Exhibit 10.222
PROPERTY RESERVES AGREEMENT
Loan No. 753948
THIS PROPERTY RESERVES AGREEMENT (as the same may from time to time
hereafter be modified, supplemented or amended, this "AGREEMENT") is made as of
July 2, 2004, by INLAND WESTERN KANSAS CITY, L.L.C., a Delaware limited
liability company, having an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("BORROWER"), and PRINCIPAL LIFE INSURANCE COMPANY, an Iowa
corporation, having a principal place of business and post office address at c/o
Principal Real Estate Investors, LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇-▇▇▇▇ ("LENDER").
RECITALS
Lender has agreed to make a loan (the "LOAN") in the original principal
amount of Twenty Million One Hundred Fifty Thousand and No/100 Dollars
($20,150,000.00) (the "LOAN AMOUNT") to Borrower as set forth in the Loan
Documents, executed by and between Lender and Borrower (capitalized terms used
herein and not otherwise defined will have the meanings given to them in the
Loan Documents); and
The Loan is evidenced by Borrower's secured promissory note delivered to
Lender (as may be modified, amended, supplemented, extended or consolidated in
writing, and any note(s) issued in exchange therefore or in replacement thereof,
the "NOTE"), in the Loan Amount, bearing interest at the rate and being payable
in the manner provided therein and further evidenced and secured by, among other
things, a "MORTGAGE" (it being agreed that Mortgage as hereinafter used shall be
construed to mean "mortgage" or "deed of trust" or "trust deed" or "deed to
secure debt" as the context so requires) bearing the aforesaid date to secure
the Note and creating a lien on Borrower's interest in certain real estate in
the county of Platte, state of Missouri, together with all existing improvements
constructed thereon, said Premises being more particularly described in said
Mortgage; and
Borrower has agreed to deposit with Lender certain funds to be held by
Lender to reimburse Borrower for the costs of certain tenant improvements which
are to be borne by Borrower in accordance with approved Leases of space at the
Premises ("TENANT IMPROVEMENTS") and certain reasonable leasing commissions to
be paid to third party brokers pursuant to written agreements covering leasing
activities at the Premises ("LEASING COMMISSIONS"); and
The funds shall be held by Lender as additional security for the Loan and
are hereafter referred to as the "Property Reserves"; and
Lender and Borrower desire to set forth the terms and conditions for
placing the Property Reserves with Lender and the terms and conditions upon
which said Property Reserves shall be held, disbursed or applied as contemplated
by the parties hereto.
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NOW THEREFORE, in consideration of the making of the Loan, the mutual
promises and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Lender and Borrower, intending to be legally bound, agree as follows:
1. PROPERTY RESERVES. The following Property Reserves shall be held by
Lender as additional security for the Loan and disbursed or applied as
hereinafter provided:
a. All funds to which Borrower is entitled under the Escrow
Agreement shall be deposited with Lender immediately upon
receipt thereof by Borrower. Property Reserves deposited as a
result of monies withdrawn under Sections 2(c) and 2(d) of the
Escrow Agreement are sometimes referred to herein as the "RENT
RESERVES". Property Reserves deposited as a result of
monies withdrawn under Sections 2(a) and 2(b) of the Escrow
Agreement are sometimes referred to herein as the "TI/LC
RESERVES".
b. The term "ESCROW AGREEMENT" as used herein means the Escrow
Agreement dated June 30, 2004 among Borrower, Red Boardwalk,
LLC, Redbarry, L.L.C. ("Sellers") and Chicago Title Insurance
Company ("Escrow Agent"), a copy of which is attached hereto as
Exhibit A and made a part hereof.
Notwithstanding the foregoing, provided no Event of Default has occurred
under the Loan Documents, prior to the Termination Date (as defined in the
Escrow Agreement) Borrower shall not be obligated to deposit funds from monthly
draws with Lender pursuant to this Agreement but may receive monthly
disbursements of such funds directly from Escrow Agent. Borrower shall provide
Lender with copies of each draw request submitted under the Escrow Agreement.
Upon the occurrence of an Event of Default under the Loan Documents, Lender may
direct Escrow Agent to deliver all funds due to Borrower directly to Lender and
all funds thereafter received by Borrower pursuant to the Escrow Agreement shall
be immediately remitted to Lender to be applied by Lender in accordance with the
terms of the Loan Documents. All funds received by Borrower as of the
Termination Date shall be immediately deposited with Lender and shall be
disbursed by Lender in accordance with the terms and provisions of this
Agreement.
