<PAGE>
Securities and Exchange Commission
Washington, DC 20549
FORM 10-K
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999
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
ACADIA REALTY TRUST
(Exact name of registrant as specified in its charter)
Maryland 23-2715194
(State of incorporation) (I.R.S. employer identification no.)
20 Soundview Marketplace
Port Washington, NY 11050 (516)767-8830
(Address of principal executive offices) (Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, $.001 par value
(Title of Class)
New York Stock Exchange
(Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: NONE
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting common equity stock held by
non-affiliates of the Registrant was approximately $137.4 million based on the
closing price on the New York Stock Exchange for such stock on March 22, 2000
(the Company has no non-voting common equity).
The number of shares of the Registrant's Common Shares of Beneficial Interest
outstanding was 25,261,715 on March 22, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Part III - Definitive proxy statement for the Annual Meeting of Shareholders
presently scheduled to be held May 16, 2000, to be filed pursuant to Regulation
14A.
<PAGE>
TABLE OF CONTENTS
Form 10-K Report
Item No. Page
- -------- PART I ----
1. Business 3
2. Properties 8
3. Legal Proceedings 15
4. Submission of Matters to a Vote
of Security Holders 15
PART II
5. Market for the Registrant's Common Equity and
Related Shareholder Matters 16
6. Selected Financial Data 17
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 19
7A. Quantitative and Qualitative Disclosures about
Market Risk 26
8. Financial Statements and Supplementary Data 26
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 26
PART III
10. Directors and Executive Officers of the Registrant 27
11. Executive Compensation 27
12. Security Ownership of Certain Beneficial Owners and Management 27
13. Certain Relationships and Related Transactions 27
PART IV
14. Exhibits, Financial Statements, Schedules and
Reports on Form 8-K 27
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report on Form 10-K constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions, which will, among other things, affect
demand for rental space, the availability and creditworthiness of prospective
tenants, lease rents and the availability of financing; adverse changes in the
Company's real estate markets, including, among other things, competition with
other companies; risks of real estate development and acquisition; governmental
actions and initiatives; and environmental/safety requirements.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Acadia Realty Trust (the "Company"), formerly Mark Centers Trust, was
formed on March 4, 1993 as a Maryland Real Estate Investment Trust ("REIT"). The
Company is a fully integrated, self-managed and self-administered equity REIT
focused primarily on the ownership, acquisition, redevelopment and management of
neighborhood and community shopping centers, and multi-family properties. The
Company operates fifty-eight properties, which it owns or has an ownership
interest in, consisting of forty-seven neighborhood and community shopping
centers, three enclosed malls, two mixed use properties (a retail/office center
and a retail/residential property), five multi-family properties and one
redevelopment property which are all located in the Eastern and Midwestern
regions of the United States. The retail/office mixed use property is currently
held for sale.
All of the Company's assets are held by, and all of its operations are
conducted through, Acadia Realty Limited Partnership, a Delaware limited
partnership (the "Operating Partnership"), previously Mark Centers Limited
Partnership, and its majority owned subsidiaries. As of December 31, 1999, the
Company controlled 71% of the Operating Partnership as the sole general partner.
On August 12, 1998 the Company completed the transactions contemplated
by the Contribution and Share Purchase Agreement dated April 15, 1998 (the "RDC
Transaction"). In connection with the RDC Transaction, the Operating Partnership
acquired (i) fee title or all, or substantially all, of the ownership interests
in twelve shopping centers, five multi-family properties and one redevelopment
property, (ii) a 49% interest in one shopping center, (iii) certain third party
management contracts, and (iv) certain promissory notes from real estate
investment partnerships and related entities, which are not under common
control, in which RD Capital, Inc. ("RDC") serves as general partner or in
another similar management capacity, for approximately 11.1 million Operating
Partnership Units ("OP Units") and approximately 2.0 million common shares of
beneficial interest ("Common Shares") valued at $97.2 million. In addition, the
Company assumed mortgage debt aggregating $154.2 million and incurred other
capitalized transaction costs of $5.8 million resulting in an aggregate purchase
price of $257.2 million. Pursuant to the terms of the RDC Transaction, the
recipients of the OP Units and Common Shares were restricted, subject to certain
limited exceptions, from selling or otherwise transferring such OP Units or
Common Shares prior to the first anniversary of the closing of the RDC
Transaction. As part of the RDC Transaction, the Company issued approximately
13.3 million Common Shares to three real estate investment limited partnerships
(collectively "RDC Funds"), in which affiliates of RDC serve as general partner,
in exchange for $100.0 million. As a result of the RDC Transaction, the RDC
Funds owned 63% of the Common Shares in the Company. Each of the RDC Funds
appointed each of its partners as such RDC Funds' proxy with respect to the
Common Shares to which such partner would be entitled upon a dissolution of such
RDC Fund and a distribution of such Common Shares among the partners. Other real
estate investment partnerships and related entities in which RDC or its
affiliates serve as general partner or in another similar management capacity,
owned 93% of the minority interest in the Operating Partnership as limited
partners. Collectively, after giving effect to the conversion of their OP Units,
which are generally exchangeable for Common Shares on a one-for-one basis, these
entities and the RDC Funds beneficially owned 72% of the Common Shares as of the
closing of the RDC Transaction. The Operating Partnership is also obligated to
issue additional OP Units valued at $2.8 million upon the completion of certain
improvements and the commencement of rental payments from a designated tenant at
one of the properties acquired in the RDC Transaction.
In March 2000, the RDC Funds, in accordance with their respective
partnership agreements (the "RDC Fund Partnership Agreements"), distributed to
their respective limited partners the Common Shares which had been issued to the
RDC Funds in connection with the RDC Transaction. Pursuant to a registration and
lock-up agreement, dated as of the date of the RDC Transaction (the
"Registration Agreement"), in March 2000, the Company filed a registration
statement with the Securities and Exchange Commission to permit the resale of
such Common Shares, which registration statement was declared effective in March
2000. Pursuant to the RDC Fund Partnership Agreements and the Registration
Agreement, such limited partners had agreed to certain restrictions on the sale
of such Common Shares by such limited partners (the "Original Lock-Up
Provisions"). In March 2000, such limited partners agreed, subject to certain
conditions, to extend the term of the Original Lock-Up Provisions until December
28, 2000.
<PAGE>
Concurrent with the closing of the RDC Transaction, the Company
appointed Ross Dworman and Kenneth F. Bernstein, the Chief Executive Officer and
Chief Operating Officer, respectively, of RDC, as the Chairman and Chief
Executive Officer, and President, respectively, of the Company. Messrs. Dworman
and Bernstein, together with two designees of RDC, were appointed to the Board
of Trustees. Following the completion of the RDC Transaction, the Company
changed its name from Mark Centers Trust to Acadia Realty Trust and the name of
the Operating Partnership was changed from Mark Centers Limited Partnership to
Acadia Realty Limited Partnership.
BUSINESS OBJECTIVES AND OPERATING STRATEGY
The Company's primary business objective is to acquire and manage
commercial retail properties that will provide cash for distributions to
shareholders while also creating potential for capital appreciation to enhance
investor returns. The Company's acquisition program focuses on acquiring
sub-performing neighborhood and community shopping centers that are well-located
and creating significant value through retenanting, timely capital improvements
and property redevelopment. In considering acquisitions, the Company focuses on
quality shopping centers located in the Northeast, Mid-Atlantic, Southeast and
Midwest regions. The Company considers both single assets and portfolios in its
acquisition program. In conjunction with evaluating potential portfolio
acquisitions, the Company also regularly engages in discussions with public and
private entities regarding business combinations as well. Furthermore, the
Company may, from time to time, consider acquiring multi-family apartment
complexes as well as engaging in joint ventures related to property acquisition
and development.
The Company typically holds its properties for long-term investment. As
such, it continuously reviews the existing portfolio and implements programs to
renovate and modernize targeted centers to enhance the property's market
position. This in turn strengthens the competitive position of the leasing
program to attract and retain quality tenants, increasing cash flow and
consequently property value. Upon evaluating the portfolio, the Company also
periodically identifies certain properties for disposition and redeploys the
capital to existing centers or acquisitions with greater potential for capital
appreciation.
Operating functions such as leasing, property management, construction,
finance and legal (collectively the "Operating Departments") are provided by
Company personnel, providing for fully integrated property management and
development. The Operating Departments' involvement in acquisitions is an
essential component to the acquisition program. By incorporating the Operating
Departments in the acquisition process, acquisitions are appropriately priced
giving effect to each asset's specific risks and returns. Also, because of the
Operating Departments' involvement with, and corresponding understanding of, the
acquisition process, transition time is minimized and management can immediately
execute an asset's strategic plan. All operating activities are supported by a
management information system which was substantially upgraded in 1999 and
provides management with the operating data necessary to make informed operating
decisions on a timely basis. The Company also designed and implemented a web
site in 1999 providing the investment community and prospective tenants with
detailed financial and portfolio information.
PROPERTY ACQUISITIONS
The requirements that acquisitions be accretive based on the Company's
long-term cost of capital as well as increase overall portfolio quality and
value are core to the Company's acquisition program. When the blended cost of
equity and debt increase, it is important to reduce acquisition activity to
align the level of investment activity with capital flows. Due to a difficult
capital market environment experienced throughout the REIT industry during 1999,
the Company made the strategic decision to limit its acquisition program. As a
result of what the Company considers this common sense approach, it believes it
will be better positioned to take advantage of favorable acquisition
opportunities in the event the capital markets improve. Consistent with this
disciplined approach, the Company limited its acquisition activity during 1999
to three opportunistic investments as follows:
On November 16, 1999, the Company acquired 100% of the partnership
interests of the limited partnership which owns the Pacesetter Park Shopping
Center, a 96,000 square foot community shopping center located in Rockland
County, New York. The aggregate purchase price of $7.4 million consisted of the
assumption of $4.6 million in first mortgage debt and the issuance of $2.2
million in preferred Operating Partnership units with the balance funded from
working capital.
<PAGE>
On May 5, 1999, the Company acquired the sole general partner's
interest in the limited partnership owning the Gateway Mall (formerly the Mall
189), a 122,000 square foot shopping center located in Burlington, Vermont, for
$6.5 million. The interest, which is senior to the interests of the limited
partners, was acquired out of bankruptcy by restructuring and assuming the
mortgage debt of $6.2 million. The balance of the purchase was funded from
working capital. The Gateway Mall is in its early stages of redevelopment with
anticipated completion in late 2001. The property is a partially enclosed mall
that will be reconfigured into a conventional strip center format.
On February 24, 1999, the Company acquired the Mad River Station, a
154,000 square foot shopping center located in Dayton, Ohio for $11.5 million.
The Company assumed $7.7 million in mortgage debt and funded the remaining
purchase from working capital.
PROPERTY DEVELOPMENT
In 1999, the Company completed the redevelopment of a 39,700 square
foot building located in Greenwich, Connecticut, which consists of 17,000 square
feet of retail space and 21 apartments (approximately 15,000 square feet).
During June 1999, Restoration Hardware, the lead anchor for the center occupying
12,300 square feet of the retail space, commenced paying rent. The remaining
retail space has been leased as well with occupancy anticipated during the
second quarter of 2000. All twenty-one residential units are leased as of
December 31, 1999. Costs incurred on this project, including the initial
acquisition cost, totaled $17.5 million.
During 1999, the Company also completed the following property development and
expansions:
- - The completion of a 10-screen theater at the Wesmark Plaza in Sumter,
South Carolina.
- - The expansion of a 42,000 square foot Waldbaum's (A&P) Supermarket to
65,000 square feet including a new parking lot and exterior facade at the
Town Line Plaza in Rocky Hill, Connecticut.
- - The installation of Walmart and Circuit City in approximately 121,000 and
33,000 square feet, respectively, as well as an 11,600 square foot
expansion of Stern's Department Store in the Ledgewood Mall in Ledgewood,
New Jersey. The installation of these tenants in addition to PharMor
leasing 47,300 square feet resulted in a 94% occupancy level at the
property as of December 31, 1999.
The Company also received municipal approval in 1999 to renovate and
expand by approximately 30,000 square feet the 125,000 square foot Elmwood Park
Shopping Center. As part of the redevelopment, the Company is planning to
construct a 48,000 square foot free-standing A&P supermarket, replacing a 28,000
square foot in-line Grand Union supermarket at a significantly higher rent per
square foot. The Company expects redevelopment costs of approximately $9.1
million to complete this project in 2002. In conjunction with the A&P
supermarket rent commencement, the Operating Partnership is also obligated to
issue OP Units equal to $2.8 million as previously discussed in the RDC
Transaction.
LEASING ACTIVITY
During 1999, the Company replaced several weak or formerly vacated
anchor tenants with stronger retailers at various centers in connection with
management's goal of repositioning and reanchoring of the portfolio. Anchor
replacements included the following:
- - Kmart replaced a former Caldors at the Crossroads Shopping Center
(joint venture property), in White Plains, New York.
- - A lease was executed with Ames Department Stores for 76,000 square feet,
replacing a former Bradless at the New Louden Center in Latham, New York.
Rent is anticipated to commence during the second quarter of 2000.
- - A lease was executed with Homegoods, Inc. (a TJX company) for 37,000 square
feet, replacing a majority of the 43,000 square feet formerly occupied by
Burlington Coat at the Bloomfield Town Square in Bloomfield, Michigan. Rent
is expected to commence during the third quarter of 2000.
<PAGE>
- - A former BiLo grocery store (Penn Traffic Company) occupying 59,100 square
feet was replaced by a Redner's Market at the Pittston Plaza and commenced
paying rent during June 1999.
- - Acme (Albertson's) currently occupying 44,824 square feet at the
Marketplace at Absecon in Absecon, New Jersey, replaced a Super Fresh
supermarket and commenced paying rent during September 1999.
The Company also recaptured two anchor spaces during 1999 as part of
the Company's reanchoring activities. The first lease was acquired during August
1999 for 60,400 square feet from Montgomery Ward. This lease, which was for
space located at the Northside Mall in Dothan, Alabama, was acquired for $57,000
and provided for minimum rent of $1.24 per square foot. The second, which was
acquired from Caldor's for $400,000, was for 85,800 square feet located at the
Methuen Shopping Center in Methuen, Massachusetts, and provided for minimum rent
of $2.20 per square foot. Although recapturing these lease resulted in an
interim loss in revenues and a decline in overall portfolio occupancy,
management anticipates these properties will be reanchored with stronger tenants
at market rents, which are currently greater than the former rent on both of
these spaces.
DISPOSITION OF PROPERTIES
In connection with the Company's ongoing program of evaluating its
property portfolio and optimizing the portfolio for both cash flow and future
capital appreciation, the Company sold two non-core assets during 1999. The
Searstown Mall was sold on February 1, 1999 for a sale price of $3.3 million and
the Auburn Plaza on March 29, 1999 for $3.5 million.
FINANCING STRATEGY
The Company intends to continue to finance acquisitions and property
redevelopment with sources of capital determined by management to be the most
appropriate based on, among other factors, availability, pricing and other
commercial and financial terms. The sources of capital may include bank and
other institutional borrowing, the issuance of equity and/or debt securities and
the sale of properties. In 1999, the Company established the specific goal of
enhancing the flexibility within its mortgage debt structure to better position
itself to take advantage of favorable opportunities for portfolio and strategic
transactions. This enhanced flexibility is currently being accomplished
primarily through the use of variable rate debt and fixed rate debt with low
prepayment penalties. Management believes it was largely successful in the
pursuit of this goal while at the same time maintaining a debt service coverage
ratio (including interest expense and principal amortization) of 1.94x for 1999.
See Item 7A for a discussion on the Company's market risk exposure related to
its mortgage debt.
FINANCIAL INFORMATION ABOUT MARKET SEGMENTS
The Company has two reportable segments: retail properties and
multi-family properties. The accounting policies of the segments are the same as
those described in the notes to the consolidated financial statements appearing
in Item 8 of this Annual Report on Form 10-K. The Company evaluates property
performance primarily based on net operating income before depreciation,
amortization and certain non-recurring items. The reportable segments are
managed separately due to the differing nature of the leases and property
operations associated with retail versus residential tenants. The Company does
not have any foreign operations. See the consolidated financial statements and
notes thereto included in Item 8 of this Annual Report on Form 10-K for certain
information on industry segments as required by Item 1.
CORPORATE HEADQUARTERS AND EMPLOYEES
The Company's executive offices are located at 20 Soundview
Marketplace, Port Washington, New York 11050, and its telephone number is (516)
767-8830. The Company has an internet Web address at www.acadiarealty.com. The
Company has 168 employees of which 48 are located at the executive offices, 6 at
the New York City corporate office, 13 at the Pennsylvania regional office and
the remaining property management personnel are located on-site at the Company's
properties.
COMPETITION
There are numerous shopping facilities that compete with the Company's
properties in attracting retailers to lease space. In addition, there are
numerous commercial developers and real estate companies that compete with the
Company in seeking land for development, properties for acquisition and tenants
for their properties. Also, retailers at the Company's properties face
increasing competition from outlet malls, discount shopping clubs, internet
commerce, direct mail and telemarketing.
<PAGE>
COMPLIANCE WITH GOVERNMENTAL REGULATIONS - ENVIRONMENTAL MATTERS
Under various Federal, state and local laws, ordinances and regulations
relating to the protection of the environment, a current or previous owner or
operator of real estate may be liable for the cost of removal or remediation of
certain hazardous or toxic substances disposed, stored, generated, released,
manufactured or discharged from, on, at, under, or in a property. The Company
believes that it is in compliance in all material respects with all Federal,
state and local ordinances and regulations regarding hazardous or toxic
substances.
Upon conducting environmental site inspections in connection with
obtaining the Morgan Stanley Mortgage Capital ("Morgan Stanley") financing
during October 1996, certain environmental contamination was identified at the
Troy Plaza in Troy, New York. The Company has entered into a voluntary remedial
agreement with the State of New York for the remediation of the property.
Environmental consultants have completed the remediation operations at the site
and are performing a post-remediation sampling and analysis program. Upon the
issuance of a final report to the State of New York, the Company will have
satisfied all conditions to the voluntary remedial agreement. As of December 31,
1999, Morgan Stanley holds $250,000 in escrow to be released upon the Company
receiving final approval from the State of New York. Management is not aware of
any other environmental liability that they believe would have a material
adverse impact on the Company's financial position or results of operations.
Management is unaware of any instances in which it would incur significant
environmental costs if any or all properties were sold, disposed of or
abandoned.
RETAIL ENVIRONMENT
Seasonality
The retail environment is seasonal in nature, particularly in the
fourth calendar quarter when retail sales are typically at their highest levels.
As such, contingent rents based on tenants achieving certain sales targets are
generally higher in the fourth quarter when such targets are typically met.
Tenant Bankruptcies
Since January of 1999, certain tenants experienced financial
difficulties and several have filed for bankruptcy protection under Chapter 11
of the United States Bankruptcy laws ("Chapter 11"). Following are the
significant bankruptcies to have occurred since then:
On March 1, 1999, the Penn Traffic Company ("Penn Traffic") filed for
protection under Chapter 11. Penn Traffic, which operates grocery stores under
the names "Bi-Lo Foods" and "P&C Foods", is a tenant at seven locations in the
Company's portfolio comprising approximately 308,000 square feet. Rental
revenues (including expense reimbursements) from Penn Traffic for the years
ended December 31, 1999 and 1998 totaled $1.0 million and $2.4 million,
respectively. Two of these leases were assigned to other supermarket operators,
two of the leases were assumed by Penn Traffic, two leases were rejected and the
tenant did not renew one lease following its expiration on April 30, 1999.
During 1999, the Company received $460,000 in settlement of claims filed related
to the Chapter 11 proceedings for Penn Traffic which has since reorganized and
emerged from bankruptcy.
On March 23, 1999, Factory Card Outlet filed for protection under
Chapter 11. This retailer is a tenant at two locations in the Company's
portfolio comprising approximately 19,000 square feet. Rental revenues from
these two locations totaled $283,000 and $202,000 for the years ended December
31, 1999 and 1998, respectively. The tenant has neither affirmed nor rejected
the leases at either of the locations.
On March 10, 2000, Eagle Supermarkets filed for protection under
Chapter 11. This grocery is a tenant at one location in the Company's portfolio
comprising approximately 52,000 square feet. Rental revenues from this tenant
were $327,000 and $86,000 for the years ended December 31, 1999 and 1998,
respectively. The tenant has neither affirmed nor rejected the lease.
In addition to the above bankruptcies, in August 1999, old America
Stores, L.P. ceased operations and proceeded to undergo an orderly liquidation
of assets for the benefit of its creditors. This tenant previously occupied
stores in two locations, Martintown Plaza (18,000 square feet) and Wesmark Plaza
(30,000 square feet). Rental revenues from these two locations totalled $216,000
and $132,000 for the years ended December 31, 1999 and 1998, respectively. A
settlement has been agreed to pursuant to which the Company shall receive
approximately $45,000.
TAX STATUS - QUALIFICATION AS REAL ESTATE INVESTMENT TRUST
The Company has and currently transacts its affairs so as to qualify as,
and has elected to be treated as, a real estate investment trust under sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code").
Under the Code, a real estate investment trust that meets applicable
requirements is not subject to Federal income tax to the extent that it
distributes at least 95% of its REIT taxable income to its shareholders. If the
Company fails to qualify as a REIT in any taxable year, it will be subject to
Federal income tax on its taxable income.
<PAGE>
ITEM 2. PROPERTIES
SHOPPING CENTER PROPERTIES
As of December 31, 1999, the Company owned and operated 53 shopping
centers (including one property which is under redevelopment, two mixed-use
centers and a shopping center in which the Company owns a 49% interest) totaling
approximately 9.1 million square feet of gross leasable area ("GLA"). The
Company's shopping centers, which are located in 16 states, are generally
well-established, anchored community and neighborhood shopping centers. The
shopping centers are diverse in size, ranging from approximately 45,000 to
516,000 square feet with an average size of 172,000 square feet. The Company's
portfolio was approximately 89% occupied at December 31, 1999. The Company's
shopping centers are typically anchored by a national or regional discount
department store and/or a supermarket or drugstore.
The Company had 737 leases (including the mixed-use and joint venture
properties) as of December 31, 1999 of which approximately 45% were with
national or regional tenants. A substantial portion of the income from the
properties consists of rent received under long term leases. Most of these
leases provide for the payment of fixed minimum rent monthly in advance and for
the payment by tenants of a pro-rata share of the real estate taxes, insurance,
utilities and common area maintenance of the shopping centers. Minimum rents and
expense reimbursements accounted for approximately 94% of the Company's total
revenues for the year ended December 31, 1999.
As of December 31, 1999, approximately 56% of the Company's existing
leases also provided for the payment of percentage rents either in addition to
or in place of minimum rents. These arrangements generally provide for payment
to the Company of a certain percentage of a tenant's gross sales in excess of a
stipulated annual amount. Percentage rents accounted for approximately 3% of the
total 1999 revenues of the Company.
Six of the Company's shopping center properties are subject to
long-term ground leases in which a third party owns and has leased the
underlying land to the Company. The Company pays rent for the use of the land
and is responsible for all costs and expenses associated with the building and
improvements.
No individual property contributed in excess of 10% of the Company's
total revenues for the years ended December 31, 1999 and 1998. For the year
ended December 31, 1997, greater than 10% of the Company's total rents were
derived from leases at the Northwood Centre, a mixed-use (retail/office)
property (See "Major Tenants" in Item 2).
<PAGE>
The following sets forth more specific information with respect to each
of the Company's shopping centers, mixed-use and joint venture properties at
December 31, 1999:
<TABLE>
<CAPTION>
Year Occupancy (1) Anchor Tenants (2)
Shopping Center Constructed(C) Ownership % Current Lease Expiration
Property Location Acquired(A) Interest GLA 12/31/99 Lease Option Expiration
- ------------------------------------------------------------------------------------------------------------------------------------
NEW ENGLAND REGION
Connecticut
<S> <C> <C> <C> <C> <C> <C>
239 Greenwich Avenue Greenwich 1998 (A) Fee 16,834 (3) 79% Restoration Hardware 2015/2020
Town Line Plaza Rocky Hill 1998 (A) Fee 205,752 (4) 93% Super Food Market (A&P) 2017/2052
Massachusetts
Methuen Shopping Center Methuen 1998 (A) Fee 134,494 32%(5) DeMoulas Market 2000/2015
Crescent Plaza Brockton 1984 (A) Fee (6) 216,095 100% Bradlees 2009/2027
Shaw's 2012/2042
Rhode Island
Walnut Hill Plaza Woonsocket 1998 (A) Fee 267,721 97% Sears 2003/2033
Shaw's 2013/2043
Vermont
The Gateway
Shopping Center Burlington 1999 (A) Fee 117,394 (7) 62% Grand Union 2005/2010
NEW YORK REGION
New Jersey
Berlin Shopping Center Berlin 1994 (A) Fee 187,296 88% Kmart 2005/2049
Acme 2005/2015
Elmwood Park Plaza Elmwood Park 1998 (A) Fee 124,144 (8) 86% Grand Union 2001/none
Ledgewood Mall Ledgewood 1983 (A) Fee 516,682 94% The Sports' Authority 2007/2037
Stern's 2005/2030
Walmart 2019/2049
Circuit City 2020/2040
Manahawkin Village
Shopping Center Manahawkin 1993 (A) Fee 175,261 100% Kmart 2019/2069
Hoyt's Cinema 2018/2038
Marketplace of Absecon Absecon 1998 (A) Fee 91,699 96% Acme 2015/2055
New York
Branch Shopping Center Village of the 1998 (A) LI (9) 125,812 99% Grand Union 2013/2028
Branch Pergament 2004/2019
New Loudon Center Latham 1982 (A) Fee 251,743 51%(10) Price Chopper 2015/2035
Marshalls 2004/2009
Troy Plaza Troy 1982 (A) Fee 128,479 100% Ames 2001/2016
Price Chopper 2004/2014
Smithtown Shopping
Center Smithtown 1998 (A) Fee 87,155 90% Daffy's 2008/2028
Walgreens 2021/none
Soundview Marketplace Port Washington 1998 (A) LI/Fee (9) 180,620 92% King Kullen 2007/2022
Clearview Cinema Group 2010/2030
(subsidiary of Cablevision)
Pacesetter Park
Shopping Center Ramapo 1999 (A) Fee 95,559 82% Grand Union 2020/2040
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Occupancy (1) Anchor Tenants (2)
Shopping Center Constructed(C) Ownership % Current Lease Expiration
Property Location Acquired(A) Interest GLA 12/31/99 Lease Option Expiration
- ------------------------------------------------------------------------------------------------------------------------------------
MID-ATLANTIC REGION
Pennsylvania
<S> <C> <C> <C> <C> <C> <C>
25th Street Shopping
Center Easton 1993 (A) Fee 131,477 91% CVS 2005/2010
Petco 2009/2018
Ames Plaza Shamokin 1966(C) Fee 98,210 68% Ames 2003/2013
Atrium Mall Abington 1998(A) Fee 178,434 78% SuperFresh (A&P) 2009/2039 (11)
Circuit City 2009/2029 (11)
TJ Maxx 2004/2014
Birney Mall Moosic 1968 (C) Fee 193,899 100% Kmart 2004/2049
Consolidated Stores 2003/2008
Blackman Plaza Wilkes-Barre 1968 (C) Fee 117,456 99% Kmart 2004/2044
Bradford Towne Centre Towanda 1993 (C) Fee 257,319 92% Kmart 2019/2069
P&C Foods 2014/2024
Circle Plaza Shamokin Dam 1978 (C) Fee 92,171 100% Kmart 2004/2049
Dunmore Plaza Dunmore 1975 (A) Fee (12) 45,380 96% Price Chopper 2000/2020
Eckerd Drug 2004/2019
East End Centre Wilkes-Barre 1986 (C) Fee 308,427 100% Ames 2007/2037
PharMor 2003/2017
Price Chopper 2008/2028
Green Ridge Plaza Scranton 1986 (C) Fee 197,622 67% Ames 2007/2037
Kingston Plaza Kingston 1982 (C) Fee 64,824 100% Price Chopper 2006/2026
Dollar General 2001/2007
Luzerne Street Shopping
Center Scranton 1983 (A) Fee 57,715 100% Price Chopper 2004/2024
Eckerd Drug 2004/2019
Mark Plaza Edwardsville 1968 (C) LI(9) 216,220 94% Kmart 2004/2049
Redner's Markets 2018/2028
Monroe Plaza Stroudsberg 1964 (C) Fee 130,569 100% Ames 2001/2019
Shoprite 2005/2023
Eckerd Drug 2002/2012
Mountainville Shopping
Center Allentown 1983 (A) Fee 114,801 96% Acme 2004/2028
True Value Hardware 2002/2010
Eckerd Drug 2004/2019
Pittston Plaza Pittston 1994 (C) Fee 79,568 100% Redner's Markets 2018/2028
Eckerd Drug 2004 (13)
Plaza 15 Lewisburg 1995 (A) Fee 113,530 98% Weis Market 2001/2021
Ames 2001/2021
Plaza 422 Lebanon 1972 (C) Fee 154,791 88% Ames 2001/2021
Giant Food 2004 (14)
Route 6 Mall Honesdale 1994 (C) Fee 175,482 97% Kmart 2020/2070
Shillington Plaza Reading 1994 (A) Fee 150,742 100% Kmart 2004/2049
Weis Market 2001/2019
Tioga West Tunkhannock 1965 (C) Fee 122,338 100% BiLo 2014/2024
Ames 2000/2015
Eckerd Drug 2000/2010
Fashion Bug 2009/2021
Union Plaza New Castle 1996 (C) Fee 217,992 100% Sears 2011/2031
Ames 2017/2026
Peebles 2018/2027
Valmont Plaza West Hazleton 1985 (A) Fee 200,164 79% Ames 2007/2027
Virginia
Kings Fairgrounds Danville 1992 (A) LI(9) 118,535 100% Schewel Furniture 2001/2011
The Tractor Co. 2008/2023
CVS 2002/2012 (13)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Year Occupancy (1) Anchor Tenants (2)
Shopping Center Constructed(C) Ownership % Current Lease Expiration
Property Location Acquired(A) Interest GLA 12/31/99 Lease Option Expiration
- ------------------------------------------------------------------------------------------------------------------------------------
SOUTHEAST REGION
Alabama
<S> <C> <C> <C> <C> <C> <C>
Midway Plaza Opelika 1984 (A) Fee 207,538 71% Office Depot 2007/2022
Carmike Cinema 2005/2015
Beall's Outlet Stores 2001/none
Northside Mall Dothan 1986 (A) Fee (9) 382,299 65%(15) Wal-Mart 2004/2029
Florida
New Smyrna Beach New Smyrna
Shopping Center Beach 1983 (A) Fee 100,430 96% DeMarsh Theater 2005/2015
Hardbodies Family Fitness
Georgia 2008/none
Cloud Springs Plaza Fort Oglethorpe 1985 (A) Fee 113,367 96% Food Lion 2011/2031
Consolidated Stores 2000/2005
Badcock Furniture 2000/2010
South Carolina
Martintown Plaza North Augusta 1985 (A) LI (9) 133,892 89% Belk's Store 2004/2024
Office Depot 2008/2018
Wesmark Plaza Sumter 1986 (A) Fee 215,198 87% Staples 2005/2015
Theater Management 2009/2019
Goody's 2005/2015
MIDWEST REGION
Illinois
Hobson West Plaza Naperville 1998 (A) Fee 99,950 92% Eagle Foods 2007/2032 (16)
Indiana
Merrillville Plaza Hobart 1998 (A) Fee 235,420 94% JC Penney 2008/2018
Office Max 2008/2028
TJ Maxx 2004/2009
Michigan
Bloomfield Town Square Bloomfield Hills 1998 (A) Fee 213,903 92% Burlington Coat 2009/2014 (17)
Drug Emporium 2000/2020
TJ Maxx 2003/2013
Office Max 2010/2025
Ohio
Mad River Station
Shopping Center Dayton 1999 (A) Fee 153,968 94% Office Depot 2000/2010
Babies `R' Us 2005/2020
MIXED-USE PROPERTY
Florida
Northwood Centre Tallahassee 1985 (A) Fee 500,012 (18) 96% FL Dept of HRS 2004
FL Dept of Business and
Professional
Regulation 2006
PROPERTY HELD IN JOINT-VENTURE (19)
New York
Crossroads Shopping
Center Greenburgh 1998 JV 310,897 99% Kmart 2012/2037
Waldbaum's (A&P) 2007/2032
---------- ----
Total 9,127,280 89%
========== ====
</TABLE>
<PAGE>
Notes:
(1) Does not include space leased but not yet occupied by the tenant.
(2) Tenant GLA comprises at least 10% of GLA for the center.
(3) This represents the GLA related to the retail portion of this mixed-use
property. The property also has 21 apartments (approximately 15,000
square feet). The remaining retail space has been leased but is not yet
occupied as of December 31, 1999.
(4) Includes a 92,500 square foot non-owned Walmart (formerly Caldors).
(5) The Company recaptured a lease with Caldors for 85,800 square feet in
October 1999. The lease provided for minimum rent of $2.20 per square
foot, which is below the prevailing market rate for rents.
(6) During the term of the lease, Bradlees has the right of first refusal
in the event that the Company sells all or a portion of the Crescent
Plaza giving it the right to purchase on the same terms as a bona fide
offer from a third party.
(7) The Company purchased this property in May 1999. The property is a
partially enclosed mall that will be reconfigured into a conventional
strip center format.
(8) The Company has signed a lease with A&P to construct a 48,000
free-standing building at this site.
(9) The Company is a ground lessee under long-term ground leases.
(10) Does not include 76,000 square feet leased, but not yet occupied, by
Ames Department Stores as of December 31, 1999.
(11) The Company is currently redeveloping this property. This tenant
continues to pay rent but is currently not operating in their space.
(12) The Company holds a fee interest in a portion of the Dunmore Plaza and
an equitable interest in the land on the remaining portion. An
industrial development authority holds the fee for this remaining
portion and the equitable interest in the building on such remaining
portion is held by an unrelated entity. The Company receives and
accounts for most of its income from this property as percentage rent.
(13) Includes space leased for which rent is being paid but which is not
presently occupied.
(14) This space is currently being sub-leased to a non-grocery store tenant.
(15) The Company recaptured a lease with Montgomery Wards for 60,400 square
feet in August 1999. The lease provided for minimum rent of $1.24 per
square foot, which is below the prevailing market rate for rents.
(16) The tenant is currently operating under Chapter 11 of the United States
Bankruptcy laws and has neither affirmed nor rejected the lease.
(17) Subsequent to December 31, 1999, the Company recaptured the lease for
43,200 square feet with Burlington Coat and signed a lease with
Homegoods, Inc. (a TJX company) for approximately 37,000 square feet of
this space.
(18) This property was held for sale as of December 31, 1999. On December
15, 1999, the Company received a Notice of Exercise of Right to
Terminate Lease from the Florida Department of Health for an aggregate
59,150 square feet representing $827,000 of rents.
(19) The Company has a 49% investment in this property.
<PAGE>
MAJOR TENANTS
No individual retail tenant accounted for more than 6.8% of
minimum rents for the year ended December 31, 1999 or 11.1% of total leased GLA
as of December 31, 1999. The following table sets forth certain information for
the 25 largest retail tenants based upon minimum rents in place as of December
31, 1999 (GLA and rent in thousands):
<TABLE>
<CAPTION>
Percentage of Total
Represented by Retail Tenant
----------------------------
Number of
Retail Stores in Total Annualized Base Total Annualized Base
Tenant Portfolio GLA Rent (1) Portfolio GLA (2) Rent (2)
------ --------- ----- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Kmart 9 924 $ 3,432 11.1% 6.8%
Ames (3) 10 739 2,211 8.9% 4.4%
Price Chopper 6 267 1,559 3.2% 3.1%
Grand Union 4 175 1,365 2.1% 2.7%
A&P (Waldbaum's, Superfresh) (4) 2 110 1,338 1.3% 2.7%
Eckerd Drug (5) 16 179 1,331 2.2% 2.6%
Walmart 2 233 1,117 2.8% 2.2%
Shaw's 2 103 1,015 1.2% 2.0%
Acme (Albertson's) 3 109 948 1.3% 1.9%
Circuit City (4) 2 66 890 0.8% 1.8%
Redner's Supermarket 2 112 837 1.3% 1.7%
T.J. Maxx 5 130 825 1.6% 1.6%
PharMor 2 90 797 1.1% 1.6%
Sears 2 160 703 1.9% 1.4%
Penn Traffic (BiLo, P&C Foods) 2 86 636 1.0% 1.3%
Sterns (Federated) 1 62 618 0.7% 1.2%
CVS 6 63 599 0.8% 1.2%
JC Penney 2 73 547 0.9% 1.1%
Clearview Cinemas (6) 1 25 518 0.3% 1.0%
Payless Shoe Source 12 41 513 0.5% 1.0%
Blockbuster Video 4 23 495 0.3% 1.0%
Office Depot 3 84 443 1.0% 0.9%
Walgreens 2 19 420 0.3% 0.8%
Marshalls 2 53 417 0.6% 0.8%
King Kullen Grocery 1 41 414 0.5% 0.8%
--- ----- ------- ----- -----
Total 103 3,967 $23,988 47.7% 47.6%
=== ===== ======= ===== =====
</TABLE>
(1) Base rents do not include percentage rents, additional rents for
property expense reimbursements, or contractual rent escalations due
after December 31, 1999.
(2) Total GLA and annualized base rent for the Company's retail properties,
excluding mixed-use and joint venture properties.
(3) Does not include leased space at the New Loudon Center for which rent
payment has not yet commenced.
(4) The Company is currently redeveloping the Atrium Mall. The A&P
Supermarket and Circuit City at this center are currently paying rent,
but have ceased operating at this location.
(5) Subsidiary of JC Penney.
(6) Subsidiary of Cablevision.
In 1999, approximately 5.9% of the Company's total revenue was derived
from current leases of office space and specialized computer facilities with
four agencies of the State of Florida at the Northwood Centre in Tallahassee,
Florida; the Florida Department of Children and Families (3.2%), the Florida
Department of Business Professional Regulation (1.8%), the Florida Department of
Health and Rehabilitative Services (0.7%) and the Florida Department of Revenue
(0.2%). During 1998, the State of Florida renewed leases for approximately
59,000 and 123,000 square feet with lease terms of five and seven years,
respectively. Leases with these Florida agencies contain customary conditions,
required under Florida law, permitting state agency tenants to cancel their
leases upon six months' notice in the event that state-owned office facilities
in the same county become available. These leases do not provide for early
termination penalties. There are currently state-owned facilities available in
the county and the State of Florida periodically reassesses its options with
respect to such leases including those of the Company. On December 15, 1999, the
Company received a Notice of Exercise of Right to Terminate Lease from the
Florida Department of Health and Rehabilitative Services for approximately
59,000 square feet representing $827,000 of rents. The Company would be further
adversely affected in the event that the State of Florida exercises its right to
cancel the lease for any other space it currently leases. This property is
currently held for sale by the Company.
<PAGE>
LEASE EXPIRATIONS
The following table shows scheduled lease expirations for retail
tenants in place as of December 31, 1999, assuming that none of the tenants
exercise renewal options. The table does not include leases related to the
Company's mixed-use and joint venture properties (GLA and rent in thousands):
<TABLE>
<CAPTION>
Percentage of Total
Represented by Expiring Leases
------------------------------
Number of GLA of Expiring Annualized Base Annualized Base
December 31, Leases Expiring Leases Rent(1) Leased GLA Rent
------------ --------------- --------------- --------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
2000 157 660 4,901 9% 10%
2001 100 744 3,958 10% 5%
2002 83 382 3,480 5% 9%
2003 73 502 3,914 7% 8%
2004 78 1,330 6,463 18% 13%
2005 45 617 4,351 8% 9%
2006 16 147 1,149 2% 2%
2007 20 551 3,025 8% 6%
2008 28 349 3,126 5% 6%
2009 27 525 3,413 7% 7%
Thereafter 35 1,540 12,591 21% 25%
--- ----- ------- ---- ----
Total 662 7,347 $50,371 100% 100%
=== ===== ======= ==== ====
</TABLE>
(1) Base rents do not include percentage rents, additional rents for
property expense reimbursements, nor contractual rent escalations due
after December 31, 1999. The table does not include activity related to
the Company's mixed-use or joint venture properties
GEOGRAPHIC CONCENTRATIONS
The following table summarizes the Company's retail properties
(including mixed-use and joint venture properties) by region as of December 31,
1999 (GLA and rent in thousands):
<TABLE>
<CAPTION>
Percentage of Total
Represented by Region
Annualized Base -----------------------
Annualized Base Rent per Leased Annualized Base
Region GLA Occupied % Rent(1) Square Foot GLA Rent
------ --- -------- ------- ----------- --- ----
<S> <C> <C> <C> <C> <C> <C>
New England 941 83% $ 5,143 $ 6.56 10% 8%
New York Region 1,964 88% 18,210 10.56 22% 30%
Mid-Atlantic 3,538 93% 16,866 5.15 39% 27%
Southeast 1,153 79% 3,883 4.28 12% 6%
Midwest 703 93% 6,268 9.57 8% 10%
----- ----- -------- ------ ---- ----
8,299 89% 50,371 6.86 91% 81%
Mixed-Use Property 517 95% 7,089 14.42 6% 11%
Joint Venture Property 311 99% 4,889 15.89 3% 8%
----- ----- -------- ------ ---- ----
Total 9,127 89% $ 62,349 $ 7.65 100% 100%
===== ===== ======== ====== ==== ====
</TABLE>
(1) Base rents do not include percentage rents, additional rents for
property expense reimbursements, nor contractual rent escalations due
after December 31, 1999.
<PAGE>
MULTI-FAMILY PROPERTIES
The Company owns five multi-family properties located in the
Mid-Atlantic and Midwest regions. The properties average 455 units and as of
December 31, 1999, had an average occupancy rate of 92%. The following sets
forth more specific information with respect to each of the Company's
multi-family properties at December 31, 1999:
<TABLE>
<CAPTION>
Multi-family Ownership % Occupied
Property Location Year Acquired Interest Units 12/31/99
- ---------------------------------------------------------------------------------------------------------------------
Maryland
<S> <C> <C> <C> <C> <C>
Glen Oaks Apartments Greenbelt 1998 Fee 463 98%
Marley Run Apartments Pasadena 1998 Fee 336 94%
Missouri
Gate House, Holiday House, Tiger Village Columbia 1998 Fee 592 97%
Colony Apartments Columbia 1998 Fee 282 98%
North Carolina
Village Apartments Winston Salem 1998 Fee 600 77%
----- ---
Totals 2,273 92%
===== ===
</TABLE>
ITEM 3 LEGAL PROCEEDINGS
On November 20, 1995, Jack Wertheimer, a former President of the
Company, filed a complaint against the Company, its Trustees, including Mr.
Slomowitz, and the Company's former in-house General Counsel and former Chief
Financial Officer in the United States District Court for the Middle District of
Pennsylvania. The complaint, which was filed in connection with the termination
of Mr. Wertheimer's employment, included many of the allegations raised in a
state court proceeding commenced by Mr. Wertheimer in November 1994. The Federal
court complaint also included a civil RICO action in which Mr. Wertheimer
alleged that the Board of Trustees of the Company conspired with Mr. Slomowitz
to terminate Mr. Wertheimer's employment as part of Mr. Slomowitz's breach of
his duty of good faith and fair dealing. Further, Mr. Wertheimer alleged that
the above defendants engaged in securities fraud in connection with the initial
public offering and that Mr. Slomowitz defrauded or overcharged the Company in
corporate transactions. The Federal complaint sought treble damages under RICO,
as well as damages arising from Mr. Wertheimer's alleged termination of
employment, invasion of privacy, intentional infliction of emotional distress,
fraud and misrepresentation.
On December 31, 1998, the Company and Mr. Wertheimer settled this litigation and
entered into an agreement whereby the Company paid Mr. Wertheimer $1.0 million
on December 31, 1998 and agreed to pay him (i)$900,000 on April 1, 1999, which
was paid on such date, and (ii) five annual payments of $200,000 commencing
January 10, 2000, the first of which was paid on such date. Pursuant to this
agreement, the Company has obtained a standby letter of credit to collateralize
these future payments.
The Company is involved in other various matters of litigation arising in the
normal course of business. While the Company is unable to predict with certainty
the amounts involved, the Company's management and counsel are of the opinion
that, when such litigation is resolved, the Company's resulting liability, if
any, will not have a significant effect on the Company's consolidated financial
position.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of 1999.
<PAGE>
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
(a) Market Information
The following table shows, for the period indicated, the high and low
sales price for the Common Shares as reported on the New York Stock Exchange
(the "NYSE"), and cash dividends paid during the two years ended December 31,
1999 and 1998.
Dividend
Quarter Ended High Low Per Share
------------- ---- --- ---------
1999
March 31, 1999 5 1/2 5 $ 0.12
June 30, 1999 5 3/4 4 15/16 0.12
September 30, 1999 5 5/8 5 0.12
December 31, 1999 5 3/16 4 1/2 0.12
1998
March 31, 1998 9 3/16 8 3/4 $ --
June 30, 1998 8 7/8 7 7/16 --
September 30, 1998 7 5/8 5 3/16 --
December 31, 1998 6 1/4 4 15/16 --
At March 22, 2000, there were 213 holders of record of the Company's Common
Shares.
(b) Dividends
The Company has determined that 41% of the total dividends distributed
to shareholders in 1999 represented ordinary income, while the remaining 59%
represented return of capital. The Company's cash flow is affected by a number
of factors, including the revenues received from rental properties, the
operating expenses of the Company, the interest expense on its borrowings, the
ability of lessees to meet their obligations to the Company and unanticipated
capital expenditures. Future dividends paid by the Company will be at the
discretion of the Trustees and will depend on the actual cash flows of the
Company, its financial condition, capital requirements, the annual distribution
requirements under the REIT provisions of the Code and such other factors as the
Trustees deem relevant.
<PAGE>
ITEM 6 SELECTED FINANCIAL DATA
The following table sets forth, on a historical basis, selected financial
data for the Company. This information should be read in conjunction with the
audited consolidated financial statements of the Company and Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing elsewhere in this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------------------------------------------------------
1999 1998(1) 1997 1996 1995
----------------------------------------------------------------------------------
OPERATING DATA:
<S> <C> <C> <C> <C> <C>
Revenues $ 92,709 $ 59,771 $ 44,498 $ 43,796 $ 43,332
-----------------------------------------------------------------------------------
Operating expenses 38,483 28,485 17,055 17,868 16,374
Interest and other financing expense 23,314 18,302 15,444 12,733 10,598
Depreciation and amortization 19,887 15,795 13,768 13,398 11,820
-----------------------------------------------------------------------------------
Total 81,684 62,582 46,267 43,999 38,792
-----------------------------------------------------------------------------------
11,025 (2,811) (1,769) (203) 4,540
Non-recurring charges (2) - (2,249) - - -
Equity in earnings of unconsolidated
partnerships 584 256 - - -
Adjustment of carrying value of property
held for sale - (11,560) - (392) -
-----------------------------------------------------------------------------------
Income (loss) before (loss) gain on sale,
extraordinary items and minority interest 11,609 (16,364) (1,769) (595) 4,540
(Loss) gain on sale of property (1,284) (175) (12) 21 93
Extraordinary items - loss on early
extinguishment of debt - (707) -- (190) --
Minority interest (3,130) 3,348 217 40 (833)
-----------------------------------------------------------------------------------
Net income (loss) $ 7,195 $(13,898) $ (1,564) $ (724) $ 3,800
===================================================================================
Net income (loss) per Common Share
- basic and diluted $ 0.28 $ (0.91) $ (0.18) $ (0.08) $ 0.44
===================================================================================
Weighted average number of Common
Shares outstanding
- basic 25,708,787 15,205,962 8,551,930 8,546,553 8,540,631
===================================================================================
- diluted (3) 25,708,787 15,205,962 8,551,930 8,546,553 8,563,466
===================================================================================
Funds from Operations (4) $ 31,160 $ 15,073 $ 11,003 $ 12,536 $ 15,388
===================================================================================
Funds from Operations per share (5) $ 0.85 $ 0.74 $ 1.08 $ 1.23 $ 1.51
===================================================================================
BALANCE SHEET DATA:
Real estate before accumulated
depreciation $ 569,521 $ 551,249 $ 311,688 $ 307,411 $ 291,157
Total assets 570,803 528,512 254,500 258,517 249,515
Total mortgage indebtedness 326,651 277,561 183,943 172,823 151,828
Minority interest - Operating
Partnership 74,462 79,344 9,244 10,752 13,228
Total equity 152,487 154,591 48,800 56,806 69,779
</TABLE>
<PAGE>
Notes:
(1) Activity for the year ended December 31, 1998 includes the operations
of the properties acquired in the RDC Transaction from August 12, 1998
through December 31, 1998.
(2) Non-recurring charges represent expenses incurred related to the RDC
Transaction including payments made to certain officers and key
employees pursuant to change in control provisions of employment
contracts, severance paid to Mr. Slomowitz, retention bonuses for
certain employees and transaction-related consulting and professional
fees.
(3) For 1999 through 1996, the weighted average number of shares
outstanding on a diluted basis is not presented as the inclusion of
additional shares is anti-dilutive.
(4) 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.
FFO for the 1998 through 1995 has been restated to include
straight-line rent.
(5) Includes weighted average OP Units as follows: 1999 - 10,883,184; 1998
- 5,252,815; 1997 and 1996 - 1,623,000; 1995 - 1,621,937; 1994 -
1,621,000.
<PAGE>
ITEM 7 - MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the consolidated
financial statements of the Company (including the related notes thereto)
appearing elsewhere in this Annual Report. Certain statements contained in this
report constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions, which
will, among other things, affect demand for rental space, the availability and
creditworthiness of prospective tenants, lease rents and the availability of
financing; adverse changes in the Company's real estate markets, including,
among other things, competition with other companies; risks of real estate
development and acquisition; governmental actions and initiatives; and
environmental/safety requirements.
RESULTS OF OPERATIONS
Comparison of the year ended December 31, 1999 ("1999") to the year ended
December 31, 1998 ("1998")
The following comparison references the effect of the properties acquired on
August 12, 1998 as a result of the RDC Transaction (the "RDC Properties").
Total revenues increased $32.9 million, or 55%, to $92.7 million for 1999
compared to $59.8 million for 1998.
Minimum rents increased $26.1 million, or 56%, to $73.0 million for 1999
compared to $46.9 million for 1998. $21.4 million, or 82%, of the increase was
attributable to the RDC Properties. $1.4 million, or 5%, of the increase was
attributable to amounts received as a result of two settlements. The first
settlement was related to the liability of a tenant-assigner of a lease to a
former tenant who had filed for bankruptcy protection under Chapter 11 of the
United States Bankruptcy laws ("Chapter 11") and the second was with respect to
certain claims related to the Chapter 11 proceedings for the Penn Traffic
Company. The remaining increase was primarily due to two property acquisitions,
a redevelopment project placed in service subsequent to 1998, and anchor
replacements at the Ledgewood Mall.
Percentage rents increased $343,000, or 13%, to $3.0 million for 1999 compared
to $2.7 million for 1998. This increase was primarily attributable to the RDC
Properties and the impact from the Company's adopting the Emerging Issue Task
Force ("EITF") Issue No. 98-9 "Accounting for Contingent Rent in Interim
Financial Periods" as of April 1, 1998 (subsequently codified with Staff
Accounting Bulletin No. 101 "Revenue Recognition").
Expense reimbursements increased $5.1 million, or 59%, for 1999, of which $3.8
million resulted from the RDC Properties. The remaining increase was primarily
attributable to anchor replacements at the Ledgewood Mall and an increase in
expense recoveries resulting from increased contract services, primarily snow
removal, as a result of the comparatively mild winter season in 1998.
Other income increased $1.4 million, of which $625,000 resulted from the RDC
Properties and $442,000 was due to management fees which were earned under four
contracts acquired in the RDC Transaction. The remaining increase was
attributable to additional interest income resulting from a higher balance of
interest earning assets in 1999.
Total operating expenses increased $11.9 million, or 26%, to $58.4 million for
1999, from $46.5 million for 1998.
Property operating expenses increased $7.4 million, or 52%, to $21.6 million for
1999 compared to $14.2 million for 1998. $6.4 million, or 86% of the increase,
was attributable to the RDC Properties. The remaining increase was due to
additional staffing in the leasing and property management departments following
the RDC Transaction and an increase in contract services, primarily snow
removal, as a result of the comparatively mild winter season in 1998. This
increase was partially offset against a decrease in estimated claims related to
the Company's property-related liability insurance policies.
Real estate taxes increased $3.0 million, or 40%, from $7.5 million for 1998 to
$10.5 million for 1999. This increase was primarily attributable to the RDC
Properties.
<PAGE>
RESULTS OF OPERATIONS
Comparison of the year ended December 31, 1999 ("1999") to the year ended
December 31, 1998 ("1998"), continued
Depreciation and amortization increased $4.1 million, or 26%, for 1999 primarily
attributable to the RDC Properties. This increase was partially offset by the
effect from the sale of two properties during the first quarter of 1999 and the
sale of a property in December 1998.
General and administrative expense increased $1.9 million, or 44%, from $4.4
million for 1998 to $6.3 million for 1999, which was primarily attributable to
additional staffing and administration costs following the RDC Transaction.
See the following comparison of 1998 to 1997 for a discussion of non-recurring
charges, settlement of litigation, adjustment of carrying value of property held
for sale and extraordinary item - loss on extinguishment of debt for 1998.
Interest expense of $23.3 million for 1999 increased $5.0 million, or 27%, from
$18.3 million for 1998. This increase was primarily attributable to the mortgage
debt associated with the RDC Properties partially offset by the paydown of
certain existing debt with the proceeds from the RDC Transaction. Contributing
further to this increase was an additional $49.1 million of outstanding debt as
of December 31, 1999 as a result of new borrowings made subsequent to 1998.
Comparison of the year ended December 31, 1998 ("1998") to the year ended
December 31, 1997 ("1997")
Total revenues increased $15.3 million, or 34%, to $59.8 million in 1998
compared to $44.5 million in 1997.
Minimum rents increased $13.2 million, or 39%, to $46.9 million for 1998
compared to $33.7 million for 1997. $12.6 million, or 95% of this increase was
attributable to the RDC Properties. The remaining increase was primarily a
result of increases at the Mark Plaza and Ledgewood Mall.
Percentage rents decreased $532,000, or 17%, to $2.7 million for 1998 compared
to $3.2 million for 1997 primarily as a result of the impact from the Company
adopting the Emerging Issue Task Force ("EITF") Issue No. 98-9 "Accounting for
Contingent Rent in Interim Financial Periods" as of April 1, 1998 (Subsequently
codified by the Securities and Exchange Commission Staff Accounting Bulletin No.
101 "Revenue Recognition").
Expense reimbursements of $8.6 million for 1998, which represent the
pass-through of certain property expenses to the tenants, increased $2.0
million, or 31%, from $6.6 million for 1997 of which $2.1 million of the
increase was a result of the RDC Properties.
Other income increased $511,000, or 50%, to $1.5 million for 1998 compared to
$1.0 million for 1997. $240,000 of this increase was attributable to third party
management fees earned related to certain management contracts acquired in
connection with the RDC Transaction. The remaining increase was primarily
attributable to the RDC Properties and an increase in interest earning assets in
1998.
Total 1998 operating expenses increased $15.7 million, or 51%, to $46.5 million
compared to $30.8 million in 1997.
