-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D1lrIpBwOZ+/95A9iNz9X5CdmkXh84d9Dds/IIzuVroKUaQ0scgU4XMkajTncsEQ AB65617/EA9LIycbp90RlQ== 0000950170-98-002209.txt : 19981118 0000950170-98-002209.hdr.sgml : 19981118 ACCESSION NUMBER: 0000950170-98-002209 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY ONE INC CENTRAL INDEX KEY: 0001042810 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 521784271 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13499 FILM NUMBER: 98751348 BUSINESS ADDRESS: STREET 1: 777 17TH STREET PENHOUSE SUITE CITY: MIAMI BEACH STATE: FL ZIP: 33139 MAIL ADDRESS: STREET 1: 777 17TH STREET PENTHOUSE SUITE CITY: MIAMI BEACH STATE: FL ZIP: 33139 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1998 Commission File No. 0001042810 EQUITY ONE, INC. ---------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) 1600 N.E. MIAMI GARDENS DRIVE, SUITE 200 N. MIAMI BEACH, FLORIDA 33179 ---------------------------------------- (Address of Principal Executive Offices) (305) 947-1664 ------------------------------------------------ (Issuer's Telephone Number, Including Area Code) MARYLAND 52-1794271 - ------------------------------- ----------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or organization) Check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: As of the close of business on November 13, 1998, 10,238,528 shares of the Company's common stock, par value $0.01 per share, were issued and outstanding. EQUITY ONE, INC. INDEX TO FORM 10-Q QUARTER ENDED SEPTEMBER 30, 1998 PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets- As of September 30, 1998 (unaudited) and December 31, 1997 Condensed Consolidated Statements of Operations- For the three months and nine months ended September 30, 1998 and 1997 (unaudited) Condensed Consolidated Statements of Stockholders' Equity For the three months and nine months ended September 30, 1998 and 1997 (unaudited) Condensed Consolidated Statements of Cash Flows- For the nine months ended September 30, 1998 and 1997 (unaudited) Notes to the Condensed Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signatures 2
PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements EQUITY ONE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) SEPTEMBER 30, 1998 (UNAUDITED) AND DECEMBER 31, 1997 September 30, December 31, 1998 1997 ASSETS (Unaudited) Rental Properties: Land $ 41,307 $ 40,764 Building and improvements 103,670 83,889 Land held for development 2,372 1,394 Construction in progress 2,375 394 -------- -------- 149,724 126,441 Accumulated depreciation (9,272) (7,191) -------- -------- Rental properties, net 140,452 119,250 Cash and cash equivalents 4,665 2,598 Restricted cash 200 Accounts and other receivables, net 1,141 892 Securities available for sale 1,655 45 Deposits 1,675 1,339 Prepaid and other assets 1,213 1,252 Deferred expenses, net 1,034 1,527 -------- -------- Total assets $ 152,035 $ 126,903 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 62,611 $ 71,004 Accounts payable and accrued expenses 5,151 1,281 Put option liability 2,127 Deposit on rental property held for sale 200 Tenants' security deposits 934 764 Deferred rental income 458 274 -------- -------- Total liabilities 71,481 73,323 -------- -------- Stockholders' equity: Common stock 102 69 Additional paid-in capital 80,535 55,036 Notes receivable from stock sales (1,525) Net unrealized holding loss on securities available for sale (83) Retained earnings -------- -------- Total stockholders' equity 80,554 53,580 -------- -------- Total liabilities and stockholders' equity $ 152,035 $ 126,903 ======== ========
See accompanying notes to the condensed consolidated financial statements. 3
EQUITY ONE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, 1998 1997 1998 1997 (Unaudited) (Unaudited) REVENUES: Rental income $ 5,688 $ 4,927 $ 16,855 $ 14,288 Investment revenue 146 260 310 572 ------- ------- -------- -------- Total revenues 5,834 5,187 17,165 14,860 ------- ------- -------- -------- COSTS AND EXPENSES: Operating expenses 1,410 1,237 4,133 3,631 Depreciation and amortization 763 603 2,118 1,781 Interest 1,123 1,411 4,020 4,350 Put option expense 1,320 General and administrative expenses 447 339 1,108 929 ------- ------- -------- -------- Total costs and expenses 3,743 3,590 12,699 10,691 ------- ------- -------- -------- NET INCOME $ 2,091 $ 1,597 $ 4,466 $ 4,169 ======= ======= ======== ======== EARNINGS PER SHARE: BASIC EARNINGS PER SHARE $ 0.20 $ 0.23 $ 0.52 $ 0.66 ======= ======= ======== ======== NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE 10,239 6,908 8,555 6,289 ======= ======= ======== ======== DILUTED EARNINGS PER SHARE $ 0.20 $ 0.22 $ 0.52 $ 0.61 ======= ======= ======== ======== NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE 10,299 7,247 8,616 6,797 ======= ======= ======== ========
See accompanying notes to the condensed consolidated financial statements. 4
EQUITY ONE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (IN THOUSANDS) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) - ----------------------------------------------------------------------------------------------------------------------- Notes Net Unrealized Total Additional Receivable Holding Loss Stock- Common Paid-in From on Securities Retained holders' Stock Capital Stock Sales Available for Sale Earnings Equity Three Months Ended September 30, 1998 BALANCE, JULY 1, 1998 $ 102 $ 81,003 $ 81,105 Net income $ 2,091 2,091 Net unrealized holding loss on securites available for sale $ (83) (83) Accrued dividends (468) (2,091) (2,559) ----- ------- ------- ----- ------- ------- BALANCE, SEPTEMBER 30, 1998 (Unaudited) $ 102 $ 80,535 $ $ (83) $ $ 80,554 ----- ------- ------- ----- ------- ------- Three Months Ended September 30, 1997 BALANCE, JULY 1, 1997 $ 69 $ 54,950 $ (1,525) $ 53,494 Net income $ 1,597 1,597 Dividends paid (216) (1,597) (1,813) ----- ------- ------- ----- ------- ------- BALANCE, SEPTEMBER 30, 1997 (Unaudited) $ 69 $ 54,734 $ (1,525) $ $ $ 53,278 ===== ======= ======= ===== ======= ======= Nine Months Ended September 30, 1998 BALANCE, JANUARY 1, 1998 $ 69 $ 55,036 $ (1,525) $ 53,580 Net income $ 4,466 4,466 Net unrealized holding loss on securites available for sale $ (83) (83) Issuance of common stock 33 34,088 34,121 Stock issuance costs (1,077) (1,077) Put option liability (807) (807) Property distributed (4,758) 1,525 (3,233) Accrued dividends (468) $ (2,091) (2,559) Dividends paid (1,479) (2,375) (3,854) ----- ------- ------- ----- ------- ------- BALANCE, SEPTEMBER 30, 1998 (Unaudited) $ 102 $ 80,535 $ $ (83) $ $ 80,554 ===== ======= ======= ==== ======= ======= Nine Months Ended September 30, 1997 BALANCE, JANUARY 1, 1997 $ 58 $ 44,562 $ (1,525) $ 43,095 Net income $ 4,169 4,169 Issuance of common stock 11 10,596 10,607 Dividends paid (424) (4,169) (4,593) ----- ------- ------- ----- ------- ------- BALANCE, SEPTEMBER 30, 1997 (Unaudited) $ 69 $ 54,734 $ (1,525) $ $ $53,278 ===== ======= ======= ==== ======= =======
See accompanying notes to the condensed consolidated financial statements. 5
EQUITY ONE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) Nine Months Ended September 30, 1998 1997 (Unaudited) OPERATING ACTIVITIES: Net income $ 4,466 $ 4,169 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,287 1,965 Provision for losses on accounts receivable 42 32 Gain on sales of securities (56) Put option liability 1,320 Changes in assets and liabilities : Restricted cash (200) Accounts and other receivables (243) (417) Deposits (736) (1,248) Prepaid and other assets (47) (161) Accounts payable and accrued expenses 1,674 1,559 Deposit on rental property held for sale 200 Tenants' security deposits 170 84 Deferred rental income 184 17 -------- -------- Net cash provided by operating activities 9,117 5,944 -------- -------- INVESTING ACTIVITIES: Acquisition of rental property (22,252) (16,934) Improvements to rental property (2,283) (679) Construction costs incurred (1,981) Purchases of securities (1,714) (5,246) Sales and prepayments of securities 21 6,582 Change in deposits for acquisition of rental property 400 -------- -------- Net cash used in investing activities (27,809) (16,277) -------- -------- FINANCING ACTIVITIES: Repayments of mortgage notes payable (16,093) (18,479) Borrowings under mortgage notes payable 7,700 23,148 Cash dividends paid to stockholders (3,854) (4,593) Stock subscription and issuance 34,121 10,607 Stock issuance costs (853) Deferred financing expenses, net (262) (194) -------- -------- Net cash provided by financing activities 20,759 10,489 -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 2,067 156 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,598 1,951 -------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,665 $ 2,107 ======== ======== SUPPLEMENTAL DISCLOSURE: Cash paid for interest, net of amount capitalized $ 3,259 $ 4,082 ======== ======== SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES: Accrued dividends $ 2,559 ======== Change in unrealized depreciation in securities available for sale $ (83) ======== Put option liability charged to stockholders' equity $ 807 ======== Property and notes receivable from stock sales distributed $ 4,758 ========
See accompanying notes to the condensed consolidated financial statements. 6 EQUITY ONE, INC. AND SUBSIDIARIES NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) AND DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA) 1. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements of Equity One, Inc. and Subsidiaries (collectively, the "Company") as of September 30, 1998 and 1997 and for the nine months and three months then ended, have been prepared by the Company which is responsible for their integrity and objectivity and should be read in conjunction with the Company's December 31, 1997 annual consolidated financial statements and the related notes. To the best of management's knowledge and belief, the statements and related information were prepared in conformity with generally accepted accounting principles and are based on recorded transactions and management's best estimates and judgments. The interim results of operations are not necessarily indicative of the results which may be expected for the full year. The condensed consolidated financial statements as of September 30, 1998 and 1997 and for the nine months and three months then ended, include, in the opinion of management, all adjustments (which are normal recurring adjustments) necessary for a fair presentation of the financial condition and results of operations of the Company for the periods indicated. 2. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of the condensed consolidated financial statements are identical to those applied in the preparation of the most recent annual consolidated financial statements. PUT OPTION EXPENSE - The Company has granted a former stockholder an option to put 293,430 shares of common stock issuable upon exercise of the Company's Series C Warrants to the Company at a price of $15.50 per share or to put the Series C Warrants to the Company at a price of $7.25 per Warrant, which equals the put option price of $15.50 per Warrant less the Series C Warrant exercise price of $8.25 per Warrant. The put option is exercisable in whole or in part by the former stockholder from December 1, 1999 until December 15, 1999. The put option would involve a maximum net expenditure of $2.1 million if the shares of common stock are not sold by the former stockholder prior to the exercise of such option. For the nine months ended September 30, 1998, the Company has recognized $1.3 million as a current period expense and approximately $807,000 as a reduction of paid-in capital related to the Company's initial public offering. 7 3. EARNINGS PER SHARE Basic earnings per share is computed by dividing earnings attributable to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. 4. SUBSEQUENT EVENTS On October 30, 1998, the Company sold Parker Towne Center, located in Plano, Texas for approximately $6.85 million to an unrelated third party. The Company intends to treat this sale as a like-kind exchange for tax purposes. To date, the Company has not identified replacement property. Additionally, on October 30, 1998, the Company entered into a 20 year loan agreement with a life insurance company for $5.0 million at an interest rate of 6.85% and secured by Atlantic Village shopping center located in Jacksonville, Florida. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following should be read in conjunction with the Company's Condensed Consolidated Financial Statements, including the notes thereto, which are included elsewhere herein. (1) RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1997 Total revenues increased by approximately $647,000, or 12.5%, to $5.8 million for the three months ended September 30, 1998 from $5.2 million for the comparable period of 1997. The increase resulted primarily from the Company's acquisition of (i) a new supermarket anchored shopping center located in Lantana, Florida in January, 1998 ("Lantana Village"), (ii) a new free-standing restaurant property located in Miami Beach, Florida in April, 1998 ("El Novillo"), (iii) a new drug store anchored shopping center located in Jacksonville, Florida in May, 1998 ("Beauclerc Village"), (iv) a new supermarket anchored shopping center located in Fort Myers, Florida in June, 1998 ("Summerlin Square"), (v) a new supermarket anchored shopping center located in Jacksonville, Florida in January, 1997 ("Monument Pointe"), and (vi) a redevelopment property located in North Miami Beach, Florida in August, 1997 ("Sky Lake"). Operating expenses increased by approximately $173,000, or 14.0%, to $1.4 million for the three months ended September 30, 1998, from $1.2 million for the comparable period of 1997. The increase is primarily the result of an increase in real estate taxes of $123,000, an increase in insurance costs of $20,000, and an increase in other property operating expenses of $30,000 related to the Company's acquisitions of Lantana Village, El Novillo, Beauclerc Village, Summerlin Square, Monument Pointe and Sky Lake. Depreciation and amortization expense increased by approximately $160,000, or 26.7%, to $763,000 for the three months ended September 30, 1998, from $603,000 for the comparable period of 1997. The increase resulted primarily from the acquisitions of Lantana Village, El Novillo, Beauclerc Village, Summerlin Square, Monument Pointe and Sky Lake. Interest expense decreased by approximately $288,000, or 20.5%, to $1.1 million for the three months ended September 30, 1998, from $1.4 million for the comparable period of 1997. The decrease resulted primarily from the Company's use of proceeds from its initial public offering of common stock consummated in May 1998 (the "IPO") to reduce mortgage indebtedness. General and administrative expenses increased by $108,000, or 31.8%, to $447,000 for the three months ended September 30, 1998 from $339,000 for the comparable period of 1997. The increase resulted primarily from an increase in professional fees of $52,000 and an increase in bad debt expenses of $56,000. As a result of the foregoing, net income increased by approximately $494,000, or 31.0%, to $2.1 million for the three months ended September 30, 1998, compared to $1.6 million for the comparable period of 1997. 9 NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1997 Total revenues increased by approximately $2.3 million, or 15.5%, to $17.2 million for the nine months ended September 30, 1998 from $14.9 million for the comparable period of 1997. The increase resulted primarily from the acquisitions of Lantana Village, El Novillo, Beauclerc Village, Summerlin Square, Monument Pointe and Sky Lake. Operating expenses increased by approximately $502,000, or 13.8%, to $4.1 million for the nine months ended September 30, 1998, from $3.6 million for the comparable period of 1997. The increase is primarily the result of an increase in real estate tax escrows of $274,000, an increase in insurance costs of $40,000, an increase in payroll costs of $61,000, an increase in repairs of $30,000 and an increase in other property operating expenses of $97,000 related to the Company's acquisition of Lantana Village, El Novillo, Beauclerc Village, Summerlin Square, Monument Pointe and Sky Lake. Depreciation and amortization expense increased by approximately $337,000, or 18.9%, to $2.1 million for the nine months ended September 30, 1998, from $1.8 million for the comparable period of 1997. The increase resulted primarily from the acquisition of Lantana Village, El Novillo, Beauclerc Village, Summerlin Square, Monument Pointe and Sky Lake. Interest expense decreased by approximately $330,000, or 7.6%, to $4.0 million for the nine months ended September 30, 1998 from $4.3 million for the comparable period of 1997, primarily as a result of the Company's use of proceeds from its issuance of capital stock during 1998 and 1997 to reduce mortgage indebtedness. General and administrative expenses increased by approximately $179,000, or 19.3% to $1.1 million for the nine months ended September 30, 1998 from $929,000 for the comparable period of 1997. The increase resulted primarily from an increase in professional and consulting fees of $135,000 and an increase in bad debt expenses of $42,000. The put option expense of approximately $1.3 million, in the nine months ended September 30, 1998, resulted from the Company granting Dan Overseas (the Selling Stockholder in the Company's initial public offering of Common Stock) an option to put 293,430 Series C warrants to the Company at a price of $7.25 per warrant which resulted in a one time expense of approximately $1.3 million. Excluding this put option expense, net income would have been approximately $5.7 million for the nine months ended September 30, 1998, and basic and diluted earnings per share would have been $0.67 and $0.67 for the nine months ended September 30, 1998, respectively. As a result of the foregoing, net income increased by approximately $297,000, or 7.1%, to $4.5 million for the nine months ended September 30, 1998, compared to $4.2 million for the comparable period of 1997. 10 FUNDS FROM OPERATIONS In March, 1995, the National Association of Real Estate Investment Trusts ("NAREIT") adopted the NAREIT White Paper on Funds from Operations (the "White Paper") which provided additional guidance on the calculation of funds from operations. The White Paper defines funds from operations as net income (loss) (computed in accordance with generally accepted accounting principles ("GAAP")), excluding gains (or losses) from debt restructuring and sales of property, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures ("FFO"). Management believes FFO is a helpful measure of the performance of an equity real estate investment trust ("REIT") because, along with cash flows from operating activities, investing activities and financing activities, it provides an understanding of the ability of the Company to incur and service debt and make capital expenditures. The Company computes FFO in accordance with standards established by the White Paper, which may differ from the methodology for calculating FFO utilized by other REITs, and accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. The Company believes that in order to facilitate a clear understanding of the consolidated historical operating results of the Company, FFO should be examined in conjunction with the net income as presented in the condensed consolidated financial statements and information included elsewhere herein. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company's financial performance or to cash flows from operating activities (determined in accordance with GAAP) as a measure of the Company's liquidity, nor is it indicative of funds available to fund the Company's cash needs, including its ability to make distributions. The following table illustrates the calculation of FFO for the three months and nine months ended September 30, 1998 and 1997:
Three Months Ended Nine Months Ended September 30, September 30, 1998 1997 1998 1997 (Unaudited) (Unaudited) Net income $ 2,091 $ 1,597 $ 4,466 $ 4,169 Depreciation of real estate assets 745 590 2,075 1,743 Amortization of leasing costs 12 10 37 29 Loan pre-payment penalties 119 21 Put option expense 1,320 Write-off of unamortized loan costs related to repayment of mortgage indebtedness 88 102 Lease termination fees (4) (15) (450) (34) ------- ------- ------- ------- FUNDS FROM OPERATIONS $ 2,844 $ 2,182 $ 7,655 $ 6,030 ======= ======= ======= ======= FUNDS FROM OPERATIONS PER SHARE (Diluted) $ 0.28 $ 0.30 $ 0.89 $ 0.89 ======= ======= ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted) 10,299 7,247 8,616 6,797 ======= ======= ======= =======
11 FFO increased by approximately $662,000 or 30.3%, to $2.8 million for the three months ended September 30, 1998, from $2.2 million for the comparable period of 1997. FFO increased by approximately $1.6 million, or 27.0% to $7.7 million for the nine months ended September 30, 1998 from $6.0 million for the comparable period of 1997. The increase is primarily the result of the acquisitions of additional properties and the reduction of the Company's mortgage indebtedness. PRO FORMA RESULTS OF OPERATIONS The Company completed an initial public offering of an aggregate of 4,700,000 shares of common stock, par value $0.01 per share, on May 19, 1998. Of the 4,700,000 shares of common stock sold in the offering, 3,330,398 shares, generating net proceeds of approximately $33.0 million, were sold by the Company and 1,369,602 shares were sold by a stockholder of the Company. The following pro forma results of operations for the nine months ended September 30, 1998 and 1997, and the actual results of operations for the three months ended September 30, 1998, and the pro forma results of operations for the three months September 30, 1997, respectively, gives effect to the initial public offering as if it had occurred at the beginning of each period. Pro forma adjustments assume application of the net proceeds of the offering to purchase properties, retire mortgage indebtedness and other related adjustments and exclude the non-recurring put option expense. The following pro forma financial information is not necessarily indicative of the results of operations which would have been reported if the offering had occurred on the dates or for the periods indicated. The nine months ended September 30, 1998 and 1997 and the three months ended September 30, 1997 pro forma results of operations would have been as follows:
Three Months Ended Nine Months Ended September 30, September 30, 1997 1998 1997 (Unaudited) (Unaudited) REVENUES: Rental income $ 5,383 $ 17,613 $ 15,656 Investment revenue 309 376 645 ------- -------- -------- Total revenues 5,692 17,989 16,301 ------- -------- -------- COSTS AND EXPENSES: Operating expenses 1,335 4,263 3,925 Depreciation and amortization 674 2,237 1,994 Interest 1,220 3,445 3,775 General and administrative expenses 339 1,108 929 ------- -------- -------- Total costs and expenses 3,568 11,053 10,623 ------- -------- -------- NET INCOME $ 2,124 $ 6,936 $ 5,678 ======= ======== ======== EARNINGS PER SHARE: BASIC EARNINGS PER SHARE $ 0.21 $ 0.68 $ 0.59 ======= ======== ======== NUMBER OF SHARES USED IN COMPUTING BASIC EARNINGS PER SHARE 10,239 10,239 9,619 ======= ======== ======== DILUTED EARNINGS PER SHARE $ 0.20 $ 0.67 $ 0.56 ======= ======== ======== NUMBER OF SHARES USED IN COMPUTING DILUTED EARNINGS PER SHARE 10,577 10,299 10,128 ======= ======== ========
12 The following table illustrates the calculation of pro forma FFO for the nine months ended September 30, 1998 and 1997 and the three months ended September 30, 1997:
Three Months Ended Nine Months Ended September 30, September 30, 1997 1998 1997 (Unaudited) (Unaudited) Net income $ 2,124 $ 6,936 $ 5,678 Depreciation of real estate assets 661 2,194 1,956 Amortization of leasing costs 10 37 29 Loan pre-payment penalties 21 Write-off of unamortized loan costs related to repayment of mortgage indebtedness 102 Lease termination fees (15) (450) (34) ------- ------- ------- FUNDS FROM OPERATIONS $ 2,780 $ 8,717 $ 7,752 ======= ======= ======= FUNDS FROM OPERATIONS PER SHARE (Diluted) $ 0.26 $ 0.84 $ 0.77 ======= ======= ======= WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted) 10,577 10,299 10,128 ======= ======= =======
