Exhibit 10.103


 


WHEN RECORDED RETURN TO)


 


Thompson & Knight
L.L.P.

1700 Pacific Avenue

Suite 3300

Dallas, Texas 75201

Attention: Jeanne M. Burton


 


OPEN-END MORTGAGE AND SECURITY AGREEMENT

TO SECURE PRESENT AND FUTURE LOANS

UNDER CHAPTER 25 OF TITLE 34 OF THE GENERAL LAWS


 


755096


 


A.                      THIS
OPEN-END MORTGAGE AND SECURITY AGREEMENT (as the same may from time to time
hereafter be modified, supplemented or amended, this “Mortgage”) is made
as of June 8, 2006, by and between INLAND AMERICAN CUMBERLAND, L.L.C., a Delaware
limited liability company, having its principal place of business and post
office address at 2901 Butterfield Road, Oak Brook, Illinois 60523 as “Borrower”,
and PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation as “Lender”.


 


WITNESSETH:


 


B.                        Borrower
is justly indebted to Lender for money borrowed (the “Loan”) in the
original principal sum of Eleven Million Five Hundred Thirty One Thousand and
No/100 Dollars ($11,531,000.00) (the “Loan Amount”) evidenced by
Borrower’s secured promissory note of even date herewith; made payable and
delivered to Lender (as may be modified, amended, supplemented, extended or
consolidated in writing and any note(s) issued in exchange therefor or
replacement thereof) (the “Note”), in which Note Borrower promises to
pay to Lender the Loan Amount together with all accrued and unpaid interest
thereon, interest accrued at the Default Rate (if any), Late Charges (if any),
the Make Whole Premium (if any), and all other obligations and liabilities due
or to become due to Lender pursuant to the Loan Documents and all other
amounts, sums and expenses paid by or payable to Lender pursuant to the Loan
Documents and the Environmental Indemnity (collectively the “Indebtedness”)
until the Indebtedness has been paid, but in any event, the unpaid balance (if
any) remaining due on the Note shall be due and payable on July 1, 2013 (the “Maturity
Date”) or such earlier date resulting from the acceleration of the
Indebtedness by Lender. Subject to the provisions of the Note, a portion of the
Loan Amount may be advanced from time to time from and after the date hereof.
At no time, however, shall the unpaid principal balance of the Indebtedness
secured by this Mortgage (exclusive of interest and protective payments) exceed
Eleven Million Five Hundred Thirty One Thousand and No/100 Dollars
($11,531,000.00). Capitalized terms used herein and not otherwise defined shall
have those meanings given to them in the other Loan Documents.


 


C.                        NOW,
THEREFORE, to secure the payment of the Indebtedness in accordance with the
terms and conditions of the Loan Documents, and all extensions, modifications
and renewals


 


1

















 


thereof and the
performance of the covenants and agreements contained therein, and also to secure
the payment of any and all other Indebtedness, direct or contingent, that may
now or hereafter become owing from Borrower to Lender in connection with the
Loan Documents, and in consideration of the Loan Amount in hand paid, receipt
of which is hereby acknowledged, Borrower does by these presents grant, unto
Lender, its successors and assigns forever, that certain real estate and all of
Borrower’s estate, right, title and interest therein, located in the county of
Providence, state of Rhode Island, more particularly described in Exhibit A
attached hereto and made a part hereof (the “Land”), which Land,
together with the following described property, rights and interests, is
collectively referred to herein as the “Premises”.


 


D.                       Together
with Borrower’s interest as lessor in and to all Leases and all Rents which are
pledged primarily and on a parity with the Land and not secondarily.


 


E.                         Together
with all and singular the tenements, hereditaments, easements, appurtenances,
passages, waters, water courses, riparian rights, direct flow, ditch,
reservoir, well and other water rights, whether or not adjudicated, whether
tributary or nontributary and whether evidenced by deed, water stock, permit or
otherwise, sewer rights, rights in trade names, licenses, permits and
contracts, and all other rights, liberties and privileges of any kind or
character in any way now or hereafter appertaining to the Land, including but
not limited to, homestead and any other claim at law or in equity as well as
any after-acquired title, franchise or license and the reversion and reversions
and remainder and remainders thereof.


 


F.                         Together
with the right in the case of foreclosure hereunder of the encumbered property
for Lender to take and use the name by which the buildings and all other
improvements situated on the Premises are commonly known and the right to
manage and operate the said buildings under any such name and variants thereof.


 


G.                        Together
with all right, title and interest of Borrower in any and all buildings and
improvements of every kind and description now or hereafter erected or placed
on the said Land and all materials intended for construction, reconstruction,
alteration and repairs of such buildings and improvements now or hereafter
erected thereon, all of which materials shall be deemed to be included within
the Premises immediately upon the delivery thereof to the Premises, and all
fixtures now or hereafter owned by Borrower and attached to or contained in and
used in connection with the Premises including, but not limited to, all
machinery, motors, elevators, fittings, radiators, awnings, shades, screens,
and all plumbing, heating, lighting, ventilating, refrigerating, incinerating,
air-conditioning and sprinkler equipment and fixtures and appurtenances thereto;
and all items of furniture, furnishings, equipment and personal property owned
by Borrower used or useful in the operation of the Premises; and all renewals
or replacements of all of the aforesaid property owned by Borrower or articles
in substitution therefor, whether or not the same are or shall be attached to
said buildings or improvements in any manner (collectively, the “Improvements”);
it being mutually agreed, intended and declared that all the aforesaid property
owned by Borrower and placed by it on the Land or used in connection with the
operation or maintenance of the Premises shall, so far as permitted by law, be
deemed to form a part and parcel of the Land and for the purpose of this
Mortgage to be Land and covered by this Mortgage, and as to any of the property
aforesaid which does not form a part and parcel of the Land or does not
constitute a “fixture” (as such term is defined in the Uniform


 


2

















 


Commercial Code (“UCC”)),
this Mortgage and the other Loan Documents (the terms of which grant a security
interest in personal property or real property, the proceeds of which may
become personal property) are each hereby deemed to be, as well, a security
agreement under the UCC for the purpose of creating a security interest in all
items, including, but not limited to all property and rights which Borrower may
grant, assign, bargain, sell, transfer, set over, deliver, or otherwise convey
to Lender, as secured party, under the terms of this Mortgage or any of the
other Loan Documents, including any and all proceeds thereof (as used herein,
Borrower shall mean “Debtor” under the UCC and Lender shall mean “Secured Party”
under the UCC). Borrower hereby appoints Lender as its attorney-in-fact to
execute such documents necessary to perfect Lender’s security interest and
authorizes Lender at any time until the Indebtedness is paid in full, to
prepare and file, at Borrower’s expense, any and all UCC financing statements,
amendments, assignments, terminations and the like, necessary to create and/or
maintain a prior security interest in such property all without Borrower’s
execution of the same. Furthermore, upon a default under the Loan Documents,
Lender will, in addition to all other remedies provided for in the Loan
Documents, have the remedies provided for under the UCC in effect in the State
in which the Premises is located.


 


H.                       Together
with all right, title and interest of Borrower, now or hereafter acquired, in
and to any and all strips and gores of land adjacent to and used in connection
with the Premises and all right, title and interest of Borrower, now owned or
hereafter acquired, in, to, over and under the ways, streets, sidewalks and
alleys adjoining the Premises.


 


I.                            Together
with all funds now or hereafter held by Lender under any property reserves
agreement (including any proceeds derived from any letter of credit) or escrow
security agreement or under any of the terms hereof or of the Loan Documents,
including but not limited to funds held under the provisions of the Loan
Agreement.


 


J.                           Together
with all of Borrower’s payment intangibles, letter of credit rights, interest
rate cap agreements, tenant in common agreement rights, and any other contract
rights of Borrower related in any manner to the ownership, operation, or
management of the Premises, as well as any and all supporting obligations, and
all proceeds, renewals, replacements and substitutions thereof.


 


K.                       Together
with all funds, accounts and proceeds thereof relating to the Premises whether
or not such funds, accounts or proceeds thereof are held by Lender under the
terms of any of the Loan Documents, including, but not limited to bankruptcy
claims of Borrower against any tenant at the Premises, and any proceeds
thereof; proceeds of any Rents, insurance proceeds from all insurance policies
required to be maintained by Borrower under the Loan Documents (subject to the
balance of the terms of this Mortgage) and all awards, decrees, proceeds,
settlements or claims for damage now or hereafter made to or for the benefit of
Borrower by reason of any damage to, destruction of or taking of the Premises
or any part thereof, whether the same shall be made by reason of the exercise
of the right of eminent domain or by condemnation or otherwise (a “Taking”).


 


L.                         TO HAVE
AND TO HOLD the same unto the Lender, its successors and assigns forever, for
the purposes and uses herein expressed.


 


3

















 


M.                    Borrower
represents that it shall forever warrant and defend the title to the Premises
against all claims and demands of all persons whomsoever and will on demand
execute any additional instrument which may be required to give Lender a valid
first mortgage and security interest on all of the Premises, subject to the “Permitted
Encumbrances” set forth in the loan policy of title insurance for the
Premises issued to Lender.


 


N.                       Borrower
further represents that (i) the Premises is not subject to any casualty damage;
(ii) Borrower has not received any written notice of any eminent domain or
condemnation proceeding affecting the Premises; and (iii) to the best of
Borrower’s knowledge, following due and diligent inquiry, there are no actions,
suits or proceedings pending, completed or threatened against or affecting
Borrower or any person or entity owning an interest (directly or indirectly) in
Borrower (“Interest Owner(s)”) or any property of Borrower or any
Interest Owner in any court or before any arbitrator of any kind or before or
by any governmental authority (whether local, state, federal or foreign) that,
individually or in the aggregate, could reasonably be expected by Lender to be
material to the transaction contemplated hereby.


