Document:

Exhibit 10.55

 

 

Loan No. 20069217001

 

 

 

LOAN AGREEMENT

 

 

Dated as of April 21, 2006 

 

 

Between 

 

 

MB LOUISVILLE SOUTHGATE, L.L.C.,

as Borrower 

 

 

and 

 

 

MERRILL LYNCH MORTGAGE LENDING, INC.,

as Lender

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I
  DEFINITIONS; PRINCIPLES OF CONSTRUCTION

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section
  1.1

  	
  Definitions

  	
  1

  
	
  Section 1.2

  	
  Principles of Construction

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE II
  GENERAL TERMS

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Loan Commitment; Disbursement to Borrower

  	
  18

  
	
  Section 2.2

  	
  Interest; Loan Payments; Late Payment Charge

  	
  19

  
	
  Section
  2.3

  	
  Prepayments

  	
  20

  
	
  Section 2.4

  	
  Intentionally Omitted

  	
  22

  
	
  Section 2.5

  	
  Release of Property

  	
  22

  
	
  Section 2.6

  	
  Manner of Making Payments

  	
  22

  
	
   

  	
   

  
	
  ARTICLE III
  CONDITIONS PRECEDENT

  	
  23

  
	
   

  	
   

  
	
  Section 3.1

  	
  Conditions Precedent to Closing

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV
  REPRESENTATIONS AND WARRANTIES

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Borrower Representations

  	
  26

  
	
  Section 4.2

  	
  Survival of Representations

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE V
  BORROWER COVENANTS

  	
  34

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Affirmative Covenants

  	
  34

  
	
  Section 5.2

  	
  Negative Covenants

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI
  INSURANCE; CASUALTY; CONDEMNATION

  	
  47

  
	
   

  	
   

  	
   

  
	
  Section
  6.1

  	
  Insurance

  	
  47

  
	
  Section
  6.2

  	
  Casualty

  	
  51

  
	
  Section
  6.3

  	
  Condemnation

  	
  51

  
	
  Section
  6.4

  	
  Restoration

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII
  RESERVE FUNDS

  	
  56

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Required Repair Funds.

  	
  56

  
	
  Section 7.2

  	
  Tax and Insurance Escrow Fund

  	
  57

  
	
  Section 7.3

  	
  Replacements and Replacement Reserve

  	
  58

  
	
  Section 7.4

  	
  Intentionally Omitted.

  	
  62

  
	
  Section 7.5

  	
  Intentionally Omitted.

  	
  62

  
	
  Section 7.6

  	
  Intentionally Omitted.

  	
  62

  
	
  Section 7.7

  	
  Reserve Funds, Generally.

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VIII DEFAULTS

  	
  63

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Event of Default

  	
  63

  

 

i

 

	
  Section
  8.2 

  	
  Remedies

  	
  65

  
	
  Section 8.3 

  	
  Remedies Cumulative; Waivers

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX
  SPECIAL PROVISIONS

  	
  67

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Sale of Notes and Securitization.

  	
  67

  
	
  Section 9.2

  	
  Securitization.

  	
  67

  
	
  Section 9.3

  	
  Rating Surveillance

  	
  68

  
	
  Section
  9.4

  	
  Exculpation.

  	
  68

  
	
  Section 9.5

  	
  Termination of Manager.

  	
  70

  
	
  Section
  9.6

  	
  Servicer.

  	
  71

  
	
  Section 9.7

  	
  Splitting the Loan

  	
  71

  
	
   

  	
   

  	
   

  
	
  ARTICLE X
  MISCELLANEOUS

  	
  71

  
	
   

  	
   

  	
   

  
	
  Section
  10.1

  	
  Survival

  	
  71

  
	
  Section 10.2

  	
  Lender’s Discretion

  	
  72

  
	
  Section
  10.3

  	
  Governing Law

  	
  72

  
	
  Section 10.4

  	
  Modification, Waiver in Writing

  	
  72

  
	
  Section 10.5

  	
  Delay Not a Waiver

  	
  72

  
	
  Section
  10.6

  	
  Notices

  	
  73

  
	
  Section
  10.7

  	
  Trial by Jury

  	
  74

  
	
  Section
  10.8

  	
  Headings

  	
  74

  
	
  Section
  10.9

  	
  Severability

  	
  74

  
	
  Section
  10.10

  	
  Preferences

  	
  74

  
	
  Section 10.11

  	
  Waiver of Notice

  	
  74

  
	
  Section 10.12

  	
  Remedies of Borrower

  	
  75

  
	
  Section 10.13

  	
  Expenses; Indemnity

  	
  75

  
	
  Section 10.14

  	
  Schedules Incorporated

  	
  76

  
	
  Section 10.15

  	
  Offsets, Counterclaims and Defenses

  	
  76

  
	
  Section 10.16

  	
  No Joint Venture or Partnership; No Third
  Party Beneficiaries

  	
  76

  
	
  Section
  10.17

  	
  Publicity

  	
  77

  
	
  Section 10.18

  	
  Waiver of Marshalling of Assets

  	
  77

  
	
  Section 10.19

  	
  Waiver of Counterclaim

  	
  77

  
	
  Section 10.20

  	
  Conflict; Construction of Documents;
  Reliance

  	
  77

  
	
  Section 10.21

  	
  Brokers and Financial Advisors

  	
  78

  
	
  Section 10.22

  	
  Prior Agreements

  	
  78

  
	
  Section 10.23

  	
  Transfer of Loan

  	
  78

  
	
  Section 10.24

  	
  Joint and Several Liability

  	
  78

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule I 

  	
  Intentionally Omitted

  	
  I-1

  
	
   

  	
   

  	
   

  
	
  Schedule II 

  	
  Required Repairs

  	
  II-1

  
				

 

ii

 

LOAN AGREEMENT 

THIS LOAN
AGREEMENT, dated as of this 21 day of April, 2006 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this “Agreement”),
between MERRILL LYNCH MORTGAGE LENDING, INC.,
a Delaware corporation, having an address 4 World Financial Center, 250 Vesey
Street, 16th Floor, New York, New York 10080 (“Lender”), and MB LOUISVILLE SOUTHGATE, L.L.C., a Delaware
limited liability company, having an address c/o Inland American Real Estate
Trust, Inc., 2901 Butterfield Road, Oak Brook, Illinois 60523 (“Borrower”).

W I  T  N  E  S
S  E  T  H :

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

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

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

ARTICLE I

DEFINITIONS; PRINCIPLES OF CONSTRUCTION 

Section 1.1             Definitions.

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

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

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

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

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

“Assignment of Leases” shall mean, with respect to the Property,
that certain first priority Assignment of Leases and Rents, dated as of the
Closing Date, from Borrower, as assignor, to Lender, as assignee, assigning to
Lender all of Borrower’s interest in and to the

 

 

Leases and Rents of the Property as security
for the Loan, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.

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

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

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

“Borrower”
shall mean MB LOUISVILLE SOUTHGATE, L.L.C., together with its permitted
successors and assigns.

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

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

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

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

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

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

“Closing
Date” shall mean the date hereof.

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

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

 

2

 

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

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

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

                                (a)           the numerator is the Net Operating
Income (excluding interest on credit accounts) for such period as set forth in
the statements required hereunder, without deduction for (i) actual management
fees incurred in connection with the operation of the Property, or (ii) amounts
paid to the Reserve Funds, less (A) management fees equal to the greater of (1)
assumed management fees of four (4%) of Gross Income from Operations or (2) the
actual management fees incurred, and (B) assumed Replacement Reserve Fund
contributions equal to $250 per unit; and

 

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

 

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

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

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

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

“Eligible
Institution” shall mean a depository institution or trust company insured
by the Federal Deposit Insurance Corporation the short term unsecured debt
obligations or commercial paper of which are rated at least A-1+ by Standard
& Poor’s Ratings Services, P-1 by Moody’s Investors Service, Inc., and F-1+
by Fitch, Inc. in the case of accounts in which funds are held for 30 days or
less (or, in the case of accounts in which funds are held for more

 

3

 

than 30 days, the long term unsecured debt
obligations of which are rated at least “AA” by Fitch and S&P and “Aa2” by
Moody’s).

“Embargoed
Person” shall mean any person, entity or government subject to trade
restrictions under U.S. law, including, but not limited to, The USA PATRIOT Act
(including the anti-terrorism provisions thereof), 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 thereunder including those related to Specially Designated
Nationals and Specially Designated Global Terrorists, with the result that the
investment in Borrower or Indemnitor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan made by the Lender is in
violation of law.

“Environmental
Indemnity” shall mean that certain Environmental Indemnity Agreement
executed by Borrower in connection with the Loan for the benefit of Lender, as
the same may be amended, restated, replaced, supplemented or otherwise modified
from time to time.

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

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

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

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

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

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

“Gross
Income from Operations” shall mean all sustainable income as reported on
the financial statements delivered by the Borrower in accordance with this
Agreement, computed in accordance with accounting principles reasonably
acceptable to Lender, consistently applied, derived from the ownership and
operation of the Property from whatever source, including, but not limited to, (i) Rents from Tenants,
(ii) utility charges, (iii) escalations, (iv) intentionally omitted; (v)
service fees or charges, (vi) license fees, (vii) parking fees, and (viii)
other required pass-throughs but excluding
(i) Rents from Tenants that are subject to any bankruptcy proceeding (unless
such Tenant has affirmed its Lease), (ii) sales, use and occupancy or other
taxes on receipts required to be accounted for by Borrower to any Governmental
Authority, (iii) refunds and uncollectible accounts, (iv) sales of furniture,
fixtures and equipment, (v) Insurance Proceeds (other than business
interruption or other loss of income insurance), (vi) Awards, (vii) unforfeited
security deposits, (viii) utility and other similar deposits, and (ix) any
disbursements to Borrower from the Reserve Funds.  Gross income shall not be diminished as a
result of the Mortgage or the creation of any intervening estate or interest in
the Property or any part thereof.

 

4

 

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

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

“Indemnitor”
shall mean Minto Builders (Florida) Inc., a Maryland corporation.

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

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

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

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

“Interest
Rate” shall mean 5.4130% per annum.

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

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

 

5

 

“Lender”
shall mean Merrill Lynch Mortgage Lending, Inc., together with its successors
and assigns.

“Licenses”
shall have the meaning set forth in Section 4.1.22 hereof.

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

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

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

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

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

“Maturity
Date” shall mean May 1, 2016, or such other date on which the final payment
of principal of the Note becomes due and payable as therein or herein provided,
whether at such stated maturity date, by declaration of acceleration, or
otherwise.

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

“Monthly
Debt Service Payment Amount” shall mean an amount equal to interest only on
the outstanding principal balance of the Loan.

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

 

6

 

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

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

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

“Net
Operating Income” shall mean the amount obtained by subtracting from Gross
Income from Operations (i) Operating Expenses, and (ii) a vacancy allowance
equal to the greater of (x) market vacancy (as reasonably determined by
Lender), less actual vacancy, and (y) underwritten vacancy of 10%, less actual
vacancy.  Notwithstanding the foregoing,
if actual vacancy exceeds market vacancy and underwritten vacancy, then there
shall be no adjustment for a vacancy allowance.

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

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

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

“Note”
shall mean that certain Promissory Note of even date herewith in the principal
amount of Ten Million Seven Hundred Twenty-Five Thousand And 00/100 Dollars
($10,725,000.00), made by Borrower in favor of Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to
time.

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

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

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

 

7

 

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

“Permitted
Encumbrances” shall mean, with respect to the Property, collectively, (a)
the Liens and security interests created by the Loan Documents, (b) all Liens,
encumbrances and other matters disclosed in the Title Insurance Policy relating
to the Property or any part thereof, (c) Liens, if any, for Taxes imposed by
any Governmental Authority not yet due or delinquent, and (d) such other title
and survey exceptions as Lender has approved or may approve in writing in
Lender’s reasonable discretion, which Permitted Encumbrances in the aggregate
do not materially adversely affect the value or use of the Property or Borrower’s
ability to repay the Loan.

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

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

(ii)           Federal Housing Administration
debentures;

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

 

8

 

if such
investments have a variable rate of interest, such interest rate must be tied
to a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject
to liquidation prior to their maturity;

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

                (v)           fully Federal Deposit Insurance
Corporation-insured demand and time deposits in, or certificates of deposit of,
or bankers’ acceptances with maturities of not more than 365 days issued by,
any bank or trust company, savings and loan association or savings bank, the short
term obligations of which at all times are rated in the highest short term
rating category by each Rating Agency (or, if not rated by all Rating Agencies,
rated by at least one Rating Agency in the highest short term rating category
and otherwise acceptable to each other Rating Agency, as confirmed in writing
that such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities); provided, however, that the investments described
in this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;

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

 

9

 

(if any) and
must move proportionately with that index, and (D) such investments must not be
subject to liquidation prior to their maturity;

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

(viii)        units of taxable
money market funds, with maturities of not more than 365 days which funds are
regulated investment companies, seek to maintain a constant net asset value per
share and invest solely in obligations backed by the full faith and credit of
the United States, which funds have the highest rating available from each
Rating Agency (or, if not rated by all Rating Agencies, rated by at least one
Rating Agency and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) for money market funds; and

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

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

“Permitted
Prepayment Date” shall mean the date that is four (4) years from the first
day of the calendar month immediately following the Closing Date.

“Person”
shall mean any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal,
state, county or

 

10

 

municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on
behalf of any of the foregoing.

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

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

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

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

“Prepayment
Rate” shall mean the bond equivalent yield (in the secondary market) on the
United States Treasury Security that as of the Prepayment Rate Determination
Date has a remaining term to maturity closest to, but not exceeding, the
remaining term to the Maturity Date, as most recently published in the “Treasury
Bonds, Notes and Bills” section in The Wall Street Journal as of the date of
the related tender of the payment.  If
more than one issue of United States Treasury Securities has the remaining term
to the Maturity Date referred to above, the “Prepayment Rate” shall be the
yield on the United States Treasury Security most recently issued as of such
date.  If the publication of the
Prepayment Rate in The Wall Street Journal is discontinued, Lender shall
determine the Prepayment Rate on the basis of “Statistical Release H.15(519),
Selected Interest Rates,” or any successor publication, published by the Board
of Governors of the Federal Reserve System, or on the basis of such other
publication or statistical guide as Lender may reasonably select.

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

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

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

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

“Qualifying
Manager” shall mean either (a) a reputable and experienced management
organization reasonably satisfactory to Lender, which organization or its
principals possess at least ten (10) years experience in managing properties
similar in size, scope and value of the Property and which, on the date Lender
determines whether such management organization is a Qualifying Manager,
manages at least 1,000 residential units, provided that

 

11

 

Borrower shall have obtained
prior written confirmation from the Rating Agencies that management of the
Property by such entity will not cause a downgrading, withdrawal or
qualification of the then current rating of the securities issued pursuant to
the Securitization, or (b) the fee owner of the Property, provided that, such
owner possesses experience in managing and operating properties similar in
size, scope and value of the Property. 
Lender acknowledges that on the Closing Date, Manager shall be deemed to
be a Qualifying Manager.

 

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

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

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

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

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

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

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

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

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

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

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

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

 

12

 

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

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

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

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

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

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

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

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

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

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

“Shareholders
Agreement” shall collectively mean (i) that certain Shareholders Agreement
dated as of October 11, 2005 by and among Sole Member, Inland American Real
Estate Trust, Inc., Minto (Delaware) Inc. and Minto Holdings Inc., (ii) that
certain Supplemental Shareholders Agreement dated October 11, 2005 between
Inland American Real Estate Trust, Inc., Minto (Delaware) Inc., (iii) that
certain Securities Purchase and Subscription Agreement dated October 11, 2005
between and among Sole Member, Inland American Real Estate Trust, Inc., Minto
(Delaware) Inc. and Minto Holdings Inc., and (iv) that certain Put/Call
Agreement dated as of October 11, 2005 by and among Sole Member, Inland
American Real Estate Trust, Inc., Minto (Delaware) Inc. and Minto Holdings Inc.

“Sole
Member” shall mean Minto Builders (Florida) Inc., a Florida corporation.

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

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

 

13

 

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

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

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

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

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

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

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

(ix)           if such entity is (a) a limited
liability company, has articles of organization, a certificate of formation
and/or an operating agreement, as applicable, (b) a limited partnership, has a
limited partnership agreement, (c) a corporation, has a

 

14

 

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

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

(xi)           is solvent and pays its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) from its
assets as the same become due, and is maintaining adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;

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

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

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

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

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

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

(xviii)      has maintained and will maintain its
balance sheets, operating statements and other entity documents separate from
any other Person and has not permitted and will not permit its assets to be
listed as assets on the financial statement of any other entity except as
required or permitted by applicable accounting principles acceptable to Lender,

 

15

 

consistently applied; provided,
however, that (i) any such consolidated financial statement shall contain a
note indicating that it maintains separate balance sheets and operating
statements for the Borrower and the Property, or (ii) if such Person is
controlled by Inland American Real Estate Trust, Inc., then such Person may be
included in the consolidated financial statement of Inland American Real Estate
Trust, Inc., provided such consolidated financial statement contains a note
indicating that it maintains separate financial records for each Person
controlled by Inland American Real Estate Trust, Inc.;

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

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

(xxi)         has and will have no Indebtedness
(including loans (whether or not such loans are evidenced by a written
agreement) between Borrower and any Affiliates of Borrower and relating to the
management of funds in the custodial account maintained by the Manager) other
than (i) the Loan, (ii) liabilities incurred in the ordinary course of business
relating to the ownership and operation of the Property and the routine
administration of Borrower, which liabilities are not more than sixty (60) days
past the date incurred (unless disputed in accordance with applicable law), are
not evidenced by a note and are paid when due, and which amounts are normal and
reasonable under the circumstances, and (iii) such other liabilities that are
permitted pursuant to this Agreement provided that all such Indebtedness other
than that referred to in clause (i) shall not exceed five percent (5%) of the
Loan Amount;

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

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

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

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

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

(xxvii)      has held itself out and identified itself
and will hold itself out and identify itself as a separate and distinct entity
under its own name or in a name franchised or licensed to it by an entity other
than an Affiliate of Borrower and not as a division or

 

16

 

part of any other Person,
except for services rendered by Manager under the Management Agreement, so long
as Manager holds itself out as an agent of the Borrower;

(xxviii)     has maintained and will maintain its assets
in such a manner that it will not be costly or difficult to segregate,
ascertain or identify its individual assets from those of any other Person;

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

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

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

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

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

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

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

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

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

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

“Transferee” shall have
the meaning set forth in Section 5.2.13(a)(i) hereof.

 

17

 

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

“U S Bankruptcy Code” shall mean Title 11 U.S.C. § 101 et seq., and the regulations adopted and
promulgated pursuant thereto (as the same may be amended from time to time).

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

Section 1.2             Principles
of Construction.

All references to sections and schedules are to sections and schedules
in or to this Agreement unless otherwise specified.  All uses of the word “including” shall mean “including,
without limitation” unless the context shall indicate otherwise.  Unless otherwise specified, the words “hereof,”
“herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  Unless
otherwise specified, all meanings attributed to defined terms herein shall be
equally applicable to both the singular and plural forms of the terms so
defined.

ARTICLE II

GENERAL TERMS 

Section 2.1             Loan
Commitment; Disbursement to Borrower.

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

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

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

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

 

18

 

Section 2.2             Interest;
Loan Payments; Late Payment Charge.

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

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

                                2.2.3        Payments
Generally.  Borrower shall pay to
Lender (a) on the Closing Date, an amount equal to interest only on the
outstanding principal balance of the Loan from the Closing Date up to but not
including the first Payment Date following the Closing Date, and (b) on June 1,
2006, and each Payment Date thereafter up to but not including the Maturity
Date, an amount equal to the Monthly Debt Service Payment Amount, which shall
be applied to interest on the outstanding principal amount of the Loan for the
prior calendar month at the Interest Rate.

                                2.2.4        Intentionally
Omitted.

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

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

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

 

19

 

payment.  Any such amount shall be secured by the
Mortgage and the other Loan Documents to the extent permitted by applicable
law.  The foregoing late payment charge
shall not apply to the payment of all outstanding principal, interest and other
sums due on the Maturity Date.

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

Section 2.3             Prepayments.

2.3.1        Voluntary
Prepayments.

                                                (a)
          Except as otherwise provided
herein, Borrower shall not have the right to prepay the Loan in whole or in
part prior to the Permitted Prepayment Date. 
On or after the Permitted Prepayment Date, Borrower may, provided it has
given Lender prior written notice in accordance with the terms of this
Agreement, prepay the unpaid principal balance of the Loan in whole, but not in
part, by paying, together with the amount to be prepaid, (i) interest accrued
and unpaid on the outstanding principal balance of the Loan being prepaid to
and including the date of prepayment, (ii) unless prepayment is tendered on a
Payment Date, an amount equal to the interest that would have accrued on the
amount being prepaid after the date of prepayment through and including the
next Payment Date had the prepayment not been made (which amount shall
constitute additional consideration for the prepayment), (iii) all other sums
then due under this Agreement, the Note, the Mortgage and the other Loan
Documents, and (iv) if prepayment occurs prior to the Payment Date which is
three (3) months prior to the Maturity Date, a prepayment consideration (the “Prepayment
Consideration”) equal to the greater of (A) one percent (1%) of the
outstanding principal balance of the Loan being prepaid or (B) the excess, if
any, of (l) the sum of the present values of all then-scheduled payments of
principal and interest under this Agreement including, but not limited to,
principal and interest on the Maturity Date (with each such payment discounted
to its present value at the date of prepayment at the rate which, when
compounded monthly, is equivalent to the Prepayment Rate), over (2) the
outstanding principal amount of the Loan. 
Lender shall notify Borrower of the amount and the basis of
determination of the required prepayment consideration.

