UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE EXCHANGE ACT OF 1934.
For the transition period from to
Commission file number 1-10641
MILESTONE PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 65-0158204
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
150 E. Palmetto Park Rd. 4th Floor, Boca Raton, FL 33432
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561) 394 - 9533
-----------------
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
As of May 12, 1999, 4,943,633 shares of the Registrant's Common Stock,
par value $.01 per share, were outstanding and 16,423 shares of the Registrant's
$.78 Convertible Series A Preferred Stock were outstanding.
<PAGE>
Part I: Financial Information
Item 1. Financial Statements
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1999 (Unaudited) and December 31, 1998
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 2,478,826 $ 11,826,301
Restricted cash 9,171,036 222,000
Loans receivable 1,426,499 1,444,442
Accounts receivable 608,388 812,555
Accrued interest receivable 1,143,071 5,185,432
Due from related party 878,120 837,400
Prepaid expenses and other 864,728 1,231,663
--------------- ---------
Total current assets 16,570,668 21,559,793
Property, improvements and equipment, net 21,557,747 21,517,884
Wraparound notes, net 35,747,024 39,529,787
Deferred income tax asset, net 3,293,176 2,994,070
Investments in preferred stock 0 445,500
Management contract rights, net 174,666 193,600
Goodwill and other, net 647,088 681,562
--------------- -------
Total assets $ 77,990,369 $ 86,922,196
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,203,474 $ 2,436,964
Accrued litigation payable 9,692,454 9,692,454
Accrued interest payable 409,660 306,846
Master lease payable 1,890,813 8,962,828
Current portion of mortgages and notes payable 5,812,003 5,782,950
Income taxes payable 2,836,496 2,836,496
-------------- ---------
Total current liabilities 21,844,900 30,018,538
Mortgages and notes payable 41,669,047 42,194,179
---------- ----------
Total liabilities 63,513,947 72,212,717
---------- ----------
Commitments and Contingencies
Stockholders' equity:
Common stock ($.01 par value, 10,000,000 shares authorized,
4,943,633 issued
and outstanding at March 31, 1999 and
December 31, 1998; 692,591 shares in treasury) 49,436 49,436
Preferred stock (Series A $.01 par value, $10 liquidation
preference, 10,000,000 shares authorized, 16,423 and
2,999,707 shares issued and outstanding at March 31, 1999
and December 31, 1998, respectively) 164 29,997
Additional paid in surplus 45,527,013 45,497,180
Accumulated deficit (27,659,773) (27,426,716)
Shares held in treasury - at cost (3,440,418) (3,440,418)
----------- ---------------
Total stockholders' equity 14,476,422 14,709,479
---------- --------------
Total liabilities and stockholders' equity $ 77,990,369 $ 86,922,196
============ =============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF REVENUES AND EXPENSES
(Unaudited)
For the Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
-------------- --------------
REVENUES
<S> <C> <C>
Rent $ 2,042,097 $ 2,745,805
Interest income 1,507,034 2,240,556
Revenue from management company operations 169,680 195,842
Tenant reimbursements 277,554 257,384
Management and reimbursement income 19,442 29,051
Percentage rent 55,197 109,248
Gain on sale of real estate and real estate related assets 0 81,890
-------------- -----------
Total revenues 4,071,004 5,659,776
--------- ---------
EXPENSES
Master lease expense 1,955,054 3,445,833
Interest expense 1,069,973 1,519,598
Depreciation and amortization 191,795 208,073
Salaries, general and administrative 552,636 576,328
Property expenses 449,770 443,666
Expenses for management company operations 176,930 268,265
Professional fees 194,019 219,345
--------- ----------
Total expenses 4,590,177 6,681,108
---------- ----------
Loss before income taxes (519,173) (1,021,332)
Benefit for income taxes (286,116) (487,038)
--------- ---------
Net loss attributable to common stockholders $ (233,057) $ (534,294)
============ ============
Loss per common share, basic and diluted $ (0.05) $ (0.13)
=============== ===============
Weighted average common shares outstanding 4,244,664 4,213,368
=========== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
For the Three Months Ended March 31, 1999
<TABLE>
<CAPTION>
Common Stock Preferred Stock Treasury Stock
Shares Cost Shares Cost Shares Cost
=============================================== =========== =========== ============== =========== =========== ==============
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1999 4,943,633 $ 49,436 2,999,707 $ 29,997 (692,591) $ (3,440,418)
Cancellation of Series A Preferred Stock (2,983,284) (29,833)
Net loss for the three months ended March 31, 1999
----------- ----------- -------------- ----------- ---------- --------------
Balance, March 31, 1999 4,943,633 $ 49,436 16,423 $ 164 (692,591) $ (3,440,418)
=========== =========== ============== =========== =========== ==============
Additional
paid in Accumulated Stockholders'
surplus deficit equity
=============================================== =============== =============== ===============
<S> <C> <C> <C>
Balance, January 1, 1999 $ 45,497,180 $ (27,426,716) $ 14,709,479
Cancellation of Series A Preferred Stock 29,833 0
Net loss for the three months ended March 31, 1999 (233,057) (233,057)
--------------- --------------- ---------------
Balance, March 31, 1999 $ 45,527,014 $ (27,659,773) $ 14,476,422
=============== =============== ===============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
March 31, 1999 March 31, 1998
-------------- --------------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (233,057) $ (534,294)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 191,795 208,073
Deferred benefit taxes (299,106) (527,851)
Gain on sale of real estate related assets 0 81,890
Changes in operating assets and liabilities
Decrease in accounts receivable 204,167 111,319
Increase in due from related party (40,720) (77,954)
Decrease in accrued interest receivable 4,042,361 6,595,014
Decrease (increase) in prepaid expenses 366,935 (400,786)
Decrease in accrued expenses (1,233,489) (1,400,525)
Increase in accrued interest payable 102,814 96,265
Decrease in master lease payable (7,072,016) (10,198,183)
Decrease in due to related party 0 100,680
---------- -------------
Net cash used in operating activities (3,970,316) (5,946,352)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Principal repayments on loans receivable 17,943 16,568
Principal repayments on wraparound notes 3,782,763 5,061,340
Investment in wraparound notes 0 15,000
Purchase of leasehold improvements (178,250) (92,456)
Proceeds from realization of real estate related assets 0 75,000
Proceeds from redemption of investments in preferred stock 445,500 445,500
------- -------
Net cash provided by investing activities 4,067,956 5,520,952
----------- ------------
CASH FLOW FROM FINANCING ACTIVITIES
Principal payments on mortgages and notes payable (496,079) (779,760)
Amounts in restricted cash (8,949,036) 0
----------- ------------
Net cash used in financing activities (9,445,115) (779,760)
----------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (9,347,475) (1,205,160)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 11,826,301 13,435,237
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,478,826 $ 12,230,077
============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ 967,159 $ 1,423,333
============ ============
Cash paid during the period for income taxes $ 12,990 $ 40,813
============ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying consolidated financial statements of Milestone Properties, Inc.
