Exhibit 10.449


 


LOAN AGREEMENT


 


Dated as of December 30, 2004


 


Between


 


INLAND
WESTERN AVONDALE MCDOWELL, L.L.C.,


as Borrower


 


and


 


LASALLE BANK NATIONAL ASSOCIATION,


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

  	
   

  



 


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  ARTICLE IX

  	
  SPECIAL PROVISIONS

  	
   

  
	
  Section
  9.1

  	
  Sale of Notes and Securitization

  	
   

  
	
  Section
  9.2

  	
  Securitization

  	
   

  
	
  Section
  9.3

  	
  Rating Surveillance

  	
   

  
	
  Section
  9.4

  	
  Exculpation

  	
   

  
	
  Section
  9.5

  	
  Termination of Manager

  	
   

  
	
  Section
  9.6

  	
  Servicer

  	
   

  
	
  Section
  9.7

  	
  Splitting the Loan

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  MISCELLANEOUS

  	
   

  
	
  Section
  10.1

  	
  Survival

  	
   

  
	
  Section
  10.2

  	
  Lender’s Discretion

  	
   

  
	
  Section
  10.3

  	
  Governing Law

  	
   

  
	
  Section
  10.4

  	
  Modification, Waiver in Writing

  	
   

  
	
  Section
  10.5

  	
  Delay Not a Waiver

  	
   

  
	
  Section
  10.6

  	
  Notices

  	
   

  
	
  Section
  10.7

  	
  Trial by Jury

  	
   

  
	
  Section
  10.8

  	
  Headings

  	
   

  
	
  Section
  10.9

  	
  Severability

  	
   

  
	
  Section 10.10

  	
  Preferences

  	
   

  
	
  Section 10.11

  	
  Waiver of Notice

  	
   

  
	
  Section 10.12

  	
  Remedies of Borrower

  	
   

  
	
  Section 10.13

  	
  Expenses; Indemnity

  	
   

  
	
  Section 10.14

  	
  Schedules Incorporated

  	
   

  
	
  Section 10.15

  	
  Offsets, Counterclaims and Defenses

  	
   

  
	
  Section 10.16

  	
  No Joint Venture or Partnership; No Third
  Party Beneficiaries

  	
   

  
	
  Section 10.17

  	
  Publicity

  	
   

  
	
  Section 10.18

  	
  Waiver of Marshalling of Assets

  	
   

  
	
  Section 10.19

  	
  Waiver of Counterclaim

  	
   

  
	
  Section 10.20

  	
  Conflict; Construction of Documents;
  Reliance

  	
   

  
	
  Section 10.21

  	
  BROKERS AND FINANCIAL ADVISORS

  	
   

  
	
  Section 10.22

  	
  Prior Agreements

  	
   

  
	
  Section 10.23

  	
  Sale of Loan

  	
   

  
	
  Section 10.24

  	
  Joint and Several Liability

  	
   

  



 


	
  SCHEDULES

  	
   

  	
   

  
	
  Schedule I

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule II

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule III

  	
  -

  	
  Required Repairs

  
	
  Schedule IV

  	
  -

  	
  Rent Roll

  
	
  Schedule V

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule VI

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule VII

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule VIII

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule IX

  	
  -

  	
  Intentionally Omitted

  
	
  Schedule X

  	
  -

  	
  Other Contract Funds Agreements

  



 


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LOAN AGREEMENT


 


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


 


WITNESSETH:


 


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


 


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


 


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


 


ARTICLE I


 


DEFINITIONS; PRINCIPLES OF CONSTRUCTION


 


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


 


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


 


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


 


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


 


“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 Avondale McDowell, L.L.C., a Delaware limited liability company,
together with its permitted successors and assigns.


 


“Business
Day” shall mean any day other than a Saturday,
Sunday or any other days on which national banks in Chicago, Illinois 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.


 


“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


 


2





















 


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:


 


(a)           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 three percent (3.0%) of Gross Income from Operations or (2)
the actual management fees incurred, (B) assumed Replacement Reserve Fund
contributions equal to $0.28 per square foot of gross leaseable area at the
Property; and (C) assumed reserves for tenant improvements and leasing
commissions equal to $0.50 per square foot of gross leaseable area at the
Property; and


 


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


 


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


 


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


 


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


 


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


 


3





















 


“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.


