Exhibit
10.431


 


LOAN AGREEMENT


 


THIS LOAN AGREEMENT, dated as of this 20th day of December, 2004 (as amended, restated, replaced, supplemented or
otherwise modified from time to time, this “Agreement”),
between BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York corporation, having
an address at 383 Madison Avenue, New York, New York 10179 (“Lender”), and INLAND WESTERN GURNEE, L.L.C., a
Delaware limited liability company, having an address at 2901 Butterfield Road,
Oak Brook, Illinois 60523 (“Borrower”).


 


W I T N E S S E T H:


 


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


 


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


 


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


 


ARTICLE I

DEFINITIONS; PRINCIPLES OF CONSTRUCTION


 


Section 1.1                                      Definitions. For all purposes of this Agreement, except as otherwise expressly
required or unless the context clearly indicates a contrary intent:


 


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


 


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


 


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


 


“Anchor Tenant” shall mean shall mean, collectively (a)
Borders, Inc., (b) LNT West, Inc., (c) Cost Plus, Inc., and (d) Old Navy, LLC,
pursuant to the Anchor Tenant Lease.


 


“Anchor Tenant Lease”  shall mean:


 


(i)                                     with respect to LNT West, Inc., that certain
Lease, dated October 28, 1999, by and between Rubloff Gurnee Town Centre,
L.L.C., f/k/a Dalan/Rubloff Gurnee, L.L.C., as original landlord and
predecessor-in-interest to Borrower, as landlord, and Anchor Tenant (or its
predecessor-in-interest) as tenant as the same has previously been amended and
may be further amended, restated, renewed, substituted or replaced (but only to
the extent permitted under this Agreement);


 





















 


(ii)                                  with respect to Cost Plus, Inc., that certain
Lease, dated October 18, 1999, by and between Rubloff Gurnee Town Centre,
L.L.C., f/k/a Dalan/Rubloff Gurnee, L.L.C., as original landlord and
predecessor-in-interest to Borrower, as landlord, and Anchor Tenant (or its
predecessor-in-interest) as tenant as the same has previously been amended and
may be further amended, restated, renewed, substituted or replaced (but only to
the extent permitted under this Agreement);


 


(iii)                               with respect to Borders, Inc., that certain
Lease, dated October 24, 1999, by and between Rubloff Gurnee Town Centre,
L.L.C., f/k/a Dalan/Rubloff Gurnee, L.L.C., as original landlord and
predecessor-in-interest to Borrower, as landlord, and Anchor Tenant (or its
predecessor-in-interest) as tenant as the same has previously been amended and
may be further amended, restated, renewed, substituted or replaced (but only to
the extent permitted under this Agreement); and


 


(iv)                              with respect to Old Navy, LLC, that certain
Lease, dated September 20, 2004, by and between Dalan/Rubloff Gurnee,
L.L.C., as original landlord and predecessor-in-interest to Borrower, as
landlord, and Anchor Tenant (or its predecessor-in-interest) as tenant as the
same has previously been amended and may be further amended, restated, renewed,
substituted or replaced (but only to the extent permitted under this
Agreement).


 


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


 


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


 


“Assignment of Management
Agreement” shall
mean that certain Assignment of Management Agreement and Subordination 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 any
Governmental Authority in connection with a Condemnation in respect of all or
any part of the Property.


 


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


 


“Borrower” shall mean Inland Western Gurnee, L.L.C.,
together with its permitted successors and assigns.


 


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


 


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


 


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


 


“Cash Management Agreement” shall have the meaning specified in Section 2.6.3.


 


“Cash Management Termination Event” shall mean the Debt Service Coverage Ratio
shall be equal to or greater than 1.35 to 1.0 for two (2) complete, consecutive
calendar quarters following the calendar quarter in which the Cash Management
Trigger caused by a Debt Service Coverage Ratio deficiency occurred, provided,
however, there shall not be more than two (2) Cash Management Termination
Events during the term of the Loan.


 


“Cash Management Trigger” shall mean (i) the existence of an Event of
Default, (ii) the bankruptcy or insolvency of Borrower or Manager, or (iii)
Lender’s determination that the Debt Service Coverage Ratio for the preceding
six (6) months annualized is less than or equal to 1.25 to 1.0.


 


“Casualty” shall have the
meaning specified in Section 6.2 hereof.


 


“Casualty/Condemnation Prepayment” shall have the meaning specified in Section 6.4(e)
hereof.


 


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


 


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


 


“Closing Date” shall mean the date hereof.


 


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


 


“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of the Property, or
any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part thereof.


 


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


 


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


 


“Debt Service Coverage Ratio” shall mean a ratio for the applicable period
in which:


 


(b)                                 the numerator is the Net Operating Income
(excluding interest on credit accounts) for such period as set forth in the
statements required hereunder, without deduction for (i) actual management fees
incurred in connection with the operation of the Property, (ii) amounts paid to
the Reserve Funds, less (A) management fees equal to the greater of (1) assumed
management fees of four percent (4.0%) of Gross Income from Operations or (2)
the actual management fees incurred, (B) assumed Replacement Reserve Fund
contributions equal to $0.15 per square foot of gross leaseable area at the
Property; and (C) assumed reserves for tenant improvements and leasing
commissions equal to $0.44 per square foot of gross leaseable area at the
Property; and


 


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


 


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


 


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


 


“Disclosure Document” shall have the meaning set forth in Section 9.2 hereof.


 


“Eligible Account” shall mean a separate and identifiable
account from all other funds held by the holding institution that is either (a)
an account or accounts maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (b) a segregated trust account or accounts maintained with a
federal or state chartered depository institution or trust company acting in
its fiduciary capacity which, in the case of a state chartered depository
institution or trust company, is subject to regulations substantially similar
to 12 C.F.R. §9.10(b), having in either case a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by federal and
state authority. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.


 


“Eligible Institution” shall mean a depository institution or trust
company insured by the Federal Deposit Insurance Corporation the short term
unsecured debt obligations or commercial paper of which are rated at least A-1
by Standard Poor’s Ratings Services, P-1


 


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


 


“Environmental Indemnity” shall mean that certain Environmental
Indemnity Agreement executed by Borrower in connection 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 the
Environmental Indemnity executed by the Borrower.


 


“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended.


 


“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.


 


“Excess Cash Flow” shall
have the meaning set forth in Section 2.6.3 hereof 


 


“Exchange Act” shall have the meaning set forth in. Section 9.2
hereof.


 


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


 


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


 


“Gross Income from Operations” shall mean all sustainable income as
reported on the financial statements delivered by the Borrower in accordance
with this Agreement, computed in accordance with accounting principles
reasonably acceptable to Lender, consistently applied, derived from the
ownership and operation of the Property from whatever source, including, but not limited to, (i)
Rents from Tenants that arc in occupancy, open for business and paying unabated
Rent, (ii) utility charges, (iii) escalations, (iv) intentionally omitted; (v)
service fees or charges, (vi) license fees, (vii) parking fees, and (viii)
other required pass-throughs but excluding
(i) Rents from Tenants that are subject to any bankruptcy proceeding
(unless such Tenant has affirmed its Lease or Inland Western Retail Real Estate
Trust, Inc. has master leased such Tenant’s premises for full contract rent for
a period not less than three 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 September 30, 2003), or are not in occupancy, open for
business or paying unabated Rent, (ii) sales, use and occupancy or other taxes
on receipts required to be accounted for by Borrower to any Governmental
Authority, (iii) refunds and uncollectible accounts, (iv) sales of furniture,
fixtures and equipment, (v) Insurance Proceeds (other than business
interruption or other loss of income insurance), (vi) Awards, (vii) unforfeited
security deposits, (viii) utility and other similar deposits and (ix) any
disbursements to Borrower from the Reserve Funds. Gross income shall not be
diminished as a


 


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result
of the Mortgage or the creation of any intervening estate or interest in the
Property or any part thereof.


 


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


 


“Indebtedness” of a Person, at a particular date, means the sum (without duplication)
at such date of (a) indebtedness or liability for borrowed money; (b)
obligations evidenced by bonds, debentures, notes, or other similar
instruments; (c) obligations for the deferred purchase price of property or
services (including trade obligations); (d) obligations under letters of
credit; (e) obligations under acceptance facilities; (f) all guaranties,
endorsements (other than for collection or deposit in the ordinary course of
business) and other contingent obligations to purchase, to provide funds for
payment, to supply funds, to invest in any Person or entity, or otherwise to
assure a creditor against loss; and (g) obligations secured by any Liens,
whether or not the obligations have been assumed.


 


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


 


“Indemnity Agreement” shall mean that certain Indemnity Agreement dated as of the Closing
Date by Borrower and Indemnitor in favor of Lender.


 


“Independent Director” shall mean a director of a corporation or a limited liability company
who is not at the time of initial appointment, or at any time while serving as
a director of such an entity, and has not been at 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 of them; (b) a customer, supplier or
other person who derives any of its purchases or revenues from its activities
with the Borrower or any Affiliate of either of them; (c) a Person controlling
or under common control with any such stockholder, director, officer, partner,
customer, supplier or other Person; or (d) a member of the immediate family of
any such stockholder, director, officer, employee, partner, customer, supplier
or other person. As used in this definition, the term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.


 


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


 


“Insolvency Opinion” shall have the meaning set forth in Section 3.1.6 hereof. 


 


“Insurance Premiums” shall have the meaning set forth in Section 6.1(b) hereof. 


 


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


 


“Interest Rate” shall mean four and 597/1000 percent (4.597%) per annum.


 


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“Lease” shall mean any lease, sublease or
subsublease, letting, license, concession or other agreement (whether written
or oral and whether now or hereafter in effect) pursuant to which any Person is
granted a possessory interest in, or right to use or occupy all or any portion
of any space in the Property of Borrower, and every modification, amendment or
other agreement relating to such lease, sublease, subsublease, or other
agreement entered into in connection with such lease, sublease, subsublease, or
other agreement and every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party 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 of
Governmental Authorities affecting the Property or any part thereof, or the
construction, use, alteration or operation thereof, or any part thereof, whether
now or hereafter enacted and in force, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower, at any time in force affecting the Property or any pan
thereof, 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 Bear Stearns Commercial Mortgage,
Inc., together with its successors and assigns.


 


“Licenses” shall have the meaning set forth in Section 4.1.22
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 interest
therein, including, without limitation, any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, the filing of any financing statement, and
mechanic’s, materialmen’s and other similar liens and encumbrances.


 


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


 


“Loan Documents” shall mean, collectively, this Agreement, the
Note, the Mortgage, the Assignment of Leases and Rents, the Environmental Indemnity,
the Assignment of Management Agreement, the Indemnity Agreement and all other
documents executed and/or delivered in connection with the Loan.


 


“Lockbox Account” shall have the meaning specified in Section 2.6.3
hereof.


 


“Lockbox Bank” shall have the meaning specified in Section 2.6.3
hereof.


 


“Lockbox Trigger” shall mean (i) Lender’s determination that
the Debt Service Coverage Ratio for the preceding six (6) months annualized is
less than or equal to 1.75 to 1.0 or (ii) a Cash Management Trigger.


 


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


 


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


 


“Maturity Date” shall mean January 1, 2010, or such
other date on which the final payment of principal of the Note becomes due and
payable as therein or herein provided, whether at such stated maturity dale, by
declaration of acceleration, or otherwise.


 


“Maximum Legal Rate” shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the indebtedness evidenced by the Note
and as provided for herein or the other Loan Documents, under the laws of such
state or states whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.


 


“Monthly Debt Service Payment Amount” shall mean an amount equal to $93,319.10.


 


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


 


“Net Cash Flow” shall mean, with respect to the Property for
any period, the amount obtained by subtracting Operating Expenses and Capital
Expenditures for such period from Gross Income from Operations for such period.


 


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


 


“Net Cash Flow Schedule” shall have the meaning set forth in Section 5.1.1
l(b) hereof.


 


“Net Operating Income” shall mean the amount obtained by subtracting
from Gross Income from Operations (i) Operating Expenses, and (ii) a vacancy
allowance equal to the greater of (x) market vacancy (as reasonably determined
by Lender), less actual vacancy, and (y) underwritten vacancy of 5.87%, less
actual vacancy. Notwithstanding the foregoing, if actual vacancy exceeds market
vacancy and underwritten vacancy, then there shall be no adjustment for a
vacancy allowance.


 


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


 


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


 


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“Net Proceeds Prepayment” shall have the meaning set forth in Section 6.4(e)
hereof.


 


“Note” shall mean that certain Promissory Note of even date herewith in the principal
amount of TWENTY FOUR MILLION THREE HUNDRED SIXTY THOUSAND AND NO/100 DOLLARS
($24,360,000.00), made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.


 


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


 


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


 


“Other Charges” shall mean all ground rents, maintenance
charges, 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 or
assessed or imposed against the Property or any part thereof.


 


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


 


“Payment Date” shall mean the first (1st) day of each
calendar month during the term of the Loan or, if such day is not a Business
Day, the immediately succeeding Business Day.


 


“Permitted Encumbrances” shall mean, with respect to the Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in the Title
Insurance Policy relating to the Properly or any part thereof, (c) Liens, if
any, 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 may
approve in writing in Lender’s reasonable discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of the Property or Borrower’s ability to repay the Loan.


 


“Permitted Investments” shall mean any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
including those issued by Servicer, the trustee under any Securitization or any
of their respective Affiliates, payable on demand or having a maturity date not
later than the Business Day immediately prior to the first Payment Date
following the date of acquiring such investment and meeting one of the
appropriate standards set forth below:


 


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(i)                                     obligations of, or obligations fully
guaranteed as to payment of principal and interest by, the United States or any agency or
instrumentality thereof provided such obligations are backed by the full faith
and credit of the United States of America including, without limitation,
obligations of: the U.S. Treasury (all direct or fully guaranteed obligations),
the Farmers Home Administration (certificates of beneficial ownership), the
General Services Administration (participation certificates), the U.S. Maritime
Administration (guaranteed Title XI financing), the Small Business
Administration (guaranteed participation certificates and guaranteed pool
certificates), the U.S. Department of Housing and Urban Development (local
authority bonds) and the Washington Metropolitan Area Transit Authority
(guaranteed transit bonds); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by
S&P, must not have an “r” highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest 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 investments must not be subject
to liquidation prior to their maturity;


 


(ii)                                  Federal Housing Administration debentures;


 


(iii)                               obligations of the following United States
government sponsored agencies: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated systemwide bonds and notes),
the Federal Home Loan Banks (consolidated debt obligations), the Federal
National Mortgage Association (debt obligations), the Student Loan Marketing
Association (debt obligations), the Financing Corp. (debt obligations), and the
Resolution Funding Corp. (debt obligations); provided, however,
that the investments described in this clause must (A) have a predetermined
fixed dollar of principal due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an “r” highlighter affixed to their rating, (C)
if such investments have a variable rate of interest, such interest 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 investments must not be
subject to liquidation prior to their maturity;


 


(iv)                              federal funds, unsecured certificates of
deposit, time deposits, bankers’ acceptances and repurchase agreements with
maturities of not more than 365 days of any bank, the short term obligations of
which at all times are 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 the highest short term rating category and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of 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 a predetermined fixed dollar of principal due at
maturity that cannot, vary or change, (B) if rated by S&P, must not have an
“r” highlighter affixed to their rating, (C) if such investments have a
variable rate of interest, such interest 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 investments must not be subject to liquidation prior to
their maturity;


 


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(v)                                 fully Federal Deposit Insurance Corporation-insured
demand and time deposits in, or certificates of deposit of, or bankers’
acceptances issued by, any bank or trust company, savings and loan association
or savings bank, the short term obligations of which at all times are 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 the highest
short term rating category and otherwise acceptable to each other Rating
Agency, as confirmed in writing that such investment would not, in and of
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 a predetermined
fixed dollar of principal due at maturity that cannot vary or change, (B) if
rated by S&P, must not have an “r” highlighter affixed to their rating, (C)
if such investments have a variable rate of interest, such interest 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 investments must not be
subject to liquidation prior to their maturity;


 


(vi)                              debt obligations with maturities of not more
than 365 days and at all times 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 other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned to the
Securities) in its highest long-term unsecured rating category; provided,
however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to
their rating, (C) if such investments have a variable rate of interest, such
interest 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
investments must not be subject to liquidation prior to their maturity;


 


(vii)                           commercial paper (including both
non-interest-bearing discount obligations and interest-bearing obligations
payable on demand or on a specified date not more than one year after the date
of issuance thereof) with maturities of not more than 365 days and that at all
times 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 other
Rating Agency, as confirmed in writing that such investment would not, in and
of itself, result, in a downgrade, qualification or withdrawal of the initial,
or, if higher, then current ratings assigned to the Securities) in its highest
short-term unsecured debt rating; provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by
S&P, must not have an “r” highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest 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 investments must, not be subject
to liquidation prior to their maturity.


 


(viii)                        units of taxable money market funds, which
funds arc regulated investment companies, seek to maintain a constant, net
asset value per share and invest solely in obligations backed by the full faith
and credit of the United States, which funds


 


11





















 


have the highest rating available from each Rating Agency (or, if not
rated by all Rating Agencies, rated by at least one Rating Agency and otherwise
acceptable to each other Rating Agency, as confirmed in writing that such
investment would not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned to the
Securities) for money market funds; and


 


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


 


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


 


“Permitted Prepayment Date” shall mean the date that is three (3) years
from the first day of the calendar month immediately following the Closing Date.


 


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


 


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


 


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


 


“Policies” shall have the meaning specified in Section 6.1(b) hereof, 


 


“Prepayment Consideration” shall have the meaning set forth in Section 2.3.1.


 


“Prepayment Rate” shall mean the bond equivalent yield (in the secondary market) on the
United States Treasury Security that as of the Prepayment. Rate Determination
Date has a remaining term to maturity closest to, but not exceeding, the
remaining term to the Maturity Date, as most recently published in the “Treasury
Bonds, Notes and Bills” section in The Wall Street Journal as of the date
of the related tender of the payment. If more than one issue of United States
Treasury Securities has the remaining term to the Maturity Dale referred to


 


12





















 


above,
the “Prepayment Rate” shall be the yield on the United States Treasury Security
most recently issued as of such date. If the publication of the Prepayment Rate
in The Wall Street Journal is discontinued, Lender shall determine the
Prepayment Rate on the basis of “Statistical Release H.15(519), Selected
Interest Rates,” or any successor publication, published by the Board of
Governors of the Federal Reserve System, or on the basis of such other
publication or statistical guide as Lender may reasonably select.


