<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-12002
MARK CENTERS TRUST
(Exact name of registrant in its charter)
MARYLAND 23-2715194
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 THIRD AVENUE, KINGSTON, PENNSYLVANIA 18704
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(717) 288-4581
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
As of November 8, 1997, there were 8,554,177 common
shares of beneficial interest, par value $.001
per share, outstanding.
<PAGE>
MARK CENTERS TRUST
FORM 10-Q
INDEX
Part I: Financial Information Page
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets as of
September 30, 1997 and December 31, 1996 1
Consolidated statements of operations for
the three and nine months ended
September 30, 1997 and 1996 2
Consolidated statements of cash flows for
the nine months ended September 30, 1997
and 1996 3
Notes to consolidated financial statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II:Other Information
Signatures 18
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
MARK CENTERS TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands, except for per share amounts)
September 30, December 31,
1997 1996
(unaudited)
<S> <C> <C>
ASSETS
Rental property - at cost:
Land $ 30,855 $ 31,084
Buildings and improvements 271,474 271,423
Property under development 7,856 4,904
-------- --------
310,185 307,411
Less: accumulated depreciation 80,720 72,956
-------- --------
Net rental property 229,465 234,455
Cash and cash equivalents 1,149 3,912
Restricted cash - escrows 7,613 3,578
Rents receivable - less allowance
for doubtful accounts of $773
and $544, respectively 4,964 4,956
Prepaid expenses 1,609 1,421
Due from related parties 171 203
Deferred charges, net 9,755 9,034
Other assets 1,248 958
-------- --------
$255,974 $258,517
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $180,723 $156,772
Lines of credit 2,995 16,051
Accounts payable and accrued expenses 6,721 9,397
Payable to Principal Shareholder 3,050 3,050
Distributions payable 2,035 3,662
Other liabilities 1,909 2,027
-------- --------
Total Liabilities 197,433 190,959
-------- --------
Minority Interest 9,314 10,752
-------- --------
<PAGE>
<S> <C> <C>
Shareholders' Equity:
Common shares, $.001 par value,
authorized 50,000,000 shares, issued
and outstanding 8,554,177 and
8,548,817 shares, respectively 9 9
Additional paid-in capital 51,072 57,521
Deficit (1,854) (724)
-------- --------
Total Shareholders' Equity 49,227 56,806
-------- --------
$255,974 $258,517
======== ========
See accompanying notes
</TABLE>
1 <PAGE>
<PAGE>
<TABLE>
<CAPTION>
MARK CENTERS TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 1997 AND 1996
(in thousands except for per share amounts)
Three months ended Nine months ended
9/30/97 9/30/96 9/30/97 9/30/96
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenue:
Minimum rents $ 8,375 $ 8,388 $25,125 $25,113
Percentage rents 705 581 2,230 1,797
Expense reimbursements 1,611 1,443 5,015 4,994
Other 183 85 756 547
------- ------- ------- -------
Total revenue 10,874 10,497 33,126 32,451
------- ------- ------- -------
Expenses:
Property operating 2,052 2,273 6,744 7,366
Real estate taxes 1,393 1,282 4,246 3,948
Depreciation and
amortization 3,547 3,487 10,236 9,957
General and administrative 538 642 1,646 2,114
------- ------- ------- -------
Total operating expenses 7,530 7,684 22,872 23,385
------- ------- ------- -------
Operating income 3,344 2,813 10,254 9,066
(Loss) gain on sale of
property -- 21 (12) 21
Interest expense (3,888) (3,017) (11,533) (9,067)
------- ------- ------- -------
(Loss) income before
minority interest (544) (183) (1,291) 20
Minority interest 72 4 161 (69)
------- ------- ------- -------
Net loss $ (472)$ (179) $(1,130) $ (49)
======= ======= ======= =======
Net loss per
common share $ (.06)$ (.02) $ (.13) $ (.01)
======= ======= ======= =======
See accompanying notes
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
MARK CENTERS TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(in thousands)
Sept 30, Sept 30,
1997 1996
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,130) $ (49)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of leasing
costs 9,804 9,225
Amortization of deferred financing costs 432 732
Minority interest (161) 69
Provision for bad debts 509 782
Loss (gain) on sale of property 12 (21)
Other 52 56
------- -------
9,518 10,794
Changes in assets and liabilities:
Rents receivable (517) (392)
Prepaid expenses (188) 33
Due from related parties 32 173
Other assets (447) 758
Accounts payable and accrued expenses 733 4,378
Other liabilities (118) 322
------- -------
Net cash provided by operating activities 9,013 16,066
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for real estate and
improvements, net of payables (8,876) (13,495)
Net proceeds from sale of property 1,288 22
Payment of deferred leasing charges (751) (3,097)
------- -------
Net cash used in investing activities (8,339) (16,570)
------- -------
3
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgages (14,183) (2,751)
Proceeds received on mortgage notes 25,078 11,588
Net (increase) decrease in mortgage escrows (4,035) 2,014
Payment of deferred financing costs (895) (1,004)
Dividends paid (7,866) (9,227)
Distributions paid to Principal Shareholder (1,536) (1,835)
------- -------
Net cash used in financing activities (3,437) (1,215)
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS (2,763) (1,719)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 3,912 3,068
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,149 $ 1,349
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest, net
of amounts capitalized of $425 and $819,
respectively $11,610 $ 8,939
======= =======
</TABLE>
See accompanying notes
4
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MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except for per share amounts)
1. THE COMPANY
Mark Centers Trust (the "Company") currently owns and operates
thirty-nine properties consisting of thirty-four neighborhood and
community shopping centers, three enclosed malls and two mixed
use (retail/office) properties. All of the Company's assets are
held by, and all of its operations are conducted through Mark
Centers Limited Partnership, (the "Operating Partnership") and
its majority owned partnerships. As of September 30, 1997, the
Company controlled 84% of the Operating Partnership as the sole
general partner. The Company will at all times be the sole
general partner of, and owner of a 51% or greater interest in,
the Operating Partnership. Marvin L. Slomowitz (the "Principal
Shareholder"), who is the principal limited partner of the
Operating Partnership, owns in excess of 99% of the minority
interest in the Operating Partnership. The Company is operating
as a real estate investment trust ("REIT") for federal income tax
purposes.
2. BASIS OF PRESENTATION
The consolidated financial statements include the consolidated
accounts of the Company and its majority owned partnerships,
including the Operating Partnership, and have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with instruction to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements. The information furnished in the accompanying
consolidated financial statements reflects all adjustments which
are, in the opinion of management, necessary for a fair
presentation of the aforementioned consolidated financial
statements for the interim periods. Operating results for the
nine month period ended September 30, 1997 are not necessarily
indicative of the results that may be expected for the fiscal
year ending December 31, 1997. For further information, refer to
the consolidated financial statements and accompanying footnotes
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
5
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MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
3. SHAREHOLDERS' EQUITY AND MINORITY INTEREST
The following table summarizes the change in the shareholders'
equity and minority interest since December 31, 1996:
<TABLE>
<CAPTION>
Shareholders' Minority
Equity Interest
<S> <C> <C>
Balance at December 31, 1996 $56,806 $10,752
Net loss for the period January 1
through September 30, 1997 (1,130) (161)
Vesting of restricted shares 52 --
Distributions to Principal Shareholder -- (1,277)
Dividends, $.76 per share (6,501) --
------- -------
Balance at September 30, 1997 $49,227 $ 9,314
======= =======
</TABLE>
4. RELATED PARTY TRANSACTIONS
As of September 30, 1997 amounts due from related parties
consisted of the following:
Accrued ground rent due from Blackman Plaza
Partners (a limited partnership in which the
Principal Shareholder is a 1% general partner) $ 190
Other amounts (net) due to Principal Shareholder (19)
-------
$ 171
=======
5. CONSTRUCTION LOAN
On September 18, 1997 , the Company closed on a $5.5 million
construction loan with Firstrust Savings Bank ("Firstrust") which
refinanced and expanded the Company's existing $2.1 million
credit facility with Firstrust. This construction loan is for
the expansion of the Mark Plaza in Edwardsville, Pennsylvania, to
accommodate a 52,825 square foot Redner's Supermarket. The loan
bears interest, payable monthly, at the Firstrust commercial
reference rate plus 1% and matures March 18, 1999.
6
<PAGE>
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
6. PER SHARE DATA
Primary earnings per share are computed based on 8,559,229 and
8,560,708 shares outstanding, which represent the weighted
average number of shares outstanding (including restricted
shares) during the nine month periods ended September 30, 1997
and 1996, respectively. Fully diluted earnings per share is
based on an increased number of shares that would be outstanding
assuming the exercise of share options at the market price at the
end of the period. Since fully diluted earnings per share is not
materially dilutive or is anti-dilutive, such amounts are not
presented. The Company intends to adopt Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" ("FAS 128")
effective with the year ending December 31, 1997 (earlier
adoption is not permitted) and does not expect the impact on EPS
to be material.
7. DISTRIBUTIONS PAYABLE
On September 17, 1997, the Trustees declared a cash dividend of
$0.20 per common share and Operating Partnership Unit payable on
December 15, 1997 to shareholders and limited partners of record
as of October 31, 1997.
8. NEW ACCOUNTING PRONOUNCEMENT
Financial Accounting Standards Board Statement No. 131 ("FAS No.
131") "Disclosure about Segments of an Enterprise and Related
Information" is effective for financial statements issued for
periods beginning after December 15, 1997. FAS No. 131 requires
disclosure about segments of an enterprise and related
information regarding the different types of business activities
in which an enterprise engages and the different economic
environments in which it operates. The Company does not believe
that the implementation of FAS No. 131 will have a material
impact on its financial statements.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion is based on the consolidated financial
statements of Mark Centers Trust (the "Company") as of September
30, 1997 and 1996 and for the three and nine months then ended.
This information should be read in conjunction with the
accompanying consolidated financial statements and notes thereto.
Certain statements made in this report may constitute "forward-
looking statements" within the meaning of federal securities
laws. Such statements are inherently subject to risk and
uncertainties which may cause the actual results to differ
materially from the future results implied by such forward-
looking statements. Factors which might cause such differences
include general economic conditions, adverse changes in the real
estate markets in general and in the geographic regions in which
the Company's properties are located, changes in interest rates,
potential bankruptcy of tenants and environmental requirements.
RESULTS OF OPERATIONS
Comparison of Three Months Ended September 30, 1997 to Three
Months Ended September 30, 1996
Total revenue increased $377,000, or 4%, to $10.9 million for the
quarter ended September 30, 1997 compared to $10.5 million for
the quarter ended September 30, 1996.
In total, minimum rents did not vary significantly between 1997
and 1996. A $253,000 increase in minimum rents was experienced
following the completion of Phase I of the Union Plaza in October
1996. Additionally, minimum rents increased in 1997 following
the retenanting of various space within the core portfolio at
increased market rates. These increases were offset by certain
tenants paying percentage rent in lieu of minimum rent pursuant
to anchor cotenancy requirements with Jamesway who vacated the
Ledgewood Mall in 1996, and from the effect of the State of
Alabama Department of Public Health vacating its leased space at
the Normandale Mall following the expiration of its leases in
April 1997. The Company is actively remarketing this vacated
space.
8
<PAGE>
RESULTS OF OPERATIONS, continued
Percentage rents, representing the Company's participation in
tenants' gross sales above predetermined thresholds, increased
$124,000, or 21%, to $705,000 for the quarter ended September 30,
1997 compared to $581,000 for the same period in 1996. The
increase was primarily the result of tenants paying percentage
rent in lieu of minimum rents at the Ledgewood Mall as discussed
above.
Expense reimbursements, which represent the pass-through of
certain property expenses to the tenants, increased $168,000, or
12% in 1997, primarily as a result of the recovery of increases
in real estate taxes.
Other income increased $98,000, or 115%, to $183,000 for the
quarter ended September 30, 1997 from $85,000 for the same period
in 1996 primarily as a result of an increase in interest earned
on mortgage escrows for the quarter ended September 30, 1997.
Total operating expenses of $7.5 million for the quarter ended
September 30, 1997 decreased $154,000, or 2%, from $7.7 million
for the quarter ended September 30, 1996.
Property operating expenses decreased $221,000 for the quarter
ended September 30, 1997 compared to the same period in 1996
primarily due to a reserve for estimated environmental
remediation costs for two properties which had been established
in September 1996. (This reserve was initially in the amount of
$300,000, but was subsequently revised and reduced in June 1997
to $55,000 following a reduction in the scope of environmental
remediation required by State agencies).
The foregoing decreases in operating expenses were partially
offset by increases in real estate taxes of $111,000 and
depreciation and amortization totalling $60,000 for the quarter
ended September 30, 1997 primarily, due to the Company's property
development and expansion activities.
General and administrative expenses decreased $104,000, or 16%,
to $538,000 for the quarter ended September 30, 1997 compared to
$642,000 for the same period in 1996 primarily as a result of
lower professional fees.
Interest expense increased $871,000, or 29%, for the quarter
ended September 30, 1997 compared to the same period in 1996.
This variance was primarily the result of higher average
outstanding borrowings related to increased property development
and expansion activities.
9
<PAGE>
RESULTS OF OPERATIONS, continued
As a result of the foregoing, the net loss for the quarter ended
September 30, 1997 increased $293,000 to a loss of $472,000 from
a loss of $179,000 for the same period in 1996.
Comparison of Nine Months Ended September 30, 1997 to Nine Months
Ended September 30, 1996
Total revenue increased $675,000, or 2%, to $33.1 million for the
nine months ended September 30, 1997 compared to $32.5 million
for the same period in 1996.
The increases in minimum rents of (i) $702,000 following the
completion of Phase I at the Union Plaza in October 1996, (ii)
$290,000 following the opening of HomePlace at the New Louden
Center in June 1996 and (iii) $67,000 following the opening of
Dunham's Sporting Goods at the East End Centre in August 1996
were partially offset by a decline in minimum rents at two
centers following the loss of two anchor tenants during
1996(Jamesway at the Ledgewood Mall and Rich's Department Store
at the Auburn Plaza) as well as certain tenants at these two
centers paying percentage rent in lieu of minimum rent pursuant
to anchor cotenancy requirements. Further offsetting the gains in
minimum rent was the loss of $231,000 in minimum rent as a result
of the State of Alabama Department of Public Health vacating its
leased space at the Normandale Mall following the expiration of
its leases in April 1997 and a $110,000 decrease in rents
following the sale of the Newberry Plaza in March 1997.
