LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") made as of the 9th day of
December, 2003, between WELSH-SQUARE, INC., a Pennsylvania corporation having an
address c/o Tower Investments, Inc., One Reed Street, Philadelphia, Pennsylvania
19147 ("WSI"), INDENTURE OF TRUST OF BART BLATSTEIN DATED AS OF JUNE 9, 1998, a
Pennsylvania trust having an address c/o Tower Investments, Inc., One Reed
Street, Philadelphia, Pennsylvania ("1998 Trust") and IRREVOCABLE INDENTURE OF
TRUST OF BARTON BLATSTEIN DATED JULY 13, 1999, a Pennsylvania trust having an
address c/o Tower Investments, Inc., One Reed Street, Philadelphia, Pennsylvania
("1999 Trust"; WSI, 1998 Trust and 1999 Trust are collectively referred to
herein as "Borrower"), and CEDAR LENDER LLC, a Delaware limited liability
company having an address at 44 South Bayles Avenue, Port Washington, New York
11050 ("Lender").
W I T N E S S E T H :
WHEREAS, Lender has agreed to fund a Loan to Borrower in the
principal amount of Six Million Three Hundred Sixty Seven Thousand ($6,367,000)
Dollars (the "Loan") pursuant to the terms and conditions of this Agreement; and
WHEREAS, the Loan is evidenced by a promissory note of even date
herewith made by Borrower to Lender, in the principal amount of Six Million
Three Hundred Sixty Seven Thousand ($6,367,000) Dollars (the "Note") and is
secured by, among other things, a pledge and security agreement of even date
herewith made by Borrower to or for the benefit of Lender (the "Security
Agreement") (this Agreement, the Note and the Security Agreement and any other
documents delivered by Borrower to Lender in connection with the Loan are
sometimes collectively referred to herein as the "Loan Documents").
NOW, THEREFORE, in consideration of ten dollars ($10) and other
good and valuable consideration, the receipt of which is hereby acknowledged,
Lender and Borrower hereby covenant and agree as follows:
1. Capitalized Terms. Any undefined capitalized terms used in this
Agreement shall have the meanings ascribed to them in that certain Amended and
Restated Agreement of Limited Partnership of Delaware 1851 Associates, LP, dated
as of the date hereof (the "Partnership Agreement").
2. Loan Terms. Subject to the terms and conditions of this
Agreement and the other Loan Documents, Lender agrees to make the Loan to
Borrower, such borrowing to be evidenced by the Note and secured by the Security
Agreement.
3. Term.
(A) The Loan shall be due and payable in full, unless
accelerated sooner pursuant to the terms of this Loan Agreement, on the tenth
(10th) anniversary of the date hereof (the "Maturity Date"); provided, however,
that all unpaid principal and accrued and unpaid interest on the Loan shall
become immediately due and payable prior to such time upon the redemption of the
Preferred Interests in full. If the Preferred Interests are redeemed in part for
cash, a portion of the unpaid principal and accrued and unpaid interest on the
Loan shall become immediately due and payable in an amount equal to such cash
payment.
4. Disbursement to Borrower. The Loan is being fully disbursed on
the date hereof, and any amount borrowed hereunder in respect of the Loan may
not be reborrowed.
5. Interest. The outstanding principal balance of the Loan which is
not past due shall (i) bear interest at a basic rate of 6.755% per annum,
compounded annually (the "Basic Rate"), and (ii) accrue interest at the rate of
0.393%, per annum, compounded annually (the "Special Rate"). Interest at the
Basic Rate shall, subject to Borrower's right to defer payments pursuant to
Section 6(D) below, be paid on each Payment Date (as that term is hereinafter
defined). Interest at the Special Rate shall be deferred until the Maturity Date
or earlier repayment of the Loan. Subject to Borrower's right to defer payments
pursuant to Section 6(D) below, any principal and, to the extent permitted by
applicable law, any interest at the Basic Rate on the Note, which is not paid
when due shall bear interest, from the date due and payable until paid, payable
on demand, at a rate per annum equal to the lesser of (i) four percent (4%) in
excess of the Basic Rate (the "Default Rate"), and (ii) the maximum rate
permitted under applicable law.
6. Payments.
(A) "Applicable Period" shall mean (i) with respect to the
first Payment Date, the period commencing on the date hereof and ending on the
day immediately preceding the first Payment Date, and (ii) with respect to each
Payment Date thereafter (a "Subsequent Payment Date"), the period commencing on
the Payment Date immediately preceding the Subsequent Payment Date and ending on
the day immediately preceding such Subsequent Payment Date.
