PROMISSORY NOTE
$3,500,000.00 January 28, 1998
FOR VALUE RECEIVED, and intending to be legally bound
hereby, MARK CENTERS LIMITED PARTNERSHIP (hereinafter called
"Maker"), promises to pay to the order of ROYAL BANK OF
PENNSYLVANIA (hereinafter called "Bank"), the sum of THREE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000.00), with
interest as hereinafter provided on the unpaid principal balance
until paid, lawful money of the United States of America in
immediately available funds, without setoff or defalcation, at
the offices of Bank at 732 Montgomery Avenue, Narberth,
Pennsylvania 19072 or such other address as Bank may designate by
written notice to Maker.
INTEREST: The unpaid balance shall bear interest as
follows:
A floating rate per annum ("Floating Rate") equal to one and one-
half percentage points (1.50%) in excess of the Prime Rate (as
hereinafter defined). As used herein, "Prime Rate" shall mean
the rate publicly announced by Bank from time to time as its
prime rate. The Prime Rate may or may not be the lowest rate of
interest charged to Bank s commercial borrowers. Interest shall
be calculated on the basis of a 360 day year by multiplying the
interest rate in effect by a fraction, the numerator of which is
the actual number of days in the current billing period and the
denominator of which is 360.
PAYMENT TERMS: The principal sum and interest shall be paid
by Maker to Bank as follows: Interest shall be due and payable
commencing on March 1, 1998, and continuing on the first day of
each month thereafter until February 1, 1999 (the "Maturity
Date"), on which date all outstanding principal and accrued
interest shall be due and payable in full. Maker shall be
entitled to extend a Maturity Date for two (2) additional periods
of six (6) months each; provided, however, that no Event of
Default has occurred and is continuing. In the event Maker
elects to extend the Maturity Date, interest shall continue to be
due and payable on the first day of each month. Maker may
exercise these extension options by written notice to Bank, not
less than thirty (30) days prior to its then current Maturity
Date, accompanied by an extension fee in an amount of $35,000.00.
<PAGE 2>
If any payment hereunder is not paid when due and continues
unpaid for a period of six (6) days thereafter, Maker agrees to
pay to Bank, in addition to all amounts of principal and
interest, a late charge of five cents ($.05) for each one dollar
($1.00) so overdue, or such lesser late charge as may be required
by law, but in no event shall the late charge be less than
$25.00. The late charge is imposed for the purpose of defraying
the Bank's expenses incident to the handling of delinquent
payments and is in addition to, and not in lieu of, the exercise
by Bank of any rights and remedies hereunder, under the other
Loan Documents or under applicable laws, and any fees and
expenses of any agents or attorneys which Bank may employ. If
after an Event of Default (as hereinafter defined), Bank elects
to accelerate the maturity of this note and declare the entire
debt due and owing immediately, Bank may, as an element of
damages, continue to assess late charges against Maker pursuant
to the late charge terms that have heretofore been set forth.
Said late charges shall apply to each and every subsequent month
(before or after acceleration) that payment is not made and shall
compound at the Default Rate (as hereinafter defined).
In order to secure payment of this Promissory Note
(hereinafter called "Note") and all other obligations of Maker to
Bank presently existing or hereafter arising or incurred
(collectively, the "Obligations"), Maker hereby pledges to Bank
and grants to Bank a security interest in and a continuing lien
and right of setoff against, all property (real and personal,
tangible and intangible) owned by Maker or in which Maker has any
interest or any power of pledge, hypothecation or other
disposition, which Bank shall have in its possession or control
(including items in transit to Bank) at any time for any reasons
whatsoever, including, but not limited to monies, deposit
accounts, stocks, bonds, securities, mortgages, judgments,
security interests, chattel paper, accounts, accounts receivable,
contract rights, general intangibles, insurance policies,
instruments, documents, motor vehicle titles, real estate,
fixtures, goods, chattels, merchandise, inventory, equipment and
all other items of like kind and type and all additions and
accessions thereto and all proceeds therefrom (hereinafter called
"Collateral"). The Bank shall have no duty or obligation with
respect to the Collateral.
<PAGE 3>
Maker agrees to comply with each and every covenant,
condition and term set forth in this Note as well as all other
documents (collectively, the "Loan Documents") given by Maker or
any other Obligor (as hereinafter defined) to Bank and agrees
that any default under any of the other Loan Documents shall also
be an Event of Default hereunder. The terms and provisions of
the other Loan Documents are incorporated herein by reference.
As used herein, the term "Obligor" means any Maker and any
Guarantor, and the term "Guarantor" means any guarantor or surety
of the Obligations of Maker to Bank existing on the date of this
Note or arising in the future.
Bank shall have the right at Maker s expense to audit
Maker s books and records periodically including access to
accounts receivable and payable as well as executory contract
records. Maker agrees to provide Bank and to cause any Obligor
to provide Bank with periodic financial statements as requested
from time to time by Bank in form satisfactory to Bank.
