<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-12002
MARK CENTERS TRUST
(Exact name of registrant in its charter)
MARYLAND 23-2715194
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 THIRD AVENUE, KINGSTON, PENNSYLVANIA 18704
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(717) 288-4581
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, 1998, there were 8,554,177 common
shares of beneficial interest, par value $.001
per share, outstanding.
<PAGE>
MARK CENTERS TRUST
FORM 10-Q
INDEX
Part I: Financial Information Page
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997 1
Consolidated Statements of Operations for
the three months ended March 31, 1998
and 1997 2
Consolidated Statements of Cash Flows for
the three months ended March 31, 1998
and 1997 3
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Part II:Other Information
Exhibits and Reports on Form 8-K 17
Signatures 18
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
MARK CENTERS TRUST
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
March 31, December 31,
1998 1997
(unaudited)
<S> <C> <C>
ASSETS
Rental property - at cost:
Land $ 31,560 $ 30,855
Buildings and improvements 271,331 274,165
Property under development 8,650 6,668
-------- --------
311,541 311,688
Less: accumulated depreciation 83,104 83,326
-------- --------
Net rental property 228,437 228,362
Cash and cash equivalents 757 1,287
Cash in escrow 8,612 7,906
Rents receivable 4,105 4,802
Prepaid expenses 1,122 1,241
Due from related parties 206 177
Deferred charges, net 11,625 9,710
Other assets 923 1,015
-------- --------
$255,787 $254,500
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $185,240 $183,943
Accounts payable and accrued expenses 8,457 7,553
Note payable to Principal Shareholder 3,050 3,050
Other liabilities 1,629 1,910
-------- --------
Total Liabilities 198,376 196,456
-------- --------
Minority Interest 9,144 9,244
-------- --------
<PAGE>
<S> <C> <C>
Shareholders' Equity:
Common shares, $.001 par value,
authorized 50,000,000 shares, issued
and outstanding 8,554,177 shares,
respectively 9 9
Additional paid-in capital 51,073 51,073
Deficit (2,815) (2,282)
-------- --------
Total Shareholders' Equity 48,267 48,800
-------- --------
$255,787 $254,500
======== ========
See accompanying notes
</TABLE>
1 <PAGE>
<PAGE>
<TABLE>
<CAPTION>
MARK CENTERS TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(in thousands, except per share amounts)
March 31, March 31,
1998 1997
(unaudited)
<S> <C> <C>
Revenue:
Minimum rents $8,464 $ 8,444
Percentage rents 565 684
Expense reimbursements 1,753 1,777
Other 169 219
------- -------
Total revenue 10,951 11,124
------- -------
Operating Expenses:
Property operating 2,292 2,563
Real estate taxes 1,428 1,439
Depreciation and amortization 3,473 3,324
General and administrative 456 537
------- -------
Total operating expenses 7,649 7,863
------- -------
Operating income 3,302 3,261
Loss on sale of property -- 12
Interest expense 3,923 3,736
------- -------
Loss before minority interest (621) (487)
Minority interest 88 71
------- -------
Net loss $ (533) $ (416)
======= =======
Basic and diluted net loss
per common share $ (.06) $ (.05)
======= =======
See accompanying notes
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
MARK CENTERS TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(in thousands)
March 31, March 31,
1998 1997
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (533) $ (416)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization
of leasing costs 3,328 3,175
Amortization of deferred financing costs 145 149
Minority interest (88) (71)
Provision for bad debts 310 88
Loss on sale of property -- 12
------- -------
3,162 2,937
Changes in assets and liabilities:
Rents receivable 387 1,025
Prepaid expenses 119 140
Due from related parties (29) 43
Other assets 20 (191)
Accounts payable and accrued expenses (164) (37)
Other liabilities (281) (32)
------- -------
Net cash provided by operating activities 3,214 3,885
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for real estate and
improvements, inclusive of payables
related to construction activity (3,810) (5,340)
Net proceeds from sale of property -- 1,288
Payment of deferred leasing charges (451) (64)
------- -------
Net cash used in investing activities (4,261) (4,116)
------- -------
3
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgages (702) (10,849)
Proceeds received on mortgage notes 1,999 23,000
Net funding of escrows (681) (3,159)
Payment of deferred financing costs (87) (884)
Dividends paid -- (3,078)
Distributions paid to Principal Shareholder (12) (602)
------- -------
Net cash provided by financing activities 517 4,428
------- -------
(DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (530) 4,197
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,287 3,912
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 757 $ 8,109
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest, net
of amounts capitalized of $168 and $112,
respectively $ 3,509 $ 3,791
======= =======
</TABLE>
See accompanying notes
4
<PAGE>
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
1. THE COMPANY
Mark Centers Trust (the "Company") currently owns and operates
thirty-nine properties consisting of thirty-four neighborhood and
community shopping centers, three enclosed malls and two mixed
use (retail/office) properties. All of the Company's assets are
held by, and all of its operations are conducted through Mark
Centers Limited Partnership, (the "Operating Partnership") and
its majority owned partnerships. As of March 31, 1998, the
Company controlled 84% of the Operating Partnership as the sole
general partner. The Company will at all times be the sole
general partner of, and owner of a 51% or greater interest in,
the Operating Partnership. Marvin L. Slomowitz (the "Principal
Shareholder"), who is the principal limited partner of the
Operating Partnership, owns in excess of 99% of the minority
interest in the Operating Partnership. The Company is operating
as a real estate investment trust ("REIT") for federal income tax
purposes. On April 15, 1998 the Company entered into a
Contribution and Share Purchase Agreement which will provide
additional properties and capital to the Company (Note 8).
2. BASIS OF PRESENTATION
The consolidated financial statements include the consolidated
accounts of the Company and its majority owned partnerships,
including the Operating Partnership, and have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with instruction to Form 10-Q
and Article 10 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. The information furnished in the accompanying
consolidated financial statements reflects all adjustments which
are, in the opinion of management, necessary for a fair
presentation of the aforementioned consolidated financial
statements for the interim periods. Operating results for the
three month period ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the fiscal
year ending December 31, 1998. For further information, refer to
the consolidated financial statements and accompanying footnotes
included in the Company's Annual Report on Forms 10-K and 10-K/A
for the year ended December 31, 1997.
5
<PAGE>
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
3. SHAREHOLDERS' EQUITY AND MINORITY INTEREST
The following table summarizes the change in the shareholders'
equity and minority interest since December 31, 1997:
<TABLE>
<CAPTION>
Shareholders' Minority
Equity Interest
<S> <C> <C>
Balance at December 31, 1997 $48,800 $ 9,244
Net loss for the period January 1
through March 31, 1998 (533) (88)
Distributions to Principal Shareholder -- (12)
------- -------
Balance at March 31, 1998 $48,267 $ 9,144
======= =======
</TABLE>
4. RELATED PARTY TRANSACTIONS
As of March 31, 1998 amounts due from related parties consisted
of the following:
Accrued ground rent due from Blackman Plaza
Partners (a limited partnership in which the
Principal Shareholder is a 1% general partner) $ 205
Other amounts (net) due from Principal Shareholder 1
-------
$ 206
=======
On January 7, 1998, the Company exercised its option to purchase
Blackman Plaza Partners' interests in the Blackman Plaza with a
closing date anticipated to occur during fiscal 1998.
On March 16, 1998, the Company and the Principal Shareholder
agreed to terminate the option to purchase certain land owned by
the Principal Shareholder in Lewisburg, Pennsylvania.
5. MORTGAGE LOANS
On January 28, 1998, the Company completed a closing on a
construction loan with Royal Bank of Pennsylvania in the maximum
amount of $3,500. The loan, which is secured by one of the
Company's properties, requires monthly payments of interest only
at the lender's prime rate plus 150 basis points and matures in
February 1999 with additional extension periods through February
2000.
6
<PAGE>
MARK CENTERS TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts)
MORTGAGE LOANS, continued
On March 24, 1998, the Company completed an amendment and
extension of its existing agreement with Mellon Bank, N.A. which
extended the maturity date to July 2, 1998 and established
minimum monthly payments of the greater of (a) actual net
operating income from the collateral property or (b) $50 plus
interest at the current rate of LIBOR plus 200 basis points.
6. PER SHARE DATA
Basic earnings per share was determined by dividing net loss
applicable to common shareholders by the weighted average number
of common shares of beneficial interest ("Common Shares")
outstanding during each period consistent with the guidelines of
the Financial Accounting Standards Board Statement No. 128. The
weighted average number of Common Shares for the three months
ended March 31, 1998 and 1997 totalled 8,544,177 and 8,548,817,
respectively. Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to
issue Common Shares were exercised or converted into Common
Shares or resulted in the issuance of Common Shares that then
shared in the earnings of the Company. For the three months
ended March 31, 1998 and 1997, no additional Common Shares were
reflected as the impact would be anti-dilutive due to the net
loss in each period.
7. TENANT LEASES
On January 31, 1998, the Company entered into an agreement with
Pharmhouse Corp. (the "Tenant") to settle certain litigation.
During 1997, the Tenant had obtained an injunction against the
installation of Walmart in the Ledgewood Mall based on certain
exclusive use provisions within the Tenant's lease. The Company
paid $200 to the Tenant on May 1, 1998 and has further agreed,
pursuant to the agreement as modified May 1, 1998, to pay the
Tenant $1,525 on or before May 31, 1998, amend certain terms of
the Tenant's lease including rent and the lease expiration date,
and withdraw its appeal of this case in return for the Tenant's
withdrawal of all legal actions against the installation of
Walmart at the mall. The total of $1,725 is reflected in
deferred charges as of March 31, 1998 in the accompanying
financial statements.