 


O.                       Borrower
further represents and warrants that as of the date hereof and until the
Indebtedness is paid in full:


 


(a)                    Borrower and
each person or entity owning an interest in Borrower is not (i) identified on
the Specially Designated Nationals and Blocked Persons List maintained by the
Office of Foreign Assets Control, Department of the Treasury (“OFAC”)
and/or on any other similar list maintained by OFAC pursuant to any authorizing
statute, executive order or regulation (collectively, the “List”), (ii)
a person or entity with whom a citizen of the United States is prohibited to
engage in transactions by any trade embargo, economic sanction, or other
prohibition of United States law, regulation, or Executive Order of the
President of the United States;


 


(b)                   none of the
funds or other assets of Borrower constitute property of, or are beneficially
owned, directly or indirectly, by any Embargoed Person (as hereinafter
defined);


 


(c)                    no Embargoed
Person has any interest of any nature whatsoever in Borrower (whether directly
or indirectly);


 


(d)                   none of the
funds of Borrower have been derived from any unlawful activity with the result
that the investment in Borrower is prohibited by law or that the agreement is
in violation of law,


 


(e)                    Borrower has
and will continue to implement procedures, and has consistently and will
continue to consistently apply those procedures, to ensure the foregoing
representations and warranties remain true and correct at all times. The term “Embargoed
Person” means any person, entity or government subject to trade
restrictions under U.S. law, including but not limited to, the International
Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with
the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or
regulations promulgated


 


4

















 


thereunder with the
result that the investment in Borrower is prohibited by law or Borrower is in
violation of law;


 


(f)                      Borrower has
complied and will continue to comply with all requirements of law relating to
money laundering, anti-terrorism, trade embargos and economic sanctions, now or
hereafter in effect; and


 


(g)                   Borrower has
not and will not use funds from any “Prohibited Person” (as such term is
defined in the September 24, 2001 Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism) to make any payment due to Lender under the Loan Documents


 


Borrower will
immediately notify Lender in writing if any of the representations, warranties
or covenants are no longer true or have been breached or if Borrower has a
reasonable basis to believe that they may no longer be true or have been
breached. In addition, Borrower will, at the request of Lender, provide such
information as may be requested by Lender to determine Borrower’s compliance
with the terms hereof.


 


BORROWER COVENANTS AND
AGREES AS FOLLOWS:


 


1.                          Borrower
shall


 


(a)                     pay each item
of Indebtedness secured by this Mortgage when due according to the terms of the
Loan Documents;


 


(b)                    pay a Late
Charge on any payment of principal, interest, Make Whole Premium or
Indebtedness which is not paid on or before the due date thereof to cover the
expense involved in handling such late payment;


 


(c)                     pay on or
before the due date thereof any indebtedness permitted to be incurred by
Borrower pursuant to the Loan Documents and any other claims which could become
a lien or mortgage interest on the Premises (unless otherwise specifically
addressed in paragraph 1(e) hereof), and upon request of Lender exhibit
satisfactory evidence of the discharge thereof;


 


(d)                    complete within
a reasonable time, the construction of any Improvements now or at any time in
process of construction upon the Land which are required to be performed by
Borrower;


 


(e)                     manage,
operate and maintain the Premises and keep the Premises, including but not limited
to, the Improvements, in good condition and repair and free from mechanics’
liens or other liens or claims for liens, provided however, that Borrower may
in good faith, with reasonable diligence and upon written Notice to Lender
within twenty (20) days after Borrower has knowledge of such lien or claim,
contest the validity or amount of any such lien or claim and defer payment and
discharge thereof during the pendency of such contest in the


 


5

















 


manner provided by law,
provided that (i) such contest may be made without the payment thereof; (ii)
such contest shall prevent the sale or forfeiture of the Premises or any part
thereof, or any interest therein, to satisfy such lien or claim; (iii) Borrower
shall have obtained a bond over such lien or claim from a bonding company
acceptable to Lender which has the effect of removing such lien or collection
of the claim or lien so contested; and (iv) Borrower shall pay all costs and
expenses incidental to such contest; and further provided, that in the event of
a final, non-appealable ruling or adjudication adverse to Borrower, and
provided the court of jurisdiction has not granted a stay of the enforcement of
the ruling or judgment, Borrower shall promptly pay such claim or lien, shall
indemnify and hold Lender and the Premises harmless from any loss or damage
arising from such contest and shall take whatever action necessary to prevent
sale, forfeiture or any other loss or damage to the Premises or to the Lender; provided,
however, Lender acknowledges and agrees that performance of the obligations set
forth in this Paragraph 1(e) by Major Tenant (as hereinafter defined) with
respect to its leased premises shall be deemed compliance with such provisions
by Borrower with respect to such portion of the Premises; as used herein, the
term “Major Tenant” shall mean the tenant under the Lease Agreement
dated December 21, 2001 in favor of The Stop &
Shop Supermarket Company, as amended, or any lease to any
replacement tenant under such lease approved by Lender (a “Replacement
Tenant”).


 


(f)                       comply, and
cause each lessee or other user of the Premises to comply, with all
requirements of law and ordinance, and all rules and regulations, now or
hereafter enacted, by authorities having jurisdiction of the Premises and the
use thereof, including but not limited to all covenants, conditions and
restrictions of record pertaining to the Premises, the Improvements, and the
use thereof (collectively, “Legal Requirements”); provided, however,
Lender acknowledges and agrees that performance of the obligations set forth in
this Paragraph 1(f) by Major Tenant with respect to its leased premises shall
be deemed compliance with such provisions by Borrower with respect to such
portion of the Premises;


 


(g)                    subject to the
provisions of paragraph 6 hereof, promptly repair, restore or rebuild any
Improvements, now or hereafter a part of the Premises which may become damaged
or be destroyed by any cause whatsoever, so that upon completion of the repair,
restoration and rebuilding of such Improvements there will be no mortgage
interests or liens of any nature arising out of the construction and the
Premises will be of substantially the same character and quality as it was
prior to the damage or destruction; provided, however, Lender acknowledges and
agrees that performance of the obligations set forth in this Paragraph 1(g) by
Major Tenant with respect to its leased premises shall be deemed compliance
with such provisions by Borrower with respect to such portion of the Premises;


 


(h)                    if other than
a natural person, do all things necessary to preserve and keep in full force
and effect its existence, franchises, rights and privileges under the


 


6

















 


laws of the state of its
formation and, if other than its state of formation, the State where the
Premises is located. Borrower shall notify Lender at least thirty (30) days
prior to (i) any relocation of Borrower’s principal place of business to a
different state or any change in Borrower’s state of formation, and/or (ii) if
Borrower is an individual, any relocation of Borrower’s principal residence to
a different state;


 


(i)                        do all
things necessary to preserve and keep in full force and effect Lender’s title
insurance coverage insuring this Mortgage as a first and prior mortgage,
subject only to the Permitted Encumbrances stated in the title insurance policy
issued to Lender and any other exceptions after the date of this Mortgage
approved in writing by Lender, including without limitation, delivering to
Lender not less than 30 days prior to the effective date of any rate
adjustment, modification or extension of the Note or any other Loan Document,
any new policy or endorsement which may be reasonably required to assure Lender
of such continuing coverage;


 


(j)                        execute
any and all documents which may be required to perfect the mortgage and
security interest granted by this Mortgage and


 


(k)                     remain a
Single-Purpose Entity.


 


2.                         Borrower
shall not:


 


(a)                     construct any
building or structure nor make any alteration or addition (other than normal
repair and maintenance) to (i) the roof or any structural component of any
Improvements on the Premises, or (ii) the building operating systems, including
but not limited to, the mechanical, electrical, heating, cooling, or
ventilation systems (other than replacement with equal or better quality and
capacity).


 


Notwithstanding anything
hereinabove to the contrary, the restrictions set forth in this Paragraph 2(a)
shall not be applicable if such activity is (i) required by applicable Legal
Requirements; or (ii) specifically provided for in a Lease approved by Lender
prior to closing of the Loan or thereafter, in which a tenant has the right to
complete any of the above without Borrower’s prior consent in its capacity as
landlord under such Lease. With respect to any Lease in which the above
activities require Borrower’s prior consent (in its capacity as landlord under
such Lease), Borrower shall also obtain Lender’s prior written consent, not to
be unreasonably withheld;


 


(b)                    remove or
demolish any material Improvements, or any portion thereof, which at any time
constitutes a part of the Premises.


 


Notwithstanding anything
hereinabove to the contrary, Borrower may construct, remove or demolish tenant
improvements within the then existing building(s) or


 


7

















 


other structures to the
extent such work is required solely under the terms of any Leases approved by
Lender provided (i) no Event of Default exists under the Loan Documents; (ii)
the work is completed on a timely basis, in a good, workmanlike, lien-free
manner and in accordance with all Legal Requirements, and (iii) such work does
not negatively affect the structural integrity of the Improvements or the value
of the Premises;


 


(c)                     cause or
permit any change to be made in the general use of the Premises without Lender’s
prior written consent;


 


(d)                    initiate any
or acquiesce to a zoning reclassification or material change in zoning without
Lender’s prior written consent. Borrower shall use all reasonable efforts to
contest any such zoning reclassification or change;


 


(e)                     make or
permit any use of the Premises that could with the passage of time result in
the creation of any right of use, or any claim of adverse possession or
easement on, to or against any part of the Premises in favor of any person or
entity or the public;


 


(f)                       allow any
of the following to occur (unless a Permitted Transfer) except as expressly
permitted herein:


 


(i)                       a Transfer
of all or any portion of the Premises or any interest in the Premises;


 


(ii)                    a Transfer of
any ownership interest in Borrower or any entity which owns, directly or
indirectly, an interest in Borrower at any level of the ownership structure; or


 


(iii)                 in addition to
(i) and (ii) above, if the Borrower is a trust, or if a trust owns an interest,
directly or indirectly, in any entity which owns an interest in Borrower at any
level of the ownership structure, the addition, deletion or substitution of a
trustee of such trust; or


 


If any of such events
occur, it shall be null and void and shall constitute an Event of Default under
the Loan Documents.


 


It is understood and
agreed that the Indebtedness evidenced by the Note is personal to Borrower and
in reliance upon the ownership structure of Borrower and in accepting the same
Lender has relied upon what it perceived as the willingness and ability of
Borrower and the Interest Owners to perform its obligations under the Loan
Documents and the Environmental Indemnity and as lessor under the Leases of the
Premises. Furthermore, Lender may consent to a Transfer and expressly waive
Borrower’s covenants contained in this paragraph 2(f), in writing to Borrower;
however any such consent and waiver shall not constitute any consern or waiver
of such covenant as to any Transfer other than


 


8

















 


that for which the
consent and waiver was expressly granted. Furthermore, Lender’s willingness to
consent to any Transfer and waive Borrower’s covenants contained in this
paragraph 2(f), implies no standard of reasonableness in determining whether or
not such consent shall be granted and the same may be based upon what Lender
solely deems to be in its best interest.


 


For purposes of the Loan
Documents, the following terms shall have the respective meanings set forth
below:


 


“Transfer” or “Transferred”
shall mean with respect to the Premises, an interest in the Premises, or an
ownership interest or interest therein:


 


(i)                       a sale,
assignment, transfer, conveyance or other disposition (whether voluntary,
involuntary or by operation of law);


 


(ii)                    the creation,
sufferance or granting of any lien, encumbrance, security interest or
collateral assignment (whether voluntarily, involuntarily or by operation of
law), other than this Mortgage, the leases of the Premises assigned to Lender,
the Permitted Encumbrances, the granting of a lien on a tenant’s interest under
any Lease in accordance with the terms specifically set forth therein, and
those liens which Borrower is contesting in accordance with the provisions of
paragraph 1(e);


 


(iii)                 the issuance or
other creation of ownership interests in an entity;


 


(iv)                the reconstitution
or conversion from one entity to another type of entity;


 


(v)                   a merger,
consolidation, reorganization or any other business combination; or


 


(vi)                a conversion to or
operation of all or any portion of the Premises as a cooperative or condominium
form of ownership.


