<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 10-Q
---------------------------------------
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 1-12412
ARBOR PROPERTY TRUST
(Exact name of Registrant as specified in its Charter)
<TABLE>
<S> <C>
Delaware 23-2740383
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
<TABLE>
<S> <C>
Suite 800, One Tower Bridge, W. Conshohocken, PA 19428
(Address of principal executive offices) (Zip code)
</TABLE>
(215) 941-2933
(Registrant's telephone number, including area code)
--------------------------------------------------------
(Former name of registrant if changed since last report)
Indicate by checkmark 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 ____________
APPLICABLE TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING
FIVE YEARS:
Indicate by checkmark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.
Yes _________ No ____________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date: 11,954,864 shares as of
August 12, 1994.
<PAGE>
ARBOR PROPERTY TRUST
QUARTERLY REPORT ON FORM 10-Q
FOR QUARTER ENDED JUNE 30, 1994
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets as of June 30, 1994
and December 31, 1993 3
Condensed Consolidated Statements of Operations for the three
and six month periods ended June 30, 1994 and June 30, 1993 4
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1994 and June 30, 1993 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
PART II - OTHER INFORMATION
Items 1 through 6. 12
SIGNATURES 13
EXHIBIT INDEX 14
</TABLE>
<PAGE>
ARBOR PROPERTY TRUST
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except common share data)
<TABLE>
<CAPTION>
June 30, December 31,
1994 1993
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Investment in property, at cost:
Land $ 30,295 $ 27,865
Buildings and improvements 137,751 124,287
Capitalized lease 7,125 7,125
Personal property 1,132 1,075
Construction in progress 457 239
-------- --------
176,760 160,591
Less accumulated depreciation 24,551 22,674
-------- --------
152,209 137,917
Restricted cash - 500
Cash and short-term investments 556 885
Accounts receivable (net of allowance for
doubtful accounts of $629 and $723) 7,216 7,510
Other assets, net 6,478 7,074
-------- --------
TOTAL ASSETS $166,459 $153,886
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Collateralized floating rate notes (net
of unamortized discounts of $98 and $109) $117,902 $117,891
Distributions payable 3,288 2,826
Obligation under capitalized lease 6,987 6,971
Note payable to bank 2,150 1,800
Accounts payable and other liabilities 2,529 4,032
-------- --------
132,856 133,520
======== ========
Shareholders' Equity:
Shares of beneficial interest, without par value:
Authorized: 5,000,000 preferred shares,
45,000,000 common shares, and 50,000,000
excess shares;
Issued and outstanding: 11,954,864 and
10,277,469 common shares 116,161 95,500
Distributions in excess of accumulated
earnings (82,558) (75,134)
-------- --------
33,603 20,366
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $166,459 $153,886
======== ========
</TABLE>
_______________
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
ARBOR PROPERTY TRUST
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except shares and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues from rental operations $ 5,244 $ 5,037 $ 10,472 $ 10,012
Operating expenses, net of tenant reimbursements (including fees
to affiliate of $108 and $202 for the three months and $278 and
$398 for the six months ending June 30, 1994 and 1993,
respectively) 727 361 1,065 745
Advisory and termination fees to former advisor, discontinued
3/30/94 (including $3,843 as a result of the termination of the
advisory agreement in 1994) - 407 4,107 815
Provisions for doubtful accounts 12 38 73 105
Depreciation and amortization 1,046 860 2,035 1,832
--------- --------- --------- ---------
Income from rental operations 3,459 3,371 3,192 6,515
Interest expense (includes amortization) 2,007 2,903 3,799 5,690
Other expenses, net of interest income 526 155 1,093 366
--------- --------- --------- ---------
Income (loss) before gain on sale of real estate 926 313 (1,700) 459
Gain on sale of real estate - 440 839 440
--------- --------- --------- ---------
Net income (loss) $ 926 $ 753 $ (861) $ 899
========= ========= ========= =========
Income (loss) per weighted average share:
Income (loss) before gain on sale of real estate $ .08 $ .03 $ (.15) $ .04
Gain on sale of real estate - .04 .07 .05
--------- --------- --------- ---------
Net income (loss) $ .08 $ .07 $ (.08) $ .09
========= ========= ========= =========
Weighted average number of shares outstanding 11,931,988 10,277,469 11,338,611 10,277,469
========= ========= ========= =========
</TABLE>
_______________
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
ARBOR PROPERTY TRUST
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
-----------------
1994 1993
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(861) $ 899
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Gain on sale of real estate (839) (440)
Depreciation and amortization 2,035 1,941
Amortization of deferred financing costs 598 -
Amortization of floating rate notes discount 11 -
Amortization of zero coupon
mortgage note discount - 4,354
Termination of advisor agreement 3,843 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable
and other assets 737 (3,846)
Increase (decrease) in accounts payable
and other liabilities (1,487) (267)
------- -------
Net cash provided by operating activities 4,037 2,641
------- -------
Cash flows from investing activities:
Proceeds from sale of real estate, net 1,435 9,377
Additions to buildings and improvements
and personal property, net (279) (628)
Additions to property under contract - (5,464)
Construction expenditures (218) (35)
------- -------
Net cash provided by (used in) investing activities 938 3,250
------- -------
Cash flows from financing activities:
Distributions paid (6,102) (5,653)
Proceeds from issuance of shares 448 -
Borrowing under bank line of credit 350 -
------- -------
Net cash used in financing activities (5,304) (5,653)
------- -------
Increase (decrease) in cash and
short-term investments (329) 238
Cash and short-term investments,
beginning of period 885 1,929
------- -------
Cash and short-term investments,
end of period $ 556 $2,167
======= =======
Supplemental disclosure of cash
flow information:
Interest paid $2,637 $1,161
======= =======
</TABLE>
See Note 1 for disclosure of non-cash investing
and financing activities
_______________
See accompanying Notes to Condensed Consolidated Financial Statements
5
<PAGE>
ARBOR PROPERTY TRUST
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. DESCRIPTION OF BUSINESS AND MERGER TRANSACTION
Arbor Property Trust (the 'Trust'), formed as EQK Green Acres Trust on September
8, 1993 as a Delaware business trust, has an indefinite life and intends to
elect real estate investment trust ('REIT') status under the Internal Revenue
Code of 1986, as amended. On February 28, 1994, EQK Green Acres, L.P. (the
'Partnership') merged (the 'Merger') with and into Green Acres Mall Corp., a
wholly-owned subsidiary of the Trust (the 'Subsidiary'). Prior to February 28,
1994, the Trust did not have significant operations. On May 3, 1994, EQK Green
Acres Trust filed with the Securities Exchange Commission a Current Report on
Form 8-K to announce a name change to Arbor Property Trust. The change of name
is a result of the anticipated growth of the portfolio which will no longer be
limited to the Green Acres Mall. The Trust and the Partnership are
interchangeably referred to herein as the 'Company'.
The Partnership had been formed pursuant to an Agreement of Limited Partnership
dated as of June 30, 1986 (and amended and restated as of August 27, 1986) to
acquire and operate Green Acres Mall (the 'Property' or the 'Mall'), a regional
shopping mall located in Nassau County, Long Island, New York. In 1991, the
Partnership completed the conversion of a leased industrial building, located
adjacent to the Property, into a convenience shopping center known as the Plaza
at Green Acres (the 'Plaza').
Pursuant to the Merger, Unitholders of the Partnership received 10,172,639
common shares of the Trust (the 'Common Shares') on account of their 98.98%
percentage interest in the Partnership; the General Partners of the Partnership
received 104,830 Common Shares on account of their 1.02% percentage interest in
the Partnership; and the Special General Partner of the Partnership received
1,316,251 Common Shares in satisfaction of its residual interest in the
Partnership. Pursuant to the termination of the Partnership's advisory agreement
(see Note 3), Equitable Realty Portfolio Management, Inc. (the 'Advisor')
received 308,933 Common Shares on March 30, 1994.
The issuance of 10,277,469 Common Shares to the Unitholders and the General
Partners on account of their respective percentage interests in the Partnership
represents a reorganization of entities under common control and, accordingly,
was accounted for in a manner similar to a pooling of interests. The financial
statements of the Partnership and the Trust have been combined at historical
cost retroactive to January 1, 1993. The issuance of these Common Shares has
been reflected as of this date at the amount of the Unitholders' and General
Partners' original contributions to the Partnership.
The issuance of Common Shares to the Special General Partner on account of its
residual interest in the Partnership and to the Advisor are reflected in the
Company's condensed consolidated financial statements as of June 30, 1994. The
issuance of Common Shares to the Special General Partner has increased the
Company's carrying value of land, and buildings and improvements by $3,024,000
and $13,347,000, respectively, representing the value of the Special General
Partner's residual interest in accordance with the allocation methodology
utilized by the Partnership in connection with the Merger. Annual depreciation
expense will increase by approximately $342,000 as a result of the increase in
the basis of the Mall. The issuance of Common Shares to the Advisor has been
reflected as a charge to earnings during the first quarter of 1994 in the amount
of $3,843,000.
6
<PAGE>
NOTE 2. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. The condensed consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and related notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993.
In the opinion of the Company all adjustments, which include only normal
recurring adjustments necessary to present fairly its consolidated financial
position as of June 30, 1994, its results of consolidated operations for the
three and six month periods ended June 30, 1994 and 1993 and its consolidated
cash flows for the six months ended June 30, 1994 and 1993, have been included
in the accompanying unaudited condensed consolidated financial statements.
Net income per share for the six months ended June 30, 1994 and 1993 have been
computed on the basis of the 11,338,611 and 10,277,469 weighted average shares
outstanding during the respective periods. Net income per share for the three
month period ended June 30, 1994 and 1993 has been computed using 11,931,988 and
10,277,469 weighted average shares, respectively.
NOTE 3. ADVISORY AND MANAGEMENT AGREEMENTS
Prior to the termination of its advisory agreement as previously discussed,
Equitable Realty Portfolio Management, Inc., a wholly owned subsidiary of
Equitable Real Estate Investment Management, Inc. ('Equitable Real Estate'),
acted as 'Advisor' to the Company. For the three and six month periods ended
June 30, 1993, the subordinated incentive advisory fee was $345,000 and
$690,000, respectively. Fees of $100,000 were paid to the Advisor in 1994.
Pursuant to the Merger discussed in Note 1, on March 30, 1994, upon the
expiration of a 30 day transition period, the agreement with the Advisor was
terminated.
The Company had entered into a property management agreement with Compass
Retail, Inc. ('Compass'), a subsidiary of Equitable Real Estate, effective
January 1, 1991. Pursuant to this agreement, property management fees were based
on 4% of net rental and service income collected from tenants. In connection
with the Merger, the agreement with Compass was amended and restated to extend
its termination date by two years to August 31, 1998, and to limit Compass'
scope of responsibilities primarily to accounting and financial services
currently provided in connection with the operations of the Property. Compass'
compensation was reduced on March 1, 1994 from 4% to 2% of net rental and
service income collected from tenants. For the six months ended June 30, 1994
and 1993 management fees earned by Compass were $278,000 and $398,000,
respectively. The amount of such fees for the three months ended June 30, 1994
and 1993 were $108,000 and $202,000, respectively.
NOTE 4. DISTRIBUTIONS
On May 16, 1994, the Trust made a distribution of $.275 per Share (an aggregate
of $3,275,000) to its Shareholders. The Special General Partner and the Advisor
have agreed that all distributions received by them prior to May 1995 on account
of the Common Shares issued in respect of the Special General Partner's residual
interest in the Partnership and the termination of the agreement with the
Advisor will be reinvested through a distribution reinvestment plan in newly
issued Common Shares. Distributions totalling $448,000 were reinvested and
46,261 shares were issued under this plan. In addition, a distribution in the
amount of $.275 per share has been declared for payment on August 15, 1994, to
the shareholders of record on June 30, 1994.
