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EXHIBIT 10.1
DAVID A. GRAHAM
Vice President
Mortgage Asset Management
[PRUDENTIAL CAPITAL GROUP LOGO]
One Ravinia Drive, Suite 1400
Atlanta, GA 30346-2110
770 395-8609 Fax: 770 392-0944
VIA Fax #(404) 303-6418
April 8, 1998
EQK Realty Investors I
c/o ERE Yarmouth
5775-D Peachtree Dunwoody Road, Suite 200
Atlanta, GA 30342
Attn: Donald Henry
Subject: Prudential Loan No. 7501488
Harrisburg East Mall, Harrisburg, PA
Forbearance Agreement
Dear Mr. Henry:
As you are aware, the above-referenced Loan held by The Prudential Insurance
Company of America ("Prudential") encumbering property of EQK Realty Investors
I (EQK or Borrower) is due and payable in full on June 15, 1998. You have
indicated the Borrower's inability to pay the Loan in full on the Maturity Date
and have requested some relief or extension. Although Prudential is unwilling
to extend or reinstate the Loan, Prudential is willing to forbear exercising
remedies (other than any remedies continuing to be exercised under the Loan
documents) from the date of Borrower's execution of this letter until December
15, 1998 ("Forbearance Period"), provided the following terms and conditions
are met ("Forbearance Conditions"):
1. The Borrower executes this letter where indicated below and
returns the same to Prudential by April 10, 1998 along with an
administrative fee of $2,500.00 which fee is hereby deemed fully
earned and shall not be applied to sums due under the Loan
documents.
2. Payments ("Forbearance Payments") shall be made to Prudential as
follows: principal and interest payments of $324,076.70 shall be
due on the fifteenth of each month during the Forbearance Period.
Prudential will have the right, at its sole discretion, to apply
Forbearance Payments received to principal first, then to any
other sums due under the Loan documents, then to interest.
3. The entire remaining Loan balance must be paid in full by the
end of the Forbearance Period.
4. No defaults exist or shall hereafter occur during the
Forbearance Period under the Loan documents other than the failure
to pay the Loan in full on the Maturity Date.
5. Application Fee: Pursuant to Paragraph 6 of the 1996
Commitment, EQK owed an application fee of $437,900 to Prudential
as of November 15, 1996. $165,000 of that amount has been paid by
Maker to Payee, leaving a balance of $272,900 owed by Maker to
Payee (the "Application Fee Balance"). The Application Fee
Balance, plus interest thereon at the Contract Rate from and
including December 15, 1996 to the date of payment, is payable by
EQK on the earlier of (a) June 15, 1998 or (b) the date on which
all or any part of the Original Principal Amount (as defined in
the 1996 Commitment) is prepaid. The payment of the Application
Fee Balance remains unchanged by this forbearance agreement and
shall be paid not later than June 15, 1998 in accordance with the
1996 Commitment.
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If the Borrower complies in a timely fashion with all of the Forbearnace
Conditions, Prudential will waive default interest accruing prior to or during
the Forbearance Period, and interest will be collected only at the Contract Rate
of 8.88% upon payoff in full. However, in the event Borrower does not comply in
a timely fashion with all of the Forbearance Conditions, interest will remain
due at the default rate of 13.92% from and after the Maturity Date.
By countersigning this letter where indicated below, Borrower represents,
warrants, convents and agrees to and with Prudential as follows:
1. Prudential holds a valid and perfect first priority mortgage lien
against the property known as the Harrisburg Mall (the "Premises"), as set
forth in an Amended and Restated Open-End Mortgage and Security Agreement dated
as of December 15, 1992, as amended (the "Mortgage").
2. All leases of and rents generated by the Premises have been
absolutely assigned to Prudential, as assignee, and First Union National Bank
of Georgia, as Central Collection Agent, pursuant to the Absolute Assignment of
Leases and Rents and Rental Collection Agreement dated December 16, 1992, as
amended (the "Absolute Lease Agreement"), all rents, security deposits and
other sums paid under leases for the Premises have been and shall continue to
be paid to said Rental Collection Agent and all such sums have been and
continue to be deposited with the Escrow Agent and applied in accordance with
the Cash Management and Security Agreement dated as of December 15, 1992, as
amended (the "Cash Management Agreement"), by and among Borrower, Prudential
and First Union National Bank of Georgia, as Escrow Agent.
3. Borrower hereby ratifies and confirms all Loan documents, including,
without limitation, the Second Amended and Restated Note dated December 16,
1992, as amended (the "Note"), from Borrower to Prudential; the Mortgage; the
Absolute Lease Assignment; the Cash Management Agreement; ad the Confession of
Judgment contained in the Note; the Acknowledgement of Confession of Judgment
executed by Borrower and acknowledged December 19, 1996; and the Warrant
Agreement) by and between Borrower and Prudential.
4. Borrower does not have or hold any defenses, setoffs, demands or
claims against the Loan, Prudential or Prudential's officers, representatives or
agents.
5. As of the date of this letter, the outstanding principal balance of
the Loan is $43,794,149.14.
6. The Warrant Agreement remains in full force and effect, the number of
Shares of Borrower issuable to Prudential upon exercise of the Warrant are
367,868 Shares; Borrower currently holds in its treasury duly authorized and
previously issued Shares in such number and such Shares are reserved for
issuance to Prudential upon exercise of the Warrant. Prudential exercised the
Warrant by letter dated April 8, 1998, however, the transaction has not yet been
completed.
This is a one-time forbearance and Prudential does not presently intend to
forbear beyond the date set forth above.
In the event any of the Forbearance Conditions are not met in a timely
fashion, Prudential's obligation to forbear shall terminate and be null and
void, and Prudential shall be entitled to exercise any available remedies for
default under the Loan Documents and/or applicable law. Except for the limited
forbearance set forth above, Prudential reserves all of its rights and remedies
under the Loan documents or under applicable law, and this Forbearance Agreement
shall not be deemed an election of remedies, nor shall it constitue a waiver of
any rights or remedies otherwise available to Prudential.
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'Forbearance
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As a futher material inducement for Prudential to enter into this
Forbearance Agreement without which Prudential would not have agreed to a
Forbearance Period, Borrower hereby makes the following irrevocable waivers:
a) BORROWER WAIVES AND RELEASES ANY EXISTING OFFSETS, DEFENSES OR
COUNTERCLAIMS RELATING TO THE LOAN OR THE LOAN DOCUMENTS.
b) BORROWER ALSO WAIVES THE RIGHT TO A TRIAL BY JURY IN THE EVENT THE LOAN
DOCUMENTS OR THIS FORBEARANCE AGREEMENT BECOME THE BASIS OF LITIGATION.
Sincerely,
/s/ David Graham
by JAC
David A. Graham
Vice President
Accepted and agreed to this 9 day of April, 1998.
BORROWER:
/s/ Don Henry
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By: Don Henry
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Title: VP
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cc: Paul Egan
Jack McDonald
Laurie Cook
Mary Phillips