 


“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 June
30, 2004), or are not in occupancy, open for business or paying unabated Rent,
(ii) sales, use and occupancy or other taxes on receipts required to 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


 


4





















 


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.


 


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


 


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


 


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


 


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


 


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


 


“Interest
Rate” shall mean
four and 67/100 percent (4.67%) 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 LaSalle Bank National
Association, a national banking association, 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.


 


“Losses” shall have the meaning set forth in the Indemnity
Agreement.


 


“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.


 


6





















 


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


 


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


 


“Maximum
Legal Rate” shall
mean the maximum non-usurious 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 $139,485.12.


 


“Mortgage” shall mean, with respect to the Property,
that certain first priority Deed of Trust, 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 5.1.11(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 ten
percent (10%), 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.


 


7





















 


“Note” shall mean that certain Promissory Note of
even date herewith in the principal amount of THIRTY-FIVE MILLION EIGHT HUNDRED
FORTY-TWO THOUSAND AND NO/100 DOLLARS ($35,842,000.00), 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:


 


8





















 


(i)            obligations of, or obligations fully
guaranteed as to payment of principal and
interest by, the United States or any agency or instrumentality thereof
provided such obligations are backed by the full faith and credit of the United
States of America including, without limitation, obligations of: the U.S.
Treasury (all direct or fully guaranteed obligations), the Fanners 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;


 


9





















 


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


 


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


 


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


 


(viii)        units of taxable money market funds,
which funds 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


 


10





















 


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


 


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


 


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


 


“Permitted
Prepayment Date” shall
mean the date that is two (2) years from the first day of the calendar month
immediately following the Closing Date.


 


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


 


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


 


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


 


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


 


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


 


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


 


11





















 


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


 


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


 


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


 


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


 


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


 


“Qualifying Manager” shall mean either (a) a reputable and
experienced management organization reasonably satisfactory to Lender, which
organization or its principals possess at least ten (10) years experience in managing
properties similar in size, scope and value of the Property and which, on the
date Lender determines whether such management organization is a Qualifying
Manager, manages at least one million square feet of retail space, provided
that Borrower shall have obtained prior written confirmation from the Rating
Agency that management of the Property by such entity 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 Five Hundred Thousand and No/100
dollars ($500,000.00).


 


“REMIC Trust” shall mean a “real estate mortgage
investment conduit” within the meaning of Section 860D of the Code that holds
the Note.


 


12





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


13





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


14





















 


(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 a member of the limited
liability company upon the dissolution or disassociation of the member, and (c)
has at least one (1) manager that is an Independent Director, and (d) will not
cause or allow its managers to take any action related to a bankruptcy or
insolvency proceeding or a voluntary dissolution without the unanimous
affirmative vote of 100% of its managers, including the Independent Director;


 


(ix)           if such entity is (a) a limited
liability company, has articles of organization, a certificate of formation
and/or an operating agreement, as applicable, (b) a limited partnership, has a
limited partnership agreement, (c) a corporation, has a certificate or articles
of incorporation and bylaws, as applicable, or (d) a Delaware statutory trust,
has organizational documents that, in each case, provide that such entity will
not: (1) dissolve, merge, liquidate, consolidate; (2) except as permitted
herein, sell all or substantially all of its assets or the assets of the
Borrower (as applicable) except as permitted herein; (3) engage in any other
business activity, or amend its organizational documents with respect to the
matters set forth in this definition without the consent of the Lender; or (4)
without the affirmative vote of all directors of the corporation (that is such
entity or the general partner or managing or co-managing member or manager of
such entity), file a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings with respect to itself or to any other entity in which
it has a direct or indirect legal or beneficial ownership interest;


 


(x)            has not entered into or been a party
to, and will not enter into or be a party to, any transaction with its
partners, members, beneficiaries, shareholders or Affiliates except (A) in the
ordinary course of its business and on terms which are intrinsically fair,
commercially reasonable and 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 tax return of
its Sole Member or the general partner of Sole Member if inclusion on such tax
return is in compliance with applicable law;