 


“Permitted
Transfer” shall mean:


 


(i)                       a minor (as
determined by Lender) conveyance of an interest in the Premises by Borrower,
such as a utility easement, and for which Lender has given its prior written
consent and imposed such conditions as Lender deems advisable and appropriate;
provided, however, with regard to those easements for which Lender’s consent is
required, if: (A) Borrower provides Lender with a written request for consent
to such easement and the request is accompanied by a copy of the proposed
easement together with a certificate executed by Borrower confirming that such
easement will not adversely affect the Premises now or in the future; (B) the
request is given in the manner provided for the giving of notices in this
Mortgage; (C) the request is boldly noted as a request for consent to an
easement for which Lender’s consent is required and specifically states that
the easement will be deemed approved if Lender fails to respond within 12
business days (Lender and Borrower hereby agree that such 12 business day
period shall commence on the date of Lender’s actual receipt of all information
reasonably required by Lender in connection with Lender’s


 


9

















 


review of said easement);
and (D) in the event Lender fails to respond to Borrower’s request for consent
within the time period set forth in subparagraph (C) above, then said consent
shall be deemed to have been given; or


 


(ii)                    a sale,
assignment, transfer or conveyance of all or any portion of the Premises or an
interest in the Premises for which Borrower has complied with all of the
Property Transfer Requirements; or


 


(iii)                 any of the
following Transfers for which Borrower has complied with all of the Ownership
Transfer Requirements as applicable and Lender has given its prior written
consent (and in connection with such consent, Lender may impose any conditions
it wishes in its sole discretion);


 


(A)                 a sale,
assignment, transfer, or conveyance of an ownership interest or interest
therein;


 


(B)                   the issuance or
other creation of ownership interests in an entity;


 


(C)                   a reconstitution
or conversion from one entity to another type of entity;


 


(D)                  a merger,
consolidation, reorganization or any other business combination;


 


(iv)                with at least
thirty (30) days advance written notice, transfers of ownership interests in
Borrower and entities owning interests in Borrower among Inland American Real
Estate Trust, Inc., a Maryland corporation (“IARETI”), and its wholly owned
Affiliates for which Borrower has complied with all of the Specific Transfer
Requirements -1;


 


(v)                   with at least
thirty (30) days advance written notice, transfers of ownership interests in
Borrower and/or shares in entities owning interests in Borrower to Qualified
New Members (hereinafter defined), for which Borrower has complied with all of
the Specific Transfer Requirements - 2 (for purposes of this Permitted
Transfer, a “Qualified New Member” shall be defined as an institutional
investor or fund managed by an institutional investor having assets of
$100,000,000 or more);


 


(vi)                with at least
thirty (30) days advance written notice, transfers of direct or indirect
ownership interests in Borrower and entities owning interests in Borrower and
transfers of direct or indirect ownership interests in IARETI to a Qualified
Successor (hereinafter defined) for which Borrower has complied with all of the
Specific Transfer Requirements - 3 (for purposes of this Permitted Transfer, a “Qualified
Successor” shall be defined as an entity with a tangible net worth of
$200,000,000 or more; a debt to equity


 


10

















 


ratio of 1.5 or less; and
management personnel experienced in the ownership and management of retail
properties similar to the Premises);


 


(vii)             transfers of
ownership interests in IARETI or, provided IARETI is the surviving entity, the
merger of IARETI with any of the following entities: (A) Inland Retail Real
Estate Trust, Inc., a Maryland corporation (“IRRETI”), (B) Inland Real Estate
Corporation, a Maryland corporation (“IREC”), (C) Inland Real Estate Investment
Corporation, a Delaware corporation (“IREIC”), (D) Inland Western Retail Real
Estate Trust, Inc., a Maryland corporation (“IWRRETI”), (E) any other real
estate investment trust sponsored by IREIC, or (F) any other entity composed
entirely of any of the foregoing, by merger or other business combination; or


 


(viii)          a one time sale,
assignment, transfer or conveyance of the Premises to a Permitted Inland REIT
for which Borrower has complied with all of the One-Time Permitted Inland REIT
Property Transfer Requirements; or


 


(ix)                  a one time sale,
assignment, transfer or conveyance of: (a) 100% of the ownership interests in
Borrower to a joint venture of a Permitted Inland REIT, a New Inland REIT or an
Inland Affiliate with a Qualified Entity; or (b) up to 99% of the ownership interests
in Borrower to a Qualified Entity, in either case for which Borrower has
complied with all of the One-Time Joint Venture Ownership Transfer
Requirements; or


 


(x)                     a one time
sale, assignment, transfer or conveyance of the Premises to a joint venture of
a Permitted Inland REIT, a New Inland REIT or an Inland Affiliate with a
Qualified Entity for which Borrower has complied with all of the One-Time Joint
Venture Property Transfer Requirements.


 


“Permitted Inland REIT”
shall collectively mean: IRRETI, IREC, IWRRETI and IARETI.


 


“Qualified Entity”
shall mean an entity with: (a) a net worth equal to or greater than
$25,000,000.00; and (b) experience in the ownership and management of
properties similar to the Premises.


 


“New Inland REIT”
shall mean: a newly formed real estate investment trust sponsored by or
affiliated with IREIC, a Permitted Inland REIT or The Inland Group, Inc., an
Illinois corporation (“TIGI”).


 


“Inland Affiliates”
shall mean: subsidiaries directly or indirectly wholly owned by a Permitted
Inland REIT or a New Inland REIT, or partnerships, trusts or limited liability
companies or other entities in which all of the equity interests are owned by a
Permitted Inland REIT, a New Inland REIT or TIGI.


 


11

















 


In the event there is
any: (a) transfer of the Premises; or (b) transfer of direct or indirect
ownership interests in Borrower greater than 49%; then, if required by the
Pooling and Servicing Agreement, Lender may require receipt of written evidence
from such agency(ies) (if required by such agencies) to the effect that the
proposed transfer will not result in a re-qualification, reduction or
withdrawal of any rating in effect immediately prior to such transfer issued in
connection with the securitization transaction.


 


“One-Time Permitted
Inland REIT Property Transfer Requirements” are all of the following:


 


1.                         the
Permitted Inland REIT which is to become the successor borrower has a net worth
equal to or greater than such Permitted Inland REIT’s net worth as of the date
hereof.


 


2.                         Lender’s
exposure limitations to the successor borrower are acceptable to Lender;


 


3.                         an
experienced individual or entity, acceptable to Lender, continues to manage and
lease the Premises;


 


4.                         Borrower
satisfies subparagraphs 3 through 7 of the Property Transfer Requirements set
forth below; and


 


5.                         payment
to Lender of an assumption fee equal to one half of one percent (0.5%) of the
principal balance of the Note; provided, however, such fee shall not exceed
$25,000 and shall not be less than $10,000. Lender will require $5,000.00 of
such fee to be paid at the beginning of Lender’s review process, and such sum
shall be nonrefundable and earned upon receipt by Lender whether or not the
transaction is ultimately completed or Lender ultimately approves successor
borrower.


 


“One-Time Joint
Venture Ownership Transfer Requirements” are all of the following:


 


1.                         If the
transfer is pursuant to Permitted Transfer (ix)(a) above, IARET1 or a wholly
owned Affiliate thereof: (i) maintains at least 1% ownership interests in such
joint venture (which such joint venture entity shall be the sole member of
Borrower); and (ii) maintains operational and managerial control of such joint
venture and the Premises. If the transfer is pursuant to Permitted Transfer
(ix)(b), IARETI or a wholly owned Affiliate thereof: (a) maintains at least 1%
interest in Borrower; and (b) maintains operational and managerial control of
the Premises;


 


2.                         Lender’s
receipt of an ownership processing fee equal to: (i) $5,000.00 if IARETI
maintains ten percent (10%) or more of the ownership interests in


 


12

















 


Borrower or such joint
venture that acquires ownership interests in Borrower; or (ii) $15,000.00 if
IARETI maintains less than 10 percent (10%) of the ownership interests in
Borrower or such joint venture that acquires ownership interests in Borrower;


 


3.                         At Lender
discretion, Lender receives acceptable background and credit checks, at
Borrower’s cost;


 


4.                         Reaffirmation
of the obligations of IARETI under the Guaranty;


 


5.                         Lender
receives at least thirty (30) days prior written notice of such transfer along
with appropriate documentation thereof (including organizational documentation
evidencing the formation and existence of any entity to which an interest is
transferred);


 


6.                         The
transaction will be processed by outside counsel whose fees and costs, as well
as other applicable professional’s fees and costs, taxes, recording fees and
the like, and any other fees and costs incurred, will be payable by Borrower.
(Lender shall not charge any fees beyond the fee referenced in No. 2 above).


 


“One-Time Joint
Venture Property Transfer Requirements” are all of the following:


 


1.                         IARETI or
a wholly owned Affiliate thereof: (i) maintains at least 1 % direct or indirect
ownership interests in the joint venture that becomes Borrower; and (ii)
maintains operational and managerial control of the joint venture that becomes
Borrower and the Premises;


 


2.                         Lender’s
receipt of a Premises processing fee equal to: (i) $5,000.00 if IARETI
maintains ten percent (10%) or more of the ownership interests in such joint
venture; or(ii) $15,000.00 if IARETI maintains less than 10 percent (10%) of
the ownership interests in such joint venture;


 


3.                         Receipt,
at Borrower’s expense, of an endorsement updating the Lender’s existing loan
policy in the full amount of the Loan (and if an acceptable endorsement is not
available, a new ALTA standard loan policy), in form and by an issuer
satisfactory to Lender, and which insures this Mortgage to be a first and prior
lien subject only to those exceptions which were previously approved by Lender
or additional exceptions that are subject to Lender’s reasonable prior
approval;


 


4.                         Receipt
by Lender of copies of (a) the organizational documents of the proposed
transferee and an opinion of counsel satisfactory to Lender as to its due
formation, valid existence and authority to enter into and carry out the
proposed transaction; (b) the deeds or other instruments of transfer and


 


13

















 


documents relating to the
assignment and assumption of Leases; (c) evidence of compliance with the
insurance requirements contained in the Loan Documents; (d) compliance with the
representations and warranties in the Loan Agreement regarding the proposed
transferee’s status as a Single Purpose Entity, and (e) at Lender discretion,
acceptable background and credit checks, at Borrower’s cost;


 


5.                         Execution,
delivery, acknowledgment and recordation, as applicable, of assumption
agreements, financing statements, replacement letter(s) of credit (if
applicable), tax identification certification, automatic clearing house payment
form, and UCCs (in form and substance satisfactory to Lender) and reaffirmation
of the obligations of IARETI under the Guaranty;


 


