MORTGAGE AND SECURITY AGREEMENT
THIS MORTGAGE AND SECURITY AGREEMENT is made as of the day of
November, 1988, from DIALYSIS CORPORATION OF AMERICA, a Florida cor-
poration (hereinafter referred to as the "Mortgagor"), to MERCANTILE-
SAFE DEPOSIT AND TRUST COMPANY (hereinafter referred to as "Mortgagee"),
and any successor holder of the Note secured by this Mortgage.
SECTION 1. RECITALS
1.01 The Loan. Mortgagor is indebted to Mortgagee for a loan in the
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principal sum of Four Hundred Eighty Thousand Dollars ($480,000.00) (the
"Loan") to be advanced pursuant to a Loan Agreement between Mortgagor
and Mortgagee of even date herewith (the "Loan Agreement"), as evidenced
by a Note of Mortgagor of even date.
1.02 Obligations Secured. This Mortgage secures (a) the full and
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punctual payment of the Loan according to the terms of the Note, (b)
the payment of all sums due to Mortgagee according to the terms of any
of the Loan Documents, (c) future advances, which may be made by
Mortgagee for any reason, and (d) the performance of, and compliance
with, all of the obligations of the Mortgagor (express or implied)
contained in the Loan Documents.
SECTION 2. DEFINITIONS. Whenever capitalized in this Deed of
Trust, the following terms shall have the meaning given in this
Section 2, unless the context clearly indicates a contrary intent.
2.01 Default. "Default" means: (a) the failure of Mortgagor to
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perform, cause to be performed, abide by, comply with, or observe any
duty or obligation imposed upon Mortgagor by the Loan Documents; (b)
the breach of any of Mortgagor's warranties or covenants contained in
any of the Loan Documents; (c) a misrepresentation by Mortgagor, its
counsel, or any other person on behalf of Mortgagor, in any of the
Loan Documents; and (d) any event, happening or condition that would
constitute an Event of Default, as described herein, if not cured
within any applicable grace period.
2.02 Encumbrances. "Encumbrances" includes all liens, mortgages,
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rights, leases, restrictions, easements, deeds of trust, covenants,
agreements, rights of way, rights of redemption, security interests,
conditional sales agreements, land installment contracts, options, and
all other burdens or charges.
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2.03 Environmental Requirements. "Environmental Requirements" means
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any federal, state or local law, statute, ordinance or regulation; or
court or administrative order or decree; or private agreement which
requires special handling, collection, storage, treatment disposal or
removal of any materials located in or on or about the Property.
2.04 Event of Default. "Event of Default" has the meaning given
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and provided in Section 9.
2.05 Expense Account. "Expense Account" means the Account which
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may be maintained pursuant to Section 6.02.
2.06 Mortgage. "Mortgage" means this instrument, including all
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current and future supplements, amendments and attachments thereto.
2.07 Mortgagor. "Mortgagor" means the party identified as such in
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the introductory paragraph of this Mortgage, its successors and assigns,
including any subsequent owner of all or any portion of Mortgagor's
interest in the Property.
2.08 Land. "Land" means the Land more particularly described in
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Exhibit A to this Mortgage.
2.09 Lease. "Lease" means each lease which purports to convey any
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interest of Mortgagor in any portion of the Property, as defined in
Section 3.05, and includes subleases and assignments of leases.
2.10 Loan Documents. "Loan Documents" means this Mortgage, the
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Note, the Loan Agreement, and any and all certificates, opinions,
assignments and other documents executed in connection herewith or
therewith, and all current and future supplements, amendments, and
attachments thereto.
2.11 Note. "Note" means the Note of even date herewith payable
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to the Mortgagee by Mortgagor evidencing the loan made pursuant to the
Loan Documents in a principal sum not to exceed Four Hundred Eighty
Thousand Dollars ($480,000.00), including all current and future
replacements, supplements, amendments and attachments thereto.
2.12 Permitted Encumbrances. "Permitted Encumbrances" if any,
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listed in the title policy shall mean those exceptions, insuring the
interest of the Mortgagee hereunder, as accepted and approved by the
Mortgagee.
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2.13 Rents. "Rents" includes all rents, profits, royalties, issues,
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revenues, income, proceeds, earnings and products generated by and
arising out of the Property.
2.14 Taking. "Taking" includes any taking by condemnation or
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eminent domain, any sale in lieu of condemnation under threat thereof,
the alteration of the grade of any street, or any other injury to or
decrease in the value of the Property by any public or quasi-public
authority or corporation or any other person having the power of eminent
domain.
2.15 Taxes. "Taxes" includes all taxes, excises, documentary stamp
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and transfer taxes, recording taxes, assessments, water rents, sewer
rents, metropolitan district charges, sanitary district charges, public
dues, and other public charges levied or assessed upon the Property,
upon the Loan, or upon any Loan Document.
2.16 Tenant. "Tenant" means any lessee of Mortgagor under any
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Lease, and any sub-lessee or assignee of a Lease.
SECTION 3. GRANT
3.01 Lien on Real Property. The Mortgagor, in consideration of
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the Loan and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, grants and assigns to the Mortgagee
all the Land situate in Cumberland County, Pennsylvania, described more
particularly in Exhibit A attached hereto as a part hereof, together
with (a) all buildings and improvements now or hereafter located thereon,
(b) all rights, rights of way, air rights, riparian rights, franchises,
licenses, easements, tenements, hereditaments, appurtenances, accessions
and other rights and privileges now or hereafter belonging to the Land
or the buildings and improvements thereupon, now owned or hereafter
acquired by the Mortgagor (hereinafter collectively referred to as the
"Real Property").
3.02 Lien on Fixtures and Personal Property. The Mortgagor further
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grants and assigns to the Mortgagee all the machines, apparatus, equip-
ment, fixtures and articles of personal property now or hereafter
located on the Land or in any improvements thereon (other than that
owned by any Tenant), including without limitation all furniture,
fixtures, equipment and building materials acquired with the proceeds
of this Loan, and all the right, title and interest of the Mortgagor
in and to any of such property which may be subject to any title
retention or security agreement or instrument having priority over this
Mortgage.
