**Exhibit 10.449**

 

**LOAN AGREEMENT**

 

Dated as of December 30, 2004

 

Between

 

INLANDWESTERN AVONDALE MCDOWELL, L.L.C.,

as Borrower

 

and

 

LASALLE BANK 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                    |     |
| Section 2.7  | Intentionally  Omitted                        |     |
|         |                                          |     |
| 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 Omitted                         |     |
| Section  7.5 | Intentionally Omitted                         |     |
| Section  7.6 | Intentionally Omitted                         |     |
| 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                  |     |

 

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| 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                                             |     |
|          |                                                           |     |
| 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 | Sale of Loan                                                   |     |
| Section 10.24 | Joint and Several Liability                                    |     |

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

 

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**LOAN AGREEMENT**

 

**THIS LOAN****AGREEMENT**, dated as of this 30 day of December, 2004(as amended, restated, replaced, supplemented or otherwise modified from**time to time, this **“Agreement”)**, between LASALLE BANKNATIONAL ASSOCIATION, a national banking association, having an address at 135South LaSalle Street, Suite 3410, Chicago, Illinois 60603 **(“Lender”)**, and INLAND WESTERNAVONDALE MCDOWELL, L.L.C., a Delaware limited liability company, having anaddress at 2901 Butterfield Road, Oak Brook, Illinois 60523 (**“Borrower”**).

 

WITNESSETH:

 

WHEREAS, Borrower desires toobtain the Loan (as hereinafter defined) from Lender; and

 

WHEREAS, Lender is willingto make the Loan to Borrower, subject to and in accordance with the terms ofthis Agreement and the other Loan Documents (as hereinafter defined).

 

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

 

**ARTICLE I**

 

**DEFINITIONS; PRINCIPLES OF CONSTRUCTION**

 

Section 1.1                                      Definitions.   For all purposes of thisAgreement, except as otherwise expressly required or unless the context clearlyindicates a contrary intent:

 

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

 

**“Affiliate”** shall mean, as to any Person, any otherPerson that, directly or indirectly, is in control of, is controlled by or isunder common control with such Person or is a director or officer of suchPerson or of an Affiliate of such Person.

 

**“ALTA”** shall mean American Land Title Association,or any successor thereto.

 

**“AnnualBudget”** shallmean the operating budget, including all planned capital expenditures, for theProperty prepared by Borrower for the applicable Fiscal Year or other period.

 

**“Assignmentof Leases”** shallmean, with respect to the Property, that certain first priority Assignment ofLeases and Rents, dated as of the Closing Date, from Borrower, as assignor, toLender, as assignee, assigning to Lender all of Borrower’s interest in and tothe Leases and Rents of the Property as security for the Loan, as the same maybe amended, restated, replaced, supplemented or otherwise modified from time totime.

 

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**“Assignmentof Management Agreement”** shall mean that certain Assignment of Management Agreement andSubordination of Management Fees dated as of the Closing Date among Lender,Borrower and Manager, as the same may be amended, restated, replaced,supplemented or otherwise modified from time to time.

 

**“Award”** shall mean any compensation paid by anyGovernmental Authority in connection with a Condemnation in respect of all orany part of the Property.

 

**“BasicCarrying Costs”**shallmean, with respect to the Property, the sum of the following costs associatedwith the Property for the relevant Fiscal Year or payment period: (i) Taxes and(ii) Insurance Premiums.

 

**“Borrower”**shall mean InlandWestern Avondale McDowell, L.L.C., a Delaware limited liability company,together with its permitted successors and assigns.

 

**“BusinessDay****”** shall mean any day other than a Saturday,Sunday or any other days on which national banks in Chicago, Illinois are notopen for business.

 

**“CapitalExpenditures”** shallmean, 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).

 

**“CashExpenses”**shallmean, for any period, the operating expenses for the operation of the Propertyas set forth in an Approved Annual Budget to the extent that such expenses areactually incurred by Borrower minus any payments into the Tax and InsuranceEscrow Fund.

 

**“Casualty”** shall have the meaning specified in Section6.2 hereof.

 

**“Casualty/Condemnation****Prepayment****”** shall have the meaning specified in Section6.4(e) hereof.

 

**“Casualty Consultant”** shall have the meaning set forth in Section6.4(b)(iii) hereof.

 

**“CasualtyRetainage”** shallhave the meaning set forth in Section 6.4(b)(iv) hereof.

 

**“ClosingDate”** shall meanthe date hereof.

 

**“Code”** shall mean the Internal Revenue Code of1986, as amended, as it may be further amended from time to time, and anysuccessor statutes thereto, and applicable U.S. Department of Treasuryregulations issued pursuant thereto in temporary or final form.

 

**“Condemnation”** shall mean a temporary or permanent takingby any Governmental Authority as the result or in lieu or in anticipation ofthe exercise of the right of condemnation or eminent domain, of all or any partof the Property, or any interest therein or

 

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right accruing thereto,including any right of access thereto or any change of grade affecting theProperty or any part thereof.

 

**“Debt”**shall mean theoutstanding principal amount set forth in, and evidenced by, this Agreement andthe Note together with all interest accrued and unpaid thereon and all othersums (including the Prepayment Consideration) due to Lender in respect of theLoan under the Note, this Agreement, the Mortgage or any other Loan Document.

 

**“Debt****Service****”** shall mean, with respect to any particularperiod of time, scheduled interest payments under the Note.

 

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

 

(a)           the numerator is the Net Operating Income (excludinginterest on credit accounts) for such period as set forth in the statementsrequired hereunder, without deduction for (i) actual management fees incurredin connection with the operation of the Property, (ii) amounts paid to theReserve Funds, less (A) management fees equal to the greater of (1) assumedmanagement fees of three percent (3.0%) of Gross Income from Operations or (2)the actual management fees incurred, (B) assumed Replacement Reserve Fundcontributions equal to $0.28 per square foot of gross leaseable area at theProperty; and (C) assumed reserves for tenant improvements and leasingcommissions equal to $0.50 per square foot of gross leaseable area at theProperty; and

 

(b)           the denominator is the aggregate amount of interest dueand payable on the Note for such applicable period.

 

**“Default”**shall mean theoccurrence of any event hereunder or under any other Loan Document which, butfor the giving of notice or passage of time, or both, would be an Event ofDefault. 

 

**“DefaultRate”**shall mean,with respect to the Loan, a rate per annum equal to the lesser of (a) themaximum rate permitted by applicable law, or (b) five percent (5%) above theInterest Rate.

 

**“DisclosureDocument”**shallhave the meaning set forth in Section 9.2 hereof.

 

**“EligibleAccount”** shallmean a separate 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.

 

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**“EligibleInstitution”**shallmean a depository 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-l by Moody’s Investors Service, Inc., and F-1+ by Fitch, Inc. inthe case of accounts in which funds are held for 30 days or less (or, in thecase of accounts in which funds are held for more than 30 days, the long termunsecured debt obligations of which are rated at least “AA” by Fitch andS&P and “Aa” by Moody’s).

 

**“EnvironmentalIndemnity”**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.

 

**“Environmental****Report****”** shall have the meaning as defined in theEnvironmental Indemnity executed by the Borrower.

 

**“ERISA”** shall mean the Employee Retirement IncomeSecurity Act of 1974, as amended.

 

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

 

**“ExchangeAct”** shall havethe meaning set forth in Section 9.2 hereof.

 

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

 

**“GovernmentalAuthority”** 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****IncomeFrom Operations****”** shall mean all sustainable income asreported on the financial statements delivered by the Borrower in accordancewith this Agreement, computed in accordance with accounting principlesreasonably acceptable to Lender, consistently applied, derived from theownership and operation of the Property from whatever source, *including*, but not limited to, (i) Rents from Tenants that are inoccupancy, 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 but*excluding*(i) Rents fromTenants that are subject to any bankruptcy proceeding (unless such Tenant hasaffirmed its Lease or Inland Western Retail Real Estate Trust, Inc. has masterleased such Tenant’s premises for full contract rent for a period not less thanthree years, and the net worth of Inland Western Retail Real Estate Trust, Inc.(as determined by Lender) is not less than such entity’s net worth as of June30, 2004), or are not in occupancy, open for business or paying unabated Rent,(ii) sales, use and occupancy or other taxes on receipts required to beaccounted for by Borrower to any Governmental Authority, (iii) refunds anduncollectible accounts, (iv) sales of furniture, fixtures and equipment, (v)Insurance Proceeds (other than business interruption or other loss of incomeinsurance), (vi) Awards, (vii) unforfeited security deposits, (viii) utilityand other similar deposits and (ix) any disbursements to Borrower from theReserve Funds. Gross income shall not be

 

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diminished as a result ofthe Mortgage or the creation of any intervening estate or interest in theProperty or any part thereof.

 

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

 

**“Indebtedness”** of a Person, at a particular date, means thesum (without duplication) at such date of (a) indebtedness or liability forborrowed money; (b) obligations evidenced by bonds, debentures, notes, or othersimilar instruments; (c) obligations for the deferred purchase price ofproperty or services (including trade obligations); (d) obligations underletters of credit; (e) obligations under acceptance facilities; (f) allguaranties, endorsements (other than for collection or deposit in the ordinarycourse of business) and other contingent obligations to purchase, to providefunds for payment, to supply funds, to invest in any Person or entity, orotherwise to assure a creditor against loss; and (g) obligations secured by anyLiens, whether or not the obligations have been assumed.

 

**“****Indemnitor****”** shall mean Inland Western Retail Real EstateTrust, Inc., a Maryland corporation.

 

**“IndemnityAgreement”** shallmean that certain Indemnity Agreement dated as of the Closing Date by Borrowerand Indemnitor in favor of Lender.

 

**“IndependentDirector”** shallmean a director of a corporation or a manager of a limited liability companywho is not at the time of initial appointment, or at any time while serving asa director or manager, as the case may be, of such an entity, and has not beenat any time during the preceding five (5) years: (a) a stockholder, director(with the 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 such stockholder,director, officer, partner, customer, supplier or other Person (other than afee for its services of being an Independent Director); or (d) a member of theimmediate family of any such stockholder, director, officer, employee, partner,customer, supplier or other person. As used in this definition, the term “control”means the possession, directly or indirectly, of the power to direct or causethe direction of management, policies or activities of a Person, whetherthrough ownership of voting securities, by contract or otherwise.

 

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

 

**“InsolvencyOpinion”** shallhave the meaning set forth in Section 3.1.6 hereof.

 

**“InsurancePremiums”** shallhave the meaning set forth in Section 6.1(b) hereof.

 

**“InsuranceProceeds”** shallhave the meaning set forth in Section 6.4(b) hereof.

 

**“InterestRate”** shall meanfour and 67/100 percent (4.67%) per annum.

 

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**“Lease”** shall mean any lease, sublease or subsublease,letting, license, concession or other agreement (whether written or oral andwhether now or hereafter in effect) pursuant to which any Person is granted apossessory interest in, or right to use or occupy all or any portion of anyspace in the Property of Borrower, and every modification, amendment or otheragreement relating to such lease, sublease, subsublease, or other agreemententered into in connection with such lease, sublease, subsublease, or otheragreement and every guarantee of the performance and observance of thecovenants, conditions and agreements to be performed and observed by the otherparty thereto.

 

**“Legal****Requirements****”** shall mean, with respect to the Property,all federal, state, county, municipal and other governmental statutes, laws,rules, orders, regulations, ordinances, judgments, decrees and injunctions ofGovernmental Authorities affecting the Property or any part thereof, or theconstruction, use, alteration or operation thereof, or any part thereof,whether now or hereafter enacted and in force, and all permits, licenses andauthorizations and regulations relating thereto, and all covenants, agreements,restrictions and encumbrances contained in any instruments, either of record orknown to Borrower, at any time in force affecting the Property or any partthereof, including, without limitation, any which may (a) require repairs,modifications or alterations in or to the Property or any part thereof, or (b)in any way limit the use and enjoyment thereof.

 

**“Lender”** shall mean LaSalle Bank NationalAssociation, a national banking association, together with its successors andassigns.

 

**“Licenses”** shall have the meaning set forth in Section4.1.22 hereof.

 

**“Lien”** shall mean, with respect to the Property,any mortgage, deed of trust, deed to secure debt, lien, pledge, hypothecation,assignment, security interest, or any other encumbrance, charge or transfer of,on or affecting Borrower, the Property, any portion thereof or any interesttherein, including, without limitation, any conditional sale or other titleretention agreement, any financing lease having substantially the same economiceffect as any of the foregoing, the filing of any financing statement, andmechanic’s, materialmen’s and other similar liens and encumbrances.

 

**“Loan”** shall mean the loan made by Lender toBorrower pursuant to this Agreement and evidenced by the Note.

 

**“LoanDocuments”** shallmean, collectively, this Agreement, the Note, the Mortgage, the Assignment ofLeases and Rents, the Environmental Indemnity, the Assignment of ManagementAgreement, the Indemnity Agreement and all other documents executed and/ordelivered in connection with the Loan.

 

**“Losses”** shall have the meaning set forth in the IndemnityAgreement.

 

**“ManagementAgreement”** shallmean, with respect to the Property, the management agreement entered into byand between Borrower and the Manager, pursuant to which the Manager is toprovide management and other services with respect to the Property.

 

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

 

**“Maturity Date”**shall mean January 1, 2010, or such otherdate on which the final payment of principal of the Note becomes due andpayable as therein or herein provided, whether at such stated maturity date, bydeclaration of acceleration, or otherwise.

 

**“MaximumLegal Rate”** shallmean the maximum non-usurious interest rate, if any, that at any time or fromtime to time may be contracted for, taken, reserved, charged or received on theindebtedness evidenced by the Note and as provided for herein or the other LoanDocuments, under the laws of such state or states whose laws are held by anycourt of competent jurisdiction to govern the interest rate provisions of theLoan.

 

**“MonthlyDebt Service Payment Amount”** shall mean an amount equal to $139,485.12.

 

**“Mortgage”** shall mean, with respect to the Property,that certain first priority Deed of Trust, Security Agreement and FixtureFiling, dated the Closing Date, executed and delivered by Borrower as securityfor the Loan and encumbering the Property, as the same may be amended,restated, replaced, supplemented or otherwise modified from time to time.

 

**“NetCash Flow”** shallmean, with respect to the Property for any period, the amount obtained bysubtracting Operating Expenses and Capital Expenditures for such period fromGross Income from Operations for such period.

 

**“NetCash Flow After Debt Service”** shall mean, with respect to the Property for any period, the amountobtained by subtracting Debt Service for such period from Net Cash Flow forsuch period.       .

 

**“NetCash Flow Schedule”**shall have the meaning set forth in Section 5.1.11(b) hereof.

 

**“Net Operating Income”** shall mean the amount obtained bysubtracting from Gross Income from Operations (i) Operating Expenses, and (ii)a vacancy allowance equal to the greater of (x) market vacancy (as reasonablydetermined by Lender), less actual vacancy, and (y) underwritten vacancy of tenpercent (10%), less actual vacancy. Notwithstanding the foregoing, if actualvacancy exceeds market vacancy and underwritten vacancy, then there shall be noadjustment for a vacancy allowance.

 

**“Net Proceeds”** shall have the meaning set forth in Section6.4(b) hereof.

 

**“Net Proceeds Deficiency”**shall have the meaning set forth in Section6.4(b)(vi) hereof.

 

**“****Net Proceeds Prepayment****”**shall have the meaning set forth in Section6.4(e) hereof.

 

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**“Note”** shall mean that certain Promissory Note ofeven date herewith in the principal amount of THIRTY-FIVE MILLION EIGHT HUNDREDFORTY-TWO THOUSAND AND NO/100 DOLLARS ($35,842,000.00), made by Borrower infavor of Lender, as the same may be amended, restated, replaced, supplementedor otherwise modified from time to time.

 

**“Officers’ Certificate”**shall mean a certificate delivered to Lenderby Borrower which is signed by the Sole Member.

 

**“Operating Expenses”** shall mean the total of all expenditures, computedin accordance with accounting principles reasonably acceptable to Lender,consistently applied, of whatever kind relating to the operation, maintenanceand management of the Property that are incurred on a regular monthly or otherperiodic basis, including without limitation, utilities, ordinary repairs andmaintenance, insurance, license fees, property taxes and assessments,advertising expenses, management fees, payroll and related taxes, computerprocessing charges, operational equipment or other lease payments as approvedby Lender, and other similar costs, but excluding depreciation, Debt Service,Capital Expenditures and contributions to the Reserve Funds.

 

**“Other Charges”**shall mean all ground rents, maintenancecharges, impositions other than Taxes, and any other charges, including,without limitation, vault charges and license fees for the use of vaults,chutes and similar areas adjoining the Property, now or hereafter levied orassessed or imposed against the Property or any part thereof.

 

**“Other Contract Funds”** shall mean any payment due to Borrower underany of the agreements described on Schedule X.

 

**“Payment Date”** shall mean the first (1st) day of eachcalendar month during the term of the Loan or, if such day is not a BusinessDay, 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 Policy 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 mean any one or more of the following obligationsor securities acquired at a purchase price of not greater than par, includingthose issued by Servicer, the trustee under any Securitization or any of theirrespective Affiliates, payable on demand or having a maturity date not laterthan the Business Day immediately prior to the first Payment Date following thedate of acquiring such investment and meeting one of the appropriate standardsset forth below:

 

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(i)            obligations of, or obligations fullyguaranteed as**to payment of principal andinterest by, the United States or any agency or instrumentality thereofprovided such obligations are backed by the full faith and credit of the UnitedStates of America including, without limitation, obligations of: the U.S.Treasury (all direct or fully guaranteed obligations), the Fanners HomeAdministration (certificates of beneficial ownership), the General ServicesAdministration (participation certificates), the U.S. Maritime Administration(guaranteed Title XI financing), the Small Business Administration (guaranteedparticipation certificates and guaranteed pool certificates), the U.S.Department of Housing and Urban Development (local authority bonds) and theWashington Metropolitan Area Transit Authority (guaranteed transit bonds); 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) such investmentsmust not be subject to liquidation prior to their maturity;

                                                                                                                                     

(ii)           Federal Housing Administrationdebentures;

 

(iii)          obligations of the following UnitedStates government 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 certificatesof deposit, 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 otherwise acceptableto each other Rating Agency, as confirmed in writing that such investment wouldnot, in and of itself, result in a downgrade, qualification or withdrawal ofthe 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 proportionately with that index, and (D) suchinvestments must not be subject to liquidation prior to their maturity;

 

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(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 proportionately with that index, and (D) suchinvestments must not be subject to liquidation prior to their maturity;

 

(vi)          debt obligations with maturities ofnot more than 365 days and at all times rated by each Rating Agency (or, if notrated by all 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,which funds are regulated investment companies, seek to maintain a constant netasset value per share and invest solely in obligations backed by the full faithand credit of the United States, which funds

 

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have the highest ratingavailable from 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) for moneymarket funds; and

 

(ix)           any other security, obligation orinvestment which has been approved as a Permitted Investment in writing by (a)Lender and (b) each Rating Agency, as evidenced by a written confirmation thatthe designation 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;

 

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

 

**“PermittedPrepayment Date”**shallmean the date that is two (2) years from the first day of the calendar monthimmediately following the Closing Date.

 

**“Person”**shall mean anyindividual, corporation, partnership, joint venture, limited liability company,estate, trust, unincorporated association, any federal, state, county ormunicipal government or any bureau, department or agency thereof and anyfiduciary acting in such capacity on behalf of any of the foregoing.

 

**“PersonalProperty”**shallhave the meaning set forth in the granting clause of the Mortgage with respectto the Property.

 

**“PhysicalConditions 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, withoutlimitation, zoning, subdivision and building laws) and (b) include a copy of afinal certificate of occupancy with respect to all Improvements on theProperty.

 

**“Policies”**shall have themeaning specified in Section 6.1(b) hereof.

 

**“PrepaymentConsideration”**shallhave the meaning set forth in Section 2.3.1.

 

**“PrepaymentRate”**shall meanthe bond equivalent yield (in the secondary market) on the United StatesTreasury Security that as of the Prepayment Rate Determination Date has aremaining term to maturity closest to, but not exceeding, the remaining term tothe Maturity Date, as most recently published in the “Treasury Bonds, Notes andBills” section in The Wall Street Journal as of the date of the related tenderof the payment. If more than one issue of United States Treasury Securities hasthe remaining term to the Maturity Date referred to

 

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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 any successorpublication, published by the Board of Governors of the Federal Reserve System,or on the basis of such other publication or statistical guide as Lender mayreasonably select.

 

**“Prepayment Rate DeterminationDate”**shall meanthe date which is five (5) Business Days prior to the prepayment date.

 

**“Property”** shall mean the parcel of real property, theImprovements thereon and all personal property owned by Borrower and encumberedby the Mortgage, together with all rights pertaining to such property andImprovements, as more particularly described in the Granting Clauses of theMortgage and referred to therein as the “Property”.

 

**‘‘Provided Information”** shall have the meaning set forth in Section9.1(a) hereof.

 

**“Qualifying Entity”**shall have the meaning set forth in Section5.2.13(b) hereof.

 

**“Qualifying Manager”** shall mean either (a) a reputable andexperienced management organization reasonably satisfactory to Lender, whichorganization or its principals possess at least ten (10) years experience in managingproperties similar in size, scope and value of the Property and which, on thedate Lender determines whether such management organization is a QualifyingManager, manages at least one million square feet of retail space, providedthat Borrower shall have obtained prior written confirmation from the RatingAgency that management of the Property by such entity will not cause adowngrading, withdrawal or qualification of the then current rating of thesecurities issued pursuant to the Securitization, or (b) the fee owner of theProperty, provided that such owner possesses experience in managing andoperating properties similar in size, scope and value of the Property. Lenderacknowledges that on the Closing Date, Manager shall be deemed to be a QualifyingManager.

 

**“Rating Agencies”** shall mean each of Standard & Poor’sRatings Services, a division of McGraw-Hill, Inc., Moody’s Investors Service,Inc. and Fitch, Inc., or any other nationally-recognized statistical ratingagency which has been approved by Lender.

 

**“Rating Surveillance Charge”** shall have the meaning set forth in Section9.3 hereof.

 

**“Relevant Leasing Threshold”**shall mean, any Leasefor an amount of leaseable square footage equal to or greater than 10,000square feet.

 

**“****Relevant Restoration Threshold****”** shall mean Five Hundred Thousand and No/100dollars ($500,000.00).

 

**“REMIC Trust”** shall mean a “real estate mortgageinvestment conduit” within the meaning of Section 860D of the Code that holdsthe Note.