 


15





















 


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


 


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


 


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


 


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


 


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


 


(xix)         has maintained and will maintain
separate books and records for the Property;


 


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


 


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


 


(xxii)        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;


 


16





















 


(xxiii)       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;


 


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


 


(xxv)        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;


 


(xxvi)       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;


 


(xxvii)      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;


 


(xxviii)     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;


 


(xxix)       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;


 


(xxx)        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);


 


(xxxi)       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;


 


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


 


17





















 


“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 of Insurance Premiums or both.


 


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


 


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


 


“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. 


 


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


 


“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-1) 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.


 


18





















 


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 re-borrowed.


 


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.


 


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


 


2.2.6        Payments after Default. Upon the occurrence and during
the continuance of an Event of Default, interest on the outstanding principal
balance of the Loan and, to the extent permitted by law, overdue interest and
other amounts due in respect of the Loan shall accrue at the Default Rate,
calculated from the date such payment was due without regard to any grace or
cure periods contained herein. Interest at the Default Rate shall be computed
from the occurrence of the Event of Default until the earlier of (i) in the
event of a non-monetary default, the cure of such Event of Default by Borrower
and acceptance of such cure by Lender, and (ii) in the event of a monetary
default, the actual receipt and collection of the Debt (or that portion thereof
that is then due). To the extent permitted by applicable law, interest at the
Default Rate shall be added to the Debt, shall itself accrue interest at the
same rate as the Loan and shall be secured by the Mortgage. This paragraph
shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to
Lender by reason of the occurrence of any Event of Default and Lender retains
its rights under the Note and this Agreement to accelerate and to continue to
demand payment of the Debt upon the happening and continuance of any Event of
Default.


 


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


 


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


 


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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 three (3)
months prior to the Maturity Date, a prepayment consideration (the “Prepayment Consideration”) equal
to the greater of (A) one percent (1%) of the outstanding principal balance of
the Loan being prepaid or (B) the excess, if any, of (1) the sum of the present
values of all then-scheduled payments of principal and interest under this
Agreement including, but not limited to, principal and interest due on January
1, 2010 (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
three (3) months 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.


 


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


 


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


 


Section 2.4             Intentionally Omitted.


 


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


 


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


 


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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 Automatic Clearing House Interbank Payments System or other funds
immediately available to Lender by 1:00 p.m., Chicago 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.


 


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.


 


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(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 list of “Optional Survey Responsibilities
and Specifications” (Table A) should be added to each survey: 1, 2, 3, 4, 6, 8,
9, 10, 11, 13, 14, 15 and 16.  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, if available 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,


 


24





















 


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


 


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


 


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


 


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


 


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


 


3.1.9        Completion of Proceedings. All
organizational proceedings taken or to be taken in connection with the
transactions contemplated by this Agreement and other Loan Documents and all
documents incidental thereto shall 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 certificates from
Tenants occupying not less than seventy-five percent (75%) 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.  At any time and from time to time, Lender may
request that Borrower obtain estoppel certificates from Tenants occupying the
Property.  If requested by


 


25





















 


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


 


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 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 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


 


26





















 


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 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


 


27





















 


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 Encumbrances 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 incurred
in the ordinary course of the operation of the Property and (b) obligations
under the Loan Documents.


 


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


 


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


 


28





















 


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 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


 


29





















 


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.


 


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.


 


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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.


 


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


 


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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. To the best of Borrower’s knowledge after due
inquiry, 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. To the best of Borrower’s knowledge after
due inquiry, no Rent (including security deposits) has been paid more than one (1)
month in advance of its due date. To the best of Borrower’s knowledge after due
inquiry, all work to be performed by Borrower under each Lease has been
performed as required and has been accepted by the applicable tenant, and any
payments, free rent, partial rent, rebate of rent or other payments, credits,
allowances or abatements required to be given by Borrower to any tenant has
already been received by such tenant. To the best of Borrower’s knowledge after
due inquiry, 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,


 


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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.