("Milestone") and its wholly owned subsidiaries (together, Milestone with its
subsidiaries is hereinafter referred to as the "Company") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The financial statements as of and for the periods ended March 31,
1999 and 1998 are unaudited. The results of operations for the interim periods
are not necessarily indicative of the results of operations for the fiscal year.
Certain information for 1998 has been reclassified to conform to the 1999
presentation. These consolidated financial statements should be read in
conjunction with the financial statements and footnotes included thereto in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
The Company is engaged in the business of owning, acquiring, managing,
developing and investing in commercial real estate and real estate related
assets. The Company is primarily engaged in the ownership, operation and
management of interests in commercial real estate properties, currently (as of
the date of this filing) consisting of (i) 10 properties owned in fee (the "Fee
Properties"), (ii) the ownership of wraparound notes (the "Wraparound Notes")
and wraparound mortgages (the "Wraparound Mortgages" and, together with the
Wraparound Notes, the "Wrap Debt") which are secured by 23 commercial real
properties (the "Underlying Properties" and, together with the Fee Properties,
the "Properties") and (iii) the operation and management of the Properties. At
March 31, 1999, the Company possessed interests in 35 commercial real estate
properties consisting of (i) 10 properties owned in fee and (ii) the ownership
of wraparound notes and wraparound mortgages secured by 25 commercial real
properties. At March 31, 1998, the Company possessed interests in 31 commercial
real properties consisting of (i) four properties owned in fee and (ii) the
ownership of wraparound notes and wraparound mortgages secured by 27 commercial
real properties.
1. Acquisition and Disposition of Real Estate Related Assets
On April 6, 1999, a wraparound note held by the Company on a 125,803 square foot
shopping center property located in Pascagoula, Mississippi (the "Pascagoula
Property"), was paid as a result of the sale of the Pascagoula Property by its
owner, an affiliate of the Company (the partnership that owned the Pascagoula
Property), to an unrelated third party. In connection with the sale of the
Pascagoula Property, the Company, as the master lessee on a master lease on the
Pascagoula Property, canceled such master lease. As a result of the payment of
the wraparound note, the Company realized net cash proceeds of approximately
$2,178,000 and a book gain of approximately $607,000.
6
<PAGE>
On April 27, 1999, a wraparound note held by the Company on a 52,700 square foot
shopping center property located in Baton Rouge, Louisiana (the "Baton Rouge
Property"), was paid as a result of the sale of the Baton Rouge Property by its
owner, an affiliate of the Company (the partnership that owned the Baton Rouge
Property), to an unrelated third party. In connection with the sale of the Baton
Rouge Property, the Company, as the master lessee on a master lease on the Baton
Rouge Property, canceled such master lease. Of the gross proceeds, $1,896,208
was used to satisfy the underlying mortgage debt on the Baton Rouge Property. As
a result of the payment of the wraparound note and the satisfaction of the
underlying mortgage debt, the Company realized net cash proceeds of
approximately $2,045,000 and a book gain of approximately $321,000.
2. Legal Proceedings
As previously reported, during 1996 Milestone, certain past and present members
of its Board of Directors and executive officers, and Concord Assets Group, Inc.
("Concord"), a New York Corporation, were named as defendants in a purported
class action and derivative lawsuit (the "Winston Actions") commenced in the
Court of Chancery of the State of Delaware (the "Delaware Court"). In the
Winston Actions, the plaintiff, a Series A Preferred Stockholder purporting to
bring the action on behalf of himself, all other Series A Preferred Stockholders
and derivatively on behalf of Milestone, alleged that in connection with
Milestone's acquisition in October 1995 of certain wraparound notes, wraparound
mortgages and fee properties from certain affiliates of Concord and certain
related transactions (collectively, the "Transactions"), Milestone and its
directors engaged in self-dealing, violated federal securities laws and an
injunction against such violations and breached their fiduciary duties to the
Series A Preferred Stockholders. The plaintiff claimed, among other things,
that, as a result of the Transactions, Milestone would not have sufficient funds
to pay dividends on the Series A Preferred Stock and that the properties which
were not transferred to Union Properties Investors, Inc. ("UPI"), a then
wholly-owned Delaware subsidiary of Milestone, in the Transfer were grossly
inferior to the properties that were transferred to UPI.