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3.03 Lien on Rents and Other Rights. The Mortgagor further grants
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and assigns to the Mortgagee (a) all Rents, including, without limitation,
all cash or security deposits to secure performance by Tenants (whether
such cash or securities are to be held until the expiration of the terms
of Leases or are to be applied to one or more of the installments of rent
coming due immediately prior to the expiration of such terms), (b) all of
the estate, right, title, use, claim and demand of every nature whatso-
ever, at law or in equity, which the Mortgagor may now have or may here-
after acquire in and to the Property, and (c) all right, title and
interest of the Mortgagor in and to all extensions, betterments,
renewals, substitutes and replacements of, and all additions and appur-
tenances to, the Property, hereafter acquired by or released to the
Mortgagor, or constructed, assembled or placed by or for the Mortgagor
on the Property, and all in conversion of the security constituted
thereby.
3.04 Lien on Insurance policies and Condemnation Awards. The
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Mortgagor further grants and assigns to the Mortgagee all insurance
policies and insurance proceeds pertaining to the Property and all
awards or payments, including interest thereon and the right to
receive the same, which may be made with respect to any of the Prop-
erty as a result of any taking or any injury to or decrease in the
value of the Property.
3.05 The Property. All of the property described in this Section
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3 is collectively called the "Property."
3.06 Security Interest. Under the Uniform Commercial Code. Any por-
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tion of the Property which by law is or may be real property shall be
deemed to be a part of the Real Property for the purposes of this
Mortgage. The remainder of the Property shall be subject to the
Uniform Commercial Code and this Mortgage shall constitute a Security
Agreement with respect thereto. Mortgagor hereby grants to the Mort-
gagee a security interest in that portion of the Property not deemed
a part of the real property for the purpose of securing performance
of all of Mortgagor's obligations under the Loan Documents. With
respect to such security interest (a) the Mortgagee may exercise all
rights granted or to be granted a secured party under the Uniform
Commercial Code and (b) upon the occurrence of an Event of Default
the Mortgagee shall have a right of possession superior to any right
of possession of the Mortgagor or any person claiming through or on
behalf of the Mortgagor.
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SECTION 4. HABENDUM CLAUSE AND DEFEASANCES
4.01 Habendum Clause. The Mortgagee shall have and hold the Prop-
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erty in fee simple, upon the terms herein set forth.
4.02 Termination of Mortgage. If all obligations of Mortgagor
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under this Mortgage and the other Loan Documents are paid and satisfied
in accordance with the terms hereof and thereof, this Mortgage shall
terminate and the Property shall be released to the Mortgagor, at the
cost of the Mortgagor.
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.01 Warranty of Title and Further Assurances. The Mortgagor
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warrants that it has the right and authority to convey the Property
and warrants generally title to the Property and that it will
execute such further assurances as may be requested.
5.02 Purpose of the Loan. The Mortgagor warrants that the Loan is
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to be used for commercial purposes.
5.03 Existence, Good Standing, Power and Authority of Mortgagor.
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Mortgagor is a corporation of the State of Florida, is in good standing
in the States of Florida and Pennsylvania, and in every other state in
which it transacts business, and will maintain its good standing and
existence until all of Mortgagor's obligations under the Loan Documents
have been performed and satisfied. The execution and delivery of the
Loan Documents, the carrying out of the transactions contemplated by
the Loan Documents, and the performance of Mortgagor's obligations
under the Loan Documents, have been duly authorized by all necessary
action and will not conflict with or result in a breach of law or any
agreement, or other instrument to which Mortgagor is bound, subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws heretofore or hereafter enacted affecting creditors' rights gen-
erally, to the extent constitutionally applicable, and subject to
general equitable principles as applied by a court of law or a court
of equity. The Loan Documents are valid and binding on Mortgagor and
are enforceable against Mortgagor in accordance with their respective
terms, as applicable.
SECTION 6. COVENANTS, RIGHTS, AND DUTIES OF MORTGAGOR GENERALLY
6.01 Covenant to Pay Loan and to Perform Obligations Under the
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Terms of the Loan Documents. The Mortgagor covenants that it will
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punctually (a) pay to the Mortgagee the principal
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and interest of the Loan and all other costs and indebtedness secured
hereby according to the terms of the Note and other Loan Documents,
and (b) perform and satisfy all other obligations of the Mortgagor
under the Loan Documents.
6.02 Expense Account. The Mortgagor agrees to the following pro-
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visions with respect to the Expense Account.
6.02.1 Upon written request of the Mortgagee, the Mortgagor
will pay to the Mortgagee monthly installments, each of which shall be
equal to one-twelfth (1/12th) of the sum of (a) the estimated annual
premiums for all insurance policies required by Sections 8.01 and 8.02,
and (b) the estimated annual Taxes pertaining to the Property, to be
held by the Mortgagee in the Expense Account and disbursed by the Mort-
gagee to pay insurance premiums as they become due, and the Taxes
before any penalty or interest shall accrue thereon. Estimates are
to be made solely by the Mortgagee and payments shall be made on the
day of the month designated by the Mortgagee. No interest shall be
payable by the Mortgagee on the Expense Account unless, and then only
to the extent that, applicable law shall otherwise require. All over-
payments to the Expense Account shall be applied to reduce future
payments to the Expense Account, if any, or shall be returned to the
Mortgagor, at the sole discretion of the Mortgagee.
6.02.2 Upon the request of the Mortgagee, the Mortgagor shall
pay such additional sums into the Expense Account as the Mortgagee
determines are necessary, so that one month prior to the date the
Mortgagee is required to make payments of insurance premiums, or Taxes,
as the case may be, payments can be made therefor out of the Expense
Account.
6.02.3 The Mortgagor hereby grants the Mortgagee a security
interest in the sums on deposit in the Expense Account to secure the
obligations secured hereby, and upon the occurrence of an Event of
Default, the Mortgagee may, unless prohibited by applicable law, apply
the balance of the Expense Account to operate the Property or to
satisfy the Mortgagor's obligations under the Loan Documents, as the
Mortgagee may elect.
6.03 Compliance With Laws. The Mortgagor shall comply with all
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laws a breach of which would adversely affect (a) the financial con-
ditions of the Mortgagor, (b) the ability to use buildings and other
improvements on the Land for the purposes for which they were
designed or intended, (c) the value or status of the Property, or
(d) the value or status of the Mortgagee's title to the Property.