Property operating expenses increased $5.2 million, or 57%, to $14.2 million for
1998 from $9.0 million for 1997. $4.1 million, or 79% of this increase was
attributable to the RDC Properties. The remaining increase was primarily due to
(i) the recording of reserves of $250,000 against unbilled rents receivable
("straight-line rent") for certain leases with Penn Traffic, which filed for
Chapter 11 protection under bankruptcy law in March of 1999, (ii) an increase in
estimated claims of $450,000 related to the Company's property liability
insurance policies offset by (iii) the reversal of a $245,000 reserve for
environmental remediation costs for the Cloud Springs Plaza in 1997 following
notification from the Georgia Department of Natural Resources that contamination
exceeding a reportable quantity had not occurred.
Real estate taxes increased $1.8 million, or 32%, to $7.5 million for 1998 from
$5.7 million for 1997 of which $1.7 million of the increase was due to the RDC
Properties.
<PAGE>
RESULTS OF OPERATIONS
Comparison of the year ended December 31, 1998 ("1998") to the year ended
December 31, 1997 ("1997"), continued
Depreciation and amortization increased $2.0 million, or 15%, to $15.8 million
for 1998 from $13.8 million for 1997 of which $1.9 million of the increase was
attributable to the RDC Properties.
General and administrative expense increased $2.0 million, or 88%, to $4.4
million for 1998 from $2.4 million for 1997 which was primarily attributable to
additional staffing and administrative costs following the RDC Transaction.
Non-recurring charges of $2.2 million in 1998 were related primarily to payments
made to certain officers and key employees pursuant to change in control
provisions of employment contracts, severance paid to the Former Principal
Shareholder, retention bonuses for certain employees and RDC Transaction-related
consulting and professional fees.
Settlement of litigation of $2.4 million in 1998 resulted from the agreement
between the Company and its former President whereby the Company paid $1.0
million in 1998 and recorded a liability of $1.4 million based on future
contractual payments to be made commencing April 1999 through January 2004.
Equity in earnings of unconsolidated partnerships in 1998 are a result of the
49% interest in the Crossroads Shopping Center acquired by the Company in the
RDC Transaction.
The adjustment of carrying value of property held for sale represents a 1998
non-cash charge of $11.6 million to write-down three properties to their
estimated net realizable value pursuant to a disposition plan. One of these
properties was sold in 1998 for which an additional loss of $175,000 was
recognized. A second property was sold in February 1999 and the Company has
entered into a contract in March 1999 to sell the third property.
Interest expense increased $2.9 million, or 19%, to $18.3 million in 1998,
compared to $15.4 million in 1997 of which $2.8 of the increase was attributable
to the RDC Properties.
The $707,000 extraordinary loss is a result of the write-off of deferred
financing fees as a result of the repayment of the related mortgage debt.
<PAGE>
RESULTS OF OPERATIONS, continued
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. The reconciliation of net income to FFO for the years ended
December 31, 1999, 1998 and 1997 is as follows:
Reconciliation of Net Income (Loss) to Funds from Operations (a)
<TABLE>
<CAPTION>
For the Years Ended December 31,
1999 1998 1997
------- --------- ---------
<S> <C> <C> <C>
Net income (loss) $ 7,195 $(13,898) $ (1,564)
Depreciation of real estate and amortization of leasing
costs:
Wholly owned and consolidated partnerships 18,949 14,925 12,993
Unconsolidated partnerships 626 231 --
Non-recurring RDC transaction charges (b) -- 2,249 --
Settlement of Litigation -- 2,358 --
Income (loss) attributable to minority interest (c) 3,106 (3,348) (217)
Loss on sale of property 1,284 175 12
Adjustment of carrying value of property held for
sale -- 11,560 --
Other adjustments -- 114 (221)
Extraordinary item - loss on extinguishment of debt -- 707 --
------- -------- -------
Funds from operations $31,160 $ 15,073 $11,003
======= ======== =======
Funds from operations per share (d) $ 0. 85 $ 0.74 $ 1. 08
======= ======== =======
</TABLE>
Notes:
(a) FFO for the years ended December 31, 1998 and 1997 have been restated
to include straight-line rents (net of write-offs) of $353 and $176,
respectively.
(b) The Company acquired substantially all of the interests of RD Capital
on August 12, 1998.
(c) Does not include a distribution of $24 paid to Preferred OP
Unitholders for the year ended December 31, 1999.
(d) FFO per share is computed based on the weighted average number of
Common Shares outstanding for the years ended December 31, 1999, 1998
and 1997 of 25,708,787,15,205,962 and 8,551,930, respectively. It also
assumes full conversion of a weighted average 10,833,184, 5,252,815
and 1,623,000 OP Units into Common Shares for the years ended December
31, 1999, 1998 and 1997, respectively.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Financing and Debt
At December 31, 1999, mortgage notes payable aggregated $326.7 million and were
collateralized by 49 properties and related tenant leases. Interest on the
Company's mortgage indebtedness ranged from 7.5% to 9.6% with maturities that
ranged from April 2000 to March 2022. Of the total outstanding debt, $254.1
million, or 78%, was carried at fixed interest rates with a weighted average of
8.4% and $72.6 million, or 22%, was carried at variable rates with a weighted
average of 8.0%. Of the total outstanding debt, $136.1 million will become due
by 2001, with scheduled maturities of $94.9 million at a weighted average
interest rate of 8.5% in 2000 and $41.2 million with a weighted average interest
rate of 7.8% in 2001. 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 following summarizes the financing and refinancing transactions since
December 31, 1998:
On February 8, 2000, the Company closed on a revolving credit facility with a
bank, which provides for the borrowing of up to $7.4 million. The facility,
which is secured by one of the Company's properties, matures in March 2003 and
requires the monthly payment of interest at the rate of LIBOR plus 150 basis
points (the rate increases by an additional 25 basis points if the amount
outstanding under the facility exceeds 50% of the value of the collateral). The
monthly repayment of principal amortized over 25 years is required only if the
Company draws the full amount available under the facility. The Company has
currently not drawn any amounts under this facility.
On January 31, 2000, the Company paid down $23.1 million of outstanding debt
with a life insurance company from working capital.
On December 16, 1999, the Company closed on a $13.8 million bank loan. The
variable-rate debt, which is secured one of the Company's properties, matures in
January 2005, bears interest at LIBOR plus 165 basis points and requires the
fixed monthly payment of principal of $10,000. The interest rate is to be
lowered by 20 basis points upon stabilization of the property and certain debt
service coverage ratios.
On November 22, 1999, the Company closed on a fixed-rate facility with a bank,
which provides for the borrowing of up to $10.0 million. The loan, which is
secured by one of the Company's properties, matures in December 2002 and
requires the monthly payment of interest at 7.75% and principal amortized over
25 years. As of December 31, 1999, the Company had borrowed $5.0 million under
this facility, with the remaining $5.0 million available to be drawn in up to
three traunches. The proceeds from this borrowing were used primarily to retire
maturing debt with another lender of $4.4 million, which was secured by another
of the Company's properties.
On November 16, 1999, the Company assumed $4.6 million in first mortgage debt in
connection with the acquisition of all of the partnership interests of the
limited partnership which owns the Pacesetter Park Shopping Center. The bank
loan, which matures March 2003, bears interest at 8.18% and requires the monthly
payment of principal and interest amortized over 20 years.
During 1999, the Company closed on two variable-rate financings with an
insurance company which are secured by two of the Company's properties. On
September 21, 1999, the Company closed on a $10.0 million loan which matures in
October 2002 and on July 7, 1999, a $14.0 million loan which matures in August
2002. Both loans require monthly payments of interest at a rate of LIBOR plus
205 basis points adjusted on a quarterly basis and principal amortized over 25
years. The Company has also purchased interest rate cap agreements for both
loans, which cap LIBOR at 6.50%. Approximately $8.6 million of the proceeds were
used to retire existing debt with the same lender.
On May 5, 1999, the Company assumed $6.2 million in mortgage debt in connection
with the acquisition of the general partner's interest in Mall 189. The debt,
which matures September 1, 2002, bears interest at a fixed-rate of 7.5% and
requires the payment of interest only through May 4, 2001. Thereafter, and
through the maturity date, the loan bears interest at a fixed-rate of 9.875% and
requires total monthly payments of $55,000 representing interest and principal.
The debt can be prepaid commencing May 4, 2002, without any prepayment fees.
<PAGE>
On March 23, 1999, the Company closed on a $7.0 million facility with a bank
that is secured by one of the Company's properties. As of December 31, 1999, the
Company had $4.0 million outstanding under this facility which matures March 15,
2002, bears interest at LIBOR plus 175 basis and requires the payment of
principal amortized over a 25 year period. The Company also obtained two
irrevocable letters of credit totaling $3.0 million. The first, in the amount of
$2.0 million, is related to the acquisition of the Mall 189 as required pursuant
to the bankruptcy reorganization plan of the seller of the property. The letter
of credit is expected to be reduced in $500,000 increments as redevelopment of
the property progresses. In addition, a letter of credit for $1.0 million was
obtained related to the settlement of certain litigation in 1998 with a former
president of the Company, which is expected to be reduced in $200,000 increments
as certain obligations are met.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES, continued
Financing and Debt, continued
On February 24, 1999, the Company assumed $7.7 million in mortgage debt in
connection with the acquisition of the Mad River Station shopping center. The
debt, which matures May 23, 2005, bears interest at a fixed-rate of 9.6% and
requires the payment of principal amortized over 25 years. The debt can be
prepaid commencing May 23, 2000 with certain prepayment fees and after May 23,
2002 without any such fees.
Property Acquisitions, Development and Expansion
The Company's acquisition program focuses on acquiring sub-performing
neighborhood and community shopping centers that are well-located and creating
significant value through retenanting and property redevelopment.
On November 16, 1999, the Company acquired 100% of the partnership interests of
the limited partnership which owns the Pacesetter Park Shopping Center, a 96,000
square foot community shopping center located in Rockland County, New York. The
aggregate purchase price of $7.4 million consisted of the assumption of $4.6
million in first mortgage debt and the issuance of $2.2 million in preferred
Operating Partnership units with the balance funded from working capital.
On May 5, 1999, the Company acquired the sole general partner's interest in the
limited partnership owning the Gateway Mall (formerly the Mall 189), a 122,000
square foot shopping center located in Burlington, Vermont, for $6.5 million.
The interest, which is senior to the interests of the limited partners, was
acquired out of bankruptcy by restructuring and assuming the mortgage debt of
$6.2 million. The balance of the purchase was funded from working capital. The
Gateway Mall is in its early stages of redevelopment with anticipated completion
in 2001. The property is a partially enclosed mall that will be reconfigured
into a conventional strip center format.
On February 24, 1999, the Company acquired the Mad River Station, a 154,000
square foot shopping center located in Dayton, Ohio for $11.5 million. The
Company assumed $7.7 million in mortgage debt and funded the remaining purchase
from working capital.
The Company completed the redevelopment of a 39,700 square foot building located
in Greenwich, Connecticut, which consists of 17,000 square feet of retail space
and 21 apartments (approximately 15,000 square feet). During June 1999,
Restoration Hardware, the lead anchor for the center occupying 12,300 square
feet of the retail space, commenced paying rent. The remaining retail space has
been leased as well with occupancy anticipated during the second quarter of
2000. All twenty-one residential units are leased as of December 31, 1999 Costs
incurred on this project totalled $17.5 million.
The Company has received municipal approval to renovate and expand by
approximately 30,000 square feet the 125,000 square foot Elmwood Park Shopping
Center. As part of the redevelopment, the Company is planning to construct a
48,000 square foot free-standing A&P supermarket, to replace a 28,000 square
foot in-line Grand Union supermarket at a significantly higher rent per square
foot. The Company expects redevelopment costs of approximately $9.1 million to
complete this project in 2002. In conjunction with the A&P supermarket rent
commencment, the Operating Partnership is also obligated to issue OP Units equal
to $2.75 million as discussed in Note 2 to the Consolidated Financial
Statements. Additionally, the Company currently estimates that for the remaining
portfolio, capital outlays of approximately $3.5 million will be required for
tenant improvements, related renovations and other property improvements related
to executed leases.
Share Repurchase Plan
Through March 13, 2000, the Company had repurchased 815,600 shares at a total
cost of $4.2 million under a Share repurchase program. The program, which allows
for the repurchase of up to $10.0 million of the Company's outstanding Common
Shares on the open market, may be discontinued or extended at any time and there
is no assurance that the Company will purchase the full amount authorized.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES, continued
Liquidity Sources
Sources of capital for funding property development, property expansion and
renovation, repurchase of common stock and future property acquisitions are
expected to be obtained from cash on hand, additional debt financings, sales of
existing properties and additional equity offerings. The Company also has nine
properties that are currently unencumbered and therefore available as potential
collateral for future borrowings. 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.
HISTORICAL CASH FLOW
The following discussion of historical cash flow compares the Company's cash
flow for the year ended December 31, 1999 ("1999") with the Company's cash flow
for the year ended December 31, 1998 ("1998").
Net cash provided by operating activities increased from $7.5 million for 1998
to $25.9 million for 1999. This variance was primarily attributable to an
increase in operating income before non-cash expenses in 1999 partially offset
by changes in operating assets and liabilities.
Investing activities used $19.9 million during 1999, representing a $4.9 million
decrease from $24.8 million of cash used during 1998. This variance was the
result of an increase in net sales proceeds of $3.9 million received in 1999
versus 1998 and an increase of $1.5 million related to an investment in an
unconsolidated subsidiary partnership in 1999, offset by a $500,000 increase in
expenditures for real estate acquisitions, development and tenant installation
in 1999.
Net cash provided by financing activities of $14.2 million for 1999 decreased
$17.1 million compared to $31.3 million provided in 1998. The decrease resulted
primarily from $95.9 million of net proceeds from the issuance of Common Shares
in 1998, dividends and distributions of $13.3 million being paid in 1999 and
$2.0 of additional cash used in 1999 for the repurchase of common shares. This
was partially offset by additional cash of $65.9 million used in 1998 for the
repayment of debt and a $28.3 million increase in cash provided by additional
borrowings.
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.
<PAGE>
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (the "Statement"). In June 1999, the FASB issued Statement No. 137,
which deferred the effective date of Statement No. 133 requiring it to be
adopted for all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company expects to adopt the Statement effective January 1, 2001. The
Statement will require the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If a derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of the derivative will either be offset against
the change in fair value of the hedged asset, liability, or firm commitment
through earnings, or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The Company does not
anticipate that the adoption of this Statement will have a significant effect on
its results of operations or financial position.
IMPACT OF YEAR 2000
The year 2000 ("Y2K") problem refers to computer applications using only the
last two digits to refer to a year rather than all four digits. As a result,
these applications could fail or create erroneous results if they recognize "00"
as the year 1900 rather than year 2000. In prior years, the Company discussed
the nature and progress of its plans to become Y2K ready. In late 1999, the
Company completed its remediation and testing of systems. As a result of those
planning and implementation efforts, the Company experienced no significant
disruptions in mission critical information technology and non-information
technology systems and believes those systems successfully responded to the Y2K
date change. The Company expended approximately $200,000 during 1999 in
connection with remediating its systems. The Company is not aware of any
material problems resulting from Y2K issues, either with its products, its
internal systems, or the products and services of third parties. The Company
will continue to monitor its mission critical computer applications and those of
its suppliers and vendors throughout the year 2000 to ensure that any latent Y2K
matters that may arise are addressed promptly.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is to changes in interest rates
related to the Company's mortgage debt. See the consolidated financial
statements and notes thereto included in this Annual Report for certain
quantitative details related to the Company's mortgage debt.
Currently, the Company manages its exposure to fluctuations in interest rates
primarily through the use of fixed-rate debt. As of December 31, 1999, the
Company had total mortgage debt of $326.7 million of which $254.1 million, or
78%, is fixed-rate and $72.6 million, or 22%, is variable-rate based upon either
LIBOR or the lender's commercial paper rate, plus certain spreads. $24.0 million
of notional variable-rate principal is hedged through the use of LIBOR rate caps
as of December 31, 1999. The Company may seek additional variable-rate financing
if and when pricing and other commercial and financial terms warrant. As such,
the Company would consider hedging against the interest rate risk related to
such additional variable-rate debt through interest rate swaps and protection
agreements, or other means.
<PAGE>
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data listed in items
14(a)(1) and 14(a)(2) hereof are incorporated herein by reference.
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
This item is incorporated by reference from the definitive proxy
statement for the Annual Meeting of Shareholders presently scheduled to be held
on May 16, 2000, to be filed pursuant to Regulation 14A.
ITEM 11 EXECUTIVE COMPENSATION
This item is incorporated by reference from the definitive proxy
statement for the Annual Meeting of Shareholders presently scheduled to be held
on May 16, 2000, to be filed pursuant to Regulation 14A.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This item is incorporated by reference from the definitive proxy
statement for the Annual Meeting of Shareholders presently scheduled to be held
on May 16, 2000, to be filed pursuant to Regulation 14A.
<PAGE>
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This item is incorporated by reference from the definitive proxy
statement for the Annual Meeting of Shareholders presently scheduled to be held
on May 16, 2000, to be filed pursuant to Regulation 14A.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AMD REPORTS ON FORM 8-K
(a) 1. Financial Statements - Form 10-K
The following consolidated financial Report Page
information is included as a separate
section of this annual report on
Form 10-K
ACADIA REALTY TRUST
INDEX OF FINANCIAL STATEMENTS
Report of Independent Auditors F-2
Consolidated Balance Sheets as of
December 31, 1999 and 1998 F-3
Consolidated Statements of Operations
for the years ended December 31, 1999,
1998 and 1997 F-4
Consolidated Statements of Shareholders'
Equity for the years ended December 31, 1999,
1998 and 1997 F-5
Consolidated Statements of Cash Flows for
the years ended December 31, 1999, 1998
and 1997 F-6
Notes to Consolidated Financial Statements F-8
2. Financial Statement Schedule
Schedule III - Real Estate and
Accumulated Depreciation F-28
All other schedules are omitted since the required information
is not present or is not present in amounts sufficient to
require submission of the schedule.
3. Exhibits
<PAGE>
<TABLE>
<CAPTION>
Exhibit No.
<S> <C> <C>
3.1(a) Declaration of Trust Incorporated by reference
of the Company, as to the copy thereof filed as
amended an exhibit to the Company's
Form 10-K filed for the fiscal
Year ended December 31, 1994
3.1(b) Fourth Amendment to Incorporated by reference to
Declaration of Trust the copy thereof filed as an
Exhibit to Company's Form
10-Q filed for the quarter
ended September 30, 1998
3.2 By-Laws of the Company Incorporated by reference
to the copy thereof filed as
an exhibit to the Company's
Form S-11 (File No.33-60008)
("Form S-11")
10.1(a) Agreement of Limited Incorporated by reference to
Partnership of the the copy thereof filed as an
Operating Partnership exhibit to Amendment No. 3 to
the Company's Form S-11
10.1(b) First, Second Incorporated by reference to
and Third Amendments to the copy thereof filed as an
the Agreement of Limited exhibit to the Company's Form
Partnership of the 10-K filed for the fiscal
Operating Partnership year ended December 31, 1998
10.1(c) Certificate of Designation of
Series A Preferred Operating
Partnership Units of Limited
Partnership Interest of Acadia
Realty Limited Partnership Filed herewith
10.2 Loan Agreement Incorporated by reference to
between the Company the copy thereof filed as
and Metropolitan exhibit to Amendment No. 3
Life Insurance to the Company's Form S-11
Company
*10.6(a) 1999 Share Option Plan Incorporated by reference to
the copy thereof filed as an
exhibit to the Company's
Form S-8 filed September 28, 1999
10.14 Form of Registration Incorporated by reference
Rights Agreement to the copy thereof filed as
an exhibit to Amendment No. 4
to the Company's Form S-11
10.18 Form of Loan Agreement Incorporated by reference
together with Form of to the copy thereof filed as
First Mortgage and an exhibit to the Company's
Security Agreement Form 10-K filed for the fiscal
between the Company and year ended December 31, 1995
John Hancock Mutual Life
Insurance Company dated
March 15, 1995
10.22(a) Indenture of Mortgage, Incorporated by reference to
Deed of Trust, Security the copy thereof filed as an
Agreement, Financing exhibit to the Company's Form
Statement, Fixture 10-Q filed for the quarter
Filing and Assignment ended September 30, 1996
of Leases, Rents and
Security Deposits
between the Company
and Morgan Stanley
Mortgage Capital, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.22(b) Mortgage Note between Incorporated by reference to
the Company and Morgan the copy thereof filed as an
Stanley Mortgage exhibit to the Company's Form
Capital, Inc. 10-Q for the quarter
ended September 30, 1996
10.22(c) First Amendment to the Incorporated by reference to
Indenture of Mortgage, the copy thereof filed as an
Deed of Trust, Security exhibit to the Company's Form
Agreement, Financing 10-Q filed for the quarter
Statement, Fixture ended September 30, 1998
Filing and Assignment
of Lease, Rents and
Security Deposits
Between the Company and
GMAC Commercial
Mortgage Corporation
10.24(a) Open-End Mortgage, Incorporated by reference
Security Agreement, to the copy thereof filed as
Future Filing, Financing an exhibit to the Company's
Statement and Assignment Form 10-K filed for the fiscal
of Leases and Rents year ended December 31, 1996
between the Company
and Anchor National Life
Insurance Company
10.24(b) Promissory Note between Incorporated by reference
the Company and Anchor to the copy thereof filed as
National Life Insurance an exhibit to the Company's
Company Form 10-K filed for the fiscal
year ended December 31, 1996
10.26(a) Loan Agreement dated Incorporated by reference
March 4, 1997 by and to the copy thereof filed a
between Mark Northwood an exhibit to the Company's
Associates, Limited Form 10-K filed for the fiscal
Partnership, a Florida year ended December 31, 1996
limited partnership,
and Nomura Asset
Capital Corporation
10.26(b) Promissory Note dated Incorporated by reference
March 4, 1997 between to the copy thereof filed
Mark Northwood as an exhibit to the Company's
Associates, Limited Form 10-K filed for the fiscal
Partnership, a Florida year ended December 31, 1996
limited partnership,
and Nomura Asset Capital
Corporation
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.26(c) Leasehold Mortgage, Incorporated by reference
Assignment of Rents, to the copy thereof filed
Security Agreement and as an exhibit to the Company's
Fixture Filing by Mark Form 10-K filed for the fiscal
Northwood Associates, year ended December 31, 1996
Limited Partnership, a
Florida limited partnership,
to Nomura Asset Capital
Corporation dated March
4, 1997
10.30 Contribution and Share Incorporated by reference to
Purchase Agreement the copy thereof filed as an
with RD Capital, Inc. exhibit to the Company's
Form 8-K filed on April 20, 1998
10.31 Severance and Incorporated by reference to
Consulting Agreement the copy thereof filed as an
For Marvin L. Slomowitz exhibit to the Company's
Form 10-K filed for the fiscal
year ended December 31, 1998
10.32 Settlement agreement Incorporated by reference to
between the Company the copy thereof filed as an
and Jack Wertheimer exhibit to the Company's
Form 8-K filed on January 5, 1999
10.33 Employment agreement Incorporated by reference to
between the Company the copy thereof filed as an
and Ross Dworman exhibit to the Company's
Form 10-K filed for the fiscal
year ended December 31, 1998
10.34 Employment agreement Incorporated by reference to
between the Company the copy thereof filed as an
and Kenneth F. Bernstein exhibit to the Company's
Form 10-K filed for the fiscal
year ended December 31, 1998
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.36 Secured Promissory Note between
RD Absecon Associates, L.P. and
Fleet Bank, N.A. dated February 8,
2000 Filed herewith
10.37 Mortgage Note between RD Branch
Associates, L.P. and North
Fork Bank dated November 22, 1999 Filed herewith
10.38 Promissory Note between 239
Greenwich Associates, L.P. and First
Union National Bank dated
December 16, 1999 Filed herewith
10.39 Note and Mortgage Assumption
Agreement between Acadia Mad River
Property LLC and Lasalle National Bank
for the benefit of Certificateholders
of American Southwest Financial Securities
Corporation, Commercial Mortgage Pass-
Through Certificates, Series 1195-C1
Dated February 24, 1999 Filed herewith
10.40 Mortgage Note Modification Agreement
Between Heathcote Associates and
Huntoon Hastings Capital Corp. dated
May 5, 1999 Filed herewith
10.41 Promissory Note between Merrillville
Realty, L.P. and Sun America Life Insurance
Company dated July 7, 1999 Filed herewith
10.42 Mortgage and Note Modification
Agreement between Pacesetter/Ramapo
Associates and M&T Real Estate, Inc. Filed herewith
10.43 Secured Promissory Note between
Acadia Town Line, LLC and Fleet
Bank, N.A. dated March 23, 1999 Filed herewith
10.44 Promissory Note between RD Village
Associates Limited Partnership and
Sun America Life Insurance Company
Dated September 21, 1999 Filed herewith
21 List of Subsidiaries Filed herewith
of Acadia Realty Trust
23 Consent of Independent Filed herewith
Auditors to Form S-3
and Form S-8
27 Financial Data Schedule Filed herewith
(EDGAR filing only)
* Constitutes a compensatory plan or
arrangement required to be filed
as an exhibit to this Form.
(b) Reports on Form 8-K filed during the quarter ended
December 31, 1999 - The Company did not file any report
on Form 8-K during the quarter ended December 31, 1999.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
ACADIA REALTY TRUST
(Registrant)
By: /s/ Ross Dworman
----------------------------
Chairman and
Chief Executive Officer
Dated: March 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/Ross Dworman Chairman, March 27, 2000
- --------------------------- Chief Executive
(Ross Dworman) Officer and Trustee
(Principal Executive
Officer)
/s/Kenneth F.Bernstein President and March 27, 2000
- --------------------------- Trustee
(Kenneth F.Bernstein)
/s/Perry S. Kamerman Senior Vice President March 27, 2000
- --------------------------- of Finance (Principal
(Perry S. Kamerman) Financial and Accounting
Officer)
/s/Martin L. Edelman Trustee March 27, 2000
- ---------------------------
(Martin L. Edelman, Esq.)
/s/Gregory A. White Trustee March 27, 2000
- ---------------------------
(Gregory A. white)
/s/Marvin J. Levine Trustee March 27, 2000
- ---------------------------
(Marvin J. Levine, Esq)
/s/Lawrence J. Longua Trustee March 27, 2000
- ---------------------------
(Lawrence J. Longua)
<PAGE>
EXHIBIT INDEX
The following is an index to all exhibits filed with the Annual Report
on Form 10-K other than those incorporated by reference herein:
Exhibit
Number Description Page
- ------- ----------- ----
10.1(c) Certificate of Designation of 34
Series A Preferred Operating
Partnership Units of Limited
Partnership Interest of Acadia
Realty Limited Partnership
10.36 Secured Promissory Note between 44
RD Absecon Associates, L.P. and
Fleet Bank, N.A. dated February 8,
2000
10.37 Mortgage Note between RD Branch 66
Associates, L.P. and North
Fork Bank dated November 22, 1999
10.38 Promissory Note between 239
Greenwich Associates, L.P. and First
Union National Bank dated
December 16, 1999
10.39 Note and Mortgage Assumption 84
Agreement between Acadia Mad River
Property LLC and Lasalle National Bank
for the benefit of Certificateholders
of American Southwest Financial Securities
Corporation, Commercial Mortgage Pass-
Through Certificates, Series 1195-C1
Dated February 24, 1999
10.40 Mortgage Note Modification Agreement 100
Between Heathcote Associates and
Huntoon Hastings Capital Corp. dated
May 5, 1999
10.41 Promissory Note between Merrillville 107
Realty, L.P. and Sun America Life Insurance
Company dated July 7, 1999
10.42 Mortgage and Note Modification 120
Agreement between Pacesetter/Ramapo
Associates and M&T Real Estate, Inc.
10.43 Secured Promissory Note between 130
Acadia Town Line, LLC and Fleet
Bank, N.A. dated March 23, 1999
10.44 Promissory Note between RD Village 149
Associates Limited Partnership and
Sun America Life Insurance Company
Dated September 21, 1999
21 List of Subsidiaries
of Acadia Realty Trust
23 Consent of Independent
Auditors to Form S-3
and Form S-8
27 Financial Data Schedule
(EDGAR filing only)
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
ACADIA REALTY TRUST
Report of Independent Auditors F-2
Consolidated Balance Sheets as of
December 31, 1999 and 1998 F-3
Consolidated Statements of Operations
for the years ended December 31, 1999,
1998 and 1997 F-4
Consolidated Statements of Shareholders'
Equity for the years ended December 31, 1999, 1998,
and 1997 F-5
Consolidated Statements of Cash Flows for
the years ended December 31, 1999, 1998
and 1997 F-6
Notes to Consolidated Financial Statements F-8
Schedule III - Real Estate and Accumulated
Depreciation F-28
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Trustees of
Acadia Realty Trust
We have audited the accompanying consolidated balance sheets of Acadia Realty
Trust (a Maryland Trust) and subsidiaries (the "Company") as of December 31,
1999 and 1998, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and the
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Acadia Realty
Trust and subsidiaries as of December 31, 1999 and 1998, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ ERNST & YOUNG LLP
New York, New York
February 25, 2000
F-2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
Real estate
Land $ 81,956 $ 76,136
Buildings and improvements 477,573 452,300
Properties under development 9,992 22,813
-------- --------
569,521 551,249
Less: accumulated depreciation 90,932 87,202
-------- --------
Net real estate 478,589 464,047
Property held for sale 13,227 7,073
Cash and cash equivalents 35,340 15,183
Cash in escrow 9,707 12,650
Investments in unconsolidated
partnerships 7,463 7,516
Rents receivable, net 8,865 6,006
Prepaid expenses 2,952 2,797
Due from related parties 19 --
Deferred charges, net 12,374 11,461
Other assets 2,267 1,779
-------- --------
$570,803 $528,512
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable $326,651 $277,561
Accounts payable and accrued expenses 6,385 10,673
Due to related parties -- 176
Dividends and distributions payable 4,371 --
Other liabilities 4,224 3,817
-------- --------
Total liabilities 341,631 292,227
-------- --------
Minority interest in Operating
Partnership 74,462 79,344
Minority interests in majority
owned partnerships 2,223 2,350
-------- --------
Total minority interests 76,685 81,694
-------- --------
Shareholders' equity:
Common shares, $.001 par value,
authorized 100,000,000 shares,
issued and outstanding 25,724,315
and 25,419,215 shares, respectively 26 25
Additional paid-in capital 168,641 170,746
Deficit (16,180) (16,180)
-------- --------
Total shareholders' equity 152,487 154,591
-------- --------
$570,803 $528,512
======== ========
</TABLE>
See accompanying notes
F-3
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Year ended December 31,
1999 1998 1997
---- ---- ----
Revenues
Minimum rent $73,021 $ 46,940 $ 33,669
Percentage rents 2,994 2,651 3,183
Expense reimbursements 13,786 8,655 6,632
Other 2,908 1,525 1,014
------- -------- --------
Total revenues 92,709 59,771 44,498
------- -------- --------
Operating Expenses
Property operating 21,606 14,182 9,013
Real estate taxes 10,540 7,536 5,691
Depreciation and amortization 19,887 15,795 13,768
General and administrative 6,337 4,409 2,351
Non-recurring charges -- 2,249 --
Settlement of litigation -- 2,358 --
------- -------- --------
Total operating expenses 58,370 46,529 30,823
------- -------- --------
Operating income 34,339 13,242 13,675
Equity in earnings of
unconsolidated partnerships 584 256 --
Loss on sale of property (1,284) (175) (12)
Adjustment of carrying
value of property held
for sale -- (11,560) --
Interest expense (23,314) (18,302) (15,444)
------- -------- --------
Income (loss) before
extraordinary item and
minority interest 10,325 (16,539) (1,781)
Extraordinary item -
loss on early
extinguishment of debt -- (707) --
Minority interest in Operating
Partnership (3,130) 3,348 217
------- -------- --------
Net income (loss) $ 7,195 $(13,898) $ (1,564)
======= ======== ========
Net income (loss) per Common Share:
Income (loss) before
extraordinary item $ .28 $ (.86) $ (.18)
Extraordinary item -- (.05) --
------- -------- --------
Net income (loss) per
Common Share $ .28 $ (.91) $ (.18)
======= ======== ========
See accompanying notes
F-4
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Common Shares Total
------------- Additional Retained Shareholders'
Shares Amount Paid-in Capital Deficit Equity
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 8,548,817 $ 9 $ 57,521 $ (724) $ 56,806
Issuance of shares pursuant to the
Company's restricted share plan 5,360 - 52 - 52
Adjustment to minority interest - - - 6 6
Distributions paid to limited
partners of the Operating
Partnership - - (1,285) - (1,285)
Dividends paid in excess of
accumulated earnings ($0.76 per share) - - (6,500) - (6,500)
Loss before minority interest - - - (1,781) (1,781)
Minority interest's equity - - 1,285 217 1,502
---------- --- -------- -------- --------
Balance, December 31, 1997 8,554,177 9 51,073 (2,282) 48,800
Issuance of shares pursuant to the
Company's restricted share plan 3,800 - 29 - 29
Conversion of 800,000 OP Units
by limited partner of the Operating
Partnership 800,000 1 4,367 - 4,368
Issuance of 13,333,333 Common
Shares in connection with the RDC
Transaction, net of issuance costs 13,333,333 13 95,909 - 95,922
Issuance of 1,989,048 Common Shares in
connection with the RDC Transaction 1,989,048 1 13,965 - 13,966
Conversion of 738,857 OP Units by
limited partners of the Operating
Partnership in connection with the
RDC Transaction 738,857 1 5,403 - 5,404
Loss before minority interest - - - (17,246) (17,246)
Minority interest's equity - - - 3,348 3,348
---------- --- -------- -------- --------
Balance, December 31, 1998 25,419,215 25 170,746 (16,180) 154,591
Conversion of 700,000 OP Units
by limited partner of the Operating
Partnership 700,000 1 5,012 - 5,013
Dividends declared ($.48 per
Common Share) - - (5,133) (7,195) (12,328)
Repurchase of Common Shares (394,900) - (1,984) - (1,984)
Income before minority interest - - - 10,325 10,325
Minority interest's equity - - - (3,130) (3,130)
---------- --- -------- -------- --------
Balance, December 31, 1999 25,724,315 $ 26 $168,641 $(16,180) $152,487
========== === ======== ======== ========
</TABLE>
F-5
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 7,195 $(13,898) $ (1,564)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 19,887 15,795 13,768
Extraordinary item - loss on early extinguishment of debt -- 707 --
Minority interest in Operating Partnership 3,130 (3,348) (217)
Equity in income of unconsolidated partnerships (584) (256) --
Provision for bad debts 1,404 1,275 833
Loss on sale of property 1,284 175 12
Adjustment to carrying value of property held for sale -- 11,560 --
Other -- 29 52
Changes in assets and liabilities:
Funding of escrows, net 2,943 (4,744) (4,303)
Rents receivable (4,263) (2,495) (679)
Prepaid expenses (155) (1,556) 180
Due to/from related parties (195) 163 26
Other assets (879) (975) (290)
Accounts payable and accrued expenses (4,288) 3,120 1,233
Other liabilities 407 1,907 (117)
------ -------- --------
Net cash provided by operating activities 25,886 7,459 8,934
------ -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for real estate and improvements (25,091) (23,253) (10,558)
Net proceeds from sale of property 6,128 2,193 1,288
Investments in unconsolidated partnerships -- (861) --
Distributions from unconsolidated partnerships 637 -- --
Payment of deferred leasing costs (1,604) (2,901) (1,205)
------- -------- --------
Net cash used in investing activities (19,930) (24,822) (10,475)
------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Common Shares -- 95,923 --
Principal payments on mortgages (17,598) (80,493) (14,835)
Proceeds received on mortgage notes 48,168 19,877 25,955
Payment of note payable to shareholder -- (3,050) --
Payment of deferred financing and other costs (1,091) (967) (757)
Dividends paid (9,239) -- (9,577)
Distributions to minority interests in Operating Partnership (3,929) (31) (1,870)
Distributions to minority interest in majority owned partnerships (127) -- --
Repurchase of Common Shares (1,983) -- --
------- -------- --------
Net cash provided by (used in) financing activities 14,201 31,259 (1,084)
------- -------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20,157 13,896 (2,625)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 15,183 1,287 3,912
------- -------- --------
CASH AND CASH EQUIVALENTS, END OF YEAR $35,340 $ 15,183 $ 1,287
======= ======== ========
</TABLE>
See accompanying notes
F-6
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended December 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for interest, net of amounts
capitalized of $1,299, $857, and $569, respectively $23,793 $ 17,650 $ 15,502
======= ========= ========
Supplemental Disclosures of Non-Cash
Investing and Financing Activities:
Acquisition of real estate by assumption of debt $18,521
========
Acquisition of real estate by issuance of Preferred
Operating Partnership Units $ 2,212
========
The following activity was recorded in connection with
the RDC Transaction (Note 2).
Real estate and investment in
partnerships acquired $(253,801)
Mortgage notes payable assumed 154,234
Operating partnership units issued 83,250
Common Shares issued 13,967
Minority interests in
acquired properties 2,350
---------
Net Cash $ --
=========
</TABLE>
See accompanying notes
F-7
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies
Acadia Realty Trust (the "Company"), formerly known as Mark Centers Trust, is a
fully integrated and self-managed real estate investment trust ("REIT") focused
primarily on the ownership, acquisition, redevelopment and management of
neighborhood and community shopping centers, and multi-family properties.
All of the Company's assets are held by, and all of its operations are conducted
through, Acadia Realty Limited Partnership (the "Operating Partnership"),
formerly known as Mark Centers Limited Partnership, and its majority owned
subsidiaries. As of December 31, 1999, the Company controlled 71% of the
Operating Partnership as the sole general partner.
As of December 31, 1999, the Company operated fifty-eight properties, which it
owned or had an ownership interest in, consisting of forty-seven neighborhood
and community shopping centers, three enclosed malls, two mixed use properties
(a retail/office center and a retail/residential property), five multi-family
properties and one redevelopment property located in the Eastern and Midwestern
regions of the United States. The retail/office mixed use property was held for
sale as of December 31, 1999.
Principles of Consolidation
The consolidated financial statements include the consolidated accounts of the
Company and its majority owned subsidiaries, including the Operating
Partnership. Non-controlling investments in partnerships are accounted for under
the equity method of accounting as the Company exercises significant influence.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Properties
Real estate assets are stated at cost less accumulated depreciation. Such
carrying amounts are adjusted, if necessary, to reflect any impairment in the
value of the assets. Expenditures for acquisition, development construction and
improvement of properties, as well as significant renovations are capitalized.
Interest costs are capitalized until construction is substantially complete.
Depreciation is computed on the straight-line method over estimated useful lives
of thirty to forty years for buildings and the shorter of the useful life or
lease term for improvements, furniture, fixtures and equipment. Expenditures for
maintenance and repairs are charged to operations as incurred. Property held for
sale is reflected at the lower of the carrying amount or net realizable value.
Deferred Costs
Fees and costs incurred in the successful negotiation of leases have been
deferred and are being amortized on a straight-line basis over the terms of the
respective leases. Fees and costs incurred in connection with obtaining
financing have been deferred and are being amortized over the term of the
related debt obligation.
F-8
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies, continued
Revenue Recognition
Leases with tenants are accounted for as operating leases. Minimum rents are
recognized on a straight-line basis over the term of the respective leases. As
of December 31, 1999 and 1998, unbilled rents receivable relating to
straight-lining of rents were $3,057 and $2,163, respectively.
Percentage rents are recognized in the period when the specified target, or in
the case of percentage rent, the tenant sales breakpoint, is met.
Reimbursements from tenants for real estate taxes, insurance and other property
operating expenses are recognized as revenue in the period the expenses are
incurred.
An allowance for doubtful accounts has been provided against certain tenant
accounts receivable which are estimated to be uncollectible. Rents receivable at
December 31, 1999 and 1998 are shown net of an allowance for doubtful accounts
of $1,588 and $1,854, respectively.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less when purchased to be cash and cash equivalents.
Cash in Escrow
Cash in escrow consists principally of cash held for real estate taxes, property
maintenance, insurance, lease renewals, environmental remediation, and minimum
occupancy and property operating income requirements at specific properties as
required by certain loan agreements. The balance as of December 31, 1998 also
included amounts funded for certain legal settlement amounts (note 17).
Non-Recurring Charges
In connection with the RDC Transaction (note 2), the Company incurred
non-recurring costs of $2,249 related primarily to payments made to certain
officers and key employees pursuant to change in control provisions of
employment contracts, severance paid to the Former Principal Shareholder (note
8), retention bonuses for certain employees and transaction-related consulting
and professional fees.
Income Taxes
The Company has made an election to be taxed, and believes it qualifies as a
real estate investment trust ("REIT") under Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended. A REIT will generally not be subject
to federal income taxation on that portion of its income that qualifies as REIT
taxable income to the extent that it distributes at least 95% of its taxable
income to its shareholders and complies with certain other requirements.
Accordingly, no provision has been made for federal income taxes for the Company
in the accompanying consolidated financial statements. The Company is subject to
state income or franchise taxes in certain states in which some of its
properties are located. These state taxes, which in total are not significant,
are included in general and administrative expenses in the accompanying
consolidated financial statements.
F-9
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies, continued
Earnings Per Common Share
For the years ended December 31, 1999, 1998 and 1997, basic earnings per share
was determined by dividing the net applicable income or loss to common
shareholders for the year by the weighted average number of common shares of
beneficial interest ("Common Shares") outstanding during each year consistent
with the Financial Accounting Standards Board Statement No. 128. The weighted
average number of shares outstanding for the years ended December 31, 1999, 1998
and 1997 were 25,708,787, 15,205,962 and 8,551,930, 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 years ended December 31, 1999, 1998 and
1997 no additional shares were reflected as the impact would be anti-dilutive in
such years.
Share Repurchase Plan
As of December 31, 1999, the Company had repurchased 394,900 Common Shares at a
total cost of $1,984 under a share repurchase plan which allows for the
repurchase of up to $10,000 of the Company's outstanding Common Shares. The
repurchased shares are reflected as a reduction of par value and additional
paid-in capital.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (the "Statement"). In June 1999, the FASB issued Statement No. 137,
which deferred the effective date of Statement No. 133 requiring it to be
adopted for all fiscal quarters of all fiscal years beginning after June 15,
2000. The Company expects to adopt the Statement effective January 1, 2001. The
Statement will require the Company to recognize all derivatives on the balance
sheet at fair value. Derivatives that are not hedges must be adjusted to fair
value through income. If a derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of the derivative will either be offset against
the change in fair value of the hedged asset, liability, or firm commitment
through earnings, or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. The Company does not
anticipate that the adoption of this Statement will have a significant effect on
its results of operations or financial position.
Reclassifications
Certain 1998 and 1997 amounts were reclassified to conform with the 1999
presentation.
F-10
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
2. Acquisition and Disposition of Properties and Related Transactions
1999 Acquisitions and Dispositions
On November 16, 1999, the Company acquired 100% of the partnership interests of
the limited partnership which owns the Pacesetter Park Shopping Center, a 96,000
square foot community shopping center located in Rockland County, New York. The
aggregate purchase price of $7,400 consisted of the assumption of $4,637 in
first mortgage debt and the issuance of $2,212 in preferred Operating
Partnership units with the balance funded from working capital.
On May 5, 1999, the Company acquired the sole general partner's interest in the
limited partnership owning the Gateway Mall (formerly the Mall 189), a 122,000
square foot shopping center located in Burlington, Vermont, for $6,547. The
interest was acquired out of bankruptcy by restructuring and assuming the
mortgage debt of $6,222. The balance of the purchase was funded from working
capital. The center, which is a partially enclosed mall, is being redeveloped
into a conventional strip center format.
On February 24, 1999, the Company acquired the Mad River Station, a 154,000
square foot shopping center located in Dayton, Ohio for $11,500. The Company
assumed $7,661 in mortgage debt and funded the remaining purchase from working
capital.
Pursuant to its continuing plan to dispose of certain under-performing
properties, the Company sold two properties during 1999, the Searstown Mall on
February 1, 1999 for a sale price of $3,300 and the Auburn Plaza on March 29,
1999 for $3,500.
1998 Acquisitions and Dispositions
On August 12, 1998 the Company completed the transactions contemplated by the
Contribution and Share Purchase Agreement dated April 15, 1998 (the "RDC
Transaction") involving affiliates of RD Capital, Inc. ("RDC"). In connection
with the RDC Transaction, the Operating Partnership acquired (i) fee title to or
all, or substantially all, of the ownership interests in twelve shopping
centers, five multi-family properties and one redevelopment property, (ii) a 49%
interest in one shopping center, (iii) certain third party management contracts,
and (iv) certain promissory notes from real estate investment partnerships and
related entities, which are not under common control, in which RDC serves as
general partner or in another similar management capacity, for approximately
11.1 million Operating Partnership units ("OP Units") and approximately 2.0
million Common Shares valued at $97,217. In addition, the Company assumed
mortgage debt aggregating $154,234 and incurred other capitalized transaction
costs of $5,757 resulting in an aggregate purchase price of $257,208. As part of
the RDC Transaction, the Company also issued approximately 13.3 million Common
Shares to three real estate investment limited partnerships (collectively "RDC
Funds"), in which affiliates of RDC serve as general partner, in exchange for
$100,000.
F-11
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
2. Acquisition and Disposition of Properties and Related Transactions, continued
1998 Acquisitions and Dispositions, continued
The Company accounted for the RDC Transaction as (i) a purchase of properties
and other related assets in exchange for OP Units and Common Shares and the
assumption of certain mortgage debt and other liabilities using the purchase
method of accounting and (ii) an issuance of Common Shares for cash.
Accordingly, the accompanying 1998 consolidated financial statements include the
operations of the properties acquired in the RDC Transaction from August 12,
1998 through December 31, 1998 (note 20).
The Operating Partnership is also obligated to issue additional OP Units valued
at $2,750 upon the completion of certain improvements and the commencement of
rental payments from a designated tenant at one of the properties acquired in
the RDC Transaction.
Following the completion of the RDC Transaction, the Company changed its name
from Mark Centers Trust to Acadia Realty Trust and the name of the Operating
Partnership was changed from Mark Centers Limited Partnership to Acadia Realty
Limited Partnership. Management also adopted a plan to dispose of three
under-performing properties following the RDC Transaction. As a result, the
Company recorded a non-cash charge of $11,560 to write-down these properties to
their estimated net realizable value as the anticipated sales proceeds (net of
selling costs) were expected to be insufficient to recover the associated
carrying values. On December 30, 1998, the Company completed the sale of the
Normandale Mall for $2,350. The remaining two properties (the Searstown Mall and
Auburn Plaza) were sold in 1999.
F-12
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
3. Segment Reporting
The Company has two reportable segments: retail properties and multi-family
properties. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The Company
evaluates property performance primarily based on net operating income before
depreciation, amortization and certain nonrecurring items. The reportable
segments are managed separately due to the differing nature of the leases and
property operations associated with the retail versus residential tenants. All
the multi-family units were acquired in 1998 as part of the RDC Transaction. The
following table sets forth certain segment information for the Company as of and
for the years ended December 31, 1999, 1998 and 1997 (does not include
unconsolidated partnerships):
<TABLE>
<CAPTION>
1999
----
Retail Multi-Family All
Properties Properties Other Total
---------- ------------ ----- --------
<S> <C> <C> <C> <C>
Revenues $ 75,823 $ 14,915 $ 1,971 $ 92,709
Property operating expenses and
real estate taxes 26,190 5,956 -- 32,146
Net property income before depreciation,
amortization and certain nonrecurring items 49,633 8,959 1,971 60,563
Depreciation and amortization 17,817 1,829 241 19,887
Interest expense 19,199 4,115 23,314
Real estate at cost 487,376 82,145 -- 569,521
Total assets 477,977 85,363 7,463 570,803
Gross leasable area (multi-family - 2,273 units) 8,817 2,039 -- 10,856
Expenditures for real estate and improvements 23,912 1,179 -- 25,091
Revenues
Total revenues for reportable segments $ 93,766
Elimination of intersegment management fee income (1,057)
--------
Total consolidated revenues $ 92,709
========
Property operating expenses and real estate taxes
Total property operating expenses and real estate
taxes for reportable segments $ 33,203
Elimination of intersegment management fee expense (1,057)
--------
Total consolidated expense $ 32,146
========
Reconciliation to income before extraordinary
item and minority interest
Net property income before depreciation,
amortization and certain nonrecurring items $ 60,563
Depreciation and amortization (19,887)
General and administrative (6,337)
Equity in earnings of unconsolidated
partnerships 584
Loss on sale of property (1,284)
Interest expense (23,314)
--------
Income before minority interest $ 10,325
========
</TABLE>
F-13
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
3. Segment Reporting, continued
<TABLE>
<CAPTION>
1998
----
Retail Multi-Family All
Properties Properties Other Total
---------- ------------ ----- --------
<S> <C> <C> <C> <C>
Revenues $ 53,507 $ 5,644 $ 620 $ 59,771
Property operating expenses and
real estate taxes 19,573 2,145 -- 21,718
Net property income before depreciation,
amortization and certain nonrecurring items 33,934 3,499 620 38,053
Depreciation and amortization 14,963 629 203 15,795
Interest expense 16,685 1,606 11 18,302
Real estate at cost 470,438 80,811 -- 551,249
Total assets 439,280 81,716 7,516 528,512
Gross leasable area (multi-family - 2,273 units) 8,931 2,039 -- 10,970
Expenditures for real estate and improvements 22,844 409 -- 23,253
Revenues
Total revenues for reportable segments $ 60,204
Elimination of intersegment ground rent and
management fee income (433)
--------
Total consolidated revenues $ 59,771
========
Property operating expenses and real estate taxes
Total property operating expenses and real estate
taxes for reportable segments $ 22,151
Elimination of intersegment ground rent and
management fee expense (433)
--------
Total consolidated expense $ 21,718
========
Reconciliation to loss before extraordinary
item and minority interest
Net property income before depreciation,
amortization and certain nonrecurring items $ 38,053
Depreciation and amortization (15,795)
General and administrative (4,409)
Non-recurring charges (2,249)
Settlement of litigation (2,358)
Equity in earnings of unconsolidated
partnerships 256
Loss on sale of property (175)
Adjustment of carrying value of property
held for sale (11,560)
Interest expense (18,302)
--------
Loss before extraordinary item and
minority interest $(16,539)
========
</TABLE>
F-14
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
3. Segment Reporting, continued
<TABLE>
<CAPTION>
1997
----
Retail Multi-Family All
Properties Properties Other Total
---------- ------------ ----- --------
<S> <C> <C> <C> <C>
Revenues $ 44,238 $ -- $ 260 $ 44,498
Property operating expenses and
real estate taxes 14,704 -- -- 14,704
Net property income before depreciation,
amortization and certain nonrecurring items 29,534 -- 260 29,794
Depreciation and amortization 13,560 -- 208 13,768
Interest expense 15,435 -- 9 15,444
Real estate at cost 311,688 -- -- 311,688
Total assets 254,500 -- -- 254,500
Gross leasable area (multi-family - 2,273 units) 7,265 -- -- 7,265
Expenditures for real estate and improvements 10,558 -- -- 10,558
Revenues
Total revenues for reportable segments $ 44,931
Elimination of intersegment ground rent and
management fee income (433)
--------
Total consolidated revenues $ 44,498
========
Property operating expenses and real estate taxes Total property operating
expenses and real estate
taxes for reportable segments $ 15,137
Elimination of intersegment ground rent and
management fee expense (433)
--------
Total consolidated expense $ 14,704
========
Reconciliation to loss before extraordinary
item and minority interest
Net property income before depreciation,
amortization and certain nonrecurring items $ 29,794
Depreciation and amortization (13,768)
General and administrative (2,351)
Loss on sale of property (12)
Interest expense (15,444)
--------
Loss before minority interest $ (1,781)
========
</TABLE>
F-15
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
4. Investment in Partnerships
In connection with the RDC Transaction, the Company acquired a 49% interest in
each of the Crossroads Joint Venture and Crossroads II Joint Venture
(collectively the "Crossroads") which collectively own a 311,000 square foot
shopping center in Greenburgh, New York. The Company accounts for its investment
in Crossroads using the equity method. Summary financial information of the
Crossroads and the Company's investment in and share of income from Crossroads
follows:
December 31, December 31,
1999 1998
---- ----
Balance Sheet
Assets:
Rental property, net $ 8,801 $ 9,161
Other assets 5,204 4,308
------- -------
Total assets $14,005 $13,469
======= =======
Liabilities and partners' equity
Mortgage note payable $35,105 $35,526
Other liabilities 777 502
Partners' equity (21,877) (22,559)
------- -------
Total liabilities and partners'
equity $14,005 $13,469
======= =======
Company's investment in
partnerships $ 7,463 $ 7,516
======= =======
Statement of Operations
Total revenue $ 7,003 $ 2,680
Operating and other expenses 1,910 643
Interest expense 2,568 1,022
Depreciation and amortization 534 192
------- -------
Net income $ 1,991 $ 823
======= =======
Company's share of net income $ 976 $ 403
Amortization of excess investment
(See below) 392 147
------- -------
Income from Partnerships $ 584 $ 256
======= =======
The unamortized excess of the Company's investment over its share of the net
equity in Crossroads at the date of acquisition was $19,580. The portion of this
excess attributable to buildings and improvements is being amortized over the
life of the related property.
F-16
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
5. Deferred Charges
Deferred charges consist of the following as of December 31, 1999 and 1998:
1999 1998
---- ----
Deferred financing costs $ 7,563 $ 6,624
Deferred leasing and other costs 12,279 10,882
------- -------
19,842 17,506
Accumulated amortization (7,468) (6,045)
------- -------
$12,374 $11,461
======= =======
6. Mortgage Loans
At December 31, 1999, mortgage notes payable aggregated $326,651 and were
collateralized by 49 properties and related tenant leases. Interest rates ranged
from 7.50% to 9.60%. Mortgage payments are due in monthly installments of
principal and/or interest and mature on various dates through 2022. Certain
loans are cross-collateralized and cross-defaulted as part of a group of
properties. The loan agreements contain customary representations, covenants and
events of default. Certain loan agreements require the Company to comply with
certain affirmative and negative covenants, including the maintenance of certain
debt service coverage and leverage ratios.
On December 16, 1999, the Company closed on a $13,750 bank loan. The
variable-rate debt, which is secured one of the Company's properties, matures in
January 2005, bears interest at LIBOR plus 165 basis points and requires the
fixed monthly payment of principal of $10. The interest rate is to be lowered by
20 basis points upon stabilization of the property and certain debt service
coverage ratios.
On November 22, 1999, the Company closed on a fixed-rate facility with a bank,
which provides for the borrowing of up to $10,000. The loan, which is secured by
one of the Company's properties, matures in December 2002 and requires the
monthly payment of interest at 7.75% and principal amortized over 25 years. As
of December 31, 1999, the Company had borrowed $5,000 under this facility, with
the remaining $5,000 available to be drawn down in up to three traunches. The
proceeds from this borrowing were used primarily to retire maturing debt with
another lender of $4,372, which was secured by another of the Company's
properties.
On November 16, 1999, the Company assumed $4,637 in first mortgage debt in
connection with the acquisition of all of the partnership interests of the
limited partnership which owns the Pacesetter Park Shopping Center. The loan,
which matures March 2003, bears interest at 8.18% and requires the monthly
payment of principal and interest amortized over 20 years.
During 1999, the Company closed on two variable-rate financings with an
insurance company, which are secured by two of the Company's properties. On
September 21, 1999, the Company closed on a $10,000 loan which matures in
October 2002 and on July 7, 1999, a $14,000 loan which matures in August 2002.
