PROMISSORY NOTE
$39,000,000.00 As of October 31, 2003
FOR VALUE RECEIVED SPSP Corporation, a Pennsylvania corporation, having
an office at 44 West Lancaster Avenue, Suite 110, Ardmore, Pennsylvania 19003
("SPSP"), Passyunk Supermarket, Inc., a Pennsylvania corporation, having an
office at 44 West Lancaster Avenue, Suite 110, Ardmore, Pennsylvania 19003
("Passyunk"), and Twenty Fourth Street Passyunk Partners, L.P., a Pennsylvania
limited partnership, having an office at 44 West Lancaster Avenue, Suite 110,
Ardmore, Pennsylvania 19003 ("24th Street"; SPSP, Passyunk and 24th Street are
collectively referred to herein as "Borrower), as maker, hereby unconditionally
promises to pay to the order of Cedar-South Philadelphia II, LLC, a Delaware
limited liability company, having an address at 44 South Bayles Avenue, Port
Washington, New York 11050 ("Lender"), or at such other place as the holder
hereof may from time to time designate in writing, the principal sum of
THIRTY-NINE MILLION AND 00/100 DOLLARS ($39,000,000), in lawful money of the
United States of America with interest thereon to be computed from the date of
this Note at the Applicable Interest Rate (defined below), and to be paid in
installments as provided herein.
1. CERTAIN DEFINED TERMS
As used herein the following terms shall have the meanings set forth below:
(a) "Applicable Interest Rate" shall mean an interest rate equal
to 5.5% per annum.
(b) "Constant Monthly Payment" shall mean a payment equal to the
lesser of (i) $178,750.00, and (ii) Available Cash (as defined in the Net
Lease), subject to reduction in accordance with Section 3.2 or Section 3.3 of
the Security Instrument, and provided that, from and after the date that a
Recognized Leasehold Mortgagee (as defined in the Net Lease) shall accelerate
the repayment of a loan secured by a Recognized Leasehold Mortgage (as defined
in the Net Lease), the Constant Monthly Payment shall be reduced to One Dollar
and 00/100 ($1.00).
(c) "Loan" shall mean the loan evidenced by this Note.
(d) "Loan Documents" shall mean this Note, the Security
Instrument, and any other documents or instruments which now or shall hereafter
wholly or partially secure or guarantee payment of this Note or which have
otherwise been executed by Borrower and/or any other person in connection with
the Loan.
(e) "Initial Maturity Date" shall mean October 31, 2013, as the
same may be extended pursuant to Section 3 below.
(f) "Maturity Date" shall mean the earlier to occur of (i) the
Initial Maturity Date, and (ii) in the event that the tenant under the Net Lease
(as defined in the Security Instrument) shall exercise the purchase option
pursuant to the terms of the Net Lease, the date on which the Property shall be
conveyed to the tenant under the Net Lease pursuant to said purchase option.
(g) "Monthly Payment Date" shall mean the first day of each
calendar month prior to the Maturity Date commencing on (i) the first day of the
next succeeding calendar month after the date hereof if this Note is dated as of
the first day of a month, and (ii) the first day of the second succeeding
calendar month after the date hereof if this Note is dated as of a date other
than the first day of a month.
(h) "Security Instrument" shall mean the Open-End Mortgage and
Security Agreement dated the date hereof in the principal sum of $39,000,000
given by Borrower to (or for the benefit of) Lender covering the fee estate of
Borrower in certain premises located in Philadelphia County, State of
Pennsylvania, and other property, as more particularly described therein
(collectively, the "Property").
2. PAYMENT TERMS
If this Note is dated as of the first day of a calendar month, a
payment shall be due from Borrower to Lender on the date hereof on account of
all interest scheduled to accrue on the principal sum from and after the date
hereof through and including the last day of the current calendar month. If this
Note is dated as of a date other than the first day of a calendar month, a
payment shall be due from Borrower to Lender on the date hereof on account of
all interest scheduled to accrue on the principal sum from and after the date
hereof through and including the last day of the next succeeding calendar month
after the date hereof. The Constant Monthly Payment shall be due from Borrower
to Lender on each Monthly Payment Date, with each Constant Monthly Payment to be
applied to the payment of interest scheduled to accrue during the next
succeeding calendar month computed at the Applicable Interest Rate. The balance
of the principal sum and all interest thereon shall be due and payable on the
Maturity Date. If the Maturity Date shall be other than a Monthly Payment Date,
interest on the principal sum of this Note shall be prorated based on a 30-day
month.