 

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**“Rents”** shall mean, with respect to the Property,all rents, rent equivalents, moneys payable as damages or in lieu of rent orrent equivalents, royalties (including, without limitation, all oil and gas orother mineral royalties and bonuses), income, receivables, receipts, revenues,deposits (including, without limitation, security, utility and other deposits),accounts, cash, issues, profits, charges for services rendered, and otherconsideration of whatever form or nature received by or paid to or for theaccount of or benefit of Borrower or its agents or employees from any and allsources arising from or attributable to the Property, and proceeds, if any,from business interruption or other loss of income insurance, including theOther Contract Funds.

 

**“Replacement Reserve Account”** shall have the meaning set forth in Section7.3.1 hereof.

 

**“Replacement Reserve Fund”**shall have themeaning set forth in Section 7.3.1 hereof.

 

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

 

**“Replacements”** shall have the meaning set forth in Section7.3.1(a) hereof.

 

**“Required Repair Account”** shall have the meaning set forth in Section7.1.1 hereof.

 

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

 

**“Required Repairs”** shall have the meaning set forth in Section7.1.1 hereof.

 

**“Reserve Funds”**shall mean the Tax and Insurance Escrow Fund,the Replacement Reserve Fund, the Required Repair Fund (if any), or any otherescrow fund established by the Loan Documents.

 

**“Restoration”** shall have the meaning set forth in Section6.2 hereof. 

 

**“Securities”** shall have the meaning set forth in Section9.1 hereof. 

 

**“Securities Act”** shall have the meaning set forth in Section9.2 hereof. 

 

**“Securitization”** shall have the meaning set forth in Section9.1 hereof. 

 

**“Servicer”** shall have the meaning set forth in Section9.6 hereof.

 

**“Servicing Agreement”** shall have the meaning set forth in Section9.6 hereof.

 

**“Severed Loan Documents”** shall have the meaning set forth in Section8.2(c) hereof.

 

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**“SeveringDocumentation”**shallhave the meaning set forth in Section 9.7 hereof.

 

**“SoleMember”**shallmean Inland Western Retail Real Estate Trust, Inc., a Maryland corporation.

 

**“SpecialPurpose Entity”**meansa corporation, limited partnership, limited liability company, or Delawarestatutory trust which at all times on and after the Closing Date:

 

(i)            is organized solely for the purposeof (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 inany business unrelated to (A) the acquisition, development, ownership,management or operation of the Property, (B) acting as general partner of thelimited partnership that owns the Property, (C) acting as a member of thelimited liability company that owns the Property, or (D) acting as thebeneficiary or trustee of a Delaware statutory trust that owns the Property, asapplicable;

 

(iii)          does not have and will not have anyassets other than those related to the Property or its partnership interest inthe limited partnership, the member interest in the limited liability companyor the beneficial interest in the Delaware statutory trust that owns theProperty or acts as the general partner, managing member or beneficiary or trusteethereof, as applicable;

 

(iv)          has not engaged, sought or consentedto and will 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 trust) or amendment ofits limited partnership agreement, articles of incorporation, articles oforganization, certificate of formation, operating agreement or trust formationand governance documents (as applicable) with respect to the matters set forthin this definition;

 

(v)           if such entity is a limitedpartnership, has as its only general partners, Special Purpose Entities thatare corporations, limited partnerships or limited liability companies;

 

(vi)          if such entity is a corporation, hasat least one (1) Independent Director, and has not caused or allowed and willnot cause or allow the board of directors of such entity to take any actionrelated to a bankruptcy or insolvency proceeding or a voluntary dissolutionwithout the unanimous affirmative vote of 100% of the members of its board ofdirectors, including the Independent Director;

 

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(vii)         if such entity is a limited liabilitycompany and such limited liability company has more than one member, suchlimited liability company has as its manager a Special Purpose Entity that is acorporation and that owns at least 1.0% (one percent) of the equity of thelimited liability company;

 

(viii)        if such entity is a limited liabilitycompany and such limited liability company has only one member, such limitedliability company (a) has been formed under Delaware law, and (b) has either acorporation or other person or entity that shall become a member of the limitedliability company upon the dissolution or disassociation of the member, and (c)has at least one (1) manager that is an Independent Director, and (d) will notcause or allow its managers to take any action related to a bankruptcy orinsolvency proceeding or a voluntary dissolution without the unanimousaffirmative vote of 100% of its managers, including the Independent Director;

 

(ix)           if such entity is (a) a limitedliability company, has articles of organization, a certificate of formationand/or an operating agreement, as applicable, (b) a limited partnership, has alimited partnership agreement, (c) a corporation, has a certificate or articlesof incorporation and bylaws, as applicable, or (d) a Delaware statutory trust,has organizational documents that, in each case, provide that such entity willnot: (1) dissolve, merge, liquidate, consolidate; (2) except as permittedherein, sell all or substantially all of its assets or the assets of theBorrower (as applicable) except as permitted herein; (3) engage in any otherbusiness activity, or amend its organizational documents with respect to thematters set forth in this definition without the consent of the Lender; or (4)without the affirmative vote of all directors of the corporation (that is suchentity or the general partner or managing or co-managing member or manager ofsuch entity), file a bankruptcy or insolvency petition or otherwise instituteinsolvency proceedings with respect to itself or to any other entity in whichit has a direct or indirect legal or beneficial ownership interest;

 

(x)            has not entered into or been a partyto, and will not enter into or be a party to, any transaction with itspartners, members, beneficiaries, shareholders or Affiliates except (A) in theordinary course of its business and on terms which are intrinsically fair,commercially reasonable and are no less favorable to it than would be obtainedin a comparable arm’s-length transaction with an unrelated third party and (B)in connection with this Agreement;

 

(xi)           is solvent and pays its debts andliabilities (including, as applicable, shared personnel and overhead expenses)from its assets as the same become due, and is maintaining adequate capital forthe normal 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 tocorrect any known misunderstanding regarding the separate identity of suchentity;

 

(xiii)         will file its own tax returns; provided,however, that Borrower’s assets and income may be included in a tax return ofits Sole Member or the general partner of Sole Member if inclusion on such taxreturn is in compliance with applicable law;

 

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

 

(xv)         (a) has not commingled and will notcommingle its funds or assets with those of any other Person and (b) has notparticipated and will not participate in any cash management system with anyother Person, except with respect to a custodial account maintained by theManager on behalf of Affiliates of Borrower and, with respect to funds in suchcustodial account, has separately accounted, and will continue to separatelyaccount for, each item of income and expense applicable to the Property andBorrower;

 

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

 

(xvii)       has conducted and will conduct itsbusiness in its name or in a name franchised or licensed to it by an entityother than an Affiliate of Borrower;

 

(xviii)      has maintained and will maintain itsbalance sheets, operating statements and other entity documents separate fromany other Person and has not permitted and will not permit its assets to belisted as assets on the financial statement of any other entity except asrequired or permitted by applicable accounting principles 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 maintained and will maintainseparate books and records for the Property;

 

(xx)          has a sufficient number of employeesin light of its contemplated business operations, which may be none;

 

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

 

(xxii)        has and will have no Indebtedness(including loans (whether or not such loans are evidenced by a writtenagreement) between Borrower and any Affiliates of Borrower and relating to themanagement of funds in the custodial account maintained by the Manager) otherthan (i) the Loan, (ii) liabilities incurred in the ordinary course of businessrelating to the ownership and operation of the Property and the routineadministration of Borrower, which liabilities are not more than sixty (60) dayspast the date incurred (unless disputed in accordance with applicable law), arenot evidenced by a note and are paid when due, and which amounts are normal andreasonable under the circumstances, and (iii) such other liabilities that arepermitted pursuant to this Agreement;

 

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(xxiii)       has not and will not assume or guaranteeor become obligated for the debts of any other Person or hold out its credit asbeing available to satisfy the obligations of any other Person except asotherwise permitted pursuant to this Agreement;

 

(xxiv)       has not and will not acquire obligationsor securities of its partners, members, beneficiaries or shareholders or anyother Affiliate;

 

(xxv)        has allocated and will allocate fairlyand reasonably any overhead expenses that are shared with any Affiliate,including, but not limited to, paying for shared office space and servicesperformed by any employee of an affiliate;

 

(xxvi)       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;

 

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

 

(xxviii)     has held itself out and identified itselfand will 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;

 

(xxix)       has maintained and will maintain itsassets in 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;

 

(xxx)        has not made and will not make loans toany Person or hold evidence of indebtedness issued by any other person orentity (other than cash and investment-grade securities issued by an entitythat is not an Affiliate of or subject to common ownership with such entity);

 

(xxxi)       has not identified and will not identifyits partners, members, beneficiaries or shareholders, or any Affiliate of anyof them, as a division or part of it, and has not identified itself and shallnot identify itself as a division of any other Person;

 

(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 ofthe terms and provisions contained in its organizational documents. Thestatement of facts contained in its organizational documents are true andcorrect and will remain true and correct.

 

**“State”** shall mean, with respect to the Property,the State or Commonwealth in which the Property or any part thereof is located.

 

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**“Survey”** shall mean a survey of the Property inquestion prepared by a surveyor licensed in the State and satisfactory toLender and the company or companies issuing the Title Insurance Policy, andcontaining a certification of such surveyor satisfactory to Lender.

 

**“Tax And Insurance Escrow Fund”**shall have themeaning set forth in Section 7.2 hereof regardless of whether the funds heldtherein are held by Lender for the payment of Taxes of Insurance Premiums or both.

 

**“Taxes”** shall mean all real estate and personalproperty taxes, assessments, water rates or sewer rents, now or hereafterlevied or assessed or imposed against the Property or any part thereof.

 

**“Tenant”** shall mean any person or entity with apossessory right to all or any part of the Property pursuant to a Lease orother written agreement.

 

**“Terrorism Insurance Guarantor”** shall have the meaning set forth in Section6.1 hereof.

 

**“Title Insurance Policy”** shall mean, with respect to the Property, anALTA mortgagee title insurance policy in the form (acceptable to Lender) (or,if the Property is in a State which does not permit the issuance of such ALTApolicy, such form as shall be permitted in such State and acceptable to Lender)issued with respect to the Property and insuring the lien of the Mortgageencumbering the Property.

 

**“Transferee”** shall have the meaning set forth in Section5.2.13 hereof. 

 

**“Trustee”** shall have the meaning set forth in the Mortgage.

 

**“UCC”** or **“Uniform CommercialCode”** shall mean the Uniform Commercial Code as in effect in theapplicable State in which the Property is located.

 

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

 

Section1.2             Principles of Construction.All references to sections and schedules are to sections and schedules in or tothis Agreement unless otherwise specified. All uses of the word “including”shall mean “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**

 

Section2.1                                      Loan Commitment; Disbursement to Borrower.

 

2.1.1                        The Loan.  Subject to and upon the termsand conditions set forth herein, Lender hereby agrees to make and Borrowerhereby agrees to accept the Loan on the Closing Date.

 

2.1.2        Disbursement to Borrower.   Borrower may request and receive only one borrowinghereunder in respect of the Loan and any amount borrowed and repaid hereunderin respect of the Loan may not be re-borrowed.

 

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

 

2.1.4        Use of Proceeds. Borrower shall use the proceeds ofthe Loan to (a) repay and discharge any existing loans relating to theProperty, (b) pay all past-due Basic Carrying Costs, if any, in respect of theProperty, (c) make deposits into the Reserve Funds on the Closing Date in theamounts provided herein, (d) pay costs and expenses incurred in connection withthe closing of the Loan, as approved by Lender, (e) fund any working capitalrequirements of the Property, and (f) distribute the balance, if any, toBorrower.

 

Section2.2            Interest; Loan Payments; LatePayment Charge.

 

2.2.1        Interest Generally.  Interest on the outstanding principal balance of the Loan shall accruefrom the Closing Date to but excluding the Maturity Date at the Interest Rate.

 

2.2.2        Interest Calculation.  Interest on the outstanding principal balance of the Loan shall becalculated on the basis of a three hundred sixty (360) day year comprised oftwelve (12) months of thirty (30) days each, except that interest due andpayable for a period of less than a full month shall be calculated bymultiplying the actual number of days elapsed in the period for which thecalculation is being made by a daily rate based on a three hundred sixty (360)day year.

 

2.2.3        Payments Generally.  Borrower shall pay to Lender (a) on the Closing Date, an amount equal tointerest only on the outstanding principal balance of the Loan from the ClosingDate up to but not including the first Payment Date following the Closing Date,and (b) on February 1, 2005 and each Payment Date thereafter up to but notincluding the Maturity Date, an amount equal to the Monthly Debt Service PaymentAmount, which shall be applied to interest on the outstanding principal amountof the Loan for the prior calendar month at the Interest Rate.

 

2.2.4        Intentionally Omitted.

 

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2.2.5        Payment on Maturity Date. Borrower shall pay to Lenderon the Maturity Date the outstanding principal balance of the Loan, all accruedand unpaid interest and all other amounts due hereunder and under the Note, theMortgage and other the Loan Documents.

 

2.2.6        Payments after Default. Upon the occurrence and duringthe continuance of an Event of Default, interest on the outstanding principalbalance of the Loan and, to the extent permitted by law, overdue interest andother amounts due in respect of the Loan shall accrue at the Default Rate,calculated from the date such payment was due without regard to any grace orcure periods contained herein. Interest at the Default Rate shall be computedfrom the occurrence of the Event of Default until the earlier of (i) in theevent of a non-monetary default, the cure of such Event of Default by Borrowerand acceptance of such cure by Lender, and (ii) in the event of a monetarydefault, the actual receipt and collection of the Debt (or that portion thereofthat is then due). To the extent permitted by applicable law, interest at theDefault Rate shall be added to the Debt, shall itself accrue interest at thesame rate as the Loan and shall be secured by the Mortgage. This paragraphshall not be construed as an agreement or privilege to extend the date of thepayment of the Debt, nor as a waiver of any other right or remedy accruing toLender by reason of the occurrence of any Event of Default and Lender retainsits rights under the Note and this Agreement to accelerate and to continue todemand payment of the Debt upon the happening and continuance of any Event ofDefault.

 

2.2.7        Late Payment Charge. If any principal, interest or anyother sums due under the Loan Documents is not paid by Borrower on or prior tothe date which is five (5) days after the date on which it is due, Borrowershall pay to Lender upon demand an amount equal to the lesser of five percent(5%) of such unpaid sum or the maximum amount permitted by applicable law inorder to defray the expense incurred by Lender in handling and processing such delinquentpayment and 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 chargeshall not apply to the payment of all outstanding principal, interest and othersums due on the Maturity Date. 

 

2.2.8        Usury Savings. This Agreement and the Note are subject to the express condition that atno time shall Borrower be obligated or required to pay interest on theprincipal balance of the Loan at a rate which could subject Lender to eithercivil or criminal liability as a result of being in excess of the Maximum LegalRate. If, by the terms of this Agreement or the other Loan Documents, Borroweris at any time required or obligated to pay interest on the principal balancedue hereunder at a rate in excess of the Maximum Legal Rate, the Interest Rate orthe Default Rate, as the case may be, shall be deemed to be immediately reducedto the Maximum Legal Rate and all previous payments in excess of the MaximumLegal Rate shall be deemed to have been payments in reduction of principal andnot on account of the interest due hereunder. All sums paid or agreed to bepaid to Lender for the use, forbearance, or detention of the sums due under theLoan, shall, to the extent permitted by applicable law, be amortized, prorated,allocated, and spread throughout the full stated term of the Loan until paymentin full so that the rate or amount of interest on account of the Loan does notexceed the Maximum Legal Rate of interest from time to time in effect andapplicable to the Loan for so long as the Loan is outstanding.

 

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Section 2.3             Prepayments.

 

2.3.1        Voluntary Prepayments.

 

(a)           Except as otherwise provided herein, Borrower shall nothave the right to prepay the Loan in whole or in part prior to the PermittedPrepayment Date. On or after the Permitted Prepayment Date, Borrower may,provided it has given Lender prior written notice in accordance with the termsof this Agreement, prepay the unpaid principal balance of the Loan in whole,but not in part, by paying, together with the amount to be prepaid, (i)interest accrued and unpaid on the outstanding principal balance of the Loanbeing prepaid to and including the date of prepayment, (ii) unless prepaymentis tendered on a Payment Date, an amount equal to the interest that would haveaccrued on the amount being prepaid after the date of prepayment through andincluding the next 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 Loan Documents,and (iv) if prepayment occurs prior to the Payment Date which is three (3)months prior to the Maturity Date, a prepayment consideration (the **“Prepayment Consideration”**)****equalto the greater of (A) one percent (1%) of the outstanding principal balance ofthe Loan being prepaid or (B) the excess, if any, of (1) the sum of the presentvalues of all then-scheduled payments of principal and interest under thisAgreement including, but not limited to, principal and interest due on January1, 2010 (with each such payment discounted to its present value at the date ofprepayment at the rate which, when compounded monthly, is equivalent to thePrepayment Rate), over (2) the outstanding principal amount of the Loan. Lendershall notify Borrower of the amount and the basis of determination of therequired prepayment consideration.

 

(b)           On the Payment Date that isthree (3) months prior to the Maturity Date, and on each day thereafter throughthe Maturity Date, Borrower may, at its option, prepay the Debt without paymentof any Prepayment Consideration or other penalty or premium; provided, however,if such prepayment is not paid on a regularly scheduled Payment Date, the Debtshall include interest that would have accrued on such prepayment through andincluding the day immediately preceding the Maturity Date.  Borrower’s right to prepay any portion of theprincipal balance of the Loan shall be subject to (i) Borrower’s submission ofa notice to Lender setting forth the amount to be prepaid and the projected dateof prepayment, which date shall be no less than thirty (30) days from the dateof such notice, and (ii) Borrower’s actual payment to Lender of the amount tobe prepaid as set forth in such notice on the projected date set forthin such notice or any day following such projected date occurring in the samecalendar month as such projected date.

 

2.3.2        Mandatory Prepayments.    (a)   On the next occurring Payment Date following the date on which Borroweractually receives any Net Proceeds, if Lender is not obligated to make such NetProceeds available to Borrower pursuant to this Agreement for the restorationof the Property, Borrower shall, at Lender’s option, prepay the outstandingprincipal balance of the Note in an amount equal to one hundred percent (100%)of such Net Proceeds. No Prepayment Consideration or other penalty or premiumshall be due in connection with any prepayment made pursuant to thisSection 2.3.2. Any partial prepayment under this Section shall be applied tothe last payments of principal due under the Loan.

 

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(b)           On the date on which Borrowertenders a Casualty/Condemnation Prepayment pursuant to Section 6.4(e)below, such tender shall include (a) all accrued and unpaid interest and theprincipal indebtedness being prepaid, including interest on the outstandingprincipal amount of the applicable Note through the last day of the monthwithin which such tender occurs, and (b) any other sums due hereunder relatingto the applicable Note. Except as set forth in this Section 2.3.2(b), otherthan following an Event of Default, no Prepayment Consideration or otherpenalty or premium shall be due in connection with any Casualty/CondemnationPrepayment.

 

2.3.3        Prepayments after Default.Following an Event of Default, if Borrower or anyone on Borrower’s behalf makesa tender of payment of all or any portion of the Debt at any time prior to aforeclosure sale (including a sale under the power of sale under the Mortgage),or during any redemption period after foreclosure, (i) the tender of paymentshall constitute an evasion of Borrower’s obligation to pay any PrepaymentConsideration due under this Agreement and such payment shall, therefore, tothe maximum extent permitted by law, include a premium equal to the PrepaymentConsideration that would have been payable on the date of such tender had theLoan not been so accelerated, or (ii) if at the time of such tender aprepayment of the principal amount of the Loan would have been prohibited underthis Agreement had the principal amount of the Loan not been so accelerated,the tender of payment shall constitute an evasion of such prepaymentprohibition and shall, therefore, to the maximum extent permitted by law,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 bepayable after 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             Intentionally Omitted.

 

Section 2.5             Release of Property. Exceptas set forth in this Section 2.5, no repayment or prepayment of all or anyportion of the Loan shall cause, give rise to a right to require, or otherwiseresult in, the release of any Lien of the Mortgage on the Property. If Borrowerhas elected to prepay the entire amount of the Loan pursuant to Section 2.3.1and the requirements of this Section 2.5 have been satisfied, the Propertyshall 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 of Borrower, uponpayment in full of all principal and interest on the Loan and all other amountsdue and payable under the Loan Documents in accordance with the terms and provisionsof Section 2.3.1 of this Loan Agreement, release the Lien of the Mortgage onthe Property not theretofore released.

 

2.5.2        Intentionally Omitted.

 

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Section 2.6             Manner of Making Payments.

 

2.6.1        Making of Payments. Each paymentby Borrower hereunder or under the Note shall be made in funds settled throughthe Automatic Clearing House Interbank Payments System or other fundsimmediately available to Lender by 1:00 p.m., Chicago 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 aBusiness Day, such payment shall be made on the next succeeding Business Day.

 

2.6.2        No Deductions, Etc. All paymentsmade by Borrower hereunder or under the Note or the other Loan Documents shallbe made irrespective of, and without any deduction for, any setoff, defense orcounterclaims.

 

2.6.3        Intentionally Omitted.

 

Section 2.7            Intentionally Omitted.

 

**ARTICLEIII**

 

**CONDITIONS PRECEDENT**

 

Section 3.1             Conditions Precedent to Closing.The obligation of Lender to make the Loan hereunder is subject to thefulfillment by Borrower or waiver by Lender of the following conditionsprecedent no later than the Closing Date:

 

3.1.1        Representations and Warranties;Compliance with Conditions. The representations and warranties of Borrowercontained in this Agreement and the other Loan Documents shall be true andcorrect in all material respects on and as of the Closing Date with the sameeffect as if made on and as of such date, and no Default or an Event of Defaultshall have occurred and be continuing; and Borrower shall be in compliance inall material respects with all terms and conditions set forth in this Agreementand in each other Loan Document on its part to be observed or performed.

 

3.1.2        Loan Agreement and Note. Lendershall have received a copy of this Agreement and the Note, in each case, dulyexecuted and delivered on behalf of Borrower.

 

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

 

(a)           Mortgage, Assignment of Leases andother Loan Documents. Lender shall have received from Borrower fullyexecuted and acknowledged counterparts of the Mortgage and theAssignment of Leases and evidence that counterparts of the Mortgage andAssignment of Leases have been delivered to the title company for recording, inthe reasonable judgment of Lender, so as to effectively create upon such recordingvalid and enforceable first priority Liens upon the Property in favor of Lender(or such trustee as may be required under local law), subject only to thePermitted Encumbrances and such other Liens as are permitted pursuant to theLoan Documents. Lender shall have also received from Borrower fully executedcounterparts of the Assignment of Management Agreement and the other LoanDocuments.

