**Exhibit 10.496**

 

**THISINSTRUMENT CONTAINS INDEMNIFICATION PROVISIONS LIMITING LENDER’S LIABILITY FORNEGLIGENCE.**

 

Loan No. 10025002

 

**LOAN AGREEMENT**

 

Dated as of December 30,2004

 

Between

 

INLAND WESTERN CEDAR HILLPLEASANT RUN LIMITED PARTNERSHIP,

as Borrower

 

and

 

KEYBANK NATIONAL ASSOCIATION,

as Lender

 

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**TABLE OF CONTENTS**

 
| **ARTICLE  I**    | **DEFINITIONS;  PRINCIPLES OF CONSTRUCTION**  | ** ** |
|-------------------|-----------------------------------------------|------------|
| Section  1.1      | Definitions                                   |       |
| Section  1.2      | Principles of  Construction                   |       |
| **ARTICLE II**    | **GENERAL TERMS**                             | ** ** |
| Section  2.1      | Loan Commitment;  Disbursement to Borrower    |       |
| Section  2.2      | Interest; Loan  Payments; Late Payment Charge |       |
| Section  2.3      | Prepayments                                   |       |
| Section  2.4      | Intentionally  Omitted                        |       |
| Section  2.5      | Release of  Property                          |       |
| Section  2.6      | Manner of Making  Payments                    |       |
| **ARTICLE III**   | **CONDITIONS PRECEDENT**                      | ** ** |
| Section  3.1      | Conditions  Precedent to Closing              |       |
| **ARTICLE IV**    | **REPRESENTATIONS  AND WARRANTIES**           | ** ** |
| Section  4.1      | Borrower  Representations                     |       |
| Section 4.2       | Survival  of Representations                  |       |
| **ARTICLE V**     | **BORROWER COVENANTS**                        | ** ** |
| Section 5.1       | Affirmative  Covenants                        |       |
| Section 5.2       | Negative  Covenants                           |       |
| **ARTICLE  VI**   | **INSURANCE;  CASUALTY; CONDEMNATION**        | ** ** |
| Section 6.1       | Insurance                                     |       |
| Section 6.2       | Casualty                                      |       |
| Section 6.3       | Condemnation                                  |       |
| Section 6.4       | Restoration                                   |       |
| **ARTICLE VII**   | **RESERVE FUNDS**                             | ** ** |
| Section 7.1       | Required  Repair Funds                        |       |
| Section 7.2       | Tax  and Insurance Escrow Fund                |       |
| Section 7.3       | Replacements  and Replacement Reserve         |       |
| Section 7.4       | Intentionally  Deleted                        |       |
| Section 7.5       | Intentionally  Deleted                        |       |
| Section 7.6       | Intentionally  Deleted                        |       |
| Section 7.7       | Reserve  Funds, Generally                     |       |
| **ARTICLE  VIII** | **DEFAULTS**                                  | ** ** |
| Section 8.1       | Event  of Default                             |       |
| Section 8.2       | Remedies                                      |       |
| Section 8.3       | Remedies  Cumulative; Waivers                 |       |
| **ARTICLE  IX**   | **SPECIAL  PROVISIONS**                       | ** ** |
| Section 9.1       | Sale  of Notes and Securitization             |       |
| Section 9.2       | Securitization                                |       |
| Section 9.3       | Rating  Surveillance                          |       |
| Section 9.4       | Exculpation                                   |       |
| Section 9.5       | Termination  of Manager                       |       |
| Section 9.6       | Servicer                                      |       |
| Section 9.7       | Splitting  the Loan                           |       |

 

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| **ARTICLE  X** | **MISCELLANEOUS**                                              |   |
|----------------|----------------------------------------------------------------|--------|
| Section 10.1   | Survival                                                       |   |
| Section 10.2   | Lender’s  Discretion                                      |   |
| Section 10.3   | Governing  Law                                                 |   |
| Section 10.4   | Modification,  Waiver in Writing                               |   |
| Section 10.5   | Delay  Not a Waiver                                            |   |
| Section 10.6   | Notices                                                        |   |
| Section 10.7   | Trial  by Jury                                                 |   |
| Section 10.8   | Headings                                                       |   |
| Section 10.9   | Severability                                                   |   |
| Section 10.10  | Preferences                                                    |   |
| Section 10.11  | Waiver of Notice                                               |   |
| Section 10.12  | Remedies of Borrower                                           |   |
| Section 10.13  | Expenses; Indemnity                                            |   |
| Section 10.14  | Schedules Incorporated                                         |   |
| Section 10.15  | Offsets, Counterclaims and Defenses                            |   |
| Section 10.16  | No Joint Venture or Partnership; No Third  Party Beneficiaries |   |
| Section 10.17  | Publicity                                                      |   |
| Section 10.18  | Waiver of Marshalling of Assets                                |   |
| Section 10.19  | Waiver of Counterclaim                                         |   |
| Section 10.20  | Conflict; Construction of Documents;  Reliance                 |   |
| Section 10.21  | Brokers and Financial Advisors                                 |   |
| Section 10.22  | Prior Agreements                                               |   |
| Section 10.23  | Transfer of Loan                                               |   |

 

 
| SCHEDULES     |   |                             |
|---------------|--------|----------------------------------|
|          |   |                             |
| Schedule  I   | -      | Intentionally  Omitted           |
| Schedule  II  | -      | Rent  Roll                       |
| Schedule  III | -      | Required  Repairs                |
| Schedule  IV  | -      | Intentionally  Omitted           |
| Schedule  V   | -      | Intentionally  Omitted           |
| Schedule  VI  | -      | Affiliate  Agreements            |
| Schedule  VII | -      | Intentionally  Omitted           |
| Schedule VIII | -      | Intentionally Omitted            |
| Schedule  IX  | -      | Intentionally  Omitted           |
| Schedule X    | -      | Other Contract Funds  Agreements |

 

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**LOAN AGREEMENT**

 

THISLOAN AGREEMENT, dated as of this      day ofDecember, 2004 (as amended, restated, replaced, supplemented or otherwisemodified from time to time, this “**Agreement**”),between KEYBANK NATIONAL ASSOCIATION, a national banking association, having anaddress at 911 Main Street, Suite 1500, Kansas City, Missouri 64105 (“**Lender**”), and INLAND WESTERN CEDARHILL PLEASANT RUN LIMITED PARTNERSHIP, an Illinois limited partnership, havingan address at 2901 Butterfield Road, Oak Brook, Illinois 60523 (“**Borrower**”).

 

**W I T N E S S E T H:**

 

WHEREAS, Borrower desiresto obtain the Loan (as hereinafter defined) from Lender; and

 

WHEREAS,Lender is willing to make the Loan to Borrower, subject to and in accordancewith the terms of this Agreement and the other Loan Documents (as hereinafterdefined).

 

NOW,THEREFORE, in consideration of the making of the Loan by Lender and thecovenants, agreements, representations and warranties set forth in thisAgreement, the parties hereto hereby covenant, agree, represent and warrant asfollows;

 

**ARTICLE I**

** **

**DEFINITIONS; PRINCIPLES OF CONSTRUCTION**

 

Section 1.1             Definitions. For all purposes of this Agreement, exceptas otherwise expressly required or unless the context clearly indicates acontrary intent:

 

“**Additional Insolvency Opinion**”  shall mean any subsequent Insolvency Opinion.

 

“**Affiliate**” shall mean, as to anyPerson, any other Person that, directly or indirectly, is in control of, iscontrolled by or is under common control with such Person or is a director orofficer of such Person or of an Affiliate of such Person.

 

“**Annual Budget**” shall mean theoperating budget, including all planned capital expenditures, for the Propertyprepared by Borrower for the applicable Fiscal Year or other period.

 

“**Assignment of Leases**” shall mean,with respect to the Property, that certain first priority Assignment of Leasesand Rents, dated as of the date hereof, from Borrower, as assignor, to Lender,as assignee, assigning to Lender all of Borrower’s interest in and to theLeases and Rents of the Property as security for the Loan, as the same may beamended, restated, replaced, supplemented or otherwise modified from time totime.

 

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“**Assignment of Management Agreement**”shall mean that certain Assignment of Management Agreement and Subordination ofManagement Fees dated as of the date hereof among Lender, Borrower and Manager,as the same may be amended, restated, replaced, supplemented or otherwisemodified from time to time.

 

“**Award**” shall mean any compensationpaid by any Governmental Authority in connection with a Condemnation in respectof all or any part of the Property.

 

“**Basic****Carrying Costs**” shall mean, with respect to the Property,the sum of the following costs associated with the Property for the relevantFiscal Year or payment period: (i) Taxes and (ii) Insurance Premiums.

 

“**Borrower**” shall mean Inland WesternCedar Hill Pleasant Run Limited Partnership, together with its permittedsuccessors and assigns.

 

“**Business Day**” shall mean any dayother than a Saturday, Sunday or any other day on which national banks in NewYork, New York are not open for business.

 

“**Capital Expenditures**”shall mean, for any period, the amount expended for items capitalized underaccounting principles reasonably acceptable to Lender, consistently applied(including expenditures for building improvements or major repairs, leasingcommissions and tenant improvements).

 

“**Cash Expenses**” shall mean, for anyperiod, the operating expenses for the operation of the Property as set forthin an Approved Annual Budget to the extent that such expenses are actuallyincurred by Borrower minus any payments into the Tax and Insurance Escrow Fund.

 

“**Casualty**” shall have the meaningspecified in Section 6.2 hereof.

 

“**Casualty Consultant**” shall have themeaning set forth in Section 6.4(b)(iii) hereof.

 

“**Casualty Retainage**” shall have themeaning set forth in Section 6.4(b)(iv) hereof.

 

“**Closing Date**” shall mean the date ofthe funding of the Loan.

 

“**Code**” shall mean the InternalRevenue Code of 1986, as amended, as it may be further amended from time totime, and any successor statutes thereto, and applicable U.S. Department ofTreasury regulations issued pursuant thereto in temporary or final form.

 

“**Condemnation**” shall mean atemporary or permanent taking by any Governmental Authority as the result or inlieu or in anticipation of the exercise of the right of condemnation or eminentdomain, of all or any part of the Property, or any interest therein or rightaccruing thereto, including any right of access thereto or any change of gradeaffecting the Property or any part thereof.

 

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“**Debt**” shall mean the outstandingprincipal amount set forth in, and evidenced by, this Agreement and the Notetogether with all interest accrued and unpaid thereon and all other sums(including the Prepayment Consideration) due to Lender in respect of the Loanunder the Note, this Agreement, the Mortgage or any other Loan Document.

 

“**Debt Service**” shall mean, withrespect to any particular period of time, scheduled interest payments under theNote.

 

“**Debt Service Coverage Ratio**” shallmean a ratio for the applicable period in which:

 

(a)           the numerator is the Net Operating Income (excluding interest on creditaccounts) for such period as set forth in the statements required hereunder, withoutdeduction for (i) actual management fees incurred in connection with theoperation of the Property, (ii) amounts paid to the Reserve Funds, less (A)management fees equal to the greater of (1) assumed management fees of fivepercent (5%) of Gross Income from Operations or (2) the actual management feesincurred; (B) assumed Replacement Reserve Fund contributions equal to $0.15 persquare foot of gross leaseable area at the Property; and (C) assumed reservesfor tenant improvements and leasing commissions equal to $0.72 per square footof gross leaseable area of the Property; and

 

(b)           the denominator is the aggregate amount of interest due and payable on theNote for such applicable period.

 

“**Default**” shall mean the occurrenceof any event hereunder or under any other Loan Document which, but for thegiving of notice or passage of time, or both, would be an Event of Default.

 

“**Default Rate**” shall mean, withrespect to the Loan, a rate per annum equal to the lesser of (a) the maximumrate permitted by applicable law, or (b) five percent (5%) above the InterestRate.

 

“**Disclosure Document**” shall have themeaning set forth in Section 9.2 hereof.

 

“**Eligible Account**” shall mean aseparate and identifiable account from all other funds held by the holdinginstitution that is either (a) an account or accounts maintained with a federalor state-chartered depository institution or trust company which complies withthe definition of Eligible Institution or (b) a segregated trust account oraccounts maintained with a federal or state chartered depository institution ortrust company acting in its fiduciary capacity which, in the case of a statechartered depository institution or trust company, is subject to regulationssubstantially similar to 12 C.F.R. §9.10(b), having in either case a combinedcapital and surplus of at least $50,000,000 and subject to supervision orexamination by federal and state authority. An Eligible Account will not beevidenced by a certificate of deposit, passbook or other instrument.

 

“**Eligible Institution**” shall mean adepository institution or trust company insured by the Federal DepositInsurance Corporation the short term unsecured debt obligations or commercialpaper of which are rated at least A-l by Standard & Poor’s RatingsServices, P-1

 

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by Moody’s Investors Service, Inc., and F-1+ by Fitch, Inc. in the caseof accounts in which funds are held for 30 days or less (or, in the case ofaccounts in which funds are held for more than 30 days, the long term unsecureddebt obligations of which are rated at least “AA” by Fitch and S&P and “Aa”by Moody’s).

 

“**Environmental Indemnity**” shallmean that certain Environmental Indemnity Agreement executed by Borrower inconnection with the Loan for the benefit of Lender, as the same may be amended,restated, replaced, supplemented or otherwise modified from time to time.

 

“**ERISA**” shall mean the EmployeeRetirement Income Security Act of 1974, as amended.

 

“**Event****of Default**” shall have the meaning set forth in Section8.1(a) hereof.

 

“**Exchange Act**” shall have the meaningset forth in Section 9.2 hereof.

 

“**Fiscal Year**” shall mean each twelve(12) month period commencing on January 1 and ending on December 31 during each year of the term of the Loan.

 

“**Governmental Authority**” shallmean any court, board, agency, commission, office or other authority of anynature whatsoever for any governmental unit (federal, state, county, district,municipal, city or otherwise) whether now or hereafter in existence.

 

“**Gross Income from Operations**” shallmean all sustainable income as reported on the financial statements deliveredby Borrower in accordance with this Agreement, computed in accordance withaccounting principles reasonably acceptable to Lender, consistently applied,derived from the ownership and operation of the Property from whatever source,including, but not limited to, (i) Rents from Tenants that are in occupancy,open for business and paying unabated Rent, (ii) utility charges, (iii)escalations, (iv) intentionally omitted; (v) service fees or charges, (vi)license fees, (vii) parking fees, and (viii) other required pass-throughs butexcluding (i) sales, use and occupancy or other taxes on receipts required tobe accounted for by Borrower to any Governmental Authority, (ii) refunds anduncollectible accounts, (iii) sales of furniture, fixtures and equipment, (iv)Insurance Proceeds (other than business interruption or other loss of incomeinsurance), (v) Awards, (vi) unforfeited security deposits, (vii) utility andother similar deposits and (viii) any disbursements to Borrower from theReserve Funds. Gross income shall not be diminished as a result of the Mortgageor the creation of any intervening estate or interest in the Property or anypart thereof.

 

“**Improvements**” shall have the meaning set forth in thegranting clause of the Mortgage with respect to the Property.

 

“**Indebtedness**” of a Person, at aparticular date, means the sum (without duplication) at such date of (a)indebtedness or liability for borrowed money; (b) obligations evidenced bybonds, debentures, notes, or other similar instruments; (c) obligations for thedeferred purchase price of property or services (including trade obligations);(d) obligations under letters of credit; (e) obligations under acceptancefacilities; (f) all guaranties, endorsements (other than for collection ordeposit in the ordinary course of business) and other contingent

 

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obligations to purchase, to provide funds for payment, to supply funds,to invest in any Person or entity, or otherwise to assure a creditor againstloss; and (g) obligations secured by any Liens, whether or not the obligationshave been assumed.

 

“**Indemnitor**” shall mean InlandWestern Retail Real Estate Trust, Inc., a Maryland corporation.

 

“**Indemnity Agreement**” shall meanthat certain Indemnity Agreement dated as of the date hereof by and betweenBorrower and Inland Western Retail Real Estate Trust, Inc., a Marylandcorporation in favor of Lender.

 

“**Independent Director**” shall mean adirector of a corporation or a manager of a limited liability company who isnot at the time of initial appointment, or at any time while serving as adirector or manager, as the case may be, of such an entity, and has not been atany time during the preceding five (5) years: (a) a stockholder, director (withthe exception of serving as the Independent Director), officer, employee,partner, attorney or counsel of the Borrower or any Affiliate of either ofthem; (b) a customer, supplier or other person who derives any of its purchasesor revenues from its activities with the Borrower or any Affiliate of either ofthem; (c) a Person controlling or under common control with any suchstockholder, director, officer, partner, customer, supplier or other Person; or(d) a member of the immediate family of any such stockholder, director,officer, employee, partner, customer, supplier or other person. As used in thisdefinition, the term “control” means the possession, directly or indirectly, ofthe power to direct or cause the direction of management, policies oractivities of a Person, whether through ownership of voting securities, bycontract or otherwise.

 

“**Inland Western Retail Real Estate Trust, Inc**.”shall mean Inland Retail Real Estate Trust, Inc., a Maryland corporation.

 

“**InsolvencyOpinion**” shall have themeaning set forth in Section 3.1.6 hereof.

 

“**InsurancePremiums**” shall have the meaningset forth in Section 6.1(b) hereof.

 

“**Insurance Proceeds**” shall have themeaning set forth in Section 6.4(b) hereof. 

 

“**Interest Rate**” shall mean 5.215percent (5.215%) per annum.

 

“**Lease**” shall mean any lease,sublease or subsublease, letting, license, concession or other agreement(whether written or oral and whether now or hereafter in effect) pursuant towhich any Person is granted a possessory interest in, or right to use or occupyall or any portion of any space in the Property of Borrower, and everymodification, amendment or other agreement relating to such lease, sublease,subsublease, or other agreement entered into in connection with such lease,sublease, subsublease, or other agreement and every guarantee of theperformance and observance of the covenants, conditions and agreements to beperformed and observed by the other party thereto.

 

“**Legal Requirements**” shall mean,with respect to the Property, all federal, state, county, municipal and othergovernmental statutes, laws, rules, orders, regulations, ordinances,

 

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judgments, decrees and injunctions of Governmental Authoritiesaffecting the Property or any part thereof, or the construction, use,alteration or operation thereof, or any part thereof, whether now or hereafterenacted and in force, and all permits, licenses and authorizations andregulations relating thereto, and all covenants, agreements, restrictions andencumbrances contained in any instruments, either of record or known toBorrower, at any time in force affecting the Property or any part thereof,including, without limitation, any which may (a) require repairs, modificationsor alterations in or to the Property or any part thereof, or (b) in any waylimit the use and enjoyment thereof.

 

“**Lender**” shall mean KeyBank NationalAssociation, together with its successorsand assigns.

 

“**Licenses**” shall have the meaningset forth in Section 4.1.22 hereof.

 

“**Lien**” shall mean, with respect tothe Property, any mortgage, deed of trust, deed to secure debt, lien, pledge,hypothecation, assignment, security interest, or any other encumbrance, chargeor transfer of, on or affecting Borrower, the Property, any portion thereof orany interest therein, including, without limitation, any conditional sale orother title retention agreement, any financing lease having substantially the sameeconomic effect as any of the foregoing, the filing of any financing statement,and mechanic’s, materialmen’s and other similar liens and encumbrances.

 

“**Loan**” shall mean the loan made byLender to Borrower pursuant to this Agreement.

 

“**LoanDocuments**” shall mean,collectively, this Agreement, the Note, the Mortgage, the Assignment of Leasesand Rents, the Environmental Indemnity, the Assignment of Management Agreement,the Indemnity Agreement and all other documents executed and/or delivered inconnection with the Loan.

 

“**Major Tenant**” shall mean any tenant(i) leasing more than 10,000 square feet of the Property or (ii) whose Rentscomprise 25% or more of the effective gross income (as determined by Lender) ofthe Property.

 

“**Management Agreement**” shall mean,with respect to the Property, the management agreement entered into by andbetween Borrower and the Manager, pursuant to which the Manager is to providemanagement and other services with respect to the Property.

 

“**Manager**” shall mean Inland SouthwestManagement LLC, a Delaware limited liability company.

 

“**MaturityDate**” shall mean January 1,2010, or such other date on which the final payment of principal of the Notebecomes due and payable as therein or herein provided, whether at such statedmaturity date, by declaration of acceleration, or otherwise.

“**Maximum Legal Rate**” shall mean themaximum nonusurious interest rate, if any, that at any time or from time totime may be contracted for, taken, reserved, charged or received on theindebtedness evidenced by the Note and as provided for herein or the other Loan

 

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Documents,under the laws of such state or states whose laws are held by any court ofcompetent jurisdiction to govern the interest rate provisions of the Loan.

 

“**Monthly Debt Service Payment Amount**”shall mean an amount equal to $ 99,085.00

 

“**Mortgage**” shall mean, with respectto the Property, that certain first priority Deed of Trust, Assignment ofLeases and Rents, Security Agreement and Fixture Filing, dated the date hereof,executed and delivered by Borrower as security for the Loan and encumbering theProperty, as the same may be amended, restated, replaced, supplemented orotherwise modified from time to time.

 

“**Net Cash Flow**” for any period shallmean the amount obtained by subtracting Operating Expenses and CapitalExpenditures for such period from Gross Income from Operations for such period.

 

“**Net Cash Flow After Debt Service**” forany period shall mean the amount obtained by subtracting Debt Service for suchperiod from Net Cash Flow for such period.

 

“**Net Cash Flow Schedule**” shall havethe meaning set forth in Section 5.1.11(b) hereof.

 

“**Net Operating Income**” shall meanthe amount obtained by subtracting from Gross Income from Operations (i)Operating Expenses, and (ii) a vacancy allowance equal to the greater of (x)market vacancy (as reasonably determined by Lender), less actual vacancy, and(y) underwritten vacancy of 11.6%, less actual vacancy. Notwithstanding theforegoing, if actual vacancy exceeds market vacancy and underwritten vacancy,then there shall be no adjustment for a vacancy allowance.

 

“**Net Proceeds**” shall have themeaning set forth in Section 6.4(b) hereof.

 

“**Net Proceeds Deficiency**” shall havethe meaning set forth in Section 6.4(b)(vi) hereof.

 

“**Note**” shall mean that certainPromissory Note of even date herewith in the principal amount of TWENTY-TWOMILLION EIGHT HUNDRED THOUSAND AND NO/100 DOLLARS ($22,800,000.00), made byBorrower in favor of Lender, as the same may be amended, restated, replaced,supplemented or otherwise modified from time to time.

 

“**Officers’ Certificate**” shall mean acertificate delivered to Lender by Borrower which is signed by an authorizedsenior officer of the Sole Member.

 

“**Operating Expenses**” shall mean thetotal of all expenditures, computed in accordance with accounting principlesreasonably acceptable to Lender, consistently applied, of whatever kindrelating to the operation, maintenance and management of the Property that areincurred on a regular monthly or other periodic basis, including withoutlimitation, utilities, ordinary repairs and maintenance, insurance, licensefees, property taxes and assessments, advertising expenses, management fees,payroll and related taxes, computer processing charges,

 

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operational equipment or other lease payments as approved by Lender,and other similar costs, but excluding depreciation, Debt Service, CapitalExpenditures and contributions to the Reserve Funds.

 

“**Other Charges**” shall mean allground rents, maintenance charges, impositions other than Taxes, and any othercharges, including, without limitation, vault charges and license fees for theuse of vaults, chutes and similar areas adjoining the Property, now orhereafter levied or assessed or imposed against the Property or any partthereof.

 

“**Other Contract Funds**” shall meanany payment due to Borrower under any of the agreements described on ScheduleX.

 

“**Payment Date**” shall mean the first(1st) day of each calendar month during the term of the Loan or, if such day isnot a Business Day, the immediately succeeding Business Day.

 

“**Permitted Encumbrances**” shall mean,with respect to the Property,collectively, (a) the Liens and security interests created by the LoanDocuments, (b) all Liens, encumbrances and other matters disclosed in the TitleInsurance Policies relating to the Property or any part thereof, (c) Liens, ifany, for Taxes imposed by any Governmental Authority not yet due or delinquent,and (d) such other title and survey exceptions as Lender has approved or mayapprove in writing in Lender’s reasonable discretion, which PermittedEncumbrances in the aggregate do not materially adversely affect the value oruse of the Property or Borrower’s ability to repay the Loan.

 

“**Permitted Investments**” shall meanany one or more of the following obligations or securities acquired at apurchase price of not greater than par, including those issued by Servicer, thetrustee under any Securitization or any of their respective Affiliates, payableon demand or having a maturity date not later than the Business Day immediatelyprior to the first Payment Date following the date of acquiring such investmentand meeting one of the appropriate standards set forth below:

 

(i)            obligations of, or obligations fullyguaranteed as to payment of principal and interest by, the United States or anyagency or instrumentality thereof provided such obligations are backed by thefull faith and credit of the United States of America including, withoutlimitation, obligations of: the U.S. Treasury (all direct or fully guaranteedobligations), the Farmers Home Administration (certificates of beneficialownership), the General Services Administration (participation certificates),the U.S. Maritime Administration (guaranteed Title XI financing), the SmallBusiness Administration (guaranteed participation certificates and guaranteedpool certificates), the U.S. Department of Housing and Urban Development (localauthority bonds) and the Washington Metropolitan Area Transit Authority(guaranteed transit bonds); provided, however, that theinvestments described in this clause must (A) have a predetermined fixed dollarof principal due at maturity that cannot vary or change, (B) if rated byS&P, must not have an “r” highlighter affixed to their rating, (C) if suchinvestments have a variable rate of interest, such interest rate must be tiedto a single interest rate index plus

 

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afixed spread (if any) and must move proportionately with that index, and (D)such investments must not be subject to liquidation prior to their maturity;

 

(ii)           Federal Housing Administration debentures;

 

(iii)          obligations of the following United Statesgovernment sponsored agencies: Federal Home Loan Mortgage Corp. (debtobligations), the Farm Credit System (consolidated systemwide bonds and notes),the Federal Home Loan Banks (consolidated debt obligations), the FederalNational Mortgage Association (debt obligations), the Student Loan MarketingAssociation (debt obligations), the Financing Corp. (debt obligations), and theResolution Funding Corp. (debt obligations); provided, however, thatthe investments described in this clause must (A) have a predetermined fixeddollar of principal due at maturity that cannot vary or change, (B) if rated byS&P, must not have an “r” highlighter affixed to their rating, (C) if suchinvestments have a variable rate of interest, such interest rate must be tiedto a single interest rate index plus a fixed spread (if any) and must moveproportionately with that index, and (D) such investments must not be subjectto liquidation prior to their maturity;

 

(iv)          federal funds, unsecured certificates ofdeposit, time deposits, bankers’ acceptances and repurchase agreements withmaturities of not more than 365 days of any bank, the short term obligations ofwhich at all times are rated in the highest short term rating category by eachRating Agency (or, if not rated by all Rating Agencies, rated by at least oneRating Agency in the highest short term rating category and otherwiseacceptable to each other Rating Agency, as confirmed in writing that suchinvestment would not, in and of itself, result in a downgrade, qualification orwithdrawal of the initial, or, if higher, then current ratings assigned to theSecurities); provided, however, that the investments described inthis clause must (A) have a predetermined fixed dollar of principal due atmaturity that cannot vary or change, (B) if rated by S&P, must not have an “r”highlighter affixed to their rating, (C) if such investments have a variablerate of interest, such interest rate must be tied to a single interest rateindex plus a fixed spread (if any) and must move proportionately with thatindex, and (D) such investments must not be subject to liquidation prior totheir maturity;

 

(v)           fully Federal Deposit InsuranceCorporation-insured demand and time deposits in, or certificates of deposit of,or bankers’ acceptances issued by, any bank or trust company, savings and loanassociation or savings bank, the short term obligations of which at all timesare rated in the highest short term rating category by each Rating Agency (or,if not rated by all Rating Agencies, rated by at least one Rating Agency in thehighest short term rating category and otherwise acceptable to each otherRating Agency, as confirmed in writing that such investment would not, in andof itself, result in a downgrade, qualification or withdrawal of the initial,or, if higher, then current ratings assigned to the Securities); provided,however, that the investments described in this clause must (A) have apredetermined fixed dollar of principal due at maturity that cannot vary orchange, (B) if rated by S&P, must not have an “r” highlighter affixed totheir rating, (C) if such investments have a variable rate of interest, suchinterest rate must be tied to a single interest rate index plus a fixed spread(if any) and must move

 

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proportionatelywith that index, and (D) such investments must not be subject to liquidationprior to their maturity;

 

(vi)          debt obligations with maturities of not morethan 365 days and at all times rated by each Rating Agency (or, if not rated byall Rating Agencies, rated by at least one Rating Agency and otherwiseacceptable to each other Rating Agency, as confirmed in writing that suchinvestment would not, in and of itself, result in a downgrade, qualification orwithdrawal of the initial, or, if higher, then current ratings assigned to theSecurities) in its highest long-term unsecured rating category; provided,however, that the investments described in this clause must (A) have apredetermined fixed dollar of principal due at maturity that cannot vary orchange, (B) if rated by S&P, must not have an “r” highlighter affixed totheir rating, (C) if such investments have a variable rate of interest, suchinterest rate must be tied to a single interest rate index plus a fixed spread(if any) and must move proportionately with that index, and (D) suchinvestments must not be subject to liquidation prior to their maturity;

 

(vii)         commercial paper (including bothnon-interest-bearing discount obligations and interest-bearing obligationspayable on demand or on a specified date not more than one year after the dateof issuance thereof) with maturities of not more than 365 days and that at alltimes is rated by each Rating Agency (or, if not rated by all Rating Agencies,rated by at least one Rating Agency and otherwise acceptable to each otherRating Agency, as confirmed in writing that such investment would not, in andof itself, result in a downgrade, qualification or withdrawal of the initial,or, if higher, then current ratings assigned to the Securities) in its highestshort-term unsecured debt rating; provided, however, that theinvestments described in this clause must (A) have a predetermined fixed dollarof principal due at maturity that cannot vary or change, (B) if rated byS&P, must not have an “r” highlighter affixed to their rating, (C) if suchinvestments have a variable rate of interest, such interest rate must be tiedto a single interest rate index plus a fixed spread (if any) and must moveproportionately with that index, and (D) such investments must not be subjectto liquidation prior to their maturity;

 

(viii)        units of taxable money market funds, whichfunds are regulated investment companies, seek to maintain a constant net assetvalue per share and invest solely in obligations backed by the full faith andcredit of the United States, which funds have the highest rating available fromeach Rating Agency (or, if not rated by all Rating Agencies, rated by at leastone Rating Agency and otherwise acceptable to each other Rating Agency, asconfirmed in writing that such investment would not, in and of itself, resultin a downgrade, qualification or withdrawal of the initial, or, if higher, thencurrent ratings assigned to the Securities) for money market funds or mutualfunds; and

 

(ix)           any other security, obligation or investmentwhich has been approved as a Permitted Investment in writing by (a) Lender and(b) each Rating Agency, as evidenced by a written confirmation that thedesignation of such security, obligation or investment as a PermittedInvestment will not, in and of itself, result in a downgrade, qualification orwithdrawal of the initial, or, if higher, then current ratings assigned to theSecurities by such Rating Agency;

 

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provided, however,that no obligation or security shall be a Permitted Investment if (A) suchobligation or security evidences a right to receive only interest payments or(B) the right to receive principal and interest payments on such obligation orsecurity are derived from an underlying investment that provides a yield tomaturity in excess of 120% of the yield to maturity at par of such underlyinginvestment.

