<Page>
Exhibit 10.38
Allstate Insurance Company
Loan No. 122397
MORTGAGE, ASSIGNMENT OF LEASES,
RENTS AND CONTRACTS, SECURITY AGREEMENT
AND FIXTURE FILING
FROM
INLAND SOUTHEAST STONY CREEK, L.L.C., AS MORTGAGOR
TO
ALLSTATE INSURANCE COMPANY, AS MORTGAGEE
DATED: January 5, 2004
LOAN AMOUNT: $14,162,000
PROPERTY ADDRESS:
STONEY CREEK MARKETPLACE
17130 MERCANTILE BOULEVARD
NOBLESVILLE, INDIANA
<Page>
TABLE OF CONTENTS
<Table>
<Caption>
ARTICLE SECTION DESCRIPTION PAGE NUMBER
- ------- ------- ----------- -----------
I. COVENANTS OF MORTGAGOR........................................5
1.01. Performance of Obligations Secured............................5
1.02. Insurance.....................................................5
1.03. Condemnation..................................................7
1.04. Damage to property............................................8
1.05. Escrow Fund for Condemnation and Insurance Proceeds..........10
1.06. Taxes, Liens and other Items.................................11
1.07. Assignment of Leases, Contracts, Rents and profits...........12
1.08. Due on Sale or Encumbrance...................................16
1.09. Preservation and Maintenance of property.....................16
1.10. Use of property..............................................17
1.11. Alterations and Additions....................................17
1.12. Offset Certificates..........................................18
1.13. Mortgagee's Costs and Expenses...............................18
1.14. Protection of Security; Costs and Expenses...................19
1.15. Mortgagor's Covenants Respecting Collateral..................20
1.16. Covenants Regarding Financial Statements.....................23
1.17. Environmental Covenants......................................24
1.18. Further Assurances...........................................25
1.19. Mortgagor's Continued Existence..............................26
II. EVENTS OF DEFAULT............................................26
2.01. Monetary and Performance Defaults............................26
2.02. Bankruptcy, Insolvency, Dissolution..........................27
2.03. Misrepresentation............................................27
2.04. Default under Subordinate Loans..............................27
2.05. Liens........................................................27
2.06. Judgments....................................................27
2.07. Leases.......................................................28
2.08. Mortgagor's Continued Existence..............................28
2.09. Breach of Due on Sale or Encumbrance Provision...............28
2.10. Default under Related Agreements.............................28
III. REMEDIES.....................................................28
3.01. Acceleration.................................................28
3.02. Entry........................................................28
3.03. Judicial Action..............................................30
3.04. Foreclosure..................................................30
3.05. Rescission of Notice of Default..............................33
3.06. Mortgagee's Remedies Respecting Collateral...................33
3.07. Proceeds of Sales........................................... 33
3.08. Condemnation and Insurance Proceeds..........................34
</Table>
<Page>
<Table>
<Caption>
ARTICLE SECTION DESCRIPTION PAGE NUMBER
- ------- ------- ----------- -----------
3.09. Waiver of Marshalling, Rights of Redemption, Homestead
and Valuation..............................................34
3.10. Remedies Cumulative..........................................35
3.11. Nonrecourse..................................................35
3.12. Evasion of Prepayment Premium................................37
IV. MISCELLANEOUS................................................37
4.01. Severability.................................................37
4.02. Certain Charges and Brokerage Fees...........................37
4.03. Notices......................................................38
4.04. Mortgagor Not Released; Certain Mortgagee Acts...............39
4.05. Inspection...................................................40
4.06. Release or Reconveyance or Cancellation......................40
4.07. Statute of Limitations.......................................40
4.08. Interpretation.............................................. 40
4.09. Captions.....................................................41
4.10. Consent......................................................41
4.11. Delegation to Subagents .....................................41
4.12. Successors and Assigns.......................................41
4.13. Governing Law................................................41
4.14. Changes in Taxation .........................................41
4.15. Maximum Interest Rate........................................41
4.16. Time of Essence..............................................42
4.17. Reproduction of Documents....................................42
4.18. No Oral Modifications........................................42
4.19. Further Assurance............................................42
</Table>
ii
<Page>
MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS MORTGAGE, ASSIGNMENT OF LEASES, RENTS AND CONTRACTS, SECURITY
AGREEMENT AND FIXTURE FILING is made as of January 5, 2004, from INLAND
SOUTHEAST STONY CREEK, L.L.C., a Delaware limited liability company
("Mortgagor"), whose mailing address is 2901 Butterfield Road, Oakbrook,
Illinois 60523, in favor of ALLSTATE INSURANCE COMPANY, an Illinois insurance
corporation ("Mortgagee") whose mailing address is c/o Allstate Investments,
LLC, Allstate Plaza South, Suite G5C, 3075 Sanders Road, Northbrook,
Illinois, 60062.
In consideration of the indebtedness herein recited and as security for
payment and performance of the payment of both principal and interest and the
other obligations set forth below, Mortgagor has granted, conveyed, bargained,
sold, alienated, enfeoffed, released, confirmed, transferred, pledged, warranted
and mortgaged, and by these presents does hereby grant, convey, bargain, sell,
alien, enfeoff, release, confirm, transfer, pledge, warrant and mortgage unto
Mortgagee, all of Mortgagor's estate, right, title and interest in, to and under
that certain real property located in Noblesville, County of Hamilton, State of
Indiana, more particularly described in EXHIBIT A attached hereto and
incorporated herein by this reference (the "Land");
TOGETHER with all of Mortgagor's now or hereafter acquired estate, right,
title and interest in, to and under all buildings, structures, improvements and
fixtures now existing or hereafter erected on the Land and all right, title and
interest, if any, of Mortgagor in and to the streets and roads, opened or
proposed, abutting the Land to the center lines thereof, all rights of reversion
(including, without limitation, the right of reversion retained in that certain
Limited Warranty Deed recorded with the Hamilton County Recorder of Deeds as
Instrument No. 2000-57951 and re-recorded as Instrument No. 2001-25776), and
strips within or adjoining the Land, the air space and right to use said air
space above the Land, all rights of ingress and egress on or within the Land,
all easements, rights and appurtenances thereto or used in connection with the
Land, including without limitation, all lateral support, alley and drainage
rights, all revenues, income, rents, cash or security deposits, advance rental
deposits, profits, royalties, and other benefits thereof or arising from the use
or enjoyment of all or any portion thereof (subject however to the rights and
authorities given herein to Mortgagor to collect and apply such revenues, and
other benefits), all interests in and rights, royalties and profits in
connection with all minerals, oil and gas and other hydrocarbon substances
thereon or therein, and water stock, all options to purchase or lease, all
development or other rights relating to the Land or the operation thereof or
used in connection therewith (including, without limitation, all concurrency
rights, permits, prepaid utilities and impact fees of any nature, storm water
drainage rights and reservations, sanitary sewer rights and reservations,
potable water rights and reservations, allocations of traffic trips, use, rights
and reservations, law enforcement, library, park and educational fees, uses,
rights and reservations, and any tax and utility refunds and rebates,
irrespective of the time period to which such refunds and rebates relate),
including all Mortgagor's right, title and interest in all fixtures,
attachments, partitions, machinery, equipment, building materials, appliances
and goods of every nature whatever, whether now or hereafter located on, or
attached to, the Land, all of which, including replacements and additions
thereto, shall to the fullest extent permitted by law and for the purposes of
this Mortgage, be deemed to
1
<Page>
be real property and, whether affixed or annexed thereto or not, be deemed
conclusively to be real property; and Mortgagor agrees to execute and deliver,
from time to time, such further instruments and documents as may be required by
Mortgagee to confirm the legal operation and effect of this Mortgage on any of
the foregoing. All of the foregoing property described in this Section (the
"Improvements") together with the Land and the hereinafter defined Collateral,
shall be hereinafter referred to as the "Property").
MORTGAGOR HEREBY FURTHER GRANTS to Mortgagee a security interest in, and
assigns, all of Mortgagor's now existing or hereafter acquired right, title and
interest in the following with the understanding and intention that this
Mortgage shall also constitute a security agreement pursuant to the Uniform
Commercial Code of the State of Indiana.
(A) All equipment, fixtures, inventory, goods, farm goods, instruments,
appliances, furnishings, machinery, tools, raw materials, component parts, work
in progress and materials, and all other tangible personal property of
whatsoever kind, used or consumed in the improvement, use or enjoyment of the
Property now or any time hereafter owned or acquired by Mortgagor, wherever
located and all products thereof whether in possession of Mortgagor or whether
located on the Property or elsewhere;
(B) To the extent such general intangibles are assignable, all general
intangibles relating to the Property or the design, development, operation,
management and use of the Property (other than trademarks that contain the word
"Inland"), including, but not limited to, (1) all names under which or by which
the Property may at any time be owned and operated or any variant thereof, and
all goodwill in any way relating to the Property and all service marks and
logotypes used in connection therewith, (2) all permits, licenses,
authorizations, variances, land use entitlements, approvals, consents,
clearances, and rights obtained from governmental agencies issued or obtained in
connection with the Property, (3) all permits, licenses, approvals, consents,
authorizations, franchises and agreements issued or obtained in connection with
the construction, use, occupation or operation of the property, (4) all
materials prepared for filing or filed with any governmental agency, and (5) all
of the books and records of Mortgagor in any way relating to construction or
operation of the Property;
(C) All shares of stock or partnership interest or other evidence of
ownership of any part of the Property that is owned by Mortgagor in common with
others, including all water stock relating to the property, if any, and all
documents or rights of membership in any owners' or members' association or
similar group having responsibility for managing or operating any part of the
Property provided, however, that the foregoing shall not include any ownership
interests in Mortgagor;
(D) All accounts, deposit accounts, supporting obligations,
letter-of-credit rights, tax or insurance escrows or other escrows held pursuant
to or in connection with this Mortgage or otherwise in connection with the
Property, accounts receivable, instruments, documents, documents of title,
general intangibles, rights to payment and contract rights of every kind, all of
Mortgagor's rights, direct or indirect, under or pursuant to any and all
construction, development, financing, guaranty, indemnity, maintenance,
management, service, supply and warranty agreements, commitments, contracts,
subcontracts, insurance policies, licenses and
2
<Page>
bonds now or anytime hereafter arising from construction on the Land or the use
or enjoyment of the Property to the extent such are assignable;
(E) All condemnation and eminent domain proceeds (including payments in
lieu thereof) and insurance proceeds related to the Property;
TOGETHER with all additions to, substitutions for and the products of all
of the above, and all proceeds therefrom, whether cash proceeds or noncash
proceeds, received when any such property (or the proceeds thereof) is sold,
used, exchanged, leased, licensed, or otherwise disposed of, whether voluntarily
or involuntarily. Such proceeds shall include any of the foregoing specifically
described property of Mortgagor acquired with cash proceeds. Together with, and
without limiting the above items, all Goods, Accounts, Documents, Instruments,
Money, Chattel Paper, Deposit Accounts, Letter-of-Credit Rights, Investment
Property, Equipment and General Intangibles arising from or used in connection
with the Property, as those terms are defined in the Uniform Commercial Code
from time to time in effect in the state in which the Property is located. (All
of the foregoing including such products and proceeds thereof, are collectively
referred to as "Collateral".)
To the extent any of the Collateral described herein is personal property
owned by a tenant of the Property, then the security interest therein granted by
this Mortgage shall extend only to the reversionary interest of Mortgagor, if
any, to such personal property.
MORTGAGOR HEREBY WARRANTS AND REPRESENTS that it is the owner in fee title
to the Property (and the Collateral) free and clear of all liens and
encumbrances except for: the lien for current real estate taxes not yet due and
payable; and such other encumbrances as are set forth in EXHIBIT C attached
hereto and incorporated herein by this reference.
The personal property in which Mortgagee has a security interest includes
goods which are or shall become fixtures on the Property. This Mortgage is
intended to serve as a fixture filing pursuant to the terms of the applicable
provisions of the Uniform Commercial Code of the State of Indiana and the
provisions of Exhibit B are, for that purpose, incorporated herein. This filing
is to be recorded in the real estate records of the appropriate city, town or
county in which the Property is located. In that regard, the following
information is provided:
Names of Debtor: Inland Southeast Stony Creek, L.L.C., a
Delaware limited liability company
Organizational Number
of Debtor 3733893
Address of Debtor: See Section 4.03 hereof
Name of Secured Party: Allstate Insurance Company,
an Illinois insurance corporation
Address of Secured Party: See Section 4.03 hereof.
3
<Page>
Mortgagor hereby represents, warrants and agrees that at the time of
execution of this Mortgage and so long as any payments or performance obligation
of the Mortgage, Note (as defined herein) or the Related Agreements (as defined
herein) shall remain outstanding, (i) there is not and will not be any financing
statement other than those granting a security interest in favor of Mortgagee
covering the Collateral, the Property, or any part thereof, on file in any
public office, including, without limitation, the office of the Secretary of
State of the State of Delaware, the Secretary of State of the State of Indiana,
or the clerks office in any county in which the Property or Collateral are
located; (ii) that none of the Collateral is in the possession of anyone other
than Mortgagor; and (iii) that all of the Collateral has been in continuous,
exclusive possession of Mortgagor.
TO HAVE AND TO HOLD the Property hereby conveyed or mentioned and intended
so to be, unto Mortgagee, its successors and assigns, forever subject to and for
the purposes and uses herein set forth. This Mortgage secures:
(A) The repayment of the indebtedness evidenced by that certain Mortgage
Note (the "Note") of even date herewith with a maturity date of January 1, 2011,
executed by Mortgagor and payable to the order of Mortgagee, in the principal
sum of FOURTEEN MILLION ONE HUNDRED SIXTY TWO THOUSAND DOLLARS ($14,162,000),
with interest thereon as provided therein and all late charges, loan fees,
commitment fees, Prepayment Premium (as described in the Note), and all
extensions, renewals, modifications, amendments and replacements of the Note;
(B) The payment of all other sums which may be advanced by or otherwise
be due to Mortgagee under any provision of this Mortgage or under any other
instrument or document referred to in clause (C) below or otherwise, with
interest thereon at the rate provided herein or therein;
(C) The performance of each and every covenant and agreement of
Mortgagor contained (1) herein, in the Note, or in any note evidencing a Future
Advance (as hereinafter defined), and (2) in the obligations of Mortgagor upon
any and all pledge or other security agreements, loan agreements, disbursement
agreements, supplemental agreements, environmental indemnity agreements (the
foregoing shall not include the Commitment Letter between Mortgagor and
Mortgagee), assignments (both present and collateral) and all instruments of
indebtedness or security now or hereafter executed by Mortgagor in connection
with any indebtedness referred to in clauses (A), (B), (D), (E) or (F) of this
Section (including but not limited to the Assignment of Leases and Rents of even
date herewith from Mortgagor to Mortgagee (the "Assignment of Leases and
Rents") or for the purpose of supplementing or amending this Mortgage or any
instrument secured hereby (all of the foregoing in this clause(C), as the same
may be amended, modified or supplemented from time to time, together with the
Note and this Mortgage, being referred to hereinafter as "Related Agreements")
and all costs and expenses, including reasonable attorneys' and paralegals' fees
with respect to all such documents, including, without limitation, the
negotiation and drafting of any loan settlement or workout agreement;
(D) All costs, expenses, losses, damages and other charges sustained or
incurred by Mortgagee because of: (1) Mortgagor's default in payment or
performance, as the case may be,
4
<Page>
of any provision contained in this Mortgage or in any Related Agreement; (2)
defense of actions instituted by Mortgagor or a third party against Mortgagee
arising out of or related to the loan evidenced by the Note (the "Loan"), or in
the realizing upon, protecting, perfecting or defending the Property or the
Collateral; or (3) actions brought or defended by Mortgagee in enforcing
Mortgagee's security interest in the Property or the Collateral. All of these
costs and expenses include reasonable attorneys' fees and paralegals' fees,
whether incurred with respect to collection, litigation, bankruptcy proceedings,
interpretation, dispute, negotiation, trial, appeal, defensive actions
instituted by a third party against mortgagee, or enforcement or any judgment
based upon the Note, this Mortgage, or any of the Related Agreements, whether or
not suit is brought to collect such amounts or to enforce such rights or, if
brought, is prosecuted to judgment;
(E) All costs, expenses, and amounts arising under or pursuant to any
indemnity contained within the Note, this Mortgage, or in any of the Related
Agreements, or in any separate agreement executed by Mortgagor in favor of
Mortgagee; and
(F) The repayment of any other loans or advances, with interest thereon,
hereafter made to Mortgagor (or any successor in interest to Mortgagor as the
owner of the Property or any part thereof) by Mortgagee when the promissory note
evidencing the loan or advance specifically states that said note is secured by
this Mortgage, together with all extensions, renewals, modifications, amendments
and replacements thereof (herein and in the Related Agreements "Future
Advance"), provided that notwithstanding anything herein to the contrary, the
total amount secured by this Mortgage, including the amounts due under the Note
and capitalized interest, costs and impositions, shall not exceed in the
aggregate $100,000,000. The parties hereby acknowledge and intend that all such
advances, including Future Advances whenever hereafter made, shall be a lien
from the time this Mortgage is recorded.