(B) "Payment Date" shall mean the date that the Partnership
shall make distributions pursuant to Section 5.1 or Section 5.2 of the
Partnership Agreement.
(C) Subject to the terms of Section 6(D) below, Borrower
shall make payments of interest at the Basic Rate on each Payment Date, with
each such payment to be applied to the interest which has accrued at the Basic
Rate during the Applicable Period with respect to such Payment Date.
(D) Notwithstanding the provisions of Section 6(C) above,
Borrower shall have the right to defer the payment of interest on the Loan that
shall have accrued at the Basic Rate in any Applicable Period to the extent that
the interest at the Basic Rate for such Applicable Period exceeds the amount of
distributions made to the Preferred Group pursuant to Section 5.1(b)(1) and
Section 5.2(b)(2) of the Partnership Agreement for such Applicable Period. To
the extent that the payment of interest at the Basic Rate shall be deferred
pursuant to the immediately preceding sentence, such deferred interest shall
accrue interest at the Basic Rate and same shall be payable in each subsequent
Applicable Period, to the extent of the excess, if any, of (x) the distributions
made pursuant to Section 5.1(b)(1) and Section 5.2(b)(2) of the Partnership
Agreement for such subsequent Applicable Period, over (y) the interest at the
Basic Rate on the Loan for such Applicable Period.
(E) If and to the extent that the Preferred Group shall
receive distributions under Section 5.2(b)(1) of the Partnership Agreement, such
distributions shall be applied first to
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any accrued and unpaid interest at the Basic Rate, and then to the payment of
(i) accrued and unpaid interest at the Special Rate, (ii) the Exit Fee (as that
term is hereinafter defined), and (iii) the repayment of principal under the
Loan (with each such distribution being allocated between such items (i), (ii)
and (iii) in the same proportions as if such distribution was a complete
distribution of the Borrower's Preferred Interests).
7. Events of Default. If any of the following events has occurred,
an "Event of Default" shall be deemed to exist:
(A) Borrower fails to make any payment (subject to
Borrower's right to defer payments pursuant to Section 6(D) above) under the
Note or under any other Loan Document when due and payable, and such failure
shall not have been cured by the date which is five (5) business days after
Lender shall have given Borrower notice thereof;
(B) Borrower shall take any action that acts to revocate the
direction to the Partnership pursuant to that certain letter agreement dated the
date hereof among the Partnership and each of the Partners to pay directly to
Lender, for so long as the Loan is outstanding, all cash distributions on the
Preferred Interest distributed pursuant to Section 5.1(b)(1), Section 5.2(b)(1),
and Section 5.2(b)(2) of the Partnership Agreement and any cash distributed in
redemption of the Preferred Interest in an amount equal to the amount
distributed, and such default shall not have been cured by the date which is
five (5) business days after Lender shall have given Borrower notice thereof;
(C) Any of the representations or warranties made by
Borrower in any Loan Document shall be, or at any time shall become, false or
inaccurate in any material respect, and such default shall not have been cured
by the date which is five (5) business days after Lender shall have given
Borrower notice thereof, provided that if same cannot reasonably be cured within
such five (5) day period and Borrower shall have commenced to cure same within
such five (5) day period and thereafter diligently and expeditiously proceeds to
cure the same, such five (5) day period shall be extended for so long as it
shall require Borrower in the exercise of due diligence to cure such breach, it
being agreed that no such extension shall be for a period in excess of twenty
(20) days;
(D) If Borrower shall continue to be in default under any
other term, covenant or condition of any Loan Document in the case of any
default which can be cured by the payment of a sum of money for more than ten
(10) days after notice from Lender, or in the case of any other default
("Non-Monetary Default") for thirty (30) days after notice from Lender, provided
that if such Non-Monetary Default cannot reasonably be cured within such thirty
(30) day period and Borrower shall have commenced to cure such Non-Monetary
Default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower in the exercise of due
diligence to cure such Non-Monetary Default, it being agreed that no such
extension shall be for a period in excess of sixty (60) days;
(E) If any event of default by the Riverview Borrowers (as
that term is hereinafter defined), occurs under any of the documents evidencing,
securing, guaranteeing or otherwise related to that certain loan, dated as of
November 3, 2003, in the principal amount of
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$26,743,000 extended by Lender to Firehouse Realty Corp. ("Firehouse"), Reed
Development Associates, Inc. ("Reed"), South River View Plaza, Inc. ("South"),
Riverview Development Corp. ("Development"), Riverview Commons, Inc. ("Commons";
and together with Firehouse, Reed, South and Development, the "Riverview
Borrowers"), after the expiration of any applicable notice and cure period
provided in such documents.