Percentage rents increased $433,000, or 24%, to $2.2 million for
the nine months ended September 30, 1997 compared to $1.8 million
for the same period in 1996 primarily as a result of tenants
paying percentage rent in lieu of minimum rents as previously
discussed.
Other income increased $209,000, or 38%, to $756,000 for the nine
months ended September 30, 1997 from $547,000 for the same period
in 1996 primarily as a result of an increase in interest earned
on mortgage escrows for the nine months ended September 30, 1997.
Total operating expenses decreased $513,000, or 2%, to $22.9
million for the nine months ended September 30, 1997 compared to
$23.4 million for the same period in 1996.
Property operating expenses decreased $622,000, or 8%, for the
nine months ended September 30, 1997 compared to the same period
in 1996 primarily due to the reduction of the reserve for
10
<PAGE>
RESULTS OF OPERATIONS, continued
environmental remediation costs in 1997 as discussed earlier and
a $352,000 reduction in snow removal costs as a result of the
comparatively mild 1997 winter season.
The foregoing decreases in operating expenses were partially
offset by increases in real estate taxes of $298,000 and
depreciation and amortization totalling $279,000 for the nine
months ended September 30, 1997 primarily due to the Company's
property development and expansion activities.
General and administrative expenses decreased $468,000, or 22%,
to $1.6 million for the nine months ended September 30, 1997
compared to $2.1 million for the same period in 1996 primarily
due to the write-off of non-recurring costs totalling $286,000 as
a result of the Company's decision to terminate certain
acquisition and development activities during 1996 and reductions
in professional fees during 1997.
Interest expense increased $2.4 million to $11.5 million for the
nine months ended September 30, 1997 compared to $9.1 million for
the same period in 1996. This increase was primarily
attributable to higher average outstanding borrowings related to
retenanting, acquisition, expansion and development activities.
The net loss for the nine months ended September 30, 1997
increased $1.1 million to a loss of $1.1 million from a loss of
$49,000 for the same period in 1996.
Funds from Operations
The Company, along with most industry analysts, consider funds
from operations("FFO") as defined by the National Association of
Real Estate Investment Trusts ("NAREIT")as an appropriate
supplemental measure of operating performance. However, FFO does
not represent cash generated from operations as defined by
generally accepted accounting principles and is not indicative of
cash available to fund cash needs. It should not be considered as
an alternative to net income for the purpose of evaluating the
Company's performance or to cash flows as a measure of liquidity.
Generally, NAREIT defines FFO as net income (loss) before gains
(losses) on sales of property, non-recurring charges and
extraordinary items, adjusted for certain non-cash charges,
primarily depreciation and amortization of capitalized leasing
costs.
11
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<TABLE>
<CAPTION>
FUNDS FROM OPERATIONS
FOR THE THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 1997 AND 1996
(in thousands, except per share data)
Three months ended Nine months ended
9/30/97 9/30/96 9/30/97 9/30/96
<S> <C> <C> <C> <C>
Revenue
Minimum rents (a) $ 8,280 $ 8,303 $24,892 $24,876
Percentage rents 705 581 2,230 1,797
Expense reimbursements 1,611 1,443 5,015 4,994
Other 183 85 756 547
------- ------- ------- -------
Total revenue 10,779 10,412 32,893 32,214
------- ------- ------- -------
Expenses
Property operating (b) 2,031 1,944 6,921 6,905
Real estate taxes 1,393 1,282 4,246 3,948
General and administrative 537 642 1,637 2,104
------- ------- ------- -------
Total operating expenses 3,961 3,868 12,804 12,957
------- ------- ------- -------
Operating income 6,818 6,544 20,089 19,257
Interest expense (3,888) (3,017) (11,533) (9,067)
Amortization of deferred
financing costs (127) (263) (432) (732)
Depreciation of non-real
estate assets (52) (52) (156) (163)
------- ------- ------- -------
Funds from operations $ 2,751 $ 3,212 $ 7,968 $ 9,295
======= ======= ======= =======
Funds from operations
per share (c) $ .27 $ .32 $ .78 $ .91
======= ======= ======= =======
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Three months ended Nine months ended
9/30/97 9/30/96 9/30/97 9/30/96
<S> <C> <C> <C> <C>
Funds from operations above $ 2,751 $ 3,212 $ 7,968 $ 9,295
Depreciation of real estate
and amortization of
leasing costs (3,368) (3,172) (9,648) (9,062)
Straight-line rents and
related write-offs (net) 74 67 176 100
(Loss) gain on sale of land -- 21 (12) 21
Adjust reserve for environmental
remediation costs -- (300) 245 (300)
Minority interest 72 4 161 (69)
Other non-cash adjustments (1) (11) (20) (34)
------- ------- ------- -------
Net loss $ (472) $ (179) $(1,130) $ (49)
======= ======= ======= =======
Net loss per share (d) $ (.06) $ (.02) $ (.13) $ (.01)
======= ======= ======= =======
</TABLE>
(a) Excludes income from straight-lining of rents.
(b) Represents all expenses other than depreciation, amortization,
write-off of unbilled rent receivables recognized on a straight-
line basis and the non-cash charge for compensation expense
related to the Company's restricted share plan.
(c) Assumes full conversion of 1,623,000 OP Units into common shares
of the Company for the nine months ended September 30, 1997 and
1996, respectively, for a total of 10,177,177 and 10,171,817
shares, respectively.
(d) Net income per share is computed based on the weighted average
number of shares outstanding for the nine months ended September
30, 1997 and 1996 of 8,559,229 and 8,560,708, respectively.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
On September 18, 1997 , the Company closed on a $5.5 million
construction loan with Firstrust Savings Bank ("Firstrust") which
refinanced and expanded the Company's existing $2.1 million
credit facility with Firstrust. This construction loan is for
the expansion of the Mark Plaza in Edwardsville, Pennsylvania, to
accommodate a 52,825 square foot Redner's Supermarket. The loan
bears interest, payable monthly, at the Firstrust commercial
reference rate plus 1% and matures March 18, 1999.
As of September 30, 1997, the Company had outstanding mortgage
indebtedness totalling $183.7 million which bears interest at
rates ranging from 7.70% to 9.50% with maturities ranging from
April 1998 to November 2021. Of the total outstanding debt,
$174.6 million, or 95%, is carried at fixed interest rates and
the remaining $9.1 million, or 5%, is carried at variable rates.
Of the total outstanding debt, $99.8 million will become due by
2000, with scheduled maturities of $2.8 million in 1998, $2.1
million in 1999 and $94.9 million in 2000. As the Company does
not anticipate having sufficient cash on hand to repay such
indebtedness, it will need to refinance this indebtedness or
select other alternatives based on market conditions at that
time. The Company believes that the current loan-to-value ratios
on the collateral properties are at levels which would allow it
to fully refinance these loans on commercially competitive terms.
At September 30, 1997, the Company's capitalization consisted of
$183.7 million of debt and $96.0 million of market equity (using
a September 30, 1997 market price of $9.4375 per share).
The Company currently estimates that capital outlays of
approximately $10.3 million will be required for property
development, property expansion and tenant improvements as a
result of executed leases under which the Company expects tenants
to commence occupancy during the remainder of 1997 and 1998. Of
this amount, approximately $6.1 million will be provided through
existing construction financing or financing for which the
Company is currently negotiating a commitment. The remaining
amounts are expected to be funded through the combination of cash
provided from operations and the release of $1.8 million in
restricted cash-escrow which is held subject to certain occupancy
requirements at the Ledgewood Mall. At September 30, 1997,
$881,000 of these outlays are reflected in accounts payable and
accrued expense balances.
14
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES, continued
Historically, the principal sources for funding operations,
renovations, expansion, development and acquisitions have been
funds from operations, construction and permanent secured debt
financings, as well as short term construction and line of credit
borrowings from various lenders.
The Company anticipates that cash flow from operating activities
will continue to provide adequate capital for all debt service
payments, recurring capital expenditures and REIT distribution
requirements as well as current dividend levels as established in
June 1997. Consistent with past practice, the Company
anticipates that it will obtain construction financing related to
its capital outlays for certain property development, property
expansion and tenant improvements. The Company anticipates
meeting these and its other long-term capital needs from the
above sources as well as through other debt and equity financing
alternatives to achieve continued growth. However, there can be
no assurance that these alternative debt and equity sources will
be available and the inability to obtain these sources of capital
could have an adverse effect on the Company's ability to fund
future development, expansion and acquisition activities.
HISTORICAL CASH FLOW
The following discussion of historical cash flow compares the
Company's cash flow for the nine months ended September 30, 1997
with the Company's cash flow for the nine months ended September
30, 1996.
Net cash provided by operating activities decreased from $16.1
million for the nine months ended September 30, 1996 to $9.0
million for the nine months ended September 30, 1997. This
variance was primarily attributable to a $1.3 million decrease in
cash provided from net income before changes in operating assets
and liabilities and a $5.8 decrease in cash provided by changes
in operating assets and liabilities (primarily accounts payable)
for 1997.
Investing activities used $8.3 million during the nine months
ended September 30, 1997, an $8.2 million decrease in cash used
compared to the same period in 1996. This was due to $4.6 million
15
<PAGE>
HISTORICAL CASH FLOW, continued
less cash used during the nine months ended September 30, 1997
related to property development, expansion and retenanting
activities (including the payment of accounts payable related
thereto), a $2.3 million decrease in deferred leasing charges
paid and the receipt of $1.3 million from the sale of the
Newberry Plaza during the nine months ended September 30, 1997.
Net cash used in financing activities was $3.4 million for the
nine months ended September 30, 1997 representing a $2.2 million
increase compared to the same period in 1996. Cash provided by a
$2.1 million increase in new mortgage financing as well as a
reduction in dividends paid in 1997 was offset by a $6.0 million
increase in cash used in mortgage escrows for 1997.
INFLATION
The Company's long-term leases contain provisions designed to
mitigate the adverse impact of inflation on the Company's net
income. Such provisions include clauses enabling the Company to
receive percentage rents based on tenants' gross sales, which
generally increase as prices rise, and/or, in certain cases,
escalation clauses, which generally increase rental rates during
the terms of the leases. Such escalation clauses are often
related to increases in the consumer price index or similar
inflation indexes. In addition, many of the Company's leases are
for terms of less than ten years, which permits the Company to
seek to increase rents upon re-rental at market rates if rents
are below the then existing market rates. Most of the Company's
leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes,
insurance and utilities, thereby reducing the Company's exposure
to increases in costs and operating expenses resulting from
inflation.
16
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.20(c) Construction and/or Development Loan Agreement between
the Company and Firstrust Bank
10.20(d) Open End Fee and Leasehold Mortgage between the Company
and Firstrust Bank
27 Financial Data Schedule (EDGAR filing only)
(b) Reports on Form 8-K
None
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has fully caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
MARK CENTERS TRUST
By: /s/ Marvin L. Slomowitz
Marvin L. Slomowitz
Chief Executive Officer and
Trustee (Principal Executive
Officer)
/s/ Joshua Kane
Joshua Kane
Senior Vice President
Chief Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
Date: November 13, 1997
18
<PAGE>
INDEX OF EXHIBITS
10.20(c) Construction and/or Development Loan Agreement between
the Company and Firstrust Bank
10.20(d) Open End Fee and Leasehold Mortgage between the Company
and Firstrust Bank
27 Financial Data Schedule (EDGAR filing only)
19
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000899629
<NAME> MARK CENTERS TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,149
<SECURITIES> 0
<RECEIVABLES> 5,737
<ALLOWANCES> 773
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 310,185
<DEPRECIATION> 80,720
<TOTAL-ASSETS> 255,974
<CURRENT-LIABILITIES> 0
<BONDS> 183,718
0
0
<COMMON> 9
<OTHER-SE> 49,218
<TOTAL-LIABILITY-AND-EQUITY> 255,974
<SALES> 0
<TOTAL-REVENUES> 33,126
<CGS> 0
<TOTAL-COSTS> 22,872
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,533
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,118)
<DISCONTINUED> (12)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,130)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
<PAGE>
CONSTRUCTION AND/OR DEVELOPMENT LOAN AGREEMENT
AGREEMENT made as of the 18th day of September 1997, by and
between FIRSTRUST SAVINGS BANK, a corporation organized and
existing under the laws of the United States, Castor & Cottman
Avenues, Philadelphia, Pennsylvania 19111, herein referred to as
"LENDER", and MARK CENTERS LIMITED PARTNERSHIP, A DELAWARE
LIMITED PARTNERSHIP herein referred to as "OWNER".
WITNESSETH:
WHEREAS, OWNER represents that OWNER has or is about to
obtain good and marketable fee and leasehold title to all that
certain real property described in Exhibit "A" annexed hereto,
hereinafter referred to as the "SUBJECT PREMISES", free and clear
of all easements, restrictions, liens, encumbrances and
conditions of record unacceptable to LENDER: and
WHEREAS, OWNER intends to purchase and/or develop the same
using funds to be advanced by LENDER; and
WHEREAS, LENDER has agreed to lend to OWNER certain funds in
connection with the acquisition and/or improvement of the SUBJECT
PREMISES in reliance upon the foregoing representation and the
further representations of OWNER that the cost of acquisition of
the SUBJECT PREMISES and the cost of completion of the
contemplated improvements in accordance with the plans and
specifications submitted to LENDER by OWNER and approved by
LENDER are as set forth in the certified schedule (hereinafter
referred to as the "cost breakdown") submitted to LENDER by
OWNER:
NOW, THEREFORE, the parties hereto, each intending to be
legally bound hereby, do mutually covenant and agree as follows:
1. Within 18 months from date, OWNER shall construct and
complete upon the SUBJECT PREMISES, ready for occupancy, the
buildings and improvements referred to below in a good,
workmanlike and substantial manner to the reasonable satisfaction
of LENDER and in full compliance with the plans and
specifications submitted to LENDER by OWNER. Wherever used
herein, the term "buildings and improvements" shall include,
without limitation, all buildings shown on the Plans and
<PAGE>
Specifications; the appurtenances thereto; street improvements;
on and off-site utilities and connections; all other improvements
to the SUBJECT PREMISES referred to in or required by the plans
and specifications, the commitments specified on Exhibit "B"
hereto, and/or the building and zoning permits and subdivision
approvals issued or to be issued in connection herewith; and any
and all other improvements required by LENDER. At completion and
at all times hereafter, the SUBJECT PREMISES and the buildings
and improvements now or hereafter erected thereon shall be and
shall be kept free and clear and discharged of and from any and
all filed and unfiled mechanics' liens and municipal claims of
whatsoever cause, kind or nature.