ARTICLE I
COVENANTS OF MORTGAGOR
To protect the security of this Mortgage, and as additional consideration
to Mortgagee, Mortgagor covenants, warrants and agrees as follows:
1.01. PERFORMANCE OF OBLIGATIONS SECURED. Mortgagor shall promptly pay
when due the principal of and interest on the indebtedness evidenced by the
Note, the principal of and interest on any Future Advance, any Prepayment
Premium and late charges provided for in the Note or in any note evidencing a
Future Advance, and shall further perform fully and in a timely manner all other
obligations of Mortgagor contained herein or in the Note or in any note
evidencing a Future Advance or in any of the Related Agreements.
1.02 INSURANCE. For all times during the period there remains any
indebtedness under the Note, or any and all other indebtedness (including
without limitation Future Advances) secured by this Mortgage, Mortgagor shall
keep the Property insured against all risks or hazards as Mortgagee may
reasonably require. Such insurance shall be in policy form, amount and coverage
reasonably satisfactory to Mortgagee, including, but not limited to:
5
<Page>
(A) Fire and extended coverage on an "all risk" replacement cost basis,
in an amount equal to the insurable value of the Improvements, without
coinsurance or deducting for depreciation, containing a waiver of subrogation
clause and a deductible amount acceptable to Mortgagee;
(B) General public liability insurance, in such form, amount and
deductible satisfactory to Mortgagee, and naming Mortgagee c/o Mortgagee's
servicing agent, if any, as additional insured covering Mortgagee's interest in
the Property;
(C) Business interruption or rent loss insurance endorsement in an
amount at least equal to 100 percent of the sum of: annual debt service on the
Note, the annual debt service on any other financing permitted by Mortgagee,
ground rents, if any, and operating expenses (without contribution from
Mortgagor for a period of 12 months), including, without limitation, real estate
taxes and assessments and insurance, for the Property;
(D) Flood insurance (whether or not available through the National Flood
Insurance Program) sufficient to cover any damage which may be anticipated in
the event of flood unless Mortgagor has provided Mortgagee evidence satisfactory
to Mortgagee that no portion of the Property is located within the boundaries of
the 100 year flood plain (Flood Zone A);
(E) "Dram shop" insurance if alcoholic beverages are sold on the
Property;
(F) Boiler and machinery insurance when risks covered thereby are
present and Mortgagee requires such insurance; and
(G) Earthquake insurance if Mortgagee requires such insurance.
The insurance coverages described in subsections (A), (C), (D), (F), and
(G) above shall name Mortgagee c/o Mortgagee's servicing agent, if any, under a
standard noncontributory mortgagee loss payable clause (and naming Mortgagee as
loss payee for rent loss coverage) or otherwise directly insure Mortgagee's
interest in the Property. All losses under said insurance shall be payable to
Mortgagee in the manner provided in Sections 1.04 and 1.05 hereof. All policies
of insurance required under this Section 1.02 shall be with a company or
companies with a policy rating of A and financial rating of at least Class X in
the most current edition of Best's Key Rating Guide and authorized to do
business in the state in which the Property is located. All policies of
insurance shall provide that they will not be canceled or modified without 30
days' prior written notice to Mortgagee. True copies of the above mentioned
insurance policies or evidence of such insurance (in the form of Accord Form 27)
satisfactory to Mortgagee shall be delivered to and held by Mortgagee. True
copies of all renewal and replacement policies or evidences of such insurance
forms (Accord Form 27) thereof shall be delivered to Mortgagee at least 30 days
before the expiration of the expiring policies. If any renewal or replacement
policy is not obtained as required herein, Mortgagee is authorized to obtain the
same in Mortgagor's name and at Mortgagor's expense. Mortgagee shall not by the
fact of failing to obtain any insurance, incur any liability for or with respect
to the amount of insurance carried, the form or legal sufficiency of insurance
contracts, solvency of insurance companies, or payment or defense of lawsuits,
and Mortgagor hereby expressly assumes full responsibility therefor and all
liability, if any, with respect thereto.
6
<Page>
1.03. CONDEMNATION.
(A) Immediately upon obtaining knowledge of the commencement or threat
of any action in connection with (1) any condemnation, (2) any other taking of
the Property or any part thereof by any public authority or private entity
having the power of eminent domain, or (3) any conveyance in lieu of such
condemnation or taking of the Property or any part thereof ("Condemnation"),
Mortgagor shall notify Mortgagee in writing but in no event later than ten (10)
days after Mortgagor obtains knowledge of the commencement of or threat or
likelihood of a Condemnation. Mortgagee shall have the right, but not the
obligation, to participate in any proceedings relating to any Condemnation and
may, in its sole discretion, consent or withhold its consent to any settlement,
adjustment, or compromise of any claims arising from the Condemnation and no
such settlement, adjustment or compromise shall be final or binding upon
Mortgagee without Mortgagee's prior consent.
(B) Except as expressly provided in Section 1.03(C), if all or part of
the Property is taken by Condemnation and Mortgagee in its reasonable judgment
determines that the remainder of the Property, if any, cannot be operated as an
economically viable entity at substantially the same level of operations as
immediately prior to such Condemnation, then all proceeds of the Condemnation
("Condemnation Proceeds") shall be paid over to Mortgagee and shall be applied
first toward reimbursement of the costs and expenses (including reasonable
attorneys' and paralegals' fees) of Mortgagee, if any, in connection with the
recovery of such Condemnation Proceeds, and then, in the sole and absolute
discretion of Mortgagee and without regard to the adequacy of its security under
this Mortgage, shall be applied against all amounts due hereunder or under the
Note and any remaining Condemnation Proceeds shall be released to Mortgagor.
Partial prepayment of the Note under this Section 1.03(B) with Condemnation
Proceeds shall not be subject to the Prepayment Premium; however, such partial
prepayment shall not entitle Mortgagor to prepay the portion of the Note
remaining unpaid after application of the Condemnation Proceeds. Full or partial
prepayment of the balance shall continue to be subject to the terms and
conditions of the Note, including the No-Prepayment Period and the Prepayment
Premium described therein.
(C) If less than all of the Property is taken by Condemnation and
Mortgagee in its reasonable judgment determines that the remainder of the
Property can be operated as an economically viable entity at substantially the
same level of operations as immediately prior to such Condemnation, then
Mortgagor shall diligently restore the Property to a condition and use as close
as possible to its condition immediately prior to the Condemnation and all
Condemnation Proceeds shall be made available to Mortgagor for such restoration.
If the estimated cost of restoration, as reasonably determined by Mortgagee, is
equal to or less than One Hundred Fifty Thousand Dollars ($150,000), all
Condemnation Proceeds shall be released directly to Mortgagor for restoration of
the Property. If the estimated cost of restoration exceeds One Hundred Fifty
Thousand Dollars ($150,000), all Condemnation Proceeds shall be deposited into
an escrow fund in accordance with Section 1.05 below. Mortgagee shall have the
right to obtain an opinion of an independent contractor or engineer satisfactory
to Mortgagee, at Mortgagor's expense, to estimate the cost to restore the
remaining portion of the Property. If the amount of the Condemnation Proceeds is
not sufficient to restore the Property based on the opinion of an independent
contractor or engineer, subject to revision as restorations are made, Mortgagor
shall
7
<Page>
be obligated to pay the difference toward the restoration of the Property, prior
to the disbursement of any Condemnation Proceeds to, or for the account of,
Mortgagor.
(D) If an Event of Default exists at any time from the time of a
Condemnation through the completion of restoration and payment of any
Condemnation Proceeds, the use of the Condemnation Proceeds shall be governed by
the remedies set forth in Article III below. If an event has occurred which with
notice, the passage of time, or both, could become an Event of Default, then,
the Condemnation Proceeds shall be held by Mortgagee or in the Escrow Fund (as
defined below), as applicable, pending cure of such event prior to the
expiration of any applicable cure or grace period. The application of any
Condemnation Proceeds to the indebtedness secured hereby shall not cure or waive
any Event of Default hereunder, or invalidate any act done pursuant to any
notice thereof.
1.04. DAMAGE TO PROPERTY.
(A) Promptly upon obtaining knowledge of any damage to the Property or
any part thereof with an estimated cost of restoration in excess of Fifty
Thousand Dollars ($50,000), but in no event later than ten (10) days after
Mortgagor obtains such knowledge, Mortgagor shall notify Mortgagee of such
damage in writing. Mortgagor shall diligently restore the Property to the same
condition that existed immediately prior to the damage whether or not insurance
proceeds are sufficient for such restoration. All proceeds of any insurance on
the Property ("Insurance Proceeds") received by Mortgagor shall be applied to
such restoration. Mortgagee shall have the right to obtain an opinion of an
independent contractor or engineer satisfactory to Mortgagee, at Mortgagor's
expense, to estimate the cost to restore the Property to its original condition,
which opinion may be revised as restorations are made. If the amount of the
Insurance Proceeds is not sufficient to restore the Property based on an
independent contractor's or engineer's opinion, subject to revision as
restorations are made, Mortgagor shall be obligated to pay the difference toward
the restoration of the Property, prior to the application of any Insurance
Proceeds to such restoration as provided herein.
(B) If the estimated cost of restoration is equal to or less than One
Hundred Fifty Thousand Dollars ($150,000), Mortgagor shall promptly settle and
adjust any claims under the insurance policies which insure against such risks
and, upon receipt of the Insurance Proceeds, Mortgagee shall deliver such to
Mortgagor for use in restoration of the Property.
(C) If the estimated cost of restoration is greater than One Hundred
Fifty Thousand Dollars ($150,000), Mortgagee shall have the right, but not the
obligation, to participate in the settlement of the insurance claims and may, in
its sole discretion, consent or withhold its consent to any settlement,
adjustment, or compromise of such insurance claims and no such settlement,
adjustment, or compromise shall be final or binding upon Mortgagee without its
prior consent. Upon settlement of insurance claims, and if Mortgagor can
demonstrate to the reasonable satisfaction of Mortgagee that the projected ratio
of Net Operating Income, as defined below, to annual debt service due under the
Notes and any other notes secured by the Property ("Debt Coverage Ratio") will
be at least one hundred five percent (105%) for the twelve (12) months
immediately following reconstruction of the Property, the Insurance Proceeds
shall be deposited into an escrow fund in accordance with Section 1.05 below.
8
<Page>
As used in this Mortgage, "Net Operating Income" shall mean:
(i) all gross operating revenues anticipated to be received during the
following twelve-month period based on leases in effect as of the date of
calculation and only for such time as those leases are contracted to remain in
effect without expiration by their terms or optional termination by the tenant
(unless the tenant has waived its termination rights in writing or the term of
the lease has been extended in writing), including without limitation all
amounts to be received from tenants as payment of operating expenses (including
real estate taxes and insurance and/or other operating expenses reimbursed by
tenants) but not including refundable deposits, lease termination payments,
excess tenant improvement and leasing commission payments included as additional
rent, principal or interest payments received by Mortgagor on loans to tenants
and fees and reimbursements for work performed for tenants by Mortgagor, LESS:
(ii) all amounts, calculated on a pro forma basis, for the operation or
maintenance of the Property for the following 12 month period, including ground
rents, the cost of property management (which shall be no less than four percent
of gross revenues), maintenance, cleaning, security, landscaping, parking
maintenance and utilities, and other costs and expenses approved in writing by
Mortgagee and amounts reasonably estimated by Mortgagee for the payment of real
estate taxes and assessments and other taxes related to the operation of the
Property, insurance premiums, necessary repairs and future replacements of
equipment; payments under the Note shall not be included in Net Operating
Income.
Notwithstanding the foregoing, if any of the Related Agreements require a
historical calculation of Net Operating Income, it shall be calculated on a cash
basis for the previous twelve-month period as of the date of such calculation.
(D) If in the reasonable judgment of Mortgagee the conditions of Section
1.04(C) cannot be satisfied, then at any time from and after the occurrence of
the damage, upon written notice to Mortgagor, Mortgagee may declare the entire
balance of the Note and/or any Future Advances then outstanding and accrued and
unpaid interest thereon, and all other sums or payments required thereunder or
under this Mortgage, without any Prepayment Premium (provided there is no Event
of Default hereunder), to be immediately due and payable, and all Insurance
Proceeds shall be applied by Mortgagee first to the reimbursement of any costs
or expenses incurred by Mortgagee in connection with the damage or the
determination to be made hereunder, and then to the payment of the indebtedness
secured by this Mortgage in such order as Mortgagee may determine in its sole
discretion.
(E) Notwithstanding any provision herein to the contrary, if an Event of
Default exists at any time from the time of damage through the completion of
restoration and the final release of any Insurance Proceeds to Mortgagor, the
use of the Insurance Proceeds shall be governed by the remedies set forth in
Article III below. If an event has occurred which with notice, the passage of
time, or both, could become an Event of Default, then the Insurance Proceeds
shall be held by Mortgagee or in the Escrow Fund, as applicable, pending cure of
such event prior to the expiration of any applicable cure or grace period. The
application of any Insurance Proceeds to the indebtedness secured hereby shall
not cure or waive any Event of Default hereunder or invalidate any act done
pursuant to any notice thereof.
9
<Page>
1.05. ESCROW FUND FOR CONDEMNATION AND INSURANCE PROCEEDS.
(A) In the circumstances indicated above in subsections 1.03(C) and
1.04(C), all Condemnation Proceeds and Insurance Proceeds ("Proceeds") shall be
deposited in an interest bearing escrow fund ("Escrow Fund"). The escrow agent
and the form of the escrow agreement shall be reasonably satisfactory to
Mortgagee and Mortgagor. The costs and fees of such escrow agent shall be paid
by Mortgagor. If the amount of the Proceeds is not sufficient to restore the
Property based on an independent contractor's or engineer's opinion obtained by
Mortgagee at Mortgagor's expense, subject to revision as restorations are made,
Mortgagor shall be obligated to deposit in the Escrow Fund the difference
between the contractor's or engineer's estimate and the amount of the Proceeds
or deliver to the escrow agent an irrevocable, unconditional letter of credit
issued in the amount of such difference in a form and by a financial institution
acceptable to Mortgagee or other cash equivalent acceptable to Mortgagee.
Mortgagor's funds, if necessary, and the Proceeds shall be deposited into the
Escrow Fund and shall not be released by the escrow agent unless used to restore
the Property to its original condition and unless a disbursement agent
satisfactory to Mortgagee and Mortgagor approves such disbursements from time to
time. The escrow agreement shall provide that the escrow agent shall only
disburse funds to Mortgagor so long as the restoration work is being diligently
performed by Mortgagor and only after (1) Mortgagor has delivered to Mortgagee
and Mortgagee has approved the plans and specifications for the restoration of
the Property; (2) Mortgagor has executed a contract acceptable to Mortgagee with
a general contractor acceptable to Mortgagee for the restoration of the
Property; (3) the general contractor has submitted lien waivers and/or releases,
executed by the general contractor and all subcontractors and suppliers which
may be partial to the extent of partial payments and which, in the case of
releases, may be contingent upon payment if the escrow agent makes payment
directly to such contractor, subcontractor or supplier; (4) Mortgagor has
furnished Mortgagee with an endorsement to its title policy showing no
additional exceptions; and (5) Mortgagor has deposited its funds in the Escrow
Fund as provided in this Section and has submitted such other documents and
information as may be reasonably requested by Mortgagee to determine that the
work to be paid for has been performed in accordance with the plans and
specifications reasonably approved by Mortgagee. If any requisition for payment
of work performed is for an amount which would result in the remaining balance
of the Escrow Fund to be insufficient to complete the remainder of the
restoration, Mortgagor shall advance the requisite amount in cash to the Escrow
Fund immediately upon written request from the disbursement agent or Mortgagee.
Any failure by Mortgagor to satisfy any of the conditions to the disbursement of
Proceeds set forth in this Section upon demand by Mortgagee shall constitute a
Performance Default, as hereinafter defined.
(B) Any Condemnation Proceeds and any interest thereon remaining in the
Escrow Fund after payment of the costs to complete the restoration of the
Property pursuant to the approved plans and specifications and the costs of the
escrow agent and other costs described in Section 1.05(A) shall be paid first,
to Mortgagor to the extent of any funds of Mortgagor's contributed to the
restoration pursuant to Section 1.05(A) (so long as there is no Event of Default
or an event which with notice, the passage of time, or both, could become an
Event of Default); thereafter any remaining Condemnation Proceeds shall be
returned to Mortgagor (i) if in Mortgagee's sole discretion (reasonably
exercised) the restoration of the Property has been completed in a satisfactory
manner and with satisfactory results and (ii) so long as there is no Event of
Default or an event which with notice, the passage of time, or both, could
become an
10
<Page>
Event of Default. If the conditions of Section 1.05(B)(i) are not satisfied,
then any remaining Condemnation Proceeds shall be applied to the partial payment
or prepayment of the Note without payment of any Prepayment Premium; provided,
however, that any such partial prepayment shall not entitle Mortgagor to prepay
the portion of the Note remaining unpaid after application of the Proceeds.