Both loans require monthly payments of interest at a rate of LIBOR plus 205
basis points adjusted on a quarterly basis and principal amortized over 25
years. The Company has also purchased interest rate cap agreements for both
loans, which cap LIBOR at 6.50%. The costs of the cap agreements have been
capitalized and are being amortized as an adjustment to interest expense over
the terms of the loans. Approximately $8,555 of the proceeds were used to retire
existing debt with the same lender.
F-17
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
6. Mortgage Loans, continued
On May 5, 1999, the Company assumed $6,222 in mortgage debt in connection with
the acquisition of the general partner's interest in Mall 189. The debt, which
matures September 1, 2002, bears interest at a fixed-rate of 7.5% and requires
the payment of interest only through May 4, 2001. Thereafter, and through the
maturity date, the loan bears interest at a fixed-rate of 9.875% and requires
total monthly payments of $55 representing interest and principal. The debt can
be prepaid commencing May 4, 2002, without any prepayment fees.
On March 23, 1999, the Company closed on a $7,000 facility with a bank that is
secured by one of the company's properties. As of December 31, 1999, the Company
had $4,000 outstanding under this facility which matures March 15, 2002, bears
interest at LIBOR plus 175 basis and requires the payment of principal amortized
over a 25 year period. The Company also obtained two irrevocable letters of
credit totaling $3,000. Related to the acquisition of the Mall 189 (note 2), a
letter of credit for $2,000 is required pursuant to the bankruptcy
reorganization plan of the seller of the property. The letter of credit is
expected to be reduced in $500 increments as redevelopment of the property
progresses. In addition, a letter of credit for $1,000 was obtained related to
the settlement of certain litigation in 1998 with the former President (note
17), which is expected to be reduced in $200 increments as certain obligations
are met.
On February 24, 1999, the Company assumed $7,661 in mortgage debt in connection
with the acquisition of the Mad River Station Shopping Center. The debt, which
matures May 23, 2005, bears interest at a fixed-rate of 9.6% and requires the
payment of principal amortized over 25 years. The debt can be prepaid commencing
May 23, 2000 with certain prepayment fees and after May 23, 2002 without any
such fees.
The following table summarizes the Company's mortgage indebtedness as of
December 31, 1999 and 1998:
<TABLE>
<CAPTION>
December 31, December 31, Interest
1999 1998 Rate
------------ ------------ --------
<S> <C> <C> <C>
Mortgage notes payable - variable-rate
General Electric Capital Corp. $ 7,126 $ 6,989 8.52% (Commercial paper rate +2.75%)
Fleet Bank, N.A. 3,966 -- 7.91% (LIBOR + 1.75%)
Fleet Bank, N.A. 9,326 8,268 7.94% (LIBOR + 1.78%)
Sun America Life Insurance Company 13,931 -- 8.26% (LIBOR + 2.05%)
Sun America Life Insurance Company 9,979 -- 8.13% (LIBOR + 2.05%)
KBC Bank 14,508 14,760 7.73% (LIBOR + 1.25%)
First Union National Bank 13,750 -- 7.81% (LIBOR + 1.65%)
-------- --------
Total variable-rate debt 72,586 30,017
-------- --------
Mortgage notes payable - fixed rate
Sun America Life Insurance Company -- 8,717 --
The Manufacturers Life Insurance Company (USA) -- 4,372 --
John Hancock Mutual Life Insurance Company 53,878 54,445 9.11%
Metropolitan Life Insurance Company 41,000 41,000 7.75%
Sun America Life Insurance Company 42,143 43,832 7.75%
Huntoon Hastings Capital Corp. 6,222 -- 7.50%
North Fork Bank 5,000 -- 7.75%
M&T Real Estate Inc. 4,628 -- 8.18%
Anchor National Life Insurance Company 3,866 3,950 7.93%
Lehman Brothers Holdings, Inc. 17,973 18,140 8.32%
Mellon Mortgage Company 7,566 -- 9.60%
Northern Life Insurance Company 3,173 3,409 7.70%
Bankers Security Life 2,189 2,351 7.70%
Morgan Stanley Mortgage Capital 44,092 44,729 8.84%
Nomura Asset Capital Corporation 22,335 22,599 9.02%
-------- --------
Total fixed-rate debt 254,065 247,544
-------- --------
$326,651 $277,561
======== ========
</TABLE>
F-18
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
6. Mortgage Loans, continued
<TABLE>
<CAPTION>
Properties Payment
Maturity Encumbered Terms
-------- ---------- -------
<S> <C> <C> <C>
Mortgage notes payable - variable-rate
General Electric Capital Corp. 01/01/02 (1) (20)
Fleet Bank, N.A. 03/15/02 (2) (20)
Fleet Bank, N.A. 05/31/02 (3) (20)
Sun America Life Insurance Company 08/01/02 (4) (20)
Sun America Life Insurance Company 10/01/02 (5) (20)
KBC Bank 12/31/02 (6) (20)
First Union National Bank 01/01/05 (7) (20)
Total variable-rate debt
Mortgage notes payable - fixed rate
Sun America Life Insurance Company -- - --
The Manufacturers Life Insurance Company (USA) -- - --
John Hancock Mutual Life Insurance Company 04/01/00 (8) $455(20)
Metropolitan Life Insurance Company 06/01/00 (9) (21)
Sun America Life Insurance Company 01/01/01 (10) $346(20)
Huntoon Hastings Capital Corp. 09/01/02 (11) (22)
North Fork Bank 12/01/02 (12) $38(20)
M&T Real Estate Inc. 03/01/03 (13) $41(20)
Anchor National Life Insurance Company 01/01/04 (14) $33(20)
Lehman Brothers Holdings, Inc. 03/01/04 (15) $139(20)
Mellon Mortgage Company 05/23/05 (16) $70(20)
Northern Life Insurance Company 12/01/08 (17) $41(20)
Bankers Security Life 12/01/08 (17) $28(20)
Morgan Stanley Mortgage Capital 11/01/21 (18) $380(20)
Nomura Asset Capital Corporation 03/11/22 (19) $193(20)
Total fixed-rate debt
Notes:
(1) Soundview Marketplace (9) Valmont Plaza (18) Midway Plaza
Luzerne Street Plaza Northside Mall
(2) Town Line Plaza Green Ridge Plaza New Smyrna Beach
Crescent Plaza Cloud Springs Plaza
(3) Smithtown Shopping Center East End Centre Troy Plaza
Martintown Plaza
(4) Merrillville Plaza (10) Bloomfield Town Square Kings Fairgrounds
Atrium Mall Shillington Plaza
(5) Village Apartments Walnut Hill Shopping Center Dunmore Plaza
GHT Apartments Kingston Plaza
(6) Marley Run Apartments Colony Apartments Twenty Fifth Street Shopping Center
Circle Plaza
(7) 239 Greenwich Avenue (11) Gateway Mall Mountainville Plaza
Birney Plaza
(8) New Loudon Centre (12) The Branch Shopping Center Monroe Plaza
Ledgewood Mall Ames Plaza
Plaza 422 (13) Pacesetter Park Shopping Plaza 15
Berlin Shopping Center
Route 6 Mall (14) Pittston Plaza (19) Northwood Centre
Tioga West
Bradford Towne Centre (15) Glen Oaks Apartments (20) Monthly principal and interest
(16) Mad River Station Shopping (21) Interest only monthly
Center
(17) Manahawkin Shopping Center (22) Interest only until 5/01;
principal and interest thereafter
</TABLE>
F-19
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
6. Mortgage Loans, continued
The scheduled principal repayments of all mortgage indebtedness as of December
31, 1999 are as follows:
2000 $ 98,726
2001 44,431
2002 70,592
2003 6,717
2004 22,892
Thereafter 83,293
--------
$326,651
========
7. Minority Interests
Minority interest represents the limited partners' interest of 10,484,143 and
11,184,143 Common Operating Partnership ("Common OP") Units in the Operating
Partnership at December 31, 1999 and 1998, respectively, and 2,212 units of
Preferred Limited Partnership Interests designated as Series A Preferred Units
("Preferred OP Units") issued November 16, 1999 in connection with the
acquisition of all the partnership interests of the limited partnership which
owns the Pacesetter Park Shopping Center (note 2).
The Preferred OP Units, which have a stated value of $1 each, are entitled to a
quarterly preferred distribution of the greater of (i) $22.50 (9% annually) per
Preferred OP Unit or (ii) the quarterly distribution attributable to a Preferred
OP Unit if such unit were converted into a Common OP Unit. The Preferred OP
Units are currently convertible into Common OP Units based on the stated value
divided by $7.50. After the seventh anniversary following their issuance, either
the Company or the holders can call for the conversion of the Preferred OP Units
at the lesser of $7.50 or the market price of the Common Shares as of the
conversion date. The Preferred OP Units are subject to a twelve-month lock-up
period whereby they cannot be sold, assigned or otherwise transferred.
Minority interests at December 31, 1999 and 1998 also include an aggregate
amount of $2,223 and $2,350, respectively, representing interests held by third
parties in four of the properties acquired in the RDC Transaction in which the
Company has a majority ownership position.
8. Related Party Transactions
During 1998, the Company entered into the following transactions with Mr.
Slomowitz, a former trustee and former principal shareholder, in connection with
the RDC Transaction: (i) repaid a $3,030 note related to the Company's 1996
purchase of the Union Plaza, (ii) paid $600 in severance pay, (iii) paid $100 on
the closing of the RDC Transaction and agreed to pay $100 on each of the
following two anniversary dates of the closing of the RDC Transaction for his
agreement not to compete with the Company and for certain consulting services,
(iv) granted ten year options to purchase 300,000 Common Shares at an exercise
price of $9.00 per Common Share, (v) cancelled formerly issued options to
purchase 200,000 Common Shares at $12.00 per Common Share and (vi) agreed to pay
a brokerage commission of 2% of the sales price of nine designated properties
currently comprising a portion of the Company's portfolio, provided such
commissions would not exceed $600 in the aggregate.
On December 30, 1999, the Company and Mr. Slomowitz terminated certain of the
obligations described above which were incurred in connection with the RDC
Transaction. The principal terms included cancellation of the lease for the
Company's prior headquarters in a building owned by Mr. Slomowitz. Rent expenses
for this office space was $119, $112 and $104 for the years ended December 31,
1999, 1998 and 1997, respectively. The Company paid Mr. Slomowitz the sum of
$329 in connection with the lease cancellation. Additionally, Mr. Slomowitz
terminated his options to acquire 301,000 common shares and waived the final
$100 installment payment due August, 2000. The Company agreed to indemnify Mr.
Slomowitz with respect to certain contingent liabilities. Mr. Slomowitz retains
the right to continue to guarantee Company debt up to $55,000.
F-20
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
8. Related Party Transactions, continued
Mr. Slomowitz also removed all restrictions on the sale of any properties which
he had originally contributed to the Company, waived his claims for present and
future brokerage commissions and agreed to absorb up to $1,250 of tax
liabilities resulting in event of the sale thereof. Mr. Slomowitz also resigned
from the Company's Board of Trustees effective December 8, 1999.
On July 16, 1999, and April 9, 1999, Mr. Slomowitz converted 600,000 and 100,000
Common OP Units, respectively, into Common Shares.
In connection with the RDC Transaction, the Company acquired certain property
management contracts for three properties in which certain current shareholders
of the Company or their affiliates have ownership interests. Management fees
earned by the Company under these contracts are at rates ranging from 3% and
3.5% of collections. Such fees aggregated $639 and $225 for the years ended
December 31, 1999 and 1998, respectively. Management fees earned under
management contracts on properties owned by Mr. Slomowitz aggregated $8 and $19
for the years ended December 31, 1998 and 1997, respectively.
On June 1, 1998, the Company purchased for $1,372 the building and other
improvements constituting the Blackman Plaza from Blackman Plaza Partners in
which Mr. Slomowitz is the sole general partner (owning a one percent economic
interest). The Company was already the owner of the land. Payment for the
building and other improvements was made with the proceeds from a financing with
CS First Boston (this debt was subsequently retired following the RDC
Transaction) and the application of ground rent in arrears totaling $496 due the
Company.
9. Tenant Leases
Space in the shopping centers and other retail properties is leased to various
tenants under operating leases which usually grant tenants renewal options and
generally provide for additional rents based on certain operating expenses as
well as tenants' sales volume.
Minimum future rentals to be received under non-cancelable leases for shopping
centers and other retail properties as of December 31, 1999 are summarized as
follows:
2000 $ 50,409
2001 46,942
2002 42,902
2003 39,725
2004 34,682
Thereafter 210,408
--------
$425,068
========
Minimum future rentals above include a total of $2,176 for two tenants (with
five leases), which have filed for bankruptcy protection. None of these leases
have been rejected nor affirmed.
During the years ended December 31, 1999 and 1998, no single tenant collectively
accounted for more than 10% of the Company's total revenues. During the year
ended December 31, 1997, rental income representing 10% or more of total
revenues was earned from various governmental agencies of the State of Florida.
Leases with these Florida agencies contain customary conditions, required under
Florida Law, permitting state agency tenants to cancel their leases upon six
months' notice in the event that state-owned facilities in the same county
become available. As such, minimum rents from these Florida agencies are not
included in the above table of minimum future rentals. Rentals earned under
these leases during the year ended December 31, 1997 were $4,890. On December
15, 1999, the Company received a Notice of Exercise of Right to Terminate Lease
from the Florida Department of Health for an aggregate 59,150 square feet
representing $827 of rents.
F-21
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
10. Lease Obligations
The Company leases land at six of its shopping centers, which are accounted for
as operating leases and generally provide the Company with renewal options. The
leases terminate during the years 2016 to 2066. Four of these leases provide the
Company with options to renew for additional terms aggregating from 20 to 44
years. The Company leases space for its New York City corporate office for a
term expiring in 2002. Future minimum rental payments required for leases having
remaining non-cancelable lease terms in excess of one year are as follows:
2000 $ 714
2001 714
2002 668
2003 642
2004 642
Thereafter 21,406
-------
$24,786
=======
11. Share Incentive Plan
During 1999, the Company adopted the 1999 Share Incentive Plan (the "1999 Plan")
which replaced both the 1994 Share Option Plan and the 1994 Non-Employee
Trustees' Share Option Plan. The 1999 Plan authorizes the issuance of options
equal to up to 8% of the Common Shares outstanding from time to time on a fully
diluted basis. However, not more than 4,000,000 of the Common Shares in the
aggregate may be issued pursuant to the exercise of options and no participant
may receive more than 5,000,000 Common Shares during the term of the 1999 Plan.
Options are granted by the Share Option Plan Committee (the "Committee"), which
currently consists of two non-employee Trustees, and will not have an exercise
price less than 100% of the fair market value of the Common shares and a term of
greater than 10 years at the grant date. Vesting of options is at the discretion
of the Committee with the exception of options granted to non-employee Trustees,
which vest in five equal annual installments beginning on the date of grant.
Pursuant to the 1999 Plan, non-employee Trustees receive an automatic grant of
1,000 options following each Annual Meeting of Shareholders. As of December 31,
1999, the Company has issued 2,066,600 options to officers and employees, which
are for ten-year terms and vest in three equal annual installments beginning on
the grant date. In addition, 5000 options have been issued to non-employee
Trustees. 1,000 of these options were subsequently cancelled as further
described in note 8.
The 1999 Plan also provides for the granting of Share Appreciation Rights,
Restricted Shares and Performance Units/Shares. Share Appreciation Rights
provide for the participant to receive, upon exercise, cash and/or Common
Shares, at the discretion of the committee, equal to in value to the excess of
the option exercise price over the fair market value of the Common Shares at the
exercise date. The Committee will determine the award and restrictions placed on
Restricted Shares, including the dividends thereon and the term of such
restrictions. The Committee also determines the award and vesting of Performance
Units and Performance Shares based on the attainment of specified performance
objectives of the Company within a specified performance period. As of December
31, 1999, the Company issued 2,000 Restricted Shares, which vest equally over
three years, to an employee. No awards of Share Appreciation Rights or
Performance Units/Shares were granted for the year ended December 31, 1999.
F-22
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
11. Share Incentive Plan, continued
The Company accounts for stock-based compensation pursuant to Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), and related interpretations. Under APB 25, no compensation expense
has been recognized in the accompanying financial statements related to the
issuance of stock options because the exercise price of the Company's employee
stock options equaled or exceeded the market price of the underlying stock on
the date of grant. The alternative fair value accounting provided for under
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), has not been elected by the Company.
Accordingly, pro forma information regarding net income and earnings per share
as required by SFAS 123 has been determined as if the Company had accounted for
its employee stock options under the fair value method. The fair value for these
options was estimated at the date of the grant using the Black-Scholes
option-pricing model with the following weighted-average assumptions:
Year ended December 31,
1999 1998 1997
---- ---- ----
Risk-free interest rate 6.4% 5.2% 6.3%
Dividend Yield 9.5% 9.4% 9.0%
Expected Life 8.6 years 9.7 Years 4.0 Years
Expected volatility 32.4% 37.7% 13.7%
For purposes of pro forma disclosure, the estimated fair value of the options
are amortized to expense over the options vesting period. For the year ended
December 31, 1999, pro forma net income is $6,573, or $0.26 per Share. For the
years ended December 31, 1998 and 1997, the Company has elected not to present
proforma information because the impact on the reported net loss per Share is
immaterial.
Changes in the number of shares under all option arrangements are summarized as
follows:
Year ended December 31,
1999 1998 1997
---- ---- ----
Outstanding at beginning
of period 300,000 329,500 217,000
Granted 2,071,600 305,000 152,500
Option price per share
granted $4.89-$7.50 $8.88-$9.00 $10.13-$11.19
Cancelled 300,000 334,500 40,000
Exercisable at end
of period 1,368,733 300,000 181,100
Exercised -- -- --
Expired -- -- --
Outstanding at end
of period 2,071,600 300,000 329,500
Option prices per
share outstanding $4.89-$7.50 $9.00 $10.13-$12.75
As of December 31, 1999 the outstanding options had a weighted average remaining
contractual life of approximately 8.6 years.
F-23
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
12. Restricted Share Plan
The Company had established a restricted share plan, which originally granted to
employees 47,722 restricted Common Shares. The granted restricted shares were
scheduled to vest and be issued 20% per year over a five year period, which
began June 1, 1994. All such shares other than those which had been forfeited
prior to vesting were issued as of December 31, 1998. Each plan participant was
entitled to receive additional compensation on a quarterly basis equal to the
dividend declared on their respective restricted shares granted under the plan
until such plan participants' restricted shares were vested. For the years ended
December 31, 1998 and 1997, total compensation expense related to such
restricted shares vested in such periods amounted to $29 and $76, respectively.
13. Employee 401(k) Plan
The Company maintains a 401(k) plan for employees under which the Company
currently matches 50% of a plan participant's contribution up to 6% of the
employee's annual salary. A plan participant may contribute up to a maximum of
15% of their compensation but not in excess of $10 for the year ended December
31, 1999. The Company contributed $93, $77 and $67 for the years ended December
31, 1999, 1998 and 1997, respectively.
14. Dividends and Distributions Payable
On December 13,1999, the Company declared a cash dividend for the quarter ended
December 31, 1999 of $0.12 per Common Share. The dividend was paid on January
15, 2000 to shareholders of record as of December 31, 1999. A distribution of
$0.12 per Common OP Unit was paid to Common OP Unit holders as well. A
distribution of $10.52 per Preferred OP Unit ($22.50 per annum pro-rated due to
their November 1999 issuance) for the quarter ended December 31, 1999 was
declared December 13, 1999 and paid to Preferred OP Unit holders on January 15,
2000.
The Company has determined that the cash distributed to the shareholders is
characterized as follows for federal income tax purposes:
1999 1998 1997
---- ---- ----
Ordinary income 41% n/a 34%
Return of capital 59% n/a 66%
---- --- ----
100% n/a 100%
==== === ====
15. Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 "Disclosures About Fair
Value of Financial Instruments", requires disclosure on the fair value of
financial instruments. Certain of the Company's assets and liabilities are
considered financial instruments. Fair value estimates, methods and assumptions
are set forth below.
Cash and Cash Equivalents, Accounts Receivable, Accounts Payable and Accrued
Expenses The carrying amount of these assets and liabilities approximates fair
value due to the short-term nature of such accounts.
Mortgage Notes Payable
As of December 31, 1999 and 1998, the Company has determined the estimated fair
value of its mortgage notes payable are approximately $327,690 and $292,854,
respectively, by discounting future cash payments utilizing a discount rate
equivalent to the rate at which similar mortgage notes payable would be
originated under conditions then existing.
F-24
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
16. Summary of Quarterly Financial Information (unaudited)
The separate results of operations of the Company for the years ended December
31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
March 31, June 30, September 30, December 31, Total for
1999 1999 1999 1999 Year
-------- -------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Revenue $22,251 $21,904 $24,428 $24,126 $92,709
=====================================================================
Income before minority interest $ 1,141 $ 1,886 $ 4,362 $ 2,936 $10,325
=====================================================================
Net income $ 765 $ 1,289 $ 3,083 $ 2,058 $ 7,195
=====================================================================
Net income per share - basic and diluted $ 0.03 $ 0.05 $ 0.12 $ 0.08 $ 0.28
=====================================================================
Cash dividends declared per share $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.48
=====================================================================
Weighted average shares outstanding - basic
and diluted 25,419,215 25,510,424 25,988,860 25,908,199 25,708,787
=====================================================================
March 31, June 30, September 30, December 31, Total for
1998 1998 1998 1998 Year
--------- -------- ------------- ------------ ---------
Revenue $10,951 $10,749 $16,150 $21,921 $59,771
=====================================================================
Loss before extraordinary item and minority interest ($621) ($1,568) ($12,920) ($1,430) ($16,539)
=====================================================================
Net loss ($533) ($1,561) ($10,800) ($1,004) ($13,898)
=====================================================================
Net loss per share - basic and diluted
Loss before extraordinary item ($0.06) ($0.15) ($0.58) ($0.04) ($0.86)
=====================================================================
Net loss ($0.06) ($0.18) ($0.60) ($0.04) ($0.91)
=====================================================================
Cash dividends declared per share $0.00 $0.00 $0.00 $0.00 $0.00
=====================================================================
Weighted average shares outstanding - basic
and diluted 8,544,177 8,555,346 18,078,215 25,419,215 15,205,962
=====================================================================
</TABLE>
F-25
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
17. Legal Proceedings
On November 20, 1995, Jack Wertheimer, a former President of the Company, filed
a complaint against the Company, its Trustees, including Mr. Slomowitz, and the
Company's former in-house General Counsel and former Chief Financial Officer in
the United States District Court for the Middle District of Pennsylvania. The
complaint, which was filed in connection with the termination of Mr.
Wertheimer's employment, included many of the allegations raised in a state
court proceeding commenced by Mr. Wertheimer in November 1994. The Federal court
complaint also included a civil RICO action in which Mr. Wertheimer alleged that
the Board of Trustees of the Company conspired with Mr. Slomowitz to terminate
Mr. Wertheimer's employment as part of the Mr. Slomowitz's breach of his duty of
good faith and fair dealing. Further, Mr. Wertheimer alleged that the above
defendants engaged in securities fraud in connection with the initial public
offering and that Mr. Slomowitz defrauded or overcharged the Company in
corporate transactions. The Federal complaint sought treble damages under RICO,
as well as damages arising from Mr. Wertheimer's alleged termination of
employment, invasion of privacy, intentional infliction of emotional distress,
fraud and misrepresentation.
On December 31, 1998, the Company and Mr. Wertheimer settled this litigation and
entered into an agreement whereby the Company paid Mr. Wertheimer $1,000 on
December 31, 1998 and agreed to pay him (i)$900 on April 1, 1999 and (ii) five
annual payments of $200 commencing January 10, 2000. Pursuant to this agreement,
the Company has obtained a standby letter of credit to collateralize these
future payments (note 6).
The Company is involved in other various matters of litigation arising in the
normal course of business. While the Company is unable to predict with certainty
the amounts involved, the Company's management and counsel are of the opinion
that, when such litigation is resolved, the Company's resulting liability, if
any, will not have a significant effect on the Company's consolidated financial
position.
18. Contingencies
Upon conducting environmental site inspections in connection with obtaining the
Morgan Stanley Mortgage Capital ("Morgan Stanley") financing during October
1996, certain environmental contamination was identified at the Troy Plaza in
Troy, New York. The Company has entered into a voluntary remedial agreement with
the State of New York for the remediation of the property. Environmental
consultants have completed the remediation operations at the site and are
performing a post-remediation sampling and analysis program. Upon the issuance
of a final report to the State of New York, the Company will have satisfied all
conditions to the voluntary remedial agreement. As of December 31, 1999, Morgan
Stanley holds $250 in escrow to be released upon the Company receiving final
approval from the State of New York.
Management is not aware of any other environmental liability that they believe
would have a material adverse impact on the Company's financial position or
results of operations. Management is unaware of any instances in which it would
incur significant environmental costs if any or all properties were sold,
disposed of or abandoned.
F-26
<PAGE>
ACADIA REALTY TRUST AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
19. Extraordinary Item - Loss on Early Extinguishment of Debt
The consolidated statement of operations for the year ended December 31, 1998
includes the write-off of $707 in net deferred financing fees as a result of the
repayment of the related mortgage debts.
20. Pro Forma Information
The following unaudited pro forma condensed consolidated information for the
years ended December 31, 1998 and 1997 is presented as if the RDC Transaction
had occurred on January 1, 1997.
1998 1997
---- ----
Revenue $84,053 $82,220
======= =======
(Loss) income before
extraordinary item $(5,886) $ 5,170
======= =======
Net (loss) income $(6,067) $ 4,731
======= =======
Net (loss) income per share-
basic and diluted $ (0.24) $ 0.19
======= =======
Weighted average number of
Common Shares outstanding 24,677,928 24,676,558
========== ==========
Weighted average number of
Common Shares outstanding-
assuming dilution 24,677,928 24,680,356
========== ==========
21. Subsequent Events
On January 31, 2000, the Company paid down $23,090 of outstanding debt with a
life insurance company from working capital.
On February 8, 2000, the Company closed on a revolving credit facility with a
bank, which provides for the borrowing of up to $7,400. The facility, which is
secured by one of the Company's properties, matures in March 2003 and requires
the monthly payment of interest at the rate of LIBOR plus 150 basis points (the
rate increases by an additional 25 basis points if the amount outstanding under
the facility exceeds 50% of the value of the collateral). The monthly repayment
of principal amortized over 25 years is required only if the Company draws the
full amount available under the facility. The Company has currently not drawn
any amounts under this facility.
F-27
<PAGE>
ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
<TABLE>
<CAPTION>
Costs capitalized
Buildings & Subsequent Buildings &
Description Encumbrances Land Improvements to Acquisition Land Improvements
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shopping Centers
Circle Plaza (1) $ - $ 3,435 $ 13 $ 2 $ 3,446
Shamokin Dam, PA
Martintown Plaza (1) - 4,625 1,620 - 6,245
North Augusta, SC
Midway Plaza (1) 196 1,647 3,081 196 4,728
Opelika, AL
Northside Mall (1) 1,604 7,080 2,213 1,604 9,293
Dothan, AL
New Smyrna Beach (1) 246 2,219 3,963 246 6,182
New Smyrna Beach FL
Wesmark Plaza - 380 3,419 3,794 370 7,223
Sumter, SC
King's Fairground (1) - 1,426 242 - 1,668
Danville, VA
Cloud Springs Plaza (1) 159 2,712 1,177 159 3,889
Ft Ogelthorpe, GA
Crescent Plaza 12,000 1,147 7,425 481 1,147 7,906
Brockton, MA
New Louden Centre (2) 505 4,161 9,623 505 13,784
Latham, NY
Ledgewood Mall (2) 619 5,434 30,937 619 36,371
Ledgewood, NJ
Troy Plaza (1) 479 1,976 950 479 2,926
Troy, NY
Birney Plaza (1) 210 2,979 803 210 3,782
Moosic, PA
Dunmore Plaza (1) 100 506 137 100 643
Dunmore, PA
Mark Plaza - - 4,268 3,881 - 8,149
Edwardsville, PA
Kingston Plaza (1) 305 1,745 463 284 2,229
Kingston, PA
Luzerne Street Plaza 2,000 35 315 1,208 35 1,523
Scranton, PA
Blackman Plaza - 120 - 1,383 120 1,383
Wilkes- Barre, PA
East End Centre 14,200 1,086 8,661 3,493 1,086 12,154
Wilkes-Barre, PA
Greenridge Plaza 6,700 1,335 6,314 695 1,335 7,009
Scranton, PA
Plaza 15 (1) 171 81 1,481 171 1,562
Lewisburg, PA
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Date of
Accumulated Acquisition (a)
Total Depreciation Construction (c)
------------------------------------------------
<S> <C> <C> <C>
Shopping Centers
Circle Plaza $ 3,448 $ 1,380 1978(c)
Shamokin Dam, PA
Martintown Plaza 6,245 2,475 1985(a)
North Augusta, SC
Midway Plaza 4,924 2,138 1984(a)
Opelika, AL
Northside Mall 10,897 4,133 1986(a)
Dothan, AL
New Smyrna Beach 6,428 2,835 1983(a)
New Smyrna Beach FL
Wesmark Plaza 7,593 2,478 1986(a)
Sumter, SC
King's Fairground 1,668 479 1992(a)
Danville, VA
Cloud Springs Plaza 4,048 1,634 1985(a)
Ft Ogelthorpe, GA
Crescent Plaza 9,053 2,969 1984(a)
Brockton, MA
New Louden Centre 14,289 4,315 1982(a)
Latham, NY
Ledgewood Mall 36,990 14,285 1983(a)
Ledgewood, NJ
Troy Plaza 3,405 1,554 1982(a)
Troy, NY
Birney Plaza 3,992 3,260 1968(c)
Moosic, PA
Dunmore Plaza 743 304 1975(a)
Dunmore, PA
Mark Plaza 8,149 3,817 1968(c)
Edwardsville, PA
Kingston Plaza 2,513 1,264 1982(c)
Kingston, PA
Luzerne Street Plaza 1,558 809 1983(a)
Scranton, PA
Blackman Plaza 1,503 72 1968(c)
Wilkes- Barre, PA
East End Centre 13,240 5,308 1986(c)
Wilkes-Barre, PA
Greenridge Plaza 8,344 2,921 1986(c)
Scranton, PA
Plaza 15 1,733 507 1976(c)
Lewisburg, PA
</TABLE>
<PAGE>
ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
<TABLE>
<CAPTION>
Costs capitalized
Buildings & Subsequent Buildings &
Description Encumbrances Land Improvements to Acquisition Land Improvements
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shopping Centers (cont.)
Plaza 422 (2) 190 3,004 414 190 3,418
Lebanon, PA
Tioga West (2) 48 1,238 3,144 48 4,382
Tunkhannock,PA
Mountainville Plaza (1) 420 2,390 486 420 2,876
Allentown, PA
Monroe Plaza (1) 70 2,083 147 150 2,150
Stroudsburg, PA
Ames Plaza (1) 57 1,958 182 57 2,140
Shamokin, PA
Route 6 Mall (2) - - 12,696 1,664 11,032
Honesdale , PA
Pittston Mall 3,866 1,500 - 5,956 1,521 5,935
Pittston , PA
Valmont Plaza 6,100 522 5,591 1,029 522 6,620
West Hazelton , PA
Manahawkin 5,362 2,400 9,396 4,837 3,105 13,528
Stafford Township, NJ
Twenty Fifth Street (1) 2,280 9,276 196 2,280 9,472
Easton, PA
Berlin Shopping Centre (2) 1,331 5,351 205 1,331 5,556
Berlin, NJ
Shillington Plaza (1) 809 3,268 32 809 3,300
Reading, PA
Union Plaza - - - 20,241 5,426 14,815
New Castle, PA
Bradford Towne Centre (2) - - 16,100 817 15,283
Towanda, PA
Atrium Mall 10,360 2,772 11,088 22 2,772 11,110
Abington, PA
Bloomfield Town Square 10,332 3,443 13,774 - 3,443 13,774
Bloomfield Hills, MI
Walnut Hill Plaza 9,286 3,122 12,488 392 3,122 12,880
Woonsocket, RI
Elmwood Park Plaza - 3,248 12,992 211 3,248 13,203
Elmwood Park, NJ
Merrillville Plaza 13,931 4,288 17,152 565 4,288 17,717
Hobart, IN
Soundview Marketplace 7,126 2,428 9,711 1,180 2,428 10,891
Port Washington, NY
Marketplace of Absecon - 2,573 10,294 488 2,577 10,778
Absecon, NJ
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Date of
Accumulated Acquisition (a)
Total Depreciation Construction (c)
------------------------------------------------
<S> <C> <C> <C>
Shopping Centers (cont.)
Plaza 422 3,608 2,062 1972(c)
Lebanon, PA
Tioga West 4,430 2,029 1965(c)
Tunkhannock,PA
Mountainville Plaza 3,296 1,543 1983(a)
Allentown, PA
Monroe Plaza 2,300 1,054 1964(c)
Stroudsburg, PA
Ames Plaza 2,197 1,688 1966(c)
Shamokin, PA
Route 6 Mall 12,696 1,978 1995(c)
Honesdale , PA
Pittston Mall 7,456 867 1995(c)
Pittston , PA
Valmont Plaza 7,142 2,992 1985(a)
West Hazelton , PA
Manahawkin 16,633 1,763 1993(a)
Stafford Township, NJ
Twenty Fifth Street 11,752 2,000 1993(a)
Easton, PA
Berlin Shopping Centre 6,887 1,107 1994(a)
Berlin, NJ
Shillington Plaza 4,109 586 1994(a)
Reading, PA
Union Plaza 20,241 1,493 1996(c)
New Castle, PA
Bradford Towne Centre 16,100 2,931 1994(c)
Towanda, PA
Atrium Mall 13,882 383 1998(a)
Abington, PA
Bloomfield Town Square 17,217 473 1998(a)
Bloomfield Hills, MI
Walnut Hill Plaza 16,002 539 1998(a)
Woonsocket, RI
Elmwood Park Plaza 16,451 447 1998(a)
Elmwood Park, NJ
Merrillville Plaza 22,005 638 1998(a)
Hobart, IN
Soundview Marketplace 13,319 378 1998(a)
Port Washington, NY
Marketplace of Absecon 13,355 378 1998(a)
Absecon, NJ
</TABLE>
<PAGE>
ACADIA REALTY TRUST
SCHEDULE III-REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1999
<TABLE>
<CAPTION>
Costs capitalized
Buildings & Subsequent Buildings &
Description Encumbrances Land Improvements to Acquisition Land Improvements
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shopping Centers (cont.)
Hobson West Plaza - 1,793 7,172 243 1,793 7,415
Naperville, IL
Smithtown Shopping Center 9,326 3,229 12,917 933 3,229 13,849
Smithtown, NY
Town Line Plaza 3,966 878 3,510 6,315 908 9,795
Rocky Hill, CT
Branch Shopping Center 5,000 3,156 12,545 - 3,156 12,545
Village of the Branch, NY
The Caldor Shopping Center - 956 3,826 - 956 3,826
Methuen, MA
Gateway Mall 6,222 1,273 - - 1,273 -
Burlington, VT
Mad River Station 7,566 2,350 9,404 2,350 9,404
Dayton, OH
Pacesetter Park Shopping
Center 4,628 1,475 5,899 7 1,475 5,906
Ramapo, NY
239 Greenwich 13,750 1,817 15,846 - 1,817 15,846
Greenwich, CT
Residential Properties
Gate House, Holiday House, 8,275 2,312 9,247 578 2,312 9,825
Tiger Village
Columbia, MO
Village Apartments 9,979 3,429 13,716 311 3,429 14,028
Winston Salem, NC
Glen Oaks Apartments 17,973 5,045 20,180 359 5,045 20,538
Greenbelt, MD
Colony Apartments 3,890 1,118 4,470 147 1,118 4,617
Columbia, MO
Marley Run Apartments 14,508 4,209 16,835 188 4,209 17,023
Baltimore, MD
Properties under - - - 9,992 - 9,992
development (5)
--------- ------------------------------------------------------------------------------
$ 326,651(6) $ 73,238 $ 337,049 $ 159,234 $ 81,956 487,565
========= ==============================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Date of
Accumulated Acquisition (a)
Total Depreciation Construction (c)
------------------------------------------------
<S> <C> <C> <C>
Shopping Centers (cont.)
Hobson West Plaza 9,208 279 1998(a)
Naperville, IL
Smithtown Shopping Center 17,078 579 1998(a)
Smithtown, NY
Town Line Plaza 10,703 515 1998(a)
Rocky Hill, CT
Branch Shopping Center 15,701 432 1998(a)
Village of the Branch, NY
The Caldor Shopping Center 4,782 132 1998(a)
Methuen, MA
Gateway Mall 1,273 - 1999(a)
Burlington, VT
Mad River Station 11,753 196 1999(a)
Dayton, OH
Pacesetter Park Shopping
Center 7,381 12 1999(a)
Ramapo, NY
239 Greenwich 17,663 135 1999(c)
Greenwich, CT
Residential Properties
Gate House, Holiday House, 12,137 367 1998(a)
Tiger Village
Columbia, MO
Village Apartments 17,457 522 1998(a)
Winston Salem, NC
Glen Oaks Apartments 25,583 731 1998(a)
Greenbelt, MD
Colony Apartments 5,735 169 1998(a)
Columbia, MO
Marley Run Apartments 21,232 601 1998(a)
Baltimore, MD
Properties under 9,992 -
development (5)
-----------------------
$ 569,521 $ 90,932
=======================
</TABLE>
<PAGE>
Acadia Realty Trust
Notes To Schedule 3
December 31, 1999
1. These seventeen properties serve as collateral for the financing with Morgan
Stanley (Note 6).
2. These seven properties serve as collateral for the financing with John
Hancock Life Insurance (Note 6).
3. Depreciation and investments in buildings and improvements reflected in the
statements of operations is calculated over the estimated useful life of the
assets as follows:
Buildings 30 to 40 years
Improvements Shorter of lease term or useful life
4. The aggregate gross cost of property included above for Federal income tax
purposes was $537,459 as of December 31, 1999.
5. Properties under development includes approximately $5,504 for the Gateway
Mall property.
6. Total encumbrances includes $22,335 for Northwood Centre property which is
separately disclosed as Property held for sale in the balance sheet.
7.(a) Reconciliation of Real Estate Properties:
The following table reconciles the real estate properties from January 1, 1997
to December 31, 1999:
<TABLE>
<CAPTION>
for the year ended December 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of period $ 551,249 $ 311,688 $ 307,411
Acquisitions and adjustments related to development
options and establishment of note payable to the
former Principal Shareholder - - -
Other improvements 19,728 16,647 7,480
Properties acquired 25,905 254,164 -
Adjustment of carrying value of property held for sale - (11,560) -
Property held for sale (27,301) (11,991) -
Fully depreciated assets written off (60) (3,350) (998)
Sale of property - (4,349) (2,205)
------------------------------------------
Balance at end of period $ 569,521 $ 551,249 $ 311,688
==========================================
</TABLE>
(b) Reconciliation of accumulated Depreciation:
The following table reconciles accumulated depreciation from January 1, 1997
to December 31, 1999:
<TABLE>
<CAPTION>
for the year ended December 31,
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of period $ 87,202 $ 83,326 $ 72,956
Sale of property - (2,035) (905)
Property held for sale (14,074) (4,918) -
Fully depreciated assets written off (60) (3,350) (998)
Depreciation related to real estate 17,864 14,179 12,273
-----------------------------------------
Balance at end of period $ 90,932 $ 87,202 $ 83,326
=========================================
</TABLE>
<PAGE>
CERTIFICATE OF DESIGNATION
OF
SERIES A PREFERRED
OPERATING PARTNERSHIP UNITS
OF
LIMITED PARTNERSHIP INTEREST
OF
ACADIA REALTY LIMITED PARTNERSHIP
Series A Preferred Units
A series of ______ operating units of Preferred Limited Partnership
Interests, par value $0.001 per unit of ACADIA REALTY LIMITED PARTNERSHIP (the
"Company"), a Delaware limited partnership, shall be created and be designated
"Series A Preferred Units" having the following rights and preferences:
DESIGNATION OF SERIES A PREFERRED UNITS. The rights, references,
powers, privileges and restrictions, qualifications and limitations granted to
or imposed upon the Series A Preferred Units (referred to hereinafter sometimes
as the "Designation") shall be as set forth below. This Certificate of
Designation shall incorporate by reference the terms and obligations set forth
in Article 13 of that certain Agreement of Contribution between AmCap,
Incorporated, Berlind Group, Inc., H. Robert Holmes, Lennox Securities, Inc. and
Ralph Worthington IV and Pacesetter/Ramapo Associates, Acadia Pacesetter LLC
("Acadia"), the Company and Acadia Realty Trust, dated as of November 8, 1999.
The Company may issue other additional series of Preferred Units whose rights,
preferences, powers, privileges and restrictions, qualifications and limitations
regarding Distributions (as hereinafter defined) and or liquidation are either
subordinate to, or pari passu with, the Designations of the Series A Preferred
Units, but in no event shall the Company issue any other Series A Preferred
Units except to the holders thereof in accordance with the terms hereof.
Notwithstanding anything to the contrary contained herein, the Company may issue
Preferred Units which are senior to the Series A Preferred Units but only in
exchange for a cash capital contribution. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in the Company's
Amended and Restated Partnership Agreement, dated as of March 22, 1999, (the
"Partnership Agreement"). The Partnership Agreement is on file at the principal
place of business of the Company and copies will be made available on request
and without cost to any unit holder of the Company so requesting.
1. Stated Value. The stated value of the Series A Preferred Units shall
be One Thousand Dollars ($1,000.00) per unit (the "Stated Value").
2. Distributions,
(a) Subject to Section 2(b) below, commencing from the date of
initial Issuance of units of Series A Preferred Units (the "Date of Issuance"),
distributions (the "Distributions") on each unit of Series A Preferred Units
shall be payable in arrears quarterly in an amount equal to the greater of(i)
$22.50 or (ii) the quarterly distribution attributable to a unit of Series A
Preferred Units if such unit had been converted into Common Units (as
hereinafter defined) pursuant to Section 4 hereof. The Distributions shall be
declared and payable whenever distributions on the Common Units (defined below)
are declared and paid (a "Distribution Payment Date"). If on any Distribution
Payment Date the Company shall not be lawfully permitted under Delaware law to
pay all or a portion of any such
<PAGE>
declared Distributions, the Company shall take such action as may be lawfully
permitted in order to enable the Company to the extent permitted by Delaware
law, lawfully to pay such Distributions. Distributions shall be cumulative in
amounts equal to amounts described in subparagraphs (i) and (ii) above of this
Section 2 (a) (the "Distribution Rate") from the Date of Issuance, whether or
not in any Distribution period such Distribution shall be declared or there
shall be funds of the Company legally available for payment of such
Distributions. In addition, if a Distribution is not made in any quarter at the
Distribution Rate, then such Distribution shortfall shall bear interest from the
last day of such quarter until the date paid (whether in cash or, pursuant to
the next sentence, in Common Units) at an annual rate equal to the greater of
(a) nine percent (9%) per annum or (b) the Prime Rate as published in the New
York Times or the Wall Street Journal. If during any period of five consecutive
quarters, the Partnership has failed to make Distributions to holders of the
Series A Preferred Units in amounts which, in the aggregate, equal or exceed the
Distribution Rate for such five quarter period, the holders of the Series A
Preferred Units may convert some or all of such Units to Common Units at the
lesser of (1) $7.50 or (ii) the Market Price (as defined in the Partnership
Agreement) on the date of such conversion. If during any period of five
consecutive quarters, the Partnership has failed to make Distributions to
holders of the Series A Preferred Units in amounts which, in the aggregate,
equal or exceed the Distribution Rate for such five quarter period, such holders
may also require the Company to issue to such holders, at any time and from time
to time, Common Units equal in value to the amount by which Distributions for
the period are less than the Distribution Rate for the period, plus interest on
such shortfall as provided above (based on the Market Price on the date such
holder requests payment in the form of Common Units). No Distributions shall be
declared or paid on any class of Common Units or any other class or series of
Preferred Units, other than Distributions declared and paid on such series of
Preferred Units which, by the terms of such series, Certificate of Designation,
have rights, preferences, powers, privileges and restrictions, qualifications
and limitations that are senior or pari passu with the Series A Preferred Units
(such Preferred Units hereinafter referred to as "Qualifying Preferred Units")
until all Distributions, if any, due and legally payable on the Series A
Preferred Units have been paid to the holders of such units. The record date for
the payment of Distributions on the Series A Preferred Units shall be the day
immediately prior to each such Distribution Payment Date.
(b) For purposes of this Certificate of Designation "Business
Day" shall mean any day, excluding Saturday, Sunday and any other day on which
commercial banks in New York are authorized or required by law to close.
3. Liquidation. The Series A Preferred Units shall be preferred as to
assets over any class of Common Units or other class of preferred units of the
Company, other than Qualifying Preferred Units, such that in the event of the
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the holders of the Series A Preferred Units shall be entitled to have set apart
for them, or to be paid out of the assets of the Company, before any
distribution is made to or set apart for the holders of the Common Units or
other series of preferred units or any other capital interest heretofore or
hereafter issued, other than Qualifying Preferred Units, an amount in cash equal
to the Stated Value per unit plus any "Accrued Distributions" (as defined below)
as of such date of payment. "Accrued Distributions" shall mean, as of any date
of determination, an amount equal to the amount of Distributions, determined at
the rate fixed for the payment of distributions on the Series A Preferred Units
on such date as provided in Section 2 hereof which would be paid on the Series A
Preferred Units for the period of time elapsed from the most recent actual
Distribution Payment Date to the date of determination together with any
Distribution shortfall and interest thereon as provided in Section 2(a). If the
assets or surplus funds to be distributed to the holders of the Series A
Preferred Units are insufficient to permit the payment to such holders of their
full preferential amount, the assets and surplus funds legally available for
distribution shall be distributed ratably among the holders of the Series A
Preferred Units in proportion to the full preferential amount each such holder
is otherwise entitled to receive.
<PAGE>
4. Conversion of Series A Preferred Units.
The holders of Series A Preferred Units shall have the
following conversion rights:
(i) Optional Right to Convert. Each Series A Preferred Unit
shall be convertible, at any time or from time to time (with each such date
being referred to as the "Conversion Date") and at the Conversion Price set
forth below, into fully paid and nonassessable common units of limited partner
interests of the Company ("Common Units"), at the option of the holder as set
forth below ("Optional Conversion").
(ii) Mechanics of Conversion. Each holder of Series A
Preferred Units who desires to convert part or all of the Series A Preferred
Units held by it from time to time into Common Units shall provide notice to the
Company in the form of the Notice of Conversion attached to the certificate
pursuant to which the Series A Preferred Units were issued (which certificate
and conversion notice (a "Conversion Notice") shall be in the form annexed
hereto as Exhibit A) via telecopy, hand delivery or other mail or messenger
service. The original Conversion Notice and the certificate or certificates
representing the Series A Preferred Units for which conversion is elected (or an
affidavit in form and substance reasonably satisfactory to the Company as to
loss or destruction of such certificate or certificates), shall be delivered to
the Company by nationally recognized courier, duly endorsed. The date upon which
a Conversion Notice is initially received by the Company shall be a "Notice
Date."
The Company shall issue and deliver within three (3) Business
Days after the Notice Date, to such holder of Series A Preferred Units at the
address of the holder on the books of the Company, (i) a certificate or
certificates for the number of Common Units to which the holder shall be
entitled as set forth herein and (ii) if the Series A Preferred Units
represented by such certificate have been converted only in part, a new
certificate evidencing the Series A Preferred Units not subject to the
conversion. The person or persons entitled to receive the Common.Units issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such Common Units on the date both of the Conversion Notice and
original certificates (or affidavits) are received.
(iii) Conversion Price. Each Series A Preferred Unit shall be
convertible into a number of Common Units or fraction of Common Units obtained
pursuant to the following formula (the "Conversion Formula"):
Redemption Price
----------------
Conversion Price
where:
Redemption for each Series A Preferred Unit for which
Price = conversion is being elected, such unit's Stated
Value, plus any Accrued Distributions:
Conversion
Price = $7.50
<PAGE>
Notwithstanding the foregoing, with respect to (i) an Optional
Conversion after the seventh anniversary of the date hereof ("Seventh
Anniversary") or (ii) any Mandatory Conversion, the Conversion Price shall be
$7.50 unless during the period commencing on the first anniversary of the date
hereof and ending on the Seventh Anniversary, the average closing price of a
Common Share for any three (3) out of four (4) consecutive calendar quarters
does not equal or exceed $7.50, in which event the Conversion Price shall equal
the lesser of (i) $7.50 and (ii) the Market Price on the Mandatory Conversion
Date or Notice Date, as applicable. The Conversion Price for an Optional
Conversion prior to the Seventh Anniversary shall be $7.50.
(iv) Mandatory Conversion. At any time following the Seventh
Anniversary, the Company may cause the conversion (a "Mandatory Conversion") of
the Series A Preferred Units outstanding on the Mandatory Conversion Date (as
hereinafter defined) into Common Units pursuant to the Conversion Formula as set
forth above; provided, however, that no Mandatory Conversion may be effective
with a Mandatory Conversion Date during the time between the record date for
Distributions and the Distribution Payment Date for such record date.
To effect a Mandatory Conversion, the Company shall issue to
each holder of record an irrevocable notice stating that the Company is
effecting a Mandatory Conversion with regard to the Series A Preferred Units.
Such notice shall contain a statement indicating the number of Series A
Preferred Units subject to the Mandatory Conversion, and if less than all
outstanding Series A Preferred Units are being so converted, the percentage of
Series A Preferred Units held by each holder subject to the Mandatory
Conversion. Unless otherwise agreed to by all the holders of Series A Preferred
Units and the Company, any such Mandatory Conversion shall be exercised by the
Company on a pro rata basis among all holders of Series A Preferred Units. On
the Mandatory Conversion Date, each certificate representing Series A Preferred
Units outstanding shall automatically, with no further action required by any
holder or the Company, represent the number of Common Units of such holder, and
such Series A Preferred Units remaining if less than all outstanding units of
Series A Preferred Units were so converted, for which each Series A Preferred
Unit was converted in accordance with this Section 4(iv). As promptly as
practicable after the Mandatory Conversion Date and in no event more than three
(3) Business Days after the Mandatory Conversion Date, the Company shall issue
and shall deliver to the holders of Series A Preferred Units subject to the
Mandatory Conversion (i) a certificate representing the number of Common Units
to which the Series A Preferred Units were converted in accordance with the
provisions of this Section 4(iv) and (ii) if less than all outstanding Series A
Preferred Units were so converted, upon submission to the Company of the
certificate or certificates representing the Series A Preferred Units held by
such holder immediately prior to the Mandatory Conversion, a new certificate
evidencing the Series A Preferred Units held by such holder immediately
following the Mandatory Conversion (until such time as such certificate or
certificates are submitted to the Company, the certificate or certificates
representing the Series A Preferred Units held by a holder immediately prior to
the Mandatory Conversion shall be deemed to represent the number of Series A
Preferred Units held by such holder immediately following the Mandatory
Conversion). Such conversion shall be deemed to have been effected on the
opening of business on the date the notice was received by the holders of record
of Series A Preferred Units (the "Mandatory Conversion Date"), and at such time
the rights of the holder as holder of the converted Series A Preferred Units
shall cease and the person or persons in whose name or names any certificate or
certificates for Common Units shall be issuable upon such Mandatory Conversion
shall be deemed to have become the holder or holders of record of the Common
Units represented thereby and shall be immediately eligible to convert such
Common Units to shares of the REIT by notice to the Company without further
deliveries.
<PAGE>
(v) Reservation of Common Units Issuable Upon Conversion. The
Company shall at all times reserve and keep available out of its authorized but
unissued Common Units, solely for the purpose of effecting the conversion of the
Series A Preferred Units, such number of its Common Units as shall from time to
time be sufficient to effect the conversion of all then outstanding Series A
Preferred Units. If at any time the number of authorized but unissued Common
Units shall not be sufficient to effect the conversion of all then outstanding
Series A Preferred Units, no Mandatory Conversion may take place and the Company
will take such action as may be necessary to increase its authorized but
unissued Common Units to such number of units as shall be sufficient for such
purpose.
(vi) Adjustment to Conversion Price.
------------------------------
(a) If, prior to the conversion of all Series A
Preferred Units, the number of outstanding Common Units is increased by a unit
split, reclassification Of units or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding Common Units
is decreased by a combination or reclassification of units. or other similar
event, the Conversion Price shall be proportionately increased.
(b) If prior to the conversion of all Series A
Preferred Units, there shall be any merger, consolidation, exchange of units,
recapitalization reorganization, or other similar event (each, an "Adjustment
Event"), as a result of which Common Units of the Company shall be changed into
the same or a different number of securities of the same or another class or
classes of units or securities of the Company or another entity (the "Substitute
Units:), then the holders of Series A Preferred Units shall thereafter have the
right to receive upon conversion of Series A Preferred Units, upon the basis and
upon the terms and conditions specified herein and in lieu of the Common Units
otherwise issuable upon conversion, such number of Substitute Units as would
have been issuable with respect to or in exchange for the number of Common Units
that would have been issuable upon the conversion of Series A Preferred Units
held by such holders immediately prior to such Adjustment Event. In any such
case appropriate provisions shall be made with respect to the rights and
interest of the holders of the Series A Preferred Units to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Conversion Price and of the number of Common Units issuable upon conversion
of the Series A Preferred Units) shall thereafter be applicable, as nearly as
may be practicable in relation to any units or securities thereafter deliverable
upon the exercise hereof. The Company shall not effect any transaction described
in this subsection unless the resulting successor or acquiring entity (if not
the Company) assumes by written instrument the obligation to deliver to the
holders of the Series A Preferred Units such units and/or securities as, in
accordance with the foregoing provisions, the holders of the Series A Preferred
Units may be entitled to receive upon conversion thereof.
(c) If any adjustment under this subsection would
create a fractional unit of Common Units or a right to acquire a fractional unit
of Common Units, such fractional units shall be issued.
v. Status of Converted Units. In the event any Series A
Preferred Units shall be converted as contemplated by this Certificate of
Designation, the units so converted shall be retired, canceled, and shall not be
issuable by the Company as Series A Preferred Units.
<PAGE>
vi. Distributions on Converted Units. All distributions to be
made with respect to Common Units received pursuant to an Optional Conversion of
Series A Preferred Units or a Mandatory Conversion of Series A Preferred Units
shall be determined as if the Common Units were received on the first Business
Day following the date of the last regular distribution made with respect to the
Common Units (i.e. the holders of the Common Units received upon conversion
shall be entitled to the full quarterly distribution with respect to such Common
Units); provided, however, that in the case of a Mandatory Conversion, if such
Mandatory Conversion occurs on a date other than a Distribution Payment Date, on
the Distribution Payment Date immediately following the Mandatory Conversion,
the holder of Common Units received pursuant to such Mandatory Conversion shall
receive a distribution equal to the greater of (i) the distribution to be
received by holders of Common Units on such date (the "Common Unit
Distribution") and (ii) the sum of (A) the Distribution multiplied by the
quotient obtained by dividing (i) the number of days elapsed between the
previous Distribution Payment Date and the Mandatory Conversion Date by (ii) the
total number of days elapsed between the previous Distribution Payment Date and
the then current Distribution Payment Date (the "Total Conversion Period Days")
and (B) the Common Unit Distribution multiplied by the quotient obtained by
dividing (i) the number of days elapsed between the Mandatory Conversion Date
and the then current Distribution Payment Date by (ii) the Total Conversion
Period Days.