LIQUIDITY AND CAPITAL RESOURCES Historically, the principal sources of funding for the Company's operations, including the renovation, expansion, development and acquisition of shopping centers, have been operating cash flows, the issuance of securities and mortgage loans. The Company's principal demands for liquidity are maintenance, repair and tenant improvements of existing properties, acquisitions and development activities, debt service and repayment obligations and distributions to its stockholders. As of September 30, 1998, the Company had total mortgage indebtedness of approximately $62.6 million, all of which was fixed rate mortgage indebtedness bearing interest at a weighted average rate of 7.95% and collateralized by 13 of the Company's existing properties. Future scheduled annual maturities of mortgage notes payable for the periods ending September 30 are as follows: 1999 - - $1.2 million, 2000 - $0, 2001 - $2.6 million, 2002 - $2.1 million and 2003 - $5.9 million. The Company also has provided a $1.5 million letter of credit to secure certain obligations in connection with the acquisition of one of the Company's properties. This letter of credit is collateralized by a mixed-use property located in West Palm Beach, Florida. The Company has a $2.5 million line of credit (the "Line of Credit") with a financial institution which is currently due on demand and is collateralized by the Company's principal office building located in Miami Beach, Florida. The line of credit bears interest at 0.50% over the Citibank, N.A. prime rate. The purpose of the line of credit is to provide working capital to the Company. As of September 30, 1998, no amounts were outstanding under the Line of Credit. The Company has received a commitment for a $15.0 million revolving line of credit from the same financial institution providing the Line of Credit, which will be used to fund property acquisitions and development activities (the "Acquisition Line of Credit") and will be secured by certain of the Company's unencumbered properties. Advances under the Acquisition Line of Credit will bear interest at 225 basis points over LIBOR and will mature three years after the execution of a definitive loan agreement. This Line of Credit will be increased up to $35.0 million, subject to the financial institution obtaining participants and the Company contributing additional properties, acceptable to the financial institution and its participants. 13 The Company has determined at this time not to pursue obtaining a previously announced commitment with respect to a $60.0 million revolving line of credit facility from a different financial institution. The Company has one major redevelopment project under construction that will add an additional 240,000 square feet of retail space to the Company's portfolio. This project is expected to be completed during 1999. It is anticipated that future funding required for this project is estimated to be $15.0 million and will come from the proposed Acquisition Line of Credit and other sources of cash including obtaining permanent debt on certain unencumbered existing properties. Management expects this development to have a positive effect on cash generated by operating activities and Funds from Operations. The Company believes, based on currently proposed plans and assumptions relating to its operations, that the proceeds from its initial public offering and the Company's existing financial arrangements, together with cash flows from operations, will be sufficient to satisfy its cash requirements for a period of at least 12 months. In the event that the Company's plans change, its assumptions change or prove to be innacurate or the proceeds from the initial public offering or available financing arrangements prove to be insufficient to fund the Company's expansion and development efforts, the Company would be required to seek additional sources of financing. There can be no assurance that any additional financing will be available to the Company on acceptable terms, or at all. If adequate funds are not available, the Company's business operations could be materially adversely affected. During the three months ended September 30, 1998, the Company declared a cash dividend of $0.25 per outstanding share of Common Stock. This dividend was paid on October 6, 1998 to stockholders of record on September 22, 1998. YEAR 2000 COSTS The Company has undertaken a study of its functional application systems to determine their compliance with year 2000 issues and, to the extent of noncompliance, the required remediation. As a result of such study, the Company believes the majority of its systems are year 2000 compliant. To date, the expenses incurred by the Company in order to become year 2000 compliant, including computer software costs, have been approximately $25,000. Costs other than software have been expensed as incurred. An assessment of the readiness of year 2000 compliance of third party entities with which the Company has relationships, such as its banking institutions, tenants and others is ongoing. The Company has inquired, or is in the process of inquiring, of the significant aforementioned third party entities as to their readiness with respect to year 2000 compliance and to date has received indications that many of them are either compliant or in the process of remediation. The Company will continue to monitor these third party entities to determine the impact on the business of the Company and the actions the Company must take, if any, in the event of non-compliance by any of these third parties. The Company's initial assessment of compliance by third party entities is that there is not a material business risk to the Company posed by any such noncompliance and, as such, the Company has not yet developed any related contingency plans. 14 INFLATION Most of the Company's leases contain provisions designed to partially mitigate the adverse impact of inflation. Such provisions include clauses enabling the Company to receive percentage rents based on tenant's gross sales above predetermined levels, which rents generally increase as prices rise, or escalation clauses which are typically related to increases in the Consumer Price Index or similar inflation indices. Most of the Company's leases require the tenant to pay its share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing the Company's exposure to increases in costs and operating expenses resulting from inflation. The Company's financial results are affected by general economic conditions in the markets in which its properties are located. An economic recession, or other adverse changes in general or local economic conditions, could result in the inability of some existing tenants of the Company to meet their lease obligations and could otherwise adversely affect the Company's ability to attract or retain tenants. The properties are typically anchored by supermarkets, drug stores and other consumer necessity and service retailers which typically offer day-to-day necessities rather than luxury items. These types of tenants, in the experience of the Company, generally maintain more consistent sales performance during periods of adverse economic conditions. CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS The foregoing Management's Discussion and Analysis contains various "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events, including, but not limited to, statements regarding growth in rental revenues and sufficiency of the Company's cash flow for its future liquidity and capital resource needs. These forward looking statements are further qualified by important factors that could cause actual events to differ materially from those in such forward looking statements. These factors include, without limitation, increased competition, dependence on key tenants, geographic concentration, lack of development experience, reliance on key personnel and maintaining its REIT status. Results actually achieved may differ materially from expected results included in these forward looking statements as a result of these or other factors. 15 PART II. OTHER INFORMATION Item 1. Legal Proceedings As previously reported in the Company's Quarterly Report on Form 10-Q for the three and six months ended June 30, 1998 (the "Prior Report"), Albertsons, Inc. ("Albertsons") filed a complaint in the Circuit Court for the Eleventh Judicial District in and for Miami-Dade County, Florida against a subsidiary of the Company seeking injunctive relief and amounts representing lost profits arising from an alleged breach by the subsidiary of a letter agreement between Albertsons and such subsidiary. As reported in the Prior Report, the court dismissed with prejudice Albertsons' claim for specific performance and deferred until a later date a ruling on the remaining issues raised in Albertsons' complaint. Although the Company believes that it has meritorious defenses to the remaining claims and intends to defend the action fully and vigorously, no assurance can be given with respect to the outcome of this action or its effect on the Company. No material developments have occurred with respect to this action during the three months ended September 30, 1998. Item 2. Changes in Securities and Use of Proceeds The Company consummated its initial public offering of an aggregate of 4,700,000 shares of Common Stock on May 13, 1998. Of the 4,700,000 shares of Common Stock sold in the Offering, 3,330,398 shares generating proceeds of approximately $36.6 million, were sold by the Company. After the payment of approximately $3.6 million in Offering related expenses, the Company received net proceeds of approximately $33.0 million. Of the $5.4 million of proceeds available as of July 1, 1998, the following proceeds were used during the three months ended September 30, 1988: (i) acquired certain real estate properties for $1.0 million, and (ii) paid $1.1 million for construction costs and improvements to existing properties. Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None. 16 Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (A) Exhibits 10.1 - Agreement for Purchase and Sale, dated August 19, 1998, between Equity (Parker Towne Center), Inc. and Dunhill Partners 10.2 - Promissory Note, dated October 30, 1998, in the amount of $5.0 million from Equity One (Atlantic Village), Inc. to Southern Farm Bureau Life Insurance Company 10.3 - Mortgage, Security Agreement and Assignment of Leases, dated October 30, 1998, between Equity One (Atlantic Village), Inc. and Southern Farm Bureau Life Insurance Company 27.1 - Financial Data Schedule (B) Report on Form 8-K None 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Equity One, Inc. Date: November 16, 1998 /S/ CHAIM KATZMAN -------------------------- Chaim Katzman Chief Executive Officer (Principal Executive Officer) /S/ DAVID N. BOOKMAN ------------------------- David N. Bookman Vice President and Chief Financial Officer (Principal Accounting Financial Officer) 18 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------- 10.1 Agreement for Purchase and Sale, dated August 19, 1998 Between Equity (Parker Towne Center), Inc. and Dunhill Partners 10.2 Promissory Note, dated October 30, 1998 issued by Equity One (Atlantic Village), Inc. to Southern Farm Bureau Life Insurance Company 10.3 Mortgage Security Agreement and Assignment of Leases, dated October 30, 1998 between Equity One (Atlantic Village), Inc. and Southern Farm Bureau Life Insurance Company 27.1 Financial Data Schedule EX-10.1 2 EXHIBIT 10.1 AGREEMENT FOR PURCHASE AND SALE DATE: AUGUST 19, 1998 NAME OF BUYER: DUNHILL PARTNERS AND/OR ASSIGNS ADDRESS OF BUYER: 4807 WEST LOVERS LAND CITY: DALLAS STATE: TEXAS ZIP: TELEPHONE:___________ FACSIMILE:___________ NAME OF SELLER: EQUITY PARKER TOWNE CENTER, INC. ADDRESS OF SELLER: 777 17TH STREET PENTHOUSE CITY: MIAMI BEACH State: FLORIDA ZIP: 33139 1. DESCRIPTION OF PROPERTY: Seller ("Seller") agrees to sell and the above named Buyer ("Buyer") agrees to purchase, under the terms and conditions set forth in this Agreement, all right, title and interest of the Seller in and to the following: A. The parcel or real property, known as Parker Towne Shopping Center, located at the northeast corner of Parker Road and Avenue K in Plano, Texas, consisting of approximately 200,000 square feet of improvements and approximately 18 acres and more fully described below, and any improvements situated on such parcel, together with any and all easements, covenants and other rights appurtenant to such parcels and owned by Seller, (hereinafter the "Real Property"); See Exhibit A attached hereto B. Any and all transferable licenses, permits, certificates of occupancy, and other approvals in effect at the Closing Date and necessary for the current use and operation of the Real Property or the personal property, any and all transferable warranties, architectural or engineering plans and specifications and tests and studies, development rights that exist and are in Seller's possession, as of the Closing Date and relate to the Real or Personal Property. C. All furniture, furnishing, fixtures, equipment and other tangible personal property that is affixed to and/or located at the Real Property which is owned by Seller on the Closing Date and used in connection with the management, operation or repair of the Real Property excluding all tangible personal property owned by tenants of the Real Property (collectively "Personal Property"); D. Intangible Property (collectively "Intangible Property") consisting of: any and all Leases and Contracts in effect on the Closing Date, (ii) any and a11 refundable security deposits and other deposits and interest thereon, if required by law (iii) any and all transferable licenses, permits, licenses, certificates of occupancy, and other approval in effect at the Closing Date and necessary for the current use and operation of the real property or the personal property, (iv) any and all transferable warranties, architectural or engineering plans and specifications and tests and studies, development rights that exist and are in Seller's possession, as of the Closing Date and relate to the Real or Personal Property. E. Real Property. Personal Property and Intangible Property may sometimes be herein collectively referred to as the "Property" 2. PURCHASE PRICE: The total purchase price of the Property is $7,150,000.00 (U.S.) payable as follows: A. Initial deposit paid to Alan J. Marcus Trust Account within Five (5) days of execution of Letter of Intent $ 50,000.00 ------------- B. Additional Deposit*: $ 150,000.00 ------------- C. Wire transfer of funds required at closing: $6,950,000.00 ------------- TOTAL PURCHASE PRICE $7,150,000.00 ------------- * The Additional Deposit shall be delivered to the Trust Account of Alan J. Marcus on September 11 assuming notification by Seller to Buyer that the conditions for termination of the Back Up Contract referred to in Article 24, below, have been satisfied. The deposits to be paid by Buyer shall be held by ALAN J. MARCUS, ESQUIRE and shall be refundable to Buyer only as set forth herein and as set forth in the Escrow Agreement executed in connection herewith. 3. ACCEPTANCE: If this offer is not executed by and delivered to all parties on or before midnight 15 days from the date of execution of the Letter of Intent and delivery of the Due 2 Diligence Material (as defined below), the Deposit will, at Seller's option, be returned to Buyer and this offer withdrawn. 4. FACSIMILE:EFFECTIVE DATE: Facsimile copies of this Agreement, signed and initialed In counterpart, shall be considered for all purposes, including delivery, as originals. The Effective Date of this Agreement will be (a) the date when the last one of Buyer and Seller has signed this offer, or (b) if changes in this offer (after signature) have been made and initialed by the parties, the date when the last one of Buyer or Seller has initialed those changes. 5. INSPECTIONS AND CONDITION OF PROPERTY: A. Buyer shall have until midnight, twenty one (21) days from the date of execution of the Letter of Intent and delivery of the Due Diligence Material to complete its due diligence inspection of the Real Property (the "Inspection Period"). The Due Diligence Material delivered to Buyer with execution of the Letter of intent shall include, if available, (i) copies of all leases, lease proposals, renewals or other agreements or correspondence amending or modifying the foregoing, (ii) income and expense statements for the past three years; (iii) tenant sales figures for the past three years; (iv) a current rent roll; (v) a list of all personal property; (vi) copies of all management, leasing and service contracts; (viii) Seller's most recent title commitment and survey; and (ix) copies of Seller's most recent environmental report applicable to the Property. B. During the Inspection Period, Buyer may conduct such inspections, at Buyer's sole expense, as Buyer may deem necessary to ascertain the physical condition of the Real Property. However, Buyer shall arrange for any such inspections by appointment only coordinated with the Seller. Buyer shall not interview or speak with any tenants of the Property, unless approved by Seller in advance. C. In the event the Real or Personal Property is not acceptable to Buyer for any reason, Buyer shall provide written notice of same to Seller, at Seller's address, prior to the expiration of the Inspection Period. In such event, this Agreement shall be terminated and of no further force and effect and Buyer and Seller shall be released of all obligations hereunder and Seller shall be refunded all deposits without further notice. Failure of Buyer to deliver notice to Seller as required herein shall constitute waiver of Buyer's right to give such notice and shall be deemed acceptance of the Real and Personal Property by Buyer. D. Buyer shall (i) complete its Inspection Period; (ii) not disturb or interfere with the operation, management or use of the Property by Seller, Seller's agents, any tenant of the Property or by any such tenant's customers, invitee or guests; and (iii) not damage or affect the physical structure of the Property. Buyer shall be responsible for any and all losses, damages, charges and other costs associated with such inspections and studies, and Buyer covenants and agrees to return the Property to the same condition as existed prior to such inspections and studies. Buyer agrees not to allow any liens to arise against the Property as a result of such inspections and studies 3 and agrees to indemnify and hold Seller harmless from and against any and all claims, charges, actions, costs, suits, damages, injuries, or other liabilities which arise, either directly or indirectly, from Buyer's or its agent's or employee's entry onto the Property prior to Closing. E. Upon 24 hour notice, Buyer may have access to all of the original documents concerning the Property located at the Sellers principal office at 777 17th Street, PH Miami Beach, Florida 33139. F. Buyer acknowledges that Buyer is purchasing the Property in "AS IS, WHERE IS" Condition and Buyer further acknowledges that Seller has made no warranties or representations, express or implied, in respect to the real and personal property except as set forth herein and further, Buyer has been given the opportunity and has made an independent investigation of the Property and Buyer acknowledges that an unqualified standard of caveat emptor applies to the transaction under this Agreement. 6. CLOSING: A. The closing for delivery of the deed and payment of the balance of the purchase price shall take place at Buyer's attorney's office at a mutually agreeable time on or before October 15, 1998. B. Subject to Paragraph A. of this Article, possession of the Property shall be transferred by Seller to Buyer simultaneously with the closing of title. 7. FINANCING: This is an all cash transaction. 8. SELLER'S REPRESENTATIONS AND WARRANTIES: (a) Seller represents and warrants to Buyer that as of the Effective Date, the person executing this Agreement on behalf of Seller is duly authorized to do so, that Seller has full right and authority to enter into this Agreement, and this Agreement constitutes a valid and legally binding obligation of Seller, enforceable against Seller in accordance with its terms. (b) Seller is duly organized, validly existing and in good standing, and authorized to do business within the State of Texas. (c) To the best of Seller's knowledge, Seller has good, marketable and insurable fee simple title to the Property. 4 (d) There are no actions, suits, claims, condemnation proceedings, or other matters pending, or, to the Seller's best knowledge and belief, contemplated or threatened against Seller that could affect Seller's ability to perform its obligations under this Agreement. (e) Seller has not received notice and has no knowledge of any violation of the Property concerning zoning, building or fire codes. (f) All documents and records delivered to Buyer are true and correct, to Seller's best knowledge and belief (g) There are no payments for work and/or improvements to the Property which are unpaid or will become due or owing at Closing. (h) There are no contracts, commitments, etc. concerning the use and/or operation of the Property except as disclosed or in that exist in the ordinary course of business. 9. BUYERS REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants to Seller that the following are true, accurate and complete as of the Elective Date: (a) If Buyer is a corporation or partnership, Buyer is duly organized, validly existing and in good standing, and authorized to do business within the applicable jurisdiction. (b) Each of the persons executing this Agreement on behalf of Buyer is duly authorized to do so. Buyer has full right and authority to enter into this Agreement and to contemplate the transaction contemplated herein. This Agreement constitutes a valid and legally binding obligation of Buyer, enforceable against Buyer in accordance with its terms. (c) There are no actions, suits, claims or other matters pending, or, to the Buyer's best knowledge and belief, contemplated or threatened against Buyer that could affect Buyer's ability to perform its obligations under this Agreement. (d) Buyer has sufficient funds and worthy credit available to consummate the Closing of the transaction described in this Agreement. 10. LIMITATIONS ON FUTURE LEASES AND RENTALS: Subsequent to the expiration of the Inspection Period, Seller shall not, without Buyers prior written consent, enter into any leases or contracts except for (i) contracts to be completed or that are to terminate at or before closing, or (ii) service contracts that are terminable on not less than 60 days notice. Buyer shall have five (5) days to approve any proposed leases. In the event Buyer does not provide written consent to the proposed lease of contract, Buyer's silence shall be deemed a refusal to consent to said lease or contract. In any event, Seller shall pay for the improvements to be made for such tenant or reimburse Buyer for the cost of such improvements. If the work for such tenant has not been 5 completed by Closing, Sellers shall assign to Buyer the contract for such work and Seller shall credit Buyer for the amount paid by Buyer for the cost of the improvements. 11. CONDITION OF PROPERTY AT CLOSING. Seller shall be obligated to maintain the Property in the same condition as of the Effective Date, reasonable wear and tear excepted. Seller shall be obligated to repair and correct any deficiencies in the condition of the Property occurring subsequent to the Effective Date hereof. 12. CONDITIONS PRECEDENT TO CLOSING A. CONDITIONS PRECEDENT FOR BUYER: The obligation of Buyer to purchase the Property from Seller under this Agreement is, subject to the satisfaction, at Closing, of each of the following: (i) The representations and warranties made by Seller in this Agreement shall be true, accurate and complete in all material respects on and as of the Closing Date with the same force and effect as if such representations and warranties were made on and as of such date. (ii) Seller shall have performed all covenants and obligations required by this Agreement to be performed by Seller on or before Closing. (iii) Title to the property shall conform with the requirements of Paragraph 17 herein and Buyer shall have received a Written Commitment for Title Insurance, as described in Paragraph 17, indicating that an owner's title insurance policy in accordance with the provisions of Paragraph 17 will be issued after the date of Closing and compliance with any requirements contained therein. (iv) Seller shall furnish a written estoppel letter from the tenants set forth in Paragraph 18 of this Agreement. B. CONDITIONS PRECEDENT FOR SELLER: The obligation of Seller to sell the Property to Buyer under this Agreement is, subject to the satisfaction, at closing, of each of the following: (i) The representations and warranties made by Buyer in this Agreement shall be true, accurate and complete in all material respects on and as of the Closing Date with the same force and effect as if such representations and warranties were made on and as of such date. (ii) Buyer shall have performed all covenants and obligations required by this Agreement to be performed by Buyer on or before Closing. 13. CLOSING; DELIVERIES AT CLOSING: The closing of the transaction contemplated in this Agreement ("Closing") shall take place on the date set forth in Paragraph 6 of 6 this Agreement. A. At the time of Closing, Seller shall deliver to Buyer the following items: 1. Special Warranty Deed. 2. Bill of Sale with respect to any Personal Property included in the sale, containing the equivalent of Special Warranty Deed warranties for such Personal Property. 3. Mechanics' Lien Affidavit. 4. Title Affidavit. 5. Assignment of Leases, Rents and Security Deposits; 6. Non recourse Assignment of Contracts, if any; 7. Title evidence as set forth in Paragraph 17. 8. A corporate resolution and an incumbency certificate to evidence the Seller's capacity and authority to consummate Closing, a certified copy of Articles of Incorporation and bylaws, including all amendments thereto; and a current Certificate of Good Standing; 9. Such other documents as may be reasonably required in order to carry out the purchase and sale. B. At the time of closing, Buyer shall deliver or cause to be delivered to Seller the following items: 1. The earnest Deposit to be credited against Purchase Price; 2. If Buyer is a Corporation, a corporate resolution and an incumbency certificate to evidence Buyer's capacity and authority to consummate Closing. 3. Acceptance of Assignment of Contracts; 4. Acceptance of the Assignment of Leases and Security Deposits; 5. The balance of the Purchase Price and such other funds necessary to pay all Closing and other costs and adjustments to be paid by Buyer 7 under this Agreement (to be delivered by wire transfer). C. Each party agrees to execute and deliver at Closing a settlement statement setting forth the charges, adjustments and credits to each party and to execute and deliver such other documents and take such actions as either party or the Escrow Agent might reasonably request to consummate the transaction herein contemplated. D. At Closing, the Escrow Agent shall (a) disburse all funds, then (b) record, among the appropriate Public Records, all documents to be recorded, and then (c) deliver all original documents and copies thereof, to the appropriate parties. 14. RISK OF LOSS: Risk of loss prior to closing shall be borne by Seller. A. If between the time of execution of this Agreement and the time of closing, the Property is damaged by fire or other casualty the following shall apply, at Buyers option; 1. Upon receipt of applicable insurance proceeds, Seller shall have the obligation to repair or replace the damaged improvements built upon the Real Property. If Buyer requires, Seller shall make such repairs or replacements and this Agreement shall continue in full force and effect and the Seller shall be entitled to extend the closing for a reasonable additional period of time so as to enable Seller to complete such repairs or replacements; or 2. Buyer may notify Seller that Buyer would rather that Seller not repair or replace any such loss or damage and Seller shall assign all right to and in any and all proceeds received from insurance or in satisfaction of any claims or actions in connection with such loss or damage and upon such assignment Buyer shall close without any purchase price reduction. 