NOTE 5. DEBT REFINANCING
The Company's secured credit line matured on June 30, 1993. Pursuant to the
terms of the line of credit, the Company elected to convert the $16,500,000
balance outstanding at June 30, 1993 under the credit agreement to a term loan
payable in five quarterly installments commencing on October 1, 1993. The term
loan agreement was structured so as to permit the prepayment of the obligation
at any time without penalty.
7
<PAGE>
On August 19, 1993, the Company, through a wholly-owned subsidiary, issued
collateralized floating rate notes ('floating rate notes') in the aggregate
principal amount of $118,000,000. The proceeds from the sale of the floating
rate notes were used, in part, to pay the approximately $95,399,000 purchase
price for the zero coupon first mortgage note and to repay the $16,500,000 term
loan note. The proceeds from the issuance of the floating rate notes were also
used to purchase an interest rate cap and to pay mortgage recording taxes and
other costs incurred in connection with this refinancing. The floating rate
notes were recorded net of a $118,000 discount. In connection with the early
extinguishment of the zero coupon first mortgage note, the Company recognized an
extraordinary charge to earnings of $6,373,000 in the third quarter of 1993.
The floating rate notes are due August 19, 1998 and are collateralized by a
first mortgage on substantially all of the real property comprising Green Acres
Mall and a first leasehold mortgage on the Plaza. The floating rate notes bear
interest at a rate equal to 78 basis points in excess of the three-month LIBOR,
which is payable on a quarterly basis from November 12, 1993. The interest rate
is subject to reset on such interest payment dates. The initial interest rate,
4.03%, was effective for the period August 19, 1993 to November 11, 1993. The
average rate for the six months of 1994 was 4.67%. The average interest rate for
the three months ending June 30, 1994 was 5.03%. On May 12, 1994 the interest
rate was reset to 5.59%. Effective August 12, 1994 the interest rate on the
floating rate notes was 5.655% The interest rate cap provides that the effective
interest rate will not exceed 9% per annum. The mortgage and indenture agreement
relating to the floating rate notes limit additional indebtedness that may be
incurred by the owner of Green Acres Mall, namely, Green Acres Mall Corp., a
wholly owned subsidiary of the Company. Those agreements also contain certain
other covenants which, among other matters, prioritize the payment of debt
service on the floating rate notes in relation to distributions from the
Subsidiary.
As part of its comprehensive debt restructuring, the Subsidiary also obtained a
$3,400,000 unsecured line of credit facility from a bank. The line of credit
bears interest at 1% above the bank's prime rate and will mature February 1995,
unless extended. As of June 30, 1994, the balance of this loan was $2,150,000.
The amount available under this line was increased to $5,900,000 in August 1994
and the line's maturity was extended to April 1995. The balance as of April 1995
can be paid in four quarterly payments beginning July 1995.
NOTE 6. SALE OF PROPERTY
In April 1993, the Partnership completed the acquisition of an adjacent
industrial tract and entered into an agreement on this property with Home Depot
U.S.A., Inc. ('Home Depot'). Pursuant to the agreement, Home Depot paid
$9,500,000 to the Partnership, from which the Partnership recognized a gain of
$440,000. Approximately $4.9 million of the proceeds were used to complete the
acquisition of the adjacent property.
In January 1994, the Company completed the sale to Home Depot of an
approximately two acre parking lot and received the final installment of
$1,500,000 and recognized a gain on sale of real estate of $839,000. Home Depot
opened for business in May 1994.
8
<PAGE>
ARBOR PROPERTY TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Merger Transaction
On February 28, 1994, EQK Green Acres, L.P. merged with and into Green Acres
Mall Corp., a wholly-owned subsidiary of Arbor Property Trust. The Trust and the
Partnership are collectively referred to herein as the 'Company.' See Note 1 to
the condensed consolidated financial statements for a discussion of the
Company's common shares of beneficial interest without par value (the 'Common
Shares') issued in connection with this merger (the 'Merger').
The issuance of 10,277,469 Common Shares to the Unitholders and the General
Partners on account of their respective percentage interests in the Partnership
represents a reorganization of entities under common control and, accordingly,
was accounted for in a manner similar to a pooling of interests. The financial
statements of the Partnership and the Trust have been combined at historical
cost retroactive to January 1, 1993. The issuance of these Common Shares has
been reflected as of this date at the amount of the Unitholders' and General
Partners' original contributions to the Partnership.
The issuance of Common Shares to the Special General Partner on account of its
residual interest in the Partnership and to Equitable Realty Portfolio
Management, Inc. (the 'Advisor') are reflected in the Company's condensed
consolidated financial statements as of March 31, 1994. The issuance of Common
Shares to the Special General Partner has increased the Company's carrying value
of land, and buildings and improvements by $3,024,000 and $13,347,000,
respectively, representing the value of the Special General Partner's residual
interest in accordance with the allocation methodology utilized by the
Partnership in connection with the Merger. Annual depreciation expense will
increase by approximately $342,000 as a result of the increase in the basis of
the Mall.
Cash Flows from Operating, Investing, and Financing Activities
Cash flows from operating activities for the six months ended June 30, 1994 and
1993 were $4,037,000 and $2,641,000, respectively. Cash flow from operations in
the first half of 1993 were adversely affected by significant increases in
accounts receivable. These receivables were collected in the second half of 1993
and into early 1994.
Cash flows from investing activities for the six months ended June 30, 1994 was
$938,000. Net proceeds of $1,435,000 were received from the completion of the
Home Depot transaction. These proceeds were partially used to fund $497,000 in
capital expenditures in 1994. During the six months ended June 1993, cash
provided from investing activities was $3,250,000. This activity is primarily
due to the receipt of proceeds net of $9,337,000 from the transfer of an
adjacent tract ('Bulova Parcel') to Home Depot. A portion of these proceeds
($5,464,000) was used to complete the purchase of the Bulova Parcel. Capital
expenditures of $663,000 were made in the six months ended June 30, 1993.
Cash flows used in financing activities for the six months ended June 30, 1994
and 1993 were $5,304,000 and $5,653,000, respectively. Distributions paid by the
Company in 1994 increased $448,000 as a result of the Common Shares that were
issued in respect to the Special General Partner's residual interest in the
Partnership and the termination of the agreement with the Advisor. The dividends
on these shares were reinvested in the Company through a distribution
reinvestment plan in newly issued Common Shares. The Company also borrowed
$350,000 in 1994 to fund a portion of its capital expenditures. As of June 30,
1994, the Company has $1,250,000 of borrowing capacity available under its
$3,400,000 unsecured line of credit. Subsequent to the end of the second
quarter, the line of credit was extended to $5,900,000. This loan will mature in
April 1995. The balance of this line as of April 1995 can be paid in four
quarterly payments beginning July 1995. The agreements relating to the line of
credit contain certain covenants, including covenants limiting the incurrence of
additional debt by the Trust and prohibiting distributions to the Trust's
shareholders in an amount exceeding 100% of funds from operations (as defined to
exclude certain nonrecurring gains and losses).
9
<PAGE>
ARBOR PROPERTY TRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Results of Operations
For the six month period ended June 30, 1994, the Company reported a net loss of
$861,000 or $.08 per weighted average share, compared with net income of
$899,000 or $.09 per share for the comparable period in 1993. For the three
months ended June 30, 1994, net income was $926,000 or $.08 per weighted average
share, compared to net income of $753,000 or $.07 per share, for the second
quarter in 1993.
For the six and three month periods ended June 30, 1994 revenues from rental
operations were $460,000 or 5% and $207,000 or 4%, higher than the comparable
periods in 1993. This increase is a direct result of the remerchandising program
the Mall commenced in 1992. The significant amount of lease rollovers in 1993
and 1994 enabled management to develop a remerchandising plan aimed at achieving
an improved tenant mix while increasing base rents.
Net operating expenses increased by $320,000 and $366,000 for the six and three
month periods ended June 30, 1994, respectively, as compared to the same period
in 1993. The increase is primarily attributable to increases in real estate
taxes net of related reimbursements and certain nonreimbursable repairs and
maintenance expenses that were a result of the severe weather and higher
professional fees. These increases were partially offset by a decrease in
management fees.
Interest expense decreased in the second quarter of 1994 compared to the
comparable period in 1993 due to the issuance of the collateralized floating
rate notes which were used to repay the zero coupon note and retire the term
loan in August 1993. The zero coupon note had an effective interest rate of
10.4% per annum, and the $16,500,000 term loan accrued interest for the three
and six months ended June 30, 1993 at an average rate of 6.9%. These debt
instruments were replaced with floating rate notes that had an average interest
rate during the second quarter of 1994 of 5.03%. The average interest rate for
the six months ended June 30, 1994 was 4.67%. The notes have a floating interest
rate equal to 78 basis points in excess of three month LIBOR. The interest rate
on this debt, which is subject to a quarterly reset, was 5.655% at August 12,
1994.
The Company made significant changes to its management structure. While its
affairs had previously been administered by a third party pursuant to property
management and advisory agreements, commencing on March 1, 1994, the Company
became primarily self-managed. The property management contract with Compass was
amended and restated to extend its termination date by two years to August 31,
1998, and to limit Compass' scope of responsibility primarily to accounting and
financial services provided in connection with the operation of the Property.
Compass' compensation was reduced on March 1, 1994 from 4% to 2% of net rental
and service income collected from tenants. The aggregate expenses during the
second quarter of 1994 for property management services and administrative
services plus the Company's general and administrative costs were $634,000
whereas comparable expenses in the second quarter of 1993 were $763,000. This
reduction is a direct result of the Company's conversion to a primarily
self-managed REIT. These expenses total $1,635,000 and $1,579,000 for the six
months ended June 1994 and 1993, respectively. Management anticipates realizing
additional savings during succeeding quarters in relation to prior year
expenditures.
10
<PAGE>
Dividends; Possible Acquisitions
The Company's current quarterly dividend rate of $.275 per Common Share
represents an annual dividend rate of $1.10 per Common Share. Because dividends
payable with respect to Common Shares issued in March 1994 to the Special
General Partner and the Advisor will be reinvested through a dividend
reinvestment plan in newly issued Common Shares, the issuance of such Shares
will not affect cash available for distribution to the remaining shareholders
until May 1995.
Management anticipates that annual distributions on account of 1994 operations
will be $1.10 per Common Share. The Company expects that an increase in Funds
from Operations (before interest) will be more than adequate to offset the
effect of paying interest on the floating rate notes on a current basis in 1994
and through maturity. The anticipated growth in Funds from Operations in 1994
reflects cost reductions resulting from the termination of the Advisory
Agreement, net of costs associated with the Company's planned acquisition
program, and an increase with the Company's planned acquisitions program, and an
increase in rental revenues. The Company also received, during the first quarter
of 1994, $1,500,000 from the sale of two acres of property to Home Depot, which
supplements Funds from Operations available for distribution. During 1994, the
Company anticipates that its capital expenditures of approximately $3 million
will be funded from borrowings under its now extended line of credit.
Although previously reported acquisition discussions concerning two regional
shopping malls have been discontinued, the Company is continuing its efforts to
acquire additional real estate investments. Financing for any such investments
together with a refinancing of the existing line of credit would be sought
through some combination of public or private debt and/or equity financing
(including possibly financing provided in whole or in part by sellers)
determined by the Company to be advisable at the time. It is premature to seek
such financing and there can be no assurance that any such financing could be
obtained on favorable terms or at all. If the Company is ultimately unsuccessful
in acquiring additional real estate investments, it intends to pursue
alternative transactions, possibly including a merger with another real estate
entity.