6.                         The
transaction will be processed by outside counsel whose fees and costs, as well
as other applicable professional’s fees and costs, taxes, recording fees and
the like, and any other fees and costs incurred, will be payable by Borrower.
(Lender shall not charge any fees beyond the fee referenced in No. 2 above.);


 


7.                         Receipt
by Lender of 30 days advance written notice of the proposed Transfer in
question;


 


8.                         Receipt
by Lender of a waiver from any tenant having a right or option to purchase the
Premises or any portion thereof, waiving such right or option in form and
substance acceptable to Lender; and


 


9.                         Borrower
remains a Single Purpose Entity.


 


“Property
Transfer Requirements” are all of the following:


 


1.                         Prior
review and approval of the proposed purchaser or other transferee and the
subject transaction by Lender, at Lender’s sole discretion. Review of the
proposed purchaser or other transferee and the subject transaction shall
encompass various factors, including, but not limited to, the proposed
purchaser’s or other transferee’s creditworthiness, financial strength, and
real estate management and leasing expertise as well as the proposed
transaction’s effect on the Premises, the Borrower, and other security for the
Loan;


 


2.                         Payment
to Lender of an assumption fee equal to the greater of: (a) one half of one
percent (0.5%) of the principal balance of the Note; or (b) $15,000.00;
provided, however, that Lender will require $15,000.00 of such fee to be paid
at the beginning of Lender’s review process, and such sum shall be
nonrefundable and earned upon receipt by Lender whether or


 


14

















 


not the transaction is
ultimately completed or Lender ultimately approves the proposed purchaser or
other transferee;


 


3.                         Receipt,
at Borrower’s expense, of either (at Lender’s discretion) a new ALTA standard
loan policy or an endorsement updating the Lender’s existing loan policy in the
full amount of the Loan, in form and by an issuer satisfactory to Lender, and
which insures this Mortgage to be a first and prior mortgage subject only to
those exceptions which were previously approved by Lender and provides coverage
against usury and mechanic’s liens;


 


4.                         Receipt
by Lender of copies of all relevant information and documentation relating to
or required by Lender in connection with the proposed transfer including but
not limited to (a) the organizational documents of the proposed transferee and
an opinion of counsel satisfactory to Lender as to its due formation, valid
existence and authority to enter into and carry out the proposed transaction;
(b) the deeds or other instruments of transfer and documents relating to the
assignment and assumption of Leases; (c) evidence of compliance with the
insurance requirements contained in the Loan Documents; (d) compliance with the
representations and warranties in the Loan Agreement regarding the proposed
transferee’s status as a Single Purpose Entity, and (e) compliance with such
other closing requirements as are customarily imposed by Lender in connection
with such transactions;


 


5.                         Execution,
delivery, acknowledgment and recordation, as applicable, of new, revised and/or
replacement assumption agreements, loan modification agreements, indemnification
agreements, escrow security or property reserves agreements, security
instruments, financing statements, UCCs, new or revised letters of credit
and/or guarantees in form and substance satisfactory to Lender;


 


6.                         Payment
of outside counsel fees and costs, other applicable professional’s fees and
costs, taxes, recording fees and the like, and any other fees and costs
incurred;


 


7.                         Receipt
by Lender of 60 days advance written notice of the proposed Transfer in
question;


 


8.                         Receipt
by Lender of a waiver from any tenant having a right or option to purchase the
Premises or any portion thereof, waiving such right or option in form and
substance acceptable to Lender; and


 


9.                         At
Lender’s option, and if required by the procedures promulgated by any rating agency(ies)
associated with a securitization transaction with respect to the Loan, receipt
by Lender of written evidence from such agency(ies)


 


15

















 


to the effect that the
proposed transfer will not result in a re-qualification, reduction or
withdrawal of any rating in effect immediately prior to such transfer issued in
connection with the securitization transaction.


 


“Ownership Transfer
Requirements” are all of the Property Transfer Requirements which Lender deems
appropriate in its discretion, as well as a reasonable processing fee to be
determined by Lender; provided, however, that (i) with respect to item 2 of the
Property Transfer Requirements, the 0.5% component of the fee shall be prorated
(subject, however, to the $15,000 minimum) based on Lender’s calculation of the
effective percentage interest in Borrower transferred, and (ii) item 3 of the
Property Transfer Requirements shall be required, at Lender’s discretion, only
in the event of (A) a merger, consolidation, reorganization or any other
business combination, or (B) a reconstitution or conversion from one entity to
another type of entity.


 


“Specific Transfer
Requirements -1” are all of the following which Borrower agrees to provide
to Lender prior to each proposed transfer: (i) a processing fee of $2,000.00;
(ii) all relevant documentation and information related to the organization,
authority, and validity of the proposed ownership interest purchaser,
transferee and the transaction in general; (iii) all documents and instruments
of conveyance, transfer and assignment; (iv) at Lender’s discretion, a
reaffirmation of the obligations of the Guarantor(s) under the Guaranty; and
(v) evidence of payment of all outside counsel fees, professional fees, title
insurance fees, if any, and any and all other fees, costs and expenses related
to the proposed transfer (provided that no processing fee other than the $2,000
fee stated in (i) above shall be required).


 


“Specific Transfer
Requirements - 2” are all of the following which Borrower agrees to provide
to Lender prior to each proposed transfer: IARETI or a wholly owned Affiliate
thereof (i) (a) retains 51% or more of the ownership interest in the Borrower,
or (b) retains ownership of 20% to 50% of the ownership interest in the
Borrower subject to Lender’s review and approval in each instance of the
proposed transferee and the subject transaction; Lender’s review of the
proposed transferee and the subject transaction shall encompass various
factors, including but not limited to, transferee’s creditworthiness, financial
strength, and real estate management expertise, as well as the proposed
transaction’s effect on the Premises, Borrower and the other security for the
Loan, and (ii) otherwise retains operational and management control of Borrower
as determined by Lender, and further provided Borrower provides Lender each of
the following items prior to each proposed transfer: (a) a transfer fee equal
to the greater of $5,000.00 or the product of the percentage ownership interest
in Borrower to be transferred multiplied by one percent (1%) of the outstanding
principal balance of the Loan; (b) all relevant documentation and information
related to the organization, authority, and validity of the proposed ownership
interest purchaser, transferee and the transaction in general; (c) all
documents and instruments of conveyance, transfer and assignment; (d) a
reaffirmation of the obligations of the Guarantor(s)


 


16

















 


under the Guaranty; and
(e) evidence of payment of all outside counsel fees, professional fees, title
insurance fees and any and all other fees, costs and expenses related to the
proposed transfer (provided that no assumption or transfer fee other than the
$5,000.00 fee stated in (a) above shall be required).


 


“Specific Transfer
Requirements - 3” are all of the following which Borrower agrees to provide
to Lender prior to each proposed transfer: (i) said transfers are made to
accommodate either the merger of IARETI with the Qualified Successor or the
sale of a majority of IARETI’s assets to the Qualified Successor; and (ii) the
Qualified Successor retains direct or indirect ownership of 51 % or more of the
ownership interests in the Borrower and (iv) the Qualified Successor otherwise
retains operational and management control of Borrower as determined by Lender,
and further provided, Borrower provides Lender with each of the following items
prior to the proposed transfer: (a) a transfer fee of $10,000.00; (b) all
relevant documentation and information related to the organization, authority,
and validity of the proposed ownership interest purchaser, transferee and the
transaction in general; (c) all documents and instruments of conveyance,
transfer and assignment; (d) a reaffirmation of the obligations of the
Guarantor(s) under the Guaranty or assumption thereof by an individual(s) or
entity(ies) acceptable to Lender in its sole discretion; and (e) evidence of
payment of all outside counsel fees, professional fees, title insurance fees
and any and all other fees, costs and expenses related to the proposed transfer
(provided that no assumption or transfer fee other than the $10,000.00 fee
stated in (a) above shall be required).


 


(g)                   cause, permit
or allow:


 


(i)                       any person
or entity to own an interest in Borrower who is (A) identified on the Specially
Designated Nationals and Blocked Persons List maintained by OFAC and/or on any
other similar list maintained by OFAC, or (B) a party with whom a citizen of
the United States is prohibited to engage in transactions by any trade embargo,
economic sanction, or other prohibition of United States law, regulation, or
Executive Order of the President of the United States;


 


(ii)                    any of the
funds or other assets of Borrower to constitute property of, or be beneficially
owned, directly or indirectly, by any Embargoed Person;


 


(iii)                 an Embargoed
Person to have any interest of any nature whatsoever in Borrower (whether
directly or indirectly); or


 


(iv)                any of its funds
to be derived from any unlawful activity with the result that the investment in
Borrower is prohibited by law or that the agreement is in violation of law.


 


17

















 


3.                         (a)                     Borrower
shall pay or cause to be paid when due and before any penalty attaches, or
interest accrues all general taxes, special taxes, assessments (including
assessments for benefits from public works or improvements whenever begun or
completed), utility charges, water charges, sewer service charges, common area
maintenance charges, if any, vault or space charges and all other like charges
against or affecting the Premises or against any property or equipment located
on the Premises, or which might become a lien on the Premises, and shall,
within 10 days following Lender’s request, furnish to Lender a duplicate
receipt of such payment. If any such tax, assessment or charge may legally be
paid in installments, Borrower may, at its option, pay such tax, assessment or
charge in installments. Lender acknowledges and agrees that performance of the
obligations set forth in this Paragraph 3(a) by Major Tenant with respect to
its leased premises shall be deemed compliance with such provisions by Borrower
with respect to such portion of the Premises.


 


(b)                    If Borrower
desires to contest any tax, assessment or charge relating to the Premises,
Borrower may do so by paying the same in full, under protest, in the manner
provided by law; provided, however, that


 


(i)                       if contest
of any tax, assessment or charge may be made without the payment thereof, and


 


(ii)                    such contest
shall have the effect of preventing the collection of the tax, assessment or
charge so contested and the sale or forfeiture of the Premises or any part
thereof or any interest therein to satisfy the same,


 


then Borrower may in its
discretion and upon the giving of written notice to Lender of its intended
action and upon the furnishing to Lender of such security or bond as Lender may
require, contest any such tax, assessment or charge in good faith and in the
manner provided by law. All costs and expenses incidental to such contest shall
be paid by Borrower. In the event of a ruling or adjudication adverse to
Borrower, Borrower shall promptly pay such tax, assessment or charge. Borrower
shall indemnify and save harmless the Lender and the Premises from any loss or
damage arising from any such contest and shall, if necessary to prevent sale,
forfeiture or any other loss or damage to the Premises or to Lender, pay such
tax, assessment or charge or take whatever action is necessary to prevent any
sale, forfeiture or loss. Lender acknowledges and agrees that upon compliance
with the foregoing requirements, to the extent permitted under its Lease, Major
Tenant shall have all rights of contest as set forth in this Paragraph 3(b).