3. In the event the cost of repairs is in excess of $100,000.00 Buyer shall have the right to cancel this Agreement in which event, this Agreement shall be deemed canceled and of no further force or effect. Buyer shall be refunded its deposit monies, without further notice, and the parties shall be released and discharged of all claims and obligations hereunder. B. CONDEMNATION In the event that all or any substantial portion of the Real Property is condemned or taken by eminent domain prior to Closing, Buyer may, at its option, either: (i) terminate this Agreement by written notice thereof to Seller within five (5) days after Seller notifies Buyer of the condemnation and receive an immediate refund of the Deposit, and all interest accrued thereon or (ii) proceed to close the transaction contemplated herein pursuant to the terms hereof, in which event Seller shall deliver to Buyer at the Closing any proceeds actually received by Seller attributable to the Real Property from such condemnation or eminent domain proceeding, net of any costs associated with such condemnation or eminent domain proceeding, or an assignment of Sellers rights against the condemning authority, and there shall be no reduction in the purchase price. In the event Buyer 8 fails to timely deliver written notice of termination as described in (i) above, Buyer shall be deemed to have elected to proceed in accordance with (ii) above. 15. EXPENSE OF CLOSING. A. Seller shall pay the following costs incurred in this sale. (i) Seller's attorneys fees and costs. (ii) the cost of recording any releases or corrective title instruments. (iii) the costs of delivery of the Evidence of Title, as required in Paragraph 17B, herein; and (iv) Any stamp or transfer taxes imposed in connection with the sale of the Property. B. Buyer shall pay the following costs incurred in this sale. (i) Buyer's attorney's fees and costs; (ii) the costs of recording the deed of conveyance; (iii) the cost of a certified survey (if Buyer so requires) certified to the benefit of the Buyer and the Title Insurer.* (iv) all Title Insurance Premiums; and * (v) Any other costs and expenses in connection with the purchase. * However, Seller to pay $10,000.00 in title premiums and survey costs via a credit at closing. A. PRORATIONS. Current real estate taxes, based on the latest tax bill than available; personal property taxes and assessments, rents, maintenance fees and other similar customarily proratable items shall be prorated as of the Closing Date with Buyer being responsible for and being credited with those on the day of Closing. Seller shall be credited for all rents paid through the Closing Date. Any rents that have accrued, but are unpaid and not past due as of the date of Closing shall not be prorated. Upon collection of such rent by either party, the party collecting such rents shall make the appropriate proration and distribute same with 10 days of receipt. The provisions of the Paragraph are intended to survive Closing. At Closing, Buyer shall also reimburse to Seller the real 9 estate tax reimbursements to be due from Minyards, Blockbuster and any other tenant which similarly reimburses the Landlord. B. CREDITS: Buyer shall be credited with the amount of any prepaid rents paid to Seller by tenants of the Property for periods subsequent to the Closing date and with the amount of any deposits for tenants of the Property, including rental, cleaning, utility, key, damage and other deposits. 17. TITLE REQUIREMENTS: A. Title to the property shall be insurable and shall be conveyed from Seller to Buyer free and clear of all encumbrances except the Permitted exceptions which are set forth as Exhibit "A" and to the extent not set forth on Exhibit "A": 1. Covenants, conditions, restrictions, limitations, reservations, dedications, agreements, and easements of record (including but not limited to, water, sewer, gas, electric and other utility agreements) at the time of closing, provided that they do not contain provisions for reversion or forfeiture of title in the event of violation and do not substantially impair the use of the property for its customary purposes. 2. General and special taxes and assessments for current and subsequent years. 3. Regulatory laws and ordinances of all appropriate governmental authorities including but not limited to zoning restrictions. 4. Rights of parties in possession. 5. Those matters set forth in the existing survey (the "Survey") delivered to Buyer in connection with Buyer's Inspection Period. B. Within seven (7) days of the Effective Date, Seller shall deliver evidence of title consisting of a Commitment to issue Title Insurance from Commonwealth Land Title Insurance along with copies of all title exceptions for Buyer to review. Buyer shall have 10 days from receipt of the Evidence of Title to review same. If any exceptions render title to the Property uninsurable, Buyer shall advise Seller of same and the provisions of Section 17.E. shall apply. Buyer shall cause said title insurance to be issued and Buyer shall be responsible for any and all costs relating to the issuance of the Owners Policy and any and all endorsements required in connection therewith. All exceptions for which the Buyer does not object, along with all matters shown on the Survey, shall be considered to be Permitted Exceptions and shall be deemed acceptable by Buyer. C. Except for the Permitted Exceptions, Seller shall be obligated to deliver the property free and clear of any and all encroachments, overlaps, boundary line disputes and other 10 matters disclosed by a certified survey other than those set forth in the Survey referenced in Section 17.A.5. of this Agreement. In the event the survey shows any such encroachment or that the improvements presumed to be located on the real property in fact encroach on setback lines, easements, or lands of others, or violate any restrictions of record, covenant or applicable government regulation, same shall be treated as a title defect. D. As a further requirement of title, at closing (i) the Title Insurance Commitment shall be marked to indicate satisfaction of all requirements set forth necessary in order to deliver Title Association Standard Form B Owners' Title Insurance Policy customarily issued shall be deleted, i.e. to wit, parties in possession, GAP, mechanics and or other liens, encroachments, and easements, etc., liens or assessments not shown in the public records, and or any exception thereby seeking to impose any lien assessment and or other encumbrance against the Property. Nothing contained herein shall limit, modify and/or otherwise effect Seller's obligations to deliver to Buyer, in any event and at Buyer's expense, upon Closing, insurable title to the Property. Deletion of the standard survey exception shall not be required unless Buyer procures a properly certified survey prior to Closing. E. If the title is not insurable at the time of Closing, Seller shall have 60 days following the date for Closing within which to remedy such defect and shall use diligent effort to cure such defect within 90 days of said notice, however, Seller shall not be obligated to institute litigation to effectuate such cure. If Seller shall fail to cure such defect within said 60 day period, Buyer shall have the option of either accepting the title as it is or demanding a refund of the Buyer's deposit Buyer may also allow up to 60 additional days for Seller to cure such defect. Upon any such refund, this Agreement shall thereupon be terminated and both parties shall be relieved of further liabilities hereunder. 18. TENANT ESTOPPEL LETTERS: Seller shall deliver to Buyer, prior to Closing, an estoppel certificate (hereinafter the "Estoppel Certificate") signed by each tenant of the Property for the tenants known as Minyards, Blockbuster, Dallas Nephrology, Dollar General, Commerce Land Title and 100% of all remaining tenants indicating the amount of rend paid, the date last paid, the amount of security deposits, any prepaid rents, etc. Buyer shall, within thirty (30) days of the Effective Date, supply such form acceptable to Buyer for Seller's use. The parties acknowledge the form estoppel certificate for national or credit tenants is acceptable for purposes of this paragraph. The form estoppel attached hereto shall be used by Seller. 19. ASSIGNMENT. This Agreement may be assigned to a controlled affiliate of the Buyer without the consent of Seller. Buyer may elect to change the name or the Corporate Purchaser and upon such change, shall notify Seller and Lender. This Agreement may not be assigned to any other Buyer without approval of Seller, unless said Buyer is qualified in Seller's sole discretion said approval not to be unreasonably withheld. * However, Seller any provide an Affidavit in lieu of an Estoppel Certificate if Seller is unable to obtain same from a tenant. 11 20. DEFAULT: Should Buyer fail to purchase on the date on which title is to close in accordance with this Agreement, or fail to perform any of Buyer's other obligations under this Agreement and such default is not cured within 10 days after written notice to Buyer, Seller may, at Sellers option, cancel this Agreement by written notice to Buyer. In such event, Buyer's deposits and all other sums paid to Seller (including any interest earned thereon) shall be retained by Seller as liquidated and agreed damages for Buyer's default, and this Agreement shall terminate. Seller has removed the Property from the market and has incurred indirect expenses relative to sales, advertising and the like, and Buyer recognizes that no other method could determine the precise damage resulting and retention of all sums then paid as liquidated and agreed damages shall be Seller's sole remedy in the event of Buyer's default. If this Agreement is so canceled, Seller may sell the Property to any third party as though this Agreement had never been made (without any obligation to account to Buyer for any part of the proceeds of such sale). Buyer agrees not to file any action against Seller seeking the return of any portion of said deposits or seek any reduction in the amount of the liquidated and agreed upon damages if this Agreement is terminated for Buyer's default. Should Seller default under this Agreement or fails to perform any of Seller's other obligations under this Agreement and such default is not cured within 10 days after written notice to Seller, Buyer's sole and exclusive remedy shall be to (i) obtain a refund of all deposits made, whereupon this Agreement shall terminate and neither party shall have any liability to the other, or (ii) bring an action for specific performance, without waiving Buyer's right to damages incurred as a result of Seller's breach. 21. ESCROW AGENT: The Escrow Agent shall hold the deposit funds and perform such duties as set forth in the Escrow Agreement attached hereto, consistent with the provisions of this Agreement. 22. MISCELLANEOUS PROVISIONS: A. All written notices and demands provided under this Agreement shall be hand delivered or sent via certified or registered mail, return receipt requested, or by Federal Express or other air carrier service. All notices and demands shall be deemed properly addressed if addressed as follows and if mailed, shall be deemed given upon being deposited in the United States mail, postage prepaid: To Seller: To Buyer: Alan J. Marcus, Esquire Kevin Kerr, Esquire 20803 Biscayne Blvd. l616 Gateway Blvd. Suite 301 Richardson, Texas 75080 Aventura, Florida 33180 B. This Agreement supersedes and any all prior understanding and agreements 12 between Seller, its agents and representatives and Buyer. It is mutually understood and agreed that this Agreement represents the entire understanding between Buyer and Seller. No representations or inducements made prior to the signing of this Agreement, which are not expressly included in this Agreement or imposed by law, shall be of any force or effect. C. Neither this Agreement nor a memorandum thereof shall be recorded in the office of the Clerk in any Circuit Court of the State of Texas, or in any other Public Records of the State of Texas. Any recording of same by Buyer shall be considered a breach of this Agreement. D. The acceptance of the deed by Buyer at the closing of this transaction shall be acknowledgment by Buyer of the full performance by Seller of all of its agreements and responsibilities hereunder, and no performance of any agreement, obligation, responsibility or representation of Seller shall survive closing of this transaction, except those specifically provided for by statute and those specifically stated in this Agreement to survive the closing. E. Time shall be of the essence with regard to performance pursuant to this Agreement. F. Any disputed arising in connection with this Agreement shall be settled according to Florida law and venue for any action in connection with this Agreement shall be in Dade County, Florida. G. No modification of this Agreement shall be valid unless in writing and signed by both parties. H. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument which may be sufficiently evidenced by one such counterpart. I. Should any part, clause, provision or condition of this Agreement be held to be void, invalid or inoperative, the parties agree that such invalidity shall not affect any other part, clause, provision or condition thereof and that the remainder of this Agreement shall be effective as though such void part, clause, provision, or condition had not been contained herein. J. In the event of any litigation arising from this Agreement the prevailing party shall be entitled to recover attorneys fees and costs incurred therewith. 23. BROKER. There are no brokers involved in the sale of the Property other than BlackRock Realty Advisors, Inc. and Dunhill Partners, Inc. a commission of $121,000.00 in cash at closing, to whom Seller is obligated to pay a commission upon closing and funding of the transaction. Seller agrees to indemnify Buyer and hold Buyer harmless for any and all claims concerning Commissions that may arise in favor of any person claiming by, through or under Seller. Buyer agrees to indemnify Seller and hold Seller's harmless for any and all claim concerning Commissions that may arise in favor if any person claiming by, through or under Buyer. 13 24. BACK UP CONTRACT: Buyer acknowledges that this Agreement is a back up contract to purchase the Property. This Agreement shall not be effective and in force between Buyer and Seller until the previous Agreement is terminated, the deposit funds are returned to Buyer and a mutual release is executed between Buyer and Seller in connection with said previous Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below. SELLER: Executed by Seller on August 24, 1998. EQUITY PARKER TOWNE CENTER, INC. A Texas Corporation By: /s/ DORON VALERO ---------------------------- DORON VALERO, Vice President BUYER: Executed by Buyer on August 20, 1998. DUNHILL PARTNERS By: /s/ WILLIAM HUTCHINSON ----------------------------- William Hutchinson, Authorized Agent ESCROW AGENT: Executed by Escrow Agent on August 24, 1998. /s/ ALAN J. MARCUS - ----------------------- ALAN J. MARCUS 14 ASSIGNMENT OF CONTRACT This Assignment is made effective as of the 27 day of October, 1998, by and between DUNHILL PARTNERS, INC. ("Assignor") and PARKER TOWNE CENTRE, LTD., a Texas limited partnership ("Assignee"). RECITALS: A. Equity (Parker Towne Centre) Inc., a Texas corporation ("Seller") and Assignor entered into that certain Agreement for Purchase and Sale dated August 19, 1998 (the "Original Contract") relating to the sale and purchase of certain property located in Plano, Collin County, Texas locally known as "Parker Towne Centre" (the "Property"). B. Seller agreed to extend the closing date from October 15, 1998, to October 30, 1998, as evidenced by a letter from Alan J. Marcus, the attorney for Seller, dated September 10, 1998 (the "Extension Agreement") (the Original Contract, as amended by the Extension Agreement, referred to as the "Contract"). C. Assignor desires to transfer and assign to Assignee all of its right, title and interest in and to the Contract, and Assignee desires to accept such transfer and assignment, under the terms and conditions hereof. AGREEMENTS: NOW, THEREFORE, in consideration of the agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby confirmed, the parties hereto do hereby agree as follows: 1. Assignor hereby sells, transfers and assigns to Assignee all of its right, title and interest in and to the Contract, together, with its rights to any earnest money and other amounts deposited thereunder and any surveys, reports, documents or other materials provided to Assignor in connection therewith. 2. Assignor represents that it has deposited a total of $200,000 as earnest money under the Contract, all of which shall be credited against the purchase price of the Property upon closing. At closing, Assignee agrees to deliver $200,000 to Assignor to replace the earnest money that Assignor has previously deposited with Seller under the Contract, but only if closing actually occurs. 3. At closing, in addition to the $200,000 delivered to Assignor for the replacement of the earnest money, Assignee agrees to deliver $150,000 to Assignor as an Assignment Fee for this Assignment, but only if closing actually occurs. 4. Assignee hereby assumes, and agrees to be fully bound to perform, all the obligations of Assignor under the Contract that are first performable on or after the date of this Assignment. ASSIGNMENT OF CONTRACT PAGE 1 5. Assignor does hereby represent and warrant that (i) the Original Contract has not been modified or amended except as indicated by the Extension Agreement; (ii) the rights of the Assignor under the Contract have not been assigned to any other person; (iii) the Contract is valid and in full force and effect; and (iv) it has performed all of its obligations under the Contract that were performable on or before the date hereof, and there has been no default with respect to the obligations of the purchaser under the Contract. EXECUTED to be effective as of the date first set forth above. ASSIGNOR: DUNHILL PARTNERS, INC. By: /s/ WILLIAM L. HUTCHINSON ------------------------- William L. Hutchinson, President ASSIGNEE: PARKER TOWNE CENTRE, LTD. By: Dunhill Management, Inc., its General Partner By: /s/ WILLIAM L. HUTCHINSON -------------------------- William L. Hutchinson, President ASSIGNMENT OF CONTRACT PAGE 2 EX-10.2 3 EXHIBIT 10.2 PROMISSORY NOTE $5,000,000.00 OCTOBER 30, 1998 FOR VALUE RECEIVED, EQUITY ONE (ATLANTIC VILLAGE) INC., A Florida corporation ("BORROWER") promises to pay to the order of SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, a Mississippi corporation ("LENDER"), at its office at 1401 Livingston Lane (39213), Post Office Box 78, Jackson, Mississippi 39205, or such other place as the holder of this Note may designate, the principal sum of Five Million and No/100 Dollars ($5,000,000.00), together with interest thereon at the rate or rates specified in /Section/2 hereof. Principal and interest shall be payable at the times set forth in, and in accordance with the other provisions of, /Section/2, /Section/3 and /Section/4 of this Note. /Section/1. GENERAL; SECURITY. /Section/1.1 This Note is issued to evidence a loan made pursuant to that certain commitment letter from Lender to Borrower, dated September 22, 1998, as amended by letter dated October 2, 1998 (the ("COMMITMENT") for the purpose of providing financing in connection with certain parcel(s) of land consisting of approximately fourteen (14.0) acres located in Neptune Beach, Duval County, Florida (the "LAND"), improved by a neighborhood shopping center containing approximately 100,559 square feet of leasable area with on-site parking for 511 vehicles (said buildings, parking areas and related improvements are herein referred to collectively as the "IMPROVEMENTS"). /Section/1.2 The Land, the Improvements and all other property assigned, mortgaged or pledged to Lender under the Credit Documents, as hereinafter defined, are herein referred to collectively as the "SECURITY PROPERTY". /Section/1.3 This Note is secured by, among other security, a Mortgage, Security Agreement and Assignment of Leases of even date (the "MORTGAGE") from Borrower in favor of Lender, covering the Land, the Improvements and certain personal property relating thereto, and an Assignment of Leases and Rents of even date (the "ASSIGNMENT OF LEASES") from Borrower to Lender. /Section/1.4 This Note, the Commitment, the Mortgage, the Assignment of Leases and all other instruments, documents and agreements that secure, evidence or otherwise relate to the indebtedness evidenced hereby or the loan from Lender to Borrower under the Commitment (the "LOAN") are herein referred to collectively as the "CREDIT DOCUMENTS". /Section/1.5 All of the terms, covenants and conditions contained in the Mortgage and the other Credit Documents are hereby made a part of this Note to the same extent and with the same force as if they were fully set forth herein. /Section/2. INTEREST /Section/2.1 From the date hereof until maturity (whether by acceleration of the date of maturity upon default or otherwise), the principal sum outstanding from time to time hereunder shall bear interest at the rate of six and eighty-five one hundredths percent (6.85%) per annum. /Section/2.2 For purposes of this Note each "Loan Year" is defined as a period of twelve (12) months, with the first Loan Year commencing on November 1, 1998. /Section/2.3 Borrower shall pay interest at closing calculated from the date the proceeds of the Loan are wired by Lender to the first day of the month immediately following closing. /Section/2.4 Interest shall be computed on the basis of a three hundred sixty (360) day year for the actual number of days the principal sum is outstanding. /Section/2.5 After maturity or upon default in the payment of any sum due hereunder that is not cured within ten (10) days of said default, or upon any other default or Event of Default under any Credit Document (collectively, an "Event of Default"), interest shall, without notice, accrue at the rate of eleven and eighty-five one-hundredths percent (11.85%) per annum or, if lower, the maximum rate allowed by applicable law (the "DEFAULT RATE"). /Section/3. PAYMENT OF INTEREST AND PRINCIPAL. /Section/3.1 Borrower shall pay two hundred thirty-nine (239) equal, consecutive monthly payments of Thirty-Eight Thousand Three Hundred Sixteen and 04/100 Dollars ($38,316.04), based on a 20-year amortization, covering principal and accrued and unpaid interest, which shall be due and payable monthly, in arrears, on or before the first day of each calendar month for the preceding calendar month or portion -2- thereof, commencing with the payment due on December 1, 1998, and continuing thereafter until the maturity of this Note (whether by acceleration of the date of maturity upon default or otherwise). /Section/3.2 The two-hundred fortieth (240th) and final payment shall be in an amount equal to the entire outstanding principal balance, together with all accrued and unpaid interest and any other unpaid sums hereunder, and shall be due and payable in full on November 1, 2018 (the "MATURITY DATE"). /Section/3.3 In the event that any monthly installment shall not have been paid within ten (10) days of its respective due date, then Lender shall charge a late payment premium of the lesser of five percent (5%) or the maximum rate allowed by applicable law on said late installment. This late payment premium shall apply individually to all payments past due. This late payment charge is a reasonable estimate of compensation to Lender for loss of interest, reasonable administrative expenses and other damages, costs and expenses arising out of the late payment, it being agreed that said damages, costs and expenses are difficult or impossible to ascertain. The provisions of this /Section/3.3 shall not affect the rights of Lender under /Section/4.1. /Section/3.4 All payments of principal and interest shall be made in lawful money of the United States of America which shall be legal tender in payment of all debts, public and private, at the time of payment. /Section/3.5 This Note may not be prepaid during the period beginning on the date of this Note and ending at the expiration of the third (3rd) Loan Year. Thereafter, this Note may be prepaid in full, but not in part, upon sixty (60) days prior written notice and only upon payment of the premium required by this /Section/3.5 as hereinafter set forth. During the fourth (4th) Loan Year, this Note may be prepaid in full but not in part at the price of one hundred six percent (106%) of the principal balance of the Loan at the time of said prepayment. Thereafter this Note may be prepaid in full, but not in part, as follows: -3- PREPAYMENT AMOUNT EXPRESSED PREPAYMENT AS PERCENTAGE OF DURING LOAN YEAR OUTSTANDING PRINCIPAL BALANCE ---------------- ----------------------------- 5 105.5% 6 105.0% 7 104.5% 8 104.0% 9 103.5% 10 103.0% 11 102.5% 12 102.0% 13 101.5% 14-20 101.0% Any such prepayment shall include, but shall not be limited to, the outstanding principal, together with all accrued and unpaid interest, late payment charges and any other unpaid sums hereunder and under the Mortgage. This provision shall, at Lender's election, be applicable whether the prepayment is the result of Borrower's default or otherwise. If a prepayment is received prior to the expiration of the third (3rd) Loan Year as a result of the Borrower's default or otherwise, Lender may, in its sole discretion, elect to collect a premium of eight percent (8%) of the outstanding principal balance. The restrictions and premiums on prepayments set forth above shall not be applicable to (a) any prepayment resulting from Lender's application of any insurance proceeds or condemnation awards on account of the indebtedness pursuant to the terms of the Mortgage, or (b) a prepayment in full made during the ninety (90) day period immediately preceding the Maturity Date. /Section/3.6 Except as set forth in the preceding paragraph, this Note may not be prepaid in whole or in part, whether said prepayment is voluntary or involuntary, including any prepayment effected by