7
<PAGE>
8. SUBSEQUENT EVENTS
On April 15, 1998 the Company entered into a Contribution and
Share Purchase Agreement (the "Agreement") which will provide
additional properties and capital to the Company. Subject to the
satisfaction of all conditions to the transaction, including
approval by the Company's shareholders at a meeting expected to
be held during the third quarter of 1998, the Company, through
Mark Centers Limited Partnership, a Delaware limited partnership
through which the Company conducts substantially all of its
activities, and in exchange for approximately 11.3 million
Operating Partnership Units, will acquire substantially all of
the ownership interests in twelve retail shopping centers, five
multi-family apartment complexes, certain third party management
contracts and promissory notes owned by real estate investment
partnerships and related entities in which RD Capital, Inc., a
Delaware corporation ("RD Capital"), or its affiliates serves as
the general partner or in another similar management capacity.
In addition, the Company will also receive a cash investment of
$100 million from affiliates of RD Capital in exchange for
approximately 13.3 million newly issued common shares of
beneficial interest valued at a price of $7.50 per share. The
Agreement also provides that Ross Dworman and Kenneth Bernstein
of RD Capital will become Chairman of the Board and Chief
Executive Officer and President of the Company, respectively.
Mr. Marvin Slomowitz, the current Chairman of the Board and Chief
Executive Officer, will remain as a board member and as a
consultant to the Company. The two new executives will serve on
the board together with two independent designees of RD Capital
and two independent designees (in addition to Mr. Slomowitz) of
the existing board. The Company will change its name to Acadia
Realty Trust effective upon the closing of the transaction. The
transaction is subject to evidence of the receipt by RD Capital
of the necessary funds to make the cash investment and the
completion of closing. The transaction is a complex one
involving many parties and there can be no assurance that the
closing on this transaction will be completed. The Company has
incurred costs totalling $530 related to this transaction as of
March 31, 1998 which are reflected in deferred charges in the
accompanying financial statements.
On April 1, 1998, the Company completed an amendment with Fleet
National Bank which extended to June 15, 1998 the maturity of a
standby letter of credit in the amount of $1.7 million.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion is based on the consolidated financial
statements of Mark Centers Trust (the "Company") as of March 31,
1998 and 1997 and for the three months then ended. This
information should be read in conjunction with the accompanying
consolidated financial statements and notes thereto.
Certain statements made in this report may constitute "forward-
looking statements" within the meaning of federal securities
laws. Such statements are inherently subject to risk and
uncertainties which may cause the actual results to differ
materially from the future results implied by such forward-
looking statements. Factors which might cause such differences
include general economic conditions, adverse changes in the real
estate markets in general and in the geographic regions in which
the Company's properties are located, changes in interest rates,
potential bankruptcy of tenants and environmental requirements.
RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 1998 ("1998") to Three
Months Ended March 31, 1997 ("1997")
Total revenue decreased $173,000, or 2%, to $11.0 million for
1998 compared to $11.1 million for 1997.
In total, minimum rents were essentially constant at $8.5 million
for 1998 and 1997. Minimum rents increased at certain centers in
1998 following the re-tenanting of various space at increased
market rates as well as the effect of Stern's at the Ledgewood
Mall reverting to paying minimum rent of $138,000 in 1998. During
1997, Stern's was paying percentage rent in lieu of minimum rent
pursuant to anchor cotenancy requirements with Jamesway which
vacated the Ledgewood Mall in 1996. These increases were offset
by the $141,000 effect of the State of Alabama Department of
Public Health vacating its leased space at the Normandale Mall
following the expiration of its leases in April 1997, the $32,000
effect of the sale of the Newberry Plaza in March 1997 and the
$48,000 effect of Bruno's vacating its 48,000 square feet at the
Martintown Plaza following its Chapter 11 bankruptcy filing on
January 2, 1998. On March 31, 1998, the Company signed a lease
with Office Depot, Inc. for 30,000 square feet of this space at a
higher per square foot rent and is engaged in re-leasing efforts
for the balance of the space.
9
<PAGE>
RESULTS OF OPERATIONS, continued
Percentage rents decreased $119,000, or 17%, to $565,000 for 1998
compared to $684,000 for 1997. The decrease was primarily the
result of Stern's at the Ledgewood Mall paying minimum rent
rather then percentage rent in 1998 as discussed above.
Other income decreased $50,000 for 1998 primarily as a result of
a decrease in interest earning assets.
Total operating expenses of $7.6 million for 1998 decreased
$214,000, or 3%, from $7.9 million for 1997.
Property operating expenses decreased $271,000 for 1998 compared
to 1997 primarily due to a $287,000 decrease in winter related
expenses following the comparatively mild weather experienced in
the Northeast in 1998.
Depreciation and amortization increased $149,000 for 1998
primarily due to the Company's property development and expansion
activities.
General and administrative expenses decreased $81,000 for 1998
primarily as a result of lower salaries expense and certain
professional fees.
Interest expense of $3.9 million for 1998 increased $187,000, or
5%, from $3.7 million for 1997 primarily as a result of higher
average outstanding borrowings related to increased property
development and expansion activities.
As a result of the foregoing, the net loss for 1998 increased
$117,000 to a loss of $533,000 from a loss of $416,000 for 1997.
Funds from Operations
The Company, along with most industry analysts, consider funds
from operations("FFO") as defined by the National Association of
Real Estate Investment Trusts ("NAREIT")as an appropriate
supplemental measure of operating performance. However, FFO does
not represent cash generated from operations as defined by
generally accepted accounting principles and is not indicative of
cash available to fund cash needs. It should not be considered as
an alternative to net income for the purpose of evaluating the
Company's performance or to cash flows as a measure of liquidity.
Generally, NAREIT defines FFO as net income (loss) before gains
(losses) on sales of property, non-recurring charges and
extraordinary items, adjusted for certain non-cash charges,
primarily depreciation and amortization of capitalized leasing
costs.
10
<PAGE>
<TABLE>
<CAPTION>
FUNDS FROM OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(in thousands, except per share data)
March 31, March 31,
1998 1997
<S> <C> <C>
Revenue
Minimum rents (a) $ 8,407 $ 8,349
Percentage rents 565 684
Expense reimbursements 1,753 1,777
Other 169 219
------- -------
Total revenue 10,894 11,029
------- -------
Expenses
Property operating (b) 2,262 2,553
Real estate taxes 1,428 1,439
General and administrative 447 531
------- -------
Total operating expenses 4,137 4,523
------- -------
Operating income 6,757 6,506
Interest expense 3,923 3,736
Amortization of deferred
financing costs 145 149
Depreciation of non-real
estate assets 47 52
------- -------
Funds from operations $ 2,642 $ 2,569
======= =======
Funds from operations per share (c) $ 0.26 $ 0.25
======= =======
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
<S> <C> <C>
Funds from operations above $ 2,642 $ 2,569
Depreciation of real estate
and amortization of leasing costs (3,281) (3,123)
Straight-line rents and
related write-offs, (net) 29 94
Minority interest 88 71
Loss on sale of property -- (12)
Other non-cash adjustments (11) (15)
------- -------
Net loss $ (533) $ (416)
======= =======
Net loss per share (d) $ (0.06) $ (0.05)
======= =======
</TABLE>
(a) Excludes income from straight-lining of rents.
(b) Represents all expenses other than depreciation, amortization,
write-off of unbilled rent receivables recognized on a straight-
line basis and the non-cash charge for compensation expense
related to the Company's restricted share plan.
(c) Assumes full conversion of 1,623,000 OP Units into common shares
of the Company for the three months ended March 31, 1998 and
1997, respectively, for a total of 10,177,177 and 10,171,817
shares, respectively.
(d) Net loss per share (basic and diluted)is computed based on the
weighted average number of shares outstanding for the three
months ended March 31, 1998 and 1997 of 8,554,177 and 8,548,817,
respectively.
12
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As previously disclosed in a current report on Form 8-K filed on
April 20, 1998, and as discussed in Note 8 in the accompanying
financial statements, the Company has entered into a Contribution
and Share Purchase Agreement with certain real estate investment
partnerships and related entities in which R.D. Capital, ("RDC")
or certain of its affiliates serves as the general partner or in
another similar management capacity, which will provide
additional properties and capital to the Company. Consummation of
the transaction is subject to the satisfaction of a number of
conditions, including, but not limited to approval by the
Company's shareholders. If the transaction is completed as
anticipated, the Company's liquidity and capital resources would
be significantly impacted.
Pursuant to the terms of the Agreement, the Company has agreed,
among other things, not to declare or pay a dividend until the
closing of the RDC transaction. After closing, the newly
reconstituted Board of Trustees will reassess the Company's
dividend policy in light of the new Company's REIT distribution
requirements, cash flow and prospects.
On January 28, 1998, the Company completed a closing on a
construction loan with Royal Bank of Pennsylvania in the maximum
amount of $3.5 million. The loan, which is secured by one of the
Company's properties, requires monthly payment of interest only
at the lender's prime rate plus 150 basis points and matures in
February 1999 with additional extension periods through February
2000.
On March 24, 1998, the Company completed an amendment to and
extension of its existing agreement with Mellon Bank, N.A. which
extended the maturity date to July 2, 1998 and established
minimum monthly payments equal to the greater of (a) actual net
operating income from the collateral property or (b) $50,000 plus
interest at the current rate of LIBOR plus 200 basis points.