(F) If a default by Borrower occurs under that certain
Administrative Fee Agreement, of even date herewith, between Borrower and Cedar
GP, and such default shall not have been cured by the date which is five (5)
business days after Lender shall have given Borrower notice thereof; and
(G) If a default by Borrower shall have occurred and be
continuing under Sections 8.5, 10.3, and 10.4 of the Recap Agreement (subject to
Borrower's rights to the extent provided in the Recap Agreement, to dispute or
contest same) or Sections 5.5 (subject to Borrower's rights to the extent
provided in the Partnership Agreement, to dispute or contest same) or 5.6 of the
Partnership Agreement.
8. Remedies.
(A) Upon the occurrence of an Event of Default described in
Sections 7(A)-(E), Lender may, at its option:
(i) Declare immediately due and payable and
accelerate the entire unpaid principal balance of the Loan and
all accrued interest thereon without advance notice to Borrower,
the same becoming immediately due and payable; and
(ii) Invoke any other remedies set forth in any of
the other Loan Documents.
(B) Upon the occurrence of an Event of Default described in
Section 7(G), Lender may, at its option, take one or more of the following
actions: (i) declare immediately due and payable and accelerate a portion of the
Loan equal to the amount of the loss, cost, expense or damage suffered by the
Partnership or any member of the Cedar Group as a result thereof (the "Lender
Loss") and all accrued interest thereon without advance notice to Borrower, the
same becoming immediately due and payable, and/or (ii) treat Borrower as having
transferred to Lender a portion of its Preferred Interest in an amount equal to
the Lender Loss and Lender as having assumed (and Borrower as having been
relieved of) the amount of the Company's liabilities allocated to the Borrower
prior to the exercise of the rights contained in this Section 8(B)(ii)
multiplied by a fraction the numerator of which is the Lender Loss and the
denominator of which is the balance of the Preferred Interest prior to such
Event of Default. Notwithstanding anything to the contrary contained in this
Section 8(B), Borrower shall not have satisfied its obligations with respect to
the Sections 8.5, 10.3; or 10.4 of the Recap Agreement or Sections 5.5 or 5.6 of
the Partnership Agreement unless and until such time as it shall have made a
cash payment to the Lender in the amount of the Lender Loss. Nothing contained
in this Section 8(B) shall affect any rights of the parties pursuant to the
Recap Agreement.
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9. Transfer by Lender.
(A) Borrower shall not be permitted to transfer the Loan or
its obligations thereunder, without the consent of Lender.
(B) Lender shall be permitted to transfer its interest in
the Loan without the consent of Borrower, provided, that CSC-Columbus LLC makes
a corresponding transfer of its interests in the Partnership Agreement to an
affiliate of the entity to which the Loan is transferred.
(C) Upon the transfer of Lender's interest in the Loan,
Lender may deliver all the collateral mortgaged, granted, pledged or assigned
pursuant to the 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 thereof, 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 the
liabilities and the collateral not so transferred.
10. Prepayment. Borrower shall have the right to prepay all or any
portion of the unpaid principal balance of the Loan at any time; provided in
connection with any such prepayment, Borrower shall be obligated to pay to
Lender the Exit Fee (as that term is hereinafter provided). In the event the
Borrower makes such prepayment, in addition to the Exit Fee, Borrower shall pay
all accrued and unpaid interest (in the manner provided in Section 6(E) above)
on the amount of principal prepaid and payment of all other sums then due under
this Agreement and the other Loan Documents. The "Exit Fee" shall be a sum equal
to the product of $250,000.00 times (i) a fraction, the numerator of which is
the principal amount of the Loan being prepaid and the denominator of which is
Six Million Three Hundred Sixty Seven Thousand ($6,367,000) Dollars, times (ii)
a fraction the numerator of which is the number of whole or partial months
remaining until the Maturity Date, and the denominator of which is One Hundred
Twenty (120).
11. Construction of Agreement. The titles and headings of the
paragraphs of this Agreement have been inserted for convenience of reference
only and are not intended to summarize or otherwise describe the subject matter
of such paragraphs and shall not be given any consideration in the construction
of this Agreement. As used herein, the terms "include(s)" and "including" shall
mean "include(s), without limitation" and "including, without limitation,"
respectively.
