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MORTGAGE NOTE
Date of Note: December 1, 2003
FOR VALUE RECEIVED, Port Bay Associates, LLC, a New York
limited liability company ("Maker"), does
hereby covenant and promise to pay to
the order of FLEET NATIONAL BANK, a
national banking association ("Payee"), at
1185 Avenue of the Americas, New York, New
York 10036, or at such other place as
Payee may designate to Maker in writing
from time to time, in lawful money of
the United States of America and in
immediately available funds, the lesser of
the principal sum of THREE MILLION NINE
HUNDRED NINETY THOUSAND ONE HUNDRED
THIRTY-FIVE AND 17/100THS DOLLARS
($3,990,135.17) (the "Principal Amount") or
the Principal Amount from time to time
outstanding hereunder and to pay interest
on the Principal Amount from time to time
outstanding hereunder and such other
charges, costs and fees set forth under the
Loan Documents in like money and
funds as hereinafter provided.
1. Definitions. The following terms, as used in this Note, shall
have
the meanings indicated opposite them and
terms capitalized herein and not
otherwise defined herein but defined in the
Mortgage shall have the meaning set
forth in the Mortgage:
"Acadia" shall mean Acadia Realty Trust, a Maryland real
estate investment trust with offices at
1311 Mamaroneck Avenue, Suite 260, White
Plains, New York 10605, and its successors
and/or assigns.
"Accounting Principles" shall mean the accounting principles
utilized in the preparation of the
operating statements for the Mortgaged
Premises heretofore delivered to Payee.
"Advance" or "Earn-Out" shall have the meaning assigned to
such term in PARAGRAPH 5 of this Note.
"Applicable Rate" either the Floating Rate Option or the LIBOR
Option in effect at any given time.
"Appraised Value" shall mean the appraised value of the
Mortgaged Premises, as determined by an
independent appraiser selected by Payee
and reasonably acceptable to Maker. Payee
may require that such an appraisal be
performed at any time. Appraised Value
shall be determined utilizing an
appraisal method consistent with that used
in determining the Appraised Value
for Payee in connection with this Loan.
Maker shall solely be responsible for
the cost of up to one appraisal per annum
if requested by Payee.
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"Authorized Representative" - shall mean Michael Nelsen,
Maggie Hui, Jon Grisham, Robert Masters or
any other person or persons
designated by Maker, in a writing delivered
to Payee, as an Authorized
Representative.
"Business Day" - As used herein the "Modified Following
Business Day Convention" shall mean the
convention for adjusting any relevant
date if it would otherwise fall on a day
that is not a Business Day. The
following terms, when used in conjunction
with the term "Modified Following
Business Day Convention", and a date, shall
mean that an adjustment will be made
if that date would otherwise fall on a day
that is not a Business Day so that
date will be the first following day that
is a Business Day. A "Business Day"
means, in respect of any date that is
specified in this Note to be subject to
adjustment in accordance with applicable
Business Day Convention, a day on which
commercial banks settle payments in (i)
London if the payment obligation is
calculated by reference to any LIBOR rate,
or (ii) New York, if the payment
obligation is calculated by reference to
any prime rate.
"Change in Control" shall mean and include any of the
following:
(i) the full time active employment of Kenneth F.
Bernstein, as President and Chief Executive Officer of Acadia,
shall be voluntarily terminated by Acadia or shall otherwise
cease, unless a successor acceptable to Payee shall have been
appointed or elected and actually taken office within three
months following any such termination or cessation, in which
case the name of such successor shall be substituted for the
name of the person he or she replaces for purposes of this
clause (i);
(ii) the shareholders of Acadia approve a plan of
complete liquidation of Acadia or an agreement or agreements
for the sale or disposition by Acadia of all or substantially
all of
Acadia's assets; and/or
(iii) any "change in control" or any similar term as
defined in any of the indentures, credit agreements or other
instruments governing any indebtedness of Acadia or any of its
affiliates.
"Default" - shall mean any act or condition which with the
giving of notice or the lapse of time, or
both, could become an Event of
Default.
"Extended Maturity Date" shall mean the then applicable
extended maturity date pursuant to
PARAGRAPH 3 of this Note.
"Event of Default" shall have the meaning assigned to such
term in SECTION 6.1 of the Mortgage and
PARAGRAPH 33 of this Note.
"Floating Rate Option" shall mean the Prime Rate, floating
plus fifty basis points (.50%).