 

“**Person**” shall mean any individual,corporation, partnership, joint venture, limited liability company, estate,trust, unincorporated association, any federal, state, county or municipalgovernment or any bureau, department or agency thereof and any fiduciary actingin such capacity on behalf of any of the foregoing.

 

“**Personal Property**” shall have themeaning set forth in the granting clause of the Mortgage with respect to theProperty.

 

“**Physical Conditions Report**” shallmean, with respect to the Property, a report prepared by a company satisfactoryto Lender regarding the physical condition of the Property, satisfactory inform and substance to Lender in its sole discretion, which report shall, amongother things, (a) confirm that the Property and its use complies, in allmaterial respects, with all applicable Legal Requirements (including, without limitation,zoning, subdivision and building laws) and (b) include a copy of a finalcertificate of occupancy with respect to all Improvements on the Property.

 

“**Policies**” shall have the meaningspecified in Section 6.1(b) hereof.

 

“**Prepayment Consideration**” shall havethe meaning set forth in Section 2.3.1.

 

“**Prepayment Rate**” shall mean thebond equivalent yield (in the secondary market) on the United States TreasurySecurity that as of the Prepayment Rate Determination Date has a remaining termto maturity closest to, but not exceeding, the remaining term to the MaturityDate, as most recently published in the “Treasury Bonds, Notes and Bills”section in The Wall Street Journal as of the date of the related tender of thepayment. If more than one issue of United States Treasury Securities has theremaining term to the Maturity Date referred to above, the “Prepayment Rate”shall be the yield on the United States Treasury Security most recently issuedas of such date. If the publication of the Prepayment Rate in The Wall StreetJournal is discontinued, Lender shall determine the Prepayment Rate on thebasis of “Statistical Release H.15(519), Selected Interest Rates,” or anysuccessor publication, published by the Board of Governors of the FederalReserve System, or on the basis of such other publication or statistical guideas Lender may reasonably select.

 

“**Prepayment Rate Determination Date**”shall mean the date which is five (5) Business Days prior to the prepaymentdate.

 

“**Property**” shall mean the parcel ofreal property, the Improvements thereon and all personal property owned byBorrower and encumbered by the Mortgage, together with all rights pertaining tosuch property and Improvements, as more particularly described in the GrantingClauses of the Mortgage and referred to therein as the “Property.”

 

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“**Provided Information**” shall havethe meaning set forth in Section 9.1(a) hereof.

 

“**Purchase Contract**” shall mean thatcertain letter agreement dated April 21, 2004, between Inland Real EstateAcquisitions, Inc., Lakepointe Towne Crossing, L.P. (I & II), Davis TowneCrossing, L.P., PRTC Pleasant Run Town Crossing, L.P. and MTC Mansfield TowneCrossing, L.P., as heretofore or hereafter assigned, amended and modified.

 

“**Purchase Price Adjustment**” shallmean an adjustment of the purchase price with respect to the acquisition of theProperty in connection with an “Earnout Closing” pursuant to Section 17 of thePurchase Contract.

 

“**Qualifying Entity**” shall have themeaning set forth in Section 5.2.13(b) hereof.

 

“**Qualifying Manager**”shall mean either (a) a reputable and experienced management organizationreasonably satisfactory to Lender, which organization or its principals possessat least ten (10) years experience in managing properties similar in size,scope and value of the Property and which, on the date Lender determineswhether such management organization is a Qualifying Manager, manages at leastone million square feet of retail space, provided that Borrower shall haveobtained prior written confirmation from the Rating Agency that management ofthe Property by such entity will not cause a downgrading, withdrawal orqualification of the then current rating of the securities issued pursuant tothe Securitization, or (b) the fee owner of the Property, provided that suchowner possesses experience in managing and operating properties similar insize, scope and value of the Property. Lender acknowledges that on the datehereof Inland Southwest Management LLC shall be deemed to be a QualifyingManager. Lender also acknowledges that a new property management company thatis an affiliate of or under common control with Inland Southwest Management LLCalso shall be deemed a Qualifying Manager.

 

“**Rating Agencies**” shall mean each ofStandard & Poor’s Ratings Services, a division, of McGraw-Hill, Inc., Moody’sInvestors Service, Inc. and Fitch, Inc., or any other nationally-recognizedstatistical rating agency which has been approved by Lender.

 

“**Rating Surveillance Charge**” shallhave the meaning set forth in Section 9.3 hereof.

 

“**Relevant Leasing Threshold**” shallmean, any Lease for an amount of leaseable square footage equal to or greaterthan [10,000] square feet.

 

“**Relevant Restoration Threshold**”shall mean Three Hundred Fifty Thousand and No/100 dollars ($350,000.00).

 

“**REMIC Trust**” shall mean a “realestate mortgage investment conduit” within the meaning of Section 860D of theCode that holds the Note.

 

“**Rents**” shall mean, with respect tothe Property, all rents, rent equivalents, moneys payable as damages or in lieuof rent or rent equivalents, royalties (including, without limitation, all oiland gas or other mineral royalties and bonuses), income, receivables, receipts,

 

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revenues, deposits (including, without limitation, security, utilityand other deposits), accounts, cash, issues, profits, charges for servicesrendered, and other consideration of whatever form or nature received by orpaid to or for the account of or benefit of Borrower or its agents or employeesfrom any and all sources arising from or attributable to the Property, andproceeds, if any, from business interruption or other loss of income insurance,including the Other Contract Funds.

 

“**Replacement Reserve Account**” shallhave the meaning set forth in Section 7.3.1 hereof.

 

“**Replacement Reserve Fund**” shallhave the meaning set forth in Section 7.3.1 hereof.

 

“**Replacement Reserve Monthly Deposit**”shall have the meaning set forth in Section 7.3.1 hereof.

 

“**Replacements**” shall have themeaning set forth in Section 7.3.l(a) hereof.

 

“**Required Repair Account**” shall havethe meaning set forth in Section 7.1.1 hereof.

 

“**Required Repair Fund**” shall havethe meaning set forth in Section 7.1.1 hereof.

 

“**Required Repairs**” shall have themeaning set forth in Section 7.1.1 hereof.

 

“**Reserve Funds**” shall mean the Taxand Insurance Escrow Fund, the Replacement Reserve Fund, the Required RepairFund (if any), or any other escrow fund established by the Loan Documents.

 

“**Restoration**” shall have the meaningset forth in Section 6.2 hereof.

 

“**Securities**” shall have the meaningset forth in Section 9.1 hereof.

 

“**Securities Act**” shall have themeaning set forth in Section 9.2 hereof.

 

“**Securitization**” shall have themeaning set forth in Section 9.1 hereof.

 

“**Servicer**” shall have the meaningset forth in Section 9.6 hereof.

 

“**Servicing Agreement**” shall have themeaning set forth in Section 9.6 hereof.

 

“**Severed Loan Documents**” shall havethe meaning set forth in Section 8.2(c) hereof.

 

“**Severing Documentation**” shall havethe meaning set forth in Section 9.7 hereof. 

 

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“**Sole Member**” shall mean InlandWestern Retail Real Estate Trust, Inc., a Maryland corporation, the sole memberof the sole general partner of Borrower.

 

“**Special Purpose Entity**” means a corporation, limited partnership, limitedliability company, or Delaware statutory trust which at all times on and afterthe date hereof:

 

(i)            is organized solely for the purpose of (A)acquiring, developing, owning, holding, selling, leasing, transferring,exchanging, managing and operating the Property, entering into this Agreementwith the Lender, refinancing the Property in connection with a permittedrepayment of the Loan, and transacting lawful business that is incident,necessary and appropriate to accomplish the foregoing; or (B) acting as ageneral partner of the limited partnership that owns the Property, a member ofthe limited liability company that owns the Property or the beneficiary ortrustee of a Delaware statutory trust that owns the Property;

 

(ii)           is not engaged and will not engage in anybusiness unrelated to (A) the acquisition, development, ownership, managementor operation of the Property, (B) acting as general partner of the limitedpartnership that owns the Property, (C) acting as a member of the limitedliability company that owns the Property, or (D) acting as the beneficiary ortrustee of a Delaware statutory trust that owns the Property, as applicable;

 

(iii)          does not have and will not have any assetsother than those related to the Property or its partnership interest in thelimited partnership, the member interest in the limited liability company orthe beneficial interest in the Delaware statutory trust that owns the Propertyor acts as the general partner, managing member or beneficiary or trusteethereof, as applicable;

 

(iv)          has not engaged, sought or consented to andwill not engage in, seek or consent to any dissolution, winding up,liquidation, consolidation, merger, sale of all or substantially all of itsassets, transfer of partnership, membership or beneficial or trustee interests(if such entity is a general partner in a limited partnership, a member in alimited liability company or a beneficiary of a Delaware statutory trust) oramendment of its limited partnership agreement, articles of incorporation,articles of organization, certificate of formation, operating agreement ortrust formation and governance documents (as applicable) with respect to thematters set forth in this definition;

 

(v)           if such entity is a limited partnership, hasas its only general partners, Special Purpose Entities that are corporations,limited partnerships or limited liability companies;

 

(vi)          if such entity is a corporation, has at leastone (1) Independent Director, and has not caused or allowed and will not causeor allow the board of directors of such entity to take any action related to abankruptcy or insolvency proceeding or a voluntary dissolution without the unanimousaffirmative vote of 100% of the members of its board of directors, includingthe Independent Director;

 

(vii)         if such entity is a limited liability companyand such limited liability company has more than one member, such limitedliability company has as its manager a

 

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SpecialPurpose Entity that is a corporation and that owns at least 1.0% (one percent)of the equity of the limited liability company;

 

(viii)        if such entity is a limited liability companyand such limited liability company has only one member, such limited liabilitycompany (a) has been formed under Delaware law and (b) has either a corporationor other person or entity that shall become a member of the limited liabilitycompany upon the dissolution or disassociation of the member, and (c) has notless than one (1) Independent Director, and (d) will not cause or allow itsboard of directors to take any action related to a bankruptcy or insolvencyproceeding or a voluntary dissolution without the unanimous affirmative vote of100% of the members of its board of directors, including the IndependentDirector;

 

(ix)           if such entity is (a) a limited liabilitycompany, has articles of organization, a certificate of formation and/or anoperating agreement, as applicable, (b) a limited partnership, has a limitedpartnership agreement, (c) a corporation, has a certificate of incorporation orarticles, or (d) a Delaware statutory trust, has organizational documents that,in each case, provide that such entity will not: (1) dissolve, merge,liquidate, consolidate; (2) except as permitted herein, sell all orsubstantially all of its assets or the assets of the Borrower (as applicable)except as permitted herein; (3) engage in any other business activity, or amendits organizational documents with respect to the matters set forth in thisdefinition without the consent of the Lender; or (4) without the affirmativevote of all other directors of the corporation (that is such entity or thegeneral partner or managing or co-managing member or manager of such entity),file a bankruptcy or insolvency petition or otherwise institute insolvencyproceedings with respect to itself or to any other entity in which it has adirect or indirect legal or beneficial ownership interest;

 

(x)            has not entered into or been a party to, andwill not enter into or be a party to, any transaction with its partners,members, beneficiaries, shareholders or Affiliates except (A) in the ordinarycourse of its business and on terms which are intrinsically fair, commerciallyreasonable and are no less favorable to it than would be obtained in acomparable arm’s-length transaction with an unrelated third party and (B) inconnection with this Agreement;

 

(xi)           is solvent and pays its debts and liabilities(including, as applicable, shared personnel and overhead expenses) from itsassets as the same become due, and is maintaining adequate capital for thenormal obligations reasonably foreseeable in a business of its size andcharacter and in light of its contemplated business operations;

 

(xii)          has not failed and will not fail to correctany known misunderstanding regardingthe separate identity of such entity;

 

(xiii)         will file its own tax returns; provided,however, that Borrower’s assets and income may be included in a consolidatedtax return of its parent companies if inclusion on such consolidated tax returnis in compliance with applicable law;

 

(xiv)        has maintained and will maintain its ownresolutions and agreements;

 

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(xv)         (a) has not commingled and will not commingleits funds or assets with those of any other Person and (b) has not participatedand will not participate in any cash management system with any other Person,except with respect to a custodial account maintained by the Manager on behalfof Affiliates of Borrower and, with respect to funds in such custodial account,has separately accounted, and will continue to separately account for, eachitem of income and expense applicable to the Property and Borrower;

 

(xvi)        has held and will hold its assets in its ownname;

 

(xvii)       has conducted and will conduct its businessin its name or in a name franchised or licensed to it by an entity other thanan Affiliate of Borrower;

 

(xviii)      has maintained and will maintain its balancesheets, operating statements and other entity documents separate from any otherPerson and has not permitted and will not permit its assets to be listed asassets on the financial statement of any other entity except as required orpermitted by accounting principles reasonably acceptable to Lender,consistently applied; provided, however, that (i) any suchconsolidated financial statement shall contain a note indicating that itmaintains separate balance sheets and operating statements for the Borrower andthe Property, or (ii) if such Person is controlled by Inland Western RetailReal Estate Trust, Inc., then such Person may be included in the consolidatedfinancial statement of Inland Western Retail Real Estate Trust, Inc. providedsuch consolidated financial statement contains a note indicating that itmaintains separate financial records for each Person controlled by InlandWestern Retail Real Estate Trust, Inc.;

 

(xix)         has a sufficient number of employees in lightof its contemplated business operations, which may be none;

 

(xx)          has observed and will observe allpartnership, corporate, limited liability company or Delaware business trustformalities, as applicable;

 

(xxi)         has and will have no Indebtedness (includingloans (whether or not such loans are evidenced by a written agreement) betweenBorrower and any Affiliates of Borrower and relating to the management of fundsin the custodial account maintained by the Manager) other than (i) the Loan,(ii) liabilities incurred in the ordinary course of business relating to theownership and operation of the Property and the routine administration ofBorrower, which liabilities are not more than sixty (60) days past the dateincurred (unless disputed in accordance with applicable law), are not evidencedby a note and are paid when due, and which amounts are normal and reasonableunder the circumstances, and (iii) such other liabilities that are permittedpursuant to this Agreement;

 

(xxii)        has not and will not assume or guarantee orbecome obligated for the debts of any other Person or hold out its credit asbeing available to satisfy the obligations of any other Person except aspermitted pursuant to this Agreement;

 

(xxiii)       has not and will not acquire obligations orsecurities of its partners, members or shareholders or any other Affiliate;

 

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(xxiv)       has allocated and will allocate fairly andreasonably any overhead expenses that are shared with any Affiliate, including,but not limited to, paying for shared office space and services performed byany employee of an affiliate;

 

(xxv)        has not maintained or used, and will notmaintain or use, invoices and checks bearing the name of any other Person, provided,however, that Manager, on behalf of such Person, may maintain and useinvoices and checks bearing Manager’s name;

 

(xxvi)       has not pledged and will not pledge itsassets for the benefit of any other Person except as permitted or requiredpursuant to this Agreement;

 

(xxvii)      has held itself out and identified itself andwill hold itself out and identify itself as a separate and distinct entityunder its own name or in a name franchised or licensed to it by an entity otherthan an Affiliate of Borrower and not as a division or part of any otherPerson, except for services rendered by Manager under the Management Agreement,so long as Manager holds itself out as an agent of the Borrower;

 

(xxviii)     has maintained and will maintain its assetsin such a manner that it will not be costly or difficult to segregate,ascertain or identify its individual assets from those of any other Person;

 

(xxix)       has not made and will not make loans to anyPerson or hold evidence of indebtedness issued by any other person or entity(other than cash and investment-grade securities issued by an entity that isnot an Affiliate of or subject to common ownership with such entity);

 

(xxx)        has not identified and will not identify itspartners, members or shareholders, or any Affiliate of any of them, as adivision or part of it, and has not identified itself and shall not identifyitself as a division of any other Person;

 

(xxxi)       has not entered into or been a party to, andwill not enter into or be a party to, any transaction with its partners,members, shareholders or Affiliates except (A) in the ordinary course of itsbusiness and on terms which are intrinsically fair, commercially reasonable andare no less favorable to it than would be obtained in a comparable arm’s-lengthtransaction with an unrelated third party and (B) in connection with thisAgreement;

 

(xxxii)      does not and will not have any of itsobligations guaranteed by any Affiliate except as otherwise required in theLoan Documents; and

 

(xxxiii)     has complied and will comply with all of the termsand provisions contained in its organizational documents. The statement offacts contained in its organizational documents are true and correct and willremain true and correct.

 

“**State**” shall mean, with respect tothe Property, the State or Commonwealth in which the Property or any partthereof is located.

 

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“**Survey**” shall mean a survey of theProperty in question prepared by a surveyor licensed in the State andsatisfactory to Lender and the company or companies issuing the Title InsurancePolicies, and containing a certification of such surveyor satisfactory toLender.

 

“**Tax and Insurance Escrow Fund**” shallhave the meaning set forth in Section 7.2 hereof regardless of whether thefunds held therein are held by Lender for the payment of Taxes or InsurancePremiums or both.

 

“**Taxes**” shall mean all real estateand personal property taxes, assessments, water rates or sewer rents, now orhereafter levied or assessed or imposed against the Property or any partthereof.

 

“**Tenant**” shall mean any person orentity with a possessory right to all or any part of the Property pursuant to aLease or other written agreement.

 

“**Terrorism Insurance Guarantor**” shallhave the meaning set forth in Section 6.1 hereof.

 

“**Title Insurance Policies**” shallmean, with respect to the Property, one or more mortgagee title insurancepolicies in the form (acceptable to Lender) promulgated by the state Board ofInsurance issued with respect to the Property and insuring the lien of theMortgage encumbering the Property.

 

“**Transferee**” shall have the meaningset forth in Section 5.2.13 hereof.

 

“**Trustee**” shall have the meaning setforth in the Mortgage.

 

“**UCC**” or “**UniformCommercial Code**” shall mean the Uniform Commercial Code as ineffect in the applicable State in which the Property is located.

 

“**U.S. Obligations**” shall mean directnon-callable obligations of the United States of America as defined in Section2(a)(16) of the Investment Company Act as amended (15 USC 80a-1) stated in REMICSection 1.86 OG-2(a)(8).

 

Section 1.2             Principlesof Construction. Allreferences to sections and schedules are to sections and schedules in or to thisAgreement unless otherwise specified. All uses of the word “including” shallmean “including, without limitation” unless the context shall indicateotherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder”and words of similar import when used in this Agreement shall refer to thisAgreement as a whole and not to any particular provision of this Agreement.Unless otherwise specified, all meanings attributed to defined terms hereinshall be equally applicable to both the singular and plural forms of the termsso defined.

 

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**ARTICLE II**

** **

**GENERAL TERMS**

 

Section 2.1             LoanCommitment; Disbursementto Borrower.

 

2.1.1        The Loan. Subject toand upon the terms and conditions set forth herein, Lender hereby agrees tomake and Borrower hereby agrees to accept the Loan on the Closing Date.

 

2.1.2        Disbursement to Borrower.  Borrower may request andreceive only one borrowing hereunder in respect of the Loan and any amountborrowed and repaid hereunder in respect of the Loan may not be reborrowed.

 

2.1.3        The Note, Mortgage and Loan Documents. The Loan shall be evidenced by the Note and secured by the Mortgage,the Assignment of Leases and the other Loan Documents.

 

2.1.4        Use of Proceeds.Borrower shall use the proceeds of the Loan to (a) repay and discharge anyexisting loans relating to the Property, (b) pay all past-due Basic Carrying Costs,if any, in respect of the Property, (c) make deposits into the Reserve Funds onthe Closing Date in the amounts provided herein, (d) pay costs and expensesincurred in connection with the Closing of the Loan, as approved by Lender, (e)fund any working capital requirements of the Property, and (f) distribute thebalance, if any, to Borrower.

 

Section 2.2             Interest;Loan Payments: Late Payment Charge.

 

2.2.1        Interest Generally.   Interest on the outstanding principalbalance of the Loan shall accrue from the Closing Date to but excluding theMaturity Date at the Interest Rate.

 

2.2.2        Interest Calculation.  Interest on the outstanding principal balanceof the Loan shall be calculated on the basis of a three hundred sixty (360) dayyear comprised of twelve (12) months of thirty (30) days each, except thatinterest due and payable for a period of less than a full month shall becalculated by multiplying the actual number of days elapsed in the period forwhich the calculation is being made by a daily rate based on a three hundredsixty (360) day year.

 

2.2.3        Payments Generally.   Borrower shall pay to Lender (a) on theClosing Date, an amount equal to interest only on the outstanding principalbalance of the Loan from the Closing Date up to but not including the firstPayment Date following the Closing Date, and (b) on February 1, 2005 and eachPayment Date thereafter up to but not including the Maturity Date, the MonthlyDebt Service Payment Amount which is an amount equal to the interest on the outstandingprincipal amount of the Loan for the prior calendar month, calculated as setforth herein, which payments shall be applied to accrued and unpaid interest atthe Interest Rate.

 

2.2.4        Intentionally Deleted.

 

2.2.5        Payment on Maturity Date. Borrower shall pay to Lender on the Maturity Date the outstandingprincipal balance of the Loan, all accrued and unpaid interest and all other amountsdue hereunder and under the Note, the Mortgage and other the Loan Documents.

 

2.2.6        Payments after Default.Upon the occurrence and during the continuance of an Event of Default, intereston the outstanding principal balance of the Loan and, to the extent permittedby law, overdue interest and other amounts due in respect of the Loan, shall

 

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accrueat the Default Rate, calculated from the date such payment was due withoutregard to any grace or cure periods contained herein. Interest at the DefaultRate shall be computed from the occurrence of the Event of Default until theearlier of (i) the cure of such Event of Default in a manner reasonablysatisfactory to Lender or (ii) the actual receipt and collection of the Debt(or that portion thereof that is then due). To the extent permitted by applicablelaw, interest at the Default Rate shall be added to the Debt, shall itselfaccrue interest at the same rate as the Loan and shall be secured by theMortgage.  This paragraph shall not beconstrued as an agreement or privilege to extend the date of the payment of theDebt, nor as a waiver of any other right or remedy accruing to Lender by reasonof the occurrence of any Event of Default and Lender retains its rights underthe Note and this Agreement to accelerate and to continue to demand payment ofthe Debt upon the happening and continuance of any Event of Default.

 

2.2.7        Late Payment Charge.   If any principal, interest or any other sumsdue under the Loan Documents is not paid by Borrower on or prior to the datewhich is five (5) days after the date it is due, Borrower shall pay to Lenderupon demand an amount equal to the lesser of five percent (5%) of such unpaidsum or the maximum amount permitted by applicable law in order to defray theexpense incurred by Lender in handling and processing such delinquent paymentand to compensate Lender for the loss of the use of such delinquent payment.Any such amount shall be secured by the Mortgage and the other Loan Documentsto the extent permitted by applicable law. The foregoing late payment charge shall not apply to the payment of all outstandingprincipal, interest and other sums due on the Maturity Date.

 

2.2.8        Usury Savings.   The provisions of Section 4 of the Note arehereby incorporated by reference into this Agreement to the same extent and withthe same force as if fully set forth herein.

 

Section 2.3             Prepayments.

 

2.3.1        Voluntary Prepayments.

 

(a)           Borrower may at any time prior to the Maturity Date, provided it hasgiven Lender prior written notice in accordance with the terms of this Agreement,prepay the unpaid principal balance of the Loan in whole, but not in part, bypaying, together with the amount to be prepaid, (i) interest accrued and unpaidon the portion of the principal balance of the Loan being prepaid to andincluding the date of prepayment, (ii) unless prepayment is tendered on aPayment Date, an amount equal to the interest that would have accrued on theamount being prepaid after the date of prepayment through and including thenext Payment Date had the prepayment not been made (which amount shallconstitute additional consideration for the prepayment), (iii) all other sumsthen due under this Agreement, the Note, the Mortgage and the other LoanDocuments, and (iv) a prepayment consideration (the “**Prepayment Consideration**”) equal to the greater of (A) onepercent (1%) of the principal balance of the Loan being prepaid or (B) theexcess, if any, of (1) the sum of the present values of all then-scheduledpayments of principal and interest under this Agreement including, but not limitedto, principal and interest on the Maturity Date (with each such paymentdiscounted to its present value at the date of prepayment at the rate which,when compounded monthly, is equivalent to the Prepayment Rate), over (2) theprincipal amount of the Loan being prepaid. Lender shall notify Borrower of theamount and the basis of determination of the required prepayment consideration.

 

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(b)           Notwithstanding anything in paragraph (a) of this Section to thecontrary, on the Payment Date that is three months prior to the Maturity Date,and on each day thereafter through the Maturity Date, Borrower may, at itsoption, prepay the Debt without payment of any Prepayment Consideration; provided,however, if such prepayment is not paid on a regularly scheduled PaymentDate, the Debt shall include interest that would have accrued on suchprepayment through and including the day immediately preceding the next regularlyscheduled Payment Date.  Borrower’s rightto prepay any portion of the principal balance of the Loan shall be subject to(i) Borrower’s submission of a notice to Lender setting forth the amount to beprepaid and the projected date of prepayment, which date shall be no less thanthirty (30) days from the date of such notice, and (ii) Borrower’s actualpayment to Lender of the amount to be prepaid as set forth in such notice onthe projected date set forth in such notice or any day following such projecteddate occurring in the same calendar month as such projected date.

