Exhibit 10.5
Miami-Dade County, Florida
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MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF
LEASES AND RENTS, FINANCING STATEMENT AND
FIXTURE FILING
BY
BENTLEY'S LUGGAGE CORP.
Mortgagor,
TO
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Mortgagee,
Relating to Premises in:
Miami-Dade County, Florida
DATED: As of June 19, 2001
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This instrument was prepared by and
after recording should be returned to:
David G. Crumbaugh
Latham & Watkins
233 S. Wacker, Ste. 5800
Chicago, Illinois 60606
THIS MORTGAGE IS GIVEN IN CONNECTION WITH A MULTISTATE TRANSACTION. THE INDEBTEDNESS SECURED HEREBY IS EVIDENCED BY PROMISSORY NOTES EXECUTED OUTSIDE THE STATE OF FLORIDA. THE INDEBTEDNESS SECURED HEREBY IS ALSO SECURED BY MORTGAGES AND/OR DEEDS OF TRUST ENCUMBERING PROPERTY IN OTHER STATES. RECOVERY UNDER THIS MORTGAGE IS LIMITED TO $7,700,000 IN PRINCIPAL PLUS INTEREST, PROTECTIVE ADVANCES AND COSTS OF COLLECTION IN CONNECTION THEREWITH.
DOCUMENTARY STAMP TAX IN THE AMOUNT OF $26,950 IS BEING PAID ON THE DATE HEREOF BASED ON THE LIMITED AMOUNT. INTANGIBLES TAX IN THE AMOUNT OF $ 14,000 IS BEING PAID ON THE DATE HEREOF BASED ON THE VALUE OF THE PROPERTY ($7,000,000).
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF LEASES
AND RENTS, FINANCING STATEMENT AND FIXTURE FILING
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THIS MORTGAGE, SECURITY AGREEMENT,
Assignment of Leases and Rents FINANCING STATEMENT AND FIXTURE FILING ("Mortgage") is made as of June 19, 2001 by Bentley's Luggage Corp., a Florida corporation, with its principal office at 7401 Boone Avenue North, Brooklyn Park,
Minnesota 55428 ("Mortgagor"), to GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, with its principal office at 10 South LaSalle Street, Suite 2800, Chicago, Illinois 60603, as mortgagee, assignee and secured party, in its capacity as agent on behalf of itself as lender and for the Lenders as hereinafter defined (together with any successors or assigns in such capacity, the "Agent" or "Mortgagee").
I.
RECITALS
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WHEREAS, Mortgagor is the owner and holder of fee simple title in and to all of the real estate located in the County of Miami-Dade and State of Florida (the "State"), more fully described in Exhibit A attached hereto (the "Premises") and the owner of the Personal Property (as hereinafter defined), which Premises forms a portion of the Property described below;
WHEREAS, on June 19, 2001 Wilsons Leather Holdings Inc., a Minnesota corporation ("Borrower") entered into that certain Third Amended and Restated Credit Agreement by and among each of the financial institutions named therein (the "Lenders"), the Agent, and certain of Borrower's corporate Affiliates (as defined in the Credit Agreement) (as the same may be amended, modified or otherwise supplemented and in effect from time to time, hereinafter the "Credit Agreement");
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WHEREAS, Mortgagor is party to that certain Store Guarantors' Guaranty dated as of May 25, 1996 (as amended , restated or otherwise modified from time to time and reaffirmed by Mortgagor as of the date hereof, the "Guaranty") whereby Mortgagor has guaranteed all of the Obligations (as this and other capitalized terms not otherwise defined herein are defined in the Credit Agreement) of Borrower under the Credit Agreement;
WHEREAS, Mortgagor wishes to provide further assurance and security to the Agent and the Lenders and as a condition to the Agent and the Lenders continuing to make Loans and provide other financial accommodations to Borrower pursuant to the Credit Agreement, the Agent and the Lenders are requiring that Mortgagor grant to the Agent, on behalf of the Lenders, a security interest in and a first mortgage lien upon the Property (as hereinafter defined) to secure all of Mortgagor's obligations under the Guaranty;
WHEREAS, Mortgagor is an Affiliate of Borrower, and as such will derive direct and indirect economic benefits from the Loans and other financial accommodations provided to Borrower by Agent and Lenders pursuant to the Credit Agreement;
WHEREAS, this Mortgage is being given by Mortgagor to secure (a) the payment of all the obligations of Mortgagor under the Guaranty, this Mortgage and the other Loan Documents, (b) together with the principal amount secured hereby, interest thereon and any and all disbursements made by Mortgagee for the payment of taxes, or insurance on the Property covered by the lien of this Mortgage, and for reasonable attorneys' fees, loan commissions, service charges, liquidated damages, expenses and court costs incurred in the collection of any or all of such sums of money, and (c) the performance of all terms, covenants, conditions, provisions, agreements and liabilities contained in the Guaranty, this Mortgage and in the other Loan Documents (collectively, the "Secured Indebtedness");