2. TENANT IMPROVEMENTS AND LEASING COMMISSIONS.
a. Except as hereinafter provided and so long as no Event of
Default has occurred under the Loan Documents, Lender shall from time to
time disburse the funds constituting TI/LC Reserves in the amounts
hereinafter specified in accordance with the following terms and
conditions:
(i) Disbursements for Tenant Improvements and Leasing
Commissions shall be for an amount equal to the actual costs and
expenses incurred by Borrower, not to exceed a combined rate of $18.00
per square foot of net rentable area leased;
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(ii) Borrower shall submit written requests to Lender to
disburse funds for Tenant Improvements and Leasing Commissions no more
than once per calendar quarter and each such request shall be for an
aggregate amount of not less than $50,000;
(iii) Disbursements shall be conditioned upon Borrower
furnishing to Lender with its written request, at Lender's discretion:
(A) copies of unconditional lien waivers for completed
Tenant Improvements;
(B) a title search in form and substance acceptable to
Lender and if such search discloses conditions unacceptable to
Lender or Lender deems it reasonably necessary, then such
endorsements or other assurances reasonably satisfactory to
Lender from the title insurance company insuring the continued
first lien priority of the Mortgage, without exception for
mechanics' or materialmen's liens and subject only to those
exceptions previously approved by Lender and any other
exceptions approved in writing by Lender subsequent to the date
hereof;
(C) evidence that Borrower has completed and performed
the Tenant Improvements and has paid for and obtained all
permits, bonds, licenses and approvals required by all
applicable laws for the same, whether necessary for
commencement, performance, completion, occupancy, use or
otherwise;
(D) to the extent Lender deems reasonably necessary,
either of the following at Lender's discretion: (i) a statement
from an architect, contractor or engineering consultant, in
Lender's reasonable discretion, as to the extent and cost of the
Tenant Improvements; or (ii) a copy of the construction contract
and any change orders and addenda thereto;
(E) fully executed lease(s) or fully executed amendments
extending upcoming term expirations of previously approved
existing leases, as the case may be, all in form and substance
acceptable to Lender to creditworthy lessees (other than
Borrower or any person or entity affiliated with Borrower);
(F) lessee's estoppel certificate(s) for the improved
space in form and substance acceptable to Lender indicating,
among other things, the lessee's occupancy and unconditional
acceptance of the improvements and the commencement of
consecutive monthly rental payments, all rental concessions and
deferments having expired;
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(G) a certificate of occupancy in a form and substance
satisfactory to Lender for the improved space from the local
authority responsible for issuing such certificate;
(H) Lender having inspected, or having expressly waived
in writing such inspection, and approved the completed Tenant
Improvements which must have been completed in a good and
workmanlike manner; and
(I) Borrower having furnished to Lender in form and
substance reasonably acceptable to Lender: (i) a true, correct
and complete copy of the agreement, with the applicable broker
or agent to which a commission is due; and (ii) one of the
following, at Lender's discretion, (a) an estoppel certificate
from the applicable broker or agent, or (b) such other written
documentation either of which shall evidence payment in full of
the commission.
3. RENT RESERVES. Upon deposit with Lender of the funds constituting Rent
Reserves, then except as hereinafter provided and so long as no Event of Default
has occurred under the Loan Documents, Lender will from time to time disburse
the funds constituting Rent Reserves in the amounts hereinafter specified in
accordance with the following terms and conditions:
(i) Disbursements will be made monthly using the formula set forth
in Sections 2(c)(i) and 2(d) of the Escrow Agreement for monthly draws
thereunder (e.g., if Borrower would have been entitled under the Escrow
Agreement to make a draw of $100 for the month in question, Lender will
disburse $100 of the Rent Reserves for such month).
(ii) Prior to requesting a disbursement, Borrower will present Lender
an operating statement for the month in question, which statement will be
subject to the reasonable approval of Lender.
(iii) At such time as the operating statement indicates that base rent
(when annualized) will be at least $2,612,010, Borrower shall be entitled
to receive any portion of the remaining Rent Reserves in excess of
$2,000,000. At such time as the operating statement indicates that base
rent (when annualized) will be at least $2,649,710, Borrower shall be
entitled to receive any portion of the remaining Rent Reserves in excess of
$1,500,000. At such time as the operating statement indicates that base
rent (when annualized) will be at least $2,687,410, Borrower shall be
entitled to receive any portion of the remaining Rent Reserves in excess of
$1,000,000. At such time as the operating statement indicates that base
rent (when annualized) will be at least $2,725,110, Borrower shall be
entitled to receive any portion of the remaining Rent Reserves in excess of
$500,000. At such time as the operating statement indicates that base rent
(when annualized) will be at least $2,763,000, then, provided no Event of
Default has occurred, all remaining Rent Reserves shall be remitted to
Borrower within thirty (30) days after request therefor.
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4. INTEREST ON PROPERTY RESERVES. Borrower agrees that Lender shall not
be required to credit Borrower with interest on the Property Reserves or any
portion thereof.
5. ADMINISTRATION/INSPECTION FEE. Lender shall be entitled to charge
Borrower a reasonable processing fee for administering and reviewing any
disbursement of the Property Reserves. Additionally, Lender shall be entitled to
charge Borrower for any reasonable costs incurred by Lender in inspecting the
Premises.
