**Exhibit10.504**

 

**LOAN****AGREEMENT**

 

 

Dated as of January 26,2005

 

 

Between

 

 

**INLANDWESTERN MARKHAM CORP.,**

 

 

as Borrower

 

 

and

 

 

**BANK OFAMERICA, N.A.,**

as Lender

 

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TABLE OF CONTENTS

 
| **ARTICLE 1  DEFINITIONS; PRINCIPLES OF CONSTRUCTION**        | ** ** |
|--------------------------------------------------------------------|------------|
|                                                               |       |
| SECTION 1.1.  DEFINITIONS                                     |       |
| SECTION 1.2.  PRINCIPLES OF CONSTRUCTION                      |       |
|                                                               |       |
| **ARTICLE 2 GENERAL TERMS**                                   | ** ** |
|                                                               |       |
| SECTION 2.1.  LOAN COMMITMENT; DISBURSEMENT TO BORROWER       |       |
| SECTION 2.2.  LOAN PAYMENTS                                   |       |
| SECTION 2.3.  PREPAYMENT                                      |       |
|                                                               |       |
| **ARTICLE 3 CONDITIONS PRECEDENT**                            | ** ** |
|                                                               |       |
| **ARTICLE 4 REPRESENTATIONS AND  WARRANTIES**                 | ** ** |
|                                                               |       |
| SECTION 4.1.  ORGANIZATION                                    |       |
| SECTION 4.2.  STATUS OF BORROWER                              |       |
| SECTION 4.3.  VALIDITY OF DOCUMENTS                           |       |
| SECTION 4.4.  NO CONFLICTS                                    |       |
| SECTION 4.5.  LITIGATLON                                      |       |
| SECTION 4.6.  AGREEMENTS                                      |       |
| SECTION 4.7.  SOLVENCY                                        |       |
| SECTION 4.8.  FULL AND ACCURATE DISCLOSURE                    |       |
| SECTION 4.9.  NO PLAN ASSETS                                  |       |
| SECTION 4.10.  NOT A FOREIGN PERSON                           |       |
| SECTION 4.11.  ENFORCEABLLITY                                 |       |
| SECTION 4.12. BUSINESS PURPOSES                               |       |
| SECTION 4.13. COMPLIANCE                                      |       |
| SECTION 4.14.  FLNANCLAL INFORMATLON                          |       |
| SECTION 4.15. CONDEMNATION                                    |       |
| SECTION 4.16. UTILITIES AND PUBLIC ACCESS; PARKING            |       |
| SECTION 4.17. SEPARATE LOTS                                   |       |
| SECTION 4.18.  ASSESSMENTS                                    |       |
| SECTION 4.19.  INSURANCE                                      |       |
| SECTION 4.20.  USE OF PROPERTY                                |       |
| SECTION 4.21. CERTIFICATE OF OCCUPANCY; LICENSES              |       |
| SECTION 4.22. FLOOD ZONE                                      |       |
| SECTION 4.23. PHYSICAL CONDITION                              |       |
| SECTION 4.24. BOUNDARIES; SURVEY                              |       |
| SECTION 4.25. LEASES                                          |       |
| SECTION 4.26. FILING AND RECORDING TAXES                      |       |
| SECTION 4.27. MANAGEMENT AGREEMENT                            |       |
| SECTION 4.28. ILLEGAL ACTIVITY                                |       |
| SECTION 4.29. CONSTRUCTION EXPENSES                           |       |
| SECTION 4.30. PERSONAL PROPERTY                               |       |
| SECTION 4.31. TAXES                                           |       |
| SECTION 4.32. PERMITTED ENCUMBRANCES                          |       |
| SECTION 4.33. FEDERAL RESERVE  REGULATIONS                    |       |
| SECTION 4.34. INVESTMENT COMPANY ACT                          |       |
| SECTION 4.35.  RECIPROCAL EASEMENT AGREEMENTS                 |       |
| SECTION 4.36. NO CHANGE IN FACTS OR CIRCUMSTANCES; DISCLOSURE |       |

 

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| SECTION 4.37. INTELLECTUAL PROPERTY                           |       |
|--------------------------------------------------------------------|------------|
| SECTION 4.38. COMPLIANCE WITH ANTI-TERRORISM LAWS             |       |
| SECTION 4.39. PATRIOT ACT                                     |       |
| SECTION 4.40. SURVIVAL                                        |       |
|                                                               |       |
| **ARTICLE 5  BORROWER COVENANTS**                             |       |
|                                                               |       |
| SECTION 5.1.  EXISTENCE; COMPLIANCE WITH LEGAL REQUIREMENTS   |       |
| SECTION 5.2.  MAINTENANCE AND USE OF PROPERTY                 |       |
| SECTION 5.3.  WASTE                                           |       |
| SECTION 5.4.  TAXES AND OTHER CHARGES                         |       |
| SECTION 5.5.  PAYMENTS FREE OF TAXES                          |       |
| SECTION 5.6.  LITIGATION                                      |       |
| SECTION 5.7.  ACCESS TO PROPERTY                              |       |
| SECTION 5.8.  NOTICE OF DEFAULT                               |       |
| SECTION 5.9.  COOPERATE IN LEGAL PROCEEDINGS                  |       |
| SECTION 5.10. PERFORMANCE BY BORROWER                         |       |
| SECTION 5.11. AWARDS; INSURANCE PROCEEDS                      |       |
| SECTION 5.12. FINANCIAL REPORTING                             |       |
| SECTION 5.13. ESTOPPEL STATEMENT                              |       |
| SECTION 5.14. LEASING MATTERS                                 |       |
| SECTION 5.15. PROPERTY MANAGEMENT                             |       |
| SECTION 5.16. LIENS                                           |       |
| SECTION 5.17. DEBT CANCELLATION                               |       |
| SECTION 5.18. ZONING                                          |       |
| SECTION 5.19. ERISA                                           |       |
| SECTION 5.20. NO JOINT ASSESSMENT                             |       |
| SECTION 5.21. RECIPROCAL EASEMENT AGREEMENTS                  |       |
|                                                               |       |
| **ARTICLE 6 ENTITY COVENANTS**                                |       |
|                                                               |       |
| SECTION 6.1.  SINGLE PURPOSE ENTITY/SEPARATENESS              |       |
| SECTION 6.2.  CHANGE OF NAME, IDENTITY OR STRUCTURE           |       |
| SECTION 6.3.  BUSINESS AND OPERATIONS                         |       |
| SECTION 6.4.  INDEPENDENT DIRECTOR                            |       |
| ** **                                                         | ** ** |
| **ARTICLE 7 NO SALE OR ENCUMBRANCE**                          | ** ** |
|                                                               |       |
| SECTION 7.1.  TRANSFER DEFINITIONS                            |       |
| SECTION 7.2.  NO SALE/ENCUMBRANCE                             |       |
| SECTION 7.3.  PERMITTED TRANSFERS                             |       |
| SECTION 7.4.  LENDER’S RIGHTS                            |       |
| SECTION 7.5.  ASSUMPTION                                      |       |
| SECTION 7.6.  ASSUMPTION BY INLAND PERMITTED TRANSFEREE       |       |
|                                                               |       |
| **ARTICLE 8 INSURANCE; CASUALTY;  CONDEMNATION; RESTORATION** |       |
|                                                               |       |
| SECTION 8.1.  INSURANCE                                       |       |
| SECTION 8.2.  CASUALTY                                        |       |
| SECTION 8.3. EXPROPRIATION                                    |       |
| SECTION 8.4.  RESTORATION                                     |       |
|                                                               |       |
| **ARTICLE 9 REPLACEMENTS; RESERVE FUNDS**                     | ** ** |
|                                                               |       |
| SECTION 9.1.  REPLACEMENTS                                    |       |
| SECTION 9.2.  TAX AND INSURANCE RESERVE FUNDS                 |       |
| SECTION 9.3.  RESERVE FUNDS GENERALLY                         |       |
|                                                               |       |
| **ARTICLE 10 CASH MANAGEMENT**                                |       |
|                                                               |       |
| SECTION 10.1. CASH MANAGEMENT ACCOUNT                         |       |
| SECTION 10.2. DEPOSITS AND WITHDRAWALS                        |       |

 

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| SECTION 10.3.  SECURITY INTEREST                                       |       |
|-----------------------------------------------------------------------------|------------|
|                                                                        |       |
| **ARTICLE 11 EVENTS OF DEFAULT; REMEDIES**                             |       |
|                                                                        |       |
| SECTION 11.1. EVENT OF DEFAULT                                         |       |
| SECTION 11.2. REMEDIES                                                 |       |
|                                                                        |       |
| **ARTICLE 12 ENVIRONMENTAL PROVISIONS**                                | ** ** |
|                                                                        |       |
| SECTION 12.1. ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES             |       |
| SECTION 12.2. ENVIRONMENTAL COVENANTS                                  |       |
| SECTION 12.3. LENDER’S RIGHTS                                     |       |
| SECTION  12.4. OPERATIONS AND MAINTENANCE PROGRAMS                          |       |
| SECTION 12.5. ENVIRONMENTAL DEFINITIONS                                |       |
|                                                                        |       |
| **ARTICLE 13 SECONDARY MARKET**                                        |       |
|                                                                        |       |
| SECTION 13.1. TRANSFER OF LOAN                                         |       |
| SECTION 13.2. DELEGATION OF SERVICING                                  |       |
| SECTION 13.3. DISSEMINATION OF INFORMATION                             |       |
| SECTION 13.4. COOPERATION                                              |       |
| ** **                                                                  | ** ** |
| **ARTICLE 14 INDEMNIFICATIONS**                                        |       |
|                                                                        |       |
| SECTION 14.1. GENERAL INDEMNIFICATION                                  |       |
| SECTION 14.2. MORTGAGE AND INTANGIBLE TAX INDEMNIFICATION              |       |
| SECTION 14.3. ERISA INDEMNIFICATION                                    |       |
| SECTION 14.4. SURVIVAL                                                 |       |
|                                                                        |       |
| **ARTICLE 15 EXCULPATION**                                             | ** ** |
|                                                                        |       |
| SECTION 15.1. EXCULPATION                                              |       |
|                                                                        |       |
| **ARTICLE 16 NOTICES**                                                 | ** ** |
|                                                                        |       |
| SECTION 16.1. NOTICES                                                  |       |
|                                                                        |       |
| **ARTICLE 17 FURTHER ASSURANCES**                                      |       |
|                                                                        |       |
| SECTION 17.1. REPLACEMENT DOCUMENTS                                    |       |
| SECTION 17.2. RECORDING OF MORTGAGE, ETC.                              |       |
| SECTION 17.3. FURTHER ACTS, ETC.                                       |       |
| SECTION 17.4. CHANGES IN TAX, DEBT, CREDIT AND DOCUMENTARY STAMP  LAWS |       |
| SECTION 17.5. EXPENSES                                                 |       |
|                                                                        |       |
| **ARTICLE 18 WAIVERS**                                                 |       |
|                                                                        |       |
| SECTION 18.1. REMEDIES CUMULATIVE; WAIVERS                             |       |
| SECTION 18.2. MODIFICATION, WAIVER IN WRITING                          |       |
| SECTION 18.3. DELAY NOT A WAIVER                                       |       |
| SECTION 18.4. TRIAL BY JURY                                            |       |
| SECTION 18.5. WAIVER OF NOTICE                                         |       |
| SECTION 18.6. REMEDIES OF BORROWER                                     |       |
| SECTION 18.7. WAIVER OF MARSHALLING OF  ASSETS                         |       |
| SECTION 18.8. WAIVER OF STATUTE OF  LIMITATIONS                        |       |
| SECTION 18.9. WAIVER OF COUNTERCLAIM                                   |       |
|                                                                        |       |
| **ARTICLE 19* *GOVERNING LAW**                                    |       |
|                                                                        |       |
| SECTION 19.1.  CHOICE OF LAW                                           |       |
| SECTION 19.2.  SEVERABILITY                                            |       |
| SECTION 19.3.  PREFERENCES                                             |       |

 

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| **ARTICLE 20 MISCELLANEOUS**                                                 | ** ** |
|-----------------------------------------------------------------------------------|------------|
|                                                                              |       |
| SECTION 20.1. SURVIVAL                                                       |       |
| SECTION 20.2.  LENDER’S DISCRETION                                      |       |
| SECTION 20.3. HEADINGS                                                       |       |
| SECTION 20.4.  COST OF ENFORCEMENT                                           |       |
| SECTION 20.5.  SCHEDULES INCORPORATED                                        |       |
| SECTION 20.6.  OFFSETS, COUNTERCLAIMS AND DEFENSES                           |       |
| SECTION 20.7.  NO JOINT VENTURE OR PARTNERSHIP; NO THIRD PARTY BENEFICIARIES |       |
| SECTION 20.8.  PUBLICITY                                                     |       |
| SECTION 20.9.  CONFLICT; CONSTRUCTION OF DOCUMENTS; RELIANCE                 |       |
| SECTION 20.10.  ENTIRE AGREEMENT                                             |       |
| SECTION 20.11.  INTEREST ACT (CANADA)                                        |       |
| SECTION 20.12.  MAXIMUM INTEREST RATE                                        |       |
| SECTION 20.13.  JUDGMENT CURRENCY                                            |       |

 

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LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of January 26,2005 (as amended, restated, replaced, supplemented or otherwise modified fromtime to time, this **“Agreement”**),between BANK OF AMERICA, N.A., a national banking association, having anaddress at Bank of America Corporate Center, 214 North Tryon Street, Charlotte,North Carolina 28255 (together with its successors and/or assigns, **“Lender”**) and INLAND WESTERN MARKHAM CORP., a corporationgoverned by the laws of New Brunswick having an address at 101 McNabb Street,Markham, Ontario, Canada L3R 4H8 (together with its successors and/or assigns, **“Borrower”**).

 

**RECITALS:**

 

Borrower desires to obtain the Loan (defined below)from Lender.

 

Lender is willing to make the Loan to Borrower,subject to and in accordance with the terms of this Agreement and the otherLoan Documents (defined below).

 

In consideration of the making of the Loan by Lenderand the covenants, agreements, representations and warranties set forth in thisAgreement, the parties hereto hereby covenant, agree, represent and warrant asfollows:

 

**ARTICLE 1**

**DEFINITIONS; PRINCIPLES OF CONSTRUCTION**

 

**Section 1.1.****                                ****Definitions**

 

For all purposes of this Agreement, except asotherwise expressly required or unless the context clearly indicates a contraryintent:

 

**“Account Collateral”**shall mean (i) the Accounts, and all cash,checks, drafts, certificates and instruments, if any, from time to timedeposited or held in the Accounts; (ii) any and all amounts in or credited tothe Accounts invested in Permitted Investments; (iii) all interest, dividends, cash,instruments and other property from time to time received, receivable orotherwise payable in respect of, or in exchange for, any or all of theforegoing; and (iv) to the extent not covered by clauses (i) - (iii) above, all“proceeds” (as defined under the UCC or the PPSA as in effect in the State orProvince in which the Accounts are located) of any or all of the foregoing.

 

**“Accounts”**shall mean the Cash Management Account, theTax and Insurance Reserve Accounts, if any, and any other account or sub-accountestablished by this Agreement, the Mortgage, or the other Loan Documents.

 

**“Accredited Investor”**shall have the meaning set forth in theregulations promulgated by the Securities and Exchange Commission.

 

**“Act”**shall have the meaning set forth in Section 6.1(c).

 

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

 

**“Affiliated Loans”**shall mean a loan made by Lender to a parent,subsidiary or such other entity affiliated with Borrower or Borrower Principal.

 

**“Affiliated Manager”**shall have the meaning set forth in Section 7.1hereof.

 

**“American Express”**shall mean Amex Canada Inc., a corporationincorporated under the laws of Ontario, Canada.

 

**“American Express Lease”**shall mean that certain Lease Agreement datedas of January 25, 2005 between Borrower, as landlord, and AmericanExpress, as tenant, with respect to the Property.

 

**“American Express Lease Default”**shall mean (i) adefault, after the expiration of any applicable notice or cure periods, underthe American Express Lease or (ii) the cancellation, termination or surrenderof the American Express Lease.

 

**“Assignment of ManagementAgreement”**shallmean that certain Assignment and Subordination of Management Agreement datedthe date hereof among Lender, Borrower and Manager, as the same may be amended,restated, replaced, supplemented or otherwise modified from time to time.

 

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

 

**“Borrower Principal”**shall mean Inland Western Retail Real EstateTrust, Inc., a Maryland corporation.

 

**“Business Day”**shall mean a day on which Lender is open forthe conduct of substantially all of its banking business at its office in thecity in which the Note is payable (excluding Saturdays and Sundays).

 

**“Cash Management Account”**shall have the meaning set forth in Section 10.1(a)hereof.

 

**“Cash Management Period”**shall mean the period commencing on the 45thday prior to the Optional Prepayment Date.

 

**“Casualty”**shall have the meaning set forth in Section 8.2.

 

**“Closing Date”**shall mean the date of the funding of theLoan.

 

**“Control”**shall have the meaning set forth in Section 7.1hereof.

 

2

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**“Creditors Rights Laws”** shall mean with respect to any Person any existing or future law ofany jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,reorganization, conservatorship, arrangement, adjustment, winding-up,liquidation, dissolution, composition or other relief with respect to its debtsor debtors.

 

**“Debt”**shallmean the outstanding principal amount set forth in, and evidenced by, thisAgreement and the Note together with all interest accrued and unpaid thereonand all other sums due to Lender in respect of the Loan under the Note, thisAgreement, the Mortgage or any other Loan Document.

 

**“Debt Service”** shall mean, with respect to any particular period of time, scheduledprincipal and/or interest payments under the Note.

 

**“Default**”shall mean the occurrence of any event hereunder or under any other LoanDocument which, but for the giving of notice or passage of time, or both, wouldbe an Event of Default.

 

**“Default Rate”** shall mean, with respect to the Loan, a rate per annum equal to thelesser of (a) the maximum rate permitted by applicable law, or (b) four percent(4%) above the Note Rate.

 

**“Dollars” and “$”**shall mean the lawful currency of the UnitedStates of America.

 

**“Eligible Account”** shall mean a separate and identifiable account from all other fundsheld by the holding institution that is either (a) an account or accountsmaintained with a federal or state chartered depository institution or trustcompany which complies with the definition of Eligible Institution or (b) asegregated trust account or accounts maintained with the corporate trustdepartment of a federal or state chartered depository institution or trustcompany acting in its fiduciary capacity which, in the case of a federallychartered depository institution or trust company acting in its fiduciarycapacity is subject to the regulations regarding adversary funds on deposittherein under 12 CFR §9.10(b), and in the case of a state chartered depositoryinstitution or trust company, is subject to regulations substantially similarto 12 C.F.R. §9.10(b), having in either case a combined capital surplus of atleast $50,000,000 and subject to supervision or examination by federal andstate authority. An Eligible Account will not be evidenced by a certificate ofdeposit, passbook or other instrument.

 

**“Eligible Institution”**shall mean a depository institution or trustcompany insured by the Federal Deposit Insurance Corporation, the short termunsecured debt obligations or commercial paper of which are rated at least “A-l”by S&P, “P-l” by Moody’s and “F-l” by Fitch in the case of accounts inwhich funds are held for thirty (30) days or less (or, in the case of accountsin which funds are held for more than thirty (30) days, the long term unsecureddebt obligations of which are rated at least “AA-” by Fitch and S&P (or “A-”by S&P, if such depository’s short term unsecured debt rating is at least “A-l”by S&P) and “Aa2” by Moody’s). Notwithstanding the foregoing, prior to aSecuritization, Bank of America, N.A. shall be an Eligible Institution.

 

**“Embargoed Person”** shall mean any person identified by OFAC or any other Person with whoma Person resident in the United States of America may not conduct business or

 

3

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transactions by prohibition of federal law or Executive Order of thePresident of the United States of America.

 

**“Environmental Indemnity”** shall mean that certain EnvironmentalIndemnity Agreement, dated as of the date hereof, executed by Borrower andBorrower Principal in connection with the Loan for the benefit of Lender, asthe same may be amended, restated, replaced, supplemented or otherwise modifiedfrom time to time.

 

**“Environmental Law”**shall have the meaning set forth in Section 12.5hereof.

 

**“Environmental Liens”** shall have the meaning set forth in Section 12.5hereof.

 

**“Environmental Report”** shall have the meaning set forth in Section 12.5hereof.

 

**“****ERISA****”** shall mean the Employee Retirement IncomeSecurity Act of 1974, as amended from time to time and any successor statutesthereto and applicable regulations issued pursuant thereto in temporary orfinal form.

 

**“Event of Default”** shall have the meaning set forth in Section 11.1hereof.

 

**“Excess Cash”** shall mean all Rents and other revenue fromthe Property after payment of the following:

 

(i)  following a default by American Express underthe American Express Lease, funds sufficient to pay the monthly deposits to theTax and Insurance Reserve Account;

 

(ii)  fundssufficient to pay interest computed at the Initial Note Rate (as defined in theNote);

 

(iii)  funds sufficient to pay any interest accruingat the Default Rate, late payment charges, if any, and any other sums due andpayable to Lender under any of the Loan Documents;

 

(iv)  funds sufficient to pay Operating Expenses (tothe extent actually incurred).

 

**“****Exchange Act****”** shall mean the Securities and Exchange Actof 1934, as amended.

 

**“****Expropriation****”** shall mean anyexpropriation, requisition or other taking or sale of the use, occupancy ortitle to any or all of the Property, by or on account of any expropriationproceeding or other action by any Governmental Authority or other Person underthe power of statutory right of expropriation or otherwise or any transfer inlieu of or in anticipation thereof.

 

**“Fitch”**shall mean Fitch, Inc.

 

**“****GAAP****”** shall mean generally accepted accountingprinciples in the United States of America as of the date of the applicablefinancial report.

 

**“****General Assignment of Rents****”** shall mean that general assignment of rentsdated the date hereof, executed and delivered by Borrower as security for theLoan and encumbering the

 

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Property, as the same may be amended, restated,replaced, supplemented or otherwise modified from time to time.

 

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

 

**“Guarantor”** shall mean any Person having a long-term unsecured debt rating abovethe Trigger Rating that may, from time to time, at the option of AmericanExpress, execute a guaranty in favor of landlord under the American ExpressLease.

 

**“****Hazardous Materials****”** shall have themeaning set forth in Section 12.5 hereof.

 

**“****Improvements****”** shall have themeaning set forth in the granting clause of the Mortgage.

 

**“****Income Taxes****”**shallhave the meaning set forth in Section 5.5 hereof.

 

**“Indemnified Parties****”** shall mean (a) Lender, (b) any prior owneror holder of the Loan or Participations in the Loan, (c) any servicer or priorservicer of the Loan, (d) any Investor or any prior Investor in any Securities,(e) any trustees, custodians or other fiduciaries who hold or who have held afull or partial interest in the Loan for the benefit of any Investor or otherthird party, (f) any receiver or other fiduciary appointed in a foreclosure orother Creditors Rights Laws proceeding, (g) any officers, directors,shareholders, partners, members, employees, agents, servants, representatives,contractors, subcontractors, affiliates or subsidiaries of any and all of theforegoing, and (h) the heirs, legal representatives, successors and assigns ofany and all of the foregoing (including, without limitation, any successors by merger,consolidation or acquisition of all or a substantial portion of the IndemnifiedParties’ assets and business), in all cases whether during the term of the Loanor as part of or following a foreclosure of the Mortgage.

 

**“****Independent Director****”** shall have themeaning set forth in Section 6.4(a).

 

**“****Inland Permitted Transferee****”** shall mean a newly-formed special purposecorporation that is wholly-owned (directly or indirectly) by Inland Retail RealEstate Trust, Inc., a Maryland corporation; Inland Real Estate Corporation, aMaryland corporation; Inland Real Estate Corporation; a Delaware corporation orBorrower Principal.

 

**“****Insurance Premiums****”** shall have themeaning set forth in Section 8.1 hereof.

 

**“****Insurance Proceeds****”** shall have themeaning set forth in Section 8.4(b) hereof.

 

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

 

**“Investor****”** shall have the meaning set forth in Section 13.3hereof.

 

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**“Lease”** shallhave the meaning set forth inthe Mortgage.

 

**“Legal Requirements”**shall mean all statutes, laws, rules, orders, regulations, ordinances,judgments, decrees and injunctions of Governmental Authorities affecting theProperty or any part thereof, or the construction, use, alteration or operationthereof, whether now or hereafter enacted and in force, and all permits,licenses, authorizations and regulations relating thereto, and all covenants,agreements, restrictions and encumbrances contained in any instruments, eitherof record or known to Borrower, at any time in force affecting the Property orany part thereof, including, without limitation, any which may (a) requirerepairs, modifications or alterations in or to the Property or any partthereof, or (b) in any way limit the use and enjoyment thereof.

 

**“Lien”** shallmean any mortgage, deed of trust, lien, pledge, hypothecation, assignment,security interest, or any other encumbrance, charge or transfer of, on or affecting Borrower, the Property, any portionthereof or any interest therein, including, without limitation, any conditionalsale or other title retention agreement, any financing lease havingsubstantially the same economic effect as any of the foregoing, the filing ofany financing statement, and mechanic’s, materialmen’s and other similar liensand encumbrances.

 

**“LLC Agreement”** shall have the meaning set forth in Section 6.1(c).

 

**“Loan”** shall mean the loan made by Lender toBorrower pursuant to this Agreement.

 

**“Loan****Documents”**shall mean, collectively, this Agreement, the Note, the Mortgage, theEnvironmental Indemnity, the General Assignment of Rents, the SpecificAssignment of Lease, the Assignment of Management Agreement and any and allother documents, agreements and certificates executed and/or delivered inconnection with the Loan, as the same may be amended, restated, replaced,supplemented or otherwise modified from time to time.

 

**“Lockout****Period”**shall mean the period commencing on the date hereof and ending on the date ofthe second anniversary hereof.

 

**“Losses”** shall mean any and all claims, suits,liabilities (including, without limitation, strict liabilities), actions,proceedings, obligations, debts, damages,losses, costs, expenses, fines, penalties, charges, fees, judgments, awards,amounts paid in settlement of whatever kind or nature (including but notlimited to legal fees and other costs of defense).

 

**“Management Agreement”** shall mean the managementagreement entered into by and between Borrower and Manager, pursuant to which Manager is to provide management andother services with respect to the Property, as the same may be amended,restated, replaced, supplemented or otherwise modified in accordance with theterms of this Agreement.

 

**“Manager”**shall mean Inland US Management LLC, a Delaware limited liability company orsuch other entity selected as the manager of the Property in accordance with the terms of this Agreement.