                                                (b)
          On the Payment Date that is
three (3) months prior to the Maturity Date, and on each day thereafter through
the Maturity Date, Borrower may, at its option, prepay

 

20

 

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

2.3.2        Mandatory
Prepayments.

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

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

2.3.3        Prepayments after
Default.  Following an Event of
Default, if Borrower or anyone on Borrower’s behalf makes a tender of payment
of all or any portion of the Debt at any time prior to a foreclosure sale (including
a sale under the power of sale under the Mortgage), or during any redemption
period after foreclosure, (i) the tender of payment shall constitute an evasion
of Borrower’s obligation to pay any Prepayment Consideration due under this
Agreement and such payment shall, therefore, to the maximum extent permitted by
law, include a premium equal to the Prepayment Consideration that would have
been payable on the date of such tender had the Loan not been so accelerated,
or (ii) if at the time of such tender a prepayment of the principal amount of
the Loan would have been prohibited under this Agreement had the principal
amount of the Loan not been so accelerated, the tender of payment shall
constitute an evasion of such prepayment prohibition and shall, therefore, to
the maximum extent permitted by law, include an amount equal to the greater of
(i) 5% of the then principal amount of the Loan (or the relevant portion
thereof being prepaid) and (ii) an amount equal to the excess of (A) the sum of
the present values of a series of payments payable at the times and in the
amounts equal to the payments of principal and interest (including, but not
limited to the principal and interest payable on the Maturity Date) which would
have been scheduled to be

 

21

 

payable after
the date of such tender under this Agreement had the Loan (or the relevant
portion thereof) not been accelerated, with each such payment discounted to its
present value at the date of such tender at the rate which when compounded
monthly is equivalent to the Prepayment Rate, over (B) the then principal
amount of the Loan.

Section 2.4             Intentionally
Omitted.

Section 2.5             Release
of Property.

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

2.5.1        Release on Payment
in Full.  Lender shall, upon the
written request and at the expense of Borrower, upon payment in full of all
principal and interest on the Loan and all other amounts due and payable under
the Loan Documents in accordance with the terms and provisions of Section 2.3.1
of this Agreement, release the Lien of the Mortgage on the Property not
theretofore released.

2.5.2        Intentionally
Omitted.

Section 2.6             Manner
of Making Payments.

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

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

 

22

 

ARTICLE III

CONDITIONS PRECEDENT 

Section 3.1             Conditions
Precedent to Closing.

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

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

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

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

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

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

                                                (c)           Survey.  Lender shall have received a title survey for
the Property, certified to the title company and Lender and their successors
and assigns, in form and content satisfactory to Lender and prepared by a
professional and properly licensed land surveyor satisfactory to Lender in
accordance with the most recent Minimum Standard Detail

 

23

 

Requirements
for ALTA/ACSM Land Title Surveys.  The
following additional items from the list of “Optional Survey Responsibilities
and Specifications” (Table A) should be added to each survey: 1, 2, 3, 4, 6,
7(a), 7(b)(1), 7(b)(2), 7(c), 8, 9, 10, 11(a), 11(b), 11(c), 13, 14, 15 and 16.
The survey shall reflect the same legal description contained in the Title
Insurance Policy relating to the Property referred to in clause (ii) above and
shall include, among other things, a legal description of the real property
comprising part of such Property reasonably satisfactory to Lender. The
surveyor’s seal shall be affixed to each survey and the surveyor shall provide
a certification for each survey in form and substance acceptable to Lender.

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

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

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

                                                (g)
          Encumbrances.  Borrower shall have taken or caused to be
taken such actions in such a manner so that Lender has a valid and perfected
first Lien on the Property as of the Closing Date with respect to the Mortgage,
subject only to applicable Permitted Encumbrances and such other Liens as are
permitted pursuant to the Loan Documents, and Lender shall have received
satisfactory evidence thereof.

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

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

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

 

24

 

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

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

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

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

                                3.1.11      Intentionally
Omitted.

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

                                3.1.13      Material
Adverse Change. There shall have been no material adverse change in the
financial condition or business condition of Borrower or the Property since the
date of the most recent financial statements delivered to Lender.  The income and expenses of the Property, the
occupancy leases thereof, and all other features of the transaction shall be as
represented to Lender without material adverse change.  Neither Borrower, nor any of its constituent
Persons shall be the subject of any bankruptcy, reorganization, or insolvency
proceeding.

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

                                3.1.15      Intentionally Omitted.

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

 

25

 

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

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

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

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

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

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

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES 

Section 4.1             Borrower Representations.

Borrower represents and warrants as of the date hereof and as of the
Closing Date that:

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

 

26

 

transact the
businesses in which it is now engaged, and the sole business of Borrower is the
ownership, management and operation of the Property.

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

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

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

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

 

27

 

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

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

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

 

28

 

Borrower can
foresee, might adversely affect, the Property or the business, operations or
condition (financial or otherwise) of Borrower.

4.1.9        No Plan Assets.
 Borrower is not an “employee benefit
plan,” as defined in Section 3(3) of ERISA, subject to Title I of ERISA, and
none of the assets of Borrower constitutes or will constitute “plan assets” of
one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101. In
addition, (a) Borrower is not a “governmental plan” within the meaning of
Section 3(32) of ERISA and (b) transactions by or with Borrower are not subject
to state statutes regulating investment of, and fiduciary obligations with
respect to, governmental plans similar to the provisions of Section 406 of
ERISA or Section 4975 of the Code currently in effect, which prohibit or
otherwise restrict the transactions contemplated by this Agreement.

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

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

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

                                4.1.13      Federal
Reserve Regulations.  No part of the
proceeds of the Loan will be used for the purpose of purchasing or acquiring
any “margin stock” within the meaning of

 

29

 

Regulation U
of the Board of Governors of the Federal Reserve System or for any other
purpose which would be inconsistent with such Regulation U or any other
Regulations of such Board of Governors, or for any purposes prohibited by Legal
Requirements or by the terms and conditions of this Agreement or the other Loan
Documents.

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

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

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

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

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

                                4.1.19      No
Prior Assignment.  There is no prior
assignment of the Leases or any portion of the Rents by Borrower or any of its
predecessors in interest, given as collateral security which are presently
outstanding.

                                4.1.20      Insurance.
 Borrower has obtained and has delivered
to Lender certified copies of all insurance policies reflecting the insurance
coverages, amounts and other requirements set forth in this Agreement.  To the best of Borrower’s knowledge, no
claims have been made under any such policy, and no Person, including Borrower,
has done, by act or omission, anything which would impair the coverage of any
such policy.

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

                                4.1.22      Certificate
of Occupancy; Licenses.  All
certifications, permits, licenses and approvals, including without limitation,
certificates of completion and occupancy permits

 

30

 

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

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

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

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

                                4.1.26      Leases.
 No Person has any possessory interest in
the Property or right to occupy the same except under and pursuant to the
provisions of the Leases.  Each Lease is
in full force and effect. The rent payable under each Lease is the amount of
rent set forth in the Rent Roll. The tenants under the Leases have commenced
the payment of Rent under the Leases and there are no offsets, claims or
defenses to the enforcement thereof.  No
Rent (including security deposits) has been paid more than one (1) month in
advance of its due date.  All work to be
performed by Borrower under the Leases has been performed as required and has
been accepted by the applicable tenant. 
There has been no prior sale, transfer or assignment, hypothecation or
pledge of any Lease or of the Rents received therein which is outstanding.  To Borrower’s knowledge after inquiry, no
tenant has assigned its Lease.  No tenant
has a right or option to purchase all or any part of the leased premises or the
building of which the leased premises are a

 

31

 

part. Except
as disclosed in the Environmental Report delivered to Lender in connection
herewith, to Borrower’s actual knowledge, no hazardous wastes or toxic
substances, as defined by applicable federal, state or local statutes, rules
and regulations, have been disposed, stored or treated by any tenant on or
about the leased premises nor does Borrower have any knowledge of any tenant’s,
intention to use its leased premises for any activity which, directly or
indirectly, involves the use, generation, treatment, storage, disposal or transportation
of any petroleum product or any toxic or hazardous chemical, material,
substance or waste, except in either event, in compliance with applicable
federal, state or local statues, rules and regulations.

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

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

                                4.1.29      Filing
and Recording Taxes.  All transfer
taxes, deed stamps, intangible taxes or other amounts in the nature of transfer
taxes required to be paid by any Person under applicable Legal Requirements
currently in effect in connection with the acquisition of the Property by
Borrower have been paid or are simultaneously being paid.  All mortgage, mortgage recording, stamp,
intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgage, have been paid, and, under current Legal Requirements, the Mortgage
is enforceable in accordance with its terms by Lender (or any subsequent holder
thereof).

4.1.30      Special Purpose
Entity/Separateness.

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

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

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

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

 

32

 

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

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

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

                                4.1.36      Embargoed
Person.  As of the Closing Date, to
the best of Borrower’s knowledge, (a) none of the funds or other assets of
Borrower constitute property of, or are beneficially owned, directly or
indirectly, by any Embargoed Person; (b) no Embargoed Person has any interest
of any nature whatsoever in Borrower with the result that the investment in
Borrower (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law; and (c) none of the funds of Borrower have been derived
from any unlawful activity with the result that the investment in Borrower
(whether directly or indirectly), is prohibited by law or the Loan is in
violation of law.

                                4.1.37      Ownership
and Control.  As of the Closing Date,
Borrower represents and warrants that (a) Inland American Real Estate Trust,
Inc. (i) maintains operational and managerial control of the Sole Member,
Borrower and the Property and (ii) owns at least 21.3% (directly and/or
indirectly) of the ownership interest in the Sole Member and Borrower and (b)

 

33

 

Inland Western
Retail Real Estate Trust, Inc. owns at least 37.3% (directly and/or indirectly)
of the ownership interest in the Sole Member and Borrower.

Section 4.2             Survival
of Representations.

Borrower agrees that all of the representations and warranties of
Borrower set forth in Section 4.1 and elsewhere in this Agreement and in the
other Loan Documents shall survive for so long as any amount remains owing to
Lender under this Agreement or any of the other Loan Documents by
Borrower.  All representations,
warranties, covenants and agreements made in this Agreement or in the other
Loan Documents by Borrower shall be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.

ARTICLE V

BORROWER COVENANTS 

Section 5.1             Affirmative
Covenants.

From the Closing Date and until payment and performance in full of all
obligations of Borrower under the Loan Documents or the earlier release of the
Lien of the Mortgage encumbering the Property (and all related obligations) in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower hereby covenants and agrees with Lender that:

5.1.1        Existence;
Compliance with Legal Requirements; Insurance.  Borrower shall do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its
existence, rights, licenses, permits and franchises and comply with all Legal
Requirements applicable to it and the Property. 
Borrower shall not commit, nor shall Borrower permit any other Person in
occupancy of or involved with the operation or use of the Property to commit,
any act or omission affording the federal government or any state or local
government the right of forfeiture as against the Property or any part thereof
or any monies paid in performance of Borrower’s obligations under any of the
Loan Documents.  Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture. 
Borrower shall at all times maintain, preserve and protect all its
franchises and trade names and preserve all the remainder of its property used
or useful in the conduct of its business and shall keep the Property in good
working order and repair, and from time to time make, or cause to be made, all
reasonably necessary repairs, renewals, replacements, betterments and
improvements thereto, all as more fully provided in the Mortgage.  Borrower shall keep the Property insured at
all times by financially sound and reputable insurers, to such extent and
against such risks, and maintain liability and such other insurance, as is more
fully provided in this Agreement. 
Borrower shall operate, or cause the tenant to operate, in all material
respects, in accordance with the terms and provisions any operations and
maintenance plans recommended or reasonably required by Lender. After prior
written notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding promptly initiated and conducted in good faith and
with due diligence, the validity of any Legal Requirement, the applicability of
any Legal Requirement to Borrower or the Property or any alleged violation of
any Legal Requirement, provided that (i) no Event of Default has occurred and
remains uncured; (ii)

 

34

 

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

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

 

35

 

security as
may be required in the proceeding, or as may be reasonably requested by Lender,
to insure the payment of any such Taxes or Other Charges, together with all
interest and penalties thereon. Lender may pay over any such cash deposit or
part thereof held by Lender to the claimant entitled thereto at any time when,
in the reasonable judgment of Lender, the entitlement of such claimant is
established.

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

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

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

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

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

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

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

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

                                                (b)           execute and deliver to Lender such
documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to

 

36

 

evidence,
preserve and/or protect the collateral at any time securing or intended to
secure the obligations of Borrower under the Loan Documents, as Lender may
reasonably require; and

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

                                5.1.10      Intentionally
Omitted.

                                5.1.11      Financial
Reporting.

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

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

 

37

 

(v) a schedule audited by such independent
certified public accountant reconciling Net Operating Income to Net Cash Flow
(the “Net Cash Flow Schedule”), which shall itemize all adjustments made
to Net Operating Income to arrive at Net Cash Flow deemed material by such
independent certified public accountant. Together with Borrower’s annual
financial statements, Borrower shall furnish to Lender an Officer’s Certificate
certifying as of the date thereof whether there exists an event or circumstance
which constitutes a Default or Event of Default under the Loan Documents
executed and delivered by, or applicable to, Borrower, and if such Default or
Event of Default exists, the nature thereof, the period of time it has existed
and the action then being taken to remedy the same.

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

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

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

                                                (f)            Intentionally
Omitted.

                                                (g)           Borrower will cause Indemnitor to
furnish to Lender annually, within one hundred twenty (120) days following the
end of each Fiscal Year of Indemnitor, financial statements audited by an
independent certified public accountant, which shall include an annual balance
sheet and profit and loss statement of Indemnitor, in the form reasonably
required by Lender.

 

38

 

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

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

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

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

5.1.15      Estoppel Statement.

                                                (a)
          After request by Lender,
Borrower shall within ten (10) days furnish Lender with a statement, duly
acknowledged and certified, setting forth (i) the amount of the original
principal amount of the Note, (ii) the unpaid principal amount of the Note,
(iii) the applicable interest rate of the Note, (iv) the date installments of
interest and/or principal were last paid, (v) any offsets or defenses to the
payment of the Debt, if any, and (vi) that the Note, this Agreement, the
Mortgage and the other Loan Documents are valid, legal and binding obligations
and have not been modified or if modified, giving particulars of such
modification.

                                                (b)           Borrower shall use commercially
reasonable efforts to deliver to Lender upon request, tenant estoppel
certificates from any commercial tenants (and/or any

 

39

 

replacement
commercial tenants leasing space at the Property from Borrower) in form and
substance reasonably satisfactory to Lender provided that Borrower shall not be
required to deliver such certificates more frequently than one (1) time in any
calendar year.

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

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

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

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

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

                                5.1.20      Leasing
Matters. Any proposed commercial Leases and modifications, renewals, or
terminations of existing Leases for commercial space at the Property shall be subject
to the prior written approval of Lender, which approval may be given or
withheld in the sole discretion of Lender. Lender shall approve or disapprove
any such Lease other than a Lease for all or substantially all of the Property
within ten (10) Business Days of Lender’s receipt of a final execution draft of
such Lease (including all exhibits, schedules, supplements, addenda or other
agreements relating thereto) and a written notice from Borrower requesting
Lender’s approval to such Lease, and such Lease shall be deemed approved, if
Lender does not disapprove such Lease within said ten (10) Business Day period
provided such written notice conspicuously states, in large bold type, that “PURSUANT
TO SECTION 5.1.20 OF THE LOAN AGREEMENT, THE LEASE SHALL BE DEEMED APPROVED IF
LENDER DOES NOT RESPOND TO THE CONTRARY WITHIN TEN (10) BUSINESS DAYS OF LENDER’S
RECEIPT OF SUCH LEASE AND WRITTEN NOTICE.” 
Borrower, following Lender’s request, shall furnish Lender with executed
copies of all Leases.  All renewals of
residential Leases and all proposed residential Leases shall provide for rental
rates comparable to existing

 

40

 

local market rates (unless such rental rates are otherwise set forth in
the Leases executed prior to the Closing Date). All proposed residential Leases
shall be on the Lender-approved standard from of Lease and be on commercially
reasonable terms and shall not contain any terms which would materially affect
Lender’s rights under the Loan Documents. 
No material changes may be made to the Lender-approved standard form of
lease without the prior written consent of Lender. All Leases executed after
the Closing Date shall provide that they are subordinate to the Mortgage
encumbering the Property and that the tenant thereunder agrees to attorn to
Lender or any purchaser at a sale by foreclosure or power of sale.  Borrower (i) shall observe and perform the
obligations imposed upon the lessor under the Leases in a commercially
reasonable manner; (ii) shall enforce the terms, covenants and conditions
contained in the Leases upon the part of the tenant thereunder to be observed
or performed in a commercially reasonable manner and in a manner not to impair
the value of the Property involved, provided, however, a residential Lease may
be terminated in the event of a default by the tenant thereunder; (iii) shall
not collect any of the rents more than one (1) month in advance (other than
security deposits); (iv) shall not execute any other assignment of lessor’s
interest in the Leases or the Rents (except as contemplated by the Loan
Documents); (v) shall not alter, modify or change the terms of the Leases in a
manner inconsistent with the provisions of the Loan Documents without the prior
written consent of Lender, which consent may be withheld in the sole discretion
of Lender; (vi) shall execute and deliver at the request of Lender all such
further assurances, confirmations and assignment in connection with the Leases
as Lender shall from time to time reasonably require and (vii) shall not make
any material changes to the Lender-approved standard form of Lease.

5.1.21      Alterations.  Subject to the rights of tenants to make
alterations pursuant to the terms of their respective Leases, Borrower shall
obtain Lender’s prior written consent to any alterations to any Improvements,
which consent shall not be unreasonably withheld or delayed except with respect
to alterations that may have a material adverse effect on Borrower’s financial
condition, the value of the Property or the Net Operating Income.  Notwithstanding the foregoing, Lender’s
consent shall not be required in connection with any alterations that will not
have a material adverse effect on Borrower’s financial condition, the value of
the Property or the Net Operating Income, provided that such alterations are
made in connection with (a) alterations performed in connection with the
restoration of the Property after the occurrence of a casualty in accordance
with the terms and provisions of this Agreement or (b) any structural
alteration which costs less than $50,000.00 in the aggregate for all components
thereof which constitute such alteration or any non-structural alteration which
costs less than $100,000.00 in the aggregate for all components thereof which constitute
such alteration.  If the total unpaid
amounts due and payable with respect to alterations to the Improvements at the
Property (other than such amounts to be paid or reimbursed by tenants under the
Leases) shall at any time equal or exceed $350,000.00 (the “Threshold Amount”),
Borrower, upon Lender’s request, shall promptly deliver to Lender as security
for the payment of such amounts and as additional security for Borrower’s
obligations under the Loan Documents any of the following:  (A) cash, (B) U.S. Obligations, (C) other
securities having a rating acceptable to Lender and that the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned in connection with any Securitization, or (D) a
completion bond or letter of credit issued by a financial institution having a
rating by Standard & Poor’s Ratings Group of not less than A-1+ if the term
of such bond or letter of credit is no longer than three (3) months or, if such
term is in excess of three (3) months, issued by a financial institution having
a rating that is acceptable to Lender and that the

 

41

 

applicable
Rating Agencies have confirmed in writing will not, in and of itself, result in
a downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned in connection with any Securitization.  Such security shall be in an amount equal to
the excess of the total unpaid amounts with respect to alterations to the
Improvements on the Property (other than such amounts to be paid or reimbursed
by tenants under the Leases) over the Threshold Amount and, if cash, may be
applied from time to time, at the option of Borrower, to pay for such
alterations. At the option of Lender, following the occurrence and during the
continuance of an Event of Default, Lender may terminate any of the alterations
and use the deposit to restore the Property to the extent necessary to prevent
any material adverse effect on the value of the Property.

5.1.22      Control of Borrower.  Borrower covenants and agrees that Inland
American Real Estate Trust, Inc. shall at all times during the term of the Loan
(i) maintain operational and managerial control of the Sole Member, Borrower
and the Property and (ii) own at least five percent (5%) (directly and/or
indirectly) of the ownership interests in the Sole Member and Borrower.

                                Section
5.2             Negative Covenants.