 

2.3.2        Mandatory Prepayments.  On the next occurring Payment Date following thedate on which Borrower actually receives any Net Proceeds, if Lender is notobligated to make such Net Proceeds available to Borrower pursuant to thisAgreement for the restoration of the Property, Borrower shall, at Lender’soption, prepay the outstanding principal balance of the Note in an amount equalto one hundred percent (100%) of such Net Proceeds. No Prepayment Considerationshall be due in connection with any prepayment made pursuant to this Section 2.3.2.  Any partial prepayment under this Sectionshall be applied to the last payments of principal due under the Loan.

 

2.3.3        Prepayments after Default. Following an Event of Default, if Borrower or anyone on Borrower’sbehalf makes a tender of payment of all or any portion of the Debt at any timeprior to a foreclosure sale (including a sale under the power of sale under theMortgage), or during any redemption period after foreclosure, (i) the tender ofpayment shall constitute an evasion of Borrower’s obligation to pay anyPrepayment Consideration due under this Agreement and such payment shall,therefore, to the maximum extent permitted by law, include a premium equal tothe Prepayment Consideration that would have been payable on the date of suchtender had the Loan not been so accelerated, or (ii) if at the time of suchtender a prepayment of the principal amount of the Loan would have beenprohibited under this Agreement had the principal amount of the Loan not beenso accelerated, the tender of payment shall constitute an evasion of suchprepayment prohibition and shall, therefore, to the maximum extent permitted bylaw, include an amount equal to the greater of (i) 1% of the then principal amountof the Loan (or the relevant portion thereof being prepaid) and (ii) an amountequal to the excess of (A) the sum of the present values of a series ofpayments payable at the times and in the amounts equal to the payments ofprincipal and interest (including, but not limited to the principal andinterest payable on the Maturity Date) which would have been scheduled to be payableafter the date of such tender under this Agreement had the Loan (or therelevant portion thereof) not been accelerated, with each such paymentdiscounted to its present value at the date of such tender at the rate whichwhen compounded monthly is equivalent to the Prepayment Rate, over (B) the thenprincipal amount of the Loan.

 

Section 2.4             IntentionallyOmitted.

 

Section 2.5             Releaseof Property.   Except as set forth in this Section 2.5, norepayment or prepayment of all or any portion of the Note shall cause, giverise to a right to

 

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require,or otherwise result in, the release of any Lien of the Mortgage on theProperty. If Borrower has elected to prepay the entire amount of the Loanpursuant to Section 2.3.1 and the requirements of this Section 2.5 have beensatisfied, the Property shall be released from the Lien of the Mortgage.

 

2.5.1        Release on Payment in Full. Lender shall, upon the written request and at the expense ofBorrower, upon payment in full of all principal and interest on the Loan andall other amounts due and payable under the Loan Documents in accordance withthe terms and provisions of the Note and this Loan Agreement, release the Lienof the Mortgage on the Property not theretofore released.

 

Section 2.6             Mannerof Making Payments.

 

2.6.1        Making of Payments.Each payment by Borrower hereunder or under the Note shall be made in fundssettled through the New York Clearing House Interbank Payments System or otherfunds immediately available to Lender by 1:00 p.m., New York City time, on the datesuch payment is due, to Lender by deposit to such account as Lender maydesignate by written notice to Borrower. Whenever any payment hereunder orunder the Note shall be stated to be due on a day which is not a Business Day,such payment shall be made on the next succeeding Business Day.

 

2.6.2        No Deductions, Etc.All payments made by Borrower hereunder or under the Note or the other LoanDocuments shall be made irrespective of, and without any deduction for, anysetoff, defense or counterclaims.

 

**ARTICLE III**

** **

**CONDITIONSPRECEDENT**

 

Section 3.1             ConditionsPrecedent to Closing. Theobligation of Lender to make the Loan hereunder is subject to the fulfillmentby Borrower or waiver by Lender of the following conditions precedent no laterthan the Closing Date:

 

3.1.1        Representations and Warranties; Compliance with Conditions.   The representations and warranties of Borrower contained in thisAgreement and the other Loan Documents shall be true and correct in allmaterial respects on and as of the Closing Date with the same effect as if madeon and as of such date, and no Default or an Event of Default shall haveoccurred and be continuing; and Borrower shall be in compliance in all materialrespects with all terms and conditions set forth in this Agreement and in eachother Loan Document on its part to be observed or performed.

 

3.1.2        Loan Agreement and Note.   Lender shall have received a copy of this Agreementand the Note, in each case, duly executed and delivered on behalf of Borrower.

 

3.1.3        Delivery of Loan Documents; Title Insurance; Reports; Leases, Etc.

 

(a)           Mortgage, Assignment of Leases and other LoanDocuments. Lender shall havereceived from Borrower fully executed and acknowledged counterparts of the

 

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Mortgage and the Assignment of Leases andevidence that counterparts of the Mortgage and Assignment of Leases havebeen delivered to the title company for recording, in the reasonable judgmentof Lender, so as to effectively create upon such recording valid andenforceable Liens upon the Property, of the requisite priority, in favor ofLender (or such trustee as may be required under local law), subject only tothe Permitted Encumbrances and such other Liens as are permitted pursuant tothe Loan Documents. Lender shall have also received from Borrower fullyexecuted counterparts of the Assignment of Management Agreement and the otherLoan Documents.

 

(b)           Title Insurance. Lender shall have received a Title Insurance Policy issued by a titlecompany acceptable to Lender and dated as of the Closing Date.  Such Title Insurance Policy shall (i) providecoverage in an amount equal to the principal amount of the Loan together with,if applicable, a “tie-in” or similar endorsement, (ii) insure Lender that the Mortgagecreates a valid lien on the Property encumbered thereby of the requisite priority,free and clear of all exceptions from coverage other than PermittedEncumbrances and standard exceptions and exclusions from coverage (as modifiedby the terms of any endorsements), (iii) contain such endorsements andaffirmative coverages as are available in the State and Lender may reasonablyrequest, and (iv) name Lender, its successors and assigns, as the insured.  The Title Insurance Policy shall beassignable without cost to Lender. Lender also shall have received evidence that all premiums in respect ofsuch Title Insurance Policy have been paid.

 

(c)           Survey.   Lender shall have received atitle survey for the Property, certified to the title company and Lender andtheir successors and assigns, in form and content satisfactory to Lender and preparedby a professional and properly licensed land surveyor satisfactory to Lender inaccordance with the most recent Minimum Standard Detail Requirements forALTA/ACSM Land Title Surveys.  Thefollowing additional items from the list of “Optional Survey Responsibilitiesand Specifications” (Table A) should be added to each survey: 2, 3, 4, 6, 8, 9,10, 11 and 13.  The survey shall reflectthe same legal description contained in the Title Insurance Policy relating tothe Property referred to in clause (ii) above and shall include, among otherthings, a legal description of the real property comprising part of such Propertyreasonably satisfactory to Lender. The surveyor’s seal shall be affixed to eachsurvey and the surveyor shall provide a certification for each survey in formand substance acceptable to Lender.

 

(d)           Insurance.  Lender shall have receivedvalid certificates of insurance for the policies of insurance requiredhereunder, satisfactory to Lender in its sole discretion, and evidence of thepayment of all premiums payable for the existing policy period.

 

(e)           Environmental Reports.   Lender shall have received an environmental report in respect of theProperty, in each case reasonably satisfactory to Lender.

 

(f)            Zoning.   With respect to the Property,Lender shall have received, at Lender’s option, (i) letters, if available, orother evidence with respect to the Property from the appropriate municipalauthorities (or other Persons) concerning applicable zoning and building laws,or (ii)  other evidence of zoningcompliance, in each case in substance reasonably satisfactory to Lender.

 

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(g)           Encumbrances. Borrower shall have taken or caused to betaken such actions in such a manner so that Lender has a valid and perfectedfirst Lien on the Property as of the Closing Date with respect to the Mortgageon the Property, subject only to applicable Permitted Encumbrances and suchother Liens as are permitted pursuant to the Loan Documents, and Lender shall havereceived satisfactory evidence thereof.

 

3.1.4        Related Documents.Each additional document not specifically referenced herein, but relating tothe transactions contemplated herein, shall have been duly authorized, executedand delivered by all parties thereto and Lender shall have received andapproved certified copies thereof.

 

3.1.5        Delivery of Organizational Documents.   On or before the ClosingDate, Borrower shall deliver or cause to be delivered to Lender copiescertified by Borrower of all organizational documentation related to Borrowerand/or the formation, structure, existence, good standing and/or qualificationto do business, as Lender may request in its sole discretion, including,without limitation, good standing certificates, qualifications to do businessin the appropriate jurisdictions, resolutions authorizing the entering into ofthe Loan and incumbency certificates as may be requested by Lender.

 

3.1.6        Opinions of Borrower’s Counsel. Lender shall have received opinions of Borrower’s counsel withrespect to (a) non-consolidation issues (“**InsolvencyOpinion**”) and (b) due execution, authority, enforceability ofthe Loan Documents and such other matters as Lender may reasonably require, allsuch opinions in form, scope and substance reasonably satisfactory to Lenderand Lender’s counsel in their reasonable discretion.

 

3.1.7        Budget. Borrowershall have delivered, and Lender shall have approved, the Annual Budget for thecurrent Fiscal Year.

 

3.1.8        Basic Carrying Costs.Borrower shall have paid all Basic Carrying Costs relating to the Propertywhich are in arrears, including without limitation, (a) accrued but unpaid insurancepremiums relating to the Property, (b) currently due and payable Taxes(including any in arrears) relating to the Property, and (c) currently dueOther Charges relating to the Property, which amounts shall be funded withproceeds of the Loan.

 

3.1.9        Completion of Proceedings. All organizational proceedings taken or to be taken in connectionwith the transactions contemplated by this Agreement and other Loan Documentsand all documents incidental thereto shall be reasonably satisfactory in formand substance to Lender, and Lender shall have received all such counterpartoriginals or certified copies of such documents as Lender may reasonablyrequest.

 

3.1.10      Payments.   All payments, deposits or escrows requiredto be made or established by Borrower under this Agreement, the Note and theother Loan Documents on or before the Closing Date shall have been paid.

 

3.1.11      Tenant Estoppels.   (a) Lender shall have received an executedtenant estoppel letter, which shall be in form and substance satisfactory toLender, from each Major Tenant, and (b) Borrower shall exercise reasonablecommercial efforts to deliver estoppel letters from Tenants occupying not lessthan seventy percent (70%), disregarding the area leased by

 

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Major Tenants of the remaining gross leasable area of the Property;provided, however, that, in the event that Borrower is unable to deliver someor all of the estoppels described in clause (b) of this Section 3.1.11, Lenderagrees that the requirement to deliver such letters to Lender shall be waivedby Lender as a condition precedent to the closing of the Loan so long asBorrower delivers on or before the Closing Date, a certificate executed byBorrower with respect to all applicable leases which shall be in substantiallythe same form and contain the same terms as set forth in Lender’s standard formof estoppel certificate.

 

3.1.12      Transaction Costs.Borrower shall have paid or reimbursed Lender for all title insurance premiums,recording and filing fees, costs of environmental reports, Physical ConditionsReports, appraisals and other reports, the fees and costs of Lender’s counseland all other third party out-of-pocket expenses incurred in connection withthe origination of the Loan.

 

3.1.13      Material Adverse Change.   There shall have been no material adverse changein the financial condition or business condition of Borrower, any Major Tenantor the Property since the date of the most recent financial statementsdelivered to Lender. The income and expenses of the Property, the occupancyleases thereof, and all other features of the transaction shall be as representedto Lender without material adverse change. Neither Borrower nor any of itsconstituent Persons nor any Major Tenant shall be the subject of anybankruptcy, reorganization, or insolvency proceeding.

 

3.1.14      Leases and Rent Roll.   Lender shall have received copies of alltenant leases, certified copies of any tenant leases as requested by Lender andcertified copies of all ground leases affecting the Property.  Lender shall have received a currentcertified rent roll of the Property, reasonably satisfactory in form andsubstance to Lender.

 

3.1.15      Subordination and Attornment.  Lender shall have receivedappropriate instruments acceptable to Lender in its commercially reasonablediscretion subordinating the Leases of each of the Major Tenants and other Leasesof record prior to the Mortgage and including an agreement by such Tenants toattorn to Lender in the event of a foreclosure or delivery of a deed in lieuthereof.

 

3.1.16      Tax Lot. Lendershall have received evidence that the Property constitutes one (1) or moreseparate tax lots, which evidence shall be reasonably satisfactory in form and substanceto Lender.

 

3.1.17      Physical Conditions Reports.     Lender shall have receivedPhysical Conditions Reports with respect to the Property, which reports shallbe reasonably satisfactory in form and substance to Lender.

 

3.1.18      Management Agreement.  Lender shall have received a certified copyof the Management Agreement with respect to the Property which shall besatisfactory in form and substance to Lender.

 

3.1.19      Appraisal. Lendershall have received an appraisal of the Property, which shall be satisfactoryin form and substance to Lender.

 

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3.1.20      Financial Statements.Lender shall have received (a) a balance sheet with respect to the Property forthe two most recent Fiscal Years and statements of income and statements ofcash flows with respect to the Property for the three most recent Fiscal Years,each in form and substance reasonably satisfactory to Lender or (b) such otherfinancial statements relating to the ownership and operation of the Property,in form and substance reasonably satisfactory to Lender.

 

3.1.21      Further Documents.  Lender or its counsel shall have receivedsuch other and further approvals, opinions, documents and information as Lenderor its counsel may have reasonably requested including the Loan Documents inform and substance reasonably satisfactory to Lender and its counsel.

 

3.1.22      Environmental Insurance.   If required by Lender, Borrower shall have obtaineda secured creditor environmental insurance policy with respect to the Property,which shall be in form and substance satisfactory to Lender. Any such policyshall have a term not less than the term of the Loan. Borrower shall haveprovided to Lender evidence that the premiums for such policy has been paid infull.

 

**ARTICLE IV**

** **

**REPRESENTATIONSAND WARRANTIES**

 

Section4.1             Borrower Representations. Borrower represents and warrants as of thedate hereof and as of the Closing Date that:

 

4.1.1        Organization.  Borrower has been duly organized and isvalidly existing and in good standing with requisite power and authority to ownthe Property and to transact the businesses in which it is now engaged.Borrower is duly qualified to do business and is in good standing in eachjurisdiction where it is required to be so qualified in connection with the Property,businesses and operations.  Borrowerpossesses all rights, licenses, permits and authorizations, governmental orotherwise, necessary to entitle it to own the Property and to transact thebusinesses in which it is now engaged, and the sole business of Borrower is theownership, management and operation of the Property.

 

4.1.2        Proceedings.   Borrower has taken all necessary action toauthorize the execution, delivery and performance of this Agreement and theother Loan Documents.  This Agreement andsuch other Loan Documents have been duly executed and delivered by or on behalfof Borrower and constitute legal, valid and binding obligations of Borrowerenforceable against Borrower in accordance with their respective terms, subjectonly to applicable bankruptcy, insolvency and similar laws affecting rights ofcreditors generally, and subject, as to enforceability, to general principlesof equity (regardless of whether enforcement is sought in a proceeding inequity or at law).

 

4.1.3        No Conflicts. Theexecution, delivery and performance of this Agreement and the other LoanDocuments by Borrower will not conflict with or result in a breach of any of theterms or provisions of, or constitute a default under, or result in thecreation or imposition of any lien, charge or encumbrance (other than pursuantto the Loan Documents) upon any of the

 

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property or assets of Borrower pursuant to the terms of any indenture,mortgage, deed of trust, loan agreement, partnership agreement or otheragreement or instrument to which Borrower is a party or by which any ofBorrower’s property or assets is subject, nor will such action result in anyviolation of the provisions of any statute or any order, rule or regulation ofany court or governmental agency or body having jurisdiction over Borrower orany of Borrower’s properties or assets, and any consent, approval,authorization, order, registration or qualification of or with any court or anysuch regulatory authority or other governmental agency or body required for theexecution, delivery and performance by Borrower of this Agreement or any otherLoan Documents has been obtained and is in full force and effect.

 

4.1.4        Litigation.    To Borrower’s knowledge, there are noactions, suits or proceedings at law or in equity by or before any GovernmentalAuthority or other agency now pending or threatened against or affectingBorrower or the Property, which actions, suits or proceedings, if determinedagainst Borrower or the Property, might materially adversely affect thecondition (financial or otherwise) or business of Borrower or the condition orownership of the Property.

 

4.1.5        Agreements.    Except such instruments and agreements setforth as Permitted Encumbrances in the Title Insurance Policy, Borrower is nota party to any agreement or instrument or subject to any restriction whichmight materially and adversely affect Borrower or the Property, or Borrower’sbusiness, properties or assets, operations or condition, financial or otherwise.To Borrower’s knowledge, Borrower is not in default in any material respect inthe performance, observance or fulfillment of any of the obligations, covenantsor conditions contained in any agreement or instrument to which it is a partyor by which Borrower or the Property are bound. Borrower has no material financial obligation under any indenture, mortgage,deed of trust, loan agreement or other agreement or instrument to whichBorrower is a party or by which Borrower or the Property is otherwise bound,other than (a) obligations incurred in the ordinary course of the operation ofthe Property and (b) obligations under the Loan Documents.

 

4.1.6        Title.   Borrower has good and indefeasible feesimple title to the real property comprising part of the Property and goodtitle to the balance of the Property, free and clear of all Liens whatsoeverexcept the Permitted Encumbrances, such other Liens as are permitted pursuantto the Loan Documents and the Liens created by the Loan Documents. TheMortgage, when properly recorded in the appropriate records, together with anyUniform Commercial Code financing statements required to be filed in connectiontherewith, will create (a) a valid, perfected lien on the Property, subjectonly to Permitted Encumbrances and the Liens created by the Loan Documents and(b) perfected security interests in and to, and perfected collateral assignmentof, all personalty (including the Leases), all in accordance with the termsthereof, in each case subject only to any applicable Permitted Encumbrances,such other Liens as are permitted pursuant to the Loan Documents and the Lienscreated by the Loan Documents. There are no claims for payment for work, laboror materials affecting the Property which are due and unpaid under thecontracts pursuant to which such work or labor was performed or materialsprovided which are or may become a lien prior to, or of equal priority with,the Liens created by the Loan Documents.

 

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4.1.7        Solvency; No Bankruptcy Filing. Borrower (a) has not entered into the transaction or executed theNote, this Agreement or any other Loan Documents with the actual intent tohinder, delay or defraud any creditor and (b) received reasonably equivalentvalue in exchange for its obligations under such Loan Documents.  Giving effect to the Loan, the fair saleablevalue of Borrower’s assets exceeds and will, immediately following the makingof the Loan, exceed Borrower’s total liabilities, including, withoutlimitation, subordinated, unliquidated, disputed and contingent liabilities.The fair saleable value of Borrower’s assets is and will, immediately followingthe making of the Loan, be greater than Borrower’s probable liabilities,including the maximum amount of its contingent liabilities on its debts as suchdebts become absolute and matured. Borrower’s assets do not and, immediatelyfollowing the making of the Loan will not, constitute unreasonably smallcapital to carry out its business as conducted or as proposed to be conducted.Borrower does not intend to, and does not believe that it will, incur debt andliabilities (including contingent liabilities and other commitments) beyond itsability to pay such debt and liabilities as they mature (taking into accountthe timing and amounts of cash to be received by Borrower and the amounts to bepayable on or in respect of obligations of Borrower). Except as expresslydisclosed to Lender in writing, no petition in bankruptcy has been filedagainst Borrower, or to the best of Borrower’s knowledge, any constituentPerson in the last seven (7) years, and neither Borrower, nor to the best ofBorrower’s knowledge, any constituent Person in the last seven (7) years hasever made an assignment for the benefit of creditors or taken advantage of anyinsolvency act for the benefit of debtors. Neither Borrower nor any of itsconstituent Persons are contemplating either the filing of a petition by itunder any state or federal bankruptcy or insolvency laws or the liquidation ofall or a major portion of Borrower’s assets or property, and Borrower has noknowledge of any Person contemplating the filing of any such petition againstit or such constituent Persons.

 

4.1.8        Full and Accurate Disclosure. To Borrower’s knowledge, no statement of fact made by Borrower inthis Agreement or in any of the other Loan Documents contains any untruestatement of a material fact or omits to state any material fact necessary tomake statements contained herein or therein not misleading. There is nomaterial fact presently known to Borrower which has not been disclosed toLender which adversely affects, nor as far as Borrower can foresee, mightadversely affect, the Property or the business, operations or condition(financial or otherwise) of Borrower.

 

4.1.9        No Plan Assets.Borrower is not an “employee benefit plan,” as defined in Section 3(3) of ERISA,subject to Title I of ERISA, and none of the assets of Borrower constitutes orwill constitute “plan assets” of one or more such plans within the meaning of29 C.F.R. Section 2510.3-101. In addition, (a) Borrower is not a “governmentalplan” within the meaning of Section 3(32) of ERISA and (b) transactions by orwith Borrower are not subject to state statutes regulating investment of, andfiduciary obligations with respect to, governmental plans similar to theprovisions of Section 406 of ERISA or Section 4975 of the Code currently ineffect, which prohibit or otherwise restrict the transactions contemplated bythis Loan Agreement.

 

4.1.10      Compliance.  To Borrower’s knowledge, Borrower and theProperty and the use thereof comply in all material respects with allapplicable Legal Requirements, including, without limitation, building andzoning ordinances and codes.  Borrower isnot in default or violation of any order, writ, injunction, decree or demand ofany Governmental Authority. There

 

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hasnot been committed by Borrower or, to Borrower’s knowledge, any other Person inoccupancy of or involved with the operation or use of the Property any act oromission affording the federal government or any other Governmental Authoritythe right of forfeiture as against the Property or any part thereof or anymonies paid in performance of Borrower’s obligations under any of the LoanDocuments.

 

4.1.11      Financial Information.   All financial data, including, withoutlimitation, the statements of cash flow and income and operating expense, thathave been delivered to Lender in respect of the Property (i) are to the best ofBorrower’s knowledge, true, complete and correct in all material respects, (ii)accurately represent the financial condition of the Property as of the date ofsuch reports, and (iii) to the extent prepared or audited by an independentcertified public accounting firm, have been prepared in accordance withaccounting principles reasonably acceptable to Lender, consistently appliedthroughout the periods covered, except as disclosed therein; provided, however,that if any financial data is delivered to Lender by any Person other thanBorrower, Indemnitor or any of their Affiliates, or if such financial data hasbeen prepared by or at the direction of any Person other than Borrower,Indemnitor or any of their Affiliates, then the foregoing representations withrespect to such financial data shall be to the best of Borrower’s knowledge,after due inquiry.  Borrower does nothave any contingent liabilities, liabilities for taxes, unusual forward orlong-term commitments or unrealized or anticipated losses from any unfavorablecommitments that are known to Borrower and reasonably likely to have amaterially adverse effect on the Property or the operation thereof as retailshopping centers, except as referred to or reflected in said financialstatements.  Since the date of such financialstatements, there has been no materially adverse change in the financialcondition, operations or business of Borrower from that set forth in saidfinancial statements.

 

4.1.12      Condemnation.   No Condemnation or other proceeding has beencommenced or, to Borrower’s knowledge, is contemplated with respect to all orany portion of the Property or for the relocation of roadways providing accessto the Property.

 

4.1.13      Federal Reserve Regulations. No part of the proceeds of the Loan will be used for the purpose ofpurchasing or acquiring any “margin stock” within the meaning of Regulation Uof the Board of Governors of the Federal Reserve System or for any otherpurpose which would be inconsistent with such Regulation U or any otherRegulations of such Board of Governors, or for any purposes prohibited by LegalRequirements or by the terms and conditions of this Agreement or the other LoanDocuments.

 

4.1.14      Utilities and Public Access.  The Property has rights ofaccess to public ways and is served by water, sewer, sanitary sewer and stormdrain facilities adequate to service the Property for its respective intendeduses.  All public utilities necessary orconvenient to the full use and enjoyment of the Property are located either inthe public right-of-way abutting the Property (which are connected so as toserve the Property without passing over other property) or in recordedeasements serving the Property and such easements are set forth in and insuredby the Title Insurance Policies.  Allroads necessary for the use of the Property for their current respectivepurposes have been completed and dedicated to public use and accepted by all GovernmentalAuthorities.

 

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4.1.15      Not a Foreign Person.   Borrower is not a “foreign person” withinthe meaning of §1445(f)(3) of the Code.

 

4.1.16      Separate Lots.   The Property is comprised of one (1) or moreparcels which constitute a separate tax lot or lots and does not constitute aportion of any other tax lot not a part of the Property.

 

4.1.17      Assessments.    There are no pending, or to Borrower’sknowledge, proposed special or other assessments for public improvements orotherwise affecting the Property, nor are there any contemplated improvementsto the Property that may result in such special or other assessments.

 

4.1.18      Enforceability.   The Loan Documents are not subject to anyright of rescission, set-off, counterclaim or defense by Borrower, includingthe defense of usury, nor would the operation of any of the terms of the LoanDocuments, or the exercise of any right thereunder, render the Loan Documentsunenforceable, and Borrower has not asserted any right of rescission, set-off,counterclaim or defense with respect thereto.

 

4.1.19      No Prior Assignment.There is no prior assignment of the Leases or any portion of the Rents byBorrower or any of its predecessors in interest, given as collateral securitywhich is presently outstanding.

 

4.1.20      Insurance.   Borrower has obtained and has delivered toLender certified copies of all insurance policies reflecting the insurancecoverages, amounts and other requirements set forth in this Agreement. To thebest of Borrower’s knowledge, no claims have been made under any such policy,and no Person, including Borrower, has done, by act or omission, anything whichwould impair the coverage of any such policy.

 

4.1.21      Use of Property. TheProperty is used exclusively for retail purposes and other appurtenant andrelated uses.

 

4.1.22      Certificate of Occupancy; Licenses.  All certifications, permits,licenses and approvals, including without limitation, certificates ofcompletion and occupancy permits required to be obtained by Borrower for thelegal use, occupancy and operation of the Property as a retail shopping centerhave been obtained and are in full force and effect, and to the best of Borrower’sknowledge, after due inquiry, all certifications, permits, licenses andapprovals, including without limitation, certificates of completion andoccupancy permits required to be obtained by any Person other than Borrower forthe legal use, occupancy and operation of the Property as a retail shoppingcenter, have been obtained and are in full force and effect (all of the foregoingcertifications, permits, licenses and approvals are collectively referred to asthe “**Licenses**”). Borrowershall and shall cause all other Persons to, keep and maintain all Licenses necessaryfor the operation of the Property as a retail shopping center. To Borrower’s knowledge,the use being made of the Property is in conformity with all certificates ofoccupancy issued for the Property.

 

4.1.23      Flood Zone. To thebest of Borrower’s knowledge, after due inquiry, none of the Improvements onthe Property are located in an area as identified by the Federal EmergencyManagement Agency as an area having special flood hazards.

 

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4.1.24      Physical Condition.    Except as disclosed in the PhysicalConditions Reports delivered to Lender in connecting with this Loan, toBorrower’s knowledge, the Property, including, without limitation, allbuildings, improvements, parking facilities, sidewalks, storm drainage systems,roofs, plumbing systems, HVAC systems, fire protection systems, electricalsystems, equipment, elevators, exterior sidings and doors, landscaping, irrigationsystems and all structural components, are in good condition, order and repairin all material respects; there exists no structural or other material defects ordamages in the Property, whether latent or otherwise, and Borrower has notreceived notice from any insurance company or bonding company of any defects orinadequacies in the Property, or any part thereof, which would adversely affectthe insurability of the same or cause the imposition of extraordinary premiumsor charges thereon or of any termination or threatened termination of anypolicy of insurance or bond.

 

4.1.25      Boundaries.  To the best of Borrower’s knowledge, afterdue inquiry, all of the improvements which were included in determining theappraised value of the Property lie wholly within the boundaries and buildingrestriction lines of the Property, and no improvements on adjoining propertiesencroach upon the Property, and no easements or other encumbrances upon theProperty encroach upon any of the improvements, so as to affect the value or marketabilityof the Property except those which are insured against by title insurance.