Prepayment of the balance shall continue to be subject to the terms and
conditions of the Note, including the No-Prepayment Period and the Prepayment
Premium described therein. If an Event of Default exists, the use of the
Condemnation Proceeds shall be governed by Article III below. If, however, an
event exists which with notice, the passage of time, or both, could become an
Event of Default, the remaining balance in the Escrow Fund shall be held by the
escrow agent pending cure of the event prior to the expiration of any applicable
cure or grace period.
(C) Any Insurance Proceeds and any interest thereon remaining in the
Escrow Fund after payment of the costs to complete the restoration of the
Property pursuant to the approved plans and specifications and the costs of the
escrow agent and other costs described in Section 1.05(A) shall be paid first,
to Mortgagor to the extent of any funds of Mortgagor's contributed to the
restoration pursuant to Section 105)(A) (so long as there is no Event of Default
or an event which with notice, the passage of time, or both, could become an
Event of Default); thereafter any remaining Insurance Proceeds shall be returned
to Mortgagor (i) if in Mortgagee's sole discretion (reasonably exercised) the
restoration of the Property has been completed in a satisfactory manner and with
satisfactory results and (ii) so long as there is no Event of Default or an
event which with notice, the passage of time, or both, could become an Event of
Default. If the conditions of Section 1.05(C)(i) are not satisfied, then any
remaining Insurance Proceeds shall be applied to the partial payment or
prepayment of the Note without payment of any Prepayment Premium; provided,
however, that any such partial prepayment shall not entitle Mortgagor to prepay
the portion of the Note remaining unpaid after application of the Proceeds.
Prepayment of the balance shall continue to be subject to the terms and
conditions of the Note, including the No-Prepayment Period and the Prepayment
Premium described therein. If an Event of Default exists, the use of the
Insurance Proceeds shall be governed by Article III below. If, however, an event
exists which with notice, the passage of time, or both, could become an Event of
Default, the remaining balance in the Escrow Fund shall be held by the escrow
agent pending cure of the event prior to the expiration of any applicable cure
or grace period.
1.06. TAXES, LIENS AND OTHER ITEMS.
(A) Mortgagor shall pay or cause to be paid any and all taxes, bonds,
assessments, fees, liens, charges, fines, impositions and any accrued interest
or penalty thereon, and any and all other items which are attributable to or
affect the Property (collectively, "Impositions") by making payment prior to
delinquency directly to the payee thereof and promptly furnish copies of paid
receipts for these to Mortgagee. Mortgagor shall promptly discharge or bond any
lien or encumbrance on the Property whether or not said lien or encumbrance has
or may attain priority over this Mortgage. This Mortgage shall be the sole
encumbrance on the Property and, if with the consent of Mortgagee it is not the
sole encumbrance, then it shall be prior to any and all other liens or
encumbrances on the Property. Mortgagor may in good faith and with due diligence
protest the payment of any Imposition which it believes unwarranted or excessive
and may defer payment of such Imposition pending conclusion of such contest if
legally permitted to do so, provided that the priority of this Mortgage and
Mortgagee's security is not materially and
11
<Page>
adversely affected and that Mortgagor shall have furnished Mortgagee or the
taxing authority such security as may be required.
(B) As further security for the payment of the Note and the payment of
real estate taxes, regular or special assessments and insurance premiums,
Mortgagor shall be required to deposit one-twelfth (1/12) of the annual amounts
of such items as estimated by Mortgagee, with each monthly payment on the Note,
so that Mortgagee will hold a sufficient amount to pay all such charges not less
than thirty (30) days prior to the date on which such items become due and
payable. Mortgagee shall be furnished evidence to allow it to estimate such
amounts, including paid receipts or annual insurance premium statements,
assessment notices and tax receipts. All funds so deposited shall, until applied
to the payment of the aforesaid items, as hereinafter provided, be held by
Mortgagee without interest (except to the extent required under applicable law)
and may be commingled with other funds of Mortgagee. All funds so deposited
shall be applied to the payment of the aforesaid items only upon the
satisfaction of the following conditions: (1) no Event of Default or event,
which with notice or the passage of time or both could become an Event of
Default, shall have occurred; (2) Mortgagee shall have sufficient funds to pay
the full amounts of such items (which funds may include amounts paid solely for
such purpose by Mortgagor in addition to the escrowed funds); and (3) Mortgagor
shall have furnished Mortgagee with prior written notification that such items
are due and with the bills and invoices therefor in sufficient time to pay the
same before any penalty or interest attaches and before policies of insurance
lapse, as the case may be, and shall have deposited any additional funds as
Mortgagee may determine as necessary to pay such items.
(C) Mortgagee expressly disclaims any obligation to pay the aforesaid
items unless and until Mortgagor complies with all of the provisions set forth
in subsections 1.06(A) and (B). Mortgagor hereby pledges and grants a security
interest in any and all monies now or hereafter deposited pursuant to subsection
1.06(B) as additional security for the Note and Related Agreements. If any Event
of Default shall have occurred, or if the Note shall be accelerated as herein
provided, all funds so deposited may, at Mortgagee's option, be applied as
determined solely by Mortgagee or to cure said Event of Default or as provided
in this Section 1.06. In no event shall Mortgagor claim any credit against the
principal and interest due hereunder for any payment or deposit for any of the
aforesaid items.
1.07. ASSIGNMENT OF LEASES, CONTRACTS, RENTS AND PROFITS.
(A) Mortgagor hereby absolutely, presently and unconditionally grants,
assigns, transfers, conveys and sets over to Mortgagee, subject to all of the
terms, covenants and conditions set forth herein, all of Mortgagor's right,
title and interest in and to the following whether arising under the Leases (as
defined herein), by statute, at law, in equity, or in any other way:
(1) All of the leases of the Property which are in effect on the
date hereof and all leases entered into or in effect from time to time
after the date hereof, including, without limitation, all amendments,
extensions, replacements, modifications and renewals thereof and all
subleases, concession agreements, any ground leases or ground subleases and
all other agreements affecting the same (the "Leases") and all guaranties
thereunder;
12
<Page>
(2) All of the rents, income, profits, revenue, security deposits,
judgments, Condemnation Proceeds, Insurance Proceeds, unearned insurance
premiums, all termination and/or cancellation payments received by
Mortgagor in connection with any Lease, proceeds from the surrender, sale
or other disposition of any Lease, any other fees or sums payable to
Mortgagor or any other person as landlord and any award or payment in
connection with any enforcement action of any Lease, including, without
limitation, any award to Mortgagor made hereafter in any court involving
any of the tenants under the Leases in any bankruptcy, insolvency, or
reorganization proceeding in any state or federal court, and Mortgagor's
right to appear in any action and/or to collect any such award or payment,
and all payments by any tenant in lieu of rent (collectively, "Rents and
Profits"); and
(3) All contracts, agreements, management, operating and
maintenance agreements, warranties, licenses, permits, guaranties and sales
contracts relating to the Property and the Collateral entered into by, or
inuring to the benefit of, Mortgagor (the "Contracts").
(B) Notwithstanding the provisions of subsection 1.07(A), so long as no
Event of Default has occurred and is continuing hereunder, and, subject to
subsection 1.07(F) and Article III, Mortgagor shall have a license to manage the
Property; to collect, receive and use all Rents and Profits in accordance with
the terms of the Leases; to let the Property subject to the terms hereof and to
take all actions which a reasonable and prudent landlord would take in enforcing
the provisions of the Leases and Contracts; provided, however, that all amounts
so collected shall be applied toward operating expenses, real estate taxes and
insurance relating to the Property, capital repair items necessary to the
operation of the Property on a current basis, and the payment of sums due and
owing under the Note and this Mortgage prior to any other expenditure or
distribution by Mortgagor. From and after the occurrence of an Event of Default
(whether or not Mortgagee shall have exercised Mortgagee's option to declare the
Note immediately due and payable), such license shall be automatically revoked
without any action required by Mortgagee. Any amounts received by Mortgagor or
its agents in the performance of any acts prohibited by the terms of this
Mortgage, including but not limited to any amounts received in connection with
any cancellation, modification or amendment of any of the Leases prohibited by
the terms of this Mortgage and any amounts received by Mortgagor as rents,
income, issues or profits from the Property from and after the occurrence of an
Event of Default under this Mortgage, the Note, or any of the other Related
Agreements, shall be held by Mortgagor as trustee for Mortgagee and all such
amounts shall be accounted for to Mortgagee and shall not be commingled with
other funds of the Mortgagor. Any person acquiring or receiving all or any
portion of such trust funds shall acquire or receive the same in trust for
Mortgagee as if such person had actual or constructive notice that such funds
were impressed with a trust in accordance herewith.
(C) Upon the occurrence of an Event of Default, Mortgagee shall have the
right but not the obligation to perform as landlord under the Leases and as a
party under the Contracts. The assignment of Rents and Profits set forth herein
constitutes an irrevocable direction and authorization to all tenants under the
Leases to pay all Rents and Profits to Mortgagee upon demand and without further
consent or other action by Mortgagor. Mortgagor irrevocably appoints Mortgagee
its true and lawful attorney, at the option of Mortgagee at any time after the
13
<Page>
occurrence of an Event of Default, to demand, receive and enforce payment, to
give receipts, releases and satisfactions, and to sue, either in the name of
Mortgagor or in the name of Mortgagee, for all such Rents and Profits and apply
the same to the indebtedness secured by this Mortgage.
(D) Neither the foregoing assignment of Rents and Profits, Leases and
Contracts to Mortgagee nor the exercise by Mortgagee of any of its rights or
remedies under Article III shall be deemed to make Mortgagee a
"mortgagee-in-possession" or otherwise liable in any manner with respect to the
Property, unless Mortgagee, in person or by agent, assumes actual possession
thereof. Nor shall appointment of a receiver for the Property by any court at
the request of Mortgagee or by agreement with Mortgagor, or the entering into
possession of the Property by such receiver, be deemed to make Mortgagee a
"mortgagee-in-possession" or otherwise liable in any manner with respect to the
Property, Collateral or any of the Rents and Profits.
(E) In the event Mortgagee collects and receives any Rents and Profits
under this Section 1.07 pursuant to any Monetary or Performance Default as
defined in Section 2.01 hereof, such collection or receipt shall in no way
constitute a curing of the Monetary or Performance Default.
(F) Mortgagor shall not, without the prior written consent of Mortgagee,
(1) enter into any lease, extend or renew any Lease (other than extensions or
renewals in accordance with the terms of a lease approved by Mortgagee), or
consent to or permit the assignment or subletting of any Leases (other than
assignments or subleases in accordance with the terms of a lease approved by
Mortgagee), or amend or terminate any Lease; (2) alter, modify, change or
terminate the terms of any guaranties of any Leases; (3) create or permit any
lien or encumbrance which, upon foreclosure, would be superior to any such
Leases or in any other manner impair Mortgagee's rights and interest with
respect to the Rents and Profits; (4) pledge, transfer, mortgage or otherwise
encumber or assign the Leases, the Contracts or the Rents and Profits; or (5)
collect rents more than 30 days prior to their due date. Notwithstanding the
foregoing, so long as no Event of Default has occurred and is continuing
hereunder, Mortgagor may enter into Leases, extend or renew Leases, and permit
the assignment or sublease of Leases which demise 10,000 rentable square feet or
less for a term of five years or less ("Non-material Leases"), provided they are
on rental rates, including rental concessions, at least equal to that charged
for comparable properties within the Property's submarket area, have been
negotiated at arm's length, and do not contain material modifications to the
form of lease previously approved by Mortgagee. Mortgagor may also amend
Non-material Leases without Mortgagee's prior written consent if, in Mortgagor's
prudent business judgment, such amendments are necessary and do not impair the
value of the Property. Mortgagee will not unreasonably withhold or delay its
consent to any item submitted to it for approval pursuant to subsections
1.07(F)(1) or (2) above. Any lease submitted for Mortgagee's consent shall, at
Mortgagee's option, be accompanied by a Subordination, Nondisturbance and
Attornment Agreement in Mortgagee's then current form or another form reasonably
acceptable to Mortgagee.
(G) Mortgagor shall promptly give notice to Mortgagee of any default
under any of the Leases meeting the criteria of a lease for which Mortgagee's
consent would have been required pursuant to Section 1.07(F) regardless of
whether such Leases were executed before or after the date of this Mortgage,
together with a complete copy of any notices delivered to or by
14
<Page>
the tenant as a result of such default. Mortgagee shall have the right, but not
the obligation, to cure any default of Mortgagor under any of the Leases and all
amounts disbursed in connection with said cure shall be deemed to be
indebtedness secured hereby.
(H) Mortgagee shall have the right to approve any lease forms used by
Mortgagor for lease of space in the Property.
(I) Mortgagor hereby represents, warrants and agrees that:
(1) Mortgagor has the right, power and capacity to make this assignment
and that no person, firm or corporation or other entity other than Mortgagor has
or will have any right, title or interest in or to the Leases or the Rents and
Profits.
(2) Mortgagor shall, at its sole cost and expense, perform and discharge
all of the obligations and undertakings of the landlord under the Leases.
Mortgagor shall enforce the performance of each obligation of the tenants under
the Leases and will appear in and prosecute or defend any action connected with
the Leases or the obligations of the tenants thereunder.
(J) Mortgagee shall not be obligated to perform or discharge, nor does
it hereby undertake to perform or discharge, any obligation, duty or liability
under the Leases or under or by reason of this assignment. Mortgagor shall and
does hereby agree to indemnify Mortgagee for and to defend and hold Mortgagee
harmless from any and all liability, loss or damage which Mortgagee may or might
incur under the Leases or under or by reason of this assignment, and from any
and all claims whatsoever which may be asserted against Mortgagee by reason of
any alleged obligations or undertakings on Mortgagee's part to perform or
discharge any of the terms, covenants or agreements contained in the Leases;
provided, however, that the foregoing indemnity shall not apply to the extent
any of the foregoing arises wholly or in substantial part from the gross
negligence or willful misconduct of Mortgagee. Should Mortgagee incur any
liability, loss or damage under the Leases or under or by reason of this
assignment, or in the defense of any of such claims or demands, the amount
thereof, including costs, expenses and attorneys' and paralegals' fees at all
trial and appellate levels and whether suit be brought or not, shall be secured
by this Mortgage; and Mortgagor shall reimburse Mortgagee therefor immediately
upon demand, and upon failure of Mortgagor to do so, Mortgagee may declare all
sums so secured to be immediately due and payable.
(K) Mortgagee may take or release other security, may release any party
primarily or secondarily liable for any indebtedness secured hereby, may grant
extensions, renewals or indulgences with respect to such indebtedness, and may
apply any other security therefor held by it to the satisfaction of such
indebtedness, without prejudice to any of its rights hereunder.
(L) Nothing herein contained and no act done or omitted by Mortgagee
pursuant to the powers and rights granted it herein shall be deemed to be a
waiver by Mortgagee of its other rights and remedies under the Note, this
Mortgage and the Related Agreements, and this assignment is made and accepted
without prejudice to any of the other rights and remedies possessed by Mortgagee
under the terms thereof. The right of Mortgagee to collect said indebtedness and
to enforce any other security therefor held by it may be exercised by Mortgagee
either prior to, simultaneously with, or subsequent to any action taken by it
15
<Page>
hereunder. It is the intent of both Mortgagor and Mortgagee that this assignment
be supplementary to, and not in substitution or derogation of, any other
provision contained in this Mortgage giving Mortgagee any interest in or rights
with respect to the Leases or Rents and Profits.
(M) Neither this assignment nor pursuit of any remedy hereunder by
Mortgagee shall cause or constitute a merger of the interests of the tenant and
Mortgagor under any of the Leases such that any of the Leases hereby assigned
are no longer valid and binding legal obligations of the parties executing the
same.
(N) Mortgagor agrees, from time to time, to execute and deliver, upon
demand, all assignments and any and all other writings as Mortgagee may
reasonably deem necessary or desirable to carry out the purpose and intent
hereof, or to enable Mortgagee to enforce any right or rights hereunder.