2. A. Subject to the terms and conditions of this Agreement
and of the note(s), bond(s) and mortgage(s) hereinafter
mentioned, LENDER shall lend to OWNER sums not exceeding, in the
aggregate, FIVE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
($5,500,000.00---) to be advanced from time to time as work
progresses in amounts and on conditions described in this
Agreement. Each sum shall be advanced and disbursed by LENDER in
accordance with this Agreement(*). The sums so advanced shall
become due and payable and shall be repaid by OWNER to LENDER
within Eighteen (18) months from the date hereof. Interest shall
be computed on the basis of a 360 day year and shall be paid for
the actual number of days funds are outstanding.
B. OWNER shall pay to LENDER, on the first day of each and
every month, interest at the rate set forth on Pages 3 and 3a on
the amount of each installment of the loan theretofore advanced
by LENDER then remaining unpaid and on any interest theretofore
accrued and payable then remaining unpaid. Interest shall
commence to accrue at the time of each advance and, with respect
to accrued and payable interest, at the time such interest became
payable. Payments of interest shall begin on the first day of
the first month following the month in which the first advance is
made by LENDER hereunder. As each and every installment is
advanced or disbursed by LENDER, OWNER shall become liable to
LENDER for the principal amount of the installment so advanced,
plus the interest accruing thereon. Interest payments not
received by the 15th of the month following the billing date will
be subject to a late charge of 7% of the unpaid interest or
$7.00, whichever is greater, for each month that payment remains
unpaid. Late charges shall be due and payable with the interest
payment.
(*) See Paragraph 5 on page 3a of this Agreement.
2
<PAGE>
1. Interest Rate: It is understood and agreed that interest
shall be earned on this obligation at a variable rate equal to
one (1%) percent per annum over the Firstrust Savings Bank
Commercial Reference Rate.
The term "Firstrust Savings Bank Commercial Reference Rate" or
"Reference Rate" is hereby defined as the announced published or
posted prime rate of Mellon Bank, N.A. The Owner acknowledges
and agrees that (i) such Reference Rate is a floating annual rate
of interest and is used by Lender as a reference base with
respect to different interest rates charged to Owners; and (ii)
Lender's determination and designation from time to time of the
Reference Rate shall not in any way preclude Lender from making
loans to other Owners at a rate which is higher or lower than or
different from the Reference Rate. Firstrust Savings Bank's
Commercial Reference Rate shall change automatically as of the
opening of business on the effective date of each change in the
prime rate of Mellon Bank N.A., which (unless otherwise
designated) shall be the date on which Mellon Bank, N.A.
announces the change in its prime rate. When Firstrust Savings
Bank's Commercial Reference Rate changes on a day other than the
first day of a calendar month, interest for the month in which
such change or changes are made shall be calculated on a per diem
basis that month. Interest is computed on the actual number of
days elapsed over 360 days simple interest basis, that is, by
applying the ratio of the annual interest rate over a year of 360
days, times the outstanding principal balance, times the actual
number of days the principal balance is outstanding. Interest at
such variable rates shall be calculated and billed in arrears on
the first day of each month for interest due to the last day of
the prior month. In the event Lender shall cease to publish or
post its Reference Rate, Lender shall determine another index in
its sole opinion.
2. Additional Interest Clause: Owner agrees that on the date
of maturity or sooner acceleration of this loan, Lender may, at
its option, increase the interest rate to 1.5% per month on the
outstanding principal balance until this loan is repaid in full.
3. Prepayment Privilege: The loan may be prepaid at any time
without penalty upon sixty (60) days prior written notice to
Lender.
3
<PAGE>
4. Future Advance Clause: It is understood and agreed by and
between the parties of the first and second parts that the
consideration for the Mortgage is present and future advances of
funds to the Owners, parties of the first part, by the Lender,
party of the second part, in accordance with the terms and
conditions of this Construction and/or Development Loan Agreement
executed by and between the parties and it is understood and
agreed by and between the parties of the first and second parts
hereto that the Mortgage is to secure future advance of funds for
the construction of a 52,825 square foot one-story super market
to be leased by Redner's and to complete miscellaneous
improvements to the balance of Mark Plaza which is located on
Route #11, Edwardsville Borough, Luzerne County, PA the lien of
which advances shall relate back to the date of the Mortgage.
5. Limitation of Funding: Notwithstanding the foregoing,
Lender shall reserve to its Board of Directors full power and the
exclusive right, without regard to any other provision of any
loan instrument or of any agreement applicable to such loan, to
limit advances hereunder to the total sum of $4,600,000 and shall
not be obligated to advance the remaining $900,000 until the full
and final resolution of any and all litigation with respect to
the Property and Land Use Appeal docketed in the matter of
Associated Wholesalers, Inc. and Sunshine Markets, Inc. v.
Edwardsville Borough Planning Commission CCP Luzerne County, No.
737-C-97, and Equity Proceedings instituted in the Court of
Common Pleas of Luzerne County (Sunshine Market, Inc. and
Associated Wholesalers, Inc. vs. Mark Centers Limited
Partnership) on 11/7/96 to No. 95-E-1996 and 3/20/97 to No. 29-E-
1997.
3a
<PAGE>
C. LENDER reserves the right to treat full compliance by
OWNER with all provisions of terms of Paragraph 2, 3, 4, 6, 7,
and 8 hereof and proof of the accuracy of the representations of
OWNER contained in the recital hereto as conditions precedent to
its obligation to advance any monies hereunder and may, once such
proofs have been submitted and the provisions and terms of those
paragraphs have been met or any monies have been advanced
hereunder, discontinued such advances in the event of any default
or breach whatsoever by OWNER hereunder. This right is in
addition to and not in lieu of any and all other rights and
remedies available to LENDER in the event of OWNER'S breach or
default. Provided that Owner has complied with the terms of this
Agreement, Lender shall make advances within ten (10) days after
receipt of Owner's voucher and all supporting documentation for
the voucher.
3. A. At execution of this Agreement, OWNER shall make,
execute, acknowledge and deliver to LENDER OWNER'S mortgage note,
or bond and warrant in the amount referred to in Paragraph 2
hereof and a mortgage in a like amount secured as a first lien
upon the SUBJECT PREMISES as collateral for the payment of said
note or bond and for OWNER's compliance herewith.
B. At any time and from time to time, upon demand, OWNER
shall make, execute, acknowledge and deliver to LENDER additional
bond(s) and warrant(s) and/or mortgage note(s) and, as collateral
therefor, additional mortgage(s) secured upon the SUBJECT
PREMISES or any part or parts thereof aggregating, in amount, the
sum referred to in Paragraph 2 hereof. All such mortgages shall
be first liens upon the property subject thereto.
D. The said note(s), bond(s) and warrant(s), mortgage(s)
and all other instruments, writing and agreements to be made,
secured, produced, or delivered by OWNER or any party acting
under or on behalf of OWNER hereunder including the general
contractor employed by OWNER, if any, shall be in form and in
substance satisfactory to and approved by LENDER and shall be
recorded at such time or times as LENDER shall deem appropriate.
The title to said mortgage or mortgages shall be insured at the
expense of OWNER in favor of LENDER for the full principal amount
of said mortgage or mortgages as a continuing first lien or
liens, superior in lien to any mechanics' lien then or thereafter
filed, under a policy in form and with Chicago Title or such
other title companies acceptable to LENDER.
4
<PAGE>
4. OWNER shall procure binding written contracts with all
materialmen and mechanics for all work to be done and all
materials to be furnished in connection with the construction of
the said buildings and improvements. Each such contract shall be
duly executed and shall contain a covenant, and shall require
execution, acknowledgement, and delivery of a stipulation,
acceptable in form and substance to LENDER, waiving on the part
of the contractor and all those claiming under and through the
contractor the right to have, file or maintain any mechanics'
lien or liens against the said buildings and improvements or the
SUBJECT PREMISES or any part thereof. OWNER shall file each
original executed stipulation waiving mechanics' liens and four
executed copies of each contract with LENDER. One copy of each
stipulation waiving mechanics' liens shall be filed by OWNER, at
OWNER'S cost, in the office of the Prothonotary of the Common
Pleas Court according to the Act of Assembly in such case made
and provided. No work shall be done and no materials or supplies
shall be furnished or purchased for or in connection with the
erection of said buildings and improvements upon the SUBJECT
PREMISES until all recording contemplated by the provisions of
this Agreement, including without limitation, the recording of
the mortgage or mortgages securing the loan of LENDER, has been
accomplished and until OWNER has obtained and filed or caused to
be filed in the Office of the Prothonotary of the Common Pleas
Court of the county or counties where the said premises is
located according to the Act of Assembly in such case made and
provided a waiver or waivers of the right to file or maintain any
mechanics' liens or claims against the buildings and improvements
or the SUBJECT PREMISES or any part thereof valid, in the opinion
of counsel for LENDER, against all persons who may furnish work,
materials or supplies for in connection with the construction
contemplated hereby and available to protect LENDER.
5. OWNER warrants and represents that the street improvements
made or to be made in connection with the building operation
subject hereto have been fully authorized by appropriate
municipal ordinance or other required municipal action; that the
improvements have in fact been completed or that the municipality
involved is proceeding to let the contracts therefor (or, if such
is the obligation of OWNER and not that of the municipality, that
OWNER is proceeding to let the contracts therefor; and that OWNER
has posted with the municipality a bond in an amount deemed
sufficient by the municipality conditioned upon the completion of
such improvements; and that the construction to be done hereunder
5
<PAGE>
as well as the contemplated use of the said construction is in
strict compliance with all applicable zoning and use ordinances,
is not and will not be in violation of any such ordinances, and
is not and will not be in violation of any easements, agreements
or building restrictions, public or private. OWNER shall, upon
demand, secure and deliver to LENDER written assurances of
appropriate municipal authorities satisfactory to LENDER
evidencing the above.
B. See Completion Assurance Agreements Clause on Page 6a.
6. At or before execution hereof, OWNER shall place and
thereafter OWNER shall maintain in force insurance covering the
said building operation, including, without limitation, Workmens'
Compensation, Liability, tornado and all other insurance which
LENDER may now or hereafter deem reasonably expedient or
necessary. All insurance of whatsoever kind or nature shall be
with such company or companies, in such amounts, and in such form
as LENDER shall reasonably direct. OWNER shall also keep and
maintain in force a policy or policies of fire insurance with
standard and additional extended coverage endorsements. OWNER
shall require that any builders' risk or other similar insurance
required of any person, firm or corporation contracting with
OWNER in connection with the erection of the buildings and
improvements on the SUBJECT PREMISES shall protect against wilful
as well as negligent acts of the insured party and shall contain
a contractual liability endorsement. OWNER shall pay all premiums
required to maintain all such insurance constantly in force and
effect and shall produce evidence of such payment to LENDER upon
demand.
6
<PAGE>
B. Completion Assurance Agreements: Owner acknowledges
that at the request of Owner and in order to induce the municipal
or county authorities to enter certain agreements or to issue
necessary approvals or permits, Lender has executed or issued, or
at its sole option hereafter may execute or issue, letters of
credit, escrow letters, holdback letters or other similar
assurances ("Completion Assurance Agreements"), certifying the
availability of funds for the payment of certain costs and
expenses for which Owner is responsible. Owner agrees that any
funds Lender is required to advance pursuant to the Completion
Assurance Agreements shall be deemed to have been advanced under
the Loan and may be advanced without any further authorization
from Owner. Lender shall not be required to advance any proceeds
of the Loan to Owner with respect to work that is the subject of
any Completion Assurance Agreement unless the appropriate
municipal or county authority shall acknowledge to Lender in
writing that Lender's liability under the relevant Completion
Assurance Agreement is reduced by the amount of the requested
advance. In addition, the amounts that are the subject of such
Completion Assurance Agreements shall be deemed to have been
funded under the Loan and shall not be available for allocation
to any other category of the Loan. Upon the occurrence of an
Event of Default herein or under the Completion Assurance
Agreement, Lender shall be entitled, at its sole discretion, to
elect to fund, to the appropriate municipality, county or agency
or into an escrow account acceptable to them, any undisbursed
commitments under any or all then outstanding Completion
Assurance Agreements, all of which sums shall immediately be due
and payable by Owner to Lender and shall be deemed for all
purposes to have been disbursed under the Bond. If, at such time
as Owner shall have otherwise paid in full all amounts of
principal, interest and other sums under the Loan, Lender shall
not have been fully released by the appropriate municipal or
county authorities from Lender's liabilities under each
Completion Assurance Agreement, Lender shall not be obligated to
cancel or return the Bond or to cause the Mortgage to be
satisfied unless Owner shall have deposited with Lender cash in a
sum equal to the aggregate amount of Lender's maximum potential
liabilities under the Completion Assurance Agreements. Such sum
shall be placed in a restricted, non-interest bearing account
with Lender and shall be held as security for the obligations of
Owner to reimburse Lender upon the payment by Lender to any
beneficiary of a Completion Assurance Agreement. The proceeds of
such accounts shall be fully released to Owner at such time as
Lender is fully released from all potential liabilities under the
Completion Assurance Agreements.
6a
<PAGE>
7. A complete set of the plans and specifications for the
building operation have been delivered from Owner to Lender and
are described on Exhibit "B" which have been initialled by OWNER
and by the general contractor, if any, and approved in writing by
each person, firm or corporation issuing any commitment for or in
connection with this building operation. A true and correct copy
of the cost breakdown is attached hereto as Exhibit "C" and has
been signed and certified as to accuracy by OWNER. Owner shall
also deliver a survey or surveys of the SUBJECT PREMISES or any
part or parts thereof made by a registered surveyor acceptable to
LENDER.