 

**“Material Litigation”** shall mean, with respect toany Person, any material conviction, indictment (that is not dismissed beforetrial), judgment, litigation or regulatory action. For

 

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purposesof this definition, a matter shall be deemed material if it is reasonablyforeseeable that a prudent institutional commercial real estate mortgage lenderwould consider such matter as a material adverse factor in its underwriting ofthe Person in question. With respect to non-criminal matters, isolated actionsoccurring more than five (5) years prior to the date of a proposed transfershall not be deemed material provided that there is no indication of fraud,intentional misrepresentation or intent to defraud creditors with respect tosuch actions.

 

**“Maturity Date”** shall have the meaning set forth in the Note.

 

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

 

**“****Member****”** shall have the meaning set forth in Section 6.1(c).

 

**“****Monthly Payment****Amount****”** shall mean the monthly payment of interestdue on each Scheduled Payment Date as set forth in the Note.

 

**“****Moody’s****”** shall mean Moody’s Investor Services, Inc.

 

**“****Mortgage****”** shall mean that certain first priority mortgage/deed oftrust/deed to secure debt and security agreement dated the date hereof,executed and delivered by Borrower as security for the Loan and encumbering theProperty, as the same may be amended, restated, replaced, supplemented orotherwise modified from time to time.

 

**“Net Proceeds”** shall have the meaningset forth in Section 8.4(b) hereof.

 

**“****Net Proceeds Deficiency****”** shall have themeaning set forth in Section 8.4(b)(vi) hereof.

 

**“****Note****”** shall mean that certain promissory note of even date herewith in theprincipal amount of $25,380,000, made by Borrower in favor of Lender, as thesame may be amended, restated, replaced, supplemented or otherwise modifiedfrom time to time.

 

**“****Note Rate****”** shall have the meaning set forth in theNote.

 

**“****OFAC****”** shall have the meaning set forth in Section 4.38hereof.

 

**“****Operating Expenses****”**shall mean, with respect to any period of time, the total of all expensesactually paid or payable, computed in accordance with federal tax basisaccounting, or in accordance with other methods acceptable to Lender in itssole discretion, of whatever kind relating to the operation, maintenance andmanagement of the Property, including, without limitation, utilities, ordinaryrepairs and maintenance, Insurance Premiums, license fees, Taxes and OtherCharges, advertising expenses, payroll and related taxes, computer processingcharges, management fees equal to the greater of 4% of the Operating Income andthe management fees actually payable under the Management Agreement for suchperiod of time, operational equipment or other lease payments as approved byLender, normalized capital expenditures but

 

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specifically excluding depreciation and amortization, income taxes,Debt Service, any incentive fees due under the Management Agreement, any itemof expense that in accordance with federal tax basis accounting should becapitalized, any item of expense that would otherwise be covered by theprovisions hereof   but which is paidby American Express under the American Express Lease and deposits into theReserve Accounts.

 

**“OptionalPrepayment Date”**shall have the meaning set forthin the Note.

 

**“Other Charges”**shall mean all ground rents, maintenance charges,impositions other than Taxes, and any other charges, including, withoutlimitation, vault charges and license fees for the use of vaults, chutes andsimilar areas adjoining the Property, now or hereafter levied or assessed orimposed against the Property or any part thereof.

 

**“Participations”**shall have the meaning set forth in Section 13.1hereof.

 

**“Patriot Act****”** shall have the meaning set forth in Section 4.38hereof.

 

**“Permitted Encumbrances”**shall mean collectively, (a) the Lien and securityinterests created by the Loan Documents, (b) all Liens, encumbrances and othermatters disclosed in the Title Insurance Policy, (c) Liens, if any, for Taxesimposed by any Governmental Authority not yet due or delinquent, and (d) suchother title and survey exceptions as Lender has approved or may approve inwriting in Lender’s sole discretion.

 

**“PermittedInvestments”**shall mean to the extent availablefrom Lender or Lender’s servicer for deposits in the Reserve Accounts and theLockbox Account, any one or more of the following obligations or securitiesacquired at a purchase price of not greater than par, including those issued bya servicer of the Loan, the trustee under any securitization or any of theirrespective Affiliates, payable on demand or having a maturity date not laterthan the Business Day immediately prior to the date on which the funds used toacquire such investment are required to be used under this Agreement andmeeting one of the appropriate standards set forth below:

 

(a)                                  obligations of, orobligations fully guaranteed as to payment of principal and interest by, theUnited States or any agency or instrumentality thereof provided suchobligations are backed by the full faith and credit of the United States ofAmerica including, without limitation,obligations of: the U.S. Treasury (all direct or fully guaranteed obligations),the Farmers Home Administration (certificates of beneficial ownership), theGeneral Services Administration (participation certificates), the U.S. MaritimeAdministration (guaranteed TitleXI financing), the Small Business Administration (guaranteed participationcertificates and guaranteed pool certificates), the U.S. Department of Housingand Urban Development (local authority bonds) and the Washington MetropolitanArea Transit Authority (guaranteed transit bonds); provided, however, that theinvestments described in this clause must (i) have a predetermined fixed dollarof principal due at maturity that cannot vary or change, (ii) be rated “AAA” orthe equivalent by each of the Rating Agencies, (iii) if rated by S&P, mustnot have an “r” highlighter affixed to their rating, (iv) if such investmentshave a variable rate of interest, such interest rate must be tied to a singleinterest rate index plus a fixed spread (if any) and must

 

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moveproportionately with that index, and (v) such investments must not be subjectto liquidation prior to their maturity;

 

(b)                                 Federal Housing Administration debentures;

 

(c)                                  obligations of the following United Statesgovernment sponsored agencies: Federal Home Loan Mortgage Corp. (debtobligations), the Farm Credit System (consolidated systemwide bonds and notes),the Federal Home Loan Banks (consolidated debt obligations), the FederalNational Mortgage Association (debt obligations), the Financing Corp. (debtobligations), and the Resolution Funding Corp. (debt obligations); *provided, however,*that the investmentsdescribed in this clause must (i) have a predetermined fixed dollar ofprincipal due at maturity that cannot vary or change, (ii) if rated by S&P,must not have an “r” highlighter affixed to their rating, (iii) if suchinvestments have a variable rate of interest, such interest rate must be tiedto a single interest rate index plus a fixed spread (if any) and must moveproportionately with that index, and (iv) such investments must not be subjectto liquidation prior to their maturity;

 

(d)                                 federal funds, unsecured certificates ofdeposit, time deposits, bankers’ acceptances and repurchase agreements withmaturities of not more than 365 days of any bank, the short term obligations ofwhich at all times are rated in the highest short term rating category by eachRating Agency (or, if not rated by all Rating Agencies, rated by at least oneRating Agency in the highest short term rating category and otherwiseacceptable to each other Rating Agency, as confirmed in writing that suchinvestment would not, in and of itself, result in a downgrade, qualification orwithdrawal of the initial, or, if higher, then current ratings assigned to theSecurities); provided, however, that the investments described in this clausemust (i) have a predetermined fixed dollar of principal due at maturity thatcannot vary or change, (ii) if rated by S&P, must not have an “r”highlighter affixed to their rating, (iii) if such investments have a variablerate of interest, such interest rate must be tied to a single interest rateindex plus a fixed spread (if any) and must move proportionately with thatindex, and (iv) such investments must not be subject to liquidation prior totheir maturity;

 

(e)                                  fully Federal Deposit InsuranceCorporation-insured demand and time deposits in, or certificates of deposit of,or bankers’ acceptances with maturities of not more than 365 days and issuedby, any bank or trust company, savings and loan association or savings bank,the short term obligations of which at all times are rated in the highest shortterm rating category by each Rating Agency (or, if not rated by all RatingAgencies, rated by at least one Rating Agency in the highest short term ratingcategory and otherwise acceptable to each other Rating Agency, as confirmed inwriting that such investment would not, in and of itself, result in adowngrade, qualification or withdrawal of the initial, or, if higher, thencurrent ratings assigned to the Securities); provided, however, that theinvestments described in this clause must (i) have a predetermined fixed dollarof principal due at maturity that cannot vary or change, (ii) if rated byS&P, must not have an “r” highlighter affixed to their rating, (iii) ifsuch investments have a variable rate of interest, such interest rate must betied to a single interest rate index plus a fixed spread (if any) and must moveproportionately with that index, and (iv) such investments must not be subjectto liquidation prior to their maturity;

 

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(f)                                    debt obligationswith maturities of not more than 365 days and at all times rated by each RatingAgency (or, if not rated by all Rating Agencies, rated by at least one RatingAgency and otherwise acceptable to each other Rating Agency, as confirmed inwriting that such investment would not, in and of itself, result in adowngrade, qualification or withdrawal of the initial, or, if higher, thencurrent ratings assigned to the Securities) in its highest long-term unsecuredrating category; provided, however, that the investments described in thisclause must (i) have a predetermined fixed dollar of principal due at maturitythat cannot vary or change, (ii) if rated by S&P, must not have an “r”highlighter affixed to their rating, (iii) if such investments have a variablerate of interest, such interest rate must be tied to a single interest rateindex plus a fixed spread (if any) and must move proportionately with thatindex, and (iv) such investments must not be subject to liquidation prior totheir maturity;

 

(g)                                 commercial paper (includingboth non-interest-bearing discount obligations and interest-bearing obligationspayable on demand or on a specified date not more than one year after the dateof issuance thereof) with maturities of not more than 365 days and that at alltimes is rated by each Rating Agency (or, if not rated by all Rating Agencies,rated by at least one Rating Agency and otherwiseacceptable to each other Rating Agency, as confirmed in writing that suchinvestment would not, in and of itself, result in a downgrade, qualification orwithdrawal of the initial, or, if higher, then current ratings assigned to theSecurities) in its highest short-term unsecured debt rating; provided, however,that the investments described in this clause must (i) have a predetermined fixeddollar of principal due at maturity that cannot vary or change, (ii) if ratedby S&P, must not have an “r” highlighter affixed to their rating, (iii) ifsuch investments have a variable rate of interest, such interest rate must betied to a single interest rate index plus a fixed spread (if any) and must moveproportionately with that index, and (iv) such investments must not be subjectto liquidation prior to their maturity;

 

(h)                                 units of taxable moneymarket funds, with maturities of not more than 365 days and which funds areregulated investment companies, seek to maintain a constant net asset value pershare and invest solely in obligations backed by the full faith and credit ofthe United States, which funds have the highest rating available from eachRating Agency (or, if not rated by all Rating Agencies, rated by at least oneRating Agency and otherwise acceptable to each other Rating Agency, asconfirmed in writing that such investment would not, in and of itself, resultin a downgrade, qualification or withdrawal of the initial, or, if higher, thencurrent ratings assigned to the Securities) for money market funds; and

 

(i)                                     any othersecurity, obligation or investment which has been approved as a PermittedInvestment in writing by (i) Lender and (ii) each Rating Agency, as evidencedby a written confirmation that the designation of such security, obligation orinvestment as a Permitted Investment will not, in and of itself, result in adowngrade, qualification or withdrawal of the initial, or, if higher, thencurrent ratings assigned to the Securities by such Rating Agency;

 

*provided, however,*that no obligation orsecurity shall be a Permitted Investment if (A) such obligation or securityevidences a right to receive only interest payments, (B) the right to receiveprincipal and interest payments on such obligation or security are derived froman underlying investment that provides a yield to maturity in excess of onehundred twenty percent (120%) of the yield to maturity at par of suchunderlying investment or (C) such obligation or security has a remaining termto maturity in excess of one (1) year.

 

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**“Person”**shallmean any individual, corporation, partnership, joint venture, limited liabilitycompany, estate, trust, unincorporated association, any federal, state,provincial, county or municipal government or any bureau, department or agencythereof and any fiduciary acting in such capacity on behalf of any of theforegoing.

 

**“Personal Property”**shall have the meaning set forth in the grantingclause of the Mortgage.

 

**“Policies”**shallhave the meaning set forth in Section 8.1 hereof.

 

**“PPSA”**shallmean the Personal Property Security Act (Ontario) as amended from time to time.

 

**“ProhibitedTransfer”**shall have the meaning set forth in Section 7.2hereof.

 

**“Property”**shallmean the parcel of real property, the Improvements thereon and all PersonalProperty owned by Borrower and encumbered by the Mortgage, together with allrights pertaining to such property and Improvements, as more particularlydescribed in the granting clause of the Mortgage and referred to therein as the“Property”.

 

**“PropertyCondition Report”**shall mean a report prepared bya company satisfactory to Lender regarding the physical condition of theProperty, satisfactory in form and substance to Lender in its sole discretion.

 

**“Province”**shallmean the province in which the Property or any part thereof is located.

 

**‘‘QualifiedManager”**shall mean (a) Manager or (b) a reputableand experienced professional management organization (i) which manages,together with its affiliates, at least ten (10) first class office buildingstotaling at least 3,500,000 square feet of gross leasable area, exclusive ofthe Property and (ii) approved by Lender, which approval shall not have beenunreasonably withheld and for which Lender shall have received writtenconfirmation from the Rating Agencies that the employment of such manager willnot result in a downgrade, withdrawal or qualification of the initial, or ifhigher, then current ratings issued in connection with a Securitization, or ifa Securitization has not occurred, any ratings to be assigned in connectionwith a Securitization.

 

**“Rating Agencies”**shall mean each of S&P, Moody’s and Fitch, or anyother nationally-recognized statistical rating agency which has been approvedby Lender.

 

**“REA”** shallmean any construction, operation and reciprocal easement agreement or similaragreement (including any separate agreement or other agreement between Borrowerand one or more other parties to an REA with respect to such REA) affecting theProperty or portion thereof.

 

**“Release”**shallhave the meaning set forth in Section 12.5 hereof.

 

**“REMIC Trust”**shallmean a “real estate mortgage investment conduit” (within the meaning of Section 860D,or applicable successor provisions, of the Code) that holds the Note.

 

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**“Rents”** shall have the meaning set forth in theMortgage.

 

**“Replacements”** shall have the meaning set forth in Section 9.2(a)hereof.

 

**“Required Repairs**”shall have the meaning set forth in Section 9.l(a) hereof.

 

**“Reserve Accounts”**shall mean the Tax and Insurance Reserve Account.

 

**“Reserve Funds”** shall mean the Tax and InsuranceReserve Funds.

 

**“Restoration”** shall mean, following the occurrenceof a Casualty or a Condemnation which is of a type necessitating the repair ofthe Property, the completion of the repair and restoration of the Property asnearly as possible to the condition the Property was in immediately prior tosuch Casualty or Condemnation, with such alterations as may be reasonablyapproved by Lender.

 

**“Restoration Consultant”** shall have the meaning setforth in Section 8.4(b)(iii) hereof.

 

**“Restoration Retainage”** shall have the meaning set forthin Section 8.4(b)(iv) hereof.

 

**“Restricted Party”** shall have the meaning set forthin Section 7.1 hereof.

 

**“Sale or Pledge”** shall have the meaning set forth inSection 7.1 hereof.

 

**“Scheduled Payment Date”** shall have the meaning set forthin the Note.

 

**“Securities”**shall have the meaning set forth in Section 13.1 hereof.

 

**“Securities Act”**shall mean the Securities Act of 1933, as amended.

 

**“Securities Liabilities”**shall have the meaning set forth in Section 13.5 hereof.

 

**“Securitization”** shall have the meaning set forth inSection 13.1 hereof.

 

**“Special Member”** shall have the meaning set forth inSection 6. l(c).

 

**“Specific Assignment of Lease”** shall mean thatspecific assignment of the American Express Lease dated the date hereof,executed and delivered by Borrower as security for the Loan and encumbering theProperty, as the same may be amended, restated, replaced, supplemented orotherwise modified from time to time.

 

**“S&P”**shall mean Standard & Poor’s Ratings Services, a division of TheMcGraw-Hill Companies, Inc.

 

**“State”** shallmean the State of New York.

 

**“Tax and Insurance Reserve Account”**shall have the meaning set forth in Section 9.6 hereof.

 

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**“Tax and InsuranceReserve Funds”**shall have the meaning set forth inSection 9.6 hereof.

 

**“Taxes”**shallmean all real estate and personal property taxes, assessments, water rates orsewer rents, now or hereafter levied or assessed or imposed against theProperty or part thereof.

 

**“Tenant”**shallmean any Person leasing, subleasing or otherwise occupying any portion of theProperty under a Lease or other occupancy agreement with Borrower, including,without limitation, American Express, as tenant under the American ExpressLease.

 

**“Tenant DirectionLetter”**shall have the meaning set forth in Section 10.2(a)(i)hereof.

 

**“Title InsurancePolicy”**shall mean that certain mortgagee titleinsurance policy issued with respect to the Property and insuring the lien ofthe Mortgage.

 

**“Transferee”**shallhave the meaning set forth in Section 7.5 hereof.

 

**“Trigger Rating”**shall mean the long-term unsecured debt rating ofGuarantor (or American Express if there is no Guarantor) below BBB as issued byS&P or below Baa2 as issued by Moody’s.

 

**“UCC”**or**“Uniform Commercial Code”**shallmean the Uniform Commercial Code as in effect in the State where the applicableProperty is located.

 

**Section 1.2.****                               ****Principles of Construction.**

 

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

 

**ARTICLE 2**

**GENERAL TERMS**

 

**Section 2.1.****                               ****Loan Commitment;Disbursement to Borrower**

 

(a)                                  Subject to and uponthe terms and conditions set forth herein, Lender hereby agrees to make andBorrower hereby agrees to accept the Loan on the Closing Date.

 

(b)                                 Borrower may requestand receive only one borrowing in respect of the Loan and any amount borrowedand repaid in respect of the Loan may not be reborrowed.

 

(c)                                  The Loan shall beevidenced by the Note and secured by the Mortgage and the other Loan Documents.

 

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(d)                                 Borrower shall use the proceeds of the Loanto (i) pay the purchase price for acquiring the Property, (ii) pay certaincosts and expenses incurred in connection with the closing of the Loan, asapproved by Lender, (iv) fund any working capital requirements of the Property,and (v) distribute the balance, if any, to its members.

 

**Section 2.2.****                               ****Loan Payments**

 

(a)                                  The Loan and interest shall be payable pursuant to the terms of the Note.

 

**Section 2.3.****                               ****Prepayment**

 

The Loan may not be prepaid, in whole or in part,except in strict accordance with the express terms and conditions of the Note.

 

**ARTICLE 3**

**CONDITIONS PRECEDENT**

 

The obligation of Lender to make the Loan hereunderis subject to the fulfillment by Borrower or waiver by Lender of all theconditions precedent to closing set forth in the application or term sheet forthe Loan delivered by Borrower to Lender and any commitment rider to the application for the Loan issued by Lender.

 

**ARTICLE 4**

**REPRESENTATIONS AND WARRANTIES**

 

Borrower and, where specifically indicated, eachBorrower Principal represents and warrants to Lender as of the Closing Datethat:

 

**Section 4.1.****                               ****Organization**

 

Borrower and each Borrower Principal (when not anindividual) (a) has been duly organized and is validly existing and in goodstanding with requisitepower and authority to own its properties and to transact the businesses inwhich it is now engaged, (b) is duly qualified to do business and is in goodstanding in each jurisdiction where it is required to be so qualified inconnection with its properties, businesses and operations, (c) possesses allrights, licenses, permits and authorizations, governmental or otherwise,necessary to entitle it to own its properties and to transact the businesses inwhich it is now engaged, and the sole business of Borrower is the ownership,management and operation of the Property, and (d) in the case of Borrower, hasfull power, authority and legal right to mortgage, grant, bargain, sell,pledge, assign, warrant, transfer and convey the Property pursuant to the termsof the Loan Documents, and in the case of Borrower and each Borrower Principal,has full power, authority and legal right to keep and observe all of the termsof the Loan Documents to which it is a party. Borrower and each BorrowerPrincipal represent and warrant that the chart attached hereto as Exhibit Asets forth an accurate listing of the direct and indirect owners of the equityinterests in Borrower, and each Borrower Principal (when not an individual).

 

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**Section 4.2.****                               ****Status of Borrower**

 

Borrower’s exact legal name is correctly set forth on thefirst page of this Agreement, on the Mortgage and on any UCC-1 or PPSA FinancingStatements filed in connection with the Loan. Borrower is an organization ofthe type specified on the first page of this Agreement. Borrower is organizedunder the laws of the Province of New Brunswick. Borrower’s principal place ofbusiness and chief executive office, and the place where Borrower keeps itsbooks and records, including recorded data of any kind or nature, regardless ofthe medium of recording, including software, writings, plans, specificationsand schematics, has been for the preceding four months (or, if less, the entireperiod of the existence of Borrower) the address of Borrower set forth on thefirst page of this Agreement.

 

**Section 4.3.****                               ****Validity of Documents**

 

Borrower and Borrower Principal have taken allnecessary action to authorize the execution, delivery and performance of thisAgreement and the other Loan Documents to which they are parties. ThisAgreement and such other Loan Documents have been duly executed and deliveredby or on behalf of Borrower and Borrower Principal and constitute the legal,valid and binding obligations of Borrower and Borrower Principal enforceableagainst Borrower and Borrower Principal in accordance with their respectiveterms, subject only to applicable bankruptcy, insolvency and similar laws affectingrights of creditors generally, and subject, as to enforceability, to generalprinciples of equity (regardless of whether enforcement is sought in aproceeding in equity or at law).

 

**Section 4.4.****                               ****No Conflicts**

 

The execution, delivery and performance of thisAgreement and the other Loan Documents by Borrower and Borrower Principal willnot conflict with or result in a breach of any of the terms or provisions of,or constitute a default under, or result in the creation or imposition of anylien, charge or encumbrance (other than pursuant to the Loan Documents) uponany of the property or assets of Borrower or Borrower Principal pursuant to theterms of any agreement or instrument to which Borrower or Borrower Principal isa party or by which any of Borrower’s or Borrower Principal’s property orassets is subject, nor will such action result in any violation of theprovisions of any statute or any order, rule or regulation of any GovernmentalAuthority having jurisdiction over Borrower or Borrower Principal or any ofBorrower’s or Borrower Principal’s properties or assets, and any consent,approval, authorization, order, registration or qualification of or with anyGovernmental Authority required for the execution, delivery and performance byBorrower or Borrower Principal of this Agreement or any of the other LoanDocuments has been obtained and is in full force and effect.

 

**Section 4.5.****                               ****Litigation**

 

There are no actions, suits or proceedings at law orin equity by or before any Governmental Authority or other agency now pendingor, to Borrower’s or Borrower Principal’s knowledge, threatened against oraffecting Borrower, Borrower Principal, Manager or the Property, which actions,suits or proceedings, if determined against Borrower, Borrower Principal, Manageror the Property, would materially adversely affect the condition (financial orotherwise) or business of Borrower or Borrower Principal or the condition orownership of the Property.

 

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**Section 4.6.****                               ****Agreements**

 

Borrower is not a party to any agreement orinstrument or subject to any restriction which would materially and adverselyaffect Borrower or the Property, or Borrower’s business, properties or assets,operations or condition, financial or otherwise. Borrower is not in default inany material respect in the performance, observance or fulfillment of any ofthe obligations, covenants or conditions contained in any agreement orinstrument to which it is a party or by which Borrower or the Property is bound.Borrower has no material financial obligation under any agreement or instrumentto which Borrower is a party or by which Borrower or the Property is otherwisebound, other than (a) obligations incurred in the ordinary course of theoperation of the Property and (b) obligations under the Loan Documents.

 

**Section 4.7.****                               ****Solvency**

 

Borrower and each Borrower Principal have (a) notentered into the transaction or executed the Note, this Agreement or any otherLoan Documents with the actual intent to hinder, delay or defraud any creditorand (b) received reasonably equivalent value in exchange, for their obligationsunder such Loan Documents. Giving effect to the Loan, the fair saleable valueof the assets of Borrower and each Borrower Principal exceeds and will,immediately following the making of the Loan, exceed the total liabilities ofBorrower and Borrower Principal, including, without limitation, subordinated,unliquidated, disputed and contingent liabilities. No petition in bankruptcyhas been filed against Borrower, Borrower Principal, or Affiliated Manager inthe last ten (10) years, and neither Borrower nor Borrower Principal, orAffiliated Manager in the last ten (10) years has made an assignment for thebenefit of creditors or taken advantage of any Creditors Rights Laws. NeitherBorrower nor Borrower Principal, or Affiliated Manager is contemplating eitherthe filing of a petition by it under any Creditors Rights Laws or theliquidation of all or a major portion of Borrower’s assets or property, and Borrowerhas no knowledge of any Person contemplating the filing of any such petitionagainst Borrower or Borrower Principal, or Affiliated Manager.

 

**Section 4.8.****                               ****Full and Accurate Disclosure**

 

No statement of fact made by or on behalf ofBorrower or Borrower Principal in this Agreement or in any of the other LoanDocuments or in any other document or certificate delivered by or on behalf ofBorrower or Borrower Principal contains any untrue statement of a material factor omits to state any material fact necessary to make statements containedherein or therein not misleading. There is no material fact presently known toBorrower or Borrower Principal which has not been disclosed to Lender whichadversely affects, nor as far as Borrower or Borrower Principal can reasonablyforesee, might adversely affect, the Property or the business, operations orcondition (financial or otherwise) of Borrower or Borrower Principal.

 

**Section 4.9.****                               ****No Plan Assets**

 

Borrower is not an “employee benefit plan,” as defined in Section 3(3) of ERISA,subject to Title 1 of ERISA, and none of the assets of Borrower constitutes orwill constitute “plan assets” of one or more such plans within the meaning of29 C.F.R. Section 2510.3-101. In addition, (a) Borrower is not a“governmental plan” within the meaning of Section 3(32) of

 

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ERISA and (b) transactions by or with Borrower are not subject to statestatutes regulating investment of, and fiduciary obligations with respect to,governmental plans similar to the provisions of Section 406 of ERISA or Section 4975of the Internal Revenue Code currently in effect, which prohibit or otherwiserestrict the transactions contemplated by this Agreement.

 

**Section 4.10.****                         Not****a Foreign Person**

 

Borrower is not a non-resident corporation within the meaning of the Income Tax Act(Canada). Borrower Principal is not a “foreign Person” within the meaning of§1445(f)(3) of the Internal Revenue Code.

 

**Section 4.11.****                         Enforceability**

 

The Loan Documents are not subject to any right ofrescission, set-off, counterclaim or defense by Borrower, including the defenseof usury, nor would the operation of any of the terms of the Loan Documents, orthe exercise of any right thereunder, render the Loan Documents unenforceable,and neither Borrower nor Borrower Principal has asserted any right ofrescission, set-off, counterclaim or defense with respect thereto. No Defaultor Event of Default exists under or with respect to any Loan Document.