Lender's exercise of the right to accelerate the indebtedness evidenced hereby and secured as provided in the other Credit Documents. Borrower acknowledges and agrees that the prepayment provisions contained in this Note are a material term, and that any repayment, whether voluntary or involuntary, in violation of such prepayment terms will result in damages to Lender, and that the prepayment provisions -4- contained herein constitute a reasonable estimate of the damages which Lender will incur if the Loan is repaid other than in accordance with its terms. /Section/3.7 If, during a period when a prepayment premium is required, a default or Event of Default under any Credit Document exists and Lender elects to declare the obligations evidenced hereby to be immediately due and payable as a result of such default or Event of Default (an "ACCELERATION"), the Acceleration shall be deemed to constitute an evasion of the prepayment provisions of this Note, and, as of the date of Acceleration, to the extent permitted by law, a sum equal to the amount of liquidated damages to which Lender is entitled (as herein described) shall be added to all other sums due hereunder, and thereafter the amount of such liquidated damages shall (a) bear interest at the Default Rate; (b) be secured by the Credit Documents; and (c) be included within any tender of the amounts payable under the Credit Documents, or, if no such tender is made prior to foreclosure or sale under the Credit Documents, be included in the amounts payable to Lender or may, at Lender's sole option, be bid by Lender pursuant to such foreclosure or other sale. If the Acceleration occurs during a period when prepayment of this Note is prohibited, the amount of liquidated damages payable to Lender under this provision shall be equal to eight percent (8%) of the unpaid principal balance of this Note at the time of such Acceleration. If the Acceleration occurs during a period when a prepayment premium is payable hereunder, the amount of liquidated damages payable to Lender under this provision shall be equal to such prepayment premium. Borrower acknowledges that in either case Lender's actual damages in the event of such evasion are now and will then be impossible to ascertain. /Section/3.8 To the extent permitted by law, Borrower hereby expressly (a) waives any rights it may have under applicable law to prepay this Note in whole or in part, without penalty, upon Acceleration of this Note except in compliance with the terms of this Note and (b) further agrees that upon prepayment of the balance of the indebtedness secured by the Credit Documents at any time prior to a sale or foreclosure under the Credit Documents, Borrower or any other party making any such prepayment shall be obligated to pay, concurrently therewith, as a prepayment fee, the prepayment premium as liquidated damages, as provided for in this Note, whether such prepayment is made or occurs (i) as the result of the -5- acceptance by Lender of a prepayment tendered by Borrower; (ii) as the result of an Acceleration, including, without limitation, an Acceleration as a result of the sale or further encumbrance of any of the Security Property by Borrower in violation of the provisions of any of the Credit Documents which violation is not waived by Lender; (iii) in connection with any reinstatement of this Note under any trustee's sale or foreclosure proceedings; or (iv) in connection with any right to redeem or prevent any trustee's sale or foreclosure under any of the Credit Documents. /Section/4. DEFAULT; ACCELERATION. /Section/4.1 If any default shall occur in the payment of any installment required under /Section/3 hereof or of any other sums due hereunder at the time, place and manner provided herein and the same shall not be cured within ten (10) days of said default, or if any other default or Event of Default under any Credit Document shall occur in the observance or performance of any of the terms, covenants, conditions or other obligations of Borrower in or under the Credit Documents, then, at the option of the holder of this Note and without notice to Borrower, the outstanding principal, together with all accrued and unpaid interest and any other unpaid sums hereunder, shall immediately become due and payable. /Section/5. MISCELLANEOUS. /Section/5.1 All parties to this Note, including Borrower, Borrower's partners or principals, and any sureties, endorsers or guarantors, hereby waive presentment for payment, demand, protest, notice of dishonor, notice of acceleration of maturity, notice of intention to accelerate, and all defenses on the ground of extension of time for payment hereof, and jointly and severally agree to continue and remain bound for the payment of principal, interest and all other sums payable hereunder, notwithstanding any change or changes by way of release, surrender, exchange, or substitution of any Security Property or by way of any extension or extensions of time for the payment of principal and interest or of either; and all such parties waive all and every kind of notice of such change or changes and agree that the same may be made without notice to, or consent of, any of them. The rights and remedies shall be cumulative and concurrent and may be pursued singularly, successively or together, at the sole discretion of the holder, -6- and may be exercised as often as occasion therefor shall occur, and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release of the same. /Section/5.2 Nothing herein contained, nor any transaction related hereto, shall be construed or so operate as to require Borrower, or any party liable for payment of this Note, to pay interest at a greater rate than the maximum allowed by applicable law. Should any interest or other charges paid or payable by Borrower, or any party liable for the payment of this Note, in connection with this Note or any other Credit Document, result in the computation or earning of interest in excess of the maximum allowed by applicable law, then any and all such excess shall be and the same is hereby waived by Lender or the then holder hereof, and any and all such excess paid shall be automatically credited against and in reduction of the balance due under this Note, and the portion of said excess paid which exceeds the balance due under this Note shall be paid by Lender or the then holder hereof to the person legally entitled thereto. /Section/5.3 This Note may not be changed orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought. No waiver, change, modification or discharge of this Note shall be binding and enforceable against Lender unless duly executed in writing by a Vice President of Lender. /Section/5.4 Any and all notices, elections, demands, request, and responses thereto permitted or required to be given under this Note shall be in writing, signed by or on behalf of the party giving the same, and shall be deemed to have been properly given and shall be effective upon being personally delivered, or upon being deposited in the United States mail, postage prepaid, certified with return receipt requested, or upon being deposited with an overnight commercial delivery service requiring proof of delivery, to the other party at the address of such other party set forth below or at such other address within the continental United States as such other party may designate by notice specifically designated as a notice of change of address and given in accordance herewith; provided, however, that the time period in which a response to any such notice, election, demand or request must be given shall commence on the date of receipt thereof; and provided further that no notice of change of address shall be effective until the date of -7- receipt thereof. Personal delivery to a party or to any officer, partner, agent or employee of such party at said address shall constitute receipt. Rejection or other refusal to accept or inability to deliver because of changed address of which no notice has been received shall also constitute receipt. Any such notice, election, demand, request or response, if given to Borrower, shall be addressed as follows: Equity One (Atlantic Village) Inc. 777 17 Street, Penthouse Miami Beach, Florida 33139 and, if given to Lender, shall be addressed as follows: Southern Farm Bureau Life Insurance Company 1401 Livingston Lane (39213)(overnight) Post Office Box 78 Jackson, Mississippi 39205 Attn: Mortgage Loan Administration Department /Section/5.5 As used herein, the terms "Borrower" and "Lender" shall be deemed to include their respective heirs, successors, legal representatives and assigns, whether by voluntary action of the parties or by operation of law. In the event that more than one person or entity is a Borrower hereunder, then all references to "Borrower" shall be deemed to refer equally to each of said persons or entities, all of whom shall be jointly and severally liable for all of the obligations of Borrower hereunder. /Section/5.6 Borrower hereby agrees to pay the holder hereof, in addition to the sums above stated, all costs of collecting, securing or attempting to collect or secure this Note, including reasonable attorney's fees and other legal costs, whether same be collected or secured by suit or otherwise, and throughout all trial and appellate levels. /Section/5.7 Except as provided in /Section/5.8 hereof, notwithstanding any other term or provision of this Note or any of the other Credit Documents to the contrary, by accepting this Note, Lender acknowledges that the promise of Borrower to pay the principal indebtedness and the interest on this Note is for the sole purpose of establishing the existence of an indebteness, and Lender's source of satisfaction of said indebtedness is limited to the Security Property, and Lender shall not seek to procure payment out of any other assets of Borrower, or to procure any judgments for any sum of money which is or may be payable under this Note or under the Credit Documents or for any deficiency remaining after foreclosure or sale -8- under any of the Credit Documents; PROVIDED, however, that nothing herein contained shall (a) be deemed to be a release or impairment of (i) said indebtedness, (ii) the security therefor intended by any of the Credit Documents, or (iii) any of the Credit Documents; or (b) be deemed to preclude Lender from foreclosing upon any Security Property or from otherwise enforcing any of Lender's rights under any of the Credit Documents. It is the intent of the parties hereto, and Lender by accepting this Note acknowledges, that except as provided in /Section/5.8 hereof, the obligations of Borrower under this Note and under any of the other Credit Documents shall be and are nonrecourse as to Borrower, and Borrower shall not have any personal liability with respect to this Note or any of the other Credit Documents, except as provided in /Section/5.8 hereof. /Section/5.8 Notwithstanding anything contained in this Note or in any of the other Credit Documents, nothing contained herein or therein shall (a) limit or impair the rights of Lender to proceed against any of the Security Property in accordance with the terms of the Credit Documents, (b) limit or impair the rights of Lender to proceed against any person under any guarantee, indemnity (including but not limited to any indemnity relating to environmental matters and access of handicapped or disabled persons) or any other provision of any of the Credit Documents providing for the personal liability of any such person in accordance with its terms, or to enforce the rights of Lender under any such guaranty, indemnity or other provision in accordance with its terms, or (c) limit or impair the rights of Lender to proceed against Borrower or any other person to recover or collect, or limit or restrict the personal liability of Borrower or any other person for the payment to Lender for, any of the following, including reasonable attorney's fees and costs incurred by Lender in connection with any such recovery, collection or payment, all of which Borrower hereby indemnifies Lender against, to-wit: (i) damages suffered by Lender as a result of (a) fraud or misrepresentation by Borrower or any other person acting on behalf of or at the direction of Borrower in connection with the Loan, (b) intentional waste of any of the Security Property, including the removal of any property or fixtures from the Security Property which are not replaced by similar property or fixtures of equal or greater value, (c) the amendment, modification or termination of any lease -9- (except as permitted by subparagraph 7(h) of the Mortgage) of any of the Security Property in violation of any provision of the Credit Documents, (d) failure to observe and comply with all laws, ordinances and regulations applicable to any of the Security Property, (e) failure to comply with any of the obligations of Borrower under any of the Credit Documents or indemnity agreements pertaining to environmental matters or access of handicapped or disabled persons, (f) the sale or further encumbrance of any of the Security Property in violation of any provision of the Credit Documents, (g) failure to insure the Security Property in accordance with the terms of the Credit Documents, (h) failure to pay real estate taxes and assessments and ground lease payments (if applicable) which accrue prior to Lender taking possession of the Security Property or failure to make sufficient funds available through escrow payments to Lender to pay such taxes, assessments and ground lease payments, or (i) any of the Security Property is lost because of forfeiture to any governmental agency or third party unrelated or not affiliated with Lender for any reason; (ii) any rents, issues or profits of any of the Security Property collected by or on behalf of Borrower which are not applied to payment of the Loan or paid to third parties not affiliated with Borrower for reasonable operating costs related to the Security Property (including real estate taxes and the establishment of a reasonable reserve for that purpose) after an uncured default or an uncured Event of Default or any event or circumstance that with the passage of time, the giving of notice, or both, could constitute an Event of Default; (iii) any security deposits or other similar deposits received from tenants or occupants of the Security Property to the extent that funds for such security deposits are not obtained by Lender from Borrower; (iv) any sums expended by Lender in fulfilling the obligations of Borrower, as lessor, under any lease of any of the Security Property, excluding obligations relating to maintenance of the Security Property and liabilities occurring after Borrower has given up possession of the Security Property to Lender; -10- (v) any insurance proceeds, condemnation awards or proceeds resulting from any sale of any of the Security Property which are misapplied or misappropriated by or on behalf of Borrower or which, under the terms of the Credit Documents, should have been paid to Lender; or (vi) the amount of any valid unpaid mechanic's liens, materialmen's liens or other liens, whether or not similar, arising due to work performed or materials furnished in connection with any of the Security Property which could create liens on any portion of the Security Property. /Section/5.9 Time shall be of the essence with respect to this Note. /Section/5.10 If any provision, or portion thereof, of this Note, or the application thereof to any persons or circumstances shall to any extent be invalid or unenforceable, the remainder of this Note, or the application of such provision, or portion thereof, to any other person or circumstances shall not be affected thereby, and each provision of this Note shall be valid and enforceable to the fullest extent permitted by law. /Section/5.11 This Note shall be governed by, and construed in accordance with, the laws of the State of Florida. The jurisdiction and venue for all litigation, bankruptcy action, all other legal proceedings involving this Note, and any of the other Credit Documents executed in connection herewith shall be in Duval County, Florida. IN WITNESS WHEREOF, Borrower has executed this Note under seal as of the first above-written date. Equity One (Atlantic Village) Inc., a Florida corporation By: /s/ DORON VALERO ------------------- Name: Doron Valero Title: Vice President DOCUMENTARY STAMP TAX IN THE AMOUNT OF $17,500.00 HAS BEEN PAID AND AFFIXED TO THE MORTGAGE SECURING THIS NOTE. -11- State of Florida SS: County of Miami-Dade The foregoing Promissory Note was acknowledged before me this 30th day of October, 1998, by Doron Valero, as Vice President of Equity One (Atlantic Village) Inc., a Florida corporation, on behalf of the corporation. He personally appeared before me and is personally known to me or produced ___________________________as identification. [NOTARIAL SEAL] Notary: /s/ ALAN J. MARCUS ------------------------------ Print Name: ALAN J. MARCUS Notary Public, of FLORIDA My commission expires: AUGUST 13, 2001 [SEAL] -12- EX-10.3 4 EXHIBIT 10.3 Book 9117 Pg 1820 - -------------------------------------------------------------------------------- MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES MORTGAGOR EQUITY ONE (ATLANTIC VILLAGE) INC., a Florida corporation and MORTGAGEE SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, a Mississippi corporation DATE: October 30, 1998 Mortgagee's Address is: 1401 Livingston Lane, (39213) Post Office Box 78 Jackson, Mississippi 39205 Attention: Mortgage Loan Administration Department Mortgagor's Address is: 777 17th Street, Penthouse Miami Beach, Florida 33139 This Mortgage Prepared By and Record and Return To: Jerrold A. Wish, Esquire Greenberg Traurig, P.A. 1221 Brickell Avenue Miami, Florida 33131 (305) 579-0762 Bk: 9117 Pg: 1820 - 1856 Doc# 98266973 Filed & Recorded 11/02/98 02:09:13 P.M. HENRY W. COOK CLERK CIRCUIT COURT DUVAL COUNTY, FL REC. $ 168.O0 OTHER/MTG/NOTE $ 17,500.00 INTANGIBLE TAX $ 10,000.00 Book 9117 Pg 1821 (Space reserved for Clerk of Court) MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES (this "MORTGAGE") is made as of October 30, 1998, by EQUITY ONE (ATLANTIC VILLAGE) INC., a Florida corporation, whose address is 777 17th Street, Penthouse, Miami, Beach, Florida 33139 ("MORTGAGOR"), in favor of SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, a Mississippi corporation (the "MORTGAGEE"). WITNESSETH: WHEREAS, Mortgagor is justly and lawfully indebted to Mortgagee for a loan of money (the "LOAN") in the amount of Five Million and No/100 Dollars ($5,000,000), as evidenced by that certain Promissory Note of even date herewith given by Mortgagor in favor of Mortgagee as the same may hereafter be amended, modified, consolidated, extended, renewal or replaced (the "Note"), such Note having a stated maturity date of November 1, 2018; and WHEREAS, the obligations secured by this Mortgage (the "OBLIGATIONS") are: (i) payment and performance of all covenants, conditions, liabilities and obligations contained in, and payment of the indebtedness evidenced by the Note, together with interest and any other amounts payable thereunder; (ii) payment and performance of all covenants, conditions, liabilities and obligations of Mortgagor contained in this Mortgage and in all other documents now or hereafter executed by Mortgagor or any other Obligor relating to the Loan or held by Mortgagee relating to the Loan, as now existing or hereafter amended (collectively, the "LOAN DOCUMENTS"); (iii) all expenses and charges, including attorneys' fees, incurred by Mortgagee in collecting or enforcing any of the Obligations secured hereby; and (iv ) all other indebtedness, obligations and liabilities of Mortgagor to Mortgagee of every kind and description owing or which may become owing by Mortgagor to Mortgagee, howsoever evidenced, now or hereafter existing in favor of Mortgagee, whether direct or indirect, primary or secondary, joint or several, fixed or contingent, secured or unsecured (collectively, the "OTHER INDEBTEDNESS"); and WHEREAS, Mortgagor and all makers, endorsers, sureties, guarantors, accommodation parties and all parties liable or to become liable with respect to the Obligations are each referred to herein as an "Obligor"; NOW, THEREFORE, to secure the payment of the Obligations and the full and faithful performance of the covenants and agreements contained in this Mortgage and the other Loan Documents, Mortgagor hereby grants, bargains, sells, conveys, assigns, transfers, mortgages, pledges, delivers, sets over, warrants and confirms to Mortgagee, and grants Mortgagee a security interest in: Page 1 of 36 Book 9117 Pg 1822 (Space reserved for Clerk of Court) All those certain lots, pieces, or parcels of land lying and being in Duval County, State of Florida, being legally described in EXHIBIT "A" attached hereto and made a part hereof (hereinafter referred to as the "LAND"), TOGETHER WITH the buildings and improvements now or hereafter situated thereon (the "IMPROVEMENTS"). TOGETHER WITH all and singular the tenements, hereditaments, easements, rights-of-way, riparian rights and other rights now or hereafter belonging or appurtenant to the Land, and the rights (if any) in all adjacent roads, ways, streams, alleys, strips and gores, and the reversion or reversions, remainder and remainders, rents, royalties, income, issues and profits thereof, and all the estate, right, title, interest, property, claim and demand whatsoever of Mortgagor of, in and to the same and every part and parcel thereof, whether now owned or hereafter acquired by Mortgagor (the "RIGHTS"); TOGETHER WITH any and all tangible property now or hereafter owned by Mortgagor and now or hereafter located at, affixed to, placed upon or used in connection with the Land or the Improvements, or any present or future improvements thereon, including without limitation: all machinery, Collateral, appliances, fixtures, conduits and systems for generating or distributing air, water, heat, air conditioning, electricity, light, fuel or refrigeration, or for ventilating or sanitary purposes, or for the exclusion of vermin or insects, or for the removal of dust, refuse, sewage or garbage, or for fire prevention or extinguishing; all elevators, escalators, lifts and dumbwaiters; all motors, engines, generators, compressors, pumps, lift stations, tanks, boilers, water heaters, furnaces and incinerators; all furniture, furnishings, fixtures, appliances, installations, partitions, shelving, cabinets, lockers, vaults and wall safes; all carpets, carpeting, rugs, underpadding, linoleum, tiles, mirrors, wall coverings, windows, storm doors, awnings, canopies, shades, screens, blinds, draperies and related hardware, chandeliers and light fixtures; all plumbing, sinks, basins, toilets, faucets, pipes, sprinklers, disposals, laundry appliances and Collateral, and kitchen appliances and Collateral; all alarm, safety, electronic, telephone, music, entertainment and communications Collateral and systems; all janitorial, maintenance, cleaning; window washing, vacuuming, landscaping, pool and recreational Collateral and supplies; and any other items of property, wherever kept or stored, if acquired by Mortgagor with the intent of incorporating them in and/or using them in connection with the Land or the Improvements; together also with all additions thereto and replacements and proceeds thereof; all of which foregoing items described in this paragraph are hereby declared to be part of the real estate and encumbered by this Mortgage (the "COLLATERAL"); and TOGETHER WITH (a) any and all awards or payments, including interest thereon and the right to receive the same, growing out of or resulting from any exercise of the power of eminent domain (including the taking of all or any part of the Land or the Improvements), or any alteration of the grade of any street upon which the Land abuts, or any other injury to, taking of, or decrease in the value of the Land or the Improvements or any part thereof; (b) all rights of Mortgagor in and to any hazard, casualty, liability, or other insurance policy carried for the Page 2 of 36 Book 9117 Pg 1823 (Space reserved for Clerk of Court) benefit of Mortgagor and/or Mortgagee with respect to the Improvements or the Collateral, including without limitation any unearned premiums and all insurance proceeds or sums payable in lieu of or as compensation for any loss of or damage to all or any portion of the Improvements or the Collateral; (c) all rights of Mortgagor in and to all supplies and building materials, wherever located, for the construction or refurbishing of the Improvements, and any bill of lading, warehouse receipt or other document of title pertaining to any such supplies and materials; and (d) all rights of Mortgagor in, to, under, by virtue of, arising from or growing out of any and all present or future contracts, instruments, accounts, insurance policies, permits, licenses, trade names, plans, appraisals, reports, prepaid fees, choses-in-action, subdivision restrictions or declarations or other general intangibles whatsoever now or hereafter dealing with, affecting or concerning the Land or the Improvements or any portion thereof or interest therein, including but not limited to: (i) all contracts, plans and permits for or related to the Land or its development or the construction or refurbishing of the Improvements, (ii) any Agreements for the provision of utilities to the Land or the Improvements, (iii) all payment, performance and/or other bonds, (iv) any contracts now existing or hereafter made for the sale by Mortgagor of all or any portion of the Land or the Improvements, including any security and other deposits paid by any purchasers or lessees (howsoever such deposits may be held) and any proceeds of such sales contracts and lease contracts, including any purchase-money notes and mortgages made by such purchasers, and (v) any other contracts and agreements related to or for the benefit of the Land, Rights, Collateral and/or Improvements, including leases, repair and maintenance contracts and/or management agreements, (vi) all funds, accounts, instruments, documents, accounts receivable, general intangibles, notes, and chattel paper arising from or by virtue of transactions related to the Land and Improvements, and (vii) any declaration of condominium, restrictions, covenants, easements or similar documents now or hereafter recorded against the title to all or any portion of the Land (the "INTANGIBLES"); TO HAVE AND TO HOLD the above-described and granted Land, Improvements, Rights, Collateral and Intangibles (collectively referred to in this Mortgage as the "SECURITY PROPERTY") unto Mortgagee in fee simple forever. PROVIDED, HOWEVER, that these presents are upon the condition that if Mortgagor (a) shall pay or cause to be paid to Mortgagee the principal and all interest payable in respect of the Obligations at the time and in the manner stipulated in the Loan Documents, all without any deduction or credit for taxes or other similar charges paid by Mortgagor, (b) shall punctually perform, keep and observe all and singular the covenants and promises in the Loan Documents to be performed, kept and observed by and on the part of Mortgagor, and (c) shall not permit or suffer to occur any default under this Mortgage or any other Loan Document, then this Mortgage and all the interests and rights hereby granted, bargained, sold, conveyed, assigned, transferred, mortgaged, pledged, delivered, set over, warranted and confirmed shall cease, terminate and be void, but shall otherwise remain in full force and effect. Page 3 of 36 Book 9117 Pg 1824 (Space reserved for Clerk of Court) To secure payment of the Obligations and the full and faithful performance of the covenants and agreements in this Mortgage and the other Loan Documents, Mortgagor hereby grants, bargains, sells, conveys, assigns, transfers, pledges, sets over, warrants and confirms to Beneficiary a security interest in the Collateral and the Intangibles. Mortgagor covenants with and warrants to Mortgagee: (a) that Mortgagor has good and marketable title to the Security Property, is lawfully seized and possessed of the Land and Improvements in fee simple and has good right and authority to grant, sell, assign, mortgage and convey the same and to grant a security interest therein as provided herein, fully and absolutely waiving and releasing all rights and claims it may have in or to the Security Property as a homestead exemption or any federal, state or local law now or hereafter in effect; (b) that the Security Property is unencumbered and free and clear of all liens and security interests and title matters whatsoever except for any easements, restrictions or other title exceptions listed in the title insurance policy delivered to Mortgagee in connection with this Mortgage (the "PERMITTED EXCEPTIONS"); and (c) that Mortgagor is now in a solvent condition and no bankruptcy or insolvency proceedings are pending or contemplated by Mortgagor or against Mortgagor; and (d) that Mortgagor shall forever warrant and defend the Security Property unto Mortgagee, and the validity and priority of the lien of this Mortgage, against the lawful claims and demands of all persons whomsoever. This warranty of title shall survive the foreclosure of this Mortgage and insure to the benefit of and be enforceable by any person who may acquire the Security Property pursuant to foreclosure. Mortgagor further covenants and agrees with Mortgagee as follows: 1. PAYMENT AND PERFORMANCE. Mortgagor shall pay all sums due Mortgagee at the time and in the manner provided in the Loan Documents, and Mortgagor shall otherwise perform, comply with and abide by each and every one of the stipulations, agreements, conditions and covenants contained in the Loan Documents. 