On April 1, 1998, the Company completed an amendment with Fleet
National Bank which extended to June 15, 1998 the maturity of a
Standby Letter of Credit in the amount of $1.7 million.
At March 31, 1998, the Company's capitalization consisted of
$185.2 million of debt and $91.0 million of market equity.
As of March 31, 1998 interest on the Company's mortgage
indebtedness ranged from 7.7% to 10.0% with maturities that
ranged from July 1998 to November 2021. Of the total outstanding
13
<PAGE>
Liquidity and Capital Resources, continued
debt, $173.8 million, or 94%, was carried at fixed interest rates
and the remaining $11.4 million, or 6%, carried at variable
rates. Of the total outstanding debt, $99.5 million will become
due by 2000, with scheduled maturities of $2.5 million in 1998,
$2.1 million in 1999 and $94.9 million in 2000. As the Company
does not anticipate having sufficient cash on hand to repay such
indebtedness, it will need to refinance this indebtedness or
select other alternatives based on market conditions at that
time. The Company believes that the current loan-to-value ratios
on the collateral properties are at levels which would allow it
to fully refinance these loans on commercially competitive terms.
Historically, the principal sources for funding operations,
renovations, expansion, development and acquisitions have been
funds from operations, construction and permanent secured debt
financings, as well as short term construction and line of credit
borrowings from various lenders. The Company anticipates that
cash flow from operating activities will continue to provide
adequate capital for all debt service payments, recurring capital
expenditures and REIT distribution requirements. Consistent with
past practice, the Company anticipates that it will obtain
construction financing related to its capital outlays for certain
property development, property expansion and tenant improvements.
However, the Company may experience a cash shortfall in 1998, in
the absence of consummating the proposed RDC transaction, if
there are delays in obtaining construction financing to fund its
anticipated capital outlays. Any delays in construction
financing will increase the Company's short term reliance on cash
from operations to meet these commitments.
The Company currently estimates that capital outlays of
approximately $9.2 million will be required for tenant
improvements, related renovations and other property improvements
primarily as a result of executed leases under which the Company
expects tenants to commence occupancy during the next 12 months.
Of this amount, approximately $3.1 million will be provided
through existing construction financing. In addition, the Company
has entered into an agreement whereby it has agreed to pay a
tenant $1.5 million by May 31, 1998 to settle certain litigation
as discussed in Note 7 to the accompanying financial statements.
Although it has not yet received final commitment, the Company
has signed a term sheet to obtain $20.7 million in short-term
financing which will be secured by four of the Company's
properties, of which approximately $10.9 million will be used to
refinance existing debt and pay for transaction costs,
14
<PAGE>
Liquidity and Capital Resources, continued
approximately $7.8 million will be used for working capital and
$2.0 million will be held in escrow relating to certain reserves.
The Company intends on repaying this loan with the cash to be
invested by affiliates of RD Capital following the closing of the
RDC transaction. Final commitment from the lender is contingent
upon the satisfaction of various conditions including completion
of confirmatory due diligence on the collateral properties. While
there can be no assurance that this transaction will be
completed, the Company believes it will be concluded in an
orderly fashion to meet the Company's capital needs. The
Company's inability to complete this financing or obtain
alternative sources of capital would have an adverse effect on
the Company's ability to fund current tenant installation
activity.
HISTORICAL CASH FLOW
The following discussion of historical cash flow compares the
Company's cash flow for the three months ended March 31, 1998
("1998") with the Company's cash flow for the three months ended
March 31, 1997 ("1997").
Net cash provided by operating activities decreased from $3.9
million for 1997 to $3.2 million for 1998. This variance was
primarily attributable to a $896,000 decrease in cash provided
from changes in operating assets and liabilities (primarily
accounts receivable) for 1998.
Investing activities used $4.3 million during 1998, a $145,000
increase in cash used compared to $4.1 million used during 1997.
$1.5 million in additional cash was used in 1997 for property
development, expansion and retenanting activities (including the
payment of accounts payable related thereto). The Company
received $1.3 million in sales proceeds in 1997 related to the
sale of the Newberry Plaza. Cash used for deferred leasing costs
associated with the Company's leasing activities increased by
$387,000 for 1998.
Net cash provided by financing activities was $517,000 for 1998
representing a $3.9 million decrease compared to $4.4 million
provided during 1997. A $8.4 million net decrease in funds
provided by mortgage financing activities in 1998 was partially
offset by a $3.7 million reduction in dividends and distributions
paid in 1998.
15
<PAGE>
INFLATION
The Company's long-term leases contain provisions designed to
mitigate the adverse impact of inflation on the Company's net
income. Such provisions include clauses enabling the Company to
receive percentage rents based on tenants' gross sales, which
generally increase as prices rise, and/or, in certain cases,
escalation clauses, which generally increase rental rates during
the terms of the leases. Such escalation clauses are often
related to increases in the consumer price index or similar
inflation indexes. In addition, many of the Company's leases are
for terms of less than ten years, which permits the Company to
seek to increase rents upon re-rental at market rates if rents
are below the then existing market rates. Most of the Company's
leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes,
insurance and utilities, thereby reducing the Company's exposure
to increases in costs and operating expenses resulting from
inflation.
16
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.3(f) Second Amended and Restated Assumption Extension and
Loan Agreement between the Company and Fleet National
Bank
27 Financial Data Schedule (EDGAR filing only)
(b) Reports on Form 8-K
A Form 8-K filed on April 20, 1998. Under Item 5 -
Other Events, the Company reported that it had entered
into a Contribution and Share Purchase Agreement
with RD Capital, Inc. and certain of its affiliates.
In addition, under Item 7 - Financial Statements and
Exhibits, the Company included a copy of the
Contribution and Share Purchase Agreement and a press
release announcing the agreement.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act
of 1934, the registrant has fully caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
MARK CENTERS TRUST
By: /s/ Marvin L. Slomowitz
Marvin L. Slomowitz
Chief Executive Officer and
Trustee (Principal Executive
Officer)
/s/ Joshua Kane
Joshua Kane
Senior Vice President
Chief Financial Officer and
Treasurer (Principal Financial
and Accounting Officer)
Date: May 15, 1998
18
<PAGE>
INDEX OF EXHIBITS
10.3(f) Second Amended and Restated Assumption Extension and
Loan Agreement between the Company and Fleet National
Bank
27 Financial Data Schedule (EDGAR filing only)
19
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<NAME> MARK CENTERS TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 757
<SECURITIES> 0
<RECEIVABLES> 5,380
<ALLOWANCES> 1,275
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 311,541
<DEPRECIATION> 83,104
<TOTAL-ASSETS> 255,787
<CURRENT-LIABILITIES> 0
<BONDS> 185,240
0
0
<COMMON> 9
<OTHER-SE> 48,258
<TOTAL-LIABILITY-AND-EQUITY> 255,787
<SALES> 0
<TOTAL-REVENUES> 10,951
<CGS> 0
<TOTAL-COSTS> 7,649
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,923
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (533)
<DISCONTINUED> 0
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<PAGE>1
SECOND AMENDED AND RESTATED
ASSUMPTION, EXTENSION AND LOAN AGREEMENT
This Agreement (as from time to time amended and in effect,
the Agreement ) is made as of April 1, 1998 by and among Fleet
National Bank, a national banking association, with a place of
business at 75 State Street, Boston Massachusetts (the Lender ),
Mark Centers Limited Partnership, a Delaware limited partnership,
with a place of business at 600 Third Avenue, Kingston,
Pennsylvania 18704 (the Borrower ), and Mark Centers Trust, a
Maryland real estate investment trust, with a place of business
at 600 Third Avenue, Kingston, Pennsylvania 18704 (the REIT ).
1. Definitions. Certain terms are used in this Agreement
as specifically defined herein. These definitions are set forth
or referred to in Section 12. hereof.
2. Recitals; Reference to Agreements, Instruments, Etc.
Marvin L. Slomowitz obtained certain loans from Bank of New
England, N.A. ( BNE ) which are now held by the Lender as
assignee of Fleet Bank of Massachusetts, N.A. ( Fleet-Mass ),
which was the assignee of the Federal Deposit Insurance
Corporation (in its corporate and any receivership or other
capacity, the FDIC ) as receiver of New Bank of New England,
N.A. ( NBNE ), as assignee of the FDIC as receiver of BNE. Such
loans are evidenced, secured and otherwise affected by the
Existing Loan Documents as amended and in effect on the date
hereof and are referred to herein collectively as the Existing
Loan .
2.1. Existing Loan Documents. The Borrower, the REIT, and
the Lender and its predecessors in interest have entered into the
following instruments and agreements, each as amended from time
to time, and each of which shall be included within the
definition of the term Existing Loan Documents :
2.1.1. First Amended and Restated Assumption, Extension
and Loan Agreement. The First Amended and Restated Assumption,
Extension and Loan Agreement dated as of May 30, 1995, as amended
by Amendment Number One to First Amended and Restated Assumption
Extension and Loan Agreement dated as of December 6, 1995, by
Amendment Number Two to First Amendment and Restated Assumption,
Extension and Loan Agreement dated October 21, 1996, by letter
agreement dated February 27, 1997 from the Lender to the
Borrower, and Amendment Number Three to First Amendment and
Restated Extension and Loan Agreement dated May 16, 1997 shall be
referred to herein as the Existing Agreement :
<PAGE>2
2.1.2. Consolidated Note and Standby Letters of Credit.
The following Application and Agreement for Standby Letter of
Credit, and Standby Letter of Credit shall collectively be
referred to herein as SBLC :
(a) Application and Agreement for Standby Letter of
Credit No. RS1034937 dated March 27, 1995 from the Borrower to
the Lender; and
(b) Standby Letter of Credit No. RS1034937 dated
March 30, 1995 from the Lender to John Hancock Mutual Life
Insurance Company ( Hancock ) in the amount of $1,740,000
( Letter of Credit ).