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6.04 Notice With Respect to Ownership and Control of Mortgagor.
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Mortgagor will at all times promptly notify Mortgagee of all changes
in the ownership of the stock of Mortgagor. At any time Mortgagee may
request, Mortgagor shall furnish a complete statement, certified by an
officer of Mortgagor, setting forth all of the stockholders, officers,
and directors of Mortgagor, and the extent of their respective stock
ownership or control. In the event the Mortgagor is aware of any other
person or entity having a beneficial interest in such stock, the state-
ment shall also set forth the name of such person or entity and the
extent of such person's interest.
6.05 Statement of Amount Owing. Within ten (10) days after re-
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quest from the Mortgagee, the Mortgagor shall certify, in writing,
the amount of principal and interest then owing on the Loan.
6.06 Changes in Applicable Tax Laws. In the event (a) any law is
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hereafter enacted which imposes a tax upon the Loan, any of the Loan
Documents, or the transactions evidenced or contemplated by any of the
Loan Documents, or (b) any law now in force governing the taxation of
deeds of trust, debts secured by mortgages, or the manner of collecting
any such tax shall be changed or modified, in any manner, so as to
impose a tax upon the Loan, any of the Loan Documents, or the trans-
actions evidenced or contemplated by any of the Loan Documents,
(including, without limitation, a requirement that revenue stamps be
affixed to any or all of the Loan Documents), the Mortgagor will
promptly pay any such tax. If the Mortgagor fails to make prompt
payment, or if any law either prohibits the Mortgagor from making the
payment or would penalize the Mortgagee if Mortgagor makes the payments,
then the failure, prohibition, or penalty, shall entitle the Mortgagee
to declare the entire unpaid principal balance of the Loan, together
with all accrued interest and any other amounts due, immediately due
and payable, provided that no Event of Default has occurred, and the
Mortgagor shall thereupon have thirty (30) days to pay the entire
amount due without penalty. If an Event of Default has occurred or if
the Mortgagor fails to make payment in full within thirty (30) days,
then the Mortgagee shall be entitled to exercise all rights hereunder
as though an Event of Default had occurred.
6.07 Further Assurances and Continuation Statements. The Mort-
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gagor from time to time will execute, acknowledge, deliver and record,
at the Mortgagor's sole cost and expense, all further instruments,
deeds, conveyances,, supplemental mortgages, assignments, financing
statements, transfers, and assurances as in the opinion of the
Mortgagee's counsel may be
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necessary (a) to preserve, continue, and protect the interest of the
Mortgagee in the Property, (b) to perfect the grant to the Mortgagee
of every part of the Property, (c) to facilitate the execution of the
terms of this Mortgage, (d) to secure the rights and remedies of the
Mortgagee under this Mortgage and the other Loan Documents, or (e) to
transfer to any new mortgagee or purchaser at a sale hereunder the
Property, funds, and powers now or hereafter held by Mortgagee here-
under. The Mortgagor, at the request of the Mortgagee, shall promptly
execute any continuation statements required by the Uniform Commercial
Code to maintain the lien on any portion of the Property subject to the
Uniform Commercial Code.
6.08 Expenses. The Mortgagor shall reimburse the Mortgagee for any
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sums, including attorney's fees and expenses, incurred or expended by it
(a) in connection with any action or proceeding to sustain the lien,
security interest, priority, or validity of any Loan Document, (b) to
protect, enforce, interpret, or construe any of its rights under the
Loan Documents, (c) for any title examination or title insurance policy
relating to the title to the Property, or (d) for any other purpose
contemplated by the Loan Documents. The Mortgagor shall, upon demand,
pay all such sums together with interest thereon at the Default Interest
Rate defined in the Note accruing from the time the expense is paid.
All such sums so expended by the Mortgagee shall be secured by this
Mortgage. In any action or proceeding to foreclose this Mortgage or
to recover or collect the Loan, the provisions of law allowing the
recovery of costs, disbursements, and allowances shall be in addition
to the rights given by this Section 6.08.
6.09 Environmental Requirements. The Mortgagor hereby covenants
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and agrees that, if at any time it is determined that there are
materials (hereinafter, Environmental Materials") located on the
Property which under any Environmental Requirements require special
handling in collection, storage, treatment, disposal or removal, the
Mortgagor shall, within thirty (30) days after written notice thereof,
take or cause to be taken, at its sole expense, such actions as may be
necessary to comply with all Environmental Requirements. If the Mort-
gagor shall fail to take such action, the Mortgagee may make advances
or payments towards performance or satisfaction of the same but shall
be under no obligation to do so; and all sums so advanced or paid,
including all sums advanced or paid in connection with any judicial or
administrative investigation or proceeding relating thereto, including,
without limitation, reasonable attorneys' fees, fines, or other penalty
payments, shall be at once repayable by Mortgagor and shall bear
interest at the Default Interest Rate defined in the Note or at the
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maximum interest rate which the Mortgagor may by law pay, which ever
is lower, from the date the same shall become due and payable until
the date paid, and all sums so advanced or paid, with interest as
aforesaid, shall become a part of the indebtedness secured hereby.
Failure of the Mortgagor to comply with all Environmental Requirements
shall constitute and be a default under this Mortgage. Mortgagor shall
defend, indemnify and hold harmless the Mortgagee against any loss,
cost or expense incurred by the Mortgagee resulting from the presence
on the Property at any time of any Environmental Materials.
SECTION 7. RIGHTS AND DUTIES OF MORTGAGOR WITH RESPECT TO MANAGE-
MENT AND USE OF THE PROPERTY
7.01 Control by the Mortgagor. Until the happening of an Event of
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Default, the Mortgagor shall have the right to possess and enjoy the
Property and, except as prohibited by the Loan Documents, to receive the
Rents (as defined hereinafter in Section 7.07).
7.02 Management. At all times the Mortgagor shall provide competent and
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responsible management to maintain and operate the Property.
7.03 Financial Statements; Books and Records. The Mortgagor shall
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furnish to the Mortgagee annual financial and operating statements of
the Mortgagor and of the Property. Such statements shall show all items
of income and expense for the operation of the Property, shall be cer-
tified by the Mortgagor and shall be prepared in accordance with gen-
erally accepted accounting principles applied on a consistent basis.