2. TAXES, ASSESSMENTS AND CHARGES. Mortgagor shall pay all taxes, assessments (whether general or special) and other charges whatsoever levied, assessed, placed or made against all or any part of the Security Property or any interest of Mortgagee therein, or against any Loan Document or any obligation thereunder. Mortgagor shall make such payment in full (and shall deliver to Mortgagee the paid receipts) not later than thirty (30) days before the last day upon which the same may be paid without the imposition of interest (except interest on special assessments payable by law in installments, in which case Mortgagor shall pay each such installment when due) or other late charge or penalty. If Mortgagor shall fail, neglect or refuse to pay any such taxes, assessments or other charges as aforesaid, then Mortgagee at its option may pay the same, and any funds so advanced by Mortgagee shall bear interest, shall be paid and shall be secured as provided in paragraph 14. Page 4 of 36 Book 9117 Pg 1825 (Space reserved for Clerk of Court) 3. INSURANCE. (a) Mortgagor shall maintain property insurance with a reputable insurance company or companies with a Best's rating of A VIII or better, licensed in the state in which the Security Property is located and acceptable to Mortgagee, covering all the Improvements, the Collateral and all tangible personal property encumbered by this Mortgage, for an amount not less than their full insurable value on a replacement cost basis, without contribution or coinsurance (or with co-insurance and an agreed amount endorsement), but not less than the original amount of the Note for the benefit of Mortgagor and Mortgagee as their interests may appear, by policies on such terms, in such form and for such periods as Mortgagee shall require or approve from time to time, insuring with all risk or special form coverage against loss or damage by fire, lightning, flood, windstorm, hail, aircraft, riot, vehicles, explosion, smoke, falling objects, weight of ice or snow or sleet, collapse, sudden tearing asunder, breakage of glass, freezing, electricity, sprinkler leakage, water damage, sinkhole, earthquake, vandalism and malicious mischief, theft, riot attending a strike, civil commotion, loss of rents and other income (for no less than twelve (12) full months) and when and to the extent required by Mortgagee, against any other risks. Regardless of the types or amounts of insurance required and approved by Mortgagee, Mortgagor shall assign and deliver to Mortgagee all policies of insurance which insure against any loss or damage to the Security Property or any part thereof, as collateral and further security for the payment of the Obligations, with loss payable to Mortgagee pursuant to a standard mortgagee clause acceptable to Mortgagee. Mortgagee is hereby authorized at its option to settle and adjust any claims arising out of any insurance coverage so maintained by Mortgagor. Any expense incurred by Mortgagee in the adjustment and collection of insurance proceeds shall be reimbursed to Mortgagee first out of any insurance proceeds. (b) If Mortgagor fails to maintain such insurance in force, then Mortgagee at its option may effect such insurance from year to year and pay the premiums therefor, and any such sums advanced by Mortgagee shall bear interest, shall be paid and shall be secured as provided in paragraph 14. (c) If any insurance proceeds are received for loss or damage to the Improvements or the Collateral, then Mortgagee at its option may retain such proceeds and apply them toward the payment of the Obligations (in any order of priority Mortgagee may deem appropriate in its sole Page 5 of 36 Book 9117 Pg 1826 (Space reserved for Clerk of Court) discretion), or Mortgagee may disburse them to Mortgagor for the repair or restoration of the damaged Improvements or Collateral in the same manner as disbursements under a construction loan; Mortgagee shall not be obligated to see to the proper application by Mortgagor of any such disbursement. (d) Mortgagor shall obtain and carry commercial general liability insurance with a reputable insurance company or companies with a Best's rating of A VIII or better, licensed in the state in which the Security Property is located, and acceptable to Mortgagee, which policy shall name Mortgagor as insured and Mortgagee as additional insured, with initial limits of not less than One Million Dollars ($1,000,000) as to personal injury or death, and One Hundred Thousand Dollars ($100,000) with respect to property damage (or such greater or different limits which Mortgagee may require from time to time) and on such terms, in such form and for such periods as Mortgagee shall approve from time to time. (e) In the event of a foreclosure of this Mortgage, the purchaser of the Security Property shall succeed to all the rights of Mortgagor in and to all policies of insurance required under this Mortgage, including any right to unearned premiums. (f) Not less than thirty (30) days prior to the expiration date of each policy required under this Mortgage, Mortgagor shall deliver to Mortgagee a renewal policy or policies marked "premium paid" or accompanied by other evidence of payment satisfactory to Mortgagee. (g) Each policy of insurance required under this Mortgage shall be non- cancelable without at least thirty (30) days' advance written notice to Mortgagee. (h) The insurance coverages required by this paragraph 3 may be included in a "blanket" policy or policies subject to Mortgagee's written approval, which approval shall not be unreasonably withheld. (i) All proceeds paid under any insurance policy will be paid to Mortgagee. However, Mortgagee agrees that such proceeds may be used for restoration of damaged Improvements if the following conditions are fulfilled: Page 6 of 36 Book 9117 Pg 1827 (Space reserved for Clerk of Court) 1. No Event of Default has occurred or is continuing under this Mortgage, and no event has occurred which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default under this Mortgage. 2. Such restoration can be fully accomplished within one hundred eighty (180) days. 3. Such restoration will be performed in accordance with plans and specifications approved in writing by Mortgagee. 4. The cost of restoration does not exceed thirty percent (30%) of the outstanding Loan balance. Additionally, Mortgagee must be given satisfactory evidence that, by expenditure of the insurance proceeds, the damage to the Security Property can be fully repaired, free and clear of all liens, except for the lien of this Mortgage. 5. No waiver of payments due under the Note or other Loan Documents occurs while the Security Property is being restored. 6. No insurer denies liability as to Mortgagor or the Security Property. If all of the above conditions are not satisfied, the proceeds will be applied to the outstanding principal balance of the Loan with all terms (including, but not limited to, repayments terms) remaining the same. If the above conditions are met, the insurance proceeds received, after deducting therefrom any expenses incurred in the collection thereof, shall be disbursed periodically in accordance with procedures established by Mortgagee as restoration work is completed. 4. ESCROW ACCOUNT. At Mortgagee's option, Mortgagor shall pay to Mortgagee, together with and in addition to each regular installment of principal and/or interest payable under the Loan Documents, an amount deemed sufficient by Mortgagee to provide Mortgagee with funds in an escrow account sufficient to pay the taxes, assessments, insurance premiums and other charges next due at least thirty (30) days before the date the same are due. In no event shall Mortgagee be liable for any interest on any such funds held in the escrow account. At least thirty (30) days before the date the same are due, Mortgagor shall furnish to Mortgagee an official statement of the amount of said taxes, assessments, insurance premiums and other charges, and Mortgagee shall pay the same, but only if sufficient funds remain in the escrow account. In the event of any deficiency in the escrow account, Mortgagor shall upon notice from Mortgagee immediately deposit with Mortgagee such additional funds as Mortgagee may deem necessary to cure the deficiency, in its sole discretion. If Mortgagee elects to pay any such taxes, assessments, Page 7 of 36 Book 9117 Pg 1828 (Space reserved for Clerk of Court) insurance premiums or other charges notwithstanding the escrow account deficiency, then all sums advanced by Mortgagee in excess of the escrow account balance shall bear interest, shall be paid and shall be secured as provided in paragraph 14. An official receipt for such sums shall be conclusive evidence of Mortgagee's payment and of the validity of the tax, assessment, insurance premium or other charge so paid. In the event of any default under this Mortgage or any other Loan Document, Mortgagee at its option may apply any or all funds in the escrow account against the Obligations or any other sums secured by this Mortgage, in any order of priority Mortgagee may deem appropriate in its sole discretion. At the time of any permitted transfer of the title to all of the Security Property then encumbered by this Mortgage, the balance in the escrow account shall inure to the benefit of such transferee without any specific assignment of such funds. Upon payment in full of the Obligations, the funds remaining in the escrow account (if any) shall be paid over to the record owner of the Security Property encumbered by this Mortgage as of the date of such full payment. Notwithstanding the foregoing, Mortgagee agrees not to exercise its right to collect escrows for insurance so long as (i) no Event of Default has occurred and is continuing; and (ii) all such insurance premiums are paid in a timely manner as and when due, and evidence of such payment is provided to Mortgagee no less than ten (10) days prior to any such payment being delinquent or overdue or beyond any deadline for maximum discounts, as determined by Mortgagee in Mortgagee's sole discretion. 5. IMPROVEMENTS AND DEVELOPMENT. Without the prior written consent of Mortgagee, which Mortgagee may grant or withhold in its sole discretion, none of the Improvements covered by the lien of this Mortgage shall be removed, demolished or materially altered or enlarged (except as required in the event of fire, other casualty or condemnation). Notwithstanding the foregoing, Mortgagor shall have the right to remove and dispose of, free from the lien of this Mortgage, such Collateral as from time to time may become worn out or obsolete, provided that, simultaneously with or prior to such removal, Mortgagor shall have replaced any such Collateral with new Collateral (of at least the same quality as that of the replaced Collateral when it was new) which shall be free from any title retention or other security agreement or other encumbrance, and, by such removal and replacement, Mortgagor shall be deemed to have subjected such new Collateral to the lien of this Mortgage. Without the prior written consent of Mortgagee, which Mortgagee may grant or withhold in its sole discretion, Mortgagor shall not undertake any development of the Land, nor construct any new Improvements thereon, nor initiate or join in or consent to any new (or any change in any existing) private restrictive covenant, zoning ordinance, master plan, site plan, easement, or other public or private restrictions limiting or defining the uses which may be made of the Security Property or any part thereof. Mortgagor shall complete and pay for any permitted development and/or improvements undertaken on the Land within a reasonable time after commencing the same. 6. MAINTENANCE AND REPAIR. Mortgagor shall do everything necessary to maintain the Security Property in good condition and repair, shall operate the Security Property in a first- Page 8 of 36 Book 9117 Pg 1829 (Space reserved for Clerk of Court) class manner, shall not commit or suffer any waste, impairment, abandonment or deterioration of the Security Property, shall promptly pay all utility fees for services provided to the Security Property, and shall comply with (or cause compliance with) all applicable restrictive covenants and all statutes, ordinances and requirements of any governmental authorities having jurisdiction over the Security Property or the use thereof. In the event of any fire or other casualty loss or damage to all or any part of the Security Property, Mortgagor shall notify Mortgagee within forty-eight (48) hours of such occurrence. Mortgagor shall promptly repair, restore, replace or rebuild any part of the Security Property which may be damaged or destroyed by any casualty whatsoever or which may be affected by any condemnation, alteration of grade, or other public or quasi-public taking or injury, except to the extent precluded by Mortgagee's retention and application of the insurance or condemnation proceeds against the Obligations. If Mortgagor shall fail, neglect or refuse to repair or maintain the Security Property as aforesaid, then Mortgagee may at its option undertake such repairs or maintenance, and any funds advanced therefor by Mortgagee shall bear interest, shall be paid and shall be secured as provided in paragraph 14. 7. ASSIGNMENT OF LEASES AND RENTS AND MANAGEMENT AGREEMENTS. As further consideration for the making of the Loan evidenced by the Note, Mortgagor hereby absolutely, presently and unconditionally assigns and transfers to Mortgagee all rents, income, issues and profits of the Security Property and all right, title and interest of Mortgagor in and under all leases, tenancies and occupancy agreements of any nature whatsoever (and any extensions and renewals thereof) now or hereafter affecting the Security Property (the "LEASES"), together with any guaranties thereof and any security deposits or prepaid rent or other deposits or advances thereunder to be applied by Mortgagee in payment of the Obligations, subject to the license granted to Mortgagor pursuant to Section 7. As further security for the repayment of the Obligations, Mortgagor hereby assigns and transfers to Mortgagee all right, title and interest of Mortgagor in and under all management agreements of any nature whatsoever (and any extensions and renewals thereof) now or hereafter affecting the Security Property (the "MANAGEMENT AGREEMENTS"). (a) Mortgagor hereby empowers Mortgagee, its agents or attorneys, to demand, collect, sue for, receive, settle, compromise and give acquittances for all of the rents that may become due under the Leases and to avail itself of and pursue all remedies for the enforcement of the Leases and Mortgagor's rights thereunder that Mortgagor could have pursued but for this assignment. Mortgagee is hereby vested with full power and authority to use all measures, legal and equitable, deemed necessary or proper by Mortgagee to enforce this assignment, to collect the rents so assigned, and/or to cure any default and perform any covenant of Mortgagor as the landlord under any of the Leases, including without limitation the right to enter upon all or any part of the Security Property and to take possession Page 9 of 36 Book 9117 Pg 1830 (Space reserved for Clerk of Court) thereof to the extent necessary to exercise such powers. Mortgagee shall have the right (but not the obligation) to advance any sums necessary to exercise such powers, which sums shall bear interest, shall be paid and shall be secured as provided in paragraph 14. Mortgagor hereby empowers Mortgagee to use and apply all such rents and other income of the Security Property to the payment of the Obligations and all interest thereon and any other indebtedness or liability of Mortgagor to Mortgagee, and to the payment of the costs of managing and operating the Security Property, including without limitation: (i) taxes, special assessments, insurance premiums, damage claims, and the costs of maintaining, repairing, rebuilding, restoring and making rentable the Improvements; (ii) all sums advanced by Mortgagee (with interest thereon) for the payment of such costs or for any other reason permitted by this Mortgage or any other Loan Document; and (iii) all costs, expenses and attorney's fees incurred by Mortgagee in connection with the enforcement of this Mortgage and/or any Lease; all in such order of priority as Mortgagee may deem appropriate in its sole discretion. (b) Mortgagee shall not be obliged to press any of the rights or claims of Mortgagor assigned hereby, nor to perform or carry out any of the obligations of the landlord under any Lease, and Mortgagee assumes no duty or liability whatsoever in connection with or arising from or growing out of the covenants of Mortgagor in any Lease. This Mortgage shall not operate to make Mortgagee responsible for the control, care, management or repair of all or any part of the Security Property, nor shall it operate to make Mortgagee liable for (i) the performance or carrying out of any of the terms or conditions of any Lease, (ii) any waste of the Security Property by any tenant or any other person, (iii) any dangerous or defective condition of the Security Property, nor (iv) any negligence in the management, upkeep, repair or control of all or any part of the Security Property resulting in loss or injury or death to any tenant, licensee, employee or stranger. Mortgagor hereby indemnifies and holds Mortgagee harmless against any and all liability, loss, claim, damage, costs and attorney's fees whatsoever which Mortgagee may or might incur under any Lease or by reason of this assignment, and against any and all claims or demands whatsoever (and any related costs and attorney's fees) which may be asserted against Mortgagee by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants or agreements contained in any Lease. Nothing herein contained shall be construed as constituting Mortgagee a trustee or mortgagee in possession. Page 10 of 36 Book 9117 Pg 1831 (Space reserved for Clerk of Court) (c) Mortgagor, upon request of Mortgagee, shall promptly deliver to Mortgagee a true, correct and complete copy of each Lease as and when Mortgagor shall enter into the same, and Mortgagor shall procure and deliver to Mortgagee estoppel letters or certificates from each tenant, in form and substance satisfactory to Mortgagee, within thirty (30) days after Mortgagee's request therefor. Mortgagor hereby represents and warrants to Mortgagee (and shall be deemed to have represented and warranted to Mortgagee upon and as of the date of delivering to Mortgagee a copy of each Lease), except as previously or concurrently disclosed to and approved by Mortgagee in writing: (i) that each such copy delivered (or to be delivered) to Mortgagee is true, correct and complete; (ii) that Mortgagor is the sole owner of the entire landlord's interest in each Lease and has not previously assigned or pledged any Lease or any interest therein to any person other than Mortgagee; (iii) that all the Leases are in full force and effect and have not been altered, modified or amended in any manner whatsoever; (iv) that each tenant thereunder has accepted that tenant's respective premises and is paying rent on a current basis; (v) that no default exists on the part of such tenants or on the part of Mortgagor as landlord in their respective performances of the terms, covenants, provisions and agreements contained in the Leases; (vi) that no rent has been paid by any of the tenants for more than one (1) month in advance; (vii) that Mortgagor is not indebted to any tenant in any manner whatsoever so as to give rise to any right of set-off against or reduction of the rents payable under any Lease; and (viii) that no payment of rents to accrue under any Lease has been or will be waived, released, reduced, discounted or otherwise discharged or compromised by Mortgagor directly or indirectly, whether by assuming any tenant's obligations with respect to other premises or otherwise. (d) Mortgagor covenants and agrees with Mortgagee that each Lease shall remain in full force and effect irrespective of any merger of the interests of the landlord and tenant thereunder. (e) Mortgagor shall, at its own cost and expense, do the following with respect to any Leases of the Security Property: (i) faithfully abide by, perform and discharge each and every obligation, covenant and agreement under the Leases to be performed by the landlord under such Leases; (ii) enforce or secure the performance of each and every material obligation, covenant, condition and agreement of the Leases by the tenants thereunder to be performed; (iii) not borrow against, pledge or further assign any rental due under the Leases; (iv) not permit the prepayment of any rents Page 11 of 36 Book 9117 Pg 1832 (Space reserved for Clerk of Court) due under any Lease for more than one (1) month in advance nor for more than the next accruing installment of rents, nor anticipate, discount, compromise, forgive, or waive any such rents; (v) not waive, excuse, condone or in any manner release or discharge any tenants of or from the obligations, covenants, conditions, and agreements by said tenants to be performed under the Leases except in the ordinary and prudent course of business; (vi) not permit any tenant to assign or sublet its interest in its Lease unless required to do so by the terms of the Lease, and then only if such assignment does not work to relieve the tenant of any liability for payment of and performance of its obligations under the Lease unless the Lease so requires; (vii) not accept a surrender (unless required by the terms of a Lease) or terminate any Lease unless such lease would qualify as a "Permitted Lease" (as defined below) or the Mortgagor and tenant shall have executed a new Lease effective upon such surrender or termination for the same terms of years at a rental not less than as provided in and on terms no less favorable to the landlord than as in that Lease being replaced; (viii) not consent to a subordination of the interest of any tenant to any party other than Mortgagee and then only if specifically consented to by the Mortgagee; and (ix) not amend or modify any of the Leases or alter the obligations of the parties thereunder, except in the ordinary and prudent course of business which does not reduce the rent or diminish the term thereof or the obligations of the tenant thereunder or increase the term of the tenancy or impose additional obligations or burdens on the landlord. (f) Although Mortgagor and Mortgagee intend that this instrument shall be a present assignment of the Leases and the rents, income, issues and profits of the Security Property, it is expressly understood and agreed that so long as no Event of Default shall exist under this Mortgage and no default or event of default shall exist under any other Loan Document, Mortgagor may collect, and is hereby granted a license to collect, assigned rents, income, issues, and profits for not more than one (1) month in advance of the accrual thereof, but upon the occurrence of any such Event of Default under this Mortgage or the occurrence of any default or event of default under any other Loan Document, or at any time during its continuance, all rights and license of Mortgagor to collect or receive rents or profits shall wholly terminate upon notice from Mortgagee, and Mortgagee may apply all rents collected to the Obligations in such order and priority as Mortgagee so elects in its sole discretion. The tenants under all the Leases are hereby irrevocably authorized to rely upon and comply with (and shall be fully protected in so doing) any notice or demand by Mortgagee for the Page 12 of 36 Book 9117 Pg 1833 (Space reserved for Clerk of Court) payment to Mortgagee of any rental or other sums which may be or thereafter become due under the Leases, or for the performance of any of the tenants' undertakings under the Leases, and none of them shall have any right or duty to inquire as to whether any default hereunder or under any other Loan Document shall have actually occurred or is then existing. (g) Mortgagor has conditionally assigned to Mortgagee by separate agreement of even date herewith all Leases and rents with respect to the Security Property, which assignment is in addition to, and cumulative with, the assignment and rights granted to Mortgagee herein. Mortgagee shall have the right to approve any Management Agreement with respect to the Security Property hereafter entered into by Mortgagee, and all managers and management companies thereby selected by Mortgagor and, upon the occurrence of an Event of Default under this Mortgage or the occurrence of a default or event of default under any other Loan Document or under the Management Agreement, such Management Agreement may be terminated by Mortgagee at no cost to Mortgagee upon prior written notice to the manager under the Management Agreement. The manager under each existing Management Agreement has agreed to the foregoing and that its Management Agreement is subject and subordinate in all respects to this Mortgage. Any Management Agreement hereafter entered into by Grantor shall expressly provide that such Management Agreement may be terminated by Mortgagee at no cost to Mortgagee upon prior written notice to the manager under the Management Agreement and that the Management Agreement is subject and subordinate in all respects to this Mortgage. Mortgagor has heretofore delivered to Mortgagee a true and complete copy of any Management Agreements affecting the Security Property and any and all amendments or modifications thereof. Grantor agrees that it will not modify or amend any Management Agreement without Mortgagee's prior written consent. (h) Mortgagor shall not enter into any new lease with respect to the Security Property without Mortgagee's prior written consent. Notwithstanding the foregoing or any other contrary or inconsistent provision of this Mortgage or any other Loan Documents, so long as no Event of Default has occurred hereunder, Mortgagor may, without Mortgagee's consent, enter into new leases, or modify or amend existing leases, so long as such new or amended lease (a) has an initial lease term of no more than five (5) years and a total lease term, including available extensions, of no more than ten (10) years; and (b) leases space of no more than 7,500 square feet of building space (no vacant land may be leased); and (c) is entered into at Page 13 of 36 Book 9117 Pg 1834 (Space reserved for Clerk of Court) arms length, in the ordinary course of business, on market rates and terms, using sound business judgment, and (d) is on a standard lease form approved by Mortgagee in writing (herein called a "PERMITTED LEASE"). 