Commencing in May 1995, all outstanding Common Shares will be entitled to
receive cash distributions. Considering the potential issuance of Common Shares
related to property acquisition and the unknown amount of Funds from Operations
that may be generated from any such acquisition, the Company's dividend rate
commencing in May 1995 cannot now be determined.
11
<PAGE>
ARBOR PROPERTY TRUST
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Amended and Restated Loan Agreement by and between Green
Acres Mall Corp. and PNC Bank, National Association,
dated as of August 8, 1994.
10.2 Guaranty and Surety Agreement by and between the Trust
and PNC Bank, National Association, dated as of August 8,
1994.
(b) Reports on Form 8-K:
1. Report on Form 8-K dated June 7, 1994 (as amended by
the filing of a Form 8-K/A on August 3, 1994) regarding
the change in auditors to Arthur Andersen.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: August 15, 1994 ARBOR PROPERTY TRUST
By: /s/ Myles H. Tanenbaum
Myles H. Tanenbaum
Managing Trustee and President
(Principal Executive and
Financial Officer)
By: /s/ Dennis J. Harkins
Dennis J. Harkins
Treasurer and Controller
(Principal Accounting Officer)
13
<PAGE>
EXHIBIT INDEX
10.1 Amended and Restated Loan Agreement by and between Green
Acres Mall Corp. and PNC Bank, National Association,
dated as of August 8, 1994.
10.2 Guaranty and Surety Agreement by and between the Trust
and PNC Bank, National Association, dated as of August 8, 1994.
14
<PAGE>
EXHIBIT 10.1
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this 'Agreement') is made as of
this 8th day of August, 1994 by and between GREEN ACRES MALL CORP.,
('Borrower'), a Delaware corporation with offices at Suite 800, One Tower
Bridge, West Conshohocken, Pennsylvania 19428 and PNC BANK, NATIONAL ASSOCIATION
('Bank') a national banking association with offices at Real Estate Finance
Division, P.O. Box 7648, Broad and Chestnut Streets, Philadelphia, Pennsylvania
19101.
BACKGROUND
On August 19, 1993, EQK Green Acres, L.P. ('EQK Green Acres'), a Delaware
limited partnership entered into a Loan Agreement (the 'Original Loan
Agreement') with Bank which provided for a revolving line of credit in the
amount of $3,400,000 which was evidenced by a promissory note of EQK Green Acres
dated August 19, 1993 in the face amount of $3,400,000 (the 'Original Note').
Thereafter EQK Green Acres merged with and into Borrower which by operation of
law succeeded to the obligations of EQK Green Acres under the Original Loan
Agreement and Original Note. Borrower has applied to Bank for an increase in the
revolving line of credit to an amount of up to $5,900,000, with the continuing
option to convert such line of credit to a term loan, and Bank is willing to
grant such revolving credit and option upon the terms and subject to the
conditions hereinafter set forth. Borrower and Bank have agreed to amend and
restate in full the Original Loan Agreement to reflect the increase in the line
of credit and other modifications to the terms thereof.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound,
Borrower and Bank hereby amend and restate in full the Original Loan Agreement
and agree as follows:
1. Revolving Credit Loans. Upon the terms and subject to the conditions
hereinafter set forth, Bank agrees to make to Borrower, during the period from
the date hereof through April 30, 1995 (the 'Termination Date' and the duration
of such period shall be referred to as the 'Revolving Credit Period'), loans
(separately, a 'Revolving Credit Loan' and collectively, the 'Revolving Credit
Loans') at such times and in such amounts in whole multiples of $25,000 as
Borrower may request by telephonic notice to Bank received no later than 1:00
p.m., local time, on any business day, provided the aggregate outstanding
principal amount for all such Revolving Credit Loans shall at no time exceed the
sum of $5,900,000 (as such amount may be reduced in accordance with Subsection
9(j) hereof). The obligation of Bank to make such Revolving Credit Loans in the
maximum aggregate principal amount of $5,900,000 is hereinafter called its
'Revolving Credit Commitment.' Borrower may borrow, repay without penalty or
premium, and reborrow hereunder. Each request for an advance of a Revolving
Credit Loan shall be in writing and shall be accompanied by a form of use of
funds certificate in the form of Exhibit A attached hereto duly completed and
executed by Borrower. Bank may from time to time, without Borrower's request
therefor, advance funds against the Revolving Credit Note and disburse the same
to itself for payment of interest due and payable under the Revolving Credit
Note and fees due and payable to Bank hereunder. Bank shall make each Revolving
Credit Loan by crediting the amount thereof to the deposit account of Borrower
maintained with it. Borrower will use the proceeds of the Revolving Credit Loans
only for Borrower's working capital requirements in connection with the
operation of Borrower's mall and shopping center properties known as the Green
Acres Mall and the Plaza at Green Acres, Valley Stream, Nassau County, New York
(the 'Property') and for making loans and dividends to Guarantor (as hereinafter
defined) in the ordinary course of Borrower's business.
1
<PAGE>
2. Revolving Credit Note. The Revolving Credit Loans shall be evidenced by
a single promissory note of Borrower, substantially in the form attached hereto
as Exhibit B (the 'Revolving Credit Note'), in the principal amount of the
Revolving Credit Commitment, duly executed and delivered on behalf of Borrower.
The Revolving Credit Note shall bear interest payable monthly on the first day
of each month on the aggregate principal balance of the Revolving Credit Loans
outstanding hereunder at a rate per annum which is at all times equal to one
percent (1%) above the prime rate in effect at Bank from time to time, each
change in the rate of interest to become effective on the same day as Bank
announces a change in the prime rate. As used herein, the term 'prime rate'
shall mean the rate of interest that from time to time is publicly announced by
Bank to be its prime rate of interest. The term 'prime rate' is used merely as a
pricing index and is not and should not be considered to represent the lowest or
best rate available to a borrower.
3. Term Loan Option. At Borrower's option and upon the terms and subject
to the conditions hereinafter set forth, Bank agrees to make a term loan
(hereinafter called the 'Term Loan' and the Term Loan and Revolving Credit Loans
being hereinafter called the 'Loans') to Borrower on the Termination Date, in an
amount not exceeding the aggregate principal amount of the Revolving Credit
Loans outstanding on the Termination Date. The proceeds of the Term Loan shall
be applied to the payment in full of the Revolving Credit Note. Bank's
obligation to make the Term Loan on the Termination Date is subject to
satisfaction of the following conditions:
(a) Borrower shall give written notice to Bank of Borrower's request
for the Term Loan not less than thirty (30) nor more than sixty (60) days
prior to the Termination Date;
(b) As of the Termination Date, there shall have occurred no Event of
Default (as hereinafter Defined), or any event or condition which, with the
passage of time, the giving of notice or both could become an Event of
Default (provided, that if Borrower cures any such event or condition
existing at such time within the applicable grace period set forth herein,
if any, this condition shall be deemed satisfied as of the date of such
cure);
(c) Borrower shall pay Bank a fee equal to 0.75% of the principal
amount of the Term Loan;
(d) Borrower shall deliver to Bank the completed and duly executed
Term Note (as hereinafter defined) together with such legal opinions or
other evidence of the due authorization, execution, delivery and
enforceability thereof as Bank may reasonably request; and
(e) Borrower shall deliver a certificate setting forth in reasonable
detail calculations demonstrating that the terms of this Agreement and the
incurring by Borrower of the Term Loan will not violate the limitations set
forth in Section 19.3 of the Mortgage (as hereinafter defined). 4. Term
Note. The Term Loan shall be evidenced by Borrower's promissory note,
substantially in the form attached hereto as Exhibit C (the 'Term Note') in
the principal amount of the Term Loan, duly executed on behalf of Borrower.
The Term Note and the Revolving Credit Note are hereinafter collectively
referred to as the 'Notes.' The outstanding principal of the Term Note
shall be payable in four (4) equal and consecutive quarterly installments
each in an amount equal to one quarter of the original principal amount of
the Term Loan, payable on August 1, 1995, November 1, 1995, February 1,
1996 and April 30, 1996. On April 30, 1996, the entire amount of principal
outstanding shall be due and payable in full together with all unpaid
accrued interest. Interest shall accrue on the outstanding principal of the
Term Note, and shall be payable monthly on the first day of each month, at
a rate per annum which is at all times equal to one percent (1%) above the
prime rate, each change in the rate of interest to become effective on the
same day as Bank announces a change in the prime rate. All payments shall
be applied first to the payment of interest due and payable under the Term
Note and then to the reduction of the outstanding principal balance
thereof.
5. Payments and Computations.
(a) Borrower hereby authorizes and directs Bank to charge the deposit
account of Borrower at Bank designated by Borrower, or such other
account(s) of Borrower at Bank as Borrower may designate by written notice
to Bank from time to time (but which shall not include the trust and/or
2
<PAGE>
escrow accounts established by Borrower at Bank (the 'Escrow Accounts') in
connection with the issuance of the Senior Notes (as hereinafter defined))
(collectively, the 'Direct Debit Accounts') for all payments of principal
and interest due on the Notes and to debit such accounts for the amount of
such payments on the date each such payment is due. If and to the extent
funds in the Direct Debit Accounts are insufficient to make any payment on
the day when due, Borrower shall pay the amount of any shortfall not later
than 1:00 P.M., local time, on the day when due in lawful money of the
United States, in immediately available funds at the office of Bank at
Broad and Chestnut Streets, Philadelphia, PA 19110. Borrower hereby
authorizes Bank, if and to the extent payment is not made when due
hereunder or under the Notes as provided above, without prior notice to
Borrower to charge from time to time against any other account of Borrower
at Bank, other than the Escrow Accounts, any amount so due. Bank hereby
waives any right of set off it would otherwise have against the Escrow
Accounts in respect of the indebtedness of Borrower hereunder. All
computations of interest and fees hereunder shall be made by Bank on the
basis of a year of 360 days for the actual number of days elapsed. Should
any payment of principal or interest or fees become due and payable on a
Saturday, Sunday or legal holiday under the laws of the Commonwealth of
Pennsylvania, the payment date thereof shall be extended to the next
succeeding business day and such extension of time shall in such case be
included in computing such interest or fees, as the case may be, rather
than in the succeeding period. Any payments or prepayments made on the
Notes shall be applied, first to the payment of interest due and payable
under each such Note and then to the reduction of the outstanding principal
balance thereof. Borrower may prepay the principal of the Term Note in
whole at any time or in part from time to time (any partial prepayment to
be in whole multiples of $25,000). Each prepayment shall be accompanied by
the payment of accrued interest on the amount of such prepayment to the
date thereof and any partial prepayment shall be applied against the
installments thereof in the inverse order of maturity.
(b) Bank's statements and confirmations sent to Borrower with respect
to outstanding Loans and payments due shall be presumed correct unless
Borrower notifies Bank to the contrary within 10 days after Borrower's
receipt of such statements and confirmations.