All such financial and operating statements shall be supplied not later
than ninety (90) days after the close of Mortgagor's fiscal year. At
the request of Mortgagee, Mortgagor shall provide audited financial
statements prepared by an independent certified public accountant
approved by Mortgagee. The Mortgagor agrees to make its books and
records relating to the operation of the Property available for in-
spection by the Mortgagee, upon request at any reasonable time, at
Mortgagor's principal place of business or at such other location in
the State of Maryland as Mortgagee may reasonably request. This para-
graph shall be superseded, to the extent of any direct inconsistency
only, by the financial reporting provisions, if any, set forth in the
Loan Documents.
7.04 Leases. All leases affecting any portion of the Property
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("Leases") shall be subject to the prior written approval of the
Mortgagee, and shall contain a provision prohibiting subleasing or
assigning by any Tenant without the
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prior written approval of the Mortgagee, which approval shall not be
unreasonably withheld. Upon the execution of any Leases, the Mortgagor
shall provide the Mortgagee with a subordination and attornment agree-
ment executed by the Tenant in a form acceptable to the Mortgagee.
Upon demand by the Mortgagee, Mortgagor will transfer and assign to the
Mortgagee, in a form satisfactory to the Mortgagee, Mortgagor's
interest in any specific lease as further security for the obliga-
tions secured hereby. No such assignment shall impose upon the
Mortgagee any Liability to perform the Mortgagor's obligations under
any Lease.
7.05 Enforcement of Leases, Amendment, Waiver, etc. The Mortgagor
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will enforce all Leases according to their terms and shall take such
action to that end as may be requested by the Mortgagee, regardless of
whether any such Lease has been assigned to the Mortgagee. The Mort-
gagor shall not, without the prior written consent of the Mortgagee
(a) cancel or terminate, or consent to or accept any cancellation,
termination or surrender of any Lease, or permit any event within the
Mortgagor's control to occur which would cancel or terminate any
Lease, (b) amend or modify any Lease, (c) waive any default under or
breach of any Lease, (d) consent to or permit any prepayment or dis-
count of rent or advance rent under any Lease, or (e) give any consent,
waiver, or approval under any Lease or take any other action with re-
spect to any Lease which may impair the value of- the Mortgagee's
interest in the Property or the position or interest of the Mortgagee
with respect to the Property. Mortgagor shall comply with and perform
all duties and obligations imposed upon or assumed by it in all Leases.
7.06 Subordination and Attornment. In the event of a foreclosure
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sale pursuant to this Mortgage, each tenant under a Lease ("Tenant")
shall, upon request, attorn to and acknowledge any purchaser at fore-
closure or grantee in lieu of foreclosure as landlord and the
purchaser will not be required to credit any Tenant under any Lease
with rent paid more than one (1) month in advance. All Leases shall
be subject-and subordinate to modifications of and amendments to the
Loan Documents and any additional financing or refinancing of the
Property by or for the Mortgagee.
7.07 Restriction of Assignment of Rents. Mortgagor shall not
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assign the Rents arising from the Property or any part thereof or
any interest therein ("Rents") without the prior written consent of
the Mortgagee. Any attempted assignment, pledge, hypothecation, or
grant without such consent shall be null and void.
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7.08 Alterations and Improvements. The Mortgagor shall not make
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any alterations or improvements on the Property without the prior
written consent of the Mortgagee. All alterations or improvements
shall be erected (a) in a good and workmanlike manner strictly in
accordance with all applicable law, (b) entirely on the Land (c)
without encroaching upon any easement, right of way, or land of
others, (d) so as not to violate any applicable use, height, set-back
or other applicable restriction, and (e) without permitting any
mechanic's lien to attach to the Property which is not being con-
tested as permitted in Section 7.13. All alterations, additions,
and improvements to the Property shall automatically be a part of
the Property and shall be subject to this Mortgage.
7.09 Restrictions on Sale and Transfer of the Property. The
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Mortgagor shall not permit the Property, or any part or portion thereof
or any interest therein, to be transferred (whether by voluntary or
involuntary conveyance, merger, operation of law, or otherwise) without
the prior written consent of the Mortgagee. Any transferee of the
Property or any part or portion thereof or any interest therein, by
virtue of its acceptance of the transfer, shall (without in any way
affecting Mortgagor's liability under the Loan Documents) be conclu-
sively deemed to have agreed to assume primary personal liability for
the performance of the Mortgagor's obligations under the Loan Documents.
This section shall not apply to any condemnation, any disposition per-
mitted by Section 7.12, any Lease entered into in compliance with
Section 7.04, or any disposition by the Mortgagee by foreclosure
hereunder or as otherwise permitted by the Loan Documents.
7.10 Restriction on Encumbrances. The Mortgagor shall not allow
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any Encumbrances on the Property except the Permitted Encumbrances.
The Mortgagor shall give the Mortgagee prompt notice of any default
in or under any Permitted Encumbrances and any notice of foreclosure
or threat of foreclosure. The Mortgagor shall comply with its obliga-
tions under all Permitted Encumbrances. The Mortgagee may at its
election, satisfy any Encumbrance (other than a Permitted Encumbrance
not then in default), and the Mortgagor shall, on demand, reimburse
the Mortgagee for any sums advanced for such satisfaction together
with interest at the Default Interest Rate stated in the Note
accruing from the date of satisfaction, which sums shall be secured
hereby.
7.11 Maintenance, Waste, Repair and Inspection. Mortgagor shall: (a)
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keep and maintain the Property in good order, condition, and repair and
make, in a prompt manner, all equipment replacements and repairs
necessary to insure that the
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security for the Loan is not impaired; (b) not commit or suffer any
waste of the Property; (c) promptly protect and conserve any portion
of the Property remaining after any damage to, or partial destruction
of, the Property; (d) promptly repair, restore, replace or rebuild any
portion of the Property which is damaged or destroyed; (e) promptly
restore the balance of the Property remaining after any Taking; (f)
permit the Mortgagee or its designee to inspect the Property at all
reasonable times; and (g) not make any material change in the grade of
the Property or permit any material excavation of or on the Property
except as required for utility easements.