 

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(b)           Title Insurance.  Lender shall have received a Title InsurancePolicy issued by a title company acceptable to Lender and dated as of theClosing Date.  Such Title InsurancePolicy shall (i) provide coverage in an amount equal to the principal amount ofthe Loan together with, if applicable, a “tie-in” or similar endorsement, (ii)insure Lender that the Mortgage creates a valid first priority lien on theProperty encumbered thereby, free and clear of all exceptions from coverageother than Permitted Encumbrances and standard exceptions and exclusions fromcoverage (as modified by the terms of any endorsements), (iii) contain such endorsementsand affirmative coverages as Lender may reasonably request, 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 evidencethat all premiums in respect of such Title Insurance Policy have been paid.

 

(c)           Survey.  Lender shall have received a title survey forthe Property, certified to the title company and Lender and their successors andassigns, in form and content satisfactory to Lender and prepared by aprofessional 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: 1, 2, 3, 4, 6, 8,9, 10, 11, 13, 14, 15 and 16.  The surveyshall reflect the same legal description contained in the Title InsurancePolicy relating to the Property referred to in clause (ii) above and shallinclude, among other things, a legal description of the real property comprisingpart of such Property reasonably satisfactory to Lender. The surveyor’s sealshall be affixed to each survey and the surveyor shall provide a certificationfor each survey in form and substance acceptable to Lender.

 

(d)           Insurance.  Lender shall have received valid certificatesof insurance for the policies of insurance required hereunder, satisfactoryto Lender in its sole discretion, and evidence of the payment of all premiumspayable for the existing policy period.

 

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

 

(f)            Zoning.    With respect to the Property, Lender shallhave received, at Lender’s option, (i) letters or other evidence with respectto the Property from the appropriate municipal authorities (or other Persons)concerning applicable zoning and building laws, (ii) an ALTA 3.1 zoningendorsement to the Title Insurance Policy, if available or (iii) other evidenceof zoning compliance, in each case in substance reasonably satisfactory toLender.

 

(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 Mortgage,subject only to applicable Permitted Encumbrances and such other Liens as arepermitted pursuant to the Loan Documents, and Lender shall have receivedsatisfactory evidence thereof.

 

3.1.4        Related Documents. Eachadditional document not specifically referenced herein, but relating to thetransactions contemplated herein, shall have been duly authorized,

 

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executed and delivered by all parties thereto and Lender shall havereceived and approved certified copies thereof.

 

3.1.5        Delivery of Organizational Documents.   On or before the Closing Date, Borrowershall deliver or cause to be delivered to Lender copies certified by Borrowerof all organizational documentation related to Borrower and/or the formation,structure, existence, good standing and/or qualification to dobusiness, as Lender may request in its sole discretion, including, withoutlimitation, good standing certificates, qualifications to do business in the appropriatejurisdictions, resolutions authorizing the entering into of the Loan andincumbency certificates as may be requested by Lender.

 

3.1.6        Opinions of Borrower’s Counsel.Lender shall have received opinions of Borrower’s counsel (and if applicable,Borrower’s local counsel) (a) with respect to non-consolidationissues (an **“Insolvency Opinion”**) and (b) withrespect to due execution, authority, enforceability of the Loan Documents andsuch other matters as Lender may reasonably require, all such opinions in form,scope and substance reasonably satisfactory to Lender and Lender’s counsel intheir reasonable discretion.

 

3.1.7        Budgets. Borrower shall havedelivered, and Lender shall have approved, the Annual Budget for the currentFiscal Year.

 

3.1.8        Basic Carrying Costs. Borrowershall have paid all Basic Carrying Costs relating to the Property which are inarrears, including without limitation, (a) accrued but unpaidinsurance premiums relating to the Property, (b) currently due and payableTaxes (including any in arrears) relating to the Property, and (c) currentlydue Other Charges relating to the Property, which amounts shall be funded withproceeds of the Loan.

 

3.1.9        Completion of Proceedings. Allorganizational proceedings taken or to be taken in connection with thetransactions contemplated by this Agreement and other Loan Documents and alldocuments incidental thereto shall be reasonably satisfactory in form and substanceto Lender, and Lender shall have received all such counterpart originals orcertified copies of such documents as Lender may reasonably request.

 

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. Borrower shallexercise reasonable commercial efforts to deliver estoppel certificates fromTenants occupying not less than seventy-five percent (75%) of the grossleasable area of the Property; provided, however, that, in the event thatBorrower is unable to deliver some or all of the estoppels described above inthis Section 3.1.11, Lender agrees that the requirement to deliver such lettersto Lender shall be waived by Lender as a condition precedent to the closing ofthe Loan so long as Borrower delivers on or before the Closing Date, acertificate executed by Borrower with respect to all applicable leases whichshall be in substantially the same form and contain the same terms as set forthin Lender’s standard form of estoppel certificate.  At any time and from time to time, Lender mayrequest that Borrower obtain estoppel certificates from Tenants occupying theProperty.  If requested by

 

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Lender Borrower agrees to use commercially reasonable efforts to obtainthe estoppel certificates that Lender is requesting, which estoppelcertificates shall be in form and substance acceptable to Lender in itsreasonable discretion.

 

3.1.12      Transaction Costs. Borrower shallhave paid or reimbursed Lender for all title insurance premiums, recording andfiling fees or taxes, costs of environmental reports, Physical ConditionsReports, appraisals and other reports, the fees and costs Lender’s counsel andall other third party out-of-pocket expenses incurred in connection with theorigination 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 or the Propertysince the date of the most recent financial statements delivered to Lender.  The income and expenses of the Property, theoccupancy leases thereof, and all other features of the transaction shall be asrepresented to Lender without material adverse change.  Neither Borrower, any of its constituent Persons,shall be the subject of any bankruptcy, reorganization, or insolvencyproceeding.

 

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 received appropriate instrumentsacceptable to Lender in its commercially reasonable discretion subordinatingany Leases of record prior to the Mortgage and including an agreement by suchTenants to attorn to Lender in the event of a foreclosure or delivery of a deedin lieu thereof.

 

3.1.16      Tax Lot. Lender shall have receivedevidence that the Property constitutes one (1) or more separate tax lots, whichevidence shall be reasonably satisfactory in form and substance to Lender.

 

3.1.17      Physical Conditions Reports.     Lender shall have received Physical ConditionsReports with respect to the Property, which reports shall be reasonablysatisfactory 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. Lender acknowledges that it has reviewed the Management Agreement, andas drafted, such Management Agreement does not violate Borrower’s covenant thataffiliated agreements be 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.

 

3.1.19      Appraisal.  Lender shall have received an appraisal of theProperty, which shall be satisfactory in form and substance to Lender.

 

3.1.20      Financial Statements. Lender shallhave received (a) a balance sheet with respect to the Property for the two mostrecent Fiscal Years and statements of income and

 

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statements of cash flows with respect to the Property for the threemost recent Fiscal Years, each in form and substance reasonably satisfactory toLender or (b) such other financial statements relating to the ownership andoperation of the Property, in form and substance reasonably satisfactory toLender.

 

3.1.21      Further Documents. Lender or itscounsel shall have received such other and further approvals, opinions,documents and information as Lender or its counsel may have reasonably requestedincluding the Loan Documents in form and substance reasonably satisfactory toLender 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.

 

**ARTICLEIV**

 

**REPRESENTATIONS AND WARRANTIES**

 

Section 4.1            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 thisAgreement and the other Loan Documents. This Agreement and such other Loan Documents have been duly executed anddelivered by or on behalf of Borrower and constitute legal, valid and bindingobligations of Borrower enforceable against Borrower in accordance with theirrespective terms, subject only to applicable bankruptcy, insolvency and similarlaws affecting rights of creditors generally, and subject, as to enforceability,to general principles of equity (regardless of whether enforcement is sought ina proceeding in equity or at law).

 

4.1.3        No Conflicts. The execution,delivery and performance of this Agreement and the other Loan Documents byBorrower will not conflict with or result in a breach of any of the terms orprovisions of, or constitute a default under, or result in the creation orimposition of any lien, charge or encumbrance (other than pursuant to the LoanDocuments) upon any of the property or assets of Borrower pursuant to the termsof any indenture, mortgage, deed of trust, loan agreement, partnershipagreement or other agreement or instrument to which Borrower is a

 

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party or bywhich any of Borrower’s property or assets is subject, nor will such actionresult in any violation of the provisions of any statute or any order, rule orregulation of any court or governmental agency or body having jurisdiction overBorrower or any 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 indefault in any material respect in the performance, observance or fulfillmentof any of the obligations, covenants or conditions contained in any agreementor instrument to which it is a party or by which Borrower or the Property arebound.  Borrower has no materialfinancial obligation under any indenture, mortgage, deed of trust, loanagreement or other agreement or instrument to which Borrower is a party or bywhich Borrower or the Property is otherwise bound, other than (a) obligations incurredin the ordinary course of the operation of the Property and (b) obligationsunder 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. The Mortgage,when properly recorded in the appropriate records, together with any Uniform CommercialCode financing statements required to be filed in connection therewith, willcreate (a) a valid, perfected lien on the Property, subject only to PermittedEncumbrances and the Liens created by the Loan Documents and (b) perfectedsecurity interests in and to, and perfected collateral assignment of, allpersonalty (including the Leases), all in accordance with the terms thereof, ineach case subject only to any applicable Permitted Encumbrances, such otherLiens as are permitted pursuant to the Loan Documents and the Liens created bythe Loan Documents. There are no claims for payment for work, labor ormaterials affecting the Property which are due and unpaid under the contractspursuant to which such work or labor was performed or materials provided whichare or may become a lien prior to, or of equal priority with, the Liens createdby the Loan Documents.

 

4.1.7        Solvency; No Bankruptcy Filing.   Borrower (a) has not entered into the transactionor executed the Note, this Agreement or any other Loan Documents with theactual intent to hinder, delay or defraud any creditor and (b) receivedreasonably equivalent value in

 

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exchange for its obligationsunder such Loan Documents. Giving effect to the Loan, the fair saleable valueof Borrower’s assets exceeds and will, immediately following the making of theLoan, exceed Borrower’s total liabilities, including, without limitation,subordinated, unliquidated, disputed and contingent liabilities. The fairsaleable value of Borrower’s assets is and will, immediately following themaking of the Loan, be greater than Borrower’s probable liabilities, includingthe maximum amount of its contingent liabilities on its debts as such debtsbecome 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 account thetiming 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 factmade by Borrower in this Agreement or in any of the other Loan Documentscontains any untrue statement of a material fact or omits to state any materialfact necessary to make statements contained herein or therein not misleading.There is no material fact presently known to Borrower which has not beendisclosed to Lender which adversely affects, nor as far as Borrower canforesee, might adversely affect, the Property or the business, operations or condition(financial or otherwise) of Borrower.

 

4.1.9        No Plan Assets.   Borroweris not an “employee benefit plan,” as defined in Section 3(3) of ERISA, subjectto Title I of ERISA, and none of the assets of Borrower constitutes or willconstitute “plan assets” of one or more such plans within the meaning of 29 C.F.R.Section 2510.3-101. In addition, (a) Borrower is not a “governmental plan”within the meaning of Section 3(32) of ERISA and (b) transactions by or withBorrower 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 in effect,which prohibit or otherwise restrict the transactions contemplated by this LoanAgreement.

 

4.1.10      Compliance.   ToBorrower’s knowledge, Borrower and the Property and the use thereof comply inall material respects with all applicable Legal Requirements, including, withoutlimitation, building and zoning ordinances and codes.  Borrower is not in default or violation of anyorder, writ, injunction, decree or demand of any Governmental Authority.  There has not been committed by Borrower or,to Borrower’s knowledge, any other Person in occupancy of or involved with theoperation or use of the Property any act or omission affording the federalgovernment or any other Governmental Authority the right of forfeiture asagainst the

 

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Property or any part thereof or any monies paid in performance ofBorrower’s obligations under any of the Loan Documents.

 

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 bestof Borrower’s knowledge, true, complete and correct in all material respects,(ii) accurately represent the financial condition of the Property as of thedate of such reports, and (iii) to the extent prepared or audited by anindependent certified public accounting firm, have been prepared in accordancewith accounting principles reasonably acceptable to Lender, consistentlyapplied throughout the periods covered, except as disclosed therein; provided,however, that if any financial data is delivered to Lender by any Personother than Borrower, Indemnitor or any of their Affiliates, or if suchfinancial data has been prepared by or at the direction of any Person otherthan Borrower, Indemnitor or any of their Affiliates, then the foregoingrepresentations with respect to such financial data shall be to the best of Borrower’sknowledge, after due inquiry. Borrower does not have any contingentliabilities, liabilities for taxes, unusual forward or long-term commitments orunrealized or anticipated losses from any unfavorable commitments that areknown to Borrower and reasonably likely to have a materially adverse effect onthe Property or the operation thereof as a retail shopping center, except asreferred to or reflected in said financial statements. 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 usedfor the purpose of purchasing or acquiring any “margin stock” within themeaning of Regulation U of the Board of Governors of the Federal Reserve Systemor for any other purpose which would be inconsistent with such Regulation U orany other Regulations of such Board of Governors, or for any purposesprohibited by Legal Requirements or by the terms and conditions of thisAgreement or the other Loan Documents.

 

4.1.14      Utilities and Public Access.   The Property has rights of access to public waysand is served by water, sewer, sanitary sewer and storm drain facilitiesadequate to service the Property for its respective intended uses. All publicutilities necessary or convenient to the full use and enjoyment of the Propertyare located either in the public right-of-way abutting the Property (which areconnected so as to serve the Property without passing over other property) or inrecorded easements serving the Property and such easements are set forth in andinsured by the Title Insurance Policy. All roads necessary for the use of theProperty for their current respective purposes have been completed anddedicated to public use and accepted by all Governmental Authorities.

 

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

 

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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 Leasesor any portion of the Rents by Borrower or any of its predecessors in interest,given as collateral security which are 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.  The Property is used exclusively for retailpurposes and other appurtenant and related uses.

 

4.1.22      Certificate of Occupancy: Licenses.   All certifications, permits, licenses andapprovals, including without limitation, certificates of completion andoccupancy permits required to be obtained by Borrower for the legal use,occupancy and operation of the Property as a retail shopping center have beenobtained 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 and occupancypermits required to be obtained by any Person other than Borrower for the legaluse, occupancy and operation of the Property as a retail shopping center, havebeen obtained and are in full force and effect (all of the foregoingcertifications, permits, licenses and approvals are collectively referred to asthe **“Licenses”**). Borrower shall andshall cause all other Persons to, keep and maintain all licenses necessary forthe 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 the best of Borrower’s knowledge, afterdue inquiry, no Improvements on the Property are located in an area identifiedby the Federal Emergency Management Agency as an area having special floodhazards.

 

4.1.24      Physical Condition.   Except as disclosed in the PhysicalConditions Reports delivered to Lender in connecting with this Loan, toBorrower’s knowledge, the

 

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Property,including, without limitation, all buildings, improvements, parking facilities,sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fireprotection systems, electrical systems, equipment, elevators, exterior sidingsand doors, landscaping, irrigation systems and all structural components, arein good condition, order and repair in all material respects; there exists nostructural or other material defects or damages in the Property, whether latentor otherwise, and Borrower has not received notice from any insurance company orbonding company of any defects or inadequacies in the Property, or any partthereof, which would adversely affect the insurability of the same or cause theimposition of extraordinary premiums or charges thereon or of any terminationor threatened termination of any policy 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 the Propertyencroach 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 IVhereto and made a part hereof. To the best of Borrower’s knowledge after dueinquiry, no Person has any possessory interest in the Property or right tooccupy the same except under and pursuant to the provisions of the Leases, Thecurrent Leases are in full force and effect and to Borrower’s knowledge afterinquiry, there are no defaults thereunder by either party and there are noconditions that, with the passage of time or the giving of notice, or both,would constitute defaults thereunder. To the best of Borrower’s knowledge afterdue inquiry, no Rent (including security deposits) has been paid more than one (1)month in advance of its due date. To the best of Borrower’s knowledge after dueinquiry, all work to be performed by Borrower under each Lease has beenperformed as required and has been accepted by the applicable tenant, and anypayments, free rent, partial rent, rebate of rent or other payments, credits,allowances or abatements required to be given by Borrower to any tenant hasalready been received by such tenant. To the best of Borrower’s knowledge afterdue inquiry, there has been no prior sale, transfer or assignment,hypothecation or pledge of any Lease or of the Rents received therein which isoutstanding. To. Borrower’s knowledge after inquiry, except as set forth on ScheduleIV, no tenant listed on Schedule IV has assigned its Lease or subletall or any portion of the premises demised thereby, no such tenant holds its leasedpremises under assignment or sublease, nor does anyone except such tenant andits employees occupy such leased premises. No tenant under any Lease has aright or option pursuant to such Lease or otherwise to purchase all or any partof the leased premises or the building of which the leased premises are a part.Except as set forth in Schedule IV, no tenant under any Lease has anyright or option for additional space in the Improvements except as set forth inSchedule IV. To Borrower’s actual knowledge based on the Environmental Reportdelivered to Lender in connection herewith, no hazardous wastes or toxicsubstances, as defined by applicable federal, state or local statutes, rulesand regulations, have been disposed, stored or treated by any tenant under anyLease on or about the leased premises nor does Borrower have any knowledge ofany tenant’s intention to use its leased premises for any activity which, directlyor indirectly, involves the use, generation, treatment, storage, disposal ortransportation of any petroleum product or any toxic or hazardous chemical,material, substance or waste,

 

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except ineither event, in compliance with applicable federal, state or local statues,rules and regulations.

 

4.1.27      Survey.   The Survey for the Property delivered toLender in connection with this Agreement has been prepared in accordance withthe provisions of Section 3.1.3(c) hereof, and does not fail to reflect anymaterial matter affecting the Property or the title thereto.

 

4.1.28      Loan to Value.   The maximum principal amount of the Notedoes not exceed one hundred twenty-five percent (125%) of the fair market valueof the Property as set forth on the appraisal of the Property delivered toLender.

 

4.1.29      Filing and Recording Taxes.   All transfer taxes, deed stamps, intangible taxesor other amounts in the nature of transfer taxes required to be paid by anyPerson under applicable Legal Requirements currently in effect in connectionwith the acquisition of the Property by Borrower have been paid or aresimultaneously being paid. All mortgage, mortgage recording, stamp, intangibleor other similar tax required to be paid by any Person under applicable LegalRequirements currently in 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 paidin full, Borrower hereby represents, warrants and covenants that the Borroweris, shall be and shall continue to be a Special Purpose Entity. If Borrowerconsists of more than one Person, each such Person shall be a Special PurposeEntity.

 

(b)           The representations, warranties andcovenants set forth in Section 4.1.30(a) shall survive for so long as anyamount remains payable to Lender under this Agreement or any other LoanDocument.

 

(c)           Any and all of the assumptions madein any Insolvency Opinion, including, but not limited to, any exhibits attachedthereto, will have been and shall be true and correct in all respects, andBorrower will have complied and will comply with all of the assumptions madewith respect 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.   TheManagement Agreement is in full force and effect and, to Borrower’s knowledge,there is no default thereunder by any party thereto and no event has occurredthat, with the passage of time and/or the giving of notice would constitute a defaultthereunder.

 

4.1.32      Illegal Activity.   To Borrower’s knowledge, no portion of theProperty has been or will be purchased with proceeds of any illegal activity.

 

4.1.33      No Change in Facts or Circumstances:Disclosure.   All information submittedby Borrower to Lender and in all financial statements, rent rolls, reports,certificates

 

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and otherdocuments submitted in connection with the Loan or in satisfaction of the termsthereof and all statements of fact made by Borrower in this Agreement or in anyother Loan Document, are accurate, complete and correct in all materialrespects, provided, however, that if such information was provided to Borrowerby non-affiliated third parties, Borrower represents that such information is,to the best of its knowledge after due inquiry, accurate, complete and correctin all material respects. There has been no material adverse change in anycondition, fact, circumstance or event that would make any such informationinaccurate, incomplete or otherwise misleading in any material respect or thatotherwise materially and adversely affects or might materially and adverselyaffect the Property or the business operations or the financial condition ofBorrower. Borrower has disclosed to Lender all material facts and has notfailed to disclose any material fact that could cause any representation orwarranty made herein to be materially misleading.

 

4.1.34      Investment Company Act.  Borrower is not (a) an “investment company” ora company “controlled” by an “investment company,” within the meaning of theInvestment Company Act of 1940, as amended; (b) a “holding company” or a “subsidiarycompany” of a “holding company” or an “affiliate” of either a “holding company”or a “subsidiary company” within the meaning of the Public Utility HoldingCompany Act of 1935, as amended; or (c) subject to any other federal or statelaw or regulation which purports to restrict or regulate its ability to borrowmoney.

 

4.1.35      Principal Place of Business andOrganization. Borrower shall not change its principal place of business setforth in the introductory paragraph of this Agreement without first givingLender thirty (30) days prior written notice. Borrower shall not change theplace of its organization as set forth in the introductory paragraph of thisAgreement without the consent of Lender, which consent shall not beunreasonably withheld, conditioned or delayed. Upon Lender’s request, Borrowershall execute and deliver additional financing statements, security agreementsand other instruments which may be necessary to effectively evidence or perfectLender’s security interest in the Property as a result of such change ofprincipal place of business or place of organization.

 

4.1.36      OFAC.    Borrower represents and covenants that it is not and will not becomea person (individually, a **“Prohibited Person”**and collectively **“Prohibited Persons”**) listedon the Specially Designated Nationals and Blocked Persons List maintained bythe Office of Foreign Asset Control, U.S. Department of the Treasury (the **“OFAC List”**) or otherwise subject to any otherprohibitions or restriction imposed by laws, regulations or executive orders,including Executive Order No. 13224, administered by OFAC (as may be amendedfrom time to time, collectively the **“OFAC Rules”**). Borrower represents and covenants thatit also (i) is not and will not become owned or controlled by a ProhibitedPerson, (ii) is not acting and will not act for or on behalf of a ProhibitedPerson, (iii) is not otherwise associated with and will not become associatedwith a Prohibited Person, (iv) is not providing and will not provide anymaterial, financial or technological support for or financial or other serviceto or in support of acts of terrorism or a Prohibited Person. Borrower will nottransfer any interest in Borrower to or enter into a Lease with any ProhibitedPerson. Borrower shall immediately notify Lender if Borrower has actualknowledge (after commercially reasonable due diligence and inquiry) thatIndemnitor or any member or beneficial owner of Borrower or Indemnitor is orbecomes a Prohibited Person or (A) is indicted on or (B) arraigned and heldover on charges involving

 

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moneylaundering or predicate crimes to money laundering. Borrower will not enterinto any lease or undertake any activities related to this Agreement inviolation of the federal Bank Secrecy Act (as amended from time to time, the **“BSA”**), 31 U.S.C. § 5311, et seq. or any federal or statelaws, including but not limited to 18 U.S.C. §§ 1956, 1957 and 1960,prohibiting money laundering and terrorist financing (as amended from time totime, collectively the **“Anti-Money LaunderingLaws”**). Borrower shall provide information as Lender may requirefrom time to time to permit Lender to satisfy its obligations under the OFACRules and/or the Anti-Money Laundering Laws. Borrower shall immediately notifyLender if to Borrower’s actual knowledge (after commercially reasonable duediligence and inquiry) any Tenant becomes a Prohibited Person or (A) isconvicted of, (B) pleads nolo contendere to, (C) is indicted on, or (D) isarraigned and held over on charges involving money laundering or predicatecrimes to money laundering. In addition to the foregoing, Borrower agrees toindemnify, defend and hold harmless Lender for any actual Losses suffered orincurred (as applicable) by Lender if Borrower does not comply with thisSection 4.1.36 or any of the provisions and requirements of the OFAC Rules, BSAand/or any Anti-Money Laundering Laws.