8. FURTHER ENCUMBRANCES. Mortgagor shall not grant any other lien or mortgage on all or any part of the Security Property or any interest therein nor make any further assignment of the Leases and rentals of the Security Property without the prior written consent of Mortgagee, which Mortgagee may grant or withhold in its sole discretion; any such unpermitted lien or mortgage or assignment by Mortgagor, being herein called an "ENCUMBRANCE", shall entitle Mortgagee to declare the Obligations immediately due and payable and to foreclose this Mortgage. Any such other lien or mortgage or assignment shall be junior to this Mortgage and to all permitted tenancies now or hereafter affecting the Security Property or any portion thereof and shall be subject to all renewals, extensions, modifications, releases, interest rate increases, future advances, changes or exchanges permitted by this Mortgage, all without the joinder or consent of such junior lienholder or mortgagee or assignee and without any obligation on Mortgagee's part to give notice of any kind thereto. Mortgagor shall maintain in good standing any other mortgage or encumbrance to secure debt affecting any part of the Security Property from time to time and shall not commit or permit or suffer to occur any default thereunder, nor shall Mortgagor accept any future advance under or modify the terms of any such mortgage or encumbrance which may then be superior to the lien of this Mortgage. Except for encumbrances permitted by Mortgagee, Mortgagor shall not commit or permit or suffer to occur any act or omission whereby any of the security represented by this Mortgage shall be impaired or threatened, or whereby any of the Security Property or any interest therein shall become subject to any attachment, judgment, lien, charge or other encumbrance whatsoever, and Mortgagor shall immediately cause any such attachment, judgment, lien, charge or other encumbrance to be discharged or otherwise bonded or transferred to other security. Mortgagor shall not directly or indirectly do anything or take any action which might prejudice any of the right, title or interest of Mortgagee in or to any of the Security Property or impose or create any direct or indirect obligation or liability on the part of Mortgagee with respect to any of the Security Property. 9. PROHIBITED TRANSFERS. Mortgagor shall not cause or permit or suffer to occur any of the following events (a "DISPOSITION") without the prior written consent of Mortgagee, which Mortgagee may grant or withhold in its sole discretion, and if any of the same shall occur without such consent, then Mortgagee shall have the right to declare the Obligations immediately due and payable and to foreclose this Mortgage: (a) if all or any portion of the legal or equitable or beneficial title to all or any portion of the Security Property or any interest therein shall in any manner whatsoever be sold, conveyed or transferred, either voluntarily or by operation of law; or (b) in the case of any portion of the Security Property directly or indirectly owned by a corporation (or a partnership or joint venture or limited liability company or trust or other business entity), if any stock or partnership interest or joint venture interest or member interest or beneficial interest in such owner shall be transferred (whether among the then existing partners, Page 14 of 36 Book 9117 Pg 1835 (Space reserved for Clerk of Court) stockholders, members or other beneficial owners, or otherwise), or if such stock or partnership interest or joint venture interest or beneficial interest shall be assigned, pledged, hypothecated, mortgaged or otherwise encumbered. It is expressly agreed that, in connection with determining whether to grant or withhold consent to any Disposition or Encumbrance, the determination made by Mortgagee shall be conclusive and Mortgagee may require as conditions to granting such consent (1) an increase in the rate of interest payable under the Note, (2) payment to Mortgagee of a transfer fee, (3) payment of Mortgagee's reasonable attorneys' fees in connection with such Disposition or Encumbrance, (4) the express assumption of the payment of the Obligations by the party to whom such Disposition will be made (with or without, in Mortgagee's sole discretion, the release of Mortgagor from liability for such Obligations). The following transfers shall not be in violation of this paragraph 9: (i) Public utility easements for the benefit of the Security Property; and (ii) involuntary conveyances which are removed or reconveyed within 90 days; and (iii) a transfer as the result of the death of an obligor who is a natural person, provided that a transferee acceptable to the Beneficiary assumes the liability of the decedent with respect to the Loan within 90 days of the person's death; and (iv) trades of the publicly traded stock of Equity One, Inc., a Maryland corporation ("GUARANTOR"), in the ordinary course of business; and (v) changes in the corporate structure of Guarantor so long as (i) such changes do not directly affect Mortgagor or any of the Security Property, and (ii) Guarantor's net worth before and after any such changes is and remains in excess of $50,000,000.00, as determined by Mortgagee, and in accordance with generally accepted accounting principles consistently applied. Notwithstanding the foregoing, Mortgagee will allow a one-time transfer of the Security Property with all terms of the Note otherwise remaining the same, if the following conditions are satisfied: (1) the Obligations are current and not in default of any kind at the time of transfer; (2) the transferee demonstrates financial credentials, creditworthiness, and management ability acceptable to Mortgagee in its sole discretion; (3) Mortgagee receives a transfer fee equal to one percent of the outstanding balance of the Obligations; (4) the structure of the transaction, including the form of purchasing transferee entity, secondary financing (if any), third party guarantees and indemnifications and other fundamental matters, is acceptable to Mortgagee in its sole discretion; (5) the transferee executes an environmental certificate and indemnity agreement in form and content satisfactory to Mortgagee; (6) the transferee executes an assumption agreement and such other documentation reasonably requested by Mortgagee to evidence such transfer and to preserve and continue the security interests of Mortgagee in the Security Property and other collateral for the Obligations, in form and substance satisfactory to Mortgagee in Mortgagee's reasonable discretion; (7) the purchaser executes an indemnity agreement protecting Mortgagee against loss or damage because of the Security Property's failure to comply with applicable laws and governmental regulations, including those pertaining to access of handicapped or disabled persons; and (8) Mortgagee receives payment of all taxes, costs and expenses incurred in connection therewith, including Mortgagee's attorneys' fees. Page 15 of 36 Book 9117 Pg 1836 (Space reserved for Clerk of Court) 10. FURTHER ASSURANCES. From time to time and on demand, Mortgagor shall execute and deliver to Mortgagee (and pay the costs of preparing and recording) any further instruments required by Mortgagee to reaffirm, correct or perfect the evidence of the Obligations secured hereby and the lien and security interest of Mortgagee in all the Security Property and all additions, replacements and proceeds, including but not limited to mortgages, security agreements, financing statements, assignments and renewal and substitution notes. 11. ESTOPPEL LETTERS AND INFORMATION. Within three (3) days after request in person or within five (5) days after request by mail, Mortgagor shall furnish to Mortgagee a written statement, duly acknowledged, of the amount of principal and interest and other sums then owing on the Obligations and whether any offsets, counterclaims or defenses exist against the Obligations. Mortgagor shall promptly furnish to Mortgagee any financial or other information regarding Mortgagor or the Security Property required by any Loan Document or which Mortgagee may reasonably request from time to time. 12. NOTICES. Whenever Mortgagor or Mortgagee are obliged to give notice to the other, such notice shall be in writing and shall be given personally, by an overnight courier which provides for a return receipt or by prepaid certified mail (return receipt requested), in which latter case notice shall be deemed effectively made when the receipt is signed or when the attempted initial delivery is refused or cannot be made because of a change of address of which the sending party has not been notified. Any notice to Mortgagee shall be addressed to the attention of a Vice President or higher officer. Until the designated addresses are changed by notice given in accordance with this paragraph, notice to either party shall be sent to the respective address set forth on the first page of this Mortgage. 13. DEFAULT. At Mortgagee's option, all of the principal and interest and other sums secured by this Mortgage shall immediately or at any time thereafter become due and payable without notice to any Obligor, and Mortgagee shall immediately have all the rights accorded Mortgagee by law and hereunder to foreclose this Mortgage or otherwise to enforce this Mortgage and any other Loan Document, upon the occurrence of any of the following defaults (an "EVENT OF DEFAULT"): (a) failure to pay any sum due under any Loan Document and the expiration of the grace period (if any) provided therein; or (b) failure to pay any tax, assessment, utility charge, or other charge against the Security Property or any part thereof as and when required by this Mortgage; or (c) any waste, impairment, abandonment, deterioration, removal, demolition, material alteration or enlargement of any existing Improvements, or the commencement of construction of any new Improvements, in either case without the prior written consent of Mortgagee, which Mortgagee may grant or withhold in its sole discretion; or (d) failure to keep in force the policies of insurance required by this Mortgage or any other Loan Document; or (e) Mortgagor's failure or refusal to provide any estoppel certificate within the time required by this Mortgage; or (f) Mortgagor's recordation of any notice limiting the amount of future advances that may be secured by this Mortgage; or (g) any unpermitted sale, transfer Page 16 of 36 Book 9117 Pg 1837 (Space reserved for Clerk of Court) (whether voluntary or by operation of law), conveyance or further encumbering of all or any part of the Security Property or any interest therein, or the additional assignment of all or any part of the rents, income or profits arising therefrom; or (h) Mortgagor's failure to remove any involuntary lien on the Security Property or any part thereof within twenty (20) days after its filing, or the filing of any suit against the Security Property upon any claim or lien other than this Mortgage (whether superior or inferior to this Mortgage); or (i) Mortgagor's failure to comply within ten (10) days with a requirement, order or notice of violation of a law, ordinance, or regulation issued or promulgated by any political subdivision or governmental department claiming jurisdiction over the Security Property or any operation conducted on the Security Property (or, if such order or notice provides a time period for compliance, Mortgagor's failure to comply within such period), or, in the case of a curable noncompliance requiring longer than the applicable time period for its cure, Mortgagor's failure to commence to comply with said order or notice within said period or failure thereafter to pursue such cure diligently to completion; or (j) the issuance of any order by the state in which the Security Property is located, or any subdivision, instrumentality, administrative board or department thereof, declaring unlawful or suspending any operation conducted on the Security Property; or (k) if any representation, warranty, affidavit, certificate or statement made or delivered to Mortgagee by or on behalf of any Obligor from time to time in connection with the Obligations or this Mortgage or any other Loan Document shall prove false, incorrect or misleading in any respect deemed material by Mortgagee; or (l) the dissolution or merger or consolidation or termination of existence of any other Obligor, or the failure or cessation or liquidation of the business of any Obligor, or if the person(s) controlling any Obligor which is a business entity shall take any action authorizing or leading to the same; or (m) any default by any Obligor in the payment of any indebtedness for borrowed money (whether direct or contingent and whether matured or accelerated) to Mortgagee, or if any Obligor shall become insolvent or unable to pay such Obligor's debts as they become due; or (n) the disposition or transfer or exchange of all or substantially all of any Obligor's assets for less than fair market value, or the issuance of any levy, attachment, charging order, garnishment or other process against the Security Property, or the filing of any lien against the Security Property (and the expiration of any grace period provided in any Loan Document for the discharge of such lien); or (o) if any Obligor shall make an assignment for the benefit of creditors, file a petition in bankruptcy, apply to or petition any tribunal for the appointment of a custodian, receiver, intervenor or trustee for such Obligor or a substantial part of such Obligor's assets, or if any Obligor shall commence any proceeding under any bankruptcy, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect, or if any Obligor shall by act or omission approve, consent to or acquiesce in the filing of any such petition or application against such Obligor or the appointment of any such custodian, receiver, intervenor or trustee or the commencement of any such proceeding against such Obligor or the entry of an order for relief with respect to such Obligor, or if any such petition or application shall have been filed or proceeding commenced against any Obligor which remains undismissed for thirty (30) days or more or in which an order for relief is entered, or if any Obligor shall suffer any such appointment of a custodian, receiver, intervenor or trustee to Page 17 of 36 Book 9117 Pg 1838 (Space reserved for Clerk of Court) continue undischarged for thirty (30) days or more; or (p) if any Obligor while insolvent shall have concealed, transferred, removed, or permitted to be concealed or transferred or removed, any part of such Obligor's property with intent to hinder, delay or defraud any of such Obligor's creditors, or if any Obligor shall have made or suffered a transfer of any of such Obligor's properties which may be invalid under any bankruptcy, fraudulent conveyance, preference or similar law, or if any Obligor while insolvent shall have made any transfer of such Obligor's properties to or for the benefit of any creditor at a time when other creditors similarly situated have not been paid; or (q) Mortgagor's failure to provide the documents required by paragraph 29 after 15 days' written notice; or (r) the existence of any uncured default under any other mortgage or encumbrance affecting any part of the Security Property then encumbered by this Mortgage (in the case of a default for which such mortgage or other encumbrance provides a grace period, if the default remains uncured after the expiration of that grace period), or Mortgagor's acceptance of any future advance under, or modification of the terms of, any such other mortgage or encumbrance which may then be superior to the lien of this Mortgage; or (s) Mortgagee's election to declare the Obligations due and payable under the provisions of any other Loan Document; or (t) any default in the observance or performance of any other covenant or agreement of any Obligor in this Mortgage or any other Loan Document, the occurrence of any other event prohibited by the terms of this Mortgage or any other Loan Document, or the violation of any other provision of this Mortgage or any other Loan Document. No consent or waiver expressed or implied by Mortgagee with respect to any default under this Mortgage shall be construed as a consent or waiver with respect to any further default of the same or a different nature; and no consent or waiver shall be deemed or construed to exist by reason of any curative action initiated by Mortgagee or any other course of conduct or in any other manner whatsoever except by a writing duly executed by Mortgagee, and then only for the single occasion to which such writing is addressed. In order to declare the Obligations due and payable because of Mortgagor's failure to pay any tax, assessment, insurance premium, charge, liability, obligation or encumbrance upon the Security Property as required by this Mortgage, or because of any other default, Mortgagee shall not be required to pay the same or to advance funds to cure the default, notwithstanding Mortgagee's option under this Mortgage or any other Loan Document to do so; no such payment or advance by Mortgagee shall be deemed or construed a waiver of Mortgagee's right to declare the Obligations due and payable on account of such failure or other default. Notwithstanding the foregoing to the contrary, no non-monetary default shall be deemed an Event of Default if (a) the default is curable; and (b) such default is cured within fifteen (15) days after Mortgagor's receipt of written notice thereof or, if not curable with due diligence within fifteen (15) days, Mortgagor commences such cure within such fifteen (15) days and diligently prosecutes such cure to completion, as determined by Mortgagee. 14. ADVANCES BY MORTGAGEE. In the event of any default in the performance of any of Mortgagor's covenants or agreements contained in this Mortgage or any other Loan Document or the violation of any term thereof, Mortgagee shall have the right (but in no event the Page 18 of 36 Book 9117 Pg 1839 (Space reserved for Clerk of Court) obligation) at its option to cure the default or take any other action Mortgagee deems necessary or desirable to protect its security (including without limitation the payment of any taxes, assessments, insurance premiums, charges, liens or encumbrances required of Mortgagor under this Mortgage), without thereby waiving any rights or remedies otherwise available to Mortgagee. If Mortgagee shall elect to advance at any time any sum(s) for the protection of its security or for any other reason permitted or provided by any of the terms of this Mortgage or any other Loan Document, then such sum(s) shall be deemed Obligations, shall be repaid by Mortgagor on demand, shall be secured by this Mortgage and shall bear interest until paid at the lesser of the non-default interest rate provided for in /Section/2 of the Note plus five percent (5%) per annum, or at the highest rate allowed by applicable law, commencing on the date they are advanced by Mortgagee. Mortgagee's lien on the Security Property for such advances shall be superior to any right or title to, interest in, or claim upon all or any portion of the Security Property junior to the lien of this Mortgage. 