 


4.                         (a)                     Borrower
shall at all times keep or cause to be kept in force (i) property insurance
insuring all Improvements which now are or hereafter become a part of the
Premises for perils covered by a causes of loss-special form insurance policy,
including coverage against terrorism containing both replacement cost and
agreed amount endorsements or equivalent coverage; (ii) commercial


 


18

















 


general liability
insurance naming Lender as an additional insured protecting Borrower and Lender
against liability for bodily injury or property damage occurring in, on or
adjacent to the Premises in commercially reasonable amounts; (iii) boiler and
machinery insurance if the property has a boiler or is an office building; (iv)
rental value insurance for the perils specified herein for one hundred percent
(100%) of the Rents (including operating expenses, real estate taxes,
assessments and insurance costs which are lessee’s liability) for a period of
twelve (12) months; (v) builders risk insurance during all periods of
construction; and (vi) insurance against all other hazards as may be reasonably
required by Lender, including, without limitation, insurance against loss or
damage by flood. Notwithstanding anything herein above to the contrary, if
neither: (i) property insurance without an exclusion for terrorism, terrorist
acts or similar perils (“Terrorism”) nor; (ii) a separate policy insuring
specifically against Terrorism is available at a cost which is in Lender’s
opinion is commercially reasonable, taking into consideration, among other
things: (a) how properties similar in type, size, quality and location are
insured with respect to Terrorism; and (b) the amount of coverage, premium and
deductible applicable to such insurance, then Lender agrees to waive the
requirement to provide insurance covering Terrorism until such coverage again
becomes available at a cost, which in Lender’s opinion is commercially
reasonable.


 


(b)                    All insurance
(including deductibles and exclusions) shall be in form, content and amounts
approved by Lender and written by an insurance company or companies approved by
Lender and rated A-, class size VIII or better in the most current issue of
Best’s Insurance Reports and which is licensed to do business in the State in
which the Premises are located or a governmental agency or instrumentality
approved by Lender. The policies for such insurance shall have attached thereto
standard mortgagee clauses in favor of and permitting Lender to collect any and
all proceeds payable thereunder and shall include a 30 day (except for
nonpayment of premium, in which case, a 10 day) notice of cancellation clause
in favor of Lender. All certificates of insurance (or policies if requested by
Lender) shall be delivered to and held by Lender as further security for the
payment of the Note and any other obligations arising under the Loan Documents,
with evidence of renewal coverage delivered to Lender at least 30 days before
the expiration date of any policy. Borrower shall not carry or permit to be
carried separate insurance, concurrent in kind or form and contributing in the
event of loss, with any insurance required in the Loan Documents.


 


(c)                     To the
contrary notwithstanding, so long as there is no Event of Default hereunder and
so long as the lease with Major Tenant or any Replacement Tenant remains in
full force and effect and there are no material breaches thereof beyond the
expiration of any applicable notice and cure periods, Lender will allow Major
Tenant or any said Replacement Tenant to keep in force the insurance required
herein, except with respect to coverage for rental insurance, and such
performance by Major Tenant shall be deemed performance by


 


19

















 


Borrower with respect to
such required insurance hereunder. All insurance coverages and requirements
that are not maintained by Major Tenant or a Replacement Tenant in accordance
with the Lender’s insurance requirements herein shall at all times during the
Loan be maintained by Borrower.


 


(d)                    To the
contrary notwithstanding, so long as there is no Event of Default hereunder and
so long as the lease between Borrower and Major Tenant remains in full force
and effect and there are no material breaches thereof beyond the expiration of
any applicable notice and cure periods, Lender agrees to accept self-insurance
by Major Tenant for its leased premises. Lender will only accept self-insurance
by Major Tenant under the terms of its lease if Major Tenant maintains an
investment grade credit rating as required by its Lease. All insurance
coverages and requirements that are not self insured by Major Tenant in
accordance with the Lender’s insurance requirements herein shall at all times
during the Loan be maintained by Major Tenant or Borrower (with the exception
of coverage for rental insurance, which shall be provided by Borrower).


 


5.                         Borrower
shall deposit with and pay to Lender the estimated taxes and assessments
assessed or levied against and next due on the Premises and the estimated premiums
for the insurance required pursuant to the Loan Documents, all in accordance
with and subject to the requirements of the Loan Agreement.


 


6.                         In the
event of any damage to or destruction of the Premises, or any part thereof:


 


(a)                     Borrower will
immediately notify Lender thereof in the manner provided in this Mortgage for
the giving of notices. Lender shall have the right (which may be waived by
Lender in writing) to settle and adjust any claim under such insurance policies
required to be maintained by Borrower. In all circumstances, the proceeds
thereof shall be paid to Lender and Lender is authorized to collect and to give
receipts therefor. Borrower agrees and acknowledges that such proceeds shall be
held by Lender without any allowance of interest and that in any bankruptcy
proceeding of Borrower, all such proceeds shall be deemed to be “Cash
Collateral” as that term is defined in Section 363 of the Bankruptcy Code.
Provided that no Event of Default exists, Borrower shall have the right to
participate in any settlement or adjustment; provided, however, that any
settlement or adjustment shall be subject to the written approval of Lender,
not to be unreasonably withheld.


 


(b)                    Such proceeds,
after deducting therefrom any reasonable expenses incurred by Lender in the
collection thereof (including but not limited to reasonable attorneys’ fees and
costs), shall be applied by Lender to pay the Indebtedness secured hereby
including, but not limited to the Make Whole Premium, whether or not then due
and payable, provided, however, that if no Event of Default exists at the time
of such application, no Make Whole Premium shall be due.


 


20

















 


Notwithstanding anything
hereinabove to the contrary,


 


(i)                       in the
event the casualty occurs more than six (6) months prior to the Maturity Date
and no Event of Default exists, Lender shall apply such proceeds as follows:


 


(A)                 If the aggregate
amount of such proceeds is less than $250,000, Lender shall pay such proceeds
directly to Borrower, to be held in trust for Lender and applied to the cost of
rebuilding and restoring the Premises.


 


(B)                   If the
aggregate amount of such proceeds equals or exceeds $250,000 Lender shall
disburse such amounts of the proceeds as Lender reasonably deems necessary for
the repair or replacement of the Premises, subject to the conditions set forth
in paragraph 6(c) below.


 


(ii)                    in the event
(x) an Event of Default exists, or (y) the casualty occurs during the last six
(6) months prior to the Maturity Date and Lender determines that the repair and
restoration of such casualty cannot be completed prior to the Maturity Date, or
(z) the conditions set forth in paragraph 6(c) are not met, then Lender, in its
sole and absolute discretion may either:


 


(A)                 declare the
entire Indebtedness to be immediately due and payable, provided, however, that
if no Event of Default exists, no Make Whole Premium shall be due. All proceeds
shall be applied toward payment of the Indebtedness in such priority as Lender
elects; or


 


(B)                   disburse such
proceeds as Lender reasonably deems necessary for the repair or replacement of
the Premises subject to those conditions set forth in paragraph 6(c) which
Lender in its sole and absolute discretion may require.


 


(c)                     (i)                       In the
event that Borrower is to be reimbursed out of the insurance proceeds or out of
any award or payment received with respect to a Taking, Lender shall from time
to time make available such proceeds, subject to the following conditions: (a)
there continues to exist no Event of Default; (b) the delivery to Lender of
satisfactory evidence of the estimated cost of completion of such repair and
restoration work and any architect’s certificates, waivers of lien, contractor’s
sworn statements, and other evidence of cost and of payment and of the
continued priority of this Mortgage over any potential liens of mechanics and
materialmen (including, without limitation, title policy endorsements) as
Lender may reasonably require and approve; (c) the time required to complete
the


 


21

















 


repair and restoration
work and for the income from the Premises to return to the level it was prior
to the loss will not exceed the coverage period of the rental value insurance
required hereunder; (d) the annual net cash flow (annual net operating income
after deduction for tenant improvements, leasing commissions, annual
replacement reserves and a management fee) shall equal or exceed 1.5 times the
annual debt service on the Note. Only net operating income from approved
executed Leases in effect on the Premises, having at least three (3) years
remaining prior to the expiration of their term, with no uncured defaults,
shall be used in Lender’s determination of the annual net cash flow; (e) Lender
approves the plans and specifications of such work before such work is
commenced if the estimated cost of rebuilding and restoration exceeds 25% of
the Indebtedness or involves any structural changes or modifications. If said
plans and specifications substantially comply with those previously approved by
Lender, Lender’s approval shall not be unreasonably withheld; (f) if the amount
of any insurance proceeds, award or other payment is insufficient to cover the
cost of restoring and rebuilding the Premises, Borrower shall pay such cost in
excess of such proceeds, award or other payment before being entitled to
reimbursement out of such funds; (g) Borrower pays to Lender a non-refundable
processing fee equal to the greater of $5,000.00 or .25% of the amount of such
proceeds within sixty (60) days of the occurrence of any such damage or
destruction and before Lender disburses any proceeds; and (h) such other
conditions to such disbursements, in Lender’s reasonable discretion, as would
be customarily required by a construction lender doing business in the area
where the Premises is located or which are otherwise required by any rating
agency rating a securitization transaction with respect to the Loan.


 


(ii)                    No payment
made by Lender prior to the final completion of the repair or restoration work
shall, together with all payments theretofore made, exceed 90% of the cost of
such work performed to the time of payment, and at all times the undisbursed
balance of said proceeds shall be at least sufficient to pay for the cost of
completion of such work free and clear of all liens and mortgages. Any proceeds
remaining after payment of the cost of rebuilding and restoration shall, at the
option of Lender, either be (a) applied in reduction of the Indebtedness
secured hereby, provided, however, that if no Event of Default exists at the
time of such application, no Make Whole Premium shall be due, or (b) paid to
Borrower.


 


(iii)                 Repair and
restoration of the Premises shall be commenced promptly after the occurrence of
the loss and shall be prosecuted to completion diligently, and the Premises
shall be so restored and rebuilt to substantially the same character and
quality as prior to such damage and destruction and shall comply with all Legal
Requirements.


 


22

















 


(d)                    Should such
damage or destruction occur after foreclosure or sale proceedings have been
instituted, the proceeds of any such insurance policy or policies, if not
applied in rebuilding or restoration of the Improvements, shall be used to pay
(i) the Indebtedness then due and owing in the event of a non-judicial sale in
such priority as Lender elects, or (ii) the amount due in accordance with any
decree of foreclosure or deficiency judgment that may be entered in connection
with such proceedings, and the balance, if any, shall be paid to the owner of
the equity of redemption if it shall then be entitled to the same, or otherwise
as any court having jurisdiction may direct.


 


(e)                     To the
contrary notwithstanding, so long as there is no Event of Default hereunder and
so long as the Lease with Major
Tenant remains in full force and effect, Lender agrees that the provisions of
the Lease with Major Tenant governing the application of insurance proceeds and
restoration shall apply with respect to the portion of the Premises subject to
such Lease.