 

Section 4.2             Survival of Representations.  Borrower agrees that all of therepresentations and warranties of Borrower set forth in Section 4.1 andelsewhere in this Agreement and in the other Loan Documents shall survive forso long as any amount remains owing to Lender under this Agreement or any ofthe other Loan Documents by Borrower. All representations, warranties, covenantsand agreements made in this Agreement or in the other Loan Documents byBorrower shall be deemed to have been relied upon by Lender notwithstanding anyinvestigation heretofore or hereafter made by Lender or on its behalf.

 

**ARTICLE V**

 

**BORROWER COVENANTS**

 

Section 5.1             Affirmative Covenants.   From the Closing Date and until payment andperformance in full of all obligations of Borrower under the Loan Documents orthe earlier release of the Lien of the Mortgage encumbering the Property (andall related obligations) in accordance with the terms of this Agreement and theother Loan Documents, Borrower hereby covenants and agrees with Lender that:

 

5.1.1        Existence: Compliance with LegalRequirements: Insurance. Borrower shall do or cause to be done all thingsnecessary to preserve, renew and keep in full force and effect its existence,rights, licenses, permits and franchises and comply with all Legal Requirementsapplicable to it and the Property. Borrower shall not commit, nor shallBorrower permit any other Person in occupancy of or involved with the operationor use of the Property to commit, any act or omission affording the federalgovernment or any state or local government the right of forfeiture as againstthe Property or any part thereof or any monies paid in performance of Borrower’sobligations under any of the Loan Documents. Borrower hereby covenants andagrees not to commit, permit or suffer to exist any act or omission affordingsuch right of forfeiture. Borrower shall at all times maintain, preserve andprotect all its franchises and trade names and preserve all the remainder ofits property used or useful in the conduct of its business and shall keep theProperty in good working order and repair, and from time to time make, or causeto be made, all reasonably necessary repairs, renewals, replacements,betterments

 

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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 lega1 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 proceeding shallbe conducted in accordance with all applicable statutes, laws and ordinances;(iv) the Property or any part thereof or interest therein will not be in dangerof being sold, forfeited, terminated, cancelled or lost; (v) Borrower shallpromptly upon final determination thereof comply with any such LegalRequirement determined to be valid or applicable or cure any violation of anyLegal Requirement; (vi) such proceeding shall suspend the enforcement of thecontested 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 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. Borrowershall pay or cause to be paid all Taxes and Other Charges now or hereafterlevied or assessed or imposed against the Property or any part thereof as thesame become due and payable; provided, however, Borrower’sobligation to directly pay to the appropriate taxing authority Taxes shall besuspended for so long as Borrower complies with the terms and provisions ofSection 7.2 hereof. Borrower will deliver to Lender receipts for payment orother evidence satisfactory to Lender that the Taxes and Other Charges havebeen so paid or are not then delinquent no later than ten (10) days prior tothe date on which the Taxes and/or Other Charges would otherwise be delinquentif not paid (provided, however, that Borrower is not required tofurnish such receipts for payment of Taxes in the event that such Taxes havebeen paid by Lender pursuant to Section 7.2 hereof). If Borrower pays orcauses to be paid all Taxes and Other Charges and provides a copy of thereceipt evidencing the payment thereof to Lender, then Lender shall reimburseBorrower, provided that there are then sufficient proceeds in the Tax and InsuranceEscrow Fund and provided that the Taxes are being paid pursuant to Section 7.2.Upon written request of Borrower, if Lender has paid such Taxes pursuant toSection 7.2 hereof, Lender shall provide Borrower with evidence that such Taxeshave been paid. Borrower shall not suffer and shall promptly cause to be paidand discharged any Lien or charge whatsoever which may be or become a Lien orcharge against the Property, and shall promptly pay for all utility servicesprovided to the Property. After prior written notice to Lender, Borrower, atits own expense, may contest by appropriate legal proceeding, promptlyinitiated and conducted in good faith and with due diligence, the amount orvalidity or application in whole or in part of any Taxes or Other Charges,provided that (i) Borrower is

 

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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 part thereof held by Lender to theclaimant entitled thereto at any time when, in the reasonable judgment ofLender, the entitlement of such claimant is established.

 

5.1.3        Litigation.   Borrower shall give prompt written notice toLender of any litigation or governmental proceedings pending or threatened againstBorrower 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, representativesand employees of Lender to inspect the Property or any part thereof atreasonable hours upon reasonable advance notice, subject to the rights ofTenants under their respective Leases.

 

5.1.5        Notice of Default.   Borrower shall promptly advise Lender of anymaterial adverse change in Borrower’s condition, financial or otherwise, or ofthe occurrence of any Default or Event of Default of which Borrower hasknowledge.

 

5.1.6        Cooperate in Legal Proceedings.   Borrower shall cooperate fully with Lenderwith respect to any proceedings before any court, board or other GovernmentalAuthority which may in any way affect the rights of Lender hereunder or anyrights obtained by Lender under any of the other Loan Documents and, inconnection therewith, permit Lender, at its election, to participate in anysuch proceedings.

 

5.1.7        Perform Loan Documents.   Borrower shall observe, perform and satisfyall the terms, provisions, covenants and conditions of, and shall pay when dueall costs, fees and expenses to the extent required under the Loan Documentsexecuted and delivered by, or applicable to, Borrower.

 

5.1.8        Insurance Benefits.   Borrower shall cooperate with Lender inobtaining for Lender the benefits of any Insurance Proceeds lawfully orequitably payable in connection with the Property, and Lender shall be reimbursedfor any expenses incurred in connection therewith (including reasonableattorneys’ fees and disbursements, and the payment by Borrower of the expenseof 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 andexpense:

 

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(a)           furnish to Lender all instruments,documents, boundary surveys, footing or foundation surveys, certificates, plansand specifications, appraisals, title and other insurance reports andagreements, and each and every other document, certificate, agreement andinstrument required to be furnished by Borrower pursuant to the terms of theLoan Documents or reasonably requested by Lender in connection therewith;

 

(b)           execute and deliver to Lender suchdocuments, instruments, certificates, assignments and other writings, and dosuch other acts necessary or desirable, to evidence, preserve and/or protectthe collateral at any time securing or intended to secure the obligations ofBorrower under the Loan Documents, as Lender may reasonably require; and

 

(c)           do and execute all and such furtherlawful and reasonable acts, conveyances and assurances for the better and moreeffective carrying out of the intents and purposes of this Agreement and theother Loan Documents, as Lender shall reasonably require from time to time.

 

5.1.10      Intentionally Omitted.

 

5.1.11      Financial Reporting.   (a)Borrower will keep and maintain or will cause to be kept and maintained on aFiscal Year basis, in accordance with the requirements for a Special PurposeEntity set forth above, proper and accurate books, records and accountsreflecting all of the financial affairs of Borrower and all items of income andexpense in connection with the operation on an individual basis of theProperty. Lender shall have the right from time to time at all times duringnormal business hours upon reasonable notice to examine such books, records andaccounts at the office of Borrower or other Person maintaining such, books,records and accounts and to make such copies or extracts thereof as Lendershall desire. After the occurrence and during the continuance of an Event ofDefault, Borrower shall pay any costs and expenses incurred by Lender toexamine Borrower’s accounting records with respect to the Property, as Lendershall reasonably determine to be necessary or appropriate in the protection ofLender’s interest.

 

(b)           Borrower will furnish to Lenderannually, within ninety (90) days following the end of each Fiscal Year ofBorrower, either (i) a complete copy of Borrower’s annual financial statementsaudited by an accounting firm or other independent certified public accountantreasonably acceptable to Lender in accordance with the requirements for aSpecial Purpose Entity set forth above, or (ii) a consolidated and annotatedfinancial statement of Borrower and Sole Member (as applicable), audited by anaccounting firm or other independent certified public accountant reasonablyacceptable to Lender in accordance with the requirements for a Special PurposeEntity set forth above, together with unaudited financial statements relatingto the Borrower and the Property. Such financial statements for the Propertyfor such Fiscal Year and shall contain statements of profit and loss forBorrower and the Property and a balance sheet for Borrower.  Such statements shall set forth the financialcondition and the results of operations for the Property for such Fiscal Year,and shall include, but not be limited to, amounts representing annual Net CashFlow, Net Operating Income, Gross Income from Operations and OperatingExpenses. Borrower’s annual financial statements shall be accompanied by (i) acomparison of the budgeted income and expenses and the actual income andexpenses for the prior Fiscal Year, (ii) a certificate executed by the chieffinancial officer of Borrower or Sole

 

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Member, as applicable,stating that each such annual financial statement presents fairly the financialcondition and the results of operations of Borrower and the Property beingreported upon and has been prepared in accordance with accounting principlesreasonably acceptable to Lender, consistently applied, (iii) an unqualifiedopinion of an accounting firm or other independent certified public accountantreasonably acceptable to Lender, (iv) a certified rent roll containing currentrent, lease expiration dates and the square footage occupied by each tenant;(V)**a schedule audited by suchindependent certified public accountant reconciling Net Operating Income to NetCash Flow (the **“Net****Cash FlowSchedule****”**),****whichshall itemize all adjustments made to Net Operating Income to arrive at NetCash Flow deemed material by such independent certified public accountant.Together with Borrower’s annual financial statements, Borrower shall furnish toLender an Officer’s Certificate certifying as of the date thereof whether thereexists an event or circumstance which constitutes a Default or Event of Defaultunder the Loan Documents executed and delivered by, or applicable to, Borrower,and if such Default or Event of Default exists, the nature thereof, the periodof time it has existed and the action then being taken to remedy the same.

 

(c)           Borrower will furnish, or cause to befurnished, to Lender on or before forty five (45) days after the end of eachcalendar quarter the following items, accompanied by a certificate of the chieffinancial officer of Borrower or Sole Member, as applicable, stating that suchitems are true, correct, accurate, and complete and fairly present thefinancial condition and results of the operations of Borrower and the Property(subject to normal year-end adjustments) as applicable: (i) a rent roll for thesubject month accompanied by an Officer’s Certificate with respect thereto;(ii) quarterly and year-to-date operating statements (including Capital Expenditures)prepared for each calendar quarter, noting Net Operating Income, Gross Income fromOperations, and Operating Expenses (not including any contributions to theReplacement Reserve Fund, and other information necessary and sufficient tofairly represent the financial position and results of operation of theProperty during such calendar month, and containing a comparison of budgetedincome and expenses and the actual income and expenses together with a detailedexplanation of any variances of five percent (5%) or more between budgeted and actualamounts for such periods, all in form satisfactory to Lender; (iii) acalculation reflecting the annual Debt Service Coverage Ratio for theimmediately preceding twelve (12) month period as of the last day of such monthaccompanied by an Officer’s Certificate with respect thereto; and (iv) a NetCash Flow Schedule (such Net Cash Flow for the Borrower may be unaudited if it iscertified by an officer of the Borrower). In addition, such certificate shallalso be accompanied by a certificate of the chief financial officer of Borroweror Sole Member stating that the representations and warranties of Borrower setforth in Section 4.1.30(a) are true and correct as of the date of suchcertificate.

 

(d)           Intentionally deleted.

 

(e)           Borrower shall furnish to Lender,within ten (10) Business Days after request (or as soon thereafter as may bereasonably possible), such further detailed information with respect to theoperation of the Property and the financial affairs of Borrower as may be reasonablyrequested by Lender.

 

(f)            Borrower shall furnish to Lender,within ten (10) Business Days after Lender’s request (or as soon thereafter asmay be reasonably possible), financial and sales

 

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information from any Tenant designated by Lender (to the extent suchfinancial and sales information is required to be provided under the applicableLease and same is received by Borrower after request therefor).

 

(g)           Borrower will cause Indemnitor tofurnish to Lender annually, within one hundred twenty (120) days following theend of each Fiscal Year of Indemnitor, Indemnitor’s 10K and/or 10Q filings.

 

(h)           Any reports, statements or otherinformation required to be delivered under this Agreement shall be delivered(i) in paper form, (ii) on a diskette, and (iii) if requested by Lender andwithin the capabilities of Borrower’s data systems without change ormodification thereto, in electronic form and prepared using a Microsoft Wordfor Windows or WordPerfect for Windows files (which files may be prepared usinga spreadsheet program and saved as word processing files).

 

5.1.12      Business and Operations.  Borrower will continue to engage in the businessespresently conducted by it as and to the extent the same are necessary for the ownership,maintenance, management and operation of the Property. Borrower will qualify todo business and will remain in good standing under the laws of eachjurisdiction as and to the extent the same are required for the ownership,maintenance, management and operation of the Property.

 

5.1.13      Title to the Property.   Borrower will warrant and defend (a) thetitle to the Property and every part thereof, subject only to Liens permittedhereunder (including Permitted Encumbrances) and (b) the validity and priorityof the Liens of the Mortgage and the Assignment of Leases on the Property,subject only to Liens permitted hereunder (including Permitted Encumbrances),in each case against the claims of all Persons whomsoever. Borrower shall reimburseLender for any losses, costs, damages or expenses (including reasonableattorneys’ fees and court costs) incurred by Lender if an interest in theProperty, other than as permitted hereunder, is claimed by another Person.

 

5.1.14      Costs of Enforcement.   In the event (a) that the Mortgageencumbering the Property is foreclosed in whole or in part or that the Mortgageis put into the hands of an attorney for collection, suit, action orforeclosure, (b) of the foreclosure of any mortgage prior to or subsequent tothe Mortgage encumbering the Property in which proceeding Lender is made a party,or (c) of the bankruptcy, insolvency, rehabilitation or other similarproceeding in respect of Borrower or any of its constituent Persons or anassignment by Borrower or any of its constituent Persons for the benefit of itscreditors, Borrower, its successors or assigns, shall be chargeable with andagrees to pay all costs of collection and defense, including reasonable attorneys’fees and costs, incurred by Lender or Borrower in connection therewith and in connectionwith any appellate proceeding or post-judgment action involved therein,together with all required service or use taxes.

 

5.1.15      Estoppel Statement.   (a)  After request by Lender,Borrower shall within ten (10) days furnish Lender with a statement, dulyacknowledged and certified, setting forth (i) the amount of the originalprincipal amount of the Note, (ii) the unpaid principal amount of the Note,(iii) the applicable interest rate of the Note, (iv) the date installments ofinterest and/or

 

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principal were last paid, (v) any offsets or defenses to the payment ofthe Debt, if any, and (vi) that the Note, this Agreement, the Mortgage and theother Loan Documents are valid, legal and binding obligations and have not beenmodified or if modified, giving particulars of such modification.

 

(b)           Borrower shall use commerciallyreasonable efforts to deliver to Lender upon request, tenant estoppelcertificates from. each commercial tenant leasing space at the Property in formand substance reasonably satisfactory to Lender provided that Borrower shall notbe required to deliver such certificates more frequently than one (1) time inany calendar year.

 

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

 

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

 

5.1.17      Performance by Borrower.   Borrower shall in a timely manner observe, performand fulfill each and every covenant, term and provision of each Loan Document executedand delivered by, or applicable to, Borrower, and shall not enter into orotherwise suffer or permit any amendment, waiver, supplement, termination orother modification of any Loan Document executed and delivered by, orapplicable to, Borrower without the prior written consent of Lender.

 

5.1.18      Confirmation of Representations.   Borrower shall deliver, in connection withany Securitization, (a) one or more Officer’s Certificates certifying as to theaccuracy of all representations made by Borrower in the Loan Documents as ofthe date of the closing of such Securitization, and (b) certificates of therelevant Governmental Authorities in all relevant jurisdictions indicating thegood standing and qualification of Borrower and its member as of the date ofthe Securitization.

 

5.1.19      No Joint Assessment.   Borrower shall not suffer, permit or initiatethe joint assessment of the Property (a) with any other real propertyconstituting a tax lot separate from the Property, and (b) which constitutesreal property with any portion of the Property which may be deemed toconstitute personal property, or any other procedure whereby the lien of anytaxes which may be levied against such personal property shall be assessed orlevied or charged to such real property portion of the Property.

 

5.1.20      Leasing Matters.   AnyLeases with respect to the Property written after the Closing Date for morethan the Relevant Leasing Threshold square footage shall be subject to the priorwritten approval of Lender, which approval may be given or withheld in the solediscretion of Lender. Lender shall approve or disapprove any such Lease withinten (10) Business Days of Lender’s receipt of a final execution draft of suchLease (including all exhibits, schedules, supplements, addenda or otheragreements relating thereto) and a written notice from Borrower requestingLender’s approval to such Lease, and such Lease shall be deemed approved, ifLender does not disapprove such Lease within said ten (10) Business Day periodprovided such written

 

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noticeconspicuously states, in large bold type, that **“PURSUANT TO SECTION****5.1.20 OF THE LOAN AGREEMENT, THE LEASE SHALL BE DEEMED APPROVED IF LENDER DOES NOTRESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS DAYS OF LENDER’S RECEIPT OF SUCH LEASE AND WRITTEN NOTICE”. **Borrower shall furnish Lender withexecuted copies of all Leases. All renewals of Leases and all proposed Leasesshall provide for rental rates comparable to existing local market rates(unless such rental rates are otherwise set forth in the Leases executed priorto the Closing Date). All proposed Leases shall be on commercially reasonableterms and shall not contain any terms which would materially affect Lender’srights under the Loan Documents. All Leases executed after the Closing Dateshall provide that they are subordinate to the Mortgage encumbering theProperty and that the tenant thereunder agrees to attorn to Lender or anypurchaser at a sale by foreclosure or power of sale. Borrower (i) shall observeand perform the obligations imposed upon the lessor under the Leases in acommercially 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 the value of the Property involved except that no termination byBorrower or acceptance of surrender by a tenant of any Lease shall be permittedunless by reason of a tenant default and then only in a commercially reasonablemanner to preserve and protect the Property; provided, however,that no such termination or surrender of any Lease covering more than theRelevant Leasing Threshold will be permitted without the written consent ofLender which consent may be withheld in the sole discretion of Lender; (iii)shall not collect any of the rents more than one (1) month in advance (otherthan security deposits); (iv) shall not execute any other assignment of lessor’sinterest in the Leases or the Rents (except as contemplated by the LoanDocuments); (v) shall not alter, modify or change the terms of the Leases in amanner inconsistent with the provisions of the Loan Documents without the priorwritten consent of Lender, which consent may be withheld in the sole discretionof Lender; and (vi) shall execute and deliver at the request of Lender all suchfurther assurances, confirmations and assignment in connection with the Leasesas Lender shall from time to time reasonably require. Notwithstanding theforegoing, Borrower may, without the prior written consent of Lender, terminateany Lease which demises less than the Relevant Leasing Threshold under any ofthe following circumstances: (i) the tenant under said Lease is in defaultbeyond any applicable grace and cure period, and Borrower has the right toterminate such Lease; (ii) such termination is permitted by the terms of theLease in question and Borrower has secured an obligation from a third party tolease the space under the Lease to be terminated at a rental equal to or higherthan the rental due under the Lease to be terminated; and (iii) if the tenantunder the Lease to be terminated, has executed a right under said Lease toterminate its lease upon payment of a termination fee to Borrower, and has infact terminated its lease and paid said fee, Borrower may accept saidtermination.

 

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

 

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Closing Date,(b) tenant improvement work performed pursuant to the terms and provisions of aLease and not adversely affecting any structural component of any Improvements,any utility or HVAC system contained in any Improvements or the exterior of anybuilding constituting 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 $100,000.00 in the aggregatefor all components thereof which constitute such alteration or anynon-structural alteration which costs less than $250,000.00 in the aggregatefor all components thereof which constitute such alteration. If the totalunpaid amounts due and payable with respect to alterations to the Improvementsat the Property (other than such amounts to be paid or reimbursed by tenantsunder the Leases) shall at any time equal or exceed $500,000.00 (the **“Threshold Amount”**), Borrower, upon Lender’s request,shall promptly deliver to Lender as security for the payment of such amountsand as additional security for Borrower’s obligations under the Loan Documentsany of the following: (A) cash, (B) U.S. Obligations, (C) other securitieshaving a rating acceptable to Lender and that the applicable Rating Agencieshave confirmed in writing will not, in and of itself, result in a downgrade,withdrawal or qualification of the initial, or, if higher, then current ratingsassigned in connection with any Securitization, or (D) a completion bond or letterof credit issued by a financial institution having a rating by Standard &Poor’s Ratings Group of not less than A-1+ if the term of such bond or letterof credit is no longer than three (3) months or, if such term is in excess ofthree (3) months, issued by a financial institution having a rating that isacceptable to Lender and that the applicable Rating Agencies have confirmed inwriting will not, in and of itself, result in a downgrade, withdrawal orqualification of the initial, or, if higher, then current ratings assigned inconnection with any Securitization. Such security shall be in an amount equalto the excess of the total unpaid amounts with respect to alterations to theImprovements on the Property (other than such amounts to be paid or reimbursedby tenants under the Leases) over the Threshold Amount and, if cash, may beapplied from time to time, at the option of Borrower, to pay for suchalterations. At the option of Lender, following the occurrence and during thecontinuance of an Event of Default, Lender may terminate any of the alterationsand use the deposit to restore the Property to the extent necessary to preventany material adverse effect on the value of the Property.