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"Full Force and Effect" shall mean, as to any lease, that such
lease shall be in full force and effect,
there shall be no material default by
the tenant thereunder or default by the
landlord thereunder or other act or
condition or circumstance giving or which
may give, without the giving of any
further notice, the tenant or the landlord
the right to terminate any lease and,
if requested by Payee and required by its
lease, the tenant shall have delivered
to Payee an estoppel certificate in form
and substance reasonably satisfactory
to Payee.
"Guarantor" shall mean, individually, jointly, severally and
collectively, the Maker and Managing
Member.
"Guaranty" or "Indemnity" means, individually, jointly,
severally and collectively, (i) that
certain indemnity agreement dated of even
date hereof by the Indemnitor in favor of
Payee, as the same may be extended and
or otherwise modified from time to time,
(ii) that certain hazardous material
guaranty and indemnity agreement dated of
even date hereof by the Indemnitor in
favor of Payee, as the same may be extended
and or otherwise modified from time
to time, (iii) that certain ADA guaranty
and indemnity agreement dated of even
date hereof by the Indemnitor in favor of
Payee, as the same may be extended and
or otherwise modified from time to
time.
"Interest Period" with respect to LIBOR Advances, a period of
30, 60, 90, 120 or 180 days (or such other
periods as Payee may elect to make
available); provided, however, that no such
period shall extend beyond the
Maturity Date. Any Interest Period which
terminates on a non-Business Day shall
be deemed, for purposes hereof, to
terminate on the next succeeding Business
Day.
"LIBOR Advance" an advance with respect to which the Principal
Amount bears interest at the LIBOR
Option.
"LIBOR Option" shall mean a rate per annum equal to the sum of
the "LIBOR Spread", as defined herein, plus
the LIBOR Rate with respect to the
applicable Interest Period. The term
"LIBOR" shall mean, as applicable to any
LIBOR Advance, the rate per annum (rounded
upward, if necessary, to the nearest
1/32 of one percent) as determined on the
basis of the offered rates for
deposits in U.S. dollars, for a period of
time comparable to such LIBOR Advance
which appears on Dow Jones page 3750 as of
11:00 a.m. London time on the day
that is two (2) London Banking Days
preceding the first day of such LIBOR
Advance; provided, however, if the rate
described above does not appear on Dow
Jones page 3750 on any applicable interest
determination date, the LIBOR rate
shall be the rate (rounded upwards as
described above, if necessary) for
deposits in dollars for a period
substantially equal to the interest period on
the Reuters Page "LIBO" (or such other page
as may replace the LIBO Page on that
service for the purpose of displaying such
rates) as of 11:00 a.m. (London Time)
on the day that is two (2) London Banking
Days prior to the beginning of such
interest period. "Banking Day" shall mean,
in respect of any city, any date on
which commercial banks are open for
business in that city.
"LIBOR Spread" shall mean, at any given time, (i) one hundred
forty basis points (1.40%) if both the Loan
to Value (as defined herein) is 55%
or less and the Debt Service Coverage Ratio
(as defined herein) is 1.50 to 1 or
better and (ii) one hundred sixty basis
points (1.60%) if either the Loan to
Value is greater than 55% or the Debt
Service Coverage Ratio is less than 1.50
to 1.
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If both the Dow Jones and Reuters system are unavailable, then
the rate for that date will be determined
on the basis of the offered rates for
deposits in U.S. dollars for a period of
time comparable to such LIBOR advance
which are offered by four major banks in
the London interbank market at
approximately 11:00 a.m. London time, on
the day that is two (2) London Banking
Days preceding the first day of such LIBOR
Advance as selected by the
calculation agent. The principal London
office of each of the four major London
banks will be requested to provide a
quotation of its U.S. dollar deposit
offered rate. If at least two such
quotations are provided, the rate for that
date will be the arithmetic mean of the
quotations. If fewer than two quotations
are provided as requested, the rate for
that date will be determined on the
basis of the rated quoted for loans in U.S.
dollars to leading European banks
for a period of time comparable to such
LIBOR Advance offered by major banks in
New York City at approximately 11:00 a.m.
New York City time, on the day that is
two (2) London Banking Days preceding the
first day of such LIBOR Advance. In
the event that Payee is unable to obtain
any such quotations as provided above,
it will be deemed that LIBOR pursuant to a
LIBOR Advance cannot be determined.
In the event that the Board of Governors of
the Federal Reserve System shall
impose a Reserve Percentage with respect to
LIBOR deposits of Bank then for any
period during which such Reserve Percentage
shall apply, LIBOR shall be equal to
the amount determined above divided by an
amount equal to 1 minus the Reserve
Percentage. "Reserve Percentage" shall mean
the maximum aggregate reserve
requirement (including all basic,
supplemental, marginal and other reserves)
which is imposed on member banks of the
Federal Reserve System against
"Euro-currency Liabilities as defined in
Regulation D.