2.1.3. Existing Letter of Credit Drawing Agreements. The
following letter of credit drawing agreements shall be referred
to herein as the Existing L/C Drawing Agreement :
(a) Letter of Credit Drawing Agreement (Ledgewood)
dated March 29, 1995 between the Borrower and Hancock, as
assigned by the Borrower to the Lender pursuant to that certain
Assignment of Rights dated as of March 30, 1995.
2.2 Existing Loan Indebtedness. The Borrower and Lender
hereby acknowledge and agree that as of the date hereof, the
aggregate principal amount of the SBLC issued by the Lender on
behalf of the Borrower (the Present Committed Principal ) is
$1,740,000 pursuant to SBLC No. RS1034937.
2.3. Amendment and Restatement. The Borrower has requested
that the Lender enter into this Agreement in order to extend the
Existing Agreement and the outstanding SBLC. Subject to all of
the terms and conditions hereof, the Lender is willing to enter
into this Agreement and the other instruments and agreements
contemplated hereby.
3. Maximum Loan Amount. In consideration of all of the
terms and conditions hereof, and the instruments and agreements
contemplated hereby, the Lender agrees to amend and restate the
Existing Agreement and extend the SBLC. The maximum amount
outstanding under the SBLC, at any time (the Outstanding
Principal ), shall not exceed $1,740,000 (the Maximum Loan
Amount ). The Indebtedness due under the SBLC is referred to
herein collectively as (the Loan ).
<PAGE>3
The amount available under the SBLC shall be the
Committed Principal . The date of the Amendment Closing is
referred to herein as the Amendment Closing Date .
4. Evidence of Indebtedness. The obligation of the
Borrower to repay the Loan shall be evidenced by the SBLC and the
Agreement. The Loan shall be payable and bear interest based on
the Prime Rate plus the Applicable Spread and shall be payable on
demand but in any event no later than June 15, 1998 (the
Maturity Date ).
The SBLC shall be extended to a date not later than
June 15, 1998 subject to the terms of this Agreement.
4.1. Disbursements and Certain Payments. All payments of
principal and interest and any other payments due pursuant hereto
shall be made in lawful money of the United States of America to
the Lender at 75 Federal Street, Boston, Massachusetts 02109, or
at such other place or places as the Lender may specify by notice
to the Borrower, not later than 1:00 p.m., Boston time, on the
day such payment is due or made. On the first day of each month,
the Lender shall debit one or more of the regular deposit
accounts of the Borrower with the Lender in an aggregate amount
equal to the amount of interest, if any, payable on such date as
set forth herein. In the event that the aggregate amount of all
funds in such accounts of the Borrower is insufficient to pay the
amount of such interest, the Borrower will, without notice,
forthwith pay to the Lender in immediately available funds the
amount of the deficiency.
4.2. Charges Against Account. Without limiting in any way
any of the Lender s rights under the SBLC, the Borrower hereby
acknowledges that the Lender is authorized, and the Borrower
hereby authorizes the Lender, without notice to the Borrower, to
charge under the SBLC any accounts of the Borrower with the
Lender, including the Cash Collateral Account, (hereinafter
defined) to fund, or reimburse, drafts under the SBLC.
4.3 Additional Collateral - Cash Collateral. With the
execution of said Amendment Number Three To First Amended and
Restated Assumption, Extension, and Loan Agreement, the Borrower
deposited with the Lender to be held in escrow pursuant to the
terms of said Agreement, a cash deposit in the initial amount of
$1,740,000 (defined in said Agreement as the Wal-Mart Escrow
Fund ) to be held in a separate account (defined in said
Agreement as the Wal-Mart Escrow Account ). From and after the
date of this amendment the Wal-Mart Escrow Fund shall be used
<PAGE>4
only as cash collateral for the payment or reimbursement of
drafts under the SBLC and the Wal-Mart Escrow Fund shall become
and be known as the Cash Collateral Fund and Wal-Mart Escrow
Account shall become and be known as the Cash Collateral
Account . The Cash Collateral Account is currently Premium
Master Fund Account No. 94019-40264 located at the Lender s place
of business in Boston, Massachusetts.
4.4 Grant of Security Interest. The Borrower hereby
confirms its pledge, assignment and grant to Lender in the
Existing Agreement, and hereby pledges, assigns and grants to
Lender, as security for the prompt observance and performance by
Borrower of all other terms, conditions and provisions of the
Agreement and the Loan Documents on the Borrower s part to be
observed and performed, all of Borrower s right, title, and
interest in and to the Cash Collateral Fund and the Cash
Collateral Account (collectively, the Collateral ), and Borrower
confirms and agrees that Lender shall have, and hereby grants to
the Lender, a security interest (as defined in the Uniform
Commercial Code) in, and a banker s lien and first lien on and
right of set-off against, the Collateral, together with all of
Borrower s rights to receive principal thereof, all interest
thereon, and all of Borrower s other rights as holder and owner
of the Collateral, and any and all of Borrower s rights, title
and interests in and to any certificate, instrument, deposit
account or other evidence of any of the foregoing, and together
with any and all renewals, extensions, roll-overs or replacements
thereof, and the proceeds of any of the foregoing. In addition,
the Borrower hereby confirms that it shall not further pledge,
assign or grant any security interest in the Collateral or permit
any lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC-1 Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto.
Upon an Event of Default, in addition to the rights and
remedies in this Agreement, at Lender s option, Lender shall be
entitled to exercise all rights and remedies available to it
under the Uniform Commercial Code of the Commonwealth of
Massachusetts.
The Borrower (a) shall execute any instruments or take
any steps required by Lender in order that notice of the security
interest confirmed or granted and assigned by Borrower to Lender
under this Agreement shall be given to all appropriate parties
and/or as may be required to enable Lender to enforce its rights
under this Agreement, (b) shall execute, at the request of
Lender, all UCC-1 Financing Statements and other instruments and
<PAGE>5
documents required by Lender to perfect the security interest
intended to be created under this Agreement.
In addition to any other rights and remedies of a
secured party under the Massachusetts Uniform Commercial Code
which may be exercised by Lender, the Lender shall have the
immediate and unrestricted right to liquidate, set-off and apply
the full amount of the Collateral, including accrued interest
thereon, to payment or reimbursement of drafts under the SBLC,
without first being required to enforce any other rights of
Lender against the Borrower.
5. INTENTIONALLY OMITTED.
6. Conditions. The Amendment Closing and the Lender's
obligation hereunder shall be subject to the Borrower's
compliance with all of their respective agreements herein
contained and to the satisfaction, at or before the Amendment
Closing of the following further conditions:
6.1. Loan Documents. The following Loan Documents shall
have been duly executed and delivered by the parties thereto and
shall be in full force and effect:
(a) Such financing statements and/or amendments thereto as
the Lender shall from time to time request in order to perfect
the security interests granted by the Security Documents.
(b) Such other documents a the Lender shall requests to
accomplish the transactions contemplated by this Agreement.
6.2. Representations and Warranties. The representations
and warranties of the Borrower and the REIT contained in each of
the Loan Documents, including without limitation in Section 7. of
this Agreement, shall be true and correct as though made on and
as of the Amendment Closing Date and shall continue true and
correct until the Maturity Date.
6.3. No Default. On the Amendment Closing Date and until
the Maturity Date, no Default shall have occurred, or shall
exist.
6.4. Legal Opinions. On the Amendment Closing Date as the
Lender shall request, the Borrower shall have delivered to the
Lender an opinion or opinions in form satisfactory to the Lender
of counsel approved by the Lender:
<PAGE>6
(a) as to the Borrower and the REIT, the validity and
enforceability of the Loan Documents and the transactions
contemplated thereby, certain diligence issues and such other
matters as the Lender shall request.
6.5. No Change. Since the date of any financial statements
of the Borrower or the REIT furnished to the Lender in accordance
with the Existing Agreement, no Material Adverse Change shall
have occurred.
6.6. Legality, Etc. This Agreement and the Transactions
contemplated hereby shall not be prohibited by any law or
governmental order or regulation applicable to the Borrower, and
all necessary consents, approvals and authorizations of any
governmental or administrative agency or any other Person to or
of any of the transactions contemplated hereby shall have been
obtained and shall be in full force and effect.
6.7. General. All instruments and legal, corporate, trust
and partnership proceedings in connection with the transactions
contemplated by this Agreement shall be satisfactory in form and
substance to the Lender and the Lender shall have received copies
of all documents, including records of corporate, trust and
partnership proceedings and opinions of counsel, which the Lender
may have reasonably requested in connection therewith, such
documents where appropriate to be certified by proper corporate,
trust, partnership or governmental authorities.
7. Representations and Warranties. Each of the Borrower
and the REIT hereby represents and warrants to the Lender as
follows:
7.1. Organization, Standing and Qualification.
7.1.1. Borrower. The Borrower is a duly organized and
validly existing limited partnership in good standing under the
laws of the State of Delaware with powers and authority for the
making and performing this Agreement and any other existing Loan
Document, for paying and performing the Secured Obligations, and
for owning its properties and for the carrying on of the business
now conducted or presently proposed to be conducted by the
Borrower. Certified copies of all written rules, regulations,
procedures and bylaws, and all other documents which relate to
the governance or internal regulation of the Borrower, including
the Borrower's Partnership Agreement, and all amendments thereto,
or which are interpretative of the foregoing, have previously
been delivered to the Lender and are true, accurate, complete and
<PAGE>7
correct as of the date hereof. The Borrower's Partnership
Agreement or certificate of limited partnership has been filed or
recorded in all places where required by law to be filed or
recorded, all required notices of such filing or recording have
been published, and all necessary filings with respect to the
Borrower have been made under all fictitious name or similar
statutes.