1.08. DUE ON SALE OR ENCUMBRANCE. Neither Mortgagor nor its sole member,
shall, without the prior written consent of Mortgagee: (i) create, effect,
consent to, suffer to exist, assume, incur, permit (voluntarily or
involuntarily, by operation of law or otherwise) any direct or indirect
conveyance, sale, assignment, transfer, grant, lien, pledge, mortgage, security
interest or other encumbrance or disposition (each of the foregoing defined as
"Transfer") of the Property or an interest therein; (ii) be divested of its
title to the Property or any interest therein; (iii) enter into a contract to
sell or grant any option to purchase that results in a transfer of possession or
equitable title to the Property or any portion thereof prior to the payment of
the Note in accordance with its terms; (iv) enter into any lease giving the
tenant any option to purchase the Property or any portion thereof; (v) permit or
suffer any Transfer of any direct or indirect ownership interest in the
Mortgagor or any indemnitor or guarantor under this Mortgage or any Related
Agreement; (vi) permit or suffer any Transfer of any ownership interest in any
direct or indirect owner of a legal or beneficial interest in the Mortgagor
(including, without limitation its partners, members, trustees, beneficiaries or
shareholders); (vii) permit or suffer the merger, dissolution, liquidation, or
consolidation of the Mortgagor or any of the direct or indirect owners of
Mortgagor or the conversion of one type of legal entity into another type of
legal entity. Except as expressly consented to in writing by Mortgagee,
Mortgagor shall not incur any additional indebtedness (secured or unsecured,
direct or contingent) other than unsecured debt or trade payables incurred in
the ordinary course of business in connection with the operation of the
Property. Upon the occurrence of any of the prohibited actions specified herein,
then Mortgagee shall have the right, at its option, to declare the indebtedness
secured by this Mortgage immediately due and payable, irrespective of the
maturity date specified in the Note.
1.09. PRESERVATION AND MAINTENANCE OF PROPERTY. Mortgagor shall hire
competent and responsible property managers who shall be reasonably acceptable
to Mortgagee. Mortgagor, at its sole cost and expense, shall keep the Property
and every part thereof in good condition and repair, in accordance with sound
and prudent property management practices, and shall promptly and faithfully
comply with and obey all laws, ordinances, rules, regulations, requirements and
orders of every duly constituted governmental authority or agent having
jurisdiction with respect to the Property. All repairs, replacements and
renewals shall be at least equal in quality to the original Improvements.
Mortgagor shall not permit or commit any waste, impairment, or deterioration of
the Property, nor commit, suffer or permit any act upon or use of the Property
in
16
<Page>
violation of law or applicable order of any governmental authority, whether now
existing or hereafter enacted, or in violation of any covenants, conditions or
restrictions affecting the Property or bring or keep any article in the Property
or cause or permit any condition to exist thereon which would be prohibited by
or invalidate the insurance coverage required to be maintained hereunder.
Mortgagor shall promptly bond or discharge any mechanics' liens against the
Property.
1.10 USE OF PROPERTY. Except as may have been previously agreed in
writing by Mortgagee, Mortgagor shall continue to operate the Property for the
purposes for which it was used on the date hereof and for no other purpose.
Mortgagor shall not make or suffer any improper or offensive use of the Property
or any part thereof and will not use or permit to be used any part of the
Property for any dangerous, noxious, offensive or unlawful trade or business or
for any purpose which will reduce the value of the Property in any respect or
will cause the Property or any part thereof or interest therein to be subject to
forfeiture. Mortgagor at its expense will promptly comply with all rights of way
or use, privileges, franchises, servitudes, licenses, easements, tenements,
hereditaments and appurtenances forming a part of the Property and all
instruments relating or evidencing the same, in each case, to the extent
compliance therewith is required of Mortgagor under the terms thereof. Mortgagor
will not take any action which results in a forfeiture or termination of the
rights afforded to Mortgagor under any such instruments and will not, without
the prior written consent of Mortgagee, amend in any material respect any of
such instruments. Mortgagor shall at all times comply with all laws affecting
the Property and comply with any instruments of record at the time in force
affecting the Property or any part thereof and shall procure, maintain and
comply with all permits, licenses, and other authorizations required for any use
of the Property or any part thereof then being made, and for the proper
erection, installation, operation and maintenance of the Improvements or any
part thereof. Mortgagor shall not initiate, join in, acquiesce in, or consent to
any change in any private restrictive covenant, zoning law or other public or
private restriction, limiting or defining the uses which may be made of the
Property or any part thereof. In furtherance of the foregoing sentence,
Mortgagor will not, by act or omission: (i) impair the integrity of the Property
as a single zoning lot separate and apart from all other premises; or (ii)
permit or suffer to permit the Property to be used by the public or any party in
such manner as might make possible a claim of adverse usage or possession or any
implied dedication or easement. If under applicable zoning provisions the use of
all or any portion of the Property is or shall become a nonconforming use,
Mortgagor will not cause or permit such nonconforming use to be discontinued or
abandoned, if such discontinuance or abandonment would prevent the same or
similar nonconforming use in the future, without the express written consent of
Mortgagee (except that a nonconforming use that results from a tenant's use may
be discontinued without Mortgagee's consent if such tenant's lease terminates or
expires by its terms).
Mortgagor shall not conduct or permit or allow to be conducted on the
Property any dry cleaning plant or facility or similar operation, provided that
Mortgagor may conduct or permit or allow to be conducted on the Property a dry
cleaning drop-off establishment, so long as no dry cleaning is performed
therein.
1.11 ALTERATIONS AND ADDITIONS. Mortgagor shall not cause, suffer or
permit:
17
<Page>
(A) Any material alterations of the Property except (1) as required by
any law, statute, ordinance, order, rule, regulation, decree or other
requirement of the United States, the applicable state or county in which the
Property is located or any political subdivision of any of the foregoing, or any
agency, department, commission, board, court, bureau or instrumentality of any
of them ("Governmental Authority") or by any condition of any approval, consent,
registration, franchise, permit, license, variance, certificate of occupancy or
other authorization with regard to zoning, landmark, ecological, environmental,
air quality, subdivision, planning, building or land use required by any
Governmental Authority for the construction, lawful occupancy and operation of
the Property and the actual and contemplated uses thereof, or (2) as permitted
or required to be made by the terms of any Leases approved by Mortgagee (with
respect to work in any space demised thereunder);
(B) Any demolition or removal of any portion of the Property;
(C) Any change which would increase the risk of fire or other hazard;
(D) Any zoning, reclassification with respect to the Property; or
(E) Any unlawful use of, or nuisance to exist upon, the Property.
As used herein, the term "material alteration" shall mean any alteration,
improvement or replacement (i) the cost of which (including any related
alteration, improvement or replacement) shall exceed two percent of the
principal amount of the indebtedness secured by this Mortgage (excluding tenant
improvement work pursuant to Leases), or (ii) which materially and adversely
affects the mechanical, electrical, heating, ventilating, air-conditioning or
other building or operating systems of any of the Improvements, or materially
and adversely affects the cost of operation or maintenance of any such building
or operating systems, affects the structure or structural soundness of any of
the improvements of the Property, or the exterior or appearance of the Property,
or otherwise has a material adverse effect on the Property including the use
and/or value thereof.
1.12. OFFSET CERTIFICATES. Mortgagor, within five days upon request in
person or within ten days upon request by mail, shall furnish a written
statement duly acknowledged and notarized, of all amounts due on any
indebtedness secured hereby or secured by any of the Related Agreements, whether
for principal or interest on the Note or otherwise, and stating whether any
offsets or defenses exist against the indebtedness secured hereby and covering
such other matters with respect to any such indebtedness as Mortgagee may
reasonably require.
1.13. MORTGAGEE'S COSTS AND EXPENSES. Mortgagor shall pay all costs, fees
and expenses of Mortgagee, its agents and counsel, in connection with the
performance of Mortgagee's obligations, duties, rights, options and permitted
actions hereunder. Mortgagor will pay or reimburse Mortgagee upon demand for all
reasonable attorney's and paralegals' fees, costs and expenses, including those
in connection with appellate proceedings, incurred by Mortgagee in any
proceedings involving the estate of a decedent or an insolvent, or in any
action, legal proceeding or dispute of any kind in which Mortgagee is a
plaintiff or defendant, affecting the indebtedness secured hereby or the
Property or Collateral, this Mortgage or the interest created herein, any
condemnation action involving the Property or any action to protect the
18
<Page>
security hereof; and any such amounts paid by Mortgagee shall be secured by this
Mortgage. If Mortgagor shall default in the payment of any tax, lien, assessment
or charge levied or assessed against the Property; in the payment of any utility
charge, whether public or private; in the payment of any insurance premium; in
the procurement of insurance coverage and the delivery of the insurance policies
required hereunder; in the performance of any covenant, term or condition of any
leases affecting all or any part of the Property; or in the performance or
observance of any covenant, condition or term of this Mortgage; then Mortgagee,
at its option, may perform or observe the same, and all payments made or costs
incurred by Mortgagee in connection therewith, shall be secured hereby and shall
be, without demand, immediately repaid by Mortgagor to Mortgagee with interest
thereon at the Default Rate as described in the Note. Mortgagee shall be the
sole judge of the legality, validity and priority of any such tax, lien,
assessment, charge, claim, premium and obligation, of the necessity for any such
actions and of the amount necessary to be paid in satisfaction thereof.
Mortgagee is hereby empowered to enter and to authorize others to enter upon the
Property or any part thereof for the purpose of performing or observing any such
defaulted covenant, condition or term, without thereby becoming liable to
Mortgagor or any other person in possession holding under Mortgagor. All rights
of Mortgagee as set forth herein are rights to be exercised at the sole option
and discretion of Mortgagee and Mortgagee shall have no duty to Mortgagor or any
other person or entity to perform any acts authorized by this Section or to
incur any expense, make any appearance or take any other action. As used herein,
the term "reasonable attorney's fees" shall include support staff costs, and the
term "costs and expenses" shall include, without limitation, the amounts
expended in litigation preparation and computerized research, telephone and
telefax expenses, mileage, depositions, postage, photocopies, process service,
videotapes and the like.
1.14. PROTECTION OF SECURITY; COSTS AND EXPENSES.
(A) In addition to any other rights or remedies of Mortgagee hereunder,
under any of the Related Agreements, or in law or in equity, upon the occurrence
and during the continuance of an Event of Default (or prior thereto after notice
to Mortgagor, when possible, if Mortgagor is not paying or performing the act
itself and Mortgagee determines in its sole good faith judgment that the same is
appropriate to preserve the Property or the lien of this Mortgage or any other
collateral securing the indebtedness evidenced by the Note, either before or
after acceleration of the indebtedness) Mortgagee may, but shall not be required
to, make any payment or perform any act required to be performed by Mortgagor
hereunder or under any of the Related Agreements in any form and manner deemed
expedient to Mortgagee, including, without limitation, if applicable: (1) paying
any Impositions which remain unpaid; (2) procuring the release, discharge,
compromise or settlement of any lien filed or otherwise asserted against the
Property which has not been discharged by Mortgagor in accordance with the
provisions of this Mortgage or any of the Related Agreements, and (3) obtaining
insurance policies where insurance coverage was required to be obtained
hereunder and the required evidence that Mortgagor had obtained the same has not
been delivered to Mortgagee as required hereunder. Nothing herein shall be
construed to require Mortgagee to advance or expend monies for any purpose
mentioned herein, or for any other purpose.
(B) Mortgagor and its property manager, if applicable, shall appear in
and defend any action or proceeding purporting to affect the security of this
Mortgage or any additional or other security for the obligations secured hereby,
or the rights or powers of the Mortgagee, and shall
19
<Page>
pay all costs and expenses actually incurred, including, without limitation,
cost of evidence of title and actual attorneys' and paralegals' fees, in any
such action or proceeding in which Mortgagee may appear, and in any suit brought
by Mortgagee to foreclose this Mortgage or to enforce or establish any other
rights or remedies of Mortgagee hereunder or under any other security for the
obligations secured hereby. If Mortgagor fails to perform any of the covenants
or agreements contained in this Mortgage, or if any action or proceeding is
commenced which affects Mortgagee's interest in the Property or any part
thereof, including, eminent domain, code enforcement, or proceedings of any
nature whatsoever under any federal or state law, whether now existing or
hereafter enacted or amended, relating to bankruptcy, insolvency, arrangement,
reorganization or other form of debtor relief, or to a decedent, then Mortgagee
may, but without obligation to do so and without notice to or demand upon
Mortgagor, perform such covenant or agreement and compromise any encumbrance,
charge or lien which in the judgment of Mortgagee appears to be prior or
superior hereto. Mortgagor shall further pay all expenses of Mortgagee actually
incurred (including reasonable and actual fees and disbursements of counsel)
incident to the protection or enforcement of the rights of Mortgagee hereunder,
and enforcement or collection of payment of the Note or any Future Advance
whether by judicial or nonjudicial proceedings, or in connection with any
bankruptcy, insolvency, arrangement, reorganization or other debtor relief
proceeding of Mortgagor, or otherwise.
(C) Mortgagor shall pay to Mortgagee, immediately upon written notice
from Mortgagee: (i) all recordation, transfer, stamp, documentary or other fees
or taxes levied on Mortgagee (exclusive of Mortgagee's income taxes) by reason
of the making or recording of the Note, this Mortgage or any Related Agreement,
and (ii) all intangible property taxes levied upon any holder of the Note or
Mortgagee under this Mortgage or secured party under the Related Agreements.
Any amounts disbursed by Mortgagee pursuant to this Section or Section
1.13, including, without limitation, reasonable attorneys' and paralegals' fees,
whether or not the indebtedness as a result thereof shall exceed the face amount
of the Note, shall be additional indebtedness of Mortgagor secured by this
Mortgage and each of the Related Agreements as of the date of disbursement shall
become immediately due and payable on demand and shall bear interest at the
Default Rate set forth in the Note, from demand until paid. All such amounts
shall be payable by Mortgagor immediately upon demand. Nothing contained in this
section shall be construed to require Mortgagee to incur any expense, make any
appearance, or take any other action.
1.15 MORTGAGOR'S COVENANTS RESPECTING COLLATERAL.
(A) This instrument also creates a security interest in the Collateral,
the Contracts and in any sums held by Mortgagee, its servicing agent or any
escrow agent appointed under the terms of this Mortgage, which security interest
Mortgagor hereby grants in favor of Mortgagee under the Indiana Uniform
Commercial Code, and Mortgagee shall also have all the rights and remedies of a
secured party under the Indiana Uniform Commercial Code, and without limitation
upon or in derogation of the rights and remedies created and accorded to
Mortgagee by this Mortgage pursuant to the common law or any other laws of the
State of Indiana or any other jurisdiction, it being understood that the rights
and remedies of Mortgagee under the Indiana Uniform Commercial Code shall be
cumulative and in addition to all other rights and remedies of Mortgagee arising
under the Mortgage, the Note, the Related Agreements, the common law or
20
<Page>
any other laws of the State of Indiana or any other jurisdiction. The security
interest granted by this Mortgage is for the purpose of securing all obligations
of Mortgagor as set forth in this Mortgage, the Note and the Related Agreements.
Mortgagor acknowledges that this Mortgage shall constitute a Security Agreement
as that term is used under the laws of the State of Indiana in favor of
Mortgagee. To the extent a security interest cannot be granted or perfected
under the applicable Uniform Commercial Code provisions in any personal property
in which Mortgagor has any right, title or interest, Mortgagor hereby pledges to
Mortgagee all of its right, title and interest in all such personal property
including, but not limited to, deposit accounts, escrowed funds, cash and cash
receipts, as the same shall relate to the Property or the Collateral or the
conduct of business on the Property, now existing, hereafter acquired, wherever
located and however held. Any person holding property in which Mortgagor has any
interest shall be deemed to be holding such property in trust for Mortgagee.
(B) Mortgagor shall execute and deliver financing and continuation
statements covering the Collateral from time to time and in such form as
Mortgagee may require to perfect and continue the perfection of Mortgagee's
security interest with respect to such property, and Mortgagor shall pay all
reasonable costs and expenses of any record searches for financing statements
Mortgagee may require. Mortgagor hereby authorizes and empowers Mortgagee to
file (and hereby irrevocably appoints Mortgagee its agent and attorney-in-fact,
which shall be coupled with an interest, to execute and file, on Mortgagor's
behalf) at any time and from time to time any initial financing statements,
amendments thereto and continuation statements with or without signature of
Mortgagor as authorized by applicable law, as applicable to the Collateral. For
purposes of such filings, Mortgagor agrees to furnish any information requested
by Mortgagee promptly upon request by Mortgagee describing the Collateral.
Mortgagor hereby ratifies and approves all filings of financing statements,
amendments and continuations applicable to the Collateral made or filed by
Mortgagee prior to the date of this Mortgage.
(C) Without the prior written consent of Mortgagee, Mortgagor shall not
create or suffer to be created any other security interest in or lien or
encumbrance on the Collateral, including replacements and additions thereto.
(D) Without the prior written consent of Mortgagee or except in the
ordinary course of business, Mortgagor shall not sell, transfer or encumber any
of the Collateral, or remove any of the Collateral from the Property unless
Mortgagor shall promptly substitute and replace the property removed with
similar property of at least equivalent value on which Mortgagee shall have a
continuing security interest ranking at least equal in priority to Mortgagee's
security interest in the property removed.