12. Parties Bound, etc. The provisions of this Agreement shall be
binding upon and inure to the benefit of Borrower, Lender and their respective
heirs, executors, legal representatives, successors and assigns (except as
otherwise prohibited by the Loan Documents).
13. Waivers. Lender may at any time and from time to time waive any
one or more of the conditions contained herein, but any such waiver shall be
deemed to be made in pursuance hereof and not in modification thereof, and any
such waiver in any instance or under any particular circumstance shall not be
considered a waiver of such condition in any other instance or any other
circumstance.
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14. Governing Law. This Agreement is and shall be deemed to be a
contract entered into pursuant to the laws of the Commonwealth of Pennsylvania
and shall in all respects be governed, construed, applied and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
15. Severability. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such term, covenant or provision.
16. Notices. All notices, demands, requests or other communications
which may be or are required to be given, served, or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be hand
delivered or mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by facsimile (with the original to be
sent the same day by Federal Express or other recognized overnight delivery
service) or by Federal Express or other recognized overnight delivery service
addressed to the recipient at its address set forth below (or at such other
address as the recipient may theretofore have designated in writing). Each
notice, demand, request or communication which shall be hand delivered or mailed
in the manner described shall be deemed sufficiently given, served, sent,
received, or delivered for all purposes on the first Business Day following the
day the notice is delivered to the addressee (with the return receipt, the
delivery receipt, or the affidavit of messenger being deemed conclusive (but not
exclusive) evidence of such delivery) or the first Business Day following the
day that delivery of the Notice is refused by the addressee upon presentation.
Each notice, demand, request or communication which shall be faxed in the manner
described above shall be deemed sufficiently given, served, sent, received, or
delivered for all purposes on the first Business Day following the date of such
facsimile. Subject to the above, all Notices shall be addressed as follows:
TO BORROWER: c/o Tower Investments, Inc.
One Reed Street
Philadelphia, Pennsylvania 19147
Attention: Mr. Bart Blatstein and Brian K.
Friedman,
Esq.
Telecopier: (215) 755-8666
with a copy to: Mr. Robert C. Jacobs
1700 Walnut Street, Suite 200
Philadelphia, Pennsylvania 19103
Telecopier: (215) 545-1559
TO LENDER: c/o Cedar Shopping Centers Partnership, L.P.
44 South Bayles Avenue
Port Washington, New York 11050
Attention: Mr. Leo S. Ullman
Telecopier: (516) 767-6497
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with a copy to: Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: Mark A. Levy, Esq.
Telecopier: (212) 806-6006
17. Modification. This Agreement may not be modified, amended or
terminated, except by an agreement in writing executed by the parties hereto.
18. Exculpation. Notwithstanding any other provision in this
Agreement or the other Loan Documents, the liability of Borrower under this
Agreement and the other Loan Documents shall be limited to the Pledged
Collateral (as defined in the Security Agreement), and Lender shall not seek any
judgment against Borrower or its direct or indirect partners, members,
shareholders, principals, affiliates, officers, directors, employees or agents,
or any representatives of any of the foregoing.
[Signature Page Follows]
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IN WITNESS WHEREOF, Borrower and Lender have duly executed this
Agreement as of the day and year first above written.
BORROWER
WELSH-SQUARE, INC.
By: /s/ Bart Blatstein
------------------------------------
Name: Bart Blatstein
Title: President
INDENTURE OF TRUST OF BART BLATSTEIN DATED
AS OF JUNE 9, 1998
By: /s/ Jil Blatstein
------------------------------------
Name: Jil Blatstein
Title: Co-Trustee
By: /s/ Brian K. Friedman
------------------------------------
Name: Brian K. Friedman
Title: Co-Trustee
By: /s/ Joseph W. Seidle
------------------------------------
Name: Joseph W. Seidle
Title: Co-Trustee
IRREVOCABLE INDENTURE OF TRUST OF BARTON
BLATSTEIN DATED AS OF JULY 13, 1999
By: /s/ Brian K. Friedman
------------------------------------
Name: Brian K. Friedman
Title: Co-Trustee
By: /s/ Joseph W. Seidle
------------------------------------
Name: Joseph W. Seidle
Title: Co-Trustee
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LENDER:
CEDAR LENDER LLC
BY: CEDAR SHOPPING CENTERS
PARTNERSHIP, L.P.,
its member
BY: CEDAR SHOPPING CENTERS, INC.
its general-partner
By: /s/ Brenda J. Walker
--------------------------
Name: Brenda J. Walker
Title: Vice President
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