not exceed the maximum principal amount
of $10,000,000.00 plus interest and any disbursements made for the payment of
taxes, levies or insurance on the Security Property, with interest on those
disbursements, plus any increase in the principal balance as the result of
negative amortization or deferred interest. Without the prior written consent of
Mortgagee, which Mortgagee may grant or withhold in its sole discretion,
Mortgagor shall not file for record any notice limiting the maximum principal
amount that may by secured by this Mortgage to a sum less than the maximum
principal amount set forth in this paragraph.
39. OTHER INDEBTEDNESS SECURED. In addition to the specific indebtedness
identified herein above, the Obligations also include, and this Mortgage also
secures, all Other Indebtedness (as defined in the preliminary recitals of this
Mortgage), of Mortgagor to Mortgagee whether or not presently contemplated by
the parties, direct or indirect, otherwise secured or unsecured, joint or
several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising, regardless of how the same arise
or by what instrument, agreement or book account they may be evidenced or
whether evidenced by any instrument, agreement or book account, including
without limitation all loans (including any loan by renewal), all indebtedness,
all undertakings to take or refrain from taking any action, all indebtedness,
liabilities or obligations owing from Mortgagor to others that Mortgagee may
have obtained by purchase, negotiation, discount, assignment or otherwise, and
all interest, taxes, fees charges, expenses, and attorney's fees chargeable to
Mortgagor or incurred by Mortgagee hereunder or under any other document or
instrument delivered in connection herewith.
40. INTERPRETATION. Whenever the context of any provision of this Mortgage
shall so require, words in the singular shall include the plural, words in the
plural shall include the singular, and pronouns of any gender shall include the
other genders. Captions and headings in this Mortgage are for convenience only
and shall not affect its interpretation. All references in this Mortgage to
Exhibits, Schedules, paragraphs and subparagraphs refer to the respective
subdivisions of this Mortgage, unless the reference expressly identifies another
document. Wherever used in this Mortgage, unless the context clearly indicates a
contrary intention or unless this Mortgage specifically provides otherwise: (a)
the term "Mortgagor" shall include any subsequent owner(s) of the Security
Property; (b) the term "Mortgagee" shall include any subsequent holder(s) of
this Mortgage; (c) the term "Obligors" shall include any permitted successor(s)
or permitted assign(s) of any Obligor; (d) the term "Obligations" shall include
any modification of any Obligations from time to time and any future advances or
other sums payable to Mortgagee under this Mortgage; (e) the term "Loan
Documents" shall include any note or other instrument evidencing or pertaining
to any future advance hereunder and any renewals, extensions or modifications of
any Loan Document; and (f) the term "person" shall mean "an individual,
corporation, partnership, limited partnership, limited liability company,
unincorporated association, joint stock corporation, joint venture or other
legal entity".
Page 32 of 36
<PAGE>
Book 9117 Pg 1853
(Space reserved for Clerk of Court)
41. MISCELLANEOUS. Time is of the essence of all provisions of this
Mortgage. Mortgagor hereby waives all right of homestead exemption (if any) in
the Security Property. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several, and wherever the term "Mortgagor" is used it shall be deemed to refer
to such persons jointly and severally. If Mortgagor is a partnership, then all
general partners in Mortgagor shall be liable jointly and severally for the
covenants, agreements, undertakings and obligations of Mortgagor in connection
with the Obligations, notwithstanding any contrary provision of the partnership
laws of the state in which the Security Property is located. This Mortgage shall
be binding upon the parties hereto and their respective heirs, personal
representatives, successors and assigns, and it shall inure to the benefit of
Mortgagee and its successors and assigns and to the benefit of Mortgagor and
Mortgagor's heirs, personal representatives and permitted successors and
assigns. This Mortgage cannot be changed except by an agreement in writing,
signed by the party against whom enforcement of the change is sought.