On August 5, 1998, the counsel for the named plaintiff in the Winston Actions
and the counsel for the defendants entered into a Stipulation and Agreement of
Settlement (the "Winston Settlement Agreement") which memorialized the terms of
a settlement (the "Winston Settlement") of the Winston Actions. On January 28,
1999, the Delaware Court approved the Winston Settlement Agreement, which
approval became final effective as of the close of business on March 5, 1999. At
such time, (i) the shares of Series A Preferred Stock owned by each Series A
Preferred Stockholder who was eligible to participate in the Winston Settlement
and who did not properly opt out of the Winston Settlement and who owned shares
of Series A Preferred Stock as of the close of business on March 5, 1999 were
canceled and represented only the right of such Series A Preferred Stockholder
to receive $3.00 in cash from the Company in exchange for each such share; (ii)
the holders of shares of the Series A Preferred Stock between October 23, 1995
and the close of business on March 5, 1999, other than Series A Preferred
Stockholders who properly opted out of the Winston Settlement Agreement or who
were precluded from participating in the Winston Settlement, released any and
all claims they may have had against the Company and the other named defendants
in connection with the Transactions; (iii) Milestone's stockholders other than
Series A Preferred Stockholders who were eligible to participate in the Winston
Settlement and who properly opted out of the Winston Settlement released all
derivative claims in connection with the Transactions; and (iv)
7
<PAGE>
the Winston Actions were dismissed. In connection with the Winston Actions, the
Company retained counsel for all of the defendants (including, without
limitation, Leonard S. Mandor, Robert A. Mandor, Harvey Jacobson, Gregory
McMahon and Geoffrey Aaronson (each of whom is a director and/or officer of the
Company)) and assumed responsibility for the payment of all legal fees incurred
by such persons in connection with the Winston Actions and the Winston
Settlement (subject to the insurance coverage litigation described below).
The foregoing description of the Winston Settlement and the Winston Settlement
Agreement is qualified in its entirety by reference to the Winston Settlement
Agreement, a copy of which was filed by the Company with the Securities and
Exchange Commission (the "Commission") on August 14, 1998 as Exhibit 10.01 to
the Company's Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1998.
The Company maintains a directors and officers insurance and company
reimbursement policy (the "National Policy") issued by National Union Fire
Insurance Company of Pittsburgh, PA ("National Union") with a $2,000,000 limit
and an excess directors and officers liability and company reimbursement policy
(the "Stonewall Policy") issued by Stonewall Surplus Lines Insurance Company,
now known as American Dynasty Surplus Lines Insurance Company ("Stonewall"),
with a $2,000,000 limit. The Company believes that the amounts that it has to
pay pursuant to the Winston Settlement and in connection with the Winston
Actions are covered losses under both the National Union Policy and the
Stonewall Policy. In addition, the Company believes that the legal fees and
other expenses incurred by the Company and the other defendants in connection
with the Winston Actions are also covered losses under the National Union Policy
and the Stonewall Policy. In connection with a previous proposed settlement of
the Winston Actions which was never consummated, National Union and Stonewall
both refused to contribute to such proposed settlement, asserting that such
proposed settlement did not encompass any covered loss (as defined in the
National Policy and the Stonewall Policy, respectively). On January 29, 1998,
the Company commenced a lawsuit in the United States District Court for the
Southern District of New York against National Union and Stonewall in connection
with such refusal to contribute to such proposed settlement. In the complaint,
the plaintiffs alleged that National Union and Stonewall wrongfully failed to
contribute to the proposed settlement and sought reimbursement from National
Union and Stonewall up to the limits of their respective policies. National
Union and Stonewall both answered the complaint and denied liability. As a
result of the termination of the previously proposed settlement, the Company on
one hand, and Stonewall and National Union, on the other hand, agreed to dismiss
such action without prejudice and such action was dismissed on May 29, 1998 by
the United States District Court for the Southern District of New York. The
Company gave both National Union and Stonewall notice of the Winston Settlement
and provided each of them with a copy of the Winston Settlement Agreement on
August 12, 1998. National Union and Stonewall reviewed the Winston Settlement
Agreement and separately informed the Company that their basic position, denying
coverage, had not changed. On February 12, 1999, the Company commenced a lawsuit
in the Circuit Court for the Fifteenth Judicial Circuit in and for Palm Beach
County, Florida against both National Union and Stonewall alleging, among other
things, that National Union and Stonewall have wrongfully refused to contribute
to the Winston Settlement and seeking reimbursement from National Union and
Stonewall up to the limits of their respective policies. The initial complaint
in the new lawsuit was served on each of National Union and Stonewall on
February 12, 1999 and on March 17, 1999 the Company filed an amended complaint,
which, among other
8
<PAGE>
things, added certain of the other defendants to the Winston Actions as
plaintiffs. On April 12, 1999, National Union served a motion to dismiss the
amended complaint or to strike part thereof and a motion to recuse the Company's
Florida counsel. National Union has since agreed to withdraw its motion to
dismiss and to serve its answer to the amended complaint by June 1, 1999. The
motion to recuse the Company's Florida counsel is still pending. On April 12,
1999, Stonewall served its answer to the amended complaint and denied liability.
In connection with this action, the Company has retained counsel for all of the
plaintiffs and is assuming responsibility for the payment of all legal fees
incurred by such persons in connection with this action. At this time, the
Company is not in a position to render an opinion as to the outcome of this
action.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
This Quarterly Report on Form 10-Q for the period ended March 31, 1999
filed by Milestone contains or incorporates by reference certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 and Milestone intends that such forward-looking statements be subject
to the safe harbors created thereby. Such forward-looking statements
involve risks and uncertainties and include, but are not limited to,
statements regarding future events and its plans, goals and objectives.