 


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


 


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


 


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


 


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


 


“Qualifying Manager” shall mean either (a) a reputable and
experienced management organization reasonably satisfactory to Lender, which
organization or its principals possess at least ten (10) years experience in
managing properties similar in size, scope and value of the Property and which,
on the date Lender determines whether such management organization is a
Qualifying Manager, manages at least one million square feet of retail space,
provided that Borrower shall have obtained prior written confirmation from the
Rating Agency that management of the Property by such entity wilt not cause a
downgrading, withdrawal or qualification of the then current rating of the
securities issued pursuant to the Securitization, or (b) the fee owner of the
Property, provided that such owner possesses experience in managing and
operating properties similar in size, scope and value of the Property. Lender
acknowledges that on the Closing Date, Manager shall be deemed to be a
Qualifying Manager.


 


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


 


“Rating Surveillance Charge” shall have the meaning yet forth in Section 9.3
hereof.


 


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


 


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


 


“REMIC Trust” shall mean a “real estate mortgage investment
conduit” within the meaning of Section 860D of the Code that holds the
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 or rent
equivalents, royalties (including, without limitation, all oil and gas or other
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 other
consideration of whatever form or nature received by or paid to or for the
account of or benefit of Borrower or its agents or employees from any and all
sources arising from or attributable to the Property, and proceeds, if any,
from business interruption or other loss of income insurance, including the
Other Contract Funds.


 


“Replacement Reserve Account” shall have the meaning set forth in Section 7.3.1
hereof.


 


“Replacement Reserve Fund” shall have the meaning set forth in Section 7.3.1
hereof.


 


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


 


“Replacements” shall have the meaning set forth in Section 7.3.1(a)
hereof.


 


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


 


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


 


“Required Repairs” shall have the meaning set forth in Section 7.1.1
hereof.


 


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


 


“Restoration” shall have the meaning set forth in Section 6.2
hereof. 


 


“Securities” shall have the meaning set forth in Section 9.1
hereof. 


 


“Securities Act” shall have the meaning set forth in Section 9.2
hereof. 


 


“Securitization” shall have the meaning set forth in Section 9.1
hereof. 


 


“Servicer” shall have the meaning set forth in Section 9.6
hereof.


 


“Servicing Agreement” shall have the meaning set forth in Section 9.6
hereof.


 


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


 


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“Severing Documentation” shall have the meaning set forth in Section 9.7
hereof.


 


“Sole Member” shall mean Inland Western Retail Real Estate
Trust, Inc.


 


“Special Purpose Entity” means a corporation, limited partnership,
limited liability company, or Delaware statutory trust which at all times on
and after the Closing Date:


 


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


 


(ii)                                  is not engaged and will not engage in any
business unrelated to (A) the acquisition, development, ownership, management
or operation of the Property, (B) acting as general partner of the limited
partnership that owns the Property, (C) acting as a member of the limited
liability company that owns the Property, or (D) acting as the beneficiary or
trustee of a Delaware statutory trust that owns the Property, as applicable;


 


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


 


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


 


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


 


(vi)                              if such entity is a corporation, has at least
one (1) Independent Director, and has not caused or allowed and will not cause
or allow the board of directors of such entity to take any action related to a
bankruptcy or insolvency proceeding or a voluntary dissolution without the
unanimous affirmative vote of 100% of the members of its board of directors,
including the Independent Director;


 


15





















 


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


 


(viii)                        if such entity is a limited liability company
and such limited liability company has only one member, such limned liability
company (a) has been formed under Delaware law, and (b) has either a
corporation or other person or entity that shall become a member of the limited
liability company upon the dissolution or disassociation of the member, and (c)
has a board of directors with not less than one (1) Independent Director, and
(d) will not cause or allow its board of directors to take any action related
to a bankruptcy or insolvency proceeding or a voluntary dissolution without the
unanimous affirmative vote of 100% of the members of its hoard of directors,
including the Independent Director;


 


(ix)                                if such entity is (a) a limited liability
company, has articles of organization, a certificate of formation and/or an
operating agreement, as applicable, (b) a limited partnership, has a limited
partnership agreement, (c) a corporation, has a certificate or articles of
incorporation and bylaws, as applicable, or (d) a Delaware statutory trust, has
organizational documents that, in each case, provide that such entity will not:
(1) dissolve, merge, liquidate, consolidate; (2) except as permitted herein,
sell all or substantially all of its assets or the assets of the Borrower (as
applicable) except as permitted herein; (3) engage in any other business
activity, or amend its organizational documents with respect to the matters 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 such entity or
the general partner or managing or co-managing member or manager of such
entity), file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings with respect to itself or to any other entity in which
it has a direct or indirect legal or beneficial ownership interest;


 


(x)                                   has not entered into or been a party to, and
will not enter into or be a party to, any transaction with its partners,
members, beneficiaries, shareholders or Affiliates except (A) in the ordinary
course of its business and on terms which are intrinsically fair, commercially
reasonable and arc no less favorable to it than would be obtained in 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 and
liabilities (including, as applicable, shared personnel and overhead expenses)
from its assets as the same become due, and is maintaining adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;


 


(xii)                             has not failed and will not fail to correct
any known misunderstanding regarding the separate identity of such entity;


 


16





















 


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


 


(xiv)                         has maintained and will maintain its own
resolutions and agreements;


 


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


 


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


 


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


 


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


 


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


 


(xx)                              has observed and will observe all
partnership, corporate, limited liability company or Delaware statutory trust
formalities, as applicable;


 


(xxi)                           has and will have no Indebtedness (including
loans (whether or not such loans are evidenced by a written agreement) between
Borrower and any Affiliates of Borrower and relating to the management of funds
in the custodial account maintained by the Manager) other man (i) the Loan,
(ii) liabilities incurred in the ordinary course of business relating to the
ownership and operation of the Property and the routine administration of
Borrower, which liabilities are not more than sixty (60) days past the date
incurred (unless disputed in accordance with applicable law), are not evidenced
by a note and are paid when due, and which amounts are normal and reasonable
under the circumstances, and (iii) such other liabilities that are permitted
pursuant to this Agreement;


 


17





















 


(xxii)                        has not and will not assume or guarantee or
become obligated for the debts of any other Person or hold out its credit as
being available to satisfy the obligations of any other Person except as
otherwise permitted pursuant to this Agreement;


 


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


 


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


 


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


 


(xxvi)                    has not pledged and will not. pledge its
assets for the benefit of any other Person except as permitted or required
pursuant to this Agreement;


 


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


 


(xxviii)              has maintained and will maintain its assets
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;


 


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


 


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


 


(xxxi)                      docs not and will not have any of its
obligations guaranteed by any Affiliate except as otherwise required in the
Loan Documents;


 


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


 


18





















 


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


 


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


 


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


 


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


 


“Taxes”
shall mean all real estate and personal property taxes, assessments, water
rates or sewer rents, now or hereafter levied or assessed or imposed against
the Property or any part thereof.


 


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


 


“Tenant Direction Letter” shall mean a letter in the form of Schedule I
attached hereto from Borrower to the tenant under each Lease with respect to
the Property (whether such Lease is presently effective or executed after the
Closing Date) directing such tenant to send directly to the Lockbox Account all
payments of Rent payable to Borrower under such Lease.


 


“Terrorism Insurance Guarantor” shall have the meaning set forth in Section 6.1
hereof.


 


“Title Insurance Policy” shall mean, with respect to the Property, an
ALTA 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 ALTA
policy, 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 Mortgage
encumbering the Property.


 


“Transferee” shall have the meaning set forth in Section 5.2.13
hereof.


 


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


 


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


 


Section 1.2                                      Principles of Construction.  All
references to sections and schedules are to sections and schedules in or to
this Agreement unless otherwise specified, All uses of the word “including”
shall mean “including, without limitation” unless the context shall


 


19





















 


indicate
otherwise. Unless otherwise specified, the words “hereof,” “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all meanings attributed to defined terms herein
shall be equally applicable to both the singular and plural forms of the terms
so defined.


 


ARTICLE II


GENERAL TERMS


 


Section 2.1                                      Loan Commitment; Disbursement to Borrower.


 


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


 


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


 


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


 


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


 


Section 2.2                                      Interest; Loan Payments; Late Payment Charge.


 


2.2.1                        Interest Generally.  
Interest on the outstanding principal balance of the Loan shall accrue
from 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 be
calculated on the basis of a three hundred sixty (360) day year comprised of
twelve (12) months of thirty (30) days each, except that interest due and
payable for a period of less than a full month shall be calculated by
multiplying the actual number of days elapsed in the period for which the
calculation 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 to
interest only on the outstanding principal balance of the Loan from the Closing
Date 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 not
including the Maturity Date, an amount equal to the Monthly Debt Service
Payment Amount, which shall be applied to


 


20





















 


interest on the outstanding principal amount of the Loan for the prior
calendar month at the Interest Rate.


 


2.2.4                        Intentionally Omitted.


 


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


 


2.2.6                        Payments after Default.   Upon
the occurrence and during the continuance of an Event of Default, interest on
the outstanding principal balance of the Loan and, to the extent permitted by
law, overdue interest and other 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 or cure periods contained herein.  Interest at the Default Rate shall be
computed from the occurrence of the Event of Default until the earlier of (i)
in the event of a non-monetary default, the cure of such Event of Default by
Borrower and acceptance of such cure by Lender, and (ii) in the event of a
monetary default, the actual receipt and collection of the Debt (or that
portion thereof that is then due).  To
the extent permitted by applicable law, interest at the Default Rate shall be
added to the Debt, shall itself accrue interest at the same rate as the Loan
and shall be secured by the Mortgage. This paragraph shall not be construed as
an agreement or privilege to extend the date of the payment of the Debt, nor as
a waiver of any other right or remedy accruing to Lender by reason of the
occurrence of any Event of Default and Lender retains its rights under the Note
and this Agreement to accelerate and to continue to demand payment of the Debt
upon the happening and continuance of any Event of Default.


 


2.2.7                        Late Payment Charge.   If
any principal, interest or any other sums due under the Loan Documents is not
paid by Borrower on or prior to the date which is five (5) days after the date
on which it is due, Borrower shall 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 in order to defray the expense incurred by Lender
in handling and processing such delinquent payment 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 Documents to the extent permitted by
applicable law. The foregoing late payment charge shall not apply to the payment
of all outstanding principal, interest and other sums due on the Maturity Date.


 


2.2.8                        Usury Savings.  
This Agreement and the Note are subject to the express condition that at
no time shall Borrower be obligated or required to pay interest on the
principal balance of the Loan at a rate which could subject Lender to either
civil or criminal liability as a result of being in excess of the Maximum Legal
Rate.  If, by the terms of this Agreement
or the other Loan Documents, Borrower is at any time required or obligated to
pay interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due hereunder.
All sums paid or agreed to be paid to Lender for the use, forbearance, or
detention of the sums due under the Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Loan until payment in full


 


21





















 


so
that the rate or amount of interest on account of the Loan does not exceed the
Maximum Legal Rate of interest from time to time in effect and applicable to
the Loan for so long as the Loan is outstanding.


 


Section 2.3                                      Prepayments. 


 


2.3.1                        Voluntary Prepayments.


 


(a)                                  Except as otherwise provided herein, Borrower
shall not have the right to prepay the Loan in whole or in part prior to the
Permitted Prepayment Date.  On or after
the Permitted Prepayment Date, Borrower may, provided it has given Lender prior
written notice in accordance with the terms of this Agreement, prepay the
unpaid principal balance of the Loan in whole, but not in. part, by paying,
together with the amount to be prepaid, (i) interest accrued and unpaid on the
outstanding principal balance of the Loan being prepaid to and including the
date of prepayment, (ii) unless prepayment is tendered on a Payment Date, an
amount equal to the interest that would have accrued on the amount being
prepaid after the date of prepayment through and including the next Payment
Date had the prepayment not been made (which amount shall constitute additional
consideration for the prepayment), (iii) all other sums then 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 one month prior to the
Maturity Date, a prepayment consideration (the “Prepayment
Consideration”) equal to the greater of (A) one percent (1%) of the
outstanding principal balance of the Loan being prepaid or (B) the excess, if
any, of (1) the sum of the present values of all then-scheduled payments of principal
and interest under this Agreement including, but not limited to, principal and
interest on the Maturity Date (with each such payment discounted to its present
value at the date of prepayment at the rate which, when compounded monthly, is
equivalent to the Prepayment Rate), over (2) the outstanding principal amount
of the Loan, Lender shall notify Borrower of the amount and the basis of
determination of the required prepayment consideration.


 


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


 


2.3.2                        Mandatory Prepayments, (a) On the next occurring Payment Date
following the date on winch Borrower actually receives any Net Proceeds, if
Lender is not. obligated to make such Net Proceeds available to Borrower
pursuant to this Agreement for the restoration of the Property, Borrower shall
at Lender’s option, prepay the outstanding principal balance of the Note in an
amount equal to one hundred percent (100%) of such Net Proceeds.


 


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No
Prepayment Consideration or other penalty or premium shall be due in connection
with any prepayment made pursuant to this Section 2.3.2. Any partial
prepayment under this Section shall be applied to the last payments of
principal due under the Loan.


 


(b)                                 On the date on which Borrower tenders a
Casualty/Condemnation Prepayment pursuant to Section 6.4(e) below, such
tender shall include (a) all accrued and unpaid interest and the principal
indebtedness being prepaid, including interest on the outstanding principal
amount of the applicable Note through the last day of the month within which
such tender occurs, and (b) any other sums due hereunder relating to the
applicable Note. Except as set forth in this Section 2.3.2(b), other than
following an Event of Default, no Prepayment Consideration or other penalty or
premium shall be due in connection with any Casualty/Condemnation Prepayment.


 


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


 


Section 2.4                                      Intentionally Omitted.


 


Section 2.5                                      Release of Property. Except as set forth in this Section 2.5,
no repayment or prepayment of all or any portion of the Loan shall cause, give
rise to a right to require, or otherwise result in, the release of any Lien of
the Mortgage on the Property. If Borrower has elected to prepay the entire
amount of the Loan pursuant to Section 2.3.1 and the requirements of this Section 2.5
have been satisfied, the Property shall be released from the Lien of the
Mortgage.


 


2.5.1                        Release on Payment in Full. Lender shall, upon the written request and
at the expense of Borrower, upon payment in full of all principal and interest
on the Loan and all other amounts due and payable under the Loan Documents in
accordance with the terms and


 


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provisions of Section 2.3.1 of this Loan Agreement, release the
Lien of the Mortgage on the Property not theretofore released.


 


2.5.2                        Intentionally Omitted.


 


Section 2.6                                      Manner of Making Payments.


 


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


 


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


 


2.6.3                        Cash Management.  In
connection with the Closing, Borrower shall execute and deliver to Lender a
Tenant Direction Letter for each of the tenants at the Property, which Tenant
Direction Letter instructs each such tenant to deposit Rent and other
receivables related to the Property directly into an account (the “Lockbox
Account”) owned and controlled by Lender at a bank to be selected by Lender
(the “Lockbox Bank”).  Borrower
covenants and agrees to execute and deliver to Lender a Tenant Direction Letter
for each new tenant at the Property within thirty (30) days after the execution
of each new Lease for premises at the Property. Lender will hold the Tenant
Direction Letters in escrow; provided, however, upon the occurrence of a
Lockbox Trigger, Lender shall have the right to deliver a Tenant Direction
Letter to each tenant at the Property, Within five (5) Business Days after
receiving notice of Lender’s determination that a Lockbox Trigger has occurred,
Borrower shall enter into a “cash management agreement” with Lender and Lockbox
Bank, in form and substance acceptable to Lender (“Cash Management Agreement”),
which shall provide, among other things, that tenants at the Property shall
deposit Rent and other receivables related to the Property directly into Lockbox
Account. The Lockbox Bank shall apply funds in the Lockbox Account to pay debt service
and required reserves, fees of the Lockbox Bank and budgeted operating expenses
for the Property, as to be more particularly set forth in the Cash Management
Agreement.  Funds remaining in the
Lockbox Account after payment of the foregoing (the “Excess Cash Flow”) shall
be distributed to Borrower; provided, however, upon the occurrence of a
Cash Management Trigger and until the occurrence of a Cash Management
Termination Event, such Excess Cash Flow shall be distributed to Borrower only
to the extent of unbudgeted operating expenses approved by Lender and any
remaining funds shall remain in such Lockbox Account as additional collateral
for the Loan. Upon the occurrence of a Cash Management Termination Event, the
balance of the funds in the Lockbox Account shall be distributed to
Borrower.  The Borrower shall be responsible
for the costs associated with the Lockbox Bank and the Lockbox Account.


 


Section 2.7                                      Intentionally Omitted.


 


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ARTICLE III


CONDITIONS
PRECEDENT


 


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


 


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


 


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


 


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


 


(a)                                  Mortgage, Assignment of Leases and other Loan
Documents.    Lender shall have received from Borrower
fully executed and acknowledged counterparts of the Mortgage and the Assignment
of Leases and evidence that counterparts of the Mortgage and Assignment of
Leases have been delivered to the title company for recording, in the
reasonable judgment of Lender, so as to effectively create upon such recording
valid 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 the
Permitted Encumbrances and such other Liens as are permitted pursuant to the
Loan Documents. Lender shall have also received from Borrower fully executed counterparts
of the Assignment of Management Agreement and the other Loan Documents.


 


(b)                                 Title Insurance.   
Lender shall have received a Title Insurance Policy issued by a title
company acceptable to Lender and dated as of the Closing Date, Such Title Insurance
Policy shall (i) provide coverage in an amount equal to the principal amount of
the Loan together with, if applicable, a “tie-in” or similar endorsement, (ii)
insure Lender that the Mortgage creates a valid first priority lien on the
Property encumbered thereby, free and clear of all exceptions from coverage
other than Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements), (iii) contain such endorsements
and affirmative coverages as Lender may reasonably request, and (iv) name Lender,
its successors and assigns, as the insured. The Title Insurance Policy shall he
assignable without cost to Lender. Lender also shall have received evidence
that all premiums in respect of such Title Insurance Policy have been paid.


 


(c)                                  Survey.    Lender shall have received a
title survey for the Property, certified to the title company and Lender and
their successors and assigns, in form and content satisfactory to Lender and
prepared by a professional and properly licensed land surveyor satisfactory to
Lender in accordance with the most recent Minimum Standard Detail Requirements
for ALTA/ACSM Land Title Surveys.  The
following additional items from the


 


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list
of “Optional Survey Responsibilities and Specifications” (Table A) should be
added to each survey: 2, 3, 4, 6, 8, 9, 10, 11 and 13. The survey shall reflect
the same legal description contained in the Title Insurance Policy relating to
the Property referred to in clause (ii) above and shall include, among other
things, a legal description of the real property comprising part of such
Property reasonably satisfactory to Lender. The surveyor’s seal shall be
affixed to each survey and the surveyor shall provide a certification for each
survey in form and substance acceptable to Lender.