42. LIMITATION OF LIABILITY. Mortgagor shall not be personally liable for
the payment or performance of the Obligations, and Mortgagee shall look solely
to the Security Property and other security given for the Obligations to satisfy
such Obligations. Notwithstanding the foregoing, Mortgagor and Guarantor shall
be and remain fully and personally liable for the payment to Mortgagee for the
following, plus reasonable attorneys' fees and costs: (1) damages suffered by
Mortgagee as a result of (a) fraud or misrepresentation by Mortgagor or any
other person acting on behalf of or at the direction of Mortgagor in connection
herewith, (b) intentional waste of any of the Security Property, including the
removal of any property or fixtures from the Security Property which are not
replaced by similar property or fixtures of equal or greater value, (c) the
amendment, modification or termination of any lease (except as permitted by
subparagraph 7(a) above) of any of the Security Property in violation of any
provision of the Loan Documents, (d) failure to observe and comply with all
laws, ordinances and regulations applicable to any of the Security Property, (e)
failure to comply with any of the obligations of Mortgagor under any of the Loan
Documents or indemnity agreements pertaining to environmental or handicapped
access matters, (f) the sale or further encumbrance of any of the Security
Property in violation of any provision of the Loan Documents, (g) failure to
insure the Security Property in accordance with the terms of the Loan Documents,
(h) failure to pay real estate taxes and assessments and ground lease payments
(if applicable) which accrue prior to Mortgagee taking possession of the
Security Property or failure to make sufficient funds available through escrow
payments to Mortgagee to pay such taxes, assessments and ground lease payments,
or (i) any of the Security Property is lost because of forfeiture to any
governmental agency or third party unrelated or not affiliated with Mortgagee
for any reason; (2) any rents, issues or profits of any of the Security Property
collected by or on behalf of Mortgagor which are not applied to payment of the
Obligations or paid to third parties not affiliated with Mortgagor for
reasonable operating costs related to the Security Property (including real
estate taxes and the establishment of a reasonable reserve for that purpose)
after an uncured default or an uncured Event of Default
Page 33 of 36
<PAGE>
Book 9117 Pg 1854
(Space reserved for Clerk of Court)
or any event or circumstances that with the passage of time, the giving of
notice, or both, could constitute an Event of Default; (3) any security deposits
or other similar deposits received from tenants or occupants of the Security
Property, to the extent that funds for such security deposits are not obtained
by Mortgagee from Mortgagor; (4) any sums expended by Mortgagee in fulfilling
the obligations of Mortgagor, as lessor, under any lease of any of the Security
Property, excluding obligations relating to maintenance of the Security Property
and liabilities occurring after Mortgagor has given up possession of the
Security Property to Mortgagee; (5) any insurance proceeds, condemnation awards
or proceeds resulting from any sale of any of the Security Property which are
misapplied or misappropriated by or on behalf of Mortgagor or which, under the
terms of the Loan Documents, should have been paid to Mortgagee; or (6) the
amount of any valid unpaid mechanic's liens, materialmen's liens or other liens,
whether or not similar, arising due to work performed or materials furnished in
connection with any of the Security Property which could create liens on any
portion of the Security Property. None of the foregoing shall limit, impair or
affect (i) the obligations of Guarantor under its guaranties given in connection
herewith; or (ii) the right of Mortgagee to take any action as may be necessary
or desirable to realize upon any security given to secure the Obligations; or
(iii) the rights of Mortgagee to foreclose this Mortgage, obtain a judgment of
foreclosure against Mortgagor, and enforce Mortgagee's rights hereunder and
under the other Loan Documents.
Page 34 of 36
<PAGE>
Book 9117 Pg 1855
(Space reserved for Clerk of Court)
WITNESS the due execution hereof as of the date first written above.
Signed, sealed and delivered in the EQUITY ONE (ATLANTIC VILLAGE)
presence of these witnesses: INC., a Florida corporation
Witness: /s/ ANA PEROZO By: /s/ DORON VALERO
---------------------------- --------------------------
Print Name: ANA PEROZO Name: Doron Valero
Title: Vice President
Witness: /s/ ALAN J. MARCUS
---------------------------
Print Name: ALAN J. MARCUS [CORPORATE SEAL]
STATE OF FLORIDA )
) SS.
COUNTY OF MIAMI-DADE )
The foregoing Mortgage, Security Agreement and Assignment of Leases was
acknowledged before me this 30th day of October 1998, by Doron Valero, as Vice
President of EQUITY ONE (ATLANTIC VILLAGE) INC., a Florida corporation, on
behalf of the corporation. He personally appeared before me and is personally
known to me or produced ___________________________ as identification.