3. EXTENSION OF INITIAL MATURITY DATE
Lender will grant one or more requests to extend the Initial Maturity
Date, provided that (a) there exists no Event of Default under the Security
Instrument, (b) Borrower shall submit such request at least thirty (30) days
prior to the then Initial Maturity Date, and (c) in no event shall the Initial
Maturity Date be extended to a date that shall be later than September 30, 2033.
4. DEFAULT INTEREST
Borrower does hereby agree that upon the occurrence of an Event of
Default (as defined in the Security Instrument), Lender shall be entitled to
receive and Borrower shall pay interest on the entire unpaid principal sum at a
rate (the "Default Rate") equal to (i) the Applicable Interest Rate plus four
percent (4%) or (ii) the maximum interest rate that Borrower may by law pay,
whichever is lower. The Default Rate shall be computed from the occurrence of
the Event of Default until the earlier of the date upon which the Event of
Default is cured or the date upon which the Debt is paid in full. Interest
calculated at the Default Rate shall be added to the Debt, and shall be deemed
secured by the Security Instrument. This clause, however, shall not be construed
as an agreement or privilege to extend the date of the payment of the Debt, nor
as a
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waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default.
5. PREPAYMENT
Borrower shall have the right to prepay all or any portion of the
unpaid principal balance of this Note at any time.
6. SECURITY
This Note is secured by the Security Instrument and the other Loan
Documents. The Security Instrument is intended to be duly recorded in the public
records of the county where the Property is located. All of the terms, covenants
and conditions contained in the Security Instrument and the other Loan Documents
are hereby made part of this Note to the same extent and with the same force as
if they were fully set forth herein.
7. SAVINGS CLAUSE
This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance due
hereunder at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to contract or agree to pay. If by the
terms of this Note, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of such
maximum rate, the Applicable Interest Rate or the Default Rate, as the case may
be, shall be deemed to be immediately reduced to such maximum rate and all
previous payments in excess of the maximum rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or amount of
interest on account of the Debt does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debt for so long as
the Debt is outstanding.
8. NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
9. JOINT AND SEVERAL LIABILITY
If Borrower consists of more than one person or party, the obligations
and liabilities of each person or party shall be joint and several.
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10. WAIVERS
(a) Borrower and all others who may become liable for the payment
of all or any part of the Debt do hereby severally waive presentment and demand
for payment, notice of dishonor, protest and notice of protest and non-payment
and all other notices of any kind. No release of any security for the Debt or
extension of time for payment of this Note or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note, the Security
Instrument or the other Loan Documents made by agreement between Lender or any
other person or party shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower, and any other person
or entity who may become liable for the payment of all or any part of the Debt,
under this Note, the Security Instrument or the other Loan Documents. No notice
to or demand on Borrower shall be deemed to be a waiver of the obligation of
Borrower or of the right of Lender to take further action without further notice
or demand as provided for in this Note, the Security Instrument or the other
Loan Documents. In addition, acceptance by Lender of any payment in an amount
less than the amount then due shall be deemed an acceptance on account only, and
the failure to pay the entire amount then due shall be and continue to be an
Event of Default. If Borrower is a partnership, the agreements herein contained
shall remain in force and applicable, notwithstanding any changes in the
individuals comprising the partnership, and the term "Borrower," as used herein,
shall include any alternate or successor partnership, but any predecessor
partnership and their partners shall not thereby be released from any liability.
If Borrower is a corporation or limited liability company, the agreements
contained herein shall remain in full force and applicable notwithstanding any
changes in the shareholders or members comprising, or the officers and directors
or managers relating to, the corporation or limited liability company, and the
term "Borrower" as used herein, shall include any alternative or successor
corporation or limited liability company, but any predecessor corporation or
limited liability company shall not be relieved of liability hereunder. (Nothing
in the foregoing sentence shall be construed as a consent to, or a waiver of,
any prohibition or restriction on transfers of interests in a partnership,
corporation or limited liability company which may be set forth in the Security
Instrument or any other Loan Document.)