 

**Section 4.12.****                        ****Business Purposes**

 

The Loan is solely for the business purpose of Borrower, and is not forpersonal, family, household, or agricultural purposes.

 

**Section 4.13.****                        ****Compliance**

 

Except as expressly disclosed by Borrower to Lenderin writing in connection with the closing of the Loan, to Borrower’s knowledge,Borrower and theProperty, and the use and operation thereof, comply in all material respectswith all Legal Requirements, including, without limitation, building and zoningordinances and codes. To Borrower’s knowledge, Borrower is not in default orviolation of any order, writ, injunction, decree or demand of any GovernmentalAuthority and Borrower has received no written notice of any such default orviolation. There has not been committed by Borrower or, to Borrower’s knowledge,any other Person in occupancy of or involved with the operation or use of theProperty any act or omission affording any Governmental Authority the right offorfeiture as against the Property or any part thereof or any monies paid inperformance of Borrower’s obligations under any of the Loan Documents.

 

**Section 4.14.****                        ****Financial Information**

 

All financial data, including, without limitation, the balance sheets, statements ofcash flow, statements of income and operating expense and rent rolls, that havebeen delivered to Lender in respect of Borrower, Borrower Principal and/or theProperty (a) are true, complete and correct in all material respects, (b)accurately represent the financial condition of Borrower, Borrower Principal orthe Property, as applicable, as of the date of such reports, and (c) to theextent prepared or audited by an independent certified public accounting firm,have been prepared in accordance with tax basis accounting throughout theperiods covered, except as

 

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disclosed therein. Borrower does not have any contingent liabilities,liabilities for taxes, unusual forward or long-term commitments or unrealizedor anticipated losses from any unfavorable commitments that are known to Borrowerand reasonably likely to have a material adverse effect on the Property or thecurrent and/or intended operation thereof, except as referred to or reflectedin said financial statements. Since the date of such financial statements,there has been no materially adverse change in the financial condition,operations or business of Borrower or Borrower Principal from that set forth insaid financial statements.

 

**Section 4.15.****                         Condemnation**

 

No Condemnation or other proceeding has beencommenced or, to Borrower’s best knowledge, is threatened or contemplated withrespect to all or any portion of the Property or for the relocation of roadwaysproviding access to the Property.

 

**Section 4.16.****                         Utilitiesand Public Access; Parking**

 

To the best of Borrower’s knowledge, theProperty has adequate rights of access to public ways and is served by water,sewer, sanitary sewer and storm drain facilities adequate to service theProperty for full utilization of the Property for its intended uses. All publicutilities necessary to the full use and enjoyment of the Property as currentlyused and enjoyed are located either in the public right-of-way abutting theProperty (which are connected so as to serve the Property without passing overother property) or in recorded easements serving the Property and sucheasements are set forth in and insured by the Title Insurance Policy. All roadsnecessary for the use of the Property for its current purposes have beencompleted and dedicated to public use and accepted by all GovernmentalAuthorities. The Property has, or is served by, parking to the extent requiredto comply with all Legal Requirements.

 

**Section 4.17.****                         SeparateLots**

 

The Property is assessed for real estate taxpurposes as one or more wholly independent tax lot or lots, separate from anyadjoining land or improvements not constituting a part of such lot or lots, andno other land or improvements is assessed and taxed together with the Propertyor any portion thereof.

 

**Section 4.18.****                         Assessments**

 

To Borrower’s knowledge, there are no pendingor proposed special or other assessments for public improvements or otherwiseaffecting the Property, nor are there any contemplated improvements to theProperty that may result in such special or other assessments.

 

**Section 4.19.****                         Insurance**

 

Borrower has obtained and has delivered toLender cither (a) certified copies of all Policies or, to the extent suchPolicies are not available as of the Closing Date, certificates of insurancewith respect to all such Policies reflecting the insurance coverages, amountsand other requirements set forth in this Agreement or (b) the certificate ofAmerican Express that American Express is a self-insurer with respect to theoccurrences referred to in Section 8.1 and

 

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that the rating of American Express by the RatingAgencies has not fallen below the Trigger Rating.

 

**Section 4.20.****                        ****Use of Property**

 

The Property is used exclusively for general officepurposes and other appurtenant and related uses.

 

**Section 4.21.****                        ****Certificate of Occupancy;Licenses**

 

All certificates of occupancy and to Borrower’sknowledge all certifications, permits, licenses and approvals, including,without limitation, certificates of completion and any applicable liquorlicense required for the legal use, occupancy and operation of the Property forthe purpose intended herein, have been obtained and are valid and in full forceand effect. Borrower shall keep and maintain (or require American Express tomaintain) all licenses necessary for the operation of the Property for thepurpose intended herein. The use being made of the Property is in conformitywith the final certificate of occupancy (or compliance, if applicable) and anyother permits or licenses issued for the Property.

 

**Section 4.22.****                        ****Flood Zone**

 

None of the Improvements on the Property are locatedin an area identified by the Town of Markham or the local conservationauthority having jurisdiction as an area having special flood hazards, or, ifany portion of the Improvements is located within such area, Borrower willobtain or cause American Express to obtain the insurance prescribed in Section 8.l(a)(i)at any time during the term of the Loan when American Express ceases to be aself-insurer or when the rating of American Express by the Rating Agenciesfalls below the Trigger Rating.

 

**Section 4.23.****                        ****Physical Condition**

 

Except as set forth in the Property ConditionReport, to Borrower’s knowledge, the Property, including, without limitation,all buildings, improvements, parking facilities, sidewalks, storm drainagesystems, roofs, plumbing systems, HVAC systems, fire protection systems,electrical systems, equipment, elevators, exterior sidings and doors,landscaping, irrigation systems and all structural components, are in goodcondition, order and repair in all material respects. Except as set forth inthe Property Condition Report, to Borrower’s knowledge, there exist nostructural or other material defects or damages in the Property, as a result ofa Casualty or otherwise, and whether latent or otherwise. Borrower has notreceived notice from any insurance company or bonding company of any defects orinadequacies in the Property, or any part thereof, which would adversely affectthe insurability of the same or cause the imposition of extraordinary premiumsor charges thereon or of any termination or threatened termination of anypolicy of insurance or bond.

 

**Section 4.24.****                        ****Boundaries; Survey**

 

(a) None of the Improvements which were included indetermining the appraised value of the Property lie outside the boundaries andbuilding restriction lines of the Property to any material extent, and (b) noimprovements on adjoining properties encroach upon the

 

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Propertyand no easements or other encumbrances upon the Property encroach uponany of the Improvements so as to materially affect the value or marketabilityof the Property.

 

**Section 4.25.****                        ****Leases**

 

The entire Property has been leased to AmericanExpress pursuant to the American Express Lease. (a) The American Express Leaseis in full force and effect; (b) the premises demised under the AmericanExpress Lease have been completed and American Express has accepted possessionof and is in occupancy of the demised premises; (c) American Express hascommenced the payment of rent under the American Express Lease, there are nooffsets, claims or defenses to the enforcement thereof and Borrower has nomonetary obligations to American Express under the American Express Lease; (d)all Rents due and payable under the American Express Lease have been paid andno portion thereof has been paid for any period more than thirty (30) days inadvance; (e) the rent payable under the American Express Lease is the amount offixed rent set forth in the American Express Lease, and there is no claim orbasis for a claim by American Express thereunder for an adjustment to the Rent;(f) Borrower is the sole owner of the entire landlord’s interest in theAmerican Express Lease; (g) the American Express Lease is the valid, bindingand enforceable obligation of Borrower and American Express thereunder andthere are no agreements with American Express with respect to the AmericanExpress Lease other than as expressly set forth therein; (h) no Person has anypossessory interest in, or right to occupy, the Property or any portion thereofexcept under the American Express Lease; (i) except for the right of Firstrefusal set forth in Article 4 and the right to offer to purchase theProperty under Article 12, the American Express Lease does not contain anyoption or offer to purchase or right of first refusal to purchase the Propertyor any part thereof; and (j) neither the American Express Lease nor the Rentshave been assigned or pledged except to Lender, and no other Person has anyinterest therein.

 

**Section 4.26.****                        ****Filing and Recording Taxes**

 

All mortgage, mortgage recording, stamp, intangibleor other similar tax required to be paid by any Person under applicable LegalRequirements currently in effect in connection with the execution, delivery,recordation, filing, registration, perfection or enforcement of any of the LoanDocuments, including, without limitation, the Mortgage, have been paid or willbe paid, and, under current Legal Requirements, the Mortgage is enforceable inaccordance with its terms by Lender (or any subsequent holder thereof).

 

**Section 4.27.****                        ****Management Agreement**

 

The Management Agreement is in full force and effectand there is no default thereunder by any party thereto and, to Borrower’sknowledge, no event has occurred that, with the passage of time and/or thegiving of notice, would constitute a default thereunder. No management fees underthe Management Agreement are accrued and unpaid.

 

**Section 4.28.****                        ****Illegal Activity**

 

No portion of the Property has been or will bepurchased with proceeds of any illegal activity, and no part of the proceeds ofthe Loan will be used in connection with any illegal activity.

 

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**Section 4.29.****                        ****Construction Expenses**

 

All costs and expenses of any and all labor,materials, supplies and equipment used in the construction, maintenance orrepair of the Improvements have been paid in full. To Borrower’s knowledgeafter due inquiry, there are no claims for payment for work, labor or materialsaffecting the Property which are or may become a lien prior to, or of equalpriority with, the Liens created by the Loan Documents.

 

**Section 4.30.****                        ****Personal Property**

 

Borrower has paid in full for, and is theowner of, all Personal Property (other than tenants’ property) used inconnection with the operation of the Property, free and clear of any and allsecurity interests, liens or encumbrances, except for Permitted Encumbrancesand the Lien and security interest created by the Loan Documents.

 

**Section 4.31.****                        ****Taxes**

 

Borrower and Borrower Principal have filedall federal, provincial, state, county, municipal, and city income, personalproperty and other tax returns required to have been filed by them and havepaid all taxes and related liabilities which have become due pursuant to suchreturns or pursuant to any assessments received by them. Neither Borrower norBorrower Principal knows of any basis for any additional assessment in respectof any such taxes and related liabilities for prior years.

 

**Section 4.32.****                        ****Permitted Encumbrances**

 

None of the Permitted Encumbrances,individually or in the aggregate, materially interferes with the benefits ofthe security intended to be provided by the Loan Documents, materially andadversely affects the value of the Property, impairs the use or the operationof the Property or impairs Borrower’s ability to pay its obligations in atimely manner.

 

**Section 4.33.****                        ****Federal Reserve Regulations**

 

Borrower will use the proceeds of the Loanfor the purposes set forth in Section 2.1(d) hereof and not for anyillegal activity. No part of the proceeds of the Loan will be used for thepurpose of purchasing or acquiring any “margin stock” within the meaning ofRegulation U of the Board of Governors of the Federal Reserve System or for anyother purpose which would be inconsistent with such Regulation U or any otherRegulations of such Board of Governors, or for any purposes prohibited by LegalRequirements or prohibited by the terms and conditions of this Agreement or theother Loan Documents.

 

**Section 4.34.****                        ****Investment Company Act**

 

Borrower is not (a) an “investment company” or acompany “controlled” by an “investment company,” within the meaning of theInvestment Company Act of 1940, as amended; (b) a “holding company” or a“subsidiary company” of a “holding company” or an “affiliate” of either a“holding company” or a “subsidiary company” within the meaning of the

 

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Public Utility Holding Company Act of 1935,as amended; or (c) subject to any other federal or state law or regulationwhich purports to restrict or regulate its ability to borrow money.

 

**Section 4.35****.        Reciprocal Easement Agreements**

 

(a)                                  Neither Borrower norany other party is currently in default (nor has any notice been given orreceived with respect to an alleged or current default) under any of the termsand conditions of the REA, and the REA remains unmodified and in full force andeffect;

 

(b)                                 All easements grantedpursuant to the REA which were to have survived the site preparation andcompletion of construction (to the extent that the same has been completed),remain in full force and effect and have not been released, terminated,extinguished or discharged by agreement or otherwise;

 

(c)                                  To the best ofBorrower’s knowledge, all sums due and owing by Borrower to the other partiesto the REA (or by the other parties to the REA to the Borrower) pursuant to theterms of the REA, including without limitation, all sums, charges, fees,assessments, costs, and expenses in connection with any taxes, site preparationand construction, non-shareholder contributions, and common area and otherproperty management activities have been paid, are current, and no lien hasattached on the Property (or threat thereof been made) for failure to pay anyof the foregoing;

 

(d)                                 The terms, conditions,covenants, uses and restrictions contained in the REA do not conflict in anymanner with any terms, conditions, covenants, uses and restrictions containedin any Lease or in any agreement between Borrower and occupant of anyperipheral parcel, including without limitation, conditions and restrictionswith respect to kiosk placement, tenant restrictions (type, location orexclusivity), sale of certain goods or services, and/or other use restrictions;and

 

(e)                                  The terms,conditions, covenants, uses and restrictions contained in the American ExpressLease do not conflict in any manner with any terms, conditions, covenants, usesand restrictions contained in the REA, any other lease or in any agreement betweenBorrower and occupant of any peripheral parcel, including without limitation,conditions and restrictions with respect to kiosk placement, tenantrestrictions (type, location or exclusivity), sale of certain goods orservices, and/or other use restrictions.

 

**Section 4.36.****                        ****No Change in Facts orCircumstances; Disclosure**

 

All information submitted by Borrower or itsagents to Lender and in all financial statements, reports, certificates andother documents submitted in connection with the Loan or in satisfaction of theterms thereof and all statements of fact made by Borrower in this Agreement orin any other Loan Document, are accurate, complete and correct in all materialrespects. There has been no material adverse change in any condition, fact,circumstance or event that would make any such information inaccurate,incomplete or otherwise misleading in any material respect or that otherwisematerially and adversely affects or might materially and adversely affect theProperty or the business operations or the financial condition of Borrower.Borrower has disclosed to Lender all material facts and has not failed todisclose any material fact that could cause any representation or warranty madeherein to be materially misleading.

 

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**Section 4.37.****                        ****Intellectual Property**

 

All trademarks, trade names and service marksnecessary to the business of Borrower as presently conducted or as Borrowercontemplates conducting its business are in good standing and, to the extent ofBorrower’s actual knowledge, uncontested. Borrower has not infringed, is notinfringing, and has not received notice of infringement with respect toasserted trademarks, trade names and service marks of others. To Borrower’sknowledge, there is no infringement by others of trademarks, trade names andservice marks of Borrower.

 

**Section 4.38.****                        ****Compliance with Anti-TerrorismLaws**

 

None of Borrower, Borrower Principal or any Personwho Controls Borrower or Borrower Principal currently is identified by theOffice of Foreign Assets Control, Department of the Treasury (**“OFAC”**) or otherwise qualifies as an Embargoed Person, andBorrower has implemented procedures to ensure that no Person who now orhereafter owns a material direct or indirect equity interest in Borrower is anEmbargoed Person or is Controlled by an Embargoed Person. To Borrower’sknowledge neither Borrower nor Borrower Principal is in violation of anyapplicable law relating to anti-money laundering or anti-terrorism, including,without limitation, those related to transacting business with EmbargoedPersons or the requirements of the Uniting and Strengthening America byProviding Appropriate Tools Required to Intercept and Obstruct Terrorism Act of2001, U.S. Public Law 107-56, and the related regulations issued thereunder,including temporary regulations (collectively, as the same may be amended fromtime to time, the **“Patriot Act”**).To the best of Borrower’s knowledge, no tenant at the Property is currentlyidentified by OFAC or otherwise qualifies as an Embargoed Person, or is ownedor Controlled by an Embargoed Person.

 

**Section 4.39.****                        ****Patriot Act**

 

Neither Borrower nor Borrower Principal shall (a) beor become subject at any time to any law, regulation, or list of any government agency (including, without limitation, thelist maintained by OFAC and accessible through the OFAC website) that prohibitsor limits any lender from making any advance or extension of credit to Borroweror from otherwise conducting business with Borrower and Borrower Principal, or(b) fail to provide documentary and other evidence of Borrower’s identity asmay be requested by any lender at any time to enable any lender to verifyBorrower’s identity or to comply with any applicable law or regulation,including, without limitation, the Patriot Act. In addition, Borrower herebyagrees to provide to Lender any additional information that Lender deemsnecessary from time to time in order to ensure compliance with all applicablelaws concerning money laundering and similar activities.

 

**Section 4.40.****                        ****Survival**

 

Borrower agrees that, unless expressly providedotherwise, all of the representations and warranties of Borrower set forth inthis Article 4 and elsewhere in this Agreement and in the other LoanDocuments shall survive for so long as any portion of the Debt remains owing toLender. All representations, warranties, covenants and agreements made in thisAgreement or in

 

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the other Loan Documents by Borrower shall be deemed to have beenrelied upon by Lender notwithstanding any investigation heretofore or hereaftermade by Lender or on its behalf.

 

**ARTICLE 5**

**BORROWER COVENANTS**

 

From the date hereof and until repayment ofthe Debt in full and performance in full of all obligations of Borrower underthe Loan Documents or the earlier release of the Lien of the Mortgage (and allrelated obligations) in accordance with the terms of this Agreement and theother Loan Documents, Borrower hereby covenants and agrees with Lender that:

 

**Section 5.1.****                                Existence;Compliance with Legal Requirements**

 

(a)                                  Borrower shall do orcause to be done all things necessary to preserve, renew and keep in full forceand effect its existence, rights, licenses, permits and franchises and complywith all Legal Requirements applicable to it and the Property. Borrower herebycovenants and agrees not to commit, permit or suffer to exist any act oromission affording any Governmental Authority the right of forfeiture asagainst the Property or any part thereof or any monies paid in performance ofBorrower’s obligations under any of the Loan Documents. Borrower shall at alltimes maintain, preserve and protect all franchises and trade names used inconnection with the operation of the Property. So long as American Express isin compliance with the terms of the American Express Lease with respect to thematters described in this Section 5.1, Borrower shall be deemed incompliance with this Section 5.1.

 

(b)                                 Borrower, at its ownexpense, may contest or permit American Express to contest by appropriate legalproceeding, promptly initiated and conducted in good faith and with duediligence, the Legal Requirements affecting the Property, provided that (i) noDefault or Event of Default has occurred and is continuing; (ii) suchproceeding shall be permitted under and be conducted in accordance with theprovisions of any other instrument to which Borrower or the Property is subjectand shall not constitute a default thereunder; (iii) neither the Property, anypart thereof or interest therein, any of the tenants or occupants thereof, norBorrower shall be affected in any material adverse way as a result of suchproceeding; (iv) non-compliance with the Legal Requirements shall not imposecivil or criminal liability on Borrower or Lender; (v) unless the contest isinitiated and conducted by American Express pursuant to the American ExpressLease Borrower shall have furnished the security as may be required in theproceeding or by Lender to ensure compliance by Borrower with the LegalRequirements; and (vi) if the contest is initiated and conducted by Borrower,Borrower shall have furnished to Lender all other items reasonably requested byLender. Borrower shall give written notice to Lender of any contest initiatedand conducted by Borrower promptly after initiation thereof and shall informLender of any contest initiated and conducted by American Express of whichBorrower is given notice by American Express.

 

**Section 5.2.****                                Maintenanceand Use of Property**

 

Borrower shall cause the Property to bemaintained in a good and safe condition and repair. The Improvements and thePersonal Property shall not be removed, demolished or except as may beexpressly permitted under the American Express Lease without the consent of the

 

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landlordthereunder, materially altered (except for normal replacement of the PersonalProperty) without the prior written consent of Lender. So long as AmericanExpress is in compliance with the terms of the American Express Lease withrespect to the matters described in this Section 5.2, Borrower shall bedeemed in compliance with this Section 5.2. If under applicable zoningprovisions the use of all or any portion of the Property is or shall become anonconforming use, Borrower will not cause or permit the nonconforming use tobe discontinued or the nonconforming Improvement to be abandoned without theexpress written consent of Lender.

 

**Section 5.3.****                                Waste**

 

Borrower shall not commit or suffer any waste of theProperty or make any change in the use of the Property which will in any waymaterially increase the risk of fire or other hazard arising out of theoperation of the Property, or take any action that might invalidate or givecause for cancellation of any Policy, or do or permit to be done thereonanything that may in any way impair the value of the Property or the securityfor the Loan. Borrower will not, without the prior written consent of Lender,permit any drilling or exploration for or extraction, removal, or production ofany minerals from the surface or the subsurface of the Property, regardless ofthe depth thereof or the method of mining or extraction thereof.

 

**Section ****5.4.****                               ****Taxes and****Other****Charges**

 

(a)                                  Borrower shall pay or cause American Expressto pay all Taxes and Other Charges now or hereafter levied or assessed orimposed against the Property or any part thereof as the same become due andpayable. Borrower shall furnish or cause to be furnished to Lender suchreceipts for the payment of the Taxes and the Other Charges as are delivered toBorrower by American Express and, upon request by Lender, a certificate fromBorrower and Borrower Principal that as of the date of such certificate thereare no liens filed against the Property arising from the non-payment of Taxesor Other Charges. Borrower shall not suffer nor permit American Express tosuffer and shall promptly cause to be paid and discharged any Lien or chargewhatsoever which may be or become a Lien or charge against the Property, andshall promptly pay for all utility services provided to the Property. So longas American Express is in compliance with the terms of the American ExpressLease with respect to the matters described in this Section 5.4, Borrowershall be deemed in compliance with this Section 5.4.

 

(b)                                 Borrower, at its own expense, may contest orpermit American Express to contest by appropriate legal proceeding, promptlyinitiated and conducted in good faith and with due diligence, the amount orvalidity or application in whole or in part of any Taxes or Other Charges,provided that (i) no Default or Event of Default has occurred and remainsuncured; (ii) such proceeding shall be permitted under and be conducted in accordance with the provisions of any otherinstrument to which Borrower is subject and shall not constitute a defaultthereunder and such proceeding shall be conducted in accordance with allapplicable Legal Requirements; (iii) neither the Property nor any part thereofor interest therein will be in danger of being sold, forfeited, terminated,canceled or lost; (iv) Borrower shall promptly upon final determination thereofpay the amount of any such Taxes or Other Charges, together with all costs,interest and penalties which may be payable in connection therewith; (v) suchproceeding shall suspend the collection of such contested Taxes or OtherCharges from the Property; and (vi) Borrower shall furnish or cause AmericanExpress to furnish (but only to the extent required to be furnished by

 

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AmericanExpress under the American Express Lease) such security as may be required inthe proceeding, or deliver to Lender such reserve deposits as may be requestedby Lender, to insure the payment of any such Taxes or Other Charges, togetherwith all interest and penalties thereon (unless Borrower or American Expresshas paid all of the Taxes or Other Charges under protest). Lender may pay overany such cash deposit or part thereof held by Lender to the claimant entitledthereto at any time when, in the judgment of Lender, the entitlement of suchclaimant is established or the Property (or part thereof or interest therein)shall be in danger of being sold, forfeited, terminated, canceled or lost orthere shall be any danger of the Lien of the Mortgage being primed by anyrelated Lien.

 

**Section 5.5.****                               ****Payments Free of Taxes**

 

(a)                                  Any and all payments made by Borrower toLender under or pursuant to any of the Loan Documents for the purposes of theIncome Tax Act (Canada) shall be made free and clear of, and without deductionfor, any and all present or future taxes, levies, imposts, deductions, charges,fees, duties or withholding or other charges of any nature imposed by anytaxing authority, and all liabilities with respect thereto, imposed by any jurisdictionas a consequence or result of any action taken by Borrower including the makingof any payment under or pursuant to any of the Loan Documents excluding, in thecase of Lender, taxes imposed on its net income or capital taxes or receiptsand franchise taxes (all such non-excluded taxes, levies, imposts, deductions,charges, withholdings and liabilities being hereinafter referred to as “IncomeTaxes”). If Borrower shall be required by law to deduct any Income Taxes fromor in respect of any sum payable to Lender under or pursuant to any of the LoanDocuments, the sum payable to Lender shall be increased as may be necessary sothat after making all required deductions (including deductions applicable toadditional sums payable under this Section 5.5) the recipient thereofreceives an amount equal to the sum it would have received had no suchdeductions been made.

 

(b)                                 Borrower hereby indemnifies and holdsharmless Lender for the full amount of Income Taxes and for any incrementalIncome Taxes due to Borrower’s failure to remit to Lender the required receiptsor other required documentary evidence or due to a Borrower’s failure to payany Income Taxes when due to the appropriate taxing authority (including,without limitation, any Income Taxes imposed by any jurisdiction on amountspayable under this Section 5.5) paid by Lender and any liability(including penalties, interest and expenses) arising therefrom or with respectthereto, whether or not such Income Taxes were correctly or legally assessed. Lendershall promptly notify Borrower of any such payment of Income Taxes and, if suchpayment was made pursuant to an incorrect or illegal assessment, shallreasonably cooperate with Borrower, at the expense of Borrower, in any disputeof such assessment. Payment pursuant to this indemnification shall be madewithin 30 days from the date Lender makes written demand therefor.

 

(c)                                  Without prejudice to the survival of anyother agreement of Borrower hereunder, the agreements and obligations ofBorrower contained in this Section 5.5 shall survive the repayment of theDebt and the termination of this Agreement.

 

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**Section 5.6.****                               ****Litigation**

 

Borrower shall give prompt written notice to Lenderof any litigation or governmental proceedings pending or threatened in writingagainst Borrower which might materially adversely affect Borrower’s condition(financial or otherwise) or business or the Property.

 

**Section 5.7.****                               ****Access to Property**

 

Borrower shall permit agents, representatives andemployees of Lender to inspect the Property or any part thereof at reasonablehours upon reasonable advance notice, subject to the rights of American Expressunder the American Express Lease.

 

**Section 5.8.****                               ****Notice of Default**

 

Borrower shall promptly advise Lender of anymaterial adverse change in the condition (financial or otherwise) of Borrower,any Borrower Principal or the Property or of the occurrence of any Default orEvent of Default of which Borrower has knowledge and of any American ExpressLease Default of which Borrower has knowledge.

 

**Section 5.9.****                               ****Cooperate in Legal Proceedings**

 

Borrower shall at Borrower’s expense cooperate fullywith Lender with respect to any proceedings before any court, board or otherGovernmental Authority which may in any way affect the rights of Lenderhereunder or any rights obtained by Lender under any of the other LoanDocuments and, in connection therewith, permit Lender, at its election, toparticipate in any such proceedings.