6. Increased Costs. If after the date of this Agreement Bank shall have
determined that any enactment, promulgation or adoption of or change in any
applicable law, regulation, rule or guideline or the interpretation or
administration thereof by any court, administrative or governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank with any guideline, request or
directive which is effective or issued after the date hereof (whether or not
having the force of law and whether or not failure to comply thereunder would be
unlawful) of any such authority, central bank or comparable agency, shall either
(a) impose, modify or deem applicable any reserve, special deposit or similar
requirement (including without limitation a guideline, request or directive
which affects the manner in which Bank allocates capital resources to its
commitments, including its obligations under this Agreement and the Notes), (b)
affect or affect in the future the amount of capital required or expected to be
maintained by Bank, (c) subject Bank to any tax or change the basis of taxation
of Bank (other than a change in a rate of tax based on overall net income of
Bank), or (d) impose on Bank any other condition regarding this Agreement or the
Notes, and the result of any event referred to in clause (a), (b), (c) or (d) of
this sentence shall be to increase the direct or indirect cost (including the
amount of capital required to be maintained) to Bank of agreeing to make, or
making, funding or maintaining the Notes or Bank's obligations under this
Agreement or to reduce the amounts receivable by Bank hereunder (which increase
in cost or reduction in amounts receivable shall be determined by Bank's
reasonable allocation of such cost increase or reduction in amounts receivable
resulting from such event), then (x) Bank shall so notify Borrower and (y)
within 15 days after receipt of such notice from Bank, Borrower shall pay to
Bank, from time to time as specified by Bank, additional amounts not in
violation of the Mortgage that in the aggregate shall be sufficient to
compensate Bank for such increased cost, reduction in amounts receivable or
increase in capital adequacy requirements. A certificate as to such increase in
capital adequacy requirements, increased cost or reduction in amounts receivable
by Bank showing the manner of calculation thereof shall be submitted by Bank to
Borrower and shall, in the absence of manifest error,
3
<PAGE>
be conclusive as to the amount thereof. This covenant shall survive the
termination of this Agreement and payment of the Notes.
7. Conditions of Lending.
(a) On the date hereof, and as a condition of Bank making the next
Revolving Credit Loan after the date of this Agreement, Borrower shall
deliver to Bank all of the following, each in form and substance
satisfactory to Bank and its counsel:
(i) A commitment fee in the amount of $23,000;
(ii) The Revolving Credit Note duly completed and executed on
behalf of Borrower;
(iii) The Guaranty and Surety Agreement of Arbor Property Trust, a
Delaware business trust ('Guarantor'), substantially in the form of
Exhibit D attached hereto (the 'Guaranty') duly executed by Guarantor;
(iv) An opinion of counsel to Borrower and Guarantor of even date
herewith, covering the points set forth in Exhibit E hereto;
(v) A General Certificate of Borrower, substantially in the form of
Exhibit F attached hereto, duly executed by Borrower with blanks
appropriately filled in and exhibits attached;
(vi) A General Certificate of Guarantor, substantially in the form
of Exhibit G attached hereto, duly executed by Guarantor with blanks
appropriately filled in and exhibits attached;
(vii) A Certificate from Borrower that the following documents,
copies of which have heretofore been delivered to Bank, have not been
amended or modified and remain in full force and effect and that
Borrower has succeeded to the rights and obligations of EQK Green Acres
under such documents: (i) the Indenture between EQK Green Acres Funding
Corp. (the 'Issuer'), as agent for EQK Green Acres, and Bankers Trust
Company (the 'Trustee') pursuant to which the Issuer's Collateralized
Floating Rate Notes due August 19, 1998 (the 'Senior Notes') in the
original face amount of $118,000,000 were issued (the 'Indenture'), (ii)
the Consolidated and Restated Mortgage, Security Agreement, Assignment
of Leases and Rents and Fixture Filing made by EQK Green Acres to the
Issuer dated as of August 19, 1993 (the 'Mortgage'), and (iii) the
Mortgage Note (as defined in the Mortgage) dated August 19, 1993 issued
by EQK Green Acres to the Issuer in the principal amount of
$118,000,000;
(viii) A certificate of Borrower of even date herewith setting
forth in reasonable detail calculations demonstrating that the terms of
this Agreement and the incurring by Borrower of debt hereunder (assuming
for purposes of such calculation that the entire principal amount of the
Revolving Credit Note is outstanding) will not violate the limitations
set forth in Section 19.3 of the Mortgage;
(ix) Evidence that there are no liens on the Property other than
the lien of the Mortgage; and
(x) Such other documents, instruments, opinions, approvals and
assurances customary in this type of financing as Bank or its counsel
may reasonably request.
(b) The obligation of Bank to make Revolving Credit Loans subsequent
to the next Revolving Credit Loan and to make the Term Loan is subject to
the provisions of Sections 1 and 3 of this Agreement and the further
condition precedent that at the time each such Revolving Credit Loan and
the Term Loan is requested or scheduled to be made, no Event of Default
hereunder and no event which with the passage of time or the giving of
notice, or both, would become such an Event of Default, shall have occurred
and be continuing.
Each request for a Revolving Credit Loan hereunder and for the Term Loan
and the acceptance of the proceeds thereof by Borrower shall be deemed to be a
representation and warranty by Borrower as of the date thereof that the
representations and warranties set forth in Section 8 hereof (including
4
<PAGE>
without limitation that there has not occurred and is not continuing an Event of
Default or an event which with the passage of time or giving of notice, or both,
would become such an Event of Default) are true and correct as of the date of
such request, except that the representations and warranties in Section 8(e)
shall refer to the financial statements most recently supplied to Bank pursuant
to Section 9(a).
8. Representations and Warranties. Borrower represents and warrants that:
(a) Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is duly qualified
and in good standing to conduct business in those jurisdictions in which
its ownership of property or the conduct of its business requires such
qualification and has all requisite power and authority to execute, deliver
and perform this Agreement, the Notes and any other documents contemplated
hereby or necessary to effectuate the purposes of this Agreement;
(b) The execution, delivery and performance of this Agreement and the
Notes have been duly authorized by all requisite action of Borrower and
will not violate any applicable provision of law or judgment, order or
regulation of any court or of any public or governmental agency or
authority nor conflict with or constitute a breach of or default under any
instrument to which Borrower is a party or by which Borrower or any of its
properties is bound, including, without limitation, the Senior Notes, the
Indenture and the Mortgage;
(c) This Agreement is, and each of the Notes when issued and delivered
pursuant to this Agreement will be, a legal, valid and binding obligation
of Borrower enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws or equitable principles affecting the enforcement of the rights of
creditors generally;
(d) No approval, consent or authorization of, or registration,
declaration or filing with, any governmental or public body or authority or
of or with either the holders of the Senior Notes or the Trustee or the
Issuer under the Indenture or the Mortgage is required in connection with
the valid execution, delivery and performance by Borrower of this Agreement
and the Notes, except such as has been obtained;
(e) Since March 31, 1994, Borrower has conducted its business in the
ordinary course, and there has been no material adverse change in the
business, financial condition, operations or affairs of Borrower;
(f) There is no claim, litigation or governmental proceeding against
Borrower now pending or, to the knowledge of Borrower, threatened, which is
substantial in amount or which, if adversely determined would have a
material adverse effect on the financial condition or business of Borrower
or the ability of Borrower to perform its obligations under this Agreement,
the Notes or any of the other documents executed or to be executed in
connection herewith or therewith;
(g) Borrower has good and marketable title to the Property and all of
its other properties and assets subject only to Permitted Exceptions (as
defined in the Mortgage), and none of such properties and assets are
subject to any mortgage or deed of trust other than the Mortgage;
(h) Borrower does not have any outstanding Debt to any person or
entity other than to Bank, except for the Mortgage Note and such other Debt
as is reflected on Guarantor's March 31, 1994 consolidated balance sheet
and otherwise permitted by the Mortgage. 'Debt' shall mean (i) all
obligations of Borrower for borrowed money, (ii) all obligations of
Borrower evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of Borrower upon which interest charges
are customarily paid, (iv) all obligations of Borrower under conditional
sale or other title retention agreements relative to property purchased by
Borrower, (v) all obligations of Borrower issued or assumed as the deferred
purchase price of property or services, excluding any lease which should,
in accordance with generally accepted accounting principles, be treated as
an operating lease, (vi) all obligations of Borrower as lessee under any
lease which shall have been
5
<PAGE>
or should be, in accordance with generally accepted accounting principles,
treated as a capital lease, (vii) all obligations of Borrower under direct
or indirect guarantees in respect of, and all obligations (contingent or
otherwise) to purchase or otherwise acquire or otherwise to assure a
creditor against loss in respect of, Debt of any other Person (as defined
in the Mortgage) and (viii) any indebtedness for borrowed money, other than
Impositions (as defined in the Mortgage), secured by a lien or encumbrance
on the Property.
(i) Borrower has filed all federal, state and local tax returns
required to be filed (or has obtained valid extensions of the dates on
which such returns are required to be filed) and has paid all taxes as
shown on said returns to be due from it;
(j) There exists no Event of Default (as defined in the Indenture or
the Mortgage), or any condition or event with which the passage of time or
the giving of notice, or both would be such an Event of Default under the
Senior Notes, the Indenture or the Mortgage;
(k) (i) Except as set forth on Exhibit H, Borrower does not know of
any activity at the Property which has been conducted, or is being
conducted, except in compliance with all statutes, ordinances, regulations,
orders, and requirements of common law concerning (i) those activities,
(ii) repairs or construction of any improvements, (iii) handling of any
materials, (iv) discharges to the air, soil, surface water or ground water,
and (v) storage, treatment or disposal of any waste at or connected with
any activity at the Property ('Environmental Statutes').
(ii) Except as set forth on Exhibit H, Borrower does not know of
the presence of any contamination on the Property. As used in this
Agreement, the term 'contamination' shall mean the uncontained presence
of hazardous substances at the Property, or arising from the Property,
which may require remediation under any applicable law; and the term
'hazardous substances' shall mean 'hazardous substances' or
'contaminants' as defined pursuant to the federal Comprehensive
Environmental Response, Compensation and Liability Act, as amended,
'regulated substances' within the meaning of subtitle I of the federal
Resource Conservation and Recovery Act, as amended, and hazardous wastes
or substances or terms of similar meaning as defined pursuant to any
applicable Environmental Statute, if such presence would require removal
or remediation thereof under such Environmental Statute.
(iii) Except as set forth on Exhibit H, Borrower does not know of
any:
(A) polychlorinated biphenyls or substances containing
polychlorinated biphenyls present on the Property;
(B) asbestos or materials containing asbestos present on the
Property;
(C) urea formaldehyde foam insulation on the Property;
(D) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by a federal, state or
local government agency, authority or body, or which, even if not so
regulated, to the best of Borrower's knowledge after due
investigation, may or could pose a hazard to the health and safety
of the occupants of the Property or the owners or occupants of
property adjacent to or in the vicinity of the Property;
(E) radon or radon gas or the radioactive decay products of
radon present on the Property; or
(F) tanks presently or formerly used for the storage of any
liquid or gas above or below ground present on the Property; and
(l) Neither this Agreement nor any other document, certificate or
statement furnished to Bank in connection herewith 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. There is no fact known to Borrower which materially
adversely affects or in the future may (so far as Borrower can now
reasonably foresee) materially adversely affect the
6
<PAGE>
business, operations, affairs, conditions, properties or assets of
Borrower which has not been set forth in this Agreement or in the other
documents, certificates and statements furnished to Bank in connection
with the transactions contemplated hereby.
The foregoing representations and warranties shall continue and survive the
making of this Agreement and the issuance of the Notes.