(b) Borrower hereby waives and releases all errors, defects and
imperfections in any proceedings instituted by Lender under the terms of this
Note or of the Security Instrument or the other Loan Documents, as well as all
benefits that might accrue to Borrower by virtue of any present or future laws
exempting any of the property covered by the Security Instrument or the other
Loan Documents or any other property, real or personal, or any part of the
proceeds arising from any sale of such property, from attachment, levy or sale
under execution or providing for any stay of execution, exemption from civil
process or extension of time for payment, as well as the right of inquisition on
any real estate that may be levied upon under a judgment obtained by virtue
hereof, and Borrower hereby voluntarily condemns the same and authorizes the
entry of such voluntary condemnation on any writ of execution issued thereon,
and agrees that such real estate may be sold upon any such writ in whole or in
part in any order desired by Lender.
11. TRANSFER
Upon the transfer of this Note in accordance with Section 15.1 of the
Security Instrument, Lender may deliver all the collateral mortgaged, granted,
pledged or assigned pursuant to the
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Security Instrument and the other Loan Documents, or any part thereof, to the
transferee who shall thereupon become vested with all the rights herein or under
applicable law given to Lender with respect thereto, and Lender shall thereafter
forever be relieved and fully discharged from any liability or responsibility in
the matter; but Lender shall retain all rights hereby given to it with respect
to any liabilities and the collateral not so transferred.
12. WAIVER OF TRIAL BY JURY
BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE
APPLICATION FOR THE LOAN, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN
DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS
OR AGENTS IN CONNECTION THEREWITH.
13. EXCULPATION
(a) Lender shall not enforce the liability and obligation of
Borrower to perform and observe the obligations contained in this Note or the
Security Instrument by any action or proceeding wherein a money judgment shall
be sought against Borrower (or its partners, shareholders, officers or
directors), except only that Lender may bring a foreclosure action, action for
specific performance or other appropriate action or proceeding to enable Lender
to enforce and realize upon this Note, the Security Instrument, the other Loan
Documents, and the interest in the Property, the Rents (as defined in the
Security Instrument) and any other collateral given to Lender created by this
Note, the Security Instrument and the other Loan Documents; provided, however,
that any judgment in any such action or proceeding shall be enforceable against
Borrower only to the extent of Borrower's interest in the Property, in the Rents
and in any other collateral given to Lender. Lender, by accepting this Note and
the Security Instrument, agrees that it shall not sue for, seek or demand any
deficiency judgment against Borrower (or its partners, shareholders, officers or
directors) in any such action or proceeding, under or by reason of or under or
in connection with this Note, the other Loan Documents or the Security
Instrument. The provisions of this Article shall not, however, (i) constitute a
waiver, release or impairment of any obligation evidenced or secured by this
Note, the other Loan Documents or the Security Instrument; (ii) impair the right
of Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under the Security Instrument; (iii) affect the
validity or enforceability of any indemnity, guaranty, master lease or similar
instrument made in connection with this Note, the Security Instrument, or the
other Loan Documents; (iv) impair the right of Lender to obtain the appointment
of a receiver; (v) impair the enforcement of the Assignment of Leases and Rents
executed in connection herewith; or (vi) impair the right of Lender to obtain a
deficiency judgment or judgment on the Note against Borrower if necessary to
obtain any insurance proceeds or condemnation awards to which Lender would
otherwise be entitled under the Security Instrument; provided however, Lender
shall only enforce such judgment against the insurance proceeds and/or
condemnation awards.
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(b) Nothing herein shall be deemed to be a waiver of any right
which Lender may have under Sections 506(a), 506(b), 1111(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt or to require that all collateral shall continue to secure all of the
Debt owing to Lender in accordance with this Note, the Security Instrument and
the other Loan Documents.
14. AUTHORITY
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver this Note, the Security instrument and the other Loan Documents and
that this Note, the Security Instrument and the other Loan Documents constitute
valid and binding obligations of Borrower.