 

4.1.26      Leases.  The Property is not subject to any Leasesother than the Leases described on the Rent Roll attached as Schedule IIhereto and made a part hereof. To the best of Borrower’s knowledge, no Personhas any possessory interest in the Property or right to occupy the same exceptunder and pursuant to the provisions of the Leases. The current Leases are in fullforce and effect and to Borrower’s knowledge, there are no defaults thereunderby either party and there are no conditions that, with the passage of time orthe giving of notice, or both, would constitute defaults thereunder. To thebest of Borrower’s knowledge, no Rent (including security deposits) has beenpaid more than one (1) month in advance of its due date. To the best ofBorrower’s knowledge, all work to be performed by Borrower under each Lease hasbeen performed as required and has been accepted by the applicable tenant, andany payments, free rent, partial rent, rebate of rent or other payments,credits, allowances or abatements required to be given by Borrower to anytenant has already been received by such tenant.  To the best of Borrower’s knowledge, therehas been no prior sale, transfer or assignment, hypothecation or pledge of anyLease or of the Rents received therein which is outstanding.  To Borrower’s knowledge, no tenant listed on ScheduleII has assigned its Lease or sublet all or any portion of the premisesdemised thereby, no such tenant holds its leased premises under assignment or sublease,nor does anyone except such tenant and its employees occupy such leasedpremises. No tenant under any Lease has a right or option pursuant to suchLease or otherwise to purchase all or any part of the leased premises or thebuilding of which the leased premises are a part. Except as set forth in ScheduleII, no tenant under any Lease has any right or option for additional spacein the Improvements except as set forth in Schedule II. To Borrower’sactual knowledge based on the Environmental Report delivered to Lender inconnection herewith, no hazardous wastes or toxic substances, as defined byapplicable federal, state or local statutes, rules and regulations, have beendisposed, stored or treated by any tenant under any Lease on or about theleased premises nor does Borrower have any knowledge of any tenant’s intentionto use its leased premises for any activity which, directly or indirectly,involves the use, generation, treatment, storage, disposal or transportation ofany petroleum product or any toxic or hazardous

 

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chemical,material, substance or waste, except in either event, in compliance withapplicable federal, state or local statues, rules and regulations.

 

4.1.27      Survey.  The Survey for the Propertydelivered to Lender in connection with this Agreement has been prepared inaccordance with the provisions of Section 3.l.3(c) hereof, and does not fail toreflect any material matter affecting the Property or the title thereto.

 

4.1.28      Loan to Value.   The maximum principal amount of the Loandoes not exceed one hundred twenty-five percent (125%) of the fair market value of the Property as set forth on the appraisals of the Propertydelivered to Lender.

 

4.1.29      Filing and Recording Taxes.   All transfer taxes, deedstamps, intangible taxes or other amounts in the nature of transfer taxesrequired to be paid by any Person under applicable Legal Requirements currentlyin effect in connection with the transfer of the Property to Borrower have beenpaid or are simultaneously being paid. All mortgage, mortgage recording, stamp, intangible or other similar taxrequired to be paid by any Person under applicable Legal Requirements currentlyin effect in connection with the execution, delivery, recordation, filing,registration, perfection or enforcement of any of the Loan Documents, including,without limitation, the Mortgage, have been paid, and, under current Legal Requirements,the Mortgage is enforceable in accordance with its terms by Lender (or any subsequentholder thereof).

 

4.1.30      Special Purpose Entity/Separateness.

 

(a)           Until the Debt has been paid in full, Borrower hereby represents,warrants and covenants that the Borrower is, shall be and shall continue to be a Special Purpose Entity. If Borrower consists of more than onePerson, each such Person shall be a Special Purpose Entity.

 

(b)           The representations, warranties and covenants set forth in Section 4.1.30(a)shall survive for so long as any amount remains payable to Lender underthis Agreement or any other Loan Document.

 

(c)           Any and all of the assumptions made in any Insolvency Opinion, including,but not limited to, any exhibits attached thereto, will have been and shall be true and correct in all respects, and Borrowerwill have complied and will comply with all of the assumptions made withrespect to it in any Insolvency Opinion. Each entity other than Borrower withrespect to which an assumption is made in any Insolvency Opinion will havecomplied and will comply with all of the assumptions made with respect to it inany such Insolvency Opinion.

 

4.1.31      Management Agreement.The Management Agreement is in full force and effect and, to Borrower’sknowledge, there is no default thereunder by any party thereto and no eventhas occurred that, with the passage of time and/or the giving of notice wouldconstitute a default thereunder.

 

4.1.32      Illegal Activity. ToBorrower’s knowledge, no portion of the Property has been or will be purchasedwith proceeds of any illegal activity.

 

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4.1.33      No Change in Facts or Circumstances; Disclosure.   All information submitted by Borrower to Lender and in all financialstatements, rent rolls, reports, certificates and other documents submitted inconnection with the Loan or in satisfaction of the terms thereof and allstatements of fact made by Borrower in this Agreement or in any other Loan Document,are accurate, complete and correct in all material respects, provided, however,that if such information was provided to Borrower by non-affiliated thirdparties, Borrower represents that such information is, to the best of itsknowledge after due inquiry, accurate, complete andcorrect in all material respects.  Therehas been no material adverse change in any condition, fact, circumstance orevent that would make any such information inaccurate, incomplete or otherwisemisleading in any material respect or that otherwise materially and adverselyaffects or might materially and adversely affect the Property or the businessoperations or the financial condition of Borrower. Borrower has disclosed toLender all material facts and has not failed to disclose any material fact thatcould cause any representation or warranty made herein to be materiallymisleading.

 

4.1.34      Intentionally omitted.

 

4.1.35      Principal Place of Business and Organization. Borrower shall not change its principalplace of business set forth in the introductory paragraph of this Agreementwithout first giving Lender thirty (30) days prior written notice. Borrowershall not change the place of its organization as set forth in the introductoryparagraph of this Agreement without the consent of Lender, which consent shallnot be unreasonably withheld, conditioned or delayed.  Upon Lender’s request, Borrower shall executeand deliver additional financing statements, security agreements and otherinstruments which may be necessary to effectively evidence or perfect Lender’ssecurity interest in the Property as a result of such change of principal placeof business or place of organization.

 

4.1.36      Investment Company Act.Borrower is not (a) an “investment company” or a company “controlled” by an “investmentcompany,” within the meaning of the Investment Company Act of 1940, as amended;(b) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate”of either a “holding company” or a “subsidiary company” within the meaning ofthe Public Utility Holding Company Act of 1935, as amended; or (c) subject toany other federal or state law or regulation which purports to restrict orregulate its ability to borrow money.

 

Section 4.2             Survivalof Representations. Borroweragrees that all of the representations and warranties of Borrower set forth inSection 4.1 and elsewhere in this Agreement and in the other Loan Documentsshall survive for so long as any amount remains owing to Lender under thisAgreement or any of the other Loan Documents by Borrower. All representations,warranties, covenants and agreements made in this Agreement or in the otherLoan Documents by Borrower shall be deemed to have been relied upon by Lendernotwithstanding any investigation heretofore or hereafter made by Lender or onits behalf.

 

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**ARTICLE V**

** **

**BORROWERCOVENANTS**

 

Section 5.l              AffirmativeCovenants. From the datehereof and until payment and performance in full of all obligations of Borrowerunder the Loan Documents or the earlier release of the Lien of the Mortgageencumbering the Property (and all related obligations) in accordance with theterms of this Agreement and the other Loan Documents, Borrower hereby covenantsand agrees with Lender that:

 

5.1.1        Existence; Compliance with Legal Requirements; Insurance. Borrower shall do or cause to be done allthings necessary to preserve, renew and keep in full force and effect itsexistence, rights, licenses, permits and franchises and comply with all LegalRequirements applicable to it and the Property. There shall never be committedby Borrower or any other Person in occupancy of or involved with the operationor use of the Property any act or omission affording the federal government orany state or local government the right of forfeiture as against the Propertyor any part thereof or any monies paid in performance of Borrower’s obligationsunder any of the Loan Documents. Borrower hereby covenants and agrees not tocommit, permit or suffer to exist any act or omission affording such right offorfeiture. Borrower shall at all times maintain, preserve and protect all itsfranchises and trade names and preserve all the remainder of its property usedor useful in the conduct of its business and shall keep the Property in goodworking order and repair, and from time to time make, or cause to be made, allreasonably necessary repairs, renewals, replacements, betterments andimprovements thereto, all as more fully provided in the Mortgage. Borrowershall keep the Property insured at all times by financially sound and reputableinsurers, to such extent and against such risks, and maintain liability andsuch other insurance, as is more fully provided in this Agreement. Borrowershall operate, or cause the tenant to operate, any Property that is the subjectof an O&M Agreement (if any) in accordance with the terms and provisionsthereof in all material respects. After prior written notice to Lender,Borrower, at its own expense, may contest by appropriate legal proceedingpromptly initiated and conducted in good faith and with due diligence, thevalidity of any Legal Requirement, the applicability of any Legal Requirementto Borrower or the Property or any alleged violation of any Legal Requirement,provided that (i) no Event of Default has occurred and remains uncured; (ii)intentionally omitted; (iii) such proceeding shall be permitted under and beconducted in accordance with the provisions of any instrument to which Borroweris subject and shall not constitute a default thereunder and such proceedingshall be conducted in accordance with the provisions of any instrument to whichBorrower is subject and shall not constitute a default thereunder and suchproceeding shall be conducted in accordance with all applicable statutes, lawsand ordinances; (iv) the Property or any part thereof or interest therein willnot be in danger of being sold, forfeited, terminated, concealed or lost; (v)Borrower shall promptly upon final determination thereof comply with any suchLegal Requirement determined to be valid or applicable or cure any violation ofany Legal Requirement; (vi) such proceeding shall suspend the enforcement ofthe contested Legal Requirement against Borrower or the Property; and (vii)Borrower shall furnish such security as may be required in the proceeding, oras may be requested by Lender, to insure compliance with such LegalRequirement, together, with all interest and penalties payable in connectiontherewith. Lender may apply any such security, as necessary to cause compliancewith such Legal Requirement at any time when, in the reasonable judgment ofLender, the validity, applicability or violation of such Legal Requirement

 

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isfinally established or the Property (or any part thereof or interest therein)shall be in danger of being sold, forfeited, terminated, cancelled or lost.

 

5.1.2        Taxes and Other Charges.   Borrower shall pay or caused to be paid all Taxesand Other Charges now or hereafter levied or assessed or imposed against theProperty or any part thereof as the same become due and payable; provided,however, Borrower’s obligation to directly pay to the appropriate taxingauthority Taxes shall be suspended for so long as Borrower complies with theterms and provisions of Section 7.2 hereof. Borrower will deliver to Lenderreceipts for payment or other evidence satisfactory to Lender that the Taxesand Other Charges have been so paid or are not then delinquent no later thanten (10) days prior to the date on which the Taxes and/or Other Charges wouldotherwise be delinquent if not paid (provided, however, thatBorrower is not required to furnish such receipts for payment of Taxes in theevent that such Taxes have been paid by Lender pursuant to Section 7.2 hereof).If Borrower pays or causes to be paid all Taxes and Other Charges and providesa copy of the receipt evidencing the payment thereof to Lender, then Lendershall reimburse Borrower, provided that there are then sufficient proceeds inthe Tax and Insurance Escrow Fund and provided that the Taxes are being paidpursuant to Section 7.2.  Upon writtenrequest of Borrower, if Lender has paid such Taxes pursuant to Section 7.2hereof, Lender shall provide Borrower with evidence that such Taxes have beenpaid.  Borrower shall not suffer andshall promptly cause to be paid and discharged any Lien or charge whatsoeverwhich may be or become a Lien or charge against the Property, and shallpromptly pay for all utility services provided to the Property. After priorwritten notice to Lender, Borrower, at its own expense, may contest byappropriate legal proceeding, promptly initiated and conducted in good faithand with due diligence, the amount or validity or application in whole or inpart of any Taxes or Other Charges, provided that (i) Borrower is permitted todo so under the provisions of any mortgage or deed of trust superior in lien tothe Mortgage; (ii) such proceeding shall be permitted under and be conducted inaccordance with the provisions of any other instrument to which Borrower issubject and shall not constitute a default thereunder and such proceeding shallbe conducted in accordance with all applicable statutes, laws and ordinances;(iii) the Property nor any part thereof or interest therein will be in dangerof being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shallpromptly upon final determination thereof pay the amount of any such Taxes orOther Charges, together with all costs, interest and penalties which may bepayable in connection therewith; (v) such proceeding shall suspend thecollection of such contested Taxes or Other Charges from the Property; and (vi)Borrower shall furnish such security as may be required in the proceeding, oras may be reasonably requested by Lender, to insure the payment of any suchTaxes or Other Charges, together with all interest and penalties thereon.  Lender may pay over any such cash deposit or partthereof held by Lender to the claimant entitled thereto at any time when, inthe reasonable judgment of Lender, the entitlement of such claimant isestablished.

 

5.1.3        Litigation.   Borrower shall give prompt written notice toLender of any litigation or governmental proceedings pending or threatenedagainst Borrower which might materially adversely affect Borrower’s condition(financial or otherwise) or business or the Property.

 

5.1.4        Access to Property.   Borrower shall permit agents,representatives and employees of Lender to inspect the Property or any partthereof at reasonable hours upon reasonable advance notice, subject to therights of Tenants under their respective Leases.

 

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5.1.5        Notice of Default.Borrower shall promptly adviseLender of any material adverse change in Borrower’s condition, financial orotherwise, or of the occurrence of any Default or Event of Default of whichBorrower has knowledge.

 

5.1.6        Cooperate in Legal Proceedings.    Borrower shall cooperatefully with Lender with respect to any proceedings before any court, board orother Governmental Authority which may in any way affect the rights of Lenderhereunder or any rights obtained by Lender under any of the other LoanDocuments and, in connection therewith, permit Lender, at its election, toparticipate in any such proceedings.

 

5.1.7        Perform Loan Documents.Borrower shall observe, perform and satisfy all the terms, provisions,covenants and conditions of, and shall pay when due all costs, fees and expensesto the extent required under the Loan Documents executed and delivered by, or applicableto, Borrower.

 

5.1.8        Insurance Benefits.Borrower shall cooperate with Lender in obtaining for Lender the benefits ofany Insurance Proceeds lawfully or equitably payable in connection with theProperty, and Lender shall be reimbursed for any expenses incurred inconnection therewith (including reasonable attorneys’ fees and disbursements,and the payment by Borrower of theexpense of an appraisal on behalf of Lender in case of a fire or other casualtyaffecting the Property or any part thereof) out of such Insurance Proceeds.

 

5.1.9        Further Assurances.Borrower shall, at Borrower’s sole cost and expense:

 

(a)           furnish to Lender all instruments, documents, boundary surveys, footingor foundation surveys, certificates, plans and specifications, appraisals,title and other insurance reports and agreements, and each and every otherdocument, certificate, agreement and instrument required to be furnished byBorrower pursuant to the terms of the Loan Documents or reasonably requested byLender in connection therewith;

 

(b)           execute and deliver to Lender such documents, instruments,certificates, assignments and other writings, and do such other acts necessaryor desirable, to evidence, preserve and/or protect the collateral at any timesecuring or intended to secure the obligations of Borrower under the LoanDocuments, as Lender may reasonably require; and

 

(c)           do and execute all and such further lawful and reasonable acts, conveyancesand assurances for the better and more effective carrying out of the intentsand purposes of this Agreement and the other Loan Documents, as Lender shallreasonably require from time to time.

 

5.1.10         Intentionally Omitted.

 

5.1.11         Financial Reporting.

 

(a)                 Borrower will keep and maintain or will causeto be kept and maintained on a Fiscal Year basis, in accordance with therequirements for a Special Purpose Entity set forth above, proper and accuratebooks, records and accounts reflecting all of the financial affairs of Borrowerand all items of income and expense in connection with the operation on anindividual

 

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basisof the Property.  Lender shall have theright from time to time at all times during normal business hours uponreasonable notice to examine such books, records and accounts at the office ofBorrower or other Person maintaining such books, records and accounts and tomake such copies or extracts thereof as Lender shall desire. After theoccurrence and during the continuance of an Event of Default, Borrower shallpay any costs and expenses incurred by Lender to examine Borrower’s accountingrecords with respect to the Property, as Lender shall reasonably determine tobe necessary or appropriate in the protection of Lender’s interest.

 

(b)           Borrower will furnish to Lender annually, within one hundred twenty (120)days following the end of each Fiscal Year of Borrower, either (i) a completecopy of Borrower’s annual financial statements audited by a “Big Four” accountingfirm or other independent certified public accountant reasonably acceptable toLender in accordance with the requirements for a Special Purpose Entity setforth above, or (ii) a consolidated and annotated financial statement ofBorrower and Sole Member, audited by a “Big Four” accounting firm or otherindependent certified public accountant reasonably acceptable to Lender inaccordance with the requirements for a Special Purpose Entity set forth above,together with unaudited financial statements relating to the Borrower and theProperty. Such financial statements for the Property for such Fiscal Year andshall contain statements of profit and loss for Borrower and the Property and abalance sheet for Borrower.  Suchstatements shall set forth the financial condition and the results ofoperations for the Property for such Fiscal Year, and shall include, but not belimited to, amounts representing annual Net Cash Flow, Net Operating Income,Gross Income from Operations and Operating Expenses. Borrower’s annualfinancial statements shall be accompanied by (i) a comparison of the budgetedincome and expenses and the actual income and expenses for the prior FiscalYear, (ii) a certificate executed by the chief financial officer of Borrower orSole Member, as applicable, stating that each such annual financial statement presentsfairly the financial condition and the results of operations of Borrower andthe Property being reported upon and has been prepared in accordance withaccounting principles reasonably acceptable to Lender, consistently applied,(iii) with respect to any consolidated financial statement of Borrower and SoleMember, an unqualified opinion of a “Big Four” accounting firm or otherindependent certified public accountant reasonably acceptable to Lender, (iv) acertified rent roll containing current rent, lease expiration dates and thesquare footage occupied by each tenant; (v) a schedule audited by suchindependent certified public accountant reconciling Net Operating Income to NetCash Flow (the “**Net Cash Flow Schedule**”),which shall itemize all adjustments made to Net Operating Income to arrive atNet Cash Flow deemed material by such independent certified publicaccountant.  Together with Borrower’sannual financial statements, Borrower shall furnish to Lender an Officer’sCertificate certifying as of the date thereof whether there exists an event orcircumstance which constitutes a Default or Event of Default under the LoanDocuments executed and delivered by, or applicable to, Borrower, and if suchDefault or Event of Default exists, the nature thereof, the period of time ithas existed and the action then being taken to remedy the same.

 

(c)           Borrower will furnish, or cause to be furnished, to Lender on or beforeforty-five (45) days after the end of each calendar quarter the followingitems, accompanied by a certificate of the chief financial officer of Borroweror Sole Member, as applicable, stating that such items are true, correct,accurate, and complete and fairly present the financial condition and resultsof the operations of Borrower and the Property (subject to normal year-endadjustments) as applicable: (i) a rent roll for the subject period accompaniedby an Officer’s Certificate with

 

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respect thereto; (ii) quarterly and year-to-date operating statements(including Capital Expenditures) prepared for each calendar quarter, noting NetOperating Income, Gross Income from Operations, and Operating Expenses (notincluding any contributions to the Replacement Reserve Fund, and otherinformation necessary and sufficient to fairly represent the financial positionand results of operation of the Property during such calendar month, andcontaining a comparison of budgeted income and expenses and the actual incomeand expenses together with a detailed explanation of any variances of fivepercent (5%) or more between budgeted and actual amounts for such periods, allin form satisfactory to Lender; (iii) a calculation reflecting the annual DebtService Coverage Ratio for the immediately preceding twelve (12) month periodas of the last day of such period accompanied by an Officer’s Certificate withrespect thereto; and (iv) a Net Cash Flow Schedule (such Net Cash Flow for theBorrower may be unaudited if it is certified by an officer of the Borrower). Inaddition, such certificate shall also be accompanied by a certificate of thechief financial officer of Borrower or Sole Member stating that therepresentations and warranties of Borrower set forth in Section 4.1.30(a) aretrue and correct as of the date of such certificate. Provided, further, thatduring the twelve (12) month period commencing on the date hereof, Borrowerwill furnish a current rent roll and monthly and year-to-date operating statementswithin twenty (20) days of Lender’s written request.

 

(d)           For the partial year period commencing on the date hereof, and for eachFiscal Year thereafter, Borrower shall submit to Lender an Annual Budget notlater than thirty (30) days after the commencement of such period or FiscalYear in form reasonably satisfactory to Lender.

 

(e)           Borrower shall furnish to Lender, within ten (10) Business Days after request(or as soon thereafter as may be reasonably possible), such further detailedinformation with respect to the operation of the Property and the financialaffairs of Borrower as may be reasonably requested by Lender.

 

(f)            Borrower shall furnish to Lender, within ten(10) Business Days after Lender’s request (or as soon thereafter as may bereasonably possible), financial and sales information from each Major Tenantand such other tenants designated by Lender (to the extent such financial andsales information is required to be provided under applicable leases and same isreceived by Borrower after request therefor).

 

(g)           Borrower will cause Indemnitor to furnish to Lender annually, withinone hundred twenty (120) days following the end of each Fiscal Year ofIndemnitor, financial statements audited by an independent certified publicaccountant, which shall include an annual balance sheet and profit and lossstatement of Indemnitor, in the form reasonably required by Lender.

 

(h)           Any reports, statements or other information required to be deliveredunder this Agreement shall be delivered (i) in paper form, (ii) on a diskette,and (iii) if requested by Lender and within the capabilities of Borrower’s datasystems without change or modification thereto, in electronic form and preparedusing a Microsoft Word for Windows or WordPerfect for Windows files (whichfiles may be prepared using a spreadsheet program and saved as word processingfiles).

 

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5.1.12      Business and Operations.     Borrower will continue to engage in thebusinesses presently conducted by it as and to the extent the same arenecessary for the ownership, maintenance,management and operation of the Property. Borrower will qualify to do business and will remain in good standingunder the laws of each jurisdiction as and to the extent the same are requiredfor the ownership, maintenance,management and operation of the Property.

 

5.1.13      Title to the Property.Borrower will warrant and defend (a) the title to the Property and every partthereof, subject only to Liens permitted hereunder (including PermittedEncumbrances) and (b) the validity and priority of the Liens of the Mortgageand the Assignment of Leases on the Property, subject only to Liens permittedhereunder (including Permitted Encumbrances), in each case against the claimsof all Persons whomsoever.  Borrowershall reimburse Lender for any losses, costs, damages or expenses (includingreasonable attorneys’ fees and court costs) incurred by Lender if an interestin the Property, other than as permitted hereunder, is claimed by anotherPerson.

 

5.1.14      Costs of Enforcement.In the event (a) that the Mortgage encumbering the Property is foreclosed inwhole or in part or that the Mortgage is put into the hands of an attorney forcollection, suit, action or foreclosure, (b) of the foreclosure of any mortgageprior to or subsequent to the Mortgage encumbering the Property in whichproceeding Lender is made a party, or (c) of the bankruptcy, insolvency,rehabilitation or other similar proceeding in respect of Borrower or any of itsconstituent Persons or an assignment by Borrower or any of its constituentPersons for the benefit of its creditors, Borrower, its successors or assigns,shall be chargeable with and agrees to pay all costs of collection and defense,including reasonable attorneys’ fees and costs, incurred by Lender or Borrowerin connection therewith and in connection with any appellate proceeding orpost-judgment action involved therein, together with all required service oruse taxes.

 

5.1.15       Estoppel Statement.

 

(a)           After request by Lender, Borrower shallwithin ten (10) days furnish Lender with a statement, duly acknowledged andcertified, setting forth (i) the amount of the original principal amount of theNote, (ii) the unpaid principal amount of the Note, (iii) the Interest Rate ofthe Note, (iv) the date installments of interest and/or principal were lastpaid, (v) any offsets or defenses to the payment of the Debt, if any, and (vi)that the Note, this Agreement, the Mortgage and the other Loan Documents arevalid, legal and binding obligations and have not been modified or if modified,giving particulars of such modification.

 

(b)           Borrower shall use commercially reasonable efforts to deliver to Lenderupon request, tenant estoppel certificates from each commercial tenant leasingspace at the Property in form and substance reasonably satisfactory to Lenderprovided that Borrower shall not be required to deliver such certificates morefrequently than one (1) time in any calendar year.

 

(c)           Within thirty (30) days of request by Borrower, Lender shall deliver toBorrower a statement setting forth the items described at (a) (i), (ii), (iii)and (iv) of this Section 5.1.15.

 

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5.1.16      Loan Proceeds.Borrower shall use the proceeds of the Loan received by it on the Closing Dateonly for the purposes set forth in Section 2.1.4.

 

5.1.17      Performance by Borrower.   Borrower shall in a timely manner observe,perform and fulfill each and every covenant, term and provision of each LoanDocument executed and delivered by, or applicable to, Borrower, and shall notenter into or otherwise suffer or permit any amendment, waiver, supplement,termination or other modification of any Loan Document executed and deliveredby, or applicable to, Borrower without the prior written consent of Lender.

 

5.1.18      Confirmation of Representations.   Borrower shall deliver, inconnection with any Securitization, (a) one or more Officer’s Certificatescertifying as to the accuracy of all representations made by Borrower in theLoan Documents as of the date of the closing of such Securitization, and (b)certificates of the relevant Governmental Authorities in all relevantjurisdictions indicating the good standing and qualification of Borrower andits member as of the date of the Securitization.

 

5.1.19      No Joint Assessment.Borrower shall not suffer, permit or initiate the joint assessment of theProperty (a) with any other real property constituting a tax lot separate fromthe Property, and (b) which constitutes real property with any portion of theProperty which may be deemed to constitute personal property, or any otherprocedure whereby the lien of any taxes which may be levied against suchpersonal property shall be assessed or levied or charged to such real property portionof the Property.

 

5.1.20      Leasing Matters. AnyLeases with respect to the Property written after the date hereof, for morethan the Relevant Leasing Threshold square footage, shall be subject to theprior written approval of Lender, which approval may be given or withheld inthe sole discretion of Lender. Lender shall approve or disapprove any suchLease within ten (10) Business Days of Lender’s receipt of a final executiondraft of such Lease (including all exhibits, schedules, supplements, addenda orother agreements relating thereto) and a written notice from Borrowerrequesting Lender’s approval to such Lease, and such Lease shall be deemedapproved, if Lender does not disapprove such Lease within said ten (10)Business Day period *provided*suchwritten notice conspicuously states, in large bold type, that **“PURSUANT TO SECTION 5.1.20 OF THE LOAN AGREEMENT, THELEASE SHALL BE DEEMED APPROVED IF LENDER DOES NOT RESPOND TO THE CONTRARYWITHIN TEN (10) BUSINESS DAYS OF LENDER’S RECEIPT OF SUCH LEASE AND WRITTENNOTICE.”** Borrower shall furnish Lender with executed copies of allLeases. All renewals of Leases and all proposed Leases shall provide for rentalrates comparable to existing local market rates (unless such rental rates areotherwise set forth in the Leases executed prior to the date hereof).  All proposed Leases shall be on commerciallyreasonable terms and shall not contain any terms which would materially affectLender’s rights under the Loan Documents. All Leases executed after the date hereof shall provide that they aresubordinate to the Mortgage encumbering the Property and that the tenantthereunder agrees to attorn to Lender or any purchaser at a sale by foreclosureor power of sale.  Borrower (i) shallobserve and perform the obligations imposed upon the lessor under the Leases ina commercially reasonable manner; (ii) shall enforce the terms, covenants andconditions contained in the Leases upon the part of the tenant thereunder to beobserved or performed in a commercially reasonable manner and in a manner notto impair

 

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the value of the Propertyinvolved except that no termination by Borrower or acceptance of surrender by atenant of any Lease shall be permitted unless by reason of a tenant default andthen only in a commercially reasonable manner to preserve and protect theProperty provided, however, that no such termination or surrenderof any Lease covering more than the Relevant Leasing Threshold will bepermitted without the written consent of Lender which consent may be withheldin the sole discretion of Lender; (iii) shall not collect any of the rents morethan one (1) month in advance (other than security deposits); (iv) shall notexecute any other assignment of lessor’s interest in the Leases or the Rents(except as contemplated by the Loan Documents); (v) shall not alter, modify orchange the terms of the Leases in a manner inconsistent with the provisions ofthe Loan Documents without the prior written consent of Lender, which consentmay be withheld in the sole discretion of Lender; and (vi) shall execute anddeliver at the request of Lender all such further assurances, confirmations andassignment in connection with the Leases as Lender shall from time to timereasonably require. Notwithstanding the foregoing, Borrower may, without theprior written consent of Lender, terminate any Lease which demises less thanthe Relevant Leasing Threshold under any of the following circumstances: (i)the tenant under said Lease is in default beyond any applicable grace and cureperiod, and Borrower has the right to terminate such Lease; (ii) suchtermination is permitted by the terms of the Lease in question and Borrower hassecured an obligation from a third party to lease the space under the Lease tobe terminated at a rental equal to or higher than the rental due under theLease to be terminated; and (iii) if the tenant under the Lease to beterminated has executed a right under said Lease to terminate its lease uponpayment of a termination fee to Borrower, and has in fact terminated its leaseand paid said fee, Borrower may accept said termination.