5. No Reissuance. Any Series A Preferred Units exchanged, redeemed,
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof.
6. Voting. The Company shall not, without the affirmative consent of
the holders of at least seventy-five percent (75%) of the outstanding Series A
Preferred Units:
(a) in any manner authorize, create or issue any additional
preferred units or any class or series of capital interests, in either case (i)
ranking, either as to payment of distributions or distribution of assets, prior
to, the Series A Preferred Units or (ii) which in any manner adversely affects
the holders of units of Series A Preferred Units., or authorize, create or issue
any capital interests of any class or series or any bonds, debentures, notes or
other obligations convertible into a exchangeable for, or having optional rights
to purchase, any capital interests having any such preference or priority or so
adversely affecting the holder of Series A Preferred Units; or
(b) in any manner alter or change the designations or the
powers, preferences or rights, or the qualifications, limitations or
restrictions of the Series A Preferred Units; or
(c) reclassify the Common Units or any other units of any
class or series of capital interests hereafter created junior to the Series A
Preferred Units into capitalization of any class or series of capital interests
(i) ranking, either as to payment of dividends or distribution of assets prior
to or pari passu with the Series A Preferred Units. or (ii) which in any manner
adversely affects the holders of Series A Preferred Units; or
(d) alter the one-to-one equivalence of a Common Unit and a
Common Share (as adjusted to reflect anti-dilution protection).
<PAGE>
7. Notice of Certain Events. If at any time, the Company and/or Acadia
Realty Trust, a Maryland trust ("Acadia") proposes:
(a) to pay any distribution or dividend payable in securities
(of any class or classes) or any obligations, stock or units convertible into or
exchangeable for Common Units or the common shares of beneficial interest of
Acadia, par value $.0l per share ("Common Shares") upon either of their capital
securities, including without limitation (i) Common Units or Common Shares or
(ii) a cash distribution other than its customary quarterly cash distribution
(collectively, an "Extraordinary Distribution");
(b) to grant to the holders of its Common Units or Common
Shares generally any rights or warrants (excluding any warrants or other rights
granted to any employee, director, officer contractor or consultant of the
Company or Acadia pursuant to any plan approved by the general partner of the
Company or the Board of Trustees of Acadia (a "Rights Distribution");
(c) to effect any capital reorganization or reclassification
of capital securities of the Company or Acadia;
(d) to consolidate with, or merge into, any other company or
to transfer its property as an entity or substantially as an entirety; or
(e) to effect the liquidation, dissolution or winding up of
the Company or Acadia, then, in any one or more of the foregoing cases, the
Company shall give, by certified or registered mail, postage prepaid, addressed
to the holders of Series A Preferred Units at the address of such holders as
shown on the record books of the Company, (i) at least thirty (30) days' prior
written notice of the date on which the books of the Company shall close or of a
record date fixed for such dividend. distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, at least
thirty (30) days' prior written notice of the date when the same shall take
place. Any notice given in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of any class of capital securities shall be
entitled thereto; or
(f) to issue Preferred Units senior to the Series A Preferred
Units; it shall give at least ten (10) days' prior written notice of such event
to the holders of the series A Preferred Units. In addition, it will give such
notice as it is required to give to holders of any other Series of Preferred
Units.
8. Rank and Limitations of Preferred Units. All Series A Preferred
Units shall rank equally with each other Series A Preferred Units and shall be
identical in all respects.
9. Joinder with Acadia Realty Trust hereunder. The Company joins in the
covenant of Acadia set forth below.
10. Notices. All notices to be given hereunder shall be personally
delivered (including by nationally recognized overnight carriers, such as
Federal Express) or sent by registered or certified mail, return receipt
requested, with postage prepaid.
11. Certificate Governs. In the event of any conflict between the
provisions of this Certificate of Designation and the provisions of the
Partnership Agreement, the provisions of this Certificate of Designation shall
govern.
<PAGE>
All notices sent by mail shall be deemed effectively given on the date that is
three (3) business days after the date of such mailing. All notices personally
delivered shall be deemed effectively given on the date of such delivery.
November 18, 1999 ACADIA REALTY LIMITED PARTNERSHIP
By: Acadia Realty Trust
its General Partner
By:/s/Kenneth F. Bernstein
----------------------------------
Kenneth F. Bernstein
President
So long as any Series A Preferred Units or Common Units issued upon the
conversion thereof are outstanding, the undersigned agrees to (i) maintain the
one-to-one equivalence of a Common Share and a Common Unit (subject to
anti-dilution protections) and (ii) abide by this Agreement and cause the
General Partner of the Company to abide by this Agreement.
November 18, 1 999 Acadia Realty Trust
By:/s/Kenneth F. Bernstein
----------------------------------
Kenneth F. Bernstein
President
<PAGE>
SECURED PROMISSORY NOTE
Date of Note: As of February 8, 2000
Principal Sum: $7,400,000
Maturity Date: March 1, 2003
FOR VALUE RECEIVED, RD ABESCON ASSOCIATES, L.P., a Delaware
limited partnership ("Maker"), does hereby covenant and promise to pay to the
order of FLEET BANK, NATIONAL ASSOCIATION, a national banking association
("Payee"), at 1133 Avenue of the Americas, New York, New York 10036, or at such
other place as Payee may designate to Maker in writing from time to time, in
lawful money of the United States of America and in immediately available funds,
the lesser of the Principal Sum stated above and the Principal Sum from time to
time outstanding hereunder and to pay interest on the Principal Sum from time to
time outstanding hereunder in like money and funds as hereinafter provided.
1. Definitions. The following terms, as used in this Note,
shall have the meanings indicated opposite them and terms capitalized herein and
not otherwise defined herein but defined in the Mortgage shall have the meaning
set forth in the Mortgage:
"Acadia" shall mean Acadia Realty Trust, a Maryland business
trust.
"Accounting Principles" shall mean the accounting principles
utilized in the preparation of the operating statements for the Mortgaged
Premises heretofore delivered to Payee.
"Acme Lease" shall mean that certain Lease dated June 6, 1990
between Absecon Marketplace Associates, as landlord, and SuperFresh Food
Markets, Inc., as tenant, as amended by amendments dated October 1, 1991,
January 13, 1994 and July 27, 1999, and undated letter agreement relating to the
disclosure of gross revenue from the sale of merchandise at the premises leased
pursuant to the Acme Lease. Maker is the current landlord and American Store
Properties; Inc. is the current tenant.
"Acme Operating Requirement" shall mean that the current
tenant under the Acme Lease, operating under the trade name of Acme, is open for
business and operating a supermarket in substantially all of the premises
demised pursuant to the Acme Lease, except for periods when due to a casualty or
condemnation (in respect of which Payee is pursuant to the Mortgage obligated to
make the proceeds available for restoration) such premises are closed pending
such tenant reopening following restoration.
"Additional Advance" shall have the meaning assigned to such
term in PARAGRAPH 5 of this Note.
1
<PAGE>
"Applicable Rate" - either the Prime Rate plus the Applicable
Spread or theLIBOR Rate in effect at any given time pursuant to the terms hereof
plus the Applicable Spread.
"Applicable Spread" shall have the meaning assigned to such
term in PARAGRAPH 4(d).
"Appraised Value" - shall mean the appraised value of the
Mortgaged Premises, as determined by an independent appraiser selected by Payee
and reasonably acceptable to Maker. Payee may require that such an appraisal be
performed at any time. Appraised Value shall be determined utilizing an
appraisal method consistent with that used in determining the Appraised Value
for Payee in connection with this Loan. Maker shall solely be responsible for
the cost of only one appraisal per annum requested by Payee.
"Authorized Representative" - shall mean Perry Kamerman,
Arnold Wachsberger, Robert Masters or any other person or persons designated by
Maker, in a writing delivered to Payee, as an Authorized Representative.
"Business Day" - a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to close.
"Change in Control" shall mean and include any of the
following:
(i) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted Acadia's trustees
(together with any new trustees whose election by Acadia's trustees or whose
nomination for election by Acadia's shareholders was approved by a vote of at
least two-thirds of the trustees then still in office who either were trustees
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
trustees then in office;
(ii) any person or group (as such term is defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934 Act")),
shall acquire, directly or indirectly, beneficial ownership (within the meaning
of Rule 13d-3 and 13d-5 of the 1934 Act) of more than 35%, on a fully diluted
basis, of the economic or voting interest in Acadia's shares of beneficial
interest (or other equity securities equivalent thereto);
(iii) the full time active employment of Ross Dworman, as
chief executive officer of Acadia, and of Kenneth F. Bernstein, as President of
Acadia, shall be voluntarily terminated by Acadia or shall otherwise cease,
unless a successor acceptable to Payee shall have been appointed or elected and
actually taken office within three months following any such termination or
cessation, in which case the name of such successor shall be substituted for the
name of the person he or she replaces for purposes of this clause (iii);
(iv) the shareholders of Acadia approve a merger or
consolidation of Acadia with any other person, other than a merger or
consolidation which would result in the voting securities of Acadia outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted or exchanged for voting securities of the
surviving
2
<PAGE>
or resulting entity) more than 75% of the combined voting power of the voting
securities of Acadia or such surviving or resulting entity outstanding after
such merger or consolidation;
(v) the shareholders of Acadia approve a plan of complete
liquidation of Acadia or an agreement or agreements for the sale or disposition
by Acadia of all or substantially all of Acadia's assets; and/or
(vi) any "change in control" or any similar term as defined in
any of the indentures, credit agreements or other instruments governing any
indebtedness of Acadia or any of its affiliates.
"Default" - shall mean any act or condition which with the
giving of notice or the lapse of time, or both, could become an Event of
Default.
"Eckerd Lease" - shall mean, collectively, that certain Lease
dated November 4, 1993, between Absecon Market Place Associates, as landlord,
and Eckerd Corporation, as tenant, and that certain lease dated January 26, 2000
between Maker, as landlord, and Eckerd Corporation, as tenant.
"Event of Default" - shall have the meaning assigned to such
term in PARAGRAPH 13 of this Note.
"Fixed Rate Acceptance Notice" - shall have the meaning
assigned to such term in PARAGRAPH 4(b) hereof.
"Fixed Rate Notice" - Maker's telephonic notice immediately
confirmed in writing, which writing may be delivered by telecopier, stating that
Maker, subject to delivery by it of a Fixed Rate Acceptance Notice, elects to
pay interest on the whole or a portion of the Principal Sum at the LIBOR Rate,
as specified in such Notice, and specifying the applicable Interest Period for
the LIBOR Advance and the Business Day on which such Interest Period is to
begin.
"Full Force and Effect" - shall mean, as to any lease, that
such lease shall be in full force and effect, there shall be no material default
by the tenant thereunder or default by the landlord thereunder or other act or
condition or circumstance giving or which may give, without the giving of any
further notice, the tenant or the landlord the right to terminate any lease and,
if requested by Payee and required by its lease, the tenant shall have delivered
to Payee an estoppel certificate in form and substance reasonably satisfactory
to Payee.
"Guarantor" - shall mean Acadia Realty Limited Partnership, a
Delaware limited partnership and the sole member of Maker.
"Interest Period" - with respect to LEBOR Advances, a period
of 30, 60, 90, 120 or 180 days (or such other periods as Payee may elect to make
available); provided, however, that no such period shall extend beyond the
Maturity Date. Any Interest Period which terminates on a non-Business Day shall
be deemed, for purposes hereof, to terminate on the next succeeding Business
Day.
3
<PAGE>
"LIBOR Advance" - an advance with respect to which the
Principal Sum bears interest at the LIBOR Rate plus the Applicable Spread.
"LIBOR Rate" - shall mean, for the applicable Interest Period,
the rate per annum (rounded upward, if necessary, to the nearest 1/32 of one
percent) determined by Payee (any such determination to be conclusive, absent
manifest error) on the basis of the offered rates for deposits in U.S. dollars
in an amount approximating the proposed LIBOR Advance and having a maturity
equal to the proposed Interest Period appearing on the Telerate Screen page 3750
(or the successor page reference thereto) as of approximately 1 1:00 AM (London
time) two Business Days before the date on which such Interest Period shall
commence. If at least two such offered rates appear on the Telerate Screen page
3750 or associated pages, the rate in respect of such Interest Period will be
the arithmetic mean (rounded up to the nearest 1/16) of such offered rates. If
no such rate appears, the rate in respect of such Interest Period will be the
rate specified as LIBOR on the Reuters Screen LIBO page as of such date for such
Interest Period (in an amount equal to the portion of the Principal Sum with
respect to which the LIBOR Rate is determined). If both the Telerate and Reuters
systems are unavailable, then the rate for the applicable Interest Period will
be determined on the basis of the offered rates for deposits in U.S. dollars in
an amount approximating the proposed LIBOR Advance and having a maturity equal
to the proposed Interest Period which are offered by four major banks in the
London interbank market as of such date. The principal London office of each of
the four major London banks will be requested to provide a quotation of its U.S.
dollar deposit offered rate. If at least two such quotations are provided, the
rate in respect of such Interest Period will be the arithmetic mean (rounded up
to the nearest 1/16) of such offered rates. If fewer than two quotations are
provided as requested, the rate for the applicable Interest Period will be
determined on the basis of the rates quoted for loans in U.S. dollars to leading
European banks for such Interest Period offered by major banks in New York City
as of such date. In the event that Payee is unable to obtain any such quotation
as provided above, it will be deemed that the rate for the applicable Interest
Period cannot be determined. In the event that the Board of Governors of the
Federal Reserve System shall impose a Reserve Percentage (as hereafter defined)
with respect to LIBOR deposits of Payee, then for any Interest Period during
which such Reserve Percentage shall apply, the rate for such Interest Period
shall from time to time be adjusted to be equal to the amount determined above
divided by an amount equal to one (1) minus the Reserve Percentage such that the
LIBOR Rate shall be adjusted automatically on and as of the effective date of
any change in the Reserve Percentage. "Reserve Percentage" shall mean the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed on member banks for the Federal
Reserve System against "Euro-currency Liabilities" as defined in Regulation D.
"Liquid Net Worth" shall mean unencumbered "cash and short
term investments at cost" and "investments in marketable securities" (which
shall be marked to market) as shown by Acadia's financial statements (calculated
in a manner consistent with Acadia's statements for the period ending September
30, 1999).
"Loan" - loans of up to the Principal Sum made and/or to be
made to Maker by Payee and evidenced hereby.
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"Maturity Date" - shall mean the then applicable maturity date
pursuant to PARAGRAPH 3 of this Note.
"Mortgage" - that certain Security Agreement and Assignment of
Rents and Leases of even date herewith by Maker to Payee, as the same may be
amended, modified, supplemented and otherwise in effect from time to time.
"Mortgaged Premises" - shall have the meaning assigned to such
term in the Mortgage.
"Net Operating Income" - shall mean, with respect to the
applicable Accounting Period or Spread Accounting Period, the aggregate rental
and other receipts (unless excluded pursuant hereto) of the Mortgaged Premises
(actual results with respect to the preceding six months and pro forma with
respect to the following six-months) during such period less the aggregate
amount of all operating expenses of the Mortgaged Premises during such period,
in each case determined in accordance with the Accounting Principles. For
purposes of the determination of Net Operating Income, operating expenses shall
include, without limitation, all real estate taxes (but not in excess of the pro
rata portion of such real estate taxes applicable to the Accounting Period or
Spread Accounting Period covered by the statement), water and sewer charges,
utility charges, insurance premiums (but not in excess of the amounts applicable
to the Accounting Period or Spread Accounting Period covered by the statement),
salaries and benefits of all employees engaged in the operation, maintenance or
management of Mortgaged Premises, all costs of ordinary and necessary
maintenance, cleaning and repair, costs of snow and rubbish removal and security
services. Net Operating Income shall, however, (a) exclude from receipts all
amounts paid to Maker for tenant alterations in connection with the leasing of
space in the Project, all amounts payable to Maker under leases with Affiliates
of Maker, as tenant, or with Maker, as tenant (unless Payee otherwise agrees)
and, with respect to any lease providing for a reduction in the rentals payable
under such lease at any time during the term thereof, base rentals in excess of
the lowest base rentals payable under such lease (other than during any period
of rent concessions made with respect to consecutive monthly periods commencing
with the first month of the term of such lease), and (b) exclude from expenses
payments of principal and interest of the Loan, capital expenditures, leasing
commissions, and other expenses payable to Payee pursuant to this Note or any of
the Security Documents. Net Operating Income shall be determined without regard
to extraordinary items of income and of expense. Each lease, the rental or other
income from which was included in the calculations of Net Operating Income, must
in Full Force and Effect as of the date Net Operating Income is being
determined.
"Net Worth" shall mean the net worth of Acadia as shown on its
financial statements, and as subsequently determined in accordance with the
accounting principles, consistently applied, used in Acadia's statements as of
September 30, 1999.
"Note" - this Secured Promissory Note, as the same may be
amended or otherwise modified from time to time.
"Person" shall mean and include any individual corporation,
partnership unincorporated association, trust, governmental agency or authority
or other entity.
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"Prime Rate" - means the rate which Payee publicly announces
from time to time as its Prime Rate. The Prime Rate shall be adjusted from time
to time when and, as the Prime Rate shall change. The Prime Rate is determined
from time to time by Payee as a means of pricing some loans to its customers and
is neither tied to any external rate of interest or index, nor does it
necessarily reflect the lowest rate of interest actually charged by Payee to any
customer class or category of its customers. Payee may make commercial or other
loans at rates of interest at, above or below the Prime Rate.
"Prime Rate Advance" - an advance with respect to which the
Principal Sum or a portion thereof bears interest at the Prime Rate plus the
Applicable Spread.
"Projected Debt-Service Expense" - shall mean the amount
which, as at each Accounting Date or as at the end of each Spread Accounting
Period, Maker would be projected to pay for principal and interest for the
twelve months immediately following each Accounting Date or the end of such
Spread Accounting Period on a principal amount equal to the greater of (x) the
then outstanding Principal Sum of the Note and (y) the average outstanding
Principal Sum over the sixty (60) day period immediately preceding the date upon
which Projected Debt Service Expense is being calculated, assuming for this
purpose (A) that the interest rate for such twelve month period shall be the
greater of the ten-year treasury note rate in effect on the date Projected Debt
Service Expense is being calculated plus two (2.0%) percent, 7.5% per annum and
the weighted average interest rate payable on the Loans as of the date Projected
Debt Service Expense is being determined, and (B) that the principal is payable
in accordance with a twenty-five year self-liquidating mortgage-style
amortization schedule using the interest rate determined pursuant to the
preceding clause (A).
"Regulation D " - Regulation D of the Board of Governors of
the Federal Reserve System from time to time in effect, including any successor
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Security Documents" - shall have the meaning assigned to such
term in PARAGRAPH 16 of this Note.
"Spread Accounting Period" - shall mean the three month period
ending March 31, 2000 and each three month period ending on each June 30,
September 30, December 31 and March 31 thereafter.
2. Amortization and Interest; Facility Fee. (a) The Principal
Sum of this Note shall be payable in accordance with the following provisions:
Commencing on the earlier of the first day of the month immediately following
the month in which the Loan is fully advanced and February 1, 2001 and on the
first day of each month thereafter, Maker will pay, on account of the Principal
Sum, the amount which would be payable on a self-liquidating mortgage-style
amortization schedule based on the Principal Sum then outstanding, a loan
maturity of twenty-five (25) years and an interest rate of 8.0% per annum. Upon
the making of each Additional Advance, the amortization schedule shall be
recalculated such that immediately upon the making of each Additional Advance
the monthly principal payments shall be recalculated based on the Principal Sum
outstanding after the making of the Additional Advance, a loan
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maturity of twenty-five years less the number of months which have elapsed since
the first amortization payment pursuant to this PARAGRAPH 2 and an interest rate
of 8.0% per annum and such revised amortization schedule shall be applicable to
the payment due on the first day of the month immediately following the making
of the Additional Advance and each month thereafter, unless and until such
schedule is revised in accordance herewith. The prepayment premium provided for
in PARAGRAPH 10 hereof shall not be applicable to any such scheduled monthly
payments. Any voluntary prepayments applied to principal shall be applied in the
inverse order of maturity.
(b) Interest on the outstanding Principal Sum shall
accrue from and including the date of the advance to but excluding the date of
any repayment or prepayment thereof and shall be payable in arrears (i) on the
first day of each calendar month, commencing March 1, 2000, (ii) on the date of
any prepayment (on the amount prepaid), (iii) on the Maturity Date, and (iv)
after maturity (whether by acceleration or otherwise) on demand. All interest
calculations provided for herein shall be made on the basis of a 360-day year
and the actual number of days elapsed.
(c) Maker authorizes Payee to record on SCHEDULE I
annexed hereto the information with respect to any Loan and any payments and
prepayments of the Principal Sum made by Maker and such notations shall be
presumed to be correct and binding subject to rebuttal by Maker only by clear
and convincing evidence; provided, however, that the Failure of Payee to make
any such notation shall not limit or otherwise affect the obligation of Maker to
repay the Principal Sum nor alter or impair any of the other obligations of
Maker hereunder or under the Security Documents.
(d) Concurrently with the execution and delivery of this
Note, Maker shall pay Payee a non-refundable facility fee of $55,500.
3. Maturity Date.
(a) The outstanding Principal Sum and all accrued and
unpaid interest thereon shall be due and payable on March 1, 2003 (the "First
Maturity Date").
(b) If, as of the date of the notice of Maker referred
to in this PARAGRAPH 3 and the First Maturity Date, (w) the Acme Lease is in
Full Force and Effect, the tenant under the Acme Lease then has a credit rating
of BBB or better (as established by Standard & Poors, and no breach of the Acme
Operating Requirement is then continuing, (x) no Event of Default is then
continuing, (y) the Appraised Value of the Mortgaged Premises equals or exceeds
one hundred and fifty-four percent (154%) of the aggregate of the then
outstanding principal sum of this Note and amounts which may thereafter be
advanced hereunder, and (z) the ratio of Net Operating Income to Projected Debt
Service Coverage is 1.40:1 or greater (assuming for the purposes of this clause
(z) that the then Maturity Date was an Accounting Date (as such term is
hereinafter defined), then Maker, by written notice to Payee not later than
thirty (30) days prior to the First Maturity Date and not earlier than six (6)
months prior to such date, shall have the option to extend the maturity of the
Loan for one (1) year (the "First Extension Period") to March 1, 2004 (the
"Second Maturity Date"). At the time Maker exercises the
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<PAGE>
option to extend the term of this Note for the First Extension Period, it shall
pay Payee a non-refundable fee of $18,500.00.
(c) If, as of the date of the notice of Maker referred
to in this PARAGRAPH and the Second Maturity Date, (w) the Acme Lease is in Full
Force and Effect (as hereinafter defined), the tenant under the Acme Lease then
has a credit rating of BBB or better (as established by Standard & Poors), and
no breach of the Acme Operating Requirement is then continuing, (x) no Event of
Default is then continuing, (y) the Appraised Value of the Mortgaged Premises
equals or exceeds one hundred and fifty four percent (154%) of the aggregate of
the then outstanding principal sum of Note and amounts which may thereafter be
advanced hereunder, and (z) the ratio of Net Operating Income to Projected Debt
Service Coverage is 1.40:1 or greater (assuming for the purposes of this clause
(z) that the then Maturity Date was an Accounting Date (as such term is
hereinafter defined), then the Maker, by written notice to Payee not later than
thirty (30) days prior to the Second Maturity Date and not earlier than six (6)
months prior to such date, shall have the option to extend the maturity of the
Loan for one (1) year (the "Second Extension Period") to March 1, 2005 (the
"Final Maturity Date"). At the time Maker exercises the option to extend the
term of this Note for the Second Extension Period, it shall pay Payee a
non-refundable fee of $18,500.00.
4. Selection of Rate.
(a) Except as provided in PARAGRAPHS 4(b), 4(d), 4(e)
and 15, the outstanding Principal Sum shall bear interest at a rate per annum
equal to the Prime Rate plus the Applicable Spread.
(b) Provided there is no Default and/or Event of Default
under this Note, the Security Document(s) or any other document or instrument
delivered as additional security for this Note, Maker may elect to pay interest
on the entire or any portion of the outstanding Principal Sum (subject to the
minimum amount limitations set forth herein and the requirements set forth
below) at a rate per annum equal to the LEBOR Rate plus the Applicable Spread
for the Interest Period elected by Maker from (and including) the first day of
each Interest Period to (but not including) the last day of such Interest
Period. Maker shall, subject to delivery by it of a Fixed Rate Acceptance
Notice, elect that the entire or any portion of the outstanding Principal Sum be
treated as a LIBOR Advance pursuant to a Fixed Rate Notice. Payee must receive
such Fixed Rate Notice prior to I 1:00 A.M., New York City time, on a Business
Day at least three (3) Business Days prior to:
(1) the last day of an Interest Period (in the case
of an outstanding LIBOR Advance); or
(2) any Business Day elected by Maker in its Fixed
Rate Notice (in the case of a conversion of a Prime Rate Advance to a LIBOR
Advance) for the commencement of the applicable Interest Period.
If Maker fails to give a Fixed Rate Notice at least three (3) Business Days
prior to the end of an Interest Period, then, on the last day of the Interest
Period, the outstanding LIBOR Advance shall convert to a Prime Rate Advance. On
the date specified in the Fixed Rate Notice as the date on
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<PAGE>
which the applicable Interest Period is to begin, Payee shall notify Maker's
Authorized Representative by telephone (such notice to be promptly confirmed in
writing) or by telex, which notice shall specify the date, the proposed LIBOR
Rate and the period of time on such date during which such rate is to be
available. If Payee falls to specify the period for which such quoted rate is
available, then such rate shall be deemed to be available only for thirty
minutes from the time Payee, orally or in writing, notifies Maker's Authorized
Representative of such rate. If Maker then wishes to obtain such Loan at such
LIBOR Rate, it shall promptly give notice to Payee to such effect (the "Fixed
Rate Acceptance Notice "), which notice shall be irrevocable and may be by
telephone, promptly confirmed in writing.
(c) Without in any way limiting Maker's obligation to
confirm in writing any telephonic Fixed Rate Notice or Fixed Rate Acceptance
Notice, Payee may, prior to receipt of written confirmation, act without
liability on the basis of telephonic notice which it believes in good faith to
be from Maker and, in any event, Payee may act without liability on the basis of
telephonic or written notice which it believes in good faith to be from Maker.
(d) Subject to the provisions of PARAGRAPH 4(e), the
Applicable Spread shall be equal to one hundred seventy-five basis points
(1.75%), in the case of a LEBOR Advance, and fifty basis points (.50%), in the
case of a Prime Rate Advance; provided, however, that during any period(s) from
the date hereof through March 31, 2000 that the aggregate LIBOR Advances and
Prime Rate Advances are in an amount equal to or less than $5,757,500.00, the
Applicable Spread for such period(s) shall be equal to one hundred fifty basis
points (1.50%), in the case of LIBOR Advances, and forty-five basis points
(45%), in the case of Prime Rate Advances.
(e) (1) Within fifteen (15) days after the end of each
Spread Accounting Period, commencing with the Spread Accounting Period ending
March 31, 2000, Maker shall furnish to Payee detailed calculations of annualized
Net Operating Income for the three month period then ended upon which
recalculation of the Applicable Spread, in accordance with the provisions of
this PARAGRAPH 4(e), is to be determined, certified by an officer of a manager
of Maker as being, to the best of the knowledge of the officer making the
certification, true and correct and as having been prepared under his
supervision in accordance with the Accounting Principles consistently applied
and with the definition of Net Operating Income and further certified by such
officer that, to the best of his knowledge, he knows of no facts inconsistent
with such calculations.
(2) Effective as of and during the Spread Accounting
Period which immediately succeeds the Spread Accounting Period most recently
ended, if (x) the annualized Net Operating Income of the Mortgaged Premises for
the Spread Accounting Period most recently ended shall be equal to or greater
than 1.60 times the Projected Debt Service Expense for the immediately following
twelve month period and (y) if the outstanding Principal Sum of the Loan plus
the amount of the Loan then available shall not exceed fifty (50%) percent of
the Appraised Value of the Mortgaged Premises, then the Applicable Spread
(during the Spread Accounting Period which immediately succeeds the Spread
Accounting Period most recently ended) shall be equal to one hundred fifty basis
points (1.50%), in the case of LIBOR Advances, and forty-five basis 'points
(45%), in the case of Prime Rate Advances.
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(3) If Maker shall satisfy one but not both of the
conditions set forth in subparagraph (2) above or Maker shall fail to timely
deliver the detailed calculations required by PARAGRAPH 4(e)(1), then the
Applicable Spread shall remain as provided in PARAGRAPH 4(d).
5. Conditions to Additional Advances. Maker shall have the
option, subject to the tem-is and conditions of this Note, of requesting from
Payee additional advances (each, an "Additional Advance") on the Loan, with each
Additional Advance to be in the minimum amount of $200,000 plus $50,000
increments, but in no event may the Principal Sum outstanding at any time exceed
$7,400,000 less any payments of principal made pursuant to PARAGRAPH 2(a) of
this Note. The obligation of Payee to make Additional Advances hereunder is
subject to the satisfaction of each of the following conditions precedent:
(a) An Authorized Representative shall give Payee at
least five (5) Business Days prior written notice, specifying the date of the
proposed borrowing. Any such notice, which is oral, shall promptly be confirmed
in writing signed by an Authorized Representative and delivered to Payee. Payee
may rely on any oral or written request for a Loan, which Payee believes to be
genuine, and shall be fully protected in doing so without any requirement to
make further inquiry.
(b) After giving effect to the Additional Advance,
there shall exist no Default and/or Event of Default, including, without
limitation, no Default and/or Event of Default under PARAGRAPHS I (a)(1) or (2)
of this Note and, for this purpose, compliance with such covenants shall, prior
to the making of the proposed Additional Advance, be recalculated (using the
most recently available Appraised Value and Net Operating Income) as if the
Additional Advance has been made.
(c) All representations and warranties contained
herein, or otherwise made in writing in connection herewith or in any of the
Security Documents, by or on behalf of Maker or any other Person to Payee, shall
be true and correct, in all respects, with the same force and effect as if made
on and as of the date of the Additional Advance.
(d) There shall be no then continuing violation of
the Acme Operating Requirement.
(e) If reasonably requested by Payee, Payee shall
have received an endorsement to its existing title insurance policy insuring the
Mortgage to be a first lien, securing the Loan (including the Additional
Advance), against the Mortgaged Premises, subject only to those matters which
have been approved by Payee and its counsel.
6. Intentionally Deleted
7. Payment of Interest on and Number of LIBOR Advances. If a
LEBOR Advance is outstanding, then in addition to the monthly payments of
interest required under PARAGRAPH 2(b) hereof, all accrued and unpaid interest,
if any, on such LIBOR Advance shall be due and payable on the last day of the
Interest Period. In no event may there be more than three (3) Interest Periods
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in effect at any one time, and the entire Principal Sum outstanding need not
bear interest at the same Applicable Rate.
8. Suspension of the LIBOR. If Payee determines that Payee's
making or maintaining LEBOR Advances is unlawful for any reason, then Payee may
suspend the availability of the LIBOR Rate and immediately convert any
outstanding LIBOR Advance to a Prime Rate Advance. Payee shall immediately
notify Maker of any such conversion and Maker shall pay to Payee, on demand, (i)
all accrued and unpaid interest on the LIBOR Advance to the date of such
conversion, plus (ii) such amounts as Payee shall require to compensate it for
the costs of converting any such LIBOR Advance to a Prime Rate Advance. The
certificate of Payee as to any amounts payable pursuant to this PARAGRAPH shall,
absent manifest error, be final, conclusive and binding on Maker. No Fixed Rate
Notices electing the LIBOR Rate shall be given by Maker thereafter until Payee
determines that LIBOR Advances would be lawful.
9. Increases in Cost. In the event that at any time or from
time to time any domestic or foreign requirement of law, regulation, order or
decree or any change therein or in the interpretation or application thereof or
compliance by Payee with any request or directive (whether or not having the
force of law) from any governmental, fiscal, monetary or other authority (i)
does or shall subject Payee to any tax, duty, charge or withholding on or from
payments due from Maker (excluding taxation of the income of Payee); or (ii)
does or shall impose, modify or hold applicable or change any reserve
(including, without limitation, basic, supplemental, marginal, special or
emergency reserves but not including reserve requirements already taken into
account in calculating the LIBOR Rate), special deposit, compulsory deposit or
similar requirement with respect to assets of, deposits with or for the account
of, advances or loans by, or other credit extended by, or any other acquisition
of funds by Payee; or (iii) does or shall impose on Payee any other condition or
change therein and the result of any of the foregoing is to increase the cost to
Payee of making available to Maker, converting from or to, or maintaining LIBOR
Advances, then, and in any such event, Payee shall notify Maker in writing of
such occurrence setting forth in reasonable detail the basis for and amounts of
such increased costs, and Maker shall pay to Payee, on demand, such amounts as
will compensate Payee for such increased costs. The certificate of Payee as to
any amounts payable pursuant to this PARAGRAPH shall, absent manifest error, be
final, conclusive and binding on Maker.
10. Prepayment.
(a) On any Business Day during the term hereof that
the Applicable Rate is based upon the Prime Rate or on a date which is the last
day of an Interest Period, upon not less than five (5) days written notice to
Payee specifying the date on which prepayment is to be made, Maker shall have
the privilege of prepaying, without payment of a premium or penalty, that
portion of the unpaid balance of the Principal Sum, in whole or in part, as to
which the Applicable Rate is based upon the Prime Rate or as to which an
Interest Period is ending, which parts shall be in integral multiplies of
$50,000 together with all accrued and unpaid interest on the Principal Sum so
prepaid to the date of prepayment, and together also with accrued and unpaid
interest or other sums or charges, if any, then due and owing hereunder or under
the Security Document(s), provided that any such prepayment shall be in a
minimum amount of not less than $200,000.
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(b) (1) At any time during the ten-n hereof that the
Applicable Rate is based upon the LIBOR Rate upon not less than five (5) days
prior written notice to Payee (which notice shall be irrevocable), Maker shall
have the privilege of prepaying the unpaid balance of the Principal Sum, in
whole or in part, which parts shall be in integral multiples of $50,000, prior
to the last day of an Interest Period upon the required notice as aforesaid,
provided that any such prepayment shall be in a minimum amount of not less than
$200,000 and provided further that in addition to the payment of the whole or
portion of the Principal Sum so to be prepaid, all accrued and unpaid interest
thereon and all other sums due hereunder or under the Security Document(s),
Maker shall pay Payee such amount or amounts as shall be sufficient (in the
reasonable opinion of Payee) to compensate Payee for any loss, costs or expenses
Payee incurs with respect to the termination of any LIBOR contract and/or Hedge
Agreement (as such term is defined in the Mortgage) that Payee or its designee
has entered into to borrow funds in order to fund the Loan plus a prepayment
premium calculated in accordance with the following formula:
(a) - Upon prepayment, Payee shall determine
whether there is a fixed rate yield maintenance premium due by subtracting the
Redemption Treasury Rate from the Fixed Funds Rate (as such terms are defined
below). If the Redemption Treasury Rate is equal to or greater than the Fixed
Funds Rate, no fixed rate yield maintenance premium will be due.
(b) However, if the Redemption Treasury Rate is
less than the Fixed Funds Rate, a fixed rate yield maintenance premium will be
computed by Payee as follows:
(F-R) x P x D
-------------
360
(c) Payee shall discount (at the Redemption
Treasury) the resulting number to the net present value thereof, i.e., as if
such sum were received in equal monthly installments from the date of prepayment
to the Maturity Date. To determine present value, the discount rate shall be
calculated on the basis of a three hundred sixty-five--(365) day year.
(d) For purposes of computing the fixed rate
yield maintenance premium, the following definitions govern:
-- "F" or "Fixed Funds Rate" means the LIBOR
Rate applicable to the Loan being repaid
plus the Applicable Spread.
-- "R" or "Redemption Treasury Rate" means at
the time of prepayment, the rate of interest
per annum equal to the most recently
published quotations of yields to maturity
of U.S. Treasury obligations (bills on a
discounted basis shall be converted to a
bond equivalent), as published weekly by the
Federal Reserve Board in the Federal Reserve
Statistical release, trading closest to par
value and with a maturity date comparable to
the end of the applicable Interest Period.
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-- "P" means the amount of the Loan being prepaid.
-- "D" means the number of days remaining until the
end of the applicable Interest Period.
(e) Any payment required of Maker of the
Principal Sum or any portion thereof after acceleration of the Maturity Date
pursuant to any provisions hereof or of the Security Document(s) shall be deemed
a voluntary prepayment for the purposes hereof, and if a LIBOR Advance is then
outstanding, Maker shall be required, on demand, to pay the prepayment premium,
if any, calculated as aforesaid.
(c) Any payments of the Principal Sum received by Payee
pursuant to the terms of this PARAGRAPH 10 shall be applied in the following
order of priority: (i) first, to any accrued interest which is due and unpaid as
of the date of such payment; and (ii) second, to the outstanding Principal Sum
in the inverse order of maturity.
(d) Notwithstanding anything in this Note to the
contrary, the Loans hereunder are revolving loans. Therefore, Maker may, subject
to the other provisions of this Note, borrow, repay and reborrow hereunder.
11. Special Covenants.
(a) Maker hereby covenants as follows:
(1) As of December 31, 2000 and as of each
subsequent December 31, the outstanding Principal Sum of the Loan plus the
amount of the Loan then available shall not exceed sixty-five (65%) percent of
the Appraised Value of the Mortgaged Premises; and
(2) as of June 30, 2000, and each subsequent
December 31 and June 30 (the "Accounting Date"), the Net Operating Income of the
Mortgaged Premises for each Accounting Period shall equal or exceed 1.4 times
the Projected Debt Service Expense for the immediately following twelve month
period.
(b) Within ninety (90) days after the Accounting Date,
Maker shall furnish to Payee detailed calculations of Net Operating Income and
Projected Debt Service Expense for the current Accounting Period and upon which
satisfaction of the provisions of PARAGRAPH 11 (a)(2) are to be determined, and
certified as true and accurate, in a manner acceptable to Payee, by the chief
financial officer of the Guarantor as having been prepared under his supervision
in accordance with the Accounting Principles consistently applied and with the
definitions of Net Operating Income and Projected Debt Service Expense and that
he knows of no facts inconsistent with such calculations.
(c) "Accounting Period" - shall mean the twelve month
period consisting of the six month period immediately preceding the Accounting
Date and the six month period including and immediately succeeding the
Accounting Date.
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12. Leasing Standards. Maker covenants and agrees that no
Space Lease (as such term is defined in the Mortgage) will be consummated
without the prior written approval thereof by Payee, unless such Space Lease (i)
is prepared and executed on a commercially reasonable lease form submitted to
and approved, in writing, by Payee, with such approval not to be unreasonably
withheld or delayed, and Payee's approval of immaterial changes to the form
approved by Payee shall not be required; and (ii) (x) provides for terms and
conditions, including as to rentals and other economic terms and the
creditworthiness of the tenant, which are approved by Payee, with such approval
not to be unreasonably withheld or delayed, or (y) is of less than 5,000
rentable square feet and is on commercially reasonable terms and conditions,
including as to rentals and other economic terms and creditworthiness of the
tenant. Notwithstanding the foregoing, if a Default and/or Event of Default
shall be continuing, Maker will not enter into Space Leases without Maker's
prior written approval thereof, which approval Payee may withhold in its sole
discretion.
13. Distributions. During the continuance of an Event of
Default, Maker shall be prohibited from making distributions to its members, and
if no Events of Default exist Maker may make distributions to its members.
14. Events of Default. The occurrence of any one or more of
the following events shall constitute an event of default (an "Event of
Default") hereunder and under the Security Documents:
(a) failure of Maker (x) to pay, for a period of ten (10)
days after the same becomes due (i) any installment of interest and/or principal
under this Note, or (ii) any other payment required hereunder or under any of
the other Security Documents or under any supplement, modification or extension
hereof or thereof, or (y) to pay the final principal balance of this Note when
due, whether upon the stated maturity date set forth therein, upon acceleration
of such Principal Sum or otherwise, together with accrued and unpaid interest
thereon; or
(b) if any of Maker's representations or warranties
contained herein or in any of the Security Documents shall be untrue or
incorrect in any respect at the time made, or if any such warranty or
representation intended to be a continuing one shall become untrue or incorrect
in any material respect and Maker shall fail to remedy such situation within
thirty (30) days after notice from Payee (or immediately upon notice in case of
emergency); or
(c) if Maker shall commence a voluntary case concerning
itself under Title 1 of the United States Code entitled "Bankruptcy" as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against Maker and the petition is not controverted
within thirty (30) days, or is not dismissed within ninety, (90) days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or any substantial part of the property
of Maker; or Maker commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to Maker or there is commenced against Maker any such proceeding
which remains undismissed for a period of ninety (90) days; or Maker is
adjudicated insolvent or bankrupt; or any order of relief of other order
approving any such case or proceeding is entered; or Maker suffers any
appointment of any custodian or the like for it or any
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substantial part of its property to continue undischarged or unstayed for a
period of ninety (90) days; or Maker makes a general assignment for the benefit
of creditors; or Maker shall fail to pay, or shall state that it is unable to
pay, or shall be unable to pay, its debts generally as they become due; or Maker
shall call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts; or
(d) if any execution, warrant, attachment, garnishment or
other similar processes shall be levied or filed against the Mortgaged Premises
or any part thereof, or against Maker which involve claims aggregating more than
$100,000 and such processes shall not be stayed, vacated or discharged, such as
by bonding, within ninety (90) days after the same shall have been levied or
filed; or
(e) except as otherwise provided in PARAGRAPH 14(i) below,
if Maker shall fail to perform or observe, or cause to be perfon-ned or
observed, any other term, obligation, covenant, condition or agreement contained
in this Note or in any of the Security Documents, or in any assignment of leases
and rents or in any other instrument executed concurrently herewith by Maker
and/or Guarantor or supplemental hereto, pertaining to the debt evidenced by
this Note or the security therefor, or under any supplement, modification or
extension of any of the foregoing, on its part to be performed and such failure
shall have continued for a period of thirty (30) days after notice thereof;
provided, however, if such default shall not have been occasioned by any willful
act of Maker, and if such default cannot with due diligence be cured within such
thirty (30) days period, the time within which to cure the same shall be
extended for such period as may be necessary to cure the same with due diligence
if Maker commences within such thirty (30) days and proceeds diligently to cure
the same; or
(f) (i) if Acadia ceases, directly or indirectly (x) to
own at least fifty-five percent (55%) of the issued and outstanding equity
interests in Maker or (y) to control (i.e., power to direct or cause the
direction of the management and policies of a person, corporation, partnership
or other entity) Guarantor or Maker or (ii) if there is a Change in Control; or
(g) if there should occur a default which is not cured
within the applicable grace or cure period, if any, under any mortgage or deed
of trust of all or part of the Mortgaged Premises (as such term is defined in
the Mortgage), including a mortgage or deed of trust held by Payee, regardless
of whether any such other mortgage or deed of trust is superior, subordinate, or
collateral to the Mortgage; it being further agreed by Maker that an Event of
Default shall constitute an "Event of Default" under any such other mortgage or
deed of trust held by Payee; provided, however, that this provision shall not be
construed as Payee's consent to any such mortgage or deed of trust; or
(h) if any "Event of Default" (as such term is defined in
any Security Document) shall occur; or
(i) if Maker shall default in the performance of any
covenant set forth in PARAGRAPH 11 (a)(1) or (2) of this Note and such default
shall continue for forty-five (45) days after written notice thereof by Payee to
Maker; provided, however, that Maker shall be allowed to cure such a default by,
within such forty-five (45) day period, pledging additional collateral or making
reductions in the outstanding Principal Sum of the Loan or fixing the interest
rate pursuant and subject to all
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of the terms and conditions of this Note that, in such event, would bring the
Appraised Value of the Mortgaged Premises and/or the Net Operating Income of the
Mortgaged Premises into compliance with such covenants; any such collateral so
pledged must be satisfactory, both as to type and character of the collateral
and as to the pledgor, to Payee in its sole discretion and accompanied by such
supporting documents, financial statements and opinions of counsel as Payee may
require; or
(j) if, as of December 31, 1999 or June 30, 2000 or any
subsequent June 30 or December 31, the Net Worth of Acadia shall be less than
$50,000,000;
(k) if, as of December 31, 1999 or June 30, 2000 or any
subsequent June 30 or December 31, the Liquid Net Worth of Acadia shall be less
than $3,000,000; or
(1) if there shall be an acceleration upon default of any
other loan made or held by Payee to a borrower controlled by Acadia, including,
without limitation, that certain mortgage loan and letter of credit facility
made by Fleet Bank, National Association to Acadia Town Line, LLC, secured by a
portion of the Town Line Shopping Center, 80 Town Line Road, Rocky Hill,
Connecticut.
15. Involuntary Rate. Overdue principal and, to the extent
permitted by law, overdue interest and all other overdue amounts owing
hereunder, whether at maturity, upon acceleration or otherwise, shall bear
interest for each day that such amounts are overdue (whether or not any required
notice of default shall have been given) at a rate per annum equal to five
percent (5%) per annum in excess of the Prime Rate in effect from time to time;
provided, however, that no overdue principal shall bear interest at a rate per
annum less than five percent (5%) in excess of the rate of interest applicable
thereto immediately prior to maturity (such rate, the "Involuntary Rate").
Interest shall continue to accrue at the Involuntary Rate upon maturity of this
Note, whether by expiration of its term, acceleration or otherwise, until this
Note is paid in full, including the period following entry of any judgment on or
relating to this Note or the Security Documents. Interest on any such judgment
shall accrue and be payable at the Involuntary Rate, and not at the statutory
rate of interest, after judgment, any execution thereon, and until actual
receipt by Payee of payment in full of this Note and said judgment. Interest at
the Involuntary Rate shall be collectible as part of any judgment hereunder and
shall be secured by the Mortgage and the other Security Documents. Payee's fight
to receive interest at the Involuntary Rate shall be in addition to all other
rights and remedies provided herein or by law for the benefit of the holder
hereof upon a default; and the acceptance of the same by the holder hereof shall
not restrict such holder in any respect in the exercise of any other or further
right or remedy, nor shall the same be deemed to be, as to the holder hereof, a
waiver or release of Maker from any of its obligations herein contained or
constitute an extension of the time for payments due hereunder.
16. Security. This Note is secured by the Mortgage and all
documents, agreements, hazardous substance indemnities or guaranties made by
Maker and/or Guarantor and now or hereafter delivered in connection with or
securing this Note, including the Mortgage, that certain Loan Guaranty of even
date herewith made by Guarantor to and in favor of Payee and that certain
Hazardous Substance Indemnity of even date herewith made by Guarantor and Maker
to and in favor of Payee, are collectively (including any amendment,
modification, extension or renewal thereof now or hereafter executed in
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connection therewith or herewith) referred to herein as the "Security
Document(s)." This Note is entitled to the benefits of the Security Documents.
17. Acceleration. It is hereby expressly agreed that the
entire unpaid balance of the Principal Sum shall, at the option of the holder
hereof and upon such notice as may be required by this Note or by the Mortgage,
become immediately due and payable without necessity for presentment and demand,
notice of protest, demand and dishonor or nonpayment of this Note, all of which
are hereby expressly waived, upon the happening of any Event of Default or any
event by which, under the terms of the Security Document(s), said unpaid balance
may or shall become due and payable. Failure to exercise any such option at any
time shall not constitute a waiver of the right of the holder hereof to exercise
the same in the event of any subsequent default or acceleration event.
18. Notices. Except as otherwise provided herein, any notice
to be given hereunder shall be in writing and shall be either delivered or sent
by first-class registered or certified mail, return receipt requested postage
prepaid, addressed (a) if to Maker, to Maker's address set forth on the
signature page or (b) if to Payee, at Payee's address set forth above,
Attention: Denise Smyth, or, as to any party, at such other address as shall be
designated by such party by notice to the other party given in the manner set
forth in this PARAGRAPH and each such notice shall be effective (i) if delivered
by hand, at the time of delivery to the address specified in this PARAGRAPH, or
(ii) if given by mail, on the fourth Business Day following the time of mailing
in the manner aforesaid, or (iii) on the Business Day immediately following the
delivery of such notice to an overnight delivery service.
19. Funding Sources. Nothing contained herein shall be deemed
to obligate Payee to fund advances hereunder in any particular place or manner;
and nothing contained herein shall be deemed to constitute a representation by
Payee that it has funded or will fund advances in any particular place or
manner.
20. Taxes and Attorney's Fees. Maker shall pay to Payee,
immediately upon demand, any and all taxes assessed against Payee by reason of
its holding of this Note and the receipt by it of interest payments hereunder
(other than income, franchise and other similar taxes assessed by the United
States Government, any state or any political subdivision of either thereof on
such interest payments), and any and all other sums and charges that may at any
time become due and payable under the Security Document(s). Maker also promises
to pay, on demand, all costs, title insurance premiums, mortgage recording
taxes, disbursements and reasonable attorney's fees (including allocated costs
of internal counsel of Payee) and disbursements incurred in connection with the
negotiation, preparation, and execution of this Note and/or the Security
Documents and any other documents and instruments prepared in connection
herewith or therewith and the consummation of the transactions contemplated
hereby or thereby and the administration of this Loan and in the preservation of
rights under, enforcement 'of, this Note and the Security Document(s), any
modification, amendment, or consent related thereto and in any suit, action or
proceeding to protect or sustain the security interest of the holder of the
Security Document(s) and any refinancing or renegotiation of this Note and the
Security Document(s).
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21. No Partnership or Joint Venture. Nothing contained in this
Note or elsewhere shall be deemed or construed as creating a partnership or
joint venture between Payee and Maker or between Payee and any other person, or
cause the holder hereof to be responsible in any way for the debts or
obligations of Maker or any other person.
22. Waiver. Maker hereby waives diligence, presentment,
protest and demand, notice of protest, dishonor and nonpayment of this Note, and
expressly agrees that, without in any way affecting the liability of Maker
hereunder, Payee may extend the Maturity Date or the time for payment of any
amount due hereunder, accept additional security, release any party liable
hereunder and release any security now or hereafter securing this Note without
in any other way affecting the liability and obligation of Maker or any other
Person. Maker further waives, to the full extent permitted by law, the right to
plead any and all statutes of limitations as a defense to any demand on this
Note, under the Security Document(s), or on any guaranty or other agreement now
or hereafter securing this Note.
23. Interest Rate Limitation. Notwithstanding anything
contained herein to the contrary, the holder hereof shall never be entitled to
receive, collect or apply as interest on the obligation evidenced hereby any
amount in excess of the maximum rate of interest permitted to be charged by
applicable law; and in the event the holder hereof ever receives, collects or
applies as interest any such excess, such amount which would be excessive
interest shall be applied to the reduction of the Principal Sum; and if the
Principal Sum is paid in full, any remaining excess shall forthwith be paid to
Maker. In determining whether the interest paid or payable in any specific case
exceeds the highest lawful rate, the holder hereof and Maker shall to the
maximum extent permitted under applicable law (i) characterize any non-principal
payment as an expense, fee or premium rather than as interest; (ii) exclude
voluntary prepayments and the effects thereof; and (iii) "spread" the total
amount of interest throughout the entire contemplated term of the obligation so
that the interest rate is uniform throughout said entire term.
24. Severability. Every provision of this Note is intended to
be severable. In the event any term or provision hereof is declared by a court
of competent jurisdiction to be illegal or invalid for any reason whatsoever,
such illegality or invalidity shall not affect the balance of the terms and
provision hereof, which terms and provisions shall remain binding and
enforceable.
25. Number and Gender. In this Note the singular shall include
the plural and the masculine shall include the feminine and neuter gender, and
vice versa, if the context so requires.
26. Headings. Headings at the beginning of each numbered
paragraph of this Note are intended solely for convenience of reference and are
not to be deemed or construed to be a part of this Note.
27. Governing Law; Submission to Jurisdiction; Waivers, Etc.
(a) This Note, which, together with the Security
Documents, sets forth the entire understanding of Maker and Payee with respect
to the subject matter hereof, shall be
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governed by and construed and enforced in accordance with the laws (without
giving effect to the conflict of law principals thereof) of the State of New
York.
(b) Any legal action or proceeding with respect to
this Note or any of the Security Documents may be brought in the courts of the
State of New York or the State of New Jersey or, if the requisites of
jurisdiction obtain, of the United States of America for the Southern or Eastern
District of New York or the District of New Jersey, and, by execution and
delivery hereof, Maker hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Nothing
herein, however, shall affect the right of Payee to commence legal proceedings
or otherwise proceed against Maker in any other jurisdiction. Maker also waives
(a) the right to trial by jury in the event of any litigation to which Payee and
Maker are parties in respect of any matter arising under this Note or any of the
Security Documents, whether or not such litigation has been commenced in respect
of this Note and whether or not other persons are also parties thereto, (b) any
claim that New York or Nassau County or the District of New Jersey or any such
District is an inconvenient forum and (c) any claim against Payee for
consequential, special or punitive damages respecting the Security Documents.
Acceptance of this Note by Payee shall be deemed to constitute a waiver by Payee
of the right to trial by jury in the event of any litigation in respect of which
Maker has waived the right to trial by jury hereunder.
(c) No delay on the part of Payee in exercising any
of its options, powers or rights, or partial or single exercise thereof, whether
arising hereunder, under the Security Documents or otherwise, shall constitute a
waiver thereof or affect any right hereunder or thereunder. No waiver of any of
such lights and no modification, amendment or discharge of this Note shall be
deemed to be made unless the same shall be in writing, duly signed by Payee and
Maker. Each such waiver (if any) shall apply only with respect to the specific
instance involved and shall in no way impair the rights of Payee or the
obligations of Maker hereunder in any other respect at any other time.
28. Brokerage. Payee and Maker each hereby represents to the
other that it did not deal with any broker or similar person in connection with
this financing.
29. Set-off. Maker hereby grants to Payee, a lien, security
interest and right of setoff as security for all liabilities and obligations to
Payee, whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Payee or any entity under the control of FleetBoston
Financial Group, Inc., or in transit to any of them. At any time after an event
of default, without demand or notice, Payee may set off the same or any part
thereof and apply the same to any liability or obligation of Maker even though
unmatured and regardless of the adequacy of any other collateral securing the
Loan. ANY AND ALL RIGHTS TO REQUIRE PAYEE TO EXERCISE ITS RIGHTS OR REMEDEES
WITH RESPECT TO ANY OTHER COLLATERAL WFUCH SECURES THE LOAN, PRIOR TO EXERCISING
ITS RIGHTS OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTBER PROPERTY OF
MAKER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
30. Limitation on Liability. Notwithstanding anything to the
contrary herein or in any of the Security Documents, Payee agrees that, for
payment of this Note and any sums
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owing by Maker under the Security Documents, it will look solely to the assets
of Maker and no property or assets of any of Maker's members shall be subject to
levy, execution or other enforcement procedure for the satisfaction of the
remedies of Payee or for any payment required to be made under the Note or for
any of the covenants or warranties contained herein; provided that the foregoing
provisions of this PARAGRAPH shall not (i) constitute a waiver of any obligation
evidenced by this Note, (ii) limit the right of Payee to name Maker as a party
defendant in any action or suit for judicial foreclosure and sale under the
Mortgage, (iii) affect in any way the validity of, or the rights of Payee with
respect to, any guaranty or indemnity agreement given in connection with the
loan evidenced hereby, (iv) be applicable to the responsible Person in the event
of and to the extent of fraud, misappropriation of funds or other property, or
damage to any of the Mortgaged Premises or any other collateral securing this
Note or any part thereof intentionally inflicted in bad faith by Maker or any
partner, principal, shareholder, officer, director, agent or employee of Maker
or any partner or principal of any of the foregoing or (v) be applicable to the
liability arising in respect of hazardous materials.