 


7.                         In the
event of the commencement of a Taking affecting the Premises:


 


(a)                     Borrower
shall notify Lender thereof in the manner provided in this Mortgage for the
giving of notices. Lender may participate in such proceeding, and Borrower
shall deliver to Lender all documents requested by it to permit such
participation.


 


(b)                    Borrower shall
cause the proceeds of any award or other payment made relating to a Taking, to
be paid directly to Lender. Lender, in its sole and absolute discretion: (i)
may apply all such proceeds to pay the Indebtedness in such priority as Lender
elects, provided however, that if no Event of Default exists at the time of
such application no Make Whole Premium shall be due; or (ii) subject to and in
accordance with the provisions set forth in paragraph 6(c) above, may disburse
such amounts of the proceeds as Lender reasonably deems necessary for the
repair or replacement of the Premises.


 


(c)                     Notwithstanding
anything herein above to the contrary, provided no Event of Default exists,
Lender agrees to disburse the proceeds received from any Inconsequential
Taking, as hereinafter defined, to Borrower for the repair and/or replacement
of the Premises. An Inconsequential Taking shall be a Taking which (i) results
in less than $250,000 in proceeds; (ii) does not, in Lender’s determination,
materially or adversely affect the Improvements, parking, access, ingress,
egress or use of the Premises; and (iii) does not trigger any rights or options
of tenants under the Leases.


 


(d)                    To the
contrary notwithstanding, so long as there is no Event of Default hereunder and
so long as the Lease with Major Tenant remains in full force and effect, Lender
agrees that the provisions of the Lease with Major Tenant governing the
application of the proceeds of a Taking shall apply with respect to that
portion of the Premises subject to such Lease.


 


23

















 


8.                         If by the
laws of the United States of America or of any state or governmental
subdivision having jurisdiction over Borrower or of the Premises or of the Loan
evidenced by the Loan Documents or any amendments or modifications thereof, any
tax or fee is due or becomes due or is imposed upon Lender in respect of the
issuance of the Note hereby secured or the making, recording and registration
of this Mortgage or otherwise in connection with the Loan Documents, the
Environmental Indemnity or the Loan, except for Lender’s income or franchise
tax, Borrower covenants and agrees to pay such tax or fee in the manner
required by such law, and to hold harmless and indemnify Lender, its successors
and assigns, against any liability incurred by reason of the imposition of any
such tax or fee.


 


9.                         (a)                     Upon the
occurrence of any Event of Default, Lender may, but need not, make any payment
or perform any act herein required of Borrower, in any form and manner deemed
expedient and may, but need not, make full or partial payments of principal or
interest on prior encumbrances, if any, and purchase, discharge, compromise or
settle any tax lien, mortgage or other prior lien or title or claim thereof, or
redeem from any tax sale or forfeiture affecting said Premises, or contest any
tax or assessment. All moneys paid for any of the purposes herein authorized
and all reasonable expenses paid or incurred in connection therewith, including
but not limited to, reasonable attorneys’ fees and costs and reasonable
attorneys’ fees and costs on appeal, and any other money advanced by Lender to
protect the Premises and the mortgage interest hereof, shall be so much
additional Indebtedness secured hereby and shall become immediately due and
payable without notice and with interest thereon at the Default Rate from the
date of expenditure or advance until paid.


 


(b)                    In making any
payment hereby authorized relating to taxes or assessments or for the purchase,
discharge, compromise or settlement of any prior lien or mortgage, Lender may
make such payment according to any bill, statement or estimate secured from the
appropriate public office without inquiry into the accuracy thereof or into the
validity of any tax, assessment, sale, forfeiture, mortgage, tax lien or title
or claim thereof or without inquiry as to the validity or amount of any claim
for lien which may be asserted.


 


10.                   If one or more
of the following events (herein called an “Event of Default” or “Events
of Default” as the context so requires) shall have occurred:


 


(a)                     failure to
pay when due any principal, interest, Make Whole Premium or other Indebtedness,
utilities, taxes or assessments or insurance premiums required pursuant to the
Loan Documents or the Environmental Indemnity, and such failure shall have
continued for 5 days, as to payment of any principal, interest or taxes or
assessments, or insurance premiums or for 5 days after written notice
specifying such default is given by Lender to Borrower as to payment of any
Make Whole Premium; or


 


24

















 


(b)                    Borrower,
Interest Owner or any guarantor voluntarily brings or acquiesces to any of the
following: (A) any action for dissolution, act of dissolution or dissolution or
the like of Borrower, Interest Owner or any guarantor under the Federal
Bankruptcy Code as now or hereafter constituted; (B) the filing of a petition
or answer proposing the adjudication of Borrower, Interest Owner or any
guarantor as a bankrupt or its reorganization or arrangement, or any
composition, readjustment, liquidation, dissolution or similar relief with
respect to it pursuant to any present or future federal or state bankruptcy or
similar law; or (C) the appointment by order of a court of competent
jurisdiction of a receiver, trustee or liquidator of the Premises or any part
thereof or of Borrower, Interest Owner or any guarantor or of substantially all
of the assets of Borrower, Interest Owner or any guarantor; or


 


(c)                     one or more
of the items set forth in paragraph 10(b) above occur which were either not (i)
voluntarily brought by Borrower, Interest Owner or any guarantor or (ii)
acquiesced in by Borrower, Interest Owner or any guarantor, and which are not
discharged or dismissed within 90 days after the action, filing or appointment,
as the case may be; or


 


With respect to the
matters in (b) and (c) above for an Interest Owner only, no Event of Default
shall occur until an interested party or Interest Owner asserts a claim or
right against Borrower or the Premises which delays or otherwise affects Lender’s
rights, remedies, or interests granted under the Loan Documents (whether or not
such assertion is successful).


 


(d)                    with respect
to the matters not described in the other subparagraphs of this paragraph 10,
failure to duly observe or perform any covenant, condition or agreement of the
Borrower or any guarantor contained in this Mortgage, the Loan Agreement, the
Guaranty, the Note or the Assignment of Leases from Borrower to Lender or in
any other instrument or agreement which evidences or secures the Loan (the “Loan
Documents”) or in the Environmental Indemnity, and such failure shall have
continued for 30 days after Notice specifying such failure is given by Lender
to Borrower; or


 


If any failure to observe
or perform under (d) above shall be of such nature that it cannot be cured or
remedied within 30 days, Borrower shall be entitled to a reasonable period of
time to cure or remedy such failure (not to exceed 90 days following the giving
of Notice), provided Borrower commences the cure or remedy thereof within the
30 day period following the giving of Notice and thereafter proceeds with
diligence, as determined by Lender, to complete such cure or remedy.


 


(e)                     the failure
of Borrower to duly observe or perform any of the covenants, conditions and
agreements of the Borrower contained in paragraph 2(f) of this Mortgage; or


 


25

















 


(f)                       any
representation when made by or on behalf of Borrower, Interest Owner or any
guarantor regarding the Premises, the making or delivery of any of the Loan
Documents or the Environmental Indemnity or in any material written information
provided by or on behalf of Borrower, Interest Owner or any guarantor in
connection with the Loan shall prove to be untrue or inaccurate in any material
respect; or


 


(g)                    the failure of
Borrower to give Notice to Lender within 90 days after the death of any
individual who is personally liable for any obligation under the Loan Documents
or the Environmental Indemnity, as Borrower, indemnitor or guarantor, whether
or not such individual had executed the Note or this Mortgage; or


 


(h)                    subject to the
provisions of paragraph 2(f), the failure of Borrower to provide Lender with an
assumption agreement in form and substance and executed by a person(s) or
entity(ies) acceptable to Lender in its sole discretion to assume the
obligations of any deceased individual who is personally liable for any
obligation under the Loan Documents or the Environmental Indemnity, as
Borrower, indemnitor or guarantor, whether or not such individual had executed
the Note or this Mortgage, and such failure shall have continued for 90 days
after the death of such individual; or


 


(i)                        the
failure of Borrower to remain a Single-Purpose Entity;


 


then, in each and every
such case, the whole of said principal sum hereby secured shall, at the option
of the Lender and without further notice to Borrower, become immediately due
and payable together with accrued interest thereon, a Make Whole Premium
calculated in accordance with the provisions of the Loan Documents and all
other Indebtedness, and whether or not Lender has exercised said option,
interest shall accrue on the entire principal balance and any interest or Make
Whole Premium or other Indebtedness then due, at the Default Rate until fully
paid or if Lender has not exercised said option, for the duration of any Event of
Default.


 


11.                   Borrower agrees
that if Lender accelerates the whole or any part of the principal sum hereby
secured after the occurrence of an Event of Default, or applies any proceeds
pursuant to the provisions hereof, Borrower waives any right to prepay the
principal sum hereby secured in whole or in part without premium and agrees to
pay, as yield maintenance protection and not as a penalty, a “Make Whole
Premium”. However, in the event any proceeds from a casualty or Taking of
the Premises are applied to reduce the principal balance under the Note, no
Make Whole Premium shall be due so long as no Event of Default exists at the
time of such application.


 


12.                   Upon the
occurrence of any Event of Default, in addition to any other rights or remedies
provided in the Loan Documents, at law, in equity or otherwise, Lender shall
have the STATUTORY POWER OF SALE. In any suit to foreclose this Mortgage,
and in any sale of the Premises,, there shall be allowed and included as


 


26

















 


additional Indebtedness
payable by Borrower to Lender and secured hereby all expenditures and expenses
which may be paid or incurred by or on behalf of Lender for attorneys’ fees and
costs, including attorneys’ fees and costs on appeal, appraisers’ fees,
expenditures for documentary and expert evidence, stenographer’s charges,
publication and advertising costs, survey costs, environmental audits and costs
(which may be estimated as to items to be expended after the entry of any
decree) of procuring all such abstracts of title, title searches and
examinations, title insurance policies, torrens certificates and similar data
and assurances with respect to title as Lender deems reasonably necessary
either to prosecute such suit or to consummate such sale or to evidence to
bidders at any sale the true condition of the title to or the value of the
Premises. Further, upon the occurrence of an Event of Default and to the extent
permitted by law, Lender shall have the option of proceeding as to both real
and personal property in accordance with its rights and remedies in respect of
the real property, in which event the default provisions of the Uniform
Commercial Code shall not apply. The parties agree that in the event Lender
elects to proceed with respect to personal property separately from the real
property; ten (10) days’ notice of the sale of personal property shall be
sufficient notice. Borrower agrees that, without the written consent of Lender,
Borrower will not remove or permit to be removed from the Premises or the
Improvements thereon any personal property unless the same is immediately
replaced with unencumbered fixtures or articles of personal property, as the
case may be, of a quality and value equal or superior to those which they
replace. All such replacements, renewals and additions shall become and be
immediately subject to the security interest of this Mortgage and be covered
hereby. Borrower shall, from time to time, on request of Lender, deliver to
Lender an inventory of personal property in detail, including an itemization of
all items leased to Borrower or subject to a conditional bill of sale, security
agreement or other title retention agreement.