(E) Mortgagor shall (1) upon reasonable notice (unless an emergency or
Event of Default exists) permit Mortgagee and its representatives to enter upon
the Property to inspect the Collateral and Mortgagor's books and records
relating to the Collateral and make extracts therefrom and to arrange for
verification of the amount of Collateral, under procedures acceptable to
Mortgagee, directly with Mortgagor's debtors or otherwise at Mortgagor's
expense; (2) promptly notify Mortgagee of any attachment or other legal process
levied against any of the Collateral and any information received by Mortgagor
relative to the Collateral, Mortgagor's debtors or other persons obligated in
connection therewith, which may in any way affect the value of the Collateral or
the rights and remedies of Mortgagee in respect thereto; (3)
21
<Page>
reimburse Mortgagee upon demand for any and all costs actually incurred,
including, without limitation, reasonable and actual attorneys', paralegals' and
accountants' fees, and other expenses incurred in collecting any sums payable by
Mortgagor under any obligation secured hereby, or in the checking, handling and
collection of the Collateral and the preparation and enforcement of any
agreement relating thereto; (4) notify Mortgagee of each location at which the
Collateral is or will be kept, other than for temporary processing, storage or
similar purposes, and of any removal thereof to a new location, including,
without limitation, each office of Mortgagor at which records relating to the
Collateral are kept; (5) provide, maintain and deliver to Mortgagee originals or
certified copies of the policies of insurance and certificates of insurance
insuring the Collateral against loss or damage by such risks and in such
amounts, form and by such companies as Mortgagee may require and with loss
payable to Mortgagee, and in the event Mortgagee takes possession of the
Collateral, the insurance policy or policies and any unearned or returned
premium thereon shall at the option of Mortgagee become the sole property of
Mortgagee; and (6) do all acts necessary to maintain, preserve and protect all
Collateral, keep all Collateral in good condition and repair and prevent any
waste or unusual or unreasonable depreciation thereof.
(F) Until Mortgagee exercises its right to collect proceeds of the
Collateral pursuant hereto, Mortgagor will collect with diligence any and all
proceeds of the Collateral. If an Event of Default exists, any proceeds received
by Mortgagor shall be held in trust for Mortgagee, and Mortgagor shall keep all
such collections separate and apart from all other funds and property so as to
be capable of identification as the property of Mortgagee and shall deliver to
Mortgagee such collections at such time as Mortgagee may request in the
identical form received, properly endorsed or assigned when required to enable
Mortgagee to complete collection thereof.
(G) Mortgagee shall have all of the rights and remedies granted to a
secured party under the Uniform Commercial Code of the state in which the
Collateral is located, as well as all other rights and remedies available at law
or in equity. During the continuance of any Event of Default hereunder or under
the Note, Mortgagee shall have the right to take possession of all or any part
of the Collateral, to receive directly or through its agent(s) collections of
proceeds of the Collateral (including notification of the persons obligated to
make payments to Mortgagor in respect of the Collateral), to release persons
liable on the Collateral and compromise disputes in connection therewith, to
exercise all rights, powers and remedies which Mortgagor would have, but for the
security agreement contained herein, to all of the Collateral and proceeds
thereof, and to do all other acts and things and execute all documents in the
name of Mortgagor or otherwise, deemed by Mortgagee as necessary, proper and
convenient in connection with the preservation, perfection or enforcement of its
rights hereunder; and
(H) After any Event of Default hereunder or under the Note, Mortgagor
shall, at the request of Mortgagee, assemble and deliver the Collateral and
books and records pertaining to the Property at a place designated by Mortgagee,
and Mortgagee may, with reasonable notice to Mortgagor (unless an emergency
exists), enter onto the Property and take possession of the Collateral. It is
agreed that public or private sales, for cash or on credit to a wholesaler or
retailer or investor, or user of collateral of the types subject to the security
agreement, or public auction, are all commercially reasonable since differences
in the sales prices generally realized in the different kinds of sales are
ordinarily offset by the differences in the costs and credit risks of such
sales. The proceeds of any sale of the Collateral shall be applied first to the
expenses of
22
<Page>
Mortgagee actually incurred in retaking, holding, preparing for sale, or selling
the Collateral or similar matters, including reasonable and actual attorneys'
and paralegals' fees, and then, as Mortgagee shall solely determine.
(I) Upon the request of Mortgagee, Mortgagor will cooperate with
Mortgagee in obtaining control with respect to those items of Collateral
consisting of deposit accounts, investment property, letter-of-credit rights or
any other Collateral as to which "control" is required under the applicable
Uniform Commercial Code for perfection of a security interest.
1.16 COVENANTS REGARDING FINANCIAL STATEMENTS.
(A) Mortgagor shall keep true books of record and account in which full,
true and correct entries in accordance with sound accounting practice and
principles applied on a consistent basis from year to year shall be made of all
dealings or transactions with respect to the Property.
(B) (1) Mortgagor shall deliver to Mortgagee:
(A) Within one hundred twenty (120) days after the last day of each
fiscal year of Mortgagor and Mortgagor's sole member during the term of the
Note, unaudited financial reports prepared on a cash basis, including income
statements and cash flow statements covering the operation of the Property and
unaudited annual financial reports prepared on a cash basis, including balance
sheets, income statements and cash flow statements covering the financial
condition of Mortgagor and Mortgagor's sole member for the previous fiscal year,
all certified to Mortgagee to be complete, correct and accurate by the
individual, managing general partner, manager or chief financial officer of the
party whom the report concerns; and
(B) If available, within thirty (30) days after receipt by Mortgagor,
original annual audit reports of an independent certified public accountant
prepared in accordance with generally accepted accounting principles containing
an unqualified opinion, including balance sheets, income statements and cash
flow statements covering the operation of the Property and the financial
condition of Mortgagor and Mortgagor's sole member for the previous fiscal year.
(2) At the request of Mortgagee from time to time (but no more often
than once in each fiscal quarter of Mortgagor during the term of the Note),
Mortgagor shall also deliver to Mortgagee unaudited financial reports prepared
on a cash basis, including income statements and cash flow statements covering
the operation of the Property and unaudited financial reports prepared on a cash
basis, including balance sheets, income statements and cash flow statements
covering the financial condition of Mortgagor and Mortgagor's sole member for
the previous fiscal quarter, a portfolio analysis report covering the operation
of all properties of which Mortgagor or Mortgagor's sole member is the owner
(direct or indirect) or a general partner of the owner (direct or indirect),
setting out a cash flow statement (including debt service payments) for each
such property, and a current rent roll of the Property, all certified to
Mortgagee to be complete, correct and accurate by the individual, managing
general partner, manager or chief financial officer of the party whom the report
concerns.
23
<Page>
(3) All reports covering the financial condition of Mortgagor or
Mortgagor's sole member shall include, without limitation, balance sheets and
statements of income and of partner's equity, if applicable, setting forth in
each case in comparative form the figures for the previous fiscal quarter or
year, as the case may be. All interim quarterly reports shall also include a
breakdown of all categories of revenues and expenses, and any supporting
schedules and data requested by Mortgagee. Each set of annual or quarterly
financial reports or quarterly rent rolls delivered to Mortgagee pursuant to
this Section shall also be accompanied by a certificate of the chief financial
officer, the managing general partner or the manager of the party whom the
report concerns, stating whether any condition or event exists or has existed
during the period covered by the annual or quarterly reports which then
constituted or now constitutes an Event of Default under the Note or this
Mortgage, or which if continued or not cured would, after passage of time,
constitute an Event of Default, and if any such condition or event then existed
or now exists, specifying its nature and period of existence and what Mortgagor
did or proposes to do with respect to such condition or event.
(C) In the event such statements are not in a form reasonably acceptable
to Mortgagee or Mortgagor fails to furnish such statements and reports, then
Mortgagee shall have the immediate and absolute right to audit the respective
books and records of the Property and Mortgagor or Mortgagor's sole member, as
applicable, at the expense of Mortgagor.
(D) Notwithstanding the foregoing, Mortgagor shall not be required to
deliver financial reports covering the financial condition of Mortgagor if and
so long as (1) the Property is Mortgagor's only asset, and (2) Mortgagor
delivers the unaudited financial reports covering the operation of the Property
when and as described above.
1.17. ENVIRONMENTAL COVENANTS.
Mortgagor covenants:
(A) That no Hazardous Materials (as defined below) are currently on or
in the Property (except as expressly described in the Phase I Environmental Site
Assessment of the Property prepared by ATC Associates, Inc., dated November 18,
2003) or shall be installed, used, generated, manufactured, treated, handled,
refined, produced, processed, stored or disposed of, in, on or under the
Property other than Hazardous Materials in quantities and of types reasonably
and customarily associated with general office use which have been and are
stored, used and disposed of in compliance with Hazardous Material Laws (as
defined below) and the presence of which do not require compliance with any
reporting requirements under any Hazardous Material Laws;
(B) That no activity shall be undertaken on the Property which would
cause:
(1) the Property to become a hazardous waste treatment, storage or
disposal facility under any Hazardous Material Law,
(2) a release or threatened release of Hazardous Material from the
Property in violation of any Hazardous Material Law, or
24
<Page>
(3) the discharge of Hazardous Material into any watercourse, body
of surface or subsurface water or wetland, or the discharge into the
atmosphere of any Hazardous Material which would require a permit under any
Hazardous Material Law and for which no such permit has been issued;
(C) That no activity shall be undertaken or permitted to be undertaken,
by the Mortgagor on the Property which would result in a violation under any
Hazardous Material Law; and
(D) To obtain and deliver to Mortgagee, within a reasonable time
following completion of actions required by an appropriate governmental agency,
certifications of engineers or other professionals reasonably acceptable to
Mortgagee, in form and substance satisfactory to Mortgagee, certifying that all
necessary and required actions to clean up, remove, contain, prevent and
eliminate all releases or threats of release of Hazardous Materials on or about
the Property to the levels required by the appropriate governmental agencies
have been taken and, to the knowledge of such professional, the Property is then
in compliance with applicable Hazardous Material Laws as then in effect and
applicable to such actions. For purposes of this Mortgage, "Hazardous Materials"
means and includes asbestos or any substance containing asbestos,
polychlorinated biphenyls, any explosives, radioactive materials, chemicals
known or suspected to cause cancer or reproductive toxicity, pollutants,
effluents, contaminants, emissions, infectious wastes, any petroleum or
petroleum-derived waste or product or related materials and any items defined as
hazardous, special or toxic materials, substances or waste under any Hazardous
Material Law, or any material which shall be removed from the Property pursuant
to any administrative order or enforcement proceeding or in order to place the
Property in a condition that is suitable for ordinary use. "Hazardous Material
Laws" means all federal, state and local laws (whether under common law, statute
or otherwise), ordinances, rules, regulations and guidance documents now in
force, as amended from time to time, in any way relating to or regulating human
health or safety, industrial hygiene or environmental conditions, protection of
the environment, pollution or contamination of the air, soil, surface water or
groundwater, and includes, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, as
amended, 42 U.S.C. Section 7401 et seq., the Occupational Safety and Health Act,
29 U.S.C. Section 651 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Federal Water Pollution Control Act, 33 U.S.C.
Section 1321 et seq., and the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.
1.18. FURTHER ASSURANCES. Mortgagor, from time to time, will execute,
acknowledge, subscribe and deliver to or at the direction of Mortgagee such
documents and further assurance as Mortgagee may reasonably require for the
purpose of evidencing, perfecting or confirming the lien and security interest
created by this Mortgage or the security to be afforded by the Related
Agreements, or both. Without limiting the foregoing and notwithstanding anything
in this Mortgage or the Related Agreements to the contrary, Mortgagor will
defend, indemnify and hold Mortgagee harmless with respect to any suit or
proceeding in which the validity, enforceability or priority of any such lien or
security interest, or both, is endangered or contested, directly or indirectly.
If Mortgagor fails to undertake the defense of any such claim in a timely
manner, or, in Mortgagee's sole determination, fails to prosecute such defense
with due diligence, then
25
<Page>
Mortgagee is authorized to take, at the sole expense of Mortgagor, all necessary
and proper action in defense of any such claim, including, without limitation,
the retention of legal counsel, the prosecution or defense of litigation and the
compromise or discharge of claims, including payment of all costs and reasonable
attorneys' and paralegals' fees. All costs, expenses and losses, if any, so
incurred by Mortgagee, including all attorneys' and paralegals' fees regardless
of whether suit is brought, for all administrative, trial and appellate
proceedings, if any, will constitute advances by Mortgagee as provided in
Section 1.14 hereinabove.
1.19. MORTGAGOR'S CONTINUED EXISTENCE. Mortgagor shall at all times during
the term of the Loan maintain its legal existence and qualification to do or
transact business in the state in which the Property or any of the Collateral is
located. Mortgagor's exact legal name, state of organization and chief executive
office are as set forth respectively in the initial paragraph of this Mortgage.
So long as any of the indebtedness secured hereby remains outstanding, Mortgagor
will provide Mortgagee with thirty (30) days prior written notice of any change
in Mortgagor's name, organizational identification number, state of organization
or, if any individual, principal residence.
ARTICLE II
EVENTS OF DEFAULT
Each of the following shall constitute an event of default ("Event of
Default") hereunder:
2.01. MONETARY AND PERFORMANCE DEFAULTS.
(A) Failure to make any payment due under any one or more of the Note or
any note evidencing a Future Advance, other than the final payment and
Prepayment Premium, or to make any payment due under this Mortgage to Mortgagee
or any other party, including without limitation, payment of escrow deposits,
real estate taxes, insurance premiums and ground rents, if any, on or before the
fourth (4th) day after such payment is due; or
(B) Failure to make the final payment or the Prepayment Premium due
under any one or more of the Note or any note evidencing a Future Advance when
such payment is due whether at maturity, by reason of acceleration, as part of a
prepayment or otherwise (the defaults in (A) and (B) hereinafter "Monetary
Default"); or
(C) Breach or default in the performance of any of the covenants or
agreements of Mortgagor contained herein or in any Related Agreement
("Performance Default"), if such Performance Default shall continue for thirty
(30) days or more after written notice to Mortgagor from Mortgagee specifying
the nature of the Performance Default; provided, however, that if such
Performance Default is of a nature that it cannot be cured within the thirty
(30) day period, then Mortgagor shall not be in default if it commences good
faith efforts to cure the Performance Default within the thirty (30) day period,
demonstrates continuous diligent efforts to cure the Performance Default in a
manner reasonably satisfactory to Mortgagee and, within a reasonable period, not
to exceed one hundred eighty (180) days after the date of the original written
notice of the Performance Default, completes the cure of such Performance
Default. Notwithstanding the foregoing, if the breach or default is one which is
defined as an Event of Default elsewhere in
26
<Page>
this Article II or in the default definition of any Related Agreement, then
Mortgagor shall not be entitled to any notice or cure period upon the occurrence
of such breach or default except for such notice and cure periods, if any, as
may be expressly granted in such other defined Event of Default.
2.02. BANKRUPTCY, INSOLVENCY, DISSOLUTION.
(A) Any court of competent jurisdiction shall sign an order (1)
adjudicating Mortgagor, its sole member, or any Guarantor (which term when used
in this Mortgage shall mean any guarantor of payment of the indebtedness)
bankrupt or insolvent, (2) appointing a receiver, trustee or liquidator of the
Property or Collateral or of a substantial part of the property of Mortgagor,
its sole member, or any Guarantor, or (3) approving a petition for, or effecting
an arrangement in bankruptcy, or any other judicial modification or alteration
of the rights of Mortgagee or of other creditors of Mortgagor, its sole member,
or any Guarantor; or
(B) Mortgagor, its sole member, or any Guarantor shall (1) apply for or
consent to the appointment of a receiver, trustee or liquidator for it or for
any of its property, (2) as debtor, file a voluntary petition in bankruptcy, or
petition or answer seeking reorganization or an arrangement with creditors or to
take advantage of any bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against it and any proceeding under
such law, (3) admit in writing an inability to pay its debts as they mature, or
(4) make a general assignment for the benefit of creditors; or
(C) An involuntary petition in bankruptcy is filed against Mortgagor,
its sole member, or any Guarantor and the same is not vacated or stayed within
90 days of the filing date.
2.03. MISREPRESENTATION. Mortgagor makes or furnishes a representation,
warranty, statement, certificate, schedule and/or report to Mortgagee in or
pursuant to this Mortgage or any of the Related Agreements which is false or
misleading in any material respect as of the date made or furnished, or becomes
false or breached in any material respect upon or after execution of this
Mortgage.
2.04. DEFAULT UNDER SUBORDINATE LOANS. An occurrence of a default under
any loan subordinate to this Mortgage which is not an independent default under
this Mortgage which results in the commencement of foreclosure proceedings or
the taking of any other remedial action under such subordinate loan.
2.05. LIENS. Any federal, state or local tax lien or any claim of lien for
labor or materials or any other lien or encumbrance of any nature whatsoever is
recorded against Mortgagor or any of the Property or Collateral and is not
removed by payment or transferred to substitute security in the manner provided
by law, within thirty (30) days after it is recorded in accordance with
applicable law.