15. RECEIVER. In addition to all other remedies herein provided for, Mortgagor agrees that upon the occurrence of an Event of Default, the Mortgagee shall, as a matter of right, be entitled to an ex parte appointment of a receiver or receivers for all or any part of the Security Property without regard to the value of the Security Property or the solvency of any person or persons liable for the payment of the indebtedness secured hereby, and Mortgagor does hereby consent to the appointment of such receiver or receivers, waives any and all defenses to such appointment and agrees not to oppose any application therefor by the Mortgagee, but nothing herein is to be construed to deprive the Mortgagee of any other right, remedy or privilege it may now have under the law to have a receiver appointed; provided, however, that the appointment of such receiver, trustee or other appointee by virtue of any court order, statute or regulation shall not impair or in any manner prejudice the rights of the Mortgagee to receive payment of the rents and income. Any money advanced by the Mortgagee in connection with any such receivership shall be a demand obligation owing by Mortgagor to the Mortgagee and shall bear interest from the date of making such advancement by the Mortgagee until paid at the default rate provided in the Note and shall be a part of the Obligations and shall be secured by this Mortgage and by every other instrument securing the Obligations. The receiver or his agents shall be entitled to enter upon and take possession of any and all of the Security Property. The receiver, personally or through its agents or attorneys, may exclude Mortgagor and its agents, servants and employees wholly from the Security Property and have, hold, use, operate, manage and control the same and each and every part thereof, and keep insured, the properties, equipment and apparatus provided or required for use in connection with the business or business operated on the Security Property, and make all such necessary and proper repairs, renewals and replacements and all such useful alterations, additions, betterments and improvements as the receiver may deem judicious. Such receivership shall, at the option of the Mortgagee, continue until full payment of all sums, hereby secured, then due and payable or until title to the Security Property shall have passed by foreclosure sale under this Mortgage and the period of redemption, if any, shall have expired. Page 19 of 36 Book 9117 Pg 1840 (Space reserved for Clerk of Court) 16. REMEDIES. (a) Upon the occurrence of an Event of Default, the remedies available to Mortgagee shall include, but not necessarily be limited to, any one or more of the following: (i) Mortgagee may declare the entire unpaid balance of the Note and all accrued interest thereon, together with the prepayment premium (as defined in the Note), immediately due and payable without further notice; (ii) Mortgagee may take immediate possession of the Security Property or any part thereof (which Mortgagor agrees to surrender to Mortgagee) and manage control or lease the same to such person or persons and at such rental as it may deem proper and collect all the rents, issues and profits therefrom, including those past due as well as those thereafter accruing, with the right in the Mortgagee to cancel any lease or sublease for any cause which would entitle Mortgagor to cancel the same; to make such expenditures for maintenance, repairs and costs of operation as it may deem advisable; and after deducting the cost thereof and a commission of five (5%) percent upon the gross amounts of rents collected, to apply the residue to the payment of any sums which are unpaid hereunder or under the Note. The taking of possession under this paragraph shall not prevent concurrent or later proceedings for the foreclosure sale of the Security Property as provided elsewhere herein; (iii) Mortgagee shall have the right to foreclose this Mortgage and in case of sale in action or proceeding to foreclose this Mortgage, the Mortgagee shall have the right to sell the Security Property covered hereby in parts or as an entirety. It is intended hereby to give to the Mortgagee the widest possible discretion permitted by law with respect to all aspects of any such sale or sales; (iv) Without declaring the entire unpaid principal balance due, the Mortgagee may foreclose only as to the sum past due, without injury to this Mortgage the displacement or impairment of the remainder of the lien thereof, and at such foreclosure sale the Premises shall be sold subject to all remaining items of indebtedness; and Mortgagee may again foreclose, in the same manner, as often as there may be any sum past due; (v) Mortgagor hereby waives any appraisement before sale of any portion of the Security Property, commonly known as appraisement laws, the benefit of any laws now or hereafter enacted which in any way may extend the time for enforcement of the collection of the indebtedness secured hereby or creating or extending any period of redemption from any sale made in collecting said indebtedness, commonly known as stay laws and redemption laws, all rights of marshalling in the event of foreclosure of any lien or security interest created by this Mortgage and; Page 20 of 36 Book 9117 Pg 1841 (Space reserved for Clerk of Court) (vi) The Note provides that in the event the Mortgagee must accelerate the debt secured hereunder because of Mortgagor's default, including the unauthorized transfer sale or assignment of the Security Property as specified in Section 9 above, Mortgagee shall be entitled to the prepayment premium (as defined in the Note) as agreed liquidated damages to compensate the Mortgagee hereof for its failure to receive the stated interest rate yield for the stated term of the Note. (b) Mortgagor expressly agrees on behalf of itself, its successors and assigns and any future owner of the Security Property, or any part thereof or interest therein as follows: (i) All remedies available to Mortgagee with respect to this Mortgage shall be cumulative and may be pursued concurrently or successively. No delay by Mortgagee in exercising any such remedy shall operate as a waiver thereof or preclude the exercise thereof during the continuance of that or any subsequent default; (ii) The obtaining of a judgment or decree on the Note, whether in the State of Florida or elsewhere, shall not in any manner affect the lien of this Mortgage upon the Premises covered hereby, and any judgment or decree so obtained shall be secured hereby to the same extent as said Note is now secured; (iii) In event of any foreclosure sale hereunder, all net proceeds shall be available for application to the indebtedness hereby secured whether or not such proceeds may exceed the value of the Security Property for recordation tax, mortgage tax, insurance or other purposes; and (iv) The only limitation upon the foregoing instruments as to the exercise of Mortgagee's remedies is that there shall be but one full and complete satisfaction of the indebtedness secured hereby. (c) Mortgagee shall be entitled to enforce payment and performance of any indebtedness or obligations secured hereby and to exercise all rights and powers under this Mortgage or the Note secured hereby or under any other agreement or any laws now or hereafter in force, notwithstanding some or all of the said indebtedness and obligations secured hereby may now or hereafter be otherwise secured, where by mortgage, deed or trust, pledge, lien, assignment or otherwise. Neither the acceptance of this Mortgage nor its enforcement shall prejudice or in any manner affect Mortgagee's right to realize upon or enforce any other security now or hereafter held by Mortgagee, it being agreed that Mortgagee shall be entitled to enforce this Mortgage and any other security now or hereafter held by Mortgagee in such order and manner as Mortgagee may in its absolute discretion Page 21 of 36 Book 9117 Pg 1842 (Space reserved for Clerk of Court) determine. No remedy herein conferred upon or reserved by Mortgagee is intended to be exclusive of any other remedy herein or by law provided or permitted, but each shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute. every power or remedy given to Mortgagee or to which it may be otherwise entitled, may be exercised, concurrently or independently from time to time and as often as may be deemed expedient by Mortgagee and it may pursue inconsistent remedies. 17. NO JURY TRIAL. Mortgagee, Mortgagor and each Obligor hereby severally, voluntarily, knowingly and intentionally WAIVE ANY AND ALL RIGHTS TO TRIAL BY JURY in any legal action or proceeding arising under or in connection with this Mortgage or any other Loan Document or concerning the Obligations and/or the Security Property or pertaining to any transaction related to or contemplated in this Mortgage, regardless of whether such action or proceeding concerns any contractual or tortuous or other claim. Each Obligor severally acknowledges that this waiver of jury trial is a material inducement to Mortgagee in extending the credit described herein, that Mortgagee would not have extended such credit without this jury trial waiver, and that such Obligor has been represented by an attorney or has had an opportunity to consult with an attorney regarding this Mortgage and understands the legal effect of this jury trial waiver. 18. FEES AND EXPENSES. Mortgagor shall pay any and all costs, expenses and attorney's fees incurred by Mortgagee (regardless of whether in connection with any action, proceeding or appeal) to sustain the lien of this Mortgage or its priority, to protect or enforce any of Mortgagee's rights under this Mortgage or under any other Loan Document, to recover any indebtedness secured hereby, to contest or collect any award or payment in connection with the taking or condemnation of all or any part of the Security Property, or for any title examination or abstract preparation or appraisal or title insurance policy relating to the Security Property, and all such sums shall bear interest, shall be paid and shall be secured as provided in paragraph 14. 19. CONDEMNATION. Immediately upon obtaining knowledge of the institution or pending institution of any proceedings for the condemnation of the Security Property or any portion thereof, Mortgagor shall notify Mortgagee thereof. Mortgagee may participate in any such proceedings and may be represented therein by counsel of its selection, and Mortgagor will deliver to Mortgagee all instruments requested by Mortgagee from time to time to permit or facilitate such participation. In the event of any such condemnation proceedings, the award or compensation payable is hereby assigned to and shall be paid to Mortgagee, and Mortgagee shall not be obligated to question the amount of any such award or compensation. At Mortgagee's option, all or any portion of the award or compensation shall be applied toward payment of the Obligations (in any order of priority Mortgagee may deem appropriate in its sole discretion) or shall be disbursed to Mortgagor from time to time for the restoration of the Security Property in Page 22 of 36 Book 9117 Pg 1843 (Space reserved for Clerk of Court) the same manner as disbursements under a construction loan; Mortgagee shall not be obligated to see to the proper application by Mortgagor of any such disbursement. Notwithstanding any such condemnation award or compensation or the rate of interest payable thereon, Mortgagor shall continue to pay interest on the Obligations except to the extent that Mortgagee shall have actually received and applied the award or compensation against the Obligations. If all of the Security Property is so taken but the award or compensation is insufficient to pay the Obligations in full, then at Mortgagee's option the unpaid balance shall be immediately due and payable. All proceeds paid under any condemnation will be paid to Mortgagee. However, notwithstanding the foregoing to the contrary, Mortgagee agrees that such proceeds may be used for restoration of damaged Improvements if the following conditions are fulfilled: 1. No Event of Default has occurred or is continuing under this Mortgage, and no event has occurred which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default under this Mortgage. 2. Such restoration can be fully accomplished within one hundred eighty (180) days. 3. Such restoration will be performed in accordance with plans and specifications approved in writing by Mortgagee. 4. The cost of restoration does not exceed thirty percent (30%) of the outstanding Loan balance. Additionally, Mortgagee must be given satisfactory evidence that, by expenditure of the condemnation proceeds, the damage to the Security Property can be fully repaired, free and clear of all liens, except for the lien of this Mortgage. 5. No waiver of payments due under the Note or other Loan Documents occurs while the Security Property is being restored. If all of the above conditions are not satisfied, the proceeds will be applied to the outstanding principal balance of the Loan with all terms (including, but not limited to, repayments terms) remaining the same. If the above conditions are met, the condemnation proceeds received, after deducting therefrom any expenses incurred in the collection thereof, shall be disbursed periodically in accordance with procedures established by Mortgagee as restoration work is completed. 20. DOCUMENTARY STAMPS AND INTANGIBLE TAXES. If at any time the state in which the Security Property is located shall determine that an intangible tax, documentary tax or other similar tax shall be paid in connection with this Mortgage is insufficient or that additional Page 23 of 36 Book 9117 Pg 1844 (Space reserved for Clerk of Court) intangible or other tax should be paid, then Mortgagor shall pay for the same, together with any interest or penalties imposed in connection with such determination, and Mortgagor hereby agrees to indemnify and hold Mortgagee harmless therefrom. If any such sums shall be advanced by Mortgagee, they shall bear interest, shall be paid and shall be secured as provided in paragraph 14. 21. NO SHIFT OF TAXES. If any federal, state or local law shall hereafter be enacted which (a) for the purpose of ad valorem taxation shall deduct the amount of any lien from the value of real property, or (b) shall impose on Mortgagee the payment of all or any part of the taxes or assessments or charges required to be paid hereunder by Mortgagor, or (c) shall change in any way the laws for the taxation of mortgages or debts secured thereby or Mortgagee's interest in the Security Property, or shall change the manner of collecting such taxes, so as to affect this Mortgage or the debt secured hereby or the holder thereof, then upon demand Mortgagor shall pay such taxes or assessments or charges imposed on Mortgagee or shall reimburse Mortgagee therefor; provided, however, that if in the opinion of Mortgagee's counsel the requirement that Mortgagor make such payments might be unlawful or might result in the imposition of interest in excess of the maximum lawful rate, then Mortgagee shall have the right to declare the Obligations to be due and payable thirty (30) days after notice thereof to Mortgagor. 22. UNIFORM COMMERCIAL CODE. This Mortgage is a "security agreement" and creates a "security interest" in favor of Mortgagee as a "secured party" with respect to all property included in the Security Property which is covered by the Uniform Commercial Code, including but not limited to the Collateral and Intangibles. Upon default under this Mortgage or any other Loan Document, Mortgagee may at its option pursue any and all rights and remedies available to a secured party with respect to any portion of the Security Property so covered by the Uniform Commercial Code, or Mortgagee may at its option proceed as to all or any part of the Security Property in accordance with Mortgagee's rights and remedies in respect of real property to the extent permitted by law. Mortgagor and Mortgagee agree that the mention of any portion of the Security Property in a financing statement filed in the records normally pertaining to personal property shall never derogate from or impair in any way their declared intention that all items of collateral described in this Mortgage are part of the real estate encumbered hereby to the fullest extent permitted by law, regardless of whether any such item is physically attached to the Improvements or whether serial numbers are used for the better identification of certain items of Collateral. Specifically, the mention in any such financing statement of (a) the rights in or the proceeds of any insurance policy, (b) any award in eminent domain proceedings for a taking or for loss of value, (c) Mortgagor's interest as lessor in any present or future Lease or right to income growing out of the use or occupancy of the Land or Improvements, whether pursuant to Lease or otherwise, or (d) any other item included in the definition of the Security Property shall never be construed to alter any of the rights of Mortgagee as determined by this Mortgage or to impugn the priority of Mortgagee's lien and security interest with respect to the Security Page 24 of 36 Book 9117 Pg 1845 (Space reserved for Clerk of Court) Property; such mention in a financing statement is declared to be for the protection of Mortgagee in the event any court shall hold that notice of Mortgagee's priority of interest with respect to any such portion of the Security Property must be filed in the Uniform Commercial Code records in order to be effective against or to take priority over any particular class of persons, including but not limited to the federal government and any subdivision or instrumentality of the federal government. 23. PAYMENTS TO MORTGAGEE. Any payment made in accordance with the terms of the Loan Documents by any person at any time liable for the payment of the whole or any part of the Obligations, by any subsequent owner of the Security Property, or by any other person whose interest in the Security Property might be prejudiced in the event of a failure to make such payment (or by any partner, stockholder, officer or director of any such person), shall be deemed, as between Mortgagee and all such persons who at any time may be so liable or may have an interest in the Security Property, to have been made on behalf of all such persons. Mortgagee's acceptance of any payment which is less than full payment of all amounts then due and payable to Mortgagee, even if made by one other than the person liable therefor, shall not constitute a waiver of any rights or remedies of Mortgagee. 24. CONSENT TO CHANGES. Mortgagor consents and agrees that, at any time and from time to time without notice, (a) Mortgagee and the owner(s) of any collateral then securing the Obligations may agree to release, increase, change, substitute or exchange all or any part of such collateral, and (b) Mortgagee and any person(s) then primarily liable for the Obligations may agree to renew, extend or compromise the Obligations in whole or in part or to modify the terms of the Obligations in any respect whatsoever. Mortgagor agrees that no such release, increase, change, substitution, exchange, renewal, extension, compromise or modification, no sale of the Security Property or any part thereof, no forbearance on the part of Mortgagee, nor any other indulgence given by Mortgagee (whether with or without consideration) shall relieve or diminish in any manner the liability of any Obligor, nor adversely affect the priority of this Mortgage, nor limit or prejudice or impair any right or remedy of Mortgagee. All Obligors and all those claiming by, through or under any of them hereby jointly and severally waive any and all right to prior notice of, and any and all defenses or claims based upon, any such release, increase, change, substitution, exchange, renewal, extension, compromise, modification, sale, forbearance or indulgence. 25. GOVERNING LAW. This Mortgage shall be governed by, and construed and enforced in accordance with, the laws of the State of Florida, excepting only that federal law shall govern to the extent it may permit Mortgagee to charge, from time to time, interest on the Obligations at a rate higher than may be permissible under applicable law. 26. NO USURY. All amounts paid on this Note which are deemed interest shall, for the purpose of the calculation provided for herein, be deemed and considered to be spread over the Page 25 of 36 Book 9117 Pg 1846 (Space reserved for Clerk of Court) entire period from the date hereof to the date of final payment of the Note. In no event shall any agreed to or actual exaction charged, reserved or taken as an advance or forbearance by Mortgagee as consideration for the Obligations exceed the limits (if any) imposed or provided by the law applicable from time to time to the Obligations for the use or detention of money or for forbearance in seeking its collection; Mortgagee hereby waives any right to demand any such excess. In the event that the interest provisions of the Loan Documents or any exactions required thereunder shall result at any time or for any reason in an effective rate of interest that transcends the maximum interest rate permitted by applicable law (if any), then without further agreement or notice the obligation to be fulfilled shall automatically be reduced to such limit and all sums received by Mortgagee in excess of those lawfully collectible as interest shall be applied against the principal of the Obligations immediately upon Mortgagee's receipt thereof, with the same force and effect as though the payor had specifically designated such extra sums to be so applied to principal and Mortgagee had agreed to accept such extra payment(s) as a premium-free prepayment or prepayments. 27. SEVERABILITY. Any provision of this Mortgage which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction only, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 28. INSPECTION AND WATCHMEN. Mortgagee and any persons authorized by Mortgagee shall have the right, from time to time at the discretion of Mortgagee, to enter and inspect the Security Property. At any time after default under the terms of this Mortgage or any other Loan Document, if any of the Improvements or Collateral shall be unprotected or unguarded, or if any of the Improvements shall be allowed to remain vacant or deserted, then at its option Mortgagee may employ watchmen for the Security Property and expend any monies deemed necessary by Mortgagee to protect the same from waste, vandalism and other hazards, depredation or injury, and any sums expended by Mortgagee for such purpose shall bear interest, shall be paid and shall be secured as provided in paragraph 14. 29. OPERATING STATEMENTS. Mortgagor will keep accurate books and records in accordance with accounting principles consistently applied in which full, true and correct entries shall be promptly made as to all operations on the Security Property. Within 90 days after the end of each fiscal year, Mortgagor will furnish Mortgagee with annual operating and financial statements covering the Security Property, together with a rent roll, all certified by a principal of Mortgagor, and all in form satisfactory to Mortgagee. Mortgagor shall be charged a fee of Five Hundred Dollars ($500) for the failure to provide any of the foregoing within the prescribed time period, provided, however, that Mortgagee shall give Mortgagor fifteen (15) days' notice and opportunity to provide the foregoing before imposing such fee. Page 26 of 36 Book 9117 Pg 1847 (Space reserved for Clerk of Court) 30. INDEMNITY. In the event Mortgagee shall be named as a party to any lawsuit brought at any time against Mortgagor or with respect to the Security Property or this Mortgage or the Obligations, or if any claim shall be made against Mortgagee in connection with the Security Property, then regardless of the merits of such lawsuit Mortgagor shall defend Mortgagee and indemnify and hold Mortgagee fully harmless from any and all claims, demands, damages, liabilities, judgments, penalties, losses, costs, expenses and attorney's fees arising out of or resulting from any such lawsuit or any appeal in connection therewith. 31. NO PARTNERSHIP. Mortgagor and Mortgagee hereby acknowledge and agree that Mortgagee is not, has never been, and shall not be deemed a partner or joint venturer of Mortgagor or any other Obligor with respect to the Security Property, and that the relationship of Mortgagee to said parties is, has always been, and shall continue to be strictly the role of a lender. Mortgagor hereby (a) waives and relinquishes any and all claims, demands, counterclaims and/or defenses alleging the existence of any partnership, joint venture or other fiduciary relationship between any of them and Mortgagee, and (b) agrees to indemnify and hold Mortgagee harmless against any and all losses, damages, penalties, fines, forfeitures, legal fees and related costs, judgments, and any other fees, costs and expenses that Mortgagee may sustain as the result of any such allegation by any person whomsoever. 32. ENVIRONMENTAL LAWS; GOVERNMENTAL REQUIREMENTS. Mortgagor represents and warrants to Mortgagee that Mortgagor has undertaken an appropriate inquiry into the previous ownership and uses of the Security Property consistent with good commercial or customary practice in an effort to minimize liability with respect to any Hazardous Substances (as hereinafter defined). To the best of Mortgagor's knowledge and except as disclosed in the environmental report provided by Mortgagor to Mortgagee, or as otherwise disclosed to Mortgagee in writing, Mortgagor represents and warrants that (i) neither the Security Property nor the operations or activities conducted thereon violate any local, state or federal law, rule or regulation or duty under applicable common law pertaining to human health, safety, protection of the environment, natural resources, conservation, waste management or pollution (the "Environmental Laws"), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. /Section/9601 ET SEQ.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. /Section/6901 ET SEQ.), the Clean Air Act (42 U.S.C. /Section/7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. /Section/1251 ET SEQ.), the Emergency Planning and Community-Right-to-Know Act (42 U.S.C. /Section/11001 ET SEQ.), the Endangered Species Act (16 U.S.C. /Section/1531 et seq.), the Toxic Substances Control Act (15 U.S.C. /Section/2601 et seq.), the Occupational Safety and Health Act (29 U.S.C. /Section/651 ET SEQ.) and the Hazardous Materials Transportation Act (49 U.S.C. /Section/1801 ET SEQ.), regulations promulgated pursuant to said laws, all as amended from time to time the Federal Water Pollution Control Act (33 U.S.C. /Section/1251 ET SEQ.); (ii) no hazardous substances, toxic substances or harmful substances, hazardous wastes, hazardous materials, pollutants or contaminants (including, without limitation, asbestos or asbestos-containing materials, lead based paint, polychlorinated biphenyls, petroleum or Page 27 of 36 Book 9117 Pg 1848 (Space reserved for Clerk of Court) petroleum products or byproducts, flammable explosives, radioactive materials, or infectious substances) or any other substances or materials which are included under or regulated by the Environmental Laws (collectively, "Hazardous Substances") are located on, in or under or have been handled, generated, stored, processed or disposed of on or released or discharged from the Security Property (including underground contamination), except for those substances used by Mortgagor or any tenant under a Lease in the ordinary course of businesses in compliance with all Environmental Laws and under circumstances where no liability under any Environmental Law could reasonably be anticipated; (iii) the Security Property is presently free from contamination by Hazardous Substances and that the Security Property and the activities conducted thereon do not pose any significant hazard to human health or the environment, and (iv) the Security Property complies in all respects with all laws applicable to access to handicapped or disabled persons, including, without limitation, the "Americans with Disabilities Act" and any current or future governmental law, regulation or ruling applicable to or, if applicable, concerning lead-based paint ("Governmental Requirements"). Mortgagor shall not cause or permit the Security Property to be used for the generation, handling, storage, transportation, disposal or release of any Hazardous Substances except as exempted or permitted under applicable Environmental Laws, and Mortgagor shall not cause or permit the Security Property or any activities conducted thereon to be in violation of any applicable Environmental Laws or Governmental Requirements. Mortgagor agrees to indemnify Mortgagee and hold Mortgagee and its directors, officers, employees, successors and assigns harmless from and against any and all claims, losses, damages (including all foreseeable and unforeseeable consequential damages), liabilities, fines, penalties, charges, interest, administrative or judicial proceedings and orders, judgments, remedial action requirements, enforcement actions of any kind, and all costs and expenses incurred in connection therewith (including without limitation attorneys' fees and expenses), directly or indirectly resulting in whole or in part from the violation of any Environmental Laws or Governmental Requirements applicable to the Security Property or any activity conducted thereon, or from any past, present or future use, generation, handling, storage, transportation, disposal or release of Hazardous Substances at or in connection with the Security Property, or any decontamination, detoxification, closure, cleanup or other remedial measures required with respect to the Security Property under any Environmental Laws. All sums paid and costs incurred by Mortgagee with respect to the foregoing matters shall bear interest, shall be paid and shall be secured as provided in paragraph 14. This indemnity shall survive the full payment and performance of the Obligations and the satisfaction of this Mortgage, and it shall inure to the benefit of any transferee of title to the Security Property through foreclosure of this Mortgage or through deed in lieu of foreclosure. 