8. OWNER shall, within three (3) days after written notice from
LENDER, proceed with the construction of the said buildings and
improvements according to the aforementioned plans and
specifications and shall fully finish and complete the same,
ready for occupancy, and all street improvements, utilities and
connections, to the satisfaction of LENDER, within the time
specified. OWNER shall push the said work to completion without
delay, employing a sufficiency of materials and equipment
satisfactory to LENDER to fully finish and complete the said
buildings and improvements within the time specified.
9. OWNER shall comply strictly with all rules, regulations and
requirements of each person, firm, or corporation issuing the
commitments, if any, referred to herein. OWNER warrants and
represents that the buildings and improvements mentioned herein
will, when completed, qualify for all such commitments. OWNER
shall comply with and obtain all approvals required by Federal,
state and municipal statues, laws, and ordinances and all
regulations, rules and directions of Federal state and municipal
authorities which apply to or affect the building operation and
the SUBJECT PREMISES, whether or not the particulars are set
forth in the plans and specifications. If FHA or VA commitments
have been issued, OWNER shall comply with all requirements
therein and all construction must likewise comply with the same.
10. OWNER agrees that all monies deposited; all sums advanced
under loans (with the said note(s), bond(s) and mortgage(s) as
collateral security or otherwise) the proceeds of any other
mortgages which might be placed upon the SUBJECT PREMISES; shall
be deposited with LENDER to the credit of the Construction
Account, hereinafter referred to as "Account", established by
LENDER in connection with this transaction. LENDER is hereby
7
<PAGE>
irrevocably authorized, empowered and directed subject to the
procedures for funding under Par. 11 below, whenever in its
judgement the same shall be necessary or expedient, either with
or without voucher signed by OWNER, to apply or hold in reserve
any funds deposited to the credit of the Account for payment of
any or all of the foregoing, with such preference or priority in
payment among them as LENDER, in its sole discretion, shall
determine:
A. All sums or indebtedness due LENDER (whether or not
related to the building operation) including advances made by
LENDER in excess of its original commitment together with
interest thereon;
B. Premiums for insurance;
C. Title insurance charges, service charges and charges
for any special insurance against mechanics', municipal or other
liens or claims (which insurance shall be placed only with a
title insurance company approved by LENDER);
D. The cost of drawing and recording deeds, notes, bonds
and mortgages and other instruments and all federal, state and
local taxes thereon;
E. Commissions and all advertising and other costs for the
sale of all mortgages, securities or property held or obtained by
LENDER;
F. Expenses, including counsel fees, incurred by LENDER on
account of any matter or thing, whether in suit or not, arising
out of this Agreement or anything in connection herewith;
G. Commissions for collection of rents and interest;
H. Costs and fees, including counsel fees, incurred in
foreclosure or other legal proceedings;
I. Taxes and municipal charges assessed against or imposed
upon the SUBJECT PREMISES or any part thereof;
J. Interest and principal on any or all mortgages secured
on the SUBJECT PREMISES or any part thereof;
8
<PAGE>
K. Any sums required to indemnify or to save LENDER
harmless or to defend LENDER from any and all loss or liability
by reason of any act or omission to act on the part of LENDER
and/or OWNER and/or the general contractor, if any, in connection
with this Agreement or otherwise;
L. Debts contracted by OWNER or others for work actually
done and for materials actually furnished in and about the said
buildings and improvements and for incidental expenses connected
therewith; provided, however, that the application of such monies
to debts contracted for work, equipment and material shall be
subject to the provisions of Paragraphs 11 and 12 hereof and
nothing herein contained shall be construed as vesting in any
person, firm or corporation furnishing work or materials or
equipment any right to sue or recover payment from or have or
secure a lien or charge upon or against the Account or LENDER or
to have or secure any right to an accounting in connection
therewith. The obligation of LENDER to make all such payments as
set forth in Paragraphs 11 and 12 hereof is expressly made
subject, however, to the right herein granted to LENDER to
exercise exclusive and final control and discretion with respect
to the amount and time of such payments and the person, firm or
corporation, if any, to whom they shall be made. Subject as
aforesaid, the funds in the Account shall not be appropriated or
applied for any other uses or purposes whatsoever and shall not
be liable to attachment or other legal proceedings, or be
assigned or diverted, except by LENDER, in any way from the uses
and purposes herein designated; provided, however, that LENDER
shall have and hereby is granted a first lien and claim on all of
said funds or any balance thereof in its possession or in the
Account at any time and from time to time for the payment of all
debts or obligations of OWNER to LENDER due or to become due,
liquidated or contingent. LENDER is hereby irrevocably
authorized to apply any balance in its possession or in the
Account to the payment of such debts and obligations whenever, in
its discretion, it shall deem it necessary or expedient so to do.
11. Subject as aforesaid to LENDER'S discretionary powers, all
monies deposited, or agreed to be deposited, in the Account may
be disbursed or paid out from time to time directly to OWNER upon
production with the voucher of releases of liens from the several
contractors, mechanics and materialmen or, following a default by
Owner, at LENDER'S option and in LENDER'S discretion, to the
several contractors, mechanics and materialmen only for work
9
<PAGE>
actually done and for materials or equipment actually furnished
in and about the construction of the said buildings and
improvements. Payment to any general contractor, subcontractor
or materialmen shall constitute an advance to OWNER and a
complete discharge of the liability of LENDER for the amount so
paid. Subject as aforesaid, such payments shall be made only
upon vouchers signed by OWNER or OWNER'S duly constituted
attorney-in-fact and the general contractor, if any, and
countersigned by the proper officers of LENDER. Also subject as
aforesaid, the amount due for other expenses payable out of the
Account, at LENDER'S option and in its discretion following a
default by Owner, may be paid directly to the several parties
entitled thereto or to OWNER and shall be paid only upon like
vouchers. Unless LENDER, in its discretion, shall determine
otherwise, no part of such monies may be drawn from the Account
by OWNER, directly or indirectly, for OWNER'S personal use until
after final completion of the said buildings and improvements and
until after all sums due LENDER by OWNER in connection with this
building operation or otherwise have been paid and all liability,
contingent and liquidated, of LENDER shall have ceased or been
satisfied. Anything herein contained to the contrary
notwithstanding, LENDER shall in no event be obligated to inquire
into the accuracy or correctness or reasonableness of the cost
breakdown supplied by OWNER, nor shall LENDER have any obligation
or duty to OWNER or to any other person, firm or corporation,
including, without limitation, contractors, subcontractors,
materialmen and suppliers, to ascertain whether or not the
payments made by LENDER correspond in amount to the sums to which
the payee or payees are entitled under the terms of the cost
breakdown, voucher, order, or any other document or documents
relating thereto or whether the person, firm or corporation to
whom or to which the payment is made is the proper recipient
thereof and, in the connection, it is expressly agreed that
LENDER shall have no liability as a result of the making or
withholding of any payment even if its acts are negligent and
this shall be true whether or not LENDER has actual knowledge
that the payee or payees are misapplying the monies paid and/or
are not or have not or do not intend to pay their or any of their
contractors, subcontractors, suppliers or materialmen. OWNER,
for OWNER and all those claiming under or through OWNER, hereby
releases and agrees to indemnify, defend and save harmless LENDER
for, from, of and against any and all liability whatsoever as a
result of or in connection with the payment or non-payment by
LENDER to OWNER and/or any person, firm or corporation whatsoever
10
<PAGE>
of all or any part or parts of the monies deposited or required
to be deposited in the Account whether or not such liability is
caused by or results from, directly or indirectly, the negligence
of LENDER or any other person, firm or corporation. In
connection with the foregoing, it is expressly understood and
agreed that the provisions hereof shall be applicable to, inter
alia, any situation or circumstance in which LENDER applies such
monies or property to satisfy the indebtedness of OWNER to LENDER
or to cure or protect against or prevent any default hereunder as
well as to the circumstance in which monies paid by LENDER to any
person, firm or corporation, including OWNER, exceed or are less
than the monies properly payable to such person, firm or
corporation and also to the circumstance where the monies
retained in the Account by LENDER are insufficient to permit the
completion of construction and/or the payment of all or any
materialmen, suppliers, laborers, contractors, etc., and to the
situation where LENDER after a default by Owner has, before or
after making any payments, been advised by OWNER, the general
contractor, if any, and/or any subcontractor, materialmen or
supplier has failed or refused or intends to or will fail or
refuse to pay any person, firm or corporation any or all monies
due by it, him, her or them and LENDER continues to make payments
without regard to such advices. Vouchers shall be issued by
OWNER only on account of work performed or materials or equipment
supplied under contracts which LENDER has previously approved in
writing. Each voucher shall constitute a representation by OWNER
that it is issued under and in accordance with a contract or
contracts which LENDER has previously approved in writing; that
the work and material for which payment is requested have been
physically incorporated into the construction; that the value is
as estimated and that the cost does not exceed the cost specified
on the cost breakdown; and that the work and material for which
payment is requested conform to the plans and specifications, to
all commitments, and to all applicable statues, laws, ordinances,
rules, regulations and requirements. Neither the payment and/or
counter signature of vouchers by LENDER nor the approval thereof
by any agent of LENDER shall constitute an acceptance of the work
and materials nor be binding on LENDER except to the extent that
the facts actually are as so represented. LENDER may, in its
discretion, withhold payment on any voucher pending inspection of
the construction to determine the truth or falsity of the said
representations or for any other reason whatsoever but LENDER
shall have no obligation or duty to any person, firm or
corporation whatsoever to do so whether or not it would be
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negligence or gross negligence to refrain from so doing. LENDER
further reserves the right to withhold payment on any voucher,
whether or not the said voucher has theretofore been
countersigned, whenever LENDER shall determine, in its discretion
and judgment, that OWNER or the general contractor, if any, or
any subcontractor, is in default as herein provided. In
connection with the foregoing, it is understood and acknowledged
by OWNER, on OWNER'S behalf and on behalf of all those
contracting, directly or indirectly, with OWNER and/or the
general contractor, if any, that LENDER shall have no liability
or responsibility whatsoever for or as a result of its
determination that OWNER or the general contractor is or may be
in default hereunder and the consequences of such determination.
12. A. In order to secure more effectually the proper and
specific appropriation of the monies so deposited or required to
be deposited in the Account to the uses and purposes herein
designated, OWNER hereby irrevocably constitutes and appoints
LENDER OWNER'S true and lawful attorney for OWNER and in OWNER'S
name following a default by Owner hereunder to sign any and all
vouchers for the disbursement of the monies so deposited or
required to be deposited that LENDER, as attorney-in-fact, may,
in its discretion, deem necessary or expedient to secure the
construction and full completion of the said buildings and
improvements according to the terms of this Agreement and to pay
all sums necessary for all and any other expenses (including
without limitation, cost of work and materials furnished and to
be furnished, permit fees, taxes, water and sewer rents, the cost
of title, fire, liability and/or special insurance, the cost of
any and all street and improvements, claims, liens, construction
charges, the cost of all extra or additional labor and material
and any and all other costs, charges, and/or expenses or
whatsoever nature and character which, in its discretion, LENDER
may deem necessary or expedient to incur or which have been
incurred in connection herewith). OWNER hereby irrevocably
authorizes and empowers LENDER to do and perform for OWNER and in
OWNER'S name, as OWNER'S attorney-in-fact following a default by
Owner hereunder, all matters and things which LENDER shall, in
its discretion, deem necessary or expedient to effectuate the
performance and purposes of this Agreement and to insure the
application of such monies to the payment of debts contracted or
incurred for work done and/or for materials furnished in and
about the construction of the said buildings and improvements and
for any and all other expenses and, for its so doing, this
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warrant of attorney shall be its full and sufficient authority
and the vouchers so given and signed by LENDER as attorney-in-
fact shall be good and sufficient vouchers for all payments made
by virtue thereof. The authority herein given may be exercised
by LENDER in the event of the default hereunder of OWNER; in the
event of OWNER"S inability or refusal to act in accordance with
this Agreement, in the event of OWNER"S insolvency; if a petition
in bankruptcy is filed by or against OWNER; if OWNER shall make
an assignment for the benefit of creditors; or in the event
LENDER, in its discretion, shall determine that Owner is in
default hereunder or its security is threatened.
B. If work on the said buildings and improvements is
delayed or suspended for five consecutive business days without
cause satisfactory to LENDER, or if OWNER does not prosecute the
work vigorously with such force of workmen and mechanics as shall
be satisfactory to LENDER at any time during the progress of the
erection of the said buildings and improvements, or if OWNER
shall, in the opinion of LENDER, refuse, omit or neglect or be
unable to supply a sufficiency of materials and workmen to push
the said work to completion, LENDER may, in its discretion, but
need not, upon three days' written notice mailed to the address
of OWNER, secure and cause said buildings and improvements to be
completed for the account of and at the sole cost of OWNER and
recover under this Agreement and any bond or bonds of indemnity
executed, or to be executed, any amount expended for such
purpose, together with all expenses as aforesaid. In the event
of a proceeding under this Agreement or if judgment is entered on
any bond or bonds of indemnity for the recovery of any monies
expended for the completion of the said buildings and
improvements or for the payment of liens thereon or for the
payment of any or all other expenses as aforesaid, an account of
such expenditure verified by an officer of LENDER shall be
conclusive evidence of the amount so expended and of the
necessity for the same.
13. A. OWNER shall indemnify, defend and save harmless LENDER,
its successors and assigns, of and from any and all los,
including counsel fees and costs, of whatsoever kind and nature,
whether as mortgagee or otherwise, resulting from or arising,
directly or indirectly, in connection with any default or
threatened default by OWNER hereunder.
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B. OWNER shall, within ten days after written notice from
LENDER, pay, discharge and have satisfied or record any liens or
claims for work, materials, and/or labor done or to be done or
furnished or to be furnished for or in connection with the
construction of the said buildings and improvements which have or
may be entered or filed of record against the SUBJECT PREMISES or
any part thereof. If OWNER fails to do so within ten days after
such notice, LENDER may pay off, discharge and have satisfied of
record any such liens or claims and OWNER shall repay to LENDER
all sums of money expended by it for this purpose, including
counsel fees and costs, and LENDER, in so doing, shall not be
required to inquire into the validity or propriety of such lien
or claim.