31. Late Charge
If any installment of interest and/or principal, including the
final payment due on the Maturity Date, shall not be paid within ten (10) days
after it is due hereunder (whether by acceleration or otherwise), then and in
each such event, all such past-due amounts shall be subject to a late penalty,
payable on demand, of five cents ($.05) on every dollar ($1.00) not so paid (the
"Late Charge"). Such Late Charge shall be in addition to the other interest due
thereon and in addition to all other rights and remedies provided herein or by
law for the benefit of the holder hereof upon a default; and the acceptance of
the same by the holder hereof shall not restrict such holder in any respect in
the exercise of any other or further such right or remedy, nor shall the same be
deemed to be, as to the holder hereof, a waiver or release of Maker from any of
its obligations herein contained or constitute an extension of the time for
payments due hereunder.
32. Miscellaneous. (a) This Note may not be changed orally but
only by an agreement in writing signed by Maker and Payee.
(b) Should the indebtedness represented by this Note
or any part thereof be collected at law or in equity, or in bankruptcy,
receivership or any other court proceeding (whether at the trial or appellate
level), or should this Note be placed in the hands of attorney's for collection
upon default, Maker agrees to pay, in addition to the principal, interest and
others sums due and payable hereon, all costs of collecting or attempting to
collect this Note, including reasonable attorney's fees and expenses.
(c) Payee reserves the right to assign the Loan
and/or to sell participations in the Loan and Maker and Guarantor agree that
their financial statements and other financial information submitted to Payee
may be distributed to potential assignees and/or participants. In addition to
the other assignment rights provided in this Note, Payee may at any time pledge
all or any portion of its rights under the Security Documents including any
portion of this Note to any of the twelve (12) Federal Reserve Banks organized
under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such
pledge or enforcement thereof shall release Payee from its obligations under any
of the Security Documents.
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(d) This Note may be signed in counterparts-
33. Replacement Documents. Upon receipt of an affidavit of an
officer of Payee as to the loss, theft, destruction or mutilation of this Note
or any other Security Document which is not of public record, and, in the case
of any such loss, theft, destruction or mutilation, upon cancellation of this
Note or such other Security Document, Maker will issue, in lieu thereof, a
replacement Note or such other Security Document in the same principal amount
thereof and otherwise of like tenor.
IN WITNESS WBEREOF, Maker and Payee have executed and delivered this
Note on the day and year first above written.
Address of Maker:
20 Soundview Marketplace RD ABSESCON ASSOCIATES, L.P.
Port Washington, New York 11050
By: RD Absecon, Inc., its
general partner
By: ____________________________
Robert Masters, Senior Vice President
Witness:
- -------------------------
Agreed and Accepted:
FLEET BANK, NATIONAL ASSOCIATION
By: ____________________
Name:
Title:
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MORTGAGE NOTE
Date of Note: November 22, 1999
Arnount of Note: $5,000,000.00
Maturity Date: December 1, 2002 (the "Initial Maturity Date"),
provided, however, the Maker may extend the time to
repay the Amount of the Note to December 1, 2005 (the
"Extended Maturity Date") upon the following
conditions (the "Conditions"): (1) The Maker shall
send written notice to the Bank of its intention to
extend the term of this Note at least 90 days before
the Initial Maturity Date (the "Election Date") , (2)
The Maker is not then in default under this Note, the
Mortgage or any other documents executed in
connection with the loan evidenced hereby, (3) if
required by the Bank, updated title work to confirm
that there have been no changes to title to the
Premises, as defined below, or additional
encumbrances, (4) the payment history and financial
condition of the Maker being satisfactory to the Bank
in its sole discretion, (5) maintenance of a Debt
Service Coverage Ratio of at least 1.5 to 1.0 based
on then current leases covering the Premises (Debt
Service Coverage Ratio shall mean the annual Net
Operating Income divided by total principal and
interest payments made or scheduled to be made under
this Note during such fiscal year. Net Operating
Income means, for each fiscal year, the total base
rental income plus tenant reimbursement income less
all operating expenses excluding depreciation, income
taxes and principal and interest payments made or
scheduled to be made under this Note during such
fiscal year), (6) a maximum loan to value ratio of
65%, as determined by the Bank in its sole
discretion, based upon leases then in effect or, if
required by law or regulation, a current appraisal at
the Maker's expense, (7) The Maker pays to the Bank
an extension fee of one half of one percent of the
principal Amount of the Note outstanding on the
Initial Maturity Date, one-half of which shall be
payable on the Election Date and one-half of which
shall be payable on the Initial Maturity Date, and
(8) the Maker delivers such other documents,
certificates, consents and information as the Bank
and its counsel may require.
Interest Rate; For the First Interest Period, as defined below, the
Interest Rate is 7.75% per annum. For the Second
Interest Period, as defined below, the Interest Rate
is a rate per annum fixed on the third day prior to
the Initial Maturity Date (the "Determination Date")
equal to 1.85% per annum in excess of the Three Year
Treasury Index, as hereinafter defined, in effect on
the Determination Date. "Three Year Treasury Index"
means a rate per annum equal to the weekly average
yield on United States Treasury securities adjusted
to a constant maturity of three (3) years using the
most recent rate reported by the Bank.
<PAGE>
FOR VALUE RECEIVED, the undersigned (the "Maker"), having the address as
indicated under its name, hereby promises to pay on the Maturity Date to the
order of NORTH FORK BANK (the "Bank") at its offices at 275 Broad Hollow Road,
Melville, New York or at such other place as the holder hereof may from time to
time designate in writing, in immediately available New York funds, the Amount
of Note together with interest on the Amount of Note at the Interest Rate
(computed on an actual/360 day basis, i.e., interest for each day during which
any of the Amount of Note is outstanding shall be computed at the Interest Rate
divided by 360) as follows:
(i) a payment of interest for the period from the date hereof to
December 1, 1999, payable on November 22, 1999 in the amount of $9,687.50;
(ii) for the period from December 1, 1999 to and including the Initial
maturity Date, a combined constant scheduled monthly payment of principal and
interest equal to $37,796.44, commencing on January 1, 2000 and on the first day
of each month thereafter and, in the event the Maker fails to satisfy the
conditions, a final payment on the Initial Maturity Date of the balance of the
amount of the Note together with accrued interest (such period, from the date
hereof to the Initial Maturity Date, the "First Interest Period");
(iii) provided the Maker satisfies the Conditions, for the period from
the Initial Maturity Date to the Extended Maturity Date (the "Second Interest
Period"), a combined monthly payment of principal and interest equal to a
combined constant monthly payment of principal and interest at the Interest Rate
which would fully amortize the Amount of the Note, as of the commencement of the
Second Interest Period, over a period of 264 months and a final payment on the
Extended Maturity Date of the balance of the Amount of Note together with
accrued interest.
Each monthly installment shall be applied first to interest on the
principal outstanding and the balance of each monthly installment shall be
applied on account of principal. All payments shall be made by automatic debit
from an account maintained at the Bank in which Maker shall maintain balances
sufficient to pay the monthly payments (Account #4424006452). A late payment of
4% of any principal or interest payment not made on the date it is due shall be
due with any such late payment.
It is expressly agreed that the fees and expenses of the Bank including
reasonable attorney's fees and disbursements of the Bank's counsel in preparing,
executing, delivering, or recording any documents or instruments related to any
extension of the time for repayment of the Amount of Note to the Extended
Maturity Date and in connection with any title company searches and insurance
which the Bank may then require shall be paid by the Maker upon satisfaction of
the Conditions.
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This Note is secured by, among other things, a leasehold mortgage and
security agreement of even date herewith (the "Mortgage") and an assignment of
lessor's interest in leases (the "Assignment") made by the Maker to the Bank
encumbering, among other things, the Premises more particularly described in the
Mortgage; all of the covenants, conditions and agreements of the Mortgage are
made a part hereof by this reference.
It is expressly agreed that, upon the failure of the Maker timely to
make any payment due hereunder after any applicable grace period or upon the
happening of any "Event of Default" under the Mortgage, the principal sum
hereof, or so much thereof as may be outstanding, together with accrued interest
and all other expenses, payable by The Maker under the Mortgage, including, but
not limited to reasonable attorneys, fees for legal services incurred by the
holder hereof in collecting or enforcing payment hereof whether or not suit is
brought, and if suit is brought, then through all appellate actions, shall
immediately become due and payable at the option of the holder of the Note,
notwithstanding the Maturity Date set forth herein. Upon the stated or
accelerated maturity of this Note, the Maker agrees that this Note shall bear
interest at a per annum rate of 24% until the principal is fully paid.
Notwithstanding anything to the contrary contained in this Note, the rate of
interest payable on this Note shall never exceed the maximum rate of interest
permitted under applicable law. If at any time the rate of interest otherwise
prescribed herein shall exceed such maximum rate, and such prescribed rate is
thereafter below such maximum rate, the prescribed rate shall be increased to
the maximum rate for such period of time as is required so that the total amount
of interest received by the Bank is that which would have been received by the
Bank, except for the operation of the first sentence hereof.
The Maker may prepay this Note in full or in part without premium or
penalty ($100,000.00 minimum or integral multiples thereof) at any time upon 10
days written notice to the Bank provided that any prepayment shall be
accompanied by accrued interest computed to the last day of the month in which
prepayment is made on the amount of principal so prepaid. Each prepayment shall
be made together with accrued interest thereon to and including the date of
prepayment and partial prepayments shall be applied to principal in inverse
order of maturity.
The Maker agrees that it shall be bound by any agreement extending the
time or modifying the above terms of payment, made by the Bank and the owner or
owners of the Premises, whether with or without notice to the Maker, and the
maker shall continue to be liable to pay the amount due hereunder, but with
interest at a rate no greater than the Interest Rate, according to the terms of
any such agreement of extension or modification.
For purposes of this Note, "Year 2000 compliant" means, with regard to
any entity, that all software, embedded microchips, and other processing
capabilities utilized by, and material to the business operations or financial
condition of, such entity are able to interpret and manipulate data on and
involving all calendar dates correctly and without causing any abnormal ending
scenario, including in relation to dates in and after the Year 2000: the Maker
has (i) undertaken a detailed inventory, review and assessment of all areas
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within its business and operation that could be adversely affected by failure of
the Maker to be Year 2000 compliant, (ii) developed a detailed plan and timeline
for becoming Year 2000 compliant by December 31, 1999, and (iii) to. date,
implemented that plan (and will continue to implement that plan to completion)
in accordance with that timetable in all material respects. The Maker represents
that it will be Year 2000 compliant no later than December 31, 1999.
This Note may not be changed orally, but only by an agreement in
writing, signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought.
Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity, or in bankruptcy, receivership or any other court
proceedings (whether at the trial or appellate level), or should this Note be
placed in the hands of attorneys for collection upon default, the Maker agrees
to pay, in addition to the principal and interest due and payable hereon, all
costs of collection or attempting to collect this Note, including reasonable
attorneys' fees and expenses.
The Maker hereby authorizes the Bank to enter from time to time the
amount of each Advance to the Maker on the schedule annexed hereto and made a
part hereof, which shall be presumed to be correct absent manifest error.
Failure of the Bank to record such information on such schedule shall not in any
way affect the obligation of the Maker to pay any amount due under this Note.
Time is of the essence as to all dates set forth herein, provided,
however, that whenever any payment to be made under this Note shall be stated to
be due on a Saturday, Sunday or a public holiday or the equivalent for banks
generally under the laws of the State of New York (any other day being a
"Business Day"), such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest.
All parties to this Note, whether the Maker, principal, surety,
guarantor, or endorser, hereby waive presentment for payment, demand, protest,
notice of protest and notice of dishonor.
Any notice, demand or request relating to any matter set forth herein
shall be in writing and shall be deemed effective when mailed, postage prepaid,
by registered or certified mail, return receipt requested, to any party hereto
at its address stated herein or at such other address of which it shall have
notified the party giving such notice in writing as aforesaid.
This Note is to be construed and enforced in accordance with the laws
of the State of New York.
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This Note is the first in a series of notes up to an aggregate
principal amount of $10,000,000.00 to be issued on the terms and conditions
contained in the commitment letter dated September 30, 1999 from the Bank to the
Maker.
RD BRANCH ASSOCIATES, L.P.
By: Acadia Property Holdings, LLC
its General Partner
By: Acadia Realty Limited Partnership
its sole member
By: Acadia Realty Trust
its General Partner
By:_______________________________
Robert Masters
Senior Vice President
Address:
20 Soundview Marketplace
Port Washington, NY 11050
Property Location:
The Branch Shopping Center
Intersection of Route 111 and Route 25/25A
Village of the Branch
Smithtown, NY
(the "Premises")
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PROMISSORY NOTE
December 16, 1999
$13,750,000
Southport, Connecticut
FOR VALUE RECEIVED, 239 Greenwich Associates Limited Partnership, (the
"Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK
(the "Bank"), at its offices at 5581 W. Oakland Park Blvd., 2nd Floor,
Lauderhill, Florida 33313, or such other place as Bank shall designate in
writing from time to time, the principal sum of Thirteen Million Seven Hundred
Fifty Thousand Dollars ($13,750,000) (the "Loan"), together with interest
thereon as hereinafter provided.
1. INTEREST RATE. Interest shall be charged on the outstanding principal balance
from the date hereof until the full amount of principal due hereunder has been
paid at a rate equal to 1-month LIBOR plus one and sixty-five hundredths per
cent (1.65%) per annum ("LIBOR-Based Rate"), as determined by Bank prior to the
commencement of each Interest Period. Upon full occupancy of the retail space at
the Property (as herein defined) with all retail tenants paying rent in
accordance with Bank approved leases, the interest rate will be reduced to
1-month LIBOR plus one and forty-five hundredths percent (1.45%) per annum.
Interest shall be calculated daily on the basis of the actual number of days
elapsed over a 360 day year. The LIBOR-Based Rate shall remain in effect,
subject to the provisions hereof, from and including the first day of the
Interest Period to and excluding the last day of the Interest Period for which
it is determined.
"LIBOR" means, with respect to each day during each Interest Period, the
rate for U.S. dollar deposits of one month maturity as reported on Telerate page
3750 as of 11:00 a.m., London time, on the second London business day before the
relevant Interest Period begins (or if not so reported, then as determined by
the Bank from another recognized source or interbank quotation).
"Interest Period" means, initially, the period commencing on (and
including) the date hereof and ending on (but excluding) the first Payment Date
(as hereinafter defined), and thereafter, each period commencing on (and
including) the last day of the immediately preceding Interest Period and ending
on (but excluding) the next Payment Date, provided, (i) any Interest Period that
would otherwise end on (but exclude) a day which is not a New York business day
shall be extended to the next succeeding New York business day, unless such
extension would carry such Interest Period into the next month, in which event
such Interest Period shall end on (but exclude) the preceding New York business
day; (ii) any Interest Period that ends in a month for which there is no day
which numerically corresponds to the Payment Date shall end on (but exclude) the
last New York business day of such month, and (iii) any Interest Period that
would otherwise extend past the Maturity Date shall end on (but exclude) the
Maturity Date.
2. PAYMENT OF PRINCIPAL AND INTEREST. Interest only on the outstanding principal
balance from the date hereof to the first Payment Date shall be due and payable
on said Payment Date. Thereafter, principal and interest shall be due and
payable on the first day of each month (each, a "Payment Date") commencing on
February 1, 2000 and continuing on the first day of each month thereafter, in
consecutive monthly installments in an amount equal to the sum of (i) all then
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accrued and unpaid interest at the Interest Rate, plus (ii) a principal payment
in the amount of Ten Thousand Three Hundred Thirty-Five Dollars ($10,335.00).
The entire unpaid principal amount hereof, together with accrued and unpaid
interest thereon and all other amounts payable hereunder shall be due and
payable on January 1, 2005 (the "Maturity Date").
3. APPLICATION OF PAYMENTS. Except as otherwise specified herein, each payment
or prepayment, if any, made under this Note shall be applied to pay late
charges, accrued and unpaid interest, principal, escrows (if any), and any other
fees, costs and expenses which Borrower is obligated to pay under this Note, in
such order as Bank may elect from time to time in its sole discretion.
4. TENDER OF PAYMENT. All payments on this Note shall be made in immediately
available lawful money of the United States by direct charge to the demand
deposit account with Bank designated in writing by Borrower. All sums payable to
Bank which are due on a day on which Bank is not open for business shall be paid
on the next succeeding business day and such extended time shall be included in
the computation of interest.
5. LATE CHARGE. In the event that any installment of principal or interest
required to be made by Borrower under this Note shall not be received by Bank
within five (5) days after its due date, Borrower shall pay to Bank, on demand,
a late charge of five percent (5%) of such delinquent payment. The foregoing
right is in addition to, and not in limitation of, any other rights which Bank
may have upon Borrower's failure to make timely payment of any amount due
hereunder.
6. PREPAYMENT. The Loan may be prepaid, in whole or in part, at any time and
from time to time; provided, however, that Borrower shall indemnify Bank against
Bank's loss or expense in employing deposits as a consequence (a) of Borrower's
failure to make any payment when due under the Note, or (b) any prepayment of
the Loan on a date other than the last day of the Interest Period ("Indemnified
Loss or Expense"). The amount of such Indemnified Loss or Expense shall be
determined by Bank based upon the assumption that Bank funded 100% of the Loan
in the London interbank market. Any prepayment shall include accrued and unpaid
interest to the date of prepayment on the principal amount prepaid and all other
sums due and payable hereunder. The monthly principal installment shall not be
reamortized following a partial prepayment. Nothing herein shall be deemed to
alter or affect any obligations that Borrower may have to Bank under any
interest rate swap agreements.
7. SECURITY FOR THE NOTE.
7.1. This Note is executed and delivered in accordance with a commercial
transaction described herein. As security for the payment of the monies owing
under this Note, Borrower has delivered or has caused to be delivered to Bank
the following (each a "Loan Document" and collectively with this Note, and any
other guaranty, document, certificate or instrument executed by Borrower or any
other obligated party in connection with the Loan, together with all amendments,
modifications, renewals or extensions thereof, the "Loan Documents"): (a) an
Open-End Mortgage and Security Agreement (the "Mortgage") on certain real
property and the improvements situated thereon in the Town of Greenwich, County
of Fairfield, State of Connecticut, as more fully described in the Mortgage (the
"Property"); (b) an Absolute Assignment of Leases and Rents (the "Assignment of
Leases") assigning all of the assignor's rights as lessor under all leases
affecting the Property; and (c) a Guaranty Agreement (the "Guaranty") by James
B. Cummings, Alice K. Cummings and Acadia Realty Trust.
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7.2. Borrower hereby grants to Bank a continuing security interest in
all property of Borrower, now or hereafter in the possession of Bank, as
security for the payment of this Note and any other liabilities of Borrower to
Bank, which security interest shall be enforceable and subject to ail the
provisions of this Note, as if such property were specifically pledged
hereunder.
8. DEFAULT RATE. From and after the Maturity Date or from and during the
occurrence of an Event of Default hereunder, irrespective of any declaration of
maturity, all amounts remaining unpaid or thereafter accruing hereunder, shall,
at Bank's option, bear interest at a default rate of four percent (4%) per annum
above the interest rate then in effect as set forth herein (the "Default Rate"),
or the highest permissible rate under applicable usury law, whichever is less.
Such default rate of interest shall be payable upon demand, but in no event
later than when scheduled interest payments are due, and shall also be charged
on the amounts owed by Borrower to Bank pursuant to any judgments entered in
favor of Bank with respect to this Note.
9. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Bank as
follows:
9.1. Organization, Powers. Borrower (i) is (a) an adult individual and
is sui juris, or (b) a corporation, general partnership, limited partnership, or
limited liability company (as indicated below), duty organized, validly existing
and in good standing under the laws of the state of its organization, and is
authorized to do business in each other jurisdiction wherein its ownership of
property or conduct of business legally requires such authorization; (ii) has
the power and authority to own its properties and assets and to carry on its
business as now being conducted and as now contemplated; and (iii) has the power
and authority to execute, deliver and perform, and by all necessary action has
authorized the execution, delivery and performance of, all of its obligations
under each Loan Document to which it is a party.
9.2. Execution of Loan Documents. Each of the Loan Documents to which
Borrower is a party has been duly executed and delivered by Borrower. Execution,
delivery and performance of each of the Loan Documents to which Borrower is a
party will not: (i) violate any of its organizational documents, provision of
law, order of any court, agency or other instrumentality of government, or any
provision of any indenture, agreement or other instrument to which it is a party
or by which it or any of its properties is bound; (ii) result in the creation or
imposition of any lien, charge or encumbrance of any nature, other than the
liens created by the Loan Documents; and (iii) require any authorization,
consent, approval, license, exemption of, or filing or registration with, any
court or governmental authority.
9.3. Obligations of Borrower. Each of the Loan Documents to which
Borrower is a party is the legal, valid and binding obligation of Borrower,
enforceable against it in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws or equitable
principles relating to or affecting the enforcement of creditors' rights
generally. Borrower is obtaining the Loan for commercial purposes.
9.4. Litigation. There is no action, suit or proceeding at law or in
equity or by or before any governmental authority, agency or other
instrumentality now pending or, to the knowledge of Borrower, threatened against
or affecting Borrower or any of its properties or rights which, if adversely
determined, would materially impair or affect: (i) the value of any collateral
securing this Note; (ii) Borrower's right to carry on its business substantially
as now conducted (and as now contemplated); (iii) its financial condition; or
(iv) its capacity to consummate and perform its obligations under the Loan
Documents to which Borrower is a party.
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9.5. No Defaults. Borrower is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained herein or in any material agreement or instrument to which it is a
party or by which it or any of its properties is bound.
9.6. No Untrue Statements. No Loan Document or other document,
certificate or statement furnished to Bank by or on behalf of Borrower contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. Borrower acknowledges that all such statements, representations and
warranties shall be deemed to have been relied upon by Bank as an inducement to
make the Loan to Borrower.
10. COVENANTS
10.1. Operating Accounts. Borrower shall maintain its primary operating
accounts at Bank.
10.2. Financial Statements: Compliance Certificate.
10.2.1. Borrower shall furnish to Bank the following financial
information, in each instance prepared in accordance with generally accepted
accounting principles consistently applied:
(a) Not later than ninety (90) days after the end of each fiscal
year, annual financial statements of Borrower including, without limitation,
statements of financial condition, income and cash flows, a reconciliation of
net worth, a listing of all contingent liabilities, notes to financial
statements and any other information requested by Bank, and commencing at the
end of fiscal year 2000, prepared on a compilation basis by a certified public
accountant acceptable to Bank.
(b) Not later than thirty (30) day-s after filing with the
Internal Revenue Service, a true and complete copy of the federal tax returns,
including all schedules, of Borrower.
(c) Not later than sixty (60) days after the end of each interim
fiscal half year management prepared financial statements relating to the
operation of the Property including, without limitation, a statement of cash
flows, certified rent roll, summary of leases, a statement of profits and
losses, and any other information requested by Bank.
(d) Not later than fifteen (15) days after execution, copies of
all permitted new or modified leases, including residential leases, of the
Property.
(e) Such other information respecting the operations of Borrower
and/or the Property as Bank may from time to time reasonably request.
10.2.2. Borrower shall furnish to Bank, with each set of
financial statements described herein, a compliance certificate signed by
Borrower's authorized officer certifying that: (i) all representations and
warranties of Borrower set forth in this Note or any other Loan Document remain
true and correct as of the date of such compliance certificate; (ii) none of the
covenants of Borrower contained In this Note or any other Loan Document has been
breached; and (iii) to its knowledge, no event has occurred which constitutes an
Event of Default (or which, with the giving of notice or the passage of time, or
both, would constitute an Event of Default) under this Note or any other Loan
Document. In addition, Borrower shall promptly notify Bank of the occurrence of
any default, Event of Default, adverse litigation or material adverse change in
its financial condition.
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10.5. Indemnification.
10.5.1. Borrower hereby indemnifies and agrees to defend and
hold harmless Bank, its officers, employees and agents, from and against any and
all losses, damages, or liabilities and from any suits, claims or demands,
including reasonable attorneys' fees incurred in investigating or defending such
claim, suffered by any of them and caused by, arising out of, or in any way
connected with the Loan Documents or the transactions contemplated therein
(unless determined by a final judgment of a court of competent jurisdiction to
have been caused solely by the gross negligence or willful misconduct of any of
the indemnified parties) including, without limitation: (i) disputes with any
architect, general contractor, subcontractor, materialman or supplier, or on
account of any act or omission to act by Bank in connection with the Property;
(ii) losses, damages (including consequential damages), expenses or liabilities
sustained by Bank in connection with any environmental inspection, monitoring,
sampling or cleanup of the Property required or mandated by any applicable
environmental law; provided, however, that Borrower shall not be obligated to
bear the expense of such environmental inspections, audits and tests so long as
(a) no Event of Default exists, and (b) Bank has no cause to believe in its sole
reasonable judgment that there has been a Release or threatened Release of
Hazardous Substances (as defined in the Mortgage) at the Property or that
Borrower or the Property is in violation of any Environmental Law (as defined in
the Mortgage) (iii) claims by any tenant or any other party arising under or in
connection with any lease of ail or any portion of the Property; (iv) any untrue
statement of a material fact contained in information submitted to Bank by
Borrower or the omission of any material fact necessary to be stated therein in
order to make such statement not misleading or incomplete; (v) the failure of
Borrower to perform any obligations herein required to be performed by Borrower;
and (vi) the ownership, construction, occupancy, operation, use or maintenance
of the Property.
10.5.2. In case any action shall be brought against Bank, its
officers, employees or agents, in respect to which indemnity may be sought
against Borrower, Bank or such other party shall promptly notify Borrower and
Borrower shall assume the defense thereof, including the employment of counsel
selected by Borrower and satisfactory to Bank, the payment of all costs and
expenses and the right to negotiate and consent to settlement. Bank shall have
the right, at its sole option, to employ separate counsel in any such action and
to participate in the defense thereof, all at Borrower's sole cost and expense.
Borrower shall not be liable for any settlement of any such action effected
without its consent (unless Borrower fails to defend such claim), but if settled
with Borrower's consent, or if there be a final judgment for the claimant in any
such action, Borrower agrees to indemnify and hold harmless Bank from and
against any loss or liability by reason of such settlement or judgment.
10.5.3. The provisions of this Section 10.5 shall survive the
repayment or other satisfaction of the Liabilities.
11. EVENTS OF DEFAULT. Each of the following shall constitute an event of
default hereunder (an "Event of Default"): (a) the failure of Borrower to pay
any amount of principal or interest hereunder within five (5) days of when due
and payable; or (b) the occurrence of any other default in any term, covenant or
condition hereunder or any Event of Default under the Loan Agreement, the
Mortgage or any other Loan Document.
12. REMEDIES. If an Event of Default exists, Bank may exercise any right, power
or remedy permitted by law or as set forth herein or in the Loan Agreement, the
Mortgage or any other Loan Document including, without limitation, the right to
declare the entire unpaid principal amount hereof and all interest accrued
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hereon, and all other sums secured by the Mortgage or any other Loan Document,
to be, and such principal, interest and other sums shall thereupon become,
immediately due and payable.
13. MISCELLANEOUS.
13.1. Disclosure of Financial Information. Bank is hereby authorized to
disclose any financial or other information about Borrower to any regulatory
body or agency having jurisdiction over Bank and to any present, future or
prospective participant or successor in interest (which has agreed in writing to
keep such financial information confidential and to return such financial
information if they fail to acquire an interest in the Loan) in any loan or
other financial accommodation made by Bank to Borrower. The information provided
may include, without limitation, amounts, terms, balances, payment history,
return item history and any financial or other information about Borrower.
13.2. Integration. This Note and the other Loan Documents constitute
the sole agreement of the parties with respect to the transaction contemplated
hereby and supersede all oral negotiations and prior writings with respect
thereto.
13.3. Attorneys' Fees and Expenses. If Bank retains the services of
counsel by reason of a claim of a default or an Event of Default hereunder or
under any of the other Loan Documents, or on account of any matter involving
this Note, or for examination of matters subject to banks approval under the
Loan Documents, all costs of suit and all reasonable attorneys' fees and such
other reasonable expenses so incurred by Bank shall be paid by Borrower, on
demand, and shall be deemed part of the obligations evidenced hereby.
13.4. No Implied Waiver. Bank shall not be deemed to have modified or
waived any of its rights or remedies hereunder unless such modification or
waiver is in writing and signed by Bank, and then only to the extent
specifically set forth therein. A waiver in one event shall not be construed as
continuing or as a waiver of or bar to such right or remedy in a subsequent
event. After any acceleration of, or the entry of any judgment on, this Note,
the acceptance by Bank of any payments by or on behalf of Borrower on account of
the indebtedness evidenced by this Note shall not cure or be deemed to cure any
Event of Default or reinstate or be deemed to reinstate the terms of this Note
absent an express written agreement duly executed by Bank and Borrower.
13.5. Waiver. Borrower, jointly and severally, waives demand, notice,
presentment, protest, demand for payment, notice of dishonor, notice of protest
and diligence of collection of this Note. Borrower consents to any and all
extensions of time, renewals, waivers, or modifications that may be granted by
Bank with respect to the payment or other provisions of this Note, and to the
release of any collateral, with or without substitution. Borrower agrees that
makers, endorsers, guarantors and sureties may be added or released without
notice and without affecting Borrowers liability hereunder. The liability of
Borrower shall not be affected by the failure of Bank to perfect or otherwise
obtain or maintain the priority or validity of any security interest in any
collateral. The liability of Borrower shall be absolute and unconditional and
without regard to the liability of any other party hereto.
13.6. No Usurious Amounts. Anything herein contained to the contrary
notwithstanding, it is the intent of the parties that Borrower shall not be
obligated to pay interest hereunder at a rate which is in excess of the maximum
rate permitted by law. If by the terms of this Note, Borrower is at any time
required to pay interest at a rate in excess of such maximum rate, the rate of
interest under this Note shall be deemed to be immediately reduced to such
maximum legal rate and the portion of all prior interest payments in excess of
such maximum legal rate shall be applied to and shall be deemed to have been
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payments in reduction of the outstanding principal balance, unless Borrower
shall notify Bank, in writing, that Borrower elects to have such excess sum
returned to it forthwith. Borrower agrees that in determining whether or not any
interest payable under this Note exceeds the highest rate permitted by law, any
non-principal payment, including without limitation, late charges, shall be
deemed to the extent permitted by law to be an expense, fee or premium rather
than interest. In addition, Bank may, in determining the maximum rate of
interest allowed under applicable law, as amended from time to time, take
advantage of: (i) the rate of interest permitted by Section 687.12 Florida
Statues ('Interest rates; parity among licensed lenders or creditors') and 12
United States Code, Sections 85 and 86, and (ii) any other law, rule or
regulation in effect from time to time, available to Bank which exempts Bank
from any limit upon the rate of interest it may charge or grants to Bank the
right to charge a higher rate of interest than allowed by Florida Statutes,
Chapter 687.
13.7. Partial Invalidity. The invalidity or unenforceability of any one
or more provisions of this Note shall not render any other provision invalid or
unenforceable. In lieu of any invalid or unenforceable provision, there shall be
added automatically a valid and enforceable provision as similar in terms to
such invalid or unenforceable provision as may be possible.
13.8. Binding Effect. The covenants, conditions, waivers, releases and
agreements contained in this Note shall bind, and the benefits thereof shall
inure to, the parties hereto and their respective heirs, executors,
administrators, successors and assigns; provided, however, that this Note cannot
be assigned by Borrower without the prior written consent of Bank, and any such
assignment or attempted assignment by Borrower shall be void and of no effect
with respect to Bank.
13.9. Modifications. This Note may not be supplemented, extended,
modified or terminated except by an agreement in writing signed by the party
against whom enforcement of any such waiver, change, modification or discharge
is sought.
13.10. Sales or Participations. Bank may from time to time pledge, sell
or assign, in whole or in part, or grant participations in, the Loan, this Note
and/or the obligations evidenced thereby. The holder of any such sale,
assignment or participation, if the applicable agreement between Bank and such
holder so provides, shall be: (a) entitled to all of the rights, obligations and
benefits of Bank; and (b) deemed to hold and may exercise the rights of setoff
or banker's lien with respect to any and all obligations of such holder to
Borrower, in each case as fully as though Borrower were directly indebted to
such holder. Bank may in its discretion give notice to Borrower of such sale,
assignment or participation; however, the failure to give such notice shall not
affect any of Bank's or such holders rights hereunder.
13.11. Jurisdiction. Borrower irrevocably appoints the general partner
of the Borrower as its attorneys upon whom may be served, by regular or
certified mail at the address set forth below, any notice, process or pleading
in any action or proceeding against it arising out of or in connection with this
Note or any other Loan Document; and Borrower hereby consents that any action or
proceeding against it be commenced and maintained in any court within the State
of Florida by service of process on any such owner, partner and/or officer; and
Borrower agrees that the courts of such State shall have jurisdiction with
respect to the subject matter hereof and the person of Borrower and all
collateral securing the obligations of Borrower. Borrower agrees not to assert
any defense to any action or proceeding initiated by Bank based upon improper
venue or inconvenient forum.
13.12. Notices. All notices and communications under this Note shall be
in writing and shall be given by either (a) certified mail, return receipt
requested, or (b) reliable overnight commercial courier (charges prepaid), to
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the addresses listed in the Mortgage and to Aberdeen 239 LLC, 41 West Putnam
Avenue, Greenwich, Connecticut 06830. Notice shall be deemed to have been given
and received: (i) if by certified mail, the earlier of the actual delivery as
shown by the addressee's return receipt or when tendered, if refused; and (ii)
if by overnight courier, on the date scheduled for delivery. A party may change
its address by giving written notice to the other party as specified herein.
13.13. Governing Law. This Note shall be governed by and construed in
accordance with the substantive laws of the State of Florida without reference
to conflict of laws principles.
13.14. Joint and Several Liability. If Borrower consists of more than
one person or entity, the word "Borrower" shall mean each of them and their
liability shall be joint and several.
13.15. Continuing Enforcement. If, after receipt of any payment of all
or any part of this Note, Bank is compelled or agrees, for settlement purposes,
to surrender such payment to any person or entity for any reason (including,
without limitation, a determination that such payment is void or voidable as a
preference or fraudulent conveyance, an impermissible setoff, or a diversion of
trust funds), then this Note and the other Loan Documents shall continue in full
force and effect or be reinstated, as the case may be, and Borrower shall be
liable for, and shall indemnify, defend and hold harmless Bank with respect to,
the full amount so surrendered. The provisions of this Section shall survive the
cancellation or termination of this Note and shall remain effective
notwithstanding the payment of the obligations-evidenced hereby, the release of
any security interest, lien or encumbrance securing this Note or any other
action which Bank may have taken in reliance upon its receipt of such payment.
Any cancellation, release or other such action shall be deemed to have been
conditioned upon any payment of the obligations evidenced hereby having become
final and irrevocable.
13.16. Waiver of Jury Trial. BORROWER AND BANK AGREE THAT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY SUIT, ACTION OR PROCEEDING, WHETHER
CLAIM OR COUNTERCLAIM, BROUGHT BY BANK OR BORROWER, ON OR WITH RESPECT TO THIS
NOTE OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT
HERETO OR THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY. BANK AND
BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND INTELLIGENTLY,
AND WITH THE ADVICE OF THEIR RESPECTIVE COUNSEL, WAIVE, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. FURTHER, BORROWER WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR. RECOVER,
IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY SPECIAL, EXEMPLARY, PUNITIVE,
CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
BORROWER ACKNOWLEDGES AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL
ASPECT OF THIS NOTE AND THAT BANK WOULD NOT EXTEND CREDIT TO BORROWER IF THE
WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS NOTE.
14. LIMITATION ON RECOURSE.
14.1. Limitation on Recourse. Except as set forth in paragraph 14.2
below, in any action brought to enforce the obligation of Borrower to pay the
indebtedness evidenced by this Note or to enforce the obligation of Borrower to
pay any indebtedness or discharge any obligation created or arising under the
Mortgage or any other Loan Document, the judgement or decree shall be
enforceable against Borrower only to the extent of the Property, and any such
judgment shall not be subject to execution on, nor be a lien on the assets of
Borrower or the General Partner of Borrower, other than its interest in the
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Property. Except as aforesaid, nothing contained in this Section or the Loan
Documents shall limit the rights of Bank against any person, firm or entity,
including Borrower, provided, however, in no case (including any exception
stated in Section 10.2) shall the Bank have any right to bring any action
against the general partner of the Borrower or its assets.
14.2. Exceptions. Notwithstanding the foregoing, nothing contained in
this Section shall be deemed to prejudice the rights of Bank:
(a) to proceed against any entity or person whatsoever, including
Borrower, with respect to the enforcement of any guarantees, leases, or similar
rights to payment;
(b) to recover any expenses, damages or costs (including, without
limitation, attorneys' fees), incurred by Bank as a result of: (a) Borrowers
fraud or material misrepresentation in connection with application for or
obtaining the Loan or in performance of the Borrowers obligations hereunder, (b)
Borrowers misappropriation or misapplication of condemnation or insurance
proceeds or security deposits, (c) any environmental matters, including any loss
of value of the Property as a result of any Release or any other violation of or
assertion of lien under Connecticut General Statutes Section 22a452a or related
federal, state or local laws or regulations as to the Property, (d) Borrowers
collection of rents in advance in violation of any covenant in the Loan
Documents, the failure to make payments when due on the Loan or payments of
insurance premiums, property taxes, deposits into a capital reserve account or a
reserve for replacements or payments of other operating or maintenance expenses
related to the Property during such time as total revenues from the Property are
sufficient to pay such amounts, or the failure to pay a portion of such amounts
up to the full extent of the total revenues from the Property;
(c) to recover any tenant security deposits, advance or prepaid rents
or other similar sums paid to or held by Borrower or any other entity or person
in connection with the operation of the Property;
Borrower promises to pay to Bank all amounts described in clauses (b)
and (c) above on demand by Bank and agrees that it will be personally liable for
the payment of all such sums.
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This instrument prepared by and when recorded return to: Audrey A. Ellis, Esq.
Bilzin Sumberg Dunn
Price & Axelrod LLP
2500 First Union Financial Center
Miami, Florida 33131-2336
NOTE AND MORTGAGE ASSUMPTION AGREEMENT
(ASW 1995-C1; LOAN NO. 009590229)
THIS NOTE AND MORTGAGE ASSUMPTION AGREEMENT (this "Agreement") dated as
of February 24, 1999, among LASALLE NATIONAL BANK FOR THE BENEFIT OF CERTIFICATE
HOLDERS OF AMERICAN SOUTHWEST FINANCIAL SECURITIES CORP., COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 1995-C1 ("Lender"), having an address at 135
S. LaSalle Street, Suite 1625, Chicago, Illinois 60603, Attn: Jay Lally Re: ASW
1995-C I, Loan #009590229; MAD RIVER PROPERTIES LTD., an Ohio limited liability
company, successor in interest by merger to Mad River Ltd., an Ohio limited
partnership, having an address at c/o The Beerman Realty Co., I 1 West Monument
Building, 8th Floor, Dayton, Ohio 45402 ("Original Borrower"); and ACADIA MAD
RIVFR PROPERTY LLC, a Delaware limited liability company, having an address at
20 Soundview Marketplace, Port Washington, New York 11050 and having a Federal
Taxpayer Identification Number of 11-3465079 ("New Borrower"). Original Borrower
and New Borrower are hereinafter sometimes collectively referred to as "Borrower
Parties."
PRELIMINARY STATEMENT
A. Original Borrower is the current owner of fee title to that certain
real property (the "Land") and the buildings and improvements thereon (the
"Improvement "), located in the Township of Miami, County of Montgomery, State
of Ohio, more particularly described in Exhibit "A" attached hereto and made a
part hereof commonly referred to as the "Mad River Station Shopping Center" (the
Land and the Improvements are hereinafter sometimes collectively referred to as
the "Project").
B. Lender is the current owner and holder of a loan ("Loan") in the
original principal amount of $8,000,000 evidenced by that certain Promissory
Note dated as of May 23, 1995 (the Promissory Note, as same may be renewed,
consolidated, replaced, extended, substituted, amended or otherwise modified,
shall hereinafter be referred to as the "Note") made by Original Borrower in
favor of Column Financial, Inc., a Delaware corporation ("Original Lender"), in
the principal amount of $8,000,000 and secured by, among other things, (i) an
Open-End Mortgage and Security Agreement dated as of May 2' ), 1995 (the
"Mortgage") made by Original Borrower for the benefit of Original Lender and
encumbering the Project, recorded on May 23, 1995 under Microfiche No.
95-1322BOI of the Records of the County of Montgomery, State of Ohio (the
"Records"); (ii) an Assignment of Leases and Rents dated as of May 23, 1995 (the
"Assignment of Rents") made by Original Borrower for the benefit of Original
Lender and recorded on May 23, 1995, under Mortgage Microfiche No. 95-1323AO6 of
the Records; (iii) those certain UCC-1 Financing Statements (the "Financing
Statements") reflecting Original Borrower, as Debtor and Original Lender, as
Secured Party recorded under Mortgage Microfiche Nos.95-173AO5 and 95-173AI I of
the Records and filed with the Ohio Secretary of State on May 25, 1995 under
File Number AL88563; (iv) a Hazardous Substances Indemnity Agreement dated as of
May 23, 1995 ("Hazardous Indemnity") made by Original Borrower and Barbara
Weprin ("Welprin") in favor of Original Lender; and (v) an Indemnity and
Guaranty Agreement dated as of May 23, 1995 ("Guaranty") made by Weprin in favor
of Original Lender.
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C. The Note, the Mortgage, the Assignment of Rents, the Financing
Statements, the Hazardous Indemnity, the Guaranty and any and all other
agreements, documents, and other instruments evidencing, securing or in any
manner relating to the Loan shall hereinafter be collectively referred to as the
"Loan Documents."
D. New Borrower desires to purchase the Project from Original Borrower
and to assume all of Original Borrower's obligations under the Loan Documents.
E. A sale of the Project to and the assumption of the Loan by a third
party without the consent of the holder of the Mortgage is prohibited by the
terms thereof.
F. As required by the Loan Documents, the Lender has agreed to permit
the Original Borrower to sell the Project to the New Borrower and the New
Borrower to assume all of Original Borrower's obligations under the Loan
Documents.
In consideration of $1 0.00 paid by each of the parties to the other,
the mutual covenants set forth below, and other good and valuable consideration,
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE 1
ACKNOWLEDGMENTS, WARRANTIES AND REPRESENTATIONS
1.1 Original Borrower Representations. As a material inducement to
Lender to enter into this Agreement, to consent to the sale of the Project to
New Borrower, and to permit the New Borrower to assume all of Original
Borrower's obligations under the Loan Documents, Original Borrower acknowledges,
represents, warrants and agrees to and with Lender as follows:
(a) Authority of Original Borrower. 0riginal Borrower is a
duly formed, validly existing limited liability company formed and in good
standing under the laws of the State of Ohio. William S. Weprin ("Original
Borrower Manager") is the sole manager of Original Borrower. The execution,
delivery, and performance of this Agreement by Original Borrower has been duly
and properly authorized pursuant to all requisite company action. William S.
Weprin, as President of Original Borrower, acting alone without the joinder of
any member or other officer of Original Borrower or any other party has the
power and authority to execute this Agreement on behalf of Original Borrower and
to duly bind Original Borrower under this Agreement. The execution, delivery and
performance of this Agreement by Original Borrower does not and will not (i)
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Original Borrower or the operating agreement or other
organizational documents of Original Borrower or (ii) result in a breach or
constitute or cause a default under any indenture, agreement, lease or
instrument to which Original Borrower is a party or by which the Project may be
bound or affected.
(b) Compliance with Laws. Original Borrower has not received
any written notice from any governmental entity claiming that Original Borrower
or the Project is not presently in compliance with any laws, ordinances, rules
and regulations bearing upon the use and operation of the Project, including,
without limitation, any notice relating to zoning laws or building codes or
regulations.
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(c) Rent Roll. The Rent Roll ("Rent Roll") attached hereto and
made a part hereof as Exhibit "B" is a true, complete and accurate summary of
all tenant leases affecting the Project as of the date of this Agreement.
(d) Title to Project and Legal Proceedings. Original Borrower
is the current owner of fee title in the Project. There are no pending or
threatened suits, judgments, arbitration proceedings, administrative claims,
executions or other legal or equitable actions or proceedings against Original
Borrower, Original Borrower Manager or the Project, or any pending or threatened
condemnation proceedings or annexation proceedings affecting the Project, or any
agreements to convey any portion of the Project, or any rights thereto to any
person or entity not disclosed in this Agreement, including, without limitation,
any government or governmental agency,
(e) Other Loans. Neither Original Borrower nor any member of
Original Borrower or shareholder, director, any principal or other affiliate of
Original Borrower or member of Original Borrower has any other loans from
Original Lender, Lender or any other conduit lender or any other loans payable
to Midland Loan Services, as servicer.
(f) Loan Documents. The Loan Documents constitute valid and
legally binding obligations of Original Borrower. Original Borrower has no
defenses, setoffs, claims, counterclaims or causes of action of any kind or
nature whatsoever against Lender or any of Lender's officers, directors,
servicers or predecessors in interest with respect to (i) the Loan, (ii) the
Loan Documents, (iii) any other documents or instruments now or previously
evidencing, securing or in any way relating to the Loan, (iv) the administration
or funding of the Loan or (v) the development, operation or financing of the
Project. To the extent Original Borrower would be deemed to have any such
defenses, setoffs, claims, counterclaims or causes of action. Original Borrower
waives and relinquishes them as of the date hereof.
(g) Repair and Remediation. All maintenance, repairs and/or
remedial or corrective work required under that the Repair Letter and in Exhibit
"C" of the Mortgage has been completed in full compliance with such the Repair
Letter and the terms of Exhibit "C".
(h) RePair and Remediation Reserve. Original Borrower has
completed, performed, remediated and corrected to the satisfaction of Original
Lender and as necessary to bring the Property into compliance with all
applicable laws, ordinances, rules and regulations, each of the items described
in that certain Required Repair Letter from Original Lender to Original Borrower
dated March 23, 1995, all as required by Section C-1 of the Mortgage.
(i) Reaffirmation and Release. Original Borrower acknowledges
and agrees that nothing contained in this Agreement shall release Original
Borrower from any of its obligations, agreements, duties and liabilities under
the Loan Documents arising prior to the date hereof, provided, however, by its
execution hereof, Lender hereby releases Original Borrower for any acts or
events occurring or obligations arising under the Loan Documents (with the
exception of the Hazardous Indemnity, the provisions for the release of Original
Borrower being set forth in the Reaffirmation of Hazardous Substances Indemnity
and Consent of Indemnitors being executed in connection herewith) after the date
of the closing of the purchase and sale of the Property and the assumption of
the Loan by New Borrower.
1.2 Acknowledgments, Warranties and Representations of New Borrower. As
a material inducement to Lender to enter into this Agreement, to consent to the
sale of the Project to New Borrower and to permit the New Borrower to assume all
of Original Borrower's obligations under the Loan Documents, New Borrower
acknowledges, warrants, represents and agrees to and with Lender as follows:
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(a) Authority of New Borrower. New Borrower is a validly
existing limited liability company duly formed and in good standing under the
laws of the State of Delaware and is in the process of qualifying to transact
business in the State of Ohio. Acadia Realty Limited Partnership, a Delaware
limited partnership ("New Borrower Member"), is the sole member of New Borrower.
The execution and delivery of, and performance under, this Agreement by New
Borrower has been duly and properly authorized pursuant to all requisite company
action. New Borrower Member, acting alone without the joinder of any other
member of New Borrower or any other party has the power and authority to execute
this Agreement on behalf of and to duly bind New Borrower under this Agreement
and the Loan Documents. Neither the execution, delivery or performance of this
Agreement nor the performance under the Loan Documents by New Borrower will (i)
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to New Borrower or the articles of organization or operating
agreement of New Borrower or (ii) result in a breach of or constitute or cause a
default under any indenture, agreement, lease or instrument to which New
Borrower is a party or by which the Project may be bound or affected.
(b) Authority of New Borrower Member. The execution and
delivery of and performance under this Agreement by New Borrower Member, as the
sole member and on behalf of New Borrower has been duly and properly authorized
pursuant to all requisite partnership action. Kenneth F. Bernstein as President
of Arcadia Realty Trust, as the sole general partner ("General Partner") of New
Borrower Member, acting alone, without the joinder and consent of any other
officer or director of General Partner or any other party has the power and
authority to execute this Agreement on behalf of and to duly bind New Borrower
Member and New Borrower under this Agreement and the Loan Documents. The
execution, delivery or performance of this Agreement by New Borrower Member will
not (i) violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to New Borrower Member or (ii) result in a breach of or constitute
or cause a default under any indenture, agreement, lease or instrument to which
New Borrower Member is a party or by which the Project may be bound or affected.
(c) Compliance with Organizational Documents. New Borrower is
in full compliance with, and its organizational documents do not conflict with,
any requirements of Section 1.33 of the Loan Documents. New Borrower is not in
violation of, and will not in the future violate, any of the terms, covenants
and provisions of its organizational documents.
(d) Rent Roll. To the best knowledge of New Borrower, the Rent
Roll ("Rent Roll") attached hereto and made a part hereof as Exhibit "B" is a
true, complete and accurate summary of all tenant leases affecting the Project
as of the date of this Agreement.
(e) Financial Statement. The I O-Q Report of Acadia Realty
Trust ("Acadia") for the period ending September 30, 1998 (the "Financial
Statements") which has been previously delivered to Lender is true, complete and
accurate in every material respect and accurately represents the financial
condition of Acadia as of the date thereof. There has not been any material
adverse change between the date of said Financial Statement and the date of this
Agreement. New Borrower acknowledges that said Financial Statement has been
provided to Lender to induce Lender to enter into this Agreement and is being
relied upon by Lender for such purposes.
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(f) Title to Project and Legal proceedings. To the best
knowledge of New Borrower, there are no pending or threatened suits, judgments,
arbitration proceedings, administrative claims, executions or other legal or
equitable actions or proceedings against any of New Borrower or the Project, or
any pending or threatened condemnation proceedings or annexation proceedings
affecting the Project, or any agreements to convey any portion of the Project,
or any rights thereto to any person or entity, including, without limitation,
any government or governmental agency.
(g) Other Loans. Neither New Borrower nor any member of New
Borrower or any shareholder, director, principal or other affiliate of New
Borrower or any partner or member of New Borrower has any other loans from
Original Lender, Lender or any other conduit lender or any other loans payable
to Midland Loan Services, as servicer.
(h) Management of Project. New Borrower has engaged Hutensky
Group, LLC ("Manager") to manage the Project, pursuant to a written Management
Agreement, a true and correct copy of which has been provided to Lender
("Management Agreement"). New Borrower further covenants and agrees to comply
with all terms and conditions of the Mortgage concerning the management of the
Project, including without limitation the obligation to obtain Lender's consent
to the management of the Project by any entity other than Manager.
0) Loan Documents. As of the date hereof, the Loan Documents
constitute valid and legally binding obligations of New Borrower enforceable
against New Borrower and the Project in accordance with their terms, subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar statutes, rules, regulations or other laws affecting the
enforcement of creditors' rights and remedies generally. New Borrower has no
defenses, setoffs, claims, counterclaims or causes of action of any kind or
nature whatsoever against Lender or any of Lender's officers, directors,
servicers or predecessors in interest with respect to (i) the Loan, (ii) the
Loan Documents, (iii) any other documents or instruments now or previously
evidencing, securing or in any way relating to the Loan, (iv) the administration
or funding of the Loan or (v) the development, operation or financing of the
Project. To the extent New Borrower would be deemed to have any such defenses,
setoffs, claims, counterclaims or causes of action, New Borrower knowingly
waives and relinquishes them. New Borrower acknowledges that it has received
copies of all of the Loan Documents.
(k) ERISA. New Borrower covenants and agrees that for so long
as the loan is outstanding, unless Lender shall have previously consented in
writing, (i) New Borrower will take no action that would cause it to become an
"employee benefit plan" as defined in 29 C.F.R. Section 2510.3-1 0 1, or "assets
of a governmental plan" subject to regulation under the state statutes, and (ii)
New Borrower will not sell, assign or transfer the Project, or any portion
thereof or interest therein, to any transferee that does not execute and deliver
to Lender its written assumption of the obligations of this covenant.
(1) Qualification to do Business in Ohio. Within 45 days from
the date hereof, New Borrower shall submit to Lender satisfactory evidence that
it has qualified to transact business in the State of Ohio.
1.3 Acknowledgments, Warranties and Representations of Borrower
Parties. As a material inducement to Lender to enter into this Agreement, to
consent to the sale of the Project to New Borrower and to permit the New
Borrower to assume the indebtedness due under the Loan and all of Original
Borrower's other obligations under the Loan Documents, Borrower Parties
acknowledge, warrant, represent and agree to and with Lender as follows:
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(a) Indebtedness. As of February 17, 1999, the outstanding
principal balance of the Loan which is being assumed by New Borrower is
$7,661,302.15. The following escrow and reserve balances are being held by
Lender as of the date hereof. (i) tax escrow balance of $169,287.82 ($117,494.67
of which will be disbursed by Lender to pay the current taxes due) ; (ii)
insurance escrow balance of $19,679.42 and (iii) leasing reserve balance of
$75,675.1 1. Original Borrower and New Borrower acknowledge and agree that
Lender will continue to hold the escrow and reserve balances for the benefit of
New Borrower in accordance with the terms of the Loan Documents. In the event of
an error or omission of the foregoing information, Lender does not in any way
prejudice its rights and entitlement to all monies lawfully due Lender under the
terms of the Loan Documents.
(b) Compliance with Laws. All permits, licenses, franchises,
or other evidences of authority to use and operate the Project as it is
presently being operated and as contemplated by the Loan Documents are current,
valid and in full force and effect.
(c) No Default. To Borrower Parties' knowledge, no event, fact
or circumstance has occurred or failed to occur which constitutes, or with the
lapse or passage of time, giving of notice or both, could constitute a default
under Section 2.1 of the Mortgage.
(d) Bankruptcy. Neither of Borrower Parties has any present
intent to (i) file any voluntary petition under any Chapter of the Bankruptcy
Code, Title I 1, U.S.C.A. ("Bankruptcy Code"), or in any manner to seek any
proceeding for relief, protection, reorganization, liquidation, dissolution or
similar relief for debtors ("Debtor Proceeding") under any local, state, federal
or insolvency law or laws providing relief for debtors or (ii) directly or
indirectly to cause any involuntary petition under any Chapter of the Bankruptcy
Code to be filed against either of Borrower Parties or any member of either of
Borrower Parties, or (iii) directly or indirectly to cause the Project or any
portion or any interest of either of Borrower Par-ties in the Project to become
the property of any bankrupt estate or the subject of any Debtor Proceeding.
(e) Further Assurances. Borrower Parties shall execute and
deliver to Lender such agreements, instruments, documents, financing statements
and other writings as may be requested from time to time by Lender to perfect
and to maintain the perfection of Lender's security interest in and to the
Project, and to consummate the transactions contemplated by or in the Loan
Documents and this Agreement.
1.4 Acknowledgments, Representations and Warranties of Lender. By its
execution hereof, Lender confirms that to Lender's actual knowledge, the amounts
set forth in Section 1.3(a) above are correct and Lender has not issued any
written notices of default to Original Borrower that have not been cured.
1.5 Reaffirmations. Original Borrower reaffirms and, to the best of New
Borrower's knowledge, New Borrower affirms and confirms the truth and accuracy
of all representations and warranties set forth in the Loan Documents as if made
on the date hereof.