7.12 Removal and Replacement of Equipment and Improvements. No part
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of the Property, except supplies consumed or raw materials, work in
progress and finished goods sold or transferred in the ordinary course
of business and operations as they are currently conducted, shall be
removed from the Land, demolished, or materially altered without the
prior written consent of the Mortgagee. The Mortgagor may, without
consent and free from the lien and security interest of this Mortgage,
remove and dispose of any worn out or obsolete fixtures or equipment
which are a part of the Property, provided that prior to or simul-
taneously with their removal, such fixtures and equipment shall be
replaced with fixtures or equipment of equal or greater value. The
replacement fixtures or equipment shall be free of all Encumbrances,
shall automatically be subject to the lien and security interest of
this Mortgage, and shall automatically be subject to the granting
clauses hereof. Upon the sale of any removed fixtures and equipment
which are not replaced, the proceeds shall, at the election of the
Mortgagee, be applied as a prepayment of the Loan, to be applied in
inverse order of maturity. All sales shall be conducted in a commer-
cially reasonable manner.
7.13 Taxes and Permitted Contests. The Mortgagor shall pay: (a)
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all Taxes on or before the date any interest or penalty begins to accrue
or attach thereto; and (b) all lawful claims which, if unpaid, might
become a lien or charge upon the Property to such an extent as to
materially and adversely affect the Mortgagor's ability to use the
Property for the purposes for which it was designed or intended;
provided however, that the Mortgagor shall not be required to pay any
Taxes or claim the amount, validity or payment of which is being con-
tested, in good faith, by appropriate legal proceedings, and so long
as, in the sole opinion of the Mortgagee, no part of the Property is
in danger of being sold, forfeited or lost and the contest is not
impairing the security for the Loan. Upon payment thereof, the Mort-
gagor shall promptly supply the Mortgagee with receipts showing the
payment of the Taxes or claim.
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7.14 Restrictive Covenants, Zoning, etc. No restrictive covenant,
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zoning change, or other restriction affecting the Property may be
entered into, requested by or consented to by Mortgagor without the
prior written consent of the Mortgagee.
7.15 Preservation of Appurtenances. The Mortgagor will do all
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things necessary to preserve intact and unimpaired, all easements,
appurtenances, and other interests and rights in favor of, or consti-
tuting any portion of, the Property.
SECTION 8. INSURANCE AND CONDEMNATION
8.01 Casualty and Liability Insurance. The Mortgagor shall at
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all times keep the Property insured for the benefit of the Mortgagor
and the Mortgagee against loss or damage by fire by fire insurance
and extended coverage insurance and against such other hazards,
casualties, and contingencies, all as Mortgagee may require from time
to time. Such insurance shall be written in amounts equal to one
hundred percent (100%) of the replacement value of the Property or
such other amount as may be approved by Mortgagee. Such insurance
shall be written in forms and by companies satisfactory to the Mort-
gagee, and the losses thereunder shall be payable to the Mortgagee
alone and not to the Mortgagor and the Mortgagee, jointly. The
policy or policies of such casualty insurance shall, if requested by
Mortgagee, be delivered to and retained by the Mortgagee, and the
Mortgagor shall provide the Mortgagee with receipt evidencing the
payment of all premiums due on such policies. The Mortgagor shall
give the Mortgagee prompt notice of any loss covered by such casualty
insurance, and the Mortgagee shall have the right (subject to the
approval of Mortgagor, so long as no Event of Default has occurred)
to adjust any loss covered by an insurance policy. All monies
received as payment for a loss covered by an insurance policy
("Insurance Proceeds") shall be paid over to the Mortgagee to be
applied, at the option of the Mortgagee, either to the prepayment of
the indebtedness secured by the Mortgage or to the payment of other
charges or expenses actually incurred by the Mortgagor in the res-
toration, reconstruction, repair, renovation' or replacement of the
Property; provided, however, that the application of Insurance
Proceeds shall be made at the option of the Mortgagor so long as no
default or Event of Default has occurred and so long as the Insurance
Proceeds are sufficient, together with other funds deposited for this
purpose with the Mortgagee by Mortgagor, to restore the Property to a
condition and value satisfactory to the Mortgagee.
The Mortgagor may not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be
maintained under the above paragraph unless
13
the mortgagee is included thereon as a named insured with losses
payable to the Mortgagee as above provided. The Mortgagor shall
immediately notify the Mortgagee whenever any such separate insurance
is taken out and shall promptly deliver to the Mortgagee the policy
or policies of such insurance.
If any of the Property is located in an area which has been iden-
tified as a flood hazard area, the Mortgagor will keep the Property
covered by flood insurance in an amount at least equal to the full
amount secured by this Mortgage or the maximum limit 6f coverage
available for the Property.
Unless a written waiver from Mortgagee is obtained, Mortgagor
shall (a) keep all of its insurable properties insured against all risks
usually insured against by persons operating like properties in the
localities where the properties are located; (b) maintain public lia-
bility insurance against claims for personal injury, death or property
damage suffered by others upon or in or about any premises occupied by
it or occurring as a result of its maintenance or operation of any
automobiles, trucks or other vehicles or airplanes or other facilities
or as a result of the use of products sold by it or services rendered
by it; and (c) maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or jurisdic-
tion in which it may be engaged in business.
8.02 Business Interruption Insurance. If requested by Mortgagee,
-------------------------------
the Mortgagor shall also carry and maintain business interruption
insurance on the Property in an amount equal to six (6) months pro-
jected income, as approved by Mortgagee.