WHEREAS, this Mortgage also secures Mortgagor's obligations under the Guaranty relating to the payment of and includes all amounts owing by Borrower with respect to all future or further advances of the loans made pursuant to the Credit Agreement (the "Loans") as shall be made at all times, regardless of whether proceeds of the Loans have or shall be disbursed by Mortgagee herein or its successors or assigns, to and for the benefit of Borrower, its successors or assigns, to the same extent as if such future advances were made on the date of the execution of this Mortgage. The original principal amount of Secured Indebtedness secured by this Mortgage is TWO HUNDRED FIFTEEN MILLION DOLLARS ($215,000,000) and may decrease or increase from time to time. Such further or future advances shall bear interest at the same rate as specified in the Credit Agreement unless such interest rate shall be modified by subsequent agreement. The parties hereby acknowledge and intend that all advances, including future advances whenever hereafter made, shall be a lien from the time this Mortgage is recorded.
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II.
THE GRANT
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NOW, THEREFORE, in order to secure the payment of any and all Secured Indebtedness, and in consideration of Ten and No/100 Dollars ($10.00) in hand paid by Mortgagee to Mortgagor, the Recitals above stated, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor GRANTS, BARGAINS, SELLS, ASSIGNS, RELEASES, ALIENATES, TRANSFERS, WARRANTS, DEMISES, CONVEYS and MORTGAGES to Mortgagee and its successors and assigns forever (and grants to Mortgagee and its successors and assigns forever a continuing security interest in and to) all of Mortgagor's estate, right, claim and interest in and to the Premises described on Exhibit A, together with all Mortgagor's estate, right, claim and interest in and to the following described property, all of which other property is pledged primarily on a parity with the Premises and not secondarily (the Premises and the following described rights, interests, claims and property are collectively referred to as the "Property"):
(a) all buildings, structures and other improvements of every kind and
description now or hereafter erected, situated, or placed upon the Premises
(the "Improvements"), together with any and all Personal Property (as
defined in subsection (i) below) and all attachments now or hereafter owned
by Mortgagor and located in or on, forming part of, attached to, used or
intended to be used in connection with, or incorporated in any such
Improvements, including all extensions of, additions to, betterments,
renewals of, substitutions for and replacements for any of the foregoing;
(b) all claim, demand, right, title and interest of Mortgagor, whether
now owned or hereafter acquired, including without limitation, any
after-acquired title, franchise, license, remainder or reversion, in and to
any and all (i) land or vaults lying within the right-of-way of any street,
avenue, way, passage, highway, or alley, open or proposed, vacated or
otherwise, adjoining the Premises; (ii) alleys, sidewalks, streets,
avenues, strips and gores of land belonging, adjacent or pertaining to the
Premises or the Improvements; (iii) storm and sanitary sewer, water, gas,
electric, railway and telephone services relating to the Premises and the
Improvements; (iv) development rights, air rights, water, water rights,
water stock, gas, oil, minerals, coal and other substances of any kind or
character underlying or relating to the Premises or any part thereof; and
(v) tenements, hereditaments, easements, appurtenances, other rights,
liberties, reservations, allowances and privileges relating to the Premises
or the Improvements or in any way now or hereafter appertaining thereto,
including homestead and any other claims at law or in equity;
(c) all leasehold estates and right, title and interest of Mortgagor,
whether now owned or hereafter acquired, in and to any and all leases,
subleases, management agreements, arrangements, concessions or agreements,
written or oral, relating to the use and occupancy of the Premises or the
Improvements or any portion thereof, now or hereafter existing or entered
into (collectively "Leases");
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(d) all right, title and interest of Mortgagor, whether now owned or
hereafter acquired, in and to any and all rents, issues, profits,
royalties, revenue, advantages, income, avails, claims against guarantors,
all cash or security deposits, advance rentals, deposits or payments given
and other benefits now or hereafter derived directly or indirectly from the
Premises and Improvements under the Leases or otherwise (collectively
"Rents"), subject to the right, power and authority in the Assignments (as
hereinafter defined) to collect and apply the Rents;
(e) all right, title and interest of Mortgagor in and to all options
to purchase or lease the Premises or the Improvements or any portion
thereof or interest therein, or any other rights, interests or greater
estates in the rights and properties comprising the Property now owned or
hereafter acquired by Mortgagor;
(f) any interests, estates or other claims of every name, kind or