 


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


 


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


 


4.1.31      Management Agreement.   The
Management Agreement is in full force and effect and, to Borrower’s knowledge,
there is no default thereunder by any party thereto and no event has occurred
that, with the passage of time and/or the giving of notice would constitute a default
thereunder.


 


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


 


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


 


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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.


 


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


 


34





















 


money
laundering or predicate crimes to money laundering. Borrower will not enter
into any lease or undertake any activities related to this Agreement in
violation of the federal Bank Secrecy Act (as amended from time to time, the “BSA”), 31 U.S.C. § 5311, et seq. or any federal or state
laws, including but not limited to 18 U.S.C. §§ 1956, 1957 and 1960,
prohibiting money laundering and terrorist financing (as amended from time to
time, collectively the “Anti-Money Laundering
Laws”). Borrower shall provide information as Lender may require
from time to time to permit Lender to satisfy its obligations under the OFAC
Rules and/or the Anti-Money Laundering Laws. Borrower shall immediately notify
Lender if to Borrower’s actual knowledge (after commercially reasonable due
diligence and inquiry) any Tenant becomes a Prohibited Person or (A) is
convicted of, (B) pleads nolo contendere to, (C) is indicted on, or (D) is
arraigned and held over on charges involving money laundering or predicate
crimes to money laundering. In addition to the foregoing, Borrower agrees to
indemnify, defend and hold harmless Lender for any actual Losses suffered or
incurred (as applicable) by Lender if Borrower does not comply with this
Section 4.1.36 or any of the provisions and requirements of the OFAC Rules, BSA
and/or any Anti-Money Laundering Laws.


 


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


 


35





















 


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 lega1 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 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


 


36





















 


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 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:


 


37





















 


(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.


 


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


 


38





















 


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 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)           Intentionally deleted.


 


(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


 


39





















 


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, Indemnitor’s 10K and/or 10Q filings.


 


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


 


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


 


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


 


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


 


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


 


40





















 


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.


 


(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


 


41





















 


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 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


 


42





















 


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 $100,000.00 in the aggregate
for all components thereof which constitute such alteration or any
non-structural alteration which costs less than $250,000.00 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 $500,000.00 (the “Threshold Amount”), Borrower, upon Lender’s request,
shall promptly deliver to Lender as security for the payment of such amounts
and as additional security for Borrower’s obligations under the Loan Documents
any of the following: (A) cash, (B) U.S. Obligations, (C) other securities
having a rating acceptable to Lender and that the applicable Rating Agencies
have confirmed in writing will not, in and of itself, result in a downgrade,
withdrawal or qualification of the initial, or, if higher, then current ratings
assigned in connection with any Securitization, or (D) a completion bond or letter
of credit issued by a financial institution having a rating by Standard &
Poor’s Ratings Group of not less than A-1+ if the term of such bond or letter
of credit is no longer than three (3) months or, if such term is in excess of
three (3) months, issued by a financial institution having a rating that is
acceptable to Lender and that the applicable Rating Agencies have confirmed in
writing will not, in and of itself, result in a downgrade, withdrawal or
qualification of the initial, or, if higher, then current ratings assigned in
connection with any Securitization. Such security shall be in an amount equal
to the excess of the total unpaid amounts with respect to alterations to the
Improvements on the Property (other than such amounts to be paid or reimbursed
by tenants under the Leases) over the Threshold Amount and, if cash, may be
applied from time to time, at the option of Borrower, to pay for such
alterations. At the option of Lender, following the occurrence and during the
continuance of an Event of Default, Lender may terminate any of the alterations
and use the deposit to restore the Property to the extent necessary to prevent
any material adverse effect on the value of the Property.


 


5.1.22      Intentionally Omitted.


 


5.1.23      Intentionally Omitted.


 


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


 


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


 


43





















 


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;


 


(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 formation or operating
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


 


44





















 


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.


 


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


 


45





















 


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
partner or member of Borrower, and (C) a sale, transfer or hypothecation of a
partnership or membership interest in Borrower, whichever the case may be, by
the current partner(s) or member(s), as applicable, to an immediate family
member (i.e., parents, spouses, siblings, children or grandchildren) of such
partner or member (or a trust for the benefit of any such persons).