 


(d)                                 Insurance.  Lender shall have received
valid certificates of insurance for the policies of insurance required
hereunder, satisfactory to Lender in its sole discretion, and evidence of the
payment of all premiums payable for the existing policy period.


 


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


 


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


 


(g)                                 Encumbrances.  
Borrower shall have taken or caused to be taken such actions in such a
manner so that Lender has a valid and perfected first 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 are permitted pursuant to the
Loan Documents, and Lender shall have received satisfactory evidence thereof.


 


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


 


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


 


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


 


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3.1.7                        Budgets. Borrower shall have delivered, and Lender shall have approved, the
Annual Budget for the current Fiscal Year.


 


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


 


3.1.9                        Completion of Proceedings. All organizational proceedings taken or to
be taken in connection with the transactions contemplated by this Agreement and
other Loan Documents and all documents incidental thereto shall he reasonably
satisfactory in form and substance to Lender, and Lender shall have received
all such counterpart originals or certified copies of such documents as Lender
may reasonably request.


 


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


 


3.1.11                  Tenant Estoppels. Borrower shall exercise reasonable
commercial efforts to deliver estoppel letters from Tenants occupying not less
than eighty percent (80%) of the gross leasable area of the Property; provided,
however, that, in the event that Borrower is unable to deliver some or all of
the estoppels described above in this Section 3.1.11, Lender agrees that
the requirement to deliver such letters to Lender shall be waived by Lender as
a condition precedent to the closing of the Loan so long as Borrower delivers
on or before the Closing Date, a certificate executed by Borrower with respect
to all applicable leases which shall be in substantially the same form and
contain the same terms as set forth in Lender’s standard form of estoppel
certificate.  Borrower shall deliver to
Lender an estoppel letter executed by Anchor Tenant in form reasonably
acceptable to Lender.


 


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


 


3.1.13                  Material Adverse Change.  
There shall have been no material adverse change in the financial
condition or business condition of Borrower or the Property since the date of
the most recent financial statements delivered to Lender.  The income and expenses of the Property, the
occupancy leases thereof, and all other features of the transaction shall be as
represented to Lender without material adverse change. Neither Borrower, any of
its constituent Persons, shall be the subject of any bankruptcy,
reorganization, or insolvency proceeding.


 


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


 


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3.1.15                  Subordination
and Attornment.   Lender shall have
received appropriate instruments acceptable to Lender in its commercially
reasonable discretion subordinating any Leases of record prior to the Mortgage
and including an agreement by such Tenants to attorn to Lender in the event of
a foreclosure or delivery of a deed in lieu thereof.


 


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


 


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


 


3.1.18                  Management
Agreement.   Lender shall have
received a certified copy of the Management Agreement with respect to the
Property which shall be satisfactory in form and substance to Lender.   Lender acknowledges that it has reviewed the
Management Agreement, and as drafted, such Management Agreement does not
violate Borrower’s covenant that affiliated agreements be on terms which are
intrinsically fair, commercially reasonable and are no less favorable to it
than would be obtained in a comparable arm’s length transaction with an
unrelated third party.


 


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


 


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


 


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


 


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


 


ARTICLE IV


REPRESENTATIONS
AND WARRANTIES


 


Section 4.1                                      Borrower
Representations. Borrower represents and warrants as of the date hereof and
as of the Closing Date that:


 


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4.1.1                        Organization.   Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
the 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 each
jurisdiction where it is required to be so qualified in connection with the
Property, businesses and operations. 
Borrower possesses all rights, licenses, permits and authorizations,
governmental or otherwise, necessary to entitle it to own the Property and to
transact the businesses in which it is now engaged, and the sole business of
Borrower is the ownership, management and operation of the Property.


 


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


 


4.1.3                        No
Conflicts.   The execution, delivery
and performance of this Agreement and the other Loan Documents by Borrower will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance (other than pursuant to the Loan Documents) upon
any of the property or assets of Borrower pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, partnership agreement or
other agreement or instrument to which Borrower is a party or by which any of
Borrower’s property or assets is subject, nor will such action result in any
violation of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over Borrower or
any of Borrower’s properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any court or any
such regulatory authority or other governmental agency or body required for the
execution, delivery and performance by Borrower of this Agreement or any other
Loan Documents has been obtained and is in full force and effect.


 


4.1.4                        Litigation.   To Borrower’s knowledge, there are no
actions, suits or proceedings at law or in equity by or before any Governmental
Authority or other agency now pending or threatened against or affecting
Borrower or the Property, which actions, suits or proceedings, if determined
against Borrower or the Property, might materially adversely affect the
condition (financial or otherwise) or business of Borrower or the condition or
ownership of the Property.


 


4.1.5                        Agreements.   Except such instruments and agreements set
forth as Permitted Exceptions in the
Title Insurance Policy, Borrower is not a party to any agreement or instrument
or subject to any restriction which might materially and adversely affect
Borrower or the Property, or Borrower’s business, properties or assets,
operations or condition, financial or otherwise. To Borrower’s knowledge,
Borrower is not in default in any material respect in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which it is a party or by which
Borrower or the property are bound. Borrower has no material financial
obligation under any indenture,


 


29





















 


mortgage, deed of trust,
loan agreement or other agreement or instrument to which Borrower is a party or
by which Borrower or the Property is otherwise bound, other than (a)
obligations incurred in the ordinary course of the operation of the Property
and (b) obligations under the Loan Documents.


 


4.1.6                        Title.
  Borrower has good and indefeasible fee
simple title to the real property comprising part of the Property and good
title to the balance of the Property, free and clear of all Liens whatsoever
except the Permitted Encumbrances, such other Liens as are permitted pursuant
to the Loan Documents and the Liens created by the Loan Documents.  The Mortgage, when properly recorded in the
appropriate records, together with any Uniform Commercial Code financing
statements required to be filed in connection therewith, will create (a) a
valid, perfected lien on the Property, subject only to Permitted Encumbrances
and the Liens created by the Loan Documents and (b) perfected security
interests in and to, and perfected collateral assignment of, all personalty
(including the Leases), all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by the Loan
Documents. There are no claims for payment for work, labor or materials
affecting the Property which are due and unpaid under the contracts pursuant to
which such work or labor was performed or materials provided which are or may
become a lien prior to, or of equal priority with, the Liens created by the
Loan Documents.


 


4.1.7                        Solvency;
No Bankruptcy Filing.   Borrower (a)
has not entered into the transaction or executed the Note, this Agreement or
any other Loan Documents with the actual intent to hinder, delay or defraud any
creditor and (b) received reasonably equivalent value in exchange for its
obligations under such Loan Documents. 
Giving effect to the Loan, the fair saleable value of Borrower’s assets
exceeds and will, immediately following the making of the Loan, exceed Borrower’s
total liabilities, including, without limitation, subordinated, unliquidated,
disputed and contingent liabilities.  The
fair saleable value of Borrower’s assets is and will, immediately following the
making of the Loan, be greater than Borrower’s probable liabilities, including
the maximum amount of its contingent liabilities on its debts as such debts
become absolute and matured. Borrower’s assets do not and, immediately
following the making of the Loan will not, constitute unreasonably small
capital 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 and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
debt and liabilities as they mature (taking into account the timing and amounts
of cash to be received by Borrower and the amounts to be payable on or in
respect of obligations of Borrower). 
Except as expressly disclosed to Lender in writing, no petition in
bankruptcy has been filed against Borrower, or to the best of Borrower’s
knowledge, any constituent Person in the last seven (7) years, and neither
Borrower, nor to the best of Borrower’s knowledge, any constituent Person in
the last seven (7) years has ever made an assignment for the benefit of
creditors or taken advantage of any insolvency act for the benefit of
debtors.  Neither Borrower nor any of its
constituent Persons are contemplating either the filing of a petition by it
under any state or federal bankruptcy or insolvency laws or the liquidation of
all or a major portion of Borrower’s assets or property, and Borrower has no
knowledge of any Person contemplating the filing of any such petition against
it or such constituent Persons.


 


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


 


4.1.9                        No
Plan Assets.   Borrower is not an “employee
benefit plan,” as defined in Section 3(3) of ERISA, subject to Title I of
ERISA, and none of the assets of Borrower constitutes or will constitute “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 with Borrower are not subject to state statutes regulating investment of,
and fiduciary obligations with respect to, governmental plans similar to the
provisions of Section 406 of ERISA or Section 4975 of the Code
currently in effect, which prohibit or otherwise restrict the transactions
contemplated by this Loan Agreement.


 


4.1.10                  Compliance.   To Borrower’s knowledge, Borrower and the
Property and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes.  Borrower is
not in default or violation of any order, 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 the
operation or use of the Property any act or omission affording the federal
government or any other Governmental Authority the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents.


 


4.1.11                  Financial
Information.   All financial data,
including, without limitation, the statements of cash flow and income and
operating expense, that have been delivered to Lender in respect of the
Property (i) are, to the best of Borrower’s knowledge, true, complete and
correct in all material respects, (ii) accurately represent the financial
condition of the Property as of the date of such reports, and (iii) to the
extent prepared or audited by an independent certified public accounting firm,
have been prepared in accordance with accounting principles reasonably
acceptable to Lender, consistently applied throughout the periods covered,
except as disclosed therein; provided, however, that if any
financial data is delivered to Lender by any Person other than Borrower,
Indemnitor or any of their Affiliates, or if such financial data has been
prepared by or at the direction of any Person other than Borrower, Indemnitor
or any of their Affiliates, then the foregoing representations with respect to
such financial data shall be to the best of Borrower’s knowledge, after due
inquiry.  Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments that are known to Borrower and reasonably likely to have a
materially adverse effect on the Property or the operation thereof as a retail
shopping center, except as referred to or reflected in said financial
statements.  Since the date of such
financial statements, there has been no materially adverse change in the
financial condition. operations or business of Borrower from that set forth in said
financial statements.


 


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4.1.12                  Condemnation.   No Condemnation or other proceeding has been
commenced or, to Borrower’s knowledge, is contemplated with respect to all or
any portion of the Property or for the relocation of roadways providing access
to the Property.


 


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


 


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


 


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


 


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


 


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


 


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


 


4.1.19                  No
Prior Assignment.   There is no prior
assignment of the Leases or any portion of the Rents 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 to
Lender certified copies of all insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement. To the
best 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 which
would impair the coverage of any such policy.


 


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4.1.21                  Use
of Property. The Property is used exclusively for retail purposes and other
appurtenant and related uses.


 


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


 


4.1.23                  Flood
Zone.  To the best of Borrower’s
knowledge, after due inquiry, no Improvements on the Property are located in an
area identified by the Federal Emergency Management Agency as an area having
special flood hazards.


 


4.1.24                  Physical
Condition.  Except as disclosed in
the Physical Conditions Reports delivered to Lender in connecting with this
Loan, to Borrower’s knowledge, the Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
roofs, plumbing systems, HVAC systems, fire protection systems, electrical
systems, equipment, elevators, exterior sidings and doors, landscaping, irrigation
systems and all structural components, are in good condition, order and repair
in all material respects; there exists no structural or other material defects
or damages in the Property, whether latent or otherwise, and Borrower has not
received notice from any insurance company or bonding company of any defects or
inadequacies in the Property, or any part thereof, which would adversely affect
the insurability of the same or cause the imposition of extraordinary premiums
or charges thereon or of any termination or threatened termination of any
policy of insurance or bond.


 


4.1.25                  Boundaries.
 To the best of Borrower’s knowledge,
after due inquiry, all of the improvements which were included in determining
the appraised value of the Property lie wholly within the boundaries and
building restriction lines of the Property, and no improvements on adjoining
properties encroach upon the Property, and no easements or other encumbrances upon
the Property encroach upon any of the improvements, so as to affect the value
or marketability of the Property except those which are insured against by
title insurance.


 


4.1.26                  Leases.  The Property is not subject to any Leases
other than the Leases described on the Rent Roll attached as Schedule IV
hereto and made a part hereof (and subleases permitted under the Anchor Lease).  No Person has any possessory interest in the
Property or right to occupy the same except under and pursuant to the
provisions of the Leases. The current Leases are in full force and effect and
to Borrower’s knowledge after inquiry, there are no defaults thereunder by
either party and there are no conditions that, with the passage of time or


 


33





















 


the giving of notice, or both, would constitute defaults thereunder. No
Rent (including security deposits) has been paid more than one (1) month in
advance of its due date. All work to be performed by Borrower under each Lease
has been performed as required and has been accepted by the applicable tenant,
and any payments, free rent, partial rent, rebate of rent or other payments,
credits, allowances or abatements required to be given by Borrower to any
tenant has already been received by such tenant. There has been no prior sale,
transfer or assignment, hypothecation or pledge of any Lease or of the Rents
received therein which is outstanding. To Borrower’s knowledge after inquiry,
except as set forth on Schedule IV, no tenant listed on Schedule IV
has assigned its Lease or sublet all or any portion of the premises demised
thereby, no such tenant holds its leased premises under assignment or sublease,
nor does anyone except such tenant and its employees occupy such leased
premises. No tenant under any Lease has a right or option pursuant to such
Lease or otherwise to purchase all or any part of 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 any right or option for additional space
in the Improvements except as set forth in Schedule IV. To Borrower’s
actual knowledge based on the Environmental Report delivered to Lender in connection
herewith, no hazardous wastes or toxic substances, as defined by applicable
federal, state or local statutes, rules and regulations, have been disposed,
stored or treated by any tenant under any Lease on or about the leased premises
nor does Borrower have any knowledge of any tenant’s intention to use its
leased premises for any activity which, directly or indirectly, involves the
use, generation, treatment, storage, disposal or transportation of any
petroleum product or any toxic or hazardous chemical, material, substance or
waste, except in either event, in compliance with applicable federal, state or
local statues, rules and regulations.


 


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


 


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


 


4.1.29                  Filing
and Recording Taxes.  All transfer
taxes, deed stamps, intangible taxes or other amounts in the nature of transfer
taxes required to be paid by any Person under applicable Legal Requirements
currently in effect in connection with the acquisition of the Property by
Borrower have been paid or are simultaneously being paid. All mortgage,
mortgage recording, stamp, intangible or other similar tax required to be paid
by any Person under applicable Legal Requirements 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 subsequent
holder thereof).


 


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


 


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


 


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


 


4.1.31                  Management
Agreement.  The Management 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 occurred that, with the
passage of time and/or the giving of notice would constitute a default
thereunder.


 


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


 


4.133                     No
Change in Facts or Circumstances; Disclosure.  All information submitted by Borrower to
Lender and in all financial statements, rent rolls, reports, certificates and
other documents submitted in connection with the Loan or in satisfaction of the
terms thereof and all statements of fact made by Borrower in this Agreement or
in any other Loan Document, are accurate, complete and correct in all material
respects, provided, however, that if such information was provided to Borrower
by non-affiliated third parties, Borrower represents that such information is,
to the best of its knowledge after due inquiry, accurate, complete and correct
in all material respects. There has been no material adverse change in any
condition, fact, circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading in any material respect or that otherwise
materially and adversely affects or might materially and adversely affect the
Property or the business operations or the financial condition of Borrower.
Borrower has disclosed to Lender all material facts and has not failed to
disclose any material fact that could cause any representation or warranty made
herein to be materially misleading.


 


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


 


4.1.35                  Principal
Place of Business and Organization. 
Borrower shall not change its principal place of business set forth in
the introductory paragraph of this Agreement without first giving Lender thirty
(30) days prior written notice. Borrower shall not change the place of its
organization as set forth in the introductory paragraph of this Agreement
without the consent of Lender, which consent shall not be unreasonably
withheld, conditioned or delayed.  Upon


 


35





















 


Lender’s request,
Borrower shall execute and deliver additional financing statements, security
agreements and other instruments which may be necessary to effectively evidence
or perfect Lender’s security interest in the Property as a result of such
change of principal place of business or place of organization.


 


Section 4.2                                      Survival
of Representations.  Borrower agrees
that all of the representations and warranties of Borrower set forth in Section
4.1 and elsewhere in this Agreement and in the other Loan Documents shall
survive for so long as any amount remains owing to Lender under this Agreement
or any of the other Loan Documents by Borrower. All representations,
warranties, covenants and agreements made in this Agreement or in the other
Loan Documents by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation 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 and performance in full of all obligations of Borrower under the
Loan Documents or the earlier release of the Lien of the Mortgage encumbering
the Property (and all related obligations) in accordance with the terms of this
Agreement and the other Loan Documents, Borrower hereby covenants and agrees
with Lender that:


 


5.1.1                        Existence;
Compliance with Legal Requirements; Insurance.  Borrower shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
existence, rights, licenses, permits and franchises and comply with all Legal
Requirements applicable to it and the Property. Borrower shall not commit, nor
shall Borrower permit any other Person in occupancy of or involved with the
operation or use of the Property to commit, any act or omission affording the
federal government or any stale or local government the right of forfeiture as
against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture. Borrower shall at all times
maintain, preserve and protect all its franchises and trade names and preserve
all the remainder of its property used or useful in the conduct of its business
and shall keep the Property in good working order and repair, and from time to
time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto, all as more fully provided
in the Mortgage. Borrower shall keep the Property insured at all times by
financially sound and reputable insurers, to such extent and against such
risks, and maintain liability and such other insurance, as is more fully
provided in this Agreement. Borrower shall operate, or cause the tenant to
operate, any Property that is the subject of an O&M Agreement (if any) in
accordance with the terms and provisions thereof in all material respects.
After prior written notice to Lender, Borrower, at its own expense, may contest
by appropriate legal proceeding promptly initiated and conducted in good faith
and with due diligence, the validity of any Legal Requirement, the
applicability of any Legal Requirement to 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 be conducted in accordance with the provisions of
any instrument to which Borrower is subject and shall not constitute a default
thereunder and such


 


36





















 


proceeding shall be conducted in accordance with all applicable
statutes, laws and ordinances; (iv) the Property or any part thereof or
interest therein will not be in danger of being sold, forfeited, terminated,
cancelled or lost; (v) Borrower shall promptly upon final determination thereof
comply with any such Legal Requirement determined to be valid or applicable or
cure any violation of any Legal Requirement; (vi) such proceeding shall suspend
the enforcement of the contested Legal Requirement against Borrower or the
Property; and (vii) Borrower shall furnish such security as may be required in
the proceeding, or as may be requested by Lender, to insure compliance with
such Legal Requirement, together with all interest and penalties payable in
connection therewith. Lender may apply any such security, as necessary to cause
compliance with such Legal Requirement at any time when, in the reasonable
judgment of Lender, the validity, applicability or violation of such Legal
Requirement is finally established or the Property (or any part thereof or
interest therein) shall be in danger of being sold, forfeited, terminated, cancelled
or lost.