 

**Section 5.10.****                        ****Performance by Borrower**

 

Borrower shall in a timely manner observe, performand fulfill each and every covenant, term and provision to be observed andperformed by Borrower under this Agreement and the other Loan Documents and anyother agreement or instrument affecting or pertaining to the Property and anyamendments, modifications or changes thereto.

 

**Section 5.11.****                        ****Awards; Insurance Proceeds**

 

Borrower shall cooperate with Lender in obtainingfor Lender the benefits of any Awards or Insurance Proceeds lawfully or equitablypayable to Borrower in connection with the Property, and Lender shall bereimbursed for any expenses incurred in connection therewith (includingreasonable, actual attorneys’ fees and disbursements, and the payment byBorrower of the expense of an appraisal on behalf of Lender in case of aCasualty or Condemnation affecting the Property or any part thereof) out ofsuch Awards or Insurance Proceeds. The actual payment of any Awards shall begoverned by Section 8.4 hereof.

 

**Section 5.12.****                        ****Financial Reporting**

 

(a)           Borrowerand Borrower Principal shall keep adequate books and records of account inaccordance with federal tax basis accounting, or in accordance with othermethods acceptable to Lender in its sole discretion, consistently applied andshall furnish to Lender:

 

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(i)                                     priorto a Securitization, at the request of Lender, monthly, and following aSecuritization, quarterly and annual certificates signed and dated by Borrower,certifying that, the American Express Lease is in full force and effect,whether any defaults (or any matter that, with the passage of time or thegiving of notice, could become a default) exist thereunder and any otherinformation as is reasonably required by Lender, within twenty (20) days afterthe end of each calendar month, thirty (30) days after the end of each fiscalquarter or one hundred twenty (120) days after the close of each fiscal year ofBorrower, as applicable;

 

(ii)                                  priorto a Securitization, at the request of Lender, monthly, and following aSecuritization, quarterly and annual operating statements of the Property,prepared and certified by Borrower in the form required by Lender, detailingthe revenues received, the expenses incurred and the net operating incomebefore and after debt service (principal and interest) and major capitalimprovements (including, without limitation, any capital improvements plannedby American Express of which Borrower has notice) for the period of calculationand containing appropriate year-to-date information, within twenty (20) daysafter the end of each calendar month, thirty (30) days after the end of eachfiscal quarter or one hundred (120) days after the close of each fiscal year ofBorrower, as applicable;

 

(iii)                               annualbalance sheets, profit and loss statements, statements of cash flows, and statementsof change in financial position of Borrower and Borrower Principal in the formrequired by Lender prepared and certified by Borrower and Borrower Principalwithin one hundred twenty (120) days after the close of each fiscal year ofBorrower and Borrower Principal, as the case may be (provided that with respectto Borrower, such statements may be delivered by the holder(s) of beneficialinterests in Borrower in accordance with Section 6.1(a)(viii); and

 

(iv)                              all financial statements, operating statements, budgets,capital repair estimates or projections and certifications of any kind withrespect to the foregoing delivered to Borrower by American Express under theAmerican Express Lease.

 

(b)                                 Tothe extent not inconsistent with the provisions of Section 5.l2(a) hereof(e.g., GAAP accounting and audits shall not be required ), Borrower andBorrower Principal shall furnish Lender with such other additional financial ormanagement information (including state, provincial and federal tax returns) asmay, from time to time, be reasonably required by Lender in form and substancesatisfactory to Lender (including, without limitation, any financial reports requiredto be delivered by any Tenant or any guarantor of any Lease pursuant to theterms of such Lease), and shall furnish to Lender and its agents convenientfacilities for the examination and audit of any such books and records

 

(c)                                  Withoutlimiting any other rights available to Lender under this Loan Agreement or anyof the other Loan Documents, in the event Borrower shall fail to timely furnishLender any financial document or statement in accordance with this Section 5.12,Borrower shall promptly pay to Lender a non-refundable charge in the amount of$500 for each such failure. The payment of such amount shall not be construedto relieve Borrower of any Event of Default hereunder arising from suchfailure.

 

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(d)                                 Allitems requiring the certification of Borrower shall, except where Borrower isan individual, require a certificateexecuted by the general partner, managing member or chief executive officer ofBorrower, as applicable (and the same rules shall apply to any soleshareholder, general partner or managing member which is not an individual).

 

**Section 5.13.****                         EstoppelStatement**

 

(a)                                  Afterrequest by Lender, Borrower shall within ten (10) Business Days furnish Lenderwith a statement, duly acknowledged and certified, setting forth (i) the amountof the original principal amount of the Note, (ii) the rate of interest on theNote, (iii) the unpaid principal amount of the Note, (iv) the date installmentsof interest and/or principal were last paid, (v) any offsets or defenses to thepayment of the Debt, if any, and (vi) that the Note, this Agreement, theMortgage and the other Loan Documents are valid, legal and binding obligations andhave not been modified or if modified, giving particulars of such modification.

 

(b)                                 Borrowershall use its best efforts to deliver to Lender, promptly upon request, a dulyexecuted estoppel certificate from American Express on the form attached to theAmerican Express Lease as an exhibit.

 

**Section 5.14.****                        ****LeasingMatters.**

 

(a)                                  Borrower(i) shall observe and perform all the obligations imposed on the landlord underthe American Express Lease and shall not do or permit to be done anything to impairthe value of the American Express Lease as security for the Debt; (ii) shallpromptly send copies to Lender of all notices of default which Borrower shallsend or receive thereunder; (iii) shall enforce all of the material terms,covenants and conditions contained in the American Express Lease on the part ofthe tenant thereunder to be observed or performed; (iv) shall not collect anyof the Rents more than one (1) month in advance; (v) shall not execute anyother assignment of the landlord’s interest in the American Express Lease orthe Rents; and (vi) shall not consent to any assignment of or subletting underthe American Express Lease not in accordance with its terms without the priorwritten consent of Lender.

 

(b)                                 Borrowershall not, without the prior written consent of Lender, enter into, renew, extend,amend, modify, waive any provisions of, terminate, reduce Rents under, accept asurrender of space under or shorten the term of the American Express Lease.

 

**Section 5.15.****                        ****Property Management**

 

(a)                                  Borrowershall (i) promptly perform and observe all of the covenants required to beperformed and observed by it under the Management Agreement and do all thingsnecessary to preserve and to keep unimpaired its material rights thereunder;(ii) promptly notify Lender of any default under the Management Agreement ofwhich it is aware; (iii) promptly deliver to Lender a copy of any notice ofdefault or other material notice received by Borrower under the ManagementAgreement; (iv) promptly give notice to Lender of any notice or informationthat Borrower receives which indicates that Manager is terminating theManagement Agreement or that Manager is otherwise discontinuing its managementof the Property; and (v) promptly enforce the performance and observance of allof the covenants required to be performed and observed by Manager under theManagement Agreement.

 

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(b)                                 Ifat any time, (i) Manager shall become insolvent or a debtor in a bankruptcy proceeding;(ii) an Event of Default has occurred and is continuing; or (iii) a default hasoccurred and is continuing after the expiration of any applicable cure periodsunder the Management Agreement, Borrower shall, at the request of Lender,terminate the Management Agreement upon thirty (30) days prior notice toManager and replace Manager with a Qualified Manager, it being understood andagreed that the management fee for such replacement manager shall not exceedthen prevailing market rates.

 

(c)                                  Inaddition to the foregoing, in the event that Lender, in Lender’s reasonable discretion,at any time prior to the termination of the Assignment of Management Agreement,determines that the Property is not being managed in accordance with generallyaccepted management practices for projects similarly situated, Lender maydeliver written notice thereof to Borrower and Manager, which notice shallspecify with particularity the grounds for Lender’s determination. If Lenderreasonably determines that the conditions specified in Lender’s notice are notremedied to Lender’s reasonable satisfaction by Borrower or Manager withinthirty (30) days from the date of such notice or that Borrower or Manager hasfailed to diligently undertake correcting such conditions within such thirty(30) day period, Lender may direct Borrower to terminate the ManagementAgreement and to replace Manager with a Qualified Manager on terms andconditions satisfactory to Lender, it being understood and agreed that themanagement fee for such replacement manager shall not exceed then prevailingmarket rates.

 

(d)                                 Borrowershall not, without the prior written consent of Lender (which consent shall notbe unreasonably withheld, conditioned or delayed): (i) surrender, terminate orcancel the Management Agreement or otherwise replace Manager or enter into anyother management agreement with respect to the Property; (ii) reduce or consentto the reduction of the term of the Management Agreement; (iii) increase orconsent to the increase of the amount of any charges under the ManagementAgreement; or (iv) otherwise modify, change, supplement, alter or amend, orwaive or release any of its rights and remedies under, the Management Agreementin any material respect. In the event that Borrower replaces Manager at anytime during the term of Loan pursuant to this subsection, such Manager shall bea Qualified Manager.

 

(e)                                  Notwithstandingthe foregoing, Borrower shall be permitted to transfer the management of theProperty to Inland US Management LLC, a Delaware limited liability company,provided that the terms of the management contract between Borrower and suchentity provides for fees no greater than, is on terms that are substantiallysimilar to and is no less favorable to Borrower than the Management Agreementin effect as of the date hereof.

 

**Section 5.16.****                         Liens**

 

Borrower shallnot, without the prior written consent of Lender, create, incur, assume orsuffer to exist any Lien on any portion of theProperty or permit any such action to be taken, except Permitted Encumbrances.

 

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**Section 5.17.****                         DebtCancellation**

 

Borrower shallnot cancel or otherwise forgive or release any claim or debt owed to Borrowerby any Person, except for adequate consideration and in the ordinary course ofBorrower’s business.

 

**Section 5.18.****                         Zoning**

 

Borrower shallnot initiate or consent to any zoning reclassification of any portion of theProperty or seek any variance under any existing zoning ordinance or use orpermit the use of any portion of the Property in any manner that could resultin such use becoming a non-conforming use under any zoning ordinance or anyother applicable land use law, rule or regulation, without the prior writtenconsent of Lender.

 

**Section 5.19.****                         ERISA**

 

(a)                                  Tothe extent applicable, Borrower shall not engage in any transaction which wouldcause any obligation, or action taken or to be taken, hereunder (or theexercise by Lender of any of its rights under the Note, this Agreement or theother Loan Documents) to be a non-exempt (under a statutory or administrativeclass exemption) prohibited transaction under ERISA.

 

(b)                                 Borrowerfurther covenants and agrees to deliver to Lender such certifications or otherevidence from time to time throughout the term of the Loan, as requested byLender in its sole discretion, that, (i) Borrower is not and does not maintainan “employee benefit plan” as defined in Section 3(3) of ERISA, which issubject to Title I of ERISA, or a “governmental plan” within the meaning of Section 3(3)of ERISA; (ii) Borrower is not subject to state statutes regulating investmentsand fiduciary obligations with respect to governmental plans; and (iii) one ormore of the following circumstances is true:

 

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

 

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

 

(C)                                Borrower qualifies asan “operating company” or a “real estate operating company” within the meaningof 29 C.F.R. §2510.3-101(c) or (e).

 

**Section 5.20.****                         NoJoint Assessment**

 

Borrower shallnot suffer, permit or initiate the joint assessment of the Property with (a)any other real property constituting a tax lot separate from the Property, or(b) any portion of the Property which may be deemed to constitute personalproperty, or any other procedure whereby the Lien of any taxes which may belevied against such personal property shall be assessed or levied or charged tothe Property.

 

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**Section 5.21.****                        ****Reciprocal EasementAgreements**

 

Borrower shall not enterinto, terminate or modify any REA without Lender’s prior written consent, whichconsent shall not be unreasonably withheld, conditioned or delayed. Borrower shall enforce, comply with, and cause eachof the parties to the REA to comply with all of the material economic terms andconditions contained in the REA, provided that Borrower may agree, withoutLender’s consent, to modifications to any REA or to grant easements withrespect to the Property which could not reasonably be expected to have a materialadverse effect on the use, value or operation of the Property, on the abilityof American Express to perform its obligations under the American Express Leaseor on Borrower’s ability to perform its obligations under the Loan Documents.

 

**ARTICLE 6ENTITY COVENANTS**

 

**Section 6.1.****                               ****Single PurposeEntity/Separateness**

 

Until the Debt has been paidin full, Borrower represents, warrants and covenantsas follows:

 

Borrower has not and willnot:

 

(i)                                     engage in any business or activity other thanthe ownership, operation and maintenance of the Property, and activitiesincidental thereto;

 

(ii)                                  acquire or own any assets other than (A) theProperty, and (B) such incidental Personal Property as may be necessary for theoperation of the Property;

 

(iii)                               except as expressly provided in Article 7hereof, merge into or consolidate with any Person, or dissolve, terminate,liquidate in whole or in part, transfer or otherwise dispose of all orsubstantially all of its assets or change its legal structure;

 

(iv)                              fail to observe all organizationalformalities, or fail to preserve its existence as an entity duly organized,validly existing and in good standing (if applicable) under the applicableLegal Requirements of the jurisdiction of its organization or formation, oramend, modify, terminate or fail to comply with the provisions of itsorganizational documents;

 

(v)                                 own any subsidiary, or make any investment in,any Person;

 

(vi)                              commingle its assets with the assets of any otherPerson, or permit any Affiliate or constituent party independent access to itsbank accounts;

 

(vii)                           incur any debt, secured or unsecured, director contingent (including guaranteeing any obligation), other than (A) the Debt,(B) trade and operational indebtedness incurred in the ordinary course of businesswith trade creditors, provided such indebtedness is (1) unsecured, (2) notevidenced by a note, (3) on commercially reasonable terms and conditions, and(4) due not more than sixty (60) days past the date

 

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incurred and paid on or prior to such date,(C) financing leases and purchase money indebtedness incurred in the ordinarycourse of business relating to Personal Property on commercially reasonableterms and conditions, and/or (D) a loan with the Borrower Principal, which issubordinate to the Loan with Lender, to fund a portion of the equity requiredto purchase the Property; provided however, the aggregate amount of theindebtedness described in (B) and (C) shall not exceed at any time three percent(3%) of the outstanding principal amount of the Note;

 

(viii)                        permit itsrecords, books of account, bank accounts, financial statements and accountingrecords (including with respect to financial position, assets, liabilities, networth and operating results) to be shown on the financial statements of anyholder of a beneficial interest in Borrower unless such financial statementsshall contain a footnote indicating that Borrower is a separate legal entityand the assets of Borrower are not available as collateral to creditors of suchholder;

 

(ix)                                enterinto any contract or agreement with any general partner, member, shareholder,principal, guarantor of the obligations of Borrower, or any Affiliate of theforegoing, except upon terms and conditions that are intrinsically fair,commercially reasonable and substantially similar to those that would beavailable on an arm’s-length basis with unaffiliated third parties;

 

(x)                                   maintain its assets in such a manner that it will be costlyor difficult to segregate, ascertain or identify its individual assets fromthose of any other Person;

 

(xi)                                assumeor guarantee the debts of any other Person, hold itself out to be responsiblefor the debts of any other Person, or otherwisepledge its assets for the benefit of any other Person or hold out its credit asbeing available to satisfy the obligations of any other Person;

 

(xii)                             make any loans or advances to any Person;

 

(xiii)                          fail tofile its own tax returns or files a consolidated federal income tax return withany Person (unless prohibited or required, as the case may be, by applicableLegal Requirements);

 

(xiv)                         faileither to hold itself out to the public as a legal entity separate and distinctfrom any other Person or to conduct its business solely in its own name or failto correct any known misunderstanding regarding its separate identity;

 

(xv)                            failto maintain adequate capital for the normal obligations reasonably foreseeablein a business of its size and character and in light of its contemplatedbusiness operations (provided that Borrower’s failure to do so solely becauseof a shortfall in cash flow derived from the operation of the Property shallnot, by itself, constitute a breach of this covenant);

 

(xvi)                         Withoutthe unanimous written consent of all of its members, as applicable, and thewritten consent of 100% of the directors of Borrower, including, withoutlimitation, the Independent Director, (a) file or consent to the filing of any

 

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petition, either voluntary or involuntary, to takeadvantage of any Creditors Rights Laws, (b) seek or consent to the appointmentof a receiver, liquidator or any similar official, (c) take any action thatmight cause such entity to become insolvent, or (d) make an assignment for thebenefit of creditors;

 

(xvii)                      fail to allocate shared expenses (including,without limitation, shared office space and services performed by an employeeof an Affiliate) among the Persons sharing such expenses and to use separatestationery, invoices and checks;

 

(xviii)                   fail to remain solvent or pay its ownliabilities (including, without limitation, salaries of its own employees) onlyfrom its own funds (provided that Borrower’s failure to do so solely because ofa shortfall in cash flow derived from the operation of the Property shall not,by itself, constitute a breach of this covenant);

 

(xix)                           acquire obligations or securities of its partners,members, shareholders or other affiliates, as applicable;

 

(xx)                              violate or cause to be violated the assumptionsmade with respect to Borrower, Manager (if applicable) and their respectivedirect and/or indirect owners in any opinion letter pertaining to substantiveconsolidation delivered to Lender in connection with the Loan; or

 

(xxi)                           fail to maintain a sufficient number of employeesin light of its contemplated business operations.

 

**Section 6.2.****                               ****Change of Name, Identity orStructure**

 

Borrower shall not change orpermit to be changed (a) Borrower’s name, (b) Borrower’s identity (includingits trade name or names), (c) Borrower’s principal place of business set forthon the first page of this Agreement, (d) the corporate, partnership or otherorganizational structure of Borrower, or Borrower Principal, (e) Borrower’sprovince of organization, or (f) Borrower’s organizational identificationnumber, if applicable, without in each case notifying Lender of such change inwriting at least thirty (30) days prior to the effective date of such changeand, in the case of a change in Borrower’s structure, without first obtainingthe prior written consent of Lender. In addition, Borrower shall not change orpermit to be changed any organizational documents of Borrower if such changewould adversely impact the covenants set forth in Section 6.1 and Section 6.4hereof. Borrower authorizes Lender to file any financing statement or financingstatement amendment required by Lender to establish or maintain the validity,perfection and priority of the security interest granted herein. At the requestof Lender, Borrower shall execute a certificate in form satisfactory to Lenderlisting the trade names under which Borrower intendsto operate the Property, and representing and warranting that Borrower doesbusiness under no other trade name with respect to the Property. If Borrower doesnot now have an organizational identification number and later obtains one, orif the organizational identification number assigned to Borrower subsequentlychanges, Borrower shall promptly notify Lender of such organizationalidentification number or change. Nothing in this Section 6.2 shall bedeemed to restrict any express rights granted to Borrower under Article 7hereof.

 

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**Section 6.3.****                               ****Business and Operations**

 

Borrower will qualify to dobusiness and will remain in good standing under the laws of the State as and tothe extent the same are required for the ownership, maintenance, management andoperation of the Property.

 

**Section 6.4.****                               ****Independent Director**

 

(a)                                  The organizational documents of Borrowershall provide that at all times there shall be, and Borrower shall cause thereto be, at least one duly appointed member of the board of directors (each an **“Independent Director”**) of Borrower reasonably satisfactoryto Lender who is not at the time of such individual’s initial appointment, andshall not have been at any time during the preceding five (5) years, and shallnot be at any time while serving as a manager of Borrower, either (i) ashareholder (or other equity owner) of, or an officer, director, partner, manager,member, employee, attorney or counsel of, Borrower, Borrower Principal or anyof their respective shareholders, partners, members, subsidiaries oraffiliates; (ii) a customer or creditor of, or supplier to, Borrower or any ofits respective shareholders, partners, members, subsidiaries or affiliates whoderives any of its purchases or revenue from its activities with Borrower orany Affiliate of any of them; (iii) a Person who Controls or is under common Controlwith any such shareholder, officer, director, partner, manager, member,employee, supplier, creditor or customer; or (iv) a member of the immediatefamily of any such shareholder, officer, director, partner, manager, member,employee, supplier, creditor or customer.

 

(b)                                 The organizational documents of Borrowershall provide that the board of directors of Borrower shall not take any actionwhich, under the terms of any certificate of incorporation, by-laws or anyvoting trust agreement with respect to any common stock, requires an unanimousvote of the board of directors of Borrower unless at the time of such actionthere shall be at least one member of the board who is an Independent Director.Borrower will not, without the unanimous written consent of its board ofdirectors including the Independent Director, on behalf of Borrower, (i) fileor consent to the filing of any petition, either voluntary or involuntary, totake advantage of any applicable Creditors Rights Laws; (ii) seek or consent tothe appointment of a receiver, liquidator or any similar official; (iii) takeany action that might cause such entity to become insolvent; or (iv) make anassignment for the benefit of creditors.

 

**ARTICLE 7****NO SALE OR ENCUMBRANCE**

 

**Section 7.1.****                               ****Transfer Definitions**

 

For purposes of this Article 7an **“Affiliated Manager”** shall mean anymanaging agent in which Borrower, Borrower Principal, or any affiliate of suchentities has, directly or indirectly, any legal, beneficial or economicinterest; **“Control”** shall mean the power todirect, the management and policies of a Restricted Party, directly orindirectly, whether through the ownership of voting securities or otherbeneficial interests, by contract or otherwise; **“RestrictedParty”** shall mean Borrower, Borrower Principal any AffiliatedManager, or any shareholder, partner, member or non-member manager, or anydirect or indirect legal or beneficial owner of

 

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Borrower, Borrower Principal, any Affiliated Manager or any non-membermanager; and a **“Sale or Pledge”** shall mean avoluntary or involuntary sale, conveyance, mortgage, grant, bargain,encumbrance, pledge, assignment, grant of any options with respect to, or anyother transfer or disposition of (directly or indirectly, voluntarily orinvoluntarily, by operation of law or otherwise, and whether or not forconsideration or of record) of a legal or beneficial interest.

 

**Section 7.2.****                                NoSale/Encumbrance**

 

(a)                                  Borrowershall not cause or permit a Sale or Pledge of the Property or any part thereofor any legal or beneficial interest therein nor permit a Sale or Pledge of aninterest in any Restricted Party (in each case, a **“ProhibitedTransfer”**), other than pursuant to the American Express Lease,without the prior written consent of Lender.

 

(b)                                 AProhibited Transfer shall include, but not be limited to, (i) an installmentsales agreement wherein Borrower agrees to sell the Property or any partthereof for a price to be paid in installments; (ii) an agreement by Borrowerleasing all or a substantialpart of the Property for other than actual occupancy by a space tenantthereunder or a sale, assignment or other transfer of, or the grant of asecurity interest in, Borrower’s right, title and interest in and to any Leasesor any Rents; (iii) if a Restricted Party is a corporation, any merger,consolidation or Sale or Pledge of such corporation’s stock or the creation orissuance of new stock in one or a series of transactions; (iv) if a RestrictedParty is a limited or general partnership or joint venture, any merger orconsolidation or the change, removal, resignation or addition of a generalpartner or the Sale or Pledge of the partnership interest of any general orlimited partner or any profits or proceeds relating to such partnershipinterests or the creation or issuance of new partnership interests; (v) if aRestricted Party is a limited liability company, any merger or consolidation orthe change, removal, resignation or addition of a managing member or non-membermanager (or if no managing member, any member) or the Sale or Pledge of themembership interest of any member or any profits or proceeds relating to suchmembership interest; (vi) if a Restricted Party is a trust or nominee trust,any merger, consolidation or the Sale or Pledge of the legal or beneficialinterest in a Restricted Party or the creation or issuance of new legal orbeneficial interests; or (vii) the removal or the resignation of the Manager(including, without limitation, an Affiliated Manager) other than in accordancewith Section 5.15.

 

**Section 7.3.****                                PermittedTransfers**

 

Notwithstandingthe provisions of Section 7.2, the following transfers shall not be deemedto be a Prohibited Transfer: (a) a transfer by devise or descent or byoperation of law upon the death of a member, partner or shareholder of aRestricted Party, so long as Borrower delivers notice to Lender as soon aspracticable thereafter and that such Restricted Party is promptlyreconstituted, if applicable, following the death of such member, partner orshareholder and there is no change in Control of such Restricted Party as aresult of such transfer; (b) the Sale or Pledge, in one or a series of relatedtransactions, of not more than forty-nine percent (49%) of the stock, limitedpartnership interests or non-managing membership interests (as the case may be)in a Restricted Party; (c) a transfer of the Property to Western MarkhamLimited Partnership provided that the sole general partner is Borrower or aCanadian trust whose sole beneficiary is Borrower Principal; (d) a transfer ofthe Property to a newly formed Canadian trust of which a newly formed Canadiancorporation will be the sole trustee and Borrower will be the sole

 

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beneficiary; provided, however, no suchtransfers shall result in a change in Control in the Restricted Party or changein control of the Property, and as a condition to each such transfer, Lendershall receive not less than thirty (30) days prior written notice of suchproposed transfer and further provided that as a condition to a transferdescribed in subparagraph (d), Lender shall receive together with the writtennotice of such proposed transfer (i) a written agreement executed by theTransferee in form and substance reasonably satisfactory to Lender assuming andagreeing to observe, comply with and perform all the terms, covenants,conditions and indemnifications of the Loan Documents on the part of Borrowerto be performed arising from and after the date of the transfer (except theobligation to pay the Debt) and (ii) a written agreement executed by BorrowerPrincipal in form and substance reasonably satisfactory to Lender acknowledgingand agreeing that its obligations set forth in Article 4, Section 12.2,Article 13, Article 15 and Article 18 of this Agreement shallcontinue in full force and effect, notwithstanding the transfer.Notwithstanding the foregoing, any one or more of the transfers that results inany Person owning in excess of forty-nine percent (49%) of the ownershipinterest in a Restricted Party shall comply with the requirements of Section 7.4.

 

**Section 7.4.****                                Lender’sRights**

 

Lenderreserves the right to condition the consent to a Prohibited Transfer requestedhereunder upon (a) a modification of the terms hereof and an assumption of theNote and the other Loan Documents as so modified by the proposed ProhibitedTransfer, (b) receipt of payment of a transfer fee equal to one percent (1%) ofthe outstanding principal balance of the Loan and all of Lender’s expensesincurred in connection with such Prohibited Transfer, (c) receipt of writtenconfirmation from the Rating Agencies that the Prohibited Transfer will notresult in a downgrade, withdrawal or qualification of the initial, or ifhigher, then current ratings issued in connection with a Securitization, or ifa Securitization has not occurred, any ratings to be assigned in connectionwith a Securitization, (d) the proposed transferee’s continued compliance withthe covenants set forth in this Agreement (including, without limitation, thecovenants in Article 6) and the other Loan Documents, (e) a new managerfor the Property and a new management agreement satisfactory to Lender, and (f)the satisfaction of such other conditions and/or legal opinions as Lender shalldetermine in its sole discretion to be in the interest of Lender. All expensesincurred by Lender shall be payable by Borrower whether or not Lender consentsto the Prohibited Transfer. Lender shall not be required to demonstrate anyactual impairment of its security or any increased risk of default hereunder inorder to declare the Debt immediately due and payable upon a ProhibitedTransfer made without Lender’s consent. This provision shall apply to each andevery Prohibited Transfer, whether or not Lender has consented to any previousProhibited Transfer. In the event an opinion letter pertaining to substantiveconsolidation was delivered to Lender and the Rating Agencies in connectionwith the closing of the Loan, and if any Sale or Pledge permitted under this Article 7results in any Person and its Affiliates owning in excess of forty-nine percent(49%) of the ownership interests in a Restricted Party, Borrower shall, priorto such transfer, and in addition to any other requirement for Lender consentcontained herein, deliver a revised substantive non-consolidation opinionletter to Lender reflecting such Prohibited Transfer, which opinion shall be inform, scope and substance acceptable in all respects to Lender and the RatingAgencies.