 


13.                   The proceeds of
any foreclosure sale, or other sale of the Premises in accordance with the
terms hereof or as permitted by law, shall be distributed and applied in the
following order of priority: first, to the payment of all costs and expenses
incident to the foreclosure and/or sale proceedings, including all items as are
mentioned in any preceding or succeeding paragraph hereof; second, to the
payment of all other items which under the terms hereof constitute secured
Indebtedness in addition to that evidenced by the Note, with interest thereon
as herein provided; third, to the payment of all principal, accrued interest
remaining unpaid on the Note and Make Whole Premium; fourth, any surplus to the
Borrower or Borrower’s successors or assigns, as their rights may appear.


 


14.                   Following the
occurrence of an Event of Default, unless the same has been specifically waived
in writing, Borrower shall forthwith upon demand of Lender surrender to Lender
possession of the Premises, and Lender shall be entitled to take actual
possession of the Premises or any part thereof personally or by its agents or
attorneys, and Lender in its discretion may, with or without force and with or
without process of law, enter upon and take and maintain possession of all or
any part of the Premises together with all documents, books, records, papers
and accounts of the


 


27

















 


Borrower or the then
owner of the Premises relating thereto, and may exclude Borrower, its agents or
assigns wholly therefrom, and may as attorney-in-fact or agent of the Borrower,
or in its own name as Lender and under the powers herein granted:


 


(a)                     hold,
operate, maintain, repair, rebuild, replace, alter, improve, manage or control
the Premises as it deems judicious, insure and reinsure the same and any risks
related to Lender’s possession, operation and management thereof and receive
all Rents, either personally or by its agents, and with full power to use such
measures, legal or equitable, as in its discretion it deems proper or necessary
to enforce the payment or security of the Rents, including actions for the
recovery of Rent, actions in forcible detainer and actions in distress for
Rents, hereby granting full power and authority to exercise each and every of
the rights, privileges and powers herein granted at any and all times
hereafter, without notice to Borrower; and


 


(b)                    conduct
leasing activity pursuant to the provisions of the Assignment of Leases.


 


Lender shall not be
obligated to perform or discharge, nor does it hereby undertake to perform or
discharge, any obligation, duty or liability under any Lease. Except to the
extent that the same is caused solely by Lender’s gross negligence or willful
misconduct, should Lender incur any liability, loss or damage under any Leases,
or under or by reason of the Assignment of Leases, or in the defense of any
claims or demands whatsoever which may be asserted against Lender by reason of
any alleged obligations or undertakings on its part to perform or discharge any
of the terms, covenants or agreements in any Lease, the amount thereof,
including costs, expenses and reasonable attorneys’ fees and costs, including
reasonable attorneys’ fees and costs on appeal, shall be added to the
Indebtedness and secured hereby.


 


15.                   Upon the
occurrence of an Event of Default, Lender in the exercise of the rights and powers
conferred upon it shall have the full power to use and apply the Rents, less
costs and expenses of collection to the payment of or on account of the items
listed in (a) – (c) below, at the election of Lender and in such order as
Lender may determine as follows:


 


(a)                     to the
payment of (i) the expenses of operating and maintaining the Premises,
including, but not limited to the cost of management, leasing (which shall
include reasonable compensation to Lender and its agent or agents if management
and/or leasing is delegated to an agent or agents), repairing, rebuilding,
replacing, altering and improving the Premises, (ii) premiums on insurance as
hereinabove authorized, (iii) taxes and special assessments now due or which
may hereafter become due on the Premises and (iv) expenses of placing the
Premises in such condition as will, in the sole judgment of Lender, make it
readily rentable;


 


28

















 


(b)                    to the payment
of any principal, interest or any other Indebtedness secured hereby or any
deficiency which may result from any foreclosure sale;


 


(c)                     to the
payment of established claims for damages, if any, reasonable attorneys’ fees
and costs and reasonable attorneys’ fees and costs on appeal.


 


The manner of the application
of Rents, the reasonableness of the costs and charges to which such Rents are
applied and the item or items which shall be credited thereby shall be within
the sole and unlimited discretion of Lender. To the extent that the costs and
expenses in (a) and (c) above exceed the amounts collected, the excess shall be
added to the Indebtedness and secured hereby.


 


16.                   Upon the
occurrence of any Event of Default, unless the same has been specifically
waived in writing, Lender may apply to any court having jurisdiction for the
appointment of a receiver of the Premises. Such appointment may be made either
before or after sale, without notice, without regard to the solvency or
insolvency of Borrower at the time of application for such receiver and without
regard to the then value of the Premises or the adequacy of Lender’s security.
Lender may be appointed as such receiver. The receiver shall have the power to
collect the Rents during the pendency of any foreclosure proceeding and, in
case of a sale, during the full statutory period of redemption, if any, as well
as during any further times when Borrower, except for the intervention of such
receiver, would be entitled to collect such Rents. In addition, the receiver
shall have all other powers which shall be necessary or are usual in such cases
for the protection, possession, control, management and operation of the
Premises during the whole of said period. The court from time to time may
authorize the receiver to apply the net income in its possession at Lender’s
election and in such order as Lender may determine in payment in full or in
part of those items listed in paragraph 15.


 


17.                   (a)                     Borrower
agrees that all reasonable costs, charges and expenses, including but not
limited to, reasonable attorneys’ fees and costs, incurred or expended by
Lender arising out of or in connection with any action, proceeding or hearing,
legal, equitable or quasi-legal, including the preparation therefor and any
appeal therefrom, in any way affecting or pertaining to the Loan Documents, the
Environmental Indemnity or the Premises, shall be promptly paid by Borrower.
All such sums not promptly paid by Borrower shall be added to the Indebtedness
secured hereby and shall bear interest at the Default Rate from the date of
such advance and shall be due and payable on demand.


 


(b)                    Borrower
hereby agrees that upon the occurrence of an Event of Default and the
acceleration of the principal sum secured hereby pursuant to this Mortgage, to
the full extent that such rights can be lawfully waived, Borrower hereby waives
and agrees not to insist upon, plead, or in any manner take advantage of, any
notice of acceleration, any stay, extension, exemption, homestead, marshaling
or moratorium law or any law providing for the valuation or appraisement of all
or any part of the Premises prior to any sale or sales thereof under any
provision


 


29

















 


of this Mortgage or
before or after any decree, judgment or order of any court or confirmation
thereof, or claim or exercise any right to redeem all or any part of the
Premises so sold and hereby expressly waives to the full extent permitted by
applicable law on behalf of itself and each and every person or entity
acquiring any right, title or interest in or to all or any part of the
Premises, all benefit and advantage of any such laws which would otherwise be
available to Borrower or any such person or entity, and agrees that neither
Borrower nor any such person or entity will invoke or utilize any such law to
otherwise hinder, delay or impede the exercise of any remedy granted or
delegated to Lender herein but will permit the exercise of such remedy as
though any such laws had not been enacted. Borrower hereby further expressly
waives to the full extent permitted by applicable law on behalf of itself and
each and every person or entity acquiring any right, title or interest in or to
all or any part of the Premises any and all rights of redemption from any sale
or any order or decree of foreclosure obtained pursuant to provisions of this
Mortgage.


 


18.                   In accordance
with and subject to the terms and conditions of the Assignment of Leases,
Borrower hereby assigns to Lender directly and absolutely, and not merely
collaterally, the interest of Borrower as lessor under the Leases of the
Premises, and the Rents payable under any Lease and/or with respect to the use
of the Premises, or portion thereof, including any oil, gas or mineral lease,
or any installments of money payable pursuant to any agreement or any sale of
the Premises or any part thereof, subject only to a license, if any, granted by
Lender to Borrower with respect thereto prior to the occurrence of an Event of
Default. Borrower has executed and delivered the Assignment of Leases which
grants to Lender specific rights and remedies in respect of said Leases and
governs the collection of Rents thereunder and from the use of the Premises,
and such rights and remedies so granted shall be cumulative of those granted
herein.


 


The collection of such
Rents and the application thereof as aforesaid shall not cure or waive any
Event of Default or notice of default hereunder or invalidate any act done
pursuant to such notice, except to the extent any such Event of Default is
fully cured. Failure or discontinuance of Lender at any time, or from time to
time, to collect any such moneys shall not impair in any manner the subsequent
enforcement by Lender of the right, power and authority herein conferred on
Lender. Nothing contained herein, including the exercise of any right, power or
authority herein granted to Lender, shall be, or be construed to be, an
affirmation by Lender of any tenancy, Lease or option, or an assumption of
liability under, or the subordination of the interest, lien or charge of this
Mortgage to any such tenancy, Lease or option. Borrower hereby agrees that, in
the event Lender exercises its rights as provided for in this paragraph or in
the Assignment of Leases, Borrower waives any right to compensation for the use
of Borrower’s furniture, furnishings or equipment in the Premises for the
period such assignment of rents or receivership is in effect, it being
understood that the Rents derived from the use of any such items shall be
applied to Borrower’s obligations hereunder as above provided.


 


30

















 


19.                   All rights and
remedies granted to Lender in the Loan Documents shall be in addition to and
not in limitation of any rights and remedies to which it is entitled in equity,
at law or by statute, and the invalidity of any right or remedy herein provided
by reason of its conflict with applicable law or statute shall not affect any
other valid right or remedy afforded to Lender. No waiver of any default or
Event of Default under any of the Loan Documents shall at any time thereafter
be held to be a waiver of any rights of the Lender hereunder, nor shall any
waiver of a prior Event of Default or default operate to waive any subsequent
Event of Default or default. All remedies provided for in the Loan Documents
are cumulative and may, at the election of Lender, be exercised alternatively,
successively or concurrently. No act of Lender shall be construed as an
election to proceed under any one provision herein to the exclusion of any
other provision or to proceed against one portion of the Premises to the
exclusion of any other portion. Time is of the essence under this Mortgage and
the Loan Documents.


 


20.                   By accepting
payment of any sum secured hereby after its due date, Lender does not waive its
right either to require prompt payment when due of all other sums or
installments so secured or to declare a default for failure to pay such other
sums or installments.


 


21.                   The usury
provisions of paragraph 6 of the Note and the limitation of recourse liability
provisions of paragraph 9 of the Note are fully incorporated herein by
reference as if the same were specifically stated here.


 


22.                   In the event
one or more provisions of the Loan Documents shall be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, and the Loan
Documents shall be construed as if any such provision had never been contained
herein.


 


23.                   If the payment
of the Indebtedness secured hereby or of any part thereof shall be extended or
varied, or if any part of the security be released, all persons now or at any
time hereafter liable therefor, or interested in said Premises, shall be held
to assent to such extension, variation or release, and their liability and the
lien, mortgage interest and all provisions hereof shall continue in full force,
the right of recourse against all such persons being expressly reserved by
Lender notwithstanding such variation or release.