14. If a petition in bankruptcy is filed by or against OWNER, or
if OWNER shall, in the opinion of LENDER, at any time during the
progress of the construction of the said buildings and
improvements, cease work thereon or abandon the same for a period
of five consecutive business days, LENDER shall have the right,
and is hereby irrevocably authorized and empowered, to enter into
and upon the SUBJECT PREMISES and take charge thereof, together
with all materials and appliances thereunto belonging, and
thereupon, in the name of OWNER, as OWNER's attorney-in-fact, to
call upon the several contractors for the work to be done for the
materials to be furnished in and about the construction of the
buildings and improvements and may require several contractors to
proceed to complete the said buildings and improvements according
to the contracts, plans and specifications (or any changes,
alterations, additions or modifications thereof or thereto deemed
expedient or necessary by LENDER) and to do whatsoever else
LENDER, in its discretion, shall deem necessary or expedient to
be done to secure the erection and construction of the said
buildings and improvements according to the said contracts, plans
and specifications, and the changes, etc., thereto, if any, and
to save LENDER from any loss in connection therewith.
16. Lender is hereby irrevocably authorized, empowered and
directed to cause to be created, executed, acknowledged and
delivered all other mortgages which, in the opinion of LENDER,
should be placed upon the SUBJECT PREMISES or any part or parts
thereof. The net proceeds of said mortgages shall be deposited
to the credit of the Account and disbursed as hereinbefore
provided.
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17. OWNER agrees, for OWNER and all those claiming under or
through OWNER, that all materials delivered to the SUBJECT
PREMISES by mechanics or materialmen or suppliers for the purpose
of being used in or in connection with the erection of the said
buildings and improvements, whether actually deposited upon the
premises or upon lots or highways nearby, shall be considered
annexed to and shall be a part of the SUBJECT PREMISES as if
actually incorporated in the said buildings and improvements and
shall be subject, as against OWNER and all parties acting or
claiming under or through OWNER, to the rights, conditions, and
covenants to which the SUBJECT PREMISES are subject under this
Agreement (including, in particular), but without limitation, the
lien of the mortgage(s) referred to in Paragraph 3 hereof and the
lien of any and all other mortgages made at the insistence of
LENDER in connection herewith), but nothing herein contained
shall make LENDER responsible for any los, damage or injury to
the said materials or for the payment for the same.
18. Upon default, OWNER shall deposit with LENDER, to the credit
of the Account, all sums received by OWNER as payments on account
of the purchase or lease of the buildings and improvements, or
any part or parts of them, or of the SUBJECT PREMISES,
immediately upon receipt of such sums. LENDER shall be under no
obligation to any third party for the collection, retention or
disposition of such sums.
19. Upon default, LENDER is hereby irrevocably authorized,
directed and empowered, in its discretion, without notice to
OWNER, to reduce the principal of any or all mortgages secured or
to be secured upon the said buildings and improvements and/or the
SUBJECT PREMISES and to sell, assign, transfer, or dispose of any
and all such mortgages at such principal sum as shall be
determined and established by LENDER in its discretion. Lender
agrees that for so long as Owner is not in default hereunder, all
rents received by Lender and deposited in Account # 141008517 may
be withdrawn by Owner.
20. B. If Lender shall determine, in its sole opinion, that
the undisbursed proceeds of the Loan will be insufficient to
complete the improvements, OWNER shall, upon demand, deposit with
LENDER the shortfall in cash or, at LENDER'S option, marketable
securities, as further security (1) for the completion of
construction of the buildings and improvements; (2) for the
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<PAGE>
faithful and complete performance by OWNER hereunder; (3) for the
repayment of advances made by LENDER; and (4) for the repayment
to LENDER of all losses, damages costs and expenses incurred by
LENDER or which are obligations of OWNER hereunder or in
connection herewith. The said monies shall be deposited by
LENDER in the Account and held, without interest, subject to the
terms hereof. In the event any securities deposited with LENDER
hereunder shall, in the opinion of LENDER, be reduced in value or
if any monies deposited hereunder shall be applied by LENDER to
the cost of construction of the said buildings and improvements,
OWNER shall, upon demand, deposit with LENDER, as additional
security, cash or, at LENDER's option, marketable securities
sufficient to replace the monies so applied or offset such
reduction in value. LENDER may, but shall not be obligated to,
accept work and materials on the site of or incorporated into the
building operation in lieu of all or part of the cash to be
deposited hereunder. LENDER'S decision as to the value of such
work and materials shall be final and binding on OWNER.
21. OWNER expressly agrees that in the exercise of its remedies
hereunder LENDER or any other person, firm or corporation may
become the purchaser of any property, including the SUBJECT
PREMISES, sold by LENDER, or its nominee, at private, public or
judicial sale free, clear and discharged of any and all trusts
and without any liability to account to OWNER or anyone claiming
under or through OWNER for any profits subsequently realized by
such purchaser by or through a resale of such property or the
operation thereof or any part or parts thereof, or otherwise.
22. After the completion of the buildings and improves and when
all liability for mechanics' liens and municipal claims shall
have expired and all street improvements, utilities and
connections have been made and paid for, and after the payment or
discharge in full of all of the items enumerated in Paragraph 10
hereof and after the repayment of all advances, any balance
remaining in the Account shall be paid to OWNER or to such
person, firm or corporation as the OWNER in writing may direct,
unless OWNER is otherwise indebted to LENDER or in default
hereunder, in which event any such balance shall be applied to
the payment of such indebtedness and/or the curing of such
default.
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<PAGE>
23. LENDER shall have the right to enter upon the SUBJECT
PREMISES at any time and from time to time to inspect the work in
course of preparation and completion and/or for any other lawful
purpose and OWNER shall provide appropriate facilities for making
proper inspections of the work by the inspector or inspectors of
LENDER, and/or LENDER'S authorized representatives. OWNER shall,
within twenty-four (24) hours after receiving written notice from
LENDER so to do, proceed to remove from the premises all matters
and materials condemned by LENDER, its inspectors or
representatives, or the supervising architect, if any, whether
worked or unworked, and to take down all portions of the work
which LENDER, by like written notice, may condemn as unsound and
improper or as in any way failing to conform strictly with the
plans and specifications, and shall make good all work or
materials damaged thereby. OWNER agrees further, in order to
facilitate the proper completion of the said buildings and
improvements, to permit LENDER upon Owner's default to place upon
the SUBJECT PREMISES a superintendent whose duties shall be to
require that the buildings and improvements are constructed and
completed in accordance with the plans and specifications
(subject to such modifications as LENDER may, in its discretion,
deem necessary or expedient) in whatever way may be proper in the
opinion of LENDER and the said superintendent. The salary of
said superintendent shall be paid by OWNER out of the funds of
the operation on vouchers properly drawn as hereinbefore
provided. For all purposes, as between the parties and as to
third persons, any such superintendent shall be deemed an
employee only of OWNER and not of LENDER. OWNER shall keep and
maintain proper books and records for the building operation in
accordance with good accounting practice. Such books and records
shall at all times be open to and available for inspection by
LENDER or its designee.
24. The occurrence of any of the following events shall, at the
option of LENDER, which determination shall be evidenced by a
written notice of default to OWNER, constitute a default by OWNER
hereunder:
A. If any petition under the provision of the National
Bankruptcy Act shall be filed by or against Owner and if filed
against Owner such petition is not discharged within 90 days;
B. If OWNER shall make an assignment for the benefit of
creditors;
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<PAGE>
C. If a receiver shall be appointed for OWNER or the
property or assets of OWNER;
D. If OWNER shall become insolvent:
E. If any execution be levied or attachment be made
against the building, rents and income thereto operation or any
part thereof or (2) the rental income of the Winn Dixie Lease
which is separate collateral for the Loan;
F. If work on the buildings or improvements shall be
suspended for five (5) consecutive business days without cause
satisfactory to LENDER;
H. If OWNER fails to pay when due any bill from
subcontractors or materialmen who have performed work or
furnished material for or in connection with the building
operation;
I. If the building operation be materially injured or
destroyed by fire or otherwise; and such insurance proceeds
either are not sufficient to cause the complete reconstruction
thereof and/or will not be paid in a timely fashion to permit
occupancy of the Premises by Redner's Markets in accordance with
the terms of its lease.
J. If OWNER violates or fails to perform any of the terms,
covenants, and agreements on the part of OWNER to be performed
hereunder following receipt of Lender's written notice of default
and Owner's failure to cure within 30 days; or
K. If OWNER fails to repay any advance by LENDER or the
interest thereon when due or fails to pay any indebtedness of
OWNER to LENDER, whether arising under this Agreement or under
any obligation referred to herein or otherwise, when due subject
to the notice and grace provisions contained in the Bond.
In the event of a default hereunder as aforesaid, all monies
advanced by LENDER and all bonds, mortgages, notes, mortgage
notes and obligations given pursuant hereto shall, at the option
of LENDER, become at once due and payable and in default and it
shall be lawful for LENDER, at its option, three (3) days after
notice of default to OWNER, to enter upon the SUBJECT PREMISES
and take possession thereof together with the buildings and
improvements and all materials, supplies and appliances located
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<PAGE>
thereon and thereabout and proceed, as LENDER may elect, either
in its own name or in the name of OWNER, as OWNER'S attorney-in-
fact, being hereby so authorized and appointed irrevocably by
OWNER, to complete the construction of the buildings and
improvements at the cost and expense of OWNER according to the
terms of this Agreement, or according to such changes or
modifications to the plans and specifications as LENDER, in its
discretion, shall deem necessary or expedient, and to enforce or
cancel all contracts or make such other contracts as it may deem
advisable and to recover under this Agreement, or under any
bond(s) and warrant(s), note(s) or mortgage(s) or other
obligations executed in favor of or transferred to LENDER, all
amounts due LENDER under this Agreement and all amounts expended
for proceeding as aforesaid, together with any costs, counsel
fees, charges, or expenses incidental thereto or otherwise
incurred or expended by it, or on its behalf, in connection
herewith. In any proceeding for recovery of advances under this
Agreement and/or for reimbursement for any monies expended by
LENDER in connection with the said building operation, as well as
upon the entry of judgment on any bond or obligation, a statement
of expenditures verified by the affidavit of an officer of LENDER
shall be conclusive evidence of the amounts so expended and of
the propriety and necessity for such expenditures. LENDER shall
have the right to use any funds, securities or other property
(including, without limitation, savings and checking accounts and
certificates of deposit with LENDER owned, legally or
beneficially, by OWNER) in its hands belonging to OWNER (whether
pertaining to this operation or not) and any funds, securities,
or other property deposited under this Agreement to secure
completion of construction of the buildings and improvements to
pay the debts, costs and expenses incurred by LENDER or any other
person, firm or corporation in connection therewith and to repay
all sums due to LENDER under this Agreement or otherwise and
OWNER shall, upon exhaustion of the monies or other assets of the
Account or arising out of the building operation, pay to LENDER,
upon demand, such sums of money as LENDER may from time to time
demand for the purpose of completing the construction of the
buildings and improvements or of paying any liability, charge, or
expense incurred or assumed by LENDER pursuant to this Agreement
or for the purposes of or in connection with the construction
contemplated by this Agreement.
25. The failure of LENDER to insist in any one or more instances
upon the performance of any of the covenants and conditions of
this Agreement or to exercise any right or privilege herein
19
<PAGE>
conferred upon LENDER shall not be construed thereafter as a
waiver or relinquishment of any such covenants, conditions,
rights or privileges and the same shall continue and remain in
full force and effect.
26. OWNER shall repay all sums or indebtedness due LENDER
hereunder with the period specified as provided in Paragraph 2a
hereof, or at such other date, if any, as the loan becomes due by
reason of default or by reason of the completion and sale of the
buildings and improvements constructed under this Agreement, or
at the time required by the terms and conditions of any note(s),
bond(s) and mortgage(s) given by OWNER or LENDER, whichever shall
be the earliest date.
27. OWNER shall indemnify, defend and save harmless LENDER, its
successors and assigns, and its nominee referred to in Paragraph
21 hereof, of, from and against any and all loss or damage of
whatsoever kind or nature and of, from and against any suits,
claims or demands, including LENDER'S counsel fees and expenses,
on account of any matter or thing, whether in suit or not,
arising out of this Agreement or in connection herewith, or on
account of any act or omission to act by LENDER in connection
herewith. This obligation shall survive the completion of said
buildings and improvements and the repayment of the advances made
by LENDER hereunder.
28. The remedies herein provided shall be in addition to and not
in substitution for the rights and remedies which would otherwise
be vested in LENDER in law or equity, all of which rights and
remedies are specifically reserved by LENDER. The remedies
herein provided or otherwise available to LENDER shall be
cumulative and may be exercised concurrently. Failure to
exercise any of the remedies herein provided shall not constitute
a waiver thereof and shall not preclude the resort to any other
appropriate remedies. The use of the remedies herein provided or
otherwise available in equity or law shall not prevent the
subsequent or concurrent resort to any other remedy or remedies
vested in LENDER hereunder or by law or equity. This clause
shall be broadly construed so that all remedies herein provided
or otherwise available to LENDER shall continue to be available
to LENDER until all sums due to it by reason of this Agreement
have been paid in full to it and all obligations incurred by it
or its nominee or trustee as aforesaid in connection with the
building operation have been fully discharged without cost or
loss to LENDER or its nominee.
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<PAGE>
29. A default by OWNER hereunder shall likewise be and
constitute a default in the note(s), bond(s) and mortgage(s)
given or made by OWNER in connection herewith and in each and
every obligation and other Agreement given by OWNER to LENDER
pursuant to or in connection with this Agreement or the building
operation. A default by OWNER under any such note(s), bond(s),
mortgage(s), obligations or other agreements shall likewise be
and constitute a default by OWNER hereunder.
