ENVIRONMENTAL COMPLIANCE AND INDEMNITY AGREEMENT

 

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                ENVIRONMENTAL COMPLIANCE AND INDEMNITY AGREEMENT

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         This Environmental Compliance and Indemnity Agreement (hereinafter, the

"Environmental Indemnity" or "Agreement") is given pursuant to the terms and

conditions of a certain Loan Agreement (hereinafter, the "Loan Agreement") dated

January 30, 2004 by and among CEDAR SHOPPING CENTERS PARTNERSHIP, L.P., a

Delaware limited partnership having an address at 44 South Bayles Avenue, Port

Washington, New York 11050 (hereinafter, the "Borrower"), Fleet National Bank

and the other lending institutions which are or become parties to the Loan

Agreement (Fleet National Bank and the other lending institutions which are or

become parties to the Loan Agreement are collectively referred to as the

"Lenders" and individually as the "Lender"), and Fleet National Bank, a national

banking association having an address at 100 Federal Street, 8th Floor, Boston,

Massachusetts 02110, as Agent (hereinafter, together with any successors and

assigns thereof, the "Agent"). Capitalized terms used herein which are not

otherwise specifically defined shall have the same meaning herein as in the Loan

Agreement.

 

         As used herein:

 

         A. The term "Environmental Legal Requirements" shall mean all

applicable present or future federal, state, county and local laws, by-laws,

rules, regulations, codes and ordinances, or any judicial or administrative

interpretations thereof, and the requirements of any governmental agency or

authority having or claiming jurisdiction with respect thereto, applicable to

the regulation or protection of the environment, the health and safety of

persons and property and all other environmental matters and shall include, but

not be limited to, all orders, decrees, judgments and rulings imposed through

any public or private enforcement proceedings, relating to Hazardous Materials

or the existence, use, discharge, release, containment, transportation,

generation, storage, management or disposal thereof, or otherwise regulating or

providing for the protection of the environment applicable to the Property and

relating to Hazardous Materials, or to the existence, use, discharge, release or

disposal thereof. Environmental Legal Requirements presently include, but are

not limited to, the following laws: Comprehensive Environmental Response

Compensation and Liability Act (42 U.S.C. 59601 et seq.), the Hazardous

Materials Transportation Act (49 U.S.C. 51801 et seq.), the Public Health

Service Act (42 U.S.C. 5300(f) et seq.), the Pollution Prevention Act (42

U.S.C. 513101 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act

(7 U.S.C. 5136 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.

ss.6901 et seq.), the Federal Clean Water Act (33 U.S.C. ss.1251 et seq.), The

Federal Clean Air Act (42 U.S.C. 57401 et seq.), the Pennsylvania Solid Waste

Management Act, 35 P.S. ss.6018.101 et seq. and/or Pa. Code ss.75.260 and

75.261, the Pennsylvania Hazardous Sites Cleanup Act, 35 P.S. ss.6020.101 et

seq., the Clean Streams Law, 35 P.S. ss.691.1 et seq., and the Storage Tank and

Spill Prevention Act, 35 P.S. ss.6021.101 et seq.

 

         B. The term "Hazardous Materials" shall mean asbestos, mold, flammable

materials, explosives, radioactive or nuclear substances, polychlorinated

biphenyls, other carcinogens, oil and other petroleum products, radon gas, urea

formaldehyde, chemicals, gases, solvents, pollutants, contaminants, and any

other hazardous or toxic materials, wastes and substances which are defined,

determined or identified as such in any present or future federal, state or

local laws, by-laws, rules, regulations, codes or ordinances or any judicial or

administrative interpretation thereof.

 

         C. The term "Property" shall mean the land located at the intersection

of Route 255 and Commons Drive, Sandy Township, Clearfield County, Pennsylvania.

 

 

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         D. The term "Surrounding Property" shall mean any property located

within one hundred (100) feet of the perimeter of the Property.

 

         E. The term "Guarantor" shall mean, jointly and severally, Cedar

Dubois, LLC, and Cedar Shopping Centers, Inc.

 

         F. The term "Indemnitors" shall mean Borrower and Guarantor.

 

         G. The term "Indemnified Party" shall mean: (i) Agent and each of the

Lenders; (ii) all those claiming by, through or under Agent or any Lender,

including any subsequent holder of the Loan and any present or future owner of a

participation interest therein; (iii) any subsequent owner or tenant of all or

any portion of the Property following the exercise by Agent of its rights under

the Loan Agreement, the Guaranty, the Mortgage, the Assignment of Leases and

Rents or the other Loan Documents, including, but not limited to, a foreclosure

sale or deed in lieu thereof; and (iv) as to each of the foregoing, their

respective affiliate, parent and subsidiary corporations, and, as applicable,

the respective officers, directors, stockholders, agents, employees, accountants

and attorneys of any one or more of them, and any person, firm or entity which

controls, is controlled by, controlling, or under common control with, any one

or more of them.

 

         H. The term "Environmental Enforcement Action" shall mean all actions,

orders, requirements or liens instituted, threatened in writing, required,

completed, imposed or placed by any governmental authority and all claims made

or threatened in writing by any other person against or with respect to the

Property, or any present or past owner or occupant thereof, arising out of or in

connection with any of the Environmental Legal Requirements, any environmental

condition, or the assessment, monitoring, clean-up, containment, remediation or

removal of, or damages caused or alleged to be caused by, any Hazardous

Materials (i) located on or under the Property, or (ii) emanating from the

Property.

 

         I. The terms "generated," "stored," "transported," "utilized,"

"disposed," "managed," "released" and "threat of release," and all conjugates

thereof, shall have the meanings and definitions set forth in the Environmental

Legal Requirements.

 

         J. The term "Environmental Reports" shall mean those written reports

with respect to environmental matters affecting the Property furnished to the

Agent prior to the execution of this Agreement.

 

         FOR VALUE RECEIVED, and to induce Agent and the Lenders to grant the

Loan and extend credit to the Borrower as provided for in the Loan Agreement and

the other Loan Documents, Indemnitors hereby unconditionally agree as follows:

 

1. Compliance with Environmental Legal Requirements.

 

                  1.1 Compliance. Until the full satisfaction of the Borrower's

         Obligations, and full satisfaction of the Guaranteed Obligations (as

         defined in the Guaranty executed by the Guarantor), as applicable, the

         Indemnitors hereby guaranty that the Indemnitors shall comply in all

         materials respects with all Environmental Legal Requirements applicable

         to the Property, and that the Indemnitors shall take all remedial

         action necessary to avoid any liability of the Indemnitors or any

         Indemnified Party, or any subsequent owner of the Property, and to

         avoid the imposition of, or to discharge (by payment, bonding, or

         otherwise), any liens on the Property, as a result of any failure to

         comply with Environmental Legal Requirements applicable to the

         Property.

 

 

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                  1.2 Prohibitions. Without limitation upon the generality of

         foregoing, Indemnitors and each of them agree that they:

 

                           (a) shall not release or permit any release of any

                  Hazardous Materials on the Property;

 

                           (b) shall not generate or permit any Hazardous

                  Materials to be generated on the Property;

 

                           (c) shall not except in strict compliance with all

                  Environmental Legal Requirements, store, or utilize, or permit

                  any Hazardous Materials to be stored or utilized on the

                  Property;

 

                           (d) shall not dispose of or permit any Hazardous

                  Materials to be disposed of on the Property;

 

                           (e) shall not fail to operate, maintain, repair and

                  use the Property in accordance with all Environmental Legal

                  Requirements; or

 

                           (f) shall use commercially reasonable efforts not to

                  allow, permit or suffer any other person or entity to operate,

                  maintain, repair and use the Property except in accordance

                  with Environmental Legal Requirements.

 

2.       Notice of Conditions. Indemnitors shall provide Agent with prompt

         written notice, but in no event later than ten (10) Business Days after

         obtaining any actual knowledge or actual notice thereof, of any of the

         following conditions: (i) the presence, or any release or threat of

         release, of any Hazardous Materials on, under or from the Property,

         whether or not caused by any of the Indemnitors; (ii) any Environmental

         Enforcement Action instituted or threatened with respect to the

         Property; or (iii) any condition or occurrence on the Property that may

         constitute a violation of any of the Environmental Legal Requirements

         with respect to the Property.

 

3.       Indemnitors' Agreement to take Remedial Actions.

 

                  3.1 Remedial Actions. Upon any of the Indemnitors becoming

         aware of the violation of any Environmental Legal Requirement related

         to the Property, or the presence, or any release or any threat of

         release, of any Hazardous Materials on, under, or from the Property,

         whether or not caused by any of the Indemnitors, Indemnitors shall,

         subject to the rights to contest set forth in Section 6, immediately

         take all actions to cure or eliminate any such violation of any such

         Environmental Legal Requirement and, where required by any such

         Environmental Legal Requirement, to arrange for the assessment,

         monitoring, clean-up, containment, removal, remediation, or restoration

         of the Property.

 

                  3.2 Security For Costs. If the potential costs associated with

         the actions required in Section 3.1, the release of any lien against

         the Property, and the release or other satisfaction of the liability,

         if any, of any of the Indemnitors with respect to the Property arising

         under or related to any of the Environmental Legal Requirements or any

         Environmental Enforcement Action are determined by Agent, in good

         faith, to exceed $500,000.00, Agent shall have the right to require the

         Indemnitors to provide, and the Indemnitors shall provide, within

         thirty (30) days after written request therefor, a bond, letter of

         credit or other similar financial assurance, in form and substance

         satisfactory to Agent, in its good faith judgment, evidencing to

 

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         Agent's reasonable satisfaction that the necessary financial resources

         will be unconditionally available to pay for all of the foregoing.

 

                  3.3 Environmental Assessments. Agent shall have the right to

         require the Indemnitors, at their own cost and expense, to obtain a

         professional environmental assessment of the Property in accordance

         with Agent's then standard environmental assessment requirements and

         sufficient in scope to comply with the requirements of Section 4 upon

         the occurrence of any one or more of the following events: (i) an Event

         of Default, or (ii) upon receipt of any notice of any of the conditions

         specified in Section 2 of this Agreement.

 

4.       Agent's Rights to Inspect the Property and Take Remedial Actions.

 

                  4.1 Agent's Rights. So long as any of the Loan Documents shall

         remain in force and effect, Agent shall have the right, but not the

         obligation, through such representatives or independent contractors as

         it may designate, to enter upon the Property, at reasonable times and

         upon reasonable notice to the Indemnitors and subject to the rights of

         any tenants at the Property, and to expend funds to:

 

                           4.1.1 Assessments. Cause one (1) or more

                  environmental assessments of the Property to be undertaken, if

                  Agent in its reasonable discretion determines that any of the

                  conditions set forth in Section 2 exists. Such environmental

                  assessments may include, without limitation, (i) detailed

                  visual inspections of the Property, including without

                  limitation all storage areas, storage tanks, drains, drywells

                  and leaching areas; (ii) the taking of soils and surface and

                  sub-surface water samples; (iii) the performance of soils and

                  ground water analysis; and (iv) the performance of such other

                  investigations or analysis as are reasonably necessary and

                  consistent with sound professional environmental engineering

                  practice in order for Agent to obtain a complete assessment of

                  the compliance of the Property and the use thereof with all

                  Environmental Legal Requirements and to make a determination

                  as to whether or not any of the conditions set forth in

                  Section 2 exists;

 

                           4.1.2 Cure. Cure any breach of the representations,

                  warranties, covenants and conditions made by or imposed upon

                  Indemnitors under this Agreement including without limitation

                  any violation by any of Indemnitors, or by the Property, or by

                  any other occupant, prior occupant or prior owner thereof, of

                  any of the Environmental Legal Requirements applicable to the

                  Property;

 

                           4.1.3 Prevention and Precaution. Take all actions as

                  are necessary to (i) prevent the migration of Hazardous

                  Materials on, under, or from the Property to any other

                  property; (ii) clean-up, contain, remediate or remove any

                  Hazardous Materials on, under, or from any other property

                  which Hazardous Materials originated on, under, or from the

                  Property; or (iii) prevent the migration of any Hazardous

                  Materials on, under, or from any other property to the

                  Property;

 

                           4.1.4 Environmental Enforcement Actions. Comply with,

                  settle, or otherwise satisfy any Environmental Enforcement

                  Action including, but not limited to, the payment of any funds

                  or penalties imposed by any governmental authority and the

                  payment of all amounts required to remove any lien or threat

                  of lien on or affecting the Property; provided, however, that

                  the Agent shall not be permitted to take any such action so

                  long as (i) the Borrower, or any other Indemnitor, is

 

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                  exercising its rights under Section 6 of this Agreement, and

                  (ii) no Event of Default has occurred and is continuing; and

 

                           4.1.5 General. Comply with, settle, or otherwise

                  satisfy any Environmental Legal Requirement and correct or

                  abate any environmental condition on, or which threatens, the

                  Property and which could cause damage or injury to the

                  Property or to any person; provided, however, that the Agent

                  shall not be permitted to take any such action so long as (i)

                  the Borrower, or any other Indemnitor, is exercising its

                  rights under Section 6 of this Agreement, and (ii) no Event of

                  Default has occurred and is continuing.

 

                  4.2 Recovery of Costs. Any amounts paid or advanced by Agent

         or any Lender and all costs and expenditures incurred in connection

         with any action taken pursuant to the terms of this Agreement,

         including but not limited to reasonable environmental consultants' and

         experts' fees and expenses, reasonable attorneys' fees and expenses,

         court costs and all costs of assessment monitoring clean-up,

         containment, remediation, removal and restoration, with interest

         thereon at the Default Rate, shall be a demand obligation of

         Indemnitors to Agent and, to the extent not prohibited by law, and so

         long as the Borrower's Obligations and the Guaranteed Obligations are

         outstanding, shall be added to the obligations secured by the Mortgage

         when paid by Agent or any Lender and shall be secured by the lien of

         the Mortgage and the other Security Documents as fully and as

         effectively and with the same priority as every other obligation

         secured thereby.

 

                  4.3 Agent and the Lenders Not Responsible. The exercise by

         Agent or any Lender of any one or more of the rights and remedies set

         forth in this Section 4 shall not operate or be deemed (a) to place

         upon Agent or any Lender any responsibility for the operation, control,

         care, service, management, maintenance or repair of the Property, or

         (b) make Agent or any Lender the "owner" or "operator" of the Property

         or a "responsible party" within the meaning of any of the Environmental

         Legal Requirements.

 

                  4.4 Agent's and the Lenders' Subrogation. Furthermore, Agent

         and/or any Lender by making any such payment or incurring any such

         costs shall be subrogated to all rights of each of Indemnitors or any

         other o