Such statements are generally accompanied by words such as "intend,"
"anticipate," "believe," "estimate," "expect" or similar terms. Milestone's
actual results may differ materially from such statements. Factors that
could cause or contribute to such differences include, without limitation,
the following: (i) its plans, strategies, objectives, expectations and
intentions are subject to change at any time at its discretion; (ii)
general economic and business conditions, which may, among other things,
affect the demand for retail space or retails goods, the availability and
creditworthiness of prospective tenants, rental terms and the terms and
availability of financing, are subject to change at any time; (iii) adverse
changes in real estate markets including, among other things, competition
with other companies; (iv) adverse changes in the properties Milestone owns
which could require the expenditure of funds to fix or maintain such
properties; (v) the general risks of real estate development and
acquisitions, such as changes in demographics, construction delays, cost
overruns, work stoppages and slowdowns, the cost and availability of
skilled labor and weather conditions; (vi) governmental actions and
initiatives, such as seizures of property, condemnation and construction of
alternative roadways; (vii) environmental and safety conditions and
hazards; (viii) the adequacy of Year 2000 compliance measures; and (ix)
other risks and uncertainties indicated from time to time in Milestone's
filings with the Securities and Exchange Commission and in the documents
incorporated herein by reference. Although Milestone believes that the
assumptions underlying its forward-looking statements are reasonable, any
of the assumptions could prove inaccurate and, therefore, Milestone cannot
make any assurances that the results contemplated in such forward-looking
statements will be realized. The inclusion of such forward-looking
information should not be regarded as a representation by Milestone or any
other person that the future events, plans or expectations contemplated by
Milestone will be achieved. Furthermore, past performance is not
necessarily an indicator of future performance.
9
<PAGE>
The Company is engaged in the business of owning, acquiring, managing,
developing and investing in commercial real estate and real estate related
assets. The Company is primarily engaged in the ownership, operation and
management of interests in commercial real estate properties, currently
consisting of (i) 10 properties owned in fee (the "Fee Properties"), (ii) the
ownership of wraparound notes (the "Wraparound Notes") and wraparound mortgages
(the "Wraparound Mortgages" and, together with the Wraparound Notes, the "Wrap
Debt") which are secured by 23 commercial real properties (the "Underlying
Properties" and, together with the Fee Properties, the "Properties") and (iii)
the operation and management of the Properties. At March 31, 1999, the Company
possessed interests in 35 commercial real estate properties consisting of (i)
10 Fee Properties and (ii) Wrap Debt interests in 25 Underlying Properties. At
March 31, 1998, the Company possessed interests in 31 commercial real properties
consisting of (i) four Fee Properties and (ii) Wrap Debt interests in 27
Underlying Properties.
Impact of Year 2000
The Year 2000 problem arises from the historic use of only two digits (rather
than four) for the designation of a year in date information within computer
programs. If not corrected, any of the Company's equipment or software programs
that perform time sensitive calculations may incorrectly identify the year 2000
and beyond or not function after December 31, 1999. This could result in
miscalculations or a major failure of certain systems. The Company may also be
vulnerable to the Year 2000 problems of its tenants, financial institutions or
other service vendors and/or other companies with which it conducts business
(e.g., utility companies, etc).
Early in calendar year 1998, the Company developed and initiated a Year 2000
compliance program, including information systems modifications, in an effort to
ensure that its business is not interrupted by the Year 2000 problem. The
Company's Year 2000 compliance program is broken into the following components:
Renovating internal systems and applications and ensuring compliance of
peripheral third party systems. The Company's internal systems and applications
include the accounting system, the lease asset management system and the
operating system (AS 400). The Company uses a number of third party package
systems to supplement its internally developed programs. From time to time, the
Company updates the accounting system and the operating system with upgrades it
receives from the software manufacturers. The software manufacturers have
informed the Company that they will continue to provide all updates necessary
for such systems to be Year 2000 compliant. These software manufacturers have
informed the Company that they anticipate all such upgrades will be provided to
the Company by June 1999. The Company anticipates that it will then be able to
implement by the end of June 1999 such upgrades assuming such upgrades are
received by June 1999. The lease asset management system is currently being
updated to be Year 2000 compliant by the Company using in-house technology. The
Company anticipates that this upgrade to the lease asset management system will
be completed by the end of September 1999.
10
<PAGE>
Ensuring Year 2000 compliance by external companies that conduct business with
the Company. The Company has contacted all of its major tenants which remit rent
and other payments to the Company and financial institutions which process the
rental and other payments from major tenants on behalf of the Company, to
inquire about their Year 2000 compliance. The Company has not received responses
from all those contacted, but those who have responded have not indicated any
problems at this time. For those financial institutions that process payroll
electronically by debiting the Company's bank account and crediting the
employees' bank accounts, the Company will be conducting tests to determine Year
2000 compliance. These tests are expected to be completed by September 1999. If
such financial institutions are not Year 2000 compliant by December 31, 1999, it
is possible that employees will not receive direct deposit pay, or the correct
amount of such pay, or that the Company's bank accounts will be debited
incorrect amounts of money.
Implementing standards and conducting testing in an effort to ensure that the
Company's existing and future systems are Year 2000 compliant. All new systems,
whether hardware or software, are tested before implementation in an effort to
ensure Year 2000 compliance.
The Company believes that the total cost of its Year 2000 compliance program
will not exceed $50,000. To date, the Company has incurred approximately $10,000
of such expenses which includes hardware and software purchases and upgrades.
The Company does not anticipate that the costs of any required modifications to
its information technology or embedded technology systems will have a material
adverse effect on its financial position, results of operations or liquidity,
although there can be no assurances that this will be the case.
Although the Company believes that it will have its own systems compliant prior
to September 1999, there can be no assurances that it will be able to do so nor
can there be any assurances that, even if the Company completes timely its Year
2000 compliance program, the systems, when actually implemented in full, will
work properly independently or in conjunction with the systems of any third
parties. In addition, the Company would continue to bear the risk of a material
adverse affect, if any, if its third party systems do not appropriately address
their own Year 2000 compliance issues. The Company's current estimates of the
impact of the Year 2000 problem on its operations and financial results do not
include costs and time that may be incurred as a result of other companies'
failure to become Year 2000 compliant on a timely basis, which costs could be
material. There can be no assurance that such other companies will achieve Year
2000 compliance or that any conversions by such companies to become Year 2000
compliant will be compatible with the Company's computer and operating systems.