6. SECURITY AGREEMENT. This Agreement and the escrow of the Property
Reserves under the terms hereof are intended to create a prior perfected
security interest in the funds comprising the Property Reserves. As more fully
described in the Loan Documents, Borrower has assigned, conveyed, pledged and
transferred to Lender and granted to Lender a first and continuing lien on and
security interest in and to, among other things, all of Borrower's right, title
and interest in and to the Property Reserves, which secure the full and punctual
payment and performance of all of the Indebtedness. The Property Reserves shall
not constitute any deposit or account of the Borrower or monies to which the
Borrower is entitled upon demand, or upon the mere passage of time, or sums to
which Borrower is entitled to interest by virtue of Lender's mere possession of
the same. Lender shall not be required to segregate the Property Reserves or
hold them in any separate account for the benefit of the Borrower. Lender may
hold the Property Reserves in its account or any other account and may commingle
the Property Reserves with any other monies of Lender or any other person or
entity. Upon the payment in full of all sums due to Lender under the Loan
Documents, Lender shall promptly deliver the then existing Property Reserves to
Borrower.
7. EVENT OF DEFAULT. Upon the occurrence of an Event of Default under
any of the Loan Documents, Lender may, with respect to the Property Reserves, or
any portion thereof, exercise all enforcement rights and remedies granted to
Lender under the Loan Documents and in addition to all other rights and remedies
granted to Lender under the Loan Documents, Lender may, at its option, use such
funds partially or in full, in such order and preference as Lender may
determine, to (1) cure or partially cure any Event of Default; (2) complete the
Tenant Improvements and/or pay the Leasing Commissions; (3) pay any interest
accrued under the terms of the Note; (4) pay any other Indebtedness; (5) pay the
Make Whole Premium, if any, due and payable; (6) prepay the principal amount of
the Loan or any part thereof; or (7) hold such funds in a non-interest bearing
account as additional security for the Loan. In the event the Property Reserves
or any portion thereof are applied to prepay the principal amount of the Loan or
any part thereof, Borrower waives any right to prepay the principal amount in
whole or in part without premium, and agrees to pay, as liquidated damages and
not as a penalty, a Make Whole Premium on any principal amount prepaid. The Make
Whole Premium on any principal amount prepaid shall be calculated in accordance
with the provisions of the Loan Documents. Notwithstanding anything contained
herein to the contrary, nothing shall be construed to (a) make Lender
responsible for performing or completing the Tenant Improvements or paying the
Leasing Commissions, as the case may be, (b) require Lender to expend sums to
complete the Tenant Improvements or pay the Leasing Commissions which are in
excess of such amounts then allocated by Lender for such items, or (c) obligate
Lender to demand from Borrower additional sums to complete the Tenant
Improvements or pay the Leasing Commissions.
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8. COST OVERRUNS. In the event that the costs and expenses incurred by
Borrower in completing any Tenant Improvements or paying for any Leasing
Commissions exceed the respective amounts allocated by Lender for such items of
expense, Borrower shall be responsible for the payment (from sources other than
the Property Reserves) of such excess costs and expenses.
9. NOTICES. All notices required to be sent hereunder shall be deemed to
be an adequate and sufficient notice if given in accordance with the notice
provisions of the Mortgage.
10. GOVERNING LAW. This Agreement shall be governed, construed, and
enforced in accordance with the laws of the state in which the Premises is
located, without regard to its conflicts of law principles.
11. HEADINGS. The headings used herein are for convenience only and are
not to be used in interpreting this Agreement. Capitalized terms used herein and
not otherwise defined shall have those meanings given to them in the Loan
Documents.
12. AMENDMENTS. This Agreement, and any provisions hereof, may not be
modified, amended, waived, extended, changed, discharged or terminated orally or
by any act or failure to act on the part of Borrower or Lender, but only by an
agreement in writing signed by the parties hereto.
13. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original; and such counterparts when taken together
shall constitute but one agreement.
14. INAPPLICABLE PROVISIONS. If any term, covenant or condition of this
Agreement is held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such provision.
15. SUCCESSORS AND ASSIGNS. This Agreement and all the provisions hereof
shall inure to the benefit of the heirs, successors and assigns of Lender and
shall bind the heirs, representatives, and permitted successors and assigns of
Borrower.
IN WITNESS WHEREOF, Borrower and Lender have hereunto caused this Agreement
to be executed the date first above written.
(REMAINDER OF PAGE INTENTIONALLY BLANK
SIGNATURES ON NEXT PAGE)
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SIGNATURE PAGE OF BORROWER TO
PROPERTY RESERVES AGREEMENT
INLAND WESTERN KANSAS CITY, L.L.C., a
Delaware limited liability company
By: INLAND WESTERN RETAIL REAL
ESTATE TRUST, INC., a Maryland
corporation, Member
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Asst. Secretary
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SIGNATURE PAGE OF LENDER TO
PROPERTY RESERVES AGREEMENT
PRINCIPAL LIFE INSURANCE COMPANY, an Iowa
corporation
By: PRINCIPAL REAL ESTATE INVESTORS, LLC,
a Delaware limited liability company, its
authorized signatory
By:
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