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

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

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

                                                (a)           Permitted Encumbrances;

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

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

                                5.2.3        Dissolution.  Borrower
shall not (a) engage in any dissolution, liquidation or consolidation or merger
with or into any other business entity, (b) engage in any business activity not
related to the ownership and operation of the Property, (c) transfer, lease or
sell, in

 

42

 

one
transaction or any combination of transactions, the assets or all or
substantially all of the properties or assets of Borrower except to the extent
permitted by the Loan Documents, (d) modify, amend, waive or terminate its
organizational documents or its qualification and good standing in any
jurisdiction or (e) cause the Sole Member to (i) dissolve, wind up or liquidate
or take any action, or omit to take an action, as a result of which the Sole
Member would be dissolved, wound up or liquidated in whole or in part, or (ii)
amend, modify, waive or terminate the certificate of limited partnership or
partnership agreement of the Sole Member, in each case, without obtaining the
prior written consent of Lender or Lender’s designee.

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

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

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

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

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

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

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

                                5.2.11      Intentionally Omitted.

 

43

 

                                5.2.12      ERISA.

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

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

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

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

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

                                5.2.13      Transfers.  Unless
such action is permitted by the provisions of this Section 5.2.13, Borrower
agrees that it will not (i) sell, assign, convey, transfer or otherwise dispose
of its interests in the Property or any part thereof, (ii) permit any owner,
directly or indirectly, of an ownership interest in the Property, to transfer
such interest, whether by transfer of stock or other interest in Borrower or
any entity, or otherwise, (iii) incur Indebtedness (other than the Indebtedness
permitted pursuant to the terms of this Agreement), (iv) mortgage, hypothecate
or otherwise encumber or grant a security interest in the Property or any part
thereof, (v) sell, assign, convey, transfer, mortgage, encumber, grant a
security interest in, or otherwise dispose of any direct or indirect ownership
interest in Borrower, or permit any owner of an interest in Borrower to do the
same, or (vi) file a declaration of condominium with respect to the Property
(any of the foregoing transactions, a “Transfer”). For purposes hereof,
a “Transfer” shall not include (A) any issuance, sale or transfer of interests
in the Sole Member (provided that at all times Inland American Real Estate
Trust, Inc. or any successor entity resulting from a merger permitted hereunder
shall (x) own not less than five percent (5%) of the ownership interest in the
Sole Member and (y) control the Sole Member, Borrower and the Property), Inland
American Real Estate Trust, Inc., or any successor entity resulting from any
merger permitted hereunder, (B) a transfer by devise or descent or by operation
of law upon the death of a member or partner of Borrower, or (C) the merger of
Inland American Real Estate Trust, Inc. with any of the following entities:
Inland Retail Real Estate Trust, Inc., a Maryland corporation, Inland Real
Estate Corporation, a Maryland corporation, Inland Real Estate Investment
Corporation, a Delaware corporation, Inland Western Retail Real Estate Trust,
Inc., any other real estate investment trust sponsored by Inland Real Estate
Investment Corporation, or any other entity

 

44

 

composed entirely of any of the foregoing by merger; provided, however,
(i) Lender shall receive not less than thirty (30) days prior written notice of
any such proposed merger and/or transfer, (ii) the net worth of the entity
surviving such merger shall equal or exceed the net worth of Inland American
Real Estate Trust, Inc. immediately prior to such merger, and (iii) the entity
surviving the merger shall be publicly traded.

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

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

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

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

                                                                (iv)          Borrower shall have delivered to
Lender, without any cost or expense to Lender, such endorsements to Lender’s
Title Insurance Policy insuring that fee simple to the Property is vested in
Transferee (subject to Permitted Encumbrances), hazard insurance endorsements
or certificates and other similar materials as Lender may deem reasonably
necessary at the time of the transfer, all in form and substance reasonable
satisfactory to Lender;

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

                                                                (vi)          if required or requested by any of the
Rating Agencies, Borrower shall have caused counsel to render a substantive
non-consolidation opinion which in each case may be relied upon by the holder
of the Note, the Ratings Agencies and their respective counsel, agents and
representatives with respect to the proposed transaction, including the
Transferee, which opinion shall be acceptable to Lender in its reasonable
discretion;

                                                                (vii)         Borrower shall have paid (A) an
assumption fee equal to one percent (1.0%) of the then outstanding principal
balance of the Loan, and (B) the reasonable and customary third-party expenses
(including reasonable attorneys’ fees and disbursements) actually incurred by
Lender in connection with such Transfer; provided, however, (1) no assumption
fee shall be required for a Transfer of the Property to a Transferee acceptable
to Lender in connection with a joint venture between Inland American Real
Estate Trust, Inc. and an entity acceptable to Lender, provided Inland American
Real Estate Trust, Inc., or an Affiliate

 

45

 

wholly-owned
(directly or indirectly) by Inland American Real Estate Trust, Inc., owns at
least twenty percent (20%) of the ownership interests in such Transferee and
for which Inland American Real Estate Trust, Inc. or an Affiliate wholly-owned
(directly or indirectly) by Inland American Real Estate Trust, Inc., is the
managing entity and otherwise maintains operational and managerial control of
such Transferee and Minto Builders (Florida) Inc. remains as Indemnitor,
provided that Borrower shall pay all of Lender’s reasonable and customary
third-party expenses (including reasonable attorneys’ fees and disbursements)
actually incurred by Lender in connection with such Transfer and a processing
fee of $5,000 and (2) for a transfer described in Section 5.2.13(a)(vii)(1)
above, except solely that such Transfer results in Inland American Real Estate
Trust, Inc. or an Affiliate wholly-owned (directly or indirectly) by Inland
American Real Estate Trust, Inc., owning less that twenty percent (20%) and not
less than five percent (5.0%) of the ownership interests in such Transferee,
the assumption fee payable shall be $15,000.

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

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

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

 

46

 

Affiliate Transferee”) which shall be approved
by Lender in its reasonable discretion (“Permitted Affiliate Transfer”),
provided (1) no Event of Default shall have occurred and be continuing, (2) the
creditworthiness of Inland American Real Estate Trust, Inc., as applicable, has
not deteriorated, in the sole discretion of Lender, from the Closing Date to
the date of the proposed Transfer, (3) Borrower shall have paid all reasonable
and customary third party expenses (including reasonable attorneys’ fees and
disbursements) actually incurred by Lender in connection with such Transfer
(but not any assumption or processing fee), (4) the Permitted Affiliate
Transferee shall have assumed in writing (subject to the terms of Section 9.4
hereof) and agreed to comply with all the terms, covenants and conditions set
forth in this Agreement and the other Loan Documents, expressly including the
covenants contained in Section 5.1.1 and the representations contained in 4.1.30
hereof and (5) Borrower shall have delivered to Lender, without any cost or
expense to Lender, such endorsements to Lender’s Title Insurance Policy
insuring that fee simple to the Property is vested in Permitted Affiliate
Transferee (subject to Permitted Encumbrances), hazard insurance endorsements
or certificates and other similar materials as Lender may deem reasonably
necessary at the time of the transfer, all in form and substance reasonably
satisfactory to Lender.

(d)           Borrower, without
the consent of Lender, may grant easements, restrictions, covenants,
reservations and rights of way in the ordinary course of business for access,
parking, water and sewer lines, telephone and telegraph lines, electric lines
and other utilities or for other similar purposes, provided that no transfer,
conveyance or encumbrance shall materially impair the utility and operation of
the Property or materially adversely affect the value of the Property or the
Net Operating Income of the Property.  If
Borrower shall receive any consideration in connection with any of said
described transfers or conveyances, Borrower shall have the right to use any
such proceeds in connection with any alterations performed in connection
therewith, or required thereby.  In
connection with any transfer, conveyance or encumbrance permitted by this
subsection 5.2.13 (d), the Lender, at Borrower’s expense, shall execute and
deliver any instrument reasonably necessary or appropriate to evidence its
consent to said action or to subordinate the Lien of the Mortgage to such
easements, restrictions, covenants, reservations and rights of way or other
similar grants upon receipt by the Lender of: 
(A) a copy of the instrument of transfer; and (B) an Officer’s
Certificate stating with respect to any transfer described above, that such
transfer does not materially impair the utility and operation of the Property
or materially reduce the value of the Property or the Net Operating Income of
the Property.

ARTICLE VI

INSURANCE; CASUALTY; CONDEMNATION

Section 6.1             Insurance.

                                                (a)           Borrower shall obtain and maintain,
or cause to be maintained, insurance for Borrower and the Property providing at
least the following coverages:

                                                                (i)            comprehensive all risk insurance on
the Improvements and the Personal Property, including contingent liability from
Operation of Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount equal to one hundred percent (100%)
of the “Full Replacement Cost,” which for

 

47

 

purposes of this Agreement shall mean actual replacement value
(exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation; (B) containing an agreed amount
endorsement with respect to the Improvements and Personal Property waiving all
co-insurance provisions; (C) providing for no deductible in excess of Ten
Thousand and No/100 Dollars ($10,000) for all such insurance coverage; and (D)
containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if any
of the Improvements or the use of the Property shall at any time constitute
legal nonconforming structures or uses. 
In addition, Borrower shall obtain: (y) if any portion of the
Improvements is currently or at any time in the future located in a federally
designated “special flood hazard area,” flood hazard insurance in an amount
equal to the lesser of (1) the outstanding principal balance of the Note or (2)
the maximum amount of such insurance available under the National Flood
Insurance Act of 1968, the Flood Disaster Protection Act of 1973 or the
National Flood Insurance Reform Act of 1994, as each may be amended or such
greater amount as Lender shall require; and (z) earthquake insurance in amounts
and in form and substance satisfactory to Lender in the event the Property is
located in an area with a high degree of seismic activity, provided that the
insurance pursuant to clauses (y) and (z) hereof shall be on terms consistent
with the comprehensive all risk insurance policy required under this subsection
(i).

                                                                (ii)           commercial general liability
insurance against claims for personal injury, bodily injury, death or property
damage occurring upon, in or about the Property, such insurance (A) to be on
the so-called “occurrence” form with a combined limit, including umbrella
coverage, of not less than Five Million and No/100 Dollars ($5,000,000.00); (B)
to continue at not less than the aforesaid limit until required to be changed
by Lender in writing by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards: (1)
premises and operations; (2) products and completed operations on an “if any”
basis; (3) independent contractors; (4) blanket contractual liability for all
legal contracts; and (5) contractual liability covering the indemnities
contained in Article 9 of the Mortgage to the extent the same is available;

                                                                (iii)          business income insurance (A) with
loss payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above; (C) covering rental losses or
business interruption, as may be applicable, for a period of at least twelve
(12) months after the date of the casualty and containing an extended period of
indemnity endorsement which provides that after the physical loss to the
Improvements and Personal Property has been repaired, the continued loss of
income will be insured until such income either returns to the same level it
was at prior to the loss, or the expiration of six (6) months from the date
that the Property is repaired or replaced and operations are resumed, whichever
first occurs, and notwithstanding that the policy may expire prior to the end
of such period; and (D) in an annual amount equal to (100%) of the rents or
estimated gross revenues from the operation of the Property (as reduced to
reflect expenses not incurred during a period of Restoration). The amount of
such business income insurance shall be determined prior to the date hereof and
at least once each year thereafter based on Borrower’s reasonable estimate of
the gross income from the Property for the succeeding twelve (12) month
period.  All proceeds payable to Lender
pursuant to this subsection shall be held by Lender and shall be applied to the
obligations secured by the Loan Documents from time to time due and payable
hereunder and under the Note; provided, however, that nothing herein contained
shall be deemed to relieve Borrower of its obligations to pay the obligations
secured by the Loan Documents on the

 

48

 

respective
dates of payment provided for in the Note and the other Loan Documents except
to the extent such amounts are actually paid out of the proceeds of such
business income insurance;

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

                                                                (v)           workers’ compensation, subje ct to
the stat utory limits of the State;

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

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

                                                                (viii)
       if any of the policies of insurance
covering the risks required to be covered under subsections (i) through (vii)
above contains an exclusion from coverage for acts of terrorism, Borrower shall
obtain and maintain a separate policy providing such coverages in the event of
any act of terrorism, provided such coverage is commercially available for
properties similar to the Property and located in or around the region in which
the Property is located;

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

                                                (b)
          All insurance provided for in
Section 6.1(a) shall be obtained under valid and enforceable policies
(collectively, the “Policies” or in the singular, the “Policy”),
and shall be subject to the approval of Lender as to insurance companies,
amounts, deductibles, loss payees and insureds. The Policies shall be issued by
financially sound and responsible insurance companies authorized to do business
in the State and having a rating of “A:X” or better in the current Best’s
Insurance Reports and a claims paying ability rating of “A-” or better by at
least two (2) of the Rating Agencies including, (i) Standard & Poor’s
Ratings Group, and (ii) Moody’s Investors Services, Inc. if Moody’s Investors
Service, Inc. is rating the Securities. 
The Policies described in Section 6.1 (other than those strictly limited
to liability protection) shall designate Lender as loss payee.  Not less than thirty (30) days prior to the
expiration dates of the Policies theretofore furnished to Lender, certificates
of insurance evidencing the Policies

 

49

 

accompanied by
evidence satisfactory to Lender of payment of the premiums due thereunder (the “Insurance
Premiums”), shall be delivered by Borrower to Lender.

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

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

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

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

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

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

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

                                                (f)            If at any time Lender is not in
receipt of written evidence that all insurance required hereunder is in full
force and effect, Lender shall have the right, after ten (10) Business Days
written notice to Borrower, to take such action as Lender deems necessary to
protect its interest in the Property, including, without limitation, the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate.  All premiums incurred by
Lender in connection with such action or in obtaining such insurance and
keeping it in effect shall be paid by Borrower to Lender upon demand and, until
paid, shall be secured by the Mortgage and shall bear interest at the Default
Rate.  If Borrower fails in so insuring
the Property or in so assigning and delivering the Policies, Lender may, at its
option, obtain such insurance using such carriers and agencies as Lender shall
elect from year to year and pay the premiums therefor, and Borrower will
reimburse Lender for any premium so paid, with interest thereon as stated in
the Note from the time of payment, on demand, and the amount so owning to
Lender shall be secured by the Mortgage. The insurance obtained by Lender may,
but need not, protect Borrower’s interest and the coverage that Lender
purchases may not pay any claim that Borrower makes or any claim that is made
against Borrower in connection with the Property.

 

50

 

Section 6.2             Casualty.

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

Section 6.3             Condemnation.

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

Section 6.4             Restoration.

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

 

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

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

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

                                                                                (B)           (1) in the event the Net Proceeds are
Insurance Proceeds, less than twenty-five percent (25%) of the total
floor area of the Improvements on the Property has been damaged, destroyed or
rendered unusable as a result of such fire or other casualty, or (2) in the
event the Net Proceeds are Condemnation Proceeds, less than ten percent (10%)
of the land constituting the Property is taken, and such land is located along
the perimeter or periphery of the Property, and no portion of the Improvements
is located on such land;

                                                                                (C)           Intentionally omitted;

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

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

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

                                                                                (G)           the Property and the use thereof
after the Restoration will be in compliance with and permitted under all
applicable zoning laws,

 

52

 

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

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

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

                                                                                (J)
           the Debt Service Coverage
Ratio, after giving effect to the Restoration, shall be equal to or greater
than 1.50:1.0;

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

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

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

                                                                (iii)          All plans and specifications required
in connection with the Restoration shall be subject to prior review and
acceptance in all respects by Lender and by an independent consulting engineer
selected by Lender (the “Casualty Consultant”), such review and
acceptance not to be unreasonably withheld or delayed.  Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in
connection with the Restoration. The identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as well as the
contracts under which they have been engaged, shall

 

53

 

be subject to
prior review and acceptance by Lender and the Casualty Consultant, such review
and acceptance not to be unreasonably withheld or delayed.  All costs and expenses incurred by Lender in
connection with making the Net Proceeds available for the Restoration
including, without limitation, reasonable counsel fees and disbursements and
the Casualty Consultant’s fees, shall be paid by Borrower.

                                                                (iv)          In no event shall Lender be obligated
to make disbursements of the Net Proceeds in excess of an amount equal to the
costs actually incurred from time to time for work in place as part of the
Restoration, as certified by the Casualty Consultant, minus the Casualty
Retainage.  The term “Casualty
Retainage” shall mean an amount equal to ten percent (10%) of the costs
actually incurred for work in place as part of the Restoration, as certified by
the Casualty Consultant, until the Restoration has been completed. The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 6.4(b), be less than the amount actually held back
by Borrower from contractors, subcontractors and materialmen engaged in the Restoration.  The Casualty Retainage shall not be released
until the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 6.4(b) and that all
approvals necessary for the re-occupancy and use of the Property have been
obtained from all appropriate governmental and quasigovernmental authorities,
and Lender receives evidence satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of the Casualty
Retainage; provided, however, that Lender will release the portion of the
Casualty Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or
materialman has satisfactorily completed all work and has supplied all
materials in accordance with the provisions of the contractor’s, subcontractor’s
or materialman’s contract, the contractor, subcontractor or materialman
delivers the lien waivers and evidence of payment in full of all sums due to
the contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the continued
priority of the lien of the Mortgage and evidence of payment of any premium
payable for such endorsement.  If
required by Lender, the release of any such portion of the Casualty Retainage
shall be approved by the surety company, if any, which has issued a payment or
performance bond with respect to the contractor, subcontractor or materialman.

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

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

 

54

 

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

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

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

                                                (e)           Lender shall with reasonable
promptness following any Casualty or Condemnation notify Borrower whether or
not Net Proceeds are required to be made available to Borrower for restoration
pursuant to this Section 6.4. All Net Proceeds not required to be made
available for Restoration shall be retained and applied by Lender in accordance
with Section 2.3.2(b) hereof (a “Net Proceeds Prepayment”). If such Net
Proceeds Prepayment shall be equal to or greater than Ten Million Seven Hundred
Twenty Five Thousand and 00/100 Dollars ($10,725,000), Borrower shall have the
right to elect to prepay the remaining outstanding principal balance of the
Note (a “Casualty/Condemnation Prepayment”) in accordance with Section
2.3.2(b) hereof upon satisfaction of the following conditions:  (i) within thirty (30) days following the
date of the Net Proceeds Prepayment, Borrower shall provide Lender with written
notice of Borrower’s intention to pay the Note in full, (ii) Borrower shall
prepay the Note in accordance with Section 2.3.2(b) hereof on or before the
second Payment Date occurring following the date of the Net Proceeds
Prepayment, and (iii) no Event of Default shall exist on the date of such
Casualty/Condemnation Prepayment. 
Notwithstanding anything in Section 6.2 or Section 6.3 to the contrary,
Borrower shall have no obligation to commence Restoration of the Property upon
delivery of the written notice set forth in clause (i) of the preceding
sentence (unless Borrower subsequently shall fail to satisfy the requirement of
clause (ii) of the preceding sentence).

 

55

 

ARTICLE VII

RESERVE FUNDS 

Section 7.1             Required
Repair Funds.

7.1.1        Deposits.
 Borrower shall perform the repairs at
the Property, if any, as more particularly set forth on Schedule II
hereto (such repairs hereinafter referred to as “Required Repairs”)
within six (6) months from the Closing Date, or such earlier time as specified
on Schedule II. If Borrower has not delivered to Lender evidence
reasonably satisfactory to Lender that it has completed all Required Repairs on
or before the date that is six (6) months from the Closing Date, or such
earlier time as specified on Schedule II, Borrower shall deposit with
Lender the amount set forth on such Schedule II hereto, if any (less the
amount allocated to the performance of Required Repairs for which evidence of
completion has been delivered to Lender), to perform the Required Repairs for
the Property.  Amounts so deposited with
Lender, if any, shall be held by Lender in an interest bearing account.  Amounts so deposited, if any, shall
hereinafter be referred to as Borrower’s “Required Repair Fund” and the
account, if any, in which such amounts are held shall hereinafter be referred
to as Borrower’s “Required Repair Account.” It shall be an Event of
Default under this Agreement if Borrower does not either (i) deposit with
Lender the Required Repair Fund as set forth above, or (ii) complete the
Required Repairs at the Property within nine (9) months from the Closing Date.
Upon the occurrence of such an Event of Default, Lender, at its option, may withdraw
all Required Repair Funds from the Required Repair Account and Lender may apply
such funds either to completion of the Required Repairs at the Property or
toward payment of the Debt in such order, proportion and priority as Lender may
determine in its sole discretion.  Lender’s
right to withdraw and apply Required Repair Funds shall be in addition to all
other rights and remedies provided to Lender under this Agreement and the other
Loan Documents.

7.1.2        Release of
Required Repair Funds.  Provided sufficient
sums have been deposited by Borrower into the Required Repair Account, Lender
shall disburse to Borrower the Required Repair Funds from the Required Repair
Account from time to time upon satisfaction by Borrower of each of the
following conditions:  (i) Borrower shall
submit a written request for payment to Lender at least fifteen (15) days prior
to the date on which Borrower requests such payment be made and specifies the
Required Repairs to be paid, (ii) on the date such request is received by Lender
and on the date such payment is to be made, no Default or Event of Default
shall exist and remain uncured, (iii) Lender shall have received a certificate
from Borrower (A) stating that all Required Repairs at the Property to be
funded by the requested disbursement have been completed in good and
workmanlike manner and in accordance with all applicable federal, state and
local laws, rules and regulations, such certificate to be accompanied by a copy
of any license, permit or other approval by any Governmental Authority required
to commence and/or complete the Required Repairs, (B) identifying each Person
that supplied materials or labor in connection with the Required Repairs
performed at the Property to be funded by the requested disbursement under a contract
in excess of $50,000, and (C) stating that each Person who has supplied
materials or labor in connection with the Required Repairs to be funded by the
requested disbursement has been paid in full or will be paid in full upon such
disbursement, such certificate to be accompanied by lien waivers or other
evidence of payment satisfactory to Lender, (iv) at Lender’s option, a title
search for the Property indicating that the Property is free from all liens,
claims and other encumbrances not previously approved by Lender, and (v)

 

56

 

Lender shall
have received such other evidence as Lender shall reasonably request that the
Required Repairs at the Property to be funded by the requested disbursement
have been completed and are paid for or will be paid upon such disbursement to
Borrower.  Lender shall not be required
to make disbursements from the Required Repair Account with respect to the
Property more than once each calendar month and such disbursement shall be made
only upon satisfaction of each condition contained in this Section 7.1.2.