"LIBOR Acceptance Notice" shall have the meaning assigned to
such term in PARAGRAPH 4(b) hereof.
"LIBOR Notice" Maker's telephonic notice immediately confirmed
in writing, which writing may be delivered
by telecopier, stating that Maker,
subject to delivery by it of a LIBOR
Acceptance Notice, elects to pay interest
on the whole or a portion of the Principal
Amount at the LIBOR Rate, as
specified in such Notice, and specifying
the applicable Interest Period for the
LIBOR Advance and the Business Day on which
such Interest Period is to begin.
"Loan" loans of up to the Principal Amount made and/or to be
made to Maker by Payee and evidenced
hereby.
"Loan Documents" means the Amended and Restated $10,000,000
Note dated July 19, 2000, as modified by
Note Modification Agreement dated the
date hereof (the "Original Note"), this
Note, the $3,990,135.17 Mortgage
securing this Note, the Agreement of
Consolidation of Notes and Mortgages and
Modification of the Consolidated Mortgage
securing the Original Note dated July
19, 2000, the Guaranty, the Assignment of
Leases and Rents and all other
documents, including, without limitation,
collateral documents, security
agreements, UCC financing statements,
assignments of leases and rents,
guaranties, indemnities and any other
document, mortgage, agreement, assignment
or other instrument executed by Maker
and/or Indemnitor, as the case may be, or
any other third party pursuant hereto or
thereto or in connection herewith or in
connection with the loan evidenced by this
Note and secured by this Mortgage, as
the same may be extended and or otherwise
modified from time to time.
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"Loan to Value" shall mean the outstanding principal balance
of this Note and the Original Note divided
by the Appraised Value.
"Managing Member" shall mean Acadia Realty Limited
Partnership, a Delaware limited partnership
having an office at 1311 Mamaroneck
Avenue, Suite 260, White Plains, New York
10605, and its successors and/or
assigns.
"Maturity Date" shall mean the then applicable maturity date
pursuant to PARAGRAPH 3 of this Note.
"Mortgage" shall mean that certain Mortgage and Security
Agreement and Assignment of Leases and
Rents dated as of even date hereof,
including all exhibits thereto, by and
between Maker and Payee in the principal
sum of this Note, as the same may be
amended or modified from time to time.
"Mortgaged Premises" or "Mortgaged Property" shall have the
meaning assigned to such term in the
Mortgage.
"Net Operating Income" shall mean, with respect to the
applicable period, the aggregate rental and
other receipts (unless excluded
pursuant hereto) of the Mortgaged Premises
(actual results with respect to the
preceding six-months and pro forma with
respect to the following six-months)
during such period less the aggregate
amount of all operating expenses of the
Mortgaged Premises during such period, in
each case determined in accordance
with the Accounting Principles. For
purposes of the determination of Net
Operating Income, operating expenses shall
include, without limitation, all real
estate taxes (but not in excess of the pro
rata portion of such real estate
taxes applicable to the applicable period
covered by the statement), water and
sewer charges, utility charges, insurance
premiums (but not in excess of the
amounts applicable to the applicable period
covered by the statement), salaries
and benefits of all employees engaged in
the operation, maintenance or
management of Mortgaged Premises, all costs
of ordinary and necessary
maintenance, cleaning and repair, costs of
snow and rubbish removal and security
services. Net Operating Income shall,
however, (a) exclude from receipts all
amounts paid to the Maker for tenant
alterations in connection with the leasing
of space at the Mortgaged Premises, all
amounts payable to the Maker under
leases with Affiliates of the Maker, as
tenant, or with Maker, as tenant (unless
the Payee otherwise agrees) and, with
respect to any lease providing for a
reduction in the rentals payable under such
lease at any time during the term
thereof, base rentals in excess of the
lowest base rentals payable under such
lease (other than during any period of rent
concessions made with respect to
consecutive monthly periods commencing with
the first month of the term of such
lease), and (b) exclude from expenses
payments of principal and interest on this
Note, capital expenditures, leasing
commissions, and other expenses payable to
the Payee pursuant to this Note or any of
the other Loan Documents. Net
Operating Income shall be determined
without regard to extraordinary items of
income and of expense. Each lease, the
rental or other income from which was
included in the calculations of Net
Operating Income, must be in Full Force and
Effect as of the date Net Operating Income
is being determined.
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"Note" shall mean this Note, as the same may be amended or
otherwise modified from time to time.