Upon the occurrence of any of the following events with
respect to any Obligor, each of which shall constitute an "Event
of Default" hereunder, the entire unpaid amount of principal and
interest hereunder shall at the option of Bank become immediately
due and payable, together with the prepayment fee described
above, without notice or demand: (a) if payment of principal or
interest, as aforesaid, is not paid when due, and continues
unpaid for a period of fifteen (15) days thereafter; or (b) if at
any time during the term of this Note, Maker does not pay
principal and interest when due, but such payment is made after
the fifteen (15) day period set forth in subparagraph (a) above,
and such event occurs more than four (4) times during the term of
this Note; or (c) if any Obligor defaults in the payment or
performance of any other obligation to Bank or any other holder
hereof; or (d) if any Obligor is unable to pay its debts as they
mature or if any Obligor becomes insolvent or shall voluntarily
suspend transaction of its business or operations; or (e) if any
Obligor shall make an assignment for the benefit of creditors or
file a voluntary petition to reorganize or to effect a plan or
other arrangement with creditors or apply for or consent to the
appointment of a receiver or trustee of all or part of its
property; or (f) if any Obligor shall file an answer admitting
the jurisdiction of the court and the material allegations of an
involuntary petition filed pursuant to the Bankruptcy Code, as
amended, or shall be adjudicated a bankrupt; or (g) if an order
<PAGE 4>
shall be entered approving an involuntary petition to reorganize
any Obligor or to effect a plan or other arrangement with its
creditors, or appointing a trustee or receiver of all or part of
its property; or (h) if any Obligor shall institute liquidation,
dissolution, merger or consolidation proceedings; or (i) if any
Obligor dies or is incarcerated, or is adjudicated legally
incompetent; or (j) if there is entered against any Obligor a
judgment, levy or lien or if a writ or warrant of attachment,
execution, garnishment, distraint, possession, or any similar
process shall be issued by any court against all or a part of the
property of any Obligor; or (k) if there is a taking of
possession of a substantial part of the property of any Obligor
at the instance of any governmental authority; or (l) if any
Obligor fails to pay any income, excise, or other taxes of any
nature whatsoever prior to the time that they become delinquent;
or (m) if any information or signature heretofore or hereafter
furnished to Bank by any Obligor in connection with any
Obligations is materially false or incorrect; or (n) if any
Obligor fails to timely furnish to Bank such financial and other
information as Bank may reasonably request or require; or (o) if
any Obligor fails to perform or comply with any agreement with
Bank or to pay any obligation whatsoever to Bank when due; or (p)
if Bank, in view of circumstances which in its commercially
reasonable judgment it considers adequate, believes that the
credit of any Obligor has become impaired or that a material
adverse change has occurred in the financial condition of any
Obligor.
After an Event of Default, interest shall continue to accrue
and be payable on demand at a rate equal to three percent (3%)
per annum in excess of the interest rate which is otherwise
payable hereon but not more than the maximum rate allowed by law
(the "Default Rate"). The Default Rate shall apply retroactively
to the first such Event of Default and shall continue until all
Events of Default have been cured. Such interest shall accrue
notwithstanding the entry or opening of any judgment and shall be
added to and become part of the Obligations.
Upon the occurrence of an Event of Default hereunder, Bank
shall have all rights and remedies provided under all applicable
law and shall be deemed to have exercised the same immediately
upon the occurrence of any such event without notice or future
action, irrespective of when any record of the same may
thereafter be entered on Bank s books and Bank shall have and may
<PAGE 5>
exercise as to the Collateral all rights and remedies provided
under the Uniform Commercial Code and under all other applicable
laws; and Bank shall have the right, immediately and without
further action by it, to setoff against this Note all money owed
by Bank in any capacity to Maker, whether or not due, and also to
setoff against all other obligations of Maker to Bank all money
owned by Bank in any capacity to Maker, and Bank shall be deemed
to have exercised such right of setoff and to have made a charge
against any such money immediately upon the occurrence of such
default even though such charge is made or entered on the books
of Bank subsequent thereto. In addition thereto Bank may sell
all or any part of any Collateral at private or public sale
without advertisement or notice to or demand upon Maker or any
other Obligor, or upon seven (7) days notice, if notice is
required, and Bank may purchase the same or any part thereof at
any such sale free of all trusts, claims or equity of redemption.
Bank shall not be required to resort to any particular security
or persons to enforce payment and Bank shall not be subject to
any marshaling requirements or equities among the person(s)
designated as Maker or among any other Obligors.
No waiver of any default hereunder shall be construed as a
waiver of any subsequent default, and the exercise of any right
hereunder shall not waive the right to exercise such right
thereafter.