 

5.1.22      Intentionally Omitted.

 

5.1.23      Intentionally Omitted.

 

Section 5.2             Negative Covenants.   Fromthe Closing Date until payment and performance in full of all obligations ofBorrower under the Loan Documents or the earlier release of the Lien of theMortgage encumbering the Property in accordance with the terms of thisAgreement and the other Loan Documents, Borrower covenants and agrees withLender that it will not do, directly or indirectly, any of the following:

 

5.2.1        Operation of Property.   Borrower shall not, without the priorconsent of Lender, terminate the Management Agreement or otherwise replace theManager or enter into any other management agreement with respect to theProperty unless the Manager is in default thereunder beyond any applicablegrace or cure period, in which event no consent by Lender shall be required.Lender agrees that its consent will not be unreasonably withheld, delayed orconditioned provided that the Person chosen by Borrower as the replacementManager is a

 

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QualifyingManager and provided further that Borrower shall deliver an acceptablenon-consolidation opinion covering such replacement Manager if such Person wasnot covered by such opinion delivered at the closing of the Loan.

 

5.2.2        Liens.  Borrower shall not, without the prior writtenconsent of Lender, create, incur, assume or suffer to exist any Lien on anyportion of the Property or permit any such action to be taken, except:

 

(i)           PermittedEncumbrances;

 

(ii)          Lienscreated by or related to Indebtedness permitted pursuant to the Loan Documents;and

 

(iii)         Liensfor Taxes or Other Charges not yet due (or that Borrower is contesting inaccordance with the terms of Section 5.1.2 hereof).

 

5.2.3        Dissolution.   Borrowershall not (a) engage in any dissolution, liquidation or consolidation or mergerwith or into any other business entity, (b) engage in any business activity notrelated to the ownership and operation of the Property, (c) transfer, lease orsell, in one transaction or any combination of transactions, the assets or allor 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 formation or operatingagreement of the Sole Member, in each case, without obtaining the prior writtenconsent 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 otherwiseforgive or release any claim or debt (other than termination of Leases inaccordance herewith) owed to Borrower by any Person, except for adequateconsideration and in the ordinary course of Borrower’s business.

 

5.2.6        Affiliate Transactions.   Borrower shall not enter into, or be a partyto, any transaction with an Affiliate of Borrower or any of the partners ofBorrower except in the ordinary course of business and on terms which are fullydisclosed to Lender in advance and are no less favorable to Borrower or suchAffiliate than would be obtained in a comparable arm’s-length transaction withan unrelated third party.

 

5.2.7        Zoning.   Borrower shall not initiate or consent toany zoning reclassification of any portion of the Property or seek any varianceunder any existing zoning ordinance or use or permit the use of any portion ofthe Property in any manner that could result

 

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in such use becoming a non-conforming use under any zoning ordinance orany other applicable land use law, rule or regulation, without the priorconsent of Lender.

 

5.2.8        Assets.   Borrower shall not purchase or own anyproperties other than the Property owned by Borrower as of the Closing Date asreflected in the applicable Title Insurance Policy.

 

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 orinitiate the joint assessment of the Property with (a) any other real propertyconstituting a tax lot separate from the Property, or (b) 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 the Property.

 

5.2.11      Intentionally Omitted.

 

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

 

(b)           Borrower further covenants and agreesto deliver to Lender such certifications or other evidence from time to timethroughout the 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” asdefined in Section 3(3) of ERISA, which is subject to Title I of ERISA, or a “governmentalplan” within the meaning of Section 3(3) of ERISA; (B) Borrower is not subjectto state statutes regulating investments and fiduciary obligations with respectto governmental plans; and (C) one or more of the following circumstances istrue:

 

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

 

(ii)           Less thantwenty-five percent (25%) of each outstanding class of equity interests inBorrower are held by “benefit plan investors” within the meaning of 29 C.F.R.§2510.3-101(f)(2); or

 

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

 

5.2.13      Transfers.   Unlesssuch action is permitted by the provisions of this Section 5.2.13, Borroweragrees that it will not (i) sell, assign, convey, transfer or otherwise disposeof its interests in the Property or any part thereof, (ii) permit any owner,directly or indirectly, of an ownership interest in the Property, to transfersuch interest, whether by transfer of stock or other interest in Borrower orany entity, or otherwise, (iii) incur Indebtedness (other than the Indebtednesspermitted pursuant to the terms of this Agreement), (iv) mortgage, hypothecateor otherwise encumber or grant a security interest in the Property or any part

 

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thereof, (v) sell, assign, convey, transfer, mortgage, encumber, granta security interest in, or otherwise dispose of any direct or indirectownership interest in Borrower, or permit any owner of an interest in Borrowerto do the same, or (vi) file a declaration of condominium with respect to theProperty (any of the foregoing transactions, a **“Transfer”**).For purposes hereof, a “Transfer” shall not include (A) any issuance, sale ortransfer of interests in Inland Western Retail Real Estate Trust, Inc., (B)transfer by devise or descent or by operation of law upon the death of apartner or member of Borrower, and (C) a sale, transfer or hypothecation of apartnership or membership interest in Borrower, whichever the case may be, bythe current partner(s) or member(s), as applicable, to an immediate familymember (i.e., parents, spouses, siblings, children or grandchildren) of suchpartner or member (or a trust for the benefit of any such persons).

 

(a)           Lender shall not withhold its consentto a Transfer of the Property, provided that the following conditions aresatisfied:

 

(1)                                  thetransferee of the Property shall be a Special Purpose Entity (the **“Transferee”)**which at the time of suchtransfer will be in compliance with the covenants contained in Section 5.1.1and the representations contained in Section 4.1.30 hereof and which shall haveassumed in writing (subject to the terms of Section 9.4 hereof) and agreed tocomply with all the terms, covenants and conditions set forth in this LoanAgreement and the other Loan Documents, expressly including the covenantscontained in Section 5.1.1 and the representations contained in 4.1.30 hereof;

 

(2)                                  ifrequested by Lender, Borrower shall deliver confirmation in writing from theRating Agencies that such proposed Transfer will not cause a downgrading,withdrawal or qualification of the then current rating of any securities issuedpursuant to such Securitization;

 

(3)                                  ifManager does not act as manager of the transferred Property then the manager ofthe Property must be a Qualifying Manager;

 

(4)                                  noEvent of Default shall have occurred and be continuing;

 

(5)                                  asubstantive non-consolidation opinion was required in connection with theinitial Loan closing, Borrower shall deliver an Additional Insolvency Opinion,and if required by a Rating Agency, a fraudulent conveyance opinion, which ineach case may be relied upon by the holder of the Note, the Ratings Agenciesand their respective counsel, agents and representatives with respect to theproposed transaction, including the Transferee, which opinion shall beacceptable to Lender in its reasonable discretion;

 

(6)                                  Borrowershall have paid (A) an assumption fee equal to one percent (1.0%) of the thenoutstanding principal balance of the Loan, and (B) the reasonable and customarythird-party expenses (including reasonable

 

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attorneys’ fees and disbursements) actually incurred by Lender inconnection with such Transfer; provided, however, no assumptionfee shall be required for a Transfer of the Property to a Transferee acceptableto Lender in connection with a joint venture between Inland Western Retail RealEstate Trust, Inc. and an institution acceptable to Lender provided InlandWestern Retail Real Estate Trust, Inc., or an Affiliate wholly-owned (directlyor indirectly) by Inland Western Retail Real Estate Trust, Inc., owns at leasttwenty percent (20%) of the ownership interests in such Transferee and forwhich Inland Western Retail Real Estate Trust, Inc., or an Affiliate wholly-owned(directly or indirectly) by Inland Western Retail Real Estate Trust, Inc., isthe managing entity and otherwise maintains operational and managerial controlof such Transferee, provided that Borrower shall pay all of Lender’s reasonableand customary 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 approve or disapprove any proposed Transfer governed bythis Section 5.2.13(a) within thirty (30) days of Lender’s receipt of a writtennotice from Borrower requesting Lender’s approval, provided such noticeincludes all information necessary to make such decision, and further providedthat such written notice from Borrower shall conspicuously state, in large boldtype, that **“PURSUANT TO SECTION 5.2.13 OF THE LOANAGREEMENT, A RESPONSE IS REQUIRED WITHIN THIRTY (30) DAYS OF LENDER’S RECEIPTOF THIS WRITTEN NOTICE”.** If Lender fails to disapprove any suchmatter within such period, Borrower shall provide a second written noticerequesting approval, which written notice shall conspicuously state, in largebold type, that **“PURSUANT TO SECTION 5.2.13 OF THE LOANAGREEMENT, THE MATTER DESCRIBED HEREIN SHALL BE DEEMED APPROVED IF LENDER DOESNOT RESPOND TO THE CONTRARY WITHIN TEN (10) DAYS OF LENDER’S RECEIPT OF THISWRITTEN NOTICE”.** Thereafter, if Lender does not disapprove suchmatter within said ten (10) day period such matter shall be deemed approved.

 

(b)           Lender shall notwithhold its consent to, and shall not charge an assumption fee in connectionwith, (1) a Transfer of up to, in the aggregate, forty-nine percent (49%) ofthe direct or indirect ownership interests in Borrower, or (2) a Transfer ofgreater than forty-nine percent (49%) of the direct or indirect 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 anet worth of $200,000,000 or more, (y) with sufficient experience (determinedby Lender in its reasonable discretion) in the ownership and management ofproperties similar to the Property, and (z) which owns or manages retailproperties containing at least 1,000,000 square feet of gross leasable area. Ifa substantive non-consolidation opinion was required in connection with theinitial Loan closing, 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.

 

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(c)           Notwithstandinganything in this Section 5.2.13 to the contrary, Borrower shall be permitted toTransfer the entire Property in a single transaction to one newly-formedSpecial Purpose Entity which shall be wholly-owned subsidiary of Inland WesternRetail Real Estate Trust, Inc. (**“Permitted AffiliateTransferee”**) which shall be approved by Lender in its reasonablediscretion (**“Permitted Affiliate 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, withoutthe consent of Lender, may grant easements, restrictions, covenants,reservations and rights of way in the ordinary course of business for access,parking, water and sewer lines, telephone and telegraph lines, electric linesand other utilities or for other similar purposes, provided that no transfer,conveyance or encumbrance shall materially impair the utility and operation ofthe Property or materially adversely affect the value of the Property or theNet Operating Income of the Property. If Borrower shall receive anyconsideration 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 any transfer, conveyance or encumbrance permittedabove, the Lender shall execute and deliver any instrument reasonably necessaryor appropriate to evidence its consent to said action or to subordinate theLien of the Mortgage to such easements, restrictions, covenants, reservationsand rights of way or other similar grants upon receipt by the Lender of: (A) acopy of the instrument of transfer; and (B) an Officer’s Certificate statingwith respect to any transfer described above, that such transfer does notmaterially impair the utility and operation of the Property or materiallyreduce the value of the Property or the Net Operating Income of the Property.

 

**ARTICLE VI**

 

**INSURANCE; CASUALTY; CONDEMNATION**

 

Section 6.1         Insurance.

 

(a)           Borrower shallobtain and maintain insurance for Borrower and the Property providing at leastthe following coverages:

 

(i)            comprehensiveall risk insurance on the Improvements and the Personal Property, includingcontingent liability from Operation of Building Laws, Demolition Costs andIncreased Cost of Construction Endorsements, in each case (A) in an amountequal to one hundred percent (100%) of the “Full Replacement Cost,” which forpurposes of this Agreement shall mean actual replacement value (exclusive ofcosts of excavations, foundations, underground utilities and footings) with awaiver of depreciation; (B) containing an agreed amount endorsement withrespect to the Improvements and Personal Property waiving all co-insuranceprovisions; (C) providing for no deductible in excess of Twenty-Five Thousandand No/100 Dollars ($25,000.00) for all such insurance coverage; and (D)containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if

 

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any of the Improvements or the use of the Property shall at any timeconstitute legal non-conforming structures or uses. In addition, Borrower shallobtain: (y) if any portion of the Improvements is currently or at any time inthe future located in a federally designated “special flood hazard area”, floodhazard insurance in an amount equal to the lesser of (1) the outstandingprincipal balance of the Note or (2) the maximum amount of such insuranceavailable under the National Flood Insurance Act of 1968, the Flood DisasterProtection Act of 1973 or the National Flood Insurance Reform Act of 1994, aseach may be amended or such greater amount as Lender shall require; and (z)earthquake insurance in amounts and in form and substance satisfactory toLender 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)           commercialgeneral liability insurance against claims for personal injury, bodily injury,death or property damage occurring upon, in or about the Property, suchinsurance (A) to be on the so-called “occurrence” form with One Million andNo/100 Dollars ($1,000,000.00) coverage per occurrence, Two Million and No/100Dollars ($2,000,000.00) coverage in the aggregate and a combined limit,including umbrella coverage, of not less than Five Million and No/100 Dollars($5,000,000.00); (B) to continue at not less than the aforesaid limit untilrequired to be changed by Lender in writing by reason of changed economicconditions making such protection inadequate; and (C) to cover at least thefollowing hazards: (1) premises and operations; (2) products and completedoperations on an “if any” basis; (3) independent contractors; (4) blanketcontractual liability for all legal, contracts; and (5) contractual liabilitycovering the indemnities contained in Article 9 of the Mortgage to the extentthe same is available;.

 

(iii)          businessincome insurance (A) with loss payable to Lender; (B) covering all risksrequired to be covered by the insurance provided for in subsection (i) above;(C) covering rental losses or business interruption, as may be applicable, fora period of at least twelve (12) months after the date of the casualty; and (D)in an annual amount equal to (100%) of the rents or estimated gross revenuesfrom the operation of the Property (as reduced to reflect expenses not incurredduring a period of 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 toLender pursuant to this subsection shall be held by Lender and shall be appliedto the obligations secured by the Loan Documents from time to time due andpayable hereunder and under the Note; provided, however, thatnothing herein contained shall be deemed to relieve Borrower of its obligationsto pay the obligations secured by the Loan Documents on the respective dates ofpayment provided for in the Note and the other Loan Documents except to theextent such amounts are actually paid out of the proceeds of such businessincome insurance;

 

(iv)          atall times during which structural construction, repairs or alterations arebeing made with respect to the Improvements, and only if the Property coverageform does not otherwise apply, (A) owner’s contingent or protective liabilityinsurance covering claims not covered by or under the terms or provisions ofthe above mentioned

 

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commercial general liability insurance policy; and (B) the insuranceprovided for in subsection (i) above written in a so-called builder’s riskcompleted value form (1) on a non-reporting basis, (2) against all risksinsured against pursuant to subsection (i) above, (3) including permission tooccupy the Property, and (4) with an agreed amount endorsement waivingco-insurance provisions;

 

(v)           workers’ compensation, subject to the statutory limits ofthe State;

 

(vi)          comprehensiveboiler and machinery insurance, if applicable, in amounts as shall bereasonably required by Lender on terms consistent with the commercial propertyinsurance policy required under subsection (i) above;

 

(vii)         umbrellaliability insurance in an amount not less than Five Million and No/100 Dollars($5,000,000.00) per occurrence on terms consistent with the commercial generalliability insurance policy required under subsection (ii) above;

 

(viii)        automobileinsurance to cover all owned or non-owned automobiles in an amount not lessthan One Million and No/100 Dollars (S1,000,000.00) per occurrence;

 

(ix)           ifany of the policies of insurance covering the risks required to be coveredunder subsections (i) through (vii) above contains an exclusion from coveragefor acts of terrorism, Borrower shall obtain and maintain a separate policyproviding such coverages in the event of any act of terrorism, provided suchcoverage is commercially available for properties similar to the Property andlocated in or around the region in which the Property is located. Notwithstandingthe foregoing, Borrower shall not be. required to obtain such a policy,provided (I) Borrower confirms to Lender, in writing, that it shall protect andhold Lender harmless from any losses associated with such risks by, among otherthings, either (A) depositing with Lender sums sufficient to pay for alluninsured costs related to a Restoration of the Property following any act ofterrorism (which sum shall be treated as a Net Proceeds Deficiency), or (B)provided such act of terrorism occurs on or after the Permitted PrepaymentDate, prepaying the Loan in accordance with the terms hereof; (II) InlandWestern Retail Real Estate Trust, Inc. (**“Terrorism Insurance Guarantor”)**executes a guaranty, in formand substance satisfactory to Lender, guaranteeing in the event of any act ofterrorism, payment to Lender of any sums that Borrower is obligated to pay toLender 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 $400,000,000.00 (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 a direct or indirect ownershipinterest shall not exceed *55%,*however,Terrorism Insurance Guarantor may exceed the 55% LTV for a period not to exceedsix (6) months out of any twelve (12) month period either 1) during the timeperiod when Terrorism Insurance Guarantor is offering securities to the public,or 2) when in the business judgment of Terrorism Insurance Guarantor, exceedingan LTV of 55% is necessary given existing circumstances of the credit environment,but in no event shall the LTV exceed 70%.

 

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(x)            uponsixty (60) days’ written notice, such other reasonable insurance and in suchreasonable amounts as Lender from time to time may reasonably request againstsuch other insurable hazards which at the time are commonly insured against forproperty similar to the Property located in or around the region in which theProperty is located.

 

(b)           Allinsurance provided for in Section 6.1 (a) shall be obtained under valid andenforceable policies (collectively, the **“Policies”**or in the singular, the **“Policy”**),and shall be subject to the approval of Lender as to insurance companies,amounts, deductibles, loss payees and insureds. The Policies shall be issued byfinancially sound and responsible insurance companies authorized to do businessin the State and having a rating of “A:X” or better in the current Best’sInsurance Reports and a claims paying ability rating of “AA” or better by atleast two (2) of the Rating Agencies including, (i) Standard & Poor’sRatings Group, and (ii) Moody’s Investors Services, Inc. if Moody’s InvestorsService, Inc. is rating the Securities, The Policies described in Section 6.1(other than those strictly limited to liability protection) shall designateLender as loss payee. Not less than thirty (30) days prior to the expirationdates of the Policies theretofore furnished to Lender, certificates ofinsurance evidencing the Policies accompanied by evidence satisfactory toLender of payment of the premiums due thereunder (the **“InsurancePremiums”,**shall be delivered by Borrowerto Lender.

 

(c)           Any blanketinsurance Policy shall specifically allocate to the Property the amount ofcoverage from time to time required hereunder and shall otherwise provide the sameprotection as would a separate Policy insuring only the Property in compliancewith the provisions of Section 6.1 (a).

 

(d)           All Policies ofinsurance provided for or contemplated by Section 6.1(a), except for the Policyreferenced in Section 6.1(a)(v), shall name Borrower, or the Tenant, as the insuredand Lender as the additional insured, as its interests may appear, and in thecase of property damage, boiler and machinery, flood and earthquake insurance,shall contain a so-called New York standard non-contributing mortgagee clausein favor of Lender providing that the loss thereunder shall be payable toLender.

 

(e)           All Policies ofinsurance provided for in Section 6.1(a) shall contain clauses or endorsementsto 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)          theissuers thereof shall give written notice to Lender if the Policy has not beenrenewed fifteen (15) days prior to its expiration; and

 

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

 

(f)            If at any timeLender is not in receipt of written evidence that all insurance requiredhereunder is in full force and effect, Lender shall have the right, after ten(10) Business Days written notice to Borrower, to take such action as Lenderdeems necessary to protect its interest in the Property, including, withoutlimitation, the obtaining of such insurance coverage as Lender in its solediscretion deems appropriate. All premiums incurred by Lender in connectionwith such action or in obtaining such insurance and keeping it in effect shallbe paid by Borrower to Lender upon demand and, until paid, shall be secured bythe Mortgage and shall bear interest at the Default Rate. If Borrower fails inso insuring the Property or in so assigning and delivering the Policies, Lendermay, at its option, obtain such insurance using such carriers and agencies asLender shall elect from year to year and pay the premiums therefor, andBorrower will reimburse Lender for any premium so paid, with interest thereonas stated in the Note from the time of payment, on demand, and the amount soowning to Lender shall be secured by the Mortgage. 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.

 

Section 6.2             Casualty.   If the Property shall be damaged ordestroyed, in whole or in part, by fire or other casualty (a **“Casualty”**), Borrower (a) shall give to Lender promptnotice of such damage reasonably estimated by Borrower to cost more than OneHundred Thousand Dollars ($100,000.00) to repair, and (b) shall promptlycommence and diligently prosecute the completion of the repair and restorationof the Property as nearly as possible to the condition the Property was inimmediately prior to such fire or other casualty, with such alterations as maybe reasonably approved by Lender (a **“Restoration”**)and otherwise in accordance with Section 6.4. Borrower shall pay all costs ofsuch Restoration whether or not such costs are covered by insurance. Lendermay, but shall not be obligated to make proof of loss if not made promptly byBorrower.

 

Section 6.3             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 inanticipation of the exercise of such taking), Borrower shall continue to paythe Debt at the time and in the manner provided for its payment in the Note andin this Agreement and the Debt shall not be reduced until any Award shall havebeen actually received and applied by Lender, after the deduction of expensesof collection, 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 Property or any portion thereof is taken by acondemning authority, Borrower shall promptly commence and diligently prosecutethe Restoration of the Property and otherwise comply with the provisions of

 

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Section 6.4.  If the Property is sold, through foreclosureor otherwise, prior to the receipt by Lender of the Award, Lender shall havethe right, whether or not a deficiency judgment on the Note shall have beensought, recovered or denied, to receive the Award, or a portion thereofsufficient to pay the Debt.

 

Section 6.4               Restoration.The following provisions shall apply in connection with the Restoration of theProperty:

 

(a)            If the Net Proceedsshall be less than Relevant Restoration Threshold and the costs of completingthe Restoration shall be less than the Relevant Restoration Threshold, the NetProceeds will be disbursed by Lender to Borrower upon receipt, provided thatall of the conditions set 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 writtenundertaking to expeditiously commence and to satisfactorily complete with duediligence the Restoration in accordance with the terms of this Agreement.

 

(b)            If the Net Proceedsare equal to or greater than the Relevant Restoration Threshold or the costs ofcompleting the Restoration is equal to or greater than the Relevant RestorationThreshold, then in either case, Lender shall make the Net Proceeds availablefor the Restoration in accordance with the provisions of this Section 6.4(b).The term **“Net Proceeds”**forpurposes of this Section 6.4 shall mean: (x) the net amount of all insuranceproceeds received by Lender pursuant to Section 6.1 (a)(i), (iv), (vi) and(viii) as a result of such damage or destruction, after deduction of itsreasonable costs and expenses (including, but not limited to, reasonablecounsel fees), if any, in collecting same (**“Insurance Proceeds”**),or (y) the net amount of the Award, after deduction of its reasonable costs andexpenses (including, but not limited to, reasonable counsel fees), if any, incollecting same **(“Condemnation****Proceeds”**), whichever the case maybe.