8.03 Condemnation and Allocation of Condemnation Awards. Mortgagor,
--------------------------------------------------
immediately upon obtaining knowledge of the institution of any proceeding
for a condemnation, will notify the Mortgagee of such proceedings. The
Mortgagee may participate in any such proceedings, and Mortgagor will,
from time to time, deliver to them all instruments requested by it to
permit such participation. Any award or payment made as a result of
any Taking shall be paid to the Mortgagee, to be applied (a) if funds
sufficient to restore the remainder of the Property are available from
such award or payment (together with other funds supplied or caused to
be supplied by Mortgagor) and no Event of Default is then outstanding,
to the restoration of the remainder of the Property, or (b) if suffi-
cient funds are not available to restore the remainder of the
Property, or an Event of Default is then outstanding, to prepayment
of amounts due under the Note in inverse order of maturity. All
moneys not utilized for the repair or restoration of the remainder
of the Property shall be applied
14
as a prepayment of amount due under the Note, in inverse order of matur
ity. The application of any award or payment as a prepayment of amounts
due under the Note shall take effect only on the actual date of the
receipt of the payment or award by the Mortgagee. In the event any
payment or award is used to restore the Property, as aforesaid, the
Mortgagee shall not be obligated to see to the proper allocation
thereof nor shall any amount so used be deemed a payment of any indebt-
edness secured by this Mortgage. Payments or awards to be used for
restoration purposes, as aforesaid, shall be held by the Mortgagee and
disbursed under such terms and conditions, to such persons, and at such
times, as Mortgagee may determine.
SECTION 9. DEFAULT
9.01 Event of Default. The occurrence of any of the following
----------------
shall constitute an Event of Default.
9.01.1 Monetary Defaults. The failure of the Mortgagor to
pay any amounts due under the Loan Documents when due and payable,
whether at maturity by obligation or election to prepay, or otherwise,
unless such payment is made within ten (10) days from the date such
payment became due and payable.
9.01.2 Breach of Representations and Warranties. Any represen-
tation or warranty made by the Mortgagor herein or any statement or
representation made in any of the Loan Documents shall prove to have
been incorrect in any material respect when made or shall be breached,
which representation or warranty shall not be cured in full within ten
(10) days after Mortgagee gives Mortgagor written notice thereof.
9.01.3 Insurance Provisions. The failure of Mortgagor to
perform its obligations set forth in Section 8.01 or 8.02.
9.01.4 Receiver; Bankruptcy. If the Mortgagor (a) applies
for, or consents in writing to, the appointment of a receiver, trustee,
or liquidator for it of the Property, or of all or substantially all of
its assets, (b) files a voluntary petition in bankruptcy or admits in
writing its inability to pay its debts as they become due, (c) makes an
assignment for benefit of creditors, (d) files a petition or an answer
seeking a reorganization, composition, adjustment arrangement with
creditors, or takes advantage of any insolvency law, (e) files an
answer admitting the material allegations of a petition filed against
it in any bankruptcy, reorganization, composition, adjustment, arrange-
ment, or insolvency proceeding, or (f) is dissolved as a result of an
adversary suit or proceeding.
15
9.01.5 Receiver; Bankruptcy (Involuntary). If (a) any execu-
tion or attachment levied against the assets of the Mortgagor is not
set aside, discharged, or stayed within sixty (60) days, (b) an order,
judgment, or decree is entered by any court of competent jurisdiction
on the application of a creditor, adjudicating the Mortgagor a bankrupt
or insolvent, or appointing a receiver, trustee, or liquidator for the
Mortgagor of all or substantially all of its assets, or (c), an order
of relief is entered against the Mortgagor pursuant to any bankruptcy
statute or law and such order, judgment, or decree continues unstayed
and in effect for a period of sixty (60) days.
9.01.6 Assignment of Rents. Any attempted assignment by the
Mortgagor of the whole or any part of the Rents in contravention of
Section 7.07.
9.01.7 Prohibited Transfer or Encumbrance. Any transfer or
event in violation of Sections 7.09, 7.10, or 7.11.
9.01.8 Loss of License. The loss by the Mortgagor or by any
Tenant of any franchise agreement, license or permit necessary for the
continued operation, occupancy, or use of the Property in the manner and
to the extent being operated, occupied and used at the time of such loss,
if the same is not restored within ten (10) days after the loss.
9.01.9 Judgments. Any judgment against the Mortgagor remains
unpaid, unstayed, undischarged, unbonded or undismissed for a period of
thirty (30) days following the date which the judgment becomes final or
any appeal thereof is finally determined.
9.01.10 Other Defaults. The failure of the Mortgagor to per-
form or observe any of its obligations or covenants under this Mortgage
not previously specifically referred to in this Article 9, which failure
continues for a period of thirty (30) days after written notice to
Mortgagor.
9.01.11 Default Under Other Loan Documents. The failure of
the Mortgagor to perform or observe any of its obligations or covenants
in any Loan Document other than this Mortgage, which failure is not
remedied within any applicable grace or cure period specified in such
other Loan Document.
10.01.12 Event of Default Under Other Loan Documents. An
"Event of Default" (if so defined) occurs under a Loan Document other
than this Mortgage.
16
9.02 Payment or Performance by Mortgagee. Upon the occurrence of
------------------------------------
any Default, the Mortgagee may, at its option, make any payments or
take any other actions it deems necessary or desirable to cure the
Default or conserve the Property. The Mortgagor shall, upon demand,
reimburse the Mortgagee for all sums so advanced or expenses incurred
by it, together with interest at the Default Interest Rate stated in
the Note from the date of advance or payment of the same, which sums
shall be secured by this Mortgage. The Mortgagee may enter upon the
Property without prior notice to the Mortgagor or judicial process and
may take any action to enforce its rights under this Section 9.02 without
liability to the Mortgagor.
9.03 Possession by Mortgagee. Upon the occurrence of an Event of
------------------------
Default, the Mortgagee may enter upon and take possession of the
Property with notice to the Mortgagor, but without judicial process
or the appointment of a receiver. The Mortgagee may exclude all
persons from the Property and may proceed to operate the Property
and receive all Rents. The Mortgagee shall have the right as agent
for the Mortgagor to operate the Property and carry on the business
of the Mortgagor, either in the name of the Mortgagor or otherwise.
The Mortgagee shall not be liable to the Mortgagor for taking pos-
session of the Property, as aforesaid, nor shall the Mortgagee be
required to make repairs or replacements, and the Mortgagee shall
be liable to account only for Rents actually received by it. All
Rents collected by the Mortgagee shall be applied (a) first, to pay
all expenses incurred in taking possession of the Property, (b)
second, to pay costs and expenses to operate the Property and/or to
comply with the terms of the Loan Documents, including reasonable
attorney's fees, (c) third, to pay all sums secured by the Loan
Documents in the order of priority selected by Mortgagee, and (d)
fourth, with the balance, if any" to the Mortgagor or such other
person as may be entitled thereto. Neither the assignment of Rents
and Leases hereunder nor any other assignment of Leases shall impose
upon Mortgagee any liability to perform Mortgagor's obligations under
any Lease.