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ARTICLE 2
COVENANTS OF BORROWER PARTIES
Borrower Parties covenant and agree with Lender that:
2.1 Assumption of Loan. New Borrower hereby assumes the indebtedness
due under the Loan and all of Original Borrower's other obligations, as grantor,
trustor, mortgagor, borrower, indemnitor, guarantor, trustor or maker, as the
case may be, under the Loan Documents to the same extent as if New Borrower had
signed such instruments, rather than Original Borrower. New Borrower agrees to
comply with and be bound by all the terms, covenants and agreements, conditions
and provisions set forth in the Loan Documents.
2.2 Transfer Fee. Simultaneously with the execution hereof, Original
Borrower and/or New Borrower shall pay Lender a transfer fee equal to $7,500.00
and an administrative fee of $125.00.
2.3 Release and Covenant Not To Sue. Borrower Parties, jointly and
severally, on behalf of themselves and all of their respective heirs, successors
and assigns, remise, release, acquit, satisfy and forever discharge Lender or
any of Lender's predecessors in interest and any subsidiary or affiliate of
Lender or any of Lender's predecessors in interest, and all of the past, present
and future officers, directors, contractors, employees, agents, servicers
(including, but not limited to, Lennar Partners, Inc.), attorneys,
representatives, participants, successors and assigns of Lender and Lender's
predecessors in interest (collectively, "Lender Parties") from any and all
manner of debts, accountings, bonds, warranties, representations, covenants,
promises, contracts, controversies, agreements, liabilities, obligations,
expenses, damages, judgments, executions, actions, inactions, claims, demands
and causes of action of any nature whatsoever, at law or in equity, known or
unknown, either now accrued or subsequently maturing, which any of Borrower
Parties now has or hereafter can, shall or may have by reason of any matter,
cause or thing, from the beginning of the world to and including the date of
this Agreement, including, without limitation, matters arising out of or
relating to (a) the Loan, including, but not limited to, its administration or
funding, (b) the Loan Documents, (c) the Project or its development, financing
and operation, and (d) any other agreement or transaction between any of
Borrower Parties and any of Lender Parties. Borrower Parties, jointly and
severally, for themselves and all of their respective heirs, successors and
assigns, covenant and agree never to institute or cause to be instituted or
continue prosecution of any suit or other form of action or proceeding of any
kind or nature whatsoever against any of Lender Parties by reason of or in
connection with any of the foregoing matters, claims or causes of action.
As further consideration for the agreements herein contained, Borrower
Parties hereby agree, represent and warrant that the matters released in this
Agreement are not limited to matters which are known or disclosed. In this
connection, Borrower Parties hereby agree, represent, and warrant that they
realize and acknowledge that factual matters now unknown to one or more of the
Borrower Parties may have given or may hereafter give rise to causes of action,
claims, demands, debts, controversies, demands, costs, losses and expenses which
are presently unknown, unanticipated and unsuspected, and Borrower Parties
further agree, represent and warrant and that the release herein contained has
been negotiated and agreed upon in light of that realization and that Borrower
Parties nevertheless hereby intend to release, discharge and acquit all parties
so released from any such unknown claims.
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2.4 Payment of Transaction Costs and Expenses. Borrower Parties shall
pay at the time of execution of this Agreement by Lender: (i) the legal fees and
disbursements of Lender's counsel, Bilzin Sumberg Dunn Price & Axelrod LLP, in
connection with the preparation of this Agreement and the transactions
contemplated in this Agreement; (ii) all recording costs and documentary stamps,
if any, due upon the recording of this Agreement; and (iii) the costs of
updating Lender's policy of title insurance insuring the Mortgage to a current
date and endorsing such policy to include this Agreement in the description of
the Mortgage, or the cost of obtaining a new Lender's title insurance policy
acceptable to Lender insuring the Mortgage as affected by this Agreement.
ARTICLE 3
ADDITIONAL PROVISIONS
3.1 Consent of Lender. Subject to the terms of this Agreement, Lender
hereby consents to the sale of the Project to and the assumption of the Loan by
New Borrower. Borrower Parties agree that this Agreement shall not be deemed an
agreement by Lender to consent to any other sale or conveyance of the Project or
assumption of the Loan. Lender's consent provided herein and New Borrower's
assumption of the Loan shall not modify or alter in any manner the non-recourse
provisions set forth in any of the Loan Documents as they currently apply to
Original Borrower and shall like-wise apply to New Borrower.
3.2 Additional Documents. Contemporaneously with the execution and
delivery of this Agreement and as a material inducement to Lender to enter into
this Agreement, (a) New Borrower and Original Borrower shall have executed and
delivered to Lender UCC-3 Statements of Change amending the Financing Statements
for recording in the Records and filing with the Secretary of' State of Ohio to
add New Borrower as an additional debtor; (b) New Borrower, and New Borrower
Member shall have executed and delivered to Lender a Hazardous Substances
Indemnity Agreement in a form acceptable to Lender; (c) New Borrower Member
shall have executed and delivered to Lender an Indemnity and Guaranty Agreement
in a form acceptable to Lender; (d) Original Borrower and Weprin have executed
and delivered to Lender a Reaffirmation of Hazardous Substances Indemnity
Agreement and Consent of Indemnitors in a form acceptable to Lender; (e) Weprin
has executed and delivered to Lender a Reaffirmation of Indemnity and Guaranty
Agreement and Consent of Indemnitor in a form acceptable to Lender; and (t)
Manager and New Borrower shall have executed a Manager's Consent and
Subordination of Management Agreement, in a form acceptable to Lender.
3.3 References to Loan Documents. All references to the term "Loan
Documents" in the Mortgage and the Assignment of Rents shall hereinafter mean
and refer to (i) all of the Loan Documents described therein, (ii) this
Agreement and (iii) any and all other documents executed in connection with or
otherwise pertaining to this Agreement.
ARTICLE 4
MISCELLANEOUS PROVISIONS
4.1 No Limitation of Remedies. No right, power or remedy conferred upon
or reserved to or by Lender in this Agreement is intended to be exclusive of any
other right, power or remedy conferred upon or reserved to or by Lender under
this Agreement, the Loan Documents or at law, but each and every remedy shall be
cumulative and concurrent, and shall be in addition to each and every other
right, power and remedy given under this Agreement, the Loan Documents or now or
subsequently existing at law.
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4.2 No Waivers. Except as otherwise expressly set forth in this
Agreement, nothing contained in this Agreement shall constitute a waiver of any
rights or remedies of Lender under the Loan Documents or at law. No delay or
failure on the part of any party hereto in the exercise of any right or remedy
under this Agreement shall operate as a waiver, and no single or partial
exercise of any right or remedy shall preclude other or further exercise thereof
or the exercise of any other right or remedy. No action or forbearance by any
party hereto contrary to the provisions of this Agreement shall be construed to
constitute a waiver of any of the express provisions. Any party hereto may in
writing expressly waive any of such party's rights under this Agreement without
invalidating this Agreement.
4.3 Successors or Assigns. Whenever any party is named or referred to
in this Agreement, the heirs, executors, legal representatives, successors,
successors-in-title and assigns of such party shall be included. All covenants
and agreements in this Agreement shall bind and inure to the benefit of the
heirs, executors, legal representatives, successors, successors-in-title and
assigns of the parties, whether so expressed or not.
4.4 Construction of Agreement. Each party hereto acknowledges that it
has participated in the negotiation of this Agreement and no provision shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured, dictated or drafted such provision. Borrower
Parties at all times have had access to an attorney in the negotiation of the
terms of and in the preparation and execution of this Agreement. Borrower
Parties have had the opportunity to review and analyze this Agreement for a
sufficient period of time prior to execution and delivery. No representations or
warranties have been made by or on behalf of Lender, or relied upon by Borrower
Parties, pertaining to the subject matter of this Agreement, other than those
set forth in this Agreement. All prior statements, representations and
warranties, if any, are totally superseded and merged into this Agreement, which
represent the final and sole agreement of the parties with respect to the
subject matters. All of the terms of this Agreement were negotiated at arm's
length, and this Agreement was prepared and executed without fraud, duress,
undue influence or coercion of any kind exerted by any of the parties upon the
others. The execution and delivery of this Agreement is the free and voluntary
act of Borrower Parties.
4.5 Invalid Provision to Affect No Others. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or any related
transaction at the time performance of such provision shall be due, shall
involve transcending the limit of validity presently prescribed by any
applicable usury statute or any other applicable law, with regard to obligations
of like character and amount, then ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity. If any clause or provision
operates or would prospectively operate to invalidate this Agreement, in whole
or in part, then such clause or provision only shall be deemed deleted, as
though not contained, and the remainder of this Agreement shall remain operative
and in full force and effect.
4.6 Notices. Except as otherwise specifically provided to the contrary,
any and all notices, elections, approvals, consents, demands, requests and
responses ("Communications") permitted or required to be given under this
Agreement and the Loan Documents shall not be effective unless in writing,
signed by or on behalf of the party giving the same, and sent by certified or
registered mail, postage prepaid, return receipt requested, or by hand delivery
or overnight courier service (such as Federal Express), to the party to be
notified at the address of such party set forth below or at such other address
within the continental United States as such other party may designate by notice
9
<PAGE>
specifically designated as a notice of change of address and given in accordance
with this Section. Any Communications shall be effective upon the earlier of
their receipt or three days after mailing in the manner indicated in this
Section. Receipt of Communications shall occur upon actual delivery but if
attempted delivery is refused or rejected, the date of refusal or rejection
shall be deemed the date of receipt. Any Communication, if given to Lender, must
be addressed as follows, subject to change as provided above:
Midland Loan Services
MBS Administration
210 West 10th Street
Kansas City, Missouri 64105
Attn: Julie Hawkins
Re: ASW 1995-Cl
Loan No. 009590229
With a copy to:
Bilzin Sumberg Dunn Price & Axelrod LLP
2500 First Union Financial Center
Miami, Florida 33131-2336
Attn: Audrey A. Ellis, Esq.
and, if given to Original Borrower, must be addressed as follows,
notwithstanding any other address set forth in the Loan Documents to the
contrary, subject to change as provided above:
Mad River Properties, Ltd.
c/o Beerman Realty Co.
11 West Monument Building, 8th Floor
Dayton, Ohio 45402
Attn: Eric S. Hungerford, Esq.
With a copy to:
Eric S. Hungerford, Esq.
c/o The Beerman Realty Company
11 West Monument Building, Suite 800
Dayton, Ohio 45402
and, if given to New Borrower, must be addressed as follows, subject to change
as provided above:
Acadia Mad River Property LLC
c/o Acadia Realty Trust
20 Soundview Marketplace
Port Washington, New York II 050
Attn: Robert Masters, Esq.
With a copy to:
Robert Masters, Esq.
c/o Acadia Realty Trust
20 Soundview Marketplace
Port Washington, New York 11050
10
<PAGE>
4.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
4.8 Headings, Exhibits. The headings of the articles, sections and
subsections of this Agreement are for the convenience of reference only, are not
to be considered a part of this Agreement and shall not be used to construe,
limit or otherwise affect this Agreement.
4.9 Modifications . The terms of this Agreement may not be changed,
modified, waived, discharged or terminated orally, but only by an instrument or
instruments in writing, signed by the Party against whom the enforcement of the
change, modification, waiver, discharge or termination is asserted.
4.10 Time of Essence-, Consents. Time is of the essence of this
Agreement and the Loan Documents. Any provisions for consents or approvals in
this Agreement shall mean that such consents or approvals shall not be effective
unless in writing and executed by Lender.
4.11 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.
4.12 Submission to Jurisdiction.
(a) BORROWER PARTIES, TO THE FULL EXTENT PERNUTTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, (i) SUBMIT TO PERSONAL JURISDICTION IN THE STATE OF OHIO OVER
ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS
AGREEMENT, THE NOTE, THE MORTGAGE OR ANY OF THE OTHER LOAN DOCUMENTS, (ii) AGREE
THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION SITTING IN MONTGOMERY COUNTY, OHIO, (iii) SUBMIT
TO THE JURISDICTION OF SUCH COLTRTS, AND, (iv) TO THE FULLEST EXTENT PERMITTED
BY LAW, AGREE THAT THEY WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY
OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). BORROWER PARTIES FURTHER CONSENT
AND AGREE TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE
PREPAID, TO THE BORROWER PARTIES AT THE ADDRESSES FOR NOTICES DESCRIBED HEREIN,
AND CONSENT AND AGREE THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID
AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
(b) BORROWER PARTIES. TO THE FULL EXTENT PERMITTED BY LAW,
HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF
COMPETENT COUNSEL, WAIVE. RELINQUISH AND FOREVER FOREGO THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY
RELATING TO THIS AGREEMENT, THE LOAN DOCUMENTS, THE INDEBTEDNESS SECURED BY THE
11
<PAGE>
LOAN DOCUMENTS OR ANY CONDUCT, ACT OR OMISSION OF BORROWER PARTIES OR ANY OF
THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR
ANY OTHER PERSONS AFFILIATED WITH BORROWER PARTIES IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
The parties have executed and delivered this Agreement as of the day and year
first above
<TABLE>
<S> <C>
Signed, sealed and delivered LENDER:
in the presence of
LASALLE NATIONAL BANK FOR THE BENEFIT OF CERTIFICATEHOLDERS
OF AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION,
COMMERCIAL MORTGAGE PASS -THROUGH CERTIFICATES, SERIES
1995-Cl
Sign: By: LENNAR PARTNERS, INC.,
as attorney-in-fact
Print Name:
By:_______________________________________
Ronald E. Schrager, Vice President
</TABLE>
STATE OF FLORIDA )
) SS.:
COUNTY OF MIAMI-DADE )
The foregoing instrument was acknowledged before me this 19
day of February, 1999, by Ronald E. Schrager, as Vice President of Lennar
Partners Inc., a Florida corporation, on behalf of said corporation as
attorney-in-fact for LASALLE NATIONAL BANK FOR THE BENEFIT OF CERTIFICATEHOLDERS
OF AMERICAN SOUTHWEST FINANCIAL SECURITIES CORPORATION, COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 1995-Cl. He/She is personally known to me or
has produced a Florida driver's license as identification.
-----------------------------
Notary Public, State of Florida
Print Name of Notary:
Notary's Commission Expires:
Signed, sealed and delivered
in the presence of:
ORIGINAL BORROWER:
MAD RIVER PROPERTIES LTD., an Ohio
12
<PAGE>
limited liability company, successor in
interest to Mad River Ltd., an . Ohio
limited partnership
By:_____________________________
William S. Weprin, Manager and President
STATE OF FLORIDA )
) SS.:
COUNTY OF MONROE
I HEREBY CERTIFY that before me personally appeared William S. Weprin,
to me well known and known to me to be the President of MAD RIVER PROPERTIES
LTD., an Ohio limited liability company, successor in interest to Mad River
Ltd., an Ohio limited partnership and he did acknowledge before me that said
instrument is the free act and deed by him for the purposes therein expressed.
WITNESS my hand and official seal this 19th day of February, 1999.
----------------------------------
Notary Public. State of Florida
Print name of Notary
Notary's Commission Expires:
Signed, sealed and delivered NEW BORROWER:
in the presence of:
Sign: ___________________ ACADIA MAD RIVER PROPERTY LLC, a Delaware
limited liability company
By: Acadia Realty Limited Partnership, a
Print:____________________ Delaware limited partnership
By: Acadia Realty Trust, a Maryland real
estate investment trust, its general
partner
By:______________________________________
Kenneth F. Bernstein, President
STATE OF NEW YORK )
) SS:
COUNTY OF NASSAU )
I HEREBY CERTIFY that before me, personally appeared Kenneth F.
Bernstein, to me well known and known to me to be the President of Acadia Realty
Trust, a Maryland real estate investment trust, as the general partner of Acadia
Realty Limited Partnership, a Delaware limited partnership, as the sole member
of ACADIA MAD RIVER PROPERTY LLC, a Delaware limited liability company, and he
did acknowledge before me that said instrument is the free act and deed by him
for the purposes therein expressed.
13
<PAGE>
WITNESS my hand and official seal in the County and State last
aforesaid thiS 22nd day of February, 1999.
Notary Public
EXHIBIT A
PROPERTY DESCRIPTION
PARCEL 1:
Situate in the Township of Miami, County of Montgomery, State of Ohio and being
Lot numbered FIVE (5) Corrective Record Plan Mad River Station No. 2 as recorded
in Plat Book 133, page 3 of the Montgomery County, Ohio Records.
EXCEPTING THEREFROM THE FOLLOWING DESCRIBED REAL ESTATE:
Located in Section 7, Town 1, Range 6 MRS, Miami Township, county of Montgomery,
State of Ohio and being a tract of land described as follows:
Being a part of Lot 5 of Mad River Station No. 2 as recorded in Plat Book 133,
page 3, beginning at the northwest corner of Lot 5 of Mad River Station No. 2 as
recorded in Book 133, page 3 in the Plat Records of Montgomery County, Ohio;
thence with the north line of said Lot 5, South eighty-seven degrees forty-six
minutes thirty-eight seconds (870 461 3811) East for two hundred six and 54/100
(206.54) feet;
then South two degrees thirteen minutes twenty-two seconds (2 13' 22") West for
forty and 00/100 (40.00) feet;
thence North eighty-six degrees twenty minutes zero seconds (86 201 00") West
for one hundred four and 41/100 (104.41) feet;
thence South two degrees eleven minutes fifty-five seconds (2 111 55") East for
forty and 88/100 (40.88) feet to a corner in the west side of said Lot 5;
thence with the west side of said Lot 5 on the following two courses: North
eighty-four degrees five minutes fifty-six seconds (84 051 56") West for
ninety-nine and 89/100 (99.89) feet and North two degrees fifteen minutes f
fifty-six seconds (2 10 151 56") West for seventy-one and 93/100 (71.93) feet to
the point of beginning, containing 0.265 acres, more or less.
PARCEL 11 (EASEMENT)
14
<PAGE>
Together with Easement rights created by Reciprocal Easement Agreement between
Mad River Ltd., an Ohio Limited Partnership, and CAS III Limited Partnership, an
Ohio Limited Partnership, dated February 26, 1993, filed for record October 21,
1993 at 1:57 p.m., and recorded as Deed No. 93-673BO8 of the Montgomery County,
Ohio Records.
PARCEL III:
Situate in the Township of Miami, county of Montgomery, State of Ohio and being
Lots numbered FIVE (5) and SIX (6) Mad River Station 11, Section 2 as recorded
in Plat Book 142, page 40 of Montgomery County, Ohio Records.
PARCEL IV:
Situate in the Township of Miami, county of Montgomery, State of Ohio and being
Lot numbered one (1) Mad River Station 11 as recorded in Plat Book 131, page 17
of Montgomery County Records.
PARCEL V:
Situate in the Township of Miami, County or Montgomery, State of Ohio and being
Lot numbered two (2) Mad River Business Park Section one as recorded inplat Book
123, page 6 of Montgomery County records.
15
<PAGE>
South Burlington Outlet Center
THIS MORTGAGE NOTE MODIFICATION AGREEMENT (this "Agreement") is made as
of the 5th day of May, 1999, by and between HEATHCOTE ASSOCIATES, a New York
limited partnership with an office at 20 Soundview Marketplace, Port Washington,
New York 11050 (the "Borrower"), and HUNTOON HASTINGS CAPITAL CORP., a Delaware
corporation with an office at 9 Old Kings Highway South, Darien, Connecticut
06820 (the "Lender").
WITNESSETH:
WHEREAS, on August 3, 1995, Borrower executed and delivered to the
Lender, among other documents, a Mortgage Note evidencing an indebtedness to the
Lender in the principal amount of $6,100,000.00, which Mortgage Note was
heretofore supplemented pursuant to an Addendum to the Mortgage Note (the
"Addendum") dated as of August 3, 1995, and which Mortgage Note as so
supplemented by the Addendum is herein referred to as the "Note"; and
WHEREAS, the Note is secured by a certain Mortgage, Assignment of Rents
and Security Agreement dated August 3, 1995, made by Borrower to the Lender,
which was recorded in the City Clerk's Office in South Burlington, Vermont on
August 7, 1995, in Volume 380 at Pages 629-660 and is herein referred to as the
"Mortgage"; and
WHEREAS, Borrower has filed a Petition under Chapter 11 of the United
States Bankruptcy Code (Case No. 97B 44045) in the United State Bankruptcy Court
for the Southern District of New York (the Bankruptcy Case"); and
WHEREAS, as of the date hereof, the total principal amount of the
indebtedness of the Borrower to the Lender under the Note (the "Principal Sum")
is $5,897,847.79 (the Principal Sum, together with accrued and unpaid interest,
as provided in the Note and as allowed by law, as of the date hereof, is
hereinafter collectively referred to as the "Indebtedness"); and
WHEREAS, Lender has been requested to consent to certain modifications
of the Note and the Mortgage in connection with the confirmation of a certain
Plan of Reorganization for Heathcote Associates (the "Plan") proposed by the
Official Committee of Unsecured Creditors in the Bankruptcy Case (the
"Committee");
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, it is agreed by and between Borrower and the
Lender as follows:
1. Indebtedness. (a) The current outstanding principal amount of the
Indebtedness due under the Note and secured by the Mortgage is SIX MILLION TWO
HUNDRED TWENTY ONE THOUSAND EIGHT HUNDRED NINETY FIVE AND 85/100 DOLLARS
($6,221,895.85) in lawful money of the United States of America, consisting of
the Principal Sum and accrued and unpaid interest thereon, which, as of the date
hereof, totals $324,048.06 and continues to accrue and which the Lender is
willing to permit the Borrower to amortize pursuant to paragraph 2 of this
Agreement.
<PAGE>
(b) The Indebtedness does not include any administrative premiums owed
by the Borrower to the Lender on account of the Borrower's failure to make
certain payments under the Note which were due and payable prior to the date
hereof. Any such administrative premiums owed by the Borrower to the Lender with
respect to payments due through and including the date hereof are hereby waived
by the Lender; provided, however, that nothing contained herein shall be
construed to constitute a waiver of any administrative premiums which may become
due to the holder of the Note from and after the date hereof by reason of the
Borrower's failure to make payments due under the Note within fifteen (15) days
of the date such payments are due.
2. Interest and Payment Adjustments. The manner of payment of the
unpaid principal evidenced by the Note and the interest thereon will be modified
as follows during, and only during, the period (the "Adjustment Period")
commencing on the date of this Agreement (the effective date of the Plan
following its confirmation by the Court in the Bankruptcy Case; the "Effective
Date") and ending on the earlier to occur of (i) the second anniversary of the
Effective Date and (ii) the date upon which the first payment is made by the
Borrower to the holders of the Preferred Return Interest (as defined and set
forth in the Amended Plan of Reorganization for Heathcote Associates Proposed by
the Official Committee of Unsecured Creditors dated October 9, 1998 (Case No.
97B 44045 (JLG))) (such date being hereinafter referred to as the " Preferred
Return Interest Commencement Date"):
a. Interest Rate. Interest shall accrue on the unpaid
Indebtedness at the rate of seven and one-half percent (7.5 %) per annum.
b. Payment Adjustment. The monthly installment payment shall
consist of interest only and shall be in the amount of THIRTY EIGHT THOUSAND
EIGHT HUNDRED EIGHTY SIX AND 85/100 Dollars ($38,886.85). No portion of any such
payment shall be applied to reduce the Principal Sum of the Note.
3. Restoration of Payment Terms. Immediately upon the expiration of the
Adjustment Period, without any notice to Borrower of any kind, interest on the
unpaid Principal Sum shall again accrue at the rate of nine and seven-eighths
percent (9.875 %) per annum and Borrower's monthly installment payments under
the Note shall equal Fifty Four Thousand Eight Hundred Ninety Four and 14/100
($54,894.14) each, until the entire Indebtedness, if not sooner paid, becomes
due and payable on September 1, 2002.
4. Prepayment Provisions. Anything in the Note to the contrary
notwithstanding, the Note may not be prepaid, in whole or in part until the date
that is the first anniversary of the expiration of the Adjustment Period (i.e.
the earlier to occur of (i) the third anniversary of the Effective Date and (ii)
the first anniversary of the Preferred Return Interest Commencement Date,
following which date the Note may be prepaid in accordance with the provisions
of section 1 of the Addendum, but without penalty or premium.
<PAGE>
5. Representations and Warranties. In order to induce the Lender to
consent to the modification herein contained, Borrower hereby represents,
warrants and covenants that (i) there are no offsets, counterclaims or defenses
against any sums owed under the Note, the Mortgage, any other documents which
wholly or partially secure or guarantee payment of the Note (all of which
documents, if any, together with the Note and the Mortgage are collectively
referred to herein as the "Loan Documents") or this Agreement (ii) Borrower has
full power, authority and legal right to execute this Agreement and to keep and
observe all of the terms of this Agreement on Borrower's part to be observed or
performed, (iii) Borrower has duly authorized the execution and delivery of this
Agreement; (iv) the Loan Documents and this Agreement constitute valid and
binding obligations of Borrower, enforceable in accordance with their respective
terms, and (v) the Lender has performed any and all obligations to be performed
on the part of the Lender pursuant to the Loan Documents to and including the
date hereof.
6. Construction. Except as expressly modified by the provisions of this
Agreement, all terms, provisions and conditions of the Note are hereby ratified
and confirmed and remain in full force and effect. The modifications contained
herein shall not constitute a novation, shall not discharge, satisfy,
extinguish, terminate, impair or, except as expressly modified in or this
Agreement, otherwise affect Borrower's obligations under the Note and shall not
discharge, satisfy, extinguish, terminate, impair or otherwise affect the lien,
security interest and encumbrance of the Mortgage or the priority thereof.
7. Miscellaneous. This Agreement shall inure to the benefit of and
shall be binding upon Borrower and the Lender, and their respective successors
and assigns. This Agreement and any provision hereof may not be modified,
waived, amended, extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Borrower or the Lender, but only by an
agreement in writing and signed by the party against whom enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought. This Agreement may be executed in counterparts, each of which is an
original, but all of which together shall constitute one and the same
instrument. If any term, covenant or condition of this Agreement shall be held
to be invalid, illegal, or unenforceable in any respect, this Agreement shall be
construed without such provision. This Agreement shall be governed by and
construed in accordance with the laws of the State of Vermont and the applicable
laws of the United States of America.
IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
parties on the day and year first written above.
<PAGE>
WITNESS OR ATTEST BORROWER:
- --------------------- HEATHCOTE ASSOCIATES, L.P.
By: Acadia Heathcote LLC
Its general partner
By: Acadia Realty Limited Partnership
Its sole member
By: Acadia Realty Trust Its general partner
By:______________________________
Kenneth F. Bernstein
President
LENDER:
HUNTOON HASTINGS CAI?ITAL CORP.
By:__________________________
Mark L. Perdoncin
Vice President
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
On the _ day of April, 1999, before me personally came Kenneth F.
Bernstein, to me known to be the person who executed the foregoing instrument,
and who, being duly sworn by me, did depose and say he is the President of
ACADIA REALTY TRUST, a New York corporation, and Borrower herein, and that he
executed the foregoing instrument its name, and that he had authority to sign
<PAGE>
the same, and he acknowledged to me that he executed the same as the act and
deed of said corporation for the uses and purposes therein mentioned.
----------------------
Notary Public
STATE OF CONNECTICUT )
): SS: Darien
COUNTY OF FAIRFIELD )
On the day of April, 1999, before me personally came Mark L. Perdoncin
to me known, who, being by me duly sworn, did depose and say that he is the Vice
President of HUNTOON HASTINGS CAPITAL CORP., and that he executed the foregoing
instrument in its name, and that he had authority to sign the same, and he
acknowledged to me that he executed the same as the act and deed of said
corporation for the uses and purposes therein mentioned.
-------------------------
Notary Public
STATE OF NEWYORK )
)SS:
COUNTY OF NASSAU )
On this 20th day of April, 1999, before me personally came
Kenneth F. Bernstein, to me known, who, being by me duly sworn, did depose and
say that he resides in New York; that he is the President of Acadia Realty
Trust, the Trust described in and which executed the foregoing instrument, which
is the general partner of Acadia Realty Limited Partnership, the sole member of
Acadia Heathcote LLC, the general partner of Heathcote Associates, L.P., and
that he signed his name thereto by like order and he acknowledged to me that
<PAGE>
said instrument was executed by said Trust for and in behalf of said limited
partnership.
-----------------------
Notary Public
<PAGE>
PROMISSORY NOTE
U.S. $14,000,000.00 July 7, 1999
FOR VALUE RECEIVED, and at the times hereinafter specified,
ACADIA MERRILLVILLE REALTY, L.P., an Indiana limited partnership ("Maker"),
whose address is 20 Soundview Marketplace, Port Washington, New York 11050,
hereby promises to pay to the order of SUNAMERICA LIFE FNSURANCE COMPANY, an
Arizona corporation (hereinafter referred to, together with each subsequent
holder hereof, as "Holder"), at I SunAmerica Center, Century City, Los Angeles,
California 90067-6022, or at such other address as may be designated from time
to time hereafter by any Holder, the principal sum of FOURTEEN MILLION AND
NO/100THS DOLLARS ($14,000,000.00), together with interest on the principal
balance outstanding from time to time, as hereinafter provided, in lawful money
of the United States of America.
By its execution and delivery of this promissory note (this
"Note"), Maker covenants and agrees as follows:
1. Definitions. For purposes of this Note, the following terms
shall have the meanings ascribed to them below. Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Mortgage
(hereinafter defined).
(a) "Business Day" shall have the meaning ascribed to
it in Section 8 of this Note.
(b) "Conversion Date" shall mean the first day of the
month following the date on which the LIBOR Rate is converted to the
Remaining Term Fixed Rate pursuant to Section 3 of this Note.
(c) "Effective Rate" shall mean:
(i) for the period commencing on the date
hereof through an including July 31, 1999, seven and thirty-six
hundredths percent (7.36)% per annum;
(ii) for the period commencing on August 1,
1999, and continuing through the day immediately preceding the
Conversion Date, if any, or if the Conversion Date does not occur,
through the Original Maturity Date, the LIBOR Rate; and
(iii) for the period commencing on the
Conversion Date, if any, and continuing through the Original Maturity
Date, the Remaining Term Fixed Rate.
(d) "LIBOR Determination Date" shall mean July 29,
1999, and each succeeding date that is two (2) Business Days prior to
the commencement date of a LIBOR Period.
(e) "LIBOR Index" shall mean the rate per annum for
United States dollar deposits quoted as the London Inter-Bank Offered
Rate ("LIBOR") as reported by Telerate News Service on the LIBOR
Determination Date for delivery of funds on such LIBOR Determination
Date for a period comparable to the LIBOR Period and in an amount
approximately equal to the principal amount of this Note outstanding
on such date.
<PAGE>
(f) "LIBOR Period" shall mean the three-month period
commencing on August 1, 1999 ("the LIBOR Period Commencement Date"),
and each succeeding three-month period, and commencing on the first
day of November, February, May and August.
(g) "LIBOR Rate" shall mean a rate per annum equal to the sum
of the LIBOR Index plus the Margin.
(h) "Margin" shall mean two and five hundredths percent
(2.05%) per annum.
(i) "Original Maturity Date" shall mean August 1, 2002.
(j) "Principal and Interest Calculation" shall mean the
recalculation of combined payments of principal and interest on each
LIBOR Determination Date, based on the amount of principal balance
outstanding on such LIBOR Determination Date, which shall bear
interest at the LIBOR Rate, as determined for such LIBOR Period, and
re-amortized for each LIBOR Period based on the Original Amortization
Period minus the number of months actually elapsed from the LIBOR
Period Commencement Date.
(k) "Remaining Term Fixed Rate" shall mean a rate per annum
equal to the sum of the Remaining Term Index plus the Margin.
(1) "Remaining Term Index" shall mean the yield on the U.S.
Treasury Constant Maturity Series maturing on the Original Maturity
Date, for the week prior to the Conversion Date, as reported in
Federal Reserve Statistical Release H.15 Selected Interest Rates,
conclusively determined by Holder on the Conversion Date.
2. Interest Rate and Payments.
(a) The balance of principal outstanding from time to time
under this Note shall bear interest at a rate per annum, based on actual days in
the year divided by a three hundred sixty (360) day year composed of twelve (12)
months of thirty (30) days each, equal to the Effective Rate in effect from time
to time.
(b) Interest only on the outstanding principal balance of this
Note shall be payable on the date hereof, in advance, for the period from and
including the date hereof through and including July 31. 1999.
(c) Commencing on September 1, 1999, and on the first day of
each month thereafter through and including July 1, 2002, combined payments of
principal and interest shall be payable, in arrears, in an amount sufficient to
fully amortize the original principal amount of this Note over a three hundred
month amortization period (the "Original Amortization Period").
(d) For periods during which the LIBOR Rate shall be in
effect, the amount of the combined monthly payments of principal and interest
shall be recalculated based on the Principal and Interest Calculation, as of the
beginning of each LIBOR Period, and the LIBOR Rate shall be consecutively
redetermined and established as of the applicable LIBOR Determination Date,
effective as of the first day of the next succeeding calendar month, which shall
be deemed to be the first day of the next succeeding LIBOR Period.
<PAGE>
(e) The entire outstanding principal balance, together with
all accrued and unpaid interest and all other sums due hereunder, shall be due
and payable in full on August 1, 2002 (the "Original Maturity Date").
3. Additional LIBOR Provisions.
(a) If Holder at any time shall determine that for any reason
adequate and reasonable means do not exist for ascertaining the LIBOR Rate, then
Holder shall promptly give notice thereof to Maker. If such notice is given and
until such notice has been withdrawn by Holder, then (i) no new LIBOR Rate shall
be set by Holder, and (ii) any portion of the outstanding principal balance
hereof which bears interest at the LIBOR Rate, subsequent to the end of the
LIBOR period applicable thereto, shall bear interest at the Remaining Term Fixed
Rate.
(b) If any law, treaty, rule, regulation or determination of a
court or governmental authority or any change therein or in the interpretation
or application thereof (each, a "Change in Law") shall make it unlawful for
Holder (i) to make LIBOR based interest rate options available hereunder, or
(ii) to maintain interest rates based on LIBOR, then in the former event, any
obligation of Holder to make available such unlawful LIBOR-based interest rate
shall immediately be cancelled, and in the latter event, any such unlawful
LIBOR-based interest rates then outstanding shall be converted to the Remaining
Term Fixed Rate; provided, however, that if any such change in law shall permit
any LIBOR-based interest rates to remain in effect until the expiration of the
term thereof applicable thereto, then such permitted LIBOR-based interest rates
shall continue in effect until the expiration of such term. Upon the occurrence
of any, of the foregoing events, Maker shall pay to Holder immediately upon
demand such amounts as may be necessary to compensate Holder for any fines,
fees, charges, penalties or other costs incurred or payable by Holder as a
result thereof and which are attributable to any LIBOR-based interest rate made
available to Maker hereunder, and any reasonable allocation made by Holder among
its operations shall be conclusive and binding upon Maker.
(c) if any Change in Law or compliance by Holder with any
request or directive (whether or not having the force of law) from any central
bank or other governmental authority shall:
(i) subject Holder to any tax, duty or other charge
with respect to any LIBOR-based interest rate, or change the basis of
taxation of payments to Holder of principal, interest, fees or any
other amount payable hereunder (except for changes in the rate of tax
on the overall net income of Holder); or
(ii) impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances or loans by, or any other acquisition of funds by any
office of Holder; or
(iii) impose on Holder any other condition;
and the result of any of the foregoing is to increase the cost to Holder of
making, renewing or maintaining any LIBOR-based interest rate hereunder and/or
to reduce any amount receivable by Holder in connection therewith, then in any
such case, Maker shall pay to Holder immediately upon demand such amounts as may
be necessary to compensate Holder for any additional costs incurred by Holder
and/or reductions in amounts received by Holder which are attributable to such
LIBOR-based interest rate. In determining which costs incurred by Holder and/or
reductions in amounts received by Holder are attributable to any LIBOR-based
interest rate made available to Maker hereunder, any reasonable allocation made
by Holder among its operations shall be conclusive and binding upon Maker.
<PAGE>
4. Holder's Extension Option; Net Operating Income.
(a) If Maker shall fail to pay the outstanding
principal balance of this Note and all accrued interest and other charges due
hereon at the Original Maturity Date, Holder shall have the right, at Holder's
sole option and discretion, to extend the term of the loan evidenced by this
Note (the "Loan") for an additional period of five (5) years (the "Extension
Term"). If Holder elects to extend the term of the Loan, Maker shall pay all
fees of Holder incurred in connection with such extension, including, but not
limited to, attorneys' fees and title insurance premiums. Maker shall execute
all documents reasonably requested by Holder to evidence and secure the Loan, as
extended, and shall obtain and provide to Holder any title insurance policy or
endorsement requested by Holder.
(b) Should Holder elect to extend the term of 'the
Loan as provided above, Holder shall (i) reset the interest rate borne by the
then-existing principal balance of the Loan to a rate per annum (the "New Rate")
equal to Holder's (or comparable lenders', if Holder is no longer making such
loans) then-prevailing interest rate for five (5) year loans secured by
properties similar to the Property (hereinafter defined), as determined by
Holder in its sole discretion; (ii) re-amortize the then-existing principal
balance of the Loan over the remaining portion of the Amortization Period (the
"New Amortization Period"); (iii) have the right to require Maker to enter into
modifications of the non-economic terms of the Loan Documents as Holder may
request (the "Non-Economic Modifications"); and (iv) notwithstanding any
provision set forth in the Loan Documents to the contrary, have the right to
require Maker to make monthly payments into escrow for insurance premiums and
real property taxes, assessments and similar governmental charges. Hence,
monthly principal and interest payments during the Extension Term shall be based
upon the New Rate, and calculated to amortize fully the outstanding principal
balance of the Loan over the New Amortization Period.
(c) If Holder elects to extend the term of the Loan,
Holder shall advise Maker of the New Rate on or prior to the Original Maturity
Date.
(d) In addition to the required monthly payments of
principal and interest set forth above, commencing on the first day of the
second month following the Original Maturity Date and continuing on the first
day of each month thereafter during the Extension Term (each an "Additional
Payment Date"), Maker shall make monthly payments to Holder in an amount equal
to all Net Operating Income (hereinafter defined) attributable to the Property
for the calendar month ending on the last day of the month that is two months
preceding each such Additional Payment Date. For example, assuming the Original
Maturity Date is January 1, then Net Operating Income for the period from
January I through January '31 shall be payable to Holder on March 1; Net
Operating Income for the period from February I through February 28 shall be
payable to Holder on April 1, and so on.
(e) Holder shall deposit all such Net Operating
Income received from Maker into an account or accounts maintained at a financial
institution chosen by Holder or its servicer in its sole discretion (the
"Deposit Account") and all such funds shall be invested in a manner acceptable
to Holder in its sole discretion. All interest, dividends and earnings credited
to the Deposit Account shall be held and applied in accordance with the terms
hereof.
<PAGE>
(f) On the third Additional Payment Date and on each
third Additional Payment Date thereafter, Holder shall apply all Excess Funds
(hereinafter defined), if any, to prepayment of amounts due under this Note,
without premium or penalty.
(g) As security for the repayment of the Loan and the
performance of all other obligations of Maker under the Loan Documents, Maker
hereby assigns, pledges, conveys, delivers, transfers and grants to Holder a
first priority security interest in and to: all Maker's right, title and
interest in and to the Deposit Account; all rights to payment from the Deposit
Account and the money deposited therein or credited thereto (whether then due or
in the future due and whether then or in the future on deposit); all interest
thereon; any certificates, instruments and securities, if any, representing the
Deposit Account; all claims, demands, general intangibles, chooses in action and
other rights or interests of Maker in respect of the Deposit Account; any monies
then or at any time thereafter deposited therein; any increases, renewals,
extensions, substitutions and replacements thereof-, and all proceeds of the
foregoing.
(h) From time to time, but not more frequently than
monthly, Maker may request a disbursement (a "Disbursement") from the Deposit
Account for capital expenses, tenant improvement expenses, leasing commissions
and special contingency expenses. Holder may consent to or deny any such
Disbursement in its sole discretion.
(i) Upon the occurrence of any Event of Default
(hereinafter defined) (i) Maker shall not be entitled to any further
Disbursement from the Deposit Account; and (ii) Holder shall be entitled to take
immediate possession and control of the Deposit Account (and all funds contained
therein) and to pursue all of its rights and remedies available to Holder under
the Loan Documents, at law and in equity.
(j) All of the terms and conditions of the Loan shall
apply during the Extension Term, except as expressly set forth above, and except
that no further extensions of the Loan shall be permitted.
(k) For the purposes of the foregoing:
(i) "Excess Funds" shall mean, on any Additional Payment Date,
the amount of funds then existing in the Deposit Account (including any Net
Operating Income due on the applicable Additional Payment Date), less an amount
equal to the sum of three regularly scheduled payments of principal and interest
due on this Note;
(ii) "Net Operating, Income" shall mean, for any particular
period of time, Gross Revenue for the relevant period, less Operating Expenses
for the relevant period; provided, however, that if such amount is equal to or
less than zero (0), Net Operating Income shall equal zero (0);
(iii) "Gross Revenue" shall mean all payments and other
revenues (exclusive, however, of any payments attributable to sales taxes)
received by or on behalf of Maker from all sources related to the ownership or
operation of the Property, including, but not limited to, rents, room charges,
parking fees, interest, security deposits (unless required to be held in a
segregated account), business interruption insurance proceeds, operating expense
passthrough revenues and common area maintenance charges, for the relevant
period for which the calculation of Gross Revenue is being made; and
<PAGE>
(iv) "Operating Expenses" shall mean the sum of all ordinary
and necessary operating expenses actually paid by Maker in connection with the
operation of the Property during the relevant period for which the calculation
of Operating Expenses is being made, including, but not limited to, (a) payments
made by Maker for taxes and insurance required under the Loan Documents, and (b)
monthly debt service payments as required under this Note.
5. Budgets During Extension Term.
(a) Within fifteen (15) days following the Original
Maturity Date and on or before December I of each subsequent calendar year,
Maker shall deliver to Holder a proposed revenue and expense budget for the
Property for the remainder of the calendar year in which the Original Maturity
Date occurs or the immediately succeeding calendar year (as applicable). Such
budget shall set forth Maker's projection of Gross Revenue and Operating
Expenses for the applicable calendar year, which shall be subject to Holder's
reasonable approval. Once a proposed budget has been reviewed and approved by
Holder, and Maker has made all revisions requested by Holder, if any, the
revised budget shall be delivered to Holder and shall thereafter become the
budget for the Property hereunder (the "Budget") for the applicable calendar
year. If Maker and Holder are unable to agree upon a Budget for any calendar
year, the budgeted Operating Expenses (excluding extraordinary items) provided
in the Budget for the Property for the preceding calendar year shall be
considered the Budget for the Property for the subject calendar year until Maker
and Holder agree upon a new Budget for such calendar year-
(b) During the Extension Term, Maker shall operate
the Property in accordance with the Budget for the applicable calendar year, and
the total of expenditures relating to the Property exceeding one hundred and
five percent (105%) of the aggregate of such expenses set forth in the Budget
for the applicable time period shall not be treated as Operating Expenses for
the purposes of calculating "Net Operating Income," without the prior written
consent of Holder except for emergency expenditures which, in the Maker's good
faith judgment, are reasonably necessary to protect, or avoid immediate danger
to, life or property.
6. Reports During Extension Term.
(a) During the Extension Term, Maker shall deliver to
Holder all financial statements reasonably required by Holder to calculate Net
Operating Income, including, without limitation, a monthly statement to be
delivered to Holder concurrently with Maker's payment of Net Operating Income
that sets forth the amount of Net Operating Income accompanying such statement
and Maker's calculation of Net Operating Income for the relevant calendar month.
Such statements shall be certified by an executive officer of Maker or Maker's
manager, managing member or general partner (as applicable) as having been
prepared in accordance with the terms hereof and to be true, accurate and
complete in all material respects.
(b) In addition, on or before February 1 of each
calendar year during the Extension Term, Maker shall submit to Holder an annual
income and expense statement for the Property which shall include the
calculation of Gross Revenue, Operating Expenses and Net Operating Income for
the preceding calendar year and shall be accompanied by Maker's reconciliation
of any difference between the actual aggregate amount of the Net Operating
Income for such calendar year and the aggregate amount of Net Operating Income
for such calendar year actually remitted to Holder. All such statements shall be
certified by an executive officer of Maker or Maker's manager, managing member
or general partner (as applicable) as having been prepared in accordance with
the terms hereof and to be true, accurate and complete in all material respects.
If any such annual financial statement discloses any inconsistency between the
calculation of Net Operating Income and the amount of Net Operating Income
actually remitted to Holder, Maker shall immediately remit to Holder the amount
of any underpayment of Net Operating Income for such calendar year or, in the
event of an overpayment by Maker, such amount may be withheld from any
subsequent payment of Net Operating Income required hereunder.
<PAGE>
(c) Holder may notify Maker within ninety (90) days
after receipt of any statement or report required hereunder that Holder disputes
any computation or item contained in any portion of such statement or report. If
Holder so notifies Maker. Holder and Maker shall meet in good faith within
twenty (20) days after Holder's notice to Maker to resolve such disputed items.
If, despite such good faith efforts, the parties are unable to resolve the
dispute at such meeting or within ten (10) days thereafter, the items shall be
resolved by an independent certified public accountant designated by Holder
within fifteen (I 5) days after such ten (10) day period. The determination of
such accountant shall be final. All fees of such accountant shall be paid by
Maker. Maker shall remit to Holder any additional amount of Net Operating Income
found to be due for such periods within ten (10) days after the resolution of
such dispute by the parties or the accountant's determination, as applicable.
The amount of any overpayment found to have been made for such periods may be
withheld from any required future remittance of Net Operating Income.
(d) Maker shall at all times keep and maintain full
and accurate books of account and records adequate to reflect correctly all
items required in order to calculate Net Operating Income.
7. Prepayment.
(a) During the first (1st) year after the date of
this Note, Maker shall have no right to prepay all or any part of this Note.
(b) At any time after the first (1st) anniversary of
the date of this Note, Maker shall have the right to prepay the principal amount
of this Note, in whole or in part, and all accrued but unpaid interest hereon as
of the date of prepayment, provided that (i) Maker gives not less than thirty
(30) days' prior written notice to Holder of Maker's election to prepay this
Note, and (ii) Maker pays a prepayment premium to Holder equal to one-half
percent (1/2%) of the principal amount of this Note being prepaid, calculated as
of the prepayment date.
(c) Holder shall notify Maker of the amount and basis
of determination of the prepayment premium. Holder shall not be obligated to
accept any prepayment of the principal balance of this Note unless such
prepayment is accompanied by the applicable prepayment premium and all accrued
interest and other sums due under this Note.
(d) If Holder accelerates this Note for any reason,
then in addition to Maker's obligation to pay the then outstanding principal
balance of this Note and all accrued but unpaid interest thereon, Maker shall
pay an additional amount equal to the prepayment premium that would be due to
Holder if Maker were voluntarily prepaying this Note at the time that such
acceleration occurred, or if under the terms hereof no voluntary prepayment
would be permissible on the date of such acceleration, Maker shall pay a
prepayment premium calculated as set forth in the Mortgage
<PAGE>
(e) Notwithstanding the foregoing, (i) at any time
during the Extension Term, Maker shall have the right to prepay the full
principal amount of this Note and all accrued but unpaid interest thereon as of
the date of prepayment, without prepayment premium thereon, and (ii) no
prepayment premium shall be due in connection with the application of any
insurance proceeds or condemnation awards to the principal balance of this Note,
as provided in the Mortgage.
8. Dates of Payments. Whenever any payment to be made under
this Note shall be stated to be due on a Saturday, Sunday or public holiday or
the equivalent for banks generally under the laws of the State of Indiana (any
other day being a "Business Day"), such payment may be made on the next
succeeding Business Day.
9. Default Rate.
(a) The entire balance of principal, interest, and
other sums due upon the maturity hereof, by acceleration or otherwise, shall
bear interest from the date due until paid at the greater of (i) fifteen percent
(I 5 %) per annum and (ii) a per annum rate equal to five percent (5%) over the
prime rate (for corporate loans at large United States money center commercial
banks) published in The Wall Street Journal on the first business day of each
month (the "Default Rate"); provided, however, that such rate shall not exceed
the maximum permitted by applicable state or federal law. In the event The Wall
Street Journal is no longer published or no longer publishes such prime rate,
Holder shall select a comparable reference.
(b) If any payment under this Note is not made within
five days of the date when due, interest shall accrue at the Default Rate from
the date such payment was due until payment is actually made.
10. Late Charges. In addition to interest as set forth herein,
Maker shall pay to Holder a late charge equal to four percent (4%) of any
amounts due under this Note in the event any such amount is not paid when due.
11. Application of Payments. All payments hereunder shall be
applied first to the payment of late charges, if any, then to the payment of
prepayment premiums, if any, then to the repayment of any sums advanced by
Holder for the payment of any insurance premiums, taxes, assessments, or other
charges against the property securing this Note (together with interest thereon
at the Default Rate from the date of advance until repaid), then to the payment
of accrued and unpaid interest, and then to the reduction of principal.
12. Immediately Available Funds. Payments under this Note
shall be payable in immediately available funds without setoff, counterclaim or
deduction of any kind, and shall be made by electronic funds transfer from a
bank account established and maintained by Maker for such purpose.
13. Security. This Note is secured by a Mortgage, Security
Agreement, Fixture Filing, Financing Statement and Assignment of Leases and
Rents of even date herewith granted by Maker for the benefit of the named Holder
hereof (the "Mortgage") encumbering certain real property and improvements
thereon commonly known as Merrillville Plaza as more particularly described in
such Mortgage (the "Property").
14. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Mortgage.
<PAGE>
15. Event of Default. Each of the following events will
constitute an event of default (an "Event of Default") under this Note and under
the Mortgage and each other Loan Document, and any Event of Default under any
Loan Document shall constitute an Event of Default hereunder and under each of
the other Loan Documents:
(a) any failure to pay within five days of the date when due
any sum hereunder;
(b) any failure of Maker to properly perform any obligation
contained herein or in any of the other Loan Documents (other than the
obligation to make payments under this Note or the other Loan Documents) and the
continuance of such failure for a period of thirty (30) days following written
notice thereof from Holder to Maker; provided, however, that if such failure is
not curable within such thirty (30) day period, then, so long as Maker commences
to cure such failure within such thirty (30) day period and is continually and
diligently attempting to cure to completion, such failure shall not be an Event
of Default unless such failure remains uncured for sixty (60) days after such
written notice to Maker; or
(c) if, at any time during the Extension Term, Gross Revenue
for any calendar month shall be less than ninety-three percent (93%) of the
amount of projected Gross Revenue for such month set forth in the applicable
Budget.
16. Acceleration. Upon the occurrence of any Event of Default,
the entire balance of principal, accrued interest, and other sums owing
hereunder shall, at the option of Holder, become at once due and payable without
notice or demand. Upon the occurrence of an Event of Default described in
Section 15(c) hereof, Holder shall have the option, in its sole discretion, to
either (a) exercise any remedies available to it under the Loan Documents, at
law or in equity, or (b) require Maker to submit a new proposed budget for
Holder's approval. If Holder agrees to accept such new proposed budget, then
such budget shall become the Budget for all purposes hereunder.
17. Conditions Precedent. Maker hereby certifies and declares
that all acts, conditions and things required to be done and performed and to
have happened precedent to the creation and issuance of this Note, and to
constitute this Note the legal, valid and binding obligation of Maker,
enforceable in accordance with the terms hereof, have been done and performed
and happened in due and strict compliance with all applicable laws.
18. Certain Waivers and Consents. Maker and all parties now or
hereafter liable for the payment hereof, primarily or secondarily, directly or
indirectly, and whether as endorser, guarantor, surety, or otherwise, hereby
severally (a) waive presentment, demand, protest, notice of protest and/or
dishonor, and all other demands or notices of any sort whatever with respect to
this Note, (b) consent to impairment or release of collateral, extensions of
time for payment, and acceptance of partial payments before, at, or after
maturity, (c) waive any right to require Holder to proceed against any security
for this Note before proceeding hereunder, (d) waive diligence in the collection
of this Note or in filing suit on this Note, (e) waive relief from applicable
valuation and appraisement laws; and (f) agree to pay all costs and expenses,
including reasonable attorneys' fees, which may be incurred in the collection of
this Note or any part thereof or in preserving, securing possession of, and
realizing upon any security for this Note.
19. Usury Savings Clause. The provisions of this Note and of
all agreements between Maker and Holder are, whether now existing or hereinafter
made, hereby expressly limited so that in no contingency or event whatever,
whether by reason of acceleration of the maturity hereof, prepayment, demand for
payment or otherwise, shall the amount paid, or agreed to be paid, to Holder for
<PAGE>
the use, forbearance, or detention of the principal hereof or interest hereon,
which remains unpaid from time to time, exceed the maximum amount permissible
under applicable law, it particularly being the intention of the parties hereto
to conform strictly to Indiana and Federal law, whichever is applicable. If from
any circumstance whatever, the performance or fulfillment of any provision
hereof or of any other agreement between Maker and Holder shall, at the time
performance or fulfillment of such provision is due, involve or purport to
require any payment in excess of the limits prescribed by law, then the
obligation to be performed or fulfilled is hereby reduced to the limit of such
validity, and if from any circumstance whatever Holder should ever receive as
interest an amount which would exceed the highest lawful rate, the amount which
would be excessive interest shall be applied to the reduction of the principal
balance owing hereunder (or, at Holder's option, be paid over to Maker) and
shall not be counted as interest. To the extent permitted by applicable law,
determination of the legal maximum amount of interest shall at all times be made
by amortizing, prorating, allocating and spreading in equal parts during the
period of the full stated term of this Note, all interest at any time contracted
for, charged, or received from Maker in connection with this Note and all other
agreements between Maker and Holder, so that the actual rate of interest on
account of the indebtedness represented by this Note is uniform throughout the
term hereof.
20. Non-Recourse-, Exceptions to Non-Recourse. Except as
expressly hereinafter set forth, the recourse of Holder with respect to the
obligations evidenced by this Note shall be solely to the Property, Chattels,
and Intangible Personalty (as such terms are defined in the Mortgage).