 

5.1.21      Alterations. Subjectto the rights of tenants to make alterations pursuant to the terms of theirrespective Leases, Borrower shall obtain Lender’s prior written consent to anyalterations to any Improvements, which consent shall not be unreasonablywithheld or delayed except with respect to alterations that may have a materialadverse effect on Borrower’s financial condition, the value of the Property orthe Net Operating Income. Notwithstanding the foregoing, Lender’s consent shallnot be required in connection with any alterations that will not have amaterial adverse effect on Borrower’s financial condition, the value of theProperty or the Net Operating Income, provided that such alterations are madein connection with (a) tenant improvement work performed pursuant to the termsof any Lease executed on or before the date hereof, (b) tenant improvement workperformed pursuant to the terms and provisions of a Lease and not adverselyaffecting any structural component of any Improvements, any utility or HVACsystem contained in any Improvements or the exterior of any buildingconstituting a part of any Improvements, (c) alterations performed inconnection with the restoration of the Property after the occurrence of acasualty in accordance with the terms and provisions of this Agreement or (d)any structural alteration which costs less than $50,000.00 in the aggregate forall components thereof which constitute such alteration or any non-structuralalteration which costs less than $100,000.00 in the aggregate for allcomponents thereof which constitute such alteration. If the total unpaidamounts due and payable with respect to alterations to the Improvements at theProperty (other than such amounts to be paid or reimbursed by tenants under theLeases) shall at any time equal or exceed $350,000.00 (the **“ThresholdAmount”**), Borrower shall promptly deliver to Lender as securityfor the payment of such amounts and as additional security for Borrower’sobligations under the Loan Documents any of the following: (A) cash, (B) U.S.Obligations, (C) other securities having a rating acceptable to Lender and thatthe applicable Rating Agencies have confirmed in writing will not, in and ofitself, result in a downgrade,

 

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withdrawal or qualificationof the initial, or, if higher, then current ratings assigned in connection withany Securitization, or (D) a completion bond or letter of credit issued by afinancial institution having a rating by Standard & Poor’s Ratings Group ofnot less than A-1+ if the term of such bond or letter of credit is no longerthan three (3) months or, if such term is in excess of three (3) months, issuedby a financial institution having a rating that is acceptable to Lender andthat the applicable Rating Agencies have confirmed in writing will not, in andof itself, result in a downgrade, withdrawal or qualification of the initial,or, if higher, then current ratings assigned in connection with anySecuritization. Such security shall be in an amount equal to the excess of thetotal unpaid amounts with respect to alterations to the Improvements on theProperty (other than such amounts to be paid or reimbursed by tenants under theLeases) over the Threshold Amount and, if cash, may be applied from time totime, at the option of Borrower, to pay for such alterations. At the option ofLender, following the occurrence and during the continuance of an Event ofDefault, Lender may terminate any of the alterations and use the deposit torestore the Property to the extent necessary to prevent any material adverseeffect on the value of the Property.

 

5.1.22      Principal Place of Business. Borrower shall not change its principal place of business set forthon the first page of this Agreement without first giving Lender thirty (30) daysprior written notice.

 

5.1.23      Payments to Tenants.Borrower shall pay, in accordance with the terms of the respective Leases, theamounts set forth as required tenant improvement allowances in the tenantestoppel certificates delivered to Lender in connection with Loan closing byPanera and Mattress Firm. Borrower shall furnish to Lender copies of the checksissued to such Tenants for such payments.

 

Section 5.2             NegativeCovenants. From the datehereof until payment and performance in full of**all obligations of Borrower under the LoanDocuments or the earlier release of the Lien of the Mortgage encumbering theProperty in accordance with the terms of this Agreement and the other LoanDocuments, Borrower covenants and agrees with Lender that it will not do,directly or indirectly, any of the following:

 

5.2.1        Operation of Property.  Borrower shall not, without the prior consentof Lender, terminate the Management Agreement or otherwise replace the Manageror enter into any other management agreement with respect to the Propertyunless the Manager is in default thereunder beyond any applicable grace or cureperiod, in which event no consent by Lender shall be required.  Lender agrees that its consent will not beunreasonably withheld, delayed or conditioned provided that the Person chosenby Borrower as the replacement Manager is a Qualifying Manager and providedfurther that Borrower shall deliver an acceptable non- consolidation opinioncovering such replacement Manager if any such opinion was delivered at theclosing of the Loan and such Person was not covered by that opinion.

 

5.2.2        Liens.   Borrower shall not, without the priorwritten consent of Lender, create, incur, assume or suffer to exist any Lien onany portion of the Property or permit any such action to be taken, except:

 

(i)            Permitted Encumbrances;

 

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(ii)           Liens created by or permitted pursuant to the Loan Documents; and 

 

(iii)          Liens for Taxes or Other Charges not yet due.

 

5.2.3        Dissolution.Borrower shall not (a) engage in any dissolution, liquidation or consolidationor merger with or into any other business entity, (b) engage in any business activitynot related to the ownership and operation of the Property, (c) transfer, leaseor sell, in one transaction or any combination of transactions, the assets orall or substantially all of the properties or assets of Borrower except to theextent permitted by the Loan Documents, (d) modify, amend, waive or terminateits organizational documents or its qualification and good standing in anyjurisdiction or (e) cause the Sole Member to (i) dissolve, wind up or liquidateor take any action, or omit to take an action, as a result of which the SoleMember would be dissolved, wound up or liquidated in whole or in part, or (ii)amend, modify, waive or terminate the certificate of limited partnership orpartnership agreement of the Sole Member, in each case, without obtaining theprior written consent of Lender or Lender’s designee.

 

5.2.4        Change in Business.  Borrower shall not enter into any line ofbusiness other than the ownership and operation of the Property, or make anymaterial change in the scope or nature of its business objectives, purposes oroperations, or undertake or participate in activities other than thecontinuance of its present business.

 

5.2.5        Debt Cancellation.   Borrower shall not cancel or otherwise forgiveor release any claim or debt (other than termination of Leases in accordanceherewith) owed to Borrower by any Person, except for adequate consideration andin the ordinary course of Borrower’s business.

 

5.2.6        Affiliate Transactions.Borrower shall not enter into, or be a party to, any transaction with anAffiliate of Borrower or any of the partners of Borrower except in the ordinarycourse of business and on terms which are fully disclosed to Lender in advanceand are no less favorable to Borrower or such Affiliate than would be obtainedin a comparable arm’s-length transaction with an unrelated third party. Lenderhereby acknowledges disclosure of the agreements described on Schedule VIbetween Borrower and an Affiliate of Borrower.

 

5.2.7        Zoning. Borrowershall not initiate or consent to any zoning reclassification of any portion ofthe Property or seek any variance under any existing zoning ordinance or use orpermit the use of any portion of the Property in any manner that could result insuch use becoming a non-conforming use under any zoning ordinance or any otherapplicable land use law, rule or regulation, without the prior consent ofLender.

 

5.2.8        Assets. Borrowershall not purchase or own any properties other than the Property.

 

5.2.9        Debt.  Borrower shall not create, incur or assumeany Indebtedness other than the Debt except to the extent expressly permittedhereby.

 

5.2.10      No Joint Assessment.Borrower shall not suffer, permit or initiate the joint assessment of theProperty with (a) any other real property constituting a tax lot separate from theProperty, or (b) any portion of the Property which may be deemed to constitutepersonal

 

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property, or any otherprocedure whereby the Lien of any taxes which may be levied against suchpersonal property shall be assessed or levied or charged to the Property.

 

5.2.11      Intentionally Deleted.

 

5.2.12      ERISA.

 

(a)                                  Borrower shall not engage in any transactionwhich would cause any obligation, or action taken or to be taken, hereunder (orthe exercise by Lender of any of its rights under the Note, this Agreement orthe other Loan Documents) to be a non-exempt (under a statutory oradministrative class exemption) prohibited transaction under ERISA.

 

(b)                                 Borrower further covenants and agrees todeliver to Lender such certifications or other evidence from time to time throughoutthe term of the Loan, as requested by Lender in its sole discretion, that (A)Borrower is not and does not maintain an “employee benefit plan” as defined inSection 3(3) of ERISA, which is subject to Title I of ER1SA, or a “governmentalplan” within the meaning of Section 3(3) of ERISA; (B) Borrower is not subject tostate statutes regulating investments and fiduciary obligations with respect togovernmental plans; and (C) one or more of the following circumstances is true:

 

(i)                                     Equity interests in Borrower are publiclyoffered securities, within the meaning of 29 C.F.R. §2510.3-101(b)(2);

 

(ii)                                Less than twenty-five percent (25%) of eachoutstanding class of equity interests in Borrower are held by “benefit planinvestors” within the meaning of 29 C.F.R. §25l0.3-101(f)(2);or

 

(iii)                             Borrower qualifies as an “operating company”or a “real estate operating company” within the meaning of 29 C.F.R.§2510.3-101(c) or (e).

 

5.2.13Transfers. Unless such action is permitted by the provisions of thisSection 5.2.13, Borrower will not (i) sell, assign, convey, transfer orotherwise dispose of its interests in the Property or any part thereof, (ii)permit any owner, directly or indirectly, of an ownership interest in theProperty, to transfer such interest, whether by transfer of stock or otherinterest in Borrower or any entity, or otherwise, (iii) incur Indebtedness,(iv) mortgage, hypothecate or otherwise encumber or grant a security interestin the Property or any part thereof, (v) sell, assign, convey, transfer,mortgage, encumber, grant a security interest in, or otherwise dispose of anydirect or indirect ownership interest in Borrower, or permit any owner of aninterest in Borrower to do the same, or (vi) file a declaration of condominiumwith respect to the Property (any of the foregoing transactions, a “**Transfer**”). For purposes hereof, a “Transfer”shall not include any issuance, sale or transfer of interests in Inland WesternRetail Real Estate Trust, Inc.

 

(a)                                  On and after the date that is the later of(i) twelve (12) months following the Closing Date, or (ii) the date of anypayment in connection with an Earnout Closing (as defined in the PurchaseContract) relating to the Property, but in no event later than the date that istwenty four (24) months following the Closing Date, Lender shall not withholdits consent to a Transfer of the Property, provided that the followingconditions are satisfied:

 

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(1)           the transferee of the Property shall be aSpecial Purpose Entity (the **“****Transferee”**) which at the time of such transfer will be in compliance withthe covenants contained in Section 5.1.1 and the representations contained in4.1.30 hereof and which shall have assumed in writing (subject to the terms ofSection 9.4 hereof) and agreed to comply with all the terms, covenants andconditions set forth in this Loan Agreement and the other Loan Documents,expressly including the covenants contained in Section 5.1.1 and therepresentations contained in 4.1.30 hereof;

 

(2)           if requested by Lender, Borrower shalldeliver confirmation in writing from the Rating Agencies that such proposedTransfer will not cause a downgrading, withdrawal or qualification of the thencurrent rating of any securities issued pursuant to such Securitization;

 

(3)           if Manager does not act as manager of thetransferred Property then the manager of the Property must be a QualifyingManager;

 

(4)           no Event of Default shall have occurred andbe continuing;

 

(5)           if required or requested by any of the RatingAgencies, Borrower shall deliver an Additional Insolvency Opinion, and ifrequired by a Rating Agency, a fraudulent conveyance opinion with respect toTransferee, which opinion shall be acceptable to Lender in its reasonablediscretion;

 

(6)           Borrower shall have paid (A) an assumptionfee equal to one percent (1.0%) of the then outstanding principal balance ofthe Loan, and (B) the reasonable and customary third-party expenses (includingreasonable attorneys’ fees and disbursements) actually incurred by Lender in connectionwith such Transfer; provided, however, no assumption fee shall berequired for a Transfer of the Property to a Transferee acceptable to Lender inconnection with a joint venture between Inland Western Retail Real EstateTrust, Inc. and an institution acceptable to Lender provided Inland WesternRetail Real Estate Trust, Inc., or an Affiliate wholly-owned (directly or indirectly)by Inland Western Retail Real Estate Trust, Inc., owns at least twenty percent(20%) of the ownership interests in such Transferee and for which InlandWestern Retail Real Estate Trust, Inc., or an Affiliate wholly-owned (directlyor indirectly) by Inland Western Retail Real Estate Trust, Inc., is themanaging entity and otherwise maintains operational and managerial control ofsuch Transferee, provided that Borrower shall pay all of Lender’s reasonable andcustomary third-party expenses (including reasonable attorneys’ fees anddisbursements) actually incurred by Lender in connection with such Transfer anda processing fee of $5,000.

 

Lender shall notify Borrowerof its approval or disapproval of a proposed Transfer pursuant to this Section5.2.13(a) within thirty (30) days after receiving from Borrower a writtenrequest therefor.

 

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(b)           On and after the date that is the later of (i) twelve (12) monthsfollowing the Closing Date, or (ii) the date of any payment in connection withan Earnout Closing (as defined in the Purchase Contact) relating to theProperty, but in no event later than the date that is twenty four (24) monthsfollowing the Closing Date, Lender shall not withhold its consent to, and shallnot charge an assumption fee in connection with, (1) a Transfer of up to, inthe aggregate, forty-nine percent (49%) of the ownership interests in Borrower;or (2) a Transfer of greater than forty-nine percent (49%) of the ownershipinterest in Borrower, provided that (A) such transfer is to a QualifiedEntity (as defined below), and (B) Borrower shall pay all of Lender’sreasonable and customary third-party expenses (including reasonable attorneys’fees and disbursements) actually incurred by Lender in connection with suchTransfer and a processing fee of $5,000. For purposes of this Agreement, a **“****Qualified Entity”** shall mean an entity(x) with a net worth of $200,000,000 or more, (y) with sufficient experience(determined by Lender in its reasonable discretion) in the ownership andmanagement of properties similar to the Property, and (z) which owns or managesretail properties containing at least 500,000 square feet of gross leasablearea.  If required or requested by any ofthe Rating Agencies, Borrower shall deliver a substantive non-consolidationopinion with respect to any party not now owning more than 49% of the ownershipinterests in Borrower acquiring more than 49% of the ownership interests inBorrower.

 

(c)           Notwithstanding anything in this Section 5.2.13 to the contrary,Borrower shall be permitted to Transfer the entire Property to a newly-formedSpecial Purpose Entity which shall be wholly-owned subsidiary of Inland WesternRetail Real Estate Trust, Inc. or affiliate thereof (**“PermittedAffiliate Transferee”**) which shall be approved by Lender by the ClosingDate (**“****PermittedAffiliate Transfer”**),provided (1) no Event of Default shall have occurred and be continuing, (2) thecreditworthiness of Inland Western Retail Real Estate Trust, Inc., asapplicable, has not deteriorated, in the sole discretion of Lender, from theClosing Date to the date of the proposed Transfer, and (3) Borrower shall havepaid all reasonable and customary third party expenses (including reasonableattorneys’ fees and disbursements) actually incurred by Lender in connectionwith such Transfer (but not any assumption or processing fee).

 

(d)           Borrower, without the consent of Lender, may grant easements, restrictions,covenants, reservations and rights of way in the ordinary course of businessfor access, parking, water and sewer lines, telephone and telegraph lines,electric lines and other utilities or for other similar purposes, provided thatno transfer, conveyance or encumbrance shall materially impair the utility andoperation of the Property or materially adversely affect the value of theProperty or the Net Operating Income of the Property. If Borrower shall receiveany consideration in connection with any of said described transfers orconveyances, Borrower shall have the right to use any such proceeds inconnection with any alterations performed in connection therewith, or requiredthereby.  In connection with anytransfer, conveyance or encumbrance permitted above, the Lender shall executeand deliver any instrument reasonably necessary or appropriate to evidence itsconsent to said action or to subordinate the Lien of the Mortgage to sucheasements, restrictions, covenants, reservations and rights of way or other similargrants upon receipt by the Lender of: (A) a copy of the instrument of transfer;and (B) an Officer’s Certificate stating with respect to any transfer describedabove, that such transfer does not materially impair the utility and operationof the Property or materially reduce the value of the Property or the NetOperating Income of the Property.

 

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**ARTICLE VI**

** **

**INSURANCE; CASUALTY; CONDEMNATION**

 

Section 6.1      Insurance.

 

(a)           Borrower shall obtain and maintain, or cause to be maintained,insurance for Borrower and the Property providing at least the followingcoverages:

 

(i)            comprehensive all risk insurance on theImprovements and the Personal Property, including contingent liability fromOperation of Building Laws, Demolition Costs and Increased Cost of ConstructionEndorsements, in each case (A) in an amount equal to one hundred percent (100%)of the “Full Replacement Cost,” which for purposes of this Agreement shall meanactual replacement value (exclusive of costs of excavations, foundations, undergroundutilities and footings) with a waiver of depreciation, but the amount shall inno event be less than the outstanding principal balance of the Loan; (B)containing an agreed amount endorsement with respect to the Improvements andPersonal Property waiving all co-insurance provisions; (C) providing for nodeductible in excess of Ten Thousand and No/100 Dollars ($10,000) for all suchinsurance coverage; and (D) containing an “Ordinance or Law Coverage” or “Enforcement”endorsement if any of the Improvements or the use of the Property shall at anytime constitute legal non-conforming structures or uses. In addition, Borrowershall obtain: (y) if any portion of the Improvements is currently or at anytime in the future located in a federally designated “special flood hazardarea,” flood hazard insurance in an amount equal to the lesser of (1) theoutstanding principal balance of the Note or (2) the maximum amount of suchinsurance available under the National Flood Insurance Act of 1968, the FloodDisaster Protection Act of 1973 or the National Flood Insurance Reform Act of1994, as each may be amended or such greater amount as Lender shall require;and (z) earthquake insurance in amounts and in form and substance satisfactoryto Lender in the event the Property is located in an area with a high degree ofseismic activity, provided that the insurance pursuant to clauses (y) and (z)hereof shall be on terms consistent with the comprehensive all risk insurancepolicy required under this subsection (i).

 

(ii)           commercial general liability insuranceagainst claims for personal injury, bodily injury, death or property damageoccurring upon, in or about the Property, such insurance (A) to be on theso-called “occurrence” form with a combined limit, including umbrella coverage,of not less than Two Million and No/100 Dollars ($2,000,000.00) in theaggregate and One Million and No/100 Dollars ($1,000,000.00) per occurrence;(B) to continue at not less than the aforesaid limit until required to bechanged by Lender in writing by reason of changed economic conditions makingsuch protection inadequate; and (C) to cover at least the following hazards:(1) premises and operations; (2) products and completed operations on an “ifany” basis; (3) independent contractors; (4) blanket contractual liability forall legal contracts; and (5) contractual liability covering the indemnitiescontained in Article 9 of the Mortgage to the extent the same is available;

 

(iii)          business income insurance (A) with losspayable to Lender; (B) covering all risks required to be covered by theinsurance provided for in subsection (i) above; (C)

 

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coveringrental losses or business interruption, as may be applicable, for a period ofat least twelve (12) months after the date of the casualty and containing anyextended period of indemnity endorsement which provides that after the physicalloss to the Improvements and Personal Property has been repaired, the continuedloss of income will be insured until such income either returns to the samelevel it was at prior to the loss, or the expiration of six (6) months from thedate that the Property is repaired or replaced and operations are resumed,whichever first occurs, and notwithstanding that the policy may expire prior tothe end of such period; and (D) in an annual amount equal to 100% of the rentsor estimated gross revenues from the operation of the Property (as reduced toreflect expenses not incurred during Restoration).  The amount of such business income insuranceshall be determined prior to the date hereof and at least once each yearthereafter based on Borrower’s reasonable estimate of the gross income from theProperty for the succeeding twelve (12) month period.  All proceeds payable to Lender pursuant tothis subsection shall be held by Lender and shall be applied to the obligationssecured by the Loan Documents from time to time due and payable hereunder andunder the Note; provided, however, that nothing herein containedshall be deemed to relieve Borrower of its obligations to pay the obligationssecured by the Loan Documents on the respective dates of payment provided forin the Note and the other Loan Documents except to the extent such amounts areactually paid out of the proceeds of such business income insurance;

 

(iv)          at all times during which structuralconstruction, repairs or alterations are being made with respect to theImprovements, and only if the Property coverage form does not otherwise apply,(A) owner’s contingent or protective liability insurance covering claims notcovered by or under the terms or provisions of the above mentioned commercialgeneral liability insurance policy; and (B) the insurance provided for insubsection (i) above written in a so-called builder’s risk completed value form(1) on a non-reporting basis, (2) against all risks insured against pursuant tosubsection (i) above, (3) including permission to occupy the Property, and (4)with an agreed amount endorsement waiving co-insurance provisions;

 

(v)           workers’ compensation, subject to thestatutory limits of the State;

 

(vi)          comprehensive boiler and machinery insurance,if applicable, in amounts as shall be reasonably required by Lender on termsconsistent with the commercial property insurance policy required undersubsection (i) above;

 

(vii)         umbrella liability insurance in an amount notless than Five Million and No/100 Dollars ($5,000,000.00) per occurrence onterms consistent with the commercial general liability insurance policyrequired under subsection (ii) above;

 

(viii)        if any of the policies of insurance coveringthe risks required to be covered under subsections (i) through (vii) abovecontains an exclusion from coverage for acts of terrorism, Borrower shallobtain and maintain a separate policy providing such coverages in the event ofany act of terrorism, provided such coverage is commercially available forproperties similar to the Property and located in or around the region in whichthe Property is located. Notwithstanding the foregoing, Borrower shall not berequired to

 

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obtainsuch a policy, provided (I) Borrower confirms to Lender, in writing, that itshall protect and hold Lender harmless from any losses associated with suchrisks by, among other things, either (A) depositing with Lender sums sufficientto pay for all uninsured costs related to a Restoration of the Propertyfollowing any act of terrorism (which sum shall be treated as a Net ProceedsDeficiency) and any remaining balance following a Restoration shall be remittedby Lender to Borrower in accordance with Section 6.4(b)(vii) hereof), or (B) atthe option of Borrower prepaying the Loan in accordance with the terms hereof,including, without limitation, the payment of any Prepayment Consideration duein connection therewith; (II) Inland Western Retail Real Estate Trust, Inc. (**“Terrorism Insurance Guarantor”**) executes a guaranty, inform and substance satisfactory to Lender, guaranteeing in the event of any actof terrorism, payment to Lender of any sums that Borrower is obligated to payto Lender under clause (I) above (which shall be applied in accordance withSection 6.4 hereof), and (III) Terrorism Insurance Guarantor maintains a networth of at least $300,000,000 (as determined by such entity’s most recentaudited financial statements), such entity maintains a direct or indirectownership interest in Borrower, and the aggregate loan-to-value ratio (asdetermined by Lender) (“LTV”) for all properties on which such entity has adirect or indirect ownership interest shall not exceed 55%, however, TerrorismInsurance Guarantor may exceed the 55% LTV for a period not to exceed six (6)months out of any twelve (12) month period either 1) during the time periodwhen Terrorism Insurance Guarantor is offering securities to the public, or 2)when in the business judgement of Terrorism Insurance Guarantor, exceeding anLTV of 55% is necessary given existing circumstances of the credit environment,but in no event shall the LTV exceed 65% if Terrorism Insurance Guarantormaintains a net worth greater than or equal to $300,000,000, but less than$400,000,000, or 70% if Terrorism Insurance Guarantor maintains a net worth ofat least $400,000,000.

 

(ix)           upon sixty (60) days’ written notice, such otherreasonable insurance and in such reasonable amounts as Lender from time to timemay reasonably request against such other insurable hazards which at the timeare commonly insured against for property similar to the Property located in oraround the region in which the Property is located.

 

(b)           All insurance provided for in Section 6.1 (a) shall be obtained undervalid and enforceable policies (collectively, the **“****Policies”** or in the singular, the **“****Policy”**), and shall be subject to the approval of Lender as to insurancecompanies, amounts, deductibles, loss payees and insureds. The Policies shallbe issued by financially sound and responsible insurance companies authorizedto do business in the State and having a rating of “A:X” or better in thecurrent Best’s Insurance Reports and a claims paying ability rating of “AA” orbetter by at least two (2) of the Rating Agencies including, (i) Standard &Poor’s Ratings Group, and (ii) Moody’s Investors Services, Inc. if Moody’sInvestors Service, Inc. is rating the Securities. The Policies described inSection 6.1 (other than those strictly limited to liability protection) shalldesignate Lender as loss payee. Not less than ten (10) days prior to theexpiration dates of the Policies theretofore furnished to Lender, certificatesof insurance evidencing the Policies accompanied by evidence satisfactory toLender of payment of the premiums due thereunder (the **“InsurancePremiums**”), shall be delivered by Borrower to Lender.

 

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(c)           Any blanket insurance Policy shall specifically allocate to theProperty the amount of coverage from time to time required hereunder and shallotherwise provide the same protection as would a separate Policy insuring onlythe Property in compliance with the provisions of Section 6.1(a).

 

(d)           All Policies of insurance provided for or contemplated by Section 6.1(a),except for the Policy referenced in Section 6.1(a)(v), shall name Borrower, orthe Tenant, as the insured and Lender as the additional insured, as itsinterests may appear, and in the case of property damage, boiler and machinery,flood and earthquake insurance, shall contain a so-called New York standardnon-contributing mortgagee clause in favor of Lender providing that the loss thereundershall be payable to Lender.

 

(e)           All Policies of insurance provided for in Section 6.1(a) shall contain clausesor endorsements to the effect that:

 

(i)             noact or negligence of Borrower, or anyone acting for Borrower, or of any Tenantor other occupant, or failure to comply with the provisions of any Policy,which might otherwise result in a forfeiture of the insurance or any partthereof, shall in any way affect the validity or enforceability of theinsurance insofar as Lender is concerned;

 

(ii)            thePolicy shall not be materially changed (other than to increase the coverageprovided thereby) or canceled without at least thirty (30) days’ written noticeto Lender and any other party named therein as an additional insured;

 

(iii)           the issuers thereof shall give written noticeto Lender if the Policy has not been renewed fifteen (15) days prior to itsexpiration; and

 

(iv)           Lendershall not be liable for any Insurance Premiums thereon or subject to anyassessments thereunder.

 

(f)             If at any time Lender is not in receipt ofwritten evidence that all insurance required hereunder is in full force andeffect, Lender shall have the right, after ten (10) Business Days writtennotice to Borrower, to take such action as Lender deems necessary to protectits interest in the Property, including, without limitation, the obtaining ofsuch insurance coverage as Lender in its sole discretion deemsappropriate.  All premiums incurred byLender in connection with such action or in obtaining such insurance andkeeping it in effect shall be paid by Borrower to Lender upon demand and, untilpaid, shall be secured by the Mortgage and shall bear interest at the DefaultRate. If Borrower fails in so insuring the Property or in so assigning anddelivering the Policies, Lender may, at its option, obtain such insurance usingsuch carriers and agencies as Lender shall elect from year to year and pay thepremiums therefor, and Borrower will reimburse Lender for any premium so paid,with interest thereon as stated in the Note from the time of payment, ondemand, and the amount so owing to Lender shall be secured by theMortgage.  The insurance obtained byLender may, but need not, protect Borrower’s interest and the coverage thatLender purchases may not pay any claim that Borrower makes or any claim that ismade against Borrower in connection with the Property.