 

(i)            TheNet Proceeds shall be made available to Borrower for Restoration provided thateach of the following conditions are met:

 

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

 

(B)            (1)in the event the Net Proceeds are Insurance Proceeds, and (x) less thantwenty-five percent (25%) of the total floor area of the Improvements on theProperty has been damaged, destroyed or rendered unusable as a result of suchfire or other casualty, or (y) Borrower is required under a Lease exceeding theRelevant Leasing Threshold to use the Net Proceeds for the restoration of theProperty, or (2) in the event the Net Proceeds are Condemnation Proceeds, and(x) less than ten percent (10%) of the land constituting the Property is taken,and such land is located along the perimeter or periphery of the Property, andno portion of the Improvements is located on such land, or (y) Borrower isrequired under a Lease exceeding the Relevant Leasing Threshold to use the NetProceeds for the restoration of the Property;

 

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(C)            Leasesdemising in the aggregate a percentage amount equal to or greater than theRentable Space Percentage of the total rentable space in the Property which hasbeen demised under executed and delivered Leases in effect as of the date ofthe occurrence of such fire or other casualty or taking, whichever the case maybe, shall remain in full force and effect during and after the completion ofthe Restoration, notwithstanding the occurrence of any such fire or othercasualty or taking, whichever the case may be, and will make all necessaryrepairs and restorations thereto at their sole cost and expense. The term **“Rentable Space Percentage”** shall mean (x) in theevent the Net Proceeds are Insurance Proceeds, a percentage amount equal tofifty percent (50%) and (y) in the event the Net Proceeds are CondemnationProceeds, a percentage amount equal to fifty percent (50%);

 

(D)            Borrowershall commence the Restoration as soon as reasonably practicable (but in noevent later than ninety (90) days after such damage or destruction or taking,whichever the case may be, occurs) and shall diligently pursue the same tosatisfactory completion;

 

(E)             Lendershall be satisfied that any operating deficits, including all scheduledpayments of principal and interest under the Note, which will be incurred withrespect to the Property as a result of the occurrence of any such fire or othercasualty or taking, whichever the case may be, will be covered out of (1) theNet Proceeds, (2) the insurance coverage referred to in Section 6.1(a)(iii), ifapplicable, or (3) by other funds of Borrower;

 

(F)             Lendershall be satisfied that the Restoration will be completed on or before theearliest to occur of (1) the Maturity Date, (2) the earliest date required forsuch completion under the terms of any Leases, (3) such time as may be requiredunder applicable zoning law, ordinance, rule or regulation in order to repairand restore the Property to the condition it was in immediately prior to suchfire or other casualty or to as nearly as possible the condition it was inimmediately prior to such taking, as applicable or (4) the expiration of theinsurance coverage referred to in Section 6.1(a)(iii);

 

(G)            theProperty and the use thereof after the Restoration will be in compliance withand permitted under all applicable zoning laws, ordinances, rules andregulations provided, however, that compliance with such zoning laws,ordinances, rules and regulations (including, without limitation, parkingrequirements) will not require restoration of the Improvements or the Propertyto a size, condition, or configuration materially different than that whichexisted immediately prior to such Casualty or taking;

 

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(H)            theRestoration shall be done and completed by Borrower in an expeditious anddiligent fashion and in compliance with all applicable governmental laws, rulesand regulations (including, without limitation, all applicable environmentallaws);

 

(I)              suchfire or other casualty or taking, as applicable, does not result in the loss ofaccess to the Property or the related Improvements;

 

(J)             theDebt Service Coverage Ratio, after giving effect to the Restoration, shall beequal to or greater than 2.71: 1.0;

 

(K)            Borrowershall deliver or cause to be delivered to Lender a signed detailed budgetapproved in writing by Borrower’s architect or engineer stating the entire costof completing the Restoration, which budget should be consistent withrestoration budgets of similar retail properties then owned and operated bynationally recognized owners and operators of retail properties located in theareas in which the Property is located; and

 

(L)             theNet Proceeds together with any cash or cash equivalent deposited by Borrowerwith Lender are sufficient in Lender’s discretion to cover the cost of theRestoration.

 

(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 shall be disbursed by Lender to, or asdirected by, Borrower from time to time during the course of the Restoration,upon receipt of evidence satisfactory to Lender that (A) all materialsinstalled and work and labor performed to be paid for out of the requesteddisbursement in connection with the Restoration have been performed, and (B)there exist no notices of pendency, stop orders, mechanic’s or materialman’sliens or notices of intention to file same, or any other liens or encumbrancesof any nature whatsoever on the Property which have not either been fullybonded to the satisfaction of Lender and discharged of record or in thealternative fully insured to the satisfaction of Lender by the title companyissuing the Title Insurance 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 **“CasualtyConsultant”**), such review and acceptance not to be unreasonablywithheld or delayed. Lender shall have the use of the plans and specificationsand all permits, licenses and approvals required or obtained in connection withthe Restoration. The identity of the contractors, subcontractors andmaterialmen engaged in the Restoration, as well as the contracts under whichthey have been engaged, shall be subject to prior review and acceptance byLender and the Casualty Consultant, such review and acceptance not to beunreasonably withheld or delayed. All costs and expenses incurred by Lender inconnection with making the

 

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Net Proceeds available for the Restoration including, withoutlimitation, reasonable counsel fees and disbursements and the CasualtyConsultant’s fees, shall be paid by Borrower.

 

(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 Casualty Consultant,minus the Casualty Retainage. The term **“Casualty Retainage”**shall mean an amount equal to ten percent (10%) of the costs actually incurredfor work in place as part of the Restoration, as certified by the CasualtyConsultant, until the Restoration has been completed. The Casualty Retainageshall in no event, and notwithstanding anything to the contrary set forth abovein this Section 6.4(b), be less than the amount actually held back by Borrowerfrom contractors, subcontractors and materialmen engaged in the Restoration. TheCasualty Retainage shall not be released until the Casualty Consultantcertifies to Lender that the Restoration has been completed in accordance withthe provisions of this Section 6.4(b) and that all approvals necessary for there-occupancy and use of the Property have been obtained from all appropriategovernmental and quasi-governmental authorities, and Lender receives evidencesatisfactory to Lender that the costs of the Restoration have been paid in fullor will be paid in full out of the Casualty Retainage; provided, however,that Lender will release the portion of the Casualty Retainage being held withrespect to any contractor, subcontractor or materialman engaged in theRestoration as of the date upon which the Casualty Consultant certifies to Lenderthat the contractor, subcontractor or materialman has satisfactorily completedall work and has supplied all materials in accordance with the provisions ofthe contractor’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 to the Title InsurancePolicy insuring the continued priority of the lien of the Mortgage and evidenceof payment of any premium payable for such endorsement. If required by Lender,the release of any such portion of the Casualty Retainage shall be approved bythe surety company, if any, which has issued a payment or performance bond withrespect to the contractor, subcontractor or materialman.

 

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

 

(vi)          Ifat any time the Net Proceeds or the undisbursed balance thereof shall not, inthe reasonable opinion of Lender in consultation with the Casualty Consultant,be sufficient to pay in full the balance of the costs which are estimated bythe Casualty Consultant to be incurred in connection with the completion of theRestoration, Borrower shall deposit the deficiency (the **“NetProceeds Deficiency”**) with Lender before any furtherdisbursement of the Net Proceeds shall be made.  The Net Proceeds Deficiency deposited withLender shall be held by Lender and shall be disbursed for costs actuallyincurred in connection with the Restoration on the same conditions applicableto the disbursement of the Net Proceeds, and until so disbursed pursuant tothis Section 6.4(b)

 

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shall constitute additional security for the Debt and other obligationsunder 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 notrequired (i) to be made available for the Restoration or (ii) to be returned toBorrower as excess Net Proceeds pursuant to Section 6.4(b)(vii) may be retainedand applied by Lender toward the payment of the Debt whether or not then dueand payable in such order, priority and proportions as Lender in its solediscretion shall deem proper (provided no Event of Default exists, suchBorrower shall not be required to pay any Prepayment Consideration in connectionwith such payment), or, at the discretion of Lender, the same may be paid,either in whole or in part, to Borrower for such purposes as Lender shalldesignate, in its discretion.

 

(d)           In the event offoreclosure of the Mortgage with respect to the Property, or other transfer oftitle to the Property in extinguishment in whole or in part of the Debt allright, title and interest of Borrower in and to the Policies that are notblanket Policies then in force concerning the Property and all proceeds payablethereunder shall thereupon vest in the purchaser at such foreclosure or Lenderor other transferee in the event of such other transfer of title.

 

(e)           Lender shall withreasonable promptness following any Casualty or Condemnation notify Borrowerwhether or not Net Proceeds are required to be made available to Borrower forrestoration pursuant to this Section 6.4. All Net Proceeds not required to bemade available for Restoration shall be retained and applied by Lender inaccordance with Section 2.3.2(a) hereof (a **“NetProceeds Prepayment”**). If such Net Proceeds Prepayment shall beequal to or greater than Twenty-One Million Five Hundred Five Thousand TwoHundred and 00/100 Dollars ($21,505,200.00), Borrower shall have the right toelect to prepay the remaining outstanding principal balance of the Note (a **“Casualty/Condemnation Prepayment”**) in accordancewith Section 2.3.2(b) hereof upon satisfaction of the followingconditions: (i) within thirty (30) days following the date of the Net ProceedsPrepayment, Borrower shall provide Lender with written notice of Borrower’sintention to pay the Note in full, (ii) Borrower shall prepay the Note inaccordance with Section 23.2(b) hereof on or before the second Payment Dateoccurring following the date of the Net Proceeds Prepayment, and (iii) no Eventof Default shall exist on the date of such Casualty/Condemnation Prepayment.Notwithstanding anything in Section 6.2 or Section 6.3 to the contrary,Borrower shall have no obligation to commence Restoration of the Property upondelivery of the written notice set forth in clause (i) of the precedingsentence (unless Borrower subsequently shall fail to satisfy the requirement ofclause (ii) of the preceding sentence).

 

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**ARTICLE VII**

 

**RESERVE FUNDS**

 

Section 7.1             Required Repair Funds.

 

7.1.1        Deposits.   Borrower shall perform the repairs at theProperty, if any, as more particularly set forth on Schedule III hereto(such repairs hereinafter referred to as **“Required Repairs”**)within six (6) months from the Closing Date (or such longer time as Borrowerand Lender may mutually agree to), or such earlier time as specified on ScheduleIII, provided that the estimated cost to complete the Required Repairs isless than One Hundred Thousand and 00/100 Dollars ($100,000.00) in theaggregate. If Borrower has not delivered to Lender evidence reasonablysatisfactory to Lender that it has completed all Required Repairs on or beforethe date that is six (6) months from the Closing Date, or such earlier time asspecified on Schedule III or if the estimated cost to complete theRequired Repairs is equal to or greater than One Hundred Thousand and 00/100Dollars ($100,000.00), Borrower shall deposit with Lender one hundred twentyfive percent (125%) of the estimated cost to complete such repairs asdetermined by Lender’s structural consultant, if any (less the amount allocatedto the performance of Required Repairs for which evidence of completion hasbeen delivered to Lender), to perform the Required Repairs for the Property.Amounts so deposited with Lender, if any, shall be held by Lender in aninterest bearing account. Amounts so deposited, if any, shall hereinafter bereferred to as Borrower’s **“Required Repair Fund”**and the account, if any, in which such amounts are held shall hereinafter bereferred to as Borrower’s **“Required RepairAccount”**. It shall be an Event of Default under this Agreementif Borrower does not either (i) does not deposit with Lender the RequiredRepair Fund as set forth above, or (ii) complete the Required Repairs at theProperty within nine (9) months from the Closing Date. Upon the occurrence ofsuch an Event of Default, Lender, at its option, may withdraw all RequiredRepair Funds from the Required Repair Account and Lender may apply such fundseither to completion of the Required Repairs at the Property or toward paymentof the Debt in such order, proportion and priority as Lender may determine inits sole discretion. Lender’s right to withdraw and apply Required Repair Fundsshall be in addition to all other rights and remedies provided to Lender underthis Agreement and the other Loan Documents.

 

7.1.2        Release ofRequired Repair Funds.   Lender shalldisburse to Borrower the Required Repair Funds from the Required Repair Accountfrom time to time upon satisfaction by Borrower of each of the followingconditions: (i) Borrower shall submit a written request for payment to Lenderat least fifteen (15) days prior to the date on which Borrower requests suchpayment be made and specifies the Required Repairs to be paid, (ii) on the datesuch request is received by Lender and on the date such payment is to be made,no Default or Event of Default shall exist and remain uncured, (iii) Lendershall have received a certificate from Borrower (A) stating that all RequiredRepairs at the Property to be funded by the requested disbursement have beencompleted in good and workmanlike manner and in accordance with all applicablefederal, state and local laws, rules and regulations, such certificate to beaccompanied by a copy of any license, permit or other approval by anyGovernmental Authority required to commence and/or complete the RequiredRepairs, (B) identifying each Person that supplied materials or labor inconnection with the Required Repairs performed at the Property to be funded bythe requested disbursement under a contract in excess of $50,000, and (C)stating that each Person who has

 

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suppliedmaterials or labor in connection with the Required Repairs to be funded by therequested disbursement 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 Lender, (iv) at Lender’s option, a titlesearch for the Property indicating that the Property is free from all liens,claims and other encumbrances not previously approved by Lender, and (v) Lendershall have received such other evidence as Lender shall reasonably request thatthe Required Repairs at the Property to be funded by the requested disbursementhave been completed and are paid for or will be paid upon such disbursement toBorrower. Lender shall not be required to make disbursements from the RequiredRepair Account with respect to the Property more than once each calendar monthand such disbursement shall be made only upon satisfaction of each conditioncontained in this Section 7.1.2.

 

Section 7.2             Tax and Insurance Escrow Fund.      Borrower shall pay to Lender on eachPayment Date (a) one-twelfth of the Taxes that Lender estimates will be payableduring the next ensuing twelve (12) months in order to accumulate with Lendersufficient funds to pay all such Taxes at least thirty (30) days prior to theirrespective due dates and (b) one-twelfth of the Insurance Premiums that Lenderestimates will be payable for the renewal of the coverage afforded by thePolicies upon the expiration thereof in order to accumulate with Lendersufficient funds to pay all such Insurance Premiums at least thirty (30) daysprior to the expiration of the Policies, (said amounts in (a) and (b) above arehereinafter called the **“Tax and InsuranceEscrow Fund”**). The Tax and Insurance Escrow Fund and thepayments of interest or principal or both, payable pursuant to the Note, shallbe added together and shall be paid as an aggregate sum by Borrower to Lender.Lender will apply the Tax and Insurance Escrow Fund to payments of Taxes andInsurance Premiums required to be made by Borrower pursuant to this Agreementand under the Mortgage. In making any payment relating to the Tax and InsuranceEscrow Fund, Lender may do so according to any bill, statement or estimateprocured from the appropriate public office (with respect to Taxes) or insureror agent (with respect to Insurance Premiums) or from Borrower without inquiryinto the accuracy of such bill, statement or estimate or into the validity ofany tax, assessment, sale, forfeiture, tax lien or title or claim thereof,provided, however, Lender shall use reasonable efforts to pay such realproperty taxes sufficiently early to obtain the benefit of any availablediscounts of which it has knowledge. If the amount of the Tax and InsuranceEscrow Fund shall exceed the amounts due for Taxes and Insurance Premiums, Lendershall, in its sole discretion, return any excess to Borrower or credit suchexcess against future payments to be made to the Tax and Insurance Escrow Fund.The Tax and Insurance Escrow Fund shall be held by Lender in aninterest-bearing account and shall at Lender’s option be held in EligibleAccount at an Eligible Institution.  Anyinterest earned on said account shall accrue in said account for the benefit ofBorrower, but shall remain in and constitute part of the Tax and InsuranceEscrow Fund, and shall be disbursed in accordance with the terms hereof. Anyamount remaining in the Tax and Insurance Escrow Fund after the Debt has beenpaid in full shall be returned to Borrower. In allocating such excess, Lendermay deal with the Person shown on the records of Lender to be the owner of theProperty.  If at any time Lenderreasonably determines that the Tax and Insurance Escrow Fund is not or will notbe sufficient to pay Taxes or Insurance Premiums by the dates set forth above,Lender shall notify Borrower of such determination and Borrower shall increaseits monthly payments to Lender by the amount that Lender estimates issufficient to make up the deficiency at least thirty (30) days prior todelinquency of the Taxes or Insurance Premiums.

 

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Notwithstanding anything to the contrary hereinbefore contained, in theevent that Borrower provides (1) evidence satisfactory to Lender that theProperty is insured in accordance with Section 6.1 of this Agreement, (2)evidence satisfactory to Lender that the Taxes for the Property have been paidin accordance with the requirements set forth in this Agreement and (3) so longas no Event of Default shall have occurred, Lender will waive the requirementset forth herein for Borrower to make deposits into the Tax and InsuranceEscrow Fund for the payment of Insurance Premiums and for payment of suchTaxes, provided, however, Lender expressly reserves the right to requireBorrower to make deposits to the Tax and Insurance Escrow Fund for the paymentof Insurance Premiums if at any time the Property is not insured in accordancewith Section 6.1 of this Agreement, Taxes are not paid in accordancewith the requirements of this Agreement or an Event of Default shall have occurred.

 

Section 7.3             Replacements and ReplacementReserve.

 

7.3.1        ReplacementReserve Fund.   Borrower shall pay toLender on the Closing Date and on each Payment Date one twelfth of the amount(the **“Replacement Reserve Monthly Deposit”**)reasonably estimated by Lender in its sole discretion to be due forreplacements and repairs required to be made to the Property during thecalendar year (collectively, the **“Replacements”**),which Replacement Reserve Monthly Deposit shall be in an amount equal to noless than $0.15 per year per square foot of gross leasable area. Amounts sodeposited shall hereinafter be referred to as Borrower’s **“ReplacementReserve Fund”** and the account in which such amounts are heldshall hereinafter be referred to as Borrower’s **“ReplacementReserve Account”**. Lender may reassess its estimate of the amountnecessary for the Replacement Reserve Fund from time to time, and may increasethe monthly amounts required to be deposited into the Replacement Reserve Fundupon thirty (30) days notice to Borrower if Lender determines in its reasonablediscretion that an increase is necessary to maintain the proper maintenance andoperation of the Property. Any amount held in the Replacement Reserve Accountand allocated for the Property shall be retained by Lender in an interestbearing account, or, at the option of Lender, in an Eligible Account at anEligible Institution; provided, however, that, any interestearned on said account shall accrue in said account for the benefit ofBorrower, but shall remain in and constitute part of the Replacement ReserveFund, and shall be disbursed in accordance with the terms hereof.

 

Notwithstanding anything to the contrary in this Section 7.3, Borrowershall not be required to make Replacement Reserve Monthly Deposits, providedthat: (i) no Event of Default shall have occurred; and (ii) Borrower makes allnecessary Replacements and otherwise maintains the Property to Lender’ssatisfaction. Upon notice from Lender following; (a) an Event of Default; or(b) the failure of Borrower to make necessary Replacements or otherwisemaintain the Property to Lender’s satisfaction, Borrower shall begin to depositthe Replacement Reserve Monthly Deposit into the Replacement Reserve Fundbeginning on the Payment Date (as defined herein) immediately following thedate of such notice.

 

7.3.2        Disbursements from ReplacementReserve Account.    (a)  Lendershall make disbursements from the Replacement Reserve Account to pay Borroweronly for the costs of the Replacements. Lender shall not be obligated to makedisbursements from the Replacement Reserve Account to reimburse Borrower forthe costs of routine maintenance to the Property or for costs which are to bereimbursed from the Required Repair Fund (if any).

 

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(b)           Lendershall, upon written request from Borrower and satisfaction of the requirementsset forth in this Section 7.3.2, disburse to Borrower amounts from theReplacement Reserve Account necessary to pay for the actual approved costs ofReplacements or to reimburse Borrower therefor, upon completion of suchReplacements (or, upon partial completion in the case of Replacements madepursuant to Section 7.3.2(f)) as determined by Lender. In no event shall Lenderbe obligated to disburse funds from the Replacement Reserve Account if aDefault or an Event of Default exists.

 

(c)           Eachrequest for disbursement from the Replacement Reserve Account shall be in aform specified or approved by Lender and shall specify (i) the specific Replacementsfor which the disbursement is requested, (ii) the quantity and price of eachitem purchased, if the Replacement includes the purchase or replacement ofspecific items, (iii) the price of all materials (grouped by type or category)used in any Replacement other than the purchase or replacement of specificitems, and (iv) the cost of all contracted labor or other services applicableto each Replacement for which such request for disbursement is made. With eachrequest Borrower shall certify that all Replacements have been made inaccordance with all applicable Legal Requirements of any Governmental Authorityhaving jurisdiction over the Property to which the Replacements are beingprovided and, unless Lender has agreed to issue joint checks as describedbelow, each request shall include evidence of payment 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. Borrower shall provide Lender evidence of completionsatisfactory to Lender in its reasonable judgment.

 

(d)           Borrowershall pay all invoices in connection with the Replacements with respect towhich a disbursement is requested prior to submitting such request fordisbursement from the Replacement Reserve Account or, at the request ofBorrower, 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 paymentsmade by joint check, Lender may require a waiver of lien from each Personreceiving payment prior to Lender’s disbursement from the Replacement ReserveAccount.  In addition, as a condition toany disbursement, Lender may require Borrower to obtain lien waivers from each contractor,supplier, materialman, mechanic or subcontractor who receives payment in an amountequal to or greater than $100,000 for completion of its work or delivery of itsmaterials. Any lien waiver delivered hereunder shall conform to therequirements of applicable law and shall cover all work performed and materialssupplied (including equipment and fixtures) for the Property by thatcontractor, supplier, subcontractor, mechanic or materialman through the date coveredby the current reimbursement request (or, in the event that payment to suchcontractor, supplier, subcontractor, mechanic or materialmen is to be made by ajoint check, the release of lien shall be effective through the date covered bythe previous release of funds request).

 

(e)           If(i) the cost of a Replacement exceeds $100,000, (ii) the contractor performingsuch Replacement requires periodic payments pursuant to terms of a writtencontract, and (iii) Lender has approved in writing in advance such periodicpayments, a request for reimbursement from the Replacement Reserve Account maybe made after completion of a portion of the work under such contract, provided(A) such contract requires payment upon

 

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completion of such portion ofthe work, (B) the materials for which the request is made are on site at theProperty and are properly secured or have been installed in the Property, (C)all other conditions in this Agreement for disbursement have been satisfied,(D) funds remaining in the Replacement Reserve Account are, in Lender’s judgment,sufficient to complete such Replacement and other Replacements when required,and (E) if required by Lender, each contractor or subcontractor receivingpayments under such contract shall provide a waiver of lien with respect toamounts which have been paid to that contractor or subcontractor.