 


5.1.2                        Taxes
and Other Charges.  Borrower shall
pay or cause to be paid all Taxes and Other Charges now or hereafter levied or
assessed or imposed against the Property or any part thereof as the same become
due and payable; provided, however, Borrower’s obligation to
directly pay to the appropriate taxing authority Taxes shall be suspended for
so long as Borrower complies with the terms and provisions of Section 7.2
hereof. Borrower will deliver to Lender receipts for payment or other evidence
satisfactory to Lender that the Taxes and Other Charges have been so paid or
arc not then delinquent no later than, ten (10) days prior to the date on which
the Taxes and/or Other Charges would otherwise be delinquent if not paid (provided,
however, that Borrower is not required to furnish such receipts for
payment of Taxes in the event that such Taxes have been paid by Lender pursuant
to Section 7.2 hereof). If Borrower pays or causes to be paid all Taxes and
Other Charges and provides a copy of the receipt evidencing the payment thereof
to Lender, then Lender shall reimburse Borrower, provided that there are then
sufficient proceeds in the Tax and Insurance Escrow 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 to Section 7.2 hereof, Lender shall
provide Borrower with evidence that such Taxes have been paid. Borrower shall
not suffer and shall promptly cause to be paid and discharged any Lien or
charge whatsoever which may be or become a Lien or charge against the Property,
and shall promptly pay for all utility services provided to the Property. After
prior written notice to Lender, Borrower, at its own expense, may contest by
appropriate Segal proceeding, promptly initiated and conducted in good faith
and with due diligence, the amount or validity or application in whole or in
part of any Taxes or Other Charges, provided that (i) Borrower is permitted to
do so under the provisions of any mortgage or deed of trust superior in lien to
the Mortgage; (ii) such proceeding shall he permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances;
(iii) the Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall
promptly upon final determination thereof pay the amount of any such Taxes or
Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the Property; and (vi)
Borrower shall furnish such security as may be required in the proceeding, or
as may be reasonably requested by Lender, to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon.
Lender may pay over any such cash deposit or


 


37





















 


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


 


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


 


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


 


5.1.5                        Notice
of Default.  Borrower shall promptly
advise Lender of any material adverse change in Borrower’s condition, financial
or otherwise, or of the occurrence of any Default or Event of Default of which
Borrower has knowledge.


 


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


 


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


 


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


 


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


 


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


 


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


 


38





















 


(c)                                  do
and execute all and such further lawful and reasonable acts, conveyances and
assurances for the better and more effective carrying out of the intents and
purposes of this Agreement and the other 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 a Fiscal Year basis, in
accordance with the requirements for a Special Purpose Entity set forth above,
proper and accurate books, records and accounts reflecting all of the financial
affairs of Borrower and all items of income and expense in connection with the operation
on an individual basis of the Property. Lender shall have the right from time
to time at all times during normal business hours upon reasonable notice to
examine such books, records and accounts at the office of Borrower or other
Person maintaining such books, records and accounts and to make such copies or
extracts thereof as Lender shall desire. After the occurrence and during the
continuance of an Event of Default, Borrower shall pay any costs and expenses incurred
by Lender to examine Borrower’s accounting records with respect to the
Property, as Lender shall reasonably determine to be necessary or appropriate
in the protection of Lender’s interest.


 


(b)                                 Borrower
will furnish to Lender annually, within ninety (90) days following the end of
each Fiscal Year of Borrower, either (i) a complete copy of Borrower’s annual
financial statements audited by an accounting firm or other independent
certified public accountant reasonably acceptable to Lender in accordance with
the requirements for a Special Purpose Entity set forth above, or (ii) a
consolidated and annotated financial statement of Borrower and Sole Member (as
applicable), audited by an accounting firm or other independent certified
public accountant reasonably acceptable to Lender in accordance with the
requirements for a Special Purpose Entity set forth above, together with
unaudited financial statements relating to the Borrower and the Property. Such
financial statements for the Property for such Fiscal Year and shall contain
statements of profit and loss for Borrower and the Property and a balance sheet
for Borrower. Such statements shall set forth the financial condition and the
results of operations for the Property for such Fiscal Year, and shall include,
but not be limited to, amounts representing annual Net Cash Flow, Net Operating
Income, Gross Income from Operations and Operating Expenses. Borrower’s annual
financial statements shall be accompanied by (i) a comparison of the budgeted
income and expenses and the actual income and expenses for the prior Fiscal
Year, (ii) a certificate executed by the chief financial officer of Borrower or
Sole Member, as applicable, stating that each such annual financial statement
presents fairly the financial condition and the results of operations of
Borrower and the Property being reported upon and has been prepared in
accordance with accounting principles reasonably acceptable to Lender,
consistently applied, (iii) an unqualified opinion of an accounting firm or
other independent certified public accountant reasonably acceptable to Lender,
(iv) a certified rent roll containing current rent, lease expiration dates and
the square footage occupied by each tenant; (v) a schedule audited by such
independent certified public accountant reconciling Net Operating Income to Net
Cash Flow (the “Net Cash Flow Schedule”),
which shall itemize all adjustments made to Net Operating Income to arrive at
Net Cash Flow deemed material by such independent certified public accountant.
Together with Borrower’s annual financial statements, Borrower shall furnish to
Lender an Officer’s Certificate certifying as of the date thereof whether there


 


39





















 


exists an event or circumstance which constitutes a Default or Event of
Default under the Loan Documents executed and delivered by, or applicable to,
Borrower, and if such Default or Event of Default exists, the nature thereof,
the period of time it has existed and the action then being taken to remedy the
same.


 


(c)                                  Borrower
will furnish, or cause to be furnished, to Lender on or before forty five (45)
days after the end of each calendar quarter the following items, accompanied by
a certificate of the chief financial officer of Borrower or Sole Member, as
applicable, stating that such items are true, correct, accurate, and complete
and fairly present the financial condition and results of the operations of
Borrower and the Property (subject to normal year-end adjustments) as
applicable: (i) a rent roll for the subject 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 from Operations, and Operating Expenses (not
including any contributions to the Replacement Reserve Fund, and other
information necessary and sufficient to fairly represent the financial position
and results of operation of the Property during such calendar month, and
containing a comparison of budgeted income and expenses and the actual income
and expenses together with a detailed explanation of any variances of five
percent (5%) or more between budgeted and actual amounts for such periods, all
in form satisfactory to Lender; (iii) a calculation reflecting the annual Debt
Service Coverage Ratio for the immediately preceding twelve (12) month period as
of the last day of such month accompanied by an Officer’s Certificate with
respect thereto; and (iv) a Net Cash Flow Schedule (such Net Cash Flow for the
Borrower may be unaudited if it is certified by an officer of the Borrower). In
addition, such certificate shall also be accompanied by a certificate of the
chief financial officer of Borrower or Sole Member stating that the representations
and warranties of Borrower set forth in Section 4.1.30(a) are true and correct
as of the date of such certificate.


 


(d)                                 For
the partial year period commencing on the Closing Date, and for each Fiscal
Year thereafter, Borrower shall submit to Lender an Annual Budget not later
than thirty (30) days after the commencement of such period or Fiscal Year in
form reasonably satisfactory to Lender.


 


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


 


(f)                                    Borrower
shall furnish to Lender, within ten (10) Business Days after Lender’s request
(or as soon thereafter as may be reasonably possible), financial and sales
information from any Tenant designated by Lender (to the extent such financial
and sales information is required to be provided under the applicable Lease and
same is received by Borrower after request therefor).


 


(g)                                 Borrower
will cause Indemnitor to furnish to Lender annually, within one hundred twenty
(120) days following the end of each Fiscal Year of Indemnitor, financial
statements audited by an independent certified public accountant, which shall
include an annua1


 


40





















 


balance sheet and profit
and loss statement of Indemnitor, in the form reasonably required by Lender.


 


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


 


5.1.12                  Business
and Operations.  Borrower will
continue to engage in the businesses presently 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 to do business and will remain in good standing under the laws of each
jurisdiction 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) the title to the Property
and every part thereof, subject only to Liens permitted hereunder (including
Permitted Encumbrances) and (b) the validity and priority of 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 reimburse Lender for any
losses, costs, damages or expenses (including reasonable attorneys’ fees and
court costs) incurred by Lender if an interest in the Property, other than as
permitted hereunder, is claimed by another Person.


 


5.1.14                  Costs
of Enforcement. In the event (a) that the Mortgage encumbering the Property
is foreclosed in whole or in part or that the Mortgage is put into the hands of
an attorney for collection, suit, action or foreclosure, (b) of the foreclosure
of any mortgage prior to or subsequent to the Mortgage encumbering the Property
in which proceeding Lender is made a party, or (c) of the bankruptcy,
insolvency, rehabilitation or other similar proceeding in respect of Borrower
or any of its constituent Persons or an assignment by Borrower or any of its constituent
Persons for the benefit of its creditors, Borrower, its successors or assigns,
shall be chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys’ fees and costs, incurred by Lender or Borrower
in connection therewith and in connection with 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, duly acknowledged and
certified, setting forth (i) the amount of the original principal amount of the
Note, (ii) the unpaid principal amount of the Note, (iii) the applicable
interest rate of the Note, (iv) the date installments of interest and/or principal
were last paid, (v) any offsets or defenses to the payment of the Debt, if any,
and (vi) that the Note, this Agreement, the Mortgage and the other Loan
Documents are valid, legal and binding obligations and have not been modified
or if modified, giving particulars of such modification.


 


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(b)                                 Borrower
shall use commercially reasonable efforts to deliver to Lender upon request,
tenant estoppel certificates from each commercial tenant leasing space at the Property
in form and substance reasonably satisfactory to Lender provided that Borrower
shall not be required to deliver such certificates more frequently than one (1)
time in any calendar year.


 


(c)                                  Within
thirty (30) days of request by Borrower, Lender shall deliver to Borrower a
statement setting forth the items described 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 Loan received 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, perform and fulfill each and every covenant, term and
provision of each Loan Document executed and delivered by, or applicable to,
Borrower, and shall not enter into or otherwise suffer or permit any amendment,
waiver, supplement, termination or other modification of any Loan Document
executed and delivered by, or applicable to, Borrower without the prior written
consent of Lender.


 


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


 


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


 


5.1.20                  Leasing
Matters.  Any Leases with respect to
the Property written after the Closing Date for more than the Relevant Leasing
Threshold square footage shall be subject to the prior written approval of
Lender, which approval may be given or withheld in the sole discretion of
Lender. Lender shall approve or disapprove any such Lease within ten (10)
Business Days of Lender’s receipt of a final execution draft of such Lease
(including all exhibits, schedules, supplements, addenda or other agreements
relating thereto) and a written notice from Borrower requesting Lender’s
approval to such Lease, and such Lease shall be deemed approved, if Lender does
not disapprove such Lease within said ten (10) Business Day period provided such written notice conspicuously
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 NOT
RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS DAYS OF LENDER’S RECEIPT OF SUCH
LEASE AND WRITTEN NOTICE”. Borrower shall furnish Lender with
executed copies of all Leases. All renewals of Leases and all


 


42





















 


proposed Leases shall provide for rental rates comparable to existing
local market rates (unless such rental rates are otherwise set forth in the
Leases executed prior to the Closing Date). All proposed Leases shall be on
commercially reasonable terms and shall not contain any terms which would materially affect Lender’s rights under the
Loan Documents. All Leases executed after the Closing Date shall provide that
they are subordinate to the Mortgage encumbering the Property and that the
tenant thereunder agrees to attorn to Lender or any purchaser at a sale by
foreclosure or power of sale. Borrower (i) shall observe and perform the
obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (ii) shall enforce the terms, covenants and conditions
contained in the Leases upon the part of the tenant thereunder to be observed
or performed in a commercially reasonable manner and in a manner not to impair
the value of the Property involved except that no termination by Borrower or
acceptance of surrender by a tenant of any Lease shall be permitted unless by
reason of a tenant default and then only in a commercially reasonable manner to
preserve and protect the Property provided, however, that no such
termination or surrender of any Lease covering more than the Relevant Leasing
Threshold will be permitted without the written consent of Lender 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 (other than security deposits);
(iv) shall not execute any other assignment of lessor’s interest in the Leases
or the Rents (except as contemplated by the Loan Documents); (v) shall not
alter, modify or change the terms of the Leases in a manner inconsistent with
the provisions of the Loan Documents without the prior written consent of
Lender, which consent may be withheld in the sole discretion of Lender; and
(vi) shall execute and deliver at the request of Lender all such further
assurances, confirmations and assignment in connection with the Leases as
Lender shall from time to time reasonably require. Notwithstanding the
foregoing, Borrower may, without the prior written consent of Lender, terminate
any Lease which demises less than the Relevant Leasing Threshold under any of
the following circumstances: (i) the tenant under said Lease is in default beyond
any applicable grace and cure period, and Borrower has the right to terminate
such Lease; (ii) such termination is permitted by the terms of the Lease in
question and Borrower has secured an obligation from a third party to lease the
space under the Lease to be terminated at a rental equal to or higher than the
rental due under the Lease to be terminated; and (iii) if the tenant under the
Lease to be terminated, has executed a right under said Lease to terminate its
lease upon payment of a termination fee to Borrower, and has in fact terminated
its lease and paid said fee, Borrower may accept said termination.


 


5.1.21                  Alterations.  Subject to the rights of tenants to make
alterations pursuant to the terms of their respective Leases, Borrower shall
obtain Lender’s prior written consent to any alterations to any Improvements,
which consent shall not be unreasonably withheld or delayed except with respect
to alterations that may have a material adverse effect on Borrower’s financial
condition, the value of the Property or the Net Operating Income.
Notwithstanding the foregoing, Lender’s consent shall not be required in
connection with any alterations that will not have a material adverse effect on
Borrower’s financial condition, the value of the Property or the Net Operating
Income, provided that such alterations are made in connection with (a) tenant
improvement work performed pursuant to the terms of any Lease executed on or
before the Closing Date, (b) tenant improvement work performed pursuant to the
terms and provisions of a Lease and not adversely affecting any structural
component of any Improvements, any utility or HVAC system contained in any
Improvements or the exterior of any building constituting a part of any
Improvements, (c) alterations performed in connection with the restoration of
the Property after the occurrence of a casualty in accordance with the terms
and provisions of this Agreement


 


43





















 


or (d) any structural alteration which costs less than $50,000.00 in
the aggregate for all components thereof which constitute such alteration or
any non-structural alteration which costs less than $100,000.00 in the
aggregate for all components thereof which constitute such alteration. If the
total unpaid amounts due and payable with respect to alterations to the
Improvements at the Property (other than such amounts to be paid or reimbursed
by tenants under the Leases) shall at any time equal or exceed $350,000.00 (the
“Threshold Amount”), Borrower, upon Lender’s
request, shall promptly deliver to Lender as security for the payment of such
amounts and as additional security for Borrower’s obligations under the Loan
Documents any of the following: (A) cash, (B) U.S. Obligations, (C) other
securities having a rating acceptable to Lender and that the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned in connection with any Securitization, or (D) a
completion bond or letter of 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 letter of credit is no longer than three (3) months or, if such
term is in excess of three (3) months, issued by a financial institution having
a rating that is acceptable to Lender and that the applicable Rating Agencies
have confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned in connection with any Securitization. Such security shall be in an
amount equal to the excess of the total unpaid amounts with respect to
alterations to the Improvements on the Property (other than such amounts to be
paid or reimbursed by tenants under the Leases) over the Threshold Amount and,
if cash, may be applied from time to time, at the option of Borrower, to pay
for such alterations. At the option of Lender, following the occurrence and
during the continuance of an Event of Default, Lender may terminate any of the
alterations and use the deposit to restore the Property to the extent necessary
to prevent any material adverse effect on the value of the Property.


 


5.1.22              Intentionally
Omitted.


 


5.1.23              Intentionally
Omitted.


 


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


 


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


 


44





















 


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


 


(i)                                     Permitted
Encumbrances;


 


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


 


(iii)                               Liens
for Taxes or Other Charges not yet due (or that Borrower is contesting in
accordance with the terms of Section 5.1.2 hereof).


 


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


 


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


 


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


 


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


 


5.2.7                        Zoning.  Borrower shall not initiate or consent to any
zoning reclassification of any portion of the Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
the Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior consent of Lender.


 


45





















 


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


 


5.2.9                        Debt.
 Borrower shall not create, incur or
assume any Indebtedness other than the Debt except to the extent expressly
permitted hereby.


 


5.2.10                  No
Joint Assessment.  Borrower shall not
suffer, permit or initiate the joint assessment of the Property with (a) any
other real property constituting a tax lot separate from the Property, or (b)
any portion of the Property which may be deemed to constitute personal property,
or any other procedure whereby the Lien of any taxes which may be levied
against such personal 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 any transaction
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, this Agreement or the other Loan Documents) to be a
non-exempt (under a statutory or administrative class exemption) prohibited
transaction under ERISA.


 


(b)                                 Borrower
further covenants and agrees to deliver to Lender such certifications or other
evidence from time to time throughout 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” as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a “governmental plan” within the meaning of
Section 3(3) of ERISA; (B) Borrower is not subject to state statutes regulating
investments and fiduciary obligations with respect to governmental plans; and
(C) one or more of the following circumstances is true:


 


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


 


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


 


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


 


5.2.13                  Transfers.  Unless such action is permitted by the
provisions of this Section 5.2.13, Borrower agrees that it will not (i) sell,
assign, convey, transfer or otherwise dispose of its interests in the Property
or any part thereof, (ii) permit any owner, directly or indirectly, of an
ownership interest in the Property, to transfer such interest, whether by
transfer of stock or other interest in Borrower or any entity, or otherwise,
(iii) incur Indebtedness (other than the Indebtedness permitted pursuant to the
terms of this Agreement), (iv) mortgage, hypothecate or otherwise encumber or
grant a security interest in the Property or any part thereof, (v) sell,
assign, convey, transfer, mortgage, encumber, grant a security interest in, or otherwise
dispose of any direct or indirect ownership interest in Borrower, or permit any
owner of an interest in Borrower to do the same, or (vi) file a declaration of
condominium with respect


 


46





















 


to the Property (any of
the foregoing transactions, a “Transfer”).
For purposes hereof, a “Transfer” shall not include (A) any issuance, sale or
transfer 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 a member
of Borrower, and (C) a sale, transfer or hypothecation of a membership interest
in Borrower, whichever the case may be, by the current member(s), as
applicable, to an immediate family member (i.e., parents, spouses, siblings,
children or grandchildren) of such member (or a trust for the benefit of any
such persons).