Section 7.2             Tax
and Insurance Escrow Fund.

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

Notwithstanding anything to the contrary hereinbefore contained, in the
event that Borrower provides (1) evidence satisfactory to Lender that the
Property is insured in accordance with Section 6.1 of this Agreement and that
the Insurance Premiums for such coverage have been

 

57

 

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

Section 7.3             Replacements
and Replacement Reserve.

7.3.1        Replacement
Reserve Fund.  In the event that
Lender determines that Borrower is not making repairs and replacements
(collectively, the “Replacements”) required in order to maintain the Property
in condition and repair consistent with multifamily properties similar to the
Property and to keep the Property or any portion thereof from deteriorating,
Borrower shall pay to Lender on each Payment Date following such determination,
$5,333.34 (the “Replacement Reserve Monthly Deposit”). Amounts so
deposited shall hereinafter be referred to as Borrower’s “Replacement
Reserve Fund” and the account in which such amounts are held shall
hereinafter be referred to as Borrower’s “Replacement Reserve Account.”
Any amount held in the Replacement Reserve Account and allocated for the
Property shall be retained by Lender in an interest bearing account, or, at the
option of Lender, in an Eligible Account at an Eligible Institution; provided,
however, that, any interest earned on said account shall accrue in said account
for the benefit of Borrower, but shall remain in and constitute part of the
Replacement Reserve Fund, and shall be disbursed in accordance with the terms
hereof.

7.3.2        Disbursements from
Replacement Reserve Account.

                                                (a)
          Provided sufficient sums have
been deposited by Borrower into the Replacement Reserve Account, Lender shall
make disbursements from the Replacement Reserve Account to pay Borrower only
for the costs of the Replacements. 
Lender shall not be obligated to make disbursements from the Replacement
Reserve Account to reimburse Borrower for the costs of routine maintenance to
the Property or for costs which are to be reimbursed from the Required Repair
Fund (if any).

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

                                                (c)
          Each request for disbursement
from the Replacement Reserve Account shall be in a form specified or approved
by Lender and shall specify (i) the specific Replacements for which the
disbursement is requested, (ii) the quantity and price of each item purchased,
if the Replacement includes the purchase or replacement of specific items,
(iii) the

 

58

 

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

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

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

                                                (f)
           Borrower shall not make a
request for disbursement from the Replacement Reserve Account more frequently
than once in any calendar month and (except in

 

59

 

connection
with the final disbursement) the total cost of all Replacements in any request
shall not be less than $5,000.00.

7.3.3        Performance of
Replacements.

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

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

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

                                                (d)
          In order to facilitate Lender’s
completion or making of the Replacements pursuant to Section 7.3.3(c) above,
Borrower grants Lender the right to enter onto the Property and perform any and
all work and labor necessary to complete or make the Replacements and/or employ
watchmen to protect the Property from damage, subject to the rights of
Tenants.  All sums so expended by Lender,
to the extent not from the Replacement Reserve Fund, shall be deemed to have
been advanced under the Loan to Borrower and secured by the Mortgage. For this
purpose Borrower constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Replacements in the name of Borrower. 
Such power of attorney shall be deemed to be a power coupled with an
interest and cannot be revoked but shall only be effective following an Event
of Default. Borrower empowers said attorney-in-fact as follows:  (i) to use any funds in the Replacement
Reserve Account for the purpose of making or completing the Replacements; (ii)
to make such additions, changes and corrections to the Replacements as shall be
necessary or desirable to complete the Replacements; (iii) to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for such purposes; (iv) to pay, settle or compromise all existing
bills and claims which are or may become Liens against the Property, or as may
be necessary or desirable for the completion of the Replacements, or for
clearance of title; (v) to execute all applications and certificates in the
name of Borrower which may be required by any of the contract documents; (vi)
to prosecute and defend all actions or proceedings in connection

 

60

 

with the
Property or the rehabilitation and repair of the Property; and (vii) to do any
and every act which Borrower might do in its own behalf to fulfill the terms of
this Agreement.

                                                (e)
          Nothing in this Section 7.3.3
shall:  (i) make Lender responsible for
making or completing the Replacements; (ii) require Lender to expend funds in
addition to the Replacement Reserve Fund to make or complete any Replacement;
(iii) obligate Lender to proceed with the Replacements; or (iv) obligate Lender
to demand from Borrower additional sums to make or complete any Replacement.

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

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

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

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

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

 

61

 

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

                                7.3.4        Failure
to Make Replacements.

                                                (a)           It shall be an Event of Default under
this Agreement if Borrower fails to comply with any provision of this Section
7.3 and such failure is not cured within thirty (30) days after notice from
Lender; provided, however, if such failure is not capable of being cured within
said thirty (30) day period, then provided that Borrower commences action to
complete such cure and thereafter diligently proceeds to complete such cure,
such thirty (30) day period shall be extended for such time as is reasonably
necessary for Borrower, in the exercise of due diligence, to cure such failure,
but such additional period of time shall not exceed sixty (60) days. Upon the
occurrence of such an Event of Default, Lender may use the Replacement Reserve
Fund (or any portion thereof) for any purpose, including, but not limited to,
completion of the Replacements as provided in Section 7.3.3, or for any other
repair or replacement to the Property or toward payment of the Debt in such
order, proportion and priority as Lender may determine in its sole
discretion.  Lender’s right to withdraw
and apply the Replacement Reserve Funds shall be in addition to all other
rights and remedies provided to Lender under this Agreement and the other Loan
Documents.

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

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

                                7.3.6        Indemnification.
 Borrower shall indemnify Lender and hold
Lender harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys fees and expenses) arising from or in
any way connected with the performance of the Replacements unless the same are
solely due to gross negligence or willful misconduct of Lender. Borrower shall
assign to Lender all rights and claims Borrower may have against all persons or
entities supplying labor or materials in connection with the Replacements;
provided, however, that Lender may not pursue any such right or claim unless an
Event of Default has occurred and remains uncured.

Section 7.4             Intentionally
Omitted.

Section 7.5             Intentionally Omitted.

Section 7.6             Intentionally Omitted.

 

62

 

Section 7.7             Reserve
Funds, Generally.

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

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

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

                                7.7.4        Intentionally
omitted.

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

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

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

ARTICLE VIII

DEFAULTS 

Section 8.1             Event
of Default.

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

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

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

 

63

 

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

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

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

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

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

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

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

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

                                                                (xi)
          intentionally omitted;

                                                                (xii)
         if Borrower shall continue to be
in Default under any of the other terms, covenants or conditions of this
Agreement not specified in subsections (i) to (xi) above, for ten (10) days
after notice to Borrower from Lender, in the case of any Default which can be
cured by the payment of a sum of money, or for thirty (30) days after notice
from Lender in the case of any other Default; provided, however, that if such
non-monetary Default is susceptible of cure but cannot reasonably be cured
within such 30-day period and provided further that Borrower shall have
commenced to cure such Default within such 30-day period and

 

64

 

thereafter
diligently and expeditiously proceeds to cure the same, such 30-day period
shall be extended for such time as is reasonably necessary for Borrower in the
exercise of due diligence to cure such Default, such additional period not to
exceed one hundred eighty (180) days; or

(xiii)         if there shall be
default under any of the other Loan Documents beyond any applicable cure
periods contained in such documents, whether as to Borrower or the Property, or
if any other such event shall occur or condition shall exist, if the effect of
such event or condition is to accelerate the maturity of any portion of the
Debt or to permit Lender to accelerate the maturity of all or any portion of
the Debt.

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

Section 8.2             Remedies.

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

                                                (b)           Lender
shall have the right from time to time to partially foreclose the Mortgage in
any manner and for any amounts secured by the Mortgage then due and payable as
determined by Lender in its sole discretion including, without limitation, the
following

 

65

 

circumstances:  (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose the Mortgage to recover such
delinquent payments, or (ii) in the event Lender elects to accelerate less than
the entire outstanding principal balance of the Loan, Lender may foreclose the
Mortgage to recover so much of the principal balance of the Loan as Lender may
accelerate and such other sums secured by the Mortgage as Lender may
elect.  Notwithstanding one or more
partial foreclosures, the Property shall remain subject to the Mortgage to
secure payment of sums secured by the Mortgage and not previously recovered.

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

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

Section 8.3             Remedies
Cumulative; Waivers.

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

 

66

 

ARTICLE IX

SPECIAL PROVISIONS 

Section 9.1             Sale of
Notes and Securitization.

At the request of the holder of the Note and, to the extent not already
required to be provided by Borrower under this Agreement, Borrower shall
cooperate with Lender to allow Lender to satisfy the market standards to which
the holder of the Note customarily adheres or which may be reasonably required
in the marketplace or by the Rating Agencies in connection with the sale of the
Note or participations therein or the first successful securitization (such
sale and/or securitization, the “Securitization”) of rated single or
multi-class securities (the “Securities”) secured by or evidencing
ownership interests in the Note and the Mortgage.  In this regard Borrower shall:

                                                (a)           (i)
provide such financial and other information with respect to the Property,
Borrower and the Manager, (ii) provide budgets relating to the Property and
(iii) to perform or permit or cause to be performed or permitted such site
inspection, appraisals, market studies, environmental reviews and reports
(Phase I’s and, if appropriate, Phase II’s), engineering reports and other due
diligence investigations of the Property, as may be reasonably requested by the
holder of the Note or the Rating Agencies or as may be necessary or appropriate
in connection with the Securitization (the “Provided Information”),
together, if customary, with appropriate verification and/or consents of the
Provided Information through letters of auditors or opinions of counsel of
independent attorneys acceptable to Lender and the Rating Agencies;

                                                (b)           cause counsel to render opinions,
which may be relied upon by the holder of the Note, the Rating Agencies and
their respective counsel, agents and representatives, as to nonconsolidation,
fraudulent conveyance, and true sale and/or lease or any other opinion
customary in securitization transactions, which counsel and opinions shall be
reasonably satisfactory to the holder of the Note and the Rating Agencies;

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

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

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

Section 9.2             Securitization.

Borrower understands that certain of the Provided Information may be
included in disclosure documents in connection with the Securitization,
including, without limitation, a

 

67

 

prospectus,
prospectus supplement or private placement memorandum (each, a “Disclosure
Document”) and may also be included in filings with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities
Act”), or the Securities and Exchange Act of 1934, as amended (the “Exchange
Act”), or provided or made available to investors or prospective investors
in the Securities, the Rating Agencies, and service providers relating to the
Securitization.  In the event that the
Disclosure Document is required to be revised prior to the sale of all
Securities, Borrower will cooperate with the holder of the Note in updating the
Disclosure Document by providing all current information necessary to keep the
Disclosure Document accurate and complete in all material respects.

Section 9.3             Rating
Surveillance.

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

Section 9.4             Exculpation.

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

 

68

 

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

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

                                                (c)
          material physical waste of the
Property;

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

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

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

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

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

Notwithstanding anything to the contrary in this Agreement, the Note or
any of the Loan Documents, (A) the Debt shall be fully recourse to the Borrower
and (B) Lender shall not be deemed to have waived any right which Lender may
have under Section 506(a), 506(b), 1111(b) or any other provisions of the U.S.
Bankruptcy Code to file a claim for the full amount of the Debt secured by the
Mortgage or to require that all collateral shall continue to secure all of the
Debt owing to Lender in accordance with the Loan Documents in the event (I)
that the first full monthly payment under the Note is not paid within five (5)
days of notice that such payment is late (provided, however, that such grace
period relates only to the recourse trigger described in this paragraph), or
(II) of the failure of Borrower to (i) permit on-site inspections of the
Property subject to the rights of Tenants and any applicable cure period set
forth in the Loan Documents, or (ii) provide financial information as required
under the Loan Documents subject to any applicable cure period (except for
financial information required to be delivered by a tenant pursuant to the
applicable Lease that has not been delivered to Borrower, provided Borrower has
requested such financial information from such tenant), or (III) of the failure
of Borrower to comply with Section 4.1.30 hereof, or (IV) of the failure of
Borrower to obtain Lender’s prior written consent (to extent such consent is
required) to any subordinate financing or other voluntary lien encumbering the
Property, or (V) of the failure of Borrower to obtain Lender’s prior written
consent to any assignment, transfer or conveyance of the Property, or any
portion

 

69

 

thereof, or any interest therein as required by this Agreement or (VI)
Borrower files a voluntary petition under the U S Bankruptcy Code or any other
Federal or state bankruptcy or insolvency law, (VII) an affiliate of Borrower
files an involuntary petition against Borrower under the U S Bankruptcy Code or
any other Federal or state bankruptcy or insolvency law, or Borrower or any
affiliate of Borrower solicits or causes to be solicited petitioning creditors
for any involuntary petition against Borrower from any person (which soliciting
results in the filing of such involuntary petition against Borrower), (VIII)
Borrower colludes to arrange and thereafter files an answer or consents to or
otherwise acquiesces in or joins in any involuntary petition filed against it
by any other person under the U S Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, (IX) Borrower consents to or acquiesces in or
joins in an application for the appointment of a custodian, receiver, (other
than a receiver requested by Lender in connection with enforcement of its
rights under the Loan Documents) trustee, or examiner for Borrower or any
portion of the Property, or (X) Borrower makes an assignment for the benefit of
creditors, or admits in writing or in any legal proceeding, its insolvency or
inability to pay its debts as they become due. 
Notwithstanding the provision set forth in clause (IV) of the
immediately preceding sentence of this paragraph, a voluntary lien other than a
lien securing an extension of credit filed against the Property shall not
constitute a recourse trigger for purposes of this paragraph provided such lien
(x) is fully bonded to the satisfaction of Lender and discharged of record
within ninety (90) days of filing, or (y) within such ninety (90) day period,
Lender receives affirmative title insurance from the title insurance company
insuring the lien of the Mortgage that such lien is subject and subordinate to
the lien of the Mortgage and no enforcement action is commenced by the applicable
lien holder.  Upon the acceptance by
Lender of any cure by Borrower of a recourse trigger described in clauses (I),
(II) or (IV) above, the Debt shall no longer be fully recourse to Borrower
solely as a result of such trigger.  Upon
the acceptance by Lender of any cure by Borrower of a recourse trigger
described in clauses (III) or (V) above, the Debt shall no longer be fully
recourse to Borrower solely as a result of such trigger, provided, however,
Borrower shall remain liable to the extent of any loss, damage, cost, expense,
liability, claim or other obligation incurred by Lender (including attorneys’
fees and costs reasonably incurred) arising out of or in connection with such
trigger.

Section 9.5             Termination
of Manager.

If (a) the amounts evidenced by the Note have
been accelerated pursuant to Section 8.1(b) hereof, (b) the Manager shall
become insolvent, (c) the Manager is in default under the terms of the
Management Agreement beyond any applicable grace or cure period, or (d) Manager
is not managing the Property in accordance with the management practices of
nationally recognized management companies managing similar properties in
locations comparable to those of the Property, then, in the case of (a), (b),
(c) or (d), Borrower shall, at the request of Lender, terminate the Management
Agreement and replace the Manager with a manager reasonably approved by Lender
on terms and conditions reasonably satisfactory to Lender, it being understood
and agreed that the management fee for such replacement manager shall not
exceed then prevailing market rates.  In
addition and without limiting the rights of Lender hereunder or under any of
the other Loan Documents, in the event that (i) the Management Agreement is
terminated, (ii) the Manager no longer manages the Property, or (iii) a
receiver, liquidator or trustee shall be appointed for Manager or if Manager
shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law,
or any similar federal or state law, shall be filed by or against,

 

70

 

consented to,
or acquiesced in by, Manager, or if any proceeding for the dissolution or
liquidation of Manager shall be instituted, then Borrower (at Borrower’s sole
cost and expense) shall immediately, in its name, establish new deposit
accounts separate from any other Person with a depository satisfactory to
Lender into which all Rents and other income from the Property shall be
deposited and shall grant Lender a first priority security interest in such
account pursuant to documentation satisfactory in form and substance to Lender.

Section 9.6             Servicer.

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

Section 9.7             Splitting
the Loan.

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

ARTICLE X

MISCELLANEOUS 

Section 10.1           Survival.

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

 

71

 

representatives,
successors and assigns of such party. 
All covenants, promises and agreements in this Agreement, by or on
behalf of Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.

Section 10.2           Lender’s
Discretion.

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

Section 10.3           Governing
Law.

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

Section 10.4           Modification,
Waiver in Writing.

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

Section 10.5           Delay
Not a Waiver.

Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement, or exercising any right, power, remedy or privilege hereunder, or
under the Note or under any other Loan Document, or any other instrument given
as security therefor, shall operate as or constitute a waiver thereof, nor
shall a single or partial exercise thereof preclude any other future exercise,
or the exercise of any other right, power, remedy or privilege.  In particular, and not by way of limitation,
by accepting payment after the due date of any amount payable under this
Agreement, the Note or any other Loan Document, Lender shall not be deemed to
have waived any right either to require prompt payment when due of all other
amounts due under this Agreement, the Note or the other Loan Documents, or to
declare a default for failure to effect prompt payment of any such other
amount.

 

72

 

Section 10.6           Notices.

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

	
  If to Lender:

  	
   

  	
  Merrill Lynch Mortgage Lending, Inc.

  
	
   

  	
   

  	
  4 World Financial Center

  
	
   

  	
   

  	
  250 Vesey Street

  
	
   

  	
   

  	
  16th Floor

  
	
   

  	
   

  	
  New York, NY 10080

  
	
   

  	
   

  	
  Attention: Dominick Guerriero

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Thacher Proffitt & Wood LLP

  
	
   

  	
   

  	
  Two World Financial Center

  
	
   

  	
   

  	
  New York, New York

  
	
   

  	
   

  	
  Attention: Stephen J. Cerniglia, Esq.

  
	
   

  	
   

  	
   

  
	
  If to Borrower:

  	
   

  	
  MB
  Louisville Southgate, L.L.C.

  
	
   

  	
   

  	
  c/o Inland American Real Estate Trust, Inc.

  
	
   

  	
   

  	
  2901 Butterfield Road

  
	
   

  	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
   

  	
  Attention: Lori Foust

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  Inland American Real Estate Trust, Inc.

  
	
   

  	
   

  	
  2901 Butterfield Road

  
	
   

  	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
   

  	
  Attention:
  Robert H. Baum, Esq.

  
	
   

  	
   

  	
   

  
	
  and with a copy to:

  	
   

  	
  Inland American Real Estate Trust, Inc.

  
	
   

  	
   

  	
  2901 Butterfield Road

  
	
   

  	
   

  	
  Oak Brook, IL 60523

  
	
   

  	
   

  	
  Attention: Roberta Matlin

  

 

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

 

73

 

Section 10.7           Trial
by Jury.

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

Section 10.8           Headings.

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

Section 10.9           Severability.

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

Section 10.10         Preferences.

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

Section 10.11         Waiver of Notice.

Borrower shall not be entitled to any notices of any nature whatsoever
from Lender except with respect to matters for which this Agreement or the
other Loan Documents specifically and expressly provide for the giving of
notice by Lender to Borrower and except with respect to matters for which
Borrower is not, pursuant to applicable Legal Requirements, permitted to waive
the giving of notice.  Borrower hereby
expressly waives the right to receive any notice from Lender with respect to
any matter for which this Agreement or the other Loan

 

74

 

Documents do
not specifically and expressly provide for the giving of notice by Lender to
Borrower.

Section 10.12         Remedies of Borrower.

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

Section 10.13         Expenses; Indemnity.

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

 

75

 

(b) Borrower shall indemnify, defend and hold harmless Lender from and
against any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any
kind or nature whatsoever (including, without limitation, the reasonable fees
and disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by Borrower of its obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents, or (ii) the use or intended use of the proceeds of the Loan
(collectively, the “Indemnified Liabilities”); provided, however, that
Borrower shall not have any obligation to Lender hereunder to the extent that
such Indemnified Liabilities arise from the gross negligence, illegal acts,
fraud or willful misconduct of Lender. 
To the extent that the undertaking to indemnify, defend and hold
harmless set forth in the preceding sentence may be unenforceable because it
violates any law or public policy, Borrower shall pay the maximum portion that
it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by Lender.

Section 10.14         Schedules Incorporated.

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

Section 10.15         Offsets, Counterclaims and Defenses.