2.06. JUDGMENTS. (A) A final judgment, other than a final judgment in
connection with any condemnation, is entered against Mortgagor that (1)
materially and adversely affects the value, use or operation of the Property or
other Collateral, or (2) adversely affects, or reasonably
27
<Page>
may adversely affect, the validity or enforceability of this Mortgage, any of
the Related Agreements or the Note or priority of the liens or security
interests created by this Mortgage or any of the Related Agreements; or (B)
execution or other final process issues thereon with respect to the Property or
other Collateral; and (C) Mortgagor does not discharge the same or provide for
its discharge in accordance with its terms, or procure a stay of execution
thereon, in any event within thirty (30) days from entry, or Mortgagor shall
not, within such period or such longer period during which execution on such
judgment shall have been stayed, appeal therefrom or from the order, decree or
process upon or pursuant to which such judgment shall have been entered, and
cause its execution to be stayed during such appeal, or if on appeal such order,
decree or process shall be affirmed and Mortgagor shall not discharge such
judgment or provide for its discharge in accordance with its terms within sixty
(60) days after the entry of such order or decree or affirmance, or if any stay
of execution on appeal is released or otherwise discharged.
2.07. LEASES. Mortgagor's default in the performance of its obligations as
lessor under any Lease of 10,000 square feet or more, which default could
result, in Mortgagee's judgment, in the termination of said Lease.
2.08. MORTGAGOR'S CONTINUED EXISTENCE. Mortgagor ceases to exist or to be
qualified to do or transact business in the state in which the Property or any
of the Collateral is located or is dissolved or is a party to a merger,
consolidation or reorganization, or sells all or substantially all of its
assets.
2.09. BREACH OF DUE ON SALE OR ENCUMBRANCE PROVISION. Any occurrence of a
prohibited Transfer under Section 1.08 hereof.
2.10. DEFAULT UNDER RELATED AGREEMENTS. A "Default" or "Event of Default"
shall have occurred under or as defined in any of the Note, the Assignment of
Leases and Rents or any other Related Agreement.
ARTICLE III
REMEDIES
Upon the occurrence of any Event of Default, Mortgagee shall have the
following rights and remedies set forth in Sections 3.01 through 3.08:
3.01. ACCELERATION. Notwithstanding the stated maturity date in the Note,
or any note evidencing any Future Advance, Mortgagee may without notice or
demand, declare the entire principal amount of the Note and/or any Future
Advances then outstanding and accrued and unpaid interest thereon, and all other
sums or payments required thereunder or under this Mortgage or the Related
Agreements including, but not limited to the Prepayment Premium described in the
Note, to be due and payable immediately.
3.02. ENTRY. Irrespective of whether Mortgagee exercises the option
provided in section 3.01 above, Mortgagee in person or by agent or by
court-appointed receiver (and Mortgagee shall have the right to the immediate
appointment of such a receiver without regard to the adequacy of the security
and Mortgagor hereby irrevocably consents to such appointment and
28
<Page>
waives notice of any application therefor) may, at its option, without any
action on its part being required, without in any way waiving such Event of
Default, with or without the appointment of a receiver, or an application
therefor:
(A) Take possession of the Property and conduct tests of, manage or hire
a manager to manage, lease and operate the Property or any part thereof, on such
terms and for such period of time as Mortgagee may deem proper, with full power
to make, from time to time, all alterations, renovations, repairs or
replacements thereto as may seem proper to Mortgagee;
(B) With or without taking possession of the Property, collect and
receive all Rents and Profits, notify tenants under the Leases or any other
parties in possession of the Property to pay Rents and Profits directly to
Mortgagee, its agent or a court-appointed receiver and apply such Rents and
Profits to the payment of:
(1) all costs and expenses incident to taking and retaining
possession of the Property (including the cost of any receivership),
management and operation of the Property, keeping the Property properly
insured and all alterations, renovations, repairs and replacements to the
Property;
(2) all taxes, charges, claims, assessments, and any other liens
which may be prior in lien or payment to this Mortgage or the Note, and
premiums for insurance, with interest on all such items; and
(3) the indebtedness secured hereby together with all costs and
attorney's and paralegals' fees, in such order or priority as to any of
such items as Mortgagee in its sole discretion may determine, any statute,
law, custom or use to the contrary notwithstanding;
(C) Exclude Mortgagor, its agents and servants, wholly from the
Property;
(D) Have joint access with Mortgagor to the books, papers and accounts
of Mortgagor relating to the Property, at the expense of Mortgagor;
(E) Commence, appear in and/or defend any action or proceedings
purporting to affect the interests, rights, powers and/or duties of Mortgagee
hereunder, whether brought by or against Mortgagor or Mortgagee; and
(F) Pay, purchase, contest or compromise any claim, debt, lien, charge
or encumbrance which in the judgment of Mortgagee may affect or appear to affect
the interest of Mortgagee or the rights, powers and/or duties of Mortgagee
hereunder.
Mortgagee, as a matter of right without notice to Mortgagor or anyone
claiming under it and without regard to the then value of the Property or the
interest of Mortgagor therein, shall have the right to apply to any court having
jurisdiction to appoint a receiver or receivers to take charge of the Property
or any portion thereof. Any such receiver or receivers shall have all of the
usual and customary powers and duties of receivers in like or similar cases and
all of the powers and duties of Mortgagee in case of entry as provided
hereinabove, including without limitation, the right to collect and receive
Rents and Profits. All such Rents and Profits Paid to Mortgagee
29
<Page>
or collected by such receiver shall be applied as provided for in subsection
3.02(B) above. Mortgagor for itself and any subsequent owner of the Property
hereby waives any and all defenses to the application for such receiver and
hereby irrevocably consents to such appointment without notice of any
application therefore.
The receipt by Mortgagee of any Rents and Profits pursuant to this Mortgage
after the institution of foreclosure or other proceedings under the Mortgage
shall not cure any such Event of Default or affect such proceedings or any sale
pursuant thereto. After deducting the expenses and amounts set forth above in
this section 3.02, as well as just and reasonable compensation for all
Mortgagee's employees and other agents (including, without limitation,
reasonable and actual attorneys' and paralegals' fees and management and rental
commissions) engaged and employed, the moneys remaining, at the option of
Mortgagee, may be applied to the indebtedness secured hereby. Whenever all
amounts due on the Note and under this Mortgage shall have been paid and all
Events of Default have been cured and any such cure has been accepted by
Mortgagee, Mortgagee shall surrender possession to Mortgagor. The same right of
entry, however, shall exist if any subsequent Event of Default shall occur;
provided, however, Mortgagee shall not be under any obligation to make any of
the payments or do any of the acts referred to in this section 3.02.
3.03. JUDICIAL ACTION. Mortgagee may bring an action in any court of
competent jurisdiction to foreclose this instrument or to enforce any of the
covenants and agreements hereof. The Property may be foreclosed in parts or as
an entirety.
3.04. FORECLOSURE. Mortgagee may institute an action of mortgage
foreclosure against the Property, or take such other action at law or in equity
for the enforcement of this Mortgage and realization on the mortgage security or
any other security herein or elsewhere provided for, as the law may allow, and
may proceed therein to final judgment and execution for the entire unpaid
balance of the principal debt and the Prepayment Premium, with interest thereon
at the rate stipulated in the Note to the date of default, and thereafter at the
Default Rate specified in the Note, together with all other sums due by
Mortgagor in accordance with the provisions of the Note and this Mortgage,
including any sums which may have been advanced or loaned by Mortgagee to
Mortgagor after the date of this Mortgage, including Future Advances, and all
sums which may have been advanced by Mortgagee for taxes, water or sewer rents,
charges or claims, payments or prior liens, insurance, utilities or repairs to
the Property, all costs of suit, together with interest at the Default Rate on
any judgment obtained by Mortgagee from and after the date of any sheriff or
other judicial sale until actual payment is made of the full amount due
Mortgagee. In addition, as an alternative to the right of foreclosure for the
full amount secured hereby after acceleration thereof, Mortgagee shall have the
right, to the extent permitted by law, to institute partial foreclosure
proceedings with respect to the portion of said indebtedness so in default, as
if under a full foreclosure, and without declaring the entire secured
indebtedness due, and provided that if foreclosure sale is made because of
default of a part of the secured indebtedness, such sale may be made subject to
the continuing lien of this Mortgage for the unmatured part of the secured
indebtedness, and it is agreed that such sale pursuant to a partial foreclosure,
if so made, shall not in any manner affect the unmatured part of the secured
indebtedness, but as to such unmatured part this Mortgage and the lien thereof
shall remain in full force and effect just as though no foreclosure sale had
been made under the provisions of this section. Notwithstanding the filing of
any partial foreclosure or entry of a decree of sale therein,
30
<Page>
Mortgagee may elect at any time prior to a foreclosure sale pursuant to such
decree, to discontinue such partial foreclosure and to accelerate the secured
indebtedness by reason of any uncured default or defaults upon which such
partial foreclosure was predicated or by reason of any other defaults, and
proceed with full foreclosure proceedings. It is further agreed that several
foreclosure sales may be made pursuant to partial foreclosures without
exhausting the right of full or partial foreclosure sale for any unmatured part
of the secured indebtedness, it being the purpose to provide for a partial
foreclosure sale of the secured indebtedness without exhausting the power to
foreclose and to sell the Property pursuant to any such partial foreclosure for
any other part of the secured indebtedness whether matured at the time or
subsequently maturing, and without exhausting any right of acceleration and full
foreclosure.
All advances, disbursements and expenditures made or incurred by Mortgagee
before and during a foreclosure, and before and after judgment of foreclosure,
and at any time prior to sale, and, where applicable, after sale, and during the
pendency of any related proceedings, for the following purposes, in addition to
those otherwise authorized by this Mortgage or by the Act (collectively
"Protective Advances"), shall have the benefit of all applicable provisions of
the Act, including those provisions of the Act hereinbelow referred to:
(A) all advances by Mortgagee in accordance with the terms of this
Mortgage to: (i) preserve, maintain, repair, restore or rebuild the improvements
upon the Property; (ii) preserve the lien of the Mortgage or the priority
thereof; or (iii) enforce this Mortgage;
(B) payments by Mortgagee of: (i) principal, interest or other
obligations in accordance with the terms of any senior mortgage or other prior
lien or encumbrance; (ii) real estate taxes and assessments, general and special
and all other taxes and assessments of any kind or nature whatsoever which are
assessed or imposed upon the Property or any part thereof; (iii) other
obligations authorized by this Mortgage; or (iv) with court approval, any other
amounts in connection with other liens, encumbrances or interests reasonably
necessary to preserve the status of title;
(C) advances by Mortgagee in settlement or compromise of any claims
asserted by claimants under senior mortgages or any other prior liens;
(D) reasonable and actual attorneys' and paralegals' fees and other
costs incurred: (i) in connection with the foreclosure of this Mortgage; (ii) in
connection with any action, suit or proceeding brought by or against Mortgagee
for the enforcement of this Mortgage or arising from the interest of Mortgagee
hereunder; or (iii) in preparation for or in connection with the commencement,
prosecution or defense of any other action related to the Mortgage or the
Property;
(E) Mortgagee's fees and costs, including reasonable and actual
attorneys' and paralegals' fees, arising between the entry of judgment of
foreclosure and the confirmation hearing;
(F) expenses deductible from proceeds of sale; and
31
<Page>
(G) expenses incurred and expenditures made by Mortgagee for any one or
more of the following: (i) if the Property or any portion thereof constitutes
one or more units under a condominium declaration, assessments imposed upon the
unit owner thereof; (ii) if Mortgagor's interest in the Property is a leasehold
estate under a lease or sublease, rentals or other payments required to be made
by the lessee under the terms of the lease or sublease; (iii) premiums for
casualty and liability insurance paid by Mortgagee whether or not Mortgagee or a
receiver is in possession, if reasonably required, in reasonable amounts, and
all renewals thereof, without regard to the limitation to maintaining of
existing insurance in effect at the time any receiver or mortgagee takes
possession of the Property; (iv) repair or restoration of damage or destruction
in excess of available insurance proceeds or condemnation awards; (v) payments
deemed by Mortgagee to be required for the benefit of the Property or required
to be made by the owner of the Property under any grant or declaration of
easement, easement agreement, agreement with any adjoining land owners or
instruments creating covenants or restrictions for the benefit of or affecting
the Property; (vi) shared or common expense assessments payable to any
association or corporation in which the owner of the Property is a member in any
way affecting the Property; (vii) if the loan secured hereby is a construction
loan, costs incurred by Mortgagee for demolition, preparation for and completion
of construction, as may be authorized by the applicable commitment, loan
agreement or other agreement; (viii) payments required to be paid by Mortgagor
or Mortgagee pursuant to any lease or other agreement for occupancy of the
Property; and (ix) if this Mortgage is insured, payments of FHA or private
mortgage insurance required to keep such insurance in force.
All Protective Advances shall be so much additional indebtedness secured by
this Mortgage, and shall become immediately due and payable without notice and
with interest thereon from the date of the advances until paid at the rate of
interest payable after default under the terms of the Note.
This Mortgage shall be a lien for all Protective Advances as to subsequent
purchasers and judgment creditors from the time this Mortgage is recorded.
All Protective Advances shall, except to the extent, if any, that any of
the same is clearly contrary to or inconsistent with the provisions of the Act,
apply to and be included in:
(1) any determination of the amount of indebtedness secured by this
Mortgage at any time;
(2) the indebtedness found due and owing to the Mortgagee in the
judgment of foreclosure and any subsequent supplemental judgments, orders,
adjudications or findings by the court of any additional indebtedness
becoming due after such entry of judgment, it being agreed that in any
foreclosure judgment, the court may reserve jurisdiction for such purpose;
(3) if right of redemption has not been waived by this Mortgage,
computation of amounts required to redeem;
(4) determination of amounts deductible from sale proceeds;
32
<Page>
(5) application of income in the hands of any receiver or mortgagee
in possession; and
(6) computation of any deficiency judgment.
3.05. RESCISSION OF NOTICE OF DEFAULT. Mortgagee, from time to time before
any foreclosure sale, public sale or deed in lieu of foreclosure, may rescind
any such notice of breach or default and of election to cause the Property to be
sold by executing and delivering to Mortgagor a written notice of such
rescission, which notice, when recorded, shall also constitute a cancellation of
any prior declaration of default and demand for sale or such documents as may be
required by the laws of the state in which the Property is located to effect
such rescission. The exercise by Mortgagee of such right of rescission shall not
constitute a waiver of any breach or Event of Default then existing or
subsequently occurring, or impair the right of Mortgagee to execute and deliver
to Mortgagor, as above provided, other declarations of default and demand for
sale, and notices of breach or default, and of election to cause the Property to
be sold to satisfy the obligations hereof, nor otherwise affect any provision,
agreement, covenant or condition of the Related Agreements, the Note or of this
Mortgage or any of the rights, obligations or remedies of the parties
thereunder.
3.06. MORTGAGEE'S REMEDIES RESPECTING COLLATERAL. Mortgagee may realize
upon the Collateral, enforce and exercise all of Mortgagor's rights, powers,
privileges and remedies in respect of the Collateral, dispose of or otherwise
deal with the Collateral in such order as Mortgagee may in its discretion
determine, and exercise any and all other rights, powers, privileges and
remedies afforded to a secured party under the laws of the state in which the
Property is located as well as all other rights and remedies available at law or
in equity.
3.07. PROCEEDS OF SALES. The proceeds of any sale made under or by virtue
of this Article III, together with all other sums which then may be held by
Mortgagee under this Mortgage, whether under the provisions of this Article III
or otherwise, shall be applied as follows:
(A) To the payment of the costs, fees and expenses of sale and of any
judicial proceedings (including reasonable attorneys' and paralegals' fees and
costs, whether incurred before, during or after such proceedings, in any
appellate proceedings, before during or after sale of the Property or the
Collateral, or otherwise incurred) wherein the same may be made, including the
cost of evidence of title in connection with the sale, compensation to
Mortgagee, and to the payment of all expenses, liabilities and advances made or
incurred by Mortgagee under this Mortgage, together with interest on all
advances made by Mortgagee at the interest rate applicable under the Note, but
limited to any maximum rate permitted by law to be charged by Mortgagee;
(B) To the payment of any and all sums expended by Mortgagee under the
terms hereof, not then repaid, with accrued interest at the Default Rate set
forth in the Note, and all other sums (except advances of principal and interest
thereon) required to be paid by Mortgagor pursuant to any provisions of this
Mortgage, or the Note, or any note evidencing any Future Advance, or any of the
Related Agreements, including, without limitation, all expenses,
33
<Page>
liabilities and advances made or incurred by Mortgagee under this Mortgage or in
connection with the enforcement thereof, together with interest thereon as
herein provided; and
(C) To the payment of the entire amount then due, owing or unpaid for
principal and interest upon the Note, any notes evidencing any Future Advance,
and any other obligation secured hereby, with interest on the unpaid principal
at the rate set forth therein from the date of advancement thereof until the
same is paid in full; and then.
(D) The remainder, if any, to the person or persons, including
Mortgagor, legally entitled thereto.