 

(f)            Borrowershall not make a request for disbursement from the Replacement Reserve Accountmore frequently than once in any calendar month and (except in connection withthe final disbursement) the total cost of all Replacements in any request shallnot 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 fromdeteriorating. Borrower shall complete all Replacements in a good andworkmanlike manner as soon as practicable following the commencement of makingeach such Replacement.

 

(b)           Lenderreserves the right, at its option, to approve all contracts or work orders withmaterialmen, mechanics, suppliers, subcontractors, contractors or other partiesproviding labor or materials under contracts for an amount in excess of$100,000 in connection with the Replacements performed by Borrower. Upon Lender’srequest, Borrower shall assign any contract or subcontract to Lender.

 

(c)           Inthe event Lender determines in its reasonable discretion that any Replacementis not being performed in a workmanlike or timely manner or that anyReplacement has not been completed in a workmanlike or timely manner, and suchfailure continues to exist for more than thirty (30) days after notice fromLender to Borrower, Lender shall have the option to withhold disbursement forsuch unsatisfactory Replacement and to proceed under existing contracts or tocontract with third parties to complete such Replacement and to apply the ReplacementReserve Fund toward the labor and materials necessary to complete such Replacement,without providing any prior notice to Borrower and to exercise any and allother remedies available to Lender upon an Event of Default hereunder.

 

(d)           Inorder to facilitate Lender’s completion or making of the Replacements pursuantto Section 7.3.3(c) above, Borrower grants Lender the right to enter onto theProperty and perform any and all work and labor necessary to complete or makethe Replacements and/or employ watchmen to protect the Property from damage,subject to the rights of Tenants. 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 purpose Borrower constitutes andappoints Lender its true and lawful attorney-in-fact with full power ofsubstitution to complete or undertake the Replacements in the name of Borrower.Such power of attorney shall be deemed to be a power coupled with an interestand cannot be

 

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revoked but shall only be effective following an Event of Default.  Borrower empowers said attorney-in-fact asfollows: (i) to use any funds in the Replacement Reserve Account for thepurpose of making or completing the Replacements; (ii) to make such additions,changes and corrections to the Replacements as shall be necessary or desirableto complete the Replacements; (iii) to employ such contractors, subcontractors,agents, architects and inspectors as shall be required for such purposes; (iv)to pay, settle or compromise all existing bills and claims which are or maybecome Liens against the Property, or as may be necessary or desirable for thecompletion of the Replacements, or for clearance of title; (v) to execute allapplications and certificates in the name of Borrower which may be required byany of the contract documents; (vi) to prosecute and defend all actions orproceedings in connection with the Property or the rehabilitation and repair ofthe Property; and (vii) to do any and every act which Borrower might do in itsown behalf to fulfill the terms of this Agreement.

 

(e)           Nothingin this Section 7.3.3 shall (i) make Lender responsible for making orcompleting the Replacements; (ii) require Lender to expend funds in addition tothe Replacement Reserve Fund to make or complete any Replacement; (iii)obligate Lender to proceed with the Replacements; or (iv) obligate Lender todemand from Borrower additional sums to make or complete any Replacement.

 

(f)            Borrowershall permit Lender and Lender’s agents and representatives (including, withoutlimitation, Lender’s engineer, architect, or inspector) or third parties makingReplacements pursuant to this Section 7.3.3 to enter onto the Property duringnormal business hours (subject to the rights of tenants under their Leases) toinspect the progress of any Replacements and all materials being used inconnection therewith, to examine all plans and shop drawings relating to suchReplacements which are or may be kept at the Property, and to complete anyReplacements made pursuant to this Section 7.3.3. Borrower shall cause all contractorsand subcontractors to cooperate with Lender or Lender’s representatives or suchother persons described above in connection with inspections described in thisSection 7.3.3(f) or the completion of Replacements pursuant to this Section7.3.3.

 

(g)           Lendermay require an inspection of the Property at Borrower’s expense prior to makinga monthly disbursement in excess of $10,000 from the Replacement Reserve Accountin order to verify completion of the Replacements for which reimbursement issought. Lender may require that such inspection be conducted by an appropriateindependent qualified professional selected by Lender and/or may require a copyof a certificate of completion by an independent qualified professionalacceptable to Lender prior to the disbursement of any amounts from theReplacement 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)           TheReplacements and all materials, equipment, fixtures, or any other itemcomprising a part of any Replacement shall be constructed, installed orcompleted, as applicable, free and clear of all mechanic’s, materialman’s orother liens (except for those Liens existing on the date of this Agreementwhich have been approved in writing by Lender).

 

(i)            Beforeeach disbursement from the Replacement Reserve Account, Lender may requireBorrower to provide Lender with a search of title to the Property effective tothe

 

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date of the disbursement, which search shows that no mechanic’s or materialmen’sliens or other liens of any nature have been placed against the Property sincethe date of recordation of the Mortgage and that title to the Property is freeand clear of all Liens (other than the lien of the Mortgage and any other Lienspreviously approved in writing by Lender, if any).

 

(j)            AllReplacements shall comply with all applicable Legal Requirements of allGovernmental Authorities having jurisdiction over the Property and applicable insurancerequirements including, without limitation, applicable building codes, specialuse permits, environmental regulations, and requirements of insuranceunderwriters.

 

(k)           Inaddition to any insurance required under the Loan Documents, Borrower shallprovide or cause to be provided workmen’s compensation insurance, builder’srisk, and public liability insurance and other insurance to the extent requiredunder applicable law in connection with a particular Replacement. All suchpolicies shall be in form and amount reasonably satisfactory to Lender. All suchpolicies which can be endorsed with standard mortgagee clauses making losspayable to Lender or its assigns shall be so endorsed. Certified copies of suchpolicies shall be delivered to Lender.

 

7.3.4        Failureto 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 curedwithin said thirty (30) day period, then provided that Borrower commencesaction to complete such cure and thereafter diligently proceeds to completesuch cure, such thirty (30) day period shall be extended for such time as isreasonably necessary for Borrower, in the exercise of due diligence, to curesuch failure, but such additional period of time shall not exceed sixty (60)days. Upon the occurrence of such an Event of Default, Lender may use theReplacement Reserve Fund (or any portion thereof) for any purpose, includingbut not limited to completion of the Replacements as provided in Section 7.3.3,or for any other repair or replacement to the Property or toward payment of theDebt in such order, proportion and priority as Lender may determine in its solediscretion. Lender’s right to withdraw and apply the Replacement Reserve Fundsshall be in addition to all other rights and remedies provided to Lender underthis Agreement and the other Loan Documents.

 

(b)           Nothingin this Agreement shall obligate Lender to apply all or any portion of theReplacement Reserve Fund on account of an Event of Default to payment of theDebt or in any specific order or priority.

 

7.3.5        Balancein 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 LENDERHARMLESS FROM AND AGAINST ANY AND ALL ACTIONS, SUITS, CLAIMS, DEMANDS,LIABILITIES, LOSSES, DAMAGES, OBLIGATIONS AND COSTS AND EXPENSES (INCLUDINGLITIGATION COSTS AND REASONABLE ATTORNEYS FEES AND EXPENSES) ARISING FROM OR INANY WAY CONNECTED WITH THE PERFORMANCE OF THE REPLACEMENTS.**

 

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**UNLESS THE SAME ARE SOLELY DUE TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OFLENDER. BORROWER SHALL ASSIGN TO LENDER ALL RIGHTS AND CLAIMS BORROWER MAY HAVE AGAINST ALL PERSONS OR ENTITIESSUPPLYING LABOR OR MATERIALS IN CONNECTIONWITH THE REPLACEMENTS; PROVIDED,HOWEVER, THAT LENDER MAY NOT PURSUE ANY SUCH RIGHT OR CLAIM UNLESSAN EVENT OF DEFAULT HAS OCCURRED ANDREMAINS UNCURED.**

 

Section 7.4             Intentionally Omitted.

 

Section 7.5             Intentionally Omitted.

 

Section 7.6             Intentionally Omitted.

 

Section 7.7             Reserve Funds, Generally.

 

7.7.1        Borrowergrants to Lender a first-priority perfected security interest in each of theReserve Funds and any and all monies now or hereafter deposited in each ReserveFund as additional security for payment of the Debt. Until expended or appliedin accordance herewith, the Reserve Funds shall constitute additional securityfor the Debt.

 

7.7.2        Uponthe occurrence of an Event of Default, Lender may, in addition to any and allother rights and remedies available to Lender, apply any sums then present inany or all of the Reserve Funds to the payment of the Debt in any order in itssole discretion.

 

7.7.3        TheReserve Funds shall not constitute trust funds and may be commingled with othermonies held by Lender.

 

7.7.4        Intentionallyomitted.

 

7.7.5        Borrowershall not, without obtaining the prior written consent of Lender, furtherpledge, assign or grant any security interest in any Reserve Fund or the moniesdeposited therein or permit any lien or encumbrance to attach thereto, or anylevy to be made thereon, or any UCC-1 Financing Statements, except those namingLender as the secured party, to be filed with respect thereto.

 

7.7.6        Lendershall not be liable for any loss sustained on the investment of any fundsconstituting the Reserve Funds unless occasioned by the gross negligence orwillful misconduct of Lender.

 

7.7.7        Uponpayment in full of the Debt and performance of all other obligations under thisAgreement and the other Loan Documents, Lender shall disburse to Borrower all remainingReserve Funds.

 

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** **

**ARTICLEVIII**

** **

**DEFAULTS**

 

Section 8.1             Eventof Default.

 

(a)           Eachof the following events shall constitute an event of default hereunder (an **“Eventof Default”**):

 

(i)            ifany portion of the Debt is not paid within five (5) days of the applicable duedate;

 

(ii)           if any of the Taxes or Other Charges are not paid prior tothe date when the same become delinquent, except to the extent that Borrower iscontesting same in accordance with the terms of Section 5.1.2 hereof, or thereare sufficient funds in the Tax and Insurance Escrow Fund to pay such Taxes orOther Charges and Lender fails to or refuses to release the same from the Taxand Insurance Escrow Fund;

 

(iii)          if the Policies are not kept in full force and effect, orif certified copies of the Policies are not delivered to Lender within ten (10)days of request;

 

(iv)          if Borrower transfers or encumbers any portion of theProperty without Lender’s prior written consent (to extent such consent isrequired) or otherwise violates the provisions of Section 5.2.13 of this LoanAgreement;

 

(v)           if any material representation or warranty made byBorrower herein or in any other Loan Document, or in any report, certificate,financial statement or other instrument, agreement or document furnished toLender shall have been false or misleading in any material respect as of thedate the representation or warranty was made;

 

(vi)          if Borrower or indemnitor or any guarantor under anyguaranty or indemnity issued in connection with the Loan shall make anassignment for the benefit of creditors;

 

(vii)         if a receiver, liquidator or trustee shall be appointed forBorrower or any guarantor or indemnitor under any guarantee or indemnity issuedin connection with the Loan or if Borrower or such guarantor or indemnitorshall be adjudicated a bankrupt or insolvent, or if any petition forbankruptcy, reorganization or arrangement pursuant to federal bankruptcy law,or any similar federal or state law, shall be filed by or against, consentedto, or acquiesced in by, Borrower or such guarantor or indemnitor, or if anyproceeding for the dissolution or liquidation of Borrower or such guarantor orindemnitor shall be instituted; provided, however, if suchappointment, adjudication, petition or proceeding was involuntary and notconsented 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 itsrights under this Agreement or any of the other Loan Documents or any interestherein or 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 inSection 4.1.30 hereof;

 

(x)            with respect to any term, covenantor provision set forth herein which specifically contains a notice requirementor grace 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 of the assumptions containedin any Insolvency Opinion or Additional Insolvency Opinion are or shall becomeuntrue in any material respect;

 

(xii)          if Borrower shall continue to be inDefault under any of the other terms, covenants or conditions of this Agreementnot specified in subsections (i) to (xi) above, for ten (10) days after noticeto Borrower from Lender, in the case of any Default which can be cured by thepayment of a sum of money, or for thirty (30) days after notice from Lender inthe case of any other Default; provided, however, that if suchnon-monetary Default is susceptible of cure but cannot reasonably be curedwithin such 30-day period and provided further that Borrower shall havecommenced to cure such Default within such 30-day period and thereafterdiligently and expeditiously proceeds to cure the same, such 30-day periodshall be extended for such time as is reasonably necessary for Borrower in theexercise of due diligence to cure such Default, such additional period not toexceed one hundred eighty (180) days; or

 

(xiii)         if there shall be default under any ofthe other 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)           Uponthe occurrence of an Event of Default (other than an Event of Default describedin clauses (vi), (vii) or (viii) above) and at any time thereafter Lender may,in addition to any other rights or remedies available to it pursuant to thisAgreement and the other Loan Documents or at law or in equity, Lender may takesuch action, without notice or demand, that Lender deems advisable to protectand enforce its rights against Borrower and in the Property, including, withoutlimitation, declaring the Debt to be immediately due and payable, and Lendermay enforce or avail itself of any or all rights or remedies provided in theLoan Documents against Borrower and the Property, including, withoutlimitation, all rights or remedies available at law or in equity; and upon anyEvent of Default described in clauses (vi), (vii) or (viii) above, the Debt andall other obligations of Borrower hereunder and under the other Loan Documentsshall immediately and automatically become due and payable, without notice ordemand, and Borrower hereby expressly waives any such notice or demand,anything contained herein or in any other Loan Document to the contrarynotwithstanding.

 

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Section 8.2             Remedies.

 

(a)           Uponthe occurrence of an Event of Default, all or any one or more of the rights,powers, privileges and other remedies available to Lender against Borrowerunder this Agreement or any of the other Loan Documents executed and deliveredby, or applicable to, Borrower or at law or in equity may be exercised byLender at any time and from time to time, whether or not all or any of the Debtshall be declared due and payable, and whether or not Lender shall havecommenced any foreclosure proceeding or other action for the enforcement of itsrights and remedies under any of the Loan Documents with respect to theProperty. Any such actions taken by Lender shall be cumulative and concurrentand may be pursued independently, singly, successively, together or otherwise,at such time and in such order as Lender may determine in its sole 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.

 

(b)           Lendershall have the right from time to time to partially foreclose the Mortgage inany manner and for any amounts secured by the Mortgage then due and payable as determinedby Lender in its sole discretion including, without limitation, the following circumstances:(i) in the 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)           Lendershall have the right from time to time to sever the Note and the other LoanDocuments into one or more separate notes, mortgages and other securitydocuments (the “Severed Loan Documents”) in such denominations as Lendershall determine in its sole discretion for purposes of evidencing and enforcingits rights and remedies provided hereunder. Borrower shall execute and deliverto Lender from time to time, promptly after the request of Lender, a severanceagreement and such other documents as Lender shall request in order to effectthe severance described in the preceding sentence, all in form and substancereasonably satisfactory to Lender. Borrower hereby absolutely and irrevocablyappoints Lender following the occurrence of an Event of Default as its true andlawful attorney, coupled with an interest, in its name and stead to make andexecute all documents necessary or desirable to effect the aforesaid severance,Borrower ratifying all that its said attorney shall do by virtue thereof; provided,however, Lender shall not make or execute any such documents under suchpower until three (3) days after notice has been given to Borrower by Lender ofLender’s intent to exercise its rights under such power. Borrower shall not beobligated to pay any costs or expenses incurred in connection with thepreparation, execution, recording or filing of the

 

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SeveredLoan Documents, and the Severed Loan Documents shall not contain anyrepresentations, warranties or covenants not contained in the Loan Documentsand any such representations and warranties contained in the Severed LoanDocuments will be given by Borrower only as of the Closing Date.

 

(d)           Asused in this Section 8.2, a “foreclosure” shall include any sale by power ofsale.

 

Section 8.3             RemediesCumulative; Waivers. The rights, powers and remedies of Lender under thisAgreement shall be cumulative and not exclusive of any other right, power orremedy which Lender may have against Borrower pursuant to this Agreement or theother Loan Documents, or existing at law or in equity or otherwise. Lender’srights, powers and remedies may be pursued singly, concurrently or otherwise,at such time and in such order as Lender may determine in Lender’s solediscretion. No delay or omission to exercise any remedy, right or poweraccruing upon an Event of Default shall impair any such remedy, right or poweror shall be construed as a waiver thereof, but any such remedy, right or powermay be exercised from time to time and as often as may be deemed expedient. Awaiver of one Default or Event of Default with respect to Borrower shall not beconstrued to be a waiver of any subsequent Default or Event of Default byBorrower or to impair any remedy, right or power consequent thereon.

 

**ARTICLE IX**

** **

**SPECIAL PROVISIONS**

 

Section 9.1             Saleof Notes and Securitization. At the request of the holder of the Note and,to the extent not already required to be provided by Borrower under this Agreement,Borrower shall cooperate with Lender to allow Lender to satisfy the marketstandards to which the holder of the Note customarily adheres or which may bereasonably required in the marketplace or by the Rating Agencies in connectionwith the sale of the Note or participations therein or the first successfulsecuritization (such sale and/or securitization, the **“Securitization”**)of rated single or multi-class securities (the **“Securities”**)secured by or evidencing ownership interests in the Note and the Mortgage. Inthis regard Borrower 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, market studies,environmental reviews and reports (Phase I’s and, if appropriate, Phase II’s),engineering reports and other due diligence investigations of the Property, asmay be reasonably requested by the holder of the Note or the Rating Agencies oras may be necessary or appropriate in connection with the Securitization (the **“Provided Information”**) together, if customary, with appropriateverification and/or consents of the Provided Information through letters ofauditors or opinions of counsel of independent attorneys acceptable to Lenderand the Rating Agencies;

 

(b)           causecounsel to render opinions, which may be relied upon by the holder of the Note,the Rating Agencies and their respective counsel, agents and representatives,as to non-consolidation, fraudulent conveyance, and true sale and/or lease orany other opinion

 

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customary in securitization transactions,which counsel and opinions shall be reasonably satisfactory to the holder ofthe Note and the Rating Agencies;

 

(c)           makesuch representations and warranties as of the closing date of the Securitizationwith respect to the Property, Borrower, and the Loan Documents as areconsistent with the representations and warranties made in the Loan Documents;and

 

(d)           executesuch amendments to the Loan Documents and organizational documents as may bereasonably requested by the holder of the Note or the Rating Agencies or otherwiseto effect the Securitization; provided, however, that Borrowershall not be required to modify or amend any Loan Document if such modificationor amendment would (i) change the interest rate, the stated maturity or theamortization of principal set forth in the Note, or (ii) modify or amend anyother material economic term of the Loan.

 

All material out-of-pocket third party costsand expenses incurred by Borrower in connection with complying with requestsmade under this Section 9.1 shall 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 theevent that the Disclosure Document is required to be revised prior to the saleof all Securities, Borrower will cooperate with the holder of the Note inupdating the Disclosure Document by providing all current information necessaryto keep the Disclosure Document accurate and complete in all material respects.

 

Section 9.3             Rating Surveillance.     Lender,at its option, may retain the Rating Agencies to provide rating surveillanceservices on any certificates issued in a Securitization. Such ratingsurveillance will be at the expense of Lender (the **“RatingSurveillance Charge”**).

 

Section 9.4             Exculpation.     Subjectto the qualifications below, Lender shall not enforce the liability andobligation of Borrower to perform and observe the obligations contained in theNote, this Agreement, the Mortgage or the other Loan Documents by any action orproceeding wherein a money judgment shall be sought against Borrower, exceptthat Lender or Trustee may bring a foreclosure action, an action for specificperformance or any other appropriate action or proceeding to enable Lender orTrustee to enforce and realize upon its interest under the Note, thisAgreement, the Mortgage and the other Loan Documents, or in the Property, theRents following an Event of Default, or any other collateral given to Lender orTrustee pursuant to the Loan Documents; provided, however, that, except asspecifically provided herein, any judgment in any such action or proceedingshall be enforceable against Borrower only to the extent of Borrower’s interestin the Property, in the Rents following an Event of Default and in any other collateralgiven to Lender or Trustee, and Lender or Trustee, by accepting the Note, thisAgreement, the Mortgage and the other Loan Documents, agrees that it shall notsue for, seek or

 

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demand any deficiency judgment against Borrower in any such action orproceeding under or by reason of or under or in connection with the Note, thisAgreement, the Mortgage or the other Loan Documents. The provisions of thissection shall not, however, (a) constitute a waiver, release or impairment ofany obligation evidenced or secured by any of the Loan Documents; (b) impairthe right of Lender or Trustee to name Borrower as a party defendant in anyaction or suit for foreclosure and sale under any of the Mortgage; (c) affectthe validity or enforceability of or any guaranty made in connection with theLoan or any of the rights and remedies of Lender thereunder; (d) impair theright of Lender or Trustee to obtain the appointment of a receiver; (e) impairthe enforcement of any of the Assignment of Leases following an Event ofDefault; (f) constitute a prohibition against Lender or Trustee commencing anyother appropriate action or proceeding in order for Lender to exercise itsremedies against the Property; or (g) constitute a waiver of the right ofLender or Trustee to enforce the liability and obligation of Borrower, by moneyjudgment or otherwise, to the extent of any loss, damage, cost, expense,liability, claim or other obligation incurred by Lender (including attorneys’fees and costs reasonably incurred) arising out of or in connection with thefollowing:

 

(i)            fraud or intentionalmisrepresentation by Borrower or any Indemnitor in connection with the Loan;

 

(ii)           the gross negligence or willfulmisconduct of Borrower; 

 

(iii)          material physical waste of theProperty;

 

(iv)          the breach of any representation,warranty, covenant or indemnification provision in the Environmental Indemnityor in the Mortgage concerning environmental laws, hazardous substances andasbestos and any indemnification of Lender with respect thereto in eitherdocument;

 

(v)           the removal or disposal of anyportion of the Property after an Event of Default;

 

(vi)          the misapplication, or conversion byBorrower of (A) any insurance proceeds paid by reason of any loss, damage ordestruction to the Property which are not applied by Borrower in accordancewith this Agreement, (B) any awards or other amounts received in connectionwith the condemnation of all or a portion of the Property which are not appliedby Borrower in accordance with this Agreement, or (C) any Rents following anEvent of Default;

 

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

 

(viii)        any security deposits, advance depositsor any 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.