 


(a)                                  On
and after the date that is twelve (12) months following the Closing Date,
Lender shall not withhold its consent to a Transfer of the Property, provided
that the following conditions are satisfied:


 


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


 


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


 


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


 


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


 


(5)                                  if
required or requested by any of the Rating Agencies, Borrower shall deliver an
Additional Insolvency Opinion, and if required by a Rating Agency, a fraudulent
conveyance opinion which in each case may be relied upon by the holder of the
Note, the Ratings Agencies and their respective counsel, agents and
representatives with respect to the proposed transaction, including the
Transferee, which opinion shall be acceptable to Lender in its reasonable
discretion;


 


(6)                                  Borrower
shall have paid (A) an assumption fee equal to one percent (1.0%) of the then
outstanding principal balance of the Loan, and (B) the reasonable and customary
third-party expenses (including reasonable attorneys’ fees and disbursements) actually
incurred by Lender in connection with such Transfer, provided, however,
no assumption fee shall be required for a Transfer of the Property to a
Transferee acceptable to Lender in connection with a joint venture between
Inland Western Retail Real Estate Trust, Inc. and an institution acceptable to
Lender


 


47





















 


provided Inland
Western Retail Real Estate Trust, Inc., or an Affiliate wholly-owned (directly
or indirectly) by Inland Western Retail Real Estate Trust, Inc., owns at least
twenty percent (20%) of the ownership interests in such Transferee and for
which Inland Western Retail Real Estate Trust, Inc, or an Affiliate
wholly-owned (directly or indirectly) by Inland Western Retail Real Estate
Trust, Inc., is the managing entity and otherwise maintains operational and
managerial control of such Transferee, provided that Borrower shall pay all of
Lender’s reasonable and customary third-party expenses (including reasonable
attorneys’ fees and disbursements) actually incurred by Lender in connection
with such Transfer and a processing fee of $5,000.


 


Lender shall approve or disapprove any proposed Transfer governed by
this Section 5.2.13(a) within thirty (30) days of Lender’s receipt of a written
notice from Borrower requesting Lender’s approval, provided such notice
includes all information necessary to make such decision, and further provided
that such written notice from Borrower shall conspicuously state, in large bold
type, that “PURSUANT TO SECTION 5.2.13 OF THE
LOAN AGREEMENT, A RESPONSE IS REQUIRED WITHIN THIRTY (30) DAYS OF LENDER’S
RECEIPT OF THIS WRITTEN NOTICE”. If Lender fails to disapprove any
such matter within such period, Borrower shall provide a second written notice
requesting approval, which written notice shall conspicuously state, in large
bold type, that “PURSUANT TO SECTION 5.2.13
OF THE LOAN AGREEMENT, THE MATTER DESCRIBED HEREIN SHALL BE DEEMED APPROVED IF
LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN TEN (10) DAYS OF LENDER’S
RECEIPT OF THIS WRITTEN NOTICE”. Thereafter, if Lender does not
disapprove such matter within said ten (10) day period such matter shall be
deemed approved.


 


(b)                                 On
and after the date that is twelve (12) months following the Closing Date,
Lender shall not withhold its consent to, and shall not charge an assumption
fee in connection with, (1) a Transfer of up to, in the aggregate, forty-nine
percent (49%) of the direct or indirect ownership interests in Borrower, or (2)
a Transfer of greater than forty-nine percent (49%) of the direct or indirect
ownership interest in Borrower, provided that (A) such transfer is to a
Qualified Entity (as defined below), and (B) Borrower shall pay all of Lender’s
reasonable and customary third-party expenses (including reasonable attorneys’
fees and disbursements) actually incurred by Lender in connection with such
Transfer and a processing fee of $5,000. For purposes of this Agreement, a “Qualified Entity” shall mean an
entity (x) with a net worth of $200,000,000 or more, (y) with sufficient
experience (determined by Lender in its reasonable discretion) in the ownership
and management of properties similar to the Property, and (z) which owns or
manages retail properties containing at least 1,000,000 square feet of gross
leasable area. If required or requested by any of the Rating Agencies, Borrower
shall deliver a substantive non-consolidation opinion with respect to any party
not now owning more than 49% of the ownership interests in Borrower acquiring
more than 49% of the ownership interests in Borrower.


 


(c)                                  Notwithstanding
anything in this Section 5.2.13 to the contrary, on or after the date that is
twelve (12) months after the Closing Date, Borrower shall be permitted to Transfer
the entire Property in a single transaction to one newly-formed Special Purpose
Entity which shall be wholly-owned subsidiary of Inland Western Retail Real
Estate Trust, Inc.


 


48





















 


(“Permitted Affiliate Transferee”) which
shall be approved by Lender in its reasonable discretion (“Permitted
Affiliate Transfer”), provided (1) no Event of Default
shall have occurred and be continuing, (2) the creditworthiness of Inland Western
Retail Real Estate Trust, Inc., as applicable, has not deteriorated, in the
sole discretion of Lender, from the Closing Date to the date of the proposed
Transfer, and (3) Borrower shall have paid all reasonable and customary third
party expenses (including reasonable attorneys’ fees and disbursements)
actually incurred by Lender in connection with such Transfer (but not any
assumption or processing fee).


 


(d)                                 Borrower,
without the consent of Lender, may grant easements, restrictions, covenants,
reservations and rights of way in the ordinary course of business for access,
parking, water and sewer lines, telephone and telegraph lines, electric lines
and other utilities or for other similar purposes, provided that no transfer,
conveyance or encumbrance shall materially impair the utility and operation of
the Property or materially adversely affect the value of the Property or the
Net Operating Income of the Property. If Borrower shall receive any
consideration in connection with any of said described transfers or
conveyances, Borrower shall have the right to use any such proceeds in
connection with any alterations performed in connection therewith, or required
thereby. In connection with any transfer, conveyance or encumbrance permitted
above, the Lender shall execute and deliver any instrument reasonably necessary
or appropriate to evidence its consent to said action or to subordinate the
Lien of the Mortgage to such easements, restrictions, covenants, reservations
and rights of way or other similar grants upon receipt by the Lender of: (A) a
copy of the instrument of transfer, and (B) an Officer’s Certificate stating
with respect to any transfer described above, that such transfer does not
materially impair the utility and operation of the Property or materially
reduce the value of the Property or the Net Operating Income of the Property.


 


ARTICLE VI


INSURANCE; CASUALTY; CONDEMNATION


 


Section 6.1                                      Insurance.
  (a) Borrower shall obtain and maintain,
or shall cause Anchor Tenant to maintain, insurance for Borrower and the
Property providing at least the following coverages:


 


(i)                                     comprehensive
all risk insurance on the Improvements and the Personal Property, including
contingent liability from Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements, in each case (A) in an amount
equal to one hundred percent (100%) of the “Full Replacement Cost,”
which for purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation; (B) containing an agreed amount
endorsement with respect to the Improvements and Personal Property waiving all
co-insurance provisions; (C) providing for no deductible in excess of Ten
Thousand and No/100 Dollars ($10,000) for all such insurance coverage; and (D)
containing an “Ordinance or Law Coverage’’ or “Enforcement” endorsement if any
of the Improvements or the use of the. Property shall at any time constitute
legal non-conforming structures or uses. In addition, Borrower shall obtain:
(y) if any portion of the Improvements is currently or at any time in the
future located in a federally designated “special flood hazard area”, flood
hazard insurance in an amount equal to the lesser of (1) the outstanding
principal balance of the Note or (2) the maximum amount of


 


49





















 


such insurance
available under the National Flood Insurance Act of 1968, the Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994, as
each may be amended or such greater amount as Lender shall require; and (z)
earthquake insurance in amounts and in form and substance satisfactory to
Lender in the event the Property is located in an area with a high degree of
seismic activity, provided that the insurance pursuant to clauses (y) and (z)
hereof shall be on terms consistent with the comprehensive all risk insurance
policy required under this subsection (i).


 


(ii)                                  commercial
general liability insurance against claims for personal injury, bodily injury,
death or property damage occurring upon, in or about the Property, such
insurance (A) to be on the so-called “occurrence” form with 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 until
required to be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate; and (C) to cover at least the
following hazards: (1) premises and operations; (2) products and completed
operations on an “if any” basis; (3) independent contractors; (4) blanket
contractual liability for all legal contracts; and (5) contractual liability
covering the indemnities contained in Article 9 of the Mortgage to the extent
the same is available;


 


(iii)                               business
income insurance (A) with loss payable to Lender; (B) covering all risks
required to be covered by the insurance provided for in subsection (i) above;
(C) covering rental losses or business interruption, as may be applicable, for
a 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 revenues
from the operation of the Property (as reduced to reflect expenses not incurred
during a period of Restoration). The amount of such business income insurance
shall be determined prior to the date hereof and at least once each year
thereafter based on Borrower’s reasonable estimate of the gross income from the
Property for the succeeding twelve (12) month period. All proceeds payable to
Lender pursuant to this subsection shall be held by Lender and shall be applied
to the obligations secured by the Loan Documents from time to time due and
payable hereunder and under the Note; provided, however, that
nothing herein contained shall be deemed to relieve Borrower of its obligations
to pay the obligations secured by the Loan Documents on the respective dates of
payment provided for in the Note and the other Loan Documents except to the
extent such amounts are actually paid out of the proceeds of such business
income insurance;


 


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


 


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


 


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


 


(vii)                           umbrella
liability 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 general
liability insurance policy required under subsection (ii) above;


 


(viii)                        if
any of the policies of insurance covering the risks required to be covered
under subsections (i) through (vii) above contains an exclusion from coverage
for acts of terrorism, Borrower shall obtain and maintain a separate policy
providing such coverages in the event of any act of terrorism, provided such
coverage is commercially available for properties similar to the Property and
located in or around the region in which the Property is located.
Notwithstanding the foregoing, Borrower shall not be required to obtain such a
policy, provided (I) Borrower confirms to Lender, in writing, that it shall protect
and hold Lender harmless from any losses associated with such risks by, among
other things, either (A) depositing with Lender sums sufficient to pay for all
uninsured costs related to a Restoration of the Property following any act of
terrorism (which sum shall be treated as a Net Proceeds Deficiency), or (B)
provided such act of terrorism occurs on or after the Permitted Prepayment
Date, prepaying the Loan in accordance with the terms hereof; (II) Inland
Western Retail Real Estate Trust, Inc. (“Terrorism Insurance
Guarantor”) executes a guaranty, in form and substance
satisfactory to Lender, guaranteeing in the event of any act of terrorism,
payment to Lender of any sums that Borrower is obligated to pay to Lender under
clause (I) above (which shall be applied in accordance with Section 6.4 hereof)
and (III) Terrorism Insurance Guarantor maintains a net worth of at least
$300,000,000 (as determined by such entity’s most recent audited financial
statements), such entity maintains a direct or indirect ownership interest in
Borrower, and the aggregate loan-to-value ratio (as determined by Lender) (“LTV”)
for all properties on which such entity has a direct or indirect ownership
interest shall not exceed 55%, however, Terrorism Insurance Guarantor may exceed
the 55% LTV for a period not to exceed six (6) months out of any twelve (12)
month period cither 1) during the time period when Terrorism Insurance
Guarantor is offering securities to the public, or 2) when in the business
judgement of Terrorism Insurance Guarantor, exceeding an LTV of 55% is
necessary given existing circumstances of the credit environment, but in no
event shall the LTV exceed 65% if Terrorism Insurance Guarantor maintains a net
worth greater than or equal to $300,000,000, but less than $400,000,000, or 70%
if Terrorism Insurance Guarantor maintains a net worth of at least
$400,000,000.


 


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


 


(b)                                 All
insurance provided for in Section 6.1(a) shall be obtained under valid and
enforceable 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 by
financially sound and responsible insurance


 


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companies authorized to
do business in the State and having a rating of “A:X” or better in the current
Best’s Insurance Reports and a claims paying ability rating of “AA” or better
by at least two (2) of the Rating Agencies including, (i) Standard & Poor’s
Ratings Group, and (ii) Moody’s Investors Services, Inc. if Moody’s Investors
Service, Inc. is rating the Securities. The Policies described in Section 6.1 (other
than those strictly limited to liability protection) shall designate Lender as
loss payee. Not less than thirty (30) days prior to the expiration dates of the
Policies theretofore furnished to Lender, certificates of insurance evidencing
the Policies accompanied by evidence satisfactory to Lender of payment of the
premiums due thereunder (the “Insurance
Premiums”), shall
be delivered by Borrower to Lender.


 


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


 


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


 


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


 


(i)                                     no
act or negligence of Borrower, or anyone acting for Borrower, or of any Tenant
or other occupant, or failure to comply with the provisions of any Policy,
which might otherwise result in a forfeiture of the insurance or any part
thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;


 


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


 


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


 


(iv)                              Lender
shall not be liable for any Insurance Premiums thereon or subject to any
assessments thereunder.


 


(f)                                    If
at any time Lender is not in receipt of written evidence that all insurance
required hereunder 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
Lender deems necessary to protect its interest in the Property, including,
without limitation, the obtaining of such insurance coverage as Lender in its
sole discretion deems appropriate. All premiums incurred by Lender in
connection with such action or in obtaining such insurance and keeping it in
effect shall be paid by Borrower to Lender upon demand and, until paid, shall
be secured by the Mortgage and shall


 


52





















 


bear interest at the
Default Rate. If Borrower fails in so insuring the Property or in so assigning
and delivering the Policies, Lender may, at its option, obtain such insurance
using such carriers and agencies as Lender shall elect from year to year and
pay the premiums therefor, and Borrower will reimburse Lender for any premium
so paid, with interest thereon as stated in the Note from the time of payment,
on demand, and the amount so owning to Lender shall be secured by the Mortgage.
The insurance obtained by Lender may, but need not, protect Borrower’s interest
and the coverage that Lender purchases may not pay any claim that Borrower
makes or any claim that is made against Borrower in connection with the
Property.


 


Section 6.2                                      Casualty.  If the Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (a “Casualty”), Borrower (a) shall give to Lender prompt notice
of such damage reasonably estimated by Borrower to cost more than One Hundred
Thousand Dollars ($100,000.00) to repair, and (b) shall promptly commence and
diligently prosecute the completion of the repair and restoration of the
Property as nearly as possible to the condition the Property was in immediately
prior to such fire or other casualty, with such alterations as may be
reasonably approved by Lender (a “Restoration”)
and otherwise in accordance with Section 6.4. Borrower shall pay all costs of
such Restoration whether or not such costs are covered by insurance. Lender
may, but shall not be obligated to make proof of loss if not made promptly by
Borrower.


 


Section 6.3                                      Condemnation.


 


(a)                                  Borrower
shall promptly give Lender notice of the actual or threatened commencement of
any proceeding for the Condemnation of the Property and shall deliver to Lender
copies of any and all papers served in connection with such proceedings. Lender
may participate in any such proceedings, and Borrower shall from time to time
deliver to Lender all instruments requested by it to permit such participation.
Borrower shall, at its expense, diligently prosecute any such proceedings, and
shall consult with Lender, its attorneys and experts, and cooperate with them
in the carrying on or defense of any such proceedings. Notwithstanding any
taking by any public or quasi-public authority through Condemnation or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Borrower shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note and
in this Agreement and the Debt shall not be reduced until any Award shall have
been actually received and applied by Lender, after the deduction of expenses
of collection, to the reduction or discharge of the Debt. Lender shall not be
limited to the interest paid on the Award by the condemning authority but shall
be entitled to receive out of the Award interest at the rate or rates provided
herein or in the Note. If the Property or any portion thereof is taken by a
condemning authority, Borrower shall promptly commence and diligently prosecute
the Restoration of the Property and otherwise comply with the provisions of
Section 6.4. If the Property is sold, through foreclosure or otherwise, prior
to the receipt by Lender of the Award, Lender shall have the right, whether or
not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the Award, or a portion thereof sufficient to pay the Debt.


 


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


 


(a)                                  If
the Net Proceeds shall be less than Relevant Restoration Threshold and the
costs of completing the Restoration shall be less than the Relevant Restoration
Threshold, the Net Proceeds will be disbursed by Lender to Borrower upon
receipt, provided that all 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 written undertaking to expeditiously commence and to satisfactorily
complete with due diligence the Restoration in accordance with the terms of
this Agreement.


 


(b)                                 If
the Net Proceeds are equal to or greater than the Relevant Restoration Threshold
or the costs of completing the Restoration is equal to or greater than the
Relevant Restoration Threshold, then in either case, Lender shall make the Net
Proceeds available for the Restoration in accordance with the provisions of
this Section 6.4(b).  The term. “Net Proceeds” for purposes of this Section 6.4 shall
mean: (x) the net amount of ail insurance proceeds received by Lender pursuant
to Section 6.1 (a)(i), (iv), (vi) and (viii) as a result of such damage or destruction,
after deduction of its reasonable costs and expenses (including, but not
limited to, reasonable counsel fees), if any, in collecting same (“Insurance Proceeds”), or (y) the net amount of the
Award, after deduction of its reasonable costs and expenses (including, but not
limited to, reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”), whichever the case may be.


 


(i)                                     The
Net Proceeds shall be made available to Borrower for Restoration provided that
each of the following conditions are met:


 


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


 


(B)                                (1)
in the event the Net Proceeds are Insurance Proceeds, and (x) less than
twenty-five percent (25%) of the total floor area of the Improvements on the
Property has been damaged, destroyed or rendered unusable as a result of such
fire or other casualty, or (y) Borrower is required under a Lease exceeding the
Relevant Leasing Threshold to use the Net Proceeds for the restoration of the
Property, 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, and
no portion of the Improvements is located on such land, or (y) Borrower is
required under a Lease exceeding the Relevant Leasing Threshold to use the Net Proceeds
for the restoration of the Property;


 


(C)                                Leases
demising in the aggregate a percentage amount equal to or greater than the
Rentable Space Percentage of the total rentable space in the Property which has
been demised under executed and delivered Leases in effect as of the date of
the occurrence of such fire or other casualty or taking, whichever the case may
be, shall remain in full force and effect during and after the completion of
the Restoration, notwithstanding the occurrence of any such fire or other
casualty or taking, whichever the case maybe, and will make all necessary
repairs and restorations thereto at their sole cost and expense.  The term “Rentable Space Percentage”


 


54





















 


shall mean (x) in the event the Net Proceeds are
Insurance Proceeds, a percentage amount equal to fifty percent (50%) and (y) in
the event the Net Proceeds are Condemnation Proceeds, a percentage amount equal
to fifty percent (50%);


 


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


 


(E)                                 Lender
shall be satisfied that any operating deficits, including all scheduled
payments of principal and interest under the Note, which will be incurred with
respect to the Property as a result of the occurrence of any such fire or other
casualty or taking, whichever the case may be, will be covered out of (1) the
Net Proceeds, (2) the insurance coverage referred to in Section 6.1(a)(iii), if
applicable, or (3) by other funds of Borrower;


 


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


 


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


 


(H)                               the
Restoration shall be done and completed by Borrower in an expeditious and
diligent fashion and in compliance with all applicable governmental laws, rules
and regulations (including, without limitation, all applicable environmental
laws);


 


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


 


(J)                                   the
Debt Service Coverage Ratio, after giving effect to the Restoration, shall be
equal lo or greater than 2.49:1.0;


 


55





















 


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


 


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


 


(ii)                                  The
Net Proceeds shall be held by Lender in an interest bearing account and, until
disbursed in accordance with the provisions of this Section 6.4(b), shall
constitute additional security for the Debt and other obligations under the
Loan Documents. The Net Proceeds shall be disbursed by Lender to, or as
directed by, Borrower from time to time during the course of the Restoration,
upon receipt of evidence satisfactory to Lender that (A) all materials
installed and work and labor performed to be paid for out of the requested
disbursement in connection with the Restoration have been performed, and (B)
there exist no notices of pendency, stop orders, mechanic’s or materialman’s
liens or notices of intention to file same, or any other liens or encumbrances
of any nature whatsoever on the Property which have not either been fully
bonded to the satisfaction of Lender and discharged of record or in the
alternative fully insured to the satisfaction of Lender by the title company
issuing the Title Insurance Policy.