"Person" shall mean and include any individual corporation,
partnership unincorporated association,
trust, governmental agency or authority
or other entity.
"Prime Rate" shall mean the variable rate per annum so
designated from time to time by the Payee
as its Prime Rate. The Prime Rate is a
reference rate and does not necessarily
represent the lowest or best rate being
charged to any customer. Changes in the
rate of interest resulting from changes
in the Prime Rate shall take place
immediately without notice or demand of any
kind.
"Prime Rate Advance" an advance with respect to which the
Principal Amount or a portion thereof bears
interest at the Floating Rate
Option.
"Regulation D" - Regulation D of the Board of Governors of the
Federal Reserve System from time to time in
effect, including any successor or
other regulation or official interpretation
of said Board of Governors relating
to reserve requirements applicable to
member banks of the Federal Reserve
System.
2. Amortization and Interest; Facility Fee.
(a) The Principal Amount of this Note shall be payable in
accordance
with the following provisions: Commencing
on the first day of the first month
after an Advance and on the first day of
each calendar month thereafter, Maker
will pay, on account of the Principal
Amount, a sum (the "Fixed Principal
Payment") calculated on the basis of the
Principal Amount outstanding at the
time, a loan maturity of twenty-five years
less the number of months which have
elapsed since the date of this Note and an
assumed interest rate of 8% per annum
and such Fixed Principal Payment shall be
revised on the foregoing basis each
time an Advance is made with each revised
Fixed Principal Payment being
applicable to the payment due on the first
day of the month immediately
following the making of the additional
Advance and each month thereafter, unless
and until another Advance is made and the
Fixed Principal Payment is further
revised in accordance herewith. The
prepayment premium provided for in PARAGRAPH
10 hereof shall not be applicable to any
such scheduled monthly payments. Any
voluntary prepayments applied to principal
shall be applied in the inverse order
of maturity.
(b) Interest on the outstanding Principal Amount shall accrue from
and
including the date of the advance to but
excluding the date of any repayment or
prepayment thereof and shall be payable in
arrears (i) on the first day of each
calendar month, commencing on the first day
of the first full month after the
date hereof, (ii) on the date of any
prepayment (on the amount prepaid), (iii)
on the Maturity Date, or the Extended
Maturity Date, as the case may be or (iv)
after maturity (whether by acceleration or
otherwise) on demand. Interest shall
be calculated on the basis of 1/360 of the
annual interest at the applicable
rate on the outstanding principal balance
for each date such balance is
outstanding and shall be paid for the
actual number of days elapsed, which will
result in a higher effective annual
rate.
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(c) Concurrently with the execution and delivery of this Note,
Maker
shall pay Payee a non-refundable facility
fee of $102,000.
3. Maturity Date; Extended Maturity Date.
(a) The outstanding Principal Amount and all accrued and unpaid
interest thereon shall be due and payable
on December 1, 2008 (the "Maturity
Date").
(b) Maker shall have the option, provided that the Maker shall
have
notified the Payee sixty (60) days prior to
the Maturity Date (as defined in the
Note) or the "Extended Maturity Date" (as
hereinafter defined), as the case may
be, that the Maker wishes to extend the
term of the Note and Mortgage for up to
two (2) consecutive one (1) year periods,
the first of which extension periods,
if exercised in accordance herewith, shall
end on December 1, 2009 (the "First
Extended Term") and the second of which, if
exercised in accordance with this
Note, will end on December 1, 2010 (the
"Second Extended Term"; the last day of
the First Extended Term or, if applicable,
the Second Extended Term, the
"Extended Maturity Date"), and provided
that the Maker shall have paid to the
Payee thirty (30) days prior to the
Maturity Date or the end of the First
Extended Term, as the case may be, the
Extension Fee equal to .125% of the
outstanding balance of the Note due on the
Maturity Date or the end of the First
Extended Term, as the case may be, and
provided further that the Maker shall
have complied with all of the conditions
precedent as hereinafter set forth in
the next paragraphs with respect to each
extension. In the event this Note shall
be extended as provided herein, the
Principal Amount and interest at the
applicable Interest Rate accrued and unpaid
herein shall be due and payable on
the Extended Maturity Date. During the
First Extended Term and the Second
Extended Term, if applicable, the Fixed
Monthly Payment and interest shall
continue to be due and payable as set forth
in this Note.
Notwithstanding anything to the contrary contained herein, the
Payee's
obligation to extend the term of the Note
and Mortgage to the Extended Maturity
Date is conditioned upon the following
conditions having been satisfied for each
extension:
(i) The Payee shall have received a recently dated appraisal
of the Mortgaged Property by an independent appraiser selected by
the
Payee and paid for by the Maker, in form and substance satisfactory
to
the Payee, which appraisal must indicate a loan to value ratio of
not
greater than sixty-five (65%) percent based upon the then
combined
principal balance of this Note and the Original Note.