Notwithstanding anything to the contrary contained in this Note or in any Loan
Document, nothing shall be deemed in any way to impair, limit or prejudice the
rights of Holder (a) in foreclosure proceedings or in any ancillary proceedings
brought to facilitate Holder's foreclosure on the Property or any portion
thereof, (b) to recover from Maker damages or costs (including without
limitation reasonable attorneys' fees) incurred by Holder as a result of waste
by Maker; (c) to recover from Maker any condemnation or insurance proceeds
attributable to the Property which were not paid to Holder or used to restore
the Property in accordance with the terms of the Mortgage; (d) to recover from
Maker any rents, profits, security deposits, advances, rebates, prepaid rents or
other similar sums attributable to the Property collected by or for Maker
following an Event of Default under any Loan Document and not properly applied
to the reasonable fixed and operating expenses of the Property, including
payments of this Note; (e) to pursue the personal liability of Maker under the
provisions of Section 5.10 of the Mortgage, including any indemnification
provisions under such Section; (f) to exercise any specific rights or remedies
afforded Holder under any other provisions of the Loan Documents or by law or in
equity (or to recover under any guarantee agreement given in connection with
this Note); (g) to recover from Maker the amount of any accrued taxes,
assessments, and/or utility charges affecting the Property (whether or not the
same have been billed to Maker) that are either unpaid by Maker or paid by
Holder under the Mortgage and to collect from Maker any sums expended by Holder
in fulfilling the obligations of Maker, as lessor, under any leases affecting
the Property; (h) to pursue any personal liability of Maker and/or Guarantor
under the Environmental Indemnity Agreement; and (i) to recover from Maker the
amount of any loss suffered by Holder (that would otherwise be covered by
insurance) as a result of Maker's failure to maintain any insurance required
under the terms of any Loan Document. The agreement contained in this paragraph
to limit the personal liability of Maker shall become null and void and be of no
further force and effect in the event (i) that the Property or any part thereof
or any interest therein, or any interest in Maker, shall be further encumbered
by a voluntary lien securing any obligation upon which Maker or any general
partner, principal or affiliate of Maker shall be personally liable for
repayment, whether as obligor or guarantor;
<PAGE>
(ii) of any breach or violation of Section 5.4, 5.5 or 5.7 of
the Mortgage; (iii) of any fraud or misrepresentation by Maker in connection
with the Property, the Loan Documents or the application made by Maker for the
Loan; or (iv) of any execution, amendment, modification or termination of any
lease of any portion of the Property without the prior written consent of Holder
if such consent is required under the terms of the Loan Documents. For purposes
of the foregoing, "affiliate" shall mean any individual, corporation, trust,
partnership or any other person or entity controlled by, controlling or under
common control with Maker. A person or entity of any nature shall be presumed to
have control when it possesses the power, directly or indirectly, to direct, or
cause the direction of, the management or policies of another person or entity,
whether through ownership of voting securities, by contract, or otherwise.
21. Severability. If any provision hereof or of any other
document securing or related to the indebtedness evidenced hereby is, for any
reason and to any extent, invalid or unenforceable, then neither the remainder
of the document in which such provision is contained, nor the application of the
provision to other persons, entities, or circumstances, nor any other document
referred to herein, shall be affected thereby, but instead shall be enforceable
to the maximum extent permitted by law.
22. Transfer of Note. Each provision of this Note shall be and
remain in full force and effect notwithstanding any negotiation or transfer
hereof and any interest herein to any other Holder or participant.
23. Governing Law. Regardless of the place of its execution,
this Note shall be construed and enforced in accordance with the laws of the
State of Indiana.
24. Time of Essence. Time is of the essence of this Note.
25. Remedies Cumulative. The remedies provided to Holder in
this Note, the Mortgage and the other Loan Documents are cumulative and
concurrent and may be exercised singly, successively or together against Maker,
the Property, and other security, or any guarantor of this Note, at the sole and
absolute discretion of the Holder.
26. No Waiver. Holder shall not by any act or omission be
deemed to waive any of its rights or remedies hereunder unless such waiver is in
writing and signed by the Holder and then only to the extent specifically set
forth therein. A waiver ' of 6ne event shall not be construed as continuing or
as a bar to or waiver of any right or remedy granted to Holder hereunder in
connection with a subsequent event.
27. Joint and Several Obligation. If Maker is more than one
person or entity, then (a) all persons or entities comprising Maker are 'jointly
and severally liable for all of the Maker's obligations hereunder; (b) all
representations, warranties, and covenants made by Maker shall be deemed
representations, warranties, and covenants of each of the persons or entities
comprising Maker; (c) any breach, Default or Event of Default by any of the
persons or entities comprising Maker hereunder shall be deemed to be a breach,
Default, or Event of Default of Maker; and (d) any reference herein contained to
the knowledge or awareness of Maker shall mean the knowledge or awareness of any
of the persons or entities comprising Maker.
28. WAIVER OF JURY TRIAL. MAKER AND HOLDER KNOWINGLY,
IRREVOCABLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS
NOTE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE MORTGAGE, OR
ANY OTHER LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY LOAN
DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MAKER AND HOLDER TO ENTER
INTO THE LOAN TRANSACTION EVIDENCED BY THIS NOTE.
<PAGE>
29. WAIVER OF PREPAYMENT RIGHT WITHOUT PREMIUM MAKER HEREBY
EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE UNDER APPLICABLE LAW TO PREPAY THIS NOTE,
IN WHOLE OR IN PART, WITHOUT PREPAYMENT PREMIUM, UPON ACCELERATION OF THE
MATUMTY DATE OF THIS NOTE, AND AGREES THAT, IF FOR ANY REASON A PREPAYMENT OF
ALL OR ANY PART OF THIS NOTE IS MADE, WHETHER VOLUNTARILY OR FOLLOWING ANY
ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER ON ACCOUNT OF THE
OCCURRENCE OF ANY EVENT OF DEFAULT ARISING FOR ANY REASON, INCLUDING, WITHOUT
LIMITATION, AS A RESULT OF ANY PROHIBITED OR RESTRICTED TRANSFER, FURTHER
ENCUMBRANCE OR DISPOSITION OF THE PROPERTY OR ANY PART THEREOF SECURING THIS
NOTE, THEN MAKER SHALL BE OBLIGATED TO PAY, CONCURRENTLY WITH SUCH PREPAYMENT,
THE PREPAYMENT PREMIUM PROVIDED FOR IN THIS NOTE OR, IN THE EVENT OF PREPAYMENT
FOLLOWING ACCELERATION OF THE MATURITY DATE HEREOF WHEN THIS NOTE IS CLOSED TO
PREPAYMENT, AS PROVIDED IN THE MORTGAGE. MAKER HEREBY DECLARES THAT HOLDER'S
AGREEMENT TO MAKE THE LOAN AT THE INTEREST RATE AND FOR THE TERM SET FORTH IN
THIS NOTE CONSTITUTES ADEQUATE CONSIDEPATION, GIVEN INDIVIDUAL WEIGHT BY MAKER,
FOR THIS WAIVER AND AGREEMENT.
IN WITNESS WHEREOF and intending to be legally bound, Maker
has duly executed this Note as of the date first above written.
ACADIA MERRILLVILLE REALTY, L.P.,
an Indiana limited partnership
By: ACADIA MERRILLVILLE REALTY, INC., an Indiana corporation, its sole General
Partner
By: _______________________
Kenneth F. Bernstein
President
<PAGE>
PACESETTER/RAMAPO ASSOCIATES,
Maker,
and
M&T REAL ESTATE, INC.,
Holder,
MORTGAGE AND NOTE MODIFICATION AGREEMENT
Dated as of February 27, 1998
This instrument affects real and personal property situated in the State of New
York, in Section 4, Lot 13Fl on the Tax Map of The Town of Ramapo, Rockland
County, known as the Pacesetter Shopping Center, 1581 Route 202, Pomona, New
York 10970
RECORD AND RETURN TO:
KRASHES, ROSS, GESS & BROWN
Attorneys at Law
52 South Main Street
Spring Valley, NY 10977
<PAGE>
MORTGAGE AND
NOTE-MODIFICATION AGREEMENT
THIS MORTGAGE AND NOTE MODIFICATION AGREEMENT (this "Agreement") dated as
of the 27th day of February 1998, between M&T RF-AL ESTATE, INC., a New York
corporation having its chief executive office at One Fountain Plaza, Buffalo,
New York 142032399 ("Holder"), and PACESETTER/RAMAPO ASSOCIATES, a New York
limited partnership having its office at 1281 East Main Street, Stamford,
Connecticut 06902 ("Maker").
WHEREAS, Holder made a loan (the "Loan") to Maker in the amount of
$4,900,000.00 as evidenced by a Mortgage Note dated February 21,1997 made by
Maker in Favor of Holder (the "Note"); and
WHEREAS, the Note is secured by the mortgages described on the Schedule of
Mortgages attached hereto and made a part hereof (collectively, the "Mortgage")
, encumbering those premises as described on Exhibit A attached hereto and made
a part hereof; and
WHEREAS, Holder and Maker have agreed to modify and amend the terms of the
Note and the mortgage in the manner hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein set forth
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Holder and Maker agree as follows:
1. The outstanding principal balance of the Note as of the date hereof
is FOUR MILLION EIGHT HUNDRED SEVEN THOUSAND SEVEN HUNDRED FORTY ONE AND 79/100
($4,807,741.79).
2. The Note is hereby modified and amended as follows:
a. On page one of the Note, in the provision which is
captioned "Term," the word "six" is deleted and the word "one' is substituted
therefore and the words "March 1, 2003 are deleted and the words "March 1, 1999
are substituted therefore.
b. On page one of the Note, the provision which is captioned
"Interest" is deleted (as is the corresponding addendum provision 1) in its
entirety and the provision captioned "Repayment of Principal and Interest" is
deleted in its entirety, and the following provisions are substituted therefor:
REPAYMENT OF PRINCIPAL AND INTEREST
Maker shall pay the principal sum and interest owing to Holder, its successors
and/or assigns, in installments as follows:
(1) By the payment On March 1 , 1998 of $30,692.09 representing the
installment of interest equal in amount to the interest on the unpaid
principal balance from February 1, 1998 to the date of this Agreement
at the fixed rate of 8.2%, plus the installment of interest equal in
amount to the interest which will accrue at the fixed rate of 8.18% per
annum during the period beginning on the date of this Agreement and
ending on the last calendar day of February, 1998
<PAGE>
(2) 11 consecutive level monthly payments consisting of both principal and
interest at the fixed rate of 8.18% per annum, with principal amortized
over a period of twenty years, each installment of principal and
interest being in the amount of $40,754.13, shall become due and
payable on the 1st day of each month commencing on April 1, 1998, and
one final installment of principal, interest and expenses to become due
on the 1st day of March, 1999 (the "Maturity Date").
The amount due on the Maturity Date will be equal to the total of the
outstanding unpaid principal sum and all accrued and unpaid interest, premiums,
late charges, if any, and all other amounts owing pursuant to the Note and the
Mortgage.
Maker may extend the Maturity Date each year at maturity for one, two,
three or four additional years from the original Maturity Date set forth above,
provided the Maturity Date may not be extended beyond March 1, 2003, pursuant to
this subparagraph (b). The interest rate during any extended period will be set
two business days prior to any extension date, as follows:
EXTENSION TERM RATE
One year 275 basis points over the 1 year Treasury Bill rate
in effect two business days prior to maturity.
Two years 275 basis points over the 2 year Treasury Bill rate
in effect two business days prior to maturity.
Three years 275 basis points over the 3 year Treasury Bill rate
in effect two business days prior to maturity.
Four years 275 basis points over the 4 year Treasury Bill rate
in effect two business days prior to maturity.
The monthly payment for principal and interest during any Extension Term
will be calculated using the principal balance remaining to be paid over the
remaining portion of the original twenty year amortization period.
c. The provision on page one of the Note captioned
"Prepayment" is deleted (as is the first paragraph of the corresponding addendum
provision 3) and the following is substituted therefore:
PREPAYMENT PRIVILEGES:
Maker may prepay the unpaid principal balance at any time in whole or in
part upon payment of a prepayment penalty equal to 1% of the principal amount
prepaid during the first one year term hereof.
If the loan is extended for one year terms set forth herein the prepayment
penalty during any such one year extension periods shall be 1% of the principal
amount prepaid.
If the loan is extended for either two, three or four year terms, the
prepayment penalty will match the number of years remaining to the new Maturity
Date. For example, two years: 2% during the first year and 1% during the second
<PAGE>
year. Three years: 3% during the 1st year, 2% during the second and 1% during
the third year. Four years: 4% during the first year, 3% during the second year,
2% during the third year and 1% during the fourth year.
Notwithstanding the foregoing there shall be no prepayment charge during the
last 60 days of any extended term.
3 . Wherever in the Note or the Mortgage or any other documents
evidencing or securing the Loan, reference is made to "the Note" or "the
Mortgage", the same shall mean (and the definitions thereof are amended to be)
the Note and the Mortgage as modified and amended by this Agreement and as the
same may hereafter be modified, amended, renewed or substituted from time to
time.
4. To the extent any terms of the Note or the Mortgage are inconsistent
with any of the provisions of this Agreement, the provisions of this Agreement
shall control and govern, and such inconsistent Note or Mortgage terms shall be
deemed modified to conform to the provisions hereof.
5. Except as herein expressly modified and amended, all of the terms
covenants and conditions of the Note and the Mortgage shall remain unmodified
and in full force and effect.
6. This Agreement shall be binding on, and inure to the benefit of,
Maker and Holder and their respective successors and assigns.
7. The party of the first part's recourse for the satisfaction of the
obligations and liabilities of the party of the second part under this Agreement
and any other documents evidencing or securing the loan will be limited solely
to the party of the second part's interest in the real property and any
structures thereon and neither the party of the second part nor its partners
will have any personal liability under this Agreement or any other loan
documents.
IN WITNESS WHEREOF, Holder and Maker have duly executed this Agreement as
of the date first written above.
M & T REAL ESTATE, INC.
BY: MANUFACTURERS AND TRADERS TRUST
COMPANY,
Attorney in Fact
By:____________________________
JILL E. SODERHOLM
Vice President
PACESETTER/RAMAPO ASSOCIATES,
A NEW YORK LIMITED PARTNERSHIP
By: AmCap, Incorporated,
General Partner
By:____________________________
STEVEN BOLLERMAN,
Treasurer
<PAGE>
STATE OF NEW YORK )
SS.
COUNTY OF WESTCHESTER)
On this 27th day of February, 1998 before me personally came JILL E. SODERHOLM,
to me known who, being by me duly sworn, did depose and say that she resides at
707 Westchester Avenue, White Plains, NY; that she is a Vice President of
Manufacturers and Traders Company, Attorney-In-Fact for M&T REAL ESTATE, INC.,
by virtue of a Power of Attorney recorded in the Rockland County Clerk's Office
in Book 751 at Page 3811 on October 5, 1995 which is the corporation described
in and which executed the foregoing instrument; and that she signed her name by
order of directors of said corporation
BERTRAM P. KRASHES
Notary Public. State of New York
No. 2194220
Qualified in Rockland County
Commission Expires February 28, 1998
STATE OF NEW YORK )
)SS:
COUNTY OF WESTCHESTER)
On the 27th day of February, 1998 before me personally came STEVEN
BOLLERMAN, to me known, who, being by me duly sworn, did depose and say that he
resides at 1281 East Main Street, Stamford, Connecticut; that he is the
Treasurer of AmCap, Incorporated, the corporation described in and which
executed the foregoing instrument as general partner of PACESETTER/RAMAPO
ASSOCIATES, the partnership named in the foregoing instrument; that he signed
his name thereto by authority of the board of directors of said corporation; and
that he executed such instrument as the act and deed of, and on behalf of, said
partnership acting through its corporate general partner.
BERTRAM P. KRASHES
Notary Public. State of New York
No. 2194220
Qualified in Rockland County
Commission Expires February 28, 1998
<PAGE>
SCHEDULE OF MORTGAGES
MORTGAGE (1) Mortgage made by PACESETTER BANK SHOPPING CENTER, to UNITED
JERSEY BA.NY,/NORTHWEST in the principal amount of
$2,300,000.00 dated June 22, 1976 and recorded in the Rockland
County Clerk's Office in Liber 1117 of Mortgages at Page 945
on June 22, 1976 and on which mortgage there was paid mortgage
tax in the amount of $17,250.00, and
which mortgage (1) was assigned by UNITED JERSEY
BANK/NORTHWEST to THE HOWARD SAVINGS BANK by Assignment of
Mortgage dated January 18, 1978 recorded in the Rockland
County Clerk's Office in Liber 1157 of Mortgages at Page 70 on
February 21, 1978, and
MORTGAGE (2) Mortgage made by PACESETTER PARK SHOPPING CENTER, INC. to THE
HOWARD SAVINGS BANK in the principal amount of $400,000.00
dated February 15, 1978 and recorded in the Rockland County
Clerk's office in Liber 1157 of Mortgages at Page 65 on
February 21, 1978, and on which mortgage there was paid
mortgage tax in the amount of $4,000.00, and
which mortgages (1) and (2) were modified by a Mortgage
Modification Agreement made by THE HOWARD SAVINGS BANK with
AGRIPPINA PROPERTY, INC., dated December 10, 1980 and recorded
in the Rockland County Clerk's Office in Liber 1243 of
Mortgages at Page 537 an January 22, 1981, and
which mortgages (1) and (2) were thereafter assigned by THE
HOWARD SAVINGS BANK to THE TRUSTEES OF MELLON PARTICIPATING
MORTGAGE TRUST COMMERCIAL PROPERTIES SERIES 85/10 by
Assignment of Mortgage dated December 30, 1985 recorded in the
Rockland County Clerk's Office in Book 126 of Land Records at
Page 2692 an January 2, 1986, and
MORTGAGE (3) Mortgage made by PACESETTER/RAMAPO ASSOCIATES, A NEW YORK
LIMITED PARTNERSHIP, BORROWER, AMCAP INCORPORATED, A NEW
JERSEY CORPORATION, OWNER, TO THE TRUSTEES OF MELLON
PARTICIPATING MORTGAGE TRUST COMMERCIAL PROPERTIES SERIES
85/10 in the principal amount of $1,696,241.02 dated December
27, 1985 recorded in the Rockland County Clerk's Office in
Book 126 of Land Records at Page 2697 an January 2, 1986, and
on which mortgage there was paid mortgage tax of.$16,962.00,
and
which mortgages (1) (2) and (3) were consolidated and spread
by Agreement of Spreader, Consolidation and Modification of
Mortgage and Note in the principal amount of $4,200,000.00
made between PACESETTER/RAMAPO ASSOCIATES, AMCAP INCORPORATED,
and THE TRUSTEES OF MELLON PARTICIPATING MORTGAGE TRUST
COMMERCIAL PROPERTIES SERIES 85/10 dated December 27, 1985 and
<PAGE>
recorded in the Rockland County Clerk's office in Book 126 of
Land Records at Page 2709 on January 2, 1986, as amended by
First Amendment to Agreement of Spreader, Consolidation and
Modification of Mortgage and Note dated August 25, 1993
recorded in the Rockland County Clerk's Office on September
27, 1993 in Book 643 of Land Records at Page 2029, and Second
Amendment to Agreement of Spreader, Consolidation and
Modification of Mortgage dated August 3, 1995 and recorded in
the Rockland County Clerk's Office in book 748 of Land Records
at Page 400 on August 8, 1995, and
which mortgages (1) (2) and (3) were further assigned by THE
TRUSTEES OF MELLON PARTICIPATING MORTGAGE TRUST COMMERCIAL
PROPERTIES SERIES 85/10 to SCHNITTMAN & SCHNITTMAN by
Assignment and Assumption of Mortgage, Assignment of Leases,
and Note, dated August 3, 1995 and recorded in the Rockland
County Clerk's office in Book 748 of Land Records at Page 411
on August 8, 1995, and
which mortgages (1) (2) and (3) were further assigned by
SCHNITTMAN & SCHNITTMAN to M&T REAL ESTATE, INC. by Assignment
of Mortgage dated February 14, 1997, and recorded in the
Rockland County Clerk's office on March 12, 1997 as Instrument
Number 1997-00009746, and
MORTGAGE (4) Mortgage made by PACESETTER/RAMAPO ASSOCIATES to M&T REAL
ESTATE, INC. in the principal amount of $700,000.00 dated
February 21, 1997 and recorded in the Rockland County Clerk's
Office on March 12, 1997 as Instrument Number 1997-00009680
and on which mortgage there was paid mortgage tax of
$7,.000.00, and
which mortgages (1) (2) (3) and (4) were consolidated into a
single first mortgage lien in the consolidated principal
amount of $4,900,000.00 by Consolidation, Modification and
Extension Agreement between M&T REAL ESTATE, INC. and
PACESETTER/RAMAPO ASSOCIATES dated February 21, 1997 recorded
in the Rockland County Clerk's office on March 12, 1997 as
Instrument Number 199700009694
<PAGE>
SCHEDULE "A"
All that certain plot, piece or parcel of land situate, lying and being in the
Town of Ramapo, County of Rockland and State of New York;
BEGINNING at a point on the southerly side of Route 202 (New York State Highway
#1448), said point being the northwesterly corner of the premises, the
northeasterly corner of land now or formerly of Broadcast construction Corp. ,
and said point lying easterly 1673.53 feet from the easterly right of way line
of Camp Hill Road and said point lying distant westerly 441.50 feet from New
York State Highway monument; and
RUNNING THENCE 1) along the southerly side of Route 202 (New York State 14ighway
tl448) in an easterly direction the following two (2) courses and distances:
a. North 78 degrees 381 5511 East 441.50 feet to a New York State Highway
monument;
THENCE
b. North 78 degrees ill 3511 East 279-01 feet to the northeasterly corner of
the premises and to the northwesterly corner of other lands now or formerly
of Kanaje corporation;
THENCE 2) South 11 degrees 481 2511 East 140.00 feet along the westerly line of
other premises of said Kanaje Corporation; to the southeasterly corner of the
premises;
THENCE 3) North 78 degrees 111 3511 East, along the southerly line of said other
lands of Kanaje corporation, 86.35 feet to the northwesterly corner of lands
occupied by a Pomona Post Office;
THENCE 4) South 11 degrees 481 2511 East along the westerly line of said Post
Office and other lands of Kanaje corporation 490.00 feet to the southeasterly
corner of the premises;
5) South 78 degrees 111 3511 West along the southerly line of the premises and
the northerly line of other lands of Kanaje Corporation; 649.56 feet to the '
southwesterly corner of the premises and to a point in the easterly line of
lands now or formerly of Broadcast Construction Corp.;
THENCE 6) Northerly along the westerly line of the premises and the easterly
line of lands now or formerly of Broadcast Construction Corp., the following
four (4) courses and distances:
a) North 12 degrees 231 4511 East 111.15 feet to a point;
THENCE b) North 32 degrees 361 1511 West 231.96 feet to a point;
THENCE c) North 77 degrees 361 1511 West 210.98 feet to a point;
THENCE d) North 5 degrees 381 5811 East 239.83 feet to the southerly -side of
Route 202 (New York State Highway #1448) the northwesterly corner of the
premises the northeasterly corner of lands now or formerly of Broadcast
Construction Corp., and the point or place of BEGINNING.
TOGETHER WITH THE BENEFITS and SUBJECT TO THE BURDENS OF:
<PAGE>
1) Easement #2 - Easement to benefit property of Pacesetter Park Shopping
Center, Inc. (Area = 118 S. F. or 0.003 Acres)
2) Easement #3 - Easement to benefit property of Pacesetter Park Shopping
Center, Inc. (Area = 86 S. F. or 0.002 Acres)
3) Easement #4 - Fifteen (15) foot wide Utility Easement through lands of
Kanaje Corp. (Area - 1402 S. F. or 0.032 Acres)
4) Easement #5 - Twenty (20) foot Storm Drain Easement to benefit property of
Pacesetter Park Shopping Center, Inc. (Area = 2434 S. F. or 0.056 Acres)
NOTE: The above recited easements are as shown on a certain survey made by
Atzl & Scatassa Associates P.C. dated 9-29-76 and last updated by the
surveyor on 1-30-78.
<PAGE>
SECURED PROMISSORY NOTE
Date of Note: As of March 23, 1999
Principal Sum: $7,000,000
Maturity Date: March 15, 2002
FOR VALUE RECEIVED, ACADIA TOWN LINE, LLC, a Connecticut limited
liability company ("Maker"), does hereby covenant and promise to pay to the
order of FLEET BANK, NATIONAL ASSOCIATION, a national banking association
("Payee"), at 1133 Avenue of the Americas, New York, New York 10036, or at such
other place as Payee may designate to Maker in writing from time to time, in
lawful money of the United States of America and in immediately available funds,
the lesser of the Principal Sum stated above and the Principal Sum from time to
time outstanding hereunder and to pay interest on the Principal Sum from time to
time outstanding hereunder in like money and funds as hereinafter provided.
1. Definitions. The following terms, as used in this Note, shall have
the meaning indicated opposite them and terms capitalized herein and not
otherwise defined herein but defined in the Mortgage shall have the meaning set
forth in the Mortgage:
"Acadia" shall mean Acadia Realty Trust, a Maryland business trust.
"Additional Advance" shall have the meaning assigned to such term in
PARAGRAPH 5 of this Note.
"Applicable Rate" - either the Prime Rate plus one-half of one (.50%)
percent per annum or the LIBOR Rate in effect at any given time pursuant to the
terms hereof plus one and three-quarters (1.75%) percent per annum .
"Authorized Representative" - shall mean Maggie Hui, Arnold
Wachsberger, Robert Masters or any other person or persons designated by Maker,
in a writing delivered to Payee, as an Authorized Representative.
"Business Day" - a day other than a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to
close.
"Change in Control" shall mean and include any of the following:
(i) during any period of two consecutive calendar years, individuals
who at the beginning of such period constituted Acadia's trustees (together with
any new trustees whose election by Acadia's trustees or whose nomination for
election by Acadia's shareholders was 03/23/1999 as approved by a vote of at
least two-thirds of the trustees then still in office who either were trustees
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any, reason to constitute a majority of the
trustees then in office;
<PAGE>
(ii) any person or group (as such term is defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "1934 Act")), shall
acquire, directly or indirectly, beneficial ownership (within the meaning of
Rule 13d-3 and 13d-5 of the 1934 Act) of more than 35%, on a fully diluted
basis, of the economic or voting interest in Acadia's shares of beneficial
interest (or other equity securities equivalent thereto);
(iii) the full time active employment of Ross Dworman, as chief
executive officer of Acadia, and of Kenneth F. Bernstein, as President of
Acadia, shall be voluntarily terminated by Acadia or shall otherwise cease,
unless a successor acceptable to Payee shall have been appointed or elected and
actually taken office within three months following any such termination or
cessation, in which case the name of such successor shall be substituted for the
name of the person he or she replaces for purposes of this clause (iii);
(iv) the shareholders of Acadia approve a merger or consolidation of
Acadia with any other person, other than a merger or consolidation which would
result in the voting securities of Acadia outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
or exchanged for voting securities of the surviving or resulting entity) more
than 75% of the combined voting power of the voting, securities of Acadia or
such surviving or resulting entity outstanding, after such merger or
consolidation;
(v) the shareholders of Acadia approve a plan of complete liquidation
of Acadia or an agreement or agreements for the sale or disposition by Acadia of
all or substantially all of Acadia's assets; and/or
(vi) any "change in control" or any similar terms as defined in any of
the indentures, credit agreements or other instruments governing any
indebtedness of Acadia or any of its affiliates.
"Default" - shall mean any act or condition which with the giving of
notice or the lapse of time, or both, could become an Event of Default.
"Event of Default" - shall have the meaning assigned to such term in
PARAGRAPH 13 of this Note.
"Fixed Rate Acceptance Notice" - shall have the meaning assigned to
such term in PARAGRAPH 4(b) hereof.
"Fixed Rate Notice" - Maker's telephonic notice immediately confirmed
in writing, which writing may be delivered by telecopier, stating that Maker,
subject to delivery by it of a Fixed Rate Acceptance Notice, elects to pay
interest on the whole or a portion of the Principal Sum at the LIBOR Rate, as
specified in such Notice, and specifying the applicable Interest Period for the
LIBOR Advance and the Business Day on which such Interest Period is to begin.
"Guarantor" - shall mean Acadia Realty Limited Partnership, a Delaware
limited partnership and the sole member of Maker.
"Interest Period" - with respect to LIBOR Advances, a period of 30, 60,
90, 120 or 180 days (or such other periods as Payee may elect to make
available); provided, however, that no such period shall extend beyond the
Maturity Date. Any Interest Period which terminates on a non-Business Day shall
be deemed, for purposes hereof, to terminate on the next succeeding Business
Day.
2
<PAGE>
"Letter of Credit" shall mean each of (i) that certain $2,000,000
letter of credit which may hereafter be issued by Payee to a beneficiary
designated by Maker in connection with the acquisition of Heathcote Associates,
for the account of Maker, and (ii) that certain $ 1,000,000 letter of credit
which may hereafter be issued by Payee to Jack Wertheimer, Jr., as beneficiary,
for the account of Maker, as each of the same may be amended or otherwise
modified from time to time, and "Letters of Credit" shall mean both Letters of
Credit. Each Letter of Credit must be in form and substance reasonably
acceptable to Payee.
"Letter of Credit Application" shall mean each Application and
Agreement for Standby Letter of Credit to be delivered by Maker to Payee at the
time Maker requests that Payee issue a Letter of Credit, as the same may be
amended or otherwise modified from time to time, and "Letter of Credit
Applications" shall mean both Letter of Credit Applications. Each Letter of
Credit Application shall be in the form of EXHIBIT A to this Note.
"LIBOR Advance" - an advance with respect to which the Principal Sum
bears interest at the LIBOR Rate plus one and three quarters (1.75%) percent per
annum.
"LIBOR Rate" - shall mean, for the applicable Interest Period, the rate
per annum determined by Payee (any such determination to be conclusive, absent
manifest error) on the basis of the offered rates for Eurodollar deposits in an
amount approximating the proposed LIBOR Advance and having a maturity equal to
the proposed Interest Period appearing on the Telerate Screen page 5 (or the
successor page reference thereto) as of approximately 11:00 AM (London time) two
Business Days before the date on which such Interest Period shall commence. If
at least two such offered rates appear on the Telerate Screen page 5 or
associated pages, the rate in respect of such Interest Period will be the
arithmetic mean (rounded up to the nearest 1/16)) of such offered rates. If no
such rate appears, the rate in respect of such Interest Period 'II be the rate
specified as LIBOR on the Reuters Screen LIBO pace as of such date for such
Interest Period (in an amount equal to the portion of the Principal Sum with
respect to which the LIBOR Rate is determined).
"Liquid Net Worth" shall mean unencumbered "cash and short term
investments at cost" and "investments in marketable securities" (which shall be
marked to market) as shown by Acadia's financial statements (calculated in a
manner consistent with Acadia's statements for the period ending, September 31,
1998).
"Loan" - loans of up to the Principal Sum made and/or to be made to
Maker by Payee and evidenced hereby.
"Maturity Date" - shall mean March 15, 2002.
"Mortgage" - that certain Open-Ended Mortgage Deed, Security Agreement
and Assignment of Rents and Leases of even date herewith by Maker to Payee, as
the same may be amended, modified, supplemented and otherwise in effect from
time to time.
"Mortgaged Premises" - shall have the meaning assigned to such term in
the Mortgage.
"Net Worth" shall mean the net worth of Acadia as shown on its
financial statements, and as subsequently determined in accordance with the
accounting principles, I consistently applied, used in Acadia's statements as of
September 30, 1998.
3
<PAGE>
"Note" - this Secured Promissory Note, as the same may be amended or
otherwise modified from time to time.
"Person" shall mean and include any individual corporation, partnership
unincorporated association, trust, governmental agency or authority or other
entity.
"Prime Rate" - means the rate which Payee publicly announces from time
to time as its Prime Rate. The Prime Rate shall be adjusted from time to time
when and as the Prime Rate shall change. The Prime Rate is determined from time
to time by Payee as a means of pricing some loans to its customers and is
neither tied to any external rate of interest or index, nor does it necessarily
reflect the lowest rate of interest actually charged by Payee to any customer
class or category of its customers. Payee may make commercial or other loans at
rates of interest at, above or below the Prime Rate.
"Prime Rate Advance" - an advance with respect to which the Principal
Sum or a portion thereof bears interest at the Prime Rate plus one-half of one
(.50%) percent per annum.
"Regulation D" - Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect, including any successor or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.
"Reserve Percentage" - the maximum aggregate reserve requirement
(including, without limitation, all basic, marginal, emergency, supplemental,
special or other reserves and taking into account any transitional requirements)
as specified in Regulation D that Payee determines would be applicable on that
day to new nonpersonal time deposits in the United States in an amount equal to
or in excess of $100,000 with a maturity approximately equal to that of the
applicable Interest Period. The LIBOR Rate shall be adjusted automatically on
and as of the effective date of any change in the Reserve Percentage.
"Security Documents" - shall have the meaning assigned to such term in
PARAGRAPH 16 of this Note.
2. Amortization and Interest; Facility Fee. (a) The Principal Sum of
this Note shall be payable in accordance with the following provisions:
Commencing on May 1, 1999 and on the first day of each month thereafter, Maker
will pay, on account of the Principal Sum, the amount which would be payable on
a self-liquidating mortgage-style amortization schedule based on a $4,000,000
loan, a loan maturity of March 1, 2024 and an interest rate of 8.0% per annum.
Upon the making of each Additional Advance, the amortization schedule shall be
recalculated such that immediately upon the making of each Additional Advance
the monthly principal payments shall be recalculated based on the Principal Sum
outstanding after the making of the Additional Advance, a loan maturity of March
1, 2024 and an interest rate of 8.0% per annum and such revised amortization
schedule shall be applicable to the payment due on the first day of the month
immediately following the making of the Additional Advance and each month
thereafter, unless and until such schedule is revised in accordance herewith.
The initial amortization schedule is set forth as EXHIBIT B to this Note. The
fact that such EXHIBIT or that the amortization schedule from time to time in
effect is based on a schedule which extends beyond the Maturity Date shall not
entitle Maker to an extension of the Maturity Date The prepayment premium
provided for in PARAGRAPH 10 hereof shall not be applicable to any such
scheduled monthly payments. Any voluntary prepayments applied to principal shall
be applied in the inverse order of maturity.
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(b) Interest on the outstanding Principal Sum shall accrue from and
including the date of the advance to but excluding the date of any repayment or
prepayment thereof and Shall be payable in arrears on (i) the first day of each
calendar month, commencing April 1, 1999, (ii) on the date of any prepayment (on
the amount prepaid), (iii) on the Maturity Date, and (iv) after maturity
(whether by acceleration or otherwise) on demand. All interest calculations
provided for herein shall be made on the basis of a 360-day year and the actual
number of days elapsed.
(c) Maker authorizes Payee to record on SCHEDULE I annexed hereto
the information with respect to any Loan and any payments and prepayments of the
Principal Sum made by Maker and such notations shall be presumed to be correct
and binding subject to rebuttal by Maker only by clear and convincing evidence;
provided, however, that the failure of Payee to make any such notation shall not
limit or otherwise affect the obligation of Maker to repay the Principal Sum nor
alter or impair any of the other obligations of Maker hereunder or under the
Security Documents.
(d) Concurrently with the execution and delivery of this Note,
Maker shall pay Payee a non-refundable facility fee of $70,000.
3. Maturity Date. The outstanding Principal Sum and all accrued and
unpaid interest thereon shall be due and payable on the Maturity Date.
4. Selection of Rate.
(a) Except as provided in PARAGRAPHS 4(b) and 15, the outstanding
Principal Sum shall bear interest at a rate per annum equal to the Prime Rate
plus one-half of one (.50%) percent.
(b) Provided there is no Default and/or Event of Default under this
Note, the Security Document(s) or any other document or Instrument delivered as
additional security for this Note, Maker may elect to pay interest on the entire
or any portion of the outstanding Principal Sum (subject to the minimum amount
limitations set forth herein and the requirements set forth below) at a rate per
annum equal to the LIBOR Rate plus one and three quarters (1.75%) percent per
annum applicable to the Interest Period elected by Maker from (and including)
the first day of each Interest Period to (but not including) the last day of
such Interest Period. Maker shall, subject to delivery by it of a Fixed Rate
Acceptance Notice, elect that the entire or any portion of the outstanding
Principal Sum be treated as a LIBOR Advance pursuant to a Fixed Rate Notice.
Payee must receive such Fixed Rate Notice prior to 11:00 A.M., New York City
time, on a Business Day at least three (3) Business Days prior to:
(1) the last day of an Interest Period (in the case of an outstanding
LIBOR Advance); or
(2) any Business Day elected by Maker in its Fixed Rate Notice (in the
case of a conversion of a Prime Rate Advance to a LIBOR Advance) for the
commencement of the applicable Interest Period.
If Maker fails to give a Fixed Rate Notice at least three (3) Business Days
prior to the end of an Interest Period, then, on the last day of the Interest
Period, the outstanding LLBOR Advance shall convert to a Prime Rate Advance. On
the date specified in the Fixed Rate Notice as the date on which the applicable
Interest Period is to begin, Payee shall notify Maker's Authorized
Representative by telephone (such notice to be promptly confirmed in writing) or
by telex, which notice shall specify the date, the proposed LIBOR Rate and the
period of time on such date during which such rate is to be available. If Payee
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falls to specify the period for which such quoted rate is available, then such
rate shall be deemed to be available only for thirty minutes from the time
Payee, orally or in writing, notifies Maker's Authorized Representative of such
rate. If Maker then wishes to obtain such Loan at such LIBOR Rate, it shall
promptly give notice to Payee to such effect (the "Fixed Rate Acceptance
Notice"), which notice shall be irrevocable and may be by telephone, promptly
confirmed in writing.
(c) Without in any way limiting Maker's obligation to confirm in
writing any telephonic Fixed Rate Notice or Fixed Rate Acceptance Notice, Payee
may, prior to receipt of written confirmation, act without liability on the
basis of telephonic notice which it believes in good faith to be from Maker and,
in any event, Payee may act without liability on the basis of telephonic or
written notice which it believes in good faith to be from Maker.
5. Conditions to Additional Advances. In addition to the initial
$4,000,000 advance on the Loan on the date hereof, Maker shall have the option,
prior to September 15, 2001 and subject to the other terms and conditions of
this Note, of requesting from Payee up to eight (8) additional advances (each,
an "Additional Advance") on the Loan, with each Additional Advance to be in the
amount of $200,000 plus $ 1 00,000 increments and with the aggregate of all
Additional Advances not to exceed $3,000,000. The obligation of Payee to make
the Additional Advances hereunder is subject to the satisfaction, on or before
March 15, 2001, of each of the following conditions precedent:
(a) An Authorized Representative shall give Payee at least five (5)
Business Days prior written notice, specifying the date of the proposed
borrowing. Any such notice which is oral shall promptly be confirmed in a
writing signed by an Authorized Representative and delivered to Payee. Payee may
rely on any oral or written request for a Loan which Payee believes to be
genuine and shall be fully protected in doing so without any requirement to make
further inquiry.
(b) After giving effect to the Additional Advance, there shall
exist no Default and/or Event of Default, including, without limitation, no
Default and/or Event of Default under PARAGRAPHS I l(a)(1) or (2) of this Note
and, for this purpose, compliance with such covenants shall, prior to the making
of the proposed Additional Advance, be recalculated (using the most recently
available Appraised Value and Net Operating Income) as if the Additional Advance
has been made.
(c) All representations and warranties contained herein, or
otherwise made in writing in connection herewith or in any of the Security
Documents, by or on behalf of Maker or any other Person to Payee, shall be true
and correct, in all respects, with the same force and effect as if made on and
as of the date of the Additional Advance.
(d) The beneficiary of a Letter of Credit shall have delivered a
writing to Maker, in form and substance satisfactory to Maker, consenting to a
reduction in the undrawn amount of the Letter of Credit held by such beneficiary
by an amount equal to or exceeding the amount of the Additional Advance.
(e) If reasonably requested by Payee, Payee shall have received an
endorsement to its existing title insurance policy insuring the Mortgage to be a
first lien, securing the Loan (including the Additional Advance), against the
Mortgaged Premises, subject only to those matters which have been approved by
Payee and its counsel.
6. Conditions to Issuance of Letters of Credit. Maker shall have the
option, prior to March 15, 2000, and subject to the other terms and conditions
of this Note, of requesting that Payee issue either or both of the Letters of
Credit. The obligation of Payee to issue either or both of the Letters of Credit
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is subject to the satisfaction, on or before March 15, 2000, of each of the
following conditions precedent:
(a) An Authorized Representative shall give Payee at least ten (10)
Business Days prior written notice, specifying the date the Letter of Credit is
to be issued. Each such notice shall be accompanied by a fully completed
executed Letter of Credit Application and a draft of the form of the Letter of
Credit which Maker is requesting that Payee issue. No Letter of Credit shall
have an expiry date of later than March 15, 2002.
(b) After giving effect to the issuance of such Letter of Credit,
there shall exist no Default and/or Event of Default, including, without
limitation, no Default and/or Event of Default under PARAGRAPHS I (a)(1) or (2)
of this Note and, for this purpose, compliance with such covenants shall, prior
to the issuance of such Letter of Credit, be recalculated (using the most
recently available Appraised Value and Net Operating Income) as if such Letter
of Credit had been issued.
(c) All representations and warranties contained herein, or
otherwise made in writing in connection herewith or in any of the Security
Documents, by or on behalf of Maker or any other Person to Payee, shall be true
and correct, in all respects, with the same force and effect as if made on and
as of the date such Letter of Credit is to be issued.
(d) If reasonably requested by Payee, Payee shall have received an
endorsement to its existing title Insurance policy insuring the Mortgage to be a
first lien, securing the Loan (including the undrawn face amount of the Letter
of Credit being issued), against the Mortgaged Premises, subject only to those
matters which have been approved by Payee and its counsel.
(e) Maker shall have paid Payee the initial non-refundable Letter
of Credit fee of one (1%) percent of the face amount of the Letter of Credit,
and Maker hereby confirms its obligation to pay to Payee, annually in advance on
the anniversary of the issuance of each Letter of Credit, a fee of one (1 %)
percent of the then face amount of such outstanding Letter of Credit.
7. Payment of Interest on and Number of LIBOR Advances. If a LIBOR
Advance is outstanding, then in addition to the monthly payments of interest
required under PARAGRAPH 2(b) hereof, all accrued and unpaid interest, if any,
on such LIBOR Advance shall be due and payable on the last day of the Interest
Period. In no event may there be more than three(3) Interest Periods in effect
at any one time, and the entire Principal Sum outstanding must bear interest at
the same Applicable Rate.
8. Suspension of the LIBOR. If Payee determines that Payee's making or
maintaining LIBOR Advances is unlawful for any reason, then Payee may suspend
the availability of the LIBOR Rate and immediately convert any outstanding LIBOR
Advance to a Prime Rate Advance. Payee shall immediately notify Maker of any
such conversion and Maker shall pay to Payee, on demand, (i) all accrued and
unpaid interest on the LIBOR Advance to the date of such conversion, plus (ii)
such amounts as Payee shall require to compensate it for the costs of converting
any such LIBOR Advance to a Prime Rate Advance. The certificate of Payee as to
any amounts payable pursuant to this PARAGRAPH shall, absent manifest error, be
final, conclusive and binding on Maker. No Fixed Rate Notices electing the LIBOR
Rate shall be given by Maker thereafter until Payee determines that LIBOR
Advances would be lawful.
9. Increases in Cost. In the event that at any time or from time to
time any domestic or foreign requirement of law, regulation, order or decree or
any change therein or in the interpretation or application thereof or compliance
by Payee with any request or directive (whether or not having the force of law)
7
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from any governmental, fiscal, monetary or other authority (i) does or shall
subject Payee to any tax, duty, charge or withholding on or from payments due
from Maker (excluding taxation of the income of Payee); or (ii) does or shall
impose, modify or hold applicable or change any reserve (including, without
limitation, basic, supplemental, marginal, special or emergency reserves but not
including reserve requirements already taken into account in calculating the
LIBOR Rate), special deposit, compulsory deposit or similar requirement with
respect to assets of, deposits with or for the account of, advances or loans by,
or other credit extended by, or any other acquisition of funds by Payee; or
(iii) does or shall impose on Payee any other condition or change therein and
the result of any of the foregoing is to increase the cost to Payee of making
available to Maker, converting from or to, or maintaining LIBOR Advances, then,
and in any such event, Payee shall notify Maker in writing, of such occurrence
setting forth in reasonable detail the basis for and amounts of such increased
costs, and Maker shall pay to Payee, on demand, such amounts as will compensate
Payee for such increased costs. The certificate of Payee as to any amounts
payable pursuant to this PARAGRAPH shall, absent manifest error, be final,
conclusive and binding on Maker.
10. Prepayment.
(a) On any Business Day during the term hereof that the Applicable
Rate is the Prime Rate plus one-half of one percent (.50%) per annum or on a
date which is the last day of an Interest Period, upon not less than five (5)
days written notice to Payee specifying the date on which prepayment is to be
made, Maker shall have the privilege of prepaying, without payment of a premium
or penalty, that portion of the unpaid balance of the Principal Sum, in whole or
in part, as to which the Applicable Rate is the Prime Rate plus one-half of one
(.50%) percent or as to which an Interest Period is ending, which parts shall be
in integral multiplies of $50,000 together with all accrued and unpaid interest
on the Principal Sum so prepaid to the date of prepayment, and together also
with accrued and unpaid interest or other sums or charges, if any, then due and
owing hereunder or under the Security Document(s), provided that any such
prepayment shall be in a minimum amount of not less than $250,000.
(b) (1) At any time during the term hereof that the Applicable Rate
is the LIBOR Rate plus one and three-quarters (1.75%) percent, upon not less
than five (5) days prior written notice to Payee, Maker shall have the privilege
of prepaying the unpaid balance of the Principal Sum, in whole or in part, which
parts shall be in integral multiples of $50,000, prior to the last day of an
Interest Period upon the required notice as aforesaid, provided that any such
prepayment shall be in a minimum amount of not less than $250,000 and provided
further that in addition to the payment of the whole or portion of the Principal
Sum so to be prepaid, all accrued and unpaid interest thereon and all other sums
due hereunder or under the Security Document(s), Maker shall pay Payee any costs
or expenses Payee incurs with respect to the termination of any LIBOR contract
and/or SWAP contract that Payee or its designee has entered into to borrow funds
in order to fund the Loan plus a prepayment premium calculated in accordance
with the following formula:
(a) Upon prepayment, Lender shall determine whether there
is a fixed rate yield maintenance premium due by subtracting the Redemption
Treasury Rate from the Fixed Rate (as such terms are defined below). If the
Redemption Treasury Rate is equal to or greater than the Fixed Rate, no fixed
rate yield maintenance premium will be due.
(b) However, if the Redemption Treasury Rate is less than
the Fixed Rate, a fixed rate yield maintenance premium will be computed by Payee
as follows:
(F-R) x P x D
-------------
360
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(c) Payee shall discount (at the Redemption Treasury) the
resulting number to the net present value thereof, i.e., as if such sum were
received in equal monthly installments from the date of prepayment to the
Maturity Date. To determine present value, the discount rate shall be calculated
on the basis of a three hundred sixty-five (365) day year.
(d) For purposes of computing the fixed rate yield
maintenance premium, the following definitions govern:
-- "F" or "Fixed Funds Rate" means the LIBOR Rate applicable to the
Loan being repaid plus one and three-quarters (1.75%) percent.
-- "R" or "Redemption Treasury Rate" means at the time of .
prepayment, the rate of interest per annum equal to the most
recently published quotations of yields to maturity of U.S.
Treasury obligations (bills on a discounted basis shall be
converted to a bond equivalent), as published weekly by the
Federal Reserve Board in the Federal Reserve Statistical release,
trading closest to par value and with a maturity date comparable
to the end of the applicable Interest Period.
-- "P" means the amount of the Loan being prepaid.
-- "D" means the number of days remaining until the end of the
applicable Interest Period.
(e) Any payment required of Maker of the Principal Sum or
any portion thereof after acceleration of the Maturity Date pursuant to any
provisions hereof or of the Security Document(s) shall be deemed a voluntary
prepayment for the purposes hereof, and if a LIBOR Advance is then outstanding,
Maker shall be required, on demand, to pay the prepayment premium, if any,
calculated as aforesaid.
(c) Any payments of the Principal Sum received by Payee pursuant to
the terms of this PARAGRAPH 10 shall be applied in the following order of
priority: (i) first, to any accrued interest which is due and unpaid as of the
date of such payment; and (ii) second, to the outstanding Principal Sum in the
inverse order of maturity.
(d) Notwithstanding anything in this Note to the contrary, the
Loans hereunder are not revolving loans. Therefore, Maker may not borrow, repay
and reborrow hereunder.
11. Special Covenants.
(a) (1) As of December 31, 1999 and as of each subsequent December 31,
the outstanding Principal Sum of the Loan plus the undrawn face amount of the
Letters of Credit shall not exceed sixty (60%) percent of the Appraised Value
(as hereinafter defined) of the Mortgaged Premises; and
(2) as of the end of each Accounting Period, the Net Operating
Income (as hereinafter defined) of the Mortgaged Premises for each Accounting
Period shall equal or exceed 1.4 times the Projected Debt Service Expense (as
hereinafter defined) for the immediately following twelve month period.
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(b) Within ninety (90) days after the end of each Accounting Period,
Maker shall furnish to Payee detailed calculations of Net Operating Income and
Projected Debt Service Expense for the Accounting, Period then ended and upon
which satisfaction of the provisions of PARAGRAPH 1 (a)(2) are to be determined,
and certified as true and accurate, in a manner acceptable to Payee, by the
chief financial officer of the Guarantor as having been prepared under his
supervision in accordance with the Accounting Principles (as hereinafter
defined) consistently applied and with the definition of Net Operating Income
and Projected Debt Service Expense and that he knows of no facts inconsistent
with such calculations.
(c) (1) "Accounting Period" - shall mean the twelve month periods
ending on June 30, 1999 and on December 31, 1999 and the twelve month periods
ending on each subsequent June 30 and December 31.
(d) "Accounting Principles " - shall mean the accounting principles
utilized in the preparation of the operation statements for the Mortgaged
Premises heretofore delivered to Payee.
(1) "Appraised Value" - shall mean the appraised value of the
Mortgaged Premises, as determined by an independent appraiser selected by Payee
and reasonably acceptable to Maker. Payee may require that such an appraisal be
performed at any time, but not more frequently than once in any twelve month
Period. Appraised Value shall be determined utilizing an appraisal method
consistent with that used in determining the Appraised Value for Payee in
connection with this Loan. Maker shall solely be responsible for the cost of
such appraisal.
(2) "Full Force and Effect" - shall mean, as to any lease, that
such lease shall be in full force and effect, there shall be no material default
by the tenant thereunder or default by the landlord thereunder or other act or
condition or circumstance giving or which may give, without the giving of any
further notice, the tenant or the landlord the right to terminate any lease and,
if requested by Payee and required by its lease, the tenant shall have delivered
to Payee an estoppel certificate in form and substance reasonably satisfactory
to Payee.
(3) "Net Operating Income" - shall mean, with respect to the
applicable Accounting Period, the aggregate rental and other receipts (unless
excluded pursuant hereto) of the Mortgaged Premises during such period less the
aggregate amount of all operating expenses of the Mortgaged Premises during,
such period, in each case determined in accordance with the Accounting
Principles. For purposes of the determination of Net Operating Income, operating
expenses shall include, without limitation, all real estate taxes (but not in
excess of the pro rata portion of such real estate taxes applicable to the
Accounting Period covered by the statement), water and sewer charges, utility
charges, insurance premiums (but not in excess of the amounts applicable to the
Accounting, Period covered by the statement), salaries and benefits of all
employees engaged in the operation, maintenance or management of Mortgaged
Premises, all costs of ordinary and necessary maintenance, cleaning and repair,
costs of snow and rubbish removal and security services. Net Operating Income
shall, however, (a) exclude from receipts all amounts paid to Maker for tenant
alterations in connection with the leasing, of space in the Project ' all
amounts payable to Maker under leases with Affiliates of Maker, as tenant, or
with Maker, as tenant (unless Payee otherwise agrees) and, with respect to any
lease providing for a reduction in the rentals payable under such lease at any
time during the term thereof, base rentals in excess of the lowest base rentals
payable under such lease (other than during any period of rent concessions made
with respect to consecutive monthly periods commencing with the first month of
the term of such lease), and (b) exclude from expenses payments of principal and
interest of the Loan, capital expenditures, leasing commissions, and other
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expenses payable to Payee pursuant to this Note or any of the Security
Documents. Net Operating Income shall be determined without regard to
extraordinary items of income and of expense. Each lease, the rental or other
income from which was included in the calculations of Net Operating Income, must
in Full Force and Effect as of the date Net Operation Income is being
determined.
(4) "Projected Debt Service Expense" - shall mean the amount which,
as at the end of each Accounting Period, Maker would be projected to pay for
principal and interest on a principal amount equal to the sum of the then
outstanding(y Principal Sum of the Note plus the undrawn face amount of the
Letters of Credit for the twelve months immediately following the end of such
Accounting Period, assuming for this purpose (A) that the interest rate for such
twelve month period shall be the greater of the ten-year treasury note rate in
effect on the date Projected Debt Service Expense is being calculated plus two
and one-quarter (2.25%) percent, 7.5% per annum and the weighted average
interest rate payable on the Loans as of the date Projected Debt Service Expense
is being determined, and (B) that the principal is payable in accordance with a
twenty-five year self-liquidating mortgage-style amortization schedule using the
interest rate determined pursuant to the preceding clause (A),
12. Leasing Standards. Maker covenants and agrees that no Space Lease
(as such term is defined in the Mortgage) will be consummated without the prior
written approval thereof by Payee, unless such Space Lease (i) is prepared and
executed on a commercially reasonable lease form submitted to and approved, in
writing, by Payee, with such approval not to be unreasonably withheld or
delayed, and Payee's approval of immaterial changes to the form approved by
Payee shall not be required; and (ii) (x) provides for terms and conditions,
including as to rentals and other economic terms and the creditworthiness of the
tenant, which are approved by Payee, with such approval not to be unreasonably
withheld or delayed, or (y) is of less than 4,000 rentable square feet and is on
commercially reasonable terms and conditions, including as to rentals and other
economic terms and creditworthiness of the tenant. Notwithstanding the
foregoing, if a Default and/or Event of Default shall be continuing, Maker will
not enter into Space Leases without Maker's prior written approval thereof.
which approval Payee may withhold in its sole discretion.
13. Distributions. During the continuance of an Event of Default, Maker
shall be prohibited from making distributions to its members, and if no Events
of Default exist Maker may make distributions to its members.