 

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Section6.2            Casualty.  If the Property shall bedamaged or destroyed, in whole or in part, by fire or other casualty (a **“Casualty”**),Borrower (a) shall give to Lender prompt notice of such damage reasonablyestimated by Borrower to cost more than One Hundred Thousand Dollars ($100,000.00)to repair, and (b) shall promptly commence and diligently prosecute thecompletion of the repair and restoration of the Property as nearly as possibleto the condition the Property was in immediately prior to such fire or othercasualty, with such alterations as may be reasonably approved by Lender (a **“****Restoration”**) and otherwise in accordancewith Section 6.4. Borrower shall pay all costs of such Restoration whether ornot such costs are covered by insurance. Lender may, but shall not be obligatedto make proof of loss if not made promptly by Borrower.

 

Section6.3             Condemnation.  Borrowershall promptly give Lender notice of the actual or threatened commencement ofany proceeding for the Condemnation of the Property and shall deliver to Lendercopies of any and all papers served in connection with such proceedings. Lendermay participate in any such proceedings, and Borrower shall from time to timedeliver to Lender all instruments requested by it to permit such participation.Borrower shall, at its expense, diligently prosecute any such proceedings, andshall consult with Lender, its attorneys and experts, and cooperate with themin the carrying on or defense of any such proceedings. Notwithstanding anytaking by any public or quasi-public authority through Condemnation orotherwise (including but not limited to any transfer made in lieu of or in anticipationof the exercise of such taking), Borrower shall continue to pay the Debt at thetime and in the manner provided for its payment in the Note and in thisAgreement and the Debt shall not be reduced until any Award shall have beenactually received and applied by Lender, after the deduction of expenses ofcollection, to the reduction or discharge of the Debt. Lender shall not belimited to the interest paid on the Award by the condemning authority but shallbe entitled to receive out of the Award interest at the rate or rates providedherein or in the Note.  If the Propertyor any portion thereof is taken by a condemning authority, Borrower shallpromptly commence and diligently prosecute the Restoration of the Property andotherwise comply with the provisions of Section 6.4. If the Property is sold,through foreclosure or otherwise, prior to the receipt by Lender of the Award,Lender shall have the right, whether or not a deficiency judgment on the Noteshall have been sought, recovered or denied, to receive the Award, or a portionthereof sufficient to pay the Debt.

 

Section6.4              Restoration.  The following provisions shallapply in connection with the Restoration of the Property:

 

(a)             If the Net Proceeds shall be less thanRelevant Restoration Threshold and the costs of completing the Restorationshall be less than the Relevant Restoration Threshold, the Net Proceeds will bedisbursed by Lender to Borrower upon receipt, provided that all of the conditionsset forth in clauses (A), (E), (F), (G), (H), (J) and (L) of Section 6.4(b)(i)below are met and Borrower delivers to Lender a written undertaking toexpeditiously commence and to satisfactorily complete with due diligence theRestoration in accordance with the terms of this Agreement.

 

(b)             If the Net Proceeds are equal to or greaterthan the Relevant Restoration Threshold or the costs of completing theRestoration is equal to or greater than the Relevant Restoration Threshold,then in either case, Lender shall make the Net Proceeds available for the

 

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Restorationin accordance with the provisions of this Section 6.4(b). The term **“****Net Proceeds”**for purposes of this Section 6.4 shall mean: (x) the net amount of allinsurance proceeds received by Lender pursuant to Section 6.1 (a)(i), (iv),(vi) and (viii) as a result of such damage or destruction, after deduction ofits reasonable costs and expenses (including, but not limited to, reasonablecounsel fees), if any, in collecting same (**“****Insurance Proceeds”**), or (y) the net amount of theAward, after deduction of its reasonable costs and expenses (including, but notlimited to, reasonable counsel fees), if any, in collecting same (**“****Condemnation Proceeds”**), whichever the case may be.

 

(i)            The Net Proceeds shall be made available toBorrower for Restoration provided that each of the following conditions aremet:

 

(A)          no Event of Default shall have occurred and be continuing;

 

(B)           (1) in the event the Net Proceeds areInsurance Proceeds, and (x) less than twenty-five percent (25%) of the totalfloor area of the Improvements on the Property has been damaged, destroyed orrendered unusable as a result of such fire or other casualty, or (y) Borroweris required under a Lease exceeding the Relevant Leasing Threshold to use theNet Proceeds for the restoration of the Property, or (2) in the event the NetProceeds are Condemnation Proceeds, and (x) less than ten percent (10%) of theland constituting the Property is taken, and such land is located along theperimeter or periphery of the Property, and no portion of the Improvements islocated on such land, or (y) Borrower is required under a Lease exceeding theRelevant Leasing Threshold to use the Net Proceeds for the restoration of theProperty;

 

(C)           Leases demising in the aggregate a percentageamount equal to or greater than the Rentable Space Percentage of the totalrentable space in the Property which has been demised under executed anddelivered Leases in effect as of the date of the occurrence of such fire orother casualty or taking, whichever the case may be, shall remain in full forceand effect during and after the completion of the Restoration, notwithstandingthe occurrence of any such fire or other casualty or taking, whichever the casemay be, and will make all necessary repairs and restorations thereto at theirsole cost and expense.  The term **“****Rentable Space Percentage”** shall mean (x) in the event theNet Proceeds are Insurance Proceeds, a percentage amount equal to fifty percent(50%) and (y) in the event the Net Proceeds are Condemnation Proceeds, apercentage amount equal to fifty percent (50%);

 

(D)          Borrower shall commence the Restoration assoon as reasonably practicable (but in no event later than ninety (90) daysafter such damage or destruction or taking, whichever the case may be, occurs)and shall diligently pursue the same to satisfactory completion;

 

(E)           Lender shall be satisfied that any operatingdeficits, including all scheduled payments of principal and interest under theNote, which will be incurred with respect to the Property as**a result of the occurrence of any such fire

 

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orother casualty or taking, whichever the case may be, will be covered out of (1)the Net Proceeds, (2) the insurance coverage referred to in Section 6.1(a)(iii),if applicable, or (3) by other funds of Borrower;

 

(F)           Lender shall be satisfied that theRestoration will be completed on or before the earliest to occur of (1) theMaturity Date, (2) the earliest date required for such completion under theterms of any Leases, (3) such time as may be required under applicable zoninglaw, ordinance, rule or regulation in order to repair and restore the Propertyto the condition it was in**immediatelyprior to such fire or other casualty or to as nearly as possible the conditionit was in immediately prior to such taking, as applicable or (4) the expirationof the insurance coverage referred to in Section 6.1(a)(iii);

 

(G)           the Property and the use thereof after theRestoration will be in compliance with and permitted under all applicablezoning laws, ordinances, rules and regulations provided, however, thatcompliance with such zoning laws, ordinances, rules and regulations (including,without limitation, parking requirements) will not require restoration of theImprovements or the Property to a size, condition, or configuration materiallydifferent than that which existed immediately prior to such Casualty or taking;

 

(H)          the Restoration shall be done and completedby Borrower in an expeditious and diligent fashion and in compliance with allapplicable governmental laws, rules and regulations (including, withoutlimitation, all applicable environmental laws);

 

(I)            such fire or other casualty or taking, asapplicable, does not result in the loss of access to the Property or therelated Improvements;

 

(J)            the Debt Service Coverage Ratio, after givingeffect to the Restoration, shall be equal to or greater than 2.1:1;

 

(K)          Borrower shall deliver or cause to bedelivered to Lender a signed detailed budget approved in writing by Borrower’sarchitect or engineer stating the entire cost of completing the Restoration,which budget should be consistent with restoration budgets of similar retailproperties then owned and operated by nationally recognized owners andoperators of retail properties located in the areas in which the Property islocated; and

 

(L)           the Net Proceeds together with any cash orcash equivalent deposited by Borrower with Lender are sufficient in Lender’sdiscretion to cover the cost of the Restoration.

 

(ii)             TheNet Proceeds shall be held by Lender in an interest bearing account and, untildisbursed in accordance with the provisions of this Section 6.4(b), shallconstitute additional security for the Debt and other obligations under theLoan Documents.  The Net Proceeds shallbe disbursed by Lender to, or as directed by, Borrower from time to time duringthe course of the Restoration, upon receipt of

 

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evidencesatisfactory to Lender that (A) all materials installed and work and laborperformed to be paid for out of the requested disbursement in connection withthe Restoration have been performed, and (B) there exist no notices ofpendency, stop orders, mechanic’s or materialman’s liens or notices ofintention to file same, or any other liens or encumbrances of any naturewhatsoever on the Property which have not either been fully bonded to thesatisfaction of Lender and discharged of record or in the alternative fullyinsured to the satisfaction of Lender by the title company issuing the TitleInsurance Policy.

 

(iii)            Allplans and specifications required in connection with the Restoration shall besubject to prior review and acceptance in all respects by Lender and by anindependent consulting engineer selected by Lender (the **“Casualty Consultant”**), such reviewand acceptance not to be unreasonably withheld or delayed. Lender shall havethe use of the plans and specifications and all permits, licenses and approvalsrequired or obtained in connection with the Restoration. The identity of thecontractors, subcontractors and rnaterialmen engaged in the Restoration, aswell as the contracts under which they have been engaged, shall be subject toprior review and acceptance by Lender and the Casualty Consultant, such reviewand acceptance not to be unreasonably withheld or delayed. All costs andexpenses incurred by Lender in connection with making the Net Proceedsavailable for the Restoration including, without limitation, reasonable counselfees and disbursements and the Casualty Consultant’s fees, shall be paid byBorrower.

 

(iv)            Inno event shall Lender be obligated to make disbursements of the Net Proceeds inexcess of an amount equal to the costs actually incurred from time to time forwork in place as part of the Restoration, as certified by the CasualtyConsultant, minus the Casualty Retainage. The term **“****Casualty****Retainage****”**shall mean an amount equal to ten percent(10%) of the costs actually incurred for work in place as part of theRestoration, as certified by the Casualty Consultant, until the Restoration hasbeen completed. The Casualty Retainage shall in no event, and notwithstandinganything to the contrary set forth above in this Section 6.4(b), be less thanthe amount actually held back by Borrower from contractors, subcontractors andmaterialmen engaged in the Restoration. The Casualty Retainage shall not bereleased until the Casualty Consultant certifies to Lender that the Restorationhas been completed in accordance with the provisions of this Section 6.4(b) andthat all approvals necessary for the re-occupancy and use of the Property havebeen obtained from all appropriate governmental and quasi-governmentalauthorities, and Lender receives evidence satisfactory to Lender that the costsof the Restoration have been paid in full or will be paid in full out of theCasualty Retainage; provided, however, that Lender will releasethe portion of the Casualty Retainage being held with respect to anycontractor, subcontractor or materialman engaged in the Restoration as of thedate upon which the Casualty Consultant certifies to Lender that thecontractor, subcontractor or materialman has satisfactorily completed all workand has supplied all materials in accordance with the provisions of thecontractor’s, subcontractor’s or materialman’s contract, the contractor,subcontractor or materialman delivers the lien waivers and evidence of paymentin full of all sums due to the contractor, subcontractor or materialman as maybe reasonably requested by Lender or by the title company issuing the TitleInsurance Policy, and Lender receives an endorsement

 

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tothe Title Insurance Policy insuring the continued priority of the lien of theMortgage and evidence of payment of any premium payable for such endorsement.If required by Lender, the release of any such portion of the CasualtyRetainage shall be approved by the surety company, if any, which has issued apayment or performance bond with respect to the contractor, subcontractor ormaterialman.

 

(v)          Lendershall not be obligated to make disbursements of the Net Proceeds morefrequently than once every calendar month.

 

(vi)         If atany time the Net Proceeds or the undisbursed balance thereof shall not, in thereasonable opinion of Lender in consultation with the Casualty Consultant, besufficient to pay in full the balance of the costs which are estimated by theCasualty Consultant to be incurred in connection with the completion of theRestoration, Borrower shall deposit the deficiency (the **“NetProceeds Deficiency”**)****with Lender before any further disbursement of the NetProceeds shall be made. The Net Proceeds Deficiency deposited with Lender shallbe held by Lender and shall be disbursed for costs actually incurred inconnection with the Restoration on the same conditions applicable to thedisbursement of the Net Proceeds, and until so disbursed pursuant to thisSection 6.4(b) shall constitute additional security for the Debt and otherobligations under the Loan Documents.

 

(vii)         Theexcess, if any, of the Net Proceeds and the remaining balance, if any, of theNet Proceeds Deficiency deposited with Lender after the Casualty Consultantcertifies to Lender that the Restoration has been completed in accordance withthe provisions of this Section 6.4(b), and the receipt by Lender of evidencesatisfactory to Lender that all costs incurred in connection with theRestoration have been paid in full, shall be remitted by Lender to Borrower,provided no Event of Default shall have occurred and shall be continuing underthe Note, this Agreement or any of the other Loan Documents.

 

(c)            All Net Proceeds not required (i) to be madeavailable for the Restoration or (ii) to be returned to Borrower as excess NetProceeds pursuant to Section 6.4(b)(vii) may be retained and applied by Lendertoward the payment of the Debt whether or not then due and payable in suchorder, priority and proportions as Lender in its sole discretion shall deemproper (provided no Event of Default exists, such Borrower shall not berequired to pay any Prepayment Consideration in connection with such payment),or, at the discretion of Lender, the same may be paid, either in whole or inpart, to Borrower for such purposes as Lender shall designate, in its discretion.

 

(d)            In the event of foreclosure of the Mortgagewith respect to the Property, or other transfer of title to the Property inextinguishment in whole or in part of the Debt all right, title and interest ofBorrower in and to the Policies that are not blanket Policies then in force concerningthe Property and all proceeds payable thereunder shall thereupon vest in the purchaserat such foreclosure or Lender or other transferee in the event of such othertransfer of title.

 

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(e)            Lender shall with reasonable promptnessfollowing any Casualty or Condemnation notify Borrower whether or not NetProceeds are required to be made available to Borrower for restoration pursuantto this Section 6.4.

 

**ARTICLE VII**

** **

**RESERVE FUNDS**

 

Section 7.1             RequiredRepair Funds.

 

7.1.1         Deposits.   Borrower shall perform therepairs at the Property, if any, as more particularly set forth on Schedule IIIhereto within six (6) months from the date of funding (such repairs hereinafterreferred to as **“****Required Repairs”**).  Borrower shallcomplete the Required Repairs on or before the required deadline for eachrepair as set forth on Schedule III. It shall be an Event of Defaultunder this Agreement if (i) Borrower does not complete the Required Repairs atthe Property by the required deadline for each repair as set forth on ScheduleIII, and (ii) Borrower does not satisfy each condition contained in Section7.1.2 hereof. Upon the occurrence of such an Event of Default, Lender, at itsoption, may withdraw all Required Repair Funds from the Required Repair Accountand Lender may apply such funds either to completion of the Required Repairs atthe Property or toward payment of the Debt in such order, proportion andpriority as Lender may determine in its sole discretion.  Lender’s right to withdraw and apply RequiredRepair Funds shall be in addition to all other rights and remedies provided to Lenderunder this Agreement and the other Loan Documents.  On the Closing Date, Borrower shall depositwith Lender the amount for the Property set forth on such Schedule IIIhereto, if any, to perform the Required Repairs for the Property.  Amounts so deposited with Lender, if any,shall be held by Lender in an interest bearing account. Amounts so deposited,if any, shall hereinafter be referred to as Borrower’s **“****Required Repair Fund”** and the account, if any, in whichsuch amounts are held shall hereinafter be referred to as Borrower’s **“Required Repair Account.”**

 

7.1.2         Release of Required Repair Funds. Lender shall disburse to Borrower the RequiredRepair Funds from the Required Repair Account from time to time uponsatisfaction by Borrower of each of the following conditions:  (i) Borrower shall submit a written requestfor payment to Lender at least fifteen (15) days prior to the date on whichBorrower requests such payment be made and specifies the Required Repairs to bepaid, (ii) on the date such request is received by Lender and on the date suchpayment is to be made, no Default or Event of Default shall exist and remainuncured, (iii) Lender shall have received a certificate from Borrower (A) statingthat all Required Repairs at the Property to be funded by the requesteddisbursement have been completed in good and workmanlike manner and inaccordance with all applicable federal, state and local laws, rules andregulations, such certificate to be accompanied by a copy of any license,permit or other approval by any Governmental Authority required to commenceand/or complete the Required Repairs, (B) identifying each Person that suppliedmaterials or labor in connection with the Required Repairs performed at theProperty to be funded by the requested disbursement under a contract in excessof $50,000, and (C) stating that each Person who has supplied materials orlabor in connection with the Required Repairs to be funded by the requesteddisbursement has been paid in full or will be paid in full upon suchdisbursement, such certificate to be accompanied by lien waivers or otherevidence of payment satisfactory to

 

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Lender,(iv) at Lender’s option, a title search for the Property indicating that theProperty is free from all liens, claims and other encumbrances not previouslyapproved by Lender, and (v) Lender shall have received such other evidence asLender shall reasonably request that the Required Repairs at the Property to befunded by the requested disbursement have been completed and are paid for orwill be paid upon such disbursement to Borrower.  Lender shall not be required to makedisbursements from the Required Repair Account with respect to the Propertymore than once each calendar month and such disbursement shall be made onlyupon satisfaction of each condition contained in this Section 7.1.2.

 

Section 7.2              Taxand Insurance Escrow Fund.Borrower shall pay to Lender on each Payment Date (a) one-twelfth of the Taxesthat Lender estimates will be payable during the next ensuing twelve (12)months in order to accumulate with Lender sufficient funds to pay all suchTaxes at least thirty (30) days prior to their respective due dates and (b)one-twelfth of the Insurance Premiums that Lender estimates will be payable forthe renewal of the coverage afforded by the Policies upon the expirationthereof in order to accumulate with Lender sufficient funds to pay all suchInsurance Premiums at least thirty (30) days prior to the expiration of thePolicies, (said amounts in (a) and (b) above are hereinafter called the **“Tax and InsuranceEscrow Fund”**). The Taxand Insurance Escrow Fund and the payments of interest or principal or both,payable pursuant to the Note, shall be added together and shall be paid as anaggregate sum by Borrower to Lender. Lender will apply the Tax and InsuranceEscrow Fund to payments of Taxes and Insurance Premiums required to be made byBorrower pursuant to this Agreement and under the Mortgage. In making anypayment relating to the Tax and Insurance Escrow Fund, Lender may do soaccording to any bill, statement or estimate procured from the appropriatepublic office (with respect to Taxes) or insurer or agent (with respect toInsurance Premiums) or from Borrower without inquiry into the accuracy of suchbill, statement or estimate or into the validity of any tax, assessment, sale,forfeiture, tax lien or title or claim thereof, provided, however, Lender shalluse reasonable efforts to pay such real property taxes sufficiently early toobtain the benefit of any available discounts of which it has knowledge. If theamount of the Tax and Insurance Escrow Fund shall exceed the amounts due forTaxes and Insurance Premiums, Lender shall, in its sole discretion, return anyexcess to Borrower or credit such excess against future payments to be made tothe Tax and Insurance Escrow Fund. The Tax and Insurance Escrow Fund shall beheld by Lender in an interest-bearing account and shall at Lender’s option beheld in Eligible Account at an Eligible Institution.  Any interest earned on said account shall beheld in said account and credited toward future deposits to the Tax andInsurance Escrow Fund. Any amount remaining in the Tax and Insurance EscrowFund after the Debt has been paid in full shall be returned to Borrower. Inallocating such excess, Lender may deal with the Person shown on the records ofLender to be the owner of the Property.  If at any time Lender reasonably determinesthat the Tax and Insurance Escrow Fund is not or will not be sufficient to payTaxes or Insurance Premiums by the dates set forth above, Lender shall notifyBorrower of such determination and Borrower shall increase its monthly paymentsto Lender by the amount that Lender estimates is sufficient to make up thedeficiency at least thirty (30) days prior to delinquency of the Taxes orInsurance Premiums. Notwithstanding anything to the contrary hereinbeforecontained, in the event that Borrower provides (1) evidence satisfactory toLender that the Property is insured under a “blanket” policy which isacceptable to Lender and which otherwise satisfies the requirements of thisAgreement and (2) evidence satisfactory to Lender that the Taxes for theProperty have been paid in accordance with the requirements set forth in thisAgreement, Lender will waive the requirement set forth herein for Borrower tomake

 

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deposits into the Tax andInsurance Escrow Fund for the payment of Insurance Premiums due on such “blanket”policy of insurance and for payment of such Taxes, provided, however, Lenderexpressly reserves the right to require Borrower to make deposits to the Taxand Insurance Escrow Fund for the payment of Insurance Premiums if at any timethe Property is not insured under a “blanket” insurance policy which satisfiesthe requirements of this Agreement or Taxes are not paid in accordance with therequirements of this Agreement.

 

Section 7.3              Replacementsand Replacement Reserve.

 

7.3.1          Replacement Reserve Fund.  Borrower shall pay to Lender on the date hereof and on each Payment Dateone twelfth of the amount (the **“****Replacement Reserve Monthly Deposit**”) reasonably estimated by Lender inits sole discretion to be due for replacements and repairs required to be madeto the Property during the calendar year (collectively, the **“****Replacements”**), which Replacement ReserveMonthly Deposit shall be in an amount equal to no less than $0.15 per year persquare foot of gross leasable area. Amounts so deposited shall hereinafter bereferred to as Borrower’s **“****Replacement Reserve Fund”** and the account in which suchamounts are held shall hereinafter be referred to as Borrower’s **“****Replacement ReserveAccount.”**  Lender may reassess its estimate of theamount necessary for the Replacement Reserve Fund from time to time, and mayincrease the monthly amounts required to be deposited into the ReplacementReserve Fund upon thirty (30) days notice to Borrower if Lender determines inits reasonable discretion that an increase is necessary to maintain the propermaintenance and operation of the Property. Any amount held in the Replacement Reserve Account and allocated for theProperty shall be retained by Lender in an interest bearing account, or, at theoption of Lender, in an Eligible Account at an Eligible Institution; provided,however, that, any interest accrued on the amounts on deposit in the ReplacementReserve Fund shall be disbursed to Borrower no more than once per calendar yearupon the written request of Borrower. Notwithstanding anything to the contraryin this Section 7.3, Borrower shall not be required to make Replacement ReserveMonthly Deposits, provided that: (i) no Event of Default shall have occurred;and (ii) Borrower makes all necessary Replacements and otherwise maintains theProperty to Lender’s satisfaction. Upon notice from Lender following: (a) anEvent of Default; or (b) the failure of Borrower to make necessary Replacementsor otherwise maintain the Property to Lender’s satisfaction, Borrower shallbegin to deposit the Replacement Reserve Monthly Deposit into the ReplacementReserve Fund beginning on the Payment Date (as defined herein) immediatelyfollowing the date of such notice.

 

7.3.2         Disbursements from Replacement ReserveAccount.

 

(a)             Lender shall make disbursements from theReplacement Reserve Account to pay Borrower only for the costs of theReplacements.  Lender shall not beobligated to make disbursements from the Replacement Reserve Account toreimburse Borrower for the costs of routine maintenance to the Property or forcosts which are to be reimbursed from the Required Repair Fund (if any).

 

(b)             Lender shall, upon written request fromBorrower and satisfaction of the requirements set forth in this Section 7.3.2,disburse to Borrower amounts from the Replacement Reserve Account necessary topay for the actual approved costs of Replacements or to reimburse

 

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Borrowertherefor, upon completion of such Replacements (or, upon partial completion inthe case of Replacements made pursuant to Section 7.3.2(f)) as determined byLender.  In no event shall Lender beobligated to disburse funds from the Replacement Reserve Account if a Defaultor an Event of Default exists.

 

(c)            Each request for disbursement from theReplacement Reserve Account shall be in a form specified or approved by Lenderand shall specify (i) the specific Replacements for which the disbursement isrequested, (ii) the quantity and price of each item purchased, if theReplacement includes the purchase or replacement of specific items, (iii) the priceof all materials (grouped by type or category) used in any Replacement otherthan the purchase or replacement of specific items, and (iv) the cost of allcontracted labor or other services applicable to each Replacement for whichsuch request for disbursement is made. With each request Borrower shall certifythat all Replacements have been made in accordance with all applicable LegalRequirements of any Governmental Authority having jurisdiction over the Propertyto which the Replacements are being provided and, unless Lender has agreed toissue joint checks as described below, each request shall include evidence ofpayment of all such amounts.  Eachrequest for disbursement shall include copies of invoices for all items or materialspurchased and all contracted labor or services provided. Except as provided inSection 7.3.2(e), each request for disbursement from the Replacement ReserveAccount shall be made only after completion of the Replacement for whichdisbursement is requested.  Borrowershall provide Lender evidence of completion satisfactory to Lender in itsreasonable judgment.

 

(d)           Borrower shall pay all invoices in connection with the Replacementswith respect to which a disbursement is requested prior to submitting suchrequest for disbursement from the Replacement Reserve Account or, at the requestof Borrower, Lender will issue joint checks, payable to Borrower and thecontractor, supplier, materialman, mechanic, subcontractor or other party towhom payment is due in connection with a Replacement.  In the case of payments made by joint check,Lender may require a waiver of lien from each Person receiving payment prior toLender’s disbursement from the Replacement Reserve Account. In addition, as acondition to any disbursement, Lender may require Borrower to obtain lienwaivers from each contractor, supplier, materialman, mechanic or subcontractorwho receives payment in an amount equal to or greater than $100,000 forcompletion of its work or delivery of its materials. Any lien waiver deliveredhereunder shall conform to the requirements of applicable law and shall coverall work performed and materials supplied (including equipment and fixtures)for the Property by that contractor, supplier, subcontractor, mechanic ormaterialman through the date covered by the current reimbursement request (or,in the event that payment to such contractor, supplier, subcontractor, mechanicor materialmen is to be made by a joint check, the release of lien shall beeffective through the date covered by the previous release of funds request).

 

(e)            If (i) the cost of a Replacement exceeds$100,000, (ii) the contractor performing such Replacement requires periodicpayments pursuant to terms of a written contract, and (iii) Lender has approvedin writing in advance such periodic payments, a request for reimbursement fromthe Replacement Reserve Account may be made after completion of a portion ofthe work under such contract, provided (A) such contract requires payment upon completionof such portion of the work, (B) the materials for which the request is madeare on site at the Property and are properly secured or have been installed inthe Property, (C) all other conditions in this Agreement for disbursement havebeen satisfied, (D) funds remaining in the

 

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Replacement Reserve Account are, in Lender’s judgment, sufficient tocomplete such Replacement and other Replacements when required, and (E) ifrequired by Lender, each contractor or subcontractor receiving payments undersuch contract shall provide a waiver of lien with respect to amounts which havebeen paid to that contractor or subcontractor.

 

(f)                                    Borrower shall not make a request fordisbursement from the Replacement Reserve Account more frequently than once inany calendar month and (except in connection with the final disbursement) thetotal cost of all Replacements in any request shall not be less than $5,000.00.

 

7.3.3                        Performance of Replacements.

 

(a)                                  Borrowershall make Replacements when required in order to keep the Property incondition and repair consistent with other first class, full service retailproperties in the same market segment in the metropolitan area in which theProperty is located, and to keep the Property or any portion thereof from deteriorating.Borrower shall complete all Replacements in a good and workmanlike manner assoon as practicable following the commencement of making each such Replacement.

 

(b)                                 Lender reserves the right, at its option, toapprove all contracts or work orders with materialmen, mechanics, suppliers,subcontractors, contractors or other parties providing labor or materials undercontracts for an amount in excess of $100,000 in connection with theReplacements. Upon Lender’s request, Borrower shall assign any contract or subcontractto Lender.

 

(c)                                  In the event Lender determines in itsreasonable discretion that any Replacement is not being performed in aworkmanlike or timely manner or that any Replacement has not been completed ina workmanlike or timely manner, and such failure continues to exist for morethan thirty (30) days after notice from Lender to Borrower, Lender shall havethe option to withhold disbursement for such unsatisfactory Replacement and toproceed under existing contracts or to contract with third parties to completesuch Replacement and to apply the Replacement Reserve Fund toward the labor andmaterials necessary to complete such Replacement, without providing any priornotice to Borrower and to exercise any and all other remedies available toLender upon an Event of Default hereunder.