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(ii) No default shall have occurred and be continuing under
the Loan Documents evidencing, securing, or guaranteeing payment
of,
the Note or the Original Note.
(iii) The "Debt Service Coverage Ratio" must be at least 1.30
to 1. For purposes herein, Debt Service Coverage Ratio shall mean
the
ratio, as of any date of calculation, for the immediately preceding
six
(6) month period and the immediately succeeding six (6) month
period,
calculated by dividing: (a) the Net Operating Income for the
preceding
six (6) month period and the immediately six (6) month period; by
(b)
principal and interest payments based on a 25 year self
liquidating
mortgage amortization schedule, and the 10-year treasury rate
plus
2.00% with a floor rate of 8.00%.
(iv) All representations and warranties contained herein, or
otherwise made in writing in connection herewith or in any of the
Loan
Documents, by or on behalf of Maker or any other Person to Payee,
shall
be true and correct, in all material respects, with the same force
and
effect as if made on and as of the date of the initial date of
the
Extended Term.
(v) The extension of the Original Note.
4. Selection of Rate.
(a) Except as provided in PARAGRAPHS 4(b), the outstanding
Principal
Amount shall bear interest at a rate per
annum equal to the Prime Rate Option.
(b) Provided there is no Default and/or Event of Default under
this
Note, the Loan Document(s) or any other
document or instrument delivered as
additional security for this Note, Maker
may elect to pay interest on the entire
or any portion of the outstanding Principal
Amount (subject to the minimum
amount limitations set forth herein and the
requirements set forth below) at a
rate per annum equal to the LIBOR Option
for the Interest Period elected by
Maker from (and including) the first day of
each Interest Period to (but not
including) the last day of such Interest
Period. Maker shall, subject to
delivery by it of a LIBOR Acceptance
Notice, elect that the entire or any
portion of the outstanding Principal
receive such LIBOR Notice prior to
11:00
A.M., New York City time, on a Business Day
at least three (3) Business Days
prior to:
(1) the last day of an Interest Period (in the case of an
outstanding LIBOR Advance);
or
(2) any Business Day elected by Maker in its LIBOR Notice (in
the
case of a conversion of a Prime Rate Advance to a LIBOR
Advance)
for the commencement of the applicable Interest Period.
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If Maker fails to give a LIBOR Notice at
least three (3) Business Days prior to
the end of an Interest Period, then, on the
last day of the Interest Period, the
outstanding LIBOR Advance shall convert to
a Prime Rate Advance. On the date
specified in the LIBOR Notice as the date
on which the applicable Interest
Period is to begin, Payee shall notify
Maker's Authorized Representative by
telephone (such notice to be promptly
confirmed in writing) or by telex, which
notice shall specify the date, the proposed
LIBOR Rate and the period of time on
such date during which such rate is to be
available. If Payee fails to specify
the period for which such quoted rate is
available, then such rate shall be
deemed to be available only for thirty
minutes from the time Payee, orally or in
writing, notifies Maker's Authorized
Representative of such rate. If Maker then
wishes to obtain such Loan at such LIBOR
Rate, it shall promptly give notice to
Payee to such effect (the LIBOR Acceptance
Notice"), which notice shall be
irrevocable and may be by telephone,
promptly confirmed in writing.
(c) Without in any way limiting Maker's obligation to confirm
in
writing any telephonic LIBOR Notice or
LIBOR Acceptance Notice, Payee may, prior
to receipt of written confirmation, act
without liability on the basis of
telephonic notice which it believes in good
faith to be from Maker and, in any
event, Payee may act without liability on
the basis of telephonic or written
notice which it believes in good faith to
be from Maker.
5. Conditions to Advance. At such time as the Original Note has
been
fully advanced, Maker shall have the
option, subject to the terms and conditions
of this Note, of requesting from Payee
advances hereunder in minimum increments
of $1,000,000 each (unless the amount
remaining to be advanced is less than said
amount), with the aggregate amount of all
such advances not to exceed
$3,990,135.17 (each, every and any one of
such additional advances shall be
referred to herein as the "Advance"). The
obligation of Payee to make the
Advance hereunder is subject to the
satisfaction of each of the following
conditions precedent:
(a) An Authorized Representative shall give Payee at least ten
(10) Business Days prior written notice, specifying the date of
the
proposed borrowing. Any such