 


(a)           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 Section 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)                                  a
substantive non-consolidation opinion was required in connection with the
initial Loan closing, Borrower shall deliver an Additional Insolvency Opinion,
and if required by a Rating Agency, a fraudulent conveyance opinion, which in
each case may be relied upon by the holder of the Note, the Ratings Agencies
and their respective counsel, agents and representatives with respect to the
proposed transaction, including the Transferee, which opinion shall be
acceptable to Lender in its reasonable discretion;


 


(6)                                  Borrower
shall have paid (A) an assumption fee equal to one percent (1.0%) of the then
outstanding principal balance of the Loan, and (B) the reasonable and customary
third-party expenses (including reasonable


 


46





















 


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 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)           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
a substantive non-consolidation opinion was required in connection with the
initial Loan closing, 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.


 


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(c)           Notwithstanding
anything in this Section 5.2.13 to the contrary, 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 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 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 Twenty-Five Thousand
and No/100 Dollars ($25,000.00) for all such insurance coverage; and (D)
containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if


 


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any of the Improvements or the use of the Property shall at any 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 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 One Million and
No/100 Dollars ($1,000,000.00) coverage per occurrence, Two Million and No/100
Dollars ($2,000,000.00) coverage in the aggregate and a combined limit,
including umbrella coverage, of not less than Five Million and No/100 Dollars
($5,000,000.00); (B) to continue at not less than the aforesaid limit 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


 


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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;


 


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


 


(ix)           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 $400,000,000.00 (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 judgment 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 70%.


 


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(x)            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 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


 


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(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 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.   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


 


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


 


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


 


(b)            If the Net Proceeds
are equal to or greater than the Relevant Restoration Threshold or the costs of
completing the Restoration is equal to or greater than the Relevant Restoration
Threshold, then in either case, Lender shall make the Net Proceeds available
for the Restoration in accordance with the provisions of this Section 6.4(b).
The term “Net Proceeds” for
purposes of this Section 6.4 shall mean: (x) the net amount of 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;


 


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(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%);


 


(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;


 


54





















 


(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 2.71: 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 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


 


55





















 


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 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 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)


 


56





















 


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 (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 Twenty-One Million Five Hundred Five Thousand Two
Hundred and 00/100 Dollars ($21,505,200.00), 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 23.2(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).


 


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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 longer time as Borrower
and Lender may mutually agree to), or such earlier time as specified on Schedule
III, provided that the estimated cost to complete the Required Repairs is
less than One Hundred Thousand and 00/100 Dollars ($100,000.00) in the
aggregate. 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 or if the estimated cost to complete the
Required Repairs is equal to or greater than One Hundred Thousand and 00/100
Dollars ($100,000.00), Borrower shall deposit with Lender one hundred twenty
five percent (125%) of the estimated cost to complete such repairs as
determined by Lender’s structural consultant, 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 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


 


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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 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.


 


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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, (2)
evidence satisfactory to Lender that the Taxes for the Property have been paid
in accordance with the requirements set forth in this Agreement and (3) so long
as no Event of Default shall have occurred, 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, Taxes are not paid in accordance
with the requirements of this Agreement or an Event of Default shall have occurred.


 


Section 7.3             Replacements and Replacement
Reserve.


 


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 “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.


 


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).


 


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(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 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


 


61





















 


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.


 


7.3.3        Performance of Replacements.


 


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


 


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


 


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


 


(d)           In
order to facilitate Lender’s completion or making of the Replacements pursuant
to Section 7.3.3(c) above, Borrower grants Lender the right to enter onto the
Property and perform any and all work and labor necessary to complete or make
the Replacements and/or employ watchmen to protect the Property from damage,
subject to the rights of Tenants. All sums so expended by Lender, to the extent
not from the Replacement Reserve Fund, shall be deemed to have been advanced
under the Loan to Borrower and secured by the Mortgage.  For this purpose Borrower constitutes and
appoints Lender its true and lawful attorney-in-fact with full power of
substitution to complete or undertake the Replacements in the name of Borrower.
Such power of attorney shall be deemed to be a power coupled with an interest
and cannot be


 


62





















 


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.