7.1.2. REIT. The REIT is the sole general partner of the
Borrower. The REIT is a duly organized and validly existing real
estate investment trust in good standing under the laws of the
State of Maryland, with powers and authority for acting as
general partner of the Borrower and the making and performing the
Loan Document to which it is a party. Certified copies of the
Declaration of Trust and all written rules, regulations,
procedures and bylaws, and all other documents which relate to
the governance or internal regulation of the REIT, or which are
interpretative thereof, and all amendments to any of the
foregoing, have previously been delivered to the Lender and are
true, accurate, complete and correct as of the date hereof. The
REIT's Declaration of Trust has been filed or recorded in places
where required by law to be filed or recorded, all required
notices of such filing or recording have been published, and all
necessary filings with respect to the REIT have been made under
all fictitious name or similar statutes. The beneficial
interest of the REIT in the Borrower is subject to no Liens or
restrictions on transfer (other than restrictions on transfer
contained in this Agreement or any other Loan Documents).
7.1.3. Qualification, Etc. Each member of the REIT Group
is duly and legally qualified or registered to do business as a
foreign corporation, partnership or other organization and is in
good standing in each state or jurisdiction where such
qualification or registration is required, and is duly
authorized, qualified, registered and licensed under all laws,
regulations, ordinances or orders of public authorities or
otherwise to carry on its business in the places and in the
manner presently conducted.
7.2. Execution, Delivery and Effect of Documents. This
Agreement and each of the Loan Documents has been duly executed
and delivered by or on behalf of the Borrower and the REIT
pursuant to authority legally adequate therefor, and this
Agreement and each of the Loan Documents is in full force and
effect, is a legal, valid and binding obligation of the parties
thereto other than the Lender and is enforceable in accordance
with its terms subject to applicable bankruptcy, reorganization,
<PAGE>8
insolvency, moratorium or similar laws and equitable principles
affecting the enforcement of creditors' rights generally.
7.3. Changes in Condition. There has been no Material
Adverse Change since the date of the Existing Agreement with
respect to, (i) the Borrower, (ii) the REIT, or (iii) the REIT
and its Subsidiaries (on a consolidated basis).
7.4. Litigation. There is no litigation, at law or in
equity, or any proceeding before any federal, state or municipal
board or other governmental or administrative agency, or
arbitrator or other tribunal pending or to the knowledge of the
Borrower threatened against , the Borrower or any member of the
REIT Group which, in the aggregate, may involve any material risk
of any material judgment or liability unless such judgment would
be fully covered by insurance or, if not so covered by insurance,
would not otherwise result in any Material Adverse Change or
which seeks to enjoin the consummation of, or which questions the
validity of, any of the transactions contemplated by this
Agreement or any other Loan Document, and no judgment, decree or
order of any court, board or other governmental or administrative
agency or arbitrator or other tribunal has been issued against or
binds the Borrower or any member of the REIT Group which has, or
will have, any Material Adverse Effect.
7.5. Tax Returns. Each of the members of the REIT Group has
filed all tax returns which are required to be filed and has
paid, or made adequate provision for the payment of, all taxes
which have or may become due pursuant to said returns or to
assessments received except such taxes, if any, as are being
contested in good faith and as to which adequate reserves, under
GAAP, have been provided. No tax Liens have been filed and no
claims are being asserted with respect to any such taxes. The
charges, accruals and reserves on the books of each such Person
in respect of any taxes or other governmental charges are
adequate.
7.6. No Legal Obstacle to Agreement. Neither the execution
and delivery of this Agreement or of any other Loan Document, nor
the making by the Borrower of any borrowings hereunder, nor the
consummation of any transaction herein or therein referred to or
contemplated hereby or thereby nor the fulfillment of the terms
hereof or thereof or of any agreement or instrument referred to
in this Agreement, has constituted or resulted in or will
constitute or result in a breach of the provisions of any
instrument or agreement to which any member of the REIT Group is
a party or by which any of such Persons is subject or bound, or
<PAGE>9
the Borrower's Partnership Agreement, any certificate of limited
partnership, the REIT's Declaration of Trust, the charter or by-
laws of any such Person or the violation of any law, judgment,
decree or governmental order, rule or regulation applicable to
any such Person, or result in the creation under any agreement or
instrument of any Lien upon any of the assets of any of such
Persons. No order, consent, approval, license, authorization, or
validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or
any subdivision thereof, is required to authorize, or is required
in connection with the execution, delivery and performance of, or
the legality, validity, binding effect or enforceability of, this
Agreement or any of the Loan Documents.
7.7. Defaults. No member of the REIT Group is in breach or
default under any provision of any applicable trust instrument,
partnership agreement, certificate of limited partnership,
charter or by-laws. No member of the REIT Group is in breach of
or default under any provision of any agreement, lease or other
instrument to which it is a party or by which it is bound or of
any law, governmental order, rule or regulation, so as to have a
Material Adverse Effect.
7.8. Compliance With Laws. Each member of the REIT Group
has complied with all applicable statutes, rules, regulations,
orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof, having jurisdiction over
the conduct of their respective businesses or the ownership of
their respective properties (except that compliance with
Environmental Laws shall be as set forth in Section 11. hereof)
to the extent that the failure to so comply would cause a
Material Adverse Change.
7.9. REIT Status. The REIT is a qualified real estate
investment trust pursuant to Section 856 of the Internal Revenue
Code and the REIT has complied with all applicable provisions of
the Internal Revenue Code and the regulations promulgated
pursuant thereto necessary to maintain its status as such a
qualified real estate investment trust.
7.10. No Broker's Fee. Neither the execution and
delivery of any Loan Document nor the execution of this Agreement
will subject the Lender to any claim for a brokerage or finder's
fee or commission, or to any similar charge.
7.11. Incorporation by Reference. The representations
and warranties of the Borrower and the REIT contained in each of
<PAGE>10
the Loan Documents are true and correct, and such representations
and warranties are hereby incorporated in this Agreement as
though fully set forth herein.
7.12. Disclosure. Neither this Agreement nor any Loan
Document or other agreement, document, certificate or statement
furnished to the Lender by or on behalf of the Borrower or the
REIT in connection with the transactions contemplated hereby
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein or therein not misleading.
8. Affirmative Covenants. Until the Secured Debt shall
have been paid in full or the Letter of Credit has expired
unutilized and so long as the Lender shall be bound by this
Agreement, and without limiting the generality of any provisions
of any other Loan Documents, each of the Borrower and the REIT
hereby covenants and agrees with the Lender as follows:
8.1. Conduct of Business, Etc.
8.1.1. Business. Each member of the REIT Group will
engage only in the businesses permitted by such Person's charter,
by-laws, partnership, trust or other applicable governing
instrument as in effect on the date hereof.
8.1.2. Maintenance of Properties, Etc. Each member of
the REIT Group (i) will comply with all the terms and provisions
contained in its organizational documents, and (ii) will do all
things necessary to preserve, renew and keep in full force and
effect and in good standing its partnership, corporate, trust or
other existence and material qualifications and rights necessary
or desirable in the ordinary conduct of its business.
8.1.3. Statutory Compliance. Each member of the REIT
Group will comply with (i) all valid and applicable statutes,
rules and regulations of the United States, of the States thereof
and their counties, municipalities and other subdivisions and of
any other jurisdiction applicable to it (except that compliance
with Environmental Laws shall be as set forth in Section 11.
hereof) and (ii) any judgment, order, court injunction, decree or
demand of any court or any governmental authority by which it is
bound or affected.
8.4. Bank Account. The Borrower will establish and maintain
with the Lender an account or accounts in order to effectuate the
payment mechanisms established pursuant to Section 4.2. hereof.
<PAGE>11
8.5. REIT Status. The REIT shall comply with all applicable
provisions of the Internal Revenue Code and the regulations
promulgated pursuant thereto necessary to maintain its status as
a qualified real estate investment trust pursuant to Section 856
of the Internal Revenue Code.
8.6. Fiscal Year. Each of the Borrower and the REIT will
maintain a fiscal year ending on December 31 of each year.
8.7. Estoppel Certificates. If and to the extent from time
to time requested by the Lender, the Borrower and the REIT shall
furnish to the Lender written statements, signed and, if so
requested, acknowledged, setting forth the amount of the Secured
Obligations which the Borrower and the REIT acknowledge to be due
to the Lender, specifying any claims of offset or defense which
the Borrower or the REIT asserts against the Secured Obligations
or the REIT's guaranty thereof, and such other matters as the
Lender shall request.
8.8. Financial Statements. The Borrower and each other
member of the REIT Group will maintain systems of accounting in
which complete entries will be made of all dealings and
transactions of a financial nature in relation to their business
and affairs in accordance with GAAP.