 

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**Section ****7.5.****                                Assumption**

 

Notwithstandingthe foregoing provisions of this Article 7, following the date which issix (6) months from the Closing Date, Lender shall not unreasonably withhold consent to atransfer of the Property in its entirety to, and the related assumption of theLoan by, a corporation (a **“Transferee”)**providedthat each of the following terms and conditions are satisfied:

 

(a)                                  no Default orEvent of Default has occurred;

 

(b)                                 Borrower shall have (i) deliveredwritten notice to Lender of the terms of such prospective transfer not lessthan forty-five (45) days before the date on which such transfer is scheduledto close and, concurrently therewith, all such information concerning theproposed Transferee as Lender shall reasonably require and (ii) paid to Lendera non-refundable processing fee in the amount of $10,000. Lender shall have theright to approve or disapprove the proposed transfer based on its then currentunderwriting and credit requirements for similar loans secured by similarproperties which loans are sold in the secondary market, such approval not tobe unreasonably withheld. In determining whether to give or withhold itsapproval of the proposed transfer, Lender shall consider the experience andtrack record of Transferee and its principals in owning and operatingfacilities similar to the Property, the financial strength of Transferee andits principals, the general business standing of Transferee and its principalsand Transferee’s and its principals’ relationships and experience withcontractors, vendors, tenants, lenders and other business entities; provided,however, that, notwithstanding Lender’s agreement to consider the foregoingfactors in determining whether to give or withhold such approval, such approvalshall be given or withheld based on what Lender determines to be commercially reasonableand, if given, may be given subject to such conditions as Lender may deem reasonablyappropriate;

 

(c)                                  Borrower shall have paid to Lender,concurrently with the closing of such transfer, (i) a non-refundable assumptionfee in an amount equal to one percent (1.0%) of the then outstanding principalbalance of the Note, and (ii) all out-of-pocket costs and expenses, includingreasonable attorneys’ fees, incurred by Lender in connection with the transfer;

 

(d)                                 (i)Transferee shall have assumed and agreed to pay the Debt as and when due subjectto the provisions of Article 15 hereof and, prior to or concurrently with the closing of suchtransfer, Transferee and its constituent partners, members or shareholders asLender may require, shall have executed, without any cost or expense to Lender,such documents and agreements as Lender shall reasonably require to evidenceand effectuate said assumption and (ii) if required by Lender, a Personaffiliated with Transferee and acceptable to Lender shall have assumed theobligations of Borrower Principal under the Loan Documents with respect to allacts and events occurring or arising after the transfer of the Propertypursuant to this Section 7.5;

 

(e)                                  Borrower and Transferee, without anycost to Lender, shall furnish any information requested by Lender for thepreparation of, and shall authorize Lender to file, new financing statementsand financing statement amendments and other documents to the fullest extentpermitted by applicable law, and shall execute any additional documentsreasonably requested by Lender;

 

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(f)                                    Borrower shall have delivered to Lender,without any cost or expense to Lender, such endorsements to Lender’s TitleInsurance Policy insuring that fee simple or leasehold title to the Property,as applicable, is vested in Transferee (subject to Permitted Encumbrances), hazardinsurance endorsements or certificates and other similar materials as Lendermay deem necessary at the time of the transfer, all in form and substancesatisfactory to Lender;

 

(g)                                 Transferee shall have furnished to Lender,all appropriate papers evidencing Transferee’s organization and good standing,and the qualification of the signers to execute the assumption of the Debt,which papers shall include certified copies of all documents relating to theorganization and formation of Transferee. Transferee and such constituentshareholders of Transferee, as Lender shall require, shall comply with thecovenants set forth in Article 6 hereof;

 

(h)                                 Transferee shall assume the obligations ofBorrower under any Management Agreement or provide a new management agreementwith a new manager which meets with the requirements of Section 5.15hereof and assign to Lender as additional security such new managementagreement;

 

(i)                                     Transferee shall furnish an opinion ofcounsel satisfactory to Lender and its counsel (A) that Transferee’s formationdocuments provide for the matters described in subparagraph (g) above, (B) thatthe assumption of the Debt has been duly authorized, executed and delivered,and that the Note, the Mortgage, General Assignment of Rents, SpecificAssignment of Lease, this Agreement, the assumption agreement and the otherLoan Documents are valid, binding and enforceable against Transferee inaccordance with their terms, (C) that Transferee has been duly organized, andis in existence and good standing, and (E) with respect to such other matters asLender may reasonably request;

 

(j)                                     if required by Lender, Lender shall havereceived confirmation in writing from the Rating Agencies that rate theSecurities to the effect that the transfer will not result in a qualification,downgrade or withdrawal of any rating initially assigned or to be assigned tothe Securities;

 

(k)                                  Borrower’s obligations under the contract ofsale pursuant to which the transfer is proposed to occur shall expressly besubject to the satisfaction of the terms and conditions of this Section 7.5;

 

(1)                                  Transferee shall, prior to such transfer,deliver a substantive non-consolidation opinion to Lender, which opinion shallbe in form, scope and substance acceptable in all respects to Lender and theRating Agencies; and

 

(m)                               Transferee shall be a corporation or otherentity reasonably acceptable to Lender.

 

A consent by Lender with respect to a transfer of theProperty in its entirety to, and the related assumption of the Loan by, aTransferee pursuant to this Section 7.5 shall not be construed to be awaiver of the right of Lender to consent to any subsequent Sale or Pledge ofthe Property. Upon the transfer of the Property pursuant to this Section 7.5,Borrower and Borrower Principal shall be relieved of all liability under theLoan Documents for acts, events, conditions, or circumstances occurring orarising after the date of such transfer, except to the extent that such acts,events, conditions, or circumstances are the proximate result of acts, events,conditions, or

 

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circumstancesthat existed prior to the date of such transfer, whether or not discoveredprior or subsequent to the date of such transfer.

 

**Section 7.6.****                                Assumptionby Inland Permitted Transferee**

 

Notwithstandingthe foregoingprovisions of this Article 7, Borrower shall be permitted to transfer theProperty in its entirety to, provided the Loan is simultaneously assumed by, anInland Permitted Transferee, and provided further that each of the followingterms and conditions is satisfied:

 

(a)                                  no Default orEvent of Default has occurred;

 

(b)                                 Borrower shall have delivered writtennotice to Lender of the terms of such prospective transfer not less thanforty-five (45) days before the date on which such transfer is scheduled toclose and, concurrently therewith, all such information concerning the proposedTransferee as Lender shall reasonably require;

 

(c)                                  Borrower shall have paid to Lender allout-of-pocket costs and expenses, including reasonable attorneys’ fees,incurred by Lender in connection with the transfer;

 

(d)                                 suchInland Permitted Transferee assumes and agrees to pay the Debt as and when duesubject to the provisions of Article 15 hereof and, prior to or concurrently with theclosing of such transfer, such Inland Permitted Transferee and its constituentpartners, members or shareholders as Lender may require, shall execute, withoutany cost or expense to Lender, such documents and agreements as Lender shallreasonably require to evidence and effectuate said assumption;

 

(e)                                  Borrower and such Inland PermittedTransferee, without any cost to Lender, shall furnish any information requestedby Lender for the preparation of, and shall authorize Lender to file, newfinancing statements and financing statement amendments and other documents tothe fullest, extent permitted by applicable law, and shall execute anyadditional documents reasonably requested by Lender;

 

(f)                                    Borrowershall have delivered to Lender, without any cost or expense to Lender, endorsementsto Lender’s Title Insurance Policy insuring that fee simple title to the Property is vested in such InlandPermitted Transferee (subject to Permitted Encumbrances), hazard insuranceendorsements or certificates and other similar materials as Lender may deemnecessary at the time of the transfer, all in form and substance satisfactoryto Lender;

 

(g)                                 such Inland Permitted Transferee shall have furnished toLender, all appropriate papers evidencing Transferee’s organization and goodstanding, and the qualification of the signers to execute the assumption of theDebt, which papers shall include certified copies of all documents relating tothe organization and formation of such Transferee. Transferee and such constituentshareholders of Transferee, as Lender shall require, shall comply with thecovenants set forth in Article 6 hereof;

 

(h)                                 such Inland Permitted Transferee shall assume theobligations of Borrower under any Management Agreement or provide a newmanagement agreement with a new manager

 

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whichmeets with the requirements of Section 5.15 hereof and assign to Lender asadditional security such new management agreement;

 

(i)                                     Transferee shall furnish an opinion ofcounsel satisfactory to Lender and its counsel (A) that Transferee’s formationdocuments provide for the matters described in subparagraph (g) above, (B) thatthe assumption of the Debt has been duly authorized, executed and delivered,and that the Note, the Mortgage, the General Assignment of Rents, the SpecificAssignment of Rents, this Agreement, the assumption agreement and the otherLoan Documents are valid, binding and enforceable against Transferee inaccordance with their terms, (C) that Transferee and any entity which is acontrolling stockholder, have been duly organized, and are in existence andgood standing, and (E) with respect to such other matters as Lender mayreasonably request; and

 

(j)                                     in the event a substantive non-consolidationopinion was required in connection with the closing of the Loan, Transfereeshall, prior to such transfer, deliver a substantive non-consolidation opinionto Lender, which opinion shall be in form, scope and substance acceptable inall respects to Lender and the Rating Agencies.

 

A consentby Lender with respect to a transfer of the Property in its entirety to, andthe related assumption of the Loan by, a Transferee pursuant to this Section 7.6shall not be construed to be a waiver of the right of Lender to consent to anysubsequent Sale or Pledge of the Property.

 

**ART1CLE 8**

**INSURANCE; CASUALTY; CONDEMNATION;RESTORATION**

 

**Section 8.1.****                               ****Insurance**

 

(a)                                  Subject to the provisions of paragraph (g) ofthis Section 8.1, Borrower shall obtain and maintain, or cause AmericanExpress to maintain, insurance for Borrower and the Property providing at leastthe following coverages:

 

(i)                                     comprehensive “special causes of loss” formof insurance (or its equivalent) on the Improvements and the Personal Property(A) in an amount equal to not less than one hundred percent (100%) of the “FullReplacement Cost,” which for purposes of this Agreement shall mean actualreplacement value (exclusive of costs of excavations, foundations, undergroundutilities and footings) with a waiver of depreciation; (B) written on areplacement cost basis and containing either an agreed amount endorsement withrespect to the Improvements and Personal Property or a waiver of allco-insurance provisions; (C) providing for no deductible in excess of $10,000for all such insurance coverage; (D) at all times insuring against at least,those hazards that are commonly insured against, under a “special causes ofloss” form of policy, as the same shall exist on the date hereof, and togetherwith any increase in the scope of coverage provided under such form after thedate hereof; and (E) if any of the Improvements or the use of the Propertyshall at any time constitute legal non-conforming structures or uses, providingcoverage for contingent liability from Operation of Building Laws, DemolitionCosts and Increased Cost of Construction Endorsements and containing an “Ordinanceor Law Coverage” or “Enforcement” endorsement. In

 

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addition, Borrower shall obtain flood and earthquakeinsurance in amounts and in form and substance reasonably satisfactory toLender in the event the Property is located in a flood zone or in an area witha high degree of seismic risk, provided that the insurance shall be on termsconsistent with the special causes of loss form required under this subsection (i);

 

(ii)                                  commercial general liability insuranceagainst claims for personal injury, bodily injury, death or property damageoccurring upon, in or about the Property, with such insurance (A) to be on theso-called “occurrence” form with a general aggregate limit of not less than$2,000,000 and a per occurrence limit of not less than $1,000,000; (B) tocontinue at not less than the aforesaid limit until required to be changed byLender in writing by reason of changed economic conditions making suchprotection inadequate; and (C) to cover at least the following hazards: (1)premises and operations; (2) products and completed operations; (3) independentcontractors; (4) blanket contractual liability; and (5) contractual liabilitycovering the indemnities contained in Article 12 and Article 14hereof to the extent the same is available;

 

(iii)                               if the rating of American Express issued bythe Rating Agencies falls below the Trigger Rating, loss of rents insurance orbusiness income insurance, as applicable, (A) with loss payable to Lender; (B)covering all risks required to be covered by the insurance provided for in subsection (i)above; and (C) which provides that after the physical loss to the Improvementsand Personal Property occurs, the loss of rents or income, as applicable, willbe insured until such rents or income, as applicable, either returns to thesame level that existed prior to the loss or the expiration of twelve (12)months, whichever first occurs, and notwithstanding that the policy may expireprior to the end of such period; and (D) which contains an extended period ofindemnity endorsement which provides that after the physical loss to theImprovements and Personal Property has been repaired, the continued loss ofincome will be insured until such income either returns to the same level itwas at prior to the loss, or the expiration of twelve (12) months from the datethat the Property is repaired or replaced and operations are resumed, whicheverfirst occurs, and notwithstanding that the policy may expire prior to the endof such period. The amount of such loss of rents or business income insurance,as applicable, shall be determined prior to the date hereof and at least onceeach year thereafter based on Borrower’s reasonable estimate of the grossincome from the Property for the succeeding period of coverage required above.All proceeds payable to Lender pursuant to this subsection shall be heldby Lender and shall be applied to the obligations secured by the Loan Documentsfrom time to time due and payable hereunder and under the Note; provided,however, that nothing herein contained shall be deemed to relieve Borrower ofits obligations to pay the obligations secured by the Loan Documents on therespective dates of payment provided for in the Note, this Agreement and theother Loan Documents except to the extent, such amounts are actually paid outof the proceeds of such loss of rents or business income insurance, asapplicable;

 

(iv)                              at all times during which structuralconstruction, repairs or alterations are being made with respect to theImprovements, and only if the Property coverage form does not otherwise apply,(A) owner’s contingent or protective liability insurance covering claims notcovered by or under the terms or provisions of the above mentioned

 

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commercial general liability insurancepolicy; and (B) the insurance provided for in subsection (i) above writtenin a so-called Builder’s Risk Completed Value form (1) on a non-reportingbasis, (2) against “special causes of loss” insured against pursuant to subsection (i)above, (3) including permission to occupy the Property, and (4) with an agreedamount endorsement waiving co-insurance provisions;

 

(v)                                 workers’compensation, subject to the statutory limits of the Province, and employer’sliability insurance in respect of any work or operations on or about theProperty, or in connection with the Property or its operation (if applicable);

 

(vi)                              comprehensiveboiler and machinery insurance, if applicable, in amounts as shall bereasonably required by Lender on terms consistent with the commercial propertyinsurance policy required under subsection (i) above;

 

(vii)                           excessliability insurance in an amount not less than $75,000,000 per occurrence onterms consistent with the commercial general liability insurance required undersubsection (ii) above; and

 

(viii)                        upon sixty (60) days’ written notice, such other reasonableinsurance and in such reasonable amounts as Lender from time to time mayreasonably request against such other insurable hazards which at the time arecommonly insured against for property similar to the Property located in oraround the region in which the Property is located.

 

With respectto the policies required to be maintained pursuant to clauses (i) through(viii) above, Borrower shall use commercially reasonable efforts, consistentwith those of prudent owners of institutional quality commercial real estate,to maintain insurance against Losses resulting from acts of terrorism.

 

(b)                                 Allinsurance provided for in Section 8.1(a) shall be obtained under valid andenforceable policies (collectively, the **“Policies”**or in the singular, the **“Policy”**), and shall be subject to theapproval of Lender as to insurance companies, amounts, deductibles, loss payeesand insureds. The Policies shall be issued by financially sound and responsibleinsurance companies authorized to do business in the State and/or Province andhaving a claims paying ability rating of “A-” or better by S&P (or suchother ratings approved by Lender) and/or a general policy rating of “A” orbetter and a financial class of VIII or better by A.M. Best Company, Inc. ThePolicies described in Section 8.1(a) shall designate Lender and itssuccessors and assigns as additional insureds, mortgagees and/or loss payee asdeemed appropriate by Lender. To the extent such Policies are not available asof the Closing Date, Borrower shall deliver to Lender prior to the Closing Datea certificate of insurance evidencing the coverages and amounts requiredhereunder and, upon request of Lender as soon as available after the ClosingDate, certified copies of all Policies. Not less than ten (10) days prior tothe expiration dates of any insurance coverage in place with respecl to theProperty. Borrower shall deliver to Lender an Acord 28 or similar certificate,accompanied by evidence satisfactory to Lender of payment of the premiums duein connection therewith (the **“InsurancePremiums”**), and, assoon as available thereafter, certified copies of all renewal Policies.

 

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(c)                                  Anyblanket insurance Policy shall specifically allocate to the Property the amountof coverage from time to time required hereunder and shall otherwise providethe same protection as would a separate Policy insuring only the Property incompliance with the provisions of Section 8.1 (a).

 

(d)                                 AllPolicies provided for or contemplated by Section 8.l(a),except for the Policy referenced in Section 8.l(a)(v), shall name Borroweras the insured and Lender as the additional insured, as its interests mayappear, and in the case of property damage, boiler and machinery, flood andearthquake insurance, shall contain a standard Insurance Bureau of Canadamortgagee clause in favor of Lender providing that the loss thereunder shall bepayable to Lender.

 

(e)                                  AllPolicies provided for in Section 8.1(a) shall contain clauses orendorsements to the effect that:

 

(i)                                     noact or negligence of Borrower, or anyone acting for Borrower, or of any Tenantor other occupant, or failure to comply with the provisions of any Policy,which might otherwise result in a forfeiture of the insurance or any partthereof, shall in any way affect the validity or enforceability of theinsurance insofar as Lender is concerned;

 

(ii)                                  thePolicies shall not be materially changed (other than to increase the coverageprovided thereby) or canceled by the insurer without at least thirty (30) days’(ten (10) days’ in the case of non-payment of premium) prior written notice toLender and any other party named therein as an additional insured;

 

(iii)                               the issuers thereof shall give written notice to Lender ifthe Policies have not been renewed thirty (30) days prior to its expiration;and

 

(iv)                              Lendershall not be liable for any Insurance Premiums thereon or subject to anyassessments thereunder.

 

(f)                                    Ifat any time Lender is not in receipt of written evidence that all insurance requiredhereunder is in full force and effect, Lender shall have the right, without noticeto Borrower, to take such action as Lender deems necessary to protect itsinterest in the Property, including, without limitation, obtaining suchinsurance coverage as Lender in its sole discretion deems appropriate. Allpremiums incurred by Lender in connection with such action or in obtaining suchinsurance and keeping it in effect shall be paid by Borrower to Lender upon demandand, until paid, shall be secured by the Mortgage and shall bear interest atthe Default Rate.

 

(g)                                 Notwithstandingany other provision hereof to the contrary, Lender acknowledges that so long asno American Express Lease Default has occurred, Borrower shall not be required toobtain the insurance coverages set forth in paragraphs (a)(i) through (viii) if(x) Guarantor (or American Express if there is no Guarantor) is a self-insurerand maintains a rating issued by the Rating Agencies of not less than theTrigger Rating or (y) American Express maintains insurance with coverages andcarriers in compliance with the terms of the American Express Lease.

 

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**Section 8.2.****                                Casualty**

 

If the Property shall bedamaged or destroyed, in whole or in part, by fire or other casualty (a **“Casualty”**), Borrower shall give prompt notice of such damageto Lender and shall promptly commence and diligently prosecute the Restorationof the Property in accordance with Section 8.4, whether or not Lendermakes any Net Proceeds available pursuant to Section 8.4. Borrower shallpay all costs of such Restoration whether or not such costs are covered byinsurance. Lender may, but shall not be obligated to make proof of loss if notmade promptly by Borrower. Borrower shall adjust all claims for InsuranceProceeds in consultation with, and approval of, Lender; provided, however, ifan Event of Default has occurred and is continuing,Lender shall have the exclusive right to participate in the adjustment of allclaims for Insurance Proceeds.

 

**Section 8.3.****                               ****Expropriation**

 

Borrower shall promptly giveLender notice of the actual or threatened commencement of any proceeding forthe Expropriation of the Property of which Borrower has knowledge and shalldeliver to Lender copies of any and all papers served in connection with suchproceedings. Lender may participate in any such proceedings, and Borrower shallfrom time to time deliver to Lender all instruments requested by it to permitsuch participation. Borrower shall, at its expense, diligently prosecute anysuch proceedings, and shall consult with Lender, its attorneys and experts, andcooperate with them in the carrying on or defense of any such proceedings.Notwithstanding any taking by any public or quasi-public authority throughExpropriation or otherwise (including but not limited to any transfer made inlieu of or in anticipation of the exercise of such taking), Borrower shallcontinue to pay the Debt at the time and in the manner provided for its paymentin the Note and in this Agreement and the Debt shall not be reduced until anyAward shall have been actually received and applied by Lender, after thededuction of expenses of collection, to the reduction or discharge of the Debt.Lender shall not be limited to the interest paid on the Award by theexpropriating authority but shall be entitled to receive out of the Awardinterest at the rate or rates provided herein or in the Note. If the Propertyor any portion thereof is taken by an appropriating authority, Borrower shallpromptly commence and diligently prosecute the Restoration of the Property andotherwise comply with the provisions of Section 8.4, whether or not Lendermakes any Net Proceeds available pursuant to Section 8.4. If the Propertyis sold, through foreclosure or otherwise, prior to the receipt by Lender ofthe Award, Lender shall have the right, whether or not a deficiency judgment onthe Note shall have been sought, recovered or denied, to receive the Award, ora portion thereof sufficient to pay the Debt. So long as no American ExpressLease Default has occurred, the payment and allocation of any Awards shall begoverned by the American Express Lease.

 

**Section 8.4.****                               ****Restoration**

 

The following provisionsshall apply in connection with the Restoration of the Property:

 

(a)                                  If the Net Proceeds shall be less than$50,000 and the costs of completing the Restoration shall be less than $50,000,the Net Proceeds will be disbursed by Lender to Borrower upon receipt, providedthat all of the conditions set forth in Section 8.4(b)(i)are met and Borrower delivers to Lender a written undertaking to expeditiouslycommence and to satisfactorily complete with due diligence the Restoration inaccordance with the terms of this Agreement.

 

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(b)                                 Ifthe Net Proceeds are equal to or greater than $50,000 or the costs of completingthe Restoration are equal to or greater than $50,000, Lender shall make the NetProceeds available for the Restoration in accordance with the provisions ofthis Section 8.4. The term **“Net Proceeds”**for purposes of this Section 8.4 shall mean: (i) the net amountof all insurance proceeds received by Lender pursuant to Section 8.1(a)(i),(iv), (vi) and (viii) as a result of a Casualty, after deduction of itsreasonable costs and expenses (including, but not limited to, reasonablecounsel fees), if any, in collecting the same (**“Insurance Proceeds”**), or(ii) the net amount of the Award as a result of an Expropriation, afterdeduction of its reasonable costs and expenses (including, but not limited to,reasonable counsel fees), if any, in collecting the same (**“Expropriation****Proceeds”**),whichever the case may be.

 

(i)                                     TheNet Proceeds shall be made available to Borrower for Restoration provided thateach of the following conditions are met:

 

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

 

(B)                                (1) in the event theNet Proceeds are Insurance Proceeds, less than thirty percent (30%) of thetotal floor area of the Improvements on the Property has been damaged,destroyed or rendered unusable as a result of a Casualty, or (2) in the eventthe Net Proceeds are Expropriation Proceeds, less than ten percent (10%) of theland constituting the Property is taken, such land is located along the perimeteror periphery of the Property, and no portion of the Improvements is located onsuch land;

 

(C)                                The American ExpressLease shall remain in full force and effect during and after completion of theRestoration without abatement of Rent;

 

(D)                               Borrower shall commencethe Restoration as soon as reasonably practicable (but in no event later thansixty (60) days after such Casualty or Expropriation, whichever the case maybe, occurs) and shall diligently pursue the same to satisfactory completion;

 

(E)                                 Lender shall besatisfied that any operating deficits, including all scheduled payments underthe Note, which will be incurred with respect to the Property as a result ofthe occurrence of any such Casualty or Expropriation, whichever the case maybe, will be covered out of the insurance coverage referred to in Section 8.1(a)(iii)above;

 

(F)                                 Lender shall besatisfied that the Restoration will be completed on or before the earliest tooccur of (1) six (6) months prior to the Maturity Date, (2) the earliest daterequired for such completion under the terms of any Leases or materialagreements affecting the Property, (3) such time as may be required underapplicable zoning law, ordinance, rule or regulation, or (4) the expiration of theinsurance coverage referred to in Section 8.l(a)(iii);

 

(G)                                theProperty and the use thereof after the Restoration will be in compliance with andpermitted under all Legal Requirements;

 

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(H)                               the Restoration shall be done and completed by Borrower in an expeditious and diligentfashion and in compliance with all applicable Legal Requirements;

 

(I)                                    such Casualty or Expropriation, as applicable, does not result in the loss of accessto the Property or the Improvements;

 

(J)                                   Borrower shall deliver, or cause to bedelivered, to Lender a signed detailed budget approved in writing by Borrower’sarchitect or engineer stating the entire cost of completing the Restoration,which budget shall be acceptable to Lender; and

 

(K)                               the Net Proceeds together with any cash or cash equivalent deposited by Borrower withLender are sufficient in Lender’s reasonable judgment to cover the cost of theRestoration.