 


(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


 


63





















 


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.


 


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.


 


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.


 


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.


 


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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.


 


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.


 


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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 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;


 


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


 


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


 


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


 


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


 


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


 


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


 


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Section 8.2             Remedies.


 


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


 


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


 


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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 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


 


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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.


 


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 or Trustee may bring a foreclosure action, an action for specific
performance or any other appropriate action or proceeding to enable Lender or
Trustee 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 or
Trustee 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 or Trustee, and Lender or Trustee, by accepting the Note, this
Agreement, the Mortgage and the other Loan Documents, agrees that it shall not
sue for, seek or


 


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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 or Trustee 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 or Trustee 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 or Trustee 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 or Trustee 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 Indemnitor 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;


 


(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.


 


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Notwithstanding anything to the contrary in
this Agreement, the Note, the Indemnity Agreement or any of the Loan Documents,
(A) the Debt shall be fully recourse to the Borrower and (B) Lender shall not
be deemed to have waived any right which Lender may have under Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file 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 (I) the 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 five (5) day grace period relates
only to the recourse trigger described in this paragraph), or (II) Borrower
fails 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 to comply with Section 4.1.30 hereof, or
(III) Borrower fails to obtain Lender’s prior written consent (to the extent
such consent is required) to any subordinate financing or other voluntary lien
encumbering the Property, or (IV) Borrower fails 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, so
long as any of the events described in clauses (I), (II), (III) or (IV) of this
paragraph continue to exist. Notwithstanding the provision set forth in clause
(III) 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.


 


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


 


72





















 


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 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


 


73





















 


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


 


Section 10.4           Modification, Waiver in Writing.      No modification, amendment, extension,
discharge, termination or waiver of any provision of this Agreement, or of 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, 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):


 


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If to Lender:


 


LaSalle Bank National Association


135 South LaSalle Street, Suite 3410


Chicago, Illinois 60603


Attention: Real
Estate Capital Markets

Inland-Gateway Pavilions 


Fax: (312) 904-0900


 


with a copy to:


 


Katten Muchin Zavis Rosenman


525 W. Monroe Street


Suite 1600


Chicago, Illinois 60661


Attention: David R. Dlugie, Esq.


Fax: (312) 577-8666


 


If to Borrower:


 


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


2901 Butterfield Road


Oak Brook, Illinois 60523


Attention: Steven Grimes


Fax: (630) 218-4955


 


with a copy to:


 


Inland Western Retail Real Estate Trust, Inc.


2901 Butterfield Road


Oak Brook, IL 60523


Attention: Robert
H. Baum, Esq.


Fax: (630) 218-4900


 


and with a copy to:


 


Inland Western Retail Real Estate Trust, Inc.


2901 Butterfield Road


Oak Brook, IL 60523


Attention: Roberta Matlin


Fax: (630) 218-4955


 


A notice shall be deemed to have been given:
in the case of hand delivery, at the time of delivery; in the case 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.


 


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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. THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND
VOLUNTARILY MADE BY BORROWER AND BY LENDER, AND BORROWER ACKNOWLEDGES ON BEHALF
OF ITSELF AND ITS PARTNERS, MEMBERS, SHAREHOLDERS, AS THE CASE MAY BE, THAT
NEITHER LENDER NOR ANY PERSON ACTING ON BEHALF OF LENDER HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY OR HAS TAKEN
ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. BORROWER AND LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT BORROWER AND LENDER HAVE
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THE LOAN DOCUMENTS AND THAT EACH
OF THEM WILL CONTINUE TO RELY ON
THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER AND LENDER FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED
(OR HAVE HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF THE LOAN
DOCUMENTS AND IN THE MAKING OF THIS
WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT
THEY HAVE HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.


 


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


 


76





















 


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


 


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


 


Section 10.13         Expenses; Indemnity.