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

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

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

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

 

76

 

that Lender
will refuse to make the Loan in the absence of strict compliance with any or
all thereof and no other Person shall under any circumstances be deemed to be a
beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by Lender if, in Lender’s sole discretion, Lender deems it
advisable or desirable to do so.

Section 10.17         Publicity.

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

Section 10.18         Waiver of Marshalling of Assets.

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

Section 10.19         Waiver of Counterclaim.

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

Section 10.20         Conflict; Construction of Documents; Reliance.

In the event of any conflict between the provisions of this Agreement
and any of the other Loan Documents, the provisions of this Agreement shall
control.  The parties hereto acknowledge
that they were represented by competent counsel in connection with the
negotiation, drafting and execution of the Loan Documents and that such Loan Documents
shall not be subject to the principle of construing their meaning against the
party which drafted same. Borrower acknowledges that, with respect to the Loan,
Borrower shall rely solely on its own judgment and advisors in entering into
the Loan without relying in any manner on any statements, representations or
recommendations of Lender or any parent, subsidiary or Affiliate of Lender.
Lender shall not be subject to any limitation whatsoever in the exercise of any
rights or remedies available to it under any of the Loan Documents or any other
agreements or instruments which govern the Loan by virtue of the ownership by
it or any parent, subsidiary or Affiliate of Lender of any equity interest any
of them may acquire in Borrower, and Borrower

 

77

 

hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Lender’s exercise of any such rights or
remedies.  Borrower acknowledges that
Lender engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.

Section 10.21         Brokers and Financial Advisors.

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

Section 10.22         Prior
Agreements.

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

Section 10.23         Transfer
of Loan.

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

Section 10.24         Joint
and Several Liability.

If Borrower consists of more than one person or party, the obligations
and liabilities of each person or party shall be joint and several.

(The balance of this page has
been intentionally left blank)

 

78

 

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

	
   

  	
  BORROWER:

   

  
	
   

  	
  MB LOUISVILLE SOUTHGATE, L.L.C., a Delaware limited
  liability company

   

  
	
   

  	
  By:

  	
  Minto
  Builders (Florida) Inc., a Florida corporation, its sole member

   

  
	
   

  	
   

  	
  By:

  	
  /s/ Valerie Medina

  
	
   

  	
   

  	
   

  	
  Name: Valerie Medina

  
	
   

  	
   

  	
   

  	
  Title: Assistant Secretary

  

 

 

 

I-1

 

 

	
   

  	
  LENDER:

   

  
	
   

  	
  MERRILL LYNCH

  MORTGAGE LENDING, INC., a Delaware corporation

   

  
	
   

  	
  By:

  	
  /s/
  [ILLEGIBLE]

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:Exhibit 10.56

 

 

Loan No. 20069217001

 

 

 

 

 

MB
LOUISVILLE SOUTHGATE, L.L.C., as Borrower

                                              
(Borrower)

 

 

To

 

 

MERRILL LYNCH
MORTGAGE LENDING, INC., as Mortgagee 

                                           (Mortgagee)

 

 

MORTGAGE, ASSIGNMENT OF LEASES AND 

RENTS AND SECURITY AGREEMENT

 

 

	
  Dated:

  	
   

  	
  As of April 21, 2006

  
	
  Location:

  	
   

  	
  10800 — 10960 Southgate Manor

  
	
   

  	
   

  	
  Drive

  
	
   

  	
   

  	
  Louisville, Kentucky

  
	
  County:

  	
   

  	
  Jefferson

  
	
   

  	
   

  	
   

  
	
  PREPARED BY AND UPON

  RECORDATION RETURN TO:

  
	
   

  
	
  Thacher Proffitt & Wood LLP

  Two World Financial Center

  New York, New York

  10281 Stephen J. Cerniglia, Esq.

  

 

 

 

 

 

 

Loan No.                         

 

       Loan No. 20069217001

 

 

MORTGAGE,
ASSIGNMENT OF LEASES AND RENTS AND

SECURITY AGREEMENT

 

THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT (this “Mortgage”) is made as of this 21 day of
April, 2006 by MB LOUISVILLE SOUTHGATE,
L.L.C., a Delaware limited liability company, having its principal
place of business at c/o Inland American Real Estate Trust, Inc., 2901
Butterfield Road, Oak Brook, DuPage County, Illinois 60523, as mortgagor (“Borrower”), to MERRILL LYNCH MORTGAGE LENDING, INC., a
Delaware corporation, having an address at 4 World Financial Center, 250 Vesey
Street, 16th Floor, New York, New York County, New York 10080, as beneficiary (“Lender”).

 

W
I  T  N  E  S  S  E  T  H
:

 

WHEREAS, pursuant to that certain Loan
Agreement dated as of the date hereof between Borrower and Lender (as the same
may be amended, restated, replaced, supplemented or otherwise modified from
time to time, the “Loan Agreement”),
Borrower has agreed to borrow from Lender the sum of TEN MILLION SEVEN HUNDRED
TWENTY-FIVE THOUSAND AND 00/100 DOLLARS ($10,725,000.00) (the “Loan”) as evidenced by that certain
Promissory Note dated the date hereof made by Borrower to Lender (such Note,
together with all extensions, renewals, replacements, restatements or
modifications thereof being hereinafter referred to as the “Note”) which Note has a maturity date
of May 1, 2016;

 

WHEREAS, Borrower desires to secure the
payment of the Debt (as defined hereinafter) and the performance of all of its
obligations under the Note, the Loan Agreement and the other Loan Documents;
and

 

WHEREAS, this Mortgage is that certain “Mortgage”
as defined in the Loan Agreement, and payment, fulfillment, and performance by
Borrower of its obligations thereunder and under the other Loan Documents are,
subject to the limits set forth herein, secured hereby, and each and every term
and provision of the Loan Agreement and the Note, including the rights,
remedies, obligations, covenants, conditions, agreements, indemnities,
representations and warranties of the parties therein, are hereby incorporated
by reference herein as though set forth in full and shall be considered a part
of this Mortgage (the Loan Agreement, the Note, this Mortgage, that certain
Assignment of Leases and Rents of even date herewith made by Borrower in favor
of Lender (the “Assignment of Leases”)
and all other documents evidencing or securing the Debt are hereinafter
referred to collectively as the “Loan
Documents”).

 

NOW THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this
Mortgage:

 

 

ARTICLE I

 

GRANTS OF
SECURITY 

 

1.1           Property
Mortgaged.  Borrower does hereby
irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer,
convey and grant a security interest to Lender and its successors and assigns,
the following property, rights, interests and estates now owned, or hereafter
acquired by Borrower (collectively, the “Property”):

 

                                                (a)           Land.  The real property described in Exhibit A
attached hereto and made a part hereof (the “Land”);

 

                                                (b)           Additional Land.  All additional lands, estates and development
rights hereafter acquired by Borrower for use in connection with the Land and
the development of the Land and all additional lands and estates therein which
may, from time to time, by supplemental mortgage or otherwise be expressly made
subject to the lien of this Mortgage;

 

                                                (c)
          Improvements.  The buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter erected or located on the Land (collectively, the
“Improvements”);

 

                                                (d)
          Easements.  All easements, rights-of-way or use, rights,
strips and gores of land, streets, ways, alleys, passages, sewer rights, water,
water courses, water rights and powers, air rights and development rights, and
all estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversion and reversions, remainder and remainders, and
all land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of dower, curtesy and rights of
curtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;

 

                                                (e)
          Equipment.  All “equipment,” as such term is defined in
Article 9 of the Uniform Commercial Code, now owned or hereafter acquired by
Borrower, which is used at or in connection with the Improvements or the Land
or is located thereon or therein (including, but not limited to, all machinery,
equipment, furnishings, and electronic data-processing and other office
equipment now owned or hereafter acquired by Borrower and any and all
additions, substitutions and replacements of any of the foregoing), together
with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto (collectively, the “Equipment”). Notwithstanding the foregoing, Equipment shall
not include any property belonging to tenants under leases except to the extent
that Borrower shall have any right or interest therein;

 

                                                (f)
           Fixtures.  All Equipment now owned, or the ownership of
which is hereafter acquired, by Borrower which is so related to the Land and
Improvements forming part of the Property that it is deemed fixtures or real
property under the law of the particular state in

 

2

 

which
the Equipment is located, including, without limitation, all building or
construction materials intended for construction, reconstruction, alteration or
repair of or installation on the Property, construction equipment, appliances,
machinery, plant equipment, fittings, apparatuses, fixtures and other items now
or hereafter attached to, installed in or used in connection with (temporarily
or permanently) any of the Improvements or the Land, including, but not limited
to, engines, devices for the operation of pumps, pipes, plumbing, cleaning,
call and sprinkler systems, fire extinguishing apparatuses and equipment,
heating, ventilating, plumbing, laundry, incinerating, electrical, air
conditioning and air cooling equipment and systems, gas and electric machinery,
appurtenances and equipment, pollution control equipment, security systems,
disposals, dishwashers, refrigerators and ranges, recreational equipment and
facilities of all kinds, and water, gas, electrical, storm and sanitary sewer
facilities, utility lines and equipment (whether owned individually or jointly
with others, and, if owned jointly, to the extent of Borrower’s interest
therein) and all other utilities whether or not situated in easements, all
water tanks, water supply, water power sites, fuel stations, fuel tanks, fuel
supply, and all other structures, together with all accessions, appurtenances,
additions, replacements, betterments and substitutions for any of the foregoing
and the proceeds thereof (collectively, the “Fixtures”).
Notwithstanding the foregoing, “Fixtures” shall not include any property which
tenants are entitled to remove pursuant to leases except to the extent that
Borrower shall have any right or interest therein;

 

                                                (g)
          Personal Property.  All furniture, furnishings, objects of art,
machinery, goods, tools, supplies, appliances, general intangibles, contract
rights, accounts, accounts receivable, franchises, licenses, certificates and
permits, and all other personal property of any kind or character whatsoever
(as defined in and subject to the provisions of the Uniform Commercial Code as
hereinafter defined), other than Fixtures, which are now or hereafter owned by
Borrower and which are located within or about the Land and the Improvements,
together with all accessories, replacements and substitutions thereto or
therefor and the proceeds thereof (collectively, the “Personal Property”), and the right, title
and interest of Borrower in and to any of the Personal Property which may be
subject to any security interests, as defined in the Uniform Commercial Code,
as adopted and enacted by the state or states where any of the Property is
located (the “Uniform Commercial Code”),
superior in lien to the lien of this Mortgage and all proceeds and products of
the above;

 

                                                (h)
          Leases and Rents.  All leases, subleases or subsubleases,
lettings, licenses, concessions or other agreements (whether written or oral)
pursuant to which any Person is granted a possessory interest in, or right to
use or occupy all or any portion of the Land and the Improvements, and every
modification, amendment or other agreement relating to such leases, subleases,
subsubleases, or other agreements entered into in connection with such leases,
subleases, subsubleases, or other agreements and every guarantee, of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto, heretofore or hereafter
entered into, whether before or after the filing by or against Borrower of any
petition for relief under 11 U.S.C. §101 et seq., as the same may be amended
from time to time (the “Bankruptcy Code”)
(collectively, the “Leases”)
and all right, title and interest of Borrower, its successors and assigns
therein and thereunder, including, without limitation, cash or securities
deposited thereunder to secure the performance by the lessees of their
obligations thereunder and all rents, additional rents, revenues, issues and
profits (including all oil and gas or other mineral royalties and bonuses) from
the Land and the

 

3

 

Improvements
whether paid or accruing before or after the filing by or against Borrower of
any petition for relief under the Bankruptcy Code (collectively, the “Rents”) and all proceeds from the sale
or other disposition of the Leases and the right to receive and apply the Rents
to the payment of the Debt;

 

                                                (i)            Condemnation Awards. All
awards or payments, including interest thereon, which may heretofore and
hereafter be made with respect to the Property, whether from the exercise of
the right of eminent domain (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of the right), or for a change of
grade, or for any other injury to or decrease in the value of the Property
subject to the terms, provisions and conditions of the Loan Agreement;

 

                                                (j)
           Insurance Proceeds.  All proceeds in respect of the Property under
any insurance policies covering the Property, including, without limitation,
the right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Property subject to the
terms, provisions and conditions of the Loan Agreement;

 

                                                (k)
          Tax Certiorari.  All refunds, rebates or credits in connection
with reduction in real estate taxes and assessments charged against the
Property as a result of tax certiorari or any applications or proceedings for
reduction;

 

                                                (l)
           Conversion.  All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims;

 

                                                (m)
         Rights.  Subject to the terms, provisions and
conditions of the Loan Agreement, the right, in the name and on behalf of
Borrower, to appear in and defend any action or proceeding brought with respect
to the Property and to commence any action or proceeding to protect the
interest of Lender in the Property;

 

                                                (n)
          Agreements.  All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Borrower therein and thereunder, including,
without limitation, the right, upon the happening of any default hereunder, to
receive and collect any sums payable to Borrower thereunder, in each case, to
the extent assignable;

 

                                                (o)           Trademarks.
 All tradenames, trademarks,
servicemarks, logos, copyrights, goodwill, books and records and all other
general intangibles relating to or used in connection with the operation of the
Property (excluding, however, the name “Inland” and any mark registered to The
Inland Group, Inc., or any of its affiliates), in each case, to the extent
assignable;

 

                                                (p)
          Accounts.  All reserves, escrows and deposit accounts
maintained by Borrower with respect to the Property, including without
limitation, all securities,

 

4

 

investments,
property and financial assets held therein from time to time and all proceeds,
products, distributions or dividends or substitutions thereon and thereof;

 

                                                (q)
          Letter of Credit.  All letter-of-credit rights (whether or not
the letter of credit is evidenced by a writing) Borrower now has or hereafter
acquires relating to the properties, rights, titles and interests referred to
in this Section 1.1;

 

                                                (r)
           Tort Claims.  All commercial tort claims Borrower now has
or hereafter acquires relating to the properties, rights, titles and interests
referred to in this Section 1.1; and

 

                                                (s)
          Other Rights.  Any and all other rights of Borrower in and to
the items set forth in Subsections (a) through (r) above.

 

AND without limiting any of the other
provisions of this Mortgage, to the extent permitted by applicable law,
Borrower expressly grants to Lender, as secured party, a security interest in
the portion of the Property which is or may be subject to the provisions of the
Uniform Commercial Code which are applicable to secured transactions; it being
understood and agreed that the Improvements and Fixtures are part and parcel of
the Land (the Land, the Improvements and the Fixtures collectively referred to
as the “Real Property”)
appropriated to the use thereof and, whether affixed or annexed to the Real
Property or not, shall for the purposes of this Mortgage be deemed conclusively
to be real estate and mortgaged hereby.

 

                                1.2           Assignment of Rents.  Borrower hereby absolutely and unconditionally
assigns to Lender all of Borrower’s right, title and interest in and to all
current and future Leases and Rents; it being intended by Borrower that this
assignment constitutes a present, absolute assignment and not an assignment for
additional security only.  Borrower
hereby grants to Lender the sole, exclusive and immediate right, with or
without taking possession of the Property, to demand, collect (by suit or
otherwise) receive and give valid and sufficient receipts for any and all of
said Rents and Profits, for which purpose Borrower does hereby irrevocably
make, constitute and appoint Lender as attorney-in-fact with full power to
appoint substitutes or a trustee to accomplish such purpose (which power of attorney
shall be irrevocable so long as any indebtedness secured hereby is outstanding,
shall be deemed to be coupled with an interest, shall survive the voluntary or
involuntary dissolution of Borrower and shall not be affected by any disability
or incapacity suffered by Borrower subsequent to the date hereof.)  Nevertheless, subject to the terms of the
Assignment of Leases and Section 7.1(h) of this Mortgage, Lender grants to
Borrower a revocable license to collect, receive, use and enjoy the Rents.  Borrower shall hold the Rents, or a portion
thereof sufficient to discharge all current sums due on the Debt, for use in
the payment of such sums.

 

                                1.3           Security Agreement.  This Mortgage is both a real property mortgage
and a “security agreement” within the meaning of the Uniform Commercial
Code.  The Property includes both real
and personal property and all other rights and interests, whether tangible or
intangible in nature, of Borrower in the Property.  By executing and delivering this Mortgage,
Borrower hereby grants to Lender, as security for the Obligations (hereinafter
defined), a security interest in the Fixtures, the Equipment and the Personal
Property and other property constituting the Property, whether now owned or
hereafter acquired, to the full extent that the

 

5

 

Fixtures, the Equipment and the Personal Property may be subject to the
Uniform Commercial Code (said portion of the Property so subject to the Uniform
Commercial Code being called the “Collateral”).
If an Event of Default shall occur and be continuing, Lender, in addition to
any other rights and remedies which it may have, shall have and may exercise
immediately and without demand, any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code, including,
without limiting the generality of the foregoing, the right to take possession
of the Collateral or any part thereof, and to take such other measures as
Lender may deem necessary for the care, protection and preservation of the
Collateral.  Upon request or demand of
Lender after the occurrence and during the continuance of an Event of Default,
Borrower shall, at its expense, assemble the Collateral and make it available
to Lender at a convenient place (at the Land if tangible property) reasonably
acceptable to Lender. Borrower shall pay to Lender on demand any and all
expenses, including reasonable legal expenses and attorneys’ fees, incurred or
paid by Lender in protecting its interest in the Collateral and in enforcing
its rights hereunder with respect to the Collateral after the occurrence and
during the continuance of an Event of Default. 
Any notice of sale, disposition or other intended action by Lender with
respect to the Collateral sent to Borrower in accordance with the provisions
hereof at least ten (10) business days prior to such action, shall, except as
otherwise provided by applicable law, constitute commercially reasonable notice
to Borrower.  The proceeds of any
disposition of the Collateral, or any part thereof, may, except as otherwise
required by applicable law, be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem
proper.  Borrower’s (Debtor’s) principal
place of business is as set forth on page one hereof and the address of Lender
(Secured Party) is as set forth on page one hereof.

 

1.4           Fixture
Filing.  Certain of the Property is
or will become “fixtures” (as that term is defined in the Uniform Commercial
Code) on the Land, described or referred to in this Mortgage, and this
Mortgage, upon being filed for record in the real estate records of the city or
county wherein such fixtures are situated, shall operate also as a financing
statement filed as a fixture filing in accordance with the applicable
provisions of said Uniform Commercial Code upon such of the Property that is or
may become fixtures.

 

The Borrower hereby authorizes the Lender at any time and from time to
time to file any initial financing statements, amendments thereto and
continuation statements with or without the signature of the Borrower as
authorized by applicable law, as applicable to all or part of the fixtures or
Personal Property.  For purposes of such
filings, the Borrower agrees to furnish any information requested by the Lender
promptly upon request by the Lender.  The
Borrower also ratifies its authorization for the Lender to have filed any like
initial financing statements, amendments thereto and continuation statements,
if filed prior to the date of this Mortgage. 
The Borrower hereby irrevocably constitutes and appoints the Lender and
any officer or agent of the Lender, with full power of substitution, as its
true and lawful attorneys-in-fact with full irrevocable power and authority in
the place and stead of the Borrower or in the Borrower’s own name to execute in
the Borrower’s name any documents and otherwise to carry out the purposes of
this Section 1.4, to the extent that the Borrower’s authorization above is not
sufficient.  To the extent permitted by
law, the Borrower hereby ratifies all acts said attorneys-in-fact have lawfully
done in the past or shall lawfully do or cause to be done in the future by
virtue hereof.  This power of attorney is
coupled with an interest and shall be irrevocable.

 

 

6

 

1.5           Pledges
of Monies Held.  Borrower hereby
pledges to Lender any and all monies now or hereafter held by Lender or on
behalf of Lender, including, without limitation, any sums deposited in the
Lockbox Account (if any), the Reserve Funds and Net Proceeds, as additional
security for the Obligations until expended or applied as provided in this
Mortgage or in the Loan Agreement.

 

CONDITIONS TO
GRANT 

 

TO HAVE AND TO HOLD the above granted and
described Property unto Lender and its successors and assigns, forever;

 

PROVIDED, HOWEVER, these presents are upon
the express condition that, if Borrower shall well and truly pay to Lender the
Debt at the time and in the manner provided in the Note, the Loan Agreement and
this Mortgage, shall well and truly perform the Other Obligations as set forth
in this Mortgage and shall well and truly abide by and comply with each and
every covenant and condition set forth herein and in the Note, the Loan
Agreement and the other Loan Documents, these presents and the estate hereby
granted shall cease, terminate and be void and Lender shall mark the Note “paid
in full” and will, at Borrower’s sole cost and expense, release the lien of
this Mortgage; provided, however, that Borrower’s obligation to indemnify and
hold harmless Lender pursuant to the provisions hereof shall survive any such
payment or release.

 

ARTICLE II

 

DEBT AND
OBLIGATIONS SECURED 

 

                                2.1           Debt.  This
Mortgage and the grants, assignments and transfers made in Article 1 are given
for the purpose of securing the debt evidenced by the Note (the “Debt”).

 

                                2.2           Other Obligations.  This Mortgage and the grants, assignments and
transfers made in Article 1 are also given for the purpose of securing the
following (the “Other Obligations”):  

 

                                                (a)           the performance of all other
obligations of Borrower contained herein;  

 

                                                (b)           the performance of each obligation of
Borrower contained in the Loan Agreement and any other Loan Document; and

 

(c)           the
performance of each obligation of Borrower contained in any renewal, extension,
amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of the Note, the Loan Agreement or any other
Loan Document.