8.8.1. Annual Statements.
(i) There shall be furnished to the Lender as soon as
available and in any event within 90 days after the end of each
fiscal year of the REIT and its Subsidiaries, the consolidated
and consolidating financial statements, including the balance
sheet as at the end of such fiscal year and the statements of
earnings and shareholder's equity and cash flows, of the REIT and
its Subsidiaries. The consolidated financial statements
described above shall be accompanied by reports or certificates
of Ernst & Young or other independent certified public
accountants satisfactory to the Lender, to the effect that such
financial statements have been prepared in accordance with GAAP
consistently applied and fairly present the financial condition
of the Persons covered thereby at the dates thereof and the
results of their operations for the periods covered thereby. The
financial statements required by this Section 8.9.1.(i) shall
also be accompanied by a certificate signed by the chief
executive officer of the REIT that such signing officer has
caused the provisions of this Agreement to be reviewed and has no
knowledge of any Default, or if he has such knowledge, specifying
such Default and the nature thereof, and what action the Borrower
<PAGE>12
has taken, is taking or proposes to take with respect thereto.
8.8.2. Quarterly Statements.
(i) There shall be furnished to the Lender as soon as
available and in any event within 45 days after the end of each
of the fiscal quarters of the REIT and its Subsidiaries, the
consolidated and consolidating financial statements, including
the balance sheet as at the end of each such period and
statements of earnings and shareholders' equity and cash flows
for each such period of the REIT and its Subsidiaries. The
financial statements referred to above shall be accompanied by
(1) a certificate signed by the chief financial officer of the
REIT to the effect that such financial statements have been
properly prepared in accordance with GAAP consistently applied
and fairly present the financial condition of the Persons covered
thereby at the dates thereof and the results of their operations
for the periods covered thereby, subject only to normal year-end
audit adjustments, and (2) a certificate signed by the chief
executive officer of the REIT that such signing officer has
caused the provisions of this Agreement to be reviewed and has no
knowledge of any Default, or if he has such knowledge, specifying
such Default and the nature thereof, and what action the Borrower
has taken, is taking or proposes to take with respect thereto.
8.9. Other Information.
8.91. Material Litigation, Etc. The Borrower and the REIT
will promptly give the Lender written notice of any litigation,
arbitration or administrative proceeding to which the REIT, the
Borrower or any of their Subsidiaries may hereafter become a
party and which may result in any Material Adverse Change.
8.9.2. Defaults. Promptly upon acquiring knowledge
thereof, the Borrower and the REIT will notify the Lender in
writing of the existence of any Default and of any other
development, financial or otherwise, which might have a Material
Adverse Effect or the ability of the Borrower to repay the
Secured Obligations, specifying the nature thereof and what
action the Borrower and the REIT have taken, are taking or
propose to take with respect thereto.
8.9.3. Reports to Stockholders, Etc. Promptly after the
sending, making available or filing of the same, the REIT shall
furnish to the Lender copies of all reports and financial
statements which the REIT shall send or make available to its
<PAGE>13
stockholders, and all registration statements and all reports on
Forms 8-K, 10-Q or 10-K or any similar form hereafter in use
which the REIT shall file with the Securities and Exchange
Commission.
8.9.4. Other Information. From time to time upon request
of any authorized representative of the Lender, the Borrower and
the REIT will furnish or cause to be furnished to the Lender such
other information regarding the business, affairs and condition,
financial or otherwise, of any member of the REIT Group or any
Investment Affiliate as such representative may reasonably
request.
8.9.5. Books and Records. The Lender's authorized
representatives shall have the right during normal business hours
to inspect any of the properties of any member of the REIT Group
to examine the books and financial and other records of any such
Person, to make copies, notes and abstracts therefrom, to make an
independent examination or audit of its books and records for the
purpose of verifying the accuracy of the reports delivered by the
Borrower and the REIT pursuant to Section 8.9. hereof, this
Section 8.10. or otherwise and ascertaining compliance with this
Agreement and the other Loan Documents and to discuss the
foregoing of each of the foregoing parties with, and to be
advised as to the same by, their respective officers and other
representatives at such times and intervals as the Lender may
designate.
8.10. Further Assurances. Upon the Lender's request from
time to time, the Borrower and the REIT will make, execute,
acknowledge and deliver, and file and record, if applicable, all
such instruments and take all such action as the Lender or
counsel for the Lender may reasonably deem necessary or advisable
to carry out the intent and purposes of this Agreement or any
other document, instrument or agreement contained or referred to
herein.
9. Negative Covenants. Until the Secured Debt shall have
been paid in full or the Letter of Credit has expired unutilized
and so long as the Lender shall be obligated under the Agreement,
and without limiting the generality of any provisions of any
other Loan Documents, each of the Borrower and the REIT hereby
covenants and agrees with the Lender as follows:
9.1. Mergers and Consolidation. No member of the REIT Group
will become a party to any merger or consolidation without the
prior written consent of the Lender.
<PAGE>14
9.2. Amendments to Agreements. None of the parties to
any of the documents, instruments and agreements referred to in
Section 2.1.3. shall amend, modify or terminate any of such
documents, instruments and agreements without in each case the
prior written consent of the Lender.
10. INTENTIONALLY OMITTED.
11. Rights and Remedies of the Lender.
11.1. Events of Default. The occurrence of any one or
more of the following events (each an Event of Default ) shall
constitute a default under and breach of this Agreement:
11.1.1. The Borrower shall fail to make any payment in
respect of amounts owed pursuant to or in connection with the
SBLC, including fees; or
11.1.2. The Borrower and/or the REIT, as the case may be,
shall fail to perform or observe or cause to be performed or
observed any of the provisions of Sections 8.5., 8.8.1., 8.8.2.,
8.9.3., 9.1. and 9.4. hereof; or
11.1.3. An Event of Default shall occur under the SBLC, or
any Loan Document other than this Agreement; or
11.1.4. Any material representation or warranty made
herein or in any Loan Document, including without limitation in
any report, certificate, financial statement or other instrument
furnished in connection with this Agreement, or any Loan
Document, shall be untrue when made; or
11.1.5. The Borrower assigns this Agreement made or to be
made hereunder or any interest therein, without the prior written
consent of the Lender; or
11.1.6. Any failure to pay, observe or perform any
obligation, Indebtedness, covenant or agreement, to or with the
Lender to be paid, observed or performed on the part of any
member of the REIT Group and such failure shall continue, without
having been duly cured, waived or consented to, beyond the period
of grace, if any, therein specified and, to the extent a period
of grace is not therein specified, for a period of thirty (30)
days; or
11.1.7. The REIT shall fail to maintain its status at any
time as a qualified real estate investment trust pursuant to
<PAGE>15
Section 856 of the Internal Revenue Code;
11.1.8. The dissolution, termination, partial or complete
liquidation, merger or consolidation of the Borrower or the REIT,
or any sale, transfer or other disposition of assets of the
Borrower other than as expressly permitted by the Loan Documents
or otherwise with the prior written consent of the Lender; or
11.1.9. The Borrower or the REIT or any member of the REIT
Group shall be involved in financial difficulties as evidenced
by: (1) its commencement of a voluntary case under Title 11 of
the United States Code as from time to time in effect, or its
authorizing, by appropriate action or proceedings of partners,
directors or other governing body, the commencement of such a
voluntary case; (2) its filing an answer or other pleading
admitting or failing to deny the material allegations of a
petition filed against it commencing an involuntary case under
said Title 11, or seeking, consenting to or acquiescing in the
relief therein provided, or by its failing to controvert timely
the material allegations of any such petition; (3) the entry of
an order for relief in any involuntary case commenced under said
Title 11; (4) its seeking relief as a debtor under any applicable
law, other than said Title 11, of any jurisdiction relating to
the liquidation or reorganization of debtors or to the
modification or alteration of the rights of creditors, or by its
consenting to or acquiescing in such relief; (5) the entry of an
order by a court of competent jurisdiction (i) finding it to be
bankrupt or insolvent, (ii) ordering or approving its
liquidation, reorganization or any modification or alteration of
the rights of its creditors, or (iii) assuming custody of, or
appointing a receiver or other custodian for, all or a
substantial part of its property; or (6) by its making an
assignment for the benefit of, or entering into a composition
with, its creditors, or appointing or consenting to the
appointment of a receiver or other custodian for all or a
substantial part of its property; or
11.1.10. Failure to observe or perform any other covenant,
condition or agreement, on the part of the Borrower or the REIT
to be observed or performed pursuant to the terms of this
Agreement, and such failure shall continue for a period of thirty
(30) days after notice thereof given by the Lender to the
Borrower.
11.2. Remedies. Upon the occurrence of any Event of
Default, the Lender may at any time thereafter, at its option and
without notice, exercise any or all of the following rights and
<PAGE>16
remedies:
(a) The Lender may terminate its obligations hereunder
and/or declare the SBLC and the entire Secured Debt due and
payable, and the SBLC and Secured Debt shall thereupon become and
be immediately due and payable, anything in the Loan Documents to
the contrary notwithstanding, and without presentation, protest
or further demand or notice of any kind, all of which are
expressly hereby waived by the Borrower. Notwithstanding and
without limitation of the generality of the foregoing, upon the
occurrence of an Event of Default under Section 11.1.9. hereof,
the Lender's and the entire Secured Debt automatically shall
become and be immediately so due and payable.
(b) The Lender may exercise any or all of the rights and
remedies set forth in the other Loan Documents.
11.3. Power of Attorney. For the purposes of carrying
out the provisions and exercising the rights, powers and
privileges granted by or referred to in this Section 11., each of
the Borrower and the REIT hereby irrevocably constitutes and
appoints the Lender its true and lawful attorney-in-fact, with
full power of substitution, to execute, acknowledge and deliver
any instruments and do and perform any acts which are referred to
in this Section 11. in the name and on behalf of the Borrower
and/or the REIT. The power vested in such attorney-in-fact is,
and shall be deemed to be, coupled with an interest and
irrevocable.