3.08. CONDEMNATION AND INSURANCE PROCEEDS. All Condemnation Proceeds,
Insurance Proceeds and any interest earned thereon shall be paid over either by
the condemning authority, insurance company or escrow agent to Mortgagee and
shall be applied first toward reimbursement of the costs and expenses of
Mortgagee (including reasonable attorneys' and paralegals' fees), if any, in
connection with the recovery of such Proceeds, and then shall be applied in the
sole and absolute discretion of Mortgagee and without regard to the adequacy of
its security under this Mortgage (A) to the payment or prepayment of all or any
portion of the Note including the Prepayment Premium described in the Note; (B)
to the reimbursement of expenses incurred by Mortgagee in connection with the
restoration of the Property or Collateral; or (C) to the performance of any of
the covenants contained in this Mortgage as Mortgagee may determine. Any
prepayment of the Note or portion thereof pursuant to Mortgagee's election under
this Section shall be subject to the Prepayment Premium described in the Note.
Upon any Event of Default by Mortgagor under this Mortgage, all right, title and
interest of Mortgagor in and to all any and all insurance policies then in
force, including any and all unearned premiums and existing claims, will inure
to Mortgagee, which, at its sole option, and as attorney-in-fact for Mortgagor,
may then make, settle and give binding acquittances for claims under all such
policies, and may assign and transfer such policies or cancel or surrender them,
applying any unearned premium in such manner as Mortgagee may elect. The
foregoing appointment of Mortgagee as attorney-in-fact for Mortgagor is coupled
with an interest, and is irrevocable.
3.09. WAIVER OF MARSHALLING, RIGHTS OF REDEMPTION, HOMESTEAD AND
VALUATION.
(A) Mortgagor, for itself and for all persons hereafter claiming through
or under it or who may at any time hereafter become holders of liens junior to
the lien of this Mortgage, hereby expressly waives and releases all rights to
direct the order in which any of the Property or Collateral shall be sold in the
event of any sale or sales pursuant hereto and to have any of the Property
and/or any other property now or hereafter constituting security for any of the
indebtedness secured hereby marshalled upon any foreclosure of this Mortgage or
of any other security for any of said indebtedness.
(B) To the fullest extent permitted by law, Mortgagor, for itself and
all who may at any time claim through or under it, hereby expressly waives,
releases and renounces all rights of redemption from any foreclosure sale, all
rights of homestead, exception, monitoring reinstatements, forbearance,
appraisement, valuation, stay and all rights under any other laws which may be
enacted extending the time for or otherwise affecting enforcement or collection
of the Note, the debt evidenced thereby, or this Mortgage.
34
<Page>
3.10. REMEDIES CUMULATIVE. No remedy herein conferred upon or reserved to
Mortgagee is intended to be exclusive of any other remedy herein or by law or
equity provided, but each shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute. No delay or omission of Mortgagee to exercise any right or power
accruing upon any Event of Default shall impair any right or power or shall be
construed to be a waiver of any Event of Default or any acquiescence therein.
Every power and remedy given by this Mortgage to Mortgagee may be exercised
separately, successively or concurrently from time to time as often as may be
deemed expedient by Mortgagee. If there exists additional security for the
performance of the obligations secured hereby, Mortgagee, at its sole option,
and without limiting or affecting any of its rights or remedies hereunder, may
exercise any of the rights and remedies to which it may be entitled hereunder
either concurrently with whatever rights and remedies it may have in connection
with such other security or in such order as it may determine. Any application
of any amounts or any portion thereof held by Mortgagee at any time as
additional security or otherwise, to any indebtedness secured hereby shall not
extend or postpone the due dates of any payments due from Mortgagor to Mortgagee
hereunder or under the Note, any Future Advance, or under any of the Related
Agreements, or change the amounts of any such payments or otherwise be construed
to cure or waive any default or notice of default hereunder or invalidate any
act done pursuant to any such default or notice.
3.11. NONRECOURSE. Except as otherwise set forth in this Section, and
subject to Section 3.12 hereof, Mortgagee's recourse under this Mortgage, the
Note and the Related Agreements shall be limited to and satisfied from the
Property and the proceeds thereof, the rents and all other income a rising
therefrom during and after the month in which an Event of Default has occurred,
the other assets of Mortgagor arising out of the Property which are given as
collateral for the Note, and any other collateral given in writing to Mortgagee
as security for repayment of the Note (all of the foregoing are collectively
referred to as the "Loan Collateral"). Notwithstanding the preceding sentence:
(A) Mortgagee may, in accordance with the terms of this Mortgage, the
Note or any Related Agreement: (1) foreclose the lien of this Mortgage; (2) take
appropriate action to enforce this Mortgage, the Note and the Related Agreements
to realize upon and/or protect the Loan Collateral; (3) name Mortgagor as a
party defendant in any action brought under this Mortgage, the Note or the
Related Agreements so long as the exercise of any remedy is limited to the Loan
Collateral; (4) pursue all of its rights and remedies against any guarantor or
surety or master tenant whether or not a partner, member or other owner of
Mortgagor; and (5) pursue all of its rights and remedies against Mortgagor and
the indemnitors under that certain Environmental Indemnity Agreement of even
date herewith and that certain Terrorism Insurance Indemnity Agreement of even
date herewith;
(B) Mortgagee may seek damages or other monetary relief, to the extent
of actual monetary loss, or any other remedy at law or in equity against
Mortgagor, and the indemnitors/guarantors, if any, under any nonrecourse
exception indemnity agreements ("Nonrecourse Indemnitors") by reason of or in
connection with: (1) the failure of Mortgagor to pay to Mortgagee, upon demand,
all rents, issues and profits of the Property to which Mortgagee is entitled
pursuant to this Mortgage, the Note or the Related Agreements following an Event
of Default; (2) any waste of the Property or any willful act or omission by
Mortgagor which
35
<Page>
damages or materially reduces the value of the Property; (3) the distribution of
rents, issues and profits from the Property prior to the payment of operating
expenses or the provision for reserves, if any, to be made pursuant to this
Mortgage, the Note or the Related Agreement prior to any other expenditure or
distribution by Mortgagor; (4) the failure to account for and to turn over
security deposits (and interest required by law or agreement to be paid thereon)
or prepaid rents following the occurrence of an Event of Default under this
Mortgage, the Note or any Related Agreements; (5) the failure to timely pay all
real estate taxes or any regular or special assessments affecting the Property;
(6) the failure to account for and to turn over real estate tax accruals
following the occurrence of an Event of Default under this Mortgage, the Note or
any Related Agreements; (7) the failure to maintain casualty and liability
insurance as required under the Note or the Related Agreements or to apply
insurance proceeds or condemnation awards relating to the Property or other
collateral in the manner required under applicable provisions of this Mortgage,
the Note or any Related Agreements; (8) any modification, termination or
cancellation of any lease of all or any portion of the Property without
Mortgagee's prior written consent, if and to the extent such consent is
required under the Note or the Related Agreements and if and to the extent such
modification, termination or cancellation has a material adverse affect on the
value of the Property; (9) a default by Mortgagor under any lease of all or any
portion of the Property; or (10) costs and expenses, including, without
limitation, attorneys' and paralegals' fees and transfer taxes, incurred by
Mortgagee in connection with the enforcement of this Mortgage, the Note or the
Related Agreements or in connection with a deed-in-lieu of foreclosure if the
Event of Default giving rise to the enforcement action is one described in
subsections (B) or (C) as an exception to the nonrecourse provisions, or if the
Mortgagor or any principal of Mortgagor objects to any actions taken by
Mortgagee to exercise its remedies under this Mortgage, the Note or the Related
Agreements; Mortgagor or principal of Mortgagor commences any lawsuit to enjoin
or delay a foreclosure of the Property by Mortgagee, or raises defenses or
counterclaims to a foreclosure action; Mortgagor applies for the appointment of
a receiver, trustee or liquidator for it or for any of its property, or, as a
debtor, files a voluntary petition in bankruptcy, or petition or answer seeking
reorganization or an arrangement with creditors or takes advantage of any
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law or statute, or makes a general assignment for the benefit of
creditors; or in the event any bankruptcy or reorganization proceedings
(voluntary or involuntary), the Mortgagor or any principal of Mortgagor opposes
any motion by Mortgagee for relief from the Automatic Stay; and
(C) Mortgagor, any general partners of Mortgagor and the Nonrecourse
Indemnitor(s), if any, shall become personally liable for payment of all the
indebtedness evidenced by the Note and performance of all other obligations of
Mortgagor under this Mortgage, the Note and Related Agreements upon the
occurrence of any: (i) fraud or willful misrepresentation of a material fact by
Mortgagor, any general partners of Mortgagor, or Nonrecourse Indemnitor(s), if
any, in connection with this Mortgage, the Note, the Related Agreements or any
request for any action or consent by Mortgagee; (ii) a Transfer of any interest
in Mortgagor or all or any portion of the Property or any interest therein in
violation of the terms of this Mortgage, the Note or the Related Agreements; or
(iii) the incurrence by Mortgagor of any indebtedness in violation of the terms
of this Mortgage, the Note or Related Agreements (whether secured or unsecured,
direct or contingent), other than unsecured debt or routine trade
36
<Page>
payables incurred in the ordinary course of business in connection with the
operation of the Property.
In addition, Mortgagor, any general partners of Mortgagor and the
Nonrecourse Indemnitors, if any, shall be responsible for any costs and expenses
incurred by Mortgagee in connection with the collection of any amounts for which
Mortgagor, its general partners, if any, and the Nonrecourse Indemnitors, if
any, are personally liable under this Section 3.11, including attorneys' and
paralegals' fees and expenses, court costs, filing fees and all other costs and
expenses incurred in connection therewith.
3.12. EVASION OF PREPAYMENT PREMIUM. Mortgagor agrees that in the event
Mortgagee exercises its right to accelerate the maturity date of the Note
following an Event of Default, a tender of payment of an amount necessary to
satisfy the entire indebtedness evidenced by the Note, but without including the
Prepayment Premium described in the Note, made at any time prior to foreclosure
sale either by Mortgagor, its successors and assigns or by anyone on behalf of
Mortgagor, shall be deemed to constitute an evasion of the prepayment provisions
of the Note and such payment shall therefore be deemed to be a prepayment under
the Note, and to the extent permitted by law, shall include the Prepayment
Premium described in the Note.
ARTICLE IV
MISCELLANEOUS
4.01. SEVERABILITY. In the event any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or uneforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Mortgage, but this Mortgage shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein, but only to the extent that it is invalid, illegal or
unenforceable.
4.02. CERTAIN CHARGES AND BROKERAGE FEES.
(A) Mortgagor agrees to pay Mortgagee its standard charge (or if there
is no standard charge, then Mortgagor shall reimburse Mortgagee for its
reasonable expenses) for each written statement requested of Mortgagee as to the
obligations secured hereby, furnished at Mortgagor's request. Mortgagor further
agrees to pay the charges of Mortgagee for any other service rendered Mortgagor,
or on its behalf, connected with this Mortgage or the indebtedness secured
hereby, including, without limitation, the delivery to an escrow holder of a
request for full or partial release or satisfaction of this Mortgage,
transmittal to an escrow holder of moneys secured hereby, changing its records
pertaining to this Mortgage and indebtedness secured hereby to show a new owner
of the Property, and replacing an existing policy of insurance held hereunder
with another such policy.
(B) Mortgagor agrees to indemnify and hold Mortgagee harmless from any
responsibility and/or liability for the payment of any commission charge or
brokerage fees to anyone which may be payable in connection with the funding of
the loan evidenced by the Note and this Mortgage or refinancing of any prior
indebtedness, if applicable, based upon any action
37
<Page>
taken by Mortgagor. It is understood that any such commission charge or
brokerage fees shall be paid directly by Mortgagor to the entitled parties.
4.03. NOTICES.
(A) All notices expressly provided hereunder to be given by Mortgagee to
Mortgagor and all notices, demands and other communications of any kind or
nature whatever which Mortgagor may be required or may desire to give to or
serve on Mortgagee shall be in writing and shall be (1) hand-delivered,
effective upon receipt, (2) sent by United States Express Mail or by private
overnight courier, effective upon receipt, or (3) served by certified mail, to
the appropriate address set forth below, or at such other place as Mortgagor or
Mortgagee, as the case may be, may from time to time designate in writing by ten
(10) days prior written notice thereof. Any such notice or demand served by
certified mail, return receipt requested, shall be deposited in the United
States mail, with postage thereon fully prepaid and addressed to the party so to
be served at its address stated below or at such other address of which said
party shall have theretofore notified in writing, as provided above, the party
giving such notice. Service of any such notice or demand so made shall be deemed
effective on the day of actual delivery as shown by the addressee's return
receipt or the expiration of three (3) business days after the date of mailing,
whichever is the earlier in time. Any notice required to be given by Mortgagee
shall be equally effective if given by Mortgagee's agent, if any.
38
<Page>
(B) Mortgagor hereby requests that any notice, demand, request or other
communication (including any notice of an Event of Default and notice of sale as
may be required by law) desired to be given or required pursuant to the terms
hereof be addressed to Mortgagor as follows:
Inland Southeast Stony Creek, L.L.C.
2901 Butterfield Road
Oakbrook, Illinois 60523
Attention: Roberta Matlin
With a copy to:
The Inland Real Estate Group, Inc.
2901 Butterfield Road
Oakbrook, Illinois 60523
Attention: General Counsel
All notices and other communications to Mortgagee shall be addressed as
follows:
c/o Allstate Investments, LLC
Allstate Plaza South, Suite G5C
3075 Sanders Road
Northbrook, Illinois 60062
Attention: Commercial Mortgage Division
Servicing Manager
With a copy to:
Allstate Insurance Company
Investment Law Division
Allstate Plaza South, Suite G5A
3075 Sanders Road
Northbrook, Illinois 60062
4.04. MORTGAGOR NOT RELEASED: CERTAIN MORTGAGEE ACTS.
(A) Extension of the time for payment or modification of the terms of
payment of any sums secured by this Mortgage granted by Mortgagee to any
successor in interest of Mortgagor shall not operate to release, in any manner,
the liability of Mortgagor. Mortgagee shall not be required to: commence
proceedings against such successor or refuse to extend time for payment or
otherwise modify the terms of payment of the sums secured by this Mortgage, by
reason of any demand made by Mortgagor. Without affecting the liability of any
person, including Mortgagor, but subject to the terms and provisions of Section
3.11, for the payment of any indebtedness secured hereby, or the legal operation
and effect of this Mortgage on the remainder of the Property for the full amount
of any such indebtedness and liability unpaid, Mortgagee is empowered as
follows: Mortgagee may from time to time and without notice (1) release any
person liable for the payment of any of the indebtedness; (2) extend the time or
otherwise alter the terms of payment of any of the indebtedness; (3) accept
additional real or personal property
39
<Page>
of any kind as security therefor, whether evidenced by deeds of trust,
mortgages, security agreements or any other instruments of security; or (4)
alter, substitute or release any property securing the indebtedness.
(B) Mortgagee may at its sole option and without any duty to do so, at
any time, and from time to time, (1) consent to the making of any map or plan of
the Property or any part thereof; (2) join in granting any easement or creating
any restriction thereon; (3) join in any subordination or other agreement
affecting this Mortgage or the legal operation and effect or charge hereof; or
(4) release or reconvey, without any warranty, all or part of the Property from
the lien of this Mortgage.
4.05. INSPECTION. Upon reasonable prior notice and subject to the rights
of tenants under the Leases, Mortgagee may at any reasonable time make or cause
to be made entry upon and make inspections, reappraisals, surveys, construction
and environmental testing of the Property or any part thereof in person or by
agent, and if Mortgagee has a reasonable basis to believe that Mortgagor is in
breach of any covenant of this Mortgage in regard to the Property, the cost of
any such inspection shall be borne by the Mortgagor.
4.06. RELEASE OR RECONVEYANCE OR CANCELLATION. Upon the payment in full of
all sums secured by this Mortgage, Mortgagee shall cancel and release this
Mortgage and shall surrender this Mortgage and all notes evidencing indebtedness
secured by this Mortgage to Mortgagor. Upon payment of its fees and any other
sums owing to it under this Mortgage, Mortgagee shall release this Mortgage or
reconvey the Property without warranty to the person or persons legally entitled
thereto. The duly recorded release or reconveyance of the Property shall
constitute a reassignment of the Leases by the Mortgagee to the Mortgagor. Such
person or persons shall pay all fees of Mortgagee and costs of recordation, if
any. The recitals in such release or reconveyance of any matters or facts shall
be conclusive proof of the truthfulness thereof.
4.07. STATUTE OF LIMITATIONS. Mortgagor hereby expressly waives and
releases to the fullest extent permitted by law, the pleading of any statute of
limitations as a defense to any and all obligations secured by this Mortgage.