 

(ii)                                  The Net Proceeds shall be held by Lenderuntil disbursements commence, and, until disbursed in accordance with theprovisions of this Section 8.4,shall constitute additional security for the Debt and other obligations underthe Loan Documents. The Net Proceeds shall be disbursed by Lender to, or asdirected by, Borrower from time to time during the course of the Restoration,upon receipt of evidence satisfactory to Lender that (A) all the conditionsprecedent to such advance, including those set forth in Section 8.4(b)(i),have been satisfied, (B) all materials installed and work and labor performed(except to the extent that they are to be paid for out of the requesteddisbursement) in connection with the related Restoration item have been paidfor in full, and (C) there exist no notices of pendency, stop orders, mechanic’sor materialman’s liens or notices of intention to file same, or any other liensor encumbrances of any nature whatsoever on the Property which have not eitherbeen fully bonded to the satisfaction of Lender and discharged of record or inthe alternative fully insured to the satisfaction of Lender by the titlecompany issuing the Title Insurance Policy. Notwithstanding the foregoing, BusinessInterruption Proceeds required to be maintained by Borrower pursuant to section 8.1(a)(iii)shall be controlled by Lender at all times, shall not be subject to theprovisions of this Section 8.4 and shall be used solely for the payment ofthe obligations under the Loan Documents and Operating Expenses.

 

(iii)                               All plans and specifications required inconnection with the Restoration shall be subject to prior review and acceptancein all respects by Lender and by an independent consulting engineer selected byLender (the **“Restoration Consultant”**). Lendershall have the use of the plans and specifications and all permits, licensesand approvals required or obtained in connection with the Restoration. Theidentity of the contractors, subcontractors and materialmen engaged in theRestoration, as well as the contracts in excess of $50,000 under which theyhave been engaged, shall be subject to prior review and acceptance by Lenderand the Restoration Consultant. All costs and expenses incurred by Lender inconnection with making the Net Proceeds available for the Restoration,including, without limitation, reasonable counsel fees and disbursements andthe Restoration Consultant’s fees, shall be paid by Borrower.

 

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(iv)                              In no event shall Lender be obligated to makedisbursements of the Net Proceeds in excess of an amount equal to the costsactually incurred from time totime for work in place as part of the Restoration, as certified by theRestoration Consultant, minus the Restoration Retainage. The term **“Restoration Retainage”** shall mean an amount equal to thegreater of:

 

(A)                              ten percent (10%) of the costs actuallyincurred for work in place as part of the Restoration, as certified by theRestoration Consultant, until the Restoration has been completed and

 

(B)                                the amount of the owner’s holdback required tobe maintained pursuant to the provisions of the Construction Lien Act (Ontario)as amended from time to time.

 

The Restoration Retainage shall in no event, and notwithstandinganything to the contrary set forth above in this Section 8.4(b), be lessthan the amount actually held back by Borrower from contractors, subcontractorsand materialmen engaged in the Restoration. The Restoration Retainage shall notbe released until the Restoration Consultant certifies to Lender that theRestoration has been completed in accordance with the provisions of this Section 8.4(b)and that all approvals necessary for the re-occupancy and use of the Propertyhave been obtained from all appropriate Governmental Authorities, and Lenderreceives evidence satisfactory to Lender that the costs of the Restoration havebeen paid in full or will be paid in full out of the Restoration Retainage;provided, however, that Lender will release the portion of the RestorationRetainage being held with respect to any contractor, subcontractor ormaterialman engaged in the Restoration as of the date upon which theRestoration Consultant certifies to Lender that the contractor, subcontractoror materialman has satisfactorily completed all work and has supplied allmaterials in accordance with the provisions of the contractor’s, subcontractor’sor materialman’s contract, the contractor, subcontractor or materialmandelivers the lien waivers and evidence of payment in full of all sums due tothe contractor, subcontractor or materialman as may be reasonably requested byLender or by the title company issuing the Title Insurance Policy, and evidenceof compliance with the provisions of the Construction Lien Act (Ontario) andLender receives an endorsement to the Title Insurance Policy insuring thecontinued priority of the lien of the Mortgage and evidence of payment of anypremium payable for such endorsement. If required by Lender, the release of anysuch portion of the Restoration Retainage shall be approved by the suretycompany, if any, which has issued a payment or performancebond with respect to the contractor, subcontractor or materialman.

 

(v)                                 Lender shall not be obligated to makedisbursements of the Net Proceeds more frequently than once every calendarmonth.

 

(vi)                              If at any time the Net Proceeds or theundisbursed balance thereof shall not, in the reasonable opinion of Lender inconsultation with the Restoration Consultant, be sufficient to pay in full thebalance of the costs which are estimated by the Restoration Consultant to beincurred in connection with the completion of the Restoration, Borrower shalldeposit the deficiency (the **“Net Proceeds Deficiency”**)with Lender before any

 

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further disbursement of the Net Proceeds shall bemade. The Net Proceeds Deficiency deposited with Lender shall be held by Lenderand shall be disbursed for costs actually incurred in connection with theRestoration on the same conditions applicable to the disbursement of the NetProceeds, and until so disbursed pursuant to this Section 8.4(b) shallconstitute additional security for the Debt and other obligations under theLoan Documents.

 

(vii)                           The excess, if any, of the Net Proceeds andthe remaining balance, if any, of the Net Proceeds Deficiency deposited withLender after the Restoration Consultant certifies to Lender that theRestoration has been completed in accordance with the provisions of this Section 8.4(b),and the receipt by Lender of evidence satisfactory to Lender that all costsincurred in connection with the Restoration have been paid in full, shall beremitted by Lender to Borrower, provided no Event of Default shall haveoccurred and shall be continuing under the Note, this Agreement or any of theother Loan Documents.

 

(c)                                  All Net Proceeds not required (i) to be madeavailable for the Restoration or (ii) to be returned to Borrower as excess NetProceeds pursuant to Section 8.4(b)(vii)may (x) be retained and applied by Lender toward the payment of the Debtwhether or not then due and payable in such order, priority and proportions asLender in its sole discretion shall deem proper, or, (y) at the sole discretionof Lender, the same may be paid, either in whole or in part, to Borrower forsuch purposes and upon such conditions as Lender shall designate.

 

(d)                                 In the event of foreclosure of the Mortgage,or other transfer of title to the Property in extinguishment in whole or inpart of the Debt, all right, title and interest of Borrower in and to thePolicies then in force concerning the Property and all proceeds payable thereundershall thereupon vest in the purchaser at such foreclosure, Lender or othertransferee in the event of such other transfer of title.

 

(e)                                  Notwithstanding the foregoing, so long as noAmerican Express Lease Default has occurred, the Net Proceeds shall be used forrestoration of the Property in accordance with the provisions of the AmericanExpress Lease.

 

**ARTICLE 9REPLACEMENTS; RESERVE FUNDS**

 

**Section 9.1.****                                Replacements**

 

On an ongoing basisthroughout the term of the Loan, Borrower shall make capital repairs,replacements and improvements necessary to keep the Property in good order andrepair and in a good marketable condition or prevent deterioration of theProperty. So long as no AmericanExpress Lease Default shall have occurred, the compliance by American Expresswith its obligations for maintenance of the Property as set forth in theAmerican Express Lease shall be deemed compliance by Borrower with theprovisions of this Section 9.1.

 

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**Section 9.2.****                                Taxand Insurance Reserve Funds**

 

If required by Lenderfollowing a default by American Express under the American Express Lease Borrowershall establish an Eligible Account with Lender or Lender’s agent sufficient todischarge Borrower’s obligations for the payment of Taxes and InsurancePremiums pursuant to Section 5.4 and Section 8.1 hereof (the **“Tax and Insurance ReserveAccount”**) Borrower shall deposit into the Tax and Insurance ReserveAccount on each Scheduled Payment Date (a) one-twelfth of the Taxes that Lenderestimates will be payable during the next ensuing twelve (12) months or suchhigher amount necessary to accumulate with Lender sufficient funds to pay allsuch Taxes at least thirty (30) days prior to the earlier of (i) the date thatthe same will become delinquent and (ii) the date that additional charges orinterest will accrue due to the non-payment thereof, and (b) except to theextent Lender has waived the insurance escrow because the insurance requiredhereunder is maintained under a blanket insurance Policy acceptable to Lenderin accordance with Section 8.1(c), one-twelfth of the Insurance Premiumsthat Lender estimates will be payable during the next ensuing twelve (12)months for the renewal of the coverage afforded by the Policies upon theexpiration thereof or such higher amount necessary to accumulate with Lendersufficient funds to pay all such Insurance Premiums at least thirty (30) daysprior to the expiration of the Policies (said amounts in (a) and (b) abovehereinafter called the **“Tax and insurance ReserveFunds”**). Lender will apply the Tax and Insurance Reserve Funds topayments of Taxes and Insurance Premiums required to be made by Borrowerpursuant to Section 5.4 and Section 8.1 hereof. In making anydisbursement from the Tax and Insurance Reserve Account, Lender may do soaccording to any bill, statement or estimate procured from the appropriatepublic office or tax lien service (with respect to Taxes) or insurer or agent(with respect to Insurance Premiums), without inquiry into the accuracy of suchbill, statement or estimate or into the validity of any tax, assessment, sale,forfeiture, tax lien or title or claim thereof. If the amount of the Tax andInsurance Reserve Funds shall exceed the amounts due for Taxes and InsurancePremiums pursuant to Section 5.4 and Section 8.1 hereof, Lendershall, in its sole discretion, return any excess to Borrower or credit suchexcess against future payments to be made to the Tax and Insurance ReserveAccount. In allocating any such excess, Lender may deal with the person shownon Lender’s records as being the owner of the Property. Any amount remaining inthe Tax and Insurance Reserve Account after the Debt has been paid in fullshall be returned to Borrower or the person shown on Lender’s records as beingthe owner of the Property and no other party shall have any right or claimthereto. If at any time Lender reasonably determines that the Tax and InsuranceReserve Funds are not or will not be sufficient to pay Taxes and InsurancePremiums by the dates set forth in (a) and (b) above, Lender shall notifyBorrower of such determination and Borrower shall pay to Lender any amountnecessary to make up the deficiency within ten (10) days after notice fromLender to Borrower requesting payment thereof.

 

**Section 9.3.****                               ****Reserve Funds Generally**

 

(a)                                  No earnings or interest on the ReserveAccounts shall be payable to Borrower. Neither Lender nor any loan servicerthat at any time holds or maintains the Reserve Accounts shall have anyobligation to keep or maintain such Reserve Accounts or any funds depositedtherein in interest-bearing accounts. If Lender or any such loan servicer electsin its sole and absolute discretion to keep or maintain any Reserve Accounts orany funds deposited therein in an interest-bearing account (i) the accountshall be an Eligible Account, (ii) such funds shall not be invested except inPermitted Investments, and (iii) all interest earned or accrued thereon shallbe for the account of and be retained by Lender or such loan servicer.

 

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(b)                                 Borrowergrants to Lender a first-priority perfected security interest in, and assignsand pledges to Lender, each of the Reserve Accounts and any and all fundshereafter deposited therein as additional security for payment of the Debt.Until expended or applied in accordance herewith, the Reserve Accounts and theReserve Funds shall constitute additional security for the Debt. The provisionsof this Section 9.9 are intended to give Lender or any subsequent holderof the Loan “control” of the Reserve Accounts within the meaning of the UCC.

 

(c)                                  The Reserve Accountsand any and all Reserve Funds deposited therein shall be subject to theexclusive dominion and control of Lender, which shall hold the Reserve Accountsand any or all Reserve Funds now or hereafter deposited therein subject to the terms and conditions of this Agreement.Borrower shall have no right of withdrawal from the Reserve Accounts or anyother right or power with respect to the Reserve Accounts or any or all of the ReserveFunds hereinafter deposited therein, except as expressly provided in thisAgreement.

 

(d)                                 Lender shall furnishor cause to be furnished to Borrower, without charge, an annual accounting ofeach Reserve Account in the normal format of Lender or its loan servicer, showingcredits and debits to such Reserve Account and the purpose for which each debitto such Reserve Account was made.

 

(e)                                  As long as no Eventof Default has occurred, Lender shall make disbursements from the ReserveAccounts in accordance with thisAgreement. All such disbursements shall be deemed to have been expresslypre-authorized by Borrower, and shall not be deemed to constitute the exerciseby Lender of any remedies against Borrower unless an Event of Default hasoccurred and is continuing and Lender has expressly stated in writing itsintent to proceed to exercise its remedies as a secured party, pledgee orlienholder with respect to the Reserve Accounts.

 

(f)                                    The Reserve Fundsshall not constitute escrow or trust funds and may be commingled with othermonies held by Lender. Notwithstanding anything else herein to the contrary,Lender may commingle in one or more Eligible Accounts any and all fundscontrolled by Lender, including, without limitation, funds pledged in favor ofLender by other borrowers, whether for the same purposes as the ReserveAccounts or otherwise. Without limiting any other provisions of this Agreementor any other Loan Document, theReserve Accounts may be established and held in such name or names as Lender orits loan servicer, as agent for Lender, shall deem appropriate, including,without limitation, in the name of Lender or such loan servicer as agent forLender. In the case of any Reserve Account which is held in a commingledaccount, Lender or its loan servicer, as applicable, shall maintain recordssufficient to enable it to determine at all times which portion of such accountis related to the Loan. The Reserve Accounts are solely for the protection ofLender and Lender shall have no responsibility beyond the allowance of duecredit for the sums actually received by Lender or beyond the reimbursement orpayment of the costs and expenses for which such accounts were established inaccordance with their terms. Upon assignment of the Loan by Lender, any ReserveFunds shall be turned over to the assignee and any responsibility of Lender asassignor shall terminate. The requirements of this Agreement concerning ReserveAccounts in no way supersede, limit or waive any other rights or obligations ofthe parties under any of the Loan Documents or under applicable law.

 

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(g)                                 Borrower shall not,without obtaining the prior written consent of Lender, further pledge, assignor grant any security interest in the Reserve Accounts or the Reserve Fundsdeposited therein or permit any Lien to attach thereto, except for the securityinterest granted in this Section 9.9, or any levy to be made thereon, orany UCC and/or PPSA Financing Statements, except those naming Lender as thesecured party, to be filed with respect thereto.

 

(h)                                 Borrower will maintainthe security interest created by this Section 9.9 as a first priorityperfected security interest and will defend the right, title and interest of Lender in and to the ReserveAccounts and the Reserve Funds against the claims and demands of all Personswhomsoever. At any time and from time to time, upon the written request ofLender, and at the sole expense of Borrower, Borrower will promptly and dulyexecute and deliver such further instruments and documents and will take suchfurther actions as Lender reasonably may request for the purpose of obtainingor preserving the full benefits of this Agreement and of the rights and powersherein granted.

 

**ARTICLE 10CASH MANAGEMENT**

 

**Section 10.1.****                         CashManagement Account**

 

(a)                                  Borroweracknowledges and confirms that Borrower has established, and Borrower covenantsthat it shall maintain an Eligible Account into which Borrower shall, and shallcause Manager to, deposit or cause to be deposited all Rents and other revenuefrom the Property during the Cash Management Period or upon the occurrence ofan Event of Default prior to the commencement of the Cash Management Periodpursuant to the terms of Section 10.2 hereof (such account, thesub-accounts thereof, all funds at any time on deposit therein and anyproceeds, replacements or substitutions of such account or funds therein, arereferred to herein as the **“Cash Management Account”**).

 

(b)                                 TheCash Management Account shall be in the name of Borrower for the benefit ofLender, provided that Borrower shall be the owner of all funds on deposit insuch accounts for federal and applicable state, provincial and local taxpurposes (except to the extent Lender retains any interest earned on the CashManagement Account for its own account following the occurrence and during thecontinuance of an Event of Default). Sums on deposit in the Cash ManagementAccount shall not be invested except in such Permitted Investments asdetermined and directed by Lender and all income earned thereon shall be theincome of Borrower and be applied to and become part of the Cash ManagementAccount, to be disbursed in accordance with this Article 10. Lender shallhave no liability for any loss resulting from the investment of funds inPermitted Investments in accordance with the terms and conditions of thisAgreement.

 

(c)                                  TheCash Management Account shall be subject to the exclusive dominion and controlof Lender during the Cash Management Period or the continuance of an Event ofDefault and, except as otherwise expressly provided herein, neither Borrower,Manager nor any other party claiming on behalf of, or through, Borrower orManager, shall have any right of withdrawal therefrom or any other right orpower with respect thereto.

 

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(d)                                 Borrower agrees to pay the customary fees andexpenses incurred in connection with maintaining the Cash Management Account.

 

(e)                                  Lender shall be responsible for theperformance only of such duties with respect to the Cash Management Account asare specifically set forthherein, and no duty shall be implied from any provision hereof. Lender shallnot be under any obligation or duty to perform any act which would involve itin expense or liability or to institute or defend any suit in respect hereof,or to advance any of its own monies. Borrower shall indemnify and hold Lenderand its directors, employees, officers and agents harmless from and against anyloss, cost or damage (including, without limitation, reasonable attorneys’ feesand disbursements) incurred by such parties in connection with the CashManagement Account other than such as result from the gross negligence orwillful misconduct of Lender or intentional nonperformance by Lender of its obligationsunder this Agreement.

 

**Section 10.2.****                        ****Deposits and Withdrawals**

 

(a)                                  Borrower represents,warrants and covenants that:

 

(i)                                     Concurrently with the execution of thisAgreement Borrower has executed and delivered to Lender an instruction letterin the form of Exhibit B attached hereto addressed to American Express (the “TenantDirection Letter”). Upon the occurrence of an Event of Default or uponcommencement of the Cash Management Period, Lender or Lender’s agent, shallhave the right to deliver the Tenant Direction Letter to American Express andall payments of Rent and other items payable under the American Express Leaseshall thereafter be sent directly to the Cash Management Account;

 

(ii)                                  On the occurrence of an Event of Default orthe commencement of the Cash Management Period Borrower shall, and shall causeManager to, instruct all Persons that maintain open accounts with Borrower orManager with respect to the Property or with whom Borrower or Manager doesbusiness on an “accounts receivable” basis with respect to the Property todeliver all payments due under such accounts to the Cash Management Account.Neither Borrower nor Manager shall direct any such Person to make payments dueunder such accounts in any other manner;

 

(iii)                               All Rents or other income from the Propertyreceived after the commencement of the Cash Management Period or the occurrenceof an Event of Default shall (A) be deemed additional security for payment ofthe Debt and shall be held in trust for the benefit, and as the property, ofLender, (B) not be commingled with any other funds or property of Borrower or Manager,and (C) if received by Borrower or Manager notwithstanding the delivery of theTenant Direction Letter, be deposited in the Cash Management Account within one(1) Business Day of receipt;

 

(iv)                              Without the prior written consent of Lender,so long as any portion of the Debt remains outstanding, during the CashManagement Period or the continuance of an Event of Default neither Borrowernor Manager shall terminate, amend, revoke or modify the Tenant DirectionLetter in any manner whatsoever or direct or cause American

 

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Express to pay any amount in any manner otherthan as provided in the Tenant Direction Letter; and

 

(v)                                 So long as any portion of the Debt remainsoutstanding, during the Cash Management Period or during the continuance of anEvent of Default neither Borrower, Manager nor any otherPerson shall open or maintain any accounts other than the CashManagement Account into which revenues from the ownership and operation of theProperty are deposited.

 

(b)                                 Intentionally Omitted.

 

(c)                                  If an Event of Default shall have occurredand be continuing or during a Cash Management Period, on each Scheduled PaymentDate (and if such day is not a Business Day, then the immediately preceding daywhich is a Business Day) commencing the month immediately following the monthduring which the Cash Management Period commences, Borrower hereby irrevocablyauthorizes Lender to withdraw or allocate to the sub-accounts of the CashManagement Account, as the case may be, amounts received in the Cash ManagementAccount, in each case to the extent that sufficient funds remain therefor:

 

(i)                                     following a default by American Express under theAmerican Express Lease, funds sufficient to pay the monthly deposits to the Taxand Insurance Reserve Account shall be allocated to the Tax and InsuranceReserve Account to be held and disbursed in accordance with Section 9.2;

 

(ii)                                  funds sufficient to pay the Monthly Payment Amountshall be withdrawn and paid to Lender;

 

(iii)                               funds sufficient to pay any interest accruingat the Default Rate, late payment charges, if any, and any other sums due andpayable to Lender under any of the Loan Documents, shall be withdrawn and paidto Lender and applied against such items;

 

(iv)                              funds sufficient to pay Operating Expenses (to theextent actually incurred) for the following month shall be allocated to theOperating Expense Reserve Account to be held and disbursed to pay OperatingExpenses;

 

(v)                                 funds in an amount equal to the balance (ifany) remaining on deposit in the Cash Management Account after the foregoingwithdrawals and allocations shall be withdrawn and paid to Lender to be appliedto the principal amount of the Loan until the principal amount of the Loan ispaid in full.

 

(d)                                 Notwithstandinganything to the contrary herein, Borrower acknowledges that Borrower isresponsible for monitoring the sufficiency of funds deposited in the Cash ManagementAccount and that Borrower is liable for any deficiency in available funds, irrespectiveof whether Borrower has receivedany account statement, notice or demand from Lender or Lender’s servicer. Ifthe amount on deposit in the Cash Management Account is insufficient to makeall of the withdrawals and allocations described in Section 10.2(c)(i) through(v) above, Borrower shall deposit such deficiency into the Cash ManagementAccount within five (5) days (provided that such five day period shall notconstitute a grace period for any

 

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default or Event of Default under this Agreement or any other LoanDocument based on a failure to satisfy any monetary obligation provided in anyLoan Document).

 

(e)                                  If an Event of Default shall have occurredand be continuing, Borrower hereby irrevocably authorizes Lender to make anyand all withdrawals from the Cash Management Account and transfers between anyReserve Account as Lender shall determine in Lender’s sole and absolutediscretion and Lender may use all funds contained in any such accounts for anypurpose, including but not limited to repayment of the Debt in such order,proportion and priority as Lender may determine in its sole and absolutediscretion. Lender’s right to withdraw and apply funds as stated herein shallbe in addition to all other rights and remedies provided to Lender under thisAgreement, the Note, the Mortgage and the other Loan Documents.

 

**Section 10.3****.**** ****Security****Interest**

 

(a)                                  To secure the fulland punctual payment of the Debt and performance of all obligations of Borrowernow or hereafter existing under this Agreement and the other Loan Documents,Borrower hereby grants to Lender a first-priority perfected security interestin each of the Accounts and the Account Collateral. Furthermore, Borrower shallnot, without obtaining the prior written consent of Lender, further pledge,assign or grant any security interest in any of the foregoing or permit anyLien to attach thereto or any levy to be made thereon or any UCC and/or PPSAFinancing Statements to be filed with respect thereto. Borrower will maintainthe security interest created by this Section 10.3(a) as a first priorityperfected security interest and will defend the right, title and interest ofLender in and to each of the Accounts and the Account Collateral against theclaims and demands of all Persons whomsoever.

 

(b)                                 Borrower authorizes Lender to file anyfinancing statement or statements required by Lender to establish or maintainthe validity, perfection and priority of the security interest granted hereinin connection with the Cash Management Account. Borrower agrees that at any timeand from time to time, at the expense of Borrower, Borrower will promptly andduly execute and deliver all further instruments and documents, and take allfurther action, that may be necessary or desirable, or that Lender mayreasonably request, in order to perfect and protect any security interestgranted or purported to be granted hereby (including, without limitation, any securityinterest in and to any Permitted Investments) or to enable Lender to exerciseand enforce its rights and remedies hereunder.

 

(c)                                  Upon the occurrence of an Event of Default,Lender may exercise any or all of its rights and remedies as a secured party,pledgee and lienholder with respect to the Accounts and the AccountCollateral.  Without limitation of theforegoing, upon any Event of Default, Lender may use the Accounts and theAccount Collateral for any of the following purposes: (A) repayment of theDebt, including, but not limited to, principal prepayments and the prepayment premiumapplicable to such full or partial prepayment (as applicable); (B)reimbursement of Lender for all losses, fees, costs and expenses (including,without limitation, reasonable legal fees) suffered or incurred by Lender as aresult of such Event of Default; (C) payment of any amount expended inexercising any or all rights and remedies available to Lender at law or in equityor under this Agreement or under any of the other Loan Documents; (D) paymentof any item as required or permitted under this Agreement; or (E) any otherpurpose permitted by applicable law; provided, however, that any suchapplication of funds shall not cure or be

 

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deemed to cure any Event of Default. Without limiting any otherprovisions hereof, each of the remedial actions described in the immediatelypreceding sentence shall be deemed to be a commercially reasonable exercise ofLender’s rights and remedies as a secured party with respect to the Accountsand the Account Collateral and shall not in any event be deemed to constitute asetoff or a foreclosure of a statutory banker’s lien. Nothing in this Agreementshall obligate Lender to apply all or any portion of the Accounts and theAccount Collateral to effect a cure of any Event of Default, or to pay theDebt, or in any specific order of priority. The exercise of any or all ofLender’s rights and remedies under this Agreement or under any of the otherLoan Documents shall not in any way prejudice or affect Lender’s right toinitiate and complete a foreclosure under the Mortgage.