9. Affirmative Covenants. So long as any indebtedness of Borrower under
either of the Notes is outstanding and unpaid, or any obligation or undertaking
to Bank is not fully performed, or the Revolving Credit Commitment remains in
effect, Borrower will:
(a) Furnish or cause to be furnished to Bank:
(i) promptly after sending or making available or filing of same,
copies of all reports, proxy statements and financial statements
delivered or sent to the holders of units of beneficial interest in
Guarantor, or by Borrower, Guarantor or Issuer to the Trustee or the
holders of any of the Senior Notes, and all registration statements and
all periodic and other reports filed by Guarantor with any state or
federal regulatory agency or authority, including without limitation the
Securities and Exchange Commission;
(ii) promptly after receipt thereof, copies of any notice of
default under any mortgage (including, without limitation the Mortgage)
on the Property; (iii) a prompt and reasonably detailed notice of any
event which has or may have a materially adverse effect on the Property
or the business, financial condition, operations or affairs of Borrower;
(iv) within 30 days after the end of each fiscal quarter, quarterly
rent rolls, sales reports and cash flow reports, in form satisfactory to
Bank, with respect to the Property and Borrower;
(v) within five days after the beginning of each fiscal quarter, a
compliance certificate dated as of the first day of such fiscal quarter,
in the form of Exhibit I attached hereto, appropriately completed and
executed on behalf of Borrower and containing attachments in such detail
as is reasonably satisfactory to Bank;
(vi) copy of the annual Appraisal (as such term is defined in the
Mortgage) or the update letter of the prior Appraisal of the Property
required by and obtained pursuant to Section 18.3 of the Mortgage; and
(vii) promptly upon request, such other information regarding the
operations, business affairs and financial condition of Borrower and
Issuer as Bank may, from time to time, reasonably request;
(b) Perform and comply with, and cause Issuer to conform and comply
with, each material provision of all material agreements to which either of
them is a party, including, without limitation the Senior Notes, the
Mortgage Note, the Indenture and the Mortgage;
(c) Maintain for each fiscal quarter a Debt Service Coverage Ratio of
at least 1.5 to 1. For purposes of this Agreement, 'Debt Service Coverage
Ratio' shall mean the ratio of (i) Net Operating Income for such quarter to
(ii) Debt Service for such quarter. For purposes of this Agreement, (x)
'Debt Service' shall mean the current portion of long term debt plus
interest expense determined in accordance with generally accepted
accounting principles; and (y) 'Net Operating Income' shall mean the amount
by which the aggregate of all rents (including reimbursements by tenants of
operating expenses), license fees and other charges or sums with respect to
the occupancy, use, or right to use all or any part of the Property under
any lease, license or other agreement, or as a result of any investment or
banking arrangement, or as a result of any law suit or legal proceeding,
received by Borrower any fiscal quarter exceeds the aggregate amount of
money actually expended in such fiscal quarter by Borrower on a cash basis
pursuant to customary and reasonable arms-length transactions for the
following: labor cost; general maintenance repairs and replacements;
brokerage commissions; management fees; costs of
7
<PAGE>
licenses, permits and similar fees relating to the operation of the
Property; premiums for insurance; charges for electricity and other
utilities, assessments, water charges and sewer rents; real estate taxes;
and other customary and reasonable expenses in connection with the
operation, maintenance, and preservation of the Property. Without limiting
the generality of those items which shall not be included among the
expenses allowable for purposes of calculating Net Operating Income, the
following shall be specifically excluded from such calculation; Debt
Service; capital expenditures; depreciation and other non-cash items;
prepaid expenses which are not customarily prepaid in the ordinary course
of business; and dividends or distributions to Borrower's partners;
(d) Maintain liability, worker's compensation and hazard insurance
and, if required by federal law, flood insurance all in amounts customary
for properties such as the Property and for companies of Borrower's size
and engaged in Borrower's business, and as otherwise required by the
Mortgage and furnish evidence of such insurance to Bank upon request;
(e) Pay all premiums on the insurance referred to herein as and when
the same are due and payable, and do all things necessary to maintain the
insurance in effect;
(f) File all tax returns when due and pay when due all taxes,
assessments and other charges imposed on Borrower and the Property, except
where the same are being contested in good faith and an adequate reserve
therefor has been set aside;
(g) Permit Bank to inspect the Property, including Borrower's records
with respect thereto, at all reasonable times and upon reasonable notice,
provided that such inspections will not unreasonably interfere with the
reasonable conduct of Borrower's business;
(h) Perform and observe the following covenants relating to
environmental matters:
(i) Except with respect to the matters disclosed on Exhibit H,
Borrower shall not permit contamination of the Property by hazardous
substances. Borrower shall at all times cause hazardous substances to be
handled on the Property in a manner which will not cause an undue risk
of contamination of the Property. Borrower shall promptly remove, or
cause the responsible party to remove, in compliance with Environmental
Statutes, all hazardous waste that is located on the Property at any
time. Borrower shall notify Bank promptly after Borrower knows of the
presence of any contamination on the Property, whether generated by
activity on the Property at any time or generated by activity on
surrounding properties;
(ii) Borrower shall neither install nor permit to be installed any
temporary or permanent tanks for the storage of any liquid or gas above
or below ground except in compliance with Environmental Statutes.
Borrower shall register all tanks that are located on the Property at
any time, in compliance with Environmental Statutes;
(iii) Borrower shall cause all activities at the Property during
the term of this Agreement to be conducted in compliance with all
Environmental Statutes. Borrower shall cause all permits, licenses or
approvals to be obtained, and shall cause all notifications to be made,
as required by Environmental Statutes. Borrower shall, at all times,
cause compliance with the terms and conditions of any such approvals or
notifications; and
(iv) Borrower shall cause all construction of new structures at the
Property to use design features which safeguard against or mitigate the
accumulation of radon or radon-products in concentrations exceeding the
acceptable level in any such new structure. If required by any federal,
state or local authority or if requested by Bank based on any regulatory
requirement applicable to Bank or a recommendation from a knowledgeable
third party consultant that such is advisable under the circumstances,
at the earliest feasible time during or after construction of any new
structure on the Property, Borrower shall commission an investigation of
such new structure for the presence of radon or radon-products and shall
provide a report of such investigation to Bank. Borrower shall notify
Bank of the presence of radon or radon-products in any structure at the
Property in a concentration in excess of the
8
<PAGE>
acceptable level promptly after Borrower knows or has reason to know of
such concentration. For purposes of this Agreement, 'acceptable level'
shall mean the lowest applicable maximum concentration established by
any governmental agency with jurisdiction over the Property. In the
absence of a legally binding maximum concentration, the 'acceptable
level' shall be an air concentration of 4 picocuries/liter;
(i) Preserve and keep in full force and effect its existence, rights,
permits, patents, franchises, licenses, trademarks and trade names and
comply in all material respects with any and all laws, regulations, rules
or requirements of any federal agency or department and of any state, local
or municipal government, agency or department which may at any time be
applicable to it; and
(j) Apply (i) all net proceeds received from Guarantor on account of
any additional equity offering of or loans to Guarantor, and (ii) all
Proceeds (as such term is defined in the Mortgage) paid to Borrower
pursuant to Section 15.3 of the Mortgage after the prepayment of the
Mortgage Note in the event Proceeds have not been applied to the
Restoration (as such term is defined in the Mortgage) of the Property
following a casualty loss, to reduce the principal amount of the Notes
outstanding at the time of such receipt and in either such event the
Revolving Credit Commitment shall be reduced by the amount so applied to
prepay the Note.
10. Negative Covenants. So long as any indebtedness of Borrower under
either of the Notes is outstanding and unpaid, or any obligation or undertaking
to Bank is not performed, or the Revolving Credit Commitment remains in effect,
Borrower will not:
(a) Sell, assign, convey, transfer or otherwise dispose of legal or
beneficial interests in all or any part of the Property, unless the net
proceeds received by Borrower from any such sale, assignment, conveyance,
transfer or disposition are sufficient, and are applied by Borrower
simultaneously therewith, to prepay in full the Mortgage Note, the Notes
and Borrower's other Debt;
(b) Mortgage, encumber, grant a security interest in or otherwise
create or file or suffer to be created or filed or continued any lien on
the Property or any material portion thereof, other than the lien of the
Mortgage, and Borrower will not enter into any agreement or understanding
with any other person or entity, other than the Issuer (or the Trustee as
successor to the Issuer under the Mortgage) which would similarly limit or
restrict its ability to mortgage, encumber or create a lien on the
Property;
(c) Refinance or otherwise modify or restructure the Mortgage Note or
the Senior Notes in any material respect (including, without limitation, a
change in interest rate, maturity, amortization or collateralization);
(d) Incur, create, assume or permit to exist any Debt as to which it
is the obligor or which is secured by the Property or any other of its
assets, other than Debt to Bank hereunder and under the Notes, under the
Mortgage Note and as is reflected on Borrower's March 31, 1994 balance
sheet and otherwise permitted by the Mortgage or at any time permit the
total of its Debt to exceed 50% of the most recently appraised value of the
Property; or
(e) Wind-up, liquidate or dissolve its affairs, or enter into any
transactions of merger or consolidation or change or suffer any change in
its ownership structure, or sell, assign, convey, transfer, hypothecate or
otherwise encumber any capital stock or other interest in Borrower.
11. Events of Defaults. Each of the following shall constitute an 'Event
of Default' hereunder:
(a) If Borrower shall fail to pay any sum due hereunder or under
either of the Notes within ten (10) days after the same is due and payable;
or
(b) If Borrower fails to perform any of the other terms, agreements or
covenants herein (except if such failure is a failure by Borrower to
perform under the Indenture or the Mortgage) or
9
<PAGE>
in the Notes, and such failure shall continue for thirty (30) days after
written notice of such default from Bank to Borrower; or
(c) If an Event of Default (as defined in the Senior Notes, the
Indenture or the Mortgage) occurs and Borrower has received notice thereof
(either from Bank or from any other party to such documents), whether or
not the Mortgage Note is declared or otherwise becomes due and payable,
unless such Event of Default has been cured or waived by the necessary
party prior to the exercise by Bank of any of its remedies hereunder; or
(d) If there shall occur a material adverse change in the financial
condition of Borrower; or
(e) If an Event of Default (as defined in the Guaranty) occurs; or
(f) If either Borrower, Issuer or Guarantor makes an assignment for
the benefit of its creditors or a composition with its creditors, or is
unable or admits in writing its inability to pay its debts as they mature,
or is adjudicated insolvent or bankrupt, or files a petition or commences
any proceeding relating to it under any bankruptcy, reorganization,
arrangement, readjustment of debt, receivership, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or
there is commenced against either of them any such proceeding which shall
remain undismissed for a period of 30 days, or an order for relief, order,
judgment or decree approving the petition in any such proceeding is
entered; or
(g) If any litigation or administrative proceeding ensues involving
this Agreement or the Property or Borrower or any instrument, contract or
document delivered to Bank in compliance with this Agreement, and the
adverse result of any litigation or proceeding would have, in Bank's
opinion, a materially adverse effect on the Property or Borrower's ability
to perform its respective obligations under the Notes or this Agreement,
and an adverse result is reasonably anticipated by Bank; or
(h) If any statement, representation or warranty by Borrower with
respect to any transaction or thing contemplated by or set forth in this
Agreement or in any instrument or document delivered to Bank in connection
herewith proves to have been materially false or misleading when made; or
(i) If a Total Loss (as such term is defined in the Mortgage) occurs
and Borrower is not permitted, or if permitted does not elect, to restore
the Property in accordance with Sections 15.2 and 15.3 of the Mortgage, or
if any one or more of the anchor stores now operating on the Property,
namely, Sears, J.C. Penney, Sterns, Abraham & Strauss, K-Mart or Waldbaum,
ceases to operate or to conduct business in substantially the same manner
as it does on the date hereof, unless the tenant of any such store ceasing
its operations or business shall within four (4) months following such
cessation be replaced by a comparable anchor store tenant in occupancy of,
and paying a comparable rental rate for, a substantially similar amount of
square footage at the Property; or
(j) If Guarantor ceases to own and control 100% of the voting capital
stock of Borrower.