The inability of the Company or any of its material third parties to become Year
2000 compliant in a timely manner could have a material adverse effect on the
Company's financial condition or results of operations.
In the event that the Company or material third parties fail to complete their
Year 2000 compliance programs successfully and on time, the Company's ability to
operate its business, service tenants, bill, collect its revenue in a timely
manner, pay debts and communicate generally could be adversely affected.
Although there can be no assurance that the conversion of the Company's systems
will be successful or that the Company's key third-party relationships will have
successful conversion programs, management does not expect that any such failure
would have a material adverse effect on the financial position, results of
operations or liquidity of the Company, although there can be no assurances that
this will be the case.
11
<PAGE>
The Company has day-to-day operational contingency plans, and management is in
the process of updating these plans for possible Year 2000 specific operational
requirements. If the Company's major tenants, financial institutions or third
party systems are not Year 2000 compliant, it may have to arrange for
alternative sources of services in the fall of 1999 in preparation for the Year
2000. The Company does not have any other contingency plans with respect to
other problems that could arise in its business as a result of the Year 2000
problem. Any of these could have a material adverse effect on the Company's
financial condition or results of operations.
Recent Developments
On March 29, 1999, an agreement (the "SGSC Agreement") which was in effect
between the Company and certain of its affiliates, on one hand, and Societe
Generale Securities Corporation ("SGSC") on the other hand, was terminated by
the Company and such affiliates, via written notice. The Company and such
affiliates had retained SGSC to act as financial advisor in connection with a
transaction involving the sale of a number of shopping center properties owned
by such affiliates and two retail properties owned by the Company. Pursuant to
the terms of the SGSC Agreement, upon certain dispositions of the properties
covered by the SGSC Agreement prior to March 29, 2000 to persons or entities to
whom SGSC had shown such properties, the Company and or such affiliates would be
obligated to pay SGSC a fee based on the sale price of such properties.
The Winston Settlement became effective at the close of business on March 5,
1999. At such time, pursuant to the terms of the Winston Settlement Agreement,
Milestone canceled and retired 2,983,284 shares of Series A Preferred Stock,
representing more than 99% of the then outstanding shares of Series A Preferred
Stock. Furthermore, on March 18, 1999, Milestone wired approximately $9,000,000
to a court appointed trustee to be held for the benefit of the plaintiffs. See
Part II-Other Information, Item 1. Legal Proceedings for a description of the
Winston Settlement and Liquidity and Capital Resources within this section for a
discussion of the costs associated with the Winston Settlement.
On February 12, 1999, the Company served a complaint against each of National
Union Fire Insurance Company of Pittsburgh, PA and Stonewall Surplus Line
Insurance Company, now known as American Dynasty Surplus Line Insurance Company,
wherein the Company alleged that National Union and Stonewall wrongfully failed
to contribute to the Winston Settlement and seeking reimbursement from National
Union and Stonewall up to the limits of their respective policies. See Part II -
Other Information, Item 1. Legal Proceedings for a description of the lawsuit
against National Union and Stonewall.
12
<PAGE>
Results of Operations
Three Months Ended March 31, 1999 compared to Three Months Ended March 31, 1998
For the three months ended March 31, 1999, the Company recognized a net loss of
$233,057, or $0.05 per share of common stock, on total revenues of $4,071,004.
For the three months ended March 31, 1998, the Company recognized a net loss of
$534,294, or $0.13 per share of common stock, on total revenues of $5,659,776.
Total revenues for the three months ended March 31, 1999 were $4,071,004, as
compared to $5,659,776 for the three months ended March 31, 1998, a decrease of
$1,588,772, or 28%, due to the following:
Rent decreased $703,708, or 26%, from $2,042,097 for the three months ended
March 31, 1999 as compared to $2,745,805 for the three months ended March 31,
1998. This decrease is primarily due to property sales in 1998.
Interest income decreased $733,522, or 33%, from $1,507,034 for the three months
ended March 31, 1999 compared to $2,240,556 the three months ended March 31,
1998. This decrease is primarily due to a decrease in interest income of
approximately $700,000 as a result of the Company receiving payment during 1998
on wraparound notes held by the Company as a result of the sale of some of the
underlying properties by their owners during 1998.
Total operating expenses for the three months ended March 31, 1999 were
$3,328,409, as compared to $4,953,437 for the three months ended March 31, 1998,
a decrease of $1,625,028, or 33%, due primarily to a decrease in master lease
expense of approximately $1,491,000 resulting from a decrease in the number of
properties leased by the Company as a result of the sale of some of the
underlying properties by their owners during 1998.
Interest expense for the three months ended March 31, 1999 was $1,069,973, a
decrease of $449,625, or 30%, from $1,519,598 for the three months ended March
31, 1998. Such decrease is due to a reduction in the underlying debt of the
Company resulting from property sales in 1998.
Depreciation and amortization expense for the three months ended March 31, 1999
was $191,795, a decrease of $16,278, or 8%, from $208,073 for the three months
ended March 31, 1998. Such decrease was primarily due to property sales
in 1998.
13
<PAGE>
Cash Flows
For the three months ended March 31, 1999, the Company had a decrease in cash
and cash equivalents of $9,347,475, as compared to a decrease in cash and cash
equivalents of $1,205,160 for the three months ended March 31, 1998. For the
three months ended March 31, 1999, cash used in operating activities was
$3,970,316, cash provided by investing activities was $4,067,956 and cash used
in financing activities was $9,445,115. The decrease in cash and cash
equivalents is primarily due to the restriction of approximately $8,949,000 of
cash directly related to the Winston Actions and the Winston Settlement. See
Part II - Other Information, Item 1. Legal Proceedings for a description of the
Winston Actions and the Winston Settlement.