30. OWNER shall pay upon demand:
A. All charges for drawing all deeds, instruments, bonds,
mortgages, and mortgage notes:
B. All federal, state and municipal documentary, revenue
or transfer stamps required thereon;
C. All taxes or tax stamps on deeds of transfer or
conveyance and/or on any other instruments or documents
whatsoever;
D. Recording fees for all deeds and mortgages and other
instruments and documents;
E. The cost of searches, examination of title, and title
insurance, including special insurance against mechanics' liens
and/or municipal claims;
F. The cost of surveys required by LENDER and/or the
permanent mortgagee(s);
G. All premiums on insurance required hereunder;
H. A fee to counsel for LENDER of $7,500.00 and/or the
permanent Mortgagee(s); and
I. All other expenses or costs incident to the obtaining
or making of the loan contracted for, to the construction
contemplated by this Agreement, to the sale or lease of the
buildings and improvements, to the sale of the Note(s), bond(s)
and mortgage(s) thereon, and all payments required to complete
the buildings and improvements in accordance with this Agreement
and to comply with the terms, covenants, promises and agreements
on the part of OWNER to be kept and performed hereunder. Should
OWNER fail to make any payment as herein required, LENDER may, at
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<PAGE>
its option and in addition to all other remedies herein provided
for or otherwise available to it, at any time, pay the same,
charging the amount thereof to OWNER, and deduct the said amount
from any installment thereafter to be advanced hereunder or from
any monies, assets, or property of OWNER deposited with LENDER in
connection herewith or otherwise, and OWNER shall be and remain
liable for any deficiency thereafter remaining.
31. LENDER is not a partner with OWNER or any other party in the
building operation and is not interested in the profits thereof
except to the extent they may be collateral for the advances,
etc. made or paid by LENDER hereunder. LENDER shall not be in
any way liable or responsible for the payment of any claims
arising out of or in connection with the construction of the said
buildings and improvements or the acts of LENDER or OWNER in
connection herewith by reason of the provisions hereof or
otherwise.
32. The entire compensation of LENDER provided for in this
Agreement shall be considered as having been earned upon
execution hereof by OWNER and shall then be due and payable,
whether or not any further service or undertaking by LENDER shall
be required or occur.
33. Exit Fee: Should OWNER fail to obtain financing of the
Property from LENDER pursuant to the provisions of Paragraph 22g
of the January 8, 1997 Loan Commitment Letter, whether or not
LENDER is arbitrary or capricious in failing to make such loan,
then OWNER shall pay LENDER an exit fee equal to the greater of
1% of the Loan Amount or $54,000 on the earlier of eighteen (18)
months from closing or the date of prepayment of this Loan. The
provisions hereof shall also apply notwithstanding that OWNER may
have repaid this Loan from cash on hand and without the necessity
of any financing.
34. LENDER is hereby irrevocably authorized, whenever it shall
deem it necessary or expedient, to cause any bond(s), warrant(s),
note(s), mortgage(s), agreements or other instruments or writings
given in connection herewith or hereunder to be completed or
amended in any respect in which the same may be incomplete or in
which the same are required to be amended to comply with all
commitment issued in connection herewith, to make the same
salable and/or to cause the same to be insured by any insuring
agency, and to record such mortgage(s) as may not then be
recorded and any amendment or amendments thereto.
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<PAGE>
35. No advance or payment made hereunder, including final
payment, shall be evidence of the performance of this contract,
either in whole or in part, and no advance or payment, including
the final payment, shall be construed to be or constitute an
acceptance of any defective or faulty work or improper materials
or a waiver of any of the provisions hereof.
36. All notices to be given by LENDER to OWNER shall be deemed
to have been property given and served when given by certified
mail addressed to OWNER at OWNER's address mentioned at the
beginning of this Agreement and such notices may also be served
in person by delivery to OWNER or to an agent of OWNER at such
address. All times in connection with such notices shall run
from the time of mailing (if mailed) or delivery thereof (if
delivered other than by mail). Notices to LENDER shall be in
writing and shall be valid only when delivered to an executive
officer of LENDER at its place of business mentioned at the
beginning of this Agreement.
37. The word "OWNER", as used herein, shall include collectively
all parties designated as such at the beginning hereof. All such
parties shall be obligated jointly and severally hereby. The
term "OWNER" shall also include, where appropriate, all agents
straw men and nominees of OWNER.
38. This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their heirs, personal representatives,
successors and, to the extent permitted herein, assigns.
39. OWNER shall not and may not assign, transfer, or otherwise
encumber this Agreement, or any rights in LENDER'S commitment or
any other commitment in connection herewith, or any monies,
property or funds deposited with LENDER. An assignment,
transfer, pledge, etc., in violation hereof shall be invalid and
shall vest no rights whatsoever in the assignee, transferee, etc.
40. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each
term and provision of this Agreement shall be valid and be
enforceable to the full extent permitted by law.
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<PAGE>
41. OWNER, in addition to the payment of interest on the said
loan, agrees to pay LENDER a service charge, at execution hereof,
of $30,000.00 which Lender has received for services rendered or
to be rendered by LENDER in connection with this Agreement.
LENDER reserves the right to make additional charges for
extraordinary services rendered, if any.
IN WITNESS WHEREOF, the parties hereto have caused these
presents to be executed the day and year first above written.
FIRSTRUST SAVINGS BANK
BY: /s/ William F. Bruckner
Vice President
ATTEST: /s/ Alice T. Moffett
Assistant Secretary
OWNER: MARK CENTERS TRUST, A MARYLAND
BUSINESS TRUST, ITS GENERAL
PARTNER
BY: /s/ Joshua Kane
Senior Vice President and CFO
ATTEST: /s/ Steven M. Pomerantz
Assistant Secretary
24
LIST OF EXHIBITS
EXHIBIT "A" LEGAL DESCRIPTION
EXHIBIT "B" PLANS AND SPECS
EXHIBIT "C" COST BREAKDOWN
25
<PAGE>1
LOAN NO. C-1483
Prepared by Daniel B. Green, Esq.
OPEN END FEE AND LEASEHOLD
MORTGAGE
THIS MORTGAGE SECURES FUTURE ADVANCES
This indenture, made the 18th day of September Nineteen Ninety
Seven (1997) Between MARK CENTERS LIMITED PARTNERSHIP, A DELAWARE
LIMITED PARTNERSHIP(hereinafter called the Mortgagor/s) of the
one part, and FIRSTRUST SAVINGS BANK, a Pennsylvania Mutual
Savings Bank Chartered under the Pennsylvania Banking Code of
1965, (hereinafter called the Mortgagee) of the other part:
Whereas, the said Mortgagor/s in and by a certain obligation
or writing obligatory under his/her/its/their hand/s and seal/s
duly executed, bearing even date herewith, stand/s held and
firmly bound unto the said Mortgagee in the sum of up to
ELEVEN MILLION AND 00/100 DOLLARS ($11,000,000.00) legal tender
of the United States of America, conditioned for the payment to
the above-named Mortgagee, at its office in the City of
Philadelphia, its certain Attorney, Successors or Assigns, of the
just sum of FIVE MILLION FIVE HUNDRED THOUSAND AND 00/100
($5,500,000.00) legal tender aforesaid, with interest and premium
thereon at the rate specified in aforesaid obligation in monthly
installments of not less than SEE RIDER, the first installment to
be paid on the first day of the first month from the date
thereof, and the remaining installments monthly thereafter on the
first day of each month until the loan, additional future
advances, interest and other charges herein covenanted to be paid
are paid in full. SEE RIDER FOR PREPAYMENT PRIVILEGE.
And also conditioned for the payment unto the Mortgagee, in
addition to, and concurrently with, such monthly installments of
principal, interest and premium of the following sums:
Mortgagor will pay monthly installments of taxes as provided
in the Commitment between Mortgagor and Mortgagee.
All monthly installments of principal, interest and premium,
<PAGE>2
and all payments mentioned in the preceding paragraph shall be
added together and the aggregate amount thereof shall be paid by
the Mortgagor/s each month in a single payment to be allocated by
the Mortgagee to the following items in the order set forth:
(1) Interest and premium on the said debt, which if not paid
during the current month shall be added to the balance
of the principal debt.
(11) Amortization of the principal of the debt represented by
said obligation.
(111) Taxes, water and sewer rents, fire and other hazard and
life insurance premiums. Interest will not be earned on
money held in escrow.
Any deficiency in the amount of any such aggregate monthly
payment shall constitute an event of default thereunder and under
this mortgage.
In the event that any payment shall become overdue for a
period of ten days, the Mortgagor/s agree/s to pay an additional
charge to defray the expenses incident to the handling of
delinquent accounts, equivalent to an additional one-tenth of
seven cent (.007) per month, or any fraction thereof, on the
unpaid outstanding balance of the loan, for the period of the
delinquency, said additional charge, however, not to exceed seven
per cent (.07) per month of the monthly payment, and to be added
to the principal debt.
It Is Agreed That the Mortgagee may pay said Taxes, water
and sewer rents, insurance premiums, claims, liens, or charges,
on behalf of the Mortgagor/s, whether previously paid by
Mortgagor/s to Mortgagee or not, and Mortgagee may cause any
repairs it deems necessary to be made to said premises and pay
for same, and it may make future advances for any reason to
Mortgagor/s or their heirs, executors, administrators,
successors: or grantee/s, at the request of the owner/s of said
premises at the time of the said advances, provided however that
at no time may the total balance due by the Mortgagor/s hereunder
whether the same represents, in whole or in part, the initial
advance or any future advance or advances exceed the sum of
ELEVEN MILLION AND 00/100 Dollars ($11,000,000.00): and, to the
extent permitted by law, in the event of taxation of the debt
represented by said Obligation of this Mortgage, or of the
<PAGE>3
Mortgagee by reason of its ownership thereof, by any public
authority, the Mortgagor/s shall pay such taxes or compensate the
Mortgagee to the extent of its payment thereof, not less than
thirty days before that payment is due, and upon the failure of
the Mortgagor/s to do so, the Mortgagee may pay the said taxes,
advancing the amount thereof for the Mortgagor/s; and any sum or
sums so advanced shall be added to the principal debt and shall
bear interest at the maximum contract rate, from the date of
payment and shall be secured by this mortgage: and after any such
advances are made, all payments whatsoever to the Mortgagee, by
the Mortgagor/s shall be applied exclusively first to interest on
said advances and then to the principal thereof until the same is
paid in full and no such advances shall be construed as a waiver
of the right of the Mortgagee to enter judgement on said
obligation or to foreclose upon his Mortgage because of any
default. It is also agreed that, if any sum or sums of money
shall become payable under the aforesaid policies of insurance or
by virtue of any condemnation or taking of the mortgaged premises
for public use, the Mortgagee shall have the option to receive
and apply the same on account of the obligation of the
Mortgagor/s, or to release the same or any part thereof, for the
purpose of rebuilding or repairing the damaged premises, or for
other purposes, or release same to the Mortgagor without thereby
waiving or impairing the obligation of the Mortgagor/s, or the
lien of this mortgage securing the same. The Mortgagor hereby
expressly assigns and transfers unto the Mortgagee all sums of
money payable under such insurance claims or condemnation
proceedings, and does hereby irrevocably nominate, constitute and
appoint the Mortgagee to act for the Mortgagor as a true and
lawful attorney with full power to settle or compromise and
collect such claims, and to demand, receive and receipt for all
monies becoming payable under such claims, and to assign all
policies to any assignee of this Mortgage or to the purchaser at
a foreclosure sale.
Now This Indenture Witnesseth, That the said Mortgagor/s, as
well for and in consideration of the aforesaid debt or principal
sum of FIVE MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS
($5,500,000.00), and for the better securing the payment of the
same, with interest, unto the said Mortgagee, its Successors and
Assigns, in discharge of the further sum of One Dollar unto
him/her/it/them in hand well and truly paid by the said
Mortgagee, at and before the sealing and delivery hereof, the
<PAGE>4
receipt whereof is hereby acknowledged, has/have granted,
bargained, sold, aliened, enfeoffed, released and confirmed, and
by these presents do/es grant, bargain, sell alien, enfeoff,
release and confirm unto the said Mortgagee, its Successors and
Assigns:
SEE EXHIBIT "A" ATTACHED HERETO.
Together with all and singular the buildings, streets,
alleys, passages, ways, water, water-courses, rights, liberties,
privileges, improvements, hereditaments, and appurtenances
whatsoever, thereunto belonging, or in anywise appertaining, and
the reversions and remainders, rents, issues and profits thereof;
and also together with all heating, plumbing, cooking and
lighting fixtures and equipment, screens, awnings and shades, oil
furnaces, burners, radiators, cooling or air conditioning units
or systems, all machinery, compressors, elevators, and motors, of
every description, now or hereafter attached to or used in
connection with the real estate or the operation of the plant,
business or dwelling in the real estate hereinabove described.
The Mortgagor/s, hereby assign/s and transfer/s unto the
Mortgagee any and all rents issuing from the premises herein
described, and authorize/s it, or its agent, at any time there is
any default in the payment of the obligation secured hereby, or
in the performance of any obligation or condition contained
herein, or in the bond accompanying this mortgage, by force or
otherwise, without any liability for so doing, to enter into,
take possession of, rent, repair and operate said premises, and,
after deducting all costs of collection and administration, to
apply the balance of the rents received on account of the
obligation of the Mortgagor/s. It is hereby further agreed that
Mortgagee shall have the right to enter in and upon the premises
mortgaged hereby at any reasonable hour for the purpose of
inspecting the order, condition and repair of the building or
buildings erected thereon. If the Mortgagee enters into
possession, as provided herein, the Mortgagor/s specifically
authorize/s the Mortgagee to rent the premises under such terms
and conditions as it deems advisable including the right to have
the term extend beyond the date the mortgage is satisfied.
To Have and To Hold the said lot or piece of ground with the
<PAGE>5
buildings and improvements thereon erected, hereditaments and
premises hereby granted, or mentioned and intended so to be with
the appurtenances, unto the said Mortgagee, its Successors and
Assigns, to and for the only proper use and behoof of the said
Mortgagee, its Successors and Assigns forever, UNDER and SUBJECT
as aforesaid.
It is agreed that, in the event the premises covered by this
mortgage, or any part thereof, shall be condemned and taken for
public use under the power of eminent domain, the Mortgagee shall
have the right to demand that all damages awarded for the taking
of or damage to said premises shall be paid to the Mortgagee, up
to the amount then unpaid on this mortgage, plus prepayment
charges as hereinbefore set forth, and may be applied upon the
payment or payments last payable hereon.