12. Remedies. Upon the occurrence of an Event of Default by Borrower, Bank
may, at its option, without demand of performance and without other notice:
(a) Refuse to make any further Revolving Credit Loans or the Term Loan
and declare the Revolving Credit Commitment and any obligation to make any
further Revolving Credit Loans or the Term Loan to be terminated;
(b) Declare the Notes to be immediately due and payable;
(c) Increase the rate of interest borne by the Loans to an amount that
is the lower of five percent (5%) in excess of the interest rate otherwise
in effect thereon or the highest rate permitted by law, so long as such
default is continuing or after the Notes are accelerated; and
(d) Exercise any or all remedies granted or available to Bank under
this Agreement, the Notes, the Guaranty or as provided by law.
10
<PAGE>
13. Further Assurances. From time to time Borrower will execute and
deliver to Bank such additional instruments as Bank may reasonably request to
effectuate the purposes of this Agreement.
14. Indemnification. Borrower hereby indemnifies Bank and agrees to hold
Bank harmless from any loss, expense or damage on account of any claims, suits
or actions brought by any third party arising out of or in any way connected
with this Agreement, the Notes, or any of the documents and instruments
delivered to Bank in compliance with this Agreement or in connection with the
issuance of the Senior Notes, unless caused solely by the Bank's gross
negligence or willful misconduct. This indemnity shall survive the payment of
the Notes.
15. Counterparts. This Agreement may be executed in separate counterparts,
each of which, when so executed, shall be deemed an original but all such
counterparts shall constitute but one and the same agreement.
16. Notices. Any notice, demand, or request under this Agreement shall be
in writing, and shall be by personal service, overnight delivery service,
charges prepaid, or by postage prepaid, registered or certified mail, return
receipt requested, at the addresses of Borrower and Bank set forth on page 1 of
this Agreement or at such other address as the addressee may designate in
writing. Each notice, demand or request hereunder shall be deemed given on the
date it is delivered, in the case of personal service, one day after given to an
overnight delivery service or two days after it is deposited with the U.S.
Postal Service, in the case of registered or certified mail.
17. Governing Law. This Loan Agreement shall be construed in accordance
with and governed by the laws of the Commonwealth of Pennsylvania.
18. Bank's Expenses. Borrower will pay or reimburse Bank's out-of-pocket
expenses incurred with respect to the preparation, negotiation, modification or
enforcement of this Agreement, the Notes, and the other documents incident
hereto, and in the exercise by Bank of any of its rights hereunder or under such
documents, including the fees and disbursements of Bank's counsel.
19. Persons Bound. This Agreement shall inure to the benefit of, and shall
be binding upon Borrower and Bank and their respective successors and permitted
assigns. Borrower may not assign any of its rights or obligations hereunder
without the prior written consent of Bank.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
GREEN ACRES MALL CORP.
By: __________________________________
Title: _______________________________
PNC BANK, NATIONAL ASSOCIATION
By: __________________________________
Andrew D. Coler,
Assistant Vice President
11
<PAGE>
EXHIBIT A
USE OF FUNDS CERTIFICATE
<TABLE>
<S> <C>
TO: PNC Bank, National Association ('Bank')
FROM: Green Acres Mall Corp. ('Borrower')
RE: Green Acres Mall
</TABLE>
Date: ______________
Pursuant to the Amended and Restated Loan Agreement between us dated as of
August 8, 1994 (the 'Loan Agreement', all capitalized terms not otherwise
defined herein are used as defined in the Loan Agreement) and in connection with
Borrower's request to you to advance the proceeds of a Revolving Credit Loan in
the amount of $_________ (the 'Funds') against the Revolving Credit Note,
Borrower hereby represents and warrants to you and agrees that: (i) the proceeds
of the advance will be fully and solely applied to the costs and for the
purposes listed in Schedule I hereto and the Funds to be advanced plus those
Funds previously advanced for each item and the amounts applied by Borrower to
such items from sources as shown on Schedule I (other than the Funds) do not
exceed the costs incurred for that item to the date of the request; (ii)
Borrower has no knowledge of any Event of Default under the Loan Agreement, any
event which with the passage of time or giving of notice or both would
constitute such an Event of Default or any liens, statutory or otherwise, held
by mechanics, workmen, contractors or suppliers with respect to the Property and
the Improvements; (iii) there are no defaults by Borrower, or conditions or
events with which the passage of time or the giving of notice, or both, would be
a default by Borrower under the Senior Notes, the Indenture or the Mortgage; and
(iv) the representations and warranties set forth in the Loan Agreement remain
true and correct as of the date hereof.
GREEN ACRES MALL CORP.
By: __________________________________
Authorized Representative
A-1
<PAGE>
SCHEDULE I
Green Acres Mall Corp.
$5,900,000 Line of Credit
Use of Funds Summary
For Week Ending: ____________________
<TABLE>
<S> <C>
Cash Balance: $
Cash Requirements:
Specific Requirement* $
Specific Requirement* $
Total Requirements $
*Items such as real estate taxes, tenant improvements, etc.
Shortfall/Draw Request: $
Line Balance After Requested Draw: $
Remaining Line Availability After Requested Draw: $
</TABLE>
A-2
<PAGE>
EXHIBIT B
REVOLVING CREDIT NOTE
$5,900,000 Philadelphia, Pennsylvania
August __, 1994
For value received and intending to be legally bound, GREEN ACRES MALL
CORP. ('Borrower') hereby promises to pay to the order of PNC BANK, NATIONAL
ASSOCIATION ('Bank') on April 30, 1995, (the 'Termination Date') the principal
sum of Five Million Nine Hundred Thousand Dollars ($5,900,000), or the aggregate
unpaid principal amount of all Revolving Credit Loans made by Bank to Borrower
pursuant to Section 1 of the Loan Agreement (as hereinafter defined) and shown
on and evidenced by the books and records of Bank (after accounting for all
disbursements hereunder and repayments hereon), whichever is less, and to pay
interest from the date hereof on the unpaid principal amount hereof monthly in
arrears, commencing on September 1, 1994, and on the first day of each month
thereafter and at maturity, at a rate of one percent (1%) per annum above the
prime rate in effect at the Bank from time to time, each change in the rate of
interest to become effective on the same day as the Bank announces a change in
said prime rate. For the purposes of this Note, the term 'prime rate' shall mean
the rate of interest which from time to time is publicly announced by Bank to be
its prime rate of interest. The term 'prime rate' is used merely as a pricing
index and is not and should not be considered to represent the lowest or best
rate available to a borrower. All such interest shall be calculated on the basis
of the actual number of days that principal is outstanding over a year of 360
days. All payments of principal and interest shall be made prior to 1:00 P.M.,
local time in lawful money of the United States in immediately available funds
at the office of Bank, Broad and Chestnut Streets, Philadelphia, Pennsylvania
19110.
This Note evidences indebtedness incurred under, and is entitled to the
benefits of, that certain Amended and Restated Loan Agreement dated as of August
8, 1994, between Borrower and Bank, as the same may be amended from time to time
(the 'Loan Agreement'), which, among other things, contains provisions for
acceleration of the maturity hereof and for a higher rate of interest hereunder
upon the happening of an Event of Default. This Note evidences the outstanding
indebtedness under, and is issued in substitution of, that certain note in the
face amount of $3,400,000 dated August 19, 1993 from EQK Green Acres, L.P. (to
which Borrower is the successor by merger) issued pursuant to the Original Loan
Agreement. Capitalized terms not otherwise defined herein shall have the meaning
given them in the Loan Agreement.
GREEN ACRES MALL CORP.
By: __________________________________
Title: _______________________________
B-1
<PAGE>
EXHIBIT C
TERM LOAN NOTE
$ Philadelphia, PA
, 1995
For value received and intending to be legally bound, GREEN ACRES MALL
CORP. ('Borrower') hereby promises to pay to the order of PNC BANK, NATIONAL
ASSOCIATION ('Bank') the principal sum of Dollars ($ ), in four
(4) equal quarterly principal installments payable beginning on , 1995
and on each , , and thereafter, each in the amount of
$ , together with interest from the date hereof on the unpaid principal
amount hereof payable monthly in arrears commencing on __, 1995, and on the
first day of each month thereafter and at maturity, at a rate per annum which is
at all times equal to one percent (1%) above the prime rate in effect at Bank
from time to time, each change in the rate of interest to become effective on
the same day as Bank announces a change in said prime rate. All remaining
outstanding principal hereunder, accrued and unpaid interest thereon, and all
costs and expenses associated therewith shall be due and payable in full on
April 30, 1996. For purposes of this Note, the term 'prime rate' shall mean the
rate of interest which from time to time is publicly announced by Bank to be its
prime rate of interest. The term 'prime rate' is used merely as a pricing index
and is not and should not be considered to represent the lowest or best rate
available to a borrower. All such interest shall be calculated on the basis of
the actual number of days that principal is outstanding over a year of 360 days.
All payments of principal and interest shall be made prior to 1:00 P.M., local
time, in lawful money of the United States, in immediately available funds at
the office of Bank, Broad and Chestnut Streets, Philadelphia, PA 19110.
This Note evidences indebtedness incurred under, and is entitled to the
benefits of, that certain Amended and Restated Loan Agreement dated as of August
8, 1994, between Borrower and Bank, as the same may be amended from time to time
(the 'Loan Agreement'), which, among other things, contains provisions for
acceleration of the maturity hereof and for a higher rate of interest hereunder
upon the happening of an Event of Default. Capitalized terms not otherwise
defined herein shall have the meaning given them in the Loan Agreement.
GREEN ACRES MALL CORP.
By: __________________________________
Title: _______________________________
C-1
<PAGE>
EXHIBIT D
GUARANTY AND SURETY AGREEMENT
[Filed as Exhibit 10.2 to the Trust's
Quarterly Report on Form 10-Q]
D-1
<PAGE>
EXHIBIT E
POINTS TO BE COVERED IN
OPINION OF BORROWER'S AND GUARANTOR'S COUNSEL
1. Due organization and existence in good standing of Borrower and
Guarantor in their respective jurisdictions of formation and qualification and
good standing of Borrower and Guarantor in the respective jurisdictions where
the conduct of their business so requires, and requisite power and authority to
execute, deliver and perform the Loan Agreement, Notes and Guaranty, as the case
may be.
2. The Loan Agreement, Revolving Credit Note and Guaranty being duly
executed and delivered and constituting the legal, valid and binding obligations
of Borrower and Guarantor, as the case may be, enforceable against Borrower and
Guarantor in accordance with their respective terms.
3. To the best of such counsel's knowledge, no conflict with, or breach by
Borrower of any of the provisions of, or default by the Borrower or Issuer
under, the Senior Notes, the Indenture or the Mortgage, or, resulting from the
execution and delivery of the Loan Agreement and the Notes, or from compliance
with the provisions thereof.
4. To the best of such counsel's knowledge, the execution, delivery and
performance of the Loan Agreement, Notes and Guaranty not violating any
provision of any applicable law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect, applicable to
Borrower or Guarantor or conflicting with, resulting in a breach of or
constituting a default under, any indenture, note, loan or credit agreement,
license or any other agreement, lease or instrument to which Borrower or
Guarantor is a party, or by which either of them or the Property may be bound or
affected, including, without limitation, the Indenture and the Mortgage, or
resulting in the creation or imposition of any lien or encumbrance on the
Property.
5. To the best of such counsel's knowledge, no consent or approval of any
holder of any indebtedness, including without limitation the holders of the
Senior Notes or the Trustee under the Indenture or the Mortgage, nor any
authorization, consent, approval, license, exemption of or registration,
declaration or filing with, any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary to the valid execution, delivery or performance of the terms of the
Loan Agreement, the Notes or the Guaranty by Borrower or Guarantor, other than
those consents, approvals, licenses and filings required in the ordinary course
of the Borrower's or Guarantor's operations.