Maker, and each of them, does hereby authorize and empower
the prothonotary or clerk or any attorney of any court of record,
following the occurrence of an Event of Default, to appear for
and to CONFESS AND ENTER A JUDGMENT OR JUDGMENTS against Maker or
any one of them, in favor of Bank, its successors and assigns,
and any other holder hereof, for which this, or a true copy
hereof, shall be a sufficient warrant: (a) for such sums as are
due and/or may become due under this Note and the other Loan
Documents, and/or (b) in any action of replevin instituted by
Bank to obtain possession of any Collateral securing any of the
Obligations, with interest at the Default Rate as above provided
and the prepayment fee, with reasonable attorneys fees added, and
with costs of suit, at any one or more times after this Note
becomes due, with or without declaration filed with release of
all errors, and without stay of execution; and does hereby waive
and release all relief from any and all appraisements, stay,
exemption and homestead laws of any state, now in force or
hereafter passed, and any right to except to, strike off, appeal
<PAGE 6>
from or open any judgment so entered; and further does waive the
right of inquisition on any real estate that may be levied upon
to collect this Note, hereby voluntarily condemns the same and
authorizes the entry upon the writ of execution of such voluntary
condemnation, and agrees that such real estate may be sold on a
writ of execution. MAKER, AND EACH OF THEM, FURTHER WAIVES ALL
RIGHT TO PRIOR NOTICE AND HEARING BEFORE ENTRY OF JUDGMENT. If a
copy of this Note, verified by affidavit by Bank or someone on
behalf of Bank, shall have been filed in such action, it shall
not be necessary to file the original Note as a warrant of
attorney.
The authority and power to appear for and CONFESS JUDGMENT
against Maker, and each of them, shall not be exhausted by the
initial exercise thereof and may be exercised as often as Bank
shall find it necessary and desirable and this Note shall be a
sufficient warrant therefor. Bank may CONFESS one or more
JUDGMENTS in the same or different jurisdictions for all or any
part of the Obligations, without regard to whether JUDGMENT has
theretofore been CONFESSED on more than one occasion for the same
obligations. In the event any JUDGMENT CONFESSED against Maker,
and each of them, is stricken or opened upon application by or on
Maker s behalf for any reason, Bank is hereby authorized and
empowered to again appear for and CONFESS JUDGMENT against Maker,
and each of them, for any part or all of the Obligations, as
provided for herein, if doing so will cure any errors or defects
in such prior proceedings.
MAKER ON BEHALF OF ITSELF AND ALL OBLIGORS HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVES ANY AND ALL
RIGHTS MAKER MAY HAVE TO A TRIAL BY JURY, AND TO RAISE
COUNTERCLAIMS IN CONNECTION WITH ANY LITIGATION ARISING OUT OF
THIS NOTE OR THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
BANK AND/OR ANY OBLIGOR OR IN ANY LITIGATION IN WHICH ANY OBLIGOR
AND BANK ARE ADVERSE PARTIES. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR BANK S GRANTING THE LOAN(S) SUBJECT TO THIS NOTE.
If any provision of this Note shall for any reason be held
to be invalid or unenforceable, such provision shall not affect
any other provision of this Note that can be given effect without
such provision and this Note shall be construed as if such
provision has never been contained herein.
<PAGE 7>
This Note shall be binding upon the undersigned and their
respective heirs, personal representatives, successors and
assigns, and the benefits hereof shall inure to the benefit of
Bank and its successors and assigns. If this Note is executed by
more than one party, it shall be the joint and several
obligations of all such parties.
In the event that Bank engages an attorney to represent it
in connection with (1) any alleged default by any obligor under
any of the Loan Documents, (2) the enforcement, administration or
modification of any of Bank s rights and remedies under any of
the Loan Documents, (3) any potential and/or actual bankruptcy or
other insolvency proceedings commenced by or against any obligor,
and/or (4) any potential and/or actual litigation arising out of
or related to any of the foregoing, the Loan Documents or any of
the Obligations, then Maker shall be liable to and shall
reimburse Bank, on demand for all attorneys fees, costs and
expenses incurred by Bank in connection with any of the
foregoing. Maker shall also be liable and shall reimburse Bank,
on demand, for all other costs and expenses (including attorneys
fees) incurred by Bank in connection with the collection,
preservation and/or liquidation of any Collateral and/or in the
enforcement of any Obligor s obligations hereunder and under any
of the Loan Documents.
Presentment for payment or acceptance, demand and protest,
and notice of dishonor of payment or acceptance, notice of
protest and notice of any renewal, extension, modification or
change of time, manner, place or terms of payment are hereby
waived by Maker. Any notice to Maker shall be sufficiently
served for all purposes if placed in the mail addressed to, or
left upon the premises of the address of Maker shown on the
Bank s records. Bank may surrender this Note to any person
paying the final installment or payment due hereunder, and may
endorse or assign it to such person or his order without
recourse.
The parties agree and consent to the exclusive jurisdiction
of the federal and state courts located in Pennsylvania in
connection with any matters arising hereunder, including the
collection and enforcement hereof, except as Bank may otherwise
elect.
<PAGE 8>
This Note shall be governed by the substantive laws of the
Commonwealth of Pennsylvania.
Witness: MARK CENTERS LIMITED PARTNERSHIP
/s/ Alexander S. Kroll By: Mark Centers Trust,
General Partner
By: /s/ Joshua Kane,
Senior Vice President and
Chief Financial Officer