 

**ARTICLE 11**

**EVENTS OFDEFAULT; REMEDIES**

 

**Section 11.1.**  **Event of Default**

 

The occurrence of any one or more of thefollowing events shall constitute an **“Event of Default”**:

 

(a)                                  ifany portion of the Debt is not paid on or prior to the tenth day following the datethe same is due or if the entire Debt is not paid on or before the MaturityDate;

 

(b)                                 exceptas otherwise expressly provided in the Loan Documents, if any of the Taxes orOther Charges are not paid when the same are due and payable, unless there is sufficientmoney in the Tax and Insurance Reserve Account for payment of amounts then due andpayable and Lender’s access to such money has not been constrained orrestricted in any manner;

 

(c)                                  shouldAmerican Express cease to be a self-insurer or if the rating of American expressissued by the Rating Agencies falls below the Trigger Rating, if (i) thePolicies are not kept in full force and effect, or (ii) the certificate of insuranceis not delivered to Lender in accordance with Section 8.1;

 

(d)                                 ifBorrower breaches any covenant with respect to itself contained in Article 6or any covenant contained in Article 7 hereof;

 

(e)                                  ifany representation or warranty of, or with respect to, Borrower or Borrower Principal,or any member, general partner, principal or beneficial owner of any of theforegoing, made herein, in any other Loan Document, or in any certificate,report, financial statement or other instrument or document furnished to Lenderat the time of the closing of the Loan or during the term of the Loan shallhave been false or misleading in any material respect when made;

 

(f)                                    if(i) Borrower, or any managing member or general partner of Borrower, BorrowerPrincipal, or American Express shall commence any case, proceeding or otheraction (A) under any Creditors Rights Laws, seeking to have an order for reliefentered with respect to it, or seeking to adjudicate it a bankrupt orinsolvent, or seeking reorganization, or (B) seeking appointment of a receiver,trustee, custodian, conservator or other similar official for it or for all orany substantial part of its assets, or Borrower, any managing member or generalpartner of

 

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Borrower,Borrower Principal, or American Express shall make a general assignment for thebenefit of its creditors; or (ii) there shall be commenced against Borrower,any managing member or general partner of Borrower, Borrower Principal, orAmerican Express any case, proceeding or other action of a nature referred toin clause (i) above which (A) results in the entry of an order for relief orany such adjudication or appointment or (B) remains undismissed, undischargedor unbonded for a period of sixty (60) days; or (iii) there shall be commencedagainst Borrower, any managing member or general partner of Borrower, BorrowerPrincipal, or American Express any case, proceeding or other action seekingissuance of a warrant of attachment, execution, distraint or similar processagainst all or any substantial part of its assets which results in the entry ofany order for any such relief which shall not have been vacated, discharged, orstayed or bonded pending appeal within sixty (60) days from the entry thereof;or (iv) Borrower, any managing member or general partner of Borrower, BorrowerPrincipal, or American Express shall take any action in furtherance of, orindicating its consent to, approval of, or acquiescence in, any of the acts setforth in clause (i), (ii), or (iii) above; or (v) Borrower, any managing memberor general partner of Borrower, Borrower Principal, or American Express shallgenerally not, or shall be unable to, or shall admit in writing its inabilityto, pay its debts as they become due;

 

(g)                                  if Borrower shall be in default beyondapplicable notice and grace periods under any other mortgage, deed of trust,deed to secure debt or other security agreement covering any part of theProperty, whether it be superior or junior in lien to the Mortgage;

 

(h)                                 if the Property becomes subject to anymechanic’s, materialman’s or other Lien other than a Lien for any Taxes orOther Charges not then due and payable and the Lien shall remain undischargedof record (by payment, bonding or otherwise) for a period of thirty (30) days;

 

(i)                                     if any federal income tax lien is filedagainst Borrower, any member or general partner of Borrower, BorrowerPrincipal, or the Property and same is not discharged of record (or bonded orinsured to Lender’s satisfaction) within thirty (30) days after same is filed;

 

(j)                                     if an uninsured judgment is filed against theBorrower in excess of $20,000 which is not vacated or discharged (or bonded orinsured to Lender’s satisfaction) within 30 days;

 

(k)                                  if any default occurs under any guaranty orindemnity executed in connection herewith and such default continues after theexpiration of applicable grace periods, if any;

 

(l)                                     if Borrower shall permit any event within itscontrol to occur that would cause any REA to terminate without notice or actionby any party thereto or would entitle any party to terminate any REA and theterm thereof by giving notice to Borrower; or any REA shall be surrendered,terminated or canceled for any reason or under any circumstance whatsoeverexcept as provided for in such REA; or any term of any REA shall be modified orsupplemented unless permitted by the American Express Lease; or Borrower shallfail, within ten (10) Business Days after demand by Lender, to exercise itsoption to renew or extend the term of any REA or shall fail or neglect topursue diligently all actions necessary to exercise such renewal rightspursuant to such REA except as provided for in such REA; or

 

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(m)                               if an American ExpressLease Default shall occur under the American Express Lease; or

 

(n)                                 if Borrower shallcontinue to be in default under any other term, covenant or condition of thisAgreement or any of the Loan Documents for more than ten (10) days after noticefrom Lender in the case of any default which can be cured by the payment of asum of money or for thirty (30) days after notice from Lender in the case ofany other default, provided that if such default cannot reasonably be curedwithin such thirty (30) day period and Borrower shall have commenced to curesuch default within such thirty (30) day period and thereafter diligently andexpeditiously proceeds to cure the same, such thirty (30) day period shall beextended for so long as it shall require Borrower in the exercise of duediligence to cure such default, it being agreed that no such extension shall befor a period in excess of one hundred twenty (120) days.

 

**Section 11.2.  Remedies**

 

(a)                                  Uponthe occurrence of an Event of Default (other than an Event of Default describedin Section 11.1(f) above) and at any time thereafter Lender may, inaddition to any other rights or remedies available to it pursuant to thisAgreement and the other Loan Documents or at law or in equity, take suchaction, without notice or demand, that Lender deems advisable to protect andenforce its rights against Borrower and in the Property, including, withoutlimitation, declaring the Debt to be immediately due and payable, and Lendermay enforce or avail itself of any or all rights or remedies provided in theLoan Documents against Borrower and the Property, including, withoutlimitation, all rights or remedies available at law or in equity; and upon any Eventof Default described in Section 11.1(f) above, the Debt and all otherobligations of Borrower hereunder and under the other Loan Documents shallimmediately and automatically become due and payable, without notice or demand,and Borrower hereby expressly waives any such notice or demand, anythingcontained herein or in any other Loan Document to the contrary notwithstanding.

 

(b)                                 Uponthe occurrence of an Event of Default, all or any one or more of the rights, powers,privileges and other remedies available to Lender against Borrower under this Agreementor any of the other Loan Documents executed and delivered by, or applicable to,Borrower or at law or in equity may be exercised by Lender at any time and fromtime to time, whether or not all or any of the Debt shall be declared due andpayable, and whether or not Lender shall have commenced any foreclosureproceeding or other action for the enforcement of its rights and remedies underany of the Loan Documents with respect to the Property. Any such actions takenby Lender shall be cumulative and concurrent and may be pursued independently, singularly,successively, together or otherwise, at such time and in such order as Lendermay determine in its sole discretion, to the fullest extent permitted by law,without impairing or otherwise affecting the other rights and remedies ofLender permitted by law, equity or contract or as set forth herein or in theother Loan Documents.

 

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**ART1CLE 12**

**ENVIRONMENTALPROVISIONS**

 

**Section 12.1.**** Environmental Representationsand Warranties**

 

Borrower represents and warrants, except asdisclosed in an Environmental Report of the Property and information thatBorrower knows that: (a) there are no Hazardous Materials or undergroundstorage tanks in, on, or under the Property, except those that are both (i) incompliance with Environmental Laws and with permits issued pursuant thereto (ifsuch permits are required), if any, and (ii) either (A) in the case ofHazardous Materials, in amounts not in excess of that necessary to operate theProperty for the purposes set forth herein or (B) fully disclosed to andapproved by Lender in writing pursuant to an Environmental Report; (b) thereare no past, present or threatened Releases of Hazardous Materials in violationof any Environmental Law or which would require remediation by a GovernmentalAuthority in, on, under or from the Property except as described in theEnvironmental Report; (c) there is no threat of any Release of HazardousMaterials migrating to the Property except as described in the EnvironmentalReport; (d) there is no past or present non-compliance with Environmental Laws,or with permits issued pursuant thereto, in connection with the Property exceptas described in the Environmental Report; (e) Borrower does not know of, andhas not received, any written or oral notice or other communication from anyPerson relating to Hazardous Materials in, on, under or from the Property; (f)the Property is free of Mold; and (g) Borrower has truthfully and fullyprovided to Lender, in writing, any and all information relating toenvironmental conditions in, on, under or from the Property known to Borroweror contained in Borrower’s files and records, including but not limited to anyreports relating to Hazardous Materials in, on, under or migrating to or fromthe Property and/or to the environmental condition of or the presence of Moldat the Property.

 

**Section 12.2.**** EnvironmentalCovenants**

 

Borrower covenants and agrees that so long asBorrower owns, manages and is in possession of the operation of the Property:(a) all uses and operations on or of the Property, whether by Borrower or anyother Person, shall be in compliance with all Environmental Laws and permitsissued pursuant thereto; (b) there shall be no Releases of Hazardous Materialsin, on, under or from the Property; (c) there shall be no Hazardous Materialsin, on, or under the Property, except those that are both (i) in compliancewith all Environmental Laws and with permits issued pursuant thereto, if and tothe extent required, and (ii) (A) in amounts not in excess of that necessary tooperate the Property for the purposes set forth herein or (B) fully disclosedto and approved by Lender in writing or (C) with respect to Mold, not in acondition, location, or of a type which may pose a risk to human health or safetyor the environment or which may result in damage to or would adversely affector impair the value or marketability of the Property; (d) Borrower shall keepthe Property free and clear of all Environmental Liens; (e) Borrower shall, atits sole cost and expense, fully and expeditiously cooperate in all activitiespursuant to Section 12.4 below, including but not limited to providing allrelevant information and making knowledgeable persons available for interviews;(f) Borrower shall, at its sole cost and expense, perform any environmentalsite assessment or other investigation of environmental conditions inconnection with the Property, pursuant to any reasonable written request ofLender, upon Lender’s reasonable belief that the Property is not in fullcompliance with all Environmental Laws, and share with Lender the reports andother results thereof, and Lender and other Indemnified Parties shall beentitled to rely on such reports and other results thereof; (g) Borrower shallkeep the Property free of Mold; and (h) Borrower shall, at its sole cost andexpense, comply with all reasonable written requests of Lender to (i)reasonably effectuate remediation of any Hazardous Materials in, on, under orfrom the Property; and (ii) comply with

 

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anyEnvironmental Law; (i) Borrower shall not allow any tenant or other user of theProperty to violate any Environmental Law; and (j) Borrower shall immediatelynotify Lender in writing after it has become aware of (A) any presence orRelease or threatened Release of Hazardous Materials in, on, under, from ormigrating towards the Property; (B) any non-compliance with any EnvironmentalLaws related in any way to the Property; (C) any actual or potentialEnvironmental Lien against the Property; (D) any required or proposedremediation of environmental conditions relating to the Property; and (E) anywritten or oral notice or other communication of which Borrower becomes awarefrom any source whatsoever (including but not limited to a GovernmentalAuthority) relating in any way to Hazardous Materials. Any failure of Borrowerto perform its obligations pursuant to this Section 12.2 shall constitutebad faith waste with respect to the Property.

 

**Section 12.3.**** Lender’s Rights**

 

Lender and any other Person designated by Lender,including but not limited to any representative of a Governmental Authority,and any environmental consultant, and any receiver appointed by any court ofcompetent jurisdiction, shall have the right, but not the obligation, to enterupon the Property at all reasonable times to assess any and all aspects of theenvironmental condition of the Property and its use, including but not limitedto conducting any environmental assessment or audit (the scope of which shallbe determined in Lender’s sole discretion) and taking samples of soil,groundwater or other water, air, or building materials, and conducting otherinvasive testing. Borrower shall cooperate with and provide access to Lenderand any such person or entity designated by Lender.

 

**Section 12.4****.**** Operations and Maintenance Programs**

 

If recommended by the Environmental Report or anyother environmental assessment or audit of the Property, Borrower shallestablish and comply with an operations and maintenance program with respect tothe Property, in form and substance reasonably acceptable to Lender, preparedby an environmental consultant reasonably acceptable to Lender, which programshall address any asbestos-containing material or lead based paint that may nowor in the future be detected at or on the Property. Without limiting thegenerality of the preceding sentence, Lender may require (a) periodic noticesor reports to Lender in form, substance and at such intervals as Lender mayspecify, (b) an amendment to such operations and maintenance program to addresschanging circumstances, laws or other matters, (c) at Borrower’s sole expense,supplemental examination of the Property by consultants specified by Lender,(d) access to the Property by Lender, its agents or servicer, to review andassess the environmental condition of the Property and Borrower’s compliancewith any operations and maintenance program, and (e) variation of theoperations and maintenance program in response to the reports provided by anysuch consultants.

 

**Section 12.5.****  EnvironmentalDefinitions**

 

**“Environmental Law”** means any present and future federal, state, provincial, municipal,regional and local laws, statutes, ordinances, rules, regulations, standards,policies, codes, guidelines and other government directives or requirements, aswell as common law, including but not limited to the Environmental ProtectionAct (Ontario) and the Water Resources

 

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Act(Ontario), that apply to Borrower or the Property and relate to HazardousMaterials or protection of human health or the environment. **“Environmental Liens”**means all Liens andother encumbrances imposed pursuant to any Environmental Law, whether due toany act or omission of Borrower or any other Person. **“Environmental Report”**means the written reports resultingfrom the environmental site assessments of the Property delivered to Lender inconnection with the Loan. **“HazardousMaterials”**shall mean petroleum and petroleum products and compoundscontaining them, including gasoline, diesel fuel and oil; explosives, flammablematerials; radioactive materials; polychlorinated biphenyls and compoundscontaining them; lead and lead-based paint; asbestos or asbestos-containingmaterials in any form that is or could become friable; underground orabove-ground storage tanks, whether empty or containing any substance; anysubstance the presence of which on the Property is prohibited by any federal,state or local authority; any substance that requires special handling; and anyother material or substance now or in the future defined as a “hazardoussubstance,” “hazardous material”, “hazardous waste”, “toxic substance”, “toxicpollutant”, “contaminant”, or “pollutant” within the meaning of any EnvironmentalLaw. **“Mold”**shall mean any mold,fungi, bacterial or microbial matter present at or in the Property, including,without limitation, building materials which is in a condition, location or atype which may pose a risk to human health or safety or the environment, mayresult in damage to or would adversely affect or impair the value ormarketability of the Property. **“Release”**ofany Hazardous Materials includes but is not limited to any release, deposit,discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping,pouring, emptying, escaping, dumping, disposing or other movement of HazardousMaterials.

 

**ARTICLE 13**

**SECONDARYMARKET**

 

**Section 13.1.**** Transfer ofLoan**

 

Lender may, at any time, sell, transfer or assignthe Loan Documents, or grant participations therein (**“Participations”**) orsyndicate the Loan (**“Syndication”**) or issue mortgagepass-through certificates or other securities evidencing a beneficial interestin a rated or unrated public offering or private placement (**“Securities”**)(a Syndication or the issuance of Participations and/or Securities, a **“Securitization”**).

 

**Section 13.2.**** Delegationof Servicing**

 

At the option of Lender, the Loan may be serviced bya servicer/trustee selected by Lender and Lender may delegate all or anyportion of its responsibilities under this Agreement and the other LoanDocuments to such servicer/trustee pursuant to a servicing agreement betweenLender and such servicer/trustee.

 

**Section 13.3.**** Disseminationof Information**

 

Lender may forward to each purchaser, transferee,assignee, or servicer of, and each participant, or investor in, the Loan, orany Participations and/or Securities or any of their respective successors(collectively, the **“Investor”**) or any Rating Agency rating theLoan, or any Participations and/or Securities, each prospective Investor, andany organization maintaining

 

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databaseson the underwriting and performance of commercial mortgage loans, all documentsand information which Lender now has or may hereafter acquire relating to theDebt and to Borrower, any managing member or general partner thereof, BorrowerPrincipal, and the Property, including financial statements, whether furnishedby Borrower or otherwise, as Lender determines necessary or desirable. Borrowerirrevocably waives any and all rights it may have under applicable LegalRequirements to prohibit such disclosure, including but not limited to anyright of privacy.

 

**Section 13.4.**** Cooperation**

 

Borrower and Borrower Principal agree to cooperatewith Lender in connection with any sale or transfer of the Loan or anyParticipation and/or Securities created pursuant to this Article 13,including, without limitation, (a) the delivery of an estoppel certificaterequired in accordance with Section 5.13 and such other documents as maybe reasonably requested by Lender, (b) the execution of such amendments to theLoan Documents as may be requested by the holder of the Note or the RatingAgencies or otherwise to effect the Securitization including, withoutlimitation, bifurcation of the Loan into two or more components and/or separatenotes; provided, however, that Borrower shall not be required to modify oramend any Loan Document if such modification or amendment would (i) change theinterest rate, the stated maturity or the amortization of principal set forthin the Note, except in connection with a bifurcation of the Loan which mayresult in varying fixed interest rates and amortization schedules, but whichshall have the same initial weighted average coupon of the original Note, or(ii) in the reasonable judgment of Borrower, modify or amend any other materialeconomic term of the Loan, or (iii) in the reasonable judgment of Borrower,materially increase Borrower’s obligations and liabilities under the LoanDocuments, and (c) make changes to the organizational documents of Borrower andits principals and/or use its best efforts to cause changes to the legalopinions delivered by Borrower in connection with the Loan, provided, that suchchanges shall not result in a material adverse economic effect to Borrower.Borrower shall also furnish and Borrower and Borrower Principal consent toLender furnishing to such Investors or such prospective Investors or suchRating Agency any and all information concerning the Property, the AmericanExpress Lease, the financial condition of Borrower or Borrower Principal as maybe requested by Lender, any Investor, any prospective Investor or any RatingAgency in connection with any sale or transfer of the Loan or anyParticipations or Securities. Neither Borrower nor Borrower Principal shall beresponsible for any costs incurred by Lender in connection with aSecuritization.

 

**ARTICLE 14**

**INDEMNIFICATIONS**

 

**Section 14.1.**** General Indemnification**

 

Borrower shall indemnify, defend and hold harmlessthe Indemnified Parties from and against any and all Losses imposed upon orincurred by or asserted against any Indemnified Parties and directly orindirectly arising out of or in any way relating to any one or more of thefollowing: (a) any accident, injury to or death of persons or loss of or damageto property occurring in, on or about the Property or any part thereof or onthe adjoining sidewalks, curbs, adjacent property or adjacent parking areas,streets or ways; (b) any use, nonuse or condition in, on or about the Propertyor any part thereof or on the adjoining sidewalks, curbs, adjacent

 

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property or adjacent parking areas, streets or ways; (c) performance ofany labor or services or the furnishing of any materials or other property inrespect of the Property or any part thereof; (d) any failure of the Property tobe in compliance with any applicable Legal Requirements; (e) any and all claimsand demands whatsoever which may be asserted against Lender by reason of anyalleged obligations or undertakings on its part to perform or discharge any ofthe terms, covenants, or agreements contained in any Lease; (f) the holding orinvesting of the Reserve Accounts, or (g) the payment of any commission, chargeor brokerage fee to anyone which may be payable in connection with the fundingof the Loan (collectively, the **“Indemnified Liabilities”**);provided, however, that Borrower shall not have any obligation to Lender hereunderto the extent that such Indemnified Liabilities arise from the grossnegligence, illegal acts, fraud or willful misconduct of Lender.  To the extent that the undertaking toindemnify, defend and hold harmless set forth in the preceding sentence may beunenforceable because it violates any law or public policy, Borrower shall paythe maximum portion that it is permitted to pay and satisfy under applicablelaw to the payment and satisfaction of all indemnified Liabilities incurred byLender.

 

**Section 14.2.**** Mortgage and Intangible Tax Indemnification**

 

Borrower shall, at its sole cost and expense,protect, defend, indemnify, release and hold harmless the Indemnified Partiesfrom and against any and all Losses imposed upon or incurred by or assertedagainst any Indemnified Parties and directly or indirectly arising out of or inany way relating to any tax on the making and/or recording of the Mortgage, theNote or any of the other Loan Documents, but excluding any income, franchise orother similar taxes.

 

**Section 14.3.**** ERISA Indemnification**

 

To the extent applicable, Borrower shall, atits sole cost and expense, protect, defend, indemnify, release and holdharmless the Indemnified Parties from and against any and all Losses(including, without limitation, reasonable attorneys’ fees and costs incurredin the investigation, defense, and settlement of Losses incurred in correctingany prohibited transaction or in the sale of a prohibited loan, and inobtaining any individual prohibited transaction exemption under ERISA that maybe required, in Lender’s sole discretion) that Lender may incur, directly orindirectly, as a result of a default under Section 4.9 or Section 5.19of this Agreement.

 

**Section 14.4.****** **Survival**

 

The obligations and liabilities of Borrowerand Borrower Principal under this Article 14 shall fully surviveindefinitely notwithstanding any termination, satisfaction, assignment, entryof a judgment of foreclosure, exercise of any power of sale, or delivery of adeed in lieu of foreclosure of the Mortgage.

 

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**ARTICLE 15**

**EXCULPATION**

 

**Section 15.1.****** **Exculpation**

 

(a)                                  Except as otherwise provided herein or in theother Loan Documents, Lender shall not enforce the liability and obligation ofBorrower or Borrower Principal, as applicable, to perform and observe theobligations contained herein or in the other Loan Documents by any action orproceeding wherein a money judgment shall be sought against Borrower orBorrower Principal, except that Lender may bring a foreclosure action, actionfor specific performance or other appropriate action or proceeding to enableLender to enforce and realize upon this Agreement, the Note, the Mortgage andthe other Loan Documents, and the interest in the Property, the Rents(following an Event of Default) and any other collateral given to Lender createdby this Agreement, the Note, the Mortgage and the other Loan Documents;provided, however, that any judgment in any such action or proceeding shall beenforceable against Borrower or Borrower Principal, as applicable, only to theextent of Borrower’s or Borrower Principal’s interest in the Property, in theRents and in any other collateral given to Lender. Lender, by accepting thisAgreement, the Note, the Mortgage and the other Loan Documents, agrees that itshall not, except as otherwise provided in this Section 15.1, sue for,seek or demand any deficiency judgment against Borrower or Borrower Principalin any such action or proceeding, under or by reason of or under or inconnection with this Agreement, the Note, the Mortgage or the other LoanDocuments. The provisions of this Section 15.1 shall not, however, (i)constitute a waiver, release or impairment of any obligation evidenced orsecured by this Agreement, the Note, the Mortgage or the other Loan Documents;(ii) impair the right of Lender to name Borrower or Borrower Principal as aparty defendant in any action or suit for judicial foreclosure and sale underthis Agreement and the Mortgage; (iii) affect the validity or enforceability ofany indemnity (including, without limitation, those contained in Section 12.6and Article 14 of this Agreement), environmental indemnity, guaranty,master lease or similar instrument made in connection with this Agreement, theNote, the Mortgage and the other Loan Documents; (iv) impair the right ofLender to obtain the appointment of a receiver; (v) impair the enforcement ofthe assignment of leases provisions contained in the Mortgage; or (vi) impairthe right of Lender to obtain a deficiency judgment or other judgment on theNote against Borrower or Borrower Principal if necessary to obtain anyInsurance Proceeds or Awards to which Lender would otherwise be entitled underthis Agreement; provided however, Lender shall only enforce such judgment tothe extent of the Insurance Proceeds and/or Awards.

 

(b)                                 Notwithstanding the provisions of this Section 15.1to the contrary, Borrower and Borrower Principal shall be personally liable toLender on a joint and several basis for Losses due to:

 

(i)                                     fraud or intentional misrepresentation byBorrower, Borrower Principal or any other Affiliate of Borrower or BorrowerPrincipal in connection with the execution and the delivery of this Agreement,the Note, the Mortgage, any of the other Loan Documents, or any certificate,report, financial statement or other instrument or document furnished to Lenderat the time of the closing of the Loan or during the term of the Loan;

 

(ii)                                  Borrower’s misapplication or misappropriationof Rents received by Borrower after the occurrence of an Event of Default;

 

(iii)                               Borrower’s misapplication or misappropriationof tenant security deposits or Rents collected in advance;

 

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(iv)                              the misapplication or the misappropriation ofInsurance Proceeds or Awards;

 

(v)                                 Borrower’s failure to pay Taxes, OtherCharges (except to the extent that sums sufficient to pay such amounts havebeen deposited in escrow with Lender pursuant to the terms hereof and thereexists no impediment to Lender’s utilization thereof), charges for labor ormaterials or other charges that can create liens on the Property beyond anyapplicable notice and cure periods specified herein;

 

(vi)                              Borrower’s failure to return or to reimburseLender for all Personal Property taken from the Property by or on behalf ofBorrower and not replaced with Personal Property of the same utility and of thesame or greater value;

 

(vii)                           any act of actual waste or arson by Borrower,any principal, Affiliate, member or general partner thereof or by BorrowerPrincipal, any principal, Affiliate, member or general partner thereof;

 

(viii)                        Borrower’s failure following any Event ofDefault to deliver to Lender upon demand all Rents and books and recordsrelating to the Property; or

 

(ix)                                following an Event of Default, thewithholding from Rents by American Express of non-resident withholding taxesrequired under Part XIII of the Income Tax Act (Canada), as same may beamended, supplemented, superseded or replaced or as required by any rules orregulations promulgated by Canadian governmental authorities havingjurisdiction.

 

(c)                                  Notwithstanding the foregoing, the agreementof Lender not to pursue recourse liability as set forth in subsection (a)above SHALL BECOME NULL AND VOID and shall be of no further force and effectand the Debt shall be fully recourse to Borrower and Borrower Principal on ajoint and several basis in the event (i) of a breach by Borrower or BorrowerPrincipal of any of the covenants set forth in Article 6 hereof, to theextent that such breach is (A) material and (B) is not cured within fifteen(15) days of the earlier to occur of notice from Lender or Borrower’s knowledgeof such breach, (ii) of a breach of any of the covenants set forth in Article 7hereof, (iii) the Property or any part thereof shall become an asset in avoluntary bankruptcy or insolvency proceeding of Borrower, (iv) Borrower,Borrower Principal or any Affiliate, officer, director, or representative whichcontrols, directly or indirectly, Borrower or Borrower Principal files, orjoins in the filing of, an involuntary petition against Borrower under anyCreditors Rights Laws, or solicits or causes to be solicited petitioningcreditors for any involuntary petition against Borrower from any Person; (v)Borrower tiles an answer consenting to or otherwise acquiescing in or joiningin any involuntary petition filed against it, by any other Person under anyCreditors Rights Laws, or solicits or causes to be solicited petitioningcreditors for any involuntary petition from any Person; or (vi) any Affiliate,officer, director, or representative which controls Borrower consents to oracquiesces in or joins in an application for the appointment of a custodian,receiver, trustee, or examiner for Borrower or any portion of the Property.

 

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(d)                                 Nothing herein shall be deemed to be a waiverof any right which Lender may have under Section 506(a), 506(b), 1111(b)or any other provision of the U.S. Bankruptcy Code, to the extent applicable,to file a claim for the full amount of the indebtedness secured by the Mortgageor to require that all collateral shall continue to secure all of theindebtedness owing to Lender in accordance with this Agreement, the Note, the Mortgageor the other Loan Documents.