6. To the best of such counsel's knowledge, there exist no judgments or
other judicial or administrative orders outstanding against Borrower or
Guarantor, or any actions, suits or other proceedings pending, or threatened
against or affecting Borrower or Guarantor or the Property before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which if determined adversely to Borrower or Guarantor
would have a material adverse effect on Borrower's or Guarantor's respective
financial condition, the Property or the operations of the Borrower or
Guarantor.
E-1
<PAGE>
EXHIBIT F
GENERAL CERTIFICATE OF BORROWER
I, , do hereby certify that I am the duly elected,
qualified and acting of Green Acres Mall Corp. (the 'Borrower'), and
that as such I am authorized to certify to PNC Bank, National Association (the
'Bank') that:
1. The Borrower is a corporation duly organized and validly existing
in good standing under the laws of the State of Delaware.
2. Attached hereto and marked Exhibits 'A' and 'B' respectively are
true, complete and correct copies of the Certificate of Incorporation and
By-Laws of the Borrower as amended and in effect on the date of this
Certificate.
3. Attached hereto and marked Exhibit 'C' are true, complete and
correct copies of corporate resolutions duly adopted by the Board of
Directors of the Borrower authorizing the execution and delivery to the
Bank of the Amended and Restated Loan Agreement and other documents
required of Borrower thereby in connection with the $5,900,000 Line of
Credit from the Bank to the Borrower.
IN WITNESS WHEREOF, I have signed this Certificate on behalf of the
Borrower on this day of August, 1994.
GREEN ACRES MALL CORP.
By: __________________________________
Title: _______________________________
F-1
<PAGE>
EXHIBIT G
GENERAL CERTIFICATE OF GUARANTOR
I, , do hereby certify that I am the duly elected,
qualified and acting of Arbor Realty Trust (the 'Guarantor'), and
that as such I am authorized to certify to PNC Bank, National Association (the
'Bank') that:
1. The Guarantor is a business trust duly organized and validly
existing in good standing under the laws of the State of Delaware.
2. Attached hereto and marked Exhibits 'A' and 'B' respectively are
true, complete and correct copies of the trust agreement and of the
Guarantor as amended and in effect on the date of this Certificate.
3. Attached hereto and marked Exhibit 'C' are true, complete and
correct copies of resolutions duly adopted by the Board of Trustees of the
Guarantor authorizing the execution and delivery to the Bank of the
Guaranty and Surety Agreement in connection with the $5,900,000 Line of
Credit from the Bank to Green Acres Mall Corp., a wholly owned subsidiary
of Guarantor.
IN WITNESS WHEREOF, I have signed this Certificate on behalf of the
Guarantor on this day of August, 1994.
ARBOR REALTY TRUST
By: __________________________________
Title: _______________________________
G-1
<PAGE>
EXHIBIT H
ENVIRONMENTAL MATTERS
SHELL OIL PREMISES CONTAMINATION
Hydrocarbon contamination exists on a portion of the Property resulting from an
underground storage tank leak from premises occupied by Shell Oil Company, and
located at the corner of Sunrise Highway and Green Acres Road. From August 1980
to date Shell has been aware of and has been monitoring and performing
remediation at the site. Borrower became aware of the contamination in December,
1992, in connection with lease renewal negotiations with Shell, and since that
date has been working with Shell in its effort to design and implement an
appropriate remediation plan. Additional monitoring wells have been installed on
the premises and the surrounding portions of the Property. The source area is
presently being remediated through a soil-vapor extraction system. The ground
water contamination is being remediated by natural attenuation. Shell will
continue to monitor the wells and report to the Borrower and the state
environmental agencies on a quarterly basis.
J.C. PENNEY UNDERGROUND STORAGE TANK
A 10,100 gallon underground storage tank containing No. 2 fuel oil exists on the
J.C. Penney premises. The Borrower registered the tank, which is operated by
J.C. Penney. The tank is monitored as part of a regimented tank tightness
testing program, under contract with Tyre Environmental Services, Ltd., and is
operated in compliance with all local, state and federal regulations.
AMOCO FUEL CONTAMINATION TO PREMISES
Gasoline contamination exists on a portion of the Property resulting from an
underground fuel tank leak from an off-premises fuel station occupied by Tarton
Oil Corporation (doing business as AMOCO), and located at 700 Sunrise Highway,
Valley Stream, NY. Tarton Oil has recently installed underground Test Wells on
Borrower's Property which confirmed the presence of contaminants. Tarton Oil has
informed the Borrower that it will submit a remediation plan to the New York
Department of Conservation and the Borrower for review prior to the
implementation of such plan. Tarton Oil expects remediation to include vapor
and/or Pump & Treat extraction systems depending on New York Department of
Conservation approval.
H-1
<PAGE>
EXHIBIT I
QUARTERLY CERTIFICATE OF GREEN ACRES MALL CORP.
In compliance with the provisions of the Amended and Restated Loan
Agreement (the 'Loan Agreement') between GREEN ACRES MALL CORP. (the 'Borrower')
and PNC BANK, NATIONAL ASSOCIATION (the 'Bank') dated as of August __, 1994, the
Borrower hereby certifies the following as of , 19__:
1. All capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings given to such terms in the Loan
Agreement.
2. Borrower certifies that (a) it is in compliance with all covenants
and agreements contained in the Loan Agreement, (b) the representations and
warranties set forth in the Loan Agreement remain true and correct as of
the date hereof, and (c) no Event of Default or event which with the
passage of time or giving of notice would constitute an Event of Default
has occurred and is continuing.
3. Attached hereto is a statement of the Debt Service Coverage Ratio
for the immediately preceding fiscal quarter including the information and
the calculations used by Borrower to determine such Debt Service Coverage
Ratio.
4. The amount outstanding (assuming for this purpose that the entire
principal amount of the Revolving Credit Note is outstanding) of all
indebtedness meeting the requirements of Section 19.3(v)(A) or (B) of the
Mortgage does not on the date hereof and, to the best of Borrower's
knowledge, will not on any date during the three month period commencing on
the date of this Certificate, exceed the Threshold Amount (as defined in
the Mortgage) less the amount of any installments of gains taxes permitted
pursuant to Section 60 of the Mortgage.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate on
behalf of the Borrower on the day and year set forth above.
GREEN ACRES MALL CORP.
By: __________________________________
Title: _______________________________
I-1
<PAGE>
EXHIBIT 10.2
<PAGE>
GUARANTY AND SURETY AGREEMENT
THIS AGREEMENT is made as of this 8th day of August, 1994, by ARBOR
PROPERTY TRUST, a Delaware business trust with an address at Suite 800, One
Tower Bridge, West Conshohocken, Pennsylvania 19428 ('Guarantor') in favor of
PNC BANK, NATIONAL ASSOCIATION, a national banking association with an address
at P.O. Box 7648, Broad and Chestnut Streets, Philadelphia, Pennsylvania 19101
('Bank'), to secure obligations of Green Acres Mall Corp. ('Borrower'), a wholly
owned subsidiary of Guarantor.
Borrower and Bank have entered into an Amended and Restated Loan Agreement
of even date herewith (as it may hereafter be amended, the 'Loan Agreement')
pursuant to which Bank has agreed to make revolving credit loans (with an option
to convert to a term loan) in an aggregate principal amount up to $5,900,000
(the 'Loans') to Borrower against its two Notes (the 'Notes') each in the
principal amount of $5,900,000. Capitalized terms not otherwise defined herein
shall have the meaning given them in the Loan Agreement. As a condition to
entering into the Loan Agreement, Bank has required the execution and delivery
of this Agreement.
NOW, THEREFORE, in consideration of the undertakings of Bank pursuant to
the Loan Agreement, and as an inducement to Bank to make the Loans provided for
in the Loan Agreement, and intending to be legally bound, Guarantor hereby
agrees as follows:
1. Payment and Performance of the Obligations. In order to secure payment
of the Notes by Borrower and performance of the Loan Agreement by Borrower,
Guarantor hereby irrevocably and unconditionally guarantees to Bank, and becomes
surety to Bank for, the due and punctual payment and performance of all the
obligations of Borrower to Bank arising out of or provided for in the Notes or
the Loan Agreement or under any of the security or collateral for the Loan (the
'Collateral') or under any renewals, extensions or modifications thereof,
whether primary, secondary, direct, contingent, sole, joint, several or joint
and several, including without limitation the payment of principal and any
interest accruing thereon, now existing or hereafter at any time or times
incurred (hereinafter referred to individually as 'Obligation' and collectively
as 'Obligations'). If any Obligation is not paid or performed by Borrower
punctually when due, subject to any applicable grace period, including without
limitation any Obligation due by acceleration of the maturity thereof, Guarantor
will, upon Bank's demand, immediately pay or perform such Obligation or cause
the same to be paid or performed strictly in accordance with the terms thereof.
Guarantor will pay to Bank, upon demand, all costs and expenses, including
without limitation reasonable counsel fees, which may be incurred by Bank in the
collection or enforcement of the Obligations or of Guarantor's obligations under
this Agreement.
2. Representations and Warranties. Guarantor represents and warrants to
Bank that:
(a) Guarantor is a business trust duly organized, validly existing and
in good standing under the laws of the State of Delaware, is duly qualified
and in good standing to conduct business in those jurisdictions in which
its ownership of property or the conduct of its business requires such
qualification, and has the requisite power and authority to make and
perform this Agreement;
(b) This Agreement has been duly authorized, executed and delivered by
Guarantor and such execution and delivery and the performance by Guarantor
of its obligations hereunder will not violate any applicable provision of
law or any rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to Guarantor nor conflict with or
constitute a breach of or a default under the trust agreement of Guarantor
or any instrument to which Guarantor is a party or by which Guarantor or
Guarantor's property is bound, and this Agreement is a valid and binding
obligation of Guarantor enforceable in accordance with its terms;
(c) There is no litigation, proceeding or investigation pending or, to
the knowledge of Guarantor, threatened against Guarantor, the adverse
result of which might in any material respect affect the business,
properties or financial condition of Guarantor or the performance by
Guarantor of its obligations hereunder except such as has been disclosed to
Bank in writing, and
1
<PAGE>
Guarantor is not in violation in any material respect of any statute, rule,
order or regulation of any governmental body applicable to Guarantor;
(d) The balance sheet and related statements of operations, cash flows
and shareholders' equity of Guarantor as of March 31, 1994 are complete and
correct, were prepared in accordance with generally accepted accounting
principles consistently applied and fairly set forth the financial
condition of Guarantor as of the date thereof and the results of
Guarantor's operations for the period covered thereby; said balance sheet
accurately reflects all liabilities of Guarantor, direct or contingent, as
of the date thereof; and there has occurred no material adverse change in
the financial condition of Guarantor as shown therein since the date
thereof, except such changes as have been heretofore disclosed to Bank in
writing; and
(e) Guarantor has filed all federal, state and local tax returns
required to be filed (or has obtained valid extensions of the dates on
which such returns are required to be filed) and has paid all taxes as
shown on the said returns to be due.
3. Covenants of Guarantor.
(a) Guarantor will furnish Bank with all of the financial and other
information and reports described in Section 9(a)(i) of the Loan Agreement at
the times required thereby.