Liquidity and Capital Resources
The Company, as the holder of 44,550 shares of Kranzco Series C Redeemable
Preferred Shares of Kranzco Realty Trust, a Maryland real estate investment
trust ("Kranzco") as of January 1, 1999, received from the redemption of such
shares, in one installment on January 29, 1999, an aggregate amount of cash
equal to approximately $445,500, plus interest at the rate of 8% per annum on
the applicable outstanding balance of such shares. Such redemption payment
liquidated the Company's holdings of Kranzco Series C Redeemable Preferred
Shares, and accordingly, the Company is not entitled to future redemption
payments on such shares.
The Underlying Debt on the Property located in Quincy, Illinois, (the "Quincy
Property") came due in July 1998. Beginning July 1998, the mortgagor on the
Underlying Debt did not demand payment while the Partnership, which owns the
Quincy Property, attempted to sell the Quincy Property. Although the Underlying
Debt on the Quincy Property has not been satisfied, regular monthly debt
payments have been made by the Company through March 1999. On March 1, 1999, the
mortgagor of the Underlying Debt sent a demand letter seeking to collect the
outstanding balance of the Underlying Debt of approximately $2,910,000. To date,
the mortgagor of the Underlying Debt has not made any additional demands for
payment of the outstanding balance of the Underlying Debt.
The Underlying Debt of approximately $850,000 on the Fee Property located in
Zanesville, Ohio (the "Zanesville Property") came due in October 1998 and the
mortgagor on the Underlying Debt extended the balance due to May 1999. The
Company has obtained a loan commitment for approximately $1,750,000 to refinance
the Zanesville Property subject to various terms and conditions, some or all of
which may not be in the control of the Company.
The Company's existing borrowings and the encumbrances on the properties
securing those borrowings may inhibit or result in increased costs to the
Company in connection with its ability to incur future indebtedness and/or raise
substantial equity capital in the marketplace.
The Company has invested available funds in secure, short-term, interest bearing
investments. The Company believes that its levels of working capital, liquidity
and funds from operations are sufficient to support present operations and make
any payments required by the Winston Settlement.
14
<PAGE>
As a result of, and in connection with, the settlement of the Winston Actions,
the Company has disbursed approximately $7.5 million, which amount includes a
portion of the settlement consideration to Series A Preferred Stockholders,
defendants's attorneys fees, court and Commission filing fees, printing costs
and other expenses. The Company expects to disburse additional cash of
approximately $3 million, including payments of the settlement consideration to
Series A Preferred Stockholders and fees of the plaintiff's lawyers. Although
the expected expenditures of such funds represents a substantial amount of the
Company's cash reserves, the Company believes that it would have sufficient cash
to continue operating in the ordinary course of business. The Company, however,
is considering whether to, and ways it could, raise cash to make additional
investments in suitable real estate properties. If the Company determines to
raise additional funds, it may decide to do so through a public or private sale
of debt or equity securities, by conducting rights offerings, by selling or
realizing on assets (including, but not limited to, sales of its properties and
interest in the Wrap Debt), through corporate borrowings, or by other means. The
Company does not currently have any plans with respect to, and may never decide
to do, any of the foregoing. In addition, the Company has no current
understandings or arrangements with respect to purchasing additional properties.
Other than described herein, management is not aware of any other trends,
events, commitments or uncertainties that will, or are likely to, materially
impact the Company's liquidity.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
At March 31, 1999, the Company was not invested in any market risk sensitive
instruments held for either trading purposes or for purposes other than trading.
As a result, the Company is not subject to interest rate risk, foreign currency
exchange rate risk, commodity price risk, or other relevant market risks, such
as equity price risk.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, during 1996 Milestone, certain past and present members
of its Board of Directors and executive officers, and Concord were named as
defendants in the Winston Actions which were commenced in the Delaware Court. In
the Winston Actions, the plaintiff, a Series A Preferred Stockholder purporting
to bring the action on behalf of himself, all other Series A Preferred
Stockholders and derivatively on behalf of Milestone, alleged that in connection
with Milestone's acquisition in October 1995 of certain wraparound notes,
wraparound mortgages and fee properties from certain affiliates of Concord and
certain related transactions, Milestone and its directors engaged in
self-dealing, violated federal securities laws and an injunction against such
violations and breached their fiduciary duties to the Series A Preferred
Stockholders. The plaintiff claimed, among other things, that, as a result of
the Transactions, Milestone would not have sufficient funds to pay dividends on
the Series A Preferred Stock and that the properties which were not transferred
to UPI in the Transfer were grossly inferior to the properties that were
transferred to UPI.
On August 5, 1998, the counsel for the named plaintiff in the Winston Actions
and the counsel for the defendants entered into the Winston Settlement Agreement
which memorialized the terms of the Winston Settlement. On January 28, 1999, the
Delaware Court approved the Winston Settlement Agreement, which approval became
final effective as of the close of business on March 5, 1999. At such time, (i)
the shares of Series A Preferred Stock owned by each Series A Preferred
Stockholder who was eligible to participate in the Winston Settlement and who
did not properly opt out of the Winston Settlement and who owned shares of
Series A Preferred Stock as of the close of business on March 5, 1999 were
canceled and represented only the right of such Series A Preferred Stockholder
to receive $3.00 in cash from the Company in exchange for each such share; (ii)
the holders of shares of the Series A Preferred Stock between October 23, 1995
and the close of business on March 5, 1999, other than Series A Preferred
Stockholders who properly opted out of the Winston Settlement Agreement or who
were precluded from participating in the Winston Settlement, released any and
all claims they may have had against the Company and the other named defendants
in connection with the Transactions; (iii) Milestone's stockholders other than
Series A Preferred Stockholders who were eligible to participate in the Winston
Settlement and who properly opted out of the Winston Settlement released all
derivative claims in connection with the Transactions; and (iv) the Winston
Actions were dismissed. In connection with the Winston Actions, the Company
retained counsel for all of the defendants (including, without limitation,
Leonard S. Mandor, Robert A. Mandor, Harvey Jacobson, Gregory McMahon and
Geoffrey Aaronson (each of whom is a director and/or officer of the Company))
and assumed responsibility for the payment of all legal fees incurred by such
persons in connection with the Winston Actions and the Winston Settlement
(subject to the insurance coverage litigation described below).
