Exhibit
10.439


 


LOAN AGREEMENT


 


 


Dated as of December 21, 2004


 


 


Between


 


 


INLAND WESTERN PLACENTIA, L.L.C.,


as Borrower


 


 


and


 


 


BEAR STEARNS COMMERCIAL MORTGAGE, INC.,


as Lender


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE
  I DEFINITIONS; PRINCIPLES OF CONSTRUCTION

  	
   

  
	
  Section 1.1 Definitions

  	
   

  
	
  Section 1.2
  Principles of Construction

  	
   

  
	
  ARTICLE II GENERAL TERMS

  	
   

  
	
  Section
  2.1 Loan Commitment; Disbursement to Borrower

  	
   

  
	
  Section
  2.2 Interest; Loan Payments; Late Payment Charge

  	
   

  
	
  Section 2.3 Prepayments

  	
   

  
	
  Section 2.4
  Intentionally Omitted

  	
   

  
	
  Section 2.5 Release of
  Property

  	
   

  
	
  Section 2.6
  Manner of Making Payments

  	
   

  
	
  Section 2.7
  Intentionally Omitted

  	
   

  
	
  ARTICLE III CONDITIONS PRECEDENT

  	
   

  
	
  Section 3.1
  Conditions Precedent to Closing

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES

  	
   

  
	
  Section 4.1
  Borrower Representations

  	
   

  
	
  Section 4.2
  Survival of Representations

  	
   

  
	
  ARTICLE V
  BORROWER COVENANTS

  	
   

  
	
  Section 5.1
  Affirmative Covenants

  	
   

  
	
  Section 5.2
  Negative Covenants

  	
   

  
	
  ARTICLE
  VI INSURANCE; CASUALTY; CONDEMNATION

  	
   

  
	
  Section 6.1 Insurance

  	
   

  
	
  Section 6.2 Casualty

  	
   

  
	
  Section 6.3 Condemnation

  	
   

  
	
  Section 6.4 Restoration

  	
   

  
	
  ARTICLE VII RESERVE FUNDS

  	
   

  
	
  Section 7.1
  Required Repair Funds

  	
   

  
	
  Section
  7.2 Tax and Insurance Escrow Fund

  	
   

  
	
  Section
  7.3 Replacements and Replacement Reserve

  	
   

  
	
  Section 7.4
  Intentionally Omitted

  	
   

  
	
  Section 7.5
  Intentionally Omitted

  	
   

  
	
  Section 7.6
  Intentionally Omitted

  	
   

  
	
  Section 7.7
  Reserve Funds, Generally

  	
   

  
	
  ARTICLE VIII DEFAULTS

  	
   

  
	
  Section 8.1 Event of
  Default

  	
   

  
	
  Section 8.2 Remedies

  	
   

  
	
  Section
  8.3 Remedies Cumulative; Waivers

  	
   

  
	
  ARTICLE IX SPECIAL PROVISIONS

  	
   

  
	
  Section
  9.1 Sale of Notes and Securitization

  	
   

  
	
  Section 9.2
  Securitization

  	
   

  
	
  Section 9.3 Rating
  Surveillance

  	
   

  
	
  Section 9.4 Exculpation

  	
   

  



 


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  Section 9.5
  Termination of Manager

  	
   

  
	
  Section 9.6 Servicer

  	
   

  
	
  Section 9.7
  Splitting the Loan

  	
   

  
	
  ARTICLE X MISCELLANEOUS

  	
   

  
	
  Section 10.1 Survival

  	
   

  
	
  Section l0.2 Lender’s
  Discretion

  	
   

  
	
  Section 10.3 Governing
  Law

  	
   

  
	
  Section
  10.4 Modification, Waiver in Writing

  	
   

  
	
  Section 10.5 Delay
  Not a Waiver

  	
   

  
	
  Section 10.6 Notices

  	
   

  
	
  Section l0.7 Trial by
  Jury

  	
   

  
	
  Section l0.8 Headings

  	
   

  
	
  Section 10.9 Severability

  	
   

  
	
  Section 10.10
  Preferences

  	
   

  
	
  Section 10.11
  Waiver of Notice

  	
   

  
	
  Section 10.12
  Remedies of Borrower

  	
   

  
	
  Section 10.13
  Expenses; Indemnity

  	
   

  
	
  Section 10.14
  Schedules Incorporated

  	
   

  
	
  Section
  10.15 Offsets, Counterclaims and Defenses

  	
   

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

  	
   

  
	
  Section 10.17 Publicity

  	
   

  
	
  Section
  10.18 Waiver of Marshalling of Assets

  	
   

  
	
  Section 10.19
  Waiver of Counterclaim

  	
   

  
	
  Section
  10.20 Conflict; Construction of Documents; Reliance

  	
   

  
	
  Section
  10.21 Brokers and Financial Advisors

  	
   

  
	
  Section 10.22 Prior
  Agreements

  	
   

  
	
  Section 10.23
  Transfer of Loan

  	
   

  
	
  Section
  10.24 Joint and Several Liability

  	
   

  



 


SCHEDULES


 


	
  Schedule
  I

  	
  -

  	
  Intentionally
  Omitted

  
	
  Schedule
  II

  	
  -

  	
  Intentionally
  Omitted

  
	
  Schedule III

  	
  -

  	
  Required Repairs

  
	
  Schedule IV

  	
  -

  	
  Rent Roll

  
	
  Schedule V

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule VI

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule VII

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule VIII

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule IX

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule X

  	
  -

  	
  Other Contract Funds
  Agreements

  



 


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LOAN AGREEMENT


 


THIS LOAN AGREEMENT, dated as of this 21 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 PLACENTIA, 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:


 


“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,
collectively, (a) Office Max North America, Inc., f.k.a. Office Max, Inc. and
(b) Ross Stores, Inc., pursuant to the Anchor Tenant Lease.