33. SUBROGATION. Mortgagee is hereby subrogated (a) to the lien(s) of each and every mortgage, lien or other encumbrance on all or any part of the Security Property which is fully or partially paid or satisfied out of the proceeds of the Obligations, and (b) to the rights of the owner(s) and holder(s) of any such mortgage, lien or other encumbrance. The respective rights under and priorities of all such mortgages, liens or other encumbrances shall be preserved and Page 28 of 36 Book 9117 Pg 1849 (Space reserved for Clerk of Court) shall pass to and be held by Mortgagee as security for the Obligations, to the same extent as if they had been duly assigned by separate instrument of assignment and notwithstanding that the same may have been canceled and satisfied of record. 34. REPRESENTATIONS AND WARRANTIES. In order to induce Mortgagee to extend the credit secured hereby, Mortgagor represents and warrants that: (a) except as previously or concurrently disclosed in writing to Mortgagee, there are no actions, suits or proceedings pending or threatened against or affecting any Obligor or any portion of the Security Property or involving the validity or enforceability of this Mortgage or the priority of its lien, before any court of law or equity or any tribunal, administrative board or governmental authority, and no Obligor is in default under any other indebtedness or with respect to any order, writ, injunction, decree, judgment or demand of any court or any governmental authority; (b) the execution and delivery of this Mortgage and all other Loan Documents do not and shall not (i) violate any provisions of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award applicable to any Obligor, nor (ii) result in a breach of, or constitute a default under, any indenture, bond, mortgage, Lease, instrument, credit agreement, undertaking, contract or other agreement to which any Obligor is a party or by which any of them or their respective properties may be bound or affected; (c) this Mortgage and all other Loan Documents constitute valid and binding obligations of the Obligor(s) executing the same, enforceable against such Obligor(s) in accordance with their respective terms; (d) all financial statements of the Obligors previously delivered to Mortgagee have been prepared in accordance with accounting principles consistently applied and fairly present the correct respective financial conditions of the Obligors as of their respective dates, and the foregoing shall be true with respect to all financial statements of the Obligors delivered to Mortgagee hereafter; (e) there is no fact that the Obligors have not disclosed to Mortgagee in writing that could materially adversely affect their respective properties, businesses or financial conditions or the Security Property or any other collateral for the Obligations; (f) the Obligors have duly obtained all permits, licenses, approvals and consents from, and made all filings with, any governmental authority (and the same have not lapsed nor been rescinded or revoked) which are necessary in connection with the execution or delivery or enforcement of this Mortgage or any other Loan Document or the performance of any Obligor's obligations thereunder; (g) the Land and Improvements fully comply with all applicable restrictive covenants, zoning ordinances, subdivision and building codes, applicable health and environmental laws and regulations and, to the best of Grantor's knowledge, all other ordinances, orders and requirements issued by any state, federal or municipal authorities having jurisdiction over the Security Property; (h) the Land is served by electric, gas, sewer, water, telephone and other utilities required for its intended use and final certificates of occupancy have been or prior to occupancy will be issued by such governmental authorities as have jurisdiction over the construction and use of the Security Property; (i) the proceeds of the Obligations are not being used to purchase or carry any "margin stock" within the meaning of Regulation "U" of the Board of Governors of the Federal Reserve System, nor to extend credit to others for that purpose; and (j) each extension of credit secured by this Mortgage is exempt from the provisions of the Page 29 of 36 Book 9117 Pg 1850 (Space reserved for Clerk of Court) Federal Consumers Credit Protection Act (Truth-in-Lending Act) and Regulation "Z" of the Board of Governors of the Federal Reserve System, because Mortgagor is a person fully excluded therefrom, and/or because said extension of credit is only for business or commercial purposes of Mortgagor and is not being used for personal, family, household or agricultural purposes; (k) except for the security interest granted hereby, Mortgagor is, and as to portions of the Collateral and Intangibles to be acquired after the date hereof will be, the sole owner (or lessee in the case of Collateral leased by Mortgagor) of the Collateral and Intangibles, free from any adverse lien, security interest, encumbrance or adverse claim thereon of any kind whatsoever; (l) the Collateral will be kept on or at the Land and Improvements; and (m) Mortgagor has its principal place of business in the State where the Land is located at the address set forth at the beginning of this Mortgage and Mortgagor will immediately notify Mortgagee in writing of any change in its principal place of business as set forth in the beginning of this Mortgage. 35. BUSINESS ENTITY. If Mortgagor is a corporation, partnership or other business entity, or if Mortgagor consists of more than one person and any such person is such a business entity, then each such business entity hereby represents and warrants as to itself, in order to induce Mortgagee to extend the credit secured hereby, that: (a) it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its creation and the state in which the Security Property is located; (b) it has all requisite power and authority (corporate or otherwise) to conduct its business, to own its properties, to execute and deliver this Mortgage and all other Loan Documents executed by it, and to perform its obligations under the same; (c) its execution, delivery and performance of this Mortgage and all other such Loan Documents have been duly authorized by all necessary actions (corporate or otherwise) and do not require the consent or approval of its stockholders (if a corporation) or of any other person or entity whose consent has not been obtained; and (d) the execution, delivery and performance of this Mortgage and all other Loan Documents do not and shall not conflict with any provision of its by-laws or articles of incorporation (if a corporation), partnership agreement (if a partnership) or trust agreement or other document pursuant to which it was created and exists. 36. RIGHTS NOT IMPAIRED. The lien, security interest and other security rights of the Mortgagee hereunder shall not be impaired by any indulgence, moratorium or release granted by the Mortgagee, including, but not limited to: (a) any renewal, extension or modification which the Mortgagee may grant with respect to any of the Obligations; (b) any surrender, compromise, release, renewal, extension, exchange or substitution which the Mortgagee may grant in respect of the Security Property, or any part thereof or any interest therein; or (c) any release or indulgence granted to any endorser, guarantor or surety of any of the Obligations. In the event the ownership of the Security Property or any part thereof becomes vested in a person or entity other than Mortgagor, the Mortgagee may, without notice to Mortgagor, deal with such successor or successors in interest with reference to this Mortgage and to the indebtedness secured hereby in the same manner as with Mortgagor, without in any way discharging Mortgagor's liability Page 30 of 36 Book 9117 Pg 1851 (Space reserved for Clerk of Court) hereunder or for the payment of the indebtedness secured hereby. No sale of the Security Property, no forbearance on the part of the Mortgagee and no extension of the time for the payment of the indebtedness secured hereby given by the Mortgagee shall operate to release, discharge, modify, change or affect, in whole or in part, the liability of Mortgagor hereunder or for the payment of the indebtedness secured hereby or the liability of any other person hereunder or for the payment of the indebtedness secured hereby, except as agreed to in writing by the Mortgagee. 37. ERISA. Mortgagor covenants and agrees that: (a) it shall not engage in any transaction which would cause any obligation, or action taken or to be taken, hereunder (or the exercise by Mortgagee of any of its rights under the Note, this Mortgage and the Loan Documents) to be a non-exempt (under a statutory or administrative class exemption) prohibited transaction under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). (b) Mortgagor further covenants and agrees to deliver to Mortgagee such certifications or other evidence from time to time throughout the term of this Mortgage, as requested by Mortgagor in its sole discretion, that (i) Mortgagor is not an "employee benefit plan" as defined in Section 3(32) of ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the meaning of Section 3(3) of ERISA; (ii) Mortgagor is not subject to state statutes regulating investments and fiduciary obligations with respect to governmental plans; and (iii) one or more of the following circumstances is true: (i) Equity interests in Mortgagor are publicly offered securities, within the meaning of 29 C.F.R. /Section/2510.3-101(b)(2); (ii) Less than 25 percent of each outstanding class of equity interests in Mortgagor are held by "benefit plan investors" within the meaning of 29 C.F.R. /Section/2510.3-101(f)(2); or (iii) Mortgagor qualifies as an "operating company" or a "real estate operating company" within the meaning of 29 C.F.R. /Section/2510.3-101(c) or (e) or an investment company registered under The Investment Company Act of 1940. 38. FUTURE ADVANCES. This Mortgage shall secure such future advances as may be made by Mortgagee, at its option and for any purpose, within twenty (20) years from the date of this Mortgage. All such future advances shall be included within the term "Obligations", shall be secured to the same extent as if made on the date of the execution of this Mortgage, and shall take priority as to third persons without actual notice from the time this Mortgage is filed for Page 31 of 36 Book 9117 Pg 1852 (Space reserved for Clerk of Court) record as provided by law. The total amount of indebtedness secured by this Mortgage may decrease or increase from time to time, but the total unpaid balance so secured at any one time shall not exceed the maximum principal amount of $10,000,000.00 plus interest and any disbursements made for the payment of taxes, levies or insurance on the Security Property, with interest on those disbursements, plus any increase in the principal balance as the result of negative amortization or deferred interest. Without the prior written consent of Mortgagee, which Mortgagee may grant or withhold in its sole discretion, Mortgagor shall not file for record any notice limiting the maximum principal amount that may by secured by this Mortgage to a sum less than the maximum principal amount set forth in this paragraph. 39. OTHER INDEBTEDNESS SECURED. In addition to the specific indebtedness identified herein above, the Obligations also include, and this Mortgage also secures, all Other Indebtedness (as defined in the preliminary recitals of this Mortgage), of Mortgagor to Mortgagee whether or not presently contemplated by the parties, direct or indirect, otherwise secured or unsecured, joint or several, absolute or contingent, due or to become due, whether for payment or performance, now existing or hereafter arising, regardless of how the same arise or by what instrument, agreement or book account they may be evidenced or whether evidenced by any instrument, agreement or book account, including without limitation all loans (including any loan by renewal), all indebtedness, all undertakings to take or refrain from taking any action, all indebtedness, liabilities or obligations owing from Mortgagor to others that Mortgagee may have obtained by purchase, negotiation, discount, assignment or otherwise, and all interest, taxes, fees charges, expenses, and attorney's fees chargeable to Mortgagor or incurred by Mortgagee hereunder or under any other document or instrument delivered in connection herewith. 40. INTERPRETATION. Whenever the context of any provision of this Mortgage shall so require, words in the singular shall include the plural, words in the plural shall include the singular, and pronouns of any gender shall include the other genders. Captions and headings in this Mortgage are for convenience only and shall not affect its interpretation. All references in this Mortgage to Exhibits, Schedules, paragraphs and subparagraphs refer to the respective subdivisions of this Mortgage, unless the reference expressly identifies another document. Wherever used in this Mortgage, unless the context clearly indicates a contrary intention or unless this Mortgage specifically provides otherwise: (a) the term "Mortgagor" shall include any subsequent owner(s) of the Security Property; (b) the term "Mortgagee" shall include any subsequent holder(s) of this Mortgage; (c) the term "Obligors" shall include any permitted successor(s) or permitted assign(s) of any Obligor; (d) the term "Obligations" shall include any modification of any Obligations from time to time and any future advances or other sums payable to Mortgagee under this Mortgage; (e) the term "Loan Documents" shall include any note or other instrument evidencing or pertaining to any future advance hereunder and any renewals, extensions or modifications of any Loan Document; and (f) the term "person" shall mean "an individual, corporation, partnership, limited partnership, limited liability company, unincorporated association, joint stock corporation, joint venture or other legal entity". Page 32 of 36 Book 9117 Pg 1853 (Space reserved for Clerk of Court) 41. MISCELLANEOUS. Time is of the essence of all provisions of this Mortgage. Mortgagor hereby waives all right of homestead exemption (if any) in the Security Property. If Mortgagor consists of more than one person, the obligations and liabilities of each such person hereunder shall be joint and several, and wherever the term "Mortgagor" is used it shall be deemed to refer to such persons jointly and severally. If Mortgagor is a partnership, then all general partners in Mortgagor shall be liable jointly and severally for the covenants, agreements, undertakings and obligations of Mortgagor in connection with the Obligations, notwithstanding any contrary provision of the partnership laws of the state in which the Security Property is located. This Mortgage shall be binding upon the parties hereto and their respective heirs, personal representatives, successors and assigns, and it shall inure to the benefit of Mortgagee and its successors and assigns and to the benefit of Mortgagor and Mortgagor's heirs, personal representatives and permitted successors and assigns. This Mortgage cannot be changed except by an agreement in writing, signed by the party against whom enforcement of the change is sought. 42. LIMITATION OF LIABILITY. Mortgagor shall not be personally liable for the payment or performance of the Obligations, and Mortgagee shall look solely to the Security Property and other security given for the Obligations to satisfy such Obligations. Notwithstanding the foregoing, Mortgagor and Guarantor shall be and remain fully and personally liable for the payment to Mortgagee for the following, plus reasonable attorneys' fees and costs: (1) damages suffered by Mortgagee as a result of (a) fraud or misrepresentation by Mortgagor or any other person acting on behalf of or at the direction of Mortgagor in connection herewith, (b) intentional waste of any of the Security Property, including the removal of any property or fixtures from the Security Property which are not replaced by similar property or fixtures of equal or greater value, (c) the amendment, modification or termination of any lease (except as permitted by subparagraph 7(a) above) of any of the Security Property in violation of any provision of the Loan Documents, (d) failure to observe and comply with all laws, ordinances and regulations applicable to any of the Security Property, (e) failure to comply with any of the obligations of Mortgagor under any of the Loan Documents or indemnity agreements pertaining to environmental or handicapped access matters, (f) the sale or further encumbrance of any of the Security Property in violation of any provision of the Loan Documents, (g) failure to insure the Security Property in accordance with the terms of the Loan Documents, (h) failure to pay real estate taxes and assessments and ground lease payments (if applicable) which accrue prior to Mortgagee taking possession of the Security Property or failure to make sufficient funds available through escrow payments to Mortgagee to pay such taxes, assessments and ground lease payments, or (i) any of the Security Property is lost because of forfeiture to any governmental agency or third party unrelated or not affiliated with Mortgagee for any reason; (2) any rents, issues or profits of any of the Security Property collected by or on behalf of Mortgagor which are not applied to payment of the Obligations or paid to third parties not affiliated with Mortgagor for reasonable operating costs related to the Security Property (including real estate taxes and the establishment of a reasonable reserve for that purpose) after an uncured default or an uncured Event of Default Page 33 of 36 Book 9117 Pg 1854 (Space reserved for Clerk of Court) or any event or circumstances that with the passage of time, the giving of notice, or both, could constitute an Event of Default; (3) any security deposits or other similar deposits received from tenants or occupants of the Security Property, to the extent that funds for such security deposits are not obtained by Mortgagee from Mortgagor; (4) any sums expended by Mortgagee in fulfilling the obligations of Mortgagor, as lessor, under any lease of any of the Security Property, excluding obligations relating to maintenance of the Security Property and liabilities occurring after Mortgagor has given up possession of the Security Property to Mortgagee; (5) any insurance proceeds, condemnation awards or proceeds resulting from any sale of any of the Security Property which are misapplied or misappropriated by or on behalf of Mortgagor or which, under the terms of the Loan Documents, should have been paid to Mortgagee; or (6) the amount of any valid unpaid mechanic's liens, materialmen's liens or other liens, whether or not similar, arising due to work performed or materials furnished in connection with any of the Security Property which could create liens on any portion of the Security Property. None of the foregoing shall limit, impair or affect (i) the obligations of Guarantor under its guaranties given in connection herewith; or (ii) the right of Mortgagee to take any action as may be necessary or desirable to realize upon any security given to secure the Obligations; or (iii) the rights of Mortgagee to foreclose this Mortgage, obtain a judgment of foreclosure against Mortgagor, and enforce Mortgagee's rights hereunder and under the other Loan Documents. Page 34 of 36 Book 9117 Pg 1855 (Space reserved for Clerk of Court) WITNESS the due execution hereof as of the date first written above. Signed, sealed and delivered in the EQUITY ONE (ATLANTIC VILLAGE) presence of these witnesses: INC., a Florida corporation Witness: /s/ ANA PEROZO By: /s/ DORON VALERO ---------------------------- -------------------------- Print Name: ANA PEROZO Name: Doron Valero Title: Vice President Witness: /s/ ALAN J. MARCUS --------------------------- Print Name: ALAN J. MARCUS [CORPORATE SEAL] STATE OF FLORIDA ) ) SS. COUNTY OF MIAMI-DADE ) The foregoing Mortgage, Security Agreement and Assignment of Leases was acknowledged before me this 30th day of October 1998, by Doron Valero, as Vice President of EQUITY ONE (ATLANTIC VILLAGE) INC., a Florida corporation, on behalf of the corporation. He personally appeared before me and is personally known to me or produced ___________________________ as identification. Notary: /s/ ALAN J. MARCUS ------------------------------- Print Name: ALAN J. MARCUS Notary Public, State of FLORIDA My commission expires: AUGUST 13, 2001 [NOTARY SEAL] Page 35 of 36 Book 9117 Pg 1856 A part of the Castro Y Ferrer Grant, Section 38, Township 2 South, Range 29 East, Duval County, Florida, more particularly described as follows: For a point of beginning, commence at the Southeast corner of Lot 1, Block 26, Replat of Part of Royal Palms Unit Two A, as recorded in Plat Book 31, Pages 16, 16A, 16B, 16C and 16D of the current public records of said County; thence South 07/degrees/16'02" East, along the Westerly right of way line of Royal Palms Drive, as established as a 60 foot right of way by Official Records Volume 1819, Page 52 of said public records, a distance of 20.42 feet; thence North 85/degrees/37'27" West, along the North line of the lands as described in Official Records Volume 2010, Page 42 of said public records, a distance of 80.29 feet; thence South 00/degrees/41'22" East, along the West line of said lands as described in Official Records Volume 2010, Page 42, a distance of 214.92 feet; thence North 89/degrees/18'38" East, along the South line of said lands as described in Official Records Volume 2010, Page 42, a distance of 147.68 feet to a point on the aforementioned Westerly right of way line of Royal Palms Drive, said right of way line being a curve concave Northeasterly having a radius of 515 feet; thence Southeasterly along the arc of said curve, a chord bearing of South 44/degrees/14'11" East and a chord distance of 236.50 feet to the point of tangency of said curve; thence South 57/degrees/31'02" East, continuing along said Westerly right of way line, a distance of 87.05 feet to the point of curve of a curve concave Southwesterly having a radius of 113.55 feet; thence Southeasterly along the arc of said curve, a chord bearing of South 52/degrees/13'10" East and a chord distance of 20.97 feet; thence South 89/degrees/18'38" West, along the North line of the lands as described in Official Records Volume 3397, Page 69 a distance of 126.77 feet; thence South 00/degrees/41'22" East, along the West line of said lands, a distance of 62.00 feet; thence North 89/degrees/18'38" East, along the South line of said lands as described in Official Records Volume 3397, Page 69, a distance of 160.00 feet to a point on the aforementioned Westerly right of way line of Royal Palms Drive, said point being on a curve concave Southwesterly having a radius of 113.55 feet; thence Southerly along the arc of said curve, a chord bearing of South 05/degrees/45'42" East and a chord distance of 20.08 feet to the point of tangency of said curve; thence South 89/degrees/18'38" West, along the North line of the lands as described in Official Records Volume 2219, Page 306 and along the North line of the lands as described in Official Records Volume 2843, Page 750 and along the North line of the lands as described in Official Records Volume 3231, Page 773, a distance of 440.00 feet; thence South 00/degrees/41'22" East, along the West line of the lands as described in Official Records Volume 3231, Page 773, a distance of 160.00 feet; thence South 89/degrees/18'38" West, along the North right of way line of Atlantic Boulevard (State Road A-1-A) as now established as a 100 foot right of way, a distance of 569.18 feet; thence North 07/degrees/16'02" West, a distance of 160.00 feet; thence South 89/degrees/18'38" West, parallel with said North right of way line of Atlantic Boulevard, a distance of 201.42 feet to the Easterly right of way line of Aquatic Drive, as established by Official Records Volume 3278, Pages 176 and 177 of said public records; thence North 11/degrees/42'30" West, along said Easterly right of way line, a distance of 390.26 feet; thence North 82/degrees/43'58" East, along the South line of the lands as described in Official Records Volume 2411, Page 1171, a distance of 262.48 feet; thence North 13/degrees/54'50" East, along the Easterly line of said lands as described in Official Records Volume 2411, Page 1171 and its Northeasterly extension, a distance of 192.81 feet; thence South 85/degrees/37'27" East, along the Southerly line of aforementioned Block 26, Replat of Part of Royal Palms Unit Two A, a distance of 37.52 feet; thence South 07/degrees/16'02" East, along the West line of the lands as described in Official Records Volume 1471, Page 472, a distance of 35.00 feet; thence South 85/degrees/37'27" East, along the South line of said lands, a distance of 60.00 feet; thence North 07/degrees/16'02" West, along the East line of said lands as described in Official Records Volume 1471, Page 472, a distance of 35.00 feet; thence South 85/degrees/37'27" East, along the aforementioned Southerly line of Block 26, a distance of 541.85 feet to the Point of Beginning. TOGETHER WITH the non-exclusive right to drain surface water and run-off from the aforementioned real property (hereinafter called the "Shopping Center Property") over, across and through the drainage ditch and facilities constructed along and within the strip of land being approximately 40 feet in width along the Western boundary of the property as set forth and reserved in Official Records Volume 5683, Page 362. EXHIBIT A Page 36 of 36 EX-27.1 5
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q. 3-MOS DEC-31-1998 JUL-01-1998 SEP-30-1998 4,665,000 1,655,000 1,141,000 0 0 0 149,724,000 9,272,000 152,035,000 0 0 0 0 102,000 80,452,000 152,035,000 5,834,000 5,834,000 0 0 2,620,000 0 1,123,000 2,091,000 0 0 0 0 0 2,091,000 .20 .20
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