nature, both in law and in equity, which Mortgagor now has or may acquire
in the Premises and Improvements or other rights, interests or properties
comprising the Property now owned or hereafter acquired;
(g) all rights of Mortgagor to any and all plans and specifications,
designs, drawings and other matters prepared for any construction on the
Premises or regarding the Improvements;
(h) all rights of Mortgagor under any contracts executed by Mortgagor
with any provider of goods or services for or in connection with any
construction undertaken on or services performed or to be performed in
connection with the Premises or the Improvements;
(i) all right, title and interest of Mortgagor in and to all the
following tangible personal property ("Personal Property") owned by
Mortgagor and now or at any time hereafter located in, on or at the
Premises or the Improvements and used or useful in connection therewith:
(i) all building materials and equipment located upon the
Premises and intended for construction, reconstruction, alteration,
repair or incorporation in or to the Improvements now or hereafter to
be constructed thereon, whether or not yet incorporated in such
Improvements, (all of which shall be deemed to be included in the
Property upon delivery thereto);
(ii) all machines, machinery, fixtures, apparatus, equipment or
articles used in supplying heating, gas, electricity,
air-conditioning, water, light, power, plumbing, sprinkler, waste
removal, refrigeration, ventilation, and all fire sprinklers, alarm
systems, protection, electronic monitoring equipment and devices;
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(iii) all window, structural, maintenance and cleaning equipment
and rigs; and
(iv) all fixtures now or hereafter owned by Mortgagor and
attached to or contained in and used or useful in connection with the
Premises or the Improvements. All such property owned by Mortgagor and
placed by it on the Premises or used in connection with the operation
or maintenance shall, so far as permitted by law, be deemed for the
purposes of this Mortgage to be part of the real estate constituting
and located on the Premises and covered by this Mortgage. As to any of
the property that is not part of such real estate or does not
constitute a "fixture," as such term is defined in the Uniform
Commercial Code of the State (the "Code"), this Mortgage shall be
deemed to be a security agreement under the Uniform Commercial Code
for the purpose of creating hereby a security interest in property,
which Mortgagor hereby grants to the Mortgagee as "secured party" as
defined in the Code. The enumeration of any specific items of Personal
Property set forth herein shall in no way exclude or be held to
exclude any items of property not specifically enumerated;
(j) all the estate, interest, right, title or other claim or demand
which the Mortgagor now has or may hereafter have or acquire with respect
to (i) proceeds of insurance in effect with respect to the Property and
(ii) any and all awards, claims for damages, judgments, settlements and
other compensation made for or consequent upon the taking by condemnation,
eminent domain or any like proceeding, or by any proceeding or purchase in
lieu thereof, of the whole or any part of the Property, including, without
limitation, any awards and compensation resulting from a change of grade of
streets and awards and compensation for severance damages (collectively
"Awards").
TO HAVE AND TO HOLD the Property hereby mortgaged and conveyed or so intended, together with its rents, issues and profits, unto the Mortgagee, its successors and assigns, forever, for the uses and purposes herein set forth, subject, however, only to the Permitted Exceptions (hereinafter defined).
The Mortgagor hereby covenants with the Mortgagee and with the purchaser at any foreclosure sale: that at the execution and delivery hereof, Mortgagor owns the Property and has good, indefeasible estate therein, in fee simple; that the Property is free from all encumbrances and exceptions to title (and any claim of any other person) other than those encumbrances and exceptions which are Permitted Encumbrances defined in the Credit Agreement or are listed on Exhibit B hereto, without reimposing same ("Permitted Exceptions"); that it has good and lawful right to sell, mortgage and convey the Property; and that Mortgagor and its successors and assigns shall forever warrant and defend the Property against all claims and demands whatsoever.
If and when Mortgagor has paid all of the indebtedness evidenced by the Term B Note, and has strictly performed and observed all of the agreements, terms, conditions, provisions and warranties contained herein and there exist no commitments of the Lenders under the Term B
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Note or in the Credit Agreement that specifically relate to the Term B Note and the indebtedness evidenced thereby, then this Mortgage and the estate, right and interest of the Mortgagee in and to the Property shall cease and shall be released at the cost of Mortgagor, but otherwise shall remain in full force and effect.
III.