 


(a)           Borrower
covenants and agrees to pay or, if Borrower fails to pay, to reimburse, Lender
upon receipt of written notice from Lender for all reasonable costs and
expenses (including reasonable attorneys’ fees and disbursements) incurred by
Lender in connection with (i) the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby and thereby and all the costs of furnishing
all opinions by counsel for Borrower (including without limitation any opinions
requested by Lender as to any legal matters arising under this Agreement or the
other Loan Documents with respect to the Property); (ii) Borrower’s ongoing
performance of and compliance with Borrower’s respective agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date, including, without
limitation, confirming compliance with environmental and insurance
requirements; (iii) Lender’s ongoing performance and compliance with all
agreements and conditions contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date;
(iv) except as otherwise provided in this Agreement, the negotiation,
preparation, execution, delivery and administration of any consents,
amendments, waivers or other modifications to this Agreement and the other Loan
Documents and any other documents or matters reasonably requested by Lender;
(v) securing Borrower’s compliance with any requests made pursuant to the
provisions of this Agreement; (vi) the filing and recording fees and expenses,
title insurance and reasonable fees and expenses of counsel for providing to
Lender all required legal opinions, and other similar expenses incurred in
creating and perfecting the Liens in favor of Lender pursuant to this Agreement
and the other Loan Documents; (vii) enforcing or preserving any rights, in
response to third party claims or the prosecuting or defending of any action or
proceeding or other litigation, in each case against, under or affecting
Borrower, this Agreement, the other Loan Documents, the Property, or any


 


77





















 


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


 


(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.


 


78





















 


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 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
Steams, 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 members and others with interests in Borrower, and of the Property,
or to a sale in inverse order of alienation in the event of foreclosure of 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


 


79





















 


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.


 


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         Sale of Loan.  Lender, at any time and without the consent
of Borrower or Indemnitor, may grant participation in or sell, transfer, assign
and convey all or any portion of its right, title and interest in and to the
Loan, the servicing of the Loan, this Agreement and the other Loan Documents,
any guaranties given in connection with the Loan and any collateral given to
secure the Loan. Borrower covenants to cooperate with Lender’s efforts in the
securitization of the Loan; such cooperation includes Borrower’s obligation to
(a) make non-material modifications of the Loan Documents (such modifications shall
not (i) increase the amount of the Indebtedness, (ii) change the schedule
and/or the amount of the monthly payment and (iii) change the Interest Rate),
(b) provide additional information regarding Borrower’s financial statements,
(c) deliver updated information regarding Borrower and the Property, (d)
cooperate


 


80





















 


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


 


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)


 


81





















 


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:

  
	
   

  	
   

  	
   

  
	
  WITNESS/ATTEST:

  	
  INLAND WESTERN AVONDALE
MCDOWELL, L.L.C., a
  Delaware limited liability

  company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Inland Western Retail Real Estate Trust, Inc.,

  
	
   

  	
   

  	
  a Maryland corporation, its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/
  Debra A. Palmer

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Debra
  A. Palmer

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
  WITNESS/ATTEST:

  	
  LASALLE BANK NATIONAL ASSOCIATION,

  
	
   

  	
  a national banking association

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
											



 





















 


SCHEDULE I


 


Intentionally Omitted


 


X-1





















 


SCHEDULE
II


 


Intentionally Omitted


 


X-2





















 


SCHEDULE
III


 


REQUIRED REPAIRS


 


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


 


2.             Complete concrete
flat work repairs in accordance with the recommendations set forth in the
Property Report.


 


3.             Repair roof open
seams and EIFS parapet wall repairs in accordance with the recommendations set
forth in the Property Report.


 


X-3





















 


SCHEDULE
IV


 


RENT ROLL


 


[To Be Attached]


 


X-4





















 


SCHEDULE V


 


Intentionally Omitted


 


X-5





















 


SCHEDULE
VI


 


Intentionally Omitted.


 


X-6





















 


SCHEDULE
VII


 


PROPERTY AFFECTED BY SECTION 4.1.22


 


NONE


 


X-7





















 


SCHEDULE
VIII


 


Intentionally Omitted.


 


X-8





















 


SCHEDULE
IX


 


Intentionally
Omitted.


 


X-9





















 


SCHEDULE X


 


OTHER CONTRACT FUNDS AGREEMENTS


 


NONE


 


X-10