 

2.3           Debt and Other
Obligations. Borrower’s obligations for the payment of the Debt and the
performance of the Other Obligations shall be referred to collectively herein
as the “Obligations.”

 

7

 

ARTICLE III

 

BORROWER
COVENANTS 

 

Borrower covenants and agrees that:

 

                                3.1           Payment of Debt.  Borrower will pay the Debt at the time and in
the manner provided in the Loan Agreement, the Note and this Mortgage.

 

                                3.2           Incorporation by Reference.  All the covenants, conditions and agreements
contained in (a) the Loan Agreement, (b) the Note and (c) all and any of the
other Loan Documents, are hereby made a part of this Mortgage to the same
extent and with the same force as if fully set forth herein, and in the event
of a conflict between the terms hereof and the terms of the Loan Agreement, the
terms of the Loan Agreement shall control.

 

                                3.3           Insurance.  Borrower shall obtain and maintain, or cause
to be maintained, in full force and effect at all times insurance with respect
to Borrower and the Property as required pursuant to the Loan Agreement.

 

                                3.4           Maintenance of Property.  Borrower shall cause the Property to be
maintained in a good and safe condition and repair.  The Improvements, the Fixtures, the Equipment
and the Personal Property shall not be removed, demolished or materially
altered except as provided for in the Loan Agreement (except for normal
replacement of the Fixtures, the Equipment or the Personal Property, tenant
finish and refurbishment of the Improvements) without the consent of Lender as
provided for in the Loan Agreement. 
Borrower shall promptly repair, replace or rebuild any part of the
Property which may be destroyed by any casualty, or become damaged, worn or
dilapidated and shall complete and pay for any structure at any time in the
process of construction or repair on the Land except as set forth in the Loan
Agreement.

 

                                3.5           Waste.  Borrower shall not commit or suffer any waste
of the Property or make any change in the use of the Property which will in any
way materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or allow
the cancellation of any Policy, or do or permit to be done thereon anything
that may in any way materially impair the value of the Property or the security
of this Mortgage. Borrower will not, without the prior written consent of
Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the surface or the subsurface of the Land,
regardless of the depth thereof or the method of mining or extraction thereof.

 

3.6           Payment
for Labor and Materials.

 

                                                (a)           Subject to the terms, provisions and
conditions of the Loan Agreement, Borrower will promptly pay or cause to be
paid when due all bills and costs for labor, materials, and specifically
fabricated materials (“Labor and Material
Costs”) incurred in connection with the Property and never permit to
exist beyond the due date thereof in respect of the Property or any part
thereof any lien or security interest, even though inferior to the liens and
the security interests hereof, and in any event never permit to be created or
exist in respect of the Property or any part thereof any other or additional
lien or security interest other than the liens or security interests hereof
except for the Permitted Encumbrances.

 

8

 

                                                (b)            Subject to the terms, provisions and
conditions of the Loan Agreement, after prior written notice to Lender,
Borrower, or any tenant of the Property pursuant to the terms of such tenant’s
lease, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any of the Labor and
Material Costs, provided that (i) no Event of Default has occurred and is
continuing under the Loan Agreement, the Note, this Mortgage or any of the
other Loan Documents, (ii) Borrower is permitted to do so under the provisions
of any other mortgage, deed of trust or deed to secure debt affecting the
Property, (iii) such proceeding shall suspend the collection of the Labor and
Material Costs from Borrower and from the Property or Borrower shall have paid
all of the Labor and Material Costs under protest, (iv) such proceeding shall
be permitted under and be conducted in accordance with the provisions of any
other instrument to which Borrower is subject and shall not constitute a
default thereunder, (v) neither the Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, canceled or
lost, and (vi) Borrower shall have furnished the security as may be required in
the proceeding, or as may be reasonably requested by Lender to insure the
payment of any contested Labor and Material Costs, together with all interest
and penalties thereon.

 

                                3.7           Performance of Other Agreements.  Borrower shall observe and perform each and
every term, covenant and provision to be observed or performed by Borrower
pursuant to the Loan Agreement, any other Loan Document and any other agreement
or recorded instrument affecting or pertaining to the Property and any
amendments, modifications or changes thereto.

 

                                3.8           Change of Name, Identity or Structure.  Except as set forth in the Loan Agreement,
Borrower shall not change Borrower’s name, identity (including its trade name
or names) or, if not an individual, Borrower’s corporate, partnership or other
structure without notifying Lender of such change in writing at least thirty
(30) days prior to the effective date of such change and, in the case of a
change in Borrower’s structure, without first obtaining the prior written
consent of Lender which consent will not be unreasonably withheld, delayed or
conditioned provided that such action is otherwise in compliance with the Loan
Agreement. Borrower shall execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change reasonably required by Lender to
establish or maintain the validity, perfection and priority of the security
interest granted herein. At the request of Lender, Borrower shall execute a
certificate in form reasonably satisfactory to Lender listing the trade names
under which Borrower intends to operate the Property, and representing and
warranting that Borrower does business under no other trade name with respect
to the Property.

 

                                3.9           Title.  Borrower
has good, marketable and insurable fee simple title to the real property
comprising part of the Property and good title to the balance of such Property,
free and clear of all Liens (as defined in the Loan Agreement) whatsoever
except the Permitted Encumbrances (as defined in the Loan Agreement), such
other Liens as are permitted pursuant to the Loan Documents and the Liens
created by the Loan Documents.  To
Borrower’s actual knowledge, the Permitted Encumbrances in the aggregate do not
materially adversely affect the value, operation or use of the Property or Borrower’s
ability to repay the Loan.  This
Mortgage, when properly recorded in the appropriate records, together with any
Uniform Commercial Code

 

9

 

financing statements required to be filed in connection therewith, will
create (a) a valid, perfected first priority lien, security title and security
interest on the Property, to the extent such security interests can be
perfected by filing; subject only to any applicable Permitted Encumbrances,
such other Liens as are permitted pursuant to the Loan Documents and the Liens
created by the Loan Documents.  There are
no claims for payment for work, labor or materials affecting the Property which
are past due and are or may become a lien prior to, or of equal priority with,
the Liens created by the Loan Documents unless such claims for payments are
being contested in accordance with the terms and conditions of this Mortgage.

 

3.10         Letter
of Credit Rights.  If Borrower is at
any time a beneficiary under a letter of credit relating to the properties,
rights, titles and interests referenced in Section 1.1 of this Mortgage now or
hereafter issued in favor of Borrower, Borrower shall promptly notify Lender
thereof and, at the request and option of Lender, Borrower shall, pursuant to
an agreement in form and substance satisfactory to Lender, either (i) arrange
for the issuer and any confirmer of such letter of credit to consent to an
assignment to Lender of the proceeds of any drawing under the letter of credit
or (ii) arrange for the Lender to become the transferee beneficiary of the
letter of credit, with Lender agreeing, in each case that the proceeds of any
drawing under the letter of credit are to be applied as provided in Section 7.2
of this Mortgage.

 

ARTICLE IV

 

OBLIGATIONS
AND RELIANCES 

 

                                4.1           Relationship of Borrower and Lender. The
relationship between Borrower and Lender is solely that of debtor and creditor,
and Lender has no fiduciary or other special relationship with Borrower, and no
term or condition of any of the Loan Agreement, the Note, this Mortgage and the
other Loan Documents shall be construed so as to deem the relationship between
Borrower and Lender to be other than that of debtor and creditor.

 

                                4.2           No Reliance on Lender. The general partners, members,
principals and (if Borrower is a trust) beneficial owners of Borrower are
experienced in the ownership and operation of properties similar to the
Property, and Borrower and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
Borrower is not relying on Lender’s expertise, business acumen or advice in
connection with the Property.

 

4.3           No
Lender Obligations.

 

                                                (a)           Notwithstanding the provisions of
Subsections 1.1(h) and (n) or Section 1.2, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to such agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents.

 

                                                (b)           By accepting or approving anything
required to be observed, performed or fulfilled or to be given to Lender
pursuant to this Mortgage, the Loan Agreement, the Note or the other Loan
Documents, including, without limitation, any officer’s certificate, balance
sheet, statement of profit and loss or other financial statement, survey,
appraisal, or

 

10

 

insurance policy, Lender shall not be deemed to have warranted,
consented to, or affirmed the sufficiency, the legality or effectiveness of
same, and such acceptance or approval thereof shall not constitute any warranty
or affirmation with respect thereto by Lender.

 

4.4           Reliance.
 Borrower recognizes and acknowledges
that in accepting the Loan Agreement, the Note, this Mortgage and the other
Loan Documents, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in Section 4.1 of the
Loan Agreement without any obligation to investigate the Property and
notwithstanding any investigation of the Property by Lender; that such reliance
existed on the part of Lender prior to the date hereof, that the warranties and
representations are a material inducement to Lender in making the Loan; and
that Lender would not be willing to make the Loan and accept this Mortgage in
the absence of the warranties and representations as set forth in Section 4.1
of the Loan Agreement.

 

ARTICLE V

 

FURTHER
ASSURANCES 

 

                                5.1           Recording of Security Instrument, Etc.  Borrower forthwith upon the execution and
delivery of this Mortgage and thereafter, from time to time, will cause this
Mortgage and any of the other Loan Documents creating a lien or security
interest or evidencing the lien hereof upon the Property and each instrument of
further assurance to be filed, registered or recorded in such manner and in
such places as may be required by any present or future law in order to publish
notice of and fully to protect and perfect the lien or security interest hereof
upon, and the interest of Lender in, the Property.  Borrower will pay all taxes, filing,
registration or recording fees, and all expenses incident to the preparation,
execution, acknowledgment and/or recording of the Note, this Mortgage, the
other Loan Documents, any note, deed of trust or mortgage supplemental hereto,
any security instrument with respect to the Property and any instrument of
further assurance, and any modification or amendment of the foregoing
documents, and all federal, state, county and municipal taxes, duties, imposts,
assessments and charges arising out of or in connection with the execution and
delivery of this Mortgage, any deed of trust or mortgage supplemental hereto,
any security instrument with respect to the Property or any instrument of
further assurance, and any modification or amendment of the foregoing
documents, except where prohibited by law so to do.

 

                                5.2           Further Acts, Etc. 
Borrower will, at the cost of Borrower, and without expense to Lender,
do, execute, acknowledge and deliver all and every such further acts, deeds,
conveyances, deeds of trust, mortgages, assignments, notices of assignments,
transfers and assurances as Lender shall, from time to time, reasonably
require, for the better assuring, conveying, assigning, transferring, and confirming
unto Lender the property and rights hereby mortgaged, deeded, granted,
bargained, sold, conveyed, confirmed, pledged, assigned, warranted and
transferred or intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Mortgage or
for filing, registering or recording this Mortgage, or for complying with all
Legal Requirements.  Borrower, on demand,
will execute and deliver, and in the event it shall fail to so execute and
deliver, hereby authorizes Lender to execute in the name of Borrower or without
the signature of Borrower to the extent

 

 

11

 

Lender may lawfully do so, one or more financing statements to evidence
more effectively the security interest of Lender in the Property.  Borrower grants to Lender an irrevocable
power of attorney coupled with an interest for the purpose of exercising and
perfecting any and all rights and remedies available to Lender at law and in
equity following an Event of Default, including, without limitation, such
rights and remedies available to Lender pursuant to this Section 5.2. Nothing
contained in this Section 5.2 shall be deemed to create an obligation on the
part of Borrower to pay any costs and expenses incurred by Lender in connection
with the Securitization or other sale or transfer of the Loan, except to the
extent provided for in the Loan Agreement.

 

                                5.3           Changes in Tax, Debt, Credit and Documentary Stamp Laws.

 

                                                (a)           If any law is enacted or adopted or
amended after the date of this Mortgage which deducts the Debt from the value
of the Property for the purpose of taxation or which imposes a tax, either
directly or indirectly, on the Debt or Lender’s interest in the Property,
Borrower will pay the tax, with interest and penalties thereon, if any.  If Lender is advised by counsel chosen by it
that the payment of tax by Borrower would be unlawful or taxable to Lender or
unenforceable or provide the basis for a defense of usury then Lender shall
have the option by written notice of not less than one hundred eighty (180)
days to declare the Debt immediately due and payable.

 

                                                (b)           Borrower will not claim or demand or
be entitled to any credit or credits on account of the Debt for any part of the
Taxes or Other Charges assessed against the Property, or any part thereof, and
no deduction shall otherwise be made or claimed from the assessed value of the
Property, or any part thereof, for real estate tax purposes by reason of this
Mortgage or the Debt. If such claim, credit or deduction shall be required by
law, Lender shall have the option, by written notice of not less than one
hundred eighty (180) days, to declare the Debt immediately due and payable.

 

                                                (c)           If at any time the United States of
America, any State thereof or any subdivision of any such State shall require
revenue or other stamps to be affixed to the Note, this Mortgage, or any of the
other Loan Documents or impose any other tax or charge on the same, Borrower
will pay for the same, with interest and penalties thereon, if any.

 

                                5.4           Splitting of Mortgage.  The provisions of Section 9.7 of the Loan
Agreement are hereby incorporated by reference herein.

 

                                5.5           Replacement Documents.  Upon receipt of an affidavit of an officer of
Lender as to the loss, theft, destruction or mutilation of the Note or any
other Loan Document which is not of public record, and, in the case of any such
mutilation, upon surrender and cancellation of such Note or other Loan
Document, Borrower will issue, in lieu thereof, a replacement Note or other
Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note
or other Loan Document in the same principal amount thereof and otherwise of
like tenor.

 

 

12

 

ARTICLE VI

 

DUE ON
SALE/ENCUMBRANCE 

 

                                6.1           Lender Reliance. Borrower acknowledges that Lender
has examined and relied on the experience of Borrower and its general partners,
members, principals and (if Borrower is a trust) beneficial owners in owning
and operating properties such as the Property in agreeing to make the Loan, and
will continue to rely on Borrower’s ownership of the Property as a means of
maintaining the value of the Property as security for repayment of the Debt and
the performance of the Other Obligations. 
Borrower acknowledges that Lender has a valid interest in maintaining
the value of the Property so as to ensure that, should Borrower default in the
repayment of the Debt or the performance of the Other Obligations, Lender can
recover the Debt by a sale of the Property conducted in accordance with the
terms of the Loan Documents and applicable law.

 

                                6.2           No Sale/Encumbrance. Except as set forth in Section
5.2.13 of the Loan Agreement, Borrower agrees that Borrower shall not, without
the prior written consent of Lender, sell, convey, mortgage, grant, bargain,
encumber, pledge, assign, or otherwise transfer the Property or any part
thereof, including, but not limited to, a grant of an easement, restriction,
covenant, reservation or right of way (except as expressly permitted in Section
5.2.13 of the Loan Agreement), or permit the Property or any part thereof to be
sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned,
or otherwise transferred, unless Lender shall consent thereto in accordance
with Section 6.4 hereof.

 

                                6.3           Sale/Encumbrance Defined. Except as permitted
pursuant to the terms of Section 5.2.13 of the Loan Agreement, a sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer within the meaning of this Article 6 shall be deemed to include, but
not be limited to, (a) an installment sales agreement wherein Borrower agrees
to sell the Property or any part thereof for a price to be paid in
installments; (b) an agreement by Borrower leasing all or a substantial part of
the Property for other than actual occupancy by a space tenant thereunder or a
sale, assignment or other transfer of, or the grant of a security interest in,
Borrower’s right, title and interest in and to any Leases or any Rents; (c) the
voluntary or involuntary sale, conveyance, transfer or pledge of the stock of
the general partner of Borrower (or the stock of any corporation directly or
indirectly controlling such general partner by operation of law or otherwise)
or the creation or issuance of new stock by which an aggregate of more than ten
percent (10%) of such general partner’s stock shall be vested in a party or
parties who are not now stockholders; (d) the voluntary or involuntary sale,
conveyance, transfer or pledge of any general or limited partnership interest
in Borrower; (e) if Borrower, any general partner of Borrower, any guarantor or
any indemnitor is a limited liability company, the change, removal or
resignation of a member or managing member or the transfer or pledge of the
interest of any member or managing member or any profits or proceeds relating
to such interest; or (f) any other transfer prohibited by the terms of the Loan
Agreement.

 

                                6.4           Lender’s Rights. Except as set forth in the Loan
Agreement, Lender reserves the right to condition the consent required
hereunder upon (a) a modification of the terms hereof and of the Loan
Agreement, the Note or the other Loan Documents; (b) an assumption of the Loan
Agreement, the Note, this Mortgage and the other Loan Documents as so

 

13

 

modified by
the proposed transferee, subject to the provisions of Section 9.4 of the Loan Agreement;
(c) payment of all of Lender’s reasonable expenses incurred in connection with
such transfer including, without limitation, the cost of any third party
reports, legal fees, rating agency fees and expenses, or required legal
opinions; (d) the payment of an assumption fee equal to one percent (1%) of the
outstanding principal balance of the Loan; (e) the confirmation in writing by
the applicable Rating Agencies that the proposed transfer will not, in and of
itself, result in a downgrade, qualification or withdrawal of the initial, or,
if higher, then current ratings assigned in connection with any Securitization;
(f) intentionally deleted; (g) the proposed transferee’s continued compliance
with the representations and covenants set forth in Section 4.1.30 and 5.2.12
of the Loan Agreement; (h) the delivery of evidence satisfactory to Lender that
the single purpose nature and bankruptcy remoteness of Borrower following such
transfers are in accordance with the then current standards of Lender and the Rating
Agencies, or (i) such other conditions as Lender shall determine in its
reasonable discretion to be in the interest of Lender, including, without
limitation, the creditworthiness, reputation and qualifications of the
transferee with respect to the Loan and the Property. Lender shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due and
payable upon Borrower’s sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of the Property without Lender’s
consent (to the extent such consent is required hereunder or under the Loan
Agreement).  This provision shall apply
to every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property regardless of whether voluntary or not,
or whether or not Lender has consented to any previous sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the
Property.

 

ARTICLE VII

 

RIGHTS AND
REMEDIES UPON DEFAULT 

 

7.1           Remedies.
Upon the occurrence and during the continuance of any Event of Default,
Borrower agrees that Lender may take such action, without notice or demand, as
it deems advisable to protect and enforce its rights against Borrower and in
and to the Property, including, but not limited to, the following actions, each
of which may be pursued concurrently or otherwise, at such time and in such
order as Lender may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Lender:

 

                                                (a)           declare the entire unpaid Debt to be
immediately due and payable;

 

                                                (b)           institute proceedings, judicial or
otherwise, for the complete foreclosure of this Mortgage under any applicable
provision of law, in which case the Property or any interest therein may be
sold for cash or upon credit in one or more parcels or in several interests or
portions and in any order or manner;

 

                                                (c)           with or without entry, to the extent
permitted and pursuant to the procedures provided by applicable law, institute
proceedings for the partial foreclosure of this Mortgage for the portion of the
Debt then due and payable, subject to the continuing lien and security interest
of this Mortgage for the balance of the Debt not then due, unimpaired and
without loss of priority;

 

14

 

                                                (d)           sell for cash or upon credit the
Property or any part thereof and all estate, claim, demand, right, title and
interest of Borrower therein and rights of redemption thereof, pursuant to
power of sale or otherwise, at one or more sales, as an entirety or in parcels,
at such time and place, upon such terms and after such notice thereof as may be
required or permitted by law;

 

                                                (e)           institute an action, suit or
proceeding in equity for the specific performance of any covenant, condition or
agreement contained herein, in the Note, the Loan Agreement or in the other
Loan Documents;

 

                                                (f)            recover judgment on the Note either
before, during or after any proceedings for the enforcement of this Mortgage or
the other Loan Documents;

 

                                                (g)           apply for the appointment of a
receiver, trustee, liquidator or conservator of the Property, without notice
and without regard for the adequacy of the security for the Debt and without
regard for the solvency of Borrower, any guarantor, indemnitor with respect to
the Loan or of any Person, liable for the payment of the Debt;

 

                                                (h)           the license granted to Borrower under
Section 1.2 hereof shall automatically be revoked and Lender may, to the extent
permitted pursuant to procedures provided by applicable law, enter into or upon
the Property, either personally or by its agents, nominees or attorneys and
dispossess Borrower and its agents and servants therefrom, without liability
for trespass, damages or otherwise and exclude Borrower and its agents or
servants wholly therefrom, and take possession of all books, records and
accounts relating thereto and Borrower agrees to surrender possession of the Property
and of such books, records and accounts to Lender upon demand, and thereupon
Lender may (i) use, operate, manage, control, insure, maintain, repair, restore
and otherwise deal with all and every part of the Property and conduct the
business thereat; (ii) complete any construction on the Property in such manner
and form as Lender deems advisable; (iii) make alterations, additions,
renewals, replacements and improvements to or on the Property; (iv) exercise
all rights and powers of Borrower with respect to the Property, whether in the
name of Borrower or otherwise, including, without limitation, the right to
make, cancel, enforce or modify Leases, obtain and evict tenants, and demand,
sue for, collect and receive all Rents of the Property and every part thereof;
(v) require Borrower to pay monthly in advance to Lender, or any receiver
appointed to collect the Rents, the fair and reasonable rental value for the
use and occupation of such part of the Property as may be occupied by Borrower;
(vi) require Borrower to vacate and surrender possession of the Property to
Lender or to such receiver and, in default thereof, Borrower may be evicted by
summary proceedings or otherwise; and (vii) apply the receipts from the
Property to the payment of the Debt, in such order, priority and proportions as
Lender shall deem appropriate in its sole discretion after deducting therefrom
all expenses (including reasonable attorneys’ fees) incurred in connection with
the aforesaid operations and all amounts necessary to pay the Taxes, Other
Charges, insurance and other expenses in connection with the Property, as well
as just and reasonable compensation for the services of Lender, its counsel,
agents and employees;

 

                                                (i)            exercise any and all rights and
remedies granted to a secured party upon default under the Uniform Commercial
Code, including, without limiting the generality of the foregoing: (i) the
right to take possession of the Fixtures, the Equipment, the Personal

 

15

 

Property
or any part thereof, and to take such other measures as Lender may deem
necessary for the care, protection and preservation of the Fixtures, the
Equipment, the Personal Property, and (ii) request Borrower at
its expense to assemble the Fixtures, the Equipment, the Personal Property and
make it available to Lender at a convenient place acceptable to Lender.  Any notice of sale, disposition or other
intended action by Lender with respect to the Fixtures, the Equipment, the
Personal Property sent to Borrower in accordance with the provisions hereof at
least five (5) days prior to such action, shall constitute commercially
reasonable notice to Borrower;

 

                                                (j)            apply any sums then deposited or
held in escrow or otherwise by or on behalf of Lender in accordance with the
terms of the Loan Agreement, this Mortgage or any other Loan Document to the
payment of the following items in any order in its uncontrolled discretion:

 

                                                                (i)            Taxes and Other Charges;

 

                                                                (ii)
          Insurance Premiums;

 

                                                                (iii)
         Interest on the unpaid principal
balance of the Note;

 

                                                                (iv)
         Amortization of the unpaid
principal balance of the Note;

 

                                                                (v)
          All other sums payable pursuant
to the Note, the Loan Agreement, this Mortgage and the other Loan Documents,
including, without limitation, advances made by Lender pursuant to the terms of
this Mortgage;

 

                                                (k)           pursue such other remedies as Lender
may have under applicable law;   

 

                                                (l)
           apply the undisbursed balance
of any Net Proceeds Deficiency deposit, together with interest thereon,
to the payment of the Debt in such order, priority and proportions as Lender
shall deem to be appropriate in its discretion; or

 

                                                (m)
         under the power of sale hereby
granted, Lender shall have the discretionary right to cause some or all of the
Property, including any Personal Property, to be sold or otherwise disposed of
in any combination and in any manner permitted by applicable law.