GENERAL AGREEMENTS
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3.1 Payment of Indebtedness. Mortgagor shall pay promptly and when due all amounts owing by it in respect of the Guaranty and all other Secured Indebtedness at the times and in the manner provided in the Guaranty, this Mortgage, or any of the other Loan Documents. Each of the Revolving Notes, the Term B Note and the Swing Line Note (as defined in the Credit Agreement; hereinafter referred to as the "Notes") bears interest as therein provided. The Notes provide for a variable rate of interest.
3.2 Impositions. Except as otherwise permitted under the Credit Agreement, Mortgagor shall pay immediately, when first due and owing, all general taxes, special taxes, special assessments, water charges, sewer charges, and any other charges, fees, taxes, claims, levies, expenses, liens and assessments, ordinary or extraordinary, governmental or nongovernmental, statutory or otherwise (all of the foregoing being herein collectively referred to as "Impositions"), that may be asserted against the Property or any part thereof or interest therein.
Mortgagor may, in good faith and with reasonable diligence, contest the validity or amount of any Impositions in accordance with Section 5.2(b) of the Credit Agreement.
3.3 Payment of Impositions by Mortgagee. Upon the occurrence and during the continuance of an Event of Default (as hereinafter defined), Mortgagee is hereby authorized to make or advance, in the place and stead of Mortgagor, any payment relating to Impositions, unless such Imposition is then being contested by Mortgagor pursuant to Section 5.2(b) of the Credit Agreement. Mortgagee may do so according to any bill, statement, or estimate procured from the appropriate public office without inquiry into the accuracy or the validity of any Impositions, lien, sale, forfeiture, or related title or claim. Mortgagee is further authorized to make or advance, in place of Mortgagor, unless such matter is being contested by Mortgagor in accordance with Section 5.2(b) of the Credit Agreement, any payment relating to any apparent or threatened adverse title, lien, statement of lien, encumbrance, claim, charge, or payment otherwise relating to any other purpose herein and hereby authorized, but not enumerated in this Section, whenever, in Mortgagee's judgment and discretion, such advance seems necessary or desirable to protect the full security intended to be created by this Mortgage, but only if nonpayment by Mortgagor constitutes an Event of Default under the Credit Agreement. All such advances and indebtedness authorized by this Section shall constitute Secured Indebtedness and shall be repayable by Mortgagor upon demand with interest at the highest rate of interest which may be due and owing from time to time on any loan and payable under the Credit Agreement (the "Default Rate").
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3.4 Insurance, Damage to or Destruction of Collateral
(a) Mortgagor shall, at its sole cost and expense, maintain the policies of insurance described on Disclosure Schedule 3.18 of the Credit Agreement relating to the Property or substantially equivalent coverage with reputable insurers. If Mortgagor at any time or times hereafter shall fail to obtain or maintain any of the policies of insurance required above or to pay all premiums relating thereto, Mortgagee may at any time or times thereafter obtain and maintain such policies of insurance and pay such premium and take any other action with respect thereto which Mortgagee deems reasonably advisable. Mortgagee shall have no obligation to obtain insurance for Mortgagor or pay any premiums therefor. By doing so, Mortgagee shall not be deemed to have waived any Event of Default arising from Mortgagor's failure to maintain such insurance or pay any premiums therefor. All sums so disbursed, including reasonable attorneys' fees, court costs and other charges related thereto, shall be payable on demand by Mortgagor to Mortgagee and shall be additional Secured Indebtedness. Mortgagor must provide Mortgagee fifteen (15) days prior written notice of any non-renewal, cancellation or amendment of the insurance policies required above.