16
<PAGE>
The foregoing description of the Winston Settlement and the Winston Settlement
Agreement is qualified in its entirety by reference to the Winston Settlement
Agreement, a copy of which was filed by the Company with the Commission on
August 14, 1998 as Exhibit 10.01 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1998.
The Company maintains a directors and officers insurance and company
reimbursement policy issued by National Union with a $2,000,000 limit and an
excess directors and officers liability and company reimbursement policy issued
by Stonewall with a $2,000,000 limit. The Company believes that the amounts that
it has to pay pursuant to the Winston Settlement and in connection with the
Winston Actions are covered losses under both the National Union Policy and the
Stonewall Policy. In addition, the Company believes that the legal fees and
other expenses incurred by the Company and the other defendants in connection
with the Winston Actions are also covered losses under the National Union Policy
and the Stonewall Policy. In connection with a previous proposed settlement of
the Winston Actions which was never consummated, National Union and Stonewall
both refused to contribute to such proposed settlement, asserting that such
proposed settlement did not encompass any covered loss (as defined in the
National Policy and the Stonewall Policy, respectively). On January 29, 1998,
the Company commenced a lawsuit in the United States District Court for the
Southern District of New York against National Union and Stonewall in connection
with such refusal to contribute to such proposed settlement. In the complaint,
the plaintiffs alleged that National Union and Stonewall wrongfully failed to
contribute to the proposed settlement and sought reimbursement from National
Union and Stonewall up to the limits of their respective policies. National
Union and Stonewall both answered the complaint and denied liability. As a
result of the termination of the previously proposed settlement, the Company on
one hand, and Stonewall and National Union, on the other hand, agreed to dismiss
such action without prejudice and such action was dismissed on May 29, 1998 by
the United States District Court for the Southern District of New York. The
Company gave both National Union and Stonewall notice of the Winston Settlement
and provided each of them with a copy of the Winston Settlement Agreement on
August 12, 1998. National Union and Stonewall reviewed the Winston Settlement
Agreement and separately informed the Company that their basic position, denying
coverage, had not changed. On February 12, 1999, the Company commenced a lawsuit
in the Circuit Court for the Fifteenth Judicial Circuit in and for Palm Beach
County, Florida against both National Union and Stonewall alleging, among other
things, that National Union and Stonewall have wrongfully refused to contribute
to the Winston Settlement and seeking reimbursement from National Union and
Stonewall up to the limits of their respective policies. The initial complaint
in the new lawsuit was served on each of National Union and Stonewall on
February 12, 1999 and on March 17, 1999 the Company filed an amended complaint,
which, among other things, added certain of the other defendants to the Winston
Actions as plaintiffs. On April 12, 1999, National Union served a motion to
dismiss the amended complaint or to strike part thereof, and a motion to recuse
the Company's Florida counsel. National Union has since agreed to withdraw its
motion to dismiss and to serve its answer to the amended complaint by June 1,
1999. The motion to recuse the Company's Florida counsel is still pending. On
April 12, 1999, Stonewall served its answer to the amended complaint and denied
liability. In connection with this action, the Company has retained counsel for
all of the plaintiffs and is assuming responsibility for the payment of all
legal fees incurred by such persons in connection with this action. At this
time, the Company is not in a position to render an opinion as to the outcome of
this action.
17
<PAGE>
Item 5. Other Information
Milestone's Board of Directors determined not to declare any dividends on the
Series A Preferred Stock during the years ended December 31, 1996, 1997 and 1998
and during the three months ended March 31, 1999. The last dividend declared by
Milestone was for the quarter ended December 31, 1995 and was paid on February
15, 1996 at $0.195 per share of Series A Preferred Stock.
After September 30, 1995, holders of the Series A Preferred Stock have not been
entitled to receive dividends on a cumulative basis. Pursuant to the Certificate
of Designations of the Series A Preferred Stock, after such date, no cash
dividend may be paid on the Common Stock unless full dividends of $0.195 on all
outstanding shares of Series A Preferred Stock for the then current quarterly
dividend period are declared and either paid or sufficient sums for the payment
thereof are set apart. As a result of Milestone's Board of Directors'
determination not to declare a dividend for the quarter ended June 30, 1997,
which was the sixth consecutive quarter for which no dividend was declared, the
number of persons entitled to serve as directors on Milestone's Board of
Directors has been increased by one, and the holders of the Series A Preferred
Stock, who are otherwise entitled to elect one member of the Board of Directors,
became entitled to elect a second member of the Board of Directors to fill such
newly created directorship. Such election of a second member of the Board of
Directors is scheduled to occur at the Annual Meeting of Stockholders to be held
on May 28, 1999. Any decision as to the future payment of dividends on the
Series A Preferred Stock will depend on the results of operations and the
financial condition of the Company and such other factors as Milestone's Board
of Directors, in its discretion, deems relevant. See Part I-Financial
Information, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation, Liquidity and Capital Resources.
18
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are included herein:
10.01 Amendment No. 1 to Employment Agreement, dated as of
April 19, 1999 by and between the Company and Robert A. Mandor.
10.02 Amendment No. 1 to Employment Agreement, dated as of
April 19, 1999 by and between the Company and Harvey Shore.
27 - Financial Data Schedule Article 5 included for
Electronic Data Gathering, Analysis and Retrieval
(EDGAR) purposes only. This Schedule contains
summary financial information extracted from the
consolidated balance sheets and consolidated
statements of revenues and expenses of the Company
as of and for the three month period ended March
31, 1999, and is qualified in its entirety by
reference to such financial statements.