11.4. Remedies Cumulative. Upon the occurrence of any
Event of Default, the rights, powers and privileges provided in
this Section 11. and all other remedies available to the Lender
under this Agreement or under any of the Loan Documents or at law
or in equity may be exercised by the Lender at any time and from
time to time and shall not constitute a waiver of any of the
Lender's other rights or remedies thereunder, whether or not the
Secured Debt shall be due and payable, and whether or not the
Lender shall have instituted any foreclosure proceedings or other
action for the enforcement of its rights under the Loan
Documents.
11.5. Annulment of Defaults. An Event of Default shall
not be deemed to be in existence for any purpose of this
Agreement or any Loan Document if the Lender shall have waived
such Event of Default in writing or stated that the same has been
cured to its reasonable satisfaction, but no such waiver shall
extend to or affect any subsequent Event of Default or impair any
<PAGE>17
of the rights of the Lender upon the occurrence thereof.
11.6. Waivers. Each of the Borrower and the REIT hereby
waives to the extent not prohibited by applicable law (a) all
presentments, demands for performance, notices of nonperformance
(except to the extent required by the provisions hereof or of any
other Loan Documents), protests and notices of dishonor, (b) any
requirement of diligence or promptness on the Lender's part in
the enforcement of its rights under the provisions of this
Agreement or any Loan Document, and (c) any and all notices of
every kind and description which may be required to be given by
any statute or rule of law and any defense of any kind which the
Borrower or the REIT may now or hereafter have with respect to
its liability under this Agreement or under any Loan Document.
11.7. Course of Dealing, Etc. No course of dealing
between the Borrower or the REIT and the Lender shall operate as
a waiver of any of the Lender's rights under this Agreement or
any Loan Document or with respect to any of the Secured
Obligations. No delay or omission on the Lender's part in
exercising any right under this Agreement or any Loan Document or
with respect to any of the Secured Obligations, shall operate as
a waiver of such right or any other right hereunder. A waiver on
any one occasion shall not be construed as a bar to or waiver of
any right or remedy on any future occasion. No waiver or consent
shall be binding upon the Lender unless it is in writing and
signed by the Lender. The making of a Readvance hereunder during
the existence of a Default shall not constitute a waiver thereof.
12. Definitions. For the purposes of this Agreement, the
following terms defined elsewhere in this Agreement in the
Sections set forth below shall have the respective meanings
therein defined:
TERM DEFINITION
" Agreement" Preamble
" BNE" Section 2.
" Borrower" Preamble
" Committed Principal" Section 3.
" Event of Default" Section 15.
" Existing Agreement" Section 2.1.1.
" Existing L/C Drawing Agreement" Section 2.1.3.
" Existing Loan" Section 2.
" Existing Loan Documents" Section 2.1.
" FDIC" Section 2.
<PAGE>18
" Hancock" Section 2.1.2.(b)
" Lender" Preamble
" Letter of Credit" Section 2.1.2(b)
" Loan" Section 3.
" Maturity Date" Section 4.2.
" Maximum Loan Amount" Section 3.
" NBNE" Section 2.
" Outstanding Principal" Section 3.
" REIT" Preamble
" SBLC" Section 2.1.2.
" Wal-Mart Escrow Account" Section 4.14.
" Wal-Mart Escrow Fund" Section 4.14.
In addition, for purposes of this Agreement, the
following terms shall have the respective meanings set forth
below:
Affiliate means any Person directly or indirectly
controlling, controlled by or under direct or indirect common
control with any member of the REIT Group. A Person shall be
deemed to control another Person (i) if the controlling Person
owns or has a right to convert interests into or otherwise
acquire 10% or more of any class of voting securities of the
controlled Person or (ii) possesses directly or indirectly, the
power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of
stock or other equity securities, by contract or otherwise.
Amendment Closing Date means the date on which this
Agreement is executed and delivered and the Amendment Closing
occurs, but not later than April 15, 1998.
Applicable Spread shall mean with respect to a Prime Rate
Readvance, one quarter of one percent (0.25%) per annum.
Business Day shall mean a day other than Saturday or
Sunday on which banks are open for business in Providence.
Default shall mean any Event of Default under this
Agreement or any other specified Loan Document and any event or
condition which, with the giving of notice or the passage of time
or both, would constitute such an Event of Default.
Distribution means with respect to any Person a
declaration or making of any distribution of income or capital,
issuance of any equity securities, retirement, redemption or
other acquisition for value of any or all of its outstanding
<PAGE>19
securities, return of any capital, or contracting to do any of
the foregoing.
Event of Default shall mean each of the events and
conditions set forth in Section 11.1 hereof; provided that, as
used with reference to any other Loan Document, such term shall
mean an event or condition which constitutes a default under or
breach of such Loan Document beyond the applicable grace period
therein specified, if any.
GAAP shall mean generally accepted accounting principles
as defined by the Financial Accounting Standards Board as from
time to time in effect consistently applied.
Indebtedness of a Person shall include all obligations,
contingent or otherwise, which in accordance with GAAP should be
classified upon such Person's balance sheet as liabilities, but
in any event including liabilities secured by any Lien existing
on property owned or acquired by such Person or a Subsidiary
thereof, whether or not the liability secured thereby shall have
been assumed, all so-called capitalized lease obligations,
obligations under Interest Rate Contracts (valued at the
termination cost thereof), and all guaranties, endorsements and
other contingent obligations in respect of Indebtedness of
others.
Internal Revenue Code means the Internal Revenue Code of
1986, as amended from time to time, and any successor statute.
Lien means any security interest, mortgage, pledge, lien,
claim, charge, encumbrance, conditional sale or other title
retention agreement, lessor's interest under a so-called
capitalized lease or analogous instrument, in, of, or on any
Person's assets or properties in favor of any Person.
Loan Documents shall include this Agreement, the SBLC, and
each other present or future instrument or agreement evidencing,
securing, guarantying or otherwise relating to any or all of the
Secured Obligations or which is stated to be a Loan Document as
defined in this Agreement, each as from time to time amended or
modified, and all statements, reports and certificates delivered
to the Lender by or on behalf of the Borrower, any member of the
REIT Group or any other Person in connection herewith or
therewith, including without limitation each such agreement,
instrument, statement, report and certificate referred to in or
delivered from time to time pursuant to Section 8.9. or 8.10.
hereof.
<PAGE>20
Material Adverse Change shall mean a change which shall
materially impair the business or assets or the condition,
financial or otherwise, of , the Borrower, or the REIT on an
individual basis, or of the members of the REIT Group on a
consolidated basis.
Material Adverse Effect shall mean the effect caused by a
Material Adverse Change.
Person means any natural person, corporation, firm,
association, joint venture, partnership, trust, organization,
enterprise, government or any department, political subdivision
or agency thereof.
Prime Rate shall mean the interest rate announced by the
Lender from time to time as its Prime Rate .
REIT Group shall mean the REIT and the Borrower and their
respective Subsidiaries.
Secured Obligations shall mean (a) the payment and
performance of all covenants and agreements contained in this
Agreement, the SBLC, and each of the other Loan Documents, and
(b) without limiting the generality of the foregoing, the payment
of the Secured Debt, even if the aggregate amount of the Secured
Debt outstanding at any one time exceeds the face amount of the
SBLC.
Secured Debt shall include all Indebtedness, liabilities
and amounts from time to time evidenced by the SBLC, and, to the
extent permitted by law, all other Indebtedness and liabilities,
direct or indirect, of the Borrower to the Lender due or to
become due hereunder, or under any other Loan Document
(including, without limitation, any future advances,
disbursements, payments and reimbursements made, and charges,
expenses and costs incurred by the Lender pursuant to the
provisions of this Agreement, or any such other Loan Document).
Security shall mean all assets now or from time to time
hereafter encumbered or subjected to a lien, security interest or
charge (or intended or required so to be) pursuant to any other
Security Document to secure any or all of the Secured
Obligations.
Security Document shall include each present or future
instrument or agreement securing any or all of the Secured
Obligations.
<PAGE>21
Subsidiary of the Borrower or other specified Person shall
mean any Person (i) of which the specified parent now or
hereafter shall at any time own directly or indirectly through a
Subsidiary at least 50% of the outstanding capital stock (or
other equity interest) entitled to vote generally, or (ii) in
which the Borrower or other such specified parent or any
Subsidiary thereof shall at any time be a general partner or
joint venturer.
Uniform Commercial Code shall mean the Uniform Commercial
Code as enacted in Massachusetts and from time to time amended
and in effect.
13. Expenses; Indemnity.
13.1. Expenses. Whether or not the transactions
contemplated hereby shall be consummated, the Borrower will bear,
and from time to time upon the Lender's request will pay or
reimburse the Lender for:
(a) all expenses in connection with the preparation,
negotiation, execution and delivery of this Agreement and each
other Loan Document and the transactions contemplated hereby and
thereby and any amendment or modification hereof and thereof and
operations hereunder and thereunder, and the granting, taking or
releasing of any Security for any of the Secured Obligations,
including without limitation reasonable attorney's fees of the
Lender's counsel, charges for examining public records and
charges of any construction consultant and all other
professionals engaged by the Lender;
(b) all taxes, including recording and filing fees and
transfer and similar taxes at any time payable in respect of this
Agreement or any Loan Document or the granting, taking,
perfecting or releasing of any Security;
(c) all other out-of-pocket expenses incurred by the Lender
in respect of the granting, taking, perfecting, protecting or
releasing of any Security; and
(d) all expenses incurred by the Lender or any holder of
any Secured Obligations in connection with the enforcement of any
rights hereunder or under any other Loan Document or with respect
to any Security, including costs of collection and reasonable
attorneys' fees.