 


(iii)                               All
plans and specifications required in connection with the Restoration shall be
subject to prior review and acceptance in all respects by Lender and by an
independent consulting engineer selected by Lender (the “Casualty Consultant”), such review
and acceptance not to be unreasonably withheld or delayed. Lender shall have
the use of the plans arid specifications and all permits, licenses and
approvals required or obtained in connection with the Restoration. The identity
of the contractors, subcontractors and materialmen engaged in the Restoration,
as well as the contracts under which they have been engaged, shall be subject
to prior review and acceptance by Lender and the Casualty Consultant, such
review and acceptance not to he unreasonably withheld or delayed. All costs and
expenses incurred by Lender in connection with making the Net Proceeds
available for the Restoration including, without limitation, reasonable counsel
fees and disbursements and the Casualty Consultant’s fees, shall be paid by
Borrower.


 


(iv)                              In
no event shall Lender be obligated to make disbursements of the Net Proceeds in
excess of an amount equal to the costs actually incurred from time to time for
work in place as part of the Restoration, as certified by the Casualty
Consultant, minus the Casualty Retainage. The term “Casualty Retainage” shall mean an
amount equal to ten percent (10%) of the costs actually incurred for work in
place as part of the Restoration, as certified by the Casualty Consultant,
until the Restoration has been completed. The Casualty Retainage shall in no
event, and notwithstanding anything to


 


56





















 


the contrary set forth above in this Section 6.4(b),
be less than the amount actually held back by Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The Casualty
Retainage shall not be released until the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with the
provisions of this Section 6.4(b) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
governmental and quasi-governmental authorities, and Lender receives evidence
satisfactory to Lender that the costs of the Restoration have been paid in full
or will be paid in full out of the Casualty Retainage; provided, however,
that Lender will release the portion of the Casualty Retainage being held with
respect to any contractor, subcontractor or materialman engaged in the
Restoration as of the date upon which the Casualty Consultant certifies to
Lender that the contractor, subcontractor or materialman has satisfactorily
completed all work and has supplied all materials in accordance with the
provisions of the contractor’s, subcontractor’s or materialman’s contract, the
contractor, subcontractor or materialman delivers the lien waivers and evidence
of payment in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the title company
issuing the Title Insurance Policy, and Lender receives an endorsement to the
Title Insurance Policy insuring the continued priority of the lien of the
Mortgage and evidence of 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 by the surety company, if any, which has issued a
payment or performance bond with respect to the contractor, subcontractor or
materialman.


 


(v)                                 Lender
shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month.


 


(vi)                              If
at any time the Net Proceeds or the undisbursed balance thereof shall not, in
the reasonable opinion of Lender in consultation with the Casualty Consultant,
be sufficient to pay in full the balance of the costs which are estimated by
the Casualty Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender before any further
disbursement of the Net Proceeds shall be made. The Net Proceeds Deficiency
deposited with Lender shall be held by Lender and shall be disbursed for costs
actually incurred in connection with the Restoration on the same conditions
applicable to the disbursement of the Net Proceeds, and until so disbursed
pursuant to this Section 6.4(b) shall constitute additional security for the
Debt and other obligations under the Loan Documents.


 


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


 


57





















 


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


 


(d)                                 In
the event of foreclosure of the Mortgage with respect to the Property, or other
transfer of title to the Property in extinguishment in whole or in part of the
Debt all right, title and interest of Borrower in and to the Policies that are
not blanket Policies then in force concerning the Property and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
Lender or other transferee in the event of such other transfer of title.


 


(e)                                  Lender
shall with reasonable promptness following any Casualty or Condemnation notify
Borrower whether or not Net Proceeds are required to be made available to Borrower
for restoration pursuant to this Section 6.4.  All Net Proceeds not required to be made available
for Restoration shall be retained and applied by Lender in accordance with Section
2.3.2(a) hereof (a “Net Proceeds
Prepayment”).  If such Net
Proceeds Prepayment shall be equal to or greater than Fourteen Million Five
Hundred Thousand and 00/100 Dollars ($14,500,000.00), Borrower shall have the
right to elect to prepay the remaining outstanding principal balance of the
Note (a “Casualty/Condemnation Prepayment”)
in accordance with Section 2.3.2(b) hereof upon satisfaction of the
following conditions:  (i) within thirty
(30) days following the date of the Net Proceeds Prepayment, Borrower shall
provide Lender with written notice of Borrower’s intention to pay the Note in
full, (ii) Borrower shall prepay the Note in accordance with Section 2.3.2(b)
hereof on or before the second Payment Date occurring following the date of the
Net Proceeds Prepayment, and (iii) no Event of 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 upon
delivery of the written notice set forth in clause (i) of the preceding
sentence (unless Borrower subsequently shall fail to satisfy the requirement of
clause (ii) of the preceding sentence).


 


ARTICLE VII


RESERVE FUNDS


 


Section 7.1                                      Required
Repair Funds.


 


7.1.1                        Deposits.  Borrower shall perform the repairs at the
Property, 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 earlier time as specified
on Schedule III. If Borrower has not delivered to Lender evidence
reasonably satisfactory to Lender that it has completed all Required Repairs on
or before the date that is six (6) months from the Closing Date, or such
earlier time as specified on Schedule III, Borrower shall deposit with
Lender the amount for the Property set forth on such Schedule III
hereto, if


 


58





















 


any (less the amount allocated to the performance of Required Repairs
for which evidence of completion has been delivered to Lender), to perform the
Required Repairs for the Property. Amounts so deposited with Lender, if any,
shall be held by Lender in an interest bearing account. Amounts so deposited,
if any, shall hereinafter be referred to as Borrower’s “Required Repair Fund” and the account, if any, in which
such amounts are held shall hereinafter be referred to as Borrower’s “Required Repair Account”.  It shall
be an Event of Default under this Agreement if Borrower does not either (i)
does not deposit with Lender the Required Repair Fund as set forth above, or
(ii) complete the Required Repairs at the Property within nine (9) months from
the Closing Date. Upon the occurrence of such an Event of Default, Lender, at
its option, may withdraw all Required Repair Funds from the Required Repair
Account and Lender may apply such funds either to completion of the Required
Repairs at the Property or toward payment of the Debt in such order, proportion
and priority as Lender may determine in its sole discretion. Lender’s right to
withdraw and apply Required Repair Funds shall be in addition to all other
rights and remedies provided to Lender under this Agreement and the other Loan
Documents.


7.1.2                        Release
of Required Repair Funds.  Lender
shall disburse to Borrower the Required Repair Funds from the Required Repair
Account from time to time upon satisfaction by Borrower of each of the
following conditions: (i) Borrower shall submit a written request for payment
to Lender at least fifteen (15) days prior to the date on which Borrower
requests such payment be made and specifics the Required Repairs to be paid,
(ii) on the date such 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) Lender shall have received a certificate from Borrower (A) stating that
all Required Repairs at the Property to be funded by the requested disbursement
have been completed in good and workmanlike manner and in accordance with all
applicable federal, state and local laws, rules and regulations, such
certificate to be accompanied by a copy of any license, permit or other
approval by any Governmental Authority required to commence and/or complete the
Required Repairs, (B) identifying each Person that supplied materials or labor
in connection with the Required Repairs performed at the Property to be funded
by the requested disbursement under a contract in excess of $50,000, and (C)
stating that each Person who has supplied materials or labor in connection with
the Required Repairs to be funded by the requested disbursement has been paid
in full or will be paid in full upon such disbursement, such certificate to be
accompanied by lien waivers or other evidence of payment satisfactory to
Lender, (iv) at Lender’s option, a title search for the Property indicating
that the Property is free from all liens, claims and other encumbrances not
previously approved by Lender, and (v) Lender shall have received such other
evidence as Lender shall reasonably request that the Required Repairs at the
Property to be funded by the requested disbursement have been completed and are
paid for or will be paid upon such disbursement to Borrower. Lender shall not
be required to make disbursements from the Required Repair Account with respect
to the Property more than once each calendar month and such disbursement shall
be made only upon satisfaction of each condition contained in this Section 7.1.2.


 


Section 7.2                                      Tax
and Insurance Escrow Fund.


 


Borrower shall pay
to Lender on each Payment Date (a) one-twelfth of the Taxes that Lender
estimates will be payable during the next ensuing twelve (12) months in order
to accumulate with Lender sufficient funds to pay all such Taxes at least
thirty (30) days prior to their respective due dates and (b) one-twelfth of the
Insurance Premiums that Lender estimates


 


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will be payable for the
renewal of the coverage afforded by the Policies upon the expiration thereof in
order to accumulate with Lender sufficient funds to pay all such Insurance
Premiums at least thirty (30) days prior to the expiration of the Policies,
(said amounts in (a) and (b) above are hereinafter called the “Tax and Insurance Escrow Fund”).  The Tax and Insurance Escrow Fund and the
payments of interest or principal or both, payable pursuant to the Note, shall be
added together and shall be paid as an aggregate sum by Borrower to Lender.
Lender will apply the Tax and Insurance Escrow Fund to payments of Taxes and
Insurance Premiums required to be made by Borrower pursuant to this Agreement
and under the Mortgage. In making any payment relating to the Tax and Insurance
Escrow Fund, Lender may do so according to any bill, statement or estimate
procured from the appropriate public office (with respect to Taxes) or insurer
or agent (with respect to Insurance Premiums) or from Borrower without inquiry
into the accuracy of such bill, statement or estimate or into the validity of
any tax, assessment, sale, forfeiture, tax lien or title or claim thereof,
provided, however, Lender shall use reasonable efforts to pay such real
property taxes sufficiently early to obtain the benefit of any available
discounts of which it has knowledge. If the amount of the Tax and Insurance
Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums,
Lender shall, in its sole discretion, return any excess to Borrower or credit
such excess 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 an interest-bearing
account and shall at Lender’s option be held in Eligible Account at an Eligible
Institution. Any interest earned on said account shall accrue in said account
for the benefit of Borrower, but shall remain in and constitute part of the Tax
and Insurance Escrow Fund, and shall be disbursed in accordance with the terms
hereof. Any amount remaining in the Tax and Insurance Escrow Fund after the
Debt has been paid in full shall be returned to Borrower. In allocating such
excess, Lender may deal with the Person shown on the records of Lender to be
the owner of the Property. If at any time Lender reasonably determines that the
Tax and Insurance Escrow Fund is not or will not be sufficient to pay Taxes or
Insurance Premiums by the dates set forth above, Lender shall notify Borrower
of such determination and Borrower shall increase its monthly payments to
Lender by the amount that Lender estimates is sufficient to make up the
deficiency at least thirty (30) days prior to delinquency of the Taxes or
Insurance Premiums.


 


Notwithstanding
anything to the contrary hereinbefore contained, in the event that Borrower
provides (1) evidence satisfactory to Lender that the Property is insured in
accordance with Section 6.1 of this Agreement and (2) evidence
satisfactory to Lender that the Taxes for the Properly have been paid in
accordance with the requirements set forth in this Agreement, Lender will waive
the requirement set forth herein for Borrower to make deposits into the Tax and
Insurance Escrow Fund for the payment of Insurance Premiums and for payment of
such Taxes, provided, however, Lender expressly reserves the right to require
Borrower to make deposits to the Tax and Insurance Escrow Fund for the payment
of Insurance Premiums if at any time the Property is not insured in accordance
with Section 6.1 of this Agreement or Taxes are not paid in accordance
with the requirements of this Agreement.


 


Section 7.3                                      Replacements
and Replacement Reserve.


 


Section 7.3.1                             Replacement
Reserve Fund.  Borrower shall pay to
Lender 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 for


 


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replacements and repairs required to be made to the
Property during the calendar year (collectively, the “Replacements”)
which Replacement Reserve Monthly Deposit shall be in an amount equal to
no less than $0.15 per year per square foot of gross leasable area. Amounts so
deposited shall hereinafter be referred to as Borrower’s “Replacement Reserve Fund” and the
account in which such amounts are held shall hereinafter be referred to as
Borrower’s “Replacement Reserve Account”.
Lender may reassess its estimate of the amount necessary for the
Replacement Reserve Fund from time to time, and may increase the monthly
amounts required to be deposited into the Replacement Reserve Fund upon thirty
(30) days notice to Borrower if Lender determines in its reasonable discretion
that an increase is necessary to maintain the proper maintenance and operation
of the Property. Any amount held in the Replacement Reserve Account and allocated
for the Property shall be retained by Lender in an interest bearing account,
or, at the option of Lender, in an Eligible Account at an Eligible Institution;
provided, however, that, any interest earned on said account
shall accrue in said account for the benefit of Borrower, but shall remain in
and constitute part of the Replacement Reserve Fund, and shall be disbursed in
accordance with the terms hereof.


 


Notwithstanding anything
to the contrary in this Section 7.3, Borrower shall not be required to make
Replacement Reserve Monthly Deposits, provided that: (i) no Event of Default
shall have occurred; and (ii) Borrower makes all necessary Replacements and
otherwise maintains the Property to Lender’s satisfaction. Upon notice from
Lender following: (a) an Event of Default; or (b) the failure of Borrower to
make necessary Replacements or otherwise maintain the Properly to Lender’s
satisfaction, Borrower shall begin to deposit the Replacement Reserve Monthly
Deposit into the Replacement Reserve Fund beginning on the Payment Date (as
defined herein) immediately following the date of such notice.


 


Section 7.3.2                             Disbursements
from Replacement Reserve Account.


 


(a)                                  Lender
shall make disbursements from the Replacement Reserve Account to pay Borrower
only for the costs of the Replacements.  Lender
shall rot be obligated to make disbursements from the Replacement Reserve
Account to reimburse Borrower for the costs of routine maintenance to the
Property or for costs which arc to be reimbursed from the Required Repair Fund
(if any).


 


(b)                                 Lender
shall, upon written request from Borrower and satisfaction of the requirements
set forth in this Section 7.3.2, disburse to Borrower amounts from the
Replacement Reserve Account necessary to pay for the actual approved costs of
Replacements or to reimburse Borrower therefor, upon completion of such
Replacements (or, upon partial completion in the case of Replacements made
pursuant to Section 7.3.2(f)) as determined by Lender.  In no event shall Lender be obligated to
disburse funds from the Replacement Reserve Account if a Default or an Event of
Default exists.


 


(c)                                  Each
request for disbursement from the Replacement Reserve Account shall be in a
form specified or approved by Lender and shall specify (i) the specific Replacements
for which the disbursement is requested, (ii) the quantity and price of each
item purchased, if the Replacement includes the purchase or replacement of
specific items, (iii) the price of all materials (grouped by type or category)
used in any Replacement other than the purchase or replacement of specific
items, and (iv) the cost of all contracted labor or other


 


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services applicable to each Replacement for which such request for
disbursement is made. With each request Borrower shall certify that all
Replacements have been made in accordance with all applicable Legal
Requirements of any Governmental Authority having jurisdiction over the
Property to which the Replacements are being provided and, unless Lender has
agreed to issue joint checks as described below, each request shall include
evidence of payment of all such amounts. Each request for disbursement shall
include copies of invoices for all items or materials purchased and all
contracted labor or services provided. Except as provided in Section 7.3.2(e),
each request for disbursement from the Replacement Reserve Account shall be
made only after completion of the Replacement for which disbursement is
requested. Borrower shall provide Lender evidence of completion satisfactory to
Lender in its reasonable judgment.


 


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


 


(e)                                  If
(i) the cost of a Replacement exceeds $100,000, (ii) the contractor performing
such Replacement requires periodic payments pursuant to terms of a written
contract, and (iii) Lender has approved in writing in advance such periodic
payments, a request for reimbursement from the Replacement Reserve Account may
be made after completion of a portion of the work under such contract, provided
(A) such contract requires payment upon completion of such portion of the work,
(B) the materials for which the request is made are on site at the Property 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 arc, in Lender’s judgment, sufficient to
complete such Replacement and other Replacements when required, and (E) if
required by Lender, each contractor or subcontractor receiving payments under
such contract shall provide a waiver o! lien with respect to amounts which have
been, paid to that contractor or subcontractor.


 


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


 


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Section 7.3.3                             Performance
of Replacements.


 


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


 


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


 


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


 


(d)                                 In
order to facilitate Lender’s completion or making of the Replacements pursuant
to Section 7.3.3(c) above, Borrower grants Lender the right to enter onto the
Property and perform any and all work and labor necessary to complete or make
the 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 extent not from the Replacement Reserve Fund,
shall be deemed to have been advanced under the Loan to Borrower and secured by
the Mortgage.  For this purpose Borrower
constitutes and appoints Lender its true and lawful attorney-in-fact with full
power of substitution 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 interest and cannot be revoked but
shall only be effective following an Event of Default.  Borrower empowers said attorney-in-fact as
follows:  (i) to use any funds in the
Replacement Reserve Account for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be necessary or desirable to 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 may become Liens against the Property,
or as may be necessary or desirable for the completion of the Replacements, or
for clearance of title; (v) to execute all applications and certificates in the
name of Borrower which may be required by any of the contract documents; (vi)
to prosecute and defend all actions or proceedings in connection with the
Property or the rehabilitation and repair of the Property; and (vii) to do any
and every act which Borrower might do in its own behalf to fulfill the terms of
this Agreement.


 


(e)                                  Nothing
in this Section 7.3.3 shall: (i) make Lender responsible for making or
completing the Replacements; (ii) require Lender to expend funds in addition to
the


 


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Replacement Reserve Fund
to make or complete any Replacement; (iii) obligate Lender to proceed with the
Replacements; or (iv) obligate Lender to demand from Borrower additional sums
to make or complete any Replacement.