 

(d)                                 In order to facilitate Lender’s completion ormaking of the Replacements pursuant to Section 7.3.3(c) above, Borrowergrants Lender the right to enter onto the Property and perform any and all workand labor necessary to complete or make the Replacements and/or employ watchmento protect the Property from damage. All sums so expended by Lender, to the extentnot from the Replacement Reserve Fund, shall be deemed to have been advancedunder the Loan to Borrower and secured by the Mortgage. For this purposeBorrower constitutes and appoints Lender its true and lawful attorney-in-factwith full power of substitution to complete or undertake the Replacements inthe name of Borrower. Such power of attorney shall be deemed to be a powercoupled with an interest and cannot be revoked but shall only be effective followingan Event of Default. Borrower empowers said attorney-in-fact as follows:  (i) to use any funds in the ReplacementReserve Account for the purpose of making or completing the Replacements; (ii)to make such additions, changes and corrections to the Replacements as shall

 

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benecessary or desirable to complete the Replacements; (iii) to employ suchcontractors, subcontractors, agents, architects and inspectors as shall berequired for such purposes; (iv) to pay, settle or compromise all existingbills and claims which are or may become Liens against the Property, or as maybe necessary or desirable for the completion of the Replacements, or forclearance of title; (v) to execute all applications and certificates in thename of Borrower which may be required by any of the contract documents; (vi)to prosecute and defend all actions or proceedings in connection with theProperty or the rehabilitation and repair of the Property; and (vii) to do anyand every act which Borrower might do in its own behalf to fulfill the terms ofthis Agreement.

 

(e)                                  Nothing in this Section 7.3.3 shall: (i)make Lender responsible for making or completing the Replacements; (ii) requireLender to expend funds in addition to the Replacement Reserve Fund to make orcomplete any Replacement; (iii) obligate Lender to proceed with theReplacements; or (iv) obligate Lender to demand from Borrower additional sumsto make or complete any Replacement.

 

(f)                                    Borrower shall permit Lender and Lender’sagents and representatives (including, without limitation, Lender’s engineer,architect, or inspector) or third parties making Replacements pursuant to this Section 7.3.3to enter onto the Property during normal business hours (subject to the rightsof tenants under their Leases) to inspect the progress of any Replacements andall materials being used in connection therewith, to examine all plans and shopdrawings relating to such Replacements which are or may be kept at theProperty, and to complete any Replacements made pursuant to this Section 7.3.3.Borrower shall cause all contractors and subcontractors to cooperate withLender or Lender’s representatives or such other persons described above inconnection with inspections described in this Section 7.3.3(f) or thecompletion of Replacements pursuant to this Section 7.3.3.

 

(g)                                 Lender may require an inspection of theProperty at Borrower’s expense prior to making a monthly disbursement in excessof $10,000 from the Replacement Reserve Account in order to verify completionof the Replacements for which reimbursement is sought. Lender may require thatsuch inspection be conducted by an appropriate independent qualified professionalselected by Lender and/or may require a copy of a certificate of completion byan independent qualified professional acceptable to Lender prior to thedisbursement of any amounts from the Replacement Reserve Account. Borrowershall pay the expense of the inspection as required hereunder, whether suchinspection is conducted by Lender or by an independent qualified professional.

 

(h)                                 The Replacements and all materials,equipment, fixtures, or any other item comprising a part of any Replacementshall be constructed, installed or completed, as applicable, free and clear ofall mechanic’s, materialman’s or other liens (except for those Liens existingon the date of this Agreement which have been approved in writing by Lender).

 

(i)                                     Before each disbursement from the ReplacementReserve Account, Lender may require Borrower to provide Lender with a search oftitle to the Property effective to the date of the disbursement, which searchshows that no mechanic’s or materialmen’s liens or other liens of any naturehave been placed against the Property since the date of recordation of the

 

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Mortgage and that titleto the Property is free and clear of all Liens (other than the lien of theMortgage and any other Liens previously approved in writing by Lender, if any).

 

(j)                                     All Replacements shall comply with allapplicable Legal Requirements of all Governmental Authorities havingjurisdiction over the Property and applicable insurance requirements including,without limitation, applicable building codes, special use permits,environmental regulations, and requirements of insurance underwriters.

 

(k)                                  In addition to any insurance required underthe Loan Documents, Borrower shall provide or cause to be provided workmen’scompensation insurance, builder’s risk, and public liability insurance andother insurance to the extent required under applicable law in connection witha particular Replacement. All such policies shall be in form and amountreasonably satisfactory to Lender. All such policies which can be endorsed withstandard mortgagee clauses making loss payable to Lender or its assigns shallbe so endorsed. Certified copies of such policies shall be delivered to Lender.

 

7.3.4                        Failure to Make Replacements.

 

(a)                                  It shall be an Event of Default under thisAgreement if Borrower fails to comply with any provision of this Section 7.3and such failure is not cured within thirty (30) days after notice from Lender;provided, however, if such failure is not capable of being cured withinsaid thirty (30) day period, then provided that Borrower commences action tocomplete such cure and thereafter diligently proceeds to complete such cure,such thirty (30) day period shall be extended for such time as is reasonablynecessary for Borrower, in the exercise of due diligence, to cure such failure,but such additional period of time shall not exceed sixty (60) days. Upon theoccurrence of such an Event of Default, Lender may use the Replacement ReserveFund (or any portion thereof) for any purpose, including but not limited tocompletion of the Replacements as provided in Section 7.3.3, or for anyother repair or replacement to the Property or toward payment of the Debt insuch order, proportion and priority as Lender may determine in its sole discretion.Lender’s right to withdraw and apply the Replacement Reserve Funds shall be inaddition to all other rights and remedies provided to Lender under this Agreementand the other Loan Documents.

 

(b)                                 Nothing in this Agreement shall obligateLender to apply all or any portion of the Replacement Reserve Fund on accountof an Event of Default to payment of the Debt or in any specific order orpriority.

 

7.3.5                        Balance in the Replacement Reserve Account. The insufficiency of any balance in theReplacement Reserve Account shall not relieve Borrower from its obligation to fulfillall preservation and maintenance covenants in the Loan Documents.

 

7.3.6                        Indemnification.**         ****BORROWER SHALL INDEMNIFY LENDER AND HOLD LENDER HARMLESS FROMAND AGAINST ANY AND ALL ACTIONS, SUITS, CLAIMS, DEMANDS, LIABILITIES, LOSSES,DAMAGES, OBLIGATIONS AND COSTS AND EXPENSES (INCLUDING LITIGATION COSTS AND REASONABLEATTORNEYS FEES AND EXPENSES) ARISING FROM OR IN ANY WAY CONNECTED WITH THE PERFORMANCEOF THE REPLACEMENTS**

 

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**UNLESS THE SAME****ARE SOLELY DUE TO GROSS NEGLIGENCE OR WILLFULMISCONDUCT OF LENDER. BORROWER SHALL****ASSIGN****TO LENDER ALL RIGHTS AND CLAIMS BORROWER MAY HAVE AGAINST ALL PERSONS OR****ENTITIES****SUPPLYING LABOR OR MATERIALSIN CONNECTION WITH THE REPLACEMENTS; PROVIDED, HOWEVER, THATLENDER MAY NOT PURSUE ANY SUCH RIGHT OR CLAIM****UNLESS AN EVENT****OF DEFAULT HAS OCCURRED AND****REMAINS****UNCURED.**

 

Section 7.4                                      Intentionally Deleted.

 

Section 7.5                                      Intentionally Deleted.

 

Section 7.6                                      Intentionally Deleted.

 

Section 7.7                                      Reserve Funds, Generally.

 

7.7.1                        Borrower grants to Lender a first-priorityperfected security interest in each of the Reserve Funds and any and all moniesnow or hereafter deposited in each Reserve Fund as additional security forpayment of the Debt. Until expended or applied in accordance herewith, theReserve Funds shall constitute additional security for the Debt.

 

7.7.2                        Upon the occurrence of an Event of Default,Lender may, in addition to any and all other rights and remedies available toLender, apply any sums then present in any or all of the Reserve Funds to thepayment of the Debt in any order in its sole discretion.

 

7.7.3                        The Reserve Funds shall not constitute trustfunds and may be commingled with other monies held by Lender.

 

7.7.4                        The Reserve Funds shall be held in interestbearing accounts. All earnings or interest on the Reserve Funds shall be addedto and become a part of such Tax and Insurance Escrow Fund and shall bedisbursed in the same manner as other monies deposited in such Reserve Funds.

 

7.7.5                             Borrower shall not, without obtaining theprior written consent of Lender, further pledge, assign or grant any securityinterest in any Reserve Fund or the monies deposited therein or permit any lienor encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1Financing Statements, except those naming Lender as the secured party, to befiled with respect thereto.

 

7.7.6                        Lender shall not be liable for any losssustained on the investment of any funds constituting the Reserve Funds unlessoccasioned by the gross negligence or willful misconduct of Lender.

 

7.7.7                        Upon payment in full of the Debt andperformance of all other obligations under this Agreement and the other LoanDocuments, Lender shall disburse to Borrower all remaining Reserve Funds.

 

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**ARTICLE VIII******

 

**DEFAULTS**

 

Section 8.1                                      Event of Default.

 

(a)                                  Each of the following events shall constitutean event of default hereunder (an **“Event of Default”**):

 

(i)                                     if any portion of the Debt is not paid withinfive (5) days of the applicable due date;

 

(ii)                                  if any of the Taxes or Other Charges are notpaid prior to the date when the same become delinquent, except to the extentthat there are sufficient funds in the Tax and Insurance Escrow Fund to paysuch Taxes or Other Charges and Lender fails to or refuses to release the samefrom the Tax and Insurance Escrow Fund;

 

(iii)                               if the Policies are not kept in full forceand effect, or if certified copies of the Policies are not delivered to Lenderwithin the time frame provided herein;

 

(iv)                              if Borrower transfers or encumbers anyportion of the Property without Lender’s prior written consent (to extent suchconsent is required) or otherwise violates the provisions of Section 5.2.13of this Loan Agreement;

 

(v)                                 if any material representation or warrantymade by Borrower herein or in any other Loan Document, or in any report,certificate, financial statement or other instrument, agreement or documentfurnished to Lender shall have been false or misleading in any material respectas of the date the representation or warranty was made;

 

(vi)                              if Borrower or indemnitor or any guarantorunder any guaranty or indemnity issued in connection with the Loan shall makean assignment for the benefit of creditors;

 

(vii)                           if a receiver, liquidator or trustee shall beappointed for Borrower or any guarantor or indemnitor under any guarantee orindemnity issued in connection with the Loan or if Borrower or such guarantoror indemnitor shall be adjudicated a bankrupt or insolvent, or if any petitionfor bankruptcy, reorganization or arrangement pursuant to federal bankruptcylaw, or any similar federal or state law, shall be filed by or against,consented to, or acquiesced in by, Borrower or such guarantor or indemnitor, orif any proceeding for the dissolution or liquidation of Borrower or suchguarantor or indemnitor shall be instituted; provided, however,if such appointment, adjudication, petition or proceeding was involuntary andnot consented to by Borrower or such guarantor or indemnitor, upon the same notbeing discharged, stayed or dismissed within one hundred eighty (180) days;

 

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(viii)                        if Borrower attempts to assign its rightsunder this Agreement or any of the other Loan Documents or any interest hereinor therein in contravention of the Loan Documents;

 

(ix)                                if Borrower breaches any of its respectivenegative covenants contained in Section 5.2 or any covenant contained in Section 4.1.30hereof;

 

(x)                                   with respect to any term, covenant orprovision set forth herein which specifically contains a notice requirement orgrace period, if Borrower shall be in default under such term, covenant orcondition after the giving of such notice or the expiration of such graceperiod;

 

(xi)                                if any Purchase Price Adjustment is nottimely paid in accordance with the Purchase Contract following satisfaction ofBorrower’s reasonable documentation requirements of its seller under thePurchase Contract;

 

(xii)                             if Borrower shall continue to be in Defaultunder any of the other terms, covenants or conditions of this Agreement notspecified in subsections (i) to (xi) above, for ten (10) days after notice to Borrower from Lender, in thecase of any Default which can be cured by the payment of a sum of money, or forthirty (30) days after notice from Lender in the case of any other Default; provided,however, that if such non-monetary Default is susceptible of cure butcannot reasonably be cured within such 30-day period and provided further thatBorrower shall have commenced to cure such Default within such 30-day periodand thereafter diligently and expeditiously proceeds to cure the same, such30-day period shall be extended for such time as is reasonably necessary forBorrower in the exercise of due diligence to cure such Default, such additionalperiod not to exceed one hundred eighty (180) days; or

 

(xiii)                          if there shall be default under any of theother Loan Documents beyond any applicable cure periods contained in suchdocuments, whether as to Borrower or the Property, or if any other such eventshall occur or condition shall exist, if the effect of such event or conditionis to accelerate the maturity of any portion of the Debt or to permit Lender toaccelerate the maturity of all or any portion of the Debt.

 

(b)                                 Upon the occurrence of an Event of Default(other than an Event of Default described in clauses (vi), (vii) or (viii)above) and at any time thereafter Lender may, in addition to any other rightsor remedies available to it pursuant to this Agreement and the other LoanDocuments or at law or in equity, take such action, without notice or demand,that Lender deems advisable to protect and enforce its rights against Borrowerand in the Property, including, without limitation, declaring the Debt to beimmediately due and payable, and Lender may enforce or avail itself of any orall rights or remedies provided in the Loan Documents against Borrower and theProperty, including, without limitation, all rights or remedies available atlaw or in equity; and upon any Event of Default described in clauses (vi),(vii) or (viii) above, the Debt and all other obligations of Borrower hereunderand under the other Loan Documents shall immediately and automatically becomedue and payable, without notice or demand, and Borrower hereby expressly waivesany such notice or demand, anything contained herein or in any other LoanDocument to the contrary notwithstanding.

 

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Section 8.2                                      Remedies.

 

(a)                                  Upon the occurrence of an Event of Default,all or any one or more of the rights, powers, privileges and other remediesavailable to Lender against Borrower under this Agreement or any of the otherLoan Documents executed and delivered by, or applicable to, Borrower or at lawor in equity may be exercised by Lender at any time and from time to time, whetheror not all or any of the Debt shall be declared due and payable, and whether ornot Lender shall have commenced any foreclosure proceeding or other action forthe enforcement of its rights and remedies under any of the Loan Documents withrespect to the Property. Any such actions taken by Lender shall be cumulativeand concurrent and may be pursued independently, singly, successively, togetheror otherwise, at such time and in such order as Lender may determine in itssole discretion, to the fullest extent permitted by law, without impairing or otherwiseaffecting the other rights and remedies of Lender permitted by law, equity orcontract or as set forth herein or in the other Loan Documents. Withoutlimiting the generality of the foregoing, Borrower agrees that if an Event ofDefault is continuing (i) Lender is not subject to any “one action” or “electionof remedies” law or rule, and (ii) all liens and other rights, remedies orprivileges provided to Lender shall remain in full force and effect untilLender has exhausted all of its remedies against the Property and the Mortgagehas been foreclosed, sold and/or otherwise realized upon in satisfaction of theDebt or the Debt has been paid in full. Without limiting the generality of theforegoing, it is expressly agreed that upon any Event of Default described inclause (xi) above, in addition to all other remedies available to Lender, Lendershall have the right to enforce Indemnitor’s guaranty of the payment of thePurchase Price Adjustment, as set forth in the Indemnity Agreement, withoutfirst resorting to or exhausting any security or collateral or without firsthaving recourse to any Loan Document or any of the Property through foreclosureproceedings or otherwise.

 

(b)                                 Lender shall have the right from time to timeto partially foreclose the Mortgage in any manner and for any amounts securedby the Mortgage then due and payable as determined by Lender in its solediscretion including, without limitation, the following circumstances: (i) inthe event Borrower defaults beyond any applicable grace period in the paymentof one or more scheduled payments of principal and interest, Lender mayforeclose the Mortgage to recover such delinquent payments, or (ii) in theevent Lender elects to accelerate less than the entire outstanding principalbalance of the Loan, Lender may foreclose the Mortgage to recover so much ofthe principal balance of the Loan as Lender may accelerate and such other sumssecured by the Mortgage as Lender may elect. Notwithstanding one or more partialforeclosures, the Property shall remain subject to the Mortgage to securepayment of sums secured by the Mortgage and not previously recovered.

 

(c)                                  Lender shall have the right from time to timeto sever the Note and the other Loan Documents into one or more separate notes,mortgages and other security documents (the **“SeveredLoan Documents”**)****in such denominationsas Lender shall determine in its sole discretion for purposes of evidencing andenforcing its rights and remedies provided hereunder. Borrower shall executeand deliver to Lender from time to time, promptly after the request of Lender,a severance agreement and such other documents as Lender shall request in orderto effect the severance described in the preceding sentence, all in form andsubstance reasonably satisfactory to Lender. Borrower hereby absolutely andirrevocably appoints Lender following the occurrence of an Event of Default asits true and lawful attorney, coupled with an interest, in

 

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its name and stead to make and execute all documents necessary ordesirable to effect the aforesaid severance, Borrower ratifying all that itssaid attorney shall do by virtue thereof; provided, however, Lendershall not make or execute any such documents under such power until three (3)days after notice has been given to Borrower by Lender of Lender’s intent toexercise its rights under such power. Borrower shall not be obligated to payany costs or expenses incurred in connection with the preparation, execution,recording or filing of the Severed Loan Documents, and the Severed LoanDocuments shall not contain any representations, warranties or covenants notcontained in the Loan Documents and any such representations and warrantiescontained in the Severed Loan Documents will be given by Borrower only as ofthe Closing Date.

 

(d)                                 As used in this Section 8.2, a “foreclosure”shall include any sale by power of sale.

 

Section 8.3                                      Remedies Cumulative; Waivers. The rights, powers and remedies of Lenderunder this Agreement shall be cumulative and not exclusive of any other right,power or remedy which Lender may have against Borrower pursuant to thisAgreement or the other Loan Documents, or existing at law or in equity orotherwise. Lender’s rights, powers and remedies may be pursued singly,concurrently or otherwise, at such time and in such order as Lender may determinein Lender’s sole discretion. No delay or omission to exercise any remedy, rightor power accruing upon an Event of Default shall impair any such remedy, rightor power or shall be construed as a waiver thereof, but any such remedy, rightor power may be exercised from time to time and as often as may be deemedexpedient. A waiver of one Default or Event of Default with respect to Borrowershall not be construed to be a waiver of any subsequent Default or Event ofDefault by Borrower or to impair any remedy, right or power consequent thereon.

 

**ARTICLE IX******

 

**SPECIALPROVISIONS**

 

Section 9.1                                      Sale of Notes and Securitization. At the request of the holder of the Noteand, to the extent not already required to be provided by Borrower under thisAgreement, Borrower shall cooperate with Lender to allow Lender to satisfy themarket standards to which the holder of the Note customarily adheres or whichmay be reasonably required in the marketplace or by the Rating Agencies inconnection with the sale of the Note or participations therein or the firstsuccessful securitization (such sale and/or securitization, the **“Securitization”**) of rated single or multi-classsecurities (the “**Securities**”) secured by orevidencing ownership interests in the Note and the Mortgage. In this regardBorrower shall:

 

(a)                                  (i) provide such financial and otherinformation with respect to the Property, Borrower and the Manager, (ii)provide budgets relating to the Property and (iii) to perform or permit orcause to be performed or permitted such site inspection, appraisals, marketstudies, environmental reviews and reports (Phase I’s and, if appropriate,Phase II’s), engineering reports and other due diligence investigations of theProperty, as may be reasonably requested by the holder of the Note or theRating Agencies or as may be necessary or appropriate in connection with theSecuritization (the **“Provided Information”**),together, if customary, with

 

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appropriate verificationand/or consents of the Provided Information through letters of auditors oropinions of counsel of independent attorneys acceptable to Lender and theRating Agencies;

 

(b)                                 cause counsel to render opinions, which maybe relied upon by the holder of the Note, the Rating Agencies and theirrespective counsel, agents and representatives, as to non-consolidation,fraudulent conveyance, and true sale and/or lease or any other opinion customaryin securitization transactions, which counsel and opinions shall be reasonably satisfactoryto the holder of the Note and the Rating Agencies;

 

(c)                                  make such representations and warranties asof the closing date of the Securitization with respect to the Property,Borrower, and the Loan Documents as are consistent with the representations andwarranties made in the Loan Documents; and

 

(d)                                       execute such amendments to the Loan Documentsand organizational documents as may be reasonably requested by the holder ofthe Note or the Rating Agencies or otherwise to effect the Securitization; provided,however, that Borrower shall not be required to modify or amend any LoanDocument if such modification or amendment would (i) change the interest rate,the stated maturity or the amortization of principal set forth in the Note, or(ii) modify or amend any other material economic term of the Loan.

 

All material out-of-pocket third party costs and expenses incurred byBorrower in connection with complying with requests made under this Section 9.1shall be paid by Lender.

 

Section 9.2                                      Securitization. Borrower understands that certain of theProvided Information may be included in disclosure documents in connection withthe Securitization, including, without limitation, a prospectus, prospectussupplement or private placement memorandum (each, a **“DisclosureDocument”**) and may also be included in filings with theSecurities and Exchange Commission pursuant to the Securities Act of 1933, asamended (the **“Securities Act”**), or theSecurities and Exchange Act of 1934, as amended (the **“ExchangeAct”**), or provided or made available to investors or prospectiveinvestors in the Securities, the Rating Agencies, and service providersrelating to the Securitization. In the event that the Disclosure Document isrequired to be revised prior to the sale of all Securities, Borrower willcooperate with the holder of the Note in updating the Disclosure Document byproviding all current information necessary to keep the Disclosure Documentaccurate and complete in all material respects.

 

Section 9.3                                      Rating Surveillance. Lender, at its option, may retain theRating Agencies to provide rating surveillance services on any certificatesissued in a Securitization. Such rating surveillance will be at the expense ofLender (the **“Rating Surveillance Charge”**).

 

Section 9.4                                      Exculpation. Subject to the qualifications below, Lender shall not enforce theliability and obligation of Borrower to perform and observe the obligationscontained in the Note, this Agreement, the Mortgage or the other Loan Documentsby any action or proceeding wherein a money judgment shall be sought againstBorrower, except that Lender or Trustee may bring a foreclosure action, anaction for specific performance or any other appropriate action or proceedingto enable Lender or Trustee to enforce and realize upon its interest under theNote, this Agreement, the Mortgage and the other Loan Documents, or in the

 

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Property,the Rents following an Event of Default, or any other collateral given toLender or Trustee pursuant to the Loan Documents; provided, however, that,except as specifically provided herein, any judgment in any such action orproceeding shall be enforceable against Borrower only to the extent of Borrower’sinterest in the Property, in the Rents following an Event of Default and in anyother collateral given to Lender or Trustee, and Lender or Trustee, byaccepting the Note, this Agreement, the Mortgage and the other Loan Documents,agrees that it shall not sue for, seek or demand any deficiency judgment againstBorrower in any such action or proceeding under or by reason of or under or inconnection with the Note, this Agreement, the Mortgage or the other LoanDocuments. The provisions of this section shall not, however, (a)constitute a waiver, release or impairment of any obligation evidenced orsecured by any of the Loan Documents; (b) impair the right of Lender or Trusteeto name Borrower as a party defendant in any action or suit for foreclosure andsale under any of the Mortgage; (c) affect the validity or enforceability of orany guaranty made in connection with the Loan or any of the rights and remediesof Lender or Trustee thereunder; (d) impair the right of Lender or Trustee toobtain the appointment of a receiver; (e) impair the enforcement of any of theAssignment of Leases following an Event of Default; (f) constitute aprohibition against Lender or Trustee commencing any other appropriate actionor proceeding in order for Lender or Trustee to exercise its remedies againstthe Property; or (g) constitute a waiver of the right of Lender or Trustee toenforce the liability and obligation of Borrower, by money judgment orotherwise, to the extent of any loss, damage, cost, expense, liability, claimor other obligation incurred by Lender or Trustee (including attorneys’ feesand costs reasonably incurred) arising out of or in connection with thefollowing;

 

(i)                                     fraud or intentional misrepresentation byBorrower or any guarantor in connection with the Loan;

 

(ii)                                  the gross negligence or willful misconduct ofBorrower;

 

(iii)                               material physical waste of the Property;

 

(iv)                              the breach of any representation, warranty,covenant or indemnification provision in the Environmental Indemnity or in theMortgage concerning environmental laws, hazardous substances and asbestos andany indemnification of Lender with respect thereto in either document;

 

(v)                                 the removal or disposal of any portion of theProperty after an Event of Default;

 

(vi)                              the misapplication or conversion by Borrowerof (A) any insurance proceeds paid by reason of any loss, damage or destructionto the Property which are not applied by Borrower in accordance with thisAgreement, (B) any awards or other amounts received in connection with thecondemnation of all or a portion of the Property which are not applied byBorrower in accordance with this Agreement, or (C) any Rents following an Eventof Default;

 

(vii)                           failure to pay charges for labor or materialsor other charges that can create liens on any portion of the Property; or

 

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(viii)                        any security deposits, advance deposits orany other deposits collected with respect to the Property which are notdelivered to Lender upon a foreclosure of the Property or action in lieuthereof, except to the extent any such security deposits were applied inaccordance with the terms and conditions of any of the Leases prior to theoccurrence of the Event of Default that gave rise to such foreclosure or actionin lieu thereof.

 

(ix)                                the breach of Borrower’s indemnificationobligation pursuant to Section 10.13(b) hereof with respect to a PurchasePrice Adjustment.

 

Notwithstanding anything to the contrary in this Agreement, the Note orany of the Loan Documents, (A) the Debt shall be fully recourse to the Borrowerand (B) Lender shall not be deemed to have waived any right which Lender mayhave under Section 506(a), 506(b), 1111(b) or any other provisions of theU.S. Bankruptcy Code to file a claim for the full amount of the Debt secured bythe Mortgage or to require that all collateral shall continue to secure all ofthe Debt owing to Lender in accordance with the Loan Documents in the eventthat the (I) first full monthly payment under the Note is not paid within five(5) days of notice that such payment is late (provided, however, that suchgrace period relates only to the recourse trigger described in this paragraph),or (II) failure of Borrower to permit on-site inspections of the Propertysubject to the rights of the Major Tenants under their respective Leases and anyapplicable cure period set forth in the Loan Documents, to provide financialinformation as required under the Loan Documents subject to any applicable cureperiod (except for financial information required to be delivered by the MajorTenants pursuant to their respective Leases that has not been delivered toBorrower, provided Borrower has requested such financial information from theMajor Tenants, or to comply with Section 4.1.30 hereof, or (III) failureof Borrower to obtain Lender’s prior written consent to any subordinatefinancing or other voluntary lien encumbering the Property, or (IV) failure ofBorrower to obtain Lender’s prior written consent to any assignment, transferor conveyance of the Property, or any portion thereof, or any interest thereinas required by this Agreement. Notwithstanding the provision set forth inclause (III) of this paragraph, a voluntary lien other than a liensecuring an extension of credit filed against the Property shall not constitutea recourse trigger for purposes of this paragraph provided such lien (A) isfully bonded to the satisfaction of Lender and discharged of record withinninety (90) days of filing, or (B) within such ninety (90) day period, Lenderreceives affirmative title insurance from the title insurance company insuringthe lien of the Mortgage that such lien is subject and subordinate to the lienof the Mortgage and no enforcement action is commenced by the applicable lienholder.

 

Section 9.5                                      Termination of Manager. If (a) the amounts evidenced by the Notehave been accelerated pursuant to Section 8.1 (b) hereof, (b) the Managershall become insolvent, (c) the Manager is in default under the terms of theManagement Agreement beyond any applicable grace or cure period, or (d) Manageris not managing the Property in accordance with the management practices ofnationally recognized management companies managing similar properties inlocations comparable to those of the Property, then, in the case of (a), (b),(c) or (d), Borrower shall, at the request of Lender, terminate the ManagementAgreement and replace the Manager with a manager reasonably approved by Lenderon terms and conditions reasonably satisfactory to Lender, it being understoodand agreed that the management fee for such replacement manager shall notexceed then prevailing market rates. In addition and without limiting therights of Lender hereunder or under any of the other Loan Documents, in theevent

 

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that (i) the Management Agreement is terminated, (ii) the Manager nolonger manages the Property, or (iii) a receiver, liquidator or trustee shallbe appointed for Manager or if Manager shall be adjudicated a bankrupt orinsolvent, or if any petition for bankruptcy, reorganization or arrangementpursuant to federal bankruptcy law, or any similar federal or state law, shallbe filed by or against, consented to, or acquiesced in by, Manager, or if anyproceeding for the dissolution or liquidation of Manager shall be instituted,then Borrower (at Borrower’s sole cost and expense) shall immediately, in itsname, establish new deposit accounts separate from any other Person with adepository satisfactory to Lender into which all Rents and other income fromthe Property shall be deposited and shall grant Lender a first prioritysecurity interest in such account pursuant to documentation satisfactory inform and substance to Lender.