Provided Always, nevertheless, that if the said Mortgagor/s
do/es and shall well and truly pay, or cause to be paid, unto the
said Mortgagee, the aforesaid debt or principal sum and interest
thereon, and the aforesaid taxes, water and sewer rents and
insurance premiums, in installments, and shall produce said
receipts, on the days, at the times and in the amounts
hereinbefore mentioned and appointed for payment of the same, and
shall keep the building or buildings herein mentioned insured and
repaired as aforesaid, without any fraud or further delay, and
without any deduction, defalcation or abatement to be made of
anything herein mentioned to be paid or done, and if no new
building shall be erected or improvements added to as aforesaid,
without the prior written consent of the Mortgagee, and no
execution process shall be issued or lien or encumbrance placed
against the premises mortgaged hereby and no sale or transfer of
title or ownership of the stock of the corporation holding title
thereof be made without the written consent of the Mortgagee as
aforesaid, and if Mortgagor/s or their successors in title to the
mortgaged premises do not fail to furnish to Mortgagee or any
assignee of Mortgage, proposed by Mortgagee, a Declaration of No
Set-Off within ten days after written request for such instrument
is made then and from thenceforth, as well this present
Indenture, and the estate hereby granted, as the said recited
obligation shall cease, determine and become void, anything
hereinbefore contained to the contrary notwithstanding.
<PAGE>6
Provided, however, and as it is further agreed in the
obligation of the Mortgagor/s, that it shall and may be lawful
for the Mortgagee, when and as soon as the principal debt or sum
hereby secured shall become due and payable as aforesaid, or if
at any time defaults shall be made in the payment of any monthly
installment of interest, principal, taxes, water and sewer rents
or insurance premiums for the space of one month after any
payment thereof shall fall due, or in the production to the
Mortgagee of receipts for the payment of taxes, water and sewer
rents and all other claims or charges assessed or levied or filed
against the mortgaged premises during the preceding two months,
or in the keeping of all buildings now or hereafter erected on
said premises and all equipment owned by Mortgagor and attached
to or used in connection with the same insured with insurers
approved by the Mortgagee against loss or damage by fire with
extended coverage and against war damage or other hazard for the
benefit of the Mortgagee, in such amounts as my be required from
time to time by the Mortgagee, or in the keeping and maintaining
of said building or buildings in such good order and repair as
may be required from time to time by the Mortgagee, or if a new
building shall be erected, or an improvement be added to the said
premises without the prior written consent of the Mortgagee, or
if any execution process shall be issued or any lien or
incumbrance placed or suffered to be placed against the said
mortgaged premises, or if there be a transfer of title to the
said premises other than by operation of law without the written
consent of the Mortgagee, or if Mortgagor/s or their successors
in title to the mortgaged premises fail to furnish to Mortgagee
or any assignee of Mortgage, proposed by Mortgagee, a Declaration
of No Set-Off within ten days after written request for such
instrument is made, or if there be a default in any other term or
condition of the said obligation or of this mortgage, or if the
Mortgagee by reason of a default be required to refer the
obligation to an attorney for collection or for the filing of a
claim in Bankruptcy, to sue out forthwith a writ or writs of
Scire Facias upon this Indenture of Mortgage, or to issue its
complaint in action of mortgage foreclosure, and to proceed
thereon to judgement and execution for the recovery of the whole
of said principal debt, or so much thereof as shall then remain
unpaid, and interest on all unpaid balances of principal at the
rate hereinabove set forth, together with all costs of suit, all
monies expended by the Mortgagee in the payment of taxes, water
and sewer rents, claims, liens, or charges and in effecting
<PAGE>7
insurance or repair and in making future advances, and interest
on said expenditures at the rate set forth in Rider and a
reasonable attorney's fee of five per cent (5%) of the aggregate
amount thereof, but not less than one hundred dollars, for
collection, without further stay, any law, usage, or custom to
the contrary notwithstanding. It is agreed that the Mortgagor/s
waive/s exemption, inquisition, and condemnation, and waive/s and
relinquish/es all rights and benefits of any and all Acts passed
or to be passed exempting from Civil Process persons in the
Military or Naval Service of this State of the United States or
granting stay of execution, to the same, this waiver to be
effective only to the extent that the said Acts do not expressly
prohibit it.
It is agreed that any failure by Mortgagee to exercise any
rights, privileges or options shall not constitute a waiver of
its right to exercise the same at any other time.
It is hereby agreed that the word "Mortgagor/s" includes the
singular as well as the plural and the waivers, releases,
obligations, responsibilities and liabilities of said Mortgagor/s
shall extend to and be binding upon his, her, its, or their
heirs, executors, administrators, successors and assigns. It is
further agreed that the word "Mortgagee" and the rights, demands,
actions, grants, estates, claims, options and privileges granted
unto the Mortgagee shall extend to and include its Successors and
Assigns.
If this mortgage debt is, or is intended to be insured or
guaranteed by the Veterans Administration pursuant to the
provisions of the Servicemen's Readjustment Act of 1944, as
amended or supplemented, then the terms hereof are made subject
to and shall be modified by the Regulations of the Veterans
Administration as amended from time to time. If the Certificate
of Guaranty by that Administration is not delivered to the
Mortgagee within thirty days after requested, or if it is
impaired, lost or rendered ineffective for any reason, either
wholly or in part, at any time during the term hereof, the
balance of the principal debt and all unpaid interest thereon
shall, at the option of the Mortgagee, become due and payable
forthwith and the Mortgagee may proceed for the collection
thereof as elsewhere provided herein.
<PAGE>8
In Witness Whereof, the said Mortgagor/s, to these presents
has/have hereunto caused to set its/his/her/their hand/s and
seal/s. Dated the day and year first above written.
RIDER IS ATTACHED HERETO AND INCORPORATED HEREIN BY REFERENCE.
HAZARDOUS MATERIAL RIDER IS ATTACHED HERETO AND INCORPORATED
HEREIN BY REFERENCE.
MARK CENTERS LIMITED PARTNERSHIP, A DELAWARE
LIMITED PARTNERSHIP
BY: MARK CENTERS TRUST, A MARYLAND BUSINESS
TRUST, ITS GENERAL PARTNER
BY: /s/ Joshua Kane
Joshua Kane - Senior Vice President
ATTEST: /s/ Steven M. Pomerantz
Steven M. Pomerantz - Asst. Secretary
<PAGE>9
RIDER LOAN NO. C-1483
TO THAT CERTAIN MORTGAGE DATED THE 18TH DAY OF SEPTEMBER, 1997,
EXECUTED BY MARK CENTERS LIMITED PARTNERSHIP, A DELAWARE LIMITED
PARTNERSHIP IN THE PRINCIPAL AMOUNT OF $5,500,000 FOR THE BENEFIT
OF FIRSTRUST SAVINGS BANK COVERING THE PREMISES KNOWN AS MARK
PLAZA, ROUTE 11, EDWARDSVILLE BOROUGH, LUZERNE COUNTY, PA 18704
AS MORE FULLY DESCRIBED IN THE AFORESAID MORTGAGE. A DEFAULT
UNDER THE TERMS AND CONDITIONS OF THIS RIDER SHALL CONSTITUTE A
DEFAULT UNDER THE TERMS AND CONDITIONS OF THE MORTGAGE TO WHICH
IT IS ATTACHED.
1. Amount of Loan: $5,500,000.00.
2. Interest Rate: It is understood and agreed that interest
shall be earned on this obligation at a variable rate equal to
one (1%) percent per annum over the Firstrust Savings Bank
Commercial Reference Rate.
The term "Firstrust Savings Bank Commercial Reference Rate" or
"Reference Rate" is hereby defined as the announced published or
posted prime rate of Mellon Bank, N.A. The Mortgagor
acknowledges and agrees that (i) such Reference Rate is a
floating annual rate of interest and is used by Mortgagee as a
reference base with respect to different interest rates charged
to Mortgagors; and (ii) Mortgagee's determination and designation
from time to time of the Reference Rate shall not in any way
preclude Mortgagee from making loans to other Mortgagors at a
rate which is higher or lower than or different from the
Reference Rate. Firstrust Savings Bank's Commercial Reference
Rate shall change automatically as of the opening of business on
the effective date of each change in the prime rate of Mellon
Bank N.A., which (unless otherwise designated) shall be the date
of which Mellon Bank, N.A. announces the change in its prime
rate. When Firstrust Savings Bank's Commercial Reference Rate
changes on a day other than the first day of a calendar month,
interest for the month in which such change or changes are made
shall be calculated on a per diem basis that month. Interest is
computed on the actual number of days elapsed that month.
Interest is computed on the actual number of days elapsed over
360 days simple interest basis, that is, by applying the ratio of
the annual interest rate over a year of 360 days, times the
outstanding principal balance, times the actual number of days
the principal balance is outstanding. Interest at such variable
<PAGE>10
rates shall be calculated and billed in arrears on the first day
of each month for interest due to the last day of the prior
month. In the event Mortgagee shall cease to publish or post its
Reference Rate, Mortgagee shall determine another comparable
index in its sole opinion.
3. Loan Term: This obligation shall mature and the entire
amount advanced by Mortgagee will be due and payable on the date
which is eighteen (18) months from the date hereof.
4. Payments to Mortgagee:
a. Monthly Payments:
(i) Interest Payment: Monthly payments of interest as
calculated above shall commence on the first day of the second
month (interest in arrears) following the closing of the loan and
shall be due thereafter on the first day of each succeeding month
for the remaining loan term; and
(ii) Principal Payment: At such time as Redner's takes
possession of their store and begins paying rent, or beginning on
the first day of the thirteenth month, whichever occurs first,
then Mortgagor will pay $10,000 per month toward principal as
well as such interest provided above.
b. Exit Fee: Should Mortgagor fail to obtain financing of
the Property from Mortgagee pursuant to the provisions of
Paragraph #15b whether or not Mortgagee is arbitrary or
capricious in failing to make such loan, then Mortgagor shall pay
Mortgagee an exit fee equal to the greater of 1% of the Loan
Amount or $54,400 on the earlier of March 15, 1999 or the date of
prepayment of this Loan. The provisions hereof shall also apply
notwithstanding that Mortgagor may have repaid this Loan from
cash on hand and without the necessity of any financing.
5. Late Charge: Throughout the life of the loan, payment not
received by the fifteenth (15th) of the month shall be considered
in default from the beginning of the month and Firstrust shall be
entitled to collect a late charge of 7% of such overdue payment
to cover cost of collection.
6. Additional Interest Clause: Mortgagor agrees that on the
date of maturity or sooner acceleration of this loan, Mortgagee
<PAGE>11
may, at its option, increase the interest rate to 1.5% per month
on the outstanding principal balance until this loan is repaid in
full.
7. Prepayment Privilege: The loan may be prepaid at any time
without penalty upon sixty (60) days prior written notice to
Mortgagee.
8. Financing Statements: Security Agreements and Financing
Statements covering all personal property on described premises
will be executed this date and terms thereof are included herein
by reference. The Mortgagor agrees to pay all costs of recording
the financing statements as well as any continuation filings
thereof.
9. Insurance: Mortgagor shall obtain and maintain insurance
coverage, satisfactory to Mortgagee, on the real estate and
personal property securing this loan. All insurance policies
shall be issued by carriers with a Best's Insurance Reports
policyholder's rating of A or better and a financial size
category of Class XII or better and shall include a standard
mortgagee clause (without contribution) in favor of and
acceptable to Mortgagee. The initial policies shall be prepaid
and delivered to Mortgagee prior to closing and all renewal
policies shall be deposited with Mortgagee as evidence of such
insurance. The policies shall provide for the following, and any
other coverage that Mortgagee may from time to time deem
necessary:
(i) Fire and Extended Hazard Coverage: Fire and extended
hazard coverage must be maintained by Mortgagor in a minimum
amount of not less than the loan amount. If the policy is
written on a CO-INSURANCE basis, the policy MUST contain an
AGREED AMOUNT ENDORSEMENT as evidence that the coverage is in an
amount sufficient to insure the full amount of the mortgage
indebtedness;
(ii) Public Liability Coverage: Public liability coverage
must be maintained by Mortgagor with limits of not less than
$1,000,000 for bodily injury or death to any one person, or for
any one accident or occurrence, and $500,000 for property damage;
(iii)Rent Loss or Business Interruption Coverage: Rent loss
or business interruption coverage must be maintained by Mortgagor
in a minimum amount of not less than the debt service
<PAGE>12
payments for a minimum of twelve months;
(iv) Flood Hazard Coverage: Flood hazard overage must be
maintained by Mortgagor in a minimum amount of not less than the
loan amount, if the property is located in a federally identified
flood hazard area; and
(v) Boiler Insurance: If applicable, boiler and pressure
vessel (including pressure pipes), explosion insurance must be
maintained by Mortgagor in an amount at least equal to the
principal balance of Mortgagee's mortgage with deductible
provisions not to exceed $1,000.00, in respect to all boilers and
pressure vessels and pressure pipes which are or shall be
installed on the subject premises.
ALL INSURANCE POLICIES DELIVERED TO MORTGAGEE PURSUANT TO THIS
SUBPARAGRAPH MUST CONTAIN AN AGREEMENT BY THE INSURER(S) TO GIVE
THE MORTGAGEE TEN (10) BUSINESS DAYS PRIOR WRITTEN NOTICE OF ANY
MATERIAL CHANGE IN THE POLICIES AND/OR THE INTENTION OF THE
INSURER(S) TO CANCEL THE POLICIES.
10. Inspection of Premises: The Mortgagee or its
representative(s) shall have the right at any time to inspect the
physical condition of the mortgaged premises and the improvements
thereon.
11. Inspection of Books & Records: The Mortgagor will maintain
full and correct books and records showing in detail the earnings
and expenses of the mortgaged premises. Mortgagor will permit
the Mortgagee or its representative(s) to examine said books and
records and all supporting vouchers and data at any time and from
time to time, upon request by the Mortgagee, at the Mortgagor's
place of business.
12. Property Re-Appraisal: At Mortgagee's expense, Mortgagee
may order a re-appraisal of the property with prior notice to
Mortgagor. Mortgagor will provide current rent rolls, operating
statements, access to leases and inspection of the property for
the appraiser and their representatives.