4.08. INTERPRETATION. Wherever used in this Mortgage, unless the context
otherwise indicates a contrary intent, or unless otherwise specifically provided
herein, the word "Mortgagor" shall mean and include both Mortgagor and any
subsequent owner or owners of the Property, and the word "Mortgagee" shall mean
and include not only the original Mortgagee hereunder but also any future owner
and holder, including pledgees, of the Note or other obligations secured hereby.
In this Mortgage, the Note and the Related Agreements, whenever the context so
requires, the masculine gender includes the feminine and/or neuter, and the
neuter includes the feminine and/or masculine, and the singular number includes
the plural. In this Mortgage the Note and the Related Agreements, the use of the
word "including" shall not be deemed to limit the generality of the term or
clause to which it has reference, whether or not non-limiting language (such as
"without limitation," or "but not limited to," or words of similar import) is
used with reference thereto.
40
<Page>
4.09. CAPTIONS. The captions and headings of the Articles and Sections of
this Mortgage, the Note and the Related Agreements are for convenience only and
are not to be used to interpret, define or limit the provisions hereof.
4.10. CONSENT. The granting or withholding of consent by Mortgagee to any
transaction as required by the terms hereof shall not be deemed a waiver of the
right to require consent to future or successive transactions. Mortgagor
covenants and agrees to reimburse Mortgagee promptly on demand for all legal and
other expenses incurred by Mortgagee or its servicing agent in connection with
all requests by Mortgagor for consent or approval under this Mortgage.
4.11. DELEGATION TO SUBAGENTS. Wherever a power of attorney is conferred
upon Mortgagee hereunder or under the Related Agreements, it is understood and
agreed that such power is conferred with full power of substitution, and
Mortgagee may elect in its sole discretion to exercise such power itself or to
delegate such power, or any part thereof, to one or more subagents and such
power shall be deemed to be coupled with an interest and irrevocable so long as
this Mortgage has not been cancelled.
4.12. SUCCESSORS AND ASSIGNS. All of the grants, obligations, covenants,
agreements, terms, provisions and conditions herein shall run with the land and
shall apply to, bind and inure to the benefit of, the heirs, administrators,
executors, legal representatives, successors and assigns of Mortgagor (but this
shall not permit any assignment prohibited hereby) and the endorsees,
transferees, successors and assigns of Mortgagee. In the event Mortgagor is
composed of more than one party, the obligations, covenants, agreements, and
warranties contained herein and in the Related Agreements as well as the
obligations arising therefrom are and shall be joint and several as to each such
party.
4.13. GOVERNING LAW. THIS MORTGAGE IS INTENDED TO BE GOVERNED BY AND
CONSTRUED UNDER THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.
MORTGAGOR HEREBY WAIVES ITS RIGHT TO A TRIAL BY JURY.
4.14. CHANGES IN TAXATION. If, after the date of this Mortgage, any law is
passed by the state in which the Property is located or by any other governing
entity, imposing upon Mortgagee any tax against the Property, or changing in any
way the laws for the taxation of mortgages or deeds of trust or debts secured by
mortgages or deeds of trust so that an additional or substitute tax is imposed
on Mortgagee or the holder of the Note, Mortgagor shall reimburse Mortgagee for
the amount of such taxes immediately upon receipt of written notice from
Mortgagee. Provided, however, that such requirement of payment shall be
ineffective if Mortgagor is permitted by law to pay the whole of such tax in
addition to all other payments required hereunder, without any penalty or charge
thereby accruing to Mortgagee and if Mortgagor in fact pays such tax prior to
the date upon which payment is required by such notice.
4.15. MAXIMUM INTEREST RATE. No provision of this Mortgage or of the Note
or of any note evidencing a Future Advance shall require the payment or permit
the collection of interest in excess of the maximum non-usurious rate permitted
by applicable law. In the event such interest does exceed the maximum legal
rate, it shall be canceled automatically to the extent that such interest
exceeds the maximum legal rate and if theretofore paid, credited on the
principal amount of the Note or, if the Note has been prepaid, then such excess
shall be rebated to
41
<Page>
Mortgagor. It is the intent of Mortgagor and Mortgagee that the interest rate
charged under the Note, this Mortgage any note representing any Future Advance
and any of the Related Agreements shall comply with all applicable law and not
exceed the maximum rate allowed by law.
4.16. TIME OF ESSENCE. Time is of the essence of the obligations of
Mortgagor in this Mortgage and the Related Agreements and each and every term,
covenant and condition made herein by or applicable to Mortgagor.
4.17. REPRODUCTION OF DOCUMENTS. This Mortgage and all documents relating
thereto, specifically excluding the Note but including, without limitation,
consents, waivers and modifications which may hereafter be executed, financial
and operating statements, certificates and other information previously or
hereafter furnished to Mortgagee, may be reproduced by Mortgagee by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and Mortgagee may destroy any original document ("Master")
so reproduced. Mortgagor agrees and stipulates that any such reproduction is an
original and shall be admissible in evidence as the Master in any judicial or
administrative proceeding (whether or not the Master is in existence and whether
or not such reproduction was made or preserved by Mortgagee in the regular
course of business) and any enlargement, facsimile or further reproduction of
such a reproduction shall be no less admissible.
4.18. NO ORAL MODIFICATIONS. This Mortgage may not be amended or modified
orally, but only by an agreement in writing signed by the party against whom
enforcement of any amendment or modification is sought.
4.19. FURTHER ASSURANCES. Mortgagor, from time to time, will execute,
acknowledge, subscribe and deliver to or at the direction of Mortgagee such
documents and further assurances as Mortgagee may reasonably require for the
purpose of evidencing, perfecting or confirming the lien and security interest
created by this Mortgage or the security to be afforded by the Related
Agreements, or both. Without limiting the foregoing and notwithstanding anything
in this Mortgage or the Related Agreements to the contrary, Mortgagor will
defend, indemnify and hold Mortgagee harmless with respect to any suit or
proceeding in which the validity, enforceability or priority of any such lien or
security interest, or both, is endangered or contested, directly or indirectly.
If Mortgagor fails to undertake the defense of any such claim in a timely
manner, or, in Mortgagee's sole determination, fails to prosecute such defense
with due diligence, then Mortgagee is authorized to take, at the sole expense of
Mortgagor, all necessary and proper action in defense of any such claim,
including, without limitation, the retention of legal counsel, the prosecution
or defense of litigation and the compromise or discharge of claims, including
payment of all costs and reasonable attorneys' and paralegals' fees. All costs,
expenses and losses, if any, so incurred by Mortgagee, including all reasonable
attorneys' and paralegals' fees, regardless of whether suit is brought, for all
administrative, trial and appellate proceedings, if any, will constitute
advances by Mortgagee as provided herein.
* * * * *
[Signature Page Follows]
42
<Page>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Mortgage as of the day and year first hereinabove written.
MORTGAGOR AND "DEBTOR"
INLAND SOUTHEAST STONY CREEK, L.L.C.,
a Delaware limited liability company
By: INLAND WESTERN RETAIL REAL ESTATE
TRUST, INC., a Maryland corporation,
Its sole member
By: /s/ Debra A. Palmer
--------------------------
Its: Asst Secretary
-------------------------
43
<Page>
STATE OF Illinois )
) SS.
COUNTY OF Cook )
I, the undersigned, a Notary Public, in and for the County and State
aforesaid, DO HEREBY CERTIFY, that Debra A. Palmer, the Asst. Secretary of
INLAND WESTERN RETAIL REAL ESTATE TRUST, INC., a Maryland corporation, the sole
member of INLAND SOUTHEAST STONY CREEK, L.L.C., a Delaware limited liability
company, personally known to me to be the same person whose name is subscribed
to the foregoing instrument, appeared before me this day in person and
acknowledged that as such officer he/she signed and delivered the said
instrument as his/her free and voluntary act and deed and as the free and
voluntary act and deed of said entities, for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 14th day of January, 2004.
(SEAL)
/s/ Elizabeth Ann Irving
------------------------
Notary Public
My commission expires:
"OFFICIAL SEAL"
11-14-2004 ELIZABETH ANN IRVING
NOTARY PUBLIC STATE OF ILLINOIS
My Commission Expires 11/14/2004
This document prepared by,
and after recording return to:
Sandra L. Waldier
Bell, Boyd & Lloyd LLC
70 West Madison Street
Suite 3300
Chicago, Illinois 60602
<Page>
EXHIBIT A
Legal Description:
Lots numbered 2,3,5, and 7A and Blocks "A", "B", and "C" as shown on the plat of
Stony Creek Marketplace Lots 2, 3, 4, 5, 7, and Blocks A, B, and C Corrective
Plat recorded January 16, 2004 in Plat Cabinet 3, Slide 328 as Instrument No.
2004-00003598 in the Office of the Recorder of Hamilton County, Indiana.
Together with easements created by that certain Declaration of Development
Standards, Covenants and Restrictions dated June 14, 2001, recorded on July 3,
2001 as instrument No. 200100040592, as amended by that certain First Amendment
to Declaration of Development Standards, Covenants and Restrictions dated
January 24, 2003, recorded January 28, 2003 as Instrument No. 200300010148.
<Page>
EXHIBIT B
(Fixture Filing)
Pursuant to the security agreement contained in this Mortgage ("Security
Agreement") and the appropriate Uniform Commercial Code ("UCC") sections in the
State in which the Fixtures are located, as amended and recodified from time to
time, this Mortgage shall constitute a Fixture Filing.
1. DESCRIPTION OF FIXTURES. "Fixtures" shall include all articles of
personal property now or hereafter attached to, placed upon for an indefinite
term or used in connection with said real property, appurtenances and
improvements together with all goods and other property which are or at any time
become so related to the Property that an interest in them arises under real
estate law.
2. DESCRIPTION OF COLLATERAL. The Collateral, as defined in the
Security Agreement, includes, without limitation, the following items and types
of Collateral as well as certain other items and types of Collateral:
All equipment, fixtures, goods, inventory and all present and future
accessions and products thereof and thereto as defined in the UCC, now or at any
time acquired, used, or to be used for or in connection with the construction,
use or enjoyment of the Property by Mortgagor, whether in the possession of
Mortgagor, warehousemen, bailees or any other person and whether located at the
Property or elsewhere, including without limitation:
(A) all building, maintenance or service equipment; building,
maintenance or raw materials or supplies; component parts or work in process;
appliances; furnishings; machinery; and tools; and
(B) all goods and property covered by any warehouse receipts, bills of
lading and other documents evidencing any goods or other tangible personal
property of any kind (including any Collateral) in which Mortgagor now or at any
time hereafter has any interest in connection with any or all of the Property or
Collateral; and
(C) any and all products of any accessions to any such Collateral which
may exist at any time.
Part of the above described goods are or are to become Fixtures on the
Property. As used in this Exhibit to qualify the scope of Mortgagee's security
interest in any of the Collateral, the phrase "in connection with any or all of
the Property or Collateral" shall be used in its broadest and most comprehensive
sense and shall include without limitation property used or acquired (or to be
used or acquired) in connection with the improvement, development, construction,
repair or remodeling of any or all of the Property, property arising from or in
connection with the operation, use, maintenance, occupancy, sale, lease or
disposition of any or all of the Property or Collateral, property used or
acquired (or to be used or acquired) in connection with Mortgagor's performance
of any of its obligations to Mortgagee, and property acquired with any loan
proceeds. If any property is used (or to be used) for multiple or different
purposes, and one such purpose relates to any aspect of the Property or
collateral, such property shall constitute
<Page>
Collateral hereunder, unless Mortgagee shall release such property from this
Fixture Filing and Mortgagee's security interest in a duly executed written
instrument.
3. RELATION OF FIXTURE FILING TO MORTGAGE. Some or all of the
Collateral described in Section 2 above may be or become Fixtures in which
Mortgagee has a security interest under the Security Agreement. However, nothing
herein shall be deemed to create any lien or interest in favor of Mortgagee
under this Mortgage in any such Collateral which is not a fixture, and the
purpose of this Exhibit B is to create a fixture filing under the appropriate
Uniform Commercial Code sections in the State in which the Fixtures are located,
as amended or recodified from time to time, the rights, remedies and interests
of Mortgagee under this Mortgage are independent and cumulative, and there shall
be no merger of any lien hereunder with any security interest created by the
Security Agreement. Mortgagee may elect to exercise or enforce any of its
rights, remedies, or interests under this Mortgage as Mortgagee may from time to
time deem appropriate.
4. NAME AND ADDRESS OF MORTGAGEE:
Allstate Life Insurance Company and
Allstate Insurance Company
Allstate Plaza South, Suite G5C
3075 Sanders Road
Northbrook, Illinois 60062
Attention: Commercial Mortgage Division
Servicing Manager
5. OTHER FIXTURE FINANCING AND REMOVAL OF FIXTURES. (A) Mortgagee has
not consented to any other security interest of any other person in any Fixtures
and has not disclaimed any interest in any Fixtures; and (B) Mortgagee has not
agreed or consented to the removal of any Fixtures from the Property, and any
such consent by Mortgagor shall not be binding on Mortgagee. Mortgagee reserves
the right to prohibit the removal of any Fixtures by any person with the legal
right to remove any Fixtures from the Property unless and until such person
makes arrangements with (and satisfactory to) Mortgagee for the payment to
Mortgagee of all costs of repairing any physical injury to the Property which
may be caused by the removal of such Fixtures. Any such payment shall be made
directly to Mortgagee at its request, and Mortgagee may hold such payment as
additional collateral under this Mortgage. Failure by Mortgagor to cause the
delivery to Mortgagee of any such payment shall constitute both: (1) waste under
(and breach of) this Mortgage; and (2) conversion of Collateral under (and a
breach of) the Security Agreement.
<Page>
EXHIBIT C
(Permitted Exceptions)
1. Taxes for the year 2003 and subsequent years, a lien but not yet due and
payable.
2. Easement of necessity for access for the adjoiner to the east across the
insured real estate.
3. Terms and provisions of a Road Easement Agreement dated October 10, 2000
and recorded November 17, 2000 as Instrument No. 2000-57955.
4. Rights of Reversion as set out in a Limited Warranty Deed with Right of
Reversion dated October 17, 2000 and recorded November 17, 2000 as
Instrument No. 2000-57951, as amended by Amended Limited Warranty Deed with
Right of Reversion dated April 23, 2001 and recorded May 8, 2001 as
Instrument No. 2001-25776.
5. Memorandum of Development Agreement by and between Duke Construction
Limited Partnership and Meijer Stores Limited Partnership dated June 15,
2001 and recorded July 3, 2001 as Instrument No. 2001-40593.
6. Terms and provisions of a Taxpayer Agreement and Consent to Real
Property Tax Lien dated June 15, 2001 and recorded December 26, 2001 as
Instrument No. 2001-85653.
7. Terms and provisions of an Use Restriction Agreement by and between Duke
Construction Limited Partnership and First Indiana Bank, N.A. dated January
27, 2003 and recorded February 5, 2003 as Instrument No. 2003-12444.
8. Easement in favor of: all utility companies and their agents and employees
Type of easement: Utility
Dated: March 20, 2002
Recorded: May 2, 2002
Instrument No.: 2002-32599
Subject to the terms and conditions thereof.
9. Limited Access Fence Removal Covenant recorded November 20, 2002 as
Instrument No. 2002-89080.
10. Terms and provisions of a Nonexclusive Parking Easement Agreement by and
between Duke Construction Limited Partnership and Meijer Stores Limited
Partnership dated February 28, 2003 and recorded March 12, 2003 as
Instrument No. 2003-25008.
11. Terms and provisions of an Ordinance Vacating Right of Way for Cumberland
Road dated August 13, 2002 and recorded September 26, 2002 as Instrument
No. 2002-70245.
<Page>
12. Convenants, conditions, restrictions, setback lines, utility easements and
any amendments thereto contained in the plat of Stony Creek Marketplace,
Lots 2, 3, 4, 5, 7 & Blocks A, B, & C, Secondary Plat recorded October 22,
2002 in Plat Cabinet 3, Slide 74 as Instrument No. 2002-79217. A violation
of the covenants, conditions, and restrictions will not result in
forfeiture or reversion of title. We delete any covenant, condition, or
restriction indicating a preference, limitation or discrimination based on
race, color, religion, sex, handicap, familial status or national origin to
the extent such covenants, conditions or restrictions violate 42 USC 3604
(c).
13. Declaration of Development Standards, Covenants and Restrictions dated June
14, 2001 and recorded July 3, 2001 as Instrument No. 2001-40592, as amended
by First American to Declaration of Development Standards, Covenants, and
Restrictions dated January 24, 2003 and recorded January 28, 2003 as
Instrument No. 2003-10148. The Declaration provides for regular and special
assessments which shall constitute a lien upon the land. The Declaration
also provides that the lien of any assessment shall be subordinate to the
lien of any first mortgage. A violation of the covenants, conditions, and
restrictions will not result in forfeiture or reversion of title. We delete
any covenant, condition, or restriction indicating a preference, limitation
or discrimination based on race, color, religion, sex, handicap, familial
status or national origin to the extent such covenants, conditions, or
restrictions violate 42 USC 3604 (c).