 

In the event
of a sale, by foreclosure, power of sale or otherwise, of less than all of
Property, this Mortgage shall continue as a lien and security interest on the
remaining portion of the Property unimpaired and without loss of priority.

 

                                7.2           Application of Proceeds.  The purchase money, proceeds and avails of
any disposition of the Property, and/or any part thereof, or any other sums
collected by Lender pursuant to the Note, this Mortgage or the other Loan
Documents, may be applied by Lender to the payment of the Debt in such priority
and proportions as Lender in its discretion shall deem proper.

 

16

 

                                7.3           Right to Cure Defaults.  Upon the occurrence and during the continuance
of any Event of Default or if Borrower fails to make any payment or to do any
act as herein provided, Lender may, but without any obligation to do so and
without notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, make or do the same in such manner and to such extent as
Lender may deem necessary to protect the security hereof. Lender is authorized
to enter upon the Property for such purposes, or appear in, defend, or bring
any action or proceeding to protect its interest in the Property or to
foreclose this Mortgage or collect the Debt, and the cost and expense thereof
(including reasonable attorneys’ fees to the extent permitted by law), with
interest as provided in this Section 7.3, shall constitute a portion of the
Debt and shall be due and payable to Lender upon demand. All such costs and
expenses incurred by Lender in remedying such Event of Default or such failed
payment or act or in appearing in, defending, or bringing any such action or
proceeding shall bear interest at the Default Rate, for the period after notice
from Lender that such cost or expense was incurred to the date of payment to
Lender.  All such costs and expenses
incurred by Lender together with interest thereon calculated at the Default
Rate shall be deemed to constitute a portion of the Debt and be secured by this
Mortgage and the other Loan Documents and shall be immediately due and payable
upon demand by Lender therefor.

 

                                7.4           Actions and Proceedings.  Lender has the right to appear in and defend
any action or proceeding brought with respect to the Property and to bring any
action or proceeding, in the name and on behalf of Borrower, which Lender, in
its discretion, decides should be brought to protect its interest in the
Property.

 

                                7.5           Recovery of Sums Required To be Paid.  Lender shall have the right from time to time
to take action to recover any sum or sums which constitute a part of the Debt
as the same become due, without regard to whether or not the balance of the
Debt shall be due, and without prejudice to the right of Lender thereafter to
bring an action of foreclosure, or any other action, for a default or defaults
by Borrower existing at the time such earlier action was commenced.

 

                                7.6           Examination of Books and Records.  At reasonable times and upon reasonable
notice, Lender, its agents, accountants and attorneys shall have the right to
examine the records, books, management and other papers of Borrower which
reflect upon their financial condition, at the Property or at any office
regularly maintained by Borrower where the books and records are located.
Lender and its agents shall have the right to make copies and extracts from the
foregoing records and other papers. In addition, at reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the
right to examine and audit the books and records of Borrower pertaining to the
income, expenses and operation of the Property during reasonable business hours
at any office of Borrower where the books and records are located. This Section
7.6 shall apply throughout the term of the Note and without regard to whether
an Event of Default has occurred or is continuing.  Upon the occurrence and during the
continuance of an Event of Default, the action contemplated by this Section 7.6
shall be at Borrower’s sole cost and expense.

 

 

17

 

                                7.7           Other Rights, Etc. 

 

                                                (a)
          The failure of Lender to insist
upon strict performance of any term hereof shall not be deemed to be a waiver
of any term of this Mortgage.  Borrower
shall not be relieved of Borrower’s obligations hereunder by reason of (i) the
failure of Lender to comply with any request of Borrower or any guarantor or
indemnitor with respect to the Loan to take any action to foreclose this
Mortgage or otherwise enforce any of the provisions hereof or of the Note or
the other Loan Documents, (ii) the release, regardless of consideration, of the
whole or any part of the Property, or of any person liable for the Debt or any
portion thereof, or (iii) any agreement or stipulation by Lender extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage or the other Loan Documents.

 

                                                (b)
          It is agreed that the risk of
loss or damage to the Property is on Borrower, and Lender shall have no
liability whatsoever for decline in value of the Property, for failure to maintain
the Policies, or for failure to determine whether insurance in force is
adequate as to the amount of risks insured. Possession by Lender shall not be
deemed an election of judicial relief, if any such possession is requested or
obtained, with respect to any Property or collateral not in Lender’s
possession.

 

                                                (c)           Lender
may resort for the payment of the Debt to any other security held by Lender in
such order and manner as Lender, in its discretion, may elect.  Lender may take action to recover the Debt,
or any portion thereof, or to enforce any covenant hereof without prejudice to
the right of Lender thereafter to foreclose this Mortgage.  The rights of Lender under this Mortgage
shall be separate, distinct and cumulative and none shall be given effect to
the exclusion of the others.  No act of
Lender shall be construed as an election to proceed under any one provision
herein to the exclusion of any other provision. 
Lender shall not be limited exclusively to the rights and remedies
herein stated but shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.

 

                                7.8           Right to Release Any Portion of the Property.  Lender may release any portion of the Property
for such consideration as Lender may require without, as to the remainder of
the Property, in any way impairing or affecting the lien or priority of this
Mortgage, or improving the position of any subordinate lienholder with respect
thereto, except to the extent that the obligations hereunder shall have been
reduced by the actual monetary consideration, if any, received by Lender for
such release, and may accept by assignment, pledge or otherwise any other
property in place thereof as Lender may require without being accountable for
so doing to any other lienholder. This Mortgage shall continue as a lien and
security interest in the remaining portion of the Property.

 

                                7.9           Violation of Laws.  If the Property is not in material compliance
with Legal Requirements, Lender may impose additional requirements upon Borrower
in connection herewith including, without limitation, monetary reserves or
financial equivalents.

 

                                7.10
        Recourse and Choice of Remedies.
Notwithstanding any other provision of this Mortgage or the Loan Agreement,
including, without limitation, Section 9.4 of the Loan Agreement, Lender and
other Indemnified Parties (as hereinafter defined) are entitled to enforce the
obligations of Borrower, any guarantor or indemnitor contained in Sections 9.2,
9.3 and 9.4 

 

 

18

 

herein and
Section 9.4 of the Loan Agreement without first resorting to or exhausting any
security or collateral and without first having recourse to the Note or any of
the Property, through foreclosure or acceptance of a deed in lieu of foreclosure
or otherwise, and in the event Lender commences a foreclosure action against
the Property, Lender is entitled to pursue a deficiency judgment with respect
to such obligations against Borrower and any guarantor or indemnitor with
respect to the Loan.  The provisions of
Sections 9.2, 9.3 and 9.4 herein and Section 9.4 of the Loan Agreement are
exceptions to any non-recourse or exculpation provisions in the Loan Agreement,
the Note, this Mortgage or the other Loan Documents, and Borrower and any
guarantor or indemnitor with respect to the Loan are fully and personally
liable for the obligations pursuant to Sections 9.2, 9.3 and 9.4 herein and
Section 9.4 of the Loan Agreement. The liability of Borrower and any guarantor
or indemnitor with respect to the Loan pursuant to Sections 9.2, 9.3 and 9.4
herein and Section 9.4 of the Loan Agreement is not limited to the original
principal amount of the Note. 
Notwithstanding the foregoing, nothing herein shall inhibit or prevent
Lender from foreclosing or exercising any other rights and remedies pursuant to
the Loan Agreement, the Note, this Mortgage and the other Loan Documents,
whether simultaneously with foreclosure proceedings or in any other
sequence.  A separate action or actions
may be brought and prosecuted against Borrower pursuant to Sections 9.2, 9.3
and 9.4 herein and Section 9.4 of the Loan Agreement, whether or not action is
brought against any other Person or whether or not any other Person is joined
in the action or actions.  In addition,
Lender shall have the right but not the obligation to join and participate in,
as a party if it so elects, any administrative or judicial proceedings or
actions initiated in connection with any matter addressed in Article 8 or
Section 9.4 herein.

 

                                7.11         Right of Entry.  Upon reasonable notice to Borrower, Lender and
its agents shall have the right to enter and inspect the Property at all
reasonable times.

 

                                7.12         Release.  Upon
payment of all sums secured by this Mortgage, the Lender shall release this
Mortgage.  The Borrower shall pay the
Lender’s reasonable costs incurred in releasing this Mortgage.

 

ARTICLE VIII

 

ENVIRONMENTAL
HAZARDS 

 

                                8.1           Environmental Representations and Warranties. Based
upon that certain Phase I Environmental Site Assessment of the Property
delivered to Lender (such report is referred to below as the “Environmental Report”) and to Borrower’s
actual knowledge, after due inquiry, and except as otherwise disclosed by the
Environmental Report , Borrower hereby represents and warrants (a) there are no
Hazardous Substances (defined below) or underground storage tanks in, on, or
under the Property, except those that are both (i) in compliance with
Environmental Laws (defined below) and with permits issued pursuant thereto and
(ii) fully disclosed to Lender in writing pursuant the Environmental Report;
(b) there are no past, present or threatened Releases (defined below) of
Hazardous Substances in, on, under or from the Property which has not been
fully remediated in accordance with 

 

19

 

Environmental Law; (c) there is no threat of any Release of Hazardous
Substances migrating to the Property; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant
thereto, in connection with the Property which has not been fully remediated in
accordance with Environmental Law; (e) Borrower does not know of, and has not
received, any written or oral notice or other communication from any Person
(including, but not limited to, a governmental entity) relating to Hazardous
Substances or Remediation (defined below) thereof, of possible liability of any
Person pursuant to any Environmental Law, other environmental conditions in
connection with the Property, or any actual or potential administrative or
judicial proceedings in connection with any of the foregoing; and (f) Borrower
has truthfully and fully provided to Lender, in writing, any and all
information relating to conditions in, on, under or from the Property that is
known to Borrower and that is contained in Borrower’s files and records,
including but not limited to any reports relating to Hazardous Substances in,
on, under or from the Property and/or to the environmental condition of the
Property.

 

“Environmental
Law” means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law,
relating to protection of human health or the environment, relating to
Hazardous Substances, relating to liability for or costs of Remediation or of
other actual or threatened danger to human health or the environment.  Environmental Law includes, but is not
limited to, the following statutes, as amended, any successor thereto, and any
regulations promulgated pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing similar issues:  the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community Right-to-Know
Act; the Hazardous Substances Transportation Act; the Resource Conservation and
Recovery Act (including, but not limited to, Subtitle I relating to underground
storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean
Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the
Occupational Safety and Health Act; the Federal Water Pollution Control Act;
the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species
Act; the National Environmental Policy Act; the River and Harbors Appropriation
Act. Environmental Law also includes, but is not limited to, any present and
future federal, state and local laws, statutes, ordinances, rules, regulations
and the like, as well as common law: 
conditioning transfer of property upon a negative declaration or other
approval of a governmental authority of the environmental condition of the
Property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any governmental
authority or other Person, whether or not in connection with transfer of title
to or interest in property; imposing conditions or requirements in connection
with permits or other authorization for lawful activity; relating to nuisance,
trespass or other causes of action related to the Property; and relating to
wrongful death, personal injury, or property or other damage in connection with
any physical condition or use of the Property.

 

“Hazardous Substances”
include but are not limited to any and all substances (whether solid, liquid or
gas) defined, listed, or otherwise classified as pollutants, hazardous wastes,
hazardous substances, hazardous materials, extremely hazardous wastes, or words
of similar meaning or regulatory effect under any present or future Environmental
Laws or that may have a negative impact on human health or the environment,
including but not limited to petroleum and petroleum products, asbestos and
asbestos-containing materials, polychlorinated biphenyls, lead, radon,
radioactive materials, flammables and explosives, but excluding substances of
kinds and in amounts ordinarily and customarily used or stored in similar
properties for the purpose of cleaning or other maintenance or operations and
otherwise in compliance with all Environmental Laws.

 

20

 

“Release”
of any Hazardous Substance includes but is not limited to any release, deposit,
discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other movement of Hazardous
Substances.

 

“Remediation”
includes but is not limited to any response, remedial, removal, or corrective
action, any activity to cleanup, detoxify, decontaminate, contain or otherwise
remediate any Hazardous Substance, any actions to prevent, cure or mitigate any
Release of any Hazardous Substance, any action to comply with any Environmental
Laws or with any permits issued pursuant thereto, any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous
Substances or to anything referred to in Article 8 hereof.

 

8.2           Environmental
Covenants.  Borrower covenants and
agrees that: (a) all uses and operations on or of the Property, whether by
Borrower or any other Person, shall be in compliance with all Environmental
Laws and permits issued pursuant thereto; (b) Borrower shall not cause or
permit the Release of any Hazardous Substances in, on, under or from the
Property; (c) there shall be no Hazardous Substances in, on, or under the
Property, except those that are both (i) in compliance with all Environmental
Laws and with permits issued pursuant thereto and (ii) fully disclosed to
Lender in writing; (d) subject to a right to contest under applicable
Environmental Law, provided any such contest stays any enforcement proceeding
by the applicable authority, Borrower shall keep the Property free and clear of
all liens and other encumbrances imposed pursuant to any Environmental Law,
whether due to any act or omission of Borrower or any other Person (the “Environmental Liens”); (e) Borrower
shall, at its sole cost and expense, fully and expeditiously cooperate in all
activities pursuant to Section 8.3 below, including, but not limited to,
providing all relevant information and making knowledgeable persons available
for interviews; (f) Borrower shall, at its sole cost and expense, perform any
environmental site assessment or other investigation of environmental
conditions in connection with the Property, pursuant to any reasonable written
request of Lender made in the event that Lender has a good faith reason to
believe based upon credible evidence or information that an environmental
hazard exists on or affects the Property (including, but not limited to,
sampling, testing and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas), and share with
Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof;
(g) Borrower shall, at its sole cost and expense, comply with all reasonable
written requests of Lender made in the event that Lender has a good faith
reason to believe based upon credible evidence or information that an
environmental hazard exists on or affects the Property to (i) effectuate
Remediation of any condition (including but not limited to a Release of a
Hazardous Substance) in, on, under or from the Property; (ii) comply with any
Environmental Law; (iii) comply with any directive from any governmental
authority; and (iv) take any other reasonable action necessary or appropriate
for protection of human health or the environment; (h) Borrower shall not do or
knowingly allow any tenant or other user of the Property to do any act that
materially increases the dangers to human health or the environment, poses an
unreasonable risk of harm to any Person (whether on or off the Property),
impairs or may impair the value of the Property, is contrary to any requirement
of any insurer, constitutes a public or private nuisance, constitutes waste, or
violates any covenant, condition, agreement or easement applicable to the
Property; and (i) Borrower shall immediately notify Lender in writing of (A)
any presence or Releases or threatened Releases of Hazardous Substances in, on,
under, from or

 

 

21

 

migrating towards the Property; (B) any non-compliance with any
Environmental Laws related in any way to the Property; (C) any actual or
potential Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating to the Property; and (E) any written or oral
notice or other communication of which Borrower becomes aware from any source
whatsoever (including, but not limited to, a governmental entity) relating in
any way to Hazardous Substances or Remediation thereof, possible liability of
any Person pursuant to any Environmental Law, other environmental conditions in
connection with the Property, or any actual or potential administrative or
judicial proceedings in connection with anything referred to in this Article 8.

 

8.3           Lender’s
Rights.  In the event that Lender has
a good faith reason to believe based upon credible evidence or information that
an environmental hazard exists on the Property, upon reasonable notice from
Lender, Borrower shall, at Borrower’s expense, promptly cause an engineer or
consultant satisfactory to Lender to conduct any environmental assessment or
audit (the scope of which shall be determined in Lender’s sole and absolute
discretion) and take any samples of soil, groundwater or other water, air, or
building materials or any other invasive testing requested by Lender and
promptly deliver the results of any such assessment, audit, sampling or other
testing; provided, however, if such results are not delivered to Lender within
a reasonable period, upon reasonable notice to Borrower, Lender and any other
Person designated by Lender, including, but not limited to, any receiver, any
representative of a governmental entity, and any environmental consultant,
shall have the right, but not the obligation, to enter upon the Property at all
reasonable times to assess any and all aspects of the environmental condition
of the Property and its use, including, but not limited to, conducting any
environmental assessment or audit (the scope of which shall be determined in
Lender’s sole and absolute discretion) and taking samples of soil, groundwater
or other water, air, or building materials, and reasonably conducting other
invasive testing.  Borrower shall
cooperate with and provide access to Lender and any such Person designated by
Lender.

 

ARTICLE IX

 

INDEMNIFICATION

 

9.1           General
Indemnification. Borrower shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless the Indemnified Parties from and
against any and all claims, suits, liabilities (including, without limitation,
strict liabilities), actions, proceedings, obligations, debts, damages, losses,
costs, expenses, diminutions in value, fines, penalties, charges, fees,
expenses, judgments, awards, amounts paid in settlement, punitive damages,
foreseeable and unforeseeable consequential damages, of whatever kind or nature
(including, but not limited to, reasonable attorneys’ fees and other costs of
defense) (collectively, the “Losses”)
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any one or more
of the following: (a) ownership of this Mortgage, the Property or any interest
therein or receipt of any Rents; (b) any amendment to, or restructuring of, the
Debt, and the Note, the Loan Agreement, this Mortgage, or any other Loan
Documents; (c) any and all lawful action that may be taken by Lender in
connection with the enforcement of the provisions of this Mortgage or the Loan
Agreement or the Note or any of the other Loan Documents, whether or not suit
is filed in connection with same, or in connection with Borrower, any guarantor
or indemnitor and/or any partner, joint 

 

22

 

venturer or
shareholder thereof becoming a party to a voluntary or involuntary federal or
state bankruptcy, insolvency or similar proceeding; (d) any accident, injury
to, or death of, persons or loss of, or damage to, property occurring in, on or
about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (e) performance
of any labor or services or the furnishing of any materials or other property
in respect of the Property or any part thereof; (f) the failure of any person
to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement
for Recipients of Proceeds from Real Estate, Broker and Barter Exchange
Transactions, which may be required in connection with this Mortgage, or to
supply a copy thereof in a timely fashion to the recipient of the proceeds of
the transaction in connection with which this Mortgage is made; (g) any failure
of the Property to be in compliance with any Legal Requirements; (h) the
enforcement by any Indemnified Party of the provisions of this Article 9; (i)
any and all claims and 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 contained in any Lease;
(j) the payment of any commission, charge or brokerage fee to anyone claiming
through Borrower which may be payable in connection with the funding of the
Loan; or (k) any misrepresentation made by Borrower in this Mortgage or any
other Loan Document. Notwithstanding the foregoing, Borrower shall not be
liable to the Indemnified Parties under this Section 9.1 for any Losses to
which the Indemnified Parties may become subject to the extent such Losses
arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of the Indemnified Parties or Losses resulting from acts or
omissions arising after a completed foreclosure of the Property or acceptance
by Lender of a deed in lieu of foreclosure. 
Any amounts payable to Lender by reason of the application of this
Section 9.1 shall become immediately due and payable and shall bear interest at
the Default Rate from the date loss or damage is sustained by Lender until
paid.  For purposes of this Article 9,
the term “Indemnified Parties”
means Lender and any Person who is or will have been involved in the
origination of the Loan, any Person who is or will have been involved in the
servicing of the Loan secured hereby, any Person in whose name the encumbrance
created by this Mortgage is or will have been recorded, persons and entities
who may hold or acquire or will have held a full or partial interest in the
Loan secured hereby (including, but not limited to, investors or prospective
investors in the Securities, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan
secured hereby for the benefit of third parties) as well as the respective
directors, officers, shareholders, partners, employees, agents, servants,
representatives, contractors, subcontractors, affiliates, subsidiaries,
participants, successors and assigns of any and all of the foregoing
(including, but not limited to, any other Person who holds or acquires or will
have held a participation or other full or partial interest in the Loan,
whether during the term of the Loan or as a part of or following a foreclosure
of the Loan and including, but not limited to, any successors by merger,
consolidation or acquisition of all or a substantial portion of Lender’s assets
and business).