9.04 Acceleration of the Note. Upon an Event of Default, Mortgagee
------------------------
may, at its option and by written notice to the Mortgagor, declare the
entire balance of the Note and all other amounts due under the Loan Doc-
uments, immediately due and payable. Acceleration of maturity, once
claimed by the Mortgagee, may at the option of the Mortgagee, be
rescinded by written acknowledgment to that effect by the Mortgagee,
but the tender and acceptance of partial payments alone shall riot in
any way affect or rescind such acceleration of maturity.
17
9.05 Collection of Rents. Upon the occurrence of an Event of Default
-------------------
and the failure of the Mortgagor to cure the same within any notice and
cure periods set forth herein, and upon written demand by the Mortgagee
to the Tenants, all Rents shall be payable directly to the Mortgagee.
Any Tenant may rely upon such demand by Mortgagee pursuant to this
Section 9.04 and Mortgagor hereby consents to such payment of Rents to
Mortgagee.
9.06 Power of Sale and Assent to a Decree. The Mortgagor assents
------------------------------------
to the passage of a decree for the sale of the Property upon the occur-
rence of an Event of Default, by any court having jurisdiction and the
Mortgagor authorizes and empowers the Mortgagee, upon the occurrence of
an Event of Default, to sell the Mortgagor's interest in the Property,
in accordance with applicable law. The Property or any interest therein
may be sold upon such terms and in as many parcels as the person con-
ducting the sale may, in its sole discretion, elect. No readvertise-
ment of any sale shall be required if the sale is adjourned by announce-
ment, at the time and place set therefor, of the date, time, and place
to which the same is to be adjourned.
9.07 Application and Proceeds of Sale. Upon a sale by the Mort-
--------------------------------
gagee under Section 9.06, the purchaser shall receive that portion of
or interest in the Property purchased by it free from any claims of
the Mortgagor and without any liability to see to the application of
the purchase money. The net proceeds from the sale, after deduction
of all costs of the sale, shall be applied (a) first, to pay all
expenses incurred in taking possession of the Property, (b) second, to
pay costs and expenses to operate the Property, including attorney's
fees, (c) third, to pay all sums secured by or due under the Loan
Documents in the order of priority determined by the Mortgagee, and
(d) fourth, the balance, if any, to the Mortgagor or to other persons
entitled thereto.
9.08 Deficiency of Proceeds. If, after a sale by the Mortgagee
----------------------
under Section 9.06, a deficiency exists in the net proceeds of such
sale, the Mortgagee shall be entitled to a deficiency judgment or
decree for such deficiency which shall bear interest at the Default
Interest Rate stated in the Note.
9.09 Insurance or Condemnation After Deficiency. If the Property is
------------------------------------------
sold by the Mortgagee under Section 9.06 prior to receipt of a condem-
nation award or payment, the Mortgagee shall receive and apply the
proceeds of the award or payment toward the satisfaction of any
deficiency resulting from the sale, whether or not a deficiency
judgment is sought, recovered, or denied.
18
9.10 Right of the Mortgagee to Bid. The Mortgagee may bid and be-
-----------------------------
come the purchaser at a foreclosure sale under this Mortgage.
9.11 Bond. The Mortgagor waives any right to require any person
----
authorized to make the sale hereunder to post a bond.
9.12 Appointment of a Receiver. Upon the occurrence of an Event of
-------------------------
Default and the failure of the Mortgagor to cure the same within any
applicable notice and cure periods set forth herein, the Mortgagee
shall be entitled to the immediate appointment of a receiver for the
Property, without regard to the value of the Property or the solvency
of any person liable for payment of the amounts due under the Loan
Documents.
9.13 Remedies Cumulative. All rights, powers, and remedies of the
-------------------
Mortgagee provided for in the Loan Documents are cumulative and con-
current and shall be in addition to and not exclusive of any
appropriate legal or equitable remedy provided by law or contract.
Exercise of any right, power, or remedy shall not preclude the simul-
taneous or subsequent exercise of any other by the Mortgagee.
9.14 Consent to Jurisdiction and Venue. The Mortgagor consents to
---------------------------------
be sued in any jurisdiction where any of the Property is located.
9.15 Rights under the Uniform Commercia1 Code. Upon the occurrence
of an Event of Default, the Mortgagor shall assemble and make available
to the Mortgagee those portions of the Property which consist of personal
property at a place to be designated by the Mortgagee, and the Mortgagee
may exercise all the rights and, remedies of a secured party under the
Uniform Commercial Code. Any notices required by the Uniform Commercial
Code shall be deemed reasonable if mailed certified mail, return receipt
requested, postage prepaid, by the Mortgagee to the Mortgagor. Disposi-
tion of the Property shall be deemed commercially reasonable if made
pursuant to a public offering advertised at least twice in a newspaper
of general circulation in the County where the Property is located.
9.16 Right to Determine Which Leases Survive. if disclosed in
---------------------------------------
the advertisement of sale, a sale by the Mortgagee may be made subject
to one or more Leases of the Property.
SECTION 10. MISCELLANEOUS
10.01 Waivers. No term of any Loan Document shall be deemed waived
-------
unless the waiver shall be in writing and signed by the parties making
the waiver. Any failure by the Mortgagee
19
to insist upon the Mortgagor's strict performance of any of the terms
of the Loan Documents shall not be deemed or construed as a waiver of
those or any other terms. Any delay in exercising or enforcing any
rights with respect to a Default or an Event of Default shall not bar
the Mortgagee from exercising any rights under the Loan Documents, or
at law or in equity.
10.02 Consents.
--------
10.02.1 The Mortgagee may (a) release any person liable under
the Loan Documents, (b) release any part of the security, (c) extend the
time of payment of the Loan, and/or (d) modify the terms of the Loan
Documents, regardless of consideration and without notice to or consent
by the holder of any subordinate lien on the Property. No release,
extension or modification of the security held under the Loan Documents
shall impair or affect the lien of this Mortgage or the priority of such
lien over any subordinate lien.