 


(f)                                    Borrower
shall permit Lender and Lender’s agents and representatives (including, without
limitation, Lender’s engineer, architect, or inspector) or third parties making
Replacements pursuant to this Section 7.3.3 to enter onto the Property during
normal business hours (subject to the rights of tenants under their Leases) to
inspect the progress of any Replacements and all materials being used in
connection therewith, to examine all plans and shop drawings relating to such
Replacements which are or may be kept at the Property, and to complete any
Replacements made pursuant to this Section 7.3.3.  Borrower shall cause all contractors and
subcontractors to cooperate with Lender or Lender’s representatives or such other
persons described above in connection with inspections described in this
Section 7.3.3(1) or the completion of Replacements pursuant to this Section
7.3.3.


 


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


 


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


 


(i)                                     Before
each disbursement from the Replacement Reserve Account, Lender may require
Borrower to provide Lender with a search of title to the Property effective to
the date of the disbursement, which search shows that no mechanic’s or
materialmen’s liens or other liens of any nature have been placed against the
Property since the date of recordation of the Mortgage and that title to the
Property is free and clear of all Liens (other than the lien of the Mortgage
and any other Liens previously approved in writing by Lender, if any).


 


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


 


(k)                                  In
addition to any insurance required under the Loan Documents, Borrower shall
provide or cause to be provided workmen’s compensation insurance, builder’s
risk, and public liability insurance and other insurance to the extent required
under applicable law in connection with a particular Replacement. All such
policies shall be in form and amount reasonably satisfactory to Lender. All
such policies which can be endorsed with standard


 


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mortgagee clauses making
loss payable to Lender or its assigns shall be so endorsed.  Certified copies of such policies shall be
delivered to Lender.


 


Section 7.3.4                             Failure
to Make Replacements.   (a)  It shall be an Event of Default under this
Agreement if Borrower fails to comply with any provision of this Section 7.3
and such failure is not cured within thirty (30) days after notice from Lender;
provided, however, if such failure is not capable of being cured
within said thirty (30) day period, then provided that Borrower commences
action to complete such cure and thereafter diligently proceeds to complete
such cure, such thirty (30) day period shall be extended for such time as is
reasonably necessary for Borrower, in the exercise of due diligence, to cure
such failure, but such additional period of time shall not exceed sixty (60)
days.  Upon the occurrence of such an
Event of Default, Lender may use the Replacement Reserve Fund (or any portion
thereof) for any purpose, including but 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 the Debt in such order,
proportion and priority as Lender may determine in its sole discretion.  Lender’s right to withdraw and apply the
Replacement Reserve Funds shall be in addition to all other rights and remedies
provided to Lender under this Agreement and the other Loan Documents.


 


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


 


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


 


Section 7.3.6                             Indemnification.   Borrower shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys fees and expenses) arising from or in
any way connected with the performance of the Replacements unless the same are
solely due to gross negligence or willful misconduct of Lender.  Borrower shall assign to Lender all rights and
claims Borrower may have against all persons or entities supplying labor or
materials in connection with the Replacements; provided, however,
that Lender may not pursue any such right or claim unless an Event of Default
has occurred and remains 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                        Borrower
grants to Lender a first-priority perfected security interest in each of the
Reserve Funds and any and all monies now or hereafter deposited in each Reserve
Fund as additional security for payment of the Debt.  Until expended or applied in accordance
herewith, the Reserve Funds shall constitute additional security for the Debt.


 


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


 


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


 


7.7.4                        Intentionally
omitted.


 


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


 


7.7.6                        Lender
shall not be liable for any loss sustained on the investment of any funds constituting
the Reserve Funds unless occasioned by the gross negligence or willful misconduct
of Lender.


 


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


 


ARTICLE
VIII


DEFAULTS


 


Section 8.1                                      Event
of Default.   (a) Each of the
following events shall constitute an event of default hereunder (an “Event of Default”):


 


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


 


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


 


(iii)                               if
the Policies are not kept in full force and effect, or if 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 the Property without Lender’s
prior written consent (to extent such consent, is required) or otherwise violates
the provisions of Section 5.2.13 of this Loan Agreement;


 


(v)                                 if
any material representation or warranty made by Borrower herein or in any other
Loan Document, or in any report, certificate financial statement or other
instrument, agreement or document furnished to Lender shall have been false or


 


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misleading in any material respect as of the date the
representation or warranty was made;


 


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


 


(vii)                           if
a receiver, liquidator or trustee shall be appointed for Borrower or any
guarantor or indemnitor under any guarantee or indemnity issued in connection
with the Loan or if Borrower or such guarantor or indemnitor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any
similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Borrower or such guarantor or indemnitor, or if any
proceeding for the dissolution or liquidation of Borrower or such guarantor or
indemnitor shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Borrower or such guarantor or indemnitor, upon the same not
being discharged, stayed or dismissed within one hundred eighty (180) days;


 


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


 


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


 


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


 


(xi)                                if
any of the assumptions contained in any Insolvency Opinion or Additional
Insolvency Opinion are or shall become untrue in any material respect;


 


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


 


(xiii)                          if
there shall be default under any of the other Loan Documents beyond any
applicable cure periods contained in such documents, whether as to Borrower or
the


 


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Property, or if any other
such event shall occur or condition shall exist, if the effect of such event or
condition is to accelerate the maturity of any portion of the Debt or to permit
Lender to accelerate the maturity of all or any portion of the Debt.


 


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


 


Section 8.2                                      Remedies.
  (a) Upon the occurrence of an Event of
Default, all or any one or more of the rights, powers, privileges and other
remedies available to Lender against Borrower under this Agreement or any of
the other Loan Documents executed and delivered by, or applicable to, Borrower
or at law or in equity may be exercised by Lender at any time and from time to
time, whether or not all or any of the Debt shall be declared due and payable,
and whether or not Lender shall have commenced any foreclosure proceeding or
other action for the enforcement of its rights and remedies under any of the
Loan Documents with respect to the Property.  Any such actions taken by Lender shall be
cumulative and concurrent and may be pursued independently, singly,
successively, together or otherwise, at such time and in such order as Lender
may determine in its sole discretion, to the fullest extent permitted by law,
without impairing or otherwise affecting the other rights and remedies of
Lender permitted by law, equity or contract or as set forth herein or in the
other Loan Documents. Without limiting the generality of the foregoing,
Borrower agrees that if an Event of Default is continuing (i) Lender is not
subject to any “one action” or “election of remedies” law or rule, and (ii) all
liens and other rights, remedies or privileges provided to Lender shall remain
in full force and effect until Lender has exhausted all of its remedies against
the Property and the Mortgage has been foreclosed, sold and/or otherwise
realized upon in satisfaction of the Debt or the Debt has been paid in full.


 


(b)                                 Lender
shall have the right from time to time to partially foreclose the Mortgage in
any manner and for any amounts secured by the Mortgage then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following circumstances: (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose the Mortgage to recover such
delinquent payments, or (ii) in the event Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Lender may foreclose the
Mortgage to recover so much of the principal balance of the Loan as Lender may
accelerate and such other sums secured by the Mortgage as Lender may elect.
Notwithstanding one or more


 


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partial foreclosures, the Property shall remain
subject to the Mortgage to secure payment of sums secured by the Mortgage and
not previously recovered.


 


(c)                                  Lender
shall have the right from time to time to sever the Note and the other Loan
Documents into one or more separate notes, mortgages and other security
documents (the “Severed Loan Documents”) in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender.  Borrower hereby absolutely and irrevocably
appoints Lender following the occurrence of an Event of Default as its true and
lawful attorney, coupled with an interest, in its name and stead to make and
execute 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 such
power until three (3) days after notice has been given to Borrower by Lender of
Lender’s intent to exercise its rights under such power.  Borrower shall not be obligated to pay any
costs or expenses incurred in connection with the preparation, execution,
recording or filing of the Severed Loan Documents, and the Severed Loan Documents
shall not contain any representations, warranties or covenants not contained in
the Loan Documents and any such representations and warranties contained in the
Severed Loan Documents will be given by Borrower only as of the Closing Date.


 


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


 


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


 


ARTICLE IX


SPECIAL PROVISIONS


 


Section 9.1                                      Sale
of 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 market standards to which the holder of the Note
customarily adheres or which may be reasonably required in the marketplace or
by the Rating Agencies in connection with the sale of the Note or


 


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participations therein or the first successful securitization
(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.  In this regard Borrower shall;


 


(a)                                  (i)                                     provide
such financial and other information with respect to the Property, Borrower and
the Manager, (ii) provide budgets relating to the Property and (iii) to perform
or permit or cause 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, as may be reasonably requested by the holder of
the Note or the Rating Agencies or as may be necessary or appropriate in connection
with the Securitization (the “Provided Information”),
together, if customary, with appropriate verification and/or consents of the
Provided Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating Agencies;


 


(b)                                 cause
counsel 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 or any other opinion customary
in securitization transactions, which counsel and opinions shall be reasonably satisfactory
to the holder of the Note and the Rating Agencies;


 


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


 


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


 


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


 


Section 9.2                                      Securitization.
  Borrower understands that certain of
the Provided Information may be included in disclosure documents in connection
with the Securitization, including, without limitation, a prospectus,
prospectus supplement or private placement memorandum (each, a “Disclosure Document”) and may also be included in filings
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended (the “Securities Act”),
or the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or provided or made available to investors
or prospective investors in the Securities, the Rating Agencies, and service
providers relating to the Securitization. In the event that the Discloser
Document is required to be revised prior to the sale of all Securities,
Borrower will cooperate with the holder of the Note in updating the Disclosure
Document by providing all current information necessary to keep the Disclosure
Document accurate and complete in all material respects.


 


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


 


Section 9.4                                      Exculpation.
  Subject to the qualifications below,
Lender shall not enforce the liability and obligation of Borrower to perform
and observe the obligations contained in the Note, this Agreement, the Mortgage
or the other Loan Documents by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, an action for specific performance or any other appropriate
action or proceeding to enable Lender to enforce and realize upon its interest
under the Note, this Agreement, the Mortgage and the other Loan Documents, or
in the Property, the Rents following an Event of Default, or any other
collateral given to Lender pursuant to the Loan Documents; provided, however,
that, except as specifically provided herein, any judgment in any such action
or proceeding shall be enforceable against Borrower only to the extent of
Borrower’s interest in the Property, in the Rents following an Event of Default
and in any other collateral given to Lender, and Lender, by accepting the Note,
this Agreement, the Mortgage and the other Loan Documents, agrees that it shall
not sue for, seek or demand any deficiency judgment against Borrower in any
such action or proceeding under or by reason of or under or in connection with
the Note, this Agreement, the Mortgage or the other Loan Documents. The
provisions of this section shall not, however, (a) constitute a waiver, release
or impairment of any obligation evidenced or secured by any of the Loan
Documents; (b) impair the right of Lender to name Borrower as a party defendant
in any action or suit for foreclosure and sale under any of the Mortgage; (c)
affect the validity or enforceability of or any guaranty made in connection
with the Loan or any of the rights and remedies of Lender thereunder; (d)
impair the right of Lender to obtain the appointment of a receiver; (e) impair
the enforcement of any of the Assignment of Leases following an Event of
Default; (f) constitute a prohibition against Lender commencing any other
appropriate action or proceeding in order for Lender to exercise its remedies
against the Property; or (g) constitute a waiver of the right of Lender to
enforce the liability and obligation of Borrower, by money judgment, 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 the following:


 


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


 


(ii)                                  the
gross negligence or willful misconduct of Borrower;


 


(iii)                               material
physical waste of the Property;


 


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


 


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


 


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


 


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


 


(viii)                        any
security deposits, advance deposits or any other deposits collected with
respect to the Property which are not delivered to Lender upon a foreclosure of
the Property or action in lieu thereof, except to the extent any such security
deposits were applied in accordance with the terms and conditions of any of the
Leases prior to the occurrence of the Event of Default that gave rise to such foreclosure
or action in lieu thereof.


 


Notwithstanding anything to the contrary in this
Agreement, the Note or any of the Loan Documents, (A) the Debt shall be fully
recourse to the Borrower and (B) Lender shall not be deemed to have waived any
right which Lender may have under Section 506(a), 506(b), 111 l(b) or any other
provisions of the U.S. Bankruptcy Code to file a claim for the full amount of
the Debt secured by the Mortgage or to require that all collateral shall
continue to secure all of the Debt owing to Lender in accordance with the Loan
Documents in the event that the (I) first full monthly payment under the Note
is not paid within five (5) days of notice that such payment is late (provided,
however, that such grace period relates only to the recourse trigger described
in this paragraph), or (II) failure of Borrower to permit on-site inspections
of the Property subject to the rights of Tenants and any applicable cure period
set forth in the Loan Documents, to provide financial information as required
under the Loan Documents subject to any applicable cure period (except for
financial information required to be delivered by a tenant pursuant to the
applicable Lease that has not been delivered to Borrower, provided Borrower has
requested such financial information from such tenant), or (III) failure of
Borrower to comply with Section 4.1.30 hereof, or (IV) failure of Borrower to
obtain Lender’s prior written consent. (to extent such consent is required) to
any subordinate financing or other voluntary lien encumbering the Property, or
(V) failure of Borrower to obtain Lender’s prior written consent to any
assignment, transfer or conveyance of the Property, or any portion thereof, or
any interest therein as required by this Agreement. Notwithstanding the
provision set forth in clause (IV) of this paragraph, a voluntary lien other
than a lien securing an extension of credit filed against the Property
shall not constitute a recourse trigger for purposes of this paragraph provided
such lien (A) is fully bonded to the satisfaction of Lender and discharged of
record within ninety (90) days of filing, or (B) within such ninety (90) day
period, Lender receives affirmative title insurance from the title insurance
company insuring the lien of the Mortgage that such lien is subject and
subordinate to the lien of the Mortgage and no enforcement action is commenced
by the applicable lien holder. Upon the acceptance by Lender of any cure by
Borrower of a recourse trigger described in clauses (I), (II) or (IV) above,
the Debt shall no longer be fully recourse to Borrower solely as a result of
such trigger. Upon the acceptance by Lender of any cure by Borrower of a
recourse trigger described in clauses (III) or (V) above, the Debt shall no
longer be fully recourse to Borrower solely as a result of such trigger,
provided, however, Borrower shall remain liable to


 


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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 such trigger.


 


Section 9.5                                   Termination
of Manager.   If (a) the amounts evidenced by the Note have
been accelerated pursuant to Section 8.1(b) hereof, (b) the Manager shall
become insolvent, (c) the Manager is in default under the terms of the
Management Agreement beyond any applicable grace or cure period, or (d) Manager
is not managing the Property in accordance with the management practices of
nationally recognized management companies managing similar properties in
locations 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 Management
Agreement and replace the Manager with a manager reasonably approved by Lender
on terms and conditions reasonably satisfactory to Lender, it being understood
and agreed that the management fee for such replacement manager shall not
exceed then prevailing market rates. In addition and without limiting the rights
of Lender hereunder or under any of the other Loan Documents, in the event that
(i) the Management Agreement is terminated, (ii) the Manager no longer manages
the Property, or (iii) a receiver, liquidator or trustee shall be appointed for
Manager or if Manager shall be adjudicated a bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Manager, or if any proceeding for
the dissolution or liquidation of Manager shall be instituted, then Borrower
(at Borrower’s sole cost and expense) shall immediately, in its name, establish
new deposit accounts separate from any other Person with a depository
satisfactory to Lender into which all Rents and other income from the Property
shall be deposited and shall grant Lender a first priority security interest in
such account pursuant to documentation satisfactory in form and substance to
Lender.


 


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


 


Section 9.7                                      Splitting
the Loan.   At the election of Lender
in its sole discretion, the Loan or any individual Note making up the Loan
shall be split and severed into two or more loans which, at Lender’s election,
shall not be cross-collateralized or cross-defaulted with each other. Borrower
hereby agrees to deliver to Lender to effectuate such severing of the Loan or
any individual Note, as the case may be, as reasonably requested by Lender, (a)
additional executed documents, or amendments and modifications to the
applicable Loan Documents, (b) new opinions or updates to the opinions
delivered to Lender in connection with the closing of the Loan, (c)
endorsements and/or updates to the title insurance policies delivered to Lender
in connection with the closing of the Loan, and (d) any other certificates,
instruments and documentation reasonably determined by Lender as necessary or
appropriate to such severance (the items described in subsections (a) through
(d) collectively hereinafter shall be referred to as “Severing Documentation”),
which Severing Documentation shall be acceptable to Lender in form and
substance in its reasonable discretion. Lender hereby agrees to be responsible
for all reasonable third-party expenses incurred in connection with the
preparation and delivery of the


 


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Severing Documentation
and the effectuation of the uncrossing of the Loan from the additional Loans.
Borrower hereby acknowledges and agrees that upon such severing of the Loan,
Lender may effect, in its sole discretion, one or more Securitizations of which
the severed loans may be apart.


 


ARTICLE
X


MISCELLANEOUS


 


Section 10.1                                Survival.
  This Agreement and all covenants,
agreements, representations and warranties made herein and in the certificates
delivered pursuant hereto shall survive the making by Lender of the Loan and
the execution and delivery to Lender of the Note, and shall continue in full
force and effect so long as all or any of the Debt is outstanding and unpaid
unless a longer period is expressly set forth herein or in the other Loan
Documents. Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the legal representatives, successors
and assigns of such party. All covenants, promises and agreements in this
Agreement, by or on behalf of Borrower, shall inure to the benefit of the legal
representatives, successors and assigns of Lender.


 


Section 10.2                                Lender’s
Discretion.   Whenever pursuant to
this Agreement, Lender exercises any right given to it to approve or
disapprove, or any arrangement or term is to be satisfactory to Lender, the
decision of Lender to approve or disapprove or to decide whether arrangements
or terms are satisfactory or not satisfactory shall (except as is otherwise
specifically herein provided) be in the sole discretion of Lender and shall be
final and conclusive.


 


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


 


Section 10.4                                Modification.
Waiver in Writing.   No modification,
amendment, extension, discharge, termination or waiver of any provision of this
Agreement, or of the Note, or of any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the
same shall be in a writing signed by the party against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on Borrower, shall entitle Borrower to
any other or future notice or demand in the same, similar or other
circumstances.


 


Section 10.5                                Delay
Not a Waiver.   Neither any failure
nor any delay on the part of Lender in insisting upon strict performance of any
term, condition, covenant or agreement, or exercising any right, power, remedy
or privilege hereunder, or under the Note or under any other Loan Document, or
any other instrument given as security therefor, shall operate as or constitute
a waiver thereof, nor shall a single or partial exercise thereof preclude any
other future exercise, or the exercise of any other right, power, remedy or
privilege. In particular, and not by way of limitation, by accepting payment
after the due date of any amount payable under this Agreement,


 


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the Note or any other
Loan Document, Lender shall not be deemed to have waived any right either to
require prompt payment when due of all other amounts due under this Agreement,
the Note or the other Loan Documents, or to declare a default for failure to
effect prompt payment of any such other amount.