(b) Mortgagor irrevocably makes, constitutes and appoints Mortgagee (and all officers, employees or agents designated by Mortgagee) as its true and lawful agent and attorney-in-fact for the purpose of making, settling and adjusting claims under such policies of insurance requested above, endorsing the name of Mortgagor on any check or other item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect to such policies of insurance; provided that so long as no Event of Default shall have occurred and be continuing, Mortgagor shall have the right to direct any such settlements and adjustments in its sole discretion. Mortgagor shall promptly notify Mortgagee of any loss, damage, or destruction to the Property in the amount of $1,000,000 or more, whether or not covered by insurance. If an Event of Default shall have occurred and be continuing, Mortgagee is hereby authorized to collect all insurance proceeds relating to the Property . After deducting from such proceeds the expenses, if any, incurred by Mortgagee or Mortgagor in the collection or handling thereof, Mortgagee may, at its option, apply all net proceeds to the Secured Indebtedness in accordance with the Credit Agreement or permit or require Mortgagor to use such money, or any part thereof, to replace the Property in a diligent and expeditious manner. Notwithstanding the foregoing, if the casualty giving rise to such insurance proceeds would not reasonably be expected to have a Material Adverse Effect (as defined in the Credit Agreement) and such insurance proceeds do not exceed $5,000,000 in the aggregate, Mortgagee shall permit Mortgagor to replace the Property, and shall release such insurance proceeds therefor, so long as no Event of Default shall have occurred and be continuing at the time of any requested release of funds; provided that, if Mortgagor shall not have completed the replacement of the Property within 270 days of such casualty (excluding delays due to force majeure), Mortgagee may apply such insurance proceeds to the Secured Indebtedness in accordance with the Credit Agreement. Except as otherwise provided in this Section and in the Credit Agreement, all insurance proceeds which are to be made available to Mortgagor to replace the Property shall first be applied by
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Mortgagee in accordance with the Credit Agreement, and any excess shall be released to Mortgagor.
3.5 Condemnation and Eminent Domain. Mortgagor shall give Mortgagee prompt notice of all proceedings, instituted or threatened, seeking condemnation or a taking by eminent domain or like process (herein collectively called "Taking"), of all or any part of the Property or affecting any related easement or appurtenance (including severance of, consequential damage to, or change in grade of streets), and shall deliver to Mortgagee copies of any and all papers served in connection with any such proceeding. Mortgagor hereby assigns, transfers and sets over unto Mortgagee the entire proceeds of any and all Awards resulting from any Taking. Mortgagee is hereby authorized to collect and receive from the condemnation authorities all Awards and is further authorized to give appropriate receipts and acquittances. The proceeds of any and all Awards resulting from any Taking shall be applied as provided under Section 1.3(d) of the Credit Agreement.
3.6 Maintenance of Property. Mortgagor shall:
(a) promptly repair, restore, replace or rebuild any material portion
of the Property which may become damaged, destroyed, altered, removed,
severed, or demolished, whether or not proceeds of insurance are available
or sufficient for the purpose, with replacements at least equal in quality
and condition as previously existed, free from any security interest in,
encumbrances on or reservation of title thereto except the lien of this
Mortgage and the Permitted Exceptions;
(b) keep the Property in good condition and repair, normal wear and
tear excepted, without waste, and free from mechanics', materialmen's or
like liens or claims except for Permitted Exceptions; and
(c) not make any material alterations in the Property, except as
required by law or municipal ordinance or in the ordinary course of
business, without consent of Mortgagee, which consent shall not be
unreasonably withheld.
3.7 Prohibited Liens and Transfers.
(a) Except as otherwise provided in Section 6.7 of the Credit
Agreement and except for the Permitted Exceptions, Mortgagor shall not
create, suffer, or permit to be created or filed against the Property any
mortgage lien or other lien superior or inferior to the lien created by
this Mortgage. Mortgagor may contest any lien claim arising from any work
performed, material furnished, or obligation incurred by Mortgagor as
provided in Section 5.2(b) of the Credit Agreement.
(b) Except as otherwise provided in Section 6.8 of the Credit
Agreement, Mortgagor may not sell, lease or convey all or any part of the
Property or any interest therein.
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3.8 Stamp Taxes. If at any time the United States government, or any federal, state, or municipal governmental subdivision, requires Internal Revenue or other documentary stamps or levies any tax on this Mortgage or any of the Loan Documents, or requires payment of any tax in the nature of or comparable to the United States Interest Equalization Tax on the Secured Indebtedness, then Mortgagor shall pay such tax, including interest and penalties, in the required manner.
3.9 Change in Tax Laws. In the event of the enactment, after the date of this Mortgage, of any law of the United States of America, or any state or political subdivision thereof, (i) deducting from the value of the Premises, for the purpose of taxation, the amount of any lien thereon; (ii) imposing upon Mortgagee the payment of all or any part of the taxes, assessments, charges or liens hereby required to be paid by Mortgagor, or (iii) changing in any way the laws relating to the taxation of mortgages or debts secured by mortgages or Mortgagor's interest in the Property, or the manner of collection of taxes, so as to adversely affect this Mortgage or the Secured Indebtedness; then Mortgagor, upon demand by Mortgagee, shall pay such taxes, assessments, charges, or liens or reimburse Mortgagee therefor. If, in the reasonable opinion of counsel for Mortgagee, it would be unlawful to require Mortgagor to make such payment or the making of such payment might res ...