(b) Reports on Form 8-K:
Current Report on Form 8-K filed with the Commission on
February 11, 1999 reporting that the Court of Chancery of the
State of Delaware had approved the Winston Settlement and
that the order approving the Winston Settlement would become
final, effective upon the expiration of a 30-day appeal
period which ended at the close of business on March 5, 1999.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MILESTONE PROPERTIES, INC.
(Registrant)
Date: May 14, 1999 By /s/ Robert A. Mandor
--------------------------------------
Robert A. Mandor
President and Chief Financial Officer
Date: May 14, 1999 By /s/ Patrick S. Kirse
--------------------------------------
Patrick S. Kirse
Vice President of Accounting
(Principal Accounting Officer)
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (this "Amendment"), dated as of
April 19, 1999, by and between MILESTONE PROPERTIES, INC., a Delaware
corporation (the "Company"), and ROBERT A. MANDOR (the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is currently serving as the President and Chief
Financial Officer of the Company pursuant to that certain Employment Agreement,
dated as of January 1, 1999, by and between the Company and the Executive (the
"Employment Agreement");
WHEREAS, the Executive has assumed additional duties and responsibilities not
anticipated to be performed by the Executive at the time the Employment
Agreement was entered into;
WHEREAS, the Board of Directors of the Company (the "Board") has determined that
the Executive's base salary should be increased as a result of such additional
duties and responsibilities and such increase in salary requires an amendment to
the Employment Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 2.1 is hereby deleted in its entirety, and a new Section 2.1 shall be
inserted in lieu thereof to read as follows:
2.1 Base Salary. During the Term, the Executive shall
receive a base salary subject to adjustments as
hereinafter provided (the "Base Salary") at the
annual rate of $407,887. During the Term, the Board,
or an appropriate committee thereof, shall review no
less frequently than annually and at such other times
as the Board or committee thereof deems appropriate,
the Base Salary payable to the Executive and adjust
the same in its sole discretion; provided, however,
that the Base Salary at any time may not be less than
$407,887 per annum. In connection with making
adjustments to the Base Salary as provided for in
this Section 2.1, the Board, or an appropriate
committee thereof, will consider the contributions of
the Executive to the Company's efficiency, growth,
productivity and profitability, the expansion of the
Executive's duties, if any, the level of the
Executive's responsibilities, the Executive's tenure
with the Company,
<PAGE>
and such other factors as they deem relevant. The Base
Salary shall be payable in substantially equal installments
consistent with the Company's normal payroll schedule,
subject to applicable withholding and other taxes.
2. The Employment Agreement is, and shall continue to be, in full force and
effect, except as otherwise provided in this Amendment and except that all
references to the Employment Agreement set forth in the Employment Agreement
shall mean the Employment Agreement, as amended by this Amendment.
3. This Amendment shall be effective as of the date hereof.
4. This Amendment may be executed in one or more counterparts, each of which
shall be deemed an original and all of which taken together shall constitute one
and the same amendment.
IN WITNESS WHEROF, this Amendment has been duly signed
by the parties hereto as of the day and year first above written.
MILESTONE PROPERTIES, INC.
By /s/ Joseph P Otto
Joseph P. Otto, Vice President
/s/ Robert Mandor
Robert A. Mandor
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (this "Amendment"), dated as of
April 19, 1999, by and between MILESTONE PROPERTIES, INC., a Delaware
corporation (the "Company"), and HARVEY SHORE (the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is currently serving as the Secretary and a
Senior Vice President of the Company pursuant to that certain Employment
Agreement, dated as of January 1, 1999, by and between the Company and the
Executive (the "Employment Agreement");
WHEREAS, the Executive has assumed additional duties and responsibilities not
anticipated to be performed by the Executive at the time the Employment
Agreement was entered into;
WHEREAS, the Board of Directors of the Company (the "Board") has determined that
the Executive's base salary should be increased as a result of such additional
duties and responsibilities and such increase in salary requires an amendment to
the Employment Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Section 2.1 is hereby deleted in its entirety, and a new Section 2.1 shall be
inserted in lieu thereof to read as follows:
2.1 Base Salary. During the Term, the Executive shall
receive a base salary subject to adjustments as
hereinafter provided (the "Base Salary") at the
annual rate of $177,184.34. During the Term, the
Board, or an appropriate committee thereof, shall
review no less frequently than annually and at such
other times as the Board or committee thereof deems
appropriate, the Base Salary payable to the Executive
and adjust the same in its sole discretion; provided,
however, that the Base Salary at any time may not be
less than $177,184.34 per annum. In connection with
making adjustments to the Base Salary as provided for
in this Section 2.1, the Board, or an appropriate
committee thereof, will consider the contributions of
the Executive to the Company's efficiency, growth,
productivity and profitability, the expansion of the
Executive's duties, if any, the level of the
Executive's responsibilities, the Executive's tenure
with the Company,
<PAGE>
and such other factors as they deem relevant. The Base
Salary shall be payable in substantially equal installments
consistent with the Company's normal payroll schedule,
subject to applicable withholding and other taxes.
2. The Employment Agreement is, and shall continue to be, in full force and
effect, except as otherwise provided in this Amendment and except that all
references to the Employment Agreement set forth in the Employment Agreement
shall mean the Employment Agreement, as amended by this Amendment.
3. This Amendment shall be effective as of the date hereof.
4. This Amendment may be executed in one or more counterparts, each of which
shall be deemed an original and all of which taken together shall constitute one
and the same amendment.
IN WITNESS WHEROF, this Amendment has been duly signed by the parties hereto as
of the day and year first above written.
MILESTONE PROPERTIES, INC.
By /s/ Robert A Mandor
Robert A. Mandor, President
/s/ Harvey Shore
Harvey Shore
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-30-1999
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