 


Section 10.6                                Notices.
  All notices, consents, approvals and
requests required or permitted hereunder or under any other Loan Document shall
be given in writing and shall be effective for all purposes if hand delivered
or sent by (a) certified or registered United States mail, postage prepaid,
return receipt requested or (b) expedited prepaid delivery service, either
commercial or United States Postal Service, with proof of attempted delivery,
and by telecopier (with answer back acknowledged), addressed as follows (or at
such other address and Person as shall be designated from time to time by any
party hereto, as the case may be, in a written notice to the other parties
hereto in the manner provided for in this Section):


 


If to Lender:


 


Bear Steams Commercial
Mortgage, Inc.


383 Madison Avenue


New York, New York. 10179


Attention: J. Christopher
Hoeffel


 


with a copy to:


 


Katten Muchin Zavis Rosenman


401 South Tryon Street


Suite 2600


Charlotte, North Carolina
28202-1935


Attention: Daniel S.
Huffenus, Esq.


 


If to Borrower:


 


Inland Western Gurnee, L.L.C.


2901 Butlerfield Road


Oak Brook, TL 60523


Attention: Steven Grimes


 


with a copy to:


 


Inland Western Retail Real Estate Trust, Inc.


2901 Butterfield Road


Oak Brook IL 60523


Attention: Robert H. Baum, Esq.


 


and with a copy to:


 


Inland Western Retail Real Estate Trust, Inc.


2901 Butterfield Road


Oak Brook, IL 60523


Attention: Roberta Matlin


 


 


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


 


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


 


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


 


Section 10.9                                Severability.
  Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.


 


Section 10.10                          Preferences.


 


Lender shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments by Borrower to any portion
of the obligations of Borrower hereunder. To the extent Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party under
any bankruptcy law, state or federal law, common law or equitable cause, then,
to the extent of such payment or proceeds received, the obligations hereunder
or part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.


 


Section 10.11                          Waiver
of Notice.   Borrower shall not be
entitled to any notices of any nature whatsoever from Lender except with
respect to matters for which this Agreement or the other Loan Documents
specifically and expressly provide for the giving of notice by Lender to
Borrower and except with respect to matters for which Borrower is not, pursuant
to applicable


 


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Legal Requirements,
permitted to waive the giving of notice. Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Lender to Borrower.


 


Section 10.12                          Remedies
of Borrower.   In the event that a
claim or adjudication is made that Lender or its agents have acted unreasonably
or unreasonably delayed acting in any case where by law or under this Agreement
or the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, Borrower agrees that neither Lender
nor its agents shall be liable for any monetary damages, and Borrower’s sole
remedies shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. The parties hereto agree that any action or proceeding to
determine whether Lender has acted reasonably shall be determined by an action
seeking declaratory judgment.


 


Section 10.13                          Expenses;
Indemnity.


 


(a)                                  Borrower
covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender
upon receipt of written notice from Lender for all reasonable costs and
expenses (including reasonable attorneys’ 
fees and disbursements)  incurred
by Lender in connection with (i) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby and all the costs of
furnishing all opinions by counsel for Borrower (including without limitation
any opinions requested by Lender as to any legal matters arising under this
Agreement or the other Loan Documents with respect to the Property); (ii)
Borrower’s ongoing performance of and compliance with Borrower’s respective
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including, without limitation, confirming compliance with environmental and
insurance requirements; (iii) Lender’s ongoing performance and compliance with
all agreements and conditions contained in this Agreement and the other Loan
Documents 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 Loan
Documents and any other documents or matters reasonably requested by Lender;
(v) securing Borrower’s compliance with any requests made pursuant to the
provisions of this Agreement; (vi) the filing and recording fees and expenses,
title insurance and reasonable fees and expenses of counsel for providing to
Lender all required legal opinions, and other similar expenses incurred in
creating and perfecting the Liens in favor of Lender pursuant to this Agreement
and the other Loan Documents; (vii) enforcing or preserving any rights, in
response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Property, or any other
security given for the Loan; and (viii) enforcing any obligations of or
collecting any payments due from Borrower under this Agreement, the other Loan
Documents or with respect to the Property or in connection with any refinancing
or restructuring of the credit arrangements provided under this Agreement in
the nature of a “work-out”‘ or of any insolvency or bankruptcy proceedings;
provided, however, that Borrower shall not be liable for the payment of any
such costs and expenses to the extent the same arise by reason of the gross
negligence, illegal acts, fraud or willful misconduct of Lender.


 


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(b)                                  Borrower
shall indemnify, defend and hold harmless Lender from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan Documents,
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 extent that such Indemnified Liabilities arise from 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 law or public policy,
Borrower shall pay the maximum portion that it is permitted to pay and satisfy
under applicable law to the payment and satisfaction of all Indemnified
Liabilities incurred by Lender.


 


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


 


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


 


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


 


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


 


(b)                                 This
Agreement and the other Loan Documents arc solely for the benefit of Lender and
Borrower and nothing contained in this Agreement or the other Loan Documents shall
be deemed to confer upon anyone other than Lender and Borrower any right to
insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan hereunder arc imposed solely and exclusively for the
benefit of Lender and no other Person shall have standing to require satisfaction
of such conditions in accordance with their terms or be entitled to assume that
Lender will refuse to make the Loan in the absence of strict compliance with
any or all thereof and no other Person shall under any circumstances be deemed
to be a beneficiary of such


 


78





















 


conditions, any or all of
which may be freely waived in whole or in part by Lender if, in Lender’s sole
discretion, Lender deems it advisable or desirable to do so.


 


Section 10.17                          Publicity.
  All news releases, publicity or
advertising by Borrower or their Affiliates through any media intended to reach
the general public which refers to the Loan Documents or the financing
evidenced by the Loan Documents, to Lender, Bear Stearns, or any of their
Affiliates shall be subject to the prior written approval of Lender. All news
releases, publicity or advertising by Lender through, any media intended to
reach the general public which refers solely to the Borrower or to the Loan
made by the Lender to the Borrower shall be subject to the prior written
approval of Borrower, provided however, the foregoing shall not apply to
Provided Information included in disclosure documents in connection with a
Securitization.


 


Section 10.18                          Waiver
of Marshalling of Assets.   To the
fullest extent permitted by law, Borrower, for itself and its successors and
assigns, waives all rights to a marshalling of the assets of Borrower, Borrower’s
partners 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 the Mortgage
or sale of the Property by power of sale, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the
right of Lender under the Loan Documents to a sale of the Property for the
collection of the Debt without any prior or different resort for collection or
of the right of Lender to the payment of the Debt out of the net proceeds of
the Property in preference to every other claimant whatsoever.


 


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


 


Section 10.20                          Conflict;
Construction of Documents; Reliance.   In the event of any conflict between the
provisions of this Loan Agreement and any of the other Loan Documents, the
provisions of this Loan Agreement shall control. The parties hereto acknowledge
that they were represented by competent counsel in connection with the
negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender. Lender shall not be subject to any limitation whatsoever
in the exercise of any rights or remedies available to it under any of the Loan
Documents or any other agreements or instruments which govern the Loan by
virtue of the ownership by it or any parent, subsidiary or Affiliate 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 take any action on the
basis of the foregoing with respect to Lender’s exercise of any such rights or
remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.


79





















 


Section 10.21                          Brokers
and Financial Advisors.   Borrower
hereby represents that it has dealt with no financial advisors, brokers,
underwriters, placement agents, agents or finders in connection with the
transactions contemplated by this Agreement other than Inland Mortgage Corp.
Borrower hereby agrees to indemnify, defend and hold Lender harmless from and
against any and all claims, liabilities, costs and expenses of any kind
(including Lender’s reasonable attorneys’ fees and expenses) in any way
relating to or arising from a claim by any Person that such Person acted on
behalf of Borrower or Lender in connection with the transactions contemplated
herein. The provisions of this Section 10.21 shall survive the expiration and
termination of this Agreement and the payment of the Debt.


 


Section 10.22                          Prior
Agreements.   This Agreement and the
other Loan Documents contain the entire agreement of the parties hereto and
thereto in respect of the transactions contemplated hereby and thereby, and all
prior agreements or understandings among or between such parties, whether oral
or written, arc superseded by the terms of this Agreement and the other Loan
Documents and unless specifically set forth in a writing contemporaneous
herewith the terms, conditions and provisions of such prior agreement do not
survive execution of this Agreement.


 


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


 


Section 10.24                          Joint
and Several Liability.   If Borrower
consists of more than one person or party, the obligations and liabilities of
Teach person or party shall be joint and several.


 


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


 


80





















 


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


 


	
   

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INLAND WESTERN GURNEE, L.L.C.,
  a

  
	
   

  	
   

  	
  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Inland Western Retail Real Estate Trust,

  
	
   

  	
   

  	
   

  	
  Inc., a Maryland corporation, its sole

  
	
   

  	
   

  	
   

  	
  member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
      /s/ Valerie Medina

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Valerie Medina

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:  Assistant Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEAR STEARNS COMMERCIAL

  
	
   

  	
   

  	
  MORTGAGE, INC., a
  New York corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Michael A. Forastiere

  Managing Director

  
							



 





















 


SCHEDULE 1


 


TENANT DIRECTION LETTER


 


INLAND WESTERN
GURNEE, L.L.C.


 


	
                 ,
  200    

  



 


(Tenant’s name and address)


                                                


                                                


 


Re:                               Lease,
dated                ,
by and between
                        
,as original landlord and predecessor-in-interest to Inland Western Gurnee,
L.L.C., as landlord, and                      
as tenant as the same has been amended, concerning premises at Gurnee Town
Center, Gurnee, Illinois


 


Ladies and Gentlemen:


 


The undersigned
hereby requests that, commencing with the First Rent payment date occurring
after the date hereof, you deliver all Rent to the following address:


 


 


Account Name:


Account No.


Attention:


ABA#


 


 


	
   

  	
  INLAND
  WESTERN GURNEE, L.L.C., a

  
	
   

  	
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Inland Western Retail Real Estate Trust,

  Inc., a Maryland corporation, its sole

  member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title: Assistant Secretary

  



 





















 


SCHEDULE
II


 


Intentionally Omitted.


 


X-2





















 


PROPERTY CONDITION ASSESSMENT
UPDATE


GURNEE TOWN CENTRE


Gurnee, Illinois


November 3, 2004


 


	
  REPLACEMENT
  RESERVE SCHEDULE

  	
   

  	
  7-YEAR PROJECTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


	
  Property Component

  	
   

  	
  Quantity

  	
   

  	
  Units

  	
   

  	
  Unit
  Cost

  	
   

  	
  Footnote

  	
   

  	
  Cost

  	
   

  	
  Expected

  Life (a)

  	
   

  	
  Remaining

  Life (b)

  	
   

  	
  Year 1

  2005

  	
   

  	
  Year 2

  2006

  	
   

  	
  Year 3

  2007

  	
   

  	
  Year 4

  2008

  	
   

  	
  Year 5

  2009

  	
   

  	
  Year 6

  2010

  	
   

  	
  Year 7

  2011

  	
   

  	
  7-Year

  Totals

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Site

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



	
  Payment Maintenance

  	
   

  	
  315,000

  	
   

  	
  sf

  	
   

  	
  $

  	
  0.12

  	
   

  	
  (d)

  	
   

  	
  $

  	
  37,800

  	
   

  	
  5

  	
   

  	
  1

  	
   

  	
  $

  	
  7,560

  	
   

  	
  $

  	
  7,560

  	
   

  	
  $

  	
  7,560

  	
   

  	
  $

  	
  7,560

  	
   

  	
  $

  	
  7,560

  	
   

  	
  $

  	
  7,560

  	
   

  	
  $

  	
  7,560

  	
   

  	
  $

  	
  52,920

  	
   

  
	
  Payment Replacement

  	
   

  	
  5,000

  	
   

  	
  sf

  	
   

  	
  $

  	
  1.75

  	
   

  	
  (e)

  	
   

  	
  $

  	
  8,750

  	
   

  	
  30

  	
   

  	
  1

  	
   

  	
  $

  	
  8,750

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  8,750

  	
   

  
	
  Payment Repairs

  	
   

  	
  3,500

  	
   

  	
  sf

  	
   

  	
  $

  	
  0.75

  	
   

  	
  (f)

  	
   

  	
  $

  	
  2,625

  	
   

  	
  5

  	
   

  	
  5

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  2,625

  	
   

  	
   

  	
   

  	
  $

  	
  2,625

  	
   

  
	
  Concrete Sidewalk
  Repair

  	
   

  	
  1

  	
   

  	
  yr

  	
   

  	
  $

  	
  1,750.00

  	
   

  	
  (g)

  	
   

  	
  $

  	
  1,750

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  1,750

  	
   

  	
  $

  	
  1,750

  	
   

  	
  $

  	
  1,750

  	
   

  	
  $

  	
  1,750

  	
   

  	
  $

  	
  1,750

  	
   

  	
  $

  	
  8,750

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Building

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (c)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Masanry & Seetants

  	
   

  	
  1

  	
   

  	
  yr

  	
   

  	
  $

  	
  4,000.00

  	
   

  	
  (h),(i)

  	
   

  	
  $

  	
  4,000

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  $

  	
  4,000

  	
   

  	
  $

  	
  4,000

  	
   

  	
  $

  	
  4,000

  	
   

  	
  $

  	
  4,000

  	
   

  	
  $

  	
  4,000

  	
   

  	
  $

  	
  4,000

  	
   

  	
  $

  	
  4,000

  	
   

  	
  $

  	
  28,000

  	
   

  
	
  Roofing Repairs
  & Maintenance

  	
   

  	
  179,902

  	
   

  	
  sf

  	
   

  	
  $

  	
  0.030

  	
   

  	
  (j),(k)

  	
   

  	
  $

  	
  5,397

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  $

  	
  5,397

  	
   

  	
  $

  	
  5,397

  	
   

  	
  $

  	
  5,397

  	
   

  	
  $

  	
  5,397

  	
   

  	
  $

  	
  5,397

  	
   

  	
  $

  	
  5,397

  	
   

  	
  $

  	
  5,397

  	
   

  	
  $

  	
  37,779

  	
   

  
	
  Curtain Wall
  Maintenance

  	
   

  	
  1

  	
   

  	
  yr

  	
   

  	
  $

  	
  1,250.00

  	
   

  	
  (l)

  	
   

  	
  $

  	
  1,250

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  $

  	
  1,250

  	
   

  	
  $

  	
  1,250

  	
   

  	
  $

  	
  1,250

  	
   

  	
  $

  	
  1,250

  	
   

  	
  $

  	
  1,250

  	
   

  	
  $

  	
  1,250

  	
   

  	
  $

  	
  1,250

  	
   

  	
  $

  	
  8,750

  	
   

  
	
  EIFS & Soffit
  Paint & Patch

  	
   

  	
  1

  	
   

  	
  yr

  	
   

  	
  $

  	
  3,500.00

  	
   

  	
  (m)

  	
   

  	
  $

  	
  3,500

  	
   

  	
  1

  	
   

  	
  1

  	
   

  	
  $

  	
  3,500

  	
   

  	
  $

  	
  3,500

  	
   

  	
  $

  	
  3,500

  	
   

  	
  $

  	
  3,500

  	
   

  	
  $

  	
  3,500

  	
   

  	
  $

  	
  3,500

  	
   

  	
  $

  	
  3,500

  	
   

  	
  $

  	
  24,500

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTALS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  30,457

  	
   

  	
  $

  	
  21,707

  	
   

  	
  $

  	
  23,457

  	
   

  	
  $

  	
  23,457

  	
   

  	
  $

  	
  23,457

  	
   

  	
  $

  	
  26,082

  	
   

  	
  $

  	
  23,457

  	
   

  	
  $

  	
  172,074

  	
   

  
	
  Escalation
  Factor–2.5% per year

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1.025

  	
   

  	
  1.051

  	
   

  	
  1.077

  	
   

  	
  1.104

  	
   

  	
  1.131

  	
   

  	
  1.160

  	
   

  	
  1.189

  	
   

  	
   

  	
   

  
	
  Escalated
  Cost per year

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  31,218

  	
   

  	
  $

  	
  22,806

  	
   

  	
  $

  	
  25,261

  	
   

  	
  $

  	
  25,892

  	
   

  	
  $

  	
  26,540

  	
   

  	
  $

  	
  30,247

  	
   

  	
  $

  	
  27,883

  	
   

  	
  $

  	
  183,847

  	
   

  
	
  Facility Area

  	
   

  	
  179,902

  	
   

  	
  sf

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $/sf/yr

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  0.17

  	
   

  	
  $

  	
  0.12

  	
   

  	
  $

  	
  0.13

  	
   

  	
  $

  	
  0.13

  	
   

  	
  $

  	
  0.13

  	
   

  	
  $

  	
  0.14

  	
   

  	
  $

  	
  0.13

  	
   

  	
  $

  	
  0.14

  	
   

  
	
  Escalated $/sf/yr

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  0.17

  	
   

  	
  $

  	
  0.13

  	
   

  	
  $

  	
  0.14

  	
   

  	
  $

  	
  0.14

  	
   

  	
  $

  	
  0.15

  	
   

  	
  $

  	
  0.17

  	
   

  	
  $

  	
  0.15

  	
   

  	
  $

  	
  0.15

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  172,074

  	
   

  



 


45





















 


Cost Summary


 


	
   

  	
   

  	
  Immediate

  	
   

  
	
  Code Compliance/Life
  Safety Issues Subtotal

  	
   

  	
  $

  	
  4,500.00

  	
   

  
	
  ADA Barrier
  Removal Issues Subtotal

  	
   

  	
  $

  	
  2,500.00

  	
   

  
	
  Deferred
  Maintenance/Property Deficiency Subtotal

  	
   

  	
  $

  	
  41,125.00

  	
   

  
	
  Cost
  Estimate Total

  	
   

  	
  $

  	
  48,125.00

  	
   

  



 


43





















 


SCHEDULE
III


 


REQUIRED
REPAIRS


 


None.


 


X-3





















 


SCHEDULE IV


 


RENT ROLL


 


X-4





















 


SCHEDULE V


 


Intentionally omitted.


 


X-5





















 


SCHEDULE VI


 


Intentionally omitted.


 


X-6





















 


SCHEDULE Vll


 


PROPERTY AFFECTED BY SECTION
4.1.22


 


Not Applicable.


 


X-7





















 


SCHEDULE VIII


 


Intentionally Omitted.


 


X-8





















 


SCHEDULE IX


 


Intentionally Omitted.


 


X-9





















 


SCHEDULE X


 


OTHER CONTRACT FUNDS AGREEMENTS


 


None.


 


10