14. Events of Default. The occurrence of any one or more of the
following events shall constitute an event of default (an "Event of Default')
hereunder and under the Security Documents:
(a) failure of Maker (x) to pay, for a period of ten (10) days
after the same becomes due (i) any installment of interest and/or principal
under this Note, or (ii) any other payment, including, without limitation, any
letter of credit fees, required hereunder or under any of the other Security
Documents or under any supplement, modification or extension hereof or thereof,
or (y) to pay the final principal balance of this Note when due, whether upon
the stated maturity date set forth therein, upon acceleration of such Principal
Sum or otherwise, together with accrued and unpaid interest thereon; or
(b) if any of Maker's representations or warranties contained
herein or in any of the Security Documents shall be untrue or incorrect in any
respect at the time made, or if any such warranty or representation intended to
be a continuing one shall become untrue or incorrect in any material respect and
Maker shall fall to remedy such situation within thirty (30) days after notice
from Payee (or immediately upon notice in case of emergency); or
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(c) if Maker shall commence a voluntary case concerning, itself
under Title 1 of the United States Code entitled "Bankruptcy" as now or
hereafter in effect, or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against Maker and the petition is not controverted
within thirty (30) days, or is not dismissed within ninety (90) days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or any substantial part of the property
of Maker; or Maker commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to Maker or there is commenced against Maker any such proceeding
which remains undismissed for a period of ninety (90) days; or Maker is
adjudicated insolvent or bankrupt; or any order of relief of other order
approving any such case or proceeding is entered; or Maker suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of ninety (90) days;
or Maker makes a general assignment for the benefit of creditors; or Maker shall
fail to pay, or shall state that it is unable to pay, or shall be unable to pay,
its debts generally as they become due; or Maker shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts; or
(d) if any execution, warrant, attachment, garnishment or other
similar processes shall be levied or filed against the Mortgaged Premises or any
part thereof, or against Maker which involve claims aggregating more than
$100,000 and such processes shall not be stayed, vacated or discharged, such as
by bonding, within ninety (90) days after the same shall have been levied or
filed; or
(e) except as otherwise provided in PARAGRAPH 14(i) below, if Maker
shall fail to perform or observe, or cause to be performed or observed, any
other term, obligation, covenant, condition or agreement contained in this Note
or in any of the Security Documents, or in any assignment of leases and rents or
in any other instrument executed concurrently herewith by Maker and/or Guarantor
or supplemental hereto, pertaining to the debt evidenced by this Note or the
security therefor, or under any supplement, modification or extension of any of
the foregoing, on its part to be performed and such failure shall have continued
for a period of thirty (30) days after notice thereof; provided, however, if
such default shall not have been occasioned by any willful act of Maker, and if
such default cannot with due diligence be cured within such thirty (30) days
period, the time within which to cure the same shall be extended for such period
as may be necessary to cure the same with due diligence if Maker commences
within such thirty (30) days and proceeds diligently to cure the same; or
(f) (i) if Acadia ceases, directly or indirectly (x) to own all of
the issued and outstanding equity interests in Maker or (y) to control (i.e.,
power to direct or cause the direction of the management and policies of a
person, corporation, partnership or other entity) Guarantor or (ii) if there is
a Change in Control; or
(g) if there should occur a default which is not cured within the
applicable grace or cure period, if any, under any mortgage or deed of trust of
all or part of the Mortgaged Premises (as such term is defined in the Mortgage),
including a mortgage or deed of trust held by Payee, regardless of whether any
such other mortgage or deed of trust is superior, subordinate, or collateral to
the Mortgage; it being further agreed by Maker that an Event of Default shall
constitute an "Event of Default" under any such other mortgage or deed of trust
held by Payee; provided, however, that this provision shall not be construed as
Payee's consent to any such mortgage or deed of trust; or
(h) if any "Event of Default" (as such term is defined in any
Security Document) shall occur; or
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(i) if Maker shall default in the performance of any covenant set
forth in PARAGRAPH II (a)(1) or (2) of this Note and such default shall continue
for forty-five (45) days after written notice thereof by Payee to Maker;
provided, however, that Maker shall be allowed to cure such a default by, within
such forty-five (45) day period, pledging additional collateral or making
reductions in the outstanding Principal Sum of the Loan or reducing the underway
face amount of the Letters of Credit or fixing the interest rate pursuant and
subject to all of the terms and conditions of this Note that, in such event,
would bring the Appraised Value of the Mortgaged Premises and/or the Net
Operating Income of the Mortgaged Premises into compliance with such covenants;
any such collateral so pledged must be satisfactory, both as to type and
character of the collateral and as to the pledgor, to Payee in its sole
discretion and accompanied by such supporting documents, financial statements
and opinions of counsel as Payee may require; or
(j) if, as of December 31, 1999 or any subsequent December 31, the
Net Worth of Acadia shall be less than $50,000,000;
(k) if, as of June 30, 1999 or December 31, 1999 or any subsequent
June 30 or December 31, the Liquid Net Worth of Acadia shall be less than $3,000
000; or
(1) if there is a default, beyond any applicable notice and cure
periods, under any Letter of Credit Application.
15. Involuntary Rate. Overdue principal and, to the extent permitted by
law, overdue interest and all other overdue amounts owing hereunder, whether at
maturity, upon acceleration or otherwise, shall bear interest for each day that
such amounts are overdue (whether or not any required notice of default shall
have been given) at a rate per annum equal to five percent (5%) per annum in
excess of the Prime Rate in effect from time to time; provided, however, that no
overdue principal shall bear interest at a rate per annum less than five percent
(5%) in excess of the rate of interest applicable thereto immediately prior to
maturity (such rate, the "Involuntary Rate"). Interest shall continue to accrue
at the Involuntary Rate upon maturity of this Note, whether by expiration of its
term, acceleration or otherwise, until this Note is paid in full, including the
period following entry of any judgment on or relating to this Note or the
Security Documents. Interest on any such judgment shall accrue and be payable at
the Involuntary Rate, and not at the statutory rate of interest, after judgment,
any execution thereon, and until actual receipt by Payee of payment in full of
this Note and said judgment. Interest at the Involuntary Rate shall be
collectible as part of any judgment hereunder and shall be secured by the
Mortgage and the other Security Documents. Payee's right to receive interest at
the Involuntary Rate shall be in addition to all other rights and remedies
provided herein or by law for the benefit of the holder hereof upon a default;
and the acceptance of the same by the holder hereof shall not restrict such
holder in any respect in the exercise of any other or further right or remedy,
nor shall the same be deemed to be, as to the holder hereof, a waiver or release
of Maker from any of its obligations herein contained or constitute an extension
of the time for payments due hereunder.
16. Security. This Note is secured by the Mortgage and all documents,
agreements, hazardous substance indemnities or guaranties made by Maker and/or
Guarantor and now or hereafter delivered in connection with or securing this
Note, including the Mortgage, that certain Loan Guaranty of even date herewith
made by Guarantor to and in favor of Payee and that certain Hazardous Substance
Indemnity of even date herewith made by Guarantor and Maker to and in favor of
Payee, are collectively (including any amendment, modification, extension or
renewal thereof now or hereafter executed in connection therewith or herewith)
referred to herein as the "Security Documents." This Note is entitled to the
benefits of the Security Documents.
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17. Acceleration. It is hereby expressly agreed that the entire unpaid
balance of the Principal Sum shall, at the option of the holder hereof and upon
such notice as may be required by this Note or by the Mortgage, become
immediately due and payable without necessity for presentment and demand, notice
of protest, demand and dishonor or nonpayment of this Note, all of which are
hereby expressly waived, upon the happening of any Event of Default or any event
by which, under the terms of the Security Document(s), said unpaid balance may
or shall become due and payable. Failure to exercise any such option at any time
shall not constitute a waiver of the right of the holder hereof to exercise the
same in the event of any subsequent default or acceleration event.
18. Notices. Except as otherwise provided herein, any notice to be
given hereunder shall be in writing and shall be either delivered or sent by
first-class registered or certified mail, return receipt requested postage
prepaid, addressed (a) 'f to Maker, to Maker's address set forth on the
signature page or (b) if to Payee, at Payee's address set forth above,
Attention: Catherine Money, or, as to any party, at such other address as shall
be designated by such party by notice to the other party given in the manner set
forth in this PARAGRAPH and each such notice shall be effective (1) if delivered
by hand, at the time of delivery to the address specified in this PARAGRAPH, or
(ii) if given by mail, on the fourth Business Day following the time of mailing
in the manner aforesaid, or (iii) on the Business Day immediately following the
delivery of such notice to an overnight delivery service.
19. Funding Sources. Nothing contained herein shall be deemed to
obligate Payee to fund advances hereunder in any particular place or manner; and
nothing contained herein shall be deemed to constitute a representation by Payee
that it has funded or will fund advances in any particular place or manner.
20. Taxes and Attorney's Fees. Maker shall pay to Payee, immediately
upon demand, any and all taxes assessed against Payee by reason of its holding
of this Note and the receipt by it of interest payments hereunder (other than
income, franchise and other similar taxes assessed by the United States
Government, any state or any political subdivision of either thereof on such
interest payments), and any and all other sums and charges that may at any time
become due and payable under the Security Document(s). Maker also promises to
pay, on demand, all costs, title insurance premiums, mortgage recording taxes,
disbursements and reasonable attorneys' fees (including allocated costs of
internal counsel of Payee) and disbursements incurred in connection with the
negotiation, preparation, and execution of this Note and/or the Security
Documents and any other documents and instruments prepared in connection
herewith or therewith and the consummation of the transactions contemplated
hereby or thereby and the administration of this Loan and in the preservation of
rights under, enforcement of, this Note and the Security Document(s), any
modification, amendment, or consent related thereto and in any suit, action or
proceeding to protect or sustain the security interest of the holder of the
Security Document(s) and any refinancing or renegotiation of this Note and the
Security Document(s).
21. No Partnership or Joint Venture. Nothing contained in this Note or
elsewhere shall be deemed or construed as creating a partnership or 'joint
venture between Payee and Maker or between Payee and any other person, or cause
the holder hereof to be responsible in any way for the debts or obligations of
Maker or any other person.
22. Waiver. Maker hereby waives diligence, presentment, protest and
demand, notice of protest, dishonor and nonpayment of this Note, and expressly
agrees that, without in any way affecting the liability of Maker hereunder,
Payee may extend the Maturity Date or the time for payment of any amount due
hereunder, accept additional security, release any party liable hereunder and
release any security now or hereafter securing this Note without in any other
way affecting the liability and obligation of Maker or any other Person. Maker
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further waives, to the full extent permitted by law, the right to plead any and
all statutes of limitations as a defense to any demand on this Note, under the
Security Document(s), or on any guaranty or other agreement now or hereafter
securing, this Note.
23. Interest Rate Limitation. Notwithstanding, anything contained
herein to the contrary, the holder hereof shall never be entitled to receive,
collect or apply as interest on the obligation evidenced hereby any amount in
excess of the maximum rate of interest permitted to be charged by applicable
law; and in the event the holder hereof ever receives, collects or applies as
interest any such excess, such amount which would be excessive interest shall be
applied to the reduction of the Principal Sum; and if the Principal Sum is paid
in full, any remaining excess shall forthwith be paid to Maker. In determining
whether the interest paid or payable in any specific case exceeds the highest
lawful rate, the holder hereof and Maker shall to the maximum extent permitted
under applicable law (i) characterize any non-principal payment as an expense,
fee or premium rather than as interest; (11) exclude voluntary prepayments and
the effects thereof; and (iii) "spread" the total amount of interest throughout
the entire contemplated terms of the obligation so that the interest rate is
uniform throughout said entire term.
24. Severability. very provision of this Note is intended to be
severable. In the event any term or provision hereof is declared by a court of
competent jurisdiction to be illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the balance of the terms and provision
hereof, which terms and provisions shall remain binding and enforceable.
25. Number and Gender. In this Note the singular shall include the
plural and the masculine shall include the feminine and neuter gender, and vice
versa, if the context so requires.
26. Headings. Headings at the beginning of each numbered paragraph of
this Note are intended solely for convenience of reference and are not to be
deemed or construed to be a part of this Note.
27. Governing Law; Submission to Jurisdiction; Waivers, Etc.
(a) This Note, which, together with the Security Documents, sets
forth the entire understanding of Maker and Payee with respect to the subject
matter hereof, shall be governed by and construed and enforced in accordance
with the laws (without giving effect to the conflict of law principles thereof)
of the State of New York.
(b) Any legal action or proceeding with respect to this Note or any
of the Security Documents may be brought in the courts of the State of New York
or the State of Connecticut or, if the requisites of jurisdiction obtain, of the
United States of America for the Southern or Eastern District of New York or the
District of Connecticut, and, by execution and delivery hereof, Maker hereby
accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Nothing herein,
however, shall affect the right of Payee to commence legal proceedings or
otherwise proceed against Maker in any other jurisdiction. Maker also waives (a)
the right to trial by jury in the event of any litigation to which Payee and
Maker are parties in respect of any matter arising under this Note or any of the
Security Documents, whether or not such litigation has been commenced in respect
of this Note and whether or not other persons are also parties thereto, (b) any
claim that New York or Nassau County or the Judicial District of Hartford/New
Britain at Hartford, Connecticut or any such District is an inconvenient forum
and (c) any claim against Payee for consequential, special or punitive damages
respecting the Security Documents. Acceptance of this Note by Payee shall be
deemed to constitute a waiver by Payee of the right to trial by jury in the
event of any litigation in respect of which Maker has waived the right to trial
by jury hereunder.
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(c) No delay on the part of Payee in exercising any of its options,
powers or rights, or partial or single exercise thereof, whether arising
hereunder, under the Security Documents or otherwise, shall constitute a waiver
thereof or affect any right hereunder or thereunder. No waiver of any of such
rights and no modification, amendment or discharge of this Note shall be deemed
to be made unless the same shall be in writing, duly signed by Payee and Maker.
Each such waiver (if any) shall apply only with respect to the specific instance
involved and shall in no way impair the rights of Payee or the obligations of
Maker hereunder in any other respect at any other time.
28. Indemnity. Payee and Maker each hereby represents to the other than
it did not deal with any broker or similar person in connection with this
financing.
29. Set-off. Maker agrees that, in addition to (and without limitation
of) any right of set-off, bankers' lien or counterclaim Payee may otherwise
have, Payee shall be entitled, at its option, to offset balances held by it for
the account of Maker at any of its offices, in lawful money of the United States
of America or in any other currency, against any principal of or interest on
this Note, or any other obligation of Maker held by Payee, which is not paid
when due following any applicable notice and grace period (regardless of whether
such balances are then due to Maker), and such right of set-off may be exercised
if any execution, warrant, attachment, garnishment or other similar process
shall be filed against Maker, the Mortgaged Premises or any part thereof,
whether or not the same shall constitute a Default and/or an Event of Default.
30. Limitation on Liability. Notwithstanding anything to the contrary
herein or in any of the Security Documents, Payee agrees that, for payment of
this Note and any sums owing by Maker under the Security Documents, it will look
solely to the assets of Maker and no property or assets of any of Maker's
members shall be subject to levy, execution or other enforcement procedure for
the satisfaction of the remedies of Payee or for any payment required to be made
under the Note or for any of the covenants or warranties contained herein;
provided that the foregoing provisions of this PARAGRAPH shall not (i)
constitute a waiver of any obligation evidenced by this Note, (ii) limit the
right of Payee to name Maker as a party defendant in any action or suit for
Judicial foreclosure and sale under the Mortgage, (iii) affect in any way the
validity of, or the rights of Payee with respect to, any guaranty or indemnity
agreement given in connection with the loan evidenced hereby, (iv) be applicable
to the responsible Person in the event of and to the extent of fraud,
misappropriation of funds or other property, or damage to any of the Mortgaged
Premises or any other collateral securing this Note or any part thereof
intentionally inflicted in bad faith by Maker or any partner, principal,
shareholder, officer, director, agent or employee of Maker or any partner or
principal of any of the foregoing or (v) be applicable to the liability arising
in respect of hazardous materials.
31. Late Charge. If any installment of Interest and/or principal,
Including the final payment due on the Maturity Date, shall not be paid within
ten (10) days after it is due hereunder (whether by acceleration or otherwise),
then and in each such event, all such past-due amounts shall be subject to a
late penalty, payable on demand, of five cents ($.05) on every dollar ($1.00)
not so paid (the "Late Charge"). Such Late Charges shall be in addition to the
other interest due thereon and in addition to all other rights and remedies
provided herein or by law for the benefit of the holder hereof upon a default;
and the acceptance of the same by the holder hereof shall not restrict such
holder in any respect in the exercise of any other or further such right or
remedy, nor shall the same be deemed to be, as to the holder hereof, a waiver or
release of Maker from any of its obligations herein contained or constitute an
extension of the time for payments due hereunder.
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32. Miscellaneous. (a) This Note may not be changed orally but only by
an agreement in writing signed by Maker and Payee.
(b) Should the indebtedness represented by this Note or any part
thereof be collected at law or in equity, or in bankruptcy, receivership or any
other court proceeding (whether at the trial or appellate level), or should this
Note be placed in the hands of attorneys for collection upon default, Maker
agrees to pay, in addition to the principal, interest and others sums due and
payable hereon, all costs of collecting or attempting to collect this Note,
including reasonable attorneys' fees and expenses.
(c) Payee reserves the right to assign the Loan and/or to sell
participations in the Loan and Maker and Guarantor agree that their financial
statements and other financial information submitted to Payee may be distributed
to potential assignees and/or participants. In addition to the other assignment
rights provided in this Note, Payee may assign, as collateral or otherwise, any
of its rights under this Note (including, without limitation, rights to payments
of principal or interest on the Loan) to any Federal Reserve Bank without notice
to or consent of Maker; provided, however, that no such assignment shall release
Payee from any of its obligations hereunder. The terms and conditions of any
such assignment and the documentation evidencing such assignment shall be in
form and substance satisfactory to Payee and the assignee Federal Reserve Bank,
(d) This Note may be signed in counterparts.
(e) MAKER AGREES THAT THIS IS A COMMERCIAL TRANSACTION AND NOT A
CONSUMER TRANSACTION, AND WAIVES ANY RIGHT TO A NOTICE AND HEARING UNDER CHAPTER
903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER STATUTE OR
STATUTES AFFECTING PREJUDGMENT REMEDIES, AND AUTHORIZES PAYEE'S ATTORNEY TO
ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE
COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
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IN WITNESS WHEREOF, Maker and Payee have executed and delivered this
Note on the day and year first above written.
Address of Maker:
20 Soundview Marketplace
Port Washington, New York 11050 ACADIA TOWN LINE, LLC
By: Acadia Realty Limited Partnership,
sole member
By: Acadia Realty Trust,
sole general partner
By:_______________________________
Kenneth F. Bernstein
President
Witness :
- ---------------------------------
Agreed and Accepted:
FLEET BANK, NATIONAL ASSOCIATION
By:______________________________
Catherine E. Money
Assistant Vice President
<PAGE>
PROMISSORY NOTE
---------------
U.S. $10,000,000.00 September 21, 1999
FOR VALUE RECEIVED, and at the times hereinafter specified, RD VILLAGE
ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited partnership ("Maker"), whose
address is 20 Soundview Marketplace, Port Washington, New York 11050, hereby
promises to pay to the order of SUNAMERICA LIFE INSURANCE COMPANY, an Arizona
corporation (hereinafter referred to, together with each subsequent holder
hereof, as 'Holder"), at 1 SunAmerica Center, Century City, Los Angeles,
California 90067-6022, or at such other address as may be designated from time
to time hereafter by any Holder, the principal sum of TEN MILLION AND NO/100THS
DOLLARS ($10,000,000-00), together with interest on the principal balance
outstanding from time to time, as hereinafter provided, in lawful money of the
United States of America.
By its execution and delivery of this promissory note (this "Note"),
Maker covenants and agrees as follows:
RECITALS
A. Maker executed a Promissory Note (the "Original Note") dated June
24, 1992, in the original principal amount of U.S. $7,500,000 made payable to
the order of Sun Life Insurance Company of America, an Arizona corporation
(n/k/a Sun America Life Insurance Company.
B. The entire $7,500,000.00 amount of the original loan evidenced by
the Note has been disbursed to Maker and Maker acknowledges receipts of the
entire original loan.
C. On or about November 15, 1993, Holder advanced to Maker an
additional$450,000.00 (the "First Additional Advance"), and as of that date,
Maker and Holder executed an Amendment to the Promissory Note (The "First
Amendment to Note"). Maker acknowledges receipt of the First Additional Advance.
D. On or about December 23, 1996, Holder advanced to Maker a second
additional advance in the amount of $1,500,000.00 (the "Second Additional
Advance), and as of that date Maker and Holder executed an Amendment to the
Promissory Note (the "Second Amendment to Note"). Maker acknowledges receipt of
the Second Additional Advance.
E. On or about May 8, 1998, Maker and Holder executed a Third Amendment
to Promissory Note (the Third Amendment to Promissory Note").
<PAGE>
F. The Original Note, as modified by the First Amendment to Note, the
Second Amendment to Note and the Third Amendment to Note is here collectively
@red to as the "Prior Note".
G. The total amount outstanding under the Prior Note as of the date
hereof is $8,554,899.55.
H. The proceeds of this Note shall be disbursed by application of
$8,554,899.55 towards retirement of The Prior Note (such amount sufficient to
fully retire The Prior Note) and $1,445,100.45 advanced to Maker at closing.
Maker acknowledges that the difference between the principal face amount of this
Note and the amount of funds advanced to Maker hereunder equals the amount
applied towards retirement of the Prior Note.
AGREEMENT
1. Definitions. For purposes of this Note, -the following terms
shall have the meanings ascribed to them below. Capitalized terms used herein
and not otherwise defined shall have the meanings set forth in the Deed of Trust
(hereinafter defined).
(a) Business Day" shall have the meaning ascribed to it in
Section 8 of this Note.
(b) "Conversion Date" shall mean the first day of the month
following the date on which the LIBOR Rate is converted to the
Remaining Term Fixed Rate pursuant to Section 3 of this Note.
(c) "Effective Rate" shall mean:
(i) for the period commencing on the date hereof through and
including September 30, 1999 seven and fifty-seven hundredths
percent (7.57)% per annum;
(ii) for the period commencing on October 1, 1999, and
continuing through the day immediately preceding the Conversion
Date, if any, or if the Conversion Date does not occur, through the
Original Maturity Date, the LIBOR Rate; and
(iii) for the period Commencing on the Conversion Date, if
any, and continuing through -the Original Maturity Date, The
Remaining Term Fixed Rate.
(d) "LIBOR Determination Date" shall mean September 29, 1999, and
each succeeding date that is two (2) Business Days prior to the
commencement date of a LIBOR Period.
(e) "LIBOR Index '% shall mean the rate per annum for United
States dollar deposits quoted as the London Inter-Bank Offered Rate
("LIBOR") as reported by Bloomberg on the LIBOR Determination Date for
delivery of funds on such LIBOR Determination Date for a period
comparable to the LIBOR Period and in an amount approximately equal to
the principal amount of this Note outstanding on such date.
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(f) "LIBOR Period" shall mean the three-month period commencing
on October 1, 1999 ("the LIBOR Period Commencement Date"), and each
succeeding three-month period, and commencing on the first day of
January, April, July and October.
(g) "LIBOR Rate" shall mean a rate per annum equal to the sum of
the LIBOR Index plus the Margin.
(h) "Margin" shall mean two and five-hundredths percent (2.05%)
per annum.
(i) "Original Maturity Date" shall mean October 1, 2002.
(j) "Principal and Interest Calculation" shall mean the
recalculation of combined payments of principal and interest on each
LIBOR Determination Date, based on the amount of principal balance
outstanding, on such LIBOR Determination Date, which shall bear
interest at the LIBOR Rate, as determined for such LIBOR Period, and
re-amortized for each LIBOR Period based on the Original Amortization
Period minus the number of months actually elapsed from the LIBOR
Period Commencement Date.
(k) "Remaining Term Fixed Rate" shall mean a rate per annum equal
to the sum of the Remaining Term Index plus the Margin.
(1) "Remaining Term Index" shall mean the yield on the U.S.
Treasury Constant Maturity Series maturing on the Original Maturity
Date, for the week prior to the Conversion Date, as reported in Federal
Reserve Statistical Release H.15 Selected Interest Rates, conclusively
determined by Holder on the Conversion Date.
2. Interest Rate and Payments.
(a) The balance of principal outstanding from time to time under
this Note shall bear interest at a rate per annum, based on actual days in the
year divided by a three hundred sixty (360) day year composed of twelve (12)
months of thirty (30) days each, equal to the Effective Rate in effect from time
to time.
(b) Interest only on the outstanding principal balance of this Note
shall be payable on the date hereof, in advance, for the period from and
including the date hereof through and including September 30, 1999.
(c) Commencing on November 1, 1999, and on the first day of each
month thereafter through and including September 1, 2002, combined payments of
principal and interest shall be payable, in arrears, in an amount sufficient to
fully amortize the original principal amount of this Note over a three hundred
month amortization period (the "Original Amortization Period").
(d) For periods during which the LIBOR Rate shall be in effect, the
amount of the combined monthly payments of principal and interest shall be
recalculated based on the Principal and Interest Calculation, as of the
beginning of each LIBOR Period, and the LIBOR Rate shall be consecutively
redetermined and established as of the applicable LIBOR Determination Date,
effective as
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of the first day of the next succeeding calendar month, which shall be deemed to
be the first day of the next succeeding LIBOR Period.
(e) The entire outstanding principal balance, together with all
accrued and unpaid interest and all other stuns due hereunder, shall be due and
payable in full on October 1, 2002 (the "Original Maturity Date").
3. Additional LIBOR Provisions.
(a) If Holder at any time shall determine that for any reason
adequate and reasonable means do not exist for ascertaining the LIBOR Rate, then
Holder shall promptly give notice thereof to Maker. If such notice is given and
until such notice has been withdrawn by Holder, then (i) no new LIBOR Rate shall
be set by Holder, and (ii) any portion of the outstanding principal balance
hereof which bears interest at the LIBOR Rate, subsequent to the end of the
LIBOR period applicable thereto, shall bear interest at the Remaining Term Fixed
Rate.
(b) If any law, treaty, rule, regulation or determination of a court
or governmental authority or any change therein or in the interpretation or
application thereof (each, a "Change in LANW') shall make it unlawful for Holder
(i) to make LIBOR based interest rate options available hereunder, or (ii) to
maintain interest rates based on LIBOR, then in the former event, any obligation
of Holder to make available such unlawful LIBOR-based interest rate shall
immediately be cancelled, and in the latter event, any such unlawful LIBOR-based
interest rates then outstanding shall be converted to the Remaining Term Fixed
Rate; provided, however, that if any such change in law shall permit any
LIBOR-based interest rates to remain in effect until the expiration of the term
thereof applicable thereto, then such permitted LIBOR-based interest rates shall
continue in effect until the expiration of such term. Upon the occurrence of any
of the foregoing events, Maker shall pay to Holder immediately upon demand such
amounts as may be necessary to compensate Holder for any fines, fees, charges,
penalties or other costs incurred or payable by Holder as a result thereof and
which are attributable to any LIBOR-based interest rate made available to Maker
hereunder, and any reasonable allocation made by Holder among its operations
shall be conclusive and binding upon Maker.
(c) If any Change in Law or compliance by Holder with any request or
directive (whether or not having the force of law) from any central bank or
other governmental authority shall:
(i) subject Holder to any tax, duty or other charge with respect
to any LIBOR-based interest rate, or change the basis of taxation of
payments to Holder of principal, interest, fees or any other amount
payable hereunder (except for changes in the rate of tax on the
overall net income of Holder); or
(ii) impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances
or loans by, or any other acquisition of funds by any office of
Holder; or
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(iii) impose on Holder any other condition;
and the result of any of the foregoing is to increase the cost to Holder of
making, renewing or maintaining any LIBOR-based interest rate hereunder and/or
to reduce any amount receivable by Holder in connection therewith, then in any
such case, Maker shall pay to Holder immediately upon demand such amounts as may
be necessary to compensate Holder for any additional costs incurred by Holder
and/or reductions in amounts received by Holder which are attributable to such
LIBOR-based interest rate. In determining which costs incurred by Holder and/or
reductions in amounts received by Holder are attributable to any LIBOR-based
interest rate made available to Maker hereunder, any reasonable allocation made
by Holder among its operations shall be conclusive and binding upon Maker.
4. Holder's Extension Option-, Net Operating Income.
(a) If Maker shall fail to pay the outstanding principal balance of
this Note and all accrued interest and other charges due hereon at the Original
Maturity Date, Holder shall have the right, at Holder's sole option and
discretion, to extend the term of the loan evidenced by this Note (the "Loan")
for an additional period of five (5) years (the "Extension Term"). If Holder
elects to extend the term of the Loan, Maker shall pay all fees of Holder
incurred in connection with such extension, including, but not limited to,
attorneys' fees and title insurance premiums. Maker shall execute all documents
reasonably requested by Holder to evidence and secure the Loan, as extended, and
shall obtain and provide to Holder any title insurance policy or endorsement
requested by Holder.
(b) Should Holder elect to extend the term of the Loan as provided
above, Holder shall (i) reset the interest rate borne by the then-existing
principal balance 'of the Loan to a rate per annum (the "New Rate") equal to
Holder's (or comparable lenders', if Holder is no longer making such loans)
then-prevailing interest rate for five (5) year loans secured by properties
similar to the Property (hereinafter defined), as determined by Holder in its
sole discretion; (ii) re-amortize the then-existing principal balance of the
Loan over the remaining portion of the Amortization Period (the "New
Amortization Period"); (iii) have the right to require Maker to enter into
modifications of the non-economic terms of the Loan Documents as Holder may
request (the "Non-Economic Modifications"); and (iv) notwithstanding any
provision set forth in the Loan Documents to the contrary, have the right to
require Maker to make monthly payments into escrow for insurance premiums and
real property taxes, assessments and similar governmental charges. Hence,
monthly principal and interest payments during the Extension Term shall be based
upon the New Rate, and calculated to amortize fully the outstanding principal
balance of the Loan over the New Amortization Period.
(c) If Holder elects to extend the term of the Loan, Holder shall
advise Maker of the New Rate on or prior to the Original Maturity Date.
(d) In addition to the required monthly payments of principal and
interest set forth above, commencing on the first day of the second month
following the Original
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Maturity Date and continuing on the first day of each month thereafter during
the Extension Term (each an "Additional Payment Date"), Maker shall make monthly
payments to Holder in an amount equal to all Net Operating Income (hereinafter
defined) attributable to the Property for the calendar month ending on the last
day of the month that is two months preceding each such Additional Payment Date.
For example, assuming the Original Maturity Date is January 1, then Net
Operating Income for the period from January I through January 31 shall be
payable to Holder on March 1; Net Operating Income for the period from February
I through February 28 shall be payable to Holder on April 1, and so on.
(e) Holder shall deposit all such Net Operating Income received from
Maker into an account or accounts maintained at a financial institution chosen
by Holder or its servicer in its sole discretion (the "Deposit Account") and all
such funds shall be invested in a manner acceptable to Holder in its sole
discretion. All interest, dividends and earnings credited to the Deposit Account
shall be held and applied in accordance with the terms hereof.
(f) On the third Additional Payment Date and on each third
Additional Payment Date thereafter, Holder shall apply all Excess Funds
(hereinafter defined), if any, to prepayment of amounts due under this Note,
without premium or penalty.
(g) As security for the repayment of the Loan and the performance of
all other obligations of Maker under the Loan Documents, Maker hereby assigns,
pledges, conveys, delivers, transfers and grants to Holder a first priority
security interest in and to: all Maker's right, title and interest in and to the
Deposit Account; all rights to payment from the Deposit Account and the money
deposited therein or credited thereto (whether then due or in the future due and
whether then or in the future on deposit); all interest thereon; any
certificates, instruments and securities, if any, representing the Deposit
Account; all claims, demands, general intangibles, chooses in action and other
rights or interests of Maker in respect of the Deposit Account; any monies then
or at any time thereafter deposited therein; any increases, renewals,
extensions, substitutions and replacements thereof-, and all proceeds of the
foregoing.
(h) From time to time, but not more frequently than monthly, Maker
may request a disbursement (a "Disbursement") from the Deposit Account for
capital expenses, tenant improvement expenses, leasing commissions and special
contingency expenses. Holder may consent to or deny any such Disbursement in its
sole discretion.
(i) Upon the occurrence of any Event of Default (hereinafter
defined) (i) Maker shall not be entitled to any further Disbursement from the
Deposit Account; and (ii) Holder shall be entitled to take immediate possession
and control of the Deposit Account (and all funds contained therein) and to
pursue all of its rights and remedies available to Holder under the Loan
Documents, at law and in equity.
(j) All of the terms and conditions of the Loan shall apply during
the Extension Term, except as expressly set forth above, and except that no
further extensions of the Loan shall be permitted.
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(k) For the purposes of the foregoing:
(i) "Excess Funds" shall mean, on any Additional Payment Date,
the amount of funds then existing in the Deposit Account (including
any Net Operating Income due on the applicable Additional Payment
Date), less an amount equal to the sum of three regularly scheduled
payments of principal and interest due on this Note;
(ii) "Net Operating Income" shall mean, for any particular
period of time, Gross Revenue for the relevant period, less
Operating Expenses for the relevant period; provided, however, that
if such amount is equal to or less than zero (0), Net Operating
Income shall equal zero (0);
(iii) "Gross Revenue" shall mean all payments and other revenues
(exclusive, however, of any payments attributable to sales taxes)
received by or on behalf of Maker from all sources related to the
ownership or operation of the Property, including, but not limited
to, rents, room charges, parking fees, interest, security deposits
(unless required to be held in a segregated account), business
interruption insurance proceeds, operating expense passthrough
revenues and common area maintenance charges, for the relevant
period for which the calculation of Gross Revenue is being made; and
(iv) "Operating Expenses" shall mean the sum of all ordinary and
` necessary operating expenses actually paid by Maker in connection
with the operation of the Property during the relevant period for
which the calculation of Operating is being made, Including, but not
limited to (a) payments made by Maker for taxes and insurance
required under the Loan Documents, and (b) monthly debt service
payments as required under this Note.
5. Budgets During Extension Term.
(a) Within fifteen (15) days following the Original Maturity Date
and on or before December I of each subsequent calendar year, Maker shall
deliver to Holder a proposed revenue and expense budget for the Property for the
remainder of the calendar year in which the Original Maturity Date occurs or the
immediately succeeding calendar year (as applicable). Such budget shall set
forth Maker's projection of Gross Revenue and Operating Expenses for the
applicable calendar year, which shall be subject to Holder's reasonable
approval. Once a proposed budget has been reviewed and approved by Holder, and
Maker has made all revisions requested by Holder, if any, the revised budget
shall be delivered to Holder and shall thereafter become the budget for the
Property hereunder (the "Budget") for the applicable calendar year. If Maker and
Holder are unable to agree upon a Budget for any calendar year, the budgeted
Operating Expenses (excluding extraordinary items) provided in the Budget for
the Property for the preceding calendar year shall be considered the Budget for
the Property for the subject calendar year until Maker and Holder agree upon a
new Budget for such calendar year.
(b) During the Extension Term, Maker shall operate the Property in
accordance with the Budget for the applicable calendar year, and the total of
expenditures relating to the Property exceeding one hundred and five percent
7
<PAGE>
(105%) of the aggregate of such expenses set forth in the Budget for the
applicable time period shall not be treated as Operating Expenses for the
purposes of calculating "Net Operating Income," without the prior written
consent of Holder except for emergency expenditures which, in the Maker's good
faith judgment, are reasonably necessary to protect, or avoid immediate danger
to, life or property.
6. Reports During Extension Term.
(a) During the Extension Term, Maker shall deliver to Holder all
financial statements reasonably required by Holder to calculate Net Operating
Income, including, without limitation, a monthly statement to be delivered to
Holder concurrently with Maker's payment of Net Operating Income that sets forth
the amount of Net Operating Income accompanying such statement and Maker's
calculation of Net Operating Income for the relevant calendar month. Such
statements shall be certified by an executive officer of Maker or Maker's
manager, managing member or general partner (as applicable) as having been
prepared in accordance with the terms hereof and to be true, accurate @d
complete in all material respects.
(b) In addition, on or before February 1 of each calendar year
during the Extension Term, Maker shall submit to Holder an annual income and
expense statement for the Property which shall include the calculation of Gross
Revenue, Operating Expenses and Net Operating Income for the preceding calendar
year and shall be accompanied by Maker's reconciliation of any difference
between the actual aggregate amount of the Net Operating Income for such
calendar year and the aggregate amount of Net Operating Income for such calendar
year actually remitted to Holder. All such statements shall be certified by an
executive officer of Maker or Maker's manager, managing member or general
partner (as applicable) as having been prepared in accordance with the terms
hereof and to be true, accurate and complete in all material respects. If any
such annual financial statement discloses any inconsistency between the
calculation of Net Operating Income and the amount of Net Operating Income
actually remitted to Holder, Maker shall immediately remit to Holder the amount
of any underpayment of Net Operating Income for such calendar year or, in the
event of an overpayment by Maker, such amount may be withheld from any
subsequent payment of Net Operating Income required hereunder.
(c) Holder may notify Maker within ninety (90) days after receipt of
any statement or report required hereunder that Holder disputes any computation
or item contained in any portion of such statement or report. If Holder so
notifies Maker, Holder and Maker shall meet in good faith within twenty (20)
days after Holder's notice to Maker to resolve such disputed items. If, despite
such good faith efforts, the parties are unable to resolve the dispute at such
meeting or within ten (10) days thereafter, the items shall be resolved by an
independent certified public accountant designated by Holder within fifteen (I
5) days after such ten (10) day period. The determination of such accountant
shall be final. All fees of such accountant shall be paid by Maker. Maker shall
remit to Holder any additional amount of Net Operating Income found to be due
for such periods within ten (10) days after the resolution of such dispute by
the parties or the accountant's determination, as applicable. The amount of any
overpayment found to have been made for such periods may be withheld from any
required future remittance of Net Operating Income.
8
<PAGE>
(d) Maker shall at all times keep and maintain full and accurate
books of account and records adequate to reflect correctly all items required in
order to calculate Net Operating Income.
7. Prepayment.
(a) During the first (1st) year after the date of this Note, Maker
shall have no right to prepay all or any part of this Note.
(b) At any time after the first (1st) anniversary of the date of
this Note, Maker shall have the right to prepay the principal amount of this
Note, in whole or in part, and all accrued but unpaid interest hereon as of the
date of prepayment, provided that (i) Maker gives not less than @ (30) days'
prior written notice to Holder of Maker's election to prepay this Note, and (ii)
Maker pays a prepayment premium to Holder equal to one-half percent (1/2%) of
the principal amount of this Note being prepaid, calculated as of the prepayment
date.
(c) Holder shall notify Maker of the amount and basis of
determination of the prepayment premium. Holder shall not be obligated to accept
any prepayment of the principal balance of this Note unless such prepayment is
accompanied by the applicable prepayment premium and all accrued interest and
other sums due under this Note.
(d) If Holder accelerates this Note for any reason, then in addition
to Maker's obligation to pay the then outstanding principal balance of this Note
and all accrued but unpaid interest thereon, Maker shall pay an additional
amount equal to the prepayment premium that would be due to Holder if Maker were
voluntarily prepaying this Note at the time that such acceleration occurred, or
if under the terms hereof no voluntary prepayment would be permissible on the
date of such acceleration, Maker shall pay a prepayment premium calculated as
set forth in the Deed of Trust.
(e) Notwithstanding the foregoing, (i) at any time during the
Extension Term, Maker shall have the right to prepay the full principal amount
of this Note and all accrued but unpaid interest thereon as of the date of
prepayment, without prepayment premium thereon, and (ii) no prepayment premium
shall be due in connection with the application of any insurance proceeds or
condemnation awards to the principal balance of this Note, as provided in the
Deed of Trust.
8. Dates of Payments. Whenever any payment to be made under this Note
shall be stated to be due on a Saturday, Sunday or public holiday or the
equivalent for banks generally under the laws of the State of North Carolina
(any other day being a "Business Day"), such payment may be made on the next
succeeding Business Day.
9. Default Rate.
(a) The entire balance of principal, interest, and other sums due
upon the maturity hereof, by acceleration or otherwise, shall bear interest from
the date due until paid at the greater of (i) fifteen percent (I 5%) per annum
and (ii) a per annum rate equal to five percent (5%) over the prime rate (for
corporate loans at large United States money center commercial banks) published
in The Wall Street Journal on the first business day of each month (the "Default
9
<PAGE>
Rate") provided, however, that such rate shall not exceed the maximum permitted
by applicable state or federal law. In the event The Wall Street Journal is no
longer published or no longer publishes such prime rate, Holder shall select a
comparable reference.
(b) If any payment under this Note is not made when due, interest
shall accrue at the Default Rate from the date such payment was due until
payment is actually made.
10. Late Charges. In addition to interest as set forth herein, Maker
shall pay to Holder a late charge equal to four percent (4%) of any amounts due
under this Note in the event any such amount is not paid within fifteen (1 5)
days of the date when due.
11. Application of Payments. All payments hereunder shall be applied
first to the payment of late charges, if any, then to the payment of prepayment
premiums, if any, then to the repayment of any sums advanced by Holder for the,
payment of any insurance premiums, taxes, assessments, or other charges against
the property securing this Note (together with interest thereon at the Default
Rate from the date of advance until repaid), then to the payment of accrued and
unpaid interest, and then to the reduction of principal.
12. Immediately Available Funds. Payments under this Note shall be
payable in immediately available funds without setoff, counterclaim or deduction
of any kind, and shall be made by electronic funds transfer from a bank account
established and maintained by Maker for such purpose.
13. Security. This Note is secured by a Deed of Trust, Security
Agreement, Fixture Filing, Financing Statement and Assignment of Leases and
Rents of even date herewith granted by Maker for the benefit of the named Holder
hereof (the "Deed of Trust") encumbering certain real property and improvements
thereon commonly known as The Village Apartments as more particularly described
in such Deed of Trust (the "Property").
14. Certain Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Deed of Trust.
15. Event of Default. Each of the following events will constitute an
event of default (an "Event of Default") under this Note and under the Deed of
Trust and each other Loan Document, and any Event of Default under any Loan
Document shall constitute an Event of Default hereunder and under each of the
other Loan Documents:
(a) any failure to pay within five (5) days of the date when due
any sum hereunder;
(b) any failure of Maker to properly perform any obligation
contained herein or in any of the other Loan Documents (other than the
obligation to make payments under this Note or the other Loan Documents) and the
continuance of such failure for a period of thirty (30) days following written
notice thereof from Holder to Maker; provided, however, that if such failure is
not curable within such thirty (30) day period, then, so long as Maker commences
to cure such failure within such thirty (30) day period and is continually and
diligently attempting to cure to completion, such failure shall not be an Event
10
<PAGE>
of Default unless such failure remains uncured for sixty (60) days after such
written notice to Maker; or
(c) if, at any time during the Extension Term, Gross Revenue for
any calendar month shall be less than ninety-three percent (93%) of the amount
of projected Gross Revenue for such month set forth in the applicable Budget.
16. Acceleration. Upon the occurrence of any Event of Default, the
entire balance of principal, accrued interest, and other sums owing hereunder
shall, at the option of Holder, become at once due and payable without notice or
demand. Upon the occurrence of an Event of Default described in Section 15(c)
hereof, Holder shall have the option, in its sole discretion, to either (a)
exercise any remedies available to it under the Loan Documents, at law or in
equity, or (b) require Maker to submit a new proposed budget for Holder's
approval. If Holder agrees to accept such new proposed budget, then, such budget
shall become the Budget for all purposes hereunder.
17. Conditions Precedent. Maker hereby certifies and declares that all
acts, conditions and things required to be done and performed and to have
happened precedent to the creation and issuance of this Note, and to constitute
this Note the legal, valid and binding obligation of Maker, enforceable in
accordance with the terms hereof, have been done and performed and happened in
due and strict compliance with all applicable laws.
18. Certain Waivers and Consents. Maker and all parties now or
hereafter liable for the payment hereof, primarily or secondarily, directly or
indirectly, and whether as endorser, guarantor, surety, or otherwise, hereby
severally (a) waive presentment, demand, protest, notice of protest and/or
dishonor, and all other demands or notices of any sort whatever with respect to
this Note, (b) consent to impairment or release of collateral, extensions of
time for payment, and acceptance of partial payments before, at, or after
maturity, (c) waive any right to require Holder to proceed against any security
for this Note before proceeding hereunder, (d) waive diligence in the collection
of this Note or in filing suit on this Note, and (e) agree to pay all costs and
expenses, including reasonable attorneys' fees, which may be incurred in the
collection of this Note or any part thereof or in preserving, securing
possession of, and realizing upon any security for this Note.
19. Usury Savings Clause. The provisions of this Note and of all
agreements between Maker and Holder are, whether now existing or hereinafter
made, hereby expressly limited so that in no contingency or event whatever,
whether by reason of acceleration of the maturity hereof, prepayment, demand for
payment or otherwise, shall the amount paid, or agreed to be paid, to Holder for
the use, forbearance, or detention of the principal hereof or interest hereon,
which remains unpaid from time to time, exceed the maximum amount permissible
under applicable law, it particularly being the intention of the parties hereto
to conform strictly to North Carolina and Federal law, whichever is applicable.
If from any circumstance whatever, the performance or fulfillment of any
provision hereof or of any other agreement between Maker and Holder shall, at
the time performance or fulfillment of such provision is due, involve or purport
to require any payment in excess of the limits prescribed by law, then the
obligation to be performed or fulfilled is hereby reduced to the limit of such
validity, and if from any circumstance whatever Holder should ever receive as
interest an amount which would exceed the highest lawful rate, the amount which
would be excessive interest shall be applied to the
11
<PAGE>
reduction of the principal balance owing hereunder (or, at Holder's option, be
paid over to Maker) and shall not be counted as interest. To the extent
permitted by applicable law, determination of the legal maximum amount of
interest shall at all times be made by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated term of this Note,
all interest at any time contracted for, charged, or received from Maker in
connection with this Note and all other agreements between Maker and Holder, so
that the actual rate of interest on account of the indebtedness represented by
this Note is uniform throughout the term hereof.
20. Non-Recourse, Exceptions to Non-Recourse. Except as expressly
hereinafter set forth, the recourse of Holder with respect to the obligations
evidenced by this Note shall be solely to the Property, Chattels, and Intangible
Personalty (as such terms are defined in the Deed of Trust). Notwithstanding
anything to the contrary contained in this Note or in any Loan Document, nothing
shall be deemed in any way to impair, limit or prejudice the rights of Holder
(a) in foreclosure proceedings or in any ancillary proceedings brought to
facilitate Holder's foreclosure on the Property or any portion thereof, (b) to
recover from Maker damages or costs (including without limitation reasonable
attorneys' fees) incurred by Holder as a result of waste by Maker; (c) to
recover from Maker any condemnation or insurance proceeds attributable to the
Property which were not paid to Holder or used to restore the Property in
accordance with the terms of the Deed of Trust; (d) to recover from Maker any
rents, profits, security deposits, advances, rebates, prepaid rents or other
similar sums attributable to the Property collected by or for Maker following an
Event of Default under any Loan Document and not properly applied to the
reasonable fixed and operating expenses of the Property, including payments of
this Note; (e) to pursue the personal liability of Maker under the provisions of
Section 5.10 of the Deed of Trust, including any indemnification provisions
under such Section; (f) to exercise any specific rights or remedies afforded
Holder under any other provisions of the Loan Documents or by law or in equity
(or to recover under any guarantee agreement given in connection with this
Note); (g) to recover from Maker the amount of any accrued taxes, assessments,
and/or utility charges affecting the Property (whether or not the same have been
billed to Maker) that are either unpaid by Maker or paid by Holder under the
Deed of Trust and to collect from Maker any sums expended by Holder in
fulfilling the obligations of Maker, as lessor, under any leases affecting the
Property; (h) to pursue any personal liability of Maker and/or Guarantor under
the Environmental Indemnity Agreement; and (I) to recover from Maker the amount
of any loss suffered by Holder (that would otherwise be covered by insurance) as
a result of Maker's failure to maintain any insurance required under the terms
of any Loan Document. The agreement contained in this paragraph to limit the
personal liability of Maker shall become null and void and be of no further
force and effect in the event (i) that the Property or any part thereof or any
interest therein, or any interest in Maker, shall be further encumbered by a
voluntary lien securing any obligation upon which Maker or any general partner,
principal or affiliate of Maker shall be personally liable for repayment,
whether as obligor or guarantor; (ii) of any breach or violation of Section 5.4,
5.5 or 5.7 of the Deed of Trust; (iii) of any fraud or misrepresentation by
Maker in connection with the Property, the Loan Documents or the application
made by Maker for the Loan; or (iv) of any execution, amendment, modification or
termination of any lease of any portion of the Property without the prior
written consent of Holder if such consent is required under the terms of the
Loan Documents. For purposes of the foregoing, "affiliate" shall mean any
individual, corporation, trust, partnership or any other person or entity
controlled by, controlling or under common control with Maker. A person or
entity of any nature shall be presumed to
12
<PAGE>
have control when it possesses the power, directly or indirectly, to direct, or
cause the direction of, the management or policies of another person or entity,
whether through ownership of voting securities, by contract, or otherwise.
21. Severabilily. If any provision hereof or of any other document
securing or related to the indebtedness evidenced hereby is, for any reason and
to any extent, invalid or unenforceable, then neither the remainder of the
document in which such provision is contained, nor the application of the
provision to other persons, entities, or circumstances, nor any other document
referred to herein, shall be affected thereby, but instead shall be enforceable
to the maximum extent permitted by law.
22. Transfer of Note. Each provision of this Note shall be and remain
in full force and effect notwithstanding any negotiation or transfer hereof and
any interest herein to any other Holder or participant.
23. Governing Law. Regardless of the place of its execution, this Note
shall be construed and enforced in accordance with the laws of the State of
North Carolina.
24. Time of Essence. Time is of the essence of this Note.
25. Remedies Cumulative. The remedies provided to Holder in this Note,
the Deed of Trust and the other Loan Documents are cumulative and concurrent and
may be exercised singly, successively or together against Maker, the Property,
and other security, or any guarantor of this Note, at the sole and absolute
discretion of the Holder.
26. No Waiver. Holder shall not by any act or omission be deemed to
waive any of its rights or remedies hereunder unless such waiver is in writing
and signed by the Holder and then only to the extent specifically set forth
therein. A waiver of one event shall not be construed as continuing or as a bar
to or waiver of any right or remedy granted to Holder hereunder in connection
with a subsequent event.
27. Joint and Several Obligation. If Maker is more than one person or
entity, then (a) all persons or entities comprising Maker are jointly and
severally liable for all of the Maker's obligations hereunder; (b) all
representations, warranties, and covenants made by Maker shall be deemed
representations, warranties, and covenants of each of the persons or entities
comprising Maker; (c) any breach, Default or Event of Default by any of the
persons or entities comprising Maker hereunder shall be deemed to be a breach,
Default, or Event of Default of Maker; and (d) any reference herein contained to
the knowledge or awareness of Maker shall mean the knowledge or awareness of any
of the persons or entities comprising Maker.
28. WAIVER OF JURY TRIAL. MAKER AND HOLDER KNOWINGLY, IRREVOCABLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM BASED ON THIS NOTE, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE, THE DEED OF TRUST, OR ANY
OTHER LOAN DOCUMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY HERETO OR TO ANY LOAN
DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MAKER AND HOLDER TO ENTER
INTO THE LOAN TRANSACTION EVIDENCED BY THIS NOTE.
13
<PAGE>
29. WAIVER OF PREPAYMENT RIGHT WITHOUT PREMIUM MAKER HEREBY EXPRESSLY
WAIVES ANY RIGHT IT MAY HAVE UNDER APPLICABLE LAW TO PREPAY THIS NOTE, IN WHOLE
OR IN PART, WITHOUT PREPAYMENT PRENUUM, UPON ACCELERATION OF THE MATURITY DATE
OF THIS NOTE, AND AGREES THAT, IF FOR ANY REASON A PREPAYMENT OF ALL OR ANY PART
OF THIS NOTE IS MADE, WHETHER VOLUNTARILY OR FOLLOWING ANY ACCELERATION OF THE
MATURITY DATE OF THIS NOTE BY HOLDER ON ACCOUNT OF THE OCCURRENCE OF ANY EVENT
OF DEFAULT ARISING FOR ANY REASON, INCLUDING, WITHOUT LIMITATION, AS A RESULT OF
ANY PROHIBITED OR RESTRICTED TRANSFER, FURTHER ENCUMBRANCE OR DISPOSITION OF THE
PROPERTY OR ANY PART THEREOF SECURING THIS NOTE, THEN MAKER SHALL BE OBLIGATED
TO PAY, CONCURRENTLY WITH SUCH PREPAYMENT, THE PREPAYMENT PREMIUM PROVIDED FOR
IN THIS NOTE OR, IN THE EVENT OF PREPAYMENT FOLLOWING ACCELERATION OF THE
MATURITY DATE HEREOF WHEN THIS NOTE IS CLOSED TO PREPAYMENT, AS PROVIDED IN THE
DEED OF TRUST. MAKER HEREBY DECLARES THAT HOLDER'S AGREEMENT TO MAKE THE LOAN AT
THE INTEREST RATE AND FOR THE TERM SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE
CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY MAKER, FOR THIS WAIVER AND AGREEMENT.
IN WITNESS WHEREOF and intending to be legally bound, Maker has duly
executed this Note as of the date first above written.
RD VILLAGE ASSOCIATES LIMITED
PARTNERSHIP, a Delaware limited partnership
By: ACADIA PROPERTY HOLDINGS, LLC, a Delaware
limited liability company, its General Partner
By: ACADIA REALTY LIMITED PARTNERSHIP, a
Delaware limited partnership, its sole member
By: ACADIA REALTY TRUST, a Maryland real
estate investment trust, its General Partner
By:_____________________
Kenneth F. Bernstein,
President
14
<PAGE>
LIST OF SUBSIDIARIES OF
ACADIA REALTY TRUST
Acadia Realty Limited Partnership
Acadia Realty Trust
Acadia Property Holdings, LLC
239 Greenwich Associates Limited Partnership
Crossroads Joint Venture
Crossroads II
RD Abington Associates Limited Partnership
RD Absecon Associates, L.P.
RD Absecon, Inc.
RD Bloomfield Associates Limited Partnership
RD Branch Associates L.P.
RD Columbia Associates, L.P.
RD Elmwood Associates, L.P.
Acadia G. O. Limited Partnership
Acadia G. O. Corp.
Greenbelt Realty Corp.
Heathcote Associates, L.P.
Acadia Heathcote, LLC
RD Hendon Realty, Inc.
RD Hobson Associates, L.P.
Acadia Mad River Property LLC
Marley Associates Limited Partnership
Marley Oakwood Properties, Inc.
Acadia Merrillville Realty, L.P.
Acadia Merrillville Realty, Inc.
RD Methuen Associates Limited Partnership
Pacesetter/Ramapo Associates
Acadia Pacesetter LLC
Port Bay Associates, LLC
RD Smithtown, LLC
Sound View Management LLC
Acadia Town Line, LLC
RD Village Associates Limited Partnership
RD Whitegate Associates, L.P.
RD Woonsocket Associates Limited Partnership
Blackman Fifty L.P.
Blackman Fifty Realty Corp.
Mark Four Realty, L.P.
Mark Four Realty Corp.
Mark Kings Fairground, L.P.
Mark Kings Fairground Realty, Inc.
Mark M.P.N.M. Limited Partnership
Mark M.P.N.M. Realty, Inc.
Mark Manahawkin, L.P.
Mark Manahawkin Realty Corp.
Mark Martintown, L.P.
Mark Martintown Realty, Inc.
Mark New Smyrna Limited Partnership
Mark New Smyrna Realty, Inc.
Mark Northwood Associates, Limited Partnership
Mark Northwood Realty, Inc.
Mark Park Plaza, L.P.
Mark Park Plaza Realty, Inc.
Mark Plaza Fifty L.P.
Mark Plaza Fifty Realty Corp.
Mark Shillington, L.P.
Mark Shillington Realty Corp.
Mark Three Realty, L.P.
Mark Three Realty Corp.
Mark Troy, L.P.
Mark Troy Realty, Inc.
Mark Twelve Associates, L.P.
New Castle Fifty Realty Corp.
Mark 25th Street, L.P.
Mark 25th Street Realty Corp.
Wesmark Fifty, L.P.
Wesmark Fifty Realty Corp.
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incoporation by reference in the Registration Statement (Form
S-8 No. 33-95966) pertaining to the 1999 Share Incentive Plan of Acadia Realty
Trust, in the Registration Statement (Form S-3 No. 33-85190) of Acadia Realty
Trust, and in the Registration Statement (Form S-3 No. 333-31630) of Acadia
Realty Trust, of our report dated February 25, 2000 with respect to the
consolidated financial statements and schedule of Acadia Realty Trust included
in this Annual Report (Form 10-K) for the year ended december 31, 1999.
/s/ ERNST & YOUNG LLP
New York, New York
March 29, 2000
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 35,340
<SECURITIES> 0
<RECEIVABLES> 10,453
<ALLOWANCES> 1,588
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 569,521
<DEPRECIATION> 90,932
<TOTAL-ASSETS> 570,803
<CURRENT-LIABILITIES> 0
<BONDS> 326,651
0
0
<COMMON> 0
<OTHER-SE> 152,461
<TOTAL-LIABILITY-AND-EQUITY> 570,803
<SALES> 0
<TOTAL-REVENUES> 92,709
<CGS> 0
<TOTAL-COSTS> 58,370
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 23,314
<INCOME-PRETAX> 0
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<INCOME-CONTINUING> 7,195
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