Notary: /s/ ALAN J. MARCUS
-------------------------------
Print Name: ALAN J. MARCUS
Notary Public, State of FLORIDA
My commission expires: AUGUST 13, 2001
[NOTARY SEAL]
Page 35 of 36
<PAGE>
Book 9117 Pg 1856
A part of the Castro Y Ferrer Grant, Section 38, Township 2 South, Range 29
East, Duval County, Florida, more particularly described as follows: For a point
of beginning, commence at the Southeast corner of Lot 1, Block 26, Replat of
Part of Royal Palms Unit Two A, as recorded in Plat Book 31, Pages 16, 16A, 16B,
16C and 16D of the current public records of said County; thence South
07/degrees/16'02" East, along the Westerly right of way line of Royal Palms
Drive, as established as a 60 foot right of way by Official Records Volume 1819,
Page 52 of said public records, a distance of 20.42 feet; thence North
85/degrees/37'27" West, along the North line of the lands as described in
Official Records Volume 2010, Page 42 of said public records, a distance of
80.29 feet; thence South 00/degrees/41'22" East, along the West line of said
lands as described in Official Records Volume 2010, Page 42, a distance of
214.92 feet; thence North 89/degrees/18'38" East, along the South line of said
lands as described in Official Records Volume 2010, Page 42, a distance of
147.68 feet to a point on the aforementioned Westerly right of way line of Royal
Palms Drive, said right of way line being a curve concave Northeasterly having a
radius of 515 feet; thence Southeasterly along the arc of said curve, a chord
bearing of South 44/degrees/14'11" East and a chord distance of 236.50 feet to
the point of tangency of said curve; thence South 57/degrees/31'02" East,
continuing along said Westerly right of way line, a distance of 87.05 feet to
the point of curve of a curve concave Southwesterly having a radius of 113.55
feet; thence Southeasterly along the arc of said curve, a chord bearing of South
52/degrees/13'10" East and a chord distance of 20.97 feet; thence South
89/degrees/18'38" West, along the North line of the lands as described in
Official Records Volume 3397, Page 69 a distance of 126.77 feet; thence South
00/degrees/41'22" East, along the West line of said lands, a distance of 62.00
feet; thence North 89/degrees/18'38" East, along the South line of said lands as
described in Official Records Volume 3397, Page 69, a distance of 160.00 feet to
a point on the aforementioned Westerly right of way line of Royal Palms Drive,
said point being on a curve concave Southwesterly having a radius of 113.55
feet; thence Southerly along the arc of said curve, a chord bearing of South
05/degrees/45'42" East and a chord distance of 20.08 feet to the point of
tangency of said curve; thence South 89/degrees/18'38" West, along the North
line of the lands as described in Official Records Volume 2219, Page 306 and
along the North line of the lands as described in Official Records Volume 2843,
Page 750 and along the North line of the lands as described in Official Records
Volume 3231, Page 773, a distance of 440.00 feet; thence South 00/degrees/41'22"
East, along the West line of the lands as described in Official Records Volume
3231, Page 773, a distance of 160.00 feet; thence South 89/degrees/18'38" West,
along the North right of way line of Atlantic Boulevard (State Road A-1-A) as
now established as a 100 foot right of way, a distance of 569.18 feet; thence
North 07/degrees/16'02" West, a distance of 160.00 feet; thence South
89/degrees/18'38" West, parallel with said North right of way line of Atlantic
Boulevard, a distance of 201.42 feet to the Easterly right of way line of
Aquatic Drive, as established by Official Records Volume 3278, Pages 176 and 177
of said public records; thence North 11/degrees/42'30" West, along said Easterly
right of way line, a distance of 390.26 feet; thence North 82/degrees/43'58"
East, along the South line of the lands as described in Official Records Volume
2411, Page 1171, a distance of 262.48 feet; thence North 13/degrees/54'50" East,
along the Easterly line of said lands as described in Official Records Volume
2411, Page 1171 and its Northeasterly extension, a distance of 192.81 feet;
thence South 85/degrees/37'27" East, along the Southerly line of aforementioned
Block 26, Replat of Part of Royal Palms Unit Two A, a distance of 37.52 feet;
thence South 07/degrees/16'02" East, along the West line of the lands as
described in Official Records Volume 1471, Page 472, a distance of 35.00 feet;
thence South 85/degrees/37'27" East, along the South line of said lands, a
distance of 60.00 feet; thence North 07/degrees/16'02" West, along the East line
of said lands as described in Official Records Volume 1471, Page 472, a distance
of 35.00 feet; thence South 85/degrees/37'27" East, along the aforementioned
Southerly line of Block 26, a distance of 541.85 feet to the Point of Beginning.
TOGETHER WITH the non-exclusive right to drain surface water and run-off from
the aforementioned real property (hereinafter called the "Shopping Center
Property") over, across and through the drainage ditch and facilities
constructed along and within the strip of land being approximately 40 feet in
width along the Western boundary of the property as set forth and reserved in
Official Records Volume 5683, Page 362.
EXHIBIT A
Page 36 of 36
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,665,000
<SECURITIES> 1,655,000
<RECEIVABLES> 1,141,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 149,724,000
<DEPRECIATION> 9,272,000
<TOTAL-ASSETS> 152,035,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 102,000
<OTHER-SE> 80,452,000
<TOTAL-LIABILITY-AND-EQUITY> 152,035,000
<SALES> 5,834,000
<TOTAL-REVENUES> 5,834,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,620,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,123,000
<INCOME-PRETAX> 2,091,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,091,000
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