10.02.2 Regardless of whether a person has been given notice
or has given its prior consent, it shall not be relieved of any obliga-
tion under any Loan Documents by reason of,(a) the failure of the
Mortgagee or any other person to take any action, foreclose, or other-
wise enforce any provision of the Loan Documents, (b) the release of
any other person liable under any Loan Document, (c) the release of any
portion of the security under the Loan Documents, or (d) any agreement
or stipulation between any subsequent owners of the Property and
Mortgagee extending the time of payment or modifying the terms of any
Loan Document.
10.03 Headings. All section headings are for convenience only and
--------
shall not be interpreted to enlarge or restrict the provisions of this
Mortgage.
10.04 Notices. All notices shall be in writing and, unless other-
-------
wise specified in a written notice, shall be sent to the respective
addresses of the parties as follows:
Mortgagee: Mercantile-Safe Deposit
and Trust Company
Two Hopkins Plaza
Baltimore, Maryland 21201
Attn: Stephen D. Palmer
Mortgagor: Dialysis Corporation of America
402 Marvel Court
Easton, Maryland 21601
Attn: Barton L. Pelstring
20
A notice may be hand-delivered, sent by any overnight delivery
service or mailed, postage prepaid, by first class, registered or
certified mail. Any notice sent by mail shall be deemed to have been
received on the second business day following the date of mailing.
10.05 Binding Effect. No transfer of any portion of the Property
--------------
or any interest thereon shall relieve any transferor of its obliga-
tions under the Loan Documents. No transferor of any obligation under
any Loan Document shall be relieved of its obligations by any modifica-
tion of any Loan Document subsequent to the transfer.
10.06 Amendment. This Mortgage may not be modified except in
---------
writing signed by the Mortgagee and the Mortgagor.
10.07 Severability. In the event any provision of this Mortgage
------------
shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforce-
able any other provision hereof.
10.08 Notices from Governmental Authorities Affecting The
---------------------------------------------------
Property. Any notice from any governmental or quasi-governmental
- --------
authority or corporation with respect to the Property sent to or
known by the Mortgagor shall be promptly transmitted to the Mortgagee.
10.09 Applicable Law. The Mortgage is being executed and delivered
--------------
in the State of Maryland and shall be construed, governed and enforced
in accordance with the laws in effect from time to time in the State
of Pennsylvania for the purposes of establishing, maintaining and
enforcing the lien of this mortgage only, it being acknowledged and
agreed that the loan transactions underlying this Mortgage are
governed by the laws of the State of Maryland.
10.10 Time of the Essence. Time is of the essence with respect
-------------------
to the Loan Documents.
10.11 Effect of Payments. Any payment or other performance made
------------------
in accordance with the Loan Documents by any person other than
Mortgagor shall not entitle such person to any right of subrogation
under the Loan Documents, unless expressly consented to in writing by
the Mortgagee.
10.12 Word Forms. The use of any gender, tense, or conjugation
----------
herein shall be applicable to all genders, tenses and conjugations.
The use of the singular shall include the plural and the plural shall
include the singular.
21
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
Mortgagor has executed this Mortgage and Security Agreement as of the
day and year first above written.
WITNESS: THE MORTGAGOR:
Dialysis Corporation of
America
/s/ Phylis O Pope /s/ Barton L. Pelstring
- ------------------------------ By:---------------------------(SEAL)
Barton L. Pelstring,
President
/s/ Jamie A. Palz /s/ Dennis W. Healey
- ------------------------------ By:---------------------------(SEAL)
Dennis W. Healey,
Secretary/Treasurer
STATE OF MARYLAND, CITY/COUNTY OF Talbot, to wit:
------
I HEREBY CERTIFY, that on this 12th day of December, 1988, before
----
me, the undersigned Notary Public of the State of Maryland, personally
appeared Barton L. Pelstring, President of Dialysis Corporation of
America, known to me (or satisfactorily proved) to be the person who
executed the aforegoing Mortgage and Security Agreement and acknowledged
that he executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Phylis O. Pope
-------------------------------
Notary Public
My commission expires: 7/1/90
------
22
STATE OF FLORIDA, CITY/COUNTY OF Dade, to wit:
----
I HEREBY CERTIFY, that on this 8 day of December, 1988, before me,
---
the undersigned Notary Public of the State of Maryland, personally
appeared Dennis W. Healey, Secretary/Treasurer of Dialysis Corporation
of America, known to me (or satisfactorily proved) to be the person who
executed the aforegoing Mortgage and Security Agreement and acknowledged
that he executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Jamie A. Palz
--------------------------------
Notary Public
My commission expires:
------
Notary Public, State of Florida
My Commission Expires May 10, 1992
Bonded Thru Troy Fain Insurance Inc.
11/14/88
CJF/18661
23
dialysis corp
LEGAL9
ALL THAT CERTAIN tract or parcel of land situate in the Borough
of Lemoyne, County of Cumberland, and Commonwealth of Pennsylvania,
more particularly bounded and described as follows, to wit:
BEGINNING at a point in the eastern line of Miller Avenue (40 feet
wide) which point is measured southwardly along said line of Miller
Avenue at right angles from Walnut Street a distance of 80 feet; thence
in an eastwardly direction at right angles to Miller Avenue a distance
of 120 feet to a point in the western line of Peach Alley (20 feet
wide); thence in a southwardly direction along said line of Peach Alley
238.10 feet to a nail in the northern line of a 15-foot unnamed alley;
thence at right angles to Peach Alley and westwardly along the said
northern line of the 15-foot wide unnamed alley 120 feet to a point
in the eastern line of Miller Avenue; thence along said line of Miller
Avenue in a northwardly direction at right angles to Walnut Street
238.10 feet to a point, the place of BEGINNING.
BEING THE SAME PREMISES which Hazel M. Opperman, widow, by her deed
dated May 13, 1987, and recorded July 24, 1987 in the Office of the
Recorder of Deeds in and for Cumberland County, Pennsylvania in Record
Book 32-V, at page 51, granted and conveyed unto Dialysis Corporation
of America, the within Mortgagor.
EXHIBIT A
Description of Land