 


24.                   Upon payment in
full of the principal sum, interest and other Indebtedness secured by the Loan
Documents, these presents shall be null and void, and Lender shall release this
Mortgage by proper instrument executed in recordable form.


 


25.                   (a)                     Borrower
hereby grants to Lender and its respective agents, attorneys, employees,
consultants, contractors and assigns an irrevocable license and authorization
to enter upon and inspect the Premises and all facilities located thereon at
reasonable times, subject to the inspection rights provisions afforded


 


31

















 


to Borrower under the
Leases. Lender shall make reasonable efforts to ensure that the operations of
tenants are not disrupted.


 


(b)                    In connection
with any sale or conveyance of this Mortgage, Borrower grants to Lender and its
respective agents, attorneys, employees, consultants, contractors and assigns
an irrevocable license and authorization to conduct, at Lender’s expense, a
Phase I environmental audit of the Premises, subject to the inspection rights
provisions afforded to Borrower under the Leases.


 


(c)                     In the event
there has been an Event of Default or in the event Lender has formed a
reasonable belief, based on its inspection of the Premises or other factors
known to it, that Hazardous Materials may be present on the Premises, then
Borrower grants to Lender and its respective agents, attorneys, employees,
consultants, contractors and assigns an irrevocable license and authorization
to conduct, at Borrower’s expense using EMG Corp. or the firm of Borrower’s
choice, subject to Lender’s reasonable approval, environmental tests of the
Premises, including without limitation, a Phase 1 environmental audit,
subsurface testing, soil and ground water testing, and other tests which may
physically invade the Premises or facilities (the “Tests”). The scope of
the Tests shall be such as Lender, in its sole discretion, determines is
necessary to (i) investigate the condition of the Premises, (ii) protect the
mortgage and security interests created under this Mortgage, or (iii) determine
compliance with Environmental Laws, the provisions of the Loan Documents and
the Environmental Indemnity and other matters relating thereto. Lender shall
make reasonable efforts to ensure that the operations of the tenants are not
disrupted.


 


(d)                    Provided no
Event of Default has occurred, Lender will provide Borrower with reasonable
notice of Lender’s intent to enter, inspect and conduct the Tests provided for
in this paragraph. In addition, Lender shall conduct such inspections and Tests
during normal business hours and use reasonable efforts to minimize disruption
of the lessees’ business operations.


 


The foregoing licenses
and authorizations are intended to be a means of protection of Lender’s
mortgage and security interest in the Premises and not as participation in the
management of the Premises.


 


26.                   Within 15 days
after any written request by either party to this Mortgage, the requested party
shall certify, by a written statement duly acknowledged, the amount of
principal, interest and other Indebtedness then owing on the Note, the terms of
payment, Maturity Date and the date to which interest has been paid. Borrower
shall further certify whether any defaults, offsets or defenses exist against
the Indebtedness secured hereby. Borrower shall also furnish to Lender, within
30 days of its request therefor, tenant estoppel letters from such tenants of
the Premises as Lender may reasonably require; which Lender shall not request
more than one (1) time per annum, nor more than one (1) time prior to the date
of the Securitization Transaction.


 


32

















 


27.                   Each notice,
consent, request, report or other communication under this Mortgage or any
other Loan Document (including any notice to Lender pursuant to Sections
34-25-10(b) and 34-25-11 of the Rhode Island General Laws, as amended) (each a “Notice”)
which any party hereto may desire or be required to give to the other shall be
deemed to be an adequate and sufficient notice if given in writing and service
is made by either (i) registered or certified mail, postage prepaid, in which
case notice shall be deemed to have been received three (3) business days
following deposit to U.S. mail; or (ii) nationally recognized overnight air
courier, next day delivery, prepaid, in which case such notice shall be deemed
to have been received one (1) business day following delivery to such
nationally recognized overnight air courier. All Notices shall be addressed to
Borrower at its address given on the first page hereof or to Lender at c/o
Principal Real Estate Investors, LLC, 801 Grand Avenue, Des Moines, Iowa
50392-1450, Attn: Commercial Real Estate Servicing, Loan No. 755096, or to such
other place as either party may by written notice to the other hereafter
designate as a place for service of notice. Borrower shall not be permitted to
designate more than one place for service of Notice concurrently.


 


28.                   This Mortgage
and all provisions hereof shall inure to the benefit of the heirs, successors
and assigns of Lender and shall bind the heirs and permitted successors and
assigns of Borrower.


 


29.                   Borrower has
had the opportunity to fully negotiate the terms hereof and modify the
draftsmanship of the Loan Documents and the Environmental Indemnity. Therefore,
the terms of the Loan Documents and the Environmental Indemnity shall be
construed and interpreted without any presumption, inference, or rule requiring
construction or interpretation of any provision of the Loan Documents and the
Environmental Indemnity against the interest of the party causing the Loan
Documents and the Environmental Indemnity or any portion of it to be drafted.
Borrower is entering into the Loan Documents and the Environmental Indemnity
freely and voluntarily without any duress, economic or otherwise.


 


30.                   This Mortgage
shall be governed by, and construed in accordance with the laws of the state of
Rhode Island, without regard to its conflicts of law principles.


 


31.                   As used herein,
the term “Default Rate” means a rate equal to the lesser of (i) four
percent (4%) per annum above the then applicable interest rate payable under
the Note or (ii) the maximum rate allowed by applicable law.


 


32.                   BORROWER AND
LENDER EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE, TO THE EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY ACTIONS BROUGHT BY BORROWER OR LENDER IN
CONNECTION WITH THIS MORTGAGE, ANY OF THE LOAN DOCUMENTS, THE INDEBTEDNESS
SECURED HEREBY, OR ANY OTHER STATEMENTS OR ACTIONS OF LENDER.


 


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33.                   This Mortgage
and the Indebtedness secured hereby is for the sole purpose of conducting or
acquiring a lawful business, professional or commercial activity or for the
acquisition or management of real or personal property as a commercial
investment, and all proceeds of such Indebtedness shall be used for said
business or commercial investment purpose. Such proceeds will not be used for
the purchase of any security within the meaning of the Securities Exchange Act
of 1934, as amended, or any regulation issued pursuant thereto, including
without limitation, Regulations U, T and X of the Board of Governors of the
Federal Reserve System. This is not a purchase money mortgage where a seller is
providing financing to a buyer for the payment of all or any portion of the
purchase price, and the Premises secured hereby is not a residence or homestead
or used for mining, grazing, agriculture, timber or farming purposes.


 


34.                   Unless Lender
shall otherwise direct in writing, Borrower shall appear in and defend all
actions or proceedings purporting to affect the security hereunder, or any
right or power of the Lender, excluding any Federal regulatory proceedings
against Lender that are not instituted because of any act or omission by
Borrower, any Interest Owner or which result from the Premises. The Lender
shall have the right to appear in such actions or proceedings. Borrower shall
save Lender harmless from all reasonable costs and expenses, including but not
limited to, reasonable attorneys’ fees and costs, and costs of a title search,
continuation of abstract and preparation of survey incurred by reason of any
action, suit, proceeding, hearing, motion or application before any court or
administrative body in and to which Lender may be or become a party by reason
hereof, excluding any Federal regulatory proceedings against Lender that are
not instituted because of any act or omission by Borrower, any Interest Owner
or which result from the Premises. Such proceedings shall include but not be
limited to condemnation, bankruptcy, probate and administration proceedings, as
well as any other action, suit, proceeding, right, motion or application
wherein proof of claim is by law required to be filed or in which it becomes
necessary to defend or uphold the terms of this Mortgage or the Loan Documents
or otherwise purporting to affect the security hereof or the rights or powers
of Lender. All money paid or expended by Lender in that regard, together with
interest thereon from date of such payment at the Default Rate shall be
additional Indebtedness secured hereby and shall be immediately due and payable
by Borrower without notice.


 


35.                   Upon the
occurrence of an Event of Default, unless the same has been specifically waived
in writing, all Rents collected or received by Borrower shall be accepted and held
for Lender in trust and shall not be commingled with the funds and property of
Borrower, but shall be promptly paid over to Lender.


 


36.                   If more than
one, all obligations and agreements of Borrower are joint and several.


 


37.                   This Mortgage
may be executed in counterparts, each of which shall be deemed an original; and
such counterparts when taken together shall constitute but one agreement.


 


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IN WITNESS
WHEREOF, Borrower has caused this Open End Mortgage and Security Agreement to
be duly executed and delivered as of the date first above written.


 


REMAINDER OF PAGE INTENTIONALLY BLANK

(Signatures on next page)


 


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SIGNATURE PAGE OF BORROWER TO

OPEN END MORTGAGE AND SECURITY AGREEMENT


 


	
   

  	
   

  	
  INLAND AMERICAN
  CUMBERLAND, L.L.C., a 

  Delaware limited liability company 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Inland American Ceruzzi
  Cumberland Member,

  
	
   

  	
   

  	
   

  	
  L.L.C., a Delaware
  limited liability company, Sole 

  Member 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Inland American Cumberland
  Member II, 

  L.L.C., a Delaware limited liability 

  company, Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Inland American Real
  Estate Trust, 

  Inc., a Maryland corporation, Sole 

  Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Valerie Medina

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Valerie Medina

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Assistant Secretary

  	
   

  
										



 


STATE OF ILLINOIS             )


COUNTY OF DUPAGE         )


 


In my presence, on
the 5 day of June, 2006, before
me personally appeared Valerie Medina, to me known and known by me to be the Asst. Secretary of Inland
American Real Estate Trust, Inc., a Maryland corporation, on behalf of said
corporation, in its capacity as the sole member of Inland American Cumberland
Member II, L.L.C., a Delaware limited liability company, on behalf of said
limited liability company in its capacity as Manager of Inland American Ceruzzi
Cumberland Member, L.L.C., a Delaware limited liability company, on behalf of
said limited liability company in its capacity as Sole Member of Inland
American Cumberland, L.L.C., a Delaware limited liability company, on behalf of
said limited liability company, and the party executing the foregoing
instrument, and he/she acknowledged said instrument by him/her executed to be
his/her free act and deed, the free act and deed of Inland American Real Estate
Trust, Inc., the free act and deed of Inland American Cumberland Member II,
L.L.C., the free act and deed of Inland American Ceruzzi Cumberland Member,
L.L.C., and the free act and deed of Inland American Cumberland, L.L.C.


 


	
   

  	
  /s/ Rose Marie
  Allred

  	
   

  
	
   

  	
  Notary Public, State of Illinois

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (printed name)

  
	
   

  	
   

  
	
  My commission
  expires:

  	
   

  	
  OFFICIAL SEAL

  ROSE MARIE ALLRED

  NOTARY PUBLIC - STATE OF
  ILLINOIS
MY COMMISSION EXPIRES 06/21/09

  
	
                                         .

  
	
   

  
	
   

  
				



 


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