 

**ARTICLE 16**

**NOTICES**

 

**Section 16.1.**** ****Notices**

 

All notices, consents, approvals and requestsrequired or permitted hereunder or under any other Loan Document shall be givenin writing and shall be effective for all purposes if hand delivered or sent by(a) certified or registered United States mail, postage prepaid, return receiptrequested, (b) expedited prepaid overnight delivery service, either commercialor United States Postal Service, with proof of attempted delivery, or by (c)telecopier (with answer back acknowledged provided an additional notice isgiven pursuant to subsection (b) above), addressed as follows (or at suchother address and Person as shall be designated from time to time by any partyhereto, as the case may be, in a written notice to the other parties hereto inthe manner provided for in this Section):

 
| If to Lender:             | Bank of America, N.A.                         |
|---------------------------|-----------------------------------------------|
|                      | Capital Markets Servicing  Group              |
|                      | 900 West Trade Street, Suite 650              |
|                      | NC1-026-06-01                                 |
|                      | Charlotte, North Carolina 28255               |
|                      | Attn: Servicing Manager                       |
|                      | Telephone No: (866) 531-0957                  |
|                      |                                          |
| If to Borrower:           | Inland Western Markham Corp.                  |
|                      | c/o Inland Real Estate Investment Corporation |
|                      | 2901 Butterfield Road                         |
|                      | Oak Brook, Illinois 60523                     |
|                      | Attention: Roberta Matlin, Vice President     |
|                      | Facsimile No.: 630-218-4965                   |
|                      |                                          |
| With a copy to:           | The Inland Real Estate Group, Inc.            |
|                      | 2901 Butterfield Road                         |
|                      | Oak Brook, Illinois 60523                     |
|                      | Attention: General Counsel                    |
|                      | Facsimile No.: 630-218-4900                   |
|                      |                                          |
| If to Borrower Principal: | Inland Western Retail Real Estate Trust, Inc. |
|                      | 2901 Butterfield Road                         |
|                      | Oak Brook, Illinois 60523                     |
|                      | Roberta Matlin, Vice President                |
|                      | Facsimile No.: 630-218-4965                   |

 

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| With a copy to: | The Inland Real Estate Group, Inc. |
|-----------------|------------------------------------|
|            | 2901 Butterfield Road              |
|            | Oak Brook, Illinois 60523          |
|            | Attention: General Counsel         |
|            | Facsimile No.: 630-218-4900        |

 

Anotice shall be deemed to have been given: in the case of hand delivery, at thetime of delivery; in the case of registered or certified mail, when deliveredor the first attempted delivery on a Business Day; or in the case of expeditedprepaid delivery and telecopy, upon the first attempted delivery on a BusinessDay.

 

**ARTICLE 17**

**FURTHER ASSURANCES**

 

**Section 17.1.**** Replacement Documents**

 

Upon receipt of an affidavit of an**officer of Lender as to the loss, theft,destruction or mutilation of the Note or any other Loan Document which is notof public record and, in the case of such mutilation upon surrender andcancellation of such Note or other Loan Document, Borrower will issue in lieuthereof a replacement Note or other Loan Document, dated the date of such lost,stolen, destroyed or mutilated Note or other Loan Document in the sameprincipal amount thereof and otherwise of like tenor.

 

**Section 17.2.**** Recordingof Mortgage, etc.**

 

Borrower forthwith upon the execution and deliveryof the Mortgage and thereafter, from time to time, will cause the Mortgage andany of the other Loan Documents creating a lien or security interest orevidencing the lien hereof upon the Property and each instrument of furtherassurance to be filed, registered or recorded in such manner and in such placesas may be required by any present or future law in order to publish notice ofand fully to protect and perfect the lien or security interest hereof upon, andthe interest of Lender in, the Property. Borrower will pay all taxes, filing,registration or recording fees, and all expenses incident to the preparation,execution, acknowledgment and/or recording of the Note, the Mortgage, the otherLoan Documents, any note, deed of trust or mortgage supplemental hereto, anysecurity instrument with respect to the Property and any instrument of furtherassurance, and any modification or amendment of the foregoing documents, andall federal, state, provincial, county and municipal taxes, duties, imposts,assessments and charges arising out of or in connection with the execution anddelivery of the Mortgage, any deed of trust or mortgage supplemental hereto,any security instrument with respect to the Property or any instrument offurther assurance, and any modification or amendment of the foregoingdocuments, except where prohibited by law so to do.

 

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**Section 17.3.**** ****Further Acts, Etc.**

 

Borrower will, at the cost of Borrower (except withrespect to costs incurred by Lender, for which Lender shall be responsible),do, execute, acknowledge and deliver all and every further acts, deeds,conveyances, deeds of trust, mortgages, assignments, security agreements, controlagreements, notices of assignments, transfers and assurances as Lender shall,from time to time, reasonably require, for the better assuring, conveying,assigning, transferring, and confirming unto Lender the property and rightshereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed,pledged, assigned, warranted and transferred or intended now or hereafter so tobe, or which Borrower may be or may hereafter become bound to convey or assignto Lender, or for carrying out the intention or facilitating the performance ofthe terms of this Agreement or for filing, registering or recording theMortgage, or for complying with all Legal Requirements. Borrower, on demand,will execute and deliver, and in the event it shall fail to so execute anddeliver, hereby authorizes Lender to execute in the name of Borrower or withoutthe signature of Borrower to the extent Lender may lawfully do so, one or morefinancing statements and financing statement amendments to evidence moreeffectively, perfect and maintain the priority of the security interest ofLender in the Property. Borrower grants to Lender an irrevocable power ofattorney coupled with an interest for the purpose of exercising and perfectingany and all rights and remedies available to Lender at law and in equity,including without limitation, such rights and remedies available to Lenderpursuant to this Section 17.3.

 

**Section 17.4.**** Changes in Tax, Debt, Creditand Documentary Stamp Laws**

 

(a)                                  If any law is enacted or adopted or amendedafter the date of this Agreement which deducts the Debt from the value of theProperty for the purpose of taxation or which imposes a tax, either directly orindirectly, on the Debt or Lender’s interest in the Property, Borrower will paythe tax, with interest and penalties thereon, if any.  If Lender is advised by counsel chosen by itthat the payment of tax by Borrower would be unlawful or taxable to Lender orunenforceable or provide the basis for a defense of usury then Lender shallhave the option by written notice of not less than one hundred eighty (80) daysto declare the Debt immediately due and payable.

 

(b)                                 Borrower will not claim or demand or beentitled to any credit or credits on account of the Debt for any part of theTaxes or Other Charges assessed against the Property, or any part thereof, andno deduction shall otherwise be made or claimed from the assessed value of theProperty, or any part thereof, for real estate tax purposes by reason of theMortgage or the Debt. If such claim, credit, or deduction shall be required bylaw, Lender shall have the option, by written notice of not less than onehundred eighty (80) days, to declare the Debt immediately due and payable.

 

If at any time the United States of America, anyState thereof or any subdivision of any such State or Canada, any Provincethereof or any subdivision of such Province, shall require revenue or otherstamps to be affixed to the Note, the Mortgage, or any of the other LoanDocuments or impose any other tax or charge on the same, Borrower will pay forthe same, with interest and penalties thereon, if any.

 

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**Section 17.5.**** ****Expenses**

 

Borrower covenants and agrees to pay or, if Borrowerfails to pay, to reimburse, Lender upon receipt of written notice from Lenderfor all reasonable costs and expenses (including reasonable, actual attorneys’fees and disbursements and the allocated coats of internal legal services andall actual disbursements of internal counsel) reasonably incurred by Lender inaccordance with this Agreement in connection with (a) the preparation,negotiation, execution and delivery of this Agreement and the other LoanDocuments and the consummation of the transactions contemplated hereby andthereby and all the costs of furnishing all opinions by counsel for Borrower(including without limitation any opinions requested by Lender as to any legalmatters arising under this Agreement or the other Loan Documents with respectto the Property); (b) Borrower’s ongoing performance of and compliance withBorrower’s respective agreements and covenants contained in this Agreement andthe other Loan Documents on its part to be performed or complied with after theClosing Date, including, without limitation, confirming compliance withenvironmental and insurance requirements; (c) following a request by Borrower,Lender’s ongoing performance and compliance with all agreements and conditionscontained in this Agreement and the other Loan Documents on its part to beperformed or complied with after the Closing Date; (d) the negotiation,preparation, execution, delivery and administration of any consents,amendments, waivers or other modifications to this Agreement and the other LoanDocuments and any other documents or matters requested by Lender; (e) securingBorrower’s compliance with any requests made pursuant to the provisions of thisAgreement; (f) the filing and recording fees and expenses, title insurance andreasonable fees and expenses of counsel for providing to Lender all requiredlegal opinions, and other similar expenses incurred in creating and perfectingthe Lien in favor of Lender pursuant to this Agreement and the other LoanDocuments; (g) enforcing or preserving any rights, in response to third partyclaims or the prosecuting or defending of any action or proceeding or otherlitigation, in each case against, under or affecting Borrower, this Agreement,the other Loan Documents, the Property, or any other security given for theLoan; and (h) enforcing any obligations of or collecting any payments due fromBorrower under this Agreement, the other Loan Documents or with respect to theProperty or in connection with any refinancing or restructuring of the creditarrangements provided under this Agreement in the nature of a “work-out” or**of any insolvency or bankruptcyproceedings; provided, however, that Borrower shall not be liable for thepayment of any such costs and expenses to the extent the same arise by reasonof the gross negligence, illegal acts, fraud or willful misconduct of Lender.

 

**ARTICLE 18**

**WAIVERS**

 

**Section 18.1.**** Remedies Cumulative; Waivers**

 

The rights, powers and remedies of Lender under thisAgreement shall be cumulative and not exclusive of any other right, power orremedy which Lender may have against Borrower or Borrower Principal pursuant tothis Agreement or the other Loan Documents, or existing at law or in equity or otherwise. Lender’s rights,powers and remedies may be pursued singularly, concurrently or otherwise, atsuch time and in such order as Lender may determine in Lender’s solediscretion. No delay or omission to exercise any remedy, right or poweraccruing upon an Event of Default shall impair any such remedy, right or poweror shall be construed as a waiver

 

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thereof, but any such remedy, right or power may be exercised from timeto time and as often as may be deemed expedient. A waiver of one Default orEvent of Default with respect to Borrower shall not be construed to be a waiverof any subsequent Default or Event of Default by Borrower or to impair anyremedy, right or power consequent thereon.

 

**Section 18.2.**** Modification, Waiver in Writing**

 

No modification, amendment, extension,discharge, termination or waiver of any provision of this Agreement, or of theNote, or of any other Loan Document, nor consent to any departure by Borrowertherefrom, shall in any event be effective unless the same shall be in awriting signed by the party against whom enforcement is sought, and then suchwaiver or consent shall be effective only in the specific instance, and for thepurpose, for which given. Except as otherwise expressly provided herein, nonotice to, or demand on Borrower, shall entitle Borrower to any other or futurenotice or demand in the same, similar or other circumstances.

 

**Section 18.3.**** Delay Not a Waiver**

 

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

 

**Section 18.4.**** Trial by Jury**

 

**BORROWER, BORROWER PRINCIPAL AND LENDER EACHHEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BYJURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCHRIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANYCLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THISWAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BYBORROWER, BORROWER PRINCIPAL AND LENDER, AND IS INTENDED TO ENCOMPASSINDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BYJURY WOULD OTHERWISE ACCRUE. EACH OF LENDER, BORROWER PRINCIPAL AND BORROWER ISHEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING ASCONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER, BORROWER PRINCIPAL AND LENDER.**

 

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**Section 18.5.**** ****Waiver of Notice**

 

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

 

**Section 18.6.**** ****Remedies of Borrower**

 

In the event that a claim or adjudication is madethat Lender or its agents have acted unreasonably or unreasonably delayedacting in any case where by law or under this Agreement or the other LoanDocuments, Lender or such agent, as the case may be, has an obligation to actreasonably or promptly, Borrower agrees that neither Lender nor its agentsshall be liable for any monetary damages, and Borrower’s sole remedies shall belimited to commencing an action seeking injunctive relief or declaratoryjudgment. The parties hereto agree that any action or proceeding to determinewhether Lender has acted reasonably shall be determined by an action seekingdeclaratory judgment. Lender agrees that, in such event, it shall cooperate inexpediting any action seeking injunctive relief or declaratory judgment.

 

**Section 18.7.**** Waiver of Marshalling of Assets**

 

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

 

**Section 18.8.**** Waiver of Statute of Limitations**

 

Borrower hereby expressly waives and releases, tothe fullest extent permitted by law, the pleading of any statute of limitationsas a defense to payment of the Debt or performance of its Other Obligations.

 

**Section 18.9.**** Waiver of Counterclaim**

 

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

 

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**ARTICLE 19**

**GOVERNING LAW**

 

**Section 19.1.**** Choice ofLaw**

 

This Agreement shall be deemed to be a contractentered into pursuant to the laws of the State and shall in all respects begoverned, construed, applied and enforced in accordance with the laws of theState of New York and applicable laws of the United States of America,provided, however, that the Mortgage, General Assignment of Rents and SpecificAssignment of Lease shall be governed, construed, applied and enforced inaccordance with the laws of the Province in which the real and personalproperty secured thereby is located and provided that with respect to thesecurity interest in each of the Reserve Accounts, and the Cash ManagementAccount, the laws of the state where each such account is located shall apply.

 

**Section 19.2.**** Severability**

 

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

 

**Section 19.3.**** Preferences**

 

Lender shall have the continuing and exclusive rightto apply or reverse and reapply any and all payments by Borrower to any portionof the obligations of Borrower hereunder. To the extent Borrower makes apayment or payments to Lender, which payment or proceeds or any part thereofare subsequently invalidated, declared to be fraudulent or preferential, setaside or required to be repaid to a trustee, receiver or any other party underany Creditors Rights Laws, state or federal law, common law or equitable cause,then, to the extent of such payment or proceeds received, the obligationshereunder or part thereof intended to be satisfied shall be revived andcontinue in full force and effect, as if such payment or proceeds had not beenreceived by Lender.

 

**ARTICLE 20**

**MISCELLANEOUS**

 

**Section 20.1.**** Survival**

 

This Agreement and all covenants, agreements,representations and warranties made herein and in the certificates deliveredpursuant hereto shall survive the making by Lender of the Loan and theexecution and delivery to Lender of the Note, and shall continue in full forceand effect so long as all or any of the Debt is outstanding and unpaid unless alonger period is expressly set forth herein or in the other Loan Documents.Whenever in this Agreement any of the parties hereto is referred to, suchreference shall be deemed to include the legal representatives, successors andassigns of such party. All covenants, promises and agreements in thisAgreement, by or on behalf of Borrower, shall inure to the benefit of the legalrepresentatives, successors and assigns of Lender.

 

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**Section 20.2.**** Lender’s Discretion**

 

Whenever pursuant to this Agreement, Lenderexercises any right giver to it to approve or disapprove, or any arrangement orterm is to be satisfactory to Lender, the decision of Lender to approve ordisapprove or to decide whether arrangements or terms are satisfactory or notsatisfactory shall (except as is otherwise specifically herein provided) be inthe sole discretion of Lender and shall be final and conclusive.

 

**Section 20.3.**** Headings**

 

The Article and/or Section headings andthe Table of Contents in this Agreement are included herein for convenience ofreference only and shall not constitute a part of this Agreement for any otherpurpose.

 

**Section 20.4.**** Cost of Enforcement**

 

In the event (a) that the Mortgage is foreclosed inwhole or in part, (b) of the bankruptcy, insolvency, rehabilitation or othersimilar proceeding in respect of Borrower or any of its constituent Persons oran assignment by Borrower or any of its constituent Persons for the benefit ofits creditors, or (c) Lender exercises any of its other remedies under thisAgreement or any of the other Loan Documents, Borrower shall be chargeable withand agrees to pay all costs of collection and defense, including attorneys’fees and costs, incurred by Lender or Borrower in connection therewith and inconnection with any appellate proceeding or post-judgment action involvedtherein, together with all required service or use taxes.

 

**Section 20.5.**** Schedules Incorporated**

 

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

 

**Section 20.6.**** Offsets, Counterclaims and Defenses**

 

Any assignee of Lender’s interest in and to thisAgreement, the Note and the other Loan Documents shall take the same free andclear of all offsets, counterclaims or defenses which are unrelated to suchdocuments which Borrower may otherwise have against any assignor of suchdocuments, and no such unrelated counterclaim or defense shall be interposed orasserted by Borrower in any action or proceeding brought by any such assigneeupon such documents and any such right to interpose or assert any suchunrelated offset, counterclaim or defense in any such action or proceeding ishereby expressly waived by Borrower.

 

**Section 20.7.**** No joint Venture or Partnership; No ThirdParty Beneficiaries**

 

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

 

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(b)                                 This Agreement and the other Loan Documentsare solely for the benefit of Lender and Borrower and nothing contained in thisAgreement or the other Loan Documents shall be deemed to confer upon anyoneother than Lender and Borrower any right to insist upon or to enforce theperformance or observance of any of the obligations contained herein ortherein. All conditions to the obligations of Lender to make the Loan hereunderare imposed solely and exclusively for the benefit of Lender and no otherPerson shall have standing to require satisfaction of such conditions inaccordance with their terms or be entitled to assume that Lender will refuse tomake the Loan in the absence of strict compliance with any or all thereof andno other Person shall under any circumstances be deemed to be a beneficiary ofsuch conditions, any or all of which may be freely waived in whole or in partby Lender if, in Lender’s sole discretion, Lender deems it advisable ordesirable to do so.

 

(c)                                  The general partners, members, principals and(if Borrower is a trust) beneficial owners of Borrower are experienced in theownership and operation of properties similar to the Property, and Borrower andLender are relying solely upon such expertise and business plan in connectionwith the ownership and operation of the Property.  Borrower is not relying on Lender’s expertise,business acumen or advice in connection with the Property.

 

(d)                                 Notwithstanding anything to the contrary containedherein, Lender is not undertaking the performance of (i) any obligations underthe Leases; or (ii) any obligations with respect to such agreements, contracts,certificates, instruments, franchises, permits, trademarks, licenses and otherdocuments.

 

(e)                                  By accepting or approving anything requiredto be observed, performed or fulfilled or to be given to Lender pursuant tothis Agreement, the Mortgage, the Note or the other Loan Documents, including,without limitation, any officer’s certificate, balance sheet, statement ofprofit and loss or other financial statement, survey, appraisal, or insurancepolicy, Lender shall not be deemed to have warranted, consented to, or affirmedthe sufficiency, the legality or effectiveness of same, and such acceptance orapproval thereof shall not constitute any warranty or affirmation with respectthereto by Lender.

 

(f)                                    Borrower recognizes and acknowledges that inaccepting this Agreement, the Note, the Mortgage and the other Loan Documents,Lender is expressly and primarily relying on the truth and accuracy of therepresentations and warranties set forth in Article 4 of this Agreementwithout any obligation to investigate the Property and notwithstanding anyinvestigation of the Property by Lender; that such reliance existed on thepart, of Lender prior to the date hereof, that the warranties andrepresentations are a material inducement to Lender in making the Loan; andthat Lender would not be willing to make the Loan and accept this Agreement,the Note, the Mortgage and the other Loan Documents in the absence of thewarranties and representations as set forth in Article 4 of thisAgreement.

 

**Section 20.8.**** Publicity**

 

All news releases, publicity or advertising byBorrower or its Affiliates through any media intended to reach the generalpublic which refers to the Loan, Lender, Banc of America Securities LLC, or anyof their Affiliates shall be subject to the prior written approval of Lender,not to be unreasonably withheld. Lender shall be permitted to make any news,releases, publicity

 

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oradvertising by Lender or its Affiliates through any media intended to reach thegeneral public which refers to the Loan, the Property, Borrower, BorrowerPrincipal and their respective Affiliates without the approval of Borrower orany such Persons. Borrower also agrees that Lender may share any informationpertaining to the Loan with Bank of America Corporation, including its banksubsidiaries, Banc of America Securities LLC and any other Affiliates of the foregoing,in connection with the sale or transfer of the Loan or any Participationsand/or Securities created.

 

**Section 20.9.  Conflict;Construction of Documents; Reliance**

 

In the event of any conflict between the provisionsof this Agreement and any of the other Loan Documents, the provisions of thisAgreement shall control. The parties hereto acknowledge that they wererepresented by competent counsel in connection with the negotiation, draftingand execution of the Loan Documents and that such Loan Documents shall not besubject to the principle of construing their meaning against the party whichdrafted same. Borrower acknowledges that, with respect to the Loan, Borrowershall rely solely on its own judgment and advisors in entering into the Loanwithout relying in any manner on any statements, representations orrecommendations of Lender or any parent, subsidiary or Affiliate of Lender.Lender shall not be subject to any limitation whatsoever in the exercise of anyrights or remedies available to it under any of the Loan Documents or any otheragreements or instruments which govern the Loan by virtue of the ownership byit or any parent, subsidiary or Affiliate of Lender of any equity interest anyof them may acquire in Borrower, and Borrower hereby irrevocably waives theright to raise any defense or take any action on the basis of the foregoingwith respect to Lender’s exercise of any such rights or remedies. Borroweracknowledges that Lender engages in the business of real estate financings andother real estate transactions and investments which may be viewed as adverseto or competitive with the business of Borrower or its Affiliates.

 

**Section 20.10.**** Entire Agreement**

 

This Agreement and the other Loan Documents containthe entire agreement of the parties hereto and thereto in respect of thetransactions contemplated hereby and thereby, and all prior agreements among orbetween such parties, whether oral or written between Borrower and Lender aresuperseded by the terms of this Agreement and the other Loan Documents.

 

**Section 20.11.**** Interest Act (Canada)**

 

Except as otherwise specified in the Note, allnatural rates of interest referred to herein are based on a calendar year of365 or 366 days, as the case may be. Where a rate of interest hereunder is calculatedon the basis of a year (the “Deemed Year”) which contains fewer days than theactual number of days in the calendar year of calculation, such rate ofinterest shall be expressed as a yearly rate for the purposes of the InterestAct (Canada) by multiplying such rate of interest by the actual number of daysin the calendar year of calculation and dividing it by the number of days inthe Deemed Year.

 

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**Section 20.12.**** Maximum Interest Rate**

 

(a)                                  To the extent applicable, in the event thatany provision of this Agreement would oblige the borrower to make any paymentof interest or any other payment which is construed by a court of competentjurisdiction to be interest in an amount or calculated at a rate which would beprohibited by law or would result in a receipt by the Lender of interest at acriminal rate (as such terms are construed under the *Criminal Code*(Canada)), then notwithstanding such provision,such amount or rate shall be deemed to have been adjusted nunc pro tunc to the maximumamount or rate of interest, as the case may be, as would not be so prohibitedby law or so result in a receipt by the Lender of interest at a criminal rate,such adjustment to be effected, to the extent necessary, as follows:

 

(i)                                     firstly, by reducing the amount or rate ofinterest required to be paid pursuant to the terms of the Note; and

 

(ii)                                  thereafter, by reducing any fees,commissions, premiums and other amounts which would constitute interest for thepurposes of Section 347 of the *CriminalCode*(Canada).

 

(b)                                 if, after giving effect to all adjustmentscontemplated thereby, the Lender shall have received an amount in excess of themaximum permitted by such clause, then such excess shall be applied by theLender to the reduction of the principal balance of the Note and not to the paymentof interest or if such excessive interest exceeds such principal balance, suchexcess shall be refunded to the Borrower.

 

(c)                                  Any amount or rate of interest referred to inthis Section shall be determined in accordance with generally acceptedactuarial practices and principles at an effective annual rate of interest overthe term of this Agreement on the assumption that any charges, fees or expensesthat fall within the meaning of “Interest” (as defined in the *Criminal Code*(Canada)) shall, if theyrelate to a specific period of time, be prorated over that period of time andotherwise be prorated over the term of this Agreement and, in the event ofdispute, a certificate of a Fellow of the Canadian Institute of Actuariesappointed by the Lender shall be conclusive for the purposes of suchdetermination.

 

**Section 20.13.**** Judgment Currency**

 

Any payment made by either party hereto (the “payor”)to the other (the “payee”) on account of any amount payable hereunder (the “paymentobligation”) required to be made in a particular currency (the “originalcurrency”), which payment is made in a currency (the “other currency”) otherthan the original currency (whether made voluntarily or pursuant to anyjudgment or order of a court or tribunal of any jurisdiction), shall constitutea discharge of the obligations of the payor only to the extent of the amount ofthe original currency which may be purchased by the payee with such payment inthe other currency on the date of payment thereof. If the amount of theoriginal currency which may be so purchased is less than the amount of thepayment obligation, the payor shall indemnify and save the payee harmless fromand against any loss or damage arising as a result of such deficiency. Suchindemnity shall (a) constitute an obligation separate and independent from theother obligations of the payor contained in this agreement; (b) shall give riseto a separate and independent cause of action, and (c) shall

 

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continuein full force and effect notwithstanding, and shall not be merged in, anyjudgment or order in respect of any amount due hereunder or under any otherjudgment or order.

 

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

 
|   | BORROWER:                                                                                                                                                                  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                       |
|   |                                                                                                                                                                       |
|   | INLAND WESTERN MARKHAM CORP., a New  Brunswick corporation                                                                                                                 |
|   |                                                                                                                                                                       |
|   |                                                                                                                                                                       |
|   | By:                                                                                                                                                                        | /s/ Scott Wilton |   |
|   | Name:                                                                                                                                                                      |   | Scott Wilton |   |
|   | Its:                                                                                                                                                                       |   | Secretary |   |
|   |                                                                                                                                                                       |
|   |                                                                                                                                                                       |
|   | BORROWER PRINCIPAL:                                                                                                                                                        |
|   |                                                                                                                                                                       |
|   | Acknowledged and agreed to with respect to  its  obligations set forth in Article 4, Section 12.6,  Article 13, Article 15 and Article 18 hereof: |
|   |                                                                                                                                                                       |
|   |                                                                                                                                                                       |
|   | INLAND WESTERN RETAIL REAL ESTATETRUST INC., a Maryland corporation its                                                                                                    |
|   |                                                                                                                                                                       |
|   |                                                                                                                                                                       |
|   | By:                                                                                                                                                                        | /s/ Valerie Medina |   |
|   |                                                                                                                                                                       | Name: |   | Valerie Medina |   |
|   |                                                                                                                                                                       | Title: |   | Asst. Secretary |   |
|        |                                                                                                                                                                            |  |  |  |  |  |  |  |  |  |  |

 

[ADDITIONAL SIGNATURE PAGE TOFOLLOW]

 

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|   | LENDER:                                                |
|--------|--------------------------------------------------------|
|   |                                                   |
|   | BANK OF AMERICA, N.A., a national banking  association |
|   |                                                   |
|   |                                                   |
|   | By:                                                    | /s/ Lisa K. McGee |   |
|   |                                                   | Name: |  Lisa  K. McGee |   |
|   |                                                   | Title: |  Vice  President |   |
|        |                                                        |  |  |  |  |

 

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EXHIBIT A

 

BorrowerEquity Ownership Structure

 

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**INLAND WESTERN RETAILREAL ESTATE TRUST, INC., a****Marylandcorporation**(Borrower Principal)

 

100%

 

**INLAND WESTERN MARKHAM****CORP.,a New Brunswick****corporation (Borrower)**

 

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EXHIBIT B 

 

Tenant Direction Letter

 

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