 


“Anchor Tenant Lease” shall mean:


 


(i)                                     with respect to Office Max North America,
Inc., f.k.a. Office Max, Inc. that certain Lease Agreement, dated August 27,
1996, by and between Donahue Schriber, 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


 


(ii)                                  with respect to Ross Stores, Inc. that certain
Lease, dated August 16, 1993, by and between Diversified Shopping Center, 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 Placentia, 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.


 


“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.


 


“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.


 


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“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.


 


“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 $0.28 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.


 


3





















 


“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-l
by Standard & Poor’s Ratings Services, P-l 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.


 


“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.


 


4





















 


“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 are in occupancy, open for business
and paying unabated Rent, (ii) utility charges, (iii) escalations, (iv)
intentionally omitted; (v) service fees or charges, (vi) license fees, (vii)
parking fees, and (viii) other required pass-throughs 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 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.


 


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


 


‘‘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.


 


5





















 


“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 part 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.


 


“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 Pacific
Management LLC.


 


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“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 date, 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 $52,463.26.


 


“Mortgage” shall mean, with respect
to the Property, that certain first priority Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing, 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 5.1.1l (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 4.36%, 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.


 


“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 Thirteen
Million Six Hundred Ninety Five Thousand and NO/100 Dollars


 


7





















 


($13,695,000.00), 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, but 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 Property 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:


 


(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


 


8





















 


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;


 


(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


 


9





















 


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 are 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 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,


 


10





















 


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.l(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 Date referred to 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


 


11





















 


Release H.I5(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 will 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 set 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.


 


“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,


 


12





















 


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.


 


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


 


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


 


13





















 


“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)                              intentionally omitted;


 


(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 limited liability
company (a) has been formed under Delaware law, and (b) has either a
corporation or other person or entity that shall become


 


14





















 


a member
of the limited liability company upon the dissolution or disassociation of the member;


 


(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 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;


 


(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;


 


(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;


 


15





















 


(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 than (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;


 


(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;


 


16





















 


(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)                      does 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


 


(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 Property, 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.


 


17





















 


“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.


 


“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 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.


 


18





















 


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 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


 


19





















 


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 lights 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 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


 


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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 which 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. 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


 


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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 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                        Intentionally Omitted.


 


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 be 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) 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.


 


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


 


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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 be 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.


 


3.1.15                  Subordination and Attornment.  Lender shall have received
appropriate instruments acceptable to Lender in its commercially reasonable
discretion subordinating any


 


25





















 


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:


 


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


 


26





















 


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, 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


 


27





















 


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 Bankrupcy 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.


 


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


 


28





















 


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.


 


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.


 


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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 are 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.


 


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


 


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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 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


 


31





















 


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)                                  Intentionally omitted


 


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.


 


4.1.33                  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 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.


 


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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 state 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 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


 


34





















 


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 are 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 legal
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 be 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 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


 


35





















 


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


 


(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.


 


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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 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


 


37





















 


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
annual 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


 


38





















 


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.


 


(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.


 


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(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 Property, 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 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


 


40





















 


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 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”),


 


41





















 


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.


 


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;


 


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(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.


 


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.


 


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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 are 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 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


 


44





















 


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 have caused counsel to
render a substantive non-consolidation opinion which 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 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


 


45





















 


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. (“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


 


46





















 


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 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


 


47





















 


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;


 


(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;


 


48





















 


(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 either 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 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


 


49





















 


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 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


 


50





















 


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.


 


Section 6.4                                     Restoration.


 


(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


 


51





















 


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 all
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 may be, and will make all necessary repairs and restorations
thereto at their sole cost and expense. The term “Rentable Space Percentage” 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%);


 


52





















 


(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 to or
greater than 2.50:1.0;


 


(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


 


53





















 


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 and
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 be 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 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


 


54





















 


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.


 


(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


 


55





















 


(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 Eight Million and 00/100
Dollars ($8,000,000.00), 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 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


 


56





















 


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 specifies 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 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


 


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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 Property 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 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


 


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“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 Property 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
not 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 are 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 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


 


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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 are, in Lender’s judgment, sufficient to
complete such Replacement and other Replacements when required, and (E) if
required by Lender, each contractor or subcontractor receiving payments under
such contract shall provide a waiver of 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.


 


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


 


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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 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.


 


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


 


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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 substantive non-consolidation opinion delivered in
connection herewith 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


 


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(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 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


 


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such other sums secured by the Mortgage as
Lender may elect. Notwithstanding one or more 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 be 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


 


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required in the marketplace or by the Rating
Agencies in connection with the sale of the Note or 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 Disclosure 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),
111l(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 a
part.


 


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 Stearns 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
Placentia, L.L.C.

2901 Butterfield Road

Oak Brook, IL 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 inconnection
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 Documentsand 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 LoanDocuments;
(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 bankruptcyproceedings;
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 are 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 are 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


 


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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.


 


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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, are
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 each person or party shall be
joint and several.


 


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


 


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IN WITNESS WHEREOF, the parties hereto 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 PLACENTIA, L.L.C., a

  
	
   

  	
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Inland Western Retail Real Estate Trust,

  Inc., a Maryland corporation, its sole

  member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Debra A. Palmer

  	
   

  
	
   

  	
   

  	
  Name:  Debra
  A. Palmer

  
	
   

  	
   

  	
  Title: 
  Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BEARSTEARNS COMMERCIAL

  
	
   

  	
  MORTGAGE, INC., a New York corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Michael A. Forastiere

  Managing Director

  



 





















 


SCHEDULE I


 


Intentionally
omitted.


 





















 


SCHEDULE II


 


Intentionally
omitted.


 


SCH. X-2