<PAGE>22
13.2. Indemnity. The Borrower shall indemnify the
Lender against and hold the Lender harmless from all claims,
damages, loss and liability incurred or sustained by the Lender
or asserted against the Lender, directly or indirectly, in
connection with any of the following:
(a) any breach of any representation or warranty contained
in any of the Loan Documents;
(b) any failure to pay, observe or perform any of the
Borrower's obligations under any of the Loan Documents; or
(c) the existence of or the exercise of any of the Lender's
rights with respect to any Security;
and any and all actions, suits, proceedings, assessments,
judgments, costs and expenses, including reasonable attorney's
fees, incident to any of the foregoing.
13.3. Survival. The covenants contained in this
Section 13. shall survive the termination of this Agreement for
any reason.
1. Notices. All notices and other communications required
or permitted to be given hereunder shall be in writing and shall
be effective when mailed, postage prepaid, by registered or
certified mail (return receipt requested), or when delivered to
Federal Express or other overnight courier, delivery charges
prepaid:
If to the Borrower
or the REIT: 600 Third Avenue
Kingston, Pennsylvania 18704
Attn: Marvin L. Slomowitz
and
Joshua Kane
with a simultaneous
copy to: Wachtel & Masyr
110 East 59th Street
New York, NY 10022
Attn: Marvin J. Levine, Esquire
with a simultaneous copy, in the case of a notice of Default
given by the Lender pursuant to Section 11.10. hereof based on a
Default arising out of an act or omission of , to the trustees of
the REIT set forth and at the addresses set forth on Schedule 2
hereto
<PAGE>23
If to the Lender: Fleet National Bank
Mail Stop: MA/BO/F11C
75 State Street
Boston, Massachusetts 02109-1810
Thomas T. Hanold, Vice President,
Commercial Real Estate
with a simultaneous
copy to: Peabody & Brown
101 Federal Street
Boston, MA 02110-1832
Attn: Thomas Howard Brown, Esquire
or to such other address as any party may from time to time
specify by like notice.
15. Survival of Representations, Warranties and Covenants.
All covenants, agreements, representations and warranties made by
or on behalf of the Borrower or the REIT herein or in any other
Loan Document and in certificates delivered pursuant hereto or
thereto shall be deemed to have been material and relied on by
the Lender, notwithstanding any investigation made by the Lender
or on its behalf, and shall survive the execution and delivery to
the Lender hereof and thereof.
16. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW
OF CONFLICTS) OF THE COMMONWEALTH OF MASSACHUSETTS, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANK.
17. CONSENT TO JURISDICTION. EACH OF THE BORROWER AND THE
REIT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION
OF ANY UNITED STATES FEDERAL OR MASSACHUSETTS STATE COURT SITTING
IN BOSTON, MA IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENT AND EACH OF THE BORROWER AND THE
REIT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER OR THE REIT IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY
THE BORROWER OR THE REIT AGAINST THE LENDER OR ANY AFFILIATE OF
THE LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
<PAGE>24
DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN BOSTON
MASSACHUSETTS.
18. WAIVER OF JURY TRIAL. THE BORROWER, THE REIT AND THE
LENDER, BETWEEN AND AMONG THEMSELVES ONLY (AND NOT AS RESPECTS
ANY OTHER PERSON TO ANY JUDICIAL PROCEEDING) HEREBY WAIVE TO THE
EXTENT PERMITTED BY LAW TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING
IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
19. Restatement. This Agreement shall be effective as of
the Amendment Closing and, upon and from and after the Amendment
Closing, this Agreement shall amend, restate and supersede the
Existing Agreement. Nothing contained herein or in any of the
other Loan Documents shall obligate the Lender to enter into any
other or further extensions of or amendments to the Loan and the
Loan Documents.
20. Further Assurances. The Borrower, the REIT and the
Lender, upon request from time to time by any other of them, will
make, execute, acknowledge and deliver, and file and record, if
applicable, all such instruments and take all such action as the
requesting party or its counsel may reasonably deem necessary or
advisable to carry out the amendment and restatement of the
Existing Agreement and the transactions contemplated hereby.
21. Entire Agreement. This Agreement and the documents
referred to herein represent the entire understanding and
agreement between the parties with respect to the subject matter
hereof and supersede all other negotiations, understandings, and
representations made by and between such parties. No course of
dealing, course of performance, trade usage or parole evidence of
any nature shall be used to supplement or modify any terms of
this Agreement.
22. Amendments. The provisions of this Agreement may not
be amended, supplemented, waived or changed orally, but only by a
writing signed by the party as to whom enforcement of any such
amendment, supplement, waiver or modification is sought and
making specific reference to this Agreement.
23. Arm's-Length Transaction. The Borrower and the REIT
recognize, stipulate and agree that the Lender's actions and
relationships with the parties hereto, including, but not limited
to, those relationships created or referenced by or in the Loan
<PAGE>25
Documents, or in this Agreement, have been and constitute arm's-
length commercial transactions, and that such actions and
relationships shall at all times in the future continue to
constitute arm's-length commercial transactions and that the
Lender or the Lender's attorneys shall not any time act, be
obligated to act, or otherwise be construed or interpreted as
acting as or being the agent, attorney, partner, employee or
fiduciary of any such parties.
24. Negotiations. The Borrower and the REIT stipulate and
agree that each of the Loan Documents and this Agreement are
products of and result from lengthy arm's-length negotiations
between the parties and that neither the Lender nor any other
party has exerted or attempted to induce, through threats or
otherwise, the execution or delivery of this Agreement or any of
the Loan Documents. Without in any way limiting the foregoing,
the Borrower and the REIT stipulate and agree that at all times
during the course of the negotiations surrounding the execution
and delivery of the Loan Documents and this Agreement, it has, to
the extent deemed necessary or advisable in his or its sole
discretion, been advised and assisted by competent counsel of his
or its choosing, that counsel has been present and actively
participated in the negotiations surrounding the Loan Documents
and this Agreement and that each has been fully advised by
counsel of his or its choosing of the effect of each term,
condition, provision and stipulation contained therein.
25. Time is of the Essence. Time is of the essence of this
Agreement and the Loan Documents and all obligations and duties
hereunder and thereunder.
26. Agreements Relating to Consideration. The Borrower and
the REIT hereby acknowledge and agree that the covenants and
agreements of the Lender under this Agreement constitute full and
fair consideration for the obligations, covenants and agreements
of the Borrower and the REIT under this Agreement and that, by
virtue of such consideration, each of the parties hereto has
received reasonably equivalent value in exchange for his or its
covenants and agreements hereunder.
27. Assignment. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, the Borrower
shall not assign or attempt to assign, directly or indirectly,
any of its rights under this Agreement or under any other Loan
Document without the prior written consent of the Lender in each
instance. The Lender shall have the right from time to time to
assign all or any portion of its interest in the Loan and the
<PAGE>26
Loan Documents and grant participations therein. If the Lender
so assigns all of its interest in the Loan and the Loan Documents
from and after such assignment the Borrower shall look solely to
the assignee for satisfaction of all obligations and duties of
the Lender under the Loan Documents and the Lender so assigning
the Loan and the Loan Documents shall not have any liability,
obligations or duties under the Loan Documents with respect to
periods from and after such assignment.
28. Miscellaneous. The invalidity or unenforceability of
any term or provision hereof shall not affect the validity or
enforceability of any other term or provision hereof, and any
such invalid or unenforceable provision shall, to the extent
practicable, be deemed modified to the extent necessary to make
it valid and enforceable. The headings in this Agreement are for
convenience of reference only and shall not alter or otherwise
affect the meaning hereof. This Agreement is a Loan Document,
may be executed in any number of counterparts which together
shall constitute one instrument, and shall bind and inure to the
benefit of the parties hereto and their respective heirs,
personal representatives, successors and assigns, including as
such successors and assigns, in the case of the Lender, all
holders of any Secured Obligation. The Borrower, the REIT and
the Lender agree that nothing contained in this Agreement or any
other Loan Document is intended or shall be construed to
establish the Borrower, the REIT, any other member of the REIT
Group and the Lender, or any of them, as joint venturers or
partners. The Loan Documents are intended solely for the benefit
of the Borrower, , the REIT and the Lender, and no third party
shall have the rights or interest in any provision of the Loan
Documents, or as a result of any action or inaction of the Lender
in connection therewith. The term Borrower , together with any
pronoun referring thereto, shall include the
singular, plural, masculine, feminine and neuter, as the context
may require; and if more than one Person constitutes the
Borrower, the obligations of such Persons shall be joint and
several.
IN WITNESS WHEREOF, the Lender, the Borrower and the REIT
have each duly executed, or caused to be duly executed, this
Agreement as a sealed instrument, in the name and behalf of each
of them (acting by their respective proper officers or
appropriate legal representatives, as the case may be, hereunto
duly authorized), as of the day and year first above written.
<PAGE>27
FLEET NATIONAL BANK
By: /s/ Thomas T. Hanold
Name: Thomas T. Hanold
Title: Vice President
MARK CENTERS LIMITED PARTNERSHIP
By: Mark Centers Trust,
its general partner
By: /s/ Joshua Kane
Name: Joshua Kane
Title: Senior Vice President and
Chief Financial Officer
MARK CENTERS TRUST
By: /s/ Joshua Kane
Name: Joshua Kane
Title: Senior Vice President and
Chief Financial Officer