(b) Guarantor will not incur, create, assume or permit to exist any Debt
(as hereinafter defined) as to which it is the obligor or which is secured by
any of its assets, other than Debt which is reflected on Guarantor's March 31,
1994 balance sheet and Debt which is incurred after such date in the ordinary
course of Guarantor's business. Guarantor will notify Bank promptly following
the incurrence of any such additional Debt. 'Debt' shall mean (i) all
obligations of Guarantor for borrowed money, (ii) all obligations of Guarantor
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of Guarantor upon which interest charges are customarily paid, (iv)
all obligations of Guarantor under conditional sale or other title retention
agreements relative to property purchased by Guarantor, (v) all obligations of
Guarantor issued or assumed as the deferred purchase price of property or
services, excluding any lease which should, in accordance with generally
accepted accounting principles, be treated as an operating lease, (vi) all
obligations of Guarantor as lessee under any lease which shall have been or
should be, in accordance with generally accepted accounting principles, treated
as a capital lease, (vii) all obligations of Guarantor under direct or indirect
guarantees in respect of, and all obligations (contingent or otherwise) to
purchase or otherwise acquire or otherwise to assure a creditor against loss in
respect of, indebtedness of any other person and (viii) any indebtedness for
borrowed money, secured by a lien or encumbrance on any of its assets.
(c) Guarantor will not mortgage, encumber, grant a security interest in or
otherwise create or file or suffer to be created or filed or continued any lien
on any of its assets, and Guarantor will not enter into any agreement or
understanding with any other person or entity which would similarly limit or
restrict its ability to mortgage, encumber or create a lien on its assets.
(d) Guarantor shall at all times (i) maintain its status as a qualified
real estate investment trust under the Internal Revenue Code and applicable
regulations thereunder, and (ii) cause its shares to be listed on the New York
Stock Exchange.
(e) Guarantor shall not directly or indirectly dividend or distribute to
its shareholders more than 100% of its Funds from Operations calculated on a
rolling four quarter basis. Notwithstanding the foregoing, Guarantor may make
dividends and distributions to its shareholders to the extent necessary for
Guarantor to pay dividends necessary to maintain its status as a real estate
investment trust under the Internal Revenue Code, provided that if Guarantor
loses its status as a qualified real estate investment trust under the Internal
Revenue Code, it shall make no such dividends or distributions. 'Funds from
Operations' shall mean Guarantor's net income on a consolidated basis (computed
in accordance with generally accepted accounting principles consistently
applied), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. In determining Guarantor's net
income for the fiscal year ending December 31, 1994, non-cash charges of
$3,843,000 related to the payment
2
<PAGE>
made to Equitable Real Estate Management, Inc. (the 'Advisor') in connection
with the termination of the Advisory Agreement dated as of January 1, 1991
between the Borrower and Compass Retail, a subsidiary of the Advisor, shall not
be deducted as an expense. The Guarantor funded this expense through the
issuance of 308,933 common shares of the Guarantor to the Advisor in the first
quarter of 1994.
(f) Guarantor shall not wind-up, liquidate or dissolve its affairs, or
enter into any transactions of merger or consolidation or change or suffer or
permit any change in its ownership structure as a result of which Myles
Tanenbaum owns and controls, directly or indirectly, less than 5% of the
outstanding voting stock of Guarantor or employ any person other than Myles
Tanenbaum as the chief executive officer of Guarantor except as a result of his
death or disability.
(g) Guarantor shall at all times maintain ownership of 100% of the voting
capital stock of Borrower.
(h) Guarantor shall make available to Borrower by capital contribution or
loan, and cause Borrower to repay the outstanding principal amount of the Notes
and permanently to reduce the Revolving Credit Commitment by, an amount equal to
any net proceeds received by Guarantor from any additional equity offering or
line of credit made available to it by a third party.
4. Events of Default. Each of the following shall constitute an 'Event of
Default' hereunder:
(a) If Guarantor shall fail to pay any sum due hereunder when the same
is due and payable; or
(b) If Guarantor fails to perform any of the terms, agreements or
covenants herein, and such failure shall continue for thirty (30) days
after written notice of such default from Bank to Guarantor; or
(c) If there shall occur a material adverse change in the financial
condition of Guarantor; or
(d) If Guarantor makes an assignment for the benefit of its creditors
or a composition with its creditors, or is unable or admits in writing its
inability to pay its debts as they mature, or is adjudicated insolvent or
bankrupt, or files a petition or commences any proceeding relating to it
under any bankruptcy, reorganization, arrangement, readjustment of debt,
receivership, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or there is commenced
against it any such proceeding which shall remain undismissed for a period
of 30 days, or an order for relief, order, judgment or decree approving the
petition in any such proceeding is entered; or
(e) If any litigation or administrative proceeding ensues involving
this Agreement or Guarantor, and the adverse result of any litigation or
proceeding would have, in Bank's opinion, a materially adverse effect on
Guarantor's ability to perform its obligations hereunder, and an adverse
result is reasonably anticipated by Bank; or
(f) If any statement, representation or warranty by Guarantor with
respect to any transaction or thing contemplated by or set forth in this
Agreement or in any instrument or document delivered to Bank in connection
herewith proves to have been materially false or misleading when made.
5. General Terms and Conditions.
(a) All payments by Guarantor hereunder shall be made in Dollars of the
United States of America.
(b) Guarantor hereby waives (i) notice of acceptance of this Agreement and
of any action by Bank in reliance thereon, (ii) presentment, demand of payment,
notice of dishonor or nonpayment, protest and notice of protest with respect to
the Obligations, and giving any notice of default or other notice to, or making
any demand on anyone (including without limitation Borrower and Guarantor)
liable in any manner for the payment of the Obligations, (iii) any right to
require Bank to proceed
3
<PAGE>
initially against Borrower or any of the Collateral upon any default in the
payment or performance of the Obligations, and (iv) notice of any election by
Bank to sell any of the property mortgaged, assigned or pledged as security for
any of the Obligations at a public or private sale, provided that nothing
contained in this paragraph shall be deemed to be a waiver of any notice
expressly required to be given to Borrower pursuant to the Loan Agreement.
(c) Bank may at any time and from time to time without the consent of or
notice to Guarantor and without impairing or releasing the obligations of
Guarantor hereunder (i) exercise or refrain from exercising any right or remedy
against Borrower or others, including without limitation Guarantor, or against
any of the Collateral and (ii) modify, amend, extend, supplement or waive or
consent to the breach of any provision of the Notes, the Loan Agreement or any
of the Collateral, to which modifications, amendments, extensions, supplements,
waivers and consents Guarantor hereby assents. Without limiting the foregoing,
it is specifically understood that any modification, limitation or discharge of
Borrower's liability under the Notes, the Loan Agreement or any of the
Collateral arising out of or by virtue of any bankruptcy, arrangement,
reorganization or similar proceeding for relief of debtors under federal or
state law hereinafter initiated by or against Borrower shall not affect, modify,
limit or discharge the liability of Guarantor in any manner and this Guaranty
shall remain in full force and effect and shall be enforceable against Guarantor
to the same extent and with the same effect as if such proceedings had not been
instituted.
(d) The guaranty and surety contained in paragraph 1 hereof is absolute and
unconditional, primary, direct and immediate and shall be valid and binding upon
Guarantor regardless of (i) any invalidity, irregularity, defect or
unenforceability of or in the Notes, the Loan Agreement or any of the Collateral
or any other obligation or agreement of Borrower or Guarantor, (ii) any action
or inaction by Bank or other occurrence referred to in subsection 5(c) above, or
(iii) any other circumstance which might otherwise constitute a defense
available to, or a discharge or release of, Borrower or a guarantor, by
operation of law.
(e) No failure or delay on the part of Bank in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies of Bank hereunder are cumulative and
concurrent and not exclusive of any other rights or remedies Bank may have.
(f) No set-off, counterclaim, reduction or diminution of an obligation, or
any defense of any kind or nature that Guarantor has or may have against
Borrower or Bank shall affect, modify or impair Guarantor's obligations
hereunder. Guarantor hereby waives any claim, remedy or other right it may now
or hereafter acquire against Borrower or any other person that arises from the
existence or performance of the Obligations, including without limitation, any
right of subrogation, reimbursement, exoneration, contribution or
indemnification against Borrower or other persons or any right to participate in
the Collateral, whether or not such claim, remedy or right arises in equity,
under contract, statute or common law.
(g) Upon the occurrence and during the continuance of any Event of Default
Bank is hereby authorized at any time and from time to time to set off any or
all of the property of Guarantor in Bank's possession (including all deposits
and other indebtedness owing by Bank to or for the credit or the account of
Guarantor) at or subsequent to the occurrence of the Event of Default against
any and all of the obligations of Guarantor now or hereafter existing under this
Agreement, irrespective of whether or not Bank shall have made any demand under
this Agreement and although such obligations may be contingent and unmatured.
(h) For the purpose of any suit, action or proceeding arising out of or
relating to this Agreement, Guarantor hereby irrevocably consents and submits to
the jurisdiction and venue of any of the courts of the Commonwealth of
Pennsylvania or of any federal court located in Pennsylvania including without
limitation, the Court of Common Pleas of Philadelphia County and the Federal
District Court for the Eastern District of Pennsylvania, and irrevocably agrees
to service of process by certified mail, return receipt requested, postage
prepaid, to its address set forth at the beginning of this Agreement.
4
<PAGE>
Guarantor irrevocably waives any objection which it may now or hereafter have to
the laying of the venue of any such suit, action or proceeding brought in such
court and any claim that such suit, action or proceeding brought in such a court
has been brought in an inconvenient forum and agrees that service of process in
accordance with the foregoing sentence shall be deemed in every respect
effective and valid personal service of process upon Guarantor. The provisions
of this paragraph shall not limit or otherwise affect the right of Bank to
institute and conduct an action in any other appropriate manner, jurisdiction or
court.
(i) BANK AND GUARANTOR HEREBY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY
LITIGATION RELATING TO THIS AGREEMENT.
6. Termination. This Agreement shall terminate and be of no further force
or effect upon the payment in full of all of the Obligations and termination of
Bank's obligations under the Loan Agreement, provided that this Agreement shall
continue to be effective or be reinstated, (as the case may be) if at any time
payment of any of the Obligations is refunded or must otherwise be returned by
Bank upon the bankruptcy, arrangement, reorganization or similar proceeding for
relief of debtors under state or federal law, all as though such payment had not
been made.
7. Miscellaneous.
(a) This Agreement shall be binding upon Guarantor and Guarantor's
successors and assigns and shall inure to the benefit of Bank and its successors
and assigns.
(b) Any notice, demand or request under this Agreement shall be in writing,
and shall be delivered by personal service or shall be sent by recognized
overnight courier or shall be sent by postage prepaid, first class mail,
addressed, if to Guarantor or Bank, at the respective address set forth in the
heading of this Agreement, or at such other address as the addressee may
designate in writing. Each notice, demand or request hereunder shall be deemed
given on the date it is delivered, in the case of personal service or overnight
courier, or the date it is deposited with the Postal Service, in the case of
first class mail.
(c) No amendment, modification or release from or waiver of any provision
hereof shall be effective unless in writing and signed by Bank and shall be
effective only in the specific instance and for the specific purpose for which
given.
(d) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(e) This Agreement and the rights and obligations hereunder shall be
construed in accordance with and governed by the substantive laws of the
Commonwealth of Pennsylvania.
(f) The paragraph headings used herein are for convenience only and do not
affect or modify the terms and conditions hereof.
(g) If any provision hereof is found by a court of competent jurisdiction
to be prohibited or unenforceable it shall be ineffective only to the extent of
such prohibition or unenforceability, and such prohibition or unenforceability
shall not invalidate the balance of such provision to the extent it is not
prohibited or unenforceable, nor invalidate the other provisions hereof, all of
which shall be liberally construed in favor of Bank in order to effect the
provisions hereof.
IN WITNESS WHEREOF, Guarantor has caused this Agreement to be duly executed
as of the day and year first above written.
ARBOR PROPERTY TRUST
By: __________________________________
Title: _______________________________
5