13. Furnishment of Financial Statements by Both Mortgagor and
Guarantors: The Mortgagor shall furnish to the Mortgagee without
demand, within ninety (90) days of the closing of each calendar
year, annual balance sheets and profit and loss statements for
<PAGE>13
the prior year. Such statements shall be in such detail as
Mortgagee shall reasonably require and, where appropriate, shall
contain cash flow projections as related to the payment of the
mortgage loan for the upcoming year. In addition to the yearly
statements, at any time and from time to time, Mortgagee may
request a statement from the Mortgagor showing in detail all such
earnings and expenses since the last such statement verified and
certified by the party as true and correct.
14. Prohibition Against Transfer of Ownership in the Premises
or the Sale of Any Stock or Any Partnership Interest: Mortgagor
agrees that in the event that Mortgagor, without the prior
written consent of Mortgagee, shall sell, convey, or alienate the
mortgage premises or any part thereof, or any interest therein,
whether by way of stock transfers or sales of partnership
interests, or Mortgagor or any partner shall be divested of his
title or any interest therein, in any manner or way, whether
voluntary or involuntary, the entire balance of the indebtedness
shall be or become immediately due and payable at the option of
the Mortgagee, as well as an acceleration charge equivalent to
the highest prepayment charge payable hereunder. Nothing herein
contained shall in any way limit Mortgagor's ability to issue
Operating Partnership Units in Mortgagor or the ability of
partners of Mortgagor to transfer Operating Partnership Units in
Mortgagor.
15. Prohibition Against Additional Financing:
(a) Mortgagor agrees that no additional financing of any
type shall be arranged by or for the Mortgagor with the effect of
further encumbering the subject property without the Mortgagee's
consent. In the event any lien or encumbrance is recorded
against the premises without Mortgagee's consent, Mortgagee may,
at its option, accelerate the debt.
(b) Mortgagor agrees to seek permanent mortgage financing
for the subject property from Mortgagee no earlier than February
1, 1998, at such rates and terms as may be mutually agreeable to
both parties. Notwithstanding the foregoing, Mortgagor hereby
agrees that Mortgagee is also granted a right of first refusal
with respect to any and all financings of the Premises at the
expiration of the Loan Term whether in the form of permanent end
loan financing or otherwise. Mortgagor acknowledges, however,
that Mortgagee is under no obligation to make any additional
<PAGE>14
loans with respect to the project. Mortgagor herein confirms its
obligation to make payment of the Exit Fee provided in Paragraph
#4(b) above.
16. Management:
a. Responsible Management - Change of Control: Mortgagor
acknowledges that Mortgagee has been induced into entering into
this loan primarily upon Mortgagor's representation that
Mortgagor would offer professional management of the property
with the objective of maintaining and preserving the physical
property. Therefore, on the date hereof, Mark Centers Trust must
assume the responsibility of managing the premises in a
responsible manner so as to maximize cash flow while maintaining
the property. In the event of any change in management out of
the control of the Mortgagor, whether by reason of death,
resignation, protracted illness, change of ownership or of
employment or management policies, or for any other reason,
Mortgagor shall give prompt written notice thereof to Mortgagee,
and Mortgagor agrees that Mortgagor will thereafter continuously
maintain the centers consistent with good industry practice for
shopping centers comparable to the Premises.
b. Good Industry Practice: Notwithstanding anything to
the contrary heretofore stated, Mortgagor agrees to manage the
premises consistent with good industry practice and as such shall
use its best efforts to:
(i) Screen all rental applicants in accordance with
good management practices;
(ii) Fully lease the building with responsible tenants;
(iii)Properly collect the rents therefrom;
(iv) Take prompt action on delinquent tenants;
(v) Promptly pay operating expenses when due;
(vi) Maintain the exterior and interior appearances of
the premises; and
(vii)Repair and replace work and damaged property in an
expeditious manner.
<PAGE>15
c. Physical Inspection: Mortgagor further agrees that
Mortgagee may at any time cause a physical inspection of the
premises to be made by an appraiser or real estate manager chosen
by Mortgagee so as to determine the nature and estimated cost of
the maintenance required for the premises and which has not been
performed.
d. Failure to Manage - Default: In the event that
Mortgagor shall fail to operate the premises in a manner
consistent with Paragraph 16(b) above, then such failure shall
constitute a default under the terms of the mortgage except that
Mortgagor shall be given thirty (30) days after notice and demand
by Mortgagee to revise its management practices.
e. Failure to Maintain - Default: In the event that
Mortgagor shall fail to perform such maintenance to be required
within thirty (30) days after notice and demand by Mortgagee that
Mortgagor restore or repair said buildings, improvements,
fixtures, or articles of personal property, as specified in such
notice and demand, then such failure shall constitute a default
under the terms of the mortgage.
17. Mortgagee Not Partner: Nothing herein contained shall
constitute Mortgagee a Partner or Joint Venturer with Mortgagor.
18. Future Advance Clause: It is understood and agreed by and
between the parties of the first and second parts that the
consideration for the Mortgage is present and future advances of
funds to the Mortgagors, parties of the first part, by the
Mortgagee, party of the second part, in accordance with the terms
and conditions of a Construction and/or Development Loan
Agreement executed by and between the parties concurrently
herewith and it is understood and agreed by and between the
parties of the first and second parts hereto that the within
Mortgage is to secure future advance of funds for the
construction of a 52,825 square foot one-story super market to be
leased by Redner's and to complete miscellaneous improvements to
the balance of Mark Plaza which is located on Route #11,
Edwardsville Borough, Luzerne County, PA the lien of which
advances shall relate back to the date of the within Mortgage.
19. Notice and Grace Period: Mortgagor is granted a one time
only fifteen (15) day advance written notice of monetary defaults
and a thirty (30) day advance written notice of non-monetary
<PAGE>16
default with an extended cure right for any non-monetary default
that cannot be cured within thirty (30) days.
20. Restoration. If the cost of restoring the damage to the
Mortgaged Property, as determined by Mortgagee, does not exceed
the amount of the Loan allocable to such Mortgaged Property, and
if Mortgagor is not then in default under this Mortgage or the
Loan Documents, mortgagee shall agree to permit such insurance
proceeds to be used to reimburse Mortgagor for the cost of
rebuilding the Improvements in accordance with all applicable
laws. Mortgagor agrees to promptly commence the rebuilding of
the Improvements in a manner as to be of at least equal value and
quality and substantially the same character as the Improvements
were prior to such damage or destruction, and Mortgagor shall
diligently complete such rebuilding as promptly as possible.
Such proceeds shall be made available, from time to time, upon
Mortgagee being furnished with satisfactory evidence of the
estimated cost of completion thereof and with such architect's
certificates, waivers of lien, contractor's certifications and
other evidence of cost of payments as Mortgagee may reasonably
require and upon Mortgagor being otherwise in compliance with the
provisions of the Loan Documents. If the estimated cost of the
work exceeds ten (10%) percent of the original principal amount
of the Note, Mortgagee shall also be furnished for its approval
all plans and specifications and all construction contracts for
such rebuilding prior to commencement of the rebuilding or
restoration. All payments made prior to final completion of the
work shall be subject to customary conditions for disbursing
construction loans as determined by Mortgagee. The undisbursed
balance of insurance proceeds shall at all times be sufficient to
pay for the cost of completion of the Improvements free and clear
of liens and if such proceeds are insufficient, Mortgagor shall
deposit the amount of such deficiency with Mortgagee prior to the
disbursement of any insurance proceeds.
21. Contest.
If Mortgagor is not in default under the Loan Documents,
Mortgagor may, in good faith and with reasonable diligence,
contest the validity or enforcement of any Law with respect to
the Mortgaged Property, provided that:
(i) such contest shall have the effect of preventing the
enforcement of any such Laws so contested and the levying of
<PAGE>17
any fine on Mortgagor or against the Mortgaged property;
(ii) Mortgagor has notified Mortgagee in writing of the
intention of Mortgagor to contest the same within ten (10) days
after Mortgagor learns of the assertion that such Laws are being
violated;
(iii)such contest will prevent Mortgagor and Mortgagee from
being guilty of any crime by reason of non-compliance;
(iv) the failure to comply with such Laws does not prevent
the use and occupancy of the Mortgaged Property for its intended
use;
(v) Mortgagor has deposited with Mortgagee, at such place
as Mortgagee may from time to time in writing designate (and in
the absence of such appointment, then at the place of payment
designated in the Note), a sum of money or other cash equivalent
security acceptable to Mortgagee that is sufficient, in
Mortgagee's reasonable judgment, to pay in full the cost of
complying with such Laws and all penalties that might become due
thereof; and
(vi) Mortgagor prosecutes such contest with diligence and
keeps Mortgagee informed of the status of the contest.
MARK CENTERS LIMITED PARTNERSHIP
a Delaware Limited Partnership
By: MARK CENTERS TRUST,
a Maryland Business Trust,
its General Partner
By: /s/ Joshua Kane
Senior Vice President and CFO
Attest: /s/ Steven M. Pomerantz
Assistant Secretary
<PAGE> 18
LOAN NO. C-1483
HAZARDOUS MATERIAL RIDER
Mortgagor shall keep and maintain the Mortgaged Property in
compliance with, and shall not cause or permit the Property to be
in violation of any federal, state or local laws, regulations,
guidelines, codes and ordinances relating to zoning, land use,
health, asbestos usage, industrial hygiene or environmental
conditions in, on, under or surrounding the Mortgaged Property
including, but not limited to, soil and ground water conditions.
Mortgagor represents and warrants that to the knowledge of
Mortgagor it has not used, generated, manufactured, stored,
released or disposed of in, on, under or surrounding the
Mortgaged Property or transport to or from the Mortgaged Property
any flammable explosives, radioactive materials, asbestos,
hazardous wastes, toxic substances or related materials,
including, without limitation, any substances defined as or
included in the definition of "asbestos" or "asbestos product",
"radon" or "radon gas", "hazardous substances", "hazardous
wastes", "hazardous materials", "wastes", "solid waste",
"contaminant", or "toxic substances" under any applicable
federal, state or local laws, regulations, guidelines, codes and
ordinances (collectively referred to hereinafter as "Hazardous
Materials") in any manner which violates any such law,
regulation, guideline, code or ordinance. Mortgagor represents
and warrants that, to the best of Mortgagor's knowledge, no
Hazardous Materials (except for asbestos; if any), have been used
in the construction of the Mortgaged Property, or generated,
stored, buried, handled, released or disposed of on, in, under or
surrounding the Mortgaged Property, or a location that will
adversely affect the Mortgaged Property in any manner which
violates any such law, regulation, guideline, code or ordinance,
and there are no facts, conditions or circumstances which, to the
Mortgagor's knowledge, could result in any investigation or
inquiry by any federal, state or local governmental authority
with regard to the foregoing. Mortgagor further warrants,
covenants and agrees not to allow the Mortgaged Property to be
used as a site for generating, manufacturing, storing, releasing
or disposing of Hazardous Materials (without the prior written
consent of Mortgagee and unless all required permits, bonds and
insurance have been obtained and are maintained). Mortgagor
further
<PAGE> 19
warrants, covenants and agrees to provide Mortgagee with prompt
written notice of (1) any proposed or actual investigation or
inquiry of Mortgagor or the Mortgaged Property with regard to
Hazardous Materials by any federal, state or local governmental
authority, (2) Mortgagor's obtaining knowledge of any discovery
of or release of any Hazardous Material in, on, under or from the
Mortgaged Property or any other site owned, occupied, or operated
by Mortgagor or by any person for whose conduct Mortgagor is
responsible or whose liability may result in a lien on the
Mortgaged Property, (3) Mortgagor's receipt of any notice to such
effect regarding (1) or (2) or notice to obtain a permit from any
federal, state or local governmental authority, and (4)
Mortgagor's obtaining knowledge of the incurring of any expense
or loss by such governmental authority in connection with the
assessment, containment or removal of any Hazardous Materials for
which expense or loss Mortgagor may be liable and for which
expense a lien may be imposed on the Mortgaged Property.
Mortgagor warrants, covenants and agrees at all times to comply
fully and in a timely manner with, and to cause all employees,
agents, contractors and subcontractors of Mortgagor to so comply
with, all applicable federal, state and local laws, regulations,
guidelines, codes and ordinances regarding any Hazardous
Materials. When requested, Mortgagor shall provide Mortgagee
access to or copies of all logs or other evidences of removal of
Hazardous Materials. Mortgagor warrants, covenants and agrees to
indemnify and hold Mortgagee Harmless from and against, and
immediately pay, any and all claims, losses, damages,
liabilities, fines, penalties, charges, administrative and
judicial proceedings and orders, judgements, remedial action
requirements, enforcement actions of any kind, and all costs and
expenses incurred in connection therewith (including but not
limited to expenses and attorney's fees and legal assistant's
fees including such fees and expenses in any appellate
proceeding), arising directly or indirectly, in whole or in part,
from any past, present or future failure of Mortgagor, its
employees, agents, contractors, subcontractors or other such
persons, to comply with any of such laws, regulations,
guidelines, codes or ordinances or the provisions of this
Paragraph.
In the event that Mortgagee incurs any losses, damages,
claims costs, fees, penalties, charges, assessments, taxes, fines
or expenses, including reasonable attorney's fees and legal
<PAGE> 20
assistants' fees, in connection with cleaning up, removing,
disposal of or otherwise eliminating any Hazardous Materials from
the Mortgaged Property, such losses, damages, claims, costs,
fees, penalties, charges, assessments, taxes, fines or expenses,
including reasonable attorneys' fees and legal assistants' fees,
shall constitute remedial advances by Mortgagee as provided
hereinabove. The provisions of this paragraph will survive the
foreclosure of the Mortgage or any deed in lieu of foreclosure
delivered to Mortgagee by Mortgagor.
MARK CENTERS LIMITED PARTNERSHIP,
A DELAWARE LIMITED PARTNERSHIP
BY: MARK CENTERS TRUST, A MARYLAND
BUSINESS TRUST, ITS GENERAL PARTNER
BY: /s/ Joshua Kane
Joshua Kane, Senior Vice President
ATTEST: /s/ Steven M. Pomerantz
Steven M. Pomerantz, Asst. Secretary