 

9.2           Mortgage
and/or Intangible Tax.  Borrower
shall, at its sole cost and expense, protect, defend, indemnify, release and
hold harmless the Indemnified Parties from and against any and all Losses
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any tax on the
making and/or recording of this Mortgage, the Note or any of the other Loan
Documents, but excluding any income, franchise or other similar taxes.  Borrower hereby agrees that, in the event that
it is determined that any documentary stamp taxes or intangible personal
property taxes are due 

 

23

 

hereon or on any mortgage or promissory note
executed in connection herewith (including, without limitation, the Note),
Borrower shall indemnify and hold harmless the Indemnified Parties for
all such documentary stamp and/or intangible taxes, including all penalties and
interest assessed or charged in connection therewith.

 

                                9.3           ERISA Indemnification.  Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the Indemnified Parties
from and against any and all Losses (including, without limitation, reasonable
attorneys’ fees and costs incurred in the investigation, defense, and
settlement of Losses incurred in correcting any prohibited transaction or in
the sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender’s sole
discretion) that Lender may incur, directly or indirectly, as a result of a
default under Sections 4.1.9 or 5.2.12 of the Loan Agreement.

 

                                9.4           Environmental Indemnification.  Borrower shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the Indemnified Parties
from and against any and all Losses and costs of Remediation (whether or not
performed voluntarily), engineers’ fees, environmental consultants’ fees, and
costs of investigation (including, but not limited to, sampling, testing, and
analysis of soil, water, air, building materials and other materials and
substances whether solid, liquid or gas) imposed upon or incurred by or
asserted against any Indemnified Parties, and directly or indirectly arising
out of or in any way relating to any one or more of the following: (a) any
presence of any Hazardous Substances in, on, above, or under the Property; (b)
any past, present or threatened Release of Hazardous Substances in, on, above,
under or from the Property; (c) any activity by Borrower, any Person affiliated
with Borrower or any tenant or other user of the Property in connection with
any actual, proposed or threatened use, treatment, storage, holding, existence,
disposition or other Release, generation, production, manufacturing,
processing, refining, control, management, abatement, removal, handling,
transfer or transportation to or from the Property of any Hazardous Substances
at any time located in, under, on or above the Property; (d) any activity by
Borrower, any Person affiliated with Borrower or any tenant or other user of
the Property in connection with any actual or proposed Remediation of any
Hazardous Substances at any time located in, under, on or above the Property,
whether or not such Remediation is voluntary or pursuant to court or
administrative order, including, but not limited to, any removal, remedial or
corrective action; (e) any past, present or threatened non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with the Property or operations thereon,
including, but not limited to, any failure by Borrower, any Affiliate of
Borrower or any tenant or other user of the Property to comply with any order
of any Governmental Authority in connection with any Environmental Laws; (f)
the imposition, recording or filing or threatened imposition, recording or
filing of any Environmental Lien encumbering the Property; (g) any
administrative processes or proceedings or judicial proceedings in any way
connected with any matter addressed in Article 8 hereof and this Section 9.4;
(h) any past, present or threatened injury to, destruction of or loss of
natural resources in any way connected with the Property, including, but not
limited to, costs to investigate and assess such injury, destruction or loss;
(i) any acts of Borrower or other users of the Property in arranging for
disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Substances owned or possessed by Borrower
or such other users, at any facility or incineration vessel owned or operated
by another Person and containing such or any similar Hazardous Substance; (j)
any

 

24

 

acts of
Borrower or other users of the Property, in accepting any Hazardous Substances
for transport to disposal or treatment facilities, incineration vessels or
sites selected by Borrower or such other users, from which there is a Release,
or a threatened Release of any Hazardous Substance which causes the incurrence
of costs for Remediation; (k) any personal injury, wrongful death, or property
damage arising under any statutory or common law or tort law theory, including
but not limited to damages assessed for the maintenance of a private or public
nuisance or for the conducting of an abnormally dangerous activity on or near
the Property; and (l) any misrepresentation or inaccuracy in any representation
or warranty or material breach or failure to perform any covenants or other
obligations pursuant to Article 8 herein. Notwithstanding the foregoing,
Borrower shall not be liable under this Section 9.4 for any Losses or costs of
Remediation to which the Indemnified Parties may become subject to the extent
such Losses or costs of Remediation arise by reason of the gross negligence,
illegal acts, fraud or willful misconduct of the Indemnified Parties or Losses
resulting from acts or omissions arising after a completed foreclosure of the
Property or acceptance by Lender of a deed in lieu of foreclosure.  This indemnity shall survive any termination,
satisfaction or foreclosure of this Mortgage, subject to the provisions of
Section 10.5 herein.

 

                                9.5           Duty to Defend; Attorneys’ Fees and Other Fees and
Expenses.  Upon written request by
any Indemnified Party, Borrower shall defend such Indemnified Party (if
requested by any Indemnified Party, in the name of the Indemnified Party) by
attorneys and other professionals approved by the Indemnified Parties.  Notwithstanding the foregoing or anything to
the contrary contained in any other Loan Document, if the defendants in any
such claim or proceeding include both Borrower and any Indemnified Party and
Borrower and such Indemnified Party shall have reasonably concluded that there
are any legal defenses available to it and/or other Indemnified Parties that
are different from or additional to those available to Borrower, such
Indemnified Party shall have the right to select separate counsel to assert
such legal defenses and to otherwise participate in the defense of such action
on behalf of such Indemnified Party, provided that no compromise or settlement
shall be entered without Borrower’s consent, which consent shall not be
unreasonably withheld.  Upon demand,
Borrower shall pay or, in the sole and absolute discretion of the Indemnified
Parties, reimburse, the Indemnified Parties for the payment of reasonable fees
and disbursements of attorneys, engineers, environmental consultants,
laboratories and other professionals in connection therewith.

 

ARTICLE X

 

WAIVERS 

 

                                10.1           Waiver of Counterclaim.  To the extent permitted by applicable law,
Borrower hereby waives the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or proceeding brought
against it by Lender arising out of or in any way connected with this Mortgage,
the Loan Agreement, the Note, any of the other Loan Documents, or the
Obligations.

 

                                10.2         Marshalling and Other Matters.  To the extent permitted by applicable law,
Borrower hereby waives, to the extent permitted by law, the benefit of all
appraisement, valuation, stay, extension, reinstatement and redemption laws now
or hereafter in force and all

 

25

 

rights of marshalling in the event of any sale hereunder of the
Property or any part thereof or any interest therein.  Further, Borrower hereby expressly waives any
and all rights of redemption from sale under any order or decree of foreclosure
of this Mortgage on behalf of Borrower, and on behalf of each and every person
acquiring any interest in or title to the Property subsequent to the date of
this Mortgage and on behalf of all persons to the extent permitted by
applicable law.

 

                                10.3         Waiver of Notice.  To the extent permitted by applicable law,
Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Mortgage specifically and
expressly provides for the giving of notice by Lender to Borrower and except
with respect to matters for which Lender is required by applicable law to give
notice, and Borrower hereby expressly waives the right to receive any notice
from Lender with respect to any matter for which this Mortgage does not
specifically and expressly provide for the giving of notice by Lender to
Borrower.

 

                                10.4         Waiver of Statute of Limitations.  To the extent permitted by applicable law,
Borrower hereby expressly waives and releases to the fullest extent permitted
by law, the pleading of any statute of limitations as a defense to payment of
the Debt or performance of its Other Obligations.

 

                                10.5         Survival.  The
indemnifications made pursuant to Sections 9.3 and 9.4 herein and the
representations and warranties, covenants, and other obligations arising under
Article 8 herein, shall continue indefinitely in full force and effect and
shall survive and shall in no way be impaired by: any satisfaction or other
termination of this Mortgage, any assignment or other transfer of all or any
portion of this Mortgage or Lender’s interest in the Property (but, in such
case, shall benefit both Indemnified Parties and any assignee or transferee),
any exercise of Lender’s rights and remedies pursuant hereto including, but not
limited to, foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Loan Agreement, the Note or
any of the other Loan Documents, any transfer of all or any portion of the
Property (whether by Borrower or by Lender following foreclosure or acceptance
of a deed in lieu of foreclosure or at any other time), any amendment to this
Mortgage, the Loan Agreement, the Note or the other Loan Documents, and any act
or omission that might otherwise be construed as a release or discharge of
Borrower from the obligations pursuant hereto. Notwithstanding anything to the
contrary contained in this Mortgage or the other Loan Documents, Borrower shall
not have any obligations or liabilities under the indemnification under Section
9.4 herein or other indemnifications with respect to Hazardous Substances
contained in the other Loan Documents with respect to those obligations and
liabilities that Borrower can prove arose solely from Hazardous Substances that
(i) were not present on or a threat to the Property prior to the date that
Lender or its nominee acquired title to the Property, whether by foreclosure,
exercise by power of sale, acceptance of a deed-in-lieu of foreclosure or
otherwise and (ii) were not the result of any act or negligence of Borrower or
any of Borrower’s affiliates, agents or contractors.

 

26

 

ARTICLE XI

 

EXCULPATION 

 

The provisions of Section 9.4 of the Loan
Agreement are hereby incorporated by reference into this Mortgage to the same
extent and with the same force as if fully set forth herein.

 

ARTICLE XII

 

NOTICES 

 

All notices or other written communications
hereunder shall be delivered in accordance with Section 10.6 of the Loan
Agreement.

 

ARTICLE XIII

 

APPLICABLE LAW

 

                                13.1         GOVERNING LAW.  THIS MORTGAGE SHALL BE DEEMED TO BE A
CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE WHERE THE PROPERTY IS
LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED.

 

                                13.2         Usury Laws.  Notwithstanding
anything to the contrary, (a) all agreements and communications between
Borrower and Lender are hereby and shall automatically be limited so that,
after taking into account all amounts deemed interest, the interest contracted
for, charged or received by Lender shall never exceed the maximum lawful rate
or amount, (b) in calculating whether any interest exceeds the lawful maximum,
all such interest shall be amortized, prorated, allocated and spread over the
full amount and term of all principal indebtedness of Borrower to Lender, and (c)
if through any contingency or event, Lender receives or is deemed to receive
interest in excess of the lawful maximum, any such excess shall be deemed to
have been applied toward payment of the principal of any and all then
outstanding indebtedness of Borrower to Lender, or if there is no such
indebtedness, shall immediately be returned to Borrower.

 

                                13.3         Provisions Subject to Applicable Law.  All rights, powers and remedies provided in
this Mortgage may be exercised only to the extent that the exercise thereof
does not violate any applicable provisions of law and are intended to be
limited to the extent necessary so that they will not render this Mortgage
invalid, unenforceable or not entitled to be recorded, registered or filed
under the provisions of any applicable law. 
If any term of this Mortgage or any application thereof shall be invalid
or unenforceable, the remainder of this Mortgage and any other application of
the term shall not be affected thereby.

 

 

27

 

ARTICLE XIV

 

DEFINITIONS 

 

All capitalized terms not defined herein
shall have the respective meanings set forth in the Loan Agreement.  Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Mortgage may be used interchangeably in singular or plural form and the
word “Borrower” shall mean “each
Borrower and any subsequent owner or owners of the Property or any part thereof
or any interest therein,” the word “Lender”
shall mean “Lender and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any
other evidence of indebtedness secured by this Mortgage,” the word “Property” shall include any portion of
the Property and any interest therein, and the phrases “attorneys’ fees,” “legal fees” and “counsel fees” shall include any and all
attorneys’, paralegal and law clerk fees and disbursements, including, but not
limited to, fees and disbursements at the pre-trial, trial and appellate levels
incurred or paid by Lender in protecting its interest in the Property, the
Leases and the Rents and enforcing its rights hereunder.

 

ARTICLE XV

 

MISCELLANEOUS
PROVISIONS 

 

                                15.1         No Oral Change.  This Mortgage, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Borrower or Lender, but
only by an agreement in writing signed by the party against whom enforcement of
any modification, amendment, waiver, extension, change, discharge or
termination is sought.

 

                                15.2         Successors and Assigns.  This Mortgage shall be binding upon and inure
to the benefit of Borrower and Lender and their respective successors and
assigns forever.

 

                                15.3         Inapplicable Provisions.  If any term, covenant or condition of the Loan
Agreement, the Note or this Mortgage is held to be invalid, illegal or
unenforceable in any respect, the Loan Agreement, the Note and this Mortgage
shall be construed without such provision.

 

                                15.4         Headings, Etc. 
The headings and captions of various Sections of this Mortgage are for
convenience of reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions hereof.

 

                                15.5         Number and Gender.  Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural and
vice versa.

 

                                15.6         Subrogation.  If
any or all of the proceeds of the Note have been used to extinguish, extend or
renew any indebtedness heretofore existing against the Property, then, to the
extent of the funds so used, Lender shall be subrogated to all of the rights,
claims, liens, titles, and interests existing against the Property heretofore
held by, or in favor of, the holder of such indebtedness and such former
rights, claims, liens, titles, and interests, if any, are not

 

28

 

waived but rather are continued in full force and effect in favor of
Lender and are merged with the lien and security interest created herein as
cumulative security for the repayment of the Debt, the performance and
discharge of Borrower’s obligations hereunder, under the Loan Agreement, the
Note and the other Loan Documents and the performance and discharge of the
Other Obligations.

 

                                15.7         Entire Agreement.  The Note, the Loan Agreement, this Mortgage
and the other Loan Documents constitute the entire understanding and agreement
between Borrower and Lender with respect to the transactions arising in
connection with the Debt and supersede all prior written or oral understandings
and agreements between Borrower and Lender with respect thereto. Borrower
hereby acknowledges that, except as incorporated in writing in the Note, the
Loan Agreement, this Mortgage and the other Loan Documents, there are not, and
were not, and no persons are or were authorized by Lender to make, any
representations, understandings, stipulations, agreements or promises, oral or written,
with respect to the transaction which is the subject of the Note, the Loan
Agreement, this Mortgage and the other Loan Documents.

 

                                15.8         Limitation on Lender’s Responsibility.  No provision of this Mortgage shall operate to
place any obligation or liability for the control, care, management or repair
of the Property upon Lender, nor shall it operate to make Lender responsible or
liable for any waste committed on the Property by the tenants or any other
Person, or for any dangerous or defective condition of the Property, or for any
negligence in the management, upkeep, repair or control of the Property
resulting in loss or injury or death to any tenant, licensee, employee or
stranger. Nothing herein contained shall be construed as constituting Lender a “mortgagee
in possession.”

 

                                15.9         Future Advances.  IT IS THE INTENT OF BORROWER AND LENDER THAT
THIS MORTGAGE SECURE ALL FUTURE ADVANCES (INCLUDING OPTIONAL AND PROTECTIVE
ADVANCES) MADE PURSUANT TO THE LOAN DOCUMENTS.

 

ARTICLE XVI

 

SPECIAL
KENTUCKY PROVISIONS 

 

                                16.1         Principles of Construction.  In the event of any inconsistencies between
the terms and conditions of this Article 16 and the terms and conditions of
this Mortgage, the terms and conditions of this Article 16 shall control and be
binding.

 

                                16.2         In subsection (f) of Section 1.1 of this Mortgage entitled “Fixtures”,
the phrase “particular state in which the Equipment is located” is hereby
deleted and the words “Commonwealth of Kentucky” are substituted therefor.

 

                                16.3         In subsection (g) of Section 1.1. of this Mortgage entitle “Personal
Property”, the phrase “state or states where any of the Property is located” is
hereby deleted and the words “Commonwealth of Kentucky” are substituted
therefore.

 

29

 

                                16.4         The following is hereby added to the end of Section 1.4 of
this Mortgage entitled “Fixture Filing”.

 

Fixture Filing.  For purposes of the Uniform Commercial Code,
the following information is furnished:

(a)                                the name and address of the record
owner of the real estate described in this instrument is the name and address
of Borrower set forth in the first paragraph of this Mortgage;

(b)                               the name and address of the Debtor
(Borrower) is set forth in the first paragraph of this Mortgage;

(c)                                the name and address of the Secured
Party (Lender) is set forth in the first paragraph of this Mortgage;

(d)                               information concerning the security
interest evidenced by this instrument may be obtained from the Secured Party at
its address above;

(e)                                the federal identification number of
Borrower is 20-4390133; and

(f)                                  this document covers goods which are
or to become fixtures.

 

                                16.5         The words “, with covenant of General Warranty” are hereby
added immediately following the phrase “Lender and its successors and assigns,
forever” in the paragraph entitled “CONDITIONS TO GRANT” in Article I of this
Mortgage.

 

                                16.6         Future Advances.  This Mortgage secures not only the initial
advances under the Note but also all renewals and extensions of the Note and the
loans evidenced thereby and all other additional indebtedness, whether direct,
indirect, future, contingent or otherwise, connected with or arising out of
this Mortgage or the other Loan Documents, as the same hereafter may be
amended, to the extent of not more than $21,450,000.00.  It shall be a default under this Mortgage if
Borrower requests a release, in the manner provided by KRS 382.520, of any
portion of the lien securing any of the additional indebtedness secured by this
Mortgage pursuant to this Section prior to the date that all of the obligations
secured by this Mortgage have been paid and discharged, and Borrower hereby
waives any and all right to request such a release to the maximum extent
permitted by law.

 

[NO FURTHER TEXT ON THIS PAGE]

 

30

 

IN WITNESS WHEREOF, THIS MORTGAGE has been
executed by Borrower the day and year first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  MB LOUISVILLE SOUTHGATE, L.L.C.

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Minto Builders (Florida) Inc., a Florida corporation, its sole member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Valerie Medina

  
	
   

  	
   

  	
   

  	
  Name: Valerie Medina

  
	
   

  	
   

  	
   

  	
  Title: Assistant Secretary

  

 

 

 

ACKNOWLEDGMENT 

 

	
  STATE OF IL

  	
  )

  	
   

  	
   

  
	
   

  	
  ) SS.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  COUNTY OF
  DuPage

  	
  )

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

The foregoing instrument was subscribed,
sworn to and acknowledged before me this 20 day of April, 2006 by Valerie
Medina, as Assistant Secretary of Minto Builders (Florida) Inc., a Florida
corporation, the sole member of MB Louisville Southgate, L.L.C., a Delaware
limited liability company on behalf of said company in its capacity as Assistant
Secretary of said company.

 

 

	
  /s/ Carolyn Lundren

  	
   

  
	
  Notary
  Public,

  
	
   

  
	
  My Commission Expires:

  
	
  (Notarial Seal)

  

 

 

 

This Security Instrument was prepared by:

 

Stephen Cerniglia, Esq.

Thacher Proffitt & Wood LLP

Two World Financial Center

New York, New York 10281

 

	
  /s/ Stephen
  Cerniglia

  	
   

  	
   

  	
   

  
	
  Signature of
  Preparer

  	
   

  	
   

  	
   

  

 

 

 

 

EXHIBIT A

 

Located in
Jefferson County, Kentucky and being all of Lot 13 as shown on approved Minor
Subdivision Plat bearing Docket #256-96 attached and made a part of instrument
recoreded in Deed Book 7143, page 108, in the ofice of the Clerk of Court
Jefferson County, Kentucky;

 

TOGETHER
WITH prepetual, non-executive easement for predestrian with a vehicular ingress
and egress as described in Deed of Easement recorded in Deed Book 6997, page
301, said records.

 

 

 

Being
the same property conveyed to MB Louisville Southgate, L.L.C., a Delaware
limited liability company, by Deed dated March 2, 2006, recorded March 3, 2006
in Deed Book 8790, Page 372, in the Office of the Clerk of Jefferson County,
Kentucky.

 

Tax parcel identification
number:  23-2759-0013-0000

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