15. APPLICABLE LAW
This Note shall be governed, construed, applied and enforced in
accordance with the laws of the state in which the Property is located and the
applicable laws of the United States of America.
16. COUNSEL FEES
In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security therefor, Borrower also
agrees to pay all reasonable fees and expenses of Lender, including, without
limitation, reasonable attorney's fees for the services of such counsel whether
or not suit be brought.
17. NOTICES
All notices, requests, demands and other communications provided for by
this Agreement shall be (a) in writing, (b) sent either by hand delivery service
or by same day or overnight recognized commercial courier service, addressed to
the address of the parties stated below or to such changed address as such party
may have fixed by notice, and (c) deemed to have been delivered on the date of
receipt thereof (or the date that such receipt is refused, if applicable),
addressed as follows:
If to Borrower: c/o Greentree Properties Corporation
44 West Lancaster Avenue, Suite 110
Ardmore, Pennsylvania 19003
Attention: Mr. Gary E. Erlbaum
With a copy to: Ledgewood Law Firm, P.C.
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Richard Abt, Esq.
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If to Lender: c/o Cedar Income Fund, Ltd.
44 South Bayles Avenue
Port Washington, New York 11050
Attention: Mr. Leo S. Ullman
With a copy to: Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: Mark A. Levy, Esq.
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
"Business Day" shall mean a day upon which commercial banks are not
authorized or required by law to close in Philadelphia, Pennsylvania.
18. MISCELLANEOUS
(a) Wherever pursuant to this Note (i) Lender exercises any right
given to it to approve or disapprove, (ii) any arrangement or term is to be
satisfactory to Lender, or (iii) any other decision or determination is to be
made by Lender, the decision of Lender to approve or disapprove, all decisions
that arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
(b) Whenever used, the singular shall include the plural, the
plural shall include the singular, and the words "Lender" and "Borrower" shall
include their respective successors, assigns, heirs, executors and
administrators.
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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day
and year first above written.
SPSP Corporation
By: /s/ Gary E. Erlbaum
---------------------------------
Name: Gary E. Erlbaum
Title: President
Passyunk Supermarket, Inc.
By: /s/ Gary E. Erlbaum
---------------------------------
Name: Gary E. Erlbaum
Title: President
Twenty Fourth Street Passyunk Partners,
L.P.
By: Twenty Fourth Street Passyunk
Corporation, its general partner
By: /s/ Marc Erlbaum
---------------------------------
Name: Marc N. Erlbaum
Title: President
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ACKNOWLEDGEMENTS
STATE OF PENNSYLVANIA )
) ss.:
COUNTY OF MONTGOMERY )
AND NOW, this 24th day of October, 2003 before me, the undersigned
Notary Public, personally appeared Gary Erlbaum, who acknowledged
himself/herself to be the President of SPSP CORPORATION, a Pennsylvania
corporation, and that he/she, as such President being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself/herself as President.
IN WITNESS WHEREOF, I hereunder set my hand and official seal.
/s/
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Notary Public
My commission expires:
STATE OF PENNSYLVANIA )
) ss.:
COUNTY OF MONTGOMERY )
AND NOW, this 24th day of October, 2003 before me, the undersigned
Notary Public, personally appeared Gary Erlbaum, who acknowledged
himself/herself to be the President of PASSYUNK SUPERMARKET, INC., a
Pennsylvania corporation, and that he/she, as such President being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself/herself as President.
IN WITNESS WHEREOF, I hereunder set my hand and official seal.
/s/
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Notary Public
My commission expires:
STATE OF PENNSYLVANIA )
) ss.:
COUNTY OF MONTGOMERY )
AND NOW, this 24th day of October, 2003 before me, the undersigned
Notary Public, personally appeared Marc Erlbaum, who acknowledged
himself/herself to be the President of TWENTY FOURTH STREET PASSYUNK
CORPORATION, the general partner of TWENTY FOURTH STREET PASSYUNK PARTNERS,
L.P., a Pennsylvania limited partnership, and he/she, as such President being
authorized to do so, executed the foregoing instrument for the purposes therein
contained.
IN WITNESS WHEREOF, I hereunder set my hand and official seal.
/s/
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Notary Public
My commission expires: