Exhibit 10.4

LOAN AGREEMENT

THIS LOAN AGREEMENT (as the same may be amended, restated or otherwise modified
from time to time, this “Agreement”), is made as of September 30, 2015 (the
“Closing Date”), by and between PARKWAY BANK AND TRUST COMPANY, an Illinois
banking corporation (“Lender”), and IRESI FREDERICK MARKET SQUARE, L.L.C., a
Delaware limited liability company (“Borrower”).

 

RECITALS

A.Borrower desires to obtain a loan (the “Loan”) from Lender in the original
principal amount of Forty-Five Million Seven Hundred Fifty Thousand and 00/100
Dollars ($45,750,000.00) (the “Loan Amount”); and

B.Lender is willing to make the Loan on the condition that Borrower, among other
things, joins in the execution and delivery of this Agreement.

NOW, THEREFORE, in consideration of the making of the Loan by Lender, and the
covenants, agreements, representations, and warranties set forth in this
Agreement, the parties hereby covenant, agree, represent and warrant as follows:

ARTICLE I
CERTAIN DEFINITIONS

“Account Collateral” has the meaning set forth in Section 5.2(A) of this
Agreement.

“Affiliate(s)” means any person or Entity directly or indirectly controlling,
controlled by, or under common control with Borrower or any person or Entity
owning a material interest in Borrower, either directly or indirectly.

“Approved Accounting Method” has the meaning set forth in Section 5.1 of this
Agreement.

“Assignment of Leases” means the Assignment of Leases and Rents of even date
herewith, from Borrower to Lender encumbering the Premises, as the same may be
modified, supplemented or amended.

“Code” has the meaning set forth in Section 3.1(F) of this Agreement.

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“Collateral” means, collectively, all of the property of Borrower which is
subject to a lien or security interest granted to Lender under any of the Loan
Documents, including, without limitation, the Premises, the Account Collateral
and all proceeds and products of the foregoing, all whether now owned or
hereafter acquired, and all other property that is or hereafter may become
subject to a lien in favor of Lender.

“Deed of Trust” means that certain Deed of Trust, Security Agreement, Fixture
Financing Statement and Assignment of Rents, dated as of the date hereof, made
by Borrower and delivered to Lender as security for the Loan, as the same may be
modified, supplemented or amended.

“Entity” means a (a) corporation, (b) limited or general partnership, (c)
limited liability company or (d) statutory trust.

“Environmental Indemnity” means the Environmental Indemnity Agreement dated the
date hereof executed by Borrower and Guarantor, and delivered to Lender in
connection with the Loan, as the same may be modified, supplemented or amended.

“ERISA” has the meaning set forth in Section 3.1(G) of this Agreement.

“Event of Default” or “Events of Default” has the meaning set forth in Section
4.1 hereof.

“Governmental Authority” means any national, federal, state, regional or local
government, or any other political subdivision of any of the foregoing, in each
case with jurisdiction over Borrower, the Premises, or any Person with
jurisdiction over Borrower or the Premises exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.

“Guarantor” means IREIC.

“Guaranty” means the Guaranty dated the date hereof executed by Guarantor and
delivered to Lender in connection with the Loan, as the same may be modified,
supplemented or amended.

“Improvements” has the meaning set forth in the Deed of Trust.

“Indebtedness” has the meaning set forth in the Deed of Trust.

“Interest Owner(s)” means any person or entity owning an interest (directly or
indirectly) in Borrower, including, without limitation any grantor, trustor or
beneficiary thereof.

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“Investor” has the meaning set forth in Section 5.4(A) of this Agreement.

“IREIC” means Inland Real Estate Investment Corporation, a Delaware corporation.

“IREIS” means Inland Residential Properties Trust, Inc., a Delaware corporation.

“Land” has the meaning set forth in the Deed of Trust and shall be construed to
mean, as the context may require, one or more or all of the individual parcels
comprising the Land encumbered by the Deed of Trust.

“Leases” means, collectively, (a) any lease of the Premises or parts thereof
hereafter made by Borrower, and (b) those certain written leases of various
dates covering the Premises or parts thereof more particularly described in the
rent roll attached as Exhibit B of the Assignment of Leases, and any other lease
of the Premises or parts thereof hereafter made by Borrower.

“Legal Requirements” has the meaning assigned to that term in the Deed of Trust.

“Limited-Asset Entity” means an Entity that, at all times until the Indebtedness
is paid in full, (i) will not have any assets other than the Premises, cash, and
marketable securities, and (ii) will not create, assume, incur, guarantee, or
become liable for any debt, obligations, or performance of obligations for the
benefit of any other Person except for the Loan, and liabilities incurred in the
normal and prudent operation of the Premises.

“Loan Documents” means this Agreement, the Note, the Deed of Trust, the
Assignment of Leases, the Security Agreement, the Environmental Indemnity, the
Assignment of Management Agreement, the Guaranty and any and all other documents
delivered from time to time by or on behalf of Borrower hereunder or thereunder,
as the same may be modified, supplemented or amended.

“Manager” means Inland Residential Real Estate Services LLC, a Delaware limited
liability company.

“Material Adverse Effect” means a material adverse effect upon (i) Borrower’s
business or financial position or results of operation, (ii) any Borrower’s
ability to perform, or of Lender to enforce, any of the Loan Documents, or
(iii) the value of (x) the Collateral taken as a whole or (y) the Premises.

“Maturity Date” means September 30, 2016 or as otherwise amended or restated
pursuant to the terms of the Note, including, without limitation, as extended
under Borrower’s option under Paragraph 2(b) of the Note, or the other Loan
Documents.

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“Note” means the Secured Promissory Note evidencing the Loan, dated as of the
date hereof, made by Borrower to Lender, as such promissory note may be
modified, amended, supplemented, extended or consolidated in writing, and any
note(s) issued in exchange therefor or in replacement thereof.

“Notice” has the meaning given such term in Section 6.20 of this Agreement.

“Permitted Encumbrances” means those encumbrances shown on Schedule B of the
Title Insurance Policy.

“Permitted Transfer” has the meaning set forth in Section 6.19 of this
Agreement.

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, or any
other Entity, any federal, state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.

“Premises” has the meaning set forth in the Deed of Trust and shall be construed
to mean, as the context may require, one or more or all of the individual
parcels of Land described more particularly in the Deed of Trust, together with
all property, rights and interests related to such parcel, comprising the
Premises encumbered by the Deed of Trust.

“Qualified Manager” means a successor Manager acceptable to Lender in Lender’s
reasonable discretion, which Manager shall be a reputable management company
having experience in the management of commercial properties in the jurisdiction
in which the Premises is located and shall not be paid management fees in excess
of fees that are market fees in the surrounding geographic area.

“Rating Agency(ies)” means each statistical rating agency that has assigned a
rating to any participation interest, certificate or security issued in
connection with a Securitization Transaction.

“Rents” has the meaning provided in the Assignment of Leases.

“Securitization Transaction” has the meaning set forth in Section 5.4(A) of this
Agreement.

“Security Agreement” means the Security Agreement dated the date hereof executed
by Borrower and delivered to Lender in connection with the Loan, as the same may
be modified, supplemented or amended.

“Security Deposits” means all security deposits held or to be held with respect
to the Premises, pursuant to the Leases.

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“Taking” has the meaning provided in the Deed of Trust.

“Title Insurance Policy” means individually and collectively, as the context may
require, those certain loan policies of title insurance issued by Chicago Title
Insurance Company in the aggregate amount of not less than the Loan Amount and
insuring the first-priority lien in favor of Lender created by the Deed of
Trust, in each case acceptable to Lender in Lender’s discretion.

“Transfer” has the meaning set forth in Section 2(f) of the Deed of Trust.

“UCC” means, with respect to any Collateral, the Uniform Commercial Code in
effect in the jurisdiction in which the relevant Collateral is located.

ARTICLE II
GENERAL TERMS

Section 2.1 Loan Commitment; Disbursement to Borrower; Prepayment.

(A) The Loan. Subject to and upon the terms and conditions set forth herein,
Lender hereby agrees to make the Loan to Borrower on the Closing Date, in the
Loan Amount, which Loan will mature on the Maturity Date.

(B) Disbursement to Borrower. Borrower may request and receive only one
borrowing in respect of the Loan, which will not be subject to additional
advances and any amount borrowed and repaid in respect of the Loan may not be
reborrowed. Borrower shall, on the Closing Date, receive the Loan Amount,
subject to the direction given by Borrower as to the application of Loan
proceeds.

(C) The Note and Other Loan Documents. The Loan shall be evidenced by the Note
(made in the Loan Amount) and evidenced or secured by the other Loan Documents
executed and delivered in connection with the Loan. The Note shall bear interest
as provided in the Note, and shall be subject to the payment of interest and
principal and the repayment and prepayment of the Indebtedness as provided for
herein and therein. The Note shall be entitled to the benefits of this Agreement
and shall be secured by the Deed of Trust and the other Loan Documents given to
further secure the Loan.

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(D) Loan Prepayment. Except as may be provided in the Note, Borrower shall have
the right, after giving 30 days’ prior written notice to Lender, and for any
casualty insurance proceeds and condemnation awards applied to reduce the Loan
as described in the Deed of Trust, to prepay (without penalty or premium) in
whole or in part, principal owed under the Note together with interest thereon
to the date on which payment is made, along with all sums, amounts, advances, or
charges then due under any instrument or agreement by which the Note is secured.
In the event of partial payments, there will be no release of Collateral except
upon terms satisfactory to Bank.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

In order to induce Lender to make the Loan to Borrower and in consideration of
Lender’s reliance thereon, Borrower hereby represents, warrants and covenants,
as follows:

Section 3.1. Representations and Warranties Relating to Borrower.

(A) Organization. Borrower is and, until the Indebtedness is paid in full, will
continue to (a) be a duly organized and validly existing Entity in good standing
under the laws of the state of its formation, (b) if applicable, be duly
qualified as a foreign Entity in each jurisdiction in which the nature of its
business, the Premises or any of the other Collateral makes such qualification
necessary or desirable, (c) have the requisite Entity power and authority to
carry on its business as now being conducted, (d) have the requisite Entity
power to execute, deliver and perform its obligations under the Loan Documents,
(e) comply with the provisions of all of its organizational documents and the
legal requirements of the state of its formation and those states in which in
which it is qualified as a foreign Entity, and (f) be a Limited-Asset Entity.

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(B) Authorization. The execution, delivery and performance of the Loan Documents
and the borrowing evidenced by the Note (i) are within the applicable powers of
Borrower and each other party to the Loan Documents (other than Lender);
(ii) have been authorized by all requisite action; (iii) have received all
necessary approvals and consents, corporate, governmental or otherwise;
(iv) will not violate, conflict with, result in a breach of or constitute (with
notice or lapse of time or both) a default under any provision of law, any order
or judgment of any court or Governmental Authority, the articles of
incorporation, articles of formation or organization, by-laws, partnership,
operating or trust agreement, or other governing instrument of Borrower or any
other party to the Loan Documents (other than Lender), or any indenture,
agreement or other instrument to which Borrower or any other party to the Loan
Documents (other than Lender) is a party or by which each such party or any of
their respective assets or the Premises is or may be bound or affected; (v) will
not result in the creation or imposition of any lien, charge or encumbrance
whatsoever upon any of such party’s assets, except the liens and security
interests created by the Loan Documents; and (vi) will not require any
authorization or license from, or any filing with, any Governmental Authority or
other body (except for the recordation of the Deed of Trust and any other Loan
Document intended to be recorded in the appropriate land records in the state in
which the applicable tract forming a part of the Premises is located and except
for UCC filings relating to the security interest created hereby and by the
Security Agreement).

(C) Enforceability. The Loan Documents constitute the legal, valid, and binding
obligations of Borrower and the other parties to the Loan Documents (other than
Lender), enforceable against each such party in accordance with their respective
terms, except as may be limited by (i) bankruptcy, insolvency, reorganization or
other similar laws affecting the rights of creditors generally, and (ii) general
principles of equity (regardless of whether considered in a proceeding in equity
or at law). Such Loan Documents are, as of the date hereof, not subject to any
right of rescission, set-off, counterclaim, or defense by Borrower or any other
party to the Loan Documents (other than Lender), including the defense of usury,
nor will the operation of any of the terms of the Note, the Deed of Trust, or
such other Loan Documents, or the exercise of any right thereunder, render the
Deed of Trust unenforceable against Borrower, in whole or in part, or give rise
to any right of rescission, set-off, counterclaim or defense by Borrower,
including the defense of usury, and neither Borrower nor any other party to the
Loan Documents (other than Lender) have asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.

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(D) Financial Condition. (i) Borrower is solvent and no bankruptcy,
reorganization, insolvency or similar proceeding under any state or federal law
with respect to Borrower has been initiated, (ii) Borrower has not entered into
this loan transaction with the intent to hinder, delay or defraud any creditor,
(iii) Borrower has received reasonably equivalent value for the making of the
Loan and (iv) Borrower has no known contingent liabilities that could have a
Material Adverse Effect.

(E) Litigation. There are no actions, suits or proceedings at law or in equity
by or before any Governmental Authority now pending and served or, to the
knowledge of Borrower, threatened against Borrower or the Premises that would
have a Material Adverse Effect.

(F) Not Foreign Person. Borrower is not a “foreign person” within the meaning of
§1445(f)(3) of the Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, together with
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form (the “Code”).

(G) ERISA. As of the date hereof and until the Indebtedness is paid in full:
(i) Borrower is not and will not be an “employee benefit plan” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), which is subject to Title I of ERISA, (ii) the assets of Borrower do
not and will not constitute “plan assets” of one or more such plans for purposes
of Title I of ERISA, (iii) Borrower is not and will not be a “governmental plan”
within the meaning of Section 3(32) of ERISA, (iv) transactions by or with
Borrower are not and will not be subject to state statutes applicable to
Borrower regulating investments of and fiduciary obligations with respect to
governmental plans, (v) Borrower has made and will continue to make all required
contributions to all employee benefit plans, if any, established for or on
behalf of Borrower or to which Borrower is required to contribute, (vi) Borrower
has and will continue to administer each such plan, if any, in accordance with
its terms and the applicable provisions of ERISA and any other federal or state
law; and (vii) Borrower has not and will not permit any liability under Sections
4201, 4243, 4062 or 4069 of Title IV of ERISA or taxes or penalties relating to
any employee benefit plan or multi-employer plan to become delinquent or
assessed, respectively, if doing so would have a Material Adverse Effect.

(H) Investment Company Act. Borrower is not and, until the Indebtedness is paid
in full, will not be (i) an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, or (ii) subject to any other federal or state law or regulation that
purports to restrict or regulate its ability to borrow money.

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(I) Agreements. Borrower is not a party to any agreement or instrument or
subject to any restriction that is likely to have a Material Adverse Effect.
Borrower is not in default in any respect in the performance, observance or
fulfillment of any of the material obligations, covenants or conditions
contained in any indenture, agreement or instrument to which it is a party or by
which it or the Premises is bound.

(J) Location of Chief Executive Offices and Borrower’s Trade Name. The location
of Borrower’s principal place of business and chief executive office is 2901
Butterfield Road, Oak Brook, Illinois 60523, and Borrower has no other places of
business. Borrower does not conduct its business “also known as”, “doing
business as” or under any other name. Borrower shall not change its principal
place of business or chief executive office or conduct its business under any
other name, without first notifying Lender in writing at least 30 days prior to
any such change.

(K) No Defaults. No default or Event of Default exists under or with respect to
any Loan Document.

(L) Labor Matters. Borrower is not a party to any collective bargaining
agreements.

(M) Intellectual Property. All trademarks, trade names and service marks that
Borrower owns or has pending, if any, or under which Borrower is licensed, if
any, are in good standing and uncontested. There is no right under any
trademark, trade name or service mark necessary to the business of Borrower as
presently conducted or as Borrower contemplates conducting its business. To the
best of Borrower’s knowledge, Borrower has not infringed, is not infringing, and
has not received notice of infringement with respect to asserted trademarks,
trade names and service marks of others. To Borrower’s knowledge, there is no
infringement by others of trademarks, trade names and service marks of Borrower.

 

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Section 3.2. Representations and Warranties Relating to the Premises.

(A) Title Issues.

(i) Borrower owns indefeasible, marketable and insurable fee simple title to the
Premises, free and clear of all liens, other than the Permitted Encumbrances
applicable to the Premises, and until the Indebtedness is paid in full Borrower
shall not permit any liens (other than the Permitted Encumbrances, any title
matters or exceptions approved in writing by Lender subsequent to the date
hereof, taxes that are not yet due or delinquent, or any lien that is contested
by the Borrower in accordance with and subject to paragraph 1(e) of the Deed of
Trust) to attach to the Premises. Borrower has the right to mortgage, grant,
bargain, sell, pledge, assign, warrant, transfer and convey the same. There are
not now, and until the Indebtedness is paid in full, there will not be any
outstanding options or agreements to purchase or rights of first refusal
affecting the Premises. The Permitted Encumbrances do not and, until the
Indebtedness is paid in full, will not materially and adversely affect (a) the
ability of Borrower to pay in full all sums due under the Note or any of its
other obligations in a timely manner (b) the use of the Premises for the use
currently being made thereof, the operation of the Premises as currently being
operated or the value of the Premises, or (c) the value or marketability of the
Premises.

(ii) No Taking has been commenced or, to Borrower’s knowledge, is contemplated
with respect to all or any portion of the Premises or for the relocation of
roadways providing access to the Premises.

(iii) All costs and expenses of any and all labor, materials, supplies and
equipment used in the construction of the Improvements have been paid in full.
Borrower has paid in full for, and is the owner of, all furnishings, fixtures
and equipment used in connection with the operation of the Premises, free and
clear of any and all security interests, liens or encumbrances, except the lien
and security interest created by the Loan Documents securing the Loan.

(iv) The Premises is and, until the Indebtedness is paid in full, will be,
assessed for real estate tax purposes as one or more wholly independent tax lot
or lots, separate from any adjoining land or improvements not constituting a
part of such lot or lots, and no other land or Improvements are, and until the
Indebtedness is paid in full, no other land or Improvements will be, assessed
and taxed together with the Premises or any portion thereof.

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(v) Except as disclosed in the Title Insurance Policy, there are no pending or,
to Borrower’s knowledge, proposed special or other assessments for public
improvements or otherwise affecting the Premises, nor, to Borrower’s knowledge,
are there any contemplated improvements to the Premises that may result in such
special or other assessments and until the Indebtedness is paid in full,
Borrower shall not permit any taxes, assessments, fees, water, sewer or other
charges by Governmental Authorities relating to the Premises to become
delinquent.

(vi) The Deed of Trust creates a valid and enforceable first mortgage lien on
the Premises as security for the repayment of the Indebtedness, subject only to
the Permitted Encumbrances, any title matters or exceptions approved in writing
by Lender subsequent to the date hereof, and taxes that are not yet due or
delinquent. Each Loan Document securing the Loan establishes and creates a
valid, effective, and enforceable first lien on and a security interest in, or
claim to, the rights and property described therein. All personal property and
fixtures covered by each such Loan Document are subject to a UCC financing
statement filed and/or recorded, as appropriate, or irrevocably delivered to an
authorized agent of the company issuing the Title Insurance Policy for such
recordation or filing in all places necessary to perfect a valid first priority
lien with respect to the rights and property that are the subject of each such
Loan Document to the extent governed by the UCC.

(B) Status of the Premises.

(i) No portion of the Improvements is located in an area identified by the
Secretary of Housing and Urban Development or the Federal Emergency Management
Agency or any successor thereto as an area having special flood or seismic
hazards, or, if now or hereafter located within any such area, Borrower has
obtained and will maintain the applicable flood hazard and/or earthquake
insurance prescribed in the Deed of Trust.

(ii) Borrower has obtained and, until the Indebtedness is paid in full, will
maintain all necessary certificates, licenses, permits and other approvals,
governmental and otherwise, necessary for the operation of the Premises; and the
conduct of its business and all required zoning, building code, land use,
environmental and other similar permits or approvals, all of which are and,
until the Indebtedness is paid in full, will remain in full force and effect and
not subject to revocation, suspension, forfeiture or modification.

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(iii) Except as set forth in the title policy or survey delivered to Lender, as
of the date hereof, and until the Indebtedness is paid in full: (a) the Premises
and the present and contemplated use, occupancy, operation and construction
thereof are and will remain in full compliance with all covenants and
restrictions and all applicable licenses, permits and other approvals and all
zoning ordinances, building codes, land use and environmental laws and other
similar laws, (b) none of the Improvements lie or will lie outside of the
boundaries of the Land or the applicable building restriction lines to the
extent that such would have a Material Adverse Effect, (c) no improvements on
adjoining properties (now or will) materially encroach upon the Land.

(iv) The Premises are served by all utilities required for the current or
contemplated use thereof. All utility service is provided by public utilities
and the Premises have accepted or are equipped to accept such utility service.
The Premises are served by public water and sewer systems. All of the foregoing
utilities are located in the public right-of-way abutting the Premises, and all
such utilities are connected so as to serve the Premises either (a) without
passing over other property or, (b) if such utilities pass over other property,
they do so pursuant to valid easements.

(v) All public roads and streets necessary for service of and access to the
Premises for the current or contemplated use thereof have been completed, are
serviceable and all-weather and are physically and legally open for use by the
public.

(vi) The Premises is free from (a) damage caused by fire or other casualty; and
(b) material structural defects; and all building systems contained therein are
in good working order in all material respects, subject to ordinary wear and
tear.

(vii) Any and all liquid and solid waste disposal, septic and sewer systems
located on the Premises are in a good and safe condition and repair and in
compliance with all Legal Requirements.

(C) Status of the Leases and Rents.

(i) No Prior Assignment. As of the date hereof, (i) Lender is the assignee of
Borrower’s interest under the Leases, and (ii) there are no prior assignments of
the Leases or any portion of the Rents due and payable or to become due and
payable that are presently outstanding.

(ii) Security Deposits. As of the date hereof, Borrower is in compliance with
all applicable Legal Requirements relating to all Security Deposits.

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(iii) Leases. (a) Borrower is the sole owner of the entire lessor’s interest in
the Leases to which it is a party; (b) the Leases are the valid, binding and
enforceable obligations of the Borrower and the applicable tenant or lessee
thereunder; (c) the terms of all alterations, modifications and amendments to
the Leases are reflected in the tenant estoppel letters, if any, delivered to
and approved by Lender; (d) none of the Rents reserved in the Leases have been
assigned or otherwise pledged or hypothecated other than to Lender; (e) none of
the Rents have been collected for more than 1 month in advance; (f) the premises
demised under the Leases have been completed and the tenants under the Leases
have accepted the same and have taken possession of the same on a rent-paying
basis; (g) there exists no offset or defense to the payment of any portion of
the Rents; (h) the Leases do not contain an option to purchase, right of first
refusal to purchase, expansion right, or any other similar provision; and (i) no
Person has any possessory interest in, or right to occupy the Premises, except
under and pursuant to a Lease; and (j) all leasing broker fees and commissions
payable by Borrower with respect to the Leases have been paid in full, in cash
or other form of immediately available funds.

Section 3.3 Full and Accurate Disclosure. No statement of fact made by or on
behalf of Borrower in the Loan Documents or in any other document or certificate
delivered to Lender by Borrower contains any untrue statement of a material fact
or omits to state any material fact necessary to make statements contained
herein or therein not misleading; provided that with respect to any document
provided by a seller of any part of the Premises to Borrower and delivered to
Lender by Borrower, the foregoing representations are to Borrower’s knowledge.
There is no fact presently known to Borrower that has not been disclosed to
Lender that will have a Material Adverse Effect, nor as far as Borrower can
foresee, might have a Material Adverse Effect.

Section 3.4. Survival of Representations and Warranties. Borrower agrees that
(A) all of the representations and warranties of Borrower set forth in this
Agreement and/or in the other Loan Documents delivered as of the date hereof are
initially made as of the date hereof (except as expressly otherwise provided)
and (B) all representations, warranties and covenants made by Borrower shall be
continuing and survive the delivery of the Note and continue for so long as any
Indebtedness remains owing, provided, however, that the representations and
warranties set forth in the Environmental Indemnity shall survive as stated
therein. All representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.

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ARTICLE IV
DEFAULTS AND REMEDIES

Section 4.1. Events of Default. Each of the following shall constitute an “Event
of Default” hereunder:

(A) failure to pay when due any principal of or interest on the Note or any
other Indebtedness, utilities, taxes or assessments or insurance premiums
required pursuant to the Loan Documents and continuance of such failure for five
(5) days after payment of any such amount is due; or

(B) Borrower, any Interest Owner or any guarantor, including Guarantor,
voluntarily brings or acquiesces to any of the following: (i) any action for
dissolution, act of dissolution or dissolution or the like of Borrower, any
Interest Owner or any guarantor, including Guarantor, under the Federal
Bankruptcy Code as now or hereafter constituted; (ii) the filing of a petition
or answer proposing the adjudication of Borrower or any guarantor, including
Guarantor, as a bankrupt or its reorganization or arrangement, or any
composition, readjustment, liquidation, dissolution or similar relief with
respect to it pursuant to any present or future federal or state bankruptcy or
similar law; or (iii) the appointment by order of a court of competent
jurisdiction of a receiver, trustee or liquidator of the Premises or any part
thereof or of Borrower, any Interest Owner or any guarantor, including
Guarantor, or of substantially all of the assets of Borrower, any Interest Owner
or any guarantor, including Guarantor; or

(C) one or more of the items set forth in Section 4.1(B) above occur which were
either not (i) voluntarily brought by Borrower, any Interest Owner or any
guarantor, including Guarantor, or (ii) acquiesced in by Borrower, any Interest
Owner or any guarantor, including Guarantor, and which are not discharged or
dismissed within 90 days after the action, filing or appointment, as the case
may be; provided, however, that with respect to the matters in (B) and (C) above
for an Interest Owner only, no Event of Default shall occur until an interested
party or Interest Owner asserts a claim or right against Borrower or the
Premises which delays or otherwise affects Lender’s rights, remedies, or
interests granted under the Loan Documents (whether or not such assertion is
successful).

(D) Borrower shall fail to keep the Premises insured at all times as required by
the terms hereof and of the other Loan Documents;

14 

 

(E) with respect to matters not described in the other subsections of this
Section 4.1, failure to duly observe or perform any material covenant, condition
or agreement of Borrower contained in this Agreement, and such failure shall
have continued for 30 days after Notice specifying such failure is given by
Lender to Borrower; provided, that (i) if any such failure to observe or perform
shall be of such nature that it can be cured, but cannot be cured or remedied
within 30 days, and (ii) such failure to observe or perform shall not be with
respect to Sections 3.1(G) or (H), Section 5.7, Section 5.8, Section 6.4, or
Section 6.21, Borrower shall be entitled to a reasonable period of time to cure
or remedy such failure (not to exceed 90 days following the giving of Notice),
provided Borrower commences the cure or remedy thereof within the 30 day period
following the giving of Notice and thereafter proceeds with diligence, as
determined by Lender, to complete such cure or remedy; or

(F) with respect to matters not described in the other subsections of this
Section 4.1, failure to duly observe or perform any material covenant, condition
or agreement of Borrower contained in any of the other Loan Documents, which
continues beyond any applicable grace of cure period set forth therein; or

(G) any Transfer other than a Permitted Transfer occurs with respect to any
portion of the Premises or the other Collateral; or

(H) any representation when made by or on behalf of Borrower or any guarantor,
including Guarantor, in any of the Loan Documents or regarding the Premises, the
making or delivery of any of the Loan Documents or in any material written
information provided by or on behalf of Borrower or any guarantor, including
Guarantor, in connection with the Loan shall prove to be untrue or inaccurate in
any material respect; or

(I) the failure of Borrower to remain a Limited Asset Entity; or

(J) Borrower, in its capacity as landlord under the Leases, defaults in its
obligations under such Leases and such default continues beyond any applicable
cure periods, Borrower defaults in its obligations under such Leases and such
default continues beyond any applicable cure periods; or

(K) at any time during the term of this Agreement, Borrower shall not be the
managing agent for the Premises.

 

15 

 

Section 4.2 Remedies. Upon the occurrence of an Event of Default, all or any one
or more of the rights, powers, and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents, or at law or
in equity may be exercised by Lender at any time and from time to time, without
notice or demand, whether or not all or any portion of the Indebtedness shall be
declared due and payable, and whether or not Lender shall have commenced any
foreclosure proceeding or other action for the enforcement of its rights and
remedies under any of the Loan Documents with respect to the Premises or all or
any portion of the Collateral. Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its discretion, to the fullest extent permitted by law, without
impairing or otherwise affecting the other rights and remedies of Lender
permitted by law, equity, or contract or as set forth herein or in the other
Loan Documents.

ARTICLE V
SPECIAL PROVISIONS

Section 5.1. Financial Reporting. Borrower shall keep adequate books and records
of account in accordance with generally accepted accounting principles or in
accordance with other methods of accounting acceptable to Lender in its sole
discretion, consistently applied (“Approved Accounting Method”) and shall
furnish to Lender the following, which shall be prepared, dated and certified by
Borrower or Guarantor, as the case may be, as true, correct and complete in the
form required by Lender, unless otherwise specified below:

(A) Within 180 days after the end of each fiscal year of Guarantor, financial
statements, prepared in accordance with the Approved Accounting Method,
including, without limitation, a balance sheet, income and expense statements,
prepared and audited by an accountant or accountants acceptable to Lender in the
exercise of reasonable discretion, and accompanied by an unqualified audit
opinion.

(B) Within 120 days after the end of each calendar year for Borrower, detailed
analytical financial reports for Borrower covering the full and complete
operation of the Premises, prepared in accordance with the Approved Accounting
Method, including, without limitation, a balance sheet, income and expense
statements (including monthly income and expense amounts for each of the
preceding 12 months); and

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(C) Within 60 days after the end of each fiscal year of Borrower, a detailed
rent roll stating the leasing status of the Premises as of the end of such year
identifying such details as are applicable to a multi-family residential
property, including the lessee (and assignee, subtenants and licensees, if any)
and location of demised premises; square footage leased; base and additional
rental amounts including any increases; commencement and expiration dates; early
termination dates; renewal options and annual renewal rents; total net rentable
area of the Premises; the existence of any affiliation between Borrower and
tenant; and within 15 days of Lender’s request and if available, a listing of
sales volumes attained by lessees of the Premises under percentage leases, if
any, for the immediately preceding year and an aged accounts receivable report.
Within 15 days of Lender’s request the following concerning any leases and as
such are applicable to a multi-family residential property: identification of
any assignees, subtenants and licensees, if any; description of any rental
concessions, allowances, abatements and/or rental deferments; pass-through
amounts; purchase options; and a detailed listing of tenant defaults.

Section 5.2 Security Agreement.

(A) Pledge of Accounts. To secure the full and punctual payment and performance
of all of the Indebtedness, Borrower hereby assigns, conveys, pledges and
transfers to Lender and grants to Lender a first and continuing lien on and
security interest in and to all of Borrower’s right, title, and interest in (i)
all funds from time to time deposited or held in any account with Lender, all
investments made with respect thereto and all interest, if any, earned thereon;
(ii) all other amounts required under the Loan Documents to be deposited with
and/or held by Lender, including but not limited to insurance proceeds and
proceeds payable to Borrower pursuant to a Taking; and (iii) to the extent not
covered by the clauses (i) and (ii) above, all products and proceeds of any or
all of the foregoing (collectively, the “Account Collateral”). Borrower agrees
that the Account Collateral shall not constitute any deposit or account of
Borrower or moneys to which Borrower is entitled upon demand, or upon the mere
passage of time or sums to which Borrower is entitled to any interest or
crediting of interest by virtue of Lender’s mere possession of such deposits.
Lender shall not be required to segregate any Account Collateral and may hold
such deposits in its general account or any other account and may commingle such
deposits with any other moneys of Lender or moneys that Lender is holding on
behalf of any other person or entity.

17 

 

(B) Lender Appointed Attorney-In-Fact. Borrower hereby irrevocably constitutes
and appoints Lender as Borrower’s true and lawful attorney-in-fact, with full
power of substitution, effective at any time after the occurrence and during the
continuance of an Event of Default, after the expiration of any applicable grace
or cure period, to execute, acknowledge, and deliver any instruments and to
exercise and enforce every right, power, remedy, option and privilege of
Borrower with respect to the Account Collateral, and do in the name, place and
stead of Borrower, all such acts, things, and deeds for and on behalf of and in
the name of Borrower with respect to the Account Collateral, that Borrower could
or might do or that Lender may deem necessary or desirable to more fully vest in
Lender the rights and remedies provided for herein with respect to the Account
Collateral and to accomplish the purposes of this Agreement. The foregoing
powers of attorney are irrevocable and coupled with an interest. Beyond the
exercise of reasonable care in the custody thereof, Lender shall not have any
duty as to any Account Collateral or any income thereon in Lender’s possession
or control or in the possession or control of any agents for, or of Lender, or
the preservation of rights against any Person or otherwise with respect thereto,
it being understood that so long as Lender exercises reasonable care, Lender
shall not be liable or responsible for any loss, damage, or diminution in value
by reason of the act or omission of Lender, or Lender’s agents, employees or
bailees.

Section 5.3 Assignment and Assumption of the Loan. Borrower shall not Transfer
all or any portion of the Premises nor shall any of the Interest Owners Transfer
all or any portion of the equity held in Borrower except as may be expressly
permitted in this Agreement.

Section 5.4 Transfer of Loan by Lender.

(A) Although Lender has no present intention to do so, Lender may, at any time,
sell, transfer or assign the Note, the other Loan Documents and any or all
servicing rights with respect thereto, or grant participations therein or issue
mortgage pass-through certificates or other securities evidencing a beneficial
interest in a rated or unrated public offering or private placement (each, as
designated by Lender, a “Securitization Transaction”). Lender may forward to
each purchaser, transferee, assignee, servicer, participant, investor in such
Securitization Transaction or any Rating Agency (as hereinafter defined) rating
such Securitization Transaction (collectively, the “Investor”) and each
prospective Investor and the advisor of each of the foregoing, all documents and
information that Lender now has or may hereafter acquire relating to the
Indebtedness and to Borrower and the Premises, whether furnished by Borrower or
otherwise, as Lender determines necessary or desirable.

18 

 

(B) Borrower agrees that it shall cooperate with Lender and use Borrower’s
reasonable efforts to facilitate the consummation of any Securitization
Transaction, including, without limitation, by: (i) promptly and reasonably
providing such information as may be requested in connection with the
preparation of a private placement memorandum, prospectus or a registration
statement required to privately place or publicly distribute the securities in a
manner that does not conflict with federal or state securities laws;
(ii) providing within 10 days of Lender’s request the reports described in
Section 5.1(C) above and monthly income information for each of the preceding 12
months; and (iii) permitting Lender, or its designees to inspect the Premises
during normal business hours upon reasonable advance notice from Lender
requesting same and to discuss with Borrower or its agents information and
documentation with respect to the operation and management of the Premises.
Lender shall make reasonable efforts to ensure that the lessee’s business
operations are not disrupted.

(C) At any time, upon request of Lender, Borrower shall issue one or more
separate (or component) notes (the “Component Notes”) with revised interest
rates to replace the Note, the aggregate weighted average coupon rate of which
shall, as of the issuance of the Component Notes, equal the initial interest
rate on the Loan. Each Component Note may have a different interest rate.
Borrower shall also be obligated to enter into such amendments to other Loan
Documents as are necessary to reference the Component Notes. Notwithstanding the
foregoing, Borrower shall only be required to issue such Component Notes as long
as:

(i)at and at all times after the issuance of such Component Notes, the aggregate
weighted average coupon rate of the revised interest rates of the Component
Notes equals the aggregate weighted average coupon rate of the Loan as if the
Note had never been replaced;

(ii)there shall be no negative economic effect upon Borrower’s debt service
payments; and

(iii)such replacement shall be at no cost and expense to Borrower (including
that Lender shall reimburse Borrower for its reasonable attorneys’ fees in
reviewing the Component Notes).

(D) Lender agrees that any costs and expenses incurred by Lender under this
Section 5.4 shall be the responsibility of and paid for by Lender.

19 

 

(E) Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment of a security interest shall
release Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for Lender as a party hereto.

Section 5.5 Insurance Requirements. Borrower shall at all times keep or cause to
be kept in full force and effect the insurance required by the Deed of Trust.

Section 5.6 Management of Premises. If the Premises are managed by any Borrower
or an affiliate of any Borrower, then upon the occurrence of an Event of
Default, Lender may request, upon 30 days prior written notice to Borrower, that
Borrower selects a successor manager not affiliated with Borrower to manage the
Premises. If a successor manager is required pursuant hereto, Borrower shall
immediately seek to appoint a successor manager acceptable to Lender in Lender’s
reasonable discretion, which successor manager shall be a reputable management
company having experience in the management of commercial properties in the
jurisdiction in which the Premises is located and shall not be paid management
fees in excess of fees that are market fees in the surrounding geographic area.

Section 5.7 Leases. Borrower shall neither enter into nor make any material
amendment to the terms of form of the lease without obtaining the prior written
consent of Lender, which consent shall not be unreasonably withheld, conditioned
or delayed. As used herein “material amendment” shall mean any amendment which
reduces the term, increases the obligations of the Borrower or otherwise reduces
the per square foot amount of rent payable under the Leases.

Section 5.8 Extension Option Additional Provisions.

(a) Substitute Guarantor. Upon Borrower’s exercise of the extension option set
forth in Section 2(b) of the Note and as a condition precedent thereto, IREIS
(“Substitute Guarantor”), shall execute a guaranty in substantially the form
attached hereto as Exhibit A.

(b) Financial Reporting Requirements. Upon Substitute Guarantor’s Guaranty
becoming effective, Substitute Guarantor shall comply with the following
financial reporting requirements:

20 

 

Substitute Guarantor is an entity that files a Form 10-K report with the
Securities and Exchange Commission. In lieu of the financial reporting
requirements in Section 5.1 above, Substitute Guarantor shall provide to Lender
within one hundred twenty (120) days after the end of each of Substitute
Guarantor’s fiscal years, Substitute Guarantor’s Form 10-K report filed with the
Securities and Exchange Commission. Provided the Substitute Guarantor’s Form
10-K is filed timely and is available for viewing on a web site maintained by
the Securities and Exchange Commission, then Substitute Guarantor will have been
deemed to satisfy this reporting requirement. Notwithstanding the foregoing,
Substitute Guarantor shall at all times be responsible for delivering such Form
10-K report to Lender within said 120 day time period whether as an electronic
file or as a hyperlink to an electronic file.

ARTICLE VI
MISCELLANEOUS

Section 6.1 No Liability of Lender. Borrower acknowledges and agrees that
Lender’s acceptance or approval of any action of Borrower or any other matter
requiring Lender’s approval, satisfaction, acceptance or consent pursuant to
this Agreement or the other Loan Documents, including any report certificate,
financial statement, appraisal, or insurance policy, will not be deemed a
warranty or representation by Lender of the sufficiency, legality, effectiveness
or other import or effect of such matter.

Section 6.2 No Third Parties Benefited. This Agreement is between and for the
sole benefit of Borrower and Lender, and Lender’s successors and assigns, and
creates no rights whatsoever in favor of any other Person and no other Person
will have any rights to rely hereon.

Section 6.3 Time is of the Essence. Time is of the essence of Borrower’s
obligations under this Agreement. Lender’s waiver of any default or Event of
Default under this Agreement will not be deemed a waiver of any subsequent
default or Event of Default.

Section 6.4 Binding Effect; No Borrower Assignment. This Agreement will be
binding upon and inure to the benefit of Borrower and Lender and their
respective heirs, executors, administrators, successors, and assigns, provided
however Borrower may not assign its rights or interest in this Agreement without
Lender’s prior consent, which may be withheld in Lender’s discretion as provided
in the Deed of Trust.

Section 6.5 Execution in Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and such counterparts
when taken together shall constitute but one agreement.

21 

 

Section 6.6 Integration; Amendments; Consents. This Agreement, together with the
other Loan Documents, constitutes the entire agreement of the parties with
respect to the Loan, and supersedes any prior negotiations or agreements, and
supersedes any loan application submitted by Borrower to Lender and any
commitment letter for the Loan delivered by Lender to Borrower. No modification,
extension, discharge, termination or waiver of any provision of this Agreement
or the other Loan Documents will be effective unless in writing, signed by the
Person against whom enforcement is sought, and will be effective only in the
specific instance for which it is given.

Section 6.7 Governing Law. THE LOAN DOCUMENTS AND THE PARTIES’ RIGHTS AND
OBLIGATIONS THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS (WITHOUT GIVING
EFFECT TO ILLINOIS’ PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT (A) OF
PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO THE CREATION, PERFECTION,
FORECLOSURE AND ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE PREMISES, WHICH
MATTERS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF WHERE THE PREMISES IS
LOCATED, AND (B) THAT THE LAWS OF THE UNITED STATES OF AMERICA AND ANY RULES,
REGULATIONS, OR ORDERS ISSUED OR PROMULGATED THEREUNDER, APPLICABLE TO THE
AFFAIRS AND TRANSACTIONS ENTERED INTO BY LENDER, OTHERWISE PREEMPT THE LAW OF
THE STATE WHERE THE PREMISES IS LOCATED OR ILLINOIS LAW; IN WHICH EVENT SUCH
FEDERAL LAW SHALL CONTROL.

Section 6.8 Jurisdiction. Borrower irrevocably (a) agrees that any suit, action
or other legal proceeding arising out of or relating to this Agreement or the
Note may be brought in a court of record in the State of Illinois or in the
Courts of the United States located in the State of Illinois, (b) submits to the
jurisdiction of each such court in any such suit, action or proceeding and
(c) waives any objection that it may have to the laying of venue of any such
suit, action or proceeding in any of such courts and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum. Borrower
irrevocably consents to the service of any and all process in any such suit,
action or proceeding by service of copies of such process to Borrower at its
address provided in Section 6.20 hereof. Nothing in this Section 6.8 will affect
the right of Lender to serve legal process in any other manner permitted by law
or affect the right of Lender to bring any suit, action, or proceeding against
Borrower or Borrower’s assets in the courts of any other jurisdiction.

22 

 

Section 6.9 Severability of Provisions. If a court of competent jurisdiction
finds any provision of this Agreement or the other Loan Documents to be invalid
or unenforceable as to any Person or circumstance in any state, such finding
will not render that provision invalid or unenforceable as to any other Person
or circumstance or in any other state. Where permitted by Legal Requirements,
any provision found invalid or unenforceable will be deemed modified to the
extent necessary to be within the limits of enforceability or validity; however,
if such provision cannot be deemed so modified, it will be deemed stricken and
all other provisions of this Agreement in all other respects will remain valid
and enforceable.

Section 6.10 Preferences. Lender will have no obligation to marshal any assets
for the benefit of Borrower or any other Person or in satisfaction of any or all
of the Indebtedness. Lender will have the continuing and exclusive right to
apply or reverse and reapply any and all payments by Borrower to any portion of
the Indebtedness in accordance with the terms of this Loan Agreement, the Note
or any other Loan Document. To the extent Borrower makes a payment to Lender or
Lender receives any proceeds from the Collateral, which payment or proceeds or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or any
other Person under any bankruptcy, insolvency or other law, or for equitable
cause, then, to the extent of such payment or proceeds released by Lender, the
Indebtedness will be revived and continue in full force and effect, as if such
payment or proceeds had not been received by Lender.

Section 6.11 Joint and Several Obligations. If this Agreement is executed by
more than one Person as Borrower, all references herein to Borrower shall be
deemed to each such Person, individually and collectively, and the Indebtedness
will be joint and several obligations.

Section 6.12 No Joint Venture or Partnership. Borrower and Lender intend that
the relationship created under this Agreement and the other Loan Documents be
solely that of borrower and lender. Nothing is intended to create a joint
venture, partnership, tenancy-in-common, or joint tenancy relationship between
Borrower and Lender or to grant to Lender any interest in the Premises other
than that of mortgagee or secured party.

Section 6.13 Waiver of Counterclaim. Borrower hereby waives, to the extent
permitted by applicable law, the right to assert any counterclaim, other than a
compulsory counterclaim, in any action or proceeding brought against Borrower by
Lender under any of the Loan Documents.

Section 6.14 Intentionally Deleted.

Section 6.15 Headings, etc. The headings and captions of various paragraphs of
this Agreement are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.

23 

 

Section 6.16 Capitalized Terms. Capitalized terms used herein and not otherwise
defined shall have those meanings given to them in the other Loan Documents.

Section 6.17 Waiver of Jury Trial. AFTER CONSULTING WITH COUNSEL AND CAREFUL
CONSIDERATION, BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF THIS LOAN AGREEMENT
OR ANY OTHER INSTRUMENT OR AGREEMENT RELATED TO THE LOAN, OR OUT OF ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (ORAL OR WRITTEN), OR ACTIONS OF
BORROWER OR LENDER. THIS WAIVER IS A MATERIAL INDUCEMENT TO LENDER’S ACCEPTANCE
OF THIS LOAN AGREEMENT.

Section 6.18 Intentionally Deleted.

Section 6.19 Permitted Transfers.

(a) For purposes of this Agreement and Section 2(f) of the Deed of Trust, the
term “Permitted Transfer” means the following transfers:

(i) Minor Conveyances of Interests In the Premises. Without Lender’s consent,
Borrower may grant easements, restrictions, covenants, reservations and
rights-of-way in the ordinary course of business for access, parking, water and
sewer lines, telecommunications, electric lines and other utilities or for other
similar purposes, provided that no transfer, conveyance, or encumbrance shall
materially impair the utility and operation of the applicable portion of the
Premises or materially adversely affect the value of such tract forming a part
of the Premises or the net operating income of such tract forming a part of the
Premises. If Borrower receives any consideration in connection with any of said
described transfers or conveyances, Borrower shall have the right to use such
proceeds in connection with alterations performed in connection therewith or
required thereby. In connection with any transfer, conveyance, or encumbrance
permitted above, Lender shall execute and deliver any instrument reasonably
necessary or appropriate to evidence its consent to said action or to
subordinate the lien of the applicable Deed of Trust to such easements,
restrictions, covenants, reservations, and rights-of-way or other similar grants
upon receipt by Lender of: (A) a copy of the instrument of transfer, and (B) a
certificate of an officer of Borrower stating that such transfer does not
materially impair the utility or operation of such tract forming a part of the
Premises or materially reduce the value of such tract forming a part of the
Premises or the net operating income of such tract forming a part of the
Premises.

(ii) Intentionally Deleted.

24 

 

(iii) Intentionally Deleted.

(iv) One Time Premises Transfer to Inland Affiliate. So long as no Event of
Default exists under the Loan Documents, Lender shall not unreasonably withhold
its consent to a one-time Transfer of the entire Premises in a single
transaction to a Permitted Affiliate Transferee (hereinafter defined) provided
Lender receives 30 days’ advance written notice from Borrower and provided the
following conditions are complied with:

(1) IREIS’ creditworthiness has not deteriorated, in Lender’s sole discretion,
from the date hereof to the date of the proposed Transfer, and the Premises
continue to be managed by a Qualified Manager;

(2) the proposed entity shall be a Limited-Asset Entity and a wholly owned
Affiliate of IREIS (the “Permitted Affiliate Transferee”); and

(3) payment to Lender of a processing fee in the amount of $2,000 at the time of
consummation of the Transfer.

(v) IREIS Merger (Affiliate): Notwithstanding any provision contained in the
Loan Documents to the contrary, a “Transfer” shall not include (1) any issuance,
sale or transfer of interests in IREIS or any successor entity resulting from
any merger permitted hereunder, or (2) the merger of IREIS with any of the
following entities: (a) Inland Real Estate Corporation, a Maryland corporation,
(b) Inland Real Estate Investment Corporation, a Delaware corporation,
(c) Inland Real Estate Income Trust, Inc., a Delaware corporation, (d) any other
real estate investment trust sponsored by Inland Real Estate Investment
Corporation, (e) any other entity composed entirely of any of the foregoing, by
merger or other business combination, or (f) entities in which The Inland Group,
Inc. or the majority shareholders of The Inland Group, Inc. as of the date
hereof hold majority ownership and control, whether directly or indirectly
through affiliates and subsidiaries; provided, however, (x) Lender shall receive
not less than 30 days prior written notice of any such proposed merger and (y)
the surviving entity’s net worth shall equal or exceed IREIS’ net worth
immediately prior to such merger. A processing fee shall not be assessed in
connection with a merger under this Section, but Borrower shall be responsible
for payment of all reasonable and customary third-party expenses (including
reasonable attorneys’ fees and disbursements) actually incurred by Lender for
the Loan in connection with such transfer.

25 

 

(vi) Intentionally deleted.

 

Section 6.20 Notice. Each notice, consent, request, report or other
communication under any Loan Document (each, a “Notice”) that any party hereto
may desire or be required to give to the other shall be deemed to be an adequate
and sufficient notice if given in writing and service is made by either
(i) personal delivery; or (ii) nationally recognized overnight air courier, next
day delivery, prepaid, in which case such notice shall be deemed to have been
received one (1) business day following delivery to such nationally recognized
overnight air courier. All Notices shall be addressed as follows:

Borrower:

IREIS Frederick Market Square, L.L.C.
c/o Inland Residential Properties Trust, Inc.

2901 Butterfield Road
Oak Brook, Illinois 60523

Attn: President

 

with a copy to:

 

 

 

 

with a copy to

Guarantor:

 

 

The Inland REAL ESTATE GROUP, iNC.

2901 Butterfield Road
Oak Brook, Illinois 60523
Attention: General Counsel

 

 

INLAND REAL ESTATE INVESTMENT CORPORATION

2901 Butterfield Road
Oak Brook, Illinois 60523

Attn: President

 

Lender:

PARKWAY BANK AND TRUST COMPANY
4800 North Harlem Avenue
Harwood Heights, Illinois 60706
Attention: Gregory T. Bear, Executive Vice President

 

with a copy to:

LATIMER LEVAY FYOCK LLC
55 W. Monroe Street, Suite 1100
Chicago, Illinois 60603
Attention: Sheryl A. Fyock, Esq.

 

or to such other place as any party may by written notice to the other parties
hereafter designate as a place for service of notice. Borrower shall not be
permitted to designate more than one place for service of Notice concurrently.

26 

 

Section 6.21. Customer Identification - USA Patriot Act Notice; OFAC and Bank
Secrecy Act. Lender hereby notifies Borrower that pursuant to the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26,
2001) (the “Act”), and Lender’s policies and practices, Lender is required to
obtain, verify, and record certain information and documentation that identifies
Borrower, which information includes the name and address of Borrower and such
other information that will allow Lender to identify Borrower in accordance with
the Act. In addition, Borrower shall (a) ensure that no person who owns a
controlling interest in or otherwise controls Borrower or any subsidiary of
Borrower is or shall be listed on the Specially Designated Nationals and Blocked
Person List or other similar lists maintained by the Office of Foreign Assets
Control (“OFAC”), the Department of the Treasury or included in any Executive
Orders, (b) not use or permit the use of the proceeds of the Loan to violate any
of the foreign asset control regulations of OFAC or any enabling statute or
Executive Order relating thereto, and (c) comply, and cause any of its
subsidiaries to comply, with all applicable Bank Secrecy Act (“BSA”) laws and
regulations, as amended.

[Remainder of page intentionally blank; signatures follow]

 

27 

 

IN WITNESS WHEREOF, Borrower and Lender have caused this Loan Agreement to be
executed as of the date first above written.

 

 

Borrower:

 

IRESI Frederick Market Square, L.L.C.,
a Delaware limited liability company

          By: Inland Residential Operating Partnership, L.P.,
a Delaware limited partnership, its sole member             By: Inland
Residential Properties Trust, Inc.,
a Maryland corporation, its general partner             By: /s/ David Z.
Lichterman     Name: David Z. Lichterman     Its: Vice President, Treasurer &
CAO                  

Bank:

 

Parkway Bank and Trust Company,
an Illinois banking corporation

            By: /s/ Marianne L. Wagener     Name: Marianne L. Wagener     Its:
Senior Vice President

 

 

28 

 

Exhibit A

Form of Guaranty
(Reference: Section 5.8)

 

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