 

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Notwithstanding anything to the contrary inthis Agreement, the Note, the Indemnity Agreement or any of the Loan Documents,(A) the Debt shall be fully recourse to the Borrower and (B) Lender shall notbe deemed to have waived any right which Lender may have under Section 506(a),506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file aclaim for the full amount of the Debt secured by the Mortgage or to requirethat all collateral shall continue to secure all of the Debt owing to Lender inaccordance with the Loan Documents in the event that (I) the first full monthlypayment under the Note is not paid within five (5) days of notice that suchpayment is late (provided, however, that such five (5) day grace period relatesonly to the recourse trigger described in this paragraph), or (II) Borrowerfails to permit on-site inspections of the Property subject to the rights ofTenants and any applicable cure period set forth in the Loan Documents, toprovide financial information as required under the Loan Documents subject toany applicable cure period (except for financial information required to bedelivered by a tenant pursuant to the applicable Lease that has not beendelivered to Borrower, provided Borrower has requested such financialinformation from such tenant), or to comply with Section 4.1.30 hereof, or(III) Borrower fails to obtain Lender’s prior written consent (to the extentsuch consent is required) to any subordinate financing or other voluntary lienencumbering the Property, or (IV) Borrower fails to obtain Lender’s priorwritten consent to any assignment, transfer or conveyance of the Property, orany portion thereof, or any interest therein as required by this Agreement, solong as any of the events described in clauses (I), (II), (III) or (IV) of thisparagraph continue to exist. Notwithstanding the provision set forth in clause(III) of this paragraph, a voluntary lien other than a lien securing anextension of credit filed against the Property shall not constitute a recoursetrigger for purposes of this paragraph provided such lien (A) is fully bondedto the satisfaction of Lender and discharged of record within ninety (90) daysof filing, or (B) within such ninety (90) day period, Lender receivesaffirmative title insurance from the title insurance company insuring the lienof the Mortgage that such lien is subject and subordinate to the lien of theMortgage and no enforcement action is commenced by the applicable lien holder.

 

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 Manager shallbecome 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 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 from

 

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the 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.     Atthe option of Lender, the Loan may be serviced by a servicer/trustee (the **“Servicer”**) selected by Lender and Lender maydelegate all or any portion of its responsibilities under this Agreement andthe other Loan Documents to the Servicer pursuant to a servicing agreement (the**“Servicing Agreement”**) betweenLender and Servicer. Lender shall be responsible for any set-up fees or any othercosts relating to or arising under the Servicing Agreement.

 

Section 9.7             Splitting the Loan.     Atthe election of Lender in its sole discretion, the Loan or any individual Notemaking up the Loan shall be split and severed into two or more loans which, atLender’s election, shall not be cross-collateralized or cross-defaulted witheach other. Borrower hereby agrees to deliver to Lender to effectuate suchsevering of the Loan or any individual Note, as the case may be, as reasonablyrequested by Lender, (a) additional executed documents, or amendments andmodifications to the applicable Loan Documents, (b) new opinions or updates tothe 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 all reasonablethird-party expenses incurred in connection with the preparation and deliveryof the Severing Documentation and the effectuation of the uncrossing of theLoan from the additional Loans. Borrower hereby acknowledges and agrees thatupon such severing of the Loan, Lender may effect, in its sole discretion, oneor more Securitizations of which the severed loans may be a part.

 

**ARTICLE X**

** **

**MISCELLANEOUS**

 

Section 10.1           Survival.     ThisAgreement and all covenants, agreements, representations and warranties madeherein and in the certificates delivered pursuant hereto shall survive themaking by Lender of the Loan and the execution and delivery to Lender of theNote, and shall continue in full force and effect so long as all or any of theDebt is outstanding and unpaid unless a longer period is expressly set forthherein or in the other Loan Documents.  Whenever in this Agreement any of the partieshereto is referred to, such reference shall be deemed to include the legalrepresentatives, successors and assigns of such party. All covenants, promisesand agreements in this Agreement, by or on behalf of Borrower, shall inure tothe benefit of the legal representatives, successors and assigns of Lender.

 

Section 10.2           Lender’s Discretion.     Wheneverpursuant to this Agreement, Lender exercises any right given to it to approveor disapprove, or any arrangement or term is to be satisfactory to Lender, thedecision of Lender to approve or disapprove or to decide whether

 

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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 GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARDTO CONFLICTS OF LAW PRINCIPLES. BORROWER HEREBY IRREVOCABLY SUBMITS TO THEJURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE CITY OFCHICAGO AND STATE OF ILLINOIS IN CONNECTION WITH ANY PROCEEDING ARISING OUT OFOR RELATING TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

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 onthe part 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 other futureexercise, or the exercise of any other right, power, remedy or privilege. Inparticular, 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 requestsrequired or permitted hereunder or under any other Loan Document shall be givenin writing and shall be effective for all purposes if hand delivered or sent by(a) certified or registered United States mail, postage prepaid, return receiptrequested or (b) expedited prepaid delivery service, either commercial orUnited States Postal Service, with proof of attempted delivery, and bytelecopier (with answer back acknowledged), addressed as follows (or at suchother address and Person as shall be designated from time to time by any partyhereto, as the case may be, in a written notice to the other parties hereto inthe manner provided for in this Section):

 

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If to Lender:

 

LaSalle Bank National Association

135 South LaSalle Street, Suite 3410

Chicago, Illinois 60603

Attention: RealEstate Capital MarketsInland-Gateway Pavilions 

Fax: (312) 904-0900

 

with a copy to:

 

Katten Muchin Zavis Rosenman

525 W. Monroe Street

Suite 1600

Chicago, Illinois 60661

Attention: David R. Dlugie, Esq.

Fax: (312) 577-8666

 

If to Borrower:

 

Inland Western Avondale Mc Dowell, L.L.C.

2901 Butterfield Road

Oak Brook, Illinois 60523

Attention: Steven Grimes

Fax: (630) 218-4955

 

with a copy to:

 

Inland Western Retail Real Estate Trust, Inc.

2901 Butterfield Road

Oak Brook, IL 60523

Attention: RobertH. Baum, Esq.

Fax: (630) 218-4900

 

and with a copy to:

 

Inland Western Retail Real Estate Trust, Inc.

2901 Butterfield Road

Oak Brook, IL 60523

Attention: Roberta Matlin

Fax: (630) 218-4955

 

A notice shall be deemed to have been given:in the case of hand delivery, at the time of delivery; in the case ofregistered or certified mail, when delivered or the first attempted delivery ona Business Day; or in the case of expedited prepaid delivery and telecopy, uponthe first attempted delivery on a Business Day.

 

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Section 10.7           Trial by Jury.     **BORROWER AND LENDER HEREBY AGREE NOT TO****ELECT A TRIAL BY JURY OFANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLYTO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TOTHE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTIONTHEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY ANDVOLUNTARILY BY BORROWER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLYEACH INSTANCE AND EACH ISSUE AS TOWHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. LENDER IS HEREBYAUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THISWAIVER BY BORROWER AND LENDER. THIS WAIVER IS KNOWINGLY, INTENTIONALLY ANDVOLUNTARILY MADE BY BORROWER AND BY LENDER, AND BORROWER ACKNOWLEDGES ON BEHALFOF ITSELF AND ITS PARTNERS, MEMBERS, SHAREHOLDERS, AS THE CASE MAY BE, THATNEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANYREPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKENANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER AND LENDER ACKNOWLEDGE THAT THISWAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT BORROWER AND LENDER HAVEALREADY RELIED ON THIS WAIVER IN ENTERING INTO THE LOAN DOCUMENTS AND THAT EACHOF THEM WILL CONTINUE TO RELY ONTHIS WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER AND LENDER FURTHERACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED(OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THE LOANDOCUMENTS AND IN THE MAKING OF THISWAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THATTHEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.**

 

Section 10.8           Headings.     TheArticle and/or Section headings and the Table of Contents in this Agreement areincluded herein for convenience of reference only and shall not constitute apart of this Agreement for any other purpose.

 

Section 10.9           Severability.     Whereverpossible, each provision of this Agreement shall be interpreted in such manneras to be effective and valid under applicable law, but if any provision of thisAgreement shall be prohibited by or invalid under applicable law, suchprovision shall be ineffective to the extent of such prohibition or invalidity,without invalidating the remainder of such provision or the remainingprovisions of this Agreement.

 

Section 10.10         Preferences.     Lendershall have the continuing and exclusive right to apply or reverse and reapplyany and all payments by Borrower to any portion of the obligations of Borrowerhereunder. To the extent Borrower makes a payment or payments to Lender, whichpayment or proceeds or any part thereof are subsequently invalidated, declaredto be fraudulent or preferential, set aside or required to be repaid to atrustee, receiver or any other party under any bankruptcy law, state or federallaw, common law or equitable cause, then, to the extent of such payment orproceeds received, the obligations hereunder or part thereof intended to be

 

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satisfied shall be revived andcontinue in full force and effect, as if such payment or proceeds had not beenreceived by Lender.

 

Section 10.11         Waiver of Notice.      Borrower shallnot be entitled to any notices of any nature whatsoever from Lender except withrespect to matters for which this Agreement or the other Loan Documentsspecifically and expressly provide for the giving of notice by Lender toBorrower and except with respect to matters for which Borrower is not, pursuantto applicable Legal Requirements, permitted to waive the giving of notice.Borrower hereby expressly waives the right to receive any notice from Lenderwith respect to any matter for which this Agreement or the other Loan Documentsdo not specifically and expressly provide for the giving of notice by Lender toBorrower.

 

Section 10.12         Remedies of Borrower.     Inthe event that a claim or adjudication is made that Lender or its agents haveacted unreasonably or unreasonably delayed acting in any case where by law or underthis Agreement or the other Loan Documents, Lender or such agent, as the casemay be, has an obligation to act reasonably or promptly, Borrower agrees thatneither Lender nor its agents shall be liable for any monetary damages, andBorrower’s sole remedies shall be limited to commencing an action seekinginjunctive relief or declaratory judgment. The parties hereto agree that anyaction or proceeding to determine whether Lender has acted reasonably shall bedetermined by an action seeking declaratory judgment.

 

Section 10.13         Expenses; Indemnity.

 

(a)           Borrowercovenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lenderupon receipt of written notice from Lender for all reasonable costs andexpenses (including reasonable attorneys’ fees and disbursements) incurred byLender in connection with (i) the preparation, negotiation, execution anddelivery of this Agreement and the other Loan Documents and the consummation ofthe transactions contemplated hereby and thereby and all the costs of furnishingall opinions by counsel for Borrower (including without limitation any opinionsrequested by Lender as to any legal matters arising under this Agreement or theother Loan Documents with respect to the Property); (ii) Borrower’s ongoingperformance of and compliance with Borrower’s respective agreements andcovenants contained in this Agreement and the other Loan Documents on its partto be performed or complied with after the Closing Date, including, withoutlimitation, confirming compliance with environmental and insurancerequirements; (iii) Lender’s ongoing performance and compliance with allagreements and conditions contained in this Agreement and the other LoanDocuments on its part to be performed or complied with after the Closing Date;(iv) except as otherwise provided in this Agreement, the negotiation,preparation, execution, delivery and administration of any consents,amendments, waivers or other modifications to this Agreement and the other LoanDocuments and any other documents or matters reasonably requested by Lender;(v) securing Borrower’s compliance with any requests made pursuant to theprovisions of this Agreement; (vi) the filing and recording fees and expenses,title insurance and reasonable fees and expenses of counsel for providing toLender all required legal opinions, and other similar expenses incurred increating and perfecting the Liens in favor of Lender pursuant to this Agreementand the other Loan Documents; (vii) enforcing or preserving any rights, inresponse to third party claims or the prosecuting or defending of any action orproceeding or other litigation, in each case against, under or affectingBorrower, this Agreement, the other Loan Documents, the Property, or any

 

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other security given for theLoan; and (viii) enforcing any obligations of or collecting any payments duefrom Borrower under this Agreement, the other Loan Documents or with respect tothe Property or in connection with any refinancing or restructuring of thecredit arrangements provided under this Agreement in the nature of a “work-out”or of any insolvency or bankruptcy proceedings; provided, however, thatBorrower shall not be liable for the payment of any such costs and expenses tothe extent the same arise by reason of the gross negligence, illegal acts, fraudor willful misconduct of Lender.

 

(b)           **BORROWER SHALL****INDEMNIFY, DEFEND AND HOLD HARMLESS LENDER FROM ANDAGAINST ANY AND ALL OTHER LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND OR NATUREWHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR LENDER INCONNECTION 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 IN ANYMANNER RELATING TO OR ARISING OUT OF(I) ANY BREACH BY BORROWER OF ITS OBLIGATIONS UNDER, OR ANY MATERIALMISREPRESENTATION BY BORROWER CONTAINED IN, THIS AGREEMENT OR THE OTHER LOANDOCUMENTS, OR (II) THE USE OR INTENDED USE OF THE PROCEEDS OF THE LOAN(COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”); PROVIDED, HOWEVER,THAT BORROWER SHALL NOT HAVE ANY OBLIGATION TO LENDER HEREUNDER TO THE EXTENTTHAT SUCH INDEMNIFIED LIABILITIES ARISEFROM THE GROSS NEGLIGENCE, ILLEGAL ACTS, FRAUD OR WILLFUL MISCONDUCT OF LENDER.TO THE EXTENT THAT THE UNDERTAKING TO INDEMNIFY, DEFEND AND HOLD HARMLESS SET FORTH IN THE PRECEDING SENTENCE MAY BE UNENFORCEABLE BECAUSE IT VIOLATES ANY LAWOR PUBLIC POLICY, BORROWER SHALL PAY THE MAXIMUM PORTION THAT IT IS PERMITTEDTO PAY AND SATISFY UNDER APPLICABLE LAW TO THE PAYMENT AND SATISFACTION OF ALLINDEMNIFIED 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.     Anyassignee of Lender’s interest in and to this Agreement, the Note and the otherLoan Documents shall take the same free and clear of all offsets, counterclaimsor defenses which are unrelated to such documents which Borrower may otherwisehave against any assignor of such documents, and no such unrelated counterclaimor defense shall be interposed or asserted by Borrower in any action orproceeding brought by any such assignee upon such documents and any such rightto interpose or assert any such unrelated offset, counterclaim or defense inany such action or proceeding is hereby expressly waived by Borrower.

 

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Section 10.16         No Joint Venture or Partnership; NoThird Party Beneficiaries.

 

(a)           Borrowerand Lender intend that the relationships created hereunder and under the otherLoan Documents be solely that of borrower and lender. Nothing herein or thereinis intended to create a joint venture, partnership, tenancy-in-common, or jointtenancy relationship between Borrower and Lender nor to grant Lender anyinterest in the Property other than that of mortgagee, beneficiary or lender.

 

(b)           ThisAgreement and the other Loan Documents are solely for the benefit of Lender andBorrower and nothing contained in this Agreement or the other Loan Documentsshall be deemed to confer upon anyone other than Lender and Borrower any rightto insist upon or to enforce the performance or observance of any of theobligations contained herein or therein.  All conditions to the obligations of Lender tomake the Loan hereunder are imposed solely and exclusively for the benefit ofLender and no other Person shall have standing to require satisfaction of suchconditions in accordance with their terms or be entitled to assume that Lenderwill refuse to make the Loan in the absence of strict compliance with any orall thereof and no other Person shall under any circumstances be deemed to be abeneficiary of such conditions, any or all of which may be freely waived inwhole or in part by Lender if, in Lender’s sole discretion, Lender deems itadvisable or desirable to do so.

 

Section 10.17         Publicity.     Allnews releases, publicity or advertising by Borrower or their Affiliates throughany media intended to reach the general public which refers to the LoanDocuments or the financing evidenced by the Loan Documents, to Lender, BearSteams, or any of their Affiliates shall be subject to the prior writtenapproval of Lender. All news releases, publicity or advertising by Lender throughany media intended to reach the general public which refers solely to theBorrower or to the Loan made by the Lender to the Borrower shall be subject tothe prior written approval of Borrower, provided however, the foregoing shallnot apply to Provided Information included in disclosure documents inconnection with a Securitization.

 

Section 10.18         Waiver of Marshalling of Assets.     Tothe fullest extent permitted by law, Borrower, for itself and its successorsand assigns, waives all rights to a marshalling of the assets of Borrower,Borrower’s members and others with interests in Borrower, and of the Property,or to a sale in inverse order of alienation in the event of foreclosure of theMortgage or sale of the Property by power of sale, and agrees not to assert anyright under any laws pertaining to the marshalling of assets, the sale ininverse order of alienation, homestead exemption, the administration of estatesof decedents, or any other matters whatsoever to defeat, reduce or affect theright of Lender under the Loan Documents to a sale of the Property for thecollection of the Debt without any prior or different resort for collection orof the right of Lender to the payment of the Debt out of the net proceeds ofthe Property in preference to every other claimant whatsoever.

 

Section 10.19         Waiver of Counterclaim.    Borrowerhereby waives the right to assert a counterclaim, other than a compulsorycounterclaim, in any action or proceeding brought against it by Lender or itsagents.

 

Section 10.20         Conflict; Construction of Documents;Reliance.     In the event of any conflict betweenthe provisions 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

 

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execution of the Loan Documentsand that such Loan Documents shall not be subject to the principle ofconstruing their meaning against the party which drafted same. Borroweracknowledges that, with respect to the Loan, Borrower shall rely solely on itsown judgment and advisors in entering into the Loan without relying in anymanner on any statements, representations or recommendations of Lender or anyparent, subsidiary or Affiliate of Lender. Lender shall not be subject to anylimitation whatsoever in the exercise of any rights or remedies available to itunder any of the Loan Documents or any other agreements or instruments whichgovern the Loan by virtue of the ownership by it or any parent, subsidiary orAffiliate of Lender of any equity interest any of them may acquire in Borrower,and Borrower hereby irrevocably waives the right to raise any defense or takeany action on the basis of the foregoing with respect to Lender’s exercise ofany such rights or remedies. Borrower acknowledges that Lender engages in thebusiness of real estate financings and other real estate transactions andinvestments which may be viewed as adverse to or competitive with the businessof Borrower or its Affiliates.

 

Section 10.21         **BROKERSAND FINANCIAL ADVISORS.  BORROWERHEREBY REPRESENTS THAT IT HAS DEALT WITH NO FINANCIAL ADVISORS, BROKERS,UNDERWRITERS, PLACEMENT****AGENTS, AGENTS OR FINDERS IN CONNECTION WITH THETRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OTHER THAN INLAND MORTGAGE CORP.BORROWER HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLD LENDER HARMLESS FROM ANDAGAINST ANY AND ALL CLAIMS,LIABILITIES, COSTS AND EXPENSES OF ANY KIND (INCLUDING LENDER’S REASONABLEATTORNEYS’ FEES AND EXPENSES) INANY WAY RELATING TO OR ARISINGFROM A CLAIM BY ANY PERSON THAT SUCH PERSON ACTED ON BEHALF OF BORROWER ORLENDER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREIN. THE PROVISIONSOF THIS SECTION 10.21 SHALL SURVIVE THE EXPIRATION AND TERMINATION OF THISAGREEMENT 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, aresuperseded by the terms of this Agreement and the other Loan Documents andunless specifically set forth in a writing contemporaneous herewith the terms,conditions and provisions of such prior agreement do not survive execution ofthis Agreement.

 

Section 10.23         Sale of Loan.  Lender, at any time and without the consentof Borrower or Indemnitor, may grant participation in or sell, transfer, assignand convey all or any portion of its right, title and interest in and to theLoan, the servicing of the Loan, this Agreement and the other Loan Documents,any guaranties given in connection with the Loan and any collateral given tosecure the Loan. Borrower covenants to cooperate with Lender’s efforts in thesecuritization of the Loan; such cooperation includes Borrower’s obligation to(a) make non-material modifications of the Loan Documents (such modifications shallnot (i) increase the amount of the Indebtedness, (ii) change the scheduleand/or the amount of the monthly payment and (iii) change the Interest Rate),(b) provide additional information regarding Borrower’s financial statements,(c) deliver updated information regarding Borrower and the Property, (d)cooperate

 

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with any third parties,including, but not limited to, rating agencies and potential investors tofacilitate the rating and securitization of the Loan, (e) review Lender’ssecuritization offering materials to the extent such materials relate toBorrower, the Property or the Loan and (f) respond to any inquiries of Lenderor other party relating thereto. Borrower agrees to represent and warrant theabsence of misstatements and/or omissions in the information relating toBorrower, the Property and the Loan that is contained in the offering materialsand which has been furnished to or approved by Borrower. Borrower shall not beliable for Lender’s post-closing costs incurred pursuant to any securitizationof the Loan by Lender.

 

Section 10.24         Joint and Several Liability.     IfBorrower consists of more than one person or party, the obligations andliabilities of each person or party shall be joint and several.

 

 

(THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)

 

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IN WITNESS WHEREOF, the parties hereto havecaused this Agreement to be duly executed by their duly authorizedrepresentatives, all as of the day and year first above written.

 
|            | **BORROWER:**                                                                      |
|-----------------|------------------------------------------------------------------------------------|
|            |                                                                               |   |
| WITNESS/ATTEST: | **INLAND WESTERN AVONDALEMCDOWELL, L.L.C.,**a  Delaware limited liability  company |
|            |                                                                               |   |
|            |                                                                               | 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 |   |
|            |                                                                               |   |
|            |                                                                               |   |
|            | **LENDER:**                                                                        |
|            |                                                                               |   |
| WITNESS/ATTEST: | **LASALLE BANK NATIONAL ASSOCIATION,**                                             |
|            | a national banking association                                                     |
|            |                                                                               |
|            |                                                                               | By: |   |   |
|            | Name:                                                                              |   |   |
|            | Title:                                                                             |   |   |
|                 |                                                                                    |  |  |  |  |  |  |  |  |  |

 

----

 

**SCHEDULE I**

 

Intentionally Omitted

 

X-1

----

 

**SCHEDULEII**

 

Intentionally Omitted

 

X-2

----

 

**SCHEDULEIII**

** **

**REQUIRED REPAIRS**

 

1.             Repair concretecurb and asphalt repairs in accordance with the recommendations set forth inthat certain Property Condition Report prepared by Reeves Consulting, Inc. anddated as of November 19, 2004 (“Property Report”).

 

2.             Complete concreteflat work repairs in accordance with the recommendations set forth in theProperty Report.

 

3.             Repair roof openseams and EIFS parapet wall repairs in accordance with the recommendations setforth in the Property Report.

 

X-3

----

 

**SCHEDULEIV**

 

**RENT ROLL**

 

**[To Be Attached]**

 

X-4

----

 

**SCHEDULE V**

 

Intentionally Omitted

 

X-5

----

 

**SCHEDULEVI**

 

Intentionally Omitted.

 

X-6

----

 

**SCHEDULEVII**

 

**PROPERTY AFFECTED BY SECTION 4.1.22**

 

NONE

 

X-7

----

 

**SCHEDULEVIII**

 

Intentionally Omitted.

 

X-8

----

 

**SCHEDULEIX**

 

IntentionallyOmitted.

 

X-9

----

 

**SCHEDULE X**

 

**OTHER CONTRACT FUNDS AGREEMENTS**

 

NONE

 

X-10

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