 

Section 9.6                                      Servicer. At the option of Lender, the Loan may be serviced by aservicer/trustee (the **“Servicer”**)selected by Lender and Lender may delegate all or any portion of itsresponsibilities under this Agreement and the other Loan Documents to theServicer pursuant to a servicing agreement (the **“ServicingAgreement”**) between Lender and Servicer. Lender shall beresponsible for any set-up fees or any other costs relating to or arising underthe Servicing Agreement.

 

Section 9.7                                      Splitting the Loan. At the election of Lender in its solediscretion, the Loan shall be split and severed into two or more loans whichshall not be cross-collateralized or cross-defaulted with each other. Borrowerhereby agrees to deliver to Lender to effectuate such severing of the Loan asreasonably requested by Lender, (a) additional executed documents, oramendments and modifications to the Loan Documents, (b) new opinions or updatesto the opinions delivered to Lender in connection with the closing of the Loan,(c) endorsements and/or updates to the title insurance policies delivered toLender in connection with the closing of the Loan, and (d) any othercertificates, instruments and documentation reasonably determined by Lender asnecessary or appropriate to such severance (the items described in subsections(a) through (d) collectively hereinafter shall be referred to as **“Severing Documentation”**), which SeveringDocumentation shall be acceptable to Lender in form and substance in itsreasonable discretion. Lender hereby agrees to be responsible for allreasonable third-party expenses incurred in connection with the preparation anddelivery of the Severing Documentation and the effectuation of the uncrossingof the Loan from the additional Loans. Borrower hereby acknowledges and agreesthat upon such severing of the Loan, Lender may effect, in its sole discretion,one or more Securitizations of which the severed loans may be a part.

 

**ARTICLE X******

 

**MISCELLANEOUS**

 

Section 10.1                                Survival. This Agreement and all covenants, agreements, representations andwarranties made herein and in the certificates delivered pursuant hereto shallsurvive the making by Lender of the Loan and the execution and delivery toLender of the Note, and shall continue in full force and effect so long as allor any of the Debt is outstanding and unpaid unless a longer period isexpressly set forth herein or in the other Loan Documents. Whenever in thisAgreement any of the parties hereto is referred to, such reference shall bedeemed to include the legal representatives, successors and assigns of suchparty. All covenants,

 

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promises and agreements in this Agreement, by or on behalf of Borrower,shall inure to the benefit of the legal representatives, successors and assignsof Lender.

 

Section 10.2                                Lender’s Discretion. Whenever pursuant to this Agreement, Lenderexercises any right given to it to approve or disapprove, or any arrangement orterm is to be satisfactory to Lender, the decision of Lender to approve ordisapprove or to decide whether arrangements or terms are satisfactory or notsatisfactory shall (except as is otherwise specifically herein provided) be inthe sole discretion of Lender and shall be final and conclusive.

 

Section 10.3                                Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE ACONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE IN WHICH THE PROPERTYIS LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED ANDENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY ISLOCATED AND APPLICABLE FEDERAL LAWS.

 

Section 10.4                                Modification, Waiver in Writing. No modification, amendment, extension,discharge, termination or waiver of any provision of this Agreement, or of theNote, or of any other Loan Document, nor consent to any departure by Borrowertherefrom, shall in any event be effective unless the same shall be in awriting signed by the party against whom enforcement is sought, and then suchwaiver or consent shall be effective only in the specific instance, and for thepurpose, for which given. Except as otherwise expressly provided herein, nonotice to, or demand on Borrower, shall entitle Borrower to any other or futurenotice or demand in the same, similar or other circumstances.

 

Section 10.5                                Delay Not a Waiver. Neither any failure nor any delay on thepart of Lender in insisting upon strict performance of any term, condition,covenant or agreement, or exercising any right, power, remedy or privilegehereunder, or under the Note or under any other Loan Document, or any otherinstrument given as security therefor, shall operate as or constitute a waiverthereof, nor shall a single or partial exercise thereof preclude any otherfuture exercise, or the exercise of any other right, power, remedy or privilege.In particular, and not by way of limitation, by accepting payment after the duedate of any amount payable under this Agreement, the Note or any other LoanDocument, Lender shall not be deemed to have waived any right either to requireprompt payment when due of all other amounts due under this Agreement, the Noteor the other Loan Documents, or to declare a default for failure to effectprompt payment of any such other amount.

 

Section 10.6                                Notices. All notices, consents, approvals and requests required or permittedhereunder or under any other Loan Document except as otherwise provided in Section 1.01of the Rider to the Mortgage, shall be given in writing and shall be effectivefor all purposes if hand delivered or sent by (a) certified or registeredUnited States mail, postage prepaid, return receipt requested or (b) expeditedprepaid delivery service, either commercial or United States Postal Service,with proof of attempted delivery, and by telecopier (with answer backacknowledged), addressed as follows (or at such other address and Person asshall be designated from time to time by any party hereto, as the case may be,in a written notice to the other parties hereto in the manner provided for inthis Section):

 

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If to Lender:

 

KeyBank National Association 

911 Main Street, Suite 1500 

Kansas City, Missouri 64105 

Attention: Loan Servicing

 

If to Trustee:

 

Kenneth F. Plifka

Stutzman, Bromberg, Esserman & Plifka 

2323 Bryan Street, 22nd Floor 

Dallas, Texas 75201

 

If to Borrower:

 

Inland Western Cedar Hill Pleasant Run Limited Partnership 

c/o Inland Western Retail Real Estate Trust, Inc.

2901 Butterfield Road 

Oak Brook, IL 60523 

Attention: Roberta Matlin

 

With a copy to:

 

Inland Western Retail Real Estate Trust, Inc.

2901 Butterfield Road 

Oak Brook, IL 60523 

Attention: Robert H. Baum, Esq.

 

A notice shall be deemed to have been given: in the case of handdelivery, at the time of delivery; in the case of registered or certified mail,when delivered or the first attempted delivery on a Business Day; or in thecase of expedited prepaid delivery and telecopy, upon the first attempted deliveryon a Business Day.

 

Section 10.7                                Trial by Jury. BORROWER AND LENDER HEREBY AGREE NOT TOELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANYRIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW ORHEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIMOR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER OF RIGHT TO TRIALBY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER, AND ISINTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THERIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED TOFILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THISWAIVER BY BORROWER AND LENDER.

 

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Section 10.8                                Headings. The Article and/or Section headings and the Table ofContents in this Agreement are included herein for convenience of referenceonly and shall not constitute a part of this Agreement for any other purpose.

 

Section 10.9                                Severability. Wherever possible, each provision of thisAgreement shall be interpreted in such manner as to be effective and validunder applicable law, but if any provision of this Agreement shall beprohibited by or invalid under applicable law, such provision shall beineffective to the extent of such prohibition or invalidity, withoutinvalidating the remainder of such provision or the remaining provisions ofthis Agreement.

 

Section 10.10                          Preferences. Lender shall have the continuing and exclusive right to apply orreverse and reapply any and all payments by Borrower to any portion of theobligations of Borrower hereunder. To the extent Borrower makes a payment orpayments to Lender, which payment or proceeds or any part thereof aresubsequently invalidated, declared to be fraudulent or preferential, set asideor required to be repaid to a trustee, receiver or any other party under anybankruptcy law, state or federal law, common law or equitable cause, then, tothe extent of such payment or proceeds received, the obligations hereunder orpart thereof intended to be satisfied shall be revived and continue in fullforce and effect, as if such payment or proceeds had not been received byLender.

 

Section 10.11                          Waiver of Notice. Borrower shall not be entitled to anynotices of any nature whatsoever from Lender except with respect to matters forwhich this Agreement or the other Loan Documents specifically and expresslyprovide for the giving of notice by Lender to Borrower and except with respectto matters for which Borrower is not, pursuant to applicable LegalRequirements, permitted to waive the giving of notice. Borrower herebyexpressly waives the right to receive any notice from Lender with respect toany matter for which this Agreement or the other Loan Documents do notspecifically and expressly provide for the giving of notice by Lender toBorrower.

 

Section 10.12                          Remedies of Borrower. In the event that a claim or adjudicationis made that Lender or its agents have acted unreasonably or unreasonablydelayed acting in any case where by law or under this Agreement or the otherLoan Documents, Lender or such agent, as the case may be, has an obligation toact reasonably or promptly, Borrower agrees that neither Lender nor its agentsshall be liable for any monetary damages, and Borrower’s sole remedies shall belimited to commencing an action seeking injunctive relief or declaratoryjudgment. The parties hereto agree that any action or proceeding to determinewhether Lender has acted reasonably shall be determined by an action seekingdeclaratory judgment.

 

Section 10.13                          Expenses; Indemnity.

 

(a)                                  Borrower covenants and agrees to pay or, ifBorrower fails to pay, to reimburse, Lender upon receipt of written notice fromLender for all reasonable costs and expenses (including reasonable attorneys’fees and disbursements) incurred by Lender in connection with (i) thepreparation, negotiation, execution and delivery of this Agreement and theother Loan Documents and the consummation of the transactions contemplatedhereby and thereby and all the costs of furnishing all opinions by counsel forBorrower (including without limitation any opinions requested by Lender as toany legal matters arising under this Agreement

 

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or the other LoanDocuments with respect to the Property); (ii) Borrower’s ongoing performance ofand compliance with Borrower’s respective agreements and covenants contained inthis Agreement and the other Loan Documents on its part to be performed orcomplied with after the Closing Date, including, without limitation, confirmingcompliance with environmental and insurance requirements; (iii) Lender’songoing performance and compliance with all agreements and conditions containedin this Agreement and the other Loan Documents on its part to be performed orcomplied with after the Closing Date; (iv) except as otherwise provided in thisAgreement, the negotiation, preparation, execution, delivery and administrationof any consents, amendments, waivers or other modifications to this Agreementand the other Loan Documents and any other documents or matters reasonablyrequested by Lender; (v) securing Borrower’s compliance with any requests madepursuant to the provisions of this Agreement; (vi) the filing and recordingfees and expenses, title insurance and reasonable fees and expenses of counselfor providing to Lender all required legal opinions, and other similar expensesincurred in creating and perfecting the Liens in favor of Lender pursuant tothis Agreement and the other Loan Documents; (vii) enforcing or preserving anyrights, in response to third party claims or the prosecuting or defending ofany action or proceeding or other litigation, in each case against, under oraffecting Borrower, this Agreement, the other Loan Documents, the Property, orany other security given for the Loan; and (viii) enforcing any obligations ofor collecting any payments due from Borrower under this Agreement, the otherLoan Documents or with respect to the Property or in connection with anyrefinancing or restructuring of the credit arrangements provided under thisAgreement in the nature of a “work-out” or of any insolvency or bankruptcyproceedings; provided, however, that Borrower shall not be liable for thepayment of any such costs and expenses to the extent the same arise by reasonof the gross negligence, illegal acts, fraud or willful misconduct of Lender.

 

(b)                                 **BORROWER SHALL INDEMNIFY, DEFENDAND HOLD HARMLESS LENDER FROM AND AGAINST ANY AND ALL OTHER LIABILITIES,OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS,COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING,WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR LENDERIN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL PROCEEDINGCOMMENCED OR THREATENED, WHETHER OR NOT LENDER SHALL BE DESIGNATED A PARTYTHERETO), THAT MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST LENDER INANY MANNER RELATING TO OR ARISING OUT OF (I) ANY BREACH BY BORROWER OF ITSOBLIGATIONS UNDER, OR ANY MATERIAL MISREPRESENTATION BY BORROWER CONTAINED IN,THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, (II) THE USE OR INTENDED USE OF THEPROCEEDS OF THE LOAN OR (III) ANY PURCHASE PRICE ADJUSTMENT (COLLECTIVELY, THE “INDEMNIFIEDLIABILITIES”); PROVIDED, HOWEVER, THAT BORROWER SHALL NOTHAVE ANY OBLIGATION TO LENDER HEREUNDER TO THE EXTENT THAT SUCH INDEMNIFIEDLIABILITIES ARISE FROM THE GROSS NEGLIGENCE, ILLEGAL ACTS, FRAUD OR WILLFUL MISCONDUCTOF LENDER. TO THE EXTENT THAT THE UNDERTAKING TO INDEMNIFY, DEFEND AND HOLDHARMLESS SET FORTH IN THE PRECEDING SENTENCE MAY BE UNENFORCEABLE BECAUSE ITVIOLATES ANY LAW OR PUBLIC POLICY, BORROWER SHALL PAY THE MAXIMUM PORTION THATIT IS**

 

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**PERMITTED TO PAY AND SATISFY UNDER APPLICABLE LAW TO THEPAYMENT AND SATISFACTION OF ALL INDEMNIFIED LIABILITIES INCURRED BY LENDER.**

 

Section 10.14                          Schedules Incorporated. The Schedules annexed hereto are hereby incorporatedherein as a part of this Agreement with the same effect as if set forth in thebody hereof.

 

Section 10.15                          Offsets, Counterclaims and Defenses. Any assignee of Lender’s interest in and tothis Agreement, the Note and the other Loan Documents shall take the same freeand clear of all offsets, counterclaims or defenses which are unrelated to suchdocuments which Borrower may otherwise have against any assignor of suchdocuments, and no such unrelated counterclaim or defense shall be interposed orasserted by Borrower in any action or proceeding brought by any such assigneeupon such documents and any such right to interpose or assert any suchunrelated offset, counterclaim or defense in any such action or proceeding ishereby expressly waived by Borrower.

 

Section 10.16                          No Joint Venture or Partnership; No ThirdParty Beneficiaries.

 

(a)                                  Borrower and Lender intend that therelationships created hereunder and under the other Loan Documents be solelythat of borrower and lender. Nothing herein or therein is intended to create ajoint venture, partnership, tenancy-in-common, or joint tenancy relationshipbetween Borrower and Lender nor to grant Lender any interest in the Propertyother than that of mortgagee, beneficiary or lender.

 

(b)                                 This Agreement and the other Loan Documentsare solely for the benefit of Lender and Borrower and nothing contained in thisAgreement or the other Loan Documents shall be deemed to confer upon anyoneother than Lender and Borrower any right to insist upon or to enforce theperformance or observance of any of the obligations contained herein or therein.All conditions to the obligations of Lender to make the Loan hereunder areimposed solely and exclusively for the benefit of Lender and no other Personshall have standing to require satisfaction of such conditions in accordancewith their terms or be entitled to assume that Lender will refuse to make theLoan in the absence of strict compliance with any or all thereof and no otherPerson shall under any circumstances be deemed to be a beneficiary of such conditions,any or all of which may be freely waived in whole or in part by Lender if, in Lender’ssole discretion, Lender deems it advisable or desirable to do so.

 

Section 10.17                          Publicity. All news releases, publicity or advertising by Borrower or theirAffiliates through any media intended to reach the general public which refersto the Loan Documents or the financing evidenced by the Loan Documents, toLender, or any of its Affiliates shall be subject to the prior written approvalof Lender. All news releases, publicity or advertising by Lender through anymedia intended to reach the general public which refers solely to the Borroweror to the Loan made by the Lender to the Borrower shall be subject to the priorwritten approval of Borrower, provided however, the foregoing shall not applyto Provided Information included in disclosure documents in connection with aSecuritization.

 

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Section 10.18                          Waiver of Marshalling of Assets. To the fullest extent permitted by law,Borrower, for itself and its successors and assigns, waives all rights to amarshalling of the assets of Borrower, Borrower’s partners and others withinterests in Borrower, and of the Property, or to a sale in inverse order ofalienation in the event of foreclosure of the Mortgage or sale of the Propertyby power of sale, and agrees not to assert any right under any laws pertainingto the marshalling of assets, the sale in inverse order of alienation,homestead exemption, the administration of estates of decedents, or any othermatters whatsoever to defeat, reduce or affect the right of Lender under theLoan Documents to a sale of the Property for the collection of the Debt withoutany prior or different resort for collection or of the right of Lender to thepayment of the Debt out of the net proceeds of the Property in preference toevery other claimant whatsoever.

 

Section 10.19                          Waiver of Counterclaim. Borrower hereby waives the right to asserta counterclaim, other than a compulsory counterclaim, in any action orproceeding brought against it by Lender or its agents.

 

Section 10.20                          Conflict; Construction of Documents; Reliance. In the event of any conflict between theprovisions of this Loan Agreement and any of the other Loan Documents, theprovisions of this Loan Agreement shall control. The parties hereto acknowledgethat they were represented by competent counsel in connection with thenegotiation, drafting and execution of the Loan Documents and that such LoanDocuments shall not be subject to the principle of construing their meaningagainst the party which drafted same. Borrower acknowledges that, with respectto the Loan, Borrower shall rely solely on its own judgment and advisors inentering into the Loan without relying in any manner on any statements,representations or recommendations of Lender or any parent, subsidiary orAffiliate of Lender. Lender shall not be subject to any limitation whatsoeverin the exercise of any rights or remedies available to it under any of the LoanDocuments or any other agreements or instruments which govern the Loan byvirtue of the ownership by it or any parent, subsidiary or Affiliate of Lenderof any equity interest any of them may acquire in Borrower, and Borrower herebyirrevocably waives the right to raise any defense or take any action on thebasis of the foregoing with respect to Lender’s exercise of any such rights orremedies. Borrower acknowledges that Lender engages in the business of realestate financings and other real estate transactions and investments which maybe viewed as adverse to or competitive with the business of Borrower or itsAffiliates.

 

Section 10.21                          Brokers and Financial Advisors. **BORROWER HEREBY REPRESENTS THAT IT HAS DEALT WITH NOFINANCIAL ADVISORS, BROKERS, UNDERWRITERS, PLACEMENT AGENTS, AGENTS OR FINDERSIN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OTHER THANINLAND MORTGAGE CORP. BORROWER HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLDLENDER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, COSTS ANDEXPENSES OF ANY KIND (INCLUDING LENDER’S REASONABLE ATTORNEYS’ FEES ANDEXPENSES) IN ANY WAY RELATING TO OR ARISING FROM A CLAIM BY ANY PERSON THATSUCH PERSON ACTED ON BEHALF OF BORROWER OR LENDER IN CONNECTION WITH THETRANSACTIONS CONTEMPLATED HEREIN. THE**

 

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**PROVISIONS OF THIS SECTION 10.21 SHALL SURVIVE THE EXPIRATION ANDTERMINATION OF THIS AGREEMENT AND THE PAYMENT OF THE DEBT.**

 

Section 10.22                          Prior Agreements. This Agreement and the other Loan Documentscontain the entire agreement of the parties hereto and thereto in respect ofthe transactions contemplated hereby and thereby, and all prior agreements orunderstandings among or between such parties, whether oral or written,including, without limitation, the Commitment Letter dated November 23,2004 between Borrower and Lender are superseded by the terms of this Agreementand the other Loan Documents and unless specifically set forth in a writingcontemporaneous herewith the terms, conditions and provisions of such prioragreement do not survive execution of this Agreement.

 

Section 10.23                          Transfer of Loan. In the event that Lender transfers theLoan, Borrower shall continue to make payments at the place set forth in theNote until such time that Borrower is notified in writing by Lender thatpayments are to be made at another place.

 

[THE BALANCE OF THIS PAGE HAS BEENINTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, theparties hereto have caused this Agreement to be duly executed by their dulyauthorized representatives, all as of the day and year first above written.

 
|   | **BORROWER:**                          |
|--------|----------------------------------------|
|   |                                   |
|   | **INLAND  WESTERN CEDAR HILL**         |
|   | **PLEASANT  RUN LIMITED PARTNERSHIP,** |
|   | an Illinois limited  partnership       |
|   |                                   |
|   | By:                                    | Inland Western Cedar  Hill Pleasant Run GP, |
|   |                                   | L.L.C., a Delaware  limited liability |
|   |                                   | company, its general  partner |
|   |                                   |   |
|   |                                   | By: | Inland Western Retail  Real Estate |
|   |                                   |   | Trust, Inc., a Maryland  corporation, |
|   |                                   |   | its sole member |
|   |                                   |   |   |
|   |                                   |   | By: | /s/ Debra A. Palmer |   |
|   |                                   |   |   | Name:   Debra  A. Palmer |
|   |                                   |   |   | Title:   Assistant  Secretary |
|   |                                   |
|   |                                   |
|   | **KEYBANK  NATIONAL ASSOCIATION,**a    |
|   | national banking  association          |
|   |                                   |
|   |                                   |
|   | By:                                    |   |
|   | Name:                                  |   |
|   | Title:                                 |   |
|        |                                        |  |  |  |  |  |  |  |

 

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ACKNOWLEDGMENT

 

STATE OF ILLINOIS

 

COUNTY OF Du PAGE

 

On this 29 day ofDECEMBER, 2004, before me, DORIS E. AHERN a Notary Public in and for said state,personally appeared DEBRA A. PALMER who being by me duly sworn did say that sheis the Assistant Secretary of Inland Western Retail Real Estate Trust, Inc., aMaryland corporation, the sole member of Inland Western Cedar Hill Pleasant RunGP, L.L.C., a Delaware limited liability company, the general partner of InlandWestern Cedar Hill Pleasant Run Limited Partnership, an Illinois limitedpartnership, and that the within instrument was signed and sealed in behalf ofsaid entities.

 

 
| [Notarial Seal] | /s/ Doris E. Ahern |
|-----------------|--------------------|
|            | Print Name:        | DORIS  E. AHERN |

 

 
| My commission expires: | 10/13/08 |   |
|------------------------|----------|--------|

 
| OFFICIAL SEAL                    |
|----------------------------------|
| DORIS E AHERN                    |
| NOTARY PUBLIC  STATE OF ILLINOIS |
| MY COMMISSION  EXPIRES 10/13/08  |

 

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**SCHEDULE I**

 

IntentionallyOmitted

 

SCH. X-1

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**SCHEDULE II**

 

**RENTROLL**

 

(next page)

 

SCH. X-2

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Pleasant Run TowneCrossing - Cedar Hill, TX

 
| **TENANTS**           | ** ** | **S.F.** | ** ** | **ANNUAL  BASE RENT** | ** ** | **MONTHLY** | ** ** | **RENT** | ** ** | **LEASE   COMMENCEMENT   DATE** | ** **  | **LEASE   EXPIRATION  DATE** | ** **  |
|-----------------------|------------|----------|------------|-----------------------|------------|-------------|------------|----------|------------|---------------------------------|-------------|------------------------------|-------------|
| Oshman’s         |       | 40,954   |       | 409,540.00            |       | 34,128.33   |       | $        | 10.00      |                            | May-04      |                         | April-14    |   |
| Circuit City          |       | 32,570   |       | 455,880.00            |       | 37,088.33   |       | $        | 14.00      |                            | November-03 |                         | January-18  |   |
| Bed Bath & Beyond |       | 22,000   |       | 220,000.00            |       | 18,333.00   |       | $        | 10.00      |                            | December-03 |                         | January-14  |   |
| Michaels              |       | 21,390   |       | 224,595.00            |       | 18,716.25   |       | $        | 10.50      |                            | November-03 |                         | November-13 |   |
| Saltgrass Steakhouse  |       | 8,500    |       | 84,989.06             |       | 7,053.33    |       | $        | 10.00      |                            | June-04     |                         | May-24      |   |
| Joe's Crab Shack      |       | 7,000    |       | 75,000.12             |       | 8,250.01    |       | $        | 10.71      |                            | June-04     |                         | May-24      |   |
| The Maytag Store      |       | 5,225    |       | 94,050.00             |       | 7,837.50    |       | $        | 10.00      |                            | April-04    |                         | April-09    |   |
| Panera Bread          |       | 4,999    |       | 119,976.00            |       | 8,888.00    |       | $        | 24.00      |                            |        |                         |        |   |
| JPMorgan Chase  Bank  |       | 4,700    |       | 84,999.50             |       | 7,083.28    |       | $        | 18.08      |                            | February-04 |                         | February-24 |   |
| Bombay                |       | 4,500    |       | 81,000.00             |       | 6,750.00    |       | $        | 18.00      |                            | November-03 |                         | November-13 |   |
| Half Price Books      |       | 10,708   |       | 121,295.00            |       | 10,108.00   |       | $        | 12.00      |                            | February-04 |                         | January-14  |   |
| Brook Mays            |       | 6,250    |       | 112,600.00            |       | 9,375.00    |       | $        | 18.00      |                            |        |                         |        |   |
| Mattress Firm         |       | 6,000    |       | 132,000.00            |       | 11,000.00   |       | $        | 22.00      |                            |        |                         |        |   |
| Vitamin Shop          |       | 5,000    |       | 135,000.00            |       | 11,250.00   |       | $        | 27.00      |                            |        |                         |        |   |
| Limited Too           |       | 4,500    |       | 51,000.00             |       | 6,750.00    |       | $        | 18.00      |                            |        |                         |        |   |
| Sleep Experts         |       | 4,500    |       | 99,000.00             |       | 8,250.00    |       | $        | 22.00      |                            |        |                         |        |   |
| Little Gym            |       | 4,000    |       | 72,000.00             |       | 8,000.00    |       | $        | 18.00      |                            |        |                         |        |   |
| Carpet Mills          |       | 3,000    |       | 54,000.00             |       | 4,800.00    |       | $        | 18.00      |                            |        |                         |        |   |
| Zales                 |       | 3,000    |       | 66,000.00             |       | 5,500.00    |       | $        | 22.00      |                            |        |                         |        |   |
| Ritz Camera           |       | 2,400    |       | 55,200.00             |       | 4,600.00    |       | $        | 23.00      |                            |        |                         |        |   |
| ASAP Mail             |       | 2,000    |       | 40,000.00             |       | 3,323.33    |       | $        | 20.00      |                            |        |                         |        |   |
| Mothers Work          |       | 1,805    |       | 36,100.00             |       | 3,008.33    |       | $        | 20.00      |                            | April-04    |                         | March-14    |   |
| H&R Block         |       | 1,500    |       | 25,500.00             |       | 2,125.00    |       | $        | 17.00      |                            |        |                         |        |   |
| Luxury Nails          |       | 1,200    |       | 25,200.00             |       | 2,100.00    |       | $        | 21.00      |                            |        |                         |        |   |
| Vacant                |       | 7,807    |       | 168,140.00            |       | 13,178.33   |       | $        | 20.00      |                            |        |                         |        |   |
| Vacant                |       | 4,050    |       | 72,000.00             |       | 8,075.00    |       | $        | 18.00      |                            |        |                         |        |   |
| Vacant                |       | 2,500    |       | 55,000.00             |       | 4,583.33    |       | $        | 22.00      |                            |        |                         |        |   |
| Vacant                |       | 1,547    |       | 27,848.00             |       | 2,320.50    |       | $        | 18.00      |                            |        |                         |        |   |
| Vacant                |       | 1,240    |       | 24,800.00             |       | 2,088.67    |       | $        | 20.00      |                            |        |                         |        |   |
| Vacant                |       | 1,200    |       | 24,000.00             |       | 2,000.00    |       | $        | 20.00      |                            |        |                         |        |   |
|                  |       |     |       |                  |       |        |       |     |       |                            |        |                         |        |
| Totals                |       | 225,545  |       | 3,267,622.58          |       |        |       |     |       |                            |        |                         |        |

 

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**SCHEDULE III**

 

**REQUIREDREPAIRS**

 

**[NONE]**

 

SCH. X-3

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**SCHEDULE IV**

 

IntentionallyOmitted

 

SCH. X-4

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**SCHEDULE V**

 

IntentionallyOmitted

 

SCH. X-5

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**SCHEDULE VI**

 

**AFFILIATEAGREEMENTS**

 

**ManagementAgreement**

 

Management Agreement withInland Southwest Management LLC

 

SCH. X-6

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**SCHEDULE VII**

 

IntentionallyOmitted

 

SCH. X-7

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**SCHEDULE VIII**

 

IntentionallyOmitted

 

SCH. X-8

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**SCHEDULE IX**

 

IntentionallyOmitted

 

SCH. X-9

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